Monday Morning Cup of Coffee: ING Alt-A liquidation will relieve lack of supply
Monday Morning Cup of Coffee is a look at news across the HousingWire news desk with larger coverage to come on bigger issues.
Dutch-owned ING is continuing to dissolve non-insurance related assets as part of its bailout agreement with the government of the Netherlands. The latest announcement deals with the offloading of Alt-A mortgages in the United States. According to an article in the New York Times, the portfolio of mortgage securities, originally valued at 24 billion euros, or about $33 billion, will be sold at an expected $500 million profit for the Dutch government.
Of course, market participants offer some more perspective. The current value of the portfolio is now about 6.4 billion euros or approximately $8.8 billion. Nonetheless, the paper will be welcome to the market.
"We think the unwinding of the portfolio will be welcomed by the non-agency market as it will help relieve the lack of supply," said Greg Reiter, Head of RMBS Research at Wells Fargo Securities.
Adjustable rate mortgages slip in popularity in an environment of rising interest rates. But even so, the Motley Fool says, it can be a great mortgage product.
"The adjustable-rate mortgage, or ARM, may be the best option -- depending on your circumstances," writes Patrick Morris.
"The ARM is a curious one, as it often carries the lowest rate, yet it represented only 4.4% and 6.5% of all mortgages originated in 2009 and 2010 (the most recent years for which the data is available)," he adds.
Over to housing stories, Crain's New York Business ran an article harping on the lack of political action on rising housing costs in the big apple. but offered hope that a new regime may address it head on.
In that market, the less people make, the more they usually have to pay from their incomes for lodging. The issue may make or break the next candidate for mayor, the article points out.
"To keep this housing in good condition and create incentives for owners to keep it affordable for the long term, the next mayor should continue to use his housing agencies to offer low-cost loans and tax incentives to owners for capital repairs and energy-efficiency upgrades that will tamp down operating expenses and rent increases," the article states.
California seems to be doing well on the opposite end of the scale. Several private, high-end multifamily complexes aren't even finished with construction in San Francisco, yet they're already approaching half occupancy. Additionally, The Wall Street Journal talks about the national trend of building with only renters in mind.
For private apartment builders, it's the good times. San Fran is being flooded with young techies with great jobs. Three bedrooms can go into the $5,000 a month range, according to the San Francisco Gate. They may be flush with cash, but that won't equal more room to spread one's wings.
"They and many others moving into Upper Market may be downsizing quite a bit. Units measure as small as 450 square feet - 'teeny-weeny floor plans,' as one real estate blog described them," the article states.
Banks will have to do more to show greater survivability in harsh economic times according to an article in Bloomberg.
The stress test for 2014 will have to show reduced counterparty risk and cushion from large losses in business loans.
"The Fed is using the tests -- based on hypothetical adverse conditions and not forecasts -- to encourage the 30 biggest banks to build capital cushions against economic turmoil," the article states. "Twelve banks will be subject to the capital review for the first time."
The Federal Deposit Insurance Corp. closed no banks going into the weekend.