Mortgage lender graveyard filling up

American Home Mortgage is clinging to life, but its time will come. And when it does, it will join a very long list of failed mortgage lenders. The Implode-O-Meter blog, one of our favorites for news on the mortgage industry, now counts 105 lenders that have imploded.

While we're at it, we also want to express our support for The Implode-O-Meter, and Aaron Krowne, in their current legal battle. Loan Center of California sued The Implode-O-Meter in May, alleging that an e-mail posted on the blog in April caused such damage to the company that two of its major sources of funding -- Credite Suisse and Washington Mutual -- withdrew nearly $4 million in funding.

Aaron fears that the lawsuit could embolden powerful interests to attack blogs that dare to challenge them. If the lawsuit succeeds, he writes, "Major corporations could interpret this as 'open season' on bloggers and other conversants who criticize their companies (irrespective of merit).

This is from Blown Mortgage's coverage of the lawsuit and its importance: "The whistle blower has always had the tough road. Few people believe them at first; then come threats, lawsuits, illegal discrimination and pressure brought to bear on friends and family. It is no different with blogs. ML-Implode has chosen to shine a bright light on the mortgage industry and it makes those in the light uncomfortable. They react to this unwanted attention by attempting to shut down the light - to shut down the whistle blower through any and all means. The law and precedents set have ensured that whistle blowers are protected. It is vital to the progress of public discourse that bloggers are afforded the same protection."

Thoughts? Comments?

American Home Mortgage: Going, going...

A few quick hits:

--American Home Morgage shares finally opened today on Wall Street. When we checked they were down 88%, to $1.20 (yes, down 88% in a single day; this is what happens when a business collapses). The stock has traded above $36 in the past year. As part of his "housing is doomed" rant, Jim Cramer predicted worthlessness (bankruptcy) for this stock.

From Bloomberg: "American Home Mortgage Investment Corp. shares plunged 89% after the lender said it doesn't have cash to fund new loans and may have to sell off assets. ... Investment banks cut off credit lines, leaving American Home without money yesterday for $300 million of mortgages it had already agreed to provide, the Melville, New York-based company said in a statement today. It anticipates $450 million to $500 million of loans probably won't get funded today."

--From Reuters: IndyMac, the Pasadena-based lender that cut 400 jobs last week, said profit declined as more borrowers fell behind on payments and it made less from selling loans to investors. The shares rose as much as 20 percent as the company said credit losses weren't as steep as its competitors. Second-quarter net income slid 57%, while revenue fell 21%.

--From Inman News: Lending Tree, a division of the internet company IAC, lost $1.3 million in the second quarter, after making a $9.8 million profit a year earlier. Revenue declined 9%, to $98.6 million.

Thoughts? Comments? Insights?

L.A. home prices down 3.3%

L.A. home prices have fallen by an average of 3.3% over the past year, according to the Standard & Poor's Case-Shiller home price index -- which we consider to be the most reliable measure of home price trends.

The report, which covers price changes through May, shows:
--Nationally, the level of home price appreciation has now been declining for 18 months in a row, since December 2005.
--The 10-city composite shows year-over-year price declines of 3.4% in May.
--“At a national level, declines in annual home price returns are showing no signs of a slowdown or  turnaround,” says economist Robert Shiller.

Why we like Case-Shiller: it is the only index we know of that even tries to track the price of a typical single-family house in a given city. It uses "matched pairs" of price data -- that is, if a specific house sold twice in a period of time, it uses those two data points to measure price change.

Your thoughts? Comments? E-mail story tips to lalandblog@yahoo.com
Photo Credit: Reuters

Mortgage trouble? Walk away.

Good morning. I'm splitting the Jim Cramer post in two, because the trashing of the Inland Empire (he says it's such a housing disaster it needs to be plowed over) is overshadowing his advice to upside-down homeowners: just walk away from the house and the mortgage.

Cramer on walking away: "When your house drops 20% in value, then it doesn't matter whether you're prime or subprime. It's better to walk away, even if you're wealthy. Because you don't want to lose your credit card, and you don't want to lose your car. Your house is the one thing that's fungible. It's smart to walk away... It's actually a good thing. I know that sounds a little counter intuitive. But if your home declines 20% in value, it's really important to sell it, or walk away from it."

Strong stuff considering this guy is probably the most prominent investment advisor on television today.

Your thoughts? Comments? Play investment advisor for a second: what do you advise someone who paid $500,000 for a house, still owes all the principal, and the house is now worth $400,000?

Jim Cramer trashes IE

CNBC host Jim Cramer, never far from the fringes of any financial argument, has now claimed the "sky is falling" perch in the housing debate. In this video, Cramer rants that the Inland Empire is so awash with bad loans and unsold houses that it needs to be "plowed over"; he predicts a 100% foreclosure rate in 2/28 mortgage products; and encourages upside-down homeowners to be "smart" and walk away from their houses.  Wild stuff, but hey, he's Cramer.  Partial transcript:

"I'm looking for a 100% default of the 2 and 28's. 100 percent. The bears are looking for 50 percent. I'm saying that they're foolish and way too optimistic.... Now, where are these 2 and 28 loans concentrated? Largely in Florida, in Phoenix, in Las Vegas, in the Southland of California, the northern part, Sacramento, but most importantly, the Inland Empire. I think the Inland Empire needs an agricultural adjustment company. ... we need to, like, plow over the Inland Empire, because there's so many more homes. And the homebuilders have way too much inventory. And the people who have made these loans whoever, where the mortgages are, I think almost everything that was written from May of 2006 until the end of the year was worthless."

More, he's just getting going: "When your house drops 20% in value, then it doesn't matter whether you're prime or subprime. It's better to walk away, even if you're wealthy. Because you don't want to lose your credit card, and you don't want to lose your car. Your house is the one thing that's fungible. It's smart to walk away...  It's actually a good thing. I know that sounds a little counter intuitive. But if your home declines 20% in value, it's really important to sell it, or walk away from it."

More: "I'm calling for a dramatic decline in home values... I've sold all my real estate."

What's going on? Cramer is a smart guy, a good market-timer, but there's no gray in his world. It's black, or it's white. It's great, or it's awful. You should own it, or you should run from it. He's jawboning the Fed to cut rates to save housing. He's telling the Fed the sky is falling.

Does it matter? Yes, we think so. Cramer is influential.  We're not saying he can influence the Fed; we're saying he's a smart, opinionated, outspoken guy who frames -- and then screams -- investment arguments for some traders and investors.

Your comments? Thoughts?
Hat tip, big time: Morgan at Blown Mortgage.
Photo Credit: Booksamillion.com

Open House: Santa Monica

We popped into five open houses yesterday in Santa Monica and sniffed a trend: ever-so-slight price reductions, even north of Wilshire.  What we saw:

1720 Washington Ave. (pictured), a renovated four-bedroom, three-bath with a brick facade dating to 1889, on an impossibly tiny (2,600 SF) lot. Zero back yard. Originally listed at $1.485 million, reduced to $1.455 million, agent Karen Orlando told us she has an offer and is looking for a back-up.

2320 Idaho Ave., a 2,100 SF, four-bedroom, three-bath, was originally listed at $2.395 million, and has been sitting -- 129 days on market. It's been reduced to $2.195 million.

1701 California Ave. will show as a big price reduction -- it was originally listed at $1.79 million, but listing agent Sylvia Long told us she went out and had it appraised, and it came back at $1.5 million, and that's the new price. It's a quirky property: Two buildings, three units -- a two-bedroom, one-bath, plus a permitted one-bedroom apartment, plus another bedroom and 3/4 bath in the same building.

1144 17th #14 is a three-bedroom, three-bath townhouse, new on the market, listed at $949,000, holding right there.

822 19th St. #C, a two-bedroom, 2.5-bath townhouse with high ceilings further north of Wilshire has been on the market 75 days. Originally listed at $1.238 million, it has been reduced $46,000, to $1.192 million.

Photo Credit: L.A. Land
Thoughts? Comments? Insights?  Did we cherry pick the open houses? No, we followed the signs.

LA asking prices slip again

The median listing price of a home in greater LA fell by $5,000 in the past week, to $530,000, as inventory continued to pile up on the market, according to HousingTracker's analysis of MLS listings, which we track here every week.

The dip in asking prices confirms a clear trend: overall, listing prices are slipping slightly in Los Angeles -- they're down 1.7% over the past month, and 7.8% since this time last year.  Inventory spiked by 451 listings in the past week, and now stands at 43,676 -- up 3.8% over the past month, and 14.0% over the past year.

Date         Median Price             Inventory
4/16         $545,000                 35,489
4/23         $545,000                 36,348
4/30         $545,000                 37,338
5/07         $545,000                 37,511
5/14         $545,000                 38,297
5/21         $545,000                 39,100
5/28         $540,000                 39,941  (up 24.6% y/y)
6/4           $540,000                 40,458  (up 23.3% y/y)
6/11         $540,000                 40,766  (up 20.4% y/y)
6/18         $539,000                 41,324   (up 18.7% y/y)
6/25         $539,000                 42,059   (up 19.3% y/y)
7/2           $539,000                 42,530 (up 19.0% y/y)
7/9           $535,000                 42,517 (up 17.2% y/y)
7/16         $535,000                 42,685 (up 14.5% y/y)
7/23         $535,000               43,225 (Up 14.5% y/y)
7/30         $530,000               43,676 (Up 14.0% y/y)

Photo Credit: LA Times

Another lender on the ropes

Good morning again. Another lender is on the ropes, and this is not a sub-prime problem: "American Home Mortgage Investment shares sank on Monday after the home loan provider announced "major" writedowns, delayed a dividend, and said lenders were demanding it put up more cash."

More, from Reuters via CNBC.com: "American Home, based in Melville, New York, specializes in prime and near-prime loans. It has, however, made many loans that allow borrowers to produce little documentation. Such loans are often considered riskier. The company recently commanded a roughly 2.5 percent share of the U.S. mortgage market.... 'Bankruptcy is not out of the question,' said Matt Howlett, an analyst at Fox-Pitt Kelton Inc. in New York. 'It needs to find a partner with alternative funding and hope the market turns around. It's going to be tough.'

Thoughts? Comments? Insights of staggering insighfulness? Email story tips to lalandblog@yahoo.com.

RealtyTrac recounts foreclosures

Good morning. Research firm RealtyTrac has been criticized for double-counting houses in its foreclosure statistics, so today it introduced new research with no double-counting, and guess what: the new numbers show slightly slower growth of forelcosures in California when you take out the double-counting.

In the first six months of the year, RealtyTrac counted 189,000
"foreclosure filings" in California, an increase of 232% over the previous year. But how much of that was double-counting?

The new stats answer that question: RealtyTrac says there were  104,000 "unique properties" in California in some stage of default or foreclosure in the first half of the year, an increase of 170% over the previous year's total.  That means roughly 85,000 properties were double-counted.

We'll have more numbers and analysis on this report later in the day, but we're interested in your thoughts on it.

Photo Credit: Reuters

Mel sells, sells, buys

We've been slacking off in the celebrity real estate department, in part because we're not crazy about the demi-celebrities (Nicky Hilton, etc.). But when an A-list, single-name celebrity does nearly $100 million in real estate deals on three coasts, we figure it's worth a link.

So here are Mel Gibson's recent moves, and there will be a short quiz to follow:

Sold his 7,000 SF beachfront Malibu home for "nearly $30 million," according to the LA Times.
Sold his 28-room, Tudor-style mansion in Greenwich, CT, for $39.5 million.
Bought a 400-acre ranch in Costa Rica for $25.8 million.

Our Quiz: Does this mean anything? We consider Gibson a shrewd businessman. Is he bailing on luxury U.S. real estate at the peak? Or, are we incorrect in viewing him as a smart businessman. Or, perhaps, his buyings and sellings have nothing to do with the real estate market. You tell us.

Photo Credit: AP