Correction

»The recipe for Col. Blath's Hysteria-Suppressing Tonic in the May 29, 1858, posting contained an error. The serum requires one-third jigger of extract of henbane, not two-thirds. Martha's News regrets the error.

More Mansion Foreclosures

Houses costing more than $5 million will be part of the next foreclosure boom, according to a study by RealtyTrac.

In 2009, 1,312 homes costing more than $5 million faced foreclosure auctions. In February 2010 alone, 352 homes were on the auction block.

CoreLogic tracks 1,700 homes nationwide that have mortgages greater than $4 million. Of those, 14.8 percent were 90 days or more past due as of Jan. 31. That is almost double the 8.7 percent of homes with lesser mortgages that were similarly past due.

These pricey properties are difficult to sell because there are fewer buyers and financing is hard to get, but there’s a psychological element to the problem too. It's very, very difficult for these home owners to believe they've had such a severe reversal of fortune.

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US Housing Markets Facing Epic Hangover - Slow Recovery

The housing crash that helped bring on the worst recession since the Great Depression will linger in the nation's hardest-hit real estate markets until 2025 -- or later.  Nearly a full generation will pass before major metro areas in Arizona, California, Florida and Nevada return to the solid ground reached at the height of the housing boom in 2006-2007. And it'll take a decade or more for other urban markets in the Northeast and industrial Midwest to likewise return to peak conditions.
 Even the start of a housing recovery in general is still a year away.

Nationally, data points to a further 7 percent decline in home prices through the end of this year, with a prolonged recovery beginning early in 2011.

The areas with the deepest price declines will face the longest recovery periods. Specifically:

Orlando, Fla., won't recover its average 59.9 percent drop in home prices until 2039.
Sacramento, Calif., will jog in place until 2039 to make up its 54.8 percent home price crash.
San Jose, Calif., won't recover from a 41.7 percent home price plunge until 2023.
Jacksonville, Fla.'s home price bust of 39.3 percent will keep that market below peak until 2020. Tucson, Ariz., also will have to wait until 2020 to rebound from a 36.8 home price plummet.

Several forces in the market will severely hinder the housing recoveries of many metro areas, particularly in the hard-hit states of California, Florida, Arizona and Nevada. It will take these markets 15 or more years before home prices climb back to their peaks.

Fiserv Case-Shiller

Latest stats not so pretty

According to the U.S. Census Bureau,as of 2008, there were 51,487,282 housing units with a mortgage of some type and 23,875,803 without a mortgage. About 4.5 million of the 51.5 million mortgages in the U.S. are "seriously delinquent" (90 days or more past due) and some 1.6 million are in the foreclosure pipeline.

The nation's foreclosure rate increased in January to 3.19%, up 60.3% from a year ago, while the rate for seriously delinquent mortgages increased to 8.66%, an increase of 56.6% from 12 months earlier. In March, the nation's foreclosure rate just hit a five-year high.

A recent report from Bank of America (BAC) stated that 1.44 million of its mortgage customers are 60 days or more delinquent, roughly 14% of the company's portfolio of 10.4 million first mortgages.

The median mortgage payment is about $1,300 per month and the number of delinquent loans is at least 4.5 million, it is straightforward to extrapolate that those not paying their mortgages are "saving" almost $6 billion a month.

Our numbers here in Florida ain't too purty neither. Our 90-day delinquency rate is 19.39%, which means one in every five mortgages in the state is in default.

Foreclosures: Biggest Jump in 5 years

A record number of U.S. homes were lost to foreclosure in the first three months of this year, a sign banks are starting to wade through the backlog of troubled home loans at a faster pace. The number of U.S. homes taken over by banks jumped 35 percent in the first quarter from a year ago. In addition, households facing foreclosure grew 16 percent in the same period and 7 percent from the last three months of 2009. More homes were taken over by banks and scheduled for a foreclosure sale than in any quarter going back to at least January 2005.

The United States is on pace to more than 1 million bank repossessions this year.

Nationwide, more than 900,000 households, or one in every 138 homes, received a foreclosure-related notice.

States with the highest foreclosure rates in the first quarter 2010:

Nevada one in every 33 homes received a foreclosure-related notice during the quarter.

Arizona one in every 49 homes.

Florida, one in every 57 properties.

California one in every 62 properties.

About 231,000 homeowners have completed loan modifications as part of the Obama administration's flagship foreclosure prevention program through March. That's about 21 percent of the 1.2 million borrowers who began the program over the past year. But another 158,000 homeowners who signed up have dropped out — either because they didn't make payments or failed to return the necessary documents. That's up from about 90,000 just a month earlier.

Last month, the administration expanded the program, launching a plan to reduce the amount some troubled borrowers owe on their home loans and give jobless homeowners a temporary break. But the details of those programs are expected to take months to work out.

Chase Fighting New Regulations

Why? Because the sweeping financial overhaul could force Chase and other banks to shed assets and become smaller institutions. The new regulations will also tighten the grip both state and federal regulators have over financial institutions, possibly even setting up a consumer protection agency with wide-ranging powers.

We're not talking about a moral issue, we're talking about reality. The big banks don't want to write down their losses until they absolutely have to. They would rather let homes go to foreclosure slowly -- collecting fees along the way -- than take a major writedown now. Never mind that most experts believe that principal reduction is the only solution to the foreclosure crisis.

At issue is the $448 billion in equity lines and other junior loans held primarily by the nation's four biggest banks. If principal writedown is allowed, most of the equity lines involved will be wiped out if the property is underwater. In fact, the plan Obama announced last week for owners of such homes allowed only 10 cents to 20 cents on the dollar for second-lien holders.

Right now second lienholders are holding up mortgage modifications for underwater homes. Yet mortgage experts clearly have determined that a borrower whose mortgage is more than 115 percent underwater will likely walk away from the home. If the borrower walks away, the first lienholder forecloses and the second lienholder gets nothing anyway.

This week's Congressional hearings will explore how equity lines and other junior liens are thwarting the mortgage modification process.

Credit Cards Change Tactics

Faced with new rules of the Credit Card Act, and the impact of the economic downturn, the industry is making changes to almost every credit card.

Balance Transfer Cards

For most consumers, being able to get a balance transfer card that offers a 0 percent, 1 percent or 2 percent interest rate on a transferred balance for much more than a year will become a thing of the past.  The CARD Act is going to have upward pressure on rates simply because the ability to adjust rates on outstanding balances is severely limited now. Issuers can't do anything about accounts that have protected balances, so they will book new accounts at higher rates of interest to make up for lost revenue from penalty fees and penalty interest.

Business Cards    None of the provisions in the CARD Act apply to business credit cards.

Debit Cards

Debit cards have never been all that profitable for banks, but new rules on overdraft charges mean banks will make even less. Starting in July 2010, new customers will not be allowed to overdraft using their debit cards unless they opt in ahead of time. Overdraft fee income had been a big profit center for banks.  To help make up the lost revenue, many banks may start charging annual fees for debit cards, probably in the $20 to $30 range.

Gas Cards

The CARD Act will indirectly influence the most popular type of gas card.If there's a revolving feature, it's going to be more expensive and involve paring down rewards.

Low Interest Cards

In the near future, interest rates on fixed rate low interest cards, as well as cards with low introductory rates, likely will go up several points, and issuers will be even more selective about who gets these cards.

Prepaid and Gift Cards

The Credit CARD Act imposes prepurchase disclosure of certain fees, such as inactivity fees, associated with prepaid cards -- and mandates that the cards not expire before five years. In the past, some expired after a year -- if you still had money on it, you lost it. The new rules for prepaid cards -- including gift certificates, reloadable prepaid cards and gift cards -- go into effect Aug. 22, 2010.

Reward Cards

Rewards card issuers already have started to move away from loyalty or rewards program.

Student Cards

The days of the big credit card issuers setting up tables on college campuses and offering free pizza to entice throngs of students to sign up for easy credit are over. The CARD Act prohibits that type of marketing and requires anyone under 21 to prove a source of income or have a parent co-sign to get a card.

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30-year fixed-rate mortgage highest in 8 months

The 30-year fixed-rate mortgage hit its highest weekly level in eight months this week, averaging 5.21%, according to Freddie Mac's weekly survey of conforming mortgage rates, released on Thursday.

The mortgage averaged 5.08% last week and 4.87% a year ago. It hasn't been higher since the week ending Aug. 13, when it averaged 5.29%.

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National Office Vacancy Rate Report

The U.S. office vacancy rate rose to 17.2 percent in the first quarter, its highest level in 16 years, as the market lost about 11.6 million net square feet of occupied space during the first quarter. The U.S. vacancy rate was 2 percent higher than a year ago.

Asking rent fell 4.2 percent from a year earlier. Factoring months of free rent and landlord contributions to space improvements for each tenant, effective rent was down 7.4 percent from a year earlier. Expect less of a bloodbath in fundamentals in 2010 versus 2009, but rents will still decline and vacancies will still continue to rise. Positive rent growth is not expected to resume until next year at the earliest. Tight credit markets have curbed office construction with only 3.6 million square feet of office space coming online.

Washington DC's 10.4 percent is the nation's lowest vacancy rate.

Detroit's 26.2 percent vacancy rate is the highest in the nation.

Key West Vagrants - A Problem

Simply put, “If you have to be homeless, Key West is the best place to live” says one of several vagrants gathered at Higgs Beach in Key West.  Or at least it used to be. Over the past three months, the city police have given homeless residents more than twice as many warnings for trespassing as they did last year. Between Jan. 1 and March 23, they made 90 arrests, and the federal stimulus will ensure that the trend continues: the Key West police recently received $813,000 to add four officers to its 89-member department. Their sole mission will be quality-of-life policing.

“It’s for vagrants,” said the police chief, Donald J. Lee Jr. “People who are out on the streets, disrupting the quality of life or experience for visitors, residents and businesses.” What some call vagrants, of course, others call simply down-and-out. The police say their targets are people like the homeless man arrested last week after he told two teenage girls they were sexy and offered them a swig of his Jack Daniel’s. Yet in a city of 25,000 that claims to have more bars per capita than anywhere else in the country, enforcement can sometimes look selective.

The police now regularly question the homeless but ignore visitors like the man at a table near Ms. Skinner’s Jeep last week. He was passed out before sunset, snoring, with a 16-ounce beer in front of him and two chickens pecking near his feet. Only his pressed shorts, lack of strong body odor, and a half-eaten Godiva chocolate bar suggested that he had a home.

Vagrants say the police are “profiling” them with arrests for small infractions, like drinking outside in violation of open-container laws.  At a picnic table with a half-dozen homeless friends. With raspy voices and slurred words — some actually sounded like pirates — they all said they deserved to be left alone.

“God gave us this, not the government,” they said of the island. “This is what he’s given to us. Why can’t we enjoy it?” Some residents and tourists reply that it's often the Vagrants who want to be "given" money for booze, describing the methods used by the homeless to request cash as more man-handling than pan-handling.

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Latest Foreclosure Prevention Program

Unemployed homeowners will get a few months of relief on their mortgages.


Banks participating in the Home Affordable Modification Program, or HAMP, now will be required to consider writing down the principal for borrowers who are eligible for that program and whose mortgage debt is more than 115% of the current value of their homes. The principal would be reduced in stages over three years if the borrowers kept up on their payments.

Lenders are to receive 10 to 21 cents of federal subsidies per dollar of loan principal reduced, depending on the degree to which the borrower is underwater. Holders of second-lien mortgages that are more than six months delinquent are to receive six cents on the dollar for writing off those loans. 

At the same time, the FHA will offer a new way for some borrowers to refinance into a smaller loan. Lenders would write down the principal of a first mortgage at least 10%. The loans would then be refinanced into FHA-insured mortgages for no more than 97.75% of the home's current estimated value. To participate, homeowners must be current on their loan, occupy the home as a primary residence, fully document their income and have a credit score strong enough to meet FHA guidelines.