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  • Mon, Dec 1 2008
  • 2:57 PM » The Fed: Bernanke says Fed still has arrows in quiver
    Published Mon, Dec 01 2008 2:57 PM by Market Watch
    The Federal Reserve has lowered interest rates just about as far as they can go, but the U.S. central bank still has plenty of available firepower it could deploy to restore financial markets to normal, Fed Chairman Ben Bernanke says.
  • 2:57 PM » Voluntary Foreclosure Moratorium Launched in Florida
    Published Mon, Dec 01 2008 2:57 PM by www.thetruthaboutmortgage.com
    Well, it looks as if a foreclosure moratorium has made its way to the Sunshine state, though it’s not as cut and dry as similar proposals. The proposal is voluntary, and relies on the member institutions of the Florida Bankers Association and the Florida Credit Union League to hold off on foreclosures for 45 days on [...]
    Click Here to Read the Full Article

    Source: www.thetruthaboutmortgage.com
  • 2:57 PM » Poor Oversight to Blame for Mortgage Crisis
    Published Mon, Dec 01 2008 2:57 PM by www.thetruthaboutmortgage.com
    Many consumers, economists, homeowners, and lenders alike have been scratching their heads for months now, wondering what led to such an unprecedented housing crisis. And while there may not be one answer (no, it’s not the mortgage brokers’ fault), but rather a combination of forces behind the ongoing crisis, a lack of regulation is certainly to [...]
    Click Here to Read the Full Article

    Source: www.thetruthaboutmortgage.com
  • 1:54 PM » For Manhattan, The Issue Is Now Those Maintenance Fees
    Published Mon, Dec 01 2008 1:54 PM by CNBC
    Posted By: Given the chance to chat with several co-op owners, I asked the expected question: Will all the Wall Street layoffs really put a bullet in the island’s real estate market? The answers were mixed, some citing the still-high demand for housing in a city with relatively limited supply. Topics: | | | Sectors: | MEDIA:
  • 1:54 PM » J.P. Morgan sees Fed cutting rates to zero in Jan
    Published Mon, Dec 01 2008 1:54 PM by Reuters
    NEW YORK (Reuters) - The Federal Reserve will lower its policy rate to zero percent by January in its attempt to avert a prolonged recession and to revive the struggling credit market, according to J.P. Morgan Securities analysts.
  • 1:54 PM » Bush Officials Delayed Crackdown on Risky Mortgages
    Published Mon, Dec 01 2008 1:54 PM by CNBC
    The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. Topics: | | | | | | | | | Sectors: | Companies: | MEDIA:
  • 12:20 PM » Mortgage insurers see defaults rise again in October
    Published Mon, Dec 01 2008 12:20 PM by Market Watch
    Insured mortgage defaults rose again in October, but the number of loans brought up to date also increased, according to a report by Mortgage Insurance Companies of America. The association of the largest mortgage insurers said Monday that 80,071 mortgages with insurance went into default last month, or became 60 days past due, up 4.3% from September. In April, one lender changed its default reporting, making figures before April not directly comparable to monthly figures since then. Mortgage cures, or mortgages that are brought up to date, rose 4.4% in October to 43,211 and the highest level since June.
  • 11:01 AM » Freddie Mac Issues Another $1 Billion In Five-year Notes
    Published Mon, Dec 01 2008 11:01 AM by feeds.foxbusiness.com
    Freddie Mac Issues Another $1 Billion In Five-year Notes
    Click Here to Read the Full Article

    Source: feeds.foxbusiness.com
  • 11:00 AM » AIG sells its Private Bank
    Published Mon, Dec 01 2008 11:00 AM by CNN
    Read full story for latest details.
  • 11:00 AM » Trillions in Credit Line Cuts Ahead: Whitney
    Published Mon, Dec 01 2008 11:00 AM by CNBC
    The credit-card industry may pull back well over $2 trillion of lines over the next 18 months banking analyst Meredith Whitney said. Topics: | | | | Sectors: | MEDIA:
  • 11:00 AM » RBS promises mortgage respite
    Published Mon, Dec 01 2008 11:00 AM by www.ft.com
    The political and public campaign to force Britain's banks to do more to help customers weather the economic downturn will gain impetus today with a promise from Royal...
  • 10:46 AM » Construction Spending Declines in October
    Published Mon, Dec 01 2008 10:46 AM by Calculated Risk Blog
    The Census Bureau reported this morning that private non-residential construction decreased in October with declines in both residential and non-residential spending. I expect that non-residential investment will decline sharply over the next year or two. From the Census Bureau: Spending on private construction was at a seasonally adjusted annual rate of $756.5 billion, 2.0 percent (±1.1%) below the revised September estimate of $771.9 billion. Residential construction was at a seasonally adjusted annual rate of $338.8 billion in October, 3.5 percent (±1.3%) below the revised September estimate of $351.2 billion. Nonresidential construction was at a seasonally adjusted annual rate of $417.7 billion in October, 0.7 percent (±1.1%)* below the revised September estimate of $420.6 billion. Click on graph for larger image in new window. The graph shows private residential and nonresidential construction spending since 1993. Nonresidential spending had been strong as builders completed projects, but there is substantial evidence of a slowdown - less lending for new projects, less work for architects - and it appears the expected slowdown in non-residential spending has arrived. On the graph nonresidential spending has been relatively flat for the last few months, but I expect some serious cliff diving over the next 18 months. The second graph shows the year-over-year change for private residential and non-residential construction spending. The YoY change in non-residential spending is starting to slow down and will probably turn negative later this year or early in 2009. It now looks like investment in non-residential structures will negatively impact GDP in Q4. This had been one of the few bright spots for the economy.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 10:45 AM » Will Obama Stand By His Foreclosure Moratorium and Bankruptcy Promises?
    Published Mon, Dec 01 2008 10:45 AM by loanworkout.org
    Below are promises made to Main Street homeowners during President-Elect Obama‘s campaign in his own words from BarackObama.com. “The final plan must provide help to families who are struggling to stay in their homes. We cannot simply bailout Wall Street without helping the millions of innocent homeowners who are facing foreclosure.” Obama September 2008 “Going forward, [...]
    Click Here to Read the Full Article

    Source: loanworkout.org
  • 10:45 AM » Housing Update - How Far To The Bottom?
    Published Mon, Dec 01 2008 10:45 AM by feeds.feedburner.com
    Inquiring minds have been asking for another housing update. My previous update was was on February 15,2008 in . I did not remember Bernanke's comments at the time but looking back now they sure seem funny. CNBC is reporting . Federal Reserve Chairman Ben Bernanke told lawmakers Tuesday he expects the downtrodden U.S. housing sector to improve by the end of the year, a senator who participated in the closed-door meeting said. "He let us believe that the housing situation should begin to ameliorate by the end of the year," said Sen. Pete Domenici, a New Mexico Republican, told reporters. Using the Japan Nationwide Land Prices model as my guide, here is how I have called things in real time. click on chart for sharper image I just added the Winter 2008 arrow. Housing prices are now one notch closer to their final destination. The US Timeline scale is compressed. At the current pace, housing will bottom in about 7 years vs. 14 years in Japan. Flashback March 26 2005 The initial data point was established in the post on March 26, 2005. Here are some excerpts from that post. Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors says that "South Florida is working off of a totally new economic model than any of us have ever experienced in the past." He predicts that a limited supply of land coupled with demand from baby boomers and foreigners will prolong the boom indefinitely. "I just don't think we have what it takes to *** the bubble," said Diane C. Swonk, chief economist at Mesirow Financial in Chicago, who was an optimist during the 90's. "I don't think prices are going to fall, and I don't think they're even going to be flat." Gregory J. Heym, the chief economist at Brown Harris Stevens, is not sold on the inevitability of a downturn. He bases his confidence in the market on things like continuing low mortgage rates, high Wall Street bonuses and the tax benefits of home ownership. "" he...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 10:45 AM » Loan Delinquency Data Suggest We're Nowhere Near a Great Depression II
    Published Mon, Dec 01 2008 10:45 AM by Seeking Alpha
    submits: The chart above shows delinquency rates for business and agricultural loans at all U.S. commercial banks from 1987:Q1 to 2008:Q3 using recently released through the third quarter. In both cases, delinquency rates for agricultural and business loans are close to all-time historical lows, and especially for business loans (1.61%) far below the 3.92% peak in the second quarter of 2002 following the last recession and far below the 6% peak during the 1990-1991 recession.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • Sun, Nov 30 2008
  • 8:25 PM » 19,000 WaMu Employees Will Be Synergized Out Of A Job
    Published Sun, Nov 30 2008 8:25 PM by feeds.feedburner.com
    Forbes is reporting . Up to 19,000 employees of Washington Mutual face being laid off this weekend as JPMorgan Chase turns up the synergy on its recent acquisition. On Friday, JPMorgan Chase (JPM) said it expects to retain the 22,000 employees who work at Washington Mutual branches and 2,000 workers in the mortgage and wealth management divisions in California, spokesman Tom Kelly told Forbes.com. The company has not yet determined the total numbers to be cut in other states, but it planning to inform all former WaMu employees of their job status by Monday. WaMu had about 43,000 employees as of June, according to a filing with the Securities and Exchange Commission. Combined, Chase and WaMu have about 5,400 branches. The company said it only plans to close about 10.0%. The bulk of the job cuts will be at the Washington Mutual headquarters in Seattle due to the overlap in operations with the current employees at JPMorgan. Merger Synergizing Expect to see more synergizing from all mergers we have seen. Here is a list of synergy discussions now doubt underway. JP Morgan and Washington Mutual Bank of America and Countrywide Financial Bank of America and Merrill Lynch JP Morgan and Bear Stearns Wachovia and Wells Fargo More Synergizing Coming Still more synergy will come from hundreds of regional banks that have not yet gone under but will as the The Federal Deposit Insurance Corp. said Tuesday the list of banks it considers to be in trouble shot up nearly 50 percent to 171 during the third quarter -- yet another sign of escalating problems among the institutions controlling Americans' deposits. The 171 banks on the FDIC's "problem list" encompass only about 2 percent of the nearly 8,500 FDIC-insured institutions. Still, the increase from 117 in the second quarter is sharp, and the current tally is the highest since late 1995. Banks that don't make the list can end up collapsing anyway -- the two biggest bank failures over the past year, Washington Mutual...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 8:25 PM » Report: Trump Entertainment to Miss Payment
    Published Sun, Nov 30 2008 8:25 PM by Calculated Risk Blog
    From MarketWatch: Trump Entertainment Resorts will have to skip a $53.1 million interest payment scheduled for Monday on its 8.5% senior secured notes due 2015 in order to maintain sufficient liquidity. The casino operator has a 30 day grace period to make the payment. Not the best of times for casinos ...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 4:46 PM » CB Richard Ellis: CRE "Conditions have deteriorated" Rapidly
    Published Sun, Nov 30 2008 4:46 PM by Calculated Risk Blog
    "Conditions have deteriorated on a scale and with a speed that no one could have predicted just a few months ago. Market conditions of unprecedented strength are roiling the world's financial markets. The global economy is either in, or close to, recession and 2009 is not likely to be a year of great recovery." Brett White, president and chief executive officer of CB Richard Ellis, recent letter to clients, from the LA Times: And a few months ago White wasn't exactly optimistic: “Decreased investment volumes have now become evident in all parts of the world. ... I can best describe the current environment as being very challenging and still having a high probability of getting worse before we see improvement." Brett White, president and chief executive officer of CB Richard Ellis,
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 4:46 PM » Rubin says not to blame for Citi's troubles: report
    Published Sun, Nov 30 2008 4:46 PM by Reuters
    NEW YORK (Reuters) - Former U.S. Treasury secretary Robert Rubin said the near-collapse of Citigroup Inc , where he is a senior counselor, was due to the buckling financial system and not his own mistakes, according to an interview published on The Wall Street Journal's website on Friday.
  • 4:31 PM » Rubin: ‘Nobody Was Prepared’ for Crisis of ‘08
    Published Sun, Nov 30 2008 4:31 PM by The Big Picture
    “What came together was not only a cyclical undervaluing of risk [but also] a housing bubble, and triple-A ratings were misguided. There was virtually nobody who saw that low-probability event as a possibility.” > With that line, former Treasury Secretary Robert Rubin, and current Citibank board member, shredded what little reputation he had left. Rubin’s attempts at defending his tenure at Citi struck me as totally disingenuous. While some may uncritically accept that nonsense as fact, we know better. Many people had been warning of housing busts, excess credit creation, and derivatives for quite some time. Quite a few people were discussing this. Warren Buffett had warned about derivatives years prior. Even Merrill Lynch, and their savvy chief economist David Rosenberg, noted in August of 2004 the potential damage the housing and credit boom and bust could cause. Rubin blamed financial system, not any errors of his own at Citi. And his defense of Greenspan is, in my opinion, the work of a guilty conscious. He and Greenie both supported, and even pushed for: • Repeal of Glass Steagall • Exempting of Derivatives from Regulation • Encouraging Citi to take on more leverage in 2004 • Ultra-low interest rates during, and after the 2001 recession All of these are factors directly related to the subsequent leverage boom and bust. Here’s part of the piece: “Mr. Rubin, senior counselor and a director at Citigroup, acknowledged that he was involved in a board decision to ramp up risk-taking in 2004 and 2005, even though he was warning publicly that investors were taking too much risk. He said if executives had executed the plan properly, the bank’s losses would have been less. Its troubles have put the former Treasury secretary in the awkward position of having to justify $115 million in pay since 1999, excluding stock options, while explaining Citigroup’s $20 billion in losses over the past year and a government bailout of at least $45 billion… Since 1999, the bank has lurched...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 4:31 PM » Bailout Gravy Train
    Published Sun, Nov 30 2008 4:31 PM by The Big Picture
    Click Here to Read the Full Article

    Source: The Big Picture
  • 2:57 PM » No Real Estate Bubble in Central U.S.
    Published Sun, Nov 30 2008 2:57 PM by Seeking Alpha
    submits: The top chart above (click to enlarge) shows the OFHEO House Price Indexes for , , and , just recently updated through the third quarter 2008.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 2:57 PM » The ownership society takes another hit
    Published Sun, Nov 30 2008 2:57 PM by themessthatgreenspanmade.blogspot.com
    It is not at all clear how (or if) the investing public is going to recover from the 2008 plunge in equity markets following the ongoing plunge in home prices that began in 2006. Many were led to believe that, in a worst case scenario, stock appreciation and real estate appreciation would alternate indefinitely into the future. If one went down, the other would go up. If they both went up, well, that was a bonus. No one thought too much about what it would feel like if they both went down. About every other day now, another story comes my way about a friend or relative who says, "Yeah, I sold everything in October. I couldn't take it anymore". It's not difficult to understand that decision making process. There are enough things in life for ordinary citizens to worry about that overcoming the "fight or flight" instinct that makes us all such lousy investors doesn't rise very high on the list. You have to wonder how they're handling it over at Money Magazine. The perma-bull staff has toned down their rhetoric in recent months as it became clear that no quick reversal was forthcoming. Last month's cover story was about keeping your money "safe" while you're waiting for the rebound. Unless somehow we see Dow 14,000 again sometime soon (or at least Dow 10,000), the mainstream financial media and Wall Street firms are going to have a lot to answer for as it becomes increasingly clear that the ownership society that has been thrust upon Americans has not produced the results that were expected. This well-done in the Wall Street Journal tells the story of how Wall Street has failed the individual investor, a concept that more and more people are beginning to realize. With retirement accounts tumbling and millions of homeowners struggling to pay their mortgages, a realization is dawning on many Americans: The banks, brokerage firms, insurance companies and other players in the financial-services industry have failed them...
    Click Here to Read the Full Article

    Source: themessthatgreenspanmade.blogspot.com
  • Fri, Nov 28 2008
  • 9:12 AM » Shiller: Crisis May Run for `Years and Years'
    Published Fri, Nov 28 2008 9:12 AM by Calculated Risk Blog
    This is in three parts (each part 10 minutes). The other .
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 9:12 AM » AIG Plans to Pay Retention Bonuses to Executives
    Published Fri, Nov 28 2008 9:12 AM by Google News
    How can you give cash compensation to an executive, yet claim it is not a salary or bonus? You call it a "retention bonus," No, I am not making this up. Note that AIG chose to make this disclosure the day before Thanksgiving, clearly choosing a time when it would attract the least notice. Not that it really matters. The talk about restricting executive compensation to bailout recipients has been just that, talk. From the : One day after announcing strict limits on salaries and bonuses for its top tier of executives, AIG revealed that some of those executives will receive millions in “retention bonuses” next year... The retention bonuses for 130 key executives were disclosed by AIG in September, after the US government rescued the firm from bankruptcy by purchasing 79.9 per cent of the company for $85bn. After the government takeover, Edward Liddy, the former Allstate chairman, was named chief executive and AIG offered retention bonuses to Mr Wintrob, head of AIG’s retirement services division, among others.... The company announced on Tuesday that Mr Liddy would be paid a salary of $1 for 2008 and 2009, and that Paula Rosput Reynolds, who joined AIG as chief restructuring officer in October, would receive no salary or bonus for 2008. The company said the other five members of AIG’s seven-member leadership group would not receive annual bonuses for 2008 or salary increases through 2009. AIG also said that the company’s senior partners, about 60 executives, would not earn long-term performance awards in 2008, not earn salary increases in 2009, and that the group’s annual bonuses would be limited. An AIG spokesman said on Wednesday that retention bonuses were different from the annual bonuses included in Tuesday’s statement. In September, Mr Liddy pledged to sell off significant portions of AIG’s international operations in order to pay back the government loan. The company said at the time that retention bonuses would be necessary to maintain continuity and value...
  • 8:59 AM » Meltdown far from over, new mortgage crisis looms
    Published Fri, Nov 28 2008 8:59 AM by Washington Post
    WASHINGTON -- Black Friday's retail shoppers hunting for holiday bargains won't be enough to stave off what's likely to become the next economic crisis. Malls from Michigan to Georgia are entering foreclosure, commercial victims of the same events poisoning the housing market.
    Click Here to Read the Full Article

    Source: Washington Post
  • 8:58 AM » Banks face headache on reform of bonuses
    Published Fri, Nov 28 2008 8:58 AM by www.ft.com
    The world's biggest banks are grappling with how to change their bonus schemes after criticism from regulators and shareholders for encouraging excessive risk-taking
  • 8:57 AM » Treasury Urged to Provide No Bailout Benefit to Private Student Lenders
    Published Fri, Nov 28 2008 8:57 AM by Washington Post
    Student advocacy groups are urging the Treasury Department to prevent a new $200 billion consumer-lending program from benefiting private student lenders, which they say are largely unregulated and prey on students with risky, high-interest loans.
    Click Here to Read the Full Article

    Source: Washington Post
  • 8:56 AM » Give Bankruptcy Judges the Power to Alter Mortgages
    Published Fri, Nov 28 2008 8:56 AM by Washington Post
    I watched a middle-aged widow lose her home recently.
    Click Here to Read the Full Article

    Source: Washington Post
  • 8:56 AM » Thieves Stole Identities to Tap Home Equity
    Published Fri, Nov 28 2008 8:56 AM by Washington Post
    Federal authorities this week announced a series of arrests and convictions in connection with a global identity theft ring that stole millions of dollars by hijacking home-equity lines of credit issued to thousands of consumers.
    Click Here to Read the Full Article

    Source: Washington Post
  • 8:56 AM » From Bust to Broom: Foreclosure cleanups bustling
    Published Fri, Nov 28 2008 8:56 AM by Washington Post
    FORT EDWARD, N.Y. -- Several men wordlessly carry out furniture, broken computers and boxes of garbage from a large blue house on a quiet upstate street on a brisk autumn morning. Rusting bikes and an old grill lay discarded in the overgrown backyard which is spotted with empty beer cans and crushed milk cartons. The mood is oddly serene as the men unload the remnants of what was one someone's home.
    Click Here to Read the Full Article

    Source: Washington Post
  • Wed, Nov 26 2008
  • 3:47 PM » Did Citi Suffer a Run on Deposits?
    Published Wed, Nov 26 2008 3:47 PM by Seeking Alpha
    submits: Vikram Pandit was on Charlie Rose last night, and was asked point-blank whether there was a run on Citi's deposits last week. Here's the exchange, at around the 10:40 mark: Charlie Rose : So you go to them and decide that we need to do something because there's a loss of confidence, maybe people were taking their deposits out. Were there? Was it a significant run, in terms of deposits?
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 3:47 PM » Summers to replace Bernanke?
    Published Wed, Nov 26 2008 3:47 PM by themessthatgreenspanmade.blogspot.com
    At the end of Steven Pearlstein's excellent on the world-wide bailout juggernaut that he aptly labels "Keynes on steroids" can be found this little gem. What wasn't particularly helpful this week was the published leak from the Obama camp that former Treasury Secretary Larry Summers would be named the next chairman of the Federal Reserve when the term of Bernanke, the current chairman, expires at the end of January 2010 . A Category 4 financial crisis is hardly the time to undermine confidence in -- or confidence of -- the Fed chairman. Nor is it the time to create unneeded tension between the Fed and the White House, where Summers will be the president's closest and most powerful economic adviser. Whatever his original intentions, Obama would do well to announce publicly that there will be no change at the Fed until the crisis has passed -- and maybe not even then. This does not appear to have been widely reported, but it is rather significant - January of 2010 is just over a year away. This also prompts the question, if this is a Category 4 financial crisis, what would a Category 5 possibly look like?
    Click Here to Read the Full Article

    Source: themessthatgreenspanmade.blogspot.com
  • 3:47 PM » A conversation with Vikram Pandit, CEO of Citigroup
    Published Wed, Nov 26 2008 3:47 PM by The Big Picture
    Click Here to Read the Full Article

    Source: The Big Picture
  • 12:55 PM » Mortgage Rates Drop! It Does Not Mean What it Used to
    Published Wed, Nov 26 2008 12:55 PM by mrmortgage.ml-implode.com
    Ok - I have heard enough of the rampant speculation about how a 50bps drop in mortgage rates are going to save the housing market - I wish it were that simple. We don’t have a lack of liquidity in the mortgage market, we have a lack of qualified borrowers and major asset devaluation. Remember folks, we have seen this happen a few times this year. Rates went right back up after the initial knee jerk lower. This actually happened yesterday as after the initial betterment in the morning, all banks re-priced for the worse multiple times yesterday paring back the rate improvement sharply. I am still not convinced that the low rates will last - But, for the purpose of this analysis, let’s pretend that rates stay at 5.375 to 5.5%. In the good-old days, when rates dropped 50bps in a short period of time, the entire country would refinance for a lower rate, for cash out, to combine a first and second into new first mortgage and then add a new HELOC, etc. Back then when values went up every month and there were hundreds of lenders with thousands of programs and interest rate structures it was very easy to pump the mortgage money. Back then the refi waves came every 6-8 months and within a few months after a wave began it was noticeable how this injection rejuvenated the consumer. This can’t happen any longer. Who do you think is out there to take advantage of these low rates? Much fewer than you would think and a lot less than in the past. REFINANCES -Negative Equity - Within the states that need to most help, the vast majority can’t refi due to negative-equity - . In CA for example, some 60% of all mortgagees are either underwater or ‘near’ underwater and and will not be able to take advantage of the rates. NV, FL and AZ are even worse. The top 10 trouble states in the nation are mostly stuck underwater in their homes, unable to move or refinance. -Rates are really not that low - The rates you are hearing about at 5.25% were there for a brief period yesterday morning but by the...
    Click Here to Read the Full Article

    Source: mrmortgage.ml-implode.com
  • 12:54 PM » October New Home Sales: Lowest Since 1982
    Published Wed, Nov 26 2008 12:54 PM by Calculated Risk Blog
    The Census Bureau , New Home Sales in October were at a seasonally adjusted annual rate of 433 thousand. This is the lowest sales rate since 1982. Click on graph for larger image in new window. The first graph shows monthly new home sales (NSA - Not Seasonally Adjusted). Notice the Red columns for 2008. This is the lowest sales for October since 1981. (NSA, 34 thousand new homes were sold in October 2008, 29 thousand were sold in October 1981). As the graph indicates, sales in 2008 are substantially worse than the previous years. The second graph shows New Home Sales vs. recessions for the last 45 years. New Home sales have fallen off a cliff. Sales of new one-family houses in October 2008 were at a seasonally adjusted annual rate of 433,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 5.3 percent below the revised September of 457,000 and is 40.1 percent below the October 2007 estimate of 723,000. And one more long term graph - this one for New Home Months of Supply. "Months of supply" is at 11.1 months. Sales are falling quickly, but inventory is declining too, so the months of supply is slightly lower than the peak of 11.4 months in August 2008. The all time high for Months of Supply was 11.6 months in April 1980. And on inventory: The seasonally adjusted estimate of new houses for sale at the end of October was 381,000. This represents a supply of 11.1 months at the current sales rate. Inventory numbers from the Census Bureau do not include cancellations and cancellations are falling, but are still near record levels. 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. This is a another very weak report. I'll have more later today ...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 12:54 PM » Jumbo Prime: ‘Walk Away’ Loans - More Downgrades Coming
    Published Wed, Nov 26 2008 12:54 PM by mrmortgage.ml-implode.com
    I am hearing that more ratings agency downgrades are on the way in the Jumbo Prime arena - rightfully so. I call Jumbo Prime the ultimate ‘walk away’ loans. Conforming and Jumbo Prime defaults are surging. These programs offered by most of our nations largest banks allowed a considerable amount of leverage when purchasing or refinancing. These are the ultimate ‘walk away’ loan, as a household income of $85k per year could legitimately buy a $650k home with 5% down during the bubble years. Now, that home is worth 30-70% less and borrowers are making the wise decision to walk away. The greatest volume of Jumbo Prime was on the 5/1, 7/1 and 10/1 interest only product line with 5/1 being the most popular. Wells Fargo was the leader for this program on the West Coast. Chase and Citi were also significant players. The 5/1 interest only is fixed for 5-years at a low introductory rate, typically 1.5% or so below a 30-year fixed then after 5-years adjusts higher or lower depending upon the underlying index such as the 1-year T-Bill or LIBOR plus a margin of 2.25 to 3.25%. Although Pay Options were considered Prime for years, they are not included in this analysis, as they are now in a category of their own. Jumbo Prime are high-leverage programs that allowed borrowers to buy much more home than they should have. Because Jumbo Prime borrowers had better credit overall, banks were very easy on the qualifying. For example, with full-documentation a 620 credit score could get an 80% $750k first mortgage that allowed a 15% second on top of that for a 95% loan. These loans typically qualified at interest only payments. For stated income, the fee was very small, typically .125% in rate, with allowable credit scores around the 660 level. A 50% debt-to-income ratio was typical. THESE ARE NOT PRIME LOANS. This goes to show how distorted risk-management became. This entire mortgage and housing blow up is very linear…Subprime to Alt-A to Jumbo Prime then Prime conventional. Helocs blow the...
    Click Here to Read the Full Article

    Source: mrmortgage.ml-implode.com
  • 12:54 PM » Meredith Whitney says $44 billion in additional writedowns may be on the way
    Published Wed, Nov 26 2008 12:54 PM by feeds.feedburner.com
    Oppenheimer Banking seeress Meredith Whitney has more lumps of holiday coal for the banking industry. She's projecting that the U.S. banks, including Citigroup, could see another $44 billion in writedowns and charges in the fourth quarter. Accounting rule changes on...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 9:34 AM » The Consequences of Another 10% Housing Price Decline
    Published Wed, Nov 26 2008 9:34 AM by Seeking Alpha
    Lok Sang Ho submits: It is sometimes pointed out that the percentage decline in housing prices is much less than the percentage decline in stock prices, and this is not withstanding an estimated 4.28 trillion dollars spent on various forms of bailout programs. , this is more than what was spent in World War II. It is important to interpret this observation correctly. It must not be concluded that this means the housing market decline is less of a problem. Rather, it is evidence that the housing market decline is all the more threatening. Analysts generally agree that the problem of the financial market turmoil really started in the housing market, in particular the segment of that market that is financed by sub-prime mortgage loans. It is increasingly clear that the emergence of the sub-prime market to promote homeownership was ill-motivated, and that the widespread and abusive use of CDS has contributed to serious moral hazard that greatly aggravated the crisis.
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    Source: Seeking Alpha
  • 9:33 AM » Bernanke Admits to Misjudging the Mortgage Crisis
    Published Wed, Nov 26 2008 9:33 AM by Seeking Alpha
    submits: There are few times in life when one can say with authority that they were ahead of the curve — I mean, really, really ahead of it. But the reason so many of you read HousingWire today is because this blog-turned-news agency was among the first to call the global fallout from quickly souring mortgages. We weren’t alone, of course — Nouriel Roubini, in particular, comes to mind, as does the retired executive that pens the well-read — but we were clearly among the first to focus so intently on the interplay between the primary and secondary mortgage markets. I still remember as far back as Dec. 2006 arguing that the failure of the capital markets would portend a grave crisis for the nation’s economy.
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    Source: Seeking Alpha
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