Brooklyn Foreclosure Stats Don’t Look So Bad

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The trepidation with which we opened the PropertyShark 3rd Quarter Foreclosure Report that landed in our email inbox yesterday turned out to be unfounded. Things—in Brooklyn, at least—weren’t any worse last quarter than in the previous one, it turns out. And the number of foreclosures this year in the borough are still significantly less than what we saw in 2006. As for the other boroughs, Manhattan saw a small dip in foreclosures while Queens, Staten Island and the Bronx all experienced marginal upticks. Hardly the-sky-is-falling kinda stuff.

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  • His posts are inevitable – like the rising of sun, paying taxes, and collapse of NYC Real Estate Markets. Ooops – Did I just say that? He really must be getting through to me (Gag, Cough).

  • “Wealth is the parent of luxury and indolence, and poverty of meanness and viciousness, and both of discontent.”
    (Plato – The Republic)

    New tax bill

    Last month, Reps. Robert Andrews, D-N.J., and Ron Lewis, R-Ky., introduced HR1876, the Mortgage Cancellation Tax Relief Act of 2007. This bill would eliminate the tax on cancellation of debt income on primary residences, with some limitations.

    The tax relief would apply only to “principal residences sold by their owners,” not to rental property (which are subject to separate laws) or to vacation homes, according to a fact sheet on the proposal.

    “As drafted, the provision will apply to either an original or a refinanced mortgage (regardless of whether it was recourse or nonrecourse), but only up to the amount of the original purchase price of the property” plus the cost of improvements, the fact sheet says.

    In other words, if you used a home equity loan to improve your property and defaulted on the debt, you would not be subject to cancellation of debt tax. But if you used a home equity loan to pay off credit cards or take a vacation, you would be, says Linda Goold, tax counsel for the National Association of Realtors.

    Remember I posted the tidbit a few days ago. Plenty of loans was made at 100% financing. They have no skin in the game and will walk away.

  • Interesting and what makes this “what” comment even better is that its at least relevant to the original post!

  • What – You are such a puss. I see you changed your bio recently. Now instead of Bed Sty you live in Clinton Hill, instead of a coop your abode is a condo, and instead of Broker your profession is “Reality Parser.”

    Maybe that last one should be “Reality Poser.”

  • I agree 10:44 – I guess he is trying to say foreclosures will spike when the new mortgage cancellation package passes because it will be easier for no $ down buyers to walk away…

    Kind makes some sense…Agree?

  • And also, The Bond market is in the shitter folks. Very soon rates will go to moon.

    This was a few days ago. Working at a Bond Trading desk must be hell these days. Oh, Here come the lay-off on Wall Street.

    Oct. 2 (Bloomberg) — As far as the world’s biggest bond investors are concerned, the Federal Reserve is failing to restore confidence in the U.S. credit markets.

    Pacific Investment Management Co., TIAA-CREF and Insight Investment Management say the central bank’s decision to lower the overnight lending rate between banks by half a percentage point last month won’t prevent the economy from slowing or corporate defaults from increasing. Lehman Brothers Holdings Inc. strategists say last month’s rally in high-yield corporate bonds, the biggest since 2003, may fizzle by year-end.

    While indexes of derivatives that measure the risk of default show increasing investor confidence, the difference between the interest that banks and the U.S. government pay for three-month loans is wider now than a month ago. That’s a sign the Fed’s Sept. 18 rate decision has yet to persuade bondholders that lower borrowing costs will stop “disruptions in financial markets” from hurting the economy.

    “The reality is the fundamentals haven’t gotten any better, and, if anything, they’ve gotten worse,” said Mark Kiesel, an executive vice president at Newport Beach, California-based Pimco who oversees $85 billion in corporate bonds.

    About three-quarters of 30 fund managers who oversee $1.25 trillion expect a hedge fund or credit market blowup in the “near future,” according to a survey by Jersey City, New Jersey-based research firm Ried, Thunberg & Co. dated Oct. 1.

    Goldman’s Outlook

    Former Treasury Secretary Lawrence Summers said Sept. 27 that there is an almost even chance the economy will fall into its first recession in six years. New York-based Goldman Sachs Group Inc., the world’s most profitable securities firm, reduced its estimate of economic growth in 2008 last week by about a third, to 1.8 percent from 2.6 percent, because of fallout from the worst housing slump in at least 16 years.

    “I’m still bearish,” said Alex Moss, a senior credit analyst at Insight, a London-based money manager with $94 billion of fixed-income assets. “I can’t see any real excuse to get involved in this market.”

    More than 3 percent of company bonds were distressed in September, triple the amount in July, Standard & Poor’s said in a report last week. Bonds are considered distressed when they yield at least 10 percentage points more than comparable- maturity Treasuries. Moody’s Investors Service forecasts the U.S. default rate will more than double to 4 percent in the next year. New York-based S&P and Moody’s are the largest credit- rating companies.

    `Big Picture’

    Sales of new homes tumbled 8.3 percent in August to the lowest in more than seven years and house prices dropped the most in four decades, the Commerce Department in Washington said last week. Consumer confidence fell to the lowest in almost two years in September, according to the Conference Board’s index of confidence.

    “The big picture is you’re going to have a consumer that is going to be pulling back significantly,” Pimco’s Kiesel said. “The rate cuts by the Fed are unlikely to save housing.”

    The Fed’s Sept. 18 reduction of its target federal funds rate to 4.75 percent was “intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets.”

    The perception of credit risk in the U.S., measured by the CDX North American Investment Grade Index, fell to 55.6 basis points on Sept. 21, the lowest since July. A decline in the index signals diminishing concern that companies will default. A basis point is 0.01 percentage point.

    Record September

    The extra yield investors demand to own junk bonds instead of Treasuries narrowed to 420 basis points last month from a four-year high of 479 on Sept. 10, according to data compiled by New York-based Merrill Lynch & Co. High-yield debt, securities rated below Baa3 by Moody’s and BBB- by S&P, returned 2.44 percent last month, the best since 2003.

    Companies sold about $114 billion of bonds in the U.S. during September, a record for the month, data compiled by Bloomberg show. Issuers that abandoned sales in June, July and August returned to the market, including Montreal-based newspaper publisher Quebecor Media Inc. and Downstream Development Authority of the Quapaw Tribe of Oklahoma.

    Gains prompted Wall Street executives to declare an end to the credit-market swoon. “We are a lot closer to the bottom,” Goldman Chief Financial Officer David Viniar said last month as the securities firm reported the third-highest earnings in its 138-year history.

    Citigroup Inc. Chief Executive Officer Charles Prince said yesterday that the biggest U.S. bank will “return to a normal earnings environment in the fourth quarter.” The New York-based company reported third-quarter profit fell 60 percent on $5.9 billion of credit and trading losses.

    Lehman Adds Risk

    Lehman, whose fixed-income research team has been top- ranked in Institutional Investor magazine’s annual survey for eight straight years, told investors last week to buy more junk bonds, with the caveat that gains may be over by year-end. The firm also has increased its recommendations on investment-grade and emerging-market debt.

    “We’ve increased markedly our exposure to risky assets and we think a lot of the sell-off is over,” said Joseph Di Censo, a fixed-income strategist at Lehman in New York. “We will see a rally in the spread sectors that were the most beat up.”

    Former Federal Reserve Chairman Alan Greenspan said yesterday that the worst of the global credit slump may be almost over because banks are starting to buy lower-rated assets with longer maturities.

    Earnings Fall

    The difference between the dollar London interbank offered rate, which banks use to lend to each other, and the three-month Treasury bill yield shows a different view. The so-called TED- spread has climbed to 1.33 percentage points from 1 percentage point on Aug. 27.

    The North American CDX investment-grade index rose 5.75 basis points last week to 55.5 basis points, the biggest increase in more than a month, according to Deutsche Bank AG prices.

    While banks working for New York-based Kohlberg Kravis Roberts & Co. sold $9.4 billion of loans to finance the leveraged buyout of First Data Corp. in Greenwood Village, Colorado, lenders still need to find investors for more than $300 billion of loans and bonds to fund pending takeovers.

    Morgan Stanley, Lehman and Bear Stearns Cos. in New York reported lower third-quarter profits last month after writing down the values of unsold loans and losses on securities linked to subprime mortgages for people with patchy credit histories.

    `Short-Lived’

    UBS AG, Europe’s biggest bank, yesterday reported a loss for the quarter after the Zurich-based company reduced the value of mortgage-backed securities by about 4 billion Swiss francs ($3.4 billion). Credit Suisse Group, Switzerland’s second- largest bank, also said profits fell.

    This rally will be “pretty short-lived,” said Richard Cheng, who co-manages $45 billion in investment-grade corporate bonds at TIAA-CREF in New York. “The economy might be slowing down and third quarter earnings releases may be a little bit difficult. We see spreads widening a little bit more.”

    Sales of collateralized debt obligations, the biggest buyers of corporate loans in the first half, fell 54 percent in August to $17 billion from July, the lowest in more than a year, according to Morgan Stanley. CDOs are created by packaging bonds, loans or credit-default swaps and using their income to pay investors interest.

    Shrinking Market

    The reduction in collateralized loan obligations may make it more difficult to sell the debt, according to Dan Fuss, vice chairman of Boston-based Loomis Sayles & Co. CLOs bought as much as 60 percent of loans for LBOs this year, according to New York-based JPMorgan Chase & Co. analysts.

    “The impact of the CLO freeze up is certainly not out yet,” said Fuss, who oversees $22 billion of bonds.

    More than 65 percent of investors in mortgage-backed securities are struggling to find bids for their holdings, according to a survey of 251 institutions last month by Greenwich Associates, a Greenwich, Connecticut-based consulting firm. Among holders of CDOs, the figure is 80 percent.

    The U.S. commercial paper market is shrinking. The amount of debt outstanding that matures in 270 days or less fell $13.6 billion the week ended Sept. 26 to a seasonally adjusted $1.86 trillion, according to the Fed. It’s down 17 percent in the past seven weeks.

    “People said this subprime liquidity issue was going to go away after Labor Day,” said Tom Quindlen, CEO of corporate lending at GE Commercial Finance in Norwalk, Connecticut, a unit of General Electric Co. that has $14 billion of assets.

    “The bankers were going to return from vacation and just jump right back in,” said Quindlen. “That’s what I heard in August. Well, they get back from vacation and they’re saying it’s the first half of 2008. I think it’s going to be longer rather than shorter.”

  • Looks people, this foreclosure thing is not going away. We need to deal with it now. The stories are coming fast everyday in the Main Stream Media (MSM). Housing is cooked.

  • “What – You are such a puss. I see you changed your bio recently. Now instead of Bed Sty you live in Clinton Hill, instead of a coop your abode is a condo, and instead of Broker your profession is “Reality Parser.”

    Maybe that last one should be “Reality Poser.”

    If the President can cheat to avoid going into war. So can I.
    I reserve the the right to do whatever.
    Maybe you can get a Log-on and show us how it’s done.

  • The What… If you had something of your own to say, you might be interesting. Instead, you just clip articles and quote Apocalypse Now. You’re like some boring drunk at a party who won’t shut up.
    You’re a bore.

  • Hey What – I dont mind so much some of your posts, but please take it easy on the 5,000 + word cut and paste jobs like above. Really distracting and kind of obnoxious. Maybe you could just post the link or something if you want us to read it so badly.

    Thanks

  • Thank you sir! May I have another??!!!

    Mortgage lenders in subprime ‘traffic jam’
    By Saskia Scholtes in New York
    Published: October 3 2007 18:54 | Last updated: October 3 2007 18:54
    US mortgage companies are being overwhelmed by the large numbers of homebuyers who need to renegotiate their loans to avoid default, creating a “subprime traffic jam” that could frustrate efforts by regulators to prevent foreclosures, experts say.

    Mortgage servicers, the operations that collect loans, say they are having trouble making profits because of record levels of late payments and delinquencies. Litton Loan Servicing estimates that costs have increased 20 per cent in the last year for mortgage servicers, who even in good times depend on razor-thin profit margins.

    The result is that few subprime mortgages are being renegotiated. Moody’s, the ratings agency, found that lenders had eased terms on just 1 per cent of subprime loans resetting at higher interest rates in January, April and July this year.

    “Servicers have failed because there’s a huge resourcing issue,” said Barefoot Bankhead, managing director at Navigant Consulting. “As lenders have gone out of business, the servicing arms have been in transition without the resources to handle the enormous number of requests for loan modifications and restructuring.”

    The problem could grow more severe as more than $350bn in adjustable-rate mortgages reset at higher rates in the next 18 months.

    “Servicer inactivity could turn the subprime traffic jam into a monumental pile-up, because the longer people wait to make decisions, the worse the situation gets,” said Don Brownstein, chief executive of Structured Portfolio Management, a hedge fund.

    Moody’s found that few servicers made telephone calls to borrowers facing interest-rate resets in the near future. It said the majority of large servicers continued to rely on letters to contact borrowers.

    Moody’s said this was of “particular concern” given the potential size of the problem. Moody’s said servicer data showed that borrowers who were making payments before the reset and did not have their loans modified fell into arrears at a rate of up to 10 per cent. Analysts estimate that resets could boost payments for borrowers by between 30 and 50 per cent.

    Another complication in renegotiating mortgages is that most loans have been packaged into securities and sold to investors. Some modifications are being held up by disputes between investors with differing interests in the same pool of loans.

  • Personally I’m still waiting for “the Dump” that “the What” so vehemently predicted would happen on Tuesday.

    It’s now Thursday and the only dump I see is the sewage you spew out onto each and every thread on this website.

    You somehow justified saying becasue President Bush lied his way into war, that you can do the same…well you know what…

    THAT DOESN’T MAKE IT RIGHT!

    It just shows how ignorant and childish you are to give that as an excuse.

  • “Looks [sic] people, this foreclosure thing is not going away. We need to deal with it now. The stories are coming fast everyday in the Main Stream Media (MSM). Housing is cooked.”

    Hey everybody! The What has collected a series of articles from the mainstream media (MSM) that say housing is cooked! I guess that settles it! There’s nothing left to do but head for your basement to hide from the coming economic collapse, which is GUARANTEED to happen! We all know how consistently accurate financial “experts” have proven over the years. Plus, The What says so!

    Best,
    No Log-in

  • October 4, 2007
    2 Executives Are Ousted at Merrill

    By LANDON THOMAS Jr.
    Merrill Lynch, facing the prospect of a major write-down from its exposure to the sinking mortgage market, dismissed two senior executives in its fixed-income division yesterday.

    The firings also signaled that the aggressive push by Merrill’s chief executive, E. Stanley O’Neal, into riskier markets like leveraged loans, subprime mortgages and complex structured investments — all of which lie beyond the firm’s traditional area of expertise — may be coming back to haunt him.

    One executive who was dismissed, Osman Semerci, 39, the head of Merrill’s fixed-income division, had been in the position for little more than a year. Until the meltdown in the credit markets, he had been seen as a rising young star. Also let go was Dale M. Lattanzio, who was the head of structured credit products, the locus of many of Merrill’s recent investment problems.

    The dismissals are the latest sign that investment banks, facing big losses after years of big profits, are moving quickly to hold senior executives accountable for having succumbed too readily to the credit and buyout boom. Bear Stearns fired its co-president, Warren J. Spector, in August; Huw Jenkins stepped down early this week as the chief of UBS’s investment bank; and in February, HSBC dismissed the head of North American business, Bobby Mehta.

    Several banks have also reported large write-downs in the quarter, including Citigroup, which this week said it would write off $5.9 billion in the third quarter, causing its profit to drop 60 percent.

    At Merrill, Mr. Semerci, who is of Turkish origin, held previous top postings in various parts of Asia and was among the vanguard of young, hard-charging and, in many cases, foreign-born executives that Mr. O’Neal promoted when he became chief executive in 2002 and shook up the old guard at the firm.

    Merrill, which reports its third-quarter earnings in mid-October, is expected to make a pre-earnings announcement in the coming days that it will write-down more than $4 billion in mortgage and other structured investments tied to the beleaguered credit market.

    The write-down will come as an embarrassment for Mr. O’Neal, who during his time as chief executive pushed the firm into voguish high-risk areas of the market ranging from subprime to private equity investments as well as loans.

    The focus was a departure for Merrill, a firm that has traditionally looked to its legion of more than 15,000 brokers for both its financial and cultural strength.

    But in recent years, as Goldman Sachs continued to generate extraordinary profits from its proprietary trading and principal investment units, Merrill, along with other firms, took steps to increase its risk profile.

    In fact, Mr. Semerci’s promotion followed the abrupt firing last July of two senior fixed income executives, Jeffrey Kronthal and Harry Lengsfield. According to a person briefed on the cause of their exit who did not want to be identified because he was not authorized to speak, Mr. Kronthal and Mr. Lengsfield were let go because they were told by senior executives at Merrill that they were not taking enough risk. A spokesman for Merrill denied that was the case.

    Succeeding Mr. Semerci will be David Sobotka, 50, who joined Merrill in 2004 when it acquired Entergy-Koch, a small energy trading firm. His ascent has also been a rapid one. His career focus has been primarily on commodities, and now he will be asked to head Merrill’s giant fixed income, commodities and currencies division at a delicate time for the firm and the markets.

    Besides the dismissals, Merrill told Dow Kim, the former head of trading who left the firm last spring, that he no longer would have access to an office that he had been using at the firm, according to a person briefed on Mr. Kim’s status who did not want to be identified because he was not authorized to speak. Mr. Semerci had reported to Mr. Kim.

    A Korean-born derivatives specialist who also had a series of quick promotions under Mr. O’Neal, Mr. Kim left the firm last spring to start a hedge fund — a departure that at the time was described as mostly amicable.

    In addition to giving him office space, Merrill said at the time that it would invest in his hedge fund, called Diamond Lake Capital. According to the person briefed on the situation, Mr. Kim was told this week that Merrill would not be investing in his hedge fund.

    As it became clear this summer that the firm’s ramped up exposure to subprime mortgages and securities tied to pools of risky assets, or collateralized debt obligations, would result in a major write-down, Mr. Kim’s stature at the firm deteriorated quickly.

    He also oversaw the $1.3 billion acquisition of First Franklin, the mortgage originator, last year just before the collapse of the housing market.

    While Mr. Kim took the brunt of the blame for Merrill’s increased risk profile, Ahmass L. Fakahany, the current co-president and a close associate of Mr. O’Neal, monitored risk management at the firm until May of this year when he was promoted. There was no indication that his job was in jeopardy.

    The write-down, whenever it does come, can be seen as a reminder of what happens to firms when they stray from their core areas of competence. In 1989, Merrill wrote down $470 million from losses in high yield investments; in 2000, the firm took a $2 billion write-down from losses related to the firm’s aggressive expansion overseas; and now Merrill will take an expected $4 billion charge from its foray into credit markets.

    While Mr. O’Neal has received credit for cutting costs and making the firm more nimble and efficient, one criticism has been that he pushed out a large number of experienced executives, replacing them with younger ones like Mr. Kim and Mr. Semerci.

    He has been described as a man with a piercing intellect. But he is also known to have an aloof, distant management style that may have led to these younger executives assuming a responsibility they were not ready for.

    While times were good, all this may not have been such a bad thing. But now, given the losses that have accrued on the watch of these new executives, questions might again arise as to whether Mr. O’Neal has the right management team in place to see the firm through this difficult time in the markets.

    Jenny Anderson contributed reporting.

    Copyright 2007 The New York Times Company

  • Brownstoner, why do you leave all the posts from The What up on these threads? He’s a complete nutter. It’s obvious from the language he uses. He’s a nobody who knows nothing about the market. There are plenty other people to provide actual, correct info about the economy and real estate market. Discussions are always pretty balanced here. Used to be, anyway. But with The What around, you’ll drive off those who actually know what they’re talking about.

  • It’s the responses that keep ‘The What’ alive, not brownstoner. These responses include yours, 1:31. If you are having a hard time ignoring him, maybe it’s because you want to deny what he claims as true (because of emotion) but are struggling to do so (because of cognition and revelation). Yes, he’s far-fetched. But so was Robert Shiller in 1999.

  • “Yes, he’s far-fetched. But so was Robert Shiller in 1999.”

    So was Claude Vorilhon.

  • “So was Claude Vorilhon.”

    And so are you with THAT reference.

  • No, I’m not, 3:48. You simply want to deny what I claim as true (because of emotion) but are struggling to do so (because of cognition and revelation). The What is an extremist. Some of his points are arguably accurate, but his obsession with his chosen topic bears little difference from the inflexible positions asserted by extremists of every stripe. Could you imagine speaking with him in person? Jeez. Based on his posts, he’s about as mentally balanced as Claude Vorilhon.

  • Mmm, actually 2:58, I believe what I said was we DO already have balanced discussions here on Brownstoner. My comment showing I appreciate that balance. Also, I was not asserting one side or another, either in my post. Are you psychic or something? How do you know what I think about the market? All I was saying was I didn’t like bullies who constantly dominate all the threads on this website and interfere with intelligent discussions. I guess you love that kind of nasty blogworld nonsense, since you defend it so ardently.

  • Brownstoner leaves them on because The What provokes people and they react by posting. Great for selling ad space on this site, all B has to do is quote the number of hits on B threads and they sign up.

  • that and a little something called freedom of speech….

  • Just pray, I’m not right.
    The end of this Real Estate Mutant Bubble is coming to a end.

  • I hope you are right because maybe it would level things off and maybe some of us can actually afford to buy a house instead of a crappy condo.

  • What exactly are we battling?

    Only thing we are battling it seems are your asinine comments.

  • I don’t mind the comments but I would appreciate a link rather than the cut-and-paste job. And I’m sure the New York Times, etc. would appreciate the clickthrough.

  • what cracks me up is that he claims we are cowards for not ‘signing on’ and simply using guest- as though ‘the what’ is so different from ‘guest’? who cares- besides, its the content and dialog we all seek…and you are a major buzz-kill. get lost and start your own blog.

  • Just read your interesting article on foreclosures and it is certainly a dynamic market right now. For any of the readers, if you are interested to find out what is going on in the California distressed property market, you can get a detailed analysis of foreclose-related properties and of the market trends in the various counties in California. Existing homes for sale inventory rose in 10 out of the 13 California counties we covered. There are more distressed properties in the market in 11 counties out of these 13 counties. Contra Costa County has the highest proportion (25%) of their listed properties related to distressed properties. You can find the report at:
    http://realestateandhomes.blogspot.com

    Henry
    http://www.movoto.com