Gauging Buyers’ Resolve

by | Jan 19, 2012 | North County Coastal, Thinking of Buying?, Thinking of Selling? | 7 comments

Yesterday during our regular broker preview, I went on a thorough tour of homes around the southern part of NSDCC – Del Mar, Solana Beach, RSF, and Carmel Valley.  As expected, the ‘overpriced-ness’ was astounding.

Are buyers going for it yet?

There are 462 active listings of detached homes in those areas, averaging 148 days on market.  It sure seems like buyers are willing to be patient!

Is there demand?

Here is a comparison of NSDCC detached sales closed between December 1st and January 15th:

Period # of sales $$-per-sf DOM
Last Year
273
$393/sf
91
This Year
279
$354/sf
85

Here is the same chart for just those four areas:

Period # of sales $$-per-sf DOM
Last Year
91
$439/sf
101
This Year
92
$369/sf
96

There are plenty of buyers for well-priced homes, but there is quite a spread – the list prices of active detached listings in DM, RSF, SB, and CV are averaging $689/sf!

Can sellers hold out long enough to outlast the buyers’ patience?

Kicking Principal Reductions’ Can

by | Jan 19, 2012 | Bailout, Principal Reductions | 2 comments

All of these guys are big talkers…..From HW:

Democrats on the House oversight committee are pushing to subpoena the Federal Housing Finance Agency to obtain an analysis looking at what effects principal reductions would have on Fannie Mae and Freddie Mac.

FHFA Acting Director Edward DeMarco has long defended the agency’s policy of keeping Fannie and Freddie mortgage servicers from writing down principal. Allowing such an option would only forge more losses for the government-sponsored enterprises who already owe the Treasury Department roughly $151 billion in bailouts, he and both CEOs at Fannie and Freddie concluded.

However, both CEOs are on their way out, and other Democrats in Congress have pushed the White House to replace DeMarco as well.

Mortgage servicers primarily use principal reduction for loans held on portfolio or for private investors. And it has been used sparingly. In the third quarter of 2011, servicers cut principal on 10,722 modifications, roughly 7.8% of all workouts during the period, according to the Office of the Comptroller of the Currency. Roughly 4 million Fannie and Freddie loans are currently underwater, meaning the property is worth less than the loan on the home.

In a November committee hearing, DeMarco said he would provide the lawmakers documents and analysis used for determining the principal reduction policy.

“We have been through the analytics of the underwater borrowers at Fannie and Freddie, and looked at the foreclosure alternative programs that are available, and we have concluded that the use of principal reduction within the context of a loan modification is not going to be the least-cost approach for the taxpayer,” he said at the time.

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One Million Principal Reductions

by | Jan 18, 2012 | Principal Reductions | 5 comments

From cnbc.com:

About one million American homeowners would get writedowns in the size of their mortgages under a proposed deal with banks over shady foreclosure practices, U.S. Housing and Urban Development Secretary Shaun Donovan said Wednesday.  The deal, which could be struck within weeks, would mark the largest cut in the mortgage load since the start of the credit crisis.

“We’re very close to a settlement that would both fix the servicing problems, but also help over a million families around the country stay in their homes and get help,” Donovan said at a U.S. Conference of Mayors meeting in Washington.

Donovan’s announcement came the same day that two big regional U.S. banks disclosed they had set aside funds related to mortgage servicing matters, a sign that lenders beyond the five largest mortgage servicers may join the expected settlement.

In exchange for between $20 billion to $25 billion in relief to distressed homeowners, the banks — Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial — will put behind them potential government lawsuits about improper foreclosures and abuses in originating and servicing the loans.

Using Donovan’s estimate, the settlement could provide roughly a $20,000 reduction each for the one million borrowers.

(more…)

Timing is Everything

by | Jan 18, 2012 | Mortgage News | 2 comments

Hat tip to DOB for sending this in, from the Charlotte Observer:

As Bank of America Corp. finalized plans to buy the ailing Countrywide Financial Corp., government officials traded emails about the mortgage lender’s troubles, rumors that regulators had a hand in the deal, and the housing market’s role in the looming recession. 

The newly released messages between U.S. Treasury Department officials span the turbulent months between August 2007, when Bank of America first invested in Countrywide, and January 2008, when the Charlotte bank announced plans to buy the nation’s biggest mortgage lender.

Bank stakeholders still lament the acquisition, which led to losses and legal troubles that have continued to pummel the company.

The nearly 40 pages of emails, obtained by the Observer after a public-records request, provide a real-time look at the crisis unfolding a year before the financial meltdown. Subject lines warn of Countrywide bankruptcy rumors. Analysts discuss an imminent mortgage-market collapse. And the Treasury’s communications staffers scramble to deflect questions on whether government officials pressured the bank into the deal – questions that linger today among some Bank of America shareholders and analysts.

California-based Countrywide had seen its earnings soar during the housing boom. But by August 2007, the company was sagging under the weight of its subprime mortgages. Borrowers couldn’t pay their bills, and faltering confidence in the mortgage industry made it hard for lenders to borrow the money they needed to keep making loans.

In an early-morning email Aug. 16, 2007, Treasury official Robert Steel – who would later become chief executive of Charlotte’s Wachovia Corp. – told a colleague that then-Federal Reserve Bank of New York President Tim Geithner had just given him a dismal report about Countrywide’s future as an independent company.

“There was a Countrywide commercial paper issue last night which was solved, but days as indep. Inc. are numbered,” Steel wrote.  The same day, the deepening credit mess forced Countrywide to borrow $11.5 billion from a group of banks, and its stock tumbled.

Later that month, Bank of America invested $2 billion in the company, calling the stake a potentially lucrative vote of confidence, though bank officials reiterated that they had no interest in buying Countrywide outright.

“When we’re able to go and look at their books and see value, I think the market should take that as a sign that things are not as bad as people believe,” a bank spokesman said at the time.

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Rich Toscano on Blog Talk Radio

by | Jan 18, 2012 | Blog Talk Radio, Market Conditions | 5 comments

We’re looking forward to the second talk radio event of the year on Monday, January 23rd at 8pm.

Rich Toscano of www.piggington.com will be our guest!

If you have questions or comments for Rich, leave them here in the comment section, and/or tune in on Monday and be a caller during the show.

Click here on Monday to listen to the show, or www.bubbleinfo.com.

Check out Rich’s latest full post here: http://piggington.com/december_2011_resale_data_rodeo

An excerpt from his article showing how inventory dropped off at the end of 2011:

Rich:  This stat above, which is very important because it combines supply and demand into one figure, was substantially lower than a year prior, by 22.2% to be exact.  So we enter 2012 with a fairly different setup, supply and demand wise, (and thus a more positive outlook for prices) than we entered 2011. 

On a gloomier note, that higher demand is taking place in an environment of lifetime-low mortgage rates… if (when, in my opinion) that prop is removed, the housing market will have to fend for itself a bit more.  Of course, that could be a way off.  In the meantime, those waiting for a big price decline are likely to be disappointed.

Issa and Countrywide’s VIP

by | Jan 18, 2012 | Local Government | 3 comments

These congressmen sure get antsy about being investigated by one of their own. From HW:

An investigation by Rep. Darrell Issa, R-Calif., into the Countrywide VIP loan program that allegedly gave connected policymakers in Washington sweetened mortgages has become increasingly hushed in recent weeks.

The “Friends of Angelo” investigation has been waged over three years now. Previous subpoenaed information from members of Congress went to ethics committees in both chambers. But Sens. Kent Conrad, D-N.D., and former Sen. Christopher Dodd, D-Conn., were cleared by the committees of knowingly taking any such loans from Countrywide. Rep. Edolphus Towns, D-N.Y., denied any wrongdoing as well.

“We’re beyond ethics here,” Issa said during House oversight committee hearing September 2009 chaired by Cummings. “We are at a point where the American people at least should know who they gave money to or benefit to, how they did it, and so on.”

Frustrated with a lack of action from the committee — chaired by Towns at the time — Issa requested the panel hold hearings on the allegations rather than deferring to the ethics committee.

In February, as committee chair, Issa issued a subpoena for documents, emails and other information from Bank of America, which bought Countrywide in 2008, regarding past dealings with members of Congress.

But in December, Issa went to the ethics committee with his findings and did not publicly disclose the names of the four lawmakers he found to be allegedly linked to the VIP program. Two Republicans from California, Reps. Howard McKeon and Elton Gallegly, acknowledged being two of the four Issa mentioned to the ethics committee.

No hearings have been scheduled over the findings, and Democrats claim the discovery of Republican links to the program prompted less public proceedings. But a spokesman for the committee said recent revelations have not altered the course of the investigation at all. With a Republican majority in the House, Issa as the committee’s chair can issue subpoenas and conduct interviews on his own accord, the spokesman said, changing the dynamic from when Issa needed to publicly call on members to move the investigation forward.

A spokesperson for McKeon said in a statement that McKeon was “shocked and angry to hear this” and denied ever meeting or speaking to former Countrywide CEO Angelo Mozilo.

In a letter to Issa Tuesday, Rep. Elijah Cummings, D-Md., reversed his earlier stances on the matter and called for more public disclosures from the investigation, even revealing some details from the subpoena. Documents gathered from the investigation show communications between Countrywide executives Stephen Brandt and Maritza Cruz as they prepared McKeon’s documents. Both Cruz’s and McKeon’s signatures are on the documents, according to Cummings.

Cummings also revealed an internal email at Countrywide from Brandt that alleges Mozilo’s role in approving McKeon’s loan. 

“Per Angelo — ‘take off 1 point, no garbage fees, approve the loan and make it a no doc,'” Brandt wrote to staff, according to Cummings’ letter.

In the letter, the Maryland representative also said evidence from the subpoenas show Mike Farrell, a former lobbyist for the Mortgage Bankers Association, directed McKeon to the Countrywide VIP program.

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