by Calculated Risk on 4/21/2009 05:16:00 PM

Here is a letter from the FHFA to Chairman Dodd that was released today (ht James, Tim, Brian)

Update: here is the news release from FHFA: FHFA Expands Reporting on Homeowner Assistance

The tables show that the number of prime 60 days+ delinquent rose to 743,686 in January, from 497,131 in December. This is an increase from 1.93% in December to 2.89% in January.

The number of non-prime 60 day+ delinquent loans increased too; from 428,705 in December to 485,365 in January. But the foreclosure problem is now mostly a prime problem!

Or as Tanta used to say: "We're all subprime now!"

by Calculated Risk on 4/21/2009 04:13:00 PM

Pier loans: Bridge loans that couldn't be sold.

From the WSJ: Bankers Rebuff U.S. on Chrysler Debt

Chrysler owes ... lenders, which include banks such as Citigroup Inc. and J.P. Morgan Chase & Co., about $6.9 billion. But President Barack Obama and his auto team had demanded that the banks cut that to $1 billion, while gaining no equity stake in a restructured Chrysler.

In their five-page counteroffer, the lenders said they are prepared to cut Chrysler's first-lien debt by $2.4 billion, or down to about $4.5 billion, in exchange for a minority equity stake, likely to be 35% to 40% ...

The lenders have told Treasury ... they could recover at least 65% of their loans to the company if it is liquidated in bankruptcy.

Chrysler is probably worth more dead than alive - at least to these debt holders. That complicates the negotiations.

Nine days to go ...

by Calculated Risk on 4/21/2009 02:31:00 PM

Here are the links to the reports released today (IMF and SIGTARP):

SIGTARP:

Website: Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP)

April 21, 2009 - Quarterly Report to Congress

IMF:

IMF: Global Financial Stability Report website

by Calculated Risk on 4/21/2009 01:55:00 PM

Voit released quarterly reports today for CRE in Las Vegas, San Diego and Orange County.

The reports show the vacancy rates are up, and lease rates (falling rents), net absorption, transactions and construction are all down.

It appears new construction has all but stopped. Here are a couple of graphs for Orange County and San Diego. We are seeing a similar pattern nationwide, although new construction in these areas probably slowed earlier than most of the country.


Click on graph for larger image in new window.

This graph shows the annual Orange County office vacancy rate and new construction since 1998. (See Voit report for more.

In 2007 the rapid increase in the vacancy rate was due to a huge increase in new space combined with negative absorption as a number of Orange County financial companies (like New Century) went under. New construction has almost stopped, but the net absorption rate is still negative, so the vacancy rate is still rising.

Because of the concentration of subprime lenders in Orange County, the office space market was hit earlier than other areas of the country.

From the Voit report:

Total space under construction checked in at 173,209 square feet at the end of the first quarter, which is almost 80% lower than the amount that was under construction this same time last year. ... The office vacancy rate (for direct and sublease space) finished the year at 15.58%, constituting an increase over last year’s rate of 13.28%.

Although the chart only goes back to 1998, the record year for new development in Orange County was 1988, when 5.7 million square feet of new space was added. The vacancy rate peaked at approximately 24% in 1988 (the S&L crisis related office boom).

The second graph is for San Diego. The dynamics are similar, but construction halted later than in Orange County. From Voit:

The office vacancy rate (for direct and sublease space) finished the quarter at 16.03%, constituting a 25.23% increase over last year’s first quarter rate of 12.80%. This increase is a result of the new construction, 2.5 million square feet during 2008, coupled with a slowing economy ...

Currently there is 1.3 million square feet of Office construction underway, and total construction is lower than it was a year ago when 3.2 million square feet was under construction. This is a decrease of 59% when compared to last year ...

Although Voit didn't provide a similar graph for Las Vegas, the situation is clearly worse:

The valley-wide average vacancy rate reached 19.6 percent, which represented a 2.0-point increase from the preceding quarter (Q4 2008). Compared to the prior year (Q1 2008), vacancies were up 4.9 points from 14.7 percent.
...
The northwest witnessed the completion of Montecito Point near the intersection of key freeways, the Interstate 215 and US-95. The 186,300-square-foot building remains substantially vacant.
...
As of the close of the quarter, approximately 1.9 million square feet was in some form of construction. The southwest reported nearly 1.1 million square feet underway. As market conditions continue to shift, the timing of selected projects remains uncertain. Nearly 30 percent of product identified as under construction has delayed timing, halted material development activity or in the foreclosure process ...
emphasis added

Although each market is different, clearly new office construction has all but halted.

by Calculated Risk on 4/21/2009 12:22:00 PM

From Bloomberg: Pandit Says He’ll Repay ‘Every Dollar’ of TARP Funds

Citigroup Inc. Chief Executive Officer Vikram Pandit, speaking at the company’s annual shareholder meeting, said he will repay “every dollar with interest” of funds received [from TARP].

More from the WSJ:

Citigroup Chief Executive Vikram Pandit struck a positive, even hopeful tone, at the embattled banking giant's annual meeting, insisting that it is well prepared for success in an economic recovery.

In his review of Citi's 2008, Pandit said, "The vital signs of Citi are improving." He predicted Citi will have "strong operating leverage" going forward once the economy recovers.

Remember Pandit took over in December 2007, not long after Chuck - “As long as the music is playing, you’ve got to get up and dance. We’re still dancing.” - Prince resigned.