From the WSJ: A bankruptcy filing is "imminent" for Taylor, Bean & Whitaker Mortgage Corp., lawyers representing the mortgage lender said in a federal court filing last week. ... Meanwhile, an internal email at Taylor Bean dated Monday, Aug. 10, referred to a new computer folder "to assemble all of our bankruptcy detailed spreadsheets and support." No surprise. Nothing new on Colonial Bank (or Corus Bank, or Guaranty Bank in Texas). CIT created a little stir this morning with an filing. This was just a notice of CIT being unable to file on time - because the executives are busy - and that CIT expects to file by August 17th (just happens to be the date of the cash tender offer). CIT reiterated in the NT 10-Q that: If the tender offer is successfully completed , the Company intends to use the proceeds of the Credit Facility to complete the tender offer and make payment for the August 17 notes. Further, the Company and a Steering Committee of the bond holder lending group do not intend for the Company to seek relief under the U.S. Bankruptcy Code , but rather will pursue restructuring efforts as part of the comprehensive restructuring plan to enhance the Company’s liquidity and capital position. If the pending tender offer is not successfully completed , and the Company is unable to obtain alternative financing, an event of default under the provisions of the Credit Facility would result and the Company could seek relief under the U.S. Bankruptcy Code . emphasis added That isn't new. CIT also reiterated that there are substantial doubts that the company will continue as a going concern. In addition, as disclosed in the same Current Report on Form 8-K, the Company’s funding strategy and liquidity position have been materially adversely affected by on-going stress in the credit markets, operating losses, credit ratings downgrades, and regulatory and cash restrictions such that there is substantial doubt about the Company’s ability to continue as...

submits: U.S. CMBS loan delinquencies gained nearly a half-point to end the month of July at 3.04%, according to the latest delinquency index results from Fitch Ratings. At this current pace, Fitch anticipates the delinquency index to rise above 5% by year end. . Contributing to the rising number of past due loans is the current volume of performing specially serviced loans; the number of loans with low coverage that are depleting their reserves; and economic factors such as rising unemployment and lack of consumer spending, which will continue to impact commercial property fundamentals going forward.

After weeks of delay, the White House on Tuesday released its regulatory reform plan for derivatives trading, including a provision that would require all standardized derivatives to trade on exchanges regulated by the Securities and Exchange Commission or the Commodity Futures Trading Commission.

Please consider Monday morning's regarding an unprecedented drop in consumer credit. No Credit Where Credit Is Due U.S. consumer credit outstanding fell $10 billion in June, the fifth decline in a row during which the debt balance has shrunk $60 billion or 5.5% at an annual rate — both figures are unprecedented. As the chart below shows, the YoY trend, at -2.8%, is also running at its steepest contractionary rate in over five decades. Welcome to the new paradigm of savings, asset liquidation and debt repayment — the era of consumer frugality. After 20 years of living beyond their means, American consumers will be spending the next several years living below their means, and no, this will not be the end of the world, but it will put a firm ceiling on overall demand growth for some time to come. Consumer Credit Outstanding 10-Year Treasuries vs. Consumer Credit CPI vs. Consumer Inflation Consumer Spending vs. Consumer Credit Record Slide In Bank Lending We just received the monthly data on commercial bank lending in July and it showed a record contraction of $64.0 billion, which is the equivalent of a 12.0% annualized decline. This was the third month in a row of declining bank credit to households and businesses during which the contraction has totaled $149.0 billion (again, an unprecedented 9.0% decline at an annual rate). We are not sure if a recovery can be sustained without credit creation — we haven’t seen it happen in the past, but maybe there is a new paradigm of a credit-less recovery awaiting us. Thanks to Dave Rosenberg for the above series of 5 stunning charts that highlight the inflation/deflation debate. The key take away is those charts all show deflation. Indeed, in a credit based economy a better title for chart 3 might be "Credit IS Inflation". With that thought, you may wish to review the that explains why the money multiplier lag theory fails and why it's credit, not base money supply that is important. Mike "Mish" Shedlock...

In July, Ben Bernanke told a town hall meeting, "I was not going to be the Federal Reserve chairman who presided over the second Great Depression." According to New York Times columnist Paul Krugman in that regard he's succeeded. Bernanke's rescue of the financial sector in tandem with the Obama Administration's stimulus plan prevented a "full replay" of the Great Depression, the Nobel Prize-winning economist writes. But like President Bush declaring "Mission Accomplished" in 2003, Elliott Wave International founder, Bob Prechter thinks Krugman and Bernanke are premature in declaring victory over the credit crunch.

Housing bottoming? Things improving? Worst behind us? Well, not exactly. According to a recent Zillow study, the combination of unsold, vacant homes and underwater mortgages will likely pressure the markets further. Bloomberg: “Almost one-quarter of U.S. mortgage holders owed more than their homes were worth in the second quarter and that figure may rise to as much as 30 percent by mid-2010 as job losses and foreclosures climb, Zillow.com said. Homeowners are being hurt by price declines. The estimated median value for single-family houses slid to $186,500 in the period, a 12 percent drop from a year earlier and the 10th consecutive quarterly decrease, the Seattle-based real estate data service said in a report today… A glut of unsold homes is also pushing down prices. The 3.8 million homes for sale in June would take 9.4 months to sell at the current pace of transactions, according to the National Association of Realtors. The inventory turnover rate averaged 4.5 months in the six years from 2000 to 2005. More than 18.7 million homes, including foreclosures, residences for sale and vacation homes, stood vacant in the U.S. during the second quarter. That compared with 18.6 million a year earlier, the U.S. Census Bureau said July 24.” If you prefer your housing porn in bullet point format, this is lifted directly from the Zillow news release: • U.S. Home values fell 12.1 percent year-over-year, marking the 10th consecutive quarter of declines • Q2 was the first quarter where national declines are not growing. • Total home sales fell 23.7 percent in June versus a year earlier. In the short term, total home sales rose 3.8 percent in June versus May. • Negative equity: More than one-fifth (23 percent) of all owners of single family homes with mortgages owe more on a mortgage than their home is currently worth. • Foreclosure re-sales made up 22 percent of all home sales in June. Homes sold for loss: 29.2 percent of sellers sold homes in June for less than the previous purchase...

Following a better-than-expected employment report and indications that the manufacturing sector is beginning to revive, economists have become more confident that recovery is coming. But the big questions remains: is a recovery sustainable. In a recent research report, Richard Berner and David Greenlaw of Morgan Stanley outline three keys to sustained growth. 1. Credit markets are loosening up. As the post-Lehman panic subsides banks are becoming more willing to lend again. Berner and Greenlaw say the cycle is moving from “vicious to virtuous.” Despite continuing loan losses, especially in mortgages, they expect that fewer banks are tightening credit conditions and more money is on its way through the system. 2. Stimulus is coming online. The government’s stimulus package was always designed to be heavier in the middle, and more shovel-ready projects and state and local construction will come online at the end of this year and into next. That means more output and more jobs associated with that output. 3. Reduced inventory liquidation. Inventories are still elevated when compared to sales. But that doesn’t mean that output has to completely stall. As long as companies raise production less than demand they can continue to draw down inventories while contributing to growth. Despite strong demand for the cash-for-clunkers program, the outlook for the consumer continues to be uncertain. But even with reduced consumption, the economy can continue to grow and avoid a double-dip recession. Just don’t expect blockbuster expansion.

The Atlanta Journal Constitution is reporting fire-sale prices on some lots have dipped to 20 to 30 cents on the dollar as the . You think it’s hard selling a house these days? Try unloading a subdivision. And not just any subdivision, but one with few if any completed homes and a weedy patch where the swim-and-tennis center was planned. That’s the reality many Georgia banks find themselves in amid a foreclosure crisis that has claimed not only individual homes but also entire failed developments. These idled, “zombie” subdivisions can be found across metro Atlanta, but they’re most prevalent in outer-ring suburban areas. Selling them has proven tough, with some properties sitting on the market for months on end without even a nibble. In the past year, 16 Georgia banks have failed, more than in any other state, largely because of residential real estate losses. Dozens more are struggling. To say the market has been sluggish would be an understatement. The main problem is sheer volume – a staggering 150,000 vacant housing lots across metro Atlanta are available, more than a decade’s supply at current absorption rates. The flood of distressed subdivisions is unprecedented and has given banks numerous headaches. Is it more cost-effective to complete half-finished homes before selling or to put them on the market as-is? Should they sell lots in a distressed market or hold onto them until prices rebound? Complicating matters, subdivisions often were financed by more than one bank. And different lenders frequently disagree on what steps to take when problems arise. Shadow Inventory Is "Pig In The Python" RealtyCheck asks the question For the past few months I've talked a little bit about so-called "shadow inventory." These are the homes that banks have taken back after foreclosures (known as REO properties). In normal times banks immediately turn REOs around and up them up for sale, but that's not happening at a very fast clip these days. The Realtor's...