Foreclosure investigation to be revealed in January 2011
Treasury Secretary, Timothy Geithner and the Housing and Urban Development Secretary Shaun Donovan, said in a joint-statement that they expect the Administration task force assigned to investigate fraudulent mortgage foreclosure practices to present its results to them next month. According to a Post Chronicle report published today, the task force consists of a group of officials from 11 federal agencies. "The task force will take whatever action is necessary to hold accountable any institution that acted improperly," Secretaries Geithner and Donovan asserted in their joint-statement. The task force was formed to probe allegations of fraudulent foreclosure documentation in the wake of the 'robo-signers' scandal that has sparked public outrage with major lending banks.
Banks, facing intensifying demands from investors that they buy back billions of dollars worth of defaulted mortgages they sold to the investors, now have to brace for more challenges in the proportions of the recent financial crisis. The two officials have continually stated that the administration to date has not yet seen any signs of 'systemic' troubles with home foreclosures that might threaten U.S. financial stability, or structural problems that could hurt mortgage-related investments. Outside of the task force, state attorneys general of all 50 U.S. states, are co-operating and looking into alleged bank failures to properly review foreclosure processes and wrongly evict homeowners.
Mortgage applications down
The Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending December 17, 2010 decreased 18.6% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 20.0% compared with the previous week. The Refinance Index decreased 24.6% from the previous week. The Refinance Index has declined six straight weeks and is at its lowest level since the week ending April 30, 2010. The seasonally adjusted Purchase Index decreased 2.5% from one week earlier. The unadjusted Purchase Index decreased 4.9% compared with the previous week and was 8.4% lower than the same week one year ago. "Refinance application volume dropped sharply this week as mortgage rates held near six month highs," said Michael Fratantoni, MBA's Vice President of Research and Economics.
"Purchase applications fell for a second week, with the level of applications little changed over the past month, indicating that home sales are likely to remain relatively weak over the next few months." The four week moving average for the seasonally adjusted Market Index is down 9.8%. The four week moving average is down 1.2% for the seasonally adjusted Purchase Index, while this average is down 12.7% for the Refinance Index. The refinance share of mortgage activity decreased to 72.3% of total applications from 76.7% the previous week. This is the lowest refinance share observed in the survey since early June 2010. The adjustable-rate mortgage (ARM) share of activity increased to 6.1% from 5.5% of total applications from the previous week.
GDP up
According to the Commerce Department, gross domestic product (GDP) grew at an annual rate of 2.6% in the three months ended in September, up from the previous reading of a 2.5% rise. Economists expected the third and final reading of third quarter GDP, which is a measure of goods and services produced in the United States, to tick up to 2.7%, according to a consensus of economist opinion from Briefing.com. Third-quarter growth estimates were revised to reflect a $121.4 billion increase in business inventories rather than the $111.5 billion rise reported last month. Inventories added 1.61 percentage points to GDP growth.
Excluding inventories, the economy expanded at a 0.9 percent pace rather than 1.2%. The government calculates GDP as a measure of goods and services produced in the United States. The number is often revised multiple times. This is the third and final reading for the quarter. While the pace of economic growth is improving, the rate is still considered weak for a recovery. But outlooks are improving. In a survey of economists conducted during the last week by CNNMoney.com, the consensus forecast for economic growth during the fourth quarter rose to 3.1%. Just three months ago, economists were looking for a 2.5% for the last three months of the year.
Olick - business leaders to government: "Urgent"
"In a bold statement underscoring the precarious state of the nation's mortgage market, 52 industry executives sent an 'open letter' to the government's top six money managers. 'We the undersigned write to you regarding the urgent need to develop national standards for originating, selling and servicing mortgage loans,' the letter begins. 'The private residential mortgage securitization market is frozen as to new issuance. The housing market is suffering from a dearth of credit, which is causing a serious lack of confidence among potential homebuyers.' The letter was sent to the heads of the Federal Reserve, the FDIC, the Treasury Department, the SEC, the FHFA and the Comptroller of the Currency.
Not only does it demand a 'gold standard' for what exactly constitutes a residential mortgage, but given the 'ongoing litany of revelations pertaining to inadequate servicing, lost loan modification documents, and improper foreclosures which reveal significant problems in the mortgage servicing industry,' it makes eleven separate recommendations designed to protect not just borrowers but investors as well. Referring to 'misaligned incentives and tranche warfare,' in the securitization market, it demands appropriate action to maximize the net present value of the mortgages for the benefit of all investors in a securitization rather than the benefit of any particular class of investors.' What's striking is the slightly desperate tone of the letter, as the housing and mortgage markets teeter between a double dip and a lengthy flat lining recovery…all in the face of historic new regulation and restructuring. 'The chaotic situation in the mortgage market today demands immedia
te action to ensure all parties are treated fairly and to restore the confidence needed to support a recovery in real estate markets and the entire U.S. economy.' If you think there was a lot to talk about in housing this year, just wait."
Fed helped stocks, not economy
According to a CNBC Fed Survey in December, the Federal Reserve's policy to purchase $600 billion of bonds in a program widely known as QE2 has been mostly ineffective at lowering interest rates and will do little to improve the unemployment rate. The survey of 76 economists, bond and stock traders, and analysts, found 63% saying the Fed's program has been ineffective at lowering interest rates. A similar percentage believes the program will not help lower the unemployment rate. But respondents to the survey say the Fed program has played an important part in raising stock and commodity prices. In fact, nearly three-quarters of the group say the Fed's bond purchase program has helped raise stock prices, while 63% see it as a reason why commodity prices are higher. The Federal Reserve has been the subject of strong criticism since launching its QE2 program in November. Fed Chairman Ben Bernanke suggested it was a way to lower interest rates and unemployment. Since N
ovember, however, yields on treasuries have risen by nearly a percentage point.
Asked the reason for the increase in yields, 61% of the survey respondents said the main reason was a stronger growth outlook. Their next choice was a worsening outlook for the deficit, likely the result of the recent tax compromise in Washington, followed by a rise in the inflation forecast. "The economy is strengthening and the extension of the Bush tax cuts for all taxpayers is playing a more important role in boosting growth expectations than QE2 is," says RDQ Economics chief economist John Ryding. Overall, 72% believe the Fed will follow through and purchase the entire $600 billion of Treasuries announced in November. Twenty% believe the Fed will do less than that amount, and 8% think the Fed will do more.
As for QE3, 41% of market participants think there is a chance the Fed will continue to increase the size of its portfolio after June 2011. On average, those who believe in QE3 look for the Fed to add an additional $340 billion in purchases. But Mark Zandi, Chief Economist at Moody's Analytics, disagrees, saying, "The passage of the tax cut deal significantly improves the economy's prospects in 2011 and reduces the need for any additional QE." Add it all up, and 42% of survey participants give Fed Chairman Ben Bernanke a "B" grade and 26% give him an "A."
Treasury Secretary, Timothy Geithner and the Housing and Urban Development Secretary Shaun Donovan, said in a joint-statement that they expect the Administration task force assigned to investigate fraudulent mortgage foreclosure practices to present its results to them next month. According to a Post Chronicle report published today, the task force consists of a group of officials from 11 federal agencies. "The task force will take whatever action is necessary to hold accountable any institution that acted improperly," Secretaries Geithner and Donovan asserted in their joint-statement. The task force was formed to probe allegations of fraudulent foreclosure documentation in the wake of the 'robo-signers' scandal that has sparked public outrage with major lending banks.
Banks, facing intensifying demands from investors that they buy back billions of dollars worth of defaulted mortgages they sold to the investors, now have to brace for more challenges in the proportions of the recent financial crisis. The two officials have continually stated that the administration to date has not yet seen any signs of 'systemic' troubles with home foreclosures that might threaten U.S. financial stability, or structural problems that could hurt mortgage-related investments. Outside of the task force, state attorneys general of all 50 U.S. states, are co-operating and looking into alleged bank failures to properly review foreclosure processes and wrongly evict homeowners.
Mortgage applications down
The Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending December 17, 2010 decreased 18.6% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 20.0% compared with the previous week. The Refinance Index decreased 24.6% from the previous week. The Refinance Index has declined six straight weeks and is at its lowest level since the week ending April 30, 2010. The seasonally adjusted Purchase Index decreased 2.5% from one week earlier. The unadjusted Purchase Index decreased 4.9% compared with the previous week and was 8.4% lower than the same week one year ago. "Refinance application volume dropped sharply this week as mortgage rates held near six month highs," said Michael Fratantoni, MBA's Vice President of Research and Economics.
"Purchase applications fell for a second week, with the level of applications little changed over the past month, indicating that home sales are likely to remain relatively weak over the next few months." The four week moving average for the seasonally adjusted Market Index is down 9.8%. The four week moving average is down 1.2% for the seasonally adjusted Purchase Index, while this average is down 12.7% for the Refinance Index. The refinance share of mortgage activity decreased to 72.3% of total applications from 76.7% the previous week. This is the lowest refinance share observed in the survey since early June 2010. The adjustable-rate mortgage (ARM) share of activity increased to 6.1% from 5.5% of total applications from the previous week.
GDP up
According to the Commerce Department, gross domestic product (GDP) grew at an annual rate of 2.6% in the three months ended in September, up from the previous reading of a 2.5% rise. Economists expected the third and final reading of third quarter GDP, which is a measure of goods and services produced in the United States, to tick up to 2.7%, according to a consensus of economist opinion from Briefing.com. Third-quarter growth estimates were revised to reflect a $121.4 billion increase in business inventories rather than the $111.5 billion rise reported last month. Inventories added 1.61 percentage points to GDP growth.
Excluding inventories, the economy expanded at a 0.9 percent pace rather than 1.2%. The government calculates GDP as a measure of goods and services produced in the United States. The number is often revised multiple times. This is the third and final reading for the quarter. While the pace of economic growth is improving, the rate is still considered weak for a recovery. But outlooks are improving. In a survey of economists conducted during the last week by CNNMoney.com, the consensus forecast for economic growth during the fourth quarter rose to 3.1%. Just three months ago, economists were looking for a 2.5% for the last three months of the year.
Olick - business leaders to government: "Urgent"
"In a bold statement underscoring the precarious state of the nation's mortgage market, 52 industry executives sent an 'open letter' to the government's top six money managers. 'We the undersigned write to you regarding the urgent need to develop national standards for originating, selling and servicing mortgage loans,' the letter begins. 'The private residential mortgage securitization market is frozen as to new issuance. The housing market is suffering from a dearth of credit, which is causing a serious lack of confidence among potential homebuyers.' The letter was sent to the heads of the Federal Reserve, the FDIC, the Treasury Department, the SEC, the FHFA and the Comptroller of the Currency.
Not only does it demand a 'gold standard' for what exactly constitutes a residential mortgage, but given the 'ongoing litany of revelations pertaining to inadequate servicing, lost loan modification documents, and improper foreclosures which reveal significant problems in the mortgage servicing industry,' it makes eleven separate recommendations designed to protect not just borrowers but investors as well. Referring to 'misaligned incentives and tranche warfare,' in the securitization market, it demands appropriate action to maximize the net present value of the mortgages for the benefit of all investors in a securitization rather than the benefit of any particular class of investors.' What's striking is the slightly desperate tone of the letter, as the housing and mortgage markets teeter between a double dip and a lengthy flat lining recovery…all in the face of historic new regulation and restructuring. 'The chaotic situation in the mortgage market today demands immedia
te action to ensure all parties are treated fairly and to restore the confidence needed to support a recovery in real estate markets and the entire U.S. economy.' If you think there was a lot to talk about in housing this year, just wait."
Fed helped stocks, not economy
According to a CNBC Fed Survey in December, the Federal Reserve's policy to purchase $600 billion of bonds in a program widely known as QE2 has been mostly ineffective at lowering interest rates and will do little to improve the unemployment rate. The survey of 76 economists, bond and stock traders, and analysts, found 63% saying the Fed's program has been ineffective at lowering interest rates. A similar percentage believes the program will not help lower the unemployment rate. But respondents to the survey say the Fed program has played an important part in raising stock and commodity prices. In fact, nearly three-quarters of the group say the Fed's bond purchase program has helped raise stock prices, while 63% see it as a reason why commodity prices are higher. The Federal Reserve has been the subject of strong criticism since launching its QE2 program in November. Fed Chairman Ben Bernanke suggested it was a way to lower interest rates and unemployment. Since N
ovember, however, yields on treasuries have risen by nearly a percentage point.
Asked the reason for the increase in yields, 61% of the survey respondents said the main reason was a stronger growth outlook. Their next choice was a worsening outlook for the deficit, likely the result of the recent tax compromise in Washington, followed by a rise in the inflation forecast. "The economy is strengthening and the extension of the Bush tax cuts for all taxpayers is playing a more important role in boosting growth expectations than QE2 is," says RDQ Economics chief economist John Ryding. Overall, 72% believe the Fed will follow through and purchase the entire $600 billion of Treasuries announced in November. Twenty% believe the Fed will do less than that amount, and 8% think the Fed will do more.
As for QE3, 41% of market participants think there is a chance the Fed will continue to increase the size of its portfolio after June 2011. On average, those who believe in QE3 look for the Fed to add an additional $340 billion in purchases. But Mark Zandi, Chief Economist at Moody's Analytics, disagrees, saying, "The passage of the tax cut deal significantly improves the economy's prospects in 2011 and reduces the need for any additional QE." Add it all up, and 42% of survey participants give Fed Chairman Ben Bernanke a "B" grade and 26% give him an "A."
