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  • Mon, Sep 28 2009
  • 9:27 AM » Homes: Sell at a loss, buy at a discount
    Published Mon, Sep 28 2009 9:27 AM by CNN
    The month Jennifer Galdes moved into her condo in the Albany Park section of Chicago, the local paper suggested that the area was up and coming. Six years later, she's still waiting for a Whole Foods.
  • 9:26 AM » BofA suspends ACORN commitments: report
    Published Mon, Sep 28 2009 9:26 AM by Reuters
    (Reuters) - Bank of America Corp has suspended its current commitments to ACORN Housing, an affiliate of Association of Community Organizations for Reform Now (ACORN), a scandal-hit U.S. liberal grassroots group, the Wall Street Journal said on Monday.
  • 9:25 AM » Report: New Short-term Borrowing Rules being considered for Banks
    Published Mon, Sep 28 2009 9:25 AM by Calculated Risk Blog
    The Financial Times reports that U.S. financial regulators are considering new ratios for banks to determine the dependence on short-term borrowing: ... “Capital is critical, but liquidity enhancement is a necessary piece of the puzzle,” said Kevin Bailey, deputy comptroller [OCC] ... One ratio would compare a bank’s assets to its stable sources of funding, such as deposits or longer-term unsecured debt. excerpted with permission These measures are intended to gauge the liquidity of banks - and prevent future banks runs like with what happened at Bear Stearns and Lehman Brothers. The Wall Street banks relied heavily on commercial paper, and when that market froze, the banks experienced a severe liquidity crisis. Some smaller regional and local have relied on brokered deposits to fund their short term needs. The NY Times had a article on brokered deposits back in July: To lure the money from brokers, banks typically had to offer unusually high rates. That, in turn, often led them to make ever riskier loans, leaving them vulnerable when the economy collapsed. ... Hot money has bedeviled regulators for three decades and they are starting to fight back, albeit tentatively, devising new restrictions to keep the practice from taking more banks down. But in one of the hidden lobbying battles in Washington this year, the banks are pushing hard to keep the money flowing. So far the banks are winning, and the hot money continues to fuel bank growth. It sounds like the regulators are pushing back.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 9:24 AM » Mortgages: New Rules for High-Cost Loans take effect on Oct 1st
    Published Mon, Sep 28 2009 9:24 AM by Calculated Risk Blog
    From the NY Times: On Oct. 1, new rules adopted by the Federal Reserve will go into effect, requiring greater diligence on the part of mortgage lenders and brokers who make so-called high cost loans for borrowers with weak credit. The interest rates on these loans are at least 1.5 percentage points higher than the average prime mortgage rate. ... The regulations — finalized in July 2008 but only now being put into effect — bar lenders from making a high-cost mortgage without verifying that a borrower could repay the loan in the conventional way, and not simply through a foreclosure sale. ... During the home lending boom from 2003 to 2006, subprime lenders would often offer loans without requiring borrowers to prove that they could make the monthly payments. With stated-income loans — or as some called them, “liar loans” — borrowers could easily fabricate annual income figures and even buy a home without a down payment. ... According to Uriah King, a senior policy associate for the Center for Responsible Lending, a consumer advocacy group based in Durham, N.C., the new federal rules are “important, and they are good.” But Mr. King says the new regulations are “five years too late.” It is hard to believe it has taken this long. I think Uriah King meant "eight years (or more) too late"! Here is the 2008 : The final rule adds four key protections for a newly defined category of "higher-priced mortgage loans" secured by a consumer's principal dwelling. For loans in this category, these protections will: • Prohibit a lender from making a loan without regard to borrowers' ability to repay the loan from income and assets other than the home's value. A lender complies, in part, by assessing repayment ability based on the highest scheduled payment in the first seven years of the loan. To show that a lender violated this prohibition, a borrower does not need to demonstrate that it is part of a "pattern or practice." • Require creditors...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 9:23 AM » The Condo Glut
    Published Mon, Sep 28 2009 9:23 AM by Calculated Risk Blog
    In Delaware from The News Journal: In a risky strategy to move condominiums, the developers of the much-ballyhooed Justison Landing complex on Wilmington's Riverfront plan to auction off a third of the units in the waterfront community next month. ... Robert Buccini, a partner in Buccini/Pollin Group Inc. in Wilmington, said the auction of 38 condominiums and two town houses in a 120-condo building on the Christina River is designed to stimulate sales ... So far, about 25 condos have been sold in the building -- about two sales a month since the building was completed a year ago. "We're basically selling at discount so we can move on to our next project," Buccini said. From the Jacksonville Business Journal: Twenty-three condominiums in the Summer House in Old Ponte Vedra will go up for auction. From KUOW News in Seattle: This weekend, 40 units are up for auction and the minimum bids are typically less than half the listed price. ... there is a veritable glut of brand new condominiums on the market. A few years ago, it seemed, every parking lot in downtown Seattle was being turned into condos. Many of those projects are coming on line now, during the worst real estate market in decades. At Brix, which completed construction late last year, two thirds of the building's units are still unsold. And a twist in New Jersey, from the NY Times: At the Saffron, a nearly complete 76-unit condominium complex in the thick of this city’s downtown, the Fields Development Group is trying something new ... The first units — a minimum of 9, a maximum of 15 — will be auctioned off before the grand opening and the start of conventional marketing. ... Ending sales with an auction — after fair-market values for a building have already been well established — is a tried-and true-technique, of course. But the auctioneers for the Saffron, at Sheldon Good & Company, say they have never conducted a “jump-start” auction before. "Stimulate"? "Jump-start"...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 9:23 AM » The Fed and Subprime Lending: The Watchdog that Didn't Bark
    Published Mon, Sep 28 2009 9:23 AM by Calculated Risk Blog
    From the WaPo: ... Under a policy quietly formalized in 1998, the Fed refused to police lenders' compliance with federal laws protecting borrowers, despite repeated urging by consumer advocates across the country and even by other government agencies. The hands-off policy, which the Fed reversed earlier this month, created a double standard. Banks and their subprime affiliates made loans under the same laws, but only the banks faced regular federal scrutiny. Under the policy, the Fed did not even investigate consumer complaints against the affiliates. "In the prime market, where we need supervision less, we have lots of it. In the subprime market, where we badly need supervision, a majority of loans are made with very little supervision," former Fed Governor Edward M. Gramlich, a critic of the hands-off policy, wrote in 2007. "It is like a city with a murder law, but no cops on the beat." ... since its creation, the Fed has held a second job as a banking regulator, one of four federal agencies responsible for keeping banks healthy and protecting their customers. ... During the boom, however, the Fed left those powers largely unused. ... The Fed's performance was undercut by ... the doubts of senior officials about the value of regulation ... The failure of oversight was a serious and unfortunately common problem during the boom. For more examples see: and . The WaPo title reminds us of the conversation between Colonel Ross and Sherlock Holmes in Sir Arthur Conan Doyle's "Silver Blaze": "Is there any point to which you would wish to draw my attention?" "To the curious incident of the dog in the night-time." "The dog did nothing in the night-time." "That was the curious incident," remarked Sherlock Holmes.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 9:23 AM » L.A. Times: A House is a Home
    Published Mon, Sep 28 2009 9:23 AM by Calculated Risk Blog
    From Peter Hong at the LA Times: (ht Ann). A few excerpts: For generations of Americans, a home was seen not simply as a dwelling, but as an engine of personal wealth. That view was promoted by the home-building and real estate sales industries as well as the U.S. government, which subsidized home loans and provided tax deductions for mortgage interest. ... Now, however, the worst housing crash since the Great Depression may mean that a home purchase ought to be considered with the same warning issued to investors in securities: Past performance is not indicative of future results. ... Leslie Appleton-Young, chief economist for the California Assn. of Realtors, said that the state's median home price used to rise and fall roughly in line with the national median. ... "It didn't really get out of whack until about four or five years ago," she said. "It was tied into financing." With lax mortgage standards a thing of the past, at least for now, Appleton-Young said, home price increases will be more moderate in the future, which should lead people to "a much more realistic assessment of why they're buying a home. They'll do so more for the consumption value; it's a place to raise your family, not your nest egg." ... "In the period post-World War II, you bought a home, gave your family a great place to live relative to the alternatives, and if all went well, in 20 years you didn't have a mortgage," said [Thomas Lawler, influential housing consultant and a former Fannie Mae official]. "That's what people ought to go back to." It makes sense for people to buy houses as a place to live, not as an investment. Perhaps Leslie Appleton-Young has lost track of time, but four years ago was 2005 - the peak of the housing insanity. She probably meant four or five years before 2006 (when prices peaked) as to when house prices in California started to detach from fundamentals.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:51 AM » Prepaying Mortgages
    Published Mon, Sep 28 2009 8:51 AM by Seeking Alpha
    submits: says that all mortgages should be prepayable without penalty. He’s right — but in fact he doesn’t go far enough. As notes, it would be even better if mortgages could be prepaid at a discount when mortgage rates rise — or property prices fall. The result would be a sharp rise in mortgage prepayments: you’d repay when mortgage rates rise, by repurchasing your mortgage at a discount, and you’d repay when mortgage rates fall, by refinancing. Mortgage rates in general might have to go up somewhat in order to make up for all this new prepayment risk, but to offset that there would be significantly less default risk. And right now, when mortgage rates are low, is a good time to implement something like this: the damage you cause to a bank when you prepay a low-rate mortgage is very limited.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • Fri, Sep 25 2009
  • 7:02 PM » Alt-A Leads Latest Round of RMBS Downgrades
    Published Fri, Sep 25 2009 7:02 PM by Seeking Alpha
    submits: Standard & Poor’s has lowered its ratings on 770 classes of mortgage pass-through certificates from 705 U.S. residential mortgage-backed securities (RMBS) transactions. We downgraded 768 of these classes to ‘D’ and downgraded the remaining two to ‘CCC’. We removed 20 of the lowered ratings from CreditWatch with negative implications. In addition, we placed 183 other ratings from 21 of the affected transactions on CreditWatch with negative implications. The ratings on 158 additional classes from 19 of these transactions remain on CreditWatch with negative implications. Approximately 83.72% of the defaulted classes were from Alternative-A (Alt-A) or subprime transactions.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 6:46 PM » Freddie Exec Compensation, Bandos, Market and more
    Published Fri, Sep 25 2009 6:46 PM by Calculated Risk Blog
    Michelle at Footnoted.org digs up the employment contract for Freddie Mac's new CFO: • annual compensation of $3.5 million (this includes $675K in salary, $1.6 million in something called “additional annual salary” and $1.1 million in a target incentive • a $1.95 million signing bonus • immediate buyout of Kari’s house Why is Freddie paying more than the private sector? And I bet Geithner is jealous about the house deal! Click on graph for larger image in new window. This graph is from Doug Short of (financial planner): "Four Bad Bears". Note that the Great Depression crash is based on the DOW; the three others are for the S&P 500. And the Bandos are moving on up in Miami! From nbcphiladelphia.com: Miami's squatter problem has garnered national media attention over the past year and a half, as the foreclosure crisis threatened to transform the Magic City into something resembling a lawless, "Mad Max"-esque landscape. The squatters mostly kept a low profile, moving in ... to neighborhoods where they could take over unnoticed. But now come reports that squatters are seeking out more ritzy neighborhoods, including the pricey, tree-lined streets of Coral Gables. ... A check of county records found that the home went into foreclosure over a year ago, just about the time residents said the alleged squatters showed up. The bank which owns the property hired a realtor to sell it last month ... Maybe the lenders should sell the foreclosed homes? And from the LA Times: . Yeah, an expensive, poorly targeted tax credit for those not suffering during the recession. This isn't as dumb as allowing the FHA DAP to continue (Downpayment Assistance Program - the poster child for bad housing policy), but close. Why not a "first-time renters" tax credit for anyone who hasn't rented for 3 years? That makes as much economic sense.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 6:46 PM » Existing Home Turnover Ratio, and Distressing Gap
    Published Fri, Sep 25 2009 6:46 PM by Calculated Risk Blog
    For graphs based on the new home sales report this morning, please see: The following graph is a turnover ratio for existing home sales. This is annual sales and year end inventory divided by the total number of owner occupied units. For 2009, sales were estimated at 4.8 million units, and inventory at the August level. Click on graph for larger image in new window. Although the turnover ratio has fallen from the bubble years, the level is still above the median for the last 40 years. This suggests 2009 is about a normal year for existing home turnover. That might seem shocking based on all the reports of weak existing home sales. But the problem isn't the number of sales (except as compared to the bubble years), but the type and price of sales. The reason turnover hasn't fallen further is because of all the distressed sales (foreclosures and short sales) primarily in the low priced areas. Distressed sales declined in August, and this is a major reason existing home sales declined. There is another wave of foreclosures coming, so existing home sales might stay elevated for some time. Plus, the "first-time" homebuyers tax credit might be extended (a poorly targeted an inefficient credit). Note: there is a substantial too. All this distressed sales activity has created a gap between new and existing sales as shown in the following graph that I've jokingly labeled the "Distressing" gap. This graph shows existing home sales (left axis) and new home sales (right axis) through August. As I've noted before, I believe this gap was caused primarily by distressed sales. Even with the recent rebound in new and existing home sales, the gap is still very wide. The third graph shows the same information, but as a ratio for existing home sales divided by new home sales. Although distressed sales will stay elevated for some time, eventually I expect this ratio to decline back to the previous ratio. The ratio could decline because of a further increase...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 6:46 PM » Home Sales: Ignore Special Factors at Your Own Risk
    Published Fri, Sep 25 2009 6:46 PM by The Big Picture
    Both Existing and New Home Sales disappointed economists this week. had they been savvier observers of Housing Markets, they should not have been . Existing H ome Sales declined 2.7% month over month. They improved 3.4% above the August 2008 levels, as the national median existing-home price fell to $177,700 in August — down 12.5% from year ago levels. New Home Sales also disappointed — coming in at 0.7% gain from the prior month, about half of consensus expectations. Again, sales disappointments took place despite a record drop in prices. Median new house price dropped 9.5% in August from July — the biggest decrease since records began in 1963. New Home Sales were off 3.4% from a year earlier, as prices fell 12% from August 2008. Why? Start out with the end of the Tax Credit for First time home buyers — that sunsets November 30th. Given that most mortgage commitments are only 90 days, the August buyers of new (but already built) homes should make it. Then we move on to the Seasonality issue: With the heart of the Spring/Summer sales season behind us, experienced real estate folk know that (month over month) home sales are heading back down. Sales bottom every year in January, pick up throughout the spring, and peak in July/August. Then, begin to slide until January (see chart below). For sheer entertainment value, you can do no better our all time favorite spinmeisters , the National Association of Realtors. They had the best excuse for why August sales faltered: According to their chief economist, Lawrence Yun, the problem was (brace yourself for it) a “rising numbers of contracts entering the system, with some fallouts and a backlog contributing to a longer closing process.” You see, real estate is booming , and there have been so many sales, the entire system is backed up! WE SIMPLY CANNOT CATCH UP ON ALL THE PAPERWORK. (One has to conclude that to work at the NAR requires a unique combination of chutzpah and stupidity; they seem to have both in spades). One last...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 1:24 PM » 9/8/2009 - Media Advisory Teleconference: Builders Present New Survey Data On 55 Plus Housing Market
    Published Fri, Sep 25 2009 1:24 PM by NAHB
    Press Release
  • 1:23 PM » 9/17/2009 - Single-Family Starts Ease As Credit Deadline Looms
    Published Fri, Sep 25 2009 1:23 PM by NAHB
    Press Release
  • 1:22 PM » New York Fed purchases $1.97 billion in agency coupons
    Published Fri, Sep 25 2009 1:22 PM by snipurl.com
    New York Fed purchases $1.97 billion in agency coupons
  • 1:22 PM » Iran Denounced Over Secret Nuclear Plant
    Published Fri, Sep 25 2009 1:22 PM by WSJ
    Obama and the leaders of Britain and France accused Iran of building a covert uranium-enrichment facility and demanded that it open up the plant to international inspectors. Iran confirmed and strongly defended the facility.
  • 1:22 PM » "Have The Federal Reserve Or Prime Brokers Ever Tried To Manipulate The Stock Market?"
    Published Fri, Sep 25 2009 1:22 PM by www.zerohedge.com
    Alan Grayson: I would like to know whether it is within the Federal Reserve's legal authority to try to manipulate the stock market or the futures market. Federal Reserve GC Scott Alvarez: I don't believe the Federal Reserve tries to manipulate the stock market... (Yoda: Do or do not, there is no try.) Alan Grayson: Does the Federal Reserve actually possess all the gold that's listed on their balance sheet. Scott Alvarez, doing a classic poker body language tell, and taking his time: Yes... Alan Grayson: Who actually executes the trades for the Federal Reserve in the markets? Scott Alvarez: The Federal Reserve Bank of New York, which executes trades through Primary Dealers. Alan Grayson: Can you name one Primary Dealer? Scott Alvarez: JP Morgan Chase Alan Grayson: Do you mind if we have a GAO audit to see if there has been front-running or insider trading by them? Do you mind? Is that ok with you? Scott Alvarez: I am not sure if I have that authority...
    Click Here to Read the Full Article

    Source: www.zerohedge.com
  • 11:32 AM » CNBC: Lawler on Housing
    Published Fri, Sep 25 2009 11:32 AM by Calculated Risk Blog
    Housing economist this morning. "It is virtual certainty that [foreclosure] sales will pick up. Various moratoria has actually diminished the pace of sales, but as people try to see who can qualify for the modification program. But the backlog of loans in foreclosure are rising, and foreclosure sales will 100% pickup, we just don't know when." On tax credit: "It has been very very expensive, if you look at the number of people who have claimed the credit versus estimates of the incremental number of sales that wouldn't have occurred otherwise, looks it is costing the government about $40 thousand for every home sale generated."
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 11:32 AM » FDIC: "Credit quality declined sharply" for Shared National Credits
    Published Fri, Sep 25 2009 11:32 AM by Calculated Risk Blog
    From the FDIC: from the Fed: A SNC is any loan and/or formal loan commitment, and any asset such as other real estate, stocks, notes, bonds and debentures taken as debts previously contracted, extended to borrowers by a supervised institution, its subsidiaries and affiliates. Further, a SNC must have an original amount that aggregates $20 million or more and either 1) is shared by three or more unaffiliated supervised institutions under a formal lending agreement or 2) a portion is sold to two or more unaffiliated supervised institutions with the purchasing institutions assuming their pro rata share of the credit risk. Some key findings: • Criticized assets, which included SNCs classified as special mention, substandard, doubtful, or loss, reached $642 billion, up from $373 billion last year, and represented 22.3 percent of the SNC portfolio compared with 13.4 percent in 2008. ... • Classified assets, which included SNCs classified as substandard, doubtful, or loss, rose to $447 billion from $163 billion and represented 15.5 percent of the SNC portfolio, compared with 5.8 percent in 2008. Classified dollar volume increased 174 percent from a year ago. • Special mention assets, which exhibited potential weakness and could result in further deterioration if uncorrected, declined to $195 billion from $210 billion and represented 6.8 percent of the SNC portfolio, compared with 7.5 percent in 2008. • The severity of criticism increased with the volume of SNCs classified as doubtful and loss rising to $110 billion, up from $8 billion in 2008. Loans in nonaccrual status also increased nearly eight times to $172 billion from $22 billion. Nonaccrual loans included $32 billion in credits classified as loss and $56 billion classified doubtful. ... • Criticized volume was led by the Media and Telecom industry group with $112 billion, Finance and Insurance with $76 billion, and Real Estate and Construction with $72 billion. These three groups also represented the highest shares of...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 11:32 AM » Fed: Homeowner Mortgage Obligations Still Historically High
    Published Fri, Sep 25 2009 11:32 AM by Calculated Risk Blog
    The Federal Reserve released the for Q2 today. NOTE from Fed: "The limitations of current sources of data make the calculation of the ratio especially difficult. The ideal data set for such a calculation would have the required payments on every loan held by every household in the United States. Such a data set is not available, and thus the calculated series is only a rough approximation of the current debt service ratio faced by households. Nonetheless, this rough approximation may be useful if, by using the same method and data series over time, it generates a time series that captures the important changes in household debt service payments." Because of these limitations, the Financial Obligations Ratio (FOR) should be used to look at changes over time, not the absolute value of the ratio. Click on graph for larger image in new window. This graph shows the homeowner financial obligations for consumer and mortgage debt as a percent of disposable personal income (DPI) since 1980. "The homeowner mortgage FOR includes payments on mortgage debt, homeowners' insurance, and property taxes, while the homeowner consumer FOR includes payments on consumer debt and automobile leases." Consumer financial obligations are still a little high historically, but mortgage obligations are very high (especially considering the level of interest rates). Just like after the housing bubble of the late '80s/ early '90s, it will probably take some time for the mortgage FOR to decline to more normal levels.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 10:05 AM » The Fed's Job Is Only Half Over
    Published Fri, Sep 25 2009 10:05 AM by WSJ
    Recent media stories have chronicled in great detail the events of the last couple of years. A pair of conclusions might be fairly drawn from these early drafts of history. One is that the financial-market turmoil of the last year proved to be of significant consequence to the economy. The second is that the Federal Reserve distinguished itself from historical analogues by taking extraordinary actions to address risks to the economy. Commentators, however, tend to disagree as to whether the extraordinary actions undertaken were to the good or the detriment of the U.S. economy in the long-run.
  • 8:29 AM » Realty Q&A: Here's what happens when you pay off mortgage
    Published Fri, Sep 25 2009 8:29 AM by Market Watch
    Can you write an article on what takes place when a mortgage loan is paid off?
  • 8:28 AM » Top 10 Bubbles Waiting to Burst
    Published Fri, Sep 25 2009 8:28 AM by llenrock.com
    In a piece originally titled “10 Bubbles in the Making,” Lawrence Delevingne, a writer for The Business Insider examines 10 current economic phenomena that he thinks are poised for fallout in coming years. While there are probably other less obvious economic issues waiting to burst, Lawrence has done a good job of picking out some [...]
  • 8:27 AM » New York Fed purchases $23 billion net ($25.7 billion gross) in agency mortgage-backed securities
    Published Fri, Sep 25 2009 8:27 AM by snipurl.com
    New York Fed purchases $23 billion net ($25.7 billion gross) in agency mortgage-backed securities
  • 8:26 AM » Housing Recovery at a Crossroad
    Published Fri, Sep 25 2009 8:26 AM by CNBC
    Posted By: Existing home sales took a U-turn in August after four straight months of gains, and this is exactly what we were afraid of, as inventory at the low end of the market runs dry and the first time home buyer tax credit draws to a close. Topics: | | Sectors: |
  • 8:26 AM » Breaking the Bank News: Millions of Fraudulent Mortgages
    Published Fri, Sep 25 2009 8:26 AM by loanworkout.org
    Like all of us, I was sorry to learn that Lies of Our Times could not be sustained. It’s a real loss, and another signal that we have our work cut out for us in times that are in many ways ominous, but that also offer a good deal of hope. – Noam Chomsky The headlines [...]
    Click Here to Read the Full Article

    Source: loanworkout.org
  • 8:26 AM » Iran tells IAEA it is building 2nd enrichment plant
    Published Fri, Sep 25 2009 8:26 AM by Reuters
    VIENNA (Reuters) - Iran has told the U.N. nuclear watchdog that it has a second uranium enrichment plant under construction, a belated disclosure sure to heighten Western fears of a stealthy Iranian quest for nuclear arms capability.
  • Thu, Sep 24 2009
  • 2:11 PM » Google Gmail Users Again Hit by Technical Problems
    Published Thu, Sep 24 2009 2:11 PM by CNBC
  • 2:10 PM » Why Housing's Recovery Has Reached a Crossroads
    Published Thu, Sep 24 2009 2:10 PM by CNBC
  • 2:09 PM » Household Net Worth: Financial and Tangible Assets
    Published Thu, Sep 24 2009 2:09 PM by The Big Picture
    American households were $2 trillion richer on June 30 than they were three months earlier, the first time in two years that household net worth has increased, the Federal Reserve reported Thursday in its quarterly flow of funds report. Household wealth rose in the second quarter at a 17% annual rate, or $2 trillion, to $53.1 trillion after falling at a 13% rate in the first quarter, the Fed said. It was the first time since the second quarter of 2007 that wealth had increased. Net worth is down $12.2 trillion from the peak in 2007, an indication of how much the collapse in stock prices and home prices have hurt. Household Net Worth + Annual Rate of Change click for ginormous chart chart via Bianco Research > See also: Consumers continue to pay down debts at record pace Rex Nutting, MarketWatch, Sept. 17, 2009, http://www.marketwatch.com/story/household-net-worth-rises-first-time-in-two-years-2009-09-17
    Click Here to Read the Full Article

    Source: The Big Picture
  • 2:08 PM » Guest Post: First-Time Homebuyer Tax Credit Program: Morally Hazardous?
    Published Thu, Sep 24 2009 2:08 PM by www.nakedcapitalism.com
    The following is a submission by reader Kalpa who writes . While traveling this past weekend , I picked up a real estate booklet in the charming middle-of-the-U.S.A. town which I found myself in . Most interesting was the inside cover page note to prospective home buyers: First - time homebuyers who would otherwise qualify for the $ 8 , 000 tax credit , but don’t have the money for a down payment or closing fees , may now be able to get a loan to help cover those upfront costs . The U.S . Department of Housing and Urban Development ( HUD ) announced in May that the Federal Housing Administration ( FHA ) will allow state housing finance agencies to provide second mortgages “ monetizing ” the tax credit so that borrowers can use the funds toward their down payments and closing costs for the purchase of homes with FHA - insured mortgage loans . “ This is great news for thousands of families who want to take advantage of today’s low interest rates , competitive prices , great selection and the federal tax credit that is only available until Nov . 30 , but could not save enough money for a down payment and closing costs ,” said National Association of Home Builders Chairman Joe Robson . HUD also announced that FHA - approved lenders may purchase the tax credit from the home buyer in advance , so the home buyer can use the funds for closing costs or to make a down payment in addition to the 3.5 % minimum . Home buyers who go directly to FHA - approved lenders will still need to come up with the 3.5 % minimum down payment that is required for an FHA - insured loan . The National Council of State Housing Agencies has a list on their website ( ) of state offering first - time home buyers tax credit loan programs . For information on the $ 8 , 000 first - time homebuyer tax credit , go to . Now , admittedly , this is old news , and is dated June 11 , 2009 . But sometimes it pays to step back and look at what has just happened and is happening . We just had a near melt - down of...
    Click Here to Read the Full Article

    Source: www.nakedcapitalism.com
  • 2:07 PM » Record Credit Card Defaults Signals a Weaker Recovery
    Published Thu, Sep 24 2009 2:07 PM by Seeking Alpha
    submits: According to reports from () Investors Service, credit card delinquencies surged to record levels in August. In the first increase of charge-off rates since the rally began in March, credit card issuers wrote off 11.49% of uncollectible consumer debt compared to 10.52% in July. Also loans more than 30-days past due also rose to 5.8%. Moody’s report also suggests that charge off rates are not likely to peak until mid-2010, as unemployment continues to strain many consumers budgets. Write-offs rose to 11.49 percent from 10.52 percent in July, Moody’s said today in a report. Loans at least 30 days delinquent rose to 5.8 percent from 5.73 percent. “Early- stage” delinquencies, or loans overdue 30 to 59 days, surged to 1.65 percent, from 1.41 percent, signaling higher losses in coming months. Banks typically write off loans after 180 days.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 2:07 PM » Wells Fargo: Ready to blow?
    Published Thu, Sep 24 2009 2:07 PM by www.economist.com
    Buying Wachovia was strategically astute but financially messy “TOGETHER we’ll go far.” Wells Fargo’s corporate slogan is a pledge to its customers, but it might just as well reflect the San Francisco banking giant’s optimism about its takeover of Wachovia, a teetering rival it snatched from under Citigroup’s nose last October. Losses from the acquisition are “still in the same zip code” as the sum envisaged at the time, says John Stumpf, Wells’s chief executive. In another sign of self-confidence, Kovacevich will step down as chairman at the end of the year, a move that would be hard to imagine if the bank’s hands-on former boss were worried about the future. Others are less convinced, suspecting Wells of understating Wachovia’s loan losses and questioning its accounting. Fuelling these worries, says Bove of Rochdale Securities, is “extraordinarily poor” communications and disclosure. Alone among big banks, Wells does not hold a quarterly call for analysts. ...
    Click Here to Read the Full Article

    Source: www.economist.com
  • 2:07 PM » Housing Will Remain Weak As Long as Jobs Are Scarce
    Published Thu, Sep 24 2009 2:07 PM by CNBC
  • 1:57 PM » Housing Crash to Resume on 7 Million Foreclosures , Amherst Says
    Published Thu, Sep 24 2009 1:57 PM by Bloomberg
    The crash in U.S. home prices will probably resume because about 7 million properties that are likely to be seized by lenders have yet to hit the market, Amherst Securities Group LP analysts said. The “huge shadow inventory,” reflecting mortgages already being foreclosed upon or now delinquent and likely to be, compares with 1.27 million in 2005, the analysts led by Laurie Goodman wrote today in a report. Assuming no other homes are on the market, it would take 1.35 years to sell the properties based on the current pace of existing-home sales, they said.
  • 12:49 PM » USDA Subprime
    Published Thu, Sep 24 2009 12:49 PM by Seeking Alpha
    submits: Stare at wall... Look at computer screen....Stare back at the wall...Shake head slowly... I don't even have the words.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 12:49 PM » Aug Existing Home Sales and what happens next?
    Published Thu, Sep 24 2009 12:49 PM by The Big Picture
    Existing Home Sales totaled 5.1mm annualized, 250k less than expected and down from 5.24mm in July. The chief economist placed some blame for the shortfall in closings relative to expectations on “rising numbers of contracts entering the system, with some fallouts and a backlog contributing to a longer closing process.” The NAR said 30% of buyers were 1st time, where many took advantage of the tax credit, and 31% of sales were distressed. The median price fell 12.5% y/o/y and 2.1% m/o/m. The positive within the data was months supply which fell to 8.5 from 9.3 and is the lowest since Apr ‘07. The two key hurdles the industry must now face is an inevitable increase in foreclosures as many 1st half moratoriums have come to an end and the uncertain destiny of the tax credit which the industry is certainly begging but has become an expensive subsidy from the rest of us.
    Click Here to Read the Full Article

    Source: The Big Picture
  • 12:49 PM » Credit quality declines in annual Shared National Credits review
    Published Thu, Sep 24 2009 12:49 PM by Federal Reserve
    Credit quality declines in annual Shared National Credits review
    Click Here to Read the Full Article

    Source: Federal Reserve
  • 11:01 AM » G-20 Progress Report
    Published Thu, Sep 24 2009 11:01 AM by WSJ
    Leaders from Group of 20 countries will meet for the third time in less than a year this week in Pittsburgh to address the global crisis. The world economy and financial markets are finally showing signs of emerging from the worst slump since World War II, but the leaders are expected to vow to resist complacency and maintain measures to support growth, while starting to formulate exit strategies. In addition, deals still have to be hammered out on curtailing excessive bank compensation practices, raising bank capital standards and reforming international financial institutions. Here’s a progress report on major pledges G-20 leaders made in April when they last met in London: Fiscal stimulus to restore growth: The G-20 countries are pumping a lot of government spending into their economies. Discretionary stimulus is estimated at 2% of gross domestic product this year and 1.6% in 2010, according to the International Monetary Fund. The focus now is how and when to pull back on spending. Central banks to maintain expansionary policies, but debating when to phase out emergency programs: Many central banks are holding steady as they evaluate the strength of the recovery. The U.S. Federal Reserve has kept rates at a record-low near zero, but it’s gradually reining in a major Treasury-purchase program. The Bank of England’s policy-setting panel is also holding pat. After increasing the size of its bond-buying program in August, the BOE this month kept the bond program and its key interest rate unchanged. The European Central Bank this month also left its rate policy in tact. Repair financial sectors: While some government rescue measures have proven successful, others - such as those designed to help banks grapple with the toxic assets - have drawn little interest. In the U.S. the “stress tests” regulators conducted on large banks helped boost confidence. Moves in the U.S. and Europe last fall to inject cash into banks have been credited with helping to stem the crisis. Still...
  • 11:01 AM » Not Enough Ado About Real Estate Lately
    Published Thu, Sep 24 2009 11:01 AM by Seeking Alpha
    submits: Last year we had an unprecedented number of foreclosures. Since then, loan defaults have only increased. And yet inventory is down, not up. Sales are up, but only compared to last year. They in no way account for these record defaults. The recent increase in real estate prices has been focused on lower end homes only. Higher end homes are in a flat out stand still. Meantime, the volume on the lower end is anemic. The inventory is at about 10% of where it would normally be and about 1/500 of where it should be.
    Click Here to Read the Full Article

    Source: Seeking Alpha
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