KeNo's Housing and Economic Portal: Thursday June 10 Housing and Economic stories

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One in 7 US Homeowners Late Paying or In Foreclosure - (www.cnbc.com) One out of seven U.S. households with a mortgage ended the first quarter late on mortgage payments or in the foreclosure process, although the pace has ebbed now that unemployment appears to have peaked, the Mortgage Bankers Association said on Wednesday. While the rate of new foreclosure actions has eased, a stockpile of loans that are seriously delinquent or in foreclosure means a long path to recovery for the U.S. housing market. "It's like shutting off the oil leak but you still have a lot of oil in the Gulf to deal with," Jay Brinkmann, the MBA's chief economist, said in an interview. Loans that are 90 days or more past due or in foreclosure represent a historically high 68 percent of all problem mortgages. The combination of loans in foreclosure and those that are at least one payment past due declined to 14.01 percent on a non-seasonally adjusted basis from a record 15.02 percent in the fourth quarter, according to the MBA's National Delinquency Survey.

Home Loan Demand Sinks to 13-Year Low - (www.cnbc.com) Demand for loans to buy U.S. homes shriveled to a 13-year low last week, following the expiration of federal tax credits, while near-record low mortgage rates stoked refinancing, the Mortgage Bankers Association said on Wednesday. Mortgage purchase applications sank 27.1 percent to the lowest level since May 1997 in the absence of the popular government support, the group said. U.S. housing groped for footing after more than a year of homebuyer tax credits worth up to $8,000 expired on April 30. Requests for home purchase loans have fallen almost 20 percent over the past month despite low borrowing costs. "The data continue to suggest that the tax credit pulled sales into April at the expense of the remainder of the spring buying season," Michael Fratantoni, the industry group's vice president of research and economics, said in a statement. Overall loan requests were down 1.5 percent, on a seasonally adjusted basis, in the week ended May 14, cushioned by a 14.5 percent jump in mortgage refinancing applications as home loan rates neared historic lows. Average 30-year mortgage rates fell 0.13 percentage point last week to 4.83 percent, the lowest since last November, the MBA said. The record low was 4.61 percent in March 2009, based on the group's survey, which has been conducted since 1990.

Goldman Sachs Hands Clients Losses in ‘Top Trades’ - (www.bloomberg.com) Goldman Sachs Group Inc. racked up trading profits for itself every day last quarter. Clients who followed the firm’s investment advice fared far worse. Seven of the investment bank’s nine “recommended top trades for 2010” have been money losers for investors who adopted the New York-based firm’s advice, according to data compiled by Bloomberg from a Goldman Sachs research note sent yesterday. Clients who used the tips lost 14 percent buying the Polish zloty versus the Japanese yen, 9.4 percent buying Chinese stocks in Hong Kong and 9.8 percent trading the British pound against the New Zealand dollar. The struggles for analysts at Goldman Sachs, which is fighting a fraud lawsuit from U.S. regulators who accuse the company of misleading investors in a mortgage-linked security, show the difficulty of predicting market movements as widening budget deficits, a fragile global economic recovery and tighter financial regulations increase volatility. Stock and currency fluctuations rose to the highest in a year this month as Europe pledged about $1 trillion to stop a debt crisis in the region.

Federal housing aid plan faltering - (www.denverpost.com) The number of homeowners dropping out of the Obama administration's main mortgage-assistance plan is growing and is almost equal to the number who have received permanent relief. The Treasury Department's report Monday was the latest evidence of problems in the administration's $75 billion program. While officials insist the program is helping the housing market turn around, critics say it is merely delaying an inevitable surge in foreclosures. More than 299,000 homeowners had received permanent loan modifications as of last month, Treasury said. That's about 25 percent of the 1.2 million who have started the program since its March 2009 launch. They are paying, on average, $516 less each month. However, the number of people who started the process but failed to get their mortgages permanently modified rose drastically in April. To complete the program, borrowers must make at least three payments on time. About 277,000 homeowners, or 23 percent of those enrolled, have dropped out during that trial phase. That's up from about 155,000 a month earlier, or a 79 percent increase.

Euro Is in Danger: Merkel - (www.cnbc.com) German Chancellor Angela Markel, spooking investors on Wednesday by saying the euro was in danger, urged speedy action to stop market "extortion" and said the EU needed a process for "orderly" insolvency of members. Recommending tough moves against "notorious deficit sinners" in the euro zone, such as withdrawing voting rights, the German leader told parliament in Berlin: "Above all, what's necessary is to develop a process for an orderly state insolvency. "With that we would create an important incentive for euro zone member states to keep their budgets in order." Germany shocked financial markets on Tuesday by taking an apparently unilateral initiative involving an immediate ban on naked short-selling of euro government bonds and on related transactions in credit default swaps (CDS). The country's financial regulator also banned naked short sales of shares in Germany's 10 leading financial institutions.

Greece Denies It's Leaving EU; Euro Pares Gains - (www.cnbc.com) The euro fell from the session high against the dollar and Swiss franc on Wednesday after Greece categorically denied market rumors which said it was considering leaving the European Union or the euro zone. "We categorically deny any thought of leaving the European Union, or the euro zone," said government spokesman George Petalotis.Traders had said the euro had reached a session high on talk of Greece considering leaving the EU. Earlier in the day, a European Central Bank spokesman declined comment on market rumors of fresh central bank action, which are driving up the euro. The euro rallied across the board on Wednesday amid talk of ECB action. An ECB spokesman said: "No comment." ECB policymakers are due to gather in Frankfurt later on Wednesday as usual ahead of their regular Thursday meeting after the laying of a foundation stone for the ECB's new premises.