David Kirkpatrick

August 29, 2010

The housing market continues to suffer

And the White House is prepping to announce new initiatives to keep homeowners in their houses and forestall a new spate of foreclosures. The real-world effects of this recession are still ongoing, regardless what direction any economic indicators may point, and the help Main Street is getting from DC feels like a trickle here, a trickle there. So much for the “summer of recovery.”

From the link:

Housing and Urban Development Secretary Shaun Donovan revealed to CNN Friday that the Obama administration plans next week to unveil two new initiatives to deal with the crumbling housing market, and he left the door open to also reviving the expired $8,000 tax credit for first-time home buyers that had been propping up the industry.

“We’re going to be rolling out an FHA refinancing effort to help borrowers who are under water in their homes get above water,” Donovan said in an exclusive interview taped for CNN’s “State of the Union with Candy Crowley” on Sunday. “And second, we’re launching an emergency homeowners’ loan program for unemployed borrowers to be able to stay in their homes.”

The swift action being pushed by President Obama’s housing chief come in response to awful news in the housing industry this week, starting with Tuesday’s revelation that existing home sales hit their lowest level in over a decade, declining by over 27 percent during the month.

Update: this comes from today’s Playbook — brunch edition:

An administration official e-mails: “These are not new. He said ‘launching’ because they are previously introduced, but have not yet hit the market. The FHA short refi program was announced in March, and will launch in early September. The emergency homeowner emergency loan program, which was included in the Frank-Dodd bill (HUD put out in a release and conf. call two weeks ago), will be launched in October.”

August 12, 2010

Foreclosures still a problem

Filed under: Business — Tags: , , , , — David Kirkpatrick @ 3:04 pm

To join my previous post on the sluggish nature of the current economic recovery, here’s more dark gray news on foreclosures

From the link:

The latest foreclosure numbers carried a mixed message: They’re up 3.6% from the month before but down 9.7% from 12 months earlier.

In July there were more than 325,000 foreclosure filings — including notices of default, auctions notices and bank repossessions. That is the 17th month in a row total filings exceeded 300,000, said RealtyTrac’s CEO, James Saccacio.

“Declines in new default notices, which were down on a year-over-year basis for the sixth straight month in July,” he said, “have been offset by near-record levels of bank repossessions, which increased on a year-over-year basis for the eighth straight month.”

June 18, 2010

A fish story

Filed under: Business — Tags: , , , , , , — David Kirkpatrick @ 6:52 pm

Very fishy behavior from that font of fail that is Bank of America

From the link:

Dr. Alan Schroit was shocked when he arrived at his Galveston, Texas, vacation house only to find a seizure notice from Bank of America plastered on his padlocked front door.And that wasn’t the only nasty surprise.

Schroit summoned the police to get into his own home. When he did, he was met with the “overpowering putrid smell” of 75 pounds of rotten fish, according to court documents.

He had recently gone fishing and was storing his copious catch for a family gathering. But the bank’s foreclosure agent had shut off the home’s power.

The kicker: Schroit doesn’t have a mortgage with Bank of America, or with any bank for that matter. He owns the house free and clear!

Bank of America has been accused of several wrongful lockouts in recent months, many of which have resulted in lawsuits against the company.

“We sincerely apologize to the homeowners affected for the confusion and stress these errors have caused,” said Bank of America spokeswoman Jumana Bauwens. “We are working aggressively to improve our process through formal training, enhanced checklists and improved communication.”

Schroit has since reached an undisclosed settlement with the bank according to his attorney. Court documents show that Schroit wanted compensation that would be “adequate to deter BOA’s arrogance.”

[picapp align=”none” wrap=”false” link=”term=bank+of+america&iid=8533012″ src=”http://view1.picapp.com/pictures.photo/image/8533012/customer-uses-bank-america/customer-uses-bank-america.jpg?size=500&imageId=8533012″ width=”500″ height=”289″ /]

Want to read more BoA fail from the same link? Here’s a bird tale to join the above fish story.

March 24, 2010

White House foreclosure plan under watchdog fire

And seems to be for very good reason — the program just didn’t even come close to delivering on alleviating Main Street pain, and to make matters worse for homeowners in need of relief the Treasury Department still claims offering to help with a troubled mortgage counts as a success. Yes, the government is trying to say starting the process is just the same as actually following through and helping someone stay in their home. What a mess.

From the link:

The Special Inspector General for the Troubled Asset Relief Program said the Treasury Department set targets that weren’t “meaningful,” mismanaged the implementation of the program, and now risks a substantial number of “re-defaults,” with many participants ultimately losing their homes anyway.

The administration’s $75 billion loan modification program may help as little as 1.5 to 2 million people, about half the number Obama said it would when he first unveiled the program in February 2009, the inspector general, Neil Barofsky, wrote in a report.

Recently, Treasury Department officials have come under fire for saying the initial goal applied only to offering trial modifications, as opposed to permanent help.

“Continuing to frame HAMP’s success around the number of “offers” extended is simply not sufficient,” Barofsky wrote, referring to the Home Affordable Modification Program.

November 25, 2009

Almost a quarter of all mortgages under the water line

Ouch. This economy just doesn’t look or feel any better right now. I just had a major project for this year — a project on standby for around five months — move into the “not likely to happen” file. At least I’m ahead of the game on my mortgage.

From the link:

In a sign that more foreclosures could be on the horizon, 23% of people with mortgages owe more than their home is worth, according to a report released Tuesday.

Almost 10.7 million U.S. mortgages were “underwater” as of September, said research firm First American CoreLogic.

Another 2.3 million homeowners are within 5% of negative territory, the report said. The two figures combined comprise almost 28% of all residential properties with mortgages.

Negative equity, also called an “underwater” or “upside down” mortgage, has become more common as home values plummet. The report is closely watched because borrowers who are underwater are more likely to be foreclosed.

September 22, 2009

The next shoe? Option ARM mortgages

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 5:42 pm

I’ll have to admit, this is one mortgage vehicle I’ve never heard of, and it sounds pretty bad. I thought I was ahead of the curve 0n commercial paper, but clearly the insanity at all levels of real estate are going to reverberate for quite some time.

From the first link:

The federal government and states are girding themselves for the next foreclosure crisis in the country’s housing downturn: payment option adjustable rate mortgages that are beginning to reset.

“Payment option ARMs are about to explode,” Iowa Attorney General Tom Miller said after a Thursday meeting with members of President Barack Obama‘s administration to discuss ways to combat mortgage scams.

“That’s the next round of potential foreclosures in our country,” he said.

Option-ARMs are now considered among the riskiest offered during the recent housing boom and have left many borrowers owing more than their homes are worth. These “underwater” mortgages have been a driving force behind rising defaults and mounting foreclosures.

In Arizona, 128,000 of those mortgages will reset over the the next year and many have started to adjust this month, the state’s attorney general, Terry Goddard, told Reuters after the meeting.

“It’s the other shoe,” he said. “I can’t say it’s waiting to drop. It’s dropping now.”

August 20, 2009

More bad housing news

Filed under: Business — Tags: , , , , , — David Kirkpatrick @ 9:26 am

Any economic recovery is still a long ways from Main Street. The worst news from this mortgage report is a third of the new foreclosures were on prime fixed loans.

From the link:

An industry group says a record of more than 13 percent of American homeowners with a mortgage are either behind on their payments or in foreclosure as the recession throws more people out of work.

August 18, 2009

Study finds foreclosure leads to depression

This isn’t a topic to make light of, but a study finding people whose homes have been foreclosed on show signs of clinical depression should suprise no one.

It does point out the larger picture that the toll of this ongoing economic downturn/recession/financial crisis goes far beyond the economics.

The release:

More than 1/3 of homeowners in foreclosure suffer from major depression, Penn study shows

Findings reveal looming health crisis tied to nation’s housing woes

(PHILADELPHIA) – The nation’s home foreclosure epidemic may be taking its toll on Americans’ health as well as their wallets. Nearly half of people studied while undergoing foreclosure reported depressive symptoms, and 37 percent met screening criteria for major depression, according to new University of Pennsylvania School of Medicine research published online this week in the American Journal of Public Health. Many also reported an inability to afford prescription drugs, and skipping meals. The authors say their findings should serve as a call for policy makers to tie health interventions into their response to the nation’s ongoing housing crisis.

“The foreclosure crisis is also a health crisis,” says lead author Craig E. Pollack, MD, MHS, who conducted the research while working as an internist and Robert Wood Johnson Foundation Clinical Scholar at Penn. “We need to do more to ensure that if people lose their homes, they don’t also lose their health.”

In addition to the high number of participants reporting depression symptoms, the study of 250 Philadelphia homeowners undergoing foreclosure also shed light on other health care problems that may be spurred by difficulties keeping up with housing costs. The study participants were recruited with the Consumer Credit Counseling Service of Delaware Valley, a non-profit, U.S. Housing and Urban Development-approved mortgage counselor. The authors found that compared to a sample of residents in the general public, those in foreclosure were more likely to be uninsured (22 percent compared to 8 percent), though similar health problems were seen among both the insured and uninsured. Nearly 60 percent reported that they had skipped or delayed meals because they couldn’t afford food, and people undergoing foreclosure were also more likely to have forgone filling a prescription because of the expense during the preceding year (48 percent vs. 15 percent). The study also revealed that for 9 percent of respondents, a medical condition in their family was the primary reason for the home foreclosure, and more than a quarter of those surveyed said they had significant unpaid medical bills.

Because the financial hardships of foreclosure may lead homeowners to cut back on health care spending that they consider “discretionary” – preventive care visits, healthy foods or drugs for chronic conditions like hypertension – Pollack theorizes that the prolonged period of time that most homeowners spend in foreclosure could have a serious effect on health outcomes. In addition, the stress of undergoing foreclosure may exacerbate health-undermining behaviors. Among the participants who smoke, for instance, 65 percent said they had been smoking more since they received notice of foreclosure.

The “exceptionally high” rate of depressive symptoms found in the study is especially concerning, Pollack says, compared to previous research showing that only about 12.8 percent of people living in poverty meet criteria for major depressive disorder.

“When people purchase homes, they are buying a piece of the American Dream,” says co-author Julia Lynch, PhD, the Janice and Julian Bers Assistant Professor in the Social Sciences in Penn’s department of political science. “Losing a home can be especially devastating because it means the loss of this dream. When this happens, there is reason to worry not only about the health of the home owner but also that of family members and the broader community they live in.”

The authors say that the data collected in Philadelphia may be only the tip of the iceberg when compared to other cities that have experienced a sharp spike in housing foreclosures. Although foreclosure filings nearly doubled between 2007 and 2008 in Philadelphia, other large cities have higher unemployment and foreclosure rates.

To combat the health problems revealed in the study, Pollack and Lynch suggest that health care workers and mortgage counseling agencies coordinate their efforts to help people at risk of foreclosure access both medical and housing help. Doctors, they suggest, should ask their patients about their housing situation and steer them towards mortgage relief resources. Mortgage counselors, meanwhile, can provide information about how to access safety net health care, enroll in public insurance programs like SCHIP or Medicaid, or apply for nutritional assistance programs for pregnant and nursing mothers and their children. The implications for policy, too, are vast.

“This study raises the stakes of the housing crisis,” Pollack says. “The policy push to get people into mortgage counseling should be combined with health outreach in order to fully help people during this tremendously difficult period in their lives.”

 

###

 

PENN Medicine is a $3.6 billion enterprise dedicated to the related missions of medical education, biomedical research, and excellence in patient care. PENN Medicine consists of the University of Pennsylvania School of Medicine (founded in 1765 as the nation’s first medical school) and the University of Pennsylvania Health System.

Penn’s School of Medicine is currently ranked #3 in the nation in U.S.News & World Report’s survey of top research-oriented medical schools; and, according to the National Institutes of Health, received over $366 million in NIH grants (excluding contracts) in the 2008 fiscal year. Supporting 1,700 fulltime faculty and 700 students, the School of Medicine is recognized worldwide for its superior education and training of the next generation of physician-scientists and leaders of academic medicine.

The University of Pennsylvania Health System (UPHS) includes its flagship hospital, the Hospital of the University of Pennsylvania, rated one of the nation’s top ten “Honor Roll” hospitals by U.S.News & World Report; Pennsylvania Hospital, the nation’s first hospital; and Penn Presbyterian Medical Center, named one of the nation’s “100 Top Hospitals” for cardiovascular care by Thomson Reuters. In addition UPHS includes a primary-care provider network; a faculty practice plan; home care, hospice, and nursing home; three multispecialty satellite facilities; as well as the Penn Medicine at Rittenhouse campus, which offers comprehensive inpatient rehabilitation facilities and outpatient services in multiple specialties.

August 13, 2009

Foreclosures still on rise

Filed under: Business — Tags: , , , , — David Kirkpatrick @ 3:54 pm

No good news from the housing sector. This is one area where there will be dissonance between the facts on the ground affecting real people and the economic pundits who tout the ongoing (real, but very slow) recovery from the financial crisis.

From the link:

The number of U.S. households on the verge of losing their homes rose 7 percent from June to July, as the escalating foreclosure crisis continued to outpace government efforts to limit the damage.

Foreclosure filings were up 32 percent from the same month last year, RealtyTrac Inc. said Thursday. More than 360,000 households, or one in every 355 homes, received a foreclosure-related notice, such as a notice of default or trustee’s sale. That’s the highest monthly level since the foreclosure-listing firm began publishing the data more than four years ago.

Banks repossessed more than 87,000 homes in July, up from about 79,000 homes a month earlier.

July 24, 2009

End of credit crunch in sight?

Filed under: Business — Tags: , , , , — David Kirkpatrick @ 12:43 pm

Maybe. If nothing else things are looking better. Seems like a lot of indicators are on the uptick right now.

From the first link:

Multiple market signals are leading analysts to bet that the worst credit crisis since the 1930s is easing, as debt markets slowly heal after two years of extreme upheaval.The return of private investors to markets they had shunned as recently as the first quarter this year, a surge of corporate debt issuance, and the easing of inter-bank lending rates all indicate that financial rescue measures by government are working, analysts said.

Yet while debt markets are on the road to recovery, turning around a battered economy will be a longer haul that’s still fraught with danger, they said.

“The revival of corporate bond issuance and the narrowing of spreads from the peaks are good news,” says Ward McCarthy, managing director with Stone & McCarthy Research Associates, in Princeton, New Jersey.

The bad news however includes “continued poor performance of many financial firms and the persistent reluctance of banks to lend,” especially to homeowners, adding stress to an already strained housing market, said McCarthy.

U.S. house prices are still sliding and foreclosures rising in many places. Federal Reserve Chairman Ben Bernanke has warned the job market may struggle for another two years.

May 29, 2009

Reading these economic indicators …

… might have less worth than reading tea leaves or engaging in navel gazing. Like most numbers they can be spun up, down or sideways, but anyone seeing blue skies and smelling roses from these reports has given up and started taking antidepressants.

From the link:

The economy is sending a message of hope laced with caution: That the recession is steadily easing, but new threats could delay any recovery.One piece of heartening news was that the number of people seeking first-time jobless aid fell last week, a sign companies are cutting fewer workers.

And even though sales of newly built homes were flat last month, the figures suggested that the battered U.S. real estate market is nearing a gradual comeback.

But pessimists could point to bleaker news Thursday: The number of people continuing to receive unemployment benefits rose to 6.78 million _ the largest total on records dating to 1967 and the 17th straight record-high week.

The figure signaled that the jobless rate, which reached 8.9 percent in April, will rise in May, economists said. And many economists expect the rate to approach 10 percent by year’s end.

Another worrisome sign is that a record 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis spreads to borrowers with good credit, the Mortgage Bankers Association said. And the wave of foreclosures isn’t expected to crest until the end of next year.

May 13, 2009

April foreclosures hit record high

Filed under: Business, Politics — Tags: , , , , , — David Kirkpatrick @ 4:16 pm

Main Street is still getting pounded by this recession. The road to recovery is going to be very long.

From the link:

U.S. foreclosure activity in April jumped 32 percent from a year ago to a record high, and should mount because temporary freezes on foreclosures ended in March, RealtyTrac said on Wednesday.One in every 374 households with mortgages got a foreclosure filing in April, the highest monthly rate since RealtyTrac began tracking it in January 2005. Filings were reported on 342,038 properties last month.

The abundance of distressed properties keeps pressuring home prices, thwarting a housing recovery that is critical to rejuvenating the recessionary U.S. economy.

Most of April’s filings, which included notices of default and auctions, were in early stages. Bank repossessions, known as real-estate owned or REOs, fell on a monthly and annual basis to the lowest level since March 2008.

“This suggests that many lenders and servicers are beginning foreclosure proceedings on delinquent loans that had been delayed by legislative and industry moratoria,” RealtyTrac chief executive James J. Saccacio said in a statement.

A temporary foreclosure freeze by major banks and government-controlled home funding companies Fannie Mae (FNM.N) (FNM.P) and Freddie Mac (FRE.N) (FRE.P) ended before President Barack Obama‘s massive housing stimulus, unveiled on March 6, could take root.

“It’s likely that we’ll see a corresponding spike in REOs as these loans move through the foreclosure process over the next few months,” Saccacio said.

April 29, 2009

Foreclosure prevention plan gets a little bigger

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 1:57 pm

With all the talk about the auto industry and controversy over TARP and harping about financial bailouts recipient bonuses, et. al., Main Street gets little ink spilled its direction.

Here’s news on an expansion of the Obama administration’s foreclosure prevention plan.

From the link:

Treasury broadens the President’s home-mortgage plan to address second liens. But Congress may need to act to protect banks from lawsuits

The U.S. Treasury Dept. broadened the Obama Administration’s foreclosure-prevention program on Apr. 28 in a bid to resolve a persistent obstacle to cleaning up problem mortgages. But some financial officials say the fledgling program’s success still hinges on controversial legislation pending in Congress, which is also expected to take up another contentious bill that would allow bankruptcy judges to reduce the principal owed on a home.

April 22, 2009

Las Vegas “wins” foreclosure crown

Filed under: Business — Tags: , , , , — David Kirkpatrick @ 5:23 pm

A dubious honor to be sure, but Las Vegas has the highest foreclosure rate in the nation. There are some truly devastated areas of real estate out there.

From the link:

Metro areas in California, Florida, Nevada and Arizona topped the foreclosure filing list for the first quarter of 2009 in a report from RealtyTrac, an online marketer of foreclosed properties. A foreclosure filing includes default papers, auction sale notices and repossessions.

Las Vegas had the highest rate of foreclosures of any city, with one in every 22 homes subject to a foreclosure filing in the first three months of the year. The rate of foreclosure filings was 4.5%, seven times the national average.

Merced, Calif., had the second highest rate, with Cape Coral-Fort Myers, Fla., Stockton, Calif., and Riverside-San Bernardino-Ontario, Calif., rounding out the top five.

“The metro areas with the highest levels of foreclosure activity in the first quarter of 2009 paint a picture of concentrated problems in a relatively small number of hard-hit areas,” said James J. Saccacio, chief executive officer of RealtyTrac, in a written statement.

March 12, 2009

Tax break hints from AICPA

Helpful tax hints curtesy of the American Institute of Certified Public Accountants.

From the link:

AICPA to Taxpayers: Take Advantage of Tax Breaks to Help Offset Economic Hard Times
PR Newswire via NewsEdge :

WASHINGTON, March 11 /PRNewswire-USNewswire/ — The American Institute of Certified Public Accountants is reminding taxpayers to use the special provisions in the tax law that can help them save money and deal with the current difficult economic environment.

“In these tough economic times, taxpayers need every advantage they can get,” said Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants. “Losing a home to foreclosure, losing money on investments, and/or losing a job are some of the most stressful events in people’s lives, and they need these breaks.”

Taxpayers who lost their homes to foreclosure or had their mortgage restructured get a pass on paying taxes on the amount of debt the lender discharged under the Mortgage Forgiveness Debt Relief Act of 2007. The exception applies only to principal residences, not to second homes or vacation homes. Married taxpayers can exclude up to $2 million and single taxpayers up to $1 million.

The Mortgage Bankers Association’s National Delinquency Survey reported on March 5 that mortgage delinquencies are continuing to climb, making it increasingly important that taxpayers remember this tax break. According to the survey, the seasonally adjusted delinquency rate for one-to-four-unit residential properties rose to 7.88 percent of all outstanding loans at the end of 2008. The 2008 fourth-quarter increase was up 89 basis points from the third quarter of 2008.

Individuals who sold investments at a loss in 2008 can use those losses to reduce their 2008 tax bill. First, they can use the losses to offset any profits made from selling stocks, bonds or property. Second, up to $3,000 of losses not used to offset capital gains can be deducted from other income. If losses exceed these amounts, the remaining losses can be applied in future years.

“If you lost your job and moved to take a new one, remember that moving expenses you paid are deductible, but only if the new job is at least 50 miles from the previous job site and you stay for a certain period of time,” said Ochsenschlager. “If you did not have a full-time job before the move, then the new job has to be at least 50 miles from your old home. Also, be sure to keep good records of your moving expenses and note that meals are not a deductible moving expense.”

Ochsenschlager also added some job search expenses, such as the cost of printing a resume or hiring a consultant to help with the job search, are deductible.

It’s important that taxpayers not procrastinate. “Always file your tax return on time – even if you do not have the money to pay the entire amount,” said Ochsenschlager. “The IRS often allows taxpayers to pay their tax bill in installments. If you are getting a tax refund, file your tax return as soon as possible, so you can put the money to work for you rather than making an interest-free loan to Uncle Sam.”

About the AICPA

The American Institute of Certified Public Accountants (www.aicpa.org) is the national, professional association of CPAs, with more than 350,000 CPA members in business and industry, public practice, government, education, student affiliates, and international associates.

It sets ethical standards for the profession and U.S. auditing standards for audits of private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination.

The AICPA maintains offices in New York, Washington, D.C., Durham, N.C., Ewing, N.J., and Lewisville, Tex.

SOURCE American Institute of Certified Public Accountants

March 10, 2009

Mortgage problems to increase in 2009

A confluence of issues is coming together to keep the mortgage issue front and center for this year.

I’ve heard similar noise regarding five-year notes and commercial properties. That idea is based on a lot of bad deals went down from 2006 through 2008. Look for that fall-out to begin in 2011 and worsen through 2013. Fun times ahead, indeed.

From the link:

Robert Manning, research professor and director of the Center for Consumer Financial Services at the Rochester Institute of Technology here, contends that three issues-poor loan modifications, adjustable rates resetting, and five-year interest-only and jumbo loans coming due-will combine to make the mortgage mess worse in 2009.

“That’s what Obama’s administration is trying to prepare for,” said Manning, whose analysis for the Filene Research Institute’s study on the foreclosure crisis in Michigan helped him draw that conclusion. “We are going to have such a disaster in the housing market this year because we have three very different waves of foreclosures coming together at once.”

March 6, 2009

Mortgage default rates stunning

This figure is not so stunning — almost 50 percent of sub-prime adjustable rate mortgages (ARMs) are in arrears or foreclosure. Everyone knows these are the most toxic of the toxic assets being bandied about by economic “pundits.” Well, technically these mortgages make up the components of the toxic assets.

The stunning figure is 12 percent of all mortgages are either behind in payment or in foreclosure. That is not good news for any hope of an economic recovery from this financial crisis. The floor hasn’t been found, and probably is really too far below us to even be fathomed right now.

On that cheery note, hope everyone has a great weekend!

From the link:

The reckless lending practices in states like Florida, California and Nevada that were the epicenter of the housing crisis are no longer driving up the nation’s delinquency rate. Instead, the foreclosure crisis now is being fueled by a spike in defaults in states like Louisiana, New York, Georgia and Texas, where the economies are rapidly deteriorating and thousands are losing their jobs.

A record 5.4 million American homeowners with a mortgage of any kind, or nearly 12 percent, were at least one month late or in foreclosure at the end of last year, the Mortgage Bankers Association reported. That’s up from 10 percent at the end of the third quarter, and up from 8 percent at the end of 2007.

Prime and subprime fixed-rate loans saw sharp increases in the fourth quarter, a sign that the problem is now the economy.

“We’re seeing increases in fixed-rate categories and that’s where the problems are coming from,” said Jay Brinkmann, the group’s chief economist. “The foreclosure picture is more clearly driven by the jobs market.”

That trend highlights one of the biggest challenges confronting the Obama administration’s mortgage relief plan launched this week. While the $75 billion plan could help change the loan terms or refinance up to 9 million homeowners, unemployed borrowers will have a hard time qualifying.

On Thursday, the Labor Department said new unemployment claims last week totaled 639,000, lower than expected, but still at elevated levels. Factory orders also slipped for the sixth month in a row in January, the Commerce Department reported.

“There can be no doubt that employers continue to shed labor at a frightening pace, with no end in sight,” Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a client note Wednesday.

The key is what kind of workers are losing their jobs, Brinkmann said. Unemployment for people with college degrees, some college education or technical training _ those most likely to own homes and have prime fixed-rate loans _ has nearly doubled over the past six months.

February 18, 2009

The stimulus hits Main Street

Filed under: Politics — Tags: , , , — David Kirkpatrick @ 11:31 am

To the tune of $75 billion for staving off foreclosusres.

From the link:

Seeking to stabilize the foundering housing market, President Obama is offering a plan to help as many as nine million families refinance their mortgages or avoid foreclosure, according to a summary released by the White House on Wednesday morning.

The plan, which is more ambitious than expected, would spend $75 billion to help keep as many as four million families in their homes, and would help as many as five million more refinance their mortgages to take advantage of lower interest rates.

“The plan not only helps responsible homeowners on the verge of defaulting, but prevents neighborhoods and communities from being pulled over the edge too,” the White House said in a fact sheet.

February 2, 2009

Fannie and Freddie push eviction halt to March

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 4:36 pm

Good news for troubled mortgages. This gives home owners a little more breathing room to get things sorted out before losing their home. The two are also protecting renters who are living in foreclosed homes.

From the link:

Evictions on single-family properties that have been triggered by foreclosures have been further suspended until March, announced Fannie Mae and Freddie Mac on Friday.

At the same time, both entities, the largest holders of U.S. mortgages, are launching a new strategy to offer qualified owner-occupants and tenants’ leases so they can rent the properties on a month-to-month basis after foreclosure at market rates.

“Freddie Mac’s rental option is intended to help cushion the impact of foreclosure on families who own or rent homes with Freddie Mac-owned mortgages,” said Freddie Mac Chief Executive David Moffett.

This is the third extension of eviction suspensions. Both Fannie Mae and Freddie Mac started a program to suspend foreclosures evictions on Nov. 26. Those policies were set to expire on Jan. 9, but they were extended until Friday. A Freddie Mac spokesman declined to comment on whether the eviction restrictions would be extended past Feb. 28.

In another important development, the two mortgage entities are allowing renters in homes owned by Fannie Mae and Freddie Mac that have been foreclosed to remain there and enter into a month-to-month lease. It also allows troubled owner occupants who have been unable to obtain a modified mortgage to lease after foreclosure takes place.

January 15, 2009

One million foreclosures in 2008

Filed under: Business, Politics — Tags: , , , , , — David Kirkpatrick @ 4:21 pm

A ridiculous number. Especially given that Wall Street was handed money that is doing absolutely nothing. The Fed and really all of D.C. completely fell down on the job with this. I’m betting history will not be very kind looking back in a few years.

From the link:

SACRAMENTO, Calif.–(BUSINESS WIRE)–January 14, 2009–About 1 million homes were lost to foreclosure in 2008, up nearly 63.5 percent from 2007, according to the U.S. Foreclosure Index from ForeclosureS.com, a leading real estate information provider.

In this first look at complete 2008 statistics, the Index also shows nearly 2.1 million pre-foreclosure filings last year, up nearly 62 percent from 2007. Pre-foreclosure actions can include notice of default and/or foreclosure auction leading up to an actual foreclosure.

Month to month, foreclosed properties repossessed by lenders spiked in December, up 19.3 percent to 97,841 from November, when 82,033 properties were foreclosed. The December increase followed two months of steady declines, but December still was 6.1 percent below the peak foreclosure month of September. Pre-foreclosures, which had been slowing until December, also climbed to 190,467 in December, up 11.9 percent from November.

All regions of the country showed increases in lender-owned properties and pre-foreclosure filings in December, ForeclosureS.com analysis shows.

U.S. FORECLOSURE INDEX:
YEAR TO DATE PRE-FORECLOSURE FILINGS BY REGION
Pre-foreclosures   YTD 2007   YTD 2008   Change
Region   Filings   Per Household   Filings   Per Household    
Midwest   185,073   1.69%   228,849   1.98%   23.6%
Southeast   383,697   2.31%   735,417   4.29%   91.7%
Northeast   190,832   1.14%   235,745   1.34%   23.5%
Southwest   528,399   2.09%   883,006   3.60%   67.1%
Other States   3,476   0.60%   6,034   1.03%   73.6%
Nationwide   1,291,477   1.85%   2,089,051   2.95%   61.8%
*Percentage of every 1,000 households in state
U.S. FORECLOSURE INDEX:
YEAR TO DATE REO FILINGS BY REGION
REO   YTD 2007   YTD 2008   Change
Region   Filings   Per Household   Filings   Per Household    
Midwest   182,176   1.13%   195,057   1.24%   7.1%
Southeast   146,068   0.89%   253,126   1.49%   73.3%
Northeast   26,333   0.24%   41,250   0.25%   56.7%
Southwest   241,544   0.93%   501,641   1.99%   107.7%
Other States   1,056   0.21%   1,496   0.27%   41.7%
Nationwide   597,177   0.85%   992,570   1.34%   66.2%
*Percentage of every 1,000 households in state

On a quarterly basis, the Index also shows that the number of properties lost to foreclosure, 266,986, and pre-foreclosure filings, 528,241, both dropped in the fourth quarter, 9.2 and 2.4 percent respectively, compared with the third quarter.

“While the sheer number of about 1 million foreclosures is staggering, it was not unexpected,” says Alexis McGee, foreclosure expert, educator, author, and president of ForeclosureS.com. “Since July, we anticipated that we would see about 1 million foreclosures this year.”

“But there is good news – a variety of indicators show that some housing markets are bouncing back and we should see substantial improvement in 2009,” McGee says. “I think 2009 will surprise many people who have bought into the gloom-and-doom agenda.”

“In some areas like California, the housing recovery already has begun,” McGee says. “Inventories of unsold homes will drop quickly this year as people realize that today’s deals on homes are the best they’ll likely see in their lifetimes, both in terms of affordable prices and low interest rates!”

“The earlier declines in foreclosures and pre-foreclosure filings were likely the result of changes in state laws that slowed down the foreclosure process for many homeowners. But lenders played catch-up with foreclosure filings at year-end as December’s numbers indicate,” McGee adds.

“Don’t expect another tidal wave of foreclosures this year, either, just because more adjustable rate mortgages are due to reset,” she says. “Current mortgage rates are at 30 year lows and dropping. Those who qualify will be able to refinance and enjoy lower monthly payments, not higher ones. Those that can’t will end up either selling their homes pre-foreclosure or losing them to foreclosure. But I am anticipating our market can absorb this inventory.”

McGee said her optimism for 2009 is driven in part by positive housing market indicators, including:

Housing affordability. Thanks to drops in home prices and mortgage rates, housing is the most affordable it’s been since February 1994, when a mortgage on a median-price home equated to 18 percent of the median income. Credit Suisse estimates today’s mortgage payment on a median price home in October represented 16.7 percent of median household income based on a 6.23% mortgage. At current 5% interest rates and dropping houses affordability is more likely under 15% of the median income.

Growing U.S. population. The Census Bureau projects with births, deaths and immigration U.S. population will increase by one person every 14 seconds in 2009. More people mean more demand for housing.

Coming housing shortage. Housing construction has plummeted. Housing starts hit record lows in November, off 18.9 percent to a seasonally adjusted annual rate of 625,000 units. New building permits plunged 15.6 percent. That’s great news for housing markets because with fewer homes being built at the same time population — and housing demand — is exploding, the shortfall has to be made up somehow. In this case, it opens the door for the nation’s one million foreclosures to be easily absorbed in the market, and housing supply finally to catch up with demand.

Buyers for foreclosure properties.Tighter housing supplies mean buyers will look to foreclosure homes as viable purchase options.We are so under building right now that whatever new foreclosures do hit the market, I see them offsetting the losses of new housing we need but are not getting,” says McGee.

Unemployment is an issue, but not as large as some think. “The unemployment rate released by the government for December was consistent with economists’ consensus estimates and came in considerably better than a private forecast released in early January,” McGee says. At 7.2%, unemployment is just shy of the 7.8% experienced during the 1990-1991 recession but still well below our double-digit levels of the early 1980s.

The following charts provide additional information on trends from the latest U.S. Foreclosure Index from ForeclosureS.com:

U.S. FORECLOSURE INDEX:
TOP 10 STATES IN NUMBERS OF REO FILINGS
State   Filings   Per Household*
California   260,709   2.27%
Florida   107,833   1.71%
Texas   70,037   1.17%
Arizona   65,898   3.47%
Michigan   62,419   2.09%
Georgia   53,423   2.55%
Ohio   47,544   1.22%
Nevada   37,043   4.99%
Colorado   30,132   1.96%
Illinois   27,957   0.74%
*Percentage of every 1,000 households in state

For all of 2008, California still tops the list in terms of number of REO filings with nearly 1 ½ times as many filings as No. 2 and 3 on the list, Florida and Texas.

On a per household basis – often the best way to judge trends – California ranks a distant fifth with 22.7 of every 1,000 households lost to foreclosure in 2008. That’s behind Nevada (49.9 for every 1,000 households in the state); Arizona (34.7 of every 1,000 households); Mississippi (25.6 per 1,000); and Georgia (25.5 per 1,000). On a quarterly basis, however, California’s 4 th quarter REO filings (54,198) plunged 39.44 percent from third quarter (89,501).

January 13, 2009

Bankruptcy reform is driving foreclosures

After the shenanigans of the last couple of years, I think the banking industry needs government oversight to stand on its neck for a year or two. Clearly bankers are incapable of taking charge of themselves.

Bankruptcy is a powerful tool that never should have been altered for individuals. It shouldn’t be abused, but sometimes it is necessary.

From the link:

There’s no shortage of blame for the mortgage crisis that drove the economy into the ditch.

But here’s a fresh culprit: the 2005 bankruptcy reform act, which was strongly pushed by the credit card industry.

So say three researchers at the Federal Reserve Bank of New York, who argue that the legislation shifted risk from credit card lenders to mortgage lenders, helping trigger the surge in home foreclosures.

Before Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, households could erase their unsecured debts by filing for Chapter 7 liquidation. That freed up income that distressed homeowners could use to make mortgage payments.

The new law, however, forced better-off households seeking bankruptcy protection to file under Chapter 13. That chapter requires homeowners to continue paying their unsecured lenders.

In other words, say the Fed researchers, cash-strapped homeowners who might have saved their homes by filing Chapter 7 are now much more likely to face foreclosure.

“Is it just coincidence that the surge in subprime foreclosures that has rocked financial markets came right after the bankruptcy reform in 2005?” they asked. “Is that surge just about falling home prices, bad mortgage decisions and weak economic conditions?

“No and no.”

December 6, 2008

Mortgage delinquencies and foreclosures way up

Filed under: Business, Politics — Tags: , , , , , — David Kirkpatrick @ 1:07 pm

Now this is not really news, but as an economic indicator it’s very, very distressing. While Rome burns and corporate socialism goes on unabated, Main Street USA has been enduring a slow rot for a couple of years now.

There will be a heavy price to pay as a nation if this problem does not meet a real solution soon. I feel happy I have a very manageable mortgage, fixed at a great rate. I have friends who aren’t so lucky.

Some got a little greedy buying a home and some just got screwed by the broker/bank combo pressing them into loans that would never be workable under any circumstances, then completely hiding the nature of the loan before the shit hit the fan.

I bet a lot of these homeowners in trouble faced the same set of circumstances.

From the link:

One in 10 American homeowners fell behind on mortgage payments or were in foreclosure during the third quarter as the world’s largest economy shed jobs and real estate prices tumbled.

The share of mortgages 30 days or more overdue rose to a seasonally adjusted 6.99 percent while loans already in foreclosure rose to 2.97 percent, both all-time highs in a survey that goes back 29 years, the Mortgage Bankers Association said in a report today. The gain in delinquencies was driven by an increase of loans with payments 90 days or more overdue.

May 10, 2008

Tell me …

Filed under: Business — Tags: , , , — David Kirkpatrick @ 3:57 pm

we’re not in a recession.

Yeah, I went to b-school and learned all the signifiers and markers, and if you knocked me down I might remember some of them. And, yes, I know we don’t meet the classic standard for a “recession.”

I argue that facts override academic models any day.

From the link:

The foreclosure crisis is hitting yet another American locale: the self-storage center.

As they lose their homes, people are turning to these humble cinderblock and sheet-metal boxes to store their stuff. But some people cannot keep up with their storage bills any better than they could handle their mortgage payments, and storage companies are auctioning off their property for a pittance.