Also, the median sales price fell to 225,700 dollars, an 8.3 percent decline from the previous month and a level not seen since January 2005.

The report included a modest downward revision to July new-home sales to an 867,000 pace from 870,000, in a month that saw a surprise gain, possibly with troubled homebuilders clearing out inventories.

The inventory of new homes on the market in August fell 1.5 percent to 529,000 units. If the rate of sales stays at levels seen in August, the supply of new homes on the market would take 8.2 months to sell.

The weakness in housing has been the main drag on the US economy this year, but analysts are divided on how long the slump will last.

The latest report reflects sales in August, before the Federal Reserve announced an interest rate cut of .5 percent to 4.75 percent.

Source: Google

The New Jersey-based company announced that it is “releasing” 350 of its 380 employees “and may be filing for bankruptcy protection in order to close the business in an orderly fashion.”

“Releasing” appears to be a euphemism for “firing.” Just in case that didn’t come through loud and clear.

In a statement, John D. Blomquist, Foxton’s senior vice president and general counsel, said that “the plain fact is that we have been battling against a real estate market that recently has turned into a sharp decline, and the company no longer has the liquidity to operate as a going concern.”

Countrywide handled billing and collections for about 9 million loans at the end of August, the Calabasas, California-based company said in a Sept. 13 report. So that means that Countrywide is going to assist borrowers in .14% of its entire loan servicing portfolio.

The U.S. Treasury Department and Federal Reserve have urged mortgage companies to stave off foreclosures by cutting or postponing payments for cash-strapped homeowners. They will surely be pleased that Countrywide is taking the bull by the horns.

“This is a great, unprecedented effort to help homeowners,” Steve Bailey, Countrywide’s delusional senior managing director of loan administration, said in an interview. Countrywide, which services about one of every five U.S. mortgages, plans to meet with Moody’s executives to discuss the issue, he said.

Bailey also claims that the impact of higher resets of adjustable rate loans is widely overstated. Countrywide found that only 1.3 percent of foreclosures in July stemmed from homeowners unable to pay higher interest rates, he said. While that percentage will increase in coming months, he predicted it would remain well below 20 percent. But even if that’s all true, why didn’t Countrywide make an effort to modify the loans of 1.3 percent of its borrowers, those who are in trouble due to the toxic mortgages foisted upon them in recent years?

“Countless Texas homeowners have been duped into giving $1,200 to FAS and unfortunately, in the process, still lost their home,” Texas Attorney General Greg Abbott said.

The Better Business Bureau in Clearwater, Fla., has 236 complaints filed against FAS. Forty-three of the complaints are from Texas residents.

For more information, visit the Texas Attorney General’s Web site.

Ameriquest was the first major subprime lender to downsize in the current housing cycle, deciding in May 2006 to close all 229 retail branches and cut 3,800 jobs.

U.S. President George W. Bush said on Friday the government would try to keep some borrowers from defaulting, but would not bail out lenders.

ACC “is preparing the orderly wind down of its retail mortgage business, which is no longer accepting applications,” spokesman Chris Orlando said.

Citi said in a statement it would expand its efforts to make sure distressed borrowers get to stay in their homes.

Source: Reuters

In a conference call with analysts, chief executive Mark Ernst stated the obvious by saying that the mortgage origination market was in the midst of “the most severe dislocation it has seen in years, maybe the most severe since the 1930s.”

Ernst said that H&R Block is actively looking to get out of lending to subprime customers, regardless of the negotiations with Cerberus. “When and how exactly that would happen is fairly fluid at the moment,” he added.

“Essentially, the deal is off,” wrote Goldman Sachs analyst James Fotheringham in response to H&R Block’s announcement. He also noted that the ongoing turmoil in the finance markets reduces the chance for a new buyer.

The Option One work force has been cut down significantly - by more than half. The company announced yesterday it has stopped approving any new loans that don’t comply with Fannie Mae and Freddie Mac requirements, limiting loan originations to $200 million a month, beginning next month.

H&R Block announced this year that the Cerberus subsidiary would buy Option One for $300 million less than the net value of the subprime mortgage unit’s assets, but that number number still has not been determined due to the fact that the subprime market is continuing its downward spiral.

Source: Baltimore Sun

Rising defaults by borrowers with the worst credit histories have spread to people with more reliable records. That’s making investment banks that repackage home loans into bonds reluctant to buy, threatening profits of residential lenders. Mortgages backed by federally chartered agencies such as Fannie Mae are the only bright spot, said KBW Inc. analyst Bose George in New York.

“The rest of the mortgage market is going through a liquidity crisis,” George said. “People just don’t want the credit risk for mortgages right now.”

Among other home lenders, NovaStar Financial Inc. fell 11 percent and Impac Mortgage Holdings Inc. lost 26 percent. NovaStar’s shares continued falling after regular trading ended when Reuters reported the Kansas City, Missouri-based mortgage company has suspended funding some loans.

CIT Group Inc., which said last month it’s getting out of the home-lending business, dropped 4.9 percent. Fremont General Corp., which agreed to stop making subprime home loans earlier this year, lost 17 percent.

Accredited Home Lenders Holding Co., which said yesterday it may go bankrupt, rose 31 percent. The company said late yesterday it still expects to complete a $15.10-a-share sale to buyout firm Lone Star Funds. Lone Star Funds is the same company that purchased debt buying company B-Line LLC earlier this year.

IndyMac CEO Michael Perry noted in a recent e-mail that the market for mortgage bonds has become “very panicked and illiquid,” IndyMac Chief Executive Officer Michael Perry wrote in an e-mail earlier this week.

Bids for subprime home loans, rated as the most likely to default, became scarce in March as overdue payments were heading for their highest level since 2002. Now buyers are shunning Alt-A loans, an alternative for people with A-rated credit who don’t meet all the standards for prime loans. The category includes low-documentation mortgages.

Moody’s Investors Service labeled some varieties of Alt-A mortgages this week as no better than subprime. The ratings company said it will change how it grades related securities after failing to predict how far delinquencies would rise.

American Home Mortgage Investment Corp., which specialized in Alt-A lending, became the second-biggest residential lender to fail this year when it announced yesterday it was halting most operations. It is widely anticipated that American will march into bankruptcy court within the next few days.

Source: Bloomberg.

From Los Angeles, this article about people looking at the depressed real estate market in a new way.