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  • Wed, Apr 14 2010
  • 8:14 AM » Elizabeth Warren Directs Mortgage Ire at Banks: Why Not Agencies?
    Published Wed, Apr 14 2010 8:14 AM by Seeking Alpha
    submits: Elizabeth Warren has been all over the media of late. This lady is a ‘hot property’. And with good reason. She has all of the credentials. Harvard Professor, eight books, the Chairperson of the Congressional Oversight Panel, she’s on the list of the top fifty “Most influential lawyers in America” her name even has come up as a candidate for the Supreme Court. Not only does she have the credentials, she has a look. There is something about her that when she talks to the camera you get a warm feeling and think, “Finally there is someone who is making some sense of this mess!”
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 8:13 AM » WaMu-CRA Link Pushed Down Memory Hole
    Published Wed, Apr 14 2010 8:13 AM by Seeking Alpha
    submits: Washington Mutual, which at one time was the sixth-largest depository institution in the U.S., became the biggest bank failure in U.S. history when it was seized in September 2008 and sold to J.P. Morgan Chase & Co. (). Our legislators are now trying to figure out what happened, but are still mystified: 'Details Scarce on WaMu Failure' reads Tuesday's headline. In another WSJ , Senator Carl Levin notes: WaMu had poor policies, poor controls, inadequate oversight of its loans, it turned out toxic mortgages that sunk the bank, devastated homeowners and polluted the financial system like a poison.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 8:12 AM » As Deadline Looms, 10 Million Visit Tax Credit Web Site
    Published Wed, Apr 14 2010 8:12 AM by NAHB
    Press Release
  • 8:11 AM » 10 foreclosures for every home saved
    Published Wed, Apr 14 2010 8:11 AM by CNN
    The Obama administration's mortgage-modification program is not keeping pace with the deluge of foreclosures hitting the market, a government watchdog found.
  • 8:10 AM » JPMorgan Tops Profit, Revenue Forecasts
    Published Wed, Apr 14 2010 8:10 AM by CNBC
    The bank handily beat profit and revenue expectations for the first quarter, with strength coming from investment banking and fixed-income trading.
  • 8:10 AM » U.S. Watchdog Says Mortgage Modifications Too Slow
    Published Wed, Apr 14 2010 8:10 AM by CNBC
    U.S. Watchdog Says Mortgage Modifications Too Slow
  • 8:10 AM » Full Recovery for US 'Long Way Off': Fed Officials
    Published Wed, Apr 14 2010 8:10 AM by CNBC
    Full Recovery for US 'Long Way Off': Fed Officials
  • 8:10 AM » Housing 'Turned Corner', Recovery Fragile: HUD Head
    Published Wed, Apr 14 2010 8:10 AM by CNBC
    Housing 'Turned Corner', Recovery Fragile: HUD Head
  • Tue, Apr 13 2010
  • 7:58 PM » DataQuick: SoCal house sales increase in March, "propped up" with FHA-insured loans
    Published Tue, Apr 13 2010 7:58 PM by Calculated Risk Blog
    From DataQuick: A total of 20,476 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 33.3 percent from 15,359 in February, and up 5.0 percent from 19,506 in March 2009, according to MDA DataQuick of San Diego. ... “It’s a reflection of just how grim things got, that we’ve now had almost two years of sales gains and we’re still 18 percent below the sales average. ...” said John Walsh, MDA DataQuick president. ... Foreclosure resales accounted for 38.4 percent of the resale market last month, down from 42.3 percent in February, and down from 54.8 percent a year ago. The all-time high was in February 2009 at 56.7 percent. ... Meanwhile, Uncle Sam continues to prop up lending for many low-to mid-priced homes. Government-insured FHA loans, a popular choice among first-time buyers, accounted for 38.6 percent of all mortgages used to purchase Southland homes in March. Absentee buyers – mostly investors and some second-home purchasers – bought 21.3 percent of the homes sold in March. Buyers who appeared to have paid all cash – meaning there was no indication that a corresponding purchase loan was recorded – accounted for 27.1 percent of March sales. In February it was a revised 30.0 percent – an all-time high. The 22-year monthly average for Southland homes purchased with cash is 13.8 percent. The SoCal market is mostly first time homebuyers using FHA-insured loans, and investors paying cash. Note that foreclosure resales don't include short sales - so the 38.4% foreclosures is not all of the distressed sales (probably over 50% in SoCal).
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 7:58 PM » Treasury Official Says Housing Goals Not to Blame for Fannie, Freddie Failures
    Published Tue, Apr 13 2010 7:58 PM by Google News
    Poor management decisions and weak regulation—and not government-mandated affordable housing goals—resulted in the collapse of mortgage-finance giants Fannie Mae and Freddie Mac, a top Treasury official said on Tuesday. While the Obama administration won’t propose legislation revamp Fannie, Freddie and the broader housing-finance market until next year, the remarks could offer insight into the administration’s thinking over how to repair the broken housing-finance sector. Republicans have criticized affordable housing lending goals, which were increased first by the Clinton administration and later by the Bush administration, for steering the companies into making riskier loans “This claim simply is not supported by the facts,” said Assistant Treasury Secretary Michael Barr in a speech before the Mortgage Bankers Association on Tuesday. Fannie and Freddie, facing the loss of market share to Wall Street lending operations, “relaxed standards for the same reasons other market participants relaxed standards: old-fashioned greed and flawed regulation.” Mr. Barr said that management decisions to join in a “destructive race” to lower standards in an effort compete with Wall Street, which was buying increasingly risky loans from unregulated nonbank lenders to package and sell as securities, ultimately doomed Fannie and Freddie. The government took over Fannie and Freddie in September 2008 as rising loans defaults threatened to wipe out thin capital reserves. So far, the Treasury has injected $126 billion to keep the companies afloat, and it has pledged to back unlimited losses for the next three years.
  • 7:57 PM » Wells Fargo Drops Lawsuit Against Mortgage Borrower
    Published Tue, Apr 13 2010 7:57 PM by Google News
    Sandy Huffaker for The Wall Street Journal Charissa Kolich Wells Fargo & Co. said Tuesday that it has dropped a lawsuit against Charissa Kolich, a San Diego food-service manager we earlier this week. When Ms. Kolich lost her condo to foreclosure last year, she thought that at least she was free of mortgage bills. But Wells Fargo, which holds a home-equity loan made five years ago to Ms. Kolich, last month filed a suit against her in the Superior Court of California, San Diego County, seeking the nearly $72,000 it said she owed on that second mortgage. A Wells Fargo spokeswoman says the bank dropped that suit because it learned, through , that Ms. Kolich has cancer and thus faces a financial hardship. Both sides blamed the other for a breakdown in communication. Wells Fargo said that Ms. Kolich’s lawyers prevented the bank from finding out about her situation by getting a cease-and-desist order to stop efforts to collect on the loan. “Ms. Kolich’s situation is a prime example of why customers need to provide their lenders all the necessary information so informed decisions can be made on their accounts,” the Wells spokeswoman said. “Had Ms. Kolich not legally prevented us from contacting her and we had known about her condition, we never would have filed this lawsuit. We wish her all the best.” Alleda Harrison, a lawyer representing Ms. Kolich, shot back: “Wells Fargo had all the information they needed and were completely informed. They received a cease and desist as to their collection efforts as they were harassing our client in their attempt to collect a debt. A cease and desist does not mean they are to ignore and not respond to our letters and phone calls. Their designated attorney chose to not respond.” The original purchase of Ms. Kolich’s condo was financed by a first and second mortgage in 2004, Ms. Harrison says, and Ms. Kolich refinanced that second mortgage in 2005 to lower the rate but didn’t take any cash out. California law generally protects the former...
  • 7:57 PM » Pols Attack One Another Instead of Mortgage Lenders
    Published Tue, Apr 13 2010 7:57 PM by Google News
    Associated Press Bachus (left) and Barney talking during a committee hearing on housing reform last month. Today’s hearing of the House Financial Services Committee was billed as an to grill big banks on their foreclosure-prevention efforts and especially their holdings of junior-lien mortgages, often seen as an obstacle to loan modifications. But it swiftly disintegrated into a squabble between Republican and Democrat members over the whole idea of using government incentives and pressure to get easier loan terms for struggling borrowers. Rep. Barney Frank, the committee chairman, a Democrat from Massachusetts, said the foreclosure crisis remains an “overhang” that blocks full recovery of the economy and thus must be addressed. Rep. Spencer Bachus of Alabama, the ranking Republican, then raised the “fairness” issue sure to resound during this fall’s electoral campaigns across the country. Government bailouts mean “responsible homeowners” are having to pay for rescues of “their less prudent neighbors,” he said. He also deplored government efforts to “coerce” banks into reducing mortgage principal for more borrowers. Delving into that kind of detail in directing the banks’ efforts is “a slippery slope,” Rep. Bachus said. He added: “The market needs to find its own footing,” without government intervention, he added. Rep. Jeb Hensarling, a Texas Republican, decried what he called “another chapter of ‘America: The Bailout Nation,’” a book he said was being written by President Obama and Rep. Nancy Pelosi of California, the House majority leader. “We must remember that 94% of Americans own their home outright, rent or are current on their mortgage,” Rep. Hensarling said, “and they are being asked to bailout 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. Frank testily...
  • 7:57 PM » Small Business Optimism "Very Low and Headed in the Wrong Direction”
    Published Tue, Apr 13 2010 7:57 PM by Google News
    If the US economy was about to reach "escape velocity" as Larry Summers says, small business optimism would not be in the gutter and sinking. Thus, proof that Larry Summers is in Fantasyland can be found in a NFIB report that shows . The National Federation of Independent Business Index of Small Business Optimism lost 1.2 points in March, falling to 86.8. The persistence of index readings below 90 is unprecedented in survey history. “The March reading is very low and headed in the wrong direction,” said Bill Dunkelberg, NFIB chief economist. “Something isn’t sitting well with small business owners. Poor sales and uncertainty continue to overwhelm any other good news about the economy.” The index has posted 18 consecutive monthly readings below 90. In March, nine of the 10 Index components fell or were unchanged from February’s not-so-great readings. Employment While actual job reductions may have halted, plans to create new jobs remain weak. Over the next three months, 7 percent plan to reduce employment (down one point), and 15 percent plan to create new jobs (up two points), yielding a seasonally adjusted net negative 2 percent of owners planning to create new jobs, weaker than February and still more firms planning to cut jobs than planning to add. Capital Spending The frequency of reported capital outlays over the past six months fell two points to 45 percent of all firms, one point above the 35-year record low reached most recently in December 2009. Sales and Inventories The net percent of all owners (seasonally adjusted) reporting higher nominal sales in the past three months improved 1 point to a net negative 25 percent. Widespread price cutting continued to contribute to reports of lower nominal sales. The net percent of owners expecting real sales gains lost three points, falling to a net negative 3 percent of all owners, seasonally adjusted. Inflation The weak economy continued to put downward pressure on prices. Eleven percent of the owners reported...
  • 7:57 PM » Big Banks: Principal Forgiveness Will Cost You
    Published Tue, Apr 13 2010 7:57 PM by CNBC
    Big Banks: Principal Forgiveness Will Cost You
  • 7:57 PM » The Hidden Cost to Home Lenders of Low Pull-Through Rates
    Published Tue, Apr 13 2010 7:57 PM by
    GMAC wanted to cut the costs of having processors and underwriters work on loans that don't get funded. So it gave loan officers an incentive to do better up-front screening.
    Click Here to Read the Full Article

  • 10:39 AM » Live Blogging the WaMu Senate Hearing
    Published Tue, Apr 13 2010 10:39 AM by Google News
    “The worst managed business I had seen in my career.” That is how Washington Mutual’s former president described his company’s home loan division. The mortgage lending practices at the Seattle thrift take center stage at a Senate hearing this morning. The Senate Permanent Subcommittee on Investigations the loan fraud and generally risky and highly defective securitization practices in its mortgage business WaMu’s defense? Former CEO Kerry Killinger says he reigned in his company’s mortgage business and blames his thrift’s collapse on unfair and biased regulators who were willing to save Wall Street firms, but not his own. Deal Journal is live blogging the hearing. 9:40 am | by Michael Corkery Carl Levin, the Senate subcommittee chairmain, says the pane is investigating the financial crisis and come up with recommendations "protect Main Street from Wall Street." He's talking about securitized mortgages and credit default swaps. Is there anyone in Washington who isn't investigating the financial crisis? 9:46 am | by MIchael Corkery Levin: He's running through the cliff notes version of the financial meltdown...He offers one nice image of lenders producing polluted mortgages that were bottled and sold to investors who were unaware of the water quality. 9:49 am | by Michael Corkery Levin quotes WaMu Kerry Killinger saying he wanted his thrift to be the "Walmart of home mortgages," available to all Americans. In hindsight, that may not be the best choice of metaphor given that many of the people who got WaMu mortgage couldn't afford them. 9:55 am | by Michael Corkery Levin is running through the history of WaMu's subprime unit, Long Beach Mortgage. In a word, it is ugly. What is amazing is that Long Beach's problem began as early as 2005. Loans were going delinquent three months after being issued to home owners. But it was dismissed as an outlier, not a canary in the coal mine for the whole system. Oh well. 9:59 am | by Michael...
  • 10:23 AM » Trade Deficit increases in February
    Published Tue, Apr 13 2010 10:23 AM by Calculated Risk Blog
    The Census Bureau : [T]otal February exports of $143.2 billion and imports of $182.9 billion resulted in a goods and services deficit of $39.7 billion, up from $37.0 billion in January, revised. Click on graph for larger image. The first graph shows the monthly U.S. exports and imports in dollars through February 2010. On a year-over-year basis, exports are up 14% and imports are up 20%. This is an easy comparison because of the collapse in trade at the end of 2008 and into early 2009. This is the first time since late 2008 that imports are up a greater percentage than imports on a YoY basis as export growth appears to have slowed. The second graph shows the U.S. trade deficit, with and without petroleum, through February. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products. Import oil prices decreased slightly to $72.92 in February - but are up 86% from the low of one year ago in February 2009 (at $39.22). Oil import volumes declined in February. In general trade has been increasing, although both imports and exports are still below the pre-financial crisis levels. Exports boosted the economy over the last year, however it now appears that export growth has slowed. Imports are still increasing even with the lower oil deficit in February.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 10:23 AM » Geithner OP-ED: Financial Reform With Teeth
    Published Tue, Apr 13 2010 10:23 AM by US Treasury
    April 13, 2010 TG-637 Geithner OP-ED: Financial Reform With Teeth WASHINGTON – In an op-ed piece published in tomorrow's The Washington Post, U.S. Treasury Secretary Tim Geithner outlines the urgent need for strong financial reforms, noting that "the American people have suffered through too much to enact reform that does too little." To read the piece online: . The text of the piece follows: Financial reform with teeth By Timothy Geithner Tuesday, April 13, 2010; A17 America is close to turning the page on this economic crisis. While far too many Americans are still out of work and face deep economic hardship, we have now reported three quarters of positive growth and the beginnings of job creation. As the economy improves, we are winding down the Troubled Assets Relief Program, and Congress is moving toward enacting the strongest financial reforms since those that followed the Great Depression. In fact, we are repairing our financial system at much lower cost than anyone anticipated and expect to return hundreds of billions of dollars in available but unused TARP resources to the American people. That is a rare achievement in Washington. Our latest estimate conservatively puts the cost of TARP at $117 billion, and if Congress adopts the , the cost to American taxpayers will be zero. More broadly, we estimate the overall cost of this crisis will be a fraction of what was originally feared and much less than what was required to resolve the savings-and-loan crisis of the 1980s. The true cost of this crisis, however, will always be measured by the millions of lost jobs, the trillions in lost savings and the thousands of failed businesses. No future generation should have to pay such a price. It is simply unacceptable to walk away from this recession without fixing the system's basic flaws that helped to create it. Thankfully, signs of bipartisan support for action seem to be emerging in Washington, including for an independent consumer financial protection...
  • 8:36 AM » Real Test for Greece Yet to Come
    Published Tue, Apr 13 2010 8:36 AM by Google News
    Greece’s successful sale of treasury bills Tuesday shows the country can still borrow from capital markets despite its debt problems. But today’s auction was never in doubt: Greek officials have long said they have the cash to get through April. The real challenge comes in refinancing debts next month. Greece’s bankers sold 780 million euros in one-year treasury bills at 4.85% interest and 780 million euros in six-month bills at 4.55% interest, which is well below current market rates. That cash will help Greece pay off some two billion euros of short-term debt coming due. The deal also went well with investors, who were clamoring for six times more paper than was on offer, allowing Greece to borrow at relatively lower rates. Greek officials shouldn’t have to activate Europe’s newly-detailed rescue package just yet. The cost of insuring against a Greek sovereign default fell slightly, to $356,000 as of 11 a.m. in London compared with $366,000 on Monday, according to data provider CMA DataVision. But the real funding challenge comes in May, when a 8.5 billion euro bond comes due for repayment. (Greece also must repay a 8.2 billion euro bond on April 20.) Greece has been trying to woo Asian and U.S. investors to buy some $5 billion to $10 billion of longer-term debt, but it’s unclear how much enthusiasm the country can cook up. Every time investors buy Greece’s bonds, they fall in value. And even if Greece sails through May and even ends up activating Europe’s bailout package to be safe – as some believe will happen – this still doesn’t ensure it won’t eventually buckle beneath its mountain of debt. As some are now pointing out, that’s what happened to Argentina earlier this decade.
  • 8:35 AM » Mortgage investors see headway on 2nd-liens
    Published Tue, Apr 13 2010 8:35 AM by Reuters
    NEW YORK (Reuters) – On March 17, 2009, a group of mortgage bond investors worried about the losses they could suffer as a result of U.S. foreclosure prevention plans asked top bankers to share the pain by taking some write-downs on $450 billion in home equity loans. But the bankers said they would talk only after the investors first allowed modifications on their primary loans as prescribed under the Obama administration’s Home Affordable Modification Program, according to a trader who attended the meeting at the American Securitization Forum in New York. Thus began a year of frustration for the investors, such as asset manager BlackRock Inc <BLK.N>, who claim their rights as primary mortgage holders have been trampled by the foreclosure program that let second-lien holders off the hook. Most agreed that the program, known as HAMP, was good policy, but balked at who sustained losses and when. “It doesn’t make sense,” said Scott Simon, a managing director at Pacific Investment Management Co., in Newport Beach, California. “You’d think if you are first lien holder you’d be in first lien position.” More than a year later, investors whose losses would be lessened if banks took write-downs on second-lien mortgages are getting some attention, after being stonewalled by banks and regulators, according to the trader who attended the meeting with bankers. The change comes as they are being asked to help restore private credit to the U.S. housing finance system, which is costing taxpayers a bundle. Some $126 billion of government bailouts for top U.S. mortgage finance companies Fannie Mae and Freddie Mac has raised an awareness of the cost of defaults and loan modifications. And Fannie and Freddie have warned that they will continue to need further government support through 2010. The need of the deserted private mortgage finance market, where investors assume credit risks, has come into sharp focus as the Federal Reserve ended its support of U.S.-backed mortgage bonds...
  • 8:34 AM » NAR Calls for Implementation of Independent Valuation Protection Institute (IVPI)
    Published Tue, Apr 13 2010 8:34 AM by Google News
    On April 6, 2010, the National Association of REALTORS (NAR)® President Vicki Cox Golder sent a letter to Federal Housing Finance Agency (FHFA) Interim Director Edward J. DeMarco asking that the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac,...
  • 8:34 AM » Huge Reserve Need Seen for Home Equity Lending
    Published Tue, Apr 13 2010 8:34 AM by
    Bank of America, JPMorgan Chase and Wells Fargo may have to set aside an additional $30 billion to cover possible losses on home equity loans.
    Click Here to Read the Full Article

  • 8:34 AM » Nonagency MBS Rally on Hamp Fix
    Published Tue, Apr 13 2010 8:34 AM by
    U.S. home loan bonds without government-backed guarantees rallied for a second week, after declining as other credit markets gained in February and March.
    Click Here to Read the Full Article

  • 8:19 AM » Report: Commuting Costs offset Lower House Prices
    Published Tue, Apr 13 2010 8:19 AM by Calculated Risk Blog
    Something a little different ... From the Boston Globe: People who move to an outlying Boston suburb to find affordable housing or to get more house for their money often sacrifice the savings to higher transportation costs, according to a study to be released today by a national planning and land-use organization. The report, by the Urban Land Institute, is the first to quantify by community not only commuting costs, but the price of daily transportation around often-sprawling suburbs. Here is the on Boston: This report analyzes the combined costs of housing and transportation for neighborhoods, cities, and towns throughout a Boston regional study area that extends south to Providence, Rhode Island; west to Worcester, Massachusetts; and northeast to Dover, New Hampshire. Our analysis finds that the typical household in the study area spends upwards of $22,000 annually on housing, which represents roughly 35 percent of the median household income ($68,036). With transportation costs for the typical household reaching nearly $12,000 annually, the combined costs of housing and transportation account for roughly 54 percent of the typical household’s income. Similar studies conducted for the San Francisco Bay Area and the Washington, D.C., region have found average housing and transportation cost burdens of 59 percent and 47 percent, respectively. When gasoline prices rose to over $4 per gallon in 2008, it really crushed some exurban areas that were already hard hit by the housing bust. The old saying "Drive to you qualify" doesn't really make sense if the transportation costs offset the lower house prices.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:19 AM » Optimism at Small Businesses Falls
    Published Tue, Apr 13 2010 8:19 AM by WSJ
    Economists may be debating when the recession ended, but small business owners report little pick up in their sales or confidence in March, according to a report released Tuesday. The weak readings explain why small businesses remain reluctant to hire. The Small Business Optimism Index lost 1.2 points to 86.8 in March, said the National Federation of Independent Business . The NFIB noted that nine of the 10 components declined or failed to contribute to an increase in the top-line index. The lone improvement came in the subindex covering expected business conditions. It rose 1 percentage point to -8%. The report said 34% of respondents said “weak sales” were their top business problem. The subindex on earnings trends fell 4 points to 43%, and sales expectations subindex dropped 3 points to -3% in March. The lack of revenue may be holding back job growth. The March employment index fell 1 point to -2%. The NFIB said businesses may be finished with layoffs, but companies will only add workers if owners think “new hires can generate enough additional business to pay their way.” Earlier in April, payroll giant ADP reported that its jobs survey showed small businesses — with 49 or fewer employees — cut 12,000 jobs in March. Weak sales are also leading to inventory reductions. The inventory index was flat at -7%, and the NFIB said more firms cut stockpiles than added to them in March. Inflationary pressures were nearly nonexistent last month. Seasonally adjusted, the net percentage of owners raising prices was -20%, up one point from February. The drop in confidence among small business owners comes as economists are debating when the recession ended. The National Bureau of Economic Research said Monday it was still “premature” to set a date for the economy’s trough. The NFIB reports suggest that while the overall economy is growing, pockets of pessimism remain.
  • 8:19 AM » Banks Deploy Armies of Staff to Mortgage-Default Front
    Published Tue, Apr 13 2010 8:19 AM by Google News
    In testimony before the House Financial Services Committee Tuesday, big banks will be competing with one another to show how eager they are to prevent foreclosures. The includes some startling numbers. Wells Fargo says it has 17,400 people involved in “home preservation,” or efforts to avert foreclosures. That’s up by 10,000 since the beginning of 2009. J.P. Morgan Chase says it has more than 16,000 employees “dedicated to helping struggling customers.” That’s nearly half of the bank’s total home-lending staff. Last year, the bank said, it hired more than 3,580 loan-modification counselors. By the end of April, J.P. Morgan said, it will have 51 centers around the country “where struggling borrowers around the country can meet face to face with trained counselors.” Bank of America Corp. also says it has more than 16,000 people “dedicated to default management and loan-modification efforts.” It adds that they are “working tirelessly to assist customers through a difficult and emotional process.” The bank says it gets 125,000 calls a day related to mortgage distress. Despite the rapidly growing staff numbers–or perhaps because of the resulting bureaucracy and confusion –homeowners continue to bombard journalists with examples of lenders giving them the runaround or making . Barbara Desoer, president of Bank of America’s home-loan operation, says in her prepared testimony that the bank has “learned a great deal” over the past two years and is getting better at foreclosure prevention but “we understand the frustration those growing pains have caused.” The job is also trying for many of the call-center employees, who often deal with extremely irate customers and sometimes with ones threatening suicide. A call-center manager at one of the big banks recently told me that her employees are never allowed to hang up on a customer, no matter how abusive. She also said it’s easier to deal with the furious ones than with those who are weeping. Please follow me for housing news on...
  • Mon, Apr 12 2010
  • 5:18 PM » PIMCO's Simon on a Post-Fed MBS Market
    Published Mon, Apr 12 2010 5:18 PM by Calculated Risk Blog
    Scott Simon, Managing Director at PIMCO . A few excerpts: We are unlikely to see a significant market disruption in the Agency market stemming from the Fed’s retreat. ... if and when we see mortgages cheapen, we expect to see private institutions stepping in to buy. Even a 15 basis point move could spark a flurry of buying. Therefore, we don’t expect a major widening of mortgage spreads ... And some Q&A: Q: Could you elaborate more on who will fill the purchasing gap left by the Fed’s exit? Simon: Money managers and other institutions have been sitting on the sidelines for quite a while, but cash yields are essentially zero, making it very tempting to move out the risk and duration spectrum. This is exactly what the Fed has meant to do with a fed funds rate near zero – make it so that investors can’t stand to be in cash any more. For banks, it makes the spread between cash and Agency mortgages look more attractive, and for investors, it makes risk-adjusted yields on Agencies look competitive. ... Q: Do you think it’s at all likely the Federal Reserve will reboot its MBS purchase program later this year or in 2011? Simon: Probably not. Barring a major double dip in the economy or housing, private balance sheets have plenty of room to add Agency MBS (unlike in late 2008, when the Fed program began). And finally on housing: Q: Finally, let’s discuss housing more directly. When might we see a recovery? Simon: We continue to believe that lower-priced homes bottomed last year. Higher-priced homes should bottom later this year. If one labels recovery as prices rising dramatically, we do not foresee that anytime soon. Q: Do you think the government is done tinkering with housing sales and foreclosures? Simon: The three issues that need addressing are: 1) negative equity, 2) unemployment and 3) second liens hindering loan modifications. Obama’s plan addresses these issues, but the devil is in the details. ... My comments: In the low price / high foreclosure bubble areas,...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 5:18 PM » Mortgage Defaults May Be Driving Consumer Spending
    Published Mon, Apr 12 2010 5:18 PM by CNBC
    Hate to be an "I told you so..." Lender Processing Services just put out its "Mortgage Monitor Report," and we have a new record: The nation's foreclosure inventories reached record highs.
  • 12:38 PM » Should We Be More Optimistic About Housing?
    Published Mon, Apr 12 2010 12:38 PM by Google News
    When the stock market broke into the last week, hope was in the air for economic recovery. But a sunny outlook was missing for most of us, wrote New York Times columnist Floyd Norris. Economists, he said, were about the economy: “Having been embarrassed by , there is an understandable hesitation to appear foolishly optimistic again.” Today, the committee of economists who mark the end of recession announced its to mark the end of the downturn. Where does this leave the real-estate market? Are housing analysts also hesitant to express optimism? Most would agree that home prices hit bottom around April or May last year, since then the Case-Shiller index has risen every month through January, writes Robert Shiller in this weekend’s . Cause for optimism? Not for Mr. Shiller. Recent polls show that economic forecasters are largely bullish about the housing market for the next year or two. But one wonders about the basis for such a positive forecast. Momentum may be on the forecasts’ side. But until there is evidence that the fundamental thinking about housing has shifted in an optimistic direction, we cannot trust that momentum to continue. Meanwhile, in her column on April 5, Kelly Evans writes that it’s time to start looking past real-estate woes. “The more that other pillars of the U.S. economy—manufacturing, consumer spending, business investment and even hiring—show improvement, the more the outsize concern about the housing market seems a bit misplaced,” Ms. Evans writes. Sales are 10% below their long-run average, she writes. Foreclosure prevention has kept inventory from flooding the market and some experts expect a steady rebound in building. “Even if the worst-case scenario does start to unfold—supply soars while demand stagnates and prices move down further—it isn’t clear that would be a disaster,” she writes. Readers, are we out of the woods on housing? Has the sector’s importance as an indicator for recovery fallen back to earth?
  • 11:22 AM » NBER Statement: ‘Premature’ to Say Recession Is Over
    Published Mon, Apr 12 2010 11:22 AM by WSJ
    The following is the full text from the National Bureau of Economic Research’s , which is viewed as the unofficial arbiter of the beginning and end dates of recessions. The Business Cycle Dating Committee of the National Bureau of Economic Research met at the organization’s headquarters in Cambridge, Massachusetts, on April 8, 2010. The committee reviewed the most recent data for all indicators relevant to the determination of a possible date of the trough in economic activity marking the end of the recession that began in December 2007. The trough date would identify the end of contraction and the beginning of expansion. Although most indicators have turned up, the committee decided that the determination of the trough date on the basis of current data would be premature. Many indicators are quite preliminary at this time and will be revised in coming months. The committee acts only on the basis of actual indicators and does not rely on forecasts in making its determination of the dates of peaks and troughs in economic activity. The committee did review data relating to the date of the peak, previously determined to have occurred in December 2007, marking the onset of the recent recession. The committee reaffirmed that peak date.
  • 11:22 AM » The Mortgage Game
    Published Mon, Apr 12 2010 11:22 AM by Seeking Alpha
    submits: “It was a quiet passing.” These words, usually uttered in hushed tones, provide some solace to those remaining behind, among the living, that the last moments of the one who has gone ahead were peaceful and without pain. The same could be said for the end of the Federal Reserve’s program of buying $1.25TN mortgage-backed which took place, as scheduled, on March 31st. While the spread above Treasuries hit their widest point in five months (134bps) in the first two trading sessions of April they had narrowed to 129bps by last Friday. “Agency mortgages have adjusted to the Fed’s absence now,” was how Walt Schmidt, a mortgage strategist with FTN Financial described the market. Chad Stephens, PM with StableRiver Capital reasoned that the spreads widened as much as they did due to the holiday shortened week as much as the “queasiness among investors to step into the uncertainty.”
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 11:22 AM » MBIA: Litigation Update and Investment Implications
    Published Mon, Apr 12 2010 11:22 AM by Seeking Alpha
    submits: Late Friday afternoon, the New York State Supreme Court released a decision on the suit bond insurer MBIA () filed against Merrill Lynch (), alleging fraud in securing CDS protection on 4 CDOs of ABS with a face value of 5.7 billion. Five out of six causes of action were dismissed: one will be permitted to go forward. Dismissed were causes of action for fraud, fraud by omission, negligent misrepresentation, breach of covenant of good faith and fair dealing, and an action to enforce contractual rights. What can go forward is an action for breach of contract, based on the observation that the insured tranches of the CDOs were not triple A, regardless of the label that they bore.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 11:22 AM » Housing: The Other Big Problem
    Published Mon, Apr 12 2010 11:22 AM by
    The hefty 8-million jobs lost during the Great Recession won’t easily or quickly return, as Robert Reich reminds in today’s Wall Street Journal. But at least there’s hope that the March gains in the labor market signal that recovery has begun. Maybe. Even if that’s true, questions still abound for the other elephant weighing on [...]
    Click Here to Read the Full Article

  • 11:21 AM » US MBS reinvestment issue “overblown,” Pimco says
    Published Mon, Apr 12 2010 11:21 AM by Reuters
    NEW YORK, April 9 (Reuters) – Big investors in the $5 trillion mortgage-backed securities market are unlikely to reinvest cash from Fannie Mae and Freddie Mac as the companies strip bad loans from the bonds, Scott Simon, a managing director at PIMCO, said on Friday. A lack of reinvestment may surprise analysts who for weeks have predicted principal would be dumped back into the market and support prices, which affect consumer rates. This would soften any blow as the Federal Reserve ended its $1.25 trillion MBS purchase program in March, analysts have said. But the reinvestment issue is “overblown,” Simon said on the Pacific Investment Management Co. Web site. The Fed, U.S. Treasury, Freddie Mac, Fannie Mae and Asian central banks probably won’t reinvest in MBS as the mortgage finance giants address delinquent loans, he said. “Over half of the mortgages that are going to be paid down live between these groups, so the reinvestment of cash from delinquent loans that are bought out of pools will likely be less than half the total,” he said. Simon also said the Fed could have ended its mortgage purchases as early as October, when investors had sufficiently recovered from the financial crisis. The $400 billion bought since then inflated prices to peaks in December and early January, he said. “The final $400 billion or so of Fed purchases were pricey, some some private investors, including PIMCO, sold a portion of their holdings to the Fed,” he said. “Thus, 2010 began with many money managers underweight mortgages.” The MBS by the end of March were “still priced on the richer side of fair,” he said. The valuations have not changed so far this month, he said in an interview. Private buyers could step back in if valuations fall by as little as 0.15 percentage point, he said. This means there will be little effect on rates seen by consumers, he added. One “game changer” to that outlook would be sales of mortgage bonds by Fannie Mae and Freddie Mac, he said.
  • 11:20 AM » 4/12/10--Non-Agency Flows, Foreclosure Rates and Delinquency Curing
    Published Mon, Apr 12 2010 11:20 AM by
    *The non-agency mbs and consumer abs markets remain well bid with the strong demand we saw at the 2nd half of last week carrying over to this morning. The street has been getting lifted out of positions and hence tightening offerings across the board. The sale of cash assets to a certain extent has exacerbated the recent rally in ABX as the street covers shorts and outright buyers chase the top of the stack. The list of bwic’s this morning is fairly light. Unlike what we saw back in January when a number of customers were happy to sell into the strength right now it sounds like customers are more willing to let the market run.
    Click Here to Read the Full Article

  • 11:20 AM » HUD Updates Its TRA Proposal
    Published Mon, Apr 12 2010 11:20 AM by National Council of State Housing Agencies
    In its Fiscal Year (FY) 2011 Budget, HUD proposed the Transforming Rental Assistance (TRA) initiative to preserve HUD-funded public and assisted housing, stem the loss of affordable units, enhance
    Click Here to Read the Full Article

    Source: National Council of State Housing Agencies
  • 11:20 AM » Understanding Credit Scores and Reports
    Published Mon, Apr 12 2010 11:20 AM by Google News
    Having a healthy credit score is now more important than ever. When the mortgage crisis hit several years ago, lenders began tightening standards for loans. Even now, years after the onset of the crisis, changes in Congressional and housing agency legislation have made it more crucial to have your credit in order before buying.
  • Sun, Apr 11 2010
  • 10:53 PM » U.S. Says Regulators Feuded Over WaMu for Years
    Published Sun, Apr 11 2010 10:53 PM by NY Times
    The overseers of Washington Mutual could not agree to declare it unsound until a week before it was seized and sold, a federal investigation found.
  • 10:53 PM » Second Mortgages Vex Borrowers
    Published Sun, Apr 11 2010 10:53 PM by WSJ
    Banks are under pressure to write down second-lien mortgages to help borrowers keep their homes, which they are often reluctant to do when there is a chance of recovering some of the money.
  • 10:53 PM » Pimco Says Investors to Hold Down Mortgage Rates as Fed Exits
    Published Sun, Apr 11 2010 10:53 PM by Business Week
    Investor demand for mortgage-backed securities will help keep U.S. home-loan costs down after the end of the Federal Reserve’s $1.25 trillion purchase program for the debt, said Pacific Investment Management Co., manager of the world’s biggest bond fund.
    Click Here to Read the Full Article

    Source: Business Week
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More From MND

Mortgage Rates:
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MBS Prices:
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  • 30YR FNMA 5.0 109-05 (0-13)
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