Saturday December 13 Housing and Economic stories

TOP STORIES:

Condo Calamity in San Diego - (www.signonsandiego.com) Speculators snapped up converted units at Cityscape in Normal Heights, but now most dwellings are bank-owned or in default. The housing bust has spawned thousands of tales of staggering declines in home values in San Diego's foreclosure-ravaged neighborhoods. But few local projects have suffered as much carnage as the Normal Heights condo conversion Cityscape. Units started selling in late 2006 and early 2007, one-bedrooms for $237,000 and two-bedrooms for $345,000. Today, of the 70 condos in the flat-roofed, nearly 40-year-old complex, 66 have been taken back by lenders or are in default, the first step of the foreclosure process. One-bedrooms are reselling for an average of $66,900 and two-bedrooms for $94,200 – down more than 70 percent from the original prices. That's more than double the 31 percent drop in San Diego home values overall since early 2007.

Worried About Losing Dollars? You Better Watch Your Data Too… - (www.information-security-resources.com) - Yesterday another story emerged that has created some buzz regarding the current threats to our nation’s information security, leading off with a recent case of information and identity theft by a company insider at a major financial institution. With the number of layoffs on the rise in the financial field, how safe is any one’s personal financial information anymore? What exactly is walking out the door, and who is ultimately liable for the losses? This from Newsweek yesterday, December 8, 2008: What of the dozens of boxes of personal financial information, credit reports, social security numbers and other sensitive information that was found in a dumpster behind an apartment complex in Georgia? It had been in the custody of Ameriquest... And do you remember when WaMu, the troubled national lender, was discovered to have shipped sensitive loan documents to Mexico in semi trucks with some 10,000 records lost in transit? Don't underestimate the threat that shrinking budgets and layoffs pose to your data security. In these heady and uncertain economic times, don't we want to know where our data is day and night?

GM's Bust Turns Detroit Into Urban Prairie of Vacant-Lot Farms - (www.bloomberg.com) General Motors Corp., Ford Motor Co., and Chrysler LLC are fighting for their lives. Large stretches of Detroit are already dead. With enough abandoned lots to fill the city of San Francisco, Motown is 138 square miles divided between expanses of decay and emptiness and tracts of still-functioning communities and commercial areas. Close to six barren acres of an estimated 17,000 have already been turned into 500 ``mini- farms,'' demonstrating the lengths to which planners will go to make land productive. The city, like the automakers, has to shrink to match what's left, said June Thomas, a professor of urban and regional planning at the University of Michigan in Ann Arbor. ``The issue is how,'' she said. ``There's no vision.'' The 11th-largest U.S. city is running out of options and money as its three biggest corporate citizens seek a federal bailout and the economy contracts. While Detroit isn't even sure how short of revenue it is, the latest estimate from the mayor's office puts the deficit at $200 million and climbing on an annual budget of $3.1 billion.

Colorado houses, starting at $1,000 - (www.9news.com) Almost 90 lender-foreclosed properties were up for sale at the Crowne Plaza Denver International Airport and Convention Center as part of the Real Estate Disposition Corporation (REDC) auction. Although the highest-priced home had been appraised for more than $1.1 million, bidding for some of the homes started as low as $1,000. Those with REDC say they've auctioned nearly $3 billion worth of homes in the past year. "The banks have taken a lot of properties back through foreclosure, or short sales or through deeds in lieu of foreclosure," said Gary Kujawski. "And now they have to get cash in place and sell these properties in the open marketplace, which is an advantage for someone looking for a home or investors getting into a property at a good price."

Chinese tour groups go house-hunting in U.S. - (www.latimes.com) Caravans of cash-rich Chinese in Hummers and Lincoln Navigators have been weaving through American neighborhoods in recent months, looking for foreclosures and other bargain properties to buy. With housing prices crashing in the U.S., home-buying trips to America are becoming one of the more popular tour group packages in China. New U.S. visa rules for Chinese tourists and a loosening of foreign investment policies by China have made it easier for people such as Zhao Hongjun of Beijing to go house hunting across the Pacific. The 48-year-old owner of a media company went on a two-week road trip through the U.S. last fall, visiting scenic sites and checking out properties from Los Angeles to New York. He's been following the swoon in prices ever since, and next month he's considering joining another prospecting group that is heading for San Francisco, Los Angeles and Las Vegas, three of the hardest-hit housing markets in the U.S.

6 Reasons Modified Loans Are Going Bad Again - (www.usnews.com) So, how have modified loans performed so far? Well, according to Comptroller of the Currency John Dugan--a top bank regulator--more than half of the mortgages that were modified in the first three months of this year went delinquent again within six months. “After three months, nearly 36 percent of the borrowers had re-defaulted by being more than 30 days past due. After six months, the rate was nearly 53 percent, and after eight months, 58 percent,” Dugan said Monday in a speech.

The Stock Picker's Defeat - (online.wsj.com) William H. Miller spent nearly two decades building his reputation as the era's greatest mutual-fund manager. Then, over the past year, he destroyed it. Fueled by winning bets on stocks other investors feared, Mr. Miller's Legg Mason Value Trust outperformed the broad market every year from 1991 to 2005. It's a streak no other fund manager has come close to matching. Mr. Miller was in his element a year ago when troubles in the housing market began infecting financial markets. Working from his well-worn playbook, he snapped up American International Group Inc., Wachovia Corp., Bear Stearns Cos. and Freddie Mac. As the shares continued to fall, he argued that investors were overreacting. He kept buying. What he saw as an opportunity turned into the biggest market crash since the Great Depression. Many Value Trust holdings were more or less wiped out. After 15 years of placing savvy bets against the herd, Mr. Miller had been trampled by it. A year ago, his Value Trust fund had $16.5 billion under management. Now, after losses and redemptions, it has assets of $4.3 billion, according to Morningstar Inc. Value Trust's investors have lost 58% of their money over the past year, 20 percentage points worse than the decline on the Standard & Poor's 500 stock index. These losses have wiped away Value Trust's years of market-beating performance. The fund is now among the worst-performing in its class for the last one-, three-, five- and 10-year periods, according to Morningstar. Mr. Miller's picks read like a Who's Who of the stock market's biggest losers: Washington Mutual Inc., Countrywide Financial Corp. and Citigroup Inc.

Fed Weighs Debt Sales of Its Own - (online.wsj.com) Move Presents Challenges: 'Very Close Cousins to Existing Treasury Bills'. The Federal Reserve is considering issuing its own debt for the first time, a move that would give the central bank additional flexibility as it tries to stabilize rocky financial markets. Government debt issuance is largely the province of the Treasury Department, and the Fed already can print as much money as it wants. But as the credit crisis drags on and the economy suffers from recession, Fed officials are looking broadly for new financial tools. Fed officials have approached Congress about the concept, which could include issuing bills or some other form of debt, according to people familiar with the matter. It isn't known whether these preliminary discussions will result in a formal proposal or Fed action. One hurdle: The Federal Reserve Act doesn't explicitly permit the Fed to issue notes beyond currency.

AIG owes $10 billion for soured trades: report - (www.reuters.com) American International Group, once the world's largest insurer, owes around $10 billion to other financial services firms for trades that have gone sour, the Wall Street Journal reported in its online edition on Tuesday. The report, citing people familiar with the matter, says the trades have not been explicitly disclosed before, and are not covered by terms of a current $150 billion U.S. government rescue package. The government's rescue package was meant to save AIG from collapse, but the Wall Street Journal report says the newly discovered trades raise further questions about how the insurer will raise money to pay the debts.





OTHER STORIES:

Gaming is recession-proof? Not really - (www.latimes.com) The world's largest game publisher, expecting disappointing holiday figures, says it will cancel some projects and reduce its workforce by more than the 6% announced in October.
Plan to aid credit unions hurt by mortgage losses - (www.latimes.com) Federal regulators said Tuesday that they were making more than $40 billion available to support several credit unions that suffered losses from mortgage securities, and would provide an additional $2 billion to help struggling homeowners.

Get Ready for the Next Wave: CRE Delinquencies - (www.ml-implode.com) - Delinquencies are expected to accelerate next year. And many more delinquencies and defaults are expected in 2010, when five-yea...
Cisneros & Kemp: A New Agency Is Needed to Enforce Fair Housing - (www.ml-implode.com) - "The system doesn't work," former Housing and Urban Development secretary Henry Cisneros said at a news briefing on the 85-page ...
Ouch! Borrowers Keep Defaulting After Mortgage Modification - (finance.yahoo.com)
Foreclosure bailouts unlikely until Obama in office - (biz.yahoo.com)
Foreclosure Prevention Efforts Floundering - (www.cnbc.com)
When Lower Mortgage Rates Don't Boost House Prices - (www.seekingalpha.com)
Please Tell Government It Can't Legislate High Asset Prices - (www.seekingalpha.com)
Ten clues that tell us a new Wall Street bubble is inflating - (www.marketwatch.com)
Where did all the money go? - (www.rgemonitor.com)

Warm-weather cities sinking to bottom 10 - (www.marketwatch.com)
House Price Grapher - (www.lightsblue.com)
Over 97% Expect Real Estate Market to Continue Falling - (www.homepricetrend.com)
Praying to the SUV - (optionarmageddon.ml-implode.com)

The Stock Picker's Defeat - (online.wsj.com)
Investors Buy U.S. Debt at Zero Yield - (www.nytimes.com)
Mortgage Troubles Are Moving Downtown - (www.nytimes.com)
As F.H.A.’s Role Grows, So Does the Risk of Fraud - (www.nytimes.com)

Citadel buffeted by December storm warning - (www.nypost.com)
Interest rate on US T-bills turns negative - (www.ft.com)
China’s Exports Decline for First Time in 7 Years - (www.bloomberg.com)
Developing Countries Feel Slump - (online.wsj.com)
Rio to Cut 14,000 Jobs, Spending as Demand Falters - (www.bloomberg.com)
Deflation risks in China, Japan as demand slumps - (www.reuters.com)
U.K. Economy May Shrink Most Since 1990, Niesr Says - (www.bloomberg.com)
India's Car Sales Plunge Most in Five Years on Loans - (www.bloomberg.com)

Worst Spending Slump Since 1942 Extends ‘Scary’ U.S. Recession - (www.bloomberg.com)
Most US companies say hiring on hold for winter 2009; overseas outlook worse - (www.chicagotribune.com)
Dire Forecast for Global Economy and Trade - (www.nytimes.com)
Week-over-week mortgage filings down 7.1% - (www.marketwatch.com)
Recession prompts some couples to delay having kids - (www.latimes.com)
Vote on Detroit Bailout Nears - (www.washingtonpost.com)
Toyota to further cut production in North America over next 2 months - (www.chicagotribune.com)

Ex-Officer Faults Mortgage Giants for ‘Orgy’ of Nonprime Loans - (www.nytimes.com)
Squeezed Restaurants Shed Jobs - (online.wsj.com)
Electronic Arts says it'll miss fiscal-year targets, plans deeper job cuts - (www.latimes.com)
Frugal shoppers forgoing organic food - (www.latimes.com)
Employer-based health insurance plans no longer work - (www.latimes.com)