Can the mortgage market crash again? - (www.cnbc.com) During
the height of the housing boom, in 2006 and 2007, one of the fundamental tenets
of home mortgage lending flew out the window: the borrower's ability to repay
the loan. A broad swath of lenders simply took it out of the equation, figuring
that since home prices were rising so fast, borrowers could simply sell their
way out of any trouble. It didn't happen that way. Home prices crashed,
borrowers had no escape from the faulty loan products they'd been sold, and an
epic foreclosure crisis ensued. As a result, Congress created the Consumer
Financial Protection Bureau and directed the bureau to implement the
ability-to-repay rule. It requires lenders to look at a consumer's financial
information, document income and assets; review current debt obligations; and
assess the borrower's credit history. The rule also prohibits some of the
riskier loan products, like low- and no-doc loans, and says that affordability
will be determined based on the interest rate that would prevail in the absence
of any teaser rates.
Europe
August Car Sales Drop as Demand Lowest on Record - (www.bloomberg.com) European
car sales fell in August, bringing deliveries this year to the lowest since
records began in 1990, as record joblessness in the euro region hurt deliveries
at Volkswagen AG, PSA Peugeot Citroen and Fiat SpA. Registrations
dropped 4.9 percent to 686,957 vehicles from 722,458 cars a year earlier, the
Brussels-based European Automobile
Manufacturers’ Association,
or ACEA, said today in a statement. Eight-month sales declined 5.2 percent to
8.14 million autos. The economy of
the 17 countries using the euro emerged from a record six-quarter recession in
the three months through June. Aftereffects such as a jobless rate in the area
that held at 12.1 percent in July led industry leaders at the International
Motor Show in Frankfurt a week ago, including Peugeot Chief
Executive Officer Philippe Varin, to stick to predictions of a sixth
consecutive annual car-market contraction in 2013.
Mortgage
Bonds Imperiled by $17 Billion of Sales: Credit Markets - (www.bloomberg.com) Fannie Mae and Freddie Mac are set to auction as much as $17 billion
of mortgage bonds they acquired before the real estate collapse to
meet a regulatory directive, potentially straining demand at the same time the Federal
Reserve considers
a stimulus pullback. The offerings by year-end of residential and
commercial securities without government backing will follow sales of about $22
billion the past four months from the government-controlled companies,
according to Deutsche Bank AG. The auctions are adding to the $7 billion of new
commercial-mortgage bond deals that Wall Street is planning this month, the biggest
pipeline since Fannie Mae and Freddie Mac began the sales in May. Investors are
bracing for a pullback by the Fed from its unprecedented support for the
economy as soon as this week. While the previous sales haven’t roiled markets,
the future offerings may weigh on prices if Fannie Mae and Freddie Mac start to
jettison riskier types of the debt, according to Brean Capital LLC’s Scott Buchta.
Refinancings
Plummet After Worst Losses in 14 Years: Muni Credit - (www.bloomberg.com) U.S.
localities are scaling back refinancing by the most since 2006 as the worst
municipal bond losses in 14 years push up borrowing costs. With yields near
a 29-month high, refinancings shriveled to just $81 billion this year through
Sept. 11, out of $229 billion of total sales, Citigroup Inc. data show. That’s
down 29 percent from last year’s pace, when localities refunded the most since
at least 2003. From Massachusetts to California, issuers have canceled such
deals, which provide a way to save money other than firing workers or cutting
services. The refinancing drought is also feeding into the bond sell-off by
giving fund managers less cash with which to meet the largest wave of
withdrawals since 2011, according to research firm Municipal Market Advisors.
How
much did the Great Financial Crisis cost America? Nearly $30 trillion - (www.aei-ideas.org) The
Federal Deposit Insurance Corp. says it’s selling $2.4 billion in Citigroup
bonds. That represents the last bit of the bank owned by a government agency
because of Great Financial Crisis bailout. Washington has already cleared
about $13 billion on the Citi bailout from selling a $45 billion investment in
Citi preferred stock for $57 billion. The current sale, according to Bloomberg, “would bring the government’s overall profit
on the Citi bailout to nearly $15.5 billion.” But before we start celebrating
Washington’s savvy investment in Wall Street, let’s recall the total costs of
the financial meltdown. A new report from the Dallas Fed takes its best shot at guesstimating: The
2007–09 meltdown produced a huge downshift in the path of economic output,
consumption and financial wealth. The nation has borne additional costs arising
from psychological consequences, skill atrophy from extended unemployment, a
reduced set of economic opportunities and increased government intervention in
the economy.
Navigating
the financial labyrinth of Germany's Landesbanken - (www.reuters.com)
S&P Says Refinancing Risks Weakening Danish Banks: Nordic Credit - (www.bloomberg.com)
S&P Says Refinancing Risks Weakening Danish Banks: Nordic Credit - (www.bloomberg.com)
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