Stagnation data point of the day

Via Paul Krugman at the New York Times, a visual that shows real income history for the 35-44 crowd: But you’ll be glad to know that those over 65 have seen a huge jump in their income under the current administration, in contrast. For many, the housing rush was one of the only ways the younger crowd (read: still working) could better their financial fortunes during the past 5 or so years, even if they were busy leveraging themselves to untenable levels to make it happen. With housing now a complete bust, and the correction cycle in its infant stages, the ugly truth on real income is much more hard to ignore. I’ve said that housing and mortgages will be central to the upcoming election, and this is why.

The cover, and gratitude

A more personal post here than usual; but after more than three weeks of long, sleepless nights, our first issue of HW Magazine is at the press tonight and will be rolling off presses later this week. Below you can snag a look at the cover, click for a larger version: Beautiful, isn't it? This has been a ton of work for a core group of people, and I’m very proud and thankful to know of all of them. That includes writers like Felix Salmon at Market Movers who helped contribute a feature on commodities, and Darrell Delamaide, probably best known these days for his work at MarketWatch — who researched and wrote our cover story on hedge funds flowing into the distressed mortgage space, and what strategies they see shaping up over the next 24 months. And there’s a pretty large... more»

Another theory on Freddie’s debt sale

John Carney at Dealbreaker — one of my favorite financial writers out there — had an interesting take on Freddie’s successful debt sale Monday. HW reported on the sale’s stronger-than-expected response from investors as a net positive for the beleaguered GSE, which it was. But why demand was so strong may involve something a little less obvious, Carney opines. In short, we might have been looking at leveraged purchases of Freddie debt that could be flipped to the Fed for nearly-guaranteed profit: Here’s how it works. A bank that bought the six month notes from Freddie this morning could also bid to borrow from the Fed’s Term Facility, which held an $75 billion auction today. As collateral for the borrowing, the bank could offer the newly purchased Freddie... more»

Chart of the Day

Courtesy of FTN Financial, a chart that speaks volumes about the Q2 earnings season: Figuring out what Q3 will look like shouldn’t be too difficult.

All-Day Loans

Damn if this isn’t funny. Think the WaPo doesn’t understand mortgages? Try this on for size: Fannie Mae has withdrawn from the market for all-day loans, which are considered risky because they require less documentation than traditional prime loans. [emphasis added] I could laugh at that one Alt-A and all night. (On a more serious note, it’s proof of why we started HW.)

I.O.U.S.A

Truthfully, here at HW, we’ve been tossing around the idea of a documentary about America’s debt culture, but it looks like someone has beat us to it:

Outrage, Indifference Over FDIC’s ‘Bailout’ Plan

We’ve received more than a few irate emails from HW readers in the past day over the FDIC’s announced loan modification plan, which we first reported on yesterday. As more details emerge — like the fact that the FDIC will be offering 3 percent mortgages to some troubled borrowers — the outrage among many is palpable. We have our own thoughts on the proposal, but thought we’d use this post to share a few emailed comments from readers. Email your own to editor@housingwire.com, or comment away on this BuzzPost. ‘I’m speechless’ I just can’t believe this. How many borrowers in California lied on their stated-income loan and are now getting free money courtesy of the FDIC? I don’t know what to say — commit a felony, and have the... more»

Explaining mortgage brokers

Consumers could be scammed because they bought into the idea that real estate investing is a magical kind of business unlike any other kind of business in which you can put nothing down and make no loan payments and strike it rich. This does not excuse the mortgage broker. It explains the mortgage broker. Forgive the slight twisting of language, but you must read Tanta’s post at Calculated Risk to understand more; for every perp, there’s usually a willing victim.

What’s missing from the discussion on housing?

Well, everyone, we’re just about to push the very first issue of HW Magazine out the door. Whew. But we just realized today that one very important thing is missing, and so we’re looking for your thoughts on the following question: what’s missing in the national discussion of the housing mess? Is it that things aren’t as bad as they seem–or that they’re worse than we think? Is it that a bank nobody thinks about is about to be felled–or that the banking system is stronger than most are giving it credit for? You get the idea. Tell us your thoughts, and why, and we’ll feature the best reader answers in our inaugural print magazine department called “The Sounding Board.” We’re doing this because we want HW Magazine to connect with... more»

Lex gets it very, very wrong on Alt-A

The Financial Times’ Lex is usually a source of level-headed analysis and grounded reasoning in matters financial, but like many in the financial press, even Lex tends to get misled in trying to make sense of mortgages. And if Monday’s column on Alt-A mortgages is any indication, the old adage that says Wall Street doesn’t understand mortgage banking is alive and well. You don’t need to read the rest of the column; all you need to read is the foundation used to build it: The idea of just handing the keys back and walking away from a house worth less than the loan made against it tends to catch the imagination. Hence fears that the expiry of initial fixed rates on Alt-A loans could result in another wave of foreclosures, just as the pain in the sub-prime segment appears... more»