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The housing market continues to struggle with recent findings from the Census Bureau. They found out that in the previous quarter that there are over 2 million homes that don’t have residents living in them. This continues to saturate the housing market with numbers that have reached the equivalent of the amount of homes in Detroit.

The first quarter of the year was actually an all time low for the country housing market. This shows exactly what has happen since there has been so much overbuilding in many markets and way too many 100% financed loans lent out to people that are not prepared to pay back their loans.

There are so many people that have been forced out of their homes and they can’t find people to buy the homes and are either forced to make monthly payments, find renters which are rare, or potentially foreclosures. In essence people got a little too greedy too fast.

There are many people that believe the market will continue to drop since there is so much supply and that this could continue for years because population and the economy catches up with the vast amount of property. Experts believe that this number could reach 3 million to 4 million homes in the next several years. Countrywide, the nations largest lender already has announced a loss of 1.2 billion dollars. In turn this is going to hurt a lot of builders, real estate agents, and lenders looking to offer loans and property.

Stan O’Neal, who has been the CEO Merrill Lynch since 2002, is under serious scrutiny since his firm announced a multi-billion dollar quarterly loss recently. The loss came in large part due to O’Neal’s investment in mortgage backed securities that have been decimated by the recent credit crisis.

Public opinion of the Merrill CEO is so low that the company’s stock jumped the most it has in several years when word got out that the board of directors was going to meet to discuss whether he should be retained, fired, or asked to step down. Board members seem confident that retaining Mr O’Neal is the least likely option. The movement the price of Merrill shares is proof that public opinion favors his removal, so stock holders can’t be happy.

O’Neal took the reigns at Merrill in 2002 amidst somewhat similar circumstances. The CEO at the time had come under fire for causing what were then the biggest losses in company history. As of the latest round of losses though, O’Neal is the CEO to be held responsible for the biggest write-downs ever for Merrill Lynch.

In the wake of this turmoil and the general drop in Merrill’s stock price, experts view the company as a prime target for a takeover by a competitor. Time will tell if another big financial will take advantage of O’Neal’s mistakes.

If you’re a homeowner with an adjustable rate mortgage that’s close to resetting to a higher and variable rate, I hope you’re ready to make the payment. If you can’t afford the new payment, you may not have anywhere to go for help. Specifically, don’t expect your lender to cut you any slack.

Does that mean no one in the financial world is concerned about the billions of dollars in mortgage resets coming in the next few years? No. The financial world is concerned….about themselves. Right now some of the major players are negotiating an $80 Billion fund to bail themselves out of trouble as their customers are unable to make their new, higher payments.

Jim Jubak of msn.com reports that all of this will lead to the inevitable - a massive flood of foreclosures and delinquent loans. Tens of thousands of homeowners will lose their homes or at least see their personal credit destroyed.

So who’s to blame? A lot of people want to blame the lenders for acting irresponsibly when they extended all this credit to questionable borrowers. I guess that’s one angle you can take, but I only agree to a certain extent. On one hand, the lenders are the experts and they should have advised the borrowers the real risks of such unorthodox loan packages. On the other hand, buyer beware. If you got caught up in the hype and bought way too much house for your budget, then shame on you. Foreclosure, and potentially bankruptcy, will be your reward. I’m sorry.

What can borrowers do? Well, the first thing you need to do is ring your bank’s phone off the hook. It will be tough, because they don’t want to hear from you, and they definitely don’t want to cut you a break on your payments or interest rate. But it’s worth a shot. Just a day or two ago we posted here about how Countrywide is helping over 50,000 of its borrowers so they can stay compliant with the terms of their loans.

The world oil markets are seeing prices on crude oil top $90 per barrel - that’s a record. Unfortunately, it doesn’t seem to be slowing down. Most analysts and experts agree that prices will cruise past $100 by the end of the year. Of course, it follows that if the price of crude is flying over $100, people will see prices over $3 and maybe even $4. No thanks.

“Three dollar gasoline in this market is unavoidable,” said Stephen Schork, publisher of the industry newsletter the Schork Report. “At this rate, we’re going to see $4 a gallon.”*

Is there cause for alarm? On one hand, of course we do. Nobody wants to pay $4 for a gallon of gas. If you’ve got one of those big SUVs, you could easily put $100 worth of gas in your vehicle in one trip to the pump. Can you imagine it - $400 to $500 per month in gasoline. That could really put a dent in your leisure budget.

On the other hand, there may be hope. Certain analysts disagree that prices won’t jump that much by the holidays. They look at flat demand for gasoline as a sign that oil refiners will be able to keep up with demand through the holidays. But if crude prices don’t fall, it won’t matter. The holidays won’t see the spike in price, but we’ll have it by the spring.

Source: cnn.com

A day or so ago we posted about the fact that Mr Warren Buffett, widely held as the greatest investor of all time, was getting into the manufactured home business right when everyone else is bailing out on the real estate market. It’s called contrarian investing, and Mr Buffett isn’t the only one doing it.

CNNMoney.com is reporting that JC Flowers and Co are making a bid for Northern Rock, PLC - a huge (and dying) mortgage lender in the United Kingdom. CNN calls Norther Rock “the biggest casualty of the global credit crunch.”

This story makes a good case study in some basic investing concepts. One, as Warren Buffett shows us, is that it’s often wise to get in when everybody else is getting out. Another is that certain businesses are cyclical in nature, but over the long term they can be hugely profitable if their cyclical nature is managed correctly.

Take the mortgage business. Northern Rock overextended itself with its cash and as the credit crunch came on, money became very very tight. So many mortgage lenders got in over their heads over the last couple of years because the market was so hot for loans and they wanted to grab as much of the pie as they could.

It’s a shortsighted thing to do though. In the world of interest rates and housing demand, it’s completely predictable that what goes up must come down. Big lenders gave money out like there was no tomorrow, but tomorrow came and the market conditions that made them irrational didn’t hold up. What does that mean? Bankruptcy and buy-out.

In matters of money it’s wise to keep an eye on the future and both feet planted in reality. You can either be the one that rides the wave and then crashes, or you can be the one to wait for the crash and then swoop in and make a killing cleaning up the mess. It’s your choice.