Wachovia has big news today. Shares of falling in the premarket after the company ousted CEO Ken Thompson.

Wachovia stated he is stepping down at the request of the board, saying no single precipitating event calls because the board to reach the decision, but a series of previously disclosed disappointments and setbacks cumulatively have negatively impacted the company and performance. Perhaps you can call it an understatement.

Shares down 57% in the past 12 months.

The average time that a home sits on the market when it is for sale is now 11 months.

So what does that mean to you and me? It means nothing. Despite what is said by the professionals, we are still facing the largest portfolio of mortgage resets from right now in May 2008 to September 2008 (Mortgage reset chart).

So what does this really mean? Now we are on to something. Until the underlining mortgage issues are resolved, meaning the homeowners with mortgage resets that become unaffordable, of which only 30% of the affected homeowners are being helped, expect further home depreciation.

CNN.com has stated within the last few weeks that even with all the programs developed by the government, only about 30% of the homeowners can be helped. The reason is obvious. Why does any, for profit banking institution, want to take on the problems of another bank?

And the math is so simple. Add the inflationary pressures of oil, energy and what they mean to consumers discretionary dollars, as well as, the volume of adjustable rate mortgages that are resetting (remember that it takes between 6 months and 12 months to foreclose on a home - every state has their foreclosure laws) and you have a formula saying that we will be having credit and housing deterioration until at least 2010.

Sharpest Declines in California, Nevada and Florida;
Small Price Increases in Strongest Markets

U.S. home prices fell in the first quarter of 2008 according to OFHEO’s seasonally-adjusted purchase-only house price index. The index, which is based on data from home sales, was 1.7 percent lower on a seasonally-adjusted basis in the first quarter than in the fourth quarter of 2007. This decline exceeded the 1.4 percent price decline between the third and fourth quarters of 2007 and is the largest quarterly price decline on record. Over the past year, prices fell 3.1 percent between the first quarter of 2007 and the first quarter of 2008. This is the largest decline in the purchase only index’s 17-year history.

OFHEO’s all-transactions House Price Index (HPI) which includes data from home sales and appraisals for refinancings, showed less weakness than the purchase-only index. The all-transactions HPI fell 0.2 percent in the latest quarter and was flat over the four-quarter period.

The figures were released today by OFHEO Director James B. Lockhart, as part of the quarterly report analyzing housing price appreciation trends. “These substantial home price declines bring positive and negative news,” said Lockhart. “For homeowners and financial market observers, these declines spell further erosion in home equity levels and potentially more trouble for mortgage markets. To prospective home buyers who have been shut out of homeownership because of affordability constraints, these declines may be welcome news, as are continued low mortgage rates“.

Both OFHEO’s purchase-only index and its all-transactions index show much more muted price declines than do other house price indexes. “While house price declines are widespread, homes financed with prime, conforming mortgages continue to hold up better than those financed with other types of mortgages, a phenomenon we’ve been observing for the last several quarters,” Lockhart said.

With this release, OFHEO continues its publication of its monthly price index, which was introduced in February. Monthly price trends are shown on pages 8 and 9 and are provided for months through March. Between February and March, prices fell 0.4 percent nationally on a seasonally-adjusted basis, and they have fallen a total of 3.7 percent since their April 2007 peak.

As we continue to analyze and manage our product set, Chase has made the decision to discontinue offering our Subprime and Home Equity products through our Wholesale channel.

New Wholesale Subprime and Home Equity registrations will not be accepted after Friday, May 16, 2008.

New foreclosure filings rose 4% in April and were nearly 65% higher than the level recorded a year earlier, according to RealtyTrac.

The company’s U.S. Foreclosure Market Report indicates that foreclosure filings, default notices, auction sale notices, and bank repossessions were reported on 243,353 properties in April.

"The total number of U.S. properties with foreclosure activity in April was the highest monthly total we’ve seen since we began issuing the report in January 2005," said James J. Saccacio, RealtyTrac’s chief executive officer. "Although only about 2% of households nationwide are in foreclosure, these properties contribute to already-bloated inventories of homes for sale and put downward pressure on home values."

The company noted California, Florida, and Ohio recorded the highest foreclosure rates in April.

President Bollinger, Dean Hubbard, Co-Chairman Kravis, and distinguished guests, I am very pleased to be here and especially honored to receive the Columbia Business School’s Distinguished Leadership in Government Award. This evening I would like to offer a few thoughts on mortgage markets and the recent increase in the pace of delinquencies and foreclosures. My particular focus will be on geographic variation in mortgage performance and how that variation can help us better understand and prevent foreclosures. I will also discuss some initiatives taken by the Federal Reserve to address the foreclosure crisis as well as other policies that might be used to strengthen mortgage and housing markets.

Geographic Variation in Loan Mortgage Performance

As my listeners know, conditions in mortgage markets remain quite difficult, and mortgage delinquencies have climbed steeply. The sharpest increases have been among subprime mortgages, particularly those with adjustable interest rates: About one quarter of subprime adjustable-rate mortgages are currently 90 days or more delinquent or in foreclosure. Delinquency rates also have increased in the prime and near-prime segments of the mortgage market, although not nearly so much as in the subprime sector. As a consequence of rising delinquencies, foreclosure proceedings were initiated on some 1.5 million U.S. homes during 2007, up 53 percent from 2006, and the rate of foreclosure starts looks likely to be yet higher in 2008. Not all foreclosure starts result in the borrower’s loss of the home; sometimes the borrower is able to make up the missed payments or other arrangements are made with the lender. Given the number of borrowers in distress and the weakness of the general housing market, the share of foreclosure initiations that ultimately result in the loss of the home seems likely to be higher in the current episode than customarily has been the case.

We find it to be really funny how the so called ‘experts’ think that housing woes will be over within the next few months. What actual numbers are they reading?

Don’t let anybody fool you, the housing/mortgage bubble will last well into 2009 and here is why and we will keep it short…

From May 2008 to September 2008 Census data states that we will see about 2 million adjustable rate mortgages that will reset and come due. This is double what we saw in 2007 and we had some serious problems.

All the FHASecure and ‘Interest Rate Freeze’ programs have guidelines that are strict and should only assist approximately 15 to 25% of the affected families. Now add an average of 2 months in reserves that most families have. This takes us to somewhere in the neighborhood of September 2008. The quickest a home can be foreclosed on in some states in 6 months, like California and the longest is about 18 months like New York, so lets say an average of nine months to foreclose. Now we are at June of 2009! After 3 consecutive years of this foreclosure and depreciating home value problem, who is going to buy then?

We feel that the first time the national real estate market will flatten on an overall average will be during the 2010 buying season

Federal Reserve Panel Voiced Foreclosure Concern

Members of the Federal Reserve monetary policy committee are concerned that rising foreclosures and the huge supply of unsold homes on the market could put additional downward pressure on house prices and lead to “further disruptions in the financial markets.”

The minutes of the Dec. 11 Federal Open Market Committee also reveal that members did not expect that the housing market would continue to deteriorate after their last meeting on Oct. 31 or that the reduced availability of jumbo mortgages would last so long.

The FOMC members “agreed that the housing correction was likely to be both deeper and more prolonged than they had anticipated in October,” the Dec. 11 minutes say. The committee voted to lower the target federal funds rate 25 basis points to 4.25%.

Boston Federal Reserve Bank president Eric Rosengren advocated a more aggressive cut due to a “deteriorating housing sector, slowing consumer and business spending, high energy prices, and ill functioning financial markets.”

Southern California Land Prices Depreciate 50%

More bad news for Southern California builders holding a large inventory of finished lots: Land prices have plunged by more than half in the region, dropping to levels not seen since 2002, according to a report by The Hoffman Company, a land brokerage firm based in Irvine, California.

Prices may still have further to fall, said company principal Norm Scheel.

“The decline in the price of land has happened rapidly; in the past two years we’ve lost five years of appreciation,” Mr. Scheel said. “We may see prices drop a few more percentage points in the first half of 2008, but land values already have taken the ‘big hit’ and whatever comes next will be minor in comparison”.

The largest decline, 52%, was recorded in the French Valley near Murietta. In West Palmdale and East Lancaster in the Antelope Valley north of Los Angeles, the value of finished lots have shrunk by 38%. In Riverside County, finished lot prices are down 42%; in San Bernardino, they are off by an average of 37%.

According to the company, the depreciation has brought investors and speculators back into the market. “After months of stalemate, it’s suddenly a competitive environment”, said Mr. Scheel.

His firm has more than $100 million in sales closed or under contract in the last three months.

HOUSE PRICES WEAKEN FURTHER IN MOST RECENT QUARTER

First Quarterly Price Decline for U.S. since 1994

Washington , DC – For the first time in nearly thirteen years, U.S. home prices experienced a quarterly decline. The OFHEO House Price Index (HPI), which is based on data from sales and refinance transactions, was 0.4 percent lower in the third quarter than in the second quarter of 2007. This is similar to the quarterly decline of 0.3 percent (seasonally-adjusted) shown in the purchase-only index. The annual price change, comparing the third quarter of 2007 to the same period last year showed an increase of 1.8 percent , the lowest four-quarter increase since 1995. OFHEO’s purchase-only index, which is based solely on purchase price data, indicates the same rate of appreciation over the last year.

The figures were released today by OFHEO Director James B. Lockhart, as part of the quarterly report analyzing housing price appreciation trends.

“While select markets still maintain robust rates of appreciation, our newest data show price weakening in a very significant portion of the country,” said Lockhart. “Indeed, in the third quarter, more than 20 states experienced price declines and, in some cases, those declines are substantial.”

Focus on Housing & the Economy: Vacancies Rise, Prices to Fall, Housing Eats into GDP. Analysis and Discussion with Featured Guest Michael Pond of Barclays Bank