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  • Wed, Aug 4 2010
  • 8:44 AM » FDIC seeks CMBS underwriters
    Published Wed, Aug 04 2010 8:44 AM by Reuters
    NEW YORK (Reuters) – The Federal Deposit Insurance Corp is seeking proposals from Wall Street dealers to help issue commercial mortgage-backed securities with loans saddling failed bank balance sheets, according to an FDIC document. Dealers have until August 20 to submit their plans under the FDIC’s request for proposal, a copy of which was obtained by Reuters. An FDIC spokesman declined to comment. Federally backed issuance would be the newest development in the $700 billion CMBS market, which has been crawling back from the financial crisis since December. While likely lacking the yield of a traditional CMBS, FDIC bonds could fill a void in a market shrinking due to lack of new issuance. The FDIC has already been securitizing residential loans from failed bank portfolios, with RBS Securities last month pricing a deal backed by $471.3 million in home loans. The bonds are guaranteed by the FDIC. “Given the concentration of commercial mortgage loans on community and regional bank balance sheets, this is a logical next step” for the FDIC, said Scott Buchta, head of investment strategy at Braver Stern Securities in New York. “An FDIC guarantee may expand the field of CMBS buyers,” he added. Loans on office, retail and apartment buildings were one of the top reasons for the failure of U.S. banks as the real estate market sank. The FDIC has taken over 273 banks since the crisis erupted in 2008, and some investors predict hundreds more, based on the exposure to over-leveraged real estate. Prospects for an FDIC CMBS market are significant compared with the trickle of issuance in private markets. As of March, commercial banks held $1.28 trillion, or about half of outstanding commercial mortgages, according to Federal Reserve data. (Editing by Dan Grebler)
  • 8:44 AM » Customary and Reasonable fees: Making Your Case
    Published Wed, Aug 04 2010 8:44 AM by
    Editor’s Note: New financial reform legislation provides support for customary and reasonable fees for appraisers. Many see the standardized fees set by the Veteran’s Administration (VA) as a logical benchmark. Find a listing of VA fees by state/area along with important VA links posted free at Customary and Reasonable fees: Making Your Case [...]
  • 8:29 AM » Lender Processing Services: Feasting on Foreclosures
    Published Wed, Aug 04 2010 8:29 AM by Seeking Alpha
    Paul Price submits: [NYSE: $32.38] provides technology and outsourced services to the mortgage lending industry. They deal with about half of the biggest fifty banks in America. Since its spin-off as a separate entity in 2008 LPS has done nothing wrong. Earnings per share have progressed from 2008’s $2.41 to $2.87 in 2009 and they are on pace to hit a new record of about $3.49 this year.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 8:29 AM » More Government Workers Face Pay Cuts, Not Furloughs
    Published Wed, Aug 04 2010 8:29 AM by CNBC
    More Government Workers Face Pay Cuts, Not Furloughs
  • 8:29 AM » Planned Job Cuts Rise, But Below '09 Level: Challenger
    Published Wed, Aug 04 2010 8:29 AM by CNBC
    Planned Job Cuts Rise, But Below '09 Level: Challenger
  • 8:13 AM » D.R. Horton conference call comments: No more tax credits!
    Published Wed, Aug 04 2010 8:13 AM by Calculated Risk Blog
    A few quotes from homebuilder D.R. Horton conference call today ... (ht Mike in Long Island, Zach, Pat) "Frankly, I don't want the tax credits to be re-enacted or be re-created or extended ," CEO Donald Tomnitz said. "We want to get back to a normalized market. It's a lot easier ... designing your business with the current demand as opposed to having any kind of stimuluses or incentives to create abnormal demand." CR Note: As I've noted before, the housing tax credit was a clear and unequivocal failure. Not only did most of the benefit go to people who were going to buy anyway, but the credit didn't reduce the overall supply. The credit just incentivized some people to move - and pulled some sales forward - and to the extent the credit went to new home sales, it was actually counterproductive by increasing the excess supply. On the cancellation rate increase to 28%: "I was surprised it only increased to 28%. But nevertheless we wanted to give every buyer the opportunity to buy and close on a home. And so if they had a pulse and they were warm, we wrote 'em ," Tomnitz said. "And so as a result we did have some cancellations because people couldn't qualify." CR Note: A normal cancellation rate for Horton is in the 16% to 20% range. On the outlook: " The next 12 to 24 months will be challenging in the homebuilding industry ." CR Note: Yes. Probably more home builders will go bankrupt during the "recovery" than during the bust.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:13 AM » Personal Bankruptcy Filings up 9% in July
    Published Wed, Aug 04 2010 8:13 AM by Calculated Risk Blog
    From the American Bankruptcy Institute: The 137,698 consumer bankruptcies filed in July represented a 9 percent increase nationwide over the 126,434 filings recorded in July 2009, according to the American Bankruptcy Institute (ABI), relying on data from the National Bankruptcy Research Center (NBKRC). NBKRC’s data also showed that the July consumer filings represented a 9 percent increase from the 126,270 consumer filings recorded in June 2010. Chapter 13 filings constituted 28 percent of all consumer cases in July, a slight increase from June. “Debt burdens, unemployment and an uncertain economic climate continue to weigh on consumers,” said ABI Executive Director Samuel J. Gerdano. “The pace of consumer filings this year remains on track to top 1.6 million filings.” Click on graph for larger image in new window. This graph shows the non-business bankruptcy filings by quarter using monthly data from the ABI and previous quarterly data from . Excluding 2005, when the so-called "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005" was enacted (really a pro-lender act), the record year was in 2003 when 1.62 million personal bankruptcies were filed. This year will be close to that level.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • Tue, Aug 3 2010
  • 6:44 PM » Glut of Houses Holds Back Housing Market, Economy
    Published Tue, Aug 03 2010 6:44 PM by Google News
    Tuesday’s pending home sales report is the latest indicator that the U.S. housing market is bogged down by an inventory problem: Too many houses, not enough buyers.
  • 6:44 PM » With Wallets Thin, Consumers Face Zero-Sum Game
    Published Tue, Aug 03 2010 6:44 PM by WSJ
    You don't need an economics degree to understand this relationship: No income gain equals no spending gain.
  • 4:07 PM » Dodd-Frank and the Non-Agency MBS Markets
    Published Tue, Aug 03 2010 4:07 PM by
    This article was originally published in the August 2010 issue of Asset Securitization Report ( The Dodd-Frank financial reform act signed this month by President Obama was, in my reading, very unfriendly to the non-agency MBS market. Taken in its entirety, key provisions of the bill create significant and protracted uncertainty for issuers and investors, further delaying the much-anticipated revival of private-label MBS issuance.
    Click Here to Read the Full Article

  • 11:43 AM » Poor Credit Judgments Sank Fannie and Freddie
    Published Tue, Aug 03 2010 11:43 AM by WSJ
    Just whose narrative about the demise of Fannie Mae and Freddie Mac is faulty? Brian M. Carney suggests that housing advocates and Democrats are unable to reconcile their view that the financial crisis was caused by undisciplined financial practices among banks and Wall Street, with their continued support of the assistance Fannie and Freddie provide to the housing market ("," op-ed, July 26). Perhaps the confusion is that the writer cannot fit the facts to the Journal's view that the crisis was government-made
  • 10:39 AM » The smart money in real estate is on smart growth
    Published Tue, Aug 03 2010 10:39 AM by Reuters
    ROCKVILLE, Maryland (Reuters) – This suburb of Washington, D.C. inspired R.E.M.’s 1984 song about the soul-sucking blandness of a suburban adolescence that has been a staple of rock and roll. “(Don’t Go Back to) Rockville” described a town of empty houses, “where nobody says hello.” But some experts in the real estate business believe that in the future, more and more of us will be going back to places like the revamped Rockville — quite happily, in fact. “They had a point at the time,” Sally Sternbach, the head of Rockville’s economic development arm, says of R.E.M.’s quiet anthem. “We got it wrong. We built a mall that never found its anchors. It languished for 40 years. It was like the biblical 40 years in the desert.” Then, 15 years ago, Rockville convened hearings and forums to discuss its lackluster downtown, deciding in the end to replace it with a town square lined with shops, restaurants and apartments, all steps away from a subway station — in other words, more of an urban experience. The citizenry wanted vibrant street life both for the fun of it, and to attract business. So far, it’s worked. Teenagers use Facebook to signal spur-of-the-moment breakdance sessions on the town square’s bandstand because, as Dominique Estrera, 17, explained, it’s really the only place they can “hang out and break.” Adults like to socialize there, too. “I love the Town Square because I can’t walk more than a couple feet without seeing someone I know from doing business,” said Robin Wiener, president of Get Real Consulting, a firm that helps healthcare providers put their records online. Rockville’s renaissance over the past four years shows how the shift toward urban-style living has reached the suburbs. And urban planners insist the trend has legs. Dubbed “smart growth,” the movement favors the development of a mix of housing and businesses in and near existing cities. At the same time, it discourages the Topsy-like growth of peripheral suburbs, known disparagingly as “sprawl...
  • 10:38 AM » House Passes Legislation Allowing FHA to Increase Mortgage Insurance Premiums
    Published Tue, Aug 03 2010 10:38 AM by National Council of State Housing Agencies
    On July 30, The House of Representatives passed legislation, , that w
    Click Here to Read the Full Article

    Source: National Council of State Housing Agencies
  • 10:37 AM » Moody's: Covered Bond Bill (H.R. 5823) Positive - But Shortcomings
    Published Tue, Aug 03 2010 10:37 AM by
    The latest version of U.S. covered bond legislation (H.R. 5823) — which recently won a favorable vote from the House Financial Services Committee (HFSC) — offers both pluses and minuses, according to a comment published by Moody's Investor's Service (August 2). On the plus side, the bill "will help investors in covered bond transactions because it will set up investor-friendly procedures following an issuer default." In such a situation, there would be an established mechanism for transferring the cover pool to a separate legal estate, which would be administered for the benefit of investors so as to continue making scheduled payments over time. Yehudah Forster In addition, the bill provides certain protections to the administrator so as to minimize the potential for disruption, while preserving deficiency claims that a bondholder may have against the issuer's estate. But Moody's comment, written by VP and Senior Analyst Yehudah Forster, also points to at least two negative aspects of H.R. 5823. One negative is that the bill "provides for overcollateralization levels that will not address market value risk." This is largely because covered bond regulators are specifically directed not to take liquidity risk into account when setting minimum overcollateralization levels. The other big negative, according to Moody's, comes from an amendment that was incorporated into H.R. 5823 at the HFSC's markup session (July 28). Instead of providing for oversight of all covered bond issuance by a single regulator, the amended bill now "appoints the issuer's primary regulator as the covered bond regulator." "Since the regulators are in charge of setting standards, this feature could lead to inconsistency between programs and reduce transparency for investors," Moody's comment states. "It could also lead to a conflict of interest since the goals of the issuer's primary regulator may not always be aligned...
    Click Here to Read the Full Article

  • 10:37 AM » Quantifying Liquidity Premium of Money Market Funds in the Low Yield Environment, Part II
    Published Tue, Aug 03 2010 10:37 AM by
    This paper attempts to quantify the impact of a liquidity premium in money market funds by modeling three hypothetical portfolios of 29, 60, and 121-day weighted average maturities (WAM). Through our modeling process, we found the WAM extensions would have resulted in 0.11% and 0.31%, respectively, of additional annual yield potential over the 29-day WAM portfolio. The premise of the exercise is that by using separately managed accounts of custom maturities, investors may be able to recuperate part of the reduced yield caused by the more stringent liquidity requirements of the revised 2a-7 rule.
    Click Here to Read the Full Article

  • 10:37 AM » Real Estate News: Probes Spotlight Dual Roles in Housing Deals
    Published Tue, Aug 03 2010 10:37 AM by Google News
    Here is a look at real-estate news in today's WSJ:
  • 8:01 AM » Fed might resume modest bond buying to bolster market confidence
    Published Tue, Aug 03 2010 8:01 AM by
    The U.S. --
    Click Here to Read the Full Article

  • 8:01 AM » US State Funding Plan Stalls in Senate
    Published Tue, Aug 03 2010 8:01 AM by CNBC
    US State Funding Plan Stalls in Senate
  • 7:48 AM » Foreclosure Auction Investing Gone Wrong
    Published Tue, Aug 03 2010 7:48 AM by Calculated Risk Blog
    Usually when auction buyers lose money it is because they either overvalue the home, or the home was seriously damaged. However this is an unusual story from Carolyn Said at the San Francisco Chronicle: (ht Jesse) Roberta and Randall Strand took $97,606 out of their paid-off house to buy a foreclosed home at a courthouse auction. Five months later, they found out they actually bought the second mortgage, and that the bank planned to foreclose on the first mortgage, leaving them out in the cold. This is pretty easy to check. In this case the lender (Wachovia, now Wells Fargo) held both the 1st and 2nd and foreclosed on both. Because of timing issues, the 2nd went to the court house steps first - and the buyers are now out around $100,000. Well, probably less ... Wells and the family negotiated a confidential settlement and were finalizing details late last week.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 7:47 AM » WSJ: FOMC considering reinvesting when MBS Matures
    Published Tue, Aug 03 2010 7:47 AM by Calculated Risk Blog
    From Jon Hilsenrath at the WSJ: Federal Reserve officials will consider a modest but symbolically important change in the management of their massive securities portfolio ... The issue: Whether to use cash the Fed receives when its mortgage-bond holdings mature to buy new mortgage or Treasury bonds, instead of allowing its portfolio to shrink gradually, as it is expected to do in the months ahead. ... Buying new bonds with this stream of cash from maturing bonds—projected at about $200 billion by 2011—would show the public and markets that the Fed is seeking ways to support economic growth. This seems unlikely to happen at the Aug 10th meeting based on Chairman Bernanke's this morning, and his to Congress less than two weeks ago.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 7:46 AM » Probes Spotlight Dual Roles in Housing Deals
    Published Tue, Aug 03 2010 7:46 AM by WSJ
    Probes of the collapsed mortgage-bond boom are shedding light on how Wall Street firms, including Deutsche Bank, sometimes created securities and sold them to some investors, while advising others to bet against them.
  • 7:46 AM » Did Low Interest Rates Cause the Great Housing Convulsion?
    Published Tue, Aug 03 2010 7:46 AM by NY Times
    By focusing largely on interest rates, we have not yet found a sound explanation for what caused the housing bubble and its bursting, an economist writes.
  • 7:46 AM » Bernanke Says Rising Wages Will Lift Spending
    Published Tue, Aug 03 2010 7:46 AM by NY Times
    Federal Reserve Chairman Ben S. Bernanke said rising wages would probably spur household spending in the next few quarters, even as weak job gains dragged down consumer confidence.
  • 7:46 AM » Seeking Distressed Homeowners, Fannie Mae Tries Website
    Published Tue, Aug 03 2010 7:46 AM by Google News
    Fannie Mae launched a new website Tuesday aimed at reaching distressed homeowners and urging them to get help.
  • 7:30 AM » News: AMI Submits Comments on the S.E.C.’s Proposed Reg AB
    Published Tue, Aug 03 2010 7:30 AM by Assoc. Mtg. Investors
    Washington, D.C. The Association of Mortgage Investors submitted comments to the U.S. SEC in support of its proposed Regulation AB. Chris Katopis, the AMI’s Executive Director, stated the following: “The AMI supports solutions to America’s housing and foreclosure crisis. The restart of securitization is an essential part of the solution. We are pleased that the [...]
    Click Here to Read the Full Article

    Source: Assoc. Mtg. Investors
  • Mon, Aug 2 2010
  • 6:06 PM » Treasury links 5.6 million hires to tax credits
    Published Mon, Aug 02 2010 6:06 PM by Reuters
    WASHINGTON (Reuters) - Businesses eligible for tax credits under an Obama administration stimulus package hired an estimated 5.6 million workers, the Treasury Department said on Monday.
  • 6:05 PM » After Scorching Year-Long Run, Factories Chill Out
    Published Mon, Aug 02 2010 6:05 PM by WSJ
    The factory sector kicked it down another notch in July. What's needed in the second half is for the service sector to pick up some of the slack. But that goal remains more wishful thinking than reality.
  • 6:04 PM » Millions of Mortgage Woes Trump Uptick, Goodman Says: Tom Keene
    Published Mon, Aug 02 2010 6:04 PM by Business Week
    The millions of troubled U.S. mortgage loans are overshadowing a reduction in delinquency rates, according to Amherst Securities Group analyst Laurie Goodman.
    Click Here to Read the Full Article

    Source: Business Week
  • 6:03 PM » Fannie Mae Monthly Summary for June 2010: Single Family Delinquency of 5.15%
    Published Mon, Aug 02 2010 6:03 PM by Seeking Alpha
    submits: The Latest release of the indicated that for data through May, total serious single family delinquency continued to declined. Although this is a notable development particularly in light of the fact that Fannie Mae’s serious delinquency had been rising for over two years, more data is needed before any conclusions can be drawn as to the trend going forward.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 6:02 PM » Did You Know: Unemployed Workers per Job Opening
    Published Mon, Aug 02 2010 6:02 PM by Google News
    Did you know that at the height of this recession for every job opening there were 6.2 unemployed workers?
  • 6:01 PM » 'Strategic Defaults' Can Damage Credit for Years
    Published Mon, Aug 02 2010 6:01 PM by Google News
    Walking away from a mortgage might seem to make financial sense today, but borrowers who do it may have credit problems for several years.
  • 6:01 PM » Homeownership Rate Likely to Fall More
    Published Mon, Aug 02 2010 6:01 PM by Google News
    Some experts believe the national homeownership rate will fall to near record lows, while others believe purchase of foreclosures by consumers and investors will slow the decline.
  • 6:01 PM » NAHB International Builders? Show Welcomes Attendees with Discounted Registration Through Aug. 31
    Published Mon, Aug 02 2010 6:01 PM by NAHB
    Press Release
  • 4:44 PM » No More ‘Slum, Slumming’ for Section 8 Recipients
    Published Mon, Aug 02 2010 4:44 PM by Google News
    Recipients of the government subsidy are renting boom-era showpieces, brimming with McMansion-like features, that once sold for hundreds of thousands of dollars.
  • 10:26 AM » Falling home prices could take U.S. back to recession, Greenspan says
    Published Mon, Aug 02 2010 10:26 AM by
    "Tragic unemployment" has trapped every part of the U.S. --
    Click Here to Read the Full Article

  • 10:10 AM » Paulson on the GSEs: Mend 'Em, Don't End 'Em
    Published Mon, Aug 02 2010 10:10 AM by Seeking Alpha
    Most noteworthy paragraph in , in Friday’s Washington Post , on what to do about the GSEs: The GSEs are providing an enormous stimulus to the economy. Placing Fannie and Freddie in conservatorship was, in my view, the most effective of the stimulus efforts undertaken in the past two years. This stimulus was aimed squarely at the driver of our financial and economic crisis: the decline of home prices. Without public support, ensuring that mortgage financing was available during the worst moments of the financial crisis and the ensuing 22 months, the housing market would have ground to a halt, home prices would have spiraled downward, foreclosures would have skyrocketed, and financial institution balance sheets would have suffered greater losses, leading to a prolonged downturn and the loss of millions of additional jobs.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 9:56 AM » Negative Equity Breakdown
    Published Mon, Aug 02 2010 9:56 AM by Calculated Risk Blog
    Here is some data from a recent congressional briefing by Mark Zandi, Chief Economist of Moody's, and Yale Professor Robert Shiller. I believe all of this negative equity data was presented by Zandi. A few key points, as of Q1 2010: There is almost $2.4 trillion mortgage debt for homes in negative equity. The total negative equity is $771 billion. There are 4.1 million homeowners with more than 50% negative equity (they owe 50%+ more than their homes are worth). Click on graph for larger image in new window. This graph shows the percent of homeowners with negative equity (dashed line), percent of homeowners with mortgages with negative equity (blue), and the mortgage debt for homes with negative equity - all since Q1 2006. The good news is the percent of homeowners with negative equity, and the mortgage debt for homes with negative equity, peaked in 2009. The bad news is the declines have been relatively small even with all the distress sales, minor price increases, and some principal reduction modifications. As prices start to fall later this year (as I expect), the number of homeowners with negative equity will probably increase again (offset by foreclosures, short sales, and some modifications with principal reduction). The second graph shows the number of homeowners in negative equity, by the percent of negative equity. There are 4.1 million homeowners with more than 50% negative equity, and another 5 million homeowners with 20% to 50% negative equity. If prices fall 5%, the columns will essentially shift one to the left (ignoring remedies), and there will be 10.2 million homeowners with 20% or more negative equity. The third graph shows the percent of homeowners with mortgages in negative equity for 33 states and D.C. This is shown in three categories: >50%, 20% to 50%, and 0 to 20%. If you look at Nevada, 17.0% of homeowners (with mortgages) are more than 50% underwater, and another 35.2% are 20% to 50% underwater. These are the homeowners most...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 9:55 AM » Number of the Week: Default Repercussions
    Published Mon, Aug 02 2010 9:55 AM by WSJ
    Twenty-five percent of Americans now have a credit score of less than 600. In an economy where credit plays a central role, that presents a significant obstacle to recovery.
  • 9:55 AM » Greenspan: A ‘Quasi-Recession’
    Published Mon, Aug 02 2010 9:55 AM by WSJ
    Alan Greenspan, famous for his murky pronouncements on the U.S. economy when he was Fed chairman, did not disappoint on Sunday.
  • 9:54 AM » Fannie Mae Offers Borrowers Hardship Relief
    Published Mon, Aug 02 2010 9:54 AM by
    Struggling borrowers facing “unique hardships” may find more flexibility from lenders starting this month.
    Click Here to Read the Full Article

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Mortgage Rates:
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  • Jumbo 30 Year Fixed 3.30%
MBS Prices:
  • 30YR FNMA 4.5 108-16 (-0-02)
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  • 30YR FNMA 5.0 110-15 (-0-01)
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Recent Housing Data:
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  • Purchase Index 1.81%