Hathaway Duke

A lot of hay being made in the press today over the “positive” new home sales number with a headline that almost universally reads like the image above. But Barry Ritholtz over at the Big Picture, among others, illustrates once again that there is more to the story: First, we see the headline number. This month, September 2007 sales of new one-family houses were up 4.8%, at annual rate of 770,000 (SA)…[snip]…look at margin of error. The monthly gain of 4.8% was within the “estimated average relative standard errors” of ??10.3%. This means the data point was “statistically insignificant.” Second, we look at the year-over-year data, which in this case was 23.3% below the September 2006 estimate of 1,004,000…[snip]…The year over year number however, at 23.3% — ??8.0% — is greater than the margin of error, and therefore is statistically significant. Also mentioned by others and worth pointing out here - these new home sales figures do not account for cancellations after the initial contract is signed with a builder. Cancellation rates with major builders are humming along at a 25-70% clip, depending an whose numbers you are looking at. · Stocks Up After New Home Sales Rise [AP via WCCO] · No, New Home Sales DID NOT Rise [TheBigPicture] So what about the local picture? The Minneapolis Area Association of realtors reports that new home sales for the year are down 22%, so contrary to yesterday’s existing sales data, we are right in line with national averages. Ugly stuff indeed. Source: MAAR Housing Supply Outlook: October 2007 [PDF via]

One of our very favorite blogs on the planet is David Smith’s over at the Affordable Housing Institute, who unpacks some of the more complicated topics in real estate and housing finance with a unique and entertaining elegance. Case in point, his recent writings on subprime. The whole series is worth a read (and linked below,) but we’d like to highlight one particular point addressesing what to say when the delinquent payments mount, the phone rings, and it’s your servicer/lender wondering “what went wrong.” The first answer that occurs to many is “it was the [lender/broker/originators] fault,” and whether true or not, this may be a big mistake for troubled borrowers. Now, the media, politicians, and social justice orgs absolutely love the “duped borrower” story - they are in fact the central plotline to most of the current and proposed predatory lending legislation at the State and Federal level - and because these stories make for compelling drama, headlines, and congessional testimony (the stock and trade of the aforementioned) they are almost universally believed. The problem is, the servicer - the only party that has the power to provide relief - cares little about that particular brand of drama. Mr. Smith explains: “I was duped.” “They never showed me that schedule.” “They told me not to worry about it.” “They said I could refinance.” All these defenses are offered up. The thing is, they’re so easy to claim and so hard to prove that they usually fall on ears made deaf by overuse. The loan originator who’s accused of deceiving you is conveniently gone, and there’s no way to verify your story. Professionals learn to doubt melodrama: they presume you’re not the martyred saint you’re portraying. Stories that sound too good and can’t be disproved are suspect. Worse, 99 times out of 100, the written documentation is against you: “Isn’t that your signature?” Use this argument only if you can prove it. Otherwise you’re risking your personal credibility on a story that the lender will already have heard dozens if not hundreds of times. In other words, any reasonable workout plan with a servicer absolutely, positively, depends on their belief that you want to and will make good if given the chance. So don’t flush your credibility by telling them a un-provable story - even if it is true, they will assume the worst of you unless you can back-up the claim. Again, the whole series is a must read for anyone wanting to understand the issues, challenges and potential solutions to the gathering storm of delinquencies and foreclosures the real estate industry (and our economy) faces. AHI on Subprime/Lending: How a Lender Thinks [AHI] What’s a Delinquent Borrower to Do? [AHI] Subprime: Why Are You in Trouble? [AHI] Subprime: What’s the Best Way Forward? [AHI]

Jose Guzman, New London, Connecticut, a loan officer with a now defunct property management and loan company, has been charged with knowingly devising and executing a scheme and artifice to defraud, and to obtain money and property by means of false an…

Jeffrey Allen Herald, 49, Phoenix, Arizona, has been indicted on three counts related to providing unlicensed legal and mortgage loan services to victim clients. Herald was indicted on two counts of Fraudulent Schemes and Artifices, a class 2 felony, a…

More blood on the streets today for homesellers, as the NAR reports September existing home sales down 8% nationally: Sales of previously owned homes fell 8 percent in September to an annual rate of 5.04 million, the fewest since records began in 1999, the National Association of Realtors said in Washington. The decline was almost twice as steep as economists forecast, Of course, all real estate is local, as they say, so we spoke with the Minneapolis Area Association of Realtors director of research Jeff Allen (whose research and reports page is dynamite, by the way) to drill down a bit and get the local picture. Turns out, the local picture is even worse, for September at least. In the 13 county Twin Cities metro area, sales of previously owned/existing homes dropped by a whopping 28% - from 3,329 closed sales in September 2006 to 2,398 closed sales in September 2007. Mr. Allen does urge caution however: The sample size in our market is small enough that the month-to-month fluctuations can be sizable - which is why we use the year over year sales of previously owned homes, rather than month-to-month figures like the NAR. This metric (see graphic below, which can be found in its entirety here) shows year over year sales of previously owned homes down 12.8% - still a big drop, to be sure, but not so bleak as a 28% drop might suggest. Either way, we’ve got a bear of a sellers market to conted with, and despite all the chatter about a buyers market, these stats suggest they have not yet shown up for the party. Minneapolis Area Association of Realtors [mplsrealtor.com] Existing Home Sales Take Record Dive [Startribune]

One of the ongoing problems in cases of mortgage fraud is that the victims often don’t have the resources to hire legal representation, and have no idea where to turn for help. Add to that the fact that the authorities lack the manpower to investigate and prosecute every case of actual, bona fide fraud, and we have a situation where many, many mortgage fraud victims will never see any true relief, and an equal number of perpetrators will go unpunished. This is a fact we all will have to get used to, unfortunately. That said, there is some help to be had if you need it, and can’t afford an attorney - the Strib today publishes a great list of mortgage fraud resources, most of them free, available to those that may have been victims of mortgage fraud, or are facing forclosure. We’ve also reproduced the list in its entirety after the jump so that we’l have it once the URL is passed to history at the Star-Tribune.

Mickey Allen Weicksel, a former real estate investor who obtained about $4 million in kickbacks through a real estate scam centered in Lancaster, Pennsylvania, was sentenced to 14 years in prison, five years probation after his release, and ordered pay…

Michael and Ardith Parish, the couple’s homebuilding company, Parish Marketing and Development, as well as their son-in-law, Christopher Troup, were charged in U.S. District Court in Minneapolis, Minnesota. The criminal information charges the …

Local: · New Prague Mortgage Fraudsters Plead Guilty [Strib] · Massage Parlor Brothel Shut Down in SW Minneapolis [SWJournal] · North Minneapolis Benefits from RE Auction [Strib] · Which Projects Will Survive the Condo Shakeout [Strib] · How to Inherit/Pass Down a Cabin [Strib] · Creep: Mortgage Guy Allegedly Drugs, Fondles Teenager [PiPress] · Fake Lakes/Beaches Planned in Huge Blaine Development [PiPress] · FED: Twin Cities Economy to See Modest Growth [TCBJ] · Housing Crunch Hits TCF Bank [TCBJ] · Housing Crunch Hammers Local Lumber Company [MPR] Elsewhere & Otherwise · Dumpster Diving for Mortgage Files [WSJ] · Mortgage Insurers Melting Down [Interest Rate Roundup] · Fed: The Real Estate Boom, Fueled By Easy Credit [businessweek] · Luxury Goods Slump May be a Bad Sign for Economy [kirkreport] · Chapter 13 BK Spike: Foreclosures, Real Estate to Blame [Ritholtz] · Turns Out, Going Green Ain’t So Easy, Not Profitable [Businessweek] · Countrywide to Modify $16B in Loans, Take Massive Losses [Bloom.]

Vernon Cooks, Jr., a/k/a Jibreel Rashad, 40, was sentenced to 135 months in federal prison for operating a mortgage fraud scheme in the Dallas, Texas area.  In addition, at the sentencing hearing, U.S. District Judge Sam A. Lindsay ordered that Co…