by Calculated Risk on 11/17/2010 09:11:00 PM

From Fed Governor Elizabeth Duke: Foreclosure documentation issues. She didn't provide any specifics although she noted that the report will be published early next year. She also mentioned some foreclosure data:

The Office of the Comptroller of the Currency (OCC), the Office of Thrift Supervision (OTS), the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve are conducting an in-depth review of practices at the largest mortgage servicing operations. ... The regulators expect the initial on-site portion of our work to be completed this year and currently plan to publish a summary overview of industry-wide practices in early 2011.

Duke discusses some of the potential risks from foreclosure issues, and she noted the Fed expects the number of foreclosures will stay elevated for several years:

The number of foreclosures initiated on residential properties has soared from about 1 million in 2006, the year that house prices peaked, to 2.8 million last year. Over the first half of this year, we have seen a further 1.2 million foreclosure filings, and an additional 2.4 million homes were somewhere in the foreclosure pipeline at the end of June. All told, we expect about 2.25 million foreclosure filings this year and again next year, and about 2 million more in 2012. While our outlook is for filings to decline in coming years, they will remain extremely high by historical standards. Currently, almost 5 million mortgage loans are 90 days or more past due or in foreclosure.

Note: We will have some updated delinquency data tomorrow. For Q2, the Mortgage Bankers Association (MBA) reported that 9.11% of first-liens were 90 or more days delinquent or in the foreclosure process. That was about 4.8 million loans.

Tomorrow morning the MBA will release the Q3 National Delinquency Survey at 10 AM ET - and I'll be on the conference call at 10:30 AM.

by Calculated Risk on 11/17/2010 04:50:00 PM

A few details from the Financial Times: Dublin feels pressure on rescue package

Irish bank customers have withdrawn an estimated 11% of deposits over just a few weeks.

The Irish banks are now relying heavily on the ECB for liquidity.

The "rescue team" (IMF, European Central Bank, and European Commission officials) arrive on Thursday.

LCH.Clearnet (large clearing house) today doubled the margin requirements for Irish sovereign debt.

Also from the WSJ: Ireland Braces for Bank Exam

by Calculated Risk on 11/17/2010 02:34:00 PM

In addition to the CPI release this morning from the BLS, the Cleveland Fed released the median CPI and the trimmed-mean CPI:

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.1% (1.1% annualized rate) in October. The 16% trimmed-mean Consumer Price Index was virtually unchanged at 0.0% (0.6% annualized rate) during the month.
...
Over the last 12 months, the median CPI rose 0.5%, the trimmed-mean CPI rose 0.8%, the CPI rose 1.2%, and the CPI less food and energy rose 0.6%

So these three measures: core CPI, median CPI and trimmed-mean CPI, all increased less than 1% over the last 12 months. The indexes for rent and owners' equivalent rent both increased in October (some analysts blamed the disinflation trend on these measures of rent, but that wasn't true in October).

For the core CPI, the BLS noted:

Over the last 12 months, the index for all items less food and energy has risen 0.6 percent, the smallest 12-month increase in the history of the index, which dates to 1957

Click on graph for larger image in new window.

This graph shows these three measure of inflation on a year-over-year basis.

They all show that inflation has been falling, and that measured inflation is up less than 1% year-over-year.

Note: The Cleveland Fed has a discussion of a number of measures of inflation: Measuring Inflation

As far as disinflation, the U.S. is still tracking Japan in the '90s ...

by Calculated Risk on 11/17/2010 11:41:00 AM

Notes: CoreLogic reports the year-over-year change. The headline for this post is for the change from August 2010 to September 2010. The CoreLogic HPI is a three month weighted average of July, August, and September and is not seasonally adjusted (NSA).

From CoreLogic: September Home Prices Declined 2.79 Percent Year Over Year

CoreLogic ... today released today released its September Home Price Index (HPI) that shows that home prices in the U.S. declined for the second month in a row after rising slightly for the first seven months of the year. According to the CoreLogic HPI, national home prices, including distressed sales, declined 2.79 percent in September 2010 compared to September 2009 and declined by 1.08 percent [revised] in August 2010 compared to August 2009. Excluding distressed sales, year-over-year prices declined .73 percent in September 2010.. ...

“We’re continuing to see price declines across the board with all but seven states seeing a decrease in home prices,” said Mark Fleming, chief economist for CoreLogic. “This continued and widespread decline will put further pressure on negative equity and stall the housing recovery.”

Click on graph for larger image in new window.

This graph shows the national CoreLogic HPI data since 1976. January 2000 = 100.

The index is down 2.8% over the last year, and off 29.2% from the peak.

The index is 3.9% above the low set in March 2009, and I expect to see a new post-bubble low for this index later this year or early in 2011. As Fleming noted, prices are falling in most areas now.

by Calculated Risk on 11/17/2010 08:30:00 AM

Click on graph for larger image in new window.

Total housing starts were at 519 thousand (SAAR) in October, down 11.7% from the revised September rate of 588 thousand, and just up 9% from the all time record low in April 2009 of 477 thousand (the lowest level since the Census Bureau began tracking housing starts in 1959).

Most of the decline this month was due to multi-family starts (after two strong months).

Single-family starts decreased 1.1% to 436 thousand in October. This is 21% above the record low in January 2009 (360 thousand).

The second graph shows total and single unit starts since 1968. This shows the huge collapse following the housing bubble, and that housing starts have mostly been moving sideways for almost two years - with a slight up and down over the last six months due to the home buyer tax credit.

Here is the Census Bureau report on housing Permits, Starts and Completions.

Housing Starts:
Privately-owned housing starts in October were at a seasonally adjusted annual rate of 519,000. This is 11.7 percent (±8.6%) below the revised September estimate of 588,000 and is 1.9 percent (±9.6%)* below the October 2009 rate of 529,000.

Single-family housing starts in October were at a rate of 436,000; this is 1.1 percent (±8.6%)* below the revised September figure of 441,000.

Building Permits:
Privately-owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 550,000. This is 0.5 percent (±3.0%)* above the revised September rate of 547,000, but is 4.5 percent (±3.1%) below the October 2009 estimate of 576,000.

Single-family authorizations in October were at a rate of 406,000; this is 1.0 percent (±1.3%)* above the revised September figure of 402,000.

This was below expectations of 590 thousand starts, mostly because of the volatile multi-family starts. Starts will stay low until the excess inventory of existing homes is absorbed.

by Calculated Risk on 11/17/2010 07:30:00 AM

The MBA reports: Mortgage Applications Decline as Mortgage Rates Jump in Latest MBA Weekly Survey

The Refinance Index decreased 16.5 percent from the previous week and is at the lowest level observed since July of this year. The seasonally adjusted Purchase Index decreased 5.0 percent from one week earlier, the first decrease after three consecutive weekly increases.
...
The average contract interest rate for 30-year fixed-rate mortgages increased to 4.46 percent from 4.28 percent, with points increasing to 1.13 from 1.04 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the highest 30-year fixed-rate observed in the survey since the week ending September 10, 2010.

Click on graph for larger image in new window.

This graph shows the MBA Purchase Index and four week moving average since 1990.

The four-week moving average of the purchase index is about 30% below the levels of April 2010. This suggests existing home sales will remain weak through at least the end of the year.