by Calculated Risk on 1/28/2010 04:41:00 PM

Earlier I posted the Freddie Mac delinquency graph.

And here is the monthly Fannie Mae hockey stick graph ... (note that Fannie releases delinquency data with a one month lag to Freddie).

Click on graph for larger image in new window.

Fannie Mae reported today that the rate of serious delinquencies - at least 90 days behind - for conventional loans in its single-family guarantee business increased to 5.29% in November, up from 4.98% in October - and up from 2.13% in November 2008.

"Includes seriously delinquent conventional single-family loans as a percent of the total number of conventional single-family loans."

Once again it is important to note these stats do include Home Affordable Modification Program (HAMP) loans in trial modifications.

by Calculated Risk on 1/28/2010 02:11:00 PM

There are two key components:
1) New Requirements that Documentation be Provided Before Trial Modification Begins.
2) and guidance on Converting Borrowers in the Temporary Review Period to Permanent Modifications

From Treasury: Administration Updates Documentation Collection Process and Releases Guidance to Expedite Permanent Modifications. And the Special Directive.

1) On beginning trial modifications: The original plan allowed servicer discretion on when to place borrowers in HAMP trial modification programs. Some servicers required documentation and a first payment before putting the borrower in a trial program, others just accepted a verbal agreement over the phone. The new rules include:

Effective for all trial period plans with effective dates on or after June 1, 2010, a servicer may evaluate a borrower for HAMP only after the servicer receives the following documents, subsequently referred to as the “Initial Package”. The Initial Package includes:

Request for Modification and Affidavit (RMA) Form,

IRS Form 4506-T or 4506T-EZ, and

Evidence of Income

The trial period will start after the initial documents are received, a trial plan is sent to the borrower, and the borrower makes the initial payment.

The Treasury was initially trumpeting the number of trial modifications, but that was a poor metric of success since some servicers were just putting anyone who answered the phone in a trial modification.

2) The second key component of the directive is how to handle all the current trial modifications. For the borrowers who have not made all of their payments, the directive requires the HAMP trial program to be canceled. For borrowers who have made payments, but are missing documentation, Treasury provides some additional guidelines.

This suggests a surge of trial cancellations in February.

by Calculated Risk on 1/28/2010 01:16:00 PM

The good news for hotels is it appears the occupancy rate might be near the bottom. This week Smith Travel Research reported the occupancy rate was "virtually flat with an 0.9-percent decrease" compared to the same week in 2009.

The bad news for hotels is the average daily rate (ADR) is still falling because the occupancy rate is so low. Therefore RevPAR (revenue per available room) is still falling.

From HotelNewsNow.com: Boston leads occ., RevPAR increases in STR weekly numbers

Overall, in year-over-year measurements, the industry’s occupancy ended the week virtually flat with an 0.9-percent decrease to 46.8 percent, average daily rate dropped 9.4 percent to US$93.87, and RevPAR for the week fell 10.3 percent to finish at US$43.89.

Click on graph for larger image in new window.

This graph shows the occupancy rate by week since 2000, and the rolling 52 week average occupancy rate.

Notes: the scale doesn't start at zero to better show the change.

The graph shows the distinct seasonal pattern for the occupancy rate; higher in the summer because of leisure/vacation travel, and lower on certain holidays. Business travel is the key over the next few months.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 1/28/2010 11:04:00 AM

Here is the monthly Freddie Mac hockey stick graph ...

Click on graph for larger image in new window.

Freddie Mac reported that the rate of serious delinquencies - at least 90 days behind - for conventional loans in its single-family guarantee business increased to 3.87% in December 2009, up from 3.72% in November - and up from 1.72% in December 2008.

"Single-family delinquencies are based on the number of mortgages 90 days or more delinquent or in foreclosure as of period end ..."

Just more evidence of the growing delinquency problem, although some of these loans may be in the trial modification programs and are still included as delinquent until they become permanent.

Fannie Mae should report soon ...

by Calculated Risk on 1/28/2010 08:55:00 AM

From the Chicago Fed: Index shows economic activity moved lower in December

Led by declines in employment-related indicators, the Chicago Fed National Activity Index decreased to –0.61 in December, down from –0.39 in November. Three of the four broad categories of indicators that make up the index moved lower, although both the production and income category and the sales, orders, and inventories category made positive contributions.
...
In contrast to the monthly index, the index’s three-month moving average, CFNAI-MA3, increased slightly to –0.61 in December from –0.68 in November. December’s CFNAI-MA3 suggests that growth in national economic activity was below its historical trend; but the level of activity remained in a range historically consistent with the early stages of a recovery following a recession.

Click on table for larger image in new window.

This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967. According to the Chicago Fed:

"When the economy is coming out of a recession, the CFNAI-MA3 moves significantly into positive territory a few months after the official NBER date of the trough. Specifically, after the onset of a recession, when the index first crosses +0.20, the recession has ended according to the NBER business cycle measures. ... The critical question is: how early does the CFNAI-MA3 reveal this turning point? For four of the last five recessions, this happened within five months of the business cycle trough."

Although the CFNAI-MA3 improved slightly in December, the index is still negative. According to Chicago Fed, it is still early to call the official recession over.

by Calculated Risk on 1/28/2010 08:31:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending Jan. 23, the advance figure for seasonally adjusted initial claims was 470,000, a decrease of 8,000 from the previous week's revised figure of 478,000. The 4-week moving average was 456,250, an increase of 9,500 from the previous week's revised average of 446,750.
...
The advance number for seasonally adjusted insured unemployment during the week ending Jan. 16 was 4,602,000, a decrease of 57,000 from the preceding week's revised level of 4,659,000.

Click on graph for larger image in new window.

This graph shows the 4-week moving average of weekly claims since 1971.

The four-week average of weekly unemployment claims increased this week by 9,500 to 456,250.

The level of the 4-week average is still relatively high and suggests continued job losses in January.

by Calculated Risk on 1/27/2010 10:45:00 PM

NOTE: here is the New Home sales post from early this morning.

Now for a little fun ... this was last night (link here)

ALSO another great segment with Elizabeth Warren.

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Obama Takes On Bankers
www.thedailyshow.com
Daily Show Full Episodes Political Humor Health Care Crisis

by Calculated Risk on 1/27/2010 08:36:00 PM

NOTE: here is the New Home sales post from early this morning.

Here is the WhiteHouse.gov live feed.

Here is the CNBC feed.

And a live feed from C-SPAN.

From the NY Times: Text: Obama’s State of the Union Address

by Calculated Risk on 1/27/2010 06:31:00 PM

From Pew Research: It's All About Jobs, Except When It's Not

Recent history shows that the public response to all presidents has been shaped to some degree by rising or falling unemployment. However, only Ronald Reagan's ratings in his first term have borne as close a connection as have Obama's to changes in the unemployment rate.

In fact, the relationship between unemployment and presidential approval varies from crystal clear to murky. Indeed since 1981 there have been a number of times when the ties between changes in joblessness rates and public judgments of the president have been weak or even indiscernible. But the link is strongest when unemployment rises precipitously. And it weakens, or even disappears entirely, when other concerns -- such as national security -- become dominant public issues.

Click on graph for larger image in new window.

This graph shows the relationship between the unemployment rate and approval rating. The report also breaks it down by each President starting with Reagan.

Although other factors matter - like 9/11 or the Iran-Contra scandal - it mostly is "the unemployment rate, stupid!", especially when the unemployment rate is high.

by Calculated Risk on 1/27/2010 03:54:00 PM

Click on graph for larger image in new window.

This graph shows the Notices of Default (NOD) by year through 2009 in California from DataQuick.

There were a record number of NODs filed in California last year, however the pace slowed in the 2nd half.

From DataQuick: Another Drop in California Mortgage Defaults

The number of California homes entering the foreclosure process declined again during fourth quarter 2009 amid signs that the worst may be over in hard-hit entry-level markets, while slowly spreading to more expensive neighborhoods. There are mixed signals for 2010: It's unclear how much of the drop in mortgage defaults is due to shifting market conditions, and how much is the result of changing foreclosure policies among lenders and loan servicers, a real estate information service reported.

A total of 84,568 Notices of Default ("NODs") were recorded at county recorder offices during the October-to-December period. That was down 24.3 percent from 111,689 for the prior quarter, and up 12.4 percent from 75,230 in fourth-quarter 2008, according to San Diego-based MDA DataQuick.

NODs reached an all-time high in first-quarter 2009 of 135,431, a number that was inflated by activity put off from the prior four months. In the second quarter of last year, NODs totaled 124,562. The low of recent years was in the third quarter of 2004 at 12,417, when housing market annual appreciation rates were around 20 percent.

"Clearly, many lenders and servicers have concluded that the traditional foreclosure process isn't necessarily the best way to process market distress, and that losses may be mitigated with so-called short sales or when loan terms are renegotiated with homeowners," said John Walsh, DataQuick president.

While many of the loans that went into default during fourth quarter 2009 were originated in early 2007, the median origination month for last quarter's defaulted loans was July 2006, the same month as during the prior three quarters. The median origination month during the last quarter of 2008 was June 2006. This means the foreclosure process has moved forward through one month of bad loans during the past 12 months.

"Mid 2006 was clearly the worst of the 'loans gone wild' period and it's taking a long time to work through them. We're also watching foreclosure activity start to move into more established mid-level and high-end neighborhoods. Homeowners there were able to make their payments longer than homeowners in entry-level neighborhoods, but because of the recession and job losses, that's changing. Foreclosure activity is a lagging indicator of distress," Walsh said.

The state's most affordable sub-markets, which represent 25 percent of the state's housing stock, accounted for 52.0 percent of all default activity a year ago. In fourth-quarter 2009 that fell to 34.9 percent. ...
emphasis added

In terms of units, the peak of the foreclosure crisis may be over, but the mid-to-high end foreclosures are increasing - and the values of these properties is much higher than the low end starter properties. This suggests that prices may have bottomed in some low end areas, but we will see further price declines in many mid-to-high end areas.