Three Million More Foreclosed Homes to Come to Market

As President, Obama is a failure. To judge for yourself, compare his jobs speech of one year ago in Ohio, with what he is doing and not doing today.

Obama can't help himself. Trying to get his international ego boost, he jets and bows his way across the planet. His travels have not saved one job, one business or one more home from foreclosure.

Thirteen states reported unemployment rates above the national average of 10.2%, according to a government report released on Friday. Michigan is at 15%. California is at 12.5%.

Overall, jobless rates increased in 29 states and the District of Columbia during October, while they fell in 13 states.

Obama announced he will hold a jobs summit on Dec. 3. Obama will meet with financial experts and business leaders to discuss strategies to deal with the nation's labor problem. The man has never held a real job, so as POTUS, he has to have someone explain to him how it is done.

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Even the good die young? High-quality mortgages approaching foreclosure
Posted Nov 20th 2009 2:30PM by Tom Johansmeyer

The loans that got us into this mess were generally the first to fall. Variable rate mortgages written without documentation for people with sketchy credit histories shocked nobody as their slide became an avalanche. But, the good stuff is starting to follow. An increasing amount of fixed rate mortgages offered to borrowers with solid credit histories are feeling their ways to foreclosure. Blame unemployment for this one. When people can't work, it gets pretty hard to pay the mortgage.

Fixed rate, high quality mortgages had a foreclosure a year ago. Last quarter, it jumped to 33%, according to a Mortgage Bankers Association report. As this happened, the amount of homeowners behind on their payments or in foreclosure just set another record high ... for the ninth month in a row. Subprime mortgages are headed in the other direction. Low quality adjustable rate mortgages are now 16% of new foreclosures -- compared to 35% last year. And, more than 18% of Federal Housing Administration loans are anywhere from one payment behind to in foreclosure, with California, Nevada, Arizona and Florida worst off: together, they accounted for 44% of new foreclosures.

The fact that the job market is now to blame for the foreclosure rate does mark a turn in the financial crisis. Until this point, the loans themselves were blamed, especially those involving insane amounts of risk with little verification and (sometimes temporarily) low interest rates. Lending practices have tightened, but the looseness unleashed a contagion on global financial markets which has found its way to the labor market and has revisited housing, though in a different form.

Some are hopeful, but the situation could worsen. Jay Brinkman, chief economist with the Mortgage Bankers Association, notes to The Associated Press that if only a quarter of the 4 million homeowners either three months behind on their payments or in foreclosure are able to stay their homes, "there's a lot of potential inventory coming into the market next year." The foreclosures and subsequent inventory increases would drive prices down, pushing some borrowers into negative equity situations and threatening even more loans.

So, it looks like we're in a footrace. If the job market can recover faster than the foreclosure rate can worsen, it will stabilize the housing market and probably kick us into a virtuous cycle of job growth and home value increases. But, if foreclosures move more swiftly than jobs, the spiral could accelerate.

Happy talk will not fix housing. Housing will lead to deflation.

No one wanted to listen when the housing crisis began. The Republicans were just as bad and clueless as the Democrats, probably worse.

It should have been obvious that falling prices, the evaporation of credit and rising unemployment would create the perfect housing storm. The situation is actually getting worse, not better.

Some of the happy talkers have seized on any morsel of positive news to declare things are improving. Surely, at some time markets will heal, but at a needless price and a mass destruction of equity and capital.

I am not even going to review the suggestions made on this blog and many others that would have helped. It was a waste of time then and remains so now. Doctrine overruled pragmatism. Take your medicine.

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Prime Jumbo Trouble: The Foreclosures Keep Coming
By Nick Timiraos


WSJ
The volume of loans entering foreclosure and the rates of foreclosure starts showed no signs of slowing in July, even amid signs that early stage delinquencies may be slowing. Foreclosure starts increased by 7.1% in July, the second highest month on record, according to a monthly report by LPS Applied Analytics.

Among the report’s key conclusions: Foreclosure rates on prime jumbo loans, granted to borrowers with good credit and too large for backing from government agencies, surpassed the 2.98% average for all loan types in July, and continue to rise faster than any other loan type. Prime jumbo foreclosure rates are up a staggering 634% versus January 2008 levels, according to LPS Applied Analytics.

Meanwhile, a research report by FTN Financial notes that there are some signs that the rapid deterioration earlier this year of Alt-A loans, a level between prime and subprime that includes “liar’s loans” that didn’t require documentation of incomes, could stabilize in the coming months. But the same can’t be said about prime jumbo loans:

There is now very little financing available to support the high end of the housing market, and the performance trends in prime jumbo space are quite troubling. Therefore, we think the prime jumbo sector will surprise to the downside over the next 6-12 months, whereas the performance of the lower-loan balance Alt-A market will continue to flat-line for a few months before slowly improving starting in mid-2010.

A separate report by Hope Now, a mortgage industry coalition, found that foreclosure starts increased in July, to 284,000 from 251,000 in June, even as completed foreclosure sales decreased to 89,000, from 93,000.

Our Rulers and Masters

How the Housing Surge Will End the Iraq War.

Comes with GPS so you can find the kids.

There is a lot of debate about how to win the Iraq war, end the Iraq war or quit the Iraq war. Take your pick but the point is moot. The Iraq war will end for the mundane reason that we will not be able to afford it to continue. The war was financed with cheap borrowed money as was much else in the American economy over the last seven years. The cheap money window for American borrowers has closed. It is all a consequence of the housing mess, exasperated by the deficits in trade, oil, consumer spending, government spending and common sense.

There is not a day goes by without visible and painful consequences being felt because of the mortgage and housing mess. Today it is GE who is taking a hit for it's part in being exposed to some of the toxic waste buried into the financial system. Oil is up, dollar is down and the troubles have just begun.

Call it the revenge of the McMansion or the super-sizing of stupidity but almost all aspects of American life, economics and politics will be affected by the huge misallocation of resources into housing.