CSA Plastock/Getty Images Just over 10 years ago, French bank BNP Paribas froze U.S. mortgage-related funds. Defaults on subprime mortgage loans mounted. The market panicked. There was a run on British bank Northern Rock. Over the next year, many banks fell. Investment bank Bear Stearns collapsed. Lehman Brothers toppled. Many other financial firms including AIG, Fannie Mae, and Freddie Mac needed bail outs. The Great Recession of 2007 to 2009 was under way. It may feel as though the financial system hasn’t changed much in the decade since the downturn, but it has. The recession transformed investment banks and created a deep divide between banks that quickly remodeled their business and those that failed to move rapidly. A dramatic expansion of regulation drove most of the change until now. Most of the regulation was meant to safeguard the financial system, and the taxpayers who had to bail it out, from another crisis. We expect investment banks to embark on an even more fundamental makeover during the next decade. This second transformation will be triggered not by regulation but by rapidly evolving technology. The banks that have nearly completed their regulatory agenda have a head start, since they can free up more financial and human resources to address evolving technology. The race is open and the gap between investment banks will widen even further as they race to adopt technological innovations and reconfigure their workforces to satisfy changing customer demands. The New Face of Investment Banks The regulation with the most profound effect on banks over the past decade requires them to hold more capital against the risks they take. That strengthened investment banks’ balance sheets by forcing them to scale back and to change the nature of the risks they take. Investment banks used to trade using their own capital. Now they are banned from such proprietary trading activities, and focus more on facilitating client trades. As a result, their balance sheets are half as large on a risk-adjusted basis, and the capital they hold against trading positions has doubled over the past decade, our research shows. Investment banks are also required to have a more stable funding base, with enough liquid assets to survive longer periods of stress. They are subject to more rigorous stress testing by regulators and have to develop plans aimed at ensuring that they can recover from a crisis. In the United Kingdom, reforms have gone so far as to require banks to separate their investment banking activities from their retail divisions in the near future to protect depositors. We don’t know yet if these regulations will protect the financial system and taxpayers in a full-blown crisis; it hasn’t been tested. But it is clear that these changes have diminished the profitability of investment banks. Combined revenues are down 25% — the equivalent of $70 billion. On average, their returns on equity have been halved, to just 10%. Those declines reflect changes in strategies and the basic business model of investment banks, post-crisis. Clients can see the shift in how banks rely more on electronic channels than phones to arrange trades. They can also see it in the reduction in the size of individual trades that banks are willing to make and in the increase in the proportion of derivative contracts that are being cleared at external “central clearing houses” rather than facilitated through bank balance sheets. Less apparent to the outside world is how much banks are also investing in controls, especially in their compliance, risk, and finance divisions. Investment banks now spend an average of $300,000 per year on these functions per “front office” employee who works with clients, such as sales and trading personnel. A decade ago, that figure was lower than $200,000. As a result of the remodeling, banks’ earnings are much less linked to the potentially volatile value of the assets underlying their trades. This is most apparent in the credit markets, where revenues have shrunk by more than 40% from pre-crisis peaks. As these parts of the business have shrunk, others have grown. Fees earned from advising companies and helping them issue debt are up 25%, and now account for one-quarter of the industry’s earnings. Layoffs, particularly in sales and trading, have accompanied lower profits. Total expenditures on front-office activities have been slashed by more than 30% over the past decade. Expenditures on control functions related to implementing new regulations such as compliance, risk, finance, operations, and technology have been cut — but only by 10%. As with all periods of disruption, the effects of these alterations have been uneven across the industry, and the competitive landscape has been reshaped on three fronts. First, American investment banks as a group have gained 10 percentage points of market share — rising from 40% to 50%, primarily at the expense of European competitors. Second, the gap in shareholder returns earned by the group of investment banks in the top quartile compared with the average of those in the bottom quartile has grown from 30% in 2007 to more than 100% in 2017. The average returns generated by the group of banks in the bottom quartile have fallen by two-thirds, to just 6%. The strong have gotten stronger and the laggards have had to fight harder not to fall further behind. Third, a new breed startup is making inroads. They are technology-savvy fintech shops. In some parts of the financial markets, particularly in more liquid asset classes such as foreign exchange, new entrants offer products and services, such as market making, that directly compete with banks and offer clients more choice and often better customer experiences. Other startups seek to partner with banks in areas where they, as specialists, can offer better solutions to challenges such as cybersecurity. A Deepening Technological Divide These divisions will only deepen as investment banks focus more exclusively on the need to integrate new technology. To stay ahead — or even keep up — will require substantial reengineering and very different skills from those required to manage regulatory reform programs. The top investment banks will reconfigure their workforces to more closely match those of technology firms. In the future, technologists who can turn technological architecture and tools into more-attractive customer propositions and foundations for investment banks to reach faster decisions will join traders and sales people as the highest-paid people in investment banks. Technology specialists will play a greater role in allocating investments, working alongside senior management from a more traditional background, who currently drive much of the decision making but have limited technological expertise. Investment banks will automate manual tasks and processes to increase efficiency, move services to the cloud, and improve the quality of data analysis, in part by using artificial intelligence to better anticipate evolving customer needs. The resulting technological reinvention of investment banks is likely to reshape the industry once again. Banks hampered by tight technology budgets, overly rigid organizational structures, and competing internal visions of the future will risk stagnation — or worse. While there is no doubt the Great Recession and its aftermath left the industry reeling, the next phase of technological disruption may actually lead to a more fundamental transformation of the industry. Investment banks, and the clients they advise, will need to keep up.
По данным Федерального агентства по финансированию жилья (FHFA) индекс цен на дома в США, покупка которых осуществлялась с участием контролируемых государством ипотечных агентств Fannie Mae и Freddie Mac, в августе повысился в месячном исчислении на 0.7% при ожидавшихся 0.4%. Повышение индекса в июле пересмотрено с 0.2% до 0.4%.
По данным Федерального агентства по финансированию жилья (FHFA) индекс цен на дома в США, покупка которых осуществлялась с участием контролируемых государством ипотечных агентств Fannie Mae и Freddie Mac, в августе повысился в месячном исчислении на 0.7% при ожидавшихся 0.4%. Повышение индекса в июле пересмотрено с 0.2% до 0.4%.
Цены на жилье в США в августе выросли на 0,7 процента по сравнению с предыдущим месяцем, согласно индексу цен на жилье (HPI) от Федерального агентства по жилищному финансированию (FHFA). Ранее сообщаемое увеличение на 0,2 процента в июле было пересмотрено до 0,4 процента. Ежемесячный HPI от FHFA рассчитывается с использованием информации о ценах на продажу жилья от проданных или заложенных ипотечных кредитов или гарантированных Fannie Mae и Freddie Mac. С августа 2016 года по август 2017 года цены на жилье выросли на 6,6 процента. Для девяти регионов переписи скорректированные с учетом сезонных колебаний цены с июля 2017 года по август 2017 года колебались от -0,1 процента в регионе Новой Англии до +1,4 процента в Тихоокеанском регионе. 12-месячные изменения были положительными, от +5,0 процентов в Средне-Атлантическом регионе до +9,3 процента в Тихоокеанском регионе. Информационно-аналитический отдел TeleTradeИсточник: FxTeam
Housing Index in the United States increased to 0.70 percent in August from 0.40 percent in July of 2017. Housing Index in the United States averaged 0.29 percent from 1991 until 2017, reaching an all time high of 1.20 percent in January of 2000 and a record low of -1.80 percent in November of 2008. The FHFA (Federal Housing Finance Agency) House Price Index measures the changes in average prices of single-family houses with mortgages guaranteed by Fannie Mae and Freddie Mac. This page provides the latest reported value for - United States House Price Index MoM Change - plus previous releases, historical high and low, short-term forecast and long-term prediction, economic calendar, survey consensus and news.
Freddie Mac reported that the Single-Family serious delinquency rate in September was at 0.86%, up from 0.84% in August. Freddie's rate is down from 1.02% in September 2016.Freddie's serious delinquency rate peaked in February 2010 at 4.20%. This is the highest serious delinquency rate since May of this year.These are mortgage loans that are "three monthly payments or more past due or in foreclosure". Click on graph for larger imageIn the short term - over the next several months - the rate will probably increase slightly due to the hurricanes.After the hurricane bump, maybe the rate will decline another 0.2 to 0.3 percentage points or so to a cycle bottom, but this is pretty close to normal.Note: Fannie Mae will report for September soon.
Treasury Secretary Steven Mnuchin has no plans to fill the No. 2 slot in his department after two candidates for the job dropped out of the running.The department made the surprising announcement after Brian Brooks withdrew from consideration for deputy Treasury secretary, according to several people familiar with his decision. In May, Goldman Sachs executive Jim Donovan dropped out due to family concerns.The deputy secretary plays a pivotal role in tax reform, housing policy and other top agenda issues. “Treasury is one of the most well-staffed departments in the federal government with over 90% of our political appointees already in place or in the vetting process," a Treasury spokesperson said in a statement. "They are supported by our expert career staff, and together we have a driven and dedicated team to advance key issues, including tax reform. Secretary Mnuchin does not currently intend to fill the Deputy Secretary position, and Under Secretary Mandelker is acting in this role.”That refers to Sigal Mandelker, the agency's undersecretary for terrorism and financial intelligence, who was confirmed by the Senate in June on a 96-4 vote.President Donald Trump hadn’t formally nominated Brooks to the deputy secretary post, but the job was widely reported to be his. Brooks, an executive vice president and general counsel at Fannie Mae, had worked with Mnuchin at OneWest, a California bank built from the ashes of the foreclosure collapse.“If he was never formally nominated, we're not going to comment on further rumors related to him,” White House spokeswoman Natalie Strom said in response to questions about Brooks.Fannie Mae spokesman Pete Bakel declined to make Brooks available for an interview.Since March, Treasury counselor Craig Phillips has occupied some deputy secretary turf, hosting stakeholder meetings and making public appearances on behalf of the agency. He works out of an office once occupied by Antonio Weiss, a top Treasury official under President Barack Obama.Phillips is a one-time Hillary Clinton supporter and would be difficult if not impossible to confirm to the deputy secretary job.The Treasury spokesperson said Mnuchin has "incredible confidence" in his senior staff. "With two Undersecretaries, four Counselors, a Chief of Staff and General Counsel, he is very well-served. He has decided not to fill the Deputy position as he likes having the direct reports."Nancy Cook contributed to this report.
News that Senator Bob Corker (R-TN) is retiring from the Senate was not welcome news for advocates of reform in the government-controlled world of housing finance. "A big loss," said John Thune (R-SD). "He's always been a guy who's really about trying to find solutions, common ground, and getting results." Corker was indeed somebody who would work with his colleagues across the isle, but he was also willing to work period on difficult and contentious issues like housing, something few members are willing to do. His departure leaves a considerable vacuum in terms of the capacity of Congress to engage on the issue of housing finance, much less pass legislation. As the mortgage finance industry heads into the last quarter of 2017, we are still running about 30% down in terms of lending volumes compared to last year, the result of the post election pop in yields for US Treasury bonds that killed the declining refinance market. No amount of innovation, quantitative easing from the Federal Open Market Committee, or new, more accommodating credit scores can make up for this sharp decline in production of mortgage loans. Meanwhile in Washington, the prospects for ending the decade-long conservatorship of Fannie Mae and Freddie Mac are dim at best. In his statement to Congress, Melvin L. Watt, Director of the Federal Housing Finance Authority, said “ that these conservatorships are not sustainable and they need to end as soon as Congress can chart the way forward on housing finance reform.” But nobody on Capitol Hill seems to consider the status quo a problem when it comes to Fannie Mae and Freddie Mac. Watt seems headed for a potential confrontation with the Trump Administration and Congress over the issue of maintaining minimum capital for the GSEs, but ultimately he must blink. In his remarks, the former congressman from North Carolina seemingly made clear that he is preparing to modify the “sweep” of profits from both enterprises to the Treasury to prevent one or both from becoming technically insolvent, an eventuality that would require support from the Treasury. Watt stated: “Like any business, the Enterprises need some kind of buffer to shield against short-term operating losses. In fact, it is especially irresponsible for the Enterprises not to have such a limited buffer because a loss in any quarter would result in an additional draw of taxpayer support and reduce the fixed dollar commitment the Treasury Department has made to support the Enterprises. We reasonably foresee that this could erode investor confidence. This could stifle liquidity in the mortgage-backed securities market and could increase the cost of mortgage credit for borrowers.” While by law the Treasury’s ability to support the GSEs with new capital is limited, bond market investors and the credit rating community accords “AAA” ratings to Fannie and Freddie because of the fact of the conservatorship and the presumption of unlimited credit support from the United States. Whether such confidence is reasonable given the current posture of Congress and the Executive Branch when it comes to the GSEs and federal debt more generally is another matter entirely. Watt is aware of this market reality and what a repeat of the 2008 bond market debacle would mean to the mortgage market and US taxpayers. Yet despite his tough talk, it is not safe to assume that Watt will direct the GSEs to start accumulating capital because ultimately he reports up to Treasury. He said in blunt terms: “FHFA has explicit statutory obligations to ensure that each Enterprise ‘operates in a safe and sound manner’ and fosters ‘liquid, efficient, competitive, and resilient national housing finance markets.’ To ensure that we meet these obligations, we cannot risk the loss of investor confidence. It would, therefore, be a serious misconception for members of this Committee, or for anyone else, to consider any actions FHFA may take as conservator to avoid additional draws of taxpayer support either as interference with the prerogatives of Congress, as an effort to influence the outcome of housing finance reform, or as a step toward recap and release. FHFA's actions would be taken solely to avoid a draw during conservatorship.” Watt may seem willing to make changes in the way that the GSEs compensate taxpayers for the continued sovereign credit support given to both enterprises, yet he is unlikely to act -- especially when you recall he said the same thing last year. Watt to his credit continues to be skeptical of calls for FHFA to allow alternative credit scores when underwriting loans covered by insurance in the GSE market. “FHFA has received overwhelming feedback from the industry that it would be a serious mistake to change credit scoring models before the Enterprises implement the Single Security in mid-2019,” Watt told Congress, reflecting the view of many mortgage market participants. The incumbent consumer credit bureaus – Experian, TransUnion and Equifax – have been pushing a weaker credit score as an alternative to the incumbent credit scoring monopoly held by Fair Issaac’s FICO model. Huge amounts of money have been spent to promote the alternative scores, so far with little in the way of commercial success. Indeed, most media organizations are cowed into silence by the vast amounts of money flowing through Washington c/o Equifax and the other members of the credit score triopoly. “We have looked deeply at these issues, and this process has raised additional concerns,” Watt noted in a barely disguised rebuke for the consumer data triopoly. “For example, how would we ensure that competing credit scores lead to improvements in accuracy and not to a race to the bottom with competitors competing for more and more customers? Also, could the organizational and ownership structure of companies in the credit score market impact competition?” There are certainly legitimate concerns about competition in the consumer credit market, yet the more important issue is how a change would impact the primary and secondary markets for mortgage credit. The bond market in particular is very opposed to any change in how default risk probabilities are measured, including both investors and the credit rating agencies that serve institutional investors. The fact is, the bond markets like having one benchmark for measuring default risk, a fact that seems to elude advocates of "competition" in credit scoring. Having multiple benchmarks is not about competition but rather intellectual chaos. And as the old saying goes, be careful what you wish for, you may get it. Fact is, were FHFA to allow for the use of multiple credit scores in underwriting loans that back Fannie Mae and Freddie Mac securities, investors and credit rating agencies would be compelled to “score” the different models. Based on what we know today about the respective credit score products, the alternative score being pushed by the three incumbent consumer credit repositories would almost certainly trade at a discount to the FICO score used in most default models. Watt’s comments make clear that he understands that “competition” in credit scores is really about opening the credit box to higher risk borrowers. But thanks to the benevolence of central bankers, such worries are very distant from the minds of people who live and work in Washington. For the past decade, the FOMC has wrapped such concerns as market liquidity and default risk with a comforting blanket of cheap money. When banks and the GSEs come to grips with the hidden default risk currently embedded inside trillions of dollars worth of new mortgage production, the conversation about housing finance reform may take on a bit more urgency and seriousness. But sadly, Senator Corker will have left the building.
Ackman gave best theses at high-priced event featuring Thomas Russo and David Einhorn
Originally published The Birch Gold Group, via Alt-Market.com, As stocks continue to climb and the U.S. economy sustains its third longest period of expansion in history, market forecasters are seeking clues for when our next crisis may strike. So far, three uncommon signals have them worried. Here’s an explanation of the three uncommon signs causing alarm, and what they mean for your savings… Sign #1: Resurgence of Synthetic CDOs The riskiest plays on Wall Street are made using financial instruments known as derivatives. Derivatives are named for how they “derive” their value from the underlying assets on which they’re based. They give investors the ability to leverage assets — that is, control large quantities of an asset without actually buying or selling it. Depending on how the underlying asset performs, derivatives can generate either massive gains or crushing losses. But it’s when big banks and financial institutions start gambling in derivatives that things become especially dangerous. And that’s exactly what happened in the case of our last crisis: A slew of “too big to fail” organizations took on excessive risk through derivatives (mortgage-backed securities and others), and they couldn’t shoulder their losses when the bets went bad. Now one of the most potentially destructive derivatives is regaining popularity after being shunned by Wall Street for years because of its role in the 2008 collapse. The derivative is called a synthetic collateralized debt obligation (CDO), and Citigroup is spearheading its resurgence. Granted, post-2008 regulations do make the market for these kinds of derivatives less liable to spark another collapse, and Citigroup executives claim to be pursuing this endeavor responsibly (we can trust them, right?). But Bloomberg reports the positive trend toward CDOs is still a negative sign (emphasis ours): This time, Citigroup says, it’s doing things differently. The deals are tailored in a way that insulates it from any losses, while giving yield-starved buyers a chance to reap returns of 20 percent or more. The market today is also just a fraction of its size before the crisis, and few see corporate defaults surging any time soon. But as years of rock-bottom interest rates have pushed investors toward riskier products, the revival of synthetic CDOs may be one of the clearest signs yet of froth in the credit markets. Pay very close attention to that last sentence. In essence, it’s saying that today’s low yield environment is slowly pushing investors to engage in increasingly risky behavior to make satisfactory returns. Eventually, those risks get too big — just like they did in 2008 — and the whole house of cards comes toppling down. Sign #2: Lenders Loosening Mortgage Standards When banks lend money to people who can’t pay it back, bad things happen. It’s called “reckless lending” for a reason. And on a large enough scale, reckless lending can be a strong catalyst for systemic financial crisis. So what encourages banks to practice reckless lending in the first place? Well, there are two main incentives for banks to lend recklessly: Increasing competition from other banks, and… Decreasing demand for credit. In the case of our last crisis, both of those incentives came into play. The mortgage lending sector transformed from a duopoly into a tightly competitive market of various lenders, which drove lenders to loosen standards in an attempt to woo borrowers. On top of that, credit demand from high quality borrowers was sparse, further encouraging lenders to approve loans for risky borrowers. Today, the same thing is happening again. WolfStreet.com reports (emphasis ours): The toxic combination of “competition from other lenders” and slowing mortgage demand is cited by senior executives of mortgage lenders as the source of all kinds of headaches for the mortgage lending industry. Primarily due to this competition amid declining of demand for mortgages, the profit margin outlook has deteriorated for the fourth quarter in a row, according to Fannie Mae’s Q3 Mortgage Lender Sentiment Survey. And the share of lenders that blamed this competition as the key reason for deteriorating profits “rose to a new survey high.” And how are lenders combating this lack of demand and the deteriorating profit margins that are being pressured by competition? They’re loosening lending standards. Worse yet, house prices across the country remain grossly inflated. In fact, they’ve far surpassed their pre-2008 housing bubble levels, according to the Case-Shiller US Home Price Index. This means lenders are loosening mortgage standards and pushing borrowers into an inflated housing market, just like they did during the years leading to 2008. If interest rates rise too fast — a very real possibility considering the Fed plans to start unwinding its $4.5 trillion balance sheet and hike rates once more this year — millions of homeowners could find themselves underwater just like they did nearly 10 years ago. Loosening mortgage standards at a time like this can only do one thing: Set us up for yet another wave of defaults and foreclosures… which could easily pop the housing bubble and wreck the entire economy. Sign #3: The “Skyscraper Index” Analyzing variables with a direct relationship to the market is the first step in forecasting potential future outcomes. But taking a broader look at more obscure correlations can give even deeper insight. Take the Barclays “Skyscraper Index,” for example. Gathering data from the past 100+ years, the index examines historical booms in large commercial construction projects (primarily skyscrapers), and their tendency to precede economic downturns. Barclays’ breakdown of the relationship is compelling, to say the least… the index tracks a firm correlation between completion of record-height skyscrapers and severe market downturns — from our last major recession all the way back to The Long Depression of 1873. Followers of the index today believe conditions are shaping up for it to be proven right once again, as cities across China, India, Saudi Arabia, and the U.S. erect another round of the tallest skyscrapers in history. A good example of this is in Denver where a Manhattan developer is moving forward with plans to build a 1,000-foot skyscraper, which would dwarf all the other buildings in Denver. Proven Security For Uncommon Times One of the wisest ways investors can respond to these uncommon indicators is to seek security in proven, tangible assets. Unlike stocks, bonds, ETFs, mutual funds, and the like, these tangible “real assets” can never go to zero, regardless of what havoc grips traditional markets. Which “real assets” work best for protection? Well, there are several options… But physical precious metals have been investors’ first choice for centuries. In light of the signs discussed above, it’s no wonder metals prices have steadily risen in recent months. And you can expect them to climb higher as more investors come to grips with the reality of our current situation.
DRAIN THE SWAMP: Fannie Mae charged taxpayers $250,000 for a chandelier.
Fannie Mae and Freddie Mac’s regulator may have a travel kerfuffle of his own.
Homebuilder Lennar has come up with a genius strategy to partially eliminate the massive bubble in student loans that has crippled recent graduates and forced them into a life devoid of the American dream of home ownership...it's a "two birds with one stone" kind of solution. Yes, rather than struggle to make those monthly student loan payments, Lennar has developed an "innovative mortgage" designed to allow millennials the opportunity to convert their student debt into an "investment" in America's "Housing Bubble 2.0." So how does it work? According to the Wall Street Journal, Lennar is set to introduce the new promotion tomorrow that will make a payment on a buyer's student loans, equal to 3% of their purchase price up to $13,000, in return for purchasing a new Lennar home...it's as simple as that. Student-loan debt has been an obstacle for many potential home buyers. Now, Lennar Corp. is trying to do something about it. A subsidiary called Eagle Home Mortgage plans to introduce on Tuesday a program under which Miami-based Lennar will pay off a significant chunk of the student loan of a borrower who purchases a home from them. Housing observers said other builders are likely to look to mimic the program, which could help lure more of the critical first-time-buyer segment into home purchases. “Obviously there’s a benefit to bringing more people into the home buying market. We’re trying to design something here that supports affordability and creates that path to homeownership,” said Doug Cropsey, a senior vice president at Eagle. Lennar will make a payment to a buyer’s student loans of as much as 3% of the purchase price, up to $13,000. The contribution doesn’t directly increase the purchase price of the home or add to the balance of the loan. Meanwhile, and to our complete 'shock' no less, the WSJ also explains that Fannie Mae, a government sponsored enterprise, has agreed to back the new "innovative" loans from Lennar. All of which means that millennials will effectively have their private student loans, which can't even be expunged in bankruptcy, converted into brand new mortgage debt, backed by the full faith and credit of U.S. taxpayers, that will be socialized when the current housing bubble inevitably collapses yet again. Consumer advocates are wary the program sounds too good to be true. They point to builder incentive programs during the last boom that helped inflate the price of new homes. Those programs allowed sellers to pay a portion of the buyers’ down payment, which in turn tended to drive up the price that people could afford to pay for their homes. “We’ve had bad experiences when home sellers get involved in mortgages, particularly innovative mortgages,” said Dan Immergluck, a professor at the Urban Studies Institute at Georgia State University, who studies the housing market, mortgage finance and foreclosures. Mr. Immergluck said if the program drives up home prices, buyers without student loans will end up sharing the burden with those who do. Mortgage-finance company Fannie Mae has agreed to back the loans and will monitor the program to ensure that the value of student-loan payment isn’t included in appraisals of the home, which in turn can help drive up values. “This is not without risk,” said Jonathan Lawless, vice president of customer solutions at Fannie Mae. “Builders always want to provide more money and incentives for people to buy their homes. It has the potential to start distorting values.” On a side note, and somewhat ironically, the WSJ used a Texas family that already owns a home and simply intends to upgrade to a larger McMansion as an example of the potential of a program designed to help recent graduates who have had a hard time breaking into home ownership. Christopher Oquendo and Jeri Coate are planning to use the program to virtually eliminate their student debt. The couple, who are in their mid-30s, wanted a bigger house but were reluctant to take on more debt. Ms. Coate, who works in a notary’s office, still had outstanding student loans from training she had done to be a medical administrative assistant and the couple had other unpaid bills as well. “We needed to get something bigger and upgrade but it was kind of a rough decision to make considering our status with bills and all,” Mr. Oquendo said. The couple are now in the process of closing on a Lennar home in the city of La Marque, Texas, about 50 miles south of Houston, with two more bedrooms than they had before. Of course, if home ownership is important to millennials than another idea would be for them to actually save their money for a down payment rather than spending it all on the new iPhone every year...but what do we know.
Black Knight Mortgage Monitor: "350,000 in Hurricane Irma Disaster Areas Have Negative or Limited Equity"
Black Knight released their Mortgage Monitor report for August today. According to Black Knight, 3.93% of mortgages were delinquent in August, down from 4.24% in August 2016. Black Knight also reported that 0.76% of mortgages were in the foreclosure process, down from 1.04% a year ago.This gives a total of 4.69% delinquent or in foreclosure.Press Release: Black Knight’s Mortgage Monitor: Most Borrowers Impacted by Hurricane Harvey Have Significant Equity; 350,000 in Hurricane Irma Disaster Areas Have Negative or Limited EquityToday, the Data & Analytics division of Black Knight, Inc. released its latest Mortgage Monitor Report, based on data as of the end of August 2017. On the heels of reporting an early, 16 percent spike in mortgage delinquencies in Hurricane Harvey-related disaster areas, Black Knight examined the equity outlook for mortgage holders impacted by either Hurricane Harvey or Hurricane Irma. As Black Knight Data & Analytics Executive Vice President Ben Graboske explained, despite the extent of the damage in Texas, Hurricane Harvey-impacted borrowers have a greater equity stake, which may bode well for long-term recovery. “Before Hurricane Harvey made landfall, the average combined loan-to-value ratio (CLTV) for homeowners with mortgages in what became FEMA-designated disaster areas was 53 percent,” said Graboske. “Right on par with the national average, that’s the lowest we’ve seen since prior to 2004. This equates to approximately $131,000 in equity per borrower. That works out to a lot of skin in the game, and will likely serve as strong motivation for borrowers not to walk away from a storm-damaged home. In addition, over 75 percent of mortgages in the Hurricane Harvey footprint are held in Fannie Mae, Freddie Mac or Ginnie Mae securities. Therefore, the bulk of borrowers affected by the storm will be able to find assistance under the various foreclosure moratoriums and forbearance programs that have been instituted. While we have already seen an early spike in delinquencies in Hurricane Harvey-impacted disaster areas, with many more likely to follow in September’s data, the combination of available assistance and healthy equity stakes on the part of borrowers are both very positive signs for the long term.“In Florida, Hurricane Irma impacted a much larger portion of the state. The 48 FEMA-declared Hurricane Irma disaster areas include over 90 percent of the state’s mortgaged properties. To put this in perspective, that means that by balance, over five percent of all mortgages in the U.S. are included in Hurricane Irma’s disaster areas. Unlike Houston, though, where all-time-high home prices have contributed to a significant reduction in negative equity, home prices in Florida remain 17 percent below their 2006 peak. On average, borrowers in Hurricane Irma-related disaster areas have a CLTV of 57 percent, somewhat higher than the national average. Of the 3.2 million borrowers impacted by Irma, an estimated 170,000 were still in negative equity positions before the storm, with another 180,000 having less than 10 percent equity in their homes. Due to lackluster home price recovery since the housing crisis, the negative equity rate in Irma’s disaster area is nearly twice the national average.” emphasis added Click on graph for larger image.This graphic from Black Knight looks at negative equity volumes and rates over time.From Black Knight: • Along with increasing the amount of lendable equity, strong home price gains so far in 2017 have helped to continue to shrink the population of borrowers who owe more on their mortgages than their homes are worth • Thus far in 2017, the number of borrowers underwater on their mortgage has fallen by nearly 750K, from 2.2M entering the year to 1.4M as of the end of Q2• Today, just 1.4M borrowers remain underwater, representing 2.8 percent of all homeowners with a mortgage • This is down from over 15M and more than 28 percent of the mortgage market at the end of 2011 There is much more in the mortgage monitor.
Fannie Mae reported that the Single-Family Serious Delinquency rate declined to 0.99% in August, from 1.00% in July. The serious delinquency rate is down from 1.24% in August 2016.This is the lowest serious delinquency rate since December 2007.These are mortgage loans that are "three monthly payments or more past due or in foreclosure". The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.Click on graph for larger imageBy vintage, for loans made in 2004 or earlier (4% of portfolio), 2.65% are seriously delinquent. For loans made in 2005 through 2008 (7% of portfolio), 5.71% are seriously delinquent, For recent loans, originated in 2009 through 2017 (89% of portfolio), only 0.32% are seriously delinquent. So Fannie is still working through poor performing loans from the bubble years.In the short term - over the next several months - the delinquency rate will probably increase slightly due to the hurricanes. After the hurricane bump, maybe the rate will decline another 0.3 percentage points or so to a cycle bottom, but this is pretty close to normal.Note: Freddie Mac reported earlier.
Fannie Mae and Freddie Mac may one day stop paying billions of dollars in dividends to the U.S. government. But not today.
Freddie Mac reported that the Single-Family serious delinquency rate in August was at 0.84%, down from 0.85% in July. Freddie's rate is down from 1.03% in August 2016.Freddie's serious delinquency rate peaked in February 2010 at 4.20%. This is the lowest serious delinquency rate since April 2008.These are mortgage loans that are "three monthly payments or more past due or in foreclosure". Click on graph for larger imageAlthough the rate is still generally declining, the rate of decline has slowed. In the short term - over the next several months - the rate will probably increase slightly due to the hurricanes.After the hurricane bump, maybe the rate will decline another 0.2 to 0.3 percentage points or so to a cycle bottom, but this is pretty close to normal.Note: Fannie Mae will report for August soon.
Что "главное" в решении ФРС и на сколько существенны изменения в ее политике? В первую очередь – вчера ФРС подтвердил, что продолжает развиваться по "мягкому сценарию ужесточения денежно-кредитной политики".