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  • Fri, Apr 9 2010
  • 5:23 PM » Appraisal Organizations Seek Clarification from HUD on "New RESPA Rule FAQs Regarding Appraisal Fee Reporting
    Published Fri, Apr 09 2010 5:23 PM by Google News
    " . . .the current interpretations found in the “New RESPA Rule FAQs” contributes to a significant problem facing real estate appraisal companies and independent real estate appraisers today – forced fee reductions and widespread “cramdowns” in fees to appraisers,...
  • 5:22 PM » The Housing Bust and Construction Employment
    Published Fri, Apr 09 2010 5:22 PM by Calculated Risk Blog
    Back in 2006 some analysts that strong local economies (because of construction) would keep certain areas from being impacted by the housing bust. I disagreed and wrote: As the housing bubble unwinds, housing related employment will fall; and fall dramatically in areas like the Inland Empire. The more an area is dependent on housing, the larger the negative impact on the local economy will be. So I think some pundits have it backwards: Instead of a strong local economy keeping housing afloat, I think the bursting housing bubble will significantly impact housing dependent local economies. Here is an update to one of the graphs I posted in 2006 (data is not seasonally adjusted): Click on graph for larger image in new window. This graph shows the percentage of construction payroll jobs in three areas of California: San Diego, Riverside (Inland Empire), and Sacramento. The California percentages exclude the three metropolitan areas. Sure enough, generally the areas with the largest price declines and total lost jobs, were the areas with the highest percentage of construction employment during the boom. As an example, total employment in the Inland Empire is off 14.3% compared to 10.4% for all of California. I also took a look at some of the Case-Shiller cities. The next graph shows the price declines from the peak for each city included in S&P/Case-Shiller indices (NSA). Unfortunately the BLS doesn't break out construction employment for Denver, Dallas or Charlotte (the cities with the smallest Case-Shiller house price declines). So I compared Boston (4th smallest price decline) with Las Vegas and Phoenix with the largest price declines. I added Texas because of the minimal housing bust in that state. Sure enough - the cities with the highest level of construction employment were hit the hardest. Boston has a fairly low percentage of construction jobs and a fairly mild bust. In Texas there are a fair number of construction jobs, but there wasn't a huge surge...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 5:22 PM » REMINDER: Genworth Underwriting Guideline Updates Effective Monday
    Published Fri, Apr 09 2010 5:22 PM by www.mortgageinsurance.genworth.com
    This expansion, which will be effective for all MI applications received on or after April 12, 2010, supersedes previously issued Genworth-approved program exceptions and applies regardless of submission channel (including EXCEL® and EasySubmit®) or Automated Underwriting System (AUS) recommendation or decision.
    Click Here to Read the Full Article

    Source: www.mortgageinsurance.genworth.com
  • 2:29 PM » Trichet: Some Euro Zone Countries May Need to Accept Deflation
    Published Fri, Apr 09 2010 2:29 PM by WSJ
    European Central Bank President Jean-Claude Trichet says some countries in the euro zone might have to accept a period of deflation to restore long-term economic growth prospects. “Some countries, to regain competitiveness, will have to keep inflation below the EU average,” Mr. Trichet told the Italian paper Il Sole 24 in . Asked by the paper whether this means “even accepting a period of deflation, with all the possible social consequences this might have?” Mr. Trichet replied: “Yes.” “It is normal that some regions, after growing above the EMU average for some time, and after having accumulated high national inflation, experience a correction and therefore a period of negative inflation, as it is currently happening in Ireland,” Mr. Trichet said. The ECB contends that it has avoided deflation for the euro zone as a whole, which is supported by recent data showing annual inflation in the region at about 1.5% in March, though that was probably pushed higher by energy and food prices. Yet consumer prices are still falling on an annual basis in Ireland, and economists say other struggling peripheral countries like Portugal, Spain and, to a lesser extent, Greece either face the risk of deflation or at least a lengthy period of very low inflation. Mr. Trichet was largely confirming what economists have been saying for months about deflation in some parts of Europe, though as ING Bank economist Carsten Brzeski notes: “he has never been so outspoken in the past.” Whatever benefits in the long run in terms of restoring lost competitiveness, deflation (or negative inflation) can be poison for government finances in the short term: . Without nominal GDP, Greece and others will have trouble bringing debt ratios down without still more painful spending cuts and tax hikes. As Paul Krugman put it in today: “Deflation is a painful process, which invariably takes a toll on growth and employment. So Greece won’t grow its way out of debt. On the contrary, it will have to deal with its...
  • 12:08 PM » Wal-Mart Bets on Price Cuts
    Published Fri, Apr 09 2010 12:08 PM by WSJ
    Wal-Mart is cutting prices in an aggressive campaign to reinforce its reputation as a discount leader, as it seeks to reverse months of slowing sales.
  • 11:52 AM » More than Half of Completed Loan Modifications Re-Default; Why?
    Published Fri, Apr 09 2010 11:52 AM by Google News
    The latest federal report on loan modifications shows that loan modifications carried out from January to April 2009 had a re-default rate of 51.5%. Re-default is defined by the report as any modified mortgage that has pending payment that is 30 days or more late. The same report highlights that re-default rates of modified loans in the last 12 months is 57.9%. This means that loan modifications are a) not doing what they are meant to; help people keep up with their monthly mortgage payments. And b) are getting worse at it. Homeowners that have qualified for loan modifications are still struggling to make payments for a variety of reasons. Some have since lost their jobs, or their income has been reduced. Others simply do not see the sense in continuing to pay for a mortgage that is completely underwater. There are a lot people in that last category; around 24% of all homes with a mortgage on them were underwater in the last quarter of the 2009. The median price of a house in the United States has dropped by 28% since July 2006. It does not take a degree in Economics to see that loan modifications are just not working. The question is why bother spending money on loan modifications that do not help homeowners keep their homes? A growing number of analysts are saying there is simply no rational reason to rewrite all these underwater loans. The number of homes facing a foreclosure is huge. The last quarter of 2009 had 2.39 million borrowers that were 60 days late on their mortgage payments, which is nearly a 50% rise from the previous year. The pressure is on for the Obama administration to provide real solutions to the oncoming wave of foreclosures. Projections expect over 4.5 million foreclosure filings just this year. Some critics say the government’s current loan modification program is a disservice to the public, because it has extended the problem over years by helping homeowners, but not enough to make a real difference. Of the 594,000 loan modifications that have...
  • 11:52 AM » Fannie Mae Was Felled by Flawed Business Model, Regulators Say
    Published Fri, Apr 09 2010 11:52 AM by Business Week
    Fannie Mae, the government-backed mortgage company under conservatorship, was toppled by conflict between its mission to foster homeownership and profit demand it faced as a publicly traded company, former regulators said.
    Click Here to Read the Full Article

    Source: Business Week
  • 11:52 AM » Former Fannie CEO Admits Failings
    Published Fri, Apr 09 2010 11:52 AM by WSJ
    Daniel Mudd attributed Fannie Mae's demise to an "impossible" balancing act to satisfy private shareholders and a public mission.
  • 11:36 AM » Bernanke: Economic Policy: Lessons from History
    Published Fri, Apr 09 2010 11:36 AM by Calculated Risk Blog
    From Fed Chairman Ben Bernanke: I thought that I would speak to you about the parallels--and differences--between [the Great Depression] and the [great recession], particularly regarding the responses of policymakers. I draw four relevant lessons from the financial collapse of the 1930s ... The first lesson--economic prosperity depends on financial stability --seems obvious, but this connection was not always well understood. After the stock market crash of 1929, many thought a financial and economic crisis was necessary--even desirable--to wring out speculative excesses that had built up in the 1920s. Remarkably, despite the fact that the Federal Reserve had been founded to mitigate financial panics, the central bank made essentially no effort to prevent the wave of bank failures that paralyzed the financial system at the start of 1930s. ... Economists themselves have not always fully appreciated the importance of a healthy financial system for economic growth or the role of financial conditions in short-term economic dynamics. ... In contrast, more recent work on the subject, to which I contributed, showed that the health of the financial system and the performance of the broader economy are closely interrelated, both in the short run and in the long run. CR Note: Bernanke goes on to argue the first "lesson has been learned". Maybe. I think financial stability means being proactive, not reactive. And I think NY Fed President William Dudley was on the when he discussed identifying bubbles, and the possible tools available to policymakers to pop bubbles early. [T]he second [lesson]--policymakers must respond forcefully, creatively, and decisively to severe financial crises . Early in the Depression, policymakers' responses ran the gamut from passivity to timidity. They were insufficiently willing to challenge the orthodoxies of their day--such as the liquidationist doctrine of Mellon and others, or the rigid adherence to the variant of the gold standard...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 11:36 AM » More trouble for the housing market?
    Published Fri, Apr 09 2010 11:36 AM by Google News
    This is not a good sign. (Click on the chart to make it larger.) There's long been a worry that after last year's various foreclosure moratoria lifted, we'd see a fresh surge of trouble in the housing market. The latest figures on distressed sales, from First American CoreLogic, lend some weight to that argument. As you can see [...]
  • 11:36 AM » To protect minorities from higher loan fees, policy takes aim at the top
    Published Fri, Apr 09 2010 11:36 AM by Washington Post
    A new Obama administration policy that gets tough on home-mortgage discrimination is drawing kudos from consumer advocates, along with expressions of serious concern from lawyers who represent lenders and brokers.
    Click Here to Read the Full Article

    Source: Washington Post
  • 11:36 AM » 4/9/10--Rally in Non-Agency RMBS, FGIC, HAMP Incentives, Ambac
    Published Fri, Apr 09 2010 11:36 AM by www.fixedincomecolor.com
    *A decent size rally seems to be under way in the non-agency space with dealers tightening offerings after having been lifted out of bonds in both prime and alt-a space. We are hearing of buyers of pay-option super seniors right now, as well as subprime fixed rate bonds. The rally as it usually does is lagging in some of the 2nd lien paper, both heloc and fixed rate 2nds, however with that being said a technical (read it corp. CDS) bid is definitely in play on Ambac wrapped paper, with a fixed rate option one bond trading on Thursday into a cross-over account involved in the corporate CDS sector.
    Click Here to Read the Full Article

    Source: www.fixedincomecolor.com
  • 11:21 AM » The Rich Are Different: They Default More Often
    Published Fri, Apr 09 2010 11:21 AM by Google News
    Gabe Palacio for the Wall Street Journal Banks had scheduled a foreclosure auction of Richard Fuscone’s Westchester County, N.Y., mansion this week. But the former top Wall Street executive declared personal bankruptcy, delaying the auction. In today’s , we take a peek at foreclosures of the rich and famous. One of our findings was that people who bought some of the most expensive homes in America now are far more likely to be behind on their mortgages than are ordinary Joes–though the ordinary Joes aren’t doing very well either in that department. We got this interesting data from First American CoreLogic, whose loan database covers more than 80% of the overall home-loan market. That database includes 1,700 mortgage loans with balances of $4 million or more. About 14.8% of those loans were 90 days or more overdue at the end of January, compared with 8.7% for all home loans tracked by First American. First American CoreLogic Percentage of home loans 90 days or more delinquent. Blue: greater than $1 m Red: less than $1m What’s going on here? Sam Khater, a senior economist at First American, said his theory is that the borrowers with huge loans may be more inclined than people of lesser means to decide it isn’t worth paying the lender any more once the value of the home crashes far below the loan balance. Another possibility is that many of those borrowers were high rollers on Wall Street who have lost much or all of their incomes and no longer can keep up their Gatsby-esque lifestyles. Many of them, of course, were able to stave off foreclosure for a long spell. “If you take your average subprime borrower who loses his job, he has almost no savings to fall back on,” says Joe Garrett, a bank consultant at Garrett, Watts & Co. in Berkeley, Calif. So foreclosure may occur within months. “A wealthy borrower can last much longer,” Mr. Garrett notes. “He’s got a variety of investments that can be liquidated over time.” Don’t expect the homeless shelters to be thronged with...
  • 9:02 AM » Is Relief on the Way for Residential Housing?
    Published Fri, Apr 09 2010 9:02 AM by Seeking Alpha
    submits: The chart above ( click to enlarge ) sums up nicely the effects of rising unemployment on the housing market. But, despite what the analysis suggests, is relief really on the way?
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 9:02 AM » Did Bernanke Just Call for Higher Taxes? Unfortunately, Yes
    Published Fri, Apr 09 2010 9:02 AM by Seeking Alpha
    submits: I for calling for higher taxes on the back of high budget deficits. Unfortunately, Ben Bernanke, speaking this evening, has done exactly the same thing. : To avoid large and ultimately unsustainable budget deficits, the nation will ultimately have to choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defense, or some combination of the above.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 9:02 AM » GMAC Links Pay to Application Quality
    Published Fri, Apr 09 2010 9:02 AM by Realtor.Org
    The aim is to discourage loan officers from focusing on quantity over quality.
  • 9:02 AM » Liberté, Egalité, Foreclosuré ?
    Published Fri, Apr 09 2010 9:02 AM by The Big Picture
    Well, it looks like the the foreclosure virus is becoming more egalitarian every day; its even moving into tonier neighborhoods: RealtyTrac is forecasting that Houses with $5 million+ mortgages will likely be the next class of loans to go belly up. While the overall numbers are small, they expect to see a sharp rise in foreclosures this year. In all of 2009, there were 1,312 houses with $5M+ mortgages scheduled for foreclosure auction. The spike is apparent this year — in the month of February alone, there were 352 homes nationwide in this category. Here’s the Journal: “Mortgage defaults began to surge in late 2006, mostly among borrowers with subprime mortgages, those for people with weak credit records or high ratios of debt to income. Over the next few years defaults spread rapidly to better-heeled borrowers, especially those who got loans without documenting their income. At the end of 2009, nearly eight million households, or 15% of those with mortgages, were behind on mortgage payments or in the foreclosure process. . . Big borrowers are more likely to default than ordinary people, according to data from First American CoreLogic. Its loan database, reflecting more than 80% of the overall home-loan market, includes 1,700 loans with balances of $4 million or more. About 14.8% of those loans were 90 days or more overdue at the end of January, compared with 8.7% for all home loans tracked by First American.” It turns out that the wealthy are not any better at forecasting their own future economic circumstances than the unwashed masses were . . . > Source : CRAIG KARMIN And JAMES R. HAGERTY WSJ, APRIL 9, 2010 http://online.wsj.com/article/SB10001424052702304198004575172303998670976.html
    Click Here to Read the Full Article

    Source: The Big Picture
  • 9:02 AM » Worst Post WWII Recession ?
    Published Fri, Apr 09 2010 9:02 AM by The Big Picture
    “Did you see David Wessel’s WSJ column today? The Journal is already revising the Bush Recession down from Great to merely Bad . . . “ I’m not sure I would call that column, titled “revisionism.” It is a look at the is the best way to describe the 2007-09 economic contraction.Wessel asks “Does it deserve the heavy mantle of “The Great Recession” that it seems to be acquiring? “Great” is a big word, a mark of enormous historical significance. World War I was the Great War until the second world war came along…” Based on the interactive charts that accompany the article, the answer seems to be yes, “Great” is the right word: > Change in Nonfarm Payroll > Change in GDP Change in Industrial Output > Source : DAVID WESSEL WSJ, APRIL 8, 2010 http://online.wsj.com/article/SB10001424052702303591204575169693166352882.html
    Click Here to Read the Full Article

    Source: The Big Picture
  • 9:01 AM » New Rules Crack Down on Free Credit-Score Offers
    Published Fri, Apr 09 2010 9:01 AM by NY Times
    To sidestep Federal Trade Commission rules, freecreditreport.com is now charging $1 for credit reports.
  • 8:59 AM » How CUs Are Now Dealing With 'Walk Away' Members
    Published Fri, Apr 09 2010 8:59 AM by www.americanbanker.com
    The reference is to borrowers who "walk away" from their homes after the decline in housing prices pushed the value of the house far below the mortgage owed, creating what are more formally known as "strategic defaults." While that member was likely a "walkaway" from another lender, the issue for CUs is how to appropriately measure the credit risk that member actually presents.
    Click Here to Read the Full Article

    Source: www.americanbanker.com
  • Thu, Apr 8 2010
  • 5:45 PM » Subprime Delinquencies Dip for First Time in Four Years
    Published Thu, Apr 08 2010 5:45 PM by Seeking Alpha
    submits: With serious delinquencies up for the 34th consecutive month, U.S. prime RMBS late-pays have now eclipsed 10%, according to Fitch Ratings. Conversely, subprime delinquencies fell for the first time in nearly four years. Since beginning to rise in second quarter-2007, prime RMBS loan delinquencies nearly tripled in 2009 and are already up 90 basis points (bps) this year. Overall, prime jumbo RMBS 60+ days delinquencies rose to 10.1% for March up from 9.9% for February and 4.8% a year ago.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 5:15 PM » NAR to Press Congress for Immediate Action on Flood Insurance Renewal
    Published Thu, Apr 08 2010 5:15 PM by Google News
    The National Association of Realtors® said today that it will continue to press Congress for speedy action to renew authority for the Federal Emergency Management Agency to issue flood insurance under the National Flood Insurance Program that expired March 28. Congress is on its spring recess and will return April 12.
  • 5:15 PM » FHA to Accept Electronic Signatures on Third Party Documents
    Published Thu, Apr 08 2010 5:15 PM by HUD
    WASHINGTON - The Federal Housing Administration (FHA) today announced plans to modernize the application process for FHA mortgage insurance, making the process easier for borrowers and faster for lenders. FHA will begin accepting electronic signatures on third party documents originated and signed outside of the lender's control, such as real estate contracts. A Mortgagee Letter detailing FHA's new streamlined process is posted on the HUD website.
  • 5:15 PM » Bernanke, Plosser Moved Markets Most in 2009
    Published Thu, Apr 08 2010 5:15 PM by WSJ
    Macroeconomic Advisers ‘ of Federal Reserve officials who most moved markets in 2009 has unsurprisingly pegged Chairman Ben Bernanke ’s comments as most influential. But in what could be a bit of surprise, Philadelphia Fed President Charles Plosser came in a “distant second” to the chairman — even as the report said markets reacted “especially aggressively” to his comments. Dallas Fed President Richard Fisher came in third as market mover, followed by San Francisco Fed President Janet Yellen , who may soon be elevated to Fed vice chairman with the coming retirement of Donald Kohn . The report was issued by the well-known economic forecasting firm Thursday and was written by Laurence Meyer , a former Fed governor, and Antulio Bomfim . It acknowledged some Fed officials are uncomfortable with being ranked on their ability to move the bond market. Rankings were based on the influence a given Fed official’s remarks had on the two year Treasury yield — it’s particularly responsive to monetary policy-related issues — over a 2 1/4 hour window. Speeches that occurred at the same time as major economic releases or coincided with speeches by other central bankers weren’t counted. The twice-annual congressional monetary policy testimonies presented by the Fed chairman were also exempt from the rankings. () “We find it interesting that Presidents Plosser and Yellen have become so influential,” the report said. “One possible reason for their increased sway on financial markets is the information they provide with respect to the distribution of views on the [Federal Open Market Committee],” as they “occupy hawkish and dovish sides of the spectrum, respectively.” The report also evaluated the direction of yield moves as signals of the individual official’s monetary policy disposition. Yellen, who is widely believed to be very supportive of keeping policy low, or a dove in other terms, actually served to push yields higher on balance rather than lower, as one might expect. She did so...
  • 11:49 AM » 4/8/10--Market Notes, SEC's Proposed Revisions to Reg AB
    Published Thu, Apr 08 2010 11:49 AM by www.fixedincomecolor.com
    *Over the past week the rate markets has experienced tremendous volatility with Greek spreads blowing out and certainty of default increasing. Swap rates continue to tighten with the 10yr swap rate bouncing between positive and negative. 10yr UST touching 4% intra-day and I would expect we will see that again prior to the end of Q2. With all of that movement the action in the non-agency MBS and ABS markets have been relatively calm. We continue to see action in wrapped space with the market becoming more and more defined for Ambac wrapped bonds that are reliant predominantly on the insurance payment trading in the mid-30s area.
    Click Here to Read the Full Article

    Source: www.fixedincomecolor.com
  • 10:16 AM » March Sales: How Retailers Fared
    Published Thu, Apr 08 2010 10:16 AM by WSJ
    Many large retailers reported their March sales numbers this week, with most of them coming out the morning of Thursday, April 8. Following , Wal-Mart and its units no longer publish monthly sales figures. Updates to come as more retailers report sales. (Last updated April 8, 2010) Sort the chart below by company name, category, change in total or same-store sales, and total sales. Also, see Company name Category Same-store sales change Overall sales change Overall sales (millions) Comments Abercrombie & Fitch Apparel 5% 19% $275.4 The namesake Abercrombie & Fitch stores posted an 10% jump in sales, while abercrombie kids rose 12%. The Hollister brand continued to struggle, with sales falling 1% from a year earlier. Aeropostale Apparel 19% 25% $200.1 The company said merchandise margins for the month increased significantly over last year, and inventories remain well controlled. BJ’s Discount 7.3% 16% $1,000 BJ’s noted that the average transaction size was the same as last year, but a 7% boost in traffic tied to an earlier Easter boosted overall sales. Departments with the strongest sales increases compared to last year included apparel, food, furniture, health & beauty aids, housewares, lawn & garden, summer seasonal and small appliances. Weaker departments included household chemicals, televisions, tires and videogames. (Same-store sales change excludes gasoline.) Costco Discount 2% 12% $7,140 Costco’s results are being bolstered by higher gas sales. The company said year-to-year comparisons were negatively affected by having to close stores over the Easter holiday. Last year, the closure occurred in April. (Same-store sales change is for U.S. and excludes gasoline.) Gap Apparel 11% 12% $1,450 The discount Old Navy stores posted a 13% increase in sales, while the high-end Banana Republic chain experienced a 10% jump. Flagship Gap stores posted an 11% same-store sales gain from a year earlier. Hot Topic Apparel -7.5% -6.6% $65.9 Despite the decline in...
  • 7:26 AM » Report: BofA to increase Foreclosures significantly in 2010
    Published Thu, Apr 08 2010 7:26 AM by Calculated Risk Blog
    Irvine Renter at the Irvine Housing Blog writes: [Irvine Renter] attended a local Building Industry Association conference on Friday 26 March 2010. The west coast manager of real estate owned, Senior Vice President Ken Gaitan, stated that Bank of America, which currently forecloses on 7,500 homes a month nationally, will increase that number to 45,000 homes per month by December of 2010. After his surprising statement, two questioners from the audience asked questions to verify the numbers. Bank of America is projecting a 600% increase in its already large number of monthly foreclosures. This isn't unsubstantiated rumor; this comes straight from one of the most powerful men in (yes, that really is what they call it). It appears they have too many properties already. CR Note: I tried to verify these numbers with BofA without success. Irvine Renter clarified this for me today. Apparently Gaitan said that Bank of America anticipates the peak of foreclosure activity will occur in December 2010 and will top out at 45,000 units that month. Apparently BofA believes foreclosure activity will trend down in 2011. According to Irvine Renter, Gaitan said BofA expects about 300,000 total foreclosures in 2010. That is a significant increase from the current 7,500 per month pace. Once again, BofA's media department told me they'd get back to me - but no word so far - so there numbers have not been verified. CR note: OREO stands for "Other Real Estate Owned"
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 7:25 AM » U.S. Births per Year
    Published Thu, Apr 08 2010 7:25 AM by Calculated Risk Blog
    There is a new from researchers at the CDC, released yesterday, showing that U.S. births declined about 2% in 2008 from 2007. The preliminary number of 2008 US births was 4,251,095, down nearly 2 percent from the 2007 peak; the 2008 general fertility rate (68.7 per 1,000) also declined. Apparently some people are blaming the decline in births on the recession. From Professor Krugman: There have been many stories about the decline of the birth rate in 2008, with almost all attributing it to the recession. But James Trussell [2] raises an interesting point: doesn’t it take nine months from conception to birth? That calls for a graph ... Click on graph for larger image in new window. First, I think the decline in 2008 was relatively small from the record year in 2007. Second, I wouldn't be surprised if certain segments of the population were under stress before the recession started (like construction workers). Third, notice that the number of births started declining sharply a number of years before the Great Depression started. Many families in the 1920s were under severe stress long before the economy collapsed. So my guess is the decline in births is related to the recession (the segment of the population that was hit first), and I'd expect further declines in 2009 and probably in 2010. But I don't think the declines in births will be anything like what happened during the 1920s. 1 Hamilton BE, Martin JA, Ventura SJ. Births: Preliminary data for 2008. National vital statistics reports web release; vol 58 no 16. Hyattsville, Maryland: National Center for Health Statistics. Released April, 2010. 2 , Professor of Economics and Public Affairs and Director of the Office of Population Research at Princeton University
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 7:25 AM » China to Announce Currency Revisions
    Published Thu, Apr 08 2010 7:25 AM by The Big Picture
    : “The Chinese government is set to announce a revision of its currency policy in the coming days that will allow greater variation in the value of its currency combined with a small but immediate jump in its value against the dollar, people with knowledge of the consensus emerging in Beijing said Thursday.” Translation : Minor appeasement of those annoying Americans. Anything beyond a tiny incremental change would be surprising . . .
    Click Here to Read the Full Article

    Source: The Big Picture
  • 7:25 AM » BIS: The Future of Public Debt
    Published Thu, Apr 08 2010 7:25 AM by The Big Picture
    Interesting paper out of the Bank for International Settlements on : Since the start of the financial crisis, industrial country public debt levels have increased dramatically. And they are set to continue rising for the foreseeable future. A number of countries face the prospect of large and rising future costs related to the ageing of their populations. In this paper, we examine what current fiscal policy and expected future age-related spending imply for the path of debt/GDP ratios over the next several decades. Our projections of public debt ratios lead us to conclude that the path pursued by fiscal authorities in a number of industrial countries is unsustainable. Drastic measures are necessary to check the rapid growth of current and future liabilities of governments and reduce their adverse consequences for long-term growth and monetary stability. These charts caught my eye (more after the jump): > Projected interest payments as a fraction of GDP (%) Sources: OECD; authors’ projections. > Source : Stephen G Cecchetti, M S Mohanty and Fabrizio Zampolli Bank for International Settlements, March 2010 BIS Working Papers, No 300 http://www.bis.org/publ/othp09.pdf Public debt/GDP projections Sources: OECD; authors’ projections.
    Click Here to Read the Full Article

    Source: The Big Picture
  • 7:25 AM » SEC's proposed rules could give Fannie, Freddie an edge
    Published Thu, Apr 08 2010 7:25 AM by www.smartbrief.com
    Two commissioners of the U.S. --
    Click Here to Read the Full Article

    Source: www.smartbrief.com
  • 7:25 AM » Subprime Delinquencies Fall for First Time in 4 Years
    Published Thu, Apr 08 2010 7:25 AM by CNBC
    Subprime Delinquencies Fall for First Time in 4 Years
  • 7:25 AM » Consumer Balance Sheet and Consumer Spending in Perspective
    Published Thu, Apr 08 2010 7:25 AM by Google News
    Here is an interesting chart on posted by Barry Ritholtz. Ritholtz also notes From the “It-Aint-That-Bad” file comes the most recent reports of consumer spending. Luxury sales rose 22.7% (Mastercard SpendingPulse) Furniture sales rose 13.8% and appliance sales rose 6.9% Auto sales gained 24% from year ago levels (AutoTalk) March was the 7th consecutive month of increasing retail sales growth Cargo volume at major ports imports is trending towards an 8% increase in April Commerce Department’s personal consumption expenditures was $34.7 billion in February, an increase of 0.3% over January — the fifth monthly gain in a row. Gasoline demand continues to rise — +1.2% — before the summer driving season. Ritholtz comments " It will be some time before we return to the peak levels of 2006-07, when Houses were used more as equity structures than shelter. But that does not mean we won’t see marked improvements over the coming quarters. " Fair enough. Here is an equally true and arguably more realistic way of saying the same thing: The anemic bounce to date "does not mean we will see marked improvements over the coming quarters." State Sales Tax Revenues State tax collections are a far better measure of spending than same store sales. Please consider That report is from February 28, 2010, arguably a bit out of date. Nonetheless, state tax collections are horrid. Moreover, same store sales are invalid because of store closings. Finally, improvements over horrendous numbers from a year ago are hardly unexpected. Finally, please note that it took cash for clunkers, $8,000 tax credits, a $trillion in various Fed swap-o-rama programs, and the Fed monetizing a $trillion in mortgages to achieve this bounce in GDP. What's next? Consumer Balance Sheet Chart Brutally Misleading In isolation, the balance sheet chart at the top of this post seems to indicate the problem with consumer debt is overstated. For a different perspective, please consider by Professor G. William...
  • 7:25 AM » Bifurcation in the Commercial Real Estate as Demand Outstrips Supply, For Now
    Published Thu, Apr 08 2010 7:25 AM by Google News
    Peter L. Mosca, host of Income Property Investment Talk dot com, shares part of his interview with Dr. Sam Chandan, Global Chief Economist and Executive Vice President of Real Capital Analytics (RCA) and adjunct professor of real estate at the Wharton School of the University of Pennsylvania.
  • Wed, Apr 7 2010
  • 6:58 PM » The Senate Financial Reform Bill and the ABS Markets
    Published Wed, Apr 07 2010 6:58 PM by www.fixedincomecolor.com
    This article originally appeared in the April 2010 issue of Asset Securitization Report (www.structuredfinancenews.com). The recently-released Senate financial reform package contains a number of provisions designed to prevent a recurrence of the performance problems that triggered the recent financial crisis. The most widely discussed initiative requires “securitizers” to retain a minimum of 5% of the credit risk of any sale or conveyance of assets through the securitization process.
    Click Here to Read the Full Article

    Source: www.fixedincomecolor.com
  • 4:36 PM » Consumer Credit Declines in February
    Published Wed, Apr 07 2010 4:36 PM by Calculated Risk Blog
    The Federal Reserve : Consumer credit decreased at an annual rate of 5-1/2 percent in February 2010. Revolving credit decreased at an annual rate of 13 percent, and nonrevolving credit decreased at an annual rate of 1-1/2 percent. Click on graph for larger image in new window. This graph shows the year-over-year (YoY) change in consumer credit. Consumer credit is off 4.0% over the last 12 months. Consumer credit has declined for 12 of the last 13 months - and declined for 13 of the last 14 months and is now 5.2% below the peak in July 2008. Note: The Fed reports a simple annual rate (multiplies change in month by 12) as opposed to a compounded annual rate. Consumer credit does not include real estate debt.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 2:22 PM » Real-Estate Sites Start Targeting Renters
    Published Wed, Apr 07 2010 2:22 PM by Google News
    Associated Press Call it a sign of the times. During the housing boom, more Web sites popped up offering new ways for prospective buyers to scout for dream properties and deals. But with the homeownership rate falling, now more attention is going into catering to renters. Real-estate Web site on Wednesday launches its own platform for renters that builds off of its infrastructure for home sales. In December, added rental listings to its popular real-estate site. Web traffic measured by Experian’s Hitwise shows that of the top 20 real estate Web sites, seven are now focused on rentals, including , and , up from just three one year ago. Trulia says that an internal survey reveals that around 30% of consumers consider renting and buying at the same time. Just as with home searches, Trulia’s rental site allows browsers to limit their searches to particular price ranges, neighborhoods, and amenity offerings, such as air conditioning or washer/dryers. Landlords can upload their properties for free, and Trulia says it plans to offer millions of rentals of all types, from professionally managed apartment companies to mom-and-pop landlords or one-off leases from condo unit owners. The launch comes amid signs that the battered rental apartment market may be stabilizing. After a nearly 18-month free fall, rents modestly in the first quarter, according to Reis Inc., a New York research firm. Vacancies are still at 30-year highs, however, which suggests that landlords will continue to cut rents or offer concessions in some markets to keep units full. If job growth gathers speed later this year, that means rents will begin to pick up. And because there’s been little new construction during the credit crunch, that means many markets may have little new supply, raising the prospect of bigger rent increases in 2011 or 2012.
  • 2:21 PM » Housing Won’t Heal Until the Renters Come Back
    Published Wed, Apr 07 2010 2:21 PM by Google News
    The housing market won’t fully heal until two classes of renters—those who have delayed forming new households during the recession and those who lost their homes to foreclosure and need to repair their credit scores and rebuild their savings—make the transition to homeownership. And that may take a while. The U.S. lost 1.2 million households from 2005 to 2008 even as the country’s population increased by 3.4 million, according to a study from the Mortgage Bankers Association, underscoring the huge inventory glut that looms over any housing and rental market recovery. Rising foreclosures have led the national homeownership rate to slide to around 67%, down from its 2004 peak of 69%. But the study finds that the current recession also led to an even steeper decline in household formation for rental apartment markets. That bodes ill for the housing market, says Gary Painter, a professor at the University of Southern California who authored the study, because when household formation restarts, it will disproportionately benefit the rental market at first. As more rental households are added, that could cause the homeownership rate to register a larger decline. The study also suggests that households that have moved during the recession have been more likely to become renters than owners after moving. “When they’re moving, they’re renting. They’re not looking to buy. That’s an important dynamic,” says Michael Fratantoni, the MBA’s vice president of research and economics. Household formation typically stalls during a recession as would-be renters double up or move in with family. The study tries to quantify that effect, and finds that, young adults are 4 percentage points less likely to form an independent household during a recession, and individuals are 10 percentage points less likely to leave their parental home if they are unemployed. Normal rates of household formation, or around 1-1.5 million new households per year, should return by 2012 assuming that the job market...
  • 2:20 PM » NY Fed's Dudley: Fed should take "proactive approach" to Asset Bubbles
    Published Wed, Apr 07 2010 2:20 PM by Calculated Risk Blog
    The Fed's previous view was bubbles were hard to identify and the Fed's role was to clean up after a collapse. Now that view is changing ... From NY Fed President William Dudley: ... Today I want to tackle a difficult subject: How should central bankers deal with potential asset price bubbles. ... As I see it, we need to reexamine how central banks should respond to potential asset bubbles. After all, recent experience has underscored the fact that poorly regulated financial systems are prone to such bubbles and that the costs of waiting to respond to an asset bubble until after it has burst can be very high. Today, I will try to define some of the important characteristics of asset price bubbles. I will argue that bubbles do exist and that bubbles typically occur after an innovation that has created uncertainty about fundamental valuations. This has two important implications. First, a bubble is difficult to discern and, second, each bubble has unique characteristics. This implies that a rules-based approach to bubbles is likely to be ineffective and that tackling bubbles to diminish their potential to destabilize the financial system requires judgment. Despite the fact that it is hard to discern bubbles, especially in their early stages, I conclude that uncertainty is not grounds for inaction. Dudley discusses the stock market and housing bubbles and the various tool available to the Fed to lean again the bubbles, and then concludes: In my view, a proactive approach is appropriate when three conditions are satisfied: First, circumstances should suggest that there is a meaningful risk of a future asset price crash that could threaten financial stability. Second, we have identified tools that might have a reasonable chance of success in averting such an outcome. Third, we are reasonably confident that the costs of using the tools are likely to be outweighed by the benefits from averting the prospective crash. When these three conditions are satisfied, we should...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 2:19 PM » Bernanke on Deficits: In Long Run, We’re All on Social Security, Medicare
    Published Wed, Apr 07 2010 2:19 PM by WSJ
    This morning Jon Hilsenrath the Fed Chairman Ben Bernanke was likely to highlight the importance of deficit reduction in a series of speeches. The following is an excerpt on the issue from the chairman’s in Dallas today: Associated Press Federal Reserve Chairman Ben Bernanke The economist John Maynard Keynes said that in the long run, we are all dead. If he were around today he might say that, in the long run, we are all on Social Security and Medicare. That brings me to two interrelated economic challenges our nation faces: meeting the economic needs of an aging population and regaining fiscal sustainability. The U.S. population will change significantly in coming decades with the combined effect of the decline in fertility rates following the baby boom and increasing longevity. As our population ages, the ratio of working-age Americans to older Americans will fall, which could hold back the longrun prospects for living standards in our country. The aging of the population also will have a major impact on the federal budget, most dramatically on the Social Security and Medicare programs, particularly if the cost of health care continues to rise at its historical rate. Thus, we must begin now to prepare for this coming demographic transition. The economist Herb Stein once famously said, “If something cannot go on forever, it will stop.” That adage certainly applies to our nation’s fiscal situation. Inevitably, addressing the fiscal challenges posed by an aging population will require a willingness to make difficult choices. The arithmetic is, unfortunately, quite clear. To avoid large and unsustainable budget deficits, the nation will ultimately have to choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defense, or some combination of the above. These choices are difficult, and it always seems easier to put them off–until the day they cannot be put off any more. But...
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