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  • Tue, Feb 23 2010
  • 3:34 PM » Shadow Rental Market Pushing down Rents
    Published Tue, Feb 23 2010 3:34 PM by Calculated Risk Blog
    Here is an audio interview from Jon Lansner: " Rents are down and vacancies are up . Demand is off, and we attribute really to to the fact that here has been a pretty significant erosion of jobs in the Orange County markets. And it is having a trickle down effect. In addition to that, our members are saying that they are competing quite a bit with what historically has not been a competitor for us - that's the gray market or the shadow market - which are condominium rentals and single family home rentals and things of that nature. There is just a lot of product on the market." Scott Monroe, Pres. of South Coast Apartment Association Monroe says they are seeing much more multi-generational housing, and he expects "doubling up" to last for another 12 months or so. And this brings up a key point - the supply of rental units has been surging: Click on graph for larger image in new window. This graph shows the number of occupied (blue) and vacant (red) rental units in the U.S. ( Source: Census Bureau ). The total number of rental units (red and blue) bottomed in Q2 2004, and started climbing again. Since Q2 2004, there have been over 4.7 million units added to the rental inventory. Note: please see on using this data - this number might be a little too high, but the concepts are the same even with a lower increase. This increase in units has more than offset the recent strong migration from ownership to renting, so the rental vacancy rate is now at 10.7% and the apartment . Where did these approximately 4.7 million rental units come from? The Census Bureau's shows 1.1 million units completed as 'built for rent' since Q2 2004. This means that another 3.6 million or so rental units came mostly from conversions from ownership to rentals . These could be investors buying REOs for cash flow, condo "reconversions", builders changing the intent of new construction (started as condos but became rentals), flippers becoming landlords, or...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 3:34 PM » Poll: Most of Unemployed Don’t Expect to Find Work
    Published Tue, Feb 23 2010 3:34 PM by WSJ
    Three out of five Americans who are unemployed or underemployed don’t expect to find work in the next month, according to . Gallup surveyed more than 4,000 adults throughout January. Some of the other findings: Among the underemployed — people working part-time but want full-time work — who say their companies are hiring, only 42% are hopeful about getting full-time hours. Almost two-thirds of people with a college degree or postgraduate education aren’t hopeful about finding work — making them the least likely to be hopeful among educational groups. Almost three out of four underemployed Americans ages 50 to 65 aren’t hopeful about finding a job within a month, making them the demographic group with the lowest likelihood of being hopeful. Gallup found that 46% of blacks and the same share of people ages 18 to 29 are likely to be hopeful, making them the demographic groups most likely to be hopeful. One area where hope made little difference: having enough money. Among both groups (hopeful and not hopeful), more than one in three said they did not have enough money to pay for food in the past year. More than one out of three said the same about health care. One in five said they did not have enough money for shelter in the past 12 months. In released Tuesday, Gallup found that the underemployed reported spending 36% less than those employed — $48 per day vs. $75.
  • 2:16 PM » Credit Suisse Asks: Why Rent?
    Published Tue, Feb 23 2010 2:16 PM by Google News
    We’ve previously wondered if the housing crisis will result in for longer. But Dan Oppenheim, a home-building analyst with Credit Suisse, wants to know: “Why rent when homes are this cheap?” Home , paired with low mortgage rates, have made ownership possible for many would-be buyers left on the sidelines during the housing boom. The monthly mortgage payment on a median-priced home was just 15.3% of the median-family income in the fourth quarter, far below the 20% average from 1991-2008. Affordability, the key driver of housing demand, is “at or better than historic averages in 49 of the top 50 home building markets,” Mr. Oppenheim writes in a client note. But here’s the rub: Housing remains the most unaffordable in bigger cities with more job potential. Topping Mr. Oppenheim’s list is San Francisco, New York City and Los Angeles. The most affordable market is Detroit, a city that is seeing most of its residents flee. Next up is Ft. Myers, Fla., battered by the housing bust, and Indianapolis.
  • 2:16 PM » Home Prices Stabilize as Panic Subsides
    Published Tue, Feb 23 2010 2:16 PM by Seeking Alpha
    submits: The Case Shiller index of home prices in 20 major metropolitan areas (seasonally adjusted) has risen seven months in a row. Given the lags built into the way the index is calculated, this means that the bottom in U.S. home prices likely occurred last February or March, almost one year ago. In real terms, as shown in this chart, home prices haven't changed much at all since the end of 2008. Thus, stability has returned to a market that suffered from extraordinary volatile for many years. The popping of the housing bubble resulted in an almost catastrophic 35% decline in real home prices, which in turn caused trillions of dollars of mortgage- and asset-backed securities to evaporate, threatening the viability of the entire world's banking system. Fortunately, the dust is continuing to settle, markets are clearing, and life goes on. The stabilization of home prices has allowed the of securities such as shown in the chart below to rise for the better part of the past year. That's because the panic which set in over a year ago caused such selling pressure that the prices of asset-backed securities fell to levels that implied a continuing decline in home prices that was way too pessimistic.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 2:16 PM » Fannie Mae launches $1 billion small lender plan
    Published Tue, Feb 23 2010 2:16 PM by Reuters
    NEW YORK (Reuters) – Fannie Mae, <FNM.P> the largest provider of funding for U.S. home mortgages, on Monday said it is launching a $1 billion program to boost money available to small- and mid-sized lenders. The program would provide credit lines for 10 to 12 lenders in 2010, a spokeswoman said. Since the onset of the credit crunch, banks have reined in and tightened requirements for credit to smaller lenders, curbing availability of mortgages needed to stabilize the U.S. housing market. By early 2009, capacity of these lenders fell to between $20 billion and $25 billion, from $200 billion in 2007, according to the Mortgage Bankers Association. The so-called “warehouse lending” provides short-term funds for smaller bankers to make loans earmarked for later sale. It allows them to compete with large, retail lenders, which have taken market share in recent years. “In this market, lenders who rely on warehouse funding are struggling to sell their loans and replenish their funds in a timely way,” said Michael Williams, President and Chief Executive Officer at Fannie Mae, in a statement. “We are taking action now to help fill the gap by providing a billion dollars of critical liquidity targeted at smaller lenders across the country,” he said. Warehouse lending has already begun to make a comeback as banks demand higher quality loans that smaller counterparts are able to make, said A.W. Pickel, chief executive officer at LeaderOne Financial Corp. in Overland Park, Kansas. Banks had reduced warehouse lending when loan officers were “doing every type of loan imaginable,” including subprime, he said. But small lenders may continue to be locked out of the business as sources of funding or loan guarantees, including the Federal Housing Administration, boost capital requirements of their counterparties, analysts said. In addition, scrutiny of companies granted the credit lines continues to be intense, said Scott St. John, executive vice president of production and branch development...
  • 2:16 PM » Did You Know: Owner- vs. Renter-Occupied Housing Units
    Published Tue, Feb 23 2010 2:16 PM by Google News
    Did you know that the number of renter-occupied households reached a decade low-point in 2004 at 32.7 million units?
  • 2:09 PM » Man Bulldozes Home Ahead of Foreclosure : Says It's a Message to Banks
    Published Tue, Feb 23 2010 2:09 PM by
    Hoskins said he'd gotten a $170,000 offer from someone to pay off the house, but the bank refused, saying they could get more from selling it in foreclosure.
  • 9:34 AM » Report: State Tax Revenues decline in Q4
    Published Tue, Feb 23 2010 9:34 AM by Calculated Risk Blog
    From the Rockefeller Institute: (ht Ann) State tax revenues declined by 4.1 percent nationwide during the final quarter of calendar 2009, the fifth consecutive quarter of reduced collections, according to a report issued today by the Rockefeller Institute of Government. The five straight quarters of year-over-year decline in overall tax collections represent a record length of such decreases, the Institute said. ... “Calendar 2009 will be remembered as bringing historically sharp declines in tax revenue to states,” the report says. “Revenue gains toward the end of calendar 2009 were often driven by legislated tax increases rather than growth in the economy and tax base.” Despite revenue gains in some states during the fourth quarter, the report concludes, “another negative quarter for the nation as a whole would not be unexpected. The troubling fiscal picture for states remains clearly in place.” Here is the report: Tax revenues are still weak, and most states are still running large deficits. As a recent CNNMoney notes: States are looking at a total budget gap of $180 billion for fiscal 2011, which for most of them begins July 1. These cuts could lead to a loss of 900,000 jobs, according to Mark Zandi, chief economist of Moody's This suggests that more state and local government job cuts are coming.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 9:03 AM » Vegas House Bargains Dry Up
    Published Tue, Feb 23 2010 9:03 AM by WSJ
    Bargain hunters in Las Vegas and elsewhere are finding increasingly difficult to find foreclosed homes at reasonable prices in neighborhoods where people with jobs want to live.
  • 9:03 AM » Some Good News on Jobs: Tax Withholding Improving
    Published Tue, Feb 23 2010 9:03 AM by WSJ
    Here is some good news on the jobs picture, courtesy of economists at Deutsche Bank. After collapsing last year, individual income-tax withholding seems to be turning a corner. Tax withholding is a good jobs indicator, because you have to have a job to get your taxes withheld. Withholding sank with the recession’s onset and collapsed after the collapse of Lehman Brothers in 2008. But it seems to be turning a corner. Here’s Joseph LaVorgna’s take: “The tax data, which are reported daily by the US Treasury, are particularly valuable to us because they are not subject to revision. Over the past 3-4 months, the plunge in tax receipts has reversed sharply. While still down in year-on-year terms (-2.5%), the lengthening recovery in tax receipts strongly supports our view that net positive hiring is very near—probably not in the February figures (due to weather), but increasingly likely when the March jobs data are reported on April 2.”
  • Mon, Feb 22 2010
  • 7:12 PM » WSJ: Treasury Considering Appeal Process for HAMP
    Published Mon, Feb 22 2010 7:12 PM by Calculated Risk Blog
    From James Hagerty at the WSJ: The U.S. Treasury is considering new ... proposals ... to give borrowers 30 days to respond after being denied a modification of their loan terms under the ... HAMP. During that period, which would allow borrowers to appeal against the decision, the servicer couldn't put the home up for sale at a foreclosure auction. ... A Treasury spokeswoman said the proposals are among "many ideas under consideration in the administration's ongoing housing stabilization efforts." She added: "This proposal has not been approved and there are no immediate planned announcements on the issue." Servicers also would be required to provide a "written certification" that a borrower isn't eligible for HAMP before a foreclosure sale can be held. ... These measures would likely further slow down the foreclosure process. Probably the main impact of HAMP has been to keep the supply of distressed properties down by delaying the inevitable. In most cases, this would just be another delay ...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 7:12 PM » U.S. credit card charge-offs up, delinquencies ease
    Published Mon, Feb 22 2010 7:12 PM by Reuters
    NEW YORK (Reuters) - The U.S. credit card sector posted mixed performance in January as charge-offs rose sharply, while early stage delinquencies declined for a third month in a row, according to Moody's Investors Service.
  • 7:12 PM » Home prices seen stabilizing, sales rising
    Published Mon, Feb 22 2010 7:12 PM by Reuters
    * The median forecast is for the S&P composite index of 20 metropolitan areas to be unchanged in December from November, non-seasonally adjusted, and down 3.2 percent from December 2008. This would follow a 0.2 percent November monthly decline and 5.3 percent annual drop.
  • 5:22 PM » Geithner Statement on the Credit Card Accountability, Responsibility, and Disclosure Act
    Published Mon, Feb 22 2010 5:22 PM by US Treasury
    February 22, 2010 TG-558 Statement of Treasury Secretary Geithner on Implementation of the Credit Card Accountability, Responsibility, and Disclosure Act WASHINGTON – The U.S. Department of the Treasury today released the following statement from Secretary Tim Geithner on the implementation of the new rules under the Credit Card Accountability, Responsibility, and Disclosure Act signed into law by President Obama last spring: "With today's implementation of new rules, we are taking a critical step forward in our effort to protect American families by prohibiting the use of unfair retroactive rate hikes and late fee and over-limit fee traps by credit card companies. "Thanks to the leadership of President Obama, who signed the Credit Card Accountability, Responsibility, and Disclosure Act into law last spring, families will finally have clear, fair rules of the road that will help them understand what they are getting into when they sign up for a card and how much they pay to use it. "We continue to work on strengthening consumer protections and disclosure for a wide array of financial products. "As we work with Congress on broader reform to make our financial system safer and more stable, we are also working to consolidate the fragmented authority of seven separate agencies into a single, independent and accountable Consumer Financial Protection Agency." ###
  • 4:37 PM » Survey: Short Sales Increase in January
    Published Mon, Feb 22 2010 4:37 PM by Calculated Risk Blog
    From Campbell Surveys: Short Sales See Big Jump in Activity During January According to the latest Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions, short sales accounted for a substantial 15.9% of home purchase transactions in January. This was well above the share of other distressed property activity – damaged real estate owned or REO (13.4%) and move-in ready REO (13.8%) – and represented a big jump for short sales. ... “Short sales activity took a temporary dip in November around the expected expiration of the first-time homebuyer tax credit,” reported Thomas Popik, research director for the Campbell/Inside Mortgage Finance survey. “Few first-time homebuyers wanted to take the chance that their short sale transaction wouldn’t be approved by the November 30 deadline. But now that the tax credit has been extended, we see first-time homebuyers once again snapping up attractively priced short sales.” Survey results showed that short sales typically sell for only 91% of listing price. In contrast, move-in ready REO sells for 99% of listing price, on average. Click on graph for larger image in new window. Source: Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions, Campbell Communications, Jan 2010 This graph, based on data from Campbell Communications, shows the break down of distressed sales of all transactions by three categories: 1) move in ready REOs, 2) damaged REOs (sold mostly to investors), and 3) short sales. I expect 2010 will be the year of the "short sale" and the percentage of short sales will increase further after the servicers implement the Treasury's .
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 4:36 PM » Dodd Urges Action on Commercial Real Estate
    Published Mon, Feb 22 2010 4:36 PM by WSJ
    U.S. regulators need to “redouble” their efforts to deal with the still shaky commercial real estate market, a top U.S. Senate Democrat said Monday. Sen. Christopher Dodd (D., Conn.), who chairs the Senate Banking Committee, said in a letter released by his office that he was concerned about the potential effects of commercial real estate woes on the broader economy. “I believe that the weakness in the CRE market requires prompt and robust responses from the regulators to guard against harmful effects on financial institutions and the economy,” Dodd said in the letter to Federal Reserve Chairman Ben Bernanke . Similar letters were sent to the Federal Deposit Insurance Corp. and Office of Thrift Supervision , among others. U.S. regulators have been warning about problems in the commercial real estate market for months. FDIC Chairman Sheila Bair , speaking at a conference in Washington last month, said that regulators expect banks to report higher delinquencies and charge-off rates for commercial real estate properties in the first three months of 2010. Even income-producing properties have seen a decline in credit performance, Bair said.
  • 4:35 PM » Already Glacial, Foreclosure Process May Get Even Slower
    Published Mon, Feb 22 2010 4:35 PM by Google News
    Lenders are taking more than a year to complete foreclosure cases against many struggling home-mortgage borrowers. Now that process may get even slower. The U.S. Treasury is considering new guidelines that would give distressed borrowers more time to try to qualify for a federal program aimed to averting foreclosures. Under the proposals, loan servicing companies, which collect payments and handle foreclosures, would have to give borrowers 30 days to respond after being denied a modification of their loan terms under the Home Affordable Modification Program, known as HAMP. During that period, borrowers would have time to appeal the decision, the servicer couldn’t put the home up for sale at a foreclosure auction. The proposals are outlined in a draft presentation obtained by The Wall Street Journal and other news organizations. A Treasury spokeswoman said the proposals are among “many ideas under consideration in the administration’s ongoing housing stabilization efforts.” She added: “This proposal has not been approved and there are no immediate planned announcements on the issue.” Servicers also would be required to provide a “written certification” that a borrower isn’t eligible for HAMP before a foreclosure sale can be held. The proposal calls for servicers to seek contact with all borrowers who are 60 days or more delinquent on their loans and meet the “eligibility profile” for HAMP in an effort to determine whether they qualify. The effort to reach borrowers would have to include at least four telephone calls and two written notices, including at least one by certified mail. Servicers could deny a new application for HAMP received within six days of a scheduled foreclosure sale. But borrowers would have to be notified of the deadline for seeking a HAMP loan modification. The foreclosure process already has been greatly slowed by efforts to determine which borrowers qualify for easier loan terms and by the inability of loan servicers and courts to keep up with millions...
  • 4:35 PM » RBS Mortgage-Bond Co-Head Eichel to Oversee U.S. Credit Trading
    Published Mon, Feb 22 2010 4:35 PM by Business Week
    RBS Securities Inc. broadened the responsibilities of Scott Eichel, the global co-head of its mortgage- and asset-backed securities business, to include oversight of its U.S. flow credit trading.
    Click Here to Read the Full Article

    Source: Business Week
  • 4:35 PM » Commercial Real Estate Apocalypse in 2011-2012
    Published Mon, Feb 22 2010 4:35 PM by Google News
    Inquiring minds are digging deep into a 190 page PDF by the Congressional Oversight Panel regarding . Executive Summary Over the next few years, a wave of commercial real estate loan failures could threaten America’s already-weakened financial system. The Congressional Oversight Panel is deeply concerned that commercial loan losses could jeopardize the stability of many banks, particularly the nation’s mid-size and smaller banks, and that as the damage spreads beyond individual banks that it will contribute to prolonged weakness throughout the economy. Between 2010 and 2014, about $1.4 trillion in commercial real estate loans will reach the end of their terms. Nearly half are at present “underwater” – that is, the borrower owes more than the underlying property is currently worth. Commercial property values have fallen more than 40 percent since the beginning of 2007. Increased vacancy rates, which now range from eight percent for multifamily housing to 18 percent for office buildings, and falling rents, which have declined 40 percent for office space and 33 percent for retail space, have exerted a powerful downward pressure on the value of commercial properties. The largest commercial real estate loan losses are projected for 2011 and beyond; losses at banks alone could range as high as $200-$300 billion. The stress tests conducted last year for 19 major financial institutions examined their capital reserves only through the end of 2010. Even more significantly, small and mid-sized banks were never subjected to any exercise comparable to the stress tests, despite the fact that small and mid-sized banks are proportionately even more exposed than their larger counterparts to commercial real estate loan losses. A significant wave of commercial mortgage defaults would trigger economic damage that could touch the lives of nearly every American. Empty office complexes, hotels, and retail stores could lead directly to lost jobs. Foreclosures on apartment complexes could push...
  • 4:35 PM » How to destroy the Eurozone: Feldstein’s euro-holiday idea
    Published Mon, Feb 22 2010 4:35 PM by
    Richard Baldwin , Charles Wyplosz , 22 February 2010 Martin Feldstein suggested last week that Greece take a “holiday” from the Eurozone, rejoining with a depreciated nominal exchange rate. This column argues that the idea is not just impractical, it’s dangerous for the Eurozone. Full Article:
    Click Here to Read the Full Article

  • 1:58 PM » Obama’s Small Step Toward Principal Reduction
    Published Mon, Feb 22 2010 1:58 PM by Google News
    The Obama administration hinted Friday that it may be closer to accepting the idea of prodding banks to forgive mortgage principal for many Americans. The hint came with the announcement of a modest $1.5 billion (yes, that counts as modest in the age of trillion-dollar bailouts) federal program dubbed Help for the Hardest-Hit Housing Markets, likely to be known as 4HM. (Not to be confused with previous plans with such fanciful names as HAMP, HARP, PPIP, TARP, 2MP, HAFA and perhaps a dozen others few can recall.) The money from this latest program will go to housing finance agencies in the states deemed hardest hit by falling home prices: Arizona, California, Florida, Nevada and Michigan. Among other things, the White House said, this money can be used to help people who are “underwater,” owing more on their mortgages than the current value of their homes. The administration said the agencies “may experiment with programs that would assist borrowers to negotiate with lenders to write down mortgages.” Let’s not get carried away: This hardly marks a full embrace of the controversial concept of writing down principal. But it is a small step in that direction. It’s notable because both the Obama administration and the big banks generally have been reluctant to go down this road, preferring instead to put the stress on reducing monthly payments for troubled borrowers mostly by reducing interest rates to as little as 2% and extending terms to as long as 40 years. Writing down principal on first-lien loans might force banks to write off lots of second liens, with devastating effects on capital. But community activists and many investors in mortgage securities have been for more principal reductions. Principal reductions are tempting in some ways. If the value of the collateral has plunged, the market value of the loan is no longer equal to the principal balance, and it might be healthier for all concerned to acknowledge that. Writing down principal also would give many borrowers...
  • 1:58 PM » U.S. Commercial Property Index Rises 4.1% in December (Update2)
    Published Mon, Feb 22 2010 1:58 PM by Business Week
    U.S. commercial property values had their biggest monthly rise on record in December as the number of transactions jumped, according to Moody’s Investors Service.
    Click Here to Read the Full Article

    Source: Business Week
  • 1:58 PM » 2/22/10--Yield Curve Shifts, Coupon Swaps, MBA Delinquency Report
    Published Mon, Feb 22 2010 1:58 PM by
    The Treasury market looked to be on a trajectory toward higher long rates and a steeper curve, but the trend was interrupted late Thursday by the announcement that the Fed had raised the discount rate by 25 basis points to 0.75% At the time, the yield curve (measured by the 2-10 spread) was at an all-time wide of +293. After the announcement, however, the curve flattened sharply, and by Friday’s close was trading at +286, in line with the previous steepness record recorded in mid-January (as shown in Chart 1 below). Also of note was the widening of the 2-5-10 butterfly, which indicated that the 5-year lagged the rest of the curve late in the week.
    Click Here to Read the Full Article

  • 1:42 PM » Yellen Doesn’t Expect Fed to Sell Assets in Forseeable Future
    Published Mon, Feb 22 2010 1:42 PM by WSJ
    The Federal Reserve will rely most heavily on its power to pay interest on reserves, rather than assets sales, when the time arrives to tighten monetary policy, although those actions are unlikely for quite a while, a top Federal Reserve official said Monday. Yellen With a still weak economy and scant inflationary pressures, “this is not the time to be removing monetary stimulus,” Federal Reserve Bank of San Francisco President Janet Yellen said. “When the day comes to start raising rates again, we have tools at the ready. But, for the time being, the economy still needs the support of extraordinarily low rates,” she said. When it becomes time for the Fed to change gears, Yellen said the Fed’s ability to pay interest on reserves banks hold at the Fed will “play a lead” role in the policy response. This power, according to central bankers, mutes the inflationary power of the Fed’s swollen balance sheet by creating powerful incentives for banks to stash excess cash at the Fed, which keeps that money out of the economy. The policy maker said outright sales of assets the Fed has bought to help lower borrowing costs and support the housing market would be a bad idea for the foreseeable future. “Massive sales of mortgage-related and Treasury securities could be disruptive to markets and cause mortgage interest rates and other long-term rates to shoot up when we are still in the early stages of the recovery and the financial system, although improving, is still not at full health,” Yellen said. “Eventually, after economic conditions have improved and a policy tightening has begun, we may then start a gradual process of selling securities in order to help return the Fed’s balance sheet to its pre-crisis levels,” the official said. Yellen isn’t currently a voting member of the interest rate setting Federal Open Market Committee . Her comments came from that was to be delivered before an event at the University of San Diego, in San Diego, California. She spoke in the wake of last...
  • 11:37 AM » CEMA: Healthy ReFis for Good Borrowers
    Published Mon, Feb 22 2010 11:37 AM by The Big Picture
    Even before the Discount Rate was hiked, I had been exploring ways to take advantage of the current ultra low rates. Mortgages are under five and half percent, and are likely to rise once the Fed QE and MBS purchase programs end. We should be expecting modestly higher rates sooner rather than later, perhaps by the second half of the year. There are lots of modification programs for those people who bought more house than they could afford and are now delinquent on their mortgages. What about those of us who made prudent purchases and actually are paying our mortgages on time? Despite generally tight credit conditions, there are some ways you as a homeowner can use the current rate environment to your advantage. For homeowners who are current and have a good payment history, there are specific cost-effective ways to lower your monthly mortgage payments. Whether it makes economic sense to do so depends upon how long you plan on staying in that house — and the state you live in. A comparison of closing costs by state can be found online ( and ). I live in New York State, which has the most expensive closing costs in the country, closely followed by Texas, Florida, Oklahoma, New Mexico, New Jersey, Pennsylvania, Alaska, Colorado and California. Consider a hypothetical NY ReFi with a prime, non-jumbo mortgage. The biggest costs are going to fall into 3 categories: 1) Mortgage Recording Tax (varies by county) (0.8-1.925%) 2) Title Insurance 3) Property Tax & Escrows Let’s assume a $417k conforming mortgage. Shop around for rates, and you can find major banks offering ~5.25%. The factor that determines if a Refi makes sense are typically the Recording Tax (~$3350 -$4900) and the Title insurance ($3000-$5000). If a homeowner can save $300-$500 per payment by doing a ReFi, they can eventually recoup the costs after about 2 years (based upon the numbers above). However, New York State has recognized what a burden these taxes are to those who want to a basic ReFi. The State...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 11:37 AM » Chase Cancelling Automatic Overdraft Protection
    Published Mon, Feb 22 2010 11:37 AM by The Big Picture
    Here is an interesting little tidbit regarding Debit Card credit these days. It seems that during the fat times, Chase Bank was automatically tacking onto their Checking/Debit Cards a form of overdraft protection. It was a simple line of credit that crept up over time (ours was $10k per account). If memory serves, there was no credit application, no credit request — it just was an option offered one day many years ago. It worked as an automatic extension of credit — spend more than was in your account, and you did not bounce a check or get denied on a debit card purchase. You would be charged for an entirely separate line — a whole new account number, different invoicing and statements, etc. And, you could not pay it by depositing money into your checking account — you had to make a specific payment to that credit line. Now, it seems, that Chase (part of JP Morgan) is becoming a bit tighter with their credit lines. You have to affirmatively request this line in person at a bank branch. I assume the new credit card laws have something to do with this . . .
    Click Here to Read the Full Article

    Source: The Big Picture
  • 11:37 AM » Fed's Yellen: U.S. economy still needs ultra-low rates
    Published Mon, Feb 22 2010 11:37 AM by Reuters
    SAN DIEGO (Reuters) - The U.S. economy still needs extraordinarily low interest rates, as inflation is "undesirably low" and growth will likely be sluggish for several years, a top Federal Reserve official said Monday.
  • 11:06 AM » Mortgage Market Has to Be 'Reconstructed'
    Published Mon, Feb 22 2010 11:06 AM by Seeking Alpha
    submits: Former Federal Reserve Chairman (the good one) Paul Volcker stated the obvious during an interview with Bloomberg on Friday as recounted in this at the Huffington Post. Former Federal Reserve Chairman Paul Volcker said the nation's home mortgage market is in trouble and will have to be "reconstructed."
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 10:20 AM » Chicago Fed: Economic Activity Increased in January
    Published Mon, Feb 22 2010 10:20 AM by Calculated Risk Blog
    Note: This is a composite index based on a number of economic releases. From the Chicago Fed: The Chicago Fed National Activity Index was +0.02 in January, up from –0.58 in December. ... The index’s three-month moving average, CFNAI-MA3, increased to –0.16 in January from –0.47 in December, reaching its highest level since July 2007. January’s CFNAI-MA3 suggests that, consistent with the early stages of a recovery following a recession, growth in national economic activity is beginning to near its historical trend. With regard to inflation, the amount of economic slack reflected in the CFNAI-MA3 indicates subdued inflationary pressure from economic activity over the coming year. Production-related indicators made a positive contribution to the index for the seventh consecutive month. As a group, they contributed +0.45 in January, up from +0.14 in December. ... Click on table for larger image in new window. This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967. According to the Chicago Fed: A CFNAI-MA3 value below –0.70 following a period of economic expansion indicates an increasing likelihood that a recession has begun. A CFNAI-MA3 value above –0.70 following a period of economic contraction indicates an increasing likelihood that a recession has ended. A CFNAI-MA3 value above +0.20 following a period of economic contraction indicates a significant likelihood that a recession has ended. Although the CFNAI-MA3 improved in January, the index is still negative. According to Chicago Fed, it is still too early to call the official recession over - although the likelihood that a recession has ended is increasing.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 7:59 AM » Economists See Firm Recovery In 2010, Job Creation In 1Q
    Published Mon, Feb 22 2010 7:59 AM by WSJ
    The U.S. economy will continue to recover at a healthy pace in 2010, led by strength in the business sector, helping jobs to be created from the first quarter, a panel of economists said in a report out Monday. The National Association for Business Economics , or NABE, survey predicts the world’s largest economy will expand by 3.1% this year, close to November’s prediction that U.S. gross domestic product would rise by 3.2%. The economy is seen growing by 3.1% also in 2011. Companies are seen playing a key role in the early part of the recovery, with higher spending on software and equipment, the survey of 48 professional forecasters showed. After the sharp drop of the last two years, business’ inventory rebuilding is also expected to lift the economy. “We see a healthy expansion under way, although it will take time to reduce economic slack and repair damaged balance sheets,” said NABE President Lynn Reaser , chief economist at Point Loma Nazarene University . The predictions of the survey, which was carried out from Jan. 22 to Feb. 4, are in line with last month’s forecasts from the Federal Reserve and a group of banking economists. At its last meeting Jan. 26-27, the Fed projected that U.S. GDP would this year rise in a range between 2.8% and 3.5%. The U.S. economy is recovering from its worst downturn since the Second World War. Although the nation’s output began to rise again in the second half of 2009, boosted by inventories, nearly one in 10 Americans are still without a job and prices in some sectors of the economy continued to fall in January due to low demand. Despite scant evidence so far, NABE panelists are more optimistic in predicting the economy is already strong enough to begin creating jobs in the first quarter, compared to November’s forecast of no net change in employment. The median forecast of the survey is for an average monthly increase of 50,000 jobs in the January through March period. January’s nonfarm payrolls fell 20,000 after a 150,000 drop...
  • 7:59 AM » Bailout Anger Undermines Geithner
    Published Mon, Feb 22 2010 7:59 AM by WSJ
    In Washington, where perception can take on the status of fact, the Treasury secretary's political woes are diminishing his authority and could hurt Democrats in midterm elections.
  • 7:59 AM » Take Three: Will Congress Extend the Home Buyer Tax Credit?
    Published Mon, Feb 22 2010 7:59 AM by Google News
    It’s that time of year again: time for lobbyists to convince Congress to extend the . The National Association of Realtors and other industry groups are beginning to make the rounds on Capitol Hill to press their case, which goes something like this: We know you’ve extended the tax credit two times already, but the housing market is still fragile, the tax credit is working, and don’t forget– you’re up for re-election soon. In other words, do you really want to own the next leg down in home prices? They’ll also make their case by reminding pols that a series of other market supports are being removed, the largest of which is the Federal Reserve’s purchases of $1.25 trillion in mortgage-backed securities that and has pushed to postwar lows for much of the past year. The Federal Housing Administration is also to pull back its lending, and more foreclosures could add to the housing inventory as borrowers fail to qualify for modifications. Industry groups are also that the credit should be extended because it’s taking so long for banks to approve , where lenders agree to a sale for less than the value of the mortgage. To recap, Congress first passed a $7,500 tax credit in 2008 for first-time buyers, but that credit had to be repaid over 15 years. When it expired one year ago, Congress extended it, expanded it to $8,000, and said it wouldn’t have to be paid back. Just before that credit was to expire last December, Congress extended it again, until April 30 (sales contracts signed by April 30 have until June 30 to close). A new credit of $6,500 was created for current home-buyers. “There’s nothing more permanent in Washington than a temporary tax credit,” jokes Howard Glaser, a housing-industry consultant. This time, the lobbyists certainly have their work cut out for them. For one, industry groups last time swore that the last tax credit extension would be, well, the last extension. To secure the deal, the lawmaker who shepherded that effort through Congress, Sen. Johnny...
  • 7:59 AM » Greece is closer to asking for EU help with deficit
    Published Mon, Feb 22 2010 7:59 AM by
    Greek Prime Minister George Papandreou said the country will seek EU help if interest rates demanded by bond buyers in debt o --
    Click Here to Read the Full Article

  • 7:59 AM » Tackling the US deficit: A modest proposal
    Published Mon, Feb 22 2010 7:59 AM by Google News
    A presidential commission may provide a start on cutting America's deficit, but not much more AMERICA is spending beyond its means, both parties and the president (not to mention pundits and protesters) have recognised. But cutting budgets is tough politics, which is why special commissions are at times called in to make recommendations away from the legislative hurly-burly. On Thursday Feburary 18th Barack Obama announced that he was forming such as commission, by executive order, to seek ways to tackle the deficit. Will it work? The commission will be co-chaired by a long-time former Republican senator, Alan Simpson, and a Democratic former chief of staff to Bill Clinton, Erskine Bowles. The rest of the panel will include four more appointees from Mr Obama (one must be a non-Democrat), and three each for the Republican and Democratic leaders of both the House and the Senate. It can thus have no more than ten Democrats, and has to approve its recommendations by 14 votes, making bipartisanship a must. It is scheduled to report by December 1st this year, shortly after the mid-term congressional elections. ...
  • 7:59 AM » Late FHA loans spike 62%
    Published Mon, Feb 22 2010 7:59 AM by CNN
    The recent spike in the number of delinquent Federal Housing Administration-insured loans has some people worried that taxpayers will eventually have to bail the agency out.
  • 7:59 AM » Washington Report: Anti-Foreclosure Program
    Published Mon, Feb 22 2010 7:59 AM by Google News
    The Obama administration came out with a score card on its anti-foreclosure program last week, and there's just one word for it: Minimal.
  • Sat, Feb 20 2010
  • 5:07 PM » Study: Mods just Delay Foreclosures, 6.1 Million to Lose Homes
    Published Sat, Feb 20 2010 5:07 PM by Calculated Risk Blog
    Jeff Collins, at the O.C. Register, has a Q&A with Wayne Yamano, vice president at John Burns Real Estate Consulting: Register: Your study says that five million of the 7.7 million delinquent homes will go through foreclosure or a “foreclosure-related procedure.” How is this likely to occur? Wayne: Most shadow inventory will get out onto the market as an REO or short sale. In any event, it results in the homeowner losing their home, and that home being added to the supply of homes available for sale. Register: Do the remaining 2.7 million borrowers get their loan payments caught up? Wayne: Of the 7.7 million delinquent homeowners, we actually think that only about 1.6 million will be able avoid losing their homes, and that the remaining 6.1 million will lose their homes. We say that there is 5 million units of shadow inventory because we estimate that about 1.1 million delinquent homeowners already have their homes listed for sale, and we would not classify those homes as “shadow.” Register: When will this wave of foreclosures hit, and how will this shadow inventory affect home prices? Wayne: We don’t believe that the shadow inventory will be dumped onto the market all at once. Although we don’t believe modification efforts will truly save a lot of homeowners from losing their homes, we do believe that these programs are effective in delaying foreclosures and pushing out the additional supply to later years. Burns Consulting doesn't think there will be flood of homes hitting the market - they expect these homes will be lost over a few years - so in their view there will not be "another leg down in pricing".
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • Fri, Feb 19 2010
  • 5:49 PM » Mortgage Delinquencies by Period
    Published Fri, Feb 19 2010 5:49 PM by Calculated Risk Blog
    Much was made this morning about the decline in the 30 day delinquency "bucket" (percent of loans between 30 and 60 days delinquent). Hopefully this graph will put the problem in perspective ... Click on graph for larger image in new window. Loans 30 days delinquent are still elevated, and still above the levels in 2007 - and at about the level of early 2008 - when prices were falling sharply. The 60 day bucket also declined in Q4, but it is still above the levels of 2008. As MBA Chief Economist Jay Brinkmann noted, the 90 day and 'in foreclosure' rates are at record levels. Obviously the lenders have been slow to start foreclosure proceedings - and the 90+ day delinquent bucket is now very full. And lenders have been slow to actually foreclose - and the 'in foreclosure' bucket is at record levels. What impacts prices are distress sales; homes coming out of the 'in foreclosure' bucket without being cured. Since the lenders slowed foreclosures to a trickle, prices have stabilized or even increased slightly in some areas. But these record levels of long term delinquencies are why Brinkmann cautioned about house prices. This morning he pointed out on the conference call that there are a record 4.5 million homes seriously delinquent or in foreclosure. The loans on some of these homes will be cured - perhaps by HAMP modifications of by other lender modification programs - but many of these homes will go to foreclosure or be sold as short sales putting pressure on house prices.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 5:49 PM » February Jobs Report May Be Impacted by Blizzards
    Published Fri, Feb 19 2010 5:49 PM by WSJ
    The February jobs report may look worse than is actually the case thanks to foul winter weather, according to a report from forecasting firm Macroeconomic Advisers. That’s because the February blizzard, which laid feet of snow across the country and brought business to a virtual , kept many workers from getting to the office and likely pushed new hiring into the following month. The blizzard occurred during the periods when both the Household and Establishment Surveys were conducted, meaning it could affect both the jobs tally and the unemployment rate. Of course, those jobs would resurface in the March jobs report. Using the January 1996 blizzard as a benchmark, Macroeconomic Advisers’ estimates that the March 5th jobs report would have 66,000 fewer jobs than it would otherwise have. However, because there was a lot more snow this month than in January 1996 - and because snow delays lasted almost an entire week in some places and occurred precisely at the time when Labor Department is taking measurements - the effect could be much bigger. “I think it could be big - it could be 100,000″ jobs, says Joel Prakken , chairman of Macroeconomic Advisers.
  • 5:49 PM » For Pulte, A Lavish Retirement
    Published Fri, Feb 19 2010 5:49 PM by Google News
    Building giant had a $1.2 billion net loss last year and $1.5 billion in 2008. That doesn’t seem to have dented founder William J. Pulte’s retirement pay. Mr. Pulte is stepping down March 31. He’ll be paid $3.27 million, according to a securities filing. What’s more, he will also receive $1.5 million annually for two years for consulting services that come with an office and administrative assistance. Expenses? Reimbursed. This gig also won’t be too time-consuming: Mr. Pulte, 77, “shall not devote more than 75 hours during any calendar quarter” to the consulting, according to the filing. Do the math: 300 hours a year. “That’s a pretty nice gig,” said Michelle Leder, editor of, a Morningstar company that Friday. “If the housing market was doing really, really good, it might warrant less scrutiny,” Ms. Leder said. “It’s a very different situation in the housing market right now.” Pulte wasn’t immediately available for comment. Mr. Pulte’s spot on the company’s board will not be filled. Follow Dawn on Twitter
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