U.S. finance firms are finding themselves major real estate owners as foreclosures mount
Bloomberg News: July 2nd, 2007
ATLANTA: Only the possums are enjoying the backyard of 2035 Lilac Lane in Decatur, Georgia, where the Wall Street titan Bear Stearns was just another homeowner by default. Bear Stearns, a major U.S. underwriter of mortgage-backed securities, is now reeling from the worst housing decline since the 1930s. It never planned to take possession of the three-bedroom house. It sold the property last week and said it still owns 18 houses in the Decatur area, all acquired since November.
Citigroup, Morgan Stanley, Merrill Lynch, Lehman Brothers and JPMorgan Chase are listed in public records as the owners of at least 35 homes in the suburb, where 19,000 people live seven miles east of downtown Atlanta.
As foreclosures climb, Wall Street's lenders and investors are claiming a bigger chunk of Main Street. The value of U.S. homes held by commercial banks swelled 53 percent nationwide to $2.3 billion at the end of March, the highest since 1992, from $1.5 billion a year earlier, according to the Federal Deposit Insurance Corp.
Home values and the $6 trillion U.S. mortgage-backed securities market are locked in a downward spiral. Bear Stearns is bailing out one hedge fund it controls and leaving another to liquidation by creditors. Both funds invested in securities backed by subprime loans. The loans, for borrowers with bad or limited credit histories, are secured by houses such as the one on Lilac Lane.
The share of U.S. subprime loans entering foreclosure in the first quarter was 2.43 percent, the highest in almost five years, the Washington-based Mortgage Bankers Association said. Subprime late payments rose to 13.77 percent, compared with 11.5 percent a year earlier.
Measured annually, the national median price for a previously owned home probably will drop 1.3 percent this year, the first decline since the Great Depression in the 1930s, according to Lawrence Yun, an economist at the Chicago-based National Association of Realtors
posted by Richard at
Monday, July 02, 2007
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