The Sun-Sentinel reports on the continued push for a taxpayer-funded bailout out of irresponsible lenders:
“Want government help to get out of a bad subprime mortgage? Don't look for Congress to come to your rescue anytime soon.”
“Lawmakers have lots of ideas and plans -- as well as hearings to share their concerns and assess blame -- but there's no consensus on how to stop the foreclosures. The only thing everyone has agreed on is that something must be done.”
“‘We may have as many as 1 million to 3 million people who could lose their homes, not because they lost their jobs, not because the economy collapsed, but because they got bad deals on mortgages,’ said Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking, Housing and Urban Affairs Committee.”
“House and Senate lawmakers are working on different plans to help Americans out of the mortgage crisis, none of which seems ready for a prime-time signing by President Bush. Dodd acknowledged as much last week as he urged the White House to take action, despite all the mortgage-related legislation his committee has planned for the fall.”
St. Lucie lawyers are offering free legal assistance to troubled borrowers:
“As unprecedented numbers of St. Lucie County residents face the prospect of losing their homes through mortgage foreclosures, some local lawyers are stepping up to help these people, many of whom have never before dealt with the legal system, understand the law and navigate what can be a daunting process.”
“The St. Lucie County Bar Association, along with Florida Rural Legal Services Inc. and the 19th Judicial Circuit Pro-Bono Committee, have organized two foreclosure law clinics to give folks free help.”
“‘The idea is to give people one-on-one time with an attorney to answer specific questions to the extent that we can about the foreclosure process in general and steps they can take to preserve their rights,’ said Jason Halliburton, St. Lucie County Bar president.”
The Palm Beach Daily News reports on how the mortgage crisis is affecting the very wealthy:
“Volatile. Confusing. Troubling.”
“The careening, and career-denting, subprime mortgage sector is all that and more. It also is less catastrophic than some have indicated, say local and national experts who watch the markets closely.”
“Many financial institutions seared by the fallout have locations in Palm Beach, and some investment titans own homes here.”
“Yet borrowing money to buy a house on the island has not been jeopardized to any great extent by the larger crisis, said Ellen Bitton, of Palm Beach, CEO of Park Avenue Mortgage Group. She deals with many lenders, but the pack is dwindling.”
“Having the subprime sector in a supine stance affects all markets, Bitton said.”
“‘Rates are higher because credit is more difficult to get,’ she said.”
The Sun-Sentinel reports how the housing downturn is affecting employment for both legal and illegal immigrants:
“A combination of slowing construction because of dismal real estate sales and stepped-up scrutiny over employment documents has meant less work for many immigrants, particularly those who install drywall and roofing at South Florida construction sites.”
“Supporters of reduced immigration say this increased discomfort is precisely what's needed to persuade undocumented workers to leave the United States. Advocates for such workers say they will simply be pushed deeper underground as they struggle to survive.”
“‘Things have gotten much tougher, and if you do get a job, it's much easier for employers not to pay minimum wage, much easier not to give benefits, not to pay overtime,’ Bendixen said.”
“The poll of 900 immigrants, both legal and undocumented, concluded that more than 80 percent of immigrants from Mexico and Central America are finding it harder to obtain good-paying jobs than a year ago in the United States. The study was conducted in June, as the immigration debate consumed Congress, and released Aug. 14.”
“With bleak housing sales, fewer construction projects are in the pipeline, and analysts say the market isn't likely to pick up soon. Real estate analyst Mike Larson noted Palm Beach County has a three-year inventory of homes for sale.”
“‘Construction activity is weak and obviously the immigrant community fill a lot of construction jobs, and they're going to bear the brunt of it,’ he said.”
Yet, despite all this, the British population is being told that “Now, is the time to buy” in South Florida. The Telegraph reports from the UK:
“American estate agents claim it is ‘softening’, economists say it is ‘crashing’, and the truth is probably somewhere in-between for the US property market.”
“Prices had been climbing in Florida since 2003, with speculators pushing them up by 25 per cent a year. But the bubble has burst with an oversupply of housing and higher interest rates leading to price plunges over the past 18 months.”
“So why buy in Miami now?”
“‘It's a matter of taking a chance and playing the market,’ says Peter Esders of The International Law Partnership.”
“James Hickman, a currency exchange expert from Caxton FX, says the US market is still a good bet. He advises buyers to go for high-end property, particularly waterfront homes: ‘South Beach is popular, and with nowhere to build there any more, it is a good, long-term investment.’”
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2 comments:
I think that if foreclosures continue to increase, there will be a disconnect between the Fed funds rate and mortgage rates.
The interest rates could continue to increase even as the Fed decreases the Fed funds rate just because of the uncertainty of the default rate for these loans.
Since almost everyone realizes now that these mortgage-backed securities' rating system has been complete BS, there will be a higher risk premium on these securities, thus driving up interest rates.
I think that the worst is yet to be seen. I think reality is just now setting in on a lot of these screwed buyers and they are realizing that foreclosure is probably their best option, rather than sinking more money into a losing investment.
It's really funny how the perception of real estate has changed just in the last few months. You're not hearing a lot of real estate fluffers anymore. Everyone pretty much agrees that the market is bad. As this becomes more and more the widespread belief, foreclosures will go up and mortgages will become even harder to get since banks will be tightening up more and more.
You need seller capitulation. We aren't there yet. Some sellers are probably hoping for a federal bailout or a drop in rates, or both. In the end, they will sober up by late-2008 as all the arms reset. Realizing that the only thing that sustains real estate prices is cash flow multiples, and in Florida...they are wacked out. Allowing people to refinance a 500,000 loan over 30yrs for an asset that trades for 300,000 is really doing no one any favours. Rates aren't going to 1%, Bernanke has seen the error of Greenspans ways. Assets bubbles are painful things to unwind.
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