Putting a pretty face on the RE Bust(ZT)

Putting a pretty face on the RE Bust	gjohnsit
That's one way of doing it Darylin Tucson writes that a friend of his purchased a home from a builderthere, and the builder lowered the price after the contract was signed.And Jeff writes from Central Valley, CA: ‘KB Homes has been buildingthe same 8 houses for months now to make them look active and they alsoput 'sold' signs in a few homes, problem is nobody ever moves in!' [...] I drank the ‘Kool-Aid;' I'll give you that. Buthow could the builders–who've seen far more housing cycles in theircompany histories than I have in my reporting history– how did they notsee this coming?
First they came for the subprime lenders, then they came for the hedge funds, ... Heavyredemptions from investors concerned about their holdings of subprimemortgage securities claimed Braddock Financial Corp.'s Galena StreetFund as the latest hedge fund victim. Braddock, a top-performingbond hedge fund manager, on Thursday said it will liquidate the $300million fund after redemptions slashed its assets by a quarter since2006, CEO Harvey Allon said. Reports that losses in subprimemortgages were wreaking havoc with hedge funds, especially last month,‘just made investors nervous about being invested in the subprimemarket at all,' Allon said. Galena investors will receive 20percent of their balances by early next week, and then probably ‘morefrequently than quarterly,' he said.
RE: And yet another hedge fund in trouble	gjohnsit
They are dropping like flies UBSAG, buffeted by three quarters of declining earnings and losses at oneof its hedge funds, replaced Peter Wuffli as CEO of the world's biggestmoney manager. ‘Boards and CEOs normally don't split in this way,it's extraordinarily rare,' said Richard Bove, an analyst who coversU.S. financial companies for Punk Ziegel & Co. ‘There was an issuewith earnings.' UBS said in May it was shutting the Dillon Readunit that had been championed by Wuffli after the hedge fund lost 150million francs in the first quarter because of wrong-way bets on U.S.The losses from Dillon Read echoed the damage caused by Long-TermCapital Management LP, whose 1998 collapse cost UBS $700 million.
RE: Banks tighten credit to hedge funds	gjohnsit
This would be the opposite of the virtuous cycle Investmentbanks are demanding more capital to back loans to hedge funds investingin US subprime mortgage-linked debt, as they try to head off a repeatof the near-collapse of two Bear Stearns hedge funds. The‘haircut,' or margin requirement, on financing provided to buycollateralised debt obligations (CDOs) backed by subprime mortgagebonds has been increasing sharply, in many cases doubling, according tohedge funds, bank executives and prime brokers. One New Yorkstructured product specialist and hedge fund manager said marginrequirements had rise by about 5-10 percentage points for single-A andAA-rated CDO securities investing in mortgage-backed securities. Matt King, analyst at Citi, estimated in a note this week that marginsfor BBB-rated bonds from such CDOs went from 10-20 per cent to 50 percent, with smaller increases for higher-rated bonds.
Fannie Mae talks about "moral obligations" Abrother and sister from California recently approached Phoenix realestate agent Brett Barry about their house here in the Valley. The pairpaid $597,000 for the investment home in Tatum Ranch at the height ofthe housing market in 2005. Now, they can no longer afford to keep it.And with a record number of Valley homes for sale, their chances ofselling the home for what they paid are slim. ‘I ran the numbers,and the house won't sell for more than $495,000 now,' said Barry. ‘Theydidn't put any money into it. They have an interest-only loan. Theycould only rent it for about $1,800 and month, but their payment is$3,500.' He told them they could do one of two things: Work out a short sale or call the lender and hand over their keys. At a recent foreclosure-prevention town hall meeting in Phoenix, thedirector of National Initiatives for mortgage giant Freddie Macencouraged housing advocacy groups and lenders to steer people towardshort sales if their only other option is foreclosure. ‘We have aninvestment to protect as well as a moral responsibility to help peopleavoid foreclosure,' Christina Diaz-Malones said. A few years ago,most Valley homes to go to the foreclosure auction block enticedmultiple bids from investors. But now, lenders are taking back 80percent of the homes they are foreclosing on. Investors have stoppedbidding on many houses because they can't make money on a resale. ‘Almost everyone we are seeing now for default counseling owe more thantheir house is worth,' said Joann Hauger of Community Housing Resourcesof Arizona.
Glut of homes for rent Thepace of apartment rental in Dallas-Fort Worth has ground nearly to a halt this year. And the dramatic slowdown in apartment demand in NorthTexas has left industry analysts scratching their heads. ‘It'spretty ugly,” said apartment consultant Greg Willett. ‘Results for thesecond quarter fell way below expectations,' he said, with virtually noincrease in apartment rentals. For the first half of 2007, netapartment leasing has added up to only about 300 units. Compare thatwith the more than 7,000 net apartments leased in the first six monthsof 2006. Mr. Willett blames a combination of homebuilder giveawaysand for-rent homes for stealing the apartment market's thunder. ‘Whilethere are lots of new jobs in Dallas-Fort Worth, the associated housingdemand just isn't going to the apartment sector,' he said. Instead,renters are snapping up new-home bargains or renting houses put up forlease by investors. ‘The number of single-family homes available forrent appears to be way up, even though many aren't getting rental ratesthat actually cover mortgage costs,' Mr. Willett said. Unlessapartment demand recovers, developers could be headed for a train wreckwith almost 13,000 units in the construction pipeline, according toM/PF YieldStar's latest estimate. [...] ‘This pattern isn't seenjust in Dallas-Fort Worth,' Mr. Willett said. ‘Atlanta looks like themost extreme example.' Tenants moved out of almost 5,000 net rentalunits in the Atlanta area so far in 2007, he said.