The Home Front

Vin Baker, who played for a handful of teams during his 14-year NBA career, is the latest addition to the growing list of athletes and entertainment stars falling victim to the national housing crisis.

From the Hartford Courant:

The Durham house that was owned by former NBA basketball player Vin Baker, a six-bedroom, 9,300-square-foot Georgian brick colonial on a 12-acre parcel, has been auctioned at a foreclosure sale.The property, which features a two-lane bowling alley, basketball court, guest house and pool, was bought June 28 by U.S. Bank for $2.5 million, said Daniel B. Ryan, a Middletown attorney responsible for conducting the sale. U.S. Bank holds two mortgages on the property, Ryan said.

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I had a real interesting chat with Christopher Thornberg of Beacon Economics on Monday about the problems facing Fannie and Freddie and the government's steps to resolve them.

Some excerpts:

What is the goal of the government's recent actions in support of Fannie Mae and Freddie Mac?
"The most important thing is to keep people that are lending to Fannie and Freddie comfortable lending. So what they have done is basically gone in and said, 'We have a plan to bail out Fannie and Freddie if their equity goes negative.' Functionally what they are saying is, 'Equity holders, you're SOL—but we'll back up the debt.'"

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RealtyTrac's most recent U.S. Foreclosure Market Report found that June foreclosure filings fell 3 percent from May, but they still are up 53 percent from a year ago. All told, one in every 501 American households got a foreclosure filing last month.

From RealtyTracs press release:

"June was the second straight month with more than a quarter-million properties nationwide receiving foreclosure filings," said James J. Saccacio, chief executive officer of RealtyTrac. "Foreclosure activity slipped 3 percent lower from the previous month, but the year-over-year increase of more than 50 percent indicates we have not yet reached the top of this foreclosure cycle. Bank repossessions, or REOs, continue to increase at a much faster pace than default notices or auction notices. REOs in June were up 171 percent from a year ago, while default notices were up 38 percent and auction notices were up 22 percent over the same time period."

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Speaking Tuesday, Treasury Secretary Henry Paulson sent a sobering message to homeowners currently facing foreclosure because they bit off more mortgage than they can chew. (Emphasis is mine.)

Many of today's unusually high number of foreclosures are not preventable. Due to the lax credit and underwriting standards of the past years, some people took out mortgages they can't possibly afford, and they will lose their homes. There is little public policymakers can, or should, do to compensate for untenable financial decisions. And in the midst of rapid price appreciation, some people bought homes anticipating an immediate profit. Now that their investments have not turned out as they had hoped, these people may walk away, even though they can afford their mortgage payment. These borrowers can and should be living up to their mortgage commitment—government intervention here would be inappropriate. These two categories of foreclosures—stemming from lax underwriting standards and increased speculation—will remain elevated in the near term.

Full text of the speech here, via the Wall Street Journal.

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