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California homeowners feeling foreclosure pain
The wall street Journal reports….An industry measure of U.S. homebuilder confidence rose in February from a seven-month low in January, but remained at a level that signals lingering worry.
The National Association of Home Builders said its housing-market index, a measure of builder attitudes toward prospects for selling single-family homes,
HUD is waiving the 90 day flipping rule for 1 year effective February 1, 2010
The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of “flipping” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:
• All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
• In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
• The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
Goldman Sachs Posts $3 Billion Gain
Just months after paying back billions in bailout funds, Goldman Sachs reported a profit of $3.19 billionfor the third quarter, or $5.25 diluted earnings per common share, exceeding analyst expectations by about $1 a share. Goldman’s earnings were up 270 percent for the quarter compared to the same period last year.
It was only about 12 months ago that the 140-year-old firm averted collapse by accepting an estimated $70 billion, including $10 billion in TARP; $11 billion from the Federal Reserve; $30 billion from the FDIC; and $13 billion from AIG, as reported by The Huffington Post.
According to Huffington, Goldman Sachs was able to use this money to buy billions in distressed assets around the world at record low prices.
On the company’s Q3 conference call Thursday, David Viniar, CFO, said the firm is looking aggressively at distressed investing, but that holders of distressed assets have yet to loosen their grip.
“We are starting to see a little more than a trickle, but not much more of distressed opportunities,” Viniar said.
The Housing Market is about to Become Even More Oversupplied
While both the media and stock investors believe that housing has bottomed, they are unaware of the massive supply of homes that are already in the foreclosure process that will certainly drive home prices down even further when they are sold. We have been projecting a “W” shaped recovery for some time, and we are becoming even more convinced that we are right. The shape of the second leg down is almost completely dependent on the level of government intervention that will take place.
For a number of reasons, banks have not been aggressively taking title to homes and selling them, which has resulted in very few distressed sales in comparison to the actual level of distress in the market. This delay in REO sales, along with historically low mortgage rates and an $8,000 tax credit, has helped to stabilize the housing market – temporarily.
It is very clear that price stabilization is temporary unless something is done. Here are some facts to help project what housing will be like in 2010:
• 13.54% of the 44.7 million mortgages tracked by the Mortgage Bankers Association are delinquent.
• 7.57 million home owners are delinquent, applying the same percentage to the 11.2 million mortgages not tracked by the MBA (55.9 million total mortgages in the U.S.). That means that 10% of all homeowners in the country are delinquent.
• Based on historical trend analysis by Amherst Securities, 6.94 million homes that are already delinquent will be liquidated, which is more than a one year supply of distressed sales poised to hit the market sometime in 2010 and 2011. During Q1 2005, that figure was only 1.27 million.
• Defaults continue to grow at the rate of approximately 300,000 per month, assuring that the number of distressed sales will grow and will continue through 2012.
By: John Burns Real Estate Consulting, Inc
FHFA: HVCC Not Causing Market Problems
The regulator of the government-sponsored enterprises has moved to clear up “misinformation” about the Home Valuation Code of Conduct that the GSEs adopted three months ago and counter criticism that the new appraisal code is causing problems in the real estate market.
The code was designed to shield appraisers from inappropriate pressure from lenders, borrowers and brokers. But critics are complaining that the code has slowed the appraisal process, led to lower appraisals and the use of unqualified appraisers.
“FHFA believes that the code is serving the intended purpose and will continue its oversight role both as to the implementation of the code by the enterprises and its market impact,” the agency said.
Yea-right !
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.
