RSS Feed by Calculated Risk on 10/04/2010 10:06:00 AM
Monday, October 04, 2010
Pending Home Sales increase 4.3% in August
From the NAR: Pending Home Sales Show Another Gain
The Pending Home Sales Index ... rose 4.3 percent to 82.3 based on contracts signed in August from a downwardly revised 78.9 in July, but is 20.1 percent below August 2009 when it was 103.0. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.July was revised down from 79.4. Tom Lawler forecast an increase of about 4% - right on again.
This suggests some bounce back in existing home sales in September and October, but months-of-supply will probably still be in double digits - putting downward pressure on house prices.
Rates keep falling: 2-Year Treasury Yield Hits Record Low
by Calculated Risk on 10/04/2010 09:00:00 AM
Just a look at falling treasury yields and mortgage rates ...
From Reuters: US 2-Year Treasury Yield Hits Record Low
The two-year U.S. Treasury note yield fell to a record low of 0.403 percent on Monday ... the 30-year T-bond rose almost a full point in price to yield 3.676 percent, down 4 bps.The 10-year yield is down to 2.49% and, according to Freddie Mac (for the week ending Sept 30th): "The 30-year fixed-rate mortgage rate [4.32 percent] dropped to tie the survey’s all-time low and the 15-year fixed-rate [3.75 percent] set another record low." And mortgage rates have probably fallen further over the last week.
Lots of records ...
Sunday, October 03, 2010
Nightly Mortgage Mess
by Calculated Risk on 10/03/2010 11:32:00 PM
Note: Here is the weekly schedule for Oct 3rd, and the summary for last week.
A few articles ...
From Gretchen Morgenson at the NY Times: Flawed Paperwork Aggravates a Foreclosure Crisis
The implications are not yet clear for borrowers who have been evicted from their homes as a result of improper filings. But legal experts say that courts may impose sanctions on lenders or their representatives or may force banks to pay borrowers’ legal costs in these cases.Sanctions and awarding the defendants legal costs are likely - and it will be costly to fix these errors, but it is very unlikely in a foreclosure case that a judge will dismiss the bank's complaint with prejudice.
Judges may dismiss the foreclosures altogether, barring lenders from refiling and awarding the home to the borrower. That would create a loss for the lender or investor holding the note underlying the property. Almost certainly, lawyers say, lawsuits on behalf of borrowers will multiply.
The facts of these cases are 1) the borrower had a mortgage, and 2) the borrower is seriously delinquent (with the exception of a few cases with outright errors). Those facts are not in dispute. Just something to remember when reading these stories.
From Robbie Whelan at the WSJ: Foreclosure? Not So Fast
Israel Machado's foreclosure started out as a routine affair. In the summer of 2008, as the economy began to soften, Mr. Machado's pool-cleaning business suffered and like millions of other Americans, he fell behind on his $400,000 mortgage.That explains why Machado (and I suppose others) are hiring attorneys - they are trying to get the banks to do a principal reduction.
But Mr. Machado's response was unlike most other Americans'. Instead of handing his home over to the lender, IndyMac Bank FSB, he hired Ice Legal LP in nearby Royal Palm Beach to fight the foreclosure. ...
Mr. Machado and his lawyer, Tom Ice, say they now want to convince the owners of the mortgage to cut Mr. Machado's loan balance to between $150,000 and $200,000—the current selling price for comparable homes in his community near West Palm Beach. "The whole intent was to get them to come to the negotiating table, to get me in a fixed-rate mortgage that worked," Mr. Machado said.
And from the NY Times editorial: On the Foreclosure Front
It is hard to be shocked. During the bubble, banks and other lenders ignored loan standards and stuffed the mortgage pipeline with toxic loans and related securities. Since the bubble burst, efforts to rework bad loans have been slowed by the lenders’ resistance, and by their incompetence.
...
The robo-signing scandal is yet another reminder that it is folly to rely on banks that got us into this mess to get us out.
A QE1 Timeline
by Calculated Risk on 10/03/2010 05:21:00 PM
Note: Here is the weekly schedule for Oct 3rd, and the summary for last week.
QE2 will probably arrive on November 3rd. By request here is a look back at the QE1 announcements (phased in over a few months):
S&P 500: 851.81
The Federal Reserve announced
the purchase of the direct obligations of housing-related government-sponsored enterprises (GSEs)--Fannie Mae, Freddie Mac, and the Federal Home Loan Banks--and mortgage-backed securities (MBS) backed by Fannie Mae, Freddie Mac, and Ginnie Mae.
...
Purchases of up to $100 billion in GSE direct obligations under the program will be conducted with the Federal Reserve's primary dealers through a series of competitive auctions and will begin next week. Purchases of up to $500 billion in MBS will be conducted by asset managers selected via a competitive process with a goal of beginning these purchases before year-end. Purchases of both direct obligations and MBS are expected to take place over several quarters.
S&P 500: 913.18
As previously announced, over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant. The Committee is also evaluating the potential benefits of purchasing longer-term Treasury securities.
S&P 500: 874.09
The Federal Reserve continues to purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand the quantity of such purchases and the duration of the purchase program as conditions warrant. The Committee also is prepared to purchase longer-term Treasury securities if evolving circumstances indicate that such transactions would be particularly effective in improving conditions in private credit markets.
S&P 500: 794.35
To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve’s balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months.
Click on graph for larger image in new window.S&P 500: 1064.79
This is not investment advice!
Weekly Schedule for October 3rd
by Calculated Risk on 10/03/2010 12:40:00 PM
The previous post is the Summary for Week ending Oct 2nd
The key economic release this week is the September employment report on Friday. Fed Chairman Ben Bernanke will speak Monday evening, and his speech will be closely watched for additional hints on QE2.
Expected on Monday: September Personal Bankruptcy Filings
During the week: Reis is expected to release their Q3 Office, Mall and Apartment vacancy rate reports.
10:00 AM ET: Manufacturers' Shipments, Inventories and Orders for August. The consensus is for a 0.3% decline in August.
10:00 AM: Pending Home Sales Index for August. The consensus is for a slight increase (about 2.8%) in contracts signed. Economist Tom Lawler noted "My “best guess” right now on the pending home sales index is that it will show a seasonally adjusted increase from July to August of around 4%." It usually takes 45 to 60 days to close, so this will provide an early indication of closings in October.
11:30 AM: NY Fed's Brian Sack to speak at CFA conference in California: "Managing the Federal Reserve’s Balance Sheet".
7:30 PM: Fed Chairman Ben Bernanke will speak at the Rhode Island Public Expenditure Council meeting in Rhode Island. Although this is a "fiscal sustainability" meeting, Bernanke has promised not to speak on fiscal issues.
“With Rhode Island remaining among the top five states for unemployment, and with increasing signs that the national recovery is slowing, Ben S. Bernanke, Chairman of the Federal Reserve will visit Rhode Island to deliver the keynote address at the RIPEC Annual Dinner.”
10:00 AM: ISM Non-manufacturing Index for September. The consensus is for an increase in the service index to 52.0 from 51.5 in August.
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This index declined sharply following the expiration of the tax credit, and the index has only recovered slightly over the last couple months - suggesting reported home sales through at least October will be very weak.
8:15 AM: ADP Employment Report for September. This report is for private payrolls only (no government). The consensus is for +23,000 payroll jobs in September - still weak, but an improvement over the 10,000 jobs reported lost in August.
8:30 AM: The initial weekly unemployment claims report will be released. Consensus is for a decline to 450,000 from 453,000 last week.
10:00 AM: Job Openings and Labor Turnover Survey for August from the BLS. This report has been showing very little turnover in the labor market and few job openings.
Fed Speeches: Dallas Fed President Richard Fisher will speak at the Economic Club of Minnesota, and Kansas City Fed President Thomas Hoenig will speak at an economic forum in Omaha (Fisher and Hoenig oppose additional easing).
3:00 PM: Consumer Credit for August. The consensus is for another $4 billion decline in consumer credit.
8:30 AM: Employment Report for September. The consensus is for no change in payroll jobs, with 78,000 fewer Census jobs, or about +78,000 ex-Census increase in payrolls. The consensus is for the unemployment rate to increase slightly to 9.7% from 9.6% in August. For a short preview, see: September Employment Report Preview. This is the last employment report before the two day Fed meeting on Nov 2nd and 3rd.
10:00 AM: Monthly Wholesale Trade: Sales and Inventories for August. The consensus is 0.5% increase in inventories.
After 4:00 PM: The FDIC might have another busy Friday afternoon ...
