More cheery news on the housing front. The rise in foreclosures wasn’t unexpected, since there are widespread, albeit anecdotal reports of banks being backlogged on foreclosures, either by virtue of design or understaffing. But notice how prime mortgages are a significant component of new foreclosures.
From Bloomberg:
New foreclosures increased to 1.19 percent, rising above 1 percent for the first time in the survey’s 29 years, the Mortgage Bankers Association said in a report today. The total inventory of homes in foreclosure reached 2.75 percent, almost tripling since the five-year housing boom ended in 2005. The share of loans with one or more payments overdue rose to a seasonally adjusted 6.41 percent of all mortgages, an all-time high, from 6.35 percent in the first quarter.
Tumbling home prices are making it difficult for even the most creditworthy owners with adjustable-rate mortgages to sell or get a new loan as their financing costs rise, said Jay Brinkmann, MBA’s chief economist. Prime ARMs accounted for 23 percent of new foreclosures and subprime ARMs were 36 percent, he said.
More commentary from Reuters:
“The national foreclosure numbers continue to be driven by the hardest-hit states continuing to get much worse,” Jay Brinkmann, the association’s chief economist and senior vice president for research and economics, said in a news release.
The increases in foreclosures in California and Florida overwhelmed improvements in states such as Texas, Massachusetts and Maryland, he said.
“It is unsurprising that mortgage delinquencies picked up further in the second quarter,” John Ryding, chief economist, and Conrad DeQuadros, senior economist, at RDQ Economics in New York, said in commentary.
“However, the increase in delinquencies and foreclosures up to this point is most likely predominantly the product of poor underwriting standards. Going forward, we have to overlay the weak economy and labor market picture as this more traditional driver of delinquencies will probably become more of a factor,” they said.
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Volcker said today that the crisis is “the most complex he’s seen” and that the “slowdown will be the worst since the Great Depression”
http://jessescrossroadscafe.blogspot.com/2008/09/volcker-says-crisis-most-complex-hes.html
It’s scary when none of the 12 fed governers predicted unemployment to go so high this quarter. What else is in store I ask? As this review suggests perhaps it is time to building up one’s emergency funds and find shelter in the strenghting economic storm
If you think this is contained to the US – think again.
Here is the best rant I’ve yet seen and it’s based in the UK:
http://www.bastardoldholborn.blogspot.com/
WSJ Reports Bailout of Fannie and Freddie is Imminent
http://jessescrossroadscafe.blogspot.com/2008/09/wsj-reports-bailout-plan-soon-for.html
Larry Kudlow says all is well and we are just in a mild slow-down.
I wonder who pays him to take such insane positions. I wonder if he’s ever created anything in his life (a business, a work of art), because I get the feeling he is a modern day Goebbles spewing forth crap to keep something alive.
Who the hell is that guy and why does anyone listen to him?
Kidlow is a former cocaine cowboy fired from his job at the NY Fed Res
and forced to convert to Catholic from his ‘demon’ jewish by none other than WmFBuckley in order to get a job and recommendations at the National Review.
Since Kidlow had several drug and alcohol history, he converted and took the job.
He is also a motivational speaker, he did a gig at enron encouraging investors and employees to ‘tank up’ on stocks
as they were the ‘bargain of the millenia’. Stock was crashing to $10 and on its way to zero.
Kidlow was paid $50K for the series of speeches and ads, he took it in cash even tho $65K in stock was offered.
Subprime crisis is just the tip of the iceberg.
Now prime borrowers are in trouble too so not surprising that foreclosures are getting worse.
Wrote a post earlier on this issue.
http://jeflin.net/2008/08/13/more-pain-from-avalanche-of-mortgage-defaults