For A laugh During this Time of Adjustment

WHEN INSULTS HAD CLASS....

A member of Parliament to Disraeli: "Sir, you will either die
on the gallows or of some unspeakable disease."

That depends, Sir," said Disraeli, "whether I embrace your
policies or your mistress."

"I have never killed a man, but I have read many obituaries
with great pleasure." Clarence Darrow

"He has never been known to use a word that might send a reader
to the dictionary." - William Faulkner (about Ernest Hemingway).

"He has no enemies, but is intensely disliked by his friends."
- Oscar Wilde

"I am enclosing two tickets to the first night of my new play;
bring a friend... if you have one." - George Bernard Shaw to
Winston Churchill
In response Winston Churchill replied, ."Cannot possibly attend
first night, will attend second... if there is one."

"I've just learned of his illness... Let's hope it's nothing
trivial." - Irvin S. Cobb

"He is simply a shiver looking for a spine to run up." - Paul
Keating

"In order to avoid being called a flirt, she always yielded
easily." - Charles, Count Talleyrand

"Why do you sit there looking like an envelope without any
address on it?" - Mark Twain

"His mother should have thrown him away and kept the stork." -
Mae West

"He uses statistics as a drunken man uses lamp-posts... for
support rather than illumination." - Andrew Lang (1844-1912)

"He has Van Gogh's ear for music." - Billy Wilder

"I have had a perfectly wonderful evening - but this wasn't
it." - Groucho Marx

Mortgage Thoughts

The answer to the following info would be 'Duh'!

I don't know if this falls under the category of late-breaking news, and there are plenty in the industry who will disagree, but "The National Association of Home Builders (NAHB) concurs with a finding by the Federal Reserve Board (FRB) that excessively tight mortgage lending standards are hampering a housing and economic recovery. 'The Federal Reserve's report to Congress confirms what we have been saying for some time: That extraordinarily tight credit conditions are preventing creditworthy borrowers from obtaining home loans and this is harming the housing market and the broader economy,' said NAHB Chairman Bob Nielsen, a home builder from Reno, Nevada." Nielsen feels that the lack of credit extends to housing construction loans as well, which is crippling the housing industry and preventing construction of new homes in markets that need and want them.

Also, this in for all of you procrastinators!

The IRS said that taxpayers will have until April 17 to file their 2011 returns, thanks to two quirks of the calendar this year: April 15 falls on a Sunday, and the following day is Emancipation Day, which is observed in the District of Columbia. By federal law, District of Columbia holidays affect tax deadlines the same way federal holidays do, giving taxpayers an extra day - thank you District of Columbia.

The Recent Piggybanking Crisis

Report on the Recent Piggybanking Crisis

By Eric Hague


The following report, prepared by a bi-partisan committee comprising both Mommy and Daddy, lays out a timeline of the principal events of last week’s Piggybanking Crisis and its aftermath.


4:15 P.M., Last Friday
Daughter Georgia becomes aware that Addison Murphy from next door is placing a recently refurbished dollhouse on the market at an asking price of $30. Because Georgia barely earns enough from her weekly chores to eke out the occasional candy purchase, she has never really considered herself a candidate for doll-homeownership. Nevertheless, she elects to pursue the classic dollhouse dream and begins to explore financing options.

4:24 P.M., Last Friday
Georgia consults older sister Johanna, the manager of a local piggybank with reserves totaling some $30.12, about the possibility of securing a mortgage. Although Johanna is aware of the meagerness of Georgia’s allowance, she feels that the recent precipitous expansion of the neighborhood doll-housing market, coupled with the effects of informational asymmetries—namely, that Georgia can’t really add yet—are enough to justify the risk.

4:31 P.M., Last Friday
Georgia closes on Addison’s dollhouse. She moves two naked Barbies and a velociraptor into it.

12:00 P.M., Sunday
After receiving her allowance, Georgia makes her inaugural mortgage payment to the First Piggybank of Johanna’s Room. Suddenly left with no funds with which to buy M&Ms on the weekly outing to Pathmark, Georgia begins to realize the enormity of her situation.

12:32 P.M., Sunday
Georgia lists her dollhouse with a local pretend-estate agent, Addison’s older sister Emma.

7:04 P.M., Monday
Dumbledore, the family hamster, is found dead in his cage. Georgia is laid off from her job as chief pellet-refiller.

4:19 P.M. Tuesday
Despite a promising open dollhouse with the twins from up on Fifth Street, Georgia still has not found a buyer. Facing the prospect of missing a mortgage payment, Georgia decides to walk away from her underwater dollhouse. She relocates her tenants to the big toy chest in the basement rumpus room.

4:22 P.M. Tuesday
While Joanna is out at the swingset negotiating the sale of Georgia’s subprime dollhouse mortgage to Jackson Meyers from two houses down, Georgia apprises Johanna that she is defaulting on her debt. Johanna announces immediate plans to foreclose on the dollhouse.

8:12 P.M., Tuesday
Confronting a shortfall of Piggybank liquidity, Johanna appears before Mommy and Daddy and requests a bailout. (See minutes from “Tantrum before the Parental Subcommittee on Finance”.)

8:14 P.M., Tuesday
Members of the fiscally liberal Daddy Party announce support for a short-term emergency loan to the First Piggybank. The Mommy Party adopts the view that though Johanna is a big girl now she is not too big to fail. Following a vigorous debate in both the house and the carport, the Daddy Party unilaterally authorizes the lending of $30.00 to Johanna from the Disney World savings jar on top of the fridge.

10:26 A.M., Wednesday
During morning recess, Johanna acquires $30 through the perpetration of a Ponzi scheme involving the fraudulent trade of Silly Bandz commodities.

3:31 P.M. Thursday
Georgia files a choreless claim with Daddy during the Pathmark trip. Daddy grants Georgia a distribution of candy benefits.

5:42 P.M., Friday
Johanna repays the Disney World treasury in full. In spite of this, the Mommy Party attacks the opposition during mid-dinner debate, castigating it for its failure to live up to is promises to create new chores, as well as for its wasteful candy entitlement programs. Desperate to shore up support among daughters of all backgrounds, the Daddy Party announces that the Disney World vacation will happen next month—and that he’ll just charge the trip on his MasterCard.
The Mommy Party opposes this increase in the household debt ceiling. Talks quickly stall, and the Daddy Party is forced to sleep on the smelly couch in the rumpus room.

6:30 P.M., Friday
Aiming to draw attention to the disparity of wealth that exists between younger sisters and greedy investment piggybankers, Georgia decides to occupy Johanna’s room with a blanket fort. Johanna soon finds herself mildly inconvenienced by Georgia’s vague, ineffectual whining and chants of “I am the 50 percent!”

11:30 A.M., Saturday
The Daddy Party calls for an end to unproductive inter-party bickering as well as for his return to the Mommy Party’s bed because his back hurts from the damn couch.

Conclusions
The parental government would like all daughters—regardless of socioeconomic status—to know that even if these conflicts ultimately prove insoluble and in time precipitate a complete parental shutdown, none of this is actually the fault of the general populace of children, and the Mommy Party and the Daddy Party love them both very

So what is Obama getting Michelle.....

by Rob Chrisman

What is Barack buying Michelle this year? A little non-owner unit, perhaps, but not thanks to Freddie Mac's HomeSteps, which is owner-occupied only. The real estate sales unit of Freddie Mac launched a sales promotion for its inventory of foreclosed homes in select states. Under the HomeSteps Winter Sales Promotion, HomeSteps will pay up to 3% of the final sales price towards the buyer's closing costs and a $1,000 selling agent bonus for initial offers received between Nov. 15 and Jan. 31, 2012. Freddie sold a record number of real estate owned properties in 2011 at 94% of market value (whatever that means) and accounted for 4.4% of the nation's inventory of foreclosed properties as of Sept. 30. But accept no substitutes! The offer is valid only on HomeSteps homes sold to owner-occupant buyers - sorry Mr. Obama. It is available on HomeSteps sales in 28 states and the District of Columbia. Hey, before you scoff, take a look - there are some decent incentives and sweet deals: http://www.homesteps.com/.

Twelve miles up the road, Fannie Mae is promoting its HomePath Online Offers system, which collects offers and manages the submission process on properties listed on HomePath.com. On Pearl Harbor Day "agents and brokers representing buyers are required to submit offers exclusively on the web site. Only properties listed in the following areas are eligible to submit online offers on the designated launch date: California, Florida, and Wayne County, Michigan." Fannie believes its system offers, "A transparent offer process that keeps Selling Agents informed of the status of their clients' offers on HomePath properties listed on HomePath.com and improved communication between the Selling Agent and the Listing Broker regarding offers on HomePath properties listed on the HomePath web site." For more information go to http://www.homepath.com/ or give 'em a shout: 1-866-218-4446.

(By the way, Freddie is temporarily suspending all scheduled evictions involving foreclosed occupied single-family 1- to 4- unit residences. Freddie's announcement noted, "1-4 unit residences with Freddie Mac-owned mortgages beginning December 19, 2011, through January 2, 2012. The suspension will apply only to eviction lockouts related to Freddie Mac-owned REO properties and will not affect other pre- or post-foreclosure processes." The press mentions Fannie doing the same, although I could not find its announcement.)

Both agencies still have plenty of "foreclosure cannon fodder" although delinquencies continued to decline in October according to information released by Lender Processing Services. But foreclosure inventories reached a record high during the month, now representing 4.3% of all active mortgages - how does anyone expect house prices to move higher with that overhang out there? The total delinquency rate in the country is now about 8%, down from over 9% in October 2010. Per LPS the average delinquent loan in foreclosure has been delinquent for 631days versus a few years ago when an average foreclosure took 251 days from the first missed payment. The length of the process has increased by three months just since the beginning of this year for various reasons (backlog, type of foreclosure in the state, lawsuits, and so on).

The Fourth Inning and Foreclosures

By John W. Schoen, Senior Producer
If the U.S. foreclosure crisis were a baseball game, we’d probably be in the bottom of the fourth inning.

That’s roughly the message from the latest data on home foreclosures and delinquencies released by an industry association Thursday.

The pace of new home foreclosures edged up again in the third quarter and the number of borrowers falling behind on their payments eased a bit, according to the Mortgage Bankers Association. The good news was that the rate of borrowers who have fallen three or more months behind on their payments has dropped to about 3.5 percent of all mortgages. That’s down from a peak of 5 percent in late 2009. But it’s still three and a half times the “normal” rate of about 1 percent that prevailed before the mortgage meltdown hit in late 2007.

“If you look at the pace of improvement I think we’re three to four years away from the typical pattern of seriously delinquent loans," said Michael Fratantoni, MBA's vice president of research and economics.

Since the mortgage meltdown began in 2007, roughly six million homes have been lost to foreclosure. (Estimates vary somewhat because multiple foreclosures are often recorded on a given property as the homeowner and lender try to avoid it.) Another four million homes are estimated to be at some stage in the foreclosure process. New foreclosures are currently started at the rate of about two million a year.

That pace of new foreclosures may begin to ease more, though. The delinquency rate –- the number of borrowers who have fallen behind on their payments -- fell in the third quarter to the lowest level in nearly three years. For all loans, the rate fell to 7.99 percent from 8.44 percent in the second quarter. That’s down from 9.13 percent a year ago and the lowest level since the fourth quarter of 2008.

Borrowers with subprime adjustable mortgages saw the biggest jump in new foreclosures in the third quarter. Some 4.65 percent of those subprime loans entered the foreclosure pipeline. That's up from 3.62 percent in the second quarter, a 28 percent increase. The MBA said the rise was due in part to an increase in the number of loans that failed to get lender approval for a modification. Some states also ended their moratoriums on foreclosures during the quarter. Overall, the pace of new foreclosures for all loans edged up to 1.08 percent in the third quarter from 0.96 percent in the prior three month period. That’s down from 1.34 percent in the same period a year ago.

A lot depends on the outlook for the economy which, though showing gradual signs of improvement, is not creating jobs fast enough to put much of a dent in the unemployment rate, which is hovering at around 9 percent.

advertisementThe uptick in the pace of foreclosures comes as the U.S. homebuilding industry is beginning to show a pulse three years after nearly shutting down. Though still on track this year to set a record low since 1960, when data were first collected, single family housing starts were up 3.9 percent, and permits jumped 10.9 percent. (Many economists believe permits are a better barometer of housing market strength because they are less affected less by weather and signal a pickup in future construction.)

“This was a good report," said Patrick Newport, an economist at IHS Global Insight. “It has supporting evidence that the single-family market is finally getting off the mat.”

Continued improvement in home sales and prices, though, will depend heavily on the volume of foreclosed homes coming back on the market. Thursday’s MBA data showed that lenders have barely made a dent in the overall backlog of foreclosed homes. Since it began rising in 2007, the foreclosure inventory rate -– the percentage of loans in foreclosure -– has remained stuck at roughly 4.5 percent. That’s four and a half times the “normal” rate of about 1 percent of all homes in the foreclosure pipeline.

Not all of those homes will eventually be seized. Some foreclosures can be “cured” with a loan modification or by a homeowner catching up on missed payments. But the remainder will sit on a lender’s books until they can find a new buyer, often at a “distressed” price. Each new home that enters the foreclosure pieline becomes part of that “shadow” inventory.

“The large number of homes still in the shadow inventory will cast a cloud over the housing market and the wider economy for a few years yet,“ said Paul Dales, a senior economist at Capital Economics.

Dales figures there were something like 4.2 million homes waiting to hit the market at the end of the third quarter. As they do, they’ll continue to depress home prices, which have begun falling again after stabilizing this summer. Falling prices put more borrowers at risk of foreclosing as they burn through the remaining equity in their home and end up “underwater,” owing more than their house is worth. Some 11 million homes, or about 22 percent of all mortgaged homes, are currently underwater. Another 2.4 million have less than 5 percent equity, according to CoreLogic.

Underwater borrowers are more likely to enter a so-called “strategic” default by simply walking away from their home and no longer making mortgage payments. The rate of that default varies widely from state to state, based on both housing market conditions and state laws governing a lenders’ ability to collect the unpaid debt. Some “non-recourse” states protect homeowners from those collection efforts.

advertisementAs more homeowners fall underwater, strategic default has become a bigger headache for mortgage lenders. A recent study by the MBA's Research Institute for Housing America found that strategic defaults tend to cluster around homes already in foreclosure as friends, family and neighbors exchange advice on whether to walk away.

“It’s a concern because of the manner in which it’s become part of the public conversation,’ said Fratantoni.

Estimates of the levels of strategic default are all but impossible to make, the study found, largely because it’s very difficult to determine whether a default was truly “voluntary.” But the study found that one of the most critical variables affecting the pace of such defaults was the length of time a given home was in the foreclosure process.

The longer that process takes, the longer the idea of strategic default has to spread from one borrower to another. Today, foreclosures can take several years to play out in some parts of the country, up from historical levels of three to five months, according to the study.

“This is disastrous for a housing sector trying to recover from a crisis,” the MBA researchers said.

Delinquent payments on mortgages are down but CNBC's Diana Olick explains why they don't tell the whole story.

Home Sales vs. Building

NAR Reports Increased Home Sales, but Prices Drop
Nov 9 2011, 11:16AM
According to the National Association of Realtors® (NAR) home sales rose in every state during the third quarter compared to the same period one year earlier but prices continued to decline. The median price of a single family home declined from the third quarter of 2010 in 111 of the 150 metropolitan statistical areas (MSAs) tracked by the Association and rose in 39. In the second quarter 41 MSAs had annual price gains.

Lawrence Yun, NAR chief economist said that the market is holding fairly even. "Home sales need to recover first - only then can prices stabilize. Existing-home sales are little changed from the second quarter but are notably higher than a year ago," he said. "The good news is inventory levels have been trending gradually down."

Home sales which include single family residences, condominiums, and cooperative apartments, were down nationwide by 0.1 percent to a seasonally adjusted annual rate of 4.880 million units compared to 4.883 million in the second quarter but this was 17 percent above the 4.170 million pace recorded during the third quarter of 2010. That quarter, it should be noted, began just as the popular homebuyer tax credits expired.

Every state posted a gain but in 45 states (including the District of Columbia) those increased sales over a year ago were in double digit territory. The greatest increases were in North Dakota (+39.1 percent), Utah (+38.2 percent), and Nebraska (36.1 percent). On a regional basis, sales in the Midwest were up 25.1 percent, 16.7 percent in the West, 15.5 percent in the South, and 11.6 percent in the Northeast.

Median prices nationally declined 4.7 percent from 177,800 in the third quarter of 2010 to $169,500 in the most recent period. Distressed homes accounted for 30 percent of home sales compared to 33 percent in the second quarter and typically sold at a discount of about 20 percent.

NAR noted that median prices are a reflection of the types of homes that are selling and can be misleading at times because the level of foreclosures can vary notably in given markets. Annual price measures generally smooth out any quarterly swings.

Metropolitan area median condominium and cooperative prices were $167,600 in the third quarter, down 2.2 percent from the third quarter of 2010. Twelve metros of the 54 MSAs tracked by NAR showed increases in the median condo price, the remaining 42 declined.

The median existing single-family home price in the Northeast fell 6.5 percent from the third quarter of 2010 to $236,700. In the Midwest and the South median prices declined 2.2 percent to $142,300 and $153,200 respectively. The median existing single-family home price in the West dropped 9.0 percent to $205,700 in the third quarter from the same quarter of 2010. "Western home sales are dominated by cash investors in the lower price ranges," Yun explained.

NAR's Housing Affordability Index which measures the relationship between median home price, median family income, and mortgages interest rates stood at 183.8 in the third quarter, the second highest on record behind the first quarter of 2011. The higher the index, the greater the household purchasing power.

Twenty-nine percent of home purchases during the quarter were all cash compared to 30 percent in the second quarter and 29 percent one year earlier. Investors, who make up the bulk of cash purchasers, accounted for 20 percent of transactions in the third quarter compared to 19 percent in both the second quarter and a year ago.

First-time buyers purchased 32 percent of homes, down from 35 percent in the second quarter and 34 percent in the third quarter of 2010. Historically, entry-level buyers are responsible for about 40 percent of home purchases.

NAR President Ron Phipps said home sales should be notably higher given the buying power in today's market. "Housing affordability conditions have been at a record high this year, rents are rising and homes are selling for less than the cost of construction in most of the country. For people with secure jobs, good credit and long-term plans, today's conditions will be remembered as a golden opportunity to enter the housing market."

Newest Government Program

By Jim Puzzanghera, Don Lee and Alejandro Lazo

Los Angeles Times Staff Writers
The Obama administration is launching yet another high-profile campaign to shore up the housing market -- and with it, the economy -- by making it easier for some struggling homeowners to refinance underwater mortgage loans at today's ultra-low interest rates.

The federal government's new rules will encourage borrowers to secure new loans no matter how much value their homes have lost during the nation's housing crisis, with the hitch that they can't have missed any mortgage payments for the last six months.

The plan could help 1 million to 2 million people get significantly lower monthly payments in hopes of stabilizing the real estate market. On top of that, it would boost the economy by putting about $2,500 more in a typical homeowner's pocket each year, administration officials said.

But given the huge problems that continue to plague the real estate market, the plan is less a solution to the foreclosure crisis than a firebreak to try to prevent things from getting worse, analysts said. In particular, the program won't help the 3.5 million borrowers who are seriously delinquent on their loans or are already in default.

"It's a step forward, but what we need is a leap forward," said John Taylor, president of the National Community Reinvestment Coalition, an association of organizations that promote access to affordable housing.

The Obama administration has struggled to find a fix for the housing crisis. A program to lure banks to permanently modify mortgages has fallen so far short of its goals that Republicans have pushed to kill it. And the refinancing program, designed to help millions of homeowners, has been revised several times in hopes of making it more effective.

Separately, Federal Reserve officials have hinted in recent days that they could launch another program to buy up mortgage-backed bonds in an effort to pull home loan rates lower.

"They keep trying to find something that's going to work and so far they haven't found the silver bullet. Arguably there's no silver bullet," Bert Ely, an independent banking analyst, said of the Obama administration's attempts to help the housing market.

"More moderate approaches haven't worked, so now they're trying something that frankly is more radical," he said.

The plan could help borrowers such as James Perry, 36, an editor for a television show who owns two properties that are underwater, meaning he owes more on the mortgages than the homes are worth.

Perry bought a condominium in Santa Monica in 2005, near the height of the market, and rented it out after he couldn't sell it. Its value has dropped about 6%, he said. He owns a larger home in Tarzana for his growing family, and its value has plunged nearly 20%.

Refinancing both properties could save him about $400 a month, Perry said. "I am not a rich guy, so $400 a month will help," he said. "I have two kids. I would like to put that toward some college savings, and it would just make for a little more breathing room. We are not in any sort of trouble, but an extra $400 a month will obviously make us happier."

Perry said he tried refinancing the Santa Monica home about a year ago, paying about $500 for the appraisal, but the home's value didn't allow him to qualify for a low rate. Given that experience, he didn't bother trying to refinance the Tarzana home.

The plan announced Monday amounts to a sweeping overhaul of the 2½-year-old Home Affordable Refinance Program, easing rules and reducing fees to allow many more homeowners potentially to take advantage of historically low mortgage rates. Through August, the program had helped 894,000 homeowners refinance.

The revisions include lifting a ceiling that barred participation by borrowers who owed more than 125% of the value of their homes, and using a controversial modeling method to replace costly appraisals that are among the fees that have kept some homeowners from refinancing.

"These are important steps that will help more homeowners refinance at lower rates, save consumers money and help get folks spending again," President Obama said in touting the changes during an appearance in Las Vegas on Monday.

Nevada, California and Florida are among the states hit hardest by the subprime housing bubble crash.

About 14.6 million mortgages nationwide were underwater at the end of the first quarter, about 29% of the nearly 51 million residential mortgages nationwide, according to Moody's Analytics and Equifax. The rate was higher in California, where about 2.1 million mortgages are underwater, a third of the state's 6.3 million mortgages.

Perry's refinancing problems were typical, mortgage experts said. Even though HARP allows underwater homes to qualify, banks usually won't refinance a loan in which the borrower owed more than 105% of the value.