Would your friends foreclose on you? Maybe. Maybe not. Unfortunately, your friends are not the only ones viewing your profile or Facebook or many other popular social networking sites. Creditors and collection agencies are, too.

MSNBC reports that at least two Facebook members have been sent legal notices via their Facebook account. In what appears to be the first case of it’s kind, an Australian law firm used Facebook to identify and contact individuals who had not responded to conventional methods such as phone calls and letters.

“We’re not aware of it having occurred in the past, it’s really just an extension of methods that have been allowed by the court, including email and text message in circumstances where the conventional courses are unavailable to us,” Mark McCormack, a lawyer representing MKM the non-bank lender seeking to serve the members told MSNBC.

Australian courts have allowed legally binding papers to be served on individuals via email and text messages in the past, according to the BBC. McCormick located one of the members through her Facebook profile, identified her by the personal information she disclosed and discovered the other member was among her “friends”. The court did stipulate that the summons had to be sent to a private email address not posted on their Wall or delivered in such a way that other people visiting their profiles and pages could also view their contents.

That such communications must remain private is some consolation for consumers who find themselves at the mercy of collection agencies. One wonders how long it will last, given that several collection agencies have a reputation for not just annoying the individuals who owe but also their friends, families and employers in their efforts to collect.

So what, if anything, can individuals do to protect themselves? Well, the first obvious action is not to default on loans. Here’s an idea: use cash to make purchases and pay bills. Yes, such a thing is still possible. It’s not terribly convenient, but then neither are collection notices. Neither paying cash nor collection notice do much for your credit rating, of course, but at least if you are paying cash your payment is credited immediately rather than the 1 – 14 day delay that can occur with other forms of payment.

Individuals concerned about being located through social networking sites should probably re-evaluate why they joined such sites and the nature of the information they are posting there. They should also be sure to read the company’s privacy agreement thoroughly before agreeing to it. Way back in 2002 the Electronic Frontier Foundation (EFF) offered 12 tips for protecting your privacy online. Seven years later, they still apply. The most significant being “Do not reveal personal information inadvertently.” Facebook, MySpace, LinkedIN and other social networking sites all offer some level of privacy control which users are advised to tailor to their needs. Only in very rare cases, such as a band or author or artist whose profile is created and primarily used for promotion of their work, should be open and even then the personal details needed to create the profile should be sheilded from general public view.

Creditors are not the only potentially nefarious people lurking in the cyber-world. There are identity thieves, stalkers, and others having ill intent towards any trusting soul. And lest the criminal element feel to secure behind their virtual anonymity, there are also law enforcement agencies, government officials and other trying to police the information superhighway. As with most public places, the moral is “assume everyone can and will see what you are doing” and probably tell someone else about it, too.

Source [blownmortgage]

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California has quickly turned into a case study for the long-term effects of the housing market. The state, which ranks as the eighth largest economy in the world, found itself in a state of quiet desperation when the credit crunch took effect in October. California had already delayed its yearly budget over 80 days, finally settling on an agreement in September. In October, Arnold Schwarzenegger, the state’s governor (my state, I might add), announced he would be seeking billions of dollars from short-term loans and bond-sales to finance such basic costs as payroll expenditures.

Two months later, the state has announced that it is considering making payments to contractors, food-services companies and other state vendors in the form of warrants paying a 5% interest rate on the principal amount. That’s right. Whatever money that California has been able to raise over the past months has only been enough to pay its most immediate bills, forcing it to issue the equivalent of IOU’s to the state’s other service providers. The state has admitted that it may run out of necessary cash as early as March.

California is, of course, only 1 of 50 states in the United States. Yet it represents 13% of the housing market, and it is contributing 19% of foreclosures in the housing market to the United States economy. Couple that with a low property tax rate (among other things) that ranges between 3.6 and 6.5% and does not contribute any funding to the actual state budget (only local and county), and you are presented with a rather ugly picture. Schwarzenegger has made it clear that he would seek federal aid if the budget situation does not improve, painting a picture of a possible bailout for the state.

Adding to its woes, California also has the highest rate of unemployment of any state in the nation. That rate, at last count, is currently sitting at a 14-year high of 8.2%. The provides ample support for those calling for a further downturn in California’s economy, as disposable income for consumers rapidly evaporates, driving business activity downward, causing further reduced tax revenue for the state. It sounds ugly, and clearly it is.

I live in California, specifically in the inland area that has been hit hardest by the sub-prime crisis. California is chock-full of tremendously wealthy individuals and families, but the gap between income groups is growing more and more apparent as the financial crisis continues. Lower income families and individuals are driven to spend as though they earn as much as the wealthy, perhaps due to the ubiquitous presence of Hollywood. Even our governor, after all, is a movie star. Yet when your state finds itself bereft of funding, all the sheen and charisma in the world won’t help.

The trouble is, with the employment picture growing increasingly dire, it is entirely possible that California will not be the only state to find itself asking for handouts. Socialist programs may be extended beyond the corporate welfare policies our government has been experimenting with since the Bear Stearns bailout, and could finally include we-the-taxpayers. And yet it’s funny how that doesn’t exactly excite me.

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Dreams do come true.  In the ongoing saga of Ed McMahon’s housing troubles on his Beverly Hills home, yesterday Ed’s realtor stepped up to plate asking for someone to come purchase the home before it would be foreclosed in the next two weeks.  Well as it turns out none other than real estate mogul Donald […]
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Dreams do come true.  In the ongoing saga of Ed McMahon’s housing troubles on his Beverly Hills home, yesterday Ed’s realtor stepped up to plate asking for someone to come purchase the home before it would be foreclosed in the next two weeks.  Well as it turns out none other than real estate mogul Donald Trump will be purchasing the home according to the L.A. Times.  The agreed upon price is currently undisclosed but Ed has lowered the price on the home from $7.7 million to $4.6 million.  Either way, we’ll find out soon enough what the agreed upon price is.  The Donald does have a sweet spot for the 90210 zip code.

Today in a very special Real Homes of Genius we are going to look at the 6 counties that make up the Southern California market and give you a taste of what is happening on the ground.  These homes will range from super prime homes to something akin to the $1 home that sold in Detroit:

*Source:  Zillow

You’ll love the aerial satellite view from Zillow before the place was stripped naked like a Playboy photo shoot.  This may in fact be the ultimate Real Home of Genius and you can only imagine the face of the agent receiving the whopping 6 cents in commission.  Now on this home we can say that it was worth every penny.  People forget that these homes may have unpaid taxes, major repairs needed, and also may be more of a burden than anything else.  You can be the judge of that.  Detroit has many homes that are practically being given away just to get someone to move in.

In Southern California some people are still in delusion land and think that the housing correction is only a minor bump in the road.  A speed bump in the infinite pursuit of unlimited appreciation.  This is the psychology that is still prevalent in the market.  The market seems to be at a standoff between those that believe the bottom is not yet here and those that think now is the time to buy before prices skyrocket once again.  I tend to believe California won’t see a bottom for another 3 years and prices will fall overall by at least another 20 to 30 percent.

This isn’t some random theory.  The Case-Shiller Index currently has the L.A./O.C. index at 198.59.  The last sold future contract for November of 2011 sold for:

Someone is actually making the bet the Case-Shiller index will fall to 155.  That translates into an additional fall of 21.9% for the entire region.  These are bets that are made with real money.  Clearly the line in the sand is being drawn.  I think those making the bets for stability are vastly underestimating the explosive toxicity of the pay option ARM fiasco that will commence this forth quarter and will hit full stride in 2009.

So let us now salute the 6 counties that arguably are the most overpriced counties in our country.  Today we salute you Southern California with our Real Homes of Genius Award.

County #1 - Los Angeles

Population:                              9,948,081

Area Spotlight:                        Toluca Lake

Median Price zip code:           $862,000

What more can you ask for than having NBC-4 weatherman Fritz Coleman as your honorary mayor?  This small community of 16,978 people is between the city of Burbank and North Hollywood.  The Santa Monica Mountains surround the area of Toluca Lake and provide one of the nicer areas of Los Angeles.

Toluca Lake even though it is considered prime, has not been immune to the housing bubble busting.  The area’s median home price is now down 16.6% when it flirted with the $1 million mark.  This 6 bedroom and 7 baths home provides a lake front view (hat tip L).  You are going to love the view since it is going to cost you $6,650,000.  Now before you go to your IndyMac FDIC taken over account to put down a earnest money deposit on this place, you may want to look at the pricing action:

Listing Price History

Date                Price

May 23, 2007 $8,795,000

Jul 10, 2007     $7,795,000

Oct 17, 2007   $7,100,000

Feb 16, 2008   $6,650,000

This place has been on the market for 450 days and has seen a reduction in price by a stunning $2.1 million in one year.  Now that is a true discount.  But is it?  Let us look at the previous sales history on this place:

Date                Price

Jul 31, 1991     $1,200,000

Apr 09, 1999   $1,090,000

This place actually sold for a loss in 1999!  Even given the current selling price, we are talking about a $5.5 million gain in 9 years.  Now that is what we call high hopes.

County #2 - Orange 

Population:                              3,002,048

Area Spotlight:                        Newport Beach

Median Price zip code:           $1.85 million

Just because Kobe Bryant lives in Newport Beach doesn’t mean all homes will sell for multi-millions.  At least that reality is coming home now.  It was thought during the days of housing bubble lore, that simply buying in Newport Beach meant you were going to be a millionaire with enough money for you to create your own rendition of Redline the movie.
This above home is amazing because who would of thought steel gates would be abound in a community with a $1.85 million median price.  This 3 bedroom and 2 bath home is a nice starter home for any would be millionaire.  This place is on the market and is a foreclosed home. A  foreclosed home in Newport Beach?  That is correct.  The current list price for this home is $1.2 million.  Not bad right?  Well let us look at the previous sales history:

Sale History

12/21/2007: $949,900 *

06/27/2006: $1,477,000

The $949,900 price tag is simply the lender taking the place back.  The more important price point is the $1.47 million.  This home is already selling at a major loss since who only knows if there were second mortgages on this place that are now wiped out.  Given the current market and lack of movement on this place, the current $1.2 million doesn’t seem to be wetting the appetite of many.  At what price will this home sell?  And when it sells, you can rest assured that median price is going to head lower.

County #3 - Riverside

Population:                              2,026,803

Area Spotlight:                        Riverside

Median Price zip code:           $300,000

I love trash can real estate photography.  You almost expect Oscar the Grouch to pop and say, “buy me, buy me, buy me!”  Riverside is being hit hard by the housing crisis.  This zip code is now down 36.6% on a year over year basis and once we go into the details of this Real Home of Genius, you will know why.  This 5 bedroom 4 bath home has been on the market only for 3 days at least according to the MLS data.  The current list price is $794,900.  Is this a deal?  Well let us now examine the previous sales history to find out:

Sale History

07/25/2008: $750,000 *

03/21/2007: $1,200,000

04/30/2002: $635,000

Again that $750,000 is simply the lender taking the place back.  With the current sales price, it looks like the lender is simply trying to recoup part of the first mortgage.  This place sold at its peak only last year for $1.2 million.  If you do the math on the current discount, it works out to be approximately 33%.  Lenders are paying attention to the current market price and are cutting prices to reflect this.  A $400,000+ discount is not a bad deal.  That is, if someone even has the money to buy this place in an area where the median priced home is $300,000!  Do you see why this bottom is nowhere insight?

Until we start seeing housing glamour shots, we are nowhere near a bottom.  I’ve seen places in the Midwest where lenders take the time and meticulously arrange homes to sell for $200,000!  Here for a $794,900 home they can’t even move the garbage and recycle cans out of the way.

County #4 - San Bernardino

Population:                              1,999,332

Area Spotlight:                        Fontana

Median Price zip code:           $321,000

Don’t you love model homes?  I would get tons of brochures about these places during the boom.  San Bernardino and Riverside counties make up the Inland Empire.  These two areas have been absolutely slammed by the housing correction.  Yet as you can see with L.A. and Orange counties we are simply a year away from catching up as well.

This above home is one reason why Southern California was the epicenter of the housing bubble.  This 4 bedroom 4 baths home have been on the market for 115 days.  Currently the list price is $569,000 which is high for an area with a median priced home goes for $321,000.  This zip code has fallen 25.5% in the last year.  The current list price may not be such a good deal:

The listing description tells us this is a short sale but the MLS data is stating that it is a foreclosure.  I would venture after looking at the sales price that this is a foreclosure:

Sale History

03/14/2006: $875,000

A 34% discount in two years.  This is why the Inland Empire is having so much pain.  Also given the still high price of fuel, who is willing to commute 30 or 40 miles into OC or L.A. county for work?  The numbers simply do not work.  The incomes in these areas do not remotely reflect the price of some homes.

County #5 - Ventura

Population:                              799,720

Area Spotlight:                        Newbury Park

Median Price zip code:           $699,000

This home should be called “when refinancing goes wrong.”  This home is located in Ventura County in the city of Newbury Park.  Newbury Park has seen a 15.7% yearly decline in their housing prices and this is one of the more prime areas of the county.  This home above is a 4 bedroom 3 bath home with apparently dry grass.  This is an REO and is currently on the market for $875,900.  This home simply by looking at the sales history, we can tell that this was a refinance machine:

08/01/2008: $700,000 *

07/27/2006: $296,695*

11/07/2005: $163,000

Again, the August number is simply the bank taking the place back.  But between November of 2005 some $500,000+ in who knows what of mortgages was attached to this place.  Normally the banks take back the REOs should their be no matching bid at auction for the face value of the first mortgage.  The 2006 price was probably a refinance and given the 2008 number, this place was a mortgage equity withdrawal machine.  Don’t you wish you lived in California so you can max out your home, suck out all the equity, and let the bank take back the place?  A salute to you Real Home of Genius in Newbury Park!

County #6 - San Diego

Population:                              2,941,454

Area Spotlight:                        Poway

Median Price zip code:           $550,000

Our final stop takes us to Poway in San Diego County.  San Diego was the first county to falter during the Southern California bust.  It appreciated the quickest but also fell first.  This 4 bedroom 2 baths home in Poway is another example of the hyper bubble here in the Southland.  First let us look at the sales history action:

07/16/2008: $293,203 *

11/06/2006: $498,000

12/08/2000: $225,000

The bank is going to take a major hit on this one.  The current list price is $320,000 and is sold “as-is” which you are going to see a lot of in the months to come.  The peak price of $498,000 is absurd and even the current price of $320,000 is the lender simply trying to get out as soon as possible.

So there you have it.  These 6 counties have a combined population of 20,830,000+ and still have prices that reflect very little of the incomes of those in the areas.  California is years away from the bubble.  Need more reasons than the above examples?  Read 10 reasons why we are on the verge of flying off the diving board into the housing abyss.

Today we salute you Southern California with our Real Homes of Genius Award.

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Real Homes of Genius Special Edition: Today we Salute you Southern California. 6 Counties and 6 Homes.

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Related Posts:
■Real Homes of Genius: Today we Salute you Pacoima. Zillow says $457,000 but Listed at $225,000?
■Real Homes of Genius: Today We Salute you Huntington Park. Tweedledum and Tweedledee of housing. $500,000 Homes in Wonderland.
■Real Homes of Genius: $438,000 for 816 square feet in Pico Rivera! Another Example of Manic SoCal Housing!
■Real Homes of Genius: Today we Salute you Stanton.
■Real Homes of Genius: Today we Salute you Baldwin Park. When you Only Need to Show Concrete to Sell at $400,000+.

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Filed under: TD AmeriTrade Holding (AMTD), Financial Crisis

Here is a frightening statistic: about 63% of people with retirement accounts have stopped contributing to them. That little nugget comes courtesy of a recent survey conducted for TD Ameritrade (NASDAQ: AMTD).

Half of those who stopped contributing to their retirement accounts cited “financial strain due to the economic downturn.” Another 32% cited unemployment, while 25% mentioned health care costs, according to a company press release. Of those polled, 34% had less than $50,000 in investable assets.

Many of the people who’ve quit or curtailed contributing — nearly one in four — are aged 35 to 44, which should be prime earning years. I am not going to bore you with financial planning 101, but the earlier you start to save (absent a market meltdown), the better because over time the stock market is your friend. Lately, though, it has not been much of one.

Mulling over this survey got me thinking that whoever is elected president is going to face the gargantuan challenge of rebuilding the financial security of millions of Americans who are being forced to push back their retirement plans or who have mortgages they can no longer afford. It’s going to take years for people to rebuild their nest eggs and undo the damage they have done to their credit by over-extending themselves. Many people may never be able to return to their former lifestyles.

Of course, that may not be such a bad thing. If this crisis has taught us anything, it’s that people need to live within their means.

Many people stop contributing to their retirement plans originally appeared on BloggingStocks on Tue, 28 Oct 2008 14:27:00 EST. Please see our terms for use of feeds.

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Filed under: Rumors, Apple Inc (AAPL), Oracle Corp (ORCL)

Rumors persist about the health of Apple Inc. (NASDAQ: AAPL) CEO Steve Jobs. Gizmodo reported a rumor that his rapidly deteriorating health was the reason he canceled an appearance at next week’s Macworld conference.

Sadly, his health problems are not new. According to Arik Hesseldahl, a BusinessWeek reporter, Jobs’s surgery to treat his pancreatic cancer changed the flow of his digestive system, making it hard for him to digest some foods — and Hesseldahl reports that Jobs can no longer drink his favorite beverage, a nonalcoholic grape juice from California’s Navarro vineyards. Oracle (NASDAQ: ORCL) CEO Larry Ellison, who is a close friend of Jobs, once broke down in tears and said, “My best friend is dying.”

Investors are betting that Jobs does not have much time left. Trading in puts — an option to sell the stock at a fixed price which is generally used to bet on a decline — has risen. For example, volume of puts which can be exercised in January 2009 at a strike price of 80 and 85 surged to a high 10,000. Prior to 12:30 pm, those January 80 puts traded between $1.63 and $2.05, but when these rumors appeared thereafter, the puts rose to between $3.07 and $3.72 and peaked at $5.05 as volume jumped.

Are these just false rumors like the one in October about his heart attack? Apple is not shedding any light on the subject.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Apple investors jittery on Jobs’s renewed health rumors originally appeared on BloggingStocks on Tue, 30 Dec 2008 18:15:00 EST. Please see our terms for use of feeds.

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Filed under: Wal-Mart (WMT), Columns

Welcome to the 91st installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions, and just a bit of everything else when it comes to a very hot topic these days: Wal-Mart.

Wal-Mart Stores, Inc. (NYSE: WMT) has just settled a staggering amount of lawsuits, patching together 63 federal and state class-action suits under one umbrella for what could amount to a $640 million hit to the world’s largest retailer. For a company that makes in excess of $10 billion in profit every fiscal year, that amount sounds like a pittance.

With one swoop, Wal-Mart ended almost all of its outstanding class-action lawsuits dealing with labor accusations of unpaid overtime and working during break times, among many other things. The settlement also comes just a few weeks after a massive settlement in Minnesota. Perhaps Wal-Mart wants to wrap as much as it can into 2008’s bottom line? Wal-Mart will take a Q4 hit of $250 million for the collective settlements.

Continue reading Wal-Mart Weekly: Settling 63 lawsuits at one time

Wal-Mart Weekly: Settling 63 lawsuits at one time originally appeared on BloggingStocks on Tue, 30 Dec 2008 15:14:00 EST. Please see our terms for use of feeds.

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