by Calculated Risk on 3/18/2012 08:29:00 PM

This is significant ...

Back in October, the FHFA announced some changes to HARP to allow homeowners with GSE loans and with negative or near negative equity - and who are current on their mortgages - to refinance into lower interest rate loans.

The key to this program for the lenders was that the lender was not responsible for any of the representations and warranties associated with the original loan (this is huge for the lenders). The elimination of Reps and warrants for the original loans applies to the automated Desktop Underwriter® (DU) (see Selling Guide Announcement SEL-2011-12)

According to Fannie Mae, the updates to Desktop Underwriter® were completed yesterday. Now lenders can use the automated system (and borrowers will now be able to apply for a "HARP 2.0" refinance with lenders other than the lender for their original mortgage).

I expect having the automated system - with the elimination of reps and warrants - will lead to surge in refinance activity.

Note: We will not see the increase in the MBA refinance index reported this week, because that was for last week. We will have to wait until the end of March to see if there is a surge in refinance activity.

by Calculated Risk on 3/18/2012 05:25:00 PM

From MarketWatch: Gasoline prices rise for 9th straight day

The national average price for a gallon of gas rose to $3.838, according to motorist group AAA’s fuel gauge report.

That’s up from about $3.53 a month ago.
...
The nation’s record high of $4.11 was set in July 2008, [CNN] said.

From the WSJ: No Relief in Sight at Pump

U.S. gasoline prices jumped 6% in February, and market experts predict they will climb higher because critical refining operations in the Northeast are shutting down.
...
Gasoline futures on the New York Mercantile Exchange are up 22% this year, and settled Friday at a 10-month high of $3.3569 a gallon. Average pump prices tend to follow futures by a few weeks, averaging about 70 cents a gallon more, after taxes and transport costs. Based on futures, retail prices should average above $4 a gallon soon.

From the WSJ: Economy Hasn't Slipped on Oil Prices—Yet

Professor Hamilton had some thoughts earlier this month on the impact on the economy: Oil prices and the U.S. economy

Although the prices of oil and gasoline have risen significantly from their values in October, they are still not back to the levels we saw last spring or in the summer of 2008. There is a good deal of statistical evidence ... that an oil price increase that does no more than reverse an earlier decline has a much more limited effect on the economy than if the price of oil surges to a new all-time high.

One reason for this is that much of the impact on the economy of an increase in oil prices comes from abrupt changes in the patterns of consumer spending. ... ut if consumers have recently seen even higher prices than they're paying at the moment, their spending plans and firms' production plans are likely already to have incorporated that reality.

... based on what has happened to oil prices so far, I find myself in the unusual position of being less concerned about the impact of oil prices on the U.S. economy than many other analysts.

It definitely hurts at the pump!

Note: The graph below shows oil prices for WTI; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

Yesterday:
• Summary for Week ending March 16th
• Schedule for Week of March 18th

by Calculated Risk on 3/18/2012 03:14:00 PM

Yesterday:
• Summary for Week ending March 16th
• Schedule for Week of March 18th

From Jim the Realtor:

"Here is another contender for the cover of curb appeal magazine"

"Thank you mister neighbor (about a boat in the neighbors backyard). Thankfully its for sale. I'm sure he won't have any trouble selling it while it sits right there in the backyard, because people flying over this property will be throwing money - suitcases of money - at him to buy that boat. So don't worry about that ..."

Hard to believe this one sold in 2 weeks ... enjoy.

by Calculated Risk on 3/18/2012 10:34:00 AM

This is a followup to the previous post showing the year-over-year change in private and public sector payroll jobs. With public sector jobs down over the last few years (state and local layoffs), several readers have asked if I could compare public sector hiring / firing to the early '00s.

The following two graphs compare public and private sector job losses (or added) for President George W. Bush's first term (following the stock market bust), and for President Obama's current term (following the housing bust and financial crisis).

Important: There are many differences between the two periods. Both followed the bursting of a bubble (stock and housing), although the housing bust also led to a severe financial crisis. As Reinhart and Rogoff noted, recoveries from financial crisis are usually very sluggish. See: "The Aftermath of Financial Crises".

Click on graph for larger image.

The first graph shows the change in private sector payroll jobs from the beginning of Mr. Bush's first term compared to Mr. Obama's current term.

The employment recovery during Mr. Bush's first term was very sluggish, and private employment was down 913,000 jobs at the end of his first term. The recovery has been sluggish under Mr. Obama's presidency too, and there are still 247,000 fewer payroll jobs than when Mr. Obama's term started (although it appears this will turn positive in a couple of months).

A big difference between Mr. Bush's first term and Mr. Obama's presidency has been public sector employment. The public sector grew during Mr. Bush's term (up 900,000 jobs), but the public sector has declined since Obama took office (down 590,000 jobs). These job losses are at the state and local level, but they are still a significant drag on overall employment.

It appears the public sector jobs losses are slowing, and it looks likely that the decline in public payrolls will probably end mid-year 2012.

Yesterday:
• Summary for Week ending March 16th
• Schedule for Week of March 18th

by Calculated Risk on 3/17/2012 11:11:00 PM

Jon Lansner at the O.C. Register wrote about looking at year-over-year changes:

Forget the debate about the true oomph of February's 227,000 job gain from January.

Look at this same data on a year-over-year basis! What do you learn?

American bosses added 2.021 million jobs in the year ended in February. That's a 1.5 percent job growth pace. It's the fastest bout of hiring since January 2007.

That requires a graph! Instead of just looking at the year-over-year increase in total nonfarm payrolls, I divided the data into changes in private and public payrolls.

Click on graph for larger image.

The red line is the year-over-year changes for private payrolls; the blue line is for public payrolls.

Whereas total payrolls are up 1.5 percent, private payrolls are up 2.0% year-over-year, the fastest rate of increase since early 2006.

However public payrolls are down 1.0%, and public payrolls have been falling since mid-2009 with the exception of the decennial Census hiring (note the spike every 10 years in public hiring).

Note: It looks likely that the decline in public payrolls will end mid-year 2012 (the year-over-year change will hit zero some time later).

Earlier:
• Summary for Week ending March 16th
• Schedule for Week of March 18th