RSS Twitter

Archive for August, 2010

Wednesday, August 25th, 2010

Analysts’ estimates for July homes sales aren’t even close.

New homes sales figures out today from the Commerce Department show a seasonally adjusted rate of 276,000, representing an all-time low and well below street estimates of 339,000, according to a MarketWatch survey. Analysts in a Reuters survey predicted July home sales would remain flat with the original June number of 333,000.

But the July figure is down 12.4% from the revised June rate of 315,000 sales and 32.4% lower than the year ago, according to the Commerce Department. The median sales price of new homes sold during the month was $204,000 and the average price was $235,300. The department estimates 210,000 houses were for sale at the end of July for a supply of 9.1 months.

On Tuesday, the National Association of Realtors reported a decline of 27.2% in existing home sales for the month to 3.83 million units — the lowest point in more than a decade. The consensus street estimate was calling for a decrease of 12% for the month to a rate of 4.7 million units.

Write to Jason Philyaw.

Wednesday, August 25th, 2010

The recent Conference on the Future of Housing Finance last week at the Treasury Department concluded with some consensus on the futures of government sponsored entities Fannie Mae and Freddie Mac. In a research note today Deutsche Bank analyst Steven Abrahams summarized the coming form of "GSE 2.0."

Key elements included re-launching of the MBS guarantee business backed by catastrophe insurance from the US government. This guarantee would implicitly serve as a backstop to the TBA pass-through market. In a panel with investors in the space, both of these aspects were considered key to maintaining adequate liquidity at the GSEs.

Large scale investors, such as Ranieri & Co and PIMCO are both vocal in supporting the government guarantee, with PIMCO managing director Bill Gross saying yesterday that he feels such a guarantee is undesirable, yet neccessary. "Markets and private incentives without proper guardrails were as threatening to a sound economy in the 21st century as too much regulation and government ownership proved to be in the 1970s," he said.

Furthermore, in the future the GSEs will likely get out of the portfolio investment business, except for limited warehousing of residential and multi-family loans before securitization. Abrahams also sees the GSEs becoming co-ops, "capitalized by the very originators that need securitization," he wrote in an outlook report today.

However, there are questions of costs of the government getting into the MBS guarantee business. Further, while the government, regulators and the market at-large agree that this will lower the cost of arranging and securitizing mortgages, these solutions leave the taxpayer ultimately on the hook for losses.

"One nuance of the guarantee discussion touches on whether the catastrophe insurance should apply to the new GSEs or to separate blocks or issue years of MBS — to the entities or the assets. Opinion for now leans toward insuring the assets," wrote Abrahams.

"That would require the GSEs to operate like insurance companies with segregated books of business, separately capitalized and serviced," he adds. "If losses exhausted the capital supporting a particular book, government insurance would kick in. That would allow the GSE to continue writing new business without concerns about insolvency."

Write to Jacob Gaffney.

Wednesday, August 25th, 2010

We like Gluskin-Sheff economist David Rosenberg — because what he says not only makes sense, but is rooted in an understanding of real market dynamics. This morning, Rosenberg came out firing on housing, echoing much of the commentary we've been publishing here at HW since March of this year. Here's what we had to say:

"The U.S. housing sector is clearly double-dipping — that dive to 3.83 million units in July undercut the “depression” low of January 2009 by 15%! The lesson for the government is that their ‘tax goodies’ do nothing more than distort the market rather than actually help out. Oh yes, we should add this too; the “bulls” were all over the fact that home prices in yesterday’s existing sales report did not decline and that should be construed as a sign that real estate valuation has bottomed out. Not so fast. The fact that existing homeowners were stubborn and refused to discount was one of the reasons why sales slid a record amount in July, but reality will eventually set in that to move the near-record inventory, it will be the asking price that inevitably approaches the bid, not the other way around.

So let’s get this straight. Mortgage rates have tumbled nearly 100 basis points in the past year to a record low of 4.42% for the 30-year rate, yet existing home sales collapse a record 27% MoM to an all time low (data only back to 1999 for total sales) of 3.83 million units at an annual rate? Are you kidding me?

Not only that, but the government has implemented no fewer than eight programs to put a floor under the housing market. We suppose that someone in Washington could always argue that things would be much worse without all these incursions, but when is enough going to be enough? Let the housing market find its own equilibrium. Stop wasting taxpayers’ money on trying to influence what structure people would like to live in — there’s nothing wrong with renting and saving up for the down-payment (a word that has found its way back into the housing lexicon in the U.S.). Focus on the real crisis: job creation, or the lack thereof. It is absolutely a secular bear market when the government can expend so many resources to one sector and generate so little in the way of results.

Home listings actually rose 2.5% MoM in July so with sales sagging at a record rate, the inventory backlog surged to 12.5 months’ supply from 8.9 months in June and 8.3 months in May (and 7.8 months at the turn of the year). That is a record but there is only a limited history since the data include condos where the inventory backlog has soared to an all-time high of 16.5 months’ supply from 10.7 in June. For single-family housing, housing inventory skyrocketed to a 27-year high of 11.9 months’ supply, breaking above the prior 2008 peak of 11 months. Unless the laws of supply and demand have been repealed as they pertain to the residential real estate market, one would have to be of the view that more house price deflation is coming our way."

Wednesday, August 25th, 2010

In an all-out effort to get the economy moving again, Federal Reserve Chairman Ben Bernanke may be getting ready to take his money-creating helicopter to a new altitude.

Bernanke earned the moniker "Helicopter Ben" after the then-Fed governor referenced Milton Friedman's famed "helicopter drop" favorably in a 2002 speech outlining how the Fed could defeat deflation.

Wednesday, August 25th, 2010

We are in danger of making a dangerous U-turn on economic policy because our judgment is clouded by common misconceptions about the government's stimulus programs.

In some cases, Republican leaders have deliberately distorted some of these programs to spread doubts about the Democrats' policies. In other cases, urban myths have sprouted up without anyone deliberately fertilizing them.

Wednesday, August 25th, 2010

Shares of luxury builder Toll Brothers Inc. climbed following a surprise fiscal third-quarter profit, its first in nearly three years, as revenue fell far less than analysts expected.

However, the home-builder saw a drop in contract signings amid fewer available communities.

Wednesday, August 25th, 2010

If a housing recovery is finally upon us, it will be no thanks to Washington's serial interventions, nor to the home builders who have cheered so vigorously for them. Together with the Realtors and mortgage bankers, the home builders form a lobbying army of the Potomac. The mission is to secure ever higher federal subsidies for housing. The strategy is to convince politicians of both parties that a robust economic recovery can only occur if residential real estate is booming again. This is false.

Wednesday, August 25th, 2010

Virginia Beach-based ServiceLink LoanCare Servicing, a division of a wholly-owned subsidiary to Fidelity National Financial (FNF: 18.15 -0.55%), touted recent company growth on Wednesday. In a press statement, the firm said it has added 150 jobs and 10,000 square feet in the past 18 months. The company did not disclose if it had added new clients during that time.

Company officials cited growth across all aspects of their business, but in particular noted that a call center now handles 150,000 calls per month. The company expects to see continued job growth throughout 2011 "in anticipation of signing new clients in need of loan servicing administration," it said.

ServiceLink LoanCare Servicing is also seeing significant growth in its seller finance division, the company said. Currently, the company services seller finance accounts in Arizona, Oregon, Washington, and California with offices in Arizona, Oregon, Washington, and Virginia Beach. Since the start of this year, the company has more than doubled the seller finance accounts it services to over 16,000.

The servicer manages approximately 135,000 loans for over 80 companies, totaling approximately $20 billion in loan balances.

This story was prepared by HW wire staff. To contact the editor: editor@housingwire.com

Wednesday, August 25th, 2010

House Minority Leader John Boehner (R-Ohio) on Tuesday blasted the Obama adminstration's economic policies, calling for the firing of both Treasury Secretary Timothy Geithner and the Director of the White House National Economic Council Larry Summers.

"Obama should ask for — and accept — the resignations of the remaining members of his economic team, starting with Secretary Geithner and Larry Summers, the head of the National Economic Council," he remarked during a speech at the City Club of Cleveland.

GOP leaders are ramping up their criticism of the Obama administration ahead of midterm elections later this year, as they look to blame Democrats for continued high unemployment and the specter of a double-dip recession. "The American people are asking 'where are the jobs?' and all the president's economic team has to offer are promises of 'green shoots' that never seem to grow," Boehner said.

Other Republicans were quick to line up behind Boehner, including chairman of the House Republican Conference Mike Pence (R-Indiana), who released a statement late yesterday that said the "economic policies of this administration have failed and President Obama needs a new economic team."

"It is time to start over with a new economic team that listens to the concerns of the American people and puts pro-growth policies in place that will get the American people back to work and the economy moving again," Pence said.

Democrats were quick to characterize Boehner's remarks as unproductive complaining. "[Boehner's] chief proposal, when you look at it, apparently was that the president should fire his economic team," Vice President Joe Biden quipped in a speech Tuesday afternoon. "Very constructive advice and we thank the leader for that."

The White House has been on the receiving end of increasing criticism for an economy that has proven to be far weaker than anticipated after the financial crises of 2007 and 2008. Later this week, the Commerce Department will release revised GDP figures largely expected to show that the economy grew at a far slower pace than originally expected. Next week, a monthly jobs report is expected to show additional job losses, and administration officials are bracing for further criticism as a result.

White House Communications Director Dan Pfeiffer continued to press the issue of economic health on the White House blog Tuesday afternoon, dismissing Boehner's remarks and characterizing Republican economic plans as the reason the U.S. economy faces its current challenges.

"While the rhetoric today may be new, the ideas remain the same: out-of-control deficits, decreased oversight of the big Wall Street banks that helped create the financial crisis and putting special interests first by maintaining tax loopholes for corporations that ship American jobs overseas," he argued.

The Obama administration has already seen some turnover among its economic team. Christina Romer, chairwoman of the Council of Economic Advisers, resigned earlier this month, following Office of Management and Budget Director Peter Orszag in July.

Paul Jackson is the publisher of HousingWire.com and HousingWire Magazine. Follow him on Twitter: @pjackson

Wednesday, August 25th, 2010

During a time of stagnant job prospects, credit unions are increasing efficiencies in the workplace and contributing ot local economies. According to Callahan & Associates’ Peer to Peer software, credit unions employ more than 238,000 full or part-time employees nationally.



Origination/Lending
Kenneth Bacon, executive vice president of the Fannie Mae multifamily mortgage business, is retiring after 18 years at the mortgage...

Read More »

Servicing/Default
The serious delinquency rate for Federal Housing Administration mortgages reached 9.6% in December, the highest level in more than two...

Read More »