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  • Thu, Sep 17 2009
  • 5:55 PM » U.S. "option" mortgages to explode, officials warn
    Published Thu, Sep 17 2009 5:55 PM by Reuters
    WASHINGTON (Reuters) - The federal government and states are girding themselves for the next foreclosure crisis in the country's housing downturn: payment option adjustable rate mortgages that are beginning to reset.
  • 5:54 PM » WaMu Part II? (Wells Fargo)
    Published Thu, Sep 17 2009 5:54 PM by
    The Market Ticker began publication when I noticed a nasty little thing that Washington Mutual was doing - paying dividends from "capitalized interest" - that is, "funny money" promised to be paid in the future by homeowners who had negative-amortization loans. In California. With price-to-income ratios for homes that frequently were running 10x, or more than three times the maximum safe value. I screamed about this at the time, predicting that WaMu would ultimately blow sky high, and nobody in the regulatory apparatus did a damn thing about it. WaMu did in fact blow up and was "forcibly" folded into JP Morgan. According to sources currently working out these loans at Wells Fargo and confirmed by Dan Alpert of Westwood Capital, when selling tranches of commercial mortgage-backed securities below the super senior tranche, Wachovia promised to pay the buyer’s risk premium by writing credit default swap contracts against these subordinate bonds. Should the junior tranches eventually default, then the bank is on the hook. Uh huh. Ain't that nice? We'll write a CDS and make money twice! Better yet, we called that a "true sale" of the original securitization. Like hell. One senior member of Wells Fargo’s commercial loan group who deals directly with the quandary, who spoke on the condition of anonymity, said, “One third of this commercial portfolio we took on from Wachovia is impaired and needs to be completely rewritten. I’ve just hired five more guys and we can’t keep up with the volume of defaults. Southeast Florida and Tampa are serious trouble spots.” One third eh? Florida? SE Florida? Like Miami. where not long ago I looked up at the skyline to see multiple completed "condo developments" that had a half-dozen lights on (not including the doorman) at 10:00 PM - in a 40 story tower? Eek. There was $230 billion in that portfolio when Wells "acquired" Wachovia last year. Was it written down adequately? Good...
    Click Here to Read the Full Article

  • 5:53 PM » Builder Confidence Is Building
    Published Thu, Sep 17 2009 5:53 PM by Realtor.Org
    The home builder confidence index in September rose to its highest level since mid-2008, notching its third straight increase. The home buyer tax credit was cited as a major reason for the boost, along with low interest rates and home prices.
  • 5:53 PM » New York Fed purchases $25.5 billion net ($31.2 billion gross) in agency mortgage-backed securities
    Published Thu, Sep 17 2009 5:53 PM by
    New York Fed purchases $25.5 billion net ($31.2 billion gross) in agency mortgage-backed securities
  • 5:53 PM » Chart of the Day: Wells Fargo's Construction Loans
    Published Thu, Sep 17 2009 5:53 PM by Seeking Alpha
    submits: found this chart at . It shows the percentage of Wells Fargo’s () $38 billion in construction and development loans which are in default, compared to nationwide figures:
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 5:41 PM » U.S. Treasury to keep $1.2 billion money fund premiums
    Published Thu, Sep 17 2009 5:41 PM by Reuters
    BOSTON (Reuters) - The U.S. federal government will keep about $1.2 billion in payments collected to backstop money market funds even after its insurance program ends on Friday, a U.S. Treasury official said.
  • 5:40 PM » U.S. Fed balance sheet grows to biggest since May
    Published Thu, Sep 17 2009 5:40 PM by Reuters
    NEW YORK (Reuters) - The U.S. Federal Reserve's balance sheet grew to its largest since May on a hefty increase in its holding of mortgage-backed securities, Fed data showed on Thursday.
  • 5:39 PM » Congressional Oversight Panel to Hold Mortgage Foreclosure Hearing in Philadelphia
    Published Thu, Sep 17 2009 5:39 PM by
    WASHINGTON, D.C. - The Congressional Oversight Panel today announced that it will hold a field hearing to examine foreclosure mitigation efforts under the Troubled Asset Relief Program (TARP) on Thursday, September 24 at 10:00 a.m. in the Kirby Auditorium of the National Constitution Center in Philadelphia, Pennsylvania. The Panel is currently scheduled to hear from the following witnesses: Seth Wheeler , Senior Advisor, U.S. Department of the Treasury Edward L. Golding , Senior Vice President, Economics and Policy, Freddie Mac Eric Schuppenhauer , Senior Vice President and CFO/Program Executive for the Home Affordability and Stability Plan, Fannie Mae The Honorable Annette M. Rizzo , Judge, Philadelphia Court of Common Pleas and Co-Chair, Philadelphia Mortgage Foreclosure Steering Committee Eileen Fitzgerald , Chief Operating Officer, Neighborworks America Deborah Goldberg , Director, Hurricane Relief Project, National Fair Housing Alliance Irwin Trauss , Supervising Attorney, Consumer Housing Unit, Philadelphia Legal Assistance Dr. Paul Willen , Senior Economist and Policy Advisor, Research Department, Federal Reserve Bank of Boston Joe Ohayon , Vice President for Community and Client Relations, Wells Fargo Home Mortgage Bank of America (invited) Saxon Mortgage (invited) In establishing the Congressional Oversight Panel in the Emergency Economic Stabilization Act of 2008, Congress charged the Panel to examine, among other subjects, "the effectiveness of foreclosure mitigation efforts." The Philadelphia hearing will inform the Panel's forthcoming October oversight report, which will consider foreclosure mitigation programs under TARP, including the Making Home Affordable program. WHO: Members of the TARP Congressional Oversight Panel WHAT: Field Hearing on Foreclosure Mitigation WHEN: Thursday, September 24, 2009; 10:00 a.m. WHERE: Kirby Auditorium () The National Constitution Center Independence Mall 525 Arch Street Philadelphia, Pennsylvania 19106 The...
    Click Here to Read the Full Article

  • 5:38 PM » SEC Votes Unanimously To Ban Flash Trading, Seek Public Comment
    Published Thu, Sep 17 2009 5:38 PM by
    From Bloomberg: Sept. 17 (Bloomberg) -- The U.S. Securities and Exchange Commission proposed banning flash orders after lawmakers said the practice may give hedge funds an advantage over other investors. SEC commissioners unanimously voted today Ao seek public comment on a rule barring exchanges and trading platforms from giving clients access to information about stock orders a fraction of a second before the market. “Investors that have access only to information displayed as public quotes may be harmed if market participants are able to flash orders and avoid the need to make the orders publicly available,” Chairman Mary Schapiro said. Democratic Senators Charles Schumer and Ted Kaufman urged the commission to halt the practice, arguing frequent traders use technology to profit from access to information not available to retail investors. Direct Edge Holdings LLC has relied on flash orders to take market share from NYSE Euronext. Nasdaq OMX Group Inc. and Bats Global Markets voluntarily dropped flash orders last month after the practice drew scrutiny from Congress and the SEC. The SEC’s proposed ban requires a second vote at a later public meeting to become binding. * And here is Senator Kaufman's statement on the Flash Ban issued earlier: “I commend the SEC for its proposal to ban flash orders. Let’s not forget, however, that this occurred only after public exposure of the SEC’s previous okay of flash orders. Flash orders may be a symptom of a much larger problem. Now the SEC must examine the rest of the iceberg. I’m pleased that the SEC has begun a comprehensive review of market structure issues, and I look forward to that process. “The credibility of the U.S. financial markets is essential. For investors to have confidence, the SEC must ensure that high frequency trading, dark pools, potential conflicts of interest and other market structure issues are not undermining the interests of long-term investors.”
    Click Here to Read the Full Article

  • 5:38 PM » New York Fed announces $1.4 billion in Legacy CMBS TALF loans requested at September 17 facility
    Published Thu, Sep 17 2009 5:38 PM by
    New York Fed announces $1.4 billion in Legacy CMBS TALF loans requested at September 17 facility
  • 5:37 PM » U.S. House denies funds to scandal-hit ACORN
    Published Thu, Sep 17 2009 5:37 PM by Reuters
    WASHINGTON (Reuters) - The U.S. House of Representatives on Thursday voted to cut off federal money to ACORN, a scandal-hit liberal grassroots group which has long angered conservatives.
  • 3:11 PM » First-Time Homebuyer Credit Provides Tax Benefits to 1.4 Million Families to Date, More Claims Expected
    Published Thu, Sep 17 2009 3:11 PM by
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  • 2:42 PM » Fed’s Flow of Funds tells us how much debt there is
    Published Thu, Sep 17 2009 2:42 PM by The Big Picture
    The Q2 US balance sheet is out via the Fed’s Flow of Funds statement and it reveals that household debt (home mortgages + consumer credit) as a % of disposable income fell to 118% from 120% in Q1 and 123% at the end of ‘08 and vs the record high of 127% in ‘06. It was last below 100% in 2001 and was at 89% 10 years ago so while we are headed in the right direction in terms of consumer financial health, the process could be a long one. According to the data, the value of household real estate ROSE by $323.4b which is strange considering home prices have continued to decline, albeit at a slower pace. This, in addition to a $1.6t rise in stock prices, led to an almost $2t rise in net worth. For the country as a whole, debt as a % of GDP was little changed at 360% due to an increase in government borrowing at all levels and this is up from 257% 10 years ago.
    Click Here to Read the Full Article

    Source: The Big Picture
  • 2:42 PM » Key Dates and Events in Credit Crisis
    Published Thu, Sep 17 2009 2:42 PM by The Big Picture
    Helluva month , September ‘08 was: > Source:
    Click Here to Read the Full Article

    Source: The Big Picture
  • 1:24 PM » Fed: Household Net Worth Off $12.2 Trillion From Peak
    Published Thu, Sep 17 2009 1:24 PM by Calculated Risk Blog
    The Fed released the Q2 2009 Flow of Funds report today: . According to the Fed, household net worth is now off $12.2 Trillion from the peak in 2007. Click on graph for larger image in new window. This is the net worth as a percent of GDP. This includes real estate and financial assets (stocks, bonds, pension reserves, deposits, etc) net of liabilities (mostly mortgages). Note that this does NOT include public debt obligations. According to the Fed, household net worth increased in Q2 mostly from increases in stock holdings - although the value of household real estate increased slightly too. Note that this ratio was relatively stable for almost 50 years, and then ... bubbles! This graph shows homeowner percent equity since 1952. Household percent equity (of household real estate) was up to 43% from the all time low last quarter of 41.9%. The increase was due to a slight increase in the value of household real estate and a decline in mortgage debt - and also a decline in overall GDP (so the ratio increases). When prices were increasing dramatically, the percent homeowner equity was stable or declining because homeowners were extracting equity from their homes. Now, with prices falling, the percent homeowner equity has been cliff diving. Note: approximately 31% of households do not have a mortgage. So the 50+ million households with mortgages have far less than 43% equity. The third graph shows household real estate assets and mortgage debt as a percent of GDP. Household assets as a percent of GDP increased slightly in Q2 - because of a slight increase in real estate values, and a decline in GDP. Mortgage debt declined, but was flat as a percent of GDP in Q2 - since GDP declined too. After a bubble, the value of assets decline, but most of the debt remains.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 1:23 PM » Economists React: Housing Building on Momentum
    Published Thu, Sep 17 2009 1:23 PM by WSJ
    Economists and others weigh in on . In essence, housing starts have been steady since June, at a pace that exceeds the January low by about 100,000 units. Anyone who expected starts to zoom ever higher is probably disappointed, but we find these data generally encouraging, as a stable pace of construction at current levels seems to represent a happy medium. On one side, it is good that single-family starts (which fell by 3% in August after surging by over 35% in the prior four months) are not collapsing as the height of the homebuyers’ tax credit impact passes (the tax credit expires November 30, and buyers have to close on a completed home to be eligible, so July was just about the latest that a builder could start a home and be sure to be finished in time to close in November). At the same time, given the ongoing massive overhang of excess inventory of existing homes (associated to a substantial degree with the foreclosure wave), even though the inventory of new homes for sale is extremely low, it would not be healthy for builders to load up the pipeline with a flood of new construction –Stephen Stanley, RBS While this index (and single family starts) are well above the massively depressed levels recorded late last year and early this year, this has in all likelihood been a rebound from unsustainably weak results that was reinforced by a temporary boost to demand from the $8000 first time homebuyer tax incentive that applies to purchases that close before December 1. Gains from here on will probably be much more difficult to achieve, as poor labor market conditions, tight credit, overly leveraged household balance sheets, and still considerable inventory of new and existing homes all exert downside pressures. –Joshua Shapiro, MFR Inc. The big question ahead , of course, is whether the White House and Congress will agree to extend and perhaps even increase the $8,000 the tax credit that has helped spur home sales this year. Our expectation is that Washington will come...
  • 1:23 PM » Is WFC Playing a Mortgage Shell Game?
    Published Thu, Sep 17 2009 1:23 PM by Seeking Alpha
    submits: Jingle mail, Jingle Mail, Jingle all the way..... This borrower couldn't pay and thus stopped doing so. This should generate a "NOD" (Notice of Default) and ultimately lead to foreclosure, right? It should result in an impaired asset which might be sold to some other company (at a discount), right?
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 1:23 PM » More on Housing Tax Credit
    Published Thu, Sep 17 2009 1:23 PM by Calculated Risk Blog
    From Bloomberg: An extension of the $8,000 U.S. homebuyer tax credit is gaining support in the Senate as bill sponsor John Isakson said he is rallying lawmakers to continue a program that helped boost home sales by more than 1 million. “I’m working the floor now to make everyone aware that the $8,000 credit sunsets on Nov. 30,” Isakson, a Georgia Republican, said in an interview today. The former real estate executive says he is “talking to everybody and anybody.” This is , and hopefully the bill will be scuttled. Meanwhile the usual suspects are lining up to support the bill: Realtors, bankers and homebuilders have joined in the push, starting a campaign that encourages Congress to extend the program for one year ... White House spokesman Robert Gibbs told reporters today that President Barack Obama’s economic team is looking at the tax credit and “evaluating the impact” on new home sales. “Through that evaluation we’ll come to something to give the president a recommendation,” Gibbs said. ... The bill has at least 15 co-sponsors including Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, and senators Patty Murray, a Washington Democrat, and Joe Lieberman, a Connecticut independent. What is wrong with Connecticut?
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 10:15 AM » Gold Jumps to 18-Month High As Dollar Slides
    Published Thu, Sep 17 2009 10:15 AM by CNBC
  • 10:01 AM » REITs Ready to Reclaim Losses?
    Published Thu, Sep 17 2009 10:01 AM by Seeking Alpha
    submits: A few weeks ago we featured REITs as part of a post entitled: . Since the post it seems that the bears have become even more resolute of the bleak outlook for real estate stocks. We could not help but notice the following headline from Bloomberg: . Below is an excerpt from the article:
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 10:00 AM » Keepin' It Real Estate: Just How Hot Is the Housing Market?
    Published Thu, Sep 17 2009 10:00 AM by
    It seems that with each passing month the data gods deliver more and more evidence that the woe begotten US housing market may finally be emerging from its years-long doldrums.Existing home sales: Up. New home sales: Up. Pending home sales: Up. Home prices: Down but at a slower pace.Even a relic from the booming housing markets of yesteryear has reappeared: Bidding wars. To be sure multiple-offer situations are concentrated in lower priced markets but some sales are simply mind-boggling. Here's a sampling of just how out-of-whack supply and demand truly are in some of this country’s real estate markets: Costa ...
    Click Here to Read the Full Article

  • 10:00 AM » When Will the Economy start to add Jobs? (III.) Industrial Production & duration of Unemployment
    Published Thu, Sep 17 2009 10:00 AM by
    This is the Third of probably Five posts exploring leading indicators for job growth in the economy. So far I have examined initial jobless claims, which have until now been declining gradually, and which at their trend rate must decline at least 3 more months before they would get to the point where jobs would be created; and the ISM manufacturing employment data, which is very strong and suggests the jobs could be added to the economy next month, and even possibly now. In this, the third installment, I'm going to examine Industrial Production, and duration of Unemployment - the first of which gives a very brief leading signal, and the second of which appears to be of only limited value -- before I get to "the Holy Grail" in part IV. Industrial Production , which was just reported yesterday morning, is probably the single most important marker of the end of recessions. It tends to make a clean "v" in graphs right at the end of recessions. This is not a coincidence since the NBER makes use of it in their determination. As compared with payrolls, however, industrial production does have a slightly leading characteristic. It tends to peak a median +2 months before payrolls, and to trough at the end of recessions a median +1 month before payrolls. In particular, of the 10 troughs since World War 2, in 8 of them industrial production troughed within 2 months of the payrolls number. For example, here is the graph of the two series for the 1970s recessons: The most notable exception, of course, was 2002-3, when production troughed a full 20 months before payrolls, as shown here, along with our present recession/recovery: Without more, at best we can say that the odds are nevertheless quite good, historically, that the trough in jobs will be within 2 months of the trough in industrial production -- which would mean the economy should start to produce actual job growth this month ! Fortunately, there is some further guidance, because the only times that...
    Click Here to Read the Full Article

  • 10:00 AM » How much debt do we have?
    Published Thu, Sep 17 2009 10:00 AM by The Big Picture
    An expected positive Q3 GDP reading will technically end the recession and the rebound should continue into Q4. The question though is what the sustainability of growth will be in ‘10. Consumer demand will be the key factor in how that question is answered and the labor market outlook and thus the ability of consumers in servicing their debt will be the focus. In quantifying the huge debt load that our country carries, the Fed will release today the Q2 Flow of Funds statement which is a balance sheet of our country. In Q1, household debt (home mortgages + consumer credit) as a % of disposable income was at 120%. While that is down from the record high of 127% in ‘06, we are still well above the level of 89% 10 years ago. Just as a company’s growth gets weighed down by too much debt, a country can be hindered by the same and that is why the deleveraging process at the consumer level is a freight train that will not be stopped by gov’t policy. In the timeliest snapshot of the labor market, Initial Jobless Claims are expected to total 557k, up from 550k last week which was the lowest since early Jan, not including the seasonal distortions related to the auto sector in July. Continuing Claims are expected to rise by 12k and the Emergency Unemployment Compensation component will also be a focus as people fall off out of the Continuing Claims category before they find a job. Aug Housing Starts are expected to total 598k annualized and that would be the most since Nov ‘08 and 120k above the low in April. Permits are also expected to rise but the sustainability of building will in the short term solely dependent on whether the home buying tax credit is expanded or not. The Sept Philly Fed survey is expected to rise 4 points.
    Click Here to Read the Full Article

    Source: The Big Picture
  • 9:58 AM » SEC Carves Out New Division to Docus on Financial Risks and Trends
    Published Thu, Sep 17 2009 9:58 AM by
    The Securities and Exchange Commission is establishing a Division of Risk, Strategy and Financial Innovation to help it identify potential potholes and developments in the financial markets.The division will have responsibility over three broad areas: risk and economic analysis, strategic research and financial innovation.
    Click Here to Read the Full Article

  • 9:52 AM » Japan Foreign Bond Buys Reach 4-Year High as Funding Costs Drop
    Published Thu, Sep 17 2009 9:52 AM by Bloomberg
    Japanese investors completed the biggest weekly purchase of foreign bonds in four years as cheaper borrowing costs boosted the attractiveness of foreign debt.
  • 9:50 AM » Americans Plan to Limit Spending on Recovery Concern
    Published Thu, Sep 17 2009 9:50 AM by Bloomberg
    Americans plan to refrain from boosting their spending even after the biggest drop in consumption since 1980, signaling concern about the direction of the economy over the next six months.
  • Wed, Sep 16 2009
  • 6:53 PM » CBO: Baucus Health-Care Bill Would Trim Deficit
    Published Wed, Sep 16 2009 6:53 PM by WSJ
    The nonpartisan Congressional Budget Office on Wednesday said that a health-care measure released by Senate Finance Chairman Max Baucus (D., Mont.) would reduce the deficit by $49 billion over 10 years. Sen. Baucus touts his health-care bill. (Associated Press) In to Baucus, the CBO states the bill would cost a total of $774 billion, but would be offset by revenue-raising provisions, such as a 35% excise tax on high-cost health insurance plans, as well as spending reductions. The result, it said, would be a $49 billion reduction of federal deficits from 2010 to 2019. The CBO also anticipates that the bill would reduce deficits beyond the 10-year horizon, saying that the effect of the bill would “probably be continued reductions in federal budget deficits.” The bill would result in 94% of nonelderly people receiving insurance coverage by 2019, excluding illegal immigrants, according to the CBO. The CBO’s overall cost estimate for the bill differs from the $856 billion price tag for the bill issued by the Senate Finance Committee earlier today. A Finance Committee aide stated that higher committee estimate occurred because the committee compiled gross costs of the bill, while the CBO used net costs. For instance, while the committee counts increased spending for Medicare payments to doctors as a part of the overall cost estimate, the CBO counts it as offsetting other Medicare cost reductions, according to the aide. “They did not cap interactions and netting of provisions,” the aide said. According to the CBO cost estimate, the proposed excise tax on high-cost insurance plans would raise $215 billion over 10 years. Spending reductions would save $409 billion over the same period. Proposal to provide health-insurance coverage to more people through subsidies and other means would cost $500 billion in 10 years, according to the CBO.
  • 6:53 PM » Economists React: Deflation ‘Dead,’ but Inflation Risk Muted
    Published Wed, Sep 16 2009 6:53 PM by WSJ
    Economists and others weigh in on . While the headline number was stronger than expected headline number, the continued moderation in core consume prices [that exclude food and energy], which has remained below the 2.0% year-to-year level for the ninth consecutive month suggests that the weak economy is continuing to play a crucial role in containing core consumer price pressures. With this in mind, we continue to maintain our view that the risks of deflation are all but dead, and do not expect inflation to be a threat of any sort for some time. –Millan L. B. Mulraine, TD Securities The steepest CPI declines are now behind us. Year-on-year inflation should be back in positive territory by the end of the year as gasoline price comparisons continue to become less favorable. But the core CPI is quiet, and there is so much slack in the economy that it should remain so. There was some upward pressure this month from airline fares and lodging away from home, perhaps reflecting some stabilization in demand for travel, but the overall core rate was very quiet. –Nigel Gault, IHS Global Insight The core was rescued by a 1.3% drop in new car prices, which the BLS says was “partly” due to the clunker incentive. Expect a rebound in Sep. In Aug, though, this more than offset a hefty 1.9% jump in used auto prices. This has been coming for a while, signaled by the huge rebound in auction prices. Further big increases are in the pipeline, and we think it would be sensible to expect occasional 0.2% gains in the core over the next few months as a result, even though the medium term trend is down. Elsewhere in Aug, rents very subdued again, thanks to soft wages. –Ian Shepherdson, High Frequency Economics The path going forward is likely to be one in which rising commodity prices and import prices do put some upward pressure on the overall inflation rate, with at least some of the price pressure showing up in the core indexes. This will have two important implications for the recovery. First...
  • 5:19 PM » NAHB: Builder Confidence increases Slightly in September
    Published Wed, Sep 16 2009 5:19 PM by Calculated Risk Blog
    Click on graph for larger image in new window. This graph shows the from the National Association of Home Builders (NAHB). The housing market index (HMI) increased to 19 in September from 18 in August. The record low was 8 set in January. This is still very low - and this is what I've expected - a long period of builder depression. Note: any number under 50 indicates that more builders view sales conditions as poor than good. This second graph compares the NAHB HMI (left scale) with new home sales and single family housing starts (right scale). This is the September release for the HMI compared to the July data for starts and sales. This shows that the HMI, single family starts and new home sales mostly move in the same direction - although there is plenty of noise month-to-month. NOTE: For purposes of determining if starts are above or below sales, you have to use the . You can't compare the monthly total single family starts directly to new home sales, because single family starts include several categories not included in sales (like owner built units and high rise condos). from the NAHB (added): Builder Confidence Edges Up Again In September Builder confidence in the market for newly built, single-family homes edged higher for a third consecutive month in September, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The HMI rose one point to 19 this month, its highest level since May of 2008. “ Builders are seeing some improvement in buyer demand as a result of the first-time home buyer tax credit , and low mortgage rates and strong housing affordability have also helped to revive some optimism,” noted Joe Robson, chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Okla. “However, the window is now basically closed for being able to start a new home that can be completed in time for buyers to take advantage of the tax credit before it expires at the...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 5:04 PM » Report: Fed Reviews Banks CRE Exposure
    Published Wed, Sep 16 2009 5:04 PM by Calculated Risk Blog
    Better late than never ... From Steve Liesman at CNBC: (ht Bill) The Federal Reserve is involved a broad review of commercial real estate exposures at the nation's largest regional banks, which Fed sources say is both the result of concern in that area but part of the "new normal" for how they will be supervising banks. ... People familiar with the examinations say the fed is "getting granular" looking, for example, at the differences in banks' concentration of construction loans vs. multifamily vs. motels and retail. Clearly the Fed has room for improvement. A review of bank failures (see: ) shows that the Fed recognized problems of excessive concentration and risk taking as early as 2003 - and the Fed did nothing. I think the Fed needs to explain how the new approach would have caught the problems at Riverside (as an example) in 2004 or so. Hopefully that is the point of this "new normal".
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 4:33 PM » Many mortgage modifications push payments …. higher
    Published Wed, Sep 16 2009 4:33 PM by
    Tens of thousands of financially strapped homeowners who have asked lenders to lower their mortgage payments are instead winding up with higher monthly payments and larger debts on their homes. Homeowners who were hoping for lower payments are discovering to their dismay that lenders roll late fees, back taxes or other costs into the principal, sometimes [...]
    Click Here to Read the Full Article

  • 4:33 PM » The Recession Is Over ?
    Published Wed, Sep 16 2009 4:33 PM by The Big Picture
    In light of my earlier , my friend Scott sends this along: > via
    Click Here to Read the Full Article

    Source: The Big Picture
  • 1:46 PM » Personal Finance Daily: IRS will be digging deeper into your tax returns
    Published Wed, Sep 16 2009 1:46 PM by Market Watch
    The mortgage-interest deduction is one of the best things going for homeowners. It allows the write-off of all the interest you pay each year on your home loans, including most home-equity-loan interest, which in the early years of your mortgage can be pretty much all of your monthly payment. For many taxpayers who itemize it can be their single biggest break.
  • 1:45 PM » Housing Recovery Falters as Federal Stimulus Wanes
    Published Wed, Sep 16 2009 1:45 PM by CNBC
    For anyone who argues the relevance of government stimulus on housing recovery, consider this: A third of all home buyers in the past several months have taken advantage of the $8000 home buyer tax credit.
  • 1:44 PM » Streitfeld: The Housing Tax Credit Debate
    Published Wed, Sep 16 2009 1:44 PM by Calculated Risk Blog
    From David Streitfeld at the NY Times: When Congress passed an $8,000 tax credit for first-time home buyers last winter, it was intended as a dose of shock therapy during a crisis. Now the question is becoming whether the housing market can function without it. As many as 40 percent of all home buyers this year will qualify for the credit. It is on track to cost the government $15 billion, more than twice the amount that was projected when Congress passed the stimulus bill in February. Streitfeld discusses some of the proponents of extending and expanding the tax credit (like the NAR), and some of the opponents (most economists on the right and left). Dean Baker of the Center for Economic and Policy Research called the credit “a questionable redistributive policy” from renters to home buyers, but said that he used it himself when he bought a house. He wrote on his blog: “Thank you very much, suckers!” Mark Zandi at supports extending and expanding the tax credit because he believes the housing market is still in serious trouble: "The risks of not doing something like this are too great,” [Zandi] said. “I don’t think the coast is clear.” But if we actually look at the numbers, this is a poor choice for a second stimulus package. The NAR : NAR estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit. You can calculate the new $15 billion projection; 1.9 million times $8,000. But this only resulted in 350,000 additional sales. Divide $15 billion by 350 thousand, and the program cost is about $43,000 per additional buyer. Very expensive. Now the National Association of Home Builders estimates that expanding and extending the credit through 2010 would generate 500,000 additional sales at a cost of about $30 billion. So this is approximately $60,000 per additional house sold. And I think the cost will be much...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 1:43 PM » The End of the Official Recession?
    Published Wed, Sep 16 2009 1:43 PM by Calculated Risk Blog
    First, a nice mention in Newsweek (thank you): (see slide 4 for a quote from Feb 2005, ht Matthew, Eric) On the end of the recession, from Bloomberg: “Even though from a technical perspective the recession is very likely over at this point, it’s still going to feel like a very weak economy for some time,” Bernanke said today at the Brookings Institution in Washington, responding to questions after a speech. Although I think the official recession has probably ended, it is worth remembering that one or two quarters of GDP growth doesn't necessarily mean the recession is over. Right in the middle of the '81/'82 recession, there was one quarter when GDP increase 4.9% (annualized). On recession dating: 1 The National Bureau of Economic Research (NBER) Business Cycle Dating Committee is the recognized group for calling dating recessions in the U.S. It is always difficult to tell when a recession has ended, especially with a jobless recovery (something I expect again). As an example, it took NBER over a year and half after the 2001 recession ended to of the cycle. And it took 21 months after the 1990-1991 recession ended for NBER to . From the 2003 of the end of the 2001 recession: The committee waited to make the determination of the trough date until it was confident that any future downturn in the economy would be considered a new recession and not a continuation of the recession that began in March 2001. The economy was still struggling in 2003 - especially employment - but the NBER committee members felt that any subsequent downturn would be considered a separate recession: The committee noted that the most recent data indicate that the broadest measure of economic activity-gross domestic product in constant dollars-has risen 4.0 percent from its low in the third quarter of 2001, and is 3.3 percent above its pre-recession peak in the fourth quarter of 2000. Two other indicators of economic activity that play an important role in the committee's decisions...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 1:42 PM » Commentary: Multi-Family Vacancy to Rise
    Published Wed, Sep 16 2009 1:42 PM by Google News
    In light of rising vacancies in the third quarter, rent growth is expected to decline.
  • 1:41 PM » Treasury Issues Debt Management Guidance on the Supplementary Financing Program
    Published Wed, Sep 16 2009 1:41 PM by US Treasury
    September 16, 2009 TG-289 Treasury Issues Debt Management Guidance on the Supplementary Financing Program Washington – The U.S. Department of Treasury today issued the following statement on the Supplementary Financing Program: "Treasury currently anticipates that the balance in the Treasury's Supplementary Financing Account will decrease in the coming weeks to $15 billion, as outstanding Supplementary Financing Program bills mature and are not rolled over. This action is being taken to preserve flexibility in the conduct of debt management policy." ###
  • 1:40 PM » Governments Need Plan to Dispose of Crisis Assets, Shed Risk: IMF
    Published Wed, Sep 16 2009 1:40 PM by IMF
    After propping up the financial system during the global crisis, governments now need a plan to dispose of the assets they took over and reduce their large risk exposures, according to an IMF study.
  • 1:40 PM » Analyze The Market! Qualitative vs. Quantitative
    Published Wed, Sep 16 2009 1:40 PM by Google News
    Appraisers have had blinders on for way too long. It is time to open our eyes wide, keep an open mind and to truly think outside the “check” box. Most of us learned this crazy business by filling out a form. For me, it was actually preparing forms on the good old typewriter, and since clients didn’t accept White-out, if you made one mistake, you retyped the whole thing …. in my case, normally after almost completing the entire report. My education truly began when I started actually thinking, securing meaningful education and not merely form-filling thanks somewhat to George K. Cox, MAI, SRA. It’s time for all of us to step back, re-evaluate and employ a little common sense. Most preprinted forms utilize a Quantitative Appraisal Method while a Qualitative Method is more is line with how buyers really act. QUANTITATIVE METHOD Paired Data Analysis: A quantitative technique is normally used to identify and measure adjustments to the sale prices or rents of comparable properties. To apply this technique, sales or rental data on nearly identical properties are analyzed to isolate a single characteristic’s effect on value or rent. Where do you get these so called adjustments? I know, I know. Paired sales, right? Let me see them. Better yet, the next time you are in the hot seat be prepared to show your paired sales analysis to the court or your state regulatory board. I do believe it is possible to have a proper paired sales analysis and with regression analysis becoming more and more popular there is oftentimes support for your adjustments. However, I would bet that most appraisers do not have this data in their offices to support their adjustments. Think about it! How many home buyers have you ever seen pull out a legal pad or a 1004 form and make line item adjustments for every little difference. Wait! A bathroom is worth $2,000, a garage $5,000, a deck is $2,000, etc. By the way, why don’t these numbers ever change? Buyers don’t act this way. Has anyone ever seen a buyer...
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