Bank repossessions more than doubled in May and foreclosure filings rose 48 percent from a year earlier as previously foreclosed properties dragged down housing prices, RealtyTrac Inc. said in a report today.
One in every 483 U.S. homeowners lost their houses to foreclosure or received either a default warning or notice that their home would go up for sale at auction, RealtyTrac said. That was the highest rate since the Irvine, California-based company began reporting in January 2005 and the 29th consecutive month of year-over-year increases. Nevada, California and Arizona posted the highest rates in the U.S. and New Jersey entered the Top 10, according to RealtyTrac.
“It's definitely a different kind of market than what we got used to a couple years ago,'' said Devin Reiss, owner of Realty 500 Reiss Corp. in Las Vegas. “We used to sell homes in a day. Now 50 percent of our sales are foreclosures.''
Foreclosures add to inventory and crowd out regular sales, Michelle Meyer and Ethan Harris, economists at Lehman Brothers Holdings Inc. in New York, wrote in a report yesterday. Foreclosures will account for 30 percent of national home sales this year as 1.2 million foreclosed single-family homes will eventually enter the market, they said. They estimate that foreclosed properties, which typically sell for about 20 percent less than other homes, will depress home prices by 6 percent.
Feedback Loop
“The risk is that an adverse feedback loop will develop, in which problems in the housing market undercut the economy, causing even more stress in the housing and mortgage markets,'' Meyer and Harris wrote.
A homeowner usually receives a notice of default after falling more than 90 days behind on mortgage payments. If the borrower still doesn't pay what's owed, the property is sold to the highest bidder at an auction, typically held at a county courthouse. If bids don't reach a set amount, the lender takes ownership. Such houses are referred to as REO, or “real estate- owned.''
Lenders took possession of 73,794 houses in May, more than doubling the 28,548 REOs in May 2007, RealtyTrac said. That pushed total REOs to more than 700,000, RealtyTrac said.
“Right now, lenders are afraid to lend and buyers are afraid they'll be under water in a year, so unless something dramatic happens we're going to continue to see the trend go in the wrong direction,'' said Rick Sharga, RealtyTrac's vice president of marketing.
Federal Legislation
Legislation that would allow the federal government to guarantee up to $300 billion in refinanced mortgages passed the House of Representatives and awaits debate in the Senate, which is scheduled to recess before the July 4 holiday cheap payday loans us fast cash.
Government help would make it easier for homebuyers to get loans and would ease the number of foreclosures, said John Gall, president of the Arizona Association of Realtors and owner of Arizona Land Quest LLC in Kingman, Arizona.
“Resolving credit issues is going to require cooperation between Wall Street and Washington to provide a secure platform for lenders to loosen up their criteria,'' Gall said. “It would absolutely help here in Arizona.''
Arizona's foreclosure rate — one in every 201 households received a filing in May — was a 119 percent increase compared with May 2007 and ranked third in the U.S., RealtyTrac said.
Only Nevada, with one in every 118 households, and California, with one in every 183, had higher filing rates in May, the company said.
New Jersey
One in every 467 New Jersey households received a foreclosure filing in May, making it No. 10 on RealtyTrac's list of states. That represented an 89 percent increase from a year ago and a 44 percent increase from April, RealtyTrac said.
The number of national foreclosure filings grew 7 percent from April, according to RealtyTrac.
The nationwide rate of default warnings in May increased 1 percent from April and the number of auction notices fell 3 percent, the company said.
Metropolitan areas in California and Florida accounted for nine out of the top 10 metro foreclosure rates for the second month in a row, RealtyTrac said. Seven California metro areas were in the top 10: Stockton, Merced, Modesto, Riverside-San Bernardino, Vallejo-Fairfield, Bakersfield and Sacramento.
Stockton's rate, one in every 75 households, was more than six times the national average, the company said.
Deluged
“One of the big problems is the banks have been deluged and are way behind in actually doing the foreclosures,'' said Alan Nevin, chief economist with the California Building Industry Association in San Diego. Nevin said he's forecasting lower foreclosure rates in California starting in the last three months of the year.
The Cape Coral-Fort Myers area, on Florida's Gulf Coast, had the second-highest metro foreclosure rate in May, with one in every 79 households. The other Florida area in the top 10 was Port St. Lucie-Fort Pierce, on the Atlantic coast, at No. 10.
The only city outside Florida and California in the top 10 was Las Vegas.
RealtyTrac said it has a database of more than 1.5 million properties and monitors foreclosure filings, including default notices, auction sale notices and bank seizures.
Kuwait’s oil minister has welcomed Saudi Arabia’s call for a meeting of oil producers and consumers to discuss ways of dealing with soaring energy prices.
Mohammed al-Eleim says consumers and producers have to talk because they are "in the same boat." He did not elaborate.
But he reiterated to reporters Tuesday that record high prices of oil were not caused by market fundamentals.
The government of Saudi Arabia, the world’s largest oil producer, announced Monday it was calling for the meeting in the near future http://paydayintime.com payday loan low fee. The gathering will also include oil companies.
Light, sweet crude for July delivery traded at $134.62 a barrel by noon Tuesday in Europe in electronic trading on the New York Mercantile Exchange.
China's inflation rate slowed more than economists estimated to 7.7 percent in May from close to a 12-year high in April, according to two government officials.
Consumer prices rose less than the 8 percent median estimate in a Bloomberg News survey of 19 economists. The officials, who said they saw statistics bureau data, wouldn't be identified ahead of the official release on June 12.
Inflation slowed after food-price gains eased, the government ordered banks to set aside more money to cool lending growth and the yuan gained 5.2 cent percent versus the dollar this year. Soaring commodity prices may keep inflation above the central bank's 4.8 percent target for 2008.
“It is much, much too soon to break open the champagne,'' said Stephen Green, head of China research at Standard Chartered Bank Plc in Shanghai. “There are lots of other inflationary pressure points in the economy such as rising prices of fuel and raw materials.''
Market News International reported the 7.7 percent figure earlier today, citing unidentified sources. The rate was 8.5 percent in April.
The yuan traded at 6.9243 per dollar as of 4:07 p.m. in Shanghai, close to the highest since a peg was scrapped in 2005. It gained 7 percent last year, helping to reduce the cost of imports.
Bucking Inflation Trend
Central banks around the world are grappling with higher prices and slower growth. Federal Reserve Chairman Ben S. Bernanke said yesterday that policy makers in the U.S. will “strongly resist'' any surge in inflation expectations.
China may be “bucking the trend'' of rising inflation in Asia because the central bank tightened monetary policy earlier than its peers, restricting bank lending last year, said Liang Hong, an economist with Goldman Sachs Group Inc. in Hong Kong.
India's wholesale prices, that nation's main inflation measure, rose 8.24 percent in the week through May 24, the fastest pace since 2004. Vietnam is battling inflation of more than 25 percent.
The People's Bank of China has kept ratcheting lending curbs tighter and said June 7 that it would push banks' reserve requirements to a record 17.5 percent, the fifth increase this year payday loan paydayloans.
China's key CSI 300 Index of stocks fell 8.1 percent today, the most since February 2007, on concern that the extra lending curbs will dent company earnings. The market wasn't open yesterday because of a holiday.
`Tough' Task
Rising energy, labor and grain prices will make it “tough'' to control inflation, the central bank said in a report published on June 3.
Producer-price inflation, which shows price pressures in industry and often presages higher consumer inflation, may rise to 8.3 percent in May, the highest in almost four years, according to a Bloomberg News survey of economists. That figure is due tomorrow.
Reconstruction work after the May 12 earthquake that devastated parts of Sichuan province will increase demand for cement, steel, copper, aluminum and other materials, the central bank said.
This year's surge in inflation has largely been driven by food, which makes up about one-third of the consumer-price index. Vegetable and pork supplies are recovering from blizzards and a hog disease outbreak, according to Paul Cavey, an economist at Macquarie Securities Ltd. in Hong Kong.
Retail Food Prices
Retail food prices rose 14 percent in the four weeks to May 25 from a year earlier, down from an 18 percent gain in April, according to the Ministry of Commerce.
China's economic growth slowed to 10.6 percent in the first quarter from 11.9 percent for the whole of last year. Year-on- year export gains probably cooled for a third month in May, according to a Bloomberg News survey of economists.
The central bank hasn't raised interest rates this year after six increases in 2007 on concern that increases would attract speculative capital from abroad to an economy already flooded with cash from foreign direct investment and trade.
China's benchmark one-year lending rate is 7.47 percent, and the equivalent for deposits is 4.14 percent.
Federal officials unsealed two indictments Thursday charging Broadcom co-founder Henry T. Nicholas III with conspiracy and securities fraud relating to stock options backdating, as well as numerous drug charges.
The indictments allege a total of 25 counts against Nicholas, including conspiracy, securities fraud, false certification of financial reports, filing false statements with the U.S. Securities and Exchange Commission, wire fraud and conspiracy to distribute and acquire controlled substances.
The indictment regarding stock options also names Broadcom’s former chief financial officer, William J. Ruehle, who faces charges including conspiracy and securities fraud. He is not charged with drug violations.
Last month, securities regulators charged Nicholas and Henry Samueli, who co-founded the chip maker with Nicholas, in a civil suit with falsifying the company’s reported income, leading to what is believed to be the largest accounting restatement yet because of backdating stock options.
Nicholas spokesman Mark Saylor referred calls to another spokesman, who said lawyers for Nicholas had no comment.
Nicholas, 48, served as CEO and president since Broadcom’s (BRCM) inception until he resigned in 2003 payday loan online online cash advance. Last month, his attorney Bill Hake said Nicholas had entered an alcohol rehabilitation program.
Ruehle, 65, joined the company in 1997 as vice president and chief financial officer and retired in 2006.
Samueli stepped down as chairman of the company’s board of directors and planned to take a leave of absence as chief technology officer, according to a May statement from the Irvine, Calif., company.
The SEC’s civil complaint also charges former chief financial officer William J. Ruehle and general counsel David Dull.
The SEC said that as a result of the scheme to backdate options without properly accounting for the move, Broadcom had to restate its financial results in January 2007 and report more than $2 billion in compensation expenses it hadn’t accounted for.
In April, an attorney for Nicholas said he had entered an alcohol rehabilitation program.
The European Central Bank will keep interest rates at a six-year high today to fight inflation even as the euro-region economy cools, a survey of economists shows.
ECB policy makers meeting in Frankfurt will leave the benchmark lending rate at 4 percent, all 59 economists in a Bloomberg News survey said. The bank will wait until at least February to cut borrowing costs, according to a separate survey.
The ECB is concerned that unions will push through demands for higher wages and companies will lift prices to compensate for record energy and food costs, which have fueled the fastest inflation in 16 years. Price increases are also draining consumers' purchasing power, weighing on an economy already struggling with a credit squeeze and the stronger euro.
“The inflation outlook has worsened to such an extent that it dominates other worries,'' said Gareth Classe, an economist at Royal Bank of Scotland Group Plc in London. “As long as there are no clear signs of second-round effects, the ECB shouldn't have to raise interest rates. It's more likely they'll cut them in 2009.''
The ECB will announce today's decision at 1:45 p.m. and President Jean-Claude Trichet will hold a press conference 45 minutes later. Separately, the Bank of England may keep its key rate at 5 percent. That decision is due at noon in London.
Inflation in the 15-nation euro region accelerated to 3.6 percent in May, matching March's 16-year high. The ECB, celebrating its 10th anniversary this week, aims to keep the rate just below 2 percent, something it has failed to do every year since 1999.
Weber's Call
ECB council member Axel Weber has called for the bank to consider raising interest rates. New economic projections, to be published by the ECB today, will be “a good basis to discuss medium-term options,'' Weber said.
With crude oil prices rising 16 percent since its last forecasts were published in March, the ECB may “markedly'' revise up its inflation outlook, said Michael Schubert, an economist at Commerzbank AG in Frankfurt. The 2008 forecast may be increased to 3.5 percent from 2.9 percent and the 2009 prediction to 2.5 from 2.1 percent, Schubert said.
“There will be at least some discussion about a rate increase'' at today's meeting, said Kenneth Broux, an economist at Lloyds TSB Group Plc in London. The decision “could be a closer call than many are willing to accept.''
The ECB has said Europe's economic fundamentals are sound and stressed the need to keep inflation expectations in line with its 2 percent price-stability goal fastcash quick payday.
Expectations Rise
In a report last week, the bank said inflation expectations appear to be “trending up.'' Expectations, as measured by French inflation-indexed bonds, have risen above 2.4 percent from 2.1 percent two months ago.
“Although our central scenario remains that the central bank will keep interest rates on hold this year as it balances growth and inflation concerns, the upward drift in inflation expectations has increased the chances of rate hike in 2008,'' said Nick Kounis, an economist at Fortis Bank NV in Amsterdam.
Eonia swap contracts, a widely used market gauge of interest- rate expectations, show investors have fully priced in a quarter- point rate increase from the ECB by the end of the year.
Europe's economy expanded more than economists forecast in the first quarter, prompting the International Monetary Fund to raise its euro-region growth forecast for this year to 1.75 percent from 1.4 percent. That's still less than last year's 2.6 percent.
`Consumer Recession'
There are signs growth is slowing. Manufacturing and service industries barely expanded in May and retail sales suffered the biggest annual decline in April since records began.
“Inflation is painfully high and the negative effect on purchasing power is squeezing the life out of the domestic economy,'' said Ken Wattret, an economist at BNP Paribas SA in London. “It now looks increasingly like a consumer recession is unfolding.''
The U.S. Federal Reserve has reduced its main lending rate seven times since mid-September, to 2 percent from 5.25 percent, after the collapse of the subprime mortgage market drove the world's largest economy to the brink of a recession.
The U.S. housing slump has caused about $386 billion in credit losses and writedowns at the world's biggest banks and pushed up credit costs globally. At the same time, the Fed's rate reductions have helped fuel the euro's surge against the dollar, making European exports less competitive.
“Some ECB council members would like to raise interest rates given high inflation, but I don't see them winning a majority,'' said Holger Schmieding, chief European economist at Bank of America Corp. in London. “Growth is weakening significantly.''
Consumer spending and personal spending both increased at a slow pace in April, according to a government report released Friday that was in line with analyst expectations.
The Commerce Department said personal spending by individuals in current dollars rose 0.2% in April, in line with the 0.2% increase expected by economists surveyed by Briefing.com. March’s gain was a revised 0.4%.
The report showed personal income increased 0.2% in April, also in line with the 0.2% increase expected by economists. March’s gain was 0.3%.
In inflation-adjusted dollars, personal income remained flat from the prior month. Personal spending, in inflation-adjusted dollars, was also flat from the previous month. If inflation-adjusted personal spending is flat, that means that the increase in spending is entirely due to rising prices, not an increase in consumption.
"In the past couple of months, personal income and personal consumption have been moving in lockstep," said Michael Niemira, chief economist with the International Council of Shopping Centers.
"If your income is only growing at the same pace as consumption, it just means you are holding even and more money is going to food and energy," given the current situation of food and energy prices increasing in recent months, said Niemira. "Any leftover money from nondiscretionary spending and other living expenses is shrinking."
In the coming months, Niemira predicts the consumer spending numbers will show improvement as consumers spend their tax rebate checks no fax payday loan credit scores.
A measure in the report that tracks prices consumers pay on items, excluding food and energy, rose 0.1% over the previous month, in line with analyst expectations.
The so-called core PCE rose 2.1% from the same month a year, the same as the month prior. The Federal Reserve is widely believed to prefer that this year-over-year core inflation number stay in a range of 1% to 2%.
Personal savings increased 0.7% in April, flat from a revised 0.7% in March. That means for every $1,000 that Americans bring in after taxes, they are only saving $7.
As inflation numbers tick up, concerned consumers should pull back slightly in their spending and start saving a little bit more. "That savings rate increasing is good and bad news," said Niemira because a sagging economy depends on consumers spending their greenbacks to pump the economy back to health.
Consumer spending fuels more than two-thirds of the nation’s economic activity and is closely watched as a gauge of the economy’s health.
A report on first-quarter gross domestic product, a broad measure of the nation’s economic activity, came in at a revised 0.9% annual rate increase Thursday.
The Conference Board’s latest reading consumer confidence, released Tuesday, dropped to the lowest level in 16 years.
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