Homes foreclosure more than doubled in 1Q from 2007

Tuesday April 29, 6:18 am ET, by Alex Veiga, AP Business Writer

Number of US homes facing foreclosure jumps 112 percent in first quarter from 2007 LOS ANGELES (AP) — The number of U.S. homes heading toward foreclosure more than doubled in the first quarter from a year earlier, as weakening property values and tighter lending left many homeowners powerless to prevent homes from being auctioned to the highest bidder, a research firm said Monday.

Among the hardest hit states were Nevada, Florida and, in particular, California, where Stockton led the nation with a foreclosure rate that was 6.6 times the national average, Irvine, Calif.-based RealtyTrac Inc. said.

Nationwide, 649,917 homes received at least one foreclosure-related filing in the first three months of the year, up 112 percent from 306,722 during the same period last year, RealtyTrac said.

The latest tally also represents an increase of 23 percent from the fourth quarter of last year.

RealtyTrac monitors default notices, auction sale notices and bank repossessions.

All told, one in every 194 households received a foreclosure filing during the quarter. Foreclosure filings increased in all but four states.

The most recent quarter marked the seventh consecutive quarter of rising foreclosure activity, RealtyTrac noted.

“What would normally alleviate the foreclosure situation in a normal market is people starting to buy properties again,” said Rick Sharga, RealtyTrac’s vice president of marketing.

However, the unavailability of loans for people without perfect credit and a significant down payment is slowing the process, he said.

“It’s a cycle that’s going to be difficult to break, and we’re certainly not at the breaking point just yet,” Sharga added.

The surge in foreclosure filings also suggests that much-touted campaigns by lawmakers and the mortgage lending industry aimed at helping at-risk homeowners aren’t paying off.

Hope Now, a Bush administration-organized mortgage industry group, said nearly 503,000 homeowners had received mortgage aid in the first quarter. Most of the aid was temporary, however.

Pennsylvania was a notable standout in the latest foreclosure data. The number of homes in the state to receive a foreclosure-related filing plunged 24.4 percent from a year earlier.

Sharga credited the decline to the state’s foreclosure relief measures, noting that cities such as Philadelphia put in place a moratorium on all foreclosure auctions for April and implemented other measures aimed at helping slow foreclosures.

Nearly 157,000 properties were repossessed by lenders nationwide during the quarter, according to RealtyTrac.

The flood of foreclosed properties on the market has contributed to falling or stagnating home values, yet lenders have yet to implement heavy discounts on repossessed homes, Sharga said.

Nevada posted the worst foreclosure rate in the nation, with one in every 54 households receiving a foreclosure-related notice, nearly four times the national rate.

The number of properties with a filing increased 137 percent over the same quarter last year but only rose 3 percent from the fourth quarter.

California had the most properties facing foreclosure at 169,831, an increase of 213 percent from a year earlier. It also posted the second-highest foreclosure rate in the country, with one in every 78 households receiving a foreclosure-related notice.

California metro areas accounted for six of the 10 U.S. metropolitan areas with the highest foreclosure rates in the first quarter, RealtyTrac said.

Many of the areas — including Stockton, Riverside-San Bernardino, Fresno, Sacramento and Bakersfield — are located in inland areas of the state where many first-time buyers overextend themselves financially to buy properties that have plunged in value since the market peak.

“California still hasn’t hit bottom,” Sharga said. “We have a lot of California homes that are in early stages of default that may not be salvageable because either there’s no market or financing available, or both.”

Arizona had the third-highest foreclosure rate, with one in every 95 households reporting a foreclosure filing in the quarter. A total of 27,404 homes reported at least one filing, up nearly 245 percent from a year ago and up 45 percent from the last quarter of 2007.

Florida had 87,893 homes reporting at least one foreclosure filing, a 178 percent jump from the first quarter of last year and a 17 percent hike from the fourth quarter last year. That translates into a foreclosure rate of one in every 97 households.

The other states among the top 10 with the highest foreclosure rates were Colorado, Georgia, Michigan, Ohio, Massachusetts and Connecticut.

RealtyTrac Inc.: http://www.realtytrac.com

Where American Tax Dollars are Spent?

Do Americans know where their Tax Dollars are being spent? If 63% cannot find Iraq on the world map, probably safe to assume they cannot accurately answer this question.

How the Pie is Divided;

1. 42.2% = Military Spending

The biggest chunk of your money — 42.2 cents of every income-tax dollar — goes to fund the military. Over half of it, or 28.7 cents, goes to pay for the current war and military, 10 cents goes to interest payments on past and present military debt and 3.5 cents is allocated for Veterans’ benefits.

2. 22.1% = Health

The second largest amount is spent on health care initiatives, including Medicare

3. 10.2% Interest on non-Military Debt

About ten cents of every federal tax dollar is spent on interest for non-military related national debt.

4. 8.7% = Anti-Poverty Programs

These funds go to a variety of programs to help the underprivileged. They include food assistance, supplemental income for those with low incomes and assistance for foster care and adoption programs.

5. 4.4% = Education, Training & Social Services

These funds go towards paying for elementary, secondary and higher education. Other beneficiaries include employment training centers.

6. 3.9% = Government & Law Enforcement

This area covers a variety of programs, including the cost of running the justice system, the cost of running the Social Security program and federal employee retirement and disability.

7. 3.3% = Housing & Community Development

This money is spent on housing assistance and community development programs

8. 2.6% = Environment, Energy & Science

Spending in this area goes to environmental programs, energy exploration and any programs that deal with general science, technology and space.

9. 1.5% = Transportation, Commerce & Agriculture

One-and-a-half cents of every federal income tax dollar is going towards agriculture and transportation spending

10. 1.0% = International Affairs

The smallest amount of your tax dollars goes to foreign affairs, including foreign humanitarian assistance, conduct of foreign affairs and international financial programs.

The median income family in the United States paid $2,628 in federal income taxes in 2007. Here is how that money was spent:

• Military $1,109
• Health $581
• Interest on Non-military Debt $269
• Anti-Poverty Programs $228
• Education, Training & Social Services $115
• Government & Law Enforcement $102
• Housing & Community Development $88
• Environment, Energy & Science $69
• Transportation, Commerce & Agriculture $40
• International Affairs $27

Read the Full Report from the The National Priorities Project

CNBC Slideshow

Visa planning largest IPO in U.S. history

Visa planning largest IPO in U.S. history

By Eric Dash, Tuesday, February 26, 2008, IHT

Undaunted by recent turbulence in the financial markets, Visa, the biggest credit-card network in the United States, said Monday that it would forge ahead with what would be the largest initial public stock offering in the nation’s history.

Visa plans to sell as much as $17.1 billion of stock in late March, following in the footsteps of its smaller rival MasterCard, which went public in May 2006.

Visa and MasterCard are prospering as Americans increasingly flex plastic, rather than use cash, to pay for just about everything. The companies have not been hurt by the credit crunch, because they do not actually make credit-card loans. They merely processes transactions for banks that do.

If all goes as planned, Visa’s offering would generate a windfall for thousands of its so-called member banks, which own the company. The largest gains would go many of the nation’s biggest banks, which have been stung by losses stemming from mortgage-linked investments.

“Visa will be able to tell its story, even in an uncertain market, because its story is a good one,” said David Robertson, publisher of The Nilson Report, a payment industry newsletter. “If investors think MasterCard is a good story, Visa looks like the same thing on a bigger scale.”

Visa plans to sell 406 million Class A shares for $37 to $42 a share, with just over half going to the public and the rest to Visa’s member banks.

The first $3 billion will be placed into a special account to cover outstanding antitrust and unfair-pricing claims brought by merchants. Visa will use some of the new money to streamline its operations, expand in fast-growing emerging markets and invest in new technology like systems that enable people to make card payments using cellular phones. But the bulk of the capital will end up in the bank’s coffers, from repurchasing stock from them.

Visa’s member banks can use the extra cash.

If Visa’s shares are valued at a midpoint price of $39.50, JPMorgan Chase, the company’s largest shareholder, would receive an estimated $1.1 billion for its stake. Bank of America would get about $545 million; National City would get about $380 million; and Citigroup, U.S. Bancorp, and Wells Fargo can each expect around $240 million or more.

“The credit crunch is pretty cyclical; the prospects for Visa are very strong long-term,” said Marc Abbey, the managing partner of First Annapolis, a consulting firm that works with many banks and payments companies. “I am sure it is convenient for them to have extraordinary gains at the same time they have extraordinary losses.”

Since going public nearly two years ago, MasterCard have soared 408 percent, closing at $198.45 on Monday. It now has a market value of $26 billion.

MasterCard’s successful IPO prompted Visa to move forward with owns plans to go public. Since October 2006, Visa has reorganized its sprawling management structure, bringing together all of its global operations with the exception of those in Europe. It has also hired Joseph Saunders, the former head of Providian Financial Corporation, as its chairman and chief executive, giving him a pay package worth $11.1 million in cash for 2007. Upon completion of the IPO, he is expected to receive an additional $11.5 million in stock and options, according to Equilar, a compensation research firm.

Visa transactions accounted for roughly 66 percent of all credit and debit card purchases in the United States in 2006, compared to about 26 percent for MasterCard, according to The Nilson Report data.

Growth in card transactions, the foundation of the companies’ businesses , has historically held up well, even when the economy and consumer spending slows.

“If you look back at the last recession, card transactions did not drop ? they took a dip in growth, but they didn’t fall below prior year,” Robertson said.

“There is no reason to think that growth in the United States is going to sink Visa’s boat,” he said. “Whatever lackluster growth in the U.S. should certainly be matched and exceeded by what occurs outside the U.S.”

The prospectus for the sale lays out a convoluted capital structure, with four classes of shares, including three which go to the banks. But the deal, which is underwritten by JPMorgan and Goldman Sachs, also raises potential conflicts for the banks underwriting the shares.

Both institutions have strong ties to the financial services industry. But JPMorgan is Visa’s largest shareholder and largest customer. It is a member of the bank syndicate that agreed to lend $3 billion to the company. And it could reap more than 1.1 billion in proceeds from the IPO

Goldman, meanwhile, will serve as the “qualified independent underwriter” in setting the price of the offering, according to public filings. Its independence is not deemed in question even though Suzanne Nora Johnson, a Visa director, used to be a vice chairman of Goldman Sachs.

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