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If Americans would stop and think of the implication of having an insurance fund with no money backing up $9 trillion in their deposits, they would probably pause for a few minutes. And just because your money is sitting in a bank account doesn’t mean that it is safe. The U.S. Treasury and Federal Reserve is on a war path to devalue the dollar so even though your money is nominally the same, in real terms you have gotten a lot poorer. The dollar has fallen by over 15 percent since March. This is an enormous amount but given the...

As you all know, we are in a severe economic downturn. The official unemployment rate now exceeds 10 percent and according to many observers is actually substantially higher. Within the last year or so, our financial system has been rocked to its foundations. The collapse of the housing bubble and the numerous defaults and bankruptcies connected with it brought down major financial institutions, such as Bear-Stearns, Lehman Brothers, and Merrill Lynch. It also brought down numerous small and medium-sized banks and threatened to bring down even such banking giants as Citigroup and Bank of America. The Dow Jones stock average...

More than 14 percent of borrowers were in trouble on their mortgage during the third quarter, a new record, according to an industry survey released Thursday, which also suggests that the foreclosure rate is likely not to peak until next year as unemployment rates continue to rise. Unemployment remains a big driver of the problem, according to the Mortgage Bankers Association, which conducts the survey. Those with delinquent loans now include a growing portion of people traditionally considered creditworthy and people whose mortgages are insured by the Federal Housing Administration. "The outlook is that delinquency rates and foreclosure rates will...

WASHINGTON — The foreclosure crisis likely will persist well into next year as high unemployment pushes more people out of homes, pulls down housing prices and raises concerns about the broader economic recovery. The latest evidence was a report Thursday that a rising proportion of fixed-rate home loans made to people with good credit are sinking into foreclosure. That’s a shift from last year, when riskier subprime loans drove the housing crisis. The report from the Mortgage Bankers Association also found that 14 percent of homeowners with a mortgage were either behind on payments or in foreclosure at the end...

... In its efforts to prop up a shattered housing market, the government is greatly extending its traditional support of real estate, including guaranteeing the mortgages of middle-class and even upper-class buyers against default. In 2007, the government did not insure a single mortgage in [San Francisco], one of the most expensive in the country. Buyers here, as well as in Manhattan, Santa Monica and every other wealthy area, were presumed to be able to handle the steep prices and correspondingly hefty down payments on their own. Now the government is guaranteeing an average of six mortgages a week here....

THE ONLY REAL SURPRISE in the latest disastrous batch of data on housing is that anybody is surprised. With the $8,000 tax credit originally set to expire, housing starts plunged nearly 11% in October, to a seasonally adjusted annual rate of 529.000 units. That put new home construction back to the dismal levels of last spring before a temporary blip lifted housing activity during the warm-weather months. Even though the home-buying subsidy was extended through next March and expanded beyond first-time buyers, there's little evidence that these giveaways are working. Applications for mortgages for home purchases, for instance, fell to...

If you already took advantage of the government’s tax credit for first-time homebuyers—or are planning to do it anytime soon—you’ll probably agree with this prediction: Sales of existing homes will peak in the final quarter of 2009, then begin a year-long slide, which is likely to be a sharp one, according to some estimates. Until the unemployment rate falls, the housing market won't recover. “Most of it [the tax credit] is simply shifting sales from one period to another,” says Global Insight economist Patrick Newport. “It doesn’t get rid of the fundamental problem; there's still a glut of houses.” Newport,...

The housing market dropped off a cliff in October, as the original Nov. 30th expiration date for the first-time home buyers tax credit approached, according to the Housing Market Monitor of the Center for Economic and Policy Research. Add to that the 6.25% 60-day delinquency rate in the third quarter -- 58% above the level of one year ago -- and you've got a recipe for housing disaster: more foreclosures, slower sales and ultimately a greater decline in house prices. "With unemployment virtually certain to remain high well into next year, there is little prospect for any sizable drop in...

US STOCKS-Wall St Set To Slip At Open On (Unexpected) Housing Data Wed Nov 18, 2009 9:06am EST By Ellis Mnyandu NEW YORK, Nov 18 (Reuters) - U.S. stocks were set to open lower on Wednesday after data showed U.S. housing starts fell unexpectedly in October, offsetting strength in the natural resources sectors amid U.S. dollar weakness. Housing starts dropped to their lowest level in six months, weighed down by a sharp decline in construction activity for both single-family and multi-family dwellings, the government reported. For details, see [ID:nN1738618] The data was the latest setback for investors eager for definitive...

According to Thomas Bouchard, a US psychologist famous for his research on twins raised apart,[1] even scientists with good reason to believe that the majority are wrong can be silenced. The reason is...

The Federal Housing Administration's capital reserves have fallen to razor-thin levels, increasing the likelihood the agency will eventually require a taxpayer bailout, and adding fuel to the debate about how much support the U.S. should provide to the mortgage market. The FHA has said for months that its reserves for unexpected loan losses would fall short of the required 2% level by this fall. But an audit of the FHA released Thursday showed that reserves have been depleted much faster than the agency and analysts had expected. The FHA's capital-reserve fund fell to $3.6 billion as of Sept. 30, down...

Even if he wants to tighten, David Rosenberg reminds us of the one reason why Ben Bernanke might find that impossible. The reason — there is a wave of mortgage refinancings coming in the housing market for one, and not only that, but in the commercial space, there are 2.7 trillion of debt coming due through 2011 and another 1.5 trillion of leveraged loans. In other words, the default rate is going to rise even further and the Fed tightening policy would only aggravate that situation. In other words, the Fed is simply immobile for at least the next two...

Is Christianity the new whipping kid? Ok … now they’re just sounding stupid. The media. Specifically, the Atlantic. From the Morning Joe, author Hanna Rosin tries to link the housing crisis with Mega church preaching … “Just go out and seize that house, the money will come … and this kind of intersected with the housing crisis.” I have not read the article, not sure I need to, but at least in this interview she quantifies nothing, as in the number of foreclosures vs the number of people who attend these churches. We sort of. Her proof is the location...

All agree that the bursting of the housing bubble caused the financial collapse of 2008. Most agree that the housing bubble started in 1997. Less well understood is that this bubble was the result of government policies that lowered mortgage-lending standards to increase home ownership. One of the key players was the controversial liberal advocacy group, Acorn (Association of Community Organizations for Reform Now). The watershed moment was the 1992 Federal Housing Enterprises Financial Safety and Soundness Act, also known as the GSE Act. To comply with that law's "affordable housing" requirements, Fannie Mae and Freddie Mac would acquire more...

America’s mainstream religious denominations used to teach the faithful that they would be rewarded in the afterlife. But over the past generation, a different strain of Christian faith has proliferated—one that promises to make believers rich in the here and now. Known as the prosperity gospel, and claiming tens of millions of adherents, it fosters risk-taking and intense material optimism. It pumped air into the housing bubble. And one year into the worst downturn since the Depression, it’s still going strong. Like the ambitions of many immigrants who attend services there, Casa del Padre’s success can be measured by upgrades...

Eight months ago, the Obama administration launched a plan to help troubled homeowners avoid foreclosure by providing $75 billion in taxpayer funds to banks and mortgage servicers. The money was intended to help three to four million homeowners by lowering their monthly payments, largely by cutting their interest rates. The next day, a Yale economist and a colleague penned a New York Times op-ed arguing for a different approach. Rather than cut interest rates, John D. Geanakoplos and Susan P. Koniak wrote, the government should reduce the overall amount owed on the mortgage -- the principal. "The plan announced by...

The Two Things That Really Matter By Ian Mathias 11/08/09 Baltimore, Maryland – We’ve said it before, and again and again, but it still bears repeating: The real barometers of this recession are employment and housing… and both fronts aren’t looking so hot today. More than one in every 10 Americans is out of work, the Labor Department reluctantly reported this morning. The official unemployment rate jumped from 9.8% to 10.2% in October. Not only is that the highest in 26 years, but it blew Wall Street clear out of the water — they had priced in a rise to...

Fannie Mae and Freddie Mac are burning a huge hole in the Treasury's pocket. But the Obama administration is getting something very valuable in return: the ability to provide immense support to the housing market with only limited interference from Congress. The credit crunch has displayed yawning democratic deficits, like the inability of Congress to get a proper handle on the Federal Reserve's emergency lending programs. But with Fannie and Freddie, it is the Treasury that gets to freely commit massive amounts of money. Both companies have bought most of the mortgages written in America this year and are modifying...

Economists agree that the home-buyer tax credit is risky and stupid. So why does Washington love the policy? ___ Ted Gayer of the centrist Brookings Institute issued what one CNN blogger described as a "smackdown" of the credit. Simon Johnson, the former chief economist of the International Monetary Fund, and James Kwak, who writes a Washington Post column with Johnson, have called the credit "throwing good money after bad." And conservatives—Kevin Hassett, the director of economic policy studies at the conservative American Enterprise Institute, and Ronald Utt, a senior research fellow at the Heritage Foundation, have penned pieces slamming the...

) today reported its third-quarter 2009 results and filed its quarterly report on Form 10-Q with the Securities and Exchange Commission. The filing provides consolidated financial statements for the third quarter of 2009. The following documents are now available on Fannie Mae’s Web site: News Release reporting third-quarter 2009 financial results Fannie Mae’s quarterly report on Form 10-Q Third-Quarter 2009 Credit Supplement Fannie Mae exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America’s secondary mortgage market to enhance the...

Hot Money HIGHLIGHTS New Financing Source Tied to Immigration Providing "Cheap Equity" for Development Projects in LA This program was started by congress in 1990 to allow high net worth foreign individuals to invest in the US and thereby qualify for citizenship. Segregated by industry and geography. “Pilot” program allows for a regional center to pool these investors. Equity wants only 5-8% yield, so is priced like debt. Program Highlights: LA County only; Census tracts with 150% of national average unemployment rate Construction is best; Hotels, manufacturing, retail, medical office/hospital, and ALF/SNF; This zone specifically targets medical and ALF/SNF; Multifamily...

or nearly two years, home values plummeted to pre-2003 levels. Now, housing markets within the country are showing the first signs of stabilizing. clear pixel According to the latest results from the Standard & Poor’s Case-Shiller Home Price Indexes, which were released last week, 19 of the 20 metropolitan areas show an improvement in their annual rate of return, and 17 of the 20 metropolitan areas saw price increases in August over July. In September, existing-home sales increased to 5.57 million units, up 9.4% from August, according to the National Association of Realtors. “We’ve already seen immediate signs of a housing recovery,”...

Property Values Set to Fall 43% From Current Depressed Levels Michael David White November 02, 2009 Price Trends / WAR OF THE WORLDS: If you use a 20-year time horizon, and assume prices will return to the trend line, then our residential property bubble will bottom after values fall over 40% from current levels (see above (c) aka “(y) - (z)” aka “Loss Today to Bottom”). I make no predictions. I do watch numbers. The chart shows a catastrophe of falling real estate values loaded up on top of our current catastrophe in real estate values. No one would question...

It's time to finally lay to rest claims stretching back as far as 2007 that Goldman Sachs was peddling securities backed by risky home mortgages while it was secretly betting that the US housing market was in trouble. Far from being "secretly" down on the US housing market, very early on Goldman was publicly and privately warning that home prices would decline and that this decline would have an impact on mortgage backed securities. The complaints about Goldman being on both sides of the mortgage trade stretch at least as far back as December, 2007. Ben Stein wrote a column...

The Richmond Fed produced a report that provides some useful information on the issue of non-recourse mortgage loans and their default rates. The report includes a State-by-State breakdown of the rules for defaulting. This report was over my head. For example, the following calculation describes the probability of a short sale in a Recourse State: The conclusions are easier to read. I found this interesting: “For homes appraised at $300,000 to $500,000, borrowers in non-recourse states are 59% more likely to default than borrowers in recourse states. For homes appraised at $500,000 to $750,000, borrowers in non-recourse states are almost...

Goldman's sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation's premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies.

High Exposure To Equities? Be Careful Out There By: The Housing Time Bomb November 01, 2009 I just wanted to hop on tonight and issue a warning to anyone who has participated in this rally or has a high exposure to equities. The price action Friday was absolutely frightening! I guess it was perfect timing considering Halloween was Saturday night. IMO it is time to lighten up considerably if you are on the long side. As most of you know, this blog focuses more on the macro/long term outlook on the economy. I have remained consistently bearish because we have...

Oh boy: (h/t Doug Ross) The [Fannie Mae] "seriously delinquent" rate has gone parabolic, increasing by roughly 5% sequentially and just under 300% YoY [year-over-year]. As mere text will simply not do this metric justice, please enjoy this chart of the dataset from Blytic. It tells you all you need to know about the Fed's containment of the housing problem. The August seriously delinquent single-family number comprised of a 2.87% non-credit enhanced delinquencies and a very bothersome 11.52%, consisting of credit enhanced loans ~~~ The deterioration of FNM's book however did not stop it from increasing the size of its...

Looks like the notorious UN Human Rights Council has taken a break from its constant bashing of Israel and is focusing on (ready for this?) housing violations in US cities, including New York. You didn't know that "adequate housing" (whether you pay for it or not) was universal human birthright? Neither did we. Nonetheless, the panel sent its "special rapporteur on adequate housing," Raquel Rolnik, on a whirlwind tour to sniff out these "violations" -- not to say, crimes -- against humanity. Rolnik launched her US visit last week in the city and is also traveling to places like Chicago,...

WASHINGTON (Reuters) - Sales of newly built U.S. single-family homes unexpectedly tumbled 3.6 percent in September in their first drop since March, but the inventory of new homes available at the end of the month shrank to the smallest in 27 years, government data showed on Wednesday. September single-family home sales totaled 402,000 units at an annual pace. Analysts polled by Reuters had expected new home sales to rise to a 440,000 unit annual pace from a revised 417,000 units in August, which was originally reported as 429,000 units. The median sales price rose in September to $204,800 from $199,900,...

<p>Back in the winter when Congress was debating whether stimulus programs could get money into the economy quickly enough to make a difference, supporters of government efforts to prime the pump argued that tax credits would offer Americans a quick financial shot in the arm. After all, what else does government need to do to process a tax credit except take in applications, verify their accuracy, and then ship the money out the door?</p>

Are you wealthy but homeless? Lucky you. For well-off folks who don't own a home now and don't mind renting for a while, this is a something of a golden era. That's because renting--particularly at the high end--has become such a startlingly good deal in some cities. There's no telling how long this period will last. But sellers of fancy homes, while refusing to drop their asking prices, seem happy to lease them out for a year or two on the cheap. It was true earlier this year, but it's even more so now, thanks to some hefty rent reductions....

As the U.S. housing market has moved from boom in the middle of the decade to bust over the past two years, the sources of mortgage funding have changed dramatically. The government-sponsored enterprises—Fannie Mae, Freddie Mac, and Ginnie Mae—now own or guarantee an overwhelming share of originations. At the same time, non-agency mortgage securitization and loans retained in lender portfolios have largely dried up. This is figure 3 from the Economic Letter. (CLICK LINK TO SEE CHART) This shows the surge in non-agency securitized loans, and loans held in bank portfolios, in 2004 through 2006 (the worst loans).The sources of...

Get Ready: The Case-Shiller Will Show Housing Is Falling Again Vince VenezianiOct. 26, 2009, 12:43 PM The last few Case-Shiller reports have shown sequentially increasing home prices, but that's about to come to an end when the new numbers come out tomorrow. The Altos Research 10-City Composite Index is down 1.1% for the third quarter of 2009. Altos Research: From our October 2009 Real-time Housing Report, The Altos Research 10-City Composite Index was down by 0.5% in September and 1.1% during the third quarter. Using the housing market ask prices and more specifically, looking at the ask prices of new...

In Part I, “Scam in the making”, I explained how Wall Street created the U.S. housing-bubble and its concurrent Ponzi-scheme – with the full assistance of its accomplices: U.S. rating agencies and U.S. regulators. I also explained why it had to be obvious before they started creating this bubble that it would end with an unprecedented wave of foreclosures. Because a big part of the bubble/Ponzi-scheme was “mortgage securitization” (which meant the bank originating the mortgage no longer held title to the mortgage), and because the U.S. financial crime syndicate knew there would be a huge wave of foreclosures, it...

UN Investigator Probes US Housing Crisis And a United Nations investigator has opened a probe into the US housing crisis. Raquel Rolnik, the UN Special Rapporteur on Adequate Housing, will investigate issues including public housing, homelessness and foreclosures. On Thursday, Rolnik held a public meeting with housing activists in New York. UN Special Rapporteur on Adequate Housing Raquel Rolnik: If we take housing as a human right, you have to go back to the idea that housing is a social issue before and more priority than housing as a commodity, as a financial asset. As part of her inquiry Rolnik...

DETROIT (Reuters) - In a crowded ballroom next to a bankrupt casino, what remains of the Detroit property market was being picked over by speculators and mostly discarded. Taken together, the properties seized by tax collectors for arrears and put up for sale last week represented an area the size of New York's Central Park. Total vacant land in Detroit now occupies an area almost the size of Boston, according to a Detroit Free Press estimate.

Everybody knows New York City is an expensive place to live. But the United Nations wants to know if affordable housing is so tough to come by that it actually violates human rights.

An article that details the New York Court of Appeals case that dealt with the raising of rent amounts for a group of apartments in the Stuyvesant district. This is what happens when you institute a price floor (see comment for below) First three paragraphs: Tenants and landlords spent much of Thursday struggling to figure out what the state high court’s ruling on the future of Stuyvesant Town and Peter Cooper Village meant for all types of New Yorkers. Real estate moguls feared the news would cripple their industry, and tenants worried about their rents. Despite the lack of clarity,...

In the midst of the raging healthcare debate over who owns your body and can decide what repairs it receives, the media and the public have overlooked the fact that the U.S. House of Representatives has already ruled in H.R. 2454 that the state owns your house and can decide what repairs it receives. Your name might be on the title, the mortgage, the homeowners policy, and the property tax bill, but if H.R. 2454 becomes the law of the land, the federal government will become a dictatorial homeowners association (HOA) with the power to make your house unsalable unless...

Four-Year Old Buys House With Federal Money Vincent Fernando|Oct. 22, 2009, 11:08 AM | The stories about a return to bubble-era lending standards are getting too depressing to bear. There are the no-down payment loans backed by the USDA, the FHA mortgage worth more than 110% of the value of the home, and now this: babies buying homes. Georgia Congressman John Lewis is holding hearings: “We will hear today that taxpayers claiming the credit include those: who already owned a home, who had not yet bought a home, and who are children—some as young as four years old. There are...

Despite some tentative signs of recovery, the U.S. housing market remains vulnerable to further price drops—especially in areas where large numbers of mortgages are headed toward foreclosure over the next few years. The Wall Street Journal's quarterly survey of housing-market data in 28 major metro areas shows sharp drops in the number of homes listed for sale across the country. But the potential supply of homes is far larger because banks are likely to acquire significant numbers of foreclosed homes in some areas, notably Las Vegas, Atlanta, Detroit, Phoenix, Miami and other parts of Florida, and Sacramento, Calif., over the...

A few days ago we told the story of Denise Tejada, the 21 year old California woman who bought a house with an FHA backed loan with almost no money down. Readers were outraged. And rightfully so. It's our money on the line and it is simply outrageous that our government is still encouraging these kind of loans to be made. Even if Tejada pays off her loan in full, it was an insane gamble on our behalf to have the government back her loan. But as it turns out, the gamble was even more insane that we originally reported....

Edward Pinto, the former chief credit officer at Fannie Mae, and a consultant to the mortgage industry lays out the sad truth. The government is aggressively making the same pro-homeownership moves that got us into the last mess.

Market Movers That Aren't Housing by: Wall Strategies October 20, 2009 The market is fixated on the less than desirable housing-related reports out Tuesday morning. Such below-consensus readings on starts and permits are a shot across the bow for regulators to cut the smooth talk and extend the housing tax credit. Whether the tax credit has had a huge impact on overall housing demand in recent months is not very supported in the statistics (low mortgage rates arguably a bigger component). But, much could be said about bolstering market psychology, in this case that of homebuilders. Maybe it is time...

The financial pandemic smolders untreated beneath a hastily plugged-in life support of increased overspending that is only masking and prolonging the disease; the final collapse is getting closer. The housing collapse wrung the illusory wealth out of homes and banks as the buildings and their mortgages returned to the real world together. Suddenly bereft of wealth, homeowners cut spending; banks froze. Without buyers, business contracted, hemorrhaging ex-employees who spend even less. Instead of letting the sick banks clean out the worthless loans and securities that infect them, thereafter dying or returning to health as might be, the government has transfused...

Lenders’ actions show they think properties are not worth pursuing. Nobody is sure exactly how many bank walkaways are occurring. For various reasons, they can’t be identified in searches of public real estate and court data without individually pulling case files, experts say. But nobody questions that they are on the increase. David Rothstein, a researcher with Policy Matters Ohio, summarized the way they occur like this: • The lender files a foreclosure, gets the foreclosure judgment in court, takes the property to sheriff’s auction but doesn’t bid on it if no one else does. • The lender files as...

Subprime mortgages: Myths And Reality Kent Cherny & Yuliya Demyanyk 17 October 2009 The global crisis is said to have originated in the US subprime mortgage market. This column argues that many of the most popular explanations that have emerged for the subprime crisis are, to a large extent, myths. Subprime mortgages have received a lot of attention in the US since 2000, when the number of subprime loans being originated and refinanced shot up rapidly. The attention intensified in 2007, when defaults on subprime loans began to skyrocket triggering what was known at the time as the “subprime crisis”...

Following Vietnam’s property market collapse earlier this year, luxury apartment prices have fallen sharply, with a 30% drop in places like Phu My Hung and as much as 60% in other areas. The slump has been particularly hard in the luxury segment. Independent financial expert, Bui Kien Thanh, said local developers had focused too highly on luxury properties. He said the luxury segment is set for more trouble since customers have raised complaints about the quality of the apartments they have bought. Former deputy minister of natural resources, Dang Hung Vo, said that property prices would continue to fall if...

An Oregon apartment complex reversed its ban prohibiting residents from flying American flags from dwellings and parked vehicles after the property manager decided she didn't have the legal standing to do so, KATU in Portland reported Wednesday. The American Civil Liberties Union said that Barb Holcomb's ban at Oaks Apartments did not violate any laws, but Holcomb said her legal cousel led her to believe otherwise so she reversed the decision. "If people want to fly any flag of any nationality, it's their right," she told KATU. "When a tenant rents the unit, the inside of the unit belongs to...