by Calculated Risk on 6/02/2010 05:48:00 PM

From the American Bankruptcy Institute: May Consumer Bankruptcy Filings up 9 Percent from Last Year

The 136,142 consumer bankruptcies filed in May represented a 9 percent increase nationwide over the 124,838 filings recorded in May 2009, according to the American Bankruptcy Institute (ABI), relying on data from the National Bankruptcy Research Center (NBKRC). NBKRC’s data also showed that the May consumer filings represented a 6 percent decrease from the 144,490 consumer filings recorded in April 2010. ...

“While consumer filings dipped slightly from last month, housing debt and other financial burdens weighing on consumers are still a cause for concern,” said ABI Executive Director Samuel J. Gerdano. “Consumer filings this year remain on track to top 1.6 million filings.”

Click on graph for larger image in new window.

This graph shows the non-business bankruptcy filings by quarter using monthly data from the ABI and previous quarterly data from USCourts.gov.

Based on the comment from Gerdano, it appears the ABI has increased their forecast to over 1.6 million filings this year from their earlier forecast of just over 1.5 million filings this year.

Excluding 2005, when the so-called "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005" was enacted (really a pro-lender act), the record was in 2003 when 1.62 million personal bankruptcies were filed. This year will be close to that level.

I wonder how many of these bankruptcy filings are by homeowners who lost their homes in foreclosure and are now trying to extinguish any related recourse debt (1st or 2nd)?

by Calculated Risk on 6/02/2010 03:54:00 PM

Based on an estimate from Autodata Corp, light vehicle sales were at a 11.63 million SAAR in May. This is up 18.1% from May 2009 (when sales were very low), and up 3.9% from the April sales rate.

Click on graph for larger image in new window.

This graph shows the historical light vehicle sales (seasonally adjusted annual rate) from the BEA (blue) and an estimate for May (red, light vehicle sales of 11.63 million SAAR from Autodata Corp).

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

Note: dashed line is current month sales rate.

Auto sales have recovered from the low levels of early 2009, but are still at the lowest point of the '90/'91 recession (even with a larger number of registered drivers).

This was slightly above most forecasts of around 11.2 million SAAR.

by Calculated Risk on 6/02/2010 01:56:00 PM

From Diana Olick at CNBC: BofA: Mortgage Walkaways Have Huge Incentive

On the conference call ... this morning, BofA's credit loss mitigation executive, Jack Schakett, said the amount of strategic defaulters ... are "more than we have ever experienced before." He went on to say, "there is a huge incentive for customers to walk away because getting free rent and waiting out foreclosure can be very appealing to customers."

Schakett says the foreclosure process is still taking 13 to 14 months ... and so there's over a year of free rent.
emphasis added

This is just acknowledging the obvious - borrowers have "a huge incentive to walk away" and "foreclosure can be very appealing to customers".

On the conference call, BofA announced a new "Principal Reduction Enhancement" program for certain underwater borrowers. Here is the press release via MarketWatch: Qualified Homeowners Who Are Severely Underwater May Earn Forgiveness of Some Principal Over Three or Five Years

NHRP-eligible loans include subprime, Pay-Option ARM and prime-quality two-year hybrid ARM loans originated by Countrywide on or prior to January 1, 2009, if the amount of principal owed exceeds the current property value by at least 20 percent and the loan is 60 days or more past due.

This is really targeted at Option ARMs ... and I guess they are asking borrowers to stop paying so they can get a principal reduction.

by Calculated Risk on 6/02/2010 11:08:00 AM

From MarketWatch: GM posts 16.6% rise in May U.S. sales:

General Motors Co. on Wednesday reported a 16.6% rise in May U.S. sales from a year ago to 223,822 vehicles.

This is based on an easy comparison: in May 2009 U.S. light vehicle sales fell 31% to 9.8 million (SAAR) from 14.2 million (SAAR) in May 2008. The sharp decline last year was due to the financial crisis, the recession, the Chrysler bankruptcy (Chrysler filed for bankruptcy at the end of April, 2009) and reports of the then impending bankruptcy of GM (GM filed for bankruptcy on June 1, 2009).

UPDATE: From Ford: Ford's U.S. May Sales Up 23 Percent

UPDATE2: From MarketWatch: Chrysler U.S. May sales rise 33% to 104,819 units (Chrysler was in BK last May).

UPDATE3: From MarketWatch: Toyota U.S. May sales up 6.7%

I'll add reports from the other major auto companies as updates to this post.

NOTE: Once all the reports are released, I'll post a graph of the estimated total May sales (SAAR: seasonally adjusted annual rate) - usually around 4 PM ET. Most estimates are for about the same level as April (11.2 million SAAR).

by Calculated Risk on 6/02/2010 10:00:00 AM

From the NAR: Pending Home Sales Surge Continuing

The Pending Home Sales Index, a forward-looking indicator, rose 6.0 percent to 110.9 based on contracts signed in April, from an upwardly revised 104.6 in March, and is 22.4 percent higher than April 2009 when it was 90.6. That follows gains of 7.1 percent in March and 8.3 percent in February.

Pending home sales are at the highest level since last October when the index reached 112.4 and first-time buyers were rushing to beat the initial deadline for the tax credit. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.

Once again this is no surprise - the tax credit has pulled demand forward, and existing home sales will decline after June (existing home sales are counted when the contract closes).

I suspect a number of these homes will never close. I've heard stories of buyers entering into two deals at the end of April, intending to cancel one. Also some short sales will probably not close on time because of the lengthy process.

Post title next month: Pending home sales collapse in May!