Thursday, July 19, 2012

More On The Housing Sector

Of course Obama didn't hesitate to release his taxes, any politician who has never had a real job or worked as a builder of businesses in the private sector is always happy to release their taxes.  But then again, I guess Obama made Romney's businesses happen for him. - friend of mine from NY
I wanted to do a quick follow-up to yesterday's post on housing.  I have been postulating since late last year that the housing market "stability" was completely a function of the foreclosure moratorium that went from the middle of last year until the mortgage fraud settlement early this year plus the low/no down payment mortgage products rolled out by the FHA - and subsidized by you and me.

Yesterday I posted an article which showed that FHA mortgage delinquencies jumped 26% from last year.  Now foreclosures are ramping up:
"Thousands of foreclosures that were stuck in process due to delays over the so-called "Robo-signing" paperwork scandal are working their way through a revamped banking system and heading toward final bank repossession."
Here's the report: LINK  Even more troubling:
Even more indicative of this new surge in processing is that repeat foreclosures hit an all-time high in January, representing 47 percent of all starts, according to LPS. Repeat foreclosures are either failed loan modifications, or loans that banks were attempting to modify but couldn't.
Delinquencies and foreclosures are ramping back up.  Inventory will ramp back up as well.  And then we get today's monthly existing home sales report which showed that existing home sales dropped "unexpectedly" by 5.4% to an 8-month low.  It was not unexpected by me as I've been tracking mortgage purchase applications on this blog, which has indicated that home buying activity is in decline (refinancings are going through the roof because the Fed, in combination with FHA refi programs, has made money almost free with near-zero interest rates out to 10-years).

But wait, isn't this supposed to be the seasonal peak of the home buying season?  If home sales are declining through the peak selling season, imagine how bad it could get for the rest of the year.  And combine that with seriously deteriorating economic fundamentals and we are setting up for another housing/bank catastrophe.  2008-squared.

Circling back the quote at the top, make no mistake by thinking that I support Romney.  I actually don't care who wins the election at this point because it's irrelevant.  Either candidate is controlled by the banking and defense company interests that pay for their election (see Citizens United v Federal Election Commission for why this so:  LINK).  I wish Romney would select Herman Cain to be his running mate because then at least we would have some serious entertainment.  As it is, my only interest in this election is to see just how brutal the mud-slinging will become.


  1. Exclusive: Ex-Goldman mortgage chief plans foreclosed home fund

    (Reuters) - Former Goldman Sachs Group Inc. (GS.N) executive Donald Mullen, one of the architects of the subprime mortgage trade, is trying to raise at least $500 million for a fund that will buy foreclosed homes with an eye toward renting them out.

    As a senior mortgage executive at Goldman, Mullen was actively engaged in derivatives trades that became widely known on Wall Street as "the big short." The deals provided a way for traders and hedge funds to bet against the housing market in the run-up to the mortgage bust.

    Before joining Goldman in 2001, Mullen had held top jobs at Bear Stearns, Salomon Brothers and Drexel Burnham Lambert.

    The sources familiar with Mullen's fund said it will raise money to go after homes being sold at foreclosure or taken over by banks. The fund will target homes that are selling for between $70,000 and $190,000 and mainly in the southeastern and southwestern regions of the United States.

    who knows what gov't incentives will be thrown their way to clean up the shadow inventory

  2. To vote is to voluntarily participate in your own enslavement by a sociopathic parasite who, at best, will completely ignore you or, more likely, will use his newly granted power to ram his dick that much further up your wazoo. The politicians don't give a damn, never have given a damn, and based on that track record, likely never will give a damn. All they care about is power, how to obtain it, how to hold it and how to expand it. The electorate? Screw the electorate. They just don't give a damn. Nope. Don't think I'll be casting a ballot this year or anytime soon. I'll keep what little power I've got for myself and to myself rather than vesting it in some asswipe politician who thinks he knows better than me how to govern my life. Fuck them all, each and every one of them (Ron Paul excepted). Better we should be governed by names randomly drawn from a telephone directory that a bunch of self serving, hypocritical scumbags.

    1) If voting made a difference, we wouldn't be allowed to do it (Mark Twain)

    2) It's not who votes that counts, it's who counts the votes (Josef Stalin)

    Signed, severely pissed off Libertarian

  3. Holy shit you just gave me a reason to care about the election... A Romney/Cain ticket would be hilarious! Nice to get a laugh out of such a pathetic situation. Keep up the good work.


  4. Wrong Reasons

    One of those reasons, according to Victor Nava and Anthony Randazzo, has to do with the nature of the obligations that are being taken on.

    This added debt is coming from increased levels of borrowing on revolving lines of credit. Households are struggling to pay their bills, leading credit card usage specifically to jump 11 percent in May. Essentially, households are taking on more debts with high servicing costs - not low rate home and business loans.

    The latter, for the most part, are paid down over time, leading to reduced debt loads and stronger household balance sheets, while the higher rates and open-ended repayment structure of credit cards and other revolving debt tends to have the opposite effect, leaving consumers worse off. Hence, the authors conclude,

    while the Federal Reserve's recent consumer credit report may appear to paint a rosy picture of Americans who are spending money, taking out bank loans at a growing rate, and generally feeling better about the economy, closer inspection suggests a stagnant economy that is failing to create jobs, and Americans resorting to their "plastic safety nets" just to get by.

    But even if one takes issue with this assessment, it's not hard to find other evidence that suggests the debts being racked up now are increasingly a matter of necessity rather than choice.

    A new report from the Pew Charitable Trust, for instance, detailed by the Huffington Post in "Poorest Americans Turning To Payday Loans To Afford Food, Electricity," reveals that