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  • Mon, Aug 24 2009
  • 3:40 PM » Cure Rates on Prime Loans See Ominous Decline
    Published Mon, Aug 24 2009 3:40 PM by Seeking Alpha
    Tom Lindmark submits: This is a pretty important bit of information from A slower cure rate among delinquent loans erased improvements in the number of loans rolling into delinquency status among US residential mortgage-backed securities (RMBS), according to Fitch Ratings .
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 3:39 PM » Canadian Real Estate Braces for Continuing Losses
    Published Mon, Aug 24 2009 3:39 PM by Seeking Alpha
    submits: The Canadian real estate market remains under pressure as rental rates in Toronto and Calgary are falling and lagging lease agreements begin to show the effects of the recession. In the second quarter of 2009, companies covered by Desjardins Securities showed a 4% decline in weighted year-over-year per unit/share growth, in large part due to the excessive losses at (), the largest firm covered.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 3:38 PM » Comment on First-time Homebuyer Tax Credit
    Published Mon, Aug 24 2009 3:38 PM by Calculated Risk Blog
    A few comments on the first-time homebuyer tax credit: A couple of details: The tax credit is up to 10% of the purchase price, or $8 thousand maximum. "First-time" homebuyers are defined as anyone who hasn't owned a primarily residence for the last 3 years (not really "first-time"). The tax credit can be used as the downpayment, see Kenneth Harney's: This has led to a . Even though the program ends on November 30th, the buyer must close escrow before then - so the program will boost traffic through September and maybe into October. Existing home sales are reported in the month following the close of escrow . So the program should have a positive impact on reported numbers throughout most of the year. The odds are very high that the tax credit will be extended . My understanding is the NAR and NAHB are pulling out all the stops and the extension of this credit is their #1 priority. Also, since housing is the top economic priority for the Obama Administration, I think we will see an extension at the same size ($8K), maybe for another 6 months. This extension will probably not be a high priority until October . However, just like with the cash-for-clunkers program, I think the impact will wane over time. Anecdote: I've spoken with two younger guys (30 ish) who told me they had no down payment, but their wives are pushing them to buy a house NOW. They are using the tax credit and FHA to buy. I think that conversation is happening in many places. This suggests existing home sales will decline - perhaps significantly - after the frenzy subsides.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 3:38 PM » Buying College Housing a Good Choice?
    Published Mon, Aug 24 2009 3:38 PM by www.minyanville.com
    Thinking about buying housing for your college student?Do the math before buying your student a residence close to campus.You may want to rent out one or more bedrooms to swing the deal. If so this raises basic questions: Can your kid act as landlord and collect rent from friends or other students? Who handles routine maintenance? What about summers when your student is away and the rooms are likely to be vacant?"Buying a residence (for your student) can make sense " says June Walbert a Certified Financial Planner at USAA Financial Planning Services. "It can be a good tax ...
    Click Here to Read the Full Article

    Source: www.minyanville.com
  • 3:38 PM » Taylor Bean Files for Bankruptcy
    Published Mon, Aug 24 2009 3:38 PM by WSJ
    Taylor Bean filed for Chapter 11 protection three weeks after the company shuttered its mortgage lending operations.
  • 3:23 PM » Fitch: "Dramatic" Decrease in Cure Rates for Delinquent Mortgage Loans
    Published Mon, Aug 24 2009 3:23 PM by Calculated Risk Blog
    These are very important numbers ... from Fitch: Fitch: Delinquency Cure Rates Worsening for U.S. Prime RMBS (ht BURN, Ron ) While the number of U.S. prime RMBS loans rolling into a delinquency status has recently slowed, this improvement is being overwhelmed by the dramatic decrease in delinquency cure rates that has occurred since 2006, according to Fitch Ratings. An increasing number of borrowers who are 'underwater' on their mortgages appear to be driving this trend , as Fitch has also observed. Delinquency cure rates refer to the percentage of delinquent loans returning to a current payment status each month. Cure rates have declined from an average of 45% during 2000-2006 to the currently level of 6.6%. ... 'Recent stability of loans becoming delinquent do not take into account the drastic decrease in delinquency cure rates experienced in the prime sector since the peak of the housing market,' said [Managing Director Roelof Slump]. 'While prime has shown the most precipitous decline, rates have dropped in other sectors as well.' In addition to prime cure rates dropping to 6.6%, Alt-A cure rates have dropped to 4.3%, from an average of 30.2%, and subprime is down to 5.3% from an average of 19.4%. 'Whereas prime had previously been distinct for its relatively high level of delinquency recoveries, by this measure prime is no longer significantly outperforming other sectors,' said Slump. ... Furthermore, up to 25% of loans counted as cures are modified loans, which have been shown to have an increased propensity to re-default . ... 'As income and employment stress has spread, weaker prime borrowers become more likely to become delinquent in their loan payments and are less likely to become current again,' said Slump. Regardless of aggregate roll-to-delinquent behavior, it will be difficult to argue that the market has stabilized or that performance has improved, until there is a concurrent increase in cure rates. This is especially...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 9:11 AM » Existing Homes: What's Really Selling
    Published Mon, Aug 24 2009 9:11 AM by CNBC
    Posted By: Existing home sales in a row, now to the highest pace in two years. Excellent news that buyers are getting off the fence, but they're only getting off at a certain price point. Topics: | | Sectors: | MEDIA:
  • 9:10 AM » Should CRE Valuation Be Regulated?
    Published Mon, Aug 24 2009 9:10 AM by llenrock.com
    An interesting article in the New York Times last week highlighted the heated debate that is taking place amongst lenders, realtors, mortgage brokers, and appraisers in the residential real estate market. The debate stems from the new Home Valuation Code of Conduct, which has been in effect since May 1st as a method of reducing [...]
  • 9:10 AM » Commercial Real Estate Week In Review
    Published Mon, Aug 24 2009 9:10 AM by llenrock.com
    The Week of August 15-21 - Abercrombie & Fitch may be losing its shirt(s) - A 1200 unit apartment portfolio on Long Island obtained a $77M refi. - The Fed Treasury Announced a TALF extension. - Stalin would never let this happen with $1.5 billion. - Here comes Chinese money…again…this time to buy U.S. mortgages through PPIP. -Headline Shocker: CRE [...]
  • 9:10 AM » The coming days: The week ahead
    Published Mon, Aug 24 2009 9:10 AM by Google News
    Japanese voters go to the polls and other news • AMERICA'S successful car-scrappage scheme, dubbed “cash for clunkers”, will be suspended on Monday August 24th. The $3 billion budget allocated to the popular rebate programme has run out just a month after its launch. Consumers were encouraged to buy new cars with the offer of up to $4,500 off the cost of a new, more fuel-efficient vehicle to replace a gas-guzzler. Sales of new vehicles are likely to exceed the 1m mark in August, a monthly figure not surpassed in the past year. See article ...
  • 8:54 AM » Krugman: Some call it recovery
    Published Mon, Aug 24 2009 8:54 AM by Calculated Risk Blog
    Excerpt from Paul Krugman: The real problem here is that the standard language doesn’t make much allowance for the kind of gray zone we’re now in; that’s because in the pre-1990 era recessions tended to be V-shaped, so that jobs snapped back as soon as GDP turned around. I don’t think what we’re going through is good news — but GDP is almost surely rising, so the recession, as normally defined, is over. ... But the economy is not recovering in the most crucial area, job creation ... Excerpt from The Economist: The world economy has stopped shrinking. That’s the end of the good news ... a rebound based on stock adjustments is necessarily temporary, and one based on government stimulus alone will not last. Beyond those two factors there is little reason for cheer. America’s housing market may yet lurch down again as foreclosures rise, high unemployment takes its toll and a temporary home-buyers’ tax-credit ends (see ). Even if housing stabilises, consumer spending will stay weak as households pay down debt. In America and other post-bubble economies, a real V-shaped bounce seems fanciful. It does appear the cliff diving is over, and that the U.S. economy will grow in the 3rd quarter. But there are still more problems ahead for consumer spending and housing (I think housing is still the key - and I'll discuss this soon). An immaculate recovery seems remote.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:54 AM » Fed's Bullard: Rates to Stay Low Longer than Market Expects
    Published Mon, Aug 24 2009 8:54 AM by Calculated Risk Blog
    From Felix Salmon at Reuters: (ht Anthony) Financial markets have not fully understood that the U.S. Federal Reserve's pledge to keep interest rates exceptionally low for an extended period means they will stay low beyond when officials normally would raise them, a top Fed official said on Friday. "I don't think markets have really digested what that means," St Louis Fed President James Bullard said in an interview. The Fed's strategy is aimed at promoting a future rise in inflation, which should provide an immediate boost in activity in anticipation of a future boom, but that hasn't happened, Bullard said. Bullard is repeating the FOMC statement: The Committee ... continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. Bullard thinks the markets haven't "digested what that means" - rates will be low for a long time - maybe through much or all of 2010. Here is an interview with Bullard on a few other subjects, expects slow growth, discusses unwinding current policy:
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:39 AM » SFGate: First-Time Homebuyers Competing with Investors
    Published Mon, Aug 24 2009 8:39 AM by Calculated Risk Blog
    We've discussed this all year, and this is happening in many low priced areas ... From Carolyn Said at the San Francisco Chronicle: "Since January, I've put in 10 bids (on foreclosed homes); some were up to $80,000 over asking price and were still turned down," said [first-time home buyer, Jay] Nielsen, 41, a medical assistant. Each time, the banks selected offers from investors with all-cash offers - even when those offers were lower than his, Nielsen said. "Cash is king right now," said Glen Bell of Keller Williams Realty in Berkeley. For foreclosed homes, "a cash offer that hits the target price will many times trump a higher-priced offer with a loan. The ability to close has become just as important to banks as price. The prospect of a property being tied up longer, still on their books and then falling out is costly." The result is that average consumers say they are being shut out because they can't compete against deep-pocketed investors snapping up homes to rent out or flip. ... All-cash sales are most common where prices are low and bank-owned properties account for the lion's share of listings. In foreclosure-ridden Pittsburg, for instance, 42.7 percent of home sales in the first three weeks of July had no record of a purchase loan, according to county data analyzed by MDA DataQuick. The median price for those transactions was $105,000. There is a right now for first-time homebuyers trying to take advantage of the $8,000 tax credit (see ) before the program expires at the end of November (must close escrow by then). Meanwhile cash-flow investors are buying properties in the same price range (the numbers don't work on higher priced homes). In some of these areas, the only buyers are first-time homebuyers frequently using the and investors. The sellers are banks or short sales. Not exactly signs of a healthy market.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • Sat, Aug 22 2009
  • 12:52 PM » Fed’s Kohn Defends Pledge to Keep Rates Low
    Published Sat, Aug 22 2009 12:52 PM by WSJ
    JACKSON HOLE, Wyo. — U.S. Federal Reserve Vice Chairman Donald Kohn Saturday defended the central bank’s pledge to keep interest rates low for an extended period of time. The commitment to low rates is meant to keep inflation from falling, Kohn said during a discussion on monetary policy at an annual Kansas City conference being held here at a lodge in Wyoming. “It’s not designed to raise inflation expectations,” he said. Kohn’s comments were a response to a paper written by University of California, Santa Cruz, professor Carl Walsh that was presented to the gathering of central bankers and academics Saturday. In his paper, Walsh is often critical of the Fed’s actions; he argues, for instance, that the Fed’s policy is the wrong approach at a time when rates are in a record low range near zero. Specifically, the Fed’s policy committee has stated that it “continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” But Walsh argues that, “it is inconsistent to commit to low interest rates and stable inflation.” Kohn clearly disagrees. “I don’t see an inconsistency at all,” said Kohn.
  • 12:52 PM » 30-Year Fixed Mortgage Rates Remain Steady While Spreads Tighten
    Published Sat, Aug 22 2009 12:52 PM by Seeking Alpha
    Hickey and Walters () submit: Since spiking from 4.8% to nearly 5.8% in June, the national average 30-year fixed mortgage rate according to has stabilized in the 5.25% to 5.35% range. With the Fed Funds Rate at 0%-0.25%, potential home buyers would love to see mortgage rates decline more, while the banks lending the money would love to see spreads increase (bottom chart) so they could make more money.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 12:52 PM » Failed Banks and the Deposit Insurance Fund
    Published Sat, Aug 22 2009 12:52 PM by Calculated Risk Blog
    As a companion to the , below is a list of failed banks since Jan 2007. But first a few graphs ... Click on graph for larger image in new window. The graph shows the cumulative estimated losses to the FDIC Deposit Insurance Fund (DIF) and the quarterly assets of the DIF (as reported by the FDIC). Note that the FDIC takes reserves against future losses in the DIF, and collects fees and special assessments - so you can't just subtract estimated losses from assets to determine the assets remaining in the DIF. The FDIC closed four more banks on Friday, and that brings the total FDIC bank failures to 81 in 2009. The following graph shows bank failures by week in 2009. Note: Week 1 on graph ends Jan 9th. The FDIC is seizing about 4 to 5 banks per week recently, and with over four months to go in 2009, this suggests close to 150 bank failures this year. At the current pace there will be more failures in 2009 than in the early years of the S&L crisis. From 1982 thorough 1984 there were about 100 failures per year, and then the number of failures really increased as the 2nd graph shows. The 2nd graph covers the entire FDIC period (annually since 1934). For a graph that includes the 1920s and early '30s (before the FDIC was enacted) see the 3rd . Of course the number of banks isn't the only measure. Many banks today have more branches, and far more assets and deposits. Failed Bank List Deposits, assets and estimated losses are all in thousands of dollars. Losses for failed banks in 2009 are the initial FDIC estimates. The percent losses are as a percent of assets. See description below table for Class and Cert (and a link to FDIC ID system). The table is wide - use scroll bars to see all information! NOTE: Columns are sortable - click on column header (Assets, State, Bank Name, Date, etc.) Class: The FDIC assigns classification codes indicating an institution's charter type (commercial bank, savings bank, or savings association), its chartering agent (state...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • Fri, Aug 21 2009
  • 9:10 PM » Most affordable cities to buy a house
    Published Fri, Aug 21 2009 9:10 PM by CNN
    Here's where the average American family can afford to purchase a median-priced home without breaking the bank.
  • 8:54 PM » Real Estate Weekly: Foreclosures are a road block to housing recovery
    Published Fri, Aug 21 2009 8:54 PM by Market Watch
    The latest mortgage delinquency and foreclosure statistics came out this week, and they weren’t pretty. More than 13% of all mortgages outstanding are either in the foreclosure process or have at least one payment past due, a new record, according to the Mortgage Bankers Association.
  • 8:54 PM » A Closer Look at Housing
    Published Fri, Aug 21 2009 8:54 PM by Google News
    A few additional thoughts on Housing: 1) The hottest markets are where foreclosures have driven prices down 50% or greater; 2) Inventory remains significantly elevated — its closer to 10 months than historic averages of 5-6 months; 3) Mortgage rates are at unusually low levels — despite this, sales remain generally soft; 4) Prices remain elevated by historic norms; 5) Big increase on the low end — Starter homes and Condos — are moving units; The middle and larger (jumbo mortgages) are a vast wasteland; But for the 16k increase in condo sales in the NorthEast, monthly sales would have been negative; 6) Indeed, on a NON-seasonally - adjusted basis, National existing home sales were up a mere 12k units. 7) Lots of “shadow” inventory is waiting to come on the market once prices improve; These were specs, vacation property, etc that got caught when the market collapsed — they are renting them out or they are vacant. Finally, have this last look at the details of sales and inventory over the past 13 months: Existing Homes Sales: Sales, Inventory, and Months Supply Originally published at and reproduced here with the author's permission.
  • 8:54 PM » Investing Money, Muscle in a Foreclosure
    Published Fri, Aug 21 2009 8:54 PM by Washington Post
    As banks become desperate to offload their foreclosed properties, some are rethinking their take-it-or-leave it policies and are more willing to spend money to make their foreclosures attractive to buyers.
    Click Here to Read the Full Article

    Source: Washington Post
  • 7:37 PM » Bank Failure #81: Down Goes Guaranty
    Published Fri, Aug 21 2009 7:37 PM by Calculated Risk Blog
    A mushroom cloud forms Deep in the heart of Texas Guaranty is ash by Soylent Green is People BBVA Compass, Birmingham, Alabama, Assumes All of the Deposits of Guaranty Bank, Austin, Texas Guaranty Bank, Austin, TX was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ... As of June 30, 2009, Guaranty Bank had total assets of approximately $13 billion and total deposits of approximately $12 billion. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $3 billion. ... Guaranty Bank is the 81st FDIC-insured institution to fail in the nation this year, and the second in Texas. The last FDIC-insured institution closed in the state was Millennium State Bank of Texas, Dallas, July 2, 2009.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 4:31 PM » Dow Jones Shopping Indexes Unit
    Published Fri, Aug 21 2009 4:31 PM by WSJ
    Dow Jones has been sounding out potential buyers for the company's stock-market indexing business.
  • 4:31 PM » Fannie and Freddie question
    Published Fri, Aug 21 2009 4:31 PM by cafehayek.com
    A question for the practitioners out there. If you were a mortgage originator in the early 1990’s before Fannie and Freddie created their automated software and before the internet, how did you determine if a loan was a “conforming” loan that could be sold to Fannie or Freddie? There are two parts to this question. One, how did you interact with the borrower to discover information and second, how did you keep up with what Fannie and Freddie required. Anyone with practical experience can write me at russroberts at gmail etc or by clicking the link in the upper left hand corner of this page where it says to email me.
    Click Here to Read the Full Article

    Source: cafehayek.com
  • 3:29 PM » New York Fed purchases $5.605 billion in agency coupons
    Published Fri, Aug 21 2009 3:29 PM by bit.ly
    New York Fed purchases $5.605 billion in agency coupons
  • 1:21 PM » Existing Home Sales and First-Time Buyers
    Published Fri, Aug 21 2009 1:21 PM by Calculated Risk Blog
    Existing home sales for July will be released at 10 AM ET. From CNBC: Existing home sales may have crossed the 5 million mark in July, as buyers are coming back to the market, analysts from ING bank said in a market research note Friday. ... "The surge in the number of signed contracts… suggests existing home sales are about to cross the 5-million mark. There is a fair chance sales already crossed that barrier last month," the note said. ... "Sales pushing above 5.1 million – the pre-Lehman level – would help to make a convincing case that this is not just a correction, but a real pick-up in activity," ING analysts wrote. But no mention of the ? As I noted earlier: First-time home buyer activity has boosted existing home sales, and will continue to boost existing home sales (reported at close of escrow) through November. This level of first-time buyers is completely unsustainable - even if another tax credit is enacted. There was significant pent up demand from potential first-time buyers who were priced out of the market in 2004-2006, and then were afraid to buy as prices fell. But demand from these buyers will wane. (Like "cash-for-clunkers" demand waned). This doesn't help the mid-to-high priced market because a large percentage of sales are distressed (REOs or short sales), and there is no seller to move up. Expect a surge in existing home sales (and some new home sales) over the next few months. Expect all kinds of reports that the bottom has been reached. (Like the ING report via CNBC) Expect the frenzy to end ... Here is a repeat of a graph by buyer type in Q2 from the Campbell survey. Click on graph for larger image in new window. According to the Campbell survey first-time buyers accounted for 43% of sales in Q2 (investors another 29%). Source: , Campbell Communications, June 2009 (excerpted with permission)
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 1:21 PM » Smackdown Week: Option ARM Resets
    Published Fri, Aug 21 2009 1:21 PM by wallstreetpit.com
    A couple commentors mentioned upcoming option ARM resets as a reason to be more bearish on housing. I wanted to make some quick comments about that. First let me say that option ARM resets are a tricky thing. Most ARMs were underwritten in 2005 to early 2007. During 2005, 12-month LIBOR averaged...
    Click Here to Read the Full Article

    Source: wallstreetpit.com
  • 10:21 AM » Ben Bernanke: Reflections on a Year of Crisis
    Published Fri, Aug 21 2009 10:21 AM by Federal Reserve
    By the standards of recent decades, the economic environment at the time of this symposium one year ago was quite challenging. A year after the onset of the current crisis in August 2007, financial markets remained stressed, the economy was slowing, and inflation--driven by a global commodity boom--had risen significantly. What we could not fully appreciate when we last gathered here was that the economic and policy environment was about to become vastly more difficult. In the weeks that followed, several systemically critical financial institutions would either fail or come close to failure, activity in some key financial markets would virtually cease, and the global economy would enter a deep recession. My remarks this morning will focus on the extraordinary financial and economic events of the past year, as well as on the policy responses both in the United States and abroad.
    Click Here to Read the Full Article

    Source: Federal Reserve
  • 9:28 AM » Guaranty Bank: OTS Closes the Barn Door
    Published Fri, Aug 21 2009 9:28 AM by Calculated Risk Blog
    It has been widely reported that the assets of Guaranty Bank (Texas) will be seized Friday by the FDIC and sold to Banco Bilbao Vizcaya Argentaria SA of Spain. Meanwhile the OTS a Prompt Corrective Action (PCA) to Guaranty yesterday. Maybe they didn't get the memo ... Also, from the WSJ: Guaranty owns roughly $3.5 billion of securities backed by adjustable-rate mortgages, with two-thirds of the loans in foreclosure-wracked California, Florida and Arizona, according to the company's latest report. Delinquency rates on the holdings have soared as high as 40%, forcing write-downs last month that consumed all of the bank's capital. Guaranty is one of thousands of banks that invested in such securities ... It's not just their own bad loans (usually C&D and CRE) taking down the local and regional banks, but also bad investments in securities based on other bank's bad loans. From the article: One banking lawyer who asked not to be identified describes the result as a "wonderful chain of stupidity." I'm not sure it is so "wonderful" ...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:57 AM » U.S. Economy: Now Comes the Hard Part
    Published Fri, Aug 21 2009 8:57 AM by Seeking Alpha
    submits: By Jeffrey Bronchick, CFA It would be nice to say that the financial markets have “normalized” and the debate over their future has neatly shifted to the disheveled morass of what now constitutes global economic activity. After all, the stock market is up, credit spreads have narrowed, tens of billions of dollars have been raised to ease any number of garden variety financial stresses and companies around the globe have become extraordinarily adept at using shades of green paint to construe earnings and revenue declines of 20% to 50% or more as “signs of a bottom.”
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 8:57 AM » Hidden Backlog of Foreclosures
    Published Fri, Aug 21 2009 8:57 AM by Google News
    When it comes to foreclosures, there is no such thing as a "safe state". Even states that did not engage in widespread use of liar loans and other silly mortgage lending practices are struggling with foreclosures. The issue is jobs, and unemployment is rising everywhere. Please consider . Amid record levels of home foreclosures nationwide, there are worrying signs that the foreclosure crisis could be spreading to parts of the country that had previously been relatively unscathed. Last month, for example, RealtyTrac, a private firm that tracks foreclosure data, recorded sharp spikes in foreclosures in states like Idaho, Oregon, Utah, and Illinois, where the prolonged recession is cited as the culprit. "It surprised us when we went from a state with a low level of subprime lending to a state with a high level of foreclosures," says Gerry Mildner, the director of the Center for Real Estate at Portland State University. "Most of our problems have to do with unemployment rather than with toxic loans. RealtyTrac's Sharga points to several other states that have seen alarming jumps in unemployment, including Kentucky, Alabama and North and South Carolina. "We won't know what the impact of these rises in unemployment will be until a year from now," says Sam Khater, a senior economist with First American CoreLogic, a private real estate data firm. What worries Khater more are states where sharply rising unemployment is coupled with many homeowners who already owe more than their houses are worth. He points to states like Ohio, Georgia and Illinois. Home prices in Illinois, for example, fell 14.8 percent in June compared with a year earlier. "Their price decline has been accelerating," he says. The actual foreclosure rates are hard to predict in part because a number of state governments, along with federal government-sponsored Fannie Mae and Freddie Mac, have instituted a range of delays and moratoriums on foreclosures. "The...
  • 8:26 AM » 1 in 8 US Mortgages Falling Behind
    Published Fri, Aug 21 2009 8:26 AM by The Big Picture
    This is an astonishing number: “A survey found that one in eight U.S. households with mortgages was in foreclosure or behind on its mortgage payments during the second quarter, putting added pressure on programs aimed at preventing foreclosures.” As previously , subprime is no longer the main offender — Prime mortgages are becoming delinquent at an accelerating pace: “While foreclosure starts have slowed on the subprime loans that ignited the mortgage and banking crisis, loans extended to borrowers with good credit are deteriorating at a faster clip as falling home prices and mounting job losses weigh on more households. The Mortgage Bankers Association said its latest survey, released Thursday, showed that 13.2% of mortgages on homes with one to four units were at least a month overdue or in the foreclosure process in the April-to-June period, up from 12.1% in the first quarter and 9% a year earlier . . . Deteriorating prime loans are increasingly behind the steady rise in delinquencies and foreclosures . Among prime loans, 9% were past due or in foreclosure at the end of June, up from 5.35% one year ago. For subprime loans, those for borrowers with weak credit records or high debts relative to income, the rate was 39.5%, compared with 30% last year. Prime loans, however, accounted for 58% of foreclosure starts , up from 44% last year. Meanwhile, subprime mortgages accounted for 33% of foreclosure starts, down from 49%. Prime fixed-rate mortgages, usually considered among the safest of all loan types, accounted for one in three foreclosure starts, up from one in five.” (emphasis added) Note that this represents a significant shift — subprime was what drove the boom and eventual bust; the prime foreclosure issue is a function of the deep recession and job losses of the past 2 years. As the chart shows, Foreclosure rates vary dramatically by region: its 1 in 20 in NJ, but closer to 1 in 8 in Florida. > > Source : NICK TIMIRAOS WSJ, AUGUST 21, 2009 http://online...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 8:26 AM » 1 In 3 Chance You’ll Have Negative Home Equity
    Published Fri, Aug 21 2009 8:26 AM by The Big Picture
    Foreclosure rates in the U.S. remain near record highs. More than 13% of American homeowners with a mortgage are either behind on their payments or in foreclosure. The latest report from the Mortgage Bankers Association, released today, shows the percentage of loans that entered the foreclosure process dipped slightly to 1.36%, down from an all-time high of 1.37% in the first quarter. However, that number may soon rise again as mortgage delinquency rates continued to climb in the second quarter. That news is no surprise to Karen Weaver of Deutsche Bank. She startled everyone a few weeks ago when she predicted that, by 2011, nearly half of American mortgage holders would be underwater (meaning that they’ll owe more on their mortgages than their houses were worth).
    Click Here to Read the Full Article

    Source: The Big Picture
  • 8:26 AM » Top 10 Cities Primed for Recovery
    Published Fri, Aug 21 2009 8:26 AM by llenrock.com
    10. Tulsa (projected vacancy rate in 2010: 19.2 percent, up 2.2 percentage points from 2008). The oil and gas sector was an albatross in the 1980s, when Tulsa suffered from a severe energy bust. But in recent years energy (along with healthcare, aerospace, and government) has helped sustain Tulsa’s economy. Employment and economic growth are [...]
  • 8:26 AM » Commercial Real Estate Needs Better Reporting
    Published Fri, Aug 21 2009 8:26 AM by Google News
    is mind-boggling. A recent survey by revealed some serious challenges the industry faces when comes to reporting: Based on responses from over 70 industry representatives, an overwhelming majority of real estate investment managers still relies on print and static electronic formats that provide decision makers with little or no analytical capabilities. In addition, data collection and reporting processes are heavily manual, resulting in major challenges related to the time and effort involved in creating reports as well as ensuring data accuracy, consistency, and completeness. I know my good friends in asset management are always writing monthly and quarterly reports. But an overwhelming majority investment managers still rely on print and static electronic formats ? That's disappointing, especially in today's environment, when owners and investors are putting more and more emphasis on managing assets in order to maximize returns and minimize risks. While the survey result is alarming, I can't help but think there are opportunities here. We should be able to do better. Let's crowdsource this. Leave a comment if you have any good ideas and suggestions. Related link:
  • 8:10 AM » CRE: ABI and Nonresidential Structure Investment
    Published Fri, Aug 21 2009 8:10 AM by Calculated Risk Blog
    The American Institute of Architects (AIA) the Architecture Billings Index (ABI) monthly, and the AIA chief economist Kermit Baker frequently mentions there is an "approximate nine to twelve month lag time between architecture billings and construction spending." Click on graph for larger image in new window. This graph compares the ABI with the quarterly data on nonresidential construction investment from the Bureau of Economic Analysis. Although there is only data back to 1996, it appears that after the ABI falls consistently below 50 (contraction of billings on mostly commercial projects), then nonresidential structure investment declines on a YoY basis about one year later. And YoY investment increases about one year after the ABI surpasses 50. This suggests that nonresidential structure investment will decline through most of 2010, with no bottom in sight (since the ABI is still well below 50). Right now I'm expecting another major slump in nonresidential structure investment towards the end of this year (following the ABI slump at the end of 2008), and for nonresidential structure investment to decline throughout 2010.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:10 AM » Colonial Assets Neither Pretty Nor Pleasant
    Published Fri, Aug 21 2009 8:10 AM by Seeking Alpha
    submits: Alexis Glick With Anti-TARP, BB&T CEO Kelly King On Colonial Bank, The FDIC & Sheila Bair
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • Thu, Aug 20 2009
  • 7:02 PM » N.Y. Times on Ordering Appraisals - " . . Lenders Now Control the Entire Process"
    Published Thu, Aug 20 2009 7:02 PM by Google News
    The New York Times story " " , by David Streitfeld, the author does an excellent job of taking its readers through the HVCC time-line and illuminating the current issues with appraisal ordering and pressure. Below are a few quotes from the Times story: “We’ve been begging for years for enforcement of existing state and federal laws regulating appraising,” said Mr. Kennedy, a leader in the appraisal community. “We thought we were finally going to get that. But the code is doing nothing except putting ethical appraisers out of business.” “The code is a formula for continued problems with fraud,” said David Callahan, a senior fellow with the public policy group Demos who has studied appraisals. “Appraisers have been asking for a long time for a reliable firewall between themselves and lenders, and are further from it than ever.” "The final version of the code gives much greater leeway to lenders. For instance, lenders can hire their own appraisers if they “recognize” that complaints will be forwarded to regulators." "The appraisal world was stunned. Dave Biggers, the chief executive of A La Mode, a maker of software for appraisers, said, “It’s like telling me I can steal as long as I ‘recognize’ that complaints will be directed to the police.” "Under the code, the role of deciding what is pressure is assigned to a new entity called the If appraiser complaints are deemed valid, the institute is supposed to forward them to regulators." "Seventeen months after it was announced, the institute has no staff and no appraiser complaint hotline. All that exists is a single Web page." Related Story:
  • 7:02 PM » Lloyd's of London filed a lawsuit against appraiser for misleading the company on his application for E&O coverage
    Published Thu, Aug 20 2009 7:02 PM by Google News
    According to the story by Courtenay Edelhart, Californian staff writer, . "Lloyd's of London filed a lawsuit against Newton, owner of San Joaquin Appraisals Inc., on June 16 alleging he misled the company on his application for errors and omissions coverage. The lawsuit seeks permission to rescind the policy, which it said was granted under false pretenses." "Jerome N. Lerch, attorney for Lloyd's of London, did not return calls Tuesday seeking comment." "There's more than an insurance policy at stake. If Lloyd's loses, it could be on the hook for millions of dollars because a defunct subprime lender is suing Newton and others over several appraisals done for Crisp, Cole & Associates, a now closed real estate company the FBI is investigating for mortgage fraud."
  • 4:58 PM » U.S. Mortgage Market and Seriously Delinquent Loans by Type
    Published Thu, Aug 20 2009 4:58 PM by Calculated Risk Blog
    A little more information from the MBA Q2 delinquency report (and market graph below): Click on graph for larger image in new window. This graph shows the U.S. mortgage market by type. There are about 45 million loans included in the MBA survey, and that is about 85% of the U.S. market. This is a general breakdown, and apparently Alt-A is included in Prime (it would be helpful to break that out). The second graph shows the breakdown by type for loans that are either seriously delinquent (90+ days delinquent) or in the foreclosure process. There are about 3.6 million loans in this category. Clearly subprime is disproportionately represented (much higher delinquency rate), but now over half the loans in this category are Prime - and the delinquency rate is growing faster for Prime. This is now a Prime foreclosure crisis. For more, please see earlier posts: (several graphs) Instead of comparing the markets from the peak (See: the ), matched up the market bottoms for four crashes (with an interim bottom for the Great Depression). Note that the Great Depression crash is based on the DOW; the three others are for the S&P 500.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 4:58 PM » Place Not Your Hopes in Mortgage Servicers
    Published Thu, Aug 20 2009 4:58 PM by Seeking Alpha
    submits: has a spectacularly good post up at Baseline Scenario today about mortgage servicers. He gives a lot of examples of how incredibly bad and/or evil they are at anything to do with loan modification, and concludes: Servicers were never designed to do this kind of work; they don’t underwrite, and paying them $1,000 isn’t going to give them the experience needed for underwriting. It’s hard work that requires experience and dedication, skills that we don’t have currently…
    Click Here to Read the Full Article

    Source: Seeking Alpha
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