Problem cases - foreclosures

The above map, from realtytrac.com shows where homeowners are under the most duress. From the September report:

With one in every 91 households receiving a foreclosure filing in August, Nevada continued to document the nation’s highest state foreclosure rate for the 20th consecutive month. Foreclosure filings were reported on 11,706 Nevada properties, a 16 percent increase from the previous month and an 89 percent increase from August 2007.

California continued to document the nation’s second highest state foreclosure rate, with one in every 130 households receiving a foreclosure filing in August, and Arizona registered the third highest state foreclosure rate, with one in every 182 households receiving a foreclosure filing during the month.

Other states with foreclosure rates ranking among the top 10 were Florida, Michigan, Georgia, Ohio, Colorado, Illinois and Indiana. Michigan, Georgia, Ohio and Colorado all reported annual decreases in foreclosure activity.

California accounts for one-third of U.S. foreclosure activity
Foreclosure filings were reported on 101,724 California properties in August, one-third of the national total and the most of any state. The state’s foreclosure activity increased more than 40 percent from the previous month and more than 75 percent from August 2007.

Florida posted the second highest total in August, with foreclosure filings reported on 44,000 properties during the month — a 4 percent decrease from the previous month but still up nearly 30 percent from August 2007. One in every 194 Florida properties received a foreclosure filing in August, the nation’s fourth highest state foreclosure rate.

Foreclosure filings were reported on 14,333 Arizona properties in August, the nation’s third highest state total. Arizona foreclosure activity was up 7 percent from the previous month and nearly 63 percent from August 2007.

California, Florida and Arizona together accounted for more than half of the nation’s foreclosure activity.

Despite a nearly 13 percent annual decrease in foreclosure activity, Michigan documented the nation’s fourth highest state foreclosure total in August, with foreclosure filings reported on 13,605 properties during the month.

Other states with total properties with foreclosure filings among the 10 highest were Nevada, Ohio, Texas, Illinois, Georgia and New Jersey.

TK: This sobering coverage from Florida indicates the problem may get worse before it gets better.

The relentless slide of home prices in Lee County has left almost half of recent buyers owing more on their mortgages than the home is worth — a sure-fire recipe for a new wave of foreclosures, experts say.

Worst off are those who bought homes in 2006, just as the housing boom was ending: 78.5 percent of those now have home values less than the original loan amount, according to second-quarter statistics compiled by real estate data provider Zillow.com.

Among people who bought within the past five years, 46 percent are underwater on their mortgage in Lee, compared with 29 percent nationwide, according to Zillow.com.

The result of homeowners being “underwater” is more pressure on an economy that is already in a downturn. No longer having equity in their homes makes people feel less rich and thus less inclined to shop at the mall.

“We are so upside down,” said Michelle Nacua of Lehigh Acres. Nacua and her husband, Lani, bought their house in 2004 for $112,000. They refinanced twice and now owe $161,000, far more than the $114,000 the three-bedroom, two-bath house is assessed for by the county Property Appraiser’s Office. “It is our fault, but I hate it.”

Falling values have contributed to the sharp pullback in mortgage lending. Since the record high of $322,300 for the median Realtor-assisted sale of an existing single-family home in December 2005, the price has fallen 54 percent to $146,900 in August, according to the Florida Association of Realtors.

Even those who have been dutifully paying their mortgages are faced with the fear of foreclosures.

“The third wave is coming from people who are underwater who are suffering disruptions to income,” said Chris Lafakis, Florida analyst for Moody’s Economy.com.

“That includes losing your job or repairing your car or a death in the family. It’s a combination of declining home prices and a weakening job market.”

Lee County’s unemployment rate in August was 9 percent, up from 5.3 percent a year earlier.

The first two waves of foreclosures here consisted of investors who tried to flip for a profit and got caught in a declining market, followed by people with adjustable rate mortgages that reset to unaffordable levels, he said.

Fort Myers attorney Kevin Jursinski agreed.

“My clients are not subprime buyers; they’re people who’ve invested and can’t afford to pay,” said Jursinski.

For example, he said, “If I have a house I paid $400,000 for a few years ago with a $350,000 mortgage and I can buy a (bank-owned foreclosure) for $300,000 or $250,000, I’m going to do that,” he said. “I’m gone. Why would I want to stay in a house where I’ve lost my equity and much, much more?”

It’s not a risk-free process to dump your house, Jursinski noted: Your credit will take a hit and the bank could come after you for a deficiency judgment to get the full amount of the mortgage — although Florida laws favor the debtor.

He’d like to see some of the $700 billion bailout package passed by Congress two weeks ago used to subsidize lenders so they can reduce the debt of those homeowners.

But David Hall, president of Fort Myers-based First Community Bank of Southwest Florida, said the bailout is intended mainly to let the government purchase large bundles of no-money-down mortgages gone bad and owned by large financial houses on Wall Street.

“I just don’t see a lot of this money trickling down into Lee County, into the small communities around the country,” he said.

Credit crunch humor

For a diversion, some black humor.


From the Credit Crunch blog...


Q: What the difference between today's investment bankers and pigeons?
A: Pigeons can still make a deposit on a BMW.

From Sidd:
I went to an ATM today, and it asked to borrow a twenty till next week.

From monta's ankle:
I went to fill up my gas tank and I couldn't decide between leveraged and unleveraged.

From Rob Dawg:
Went to Best Buy to get a toaster and they gave me a free bank with purchase

FDA seeks advice on fresh produce

We already posted the comments or Robert Guenther yesterday from the FDA hearing on produce traceability. No surprise; consumer groups want more - item level markings for traceability. Here is the link to the AP story on the session. From the story:

At the first public hearing on the issue Thursday, representatives from the produce industry cited progress toward labeling on every case of fruit and vegetables that would make it easier to trace tainted food from the dinner table back to the farm.

Consumer advocates want more: marking individual tomatoes, heads of lettuce and other produce from an industry subject to 900 safety recalls over the past two years.

"We need better information going to the consumer so he can identify fruits and vegetables when it's in his refrigerator and in his cabinet shelves," said David Plunkett, senior staff attorney at the Center for Science in the Public Interest


Later.....

One of the questions the FDA is asking is whether an identifier should be assigned to fresh produce, and if so, at what stage in the supply chain. The industry agrees with that concept, said Kathy Means of the Produce Marketing Association. She said it is in the industry's best interest to quickly track problems.

"They have every incentive to want to do this," Means said.

Means said each container of produce should contain a label with a bar code that would allow businesses and the FDA to immediately identify the owner of that product — from manufacturers to packers to retailers. She said individual companies have their own system for tracking products, but the system is not uniform. She also urged the agency to let the industry enact its plan rather than seek new federal rules. Some companies are ready to put in place the barcode system immediately while others have a long way to go.

"This is going to be hundreds of millions of dollars over a few years," she said.

Some legal underpinnings for a national tracing system are in place.

A federal bioterrorism law requires food to be traced one step forward and one step back — who supplied it, and where it went — so that, in theory, regulators can follow the trail. Industry officials said they believed that law was sufficient to get companies to enact the kind of record keeping that would keep them in compliance with the law, but so far, they have heard of little enforcement by the government to ensure that companies were complying.

Sundlof said the law authorized the FDA to check whether businesses were complying only when health dangers had surfaced. He said on a few occasions this year when potential health problems were identified, the agency exercised its authority

Al Smith dinner

Pretty good campaign humor here...