The FDIC has just today finally updated its regulatory watch list, increasing the number of problem banks from 90 to 117. We have been looking for this revision to guage how the industry is moving. The news report I read indicates that the banks added to the list are larger players.

While the number of banks increased from 90 to 117, the combined assets increased brom $26 billion to $78 billion. Additionally, banks have had to set aside more that 4 times the loss provisions than were required in the 2nd quarter last year.

The impacted banks increased the number of troubled banks by 30%. The assets held by the troubled banks more than doubled.

This will impact liquidity for all types of lending.

This annoucement comes with a couple new reports that home prices have fallen by a record amount this quarter, as compared to a year ago.

These reports follow immediately upon the announcement yesterday that home sales have increased.

There were even headlines that the Housing Crisis Over? July Sales Spike. A closer read of the actual article by Alan Zibel shows that much of the increased sales was bargain priced foreclosures, and that actual housing inventory has increased to record levels.

Combining this with the loss of programs, and the imminent ban on seller funded down payment with FHA loans, and prices must drop. There are just not enough buyers.

I hope that those in charge are paying attention and can put these numbers together.

Richard Smith
American Acceptance Mortgage, Inc
Toll Free 888-474-9920 Cell 423-280-0345
Home financing in Tennessee, Georgia, and Alabama.
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