Archive for December, 2010
National home prices will not increase from the previous year until the fourth quarter of 2012, according to a panel of economists surveyed by MacroMarkets, a financial technology company.
The survey was compiled from 110 responses in December, and it is based upon the projected path of the Standard & Poor's/Case-Shiller national home price index over the next five years. According to the survey, home prices in the fourth quarter of 2010 will show a 1.13% drop from a year ago, but will begin to stabilize.
At the end of 2011, prices are expected to remain 0.17% below where they will be at the end of this year. But by the close of 2012, prices will have begun its long journey to recovery, increasing nearly 2% from 2011, according those surveyed. By 2015, prices will be increasing by more than 3.5% from the previous year.
On a micro-level, home prices are expected to increase in 40% of local markets in 2011, another technology firm, Veros Real Estate Solutions, said Wednesday.
Robert Shiller, who co-founded MacroMarkets and remains its chief economist, said less than 3% of those surveyed expected a negative change in 2015. The 3.7% increase expected in that year would be higher than the average annual rate of increases before the bubble.
MacroMarkets Managing Director Terry Loebs said the survey consistently points to price stability in the intermediate and long-term. However, he stressed that the recovery will be long road.
"Weak market fundamentals persist and continue to gnaw at wealth and confidence in these uncharted, post-bubble waters," Loebs said.
Write to Jon Prior.
November downgrades and defaults on residential and commercial mortgage-backed securities slowed to levels not seen since 2007, according to a report from Standard & Poor's.
The housing market's collapse sparked downgrades from the credit rating agency to a peak at the beginning of 2010 when S&P made more than 12,000 downgrades on RMBS and collateralized debt obligations backed by the securities in January alone. Default rates on the collateral beneath the structured finance deals reached a peak of 10% in November 2009, climbing from a 2.8% low a year earlier. (Click on chart to expand.)
But the global economic outlook began to change in late 2009 and continued into 2010. This stabilized credit spreads for and improved the performance of underlying collateral. Downgrades began to decline after January to roughly 1,000 in November. Default rates recovered as well, dropping back down to 2.9% as of November, according to S&P.
But, according to S&P, struggles remain despite an improving economy. Cumulative defaults on structured securities reached $809 billion at the end of November. Of that, just more than half was originally rated triple A, the highest investment grade S&P can give a structured deal.
"Because the credit performance of structured finance collateral tends to lag the overall economy, however, credit stabilization will continue to face a headwind of persistent high levels of unemployment and a weak labor market, which will likely continue to pressure the sector's overall credit performance going forward," S&P said.
Write to Jon Prior.
The New York Supreme Court on Wednesday ruled that MBIA Insurance Corp. did not have any way to discover if GMAC Mortgage LLC intentionally misrepresented the true nature of mortgage-backed securities that MBIA insured.
"It is not clear whether MBIA could have discovered the alleged misrepresentations concerning the loan characteristics before entering into the insurance agreements," Judge Bernard Fried wrote in his 15-page decision.
Twenty-days goes by fast when you are under investigation, your law practice is dwindling and you must respond to a proposed class-action lawsuit filed by your former employees. But a federal judge was not sympathetic to a request by the attorney for David. J. Stern who wanted more time to respond to the former employees’ lawsuit.
Stern was given 20 days to respond to a lawsuit filed by former employees on Dec. 2. The workers accused their former boss of violating the Worker Adjustment and Retraining Notification Act by failing to give them 60-days notice of mass layoffs that began in September. But on December 16 – six days before the Dec. 22 deadline – Jeffrey Tew, Stern’s attorney, filed court papers asking the judge to extend the deadline to Jan. 24, 2011.
The Minnesota couple refinanced in 2006 to start a business. It failed. Debts mounted. The Geweckes went bankrupt and failed to win a loan modification. But they bought time.
In 2009, the Geweckes filed a lawsuit to block their foreclosure. At the heart of their case is this question: Who owns their mortgage?
