Register or Sign in        Email This Page     Link To This Page    
Visit MND at MBA in NYC!
# of User Comments
Select a Date
Use the calendar to view news headlines from a specific date.
Today  |  Yesterday  |  Random
Bottom Right Default
State Name: New Jersey
State Name underscore: New_Jersey
State Name dash: New-Jersey
State Name lower underscore: new_jersey
State Name lower dash: new-jersey
State Name lower: new jersey
State Abbreviation: NJ
State Abbreviation Lower: nj
Suggest a Story
Paste the URL of the story below to submit for editorial review and possible inclusion in ATW.
Please add 8 and 2 and type the answer here:
Leave this field blank.
What is Around the Web?
It is a continuously updated stream of news from around the web
Visit throughout the day for the latest breaking news.
» Click any link below to read more.
  • Thu, Sep 24 2009
  • 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
    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

  • 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
  • 10:30 AM » After Gains, Construction Stalling
    Published Thu, Sep 24 2009 10:30 AM by CNBC
    Posted By: Before you build something, you get an architect. House, school, office building, apartment building, whatever, and that's why I find the Architectural Billings Index, from the American Institute of Architects, so very interesting. This index measures billings from AIA member-owned firms and reflects the approximate nine to twelve month lag time between billings and construction spending. Topics: | | Sectors: | MEDIA:
  • 10:15 AM » 18% of Prospective First-Time Homebuyers Say Extending $8,000 Tax Credit to 2010 Would be Primary Influence on Their Decision to Buy
    Published Thu, Sep 24 2009 10:15 AM by
    Extension of Credit Could Sway Decision of 334,000 Potential First-Time Homebuyers, According to® Survey and Analysis
    Click Here to Read the Full Article

  • 10:00 AM » Home credit extension could sway buying decisions: survey
    Published Thu, Sep 24 2009 10:00 AM by Reuters
    NEW YORK (Reuters) - Nearly one in five prospective first-time U.S. home buyers said a possible extension of an $8,000 tax credit would be the primary influence on their decision to purchase a home before the end of 2010, according to a survey by a real estate website.
  • 9:59 AM » RGE Monitor - The G20’s Crowded Agenda
    Published Thu, Sep 24 2009 9:59 AM by Google News
    This week we review the critical issues will focus on when they meet this week in Pittsburgh. The coordinated and unilateral policy actions taken by these countries and others—including aggressive fiscal and monetary stimulus, increased funding to the IMF, and backstopping financial systems globally—helped stop the economic freefall. The has improved since their last meeting in April, but the challenge of navigating towards sustainable growth is equally difficult, and the coming period brings the risk of policy missteps as countries begin to plan their exit strategies. On the eve of the G20 meeting, there remain significant divides over the timing and scope of exit strategies from monetary accommodation, the path towards fiscal consolidation, and the drive for financial regulatory reform. As RGE highlighted , financial regulation will continue to be a key part of the leaders’ debate. New capital requirements seem more likely, in the vein of raised by the Bank of International Settlements (BIS) and the Financial Stability Board. The recent meeting of the G20 finance ministers and central bank governors supported such moves. The meeting broke, however, without an agreement on compensation reforms to avoid a procyclical focus on short-term returns, a policy championed by the European Union. The issue of still being impaired also needs to be addressed.
  • 9:59 AM » Why the Dow is Hitting 10,000 even when Consumers Can't Buy and Business Cries "Socialism"
    Published Thu, Sep 24 2009 9:59 AM by Google News
    So how can the Dow Jones Industrial Average be flirting with 10,000 when consumers, who make up 70 percent of the economy, have had to cut way back on buying because they have no money? Jobs continue to disappear. One out of six Americans is either unemployed or underemployed. Homes can no longer function as piggy banks because they’re worth almost a third less than they were two years ago. And for the first time in more than a decade, Americans are now having to pay down their debts and start to save. Even more curious, how can the Dow be so far up when every business and Wall Street executive I come across tells me government is crushing the economy with its huge deficits, and its supposed “takeover” of health care, autos, housing, energy, and finance? Their anguished cries of “socialism” are almost drowning out all their cheering over the surging Dow. The explanation is simple. The great consumer retreat from the market is being offset by government’s advance into the market. Consumer debt is way down from its peak in 2006; government debt is way up. Consumer spending is down, government spending is up. Why have new housing starts begun? Because the Fed is buying up Fannie and Freddie’s paper, and government-owned Fannie and Freddie are now just about the only mortgage games remaining in play. Why are health care stocks booming? Because the government is about to expand coverage to tens of millions more Americans, and the White House has assured Big Pharma and health insurers that their profits will soar. Why are auto sales up? Because the cash-for-clunkers program has been subsidizing new car sales. Why is the financial sector surging? Because the Fed is keeping interest rates near zero, and the rest of the government is still guaranteeing any bank too big to fail will be bailed out. Why are federal contractors doing so well? Because the stimulus has kicked in. In other words, the Dow is up despite the biggest consumer retreat from the market since the Great Depression...
  • 9:59 AM » Falling Rents, Credit Card Defaults, and Market
    Published Thu, Sep 24 2009 9:59 AM by Calculated Risk Blog
    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. From Bloomberg: (ht Mike In Long Island) Manhattan apartment rents dropped an average of at least 8 percent ... Rents for studio apartments fell 11 percent to an average of $1,763, according to the broker’s data on deals in May through August compared with the same period a year earlier. The cost of a one-bedroom declined 8 percent to an average of $2,425. Two-bedrooms declined 11 percent to $3,421 and three- bedroom units fell 8 percent to $4,633. From Reuters: (ht Ron ) The U.S. credit card charge-off rate rose to a record high in August ... The Moody's credit card charge-off index -- which measures credit card loans that banks do not expect to be repaid -- rose to 11.49 percent in August from 10.52 percent in July. ... "We continue to call for a recovery of the credit card sector to begin once industry average charge-offs peak in mid-2010 between 12 percent and 13 percent," Moody's said in a report. And just a note: The consensus estimate for existing home sales tomorrow is 5.35 million SAAR. I'll take the under.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:27 AM » S&P Downgrades Four-Month-Old Repackaged Mortgage-Backed Securities
    Published Thu, Sep 24 2009 8:27 AM by Seeking Alpha
    submits: Just saw about a downgrade of a recent Re-REMIC issue by Standard & Poor’s. Re-REMIC’s are repackaged mortgage-backed securities of a supposedly more secure pedigree as they were to have been constructed of securities identified to be of better quality and thus less likely to default. Now, just 4 months after the issue of these securities, S&P has downgraded them citing “significant deterioration in the performance of the loans backing the underlying certificate” and referring to said deterioration as “severe”. How in the world are these ratings guys staying employed? More importantly, how in the world are the investment bankers finding buyers for these issues?
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 8:27 AM » Payback time for homebuyer tax credit
    Published Thu, Sep 24 2009 8:27 AM by CNN
    Question: I bought a home and qualified for the $8,000 first-time homebuyer tax credit. I'm still a bit confused, though, about the payback rules. Can you explain them? --Jessica G., Houston, Texas
  • Wed, Sep 23 2009
  • 4:37 PM » U.S. Aug mass layoffs rise, manufacturing worst hit
    Published Wed, Sep 23 2009 4:37 PM by Reuters
    WASHINGTON (Reuters) - The number of mass layoffs by U.S. employers rose by 533 in August from July, with the manufacturing sector the hardest hit, Labor Department data showed on Wednesday.
  • 3:52 PM » Central Banks Should Move Beyond Price Stability
    Published Wed, Sep 23 2009 3:52 PM by IMF
    Monetary policymakers should consider doing more to counter credit market cycles to reduce risks of damaging asset price busts, according to a new IMF study after the worst financial market slump since the Great Depression.
  • 3:51 PM » Financial Crises Tend to Have Long Impact on the Economy
    Published Wed, Sep 23 2009 3:51 PM by IMF
    The global financial crisis is likely to leave long-lasting scars on the world economy, but governments can act to stimulate a quicker revival and counter output losses, according to a new IMF study.
  • 3:50 PM » Explosive Growth Continues for Certified Green Professional Designation
    Published Wed, Sep 23 2009 3:50 PM by NAHB
    Press Release
  • 3:50 PM » Statement Regarding Purchases of Agency Mortgage-Backed Securities and Agency Debt
    Published Wed, Sep 23 2009 3:50 PM by NY Fed
    Statement Regarding Purchases of Agency Mortgage-Backed Securities and Agency Debt
  • 3:50 PM » U.S. credit card defaults rise to record: Moody's
    Published Wed, Sep 23 2009 3:50 PM by Reuters
    NEW YORK (Reuters) - The U.S. credit card charge-off rate rose to a record high in August, as more Americans lost their jobs, Moody's Investors Service said on Wednesday, in another sign consumers remain under stress.
  • 9:39 AM » A Coming Flood of Bank Owned Homes
    Published Wed, Sep 23 2009 9:39 AM by The Big Picture
    “There’s going to be a flood of bank-owned homes listed for sale at some point.” -John Burns, a real-estate consultant based in Irvine, Calif. > Yes, there certainly will be. Burns estimates there will be a “large numbers of foreclosures” that will drive home prices down 6% next year. Analyst Ivy Zelman pegs the number of coming foreclosures at three million to four million homes over the next few years. All of the voluntary foreclosure moratoriums have slowed “the flow of properties headed toward foreclosure sales” regardless of deep in distress borrowers are. These delays only work to prolong the mortgage crisis and prevent prices from falling to more natural levels. Thus, it creates a “growing ’shadow’ inventory of pent-up supply that will eventually hit the market.” Here’s the excerpt from the : “The size of this shadow inventory is a source of concern and debate among real-estate agents and analysts who worry that when the supply is unleashed, it could interrupt the budding housing recovery and ignite a new wave of stress in the housing market . . . Analysts who track the shadow market have focused primarily on the gap between the number of seriously delinquent loans and the number of foreclosed homes for sale by mortgage companies. A loan is considered seriously delinquent, which typically means it is headed to foreclosure, if it is 90 days or more past due. As of July, mortgage companies hadn’t begun the foreclosure process on 1.2 million loans that were at least 90 days past due, according to estimates prepared for The Wall Street Journal by LPS Applied Analytics, which collects and analyzes mortgage data. An additional 1.5 million seriously delinquent loans were somewhere in the foreclosure process, though the lender hadn’t yet acquired the property. The figures don’t include home-equity loans and other second mortgages. Moreover, there were 217,000 loans in July where the borrower hadn’t made a payment in at least a year but the lender hadn’t begun the foreclosure...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 9:38 AM » Alt-A Loans and Option ARMs meet Strategic Defaults: The Perfect Recipe for a Toxic California Housing Market in 2010. Behavioral Economics of Housing and Top 7 California Regions with Active Alt-A Loans.
    Published Wed, Sep 23 2009 9:38 AM by Google News
    The last week for whatever reason saw the resurgence in mainstream articles covering the fiasco. Even those who are purported to be financial experts still miss the bigger picture. That is, they fail to understand that the category of covers the vast majority of s and Alt-A is basically a category assigned to loans that were no-doc or low doc, had weaker credit scores, and low to zero down payment. In other words, mortgages that make Medusa look like the next Miss USA. Some of the confusion also arises from the difference between a reset and a recast. This is like saying dogs and cats are all the same because they are pets. Resets are no problem in this artificially low interest rate environment (the future is another story). Recasts are a gigantic problem. Another issue being ignored is the fact that current owners of Alt-A infested homes have a selling environment that lacks these maximum leverage products. That is, they bought at a time when leverage was flush in the market. When I look at current reporting I would ask reporters this – think more like a . On the other side, I would ask reporters to also think like a California HGTV granite countertop obsessed housing speculator. That is why even as far back as it was easy to see that people would be strategically defaulting on their mortgage. People at the time thought that there would be no way that people would actually stop paying their mortgage if they had the money to do so because people in general were responsible. Yeah right! And option ARMs were only for high income actors and doctors that didn’t want to disclose the amount of boob jobs they did in the last year on their tax return. But the no money down world essentially gave buyers a call option on their home with these craptastic mortgages. If prices go up, you sell and keep the difference between the sale price and the premium. If the price tanks, then you are out the premium. But guess what? Some didn’t pay a penny! These were basically free call options...
  • 9:38 AM » WSJ: Delayed Foreclosures and "Shadow" Inventory
    Published Wed, Sep 23 2009 9:38 AM by Calculated Risk Blog
    From Ruth Simon and James Hagerty at the WSJ: ... Legal snarls, bureaucracy and well-meaning efforts to keep families in their homes are slowing the flow of properties headed toward foreclosure sales, even when borrowers are in deep distress. ... some analysts believe the delays are ... creating a growing "shadow" inventory of pent-up supply that will eventually hit the market. ... Ivy Zelman ... believes three million to four million foreclosed homes will be put up for sale in the next few years. The question is whether the flow of these homes onto the market will resemble "a fire hose or a garden hose or a drip," she says. ... "We are going to see a spike from now to the end of the year in foreclosures as we take people out of the running" for a loan modification or other alternatives, says a Bank of America Corp. spokeswoman. Foreclosure sales had dropped to "abnormally low" levels in response to government efforts to stem foreclosures, she adds. The foreclosures are coming. How many and when is the question. But based on the comments from the BofA spokeswoman, it sounds like foreclosures will "spike" in Q4.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 9:38 AM » Homebuilder Stocks Are Overvalued, Says Top Analyst
    Published Wed, Sep 23 2009 9:38 AM by CNBC
  • 8:08 AM » Fannie Updates Minimum Credit Scores, Mortgage Insurance, Pricing for Certain Desktop Underwriter® Loans
    Published Wed, Sep 23 2009 8:08 AM by Fannie Mae
    Fannie Mae continually reviews its risk appetite, eligibility requirements, mortgage insurance options, and pricing. As a result of the most recent review, Fannie Mae will implement a number of changes, including Desktop Underwriter® (DU®) Version 8.0, changes to credit score requirements, and mortgage insurance coverage levels.
  • 8:07 AM » House Bill Extends Jobless Benefits for Some
    Published Wed, Sep 23 2009 8:07 AM by NY Times
    Idled workers in 27 states, the District of Columbia and Puerto Rico would get a 13-week reprieve.
  • 8:06 AM » Mortgage Electronic Registration Systems Loses Legal Shield
    Published Wed, Sep 23 2009 8:06 AM by The Big Picture
    Back in April, we mentioned the of MERS — the Mortgage Electronic Registration Systems. MERS is the firm that (technically) holds 60 million US (securtitized) mortgages on behalf of the actual buyers. They were created by a consortium of lenders in part to save money (on paperwork and recording fees) every time a loan changes owners. In the era of securitization, these savings amounted to billions of dollars. But MERS also acts as a shield, making it all but impossible for many borrowers to deal directly with whoever happens to be holding their mortgage at the moment. As the , it has “made life maddeningly difficult for some troubled homeowners.” Now, the Kansas Court of Appeals has called foul. In , 2009 Kan. LEXIS 834, the Kansas Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. (Other than , I have yet to see any MSM coverage of the issue). The Court stated that MERS’ relationship is not that of a true party possessing all the rights given a buyer. Hence, the court ruled: “By statute, assignment of the mortgage carries with it the assignment of the debt. . . . Indeed, in the event that a mortgage loan somehow separates interests of the note and the deed of trust, with the deed of trust lying with some independent entity, the mortgage may become unenforceable. The practical effect of splitting the deed of trust from the promissory note is to make it impossible for the holder of the note to foreclose , unless the holder of the deed of trust is the agent of the holder of the note. Without the agency relationship, the person holding only the note lacks the power to foreclose in the event of default. The person holding only the deed of trust will never experience default because only the holder of the note is entitled to payment of the underlying obligation. The mortgage loan becomes ineffectual when the note holder did not also hold the deed of trust .” (emphasis added). What does this mean for the 60 million people...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 8:05 AM » Need a mortgage? Consider an FHA loan
    Published Wed, Sep 23 2009 8:05 AM by CNN
    1. Chances are good that you'll come across one. During the heyday of no-money-down lending, you were unlikely to have a buyer using a government-insured Federal Housing Administration (FHA) loan, which lets borrowers purchase a home with a down payment of as little as 3.5%. Now FHAs are the only game in town for anyone who can't put down the minimum 10% many banks require to get a conventional loan.
  • 8:05 AM » Fed Grapples With Mortgage-Market Risks
    Published Wed, Sep 23 2009 8:05 AM by WSJ
    Federal Reserve officials are trying to resolve a key concern as they conclude a two-day policy meeting today: How does the central bank scale back its involvement in the market for mortgage-backed securities without disrupting a recovering housing sector? The Fed is likely to complete its full announced purchase of $1.45 trillion in mortgage-backed securities and debt issued by Fannie Mae and Freddie Mac, despite a minority view among policymakers that the full amount might not be necessary. And it’s likely to taper the final purchases, stretching them past the end of the year to allow a more orderly pullback — rather than a sudden withdrawal — after serving as the buyer for more than four-fifths of new mortgage-backed securities. When it will do both of those is less clear. Announcing a tapering in this afternoon’s statement, after the Federal Open Market Committee meeting, would indicate that Fed officials want to give markets more notice to evaluate the central bank’s eventual withdrawal (and give the Fed more time to evaluate the market reaction). But it could also surprise some traders who expected the Fed to wait until the November meeting, when the housing market and overall economy are likely to have stabilized even more. The Fed embarked on the program over the past year in order to lower mortgage rates, spur more housing activity and in turn help stabilize the overall economy. It achieved those goals by bringing activity to a market that was barely functioning. Still, some policymakers have voiced concerns about the Fed’s support for a particular sector of the economy. Others now worry about the implications of the central bank’s overpowering force crowding out private activity. Now, they must decide how to pull back the Fed’s heavy hand — and replace it with private investors — without derailing the housing recovery. Fed officials expect some increase in mortgage yields when they reinforce that the central bank will no longer be the major buyer of mortgage...
  • 8:05 AM » Mish Mailbag: How Does One Tell If Houses Are Overpriced?
    Published Wed, Sep 23 2009 8:05 AM by Google News
    Tonight I received a question from a "Concerned Canadian" about home prices. However, my answer does not change regardless of where someone lives. The same metrics apply universally. "CC" asks: Hello Mish, Recently, I watched a video clip in which you mentioned to Max Keiser that there is a huge real estate bubble in Canada. I am Canadian and that comment caught me off guard. I would like to do a bit of due diligence. Can you point me to an article or two that I could read, or can tell me the key points that convinced you that there is real estate bubble in Canada? If there is a bubble and the bubble bursts, are residential real estate prices likely to decline in Canada as they did in the USA? Would one be better off renting rather than owning a home? Thanks, Concerned Canadian Here is the video in question: . Dear CC You do not need articles. You just need common sense. Here are some things you should consider. #1) How much are home price out of whack with rental prices? (i.e. What does it cost to own vs. rent a similar house? Keep in mind maintenance, property taxes, etc.) #2) How much above the trendline growth in price appreciation are home prices selling? (Was there an unexpected or unwarranted acceleration in prices over a number of years?) #3) How much have home prices appreciated vs. wages? Any of those significantly above their trendline is a huge warning sign. When bubbles burst, prices will not only revert to the mean but overshoot as well. Note that housing markets will vary based on availability of jobs, local wages, and amenities. Thus, cities like Vancouver and Toronto will carry premiums just as San Diego, Chicago, and New York do. However, premiums are not unlimited. The desirability of San Diego and Miami did not stop a crash in the US. It will not stop a crash in Vancouver either. Moreover, desirability can change at a moment's notice as happened in Florida and Las Vegas. Your question is not really about Canada given the same...
  • Tue, Sep 22 2009
  • 4:22 PM » Wells Fargo chairman Kovacevich to retire
    Published Tue, Sep 22 2009 4:22 PM by Reuters
    NEW YORK (Reuters) - Wells Fargo & Co said on Tuesday former Chief Executive Kovacevich will retire as chairman on January 1 and current Chief Executive John Stumpf will take on the added role.
  • 4:21 PM » As Fed Meets, Key Question Is When to Start Easing Stimulus
    Published Tue, Sep 22 2009 4:21 PM by CNBC
    Policy-makers are expected to discuss ways to pull back massive provisions of cash to the economy in a way that preserves the recovery while preventing inflation
  • 4:20 PM » Funding FDIC: Why Banks Should Pay
    Published Tue, Sep 22 2009 4:20 PM by Seeking Alpha
    submits: The banking system is still suffocating under the weight of bad loans, and it’s well known that the FDIC doesn’t have enough cash to deal with the problem. What to do? According to a plan floated in the , FDIC may borrow from the banks themselves in order to replenish its Deposit Insurance Fund.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 4:20 PM » So What About Credit Risk, Bernanke?
    Published Tue, Sep 22 2009 4:20 PM by
    80% of the MBS market eh? So that would mean that you're taking on 80% of current credit risk, right? Given that, what 'ya got to say about this? And.... There's nothing that rattles a banker's heart like the prospect of credit losses when you're 80% of the market. I mean, that could be a problem, no? Some $1 trillion promised to be bought or owned at this point in MBS and related securities, with an awful lot of those securities "secured" (in theory at least) by severely-underwater property for which there is no possibility of recovery of the note. Hell, we even have the FHFA saying that you should be able to refinance out to 125% LTV, which of course leaves you at 131% underwater (remember real estate commissions?) instantly, never mind legal and rehabilitation costs. Re-default rates are extremely high too, meaning that these so-called "modifications" aren't working. I'm just kinda curious what Bernanke thinks he's going to do when the credit losses that are embedded in these securities, which he is currently hiding through is refusal to be audited freely, wind up becoming known? Then what Bernanke? You gonna try to print out of that one too? Let's cut the BS: This entire gambit by The Fed has been bad decisions layered on top of bad decisions, all items in a blown PhD thesis that has now been proved to be incorrect. Credit demand declines weren't arrested and improved; credit demand has instead collapsed. Credit quality wasn't buttressed and improved, it has instead collapsed. Credit risk wasn't mediated, it was shifted and then papered over, an act that in any society that valued the rule of law would be called out as what it is - fraud - and there would be hundreds if not thousands of shiny new pairs of handcuffs in use. Congress has been lied to, the American People have been lied to, and now the FDIC is "suggesting" that banks be paid (instead of paying) for their own insurance - yet...
    Click Here to Read the Full Article

  • 12:27 PM » Leading Indicators Predictive Value
    Published Tue, Sep 22 2009 12:27 PM by The Big Picture
    Bill King points out that the “LEI, which has increased for five straight months, is heavily weighted to monetary indicators and the stock market. Its predictive value for the stock market has been poor due to over-used monetary stimulus.” > chart courtesy of Bill King, Ramsey Securities > The LEI trended lower from 1997 to 2000 as US stocks bubbled. It declined from 2004 to 2008 as the monetary medication carried a diminishing effect on the real economy. notes a related pet peeve: We’re in a phase change where the economic relationships, proportions, leads and lags do not operate as they did in the past. So any mathematical model that’s based on this sequence is going to be junk mathematics. The last time we had junk mathematics we had the big financial crises that we’re bailing out today.
    Click Here to Read the Full Article

    Source: The Big Picture
  • 9:54 AM » Expect Patience From the Fed
    Published Tue, Sep 22 2009 9:54 AM by WSJ
    U.S. Federal Reserve policy makers will meet this week amid stronger confidence that the recession has come to an end. Bernanke But that doesn’t mean rate increases are imminent. At the conclusion of their two-day meeting, set to start Tuesday, the Federal Open Market Committee is expected to hold rates at a record-low near zero. The policy panel is also expected to acknowledge the more steady drumbeat of hopeful economic news that has emerged since their last meeting. At their August meeting, Fed officials also kept the target federal-funds rate for interbank lending at its current range of zero to 0.25% and noted in their policy statement that “economic activity is leveling out.” Since then, the housing market has shown signs of improvement. Housing starts, for instance, rose to their highest level in nine months during August, climbing 1.5% to a seasonally-adjusted annual rate of 598,000. Meanwhile, retail sales exceeded expectations and climbed 2.7%, indicating that consumers might be ready to start spending again. Also, industrial production — a key indicator when determining business cycle turning points — rose 0.8% in August compared with July. Furthermore, many economists are growing more confident that the economy will post growth in the second half of this year. Still, as Federal Reserve Chairman Ben Bernanke highlighted during his appearance at the Brookings Institution in Washington last week, there are significant challenges ahead. The economy is unlikely to grow enough in 2010 to make way for rapid labor market recovery, analysts said. In fact, as the effects of fiscal stimulus programs fade next year, some economists expect economic activity to slow down again in the first half of 2010. With this scenario as a risk, the Fed has no reason to rush to rate increases, Fed watchers say. “Concerns over the sustainability of the recovery mean that the Fed will not start to tighten policy anytime soon,” Capital Economics economist Paul Dales wrote in a recent...
  • 9:53 AM » S&P/Case Shiller 20 MSA Index – Q2 2009 Looking Under the Hood at the Underlying Data
    Published Tue, Sep 22 2009 9:53 AM by Google News
    A Tale of Seven Cities The CS-20 MSA Index and its sub indices for the month of June 2009 led much of the financial marketplace to conclude the deterioration in home prices has come to an end. As we pointed out in our report of August 20, 20091, there is still a reasonable likelihood that the housing market is only 75% of the way towards ultimate stability. The Q2 data, especially the seasonally unadjusted June month-overmonth data for various cities and for the national index, highlighted what was a very regionally-based improvement in the volume of sales (in favor of those markets that have declined in price the most, relative to peak bubble values), while possibly masking considerable softness and the prospects for continuing price deterioration in other regions and for the nation as a whole. Seven of the 20 MSA’s surveyed in the contributed disproportionately to the positive results and saw significant increases in sales volume from the period one year earlier, while the remaining 13 saw decreased sales. Not surprisingly, the seven included the cities that bubbled nearly twice as much as all the others in the index and have come down most in price from the bubble’s peak in 2006. The following table sets for the tale of these seven cities, and the others. The table should be useful in helping to track future data over the coming months. Click for
Did you know?
You can see a list of all comments on MND by clicking the 'Read the Latest Comments' option under the 'Community' menu.

More From MND

Mortgage Rates:
  • 30 Yr FRM 3.88%
  • |
  • 15 Yr FRM 3.59%
  • |
  • Jumbo 30 Year Fixed 3.90%
MBS Prices:
  • 30YR FNMA 4.5 104-25 (-0-02)
  • |
  • 30YR FNMA 5.0 106-09 (0-00)
  • |
  • 30YR FNMA 5.5 107-01 (0-03)
Recent Housing Data:
  • Mortgage Apps -0.12%
  • |
  • Refinance Index -1.23%
  • |
  • Purchase Index 1.13%