Why Fannie and Freddie Aren’t Going to Make It Easier to Get a Mortgage Any Time Soon……
by Tom on October 31, 2009
in Market Musings
Enough said? Or do I need to say More?
Tom Vanderwell
Technorati Tags: Fannie Mae, Freddie Mac
“Atlas Shrugged” Part 1 of ?
by Tom on October 31, 2009
in Atlas Shrugged
Okay, I’m finally going to get this rolling. I’ve been rereading Atlas Shrugged again and as I come across what I view are important things, I’ll talk about them.
The first “moment” comes in the first chapter when Eddy is talking to James Taggert. They are talking about the future of one of the lines of their railroad and Eddy says, “Do the right thing no matter what.”
Do the right thing no matter what. Think about that for a minute, how many of the problems we are currently having would have been avoided if people had done the right thing, no matter what?
More later……
Tom
Foreclosure disease – it’s spreading….
by Tom on October 31, 2009
in Market Musings, banks
A couple of interesting (and disturbing) points to take from this article:
- We’re in the second of three “waves” of foreclosures.
- Most people who lose their jobs are going to have a very hard time keeping up on their payments if they aren’t able to find a job soon.
- As long as the job situation remains a struggle, we’ll see foreclosures spread throughout the “general” public.
- This is way past being a subprime problem and it’s into being a problem for every community where job losses have and are occurring.
There were some analysts who tried to “spin” this week’s initial unemployment claims number as “improving.” It improved to the point that ONLY 530,000 people lost their jobs last week. If you assume that they were evenly split between those who own and rent based on historical numbers, that’s another 300,000 plus homeowners who became at risk of losing their home.
That’s why it’s spreading and it won’t be over until we can work through a deleveraging of the debt and start generating jobs again.
Tom Vanderwell
Foreclosures are beginning to flare up in suburban and secondary metro markets for Q309, according to a report from RealtyTrac.Dramatic increases in foreclosures from a year ago came in suburban areas previously believed to be more stable, such as Boise, Idaho, up nearly 22% from Q209. Another area, Provo, Utah, is located a distance of 45 miles outside Salt Lake City and rose nearly 11% in the same period. RealtyTrac provides an online marketplace for foreclosure properties with more than 1.5m default, auction and REO listings.
In several states, foreclosure activities drifted toward new focal points, such as smaller towns with previously self-sustaining industries. Chico, California in Sacramento Valley, and agricultural hub, had a 98% increase in foreclosures from Q308, according to the report.
……..“You are seeing that migration into secondary markets. You’re also seeing a migration into formerly stable areas and areas that have been wracked by unemployment.”
……..Sharga sees the foreclosure crisis coming in three waves, and with this new data, the market is showing signs of the second one.
“That first wave of foreclosures cratered the economy, which created job losses, which created the second wave. Now, we’re seeing prime rate loans affected by unemployment. And the third wave will be really a repeat of wave one, except this time we’re going to see a switch of Option ARM and Alt-A loans out for the subprime loans. It will probably be as big but somewhat shorter lived,” Sharga said.
Sharga said that he expects a peak in foreclosures in 2010, only a marginal improvement in 2011 and a return to normal monthly foreclosure activity sometime in 2012
Technorati Tags: Foreclosures
Bank Failures – it’s a 9 Bank Friday!
Wow, this is quite something. US Bank bought 9 banks today.
9 banks, 4 states, 153 Offices.
Oh, and the FDIC is going to lose $2.5 Billion on it. That’s going to leave a mark.
Tom Vanderwell
Calculated Risk: Bank Failures 107 through 115: Nine Failed Banks in Arizona, California, Illinois and Texas
From the FDIC: U.S. Bank, NA, of Minneapolis, Minnesota, Assumes All of the Deposits of Nine Failed Banks in Arizona, California, Illinois and TexasThe Federal Deposit Insurance Corporation (FDIC) entered into a purchase and assumption agreement with U.S. Bank, NA, of Minneapolis, Minnesota, a wholly-owned subsidiary of U.S. Bancorp, to assume all of the deposits and essentially all of the assets of nine failed banks. …
The nine banks involved in today’s transaction are: Bank USA, National Association, Phoenix, Arizona; California National Bank, Los Angeles, California; San Diego National Bank, San Diego, California; Pacific National Bank, San Francisco, California; Park National Bank, Chicago, Illinois; Community Bank of Lemont, Lemont, Illinois; North Houston Bank, Houston, Texas; Madisonville State Bank, Madisonville, Texas; and Citizens National Bank, Teague, Texas. As of September 30, 2009, the banks had combined assets of $19.4 billion and deposits of $15.4 billion.
The nine banks had 153 offices…
The FDIC estimates that the cost of the nine banks to the DIF will be a combined $2.5 billion. U.S. Bank’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to alternatives. The failure of the nine banks brings the nation’s total number this year to 115
Technorati Tags: FDIC, 9 Banks, US Bank, Bank shutdowns
You Can’t Drink Yourself Sober
by Tom on October 30, 2009
in Market Musings
Mortgage Rates for Friday, October 30
by Tom on October 30, 2009
in Mortgage Rates
Technorati Tags: Mortgage Rate Update
Stimulus and the GDP
by Tom on October 30, 2009
in Market Musings
Well, we got some really good economic news yesterday in the GDP (Gross Domestic Product) report. The economy grew in the 3rd quarter by 3.6%! That’s awesome! The recession is over! Oh, but wait a minute……
The government has thrown a huge amount of money in stimulus and other efforts to get the economy “juiced” up and going again. Guess what, in some senses, it’s worked. But let’s take a look at a chart that Moody’s put together (I got it from my favorite financial writer, well, one of them, Calculated Risk.) It shows the estimated growth that has been caused by temporary stimulus measures and their net effect on the economy. In the 3rd quarter, approximately 3.4% of the 3.6% in growth came because of stimulus measures.
Oh, and notice how by the fourth quarter of next year, 2010, it’s a drag on the economy? Why’s that? A couple of reasons:
- According to the documentation released by the White House this morning (as reported by CNN), the government’s stimulus measures saved or created 650,000 new jobs at a cost of $150,000,000,000. Guess what, that works out to be approximately $230,769 per job. And a lot of debt that we’re going to have pay back some time.
- The stimulus measures are not measures that are putting a lot of long term benefit into the economy but are raising significant risk of inflation that will have a long term impact.
And along that line and in conjunction with the festivities this weekend, here’s an interesting graph from another one of my favorite writers, Paul Kedrosky:
It’s Alive, It’s ALIVE, It’s ALLLIIIIVVVE!
Technorati Tags: GDP, Recession
Consumer Spending – Can’t Seem to Keep Going….
by Tom on October 30, 2009
in Market Musings
In one of the first clear signs that the consumer hasn’t recovered yet and needs that “caffeine injection” of a government stimulus to keep going, we have the September consumer spending reports. What do they show?
That the cash for clunkers boosted spending quite dramatically and then things dropped off quite a bit after that. Now a couple of thoughts on how to look at that:
- Taken at face value, it says that the consumer is running out of steam and is tapped out.
- It might also mean that all we did with the cash for clunkers was borrow 2010’s sales and move them into 2009.
So,what does that portend for the future of housing after the housing tax credit issues are gone?
Tom Vanderwell
Consumer spending retreats after clunkers ends – MarketWatch
WASHINGTON (MarketWatch) — U.S. consumer spending fell sharply in September after the government’s cash-for-clunkers program ended, while after-tax incomes fell for the fourth month in a row, the Commerce Department estimated Friday.
Technorati Tags: Consumer Spending
Mortgage Delinquencies – continuing to climb….
by Tom on October 29, 2009
in banks, house prices
I’ve got to hand it to Foresight Analytics. They didn’t try to spin a “less bad” report out of something that wasn’t less bad.
So what did their report show:
- Delinquencies in mortgages are still climbing.
- The rate of delinquencies has been consistently going up at least 1% per quarter.
I’m going to say it again, until:
- We get a significant turnaround in the jobs situation, we won’t see the trend for delinquencies reverse.
- Until we get a change in delinquencies, we’ll see more and more houses come on the market as distressed properties.
- Until we get a change in delinquencies, we’ll see more and more pressure on house prices.
- An $8,000 tax credit will temporarily forestall some of that, but it won’t change the overall dynamics of what’s happening.
It ain’t over yet, no matter the spinmeisters on CNBC, at NAR, and at the MBA might try to tell you.
Tom Vanderwell
Total delinquencies for first-lien residential mortgages grew to an estimated 11% during Q309, according a report from California-based real estate market consulting firm Foresight Analytics.The final figures for the third quarter are not due until the end of November, but Foresight’s report bases its data on earnings reports and call report filings from banks.
Residential delinquencies increased from 10.2% in Q209 and from 6.4% from the second quarter of 2008, according to the report. Except for a two-percentage point jump in Q408, the delinquency rate rose approximately 1% every quarter since the Q108.
“We have been expecting the rate of increase to slow, but clearly this has not yet occurred,” according to the report.
Technorati Tags: Mortgage Delinquencies
Jumbo Conforming Loan Limits
by Tom on October 29, 2009
in Market Musings, banks
It’s not finalized, but it looks like the government is going to keep the subsidies going for the higher priced houses. We’ve got to keep the bubble inflated because if the bubble pops, we’re all in trouble….
Tom Vanderwell
Appropriations committees in the House and Senate are proposing to extend the temporary limits for conforming jumbo loans either insured by the Federal Housing Administration (FHA) or purchased by the government-sponsored enterprises (GSE) Freddie Mac (FRE: 1.16 -5.69%) and Fannie Mae (FNM: 1.02 -4.67%).The proposed extension of the conforming minimum of $729,750 for mortgages in higher-priced markets would run through the end of 2010.
Technorati Tags: Jumbo Conforming Loans
