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  • Fri, Jul 31 2009
  • 4:03 PM » Unemployment Batters Housing Market
    Published Fri, Jul 31 2009 4:03 PM by Realtor.Org
    Job losses are shifting the foreclosure trend to regions that were previously unscathed.
  • 3:49 PM » How far out of line is the unemployment rate?
    Published Fri, Jul 31 2009 3:49 PM by krugman.blogs.nytimes.com
    There have been a number of assertions that the unemployment rate is much higher than we should have expected, given the decline in GDP. Now we have updated GDP numbers, which include a revision that makes the decline in GDP since the end of 2007 bigger than previously reported. How much mystery is left? Here's my [...]
    Click Here to Read the Full Article

    Source: krugman.blogs.nytimes.com
  • 3:48 PM » Real Estate Weekly: Home buyers, sellers less happy with agents
    Published Fri, Jul 31 2009 3:48 PM by Market Watch
    Don’t miss these top real-estate stories.
  • 3:47 PM » U.S. House Prices Haven’t Bottomed Yet
    Published Fri, Jul 31 2009 3:47 PM by Google News
    Turnover in the American real-estate market may be bottoming, but prices are unlikely to do so for some time. History suggests they’ll keep drifting for another year or two before they find a floor.
  • 3:47 PM » "Forecasts vs. Mechanisms in Economics"
    Published Fri, Jul 31 2009 3:47 PM by Google News
    Putting up another post all too quickly between conference sessions: : This between Edmund Conway and Andrew Lilico on the Today programme on the alleged crisis in economics seems to me to rest upon a misunderstanding of what economics is. Conway says the crisis has been “an earthquake for economic thought” and Lilico says we need “new theories.“ This, though, seems to regard economics as a settled but inadequate body of knowledge and theory. It’s not. It is instead a vast number of diverse insights. What’s more, all of the insights that help explain the current economic crisis were, in truth, well known to economists before 2007, for example: Risk cannot be simply described by a bell curve. But we learnt about tail risk on . And we learnt from the collapse of in 1998 that correlation risk, liquidity risk and counterparty risk are all significant. Assets can be mispriced. But we’ve known about bubbles for centuries - since at least Their existence does not disprove the efficient market hypothesis; as , the EMH is not the rational investor hypothesis. Nor, contrary to Conway’s implicit claim, is the EMH inconsistent with the possibility that behaviour can be swayed by emotions; the EMH allows for the possibility of time-varying risk premia* Long periods of economic stability can lead to greater risk-taking. We’ve known this (at least) . Banks can suffer catastrophic losses - which are correlated across banks. We learnt this - not for the first time - in the Latin American debt crisis of the early 80s and in the crises in Japan and the Nordic countries in the early 90s. Banking crises are a of even developed economies. Institutions, such as banks, can be undermined by badly designed incentives. But there’s a huge literature on the principal-agent . The current crisis, then, has not thrown up much that economists didn’t know. Instead, our problem is a different one. It’s that what we have are lots of mechanisms, capable of explaining why things happen and the links between...
  • 3:47 PM » Court Throws Out Mortgage Brokers' RESPA Suit
    Published Fri, Jul 31 2009 3:47 PM by Realtor.Org
    Brokers will now be required to disclose lender rebates and credit borrowers at closing.
  • 1:26 PM » RGE Monitor - Weekly Roundup
    Published Fri, Jul 31 2009 1:26 PM by Google News
    Check out all the great contributions that were published during the past week on RGE’s , , , , , , , , and . This week on , Nouriel makes the case for Ben Bernanke’s reappointment. Considering his initial missteps and miscalculations, Mr. Bernanke, through his creative and aggressive actions, engineered a u-turn in Fed policy, which prevented the crisis from turning into a near depression, thus earning him a role in managing the Fed’s exit. See . Don’t miss Fareed Zakaria’s interview with Nouriel, Mortimer Zuckerman and Niall Ferguson as they discuss the U.S. economy. See . On the , in a short preview of RGE’s Q2 Economic Outlook, Mary Stokes and Elisa Parisi-Capone present a concise assessment of risks and growth opportunities for the Eurozone, the UK, the Nordics, as well as Central and Eastern European countries and the Baltics. The bottom line is that --with a few exceptions-- Europe as a region is likely to lag the recovery in the BRICS and in the U.S. See . Before Chinese and U.S. officials sat down this week for high-level economic and strategic meetings, Rachel Ziemba and Adam Wolfe looked at “” China and the U.S. might be in rough agreement on short- and long-term issues, but diverge widely in the middle. On the , Lucian Bebchuk argues that Goldman Sachs should put the $11.4 billion set aside for compensation in a company account for an extended period of time and it should be adjusted downwards if performance falters. If these huge bonuses are allowed to be immediately cashed out, the distorted incentives for short-term performance would still be in place despite Goldman’s adoption of new compensation principles. Read . In , Robert Reich looks at the stock market, which has climbed over 9,000 for the first time since early January, and he urges caution. As employment and underemployment keep rising, the real economy suggests that Wall Street’s cheerleading of profits coming from dramatic cost-cutting is underwhelming. In , Joseph Mason looks at mortgage servicers...
  • 10:50 AM » Federal Reserve Balance Sheet Update: Week Of July 29
    Published Fri, Jul 31 2009 10:50 AM by www.zerohedge.com
    Total Federal Reserve balance sheet assets for the week of July 29 of $2,011 billion consisting of: Securities held outright: $1,343 billion (an increase of $125 billion MoM , resulting from $47.5 billion in new Treasury purchases and a $77.4 billion increase in Fed Agency Debt - this is the most rapid increase in monthly MBS purchases since March ) Net borrowings: $347 billion (a decline of $57 billion month over month) Float, liquidity swaps, Maiden Lane and other assets: $320 billion (decrease of $49 billion month over month due to a continued reduction in Central Bank Liquidity Swaps ($28 billion) and $25 billion in CPFF outstandings). Foreign central bank liquidity swaps are notable as they are at the lowest level since the Lehman bankruptcy ($88 billion), and presumably a good indicator on future dollar value manipulation capacity by the Fed. The rate of decline over the past week was the lowest since the metric commenced declining, and has been correlating closely with a declining dollar: this implies the Federal Reserve's toolkit to implicitly weaken the dollar is running out of options as the Liquidity Swap gets closer to zero. Foreign holdings of USTs and Agencies increased by a meager $27.4 billion monthly to $2,793 billion from $2,766 billion in the prior month. This is roughly 20% of the comparable increase in Securities Held Outright by the Federal Reserve. The Federal Reserve's Monetary Base was at $1,663 billion, indicating the flat/declining trend YTD Sources: and
    Click Here to Read the Full Article

    Source: www.zerohedge.com
  • 8:31 AM » CRE: Another Half Off Sale
    Published Fri, Jul 31 2009 8:31 AM by Calculated Risk Blog
    Actually more than half off of the loan amount ... From Silicon Valley / San Jose Business Journal: (ht Ross) Note: the building is actually in Sunnyvale. California Bavarian Corp.’s Bordeaux Centre has been sold at auction to its lender Wrightwood Capital for less than $15 million. Developer Mark Mordell, president of Cal Bavarian, ... said he was told the campus sold for less than half the $34 million debt owed on the never-occupied, 124,000-square-foot project begun by Cal Bavarian in 2007 and finished in 2008 This is another never occupied commercial building - like the ones us in San Diego last night. The Feed is full length. The Feed is Ad Free. And by request , on the last day of each month, if you like what you see, here is a tip jar - to leave a tip. Thanks! CR
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:31 AM » Unemployed Over 26 Weeks
    Published Fri, Jul 31 2009 8:31 AM by Calculated Risk Blog
    The DOL this morning showed seasonally adjusted insured unemployment at 6.2 million, down from a peak of about 6.9 million. This raises the question (and frequent emails) of how many unemployed workers have exhausted their regular unemployment benefits (Note: most are still receiving extended benefits). The monthly BLS report provides data on workers unemployed for 27 or more weeks, and those workers have exhausted their regular unemployment benefits (and maybe even the extended benefits). So here is a graph ... Click on graph for larger image in new window. The blue line is the number of workers unemployed for 27 weeks or more. The red line is the same data as a percent of the civilian workforce. According to the BLS, there are almost 4.4 million workers who have been unemployed for more than 26 weeks (and still want a job). This is 2.8% of the civilian workforce. Notice the peak happens after a recession ends, and the of long term unemployed peaked about 18 months after the end of the last two recessions (because of the jobless recovery). This suggests that even if the current recession officially ended this month, the number of long term unemployed would probably continue to rise through the end of 2010. The Feed is full length. The Feed is Ad Free. And by request , on the last day of each month, if you like what you see, here is a tip jar - to leave a tip. Thanks! CR
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • Thu, Jul 30 2009
  • 7:23 PM » HUD charges Atlanta Condo Association and real estate agent with discrimination for refusing to sell to families with children
    Published Thu, Jul 30 2009 7:23 PM by www.hud.gov
    WASHINGTON - The U.S. Department of Housing and Urban Development today announced that it is charging an Atlanta condominium association, a local real estate company, and its agent with housing discrimination for refusing to sell to families with children. HUD's charge of violating the Fair Housing Act is against Georgian Manor Condominium Association, Inc., HN Real Estate Group, Jennifer Sherrouse, and the Estate of Jean Branch.
  • 7:23 PM » Hope Now: Mortgage Loss Mitigation Statistics
    Published Thu, Jul 30 2009 7:23 PM by Calculated Risk Blog
    Hope Now released the Q2 today. Most of the data concerns modifications, but here are couple of graphs on delinquencies and foreclosures. Click on graph for larger image in new window. There are now more than 3 million mortgage loans 60+ delinquent based on the Hope Now statistics. This covers approximately 85% of the total industry. There are far more prime loans delinquent than subprime, although a much higher percentage of subprime (18.4%) vs prime (4.24%). The second graph shows foreclosure starts and completions. Foreclosure starts are above 250 thousand per month, and completions close to 100 thousand per month. There is a lag between start and completion, and a number of loans cure or are modified - but it does appear completions will increase in the 2nd half of 2009 based on the surge in starts at the beginning of the year. Just some data for everyone ...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 5:11 PM » Are Servicers Really Reaping Rewards to Foreclose?
    Published Thu, Jul 30 2009 5:11 PM by CNBC
    Posted By: An article in the New York Times today, suggesting that loan servicers would rather collect hefty fees on loans in delinquency and foreclosure than modify those loans, set off a bit of a firestorm in the community that oversees all those modifications. Folks at the Mortgage Bankers Association, who only yesterday had been defending servicers who were hauled before the Treasury Dept for a little kick in the you know where, expressed some disbelief. Topics: | | Sectors: |
  • 5:10 PM » Refinances in Second Quarter Reduce Mortgage Payments by $3.4 Billion in Coming Year
    Published Thu, Jul 30 2009 5:10 PM by www.freddiemac.com
    McLean, VA – In the second quarter of 2009, half of borrowers who refinanced their loan lowered their annual mortgage interest rate by at least 20 percent according to Freddie Mac’s quarterly Refinance Report.
    Click Here to Read the Full Article

    Source: www.freddiemac.com
  • 5:09 PM » SEC Begins Probe Of Flash Trading
    Published Thu, Jul 30 2009 5:09 PM by www.zerohedge.com
    *SEC IS EXAMINING FLASH ORDERS TO ENSURE FAIR ACCESS TO DATA 2009-07-30 19:04:18.188 GMT Next up: Dark Pools (hint, hint, Mary) Update: July 30 (Bloomberg) -- The U.S. Securities and Exchange Commission will review so-called flash orders used by four equity markets, Chief Executive Officer said. , the third-ranking Democrat in the U.S. Senate, told the SEC to review flash orders in a July 24 letter. Regulators told NYSE officials they will examine them, and based on those discussions it appears unlikely the SEC will impose curbs on other forms of high-speed trading, Niederauer said today in a conference call with analysts to discuss the New York-based company’s second-quarter results. “I don’t think there is any fear of them doing something that would severely damage the displayed liquidity on U.S. equity markets,” he said. “High-frequency trading is actually the most consistent source of liquidity.” [TD: Time for one more of those "" ads] , a spokesman for the SEC, didn’t return a telephone call seeking comment. Last month, SEC Chairman said the agency is concerned that electronic indications of bids and offers are being disseminated to a select group of brokerages. NYSE’s competitors -- Bats Global Markets, Direct Edge Holdings LLC and the CBOE Stock Exchange -- give information to their clients about orders for a fraction of a second before the trades are routed to rival platforms. , the world’s largest owner of stock exchanges, told the SEC in May that these flash orders result in most investors getting worse prices.
    Click Here to Read the Full Article

    Source: www.zerohedge.com
  • 5:08 PM » Treasury Announces Nearly $90 Million in Recovery Act Funds
    Published Thu, Jul 30 2009 5:08 PM by US Treasury
    July 30, 2009 TG-248 Treasury Announces Nearly $90 Million in Recovery Act Funds to Strengthen Communities, Provide Affordable Housing In Kansas, Deputy Secretary Visits Housing Development Built with Recovery Act Funds WASHINGTON – As part of the Obama Administration's effort to strengthen communities and ease pressures on the housing market, the U.S. Department of the Treasury today announced nearly $90 million in American Recovery and Reinvestment Act (Recovery Act) funding to spur the development of affordable housing units in Colorado, Delaware, Illinois, Maine, and Nebraska. The announcement was made by Treasury Deputy Secretary Neal Wolin in Topeka Kansas with Governor Parkinson, following a visit to Osawatomie, Kansas, where he participated in the ribbon-cutting of a housing development built because of this Recovery Act program. "Today's announcement of housing funds demonstrates how the Recovery Act is putting our nation on the path to economic stability, one community at a time," said Wolin. "This initiative will help spur construction and development, create much needed jobs, and increase the availability of affordable housing for families around the country." Osawatomie, Kansas (population 4,600) is home to the Woodland Hills development, a project that was halted in January 2009 because of a lack of funds. Because of the Recovery Act's award program for affordable housing development, which awarded $2.3 million to Woodland Hills, development now has been completed. This development will serve an elderly population and is especially meaningful to the town of Osawatomie, which was devastated by a flood in 2007, leaving more than 450 residents homeless. Since the program launch in May 2009, the Treasury Department and the Department of Housing and Urban Development have been implementing new efforts designed to help families while providing important assistance to homebuilders. Specifically, the Treasury Department has implemented...
  • 5:07 PM » Feds Charge Dozens in Mortgage Scam
    Published Thu, Jul 30 2009 5:07 PM by Realtor.Org
    A mortgage fraud case in South Florida is similar to abuses seen during housing boom.
  • 5:06 PM » Home ATM: Low on Cash, but Not Totally Tapped Out
    Published Thu, Jul 30 2009 5:06 PM by Wall Street Journal
    Using a home-equity loan for extra cash was popular during the housing boom, and while fewer people are taking advantage of the home ATM, a new Freddie Mac report indicates that it still has some cash left. Some are still able to pull extra cash out of their homes through refinancing. (Getty Images) In a report on mortgage refinancing, Freddie said that 38% of those who refinanced in the second quarter wrapped a second-lien loan such as home-equity financing into the new mortgage. That rate is at a six-year low, and is down from 43% in the first quarter. But it indicates that despite tighter credit, people are still pulling cash out of their homes. What people are doing with that money is an open question. Some economists have argued that consumption was propped up on the back of such “cash-out” mortgages, and that less availability has helped spur the jump in the saving rate and drops in consumer spending. Those who are still able to get cash-out loans may be using the money to make home improvements or spend on other big-ticket purchases, which would be a boon to the economy. Or they could be using the money to pay down credit-card debt or car loans, which would be less beneficial in the short-term. In the current environment, credit is extremely tight, but it’s also cheap. Mortgage rates remain low, and Freddie chief economist Frank Northaft anticipates more than half of mortgages the rest of the year to be refinances “as long as rates stay near their current levels of 5.25%.” Some borrowers could be taking the extra cash, and parking it in savings or elsewhere in hopes of generating a higher return in the future.
    Click Here to Read the Full Article

    Source: Wall Street Journal
  • 5:05 PM » Regulator: GSEs Unlikely to Fully Repay Bailout
    Published Thu, Jul 30 2009 5:05 PM by Calculated Risk Blog
    From the WSJ: GSEs Unlikely to Repay U.S. in Full ... "My view is that some assets in the senior preferred will have to be left behind as they come out of conservatorship," Federal Housing Finance Agency Director James B. Lockhart said Thursday in response to a question at a panel discussion in Washington. "That will mean that some of the losses will never be repaid." The Treasury has agreed to pump $200 billion into each company in order to keep them solvent. In exchange, the government receives senior preferred stock that pays a 10% dividend. So far, it has injected $85 billion in total into the companies, but Lockhart said that figure was likely to rise in the coming months. Fannie and Freddie together own or guarantee $5.4 trillion in mortgages. ... Mr. Lockhart said Fannie and Freddie would likely see their reserves continue to decline next year, but could return to strong profits in two to three years. I'm shocked!
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 5:04 PM » Mortgage Servicers' Perverse Incentives
    Published Thu, Jul 30 2009 5:04 PM by Seeking Alpha
    submits: Last month, I whether banks’ seeming to effectively modify mortgages was a function of “greed on the part of the banks — that while they pay lip service to the idea of modifying mortgages, they actually make more money by being recalcitrant and obstructive and unhelpful.” It turns out that the is yes, it is — and the NYT’s Peter Goodman has chapter and verse:
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 5:03 PM » Homebuyer tax credit fraud
    Published Thu, Jul 30 2009 5:03 PM by CNN
    The IRS is on the lookout for taxpayers and tax preparers skirting eligibility rules when claiming the $8,000 tax credit. Here's what you need to know.
  • 5:03 PM » Has the housing market hit bottom?
    Published Thu, Jul 30 2009 5:03 PM by Google News
    Tim Iacono is a retired software engineer and writes the financial blog “” which chronicles the many and varied after-effects of the Greenspan term at the Federal Reserve. Tim is also the founder of the investment website “” that provides weekly updates to subscribers on the economy, natural resources, and financial markets. Today, he looks at the question of whether the Housing market has bottomed or not yet . . . ~~~ Now that a number of recent housing reports are generating some incredibly positive headlines and the global economy appears to be slowly digging its way out of an enormous hole that was created last fall when the world nearly came to an end, the burning question on the minds of millions of people is … Has the housing market hit bottom? There is no shortage of answers. Unfortunately, most of them are far too simple and, in most cases, the individual or organization providing the answer has a bias of some sort. I’m no exception. We sold our house about five years ago and have been renting ever since. We plan to buy again, but not until at least next year and we hope to get a lot more house for our money than we could today. That’s the soonest that I think the bottom in home prices is likely to occur around here in the price range we’re looking, though a bottom in home sales may already be behind us, and this is what makes the recent discussion of a housing bottom so complicated - “hitting bottom” means different things to different people living in different parts of the country. The discourse on this subject is full of misinformation and deception from parties with vested interests that will inevitably lead people to make horrendously bad decisions that they’ll regret in another year or two while others may postpone decisions that would be best made today. With my biases out of the way, a few thoughts on a housing market bottom are offered here. In this article, regional differences will largely be set aside and the focus will be on three sets of national...
  • 5:03 PM » 2009-28: The Role of the Securitization Process in the Expansion of Subprime Credit
    Published Thu, Jul 30 2009 5:03 PM by www.federalreserve.gov
    We analyze the structure and attributes of subprime mortgage-backed securitization deals originated between 1997 and 2007. Our data set allows us to link loan-level data for over 6.7 million subprime loans to the securitization deals into which the loans were sold. We show that the securitization process, including the assignment of credit ratings, provided incentives for securitizing banks to purchase loans of poor credit quality in areas with high rates of house price appreciation. Increased demand from the secondary mortgage market for these types of loans appears to have facilitated easier credit in the primary mortgage market. To test this hypothesis, we identify an event which represents an external shock to the relative demand for subprime mortgages in the secondary market. We show that following the SEC's adoption of rules reducing capital requirements on certain broker dealers in 2004, five large deal underwriters disproportionately increased their purchasing activity relative to competing underwriters in ZIP codes with the highest realized rates of house price appreciation but lower average credit quality. We show that these loans subsequently defaulted at marginally higher rates. Finally, using the event as an instrument, we demonstrate a causal link between the demand for mortgages in the secondary mortgage market and the supply of subprime credit in the primary mortgage market.
    Click Here to Read the Full Article

    Source: www.federalreserve.gov
  • 4:42 PM » Federal Reserve approves final amendments to Regulation Z that revise disclosure requirements for private education loans
    Published Thu, Jul 30 2009 4:42 PM by www.federalreserve.gov
    Federal Reserve approves final amendments to Regulation Z that revise disclosure requirements for private education loans
    Click Here to Read the Full Article

    Source: www.federalreserve.gov
  • 10:53 AM » HUD Announces New FHA Loan Modification Program
    Published Thu, Jul 30 2009 10:53 AM by www.hud.gov
    HUD SECRETARY DONOVAN ANNOUNCES NEW FHA-MAKING HOME AFFORDABLE LOAN MODIFICATION GUIDELINES New FHA guidelines projected to help thousands avoid foreclosure per year
  • 8:44 AM » Revisiting Case-Shiller: House Prices Bottoming but Far from Stabilized
    Published Thu, Jul 30 2009 8:44 AM by Seeking Alpha
    submits: Yesterday, I that the housing data, while generally positive (the first uptick nationally in 34 months), contained some negative news due to seasonality. The crux of the problem lies in the strong tendency for house prices to increase in the spring and summer because that is when demand for housing is greatest. Add in the fact that we have seen some distortions due to a rise in distressed sales in higher-income brackets due to the jumbo loan market meltdown. All of this means that one month’s data should be taken with a large grain of salt.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 8:43 AM » Mortgage Melt-Down Investigation: Goldman Sachs and Deutsche Bank Get Served
    Published Thu, Jul 30 2009 8:43 AM by Seeking Alpha
    submits: Goldman Sachs () and Deutsche Bank () got served by the US Senate which is investigating fraud in the mortgage meltdown last year. Several other financial institutions may also have received subpoenas from the sub-committee that is headed by Senator Carl Levin. WSJ said the focus of the investigation is on whether internal communications show executives at the banks had private doubts on the soundness of the mortgage-related securities they were putting together. Anyone want to take a guess on what they will find?
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 8:42 AM » Update: Fannie and Freddie Preferred
    Published Thu, Jul 30 2009 8:42 AM by Seeking Alpha
    On July 14th I about the trading activity in Fannie Mae ()/Freddie Mac () preferred shares. It was clear then that there was a buyer. The buy side interest has continued:
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 8:41 AM » Unemployment Spreads Distress in US Home Loans
    Published Thu, Jul 30 2009 8:41 AM by CNBC
  • 8:40 AM » WSJ: FDIC to Split Failed Banks Hoping to find Buyers
    Published Thu, Jul 30 2009 8:40 AM by Calculated Risk Blog
    Think Corus and Guaranty (Texas) ... From the WSJ: (ht jb) The Federal Deposit Insurance Corp. ... is poised to start breaking failed financial institutions into good and bad pieces in an effort to drum up more interest from prospective buyers. The strategy ... is aimed at selling the most distressed hunks of failed banks to private-equity firms and other types of investors who may be more willing than traditional banks to take a flier on bad assets. The traditional banks could then bid on the deposits, branches and other bits of the failed institution that are appealing. "We want banks to participate in the resolution process, but we know it's a tough time for banks to participate in the resolution process," said Joseph Jiampietro, a senior adviser to FDIC Chairman Sheila Bair. ... "There are certain situations when assets are so distressed and make up a significant percentage of the balance sheet that strategic buyers are hesitant to participate in the process," said Mr. Jiampietro. The article quotes Jiampietro as saying the process is "pretty far along" and that a transaction could happen soon. As I said, think Corus and Guaranty Financial. Both will probably be seized as soon as bidders can be found. This suggests an RTC type entity might also be formed. Interesting times.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:39 AM » The Return of Cram-Downs, Condo Reconversions and More
    Published Thu, Jul 30 2009 8:39 AM by Calculated Risk Blog
    First a graph from on Ventura County sales and inventory by price (Effective Demand covers Ventura and the San Fernando Valley in LA) Click on graph for larger image in new window. This graph from Most of the activity is at the low end, and inventory is pretty low. This is true for many of the low-to-mid end areas. There are more foreclosures coming, but the timing is uncertain - will it be a flood, or will the banks just bleed the foreclosures into the market? But for the mid-to-high end - expect bad news! Not only is financing tight, but there is a dearth of move-up buyers. And from Bloomberg: [House Financial Services Committee Chairman Barney] Frank said he will re-attach the cram-down provisions to any new legislation requested by the industry, “unless we see a significant increase in mortgage modifications and foreclosure- avoidance.” ... Cram-downs let federal judges lengthen terms, cut interest rates and reduce mortgage balances of bankrupt homeowners, even if the lender objects. Not much on Corus or Guaranty Bank (Texas), although both will probably be seized by the FDIC soon. Talk about seizing: A company affiliated with Corus Bank seized the 216-unit Aventine at Boynton Beach apartment complex. In a July 16 filing in Palm Beach County Circuit Court, Aventine Marketing released Boynton Pinehurst from the $25 million remaining on its mortgage with the Chicago-based bank in exchange for the deed to the property. ... Boynton Pinehurst ... planned to convert Aventine into condos when it took a $37.2 million mortgage from Corus Bank in 2006. It paid $48 million for the property that year. Looks like another property with the value cut in half - and more apartments back on the market (aka "reconversions"). And here is another condo project being converted to apartments: (ht Rich and others) Millworks, a 420,882-square-foot residential/commercial project at De Long and Reichert avenues, had a grand opening in May but has only sold two of 124 condominiums...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:38 AM » Home Crisis Investigation
    Published Thu, Jul 30 2009 8:38 AM by Google News
    If Timothy Geithner is as bad at handling the economy as he is at picking bathroom tiles, he won’t need to sell his house. > Mon - Thurs 11p / 10c
  • 8:38 AM » Settling For Less in the New Normal
    Published Thu, Jul 30 2009 8:38 AM by Google News
    Good Evening: Just as they have during 9 of the past 10 sessions, U.S. stocks suffered a setback in the morning, only to rally late in the day. Unlike so many recent sessions, however, all the major averages remained in the red as the closing bell rang on Wednesday. A sell off in China, some weakish economic data, falling commodity prices, and a poor 5 year note auction gave Mr. Market a list of reasons to retreat today. That he cedes ground only grudgingly is a testament to the old gentleman’s resilience, but it may also mean a larger move (up or down) is coming. The VIX, for example, is proving just as resistant to decline as are the main indexes. PIMCO’s Bill Gross would argue that the old man would be well advised to keep his pulse in check until nominal GDP growth shows some resilience of its own. The big news overnight was not earnings related, but China related. Whispers are flowing from Beijing that the central government either is, or soon will be, attempting to rein in the breakneck pace of lending by that nation’s banks. I have no idea whether these rumors will prove to be true, but they were given currency by a 5% fall in Chinese stock prices today, as well as by the large thumping delivered to the types of commodities China loves to consume. Then again, these moves could simply be a corrective head fake after long upside runs, so market participants will be watching China’s next PMI number (Thursday night) for clues. Since Chinese demand has been the fertilizer to the green shoots spotted here and in Europe, any threats to that demand will likely have a cooling effect on global risk appetites. U.S. stock index futures were thus on the defensive this morning when word hit the tape that Yahoo! and Microsoft had finally struck a deal. In an interesting display of how things have changed over the 20 month courtship between the two companies, Yahoo went from being the subject of a $40 billion takeover to simply sharing some search assets with MSFT. No cash will...
  • 8:38 AM » Many Chime In On "Housing Hypocrites" Post
    Published Thu, Jul 30 2009 8:38 AM by Google News
    Yesterday's post generated an unusually high number of responses. Let's take a look at some of them. Mike From NYC Writes: Calculated Risk has a post titled In this story, the building owners are "transferring their ownership interest to their financiers". Well, that's one way of putting it! One thing I have noticed, and you mentioned a similar thing to me in an email not too long ago, is that when a company makes a business decision to pay or not, for a mortgage or other business deal, no one makes a big moral issue out of it. But when individuals do it, it's like they are breaking an eleventh commandment or something, like they are exposing some huge moral failing. I'm just really sick of everyone making a huge moral case against people who are in most cases already in trouble, and those same critics never show up to tar corporate defaulters with the same brush. regards, Mike From NYC "Little Joe" on Silicon Investor writes: This is how I see it. It was the bank's outright fraud that brought the country to its knees and in reality caused these properties to go upside down. The values would never have gotten as high as they did but for the banks' fraud. The consumers debt was significantly increased because inflated prices were paid for the home. We would not have this precipitous drop without the banks' fraud. Then the banks get bailed out and some guy or gal who bought a home paid 20% down took payments they could afford finds him/her self paying for a home that is worth less than they paid for it. The government has made no attempt whatsoever to bring the banksters to justice. They are rewarded with bail outs and bonuses. So when you sum up: Bank Fraud causes the problem. Bank gets bailed out CEO's get big bonuses. Consumer got to pay an inflated value for their home and watch its value decline to less than the mortgage balance. To add insult to injury consumers other assets dropped. To add further insult to...
  • Wed, Jul 29 2009
  • 6:40 PM » Obama: ‘Beginning of the End of the Recession’
    Published Wed, Jul 29 2009 6:40 PM by Wall Street Journal
    President Barack Obama attended a town hall meeting in North Carolina today. The primary focus was health care, but he also began with a look at state of the economy and a defense of the stimulus program. Here is an excerpt of his remarks on the economy. (.) President Obama in North Carolina. (Associated Press) So when I took office in January, I asked to see ten letters from people across the country every day. And most of the letters these days are all about one thing: the economy. So before I take your questions, I want to spend a few minutes talking about where we are and where we need to go. I don’t know whether you’ve seen the cover of the latest Newsweek magazine on the rack at the grocery store, but the cover says, “The Recession is Over.” I bet you found that news a little startling. I know I did. Now, it’s true that we’ve stopped the freefall. The market is up and the financial system is no longer on the verge of collapse. We’re losing jobs at nearly half the rate we were when I took office six months ago. So, we may be seeing the beginning of the end of the recession. But that’s little comfort if you’re one of the folks who have lost their job, and haven’t found another… So, we know the tough times aren’t over. But we also know that without the steps we have already taken, our troubled economy – and the pain it’s inflicting on North Carolina families – would be much worse… It will take time to achieve a complete recovery, and we will not rest until anyone who’s looking for work can find a job. But there is little debate that these steps, taken together, have helped stop our economic freefall.
    Click Here to Read the Full Article

    Source: Wall Street Journal
  • 6:40 PM » Beige Book: Less Bad Is the New Good
    Published Wed, Jul 29 2009 6:40 PM by Google News
    The Current Economic Conditions, aka , is a Federal Reserve report published 8X/year. Each Fed District gathers anecdotal information on current economic conditions in each District and reports back to the Fed. The Beige Book summarizes this information by District and sector. An overall summary of the twelve district reports is prepared by a designated Federal Reserve Bank on a rotating basis. Current findings are that the “Pace of Economic Decline” is slowing. Excerpts: Reports from the 12 Federal Reserve Districts suggest that economic activity continued to be weak going into the summer, but most Districts indicated that the pace of decline has moderated since the last report or that activity has begun to stabilize, albeit at a low level. Five Districts used the words “slow”, “subdued”, or “weak” to describe activity levels; Chicago and St. Louis reported that the pace of decline appeared to be moderating; and New York, Cleveland, Kansas City, and San Francisco pointed to signs of stabilization. Minneapolis said the District economy had contracted since the last report. Most Districts reported sluggish retail activity. Manufacturing activity showed some improvement, with some moderation of declines and most other Districts indicated that manufacturing activity continued at low levels. Residential real estate markets stayed soft in most Districts, although many noted some signs of improvement. By contrast, commercial real estate markets weakened further in recent months in two-thirds of the Districts and remained slow in the others. Districts reported varied—but generally modest—price changes across sectors and products, with competitive pressures damping increases; Most Districts indicated that labor markets were extremely soft, with minimal wage pressures, and cited the use of various methods of reducing compensation in addition to, or instead of, freezing or cutting wages. Consumer spending in the early summer remained below previous-year levels in most Districts...
  • 4:03 PM » Board publishes "5 Tips for Shopping for a Mortgage"
    Published Wed, Jul 29 2009 4:03 PM by www.federalreserve.gov
    Board publishes "5 Tips for Shopping for a Mortgage"
    Click Here to Read the Full Article

    Source: www.federalreserve.gov
  • 12:40 PM » Momentum on Trading Curbs Builds
    Published Wed, Jul 29 2009 12:40 PM by Wall Street Journal
    The chairman of the Commodity Futures Trading Commission said the debate over energy trading should move from whether to set position limits to who should set them and at what level.
    Click Here to Read the Full Article

    Source: Wall Street Journal
  • 12:26 PM » Monthly Case Shiller
    Published Wed, Jul 29 2009 12:26 PM by Google News
    This should be the last of the Seasonal adjustment discussions, but note the difference between the two data runs: Non Seasonally Adjusted and Seasonally Adjusted . click for larger chart via Bianco Research ~~~ Give em a few secs to round up the media coverage
  • 12:25 PM » Shiller: Home Prices Downward Momentum Abating
    Published Wed, Jul 29 2009 12:25 PM by Google News
    Macromarkets Chief Economist Robert Shiller and Macromarkets CEO Sam Masucci weigh in on the state of the housing market and economy. Video (autostart) after the jump July 28, 2009
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