Foreclosure Archives - David Westerfield

(Update: to be fair, Bank of America did take a hit this past quarter)

In order to create incentive and get consumers’ as well as investors’ confidence back up to levels before the financial crisis started, it seems the media and their overlords, whoever they may be (I personally think Goldman, JPMorgan, BofA, et al. :] ), are intent on continuing to mask the reality of the actual crisis in the housing market and the broader market that is getting worse and apparently far from over, where there is an increasing amount of pain and hurt; something those very banks helped create and are profiting from now.

Case in point: foreclosures for the third quarter versus foreclosure filings year over year.

Foreclosures rise 5 percent from summer to fall – AP

“The number of households caught up in the foreclosure crisis rose more than 5 percent from summer to fall as a federal effort to assist struggling borrowers was overwhelmed by a flood of defaults among people who lost their jobs.”

Now while the above is certainly a true number and an accurate reading of the number of actual foreclosures for the third quarter, the reality going on behind the scenes can be seen in this article, which has come out on the same day as the last article:

U.S. Foreclosure Filings Jump 23% to Record in Third Quarter – Bloomberg

“U.S. foreclosure filings climbed to a record in the third quarter as lenders seized more properties from delinquent borrowers, according to RealtyTrac Inc.

A total of 937,840 homes received a default or auction notice or were repossessed by banks, a 23 percent increase from a year earlier, the Irvine, California-based seller of default data said today in a report. One out of every 136 U.S. households received a filing, the highest quarterly rate in records dating to January 2005.”

Commercial Real Estate Watch

By David Westerfield

On September 18, 2009

In Business, Economics

Exclusive – Wells Fargo’s Commercial Portfolio is a ticking time bomb – BankImplode.com

“In order to sort through the disaster that is Wells Fargo’s commercial loan portfolio, the bank has hired help from outside experts to pour over the books… and they are shocked with what they are seeing. Not only do the bank’s outstanding commercial loans collectively exceed the property values to which they are attached, but derivative trades leftover from its acquisition of Wachovia are creating another set of problems for the already beleaguered San Francisco-based megabank.”

Wells’ Commercial Real Estate “Ticking Time Bomb” And Coming CRE Woes – Naked Capitalism

“The CRE alarmists may yet be proven right, but the delayed reckoning due to CDS [credit default swap’s] accounting means it may take a while for these shoes to start dropping.”

Facing the next real-estate collapse – New York Post

“The next wave of the credit crisis is about to hit — a collapse in com mercial real estate and potential explosion of bank failures. With its resources tapped out by the first wave, what should Washington do?

“Over the last year, the Federal Reserve doubled the size of its balance sheet, and took unprecedented action in monetizing government debt and extending credit to financial institutions. Now it must head off inflation and extricate itself from $5 trillion-plus in credit exposure from various bailouts. The Treasury, meanwhile, is issuing debt at the fastest pace in peacetime history.

“Now comes the next crisis. The same factors that caused the residential bubble — easy credit, lax lending standards and booming mortgage-backed-securities underwriting — also drove commercial real-estate overvaluation. But the commercial market lags the residential one by about a year, so this bubble is still popping.”

Commercial Real Estate Loan Foreclosures Coming to Pass

By David Westerfield

On September 14, 2009

In Business, Economics, Video

From Calculated Risk:

This is happening all across the country: falling demand [for commercial real estate] and still more office supply coming available as large commercial real estate projects are completed. This means falling rents and property values. And as the construction loans come due, there will be more and more losses for lenders.

From WashingtonPost article cited in Calculated Risk’s blog:

“We may see the commercial version of the subprime situation,” said Steve Silverman, director of the Montgomery County Department of Economic Development.

This was predicted earlier this year by Gerald Celente, founder of Trends Research Institute. The question is, will the effects of this and other situations prove to be as dire as he predicted? We’ll have to see I guess.

Paper: Nearly One-Third Of All Mortgages Are Underwater

By David Westerfield

On August 17, 2009

In Economics

Apparently, we have not yet come to the end of the foreclosure mayhem, and therefore, the stress on banks, and therefore the rest of the economy, including the Fed, government and taxpayers. On top of the potential landslide of commercial real estate foreclosures expected this fall, it now appears that about one-third of all mortgages in the U.S. are now underwater (meaning they are on the path to foreclosure or are in the process). Many of the things Peter Schiff and Gerald Celente were saying earlier this year are now coming to fruition. And as Biden said that they “misread how bad the economy was,” well, that appears to be exactly the case. What we have been seeing in the markets since March or so has been a bear market rally it appears.

If Celente’s and Schiff’s predictions hold up, we have years to go before it gets any better in the economy. Just as in the Great Depression, government intervention didn’t fix the problem, it just prolonged it and kept us from a solid recovery. The only thing that got us out of the depression was production and savings, brought on by a massive war, which in Europe was greatly a product of the logical end of eugenics. History repeats itself in strange ways sometimes. This time around, we have economic calamity (like the depression), climate change (like eugenics), and an unstable Middle East (like Europe).