by Calculated Risk on 6/12/2010 10:11:00 PM

Just an update on H.R. 5072: FHA Reform Act of 2010

The bill passed in the house 406-4. This bill has several provisions, but a key for the housing market is the increase in the maximum annual premium payments for mortgage insurance.

The current maximum is an annual premium of 0.50% of the outstanding principal balance for loans with the original principal obligation under 95% LTV, and 0.55% for loans with the original principal obligation over 95% LTV.

This legislation will increase the maximums to 1.50% and 1.55% respectively.

The proposed effective date is September 30, 2010. There is no senate version yet.

by Calculated Risk on 6/12/2010 04:09:00 PM

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for June 11, 2010.

Changes and comments from surferdude808:

Extremely quiet week for the Unofficial Problem Bank List as the OCC did not release its actions for May. No doubt that will happen next week.

Only three changes to report. There were two removals -- the failed Washington First International Bank ($521 million) and an action termination by the OCC against Mission Oaks National Bank ($187 million Ticker: MOKB).

The other change is an updated Prompt Corrective Action against Imperial Savings and Loan Association ($9.6 million).

The Unofficial Problem Bank List stands at 760 institutions with aggregate assets of $385 billion.

CR Note: A special thanks to surferdude808 for tracking all the institutions and compiling this list (no one else is doing this).

by Calculated Risk on 6/12/2010 01:15:00 PM

Note: This is not Mortgage Equity Withdrawal (MEW) data from the Fed. The last MEW data from Fed economist Dr. Kennedy was for Q4 2008. My thanks to Jim Kennedy and the other Fed contributors for the previous MEW updates. For those interested in the last Kennedy data, here is a post, and the spreadsheet from the Fed is available here.

The following data is calculated from the Fed's Flow of Funds data and the BEA supplement data on single family structure investment. This is an aggregate number, and is a combination of homeowners extracting equity (hence the name "MEW", but there is very little MEW right now!), normal principal payments and debt cancellation.

Click on graph for larger image in new window.

For Q1 2010, the Net Equity Extraction was a record low of minus $122 billion, or a negative 4.4% of Disposable Personal Income (DPI). This is not seasonally adjusted.

This graph shows the net equity extraction, or mortgage equity withdrawal (MEW), results, using the Flow of Funds (and BEA data) compared to the Kennedy-Greenspan method.

The Fed's Flow of Funds report showed that the amount of mortgage debt outstanding declined sharply in Q1, and this was probably mostly because of debt cancellation per foreclosure sales, and some from modifications, and partially due to homeowners paying down their mortgages as opposed to borrowing more. Note: most homeowners pay down their principal a little each month unless they have an IO or Neg AM loan, so with no new borrowing, equity extraction would always be slightly negative.

Mark Whitehouse at the WSJ argues: Default, Not Thrift, Pares U.S. Debt

The falling debt burden conjures up images of a nation seeking to repent after a decade of profligacy, conscientiously paying down mortgages and credit-card balances. That may be true in some cases, but it’s not the norm. In fact, people are making much more progress in shedding their debts by defaulting on mortgages and reneging on credit cards.

I think that is correct - most of the decline in mortgage debt outstanding is probably because of debt cancellations via foreclosures, short sales, and some modifications.

by Calculated Risk on 6/12/2010 08:38:00 AM

From Danny Hakim at the NY Times: New York Plan Makes Fund Both Borrower and Lender (ht jb)

Gov. David A. Paterson and legislative leaders have tentatively agreed to allow the state and municipalities to borrow nearly $6 billion to help them make their required annual payments to the state pension fund.

And, in classic budgetary sleight-of-hand, they will borrow the money to make the payments to the pension fund — from the same pension fund.

Oh my ...

by Calculated Risk on 6/12/2010 12:49:00 AM

Since we all need a laugh ...

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
The Spilling Fields - BP Ad Campaign
www.thedailyshow.com