By Michael Corkery From The Wall Street Journal Online As the glut of unsold home remains stubbornly high and housing demand slides, home builders face a dilemma: to sell, or not to sell?

Lennar Corp., for one, has joined the “not to sell” camp at its development in Orange County, Calif. The Miami company plans to finish building 259 homes — the first phase of a 1,100-unit development in Irvine — but it has decided not to sell any of them until the constrained mortgage market and swollen housing inventory improves.

“We are better off holding off on sales at this asset and not discounting as steeply as the market is discounting right now,” says Emile Haddad, Lennar’s chief investment officer, who oversees the company’s large West Coast projects. “It doesn’t make sense for us to sell it in an environment that as strained as it is right now.”

Mr. Haddad says Lennar will monitor the Orange County market on a monthly basis, but “this might be put on hold for the whole year of 2008.” Lennar also is halting development of a large community planned near Angel Stadium of Anaheim, despite preparing the land to support the project.

Analysts expect more builders to mothball projects in the coming months, as they decide that the losses from selling homes at huge discounts are greater than the costs of carrying properties on their books. But it’s not an easy decision. Builders are facing increasing pressure from lenders to service their debt and also have overhead expenses to support.

“It’s the next natural step in the evolution” of the housing downturn, says Nishu Sood, a home-builder analyst at Deutsche Bank. “This normally happens during a recession when you just don’t have a base of demand. But it’s like that now. In some of these locations, you just can’t give a house away.”

Some builders don’t have the luxury of waiting for a brighter day. The more highly leveraged companies are slashing prices to move inventory to generate cash and pay down debt. This fall, builder Hovnanian Enterprises Inc., based in Red Bank, N.J., offered discounts on homes of as much as 30%, while Standard Pacific Corp., of Irvine, Calif., has been offering discounts and other incentives of as much as 25% on certain homes. Both companies say their recent, heavily marketed discounts have sparked sales in the difficult market.

Lennar Chief Executive Stuart Miller recently called some price cuts “unrealistic and maybe even ridiculous.” “The market has just deteriorated more and more. We don’t want to go below a certain floor, and that is the floor of reasonableness,” Mr. Miller told analysts on a conference call in late September.

Outside some of its Orange County developments, Lennar continues to discount homes in many markets to make sales under increasingly tough conditions. In the third quarter, Lennar delivered 7,636 homes at an average price $296,000, including discounts or amenities of $46,000 per home. That compares with an average price of $316,000, including $35,900 in discounts and amenities in the year-earlier period.

Lennar’s move in Orange County is unusual in that the company is mothballing homes. Builders typically mothball partially developed or undeveloped land because vacant homes require watching. One alternative would be for builders to sell their land instead, but that market is even more dismal than the one for housing. Recent land transactions in California, Phoenix and Southeast Florida, while few in number, have fetched discounts of 70% and 80% on finished lots, according to Zelman & Associates, an independent housing research firm.

“They have all this land that they need to turn over, so they keep building,” says Paul Puryear, an analyst at Raymond James & Associates. “We would recover so much quicker if you could just turn it off, but you can’t turn it off.” Lennar may be in a better position than others to mothball certain developments and land. The company was one of the first large builders to discount homes through much of 2006, burning through its unsold inventory and generating cash. At the time, the company was criticized for softening prices, but “it ended up being the right move given the subsequent deterioration in the market,” says UBS analyst David Goldberg. Although it posted a $514 million third-quarter loss, the company ended the period with a net debt-to-capital ratio of 36% compared with an industry average of 43%, Mr. Goldberg says.

Luxury builder Toll Brothers Inc., based in Horsham, Pa., said last week that it is willing to hold prices, even if that means generating few sales. Mr. Sood says such a strategy amounts to the “effective mothballing” of certain developments. “They might have a salesperson in these communities, but it’s effectively fallow,” Mr. Sood says. “They are selling less than one home a month” in some communities. Chief Executive Robert Toll said builders with cash problems may need to reduce prices more aggressively. “But fortunately, for the time being, that’s not us,” Mr. Toll told analysts on a conference call last week.

Builders continue to put up new homes, though in far fewer numbers than during the housing boom. According to the Census Bureau, builders started construction on 79,400 single-family and 21,200 multifamily homes in September, which was down 33% and 31%, respectively, from the same month a year earlier. Housing starts are off by about 48% from a peak in January 2006.

Considering there are too many houses already looking for buyers, it might seem surprising that builders are building at all. But unlike auto manufacturers that can ramp production up or down in a matter of weeks, it can take years for a housing development to makes its way through the development pipeline. By the time the builder has spent money putting in roads and sidewalks, the housing market may have turned. “Many builders are stuck between a rock and hard place,” says Jonathan Dienhart, director of published research at Hanley Wood Market Intelligence, a housing research firm in Costa Mesa, Calif. “They can’t make money by building, and they can’t make money by not building. They have to choose the lesser of two evils.” Lennar’s Mr. Haddad says the builder had to finish constructing the first phase of its Irvine project, called Central Park West, where the mix of condos and town homes had an average price of $700,000. “You create a stigma for a community if it’s only half built,” Mr. Haddad says. The 14 buyers who signed contracts for the 259 homes got their deposits back. A spokesman for Lennar’s partner in the project, San Francisco-based Stockbridge Real Estate Fund, said, “We are under no pressure to sell strong assets into a weak market, especially where the market’s long-term prospects remain favorable.” Mr. Haddad says Stockbridge has a larger equity stake in the project than Lennar, but he declined to elaborate. Mr. Haddad says the lender on the project, Britain’s Barclays PLC, is “fully aware of what we are doing.” Barclays declined to comment.

In ecology, a niche refers to the place or position occupied by an organism or a population within an ecological community called the ecosystem.  It is the term which defines the role the organism or the population plays in the general scheme of things.  The niche an organism or a population holds is the one responsible for dictating the ability of the species to survive.  It is the one which spells whether an organism or a population will perish or thrive.

In marketing, a niche refers to a service or a product that occupies a special area of demand.  It is that small corner in the market that accounts for a certain kind of specialty concerning an unmet customer need.  To be able to attract a strong, solid market, the choice of a niche product should ultimately complement the website one owns.  It is through this scheme that he is able to generate a specific market for the niche product he is trying to sell.

Niches are involved in niche marketing, the process of finding market segments that are small but potentially profitable nonetheless.  To maintain a profitable quantity of sales, this marketing strategy relies on increasing the loyalty of customers so that their corporate objectives will be met or surpassed.  Illustrative of this is the fact that the quality of the product or service sold will generate customer satisfaction and, consequently, customer loyalty.  The result is profitability garnered through a solid market base that trusts in the ability of the product or service to really deliver.

One of the great things about niche marketing is that it encourages those who indulge in it to be unique and one-of-a-kind.  Here one is not forced into the lion’s den and made to compete against established marketers.  He is made to occupy a strong and secure position that ultimately wins him a real place in the market.  Niche marketing differs from other online marketing strategies because this particular quality allows it to operate almost autonomously and without having to contend with corporate sharks that tear each other to pieces.

One of the most important things that should be thought over by those involved in this type of business is the niche business that is going to be involved in the process.  It is important to consider the type of business that one is going to work on to be able to ensure himself of the success that he hopes to have.  It is also important for him to know everything about the niche business at hand.  Learning the tricks of the trade in is one of the things that one could do to make a niche business prosper tremendously.

Being able to reach the niche market is another consideration to make.  In doing so, one should know the exact phrases that people are searching for.  The use of tools can help a lot in knowing the type of keywords that should be used to make the business profitable. Targeting the right keywords does a lot in making this type of business soar.

Those who engage in niche marketing know that determining the potential of a niche before doing everything else is a must if one wants to save all the time and effort that might be wasted if he plunges into everything head on.  Building a niche marketing site that proves to be profitable should be done after an unsatisfied customer demand is identified, and marketing the site appropriately by reaching out to customers the best possible way is what niche marketers should consider if they want their business to reach skyrocketing success.

Is niche marketing needed in a world teeming with a hundred like systems designed for people to make money online?  Those who know how the system works will answer in the affirmative, because niche marketing is the only system capable of filling up a gaping hole in the market by catering to the unsatisfied needs of customers – needs that are usually not given notice by those in the big league.  Though niche marketing, one is able to gain a foothold in the market by being a needle in a haystack.  Small and inconspicuous it may be, but its ability to sting someone so madly once it is found will render him more than surprised.

Andy Huang

Atradius Trade Credit Insurance has developed this list
of 10 Hiding Places for Business Credit Risk to help
financial professionals spot unseen credit risk. Atradius
Trade Credit Insurance is the U.S. arm of Atradius
Group, one of the world leading credit insurers.
Atradius suggests financial professionals look beyond
the figures issued in corporate financial statements,
to also evaluate the following areas when assessing
business credit risk:

1. Capitalization – Evaluate how the firm is capitalized
and if it has access to future capital. Determine
sources of capital and how the capital is structured.

2. Loss on Derivatives – Find out if complex hedging
strategies are in place that may not be actual hedges.
Determine if derivatives used are liquid and if there are
“naked” positions.

3. Mark-to-Market Accounting – Ensure derivative
positives in place are valued correctly and find out
valuation rationale. Determine if rationale has material
impact on financials.

4. Managing Leverage with New Forms of Debt –
Determine if convertibles that look like equity actually
act as debt triggers.

5. Goodwill and Intangible Valuations – Assess if
valuations are accurate and what assets are being
valued and at what price. Check to see if big
write-offs are coming.

6. Off Balance Sheet Transactions – Determine
if there are operating leases that should be capital
leases or capital leases that should be operating leases.

7. Calculating Pension Liability – Reconcile
estimated needs with the projected returns and
see if projections are realistic. Evaluate how options
are treated.

8. Financial Engineering with SPEs and JVs –
Find out if companies are being set up to assist in
product financing to customers of the parent and
determine the effect on the parent if the entity fails.

9. Engineering with Mergers and Acquisition
Activity – Establish if any mergers or acquisitions
impacted the firm’s overall debt/risk ratio.

10. Revenue Recognition and Measurement –
Determine if company is booking future revenue in
current periods for long-term contract deals and if
unrealized revenue is being calculated correctly.
Check to see if swap transactions overstate revenue
and add no realized value. Assess how currency
value affects earnings.
A growing number of companies in the U.S. are
turning to business credit insurers for highly
specialized trade credit underwriting expertise
and their ability to dig deep into company balance
sheets to uncover credit risk that is often not
readily perceived.

The price of Google Assassin is about to increase… in the next 24 hours.

Remember, if you fail to to take action today, you will be locked out and forced to pay the higher price every single month if you later decide to secure membership in my exclusive club.

Secondly, as promised, the Google Assassin members have received all 3 days of my fast-action bonus e-course, “$169k in one day:

selling e-books the easy way”. Over 90 minutes of gold-dust.

Never to be repeated…

Were you left out of the loop? There’s hope… you see, Chris X  have just completed an action plan for the course, and he is going to e-mail it to the members tonight at exactly 8PM Eastern time.

Why is this important? Because that e-mail will also have the download links for all three day’s e-courses inside. So if you missed the boat on Friday, it’s your one chance to clamber back in, before Chris and his Assassin team sail into the mist for good.

I will never mention, release or rehash the course in any way after that e-mail, which is only a few hours away.

So, consider this your final warning: Google Assassin is increasing in price in the next 24 hours, … and you have until 8PM Eastern (5PM western, 1AM UK time), to order your copy and claim the $169k info product bonus.

One of the most important aspects of a search engine optimization project is also one of the most overlooked – preparation! There are some important steps to take in advance of optimizing your site that will make sure your SEO is successful.

Before You Start

Before you start any search engine optimization campaign, whether it’s for your site or that belonging to a client, you need to answer the following questíons:

1) What is the overall motivation for optimizing this site? What do I/they hope to achieve? e.g. more sales, more subscribers, more traffíc, more publicity etc.

2) What is the time-frame for this project?

3) What is the budget for this project?

4) Who will be responsible for this project? Will it be a joint or solo effort? Will it be run entirely in-house or outsourced?

Answering these questíons will help you to build a framework for your SEO project and establish limitations for the size and scope of the campaign.

Ready: How Search Engine-Compatible is the Site Currently?

Something I find very useful before quoting on any SEO project is to produce what I call a Search Engine Compatibility Review. This is where I carry out a detailed overview and analysis of a site’s search engine compatibility in terms of HTML design, page extensions, link popularity, title and META tags, body text, target keywords, ALT IMG tags, page load time and other design elements that can impact search engine indexing.

I then provide a detailed report to potential clients with recommendations based on my findings. It just helps sort out in my mind what design elements need tweaking to make the site as search engine-friendly as possible. It also helps marketing staff prove to an often stubborn programming department (or vice versa!) that SEO is necessary. You might consider preparing something similar for your site or clients.

Steady: Requirements Gathering

Next, you need to establish the project requirements, so you can tailor the SEO campaign to you or your client’s exact needs. For those of you servicing clients, this information is often required before you are able to quote accurately.

To determine your project requirements, you need to have the following questíons answered:

1) What technology was used to build the site? (i.e. Flash, PHP, frames, Cold Fusion, JavaScrípt, Flat HTML etc)

2) What are the file extensions of the pages? (i.e. .htm, .php, .cfm etc)

3) Does the site contain database driven content? If so, will the URLs contain query strings? e.g. www.site.com/longpagename?source=123444fgge3212, (containing “?” symbols), or does the site use parameter workarounds to remove the query strings? (the latter is more search engine friendly).

4) Are there at least 250 words of text on the home page and other pages to be optimized?

5) How does the navigation work? Does it use text links or graphical links or JavaScrípt drop-down menus?

6) Approximately how many pages does the site contain? How many of these will be optimized?

7) Does the site have a site map or will it require one? Does the site have an XML sitemap submitted to Google Sitemaps ?

What is the current link popularity of the site?

9) What is the approximate Google PageRank of the site? Would it benefit from link building?

10) Do I have the ability to edit the source code directly? Or will I need to hand-over the optimized code to programmers for integration?

11) Do I have permission to alter the visible content of the site?

12) What are the products/services that the site promotes? (e.g. widgets, mobile phones, hire cars etc.)

13) What are the site’s geographical target markets? Are they global? Country specific? State specific? Town specific?

14) What are the site’s demographic target markets? (e.g. young urban females, working mothers, single parents etc.)

15) What are 20 search keywords or phrases that I think my/my client’s target markets will use to find the site in the search engines?

16) Who are my/my client’s major competitors online? What are their URLs? What keywords are they targeting?

17) Who are the stake-holders of this site? How will I report to them?

18) Do I have access to site traffíc logs or statistics to enable me to track visitor activity during the campaign? Specifically, what visitor activity will I be tracking?

19) How do I plan on tracking my or my client’s conversion trends and increased rankings in the search engines?

20) What are my/my client’s expectations for the optimization project? Are they realistic?

Answers to the first 10 questíons above will determine the complexity of optimization required. For example, if the site pages currently have little text on them, you know you’ll need to integrate more text to make the site compatible with search engines and include adequate target keywords. If the site currently uses frames, you will need to rebuild the pages without frames or create special No-Frames tags to make sure the site can be indexed, and so on.

This initial analysis will help you to scope the time and costs involved in advance. For those of you optimizing client sites, obtaining accurate answers to these questíons BEFORE quoting is absolutely crucial. Otherwise you can find yourself in the middle of a project that you have severely under-quoted for.

The remainder of questíons are to establish in advance the who, what, where, when, why and how of the optimization project. This will help you determine the most logical keywords and phrases to target, as well as which search engines to submit the site to.

For those of you optimizing web sites for a living, you might consider developing a questionnaire that you can give clients to complete to ensure you tailor the web site optimization to their exact needs.

Go!

So now you are clear about your motivations for optimizing the site, you know more about the target markets, you know how compatible the existing site is with search engines and how much work is involved in the search engine optimization process. You’re ready to tackle the job.

About The Author
Article by Kalena Jordan, one of the first search engine optimization experts in Australia, who is well known and respected in the industry, particularly in the U.S. As well as running a daily Search Engine Advice Column, Kalena manages Search Engine College – an online training institution offering instructor-led short courses and downloadable self-study courses in Search Engine Optimization and other Search Engine Marketing subjects.

100% automated affiliate marketing!

That’s right; you can now put your affiliate marketing on Auto Pilot!

What would happen to your income if your affiliate program was put on auto pilot? While you sleep or hang out with your family and friends you can have a secret computer based member of your team working away on your affiliate business.

Very few programs come out that can allow a newbie to make some serious money online but this secret tool can do it. Why, because this system becomes a member of your team.

One of the keys to making it online is the ability to get things done and with all the various things that need to get done it can take a long time. You need to have a team of people working away to give yourself the best chance of success.

This system is your complete team in a box. It does all the work for you. You just push the buttons.

This is the biggest no brainer of 2007. The guy that built this has spent almost $50,000 in development to completely automate everything you need to do to get going and generating a profit.

You MUST see this program. Click here now.

To your success!

Andy Huang

Stalled Condo Projects Tarnish Trump’s Name

Buyers Lambaste Developer, Whose Coffers Seem Secure

By ALEX FRANGOS November 16, 2007;

Even the Trump name isn’t bigger than the calamitous condo market. Donald Trump’s reputation as a real-estate developer could take a hit as some condominium projects emblazoned with his famous name run into trouble.

In recent years, Mr. Trump has lent his name, and in some cases his own money, to at least 20 projects in the U.S. and another half dozen abroad, including buildings in Dubai of the United Arab Emirates and Seoul, South Korea. While in some cities such projects are doing fine, others face slow sales, project delays and cancellations — and irate buyers.

In Tampa, Fla., buyers who placed deposits of $200,000 to $1.2 million on units in the 52-story Trump Tower Tampa are fuming. Nearly three years after the $260 million skyscraper was started, construction has stopped.

Meantime, a Fort Lauderdale, Fla., tower with Mr. Trump’s name on it was put on hold indefinitely last month, and a West Palm Beach project could be put on the shelf shortly. Construction on a Trump Tower in Toronto is just getting under way after years of delays and a reduction in height. And at Trump Tower Chicago, a hotel and condo project set to be the second tallest building in the city after the Sears Tower, 30% of the 825 units remain unsold as the condo market there slows.

Mr. Trump is known for focusing on the positive. “All of my stuff has been a great success,” he said in an interview Wednesday. “Nobody has even come close to the track record that I have.” He points to many other projects he is involved in that he considers outsized successes, including ones in Las Vegas, Hollywood, Fla., Miami, New York, Hawaii and the Dominican Republic. “Somebody says ‘how’s the market?’ I say not good except for Trump,” he says.

But the recent problems at developments bearing his name are evidence that no one is immune from the downdraft in the housing market. New housing projects throughout the country are suffering from weak demand and falling prices as banks tighten credit standards and a glut of empty units swells.

This time around, Mr. Trump personally is in little danger financially. During the last real-estate collapse in the early 1990s, he was pushed to the brink of bankruptcy because he was personally on the hook for hundreds of millions of dollars worth of debt. He later restructured his debt with the banks and worked his way back to doing real-estate deals.

In some recent condo projects, Mr. Trump has sold his name to developers for a fee and, in certain cases, he gets a portion of the sales in the building as well. In some he has contributed a minority slice of equity. This means, even if the projects fail, his financial exposure is limited, although his reputation may suffer. In other projects, such as in Chicago and Las Vegas, he says he is the lead investor.

At Trump Tower Tampa, which began its marketing in 2005, sales initially soared. The local development company, SimDag LLC, sold all 192 units and then, as the market skyrocketed, returned buyers’ deposits, raised the units’ prices and sold out again.

Then in August 2006, a city inspector examining a key part of the foundation known as the caissons discovered the plot of land wasn’t solid enough to support design. Construction never resumed.

In May, Mr. Trump sued SimDag in federal court in Tampa, charging the developer with failing to pay him much of his licensing fee and failing to execute on construction and sales milestones promised in the contract. Court documents filed by Mr. Trump’s lawyers say his involvement was limited to licensing his name to the developer for $4 million plus a cut of the sales.

But many of the buyers feel that they were led to believe that he had a much larger stake. “The only reason we bought into this was because of Trump,” says Don Wallace, a local restaurant owner whose wife, Elaine Lucadano, has interests in two units. “He’s bashing Rosie O’Donnell, and we’re twisting in the wind,” referring to Mr. Trump’s tabloid spat with the talk-show host. Jugal and Maju Teneja, who paid $528,000 to reserve a unit in October, filed a suit against Mr. Trump and SimDag in Hillsborough County Circuit Court, claiming they deceived buyers into thinking Mr. Trump was closely involved in the development of the tower.

Mr. Trump says his role as a licensor was disclosed in offering documents given to buyers, a point Mr. Wallace disputes. Mr. Trump also noted that his ability to deal with construction problems has been limited. “When I license my name to somebody, I don’t have the same power over a job,” he says. “I could have pulled the Tampa job off easily. Other people can’t pull it off easily.” Now, Mr. Trump says, the Tampa project has become a victim of the deteriorating financing and sales climate. “If there was a job today that was going to start…I would most likely say let’s wait a little while,” he says.

Overall, though, he says his projects are successful, even in markets that are suffering problems, noting his name indeed sells units. “How many times is Trump supposed to be selling out a building before they move forward?,” Mr. Trump asks. As for his brand image, he says: “Tampa doesn’t hurt me.”

SimDag pins the delays on construction problems. “This wasn’t a story about a bad market. It’s a story about bad soil,” says David Hooks, a spokesman for SimDag. The developer says it is now being held up by a delay in obtaining construction financing and that the company is close to getting financing from a hedge fund it declined to identify.

The Trump name has driven the success of numerous condo projects. Mr. Trump says six months ago he received nonrefundable deposits for every unit on a project in Honolulu in one day. His says his interest in the project goes beyond licensing his name, but declined to give details. A condo-hotel tower in New York’s Soho that he is affiliated with has 4,500 inquiries of interest for 450 slots, though they aren’t for sale yet, he says.

But not all of Mr. Trump’s ventures have been runaway successes. His casino company was forced to seek bankruptcy-court protection in 2004. It emerged in 2005 as Trump Entertainment Resorts Inc., but has since struggled. In the condo market, some of Mr. Trump’s projects may be suffering in part from brand dilution. One person familiar with the Fort Lauderdale project Trump Las Olas said it was shelved partly because Mr. Trump has lent his name to two other projects nearby.

Mr. Trump denies there was any brand dilution, though he says Trump Las Olas didn’t make it because it “can’t compete with the Graves site,” a hotel and tower project that also bears his name in Fort Lauderdale, designed by architect Michael Graves. “Frankly, it’s a better site…It’s a more impressive building,” Mr. Trump says. Mr. Trump’s delayed condo-hotel project in Toronto fell behind a competing Ritz-Carlton, and the building now going up has 13 stories fewer than originally planned. However, Mr. Trump says the project is in good shape.

In Atlanta, two condo towers with the Trump name are about to be launched at a time when 5.8% of the homes there are for sale, the second-highest inventory of unsold homes in the country, according to Zelman & Associates, a housing-research firm. Mr. Trump says Atlanta is “a beautiful job going well.” Asked about Atlanta’s poor housing market, Mr. Trump said, “You know I can’t be everywhere. It’s like somebody says, ‘why didn’t you build here.

————————————————————————– ——————————

Survey reveals rising tide of tighter standards for prime loans

Federal Reserve publishes report on lending practices

Wednesday, November 07, 2007

Inman News About 41 percent of loan officers responding to a Federal Reserve Board survey in October reported they had tightened lending standards on prime residential mortgages during the previous three months, compared with 15 percent of respondents in a July survey. About 36.7 percent of the 49 respondents stated that credit standards “tightened somewhat” for prime residential loans, while 4.1 percent stated that credit standards “tightened considerably” during that period.

The October 2007 Senior Loan Officer Opinion Survey on Bank Lending Practices also revealed that about 22.5 percent of the 40 banks that originated nontraditional residential loans reported that lending standards tightened considerably for those loans during the three months prior to the survey, with 37.5 percent reporting some tightening and the remaining 40 percent reporting that lending standards remained basically unchanged.

That compares with a total of 40 percent of respondents that reported tightening during the previous survey period ending in July. According to Call Reports, the 40 banks in the October survey accounted for about 70 percent of residential real estate loans on the books of all commercial banks as of June 30. Representatives for five of nine banks that originated subprime loans in the three months prior to the survey reported tightening standards for those loans, which was a roughly equal proportion to the July survey. The latest survey was mailed out to banks in early October and responses were due Oct. 18.

“About half of the domestic respondents, on net, indicated that demand for prime, nontraditional and subprime residential mortgages had weakened over the past three months. The net fractions reporting weaker demand for prime and nontraditional mortgage loans increased notably compared with the July survey, whereas the net fraction reporting weaker demand for subprime loans was only slightly larger than in July,” the report states.

In response to special questions about prime jumbo mortgage lending — for loans that exceed the federally established conforming loan limit, which is $417,000 for most states — about 45 percent of domestic respondents reported a decline in the volume of prime jumbo mortgages handled by their banks during the survey period compared to the previous three months. Between 30-47 domestic respondents participated in those questions, representing about 60 percent to 70 percent of all residential real estate loans on the books of all commercial banks as of June 30.

Among all respondents, about 55 percent reported either “moderately lower” or “substantially lower” volume in originations of prime jumbo mortgages during the survey period compared to the previous three-month period ended in July. Also, about 37 percent of all respondents reported that the share of new prime jumbo mortgage originations securitized by their banks during the three-month survey period declined in comparison to the previous three-month period. “Domestic banks tightened several lending terms on prime jumbo loans over the past three months,” according to the report, and “significant fractions of respondents reported that they had increased loan fees and spreads of mortgage loan rates over their cost of funds and that they had required more stringent income and asset documentation as well as higher minimum down payments.”

The Bush administration has so far not supported efforts to increase the conforming loan limit — which would aid states where the typical home price is higher than this limit, and most buyers must use jumbo loans and other forms of unconventional financing that are challenged by a credit crunch — and Congress has wrestled with an increase in this limit. In response to survey questions about the commercial paper market, about half of domestic and 75 percent of foreign institutions reported that they tightened, on net, lending standards and terms to provide backup lines of credit for commercial paper programs during the survey period.

Commercial paper is a promissory note issued to finance the short-term credit needs of large institutional buyers such as banks and corporations. Commercial paper often matures in a short period of time and is generally considered to be a low-risk investment.

Also, the survey revealed that about 25 percent of domestic respondents and 60 percent of foreign respondents tightened lending standards and terms of credit for unsecured commercial paper programs with satisfactory ratings in the ability to repay short- term debt obligations, while fewer than 10 percent of domestic respondents and about 40 percent of foreign respondents said they had tightened lending policies on credit lines for commercial paper programs receiving top credit ratings.

————————————————————————– ——————————-

Mogul’s advice to Realtors: Don’t keep your day job.

The Southern California market will get worse before it gets better, he warns a gathering. One survival strategy: Slash prices, now.

By Peter Y. Hong, Los Angeles Times Staff Writer November 3, 2007

Even Realtors can lose faith in the housing market. Speaking to a gathering of industry professionals Friday, longtime California real estate titan Fred C. Sands called the housing market “pathetic” and said some agents needed to start looking for other work.

“If you’ve been in it for five or six years and are barely making a living, you might want to think about what you were doing before and get back into it — you can come back in a couple of years,” Sands told members of the California Assn. of Realtors meeting in Universal City. In the short term, the local real estate market “is not going to get better,” Sands said.

He added that he could speak with candor because he was no longer in the home-selling business. Sands now leads Vintage Capital Group, an investment firm that focuses on commercial real estate development. Such frank remarks are rare at gatherings of famously upbeat real estate agents, but Sands said those in the business needed to remember the last slump and realize “the last five or six years were not normal.”

The soaring market of a few years ago will be followed by a correspondingly sharp decline, he said: “The longer the up cycle, the more excess there is, and the worse it is for what follows.” Few homeowners and real estate agents would find room to quibble with that. An estimated 12% of Californians will sell their homes at a loss this year, said Realtors association economist Leslie Appleton- Young, up from about 2% in 2006.

Slumping sales and prices have also brought hardship on many agents, many of whom were drawn into the profession during the housing boom that began in the late 1990s. There are now 540,000 licensed real estate agents and brokers in California, up 50% from 2003, according to the state Department of Real Estate. But more than half of those agents haven’t been involved in a transaction in the last 12 months, a Realtors association board member said.

Sands on Friday asked audience members who worked in the San Fernando Valley to raise their hands. “I feel your pain,” he told them. He suggested that those who planned to stay in the business focus on affluent Valley areas or “move to the Westside.” Prices have remained stronger on the Westside and in other affluent areas, in part because buyers there are less likely to use loans with low teaser rates that are now adjusting higher.

But wealthy areas won’t escape unscathed, Sand said. “We saw 25-year-old guys buying $3-million houses,” he said of the questionable mortgage practices of recent years. “Someone who makes $100,000 a year can’t afford a $2-million house, but that’s what’s been going on,” Sands said.

“The idea that everyone is supposed to own a home is baloney,” he added. Sands counseled agents that property prices must be cut drastically to “get in front of the crisis.” Otherwise, agents will “follow it down like a dope” and get even less for the properties, if they can sell them at all, he said.

Speaking with Sands was Alan Long, president of the Southern California region of Sotheby’s International Realty Inc., who also told agents to cut listing prices to speed sales. Rising foreclosures could cause prices to fall 20% below 2005 levels, he said. Long counseled agents to drop sellers who aren’t willing to lower prices.

“Let go of the fear another agent will take over and sell it — they won’t,” he said. Long said agents could survive by working with buyers, emphasizing to them the advantages of purchasing from a position of strength. Agents should “go with the flow” by using the downturn to prod buyers, he said. “We are salespeople. We have to be positive.” That remark prompted Sands to interject: “But if you go too far, you lose credibility. People need to know what’s happening.”

peter.hong@latimes.com Times staff writer Annette Haddad contributed to this report.