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  • Fri, Nov 13 2009
  • 8:20 AM » Home-Purchase Index Plunges
    Published Fri, Nov 13 2009 8:20 AM by The Big Picture
    So much for the Housing Rebound: “Mortgage applications to purchase homes in the U.S. plunged last week to the lowest level in almost nine years as Americans waited for the outcome of deliberations to extend a government tax credit. The Mortgage Bankers Association’s index of applications to buy a house dropped 12 percent in the week ended Nov. 6 to 220.9, the lowest level since Dec. 2000. The group’s refinancing gauge rose 11 percent as interest rates decreased, pushing the overall index up 3.2 percent. The drop in buying plans points to the risk that the recent stabilization in housing will unravel without government help. In a bid to sustain the recovery, Congress passed and the administration signed a bill last week to extend jobless benefits and incentives for first-time homebuyers, adding a provision that also made funds available to current owners.” If stabilization comes only through government subsidies and artificially propped up home prices, is it truly stabilization? > Source: Bob Willis Bloomberg, Nov. 12 2009 http://www.bloomberg.com/apps/news?pid=20601087&sid=a1_pyNFw6mbg&pos=5
    Click Here to Read the Full Article

    Source: The Big Picture
  • 8:19 AM » The Fed Cracks Down on Overdrafts
    Published Fri, Nov 13 2009 8:19 AM by Seeking Alpha
    submits: Go Fed! In a very CFPA-ish move, the Fed has now that effective July 1, no bank can impose overdraft fees on its customers for ATM or debit card transactions, unless and until they explicitly ask for that “protection”. And they even come with a talking about “an important step forward in consumer protection”, which is not the kind of language we’re used to hearing from Fed chairmen. One weird thing, though: in the the Fed has published as a model for banks to follow, consumers are given two choices at the bottom: the first choice is opting out of overdraft protection on ATM and debit-card transactions, while the second choice is opting in. That’s confusing, because opting out is the default option: if you simply ignore the letter and do nothing, you’re opted out automatically.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 8:18 AM » Falling Credit: Unless Lending Can Increase, Crisis Will Continue
    Published Fri, Nov 13 2009 8:18 AM by Seeking Alpha
    The crisis of 2008 was marked by low access to credit for companies and individuals. The reduction in credit was led by losses on the real estate loans made by banks, which closed their doors on the best of businesses and individuals. Credit/loans are the lifeblood of the economy and facilitate commerce by letting businesses take out loans for the production of goods and services. A reduction in credit disrupts the continuum needed to preserve the flow of economic activity. As a result, businesses reduced production and laid off millions of employees. The stock market fell from September 2007 until March 2009. Since March, the market has risen more than 50% and still rising. However, the increase in stock prices has not reflected upon an increase in credit. The total credit in the country continues to fall, and until the trend reverses, the economy will continue to recede. The graph below depicts an important indicator of economic activity, the total bank credit issued by all commercial banks in the country. As the graph shows, credit had never fallen so precipitously in the last 40 years of account keeping. Even in the severe recessions of 1981-82 and 2001-02, both marked by grey lines, the credit grew, although at a slower pace. A reduction in credit is the most important indicator of how the economy would perform in the medium term.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 8:18 AM » Did You Know: Loan Types Utilized
    Published Fri, Nov 13 2009 8:18 AM by Google News
    Did you know that in 2008 there was a sharp increase in government insured loans and a significant drop in conventional loans?
  • 8:18 AM » Maximum Loan Limits for Fannie Mae and Freddie Mac to Remain Unchanged for 2010
    Published Fri, Nov 13 2009 8:18 AM by FHFA
    November 12, 2009: Maximum Loan Limits for Fannie Mae and Freddie Mac to Remain Unchanged for 2010
  • Thu, Nov 12 2009
  • 3:17 PM » Housing Recovery 'Still In Uncharted Territory': HUD Secretary
    Published Thu, Nov 12 2009 3:17 PM by CNBC
    FHA: "Bailout Doesn't Apply." Those are not my words, but the words of HUD Secretary Shaun Donovan toward the end of a lengthy explainer on the FHA's annual actuarial report, released this morning.
  • 1:30 PM » Banks Are Getting Desperate With Principal Reduction Offers
    Published Thu, Nov 12 2009 1:30 PM by The Big Picture
    has a fascinating and detailed look at an UNSOLICITED (pdf) offer from BofA. A few background details: The homeowner bought the house in May 2005 for $420,000. The homeowner refinanced in March 2006. This included a negatively amortizing adjustable rate mortgage (NegAM ARM) first with BofA for $392,000, and a 2nd with IndyMac for $49,000. (Total = $441,000) For personal reasons, the homeowner was no longer able to make the payment, and is now delinquent. They were offered a HAMP modification, but apparently did not respond. This unsolicited offer is from a BofA internal program. The balance due on the NegAM ARM with BofA is currently $429,000 and the homeowner owes another $17,000 in delinquent payments. (Total due is $446,000 for 1st, not including 2nd) The house would probably sell for about $325,000. The offer from BofA: BofA is offering to reduce the principal (including delinquent payments) to $334,400. The new loan would be a fixed rate at 5.5%, with the same term (about 25 years left), but amortized over 40 years. In 25 years the homeowner would owe a balloon payment of $198,000. The current minimum payment on the NegAM ARM is $1,966 (not including taxes and insurance), and the payments on the new loan would be $1,725 per month (principal and interest). There is no mention of the 2nd in the offer.
    Click Here to Read the Full Article

    Source: The Big Picture
  • 1:29 PM » Values Have Dropped Less than 25% of the Fall Required to Reach Trend Status
    Published Thu, Nov 12 2009 1:29 PM by Seeking Alpha
    submits: PRICE TRENDS / WAR OF THE WORLDS (Part 4): Property owners nationwide have lost only one dollar for every four dollars they can ultimately expect to lose on their home.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 1:28 PM » GMAC Real Estate Merges With Real Living
    Published Thu, Nov 12 2009 1:28 PM by Realtor.Org
    The newly rebranded company will have annual residential sales of more than $20 billion. Real Living's Harley E. Rouda Jr. becomes president of the combined operations.
  • 1:27 PM » Builders Get Tax Relief From Losses
    Published Thu, Nov 12 2009 1:27 PM by Realtor.Org
    Biggest home construction companies will receive hundreds of millions in tax refunds, allowing them to boost cash reserves as they move toward recovery.
  • 1:27 PM » Press Release: Average Distance Traveled by AMC Appraisers is 13 Miles
    Published Thu, Nov 12 2009 1:27 PM by Google News
    PITTSBURGH -- November 10, 2009 -- Findings Reconfirm AMC's Strong Reliance on Local, Independent Appraisers -- The typical driving distance traveled by independent appraisers, retained by the nation's largest appraisal management companies (AMCs), averages 13 miles in urban and suburban areas this year, according to a new survey conducted by the Title Appraisal Vendor Management Association (TAVMA). "Our members, the nation's largest appraisal management companies, track a variety of metrics, including for distances traveled," said Jeff Schurman, Executive Director of TAVMA. "We polled our AMC members in light of unsubstantiated statements that AMCs send out-of-market appraisers great distances to value properties. Based on what our members are reporting to us that's simply not the case. Going forward, we will survey and report on average driving distances quarterly." Schurman added that AMCs typically use one of three methods for controlling how far appraisers travel: Geo-coding; zip code to zip code mapping; and/or order form instructions not to exceed defined distance parameters. "That an appraiser services a particular area, how often, and how recently are three critical selection criteria that AMCs use in selecting the most appropriate appraiser for an assignment," said Steve Haslam, CEO, StreetLinks National Appraisal Services. "Does this mean that in Montana or Wyoming, some appraisers aren't driving further than 13 miles? Of course not. The United States has over 3.5 million square miles of land area and about 60 thousand residential appraisers; a land-to-appraiser ratio of 59:1. The nature of the business is that appraisers sometimes travel outside of their own neighborhood -- but that doesn't mean outside of their sphere of professional expertise. In many markets, our selection criteria divide heavily populated counties into smaller zones that we don't let appraisers cross." Mr. Haslam added...
  • 1:27 PM » Reminder- FHA Streamline Guidelines Change Effective November 17th!
    Published Thu, Nov 12 2009 1:27 PM by www.mortgageprocessor.org
    Written By: Stacey Sprain, Certified Ambassador Loan Processor (CALP) As announced in Mortgagee Letter 2009-32-Revised Streamline Refinance Transactions, major changes will be effective for cases requested on and after Tuesday, November 17th! Are you ready for these changes? For many years, streamline refinances have been a treat for FHA-insured mortgagors because they have offered the benefit of little required documentation, immediate interest rate and/or payment reduction, and the ability in many cases to roll in all costs without the need for any funds out of pocket. Starting Tuesday I suspect we won’t be seeing nearly as many of them or we will be seeing more of them done with the need for borrowers to bring funds to their closings. A number of things are changing with the implementation of the new requirements; one of them being a requirement for a minimum of six month’s seasoning on any FHA loan to be streamlined. In the past no seasoning has been required aside from investor overlays. Another requirement is the need for a strong payment history in the most recent 6-12 month period. If the mortgage being refinanced is seasoned less than 12 months, a perfect payment history must be verified. For those mortgages seasoned 12 months or greater, no more than 1 30-day late payment may have occurred in the most recent 12 month period and late payments cannot have been made in the most recent 90 day period. Streamline refinances must still clearly exhibit a tangible benefit to the borrower(s) but requirements have been detailed a bit more specifically within the Mortgagee Letter than in the past. Investor overlays have included the requirement for verbal employment verifications in some cases but starting Tuesday, the lender is required to certify that the borrower is employed and/or has income at the time of the loan application. This will lead to a requirement for verbal VOEs in all cases and if the lenders are wise, they will require that the employment be verified...
    Click Here to Read the Full Article

    Source: www.mortgageprocessor.org
  • 10:33 AM » Clear 'Rules of the Game' for Free Market Capitalism
    Published Thu, Nov 12 2009 10:33 AM by Seeking Alpha
    Appreciate all the I've received on titled "It's time to champion real free market capitalism." Several have said that "real" free market capitalism should have no government involvement.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 10:33 AM » Obama Administration Won't Release Mortgage Modification Figures
    Published Thu, Nov 12 2009 10:33 AM by Seeking Alpha
    No news is good news, right? Well, that may work in raising teenagers but when it comes to public policy in general and housing policy specifically the American public deserves to know what is going on. Why? American taxpayers are picking up the tab, that’s why.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 10:15 AM » FHA COMMISSIONER REPORTS ON FHA'S FINANCES
    Published Thu, Nov 12 2009 10:15 AM by HUD
    U.S. Department of Housing and Urban Development (HUD) Secretary Shaun Donovan and Federal Housing Administration (FHA) Commissioner David H. Stevens today briefed members of the media, industry leaders and congressional Members on the FHA’s financial outlook, in coordination with the agency’s release of its annual independent actuarial study.
  • 10:13 AM » FHFA Reaffirms Undercapitalized Status of the Federal Home Loan Bank of Seattle
    Published Thu, Nov 12 2009 10:13 AM by FHFA
    Federal Housing Finance Agency (FHFA) Acting Director Edward J. DeMarco today announced that he has reaffirmed the status of the Federal Home Loan Bank of Seattle (Seattle Bank) as “Undercapitalized” under the FHFA’s Prompt Corrective Action Regulation. This determination continues the restrictions currently imposed on the Federal Home Loan Bank of Seattle that prohibit it from redeeming or repurchasing any capital stock or paying any dividends. Acting Director DeMarco took this action because of uncertainty concerning collateral values and potential for future losses on the Seattle Bank’s private-label mortgage-backed securities portfolio.
  • 8:42 AM » Fannie, Freddie, Counterparty Risk and More
    Published Thu, Nov 12 2009 8:42 AM by Calculated Risk Blog
    Yesterday I some excerpt from Freddie Mac's 10-Q: We believe that several of our mortgage insurance counterparties are at risk of falling out of compliance with regulatory capital requirements, which may result in regulatory actions that could threaten our ability to receive future claims payments, and negatively impact our access to mortgage insurance for high LTV loans. The WSJ has more tonight, including the risks to Fannie Mae: Fannie Mae has about $109.5 billion of mortgage-insurance coverage in force ... Freddie Mac had $63.4 billion in mortgage insurance and $12.2 billion in bond insurance. And this a key sentence: The reduction in private insurance coverage has contributed to the rise in the volume of loans backed by the Federal Housing Administration ... Instead of using private mortgage insurance for loans greater than 80% LTV, low down payment borrowers are now using FHA insurance. That will probably end well ... Also - the WSJ has more on the new FDIC "Prudent Commercial Real Estate Loan Workouts" guidance issued Oct 30th: . Here is the new FDIC that states performing loans "made to creditworthy borrowers" will not require write downs "solely because the value of the underlying collateral declined".
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • Wed, Nov 11 2009
  • 6:20 PM » WSJ on Permanent Modifications
    Published Wed, Nov 11 2009 6:20 PM by Calculated Risk Blog
    Ruth Simon at the WSJ has some details on permanent modifications: The administration won't release figures on completed modifications until December , but so far it appears that very few trial modifications are becoming permanent , often because of a lack of documentation. ... J.P. Morgan Chase & Co. said last week that more than 92,000 of its customers have made at least three trial payments under the program, but just 26% of them had submitted all the required documents for a permanent fix. ... At Morgan Stanley's Saxon Mortgage Services, about 26,000 of the 39,000 borrowers in the program have made more than three trial payments. Roughly 500 have received completed modifications. emphasis added Diani Olick at CNBC yesterday: Insiders however tell me that a lot of that paperwork has to do with those so-called "stated-income" loans ... In my for the economy, the percent of permanent modifications is related to the #1 downside risk. If few of these modifications are successful, there could be a flood of foreclosures on the market next year.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 6:20 PM » Unsolicited Principal Reduction Offer from BofA
    Published Wed, Nov 11 2009 6:20 PM by Calculated Risk Blog
    Here is an unsolicited (pdf) offer from BofA. (ht Dwight) A few background details: The homeowner bought the house in May 2005 for $420,000. The homeowner refinanced in March 2006. This included a negatively amortizing adjustable rate mortgage (NegAM ARM) first with BofA for $392,000, and a 2nd with IndyMac for $49,000. (Total = $441,000) For personal reasons, the homeowner was no longer able to make the payment, and is now delinquent. They were offered a HAMP modification, but apparently did not respond. This unsolicited offer is from a BofA internal program. The balance due on the NegAM ARM with BofA is currently $429,000 and the homeowner owes another $17,000 in delinquent payments. (Total due is $446,000 for 1st, not including 2nd) The house would probably sell for about $325,000. The offer from BofA: BofA is offering to reduce the principal (including delinquent payments) to $334,400. The new loan would be a fixed rate at 5.5%, with the same term (about 25 years left), but amortized over 40 years. In 25 years the homeowner would owe a balloon payment of $198,000. The current minimum payment on the NegAM ARM is $1,966 (not including taxes and insurance), and the payments on the new loan would be $1,725 per month (principal and interest). There is no mention of the 2nd in the offer. If the homeowner accepts the offer, he would still owe more on the 1st than the house is worth (the 2nd mortgage would have to be resolved). The personal issue still exists, and reducing the monthly payments by a couple of hundred dollars probably will not help. My understanding is the homeowner is considering trying for a short sale, but it is interesting that BofA is sending out unsolicited principal reduction offers - probably to NegAm borrowers. UPDATE: The number is answered by a recording that announces they are a "debt collector", and then says they are now closed (probably for Veterans Day)
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 6:20 PM » Economic Outlook: Possible Upside Surprises, Downside Risks
    Published Wed, Nov 11 2009 6:20 PM by Calculated Risk Blog
    As I've noted several times, my general outlook is for GDP growth to be decent in Q4 (similar to Q3) and for sluggish and choppy GDP growth in 2010. I've been asked to list some possible upside surprises, and downside risks, to this forecast. Possible Upside Surprises: Consumer spending. One of the key reasons I think growth will be sluggish in 2010 is because I expect the personal saving rate to increase as households rebuild their balance sheets and reduce their debt burden. But you never know. As San Francisco Fed President Dr. Yellen yesterday: "Consumers have surprised us in the past with their free-spending ways and it’s not out of the question that they will do so again." Still, it is hard to imagine much of a spending boom with high unemployment (putting pressure on wages), and limited credit (so some people can spend beyond their income). Exports. Perhaps we are seeing a shift from a U.S. consumption driven world economy, to a more balanced global economy. An increase in consumption in other countries, combined with the weaker dollar should lead to more U.S. exports. And if China revalued that might lead to a boom in U.S. exports. Just this morning, Reuters reported: "China sent its clearest signal yet that it was ready to allow yuan appreciation after an 18-month hiatus, saying on Wednesday it would consider major currencies, not just the dollar, in guiding the exchange rate." Please don't hold your breath waiting for China! Residential Investment. Those expecting a "V-shaped" or immaculate recovery - with unemployment falling sharply in 2010 - are expecting single family housing starts to rebound quickly to a rate significantly above 1 million units per year. That won't happen. But it is possible for single family starts to rebound to 700 thousand SAAR, even with the large overhang of existing housing inventory. Another large stimulus package. The greatest impact from the stimulus package is behind us as the following...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 6:20 PM » Fed's Fisher: Suboptimal Growth in 2010, "Perhaps" 2011
    Published Wed, Nov 11 2009 6:20 PM by Calculated Risk Blog
    "[L]ooking into 2010 and perhaps to 2011, the most likely outcome is for growth to be suboptimal, unemployment to remain a vexing problem and inflation to remain subdued." Dallas Fed President Richard Fisher And a little more Fed Speak ... (note: Fisher's speeches are always colorful). From Dallas Fed President Richard Fisher: Now, I’ve often thought that economic forecasters seem to be cursed—or maybe blessed, I suppose, dependent upon your point-of-view—with a short-term memory: They tend to extrapolate only the most recent trends into the future. As if goosed by the more optimistic tone of the latest GDP release, many now believe that solid output growth will extend into the first half of next year. The latest Blue Chip survey, for example, shows that professional forecasters expect GDP growth averaging 2.8 percent in the first half of 2010. I am wary of the consensus view. For a good while now, I’ve suggested that we are more likely to see a more uneven recovery—not a “V”-shaped recovery but something more akin to a check mark, where the elongated arm of that check mark inclines at a slope that is less than desirable and might possibly be repressed by an occasional pause or several quarters of weak growth. Why a check mark? Several recent sources of strength are likely to wane as we head into next year. Cash-for-clunkers and the first-time-homebuyer tax credit have both shifted demand forward, increasing sales today at the expense of sales tomorrow. Neither of these programs can be repeated with any real hope of achieving anywhere near the same effect: The more demand you steal from the future, the less future demand there is for you to steal. The general tax cuts and government spending increases included in this year’s fiscal stimulus package won’t have their peak impact on the level of GDP until sometime in 2010, but their peak impact on the growth of GDP has come and gone; the fiscal stimulus continues to drive GDP upward, compared with what it...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 6:19 PM » Counterparty Risk: The Mortgage Insurers
    Published Wed, Nov 11 2009 6:19 PM by Calculated Risk Blog
    From the : While management believes that Ambac will have sufficient liquidity to satisfy its needs through the second quarter of 2011, no guarantee can be given that it will be able to pay all of its operating expenses and debt service obligations thereafter, including maturing principal in the amount of $143,000 in August 2011. In addition, it is possible its liquidity may run out prior to the second quarter of 2011. Ambac is developing strategies to address its liquidity needs; such strategies may include a negotiated restructuring of its debt through a prepackaged bankruptcy proceeding . No assurances can be given that Ambac will be successful in executing any or all of its strategies. If Ambac is unable to execute these strategies, it will consider seeking bankruptcy protection without agreement concerning a plan of reorganization with major creditor groups. emphasis added Apparently the Wisconsin Commissioner of Insurance will rule on Ambac’s statutory capital by November 16th. (ht JA) And from : We have institutional credit risk relating to the potential insolvency or non-performance of mortgage insurers that insure single-family mortgages we purchase or guarantee. As a guarantor, we remain responsible for the payment of principal and interest if a mortgage insurer fails to meet its obligations to reimburse us for claims . If any of our mortgage insurers that provides credit enhancement fails to fulfill its obligation, we could experience increased credit-related costs and a possible reduction in the fair values associated with our PCs or Structured Securities. ... Based upon currently available information, we expect that all of our mortgage insurance counterparties will continue to pay all claims as due in the normal course for the near term except for claims obligations of Triad that are partially deferred after June 1, 2009, under order of Triad’s state regulator. We believe that several of our mortgage insurance counterparties are at risk of falling out of...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 6:19 PM » Toll Brothers: Year Over Year Contracts Up 42%
    Published Wed, Nov 11 2009 6:19 PM by The Big Picture
    is live blogging the Toll Brothers conference call. Here are a few highlights: • For the year ending Oct. 31, contracts fell 16%, deliveries declined 37% . • Company has $1.81 billion of cash • Firm is gaining market share • 84% of its land is owned (the rest is optioned) • There will be less competitors int he future
    Click Here to Read the Full Article

    Source: The Big Picture
  • 6:19 PM » States May Cut 900,000 Jobs Without More U.S. Aid, Think Tank Says
    Published Wed, Nov 11 2009 6:19 PM by WSJ
    State and local governments in the U.S. may be forced to cut 900,000 jobs next year without additional help from the federal government, according to a report released by a prominent liberal think tank Wednesday. To prevent state budget cuts from imperiling an economy just beginning to recover, policy makers should send additional stimulus funds in 2010 to state and local governments, urged officials at the Center on Budget and Policy Priorities , a Washington think tank. If the government does not send more economic relief, deficit-strapped states trying to balance their budgets will have to make deep cuts in services and jobs. Those cuts could shave nearly a full point off the country’s gross domestic product and result in the loss of 900,000 jobs, the report predicts. “Cutting services, laying off workers and raising taxes would further weaken the economy” at a time when its recovery would be especially fragile, said report co-author Iris Lav , a senior adviser at the think tank. Most of the federal stimulus funds sent to the states earlier this year will run out by December 2010, including $87 billion dedicated to Medicaid programs. Around $48 billion in grants for education and other purposes are also likely to be exhausted then, according to the report. Even as the economy begins to recover, state revenues are not likely to bounce back for one to three years. State fiscal stability is “very tied to the job market and the job market is still very, very weak,” said Mark Zandi , chief economist of Moody’s Economy.com . Zandi acknowledged that sending additional stimulus funds to the states would increase the federal deficit. “Clearly this will be costly,” he said, estimating that the government should send at least $25 billion to states. “But the cost in my view to taxpayers of not doing more would be even greater.” The report urges Congress not to wait until next fall to increase stimulus funding. Most governors will soon submit budgets to state legislatures for...
  • 6:19 PM » Congressional Oversight Panel Releases Report on the Use of Government-Backed Guarantees to Promote Financial Stability
    Published Wed, Nov 11 2009 6:19 PM by cop.senate.gov
    While Taxpayers Will Likely Profit, Guarantees Carry Enormous Risk and Created Significant Moral Hazard WASHINGTON, D.C. - The Congressional Oversight Panel today released its November oversight report, "Guarantees and Contingent Payments in TARP and Related Programs." The Panel found that the programs' income will likely exceed their direct expenditures, and that guarantees played a major role in calming financial markets. These same programs, however, exposed American taxpayers to trillions of dollars in guarantees and created significant moral hazard that distorts the marketplace. During the financial crisis, the federal government dramatically expanded its role as a guarantor. Treasury, the FDIC, and the Federal Reserve Board together negotiated to secure hundreds of billions of dollars in assets belonging to Citigroup and Bank of America. In addition to increasing the deposit insurance coverage of bank accounts, the FDIC established the Debt Guarantee Program (DGP) to stimulate the market for banks to issue debt and raise capital, and Treasury acted to reassure anxious investors by guaranteeing that money market funds would not fall below $1.00 per share. Altogether, the federal government's guarantees have exceeded the total size of TARP, making guarantees the single largest element of the government's response to the financial crisis. At its high point, the federal government was guaranteeing or insuring $4.3 trillion in face value of financial assets under the three guarantee programs discussed in the Panel's report. The enormous scale of these guarantees played a significant role in calming the financial markets last year. Lenders who were unwilling to risk their money in distressed and uncertain markets became much more willing to participate after the U.S. government promised to backstop any losses. The Panel found that Treasury took an aggressive stance in protecting taxpayer interests, and the Panel did not identify any major flaws...
    Click Here to Read the Full Article

    Source: cop.senate.gov
  • 6:19 PM » KB Homes and Countrywide Financial Named in Class Action Complaint Alleging Inflated Appraisal and Inflated Appraisal Fee Schemes
    Published Wed, Nov 11 2009 6:19 PM by Google News
    KB Home and Countrywide Financial Corp. have been named as defendants in a Class Action suit filed on October 30th, 2009 in the US Dist. Court for the Middle District of Florida - Orlando Division. The attached suit details alleged predatory practices in an attempt to dominate mortgage lending and corrupt the loan underwriting and approval process. Specifically, two schemes were identified. S cheme 1 – Inflated Appraisals According to the complaint, “Defendants KB Home, Countrywide and LandSafe, along with their network of staff and fee appraisers, formed and operated a criminal enterprise (the “KB-Countrywide Criminal Enterprise”) which through the “Inflated Appraisal Scheme” inflated the sale amounts of KB Home properties and loan amounts of Countrywide loans by corrupting the appraisals of KB home properties such that the appraisals would always indicate a value at or above the contracted sales price for the properties or were otherwise inflated.” Scheme 2 – Inflated Appraisal Fee According to the complaint, “Scheme 2 in this action arises from a scheme (the “Inflated Appraisal Fee Scheme”) between Countrywide and LandSafe to profit from: (1) imposing marked-up appraisal fees on Countrywide borrowers; and (2) controlling the appraisal process and results.” Scheme 2 works as follows: According to the complaint, “Scheme 2 works because of: 1) Countrywide’s insistence that LandSafe be the appraisal firm that conducts the appraisal on the loan; 2) The secret agreement between Countrywide and Landsafe to mark up the actual cost of the appraisal and to have the actual appraisal done by a third party at a fraction of the cost listed on HUD-1 and final settlement statement; and 3) Concealment from consumers of the appraiser’s invoice to LandSafe. If Countrywide did not insist on LandSafe’s exclusivity, an independent appraiser would charge Countrywide the actual cost of the appraisal and Countrywide, through its subsidiary LandSafe, would be unable to skim off each appraisal...
  • 6:19 PM » The Comprehensive State of the U.S. Housing Market: Learning to Love the Housing Data and Forgetting the Economic Facts. Everything you wanted to know about U.S. Housing Trends.
    Published Wed, Nov 11 2009 6:19 PM by Google News
    America has built a large part of its economy on homeownership. Owning a home is part of the ever more elusive American Dream. Yet over time, owning a home became a larger and larger burden as new buyers were required to take on bigger debt loads merely to buy a basic home. Incomes weren’t rising so debt was the new subsidy. The apex of the bubble was reached in 2005 although prices didn’t start falling in drastic fashion for a couple years later. The are largely to blame for inciting the biggest housing bubble the world has come to know. Wall Street is equally to blame for creating the structure that allowed this to happen as they championed de-regulation and completely neglected any fiscal responsibility. In today’s article, I will dissect the housing market from every angle. It is easy to get caught up in the day to day data but the bigger picture is usually missed. Let us first look at the total number of housing units in the U.S.: us housing units In the United States we have approximately 129,000,000 housing units. These are made up of owner-occupied, rented, and vacant units. The largest of these three categories is the owner-occupied category and most of the media focuses on this number. Yet the other categories carry as much weight in determining a housing recovery. Let us look at the vacant housing units: The vacancy rate for both owner-occupied and rental properties is still near all time highs. With so many sales, how can it be that this number is so high? I’ll get into this later in the article. But part of this has to do with demographics, the makeup of current housing inventory, and years of over building. It is also the case that we are shifting a large number of would be renters into homes and causing the rental vacancy rate to spike. Many of these apartment projects are financed with commercial real estate loans and the is essentially shifting defaults from residential loans to commercial loans. That is why we are seeing rents fall as owners compete...
  • 6:18 PM » Market gains on homebuilder forecast, China data
    Published Wed, Nov 11 2009 6:18 PM by Reuters
    NEW YORK (Reuters) - The Dow and the Standard & Poor's 500 index closed at 13-month highs on Wednesday as an upbeat forecast from a top homebuilder and data from China pointed to a strengthening global economy.
  • 6:18 PM » Home prices fell in most U.S. cities in third quarter
    Published Wed, Nov 11 2009 6:18 PM by Reuters
    WASHINGTON (Reuters) - Home prices fell in the third quarter from year-ago levels in about 80 percent of U.S. metropolitan areas, the National Association of Realtors said on Tuesday.
  • 6:18 PM » Sen Dodd seeks more muscle in US financial reforms
    Published Wed, Nov 11 2009 6:18 PM by Reuters
    WASHINGTON (Reuters) - Pushing for tougher changes in U.S. financial regulations, the Senate's top banking legislator on Tuesday proposed a new super-cop to police banks, a systemic risk agency and strong consumer protections.
  • Tue, Nov 10 2009
  • 5:09 PM » Federal Reserve: Ways to improve housing options for low-income renters
    Published Tue, Nov 10 2009 5:09 PM by Federal Reserve
    The Federal Reserve Board on Tuesday announced the availability of a collection of brief articles that examine ways to improve the availability of housing options for low-income renters. The publication, commissioned in conjunction with the Community Affairs staff at the Federal Reserve Bank of St. Louis, focuses on opportunities to strengthen the Low Income Housing Tax Credit (LIHTC) program. Since its creation in 1986, this program has been a major source of capital for the development of rental housing. However, the recent economic downturn has significantly reduced investor interest in this tax credit.
    Click Here to Read the Full Article

    Source: Federal Reserve
  • 3:49 PM » Mom and Pops Willing to Negotiate on Rent
    Published Tue, Nov 10 2009 3:49 PM by Realtor.Org
    A third of small landlord operations are prepared to cut rents by 10 percent to prevent vacancy, survey shows.
  • 3:48 PM » HUD Issues Mortgagee Letters on Condominium Approval (2009-46A & 2009-46B)
    Published Tue, Nov 10 2009 3:48 PM by Google News
    November 6, 2009 MORTGAGEE LETTER 2009-46 A TO: ALL APPROVED MORTGAGEES SUBJECT: Temporary Guidance for Condominium Policy In Mortgagee Letter 2009-46 B, the Federal Housing Administration (FHA) announced the permanent baseline guidance for condominium project eligibility. This Mortgagee Letter (ML) waives five provisions of that guidance and serves as a temporary directive to address current housing market conditions. This temporary guidance is effective for all FHA case numbers assigned on or after December 7, 2009 through December 31, 2010, except as noted for the “Spot Loan” Approval Process… November 6, 2009 MORTGAGEE LETTER 2009-46 B TO: ALL APPROVED MORTGAGEES ALL FHA ROSTER APPRAISERS SUBJECT: Condominium Approval Process for Single Family Housing In accordance with the passage of the ), the Federal Housing Administration (FHA) is implementing a new approval process for condominium projects and insurance requirements for mortgages on individual units, as authorized under Section 203(b) of the National Housing Act. The requirements of this Mortgagee Letter are effective for all case numbers assigned on or after December 7, 2009 , except as noted. This Mortgagee Letter revises and consolidates existing guidance, and therefore replaces Mortgagee Letter 2009-19… To read these mortgagee letters and any attachments in their entirety, please visit: view the 2009 letters and click on the letter of your choice. Mortgagee Letters from previous years can be found on the same page. If you have questions about either of these new FHA Mortgagee Letters please email: or visit:
  • 3:48 PM » Shadow Inventory Dwarfs Loan Mods
    Published Tue, Nov 10 2009 3:48 PM by CNBC
    I'm back on the foreclosure bandwagon again, especially after getting the Treasury's Home Affordable Modification Program status report this morning, and its glaring omission of any information as to how many borrowers are actually keeping up with the payments on their trial modifications.
  • 3:48 PM » Multifamily Construction Activity Shows Improvement in Third Quarter
    Published Tue, Nov 10 2009 3:48 PM by NAHB
    Press Release
  • 2:29 PM » Fed's Lockhart on CRE and Small Business
    Published Tue, Nov 10 2009 2:29 PM by Calculated Risk Blog
    From Atlanta Fed President Dennis Lockhart: [H]ow serious is the CRE problem for the financial system and the broad economy? First, let me provide some overview comments: While the CRE problem is serious for parts of the banking industry, I don't believe it poses a broad risk to the financial system. Compared with residential real estate, the size of the CRE debt market is smaller, and the exposure is more concentrated in smaller banks. However, I am concerned about the potential impact of CRE on the broader economy. Unlike residential real estate, there is not the same direct linkage from CRE to household wealth—and therefore consumption—caused by erosion of home equity. However, there could be an impact resulting from small banks' impaired ability to support the small business sector—a sector I expect will be critically important to job creation . To add some detail: At the end of June 2009 there was approximately $3.5 trillion of outstanding debt associated with CRE. This figure compares with about $11 trillion of residential debt outstanding. About 40 percent of the CRE debt is held on commercial bank balance sheets in the form of whole loans. A lot of the CRE exposure is concentrated at smaller institutions (banks with total assets under $10 billion). These smaller banks account for only 20 percent of total commercial banking assets in the United States but carry almost half of total CRE loans (based on Bank Call Report data). Many small businesses rely on these smaller banks for credit. Small banks account for almost half of all small business loans (loans under $1 million). Moreover, small firms' reliance on banks with heavy CRE exposure is substantial . Banks with the highest CRE exposure (CRE loan books that are more than three times their tier 1 capital) account for almost 40 percent of all small business loans . To repeat my current assessment, while the CRE problem is very worrisome for parts of the banking industry, I don't see it posing...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 10:34 AM » Loss at Bond Insurer MBIA Is Worse Than Expected
    Published Tue, Nov 10 2009 10:34 AM by NY Times
    The bond insurer suffered drops in its investment income and premiums collected on insurance policies, leading to a loss of $727.8 million for the third quarter.
  • 10:33 AM » ‘Too Complex to Fail’ the Real Issue, Says IMF
    Published Tue, Nov 10 2009 10:33 AM by IMF
    Governments should consider the potential of financial institutions to severely damage global financial and economic stability in assessing when firms are "too complex to fail," the IMF said, launching a paper to help determine which firms and markets are systemically important.
  • 10:33 AM » The Battered Businesses Behind Housing
    Published Tue, Nov 10 2009 10:33 AM by CNBC
    While we all worry so much about the auto industry, I find it astounding that we don't pay all that much attention to the battered industries behind the battered housing market.
  • 10:33 AM » Negative Equity Falls in Third Quarter, Home Values Show Short-Term Stabilization
    Published Tue, Nov 10 2009 10:33 AM by zillow.mediaroom.com
    Impending Foreclosures, Homebuyer Tax Credits Likely to Affect Real Estate This Winter:
    Click Here to Read the Full Article

    Source: zillow.mediaroom.com
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