Drop in Housing Starts Indicates Unemployment Is Headed to 9%

Where is the economy headed? Some "experts" say the economy is ready to rebound, after a short contraction. Others think that the economy is just at the beginning of a long and painful recession. However, the truth may be hidden in data that tracks housing starts, according to University of San Francisco business professor Jon Fisher, who previously founded and sold his online authentication company Bharosa to Oracle. Fisher contends the unemployment rate may be headed to 9 percent.

Fisher says that history shows that as the number of new housing starts drops, the unemployment rate rises shortly thereafter. After analyzing new housing start data, in the next 12 months, Fisher says the U.S. could see unemployment rates as high as 9 percent, a rate not seen since 1983.

"This is important data given the number of layoffs projected on Wall Street," Fisher wrote in an email. "I think the numbers are a fraction of what we're going to see."

Numerous Wall Street firms have already announced layoffs totaling more than 83,000, including 15,500 from Citi, while New York City estimates it will lose 33,000 jobs in Manhattan alone.

However, by the end Q1 2008, the impact was yet to be seen. According to Rob Hegarty, Managing Director and Practices Leader, Securities & Investments and Insurance at TowerGroup, financial services firms actually increased staff globally since the end of 2007. On Dec. 31, 2007, Hegarty said in his presentation at the 2008 TowerGroup Annual Financial Services Business & Technology Conference and Exhibition in Boston, firms had 856,000 employees and by the end of March this year, there were 865,000 employees. Granted, many of the layoffs actually took place in late March and in April-May, so the numbers may be slightly off.

University of San Francisco's Fisher maintains that the drop in housing starts is a good indicator as to where the unemployment rate is headed and that Wall Street won't be immune to further drastic reductions. He writes: "The following chart is a plot of new U.S. housing starts (white line) and unemployment (red line) over the last 50 years. Historically, when new U.S. housing starts have plunged, unemployment has surged in the following year."

"In 1974, new U.S. housing starts plunged from 2.5M to less than 1.0M units followed by a surge in 1975 unemployment from approximately 5.6 percent to more than 9 percent. The same pattern may be seen starting in 1968, 1978, 1985 and in 2007."

"Perhaps 2007 will eventually mark the steepest and greatest decline in new U.S. housing starts in U.S. history yet 2008 unemployment, recently revised upward by the FED to 5.6 percent, has yet to spike."

"We are exactly where we were in 1975 before an unemployment surge to more than 9 percent or before an unemployment surge to 11 percent (1981) or before an unemployment surge to 8 percent (1991). The FED's unemployment predictions do not reconcile with causal or coincidental historical data," Fisher adds.

'Extreme Makeover' house faces foreclosure

We read of severe financial mismanagement of the worst kind has put another home in foreclosure.  But it's not just any home.  This home was FREE and yet, it is in foreclosure!

 

The Harper family lotto had come in; it was getting a donated home plus freebies from "Extreme Makeover" and hundreds of volunteers.  The AP reports that - the house was built in January 2005, after Atlanta-based Beazer Homes USA and ABC's "Extreme Makeover" demolished their old home and its faulty septic system.  Within six days, construction crews and hoards of volunteers had completed work on the largest home that the television program had yet built.

 

The finished product was a four-bedroom house with decorative rock walls and a three-car garage that towered over ranch and split-level homes in their Clayton County neighborhood. The home's door opened into a lobby that featured four fireplaces, a solarium, a music room and a plush new office.

 

Materials and labor were donated for the home, which would have cost about $450,000 to build. Beazer Homes' employees and company partners also raised $250,000 in contributions for the family, including scholarships for the couple's three children and a home maintenance fund.

 

But this wasn't enough.  Caught up in the ridiculous idea that one's home is an ATM, the family took out a $450,000 loan that can't be repaid.  Let's add it up, shall we?  The house was paid for at $450,000 + $250,000 (cash) + scholarship funds, which comes to approximately $850,000 in donations --- DOWN THE DRAIN! 

 

As you can tell this story has ticked me off.  And the reason why is because it is irresponsible morons like this, across the whole *%$#! Nation, that are being bailed out with our tax dollars.  But they'll get their bailouts no matter how angry you or I get because these people, no matter how financially & morally-challenged they may be, are after all - VOTERS.

 

As you can imagine many of the volunteers of the Harper family's "home makeover" aren't very happy.  Lake City Mayor Willie Oswalt, who helped vault a massive beam into place in the Harper's living room said, It's aggravating. It just makes you mad. You do that much work, and they just squander it.

Home prices drop record 15.8%

May home prices dropped a record 15.8% from a year ago, according to the S&P/Case-Shiller Home Price Index of 20 cities. It was the 22nd consecutive month of decline recorded by the index. Prices fell 0.9% from April to May.

Each of the 20 metro areas covered by the index posted annual declines; nine posted record lows and 10 cities recorded double-digit drops.

The Case-Shiller 10-city Index posted a year over year decline of 16.9%, and a 1% month over month dip. Both the 10-City Composite Index and the 20-City Composite Index are reporting record annual declines.

"Since August 2006, there has not been one month where we have seen overall price increases, as measured by the two Composites," said David Blitzer, Chairman of the Index Committee at Standard & Poor's.

Losing streak
Case-Shiller has been tracking the 20-city index for 19 years, while the 10-city index is 21 years old. The current streak of price declines has been unprecedented in both its length and depth. The last extended decline began in in April 1990, when the 10-city index sank for 10 consecutive months. But that total loss was just 6.5%.

Since the 10-city index peaked in July 2006, it has plunged 19.8%. The 20-city is down 18.4% from the peak.

The 20-city index's Sun Belt cities, which recorded the biggest price gains during the boom, have led the charge down. Las Vegas prices have plummeted 28.4% during the past 12 months; Miami prices fell 28.3%; and Phoenix homes lost 26.5% of their value.

Midwest metro areas, which have endured tough economic times for years, are also feeling the pain. Detroit prices are off 17.4% for the 12 months, and Cleveland is down 8%.

Northeast cities like Boston, down 6.2% for the 12 months, and New York, off 7.9%, have been less volatile than the Sun Belt.

The smallest year-over-year declines were recorded by Charlotte, N.C. (down 0.2%), Dallas (down 3.1%), and Denver (down 4.8%).

The soaring numbers of foreclosures are helping to push down prices. Banks tend to slash prices when selling repossessed homes, since they lose money every month a house sits vacant. They must pay property taxes, maintenance expenses and utility costs while getting nothing back in return.

Those sales, in turn, tend to bring down prices in the rest of a given neighborhood, creating a vicious cycle.

Foreclosures accounted for a large - and growing - share of all existing homes sold in some markets. In California, for example, 40% of the existing homes sold during the three months ended June 30 were foreclosures, according to DataQuick, a real estate information provider. That's up from just 5.4% during the same period in 2007.

Rays of light
Optimistic observers might point out that price declines appear to be slowing. The 10-city index's 1% month to month dip in May was less than April's, when it registered a 1.5% decline, while the 20-city index fell just 0.9% in May after dropping 1.3% in April.

Can this be a sign of better times to come?

"Recent home buyers just entering the markets may be seeing price stabilization," said Lawrence Yun, the usually optimistic chief economist for the National Association of Realtors.

He pointed out that in places like Las Vegas and Phoenix, drastically lower prices have led to an uptick in sales volume, a sign that conditions may stabilize.

But Patrick Newport, an economist with Global Insight, an economic forecasting firm, thinks there are more hard times ahead. He points out that seasonal variations may account for what appears to be a slowdown in the pace of the May decline.

"You can't go by monthly numbers," he said. "What I look at is the Census Bureau's inventory of vacant homes on the market. That hasn't budged much, although it dropped to 2.8% [of total homes for sale] in the second quarter from 2.9%."

Historically, vacant homes have made up about 1.7% of housing inventory.

"What's worrying me is that foreclosures are adding to inventory, and the inventory numbers tell you what to expect for the next couple of years," says Newport. "They're saying home prices will drop."

And Yun expresses concern over mortgage rates, which have been on the rise. Higher rates can cancel out more affordable prices by increasing monthly mortgage payments.

The new housing rescue bill that just cleared Congress over the weekend may help, however. "The tax credit for first-time home buyers will offset the slight rise in mortgage rates," he said.

Four years of gains in home prices wiped out

Home prices across 20 major U.S. cities have dropped a record 15.3% in the past year and are now back to where they were in the summer of 2004, according to the Case-Shiller home price index released Tuesday by Standard & Poor's.

Prices in the 20 cities are now down 17.8% from the peak two years ago.

Prices were lower in April than they were a year earlier in all 20 of the major metropolitan areas as tracked by the Case-Shiller index.

Las Vegas, Miami and Phoenix saw the biggest declines, with prices falling by 25% or more in the past year. Prices in 10 cities have fallen by more than 10%.

Home prices in Charlotte, N.C., which was the last holdout to show gains, have now slipped 0.1% in the past year.

Prices were down a record 16.3% on a year-over-year basis in a smaller subset of 10 metropolitan areas that have been tracked over a longer period.

With so many homes on the market and foreclosures rising, prices are likely to keep falling, said Patrick Newport, an economist with Global Insight. He foresees prices dropping a further 10%.

What goes up, comes down

Home prices surged in 2003 through 2006, climbing by a cumulative 52%, according to Case-Shiller. Since then, however, the housing and credit bubbles have burst and homeowners have given up half of their gains from earlier in the decade.

Falling prices have eroded Americans' wealth, cutting into their ability to borrow against the equity in their homes or refinance or sell for a profit. Millions of Americans now owe more on their homes than they're worth.

The falling home values could also trigger higher monthly payments for many homeowners with negative amortization loans.

But falling prices are likely a necessary ingredient if the housing market is to get growing again.

"We expect the 20-city Case-Shiller composite to fall another 15% to 20%, to a bottom at the end of 2009, translating to a peak-to-trough drop of 30% to 35%," wrote Michelle Meyer, an economist for Lehman Bros.

The Case-Shiller index tracks sales of the same homes over time, so it's not influenced by the mix of homes sold in a period. Unlike the home price index from the OFHEO, the Case-Shiller gauge tracks homes with nonconforming loans, such as subprime loans or jumbo loans, which were common in the frothiest markets.

"There might be some regional pockets of improvement, but on an annual basis the overall numbers continue to decline," says David Blitzer, chairman of the index committee at Standard & Poor's.

Home prices fell in 12 of 20 cities in April compared with March. Prices have fallen in those 12 cities for eight consecutive months.

Here's the city-by-city breakdown in the Case-Shiller index:

Las Vegas, down 26.8% in the past year; Miami, down 26.7%; Phoenix, down 25%; Los Angeles, down 23.1%; San Diego, down 22.4%; San Francisco, down 22.1%; Tampa, down 20.4%; Detroit, down 18%; Minneapolis, down 15.5%; Washington, down 14.8%; Chicago, down 9.3%; New York, down 8.4%; Atlanta, down 7.5%; Cleveland, down 6.8%; Boston, down 6.4%; Seattle, down 4.9%; Denver and Portland, both down 4.7%; Dallas, down 3.4%; and Charlotte, down 0.1%.

In the OFHEO index, here's the regional breakdown:

Pacific, down 15% in the past year; Mountain, down 4.9%; South Atlantic, down 4.8%; New England, down 4.6%; East North Central, down 3.8%; Middle Atlantic, down 3.3%; West North Central, down 2.4%; East South Central, up 0.1%; West South Central, up 1.9%.

How to Sell Your House Quickly When Facing Foreclosure

If you are currently in foreclosure, strongly consider selling your property as a backup plan. The object is to pay off all debt and expenses, walk away without a foreclosure or bankruptcy on your credit history and perhaps put a little cash in your pocket to start over. Some lenders provide assistance with seller-paid closing costs as well; which is always a plus.

Many people underestimate the value of personal credit. Credit isn’t just used for purchases anymore. Do you know that many employers run credit checks prior to making a hiring decision? Foreclosure and bankruptcy are two of the worst marks to have on your credit because they drastically reduce credit scores. There is definite value in doing all that you can to prevent these items from being posted on your report. One of the strategies to stop foreclosure is to sell your property as quickly as possible; keeping in mind that the foreclosure process can be complete in a little over one month in certain states.

Your lender may agree to accept the sale as total satisfaction of your mortgage obligation even if the proceeds of the sale are less than the amount that you actually owe. This is called a short sale. In order to qualify for this option, you must be at least two months behind on your mortgage. The "as is” appraised value and the sale price should be least 70 percent to 80 percent of the unpaid principal balance of the home. You must also be able to close on the sale of your house within one to two months. (Note: These percentages are not a hard-and-fast standard for all lenders but they are a starting point.)

For example, if you owe $180,000 on your existing home loan, then the house must sell for a minimum of $126,000. The house can then be sold for a minimum of $126,000 (which is 70 percent of the appraised value), although selling the house for $180,000 would be more favorable.

There are three steps that must be taken in order to successfully sell your home quickly. They are:

1. Valuing your property,
2. Figuring out your bottom-line sale price, and
3. Locating buyers.

Be aware that realtors and investors can be quite sophisticated. They often know more about the market value of your home than you do because a great deal of information can be found on the Internet. They have access to such information as the value of your home, the square footage, the number of bedrooms and bathrooms, what similar houses in the neighborhood have sold for, and if the owner on record is current on taxes.

The very best advice that I can give is for you to do your homework prior to calling a realtor or investor. Each of the three steps to sell your home quickly are discussed below:

1. How to Value Your House
Let’s start by discussing how to value your property, otherwise known as “market analysis.” It involves comparing your house to houses with the following characteristics:

Similar square footage, number of bedrooms/bathrooms
Similar features (fireplace, pool, waterfront, etc.)
Within one mile of your home
Similar year built
Sold within the last six to 12 months


There are several real estate websites that allow you to compare your house to houses with similar characteristics and provide a ballpark figure of the value of your home. Another method of obtaining a rough estimate of the appraised value of your home is to research the data contained within your county website. Many county websites provide information regarding market value, neighborhood sales information, house description, tax information, and much more.

Once you have a rough idea of the market value, contact a realtor and request a market analysis to obtain more detailed information. Ask the realtor to provide a list of ALL comps in your neighborhood; not just the three or four that he or she feels are the most relevant. To confirm their analysis, get a second opinion. It won’t take long to find a list of realtors in your area in the yellow pages or on the internet. Then make the call.

It is also important that you know the cost of all necessary repairs. Obtain at least three quotes and be willing to provide information regarding the lowest repair quote to the buyer upon request.

Gathering all of the information above will assist you with the next step.

2. Developing a Bottom-Line Sales Price

Now let’s discuss how to develop a bottom-line sales price based on the following formula:

Market Value
- Repairs
- Closing Costs
= List Price

Remember, time is not on your side if you are currently in foreclosure. Therefore you cannot afford extensive negotiations. Again, the object is to be able to pay off all debt and expenses, walk away without a foreclosure or bankruptcy on your credit and perhaps put a little cash in your pocket to start over. On the other hand, many lenders in the current market are overwhelmed with foreclosures and may take a long time to get back to you on a short sale request. The good news is that if a short sale offer has been submitted, the lender will typically temporarily postpone foreclosure proceedings until they respond to the offer.

3. How to Locate Buyers

There are several ways to locate buyers, depending on the amount of time you have to complete the sale. The three most effective methods for quickly locating buyers are:

To Google “foreclosure listings” and then list your property on the Internet for free,
List your property with a real estate agent and/or contact an association of real estate investors.
You can also sell the house yourself by putting a “for sale” sign at a major intersection near your house and placing an ad in local classifieds.
Here we’ll only discuss two options in detail:

1. Listing with a Realtor
The conventional method of locating buyers is to contact a Real Estate Agent and ask them to list your property. In order to locate a realtor, review the Yellow Pages or request referrals from friends. If you contact an agent, they will come out to evaluate your home and more than likely request that you sign a document that allows them to represent you when speaking to prospective buyers. Remember, DO NOT LET ANYONE PRESSURE YOU INTO SIGNING ANYTHING. After evaluating your property, the agent will run a market analysis to identify the price houses with similar square footage, number of bedrooms/bathrooms, and features have sold for within one mile of your neighborhood in the last six to 12 months. The agent will then suggest a list price that you can either accept or reject. Once your property is listed in the Multiple Listing Service (MLS), it will be available to all agents (thus potential buyers) in your area.

Disadvantages
Although the agent handles all of the details, they do not do it for free. Agents usually charge between three percent and six percent of the final negotiated sales price. The seller (that's you) customarily pays for fees associated with both the buyer’s and seller’s agent (which usually totals 6 percent). If you have requested a short sale from your lender; they the lender may agree to pay the closing cost.

Another disadvantage is that most buyers who are looking to live in the property want the house to look brand new. Therefore, you must take into account the cost to repair your property prior to listing it or, if enough equity exists, be prepared to reimburse the seller for requested repairs after closing. Please note, you do not necessarily have to perform repairs. You could sell the house as-is, yet unless your house is in tip-top condition more than likely you will not get full market value.

Advantages
The number one advantage to listing your house with an agent is that you may be able to obtain full market value for your home. Again, this is time dependent, so if you have lots of time you can request more money. The coverage that the multiple listing obtains is also a huge advantage. Another advantage is that the agent walks you through the entire process. Therefore, you do not have to search for prospective buyers, negotiate the price and terms of sale directly, or even know the entire sales process. The agent will handle all of the details and walk you step-by-step through the process.

2. Selling to an Investor
An alternative to listing your house with a realtor is to locate an investor who is willing to purchase your home. This is the best option if you must sell the house quickly, because they are often able to make cash purchases. Therefore, the loan processing time is eliminated. Investors are also very helpful with developing creative solutions so that you can sell your house with no out-of-pocket expenses, thus you can walk away without any financial obligations. If requested, they will often provide guidance on how you can save your home as well.

You can take matters into your own hands by locating an investor on your own. In order to locate an investor, review your local newspaper or Yellow Pages. Their ads usually state “I Buy Houses” or “ Cash for Houses,” so they are pretty easy to recognize. Another great way to find multiple investors is to contact your local real estate investment club. Visit the following link in order to obtain a list of investment clubs throughout the nation: http://www.creonline.com/real-estate-clubs/index.html. Ask if they can refer you to someone who may be interested in purchasing your property. If you have time, it may also be a good idea to pass out flyers at their monthly meeting.

Disadvantages
The disadvantage of working with investors is that they purchase houses in order to make money by performing repairs and reselling the house or renting it out. In order to make money, they must obtain the house at a discounted rate (usually 10-30 percent below market value). That means that you will not walk away with all of your equity. So prior to making the decision to sell to anyone for less than the full amount, consider what you stand to gain and what you stand to lose. Also, watch out for scammers. Certain people will try to prey on your lack of knowledge, so take heed of the useful tips provided here.

Advantages
The advantage to working with an investor is that they can move very quickly. Plus, you most likely will not have to perform repairs, make back payments, pay foreclosure attorneys, pay a reinstatement fee, or pay late fees. You will walk away with a portion of your equity in order to start over (depending on the amount of repairs needed), no foreclosure or bankruptcy on your credit, and hopefully less stress. Remember what I said at the beginning of the article, this is a temporary situation. Just make sure that you walk away with all that you can, and don’t allow anyone to push you around. The key is to educate yourself as much as possible…so you’re already on the right track.

Countrywide Financial : San Diego sues lender in 'foreclosure sanctuary' plan

The city attorney of San Diego has filed suit against the Countrywide mortgage-lending unit of Bank of America.

Falling house prices and rising repossession rates in the US are at the root of the legal action, as the official attempts to make the city a "foreclosure sanctuary".

The lawsuit aims to prevent the lender from repossessing properties within his jurisdiction, and therefore bids to prop up the local housing market.

City attorney Michael Aguirre commented: "We are asking that any additional foreclosures be stopped and that the parties come together and work out a reasonable alternative based on the values of these properties today so we can stop the spread of this foreclosure disease."

He added: "We would like to see San Diego become a foreclosure sanctuary."

Mr Aguirre is also planning lawsuits against Wachovia, Wells Fargo and Washington Mutual - banks which are also attempting to foreclose on local residents.

Chicago-area home sales down almost 28% in June

Home sales in the Chicago area fell almost 28% in June, according to the Illinois Assn. of Realtors.

In the nine-county Chicago region, home and condominium sales totaled 7,656 in June, compared with 10,612 sales in June 2007, the Realtors’ group said in a release Thursday.

The median home sale price in the Chicago area was $256,000 in June, down 3.3% from June 2007. The median is the price where half the homes sold for more and half sold for less.

Statewide sales fell 27% in June, to 11,643 homes compared with 15,945 in June 2007, the Realtors’ group said. The median sale price statewide was $200,000, down 6.1% compared with June 2007.

Chicago-area sales were up 10.5% in June compared with May, according to the release. June’s statewide sales were up 3.6% over May.

The Realtors’ group's sales figures include new and existing homes. The nine-county Chicago Primary Metropolitan Statistical Area consists of Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will.

Also Thursday, the National Assn. of Realtors reported that nationwide sales of existing homes dropped by 2.6% last month to a seasonally adjusted annual rate of 4.86 million units. That's more than double the expected decline. It leaves sales 15.5% below where they were a year ago.

The downward slide in sales is depressing prices, too. The nationwide median price for a home sold in June has dropped to $215,100, down by 6.1 percent from a year ago. That was the fifth-largest year-over-year price drop on record.

FBI launches IndyMac fraud investigation

A fraud investigation into the failed bank IndyMac Bancorp, based in Pasadena, California, has been launched by the FBI.

The lender is one of 21 other mortgage companies being investigated for possible mortgage lending fraud related to at-risk subprime borrowers.

IndyMac was taken over by the Federal Deposit Insurance Corp (FDIC) last Friday, July 11th, with officials claiming that it appears the whole company rather than specific employees are under investigation, reports the Associated Press.

The bank was seized after regulators reached the conclusion that it was unlikely to be able to meet depositor withdrawal demands.

FBI special agent Richard Kolko said in a statement: "Given the volatility of today's subprime market, we have seen an increase in subprime-related complaints.

"To protect the integrity of our cases, we do not confirm or comment about specific companies that may or may not be a part of our investigations."

IndyMac, which has $32 billion in assets, is the fourth-largest financial institution ever to fail in the US.

Easton, Maryland : Buy a house, get a car

Catherine Poe is throwing in a Toyota Prius hybrid with the sale of her renovated Maryland house.

Poe and her daughter bought the 1907 three-bedroom colonial in Easton, Maryland, in 2005 as an investment property.

In the past, the pair has bought two historic homes within minutes of Maryland's shoreline, renovated and resold them during a red-hot housing market.

Poe said she and her daughter bought this house for $335,000, spent $300,000 restoring it and were hoping for a $40,000 profit when they first put it on the market.

But after more than a year of trying to sell it, taking it off the market and putting it back on, they say they're ready to cut their losses.

With gas prices hovering about $4 a gallon in most states, they hope the fuel-efficient Toyota Prius hybrid, which costs about $23,000 for a new model, will sweeten the pot even more.

Poe's real estate agent said he is optimistic about the giveaway, saying that an incentive of that magnitude was a first for one of his clients.

"You have to be creative. You have to learn how to do different things, and if we learn anything from this, certainly, we will replicate it," said Chuck Mangold, who has put an ad for the Prius in the local newspaper.

But Elizabeth Blakeslee of the National Association of Realtors cautions buyers about "gimmicks" to draw attention to a house.

"In my 18 years as a Realtor, I have never known anyone who has actually received whatever it was, the trip or the car," said Blakeslee, a regional vice president for the NAR. "It's generally negotiated away during the process of the buying or selling negotiations."

She added that a competitive selling price is a better way to get buyers interested and generate a sale.

According to the NAR, existing home sales remain 14 percent below a year ago. Even with a projected small uptick in 2009, analysts are predicting a slow recovery.

Poe said she is motivated by a love for old homes.

"It's not flipping, so much as coming back and renovating and presenting it to the person who appreciates that," she said. "It's not like coming and going 'Wham, bam, here's a house for you,' just jack up the price $100,000.

"The love affair with historic houses is still there. We're having to be realistic also."

The house is selling for $595,000, and Poe says she is willing to reduce the price if a potential buyer doesn't want the Prius.

Donald Trump Sells Palm Beach Home For $100,000,000

The real estate market might be slumping, but not for Donald Trump, who sold his Palm Beach mansion for $100 million, his spokeswoman said Wednesday.

"In an age of so many people getting hurt in real estate, it shows that you can still do well in real estate," Trump told The Associated Press in a phone interview.

His spokeswoman says $100 million is the most ever paid for an estate in the U.S., though there is no way to verify that claim.

Russian fertilizer billionaire Dmitry Rybolovlev purchased the roughly 60,000 square-foot oceanfront home, which Trump fixed up after buying it for about $41 million in 2004.

He assigned renovations to "Apprentice" winner Kendra Todd, who dressed it up with marble and 24-karat gold fixtures, even in the bathrooms. The home, called Maison de L'Amitie, is spread over several buildings and includes separate coat closets and bathrooms for men and women off the main entryway for easy entertaining. A mammoth fountain greets guests from the front along with 475 feet of ocean in the back.

"I think it's a great sign for the area, a great sign for Palm Beach and all that Palm Beach represents," Trump said.

6 months - 343,000 homes lost

Through the first half of 2008, the foreclosure rate shows little sign of letting up.

The number of Americans losing their homes to foreclosure continued to soar in June, according to a report released Thursday.

RealtyTrac, an online marketer of foreclosed properties, reported that lenders repossessed 71,563 homes in June. A year ago, just 26,369 homes were taken back.

During the first six months of 2008, 343,159 Americans lost their homes, up 136% from 145,696 recorded during the same period in 2007.

The report revealed that foreclosure filings of all types, including notices of default, notices of auction sales and bank repossessions, rose 53% from June 2007, to 252,363. For the first six months, total filings rose 56% to 1.4 million.

"June was the second straight month with more than a quarter-million properties nationwide receiving foreclosure filings," said James Saccacio, chief executive officer of RealtyTrac.

There was a shred of good news: When compared with May, filings declined 3%.

Part of that decline may be traced to the actions of states, including Maryland and Massachusetts, that have put moratoriums on foreclosures, according to Rick Sharga, a spokesman for RealtyTrac.

"Massachusetts put a 90-day hold on new foreclosures," he said, "and filings dropped 3% there over last year."

But big increases were more common. In 13 states, filings more than doubled from a year earlier, including in Arizona, Nebraska and Oregon.

"The year-over-year increase of more than 50% indicates we have not yet reached the top of this foreclosure cycle," said Saccacio.

Adding to foreclosure woes is that home prices have been falling all year, down more than 14% in the first quarter, according to the latest figures from the S&P Case-Shiller Home Price Index.

Price declines strip homeowners of equity, making many mortgage borrowers owe more than their homes are worth. When they're underwater, they can't borrow against home equity to help out during a rough financial stretch.

Underwater properties are hard to sell because any deal would be for a sum below the mortgage balance - the bank would have to agree to take a loss. Many of these "short sales" get turned down and wind up as bank-owned properties.

"The real explosion has been in bank repossessions," said Sharga. "There's really no place else for these places to go except back to the lenders when they're underwater."

Two things work against short sales, according to Duane LeGate, president of HouseBuyerNetwork.com, a short-sale specialist. One is there is often a question of who has authority over the loan. Mortgage servicers are loath to make decisions that will result in losses of mortgage principal of loans in investor pools, even if it means smaller losses than foreclosures produce.

The second is manpower. Servicers simply don't have the personnel to handle the volume of short-sale and other loss-mitigation requests they've been receiving. Delays in processing short sales can mean approvals come too late.

"We hear about all these streamlined mortgage lending programs," said LeGate. "Where are the streamlined processes to undo the mortgages they originated?"

Sun Belt still hard hit
Nevada led all states in the rate of foreclosure activity for the 17th consecutive month, with one filing for every 122 households, a total of 8,713. California had the most filings with 68,666, one for every 192 households.

Other states with very high foreclosure rates included Arizona, one for every 201 households, Florida (one for every 211), Michigan (one in 375) and Ohio (one in 382).

California had seven of the 10 metropolitan areas worst hit by foreclosure. Stockton had one for every 72 households - more than six times the national average of one for every 501 households. Merced, was second with one for every 77 households, and Modesto - one in 86 - was third.

Cape Coral-Fort Myers, Fla., where one in every 91 households received a foreclosure filing, had the fourth highest rate. In Las Vegas, the only city outside of California and Florida with a foreclosure rate ranking among the top 10, one in 99 households received a foreclosure filing in June.