by Calculated Risk on 6/20/2009 08:57:00 AM

From the Sacramento Bee: 7 lenders get immunity from state foreclosure prevention act

Bank of America Home Loans, CitiMortgage and Carrington Mortgage Services are among the first seven lenders and loan servicers granted immunity from the state's foreclosure prevention act launched this week in California.

The new law makes lenders prove to the state that they have a comprehensive loan-modification program that helps borrowers stay in their homes. Those that can't prove it to the state's satisfaction must wait an extra 90 days before foreclosing on borrowers.
...
State agencies reported Friday that 38 institutions received temporary 30-day immunity while the state reviews their applications. Among them were some of the Sacramento region's leading lenders, including Wells Fargo, GMAC and JPMorgan Chase.

From the California Department of Corporations: Mortgage Loan Servicers who have been granted an exemption

Exemptions under the Department of Corporations

Exemptions under the Department of Financial Institutions

Exemptions under the Department of Real Estate

This was never a big deal. Most lenders will be exempt.

by Calculated Risk on 6/20/2009 01:00:00 AM

From Bloomberg: GE Vice Chair Rice Sees No ‘Green Shoots’ in Orders (ht Comrade de Chaos)

... “I am not particularly of the green shoots group yet,” [General Electric Co. Vice Chairman John] Rice said ... “I have not seen it in our order patterns yet. At the macro level, there may be statistics suggesting the economy is starting to turn. I am not seeing it yet.”
...
“We see a world where good companies and good consumers can’t get all the credit we would like,” Rice said. “Companies with lots of cash on their balance sheet are worried about whether they will get what they need for working capital” and are cutting spending.

“Until that changes I don’t think you will see a significant rebound,” Rice said. “We are preparing for 12 or 18 months of tough sledding.”

Maybe the cliff diving is over, but no green shoots ....

by Calculated Risk on 6/20/2009 12:11:00 AM

During the Chrysler bankruptcy, I excerpted and linked to lawyer Steve Jakubowski's Bankruptcy Litigation Blog. Steve has taken it a step further and stepped into the GM fray ...

From Steve: Objecting to the GM 363 Sale's Treatment of Product Liability Claims: Stepping Into The Fray

[A] lot of panicked plaintiffs' lawyers involved in cases against GM are screaming these days as they watch years of toil on behalf of people seriously injured by defective GM products (like crushed roofs, exploding "side saddle" gas tanks, and collapsing seat backs) potentially go for naught as GM makes its grandest attempt ever to crush an entire class of former customers and existing and future products liability claimants in a sale that many plaintiffs lawyers of record only received written notice of in the past couple of days.

Those following this blog know my rising concern (even anger) over how products liability claimants were completely stiffed in Chrysler ...

So, I decided to do something about it, and officially stepped into the fray by filing this Objection to the GM Sale and this Memorandum in Support jointly with counsel for the Center for Auto Safety, Consumer Action, Consumers for Auto Reliability and Safety, National Association of Consumer Advocates, and Public Citizen.

From the NY Times: New Objections May Delay G.M. Exit From Bankruptcy

A group of General Motors bondholders and some of the automaker’s labor unions filed objections on Friday to G.M.’s plan to sell its assets to a new company that could emerge from bankruptcy protection.

Their opposition, with objections filed by consumer groups, a handful of states and cities, and individual retirees, shareholders and bondholders, threatens to put the brakes on what the company and the government had hoped would be a rapid trip through the Chapter 11 process.

The GM bankruptcy might take a little longer than Chrysler.

by Calculated Risk on 6/19/2009 07:13:00 PM

Regrets to Kansas
Carry on my wayward bank...
Now, dust in the wind
by Soylent Green is People
From the FDIC: Bank of Kansas, South Hutchinson, Kansas, Assumes All of the Deposits of First National Bank of Anthony, Anthony, Kansas

As of March 31, 2009, First National Bank of Anthony had total assets of $156.9 million and total deposits of approximately $142.5 million.
...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $32.2 million. Bank of Kansas' acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. First National Bank of Anthony is the 40th FDIC-insured institution to fail in the nation this year, and the second in Kansas.

by Calculated Risk on 6/19/2009 06:11:00 PM

Spring wanes to Summer
Crushing debt broods over banks
Fresh Winter for one.
by Soylent Green is People
From the FDIC: United Community Bank, Blairsville, Georgia Assumes All of the Deposits of Southern Community Bank, Fayetteville, Georgia

As of May 29, 2009, Southern Community Bank had total assets of $377 million and total deposits of approximately $307 million.
...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $114 million. United Community Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Southern Community Bank is the 38th FDIC-insured institution to fail in the nation this year, and the seventh in Georgia.

Consiglieres?
Blair's agents aren't advisors
More like a Capo
by Soylent Green is People
And from the FDIC: First Bank, Troy, North Carolina, Assumes All of the Deposits of Cooperative Bank, Wilmington, North Carolina

As of May 31, 2009, Cooperative Bank had total assets of $970 million and total deposits of approximately $774 million.
...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $217 million. First Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Cooperative Bank is the 39th FDIC-insured institution to fail in the nation this year, and the second in North Carolina.

by Calculated Risk on 6/19/2009 05:24:00 PM

NOTE: These graphs were correct, but the data was incorrect. The State added a zero to the HELOC data - I'll post corrected charts tomorrow. (ht Armin)

best to all

by Calculated Risk on 6/19/2009 02:58:00 PM

The 2009 First Quarter results from the Department of Corporations Survey of Loan Servicers has been released. Historical data is here.

There is a lot of information in this survey: the unpaid balances by loan type, the number of loans by loan type, and modification data.

From Jim Wasserman at the Sacramento Bee: Growing trouble with prime loans (ht Paul)

I was going through the state Department of Corporation's newest quarterly report (Q1-2009) for lenders' loan modification activities and this jumped out at me: The number of workouts initiated for prime loans is rising fast, mirroring rising unemployment in California.

The data come from lenders that report to the state as part of Gov. Arnold Schwarzenegger's Nov. 2007 Subprime agreement. These lenders service about 3.3 million loans in California, about half the state's total.

Click on graph for larger image in new window.

The first graph shows the number of loan modifications initiated by type (Prime, Alt-A, Subprime). This totals almost 1.5 million loan modifications initiated in California since January 2007 (there are 3.3 million loans including HELOCs) - so there is probably some double counting as modification negotiations are started and stopped.

Modifications for prime loans are surging (and Alt-A is increasing rapidly too). It is possible that subprime peaked during the moratorium period.

The second graph shows loan mods completed by category. The data was only broken out by category starting in Jan 2008.

I expect a surge in prime loan mods completed based on the mods initiated.

Note that completion can mean: account paid current (about 5%), paid-in-full (6%), modified terms (about 60% of completions), short sale (about 11%), deed-in-lieu of foreclosure (few), reductions in principal (few), and other workouts (about 15%).

As an aside, the California website is titled "Subprime". With the surge in prime modifications, I guess we're all subprime now!

by Calculated Risk on 6/19/2009 01:11:00 PM

From Bloomberg: Obama Mortgage Refinancing Program May Expand, Lockhart Says

President Barack Obama’s program to help more homeowners refinance may be expanded to include borrowers who owe more than 105 percent of their homes’ values, Federal Housing Finance Agency Director James Lockhart said.

The Obama administration is considering allowing Fannie Mae and Freddie Mac to refinance loans with current loan-to-value ratios of 125 percent or higher, Lockhart said at a National Association of Real Estate Editors Association conference in Washington yesterday.

This is part of the Home Affordable program, and only applies to homeowners with loans that Fannie and Freddie holds or guarantees.

As long as this is no cash out, increasing the LTV limit from 105% to 125% just allows Fannie and Freddie to lower the risk on loans they already own or guarantee.

by Calculated Risk on 6/19/2009 11:04:00 AM

Note: the BLS started keeping state records in 1976, so obviously this doesn't include the Depression.

From the BLS: Regional and State Employment and Unemployment Summary

Michigan again reported the highest jobless rate, 14.1 percent in May. The states with the next highest rates were Oregon, 12.4 percent; Rhode Island and South Carolina, 12.1 percent each; California, 11.5 percent; Nevada, 11.3 percent; and North Carolina, 11.1 percent. Six additional states and the District of Columbia recorded unemployment rates of at least 10.0 percent. The California, Nevada, North Carolina, Oregon, Rhode Island, and South Carolina rates were the highest on record for those states. Florida, at 10.2 percent, and Georgia, at 9.7 percent, also posted series highs. Nebraska and North Dakota registered the lowest unemployment rates, 4.4 percent each. Overall, 12 states and the District of Columbia had significantly higher jobless rates than the U.S. figure of 9.4 percent, 29 states reported measurably lower rates, and 9 states had rates little different from that of the nation.

by Calculated Risk on 6/19/2009 10:30:00 AM

Here are some more CRE price declines ...

From Bloomberg: Simon Halabi’s Companies Default on $1.9 Billion Debt (ht Brian)

Billionaire investor Simon Halabi’s real estate companies defaulted on 1.15 billion pounds ($1.9 billion) of bonds backed by nine London office buildings as the recession cut the value of the properties by about 50 percent.
...
The buildings were valued at 929 million pounds as of June 8, down from 1.83 billion pounds in October 2006, Hatfield Philips said. Halabi’s companies borrowed against the buildings in 2006. The debt, which was packaged into bonds, expires in October.

Another 'half off' sale.

by Calculated Risk on 6/19/2009 08:58:00 AM

From CNBC: 'Too Big to Fail' Doctrine Must End: FDIC's Bair

“Clearly, there has been moral hazard and lack of market discipline fed by the 'too big to fail' doctrine, and this in turn has been fed by the lack of resolution mechanism that really works for very large financial organizations and this has been a central focus of ours,” [Sheila Bair, chairman of the Federal Deposit Insurance Corp] said in an interview on CNBC.
...
“[Obama’s regulation is] a good opening to the process,” said Bair. “I commend the President for getting personally involved in this and taking leadership and putting his own considerable influence behind the efforts…We’re still analyzing the whitepaper and want to work with the administration and Congress constructively on this.”
...
“[The FDIC] is guaranteeing over $6 trillion right now,” she said. “The FDIC has tremendous exposure to the system so we would like a real say on systemic risk issues. [Reform overhaul] is an institutional issue, not a turf issue or a personality issue.”

"Still analyzing the whitepaper"?

by Calculated Risk on 6/18/2009 09:30:00 PM

From Reuters: Housing Sales Lackluster This Spring: Coldwell (ht Annie)

Jim Gillespie, president and chief executive of Coldwell Banker Real Estate, in an interview with Reuters, said sales were only modest during the spring, with demand overwhelmingly dominated by first-time home buyers and investors.

"The more important 'move-up' buyers were absent and that is not encouraging," said Gillespie ..."They are key to a U.S. housing market recovery,"

With lenders as sellers in a large percentage of sales, it is no surprise there are few move-up buyers. This will impact the mid-to-high end for some time.

The article also mentions a proposal for a new $15,000 tax credit.

by Calculated Risk on 6/18/2009 07:49:00 PM

From DataQuick: Uptick in Bay Area home sales and median price

The median price paid for a Bay Area home jumped in May as more expensive homes started to sell again. The overall number of homes sold increased for the ninth month in a row, a real estate information service reported.

The median price [increase] ... was due to a small but noticeable increase in sales of homes financed with home loans for more than $417,000, commonly called “jumbo” mortgages. They accounted for 25.5 percent of the Bay Area’s home sales last month, the highest since 25.8 percent last October. Two years ago it was more than 60 percent. The presence of those high-end sales in the statistics pulled the May median up.

Sales of $800,000-plus existing single-family houses rose to 13.2 percent of all house resales last month, up from 9.8 percent in April and the highest since they were 14.8 percent of sales last October. Sales of sub-$400,000 existing houses dropped to 57.5 percent of May sales, down from 62.2 percent in April and the lowest since 56.5 percent in November.

[CR: Be careful with the median price, it is distorted by the change in mix.]

... A total of 7,447 new and resale houses and condos sold in the nine-county Bay Area last month. That was up 4.3 percent from 7,139 in April and up 19.8 percent from 6,216 in May 2008.

The May 2008 sales were the lowest in DataQuick’s statistics, which go back to 1988. May sales have averaged 9,881 and peaked in May 2004 at 13,567 sales.
...
Last month 42.1 percent of all homes resold in the Bay Area had been foreclosed on in the prior 12 months, down from 46.4 percent in April and the lowest since the figure was 41.6 percent last September. A year ago the percentage was 27.7 percent, while the peak was 52.0 percent this February. By county, foreclosure resales ranged last month from 7.7 percent of all resales in San Francisco to 65.1 percent in Solano.

... Foreclosure activity is off its recent peak but remains high by historical standards ...

by Calculated Risk on 6/18/2009 05:49:00 PM

No news yet on the June 18th deadline, but if you want to see some dumping ...

Corus faces a June 18 deadline from the Office of the Comptroller of the Currency to boost its capital levels or risk being put into conservatorship or receivership.

Robert J. Glickman, the former CEO of Corus Bankshares Inc., ran the bank for 35 years before stepping down in April. Now he is selling like crazy.

SC 13D/A SEC Filing June 9th:

On June 3, 2009 ... Robert Glickman disposed of 111,074 shares of Common Stock which he owned directly. On June 4, 2009, Robert Glickman disposed of 800,248 shares of Common Stock beneficially owned by him. On June 5, 2009, Robert Glickman disposed of 485,178 shares of Common Stock beneficially owned by him. On June 8, 2009, Robert Glickman disposed of 16,653 shares of Common Stock beneficially owned by him. ... The shares disposed of by Robert Glickman on June 3, 2009, June 4, 2009, June 5, 2009 and June 8, 2009 represent approximately 2.6% of the total issued and outstanding shares of the Company

SC 13D/A SEC Filing June 12th:

On June 9, 2009, Robert Glickman disposed of 14,126 shares of Common Stock beneficially owned by him. .... On June 10, 2009, Robert Glickman disposed of 391,879 shares of Common Stock beneficially owned by him. ... On June 11, 2009, Robert Glickman disposed of 752,714 shares of Common Stock beneficially owned by him. ... On June 12, 2009, Robert Glickman disposed of 970,123 shares of Common Stock beneficially owned by him.

The shares disposed of by Robert Glickman on June 9, 2009, June 10, 2009, June 11, 2009 and June 12, 2009 represent approximately 4.0% of the total issued and outstanding shares of the Company

SC 13D/A SEC Filing June 17th:

On June 15, 2009, Robert Glickman disposed of 390,498 shares of Common Stock beneficially owned by him. ... On June 16, 2009, Robert Glickman disposed of 334,691 shares of Common Stock beneficially owned by him. ...

The shares disposed of by Robert Glickman on June 15, 2009 and June 16, 2009 represent approximately 1.4% of the total issued and outstanding shares of the Company

by Calculated Risk on 6/18/2009 05:00:00 PM

Sorry to bother everyone with this issue.

Starting Tuesday, Google / Blogger erroneously started inserting a redirect warning for visitors of my old blogspot address, instead of redirecting the old blogspot URL to the new URL. This is a sytem wide problem, impacting many blogs using the redirect feature from blogspot.

Blogger engineers are working on the problem.

For Firefox users, you will see a redirect warning. Safari and Internet Explorer users are told the site no longer exists.

In my case this means Google-Blogger is not correctly redirecting:
http://calculatedrisk.blogspot.com/
to my new URL:
http://www.calculatedriskblog.com/

This is a problem for anyone who bookmarked the old URL, or is coming in on a link from another site (with the old URL).

To avoid this problem, you can change your bookmark to http://www.calculatedriskblog.com/

I apologize for the inconvenience - thanks for visiting - hopefully this will be fixed soon.

by Calculated Risk on 6/18/2009 03:41:00 PM

This is the first same month year-over-year increase in miles driven (April 2009 compared to the April 2008) since November 2007.

Of course gasoline prices have increased sharply since April. The EIA reports that gasoline prices have increased from about $2.10 per gallon in April, to $2.70 per gallon in June - and that will probably impact miles driven.

The Dept of Transportation reports on U.S. Traffic Volume Trends:

Travel on all roads and streets changed by +0.6% (1.4 billion vehicle miles) for April 2009 as compared with April 2008. Travel for the month is estimated to be 249.5 billion vehicle miles.

Cumulative Travel for 2009 changed by -1.1% (-10.0 billion vehicle miles).

Click on graph for larger image in new window.

The first graph shows the annual change in the rolling 12 month average of U.S. vehicles miles driven. Note: the rolling 12 month average is used to remove noise and seasonality.

By this measure, vehicle miles driven are off 3.1% Year-over-year (YoY); the decline in miles driven was worse than during the early '70s and 1979-1980 oil crisis.

Note that rolling miles driven has a built in lag, and miles driven was larger in April 2009 than April 2008.

The second graph shows the comparison of month to the same month in the previous year as reported by the DOT.

As the DOT noted, miles driven in April 2009 were 0.6% greater than in April 2008.

This is the first same month year-over-year increase since November 2007.

Year-over-year miles driven started to decline in December 2007, and really fell off a cliff in March 2008. This makes for an easier comparison for April 2009.

by Calculated Risk on 6/18/2009 03:00:00 PM

Some mid-day amusement ...

This was funny ... I never posted on this, because it was pretty clear there wasn't any real story. Maybe the post should be titled: "How some blogs were snookered!"

But a false bottom in a suitcase?

From Dow Jones: US Says Seized 'Treasury Bonds' Are Not The Real Thing

A cache of what appeared to be around $135 billion of U.S. bonds seized at the Italian-Swiss border is, in fact, worthless, a Treasury Department spokesman said.

Two alleged Japanese citizens were stopped by Italian authorities June 4 trying to cross into Switzerland with the supposed bonds, hidden in the false bottom of a suitcase, the authorities said.

by Calculated Risk on 6/18/2009 01:20:00 PM

Note: some readers might notice the occupancy rate has risen to 61% - but that is just seasonal. The hotel occupancy rate is usually the highest during the peak vacation months of June, July and August.

From HotelNewsNow.com: STR posts US results for 7-13 June 2009

In year-over-year measurements, the industry’s occupancy fell 10.1 percent to end the week at 61.0 percent. Average daily rate dropped 9.4 percent to finish the week at US$96.61. Revenue per available room for the week decreased 18.6 percent to finish at US$58.96.

Click on graph for larger image in new window.

This graph shows the YoY change in the occupancy rate (3 week trailing average).

The three week average is off 11.6% from the same period in 2008.

The average daily rate is down 9.4%, so RevPAR is off 18.6% from the same week last year.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 6/18/2009 01:01:00 PM

In a post yesterday, I misread the BLS methodology on calculating Owners' Equivalent Rent.

For a discussion from the BLS of rent measures see: How the CPI measures price change of Owners’ equivalent rent of primary residence (OER) and Rent of primary residence (Rent)

The survey question referenced in the above post is for weighting, not price changes.

The price relative for OER is calculated by sampling non rent-controlled renters every six months. These average rents are divided by the sample six months earlier - and converted to a monthly change (by taking to the 1/6th power).

From the BLS document above: "The first step is standardizing the collected (market) rents, putting them on a monthly basis, and adjusting them for a number of circumstances that should not affect the CPI."

To be clear - the BLS is using market rents, not the opinion of homeowners to calculated OER.

I apologize for any confusion.

by Calculated Risk on 6/18/2009 12:20:00 PM

The Nelson A. Rockefeller Institute of Government report on state income taxes is now available on their website: April Is the Cruelest Month

Yesterday I posted a couple of graphs based on the report.

Reader Ann suggested the following graph ...

This shows the change in personal income taxes multiplied by the percent personal income tax of total state taxes in 2008.

This adjusted the decline in personal income taxes by the relative importance of the tax.

As an example, personal income taxes make up 68.5% of the revenue in Oregon and 55.9% in New York. A decline in personal income tax revenue is more important for those states than Arizona (25.3% of the revenue).