Bank repossessions (that’s when not even the bank can sell your house) are up 48% from a year ago, as falling house prices trapped borrowers in mortgages they couldn’t afford, says Bloomberg.
Does Angelo Mozilo spend all of his time thinking of ways to be shady? Now ABC News says that Countrywide had a special “VIP desk” that gave out below market rate loans to Senators and other politically connected people.
More bad news! The New York Times says that about 1 in 11 American mortgages were past due or in foreclosure at the end of March. [NYT]
It is done! The Federal Reserve has given the OK for Bank of America to buy subprime poster child Countrywide Financial Corp.. Bank of America CEO, Ken Lewis, says that even though the mortgage market has deteriorated significantly since the bank offered to buy the mortgage lender, buying Countrywide is still a good deal because the housing market is going to improve “by early next year.”
Grim numbers today from the Mortgage Bankers Association. 2.5% of all mortgages serviced by the association’s members are now in foreclosure — 1.1 million homes. The rest of the numbers aren’t any more cheerful. Both the rate of new foreclosures and late payments were the highest on record going back to 1979, says the AP.
Just when you thought it was safe to go back in the water… Wachovia CEO Ken Thompson has been gobbled up in a subprime shark attack after 32 years with the company.
Meet Tracy Warren. NPR says she’s not surprised by the mortgage meltdown because she was supposed to be in charge of preventing it. Tracy worked for a quality control contractor that reviewed subprime loans for investment banks before they were sold on Wall Street, and her company’s biggest client was none other than Bear Stearns. Tracy says she found plenty of loans to reject. The trouble is, according to Tracy, after she rejected them… her bosses unrejected them.
Marketplace Money took a look at some folks who are selling their possessions on eBay and Craigslist in order to pay their bills. The main interviewee was a former mortgage broker who used to make six figures but was now selling his collection of cool amps to pay off his $5,000 a month mortgage and $50,000 in credit card debt.
Last week the best radio show ever, This American Life, tackled the housing and credit crisis by talking to some of the real people involved with packaging junk no-proof loans into “sensible” investments. In the words of host Ira Glass and friends, it all comes back to “The Giant Pool Of Money.” [This American Life]
People lose their houses and move all their stuff into self-storage, where the first month is often free. Then it turns out they can’t pay their self-storage bills any better than their mortgage. However, the number of defaults are down from a year ago, suggesting that the worst is over. [NYT]
Dr. Housing Bubble tells the tumultuous story of one two bedroom 1 bath 825 square foot home in Santa Ana, California. The little house sold for $88,000 in 1988 and had skyrocketed in “value” all the way up to $505,000 when it was sold in 2006. The 90 year old house is current on the market for $177,495. [Dr. Housing Bubble]
Fannie Mae lost $2 billion in the first quarter. Whoopsie. [Chicago Tribune ]
Was ex-American League MVP and admitted steroid abuser Jose Canseco too busy counting the money from his Major League Baseball tell-all books to remember to pay his mortgage? Nope. When the California market tanked, Canseco made “a mathematical decision” to walk away from his mortgage, says the Wall Street Journal.
For those of you hoping that foreclosure crises has hit bottom, we’ve got some bad news. A new report released by the The Pew Charitable Trusts says that 1 in 33 homeowners is expected to be in foreclosure over the next two years, due primarily to subprime mortgages made in 2005 and 2006.
WaMu announced today that they lost $1.14 billion in the first-quarter and CEO Kerry Killinger said that nothing of this scale had happened “since the Great Depression.” Comforting!
“Nothing of this scale has happened since the Great Depression,” Chief Executive Kerry Killinger said at WaMu’s annual meeting. “This is the toughest credit cycle I have seen in my years in the industry.”
WaMu says it will cut 3,000 more jobs, including that of Mary Pugh, chair of their finance committee who “had been fiercely criticized for failing to protect Washington Mutual from overexposure to subprime and other risky mortgages,” according to Reuters.
What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge? As Americans are now painfully aware, with hundreds of thousands of homeowners facing foreclosure and our markets reeling, the answer is a resounding no.
Home prices experienced the steepest drop on record for a single quarter says the National Association of Realtors:
The national median price drop of 5.8%, to $206,200 from $219,300, was the steepest ever recorded by the National Association of Realtors (NAR), which has been compiling the report since 1979.