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

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TOP STORIES:

Mortgages in foreclosure process hit record - (www.sfgate.com) A record share of U.S. mortgages were in the foreclosure process at the end of 2010, matching the all-time high, as lenders and servicers delayed home seizures to investigate charges of improper documentation. About 4.63 percent of loans were in foreclosure in the fourth quarter, up from 4.39 percent in the previous three months, the Mortgage Bankers Association said in a report Thursday. The combined share of foreclosures and loans with overdue payments was 14 percent, or about one in every seven mortgages. Property seizures plunged at the end of 2010 as lenders such as Bank of America Corp. and JPMorgan Chase & Co. temporarily halted proceedings to review their handling of court documents. That left more homes in the foreclosure process with their status unresolved. Repossessions tumbled 32 percent in the fourth quarter from the prior period, according to data from RealtyTrac Inc. in Irvine.

NAR has been overstating house sales for a decade - (www.bayarearealestatetrends.com) Though this is sure to be a huge news story in the coming weeks, the biggest loser will probably be NAR’s already questionable economic integrity. (David Lereah anyone?) Be ready to hear their excuse, “benchmarking drift” or “data drift” quite a bit as this plays out. On that note, consider this remark by Jonathan Miller: Likewise, CoreLogic is attacking NAR’s existing home sales report and for seemingly good reason but I’m sure it is not altruistic. I would guess that CoreLogic wants to be the next Case Shiller in terms of attention, and what better way than attack NAR, the other most highly recognized source of housing market trends, especially one that is vulnerable to criticisms. So, sure, CoreLogic may have alterior motives for wanting to embarrass NAR. But that doesn’t mean that the “attack” isn’t warranted.

The curse of negative equity - (www.miamiherald.com) Hundreds of thousands of South Floridians are underwater on their mortgages, which could have profound impact on the region’s economic recovery, or lack of. Wesley Ulloa bought her first condo for $230,000 in 2007, and watched helplessly as it lost two-thirds of its value during South Florida’s historic housing market tailspin. The 24-year-old real estate agent has been selling units in her Coconut Grove building for $80,000, a figure that makes her shudder each month as she makes her mortgage payment. She’s one of hundreds of thousands of South Floridians coping with the reality of being underwater on their mortgages—one of the most widespread side effects of the real estate market collapse. “I get a little angry. I think ‘Man I bought this for $230,000 and for what I’m paying, I could be in a house’,” she said. “But I can’t dwell on it. I mean, what are you going to do?”

How Underwriting Went Under - (www.newgeography.com) The White House remedies for the mortgage meltdown were presented on Friday. Congress will debate the life extension, death, or rebirth of federal mortgage entities Fannie Mae and Freddie Mac during the coming weeks. When the noise has died down, don't expect substantial change. But those who hope for genuine financial reform should, nonetheless, listen carefully not only to what Washington says, but to whom it says it. Will the new guidelines call on traditional home-loan bankers to make traditional loans? Or will we hear a shout-out to the investment bankers/mortgage traders who designed the mess? In any new financial structure for home loans, the single most important issue will be the ratio of debt to assets that the government will expect lenders to show. During the real estate boom, lenders were willing — and able — to provide mortgage brokers with financing for 100 percent or more of the value of a property with the expectation that real estate prices would rise. We witnessed the triumph of the trader over the banker: Profit relied on the sale or refinancing of the asset. For a mortgage originator or securitizer with no plans to hold on to the mortgage, what really matters has been the ability to place it, not the depth of the underwriting or the long-term financial prospects of the home resident.

US economics: One big Ponzi scheme - (www.english.aljazeera.net) Thank you, Bernie, for breaking your silence - even if you are still clinging to that cover-up mode you adopted since you took the entirety of the blame for your crimes. What is clear is that ripping off the rich is punished far more severely than ripping off the poor. The lengthy sentence you were given spared countless other greedsters and goniffs from facing the music - what music there is. In an interview - with a reporter from The New York Times who is writing a book to cash in on a man who has already cashed out - we learn, in the vaguest terms, that Mr M believes the banks he did his crooked business with "should have known" his figures did not figure. Keeping with the deceit that has served him well over the years, he names no names. That said, how right he may be. There were many who should have known and done something about it. The Securities and Exchange Commission (SEC) and other regulators for one. Perhaps The New York Times for another. Remember, it was Madoff's confession to his sons that started him on his way to his new 12' x 12' home from home - in a federal correctional institute, where he may dream of his seized penthouse, homes and yachts - rather than any press expose. For years, he went undetected by business journalists, who knew - or should have known - what he was up to. There are even questions about the speed with which he was sentenced, preventing him from being tried - a process which, through diligent cross-examination, would have brought us more information on the details of his dirty deals.