Saturday, June 5, 2010

Is Massive Refinancing During Bubble Years a Ticking Bomb? = Investors Played a Key Role in Creating

[mEDITate-OR:

not see that both previous, and now future, foreclosures...
occurred in the same, select places and will continue.

What these two article also show U.S. is that MOST of the underwater home owners
already took their paper profits out of their homes..., in cash.

Now, they are going to have to pay some or all of it back.
If they can.

And, if they cannot, the lender/bank that gave them the HELOC will have to eat it.

---------
JGBHimself | 06/02/10 2:55 PM

Very good article - probably the best Jumbo loans data we have seen in over a year. Thanks.
As you point out for U.S., the "Jumbo Loan" problem is huge, not being fixed or addressed, and will materially affect the states that have them.
In a recent AZ Republic article they discovered an interesting other problem - builders are now able to buy fully ready lots for a fraction of what it costs to develop them, or what they were a few years ago. That means that they can now build and sell a new home for from 40% to 60% of what the same home was priced at the peak. All existing sand states home owners - & especially those with jumbo loans - are now being attacked from both sides - foreclosures and now brand new homes.
Could get ugly.
-----------

I didn't include it in my article, but I have California stats for origination of HELOCs since January 2003.
It's incredible.  At the peak in June 2005, 91,000 purchase HELOCs were issued.  That does not include any refis.  Do you know how many were originated in March of this year?  22 for the entire state.  And 18 refi cash outs ... for the entire state.
The banks have completely pulled the plug on HELOC lending there.  They've also reduced or eliminated the unused credit lines of many current HELOC holders on the grounds that the houses have dropped substantially in value.  Most California borrowers also have a HELOC or second mortgage.  They are really up the creek.  Many were using their lines of credit to pay their mortgage and/or live on.  Not much longer though.
Thanks again. Keith Jurow
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Is Massive Refinancing During Bubble Years a Ticking Bomb?
============

Posted by at No comments:

Obama’s Optimism Puzzles Investors on Jobs Forecast = As The Pretty Woman told U.S.: "Mistake, big mistake."

[mEDITate-OR:
wonder why the President spoke to U.S. about jobs before this latest report...
As The Pretty Woman told U.S.:  "Mistake, big mistake."

All she had was Richard Gere's credit card to use.
Obama has a few more shekels than that to play with.
Heck of lot more than we do.
------------
Bloomberg
Obama’s Optimism Puzzles Investors on Jobs Forecast
President Barack Obama’s upbeat comments on the U.S. job market earlier this week left investors and analysts puzzled after a government report today showed payroll growth was weaker than forecast.
“People definitely felt suckered into thinking this was going to be a good number,” said Kevin Shacknofsky, who manages $2.2 billion for Alpine Mutual Funds in Purchase, New York. “The expectations for the jobs data were driven up and the market rallied earlier in the week when the president hinted the job number would be great.”
Private payrolls rose by 41,000 in May, Labor Department figures showed today, trailing the 180,000 gain forecast by economists. Including government workers, employment rose by 431,000 after a 290,000 increase in April, boosted by a jump in hiring of temporary census workers. The jobless rate fell to 9.7 percent from 9.9 percent.
Obama, speaking June 2 in Pittsburgh, said that “after losing an average of 750,000 jobs a month during the winter of last year, we’ve now added jobs for five of the last six months, and we expect to see strong job growth in Friday’s report.”
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Unemployment Falls to 9.7 Percent, But Private Sector Job Growth Slows + Why the May Jobs Report is Better—and Worse—Than it Looks

[mEDITate-OR:
parse not the economic data...

This is a very good explanation of the many various variable impacts
that the May jobs report shows U.S.

In the 1st article:
This is again a very well thought out examination of the underlying factors that can not appear obvious in these reports.
What this shows U.S. is that from the 1st of the year services have declined and manufacturing has climbed.
While these reports, as with the UI report yesterday, are extremely variable, we should remember that they are "polling numbers", unlike ADPs, which are their customers driven.
What is most distressing is the chart only hints at the next huge round of state and local govt cuts = police, fire, teacher, etc.
IF, as you suggest and we expect, both Census "retires" and govt job losses will flood the numbers and charts for the next 4 to 6 months, there is NO way that manufacturing gains will cover those losses.

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Unemployment Falls to 9.7 Percent, But Private Sector Job Growth Slows

jobs-2010-06.jpg
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Why the May Jobs Report is Better—and Worse—Than it Looks
=============
JGB
04 Jun 2010, 18:10
This is again a very well thought out examination of the underlying factors that can not appear obvious in these reports.

While these reports, as with the UI report yesterday, are extremely variable, we should remember that they are "polling numbers", unlike ADPs, which are their customers driven.

What is most distressing is the chart only hints at the next huge round of state and local govt cuts = police, fire, teacher, etc. IF, as you suggest and we expect, both Census "retires" and govt job losses will flood the numbers and charts for the next 4 to 6 months, there is NO way that manufacturing gains will cover those losses.
-------
Unemployment Falls to 9.7 Percent, But Private Sector Job Growth Slows
Posted by at No comments:

Economic Editorial Opinion: Private Sector Labor Market Far From Recovery

[mEDITate-OR:
think that what you see is what you should see...

These are two very well done "Opinion Pieces".
While most of what they say is true, it is not complete...
or completely accurate.

But, they are a very good economic read.

As you will see below, my quibble is not just a wee, skoshi question.
It is a major challenge to their objectivity.

Their chart is grossly and intentionally misleading, for arguments sake alone.
=============
Very interesting chart, in order, of course, to make your point.

Would you consider, since you say you study these things, doing a similar chart showing U.S. that last six months of the Bush administration - Sept, Oct, Nov & Dec of 08, plus Jan & Feb of 09.

As with your Obama view-points, show U.S. your comparison of what Bush said and did to U.S. before the election and what actually happened to U.S. after he departed U.S.

Oh, and why did you start your chart in Dec 08? What, precisely, was it that you think he actually DID, or could have done, prior to taking the oath of office?

Disirregardless, very well done.
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Private Sector Labor Market Far From Recovery
-----------

Heritage Employment Report: May Jobs Struggle to Appear




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Posted by at No comments:

May jobs report: Census inflates payrolls

[mEDITate-OR:
or miss the main news stories of the day...

Not only did CNN provide U.S. with a chart...
but explained why it is misleading.

In the 2nd item we see the full Labor Dept Report.
which will enable you to see the numbers for your state and major cities.

The 3rd article is, as always, from Bloomberg, a very thorough analysis.

---------
May jobs report: Census inflates payrolls

chart_job_losses_060410_v2.top.gif
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----------
U.S. Economy: May Employment Gain Trails Forecast
==============
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Manufacturing expands for 10th straight month + Unemployment falls in most metro areas

[mEDITate-OR:
make something out of this news...

There is some Good News and some Bad News.

The good news is that basic manufacturing IS expanding...
not dog.com's or RE construction.
This should be much more stable for U.S. over time.
But, this growth is NOT getting U.S. back to pre-collapse levels.

However, the job losses at the state and local levels are wiping out all the jobs progress that we are making. We are going to see another massive loss of police, fire and teaching jobs
--------
While the 2nd article suggests that unemployment is falling, what is not telling U.S. is that many long-term unemployed are dropping out of the lists, AND many that came back INTO the jobs market are quiting looking, again, bcuz they found no jobs available.

This "hidden" labor pool is huge.
IF they re-enter the jobs waiting lists, the level of unemployed will stay UP for a very long time.
So...., we might see a couple of years of BOTH more jobs AND more unemployed.

--------
Manufacturing grows for 10th straight month
May results better than expected, trade group says
A private trade group said the U.S. manufacturing sector expanded in May, marking the 10th consecutive month of growth.
------
Unemployment falls in most metro areas
Biggest improvements in April seen in Midwestern regions
Unemployment rates fell in April for more than 90 percent of the nation's 372 largest metro areas as hiring picked up around the country.
=============
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Personal Bankruptcy Filings increase 9% compared to May 2009

[mEDITate-OR:
wonder if this is good news or more bad news...
 
The 136,142 consumer bankruptcies filed in May represented a 9 percent increase nationwide over the 124,838 filings recorded in May 2009
the May consumer filings represented a 6 percent decrease from the 144,490 consumer filings recorded in April 2010.
 
Actually, it is both.
The "moving average" or quarterly numbers are much worse.
However, the Mo2Mo numbers are down.
 
This might be the start of a decline, or it might be April was just a surge of post-Christmas filings.
 
Disirregardless, this looks like this year will be higher than the pre-BK change levels.
 
==========
Wednesday, June 02, 2010


This graph shows the non-business bankruptcy filings by quarter using monthly data from the ABI and previous quarterly data fromUSCourts.gov.
Based on the comment from Gerdano, it appears the ABI has increased their forecast to over 1.6 million filings this year from their earlier forecast of just over 1.5 million filings this year.
Excluding 2005, when the so-called "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005" was enacted (really a pro-lender act), the record was in 2003 when 1.62 million personal bankruptcies were filed. This year will be close to that level.

=======
Posted by at 1 comment:

First-time jobless claims drop for second week + Private sector adds 55,000 jobs in May

[mEDITate-OR:
not see that the ADP numbers are "telling" to U.S.

Unemployment is changing, and so is who is hiring.
While we see the Federal Govt stalling on two small business lending bills...
to take a vacation..., for campaigning
the real driver of jobs in the economy is wallowing..., small business is NOT hiring.

What MIGHT be true is that they cut back to so many part time employees, that they can simply expand hours, as needed, without adding new people.
The number of hours worked DO appear to be increasing, so that might explain some of this.

But, IF we need job creation, we NEED funding for small business.
We do not have it, and might not get it.
THAT would be VERY bad news.

-------
First-time jobless claims drop for second week
But claims remain at elevated levels, even as employers lift hiring
New claims for unemployment insurance fell for the second straight week, fresh evidence the job market is slowly improving.
----------
Private sector adds 55,000 jobs in May
April’s report revised from 32,000 to 65,000, according to ADP
Private employers added 55,000 jobs in May, compared with an upwardly revised gain of 65,000 in April, a report by a payrolls processor showed on Thursday.
-----------
Job hopes rise on wave of economic data
Reports don't ‘scream strength’ but they do ‘set encouraging tone’
A handful of economic reports released Thursday raised hopes for an improving job market with fewer layoffs and more hiring.
==========
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Research: 270 Days is Optimal Time in Foreclosure + Is Massive Refinancing During Bubble Years a Ticking Bomb?

[mEDITate-OR:
wonder what the foreclosure problems are about...

You will want to read both Jim's CR article, last one below.
and
the one by Keith Jurow, Ph.D., is a former senior economic writer for the Holt Investment Advisory of Westport, Connecticut

Together, they provide U.S. with a very interesting conundrum - foreclosures may not be what they seem.
and
strategic defaults and what is driving them may not be either.

Cogitate on this:
-----------
Jim, there are some factoids that you may have to add into your equation:
 
First, that most if not all of the seriously underwater RE loans were in the sand states.
That most of the AltA and subprime RE loans were also made there.
That most of them were originate by the Big Bad Three = Countrywide, WAMU and Wichovia.
So, the most serious problems are VERY localized.
 
Second, there was a flood of REFIs in those same sand states.
where the "owner" pulled their paper profits back out of the equity, and spent it.
The numbers are truly staggering:  See:
 
 
His point, and mine, is that since they already have taken out ALL of their profits, they have NO equity.
All they have is a debt that they cannot sell, rent, refi again or pay off.
They have nothing to loose by a strategic default, except that debt.
"Freedom is another word for nothing left to loose...", so said JanisJ.
But, freedom ain't free.
 
===========
Wednesday, June 02, 2010
Posted by at No comments:

Unofficial Problem Bank List: Assets increase sharply

[mEDITate-OR:
think that just bcuz the additions are equal to the eliminated ones...
that the problem is not getting worse.

This "chart" is truly amazing.
Not only does CR provide U.S. with info not found elsewhere...
but it is "movable"..., click on column heading to change the order of the columns.

These troubled banks, change..., monthly.
And, they have changed by type and area of the problems.

What we do NOT see, yet..., however, are the massive numbers and size of the commercial RE loans for office bldgs, shopping malls and apartments.

What we also do not see, here, yet..., are the construction RE loans - especially for Condos.

But, what we DO see, is what were are going to get..., sooner or later.

--------
--------
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May Employment Report: 20K Jobs ex-Census = Employment-Population Ratio, Part Time Workers, Unemployed over 26 Weeks

[mEDITate-OR:
calculate how much you are loosing by not having "Calculated ([y]our?) Risk"...

First, remember to visit CR's web site for the large view.

Second, you should look at and compare the 2nd and 3rd charts.
Same info, different perspective.
Available ONLY from Jim @ CR.

------------
This graph shows the unemployment rate and the year over year change in employment vs. recessions.
The second graph shows the job losses from the start of the employment recession, in percentage terms (as opposed to the number of jobs lost).
---------
This graph shows the job losses from the start of the employment recession, in percentage terms - but this time aligned at the bottom of the recession.
This graph shows the employment-population ratio; this is the ratio of employed Americans to the adult population.

The number of persons employed part time for economic reasons (some-times referred to as involuntary part-time workers) declined by 343,000 in May to 8.8 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.
The blue line is the number of workers unemployed for 27 weeks or more. The red line is the same data as a percent of the civilian workforce.
--------
This graph is a favorite of those expecting a huge rebound in employment. The graph is a little complicated - the red line is the three month average change in temporary help services (left axis). This is shifted four months into the future The blue line (right axis) is the three month average change in total employment (excluding temporary help services and Census hiring).
=========
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As federal stimulus fades, private hiring falters

[mEDITate-OR:
not see that what looked so good last month...
look very bad this time.

Which only goes to prove that Presidents should NOT make economic predictions.
-------
As federal stimulus fades, private hiring falters
Surge in Census jobs in May masks underlying employment weakness 
 
As the impact of government stimulus fades, job creation will have to come from growth in the private sector. The latest data on the job market weren't encouraging.
----------
Private employers stall hiring in May
U.S. added 431,000 jobs, most of which were for temp census workers
Job creation by private companies grew at the slowest pace of the year in May, even while the hiring of temporary census workers drove overall payrolls up 431,000.
---------
Video:
June 4: Labor Secretary Hilda Solis explains why private businesses are pulling back on hiring in the dismal job market.
===========
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Did Fannie and Freddie Cause the Housing Bubble? Part 2

Following the first of Daniel's articles
there started an interesting discussion...
--------
Daniel, even we make some errors. nadezhda below makes another interesting point - for us - you, me and U.S. - that bcuz of their RE loan size limits, it was not possible for FMae&Mac to even make the worst of the large ARMs, AltAs and subprime RE loans. True, that would have been much more true in the Sand State where the cost of housing exploded up above those lending limits. So, you might argue with me that the real reason that FMae&FMac did not make all those bad RE loan was that they COULD not.
But, that does not solve {y}our problem = Who DID make those loans?

And something else for you to consider, Who "services" those bad NAS securitized RE loans? Why the Big Three Bad Banks, of course - BankOAmer is no 1, Chase is no 2 and Wells is no 3. And, while FMae&FMac ARE doing modifications, those banks are not.
Why, Daniel?
Is it bcuz they originate those bad loans, then sold them to "The Suckers", but then kept them for the "servicing" profits?
====
And, Daniel, please take a look at WHO is now being required to buy back some of the worst of the bad loans that were sold to FMae&FMac.

The names most often occurring are, would you believe this, BkOAmer/Countrywide, Chase/WAMU and Wells/Wachovia. As the SNL "Lady" oft said to U.S.: "Isn't that special."
======
While the first point is important, what is also is that there is an OVERstating of the F&F problems by some/many, AND a total ignoring of the NAS - non-agency Securitized - RE loan problems.

Where are THOSE numbers? Jozef and/or Daniel? Show me the money, and/or where IS the beef?
---------
Jozef:
Your response to my first point was to answer the wrong question. We did not ask you to look up GSE numbers for U.S., as you showed U.S. anyone can do that. What we asked was WHAT are the non-agency securizations packages numbers?
For most of the dead zone years when most of the subprime and AltA loans were created, the non-agency RE loans were over 50% of the total RE market, and an even higher number in the Sand States = Cal, Nev, Fla & AZ. 
What ARE the non-agency bad loan number for THOSE state, for those bad loan years?
Go ahead, try to find them!
=========
Josef, do you really find it troubling that "fraudulent" RE loan practices by Countrywide, WAMU and Wichovia, which violated the contracts with F&F and U.S., are being returned to them, making THEM, as opposed to you and U.S., pay for their intentional fraud?
How very interesting, of you, to like being swindled.
----------
Jozef:
Your response to the second point is to suggest that you are unaware of the criminal investigations that are ongoing on both the Federal and SEC and local levels. We are not. While we could tell them some horrific stories about WAMU in WA, Cal and AZ, we have no reason to do so, bcuz they already have them. Even if you do not.

If you have not read these "tip of the iceberg" stories, you might find them interesting:Mortgage Lenders Seek Relief on Bad Debt Repurchases
http://www.businessweek.com/news/2010-05-27/mor...
Banks Say No. Too Bad Taxpayers Can’t.
http://www.nytimes.com/2010/06/06/business/06gr...
=========
Posted by at No comments:

Did Fannie and Freddie Cause the Housing Bubble?

[mEDITate-OR:
confuse yourselves with unknowable facts...

Daniel is a very good commenter, but he too can make mistakes.
So, when he caught Krugman making one, he pounced.

You will find these two articles to be, truly, wonderful...
if not perfect.

The problem here is that some want to believe what their heart are telling them must be true.
As RonnieR taught all of U.S. - The Govt will not solve our problems, Govt IS the problem.

Then buy eliminating the laws and regulations that DO work...
and cutting back on taxes to force cut in spending on programs that YOU don't like...
we created a self-fulfilling prophesy.

{Y}our Govt has to BE very bad, bcuz we make it so.

==========
JGBell

Very good point, Daniel; but you too missed The Point. But, your graphs show it to U.S. nevertheless.

In 01-03 the GSE were the largest lender, true; but of what KIND of RE loan. In Krugman's 2nd chart that would appear to have been "Prime" RE loans, that were not the original problem loans.  In 04-07 the NAS - NonAgency Securitized - share of the market exploded, according to your chart.  However, in Krugman's chart that was when the AltA & Subprime RE loans also exploded.

So, who DID make all of those 04-06  subprime RE loans...??? In the Sand States of Cal, Nev, Fla & AZ???  And who went BK and were bought out - Countrywide, WAMU & Wichovia.

Are you really saying to U.S. that by making all those 01-03 prime loans the GSE's caused all of the problems? When your own chart shows U.S. that it was the NAS creating AltA and subprime RE loans in 04-7 that did U.S. in.

What you also did not point out was that the GSE, like GD fools, began to sell AltAs and Subprime RE loans towards the very end of the disaster. Late to the party, and like a drunken sailor. While the GSE's were to blame for stupidly jumping in late; they did NOT start or fuel the subprime and AltA problems in the sand state. Nice try, but you are wrong
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Did Fannie and Freddie Cause the Housing Bubble?
-----------
Things Everyone In Chicago Knows - Which happen not to be true.
-----------

krugman gses cht1.png

krugman gses cht2.png

nominal mortgage issuance 2010-06.PNG
============

Posted by at No comments:

Should you rent or buy? = Trulia's Rent vs. Buy calculator + Most (and least) affordable cities

[mEDITate-OR:
stop questioning your life style assumptions..., economically, of course.

Maybe even to giving up your day jobs...
bcuz, you do see, do you not, that where you live...
while you work and after you retire...
matters..., a lot

But, oddly, what has changed is the price & cost of owning a home.
What is also about to change is the cost of renting.

Bcuz of the RE collapse, single family homes are, in some place, real bargins.

However, what we are also seeing is that the RE loans for apartments, and for the construction of condos, has markedly changed, and will change even more so over the next 2 to 5 years.
There is not money available for buyers of condos, so the builder/lenders have to rent them.

And, with the competition from foreclosures, many apartments RE loans are so underwater, with vacancies, and collapsing land values, that they are being foreclosed on, too.

Rents are now dropping in high foreclosure areas at alarming rates.

--------
Should you rent or buy?
-----------
------------
Here are the 5 metro areas where the average American family can easily afford to purchase a median-priced home - and the 5 where they can't
===========
chart_rent_vs_buy_2.top.gif
==========
Posted by at No comments:

Thursday, June 3, 2010

First-time jobless claims drop for second week + Private sector adds 55,000 jobs in May

[mEDITate-OR:
wonder who might be telling U.S. the truth, here...

These reports probably are closer than what we will see tomorrow. When the temp census worker hires are going to be added to the normal numbers. As Jim at CR showed U.S. the census jobs will materially impact the jobs numbers for a number of months - with the larges skewing this month and next.
-------

First-time jobless claims drop for second week
But claims remain at elevated levels, even as employers lift hiring
New claims for unemployment insurance fell for the second straight week, fresh evidence the job market is slowly improving.
----------
Private sector adds 55,000 jobs in May
April’s report revised from 32,000 to 65,000, according to ADP

Private employers added 55,000 jobs in May, compared with an upwardly revised gain of 65,000 in April, a report by a payrolls processor showed on Thursday.
Job hopes rise on wave of economic data
Reports don't ‘scream strength’ but they do ‘set encouraging tone’

A handful of economic reports released Thursday raised hopes for an improving job market with fewer layoffs and more hiring.
==========
Posted by at No comments:

Wednesday, June 2, 2010

Is Massive Refinancing During Bubble Years a Ticking Bomb? = Investors Played a Key Role in Creating

[mEDITate-OR:

not see that both previous, and now future, foreclosures...
occurred in the same, select places and will continue.

These are two MUST READ articles.

What these two article also show U.S. is that MOST of the underwater home owners
already took their paper profits out of their homes..., in cash.

Now, they are going to have to pay some or all of it back.
If they can.

And, if they cannot, the lender/bank that gave them the HELOC will have to eat it.

--------
JGBHimself | 06/02/10 2:55 PM


Very good article - probably the best Jumbo loans data we have seen in over a year. Thanks.
As you point out for U.S., the "Jumbo Loan" problem is huge, not being fixed or addressed, and will materially affect the states that have them.
In a recent AZ Republic article they discovered an interesting other problem - builders are now able to buy fully ready lots for a fraction of what it costs to develop them, or what they were a few years ago. That means that they can now build and sell a new home for from 40% to 60% of what the same home was priced at the peak. All existing sand states home owners - & especially those with jumbo loans - are now being attacked from both sides - foreclosures and now brand new homes.
Could get ugly.
-----------

I didn't include it in my article, but I have California stats for origination of HELOCs since January 2003.

It's incredible.  At the peak in June 2005, 91,000 purchase HELOCs were issued.  That does not include any refis.  

Do you know how many were originated in March of this year?  22 for the entire state.  And 18 refi cash outs ... for the entire state.

The banks have completely pulled the plug on HELOC lending there.  They've also reduced or eliminated the unused credit lines of many current HELOC holders on the grounds that the houses have dropped substantially in value.  Most California borrowers also have a HELOC or second mortgage.  They are really up the creek.  Many were using their lines of credit to pay their mortgage and/or live on.  Not much longer though.
Thanks again. Keith Jurow

=============
Is Massive Refinancing During Bubble Years a Ticking Bomb?
============
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