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Median listing prices in Los Angeles County dropped by another $990 over the past week, according to Housing Tracker's weekly analysis of MLS listings, and have now fallen $150,000, or 26%, from their April 2006 peak.
Numbers: Housing tracker reports median listing prices fell to $429,000 from $429,990, marking a decline of 20.4% over the past year. That 20.4% rate of annual decline marks the highest rate of decline in this housing cycle. Inventory of homes and condos for sale dropped by more than 300 units, to 45,164, and is pacing 7.4% ahead of year-ago levels.
Analysis: A decline in the median sales, or listing, price doesn't necessarily mean the value of a typical home has declined by the same amount. It suggests some decline in overall values, but also that the market of listings and sales is increasingly dominated by cheaper homes. This is the foreclosure factor: More and more homes on the market are cheaper, foreclosed homes.
Date Median listing price Inventory
4/06 $579,666 27,251
4/07 $545,000 35,489
5/07 $545,000 38,297
6/07 $540,000 40,766 (up 20.4% y/y)
7/07 $535,000 42,685 (up 14.5% y/y)
8/07 $529,000 44,483 (up 13.6% y/y)
9/07 $520,000 46,414 (up 16.9% y/y)
10/07 $510,000 46,603 (up 15.6% y/y)
11/07 $499,900 46,503 (up 19.0% y/y)
12/07 $495,000 (down 10.0% y/y) 43,174 (up 28.2% y/y)
1/08 $479,900 (down 12.6%) 40,850 (up 33.3% y/y)
2/08 $475,000 (down 13.5%) 43,625 (Up 38.3%)
3/08 $464,900 (down 15.5%) 42,098 (Up 31.4%)
4/08 $450,000 (down 17.4%) 42,430 (up 16.7%)
5/08 $449,900 (down 17.4%) 42,532 (up 11.1%)
6/02/08 $446,500 (down 17.3%) 42,458 (up 4.9%)
6/09/08 $440,000 (down 18.5%) 42,398 (up 4.0%)
6/23/08 $429,990 (down 20.2%) 45,493 (up 8.2%)
6/30/08 $429,000 (down 20.4%) 45,164 (up 7.4%)
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
 Shares of Pasadena-based IndyMac slipped by 19 cents today, which would be no big deal for most stocks. But IndyMac is a penny stock these days, so a loss of less than two dimes a share wiped out roughly a quarter of its value. It closed at 62 cents a share.
Over at Money & Co., Tom Petruno details the near-run on the bank Friday and Saturday, as investors lined up to pull their money out of the bank, which has been battered to the brink of survival by bad loans. As Petruno explains, Sen. Charles Schumer (D-N.Y.) didn't do IndyMac any favors when he wrote to federal regulators saying he was "concerned that IndyMac’s financial deterioration poses significant risks to both taxpayers and borrowers."
Over at LA Biz Observed, Mark Lacter notes that IndyMac is about to become America's largest independent mortgage company, -- if it survives the next few days. "A new report by the Center for Responsible Lending finds that IndyMac engaged in the now-familiar pattern of loosey-goosey lending practices that fueled the mortgage boom. The nonprofit organization says it interviewed former employees who spoke of the pressure to cut deals with little regard for their customers' ability to repay the loans."
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: Bloomberg News
 In general, the bar at L.A. Land is set very high for news coverage. In this particular case, though, the item just limboed right underneath the bar.
From a media alert forwarded to me by a colleague:
What: Hollywood actresses in bathing suits will be protesting to save
foreclosure victims in front of the Bank of America building in Hollywood. The
Hollywood actresses will be supporting homeowners who are metaphorically losing
their shirts because of bad loans. The protest will take place before the 4th
of July to emphasize the idea of the American Dream that was lost because of bad
home loans.
Who: Hollywood actresses from film and television and
Forbes contributor and financial expert Robert Maltbie.
When:
Thursday, July 3rd at 10 a.m.
Where: Bank of
America
6300 West Sunset
Los Angeles, CA
90028
The media advisory further states that the Internet show "Hollywood by the Numbers" (surely you've heard of it) will be launching its newest video
called "Subprime Slime," in hopes of raising money "to benefit foreclosure victims."
I spoke briefly with the PR person for this event, Lorena Meza, who assured me, "This is a real event." She was giggling a bit, though. I asked if I'd be correct in assuming the various actresses are, for lack of a better way of saying it, unknown. "I think one of them was in Terminator 2," she replied. "But they're not 'A' or 'B' list. They might be, like, 'D' list."
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo Credit: "Hollywood by the Numbers"
 I'm fully aware that, in general, home prices are falling sharply. But the recent run-up in mortgage rates is driving up the cost of homeownership (Work with me; one sign of intelligence is the ability to hold in your head two opposing ideas). From Zillow.com this morning: "... the average Los Angeles area homeowner will pay $2,280 more on their
mortgage per year with today’s interest rates vs. if they had bought just
two months ago."
Here's how Zillow breaks that down: "Los Angeles area mortgage APR’s on a 30-year fixed loan, to a
borrower with good or better credit (credit score of 680+), have risen from
5.75% in April to 6.51% in June. In real dollars, this means a buyer in Los Angeles who purchased a
$482,500 home (area median home value), with 20% down, would have paid $2,253/
month on a loan secured at this rate in April, vs. paying $2,442/month on a
loan secured in June."
More, from Zillow: That’s a difference of $190 more per month -– which translates
into $2,280/ year, or $68,400 over 30 years..."
Th Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo credit: Bloomberg News
 Off topic but irresistible to those following the saga of U.S. Rep. Laura Richardson (pictured), the triple-default and single-foreclosure Democrat of Long Beach: the car she leases for official use is the most expensive lease of any member of the House of Representatives, according to Gene Maddaus of the Daily Breeze.
Maddaus: "When she arrived in Congress last fall, Rep. Laura Richardson sought out a vehicle that would match her newfound status. She settled on a 2007 Lincoln Town Car - the choice of many representatives who lease their vehicles at taxpayers' expense. But hers was distinct: at $1,300 a month, it was the most expensive car in the House of Representatives."
Please note the phrase "at taxpayers' expense."
Better known for defaulting on three mortgages and losing one house to foreclosure, Richardson is fast gaining a reputation for inventive auto financing. The backstory from Maddaus: " When she was a councilwoman in Long Beach, she crashed her BMW, abandoned it at a body shop, failed to pay a prior repair bill, and then racked up 30,000 miles on a city-owned hybrid in one year - apparently violating a policy against personal use of city cars."
I know, I know, it's not a housing story. But I also know some of you are following the saga of Rep. Richardson's personal and public finances. For my money it's one of the better political stories to come out of the foreclosure crisis.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Hat tips: Uncle Billy via e-mail, with a reminder from LAObserved.
Photo Credit: Rep. Laura Richardson, center, arrives at a fundraiser in Washington, Wednesday, June 25, 2008, via A.P.
Business Week still sees many reasons to be bearish about housing, reporting, "The housing crisis is entering a new and frightening stage." Two take-aways from this lengthy and worthwhile report ominously titled "The Housing Abyss":
"Overshooting" -- Because prices are falling so rapidly, housing analysts believe it is likely prices will "overshoot" -- that is, continue falling below levels that might otherwise make economic sense. "The risk for the financial system and the economy is that the price drop, already horrifying, will start feeding on itself.... That process has already started in parts of Arizona, California, Florida, and Nevada.... Fiserv's James L. Smith worries that instead of settling at a reasonable price level, 'we're going to blow past [it] without even looking back.'"
"Buying and Bailing" -- Business Week spots another of those anecdotal but not easily quantifiable trends: homeowners who buy a new house at a low price, then bail on the upside-down mortgage of their older home: "Steve Hawks, owner of RE/MAX Platinum real estate agency in Henderson, Nev., says he has been flooded with calls from people interested in 'buying and bailing' — that is, buying an additional house while their credit is still good, then walking away from the old one unless they can cut a favorable deal with the lender. So far the number of people who have done so appears to be small."
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Hat Tip: Patrick.net
A quick note: I'm taking a short vacation, no blogging until Monday. No, I will not be staying at the house pictured above. That's Lenny "Nails" Dykstra's Lake Sherwood home, which the former baseball star has listed for $24.9 million.
Photo Credit: Sheila Cooper
 California's housing market continued its historic decline in May, as a flood of foreclosed homes for sale drove down the median price paid for a single-family home by a stunning 35% from year-earlier levels, the California Assn. of Realtors reported today.
The median price paid for a single-family home in the state dropped by almost $210,000, from $594,530 in May 2007 to $384,840 in May 2008, the association reported. That drop represents a decline of $3,800 per week, or $549 per day, and is the highest ever measured by the association. The price decline appeared to be accelerating from April to May, as median prices dropped by 4.7% in that period.
“The statewide median price declined 35.3% to $384,840 in May, a record for year-to-year percentage decreases in the median, reflecting the effect of large numbers of short sales and foreclosures in the market,” said association Vice President and Chief Economist Leslie Appleton-Young. “With the statewide median in the $585,000- to $595,000-range through August of last year, we expect the market to continue to experience large year-to-year adjustments through the summer, even if the median price holds steady over the next few months.”
There was a glimmer of hope in the report: the number of homes sold in the state rose 18% from year-ago levels, marking the second straight month of year-over-year gains after 30 straight months of decline. The Realtors' group attributed the pickup in sales to a flood of cheaper houses -- many previously foreclosed on -- that has dramatically changed the state's real estate market. Additionaly, inventory of for-sale homes has decreased when expressed in terms of how long it would take to sell off all the inventory: "C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in May 2008 was 8.4 months, compared with 10.7 months (revised) for the same period a year ago," the association reported.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo credit: Getty Images
 Here's video I'd like to see: Countrywide Financial employees and shareholders gave chairman Angelo Mozilo (pictured) a standing ovation today, and Mozilo "fought back tears" at a shareholders meeting to approve the sale of the company, according to Reuters.
Here's more: "Scott Adams, coordinator for a pension program of the American Federation of State, County and Municipal Employees, said the Countrywide shareholders meeting lasted fewer than 20 minutes and had about 300 attendees, including many employees.
"He said Mozilo, 69, entered to a standing ovation, and then fought back tears in recalling how he had received a loan from Bank of America to help co-found Countrywide.
"Mozilo, the son of a Bronx, New York, butcher, said he felt emotional because of his Italian heritage, Adams said."
I doubt that shareholders or Mozilo discussed the new lawsuits against the company, filed by attorneys general in California and Illinios.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo credit: Getty Images
 News item this morning from the L.A. Times: "Countrywide Financial Corp. and its chief executive, Angelo Mozilo,
were sued today by California Atty. Gen. Jerry Brown, who accused them
of forcing thousands of Californians into foreclosure by deceptively
marketing risky adjustable-rate mortgages to borrowers who didn't
understand that their monthly payments would one day 'explode.'
"In a complaint filed in Los Angeles County Superior Court, Brown
alleges that Countrywide and its top executives, beginning in 2004,
plotted to loosen or ignore lending standards so they could make more
sub-prime mortgages and other adjustable-rate loans that were promoted
by emphasizing low initial rates.... Countrywide spokesman Rick Simon said the company would have no
immediate comment on the lawsuit. The mortgage lender, the nation's
largest, is expected to face a similar suit today in Illinois."
The New York Times first reported the Illinois lawsuit last night.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo Credit: Los Angeles Times
 Sam Zell, the real estate mogul who runs the Tribune Company, put out this stunner this morning: he's willing entertain offers for the company's prize real estate holdings, which include the Tribune Tower in Chicago and the Times Mirror Square complex here in Los Angeles (pictured), which many know as the Los Angeles Times building.
Here's how Thomas Mulligan is covering the story for the L.A. Times: "Tribune Co. is putting two of its most historic properties -- the L.A. Times building and Tribune Tower in Chicago -- on the block."
This from an e-mail Sam sent to me personally, as well as every other Tribune employee: "... we are in the process of asking a number of real estate firms to give us their best thinking on how we can generate more value from Tribune Tower in Chicago, and the Times Mirror Square complex in Los Angeles."
More: "We’ll be considering numerous options to maximize the value of these properties. While a near-term transaction is possible, we’ll be focusing on opportunities that allow for some level of ongoing occupancy in both buildings for the mid-term (defined as five years), for farther out (15 years), and beyond.
"Most importantly, we are not rushing this process, and I can assure you we will not accept anything but full market value for these assets. As we made clear on our first quarter earnings call, Tribune has sufficient liquidity to satisfy our principal amortization requirements through 2008, due to the proceeds we will realize from the Newsday transaction, and from our plans to create an asset-backed commercial paper program.
"Our request for proposals, which is being issued today, is likely to generate media attention and debate about what we should or should not do with the properties. Both Tribune Tower and Times Mirror Square are iconic structures, deeply intertwined with the history of this company. But, they are also both under-utilized, and as employee-owners, it’s in our best interests to maximize the value of all our assets."
Your thoughts? Comment? E-mail story tips to peter.viles@latimes.com.
Photo: Los Angeles Times
News item from the New York Times tonight: "The Illinois attorney general is suing Countrywide Financial, the troubled mortgage lender, and Angelo R. Mozilo, its chief executive, contending that the company and its executives defrauded borrowers in the state by selling them costly and defective loans that quickly went into foreclosure."
More: "The lawsuit, which is expected to be filed on Wednesday in Illinois state court, accused Countrywide and Mr. Mozilo of relaxing underwriting standards, structuring loans with risky features, and misleading consumers with hidden fees and fake marketing claims, like its heavily advertised 'no closing costs loan.' Countrywide also created incentives for its employees and brokers to sell questionable loans by paying them more on such sales, the complaint said."
The report says Countrywide did not immediately respond to an e-mail seeking comment.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
 A week ago, I asked readers to submit questions they'd like to pose to U.S. Rep. Laura Richardson, the triple-default Democrat from Long Beach who still hasn't explained details of the loan modification she negotiated with Washington Mutual in hopes of saving a home from foreclosure.
Here are the four reader questions I've submitted to Richardson's office: Laker asked, "On your Sacramento house, for the benefit of the public and those that are about to lose their home to foreclosure, would you please disclose the agreement you've reached with WAMU on the loan modification?"
RahRahGrl asked, "Have you paid your property taxes (for all properties) in full?"
RZ asked, "How do you respond to constituents who think that your personal woes (house foreclosure, missed payments, etc.) have taken away your credibiility to make good decisions as a congresswoman?"
My Less Than Prime Beef asked, "Is it time yet for another Congressional pay raise?" I've e-mailed these to Rep. Richardson's office and called also seeking answers. I'll let you know if I hear back. Relatedly, it appears Richardson still enjoys the support of House leadership. This is from the AP today: "The majority leader of the U.S. House is holding a fundraiser for Southern California Congresswoman Laura Richardson despite reports about Richardson's history of defaulting on home loans and failing to pay off debts."
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: L.A. Times
 Today's report on falling home values from Case-Shiller is further evidence that the housing meltdown is not a 50-state phenomenon: Price declines are concentrated in California, the rest of the Southwest and Florida, which I'll now call the Bubble Belts. Take a look at these numbers from today's Case-Shiller report:
Declines in California-Southwest-Florida from April '07 to April '08:
Las Vegas -26.8%
Miami -26.7%
Phoenix -25.0%
Los Angeles -23.1%
San Diego -22.4%
San Francisco -22.1%
Tampa -20.4%
Average decline for Cal.-Southwest-Florida: -23.8%
Declines in other large cities:
Atlanta -7.5%
Boston -6.4%
Charlotte -0.1%
Chicago -9.3%
Cleveland -6.8%
Dallas -3.4%
Denver -4.7%
Detroit -18.0%
Minneapolis -15.5%
New York -8.4%
Portland -4.7%
Seattle -4.9%
Washington -14.8%
Average decline for rest of the nation: -8.0%
Conclusion: The price declines in the Bubble Belts are three times as severe as those in the rest of the nation.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo: Getty Images
 Excellent post over at L.A. Now reminiscing about the days when Malibu's Paradise Cove was affordable -- a "risky investment" even, and how the media, the celebrities and the money people ruined all that.
Veronique de Turenne (one of the best names in blogging), starts off, "When we bought the trailer here in Paradise Cove 14 years ago, a series of bruising lawsuits between residents and the park's owners had turned it into a risky investment and home values had tanked. We had a tiny down payment and this was the only place we could afford. Anywhere.
"It was quiet here, a mix of families and retirees. There were no car alarms. There were very few golf carts. You knew everyone you saw on the beach."
Read the whole thing here.
Today's Case-Shiller report on home prices in large cities shows that home price declines in Los Angeles are accelerating, as foreclosures continue to weaken the region's housing market.
The Case-Shiller report for April shows prices in Los Angeles falling at an annual rate of 23.1%, an increase from an annual rate of decline of 21.7% in March. Nationwide, Case-Shiller's composite of 20 large cities also shows housing price declines accelerating, now falling at a rate of 15.3% from year-earlier levels.
Bloomberg News: "Home prices in 20 U.S. metropolitan
areas fell in April by the most on record, signaling the housing
recession is far from over, a private survey showed today."
The Case-Shiller report continues to show that the housing collapse is most severe in the west and Florida, with cities in those regions showing price declines much worse than the rest of the country. These are the markets where prices are falling fastest, according to Case-Shiller:
Las Vegas: -26.8%
Miami: -26.7%
Phoenix: -25.0%
Los Angeles: -23.1%
San Diego: -22.4%
San Francisco: -22.1%
Average of 20 large cities: -15.3%
Chicago: -9.3%
New York: -8.4%
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Good morning. There's an excellent piece of enterprise reporting in this morning's Wall Street Journal about the new wave of no-money-down mortgages built on government-backed loans.
The Journal's Nick Timiraos: "The offers -- including "100% financing" -- are made possible due to
down-payment assistance programs run by nonprofit organizations. These
programs are funded largely by home builders and also by private
homeowners desperate to sell. The seller-funded groups provide enough
down-payment money to buyers that they can qualify for a mortgage
backed by the Federal Housing Administration, which requires at least a
3% down payment."
More: "D.R. Horton Inc., the nation's largest home builder by
volume, is touting '100% financing' for its two- and three-bedroom
condominiums near the beach in Maui, Hawaii, which start at $498,000.
In the Seattle area, local builder Quadrant Corp. is advertising
townhouses that can be purchased with as little as $500 down. 'Use your
coffee budget to move into a new home,' says an online promotion."
The FHA says borrowers who receive a down payment from a nonprofit group are two or three times more likely to default, the Journal reports. It estimates that such borrowers now make up 34% of all FHA loans -- up from 2% in 2000.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Interesting numbers tonight from Housing Tracker's weekly analysis of MLS listings: Median listing prices in Los Angeles County dropped sharply over the past week, falling by more than $10,000, as inventory of for-sale houses and condos spiked higher. Here's your headline: Median listing prices in Los Angeles have now fallen $149,000, or 25.8%, from their April 2006 peak.
Numbers: Housing tracker reports median listing prices fell from $439,999 to $429,900, marking a decline of 20.2% over the past year. That 20.2% rate of annual decline marks the highest rate of decline in this housing cycle. This tracks pretty close to median sales prices as reported by DataQuick: down 23.3% over the past year in Los Angeles, to $422,000.
Inventory of for-sale homes and condos rose by more than 3,000 units, to 45,493, and is pacing 8.2% ahead of year-ago levels. That sharp rise broke a long streak during which inventory had stayed fairly flat.
Analysis: A decline in the median sales, or listing price, doesn't necessarily mean the value of a typical home has declined by the same amount. It suggests some decline in overall values, but also that the market of listings and sales is increasingly dominated by cheaper homes. This is the foreclosure factor: more and more homes on the market are cheaper, foreclosed homes.
Date Median listing price Inventory
4/06 $579,666 27,251
4/07 $545,000 35,489
5/07 $545,000 38,297
6/07 $540,000 40,766 (up 20.4% y/y)
7/07 $535,000 42,685 (up 14.5% y/y)
8/07 $529,000 44,483 (up 13.6% y/y)
9/07 $520,000 46,414 (up 16.9% y/y)
10/07 $510,000 46,603 (up 15.6% y/y)
11/07 $499,900 46,503 (up 19.0% y/y)
12/07 $495,000 (down 10.0% y/y) 43,174 (up 28.2% y/y)
1/08 $479,900 (down 12.6%) 40,850 (up 33.3% y/y)
2/08 $475,000 (down 13.5%) 43,625 (Up 38.3%)
3/08 $464,900 (down 15.5%) 42,098 (Up 31.4%)
4/08 $450,000 (down 17.4%) 42,430 (up 16.7%)
5/08 $449,900 (down 17.4%) 42,532 (up 11.1%)
6/02/08 $446,500 (down 17.3%) 42,458 (up 4.9%)
6/09/08 $440,000 (down 18.5%) 42,398 (up 4.0%)
6/23/08 $429,990 (down 20.2%) 45,493 (up 8.2%)
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Calculated Risk, the reliably insightful economics blog, posted the above chart today as part of its coverage of the Harvard Joint Center for Housing Studies report. It's not up to date -- as you can see it does not include 2007 and 2008 data; but it's a powerful illustration of why the Los Angeles housing market really is different. What happened here did not happen in most of America. What happens next? That's why the blog publishes comments.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Hat Tip: Uncle Billy Reads Calculated Risk.
 Worthwhile reading over the weekend for those of you trying to sell a house right now -- 12 tips, plus a few extras, to sell your house.
The list compiled by Marni Jameson contains some of the usual suspects (Number 2 is "start at the curb", and Number 3 is "Paint!"), and I'll print the entire thing below. What struck me is the tidbit of advice that came after the 12 tips: get real about price.
In an effort to make this unpopular advice more acceptable, San Diego broker Sandy Fish puts it diplomatically. Don't ignore the competition:
"Fish helps clients get realistic about their homes by showing them what else is on the market in the same price range. 'When they see what they're up against, including new homes, that often motivates them to get real about their price and what they should fix up,' Fish says.
Click below to see the top 12 tips.
Read more Twelve tips to sell your house in a crummy market »
 New York Times columnist Paul Krugman writes one of those "Tipping Point" columns today that speaks volumes about the shifting debate about housing in America. His point? Homeownership is overrated and over-supported by the federal government.
Highlights: "Why should ever-increasing homeownership be a policy goal? How many people should own homes, anyway?... Homeownership isn’t for everyone. In fact, given the way U.S. policy favors owning over renting, you can make a good case that America already has too many homeowners.... All I’m suggesting is that we drop the obsession with ownership, and try to level the playing field that, at the moment, is hugely tilted against renting."
Krugman points out the rarely mentioned economic risk of buying a house -- losing money in the short term. He guesstimates that 10 million American households are upside down in their mortgages right now, owing more than their homes are worth.
Definitely worth reading, if only as a reminder of how conventional wisdom can shift by 180 degrees:
2002 Conventional Wisdom: Increasing homeownership levels is a good government policy and lenders should be encouraged to find ways to lend to people who have less-than-good credit.
2008 Conventional Wisdom: "There are some real disadvantages to homeownership," as Krugman writes today.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo: Los Angeles Times
 I'll give you the bad news first, then the not-so-bad news.
First: Los Angeles has America's most expensive gas, at an average of $4.59 per gallon, according to the Lundberg Survey of 7,000 gas stations. The survey reports the nationwide average is $4.10 a gallon, and the most expensive gas in America is in Los Angeles and Fresno -- where regular averages $4.59 per gallon.
Now the better news: Gas prices in Los Angeles have been fairly steady for about a week now. The attached photo was taken June 13 in Santa Monica, and the price at that station (Lincoln and Santa Monica boulevards) hasn't budged in nine days, still $4.89/gallon.
LosAngelesGasPrices.com, an excellent resource, reports that regular gas averages $4.60 per gallon in L.A., unchanged from a week ago.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: LA Land, via the Pain at the Pump gallery in Your News at Your Scene at LATimes.com.
Those following the progress of the Dodd-Shelby mortgage rescue plan in the Senate might want to check out two solid pieces of enterprising reporting on the bill this weekend.
First, the Examiner's Tim Carney reports that the bailout section of the Dodd-Shelby bill is, in the words a lobbyist, "exactly what Bank of America and Countrywide wanted."
Is there a connection between Bank of America and Sen. Christopher J. Dodd (D-Conn.)? There is. Carney: "Bank of America's political action committee (PAC) has donated $20,000 to Dodd since he became chairman of the banking panel 17 months ago. From January 2007 to March 2008, Bank of America employees have donated at least $50,400 to Dodd's campaigns, according to the Center for Responsive Politics."
National Review's the Corner follows up, citing an internal Bank of America document:
"National Review Online has obtained an internal Bank of America "discussion document" (PDF here) on the subject of the FHA Housing Stabilization and Homeownership Retention Act of 2008, a.k.a. the Dodd-Shelby mortgage-lender bailout bill .... This discussion document (dated March 11, 2008) would appear to support the contention that BofA essentially wrote the bailout section of the bill."
Faithful readers of the blog will remember that Bank of America has been pushing hard for a big federal intervention for months. This was from a New York Times story on BofA's lobbying efforts back in February: "Bank of America suggested creating a Federal Homeowner Preservation Corporation that would buy up billions of dollars in troubled mortgages at a deep discount, forgive debt above the current market value of the homes and use federal loan guarantees to refinance the borrowers at lower rates. 'We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bailout of the bond market,' the financial institution noted. In practice, taxpayers would almost certainly view such a move as a bailout."
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Hat tips: Mr. Mortgage, The Mortgage Lender Implode-O-Meter and MN via e-mail.
 Why is it that we love the tree but complain so much about the roots? As if we could have one without the other. In this special edition of "Tree of the Week," Pieter Severynen sings the praises of roots, the kings of the underground jungle.
Roots and the underground jungle
What happens to trees below ground is as interesting as what we see above the surface. Trees stand up because their roots anchor them. The large perennial roots, usually oriented more horizontally than vertically, also conduct water and minerals upward and food down, and store sugars or starches manufactured by the leaves. They occur mainly in the top 18 to 30 inches of soil. Small, fairly short-lived feeder roots, less than one-sixteenth of an inch in diameter, constitute the bulk of the root mass; they grow outward and upward at a very slow pace, close to the soil surface, where they can absorb water, minerals and oxygen. These feeder roots are concentrated in the top 6 to 9 inches. Altogether the roots are bundled in the shape of a plate, which typically extends 2-3 times the width of the tree crown or more, so that an idealized tree representation looks less like a wine glass than a wine glass on a plate. Roots grow best in good soil, consisting of 50% solids, and 50% voids filled with air and water; the more compacted the soil, the more reluctant the feeder roots become to wiggle their way between the soil particles and the less the tree grows.
Utter darkness and silence may rule down below, but it is a jungle teeming with billions of creatures. Viruses, bacteria, fungi, amoebae, nematodes, arthropods and worms silently compete with, stalk, pounce on, kill and eat each other, or try to invade or take a bite out of the juicy roots. But roots have their own defenses and they do not fight alone. Millions of years ago certain beneficial fungi (mycorrhizae, fungus root) started cooperating with roots and growing on or inside them. Their thin threadlike hyphens now hugely extend the reach of roots in their search for minerals and water and help fight off competitors. In return the mycorrhizae receive sugars from the plant. The arrangement is so profitable that almost all plants use it, but in order to feed both roots and fungus a tree may have to divert below ground as much as 40% of the food produced by the leaves.
Thanks, Pieter.
Your thoughts? Comments?
Photo Credit: Pieter Severynen
The New York Times reports tonight that levels of homeownership have dropped sharply since 2005, wiping out all the gains of the Bush-era push for expanded homeownership: "Driven largely by the surge in foreclosures and an unsettled housing market, Americans are renting apartments and houses at the highest level since President Bush started a campaign to expand homeownership in 2002."
More: "The percentage of households headed by homeowners, which soared to a record 69.1 percent in 2005, fell to 67.8 percent this year, the sharpest decline in 20 years, according to census data through the end of March. By extension, the percentage of households headed by renters increased to 32.2 percent, from 30.9 percent. ... 'We’re not going to see homeownership rates like that for a generation,' said economist Mark Zandi."
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
 Responding to reports of the FBI's "crackdown" on mortgage fraud -- 144 cases nationwide in recent months -- readers here were unimpressed. Bill commented, "Heck, I could find 144 cases within a 10-minute walk of my house."
Laker adds, "Funny, you don't need FBI investigators spending months researching ... just check sales of houses in 2006, 2007 that got foreclosed within 12 months."
In the spirit of public service, a couple of readers have pointed out a pattern they believe might indicate mortgage fraud.
I'll go slowly: Readers of this blog believe a tell-tale sign of mortgage fraud is when a house sells at what appears to be a wildly inflated price. Then the house goes into foreclosure, or comes back on the market rather quickly, at a much lower price. These would be hints that the high sales price may have been fraudulent, creating a nice windfall of profit for the seller and the "buyer" (who had no intention of paying for the house) to split when they walk away from said house. A ding to the "buyer's" credit score, but a nice windfall.
Here's an example:
House sells in October 2004 for $800,000.
Same house sells again in August 2006 for $1.8 million.
House now for sale, listed at $1.1 millon.
Or:
House sells in February 2007 for $510,000.
House goes into foreclosure and is listed for sale at $279,000.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
A few updates on "Operation Malicious Mortgage,"
the Department of Justice name for today's announcement of various recent mortgage fraud prosecutions.
The DoJ's press release, which you can read here, says the initiative involves 144 cases and 406 defendants across the country. Many of the indictments have been previously announced, including four in Southern California. More on the California cases at the bottom of this post.
From the DoJ: "Operation Malicious Mortgage addresses primarily three types of mortgage fraud schemes: lending fraud,
foreclosure rescue scams and mortgage-related bankruptcy schemes.
Lending fraud frequently involves multiple loan transactions in which
industry professionals construct mortgage transactions based on gross
fraudulent misrepresentations about the borrower’s financial status,
such as overstating the borrower’s income or assets, using false or
fictitious employment records or inflating property values."
You can read complete L.A. Times coverage here.
Analysis: These appear to be a collection of smallish and unrelated prosecutions, but if you bundle them together and give them a name, you can portray them as part of a "crackdown," or, as the Department of Justice likes to say, a "takedown."
Relatedly: What is with the need to make every effort into an "Operation"? Operation Malicious Mortgage? A recent California fraud prosecution was called "Operation Homewrecker." I'm quite certain the readers of this blog can do much better in the "Operation Name that Operation" game. Please send your nominations via the comment button.
You can find a summary of recent Southern California mortgage fraud cases below.
Read more More on 'Operation Malicious Mortgage' »
Are you a stuck flipper? Flipping out because you're upside down and bleeding cash? If so, the producers of a new cable TV show are looking for you. Seriously.
They sent me this e-mail: "A cable television series is searching for home owners in trouble to participate in a special episode about how to turn a losing investment into a moneymaker. If you're in over your head and need expert financial and construction advice, please write to realestatenightmares@gmail.com."
Your thoughts? Comments? Be nice to the stuck flippers. E-mail story tips to peter.viles@latimes.com.
Photo: Los Angeles Times
 For the curious among you, here's a link to the announcement of the indictments against the two former hedge fund managers at Bear Stearns. The charges are simple -- conspiracy, wire fraud, securities fraud.
Analysis: Whenever you see a picture like the one here (which shows former Bear Stearns big shot Matthew Tannin performing the time-honored, carefully staged, New York perp walk), you know the government, in its own ham-fisted way, is trying to SEND A MESSAGE.
So let's be clear about what the message is: It has nothing to do with the mortgage industry or the sub-prime meltdown. That's not what this case is about. The government is prosecuting hedge fund managers for allegedly lying to their investors; the government is coming to the defense of wealthy, sophisticated hedge fund investors. In other words, there is less here than meets the eye.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo credit: AP
From CNN this morning: "Hundreds of people have been arrested for alleged mortgage fraud as part of an investigation by the FBI and Justice Department that began March 1, government officials told CNN Thursday."
More: "Losses in the fraud cases total about $1 billion, one official said, adding that at least 300 were arrested.... Most of the arrests came Wednesday, federal law enforcement officials said, in cities including Miami, Houston, San Antonio, Baltimore, Chicago and others. The suspects are thought to have been involved mostly in small-scale schemes."
Analysis/Bloviation: I'm always suspicious of these government dog-and-pony shows, which invariably involve a press conference and a specially named task force (Operation Malicious Mortgage ... Operation Sub-Prime Thunder ... Operation Get the Bad Guys, whatever). These roundups are clearly planned and executed with the hope of commanding extensive media coverage. I'm not particularly interested in the pronouncements from Washington today; I'm more curious to see what kind of cases the government is bringing here in Los Angeles.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
From the AP this morning, via The New York Times: "Two former Bear Stearns managers have surrendered to face criminal charges in the wake of the
collapse of the sub-prime mortgage market, the federal authorities said
Thursday. One former manager, Matthew Tannin, was taken
into custody outside his New Jersey home, while the other, Ralph R.
Cioffi, was arrested at his New York City home, the FBI said.
The AP reports that federal authorities are expected to outline the charges against the two men later today.
Analysis: By my reckoning these are the first big arrests in the sub-prime mortgage collapse. For those of you who weren't paying close attention late last spring, the collapse of two Bear Stearns hedge funds roughly a year ago hit Wall Street like a thunderbolt, revealing the dirty little secret of mortgage-backed securities: they were not secure.
Here's how L.A. Land first reported the story on June 14, 2007, after Business Week broke it: "Business Week: 'The situation is so bleak that Bear Stearns' asset
management group is suspending redemptions at the onetime $642 million
fund—meaning investors have no choice but to sit on their losses. And
that's got some hopping mad.'
We now know the collapse of the Bear Stearns hedge funds was a classic tipping point, providing evidence to for all to see that investments built on sub-prime mortgages were beyond risky, they were doomed. When it broke, though, the story did not initially receive wide play; it was seen as a problem unique to Bear Stearns and these hedge funds. Companies that would later be battered by the crisis were still seen as decent investments. In mid-June of 2007, Countrywide Financial stock was trading at $38.81; today it opened at $4.74. Washington Mutual Inc. shares were trading at $43.48; today they opened at $6.26.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
 My colleagues over at the Bottleneck blog posted an interesting item today asking if rising gas prices will make downtown real estate look more attractive:
"We've been hearing this for awhile -- mostly from developers. Suburban residents will move into urban areas because they can't stand their commutes anymore. There's been much debate about whether this is true. But the Wall Street Journal reports that gas prices might be doing what traffic could not:
'Abandoning grueling freeway commutes and the ennui of San Fernando Valley suburbs, Mike Boseman recently found residential refuge in [Pasadena]. His apartment building straddles a light-rail line, which the 25-year-old insurance broker rides to and from work in Los Angeles...' "
The Associated Press has a similar story, reporting, "Real estate agents, transportation officials and industry surveys indicate that home buyers are placing more importance on cutting their gas bills and commute times than they have since the oil shocks of the 1970s."
More, from the A.P.: "On Wednesday, a survey of 900 Coldwell Banker agents showed a remarkable 96% said that rising gas prices were a concern to their clients, and 78% said higher fuel costs are increasing their desire for city living."
One more, from LosAngelesGasPrices: The average price of a gallon of regular unleaded in L.A. is $4.61 Wednesday, up from $4.60 Tuesday.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo: Los Angeles Times
California's housing slump continued to accelerate across the state in May, as the median price of homes sold fell a stunning 30% from year-earlier levels, with median prices falling by $2,700 per week, DataQuick Information Services reports today.
The median price paid for a California home in May was $339,000, a decline of $145,000 from the median price of $484,000 in May 2007. DataQuick estimates that roughly half of the decline is due to depreciation in home values, and the other half due to changes in the "mix" of homes selling, with cheaper, previously foreclosed houses increasingly dominating sales numbers.
DataQuick had earlier reported that Southern California home prices fell by 27% in the same period, but the statewide numbers are even weaker, as they include the hard-hit Central Valley of the state, where foreclosures are widespread.
Statewide sales of new and existing homes in May were 10.7% below year-ago levels, and 38.3% of the homes that sold in May were "foreclosure resales," DataQuick reported. A year ago that percentage stood at only 5.4%.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
The editorial page at Investor's Business Daily today joins with the Wall Street Journal in asking for a full investigation of the "sub-prime six" -- the six named movers and shakers, among them two Senate Democrats, who received special attention from Countrywide Financial because of their VIP status.
For the record, those named in media reports as "Friends of Angelo" -- Countrywide Chairman Angelo Mozilo -- are Democratic insider James Johnson, formerly an advisor to the Obama campaign; Democratic Sens. Chris Dodd of Connecticut and Kent Conrad of North Dakota (pictured); former Health and Human Services Secretary Donna Shalala; former U.N. Ambassador Richard Holbrooke; and former Secretary of Housing and Urban Development Alphonso Jackson. If you are keeping track, five of the six are Democrats.
IBD: "The Democrats' initial response has been to stall. They hope the
problem will disappear until after the election. Given the media's lack
of curiosity so far — a small handful of news organizations, including
our competitor, the Wall Street Journal, have pushed this story ahead —
it looks like the Democrats might get their wish.... These revelations suggest that, at the very least, the Democratic
Party is afflicted with a kind of corruption that taints all recent
decisions on the sub-prime crisis. They need to investigate it fully,
immediately and without prejudice — or risk having it blow up in their
faces."
Bloviation: Why the lack of media curiosity? My gut tells me the mainstream news media would have much more enthusiasm for the story if it had been broken by The New York Times and had begun with a sweetheart deal for a top campaign advisor to John McCain and had then spread to two Republican U.S. senators. That's just my two cents.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: Associated Press
Hat tip: Pseudo 100, via e-mail
 This blog doesn't generally cover the home-building industry that closely, because new home construction isn't a huge factor in big parts of the L.A. housing market. But economists consider home-building very important -- it contributes much more to GDP than the ongoing buying and selling of existing homes, news of which dominates our market.
For that reason, the accelerating slump in housing starts is a pretty big story. Floyd Norris at the New York Times calls the latest reading "horrid": "The picture is as ugly as it has ever been. But it may get worse .... To me, the wonder is that there are any housing starts at all. In significant parts of the country, it may be years before there is much demand for additional homes over the number already built."
Bad news, right? Not in the eyes of economist Dean Baker: "As noted before, the sharp downturn in starts is actually good news. There is a huge excess supply of housing at the moment, which just keeps expanding due to the flood of foreclosures. This inventory will most quickly be eroded if builders stop building new units. The sharper the downturn in construction, the quicker the inventory of homes on the market moves back to normal levels.
More from Baker's weekly analysis of the housing market: "In short, there is very little reason to expect any turnaround in the housing market any time soon. The continuing plunge in house prices will accelerate the pace of foreclosures in the second half of the year as the number of homeowners with negative equity soars and the extent to which these homeowners find themselves underwater increases. Homeowners may struggle to meet the mortgage on a home in which they are $10,000 underwater at the moment. They are less likely to make sacrifices to keep a home on which they are $100,000 underwater. Many more homeowners will find themselves in this situation by the end of the year."
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo: AFP
A lawsuit to watch, from Inman News: "A lawsuit filed in California Superior Court challenges real estate auction practices, charging that some auction companies engage in deceptive advertising and violate provisions of federal law related to real estate closing services."
More: "'Many modern real estate auctions are nothing more than a bait-and-switch scheme to lure hopeful buyers to submit offers that can later be accepted or rejected by the lenders/sellers, despite the general public's perception that once the auctioneer declares, 'Sold,' the property is in fact sold,' the lawsuit charges. ... Filed June 12 on behalf of three individuals who attended a real estate auction event in Southern California -- including one individual who is a RE/MAX real estate broker -- the lawsuit also charges that auction companies 'direct and require the use of their settlement service providers and shift the cost of sales, including commissions, from the lenders/sellers to the consumers' in auction event signing rooms."
The lawyer who filed the suit, Shawn M. Olson of Spainhour Law Group, told L.A. Land that one of the plaintiffs, Laura Torres, was the winning bidder on a Corona house, bidding $153,000 for a home listed with a minimum bid of $95,000. "So she signs all the contracts, opens escrow, gets an appraisal, gets inspections, and 29 days later, when she thinks escrow is going to close the following day, on the 30th day, Countrywide calls and says they need $50,000 more -- on a $153,000 home," Olson said.
The lawsuit names as defendants Countrywide Home Loans Inc., GMAC Mortgage LLC, Real Estate Disposition Corp. and DoveBid Inc., which partners with the brokerage company CataList Homes. Inman quotes CataList president Michael Davin saying, "I can't comment specifically on the case as I haven't read the documents. However, we will stand firm and defend our auction practices as the reserve auction method is an effective and fully legal sales process utilized for hundreds of years in the sale of many types of assets."
Inman further reports that GMAC had no immediate comment and that representatives for REDC and Countrywide could not immediately be reached for comment.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
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