Note: This was before the FDIC seized banks related to FBOP today. This is an unofficial list of Problem Banks. Changes and comments from surferdude808: The Unofficial Problem Bank List crossed a major threshold this week as 500 institutions are now listed. The list grew by a net 18 institutions this week and nearly $44 billion in assets were added. Most of the increase comes is a result of the FDIC finally releasing its actions for September 2009. It will take another month to get their actions for October 2009. The FDIC released 25 cease & desist order and 2 Prompt Corrective Actions. The list already included 8 of these 25 as they were identified through 8-K filings, media reports, or the State Banking Department of Illinois’ website. From last week’s list, we dropped the 6 failures last Friday and another one that had failed back in July. Also, the FDIC issued a Cease & Desist Order on September 28, 2009 against Hillcrest Bank Florida that failed last Friday; hence, it never had time to appear on the list. Most notable among the new additions are R-G Premier Bank of Puerto Rico ($6.5 billion); Central Pacific Bank, Honolulu, HI ($5.5 billion); and West Coast Bank, Lake Oswego, OR ($2.6 billion). The other 22 institutions added had an average asset size of $262 million. Looking at the additions from a geographic perspective, there were four institutions headquartered in Washington, and two each in Florida, Georgia, Minnesota, and Wisconsin. There is a new addition from the FDIC issuing a Prompt Corrective Action Order on September 18th against Washita State Bank, Burns Flat, OK. Although not new to the list as they have been operating under a formal action, there were two other Prompt Corrective actions added. First, the OTS issued a PCA order on October 22nd against Century Bank, a Federal Savings Bank, Sarasota, FL; and the Federal Reserve issued a PCA order on October 27th against SolutionsBank, Overland Park, KS. The list is compiled from regulator press...

The appraisal system implemented last May could be ended as part of legislation for a new Consumer Financial Protection Agency.

Federal Reserve adopts policy statement supporting prudent commercial real estate (CRE) loan workouts

Written By: Stacey Sprain, Certified Ambassador Loan Processor (CALP) As I’m sure we’ve all learned by now, HUD announced late last Wednesday afternoon that another extension had been issued in regards to the implementation of the new condominium project approval procedures mentioned in Mortgagee Letter 2009-19. I, for one, am extremely grateful for the additional time; though the extension was issued just as I was wrapping up a very thorough review of the Mortgagee Letter- go figure! I’ll be honest- condo project reviews are not near the top of my list of favorite things to deal with. I saw the length of that Mortgagee Letter when it first came out, I started reading it, ADHD kicked in, I tossed it aside and kept it on my list of things to review when I got to it. Well last week, I finally got to it! And I also came away from it with a long list of questions and complete confusion as to why on earth any of us brokers or lenders would be the least bit motivated to participate in the DELRAP option. The risk is HUGE! Now I can tell you this though- for lenders who have the staff and expertise to afford them a department of knowledgeable and experienced staff with direct access to legal opinions, these new project review and approval options are golden and being able to offer DELRAP will help them stand out in their market. But somehow I don’t think we’re going to see very many jump right up at the chance. Condominium project reviews are very complex. The list of exhibits alone is completely overwhelming. Refer to Attachment A which includes a listing of 16 different document sets and start adding up the inches of paper. I’m thinking, wow, one project might have a pile of condo docs about three feet high- what a fun job for somebody else! I came away from my review of the Mortgagee Letter with a pile of notes- let me see if I can explain them as they may help put some of the risk concerns in perspective. 1. It states clearly that the DELRAP option is only available to lenders...

WASHINGTON (Reuters) - U.S. consumer spending fell in September for the first time in five months as the boost from a government auto incentive faded, data showed on Friday, adding to fears that consumers may be pulling back as they head into the last quarter of the year.

Along with Thursday’s GDP report, the Department of Commerce offered an important clue to answering one of the biggest questions hanging over the U.S. economy: How quickly U.S. consumers can shed their onerous debts and get into a position to spend again. In buried deep in its Web site, the Bureau of Economic Analysis reported that U.S. households’ annualized mortgage payments fell by more than $10 billion in the third quarter from the second, a decline of about 1.5%. In all, they had fallen an annualized $35.7 billion from their peak in the first quarter of 2008. The data reflect two trends. For one, with the Federal Reserve holding short-term interest rates near zero, the wave of pain wrought by payment resets on floating-rate mortgage loans may have largely passed. Beyond that, an increasing share of mortgage holders has stopped making payments on loans. The official data are just starting to pick up the effect of those defaults, because the debt isn’t erased until the lender has foreclosed, sold the house and charged off the loan. Mortgage debt is by far the largest portion of household debt, so the decline in payments will likely have a large effect on one of the most widely-watched indicators of U.S. consumers’ indebtedness — the financial obligation ratio, which measures payments on mortgages, credit cards and rent as a share of disposable income. And if the growing ranks of delinquent mortgage holders are any indication, the finances of U.S. households will be even better in quarters to come. None of that, of course, means that people will be heading straight for the mall. Many have lost their homes, their jobs and much of their savings. But for those who have gotten out from under onerous loans, it will be a bit easier to live within their means.

I'm working on a GDP post for later ... Click on graph for larger image in new window. From Doug Short of (financial planner). Note that the Great Depression crash is based on the DOW; the three others are for the S&P 500. The S&P was up 2.24% today ... From Bloomberg: (ht Brian) Moody’s Investors Service said it’s planning a review of U.S. home-loan securities that will likely lead to another round of rating changes based on a new view that property prices won’t bottom until next year’s third quarter . The firm will boost its loss projections by “significant” amounts for prime-jumbo, Alt-A, option adjustable-rate and subprime mortgages backing bonds issued between 2005 and 2008, also after seeing higher losses per foreclosure than expected ... Recent data showing rising home prices doesn’t prove the slump is over, the company said. “The overhang of impending foreclosures and the continued rise in unemployment rates will impact home prices negatively in the coming months,” New York-based Moody’s said. emphasis added And the Fed has finished its $300 billion Treasury purchase program - from Bloomberg:

The FHA loan has become increasingly popular for buyers looking to buy fixer-uppers, especially foreclosures.

The DOL reports weekly decreased slightly to 530,000: In the week ending Oct. 24, the advance figure for seasonally adjusted initial claims was 530,000, a decrease of 1,000 from the previous week's unrevised figure of 531,000. The 4-week moving average was 526,250, a decrease of 6,000 from the previous week's unrevised average of 532,250. ... The advance number for seasonally adjusted insured unemployment during the week ending Oct. 17 was 5,797,000, a decrease of 148,000 from the preceding week's revised level of 5,945,000. Click on graph for larger image in new window. This graph shows the 4-week moving average of weekly claims since 1971. The four-week average of weekly unemployment claims decreased this week by 6,000 to 526,250, and is now 132,500 below the peak in April. The significant decline from the peak strongly suggests that initial weekly claims have peaked for this cycle. However, the key question is: Will claims continue to decline sharply, like following the recessions in the '70s and '80s, or will claims plateau for some time at an elevated level, as happened during the jobless recoveries in the early '90s and '00s? The level is still very high suggesting continuing job losses ...

Originators want to originate new loans, investors want to buy bonds with new conservatively underwritten loans, Treasury & Federal Reserve want the new issue CMBS market to start, borrowers certainly want to take out new loans to refinance maturing loans, and yet, four months after the Treasury launched the program, not one new issue CMBS deal has come to the market. This highlights the chicken-and-egg type problem that the CMBS market faces. Everyone knows that the new origination will be of higher quality and so should have tighter spreads than the legacy bonds. Yet, lacking an efficient hedge, all that the originators have for indication of spreads are the legacy bonds, which are still too wide for new issue deals. In other words, originators are looking for tighter and stable bond spreads to originate, and market is looking for new collateral for tighter spreads – sort of a chicken-and-egg type problem.

At an October 22 read more

submits: Fitch explains how interest shortfalls are allocated in transactions and how and when they can be recovered. Declining U.S. commercial real estate fundamentals are likely to induce more interest shortfalls well into next year, according to Fitch Ratings. Fitch expects CMBS interest shortfalls to increase in size and magnitude through 2010 or until the commercial real estate market recovers.

Concerns arise that the current recovery may be tenuous because it is largely government sponsored.

WASHINGTON - Housing and Urban Development (HUD) Secretary Shaun Donovan and Homeland Security (DHS) Secretary Janet Napolitano today announced the launch of DisasterRecoveryWorkingGroup.gov-a new interagency website that will allow federal disaster recovery officials to solicit public comments from state, local and tribal partners and the public.

The Census Bureau New Home Sales in September were at a seasonally adjusted annual rate (SAAR) of 402 thousand. This is a decrease from the revised rate of 417 thousand in August (revised from 429 thousand). Click on graph for larger image in new window. The first graph shows monthly new home sales (NSA - Not Seasonally Adjusted). Note the Red columns for 2009. Sales in September 2009 (31 thousand) were below September 2008 (35 thousand). This is the 3rd lowest sales for September since the Census Bureau started tracking sales in 1963. In September 2009, 31 thousand new homes were sold (NSA); the record low was 28 thousand in September 1981; the record high for September was 99 thousand in 2005. The second graph shows New Home Sales vs. recessions for the last 45 years. New Home sales fell off a cliff, but are now 22% above the low in January. Sales of new one-family houses in September 2009 were at a seasonally adjusted annual rate of 402,000 ... This is 3.6 percent (±10.2%)* below the revised August rate of 417,000 and is 7.8 percent (±12.0%)* below the September 2008 estimate of 436,000. And another long term graph - this one for New Home Months of Supply. There were 7.5 months of supply in September - significantly below the all time record of 12.4 months of supply set in January. The seasonally adjusted estimate of new houses for sale at the end of September was 251,000. This represents a supply of 7.5 months at the current sales rate. The final graph shows new home inventory. Note that new home inventory does not include many condos (especially high rise condos), and areas with significant condo construction will have much higher inventory levels. Months-of-supply and inventory have both peaked for this cycle, and new homes sales has probably also bottomed for this cycle. Sales were probably impacted by the end of the first-time home buyer tax credit (because of timing, new home sales are impacted before existing home sales). New home sales are far more important...

This morning, we discussed . This afternoon, let’s look at Strategic Non-Foreclosure . Data via ‘ Monthly Mortgage Monitor shows a growing disparity between delinquencies and foreclosure starts. In other words, as more people fall behind on their mortgages, banks are becoming increasingly leery of putting them into foreclosure. LPS calls this “Shadow Foreclosure Inventory” – The number of loans deteriorating further into delinquent status is more than twice the volume of foreclosure starts. Why would they wait? Some of it is voluntary foreclosure abatement, some mortgage mod delays. Yet the chart below implies something beyond that. Perhaps its strategic. Consider : The bank may have other (more expensive?) local properties that would be effected by a foreclosure. They may be waiting for a more advantageous time of year to put the homes up for sale. But I suspect the biggest reason are costs: Until foreclosure, the nominal owner remains liable for all state, real estate and local school taxes. Plus, some localities require regular maintenance (mow yard, clean street, shovel sidewalk, etc.) Hence, not foreclosing not only gives the owner time to get current, but may also prevent the bank from accruing expenses . . . Here is LPS chart: > click for larger graph Data as of September 30, 2009 Month-end > As notes: “As the graph illustrates, delinquencies are rising, but foreclosure starts are not. As of September 2009, 90+deterioration more than doubled actual foreclosure starts. LPS has dubbed this “shadow foreclosure inventory.” Higher unemployment begets delinquencies and defaults, but foreclosures aren’t flowing through due to modification efforts and various moratoria. Depending on the success of programs like HAMP, more than a few of these loans are still destined for foreclosure.” Good stuff. > Hat tip Scott F! Sources : LPS Mortgage Monitor, October 15, 2009 http://www.lpsvcs.com/NewsRoom/IndustryData/Documents/10-2009%20Mortgage%20Monitor/LPS%20Mortgage...

She can feel what the callers on the other end of the line are feeling. Recently it’s been tearing, gripping, throat-tightening. Giselle Sanchez and 12 other call center operators spend all day answering questions about where to find help. Sometimes it’s help with the rent. Other times it’s help steering away from suicide. These call-takers are the [...]

A busy day ... here is a summary: From the WSJ: . The WSJ is reporting GMAC is in "advanced" talks with Treasury for another bailout: "The U.S. government is likely to inject $2.8 billion to $5.6 billion of capital into [GMAC], on top of the $12.5 billion that GMAC has received since December 2008 ... " The Home Buyer tax credit has apparently been extended, and eligibility expanded to include some move-up buyers. Details: Income eligibility for first-time home buyers stays at $75,000 for individuals, and $150,000 for couples. For move-up buyers, income eligibility is $125,000 for individuals and $250,000 for couples. There is a minimum 5 year residency requirement - in their current home - for move-up home buyers. The tax credit is the lesser of $7,290 or 10% of the purchase price. The credit runs from Dec. 1, 2009 to April 30, 2010, with an additional 60 day period to close escrow. (So end of April to sign contract, end of June to close escrow) Expect bill to be signed by Friday, packaged with the unemployment benefit extension. From Dow Jones tonight: Boston Properties Inc. ... reported Tuesday ... that gross rents declined 17% when comparing what new tenants are paying with the rent that had been paid by old tenants occupying that space. ... The results follow similar releases Monday by SL Green Realty Corp. (SLG), one of New York's largest office landlords, and Liberty Property Trust (LRY), of Malvern, Pa., which owns 700 properties including offices and light manufacturing. Earlier I posted some interesting comments from the Liberty Property Trust . The Case-Shiller Home Price Index an increase in August. Here is a repeat of the graph: Click on graph for larger image in new window. This graph shows the nominal seasonally adjusted Composite 10 and Composite 20 indices (the Composite 20 was started in January 2000). The Composite 10 index is off 32.5% from the peak, and up about 1.0% in August. The Composite 20 index is off 31.3% from the...

Nice interactive chart in the NYT, in an that is surprisingly realistic: “Even as new figures show house prices have risen for three consecutive months, concerns are growing that the real estate market will be severely tested this winter. Artificially low interest rates and a government tax credit are luring buyers, but both those inducements are scheduled to end. Defaults and distress sales are rising in the middle and upper price ranges. And millions of people have lost so much equity that they are locked into their homes for years, a modern variation of the Victorian debtor’s prison that is freezing a large swath of the market.” > Home Prices in Selected Cities, Through August 2009 click for graphic via > Source DAVID STREITFELD NYT, October 27, 2009 http://www.nytimes.com/2009/10/28/business/economy/28home.html

Here are some key parts of the hashed out between House Financial Services Committee Chairman Barney Frank (D., Mass.) and the Treasury Department. 1) It would create a financial services oversight council, chaired by the Treasury Secretary, which would consist of Federal Reserve Chairman, Comptroller of the Currency, Federal Deposit Insurance Corp. Chairman, and heads of the Securities and Exchange Commission, Federal Housing Finance Agency, Commodity Futures Trading Commission, and others. The council would: a. advise Congress on banking regulation b. identify companies and activities that should be subject to more supervision. c. Issue formal recommendations that a council member adopt for firms it regulates. d. Resolve a dispute between regulators. e. Subject a financial activity or practice to tougher rules and standards if the activity could threaten companies or markets. 2) The Fed would be able to direct any large financial holding company to shrink by selling or transferring assets or stopping certain activities if it determines there could be a “threat to the safety and soundness of such company or to the financial stability of the United States.” 3) The Fed would be able to set concentration limits for large financial holding companies, prohibiting these firms from having credit exposure to buy unaffiliated company that exceeds 25% of the holding company’s capital stock and surplus or a lower amount if the Fed determines it to be prudent. 4) The Fed could require any large holding company it determines to be critically undercapitalized to enter bankruptcy. 5) The FDIC can, with the approval of the Fed and Treasury Department, make a loan or offer guarantees to a solvent company “predominantly engaged in activities that are financial in nature” if this is necessary to “prevent financial instability during times of severe economic distress.” 6) Any losses incurred by the FDIC would be paid by borrowed funds from Treasury, and later recouped by assessments on...