Realtors see improved homes sales by end of 2008; Fannie Mae expects continued depressed housing market…Seismic company wants to test for hydrocarbons in Beaumont area…Law firm seeks $688 million for Enron settlement work…
A real estate trade group is predicting that the pace of home sales will pick up significantly later this year. The monthly forecast from the National Association of Realtors calls for sales of previously owned homes to increase by nearly one percent this year–to 5.7 million. Sales for the just completed year were projected 5.65 million. Final results for U.S. existing home sales in 2007 are to be released later this month. They are expected to be down 12.7 percent from 6.48 million in 2006. Numerous economists, however, are much more pessimistic about the housing market this year. They are predicting far lower home sales.
A gloomy outlook on the housing market from the top man at Fannie Mae. Daniel Mudd, CEO of the mortgage finance company, expects the housing market will weaken through next year, with a turnaround unlikely until 2010. In remarks prepared for a conference of the U.S. Chamber of Commerce, Mudd goes on to says the mortgage crunch and its effect on the housing market will be a drag on the entire U.S. economy. He’s urging lawmakers and lenders to pursue “the most generous means possible” to help borrowers facing sharply higher mortgage payments in the next few years. His forecast is in contrast with the National Association of Realtors, which is predicting that the pace of home sales will pick up significantly later this year.
Housing research and construction firm Metrostudy expects home construction to fall for the second year in a row, but that means lower prices for the homebuyer. The group’s president spoke to the Greater Houston Builder’s Association forecast luncheon, saying developers are expected to build 11 percent fewer homes this year than last.
Bad news on the earnings front from one of the nation’s largest homebuilders. KB Home says its fiscal fourth-quarter loss rose as continuing problems in the housing market led to fewer home sales and lower revenue. In addition, chief executive Jeffrey Mezger is warning that 2008 “will be another tough year for the homebuilding industry.”
Beaumont officials say residents can expect to hear underground booms around town this week as a company uses seismic testing to search for pockets of oil and natural gas. City offices have been flooded with telephone calls from people curious about the source of the noises heard around downtown and the Neches River. Officials with Lake Ronel Oil Company say explosives are detonated nearly 110 feet underground to give them a picture of conditions up to 15,000 feet down. A city ordinance requires that the underground blasts take place 750 feet away from structures. The population density in the surrounding area determines what size explosive will be used, ranging from 2.5 to 11 pounds. A city official says most callers were more curious than upset about the noise.
A Houston federal judge denied a prosecutor’s push to throw a former Merrill Lynch executive back in prison for the entire term imposed for five Enron-related crimes, even though three of those convictions have been overturned. U.S. District Judge Ewing Werlein denied a request from federal prosecutors to revoke James Brown’s bond. He served a year of a three-year, 10-month term but was released as the 5th U.S. Circuit Court of Appeals overturned three convictions of conspiracy and fraud against him and other former Merrill Lynch executives. Brown’s con-defendants, Daniel Bayly and Robert Furst, are to be retried later this month. Brown will be retried at a later date.
California law firm Coughlin Stoia Geller Rudman & Robbins is seeking $688 million for its work in gaining $7.3 billion in settlements after the collapse of >STRONG>Enron. That’s a 9.52 percent fee, which U.S. District Judge Melinda Harmon will consider at a February 29th hearing in Houston. Judge Harmon will also consider a University of California plan to distribute the settlements to shareholders who lost money. Some $6.6 billion in settlements came from Citigroup, JPMorgan Chase and the Canadian Imperial Bank of Commerce. Other funds came from Bank of America and Lehman Brothers, Arthur Andersen, a law firm, Andrew Fastow’s partnership LJM2 and most of Enron’s former directors.
Treasury Secretary Henry Paulson says the Bush administration is considering expanding a program to help at-risk mortgage holders. Paulson tells CNBC that the administration is involved in discussions with the mortgage industry to expand a current program to freeze adjustable rate mortgages for five years to include borrowers of loans at prime rates. Currently, the rate freeze only covers a much smaller segment of adjustable-rate loans made to subprime borrowers–those with weak credit histories. Paulson didn’t provide any details on when this expansion might go forward. While on CNBC, Paulson also called on Congress to quickly pass legislation that would reform the Federal Housing Administration. Paulson says that would help a quarter million at-risk homeowners refinance to more affordable loans.