by Calculated Risk on 8/08/2014 02:56:00 PM

From housing economist Tom Lawler:

Yesterday Fannie Mae and Freddie Mac both released their quarterly financial results for the second quarter of 2014. On the earnings front Fannie reported that both GAAP net income and comprehensive income last quarter were $3.7 billion, meaning that Fannie expects to pay Treasury $3.7 billion in dividends in September. That payment would bring total dividends paid to Treasury of $130.5 billion, compared to $116.1 billion in cumulative cash draws from Treasury since 2008. Freddie Mac reported GAAP net income of $1.4 billion and comprehensive income of $1.9 billion, meaning that Freddie expects to pay Treasury $1.9 billion in dividends in September. That payment would bring total dividends paid to Treasury of $88.2 billion, compared to $71.3 billion of cumulative cash draws from Treasury since 2008.

Here are some summary delinquency rate stats for the conventional SF mortgage books of both companies.

Payment Status, Fannie Conventional SF Mortgage Book
	6/30/2014	3/31/2014	6/30/2013
30 to 59 days delinquent	1.46%	1.40%	1.85%
60 to 89 days delinquent	0.42%	0.40%	0.51%
seriously delinquent	2.05%	2.19%	2.77%

Payment Status, Freddie Conventional SF Mortgage Book
	6/30/2014	3/31/2014	6/30/2013
One month past due	1.53%	1.40%	1.80%
Two month's past due	0.48%	0.47%	0.55%
Seriously delinquent	2.05%	2.20%	2.79%

Here are some summary stats for SF REO activity at both companies.

	Freddie SF REO Activity			Fannie SF REO Activity
	Acquisitions	Dispositions	Inventory	Acquisitions	Dispositions	Inventory
Q4/10	23,771	26,589	72,079	45,962	50,260	162,489
Q1/11	24,707	31,627	65,159	53,549	62,814	153,224
Q2/11	24,788	29,348	60,599	53,697	71,202	135,719
Q3/11	24,378	25,381	59,596	45,194	58,297	122,616
Q4/11	24,758	23,819	60,535	47,256	51,344	118,528
Q1/12	23,805	25,033	59,307	47,700	52,071	114,157
Q2/12	20,033	26,069	53,271	43,783	48,674	109,266
Q3/12	20,302	22,660	50,913	41,884	43,925	107,225
Q4/12	18,672	20,514	49,071	41,112	42,671	105,666
Q1/13	17,881	18,984	47,968	38,717	42,934	101,449
Q2/13	16,418	19,763	44,623	36,106	40,635	96,920
Q3/13	19,441	16,945	47,119	37,353	33,332	100,941
Q4/13	16,941	16,753	47,307	32,208	29,920	103,229
Q1/14	14,384	18,126	43,565	31,896	32,727	102,398
Q2/14	10,592	18,023	36,134	31,678	37,280	96,796

Fannie Mae reported that for foreclosures completed in the first six months of 2014, the average number of days from the borrowers’ last paid installment on their mortgage to when the related properties were added to Fannie’s REO inventory was 918 – or slightly over 2 ½ years. Average days to foreclosure were especially long in New York (1,371), Florida (1,332), and New Jersey (1,307).

Freddie Mac reported that for foreclosures completed in the first six months of 2014, the average number of days from the borrowers’ last scheduled payment to when the related properties were added to Freddie’s REO inventory was 875 days. Average days to foreclosure ranged from 403 in Missouri to 1,337 in New Jersey.

Fannie Mae’s average charged guaranty fee on SF mortgages acquisitions last quarter was 62.6 bp, little changed from 63.0 bp in the previous quarter but up considerably from 25.7 bp average in 2010. Pursuant to the Temporary Payroll Tax Cut Continuation Act of 2011 (the “TCCA”), on April 1, 2012 Fannie increased Gfees by 10 bp, and the incremental revenue from this 10 bp is remitted to Treasury.

Freddie Mac’s average charged guaranty fee on SF mortgage acquisitions last quarter was 58 bp, up from 56 bp in the previous quarter and well above the 25 bp average in 2010. Pursuant to the TCCA, on April 1, 2012 Freddie increased Gfees by 10 bp, and the incremental revenue from this 10 bp is remitted to Treasury.

Fannie Mae’s “national” home price index, a unit-weighted repeat sales index based on purchase transactions in Fannie-Freddie acquisitions and public deed data, increased by 5.9% from the second quarter of 2013 to the second quarter of 2014. In 2013 this HPI increased by 8.3% (Q4/Q4).

Freddie Mac’s “national” home price index, a value-weighted repeat transactions index (using weights based on each state’s share of Freddie’s SF book) based on repeat transactions on residential properties acquired by Freddie or Fannie (purchase transactions and some refinance transactions), increased by 6.1% from June 2013 to June 2014. In 2013 this HPI increased by 9.3%.

by Calculated Risk on 8/08/2014 11:13:00 AM

From Fannie Mae:

• Fannie Mae reported net income of $3.7 billion and comprehensive income of $3.7 billion for the second quarter of 2014.
• Fannie Mae expects to pay Treasury $3.7 billion in dividends in September 2014. With the expected September dividend payment, Fannie Mae will have paid a total of $130.5 billion in dividends to Treasury in comparison to $116.1 billion in draw requests since 2008. Dividend payments do not offset prior Treasury draws.
...
Foreclosed property income decreased in the second quarter and first half of 2014 compared with the second quarter and first half of 2013 due to a decrease in gains recognized on dispositions of our REO properties. During the second quarter and first half of 2014, we experienced a modest increase in REO prices compared with a significant increase in REO prices in the second quarter and first half of 2013.
emphasis added

From Freddie Mac:

• Net income was $1.4 billion – the company’s eleventh consecutive quarter of positive earnings, compared to $4.0 billion in first quarter of 2014
• Based on June 30, 2014 net worth of $4.3 billion, the company’s September 2014 dividend obligation will be $1.9 billion, bringing total cash dividends paid to Treasury to $88.2 billion.

Click on graph for larger image.

Here is a graph of Fannie and Freddie Real Estate Owned (REO).

REO inventory decreased in Q2 for both Fannie and Freddie.

Delinquencies are falling, but there are still a large number of properties in the foreclosure process with long time lines in judicial foreclosure states.

Fannie noted there was only a "modest increase in REO prices" in Q2.

by Calculated Risk on 8/08/2014 08:21:00 AM

This is a key distressed market to follow since Las Vegas has seen the largest price decline of any of the Case-Shiller composite 20 cities.

The Greater Las Vegas Association of Realtors reported GLVAR reports median local home price hits $200,000

According to GLVAR, the total number of existing local homes, condominiums and townhomes sold in July was 3,314, up from 3,274 in June, but down from one year ago. Total sales increased thanks largely to a 12.2 percent monthly increase in condo and townhome sales.

GLVAR said 35.6 percent of all existing local homes sold in July were purchased with cash. That’s up slightly from 34.7 percent in June, but still near a five-year low and well short of the February 2013 peak of 59.5 percent, suggesting that fewer investors are buying homes in Southern Nevada.
...
In July, 11.5 percent of all existing local home sales were short sales. That’s up from 10.8 percent in June. Another 9.1 percent of all July sales were bank-owned properties, down from 10.1 percent in June.
...
The total number of single-family homes listed for sale on GLVAR’s Multiple Listing Service in July was 13,717. That’s down 0.9 percent from 13,838 in June and down 2.9 percent from one year ago.

By the end of July, GLVAR reported 7,266 single-family homes listed without any sort of offer. That’s up 2.0 percent from 7,126 such homes listed in June, and a 55.2 percent jump from one year ago.
emphasis added

There are several key trends that we've been following:

1) Overall sales were down about 9% year-over-year.

2) Conventional (equity, not distressed) sales were up 13% year-over-year.  In July 2013, only 64.0% of all sales were conventional equity.  This year, in July 2014, 79.4% were equity sales. 

3) The percent of cash sales has declined year-over-year from 54.5% in July 2013 to 35.6% in July 2014. (investor buying appears to be declining).

4) Non-contingent inventory is up 55% year-over-year.

More inventory (a major theme for 2014) suggests price increases will slow.

by Calculated Risk on 8/07/2014 07:07:00 PM

Earlier today the MBA released their Q2 National Delinquency Survey: Delinquency and Foreclosure Rates Decrease in Second Quarter

One of the key questions for housing is when will delinquencies and foreclosures be back to normal?

As Joel Kan, MBA’s Director of Economic Forecasting, said this morning:

“Some states hardest hit by the crisis, for example California and Arizona, now have foreclosure inventory rates that are both back to pre-crisis levels and less than half the current national rate. On the other hand, despite declines last quarter, states with slower-moving judicial foreclosure regimes, like New Jersey, Florida and New York, have foreclosure inventory rates two to three times the national average."

So the answer about when delinquencies and foreclosures will be back to normal depends on the state and foreclosure process.  Some states have already recovered and others are lagging behind.

A key point to remember is that most of the problem loans were originated in 2007 or earlier (a long time ago), and the lenders are just working through the backlog.  From the MBA:

... 75 percent of seriously delinquent loans were originated in 2007 and earlier. Loans with vintages started in 2011 and later only accounted for six percent of all seriously delinquent loans.

Click on graph for larger image.

This graph shows the percent of loans delinquent by days past due.

The percent of loans 30 days and 60 days delinquent are back to normal levels.


The 90 day bucket peaked in Q1 2010, and is about two-thirds of the way back to normal.

The percent of loans in the foreclosure process also peaked in 2010 and is close to two-thirds of the way back to normal.

So it has taken about 4 years to reduce the backlog by two-thirds, so a rough guess is that delinquencies and foreclosures will be back to normal in about 2 years.

by Calculated Risk on 8/07/2014 05:27:00 PM

From HotelNewsNow.com: STR: US hotel results for week ending 2 August

The U.S. hotel industry recorded positive results in the three key performance measurements during the week of 27 July through 2 August 2014, according to data from STR.

In year-over-year measurements, the industry’s occupancy rate rose 4.5 percent to 76.3 percent. Average daily rate increased 6.2 percent to finish the week at US$118.70. Revenue per available room for the week was up 11.0 percent to finish at US$90.54.
emphasis added

Note: ADR: Average Daily Rate, RevPAR: Revenue per Available Room.

The occupancy rate probably peaked for 2014 during the last week in July at 77.9%.  Before this year, the previous weekly high for the occupancy rate was late in July 2000 at 77.0%.

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Click on graph for larger image.

The red line is for 2014, blue is the median, and black is for 2009 - the worst year since the Great Depression for hotels.  Purple is for 2000.

The 4-week average of the occupancy rate is solidly above the median for 2000-2007, and is at the same level as in 2000. 

Right now it looks like 2014 will be the best year since 2000 for hotels.   A very strong year ...

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com