Texas Bankruptcy Blog : Texas Bankruptcy Lawyer & Attorney : Fears Nachawati law Firm : Chapter 7, Chapter 13, Consumer Bankrutpcy : Dallas, Fort Worth, Austin, Houston, San Antonio

New home sales tumbled in August to the slowest pace in 17 years, while the average sales price fell by the largest amount on record, demonstrating the depth of the problem that Washington is trying to solve.

The Commerce Department said Thursday that new homes sales fell by 11.5 percent in August to a seasonally adjusted annual sales rate of 460,000 units, the slowest sales pace since January 1991.

The Dallas Morning News reported, it was a much bigger sales decline than the small 1 percent drop that economists had been expecting. The average price of a new home sold in August dropped by a record amount of 11.8 percent to $263,900, compared to the July average of $299,100. The median price was also down, falling 5.5 percent to $221,900.

The big drop in new home sales followed news Wednesday that sales of existing homes were down 2.2 percent in August to a seasonally adjusted annual rate of 4.91 million units. Both segments of the market remain under pressure from the steepest housing downturn in decades.

That housing slump has contributed to a record surge in mortgage defaults, leading to billions of dollars in losses by financial firms and spawning a severe credit crisis that is threatening to send the country into a steep recession.

In a nationally televised speech Wednesday night, President Bush said the credit crisis could trigger a “long and painful recession” unless Congress acts quickly to pass a $700 billion bailout plan for the nation’s financial system. Negotiations on that plan were continuing Thursday with expectations that an agreement would be reached soon.

Besides the weak housing report, the government said Thursday that new claims for unemployment benefits shot up last week to the highest level in seven years. Orders to factories for big-ticket manufactured goods fell by a much-bigger-amount than expected amount of 4.5 percent in August. Both indicate the rising pressures facing the economy.

The report on new home sales showed that business was off in every region of the country except the Midwest, which posted a 7.2 percent increase. Sales plunged by 36.1 percent in the West and were down 31.9 percent in the Northeast. Sales fell a more modest 2.1 percent in the South.

These are tough times on the financial front. However, you don't have to watch your retirement hopes slip away from you.  You’ve been planning for your future and saving for retirement. But what do you do when your expenses outgrow your income? Is it wise to make early withdrawals from your retirement to pay for your expenses today? Many retirement plans penalize for early withdrawal. According to IN.gov, taking a lump sum distribution. “gives you the freedom to do whatever you want with the money.  But beware: at the time you cash out, you will owe all applicable taxes. If you're younger than 59-1/2, you'll pay a 10 percent penalty plus state and federal income tax on the full amount of your distribution (including the penalty.) This choice may also affect your ability to receive unemployment compensation . . . Also, if you are vested, you will lose your right to a lifetime pension benefit.” 

If you are overwhelmed by debt and cannot seem to catch up on your bills it is important to know there are alternative solutions to tapping into your retirement. If you are not ready to empty your nest egg solely to survive today and potentially exhaust your funds for tomorrow you may want to consider bankruptcy. For more information on bankruptcy please contact Fears | Nachawati Law Firm, Phone (214) 890-0711, 4925 Greenville Avenue, Suite 715, Dallas, Texas 75206.

People with financial difficulties who own homes at some point in time may not be able to make their monthly mortgage payments.  This, of course, may occur for any number of reasons including bad financial decisions, loss of employment, and / or unforeseen medical conditions resulting in astronomical bills.  Whatever the reason may be lenders have no alternative but to call in the loan after a certain number of late or missed payments.  The more equity in your home the more beneficial it is to the lender to foreclose.  While foreclosure makes the lender whole, it may be a financial disaster for you.  Your home is gone, your equity is gone, your credit is negatively affected, and you incur the costs of moving.  You should always try to avoid foreclosure even if it means selling your house.

There are ways to avoid foreclosure like contacting your lender as soon as you realize you have a problem.  Lenders may be able to assist you in lowering your payments.  Be sure to prioritize your spending and you may be able to reduce your monthly expenditures – by putting a membership on hold.  If you are behind on your home mortgage filing for bankruptcy may allow you to keep your home.  For more information on bankruptcy please contact Fears | Nachawati Law Firm, Phone (214) 890-0711, 4925 Greenville Avenue, Suite 715, Dallas, Texas 75206.

A close look at homes lost to foreclosure here in the first half of the year shows that the pain is being felt in almost every neighborhood.

Dallas-Fort Worth home foreclosures for October up 35%
But analyzing more than 11,000 homes sold at foreclosure during the first half of 2008, it's obvious that some areas have been hit harder by home mortgage defaults.

The Dallas Morning News reports,the largest number of foreclosures in the first six months of the year were in ZIP codes 75115 – which includes most of DeSoto – and 75052, Grand Prairie, according to data supplied by Foreclosure Listing Service.

Broken out by city, the largest number of foreclosed homes in the first half of the year were in Dallas, Fort Worth, Arlington and Garland.

The foreclosed homes in the five-county area on average had $123,668 in debt, a tax value of $148,384 and loans that were four years old.

The average square footage of the foreclosed residences was about 1,941. And the average age of the homes was 24 years.

Compared to the overall housing base in each city, the communities with the largest percentage of foreclosures at midyear were Aubrey and Oak Point in Denton County and Princeton in Collin County.

"If you look at those areas, most of them have subdivisions that have been built in the last few years and that are way out," said George Roddy, chief executive of Addison-based Foreclosure Listing Service. "You have the crummy loans that were made and add in the cost of driving to work to Dallas, and people can't afford it.

"They wanted to get in a new home and get in it cheap and weren't thinking about the cost of commuting."

Most analysts predict that foreclosure rates in Dallas and across the country will remain high through next year.

Many homeowners who financed their houses with adjustable rate mortgages have yet to see their payments increase. And when they do, it will be hard for many to make the higher monthly payments or find cheaper funding.

Foreclosed homes now make up a sizable portion of the total inventory of housing for sale in North Texas.

Currently, there are more than 3,100 foreclosed properties identified in the Realtors' local multiple listing services. But the number is definitely higher since not all sellers of foreclosed houses choose to identify the properties as distressed sales.

"A lot of these properties are going to auction before they are even listed for sale," said agent Connie Zetterlund with Coldwell Banker Real Estate. "They are still selling for pretty good prices."

But with the growing numbers of foreclosed homes and increased financial pressures on lenders, it's likely that lenders will move faster to unload houses they have taken back.

"They are going to see in their pipeline what is coming on, and they are going to have to get rid of more."

A close look at homes lost to foreclosure here in the first half of the year shows that the pain is being felt in almost every neighborhood.

The Dallas Morning News reports, the largest number of foreclosures in the first six months of the year were in ZIP codes 75115 – which includes most of DeSoto – and 75052, Grand Prairie, according to data supplied by Foreclosure Listing Service.

Broken out by city, the largest number of foreclosed homes in the first half of the year were in Dallas, Fort Worth, Arlington and Garland.

The foreclosed homes in the five-county area on average had $123,668 in debt, a tax value of $148,384 and loans that were four years old.

The average square footage of the foreclosed residences was about 1,941. And the average age of the homes was 24 years.

Compared to the overall housing base in each city, the communities with the largest percentage of foreclosures at midyear were Aubrey and Oak Point in Denton County and Princeton in Collin County.

"If you look at those areas, most of them have subdivisions that have been built in the last few years and that are way out," said George Roddy, chief executive of Addison-based Foreclosure Listing Service. "You have the crummy loans that were made and add in the cost of driving to work to Dallas, and people can't afford it.

"They wanted to get in a new home and get in it cheap and weren't thinking about the cost of commuting."

Most analysts predict that foreclosure rates in Dallas and across the country will remain high through next year.

Many homeowners who financed their houses with adjustable rate mortgages have yet to see their payments increase. And when they do, it will be hard for many to make the higher monthly payments or find cheaper funding.

Foreclosed homes now make up a sizable portion of the total inventory of housing for sale in North Texas.

Currently, there are more than 3,100 foreclosed properties identified in the Realtors' local multiple listing services. But the number is definitely higher since not all sellers of foreclosed houses choose to identify the properties as distressed sales.

"A lot of these properties are going to auction before they are even listed for sale," said agent Connie Zetterlund with Coldwell Banker Real Estate. "They are still selling for pretty good prices."

But with the growing numbers of foreclosed homes and increased financial pressures on lenders, it's likely that lenders will move faster to unload houses they have taken back.

"They are going to see in their pipeline what is coming on, and they are going to have to get rid of more."

The Dallas News featured a September 3, 2008 Washington Post article that reported how many people are feeling the need to tap into their 401(k) plans just to survive.   The article stated that, “Hard economic times are driving some people to take actions that could jeopardize their futures”. The article noted that there is an increase in people tapping into their 401(k) plans to supplement their financial needs, but that people who do are jeopardizing their long term retirement plans. A person must show severe financial need. Moreover, they would be subject to a 10% penalty tax if younger than 59 ½ and their account would be frozen for six months after the withdrawal wherein neither the employee nor employer may contribute.  People who are feeling the effects of this difficult economy, who are being inundated with bills that have now surpassed their income, should be aware that in most circumstances their 401(k) is protected should they need to file for bankruptcy. There may not be a need to diminish your retirement savings to survive in today’s economy. For more information on bankruptcy – who it’s for and what assets may be protected please contact Fears | Nachawati Law Firm, Phone (214) 890-0711, 4925 Greenville Avenue, Suite 715, Dallas, Texas 75206.

Today, WallStreet was devastated following reports that Lehman Brothers Holdings Inc. filed for Chapter 11 bankruptcy early Monday morning and said it will slowly wind down its operations after being in business for 158 years. At $639 billion, Lehman's is the largest bankruptcy filing in U.S. history--easily surpassing the Enron and WorldCom collapses combined. Lehman filed for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court of the Southern District of New York. The company's broker-dealer subsidiary and other parts of Lehman were not in the bankruptcy filing. Shares of Lehman were down 90% to around 40 cents a share. According to the details of the bankruptcy filing, Lehman held consolidated assets totaling $639 billion and total liabilities of $613 billion. The largest creditor to Lehman Brothers is Citigroup (C: 15.34, -2.62, -14.58%), which has $139 billion in bond debt, followed by The Bank of New York Mellon (BK: 38.35, -1.60, -4.00%), which had a combined $17 billion in bond debts with Lehman. In other liabilities, Japanese bank AOZORA loaned Lehman $463 million, while Lehman also has an outstanding bank loan with Mizuho Corporate Bank worth $289 million.  For questions regarding bankruptcy, call the Fears | Nachawati Law Firm, Phone (214) 890-0711, 4925 Greenville Avenue, Suite 715, Dallas, Texas 75206.

The partners of Fears | Nachawati Law Firm were selected to give a presentation to Bankruptcy Lawyers and Practitioners at a continuing legal education seminar in Barcelona, Spain.  The presentation was a success, as lawyers throughout Texas attended the seminar in an effort to learn about the latest trends in Consumer Bankruptcy Law.  More about the presentation or press questions can be directed to the law firm's assistant at (214) 890-0711.

With the arrival of Hurricane Ike and its deadly aftermath, many Texas homeowners are not only left homeless, but are also left without insurance coverage on their primary residence or home and their beach and vacation homes. Others are left owing more than their house is worth, as some homeowners in Galveston and Houston will inevitably face foreclosure due to Ike’s destruction and the lack of appropriate insurance coverage. Filing Chapter 13 Bankruptcy in Galveston or Houston may give homeowners a chance to get out from underneath a residence that has seen a sudden drop in value. A Chapter 13 Bankruptcy could also allow a couple to reorganize their debt in response to dealing with the aftermath of Hurricane Ike. If you need more legal information on whether a Chapter 13 Bankruptcy filing is right for you, attorneys are waiting to answer your questions. You can call us to set up a free consultation at 1 (866) 705-7584. Fears | Nachawati Law Firm.
 

A new study on home prices shows that the Dallas area still has a big edge in providing affordable housing for relocating corporate 5c7e490cemployees.

The Dallas Morning News reported, Coldwell Banker Real Estate's annual home price comparison index tracks the cost of homes in more than 300 U.S. markets in areas that would appeal to "typical corporate middle-management transferees."

But that's substantially below the nationwide average of $403,738 in the survey, which compares the cost of a typical single-family dwelling with about 2,200 square feet, four bedrooms, 2 ½ baths, a family room and a two-car garage. The real estate sales firm said all the houses used in the comparison were in neighborhoods popular with corporate transferees.

Nationwide, the average price in Coldwell Banker's report was down about 4 percent from last year, which reflects the softer housing market.

The most expensive markets on the real estate firm's annual price list are La Jolla, Calif., at $1.84 million, and Greenwich, Conn., at $1.79 million.

At the other end of the spectrum, the cheapest U.S. markets include Sioux City, Iowa, at $133,459 and Jackson, Mich., at $134,325.

In Texas, the cheapest markets, according to Coldwell Banker, include Arlington at $143,775 and Killeen at $145,812.

A similar house would cost $209,557 in Plano and $149,108 in Fort Worth.

Coldwell Banker has been issuing the report since the 1980s.

No sign yet of a housing turnaround in North Texas.

The Dallas Morning News reported, Pre-owned home sales slumped 18 percent in August compared with a year ago.

And median sales prices slid 3 percent to $150,000, according to the latest statistics from the North Texas Real Estate Information System and Texas A&M University's Real Estate Center.

The fall-off in condo sales was even steeper – 31 percent last month.

The only good news in the monthly report is that the number of houses on the market continues to fall, dropping 14 percent at the end of August. But that may be because some sellers have taken their homes off the market.

Just over 42,000 pre-owned single-family homes were listed for sale in the Realtors' multiple listing service at the start of this month.

August's drop in home sales was one of the largest in North Texas in the current housing sector slowdown. Monthly pre-owned home sales volumes are now down more than 30 percent from the peak in mid-2006.

So far in 2008, local pre-owned home sales have fallen 15 percent from the first eight months of 2007. And overall prices are down 1 percent.

Real estate agents say that buyers are taking longer to make a decision and sometimes have trouble lining up financing.

"I've never seen a market like this where we have people sometimes looking at 30 to 40 homes before they pull the trigger," said agent Scott Schueler with Keller Williams Realty. "When they do pull the trigger, there is a 30 percent fallout rate. They are not making quick decisions, even when they find good deals."

On average it takes 77 days to sell a house in North Texas – 10 percent longer than in August 2007.

There is a 6.5-month inventory of houses on the market. That compares with a national inventory of more than 10 months.

Mortgage market problems are definitely adding to the home sales slowdown.

President Bush said Sunday that the historic federal government takeover of mortgage giants Fannie Mae and Freddie Mac is needed to keep them from failing, a risk he called "unacceptable" for an economy battered by housing and credit crises.

"Allowing the companies to fail or further deteriorate would damage our home mortgage market, and could weaken other credit markets that are unrelated directly to housing," Bush said in a statement released Sunday afternoon. "Americans should be confident that the actions taken today will strengthen our ability to weather the housing correction and are critical to returning the economy to stronger sustained growth."

The Bush administration announced Sunday it was taking control of the two institutions to avert the potential for major financial turmoil.

The Dallas Morning News reported, the companies, which together own or guarantee about $5 trillion in home loans, about half the nation's total, have lost $14 billion in the last year and are likely to pile up billions more in losses until the housing market begins to recover.

Both companies were placed into a government conservatorship that will be run by the Federal Housing Finance Agency, the new agency created by Congress this summer to regulate Fannie and Freddie. The executives and board of directors of both institutions are being replaced.

In a statement, the president called the moves temporary until the appropriate role for the companies can be determined.

He said they must be reformed so that "they not pose similar risks to our economy or the financial system again."

Treasury Secretary Henry Paulson said the actions were being taken because the failure of either of the mortgage companies "would cause great turmoil in our financial markets here at home and around the globe." The huge potential liabilities facing each company could cost taxpayers tens of billions of dollars. But Paulson stressed that the financial impacts if the two companies had been allowed to fail would be far more serious.

Bush said the federal regulator for Fannie Mae and Freddie Mac determined they could no longer operate safely and conduct their public mission.

He said that posed "an unacceptable risk to the broader financial system and our economy."

The nation’s unemployment rate zoomed to a five-year high of 6.1 percent in August as employers slashed 84,000 jobs, dramatic proof of the mounting damage a deeply troubled economy is inflicting on workers and businesses alike.

The Labor Department’s report, released Friday, showed the increasing toll the housing, credit and financial crises are taking on the economy.

The report was sure to rattle Wall Street again. All the major stock indexes tumbled into bear territory Thursday as investors lost hope of a late-year recovery. With the employment situation deteriorating, there’s growing worry that consumers will recoil, throwing the economy into a tailspin later this year or early next year.

The Dallas Morning News reported, the jobless rate jumped to 6.1 percent in August, from 5.7 percent in July. And, employers cut payrolls for the eighth month in a row. Job losses in June and July turned out to be much deeper. The economy lost a whopping 100,000 jobs in June and another 60,000 in July, according to revised figures. Previously, the government reported job losses at 51,000 in each of those months.

The latest snapshot was worse than economists were forecasting. They were predicting payrolls would drop by around 75,000 in August and the jobless rate to tick up a notch, to 5.8 percent. The grim news comes as the race for the White House kicks into high gear. The economy’s troubles are Americans’ top worry.

“With the unemployment rate over 6 percent, it is a clear warning sign that this economy is continuing to soften faster than we thought. It is a real concern,” said Joel Naroff, president of Naroff Economic Advisors. “Businesses have decided to hunker down. They are not hiring, and they are paring workers where they can. That is making things pretty tough out there.”

Wachovia Corp., Ford Motor Co., Tyson Foods Inc. and Alcoa Inc. were among the companies announcing job cuts in August. GMAC Financial Services this week said it would lay off 5,000 workers.

Job losses in August were widespread, the government report showed.

Factories cut 61,000 jobs, with housing-related manufacturers and automakers among the hardest hit. Construction firms eliminated 8,000 jobs, retailers axed 20,000 slots, professional and business services slashed 53,000 positions and leisure and hospitality got rid of 4,000. Those losses swamped employment gains in the government, education and health.

Job losses at all private employers — not including government — came to 101,000 in August.

The government said workers age 25 and older accounted for all the increase in unemployment in August.

All told, the number of unemployed rose to 9.4 million in August, compared with 7.1 million a year ago. Economists predict more job losses ahead, pushing the jobless rate to 6.5 percent or higher next year.

Workers saw wage gains in August, however.

Average hourly earning rose to $18.14 in August, a 0.4 percent increase from July. Economists were forecasting a 0.3 percent gain. Over the past year, wages have grown 3.6 percent, but paychecks aren’t stretching as far because of high food and energy prices.

Caught between dueling concerns of slow growth and inflation, the Fed is expected to leave a key interest rate alone at 2 percent when it meets next on Sept. 16 and probably through the rest of this year. Concerned about inflation, the Fed at its last two meetings didn’t budge the rate. Before that, though, the Fed had aggressively cut rates to shore up the economy.

With the Fed on the sidelines, Democratic presidential nominee Barack Obama has called for a second round of government stimulus, while his GOP rival John McCain has favored free-trade and other business measures to spur the economy.

Dallas-area home prices continue to drift lower, dropping 3.2 percent over last year in the latest national study.

But there were indications in the report that home prices in North Texas are bottoming.

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U.S. new-home sales rise a little
The drop in local home prices has remained at just over 3 percent for several months in the Standard & Poor's/Case-Shiller home price index, which was released Tuesday.

Dallas' small decline was just a fraction of the nationwide drop, a record 15.9 percent in the 20 cities included in the survey.

The Dallas Morning News reports, "While there is no national turnaround in residential real estate prices, it is possible that we are seeing some regions struggling to come back, which has resulted in some moderation in price declines at the national level," Standard & Poor's David M. Blitzer said in the monthly report. "The rate of home price decline may be slowing."

In the Dallas area, home prices were up a scant 0.7 percent from May to June.

But researchers are cautious about using month-over-month comparisons.

"Don't forget we're in the middle of the annual sales season, so things are generally the best then," said economist James Gaines of Texas A&M University's Real Estate Center.

"On the other hand, we've been saying for some time that the Texas markets have weathered the housing bust storm much better than most areas, Dallas included most especially.

"I guess the word might be to be cautiously optimistic that the Dallas market has reached or is reaching a bottom, but sales volumes will continue to be down relative to the frenzied activity of 2005-2006."

Another survey out Tuesday – from the Office of Federal Housing Enterprise Oversight, or OFHEO – found that home prices in the Dallas area were up about 2 percent at midyear from the same time in 2007.

But the report uses a narrower housing sample than Case-Shiller: only homes financed by government-sponsored mortgage companies Fannie Mae and Freddie Mac.

Case-Shiller tracks the prices of typical single-family homes in each metropolitan area.