Housing

Defaults climbing in Bay Area housing market:

http://www.bizjournals.com/sanjose/stories/2006/10/16/daily58.html?from_rss=1

Home Builders Beginning to File for Bankruptcies, Straining Lenders, Worrying the Fed
On October 11th, Kara Homes, a major New Jersey homebuilder with assets of $350 million filed for bankruptcy. They are one of the first decent sized builders to make such an announcement, but it is unlikely that they are the only ones feeling financial strain at the moment. Larger homebuilders such as Lennar, D.R. Horton and KB Homes have already signaled that they will be reporting weaker profits or lower sales. The impact is being felt across the board as Kara’s bankruptcy deals a major blow to its creditors, who are regional banks such as Amboy National. According to the Ashbury Park Press, Amboy holds $58.2 million in loans with Kara Homes Inc. Unfortunately for Amboy, this is the second time in five months that they have had to deal with faulty loans. Real Estate Mogul Solomon Dwek of Ocean Township bounced a $25.2 million check five months ago and had his assets frozen by a Superior Court judge. Amboy says Dwek owes it $49.7 million, which makes it the largest bank creditor in that case. Ashbury Press also adds that Amboy was not the only bank included in the Kara bankruptcy filing. National City Bank of Philadelphia holds $48.2 million on loans to Kara. North Fork Bank of Edison holds $21.3 million; TD Bank North of Portland, Ore., holds $15.9 million; Yardville National Bank holds $7.8 million; Magyar Bank of North Brunswick holds $7.5 million; and Park Avenue Bank of New York holds $3 million in loans to Kara. Kara’s bankruptcy may be a good time for investors to think about whether more banks are exposed to this same problem. In the past year, bank exposure to mortgages and home loans has hit an eight year peak. If more of these bankruptcies occur, the Federal Reserve may have a much more serious problem to deal with than inflation.
http://biz.yahoo.com/fxcm/061018/1161196805704.html?.v=1

Housing Correction Just Getting Started?
http://www.nysun.com/article/41659

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