by Calculated Risk on 8/20/2010 11:43:00 AM

From Treasury: HAMP Servicer Performance Report Through July 2010

And here is the HUD Housing Scorecard.

Click on table for larger image in new window.

About 422 thousand modifications are now "permanent" - up from 389 thousand last month - and 617 thousand trial modifications have been cancelled - up sharply from 521 thousand last month.

According to HAMP, there are 255,934 "active trials", down from 364,077 last month. There is still a large number of borrowers in limbo since only 165 thousand trials were started over the last 5 months. I expect another large number of cancellations in August.

The second graph shows the cumulative HAMP trial programs started.

Notice that the pace of new trial modifications has slowed sharply from over 150,000 in September to under 17,00 in July. The program is winding down ...

Debt-to-income ratios

If we look at the HAMP program stats (see page 3), the median front end DTI (debt to income) before modification was 44.8% - the same as last month. And the back end DTI was an astounding 79.7 (about the same as last month).

Think about that for a second: for the median borrower, about 80% of the borrower's income went to servicing debt. And the median is 63.5% after the modification.

These borrowers are still up to their eyeballs in debt after the modification.

Summary:

Another large number of trial programs were cancelled. This will mean more foreclosures (or short sales) in the near future.

A large number of borrowers are still in modification limbo, so there will probably be more cancellations coming.

The program is winding down quickly.

The borrowers DTI characteristics are poor - suggesting a high redefault rate over the next year or two.

by Calculated Risk on 8/20/2010 10:00:00 AM

Click on graph for larger image in new window.

This graph shows the high and low unemployment rates for each state (and D.C.) since 1976. The red bar is the current unemployment rate (sorted by the current unemployment rate).

Eleven states now have double digit unemployment rates. A number of other states are close..

Nevada set a new series high at 14.3% and now has the highest state unemployment rate. Michigan held the top spot for over 4 years until May.

From the BLS: Regional and State Employment and Unemployment Summary

Regional and state unemployment rates were little changed in July. Eighteen states and the District of Columbia recorded unemployment rate decreases, 14 states registered rate increases, and 18 states had no change, the U.S. Bureau of Labor Statistics reported today.
...
Nevada again reported the highest unemployment rate among the states, 14.3 percent in July. The rate in Nevada also set a new series high. (All region, division, and state series begin in 1976.) The states with the next highest rates were Michigan, 13.1 percent, and California, 12.3 percent. North Dakota continued to register the lowest jobless rate, 3.6 percent, followed by South Dakota and Nebraska, 4.4 and 4.7 percent, respectively.
emphasis added

by Calculated Risk on 8/20/2010 08:37:00 AM

Here is a story from Walter Hamilton and Alejandro Lazo at the LA Times on the growing number of investors trying to buy and flip foreclosed homes at the court house steps: Professional investors move into flipping foreclosed homes

On a recent day, [Bruce] Norris steered his sport utility vehicle into the driveway of a 3,300-square-foot McMansion on a corner lot in Moreno Valley. The front lawn was brown and the backyard was littered with garbage. But the windows were intact and there was no visible damage -- far better than many foreclosures.

Aiming for an all-important look inside, Norris rang the doorbell and delivered the bad news to the teenage boy who answered the door that the home was scheduled to be sold that day.

"Do you mind if I poke around a little bit to see what kind of condition it's in?" Norris asked, angling his body to get a glimpse of the living room.
...
In the end, no one bought the home. The sale was delayed after the owner filed for bankruptcy protection.

by Calculated Risk on 8/19/2010 10:01:00 PM

Hotel occupancy is one of several industry specific indicators I follow ...

From HotelNewsNow.com: STR: Chain-scale segments report RevPAR boost

Overall, the industry’s occupancy increased 6.9% to 68.3%, ADR rose 1.9% to US$98.88, and RevPAR increased 9.0% to US$67.52.

The following graph shows the four week moving average for the occupancy rate by week for 2008, 2009 and 2010 (and a median for 2000 through 2007).

Click on graph for larger image in new window.

Notes: the scale doesn't start at zero to better show the change. The graph shows the 4-week average, not the weekly occupancy rate.

On a 4-week basis, occupancy is up 6.8% compared to last year (the worst year since the Great Depression) and 3.7% below the median for 2000 through 2007.

The occupancy rate is almost back to the levels of 2008 - and 2008 was a tough year for the hotel industry!

NOTE: The supply of rooms in the survey is up just over 2% from last year. The increase in the occupancy rate is from an increase in demand - although this is still fairly weak.

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

by Calculated Risk on 8/19/2010 06:04:00 PM

Here is a look at European bond spreads from the Atlanta Fed weekly Financial Highlights released today (graph as of Aug 18th):

Click on graph for larger image in new window.

From the Atlanta Fed:

Peripheral European bond spreads over German bonds remain volatile and elevated.

Since August 9, the 10-year Greece-to-German bond spread has risen 93 basis points (bps) through August 17. Likewise, Portugal’s bond spreads rose 32 bps, Italy’s rose 16 bps, Spain’s rose 21 bps, and Ireland’s rose 42 bps during the same period.

As of today, the Greece-to-German spread has widened to 834 bps (peaked at 963 bps in May) and the Ireland-to-German spread has increased to 293 bps (peaked at 306 bps in May).

The spreads are below the peak of the crisis in May, but above the level when the stress test results were released.

Note: The Atlanta Fed data is a couple days old. Nemo has links to the current data on the sidebar of his site.

by Calculated Risk on 8/19/2010 02:22:00 PM

Moody's reported (via Bloomberg) today that the Moody’s/REAL All Property Type Aggregate Index declined 4% in June. This is a repeat sales measure of commercial real estate prices.

Below is a comparison of the Moodys/REAL Commercial Property Price Index (CPPI) and the Case-Shiller composite 20 index.

Notes: Beware of the "Real" in the title - this index is not inflation adjusted. Moody's CRE price index is a repeat sales index like Case-Shiller - but there are far fewer commercial sales - and that can impact prices.

Click on graph for larger image in new window.

CRE prices only go back to December 2000.

The Case-Shiller Composite 20 residential index is in blue (with Dec 2000 set to 1.0 to line up the indexes).

It is important to remember that the number of transactions is very low and there are a large percentage of distressed sales.

Commercial real estate values are now down 41.3% from the peak in late 2007.

As I've noted every month, this is a very thin market that is skewed by distressed sales. For more, see John Murray at PIMCO's caution about the CPPI index: PIMCO U.S. Commercial Real Estate Project and MIT Professor David Geltner comments that appear on the Real Estate Analytics LLC website on the lower right under "Professor's Corner".

Note: there is also a new CRE index from CoStar, see: CoStar: Commercial Real Estate Prices decline sharply in June

by Calculated Risk on 8/19/2010 01:02:00 PM

The Census Bureau released a number of tables from the 2009 American Housing Survey today (report to be released in October).

The survey showed:

76.4 million owner occupied housing units in 2009.

24.2 million were owned free and clear (no mortgage). That is 31.7%.

26.8 million primary mortgages were originated in 2004 or earlier.

12.7 million primary mortgages were originated prior to 2000.

24.1 million primary mortgage had interest rates above 6%.

Click on graph for larger image in new window.

This graph shows the number of primary mortgages by interest rate.

Only 6.2 million of primary mortgages were under 5% (as of 2009). This will increase in 2010, but quite a few homeowners had primary mortgage interest rates above 6%. And the BEA recently reported that the effective rate on all mortgages was still above 6% in Q2.

Of course many of these homeowners have second mortgages, or they can't qualify to refinance because or low property values or insufficient income.

It must be very frustrating for these homeowners when they see that Freddie Mac is reporting, via MarketWatch: Fixed-rate mortgages break record low

The 30-year fixed-rate mortgage averaged 4.42% for the week ending Aug. 19, a record low since Freddie started tracking the rate in 1971.

There were at least 10.9 million homeowners with 2nd mortgages and another 800 thousand the 3 or more mortgages. Unfortunately that data includes another 5 million homeowners with the number of mortgages not reported.

There is much more data in the tables.

by Calculated Risk on 8/19/2010 10:00:00 AM

Here is the Philadelphia Fed Index: Business Outlook Survey

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a reading of 5.1 in July to ‐7.7 in August. The index turned negative, marking a period of declining monthly activity for the first time since July 2009 (see Chart). Indexes for new orders and
shipments also suggest a slowing this month; the new orders index fell slightly, to ‐7.1, while the shipments index turned negative, declining to ‐4.5. Indicating weakness, indexes for both delivery times and unfilled orders remained negative this month.

The percentage of firms reporting a decline in employment (23 percent) was higher than the percentage (20 percent) reporting an increase. More concerning was the significant drop in the average employee workweek index from 1.7 in July to ‐17.1 in August.
emphasis added

Click on graph for larger image in new window.

This graph shows the Philly index for the last 40 years.

This index turned down sharply in June and July and was negative in August for the first time since July 2009.

These surveys are timely, but noisy. However this is further evidence of a 2nd half slowdown.

by Calculated Risk on 8/19/2010 08:30:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending Aug. 14, the advance figure for seasonally adjusted initial claims was 500,000, an increase of 12,000 from the previous week's revised figure of 488,000. The 4-week moving average was 482,500, an increase of 8,000 from the previous week's revised average of 474,500.
...
The advance number for seasonally adjusted insured unemployment during the week ending Aug. 7 was 4,478,000, a decrease of 13,000 from the preceding week's revised level of 4,491,000.

Click on graph for larger image in new window.

This graph shows the 4-week moving average of weekly claims since January 2000.

The four-week average of weekly unemployment claims increased this week by 8,000 to 482,500.

The dashed line on the graph is the current 4-week average. This is the highest level for initial claims - and also for the 4-week average - since November 2009.

by Calculated Risk on 8/18/2010 07:30:00 PM

From Bob Egelko at the San Francisco Chronicle: Furloughs back on starting this Friday

The state Supreme Court allowed Gov. Arnold Schwarzenegger on Wednesday to resume unpaid furloughs of 144,000 state employees for three days a month, starting this Friday ... The governor ordered the new round of furloughs in late July, claiming executive authority to cut costs while the state faces a $19 billion deficit.

And from Michelle Cole at The Oregonian: With projected revenues dropping by as much as $1 billion, Oregon leaders debate what to do (ht Scott)

On Tuesday, Gov. Ted Kulongoski advised legislative leaders, school superintendents and agency directors that state economists expect tax collections to be down significantly more than the $577 million shortfall projected in May. ... Now state economists believe revenues will shrivel by an additional $200 million to $500 million, prompting Kulongoski to send a flurry of letters and notices warning of more cuts to schools and state services.

Just a couple reminders that there are more state and local cuts coming ...