Tuesday, December 16, 2008

FHFA September Foreclosure Prevention

Here's a news release from the Federal Housing Finance Agency, for those keeping an eye on foreclosure and note modification trends:

FHFA September Foreclosure Prevention Report Released

Washington, DC – James B. Lockhart, Director of the Federal Housing Finance Agency today released the September monthly Foreclosure Prevention Report, which provides comprehensive monthly data on the loss mitigation efforts of Fannie Mae and Freddie Mac as well as information on delinquencies, foreclosures initiated and foreclosures completed.

Since year-end 2007, while loans 60+ days delinquent have increased, loans for which foreclosure was started actually decreased. Loss mitigation actions have increased for all workout types. Short sale and deed-in-lieu volumes increased significantly in September 2008. In comparison to 2007, the Enterprises’ loss mitigation performance ratio shows considerable sustained improvement with the year-to-date ratio at 54.6 percent versus 43.5 percent for 2007.

The report shows that as of September 30, 2008 of the Enterprises’ 30.7 million residential mortgages:

  • Loans 60+ days delinquent (including those in bankruptcy and foreclosure) as a percent of all loans increased from 1.46 percent as of March 31 to 1.73 percent as of June 30 to 2.21 percent as of September 30.
  • Loans for which foreclosure was started as a percent of loans 60+ days delinquent declined from 8.29 for the first quarter and 7.81 percent for the second quarter to 7.12 percent for the third quarter.
  • Loans for which foreclosure was completed as a percent of loans 60+ days delinquent increased from 2.41 percent for the first quarter to 2.55 percent for the second quarter and stabilized at 2.55 percent for the third quarter.
  • Modifications completed declined from 15,636 for the first quarter to 15,372 for the second quarter to 13,450 for the third quarter. However, loans reinstated through Fannie Mae’s HomeSaver Advance (HSA) Program increased from 1,244 in the first quarter to 16,658 in the second quarter and 27,277 in the third quarter.
The loss mitigation ratio is calculated at the total mitigation activities (payment plans, HomeSaver Advances, loan modifications, short sales, deeds in lieu, assumptions, and charge-offs) divided by the total of loss mitigation activities plus foreclosures completed and third-party sales.

Sunday, December 14, 2008

Interesting Commentary From JP Morgan Chase

A colleague forwarded this to me, so I don't have the direct link.

"In recent months, Wall Street has seen an extreme liquidity drought with steady redemptions from hedge funds and long-term mutual funds. However, this doesn't mean that investors have no money to put to work. In fact, in November, M2 (the total value of money held in cash, checking accounts, savings accounts, CDs under $100,000 and retail money market accounts) exceeded $7.9 trillionfor the first time, up 7.4% over the past year. Interestingly, holdings in these short-term accounts now exceed the total capitalized value of the S&P 500. The problem is not the ability of investors to invest, but rather their willingness to do so."

Don't want to miss the bounce, do you? Good time to be checking in with your financial planner. Please email me if you need a referral.

Monday, December 08, 2008

How to get a Cheap Vacation to Antigua


Elite Island Vacations has thrown out an interesting twist on the stock market uncertainty - a bet that your financial stock shares are likely well below their fair value. They are willing to take your shares at July 1 2008 value in exchange for travel services - with some restrictions I am sure.

Example: GOOG shares closed at $302 today. On July 1, they were worth $534. If you have shares of Google, and want to go to Antigua, you can pay with your shares, and get $534 of travel for every single share - that you would only be able to get $302 on the open market for.

Why do this? Elite Island Vacations clearly believes that the shares are worth more than their current trading value. That and the fact that they are very clever marketers. It's no different than offering a sale on their service, but this is bound to get a lot of attention. I'd certainly never heard of them before.

Is The Loan Modification Trend Working?

New reports on CNBC today that the re-default rate on modified mortgage loans is greater than 50% after 6 months.

That's a pretty disappointing and discouraging statistic. A lot of money is being spent on the modification efforts, and with that kind of performance, lenders are going to be less likely to continue the effort.

This gives good fuel to the debate over whether market intervention can soften the blows of a natural market correction....