by Calculated Risk on 11/26/2012 07:10:00 PM

Notes: I follow several house price indexes (Case-Shiller, CoreLogic, LPS, Zillow, FNC and more). The timing of different house prices indexes can be a little confusing. LPS uses September closings only (not a three month average like Case-Shiller or a weighted average like CoreLogic), excludes short sales and REOs, and is not seasonally adjusted.

From LPS: U.S. Home Prices Up 0.1 Percent for the Month; Up 3.6 Percent Year-Over-Year

Lender Processing Services ... today released its latest LPS Home Price Index (HPI) report, based on September 2012 residential real estate transactions. The LPS HPI combines the company’s extensive property and loan-level databases to produce a repeat sales analysis of home prices as of their transaction dates every month for each of more than 15,500 U.S. ZIP codes. The LPS HPI represents the price of non-distressed sales by taking into account price discounts for REO and short sales.

The LPS HPI is off 22.8% from the peak in June 2006. Note: The press release has data for the 20 largest states, and 40 MSAs. LPS shows prices off 54.4% from the peak in Las Vegas, 46% off from the peak in Riverside-San Bernardino, CA (Inland Empire), and barely off in Austin and Houston.

Looking at the year-over-year price change, in May, the LPS HPI was up 0.4% year-over-year, in June the index was up 0.9% year-over-year, 1.8% in July, 2.6% in August, and now 3.6% in September. This is steady improvement on a year-over-year basis. Note: Case-Shiller for September will be released tomorrow morning.

by Calculated Risk on 11/26/2012 04:15:00 PM

LPS released their First Look report for October today. LPS reported that the percent of loans delinquent decreased in October compared to September, and declined about 7% year-over-year. Also the percent of loans in the foreclosure process declined sharply in October and are the lowest level since August 2009.

LPS reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) decreased to 7.03% from 7.40% in September (delinquencies increased seasonally in September). Note: the normal rate for delinquencies is around 4.5% to 5%.

 The percent of loans in the foreclosure process declined to 3.61% from 3.87% in September. 

The number of delinquent properties, but not in foreclosure, is down about 10% year-over-year (400,000 fewer properties delinquent), and the number of properties in the foreclosure process is down 19% or 412,000 year-over-year.

The percent (and number) of loans 90+ days delinquent and in the foreclosure process is still very high, but the number of loans in the foreclosure process is starting to decline fairly quickly.

LPS will release the complete mortgage monitor for October in early December.

LPS: Percent Loans Delinquent and in Foreclosure Process
	Oct 2012	Sept 2012	Oct 2011
Delinquent	7.03%	7.40%	7.58%
In Foreclosure	3.61%	3.87%	4.30%
Number of properties:
Number of properties that are 30 or more, and less than 90 days past due, but not in foreclosure:	1,957,000	2,170,000	2,219,000
Number of properties that are 90 or more days delinquent, but not in foreclosure:	1,543,000	1,530,000	1,681,000
Number of properties in foreclosure pre-sale inventory:	1,800,000	1,940,000	2,212,000
Total Properties	5,300,000	5,640,000	6,111,000

by Calculated Risk on 11/26/2012 12:58:00 PM

A frequent topic on this blog back in 2005, 2006, 2007 and even in 2008 were FHA loans and DAPs (seller financed Down-payment Assistance Programs). With DAPs, the seller "donated" the down payment to a non-profit (for a fee of course), and the non-profit gave the down payment to the buyer.  This allowed people to get around the FHA's down payment requirement, and to buy for no money down. For nerdy details, see Tanta's DAP for UberNerds

DAPs were finally banned in 2008 after wrecking havoc on the FHA's finances.

From Nick Timiraos at the WSJ: FHA’s Biggest Loser: No-Money-Down Mortgages

One of the biggest reasons the Federal Housing Administration is facing severe financial woes is a problem agency officials identified and sought to correct years ago.
...
A big chunk of the losses leading to a $16.3 billion shortfall have come from programs that allowed home sellers to fund down payments via nonprofit groups that provided them to buyers as a “gift.” After trying for years, the FHA finally prevailed on Congress to shut down the programs in late 2008, but not before the agency backed billions in risky no-money-down loans as home prices were dropping fast.
...
Seller-funded down-payment assistance loans accounted for just 4% of outstanding loans at the end of September, but they represented 13% of all seriously delinquent mortgages, according to a recently released audit.

The audit said that had the FHA not allowed the programs to go forward, then the mortgage program’s $13.5 billion net worth deficit would have turned to a positive $1.77 billion.

The FHA made many bad loans in fiscal years 2008 and 2009 (from October 2007 through October 2009) when private capital left the mortgage market, and the FHA saw a huge surge in market share. With falling house prices, and low down payment loans, many of these borrowers defaulted.

However DAPs also played a significant role in negatively impacting the FHA - and that was obvious in early 2005!

by Calculated Risk on 11/26/2012 10:30:00 AM

From the Dallas Fed: Growth Stalls and Company Outlook Worsens

Texas factory activity was little changed in November, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, came in at 1.7, indicating output barely increased from October.

Other survey measures suggested flat manufacturing activity in November. The new orders index came in at 0.4, suggesting that demand was unchanged from October.
...
Perceptions of broader business conditions worsened in November. The general business activity index fell to -2.8, returning to negative territory. The company outlook index moved down to -4.8, registering its first negative reading since April.

Labor market indicators were mixed. The employment index edged up to 6.7 in November, with more than 20 percent of firms reporting hiring compared with 15 percent reporting layoffs. The hours worked index dipped from -5.9 to -7.1.

This was below expectations of a reading of 4.7 for the general business activity index. Later this week two more regional manufacturing surveys will be released (Richmond and Kansas City). 

by Calculated Risk on 11/26/2012 08:30:00 AM

The Chicago Fed released the national activity index (a composite index of other indicators): Economic Activity Slower in October

Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) decreased to –0.56 in October from 0.00 in September. All four broad categories of indicators that make up the index decreased from September, and only two made positive contributions to the index in October.

The index’s three-month moving average, CFNAI-MA3, decreased from –0.36 in September to –0.56 in October—its eighth consecutive reading below zero. October’s CFNAI-MA3 suggests that growth in national economic activity was below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.

This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967.

Click on graph for larger image.

This suggests economic activity slowed, and growth was still below trend in October.

According to the Chicago Fed:

What is the National Activity Index? The index is a weighted average of 85 indicators of national economic activity drawn from four broad categories of data: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories.

A zero value for the index indicates that the national economy is expanding at its historical trend rate of growth; negative values indicate below-average growth; and positive values indicate above-average growth.

by Calculated Risk on 11/25/2012 08:59:00 PM

Monday economic releases:
• At 8:30 AM ET, the Chicago Fed will release their National Activity Index for October. This is a composite index of other data.

• At 10:30 AM, the Dallas Fed Manufacturing Survey for November will be released. The consensus is for 4.7 for the general business activity index, up from 1.8 in October.

• Expected: LPS "First Look" Mortgage Delinquency Survey for October.

• Also on Monday, Euro zone finance ministers will discuss the funding situation for Greece.

The Asian markets are mostly green tonight, with the Nikkei up 0.8%.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are down 6 and DOW futures are down 56.

Oil prices are down with WTI futures at $87.95 per barrel and Brent at $111.23 per barrel.

Here is a graph from Gasbuddy.com showing the roller coaster ride for gasoline prices. Notes: Add a California city to the graph - like Los Angeles or San Francisco - and you will see the recent sharp increase and decrease due to refinery problems. If you add New York, it will show the recent spike (much smaller than in California).

If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

Weekend:
• Summary for Week Ending Nov 23rd
• Schedule for Week of Nov 25th

Four more questions this week for the November economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).

by Calculated Risk on 11/25/2012 01:08:00 PM

The eurozone finance ministers are meeting on Monday, and trying to reach an agreement to disburse more funds to Greece.

From the Financial Times: Greece upbeat about signing debt deal

Eurozone finance ministers will make another attempt on Monday ... to settle differences over debt relief measures for Athens and give a green light to disburse up to €44bn of aid.

The stumbling blocks to a deal, in addition to Berlin’s reluctance to accept drastic interest rate cuts, include opposition by some eurozone members to returning profits from the European Central Bank’s purchases of Greek bonds, and a gloomy assessment of Greece’s growth prospects until 2020 by the IMF.
excerpt with permission

And from Bloomberg: Euro Ministers Take Third Swing at Clearing Greek Payment

Finance chiefs from the 17-member single currency return to Brussels tomorrow ...

Euro-area finance ministers held a conference call yesterday to prepare for the Brussels meeting. A breakthrough hinges on coming up with 10 billion euros ($13 billion) through reductions in interest rates charged by creditors and a debt buyback financed by bailout funding. The gap emerged when the finance chiefs agreed this month to give Greece two more years to meet targets.

I expect an agreement will be reached soon that will buy more time.

by Calculated Risk on 11/25/2012 10:32:00 AM

This is just a reminder: The Not Seasonally Adjusted (NSA) monthly Case-Shiller house price indexes will show month-to-month declines soon, probably starting with the October report to be released in late December. The CoreLogic index has already started to decline on a month-to-month basis. This is not a sign of impending doom - or another collapse in house prices - it is just the normal seasonal pattern.

Even in normal times house prices tend to be stronger in the spring and early summer, than in the fall and winter. Currently there is a stronger than normal seasonal pattern because conventional sales are following the normal pattern (more sales in the spring and summer), but distressed sales (foreclosures and short sales) happen all year. So distressed sales have a larger negative impact on prices in the fall and winter.

In the coming months, the key will be to watch the year-over-year change in house prices and to compare to the NSA lows in early 2012. As an example, the September CoreLogic report showed a 0.3% month-to-month decline in September from August, but prices were up 5.0% year-over-year. That was the largest year-over-year increase since 2006.

I think house prices have already bottomed, and that prices will be up close to 5% year-over-year when prices reach the usual seasonal bottom in early 2013.

Click on graph for larger image.

Note: The Case-Shiller September report will be released this coming Tuesday. For this graph, I used Zillow's forecast for September.

This graph shows the month-to-month change in the CoreLogic and NSA Case-Shiller Composite 20 index over the last several years. The CoreLogic index turned negative in the September report (CoreLogic is 3 month weighted average, with the most recent month weighted the most). Case-Shiller NSA will probably turn negative month-to-month in the October report (also a three month average, but not weighted).

by Calculated Risk on 11/24/2012 07:48:00 PM

I haven't checked in with Jim the Realtor in San Diego for some time. In this video below, Jim reviews a few upcoming REO listings in North County San Diego. Jim says: "there are only 16 houses owned by banks that aren't on the market" in the North County area (152 homes closed in the area last month, so the bank owned REO will not have much of an impact).

The first house is interesting. It looks like the bank will actually make money when they sell it.

The third house is good for a laugh (starts about 4:20). The bank has made some absurd repairs, like putting in a low end vanity in the master bath to replace a built-in that went all the way across the bathroom. (around 9:20 - Jim can't help but laugh).

Earlier:
• Summary for Week Ending Nov 23rd
• Schedule for Week of Nov 25th

by Calculated Risk on 11/24/2012 05:27:00 PM

CR Note: The first unofficial problem bank list was published in August 2009 with 389 institutions. The number of unofficial problem banks grew steadily and peaked at 1,002 institutions on June 10, 2011. The list has been declining recently.

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Nov 23, 2012. (repeat from last week, table is sortable by assets, state, etc.)

Changes and comments from surferdude808:

As expected, a very quiet week for the Unofficial Problem Bank List as it went without change. You have to go back to January 6th of this year for the last time it went a week unchanged. The list stands at 857 institutions with assets of $329.2 billion. A year ago, the list held 980 institutions with assets of $400.5 billion.

Next week, the FDIC will likely release its actions through October 2012 and the Official Problem Bank List as of September 30, 2012. The difference between the two lists will likely drop from 187 at last issuance to the low 170s.

CR Note: The FDIC's official problem bank list is comprised of banks with a CAMELS rating of 4 or 5, and the list is not made public. (CAMELS is the FDIC rating system, and stands for Capital adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to market risk. The scale is from 1 to 5, with 1 being the strongest.)

As a substitute for the CAMELS ratings, surferdude808 is using publicly announced formal enforcement actions, and also media reports and company announcements that suggest to us an enforcement action is likely, to compile a list of possible problem banks in the public interest.

When the list was increasing, the official and "unofficial" counts were about the same. Now with the number of problem banks declining, the unofficial list is lagging the official list. This probably means regulators are changing the CAMELS rating on some banks before terminating the formal enforcement actions.

Earlier:
• Summary for Week Ending Nov 23rd
• Schedule for Week of Nov 25th