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  • Wed, Oct 21 2009
  • 7:34 AM » HUD Hints on Home Buyer Tax Credit
    Published Wed, Oct 21 2009 7:34 AM by CNBC
    Posted By: I have to say I was a bit surprised at the crafting of HUD Secretary Shaun Donovan's statement before the Senate Banking Committee today, specifically with regards to the first time home buyer tax credit. Topics: | | Sectors: | MEDIA:
  • 7:34 AM » Builders Urge Congress to Renew Home Buyer Tax Credit to Create Jobs, Boost Economy
    Published Wed, Oct 21 2009 7:34 AM by NAHB
    Press Release
  • 7:34 AM » No decision yet on homebuyer credit - Obama official
    Published Wed, Oct 21 2009 7:34 AM by CNN
    While momentum is building on Capitol Hill to extend the $8,000 first-time homebuyer credit, President Obama's housing secretary said Tuesday the administration has not decided whether to support its expansion.
  • 7:19 AM » Is it time to dump your ARM?
    Published Wed, Oct 21 2009 7:19 AM by CNN
    If you are among the 6.5 million homeowners who took out a low-rate adjustable-rate mortgage during the housing boom, you've probably spent the past couple of years waiting for your day of reckoning to come.
  • 7:19 AM » No Tightening in Next Several Months: Fed's Yellen
    Published Wed, Oct 21 2009 7:19 AM by CNBC
  • 7:19 AM » Morgan Stanley may give up Crescent Real Estate: report
    Published Wed, Oct 21 2009 7:19 AM by Reuters
    (Reuters) - Morgan Stanley may hand over its unit Crescent Real Estate Equities Co to Barclays Capital, the Wall Street Journal said, citing people familiar with the matter.
  • Tue, Oct 20 2009
  • 2:46 PM » DataQuick: California Mortgage Defaults Trend Down in Q3
    Published Tue, Oct 20 2009 2:46 PM by Calculated Risk Blog
    There is a lot of interesting data in the DataQuick report. A few key points: 2009 will be another record year for NODs. Lenders have change policies and are trying to modify more mortgages. 2006 was a toxic lending year (probably because that was when house prices peaked or were starting to fall). Defaults are movin' on up into the mid and high priced areas. Click on graph for larger image in new window. This graph shows the Notices of Default (NOD) by year through 2009 1 in California from DataQuick. 1 2009 estimated as total NODs to date, plus Q3 NODs (as estimate for Q4). Clearly 2009 is on pace to break the record of 2008. I'd expect something close to 500 thousand NODs for the entire year. From DataQuick: The number of mortgage default notices filed against California homeowners fell last quarter compared with the prior three-month period, the result of lenders' evolving foreclosure policies, an uncertain legislative environment and an uptick in the number of mortgages being renegotiated , a real estate information service reported. A total of 111,689 default notices were sent out during the July-through-September period . That was down 10.3 percent from 124,562 for the prior quarter , and up 18.5 percent from 94,240 in third quarter 2008 , according to San Diego-based MDA DataQuick. The number of recorded default notices peaked in the first quarter of this year at 135,431, although that number was inflated by deferred activity from the prior four months. "It may well be that lenders have intentionally slowed down the pace of formal foreclosure proceedings. If so, it's not out of the goodness of their hearts. It's because they've concluded that flooding the market with cheap foreclosures in this economic environment may not be in their best financial interest . Trying to keep motivated, employed homeowners in their homes might be the most cost-efficient way to stem losses," said John Walsh, DataQuick president. ... While most foreclosure...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 1:59 PM » MBA's Chief Economist Brinkmann on State of Housing
    Published Tue, Oct 20 2009 1:59 PM by Calculated Risk Blog
    Emile Brinkmann, MBA Chief Economist, today before the Senate Committee on Banking, Housing and Urban Affairs at a hearing titled, "The State of the Nation's Housing Market." Here are some excerpts: "... Whenever I am asked when the housing market will recover, I explain that the economy and the housing market are inextricably linked. The number of people receiving paychecks will drive the demand for houses and apartments and the recovery will begin when unemployment stops rising. ... This isn't quite correct. Usually housing leads the economy both into and out of a recession, and, in recent recessions, employment lags. I'd argue the recovery in housing has already started, but it will be a very sluggish recovery. ... Prior to the onset of this recession, the housing market was already weakened due in part to the heavy use of loans like pay option ARMs and stated income loans by borrowers for whom these loans were not designed. Together with rampant fraud by some borrowers buying multiple properties and speculating on continued price increases, this led to very high levels of construction to meet that increased demand, demand that turned out to be unsustainable. When that demand disappeared, a large number of houses were stranded without potential buyers. The resulting imbalance in supply and demand drove prices down, particularly in the most overbuilt markets like California, Florida, Arizona, and Nevada - markets that had previously seen some of the nation's largest price increases. emphasis added Unfortunately the MBA didn't take the lead on trying to stop these lending practices. Thus the nature of the problem has shifted. A year ago, subprime ARM loans accounted for 36 percent of foreclosures started, the largest share of any loan type despite being only 6 percent of the loans outstanding. Now prime fixed-rate loans represent the largest share of foreclosures initiated. We're all subprime now! Unfortunately, the consensus is...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 1:59 PM » Housing and the Economy
    Published Tue, Oct 20 2009 1:59 PM by Calculated Risk Blog
    Just a quick comment ... Probably the best leading indicator for the economy is investment in housing 1 . We can use new home sales, housing starts (usually single-family starts), or residential investment (from the BEA ), as indicators of housing. We can probably also use the NAHB index. Those expecting a "V-shaped" or immaculate recovery - with unemployment falling sharply in 2010 - are clearly expecting single family housing starts to rebound quickly to a rate significantly above 1 million units per year. Not. Gonna. Happen. There are just too many excess housing units for a rapid recovery in new home sales and single family housing starts. Yes, new home inventory has declined significantly, and existing home inventory has also decreased (although still very high). But there are also a record number of vacant rental units - with the vacancy rate approaching 11% - and the housing inventory includes these units too. Notice what is not included as a leading indicator: existing home sales. The sale of an existing home adds a little to the economy (some commissions and fees), and sometimes some added spending on improvements. Only the improvements add to the housing stock (not commissions). And right now marginal buyers have very little to spend on improvements (see ). Those looking at existing home sales for economic guidance are confusing activity with accomplishment. 1 I've written about this extensively, but I'll put up another post on housing investment leading the economy soon.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 1:59 PM » IRS probing home-buyer tax credit claims: report
    Published Tue, Oct 20 2009 1:59 PM by Reuters
    (Reuters) - The U.S. Internal Revenue Service is probing more than 100,000 doubtful claims of a tax credit meant for first-time home buyers, the Wall Street Journal reported on its website on Tuesday.
  • 12:24 PM » Looking At Mortgage Delinquencies
    Published Tue, Oct 20 2009 12:24 PM by The Big Picture
    Earlier today, we noted that the of Housing were re-asserting themselves. This is a very different phenomena than the ongoing crisis: That was caused by the credit bubble, which in turn led to wildly overvalued Housing, which was purchased by people who often could not afford them, which in turn led them to subsequently become delinquent, then default, and finally slide into foreclosure. Along those lines, the following pair of charts (via Realpoint) should get your brains racing: It appears that despite the various voluntary foreclosure abatements, the problem has not yet been solved. Banks continue to rack up serious unpaid mortgages, which over time is very likely to lead to increased foreclosures . . . > Future Workouts – Delinquency Categories click for larger charts > Unpaid Balance for 2005, 2006 and 2007 Vintage Transactions > Source : Realpoint,August 2009 http://bit.ly/IOdxz
    Click Here to Read the Full Article

    Source: The Big Picture
  • 11:05 AM » How to look up your mortgage to see if it may be fraudulent
    Published Tue, Oct 20 2009 11:05 AM by loanworkout.org
    Here is a “how to guide” on looking up your mortgage in Florida via your county recorder. I am not cosigning everything said by the author in this link and will research further to see the validity of the mortgage claims made. http://www.scribd.com/doc/20916919/Foreclosure-Fraud-Guide-to-Looking-up-Public-Records-for-Fraud?ref=patrick.net
    Click Here to Read the Full Article

    Source: loanworkout.org
  • 10:02 AM » Seasonality Bites Housing
    Published Tue, Oct 20 2009 10:02 AM by The Big Picture
    As we warn year after, Housing is extremely seasonal. This part of the calendar is expected to slip straight thru to January — mostly in EHS, but we will also see it in New Homes Sales, Permits and Starts. Add to this the sunsetting government subsidies — $8,000 tax credit for first-time home buyers, and the eventual removal of ZIRP — and you have a recipe for slowing Permits, Starts, and Sales. Yesterday saw the National Association of Home Builder’s declined for the month of October. Commerce Data: BUILDING PERMITS Privately-owned housing units authorized by building permits in September were at a seasonally adjusted annual rate of 573,000. This is 1.2 percent (±1.8%)* below the revised August rate of 580,000 and is 28.9 percent (±2.2%) below the September 2008 estimate of 806,000. Single-family authorizations in September were at a rate of 450,000; this is 3.0 percent (±1.0%) below the revised August figure of 464,000. Authorizations of units in buildings with five units or more were at a rate of 104,000 in September. HOUSING STARTS Privately-owned housing starts in September were at a seasonally adjusted annual rate of 590,000. This is 0.5 percent (±9.9%)* above the revised August estimate of 587,000, but is 28.2 percent (±6.7%) below the September 2008 rate of 822,000. Single-family housing starts in September were at a rate of 501,000; this is 3.9 percent (±9.3%)* above the revised August figure of482,000. The September rate for units in buildings with five units or more was 78,000. HOUSING COMPLETIONS Privately-owned housing completions in September were at a seasonally adjusted annual rate of 693,000. This is 10.2 percent (±10.4%)* below the revised August estimate of 772,000 and is 39.6 percent (±5.7%) below the September 2008 rate of 1,148,000. Single-family housing completions in September were at a rate of 464,000; this is 8.3 percent (±14.3%)* below the revised August figure of 506,000. The September rate for units in buildings with five units or more was...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 10:02 AM » Housing Starts in September: Moving Sideways
    Published Tue, Oct 20 2009 10:02 AM by Calculated Risk Blog
    Click on graph for larger image in new window. Total housing starts were at 590 thousand (SAAR) in September, up 0.5% from the revised August rate, and up sharply from the all time record low in April of 479 thousand (the lowest level since the Census Bureau began tracking housing starts in 1959). Starts had rebounded to 590 thousand in June, and have move sideways for four months. Single-family starts were at 501 thousand (SAAR) in September, up 3.9% from the revised August rate, and 40 percent above the record low in January and February (357 thousand). Just like for total starts, single-family starts have been at this level for four months. Here is the Census Bureau report on housing . Building Permits: Privately-owned housing units authorized by building permits in September were at a seasonally adjusted annual rate of 573,000. This is 1.2 percent (±1.8%)* below the revised August rate of 580,000 and is 28.9 percent (±2.2%) below the September 2008 estimate of 806,000. Single-family authorizations in September were at a rate of 450,000; this is 3.0 percent (±1.0%) below the revised August figure of 464,000. Housing Starts: Privately-owned housing starts in September were at a seasonally adjusted annual rate of 590,000. This is 0.5 percent (±9.9%)* above the revised August estimate of 587,000, but is 28.2 percent (±6.7%) below the September 2008 rate of 822,000. Single-family housing starts in September were at a rate of 501,000; this is 3.9 percent (±9.3%)* above the revised August figure of 482,000. Housing Completions: Privately-owned housing completions in September were at a seasonally adjusted annual rate of 693,000. This is 10.2 percent (±10.4%)* below the revised August estimate of 772,000 and is 39.6 percent (±5.7%) below the September 2008 rate of 1,148,000. Single-family housing completions in September were at a rate of 464,000; this is 8.3 percent (±14.3%)* below the revised August figure of 506,000. Note that single-family completions of 464 thousand...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 7:24 AM » Why is the Chamber of Commerce Defending Big Banks?
    Published Tue, Oct 20 2009 7:24 AM by Google News
    On Warren Olney’s , I had a chance to talk with US Chamber of Commerce management directly regarding the issue posed here last week: Why would an organization representing 3 million small businesses come out in support of our largest banks? My question was picked up and focused by the host. Warren Olney (at the 36:35 mark): “Mr. Hirschmann, back to you. Are you serving the interests of your own members, if you resist the idea of breaking up the big banks?” (leading the Chamber’s ): “I just don’t think the question is whether we need to break up the big banks. The question is how do we ensure that the kinds of practices that they engaged in — and others outside the banking system — don’t happen any more. Which is why we pointed to transparency in areas like derivatives and leverage.” [my transcription] Mr. Hirschmann then goes on to talk about the consumer protection agency (he’s opposed). The conflict between the Chamber’s principles and its actions becomes increasingly clear. Hirschmann made some good statements, along the lines of: no one should have permanent access to the taxpayer’s pocket, and any firm – no matter how large – should go out of business if its managers make the wrong decisions. This is exactly what the representative of small business should say. But, despite being given repeated opportunity to say something at least generally along the lines of (e.g., “too big to fail is too big to exist”), Hirschmann retreated into platitudes about the need to modernize our entire regulatory system. At the same time, he emphasized that the Chamber is adamantly opposed to the main piece of this modernization – as proposed by the administration – which is a new agency to protect consumers vis-à-vis financial products. He didn’t dispute that the actions of our largest financial players have seriously hurt small business people – through bringing about a massive financial crisis and deep rececession – but the Chamber apparently favors just reshuffling regulatory responsibilities...
  • 7:24 AM » WSJ: IRS Examining Many Suspicious First-Time Homebuyer Tax Credit Claims
    Published Tue, Oct 20 2009 7:24 AM by Calculated Risk Blog
    John Mckinnon at the WSJ reports: The Internal Revenue Service is examining more than 100,000 suspicious claims for the first-time home-buyer tax break ... The tax credit is completely refundable, even if the homebuyer has no tax liability - and this makes it a target for fraud. : "[The tax credit is] fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed." Also, the credit is separate from the closing, and the WSJ article suggests this is contributing to the "widespread" fraud. Bonnie Speedy, national director of AARP Tax-Aide ... suggested that abuse of the home-purchase credit appeared to be widespread ... And - not mentioned in the article - the homebuyers are required to pay back the tax credit if they do not own and live in the home for three years ... so there will probably be more fraud in the future. : The obligation to repay the credit on a home purchased in 2009 arises only if the home ceases to be your principal residence within 36 months from the date of purchase. The full amount of the credit received becomes due on the return for the year the home ceased being your principal residence . emphasis added I hope these people stretching to buy - like the buyer mentioned in the previous paying 54% of her income for her house, including multiple jobs - realize they have to pay back the entire credit if they don't own and occupy the home for three years.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • Mon, Oct 19 2009
  • 6:53 PM » Will Government Aid Set Housing Market Back?
    Published Mon, Oct 19 2009 6:53 PM by CNBC
    Posted By: A new survey from John Burns Real Estate Consulting really puts the regional breakout in perspective and shows the government's effect on the new construction market especially. Topics: | | | Sectors: |
  • 6:52 PM » Fannie Mae and Freddie Mac HAMP Trial Modifications Increase More Than 40 Percent in September
    Published Mon, Oct 19 2009 6:52 PM by FHFA
    October 19, 2009: Fannie Mae and Freddie Mac HAMP Trial Modifications Increase More Than 40 Percent in September
  • 6:52 PM » An FHA Loan Example, Einhorn Speech, and More
    Published Mon, Oct 19 2009 6:52 PM by Calculated Risk Blog
    Scott Jagow at American Public Media MarketPlace provides an example of a recent FHA insured loan homebuyer: Denise works three jobs so she can afford her new house. She makes $2470 a month but pays $1328 to service her mortgage. That means 54% of her income goes to the house, leaving her with $285 a week to live on. Doable, but tight. She’s breaking the 30% rule and then some, not to mention she’s still spending out of pocket to renovate the yard, fix the roof and paint. Apparently 20 year old Denise bought the home for $155,000, and according to the comments, obtained an additional $28,000 on a "203K HUD supplemental loan to renovate the home" for a total of $183,000. Not exactly up to the new proposed of affordability! Rolfe Winkler has a speech from David Einhorn . Here is the . I don't agree with everything he says, but he is entertaining! Paul Kiel at Propublica writes: . The government has doled out billions to 687 banks [1] over the past year through a program meant to bolster already “healthy” banks. But an increasing number of those are troubled. Four banks in particular are foundering, including one that has acknowledged its executives cooked its books. Paul has the details.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 6:52 PM » Moody’s: CRE Prices Off 41 Percent from Peak, Off 3% in August
    Published Mon, Oct 19 2009 6:52 PM by Calculated Risk Blog
    From Bloomberg: (ht James) The Moody’s/REAL Commercial Property Price Indices fell 3 percent in August from July, bringing the market’s decline to almost 41 percent since its peak in October 2007, Moody’s Investors Service said in a statement today. ... “We can’t call a bottom at this point, but it’s an encouraging sign to see the deceleration in the decline,” said Connie Petruzziello, a Moody’s analyst and co-author of the commercial property price report. ... August was the 11th consecutive month the commercial property index fell. The August report was based on prices for 73 properties that sold during the month and for which Moody’s has previous price records. Here is a comparison of the and the Case-Shiller composite 20 index. Notes: Beware of the "Real" in the title - this index is not inflation adjusted - that is the name of the company (an unfortunate choice for a price index). Moody's CRE price index is a repeat sales index like Case-Shiller - but there are far fewer commercial sales - only 73 repeat sales in August - and that can impact prices. Click on graph for larger image in new window. CRE prices only go back to December 2000. The Case-Shiller Composite 20 residential index is in blue (with Dec 2000 set to 1.0 to line up the indexes). This shows residential leading CRE (although we usually talk about residential investment leading CRE investment , but in this case also for prices), and this also shows that prices tend to fall faster for CRE than for residential.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 3:12 PM » Bernanke: We Need To Develop A Fiscal Exit Strategy
    Published Mon, Oct 19 2009 3:12 PM by WSJ
    Federal Reserve Chairman Ben Bernanke said Monday it was crucial to develop a fiscal exit strategy to maintain confidence in the U.S. economy and the dollar. Asked about how to address global economic imbalances at an Asia economics conference in Santa Barbara, Bernanke acknowledged that the U.S. has a “difficult” fiscal situation. To counter the deep recession, the U.S. has passed a massive stimulus that is expected to sharply increase the country’s debt. “We need to develop a fiscal exit strategy which will involve a trajectory towards sustainability,” Bernanke said. “That’s critically important to maintain confidence in our economy and confidence in our currency.” Bernanke then added: “I know that’s very well understood in Washington.” The dollar’s value against major currencies has fallen in recent weeks as U.S. interest rates are expected to remain close to zero for some time to fight the economic downturn, while investors’ appetite for risk has returned.
  • 2:57 PM » Campbell Surveys: ‘Mini-Boom’ in Existing Home Market
    Published Mon, Oct 19 2009 2:57 PM by Calculated Risk Blog
    Excerpts posted with permission from In September the housing market took a major turn to the upside, according to respondents to the Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions. Real estate agent survey respondents reported average residential property prices rose 6% from August to September ... The reported month-to-month price increase of 6% was driven by high demand for REO –also commonly referred to as foreclosed properties--according to transaction data reported by survey respondents. ... The average price for non-distressed properties remained nearly constant between August and September. ... Strong demand for moderately priced REO caused time-on-market for these properties to decline markedly. In August, damaged REO stayed on the market an average of 9.4 weeks; by September, time-on-market had declined to 7.0 weeks. For move-in ready REO, time-on-market declined from 8.0 weeks in August to 5.9 weeks in September. In contrast, average time-on-market for non-distressed properties rose from 13.0 weeks in August to 14.2 weeks in September. First–time homebuyer demand for properties continued to be strong in the month of September. First-time homebuyers accounted for 42% of home purchase transactions in September. ... Many agents indicated an REO buying frenzy in local markets , especially California. “Entry level REO's are taken by the storm! Many multiple offers!” exclaimed a California agent. “Low inventory and high demand are resulting in 20-60 offers on most properties in the entry level to moderate price points. First-time homebuyers have difficulty competing with investors and high down-payment buyers,” reported another real estate agent located in California. “Banks and listing agents are pricing these REO's at liquidation prices to encourage a bidding war and it's working,” wrote a real estate agent located in Florida. Despite reporting strong increases in both average prices and number of transactions, real...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 2:57 PM » NAHB: Builder Confidence Decreases Slightly in October
    Published Mon, Oct 19 2009 2:57 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) decreased to 18 in October from 19 in September. The record low was 8 set in January. Note that Traffic of Prospective Buyers declined sharply. 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 single family housing starts (right scale). This includes the October release for the HMI and the August data for starts (September starts will be released tomorrow). This shows that the HMI and single family starts mostly move in the same direction - although there is plenty of noise month-to-month. Those expecting a sharp rebound in starts are probably wrong. Press release from the NAHB (added): “This is the first time since November of 2008 that all three component indexes of the HMI have declined,” noted NAHB Chief Economist David Crowe. “Clearly, builders are experiencing the effects of the expiring tax credit on their sales activity, since it would be virtually impossible at this point to complete a new home sale in time to take advantage of that buyer incentive before Nov. 30.” ... Each of the HMI’s component indexes recorded declines in October. The component gauging current sales conditions fell one point to 17, while the component gauging sales expectations for the next six months declined two points to 27 and the component gauging traffic of prospective buyers fell three points to 14. On a regional basis, the Northeast was the only part of the country to record an improvement in its HMI score, with a one-point gain to 25. Meanwhile, the Midwest and South each recorded one-point declines to 18 and the West recorded a four-point decline to 14.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 1:38 PM » Housing and Banking Set to Lead Another Economic Wave Lower
    Published Mon, Oct 19 2009 1:38 PM by Seeking Alpha
    I begin the week by summarizing comments on the Housing and Banking Sectors by Elizabeth Warren, the Top Cop of the Congressional Oversight Panel. And Bank Failure Friday resumes. It’s time for Congress, Geithner, Bernanke and Bair to heed the warnings from the Congressional Oversight Panel, as Elizabeth Warren sees the risks I have been talking about in Housing and Banking since April 2006. Warren says the Big Banks always get what they want. They take the money and write the rules. They report record profits and pay themselves record bonuses. She agrees with me that the housing market is getting worse, not better, with foreclosures up 5% in the third quarter. Foreclosures are outpacing mortgage modifications two to one. Look for ten to twelve million foreclosures by the time “The Great Credit Crunch” ends. Foreclosures are mushrooming out to prime borrowers and will continue as unemployment rises. Creditors and investors need to take a haircut to ease the pain on Main Street. On banking, Warren says that the Stress Tests need to be re-done, as economic conditions have blown through the worst case of the Stress Tests and tests need to be repeated and extended through 2012. On TARP, Warren indicates that there is zero chance that we will find out where the money has gone. TARP was supposed to price and remove toxic assets, it did not. Then TARP was supposed to increase small business lending, it has not. Wall Street thinks that we have returned to business as usual, while Main Street is struggling with job losses, tighter credit, foreclosures, all leading to a lower standard of living. After a week off, Bank Failure Friday returned with the 99 th failure of the year. The FDIC closed San Joaquin Bank () , a small community bank in Bakersfield California. This $775 million bank had huge overexposer to C&D and CRE loans with risk exposures of 320% and 1002% versus the ignored 2006 regulatory guideline of 100% and 300%. The FDIC and other banking regulators were clearly...
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 12:51 PM » Obama Administration Announces Initiative for State and Local Housing Finance Agencies
    Published Mon, Oct 19 2009 12:51 PM by treasury.gov
    Programs Designed to Expand Resources for Working Families to Access Affordable Rental Housing and Home Ownership over Long Term at Little or No Expected Cost to the Taxpayer
  • 12:04 PM » Bloomberg: FDIC Failed to Limit CRE Loans
    Published Mon, Oct 19 2009 12:04 PM by Calculated Risk Blog
    Bloomberg reviewed 23 recent Inspector General reports of bank failures and concluded that the FDIC "failed to enforce its own guidelines to rein in excessive commercial real estate lending" (CRE). From Bloomberg: (hts Mike in Long Island, Ron at ) ... The FDIC’s Office of Inspector General analyzed from August 2008 to March and found that for 20, the agency’s examiners didn’t identify the issue early enough or should have taken stronger supervisory action after recognizing the banks had dangerously high levels of the loans before they failed. ... “It’s often we’ll see in our reports that the FDIC detected problems in the bank in a timely fashion , but in some cases forceful corrective action wasn’t required by the FDIC to be taken quickly enough,” Jon Rymer, the FDIC’s inspector general, said in a telephone interview. This is recurring theme. The examiners in the field, for both the FDIC and the Fed, recognized problems fairly early, but the agencies failed to take aggressive action. Here are two related posts: and The from a state regulator: “We should have been more strict,” Joseph Smith, North Carolina’s bank commissioner and chairman of the Conference of State Bank Supervisors, said in a telephone interview. ... “ Had we required the reduction of CRE lending , it would have been thought of as an intrusion by regulators into the businesses of banks and to the operations of local economies,” Smith said. “Yes, it would have been the right thing to do . It would have caused a firestorm then. That might have been better than a firestorm now.” I believe the regulators should have clamped down on CRE lending in 2006 - and the FDIC was aware of the problem. Here is a interagency guidance on CRE lending from January 13, 2006. Concentrations of CRE loans may expose institutions to unanticipated earnings and capital volatility in the event of adverse changes in the general commercial real estate market. ... The proposed guidance reinforces existing guidelines for...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 12:04 PM » Securitized Loans Are 5X More Likely to Be Delinquent
    Published Mon, Oct 19 2009 12:04 PM by The Big Picture
    Here is an interesting data point you may have missed: A study found that securitized mortgages were five times as likely to be delinquent as mortgages that were not resold to securitizers . Kinda makes you think that the banks that planned on keeping their mortgages had different lending standards than those that knew the paper would be off their hands soon. (Approximately one in eight homeowners have had their mortgages securitized). I do not recall the data source, but sub-prime mortgages are also much more likely to be securitized than prime mortgages are. The graphic from is probably the best explanation I have seen on the securitization process yet: > Hat tip > Sources : Karen Weise ProPublica – August 6, 2009 http://www.propublica.org/ion/bailout/item/making-home-affordable-loan-modifications-denied-806 Marketplace, August 6, 2009 http://marketplace.publicradio.org/display/web/2009/08/06/pm-loan-mods/
    Click Here to Read the Full Article

    Source: The Big Picture
  • 10:24 AM » Fed Statement Regarding Reverse Repurchase Agreements
    Published Mon, Oct 19 2009 10:24 AM by NY Fed
    Numerous Federal Reserve communications have indicated that reverse repurchase agreements are a tool that could be used to support a reduction in monetary accommodation at the appropriate time. Over the past year, the Federal Reserve Bank of New York has been working internally and with market participants on operational aspects of reverse repos to ensure that this tool will be ready when and if the Federal Open Market Committee decides they should be used. This work is a matter of prudent advance planning by the Federal Reserve, and no inference should be drawn about the timing of monetary policy tightening.
  • 10:00 AM » Subprime mortgages: Myths and reality
    Published Mon, Oct 19 2009 10:00 AM by www.voxeu.org
    Kent Cherny , Yuliya Demyanyk , 17 October 2009 The global crisis is said to have originated in the US subprime mortgage market. This column argues that many of the most popular explanations that have emerged for the subprime crisis are, to a large extent, myths. Full Article:
    Click Here to Read the Full Article

    Source: www.voxeu.org
  • 9:59 AM » Understanding a systemic banking crisis
    Published Mon, Oct 19 2009 9:59 AM by www.voxeu.org
    Harald Uhlig , 15 October 2009 The recent crisis was like a bank run, but it didn’t quite fit. This column describes six features that a model of the recent crisis ought to capture and describes a new theory with which we might analyse the crisis and policy responses. Full Article:
    Click Here to Read the Full Article

    Source: www.voxeu.org
  • 9:58 AM » Commercial Real Estate and REITs: Ticking Time Bomb?
    Published Mon, Oct 19 2009 9:58 AM by Seeking Alpha
    submits: In keeping with the Monday morning ritual of taking a look at new highs and lows on the NYSE, Barron’s showed 802 for the former and 6 for the latter which gives us a ratio of 134:1. This is a new high both in terms of the outright number of new highs as well as the ratio of highs to lows. Not completely surprising given that we spent 2 days above the 10K mark but also a good way to check on the breadth of things. The relative strength of the dollar against its trading partners is also a statement on the rate outlook in the U.S. and that is a product of what investors think it will take to have unemployment in this country begin to come down.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 9:58 AM » Today in Forex: It's All About the Euro
    Published Mon, Oct 19 2009 9:58 AM by Seeking Alpha
    Finance ministers from the Euro Zone will be meeting later today to discuss with Jean-Claude Juncker, the Eurogroup chairman, their concerns about the Euro-zone’s recovery, given the single currency Euro’s recent continued rise. With that question foremost on their minds, investors took the opportunity to trim long positions, forcing the Euro to retreat from multi-month peaks versus the U.S. Dollar and the Japanese Yen. Since the beginning of the year, the Euro’s appreciation versus the U.S. currency has been nearly 6%; late last week, it hovered close to $1.50. As reported at 2:21 p.m. [JST] in Tokyo, versus the U.S. Dollar, the Euro traded at $1.4875, a decline of .2% from late Friday’s trade, while against the Japanese Yen, the Euro traded at 135.15 Yen, a loss of .3%, though it had at one point in the day traded at 134.76 Yen; Friday, the Euro traded at 136.07 Yen, the highest in nearly 2-months. The U.S. Dollar gained back some earlier losses in Friday’s trading, following the news from the Bank of America of a substantial loss in the 3rd quarter of 2009. U.S. consumer confidence appears to, once again, be waning, and the U.S. currency is benefiting from a decrease in demand for risk.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 9:58 AM » Property Values: 10 Key Charts (October Update)
    Published Mon, Oct 19 2009 9:58 AM by Seeking Alpha
    submits: The good news is that recent price trends are strong in residential real estate. We have a quarter of price growth in the bag. Prices have also fallen so far since the summer-of-2006 peak that affordability is roughly equal to what it was at the turn of the century (2000). Nobody can argue that a fall of 30% doesn’t make it easier to buy. Is it the best time to buy? click to enlarge The bad news is that the financial media is incapable of balancing competing and complicating factors which any buyer of real estate must review. If you look at mortgage payments and the number of past due accounts; if you look at the number of properties which are approaching or are now in negative equity (in which mortgage debt exceeds the value of the house); if you look at the supply of existing (not new) properties for sale; if you look at the systemic debt levels of consumers and of American society as a whole; if you look at unemployment; and if you look at the trends which history dictates after a credit crisis; if you look at all of these major factors, they are all negative for real estate. Balancing these factors requires the intelligence to incorporate many different variables; a balance which is impossible on a breaking news story. All of these variables create a fuller opinion on the future of property values. You need this information to make a good decision about your most important investment – the purchase of your home. Look at the charts. Glance at the captions. What feeling does it leave you with? That feeling should be your “buy” or “sell” indicator. The daily media is simply a dumb conformist blind man--chasing the latest number with no regard to competing claims, no memory, and no common sense. You can’t be fooled again on the value of real estate. EQUITY VANISHES: About $7 trillion has been taken from the wealth account of property owners. If there are 130 million housing units in the United States (rental and owner occupied), then owners have lost an average...
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 8:56 AM » Buyer's Market Intensifies as Florida Struggles with Mounting Foreclosures
    Published Mon, Oct 19 2009 8:56 AM by Seeking Alpha
    submits: Miami-Dade Circuit Judge Jennifer Bailey was recently quoted as saying the biggest challenge the system faces is "to keep morale up." In 2006 Miami-Dade saw 3,474 foreclosure cases. For the first six months of this year, they have handled 34,417. That's not a misprint.The scary part is the first three months of this year, bankers were under a wink-wink order from Obama to hold off on foreclosures . . . as if that would somehow help matters. It has not. In fact, Miami-Dade could see more than 50,000 foreclosures during the last six months of 2009, bringing the total close to 100,000 or almost 30 times what it was in 2006.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 8:56 AM » Barney Frank's Bad Housing Loans
    Published Mon, Oct 19 2009 8:56 AM by Seeking Alpha
    submits: On October 8, the New York Times a story on the Federal Housing Administration (F.H.A.) stating: Many of the loans the F.H.A. insured in 2007 and last year are now turning delinquent, agency officials acknowledge. The loans made in those two years are performing “far worse” than newer loans, dragging down the whole portfolio, Mr. Stevens of the F.H.A. said in an interview.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 8:56 AM » Wall St. and Main St.: The Glaring Disconnect
    Published Mon, Oct 19 2009 8:56 AM by Seeking Alpha
    I have long argued that the current “recovery” is only in name, as unemployment has continued higher and any worthwhile economist will tell you that there is no such thing as a jobless recovery. The mirage of a recovery is a short-term phenomenon created by handing the banks Trillions of dollars as well as accounting trickery which allows banks to hide and understate their losses. It is a glaring disconnect, as Wall Street recovers and generates billions in profits, paying itself millions in bonuses, while around 20% of the American workforce is either unemployed or underemployed. This is Depression-era unemployment with wages declining, foreclosures skyrocketing and working families worried about how to pay the bills. The middle class today is in desperate shape as the gap between the wealthy and everyone else is growing wider.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 8:27 AM » Inventory Restocking and Q3 GDP
    Published Mon, Oct 19 2009 8:27 AM by Calculated Risk Blog
    Professors Hamilton and Krugman have mentioned that Q3 GDP will probably be reasonably strong, see Hamilton's and Krugman's . I agree. But I don't think growth in Q3, or even in Q4, are the question. The key question is what happens in early 2010. The following graph shows the contributions to GDP from changes in private inventories for several recessions. The blue shaded area is the last two quarters of each recession, and the light area is the first four quarters of each recovery. Click on graph for larger image in new window. The Red line is the median of the last 5 recessions - and indicates about a 2% contribution to GDP from changes in inventories, for each of the first two quarters coming out of a recession. But this boost is always transitory. Following the 1969 recession, changes in inventory added 6.2% to GDP in the first quarter of recovery - and GDP increased at an 11.5% (SAAR) that quarter. No one is predicting a quarter like that. But a 1% to 2% contribution from changes in inventories is possible. And Personal Consumption Expenditures (PCE) will be strong too. The following graph shows real PCE through August (2005 dollars). Note that the y-axis doesn't start at zero to better show the change . The quarterly change in PCE is based on the change from the average in one quarter, compared to the average of the preceding quarter. The colored rectangles show the quarters, and the blue bars are the real monthly PCE. The July and August numbers suggest PCE will grow at about a 3.6% (annualized rate) in Q3, however suggest less growth in September (July and August were boosted by cash-for-clunkers). So maybe we will see 3% PCE growth in Q3, and that would mean a contribution to GDP of about 2%. Add in positive contributions from net exports, an increase in residential investment (for the first time since Q4 2005), some increase in equipment and software investment - and Q3 should look pretty healthy. Yes, investment in non-residential structures...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:26 AM » Offices: See-Through Buildings in LA
    Published Mon, Oct 19 2009 8:26 AM by Calculated Risk Blog
    From Roger Vincent at the LA Times: ... Almost 51 million square feet of office space in Los Angeles County, Orange County and the Inland Empire is now empty -- more than 17% of the total. ... "These vacancies are a direct reflection on unemployment," said Joe Vargas, an executive vice president at Cushman & Wakefield. "Companies continue to reduce their workforce, or they are not hiring." ... Real estate rentals are a lagging indicator of the economy, so the shrinking-space trend is expected to persist well into next year even if the nation's financial outlook continues to improve. ... Cushman & Wakefield's Vargas predicts Southern California will remain a tenant's market through mid-2010 and perhaps longer if employment doesn't start picking up. "This is certainly the worst downturn we've seen," Vargas said. "We're not going to see real improvement until job growth occurs." Usually the unemployment rate and the office vacancy rate tend to peak around the same time. So, as the unemployment rate continues to rise into 2010, the office vacancy rate will probably increase too. On a national basis, Reis' forecast is for the office vacancy rate to peak at 18.2 percent in 2010 (currently 16.5%), and for rents to continue to decline through 2011.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:25 AM » U.K.: FSA to Tighten up Mortgage Regulation, Ban Stated Income Loans
    Published Mon, Oct 19 2009 8:25 AM by Calculated Risk Blog
    From the Telegraph: [T]he Financial Services Authority ... plans to tighten up regulation and crack down on risky lending ... The FSA's Mortgage Market Review, published tomorrow, will focus on the third of the market considered "higher risk". ... Among the report's proposals, the financial regulator is expected to call for an end to self-certification mortgages and rule that responsibility for income verification be transferred from mortgage brokers to lenders. ... Second charge and buy-to-let mortgages, neither of which are regulated by the FSA, are expected to be brought under its supervision. In addition, sub-prime, interest-only, and 125pc mortgages will all be subjected to closer scrutiny and higher capital requirements. The terms are different in the U.K.: "Self certification" is stated income, "second charge" is a second mortgage, and "buy-to-let" is a rental unit. Subprime, interest only (IO) and 125 percent loan-to-value (LTV) are the same. There is no purpose for self certification (stated income) loans and these should be banned everywhere. Self certification means "buyer underwritten" as opposed to "lender unwritten" - and that makes no sense. Tanta wrote a couple of great posts on this in 2007: and . About time ...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:25 AM » HUD Inspector General's Report on FHA Lender Approval Process
    Published Mon, Oct 19 2009 8:25 AM by Calculated Risk Blog
    Just a follow-up to the previous post - here is the HUD Inspector General's on the FHA single-family lender approval process (ht MrM) Click on graph for larger image in new window. This graph from the Inspector General's report shows the number of approved FHA lenders by year. In 2008 there were 3,297 lender applications approved by the FHA, more than triple the number in 2007. And 2009 is on pace for a similar number of approvals as 2008 (another 3,000+ lenders). From the report: Congressional concerns brought about in part by media coverage has raised concerns that former subprime lenders and brokers are obtaining approval to participate in the FHA program and that they will be responsible for FHA insurance of loans to people unlikely to make their payments. Our audit objective was to determine whether the application process for Title II provided effective controls to ensure approval of only those lenders that complied with FHA requirements ... And from the results: Finding 1: FHA's Lender Approval Process Did Not Ensure That Only Eligible Applicants Were Approved FHA's lender application process was not adequate to ensure that all of its lender approval requirements were met. This condition occurred because FHA control procedures had been enhanced and automated to handle the recent large increase in the number of lenders applying for the FHA program.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
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