Archive for November, 2007
November 28th, 2007
From the AP:
WASHINGTON — Third-quarter profits at federally insured banks and thrifts sank to a four-year low as reserves set aside to cover losses from bad mortgages soared to a 20-year high, data released Wednesday show.
The quarterly banking industry statistics, made public by the Federal Deposit Insurance Corp., highlighted a dramatic deterioration in third-quarter results as the slumping housing and mortgage markets dragged down banks’ results.
Profit dropped $9.4 billion, or 24.7 percent, to $28.7 billion, dragged down by soaring loan defaults, the FDIC said.
It was the worst bank and thrift performance since the first quarter of 2003. Provisions for loan losses totaled $16.6 billion, the largest amount since the second quarter of 1987.
The industry’s performance “was hurt by asset-quality problems and volatility in financial markets during the third quarter,” Sheila Bair, the FDIC’s chairman, said in a prepared statement, noting that delinquencies and loan losses were up in all loan categories — not just residential mortgage loans. Real estate construction loans are also having problems, she noted.
Numerous banks, including Wachovia Corp. and Bank of America Corp., have reported big declines in third-quarter profit. Wells Fargo, the fifth-largest U.S. bank, said late Tuesday it will recognize $1.4 billion in losses in the fourth quarter on home equity loans that aren’t being repaid as the real estate slump deepens.
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Our own AMCORE Bank was among the third-quarter casualties. AMCORE, which is headquartered on Rockford’s Seventh Street and is the largest publicly traded company based in Winnebago County, reported in October that its revenues dropped about 13 percent — from $62.3 million to $54.4 million — compared to third quarter 2006, and the company’s net income plummeted from $12.5 million last year to just $1.9 million this year, a fall of about 85 percent.
The company took a one-time loss of $5.6 million on the pending sale of longer-term, mortgage backed bonds and increased the amount of money it’s setting aside for loan losses from $4.2 million last year to $15.3 million.
November 27th, 2007
I don’t have anything new to report today so I was looking on the wire …. not encouraging.
This from AP out of Detroit.
DETROIT — Rising foreclosures will lead to billions of dollars in lost economic activity next year in the nation’s major metropolitan areas, but homeowners and financial institutions have the ability to work together to contain the effects, according to a report compiled for the U.S. Conference of Mayors.
The report was released Tuesday ahead of a meeting of mayors from across the country in Detroit, where they hope to create policy recommendations to help address the nation’s housing crisis.
Prepared by forecasting and consulting firm Global Insight, the report said weak residential investment, lower spending and income in the construction industry and curtailed consumer spending because of falling home values will combine to hold back the nation’s economic activity.
“The wave of foreclosures that has rippled across the U.S. has already battered some of our largest financial institutions, created ghost towns of once vibrant neighborhoods — and it’s not over yet,” the report said.
And this out of New York:
NEW YORK — U.S. home prices fell 4.5 percent in the third quarter from a year earlier, the sharpest drop since Standard & Poor’s began its nationwide housing index in 1987 and another sign that the housing slump is far from over, the research group said Tuesday.
The index also showed that prices fell 1.7 percent from the previous three-month period, the largest quarter-to-quarter decline in the index’s history.
The S&P/Case-Schiller quarterly index tracks prices of existing single-family homes across the nation compared with a year earlier.
The bumpy ride continues ….
November 26th, 2007
In 2006, we launched Getting Real, an occasional feature about high-priced, historic or unique homes up for sale. It runs on Mondays the weeks we don’t run an On The Rise feature on a construction project.
In two weeks we’re publishing an update on how the 2007 Getting Real residences have fared in a tough market.
The answer is not well. Of the 11 homes we featured, which ranged from a $150,000 house in Polo built in 1874 to a $1.275 million mansion in Belvidere that was finished in 2005, it appears only one has sold.
Brad Zimmerman, a Dickerson & Nieman Realtor, said he has a contract to sell a 1930s Greek Revival home designed by noted local architect Jesse Barloga. The sale should close in mid- to late December.
Five of the houses have been pulled off the market with owners planning to put them back up for sale in the spring. Of the five houses still for sale, only two have the same listing price. The Belvidere house above now has a sale price of $1.195 million, a Spring Creek Road house was just relisted for $799,000, down $96,000 from the original asking price, and a Harlem Boulevard home has a $250,000 asking price, down from $275,000.
Ken Walker of Whitehead Inc. Realtors, who is the agent for a 2,200-square-foot South Beloit home sitting on 31.6 acres selling for $749,900, said lenders have cut down on giving “jumbo” loans, or mortgages generally above $400,000.
“That’s really had an impact in the high-end market,” Walker said.
November 21st, 2007
Troy Redington, the former Webmaster at the Register Star, read my column about credit scores and the fact that a car we paid off three years early was still listed on my credit report as a delinquency six years later.
Troy had a tip that I’ll try. He said he sent a certified letter to the credit agency asking for documented proof of that delinquency. The credit agency will need to find proof and confirm it. If the credit agency can’t within 30 business days, Troy said the item has to be removed from the credit report.
Troy added Thanksgiving to Christmas is a perfect time to do it because people at the agency might not be working as hard with holiday preparations on their minds. Troy, who since has left us towork for FatWallet.com, said he was able to lift his score from a 680 to 750.
November 20th, 2007
I occasionally get calls from people upset with their home assessment. I will finally get a chance to see the process all the way through.
I’ve been a homeowner in Winnebago County for 12 years. Four years ago Rockford Township’s assessors tried to raise the fair market value of our house from $97,000 to $116,000 even though we hadn’t done any improvements to the property. We live in Snow’s Landing, the first subdivision platted in the Loves Park area. I went down to the township office, paid for reports of some comparable properties and challenged the assessments. I won.
Now since, we added a two-car garage to the property so when the township assessor last year wanted to increase the fair market value to $118,000 we didn’t complain.
This year, though, the assessor believes the house has a value of more than $130,000.
If you regularly read my stories, you know I love statistics. We keep a database of real estate transactions here at the RRS so it was easy to look up every home sale since 2005 in my neighborhood. It showed there have just been two home sales in my area above $118,000 and one of those was in 2006 when the housing market was at its hottest.
I thought that would do it, but the Winnebago County Board of Review didn’t agree. The board upheld the assessment.
Now I get to see the next step. I’m requesting a hearing where I can present additional evidence. I haven’t collected the data yet but the Rockford Area Association of Realtors tracks sale prices by grid. I remember in 2006 the grid I live in was one of a dozen or so that actually had average sale prices decline. With prices essentially flat overall and down among existing houses in 2007, it’s fair to assume if anything home values are declining again in my neighborhood. I’m going to channel my inner Ross Perot and will present a graph of average price in my area versus the percentage increases in my assessment.
If board of review members are out there, you have been warned.
November 14th, 2007
At least one area home builder is offering incentives to clear a backlog of unsold units.
Buckley Homes issued a news release Tuesday offering free moving assistance and up to six months of mortgage payments or free upgradses for anyone who buys a home at its Stonehaven development in Rockford or Hawthorn Ridge in Loves Park by the end of the year.
Both are condominium developments which feature show shoveling and leaf raking as part of the deal.
Prices in the two subdivisions range from the $160,000s to the low $300,000s.
The incentives show there is a silver lining to every black cloud. The slumping housing market has been perhaps the business story of the year, with houses sitting unsold for months. Of course, that means there is tremendous opportunity for people who have good credit scores and are in the market to buy.
November 13th, 2007
The former Essex Wire building on North Main Street in Rockford got an exterior cleanup thanks to a partnership between the EIGERlab, La Voz Latina and ADV Land and Landscape.
Saturday, La Voz Latina volunteers served as the labor to landscape the building according to ADV designs. It allowed La Voz volunteers to learn more about landscaping and gave the property a much-needed new look. To see a photo slide of the work go to http://www.dropshots.com/EIGERDome.
Long used for storage and adding little to the North Main corridor, Beloit, Wis.-based Hendricks Commercial Properties bought the massive World War II era building late this summer for just $600,000. The organization is the development arm of Beloit billionaire Ken Hendricks.
Hendricks still has not released his final plans for the building, but the news release by Rockford Area Ventures, which runs the EIGERlab, gave a hint. It said Hendricks is “renovating the building to serve as an Innovation Center.”
November 12th, 2007
Bob Campbell is the head of the Rockford Affordable Housing Coalition and works hard at helping people prepare for home ownership, save their home or improve their finances.
Bob’s hard work was highlighted in USA Today last Friday. He was in a story about companies supposedly trying to help when in fact they are are just skimming a few more dollars out of people who are in dire straits.
Friday’s story centered around a Machesney Park couple who were working with Florida-based Mortgage Assistant Solutions, which runs a company called Fresh Start by its customers. Fresh Start was supposed to negotiate a new fixed-rate loan with their lender. Instead, the company kept $700 of the $1,200 the couple gave it even though it either did nothing or was unable to secure a new loan as the house got perilously close to foreclosure.
Campbell’s group was able to get the couple a new fixed-rate loan in days.
It’s important to note that the story pointed out at least one person who credited Fresh Start with helping them and that Fresh Start officials deny they are scamming people in any way.
Still, Campbell said there have been enough complaints locally about Fresh Start that he turned a file of information over to Illinois Attorney General Lisa Madigan. In September, Madigan filed suit against Fresh Start for allegedly defrauding desperate Illinois homeowners who enrolled in Fresh Start.
The lesson again is that if you are a homeowner behind on payments or staring at foreclosure, the first phone call you should make is to the Rockford Affordable Housing Coalition, 815-962-2011.
November 9th, 2007
Everyone who has to pay a PMI — a small monthly fee required for the vast majority of homeowners who have less than 20 percent equity in their houses — probably wonders why they have to pay it in the first place.
Well, the companies that issue the insurance are real, do serve a purpose and, according to an Associated Press story, are starting to drown in red ink thanks to the record number of foreclosures being filed nationally.
Emily Fredrix wrote that the PMI industry leader, MGIC Investment Corp. of Milwaukee is saying it won’t turn a profit for at least a year. That’s a remarkable drop considering the company had $1.5 billion in revenue in 2006 and a profit of nearly $565 million, according to Hoovers.com.
Fredrix wrote that PMI Group Inc. saw its U.S. claims this quarter rise 49 percent to $92.6 million from the same quarter last year and Radian Group Inc. posted a loss of $703.9 million in the third quarter because of writedowns and losses through subprime mortgage joint venture.
It would be big trouble if the private mortgage insurers run out of money. The Mortgage Insurance Companies of America reported there was about $776 billion in private mortgage insurance in place as of September, or about 10 percent of the total loan market.
November 8th, 2007
Home construction has taken a beating because of the real estate slowdown. With fewer people buying, there isn’t reason to build new.
Estwing Manufacturing Co. of Rockford is the latest company to get caught in the economic ripples. The company is cutting 37 jobs because of the slowdown. Estwing makes things like hammers, axes, chisels and pry bars.
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