Archive for December, 2011
Bond insurer MBIA Inc. will pay Morgan Stanley $1.1 billion to settle a two-year-old legal clash over guarantees tied to commercial and residential real estate, according to a person familiar with the matter.
Talks that spanned the past two months between Morgan Stanley, MBIA and New York's top financial regulator, Benjamin M. Lawsky, culminated late Monday night in a settlement that resolves about $4 billion in insurance contracts Morgan Stanley bought from MBIA before the financial crisis, according to the person. Under the agreement, the insurance contracts Morgan Stanley bought from MBIA will disappear, ending the New York securities firm's costly entanglement with the insurer.
U.S. home values continued their decline in October, falling 0.3% from September, according to Zillow (Z: 29.35 +10.26%), which noted that the rate of monthly depreciation has stabilized as the housing market heads toward the bottom.
On a year-over-year basis, the Zillow home value index declined 5.1% to $147,900. Home values have fallen 23.7% since their peak in May 2007.
The Zillow index tracks with recently released indexes from CoreLogic (CLGX: 14.56 +0.62%) and Lender Processing Services (LPS: 16.78 +1.39%), which also noted declines in the September/October time periods.
Regionally, 95 of the 156 of the metropolitan statistical areas covered by Zillow experienced monthly home value depreciation and 39 metros showed monthly home value increases. Twenty-two metros remained flat.
Some of the nation's hardest hit areas showed some stabilization. In Miami, home values were flat on a monthly basis while Phoenix and Detroit saw monthly gains of 0.2% and 1%, respectively.
But the housing market is far from healthy with only 10 metros seeing home value appreciation on a yearly basis with seven of those metros also having monthly appreciation, including Fort Collins, Colo., Madison, Wis., and Oklahoma City.
The foreclosure liquidation rate continued to decline in October with 8.1 out of every 10,000 homes in the country being liquidated, down from the all-time high of 10.7 out of every 10,000 in October 2010 — just prior to the robo-signing controversy.
"As expected, home values continue to fall in the back half of this year due to an abundance of housing supply relative to demand," said Stan Humphries, Zillow chief economist. "This crisis of consumer confidence along with high rates of negative equity, are the biggest factors hindering a housing recovery."
Zillow expects home values to fall another 2% to 4% before reaching the bottom in 2012.
The chart below (click to expand) shows what is happening in the 25 largest metros covered by Zillow.
Write to Kerry Curry.
Follow her on Twitter @communicatorKLC.
Congressional leaders want to use the government-sponsored enterprises as a gift card for the taxpayers.
Sen. Bob Casey, D-Pa., drafted legislation that looks to deposit the guarantee fees of Fannie Mae and Freddie Mac directly into the coffers of the Treasury, in order to maintain the payroll tax cut.
It is akin to giving Bill Gates an update to Microsoft Silverlight for Christmas.
But the larger question is at what point will the continued and sustained slaps to the face of Fannie and Freddie stop?
Perhaps never. Casey clearly is joining the chorus of the thought machine that dictates the GSEs must be treated as pariahs.
But at what costs? Do we really need to take the money the GSEs earned for their services? It is not enough, in Casey's view that 10% of GSE revenue every quarter goes to the Treasury until everything is paid back.
And these slim pickings must then go into the single basket of the Treasury?
The problem is more than a little distressing. It is understandable to say that Fannie and Freddie need to be dealt with strongly. It's well established that the villagers are waving pitchforks and torches outside the gates of the GSEs.
It is very important the single largest investor in the GSEs, the American taxpayer, gets every single penny back. But let's put some perspective on this.
The national political milquetoast so far appears incapable of reaching a solution to the GSEs. So excuse me for the vote of no confidence here.
What's more, Congress is especially incapable of managing the nation's debts.
The sovereign rating is facing another downgrade due to the lack of a deficit reduction plan. This is a rating nearly independent of the GSEs and it is that directly impacts the operations of Fannie and Freddie, and now this legislation appears to say that we need to rob Peter to pay Paul.
Money paid into the Treasury can end up anywhere. There is no Federal Housing Finance Agency overseeing that operation. Further, the accountability the public enjoys today — the parading of CEOs in front of Congressional-appointed panels to talk about their pay — will be sucked into the Treasury along with the g-fees.
Fannie and Freddie are in conservatorship; they cannot fight back.
That doesn't mean we should sit back in silence and allow illogical ideas on mortgage finance to move forward.
Indeed, this is one piece of legislation that needs to be regifted.
Happy holidays.
Write to Jacob Gaffney.
Follow him on Twitter @jacobgaffney.
Tags: Fannie Mae, FHFA, freddie mac, Treasury
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