Archive for August, 2009
Report: 10,000 stores could close by year-end
As many as 10,000 stores are expected to close by the end of this year, according to a retail report released Tuesday. Retail distress advisers at Grant Thornton LLP’s Corporate Advisory and Restructuring Services division in New York focused a report.
Retailers faced their biggest declines at the end of last year, Grant Thornton CARS national managing principal Marti Kopacz said in the release. More than halfway through 2009, consumers still aren’t in the mood to open up their wallets.
“Falling sales hit all regions of the country and nearly all retail sectors, challenging stores and pushing many to the brink of failure,” Kopacz said. “Either retailers are contemplating bankruptcy, have already declared it or are announcing significant reductions.”
California loses 123,400 manufacturing jobs
California loses 123,400 manufacturing jobs
Every state but Alaska lost manufacturing jobs during the past 12 months, according to a Business First of Buffalo analysis of new federal data.
Ohio experienced the worst drop, losing 127,000 manufacturing jobs in a year. California and Michigan also had declines in excess of 100,000 jobs.
The overall national loss was 1.52 million manufacturing jobs — from 13.44 million in July 2008 to 11.92 million in July 2009.
Wells Fargo Modifies Nearly a Quarter-Million Mortgages
Wells Fargo says that through the first seven months of this year, it modified more than 240,000 mortgage loans, including 20,219 trial modification starts under the federal Home Affordable Modification Program (HAMP)
Wells Fargo Home Mortgage currently services one of every six mortgage loans in the nation
Small-business bankruptcies jump 81 percent in June
Small-business bankruptcies jump 81 percent in June
• California is hardest hit state
• Sacramento one of hardest hit metro areas
Commercial bankruptcies among the nation’s more than 25 million small businesses increased by nearly 81 percent in June 2009 from June 2008, according to Equifax Inc. (NYSE: EFX), which analyzed its small business database for the study.
There were 10,339 bankruptcy filings in June 2009 throughout the U.S., up from 5,712 a year ago, according to the data.
California is the most negatively affected state with 10 MSA’s (metropolitan statistical areas) among the 15 areas with the most commercial bankruptcy filings during June.
Los Angeles, Riverside/San Bernardino and Sacramento metropolitan areas led the nation in small-business bankruptcy filings.
“The data shows that the economic pain is continuing for small businesses across the country,” says Reza Barazesh, head of North American research for Equifax’s Commercial Information Solutions division. “While it may not be quite as intense in some areas as what we saw earlier this year, we’re still seeing hefty increases in the number of bankruptcies in a lot of major metro areas”.
New-home starts drop sharply in California
• Ending of state tax credit is blamed
• ‘Activity stopped as quickly as it started’
California homebuilders pulled back on new-home production in July as homebuyers retreated from housing markets around the state following the discontinuation of the successful homebuyer tax credit early in the month, the California Building Industry Association says.
“Our homebuilders reported a significant drop in traffic last month, largely due to the state closing the window on the homebuyer tax credit,” says Robert Rivinius, CBIA’s president and CEO.
The Franchise Tax Board stopped taking applications for the $10,000 new-home credit at the beginning of July because the amount allocated for the program had run out.
“Activity stopped as quickly as it started, which is bad news for housing and the broader economy,” says Mr. Rivinius.
According to statistics compiled by the Construction Industry Research Board, homebuilders pulled permits for 3,011 total housing units in July, down 14 percent from June. Permits for single-family homes totaled 2,045, down 29 percent from June when builders pulled permits for 2,864 units, the highest monthly tally since July of last year.
CIRB also announced that it is revising its forecast downward from 40,000 total units to just 39,500 total units in 2009, which would be by far the lowest total on record.
Home prices rise for second month in a row, up 1.4%
( The prices of single-family homes in 20 major cities rose a not-seasonally adjusted 1.4% in June, the second increase in a row after falling every month for three years, according to the Case-Shiller home-price index released Tuesday by Standard & Poor’s.
Prices rose in 18 of the 20 cities in June. Only Detroit and Las Vegas saw prices falling in June from May. In the past year, prices are down in all 20 cities.
Prices rose 0.5% in May from April.
After seasonal adjustments, prices rose 0.8% in June and were flat in May. (MarketWatch)
Obama to reappoint Fed Chairman Bernanke
President Barack Obama plans to announce the reappointment of Federal Reserve Chairman Ben Bernanke on Tuesday, reports said late Monday. The annoucement of a second term for Bernanke will be made from Martha’s Vineyard, Mass., The Wall Street Journal reported, citing White House Chief of Staff Rahm Emanuel. Obama is expected to praise the Fed chairman for his “bold action” in dealing with the financial crisis, according to Reuters. Bernanke’s four-year term expires in January, and his reappointment will require Senate confirmation. (MarketWatch)
Silicon Valley real estate market: The bidding war is back
The affordable end of Silicon Valley’s housing market has taken off, with homes often attracting dozens of bids in a repeat of the overheated days of the dot-com boom and the housing bubble.
But despite prices that are in some cases half of what they were at the peak of the market, first-time buyers are being shut out, outbid by investors willing to pay cash for houses they think will bring a good return on their money as rentals, and eventually appreciate in value.
During the dot-com era, the frenzy was for high-priced homes. This time, the homes that are selling briskly are lower-priced bank-owned foreclosures or sales by distressed borrowers. Those homes are sometimes fetching 50 bids or more. But even homes in more expensive areas such as Willow Glen and Cupertino are getting multiple offers, agents say.
A four-bedroom bank-owned home in South San Jose listed at $299,000 got 112 bids last month. The 1,220-square-foot house will probably go to a buyer who made an all-cash offer of about $360,000.
“There just seems to be a groundswell of people who have a good amount of money,” said Brett Mattos of Ventura Barnett Properties, who listed the property. “The last four foreclosures I’ve had sold for cash.”
P Carey- Mercurynews.
Payday lender agrees to end abusive practices
• CashCall had charged 139 percent interest on its loans
• ‘CashCall preyed on consumers desperate for cash’
CashCall, Inc., an Anaheim-based fast-money lender, has agreed to stop using “loan shark tactics” in collecting debt, including abusive calls at all hours of the day and night and empty threats of law enforcement action, says California Attorney General Edmund Brown Jr.
The court-ordered judgment also forces CashCall to stop misleading consumers with deceptive advertising and pay $1 million in civil penalties and legal expenses.
“CashCall preyed on consumers desperate for cash, charging triple digit interest rates and using loan shark tactics to collect on their debts,” says Mr. Brown. “This judgment forces CashCall to stop harassing its customers and should serve as a warning to consumers to be wary of fast-money lenders.”
CashCall, owned by Paul Reddam, founder and former owner of DiTech mortgage company, currently charges 139.34 percent annual interest on the $2,600 loan it offers to consumers. This means that consumers who make the required $298.94 monthly payment over 36 months pay $10,761.84 over the life of the loan. That adds more than $8,000 in interest to the loan.
Stockton – Nearly two thirds of all mortgages underwater
• Two-thirds of mortgages in Stockton in negative equity
• ‘Mortgage risk will continue to be very elevated’
The housing collapse in the Stockton area of the Central Valley is so profound that 66.56 percent of home mortgages are underwater – the term used when home value is less than the outstanding mortgage.
Nationally, more than 15.2 million U.S. mortgages, or 32.2 percent of all mortgaged properties, were in negative equity position as of June 30, according to newly released data from First American CoreLogic.
Negative equity and near negative equity mortgages combined account for nearly 38 percent of all residential properties with a mortgage nationwide.
In Stockton, 87,916, or 66.56 percent of all properties with a mortgage, are in negative equity. A total of 92,057 mortgages, or 69.69 percent, are in near negative equity or negative equity.
In Stockton, $17,657,052,032 total property value was at risk of default.
Negative equity, often referred to as “underwater” or “upside down,” means the borrower owes more on their mortgage than the home is worth. Near negative equity is when mortgages are within 5 percent of being in a negative equity position. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.
“Negative equity continues to be the dominant driver of the mortgage market because it leads to foreclosures in the event a borrower experiences some kind of economic shock: job loss, illness or other adverse situation,” says Mark Fleming, chief economist for First American CoreLogic.
“Given that negative equity did not increase this quarter and home price declines are moderating or flattening, it may indicate we are at the peak of the negative equity cycle. However, until negative equity recedes and unemployment declines, mortgage risk will continue to be very elevated,” he says.
