by Calculated Risk on 11/18/2011 09:45:00 PM

On the mess in Greece, from the Athens News: Troika back in town

Prime Minister Lucas Papademos ... must win pledges from the rival parties that they will do what it takes to meet bailout terms or Greece's lenders will withhold an 8bl euro aid tranche Athens needs to dodge default next month, plus longer-term financing later.

As part of that process, representatives from the "troika" of the International Monetary Fund, the European Union and European Central Bank met with [Finance minister] Venizelos and Papademos on Friday and it is expected that Pasok party leader George Papandreou will be meeting the troika at his office in Parliament at 10:30 on Saturday morning. ND leader, Antonis Samaras is also due to meet officials from troika on Saturday.

Tensions have risen between coalition partners, Pasok and ND, as the latter's leader, Antonis Samaras, has refused to sign the commitment sought by EU and IMF authorities.

Underscoring the pressure on Athens, the Dutch finance minister said the Greek parties had "to make a clear and unequivocal choice in writing" by signing a pledge. ... "Are they with us, or not? We don't have the luxury of patience any longer," Jan Kees de Jager said.

Samaras said on Thursday said he wanted to win an outright majority in the snap election to reverse the austerity measures he disagrees with.

Samaras may be correct about the austerity measures, but if he doesn't sign the agreement, I doubt the Troika will provide the 8 billion euro aid tranche - and Greece would then default in December.

From the NY Times: Europe Fears a Credit Squeeze as Investors Sell Bond Holdings

Financial institutions are dumping their vast holdings of European government debt and spurning new bond issues by countries like Spain and Italy. And many have decided not to renew short-term loans to European banks, which are needed to finance day-to-day operations.
...
The pullback — which is increasing almost daily — is driven by worries that some European countries may not be able to fully repay their bond borrowings, which in turn would damage banks that own large amounts of those bonds. It also increases the already rising pressure on the European Central Bank to take more aggressive action.

On Friday, the bank’s new president, Mario Draghi, put the onus on European leaders to deploy the long-awaited euro zone bailout fund to resolve the crisis, implicitly rejecting calls for the European Central Bank to step up and become the region’s “lender of last resort.”

by Calculated Risk on 11/18/2011 07:09:00 PM

Unfortunately
These recent Occupied banks
Are not on Wall Street
by Soylent Green is People
From the FDIC: Grinnell State Bank, Grinnell, Iowa, Assumes All of the Deposits of Polk County Bank, Johnston, Iowa

As of September 30, 2011, Polk County Bank had approximately $91.6 million in total assets and $82.0 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $12.0 million. ... Polk County Bank is the 89th FDIC-insured institution to fail in the nation this year, and the first in Iowa.

From the FDIC: First NBC Bank, New Orleans, Louisiana, Assumes All of the Deposits of Central Progressive Bank, Lacombe, Louisiana

As of September 30, 2011, Central Progressive Bank had approximately $383.1 million in total assets and $347.7 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $58.1 million. ... Central Progressive Bank is the 90th FDIC-insured institution to fail in the nation this year, and the first in Louisiana.

A first this year for both states.

by Calculated Risk on 11/18/2011 04:02:00 PM

From economist Tom Lawler:

Based on my regional tracking, I estimate that existing home sales as measured by the National Association of Realtors ran at a seasonally adjusted annual rate of about 4.86 million in October, down 1.0% from September’s pace, and up 11% from last October’s pace. Compared to a year ago sales showed little growth (or actual declines) in a number of northeast and mid-Atlantic areas.

Active listings were clearly down again in October from September, with my “best guess” nationwide being a drop of 3.5%. NAR’s inventory numbers don’t often track publicly-available listings, but I’d guess NAR’s numbers will show a similar monthly drop. If that were the case, the NAR’s existing home inventory number would show a YOY decline of about 13.1% (less than publicly-available listings data would suggest, but that has been the case for a while.)

On the median sales price side, a larger % of realtor groups/MLS/etc. reported YOY declines in median sales prices in October than was the case in September, and in many others reported larger YOY % declines in October than in September. Based on the data I have, I estimate that the NAR will show an October median existing home sales price that is about 5.2% lower than last October. In September the NAR’s MSP showed a YOY drop of 3.5%.

CR Note: The NAR is scheduled to release their October existing home sales report on Monday November 21st at 10 AM ET. The consensus is for sales of 4.80 million (close to Tom's estimate). With a 3.5% decline in inventory, this would give 8.3 months of supply, down from the reported 8.5 months in September. Also - the NAR might announce the release of the "benchmark revisions" that are expected to show downward revisions for sales and inventory since 2006 or so.

by Calculated Risk on 11/18/2011 01:30:00 PM

By request, the following graphs show the percent of loans delinquent by loan type: Prime, Subprime, FHA and VA. First a table comparing the number of loans in 2007 and Q3 2011 so readers can understand the shift in loan types.

Both the number of prime and subprime loans have declined over the last four years; the number of subprime loans is down by about one-third. Meanwhile the number of FHA loans has increased sharply.

Note: There are about 50 million total first-lien loans - the MBA survey is about 88% of the total.

MBA National Delinquency Survey Loan Count
	Q2 2007	Q3 2011	Change	Q3 2011 Seriously Delinquent
Prime	33,916,830	31,302,080	-2,614,750	1,734,135
Subprime	6,204,535	4,193,659	-2,010,876	1,077,351
FHA	3,030,214	6,594,478	3,564,264	553,277
VA	1,096,450	1,436,140	339,690	66,493
Survey Total	44,248,029	43,526,357	-721,672	3,431,256

Click on graph for larger image in graph gallery.

First a repeat: This graph shows the percent of loans delinquent by days past due. Loans 30 days delinquent decreased to 3.19% from 3.46% in Q2. This is the lowest level since early 2007.

Delinquent loans in the 60 day bucket decreased slightly to 1.30% from 1.37% last quarter. This is the lowest level since Q1 2008. There was a decrease in the 90+ day delinquent bucket too. This decreased to 3.50% from 3.61% in Q2 2011. This is the lowest level since 2008. This decrease was probably due to the pickup in foreclosure actions.

The percent of loans in the foreclosure process was unchanged at 4.43%.

Note: Scale changes for each of the following graphs.

The second graph is for all prime loans.

This is the key category now ("We are all subprime!", Tanta).

Since there are far more prime loans than any other category (see table above), about half the loans seriously delinquent now are prime loans - even though the overall delinquency rate is lower than other loan types.

This graph is for subprime. This category gets most of the attention - mostly because of all the terrible loans made through the Wall Street "originate-to-distribute" model and sold as Private Label Securities (PLS). Not all PLS was subprime, but the worst of the worst loans were packaged in PLS.

Although the delinquency rate is still very high, the number of subprime loans had declined sharply.

This graph is for FHA loans. The delinquency rate decreased in Q3 and has mostly been declining the last couple years. Some of the decline is because most of the FHA loans were made in the last few years, not in the 2004 to 2006 period like subprime.

Another reason for the improvement was eliminating Downpayment Assistance Programs (DAPs). These were programs that allowed the seller to give the buyer the downpayment through a 3rd party "charity" (for a fee of course). The buyer had no money in the house and the default rates were absolutely horrible. HUD mentioned this in the annual review of the FHA financial status.

The last graph is for VA loans.

All four categories saw a decrease in overall delinquencies Q3.

There are still quite a few subprime loans that are in distress, but the real keys going forward are prime loans and FHA loans.

All current mortgage delinquency graphs.

by Calculated Risk on 11/18/2011 10:52:00 AM

Another bright spot for the economy has been the recovery in heavy truck sales (see graph below).

First, here is an early forecast for November light vehicle sales from J.D. Power and Associates:

November new-vehicle retail sales are projected to come in at 791,900 units, which represents a seasonally adjusted annualized rate (SAAR) of 11.3 million units—the highest monthly selling rate in three and a half years.

Total light-vehicle sales in November are expected to come in at 975,600 units, which is 8 percent higher than in November 2010. Fleet sales are expected to decrease by 6 percent compared with November 2010, but will account for 19 percent of total sales.

Their total sales forecast would be 13.4 million (SAAR), and that would be the highest sales rate since August 2008 (excluding cash-for-clunkers in August 2009).

Growth in auto sales should make a nice positive contribution to Q4 GDP. Sales in Q3 averaged 12.45 million SAAR, and just looking at October and this forecast for November, sales will be up close to 7% in Q4 over Q3 (over 30% annualized).

Click on graph for larger image.

This graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is current estimated sales rate.

Heavy truck sales really collapsed during the recession, falling to a low of 175 thousand in April 2009 on a seasonally adjusted annual rate (SAAR). Since then sales have almost doubled and hit 346 thousand (SAAR) in October 2011.

This is the highest level since June 2007 (over 4 years ago). And this is still below the average of the last 20 years - and well below the peaks - so there is probably more growth in sales to come.