foreclosures: Mortgage Purchase Applications Showing Stability
- 08/27/09 01:15 AM
The MBA reported on Wednesday that the mortgage purchase application index rose 1% this past week to 280.5. While the reading of 280.5 does not represent overly encouraging demand for real estate, the index has slowly risen for four consecutive weeks. The 30-year fixed rate mortgage rose from 5.15% to 5.24% for the week ending August 21st. Between the recent surges in existing and new home sales, as well as the past four weeks of mortgage purchase applications, it appears that demand has stabilized thanks to precipitous home value declines, an $8,000 first time home buyer tax credit, and a $1.25 trillion Fed funny … (2 comments)
foreclosures: CNBC's Diana Olick on "Cure Rates"
- 08/25/09 04:22 PM
On Monday CNBC's Diana Olick wrote a post about mortgage cure rates. For those of you who haven't read her stuff before, I recommend it. She is one of a very small minority of housing analysts who understand the comprehensiveness of the housing market. A cure rate is a term used to represent the percentage of delinquent loans that are returned to "current" status each month. In other words, for every 100 loans that are delinquent, how many of the owners will get caught up with the payment they have missed. According to Fitch Ratings, Olick writes that from 2000-2006, 45% of loan delinquencies were … (4 comments)
foreclosures: Observations on NAR's Existing Home Sales Report
- 08/22/09 03:39 PM
The NAR published their monthly existing home sales report on Friday which showed that home sales rose 7.2% in July from June on a seasonally adjusted rate and are up 5% from last year at this same time. This is clearly good news as the real estate market needs a massive increase in demand in order to absorb the excess supply of homes that is sitting on the market as well as the foreclosures that are about to hit the market. The interesting statistic within the report that didn't make the headlines but is just as relevant is that housing inventory, the number of homes … (4 comments)
foreclosures: All Real Estate Is Local, But...
- 08/17/09 03:40 PM
The NAR published their quarterly metro home value report this past week. While there were some bright spots like Elmira, NY, which showed 11.3% year over year appreciation, there is also continued systemic weakness throughout our countries housing markets. Broadly speaking, the median home value fell -15.6% from the 2Q of 2008 to the 2Q of 2009, this is the steepest decline on record for this quarterly report. Additionally, all four regions within the United States were down. The Northeast, Midwest, South, and West experienced home value declines of -9.7%, -8.6%, -10.3%, and -26.6% respectively. While all real estate is local, every … (4 comments)
foreclosures: Home Value Declines Continue to Drive Sales
- 08/16/09 10:06 AM
The NAR published their quarterly home sales report this past week which shows the rate of home sales for all 50 states as well as the District of Columbia. Of the 51 total markets, 41 of them showed year over year home sales declines from the 2Q of 2008 to the 2Q of 2009. The year over year data, the weather man's guide, is a better indicator than month over month data as it accounts for seasonal variances as well as providing a larger scope to interpret the information, in other words, a frame of reference. It is this year over year perspective … (6 comments)
foreclosures: The Weather Man's Guide To Understanding Real Estate Data
- 08/15/09 01:10 AM
Due to some recent improvements in seasonal housing data and statistics, a lot of people (Jim Cramer) and media outlets (AP) are beginning to sound the drum for a housing bottom. I thought it would be worth pointing out that much like the weather, the majority of real estate data is best interpreted in a year over year comparison versus month over month. The reason for this is because real estate is a seasonal industry, much like the weather is. Home values, the number of listings, and the number of sales, are driven by the time of the year. You don't see weather men or women comparing … (4 comments)
foreclosures: RealtyTrac: Foreclosure Filings Set New Record In July
- 08/13/09 12:30 AM
According to RealtyTrac, foreclosure filings set a new record in July as they rose 7% from June and are up 32% year over year. According to James J. Saccacio, RealtyTrac's chief executive, "July marks the third time in the last five months where we've seen a new record set for foreclosure activity". In other words, despite calls of a housing bottom by CNBC's Jim Cramer and even the AP, the housing market is still deteriorating and home values are still eroding. This escalation of foreclosure activity also brings into question the effectiveness and long-term sustainability of the Obama Administration's $75 billion loan modification … (4 comments)
foreclosures: Mortgage Purchase Applications Remain Steady But Weak
- 08/12/09 01:06 AM
The Mortgage Bankers Association announced today that the mortgage purchase application index remains steady but weak as it rose just 1.1% from last week to 267.3. It is the fifth consecutive week that the index has been below 270. The 30-year fixed rate mortgage jumped from 5.17% to 5.36% for the week ending the July 31, 2009. This data continues to reinforce two ongoing trends. First, while demand for real estate appears to have bottomed from the lows we saw in January in the NAR existing home sales report, the current demand is being outpaced by the rate of homes going into foreclosure. In … (0 comments)
foreclosures: Loan Modifications: Do Loan Servicers Want You To Default?
- 08/04/09 01:40 AM
Peter S. Goodman wrote an article in the New York Times on July 30th making the case as to why loan servicers may be financially benefiting from homeowners defaulting on their loans which could explain the reluctance of these loan servicers to modify loans and make them more affordable. Goodman writes, "Mortgage companies, some of which are affiliated with the nation's largest banks, are paid to manage pools of loans owned by investors. The companies typically collect a percentage of the value of the loans they service. They extract their share regardless of whether borrowers are current on their payments. Indeed, their percentage often increases … (8 comments)
foreclosures: NAR: Home Prices Down -15.4% Year Over Year
- 07/26/09 03:17 PM
The NAR announced that home values fell -15.4% year over year from June of 2008 to June of 2009. While bulls would blindly taut that the "pace" of home value declines has slowed from last month's year over year decline of -16.8%, there is still significant systemic risk in the housing market that can't be overlooked, not the least of which is that the pace of foreclosures is actually accelerating. To give the current pace of home value declines some perspective, something that is often missing, here is what the year over year percentage change in the median home value has looked like over the past several … (1 comments)
foreclosures: Existing Home Sales Up 3.6% in June, Why That Is Not Enough
- 07/26/09 03:10 AM
The NAR announced this week that existing home sales rose 3.6% to a 4.89 million seasonally adjusted rate, the strongest pace since October of 2008. The rate of sales while encouraging, is still off -0.2% from last year despite an $8,000 first time home buyer tax credit and record housing affordability. Inventory of existing homes for sale fell -0.7% from last month to 3.823 million and is down -14.9% from the same time last year. The result is that the month's supply of housing is down -4.1% from last month to a 9.4 month supply and is down -14.5% from June of last year. Without … (31 comments)
foreclosures: Meredith Whitney: "I Think You Can See 13% Unemployment"
- 07/19/09 06:19 AM
In one of Meredith Whitney's most recent and damning interviews (watch the video) on the economy, housing market, and banking system she forecasts 13% unemployment, 50% home value declines from the peak, the bursting of the homeownership bubble, and a prolonged banking and credit crisis. Whitney, a banking analyist, has been one of the foremost experts on predicting the current crisis and recently said during a CNBC interview, "The banks are not prepared for double digit unemployment. I think you can see 13% unemployment. It's the unemployment that will come to haunt banks and require many banks to come back for capital." Harvard University professor Elizabeth … (0 comments)
foreclosures: Bank of America "Earnings"
- 07/18/09 02:13 AM
How can a bank lose money when they can borrow at 0% and lend at 5%? Most won't lose money, and Bank of America was no exception when it released its second quarter earnings this past week, but they came close. A couple of things from a Reuters report that are worth pointing out: First, "Results included a $5.3 billion pre-tax gain from the sale of one-third of the bank's stake in China Construction Bank Corp". Second, "Second-quarter net income applicable to common shareholders fell 25 percent to $2.42 billion". When you add these numbers up you can see that Bank of America … (11 comments)
foreclosures: Jim Cramer: "The Worst Is Over"
- 07/17/09 04:24 PM
Despite RealtyTrac's recent announcement revealing that foreclosure filings surged 33% from last year, Jim Cramer is refusing to back down from his shameful housing bottom call that he made in June. In fact, Cramer took his prediction one step further on Thursday when he wrote, "the worst is over" while referencing JPMorgan Chase's recent earnings and statement about delinquencies stabilizing. While the case can certainly be made that the banking system has been back-stopped thanks to TARP, hundreds of billions of loan guarantees made by the Treasury, and some very bank-friendly tax benefits, it is reckless for Cramer to think that the worst is … (9 comments)
foreclosures: RealtyTrac: Foreclosure Filings Surge 33% From Last Year
- 07/16/09 04:05 PM
According to RealtyTrac, foreclosure filings surged by 33% from June of 2008 to June of 2009. Additionally, filings are up 5% month over month from May to June. In other words, despite Obama's housing plan, the pace of foreclosures is accelerating. According to the AP, "It was the fourth-straight month in which more than 300,000 households received a foreclosure filing". Not that anybody should be surprised, Bush's loan modification plan didn't work either, why would this one? The problem of course is not just housing affordability, but home values. As long as home values continue to deteriorate, loan modifications will only … (4 comments)
foreclosures: MBA: Mortgage Purchase Applications Fall Sharply As Rates Plunge
- 07/15/09 03:50 PM
According to the Mortgage Bankers Association and their weekly mortgage application survey, mortgage purchase applications fell 9.4% from the previous week to 258.8. This is the lowest reading in 7 weeks when the survey fell to 256.6 during the week of May 22. The reason the purchase application is relevant is because it is an indicator of future demand for real estate. And the reason this anemic demand for real estate is significant is because there is another tsunami of foreclosures that will be making land-fall within the next 6-12 months. Interestingly, the 30-year fixed rate mortgage fell from 5.34% last … (2 comments)
foreclosures: Study: Distressed Commercial Real Estate Doubles
- 07/09/09 09:35 AM
According to a bloomberg article written by David M. Levitt based on a study by Real Capital Analytics Inc., $108 billion worth of commercial real estate is now in default, bankruptcy, or foreclosure. The report cites that at the end of June there were over 5,300 properties in distress. This is more than twice the number identified at the end of 2008. According to a report put out by the AP, banks held approximately $1.8 trillion in commercial real estate loans. Jon D. Greenlee, the Federal Reserve's associate director for banking supervision and regulation, said that 7 percent of those loans … (3 comments)
foreclosures: Consumer Credit Bubble Bursting
- 07/08/09 06:38 AM
According to the American Bankers Association, delinquencies of consumer card debt surged from 5.52% in the fourth quarter to 6.6% in the first quarter. This is nearly a 20% jump in one quarter. Additionally, the mortgage bankers association recently announced that a record 12.07% of all mortgages were at least 30 days late. These statistics are the latest indications that the consumer credit bubble, much like the stock, housing, and homeownership bubbles, are bursting. What this means is that the health of the consumer, which many expect to drive an economic and housing recovery, is actually deteriorating. For housing specifically, the concern is that … (5 comments)
foreclosures: S&P Raises Loss Expectations For Mortgages
- 07/07/09 01:26 AM
In the latest sign that the housing market continues to deteriorate, according to Reuters, Standard & Poors recently raised loss expectations for Alt-A, and subprime loans. The reason this downgrade by S&P of mortgage securities is relevant is because home values are driven by demand and supply, Jim Cramer. So long as foreclosures (supply) continue to rise and demand remains anemic, property values will continue to erode. Here is what the new Standard and Poors loss projections looks like compared to their previous ones. Loss rates are based on the vintage or the year that the loan was originated. The number in parentheses is the previous projection. 2005 2006 2007 … (5 comments)
foreclosures: The Next Wave of Foreclosures: Option ARMs
- 07/05/09 01:30 AM
Whoever said, Jim Cramer, that the housing market has bottomed doesn't know anything about Option ARMs. Those loans are represented by the light yellow bars in the graph below, the ones that surge in 2010 and 2011.
Never mind that a record 12% of all mortgages are 30 days late, or that the real unemployment rate is 16.5% and that there is a relationship between job losses and foreclosures, the Option ARM loans represent the next major obstacle to a housing recovery, and the problem with them is that they are not easily diffused with a refinance. Sorry, President Obama. By design, … (11 comments)
The MBA reported on Wednesday that the mortgage purchase application index rose 1% this past week to 280.5.
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