The following table contains closed residential real estate transactions in Branchburg for October and November, 2007. However, unlike the inaccurate information promulgated by most agents and media sources, the “DOM” (Days on Market) column indicates the sum of days-on-market accrued through serial listings of the same home (it is a common agent “trick” to withdraw and re-list a home, in order to create the public impression of a “fresh” home that has seen fewer days on market). In addition, the “OLP” (Original List Price) column reflects the list price of each home at the time it was first offered for sale.

Sales statistics posted at Branchblog will always be cross-checked to provide the most accurate and unbiased housing market snapshot possible.

Please direct specific inquiries to Chip Hughes at (908) 334-2329 or chip.hughes@att.net. Better yet, leave a comment!

All information is deemed accurate, but not guaranteed, and is provided courtesy of Garden State Multiple Listing System:

AVERAGES: 153 Days-on-Market; SALE PRICE: 92% of original list price.   

I could be mistaken, but: 

1. The current Secretary of the Treasury is advancing a SIV/commercial paper bank bailout that sounds suspiciously similar to the kinds of things Enron did that put several of their execs in jail and deep-sixed the company. 

2. Goldman Sachs has announced that- unlike every other bank on the planet- they were, and are, in a short position on mortgages.  They expect no mortgage-based impairments.  However, they also hold Level 3 assets (assets which are so illiquid, they are marked-to-model, not marked-to market) of approximately 72 billion dollars. 

3. NAR has reduced its 2007 sales projections in all 11 months of 2007…while maintaining the market will return to health in 2008.  NAR is also pressing Congress to allow deadbeat homeowners to deed in lieu of foreclosure and face no adverse tax consequence for doing so. 

4. Scads of local Realtors have their homes on the market. 

5. The Chairman of the Federal Reserve told Congress that he thinks it’d be pretty cool if there were a GSE- a la Fannie Mae or Freddie Mac- to do nothing but package jumbo mortgages.  I guess Fannie and Freddie’s stellar recent performances have inspired the Chairman to expand these enterprises.  Oh…Fannie Mae lost over 1 billion dollars in its most recent quarter. 

6. Inflation is not growing…at least, by a standard of measurement that assumes people can eat plasma TVs. 

If I had more time, I could keep adding to this list, but these six items are enough to make me think that we’re entering the endtimes.  I mean honestly, what are these people thinking?  We Realtors have been upfront and vocal in screaming for all kinds of handouts, bailouts and do-overs.  Now, it appears that it may come true.  And, the cruelest irony of all is that the handouts may be the thing that finishes off the market for good. 

From Bloomberg, Thrusday, November 15:

Freddie Mac, the second-largest source of money for U.S. home loans, joined Fannie Mae in introducing or raising fees on mortgages the company buys from lenders because of the increased risks in slumping housing and mortgage markets.

Freddie Mac is primarily setting new fees for mortgages made to borrowers with credit scores below 680, whose loans exceed 70 percent of their property’s value. The new charges range from 0.75 percent to 2 percent depending on credit scores, according to a bulletin by the company. The changes take effect March 1.
…
Freddie Mac’s changes are “in response to continuing volatility and turmoil in the mortgage market, including the deteriorating performance of higher-risk mortgage products,” the McLean, Virginia-based company said in a letter on its Web site.

It also said mortgages from markets with falling prices must now have loan-to-value ratios at least five percentage points below normal requirements for mortgages with the same attributes.
…
Under Freddie Mac’s new fee system, a lender selling a mortgage to the company from a borrower with a credit score of 675 who made less than a 30 percent down payment for the purchase of a $300,000 home will forfeit $2,250 in charges. The lender, which would typically make less than $3,000 on the sale, could get paid more by raising the interest rate on the loan.

From the Wall Street Journal:

The Subprime FHA
By JOHN BERLAU
October 15, 2007; Page A23

…
FHA-backed loans are being touted for their “safety” — to consumers and the financial system. “If we can get people into the FHA rather than to some of the other kinds of loans they have, everybody will be better off,” argued Rep. Barney Frank (D., Mass.), chairman of the House Financial Services Committee, during a hearing this year.

Although differing on details, Bush administration officials agree with Mr. Frank on the basics. Secretary of Housing and Urban Development Alphonso Jackson, whose department is parent to the FHA, has described the loans the agency backs as a “safe alternative to . . . exotic subprime loans.”

Both Mr. Frank and President Bush support major increases in the limits on the value of loans the agency can make, which are contained in a bill that passed the House of Representatives last month. Only 72 Republicans, mostly members of the conservative Republican Study Committee, voted against the bill. A similar bill cleared the Senate Banking Committee 20-1.

But before the FHA’s loan spigots are opened up, a little due diligence by the political sector is in order. The FHA’s recent credit history shows it is far from the prudent institution it is said to be. By its own estimate, next year the agency expects to be in the red, paying out more for defaulted loans than borrowers pay to it in insurance premiums. “Because of adverse loan performance,” the FHA states in its budget submission for 2008, “total costs exceed receipts on a present value basis, and therefore would require appropriations . . . to continue operation.”

The agency poses more than just a threat to taxpayers. The collapse of whole segments of the housing market can be traced to FHA-subsidized mortgage products. Despite its decreasing market share, the FHA appears to have played a significant role in the current mortgage “meltdown” attributed to subprime loans.

For the past three years, delinquency rates on the oh-so-safe mortgages insured by the FHA have consistently been higher than even those of the dreaded subprime mortgages. In the last quarter of 2006, for instance, the delinquency rate for subprimes had increased to 13.33% in the National Delinquency Survey compiled by the Mortgage Bankers Association. But in the FHA category, the rate had risen to 13.46% — “a new record.”

Nationally, FHA-backed loans do have a lower foreclosure rate than subprimes do, but one that’s nearly twice as high as the rate for all mortgages. And in certain regions, FHA-insured loans account for a disproportionate share of mortgage woes.
…
FHA-insured loans have also been at the center of some of the worst excesses of the housing boom, including mortgage fraud, loans made without income verification, and property “flipping” with inflated appraisals. Last month, in a case brought by federal prosecutor Patrick Fitzgerald, a Rockford, Ill., real-estate agent pleaded guilty to conspiring to defraud the U.S. government through the use of phony pay stubs and credit letters to obtain FHA loans for home-buying clients.

Several similar schemes involving FHA-backed loans have been documented by congressional probes and newspapers such as the Baltimore Sun. GOP Sen. Susan Collins of Maine, who supervised a 2001 Senate subcommittee investigation of mortgage fraud, said bluntly that “the federal government has essentially subsidized much of this fraud.”

How could an agency with a reputation for being so conservative have made loans that turned out to be so problematic? Part of the answer rests in a foolish quest to compete with the private sector for “market share.” In both the Clinton and Bush administrations, the FHA’s response to private alternatives for low-income borrowers was to aggressively compete with them — by making the agency’s own lending standards even more “subprime” than those of the private sector.

Since its inception in 1934, the FHA has required a down payment — originally 20%, but gradually whittled down to 3% — for a home loan. The down payment requirement was to help ensure that borrowers were responsible, even if they didn’t have perfect credit histories.

But in 1997, home sellers and buyers started to get around this rule by donating money to foundations that provide down-payment assistance to buyers. Since the FHA does not count assistance from these foundations as a seller inducement — as many non-FHA lenders do — seller-funded charities can contribute virtually unlimited amounts to borrowers to cover down payments, closing costs and even FHA borrower insurance premiums. A recent paper by HUD researcher Austin Kelly notes that, since 2000, studies by HUD’s Office of Inspector General “have found that sales prices of homes using seller-funded nonprofits tend to reflect the assistance” provided by the charities.

In other words, the buyer’s assistance is frequently rolled into the home price, inflating the value of the home and leaving the FHA — and ultimately the taxpayer — holding the bag for a defaulted loan. And studies also indicate that the FHA will be picking up the tab at a higher level for these loans.
…
Despite these trends, HUD Secretary Jackson’s biggest concern has appeared to be not the FHA’s solvency, but the government agency’s loss of business to the private sector. “I am absolutely emphatic about winning back our share of the market,” he told the Washington Post in 2005.

Looking at the agency’s dismal performance over the past few years, we can predict that, if the FHA racks up more “wins,” taxpayers and low-income home buyers will likely be suffering the losses.

It is important to note that the vast majority of home mortgages, FHA-backed or otherwise, are not in danger of foreclosure. Overly burdensome regulation of any type of lender would be counterproductive. But those concerned with the fiscal health of the mortgage market and the U.S. Treasury should be emphatic in opposing the expansion of a government agency that added so much fuel to the current “meltdown.”

Perhaps the song “Jingle Bells” should be retitled “Jingle Mail” if this bill can get thru the Senate and is signed by Dubya.

As always, the people who pay will be honest, upstanding folks who pay their bills, mortgages and taxes.

Hard to believe the cost of this will only be $2,000,000,000. As always, the idea is: privatize gain, socialize loss:

The U.S. House of Representatives Thursday overwhelmingly approved legislation providing tax relief to homeowners facing a foreclosure.

Under the bill, which was approved by a vote of 386-27, any debt forgiven to homeowners unable to repay their mortgage would no longer be treated as taxable income.

“It simply makes good sense to do this,” said Rep. Richard Neal, a Massachusetts Democrat.

The legislation was passed in response to a subprime mortgage crisis that has reduced property values and left a growing number of homeowners unable to pay rising interest costs on their loans.

To cover the roughly $2 billion 10-year cost of the bill, the bill would change tax rules on the sale of vacation homes and rental property that were used as a principal residence.

The bill now heads to the Senate.

The following table contains closed residential real estate transactions in Branchburg for August, 2007. However, unlike the inaccurate information promulgated by most agents and media sources, the “DOM” (Days on Market) column indicates the sum of days-on-market accrued through serial listings of the same home (it is a common agent “trick” to withdraw and re-list a home, in order to create the public impression of a “fresh” home that has seen fewer days on market). In addition, the “OLP” (Original List Price) column reflects the list price of each home at the time it was first offered for sale.

Sales statistics posted at Branchblog will always be cross-checked to provide the most accurate and unbiased housing market snapshot possible.

Please direct specific inquiries to Chip Hughes at (908) 334-2329 or chip.hughes@att.net. Better yet, leave a comment!

All information is deemed accurate, but not guaranteed, and is provided courtesy of Garden State Multiple Listing System:

AVERAGES: 181 Days-on-Market; SALE PRICE: 91% of original list price.

Great Society Part II: Fed Tries to Save Itself From…Itself

Posted on Aug 24th, 2007, at Seeking Alpha:

David Roskoph submits: The scuttlebutt is that FHA (Federal Housing Administration) is being retooled to assume lots of the bad paper issued by those nasty sub-prime lenders. Now that the proverbial fan is mired with economic reality, the options are bleak. Tap dancing from the Feds let us know that this problem is obviously too big to be rescued by an airdrop of cheap money. The choice is foreclosing on hundreds of thousands of new home owners and preparing for the economic and social tsunami or saving the day with something like a “Great Society II”.

The scuttlebutt is that FHA (Federal Housing Administration) is being retooled to assume lots of the bad paper issued by those nasty sub-prime lenders. Now that the proverbial fan is mired with economic reality, the options are bleak. Tap dancing from the Feds let us know that this problem is obviously too big to be rescued by an airdrop of cheap money. The choice is foreclosing on hundreds of thousands of new home owners and preparing for the economic and social tsunami or saving the day with something like a “Great Society II”.Such an unprecedented number of foreclosures will not only disrupt the financial order but perhaps the social order too. In as much as all those new loans invited many of the “have-nots” to become part of the “haves” through home ownership. That is, after all, the definition of a sub prime mortgage. Just like Katrina’s anti-government backlash, so too will these forlorn foreclosures find the Government ultimately to blame. The last time we’ve seen this degree of (potential) wholesale displacements was the Great D and we were, by and large, much more appreciative of just how wonderful life was in these great states. That’s not quite the case today.

Cynicism is pervasive and far too many Americans are both on the Government dole and quite convinced that the government is morally obligated to underwrite their folly as well as their happiness. So you have to at least entertain the idea of “what if”.

LBJ sought mass compensation for the institutionalized imbalances through lots of well intended programs. A trillion was transferred from the “haves” to the “have-nots” and that redefined the concept of “opiates or the masses”. It felt good but left the systemic problems untouched (if not exacerbated), Great Society I. Considering the magnitude of this debacle, maybe it’s time for another dose of opiates. President Bush hasn’t much of a legacy so why not tack on “no home owner left behind” plan? After all, if you’re not quite up to a conforming loan, you’ve been preyed upon by those unscrupulous mortgage companies who virtually forced you get in over your head, you’ve suffered institutional oppression. You deserve a fix and this is America. A newly expanded FHA would consume a goodly portion of the bad loans to quell the public (and the markets), pay the defaults by fiat, and thus avert a catastrophe. It feels good, keeps the peace and forgets the binge ever happened, Great Society II.

Only, where do you think all that inflation came from in the 70’s?

The following table contains closed residential real estate transactions in Branchburg for July, 2007. However, unlike the inaccurate information promulgated by most agents and media sources, the “DOM” (Days on Market) column indicates the sum of days-on-market accrued through serial listings of the same home (it is a common agent “trick” to withdraw and re-list a home, in order to create the public impression of a “fresh” home that has seen fewer days on market). In addition, the “OLP” (Original List Price) column reflects the list price of each home at the time it was first offered for sale.Sales statistics posted at Branchblog will always be cross-checked to provide the most accurate and unbiased housing market snapshot possible.Please direct specific inquiries to Chip Hughes at (908) 334-2329 or chip.hughes@att.net. Better yet, leave a comment!All information is deemed accurate, but not guaranteed, and is provided courtesy of Garden State Multiple Listing System:

From The Wall Street Journal: 

Berkshire Chief Finds
His Popularity Grows
As More Loans Falter

By KAREN RICHARDSON
August 21, 2007; Page C1

The bond market has seized up, stocks are in turmoil, private-equity funds are sidelined and hedge-fund managers and lenders are hosting fire sales.

These are happy days for Warren Buffett.

“I can spend money faster than Imelda Marcos when things are right,” he says, referring to the former Philippines first lady and renowned shopper.

For the past three years, Mr. Buffett’s traditional bargain-hunting investment strategy has been partly stymied as debt-fueled private-equity funds and hedge funds drove asset prices out of his value-investing orbit.

The result: Today he’s sitting on a war chest of nearly $50 billion in cash.

Now, with the shakeout in the subprime-mortgage market forcing the end of easy money and the distressed sale of assets — such as Thornburg Mortgage Inc.’s sale yesterday of $20.5 billion of its top-rated mortgage-backed securities — many see Mr. Buffett, the 76-year-old chairman of the giant Berkshire Hathaway Inc. holding company, as one of the last buyers standing.

So what is Berkshire buying or looking to buy? Mr. Buffett hews to Berkshire’s policy of not discussing potential transactions. But it is safe to guess that sellers of all shapes and sizes — from beleaguered lenders hurt by the mortgage-backed and commercial-paper markets, to sponsors of private-equity deals that run the risk of falling through — are reaching out to him.

Some investors speculate Berkshire could be a buyer for parts of mortgage lender Countrywide Financial Corp., whose stock price has been hit hard by subprime worries. Countrywide’s assets, including its debt-servicing business and its portfolio of high-quality mortgages and mortgage-backed securities, could be attractive to Berkshire, these investors say.

It wouldn’t be the first time a financial firm asked Mr. Buffett for help. In 1991, he took over as chief executive of Salomon Brothers, then in the midst of a criminal probe for a scandal involving the Treasury market. Many credit Mr. Buffett today for shepherding Salomon back into the good graces of securities regulators and investors.

Seven years later, he came close to bailing out hedge-fund Long-Term Capital Management, which was run by some of his old Salomon crew, but later changed his mind, in part because he wanted the firm’s assets — its stocks, bonds and other securities — not its management company and its complex partnership structure.

Unlike LTCM, Countrywide runs some straightforward lending businesses, a strong brand name and high-quality mortgage assets that could complement Berkshire’s other securities investments. For example, Berkshire is a longtime shareholder in Wells Fargo & Co. and M&T Bank, also reputed to be conservative lenders with strong brand recognition and long operational histories.

In fact, Mr. Buffett has already been dipping his toe a little deeper into the market for mortgage-backed securities. In the second quarter, Berkshire reported that its insurance division doubled its investment in mortgage-backed securities rated double-A or higher, to $3.7 billion, from the first quarter.

As with other investments, Mr. Buffett declined to elaborate.

Investors are betting that he’s likely to swoop in and make some good calls. While the Dow Jones Industrials Average sank last week, Berkshire’s normally steady shares rallied. The Class A shares gained $2,200, or 1.9%, yesterday in 4 p.m. composite trading on the New York Stock Exchange to $120,700, up 8.2% since Aug. 10 and 9.7% higher in the year to date.

“This is Berkshire Hathaway’s market,” says Thomas Russo, partner at investment fund Gardner Russo & Gardner, where he manages about $3 billion. Mr. Gardner, also a longtime investor in Berkshire, says Mr. Buffett should be able to cherry-pick from a variety of cheap assets.

Imperiled private-equity deals, which rely on the debt markets for financing, could also be attractive to Berkshire. Texas utility TXU Corp., which is trying to persuade its shareholders to agree to its sale to Kohlberg Kravis Roberts & Co. and TPG, would complement Berkshire’s stable of companies, which includes the utility conglomerate MidAmerican Energy Holdings.

The trick would be getting a good price if the deal falls through, which might be difficult given TXU’s improved operating performance recently. Also, Berkshire doesn’t participate in auctions, so any deals would have to be privately negotiated with Mr. Buffett.

A spokeswoman for TXU declined to comment. A Countrywide spokesman wrote in an email that company policy prevents it from commenting on rumors of mergers and acquisitions.

Berkshire could also be taking advantage of cheaper stock prices in companies he already owns. For example, Berkshire bought shares of USG Corp., the wallboard maker, for as high as $46 in the past year and built up a little over a 17% stake. Yesterday, the shares closed at $37.96.

Aside from the nearly $47 billion in cash and cash equivalents on its balance sheet as of June 30, Berkshire also holds about $74 billion in stocks and about $27 billion in bonds, some of which Mr. Buffett has said he wouldn’t hesitate to redeploy to other investments if they looked like they would yield better returns.

Berkshire, which so far this year has generated about 32% of its revenue from insurance units including Geico and General Re, can also borrow cheaply since it carries a sterling triple-A credit rating.

Mr. Buffett doesn’t shy away from good, quick trading opportunities . After the Enron Corp. and WorldCom debacles in 2002, Berkshire bought the high-yield bonds of some 25 energy companies and some telecommunications firms, which had all been priced lower because of various scandals. By the end of that year, Berkshire had sextupled its “junk” bond investment to $8.3 billion.

At the end of 2003, Berkshire reported realized gains from the investments of about $1.1 billion, or 13.3%. Today, Berkshire still owns $2.9 billion in junk bonds, which Mr. Buffett says he’d sell if somebody brings him a deal that he can warm to.

There doesn’t appear to be a shortage of people who are courting him these days. “I’m definitely more popular than I was a few months ago,” he says — and then quips: “But I started from a low base.”

From the Wall Street Journal:

Wall Street, Bear Stearns Hit Again
By Investors Fleeing Mortgage Sector
By KATE KELLY, LIAM PLEVEN and JAMES R. HAGERTY

August 1, 2007; Page A1