by Calculated Risk on 2/23/2010 08:10:00 AM

From the Rockefeller Institute: States Reported Fifth Consecutive Drop in Tax Collections in the Fourth Quarter of 2009 (ht Ann)

State tax revenues declined by 4.1 percent nationwide during the final quarter of calendar 2009, the fifth consecutive quarter of reduced collections, according to a report issued today by the Rockefeller Institute of Government.

The five straight quarters of year-over-year decline in overall tax collections represent a record length of such decreases, the Institute said.
...
“Calendar 2009 will be remembered as bringing historically sharp declines in tax revenue to states,” the report says. “Revenue gains toward the end of calendar 2009 were often driven by legislated tax increases rather than growth in the economy and tax base.”

Despite revenue gains in some states during the fourth quarter, the report concludes, “another negative quarter for the nation as a whole would not be unexpected. The troubling fiscal picture for states remains clearly in place.”

Here is the report: Final Quarter of 2009 Brought Still
More Declines in State Tax Revenue

Tax revenues are still weak, and most states are still running large deficits. As a recent CNNMoney article notes:

States are looking at a total budget gap of $180 billion for fiscal 2011, which for most of them begins July 1. These cuts could lead to a loss of 900,000 jobs, according to Mark Zandi, chief economist of Moody's Economy.com.

This suggests that more state and local government job cuts are coming.

by Calculated Risk on 2/22/2010 11:36:00 PM

Louise Story at the NY Times writes: Judge Accepts S.E.C.’s Deal With Bank of America

[A] federal judge wrote on Monday that he had reluctantly approved a $150 million settlement with the Securities and Exchange Commission.

And from the Judge:

"In short, the proposed settlement, while considerably improved over the vacuous proposal made last August in connection with the Undisclosed Bonuses case, is far from ideal. Its greatest virtue is that it is premised on a much better developed statement of the underlying facts and inferences drawn therefrom, which, while disputed by the Attorney General in another forum, have been carefully scrutinized by the Court here and found not to be irrational. Its greatest defect it that it advocates very modest punitive, compensatory, and remedial measures that are neither directed at the specific individuals responsible for the nondisclosures nor appear likely to have more than a very modest impact on corporate practices or victim compensation. While better than nothing, this is half-baked justice at best."
Judge Jed S. Rakoff, Feb 22, 2010

I always enjoy some judicial snark.

by Calculated Risk on 2/22/2010 08:32:00 PM

Floyd Norris writes at the NY Times: Horrid Job Number Coming

It snowed this month in much of the United States. ... Both the household survey (which produces the unemployment rate) and the employer survey (which produces the job count) ask about workers in the week during which the 12th of the month fell [the week of the blizzards].
...
That means that a lot of people who had jobs may report they did not work during the week, and companies may say they had fewer people on the payroll than they would have cited a week earlier or later. If so, we may get a truly horrid job number.

Apparently the weather negatively impacted the jobs report in January 1996, and net employment turned negative for one month in the middle of a huge job boom.

Maybe the snow storms will impact the BLS report in February. Maybe not. ADP also uses payroll employment on the 12th of the month, so they should also be impacted.

Perhaps we will be able to tell if the weather had an impact by looking at weekly initial unemployment claims and the ISM reports (monthly surveys). Just something to remember next week ...

by Calculated Risk on 2/22/2010 05:07:00 PM

From James Hagerty at the WSJ: U.S. Weighs Changes to Mortgage-Relief Program

The U.S. Treasury is considering new ... proposals ... to give borrowers 30 days to respond after being denied a modification of their loan terms under the ... HAMP. During that period, which would allow borrowers to appeal against the decision, the servicer couldn't put the home up for sale at a foreclosure auction.
...
A Treasury spokeswoman said the proposals are among "many ideas under consideration in the administration's ongoing housing stabilization efforts." She added: "This proposal has not been approved and there are no immediate planned announcements on the issue."

Servicers also would be required to provide a "written certification" that a borrower isn't eligible for HAMP before a foreclosure sale can be held.
...
These measures would likely further slow down the foreclosure process.

Probably the main impact of HAMP has been to keep the supply of distressed properties down by delaying the inevitable. In most cases, this would just be another delay ...

by Calculated Risk on 2/22/2010 02:56:00 PM

From Campbell Surveys: Short Sales See Big Jump in Activity During January

According to the latest Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions, short sales accounted for a substantial 15.9% of home purchase transactions in January. This was well above the share of other distressed property activity – damaged real estate owned or REO (13.4%) and move-in ready REO (13.8%) – and represented a big jump for short sales.
...
“Short sales activity took a temporary dip in November around the expected expiration of the first-time homebuyer tax credit,” reported Thomas Popik, research director for the Campbell/Inside Mortgage Finance survey. “Few first-time homebuyers wanted to take the chance that their short sale transaction wouldn’t be approved by the November 30 deadline. But now that the tax credit has been extended, we see first-time homebuyers once again snapping up attractively priced short sales.”

Survey results showed that short sales typically sell for only 91% of listing price. In contrast, move-in ready REO sells for 99% of listing price, on average.

Click on graph for larger image in new window.

Source: Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions, Campbell Communications, Jan 2010

This graph, based on data from Campbell Communications, shows the break down of distressed sales of all transactions by three categories: 1) move in ready REOs, 2) damaged REOs (sold mostly to investors), and 3) short sales.

I expect 2010 will be the year of the "short sale" and the percentage of short sales will increase further after the servicers implement the Treasury's HAFA program .