by Calculated Risk on 12/12/2012 04:08:00 PM

From economist Tom Lawler: “Free” Data on Delinquency/Foreclosure Rates for First and Second Liens by State for Five “Mortgage Settlement” Servicers

On “The Office of Mortgage Settlement Oversight,” there is a report that can be downloaded that shows the first- and second-lien servicing portfolios for Ally, Bank of America, Citi, Chase, and Wells by delinquency status as of September 30th, 2012 – both nationally and by state.

Below are some summary stats (stated as a % of number of loan) for each servicer.

The data highlight how truly badly Bank of America’s servicing portfolio is performing, with the “DLQ 180+” and “in Foreclosure” %’s suggesting unusual “slowness” in resolving seriously-delinquent loans (Chase’s “in foreclosure” % suggests problems at that institution as well).

The reports (which, again, have data by state) are available here. (click on “servicer performance data”). Here is the spreadsheet.

1st Lien Portfolio	Bank of America	Chase	Ally	Citi	Wells
Current (0-29)	84.44%	87.29%	88.85%	89.43%	91.91%
DLQ 30-59	3.07%	3.62%	3.48%	3.14%	2.50%
DLQ 60-179	2.08%	2.07%	2.47%	2.11%	1.74%
DLQ 180+	3.27%	0.51%	0.49%	1.13%	0.70%
Bankruptcy	2.33%	1.46%	1.65%	1.69%	0.80%
Foreclosure	4.81%	5.06%	3.06%	2.50%	2.35%
Total Active Portfolio	100.00%	100.00%	100.00%	100.00%	100.00%
2nd Lien Portfolio	Bank of America	Chase	Ally	Citi	Wells
Current (0-29)	92.81%	95.19%	93.33%	93.18%	95.12%
DLQ 30-59	1.48%	1.31%	1.87%	1.64%	0.80%
DLQ 60-179	1.65%	1.27%	2.07%	1.96%	1.01%
DLQ 180+	1.71%	0.30%	0.46%	0.61%	0.42%
Bankruptcy	2.15%	1.49%	2.15%	2.30%	1.98%
Foreclosure	0.20%	0.45%	0.13%	0.31%	0.66%
Total Active Portfolio	100.00%	100.00%	100.00%	100.00%	100.00%

by Calculated Risk on 12/12/2012 02:00:00 PM

Here are the updated projections from the FOMC meeting.

Fed Chairman Ben Bernanke's press conference starts at 2:15 PM ET. Here is the video stream.


Live stream by Ustream

The FOMC is no longer presenting a "date-based guidance" for policy, and instead changed to announcing thresholds for raising the Fed Funds rate based on the unemployment rate and inflation. How this will work will be a key topic of the press conference today. Currently the thresholds are holding rates low "at least" until the unemployment rate is below 6 1/2%, and the inflation outlook "between one and two years ahead" is no more than 2 1/2%, as long as inflation expectations remain "well anchored" - this means inflation could increase to 3% or 4% without an increase in rates, as long as expectations remain anchored and the outlook one to two years ahead is at or below 2 1/2%. This is a significant change in policy guidance.

Another key question is: Which will come first, a rate hike or stopping or slowing QE3 (the FOMC will expand QE3 to $85 billion per month in January)? 

The four tables below show the FOMC December meeting projections, and the September projections to show the change.

GDP projections of Federal Reserve Governors and Reserve Bank presidents
Change in Real GDP1	2012	2013	2014	2015
Dec 2012 Projections	1.7 to 1.8	2.3 to 3.0	3.0 to 3.5	3.0 to 3.7
Sept 2012 Projections	1.7 to 2.0	2.5 to 3.0	3.0 to 3.8	3.0 to 3.8

¹ Projections of change in real GDP and in inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.

GDP projections have been revised down slightly for 2013.

The unemployment rate was at 7.7 in November, and the projection for 2012 has been revised down. The projection for 2014 was revised down too.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents
Unemployment Rate2	2012	2013	2014	2015
Dec 2012 Projections	7.8 to 7.9	7.4 to 7.7	6.8 to 7.3	6.0 to 6.6
Sept 2012 Projections	8.0 to 8.2	7.6 to 7.9	6.7 to 7.3	6.0 to 6.6

² Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

The forecasts for overall and core inflation show the FOMC is still not concerned about inflation.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents
PCE Inflation1	2012	2013	2014	2015
Dec 2012 Projections	1.6 to 1.7	1.3 to 2.0	1.5 to 2.0	1.7 to 2.0
Sept 2012 Projections	1.7 to 1.8	1.6 to 2.0	1.6 to 2.0	1.8 to 2.0

Here is core inflation:

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents
Core Inflation1	2012	2013	2014	2015
Dec 2012 Projections	1.6 to 1.7	1.6 to 1.9	1.6 to 2.0	1.8 to 2.0
Sept 2012 Projections	1.7 to 1.9	1.7 to 2.0	1.8 to 2.0	1.9 to 2.0

by Calculated Risk on 12/12/2012 12:30:00 PM

The thresholds are huge!

FOMC Statement:

Information received since the Federal Open Market Committee met in October suggests that economic activity and employment have continued to expand at a moderate pace in recent months, apart from weather-related disruptions. Although the unemployment rate has declined somewhat since the summer, it remains elevated. Household spending has continued to advance, and the housing sector has shown further signs of improvement, but growth in business fixed investment has slowed. Inflation has been running somewhat below the Committee’s longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will purchase longer-term Treasury securities after its program to extend the average maturity of its holdings of Treasury securities is completed at the end of the year, initially at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and, in January, will resume rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. The Committee views these thresholds as consistent with its earlier date-based guidance. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who opposed the asset purchase program and the characterization of the conditions under which an exceptionally low range for the federal funds rate will be appropriate.

The projections will be released at 2:00 PM, and the press conference will be at 2:15 PM.

by Calculated Risk on 12/12/2012 10:02:00 AM

Note: The FOMC statement will be released around 12:30 PM ET today.

Neil Irwin at the WaPo lists Five things to look for out of the Fed today.

Here is the list:

1. More bond buying starting in January (after the expiration of Operation Twist). Most estimates are for an expansion of QE3 from $40 billion per month to around $85 billion per month.

2. "But what kinds of bonds?" Treasuries or Fannie / Freddie Mortgage Backed Securities (MBS) or some combination of both.

3. "What’s the threshold?". This probably will not happen at this meeting (setting thresholds for raising the Fed Funds rate based on the unemployment rate, inflation, and possibly other economic indicators). As Irwin notes, if they do announce thresholds it "would be a surprise and would be the big headline out of the meeting."

4. "What kind of year is 2013 going to be?" The projections will be released at 2:00 PM ET. Of course the projections depend on the "fiscal cliff" negotiations.

5. "What’s our potential?" This is the Fed's longer term projections for GDP growth, the unemployment rate, and inflation, and these will be included in the projections.

by Calculated Risk on 12/12/2012 07:01:00 AM

From the MBA: Mortgage Rates Drop to New Lows in Latest MBA Weekly Survey

The Refinance Index increased 8 percent from the previous week and is at its highest level since the week ending October 12, 2012. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. ...

“Continued uncertainty due to the lack of resolution regarding the fiscal cliff led interest rates lower last week, with mortgage rates reaching a new low in our survey,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “Refinance activity increased, with the refinance index hitting its highest level in two months, and the refinance share reaching its highest level since January 2009. Applications for purchase increased for a fifth consecutive week, and are running almost ten percent above their level at this time last year.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.47 percent, the lowest rate in the history of the survey, from 3.52 percent, with points decreasing to 0.36 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

Click on graph for larger image.

The first graph shows the refinance index.

The refinance activity is at the highest level in two months, and has been at a fairly high level all year.

The second graph shows the MBA mortgage purchase index.

As Fratantoni noted, purchase activity is up about 10% from a year ago. The purchase index has increased 10 of the last 12 weeks, and the 4-week average of the purchase index is at the highest level since 2010 (when the tax credit boosted application activity).

The 4-week average is up about 25% from the post-bubble low.