The big news today in housing is this, from Bloomberg:
American Home Mortgage Investment Corp. shares plunged 89 percent after the lender said it doesn’t have cash to fund new loans and may have to sell off assets. …
American Home caters to borrowers whose credit scores fall just short of standards for top-rated mortgages. The announcement provides fresh evidence that defaults may be spreading from subprime borrowers with the worst credit records to homeowners with more reliable repayment histories. The biggest U.S. mortgage lender, Countrywide Financial Corp., said last week overdue payments rose among some of its most creditworthy clients.
Shares of American Home, halted by the New York Stock Exchange before yesterday’s regular session, plummeted $9.32 from their July 27 close to $1.15 in 2:50 p.m. New York Stock Exchange composite trading. They changed hands at $6.39 in pre-market transactions yesterday. Two years ago, they fetched almost $40.
Banks pulled the money out because of fraud. Nice. Now the problem is that there is a second side to this. Housing prices are collapsing too. The Big Picture has the details, about among the hardest hit? Las Vegas, Miami, and Denver. Three swing states. Here’s their summary:
Pretty astonishing fall from the peak. And, based upon inventory levels and present sale rates, we are not remotely close to done.
Defaults and foreclosures. Falling house values. Those do not make for a good environment for economic optimism, which Republicans need to win elections.