Bagholder banks predict big price jumps in 2013, more kool aid

  31 Responses to “Bagholder banks predict big price jumps in 2013, more kool aid”

1. Monday Morning Links | Iacono Research says:

   December 17, 2012 at 5:35 am

   [...] – Globe & Mail London Property ‘Less Frothy’ as Asking Prices Fall – Bloomberg Bagholder banks predict big price jumps in 2013 – OC Housing News BofA’s Moynihan: U.S. Must Rethink Housing Ambitions – Bloomberg [...]
2. el O says:

   December 17, 2012 at 6:37 am

   Speaking of bag holders/kool-aid drinkers……

   since bear markets are notorious for head-fakes (due to misallocation of capital), many hedge funds, PEgroups and Chinese investors speculators are destined to join the ‘sucker class’. It’s already too late for many.
3. Irvine Renter says:

   December 17, 2012 at 7:05 am

   An example of a group seeing what they want to see. They support principal reductions, so they conducted a “study” to blame lenders for predatory lending to justify their calls for principal reduction.

   Nonprofit Imagines Role of Predatory Lending in Foreclosure Crisis

   The Center for Responsible Lending (CRL), a nonprofit research and policy group, rests the bulk of the blame for the recent foreclosure crisis in the realm of “predatory lending.” The group finds disparities in the types of loans that were issued to minorities prior to the foreclosure crisis and finds disproportionate affects of the staggering market on those minorities.

   “The predatory lending practices in the mortgage market caused the worst foreclosure epidemic in U.S. history,” CRL stated in its December report, The State of Lending in America & Its Impact on U.S. Households.

   According to CRL’s estimate, about 3.3 million homes with loans originated from 2004 to 2008 have been foreclosed as of February of this year. Another 3.2 million loans originated over the same period were 60 or more days delinquent or in foreclosure as of February.

   CRL admited, “[f]oreclosures have touched almost every U.S. community, affecting borrowers across racial, ethnic, and income lines.” However, the group asserted, “The disparate impact of the foreclosure crisis on borrowers of color reflects that African-American and Latino borrowers were far more likely to receive higher-rate and other risky loan terms than white borrowers.”

   While a greater number of white and middle- or higher-income Americans lost their homes to foreclosure than minority or low-income Americans, the proportion of minorities who underwent foreclosure in recent years is significantly higher.

   About 11 percent of African-American homeowners and 14 percent of Latino homeowners have had their homes foreclosed as of February. In contrast, 6 percent of non-Hispanic white borrowers have undergone foreclosure.

   From 2004 through 2008, African-American borrowers were 2.8 times more likely to be placed into higher-rate loans than their white counterparts, according to CRL.

   While foreclosures continue to work their way through the pipelines in many areas across the country, CRL continues to observe differences in the way minorities and non-minorities are treated in the mortgage industry.

   Banks and lenders have significantly tightened credit over the past few years, but CRL says the impact is greater among minorities. Conventional, non-government lending to white borrowers declined 67 percent between 2000 and 2010.

   Among African-American borrowers, the decline is 83 percent, and among Latino borrowers the decline is 75 percent.

   CRL understands, “[t]hese current trends in mortgage credit may be temporary responses to the crisis and could abate once the market fully adjusts to the new regulations and protections of Dodd-Frank.”

   • matt138 says:

     December 17, 2012 at 5:03 pm

     Playing the race card!

     • matt138 says:

       December 17, 2012 at 5:09 pm

       What if their real estate agent and loan superhero were of the same ethnicity? Who are we going to point fingers at then? The man behind the curtain? Nah, Bernanke is handing out money to everyone, just like Greenspan.

       • Irvine Renter says:

         December 17, 2012 at 5:51 pm

         If there is a national issue impacting anyone, a group like this will perform a study to say how it must have been a racial conspiracy.
4. Irvine Renter says:

   December 17, 2012 at 7:08 am

   Loan Limits to Increase in Some Areas in 2013

   The Department of Housing and Urban Development recently announced that 19 counties will have their FHA loan limits increased in 2013 compared with the limits in place in 2012. The Federal Housing Finance Agency, meanwhile, announced that the loan limits for Fannie Mae and Freddie Mac will remain unchanged next year.

   The counties receiving higher FHA loan limits are in Alaska and Texas, including Anchorage, Austin and Galveston.

   The minimum and maximum loan limits for FHA loans will remain unchanged in 2013 at $271,050 and $729,750 in high-cost areas. The maximum claim amount and loan limit for home-equity conversion mortgages (reverse mortgages) will also remain at $625,500.

   The conforming loan limit for the government-sponsored enterprises will remain at $417,000 in 2013 and the high-cost loan limit for Fannie and Freddie remains at $625,500. The high-cost limit was established by the Housing and Economic Recovery Act of 2008.

   “The fact that loan limits did not change is a function of a number of factors, including the prohibition on HERA loan limit declines in high-cost areas,” the FHFA said. “Also important is the $417,000 floor on loan limits; in most areas of the country, 115 percent of the local median home price is far below $417,000. In many areas, even significant increases in median home values would not produce loan limits that exceed the $417,000 floor.”

   According to an Inside Mortgage Finance analysis, the baseline loan limit would have dropped over five years to $364,662 in 2012 if it hadn’t been frozen by the no-decline rule. The projection was based on the 12-month change in the FHFA house price index as of the end of September each year. With the 4.0 percent annual increase in the index recorded at the end of the third quarter of 2012, the baseline limit would rise to $379,395 next year.

   During the third quarter of 2012, the GSEs together securitized about $84.4 billion of mortgages that had loan amounts above $365,000, or about 47.5 percent of their total business.

   • Mike says:

     December 17, 2012 at 7:39 am

     “the baseline loan limit would have dropped over five years to $364,662 in 2012 if it hadn’t been frozen by the no-decline rule.”

     I didn’t realize that. It’s sounds like the “Real Estate only goes up!” sales line has been officially adopted by FHA.

     • Irvine Renter says:

       December 17, 2012 at 8:09 am

       Someone at the FHA figured out that lowing the conforming limit also lowers home prices. And since their losses grow exponentially larger as prices decline, they decided to stop creating their own problems.
     • Bonnie Benton says:

       December 17, 2012 at 12:43 pm

       Isn’t much of this “price increase” fueled by few properties in very low price ranges on the market, causing some buyers to purchase larger, more expensive homes; and another influx of mostly Asian cash buyers not subject to appraisal constraints?

       • Irvine Renter says:

         December 17, 2012 at 12:53 pm

         Yes, that is what’s behind much of the recent runnup. I’m also told the escrow cancellation rate is starting to run higher again because those that aren’t buying with cash can’t close the deal when the appraisal comes it at recent comp values.

         Thanks for stopping by, Bonnie.
       • Bonnie Benton says:

         December 17, 2012 at 2:08 pm

         So….we could say there really isn’t true “price appreciation”, just larger, more expensive housing that is selling due to market anomolies. Anything to sell newspapers!

         I’m told that is also causing a run-up in land prices….back to $3M/ac in decent areas….we’re just trying to develop another bubble And TIC is not only flooding the market with it’s own new apartment units, it’s also buying up old projects. As they control rents, they control land prices.
5. Irvine Renter says:

   December 17, 2012 at 7:26 am

   Fed promises to print money until unemployment drops to 6.5%

   (Reuters) – The Federal Reserve, announcing a new round of monetary stimulus, took the unprecedented step on Wednesday of indicating interest rates would remain near zero until unemployment falls to at least 6.5 percent.

   It was the latest in a series of unorthodox measures taken by central banks around the world as major economies face erratic, sub-par recoveries from the global financial crisis and recession of 2007-2009.

   The Fed said it expects to hold rates steady until its new threshold on unemployment was reached as long as inflation does not threaten to break above 2.5 percent and inflation expectations are contained.

   Fed officials, who cut their forecasts for both economic growth and inflation next year, also replaced an expiring stimulus program with a fresh round of Treasury debt purchases.

   “The committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions,” the Fed’s policy-setting panel said in a statement at the close of a two-day meeting.

   Fed officials committed to purchase $45 billion in longer-term Treasuries each month on top of the $40 billion per month in mortgage-backed bonds the U.S. central bank started buying in September. They also repeated a pledge to keep pumping money into the economy until the outlook for the labor market improves “substantially.”

   The Fed will fund the new Treasury purchases with an expansion of its $2.8 trillion balance sheet. Under the “Operation Twist” program, the Fed bought an identical amount but paid for them with proceeds from sales and redemptions of short-term debt.

   Some policymakers view actions that expand the Fed’s balance sheet as economically more potent than those that do not. However, Fed Chairman Ben Bernanke told a news conference that the stimulus would remain about the same, given that the central bank is still purchasing a combined $85 billion per month in longer-term securities.
6. Mike says:

   December 17, 2012 at 7:28 am

   Banks also need some sort of Safe Harbor provision. If they can get an FHA sponsor loan purchased by the Federal Reserve, then there would be no legal recourse against the banks in case the loan defaults. The bailouts will continue into the banks or solvent. I just hope we are not entering an age where all TBTF banks always get a bailout.

   • Me says:

     December 17, 2012 at 10:27 am

     Do you hear that? Its air filling the next bubble. I think the govt and the Fed realize 90% of americans need equity and debt to keep this train moving.

     • Me says:

       December 17, 2012 at 10:30 am

       Its one big game of musical chairs. As long as you always get one more player to the game it doesn’t ever have to end!

       • Irvine Renter says:

         December 17, 2012 at 10:33 am

         Nobody recognized the first Ponzi scheme, and now they are working hard to create another.
       • matt138 says:

         December 17, 2012 at 5:31 pm

         and this is just housing. what about hypothecation, rehypothecation, repos and reverse repos OTC derivatives amongs the commodities and sovereign debt markets? who can keep up? It makes the mind spin

         your wallet is going toward this bailout. not just that, but they will gouge the purchasing power of your bank account, annuities, bonds, etc.

         every ponzi needs its patsy
       • matt138 says:

         December 17, 2012 at 5:32 pm

         An astute blogger posted here once:

         reality bats last
     • Mike says:

       December 17, 2012 at 10:31 am

       The first home builder to state, “Buy now or be priced out”

       Ara #Hovnanian on @cnbc “Everyone will look back five years from now, that hasn’t bought a house and say, ‘What was I thinking
   • Taxxee says:

     December 17, 2012 at 11:00 am

     Big banking needs to appear to be a legitimate business. Just because it’s become a money laundering/insurance fraud isn’t a good reason not to collect a big bonus. Right?

     • matt138 says:

       December 17, 2012 at 5:34 pm

       removing the fear of failure allows for infinite leverage. wealth transfer
7. Mike says:

   December 17, 2012 at 12:02 pm

   Prop 13 News, more articles in the papers. Is something up? Even if it only affect commercial buildings does it still need a vote?

   Is every pillar of Prop. 13 sacrosanct?
   

   By The Bakersfield Californian Saturday, Dec 15 2012 11:00 PM

   Ever since state voters approved two tax measures on the November ballot and elected a Democratic supermajority to the state Legislature, we’ve heard rumblings about Proposition 13 — whether it’s time to change the landmark tax-slashing initiative passed in 1978, and if so how it should be changed.

   Thirty-fours years after Prop. 13′s passage, perhaps the time indeed has come to start a discussion about our state’s tax structure. That doesn’t mean an outright rollback of Prop. 13 but rather a debate about how to best retool our system of taxation in order to fortify vital support services at both the local and state levels to the degree the public demands.

   So far, no one has mentioned rolling back the hallmark cap on residential property tax increases. While this provision has created just as much trouble as any other in Prop. 13, polls show consistent public support for it, so it seems wise not to mess with it. But other areas are ripe for reform.

   Assemblyman Tom Ammiano, D-San Francisco, has proposed changing the method of taxing commercial property, imposing a so-called “split roll” that would tax commercial property at market value. Since commercial property changes hands much less often than homes, it is reassessed less often and therefore enjoys far more benefits from Prop. 13 than residential properties.

   Though Ammiano’s colleagues have given it a lukewarm response, and it terrifies the business community, it could significantly impact tax revenue. Take Kern County, for example, with its vast tracts of land owned by energy companies, mainly oil and gas but increasingly wind companies, too. The current combined value of that land exceeds $35 billion. Significant new revenue would result if those properties were reassessed more often and taxes paid on property values that were closer to the actual market value.

   Other proposals — and the ones getting the most traction — target Proposition 13′s requirement mandating a two-thirds majority vote for local governments wishing to raise special taxes. These lesser-known and less understood restrictions created by Prop. 13 are what have largely contributed to the centralization of control in Sacramento over local services. In short, these rules have hamstrung local governments’ ability to fund local services that local voters want and need.

   Sen. Mark Leno, D-San Francisco, has proposed that parcel taxes to fund school operations be allowed to pass with 55 percent of the vote. He argues that the change would give local voters the flexibility to raise taxes to fund libraries and music programs or improve teaching. Assemblyman Bob Blumenfield, D-Woodland Hills, has been advocating to lower the vote for all local infrastructure bonds to 55 percent.

   It’s completely reasonable to question the need for a two-third majority of the vote to raise special taxes locally, as these two proposals do. What justification is there to require such an overwhelming percentage of the vote?

   Remember Measure I, Kern County’s attempt to raise the sales tax a half-cent to help fund local roads and make the county eligible for more federal money? It garnered roughly 56 percent of the vote in 2006 but failed to meet the two-thirds requirement. In tax-averse Kern County, 56 percent is a major victory on a tax increase. More recently, Los Angeles County voters in November overwhelmingly supported a measure to increase sales tax to pay for transit. But a mere 66 percent of the vote wasn’t sufficient: It fell a half-percentage point short of the two-thirds threshold.

   It’s too soon to endorse any one proposal at this point. And we’d prefer to see more comprehensive reform than bills here and there that target certain aspects of Proposition 13. But the debate on how to restore more local control — yes, in the form of greater flexibility to raise taxes — is long overdue.

   A call for debate on this topic is not to be confused with a call for more taxes. But there’s no denying the tax system that supports California today is broken. And it’s long past time to explore ways to fix it.
8. Mike says:

   December 17, 2012 at 12:05 pm

   And for our Nevada investors and strategic “squatters”.

   Banks push to change Nevada law that crimped foreclosures

   Written by DAVID McGRATH SCHWARTZ Las Vegas Sun

   Foreclosures in Nevada could spike next year if lawmakers and banks roll back a bill passed in 2011 that played a large role in stymieing banks’ attempts to retake homes from Nevadans, according to the state’s banking association president and housing analysts.

   But more foreclosures aren’t necessarily a bad thing for Nevada’s housing market, at least in the long term, according to housing analysts.

   Banks are in talks with Democratic Attorney General Catherine Cortez Masto and lawmakers about how to amend the state law that slowed foreclosures to a trickle in fall 2011, according to the Las Vegas Sun.

   Although foreclosures since have risen, they’re still about a quarter of where they were before the law went into effect.

   At issue is Assembly Bill 284, a measure passed by the Nevada Legislature in 2011 and signed by Republican Gov. Brian Sandoval that forces banks to prove they have the legal right to foreclose on a particular home before they take action. Most important, the law requires bank workers to sign an affidavit that they have personal knowledge of a property’s document history, or they will face criminal or civil penalties.

   Democratic lawmakers and Cortez Masto, who helped pass the bill, said the law was intended to uphold the integrity of the legal process and protect homeowners from banks wrongfully foreclosing on homeowners without having necessary paperwork. She has said it was never intended to prevent legitimate foreclosures.

   But after the law took effect in late 2011, foreclosures in Nevada — which previously led the nation in foreclosures — ground to a halt.

   In August 2011, banks issued 5,350 foreclosure notices in the state, according to the Nevada Foreclosure Mediation Program. In September, there were 4,684 “notices of default.”

   In October 2011, when the law went into effect, the number dropped to 80.

   Since then, the foreclosure filings per month have crept upward, reaching 1,417 in November.

   That is proof, according to some consumer advocates, that banks are figuring out the paperwork behind home loans that had been sliced and diced into various investment instruments at the height of the housing boom. That slicing and dicing is what made it so difficult to determine which entity could legally foreclose on a home.

   Many housing analysts believe the law is stalling legitimate foreclosures and creating an artificial, short-term boost in housing prices.

   Cortez Masto has created a working group involving the state’s largest banks to discuss possible changes to the law in the next legislative session.

   That group includes bankers, servicers, title and other real estate interests, as well as consumer representatives and lawmakers.

   “We do not anticipate recommending repeal of any of the current provisions of the law,” she said in the statement. “The working group is attempting to clarify some of the terms in the law.”

   She said it’s still unclear what recommendations the group will make to lawmakers.

   Bill Uffelman, president and CEO of the Nevada Bankers Association, which lobbies the Legislature, said banks were not looking to repeal the entire law.

   “The Attorney General’s Office and affected parties are working to change the affidavits so it’s workable, without fear of criminal or civil liability,” Uffelman said.

   “Just amend it,” he said. “The notion behind AB 284 wasn’t bad. The policy’s fine. Let’s fix the application.”

   Some housing analysts say the law has allowed some Nevadans to live in their homes without paying a mortgage. Banks, confounded by their own shoddy paperwork and the state law, aren’t able to foreclose for months or years. Economics analyst Jeremy Aguero this fall labeled them “strategic squatters.”
9. darms says:

   December 17, 2012 at 1:39 pm

   $319,000 for that ugly dump of a house? 1,283 sq ft? Does that include the perverted converted garage as well? IR, you’ve had some ugly houses here from time to time but this one is just too much…

   • Irvine Renter says:

     December 17, 2012 at 5:53 pm

     At #319,000, a buyer should get something livable. Unfortunately, that isn’t how Orange County works.
10. Perspective says:

    December 17, 2012 at 2:43 pm

    More programs to help underwater homeowners are being considered:

    “Some struggling homeowners left out of current U.S. government mortgage-aid programs because their home loans have been packaged into private securities could see their interest rates cut through a subsidy being considered by the Treasury Department.

    Under the plan, the government would pay the difference between the new and original interest rates to the owners of the loans for five years in an effort to overcome investors’ objections to mortgage modifications, according to a person familiar with plan who asked not to be identified because the initiative is not final or public.
    …
    Eligible Borrowers
    Borrowers who are current on their mortgage payments and who owe at least 25 percent more than the value of their properties would be eligible for the program, which would reset their loans to the average fixed rate as determined by a weekly survey by Freddie Mac.

    About 930,000 homeowners with loans in so-called private- label securities are both underwater and current on their payments, according to data from JP Morgan Securities LLC…”

    http://www.businessweek.com/news/2012-12-17/treasury-plan-would-cut-rates-on-some-mortgages-in-bonds

    • Mike says:

      December 17, 2012 at 3:27 pm

      Yeah, it’s just to eventually transfer all the underwater loans to FHA, Fannie, and Freddie. Which will then be owned by the Fed as the new investor. Then there will be a Fed principal reduction program…in my opinion.

      • matt138 says:

        December 17, 2012 at 5:42 pm

        I agree. The final tab will be paid by the debasement of our past productivity, savings, and our current productivity, wages. Massive headwinds for standards of living are in the cards. The public is too stupid to grasp that inflation is a hidden tax, thus inflation is accepted.

        The public deserves every kneecapping to which they consent.

        • Irvine Renter says:

          December 17, 2012 at 5:55 pm

          “Massive headwinds for standards of living are in the cards.”

          That’s what I see coming. We should have endured a decline in our standard of living back in 2001, but with the magic of free money from a massive credit bubble, the decline in living standards was avoided for a while.

          The decline in the standard of living won’t be uniform. When inflation comes back those that see their wages rise with prices will survive, but those that don’t will see their paychecks eaten away by higher prices on everything they need to survive.
        • matt138 says:

          December 17, 2012 at 6:50 pm

          Completely agree.

          An added bonus: the majority of the wealthy will continue to invest to keep pace with or outpace inflation, and the poorest will be flogged hardest by the regressive tax, inflation, caused by policies which they vote for.

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