You would kinda expect them to say that, though.

California foreclosures surge 327%
 

Peter Viles is reporting California foreclosure "surge": Up 327% from '07 levels.
 

The number of California homes lost to foreclosure in the first quarter surged 327% from year-ago levels -- reaching an average of more than 500 foreclosures per day -- DataQuick said in a report, warning that the widening foreclosure problem could "spread beyond the current categories of dicey mortgages, and into mainstream home loans."

From DataQuick's report on California foreclosures in the first three months of 2008: "Trustees Deeds recorded, or the actual loss of a home to foreclosure, totaled 47,171 during the first quarter. ... Last quarter's total rose 48.9 percent from 31,676 in the previous quarter, and jumped 327.6 percent from 11,032 in first quarter 2007." That translates into 517 foreclosures every day in the first quarter of 2008.

More: "Homeowners received 113,676 default notices in the first quarter, up 143 percent from a year ago, La Jolla, California- based DataQuick said today in a statement. The level was the highest since at least 1992, when DataQuick's statistics begin."

Despite well publicized federal efforts to reach out to homeowners in default, the odds that they will ultimately lose their homes appear to be increasing. DataQuick reports that, of the homeowners in default, "an estimated 32 percent emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying off what they owe. A year ago it was about 52 percent.

Banks are so capital impaired they are not able to take writedowns until they raise still more capital. More asset sales are coming. In the meantime, because so many problem mortgages are securitized in pools, banks cannot act even if they wanted to.

As the recession deepens, a downward spiral of foreclosures, REOs, and capital raising efforts is going to accelerate. We are nowhere near a bottom. Many banks and lending institutions are going to fail.

The Housing Bust and Lending: The Worst Is Yet to Come   (May 14, 2008)

"It's worth recalling how few people buy houses for cash. The entire edifice of home ownership rests on debt--buyers being able to borrow large amounts of money for a reasonable rate of interest."

"The entire housing bubble was essentially a debt bubble, driven by lending standards which sank to near-zero (anyone with a pulse willing to lie was suddenly qualified to borrow hundreds of thousands of dollars), non-U.S. buyers snapping up trillions in mortgage-backed securities (MBS) and derivatives, and lax lending regulations enabling banks to lower their reserves to 1% and spin the mortgages off their balance sheets."

"As the reinforcing fires of falling values, tighter standards and fear spreads, the risk of lenders failing is rising fast. If we think through the consequences of the debt bust--fewer fools (oops I mean investors) willing to buy depreciating mortgage-backed paper, fewer buyers willing to gamble that "the bottom is in," fewer buyers with actual down payments, i.e. qualified buyers, fewer speculators rushing to maximize their leverage, and less money to lend since lenders might actually have to keep some mortgages on their books--what does that mean for lenders who are reporting massive losses and impaired capital?"

"Put together sinking equity, rising defaults, tighter lending, risk-averse investors, a shrinking pool of qualified/willing buyers and sinking lenders, and the only conclusion which can be drawn is: the worst is yet to come.

"http://www.oftwominds.com/b...

Since late 2006, 259 major US lending operators have "Imploded"

http://ml-implode.com/index...

The Impending Mortgage Crisis

If you read the papers and watch the news, you may believe that we are in and have been in a subprime mortgage crisis for the last year or so. That is true. Many pundits are also saying that the subprime crisis is nearing its end. That is also true, to a point. Subprime mortgage troubles will not inflict that much more damage on the broader economy. However, prime and Alt-A mortgages with toxic features will cause troubles that will make the current troubles look like a walk in the park. Furthermore, broad-based declines in housing prices will start to wreak havoc on housing markets across the country.

The problem with the housing market bulls is that they are thinking within the framework of past housing downturns. The current downturn is unlike any other since the Great Depression, and no other downturn has started with houses so overpriced relative to rents. Few downturns started with such reasonable interest rates, and no other downturn saw double-digit house price declines across the country. This downturn is different, and it is going to lead homeowners (or homedebtors, as the Irvine Housing Blog calls those who have little equity) to change their behavior in ways that only the pessimists, such as myself, anticipate.

Another factor weighing on prices is the increase in foreclosures. Banks that own foreclosed houses are motivated sellers, and they will cut the prices so that they can sell their inventory. Increasing foreclosures will increase supply and decrease prices of transactions. Why pay $200k for a house when your neighbor got his out of foreclosure for $140k? Foreclosures are actually understated because banks often don’t have the manpower necessary to foreclose and sell delinquent properties.

The foreclosure problem will soon get much worse. Considering that it often takes over half a year (and can take much longer) between when a homedebtor falls behind on a mortgage and when the house is repossessed, the current wave of foreclosures began before house prices had fallen significantly. With prices now down 20% in many areas and 30% or more in some areas, the rate of foreclosures will increase drastically over the next year. Those that need to sell and who have little equity will be unable to sell for more than they owe. Short sales are difficult, so foreclosure will be the last resort for many who need to move.

Even though asking prices for houses have fallen dramatically already, they have not fallen nearly enough: witness the low volume of house sales relative to prior years.

http://seekingalpha.com/art...

The Coming Crisis

The coming crisis will be caused by option ARM recasts, falling prices, and banks’ increasing reluctance to lend. The crisis will manifest itself in people simply walking away from houses where their mortgage is worth more than the house. Considering how many people have used home equity loans to remove equity, how many have had negative amortization in their loans, and considering how small down payments became over the last few years, very few homeowners will be left with equity in their houses. Economy.com currently estimates that nine million households have negative equity. That figure could easily double or triple as house prices fall by another 20% to 30%.

The assumption on the part of mortgage lenders, regulators, and housing market optimists is that as long as people can afford to pay their mortgages, they will. But homedebtors faced with 20% to 30% negative equity will be much better off going through foreclosure than they will paying off their debts. Helping them is the fact that in a number of states, purchase money mortgages are non-recourse debt, meaning that banks cannot sue to recover the money they lose. The sheer number of foreclosures will mean that banks will not have the manpower to go after domedebtors even when they want to do so.

The rising tide of foreclosures caused by people walking away from houses in which they have negative equity will act as part of a positive-feedback loop to increase the rate of price declines. The housing market is not getting better anytime soon and it will soon get much, much worse.

http://seekingalpha.com/art...

cut paste, cut paste, cut paste, cut paste,

robot.

These are the same folks who made the very same pronouncement about a year ago, and you can see how accurate that one turned out.  If you want to do me a favor, ask them who they like in the Preakness tomorrow...I'll bet on whichever horse they DON'T pick.

 Fed's Direct Loans to Banks Climb to Record Level

May 15 (Bloomberg) -- The Federal Reserve's direct loans of cash to commercial banks climbed to the highest level on record in the past week as money-losing lenders increasingly turn to the central bank for funds.

Funds provided through the so-called discount window for banks rose by $2.8 billion to a daily average of $14.4 billion in the week to May 14, the central bank said today in Washington. Separately, the Fed's loans to Wall Street bond dealers rose by $75 million to $16.6 billion.

http://www.bloomberg.com/ap...

 U.S. Economy: Confidence Slumps, Single-Family Home Starts Fall

May 16 (Bloomberg) -- U.S. consumer confidence was the weakest this month since Jimmy Carter was president, and single- family home construction fell to a 17-year low in April.

The Reuters/University of Michigan preliminary index of consumer sentiment dropped to 59.5, compared with an average reading of 85.6 in 2007. Builders broke ground on 692,000 single-family homes at an annual rate, the Commerce Department said today in Washington. Total housing starts unexpectedly rose because of an increase in condominium construction.

The figures show that consumers see more pain ahead, even as Wall Street executives proclaim that the worst of the credit crisis is over. The rout in housing is depressing home values, a threat to the consumer spending that accounts for more than two- thirds of gross domestic product.

``We are in the neighborhood of zero'' growth, Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc. in New York, said in a Bloomberg Television interview. Consumer sentiment is also being hurt by the increase in energy costs, which ``will weigh on consumer spending,'' he said

Former Federal Reserve Chairman Alan Greenspan, speaking at an investment conference in Asia this week, said that U.S. home prices won't bottom until 2009 when the excess supply of homes is eliminated.

Spam, spam spam, spam.  One would think we are not capable of reading articles on current events without Maggies assistance.  Thank you maggie for your valuble survice to the illeterutes on this blog.

Adjusted for inflation and declining wages, there is no bottom in sight for housing.

Inflation is running rampant, which equals a lower real wage for the average american.

As far as wages go, they have been declining for almost 10 years now. 2000=$61,000 ,2008=$60,500

Housing is now also in decline, even if people aren't bright enough to understand the massacre that inflation is doing to their asset.

Add these up and the declines are mind boggling.

Median Family Household Wages - 2000-2008 -- $61,000 now $60,500 = negative

House Prices - 2000-2008 -- 224k-114k = doubled

Inflation = around 10%

=Consumer is screwed, there is no way around it, we must have huge inflation to fix the dislocation.