Mar222016
Lenders destabilize housing with failed bubble-era loan products
With memories of the housing bust fading, lenders embrace loan products proven to destabilize housing markets and cause foreclosures and lender losses.
One of the main factors preventing further home price inflation is the lack of down payment savings among the buyer pool. With super low mortgage rates, even the meager incomes emerging from the Great Recession can finance amounts in excess of the conforming loan limits, which also inhibit higher home prices. Pressure will mount to raise the conforming loan limit, and pressure will also mount to find ways to accommodate potential homebuyers with less than 20% down.
During the housing bubble, lenders gave out second mortgages to anyone who didn’t have a 20% down payment. A common product was the 80/20 loan which had a conventional 80% first mortgage and a higher interest rate 20% second mortgage. Lenders rolled the risk premium into the interest rate on the second mortgage. Unfortunately, lenders and investors in these second mortgages greatly underestimated the risk because they failed to recognize that the proliferation of these products destabilizes the housing market.
Rather than learn this difficult and painful lesson, lenders and investors offer the same loan products that cost them billions and ruined the economy less than 10 years ago.
A Smaller Down Payment, and No Mortgage Insurance Required
By TARA SIEGEL BERNARD, MARCH 11, 2016
While most lenders require mortgage insurance on loans with smaller down payments to compensate for their extra risk, there are several options that do not. A few new programs have become available postrecession, while some older strategies have been resurrected, including the piggyback loan. All let borrowers avoid the added monthly expense of insurance, which generally costs from 0.3 percent to more than 1 percent of the loan amount annually. But borrowers may pay a slightly higher interest rate instead.
I can’t say I am surprised this is happening. Back in November of 2012, I wrote about the financial opportunity of investing in second mortgages in the post FHA = subprime, 12.4% interest cost of FHA insurance, 50% risk premium. Another way to look at the cost of an FHA mortgage is to consider it a 80/16.5 mortgage because the incremental cost of the FHA insurance is only required if borrowers need to borrow the last 16.5% to complete the transaction.
At the time, FHA borrowers were in effect taking out 12.4% second mortgages. Any lender offering second mortgage debt at rates less than 12.4% would be competitive with the FHA. The FHA lowered it’s fees since then making the competitive comparison less lucrative, but the basic math still offers opportunities for second-mortgage lenders — and now they exploit it.
Avoiding mortgage insurance won’t always be possible. Nor will it always be the best or most economical decision. But the good news is that prospective home buyers have options, whether through a traditional bank, a credit union or a newer alternative lender.
“Where we’ve seen the biggest change is in the appetite of jumbo lenders in the private sector to allow for 90 percent financing, which we hadn’t seen be this widespread since before the crash of 2007 to 2008,” said Mark Maimon, a vice president with Sterling National Bank in New York.
In other words, lenders finally forgot about the perils of poor lending they learned during the crash, and they embrace the toxic loan products that cost them billions. Brilliant! Not….
Are you prepared to cover the bills on the next bailout? 
As a taxpayer, you will certainly be asked to do so.
The piggyback or second mortgage — not to be confused with the versions misused during the housing bubble, which permitted up to 100 percent financing — can take different forms. The second loan may be a home equity line of credit, which typically carries a variable rate that is based on the prime rate plus an additional margin set by the lender. It generally requires only interest-only payments, but adjusts to a principal and interest payment after 10 years. (Fixed-rate second mortgages, say over a 20-year term, may be also available, but rates are usually higher than the line of credit.)
How are these loans not to be confused with the versions misused during the housing bubble when they carry most of the same terrible characteristics? An interest-only HELOC with a variable rate is better? WTF? How do people not see this as a huge red flag?
Piggyback seconds making a comeback
By JEFF LAZERSON, March 18, 2016
Stunning! That’s what I was thinking when I learned this week that for the first time in eight years, big-boy second mortgages are back.
You can now get a fixed-rate second mortgage all the way up to $500,000 bringing just 5 percent to the table. This offers you extraordinary buying power.
Does the market need more buying power and more leverage, or does it need lower prices and higher incomes?
Leverage is never the answer. Didn’t we learn that lesson 10 years ago?
For example, now you can buy an Orange County home for up to $1,184,736 with a $59,236 down payment, receiving fairly priced money (not highway robbery rates).
You do a Fannie Mae first mortgage up to $625,500 and a $500,000 piggy-back second for a combined total loan amount of $1,125,500. You will need a 760 middle credit score for sure to get this lean, mean, leverage machine.
Say you already own your home. Go bigger!
You can cash out up to $500,000 by taking out a new second mortgage, allowing you to keep an existing first mortgage of up to $1 million on the first, with a total loan-to-value of 95 percent. You can squeeze out almost all of your home equity if it’s needed. Nice!
Nice? Are you kidding me? This is a disaster waiting to happen. Perhaps it’s time to refresh everyone’s memory on how the credit cycle works.
Housing Markets and Drag Racing
My father is a motor-sports enthusiast. I spent many evenings in my youth attending auto races at the oval short-tracks across Central Wisconsin: Dells Raceway Park, Golden Sands Speedway, State Park Speedway, Madison International Speedway, Rockford Speedway, and the Milwaukee Mile Speedway. I have many fond memories, and to this day, the smell of burning rubber and the uproar of racing motors reminds me of those exciting evenings. For several years we attended drag races at Great Lakes Dragaway, where I watched the stars of the sport compete.
Each drag race begins with a ritual; first, the drivers warm up their tires with a crowd-pleasing, high-power tire burn, and as the anticipation builds, the drivers position their cars near the starting line. From that point on, the drag strip’s Christmas Tree lights direct the show.
The starting line has two sensors: the first lets a driver know they are near the starting line, and the second tells them they are on the line. Once both cars are staged (both lights are on), the Christmas Tree begins a countdown through three yellow lights followed by the green light signal. (Have you been on the Xcelerator at Knotts?) If a racer starts too soon, a red light appears, and they are disqualified.
So what does this have to do with housing markets?
Some of the cartoons I create contain valuable conceptual teachings (and some are just silly). The graphic below illustrates the stages of a loan-induced housing bubble by comparing the stages of the process to the beginning of a drag race.
Housing bubble rallies are just like drag races. First, the preconditions for a bubble must be established; like drag racers positioning themselves, the housing market must first stabilize and prices must start rising again. Without these preconditions, lenders won’t loosen credit standards, offer toxic loan products, and inflate a housing bubble. At this stage, the 30-year fixed-rate mortgage, the only stable loan product known, forms the bedrock of the market. We just completed this stage over the last four years.
The very first sign of a housing bubble is the increased use of adjustable-rate mortgages. People generally use ARMs because they can’t afford the higher interest rates of a fixed-rate mortgage; in other words, they are buying houses they can’t afford. We haven’t seem much of this yet because mortgage rates are still near record lows, but it’s coming.
The second sign of a housing bubble is the use of interest-only mortgages. In the past, the housing market would proceed to this stage without hindrance or hesitation, but with the new Dodd-Frank qualified mortgage rules in place, rules which ban interest-only mortgages, the inevitable progression to this toxic form of financing should at least be slowed down. Ideally, the next housing bubble will not inflate because its growth will stop at this stage.
If we are fortunate, private equity won’t embrace interest-only mortgages again and cause it to proliferate, but the first step toward that end is embracing interest-only HELOCs and second mortgages, which the story from today demonstrates is already occurring.
The final stage is the widespread proliferation of toxic loan products like Option ARMs. Once financing crosses the Ponzi threshold of interest-only loans, the market destabilizes, mortgage defaults accelerate, and a credit crunch becomes imminent; it’s only a matter of time before lenders realize their folly and abruptly stop making bad loans. Once that happens, credit tightens, and lenders retreat to the stability of 30-year fixed-rate mortgages.
Do we really want to repeat the mistakes of the housing bubble?
Come join us on Thursday
The homebuying season started early this year due to the low mortgage rates. If you or someone you know are considering buying this year, I invite you to come out to our event at JT Schmids on Thursday. We provide free appetizers and drinks and great presentations. I hope to see you there.
RSVP for event here.
[listing mls=”PW16057954″]
Inventory shortages, affordability concerns crush existing-home sales
The latest existing-home sales report confirms how barren the market is as almost every sector of housing continues to suffer from the impact of barely any inventory.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, tumbled 7.1% to a seasonally adjusted annual rate of 5.08 million in February from 5.47 million in January. Despite last month’s large decline, sales are still 2.2% higher than a year ago, the National Association of Realtors report stated.
Lawrence Yun, chief economist for the real estate agent trade group, said existing sales disappointed in February and failed to keep pace with what had been a strong start to the year.
“Sales took a considerable step back in most of the country last month, and especially in the Northeast and Midwest,” he said. “The lull in contract signings in January from the large East Coast blizzard, along with the slump in the stock market, may have played a role in February’s lack of closings.”
“However, the main issue continues to be a supply and affordability problem. Finding the right property at an affordable price is burdening many potential buyers,” Yun said.
Although the previous January existing-home sales report was hampered by a lack of housing supply, existing-home sales still surged to the highest annual rate in six month.
The month before that also jumped since the delayed closings due to TRID pushed a portion of November’s would-be transactions into December’ figure.
Total housing inventory at the end of February grew 3.3% to 1.88 million existing homes available for sale, but is still 1.1% lower than a year ago (1.90 million). Unsold inventory is at a 4.4-month supply at the current sales pace, up from 4.0 months in January.
Ten-X, an online real estate marketplace, projections showed that existing home sales for February would fall between seasonally adjusted annual rates of 5.23 to 5.58 million annual sales, with a targeted number of 5.4 million.
“Constrained inventory will continue to limit the recovery of the housing market, and it doesn’t seem likely that we’re going to see a surge in the number of homes for sale as the spring home buying season approaches,” Ten-X Executive Vice President Rick Sharga said about the forecast. “As demand appears to be growing, especially in certain geographies, prices are likely to rise, impacting affordability, and leaving homeownership just out of reach for many would-be buyers.”
You can’t taper a ponzi, so the fact that these types of loan products are making a comeback indicates:
1)at current price levels, the world is running out of greater fools.
2)sell-side desperation has begun to set-in.
3)the ‘up’ cycle is nearing its end.
Yes. This is exactly how Ponzi schemes get built. Interest-only loans define the Ponzi Limit. Once those start to proliferate, the market has gone full Ponzi. We all need to hope Dodd-Frank does its job of curbing the coming excess.
Lawyers wrote Dodd-F.
Lawyers are wordsmiths = loopholes
Nuff said 😉
Every creditor is free to make as many non-QM loans as they desire, and corner the market. They’ll just have to reserve for and manage the risk. The further a mortgage loan deviates from the QM standard, the more likely, in the event of default, the borrower will get to hit the creditor with steep damages.
Majority fears future generations ‘will never be able to buy a home’
A large majority of people in Britain fears that future generations will never be able to buy or rent a home to settle down in.
Research published on Monday shows three-quarters of people worry that long-term homes are out of reach, with the level of concern highest among members of generation X, now aged between 37 and 50, and generation Y, aged between 15 and 36. The poll by Ipsos/ Mori for the housing charity Shelter also found that 25- to 34-year-olds have moved more than twice as frequently per year of their lifetime as pensioners.
Shelter said the findings were “alarming” and warned the country was at the “mercy of the housing crisis”, which has left millions facing a “lifetime of instability”.
The survey came as the average house price in England passed the £300,000 mark for the first time, increasing from £299,287 in February to £303,190, according to the property website Rightmove.
Asking prices have jumped by more than £100,000 typically over the last decade, it said. In March 2006, the average price was £200,980.
Average prices hit new heights across six regions. A typical home now costs £644,045 to buy in London; £399,680 in the south-east; £326,836 in east England; £292,251 in the south-west; £204,140 in the West Midlands; and £177,437 in the north-west.
Rents rose on average by 4.8% last year across the UK, according to data from Homelet, an insurance company. They rose 7.7% in London, 6.7% in the east Midlands and 6.5% in the south-east.
Campbell Robb, chief executive of Shelter, said the nation’s housing system was broken.
“The fact that vast numbers of people fear their grandchildren will never have a home to put down roots highlights the sad truth that this country is once again at the mercy of a housing crisis. Our current housing shortage means millions are facing a lifetime of instability and, understandably, people are giving up hope. But if our history tells us anything, it’s that together we can make things change. For the sake of future generations we cannot make this crisis someone else’s problem.”
He added: “You have graduates starting on £40,000 to £45,000 in London, and they don’t take the jobs because they can’t afford to live in London or can’t afford to buy because it is so expensive. We are seeing a generation of people now in their 50s or 60s who are looking at their children, and their children will be worse off than they are. That is the first generation since the second world war that we are seeing that happen to, and that is primarily because of the housing market.”
In the year to December 2015, work started on 143,500 new homes across the UK, an increase of 91% on the building slump in 2009. The figure is still well short of the estimated 250,000 new homes needed each year to meet demand.
In England only 23,540 of the new homes started in the year 2014-15 were built by housing associations which rent out properties at below market rate, according to government figures. Just 1,890 were built by councils over the same period.
A Cheaper Way to Battle Recession
A dumb idea on many levels
What should the U.S. government do to fight recessions? What should it do to fight slow growth? This is the eternal question of so-called countercyclical policy. The two mainstream ideas are fiscal and monetary stimulus. The fiscal version works by having the government borrow and spend money, either on useful things like infrastructure, or by simply mailing people checks. The typical monetary variety works by having the Federal Reserve swap money for financial assets, which lowers interest rates.
Unfortunately, both of these methods have major drawbacks. Fiscal stimulus is dependent on Congress, which these days doesn’t tend to respond in a rapid, reliable or even a responsible way. Monetary stimulus just doesn’t seem to work very well when interest rates are near zero — the impact of quantitative easing, for example, was questionable.
Because of these limitations, macroeconomists have been trying to dream up alternate ways of stimulating the economy. One of these ideas is the so-called helicopter drop — have the central bank print money and give it to people. A second idea is to make interest rates very negative, which would probably require forcing people to use electronic money rather than physical cash.
A third new idea is to have the government lend people money at very low interest rates. The basic reasoning is that people have constraints on how much they can borrow — not everyone can get a mortgage, or take out a large loan on a credit card. This creates limits on how much they can spend. The government, on the other hand, can borrow almost unlimited money, at far lower interest rates than normal people. The interest rate on one-month Treasury bills is just a bit more than 0.25 percent, while credit-card interest rates are about 15 percent.
Suppose the government offers loans to citizens at 0.5 percent, up to some maximum amount per-person. If people repay the loans, the government makes a profit. If they don’t, the amount they don’t pay back acts as fiscal stimulus. Either way, people will tend to spend the money they borrow, giving a bump to aggregate demand in the short term. Because some people will pay back their loans, the cost to the government — and thus to the future taxpayer — is lower than for pure fiscal stimulus.
This approach was suggested by University of Michigan economist Miles Kimball, in a 2011 paper entitled “Getting the Biggest Bang for the Buck in Fiscal Policy.” He called the proposal “national lines of credit.” More recently, it has been suggested by the University of California-Berkeley’s Brad DeLong, under the name of “social credit.”
Now, some research suggests that the U.S. government may have already done a version of this during the Great Recession, and that it helped fight the slump. In a conference paper entitled “Credit Policy as Fiscal Policy,” Massachusetts Institute of Technology finance professor Deborah Lucas documents more than 150 programs that the government used to lend to or encourage lending to consumers. Here, from Lucas’ paper, is a picture of total nonemergency federal loans, including direct loans and guarantees:
http://assets.bwbx.io/images/iB2gKqQx5KIc/v1/640x-1.png
Lucas calculates the impact of these loans on aggregate demand, using standard estimates of fiscal multipliers. She finds that federal lending did as much as the American Recovery and Reinvestment Act of 2009 to stimulate demand and keep the economy from crashing during those dark years.
Obviously, if federal lending can be used to stimulate aggregate demand at a much lower cost than fiscal stimulus, it’s something to consider. However, there are some potential drawbacks.
One potential problem is that when the government lends to lots of individuals, it changes the relationship between citizens and their government. The Treasury will want to make sure that as many people as possible repay their federal loans, since deficits look bad politically. But since the government also controls policy regarding loan repayment, this gives leaders an incentive to make defaulting on debt much harder.
This is happening with student loans. The federal government — which owns most student loans — has proven to be a ruthless debt collector. When you borrow from a bank and can’t pay it back, the government can step in to protect you with personal bankruptcy law. When the lender is the government, such protection may not be forthcoming.
A second, related problem is fairness. If the government is lenient in collecting debts, then people who pay back their loans may feel cheated when their neighbors fail to repay.
So there are serious political problems with using national lines of credit. But the evidence shows that it can give a big boost to demand, so the challenge is to find ways to minimize the political problems. Not only are national lines of credit a potential tool for recession-fighting, but they might even be useful for boosting growth to higher levels in a sluggish economy like the one the U.S. now is experiencing.
Another alternative is we could pay people to spend the government’s money. It’s a combination of a helicopter drop and positive interest rates on debt (not deposits). The quicker you spend the money, the more you get paid to spend it. Wait, we already have those – they’re called Democrats. Republicans are a close second, and would probably be first, if not for Tea Party activists.
LOL! The ideas these people are floating are nutty.
Why even bother to call these loans. If people know the federal reserve printed the money and there are no consequences for failure to repay, why not just call it a handout because that’s what it is.
We’re getting too cute with our ideas. We have buffers in place to help those in need during difficult times.
I’m starting to think that most economists are just bored because not much changes in the realm of economic theory. Coming up with wacky schemes must be a fun mental exercise that keeps them stimulated.
One problem I’ve noted with economists is that they rarely think through the moral and ethical implications of what they propose, and they fail to think through the inevitable changes in behavior that result from the new incentives. Giving poor people loans with an option to repay may stimulate the economy, but think about the moral hazards that creates.
Oh Contraire,
They warmly embrace moral hazard as the key piece that drives the credit cycles and economic growth… it is a key part of their theory of being able to drive economic expansion.
You either get on the bus and play the game or get left in the dust.
Freddie Mac: 4 financial hurdles blocking homeownership
Nearly three quarters of renters think that renting is a more affordable choice than homeownership, even though, according to the facts, it’s more affordable to buy, a survey from Freddie Mac reported.
The survey found that 70% of renters currently feel renting is a more affordable choice than homeownership and 55% plan to keep renting in the next three years.
The quarterly online survey of renters was conducted in January and February 2016.
And this view doesn’t change across generations, with 70% of Millennials, 61% of Gen Xers and 73% of Baby Boomers thinking that renting is a more affordable choice for them.
“Renting is becoming a popular choice among many age groups,” said David Brickman, executive vice president of Freddie Mac Multifamily. “While most renters still have favorable views toward homeownership and aspire to it, many choose to rent because they view it as more affordable and a better fit for their lifestyle right now.”
The survey also found that 46% say renting is a good choice for them now regardless of whether they plan to buy or believe they will be able to afford to do so.
The percent is even higher among Millennials, with 54% saying renting is a good choice for now.
Here’s what financial hurdles renters who plan to buy in the next three years still indicate they have to overcome:
* Affording a down payment (36%)
* Not a good enough credit history (35%)
* Not making enough money (30%)
* Carrying too much debt (23%)
However, 52% of single-family home renters say that they plan to purchase a home in the next three years, compared to 36% of apartment renters.
The macabre truth of gun control in the US is that toddlers kill more people than terrorists do
This week, in my country, considered by some of its more embarrassing denizens to be the “greatest country in the world”, an outspoken Florida “gun rights” advocate left a loaded .45 calibre handgun in the back seat of her car and was promptly shot and wounded by her four-year-old child. Truly a pinnacle of human potential, much like the invention of paper in second-century BC China, or Aristotle holding forth in the Lyceum, or whoever first pointed out that Florida looks like America’s penis.
What do you say about the outspoken Florida “gun rights” advocate who left a loaded .45 calibre handgun in the back seat of her car and was promptly shot and wounded by her four-year-old child? I take no pleasure in violence and pain. I’m not happy that Jamie Gilt, 31 – who has built a thriving web presence on the argument that guns are not only perfectly safe around kids, but necessary for their protection – left a loaded handgun in reach of her four-year-old son, who then picked it up, aimed it at his mother, and pulled the trigger. I find zero delight in the thought of Gilt’s toddler’s almost certain panic and horror in that moment, nor the guilt he may well carry for the rest of his life (guilt that only his mother deserves). I’m sure being shot in the back really hurts – even more so when it comes with a side of nationwide liberal schadenfreude.
But I have no interest in letting Gilt off the hook. Her child could just as easily have shot himself, or a passerby, or someone else’s child. With just a few tweaks of location and circumstance, he could have shot my child. Someone else still could, accidentally or with intention – it’s a possibility you have to consider in a country with so many guns and so few laws regulating them. That’s the macabre truth of parenting in 21st-century America.
I grew up with the same persistent, low-grade fear of gun violence as any American – my middle school was once locked down because of a shooting at the high school up the street, and I was a junior at that same high school when we watched the Columbine massacre unfold on TV – but my family didn’t have guns, and we lived in a liberal city so most of my friends’ parents didn’t either. Guns were scary, but for the most part they felt far away.
Growing up here myself didn’t prepare me for how distinctly, viscerally frightening it would be to raise children in a gun-obsessed nation. My step-daughters go to school in a borderline-rural suburb, whereas I was educated in central Seattle. They already know of at least one friend-of-a-friend who was killed in a school shooting. Many of their friends’ parents are gun owners. Not only that, but, over the past few decades, the National Rifle Association has been aggressively and successfully rolling back firearm restrictions, making gun ownership as quick and easy for anyone’s irresponsible, drunk cousin as their meticulous, gun-safety-trained dad. When we send our kids to friends’ houses for sleepovers, it sometimes feels like a leap of faith.
In the US in 2015, more people were shot and killed by toddlers than by terrorists. In 2013, the New York Times reported on children shot by other children: “Children shot accidentally – usually by other children – are collateral casualties of the accessibility of guns in America, their deaths all the more devastating for being eminently preventable.”
And I’m supposed to believe that frightened Syrian refugees – or whomever becomes the next rightwing scapegoat du jour – are the real threat to my children? I’m supposed to be afraid of sharks? Heavy metal music? Violent video games? Horse meat in my hamburger patties? Teenagers pouring vodka up their butts?
States with more guns have more gun deaths. Keeping a gun in your house increases your chances of accidental death by shooting, but does not make you safer. A woman’s chance of being murdered by an abusive partner increases fivefold if the partner has access to a gun. “Good guys with guns” are a fantasy. How much longer will we keep participating in this great collective lie that deadly weapons keep us safe?
The accidental shooting of Jamie Gilt is the object lesson that my absurd nation deserves. When even supposed gun safety experts cannot keep themselves safe from their own toddlers, we should take that as an unequivocal reminder that guns are inherently dangerous. They are exploding projectile machines designed specifically for killing. And that’s not bleeding-heart hyperbole – it’s the explicit reason why many people are drawn to them. Cowboy games. Vigilante justice. Power.
America does not get to claim some hypercivilised global high ground when we foster – legislatively and culturally – a system in which incidents such as Gilt’s are not just possible, but inevitable.
This seems like one example of an epidemic of bad parenting.
There are 42.6 poison exposures in children younger than 6 years/1000 children.
Many more toddlers die from drowning in swimming pools than die from guns. Are we going to ban all swimming pools in California?
Car crashes are the leading cause of accidental death for children 12 and under (~9000/yr). A third of these deaths occurred when the child wasn’t wearing a seat belt. Often, the parent has been drinking and the child isn’t wearing a seatbelt.
All of these accidental deaths are preventable – fences, trigger locks, cabinet locks, and seatbelts go a long way.
This is why we regulate swimming pools and car safety – because we are dumb and reckless, and these things are extremely dangerous.
I can’t have a reasonable discussion on gun regulation with my gun worshiping friends/family. So I don’t.
February breaks global temperature records by ‘shocking’ amount
February smashed a century of global temperature records by a “stunning” margin, according to data released by Nasa.
The unprecedented leap led scientists, usually wary of highlighting a single month’s temperature, to label the new record a “shocker” and warn of a “climate emergency”.
The Nasa data shows the average global surface temperature in February was 1.35C warmer than the average temperature for the month between 1951-1980, a far bigger margin than ever seen before. The previous record, set just one month earlier in January, was 1.15C above the long-term average for that month.
“Nasa dropped a bombshell of a climate report,” said Jeff Masters and Bob Henson, who analysed the data on the Weather Underground website. “February dispensed with the one-month-old record by a full 0.21C – an extraordinary margin to beat a monthly world temperature record by.”
“This result is a true shocker, and yet another reminder of the incessant long-term rise in global temperature resulting from human-produced greenhouse gases,” said Masters and Henson. “We are now hurtling at a frightening pace toward the globally agreed maximum of 2C warming over pre-industrial levels.”
The UN climate summit in Paris in December confirmed 2C as the danger limit for global warming which should not be passed. But it also agreed agreed to “pursue efforts” to limit warming to 1.5C, a target now looking highly optimistic.
Climate change is usually assessed over years and decades, and 2015 shattered the record set in 2014 for the hottest year seen, in data stretching back to 1850. The UK Met Office also expects 2016 to set a new record, meaning the global temperature record will have been broken for three years in a row.
One of the world’s three key temperature records is kept by Nasa’s Goddard Institute for Space Studies (Giss) and its director Prof Gavin Schmidt reacted to the February Giss temperature measurements with a simple “wow”.
“We are in a kind of climate emergency now,” said Prof Stefan Rahmstorf, from the Potsdam Institute of Climate Impact Research in Germany. He told Fairfax Media: “This is really quite stunning … it’s completely unprecedented.”
“This is a very worrying result,” said Bob Ward, policy director at the Grantham Research Institute on Climate Change at the London School of Economics, noting that each of the last five months globally have been hotter than any month preceding them.
“These results suggest that we may be even closer than we realised to breaching the [2C] limit. We have used up all of our room for manoeuvre. If we delay any longer strong cuts in greenhouse gas emissions, it looks like global mean surface temperature is likely to exceed the level beyond which the impacts of climate change are likely to be very dangerous.”
A major El Niño event, the biggest since 1998, is boosting global temperatures, but scientists are agreed that global warming driven by humanity’s greenhouse gas emissions is by far the largest factor in the astonishing run of temperature records.
Prof Adam Scaife, at the UK Met Office, said the very low levels of Arctic ice were also helping to raise temperatures: “There has been record low ice in the Arctic for two months running and that releases a lot of heat.” He said the Met Office had forecast a record-breaking 2016 in December: “It is not as if you can’t see these things coming.”
With the obvious implication that this temperature spike of +.21C MOM was caused by a concomitant rise in CO2 MOM. And when the global temperature falls back to trend next year after the El Nino event passes, we can expect to hear what? That dangerous global cooling is a result of climate change?
Take a moment and go to the source document and view the temperature chart. The two-monthly cumulative rise is remarkable.
Ironically, you are highlighting two months of weather data on a 20 year graph that shows no warming.
+1
20yrs? How bout 58yrs of no global warming..
NOAA Radiosonde Data Shows No Warming For 58 Years.
In their “hottest year ever” press briefing, NOAA included this graph, which stated that they have a 58 year long radiosonde temperature record. But they only showed the last 37 years in the graph.
Here is why they are hiding the rest of the data. The earlier data showed as much pre-1979 cooling as the post-1979 warming.
I combined the two graphs at the same scale below, and put a horizontal red reference line in, which shows that the earth’s atmosphere has not warmed at all since the late 1950’s
The omission of this data from the NOAA report, is just their latest attempt to defraud the public. NOAA’s best data shows no warming for 60 years. But it gets worse. The graph in the NOAA report shows about 0.5C warming from 1979 to 2010, but their original published data shows little warming during that period.
http://realclimatescience.com/2016/03/noaa-radiosonde-data-shows-no-warming-for-58-years/
This article is the latest attempt to defraud the public.
Either it’s a temporary anomaly or the end-of-days. Here’s hoping for the latter so that we don’t have to hear anymore of this AGW nonsense.
Two data points does not make a trend, but to have two statistical outliers both skewed in the same direction back-to-back, is certainly troubling. If this data doesn’t snap back over the next several months, it could be very alarming.
I would be more shocked if we didn’t have outliers during a strong el Nino season. This is what is supposed to happen.
Humans of New York puts a face to foreclosure troubles
“I help maintain properties for absentee landlords. I think most people imagine landlords to be rich guys on Long Island. But most of my clients only own one or two properties. A lot of times they were inherited. Part of my job is helping to get squatters out of the buildings. There are professional squatters out there. You can’t even call them criminals. They know the laws and they’re working within the system. If you catch somebody breaking into your house– that’s ‘breaking and entering.’ But if you happen to live out of state, and somebody breaks into your house and you don’t notice for six months, then that person becomes your tenant. It doesn’t matter if you gave them permission or not. If you want to evict them, you have to go through the legal system, which is very expensive. So it’s usually cheaper to pay the squatters off. The laws themselves aren’t bad. They were enacted to keep predatory landlords from evicting people without due process. But like all laws, there are people who have figured out how to abuse them. I have one squatter who has been living rent free in an old building for six years. He hasn’t paid a dime. He’s well dressed. He’s always very polite and professional when he answers the door. But we’re offering him $80,000 to leave and he’s asking for more.”
And people wonder why rents are so high.
I wonder how much supply is tied up this way.
Iranians to splash up to $8B on overseas property: Study
Wealthy Iranians, companies and state-backed buyers will spend up to £6 billion ($8.5 billion) on overseas real estate over the next five-to-10 years following the lifting of international sanctions, a report said on Wednesday.
High-net-worth Iranians are likely to look to buy properties in London, Dubai, Switzerland, Germany or the south of France, London estate agency, Rokstone, said.
Becky Fatemi, the agency’s Iran-born managing director, said London would be the location of choice, due to historical ties between the two nations. She added that wealthy Iranians tended to invest in property, jewelry and gold.
“Britain was the colonial power in Iran and it was British firms that first exploited Iran’s oil reserves. Between 1945 and 1979, the Shah of Iran, his royal court and the business elite had lots of ties with Britain and the elite-owned luxury residential property in London and the home counties,” Fatemi said in a media release on Wednesday.
“Dubai on the doorstep will also be popular but it cannot compete with London’s educational system or cool summer climate. The other historic ties are with Germany, Paris, the French Riviera and Switzerland, but London is safer than these since a lot of properties in the capital are in conservation areas where building alterations are restricted, so values hold and outperform continental Europe,” she later added.
The next housing crisis is here
And this time the crisis is all about one thing: supply.
Following the mid-aughts housing bubble that saw homeowners across the country get themselves upside down in homes and mortgages they couldn’t ever afford to repay — a crisis that was as much about too much supply as it was about too much bad financing — the market has gone the complete other direction.
First-time homebuyers are crowded out, with Trulia’s chief economist Ralph McLaughlin writing Monday that the number of starter homes on the market has declined 43.6% in the past four years.
Homeowners who want to move from a starter home to something better can’t afford the next step. McLaughlin notes that the number of “trade-up” homes on the market is also down about 40% over the same period.
Meanwhile, mortgage lenders, despite record-low rates, are still reluctant to extend credit to less-than-superb borrowers.
And as investors look for places to earn whatever return on capital they can muster, the low end of the housing market has almost ceased to exist as the investor class has bought up homes with the plan to flip them.
On Monday, the latest report on existing-home sales showed the pace of sales in February fell 7.1% from January’s to an annualized rate of 5.08 million. Compared with last year, however, the pace of sales is still up 2.2%.
This report also showed that sales to individual investors — or buyers who intend to flip the home for a profit — accounted for 18% of existing homes sold in February, the highest share since April 2014. Almost two-thirds of these buyers paid cash.
Also in Monday’s report, commentary from Lawrence Yun, chief economist for the National Association of Realtors — which publishes the report on existing-home sales — showed the kind of crisis the housing market is facing.
“The lull in contract signings in January from the large East Coast blizzard, along with the slump in the stock market, may have played a role in February’s lack of closings,” Yun said Monday.
“However, the main issue continues to be a supply and affordability problem. Finding the right property at an affordable price is burdening many potential buyers.”
Supply?? Laughable!
The financial architects will use every excuse in the book (except to blame themselves) for the next failure.
Exactly. Nobody seems willing to call out the banks for instituting the practices that artificially created the supply problem. This isn’t the result of the laws of supply and demand, it’s a completely artificial problem created by bank policy.
It’s also illegal but the politicians are looking the other way because the incumbent home owners would be enraged if their “investment” lost value.
Mortgage Lenders Cautious of High-Risk Borrowers
http://www.dsnews.com/news/03-21-2016/mortgage-lenders-cautious-of-high-risk-borrowers
The non-qualified mortgage loan market has originators a bit wary toward borrowers and questioning if the risk is really worth it.
Lenders are showing mixed feelings toward the non-qualified mortgage loan market, according to the Lenders One Mortgage Barometer, a new survey of 200 mortgage lenders conducted by Lenders One.
The survey results found that although 64 percent of lenders stated that they originate non-qualifying mortgage loans, only 18 percent indicated that they do this often. Of the lenders that do no originate non-qualifying mortgage loans, 51 percent indicated that they are extremely or very likely to originate these types of loans in 2016.
Lenders One also found that mortgage lenders are focused on gaining competitive edge through better customer service and faster origination and closing processes. Seventy-seven percent of mortgage lenders say better customer service will be the key to being competitive in 2016. Meanwhile, 71 percent of those surveyed indicated that improving the time from origination to closing will make them competitive.
“Mortgage lenders are looking at 2016 as a year in which they will move toward a more growth-focused business strategy,” said Daniel T. Goldman, Interim CEO of Lenders One. “However, some external factors such as rising interest rates and a complex regulatory environment will continue to temper the pace at which mortgage lenders seek to expand.”
Despite the upbeat consensus among lenders, they are still troubled by regulatory compliance and interest rates.
A total of 73 percent of respondents said compliance with regulations and rising interest rates are extremely impactful to their business, while 68 percent said it was very impactful.
Lenders One pointed out 3 compliance-related areas on which mortgage lenders are most focused:
• TILA-RESPA Integrated Disclosure (TRID) (41 percent)
• The Home Mortgage Disclosure Act (HMDA) (24 percent)
• Consumer Financial Protection Bureau (CFPB) audits (14 percent)
This is a sign that Dodd-Frank is working as intended.
Not only is there a new sheriff in town (CFPB), but that sheriff isn’t gonna fall for the same BS as previous sheriffs; and the citizens have been armed (ATR/QM private right of action). Beware creative aggressive mortgage creditors.
El O isn’t the only one who can spin a metaphor.
Wishful thinking!
ie., the so-called ‘regulators’ are still allowed to accept job offers from the firms/industry they’re assigned to regulate.
+1 Not only that, but the new “sheriff” in town is staffed by all the same people that missed the crisis last time around, minus those that jumped ship to help private industry circumvent the new laws. Who better to dupe their former coworkers?
The ATR/QM private right of action is the key. We don’t have a single sheriff who can be captured by the interests they regulate. We have several million sheriffs who would pounce on any opportunity to slap down an irresponsible lender.
It’s an issue, certainly. If you’re employed by the CFPB, you must disclose to the CFPB and receive authorization, before interviewing with a regulated entity. This effectively chills direct employment from the CFPB to regulated industries. Attorneys go to firms first, for a bit, and then move on to “banks.”
Also, if we can judge the effectiveness of regulation based upon the level of outraged opposition from shills of the regulated industry, then Dodd-Frank has been very effective!
Yes. Jeb Hensarling in particular has been an eloquent and often humorous industry shill. I don’t agree with much of what he says, but he comes up with some great bluster and nonsense.
Third point – Regardless of how captured the regulator might be, the ATR/QM portion of Dodd-Frank is enforced by private parties with attorneys whose financial interests are aligned with the wronged borrowers.
Good points Perspective.. We’ll see what happens.