The hits keep coming: Thursday morning's mini-roundup*

*Updated

-- Another Southern California bank on the brink? Scott Reckard reports that federal regulators have ordered Vineyard National Bank of Corona to stop accepting so-called hot-money deposits that are considered too risky. The 16-branch bank has been thumped by the giant losses of its home builder and developer clients.

-- 2007 wasn't a very good year for mortgages, either: The delinquency rate of very young mortgages is rising, the WSJ reports. Home loans made in early 2007 are turning sour at a pace that surpasses the 2006 vintage.

-- First soaring mortgages, now climbing utility bills: Onerous energy prices are prompting a surge in the number of customers who can't pay their bills. SoCal Edison alone shut off service to about 165,000 between January and May, a 14% increase over the same 2007 period.

-- Not done yet: Dr. Housing Bubble lays out 10 reasons why California is nowhere near the housing bottom.

-- New listing: The cavernous hangar in Playa Vista where Howard Hughes' Spruce Goose was built is on the block. The site is valued at about $60 million. Check out the historic photos.

-- Annette Haddad

Email tips to annette.haddad@latimes.com

Comments

[sfvrealestate]

Annette, the Dr. Housing Bubble blog carries lots of advertising from foreclosure sites. I think there may be a bit of a conflict of interest there regarding the good doctor's unbiased opinion on the market downturn. Not saying the market's good, mind you...just saying.

[TakeFive]

“Onerous energy prices are prompting a surge in the number of customers who can't pay their bills.”

In a related item, sales of wood burning stoves are surging:

“Dave Burton typically closes his stove store in the summer months. This year, he never got the chance.

“Customers from as far away as Rhode Island kept calling Cape Cod Stove and Alternative Energy about pellet-burning stoves, and by the middle of July, the waiting list stretched to eight weeks.”

http://www.capecodonline.com/apps/pbcs.dll/article?AID=/20080805/BIZ/808050302/-1/NEWS

[TakeFive]

sfvrealestate wrote:

“Annette, the Dr. Housing Bubble blog carries lots of advertising from foreclosure sites. I think there may be a bit of a conflict of interest there regarding the good doctor's unbiased opinion…”

sfvrealestate – why do you buy advertising? To make sales, correct? Yet here is the very last line in Dr. Housing Bubble’s post:

“10 reasons are enough to keep you from jumping into a bubble that still has plenty of air to release.”

If there is a conflict, it would seem to be with his advertisers and not with is opinions.

[Michael Snyder]

In the first round of lawsuits related to the packaging of subprime loans into equally flawed securities AP reports a $7 billion settlement with Citigroup.

"ALBANY, N.Y. (AP) - New York Attorney General Andrew Cuomo says he's reached a settlement worth more than $7 billion with Citigroup that requires the company to buy back auction-rate securities from about 40,000 customers nationwide.

Cuomo had threatened to charge the company with fraudulent sales of auction-rate securities and with the destruction of key documents.

The settlement announced Thursday requires Citigroup to buy back securities from retail customers, charities and small to mid-sized businesses by Nov. 5.

Citigroup will also have to pay New York state a $50 million civil penalty, and a separate $50 million civil penalty to the North American Securities Administrators Association.

Citigroup did not immediately return a call for comment."

I'm actually pleased and a bit surprised to see the majority of the funds seized being returned to the investors who were duped in the largest Ponzi scheme in history. One would hope this action would open a floodgate of restoration, but I'm bettin' on the good old boys / Goldman Sachs network will petition for relief based on the same "logic" they used so effectively to engineer the Bear Stearns debacle. That is that somehow we "need" these people and forcing them to be responsible for their bad decisions and irresponsible behavior will somehow adversely effect those of us who are paying for this mess.

There are over $5trillion dollars spinning around in an unregulated financial derivatives market comprised of products so ethereal the folks who came up with them can't fully explain how they work. CDOs, SIVs, CDSs, the alphabet soup of acronyms deserves one of its' own, AFD Another F*#^ing Derivative. Although these products contribute nothing to the economy beyond the Broker's commissions, they have managed to double the cost of Municipal Debt in a little over a year. The Fed's 2% funds give away to "Investment Banks" has resulted in the biggest commodities run up in history. Once again dismissing the plight of the consumer, the Fed extended these privileges until January 30.

None of the Fed's extraordinary measures in the past year have "trickled down" to the consumer level. Mortgage rates keep rising even as home values continue to plummet. Equity based credit is now non existent and credit card defaults are on the rise. Even WalMart is feeling the pinch noting a pronounced pay period driven sales pattern.

Settlements like this one need to become commonplace. If these investment houses face bankruptcy then the top CEOs and CFOs who engineered this mess should be held personally liable. Since the $15 thousand in goods we are allowed to retain in a BK won't cover their weekly expenses this might prove an incentive for common sense.

[Bubblewatcher]

The Dr. Housing Bubble article should be required reading for anyone who visits this blog on a regular basis. It's brilliant, and thoroughly researched. Any realtor would naturally want to keep it under wraps -- the last thing any real estate agent in this environment wants is for the unvarnished truth to get out there.

[bobarty]

sfvrealestate. Typical RE worker. Why don't you try disproving his ten points instead of changing the subject? So what if he has foreclosure ads? The SF Chronicle has Obama ads, is that a conflict of interest? Yahoo will have a story on Detroit's problems on it's front page and have a Toyota ad, is that a conflict? The Huffington Post (which I hate) has liberal ads everywhere, does that make the columnists on there less credible?

Or are you just mad you can't get an elderly lady on a fixed income to get a 80/20 stated income loan anymore?

[Arti]

Finally Dr Housing Bubble gets some love on this blog. His blog was one of the very first on this topic and he posts at length and often. A pretty entertaining blog too, I recommend it if you like reading about this issue.

[Ace]

On Dr. Housing Bubble...

Since when is linking to an opinion piece by an anonymous bubble blogger considered journalism? I think the LA Times (even it's blogs) should have higher standards than that.

Leave the opinions to the comment section.

[Laker]

"....2007 wasn't a very good year for mortgages, either: The delinquency rate of very young mortgages is rising, the WSJ reports. Home loans made in early 2007 are turning sour at a pace that surpasses the 2006 vintage...."

2007 was the final days of many of the flippers getting out, and the last major mortgage fraud cashouts. There are tons of straw buyers purchases. It is amazing that most of 2007 vintage of mortgages is defaulting after the first mortgage bill. There are sellers that could not sell their houses but were "smart" enough to "sell" them to buyers that never existed.
This is exactly what happened to my friend that was renting a place in van nuys. To remind you, he was renting and suddenly started to receive mail addressed to some new name that he never seen. We later discovered that this was after a sale of his place to this new buyer. Then his landlord told him that he will need to leave the house in 3 months, but offered my friend to stay the last two month for free....
Back then (January 08), i told my pal that this smells bad...and i estimated a soon foreclosure. Yep, NOD appeared in Feb 08, the bank took it back last month...
This house was sold around 2002 for $230,000
Then sold for $400,000 two year later,
then "sold" for $630,000 in late 2007....
The bank probably realized the fraud as they got it back at NTS auction for.....$300,000.
HALF....
I'm sure there are tons of these cases, so we now get defaults and foreclosures from 2007 vintages, where according to history, it takes 3-5 years to usually show up...

[Rob Dawg]

I think there may be a bit of a conflict of interest there regarding the good doctor's unbiased opinion on the market downturn.

A used house salesperson cautioning against blog bias? The same one who blogger her happy talk last month that interest rates were unlikely to rise?

[It All Happens on the Margin]

SFVRE:

uhh - if there's a foreclosure ad on the Dr. Housing Bubble, that would imply the ads are targeting buyers of distressed properties.

Dr. HB clearly advises not to do ANYTHING - just to wait on the sidelines.

That actually strengthens his arguments as he is going against the grain of his advertisers, no?

[E]

LOL SFV.

HousingPanic used to have subprime toxic loan ads on their site too.

Do you think anybody was dumb enough to shop for one of those loans off the site?

It sure was funny seeing the REIC waste advertising dollars on bubble blogs however.

[BJHat]

I hate to burst Doc. Bubble's bubble because there most of his points are valid and informative, but his reason #5 is invalid. The last time the Fed and the Treasury Department raised rates in a stagflation environment was The Great Depression and it exacerbated the problem instead of solving the problem.

The dollar has recovered recently against other currencies and many experts would argue that other currencies are artificially inflated. European banks are in the process of reducing interest rates which will increase the value of the US dollar. Personally I like what Paulson and Bernake have been doing recently even though the tax burden will be higher the greater good will be served. If Fannie and Freddie, and Bear, and Indy, etc. are allowed to collapse there could be a massive run on our financial system which we would never recover from.

It's easy to criticize the Gov Doc, but realisticly what they are doing is necessary at this point.

[sheila]

As for the energy price disasters, I hope people will push hard to get their cities and counties (in CA) to FUND THE AB 811 loan programs for all of us.

They are allowed to now issue bonds and loan us money for larger efficiency improvements and SOLAR PANELS! and use the property tax system for repayment, which means the loan attaches to the property - no risk to govt lender, tax writeoff for borrower...

we can't wait any longer for Big Energy monopolies to force us from our homes and hijack us with new, centralized so-called "renewable" power plants, so we need these loan programs funded... Everyone wins.

second thing on energy, we need FEED IN TARIFFS payable to those of us who produce more power than we use - we deserve to be paid well, but currently are forced to give our excess power to utilities for FREE???? if you call your state reps (assemblyman and senator), you can demand the following changes to AB 1920, pending now:

1. do not cap our system sizes - if we want to oversize, that FITS THE PURPOSE OF A RENEWABLE ENERGY PROGRAM, so stop trying to stifle us!

2. use Germany, Spain, Japan or the other 35 nations already succeeding fantastically as models for the rate and permitting processes. 60-75 cents/watt is enough to level the playing field for small producers like us...

We have a very narrow window of opportunity for energy independence here. we just need a few more pieces to fit into the puzzle and we can all do the right thing. please support!

[Michael Snyder]

shelia,
I just did an energy audit for a client in the SFV who is using 4,000KW every month! ( as much as a small market) To zero out his power bill he will require a 36KW solar system. That's over 2,000 sq. ft. of panels! To put this in prospective, the typical 2,000 sq. ft. home without a pool will run on 4.8KW and the same home with a pool will take a 6 KW system.

My point in this comparison is the existing cap on the mandated rebate program of 6KW. While this SFV home is exceptional, (4,000 sq. ft. guest house pool, etc) many larger homes will require up to 12KW to manage their requirements. The way it is now the Utilities are required to compensate you "in kind" for the power you produce. In simple terms, when you're making more power than you're using your meter runs backward. Utilities will not compensate you in cash for the power you generate in excess of what you produce. While this may seem illogical to some, there are very real engineering concerns that support this decision.

On site solar is an ideal support for our over loaded power distribution system. Solar is operating at peak efficiency during peak usage times and they re-distribute locally saving the main grid from the additional load. If Congress can pour billions into their pet projects like ethanol & bridges to nowhere, they should be able to lift the cap on wattage for homeowners who want to power their homes with solar. Like it or not, it's the "south of the boulevard" crowd that'll pay the premium prices necessary to launch this technology. Remember the first color televisions? (then you are old!) At the time of their release they cost as much as a luxury car. Without "rich folks" to buy them, color tv never would have made it into mass production.

Lifting the cap on wattage for rebate proposes is smart, but the systems need to be sized to the dwelling they're supporting. The engineering ramifications surrounding over sized systems feeding into the low side of the grid will hake you want to use your head for a hammer.

[sheila]

Michael, thanks for your thoughts on this issue. I spoke at great length with an engineer whose only job is "grid load balancing," recently. He works for the utilities, and has no skin in the game, other than making sure things are planned SMARTLY.

I have heard your point before, so I directly asked, and he told me that any "engineering" based objections to having properties feed significant excess to the grid were completely false, so i tend to agree with his take. He said the grid can already handle any amount of power coming from any amount of rooftops that we could feed in right now. the balancing isn't "simple," but people like him, not people like me, will be doing that job!

the only reason to cap system sizes is to prevent us from competing with giant, wasteful "renewable" projects owned by utilities. they want to OWN massive power plants (renewable or otherwise), and OWN a bunch of new transmission, especially since they are switching to nodal pricing in November, which will hijack ratepayers even more.

they are making excuses, and we need to expose that. a recent City Atty report on Sempra showed actual supply and pricing manipulations for natural gas, a massive buildout of "peaker" plants even while CA was mandated to reduce fossil fuels, as well as intentional roadblocks to SDG & E customers wishing to install rooftop PV. They are not alone - Big Energy Monopolists run this country, and they run this state, and we have a very narrow window of opportunity to get partial independence.

it was, in fact, the Big Energy lobby which actually stripped the feed-in-tariffs and the removal of system size caps from the initial version of AB 1920, and it was for monopolistic, not engineering reasons. they are switching to "nodal" pricing in November, so they want to own all their generation and transmission and are incredibly threatened by any independent producers...

I am not really just talking about lifting the cap for rebate purposes, although i agree with that. i am talking about lifting the cap and instituting FAIR feed in tariff rates (based on performance) for all of us, so we can actually get PAID for producing the exact commodity that the utilities desperately need - CLEAN energy. they have no infrastructure expenses (although i encourage smart grid upgrades), there is no wilderness killoff, and they can hit their RPS quickly and affordably. a win for all, one would think, but not if one partygoer wants to take the entire pinata and go home.

Many of us could produce far more power than we use, so why shouldn't we be allowed to participate in the free market? a FIT just consolidates the billions of advantages given to Big Energy into a simple penny rate multiple of retail pricing.

a feed in tariff, like the ones working spectacularly well overseas (Germany will install nearly 2 GW of rooftop PV this year alone!! even though it's "solar resource" is lower than the entire US and it only has 80 million people) will allow us to get rewarded for doing the right thing, will encourage us to conserve, will save our open spaces, will prevent a total utility hijacking in the renewable era, and will make our power supply much more reliable (this, too, from the grid-load engineer).

from what i understand, and i have done years of research on this, there is NO downside to my suggested amendments to AB 1920, so i hope you, as an industry professional, will pressure your reps to make these changes and pass this bill as amended...

[Michael Snyder]

shelia,
I am but a humble C-10 and actually glad to hear about this engineer's opinion. Personally I take pride in doing a clean bit of work so I don't have an aesthetic objection to solar. The panels are light weight so there's no reason not to build out to your maximum potential with allowances for FD mandated clearances. If these systems are in sunlight they're making volts. We engineer DC strings carrying up to 700 volts so the FD has required a four foot setback from the exterior wall in case they have to cut into the roof. (hit that with an ax and you will be off the roof)
At about eight dollars a watt (installed) it would sure be easier for me to cost justify these systems if the utilities would offer cash reimbursement for over production. With the run up in commodities pricing the equipment manufacturers seem to be holding their own on the price line. I don't know how long this will last, but a significant increase in production always brings the cost per piece down. So far that's keeping up with the increase in raw material prices.

You're right about the good old boys network that's been running this state & country into the ground for a generation. I haven't read the legislation you're supporting, but in keeping with anything a bunch of lawyers get a hold of it's probably convoluted and guaranteed to produce a minimal impact on the entrenched utilities. Given the propensity for outsourcing in corporate America I'm surprised they're not all over home generated power. Or do you think it's because they can't play the dollar against the rupee to pay the bill?

[shockg]

The Dr. Housing Bubble article should be required reading for anyone who visits this blog on a regular basis. It's brilliant, and thoroughly researched. Any realtor would naturally want to keep it under wraps -- the last thing any real estate agent in this environment wants is for the unvarnished truth to get out there.

lol, yeah like your going to get a balanced unbiased opinion from a bubble blog. Look at who creates bubble blogs and why. Are they created for the overall good of mankind or to push the agenda of the operator and all his decipels?