The Home Front
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'Antiquated' State Laws Exacerbating Foreclosure Crisis
Continue reading… 13 CommentsIn a new report, the National Consumer Law Center argues that outdated state laws are exacerbating the national foreclosure epidemic. (Via WSJ Developments.)
Much has been written about the financial and economic causes of this disaster. Much less notice has gone to another factor that has accelerated and multiplied this grave loss of homes and savings: antiquated state laws that in some ways afford fewer protections to homeowners than to renters."
According to the NCLC report, examples of state laws tilted against homeowners include the following:
"Fast track" foreclosure. In 30 states and the District of Columbia, mortgage holders who allege that homeowners have fallen behind in their payments can bypass the courts and move directly to take away and auction off homes. This denies homeowners due process protection comparable to that given many tenants. It also places upon homeowners the heavy burden to get a judge to review the mortgage holder’s claims and stop the foreclosure.
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Uncle Sam To Take Up to 36% Stake in Citigroup: 5 Things to Know
Continue reading… 5 CommentsUncle Sam announced plans Friday to toss yet another lifeline to Citigroup by converting its preferred shares to common stock, a move that allows the struggling financial behemoth to boost a key capital ratio and hopefully reassure skittish investors. Under the plan, the Treasury Department would swap up to $25 billion of preferred stock as long as other big Citigroup investors do the same. Should the deal go through, the government would own as much as 36 percent of Citigroup's common stock.
Here are five things you need to know about the development:
1. Tangible Common Equity: Citigroup's share price has been hammered of late amid concern that the company doesn't have enough capital to absorb its massive losses. Investors have grown particularly concerned about a specific bucket of capital--know as tangible common equity--that does not reflect the $45 billion that the government has pumped into the company. By converting these preferred shares into common shares, the government is enabling the company to boost this key buffer against losses. Assuming that other big investors go along with the plan, Citigroup's tangible common equity could increase to as much as $81 billion, up from just under $30 billion in the fourth quarter. "This securities exchange has one goal: to increase our tangible common equity," Citigroup CEO Vikram Pandit said in a statement.
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Mortgage Rates Inch Higher to 5.07%
Continue reading… 0 CommentsFreddie Mac said Thursday that average 30-year fixed mortgage rates increased slightly, to 5.07 percent, in the week ending Feb. 26. Rates at those levels are still extremely attractive.
Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 5.07 percent with an average 0.7 point for the week ending February 26, 2009, up from last week when it averaged 5.04 percent. Last year at this time, the 30-year FRM averaged 6.24 percent.
The 15-year FRM this week averaged 4.68 percent with an average 0.7 point, unchanged from last week when it averaged 4.68 percent. A year ago at this time, the 15-year FRM averaged 5.72 percent…
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Banks Take First Quarterly Loss Since 1990
Continue reading… 7 CommentsThe Federal Deposit Insurance Corp. on Thursday reported that the nation's banking industry suffered its first quarterly loss in nearly two decades during the last three months of 2008.
Here are the ugly details:
Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported a net loss of $26.2 billion in the fourth quarter of 2008, a decline of $27.8 billion from the $575 million that the industry earned in the fourth quarter of 2007 and the first quarterly loss since 1990. Rising loan-loss provisions, losses from trading activities and goodwill write-downs all contributed to the quarterly net loss as banks continue to repair their balance sheets in order to return to profitability in future periods.
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Mortgage Interest Deduction on the Slicing Block
Continue reading… 98 CommentsIn order to pay for health care reform, President Barack Obama is proposing to take the axe--or at least the scalpel--to a longtime sacred cow: the mortgage interest deduction. The plan, which was included as part of the president's budget proposal for 2010--unveiled Thursday---would reduce the value of the mortgage interest and other deductions for the nation's highest earners. Taken together, the increases are expected to bring in $318 billion over 10 years.
Here's how The Wall Street Journal described the proposal:
Households paying income taxes at the 33% and 35% rates can currently claim deductions at those rates. Under the Obama proposal, they could deduct only 28% of the value of those payments…
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New Home Sales Hit Record Lows
Continue reading… 0 CommentsAnother nasty batch of housing figures came out Thursday: the government reported that new home sales hit a record low in January, falling 10 percent from December and nearly 50 percent from a year earlier.
Here's what Ian Shepherdson, chief US economist at High Frequency Economics, had to say about the numbers in a report of his own:
We thought December's rise in mortgage applications and the upt- ick in buyer traffic reported by the NAHB survey might be [reflected] in a modest rise in sales, but alas not. We do think, [though], that sales are now very close to their floor. Activity has been compressed from near 1.4M at the peak to just 0.3M, so it can't fall much further; sales will not drop to zero. The [absolute level] of inventory continues to fall, down 29.9% y/y, but because sales are falling even faster the months supply is still rising, up to 13.3 in Jan from 12.2 in Dec. This will keep [prices] falling for the rest of this year at least.
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Jumbo Prime Loans Going Bad at a Rapid Rate
Continue reading… 3 CommentsA new report from Lender Processing Services shows that even borrowers with decent credit are getting into trouble. (The data is through January 31.)
From the report (via Housing Wire):
Foreclosure starts continue to increase across product types over the past several months in spite of moratoria and mitigation.
Non-Agency Jumbo Prime starts have increased almost 125% since January 2008, the most of any product…
Though it should be noted that delinquency rates remain relatively low in comparison, over the last 12 months the rate of deterioration in jumbo prime has exceeded all other product.
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Tim Geithner on Bank Nationalization
Continue reading… 0 CommentsHere's how Treasury Secretary Timothy Geithner handled the issue of bank nationalization during a recent appearance on The NewsHour with Jim Lehrer.
JIM LEHRER: All right. Now, back to the banks for a moment. Much has been said and discussed about nationalizing the banks. Fit that word into what we've just been talking about.
TIMOTHY GEITHNER: Jim, I think that's the wrong strategy for the country, and I don't think it's a necessary strategy. What we need to do is to make sure that these institutions have the resources necessary to perform their critical function on an ongoing basis in our economy as a whole, these major banking institutions.
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Home Sales Slide Resumes: 5 Things to Know
Continue reading… 2 CommentsAfter bouncing back a month earlier--thanks largely to bargain hunters--existing home sales resumed their downward slope in January, dropping more than 5 percent from December and nearly 9 percent from January of last year, the National Association of Realtors said Wednesday. "So much for the much-touted signs of stability that many analysts saw in the December sales report that showed a bump up in sales," Richard Moody, the chief economist at Mission Residential, said in a report.
[Check out Housing Rebounds--or Does it? 4 Things to Know]
From the report:
A high prevalence of distressed home sales, and of those in lower price ranges, has skewed the median price to be markedly lower than under normal market conditions. The national median existing-home price for all housing types was $170,300 in January, down 14.8 percent from a year earlier when the median was $199,800 …
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5 Beefs With the Home Mortgage Interest Deduction
Continue reading… 5 CommentsHarvard professor Edward Glaeser is calling for a makeover of the home mortgage interest deduction. "Ending the madness of encouraging Americans to bet everything on housing, we can hopefully reduce the odds of a tragic repeat of the current boom-bust cycle," he writes in a New York Times blog post. See the full post for his five major beefs with the deduction as well as his "utterly quixotic" proposal for improving it.
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Real Estate Trends in Miami
Continue reading… 1 CommentIn the latest installment of a new regular feature at the Home Front—in cooperation with our partners over at Trulia—here's a look at some key housing trends and statistics for Miami.
[Check out stats and trends for New York City, Chicago, Washington, D.C., Los Angeles, Boston, and San Francisco.]
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Your Real Estate Budget in Miami
Continue reading… 0 CommentsIn cooperation with our partners over at Trulia, here's a look at what your real estate dollar will buy you in Miami these days:
[Check out New York City, Chicago, Washington, D.C, Los Angeles, Boston, and San Francisco.]
More info on this property here
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Tumbling Asking Prices: Miami
Continue reading… 0 CommentsIn cooperation with our partners over at Trulia, here's a look at some Miami properties that have been forced to reduce their asking prices:
[Check out New York City, Chicago, Washington, D.C, Los Angeles, Boston, and San Francisco.]
More info on this property here
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Residential Real Estate Delinquency Rate Jumps
Continue reading… 0 CommentsThe Federal Reserve says that delinquency rates for residential real estate loans jumped to 6.29 percent in the fourth quarter of 2008 from 5.22 percent in the pervious quarter. The rate has more than doubled from 3 percent in the fourth quarter of 2007. Commercial real estate is experiencing a similar trend. See the figures here. (via Calculated Risk.)
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Home Price Declines Set New Records
Continue reading… 3 CommentsThe most recent Case-Shiller report, released Tuesday, showed that the national housing swoon picked up steam in December:
The decline in the S&P/Case-Shiller U.S. National Home Price Index – which covers all nine U.S. census divisions – recorded an 18.2% decline in the 4th quarter of 2008 versus the 4th quarter of 2007, the largest in the series’ 21-year history. The 10-City and 20-City Composites also set new records, with annual declines of 19.2% and 18.5%, respectively.
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Real Estate Decline in 'Final Chapter?'
Continue reading… 5 CommentsMerrill Lynch economist David Rosenberg sees a silver lining in the ugly housing figures that were released earlier this week:
[After adjusting for homes not “built for sale,”] starts sagged sharply in January to a mere 245K units at an annual rate, down 12% sequentially and 54% on a year-to-year basis.
That 245K level of single-family starts in January compares to the new home sales rate of 330K in December. In other words, builders have managed to pull the growth rate of new housing supply below the prevailing growth in new demand. So, we can now say with a reasonably high level of comfort that we are hopefully entering a new and final chapter of this unprecedented decline in residential real estate prices.
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Mortgage Rates Drop to Nearly 5%
Continue reading… 4 CommentsHeads up, thirty-year fixed mortgage rates are heading back towards 5 percent:
Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 5.04 percent with an average 0.7 point for the week ending February 19, 2009, down from last week when it averaged 5.16 percent. Last year at this time, the 30-year FRM averaged 6.04 percent…
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Octuplets' Mom Nadya Suleman's Housing Crisis
Continue reading… 44 CommentsI wonder what Rick Santelli thinks about this…
The grandmother of California's newborn octuplets faces the threat of foreclosure on the house she has shared with her daughter and six of her grandchildren, property records revealed on Wednesday.
According to a mortgage default notice filed last week with the Los Angeles County Registrar-Recorder's Office, Angela Suleman is more than $23,000 behind in payments on her house in the Los Angeles suburb of Whittier, an agency spokesman said.
The default notice was first made public when a copy of the document, giving Suleman three months to settle her debt in order to avoid foreclosure, was posted on the celebrity news website TMZ.com.
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First-Time Home Buyer Tax Credit: 6 Things to Know
Continue reading… 1423 CommentsWhile the proposed $15,000 home-buyer tax credit died in negotiations between the House and the Senate, the $787 billion stimulus bill that President Barack Obama signed into law Tuesday includes a similar--albeit smaller--measure designed to help revive the real estate market. Here are six things you need to know about the freshly-enacted $8,000 first-time home buyer tax credit.
1. Eight grand, new buyers: The tax credit included in the economic stimulus legislation is much narrower than the $15,000 proposal. This credit is equivalent to 10 percent of the purchase price of the home--although it's capped at $8,000--and applies only to first-time home buyers and principal residences. But unlike an earlier $7,500 home buyer tax credit, this one does not have to be repaid.
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Home Builders: 'Essentially No Improvement'
Continue reading… 2 CommentsHome builders haven't seen much improvement in the struggling market for new homes lately, the builders' trade group said Tuesday:
The National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today, held in the single digits for a fourth consecutive month in February. The HMI rose a single point to 9 – virtually unchanged from an all-time record low in the previous month – indicating that home builders have seen essentially no improvement in the market for new, single-family homes…
