The Housing Bill
by Osman Parvez ---- Today, you're no doubt hearing that President Bush signed the housing bailout bill into law. I have mixed feelings. On one hand, institutions that backstop half of the nation's mortgages are at risk for collapse. On the other, markets tend to work better without government manipulation, even when the efforts are to protect institutions supposedly "too big to fail." Ultimately, it's the taxpayers who foot the bill and from what I've read, this one is a blank check - limited only by the new national debt ceiling. In addition to helping prop up Fanny and Freddy, [...]
Thoughen Up! You Made a Mistake.
by Osman Parvez ---- A few weeks ago, we did a poll on walking away. The majority of House Einstein readers wouldn't walk away if their home dropped in value (72%) and didn't know anyone who had (75%). In To Walk or Not, Portfolio.com's Felix Simon writes about an anonymous reader with a second home that has dropped significantly in value. The homeowner is considering his options, including allowing the property to fall into foreclosure despite the fact that he can afford to pay. The catch is that the homeowner's income and other assets are high enough that the lender [...]
Survey Says…
by Osman Parvez ---- There were 35 responses to the Walk Away survey. Here are the results (with a few comments from yours truly): I'm glad to see that over 70% said "no," they wouldn't walk away. Not surprising, but I imagine if I had specified a few assumptions... say only a year of ownership and a large drop in value, the results would be quite different. People who have owned property for a short period understandably have little tolerance for large falls in value. Luckily we're not seeing anything like that in Boulder, but some former bubble markets are [...]
The Fed’s Foreclosure Map (New!)
by Osman Parvez ---- There's a new foreclosure map worth checking out. The Federal Reserve's dynamic map is a very powerful tool for seeing current areas in trouble and possibly forecasting the future. You can zoom down to the City level and see the difference between zip codes, toggling between Subprime and Alt-A loans. In Colorado 6.8% of subprime loans are in foreclosure and 1.9% of Alt-A loans. Here's a few maps I generated from the site (darker= higher percentage): Subprime loans that have had a late payment in the last 12 months: Subprime loans that were originated with low [...]
March on Wall Street
by Osman Parvez ---- Jesse Jackson and the Rainbow/Push Coalition are marching on Wall Street today to protest the mortgage rate freeze plan. According to the Center for Responsible Lending, the Bush-Paulson plan is a small first step with only 145,000 families expected to receive help. Jackson and his group will be protesting that the plan doesn't go far enough to aid people impacted by the foreclosure fueled housing correction. From Democracy Now: A growing coalition of housing and civil rights advocates are calling for federal intervention to protect homeowners from foreclosures. Today, those calls are coming to the hub [...]
Foreclosures No Longer Over-Reported
by Osman Parvez ---- As you know, the Colorado Division of Housing became alarmed last year by the high rate of foreclosures being reported in the media. Turns out, the reports were grossly exaggerated. The source of the data was double and triple counting foreclosures (when first filed, when at auction, and when lender owned). As posted previously, I noticed a strong dip across the board in foreclosures recently. Yesterday, I got confirmation from Kathi Williams, the Director of the Division of Housing. Apparently the data discrepancy is all cleaned up now. And not coincidentally, we're off the top 10 [...]
Fed Rate Cuts – Does it Help?
by Osman Parvez ---- If you want to make a smart real estate decision, it's important to understand the factors that affect the real estate market. When you're getting ready to buy or sell, you need to know what's happening at the micro level of your neighborhood right down to the street level. But if you're watching how things are shaping up for the longer term, look at the big picture. As you know from my frequent updates, foreclosures are a problem for the housing market in Colorado. As I've illustrated, the depth of the trouble varies dramatically from region [...]
Record Foreclosures in Denver
by Osman Parvez ---- A few weeks ago, I had dinner with a friend who had just bought a foreclosed home. A smart investor (and lending officer), he ran the numbers thoroughly and dived-in at a very attractive price. Foreclosures are truly a cloud with a silver lining. For the previous owners, it was a painful experience but hopefully one they will recover from. For the new buyers, it's a fresh start and if they did their homework, a savvy investment. There are opportunities out there. More on the regional impact of foreclosures. From the Rocky Mountain News: More than [...]
Contrary Indicators
by Osman Parvez ---- I've been a little too busy lately to blog as much as I'd like, but every once in a while some information pops on my radar screen and screams for attention. You've probably heard about the collapsed Bear Stearns subprime hedge funds (subprime lending is largely made up of loans made to people poor credit histories, essentially riskier loans made a higher rates). There's widespread concern (arguably overblown) that the problems in the subprime sector and in its many derivative products, including credit default swaps, will spread widely. Some investors are worried that this will be [...]
Oops, Our Mistake… (RealtyTrac to Cleanup Foreclosure Data)
by Osman Parvez ---- I've been tracking the foreclosure situation in Colorado using data from Realtytrac but then I discovered their numbers might be inflated by as much as 3x. After putting in all the time to build charts and track data, perhaps "disappointed" is putting it lightly. Anyway, good news is on the horizon. The company will be fixing its reporting system. Although I know their data is still too high, If I get some time over the next few days, perhaps I'll do a foreclosure update for the sake of continuity. RealtyTrac to Revise Formula Newark Star-Ledger (NJ) [...]
Foreclosure Update
by Osman Parvez ---- I recently posted on the overstated data I've been using in my foreclosure updates. A few days ago the Colorado Division of Housing published their own data on foreclosures. Unsurprisingly, Boulder County had the lowest foreclosure rate of any metro county with 1 in 144 occupied units in foreclosure. However, according to the new report, foreclosures in 2006 in Colorado were up 31% from 2005 (as compared to 85% according to Realtytrac). That's a huge difference. Here's a link to summary and methodology of the new report and the data. Here's the press release. (3/7/2006) New [...]
Impacts of the Subprime Implosion
by Osman Parvez ---- By now, you probably know that there's been a rapid increase in the number of subprime lenders tightening standards or closing their doors. Novastar Financial (NFI) and New Century Financial (NEW) in particular (see charts below). According to a new Credit Suisse report, nearly two dozen subprime lenders have ceased operations or have been acquired in the past year. Cumulative losses from subprime loans could exceed $10Bn over the next couple of years. The question you're probably asking... what does it mean for the Boulder (and the regional) real estate market? Here's a few thoughts. 1. [...]
Flawed Foreclosure Data
by Osman Parvez ---- For almost a year I've been tracking foreclosure statistics with data from Realtytrac.com. Now, new information is casting a shadow on the quality of that information and apparently the statistics could be 1/3 of what's being reported. For some time, the Colorado Division of Housing has been trying to figure out why there's a large discrepancy between their numbers and what's published by Realtytrac. After some analysis, they determined that Realtytrac.com is grossly over estimating. From the Northern Colorado Business Report "We have had a hard time understanding this disparity between their numbers and ours," said [...]
The Foreclosure Hotline
by Osman Parvez • Number: 1-877-601-HOPE (4673) • What is it? Help for tens of thousands of Colorado homeowners who are delinquent on their mortgages or may miss a mortgage payment • When you should call: First signs of trouble • What they can do: Counselors can act as intermediaries between you and lenders, give you a game plan, help you organize your finances, avoid scams, reduce your potential liability, and possibly sell or keep your home. Remember: Foreclosures lower values of surrounding homes. Every foreclosure on average costs a municipality an estimated $10,000 per home for additional costs, such [...]
The Half a Million Dollars Home Raffle
by Osman Parvez Remember Casey Serin? He's that 24 year old kid who lied on his mortgage applications and ended up $2 million in the hole buying investment properties. He realized he was in over his head and had to try and get out of the mess he created, he started a blog a few weeks ago. It's called iamfacingforeclosure.com and he's using it to publicize his situation and document his efforts. Now Casey's got a new trick up his sleeve. He's planning to setup a raffle for one of his $500,000 houses. While I don't approve of his complete [...]
