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Trouble on the Home Front
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Author Trouble on the Home Front
HenryTo
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PostPosted: Wed Jan 25, 2006 9:14 am    Post subject: Trouble on the Home Front Reply with quote

FYI:
--------------------------------------------------------------------------------
Trouble on the Home Front
By Nicholas Yulico
TheStreet.com Staff Reporter
1/25/2006 9:48 AM EST
URL: http://www.thestreet.com/markets/realestate/10263958.html

Homebuilders Centex (CTX:NYSE) and Ryland (RYL:NYSE) both reported strong quarterly earnings, but their new-order numbers, which will drive future growth, look dismal.

Calabasas, Calif.-based Ryland said its net income rose 49% to $162 million, or $3.32 per share, compared to $108.7 million, or $2.17 per share, a year earlier. The results handily beat the consensus $3.12 estimate on First Call.

But Ryland's unit orders fell 5% year-over-year for its latest quarter. The lackluster performance led A.G. Edwards analyst Greg Gieber to cut his rating on Ryland to sell. He also dropped his 2006 EPS estimate to $10.25 from $10.90. In a research note Wednesday morning, Gieber noted that the only area of strength in Ryland's orders came from Texas, where unit sales were up 27%. However, the average selling price in Texas is 36% below the company's average, with equally low gross margins, he said.

"Using our new 2006 EPS estimate, Ryland currently trades at a 7.3 times multiple. That is a 12% premium to the group's current average 2006 multiple of 6.5 times. We don't believe Ryland warrants any premium to the group," Gieber wrote.

Centex, which reported a 30% increase in its quarterly earnings, reported order growth, but it was weaker than analysts expected.

The Dallas-based builder said its new orders rose 4% to 8,128 homes. Sales were strongest in the Southwest, where orders spiked 28% year over year. On the West Coast, orders rose 10%. But orders fell 15% in the Southeast, 8% in the mid-Atlantic and 3% in the Midwest.

"This is not particularly positive to hit only 4%, though we don't know all the details behind it," says Gieber, who was expecting nearly 11% order growth.

Centex said net income rose to $329.3 million, or $2.49 a share, for its fiscal third quarter ending Dec. 31, up from $253.8 million, or $1.91 a share, a year earlier. Excluding discontinued items, Centex posted earnings of $332.7 million, or $2.52 a share. Analysts expected earnings of $2.48 a share, according to Thomson First Call.

Revenue rose 25% to $3.74 billion, shy of analysts forecast of $3.81 billion.

Centex's earnings growth came amid an 18% increase in home closings, which rose to 9,504 units from 8,047, and a 130-basis-point jump in operating margin.

The weak orders will likely be a focus on both companies' conference calls Wednesday morning. Homebuilder Meritage (MTH:NYSE) will also report earnings today at an unspecified time.

The existing home sales data comes out at 10 a.m. EST from the National Association of Realtors.

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rffrydr
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PostPosted: Thu Dec 27, 2007 9:48 am    Post subject: Reply with quote

Thy neighbor's keeper:

http://www.cnbc.com/id/22398678
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PostPosted: Mon Dec 24, 2007 8:59 pm    Post subject: Reply with quote

It's a crime:

http://www.nytimes.com/2007/12/25/us/25fraud.html?pagewanted=2&_r=1
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rffrydr
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PostPosted: Sun Dec 23, 2007 8:29 pm    Post subject: Reply with quote

But the prop tax remains:

http://biz.yahoo.com/ap/071223/taxed_out.html
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PostPosted: Sun Dec 23, 2007 10:39 am    Post subject: Reply with quote

The spillover effect:


http://www.sacbee.com/103/story/586093.html
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HenryTo
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PostPosted: Tue Dec 11, 2007 10:54 am    Post subject: Reply with quote

Freddie sees more losses over the next few years. Look for liquidity in the mortgage market to contract significantly over the next few months, as the additional fees and other "cautionary" measures start to kick in.
----------------------------------------------------------------------------------
Freddie Sees $5.5B-$12B More Losses
Tuesday December 11, 11:45 am ET
By Marcy Gordon, AP Business Writer
Freddie Mac Chief Says Business Will 'Get Tougher Before It Gets Better' As Defaults Rise

WASHINGTON (AP) -- The chief executive of Freddie Mac estimated Tuesday the mortgage finance company will lose an additional $5.5 billion to $7.5 billion over the next few years as the housing crisis worsens and home-loan defaults rise.

The government-sponsored company has already logged about $4.5 billion in projected losses during the first nine months of this year.

"I honestly think it's going to get tougher before it gets better," Richard Syron, the company's chairman and CEO, said in a discussion with financial analysts in New York.

Freddie's shares fell $1.80, or more than 5 percent, to $33.24 in morning trading.

While the mortgage crisis has brought a rising wave of foreclosure notices into public view, less evident have been "pictures of people standing with furniture on the lawn" after being forcibly evicted from their homes, Syron said. "As that begins to happen, and it will happen, I am afraid of the impact that this has."

Syron's remarks came a day after Freddie Mac and its larger government-sponsored rival Fannie Mae said they are changing their criteria for purchasing delinquent home loans they've guaranteed, in order to reduce the number they buy from investors.

On Tuesday, Freddie Mac announced it was imposing a 0.25 percent fee on all new home loans it buys or guarantees with settlement dates starting March 9, matching an earlier move by Fannie Mae.

The two companies, which together own or guarantee around two-fifths of U.S. home-mortgage debt, have cut their dividends and sold billions of dollars of special stock recently to buttress their finances after posting stunning third-quarter losses. They have been forced to set aside billions of extra dollars to account for bad home loans, eroding their profits at a time when home prices are falling and defaults are spiking on high-risk mortgages made to borrowers with weak credit histories.

Fannie's shares declined $1.85, or 5 percent, to $35.06.


Last edited by HenryTo on Sat Jan 12, 2008 11:14 am; edited 1 time in total
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HenryTo
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PostPosted: Mon Dec 10, 2007 8:29 pm    Post subject: Reply with quote

Fannie and Freddie adding fuel to the fire, as they quietly add a new 0.25% upfront fee on all new mortgages that it buys or guarantees:

http://online.wsj.com/article/SB119733436109620199.html?mod=yahoo_hs&ru=yahoo

Quote:
Fannie Mae, the giant government-sponsored mortgage investor, last week raised costs for many borrowers by quietly adding a 0.25% up-front charge on all new mortgages that it buys or guarantees. On a $400,000 mortgage, that would mean an extra $1,000 in fees, almost certain to be passed on to the consumer. Freddie Mac, the other big government-sponsored mortgage investor, is expected to impose a similar fee soon, according to a person familiar with the situation.

The new charge from Fannie Mae adds to the general gloom over the housing market. It comes as mortgage interest rates are heading up again after a recent dip -- as well as increases in mortgage-insurance costs, tougher requirements on down payments and other moves by lenders to ration credit. And last month, Fannie and Freddie imposed surcharges for mortgage borrowers with lower credit scores.

Loan applications have been so slow lately, says Lou Barnes, a mortgage banker in Boulder, Colo., that it feels like "our client base today is limited to people who don't read the newspaper or watch television."
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PostPosted: Mon Dec 10, 2007 2:05 pm    Post subject: San Frandisco Chronicle on the Mortgage Meltdown Reply with quote

"The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process."

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/09/IN5BTNJ2V.DTL

DK
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rffrydr
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PostPosted: Mon Dec 10, 2007 12:30 pm    Post subject: Reply with quote

Our good friend the Realtors are calling a (data) bottom...again:


http://www.marketwatch.com/news/story/pending-home-sales-index-rises/story.aspx?guid=%7BF169379B-F26A-45FA-BC8D-EE2125E78898%7D
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PostPosted: Fri Dec 07, 2007 3:36 pm    Post subject: Reply with quote

More whining from the "free market":

Quote:
``We do not think it is hyperbolic to say that the sanctity of such contracts, entered into in good faith, is at the cornerstone of capitalism,'' Deutsche Bank AG analysts Karen Weaver, Katie Reeves and Ying Shen, based in New York, said in a note to clients today. ``And if we are to in anyway devalue that sanctity, we face a far greater liquidity crunch than the one in which we currently find ourselves.''


http://www.bloomberg.com/apps/news?pid=20601087&sid=a.YBGDHmw9VQ&refer=home

Is this the same market which "incentivised" the orginating of Option ARMs over and above the qualifing fixed? Or is the market that is xxx to GS to "stand behind it's product." Facing the largest LIBOR spread in the post-war world they're talking about a "chilling effect"!


Another market chimes in:

http://www.reuters.com/article/pressRelease/idUS215246+06-Dec-2007+PRN20071206
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PostPosted: Thu Dec 06, 2007 11:33 pm    Post subject: Reply with quote

Global property indicies:

http://economist.com/daily/chartgallery/displaystory.cfm?story_id=10241827
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PostPosted: Wed Dec 05, 2007 10:07 am    Post subject: Reply with quote

FNE sees 12% max downside:
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PostPosted: Wed Dec 05, 2007 12:03 am    Post subject: Reply with quote

Motley Fool on the Lennar-Morgan Stanley joint venture that was just announced on Monday (the venture which involves Lennar taking a 60% write-down):

Lennar's Sensible Fire Sale

http://www.fool.com/investing/general/2007/12/04/lennars-sensible-fire-sale.aspx

Quote:
First, if the powers that be at Lennar (who are among the most capable in the industry) had even briefly thought that our nation's housing market was approaching that elusive "bottom," there's absolutely no way they'd have dumped properties in such volume at just $0.40 on the dollar.

Second, I hope we'll see other deals of this type emerge, perhaps including the likes of Centex (NYSE: CTX), D.R. Horton (NYSE: DHI), or Pulte (NYSE: PHM). They're a means of more rapidly paring the builders down to their fighting trim, which has to occur before any sort of a turnaround in the group can take place.
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PostPosted: Fri Nov 30, 2007 8:35 pm    Post subject: Reply with quote

Various predictions on home price declines in Southern California by noted economists, courtesy of the LA Times:

http://www.latimes.com/business/la-fi-howlowbox27nov27,1,5234984.story?coll=la-headlines-business
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PostPosted: Mon Nov 26, 2007 9:07 pm    Post subject: Reply with quote

ARM reset? Not in California (Redwood Trust a buy?):


http://www.msnbc.msn.com/id/21964048/
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PostPosted: Sun Nov 25, 2007 10:57 am    Post subject: Reply with quote

The best this has to say is that there is one spike behind us:

http://www.google.com/trends?q=foreclosure

Top four geographical zones in FL.
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