The Golden Age Our Leaders Have Brought Us

The following shows that when we say the economy is tanking majorly, we're blowing it out our ass.

Not.

Hundreds of thousands of utility customers are at risk of disconnections as the sagging economy drives up the number of past-due home heating bills and the amounts owed, utility companies in cold-weather states say.
Xcel Energy says 17%-19% of its 1.1 million Minnesota customers and its 280,000 Wisconsin customers are in arrears. That's about the same as a year ago, but balances owed are up 10% in Minnesota and up 20% in Wisconsin, says Pat Boland, Xcel's credit policy manager.

Xcel disconnects 600-650 customers daily, he says. "Obviously the economy is playing a very big role in the disposable income that folks have," Boland says. Another factor: Cold weather added 7%-8% to this year's bills.

The extent of the problem is becoming apparent now because most states in the Midwest and Northeast have moratoriums on disconnecting utilities in winter months. Those restrictions typically end March 31 or April 15. Companies try to work out payment plans before curtailing service, and aid is available for some low-income customers.

A record $40 million was owed by 226,670 delinquent customers of rate-regulated utilities statewide in March, says Jerry McKim of Iowa's Bureau of Energy Assistance. "What we have is a crisis that never goes away," and more federal and state assistance is needed, he says.

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• Central Maine Power Company says that as of March 31, 29,000 of its 537,000 residential customers had not paid anything on their accounts since December — a 4% increase from 2007.

Northern Utilities, which supplies natural gas to 26,000 residential and business customers in Maine, says the amount owed by customers whose bills are 30-60 days past due is up 45% from the first quarter of 2007.

Northern's customers in New Hampshire and accounts at sister company Bay State Gas in Massachusetts have similar arrearages, says spokeswoman Sheila Doiron.

• In River Falls, Wis., a city of 14,000, service to a dozen homes with overdue bills was discontinued by River Falls Municipal Utilities this month, says customer service supervisor Jan Lorenz. The utility has 5,800 customers. "In past years, nobody would be shut off," she says.

Home foreclosures and high gasoline prices are part of the problem. "We see people that just move in the middle of the night and they're gone," Lorenz says. "We have people say, 'I can't afford gas to go to work, so how can I pay my bills?' "

Forty-five customers of St. Croix Gas, which serves 7,000 customers in the River Falls area, haven't paid after being cut off on April 15 — a 10% increase from 2007, vice president Marti Piepgras says. Disconnect notices are up 50% this year.

• Wisconsin Public Service says 12%-15% of its 500,000 residential customers have past-due bills. That's up 5% from 2007, says credit administrator Jim Ollmann. "Customers are struggling," he says.

Link.

A homebuilder gets bit in the ass by excess lending in a tanking market.

Sales of new homes plunged in March to the lowest level in 16 1/2 years as housing slumped further at the start of the spring sales season.

The median price of a new home in March compared to a year ago fell by the largest amount in nearly four decades.

The Commerce Department reported Thursday that sales of new homes dropped by 8.5 percent last month to a seasonally adjusted annual rate of 526,000 units, the slowest sales pace since October 1991.

The median price of a home sold in March dropped by 13.3 percent compared to March 2007, the biggest year-over-year price decline since a 14.6 percent plunge in July 1970.

The dismal news on new home sales followed earlier reports showing that sales of existing homes fell by 2 percent in March.

Housing, which boomed for five years, has been in a prolonged slump for the past two years with sales and home prices falling at especially sharp rates in formerly boom areas of the country.

For March, sales were down in all regions of the country, dropping the most in the Northeast, a decline of 19.4 percent.

Sales fell by 12.9 percent in the Midwest, 12.5 percent in the Midwest and 4.6 percent in the South.

The pace of sales slowed to an annual rate of 526,000 last month, the weakest rate since October 1991, the Commerce Department said.

This follows a downwardly revised 575,000 in February and delivered more grim news to the troubled housing sector.

Economists polled by Reuters had forecast March sales to slow to a 580,000 annual pace from the previously reported 590,000 reading the month before.

The inventory of unsold homes dipped 1.1 percent to 468,000 which, at the current level of sales, would take 11 months to clear, up from February's 10.2 months' supply.

The March median sales price for a new home dropped 13.3 percent from the year-ago level and, at $227,600, was down 6.8 percent compared with the month before.

The Commerce Department said that the year-on-year percentage decline was the largest since July 1970.

Link.

Falling U.S. home prices and a lack of available credit may result in foreclosures on 6.5 million loans by the end of 2012, according to a Credit Suisse research report on Tuesday.

The foreclosures could put 12.7 percent of all residential borrowers out of their homes, Credit Suisse analysts, led by Rod Dubitsky, said in the report. That compares with a foreclosure rate of 2.04 percent in the last quarter of 2007, they said, citing Mortgage Bankers Association data.

The new forecast includes 2.7 million subprime loans whose risky characteristics sparked the worst housing market since the Great Depression. Subprime foreclosures, on top of the 676,000 already in or through the process, will hit 1.39 million in the next two years alone, an upward revision from the 730,000 predicted by Credit Suisse in October.

Falling home prices have made an increasing number of U.S. homeowners more vulnerable to default, they said. Nearly a third of subprime borrowers owed more than their home was worth at the end of last year, and that figure will double to 63 percent in 2009, they said.

Link.

The number of mortgage default notices (NODs) filed against California homeowners in Q1 2008 increased by 39% over Q4 2007, to the highest level on record.