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Fannie Mae Foreclosures Nearly Double in Q110
The amount of foreclosures held by the government-sponsored enterprise (GSE) Fannie Mae nearly doubled from 2009. According to the quarterly earnings report filed for Q110, Fannie Mae holds more than $11.4bn in single-family foreclosed properties, up from $6.2bn in Q109. The foreclosure rate in its single-family portfolio reached 1.36%, up from 0.55% last year. For the quarter, Fannie reported an $11.5bn loss and requested $8.4bn in aid from the Treasury Department.
The foreclosure volume reached over 109,000 from 62,000 in 2009. At the beginning of the period that number was just over 86,000. The region with the most was the Southeast with 17,700, followed by the Midwest with 15,000 and the Southwest with 12,800. The West was fourth with 12,600 and well behind the others, the Northeast had 3,500 foreclosed properties in the Fannie Mae portfolio. In the report, Fannie pointed out that foreclosure levels in the first half of 2009 were affected by foreclosure moratoria. “The continued weak economy and high unemployment rates, as well as the prolonged decline in home prices on a national basis, continue to result in an increase in the percentage of our mortgage loans that transition from delinquent to foreclosure status and significantly reduced the values of our foreclosed single-family properties,” according to the report.
Real estate's new problem: Not enough homes
Despite the housing bust and high foreclosure rates, in some areas real estate agents are complaining that they don't have enough homes to sell. There is currently an eight-month supply of homes on the market -- meaning that, at the current sales pace, it would take eight months to run through the backlog. That's still a lot compared to the six-month supply that is expected in a normal market, but it is much better than it was. In Denver, Phoeniz and San Francisco they are even bidding-war tight. In California, almost all cities have a short supply of single-family homes. That's especially true in the lower-priced categories, according to Leslie Appleton-Young, chief economist for the California Association of Realtors. There are plenty of more expensive homes in California, but this inventory is going quick: inventory for million-dollar-plus homes has dropped from 21.6 months to 10.9 months.
Ordinarily, rising prices are an indication of shrinking inventory. But these are far from ordinary times. Never have there been so many properties that could be for sale -- but aren't. This so-called "shadow inventory" comes from two main sources: properties lenders have not yet repossessed or have not yet put back on the market; and homeowners who want to sell but who have refrained because of low prices. Lenders are also holding back on foreclosing at all, either because they're having trouble handling the volume of repossessions or because they want to sell off some of the inventory they already have. Zillow.com surveys estimate that 8% of homeowners are very likely to try to sell their homes in the next twelve months if they see signs of improvement in their local markets.
Stocks set for slide
U.S. stock futures dropped Tuesday amid growing worries about whether a massive European aid package would be enough to fix the region's debt woes. At 6:15 a.m. ET, Dow Jones industrial average, S&P 500 and Nasdaq futures were all sharply lower. Futures measure current index values against perceived future performance and offer an indication of how markets may open when trading begins. U.S. stocks joined a worldwide rally and surged Monday, posting their best day in 14 months. The source of the enthusiasm was a nearly $1 trillion European rescue package aimed at stabilizing the euro and providing aid to the regions's debt-laden governments. But confidence in the EU bailout began to fade Tuesday. Worries that it would not be enough to fix the problems facing many European governments led to a drop in world markets.
The House Financial Services Subcommittee on Capital Markets will hold a hearing on last Thursday's stock market roller coaster ride, in which the Dow sold off nearly 1,000 points in under ten minutes before rebounding. Erroneous trading in more than 300 stocks, due to errors in electronic trading programs, resulted in the Dow's biggest ever intraday sell off.
Dollar and commodities: The dollar was up 0.8% against the euro and 0.3% on the British pound. The greenback was down 1% on the Japanese yen. U.S. light crude oil fell $1 to trade at $75.80 a barrel on the New York Mercantile Exchange. COMEX gold for June delivery jumped $8.30 to $1,209.90 per ounce. Bonds: Treasury prices were higher early Tuesday, pushing the benchmark 10-year yield down to 3.48%. Bond prices and yields move in opposite directions.
Goldman Sachs and JPMorgan Chase Roar Ahead The trading operations of Goldman Sachs and JPMorgan Chase made money every single business day in the first quarter, a feat that was a first for the companies and underlines the boom in Wall Street’s investment banking revenues. Goldman’s trading desk recorded a profit of at least $25 million on each of the quarter’s 63 working days, making more than $100 million a day on 35 occasions, according to a regulatory filing issued on Monday. The result, following a series of regulatory probes into Goldman’s trading activities, could fuel criticism of its business model and market behavior.
However, JPMorgan also achieved a loss-free quarter in its trading unit — making an average of $118 million a day, nearly $5 million an hour — as it built on the gains made during the financial crisis when rivals faltered or failed. The 14 largest global investment banks reported $78.8 billion first-quarter revenues, their best numbers in three years and just 1 percent shy of the record. Analysts said the resurgence might give ammunition to politicians who want to impose a global banking tax and could strengthen the hand of regulators seeking to force banks to hold more capital and liquid assets against future problems. Goldman, which is already facing civil fraud charges from U.S. regulators over a mortgage-backed security, could also face particular calls to rein in its operations. Morgan Stanley analysts found that Goldman had continued to lead the pack in revenue overall in the first quarter as industry leader in equities and in fixed income, currencies and commodities (FICC). FICC revenues now account for 61 percent of investment banking revenues globally, compared with about half before the crisis.
NYC Recession May Linger for Average New Yorker
New York City's recession likely will linger for the average resident, for a long time. The city's recovery might be rocky and long, according to a report by the think-tank Fiscal Policy Institute, due to the high number of job-seekers, the concentration of job losses among middle- and low-income people, soaring bankruptcy rates at small and medium businesses, and the risk the city will slash public workers to close a budget gap. After nearly sinking during the credit crunch, Wall Street last year resumed earning record profits. "For the average New Yorker, however, the bite of this recession is much worse and there is no end in sight," the report said. The recession hurt residents of the city particularly hard because commuters hold about 40 to 50 percent of its highest paying jobs. "In most moderate and average paying sectors, city residents hold 90 percent or more of the jobs," the report said. Employers must hire 400,000 workers to reduce joblessness to pre-recession levels, the report said. The Fiscal Policy Institute says it works to ensure taxes are fair and that public services are adequate.
Blog Written By: Chris McLaughlin With Short Sales Riches.com