by Calculated Risk on 8/26/2009 07:56:00 PM

From the DOT: Cash for Clunkers Stats

Number Submitted: 690,114
Dollar Value: $2,877.9M

This should push light vehicle sales to about 16 million (SAAR) in August. Of course the real question is what happens in September.

Darn - Floyd Norris beat me to it, but my table is sortable.

Using the Census Bureau population estimates, here is a table of dollars per person.

New Hampshire is the "Clunker State" by 'Dollars per person'. What happened in D.C.? No one wanted a new car? (UPDATE: several people told me almost everyone in D.C. buys cars in Virginia or Maryland)

NOTE: Columns are sortable - click on column headers: State (includes territories), Clunker dollars, Population, Dollars per person.

by Calculated Risk on 8/26/2009 05:48:00 PM

From Bloomberg: FDIC Sets Standards for Private-Equity Firms to Buy Shut Banks (ht Anthony)

The Federal Deposit Insurance Corp. approved guidelines for private-equity firms to buy failed banks ... agreeing to lower to 10 percent from the proposed 15 percent the Tier 1 capital ratio private-equity investors must maintain after buying a bank.

From the FDIC: Attachment: Final Statement of Policy of Qualifications for Failed Bank Acquisitions

As a reminder, the deadline for Corus Bank bids is reported to be next week. So this is just in time.

Also, the Q2 FDIC Quarterly Banking Profile will probably be released tomorrow AM (including stats on the Deposit Insurance Fund and the number of problem banks at the end of Q2).

by Calculated Risk on 8/26/2009 03:59:00 PM

From the NY Times: Adjustable Mortgages Loom as Threat to Housing Recovery
(ht Shnaps, Ann)

When Harvey Clavon took out an exotic mortgage to refinance his home in Santa Clarita, Calif., three years ago, he thought he knew what he was doing.

Mr. Clavon, 63, was planning to sell the home in a few years and retire to Palm Springs. So he got a loan called an option adjustable rate mortgage, or option ARM, which allowed him the option of paying less than the interest for the first five years.

On his annual salary of $100,000 as a television camera operator, he could afford the $2,200 initial mortgage payments. And he would sell the home before the mortgage reset.
...
Mr. Clavon made only minimum payments on his mortgage, his balance has risen to $680,000 from $618,000, on a house worth closer to $400,000.

What a surprise!

And the article also has a quote from the Shnapster's friend Ted Jadlos on Option ARMs!

“Everyone’s been focused on subprime, but we’re more concerned about this,” said Todd Jadlos, managing director of LPS Applied Analytics ... “By the time subprime defaults had increased 200 percent, in June and July of 2007, option ARMs had gone up 400 percent. People just didn’t notice because the overall numbers weren’t as high.”

And some more mortgage fraud news: Task Force Cracks Mortgage Fraud Case Involving 453 Homes

Ohio Attorney General Richard Cordray and Cuyahoga County Prosecutor Bill Mason today announced details of an 18-month investigation that led to indictments against 41 people and four companies. The defendants are alleged to have engaged in real estate transactions to purchase 453 homes with fraudulent loans totaling $44 million. ...

The scheme involved using straw buyers to purchase homes, falsely claiming home improvements were performed on houses in order to refinance them, and then selling houses to unqualified buyers with the assistance of real estate agents, mortgage brokers and title companies.

Lenders were tricked into believing that the buyers were making at least a 10% down payment when they were not, that the buyers had assets when they did not, and that the properties were worth more than they actually were. [Defendants] defrauded lenders through loan application fraud, down payment fraud and loan distribution fraud. The defendants siphoned off more than $31 million in profits from their criminal enterprise. Eventually, 358 of the homes fell into foreclosure.

Hey, almost 100 homes in this scheme are not in foreclosure!

As tax breaks expire, home sales decline ... from Reuters: California tax credit expires, home permits sink

Homebuilding permits filed in California in July fell significantly from June as a state tax credit for buyers of new homes expired ...

The tax credit offered earlier this year pulled homebuyers from the sidelines back into the state's beleaguered market for new homes but they have retreated since the incentive lapsed last month.

"Our homebuilders reported a significant drop in traffic last month, largely due to the state closing the window on the homebuyer tax credit," said Robert Rivinius, president and chief executive of the California Building Industry Association.

He noted the state government stopped taking applications for the $10,000 new-home credit at the beginning of July.

"Activity stopped as quickly as it started, which is bad news for housing and the broader economy," Rivinius said.
emphasis added

Just imagine what will happen when the $8K first-time home buyer tax credit expires.

And a preview for BFF: Sioux City Bank at Risk of Failing

Vantus Bank, based in Sioux City, is at risk of failing because of the recession and rising bad loans.

Federal regulators have told the bank, which has 13 locations in Iowa, that its plan to increase its capital was unacceptable. According to a filing with the U.S. Securities and Exchange Commission, it must be sold or liquidated by Sept. 30.

by Calculated Risk on 8/26/2009 02:15:00 PM

From the American Trucking Association: ATA Truck Tonnage Index Rose 2.1 Percent in July

Click on graph for slightly larger image in new window.

The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 2.1 percent in July. In June, SA tonnage fell 2.4 percent. July’s gain, which raised the SA index to 101.9 (2000=100), wasn’t large enough to completely offset the reduction in the previous month. The not seasonally adjusted (NSA) index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 106.3 in July, down 0.9 percent from June.

Compared with July 2008, SA tonnage fell 10.4 percent, which was the best year-over-year showing since February 2009. June’s 13.6 percent contraction was the largest year-over-year decrease of the current cycle.

ATA Chief Economist Bob Costello said that truck tonnage will continue to be choppy in the months ahead, but that is not necessarily a bad thing. “It is not unusual for an economic indicator to become volatile before changing direction,” Costello noted. He is hopeful that truck tonnage has finally hit bottom as it has been bouncing around a seven-year low for the last few months. “While I am optimistic that the worst is behind us, I just don’t see anything on the economic horizon that suggests freight tonnage is about to rise significantly or consistently,” Costello said. “Still, even small gains are better than the February 2008 through April 2009 cumulative tonnage reduction of 15.5 percent.”

Once again it appears the cliff diving is over, and the index is now moving sideways and "choppy".

by Calculated Risk on 8/26/2009 12:35:00 PM

From Atlanta Fed President Dennis Lockhart: The U.S. Economy and the Employment Challenge

On the economic outlook:

With respect to growth, my forecast envisions a return to positive but subdued gross domestic product (GDP) growth over the medium term weighed down by significant adjustments to our economy. Some of these adjustments are transitional in the sense that they impede the usual forces of recovery. Among these are the rewiring of the financial sector and the need for households to save more to repair their balance sheets.

Some of these adjustments, however, are more "structural" in nature. By this, I mean that the economy that emerges from this recession may not fully resemble the prerecession economy. In my view, it is unlikely that we will see a return of jobs lost in certain sectors, such as manufacturing. In a similar vein, the recession has been so deep in construction that a reallocation of workers is likely to happen—even if not permanent. ...

My forecast for a slow recovery implies a protracted period of high unemployment. And labor market weakness is a concern I hear about often as I travel around the Southeast.

And on Commercial real estate:

I'm concerned that commercial real estate weakness poses a serious potential risk to the economic recovery and to the banking system. Commercial real estate loan exposure is heavily concentrated in banks and commercial mortgage-backed securities. Commercial real estate values—that is, collateral values for loans—are being revised down materially by the potent combination of increased vacancy, rent reductions, and appropriately higher capitalization rates. Further, there is a clear link between employment trends (positive and negative) and commercial real estate trends.

On that note, here is a graph from a post in July:

Click on graph for larger image in new window.

This graph shows the office vacancy rate vs. the quarterly unemployment rate and recessions.

As Lockhart noted: "[T]here is a clear link between employment trends (positive and negative) and commercial real estate trends."

As the unemployment rate continues to rise over the next year, the office vacancy rate will probably rise too. Reis' forecast is for the office vacancy rate to peak at 18.2 percent in 2010, and for rents to continue to decline through 2011.