by Calculated Risk on 11/26/2012 04:15:00 PM

LPS released their First Look report for October today. LPS reported that the percent of loans delinquent decreased in October compared to September, and declined about 7% year-over-year. Also the percent of loans in the foreclosure process declined sharply in October and are the lowest level since August 2009.

LPS reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) decreased to 7.03% from 7.40% in September (delinquencies increased seasonally in September). Note: the normal rate for delinquencies is around 4.5% to 5%.

 The percent of loans in the foreclosure process declined to 3.61% from 3.87% in September. 

The number of delinquent properties, but not in foreclosure, is down about 10% year-over-year (400,000 fewer properties delinquent), and the number of properties in the foreclosure process is down 19% or 412,000 year-over-year.

The percent (and number) of loans 90+ days delinquent and in the foreclosure process is still very high, but the number of loans in the foreclosure process is starting to decline fairly quickly.

LPS will release the complete mortgage monitor for October in early December.

LPS: Percent Loans Delinquent and in Foreclosure Process
	Oct 2012	Sept 2012	Oct 2011
Delinquent	7.03%	7.40%	7.58%
In Foreclosure	3.61%	3.87%	4.30%
Number of properties:
Number of properties that are 30 or more, and less than 90 days past due, but not in foreclosure:	1,957,000	2,170,000	2,219,000
Number of properties that are 90 or more days delinquent, but not in foreclosure:	1,543,000	1,530,000	1,681,000
Number of properties in foreclosure pre-sale inventory:	1,800,000	1,940,000	2,212,000
Total Properties	5,300,000	5,640,000	6,111,000

by Calculated Risk on 11/26/2012 12:58:00 PM

A frequent topic on this blog back in 2005, 2006, 2007 and even in 2008 were FHA loans and DAPs (seller financed Down-payment Assistance Programs). With DAPs, the seller "donated" the down payment to a non-profit (for a fee of course), and the non-profit gave the down payment to the buyer.  This allowed people to get around the FHA's down payment requirement, and to buy for no money down. For nerdy details, see Tanta's DAP for UberNerds

DAPs were finally banned in 2008 after wrecking havoc on the FHA's finances.

From Nick Timiraos at the WSJ: FHA’s Biggest Loser: No-Money-Down Mortgages

One of the biggest reasons the Federal Housing Administration is facing severe financial woes is a problem agency officials identified and sought to correct years ago.
...
A big chunk of the losses leading to a $16.3 billion shortfall have come from programs that allowed home sellers to fund down payments via nonprofit groups that provided them to buyers as a “gift.” After trying for years, the FHA finally prevailed on Congress to shut down the programs in late 2008, but not before the agency backed billions in risky no-money-down loans as home prices were dropping fast.
...
Seller-funded down-payment assistance loans accounted for just 4% of outstanding loans at the end of September, but they represented 13% of all seriously delinquent mortgages, according to a recently released audit.

The audit said that had the FHA not allowed the programs to go forward, then the mortgage program’s $13.5 billion net worth deficit would have turned to a positive $1.77 billion.

The FHA made many bad loans in fiscal years 2008 and 2009 (from October 2007 through October 2009) when private capital left the mortgage market, and the FHA saw a huge surge in market share. With falling house prices, and low down payment loans, many of these borrowers defaulted.

However DAPs also played a significant role in negatively impacting the FHA - and that was obvious in early 2005!

by Calculated Risk on 11/26/2012 10:30:00 AM

From the Dallas Fed: Growth Stalls and Company Outlook Worsens

Texas factory activity was little changed in November, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, came in at 1.7, indicating output barely increased from October.

Other survey measures suggested flat manufacturing activity in November. The new orders index came in at 0.4, suggesting that demand was unchanged from October.
...
Perceptions of broader business conditions worsened in November. The general business activity index fell to -2.8, returning to negative territory. The company outlook index moved down to -4.8, registering its first negative reading since April.

Labor market indicators were mixed. The employment index edged up to 6.7 in November, with more than 20 percent of firms reporting hiring compared with 15 percent reporting layoffs. The hours worked index dipped from -5.9 to -7.1.

This was below expectations of a reading of 4.7 for the general business activity index. Later this week two more regional manufacturing surveys will be released (Richmond and Kansas City). 

by Calculated Risk on 11/26/2012 08:30:00 AM

The Chicago Fed released the national activity index (a composite index of other indicators): Economic Activity Slower in October

Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) decreased to –0.56 in October from 0.00 in September. All four broad categories of indicators that make up the index decreased from September, and only two made positive contributions to the index in October.

The index’s three-month moving average, CFNAI-MA3, decreased from –0.36 in September to –0.56 in October—its eighth consecutive reading below zero. October’s CFNAI-MA3 suggests that growth in national economic activity was below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.

This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967.

Click on graph for larger image.

This suggests economic activity slowed, and growth was still below trend in October.

According to the Chicago Fed:

What is the National Activity Index? The index is a weighted average of 85 indicators of national economic activity drawn from four broad categories of data: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories.

A zero value for the index indicates that the national economy is expanding at its historical trend rate of growth; negative values indicate below-average growth; and positive values indicate above-average growth.

by Calculated Risk on 11/25/2012 08:59:00 PM

Monday economic releases:
• At 8:30 AM ET, the Chicago Fed will release their National Activity Index for October. This is a composite index of other data.

• At 10:30 AM, the Dallas Fed Manufacturing Survey for November will be released. The consensus is for 4.7 for the general business activity index, up from 1.8 in October.

• Expected: LPS "First Look" Mortgage Delinquency Survey for October.

• Also on Monday, Euro zone finance ministers will discuss the funding situation for Greece.

The Asian markets are mostly green tonight, with the Nikkei up 0.8%.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are down 6 and DOW futures are down 56.

Oil prices are down with WTI futures at $87.95 per barrel and Brent at $111.23 per barrel.

Here is a graph from Gasbuddy.com showing the roller coaster ride for gasoline prices. Notes: Add a California city to the graph - like Los Angeles or San Francisco - and you will see the recent sharp increase and decrease due to refinery problems. If you add New York, it will show the recent spike (much smaller than in California).

If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

Weekend:
• Summary for Week Ending Nov 23rd
• Schedule for Week of Nov 25th

Four more questions this week for the November economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).