Our old SoCal rental house is for sale

In a bit of irony that is quite appropriate for today, the five-year anniversary of this blog (more on that in an hour or so), it looks like the rental home in Southern California - where we spent more than three years during the middle of the last decade as the housing bubble reached its peak and where this blog was first written - is now up for sale.
If memory serves, the owners paid $555K for it in late-2003 while it was still under construction and we moved in not long after, following the sale of our house a mile away.

That was back in the days when homebuilders could, basically, do as little as possible and people would still come with their "loan pre-approval" papers to buy real estate.

In this case, there was no landscaping provided, no window coverings, and not much of anything else, so the owners must have put about $50K into it at the start, bringing their cost basis up to around the current asking price of $599K which is about what Zillow says its worth.

You probably shouldn't feel sorry for the owners though. Not only are they very nice people but they own a ton of property in Santa Barbara and the only reason they bought this one was to do one of those tax exchange deals to reduce the tax owed on properties they sold up the coast where prices had gone parabolic.

I remember looking up houses in Santa Barbara on Realtor.com back then to see that you could get a 70-year old, 900 square foot two bedroom house - something like this - for about a million dollars. They're about half price now, which still seems way too high.

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Government should just get out of the way

Well, it looks like many more billions of dollars will be spent to aid the nation's housing market in what is, in large part, an ultimately futile attempt to keep home prices above where the market would like to take them.

Freakishly low interest rates and $8,000 or more in tax credits for homebuyers apparently hasn't done the trick, so the White House today is launching a new program to help homeowners who can't afford to stay in their house by lowering payments through government subsidized financing and, in some cases, reducing mortgage balances.

Not long ago, a commenter here noted the following:

I feel that another leg down is inevitable. I also think the government will try to intervene which may keep us in limbo for longer than necessary. The end could come and we could get back to business in a more stable, albeit lower price level, market if the government would just get out of the way. It is much harder to sell or rent in a market that is still trending downward or where there is a lot of lingering doubt. If we could reach a bottom and have prices stabilize on their own for a few months without any government action, it would become obvious to all that the worst truly is behind us and then all the pent up buying could come back. But as long as the market is being propped up superficially, the skeptics will continue to wait on the sidelines making recovery impossible. We need to bottom and start over so we can develop business models that will work. With the government involved and more bad news waiting in the wings, it is impossible to make long-term plans. The economy will just have to wait until the government gets out of the way, IMHO.

Unfortunately, that doesn't appear to be one of the options now being considered...

While I'm as sympathetic as anyone about a family down on their luck after job losses and a collapsing real estate market, this misplaced notion of the sanctity of homeownership and how people losing their houses to foreclosure is somehow such a terrible tragedy is ultimately doomed to make things much worse than they would otherwise be.

The vital lesson that, apparently, has not yet been learned through previous efforts at bailing out homeowners is that most of these people had no business buying the place in the first place and, while the feeling that "Banks got their bailout so I want mine too" is both understandable and pervasive, it is no reason to make a bad situation even worse.

Caroline Baum has some similar thoughts in today's column at Bloomberg:

Between them, the federal government and central bank can lower mortgage rates, modify mortgages, use their power to get private lenders to modify mortgages, and create incentives to move inventory, such as the first-time homebuyer’s tax credit.

What they can’t do is manufacture enough artificial demand for an asset that was artificially inflated to begin with. Prices will have to fall, which is how supply is allocated in a market economy. (An occasional reminder is in order given the current spend-money-to-save-money mindset.)
...
I’m all for charity and doing what makes sense. If a lender decides it’s in his self-interest to reduce the loan balance on underwater or delinquent mortgages -- if modification is cheaper than foreclosure -- that’s between management and shareholders.

With government programs, those who lived within their means, who bought a home they could afford, are being asked to pay for the mistakes of others. Bankers and insurance companies weren’t the only ones who were greedy.

Barry Ritholtz also had some thoughts on this, arguing we need more foreclosures, not less:

I have been dismayed about the latest actions out of Washington and Wall Street. The banks are now pushing all manner of mortgage mods and foreclosure abatements. These are little more than “extend & pretend” measures, designed to put off the day of reckoning. They are not only ineffective, they are counter-productive. They reward the reckless and punish the responsible, and create a moral hazard. Worse yet, they penalize middle America for the sake of giant Wall Street banks.

It may sound counter-intuitive, but the best thing for the nation (but not necessarily the banks) is to allow the foreclosure process to proceed unimpeded. We need more, not less foreclosures.
...
We should allow the real estate market to experience a healthy price normalization process. Even though home prices have fallen dramatically, they have yet to reach their historical means relative to income or the cost of renting. This is to say nothing of the usual careening past the median towards under-valuation that typically follows a massive mis-allocation of capital.

Yes folks, this is how you get a "lost decade", by again and again trying to: a) prop up assets that desperately want to return to levels supported by market fundamentals; b) keep insolvent banks solvent; and c) sustaining the misguided belief that a 70 percent homeownership rate is or ever was a desirable goal.

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Peter Schiff on Alan Greenspan

Left sitting in my draft folder for a few days are these thoughts from Peter Schiff about the former Fed chairman following his 48-page defense of monetary policy last week. Now seemed like a good time to hoist it up to the main page.

Peter starts off by noting, "He's not just the worst Fed chairman we've ever had, he's the worst American we've ever had" and then works himself up into a little bit of a lather from there on such subjects as the impact of long-term vs. short-term rates during the housing bubble and other topics.

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Potential shadow inventory now at 18 million?

Stan Humphries, the chief economist at Zillow.com talked to Aaron Task of Tech Ticker and inadvertently ended up generating the somewhat sensational headline that now accompanies the related story at Yahoo! Finance, a headline that has been embellished a bit above as detailed below. (Hopefully it's not too late already, but that Tech Ticker story begins playing the video automatically, something that I, for one, find quite annoying).

With the likely exception of real estate agents who are now working with hesitant buyers, no one really disputes the fact that there are a ton of houses that are likely to come on to the market over the next year or two both from distressed sales and from sellers who think the market has recovered enough that they'll get a decent price.

But, in the interview, Humphries was referring to the second category only and the 10 million figure came from a simple calculation that, based on a recent survey, eight percent of homeowners are very likely to sell their property if market conditions improve.

Take that potential 10 million and add it to the potential 8 million homeowners who are likely to lose their home through the foreclosure process as detailed in a number of recent reports on the "foreclosure pipeline" and you get a whopping 18 million for the shadow inventory.

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Californians to get $18,000 to buy a house

More evidence of how wacky things have become in today's real estate market comes via the overlap of the expiring Federal homebuyer tax credit of $8,000 with local versions of the same, in particular the one in California where another $10,000 in government money is being offered as detailed in this item at the WSJ real estate blog.

The $200 million program, split between first-time buyers of existing homes and new units, should keep the Golden State’s sales moving along post spring-selling season.

But, it might not get off to a peaceful start on May 1: Get ready for a stampede early on as some buyers rush to overlap with the federal tax credit that’s dangling as much as $8,000 to buyers. (Yes, that’s up to $18,000 for buying a house.)

For the federal incentive, contracts must be inked by April 30, while closings have to happen by June 30. The California credit covers closings on existing or new homes on or after May 1, leaving a short window for double dipping.

Since there is a dollar limit rather than a time limit for the California tax credits, don't be surprised if the same kind of mania develops as was seen last summer for the "Cash for Clunkers" program. Dangling not just $8,000 but a whopping $18,000 in front of someone who might be sitting on the fence is sure to have an extreme mood-altering affect.

Of course, unless either or both of the tax credit programs are extended, look for sales (and prices) to plummet after all the free money has run out.

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What if it was all just a big bubble?

One of the things that many people go through their entire lives without ever realizing is that conditions haven't always been the way they remember them to be. Due to the length of a typical lifetime and the number of those years that individuals are productive, it's reasonable to think that someone in their mid-60s could retire today and look back at the last 40 years only to conclude that what they just experienced was normal.

But, what if the last 40 years were anything but normal?

What if, in the world of finance and economics, it was all just a big bubble?

One look at the chart below from this recent Wall Street Journal story and it becomes instantly clear that stock market valuations over the last twenty years have been nowhere near normal. In fact, what were deemed "generational lows" for valuations at the peak of the financial market crisis a year ago look like nothing of the sort over the broad sweep of time.

And when you consider what happened in the natural resource sector in the 1970s and then what followed in Japan in the 1980s, it's quite easy to come to the conclusion that, since the world left those last vestiges of sound money when Nixon closed the gold window in 1971, we live in a radically different world.

While some quickly dismiss ideas like this, reminding anyone who will listen that "correlation is not causation" while citing technological advances made during this time as just cause for the changes we've seen in financial markets, breakthroughs such as railroads and electricity a hundred or more years ago likely had a bigger impact on the world than computers, communication, and medical technology more recently.

The sad possibility that so few consider is that, what has happened in the last 40 years probably has much more to do with the financial system, credit, and debt than the technological advances themselves.

A brief stroll through history might be helpful in seeing just how accustomed we've become to bubbles and, as if we don't know it already, how dangerous the financial world has become.

The Era of Disco and Inflation

Having survived World War II and emerged as the only superpower in the West, the U.S. navigated the early years of the Cold War with aplomb before embarking on Great Society spending in the 1960s and then positioning themselves for defeat in Vietnam only to go stumbling into the 1970s with, perhaps, its best years already behind it.

The decisions made in the 1960s set off the first series of financial market bubbles during the previous secular bull market in the natural resource sector, an incompetent Arthur Burns at the helm of the Federal Reserve bending to political will and feeding an extended bout of inflation never before seen in the U.S.

As U.S. energy demand was soaring and U.S. oil fields were peaking, crises in the Middle East caused multiple oil price spikes and, by the end of the decade, a full-blown commodities bubble was in process.

The oil price moved from an inflation-adjusted $15 or $20 a barrel to $100 a barrel or more late in the decade and the gold price rose from its former $35 peg to a peak of over $800 just after the decade came to a close.

This was the first of many recent financial market bubbles in a new era of pure fiat money all around the world where rising and collapsing asset prices became an increasingly dominant theme, interrupted only briefly by the early-1980s "tough love" by a new, stern Fed chairman.

Not the Reagan Revolution You Thought

Many think that the main force behind the "Reagan Revolution" in the early-1980s was the embrace of free markets and a tilt toward conservatism, but, this only tells part of the story. Aided by the advancement of computer technology, credit markets in the U.S. and in other parts of world expanded by leaps and bounds and both public and private debt began to grow more quickly, bolstering economic growth.

Fed chairman Paul Volcker induced two debilitating recessions during Reagan's first few years, breaking the back of wage-driven inflation that came before the waves of cheap foreign imports and the removal of actual costs of homeownership (replaced with the nefarious "owners' equivalent rent") in the consumer price index that would forever distort the government's measure of inflation.

Bond markets saw their first large-scale excesses and the stage was set for a two-decade long bull market in U.S. stocks. Meanwhile, a housing "warm-up" bubble inflated in some parts of the country, aided by a Savings and Loan crisis that now looks almost quaint in comparison to the more recent banking crisis.

But, the real action in the 1980s was in Japan where both real estate and stock prices rose to heights that, even in comparison to recent events, are still quite impressive. As always seems to be the case, too few questions were asked during the inflation of the bubble and too few lessons were learned after it burst.

By the end of the decade, people everywhere were already becoming conditioned to expect financial market bubbles - periods of rapid price increases and heady economic growth that would only accelerate in the decades ahead.

Another "New Economy" Era

Major changes in retirement planning driven by the growing use of 401k plans, ongoing advancements in personal computing, and a rapidly growing financial services industry led to the greatest expansion in stock ownership in history during the 1990s and the U.S. was primed for a major stock market bubble of its own.

Widespread use of the internet by corporations early in the decade led to a similar adoption for residential users and the great broadband infrastructure roll-out provided high speed internet access to a growing number of individuals. Meanwhile, NASDAQ stocks began to climb at a dizzying pace.

Fed chairman Alan Greenspan, who had set the tone early in his tenure through both word and deed following the 1987 U.S. stock market crash, retreated from mid-decade "irrational exuberance" warnings to embrace the "New Economy" along with its new, higher stock prices.

After being credited with "saving the world" during the 1997 Asian financial crisis, the man once referred to as "the greatest central banker ever" watched as a new century was ushered in and NASDAQ stocks soared past the 5,000 mark only to find that this bubble too would finally meet its pin.

In what would soon become a recurring nightmare, many retirement dreams were dashed as investors of all stripes reflected on what they had just seen. Though Japan had experienced much the same thing the decade before, this was the first time that the American people participated broadly in the inflation and bursting of a major asset bubble and many of them were chastened. Unfortunately, many others were emboldened.

Bursting Bubbles Everywhere

In a previous era or under different circumstances, the 2000 stock market crash might have been followed by a long period of bubble-free reflection on what had just transpired as millions of Americans looked back at how they were so caught up in such ridiculous ideas as Pets.com, but, that was not to be.

In a system of money and credit where there is virtually no limit on how much of the stuff can be created, there was a natural remedy for the economic downturn that followed the bursting of the internet bubble and the attacks that are now forever referred to as simply 9/11.

All through the 18-year bull market in stocks, the nation's housing market had been just sitting there waiting to be goosed, experiencing only short-lived, localized bouts of irrational exuberance and disappointment in such places as Houston during the U.S. oil boom and parts of California and Massachusetts later on.

Under the guiding hand of a revered Fed chairman, interest rates were slashed and a refinancing boom was kicked off only to be followed by some of the most outrageous excesses in mortgage lending the world has ever seen.

Despite signs that were obvious to many as early as 2002 and 2003, the housing bubble morphed into a broader credit bubble and the two proceeded to inflate to ever more dangerous levels as banks, hedge funds, governments, and the real estate industry joined forces to create the biggest and most dangerous bubble yet.

Beginning in 2006 and culminating with the global financial market crash in late-2008, another massive financial market bubble met its fate and, now, the world sits and waits.

Where to from Here?

No one's quite sure where we'll go from here, but an increasing number of people are beginning to wonder if this is the end of the road. That is, if the last forty years were all just one big money and credit bubble, temporarily misinterpreted as prosperity, that can produce no more bubbles except for the one that is most feared - another massive bubble in natural resources as a relatively fixed supply of goods meets up with an unlimited supply of paper money.

It's no coincidence that the almost non-stop sequence of financial bubbles over the last forty years followed the abandonment of anything resembling a system of sound money.

Contemporary economic thought posits that money is simply a "unit of account" and that there is no longer any need for it to maintain an intrinsic value of any sort. They say it's just "notations on paper" and that the world's economic and financial wizards, though set back a bit by their latest failure, have things squarely under control.

If you're anything like me, you don't believe that for a second.

In the fullness of time, the last forty years will likely be seen as an aberration - just one big bubble - as theories are abandoned and a more enlightened approach ultimately prevails.

Unfortunately, between now and then, things are likely to get worse before they get better.

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New home sales at record lows

The Commerce Department reports(.pdf) that new home sales reached all-time record lows last month, below the levels seen in early-2009 at the height of the financial market crisis.
Sales of new homes fell from an upwardly revised annual rate of 315,000 in January to just 308,000 in February as homebuilders continue to lose the battle they've been waging with low-priced distressed property in many parts of the country and the urgency of the original December expiration of the homebuyer tax credit has long since faded.

As in yesterday's disappointing report on existing home sales, the "Months of Supply" metric is back on an upward path and this could be the beginning of another leg down for home prices. The expiration of the extended homebuyer tax credit in the months ahead should boost sales to some degree, however, there is a good deal of uncertainty as to how big a boost will be seen, the more important question being what happens after that.

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Blytic does real estate (and more)

There's an interesting new website called Blytic that has all kinds of economic data for those who dabble in this sort of thing and, after speaking with its creator yesterday (who is also the author of the Paper Economy blog), it seemed like a good idea to share this chart with a somewhat surprising curve for home prices and give him a plug at the same time.

Shown below are the well known 20-City Case-Shiller Home Price Index (in blue) along with the less well known Radar Logic 25-city MSA Composite Index (in red) that appears to already be well into another leg down for property prices.
Yes, the chart is a little blurry, but the neat thing is that you can click on the image above and you will be transported to a much larger interactive version of the same graphic at Blytic where you can fool with scaling and all sorts of other things via the options panel on the right. Apparently, some older browsers require a plug-in, but my versions of Firefox and MS Explorer interacted with the graphic immediately.

The latest Case-Shiller data will be released on Tuesday and there are more than a few people who think that the blue line in the chart will soon adopt the trend of the red line above it.

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Existing home sales fall further in February

The National Association of Realtors reported that sales of existing homes fell 0.6 percent in February after a drop of more than 7 percent in January and sales are now at their lowest level in eight months.
It's probably best not to make too much of the winter data for existing home sales because it is a very slow time of the year when seasonal adjustments can have a big impact on the data and the weather was bad last month, but, that "Months of Supply" metric certainly looks to be going in the wrong direction right now.

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Surprise! Loan mods lower your credit score

Among the many other less-than-desirable features of the mortgage modification program known as HAMP (Home Affordable Modification Program) is the revelation that, according to this AP report, your credit score will probably be lowered soon after you apply for help.

For borrowers who are making their payments on time but are on the verge of default, the Obama administration's loan modification program can reduce their credit score as much as 100 points. That makes it harder to get a loan and can present a problem when applying for a new job.

Housing counselors say it's unfair, especially because the news often comes as a surprise to homeowners.

"Why should people's credit be hurt even worse when they're trying to do the right thing?" said Eileen Anderson, senior vice president at Community Development Corp. of Long Island, a housing counseling group in New York.

And many homeowners are angry that a program designed to help carries such a penalty, said Kathy Conley, a housing counselor with GreenPath Inc., a nonprofit group in Farmington Hills, Mich.

"It's a feeling of being duped," she said.

Apparently, Treasury Department guidelines require that mortgage companies notify credit bureaus at some early stage of the process, though it probably doesn't say this on any of the HAMP application forms.

Of course, from the point of view of the credit agencies, this all makes good sense, however, it does seem like a double-standard. When the big banks got their big backing from the government when they ran into trouble, the ratings agencies thought that was swell, but, after the little guy gets his little bailout, his credit gets hit.

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The new foreclosure trend - non-foreclosures

From the recent Lender Processing Services report(.pdf) comes the chart shown below depicting the latest foreclosure trend - non-foreclosures. That is, where borrowers stop making mortgage payments but stay in the house.

Does anyone know of any estimate of the impact of this extra cash on such things as consumer spending within the GDP data? Here's my back-of-the-envelope calculation for Q4:

• 3 months x $1,000 a month x 711,214 households x 75 percent = $1.6 billion

Assuming these "homeowners" bought things with 75 percent of what they didn't pay in mortgage payments, this would account for about 2 percent of the increase in personal consumption during the fourth quarter - not really significant, but it sure didn't hurt.

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Ron Paul on yesterday's FOMC meeting

Rep. Ron Paul (R-TX) comments on yesterday's FOMC meeting that resulted in a continued pledge by the central bank to keep interest rates low for "an extended period".

At about the three minute mark, there's a brief discussion of the Fed's alleged involvement with Saddam Hussein and Watergate that Fed chief Ben Bernanke termed "bizarre" and then they go on to talk about the new financial market regulation bill that, not surprisingly, Paul doesn't think too much of as it give even more power to the Fed.

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Scary housing statistics of the last 24 hours

Following the remarkably high 60 percent back-end debt-to-income ratio for homeowners whose loans have been made "permanent" via the government's HAMP program as noted here a couple days ago come more scary statistics on the nation's housing market.

From Diana Olick's Loans Going Bad Faster Than the Fixes comes word of how long the foreclosure process is being dragged out:

More than 31 percent of loans that have been delinquent for six months are not yet in foreclosure, while 22.8 percent of loans delinquent for 12 months have not been moved to foreclosure status...

More evidence of banks being hopelessly behind or not wanting to take market prices for REOs comes in California foreclosure starts rise nearly 20% in February from the LA Times:

The number of properties scheduled for foreclosure sale also remained near record levels. However, actual sales of foreclosure properties, whether back to the bank or those sold to third parties, dropped 11.9% in February from the month prior.

Lastly, Paul Jackson at Housing Wire concludes that Housing Recovery is Spelled R-E-O after culling through yesterday's report from Lender Processing Services:

On average, severely delinquent borrowers have gone more than 9 months without making a mortgage payment—and yet foreclosure has not yet started for them. For those borrowers who are in the foreclosure process, it’s been an average of 13.6 months—more than one full year—since they last made any payment on their mortgage.

With this kind of data piling up, it's hard to get excited about the prospects for any sort of a near-term recovery. Based on how the banks and the government are handling the problem, we're probably in for a housing market bottom that will take years to form.

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Meredith Whitney on the housing double-dip

Skip to about the four-minute mark to hear Meredith Whitney talk about the next leg down for home prices as a result of the foreclosure pipeline emptying into the market.

It should come as no surprise that Whitney thinks banks are not prepared for home prices to go lower and that, after the Federal Reserve's scheduled exit from the mortgage backed securities market in just two weeks, there will be a "material" correction there.

There's more in this CNBC story including something about disappointment awaiting those who think we're returning to the old normal - the new normal is apparently not so good.

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Housing starts clunk along the bottom

The Commerce Department reported(.pdf) that housing starts fell 5.9 percent in February, from a seasonally adjusted annual rate of 611,000 to 575,000, while permits for new construction dropped 1.6 percent, from 621,000 to 612,000.

Homebuilding activity has been at depressed levels for almost a year-and-a-half now as distressed sales have continued to limit demand for new construction.
January housing starts were revised upward from 591,000 to 611,000 making the decline in February about twice as large as it would have been using originally reported data and the previously reported number of housing permits was also revised upward.

Inclement weather in parts of the country affected the February data, however, housing starts fell more in the South (down 16 percent) than in the Northeast (down 9.6 percent) during a month of record snowfall in the Northeast.

On a year-over-year basis, new home construction was up 0.2 percent while the number of permits issued rose 11.3 percent and, from the peak of homebuilding activity in 2005, housing starts are now down 73 percent with permits issued are a full 75 percent lower.

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A story of mass delusion on Wall Street

Michael Lewis was on 60 Minutes talking about the financial market meltdown and his new book that hits bookstores today - The Big Short: Inside the Doomsday Machine.

Favorite comment: "Wall Street is able to delude itself because it gets paid to delude itself ... If you pay someone not to see the truth, they will not see the truth."

On AIG and Goldman Sachs: "They insured tens of billions of dollars of subprime mortgage loans without even knowing they were doing it. Goldman Sachs persuaded them to insure these piles of loans without them ever investigating what was in the pile. So, there's an additional level of incompetence here - they didn't even know the mistake that they were making."

And a closing thought from Steve Kroft: "Lewis believes the financial industry is living in a world so disconnected from American life that it can't be sustained. He thinks it may take a while, but he believes that Wall Street as we know it has done itself in."

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ECONned

A new book by Yves Smith of Naked Capitalism has just hit bookstores - ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism. It follows in a long line of post-crisis books and, so far, the reviews look pretty good. There's also this slick video that may help boost sales a little.

Interestingly, the only negative review at Amazon complains about there being too many conspiracy theories - what's wrong with conspiracy theories anyway?

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The New Road to Serfdom - Part 63

In reading through some of the commentary about Friday's report(.pdf) containing the latest data for the government's Home Affordable Modification Program (HAMP), the item circled in red below sort of "popped out at me" as being one of the more important reasons why this program will, ultimately, be an even bigger failure than it already is.

Even after mortgage payments were reduced to a maximum of 31 percent of gross monthly income, the median total debt service each month is almost twice that amount, which almost guarantees a high rate of default down the road.
Based on the note above, it seems there is no upper limit on the back-end debt-to-income ratio and borrowers coming in at above 55 percent are required to seek counseling, but, apparently, this doesn't stop their loan mod from becoming "permanent".

Whatever happened to 28 and 42 percent for front-end and back-end debt-to-income ratios?

How can these people possibly last when they have to start with just 40 percent of their income to pay taxes and then take what's left over to put food on the table, put gas in the car, pay their medical bills, pay their utility bills, and the many other costs of everyday life?

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CityCenter contractor to file $492 million suit

The Las Vegas Sun reports that the $8.5 billion white elephant otherwise known as MGM Mirage/Dubai World's CityCenter project will soon be the proud owner of a nearly half billion dollar "mechanics' lien" as, apparently, some bills are going unpaid.

MGM Mirage said it would dispute the claimed amount and also signaled it has counterclaims over construction defects at the Harmon Hotel part of the project, where construction has been suspended. When work resumes, it's scheduled to be completed at 28 floors, rather than the planned 49 floors.

"CityCenter believes that its actual obligation to the general contractor is substantially less than the amount claimed and that it is also entitled to significant offsets against the claimed amount. CityCenter intends to pursue all of its rights and remedies against the general contractor, including arbitration,'' MGM Mirage said in a regulatory filing.

"While CityCenter’s investigation into the general contractor’s potential liability regarding the Harmon Hotel is continuing, and there can be no assurance at this point as to the ultimate outcome of any action CityCenter may undertake, CityCenter believes that the amount of its claim against the general contractor may exceed the amount of CityCenter’s estimated remaining liability to the general contractor,'' MGM Mirage said in its filing.

There's a bit more detail at the LV Sun and in this report from Reuters - it seems this is not the first time that paying the bills has been a problem for CityCenter managers.

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Your path to homeownership

A funny look at Ginnie Mae's online tool for making that important rent versus buy decision, recently spotted over at Patrick.net.

The numbers are pretty funny too - $750 to rent and a purchase price of $950,000??

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