by Calculated Risk on 12/10/2009 08:30:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending Dec. 5, the advance figure for seasonally adjusted initial claims was 474,000, an increase of 17,000 from the previous week's unrevised figure of 457,000. The 4-week moving average was 473,750, a decrease of 7,750 from the previous week's revised average of 481,500.
...
The advance number for seasonally adjusted insured unemployment during the week ending Nov. 28 was 5,157,000, a decrease of 303,000 from the preceding week's revised level of 5,460,000.

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 decreased this week by 7,750 to 473,750. This is the lowest level since October 2008.

Although falling, the level of the 4 week average is still high, suggesting continuing job losses.

by Calculated Risk on 12/10/2009 12:17:00 AM

See update below for an earlier use of "toxic titles".

Just another addition to the crisis lexicon ... "toxic titles" ... from Fed Governor Elizabeth Duke: Keys to Successful Neighborhood Stabilization (ht Brian)

Communities with weak underlying economies are characterized by a long trend of population loss, gradual impoverishment, and strained municipal resources. For cities like Cleveland, Detroit, and Indianapolis the increase in foreclosures over the last few years has exacerbated a pre-existing vacancy problem. The increased rates of foreclosures and the related economic downturn have hastened a cycle of decreasing property values. Declines in state and local property and sales tax revenues result in even more vacant homes and deteriorating neighborhoods.

Many community organizations and homeowners have been frustrated by the difficulties of working with mortgage lenders and servicers, and these problems are even more exaggerated in weaker market cities. In the most devastated neighborhoods, some lenders do not even complete the foreclosure process or record the outcome of foreclosure sales because the cost of foreclosing exceeds the value of the property. Anecdotal evidence suggests that these "toxic titles" have placed significant numbers of properties in a difficult state of legal limbo.

I've seen toxic titles before in downturns with properties listed for $1 and still no takers ...

UPDATE: Here is an earlier use of "toxic titles" from an article by Mary Kane in Jan 2008: ‘Toxic Titles’ Haunt Cities in Mortgage Meltdown

'Walkaways wind up with “toxic titles,’’ [Kermit Lind, a Cleveland law professor who specializes in housing cases] says. The mortgage company retains a lien, or a charge, on the house, but the borrower still is considered the owner. The property sits in limbo, with the mortgage usually exceeding what it would sell for, because of its decline. If the city has to tear it down, it adds its own $8,000 to $10,000 demolition lien. Not surprisingly, potential buyers aren’t exactly lining up. Non-profit neighborhood groups that could fix up the property face long and expensive legal battles to claim it.

by Calculated Risk on 12/09/2009 09:09:00 PM

Mark Whitehouse writes about the advantages of renting in the WSJ: American Dream 2: Default, Then Rent (ht Pat)

Whitehouse describes one former homeowner with a monthly income of $8,300. He was paying $4,800 a month on his home and he was basically working to pay his mortgage. He was really a "debt owner" since the home was worth far less than the amount owed. He now rents a similar home for $2,200 a month and is enjoying life:

[H]e now has the wherewithal to do things he couldn't when he was stretching to pay the mortgage. He recently went to concerts by Rob Thomas and Mat Kearney. He also kept his black BMW 6 Series coupe, which has payments of about $700 a month.

"I don't know if I'll buy another house again, because it's such a huge headache," he says.

This is one of the tragedies of the housing bubble - it encouraged people to become homeowners before they were really ready and also encouraged them to buy too much home (58% DTI for the mortgage is definitely "house poor"). Many of these people will not buy again for years, if ever.

The article also mentions the "stealth stimulus" from all the delinquencies:

For the 4.8 million U.S. households that ... haven't paid their mortgages in at least three months, the added cash flow could amount to about $5 billion a month ... "It's a stealth stimulus," says Christopher Thornberg of Beacon Economics ...

by Calculated Risk on 12/09/2009 07:04:00 PM

From KTLA: Home of Subprime Lender Targeted by Violent Robbers (ht WestSac_grrl)

Three suspects are under arrest after a violent home invasion robbery in a gated Newport Beach community ... The home is owned by Daniel Sadek, a prominent former subprime lender.
...
Police did not immediately know whether the men who invaded Sadek's home were collecting on a debt or were there to rob him. They were taking cash and jewelry ...

Sadek made and lost a fortune in the subprime mortgage business. Quick Loan Funding, which he founded in 2002, wrote about $4 billion in subprime mortgages before it collapsed in 2007

The house was the scene of a fire two weeks ago.

There is no evidence of a connection to the collapse of Quick Loan.

by Calculated Risk on 12/09/2009 03:53:00 PM

From Maria Bartiromo at CNBC: Citi Plans to Repay TARP Via Stock Offering: Sources

Citigroup plans to pay back some of the $45 billion in TARP money it received last year by raising capital through a stock offering, CNBC has learned.

An announcement could come as early as Thursday.

Are the regulators sure they have enough capital?