Housing/Mortgage/Real Estate

[G M]

LOL!

[ppulatie]

Several reasons they are down all over:

1.  Increased values allow for selling before foreclosure.

2.  Automatic GSE mod approvals for loans that are from 90 days to 270 days late.

3. Private Label MBS is down to about 25% of volume in 2007.  Those loans left tend to be stronger borrowers.

4. Adjustable Rate loans have defacto modifications, thanks to the low interest rates.  Current rates are about 2.75% to 3.25% in most cases.

5. GSE new loan originations have since 2009 been to very strong borrowers.  Default rate is .0025% for those loans.

6. HARP refinances of negative equity loans reduced rates to 3.5% and saved borrowers hundreds per month. 

7. Low income and poor credit borrowers, i.e. Community Reinvestment Act loans, have been greatly reduced, hence less foreclosures.

Watch out for FHA though. It is going to get real messy soon.

[Crafty_Dog]

BREAKING NEWS: Newark Votes, Approves Use of Eminent Domain to Fight Foreclosures–First Domino Falls
6
 
 Newark, New Jersey has become the first city in the country to officially approve a controversial plan that uses eminent domain to fight foreclosures and neighborhood blight.

Newark’s new mayor, Ras Baraka, introduced the resolution and the Newark Municipal Council, which passed it unanimously, according to a press release issued today by New Jersey Communities United (unitednj.org), which describes itself as a progressive grassroots community organization committed to building power for low and moderate income people, predominantly in Newark.

According to the release…

“Newark Council Unanimously Approves Resolution Supporting Local Principal Reduction Program for Families Facing Foreclosure
Mayor-Elect Ras Baraka Leading Fight Against Foreclosure Crisis in Newark”

The program would allow homeowners trapped in certain type of mortgage, known as a Private Label Security or PLS Loans, to voluntarily participate in a program where the City purchases these mortgages from investors and repackages them at terms homeowners can afford. For most of the estimated 1,200 homeowners with these types of loans in Newark, the policy would save them from losing their homes to foreclosure.

Mayor-Elect Ras Baraka…

“Newark families have been absolutely devastated by the foreclosure crisis.  Unless we take decisive action now, the situation will only get worse.  As Mayor of Newark, I will aggressively move forward to implement the resolution passed by the Council. It will send a clear message that we will no longer accept the predatory lending and questionable foreclosure practices by banks. More importantly this policy will keep families in their homes and begin to reverse the blight created by vacant and abandoned houses that have already been lost to bank foreclosures.”

Trina Scordo, executive director of NJ Communities United, said…

“Newark voters elected the right candidate to lead the City in a new direction.  Mayor Baraka’s vision for a better Newark begins with putting the people’s needs above the interests of Wall Street. His leadership on this issue and his ability to work with Council leaders to move innovative policies like this bode well for the future of Newark.”
The release also points out that according to a recent report published by the Haas Institute at the University of California, Berkeley titled: “Underwater America: How the So-Called Housing Recovery is Bypassing Many Communities,” New Jersey is at or near the top of the list of states hardest hit by the foreclosure crisis.

The study found that New Jersey cities, Newark, Elizabeth and Paterson are ranked second, third and fourth in the country for the percentage of homes with “underwater mortgages,” the term used when homeowners owe more than the value of their properties.

Underwater mortgages lead to foreclosure because when homeowners are hit with a life event, such as divorce, illness, injury or job loss, they can’t sell their homes or borrow against them to get through the rough patch.  If that happens and the bank won’t modify, it’s a foreclosure.  New Jersey’s high percentage of underwater mortgages means, “there are thousands of homes at the brink of foreclosure,” the release explains.

Lenders and servicers have resisted approving principal reductions as a preventive measure or in any broad based way, the argument being that as long as borrowers are making their payments there’s no need to provide any assistance.  As I recently wrote, it’s clear to me that from the beginning of the foreclosure crisis, it’s been a matter of not wanting to leave any money on the table, and a sort of baseless optimism that says: “Hey, maybe property values will come back and we won’t have as great a loss.”
Let’s face it… that sort of thinking has resulted in almost 8 million homes lost to foreclosure since 2008, and cities in New Jersey like Newark, and in California like Richmond, are clearly tired of waiting for some imagined turnaround in the housing market that has failed to materialize for six years while they’ve watched their communities continue to pay the price of inaction by the holders of these mortgages.

So today, I would have to say that Newark is to be commended for having the courage to draw the line and take control of their city’s destiny by becoming the first American city to say yes to the use of eminent domain as a way to deal with underwater loans and urban blight caused by the ongoing foreclosure crisis.  But in addition, since there are reportedly some 26 other cities across the country that have been considering the plan, I would also have to imagine that Newark only represents the first domino to fall, in what could potentially become a long line of dominoes.

And I suppose that’s really why the banking industry lobbyists have tried so hard to scare cities away from the use of eminent domain… they simply don’t want to cede control… I understand.

But, at this point cities like Newark have endured six years of a housing market’s collapse, and they still have thousands of homes underwater by 50 percent and more.  What would you do if you were mayor of such a city… if you pledged an oath to protect that city… what else could you do.

ONE MORE THING: The opposition will no doubt say that investors will lose money as a result of using eminent domain in this instance, but that’s just not true.  Investors must receive “fair market value” for the properties being seized by the city, which is more than they’d be able to get were they to foreclose.  In fact, in New Jersey, where it takes something like 1,000 days to foreclose, the investors would be lucky to net half the home’s fair market value by foreclosing.

A Lesson From the 1930s…

During the 1930s, we lost 50 percent of the homes in the country to foreclosure, and by the middle of that decade, states started passing moratoria that banned foreclosures for five years.  Of course, that’s the worst possible answer to the problem, because it encourages more to default, and it only puts off the problem.
So, investors… look at it that way… would you rather see eminent domain used and receive fair market value, or see a five-year prohibition on all foreclosures?  Because that’s your real choice… the city of Newark is saying that the status quo is simply not an option.

Stand by, lots more to come.  You might even think of this as being the shot heard round the world.

[Crafty_Dog]

Monday Morning Outlook
________________________________________
Housing Recovery Still on Track To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 6/2/2014

Just a couple of months ago the pessimists were saying the housing recovery was on the ropes. Home sales were down and housing starts had dropped.

But barely more than a month later this looks like just another head-fake. Existing home sales grew 1.3% in April and, given data on pending home sales, look like they rose another 2% in May. (Existing home sales are counted at closing; pending sales are contracts on existing homes.) Meanwhile, new home sales bounced back in April as well.
What the pessimists keep missing is that based on population growth and “scrappage” (voluntary knock-down, fires, floods, hurricanes, tornadoes,…etc.) the US needs about 1.5 million new homes per year, about 60% higher than the 943,000 started in the last twelve months. These include both single- and multi-family homes as well as owner-occupied homes and rentals. The US has not hit that level in over seven years. Building is still poised to grow much further.

Yes, existing home sales remain relatively slow. But, like used car sales, these homes sales barely contribute anything to GDP. Also, inventories have been low, which has held back sales. That's changing.

Yes, new home sales have been stuck in the same range for the last eighteen months. But official data on new home sales don’t include condos and coops. And, given the shift in construction toward multi-family units, it stands to reason that condos and coops make up a larger share of sales as well.

We’d be worried if new homes were piling up in inventories, but the months’ supply of new homes – how many months it would take to sell all inventory at the current pace of sales – is below long-term averages. In other words, if anything there’s a shortage of new homes, not a surplus.

And a lack of inventory is probably behind much of the strong price gains we’ve seen. The Case-Shiller index, which tracks home prices in 20 key markets, is up 12.4% from a year ago; the FHFA index, which tracks nationwide prices for homes financed by conforming mortgages, is up 6.5%.

As a result of these gains, we estimate that after the huge boom and bust, national average home prices are finally at fair value. This doesn’t mean home prices are suddenly going to stop going up. They’ll just go up more slowly in the next couple of years than they have in the past couple of years, more in-line with increases in rents and construction costs.

Regardless, housing is volatile from month to month, so don’t be surprised when, later this year, the pessimists latch onto some other reports and claim the housing recovery is done. And don’t be surprised when the data prove them wrong again.

[ppulatie]

Thought I would make a couple of comments...........

1. Wesbury continues his"rah rah" real estate projections, without any real analysis of what is going on.  He argues that the 1.3% existing sales gain in April was a sign of this, and expects May to be 2% increase.

Anyone in the industry with a desire for accuracy will say that Month to Month means nothing. It is Year to Year that matters, and YOY is down sharply. But if he wants to argue that Month to Month is important, Spring is the most important selling season, and only 1.3% increase occurred?  That  is so far below historical norms that it is pathetic.
And 2% in May will be just as bad.

He also claims that existing home sales provide little to GPD.  What a friggin idiot?  Existing home sales should be comprised of two types of prgianic buyers.......first time buyers and move up buyers.  Correct me if I am wrong, but don't first time buyers go out and buy home furnishings, decorate and engage in landscaping to their own desires. Move up buyers engage in even more of this behavior.  But I guess that it means nothing to Wesbury because it goes against his beliefs.

First time buyers are down to less than 25% of sales. This is close to a 50% drop. The reason is that there are few qualified buyers and what do exist are buying FHA.........the wonderful FHA with 96.5% LTV loans, and credit scores down to 580.  Great buyers there, no wonder they have a minimum 15% default rate.

Move up buyers are mostly non-existent as well. When Negative Equity, Low Equity and other factors like FICO are factored in, between 60% and 70% of the potential move up buyers are now out of the market. What remains are borrowers with significant equity who have no desire to move, or others with very low interest rates and will not want to buy anew as rates begin to increase again.

The Investor market is shrinking. Blackrock is decreasing its sales for the year by 70%. Other firms are doing the same.  The "new" investors are the Homeowner Wannabees who are buying investment properties now.  Dumbshits missed the boat and are going to get screwed again!

Don't even consider the 25-34 year old cohort.  They haven't the income to buy homes, and the college grads are out of the market for a decade due to student debt.  But hey, maybe Obama will take his pen and wipe that out......

Wesbury talks about the need for new homes in the 1.5m range.  Hasn't anyone told him that new household creation has dropped by 66%?  Who needs 1.5m units when up to 1m household creation units have disappeared.

When he talks about the 943k units started over the past year, look at the numbers. The growth is occurring mostly in Multi Unit properties, in other words rentals.  The home builders know the market has changed.

Oh yes, the housing inventory for sale is increasing and is up to about 6 months so sales are going to increase.  This number has been increasing for months and over the last few months, has been from 4 months up.  Wesbury.......where are the sales that should be occurring?  1.3% increase with 6 months inventory?  What is he going to say when it gets up to 8 or 9 months?

Also, contrary to what Wesbury says elsewhere, foreclosures are increasing again. There are 4m homes delinquent or in foreclosure, and 90% will end up foreclosed upon.  What is that going to do to the market?

The Fannie 3rd Qtr 2013 SEC filing says that 31% of the GSE loans will default. 67% of their subprime will default.  What about this?

I am in contact with Mortgage Bankers all the time. They now do 46% of all new loan originations.  They are all reporting significant drop offs in both refi's and new loan originations.  This is only going to get worse as the year continues.  Many of them are going to end up closing.  (Profit on loan originations for 1qtr 2014 was only $1,223.  Not much in it for a Mortgage Banker to continue operating.)

I DESPISE people who look at the monthly reports, don't do any real looking into what is going on, and yet proclaim all is improving.

[ppulatie]

Eminent Domain.........expect more new forthcoming on ED.  More cities are going to take it up.

Disclosure: I  was originally opposed to the idea of ED.  I have since changed my mind and find that it is going to be the only possible way to begin to resolve what is going on in many cities in the US.  In fact, I expect that ED will begin to create a complete "sea change" in how foreclosures and modifications are handled if the first ED action is properly done.

Crafty,

This should hopefully provoke some response.

[Crafty_Dog]

I'm really surprised at your new position!  Care to flesh it out?

[ppulatie]

Lol......I thought that would provoke a response............

For those who do not know, I have been heavily involved in this entire mess since 2007, working on all sides.  I understand the problems and processes in far greater detail, and the issues involved.

In the last 7 years, there have been all types of programs developed to try and resolve the crisis, HAMP, HARP, Hope 4 Homeowners, National Mortgage Settlement, CA AG actions against Wells/World and the Countrywide settlement among others. What do they all have in common?  THEY HAVE ALL FAILED!!!!

Nothing has worked. Trillions have been spent, and the problems continue.  Foreclosures are postponed so that it now takes years to foreclose on a property. Modifications can take from 6 months to years to get done and when done, all but a few end up re-defaulting.

The Fed buys MBS to promote a housing recovery. They buy because no one else wants the return that even good loans provide, and no one want the crap still out there.  In fact, if you look at the MBS purchases, the Fed buys 95% of all new issues.  Why are they tapering?  Look at the numbers of new issuances, and the taper tracks with that.

Home values are up........only because of Wall Street hot money.  You have a city of 30000 housing units, 10 home sales per month all cash driven driving prices up by 20% for the year.  Yeah, right......does anyone really believe that the crap homes have appreciated.......or is it just market manipulation? 

What is the definition of insanity?  Continuing to do the same thing over and over again, expecting the outcome to be different the next time.

The truth is that if we had let the market crash, the "hurt" occur, and housing to bottom, we would be on the way to the beginnings of a recovery. Instead, we have played games, delaying the pain, and in the end only made things worse for when the crash comes.

Everything is being viewed as a zero sum game, when it comes to the housing crisis. No one wants to give up a thing, and this attitude is only hurting the entire country. 

Key points:

1.  Servicers have no desire to modify loans in a beneficial manner.  They get 25 bps on the total dollar portfolio for servicing performing loans. When the loan goes into default, they get from .50 to 1.25 bps per loan, plus all late fees and other charges they can impose. Plus they can get up to $4200 for ultimately modifying a loan from the government. If they modify a loan in a timely manner, they lose money.  In they do principal reductions, they really lose money.

2. If servicers get sued for foreclosure and modification issues, they don't get harmed. It is the Investor who pays.

3.  The Master Servicer, think Wells Fargo in most cases, gets 10 bps on the servicing. They do not want to do principal reductions due to losing servings dollare either.

4.  The Trustee for the loans who controls the Trust and the Investors, have no reason to perform in a manner that would cut loses for Investors. That is because most of them also originated Trusts.  If they go after the servicers, then they could be also be the recipient of the same attacks on their own servicing actions.

5.  The Investors have no real power to act. To challenge the Servicer or Trustee, they must obtain 50% of the investors in the Trust to join in on any actions. Then they must file lawsuits, and fight to get the documents to prove their arguments.  Ultimately, they settle out of court for pennies of what they could have had for losses incurred. BFD.......

6. Homeowners are either getting "stalled" by the servicers until a foreclosure presents a negative Net Present Value so as to deny a mod, or are given a mod with no ability to perform so the loan will go back into default. They continue to get no relief.

7. Cities are suffering immense harm. Richmond Ca is the perfect example.  The city literally sits across the bay from another coastline, that of Tiburon/Belevedre.  That area is the most expensive real estate in the country, outside of downtown New York. Yet Richmond is one of the worst cities for foreclosure in the country.

12% of homes are in default, and a 20% vacancy rate. Incomes under the national average by 20%.  Crime rate is only surpassed by 5% of all cities in the US. 45% Negative Equity position. Gang and drug activity. Businesses are leaving and not coming into the city. The city has to let go critical servicers like the police to meet depleted budgets.

The servicers are doing nothing to assist the city. The GSEs do nothing. So everyone suffers.

I have seen the agreements on MBS and what can be done or not. The simple fact is that by invoking ED and taking the homes for fair market value, and then getting them refinanced by willing parties, and they do exist, the Investors will actually suffer less losses than if the homes are foreclosed upon.  But that makes too much sense for the Servicers, Banks, MBA and other parties.

ED, if done right, can be used as a model across the US, helping cities and homeowners everywhere.  Furthermore, it can change the adversarial relationship between all parties, and in turn, creative a cooperative relationship where everyone seeks to resolve the problems.

The threat of using ED can accomplish this. It can change the way that foreclosures and modifications are being  handled for the better.

Many argue that ED is unlawful. Those are the same parties that oppose any meaningful efforts because it costs them money.  There is no reason to believe that ED would be anything other than in the best interests of the public domain, which is the legal  standard for invoking it.  The threat of invocation after the first successful ED action would serve to begin the process of having all parties work together to resolve the problems.

[Crafty_Dog]

"The simple fact is that by invoking ED and taking the homes for fair market value, and then getting them refinanced by willing parties, and they do exist, the Investors will actually suffer less losses than if the homes are foreclosed upon.  But that makes too much sense for the Servicers, Banks, MBA and other parties."

1) Umm isn't one of your key points that no one knows what the hell FMV is?

2) Perhaps more to the point-- is this Constitutional?  and what precedent does it set?

[ppulatie]

  Post reply ( Re: Housing/Mortgage/Real Estate ) 


Re: Housing/Mortgage/Real Estate
The answer to Fair Market Value is

Yes. FMV can be determined.  Furthermore Loss Given Default can be determined also.

Prior to coming to this position, I have looked at the property situation in Richmond carefully. I found that based upon the relevant factors, it actually makes sense to either modify the loans with Principal Reductions, or allow Short Refinances with payoffs of Fair Market Value. But the servicers are preventing this.

You have to look at things from the Loss Given Default perspective.

1.  Loans that go into default and are foreclosed upon are not going to recover the principal due. The property gets sold at a price that the market is willing to bear, but the price will also involve sales commission and other factors as upkeep removed from the proceeds.  The ultimate result is that under the best of cases, the proceeds received with be about 90% of perceived FMV.  All loan amounts and arrearages above the FMV are also lost.

2. Take, Richmond, Newark or other cities considering EC.  Who the hell wants to live in those shitholes with extensive crime, poor policing, bad economic conditions, etc.  Buyer for the properties are few and far between and would involve steep discounts.  Look at Detroit where they can't  even give away properties.

3. So the properties sit vacant and as vacancies increase, values go down further. Or, the properties become the targets of gangs, drug dealing, squatters, and ultimately are damaged to the point where they are worthless anyway.

Under this scenario, ED makes sense.

As to legal, this has been the subject of hot debate.  Lenders, investors and advocates are saying that it would not be legal.  However, others are coming up with legal arguments in support of ED.

ED is accomplished with the Public Interest in mind. Use of ED in this scenario is definitely within the Public Interest.  More

[Crafty_Dog]

Color me real doubtful here.  No doubt YOU could do it well, but A) you are not likely to be put in charge B) those put in charge are likely to be idiots AND subject to tremendous corrupting pressures C) the meaning of the ED clause of the Constitution would become meaningless against fascist and corrupt state interventions from here forward.

What am I missing?

[DougMacG]

Mortgages are already highly regulated by government and 90+% of them have government backing.  Yet...  
The originator, appraiser, servicer and master servicer have no interest in seeing the loan succeed and the investors have no power to act.  Every key player in the process has either an upside down incentive or is powerless to act.

The government's 'solution' to the foreclosure crisis has been to delay and stall off the solution, the foreclosure process, making it harder and harder for the lender to recover the securing asset from the defaulted loan.  

I forget the exact timing but a friend of mine lived in his house maybe 4 years after he quit paying.  This is because of tangled up rules coming out of government, state, federal and local, not lender choice.  The no consequences environment didn't help him either.  He was just trying to quit an over-borrowed situation.

Not all upside down owners paid too much for their property.  Some borrowed it up after the fact.  In either case, these were consensual transactions, even the foreclosure clause is consensual.  Takings are not.

The best way to get new loans made is to secure the loans; that is the point of a mortgage and the mortgage industry, as opposed to unsecured loans.  But a loan is not secured if the lender cannot repossess the property in a timely manner before it is destroyed.  And as pp suggests in the macro sense, these lenders can't repossess even before the city is destroyed.

The answer to government power gone awry is not to give the government far greater power, to right many wrongs with more and more wrongs.  Like Crafty, I don't buy it.  The way you fix it is to simplify the rules, clean up the existing laws.  If you don't meet the terms of your mortgage, you lose your home.  The law should allow a reasonable delay to clear up misunderstandings, check lost in mail, give a short time to find a different funding source, but not years and years of delays.

Defaulted loans and foreclosed properties are part of a continuous correction that keep the market at market value.  It is a positive thing that makes widespread home ownership possible.  A market prevented from correcting is not a market.  It is a quagmire.

This takings idea is made 'legal' by the Supreme Court Kelo decision.  It was a wrongly decided, 5-4 decision.  Public taking for private use unconstitutional and wrong.  As Crafty suggests, local governments are not smarter than free markets and Nazi-Soviet-style central planning is not better than free people making free choices.  Let's just go back to what worked before all the government over-meddling.

One example of where public taking for private use did not work out is the Kelo property in New London.
http://dogbrothers.com/phpBB2/index.php?topic=1850.msg78906#msg78906

Eminent domain by definition does not pay the amount that a willing seller and a willing agree to, fair market value.  

When cities start taking up properties in default to 'improve' neighborhoods, they will not limit their takings to defaulted properties.

A mortgage with a right to take back the property in the event of default is a contract.  Places where ordinary contracts are not enforceable are called third world countries.  Yes, I would include Detroit and Obama's vision for America in that category.

Where in the constitution does it say government shall not take private property for other than compelling public use?  Perhaps in the 9th, 5th and 2nd amendments.

[ppulatie]

CD,

There are  VERY competent people involved in the ED considerations from what I have seen and heard.  If the process is started, the first city must be done efficiently and in a realistic and short time period, or it will fail.  If it works, it will sweep across the country.

[G M]

I agree with Doug and Crafty. If it sweeps the country, it'll be graftapalooza on an epic scale.

[ppulatie]

DougMac,

What if the ED action actually improves the position of the Investor? What if the Investor gets more in return that could be expected by foreclosure?  That is the bottom line.

Government programs and interventions have failed miserably in stemming the crisis.  Right now, 8m homes have had completed foreclosures, and untold others with Deed in Lieu's or Short Sales.  4 million more are currently delinquent and other 2 million plus modifications have occurred in which 66% will redefault.  That is 14m homes in trouble, or 28j% of all homes that had first mortgages.  Greater than 1 in 4!!!

Even worse, FHA and the GSE's expect that 30% or their current loans will default in the future, and of the subprime done by the GSEs, 67%.  

Also, there are large numbers of ARM's just waiting for interest rates to increase and when that happens, kiss half of those loans goodbye in the first couple of years.

Can the country really afford this?

Absolutely nothing has been accomplished in the past 7 years to resolve the crisis except to delay the problems. The delays are done through phony attempts to modify loans, foreclosure regulations that stop the ability to foreclose, artificial increases in home values designed to "hide" the problems and delay, and programs like HARP designed to lower payments and interest rates to  stimulate a consumer driven economy that is otherwise moribound.

None of the parties involved in the loans are working together to resolve the problems. They are at cross purposes. To give you an idea of the problems:

1. Homeowners have no trust in the lenders and servicers. Those in trouble feel that the serrvicers are out to steal their homes unlawfully. Most of this belief is based upon idiots like the media and Liz Warren expounding ideas that are not true or factual like: 1) The loans were sold multiple times. 2) Robo signing. 3) Poor and stupid modification practices.

2. It is no longer subprime driving the defaults either. It is Prime loans, people who have lost jobs or income, now forced into default. This has been the case since 2010.

3. Modification departments that are nothing more than "loss centers" for servicers. They contribute nothing to the bottom line for a non-bank owned loan, unless servicing fees, late fees and other things can be charged.  Additionally, antiquated processes for doing mods.  Then you have the problems of homeowners who cannot even follow simply instructions for getting in the paperwork for doing mods, committing fraud, strategic defaults, etc.

4. Basel III which has caused bank servicers to be forced to sell servicing rights to the non-bank servicers, which screws up loan mods in process.  If they don't sell the loan servicing rights, increased Basel III capital requirements are implemented.

5.  Regulatory agencies like the CFPB which have taken the position that literally says, "If you are doing something right, but you think it is wrong, then it is wrong".  The CFPB has decided that if you are a lender or servicer, and they come in to audit you, if you have an attorney present, the attorney cannot say a thing or represent you. You have no legal rights!.  

6. Investors who have NO INPUT on what to do regarding a delinquent loan.  The Servicer has all the power to decide.

The entire system is completely broken. No one is talking to another. Even within the lenders and servicers, the departments have no cross communication and no one knows what the other is doing.

ED is actually a "threat" to use the process to bring the parties together to try and workout solutions. It will not work in a city like San Francisco with few foreclosure problems, but for cities that have been severely damaged and the process does not improve, ED could help.

What has to happen is a plan of action put into place that will bring the parties together to work towards a common cause. This requires both the involved parties and independent parties capable of properly evaluating the situation and bring about resolution.

If all parties can work together to resolve a problem like in Richmond or Newark, it will prove that the involved parties can work together for the common good. Then, one can see the beginnings of them working together in a non ED environment.

The strategies are being developed now. The processes and methodologies are being put together.

I came to this decision reluctantly. When first hearing about ED, my thoughts were "Fuck ED and Richmond". Over time, I have reviewed and evaluated things and have come to the conclusion that ED may provide an ability to bring the parties together.

At this time, it is either ED, or another 10 years of doing again and again, what has failed in the past time and again.

[ppulatie]

GM,

If the government is involved, yes. But the plans are to keep the governments out of this at both the state and federal level. It is private enterprise coming together to solve a problem that cannot otherwise be solved.

There is another solution.........do what was done during the Depression........a 5 year moratorium on foreclosures.  Would that be any better?

There have to be better solutions and if the threat of ED can be used to bring the involved parties together to work towards a solution, so much better.

What people read in the papers or on the internet or airwaves is misrepresenting what is really going on. Foreclosures are not recovering. People are not improving their financial situations. The Housing Market is not recovering.  People are representing otherwise, but going into the numbers reveal an entirely different understanding.

We are talking about another 20% of the country facing foreclosure in the next decade, if nothing is done. What happens when the economy crashes, which it will. What happens when interest rates rise?

The government actions to date have destroyed the refinance industry. Does anyone really think that with interest rates on loans at 3.5%, people will refinance again for other purposes?  Will they want to move up into "better" homes, when they will be paying 6% or greater?

The banks have been laying off residential lending employees by the thousands.  The Mortgage Bankers are doing so as well.  Even worse, their loan volumes have decreased by 70% from one year ago.  Add to this that they made $1,200 per loan origination in first quarter 2014, and they are in real trouble.  By the end of the year, expect that 50% of them will be gone.

Think the new mortgage regulations and QM loans are going to be an improvement?  Think again. Lenders now have a duty of care to the borrower, and under the UDAP (Unfair and Deceptive Acts and Practices) codes, it will likely go to a fiduciary duty. So new loans originated in 2014 and beyond that default will likely go to litigation.

QM?  There is a huge loophole in it which only a few people are aware of yet. When word gets out, lenders will have little or no defense to defend against the lawsuits.

Safe harbor for QM?  That is a joke.  Imagine that 30% of all loans originated under QM are at great risk of default at time of funding.  (We have the proof.)

You cannot believe who fucked up the entire situation is, whether from the foreclosure side, the current lending practices, regulatory oversight, or anything else. We cannot just continue to do things as we are now. New and extreme measures must be taken.

[ppulatie]

Angel Oak Funding loan guidelines

1 day out of short sale or foreclosure

Credit Scores beginning at 500 up to 80% ltv and 50% Debt to Income

Bank Statement documentation for Self employed


And people wonder why I am so negative?  Here we go again......

[Crafty_Dog]

New Single-Family Home Sales Rose 18.6% in May To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 6/24/2014

New single-family home sales rose 18.6% in May to a 504,000 annual rate, coming in well above the consensus expected pace of 439,000. Sales are up 16.9% from a year ago.

Sales increased in all major areas of the country.

The months’ supply of new homes (how long it would take to sell the homes in inventory) fell to 4.5 in May from 5.3 in April. The decline in the months’ supply was all due to a faster sales pace. Inventories were unchanged.

The median price of new homes sold was $282,000 in May, up 6.9% from a year ago. The average price of new homes sold was $319,200, up 1.7% versus last year.

Implications: The housing recovery continues. New single-family home sales boomed in May to a 504,000 annual rate, blowing away consensus expectations and coming in at the highest pace in six years. There has been a lot of volatility over the past year, but we can take some of this volatility out by taking a 12-month moving average, which is tied at the best level since February 2009. Still, at this point in the housing recovery we expected this number to be higher – but, a few factors are weighing on sales. First, the homeownership rate remains depressed as a larger share of the population is deciding to rent rather than own. Second, buyers have shifted slightly from single-family homes, which are counted in the new home sales data, to multi-family homes (think condos in cities), which are not counted in the report. Third, financing is still more difficult than it has been in the past. Perhaps the best news in today's report was that the months’ supply of new homes – how long it would take to sell all the new homes in inventory – declined to 4.5 in May, well below the average of 5.7 over the past twenty years. The inventory of new homes remains very low and as the pace of sales continues to recover in the years ahead, homebuilders still have plenty of room to increase both construction and inventories. Another way to think about it is that the construction of new homes can outpace a rising pace of sales. In other housing news this morning, the Case-Shiller index, which measures home prices in 20 key metro areas, increased 0.2% (seasonally-adjusted) in April and is up 10.8% in the past year. Price gains in the past year have been led by Las Vegas and San Francisco. The FHFA price index, for homes financed with conforming mortgages, was unchanged in April and is up 5.9% from a year ago. As inventory continues to come onto the market, price gains will continue but not as fast as in the past two years. In other news this morning, the Richmond Fed index, a measure of factory sentiment in the mid-Atlantic region, dipped to +3 in June from +7 in May, signaling continued manufacturing growth, but perhaps not as fast as in May.

[DougMacG]

Strange how he quotes such good sounding news.  Headline is up 18.6%, but sales are up 16.9% from a year ago (meaning they were down year to year just one month ago) and average price is up 1.7% from a year, then he couches it in caveats, "There has been a lot of volatility over the past year...a few factors are weighing on sales. First, the homeownership rate remains depressed as a larger share of the population is deciding to rent rather than own. Second, buyers have shifted slightly from single-family homes... Third, financing is still more difficult than it has been in the past."  My guess is pp will not be highly impressed with this news.

Housing is regional and neighborhood by neighborhood as much as it is a national market.  Along with all the weaknesses pointed out by pp, I certainly see pockets of strength in our area.  Even in strength, they are only back to one decade ago levels.

"a larger share of the population is deciding to rent rather than own" (This is not bad news in the rental property business!)  What it means though is that housing is tied to people's incomes.  Fewer people have good jobs and good credit after all the economic disruption and the Obama non-recovery.  It also means there is upside potential in the housing market if and when we finally turn our economic policies around.

[ppulatie]

You also have to look where all the activity was.......

Total increase in actual units sold...........9000 for the month

Increase in the South .....6000 units
Increase in the West ......3000 units
Midwest.....broke even
Northeast.......1000 units

Now, these numbers are rounded............501 is rounded up and 499 is rounded down.  We don't know actual numbers so this could be very deceptive....Law of Small Numbers....

These are also Sampling Surveys with estimated numbers.........could this be subject to the same frauds as the Employment reports on surveys?

Additionally, the "sale" is either contract signed or deposit taken.  That is a lot of room for the sale to "fall out".

Relative Standard Error Rates for

Northeast.....25
Midwest.....20
South.....12
West.....12

Would you put money on such Error Rates?

Confidence levels are just as pathetic.

BTW, the banks own internal studies are not optimistic.

[DougMacG]

While looking through Scott Grannis today I notice this chart showing the new homes 'recovery' in perspective:
http://4.bp.blogspot.com/-fqMBZcvT7JA/U6oVBE1reXI/AAAAAAAAQ8Q/sDyr93uxZHs/s1600/New+Home+Sales.jpg
http://scottgrannis.blogspot.com/2014/06/steady-and-slow-improvement-is-boring.html

From that other source we keep hearing how good housing is since hitting rock bottom instead of how poor it is compared to better economic times.  Highest in 5 years is still down 60% from pre-crash levels.

[Crafty_Dog]

The "pre-crash levels" are also known as "the bubble".

[DougMacG]

The "pre-crash levels" are also known as "the bubble".

Okay, then down 50% from the previous 50 year average.

[ppulatie]

DougMacG

Let's take Scott's chart and long at it a bit further.

1. Notice the upsurge in Purchases in 2009 and 2010, and then the fall back?  That was due to the Obama Tax Credit of about $8500 per home purchase, if I remember the amount correctly. It simply brought housing demand forward, and the second the incentive stopped, housing sales fell again.

2. Sales start rising again in 2011 with the introduction of QE 2 and QE 3. Now they are bouncing again as QE is pulled back with year over year sales dropping.

3. Interest rates during this latest increase were at the lowest that they have every been on mortgages, and yet you only get that little push upwards. What happens as rates increase.  (BTW, a 2% increase in rates will drop home values about 18%, as historical research has shown.)

4.  With existing inventory as low as it was in 2011 - 2013, buyers went to purchasing new homes............and this is all they got as increases?

5.  BTW, even last year, it was about the 6th lowest year on record..........even worse that when the US population was under 200 million.

Now, you really have to look at the report each month to understand something else going on, and that is the methodology used to arrive at these numbers.  They use statistical sampling from different regions. The reports have a 90% confidence level, meaning that there is huge room for errors.

More important, they round off the numbers.  In each of the 4 regions, they take the estimate sales and round to the nearest thousand.  So, if you have 501 sales, they round to 1000.  How accurate is that?

Plus, the error rates per region are from 12.5% to about 25%.  This means the data is statistically "worthless".  Yet, we are to believe that this is a "successful" recovery.

Right now, the lending standards are so screwed up, it is pathetic.  One of my partners does mortgage loans still. He has a client wanting to buy a home, and it will have a 60% LTV.  Debt to Income is 25%.  His and the wife's income is VERIFIED at $423k per year. 823 Credit Score.  $800k in the bank after the loan closes.  He cannot get a loan because he does not have three credit lines over 2 years old.  He pays cash for everything but this, but that is not being credit worthy.

Meanwhile, FHA is giving out loans at up to 55% Debt to Income, with credit scores as low as 600.  And that is credit worthy?

Unless people pay attention to this stuff daily, and are really in the industry, they have not a clue what is really going on.

[G M]

Always glad to get Pat's insights on this.

[Crafty_Dog]

Amen.

[DougMacG]

Likewise! 

It is quite frustrating and disappointing that so many economic measures are loaded with so many errors, even before the people with an agenda add their spin.

How do they tout the recent growth in new homes sales without mentioning that other than the other hope and change years, we are building at about half the rate of the last half century?

PP spells it out so well (as usual).  The 'surge' in growth was when the feds were paying for part of your house.  Incentives like that create dependency, not wealth, and they artificially bumps up prices making them less affordable.  The rest of the growth comes from low interest rates.  But the rates don't just happen to be low but are artificially low based on unsustainable and destructive policies.  Why do we want unsustainable growth?

Some might say homebuilding and the hiring of plumbers and cabinet makers peaked and will never return to previous levels because nearly everyone now has a home.  But ask people like Bill and Hillary Clinton or john and Theresa Kerry, what is the right number of homes per 'household'?  http://www.snopes.com/politics/kerry/homes.asp
 If we all built 5 homes worth $30 million, that would stimulate more employment than we have people.  And it would only take less than a third of the money Bill Clinton has made out of office giving speeches.  Maybe (another) government program could solve this; if the homeless gave speeches under equal pay laws and the Fed accommodated that, we could have endless wealth!

[ppulatie]

I am going to throw out some industry actions that are simply impossible to believe, but absolutely true.  This part concerns Mortgage Bankers.

A Mortgage Banker is not a bank, but is a lender who generally funds on a Warehouse Line of Credit and which will be sold to the GSEs in the end.  Prior to funding, the loans will be run through the GSEs automated approval systems. Once approved, they are funded.  These are the QM loans that you hear about.

A QM loan comes with a Safe Harbor provision whereby a lender is "protected" from Ability to Repay and Duty of Care provisions in Dodd Frank. So the perception is that the loans have no problems.  

The key Ability to Repay component is the Debt to Income Ratio. As long as Debt to Income is 43% or less, or the loan is GSE approved, the Ability to Repay provision is presumed to be met.

Since the QM regs came out, I have been studying the 43%  DTI extensively. Turns outs that DTI is effective only 53% of the time in predicting defaults. Further research revealed that with a 43% DTI, more than 25% of all loans will have a Negative Cash Flow, so unless a borrower changes habits, they will likely experience first year defaults.  (Think FHA with 10% rates.)

Now, Safe Harbor is not really Safe Harbor. Under Dodd Frank, a lender can be sued for Unfair and Deceptive Acts and Practices (UDAP). UDAP can be used even if a practice is legal.

We created a model to identify the Default Risk on any loan, and it has an 82% reliability right now, without having access to a complete loan file.  We have been presenting the model to Mortgage Bankers.  Here is the response.

They argue that if they know the risk of any one loan, then their liability increases. But with Safe Harbor, as long as they don't know the risk, they are protected.  So they don't want to use the model.  

Here is their real problem. Under UDAP, if they fund the loan and it defaults, the borrower can sue them regardless of Safe Harbor. But, if it defaults, they must buy the loan back from the GSEs. And the CFPB and DOJ can come after them for funding loans a borrower could not repay.  However, if they deny the loan, since the loan was approved by the GSEs, they could be sued by the borrower for discrimination or under Fair Lending Laws and also UDAP. And the DOJ and CFPB can go after them for discrimination and Disparate Impact.  

IOW, they are screwed if they do, or if they don't fund the loan.


But here is what we knew and were recently able to confirm. The Mortgage Banker is going to fund the loan no matter the risk. If they don't fund the loan, they decrease their earnings.  (Each loan generally makes about $1500 in total profit.)  So it is do the loan whatever the risk, and make the money. And pray that the loan does not default.

BTW, the banks are of the same attitude.......and the GSEs as well.

[ppulatie]

Hey Wesbury and you other idiots bulls:

What happened to Housing Starts?  Here was the most positive spin I could find to post.  Maybe Wesbury can use it to draw up his latest report.

Apr, May and Jun are supposed to be the best months for housing, and this is all we get?  Interesting that this happens as housing inventory is increasing, existing sales are down year over year, pending sales are weaker than expected and new home sales are not that great.  Maybe Obama can restart housing by offering all the new illegal children new homes free to live in, and then bring the families in.

Going to be a fun second half of the year.



Housing starts hit slowest pace in nine months

WASHINGTON - U.S. home construction fell in June to the slowest pace in nine months, a setback to hopes that housing is regaining momentum and will boost economic growth this year.

Construction fell 9.3 percent last month to a seasonally adjusted annual rate of 893,000 homes, the Commerce Department said Thursday. That was the slowest pace since last September and followed a 7.3 percent drop in May, a decline even worse than initially reported.

Applications for building permits, considered a good indicator of future activity, were also down in June, dropping 4.2 percent to a rate of 963,000 after a 5.1 percent decline in May.

The worse-than-expected June performance reflected a big drop in activity in the South, where construction plunged by 29.6 percent last month.

Analysts, however, said that the June decline in construction may have been influenced by temporary factors such as heavy rain in parts of the South which could have held back housing starts in that region.

Jennifer Lee, senior economist at BMO, said it was too soon to conclude that the housing recovery has stalled. "After all, job growth continues, mortgage rates are near their lows for 2014 and homebuilder confidence has been increasing," she said in a research note.

"In short, much weaker than expected, but the data are volatile and the plunge in starts was all in one region. We view the homebuilder survey as more of trend-setter over time -- it suggests that the weakness in this report be discounted," said Jim O'Sullivan, chief U.S. economist at research firm High Frequency Economics.

The overall weakness reflected a 9 percent fall in construction of single-family homes, the biggest part of the market, and a 9.9 percent drop in construction of apartments and other multi-family units.

All of the June weakness was confined to the South, where about 40 percent of home construction occurs. Construction was up 14.1 percent in the Northeast, 28.1 percent in the Midwest and 2.6 percent in the West.

Home construction has struggled to gain traction this year, limiting its ability to contribute to economic growth. Part of the weakness reflected an unusually severe winter which hampered construction. But rising home prices, a rise in mortgage rates from historically low levels and tighter lending standards imposed since the financial crisis have also been a barrier, especially for potential first-time buyers.

There still is hope that housing will perform better in the second half of the year although Federal Reserve Chair Janet Yellen told Congress this week that the slowdown in housing is one of the concerns at the Fed and that its forecast for an economic rebound may prove to be too optimistic.

The National Association of Home Builders, however, reported Wednesday that homebuilder confidence surged in July, reflecting heightened expectations that the second half of the year will see rising sales. The builders' sentiment index rose to 53, up four points from a revised reading of 49 in June. Readings above 50 indicate more builders view sales conditions as good rather than poor. The July reading was the first month above 50 since January when the index stood at 56.

New home sales surged 18.6 percent in May to a seasonally adjusted annual rate of 504,000, the highest level in six years, while sales of previously owned homes rose 4.9 percent, the biggest one-month gain in nearly three years, to a rate of 4.89 million homes.

Even with the big May increases, sales of new homes are still running at just about half the pace of a healthy real estate market.

Economists expect there is a lot of pent-up demand for homes after many potential buyers put off purchases during the 2007-2009 recession and the weak recovery since that time. Job growth has accelerated in recent months, with an increase of 288,000 jobs in June. That has helped to push down the unemployment rate to a nearly six-year low of 6.1 percent in June.

There is optimism that employers will step up their hiring further in the second half of this year as they respond to a rebound in overall economic growth following a weak winter.

The economy shrank at an annual rate of 2.9 percent in the January-March quarter but analysts believe growth rebounded to around 3 percent in the April-June quarter and will remain around that level for the remainder of this year.

[G M]

Don't give him any ideas Pat.

[ppulatie]

I am sure he has already thought of it.


Here is another article about what is happening with mortgages.  In this piece, the writer is speaking about the mortgage banker.  In 2007, the mortgage bankers were the companies who failed because they could not repurchase all the defective mortgages. So, the potential for the same pattern exists again.

Combine this with what I wrote about having their heads buried in the sand on QM mortgages and not wanting to know the risk, and things will heat up quickly.

I have already prepared the homeowner arguments to be filed in lawsuits alleging that lenders did not adequately consider ability to repay the loan.  The way the arguments are set up, Safe Harbor will not protect the lenders. I will be releasing this to attorneys in the next couple of weeks.

The banks and the GSEs are not going to change their practices. I have reached the point where I now believe that the only way they will respond is to make it truly painful for them.  The Regulatory Lawsuits being settled do not offer pain. When you look into the details, the pain is actually on the investors who own the MBS. The required principal reductions and modifications are where the bulk of the fines go.



Fannie, Freddie making risky deals with small lenders: watchdog
 
WASHINGTON (Reuters) - U.S. housing finance companies Fannie Mae and Freddie Mac are making riskier deals as they increasingly purchase mortgages from smaller lenders, a federal watchdog said on Thursday.

The government-owned companies do not lend money directly, but underpin the U.S. housing market by guaranteeing most new mortgages in the country.

The Federal Housing Finance Agency Office of Inspector General said in a report that the purchases from smaller lenders raises the exposure of the two companies.

"Smaller and non-bank lenders may have relatively limited financial capacity," the watchdog said. "The enterprises face an increase in the risk that those counterparties could default on their financial obligations."

Fannie Mae and Freddie Mac, which were seized by the U.S. government in 2008 during a housing market implosion, purchase loans from lenders and package them into securities that are then sold to investors.

In the past, the two companies bought most of their loans from the country's largest banks. Small lenders generally dealt with larger banks, who in turn sold them to Fannie and Freddie.

However, tighter regulations have made big banks such as Bank of America Corp and Wells Fargo & Co reticent to buy loans from other lenders, so more small banks and non-bank enterprises now sell directly to Fannie and Freddie.

Freddie Mac's top five mortgage sellers provided 70 percent of its loans in early 2011, but only 44 percent in late 2013, according to the report.

[Crafty_Dog]

FWIW, here is Wesbury's take on the June numbers:

Housing Starts Declined 9.3% in June To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 7/17/2014

Housing starts declined 9.3% in June to a 0.893 million annual rate, coming in well below the consensus expected 1.020 million. Starts are up 7.5% versus a year ago.
The decline in starts in June was due to a drop in both single-family and multi-family units. In the past year, single-family starts are down 4.3% while multi-family starts are up 38.3%.

Starts in May fell in the South, but rose in the Midwest, Northeast, and the West.

New building permits declined 4.2% in June to a 963,000 annual rate, coming in below the consensus expected 1.035 million pace. Compared to a year ago, permits for single-units are up 0.6% while permits for multi-family homes are up 6.8%.

Implications: Housing starts fell substantially in June, with declines in both single-family and multi-family starts. However, don’t read too much into the drop in the headline number. Starts data tend to be very volatile from month-to-month and last month housing starts dropped 29.6% in the South, the steepest decline ever for any single month in at least the last 50 years for that key region. But, starts increased in all other regions of the country. To find the underlining trend and get rid of monthly volatility we look at the 12-month moving average, which just hit its highest level since October 2008. And, even though starts fell, the total number of homes under construction, (started, but not yet finished) increased 1.1% in June and are up 20.5% versus a year ago. The one conclusion we can make from today’s numbers is that multi-family construction is taking the clear lead in the housing recovery. Single-family starts have been essentially flat for almost the past two years, while the trend in multi-family units has been up (although volatile). In the past year, 35% of all housing starts have been for multi-unit buildings, the most since the mid-1980s, when the last wave of Baby Boomers was leaving college. From a direct GDP perspective, the construction of multi-family homes adds less, per unit, to the economy than single-family homes. However, home building is still a positive for real GDP growth and we expect that trend to continue. Based on population growth and “scrappage,” housing starts will eventually rise to about 1.5 million units per year (probably around the end of 2015). Although building permits declined in June, it was all due to the volatile multi-family sector; single-family permits rose 2.6%. We expect a rebound in building permits next month. In other news this morning, new claims for unemployment insurance declined 3,000 to 302,000. Continuing claims for jobless benefits dropped 79,000 to 2.51 million. It’s early, but plugging these figures into our models suggests a nonfarm payroll gain of 206,000 in July, another solid month.

[ppulatie]

At least Wesbury admits that Single Family have been flat for the last two years.......

But single family is the key to housing recovery. Multi units are apartments and condos for the most part. They do not stimulate Single Family actions in any meaningful manner, except for condo purchases which are generally people who could not buy single family.

BTW, Chase is bailing out on FHA lending. Too much risk as I have been saying all along. Chase represents just over 2% of FHA lending and dropping down to probably 1.5%.

Mortgage bankers are now up over 50% of all lending activity, if current reports are correct. But that is in an environment where mortgage lending has dropped 72% from last year levels.

First time buyers are now about 20% of activity, down from traditional levels of 35-40%.  And most are FHA, of course.  Moveup buyers are lacking in traditional numbers like first time buyers.  And with the hot money investors leaving the market, watch out.

Pay attention to Phoenix. The party is over there.....again.....Homes sales are down considerably and home values are falling again.  Vegas will be next.

[ppulatie]

Happy times are here again. NAR cites Existing Home Sales up

2.6% Month over Month

Seasonally Adjusted Rate of 5.04 million homes per year.  (Of course, take the Seasonally Adjusted Rate for Jun and multiply by 12.  Ignore what the amounts were in previous months because that would offer a different set of facts.)



I am  probably not allowed to say this according to NAR rules, but Year over Year Sales are down again, for the 8th month in a row.  (Damnable facts.)

If we take actual sales for the first 6 months of the year, it is 2,319,000 total sales.  Seems that this number is much under the 5.04 annual rate that NAR cites. 
And don't forget that the Buying Season is pretty much over and total sales monthly will begin to decline again no later than August.  Guess that 5.04 rate is not going to hold up for the year.

[ppulatie]

Will Wesbury and others start to believe that the party is over?  Or is this the result of potential buyers deciding to go on a June vacation after school ended.  Waiting with baited breath for the excuses.......


New Home Sales Plummet

WASHINGTON (AP) — Sales of new U.S. homes plunged in June, a sign that real estate continues to be a weak spot in the economy.

New home sales fell 8.1 percent last month to a seasonally adjusted annual rate of 406,000, the Commerce Department said Thursday. The report also revised down the May sales rate to 442,000 from 504,000.

Buying of new homes fell 20 percent in the Northeast, followed by less extreme declines in the Midwest, South and West. The modest sales caused the inventory of new homes on the market to increase to 5.8 months, the highest since October 2011.

The median sales price was $273,500, up 5.3 percent over the past 12 months.

Home sales had been improving through the middle of 2013, only to stumble over the past 12 months due to a mix of rising prices, higher mortgage rates and meager wage growth.

The pressures from mortgage rates have eased since the start of 2014 and the pace of price increases have slowed. Still, other indicators suggest that home-buying has stalled after rebounding from lows reached during the Great Recession.

The National Association of Realtors reported that sales of existing homes increased 2.6 percent in June to a seasonally adjusted annual rate of 5.04 million homes. It marked the first time that sales have been above the 5 million-mark since October.

Economists were encouraged by the second straight monthly gain in existing home sales, though those sales are still hovering below the recent peak of 5.38 million sales hit last July.

[Crafty_Dog]

New Single-Family Home Sales Declined 8.1% in June To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 7/24/2014

New single-family home sales declined 8.1% in June to a 406,000 annual rate, coming in well below the consensus expected pace of 475,000. Sales are down 11.5% from a year ago.

Sales declined in all major areas of the country.

The months’ supply of new homes (how long it would take to sell the homes in inventory) rose to 5.8 in June from 5.2 in May. The increase in the months’ supply was due to a slower sales pace along with an increase in inventories.

The median price of new homes sold was $273,500 in June, up 5.3% from a year ago. The average price of new homes sold was $331,400, up 8.3% versus last year.

Implications: Forget about new home sales for a minute. New claims for unemployment insurance dropped 19,000 last week to 284,000, the lowest since February 2006, which was at the peak of the housing boom. The Labor Department said there was nothing unusual about last week’s reports from the states, but noted the data are often volatile this time of year due to summer-related auto plant shutdowns. This suggests there were fewer shutdowns than normal last week. Continuing unemployment claims declined 8,000 to 2.50 million. Plugging these figures into our payroll models, which are rated #1 by Bloomberg for the past two years, suggests nonfarm payrolls increased 218,000 in July, while private payrolls grew 216,000. These forecasts will likely change next week as we get data from ADP and Intuit, as well as one more week of unemployment claims. On the housing front, new single-family home sales dropped steeply in June and were revised substantially lower in May. Today’s report came in well below even the most pessimistic forecast for sales in June. This does not mean we are back in a housing recession; home construction remains in an upward trend and new homes sales have been hovering in the same range for the past two years. There are a few key reasons why new home sales remain so low. First, the homeownership rate remains depressed as a larger share of the population is deciding to rent rather than own. Second, buyers have shifted slightly from single-family homes, which are counted in the new home sales data, to multi-family homes (think condos in cities), which are not counted in the report. Third, financing is still more difficult than it has been in the past. The inventory of new homes rose in June, but still remains very low and most of the inventory gains are for homes not started, instead of homes completed. Homebuilders still have plenty of room to increase both construction and inventories. Once again, the housing recovery remains intact, despite the fits and starts which are to be expected when the overall economy is a Plow Horse, not a Race Horse.

[ppulatie]

 

Such rubbish from Wesbury.

Why are people deciding to rent rather than buy? 

1. They can't afford the homes and the loans.
2. Income growth is stagnate except for the upper class.
3. 50% of current homeowners cannot sell due to low or negative equity.
4. 25-34 age group doesn't have the money to buy thanks to student debt.
5. Home construction is bouncing on the bottom still, even with poor analytics to derive the numbers.
6. Homeownership is still higher than traditional norms.  We should be no more than 63% and not the current 65%.

Yes, financing is still more difficult that the past, but does anyone seriously want to go back to the go-go lending of 2005?  Also, check out FHA.  15-20% default rates within the first two years of origination.  That is huge.  And that is what idiot Wesbury wants to go back to.

Wesbury, you are out of the game. Go to the locker room and play with your buddy Krugman.......

[DougMacG]

AP:  35 PERCENT IN US FACING DEBT COLLECTORS

US Home ownership rate in 2013 was 65%

Labor Force Participation Rate for 25-29 Year Olds Hits Record Low,

As a landlord I can tell you it is tough as hell collecting rent in the Obama economy.

Areas of US facing record rates of evictions.  Blacks, women and children are hit hardest.

Just some random, unconnected thoughts.

http://hosted.ap.org/dynamic/stories/U/US_DEBT_STUDY?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2014-07-29-00-12-33
http://www.aei.org/article/economics/financial-services/housing-finance/long-term-home-ownership-trends-the-us-england-and-canada/
http://valleywag.gawker.com/rising-rents-shot-san-francisco-eviction-rates-up-170-1459058928
http://usatoday30.usatoday.com/money/economy/housing/2010-07-27-1Aevictions27_ST_N.htm
http://cnsnews.com/news/article/ali-meyer/labor-force-participation-rate-25-29-year-olds-hits-record-low

San Francisco eviction map:


Meanwhile, DOW is over 17,000.  Crisis?  What crisis?

[G M]

Plow horse!

[ppulatie]

DougMacG:

To go with your Collections post about the 35%, here is some more numbers to put things into a better perspective. Per the Fed

33% of all people have no revolving debt.
33% of the people have less than $1000 in revolving debt.
The remaining group has all the rest of the revolving debt.

Dependent upon the source, the "average" revolving debt in the country is from $8k to $15k.  (The differences are based upon what is considered revolving debt.)  So if 66% of all people have $1000 or less in revolving debt, imagine what the real numbers are for those who hold all the debt.

 

[G M]

http://www.latimes.com/business/la-fi-home-sales-20140814-story.html?track=rss&utm_source=PANTHEON_STRIPPED&utm_medium=PANTHEON_STRIPPED&utm_campaign=PANTHEON_STRIPPED

[Crafty_Dog]

Housing Starts Surged 15.7% in July To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 8/19/2014

Housing starts surged 15.7% in July to a 1.093 million annual rate, coming in well above the consensus expected 0.965 million. Starts are up 21.7% versus a year ago.
The increase in starts in July was due to strong gains in both single-family and multi-family units. In the past year, single-family starts are up 10.1% while multi-family starts are up 44.7%.
Starts in July rose in the Northeast, South, and West, but fell in the Midwest.
New building permits increased 8.1% in July to a 1.052 million annual rate, coming in above the consensus expected 1.000 million. Compared to a year ago, permits for single-units are up 3.9% while permits for multi-family homes are up 14.1%.

Implications: Great news on home building. Housing starts boomed in July, soaring 15.7%, and were revised up substantially for June. The upward trend should continue. Building permits also soared in July, up 8.1%, as single-family and multi-family permits rose 0.9% and 21.5% respectively. Starts can be volatile from month to month, so to find the underlying trend we look at the 12-month moving average, which now stands at the highest level since October 2008. The total number of homes under construction, (started, but not yet finished) increased 2.9% in July and are up 22.8% versus a year ago. No wonder residential construction jobs are up 116,000 in the past year. Multi-family construction is taking the clear lead in the housing recovery. Single-family starts have been in a tight range for the past two years, while the trend in multi-family units has been up (although volatile). In the past year, 35% of all housing starts have been for multi-unit buildings, the most since the mid-1980s, when the last wave of Baby Boomers was leaving college. From a direct GDP perspective, the construction of multi-family homes adds less, per unit, to the economy than single-family homes. However, home building is still a positive for real GDP growth and we expect that trend to continue. Based on population growth and “scrappage,” housing starts will eventually rise to about 1.5 million units per year. In other recent housing news, the NAHB index, which measures confidence among home builders, rose two points to 55 in August, the best reading since January. Looks like a broad pick-up in both sales and foot traffic around the country.

[ppulatie]

Once again, Wesbury is promoting a poor analysis.  Here is why.

1. Raw data has Multi Unit up by 11.6k units for the month.  Multi units are mostly apartments.  This does not help single family which is the real area of importance for a housing recovery.

2. Single Family increased 2.9% over the Jun numbers. 

Jun was 606k seasonable adjustments (for the year)
Jul was 656k

Stupid dumbshit is basing it on numbers with seasonable adjustments.

3.  Real Single family number show

62.2k for Jun
61.6k for Jul

So let's promote the seasonably adjusted numbers while we ignore the raw data which does not meet the message we want to project.

What a joke........

[ppulatie]

Now, for the comments on housing from a guy I am starting a joint venture with.....for much better understanding of reality, you read this guy and not Wesbury.....

http://mandelman.ml-implode.com/

http://mandelman.ml-implode.com/2014/08/i-dont-care-what-the-media-says-housing-market-is-horrible-and-homeowners-still-suffering-through-the-loan-mod-process/

I Don’t Care What the Media Says, Housing Market is Horrible, and Homeowners Still Suffering through the Loan Mod Process



I know what sorts of headlines run rampant through the media these days. It’s nothing new… it’s been going on non-stop since at least 2008. It’s also utter and complete nonsense.

Housing market horrors…

Now, I said this would happen so many times last year, that it’s annoying to have to repeat myself, but the housing market has been hit by yet another foreseeable perfect storm. To begin with, ever since the president’s Making Home Affordable program was announced, we’ve been refinancing the same people over and over again, this last time around at rates as low as 3.5 percent fixed.

So, that ended last July and won’t return because even the almost-all-powerful Fed can’t get rates low enough to pull the same trick again, so although there will always be some that refinance, any sort of refi boom is DOA.

And then there’s all them new-fangled rules, supposedly put in place to right the wrongs that caused the mortgage and housing meltdown… Dodd Frank, the CFPB, TILA, RESPA… and anyone who thought these new rules wouldn’t suppress home sales was simply delusional.

Of course, all of these things are on top of the rest of the problems we’ve neglected to fix for the last six years. Underwater homes are still a huge problem.
The national average is only 20 percent, but no one sells their home to break even, so when you factor in sales commissions, moving expenses and the need for a 20 percent down payment, the percentage of homes underwater is… I don’t know… HIGH. Like, it wouldn’t surprise me to find out it’s over 70 or 80 percent, not that anyone has any incentive to find out. And most of whoever is left probably likes their home and doesn’t want to move.

The evidence is abundant…

During the fourth quarter of 2013, Black Knight reported that origination volume dropped below 400,000 mortgages for the first time since 2011. And by year-end, we were at the lowest point since mid-2008 when volume plummeted to around 300,000, and it felt like the world might not make it through the bloodletting.
However, mortgage originations during the first quarter were pathetic, down some 70 percent year-over-year at Citi and Chase, and its safe to assume elsewhere as well. Then the second quarter was similarly bad… originations were down 66 percent year-over-year at the end of Q2.

Now, the American Enterprise Institute (AEI) has reported that, “potential default rates remain nearly double the 6 percent maximum AEI says is conducive to a stable market, suggesting there’s been no “discernible impact from QM [Qualified Mortgage] regulation.”

Unnamed AEI researchers were quoted in DS News as saying: “Risk in the mortgage marketplace remains perilously high.”

So, that’s all very encouraging in terms of pointing to the obviously bright future ahead, as I’m sure you’d agree.

All done waiting for the kids to come home?

Zillow and Puulseonomics, whoever they are, just published the results of their study of why “millennials” are still not buying homes like no one thought they would.
Apparently, “a panel of economists, real estate experts, and market strategists” has finally found the courage to agree publicly that “the median age of first-time homebuyers is likely to keep moving up in the next decade,” because they’ve all concluded at long last that the millennials have decided to sit out the carnage and not buy homes until later in their lives.

You know, later in their lives… like maybe the times of their lives when they have jobs, can qualify for loans, and aren’t still watching their parents, aunts and uncles losing homes every year, because those sorts of times would seem to be worth waiting for as far as house hunting is concerned.
Hey, maybe some of the millennials are simply waiting to buy their own parent’s home after foreclosure as an REO. What? It could happen.
The National Association of Realtors said that the typical first-time homebuyer in 2013 was 31 years old, but a significant number of “experts’ sais they think the average age will go up to 34 or even older in the years to come.

Homeownership in the United States today is at a 20 year low, and the Zillow/Pulse study reported that the largest declines are among “younger and early middle-aged Americans,” which could mean that many of the older folks have already lost homes to foreclosure, like maybe over the last six years, or that the older homeowners have become too much of a pain in the neck to foreclose on, I’m not sure which is more likely.

Of course, student loan debt and bleak prospects for good jobs were cited as the only culprits, which just shows me that they think that collectively we’re dumber than a stump.

Household formation is still down at levels never before seen in this country, and there’s simply no need to buy a home until you’ve got a household to put in it. And household formation is likely to be down in part because of student loan debt, but also because fewer people want to get married when they’re poor.
And as to the big picture, the survey concluded that, “it’s way too soon to conclude that the market has healed and returned to the old normal,” thus establishing for all to see that it is they who are dumber than stumps. (Does that last sentence make me something less than a serious journalist, or just someone who tells truth to power?)
Triple Celebrity Foreclosurcide…

And speaking of power, Burt Reynolds has lost his motion in a Florida court to have his foreclosure thrown out, instead the judge told Bank of America to proceed with the foreclosure on his waterfront Hobe Sound home known as Valhalla. Merrill Lynch filed the foreclosure action in 2011, after Burt fell behind on his payments.
Witnesses on the scene said that Burt, asking that the court call him “Lewis,” turned to them and said: “Sometimes you have to lose your house ‘fore you can find anything.”

Actress Mischa Barton, former star of “The O.C.” is officially in foreclosure, after the bank filed a Notice of Default this week on her Beverly Hills property. Barton is said to have bought the place for $6.4 million in 2005, when presumably she was still a famous movie star. Now $100,000 behind, TMZ.com reported that she’s been trying to unload the place since 2010.

Her mortgage is approximately $4.25 million, so it would seem that she’s down over $2 million since she bought it, and couldn’t sell it for what she owed. She even tried renting it out for $35,000 a month, but couldn’t find another member of the nouveau riche crowd to over-pay to live in the place.

Just further evidence of how red hot the Beverly Hills housing market has gotten over the last couple years as home prices have reportedly skyrocketed to 2006 levels… apparently everywhere but in the 90210.

Rounding out the celebrity trifecta is former heavyweight boxing champion, Evander Holyfield, whose failed business ventures, two divorces and hefty six-figure annual child support bills, have lad him to recently lose his 54,000 square foot mansion complete with 109 rooms, bowling alley and in-home theater, to foreclosure.

It took nearly four years for JPMorgan Chase to take ownership of the shopping mall size home in Fairburn, Georgia for $7.5 million. Holyfield reportedly owed north of $14 million. So, is that another example of home prices recovering? Georgia mansions are still down by 50 percent? How low were they?

Sources say that Holyfield never applied for a loan modification, but if he had, my advice to Chase would have been that they place armed guards, motion sensors, and video surveillance all around the Holyfield file 24 hours a day in a fire proof environment in order to make sure that his paperwork could not be lost under any circumstances. I would not want to be the guy that lost his paperwork, would you?

Loan modification madness…

With all of this swirling around us every day, the news continues to report only that economic recovery is sweeping the nation. That anyone still listens to such fanciful tales, let alone believes them, is amazing to me. The only explanation I can come up with is that optimism is a very hard thing of which to let go.


But we all know the real deal, we can feel the truth about the economy, we know what recovery feels like and this is not it.

Every month, foreclosures are supposedly down or coming to an end, until they’re up in Illinois, or breaking records in Connecticut… the numbers are always manipulated, and there’s no money in telling the truth about the whole mess, so no one does.

Although I couldn’t prove it, because I don’t keep track of the specific numbers, I think Mandelman Matters is a valid barometer for what’s going on with foreclosures and loan modifications. I hear from homeowners everyday from all over the country and those I can help in some way, I help. So, if the news about foreclosures were true, I’d know it.

Yes, for some homeowners loan modifications are easier to get than they have been in the past, but that’s not to say the process is easy or fun by any means. The people who have it the easiest are those with W-2 income and one home, who aren’t more than a year behind.

But, for the self-employed with a rental property who are more than a year behind… it’s like playing Pin-the-Tail-on-the-Donkey barefoot in a pitch black room filled with dangerous objects and broken glass all over the floor. It’s not impossible, by any means, I see these sorts of cases get approved every week, but it’s next to impossible without some sort of real expert guidance.

I wish I could do more to help more people, but I’m just one person and I can’t really afford to do what I do now. And the problem is, it’s obvious that our government, both state and federal, have essentially given up on doing anything more to make anything better. So, I fear this is it.

If you’re reading this and need help, especially if you’re with Bank of America or Ocwen, but also if you’re with Chase and/or a few others like SPS, SLS… maybe even Nationstar, you can contact me at Mandelman@mac.com. And if I can help you in some meaningful way… I certainly will.

People ask me why I continue to do what I do all the time now… and I wonder about the same thing myself every few hours on some days. The reasons are below… from one homeowner I spoke with just a few days ago… and another I’ve never spoke with, but who I apparently helped anyway.

[DougMacG]

Did Wesbury see this coming? (No)  Investors pull back. Who saw that coming?  (Our PP)  

Why do they say "Unexpectedly"?  Housing is tied to incomes and employment.  Were we doing something right on that front? (No)

http://www.reuters.com/article/2014/09/22/us-usa-economy-housing-idUSKCN0HH1WY20140922

[ppulatie]

DougMacG,

I have a confusing puzzle for you.  You probably saw this.  (Remember, this comes from the Census Dept)

Sales of US new homes soar in August

WASHINGTON (AP) — U.S. sales of new homes surged in August, led by a wave of buying in the West and Northeast.

The Commerce Department said Wednesday that new-home sales climbed 18 percent last month to a seasonally adjusted annual rate of 504,000. The report also revised up the July sales rate to 427,000 from 412,000.

Newly constructed homes sold at the fastest clip since May 2008. It's a clear sign of improvement for a real estate market that has been muddled in recent months, as the rebound in sales following the housing bust began to slow.

Sales of new homes are up 33 percent over the past 12 months. Median prices for new homes have risen nearly 8 percent during the same period to $275,600.

"All is not perfect in the housing market but things are certainly better today than they were about one year ago," said Dan Greenhaus, chief strategist at BTIG brokerage.

In the West, August purchases of new homes soared 50 percent compared to the prior month. Off the sharp August increase, sales in the West have nearly doubled in the past 12 months.

Between August and July, sales grew 29.2 percent in the Northeast. Buying increased 7.8 percent in the South and remained flat in the Midwest.

The housing market has been sputtering for much this year. A nascent recovery in sales and prices began to struggle toward the middle of 2013. Ferocious winter weather delayed construction and limited sales at the beginning of 2014. Buying did pick up over the summer. Yet the pace of sales has been depressed by sluggish wage growth and the price surge last year that put homes out of reach for many Americans.

While new-home sales did show greater strength in August, they are significantly below the 1990s pace of more than 700,000 sales a year, said Tom Showalter, chief analytics officer at Digital Risk, a mortgage analyst company.

"We're well below historic norms," Showalter said.

There are signs that another housing uptick may be in the works.

The National Association of Home Builders/Wells Fargo builder sentiment index climbed in September to 59, the highest reading since November 2005. Readings above 50 indicate more builders view sales conditions as improving.

But greater builder confidence has yet to translate into more construction.

In August, homebuilding fell 14.4 percent compared to the prior month to a seasonally adjusted annual rate of 956,000 houses and apartment complexes, according to the Commerce Department.

Much of that decrease was in the volatile apartments sector. Homebuilders started single-family houses at an annual rate of 626,000 last month, slightly below the pace of 631,000 in August 2013.

Existing home sales have also eased back compared with last year's pace.

Purchases of existing homes fell 1.8 percent to a seasonally adjusted annual rate of 5.05 million in August, the National Association of Realtors said this week. Sales fell from a July rate of 5.14 million, a figure that was revised slightly downward. Overall, the pace of home sales has dropped 5.3 percent year-over-year.


Here is the puzzle for you.

seasonally adjusted

Total                     Total        Northeast           Midwest         South         West               
July Sales              427k           24k                    58k             243k           102k
Aug Sales              504k           31k                    58k             262k           153k   


non seasonally adjusted

Total                     Total        Northeast           Midwest         South         West               
July Sales              38k               2k                    5k                22k             9k
Aug Sales              41k               3k                    5k                20k            13k 

Interesting Puzzle, isn't it?  The South has decreased sales, but adjusted numbers show a 19k gain. Total Actual Sales across the country increase by 3k, but perthe adjusted numbers, this amounts to yearly gains of 77k and not 36k.

Once again, we see the government manipulating the data to make things look better than what they are.  Wesbury and others will claim how great things are, but will not have even enough sense to look at the raw numbers.

Can anyone explain?






   

[ppulatie]

Thought I would post the Pending Home Sales for Sept.  Once again, we see it falling.  Some key points:

Approximately 35-40% of the Pending Sales will be cancelled due to either Appraisal Issues or else loan denials, etc.

Yan states: “Fewer distressed homes at bargain prices and the acknowledgement we’re entering a rising interest rate environment likely caused hesitation among investors last month,” he said. “With investors pulling back, the market is shifting more towards traditional and first-time buyers who rely on mortgages to purchase a home.”

Distressed homes are down only because of government modification programs that are only temporary fixes for up to 5 years, at which time when payments increase the problems begin anew for those homeowners which number about 7 million loans. Plus 4 million loans are currently delinquent or in default. 2.5 million 2nd Lines of Equity are beginning to reset with payments hundreds of dollars higher, and when interest rates increase, this gets even worse. 2 million plus adjustable rate mortgages left over from the crisis which when rates increase, those loans will begin to re-default.

Add to home conditions that higher interest rates will depress home prices which creates more Neg Equity loans and which increases likelihood of default. Add in the fact that incomes have fallen for people with mortgages, (though Yan says otherwise) the financial stresses will lead to more defaults.

First time borrowers have been falling to about 22%. Increased interest rates will cause further decline in the ability to qualify until values begin to drop. Even then, this will not significantly impact purchases except to drive investors back into to market.

It is being reported that among first time buyers, over 50% are having down payment help from family members. Over 30% of down payment assistance loans default. FHA is the haven for first time home buyers with and without down payment assistance. Expect defaults to increase.

The major lenders are pulling back on FHA due to the risk of defaults and buybacks, even with QM standards. Many lenders are running from QM loans as well for the same reason, as well they should. There is an "unseen" trap with QM that is waiting to nail lenders doing QM on defaulting loans.

BTW, how does Yan expect first time buyers, or others for that matter, to be able to afford 5% yearly increases in home values if they can't afford homes now?  Also, how can he ignore the current delinquency conditions of homeowners, the re-default risk on modifications, and the 2nds and Adjustable Rate loans that will default?

It is nice that one can live in a "tunnel vision world" where you can ignore any negative factors that do not support the perspective that you want to sell. For this, Yan earns the idiot of the day award, which will then go to Wesbury when he comments on this.

BTW, when I mentioned above about the banks walking away from QM and FHA loans, the shift is to Mortgage Bankers doing the loans instead. Their goal is to do the loans as long as they have QM approval. They do not care about the Ability to Repay provision. As defaults occur with the riskier loans, many of the MB will fail because they do not have the asset base to repurchase defaulted loans.  (When a loan defaults, it loses approximately 50% of its face value minimum, unless it is severely modified. Add in the legal costs and borrower damages, and it is not going to be "pretty".)

Pat



Pending Home Sales Fall Slightly in August

WASHINGTON (September 29, 2014) – Pending home sales slowed modestly in August but contract signings remain at their second-highest level over the past year, according to the National Association of Realtors®. All major regions experienced declines except for the West, which rose for the fourth consecutive month.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, fell 1.0 percent to 104.7 in August from 105.8 in July, and is now 2.2 percent below August 2013 (107.1). Despite the slight decline, the index is above 100 – considered an average level of contract activity – for the fourth consecutive month and is at the second-highest level since last August.

Lawrence Yun, NAR chief economist, says contract signings are holding steady and fewer distressed sales and less investor activity is likely behind August’s modest decline. “Fewer distressed homes at bargain prices and the acknowledgement we’re entering a rising interest rate environment likely caused hesitation among investors last month,” he said. “With investors pulling back, the market is shifting more towards traditional and first-time buyers who rely on mortgages to purchase a home.”

According to NAR’s Profile of Home Buyers and Sellers, 81 percent of first-time buyers in 2013 who financed their purchase obtained a conventional or FHA loan. Overall, first-time homebuyers have been less prevalent from the housing recovery, representing less than a third of all buyers each month for the past two years.

Yun says first-time buyer participation should gradually improve despite tight credit conditions and the inevitable rise in rates. “The employment outlook for young adults is brightening and their incomes finally appear to be rising,” he said. “Jobs and income gains will help repay student debt and better position first-time buyers, setting the stage for improved sales growth in upcoming years.” 

The PHSI in the Northeast slipped 3.0 percent to 86.5 in August, but is still 1.6 percent above a year ago. In the Midwest the index fell 2.1 percent to 102.4 in August, and is 7.6 percent below August 2013. 

Pending home sales in the South decreased 1.4 percent to an index of 117.0 in August, unchanged from a year ago. The index in the West rose for the fourth consecutive month (2.6 percent) in August to 102.1, but still remains 2.6 percent below August 2013.

Existing-home sales are expected to be stronger in the second half of the year behind improved inventory conditions, continuously low interest rates and slower price growth. Overall, Yun forecasts existing-homes sales to be down 3.0 percent this year to 4.94 million, compared to 5.09 million sales of existing homes in 2013. The national median existing-home price is projected to grow between 5 and 6 percent this year and 4 and 5 percent next year.

[Crafty_Dog]

http://www.ftportfolios.com/blogs/EconBlog/2014/9/30/is-housing-healthier-than-it-appears--are-mortgage-lenders-loosening-up

[ppulatie]

Notice that Wesbury does not mention his data sources............just that the sources are believed to be accurate and reliable.  I would suggest that he look at other measures to determine whether Mortgage Credit is loosening or not.  The MBA has one such measure.  it does not show any real change in overall.

Also, the MBA Purchase and Refinance Index continue to reflect poor finance activity.  Here is the link to it.

http://www.mortgagenewsdaily.com/09302014_application_volume.asp

IMO, Webury remains full of shit...


Mortgage Credit Availability Index (MCAI)

   
Mortgage Credit Availability Unchanged in September



   
Higher Index=More Credit Available
Lower Index=Less Credit Available


Mortgage credit availability remained unchanged in September, according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA), which analyzes data from the AllRegs® Market Clarity® product.

The MCAI remained unchanged at 116.1 in September. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of a loosening of credit. The index was benchmarked to 100 in March 2012.

NEW CONVENTIONAL AND GOVERNMENT COMPONENT INDICES
Last month, MBA began reporting on two additional measures of credit availability as part of the monthly MCAI release: the Conventional Mortgage Credit Availability Index and the Government Mortgage Credit Availability Index, with historical data back to 2011.



The Conventional and Government MCAIs, which are component indices of the Total MCAI, are constructed using the same methodology, and are designed to show relative credit risk/availability for conventional and government (FHA/VA/USDA) loan programs. The difference between the component indices and the total MCAI is first, the population of programs they examine, and second, the "base levels" to which they are calibrated. Using data from the MCAI and our Weekly Applications Survey, MBA calibrated the Conventional and Government indices to better represent where each index might fall in March 2012 (the "base period") relative to the Total= 100 benchmark.

Although the Government MCAI decreased slightly and the Conventional MCAI increased slightly, both the Conventional MCAI and Government MCAI changed less than one percentage point.

EXPANDED HISTORICAL SERIES
The Total MCAI has an expanded historical series which gives perspective on credit availability going back 10 years (expanded historical series does not include new Conventional or Government MCAI). The expanded historical series covers 2004 through 2010, and was created to provide historical context to the current series by showing how credit availability has changed over the last 10 years - this includes the housing crisis and ensuing recession. Data prior to March 31, 2011, was generated using less frequent and less complete data measured at six-month intervals and extrapolated in the months between for charting purposes.



MBA has partnered with AllRegs® to produce monthly MCAI, which feeds current mortgage underwriting parameters into a single index number to capture whether overall mortgage credit is more or less available from month to month.

The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit.

[DougMacG]

Workforce participation rates started falling sooner than this.



The peak of this chart is the day before Pelosi-Reid-Obama-Hillary-Biden took the majorities in congress, then it slides further and further during the first 6 years of the Obama presidency.

Our country is better off than the day I took office?  - Really?