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ppulatie
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« Reply #100 on: March 07, 2011, 11:26:46 AM »

For all

I am a friend of CD who has been on the front lines of the Housing Crisis since Oct 07.  I have worked almost exclusively with homeowner's and their attorney for two years, before making a move to represent lenders.  The reason for that move is because most homeowners were "willing victims" themselves, at the minimum, and at worst, engaged in fraud themselves.  The attorneys that represented the homeowners were no better, it was only an income stream for their business.  They knew that the homeowners would only lose in court, but did not care.

Most of what you read in the Media and on the Internet are misrepresentations, falsehoods, and Internet Myths.  The representations have no basis in fact, or if some representations are accurate, most of the time, the errors can be fixed.  So, be careful of what you read, especially from websites like Living Lies, Foreclosure Fraud, etc.

Now, on to the article that CD just posted.....

Gretchen Morgensen and Michael Powell were the writers again.  Morgenson writes at least twice per month like this.

I am getting so  tired of these type of articles. These people take a line in the sand, and will not change their opinions in the face of facts presented to them.

I am totally convinced that MERS is lawful, especially after seeing the documents held by banks and the MERS Membership Agreement.  These documents show a legitimate Power of Attorney or Agency relationship with MERS and the lender. 

People like Morgensen have either not seen these documents, or just ignore them, because the documents do not "fit the story" that they want to tell.  As well, they ignore court cases that don't support their viewpoints.

Yves Smith of Naked Capitalism is one of these alsol.  She did not like what I wrote about the culpability of the homeowners, or court cases against what she was arguing, so she blocked me from posting comments.

When you ask these people about the fact that the homeowners are in default, not having made payments for up to two years, the reply is always bank fraud.  Banks took advantage of the homeowners.  Never do they mention that in almost all cases, the damned homeowners knew what they were doing.  And now, the homeowner wants to file Quiet Title actions so as to void the debt.

CA, Oregon and Arizona are trying to pass through new Statutes to address the foreclosure issues.  The statutes will dictate the process to be used to ensure that the foreclosures are lawful, and the foreclosing lender has ownership of the Note.  This process should be fairly straight forward, as the proposed statute now reads.  It will involve more work for the lender, but that should not be a big issue.

However, foreclosure attorneys are still going to "attack" legal standing and other parts of the foreclosure process. For them, it is all about the business model, getting money in, and not caring who is correct.

(I have already developed foreclosure exams that will fully review the process and the legitimacy of the foreclosure.  It was meant to be used for bank clients, but if asked, I will use it for foreclosure attorneys.  It is a totally unbiased look at all the facts.)

Regarding MERS, a recent Appellant Court decision in CA, Gomes v Countrywide, has pretty much solved that issue.  MERS was upheld to be a legitimate Agent for lenders.  MERS can foreclose since in the Deed of Trust, the homeowner grants MERS the right to foreclose, and that there is no need to Prove the Note.  Now, a homeowner can only try to go to BK Court to fight MERS, and that is proving difficult.  (You should see the homeowners who are arguing that the decision doesn't mean a thing in CA.  And the arguments are pathetic.)

Robo-signing is another false argument.  I have seen the corporate resolutions that allow these persons to sign, and cannot find fault with them.  Yes, there is a problem with "lack of actual knowledge", but in CA, that is not required.  As well, by the time the documents are signed, the file has been reviewed at least three times for accuracy. 

Rarely, a foreclosure will be claimed to be unlawful because the borrower was not in default, but I have yet to see one.  Anyway, I would not accept that it was unlawful unless I reviewed the documents myself.  Believe it or not, homeowners and their attorneys do lie.

An interesting case out of Alabama in the trial courts has ruled that a homeowner cannot argue Securitization and New York Trust law. The problem was that the homeowner was a Third Party Beneficiary, which is an accurate read on the situation.  Of course, it is not applicable jurisdictionally in other states.  But, the arguments can easily be applied in other states.  Again, homeowner advocates are saying that this ruling is flawed.

The argument that was being attempted was that under New York Trust Law, there is a specific procedure for the Note to be assigned to the Trust.  It had to be in the Trust by the Closing Date of the Trust.  The argument was that since the Deed had not yet been assigned, then the Note was not in the Trust, and therefore no legal standing to foreclose existed.

These type arguments ignore certain factors.  Assignments may be in recordable or non-recordable form.  In non-recordable form, under UCC Code, simply transferring the Note, would also transfer the Deed.  Courts have ruled on this often, though certain states like MA may say that the Deed follows the Note instead of the former.  Part of the Ibanez decision in MA spoke about that.

Ibanez also referred to another way to prove transfer of the Note into the Trust.  That was to show "intent" by using the Pooling and Servicing Agreement, the Mortgage Loan Schedule, and the Trustee Acceptance Letter.  Of course, this type of procedure is ignored by Morgenson and others.

Many may hear attorneys and others talk about actions to "Quiet Title".  Quiet Title means that the Note is voided. This is the goal of every homeowner action.  The homeowner want to get the home for free, though they will deny it.  So when you here Legal Standing, just know that the homeowner has no intention of paying his debt, and instead wants to "welch" out of it.

I will be setting up a separate thread here so that people can specifically ask questions, etc. and I can clear up misconceptions.  I will attempt to provide unbiased review of the issues, and offer recommendations.  Furthermore, I will try and explain what is the future of housing at this time, and what we can expect.

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PPulatie
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« Reply #101 on: March 07, 2011, 12:44:39 PM »

"Believe it or not, homeowners and their attorneys do lie"

An analogous situation are patients who go to doctors feighting chronic pain to get narcotic Rx.

It is rampant.  And of course there are doctors who sell their souls to get the cash payments which is usually how the encounter works.  I know because I, like all doctors have patient coming in with multiple scams.  The stories are endless but there are consistent patterns much of the time.

The doctors write their notes, as though everything is hunky dorry and the patient shows them an old injury or gives them the compliants, pays in cash and then goes fills the script and gets high or sells the stuff.

The doctors pretend they don't have a clue and they were just "helping" a pain patient.
They play niave or just say, "how was I supposed to know".  "I take the patient at his/her word and it is not be job or place to judge them or deny them pain medicine and chance they may be legitimate and be suffering".

And some doctors are niave.  Patients will play into their good natures by complimenting them.   But those in practice for some time learn the ropes. 

There is no questions doctors, myself included, who do get fooled, and it is sometimes very difficult and even impossible to know if the patient is lying or not without following the patient around after they leave the office.  But there are doctors who will play "the game" and pretent it is all legit just to get the cash.  They can get 100s of patients, cash paying, to their office, in weeks or months, some from out of state, if they want.  It is rampant.  It has been for decades.  Probably worse now.

They know it is very hard to do anything about it and they feel as long as they document there "well meaning" intentions they can't be proved to be crooks and drug dealers.  And most of the time they are right.
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JDN
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« Reply #102 on: March 08, 2011, 08:20:06 AM »

Crime does pay....

"In many ways, the Raj case is just the government’s attempt to change the subject. Insider trading had nothing to do with the bubble that caused the 2008 financial collapse that ignited a bailout of the big banks, led to the Great Recession, and has the general public demanding Wall Street accountability. Not a single Wall Street executive has gone to jail over the excesses that led to the collapse. For all the millions spent on examining the bankruptcy of Lehman Brothers, the collapse that sparked the broader meltdown, the government is having a difficult time even coming up with a civil case against its senior executives where they can avoid jail but simply pay fines and possibly face a bar from doing business in the securities industry. Prosecutors are coming to the conclusion that it's difficult, maybe impossible, to put people in jail for greed and irrational exuberance."
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ccp
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« Reply #103 on: March 08, 2011, 09:44:58 AM »

Crime does pay.  Particularly white collar crime.

That is why I don't understand why we have law enforcement retiring at 50 when we have stealing and thievery rampant in our society.  This society does not take theft seriously.  The law enforcement officers could be retrained to go after some of this stuff.

"Not a single Wall Street executive has gone to jail over the excesses that led to the collapse"

Nor did any politician pay in away way for their complicity from the SEC to Barney Frank etc.

"Prosecutors are coming to the conclusion that it's difficult, maybe impossible, to put people in jail for greed and irrational exuberanc"

Sure with the same millions stolen they can now hire million dollars liars for hire (to quote The Guardian Angels guy) to make near impossible for any prosecuters to get anywhere.   The rest of us can't hire attorneys for hundreds of dollars an hour.  Talk about health care making people broke.

Only the millions of people out of work are suffering.   It does make one question the concept of trickle down economics, the wealth gap which gets wider. I continue to have a problem with that.  Yet, when all taken into context,
to me the less intrusive government theory is the least of the two evils.  More regulation makes things worse and does little good.  Indeed government cannot even enforce what they have on the books.

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DougMacG
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« Reply #104 on: March 08, 2011, 09:47:03 AM »

JDN, Your post is in quotes but no source, author, link. I usually find it through google - don't make us work that hard. Your title says "Crime does pay...." but the post doesn't mention a crime.  Please clarify. Thank you.

From the piece "Prosecutors are coming to the conclusion that it's difficult, maybe impossible, to put people in jail for greed and irrational exuberance."  - I hope so.

http://news.yahoo.com/s/dailybeast/20110307/ts_dailybeast/12789_rajrajaratnamandwallstreetscourtroomshowdown_1
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JDN
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« Reply #105 on: March 08, 2011, 10:29:39 AM »

Doug; sorry, I usually source.

I too intrinsically agree nothing is wrong with "greed and irrational exuberance", however I draw
the line when greed begets illegal activity.  The "crime" in this instance is insider trading.  An insidious crime that
people think is harmless, yet it's path of damage can harm hundreds of thousands of people.

Frankly, in my opinion "white collar crime" is not nearly punished as severely as it should be; it is difficult to prove
and perpetrators are protected by an army of high priced attorneys, it seems unstoppable. 
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ccp
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« Reply #106 on: March 08, 2011, 11:03:31 AM »

"The "crime" in this instance is insider trading.  An insidious crime that
people think is harmless, yet it's path of damage can harm hundreds of thousands of people."

Agreed.

Not to mention the outright fraud and scams. 

"Frankly, in my opinion "white collar crime" is not nearly punished as severely as it should be; it is difficult to prove
and perpetrators are protected by an army of high priced attorneys, it seems unstoppable."

Agreed. 
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DougMacG
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« Reply #107 on: March 08, 2011, 11:20:14 AM »

JDN, Thank you.  The crime deserves punishment, but the attacks on pursuing profits only muddle that issue.  It is moral absence, not greed or desire to make a good living, that 'begets illegal activity'.  

"Frankly, in my opinion "white collar crime" is not nearly punished as severely as it should be; it is difficult to prove..."

It gets punished when convicted but financial law enforcement seems inept.  Also the 'watchdog media' is a thing of the past, all chasing the same false stories, it seems to me.  No one in the financial press for example uncovered anything about Enron except their own political hatred until after it was spiraling downward.

Agreed, insider trading is no joke, it undermines markets which is/was our economic system, I would call it akin to treason.  Like Hillary's corrupt commodity futures.  It undermines everyone who trusts the market and places a trade.  I posted a personal friend story of taking a company from scratch to going public to selling for an amazing price.  No real player like him, even with a great sense of humor, cracks so much as a joke about how things are going in the company outside of what goes out to everyone in a conference call.  For 2 years as a rumored takeover target we tried to tease him for information.  I have a first cousin managing one of the market's largest mutual fund companies for decades.  You will get more of his view by googling him than he would tell his own mother in a private phone call.  

But a lot of these publicized cases about making or losing a lot of money don't involve a real, underlying crime.  The facts determine that.
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Crafty_Dog
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« Reply #108 on: May 11, 2011, 08:24:35 AM »

MONTEREY, Calif. — By summer’s end, buyers and sellers in some of the country’s most upscale housing markets are slated to lose one their biggest benefactors: the deep pockets of the federal government. In this seaside community of pricey homes, the dread of yet another housing shock is already spreading.

“We’re looking at more price drops, more foreclosures,” said Rick Del Pozzo, a loan broker. “This snowball that’s been rolling downhill is going to pick up some speed.”
For the last three years, federal agencies have backed new mortgages as large as $729,750 in desirable neighborhoods in high-cost states like California, New York, New Jersey, Connecticut and Massachusetts. Without the government covering the risk of default, many lenders would have refused to make the loans. With the economy in free fall, Congress broadened its traditionally generous support of housing to a substantial degree.

But now Democrats and Republicans agree that the taxpayer should no longer be responsible for homes valued well above the national average, and are about to turn a top slice of the housing market into a testing ground for whether the private mortgage market can once again go it alone. The result, analysts say, will be higher-cost loans and fewer potential buyers for more expensive homes.

Michael S. Barr, a former assistant Treasury secretary, said the federal government’s retrenchment would be painful for many communities. “There’s always going to be a line, and for the person just over it it’s always going to be an arbitrary line,” said Mr. Barr, who teaches at the University of Michigan Law School. “But there is no entitlement to living in a home that costs $750,000.”

As the housing market braces for more trouble, homeowners everywhere have been reduced to hoping things will someday stop getting worse. In some areas, foreclosures are the only thing selling. New home construction is nearly nonexistent. And CoreLogic, a data company, said Tuesday that house prices fell 7.5 percent over the last year.

The federal government last year backed nine out of 10 new mortgages nationwide, and losses from soured loans are still mounting. Fannie Mae, which buys mortgages from lenders and packages them for investors, said last week it needed an additional $6.2 billion in aid, bringing the cost of its rescue to nearly $100 billion.

Getting the government out of the mortgage business, however, is proving much more difficult than doling out new benefits. As regulators prepare to drop the level at which they will guarantee loans — here in Monterey County, the level will drop by a third to $483,000 — buyers and sellers are wondering why they should be punished simply for living in an expensive region.

Sellers worry that the pool of potential buyers will shrink. “I’m glad to see they’re trying to rein in Fannie Mae, but I think I’m being disproportionately penalized,” said Rayn Random, who is trying to sell her house in the hills for $849,000 so she can move to Florida.

Buyers might face less competition in the fall but are likely to see more demands from lenders, including higher credit scores and larger down payments. Steve McNally, a hotel manager from Vancouver, said he had only about 20 percent to put down on a new home in Monterey County.

If a bigger deposit were required, Mr. McNally said, “I’d wait and rent.”

Even those who bought ahead of the changes, scheduled to take effect Sept. 30, worry about the effect on values. Greg Peterson recently purchased a house in Monterey for $700,000. “That doesn’t get you a palace,” said Mr. Peterson, a flight attendant.

He qualified for government insurance, which meant he needed only a small down payment. If that option is not available in the future, he said, “home prices all around me will plummet.”

The National Association of Realtors, 8,000 of whom have gathered in Washington this week for their midyear legislative meeting, is making an extension of the loan guarantees a top lobbying priority.

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Page 2 of 2)



“Reducing the limits will put more downward pressure on prices,” said the N.A.R. president, Ron Phipps. “I just don’t think it makes a lot of sense.” But he said that in contrast to last year, when a one-year extension of the higher limits sailed through Congress, “there’s more resistance.”


Federal regulators acknowledge that mortgages will get more expensive in upscale neighborhoods but say the effect of the smaller guarantees on the overall housing market will be muted.
A Federal Housing Administration spokeswoman declined to comment but pointed to the Obama administration’s position paper on reforming the housing market. “Larger loans for more expensive homes will once again be funded only through the private market,” it declares.

Brokers and agents here in Monterey said terms were much tougher for nonguaranteed loans since lenders were so wary. Borrowers are required to come up with down payments of 30 percent or more while showing greater assets, higher credit ratings and lower debt-to-income ratios.

In the Federal Reserve’s quarterly survey of lenders, released last week, only two of the 53 banks said their credit standards for prime residential mortgages had eased. Another two said they had tightened. The other 49 said their standards were the same — tough.

The Mortgage Bankers Association has opposed letting the limits drop, although a spokesman said its members were studying the issue.

“I don’t want to sugarcoat this,” said Mr. Barr, the former Treasury official. “The housing finance system of the future will be one in which borrowers pay more.”

The loan limits were $417,000 everywhere in the country before the economy swooned in 2008. The new limits will be determined by various formulas, including the median price in the county, but will not fall back to their precrisis levels. In many affected counties, the loan limit will fall about 15 percent, to $625,500.

Monterey County, however, will see a much greater drop. The county is really two housing markets: the farming city of Salinas and the more affluent Monterey and Carmel.

Real estate records show that 462 loans were made in Monterey County between the current limit and the new ceiling since the beginning of 2009, according to the research firm DataQuick. That was only about 1 percent of the loans made in the county. But it was a much higher percentage for Monterey and Carmel — about a quarter of their sales.

Heidi Daunt, with Treehouse Mortgage, said loans too large for a government guarantee currently carried interest rates of at least 6 percent, more than a point higher than government-backed loans.

“That can definitely blow a lot of people out of the water,” Ms. Daunt said.
« Last Edit: May 11, 2011, 10:12:45 AM by Crafty_Dog » Logged
G M
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« Reply #109 on: May 11, 2011, 08:52:21 AM »

Reminds me of a Sam Kinnison stand up routine, where Jesus was looking down on Jim and Tammy Fae Bakker's complex and asking "When did I say build a waterslide"?

The founding fathers are looking down at us and asking "Where did we say real estate was a role of the federal government"?
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Crafty_Dog
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« Reply #110 on: May 17, 2011, 11:43:24 AM »

Housing starts dropped 10.6% in April To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 5/17/2011


Housing starts dropped 10.6% in April to 523,000 units at an annual rate. They were also revised up by 6.6% in March, but are still down 23.9% versus a year ago.

The drop in April was mostly due to a 24.7% fall in multi-family starts (which are very volatile from month to month). Still, multi-family starts are 6.6% higher than a year ago. Single-family starts fell 5.1% in April and are down 30.4% versus a year ago.
 
Starts plummeted in the South, declined in the Northeast, but were up in the Midwest and West.
 
New building permits fell 4.0% in April to a 551,000 annual rate and were revised down by 3.3% in March.  Permits are down 12.8% versus a year ago with permits for single-family units down 18.6%.
 
Implications:  Housing starts fell 10.6% in April, coming in well below consensus expectations.  The number of homes under construction also fell to the lowest level on record (dating back to 1970). However, it appears the drop in starts in April was primarily due to an unusually violent tornado season. On net, all of the drop happened in the South. Outside that one region, starts were up 5.5%. In addition, two-thirds of the decline in starts was in multi-family units, which are volatile from month to month. In other words, with the drop in starts in April concentrated in one weather-ravaged region and primarily due to the more volatile component of home building, today’s report does not signal a future downward trend. Instead, we anticipate a significant rebound sometime in the next couple of months. Multi-family building has been generally moving up since late 2009 and, with the ongoing shift toward renting over owning, that trend should re-assert itself. Meanwhile, the South is still suffering, now with floods. But the impact of these disasters should clear by June. Also, not every aspect of home building is suffering. Completions increased 4.1% in April and yet are still at a low enough level so that builders can continue to work off the large excess inventory of homes. In fact, the pace of home building is still so low that inventory reduction will continue at a robust pace even as home building begins its long-term recovery later this year.
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JDN
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« Reply #111 on: May 17, 2011, 08:29:33 PM »

The founding fathers are looking down at us and asking "Where did we say real estate was a role of the federal government"?

The government shouldn't have a role.  The Mortgage Deduction should be eliminated.  It would raise needed money and get government out of the real estate business.
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G M
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« Reply #112 on: May 17, 2011, 08:48:38 PM »

How about Fannie and Freddy? HUD?
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JDN
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« Reply #113 on: May 17, 2011, 09:07:22 PM »

Get rid of them.  Banks are big boys; they should start acting like one.  Make the loan based on it's merit; period.  And if they make bad loans, well....

Yet truly poor people need housing; not necessarily a "house".  We are a "rich" country.  Something needs to be done and to be frank,
I don't know exactly what HUD does. But they don't need to be in the housing business.  I'ld call it the shelter
business for the homeless maybe; spartan and dry is fine. 


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Crafty_Dog
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« Reply #114 on: May 18, 2011, 10:02:40 AM »

Dang JDN, you sure ate your Wheaties this morning! grin
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Crafty_Dog
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« Reply #115 on: May 23, 2011, 06:52:49 AM »



EL MIRAGE, Ariz. — The nation’s biggest banks and mortgage lenders have steadily amassed real estate empires, acquiring a glut of foreclosed homes that threatens to deepen the housing slump and create a further drag on the economic recovery.


All told, they own more than 872,000 homes as a result of the groundswell in foreclosures, almost twice as many as when the financial crisis began in 2007, according to RealtyTrac, a real estate data provider. In addition, they are in the process of foreclosing on an additional one million homes and are poised to take possession of several million more in the years ahead.
Five years after the housing market started teetering, economists now worry that the rise in lender-owned homes could create another vicious circle, in which the growing inventory of distressed property further depresses home values and leads to even more distressed sales. With the spring home-selling season under way, real estate prices have been declining across the country in recent months.

“It remains a heavy weight on the banking system,” said Mark Zandi, the chief economist of Moody’s Analytics. “Housing prices are falling, and they are going to fall some more.”

Over all, economists project that it would take about three years for lenders to sell their backlog of foreclosed homes. As a result, home values nationally could fall 5 percent by the end of 2011, according to Moody’s, and rise only modestly over the following year. Regions that were hardest hit by the housing collapse and recession could take even longer to recover — dealing yet another blow to a still-struggling economy.

Although sales have picked up a bit in the last few weeks, banks and other lenders remain overwhelmed by the wave of foreclosures. In Atlanta, lenders are repossessing eight homes for each distressed home they sell, according to March data from RealtyTrac. In Minneapolis, they are bringing in at least six foreclosed homes for each they sell, and in once-hot markets like Chicago and Miami, the ratio still hovers close to two to one.

Before the housing implosion, the inflow and outflow figures were typically one-to-one.

The reasons for the backlog include inadequate staffs and delays imposed by the lenders because of investigations into foreclosure practices. The pileup could lead to $40 billion in additional losses for banks and other lenders as they sell houses at steep discounts over the next two years, according to Trepp, a real estate research firm.

“These shops are under siege; it’s just a tsunami of stuff coming in,” said Taj Bindra, who oversaw Washington Mutual’s servicing unit from 2004 to 2006 and now advises financial institutions on risk management. “Lenders have a strong incentive to clear out inventory in a controlled and timely manner, but if you had problems on the front end of the foreclosure process, it should be no surprise you are having problems on the back end.”

A drive through the sprawling subdivisions outside Phoenix shows the ravages of the real estate collapse. Here in this working-class neighborhood of El Mirage, northwest of Phoenix, rows of small stucco homes sprouted up during the boom. Now block after block is pockmarked by properties with overgrown shrubs, weeds and foreclosure notices tacked to the doors. About 116 lender-owned homes are on the market or under contract in El Mirage, according to local real estate listings.

But that’s just a small fraction of what is to come. An additional 491 houses are either sitting in the lenders’ inventory or are in the foreclosure process. On average, homes in El Mirage sell for $65,300, down 75 percent from the height of the boom in July 2006, according to the Cromford Report, a Phoenix-area real estate data provider. Real estate agents and market analysts say those ultra-cheap prices have recently started attracting first-time buyers as well as investors looking for several properties at once.

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Page 2 of 2)



Lenders have also been more willing to let distressed borrowers sidestep foreclosure by selling homes for a loss. That has accelerated the pace of sales in the area and even caused prices to slowly rise in the last two months, but realty agents worry about all the distressed homes that are coming down the pike.

“My biggest fear right now is that the supply has been artificially restricted,” said Jayson Meyerovitz, a local broker. “They can’t just sit there forever. If so many houses hit the market, what is going to happen then?”
The major lenders say they are not deliberately holding back any foreclosed homes. They say that a long sales process can stigmatize a property and ratchet up maintenance and other costs. But they also do not want to unload properties in a fire sale.

“If we are out there undercutting prices, we are contributing to the downward spiral in market values,” said Eric Will, who oversees distressed home sales for Freddie Mac. “We want to make sure we are helping stabilize communities.”

The biggest reason for the backlog is that it takes longer to sell foreclosed homes, currently an average of 176 days — and that’s after the 400 days it takes for lenders to foreclose. After drawing government scrutiny over improper foreclosures practices last fall, many big lenders have slowed their operations in order to check the paperwork, and in two dozen or so states they halted them for months.

Conscious of their image, many lenders have recently started telling real estate agents to be more lenient to renters who happen to live in a foreclosed home and give them extra time to move out before changing the locks.

“Wells Fargo has sent me back knocking on doors two or three times, offering to give renters money if they cooperate with us,” said Claude A. Worrell, a longtime real estate agent from Minneapolis who specializes in selling bank-owned property. “It’s a lot different than it used to be.”

Realty agents and buyers say the lenders are simply overwhelmed. Just as lenders were ill-prepared to handle the flood of foreclosures, they do not have the staff and infrastructure to manage and sell this much property.

Most of the major lenders outsourced almost every part of the process, be it sales or repairs. Some agents complain that lender-owned home listings are routinely out of date, that properties are overpriced by as much as 10 percent, and that lenders take days or longer to accept an offer.

The silver lining for home lenders, however, is that the number of new foreclosures and recent borrowers falling behind on their payments by three months or longer is shrinking.

“If they are able to manage through the next 12 to 18 months,” said Mr. Zandi, the Moody’s Analytics economist, “they will be in really good shape.”
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Crafty_Dog
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« Reply #116 on: May 24, 2011, 01:23:57 PM »

New single-family home sales rose 7.3% in April To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 5/24/2011


New single-family home sales rose 7.3% in April, coming in at a 323,000 annual rate, beating the consensus expected pace of 300,000.

Sales were up in all major regions of the country.
 
At the current sales pace, the months’ supply of new homes (how long it would take to sell the homes in inventory) fell to 6.5 in April from 7.2 in March. The decline in the months’ supply was due to both the faster pace of sales and lower inventories, which fell 5,000 from last month, hitting the lowest level on record, since at least 1963.
 
The median price of new homes sold was $217,900 in April, up 4.6% from a year ago. The average price of new homes sold was $268,900, down 0.6% versus last year.
 
Implications:  New home sales rose 7.3% in April, beating consensus expectations for the second straight month.  And for the first time since August 2007, sales increased in all four major regions of the country, showing that the gain in sales was widespread and not confined to one area. On top of that, the level of new homes in inventory fell to the lowest level on record, since at least 1963. While this is all very good news, it does not necessarily signal the start of a consistent upward trend. Sales remain in the range we have seen since last May, and the new home market still faces two major challenges. With such a large number of existing homes on the market, many of which are like new or are in foreclosure and steeply discounted, the new home market isn’t as attractive to buyers. Credit conditions also remain very tight, despite low mortgage rates, particularly for buyers who don’t have very good credit scores and a 20% down-payment. So while housing is clearly beginning to recover, these issues will keep the pace of recovery subdued for the time being. We expect new home sales to eventually increase substantially, but it will take several years to fully recover. In other news this morning, the Richmond Fed index, a measure of manufacturing activity in the mid-Atlantic, dropped to -6 in May from +10 in April. While this number was a disappointment, it is not consistent with other manufacturing indicators that show continued growth in manufacturing.
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« Reply #117 on: June 04, 2011, 03:47:51 PM »

http://www.digtriad.com/news/watercooler/article/178031/176/Florida-Homeowner-Forecloses-On-Bank-Of-America

How great is this?   grin
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« Reply #118 on: June 04, 2011, 04:43:08 PM »

ROTFLMAO!!!  cheesy
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« Reply #119 on: June 04, 2011, 06:04:34 PM »

That is VERY Funny!
Back in 2005, I was a paid business consultant, and was hired by a Mortgage company to analyze their turnover, sales and closure rate. I was floored to learn of the practices in the Banking industry, and am NOT surprised that it tanked. If you haven't heard of the dark secret of the Banling Industry called YSP (yearly spread premium) you need to, and you should understand it well.
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C-Mighty Dog      small dog...Big Balls
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« Reply #120 on: July 10, 2011, 05:15:03 PM »

http://www.vegasinc.com/news/2011/jul/08/las-vegas-home-sales-surge-prices-continue-fal/
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« Reply #121 on: July 10, 2011, 05:29:47 PM »


The Nevada state legislature repealed the laws of supply and demand.   wink
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« Reply #122 on: July 11, 2011, 03:11:47 PM »

By ROBERT BRIDGES

At the risk of heaping more misery on the struggling residential property market, an analysis of home-price and ownership data for the last 30 years in California—the Golden State with notoriously golden property prices—indicates that the average single family house has never been a particularly stellar investment.

In a society increasingly concerned with providing for retirement security and housing affordability, this finding has large implications. It means that we have put excessive emphasis on owner-occupied housing for social objectives, mistakenly relied on homebuilding for economic stimulus, and fostered misconceptions about homeownership and financial independence. We've diverted capital from more productive investments and misallocated scarce public resources.

Between 1980 and 2010, the value of a median-price, single-family house in California rose by an average of 3.6% per year—to $296,820 from $99,550, according to data from the California Association of Realtors, Freddie Mac and the U.S. Census. Even if that house was sold at the most recent market peak in 2007, the average annual price growth was just 6.61%.

So a dollar used to purchase a median-price, single-family California home in 1980 would have grown to $5.63 in 2007, and to $2.98 in 2010. The same dollar invested in the Dow Jones Industrial Index would have been worth $14.41 in 2007, and $11.49 in 2010.

View Full Image

Here's another way of looking at the situation. If a disciplined investor who might have considered purchasing that median-price house in 1980 had opted instead to invest the 20% down payment of $19,910 and the normal homeownership expenses (above the cost of renting) over the years in the Dow Jones Industrial Index, the value of his portfolio in 2010 would have been $1,800,016. The stocks would have been worth more than the house by $1,503,196. If the analysis is based on 2007, the stock portfolio would have been worth $2,186,120, exceeding the house value by $1,625,850.

In light of this lackluster investment performance, and in the aftermath of the recent housing-market collapse, why is there such rapt attention to the revival of the homebuilding industry and residential property markets? The answer is that for policy makers whose survival depends on economic recovery, few activities have such direct, intense and immediate positive economic impact as new home construction.

These positive effects are transitory, however, when local economies have insufficient permanent employment to justify a constant level of demand for new housing stock. Existing housing does little to create new employment beyond limited levels of service employment. By contrast, a business investment in the amount of the several hundred thousand dollars represented in the value of a house would likely create many permanent jobs and produce income, profits and competition. As with most things, the benefits of building new homes come with a sobering caveat: What becomes of the work force once the party is over?

Home values may gain value over time, but home equity is locked-in until the house is sold. The profits may then be reinvested or spent, creating significant stimulative effects, but usually this happens when market conditions are strong, exacerbating unsustainable market booms. When troubled assets are dumped, or when defaults occur during weak market conditions, the trough is deepened.

Housing markets may be forever doomed to cyclicality for many reasons, but public policies that stimulate new construction or home purchases by tax and financing subsidies, reduction of qualifying incomes, buyer credits, mortgage backstopping, and preferential zoning and permitting, only intensify these cycles. Efforts to reduce loan balances and to create special rescue programs have reduced the security of loans, challenged the enforceability of contracts, and driven up real borrowing costs. Nearly a third of our states do not allow lenders the recourse provisions necessary to go after a borrower's personal assets in case of default on a residential mortgage. The sanctity of mortgage obligations has become the rough moral equivalent of the 55-mile-per-hour speed limit.

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Getty Images/Illustration Works
There is also a misconception that paying off a home mortgage is a path to financial or retirement security. The reality is that tapping the equity is expensive: Home-equity loans or lines of credit made with low qualifying incomes often command high interest rates and costs. If an emergency occurs—the loss of a job, or a business setback—it's likely that the same conditions creating the problem will lower the value and impede the marketability of the home and curtail the availability of financing for a buyer. Funds set aside for emergencies should always be liquid assets.

Is it wise for coming generations to continue to view ownership as the cornerstone of personal finance? Young people planning for retirement increasingly face a choice between house payments and contributions to retirement accounts. They simply can't afford both. With the specter of looming cuts in Social Security and other entitlement programs, or even possible systemic insolvency, the challenge for tomorrow's retirees is income self-sufficiency.

A nation of house buyers becomes captive to the economic cyclicality caused by bursts of construction activity, and it is not lifted or sustained by the limited levels of service employment related to existing housing. By contrast, a nation of business startups and investors supports our capital markets and creates long-term employment, income, exports and the myriad technological advancements desperately needed by an expanding American society.

New home construction and the markets for existing homes should be recognized as activities secondary to, and dependent on, employment. Healthy job markets create healthy property markets, not the reverse. Housing demand driven by job growth creates conditions capable of sustaining a stable level of construction employment, attracting private equity investment, sustaining competitive private debt markets, encouraging capital growth, and ensuring the lowest possible housing prices.

Owner-occupied homes will always be the basis for healthy and stable neighborhoods. But coming generations need to realize that while houses are possessions and part of a good life, they are not always good investments on the road to financial independence.

Mr. Bridges is professor of clinical finance and business economics at the University of Southern California's Marshall School of Business.
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DougMacG
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« Reply #123 on: July 13, 2011, 12:14:55 PM »

A recent George Will column writing about a new book recapping the runup to the collapse with a focus on housing, blaming liberal Democratic policies (with willing RINOs).

http://www.washingtonpost.com/opinions/burning-down-the-house/2011/06/30/AGeRSGuH_story.html

George F. Will:   Burning down the house

“The louder he talked of his honor, the faster we counted our spoons.”
— Emerson

The louder they talked about the disadvantaged, the more money they made. And the more the financial system tottered.

Who were they? Most explanations of the financial calamity have been indecipherable to people not fluent in the language of “credit default swaps” and “collateralized debt obligations.” The calamity has lacked human faces. No more.

Put on asbestos mittens and pick up “Reckless Endangerment,” the scalding new book by Gretchen Morgenson, a New York Times columnist, and Joshua Rosner, a housing finance expert. They will introduce you to James A. Johnson, an emblem of the administrative state that liberals admire.

The book’s subtitle could be: “Cry ‘Compassion’ and Let Slip the Dogs of Cupidity.” Or: “How James Johnson and Others (Mostly Democrats) Made the Great Recession.” The book is another cautionary tale about government’s terrifying self-confidence. It is, the authors say, “a story of what happens when Washington decides, in its infinite wisdom, that every living, breathing citizen should own a home.”

The 1977 Community Reinvestment Act pressured banks to relax lending standards to dispense mortgages more broadly across communities. In 1992, the Federal Reserve Bank of Boston purported to identify racial discrimination in the application of traditional lending standards to those, Morgenson and Rosner write, “whose incomes, assets, or abilities to pay fell far below the traditional homeowner spectrum.”

In 1994, Bill Clinton proposed increasing homeownership through a “partnership” between government and the private sector, principally orchestrated by Fannie Mae, a “government-sponsored enterprise” (GSE). It became a perfect specimen of what such “partnerships” (e.g., General Motors) usually involve: Profits are private, losses are socialized.

There was a torrent of compassion-speak: “Special care should be taken to ensure that standards are appropriate to the economic culture of urban, lower-
income, and nontraditional consumers.” “Lack of credit history should not be seen as a negative factor.” Government having decided to dictate behavior that markets discouraged, the traditional relationship between borrowers and lenders was revised. Lenders promoted reckless borrowing, knowing they could off­load risk to purchasers of bundled loans, and especially to Fannie Mae. In 1994, subprime lending was $40 billion. In 1995, almost one in five mortgages was subprime. Four years later such lending totaled $160 billion.

As housing prices soared, many giddy owners stopped thinking of homes as retirement wealth and started using them as sources of equity loans — up to $800 billion a year. This fueled incontinent consumption.

Under Johnson, an important Democratic operative, Fannie Mae became, Morgenson and Rosner say, “the largest and most powerful financial institution in the world.” Its power derived from the unstated certainty that the government would be ultimately liable for Fannie’s obligations. This assumption and other perquisites were subsidies to Fannie Mae and Freddie Mac worth an estimated $7 billion a year. They retained about a third of this.

Morgenson and Rosner report that in 1998, when Fannie Mae’s lending hit $1 trillion, its top officials began manipulating the company’s results to generate bonuses for themselves. That year Johnson’s $1.9 million bonus brought his compensation to $21 million. In nine years, Johnson received $100 million.

Fannie Mae’s political machine dispensed campaign contributions, gave jobs to friends and relatives of legislators, hired armies of lobbyists (even paying lobbyists not to lobby against it), paid academics who wrote papers validating the homeownership mania, and spread “charitable” contributions to housing advocates across the congressional map.

By 2003, the government was involved in financing almost half — $3.4 trillion — of the home-loan market. Not coincidentally, by the summer of 2005, almost 40 percent of new subprime loans were for amounts larger than the value of the properties.

Morgenson and Rosner find few heroes, but two are Marvin Phaup and June O’Neill. These “digit-heads” and “pencil brains” (a Fannie Mae spokesman’s idea of argument) with the Congressional Budget Office resisted Fannie Mae pressure to kill a report critical of the institution.

“Reckless Endangerment” is a study of contemporary Washington, where showing “compassion” with other people’s money pays off in the currency of political power, and currency. Although Johnson left Fannie Mae years before his handiwork helped produce the 2008 bonfire of wealth, he may be more responsible for the debacle and its still-mounting devastations — of families, endowments, etc. — than any other individual. If so, he may be more culpable for the peacetime destruction of more wealth than any individual in history.

Morgenson and Rosner report. You decide.
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« Reply #124 on: July 19, 2011, 11:13:19 AM »

Housing starts increased 14.6% in June To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 7/19/2011


Housing starts increased 14.6% in June to 629,000 units at an annual rate, easily beating the consensus expected pace of 575,000.  Starts are up 16.7% versus a year ago.

The increase in June was about evenly split between multi-family starts, which rose 30.4% (and which are extremely volatile from month to month) and single-family starts, which rose 9.4%. Multi-family starts are double levels from a year ago while single-family starts are up 0.4%.
 
Starts rose in all major regions of the country.
 
New building permits increased 2.5% in June to a 624,000 annual rate, also easily beating consensus expectations. Compared to a year ago, permits for multi-unit homes are up 34.0% while permits for single-family units are down 3.8%.
 
Implications:  Housing starts spiked higher in June, rising 14.6%, well above consensus expectations. The gains were about evenly split between the volatile multi-family sector, which has been trending higher since late 2009, and single-family homes. This gain supports our view from a couple of months ago that the dip in home building in the Spring was due to the unusually wicked tornado season. The details of today’s report were strong as well. Building permits, a sign of future activity, beat consensus expectations and the total number of homes under construction increased for the first time since 2006. Starts are not going to increase every month, but home building is set to trend higher over the next several years. Population growth and “scrappage” rates suggest that once the excess inventory of homes is cleared that the underlying trend for building activity is about 1.6 million starts per year. That’s about 2.5 times current levels. In other words, home building must increase substantially just to get back to “normal” levels, not even to go back to the overbuilding of the prior decade. For at least the near term, growth in multi-family construction should outpace the growth in single-family units. There is an ongoing shift toward renting rather than owning. Part of that shift is due to tight credit conditions which are unlikely to disappear very soon.
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« Reply #125 on: August 11, 2011, 01:41:05 PM »

Do we make this business look to easy?  Article WHAT? authorizes the federal government to go into the landlord business.

Gov't considers turning foreclosures into rentals

WASHINGTON (AP) -- The Obama administration may turn thousands of government-owned foreclosures into rental properties to help boost falling home prices.

The Federal Housing Finance Agency said Wednesday it is seeking input from investors on how to rent homes owned by government-controlled mortgage companies Fannie Mae and Freddie Mac and the Federal Housing Administration.
http://hosted.ap.org/dynamic/stories/U/US_GOVERNMENT_HOME_RENTALS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2011-08-10-13-18-31
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« Reply #126 on: August 11, 2011, 02:03:16 PM »

IIRC pp wrote a couple of months ago that real estate prices would drop for one more year due to the still large backlog in foreclosures.  Just thought I would bring the question here from the stock, gold and investment threads, have people thought about putting any of what they might have left in real estate, with the idea that there are some amazing buys available out there and it is impossible to time the exact bottom of any market.  Assuming this once great country eventually makes a strong comeback, prime property will again have real value.  Housing will turn right after (if/when) investment and employment conditions turn IMHO.

I have shared pp's wisdom with people off the board, adding that a) there is no hurry if prices are still falling and b) you can buy now if you anticipate the price at the bottom of the market and offer it now.  What does the seller have to gain by waiting for prices to fall further.

Real estate has some similarities to gold, somewhat finite quantity and not directly tied to a currency, and differences like property taxes, regulatory abuse and other things that can go wrong.  OTOH, gold is at record highs and real estate at recent record lows.  I have bought homes during this downturn for 30% less than I was paying 30 years ago, with as fast as a 2 year rough payback on purchase price from rent.  People could conceivably buy the site or land of their dream home now and build it later when incomes improve.

Each market is different.  I wonder what others are seeing.
http://www.twincities.com/ci_17826562
Twin Cities home prices down (another) 15 percent; 4 in 10 sales are foreclosures

The Twin Cities median home price fell more than 15 percent last month to $140,000 from a year earlier, according to data released today.
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« Reply #127 on: August 11, 2011, 05:39:08 PM »

CounterPOV:  Popped bubbles don't bounce.
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« Reply #128 on: August 11, 2011, 06:29:08 PM »

"CounterPOV:  Popped bubbles don't bounce."

Fair enough.  We will see.  But people need a place to live and they demand  location and quality, in the sense of being willing to pay a good share of their income to get it.  With gold for example, it is only a function of what other people will pay for it - more volatile up and potentially more volatile down.

More importantly (IMO), some experts say housing is still overpriced and maybe most of it still is.  I only buy when I think it is under-priced / under-valued.
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« Reply #129 on: August 11, 2011, 10:25:51 PM »

Good luck and prosperity to both of us  smiley
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« Reply #130 on: August 11, 2011, 10:36:41 PM »

"CounterPOV:  Popped bubbles don't bounce."

Fair enough.  We will see.  But people need a place to live and they demand  location and quality, in the sense of being willing to pay a good share of their income to get it.  With gold for example, it is only a function of what other people will pay for it - more volatile up and potentially more volatile down.

More importantly (IMO), some experts say housing is still overpriced and maybe most of it still is.  I only buy when I think it is under-priced / under-valued.

If one can find property in a place that is a location you don't mind having a pretty permanent base of operations and can own it outright, that can be a good thing for the rough times I expect to see happen not far off from now.
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« Reply #131 on: August 11, 2011, 10:44:17 PM »

A VERY valid point, but one distinct from the investment POV.
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« Reply #132 on: August 11, 2011, 10:57:03 PM »

A VERY valid point, but one distinct from the investment POV.

I think the idea of a home as more than a place to live is dead and gone, at least for a generation, if not longer.
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« Reply #133 on: August 16, 2011, 11:43:19 AM »

Housing starts fell 1.5% in July to 604,000 units at an annual rate To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 8/16/2011


Housing starts fell 1.5% in July to 604,000 units at an annual rate, slightly beating the consensus expected pace of 600,000.  Starts are up 9.8% versus a year ago.

The decline in July was due to single-family starts, which fell 4.9%.  Multi-family starts (which are extremely volatile from month to month) rose 7.8% in July. Multi-family starts are up 47.9% from a year ago while single-family starts are down 0.9%.
 
Starts fell in the Midwest and West, but rose in the Northeast and South.
 
New building permits fell 3.2% in July to a 597,000 annual rate, below the consensus expected pace of 605,000. Compared to a year ago, permits for multi-unit homes are up 16.3% while permits for single-family units are down 1.2%.
 
Implications: Housing starts came in at a 604,000 annual pace in July, slightly beating consensus expectations.  While this was lower than last month, the level of starts remains far above levels we saw earlier this year, supporting our view from a few months ago that the dip in home building in the Spring was due to the unusually harsh tornado season. The decline in July was due to single-family starts, which fell 4.9%.  In the volatile multi-family sector (which has been trending higher since late 2009), starts rose 7.8%.  After rising last month, the total number of homes under construction fell again – to the lowest level on record (since at least 1970).  This decline was largely due to the fact that building completions rose 11.8%, to the highest level in over a year.  We should see a shift again next month to fewer completions and rising starts as the housing market slowly recovers.  Based on population growth and “scrappage” rates, home building must increase substantially to avoid shortages in some regions of the country and with the ongoing shift toward renting rather than owning, growth in multi-family construction should continue to outpace the growth in single-family units.  In other news this morning, import prices rose 0.3% in July.  Overall import prices are up 14% in the past year and up 5.5% excluding oil.  Export prices declined 0.4% in July but are up 9.8% in the past year.  Ex-agriculture, export prices rose 0.2% in July and are up 8.3% in the past year, the largest increase on record (dating back to the mid-1980s).
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« Reply #134 on: August 18, 2011, 02:52:51 PM »


Data Watch

--------------------------------------------------------------------------------
Existing home sales declined 3.5% in July to an annual rate of 4.67 million units To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 8/18/2011


Existing home sales declined 3.5% in July to an annual rate of 4.67 million units, coming in below the consensus expected pace of 4.90 million units. Existing home sales are down 21.0% versus a year ago.

Sales in July were down in the West and South, but up in the Northeast and Midwest. All of the decline in sales was due to single-family sales; condos-coops sales were unchanged.
 
The median price of an existing home fell to $174,000 in July (not seasonally adjusted), and is down 4.4% versus a year ago. Average prices are down 3.2% versus last year.
 
The months’ supply of existing homes (how long it would take to sell the entire inventory at the current sales rate) rose to 9.4 from 9.2 in June.  The increase in the months’ supply was mostly due to the slowdown in the pace of sales. An increase in condos-coops inventories also boosted the months’ supply.
 
Implications:  Sales of existing homes fell to an eight-month low in July.  The consensus expected a gain to 4.90 million units at an annual rate due to the strong showing of pending home sales over the past couple of months. Pending home sales are homes that have gone under contract to be purchased. What seems to have happened is that people have decided to cancel on their contracts. The National Association of Realtors said that cancelled contracts to buy existing homes remained at higher levels over the past two months from a more typical 9% - 10% over the past year. The spike in cancellations is probably due to a couple factors. First, stricter lending rules and low appraisals seem to be playing a large factor. Second, with the debt debate looming in July this may have spooked some people from closing on their contracts. We expect a bounce back in existing homes next month. In other news, The Philly Fed index fell to -30.1, the lowest level in over two years. The consensus expected a decline to 2.0. There are times when manufacturing surveys are more based on sentiment, and we believe with all the financial turmoil that has been happening in Europe, along with the large market losses over the last couple weeks, that this is one of those times. However, mid-month manufacturing indicators should not be completely ignored and we will be paying close attention to these along with the weekly indicators we follow to see if we see any change to our forecast. So far, other than data which measure sentiment, the economy appears to be avoiding any sharp downturn.
 
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DougMacG
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« Reply #135 on: August 18, 2011, 10:43:15 PM »

The only positive side of the continued housing debacle is that I am extremely thankful that pp gave us a headsup that it was going down for (at least) another year.  I got some mileage out of that information helping others and it turned out to be true.

It is all tied together.  The economy doesn't come back without housing and housing doesn't come back without a positive turn in the economy.
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« Reply #136 on: August 23, 2011, 11:56:57 AM »

New single-family home sales fell 0.7% in July To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 8/23/2011


New single-family home sales fell 0.7% in July, coming in at a 298,000 annual rate versus a consensus expected pace of 310,000.

Sales were down in the South and West, but up in the Northeast and Midwest.
 
At the current sales pace, the months’ supply of new homes (how long it would take to sell the homes in inventory) was unchanged at 6.6 months. Inventories fell slightly, but so did the pace of sales. Inventories are at their lowest level on record, dating back to 1963.
 
The median price of new homes sold was $222,000 in July, up 4.7% from a year ago. The average price of new homes sold was $272,300, up 8.0% versus last year.
 
Implications:  New home sales declined slightly in July, remaining in the very low range they have been in since May 2010. This number is based on contracts signed in July, at the height of the debt ceiling debate and (unwarranted) fears of a government default. New home sales face a number of strong headwinds. Credit conditions remain tight (even as mortgage rates decline) and many existing homes are selling at steep discounts, including foreclosed properties and short sales. However, the inventory of new homes for sale fell to the lowest level on record yet again in July. This is exactly what must happen to speed up the eventual housing recovery. The median price of a new home is up 4.7% versus a year ago while average prices are up 8.0%. In other news this morning, the Richmond Fed index, a measure of manufacturing in the mid-Atlantic, fell to -10 in August from -5 in July.  Regional surveys of manufacturing activity have performed poorly so far in August, but this probably reflects the nature of survey data, which can sometimes reflect sentiment rather than actual levels of business activity.  Chain-store sales have decelerated modestly so far in August (when they usually slow anyhow) but are still running solidly above year-ago levels, 3.6% according to Redbook, 3% according to the International Council of Shopping Centers.
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« Reply #137 on: September 09, 2011, 06:52:47 AM »

This is Pravada on the Hudson and so we must read between the lines.  I could be wrong but I wonder about the conjunction of the subject matter of this article and the recent investigation of 17 financial firms.  IIRC Fannie Mae's Raines (who now sits with major-donations-recipient-as-a-Senator Oboma) already got in trouble for accelerating FM's profits so as to inflate his bonuses)
==========================

Regulators are nearing a settlement with Fannie Mae and Freddie Mac over whether the mortgage finance giants adequately disclosed their exposure to risky subprime loans, bringing to a close a three-year investigation.

The proposed agreement with the Securities and Exchange Commission, under the terms being discussed, would include no monetary penalty or admission of fraud, according to several people briefed on the case. But a settlement would represent the most significant acknowledgement yet by the mortgage companies that they played a central role in the housing boom and bust.

And the action, however limited, may help refurbish the S.E.C.’s reputation as an aggressive regulator, particularly as the country struggles with the aftereffects of the financial crisis that the housing bubble fueled.

But the potential settlement — even it if it is little more than a rebuke — comes at an awkward time for Fannie Mae and Freddie Mac. Last week, the government overseer of the two companies sued 17 large financial firms, blaming them for luring the mortgage giants into buying troubled loans. That is a similar accusation to the one the S.E.C. is leveling at Fannie and Freddie — that the two entities misled their own investors. The case against the financial firms could be complicated should Fannie and Freddie sound a note of contrition for their own role in the implosion of the mortgage market in settling with the S.E.C.

Article ToolsRecommend           E-mail ThisPrintShare
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LinkedinDiggFacebookMixxMy SpacePermalink6 CommentsTwitter .The agency abandoned hopes of assessing a fine because of the precarious financial positions of the two companies, according to the people briefed on the case, who spoke on condition of anonymity because the deal was not yet final. The government has already propped up Fannie Mae and Freddie Mac with more than $100 billion since taking control of them in 2008. Any fee levied against them would simply wind up on the taxpayers’ tab.

The negotiations have been going on since at least early summer, and a deal may not materialize until later this year, these people cautioned. Fannie Mae, Freddie Mac and the S.E.C. all declined to comment.

The sprawling investigation into Fannie Mae and Freddie Mac once encompassed both civil and criminal elements, making headlines as one of the most significant cases to stem from the financial crisis. The case also threatened to ensnare some of Fannie and Freddie’s former top officials. Earlier this year, recent chief executives at both companies received so-called Wells notices from the S.E.C., an indication that the agency was considering a civil enforcement action against them.

But three years on, the civil settlement would be the only government action against the companies.

The criminal inquiry has sputtered to a halt. The Justice Department has concluded its inquiry, at least at Freddie Mac, according to a securities filing in August by the company. No charges have been filed against either company.

At the S.E.C., regulators have zeroed in on the fine print of Fannie’s and Freddie’s disclosures, according to those who have been briefed on it. The agency is specifically looking at the way the companies reported their subprime mortgage portfolios and concentrations of loans extended to borrowers who offered little documentation.

While Fannie and Freddie do not offer home loans, they buy thousands of mortgages from lenders and resell them in packages to investors. The S.E.C.’s case hinges on whether the companies misled the public and regulators by lowballing the number of high-risk mortgages on their books.

One potential weakness of the case is that it hinges on the definition of subprime, which the government itself has struggled to nail down. The term often references loans to borrowers with low credit scores and spotty payment records. But Fannie and Freddie categorized loans as prime or subprime based on the lender rather than on the loan itself.

The path to the current settlement talks at Fannie Mae and Freddie Mac has been a delicate one. While internally, the two companies did not view the government’s case as particularly strong, they said they moved to settle to spare time and precious resources, according to one person close to the talks. In addition, the companies asked that whatever the settlement, it not include a fine or accusations of fraud in the hopes of protecting an already battered morale and an empty purse at the institutions.

In particular, a fraud accusation could cause an exodus of the employees best equipped to dig the institutions out of their current morass, people close to the talks said. A settlement with the mortgage companies would be a first step in wrapping up the S.E.C.’s broader examination. The agency is still pursuing potential claims against at least four former executives at Fannie and Freddie.

This summer, lawyers for Richard Syron, the former chief of Freddie Mac, and Daniel H. Mudd, his counterpart at Fannie Mae, met with the S.E.C.’s enforcement chief, Robert Khuzami, according to some of the people briefed on the case.

The S.E.C. has sent Wells notices to Mr. Syron; Mr. Mudd; the former chief financial officer at Freddie Mac, Anthony J. Piszel; and Donald J. Bisenius, executive vice president at Freddie until his recent departure.

None of the individuals have been accused of any wrongdoing.

Mr. Mudd and Mr. Syron are the two most prominent executives swept up in the case. Mr. Mudd is now chief executive of the public traded hedge fund and private equity firm Fortress Investment Group. Mr. Syron, a former president of the American Stock Exchange, is an adjunct professor at Boston College and serves on its board of trustees.

Through their lawyers, Mr. Mudd and Mr. Syron declined to comment. The S.E.C. could yet decide not to sue the former executives.

Ultimately, the two mortgage companies have larger worries to confront than the potential citations: chief among them is their continuing viability.

Earlier this year, the Obama administration announced plans to wind down the two companies, leaving the fates of the companies unresolved and the future of government-backed housing finance in doubt.
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ppulatie
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« Reply #138 on: September 09, 2011, 10:35:06 AM »

Nothing is as it seems with Washington and politics, and the lawsuits with FHFA and the SEC certainly show this to be true.  Never more so than this.  The truth is that I have had discussions the past week with knowledgeable people who are just as confused.  What I do know:

       There are increasing demands for the privatization of F&F, or the deisbanding of each.

       F&F has cost the taxpayers approximately $240b, and some estimates suggest that it could go as high as $1.1T, by the end of the crisis.

       There are calls to eliminate the Federal guarantees of F&F loans.

       F&F controls 60% of the lending market today.  FHA & VA has 35% and 5% by other lenders.

       It is believed that another $50B is needed within a short time period for further bailouts.

       Eliminate F&F, or even just the guarantees, and interest rates will rise, lending will stall further, and home values will fall further.

       F&F knew the quality of the mortgages that they were buying.  They resisted buying them until 2004, when they saw that they were losing market share, quality borrowers already
       had bought or refinanced.  The market had changed, and subprime and alt-a would be the products that kept F&F moving forward.

F&F are "political animals".  They use every political mechanism to achieve their goals, and their goals are to completely dominate the industry as they do now.  They will fight with every means at their disposal to remain alive and dominate. 

Based upon all the above, I can only conjecture:

      1.  FHFA know that F&F are facing greater losses.  More bailout money will increase the demands for elimination of F&F.  Elimination means further decline in the housing market.
          FHFA is their "regulator" and understands this very well.  Eliminate F&F, and there is no need for FHFA.  No Federal Agency wants to do something to eliminate their own agency.

          F&F has all the loan documents for each loan that they buy, unlike securitized loans.  Since 2007, F&F have been demanding "repurchases" of defective loans.  60% of the demands
          are successfully defended against the repurchase by the banks.  40% end up in buy backs.

      2.  The SEC investigation is for the same issues that FHFA has alleged in its lawsuits against the lenders.  No monetary compensation of admission of fraud apparently on the table. So,
           what is the purpose?

If a "settlement" occurs whereby there is no monetary award or admission of wrongdoing, this would provide an argument for F&F to claim that they had done no wrong.  Then, they can go to their favorite politicians to derail any attempts to shut them down, or end the guarantees.

Further bailouts of F&F would jeopardize such a strategy.  So if the FHFA can go after the banks and get a settlement, then that would lessen the bailout needs.  Furthermore, the banks would need to give an admission of liability, and that would further support the F&F claim that they did not know what was going on.

The banks would have to pay the damages from the settlement.  You can bet that the FED would be lurking in the background, ready to "bail out" endangered banks through the issuance of more credit.  That way, we would not experience bank failures.

Again, this is only conjecture. But it is the only scenario that makes sense to me.

         



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DougMacG
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« Reply #139 on: September 09, 2011, 11:43:05 AM »

One link on the lawsuit story: http://dealbook.nytimes.com/2011/09/06/u-s-takes-hard-line-in-suits-over-bad-mortgages/  Feds suing institutions that are federally insured...  Cut off new funding and existing losses get worse.  Yes, very confusing when there is no painless way out.

PP,  Great to you have you back in. A bad situation but very helpful info.  I have made good use of the info you already posed; not getting rich but avoiding new mistakes.  Combining the numbers Fannie, Freddie, FHA and VA, mortgages are 95% federal(?) and the other 5% I assume are federally insured banks?  And none of it is savings based, as in the old S&L concept.(?) As one who is greatly exposed to the continued downturn, this is painful.  Housing is tied to jobs and income so the ending of bailouts and closing of failed agencies needs to follow the policies that will lead back to growth, meaning no time soon.

Other groups tied to property values include the property tax authorities across the country.  I wonder what percent of foreclosed homes never make it back to life.  90,000 in Detroit alone? http://online.wsj.com/article/SB10001424052748703950804575242433435338728.html
(I hear the Kelo property in New London is still available.)

The reforms needed lead to higher mortgage interest rates, but that is in addition to the certainty that rates out of the Fed eventually will rise and that rise could be severe when new dollars already printed have their known effect.  People only pay the monthly that they can afford so it follows that values will drop further.  Plenty of people are still in adjustables at artificially low rates partly because they can't qualify to refinance what they already owe, so when rates go up and up, down go more more properties into default.

Besides aging baby boomers with fading birth rates, net immigration I think is close to zero so demographics won't bring any explosion of demand.

I favor privatization wherever possible, but that alone doesn't make any of this go away.  Only sustained, robust economic growth can make a positive difference on housing IMO.  That could be years out?
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ppulatie
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« Reply #140 on: September 09, 2011, 06:37:04 PM »

Doug,

I am generally very busy, so I tend to forget about this website. Right now, I am preparing for being an expert witness in a Predatory Lending trial, one of the worst I have ever seen.

The link to the article you posted made me wonder about the author, who is a law professor.  He writes:  "Unlike other purchasers, the F.H.F.A. can pursue its claims even though Fannie Mae and Freddie Mac bought the mortgage securities from 2005 to 2007 because a provision of federal law extends for up to three years the limitations period for filing claims."  Unless my calendar is all screwed up, we are past the three year mark for even 2007 vintage loans.

You are right about the 95% percentage.  The other 5% are generally banks, some hard money lenders, and one securitized product each year, from Redwood Trust.

The rest of what you write sounds like you really understand what is going on.  The fact is that we are not likely to have housing recovery for less than 20 years.

Here are links to a 3 Part Article I wrote for a website about what we face. 

http://ml-explode.com/2011/08/promoting-housing-recovery-parts-i-and-ii/

http://ml-explode.com/2011/08/promoting-housing-recovery-part-iii-proposed-solutions-for-the-housing-market/

The 9th Circuit Court just dealt those arguing against MERS a potentially fatal blow.  It essentially said that the actions of MERS were properly disclosed through the Deed of Trust, and one could not claim fraud.  It also ruled that the Note and Deed were not fatally separated, and that the use of MERS did not mean that foreclosure was impossible.  Combine this ruling with Gomes v Countrywide in California, and essentially there are only "technical defects" left to argue, and those defects can be corrected so that foreclosure can occur.  Of course, BK is still an option to try and prove legal standing, but the MERS ruling will make that more problematic.

Attorneys for homeowners are trying to spin the 9th decision as showing how to argue foreclosure in State Courts, but this is simply more "misrepresentation" to keep their income flows rolling in.  For my analysis on this,

http://globaleconomicanalysis.blogspot.com/2011/09/arizona-circuit-court-ruling.html?x#echocomments

http://globaleconomicanalysis.blogspot.com/2011/09/mers-addendum-circuit-court-ruling-has.html?x#echocomments

 

 

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DougMacG
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« Reply #141 on: September 10, 2011, 01:02:17 AM »

Pat and all, I have gone through the links to those writings and others and am extremely impressed.  Though I am a big picture person, there are many pieces in this puzzle that are interesting topics of their own and apply to other topics here as well.

It is fascinating (scary) to see how the government sponsored entities like Fannie and Freddie went, in a short time, from just a way to open home ownership up to a few more people to a takeover of 95% going on 100% of the market.  Hard to follow that story and not think of what is happening in health care. 

This passage from 'Forces Facing The Housing Market' applies to a discussion on tax deductions today:  "Debt reduction commissions have recommended that one manner to increase income to cover debt would be in eliminating the mortgage deduction. The affect of any such action would immediately crash the housing market. For many, the deduction is the single most important reason to buy a home. Eliminate the deduction, you eliminate purchases, and the result is another round of decreasing home values."

We need to solve problems in this country but we don't need to move so radically against a largely positive thing when we could correct about a hundred thousand worse policies first.

There are other points I would like to explore, one is how impending inflation will affect housing.  Pat made a powerful point in loan modifications that pushing the excess principle past the original term of the mortgage allows those dollars to be paid back in 30 year forward dollars for example- far cheaper for the borrower without requiring a principle write down now for the lender.  The effect of inflation even at 3-4% is an integral part of a 30+ year money equation and inflation that is coming is likely much higher. 

A big factor in the housing recovery is how general economic conditions affect how we work our way past the foreclosure and underwater inventory excesses.  The 6, 10 or 20 year recovery time estimates assume I think that we keep trudging forward at Obamanomic economic stagnation speed.  Another scenario is that we may not be that far away from an economic growth resurgence that is more robust than experts are predicting.  6 million more foreclosed homes sold may only require somewhere between 6 and 12 million new jobs, which is not unprecedented or out of the realm of possibilities.

On the demographic front, I would add the possibility of a pro-active immigration policy, bringing in some measure of investment, skill and youthfulness.  For example, one idea is to offer the best and brightest of those who already come here for our universities the possibility of staying under certain positive conditions.  New entrants might be more welcome, appreciated and assimilate better and faster if they are small business entrepreneurs and employers, energy or software engineers or filling other specific needs in our economy.  They are more likely to acquire housing of their own if they are legal, documented and economically engaged.  Not just housing but social security and retirement systems survival will require new workers and new energy.  A controversial idea but food for thought.
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Crafty_Dog
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« Reply #142 on: September 10, 2011, 09:38:15 AM »

Amen to the appreciation of Pat's superb posts.

-------------------------------------------------------------------------

With the government's lawsuits last week against 17 big banks, we can now say we've seen it all. The suits attempt to argue that Fannie Mae and Freddie Mac, the government-created mortgage giants at the center of the financial crisis, were in fact unwitting victims.

One has to laugh or cry examining the complaints drafted by Fan and Fred's regulator, the Federal Housing Finance Agency (FHFA). As the conservator for the two mortgage monsters since their federal rescue in 2008, the FHFA is suing most of the financial industry on grounds that banks misrepresented to Fan and Fred the quality of loans inside mortgage-backed securities bought by the two firms during the housing boom. Yes, Fannie Mae and Freddie Mac are now shocked, shocked to discover they were buying low-quality mortgages during the housing mania.

We know that FHFA Acting Director Edward DeMarco has a mission to protect the taxpayers who have bailed out Fannie and Freddie with $171 billion and counting. It's also true that Mr. DeMarco deserves taxpayer gratitude for his efforts to resist additional housing bailouts. But when examining the new bank lawsuits, it's worth remembering that an attorney doesn't have an obligation to sue everyone with whom his client has ever done business. And taxpayers may wonder if they'll really be better off after Washington attempts this cashectomy on a still-weak banking system.

Any cash would have to come from a settlement, because we can't imagine the feds bringing these cases into a courtroom. At that point the FHFA's attempt to cast Fan and Fred as victims might have to be reconciled with a voluminous FHFA paper trail blaming Fan and Fred for "unsafe and unsound practices," "imprudent decisions" to "purchase or guarantee higher risk mortgage products," and its determination to take on more risk despite internal and external warnings.

Even the report of the Financial Crisis Inquiry Commission, whose Democratic majority tried to minimize government's role in the meltdown, acknowledged the Fan and Fred mess. Its final report quoted an FHFA examiner who observed that Fannie was "the worst-run financial institution" he'd seen in 30 years as a regulator.

The common theme in the new lawsuits is that banks misled Fan and Fred about how many of the loans inside the mortgage pools were going to owner-occupants versus speculators, and how high the ratio was of the value of a loan to the value of the property.

Many of these securities included dodgy subprime and "Alt-A" loans, meaning the borrowers had low credit scores or provided little or no documentation to back up their claims. But Fan and Fred thought that by buying the triple-A tranche of these securities they would be the last ones stuck with the losses. The toxic twins were happy to enjoy the high yields while also fulfilling their federal affordable-housing mandates, even as they warned in securities filings that they were taking on more risk.

So to sum up the argument made by the FHFA: Fan and Fred were duped by banks because the two mortgage giants thought they were buying pools that included very risky mortgages, when in fact they included insanely risky mortgages.

Several of the bank defendants say that on their deals Fan and Fred could have studied the "loan tape," with detailed information on mortgage borrowers, if they had cared enough to make their own judgments on risk. On the question of property values, the government fed publicly available data into a computer model and decided that the properties were valued too highly during the real-estate bubble. No kidding.

But if there were fraudulent appraisals at the time, this would suggest a lawsuit against appraisers, unless one is simply looking for the deepest shareholder pockets. In any case, why didn't Fan and Fred use such a model before deciding to buy?

On the question of occupancy, if a buyer falsely claimed that he would occupy a given property, why is the bank any more liable than Fan and Fred are? The two mortgage giants had already agreed to buy pools of loans with little or no documentation of the borrowers' claims. Why? Because Fan and Fred's well-paid management and boards were enjoying the ride, and they knew that taxpayers would be there to pay the bill when it ended.

To be clear, not all of the loans went bad, and some of the securities mentioned in the suits are still paying on time and in full. So exactly how much harm are Fan and Fred alleged to have suffered at the hands of banks?

FHFA won't say. These look like lawsuits with a premise to be named later.

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Crafty_Dog
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« Reply #143 on: September 20, 2011, 10:51:04 AM »

Data Watch

--------------------------------------------------------------------------------
Housing starts fell 5.0% in August to 571,000 units at an annual rate To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 9/20/2011


Housing starts fell 5.0% in August to 571,000 units at an annual rate, coming in below the consensus expected pace of 590,000.  Starts are down 5.8% versus a year ago.

The decline in August was mostly due to multi-family starts, which are extremely volatile from month to month and which fell 13.5%. Single-family starts declined 1.4%. Multi-family starts are down 14.0% from a year ago while single-family starts are down 2.3%.
 
Starts fell in the Northeast and South, but rose in the Midwest and West.
 
New building permits gained 3.2% in August to a 620,000 annual rate, easily beating the consensus expected pace of 590,000. Compared to a year ago, permits for multi-unit homes are up 7.8% while permits for single-family units are up 2.0%.
 
Implications:  Home building was stuck in the mud in August, both literally and figuratively. Housing starts declined 5% and fell short of consensus expectations. In addition, the total number of homes under construction fell to a new record low (since at least 1970). However, the weakness in August was largely due to Hurricane Irene. In the face of reports about the on-coming hurricane as well as its actual landfall and aftermath, builders postponed breaking ground on new homes. Excluding the Northeast, which was the hardest hit region, single-family starts were unchanged in August, which pretty much sums up the state of single-family construction for the past couple of years. Multi-unit starts were down in August, but as the top chart to the right shows, are still in a general rising trend as more former homeowners become renters. The brightest news from today’s report was that permits to build new homes were up 3.2% and came in well above consensus expectations. Permits are now up 7.8% versus a year ago. Excluding the temporary burst in activity in late 2009 and early 2010, which was due to the homebuyer tax credit, this is the steepest climb in permits since 2005, back before the housing collapse began. The rise in permits is consistent with our view that housing is at or very close to an upward inflection point. Based on population growth and “scrappage” rates, home building must increase substantially over the next several years to avoid eventually running into shortages.
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G M
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« Reply #144 on: September 20, 2011, 10:54:24 AM »

B.S.


There is still a huge shadow inventory of homes yet to be foreclosed on. There is still air in the bubble and the market has not yet found the floor.
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DougMacG
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« Reply #145 on: September 20, 2011, 12:33:30 PM »

"There is still a huge shadow inventory of homes yet to be foreclosed on. There is still air in the bubble and the market has not yet found the floor."

True.  PP has documented that very well.  Housing will recover only after more people start making significantly more money.  Some say 20-30 years, some say never.  I say the economic recovery will begin very quickly after our disastrous economic policies are corrected, and housing will always be a major part of household expense priorities.   

In total, there is still an oversupply of homes and they are mostly still over-valued - for our economy and demographic.  A bold change in economic policies will be extremely hard to achieve no matter who wins the next election.

But if we do turn the economy around and real incomes grow, along with the very likely and  unfortunate onset of future inflationary growth, today's debts and sunken investments become trivial and a prosperous people will be busy buying, building and re-building homes again as their largest investment and expense.
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G M
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« Reply #146 on: September 20, 2011, 12:41:38 PM »

But if we do turn the economy around and real incomes grow, along with the very likely and  unfortunate onset of future inflationary growth, today's debts and sunken investments become trivial and a prosperous people will be busy buying, building and re-building homes again as their largest investment and expense.

Agreed.

As has been said before, decline is a choice.
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ppulatie
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« Reply #147 on: September 20, 2011, 03:33:58 PM »

Major problem with this report...........

New family starts are running about 400k per year.

40m people aged 65 and up with 77% home ownership rates are beginning to pass and more will occur each day and year.  Boomers also.

Up to 3.5m housing units overbuilt. 

Real wages back to 1996 levels.

Home values still overpriced.

Lack of qualified buyers.

What will happen is that qualified buyers will buy the new homes, for the "prestige" of having a new home, and the resales go stale with the rest of the overbuilt housing units.

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ccp
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« Reply #148 on: September 20, 2011, 03:38:48 PM »

PP,
Do you think mortgage rates will continue down?
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Crafty_Dog
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« Reply #149 on: September 21, 2011, 05:49:29 PM »

Existing home sales rose 7.7% in August To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 9/21/2011


Existing home sales rose 7.7% in August to an annual rate of 5.03 million units, easily beating the consensus expected pace of 4.75 million units. Existing home sales are up 18.6% versus a year ago.

Sales in August were up in all major regions of the country. Almost all of the increase in overall sales was due to single-family homes. Sales of condos/coops rose slightly.
 
The median price of an existing home fell to $168,300 in August (not seasonally adjusted), and is down 5.1% versus a year ago. Average prices are down 4.0% versus last year.
 
The months’ supply of existing homes (how long it would take to sell the entire inventory at the current sales rate) fell to 8.5 from 9.5 in July.  The drop in the months’ supply was due to both the faster pace of sales as well as a smaller inventory of homes for sale.
 
Implications:  Sales of existing homes rebounded sharply in August, coming in well above consensus expectations, and beating the forecast of all 74 economic groups that made predictions. What makes the 7.7% gain to a 5.03 million annual pace even more impressive is that it came in the face of financial volatility in August as well as a hurricane that hit the eastern seaboard late in the month. It would not have been surprising if these factors temporarily depressed sales, which are counted at closing. Lenders could have balked, asking for a larger down-payment or re-inspection to make sure the storm did not damage the home; buyers could have balked out of (in our view, unwarranted) concern about a double-dip recession. Despite these potential pitfalls, the strength in sales was widespread, increasing in all major regions of the country and for both single-family homes and condos/coops. While a large portion of sales came from distressed properties (such as foreclosures and short sales), this is necessary for inventories to continue to be worked off and for the housing market to ultimately recover. The inventory of existing homes is down 13.1% in the past year and homes available for sale this August were at the lowest level for any August since 2005. Despite today’s good news, strict lending standards continue to making access to credit difficult, so we don’t expect robust sales gains every month.  In other recent news, the growth of chain store sales continues to show we are not in recession. Last week’s same-store sales were up 3.4% versus a year ago according to the International Council of Shopping Centers and up 4.1% according to Redbook Research.
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