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  • Fri, Apr 16 2010
  • 5:34 PM » Kanjorski and Capito Introduce Bills to Extend USDA’s Rural Home Loan Guarantee Program
    Published Fri, Apr 16 2010 5:34 PM by National Council of State Housing Agencies
    On April 14, Congressman Paul Kanjorski (D-PA), Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, read more
    Click Here to Read the Full Article

    Source: National Council of State Housing Agencies
  • 12:53 PM » March State Unemployment Rates: New Record Highs in California, Florida, Georgia and Nevada
    Published Fri, Apr 16 2010 12:53 PM by Calculated Risk Blog
    From the BLS: Regional and state unemployment rates were little changed in March. Twenty-four states recorded over-the-month unemployment rate increases , 17 states and the District of Columbia registered rate decreases, and 9 states had no rate change, the U.S. Bureau of Labor Statistics reported today. Forty-four states and the District of Columbia recorded jobless rate increases from a year earlier, 5 states had decreases, and 1 state had no change. ... Michigan again recorded the highest unemployment rate among the states, 14.1 percent in March. The states with the next highest rates were Nevada, 13.4 percent; California and Rhode Island, 12.6 percent each; Florida, 12.3 percent; and South Carolina, 12.2 percent. North Dakota continued to register the lowest jobless rate, 4.0 percent in March, followed by South Dakota and Nebraska, 4.8 and 5.0 percent, respectively. The rates in California, Florida, and Nevada set new series highs, as did the rate in Georgia (10.6 percent). emphasis added Click on graph for larger image in new window. This graph shows the high and low unemployment rates for each state (and D.C.) since 1976. The red bar is the current unemployment rate (sorted by the current unemployment rate). Fifteen states and D.C. now have double digit unemployment rates. New Jersey and Indiana are close. Four states and set new series record highs: California, Florida, Nevada and Georgia.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 11:04 AM » Consumer Sentiment Turns Down in April
    Published Fri, Apr 16 2010 11:04 AM by WSJ
    Consumers grew gloomier in the middle of April despite a better-looking job market, according to a report released Friday. The University of Michigan/Reuters consumer sentiment index’s preliminary reading for April fell to 69.5, from a final March reading of 73.6. The index was the lowest since November 2009. Economists surveyed by Dow Jones Newswires had expected the mid-April index to rise to 75.0. The mid-April current conditions index fell to 80.7 from 82.4 in late March, and the expectations index dropped to 62.3 from 67.9. The expectations index is at its lowest since March 2009. Consumer economic attitudes generally are driven by labor markets. The high March jobless rate of 9.7% may be holding down spirits even though on April 2 the government reported that payrolls have finally begun to grow again, with March jobs up 162,000. Within the Michigan survey, the April one-year inflation expectations reading was 2.9% versus 2.7% at end-March and the five-year inflation reading remained at 2.7%.
  • 9:31 AM » Did You Know: Foreclosure Rates Among Homeowners with IDAs
    Published Fri, Apr 16 2010 9:31 AM by Google News
    Did you know that low-income home buyers with individual development accounts (IDAs) have better homeownership outcomes than other low-income households?
  • 9:15 AM » Congress restores unemployment benefits that were cut off
    Published Fri, Apr 16 2010 9:15 AM by Washington Post
    Congress agreed Thursday to restore jobless benefits to hundreds of thousands of Americans whose unemployment checks were cut off during a partisan debate over whether the cost should be added to the federal deficit, and President Obama signed it into law hours later.
    Click Here to Read the Full Article

    Source: Washington Post
  • 9:15 AM » Economist's Commentary: Metro-Area Housing Equity, Part Two
    Published Fri, Apr 16 2010 9:15 AM by Google News
    Despite the national scope of the housing downturn, the latest equity picture reminds us that real estate is incredibly local.
  • 9:00 AM » When right-to-rent meets principal reduction
    Published Fri, Apr 16 2010 9:00 AM by Reuters
    What happens when you cross with , and turn the whole thing into an entirely voluntary private-sector program with no government involvement whatsoever? It might look a little bit like , a for-profit company which has a very interesting idea for keeping people in their homes. The details can be found : the core of the scheme is where AHP persuades a lender to accept a short sale on a home. That’s the principal-reduction bit; the right-to-rent bit then kicks in when the buyer of the home — an AHP client, along with the seller — agrees to rent back the home to the former owner at a low, affordable rate which can’t be more than one-third of the tenant’s income. Rent increases by 5% annually for five years; at any point, the tenant has the option to buy back the home at a predetermined price which rises year by year; tenants get financial counseling to enable them to do that. The buyer can sell the home at any point in the first five years subject to the existing lease and option; after that, it’s put on the market and any profits over and above the option price get split equally between the buyer and the tenant. If everything goes according to plan, the buyer makes healthy returns: one financial projections sheet which foresees returns in the low double digits. And the homeowner ends up buying back their own home for much less than they originally bought it for. Meanwhile, AHP makes relatively modest fees of a few thousand dollars along the way. I don’t know much about American Homeowner Preservation, and their website could use a bit of work. But in principle, I think there’s a very good idea here. Any bank dealing with AHP is going to want to make very sure they’re getting a genuine market rate for the house in question, but so long as that’s the case, and the bank is open to short sales in principle, this looks like a win-win for all concerned. The owner gets to stay in their house, the bank gets to avoid the expense of foreclosure proceedings, and the investor gets...
  • 9:00 AM » Remodeling a Home Built Before 1978 Requires a Certified Lead Contractor
    Published Fri, Apr 16 2010 9:00 AM by Google News
    Getting the lead out of your home may be tough to do, according to the National Association of Home Builders (NAHB). We've known for a long while now that lead paint is hazardous to our health. Lead paint can be very dangerous to children if they inhale or ingest it. It can cause damage to their brains and nervous systems. However, removing it may be difficult.
  • 9:00 AM » BofA Beats Estimates on Merrill Revenue
    Published Fri, Apr 16 2010 9:00 AM by Business Week
    Bank of America Corp., the largest U.S. lender, posted its first profit in three quarters as the company reaped gains from Merrill Lynch & Co.’s investment banking and provisions for loan losses declined.
    Click Here to Read the Full Article

    Source: Business Week
  • 8:27 AM » WaMu Examiner Ridiculed, Called "Housing 'bubble' boy"
    Published Fri, Apr 16 2010 8:27 AM by Calculated Risk Blog
    From Jim Puzzanghera at the LA Times: Federal banking examiners found serious problems at Washington Mutual Bank at least five years before its 2008 collapse, but their supervisors showed little concern ... During those five years, examiners constantly warned of "less than satisfactory" loan underwriting, the "horrible performance" of its subprime-backed mortgage securities and the failure of WaMu executives and federal regulatory supervisors to do much about it. One examiner said he was derided by colleagues as "the housing 'bubble' boy" for his "gloom and doom" predictions for some risky loans, and another complained that critics of subprime loans were called "chicken little." ... Former OTS Director John Reich, who served from 2005 to 2009, referred to WaMu Chief Executive Kerry Killinger as "my largest constituent" in a 2007 e-mail. That attitude pervaded the upper levels of the agency ... Once again the field examiners did their job, but their efforts were ridiculed. I was asked by a reporter a couple of years ago who was to blame for the housing bubble, and I said the list is long, but it starts with the regulators ... This photo from 2003 shows two regulators: John Reich (then Vice Chairman of the FDIC and later at the OTS) and James Gilleran of the Office of Thrift Supervision (with the chainsaw) and representatives of three banker trade associations: James McLaughlin of the American Bankers Association, Harry Doherty of America's Community Bankers, and Ken Guenther of the Independent Community Bankers of America.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:27 AM » State Tax Revenue Stabilize in 2010
    Published Fri, Apr 16 2010 8:27 AM by WSJ
    State taxes continued to stabilize in the first two months of the year in a sign that government finances, though still weak, have begun to stabilize from the freefall that characterized much of the past year, according to a survey. Preliminary data show that 45 states saw combined tax revenues fell 2.2% in the first two months of 2010 versus the same period a year ago, according to a survey expected to be released today by the Nelson A. Rockefeller Institute of Government at the State University of New York . While declines in the first two months of the came after a year in which state and local taxes fell more than they have in a generation, there are signs that tax revenue declines are abating. California’s controller reported that March tax collections were 6% above earlier projections. A separate report released Wednesday by the National Conference of State Legislatures showed that 42 states project their revenues will grow in the fiscal year that ends in June 2011.
  • Thu, Apr 15 2010
  • 3:52 PM » NAHB Builder Confidence increases in April
    Published Thu, Apr 15 2010 3:52 PM by Calculated Risk Blog
    The increase this month was driven by traffic of prospective buyers and current sales - and this was the last month that buyers can take advantage of the housing tax credit - so this increase was no surprise. Note: any number under 50 indicates that more builders view sales conditions as poor than good. 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) was at 19 in April. This is an increase from 15 in March. The record low was 8 set in January 2009. This is very low - and this is what I've expected - a long period of builder depression. The HMI has been in the 15 to 19 range since May 2009 . This second graph compares the NAHB HMI (left scale) with single family housing starts (right scale). This includes the April release for the HMI and the February data for starts (March starts will be released tomorrow). This shows that the HMI and single family starts mostly move generally in the same direction - although there is plenty of noise month-to-month. And right now they are moving sideways - at best. Press release from the NAHB: (TBA)
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 3:52 PM » Secondary Sources: Housing Poll, Consumers and Fed, Greece
    Published Thu, Apr 15 2010 3:52 PM by WSJ
    A roundup of economic news from around the Web. Gallup has a poll showing Americans getting more upbeat about the housing market. “Lower but stabilizing home prices combined with continued low mortgage interest rates have persuaded 72% of Americans that now is a “good time” to buy a house — essentially the same percentage as a year ago, but up 19 points from 2008. Americans’ expectations about housing prices have improved markedly from last year — potentially encouraging prospective buyers to take advantage of the current home-buying opportunity, and thereby making it easy for homeowners to sell. Thirty-four percent of Americans expect the average price of houses in their area to increase over the next year — up 12 points from last year, and the highest such expectations in Gallup’s monitoring since June 2007.” Tim Duy says that consumers appear to be recovery and that might make the Fed’s job harder. “The retail sales report was strong, pointing to both pent-up demand and sustainability. Yet the Fed remains on hold, realizing that a long, sustained period of high growth is necessary to soak up the un- and underemployed and relieved disinflationary pressures. Moreover, financial markets remains hobbled, leaving small firms in particular starved for credit. Still, FOMC members eye the balance sheet warily; makes any respectable central banker nervous. Faster than expected growth only makes them more nervous.” Felix Salmon points to a cool that allows you to look at potential scenarios facing Greece. “The stakes could barely be higher. Either Greece manages to implement its current plan, or it comes very close to spiraling out of control into devaluation and/or default. Maybe that’s why the EU isn’t insisting on high levels of conditionality in its rescue package: it knows that the Greeks themselves have every incentive to get this right. Which doesn’t, of course, mean that they’ll succeed.” Compiled by
  • 3:21 PM » Bank of America Said to Arrange $500 Million Loan CDO (Update2)
    Published Thu, Apr 15 2010 3:21 PM by Business Week
    Bank of America Corp. is arranging a $500 million collateralized loan obligation that will be managed by Symphony Asset Management LLC as leveraged-loan prices soar, according to people familiar with the transaction.
    Click Here to Read the Full Article

    Source: Business Week
  • 3:21 PM » Federal Government Needs Central Role in New Housing Finance System
    Published Thu, Apr 15 2010 3:21 PM by NAHB
    Press Release
  • 1:48 PM » Fed Says Economy Has Expanded "Somewhat"; OK But What Is Priced In?
    Published Thu, Apr 15 2010 1:48 PM by Google News
    Bloomberg is reporting The Federal Reserve said the economy expanded “somewhat” across most of the U.S. in March as consumer spending and manufacturing improved, signaling the recovery is broadening without gaining much speed. “Overall economic activity increased somewhat since the last report across all Federal Reserve Districts except St. Louis, which reported ‘softened’ economic conditions,” the Fed said today in its Beige Book business survey, published two weeks before the Federal Open Market Committee meets to set monetary policy. Fed Chairman Ben S. Bernanke and his colleagues are debating how and when to tighten credit, including whether to modify a pledge to keep interest rates very low for an “extended period.” Earlier today, Bernanke told lawmakers there are “significant restraints” on a recovery he said will be “moderate” over the coming quarters. “While labor markets generally remained weak, some hiring activity was evident, particularly for temporary staff,” according to the Beige Book. Consumer prices “generally remained level,” and producers had difficulty passing along increases in some raw materials, the Fed said. Eleven of 13 major categories showed increases in sales last month, led by a 6.7 percent advance at auto dealers. Purchases of building materials jumped 3.1 percent, the most since November 2007, and receipts at clothing stores increased by the most in a year. Vehicle sales increased in recent weeks in eight Fed regions, the central bank said. Reports earlier this month showed service industries expanded in March at the fastest pace since May 2006, while manufacturing grew at the quickest rate since July 2004. “Business services were mixed, with some signs of economic recovery,” the Fed said today. Manufacturing increased since the last report in most of the U.S. Four regions reported “strong demand” for temporary staffers, and in the Atlanta area, many companies kept increasing the number of hours for existing workers. U.S. employers added...
  • 1:48 PM » 4/15/10--Trading Commentary, ABX Volatility, WAMU in Maui
    Published Thu, Apr 15 2010 1:48 PM by www.fixedincomecolor.com
    *Trading desk commentary from 12th Streets own Brett Fitzgerald: We have seen increased demand in wrapped space as buyers size up solvent monolines (FSA and MBIA). FSA HELOCS making a strong move over the last couple of sessions. Decent block of CWHEL 07-B A covered $78a, which is helping to push FSA towards the magic 8 handle. We moved blocks of (MBIA and FSA) CES and HELOCS today with like bonds to offer on the follow. We have buyers sitting in the wings waiting to pounce on ABK paper in the M30s. Seasoned FGIC HELOC list tomorrow that should define how people analyze seasoned 2nd lien credit w/o available loan level information??? (aka_One time YO!)
    Click Here to Read the Full Article

    Source: www.fixedincomecolor.com
  • 1:32 PM » Looking at Morgan Stanley’s $8 Billion Real Estate Problem
    Published Thu, Apr 15 2010 1:32 PM by Google News
    On Wednesday, the reported that losses at a Morgan Stanley real-estate fund could wipe out nearly two-thirds of its $8.8 billion investments–likely the biggest dollar loss in the history of private-equity property funds. In this Anton Troianovski explains how this happened and why Morgan Stanley is in the process of starting another real-estate fund. Related:
  • 7:50 AM » Lawler: BoA and Chase on Second Mortgages
    Published Thu, Apr 15 2010 7:50 AM by Calculated Risk Blog
    The following report is from housing economist Tom Lawler: In a House Financial Services Committee meeting today on “Second Liens and Other Barriers to Principal Reduction as an Effective Foreclosure Mitigation Program, spokespersons from BoA, Citi, JPMorgan Chase, and Wells Fargo explained the potential dangers of broad principal reductions, as well as tried to dismiss the silly claim that many second mortgages have “virtually no value” because so many borrowers with seconds have total mortgage balances at or exceeding the value of the home collateralizing those mortgages. Below are some observations on BoA’s and Chase’s testimony. BoA provided a few interesting stats: of the 10.4 million first lien mortgages that it services, 15% of second mortgages owned by BoA, while 16% have second mortgages with other lenders. (Thus, 31% have second liens!). BoA also said that about 90% of BoA’s owned second-lien mortgage portfolio is made up of “standalone originations used to finance a specific customer need, such as education expenses or home improvements, with “(t)he remainder consists of piggy back (combo) loans originated with the home purchase.” BoA made this point to highlight that the vast bulk of its second mortgage lending was collateralized consumer credit lending, where the borrower’s ability to pay was a major factor behind extending the credit. Here is what BoA said about their second mortgage portfolio: “Most of our second loans continue to have collateral value, and of those where the second loan is underwater, a significant number are still performing. Indeed, out of 2.2 million second liens in Bank of America’s held for investment portfolio – only 91,000 seconds – about four percent – are (i) delinquent, (ii) behind a delinquent first mortgage and (iii) not supported by any equity.” BoA’s spokesperson vexed a number of investors in first-lien mortgages (or securities backed by such mortgages) by saying that in cases where the first and second are held by different...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 7:50 AM » Lagging Psychology at Turning Points
    Published Thu, Apr 15 2010 7:50 AM by The Big Picture
    Over the past few weeks, we’ve been debating the state of the economic recovery. The posts that have emphasized the shift in data towards the positive have generated a lot of pushback. This is something that I want to discuss in general terms — I want readers to not only understand my perspective, but to grasp what typically occurs heading into recessions and recoveries, into new bull and bear markets. Over the next week, I will put together a broad overview of the positives and negatives of the economy, looking at the risks and opportunities presented. For now, let’s discuss the sentiment that typically accompanies oscillating phenomena, such as markets or the economic cycle. Historically, the sentiment that occurs at inflection points are extremes. The are the result of the prior few years of economic/market activity. They lag the cycle — often quite significantly. Consider: • Humans have an unfortunate tendency of to overemphasize our most recent experiences. We extrapolate from what has already happened, rather than deduce based on what is occurring right now. • The analyst community is typically too bullish at tops, too bearish at bottoms. They extrapolate from the most recent data to infinity or zero. Hence, they miss the inflection points. • Very often, sentiment is a justification of recent action. Very often, equity buyers describe themselves as bullish after their purchase . The comments they make can be an attempt to reassure themselves. • Changing your viewpoint is a slow process. We remember what most recently rewarded us, and internalize that. After a period of economic expansion, we are slow to grasp the change for the worse. At the tail end of an ugly recession, we find it hard to imagine an imminent improvement. • Investors develop the equivalent of Muscle memory. During a bull market, every dip that was bought made us money. When the cycle changes, we are slow to perceive it. Bulls become out of phase with what is taking place, buying on the way down...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 7:50 AM » Flicker of Hope in Subprime Failings
    Published Thu, Apr 15 2010 7:50 AM by WSJ
    Subprime-mortgage delinquencies dropped for the first time in almost four years.
  • 7:50 AM » Homebuilder Bonds Recover From Subprime Losses: Credit Markets
    Published Thu, Apr 15 2010 7:50 AM by Business Week
    U.S. homebuilder bonds have recovered to levels last seen before the global credit freeze as investors gain confidence the economic recovery is strong enough to prevent defaults.
    Click Here to Read the Full Article

    Source: Business Week
  • 7:50 AM » Rural Home-Buyer Program Is Nearly Broke
    Published Thu, Apr 15 2010 7:50 AM by Business Week
    Rural Home-Buyer Program Is Nearly Broke
    Click Here to Read the Full Article

    Source: Business Week
  • 7:50 AM » JPMorgan Expects More Real Estate Loan Losses
    Published Thu, Apr 15 2010 7:50 AM by Seeking Alpha
    submits: As Mel Brooks said in History of the World, “It’s good to be the king.” JPMorgan () beat Wall Street expectations and reported solid results after their trading desks and iBanking groups brought in some big kills last quarter. The New York-based bank reported a quarterly profit of $3.3 billion, or 74 cents a share, compared with $2.1 billion, or 40 cents a share, a year earlier. Total revenue rose 5 percent to $28.2 billion for the quarter. iBanking earned $2.5 billion, up 50 percent from a year earlier. JPMorgan set aside $7 billion for loan losses in the quarter, down 30 percent from a year ago.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 7:50 AM » How loan servicers milk the foreclosure-prevention program
    Published Thu, Apr 15 2010 7:50 AM by Reuters
    If there’s one consistent villain in the tale of attempts to minimize home foreclosures, it’s the loan servicers. They lose paperwork, they foreclose on homes they have no right to foreclose on, they accept borrowers into modification programs while trying to foreclose on them at the same time, they deny borrowers a modification even when they shouldn’t, they’re impossible to get ahold of, their communication with borrowers is atrocious, they claim to be owed vastly more money than they actually are owed, and so on and so forth. Which is why it’s so depressing that servicers are actually the biggest winners of the way that the government is doing mortgage modifications — at the expense of homeowners, no less. , who is not giving up in his attempt to push principal reduction as a solution to the mortgage-modification problem, finds this in : “HAMP’s original emphasis on interest rate reduction, rather than principal reduction, benefits lenders and servicers at the expense of homeowners,” the report reads. “Lenders benefit from avoiding having to write down assets on their balance sheets and from special regulatory capital adequacy treatment for HAMP modifications. Mortgage servicers benefit because a reduction in monthly payments due to an interest rate reduction reduces the servicers’ income far less than an equivalent reduction in monthly payment due to a principal reduction. “Servicers are thus far keener to reduce interest rates than principal. The structure of HAMP modifications favors lenders and servicers, but it comes at the expense of a higher redefault risk for the modifications, a risk that is borne first and foremost by the homeowner but is also felt by taxpayers funding HAMP.” The explains: Servicers’ primary compensation is a percentage of the outstanding principal balance on a mortgage. Thus, principal reductions reduce servicers’ income, whereas interest reductions do not, and forbearance and term extensions actually increase servicers’ income because...
  • 7:50 AM » Proving Appraisal Adjustments
    Published Thu, Apr 15 2010 7:50 AM by www.orep.org
    Editor’s Note: Enjoy this “how to” on proving appraisal adjustments. This is Part One, Part Two will be published April 28th. Proving Appraisal Adjustments By Beverly A Bayer, SRA – Mvappraiser@yahoo.com When I began appraising, I asked my mentor what adjustments to use- he said, “Figure it out for yourself.” So I did. Here’s what I learned. When my [...]
  • 7:50 AM » Mortgage Defaults Drive Consumer Spending: Experts Weigh In
    Published Thu, Apr 15 2010 7:50 AM by CNBC
    I opened up a big can of debate Monday, when I repeated some chatter around that consumer spending might be juiced by all those folks not paying their mortgages. They have a little extra cash, so they're spending it at the mall.
  • 7:50 AM » NCSHA Urges FHFA to Establish Strong Affordable Housing Goals for Fannie and Freddie
    Published Thu, Apr 15 2010 7:50 AM by National Council of State Housing Agencies
    On April 12, NCSHA urged the Federal Housing Finance Agency (FHFA) to establish strong affordable housing goals for Fannie Mae and Freddie Mac in read more
    Click Here to Read the Full Article

    Source: National Council of State Housing Agencies
  • Wed, Apr 14 2010
  • 6:32 PM » Bills Introduced To Extend ‘Zero Down’ Home Loans
    Published Wed, Apr 14 2010 6:32 PM by Google News
    Coke Whitworth/Aurora Select for The Wall Street Journal Erick Moore used a no-money-down USDA-backed loan to buy this four-bedroom house outside Raleigh, N.C. The real-estate industry has two new allies in Congress in its push to keep alive one of the last remaining no-money-down mortgage programs: The Department of Agriculture’s Single-Family Housing Guaranteed Loan Program, which, as we wrote last month, is expected to exhaust its fiscal-year funding in coming weeks. Two members of the House–one from each party!-separately introduced bills that would raise fees on these USDA loans; the funds would be use to keep the program running. Neither program, put forth by Rep. Shelley Moore (R, W.Va.) and Rep. Paul E. (D, Pa.), places additional cost on the taxpayers. The next step is discussion at committee level before a final bill is moved to the House floor. That’s expected to happen quickly, given the money is quickly dwindling during the key spring selling season. Ms. Capito “believes they will be able to work out any differences,” according to a spokeswoman. The USDA wasn’t immediately available for comment Wednesday. As we’ve , the program, offering no-money-down loans in certain parts of the country for low- and middle-income borrowers, has become quite popular in , particularly with buyers in exurbs that have seen rapid development. Demand has also been fed by the government offering a tax credit to first-time buyers–big tappers of the USDA program. While some industry watchers criticize zero-down deals-they were a big factor in housing’s implosion-lenders consider this a safe bet because the USDA guarantees a percentage of the principal amount, up to 90%. That means the agency will pay should the borrower default. The USDA has previously said that last fiscal year’s foreclosure rate was 1.72%, below the Federal Housing Administration’s 3.32%. Borrowers also can’t make more than 115% of a county’s median income, keeping loans modest: The average USDA loan is $112...
  • 6:32 PM » Will Modification Efforts Diminish (or Just Delay) Price Declines?
    Published Wed, Apr 14 2010 6:32 PM by Google News
    New efforts to modify mortgages by reducing loan balances could limit home-price declines, but it could also take longer for the housing market to find a bottom, according to a new report. Analysts at Moody’s Investors Service have revised upward their home price outlook on account of the changes and now predict a 5% decline in home prices from the fourth quarter of 2009 instead of a 7% decline, as measured by the Standard & Poor’s/Case-Shiller index. But while declines may be less severe, the changes will also increase the amount of time that it takes for housing to hit bottom by around six months, to the second quarter of 2011. Last month, the Obama administration said it would offer additional incentives for banks and investors to reduce loan balances for borrowers that are underwater, or that owe more than their homes are worth. One program will allow investors who reduce loan balances to refinance underwater borrowers who are current on their mortgages into new, smaller loans backed by the Federal Housing Administration. Another will allow borrowers facing hardship who apply for a loan modification under the government’s Home Affordable Modification Program to be considered for a write-down. Before the changes were made, Moody’s analysts had predicted around 2.25 million homeowners this year to lose homes to foreclosure or short sale, where a home is sold for less than the amount owed. Now, Moody’s expects around 350,000 fewer distressed sales, and short sales will account for a higher number of those, which typically result in higher sale prices than foreclosures. Banks may be more willing to consider writing down principal balances than they were one year ago because of recent signs that prices are stabilizing, said FHA Commissioner David Stevens in testimony to a congressional panel on Wednesday. That stability has led lenders to “make more accurate calculations about the expected returns from principal write-downs,” he said in written testimony. But not...
  • 6:32 PM » Treasury commences overhaul of Fannie Mae, Freddie Mac
    Published Wed, Apr 14 2010 6:32 PM by Washington Post
    Nineteen months after the government seized mortgage finance giants Fannie Mae and Freddie Mac in what has become the costliest bailout of the financial crisis, the Treasury Department on Wednesday began the process of overhauling them.
    Click Here to Read the Full Article

    Source: Washington Post
  • 3:26 PM » Fed's Beige Book: Economic activity increased "somewhat"
    Published Wed, Apr 14 2010 3:26 PM by Calculated Risk Blog
    From the Federal Reserve: Overall economic activity increased somewhat since the last report across all Federal Reserve Districts except St. Louis, which reported "softened" economic conditions. Districts generally reported increases in retail sales and vehicle sales. On Real Estate: Residential real estate activity increased, albeit from low levels, in most Districts , with the exceptions of St. Louis, where it was mixed, and San Francisco, where it was flat. Contacts in Philadelphia, Cleveland and Kansas City expressed concern about whether sales would continue to grow after the expiration of the first-time home buyer tax credit. New York, Kansas City, Dallas and San Francisco noted sluggish sales for high-end homes. Home prices were stable across most Districts, but decreased in parts of the New York and Atlanta Districts. Residential construction activity increased slightly in New York, Atlanta, St. Louis, Minneapolis and Dallas, but remained weak in Cleveland, Chicago and San Francisco. Commercial real estate activity was slow across the nation. Notable exceptions were Richmond, which saw an uptick in commercial leasing, and Dallas, where the sector was mixed and might be nearing bottom. In Boston, leasing activity consists largely of renewals, with many renewing tenants leasing less space. Manhattan Class A office rents were down 20 percent to 25 percent year over year. Contacts in Philadelphia, Richmond, Kansas City and Dallas expressed concern that lease concessions from landlords were putting downward pressure on rents. Commercial construction continued to be weak in most Districts. Cleveland saw some development in the energy and industrial segments.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 11:47 AM » Political Tide Turns Against Aggressive Mortgage-Modifications
    Published Wed, Apr 14 2010 11:47 AM by Google News
    Republicans used Tuesday’s hearing of the House Financial Services Committee as an occasion to fulminate against what they see as the unfairness of many programs to avert foreclosures. That was no surprise. Bloomberg News Rep. Jeb Hensarling, a Texas Republican, questions U.S. Treasury Secretary Timothy Geithner in April 2009 during a hearing of the Congressional Oversight Panel for TARP. But the Democrats’ response was interesting: They didn’t fight back very hard. The mild response suggests that Democrats are heeding the risk that voters will punish politicians who seem too inclined to back bailouts, whether those bailouts benefit banks or struggling borrowers. Here’s a sample of the Republicans’ attack, one sure to resonate on the campaign trail this fall: The Obama administration’s Home Affordable Modification Program, or HAMP, said Rep. Jeb Hensarling, a Texas Republican, is: Yet another chapter in ‘America: The Bailout Nation,’ as coauthored by the President and by Speaker (Nancy) Pelosi. It takes $50 billion from taxpayers or borrows the money from the Chinese to bail out banks that made bad loans, and to bail out many who bought more home than they could afford, speculated in residential real estate or used their home equity as an ATM machine. We must remember that 94% of Americans own their home outright, rent or are current on their mortgage, and they are being asked to bail out the other 6%. It’s a policy that says to the citizens who work hard, who live within their means, who save for a rainy day, ‘You are a sucker.’ When you are struggling to pay your own mortgage, you shouldn’t be forced to pay your neighbors as well. Rep. Barney Frank, the Massachusetts Democrat who is chairman of the committee, retorted that bailouts began under the administration of a Republican, President George W. Bush. But, Rep. Frank added a bit later, “not everybody who’s in default is going to get help or should be helped…. When you’re talking about people who had a loan and then...
  • 11:47 AM » 4/14/10--Foreclosure Prevention, 2nd Lien Principal Pushback
    Published Wed, Apr 14 2010 11:47 AM by www.fixedincomecolor.com
    *From this morning's WSJ, article, Foreclosure-Prevention Program Struggles to Make Impact. "Republicans are attacking the administration for what they say is the unfairness of HAMP. At a hearing of the House Financial Services Committee Tuesday, Rep. Jeb Hensarling, a Texas Republican, estimated that 94% of American households own their homes free of mortgage debt, are current on their mortgage payments or are renting. "They are being asked to bail out the other 6%," Mr. Hensarling said. "It's a policy that says to the citizens who work hard, who live within their means, who save for a rainy day: You are a sucker."
    Click Here to Read the Full Article

    Source: www.fixedincomecolor.com
  • 8:14 AM » Household Debt as a Percent of GDP
    Published Wed, Apr 14 2010 8:14 AM by Calculated Risk Blog
    From Neil Irwin at the WaPo: "There have always been Wall Street economists wanting to cheerlead the recovery, and quick to jump on any piece of news showing a great boom is around the corner," said Kenneth Rogoff, a Harvard economist. "The data so far are more consistent with a very moderate recovery." There are a number of reasons that would be the case. American households are trying to reduce debt to stabilize finances. But they are doing so slowly, with total household debt at 94 percent of gross domestic product in the fourth quarter down just slightly from 96 percent when the recession began in late 2007. ... "When you have a recession that's amplified by a deep financial crisis, the recovery is slower and more painful, much akin to recovering from a heart attack," said Rogoff ... "It just takes time. If you look at a typical recovery, we would be growing at 7 or 8 percent by now given the depth of our fall." Click on graph for larger image. This graph, based on the Federal Reserve Flow of Funds data, shows household debt as a percent of GDP through Q4 2009 (note: I removed a few non-profit categories). Note that the household debt problem is mostly a mortgage debt problem. Mortgage debt as a percent of GDP started really picking up in 2001 and 2002 and continued to increase sharply through 2006. There was also a sharp increase in mortgage debt in the late '80s. That was partially associated with Tax Reform Act of 1986 that only allowed mortgage debt to be tax deductible, and excluded interest on all personal loans including credit card debt. There was also a smaller housing bubble in the late '80s that was associated with the increase in mortgage debt. The second graph shows the annual change in the percent of household mortgage debt. There was some increase in the late '90s associated with the booming economy and stock bubble wealth effect. But the real boom in mortgage debt started in the 2nd half of 2001...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:14 AM » Taxpayers Get Larger IRS Refunds
    Published Wed, Apr 14 2010 8:14 AM by Business Week
    April 12 (Bloomberg) -- Bloomberg's Michael McKee reports on the increase in U.S. taxpayer refunds from the Internal Revenue Service. (Source: Bloomberg)
    Click Here to Read the Full Article

    Source: Business Week
  • 8:14 AM » Commercial REITs: Beaten Down, Bid Up
    Published Wed, Apr 14 2010 8:14 AM by WSJ
    Contrarian investors see a rebound for companies like iStar as the financing environment improves, but some analyst think the rally is overdone.
  • 8:14 AM » Banks Resist Plans to Reduce Mortgage Balances
    Published Wed, Apr 14 2010 8:14 AM by NY Times
    An official at JPMorgan Chase said mortgage reductions could reward households for taking on more debt than they could afford and was simply unworkable.
  • 8:14 AM » 10 Key Charts to See Before You Buy or Sell a Home
    Published Wed, Apr 14 2010 8:14 AM by Seeking Alpha
    submits: Disclosure: no positions
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 8:14 AM » Morgan Stanley Loses $5.4B in Real Estate Fund - Biggest Loss in History
    Published Wed, Apr 14 2010 8:14 AM by Seeking Alpha
    submits: Here's a story for the decade. Morgan Stanley's () Msref VI, an $8.8 billion real estate fund, lost $5.4 billion, the biggest loss in the history of private real estate equity investing. This story is from and it is worth a read. It isn't clear from the article, but they bought many of their properties in 2007. I don't have to tell you how insane of a move that was when the U.S. housing market was collapsing. One of their big misses was the Eurotower in Franfurt which, ironically, is the home of the European Central Bank.
    Click Here to Read the Full Article

    Source: Seeking Alpha
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