Archive for 2007

While there are some bright spots in the housing market, I still don’t think it’s hit the bottom of this dip yet.

The pace of existing home sales edged up in November from a record low, according to a report on Monday that offered some tentative signs of stabilization in the still-ailing housing market.

Sales of previously owned homes rose 0.4 percent to a 5 million-unit annual rate, the first increase in nine months, the National Association of Realtors said.

Not only has the residential mortgage industry self-imploded, but now the commercial sector might be showing signs of strain as well.

As more banks report write-downs tied to the global credit crunch, analysts say Wachovia Corp (WB.N) may have losses lurking in an area that has garnered less investor attention.

The fourth-largest U.S. bank has in recent years aggressively tried to add market share by underwriting commercial mortgage-backed securities.

Demand for such securities has slid amid credit concerns, leaving dealers struggling to unload loans whose quality might be perceived as less sound than investors now demand.

It’s going to make for an interesting 2008, that’s for sure.

So… Today is an up day yes? The number of jobless claims have dropped by the largest amount in three months.

The number of laid off workers filing claims for unemployment benefits fell last week by the largest amount in three months.

The Labor Department reported that applications for jobless benefits dipped by 15,000 last week to a total of 338,000. The decline was the largest since the level of claims had dipped by 22,000 in the first week of September.

Of course, someone else will release something by the end of the day that negates this good news.

I really don’t think this is news...

Homeowners started losing hold of their homes years before spiking foreclosures and the housing slump slammed the economy.

Piece by piece, some gave away their homes by tapping equity to take cash out to pay for cars, weddings and vacations. Others never owned one brick. During the country’s most recent housing boom, the term “homeowner” became a misnomer as lenders offered 100 percent or more home financing to some buyers.

Now, slipping home prices threaten to further erode the value of many Americans’ single largest asset, curbing consumer spending and jeopardizing retirement assets.

It was clear a couple years ago that people didn’t have any actual equity in their homes.

Four years ago, our neighbor moved in, paying about $165,000 for his house. Two years later he got a home equity loan for $50,000 so he could finish off the basement. I knew there was something wrong at the time, because there is no way to build $50,000 in equity in two years on a 100% loan at 7% interest. My suspicions were correct when he moved out this past year.

Oh, it sure would have been nice to take a home quity loan to do some things around here, but I am glad now that I didn’t, that’s for sure. The only problem I face now is being the only house on my street that isn;t in danger of being foreclosed. So much for the appreciation of my most valuable asset.

It seems everyone had their fingers in the subprime lending debacle. It amazes me that so many other non-mortgage related companies had mortgage units that were helping to push those ridiculous loans at people.

H&R Block Inc (HRB.N) said on Tuesday the sale of its struggling subprime home lender unit, Option One Mortgage Corp, to Cerberus Capital Management LP was terminated, a move that will trigger $75 million of charges and 620 job cuts.

Block shares were down 7.5 percent to $18 in pre-market trade.

The end of the deal “is not a good thing,” said Alexander Paris, an analyst at Barrington Research in Chicago. “There’s charges and losses, but it might be making the best out of a bad situation.”

The best out of a bad situation would find mortgage companies freezing rates and even rolling some of them back to a point where people wouldn’t actually lose their homes. It sounds better than having millions of empty homes all around the country.

I wonder how many other companies, like H&R Block, will be recording mortgage related losses before the year ends.

Headline #1:

Manufacturing sector growth slipped in Nov: ISM

Growth in factory activity slipped in November to the lowest since January as tight credit conditions and the housing downturn restrained production, according to an industry report released on Monday.

Headline #2:

New orders boost manufacturing in Nov.

U.S. manufacturing expanded in November as new orders and production improved, but weakness in employment suggested that industrial jobs may not be as plentiful in coming months.

So… Which is it? Growing or slipping? Shrinking or expanding? Is it sunny or cloudy? I just can’t restrain myself.

As a DISH subscriber, I am not too sure I am happy with this news.

AT&T Inc (T.N) is trying to put together a bid for EchoStar Communications Corp (DISH.O) before the end of the year, whetted by the satellite operator’s recent stock dip, according to Barron’s financial newspaper.

Shares of the second-largest U.S. satellite television operator fell 24 percent in one month, Barron’s said in its November 19 edition, which may make reaching an agreement on a share purchase price easier.

In the past, AT&T has supposedly offered $65 a share and EchoStar has demanded $75 a share, Barron’s said.

At Friday close, EchoStar’s stock was at $39.83 on the Nasdaq, up 32 cents on the day.

Citing a person familiar with the company, Barron’s said AT&T would like to get a deal done quickly because it wants an agreement in place before the next presidential election, when any victory for the Democrats, antitrust experts believe, would probably mean increased scrutiny of mergers and acquisitions.

In the past, I never had a good experience with AT&T. I wonder if the new AT&T is better? If not, I may find myself checking out DirecTV in a year or so.

It amazes me that there is any doubt in anyone’s mind about Ken Lay’s guilt in this case.

On the other hand though, if his convictions were vacated upon his death, does the government really have the right to seize the “proceeds of the fraud” that he was technically not convicted of committing?

A judge says the federal government can proceed with its attempt to seize nearly $13 million from the estate of former Enron Corp. founder Kenneth Lay.

U.S. District Judge Ewing Werlein rejected a request from Lay’s widow to halt the government’s bid for the money, which prosecutors claim were “proceeds of the fraud proven in the criminal case against Lay.”

Kenneth Lay had been convicted in May 2006 of 10 counts of fraud, conspiracy and lying to banks in two separate cases. A judge ruled last fall that Lay’s death of heart disease in July 2006 vacated his convictions because Lay couldn’t challenge them.

But Werlein wrote in his ruling Wednesday that prosecutors had “ample allegations” of criminal activity tied to the cash and property to pursue their civil forfeiture case.

Linda Lay, wife of the former Enron head, will continue to fight the attempts to seize the assets, which include the family condominium valued at $6 million, said Samuel Buffone, her attorney.

The government will have to prove his guilt again at a civil forfeiture trial, but the burden of proof is lower than in a criminal case.

Interesting, that’s for sure. There is no doubt Ken Lay did the things he was convicted of, but this seems like a huge technical loophole to me. If his convictions were vacated by the court upon his death, then any monetary fines and “proceeds” should automatically be vacated too, shouldn’t they?

No, I am not taking Ken Lay’s side, but rather pointing out the fact that the government is trying to seize funds from his estate when there has technically not been a conviction. What happens when they seize your home and your assets because of the “proceeds” of your activities, whether or not you were ever brought to trial and/or convicted?

Sure, they are pursuing it through a civil forfeiture trial, but the whole thing reeks if you ask me. His convictions never should have been vacated.

It could be the housing market, or it could be the fact that La-Z-Boy furniture just isn’t what it used to be.

My mom bought two La-Z-Boy recliners and a sleeper sofa over a decade ago. She just moved across country and that furniture is still in excellent condition, they are comfortable, and they are great.

We purchased a sofa, a couple recliners and another chair from them about 5 years ago, and the sofa is on it’s last legs, springs are popping in it, one of the chairs is more uncomfortable than sitting on a concrete pad, one recliner broke ages ago, and we are seriously contemplating if we want to spend money at La-Z-Boy ever again. We spent almost $4,000 on that furniture, why would I toss more money down that hole?

Furniture maker and retailer La-Z-Boy Inc (LZB.N) reported a quarterly loss on Tuesday and the company said it would not meet its fiscal 2008 outlook, hurt by a depressed housing market and disappointing sales.

The company cited continued weak overall demand for furniture and said it was delaying plans for new stores in southeastern Florida due to the depressed housing market there.

A net loss in the fiscal second quarter came to $9.9 million, or 19 cents per share, on charges related to write-downs, restructuring and discontinued operations, compared with a year-ago profit of $1.95 million, or 4 cents per share .

And don’t even get me started on their delivery staff. Maybe this loss will force them to finally look at the big picture and realize they are making crappy furniture.

Honestly, I am surprised Countrywide is still in the game. I guess being the largest mortgage lender in the country has buffered them a bit as the subprime market goes belly up.

Countrywide Financial Corp (CFC.N) on Tuesday said October mortgage loan volume fell 48 percent from a year earlier, but credit quality has begun to stabilize as the largest U.S. mortgage lender curtails riskier home loans.

The company also said it ended October with 52,775 employees, down 2,077 from September and 8,092 from August. Countrywide plans to eliminate up to 12,000 jobs by December as it focuses on making smaller, safer — and fewer — loans.

Countrywide said it lost $1.2 billion in the third quarter, but expects to be profitable this quarter and in 2008, despite a projected 30 percent drop next year in U.S. mortgage volume.

One thing I do know about Countrywide, they are NOT working with some people stuck in those loans.

This I know for a fact. My mom has tried to work get Countrywide to help her, to no avail, over the course of the previous 8 months. She even sent them a certified letter and they refused to sign for it, which means they don’t even care what she had to tell them.

Great way to work with people.

Losses eight times larger than average Wall Street forecasts, and we still depend on those same analysts when it comes to the stock market, economy and other important stuff?

General Motors Corp (GM.N) posted its largest quarterly net loss on Wednesday, reflecting a $39-billion charge related to unclaimed tax credits and a loss at its former finance subsidiary GMAC.

The largest U.S. automaker posted a third-quarter net loss of $39 billion, or $68.85 per share, compared with a loss of $147 million, or 26 cents per share a year earlier.

Excluding one-time items, GM reported a net loss of $1.6 billion, or $2.80 per share. The loss on that basis was about eight times larger than the average Wall Street forecast.

Imagine how things would be if those analysts decided to mess with our heads. I can’t imagine losing $39 billion. I get sick when I can’t find the $20 I had on me the night before.