Slash and Probe

Lenders are beginning to get the hang of this foreclosure situation, and are now willing to cut prices over and over until someone bites (well, most of them). Some are even starting to undercut the market, by throwing the foreclosed properties on at $100,000 or more discounts, in attempts to get multiple offers and spur a bidding war. Over here, I've seen it work. But in the long run, it seems no matter what they do, the lenders are selling their inventory at significant discounts (Lenders slash prices on foreclosed houses as numbers surge, AP).

That takes care of slashing. Now the probing. AIG is being probed for misrepresenting values of subprime mortgages. The news worried investors, dropping the stock nearly 5% today (AIG faces probe on mortgage contracts: report, Reuters).

etcList
Clinton, Obama hold secret meeting (AP)
Leisure Living: Reverse mortgages more popular (AP)
Freddie Mac CEO tries to reassure battered shareholders (AP)
Despite Interest Rate Cuts, Foreclosures Hit Record High (Washington Post)

This Game is Fixed

The markets resurged today after some good sales and employment news, despite the increasing cost of oil and the gradual weakening of the US dollar. All in all, we'll call it a good day, it's nice to have those every once in a while (Stocks rise following jobs report, retailer data, AP).

Market Run Down
Dow +1.73% ][ Nasdaq +1.87% ][ S&P 500 = +1.95% ][ 10YrBond +2.16%

Speaking of games, lenders have a tendency of not disclosing their intentions. Although it is in their best interest to avoid foreclosures, it is still nice to see that they are willing to work things out with defaulting borrows every so often. The idea is to work out payment plans, or rework loans, so that people who could not previously afford their mortgages, can begin the process of bringing their loans back up to speed. The lender gets money, the borrow gets to keep the house, and neighborhood value don't get affected. I'd say that's a good day's work. Two good days, in one post, there is good news out there after all (The trick to getting a mortgage fixed, CNNmoney.com)

Let's Shake Things Up

Southern California will be collectively preparing for what is predicted to be one big earthquake. How will we prepare? With one great big simultaneous earthquake drill. The expected 7.8 magnitude, 3 minute long quake, is expected to cause a great deal of damage (Plans for massive earthquake drill unveiled, Pasadena Star News). It is good to hear that we are beginning to take precautions before, rather than after, the damage has been done.

New York sets rating agency fee reforms (Reuters) - "The three top credit rating agencies struck a pact with New York's attorney general on Thursday to change the way they charge fees for reviewing mortgage-backed securities, the latest development in a probe into the U.S. home loan industry." As the government probes further and further into every nook and deep dark hidden filing cabinet, fingers continue to get pointed left and right. Restructuring the way credit companies charge doesn't appear to be the most effective use of their time. Hopefully it will have some positive affect on the market.

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Altadena family shows off 50-year restoration (Pasadena Star News)
Homes in foreclosure top 1 million (CNNmoney.com)

Foreclosures and Recessions and Foreclosures, oh my.

Did you hear about the recent surge of foreclosed properties? Ok, of course you have, but an interesting little note, the rich and famous aren't so immune of the unfortunate circumstances of the current market conditions (Ed McMahon fights foreclosure on Beverly Hills home, Reuters). KB Homes, builder extraordinaire, has also been affected by the turn of events in the last year or so, and posted two-thirds their expected earnings, leading them to revert to their older more humbler ways (Downsizing the American home, FORTUNE).

It appears that many companies are looking into buying their competitors out. Verizon in Talks to Buy Alltel for $27 Billion (CNBC) & Smucker to buy P&G's Folgers in $3 bln stock deal (Reuters). Hopefully Verizon can put an end to the wizard commercials Alltell bombards us with.

Mixed financial market for the day - Stocks wobble as financials weigh on sentiment (AP Business)
Dow -.10% ][ Nasdaq +.91% ][ S&P 500 -.03% ][ 10YrBond +1.08%

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Subprime debacle may spark 2-year credit recession (Reuters) Mortgage brokers face industry upheaval (Reuters)

Shampoo Marketing Tactics for Luxury Home Buying

Buy one, get one free. No, you're not in aisle 6 of the local supermarket. You are shopping the lanes of San Diego, for a new home. These Developers go back to the basics in marketing their properties, we'll see how much this catches on (Slow home sales? Buy one, get one free in San Diego, Reuters).

If you were curious as to the market's current conditions, home prices continue declining throughout the nation. Don't forget, these are averages, of large areas. There are still pockets that haven't been hit quite as hard as others, and if you are sitting here near us in Pasadena, it's likely you're in one of these more insulated areas (Home prices continue sharp descent, CNNMoney.com)

The market takes a bit of a dip today: Stocks slide on more concerns about financials (AP)
Dow -.81% ][ Nasdaq -.44% ][ S&P 500 -.58% ][ 10 YrBond -1.84%

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Be wary of contractors who lack the proper credentials, LaTimes
Inflation moves up on Bernanke's list of worries, AP

The Domino Effect of the Foreclosed

It is interesting to see that many of the foreclosures that currently are hitting the market aren't the owner's only property (Lose Homes, Pay More Tax, NY Times). In fact, they may have a nice portfolio of homes, and had just over extended themselves. So as they try to hide their properties from the lenders or protect themselves by declaring bankruptcy, other homes in the surrounding areas begin to suffer. Those abandoned homes that sit, withering away in stature, adversely affect the value of the entire neighborhood (Lenders foot the bill for abandoned homes, CNNMoney.com). Meanwhile mortgage relief seems to be growing in popularity, which helps readjust the payments for struggling homeowners, in hopes that everyone can avoid the dreaded foreclosure process (Housing rescue on the rise; so are foreclosures, CNNMoney.com), which contrary to popular belief, "...benefits no one: the borrower, community, lender and investor all lose [when homes go into foreclosure.]"

My sympathies to Wachovia's ex-CEO Thompson, as he packs up his desk due to an unfortunate decision regarding the purchase of a mortgage lender (Wachovia ousts CEO Thompson after losses mount, Reuters). May he find new employment without much difficulty.

Also, a rough day at the market (Dow -1.06%, Nasdaq -1.23%, S&P 500 -1.05%) : Stocks down after tepid economic data, bank woes (AP)