http://ml-implode.com Tracking the housing finance breakdown. en http://ml-implode.com/staticnews/2012-05-16_HousingandMortgagesFueledbyEuroZoneTroubles.html http://ml-implode.com 2012-05-16 Once again, Europe is making global headlines as Greeks, uncertain of the future, are withdrawing their money from banks. After the talks to form a coalition government fell apart and a new vote was set for June, there is increased fear that Greece will exit the European Union and its common currency. These events are having a positive affect on U.S. housing and mortgages which are being fueled by Euro zone troubles. The National Association of Realtors Quarterly Housing Affordability Index showed that for the first time the index has climbed above 200 since 1970 when record keeping began. The index hit 205.9 with the first time home buyers index at a record 135.8%. The purchasing power of a household is measured by median home price, median family income and the average mortgage rates. While market conditions are favorable for home buyers, good credit is still necessary to obtain a mortgage. As mortgage rates have continued to fall, single family home starts were also up 2.3% in April according to the Commerce Department and the Department of Housing and Urban Development. Although this is a small percentage and does not represent what would be considered a healthy housing market, it is definitely a start in the right direction. The National Association of Builders reported that the Housing Market Index, which measures home builder confidence based on potential buyer traffic and sales, rose 5 points and hit its highest reading since April 2007. As mortgage rates continue to fall, mortgage application activity increased especially with mortgage refinances. For the week ending May 11th, mortgage refinance activity rose 13.0% from the previous week and represented 74.9% of all applications. While government refinances were only 4%, conventional mortgage refinances were up 14%. Right now, most FHA borrowers are waiting for the updated FHA streamline refinance with no cash out which goes into effect June 11th. This program will be offering lower upfront and annual mortgage insurance premiums to existing FHA borrowers who have loans that were endorsed prior to June 1, 2009. The increase in conventional mortgage applications often happens whenever mortgage rates decrease. In many cases, a slight decrease in mortgage rates can make a borrower eligible for approval because a lower rate will reduce the corresponding debt to income ratios to an acceptable level. HARP refinance applications fell to 28% after being just above 30 percent in April. Many borrowers are still not aware that they do not need to use their original lender or servicer in order to refinance with HARP. In many cases, those who have not received an approval from their lender go on to be approved by another lender. While many borrowers know of and understand the details of HARP, there are many more who are not even aware of its existence. Since this program was expanded for underwater borrowers, it will continue through 2013 so that everyone can be reached and given the opportunity to refinance to lower mortgage rates. Continuing efforts are being made to get the word out to homeowners giving them the opportunity to submit online inquiries for HARP without too much effort or information. This has become a very successful means for borrowers to receive what they are looking for, as well as an approval. Europe's financial problems may continue to be an ongoing event not only with Greece, but also with Spain, Italy, Portugal and other countries that are part of the Euro zone. Just in case, the Federal Reserve policy makers suggested that they are ready to further stimulate the U.S. economy if growth stalls or other risks or threats increase, which was stated at the central bank's April 24/25 meeting. In the meantime, while Europe struggles through their problems, investors tend to reduce their risk which will keep mortgage rates low or even push them lower. At the same time, energy prices have fallen giving consumers more money to spend in other areas of the economy including housing. All of these event will help keep mortgage rates down and the housing market moving, even if at a slow pace. FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders' rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard 0.7 to 1% point origination fee. http://ml-implode.com/staticnews/2012-05-16_ChartsOfTheDayFollowWhereTheMoneyWasIsAndWillNotBe.html http://ml-implode.com 2012-05-16 ``So summing up - Where has the cash come from? Central Banks. Where has it gone? Bank reserves and non-financial corporate balance sheet 'war-chests'. Where is it going? Nowhere into the real economy.'' http://ml-implode.com/staticnews/2012-05-16_YoungAmericansdelaypurchaseofhomes.html http://ml-implode.com 2012-05-16 First-time buyers, usually between the ages of 25 and 34, are an important source of incremental housing demand, as they are at the start of a chain of housing transactions. The reduction in demand for "starter homes" has left existing homeowners who want to move on to bigger, more expensive properties in a bind as the pool of people willing to buy their homes has shrunk....Many, like Andrea and James, have moved back home. Almost 6m Americans between 25 and 34 lived with their parents in 2011, up from 4.7m when the recession began in 2007, the Census Bureau said. Brad Doremus, senior analyst at Reis, the commercial real estate research group, said first-time buyers are particularly hurt by tighter mortgage requirements that are even harder to meet with growing student debt burdens.... Roshell Schenck, 28, from Erie, Pennsylvania, has a PhD in pharmacy and earns $125,000 a year -- but yet she is unable to own a home. "Between undergraduate and doctorate schooling and interest, I now have approximately $120,000 in loans," she said. "Although I make a very good salary, there is no government help for housing programmes because of the amount of money I make and there is no one willing to give me a loan because of the amount of student loan debt I have." http://ml-implode.com/staticnews/2012-05-16_WellsFargogives22000toSuicideHotlineAgiftthebankcanusetoo.html http://ml-implode.com 2012-05-16 ``I'm going to remember Wells Fargo's $22,000 gift to establish a suicide hotline forever, and I hope that not only will you remember it too, but that you'll also keep forwarding the story of Norm Rousseau to others for years to come, so they can remember what happened too. Because although I only spoke to Norm for an hour or so... I know for sure that wherever you believe he is right now, he'll smile through eternity if his battle and his death produced that kind of result.'' http://ml-implode.com/staticnews/2012-05-16_ObamaHeadOverHeelsforJamieDimonandJPMorganChase.html http://ml-implode.com 2012-05-16 Now that Obama's financial disclosure forms show that he has a "JPMorgan Chase Private Client Asset Management" checking account with a million bucks in it, maybe a few of the star-struck lefties will look for a fearless leader who isn't connected to Wall Street.I said maybe. http://ml-implode.com/staticnews/2012-05-16_NewUSHousingConstructioninAprilExceedsForecasts.html http://ml-implode.com 2012-05-16 Starts rose 2.6 percent to a 717,000 annual rate from March's revised 699,000 pace that was stronger than previously reported, Commerce Department figures showed today in Washington. The median estimate of 80 economists surveyed by Bloomberg News called for a rise to 685,000. Building permits, a proxy for future construction, fell from a more than three-year hig http://ml-implode.com/staticnews/2012-05-16_ForeclosureVictimsMakeSurprisingReturnToHomeownership.html http://ml-implode.com 2012-05-16 Data is not available, but interviews with more than 30 lenders, builders, Realtors and consumers suggest that a growing number of Americans are getting back into the housing market, even though they went through a foreclosure, bankruptcy or short sale in recent years. http://ml-implode.com/staticnews/2012-05-16_MortgagePrincipalReductionsWeighedforFannieFreddie.html http://ml-implode.com 2012-05-16 The conservator of Fannie Mae (FNMA) and Freddie Mac may let servicers forgive debt on a limited number of mortgages owned or guaranteed by the taxpayer-owned companies, according to a person with direct knowledge of the discussions.The model could be a new California effort that will pay for writedowns using federal dollars set aside for regions that have seen the worst housing-market declines, the person said. Because the government will bear the full costs of the California program, mortgages backed by the two government- sponsored enterprises will be eligible for the first time. http://ml-implode.com/staticnews/2012-05-16_AccidentallyReleasedandIncrediblyEmbarrassingDocumentsShowHowGol.html http://ml-implode.com 2012-05-16 The lawyers for Goldman and Bank of America/Merrill Lynch have been involved in a legal battle for some time -- primarily with the retail giant Overstock.com, but also with Rolling Stone, the Economist, Bloomberg, and the New York Times. The banks have been fighting us to keep sealed certain documents that surfaced in the discovery process of an ultimately unsuccessful lawsuit filed by Overstock against the banks. Last week, in response to an Overstock.com motion to unseal certain documents, the banks' lawyers, apparently accidentally, filed an unredacted version of Overstock's motion as an exhibit in their declaration of opposition to that motion. In doing so, they inadvertently entered into the public record a sort of greatest-hits selection of the very material they've been fighting for years to keep sealed. http://ml-implode.com/staticnews/2012-05-16_NeedyStatesUseHousingAidCashtoPlugBudgets.html http://ml-implode.com 2012-05-16 Hundreds of millions of dollars meant to provide a little relief to the nation's struggling homeowners is being diverted to plug state budget gaps. http://ml-implode.com/staticnews/2012-05-16_WhatScaresMeIsnt2BillionLossJPMorganMadeWhatScaresMeistheRecord1.html http://ml-implode.com 2012-05-16 Bhide takes issue with Dimon's description of the funds that the Chief Investment Office (part of the bank's treasury function) as "deposits" but rather as market funds. He also contends that no one can be running a major risk-taking trading operation along with a huge, sprawling international bank. A major trading operation requires that senior management be on top of position risks, and the organizational and operational demands of running a super big bank make that impossible. Finally, he argues that the risks JPM and other banks are taking are much greater than is commonly recognized, and JP Morgan's profit level in the face of unfavorable conditions for financial firm is proof of unduly high risk levels. http://ml-implode.com/staticnews/2012-05-16_RealDealonRetailEvenWorseThanTheySaid.html http://ml-implode.com 2012-05-16 An underlying "situation," which no one was talking about, was that the market had to settle $35 billion in net new Treasury paper today. That sucked cash out of the accounts of Primary Dealers and others who had bought that paper. The Fed was probably quickly funding that, if it hadn't already greased the skids to counter the Greece skid. The Fed normally settles all of its monthly forward MBS purchases, usually around $30 billion worth, with the Primary Dealers around mid month. It may have sent the cash out on Monday for this round, as suggested by Monday's big drop in Treasury yields.Source: Wall Street Examiner (http://s.tt/1bVP2) http://ml-implode.com/staticnews/2012-05-16_GreeceHeadsForTheEuroExitSevenAndAHalfThingsToKnow.html http://ml-implode.com 2012-05-16 Greeks Walk, Don't Run, From Banks: It's not exactly a panic or a full-blown bank run yet, but it looks like Greece is starting to speed-walk away from its banks -- and maybe the euro. Greeks pulled nearly $900 million out of their banks on Monday and seemed to be withdrawing money at a similar pace on Tuesday http://ml-implode.com/staticnews/2012-05-16_WhenWillWeLearnTheBanksDontThinkWeEverWillButWeMust.html http://ml-implode.com 2012-05-16 In 2007, the banks gambled on mortgages and lost, causing the largest global recession since 1929. They then gambled on European sovereign debt and lost. And now we hear J P Morgan Chase (JPM) just lost $2 billion on a derivatives' bet. Should this not be the last straw?There are important lessons to be learned from all this, lessons the bank lobbyists don't want anyone to hear. http://ml-implode.com/staticnews/2012-05-16_ScreechingHaltinChinaWeakTradeDataImportsandExportsFallWayShorto.html http://ml-implode.com 2012-05-16 China bulls are in for a multi-year shock because rebalancing from an economy overly dependent on exports is going to be far more painful, and last much longer than most think. Data is coming in much weaker than expected, but I propose this is only the very beginning. http://ml-implode.com/staticnews/2012-05-16_AIGWagersonSubprimeBettingSecondTimeDifferentMortgages.html http://ml-implode.com 2012-05-16 American International Group Inc. (AIG), the insurer that needed a $182.3 billion bailout from the U.S. government in 2008 after failed mortgage investments, is betting this time it's different.Chief Executive Officer Robert Benmosche has increased non- government-guaranteed residential and commercial-mortgage backed securities holdings by $11.1 billion since 2010 to $28.4 billion at the end of March, according to regulatory filings. The New York-based insurer has acquired debt sold by the Federal Reserve that the central bank acquired from AIG when the company was rescued, including $600 million of CMBS last month http://ml-implode.com/staticnews/2012-05-15_BillBlackWhyJPMorgangetsawaywithbadbets.html http://ml-implode.com 2012-05-15 ``It is a travesty for JPMorgan to be able to create an additional $2 billion in losses through investments that are supposed to be allowed only if they reduce losses. The government must revise the regulations and reject JPMorgan's absurd treatment of anti-hedges as hedges.'' http://ml-implode.com/staticnews/2012-05-15_FHFAOutlinesStrategicPlanGoalsforNextFourYears.html http://ml-implode.com 2012-05-15 ``The Federal Housing Finance Agency released a draft of its Strategic Plan:  Fiscal Years 2013-2017 this morning.  The document, which lays out goals for those years and methods for achieving them, is available for public comment until June 13.'' http://ml-implode.com/staticnews/2012-05-15_RealDealonRetailEvenWorseThanTheySaid.html http://ml-implode.com 2012-05-15 April is virtually always a down month for that series. This year the the month to month decline as 5.7%. That is bad. Last April the drop was only 2.7%. In April 2010 the decline was 1.6%. Even in the pits of the depression in April of 2008 and 2009, the numbers were only down by 2.2% and 0.2% respectively. The average decline for April for the past 10 years was 2.1%. Any way you slice it, this was a really bad number, far more recession-like than like a recovery. ... [The Fed is] likely to engage in yet more money printing if the economy should begin to shrink. That will be another signal for stocks to rally and the stop-start ratcheting of the economy and the markets will go on. Eventually the Fed will lose control on one of those cycles. We'll know when eventually is at the time, when it becomes apparent that the pumping no longer works, or else it resolves into an extreme inflationary spiral. Either way, it won't end well. http://ml-implode.com/staticnews/2012-05-15_GreekDepositorsWithdrew898MillionFromBanksMonday.html http://ml-implode.com 2012-05-15 In a transcript of remarks by President Karolos Papoulias to Greek political leaders that was released Tuesday, Mr. Papoulias said that withdrawals plus buy orders received by Greek banks for German bunds totalled some 800 million.... Greek banks have seen a steady decline in deposits since the start of the country's debt crisis in 2009, which prompted depositors to withdraw cash and transfer funds to overseas banks. In the past two years, deposit outflows have generally averaged between €2 billion and €3 billion per month, though in January they topped the €5 billion mark.