Archive for June, 2009
Recession is losing steam, Conference Board reports
The U.S. recession is “losing steam” and a slow recovery should begin by the end of the year, the Conference Board said Thursday as it announced that the index of leading economic indicators rose 1.2% in May, the second straight increase.
The increase was in line with the MarketWatch consensus forecast of 1.1% increase. Seven of the 10 indicators improved in May, the private research organization said. The leading index is up 1.2% in the past six months, the first increase since April 2007. The coincident index fell 0.2% in May, “but the declines are less intense,” said Ken Goldstein, an economist for the organization. – (MarketWatch)
Oh really ?
CA Mortgage moratorium clicks into place
A state law imposing a 90-day moratorium on some California home foreclosures takes effect today.
But it’s not all-inclusive. The law lets state regulators grant loan servicers and lenders exemptions if they have a mortgage modification program in place that meets state requirements of reducing mortgage payments to no more than 38 percent of a borrower’s income.
Other requirements include:
• The loan was recorded between Jan. 1, 2003 to Jan. 1, 2008;
• The loan is the first mortgage or deed of trust;
• The borrower occupies the property as their principal residence when the loan becomes delinquent; and,
• The Notice of Default (NOD) has been recorded on the property.
Loans that are exempted under the moratorium include: loans purchased, serviced, or used as collateral by CalHFA; loans where the borrower has surrendered the property, contracted with an organization regarding how to extend the foreclosure process, or filed bankruptcy and the case has not been closed or dismissed.
California foreclosures still climbing
California foreclosures sales jumped 31.9 percent in May, following a 35 percent increase the prior month, according to a report Tuesday from ForeclosureRadar, a Discovery Bay-based company that tracks the daily movements of foreclosures in the state.
“Notices of Trustee” sales, which set the auction date and time, rose 42 percent from April, indicating that foreclosure sales are likely to continue to rise in the weeks and months ahead, the report says. Despite these increases, and a record number of foreclosures scheduled for auction, lenders continue to voluntarily postpone the majority of foreclosure sales, the report says.
The majority of foreclosure sales continue to be taken back by the lender, with 87.9 percent, or 15,599 sales, with a total loan value of $6.98 Billion, taken back by the lender in May.
PS- Sean from FC Radar will be our speaker in September at the Capital City Wealth Builders monthly meeting (Plse. See: CCWealthbuilders.com)
Number of jobless men doubles to 7.5 million
The recession has been particularly hard on men. The latest data from the Bureau of Labor Statistics show that the number of unemployed men aged 20 and older has doubled in the last year alone, increasing from 3.7 million in May 2008 to 7.5 million last month, according to outplacement firm Challenger, Gray & Christmas Inc.
The ranks of unemployed women have also grown during that time, but not nearly as fast. Last month, the BLS counted about 5.6 million out-of-work women aged 20 and over, up from 3.6 million in May 2008.
“Some have dubbed this recession the ‘man-cession’ because of the heavy impact that the downturn has had on construction, manufacturing and financial services; industries heavily occupied by men,” says John Challenger, chief executive officer of Challenger, Gray & Christmas.
“Meanwhile, health care and education, sectors dominated by women, are doing relatively better,” he says.
Very Simple: High Unemployment = Bad RE market
U.S. May housing starts jump 17.2% to 532,000 rate
U.S. housing starts bounced back with a vengeance in May, rising 17.2% to a seasonally adjusted annual rate of 532,000 after plunging 12.9% in April to a postwar low, the Commerce Department estimated Tuesday. The surprising increase was led by a 62% gain in new construction of multifamily dwellings.
Starts of single-family homes rose 7.5% to a 401,000 rate, the highest since November. Economists surveyed by MarketWatch expected an increase to 485,000. Building permits rose 4% in May to a seasonally adjusted annual rate of 518,000. Permits for single-family homes rose 7.9% to a 408,000 annual rate, the highest since November- WASHINGTON (MarketWatch
Note the increase in muti-family- we are turning into renters for now.
Late Payments on Multifamily & Retail CMBS Highest Since 2001
Overdues on securities backed by multifamily and retail commercial loans climbed 29 basis points in May to 2.07%, according to Fitch Ratings Agency — the highest percentage of delinquencies since the company created a tracking index back in 2001.
Foreclosure Scammers Target Short Sales
Scottsdale, Arizona-based National Short Sale Center says more than 50 percent of the homeowners it is working with to secure short sales have been approached by “circumspect individuals or companies” proffering fraudulent foreclosure rescue services.
With 20 percent of the nation’s homeowners underwater, the Obama administration recently introduced a new component of its Making Home Affordable program, aimed at steering struggling homeowners who do not qualify for a federal loan modification toward short sales. The government’s new plan will pay a servicer $1,000 for completing a successful short sale and will pay the borrower $1,500 to assist with relocation expenses.
While a short sale can prove to be a practicable alternative to foreclosure, National Short Sale Center says many struggling homeowners are confused about short sales and fall for deceptive offers, including phone calls, letters, advertisements, and e-mails (also known as phishing).
Travis Hamel Olsen, president of National Short Sale Center, stressed, “Under no circumstances should anybody be paying an upfront fee to complete a short sale. Unscrupulous companies use myriad ways to take advantage of unsuspecting homeowners. Usually if the deal seems too good to be true, then it probably is.”
The types of fraud circulating include sale-leasebacks, quitclaims, stripping homeowner equity, and misleading homeowners into signing over deeds. And with the administration’s mortgage relief initiatives and its recent push for modifications, dozens of bogus companies with official-sounding names and fake Web sites mimicking the fonts and layouts of government sites claim to help struggling homeowners modify their mortgages. Some unsuspecting borrowers have fallen prey to unscrupulous con artists that take them for up to $7,000 before disappearing.
Olsen said, “The fraud usually comes through in the fine print, but foreclosure rescue teams and highly suspect scammers are basically taking homes through a variety of means, resulting in foreclosure and eviction.”
Foreclosure crisis spreads from subprime to prime mortgages
The pace of prime borrowers going into foreclosure is accelerating, especially in states with mounting unemployment or property values that saw a big run-up during the housing boom.
It’s a marked shift from earlier this year, when foreclosures were driven by defaults on subprime loans. And it has major implications — ravaging the credit scores of borrowers who once had unblemished records and dragging down property values in more affluent neighborhoods.
It also threatens to undermine the housing recovery.
“In the beginning, the higher-end (homes) were a bit isolated,” says Kevin Marshall, president of Clear Capital, a provider of real estate asset valuation. “But in the last several months, we’re seeing a significant erosion in the higher-end homes. It’s reached into the prime loans.”
California, Florida, Arizona and Nevada represent 56% of the increase in foreclosure starts, including half of the increase in prime fixed-rate foreclosure starts, according to the MBA. – USA TODAY
Memo to NAR: this is why the median price is going up- not because of recovery !
U.S. regulator: Be wary of reverse mortgages
Reverse mortgages could be the next subprime mortgage product to experience rapid growth while taking advantage of a vulnerable segment of the population, top U.S. bank regulator John Dugan said Monday.
In a reverse mortgage, the homeowner receives money from the lender, which does not have to be repaid as long as the borrower lives in the home.
“I believe the critical lesson here is the need to act early, before problems escalate,” Dugan said.
He said regulators need to set more standards for proprietary reverse mortgages. Regulators also need to be vigilant about misleading marketing and need to crack down on any lenders who try to bundle a reverse mortgage with other financial products, such as an annuity or life insurance product, Dugan said.
US Household wealth drops for 7th straight quarter
The net worth of U.S. households fell by $1.3 trillion in the first quarter, a seventh straight decline that has seen household wealth drop by nearly $14 trillion, the Federal Reserve reported Thursday.
Household net worth fell at a 9.9% annual rate in the first three months of the year to $50.4 trillion, the lowest in more than four years. Net worth — assets minus liabilities — peaked at $64.4 trillion in the spring of 2007, the Fed said in its quarterly flow of funds report. Read more.
U.S. families have lost 22% of their wealth since the peak. Much of the loss came in the fourth quarter of 2008, when households lost $4.9 trillion.
Disposable personal income rose at a 5.4% annual rate in the quarter to $10.8 trillion annualized. Net worth fell to 4.67 times disposable income, the lowest since 1992.
Owners’ equity in real estate dropped to a record low 41.4% of its value.
