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HomeReport Points to Double Dip in Housing
Posted by Larry Doyle on July 14th, 2010 2:01 PM |
While economists and analysts are aggressively debating whether our nation’s overall economy is poised for a double dip, one firm is not bashful in highlighting that our housing market specifically is beginning to slide down the slippery slope of a double dip. Thank you to our friends at 12th Street Capital for bringing this report to our attention.
Housing Wire, a leading financial website providing news on the mortgage market, highlights the following report, Economist Reports the Housing Market Double Dip Is Beginning:
Toronto-based Capital Economics, an independent macroeconomic research firm, said Tuesday that a double dip in the United States housing market is now materializing. (more…)
Treasury’s Housing Program: “Big Hat, No Cattle”
Posted by Larry Doyle on April 21st, 2010 12:04 PM |
High five to 12th Street Capital for pointing out the quarterly release of the Special Inspector General for the Troubled Asset Relief Program. While this report covers a wealth of topics, let’s zero in on the SIGTARP’s summation of the Treasury’s HAMP (Home Affordable Modification Program).
As our friends at 12th Street write:
Ultimately, the report goes on to focus on HAMP and I would say this sums it up best:
“In sum, until Treasury fulfills its commitment to provide a thoughtfully designed consistently administered, and fully transparent program, HAMP risks being remembered not for catalyzing a recovery from our current housing crisis, but rather for bold announcements, modest goals, and meager results.”
Gaming Uncle Sam’s Mortgage Modification Program
Posted by Larry Doyle on March 31st, 2010 11:08 AM |
A new release by the SIGTARP (Office of the Special Inspector General for the Troubled Asset Relief Program) is exceptionally enlightening in detailing how a likely significant percentage of those homeowners who entered the trial mortgage modification process gamed the system.
Once again, major high five to our friends at 12th Street Capital for sharing this report and providing insightful commentary. As 12th Street points out this morning:
With all of the hoopla surrounding the government and Bank of America announcements to push principal forgiveness to the top of the waterfall for mortgage modification triage, it would have been easy to miss the latest report from the SIGTARP (Special Inspector General of TARP). I have attached the report here and would encourage you to print it out and read it. (more…)
Where is Wall Street Hiding Hundred Plus Billion in Lo$$es?
Posted by Larry Doyle on March 8th, 2010 11:24 AM |
U.S. Rep. Barney Frank (D-MA)
Banks are increasingly healthy, right? Our nation’s accounting rules promote real transparency and integrity in our financial reporting, right? Housing is bottoming, right? No, no, and no!
Why so pessimistic, you may ask? I am not pessimistic at all. I am merely searching for the truth in the midst of the smoke and mirrors on Wall Street and in Washington.
Thank you to our friends at 12th Street Capital for sharing a recently released letter from Congressman Barney Frank imploring the four largest banks involved in mortgage originations to write off second liens they are holding on their books at inflated values.
Why does Congressman Frank believe these loans need to be written off? (more…)
SEC’s New Money Market Fund Rules
Posted by Larry Doyle on January 29th, 2010 10:44 AM |
Sense on Cents once again thanks our friends at 12th Street Capital for providing tremendously useful information and analysis. What do we learn today? The new rules adopted by the SEC for money market funds.
The overview of these rules is provided by Orrick, Herrington and Sutcliffe LLP. The driving force behind the new SEC rules is an effort to promote greater disclosure and liquidity within money market portfolios. After the crisis of 2008-whenever (it’s not over yet), money market funds were and are much riskier than previously perceived. The risks lay in the fact that these funds invested in a fair amount of risky assets. Now that the government backstop of this industry has ceased, the new rules are needed for the industry to move forward.
Investors need to know that when these rules are effective (sometime in 2010), funds can ‘break the buck’ ($1.00 NAV, net asset value) and suspend redemptions.
Navigate accordingly knowing that the money market industry is not what it used to be.
Thanks again to 12th Street and to Orrick for this 2-page overview. Click on image to open pdf document:
LD
Mortgage Modification Applications Decline in November
Posted by Larry Doyle on December 14th, 2009 4:01 PM |
If you don’t buy a ticket, you can’t get into the game.
The Obama administration’s attempt to stabilize the housing market has been an abysmal failure. That fact has been widely broadcast here at Sense on Cents and increasingly at other outlets. While the administration is now attempting to revive this initiative, the fact is the trend in this program is declining. What trend? How is that defined?
Just as a student won’t gain admission to a school without having applied, similarly homeowners will not gain the benefits of a mortgage modification without processing an application. Thank you to our friends at 12th Street Capital for sharing a recent report produced by Bank of America highlighting a number of trends in mortgage modifications, including applications. Let’s navigate. Bank of America reports:
Last month we said that we expected the focus of the HAMP program to shift from outreach and initiation of new trial modifications to completion of modifications and much of this has been confirmed now. The number of trial modifications started over the last month was the lowest yet at about 77k. This represents more than a 50% drop from the prior month. Also, the number of offers given over the last month was at all time lows dropping 30% from the previous month. This month’s report also disclosed permanent modifications for the first time. So far, 31k trial modifications have been successfully converted to permanent modifications. This represents only 4% of started trial modifications. Furthermore, an equal number have failed and are no longer active.
What are the actual figures for mortgage modification applications since this program was launched last spring? BofA reports:
May: 50,130
June: 93,146
July: 110,397
Aug: 133,192
Sept: 100,216
Oct: 163,913
Nov: 77,414,
While Uncle Sam will try to make a go of saving this program, the fact is it’s a pea shooter in the midst of a sandstorm. What would be the heavy artillery? Principal reduction via mortgage cram-downs.
Although Congress has shot down that plan twice, look for a return engagement in 2010.
For those interested in reviewing the Bank of America Mortgage Modification Monitor, click on the image below to access the entire pdf document:
LD
UPDATE: Mortgage Modifications Leading to Mortgage Cram-Downs
Posted by Larry Doyle on December 11th, 2009 11:38 AM |
Despite overwhelming efforts on the part of Uncle Sam, the simple fact of the matter is the program to successfully and permanently modify mortgages has not gained truly meaningful traction. Public pressure on mortgage servicers specifically and the mortgage modification program at large have generated a slight, but hardly significant, increase in permanent modifications over the last month. Let’s review the statistics provided by Uncle Sam’s Making Home Affordable Program:
(more…)
Two Sets of Books Require Two Sets of Accounting Standards
Posted by Larry Doyle on December 8th, 2009 2:43 PM |
What was at the core of the current economic crisis?
The financial transactions embedded in the SIVs (structured investment vehicles) located off-balance sheet within our major financial institutions brought our country to its knees. As the securities housed in these SIVs plunged in value, Uncle Sam was forced to ride to the rescue and bail out Wall Street.
Uncle Sam’s bailing required not only billions in dollars but also the coordination and complicity of the accounting industry. The Federal Accounting Standards Board (FASB) knows that Congress, supported by Wall Street, jammed revised accounting standards in place in order to facilitate Uncle Sam’s bailout.
The FASB, in an attempt to save face and a degree of integrity, has pushed back on Wall Street by passing FAS 166 and 167 which would require investments in off-balance sheet vehicles to be brought on-balance sheet. The implementation of FAS 166 and 167 is imminent and would require financial institutions to set aside increased capital against selected assets.
(more…)
