Entries Tagged 'News' ↓
FDIC to Open Temp Office to Handle Resolutions, Receivership Operations
November 19th, 2008 — News
Paulson and Bair’s Dueling Foreclosure Strategies
November 18th, 2008 — News
Treasury Secretary Henry Paulson and FDIC Chairwoman Shelia Bair battled it out on Capitol Hill today over competing plans for the $700 billion Troubled Asset Relief Plan funds.
House of Representatives Financial Services Committee Chairman Barney Frank (D. Mass.) bashed Paulson for shifting his plan for the bailout funds, investing the money in healthy banks rather than buying the troubled mortgages he originally said he would. "The fundamental policy issue is our disappointment that funds are not being used to supplement mortgage foreclosure reduction," Frank said.
Bair, meanwhile, told lawmakers the money should be used to prevent foreclosures. Her plan is to use some of the money to encourage banks to renegotiate loans by guaranteging that lenders get some money back if the loans later fail. Bair says her plan could prevent 1.5 million foreclosures.
Federal Reserve Chairman Ben Bernanke said he supports Bair's approach. Paulson defended his strategy saying the direct investments were needed to shore up the financial system and the best way to support housing prices is for banks to now use that federal money to provide low cost loans.
Builders’ confidence sinks
November 18th, 2008 — News
Robert Shiller (and me) on housing
November 14th, 2008 — News
A shameless plug here that I participated in a 30-minute segment on the "state of the housing market" on NPR's Here's a link to the audiocast, on the off-chance you weren't glued to NPR all day Thursday.
At one point, I interjected and asked Shiller if he thought we were hurtling toward a depression. What prompted me to ask were comments Shiller had made in a separate interview recently where he was pretty bearish. On Talk of the Nation, Shiller seemed a little more hopeful that we can dig our way out this time -- noting that after the Crash of 1929, the country had to wait three years for do-nothing Hoover to leave office and make way for FDR and his aggressive agenda to create jobs through public works programs. This time, we only have to wait another two months (though even that short delay could be enough time for GM and the other automakers to file bankruptcy first).
Photo credit: The National Post, which published an interview with Shiller in early October and which is recommended reading.
Why it’s so hard to sell a house: REOs and short sales
November 13th, 2008 — News
If you are trying to sell a house, this chart might make it hard for you to sleep tonight. It shows what you're up against. The figures come from a Nov. 1-8 nationwide survey of real estate agents conducted by Campbell Communications and sponsored by the publication Inside Mortgage Finance. More than 2,500 agents participated.
As you can see, 29% of all sales in September and October were REO--real estate owned. That means the previous owners lost the houses in foreclosure and the current owners--usually banks--were unloading them. Another 12% were short sales. That means the current owners were selling them for less than the money owed on the mortgage(s).
In other words, about 4 in 10 sales were by people who were highly motivated to get rid of the properties even if they couldn't get very high prices. That helps explain why ordinary sellers are having such a hard time finding buyers. The chart calls them "non-distressed," but a lot of them are feeling quite distressed anyway, thank you.
The survey also found that total sales fell 19% from September to October as economic and financial conditions worsened. It's bad out there.
85,000 homes lost in October
November 13th, 2008 — News
What will soak up excess housing? Time
November 13th, 2008 — News
Bill Conerly at Seeking Alpha has a good post today about how to deal with the excess housing supply. In a nutshell, he says helping people move from renting to owning isn't the right solution because it will just exacerbate the oversupply of rental units. The only solution, in his view, is population growth. That takes time.
Mortgage rates down for 2nd week
November 13th, 2008 — News
CalPERS Real Estate Investments Take A Beating
November 13th, 2008 — News
The $189 billion California Public Employees’ Retirement System, the largest and most closely watched pension fund in the country, has revealed a huge hit to its real estate portfolio. Its housing related assets are down 35% to $6.1 billion as of June 30. Until recently, the big fund was still reporting double-digit increases in its real estate investments. According to a report that will be presented to the fund’s investment committee on Nov. 17, CalPERS’ overall real estate portfolio is down 11.2% for the fiscal year that ended in June.
The fund seems to have made some very basic investment mistakes, including over concentration in its once red-hot home market of California. Among its biggest disappointments is a nearly $1 billion investment in a partnership involving homebuilder Lennar, forestry giant Weyerhaeuser and private equity firms Cerberus and MacFarlane Partners. That partnership, called Land Source, is now in bankruptcy. A report prepared for the fund by independent consultant Le Pastrier Development Consulting found that high-levels of leverage contributed to the volatility of the fund’s housing investments.
CalPERS, known for agitating for corporate governance changes at big companies it invests in, is adjusting its own policies in the wake of the real estate debacle. The fund is busily restructuring its partnerships to reduce debt. In the future, real estate investments will have to pass muster with an internal review committee, an independent fiduciary and a board consultant. CalPERS is still looking for a new chief investment officer. The fund’s previous top manager, Russell Read, bailed out last spring.
Look closely at California’s foreclosure rate drop and you’ll see a new state law clouding the picture.
November 13th, 2008 — News
You might be surprised to learn that the California foreclosure rate actually decreased by 18% in October compared to September, according to RealtyTrac’s new report. But the news isn’t necessarily good.
The state’s filings have dropped for two straight months because of a new law that requires lenders to make a number of attempts to contact homeowners and then wait 30 days before issuing default notices. This has slowed down the number of foreclosures and will likely just delay the inevitable.
Despite the drop in the California rate, foreclosures nationwide increased 5% from the previous month and 25% from Oct. 2007, RealtyTrac said.
And the worst is likely on the way. Rick Sharga, RealtyTrac's vice president of marketing, told me today that he expects a sharp increase in coming months as the economy worsens and more and more people lose jobs.
"Another wave right now is about to come, driven by the economic downturn," Sharga said.