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HomeWhere 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…)
Fannie Mae Plays “Let’s Make a Deal”
Posted by Larry Doyle on March 5th, 2010 12:38 PM |
“Let’s see, do you want to go for the prize behind Door #1 or take a chance on what’s in the big box?”
“Well Monty, I’m playing with your money so it doesn’t really matter now, does it?”
1970’s vintage TV may have been entertaining, but is the current deal-making used by Fannie Mae to liquidate housing inventory truly the way to develop a healthy and robust housing market?
Just what is Fannie Mae doing? (more…)
Housing Plans Promote Long, Slow Decline
Posted by senseoncents on February 26th, 2010 9:32 AM |
Why do I remain overall bearish on housing?
All reports to the contrary, the pace of delinquencies will continue to steadily pressure housing — especially in selected markets.
While the Obama administration is dogged by the issues within housing, I continue to believe that their approach is more exacerbating the situation than improving it. What is the crux of the problem within housing? The law of unintended consequences which changes the behaviors of some, given the engagement with others.
Bloomberg provides some insights on Obama’s new proposals toward housing in writing, Obama May Prohibit Home-Loan Foreclosures Without Preview:
The Obama administration may expand efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the government’s Home Affordable Modification Program. (more…)
Why Housing Will Remain Under Pressure
Posted by Larry Doyle on February 16th, 2010 6:56 AM |
I have maintained and continue to maintain that unless and until we see a measurable decline in mortgage delinquencies, we will not truly experience a measurable turn in the tide for housing overall.
In this same vein, new studies project that measures taken to aid delinquent borrowers and to stem the tide of foreclosures are nothing more than fingers in the dike. These measures are merely temporarily holding back a new and eventual wave of foreclosures.
The Wall Street Journal highlights these new studies this morning in writing, Foreclosures Seen Still Hitting Prices:
More waves of foreclosures will keep downward pressure on home prices in parts of the U.S. over the next several years, two new studies project.
The studies—by John Burns Real Estate Consulting Inc. and Standard & Poor’s Financial Services LLC—both conclude that most efforts to modify loans with easier terms will delay, not prevent, the loss of homes to foreclosure.
The Treasury Department is expected to give its latest update this week on government efforts to avert foreclosures. (more…)
![[HOUSING]](http://sg.wsj.net/public/resources/images/NA-BE294A_HOUSI_NS_20100215184109.gif)
Greenspan: U-Shaped Recovery
Posted by Larry Doyle on February 8th, 2010 11:30 AM |
Alan Greenspan is certainly not viewed in the same light now as he was during a large part of his tenure as chairman of the Federal Reserve. That said, when the former Fed chair speaks, people do listen. What is he saying now? Greenspan is throwing some cold water on the topic of a V-shaped economic recovery. Bloomberg highlights his views this morning in writing, Greenspan Sees ‘Slow’ Recovery, Is ‘Concerned’ if Stocks Drop:
Former Federal Reserve Chairman Alan Greenspan said a U.S. economic recovery is “going to be a slow, trudging thing,” and that he “would get very concerned” if stock prices continue to fall. (more…)
Foreclosures Cast Increasingly Long ‘Shadow Inventory’
Posted by Larry Doyle on December 17th, 2009 5:52 PM |
I continue to reiterate that as long as mortgage delinquencies increase, we will experience a subsequent increase in foreclosures, in turn excessive housing supply, and a weak housing market.
This dynamic is not about to change anytime soon. We saw evidence of this today as one of the largest homebuilders, Hovnanian Enterprises, reported extremely weak earnings. The Wall Street Journal covers the Hovnanian story specifically and housing in general in this video clip.
Specifically on the foreclosure front, Bloomberg reports Shadow Inventory of U.S. Homes Climbs:
The number of homes that may be in the pipeline for a sale because of foreclosure and delinquency climbed about 55 percent to 1.7 million at the end of September, according to estimates by First American CoreLogic.
The “shadow inventory” rose from 1.1 million a year earlier. Such properties include those taken over by banks and mortgage companies and those where the loans are at least 90 days delinquent, the Santa Ana, California-based research firm said in a report today.
How long might it take for the excess housing supply and foreclosure problem to abate? Bloomberg offers:
the pending supply reveals there is still quite a bit of inventory that will impact the housing market for the next few years,” First American said.
Batten down the hatches.
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…)
Obama Administration Ready to Admit Failure of Mortgage Modification Program
Posted by Larry Doyle on December 8th, 2009 11:19 AM |
Throwing good money after bad is not a practice that generates long term success and prosperity. In fact, the unintended consequences and costs of dysfunctional government programs should never be discounted. While intentions of certain programs may be noble, the practicality of Uncle Sam’s attempt to manipulate a market is not easily achieved. I am writing about the results of the Obama administration’s mortgage modification program.
I highlighted the state of this program in October in writing, “Mortgage Modifications: Statistically Insignificant”:
Status of Efforts
• 63 servicers had signed participation agreements for the first-lien modification program;
• More than 1.3 million solicitation letters for HAMP loan modifications to borrowers;
• More than 328,000 HAMP trial modification offers to borrowers;
• More than 209,000 HAMP trial modifications had started;. . . and of the 209,000 mortgage modifications (.3% of total homeowners) started in the country, how are we doing?
• 1,080 borrowers had successfully completed the trial period and received HAMP modifications.
Yep. A whopping 1,080 borrowers have successfully completed the trial period and received modifications. A full .5% of those modifications that had started. Yes, a full 1,080 homeowners. I am sure there are plenty of homeowners still in the trial period, but even 209,000 homeowners as a percentage of the overall housing market is hardly significant.
What have we learned about housing over the last few months? Servicers have little interest in this program. Homeowners who are more than 30 days past due also have little interest in this program. The number 1,080 is clear evidence of that and, in my opinion, renders the entire mortgage modification program statistically insignificant.
Today we learn the Obama administration will release details later this week indicating that 6% of those mortgages in the modification process have now or will ultimately be successfully and permanently modified. (more…)
FHA: Go Broke First, Tighten Standards Later
Posted by Larry Doyle on December 2nd, 2009 11:09 AM |
When will those charged with spending taxpayer money treat associated responsibilities with the seriousness they deserve? Indiscriminately and wastefully allocating taxpayer funds is not merely a question of competence but, in my opinion, a question of patriotism.
The Obama administration’s support of our nation’s housing market has been overwhelming. Taxpayer funds have been directed towards Freddie, Fannie, the FHA (Federal Housing Administration), and a wide number of banks. Although government spending and waste go hand in hand, the American taxpayer deserves so much better.
With the recent news that the FHA insurance fund is depleted, now the FHA decides to tighten standards. Spend money first, ask questions later? Where and when will this madness end? A recent release from the Federal Register/Department of Housing and Urban Development highlights new initiatives by Housing and Urban Development (HUD) which oversees the FHA. The FHA Summary reads as follows: (more…)
