by Calculated Risk on 7/10/2009 10:12:00 PM

Just using Sacramento as an example ... I wish the NAR broke out the data like this!

Click on graph for larger image in new window.

The Sacramento Association of REALTORS® is now breaking out monthly resales by equity sales (normal resales), and distressed sales (Short sales and REO sales). Here is the June data.

They started breaking out REO sales last year, but this is the first monthly report with short sales.

Just over 70% of all resales (single family homes and condos) were distressed sales.

Total sales in June were off 7% compared to June 2008, and that breaks a string of YoY increases.

This is just a reminder - with 70% distressed sales, there will be few move-up buyers for the higher priced areas.

by Calculated Risk on 7/10/2009 07:16:00 PM

Spirited collapse
A corkscrewed, spiraling fall
Time to drown sorrows.
by Soylent Green is People

From the FDIC: Central Bank & Trust, Lander, Wyoming, Assumes All of the Deposits of Bank of Wyoming, Thermopolis, Wyoming

Bank of Wyoming, Thermopolis, Wyoming, was closed today by the State of Wyoming, Department of Audit, Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver....

As of June 30, 2009, Bank of Wyoming had total assets of $70 million and total deposits of approximately $67 million. ...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $27 million. Central Bank & Trust's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Bank of Wyoming is the 53rd FDIC-insured institution to fail in the nation this year, and the first in Wyoming. The last FDIC-insured institution to be closed in the state was Westland, FS & LA, Rawlins, on July 26, 1991.

It is Friday ...

by Calculated Risk on 7/10/2009 04:53:00 PM

From the San Francisco Business Times: Sellers owe balances after short sales (ht Michael, SocketSite)

The rising tide of “short sales” by troubled home owners facing foreclosure is prompting lenders to become more aggressive in their attempts to pursue former homeowners for their loan losses in a short sale. In a short sale, a house is sold, with a lender’s approval, for an amount that won’t pay off the mortgages on the property.

Often, the troubled home owner assumes the loss will be eaten by the lender. But Bank of America and Chase have quietly added language in their short-sale agreements that require the borrower to sign a promissory note for the shortfall.

A spokesman for the American Bankers Association said this week that he wasn’t aware of the practice, suggesting how little attention has been paid so far to collection of these notes from troubled borrowers.

BofA says its intention is to protect investors holding the mortgages.

This is nothing new. Zach Fox (when he was still at the NC Times) reported in April: Lawyers say lenders set stage to collect on 'short sales'

Lenders appear to be inserting language into short sale contracts that allow them to sue for any "deficiency," or the amount lost by a bank by selling a home for less than the mortgage ---- opening the door to collection agencies and court judgments that can run into the hundreds of thousands of dollars for some North County homeowners.
...
One real estate agent who specializes in short sales, Chris Mackey of Carmel Valley, said about 50 percent of the short sale contracts he has seen include the language before he requests its removal. Banks generally have removed the language, he said.

... the North County Times obtained a short sale contract issued by Countrywide Financial Corp ... The contract warned the homeowner, who owned a house in El Cajon, that Countrywide "may pursue a deficiency judgment for the difference in the payment received and the total balance due ... "

It sounds like the banks will remove the language if asked. I'd suggest having a lawyer review the contract, and make sure "all loans are extinguished and debts forgiven".

by Calculated Risk on 7/10/2009 03:52:00 PM

First the market ...

Click on graph for larger image in new window.

This graph is from Doug Short of dshort.com (financial planner): "Four Bad Bears".

Note that the Great Depression crash is based on the DOW; the three others are for the S&P 500.

And the next two graphs are from the Cleveland Fed.

From Mike Bryan, a vice president and senior economist in the Atlanta Fed’s research department: Economic and financial data, neatly wrapped

We thought if these summaries are useful internally, then a wider audience will also find them valuable. So beginning today we will publish our Economic Highlights and Financial Highlights, exclusive of any proprietary data, on our Web site. We anticipate updating these digests weekly.

From the Financial Highlights on the Fed assets:

While the overall size of the Fed’s balance sheet has been shrinking slightly over the last two months, the composition of the balance sheet has changed.

There have been sizeable declines in short-term lending to financials and lending to nonbank credit markets.

Offsetting these declines have been increases in holdings of agency debt and mortgage backed securities (MBS) as well as increases in holdings of U.S. Treasury securities. Combined, these three categories have increased by about $460 billion since the week ended March 18.

The third graph shows the bank failures by asset size and state.

I'm looking forward to these highlights every week!

Now for this BFF (Bank Failure Friday) ...

by Calculated Risk on 7/10/2009 02:52:00 PM

From Robert Reich: When Will The Recovery Begin? Never. (ht Bob Dobbs)

The so-called "green shoots" of recovery are turning brown in the scorching summer sun. In fact, the whole debate about when and how a recovery will begin is wrongly framed. On one side are the V-shapers who look back at prior recessions and conclude that the faster an economy drops ...

Unfortunately, V-shapers are looking back at the wrong recessions. ...

That's where the more sober U-shapers come in. They predict a more gradual recovery ...

Personally, I don't buy into either camp. In a recession this deep, recovery ... depends on consumers who, after all, are 70 percent of the U.S. economy. And this time consumers got really whacked. Until consumers start spending again, you can forget any recovery ...

Eventually consumers will replace cars and appliances and other stuff that wears out, but a recovery can't be built on replacements. Don't expect businesses to invest much more without lots of consumers hankering after lots of new stuff. And don't rely on exports. The global economy is contracting.

Eventually the economy will start growing again ... but I think the "recovery" will be very sluggish.

Reich suggests the only market for cars will be replacements - but the replacement level (based on scrappage rates) is in the 12 to 13 million range. And that would be a significant increase from the current 9.7 million annual sales rate. That is still well below the peak, but recovery is from the bottom of the cliff - and is not measured from the previous peak.