Existing home sales up
The National Association of Realtors said Friday that sales
increased 5% last month to a seasonally adjusted annual rate of
4.61 million, the best level since January 2011 and the third
straight monthly increase. For the year, sales totaled only 4.26
million. While that's up from 4.19 million the previous year,
it's below the 6 million that economists equate with healthy
housing markets. Sales are increasing at a time when the market
is flashing other positive signs. Mortgage rates are at
record-low levels. Homebuilders have grown slightly less
pessimistic because more people are saying they might be open to
buying a home this year. And home construction picked up in the
final quarter of last year. The median sales price rose 2.3% to
$164,500 in December. Still the housing market has a long way to
go before it is fully recovered from the housing bust four years
ago. In the last four years, home sales have slumped under the
weight of foreclosures, tighter credit and falling price. Fewer
first-time buyers, who are critical to a housing recovery, are in
the market for a home. Purchases by that group fell last month to
make up only 31% of sales. That's down from 35% in November. In
healthy markets, first-time buyers make up at least 40%. At the
same time, homes at risk of foreclosure made up a third of all
sales last month. In healthy markets, they comprise 10% of sales.
Investors are increasingly buying homes priced under $100,000.
Still, Sales rose across the country in December. They increased
on a seasonal basis by more than 10% in the Northeast, 8.3% in
the Midwest, 2.9% in the South and 2.6% in the West. The glut of
unsold homes declined to 2.38 million homes. At last month's
sales pace, it would take a nearly 7 months to clear those homes.
Analysts say a healthy supply can be cleared in about six
months.
US and Europe to face more ratings cuts?
The string of sovereign debt downgrades in recent months could be
just the beginning. The US, Europe—even Germany—could face
further ratings cuts over the next three years, according to a
lengthy analysis this week by Citigroup. The European Union got
a slight reprieve late Friday as Standard & Poor's backed it's
triple-A/A-1+ rating on the EU. It had been under review and at
risk of a downgrade. The outlook remains "negative." In
announcing its decision, S&P said the EU "benefits from multiple
layers of debt-service protection sufficient to offset the
current deterioration we see in member states' creditworthiness."
The US is at the top of Citi's list for possible downgrades
because its debt and deficit troubles are unlikely to be resolved
with the political infighting in Washington. Some of the other
usual suspects also are on Citi’s list – the European
peripheral nations in particular such as Greece and Spain. But
even mighty Germany, seen as the continent’s most secure
economy, could face a downgrade as the sovereign debt crisis
escalates and a European recession spreads through the region.
“We expect a string of further ratings downgrades for
advanced-economy sovereign debt, and do not expect any ratings
upgrades,” Citi analysts Michael Saunders and Mark Schofield
wrote. That includes American debt, which Standard & Poor’s
downgraded in August in a move that set off a more than 600-point
one-day selloff in the Dow industrials.
Citi said it is keeping its outlook unchanged on US debt in the
near term but sees trouble looming for the American rating over
the next two to three years. Indeed, the list of potential
downgrades is ominous and serves as a reminder that while the US
equity markets seem conveniently to have forgotten about the
world’s debt troubles, some stern and punitive reminders are on
the way. Further downgrades for the US, and the initial
downgrade for Germany, could be a few years away. But in the
next six months, the ratings agencies are likely again to start
rattling their sabers, starting with the declaration of a Greek
default that is approaching a near-certainty in March. In fact,
in the next six months, Citi expects Moody’s to cut ratings for
Italy, Spain, Portugal and Greece, with the nascent recovery in
Ireland allowing it to be the only one of the “PIIGS” nations
to escape the downgrade scalpel. Additionally, France and
Austria are deemed likely for a “negative outlook,” while
Greece will be placed into either “selective default” or
“outright default.” Going out further, the next two to three
years are likely to see downgrades not only to the US but also to
Japan, France, Italy, Spain, Austria, Belgium, Finland, the
Netherlands and Portugal.
DSNews.com - FHA steps up lender requirements
The Federal Housing Administration (FHA) on Friday announced new
measures to strengthen standards for the lenders it works with
– measures the agency says will help it better manage the risk
that comes with insuring mortgages against default. The new
regulations institute tighter requirements for lenders authorized
to insure mortgages on the agency’s behalf under the Lender
Insurance mortgagee program.FHA says these institutions will be
required to meet stricter performance standards to obtain and
maintain their approval status. More than 80% of all FHA forward
mortgages are insured through lenders participating in the Lender
Insurance program. FHA’s second mortgagee program – the
Direct Endorsement program – requires the agency’s approval
for endorsement. In order to be eligible to participate in the
FHA single-family programs as a Lender Insurance mortgagee, a
lender must be an unconditionally approved Direct Endorsement
mortgagee that is high performing. Under the new rule, a Lender
Insurance mortgagee must demonstrate a two-year seriously
delinquent and claim rate at or below 150% of the aggregate rate
for the states in which the lender does business. HUD and FHA
will review Lender Insurance mortgagee performance on an ongoing
basis to ensure participating lenders continue to meet the
program’s eligibility standards. The new rule also establishes
a process by which new HUD-approved lenders created through
corporate mergers, acquisitions, or reorganizations may be
considered for Lender Insurance authority. In addition, FHA has
shored up its processes for requiring lenders to cover potential
losses from insurance claims paid on mortgages that involve fraud
or that are found not to meet the agency’s underwriting
guidelines, which could force lenders to buy back more defaulted
loans. For those loans insured by Lender Insurance lenders, HUD
may require indemnification for “serious and material”
violations of FHA origination requirements and for fraud and
misrepresentation. In a separate notice to be published soon,
FHA plans to propose to reduce the maximum amount allowed for
seller concessions, in which the seller contributes a share of
the purchase price toward the buyer’s closing costs.
FHA says it will bring the maximum allowable amount to a level
more in line with industry norms. The current level exposes FHA
to excess risk by creating incentives to inflate appraised value,
the agency explained in a press statement. FHA says these
measures will help to protect and strengthen its Mutual Mortgage
Insurance Fund, which has fallen below the level mandated by
Congress, while enabling the agency to continue to fulfill its
mission of providing qualified borrowers with access to
homeownership. “Taken together, the changes announced today
will protect FHA’s insurance fund from unnecessary and
inappropriate risks while offering clear guidance to lenders
regarding HUD’s underwriting expectations,” said Carol J.
Galante, FHA’s acting commissioner. “FHA must continue to
strike a balance between managing risks to its insurance funds
and ensuring that FHA products are offered as widely as possible
to qualified borrowers,” Galante continued. “We hope that the
added clarity and certainty provided through these rules will
enable lenders to extend financing opportunities to larger
numbers of American families.”
Growth but few jobs
The National Association for Business Economics' industry survey
found that two-thirds of respondents expected no change in
employment at their companies over the first half of the year.
That was the highest share in recent quarters. Although the US
jobless rate fell to a near three-year low of 8.5% in December,
fewer businesses said they would hire more workers, compared with
the previous industry poll. The survey, which was conducted
between December 15 2011, and January 5 2012, found that 65% of
respondents expect gross domestic product growth to exceed 2%
between the fourth quarter of last year and the last quarter of
2012. That was higher than the 1.6% growth rate economists
polled by Reuters found. About two-thirds of the companies
surveyed said the European debt crisis would have little impact
on their sales over the first half the year, while 27% of
respondents said they expected to see a decline in sales of 10%
or less.
CMBS delinquency rate higher than 9% in 2011
The delinquency rate of loans in commercial mortgage-backed
securities (CMBS) bounced higher in December and remained above
9% all year. Delinquency rates were mixed across the five
commercial property types in December with hotel and multifamily
rates declining while office, retail and industrial rose.
Moody's Investors Service said the rate rose to 9.32% last month
from 9.27% in November and from 8.79% a year earlier. The
ratings agency said there were $3.7 billion of newly delinquent
loans in December, including Bank of America Plaza in Atlanta,
while $3.5 billion were resolved or worked out. The $1.4 billion
of new CMBS deals was more than offset by $5.5 billion of
seasoned loan dispositions and payoffs, pushing the CMBS universe
to $582.8 billion, analysts said. The $363 million loan that
went into arrears in Atlanta is the seventh largest delinquent
loan overall, according to Moody's. The delinquent rate in the
hotel sector fell to 12.96% from 13.54% a month earlier, while
multifamily declined to 14.44% from 14.88%, which remains the
highest rate among the core asset classes, Moody's said. Retail
delinquencies rose to 7.22% from 6.97% in November; industrial
climbed to 12.09% from 11.5%; and office increased to 8.65% from
8.39%. Moody's specially serviced loan tracker fell to 11.97% in
December from 12.1% the prior month.
The National Association of Realtors said Friday that sales
increased 5% last month to a seasonally adjusted annual rate of
4.61 million, the best level since January 2011 and the third
straight monthly increase. For the year, sales totaled only 4.26
million. While that's up from 4.19 million the previous year,
it's below the 6 million that economists equate with healthy
housing markets. Sales are increasing at a time when the market
is flashing other positive signs. Mortgage rates are at
record-low levels. Homebuilders have grown slightly less
pessimistic because more people are saying they might be open to
buying a home this year. And home construction picked up in the
final quarter of last year. The median sales price rose 2.3% to
$164,500 in December. Still the housing market has a long way to
go before it is fully recovered from the housing bust four years
ago. In the last four years, home sales have slumped under the
weight of foreclosures, tighter credit and falling price. Fewer
first-time buyers, who are critical to a housing recovery, are in
the market for a home. Purchases by that group fell last month to
make up only 31% of sales. That's down from 35% in November. In
healthy markets, first-time buyers make up at least 40%. At the
same time, homes at risk of foreclosure made up a third of all
sales last month. In healthy markets, they comprise 10% of sales.
Investors are increasingly buying homes priced under $100,000.
Still, Sales rose across the country in December. They increased
on a seasonal basis by more than 10% in the Northeast, 8.3% in
the Midwest, 2.9% in the South and 2.6% in the West. The glut of
unsold homes declined to 2.38 million homes. At last month's
sales pace, it would take a nearly 7 months to clear those homes.
Analysts say a healthy supply can be cleared in about six
months.
US and Europe to face more ratings cuts?
The string of sovereign debt downgrades in recent months could be
just the beginning. The US, Europe—even Germany—could face
further ratings cuts over the next three years, according to a
lengthy analysis this week by Citigroup. The European Union got
a slight reprieve late Friday as Standard & Poor's backed it's
triple-A/A-1+ rating on the EU. It had been under review and at
risk of a downgrade. The outlook remains "negative." In
announcing its decision, S&P said the EU "benefits from multiple
layers of debt-service protection sufficient to offset the
current deterioration we see in member states' creditworthiness."
The US is at the top of Citi's list for possible downgrades
because its debt and deficit troubles are unlikely to be resolved
with the political infighting in Washington. Some of the other
usual suspects also are on Citi’s list – the European
peripheral nations in particular such as Greece and Spain. But
even mighty Germany, seen as the continent’s most secure
economy, could face a downgrade as the sovereign debt crisis
escalates and a European recession spreads through the region.
“We expect a string of further ratings downgrades for
advanced-economy sovereign debt, and do not expect any ratings
upgrades,” Citi analysts Michael Saunders and Mark Schofield
wrote. That includes American debt, which Standard & Poor’s
downgraded in August in a move that set off a more than 600-point
one-day selloff in the Dow industrials.
Citi said it is keeping its outlook unchanged on US debt in the
near term but sees trouble looming for the American rating over
the next two to three years. Indeed, the list of potential
downgrades is ominous and serves as a reminder that while the US
equity markets seem conveniently to have forgotten about the
world’s debt troubles, some stern and punitive reminders are on
the way. Further downgrades for the US, and the initial
downgrade for Germany, could be a few years away. But in the
next six months, the ratings agencies are likely again to start
rattling their sabers, starting with the declaration of a Greek
default that is approaching a near-certainty in March. In fact,
in the next six months, Citi expects Moody’s to cut ratings for
Italy, Spain, Portugal and Greece, with the nascent recovery in
Ireland allowing it to be the only one of the “PIIGS” nations
to escape the downgrade scalpel. Additionally, France and
Austria are deemed likely for a “negative outlook,” while
Greece will be placed into either “selective default” or
“outright default.” Going out further, the next two to three
years are likely to see downgrades not only to the US but also to
Japan, France, Italy, Spain, Austria, Belgium, Finland, the
Netherlands and Portugal.
DSNews.com - FHA steps up lender requirements
The Federal Housing Administration (FHA) on Friday announced new
measures to strengthen standards for the lenders it works with
– measures the agency says will help it better manage the risk
that comes with insuring mortgages against default. The new
regulations institute tighter requirements for lenders authorized
to insure mortgages on the agency’s behalf under the Lender
Insurance mortgagee program.FHA says these institutions will be
required to meet stricter performance standards to obtain and
maintain their approval status. More than 80% of all FHA forward
mortgages are insured through lenders participating in the Lender
Insurance program. FHA’s second mortgagee program – the
Direct Endorsement program – requires the agency’s approval
for endorsement. In order to be eligible to participate in the
FHA single-family programs as a Lender Insurance mortgagee, a
lender must be an unconditionally approved Direct Endorsement
mortgagee that is high performing. Under the new rule, a Lender
Insurance mortgagee must demonstrate a two-year seriously
delinquent and claim rate at or below 150% of the aggregate rate
for the states in which the lender does business. HUD and FHA
will review Lender Insurance mortgagee performance on an ongoing
basis to ensure participating lenders continue to meet the
program’s eligibility standards. The new rule also establishes
a process by which new HUD-approved lenders created through
corporate mergers, acquisitions, or reorganizations may be
considered for Lender Insurance authority. In addition, FHA has
shored up its processes for requiring lenders to cover potential
losses from insurance claims paid on mortgages that involve fraud
or that are found not to meet the agency’s underwriting
guidelines, which could force lenders to buy back more defaulted
loans. For those loans insured by Lender Insurance lenders, HUD
may require indemnification for “serious and material”
violations of FHA origination requirements and for fraud and
misrepresentation. In a separate notice to be published soon,
FHA plans to propose to reduce the maximum amount allowed for
seller concessions, in which the seller contributes a share of
the purchase price toward the buyer’s closing costs.
FHA says it will bring the maximum allowable amount to a level
more in line with industry norms. The current level exposes FHA
to excess risk by creating incentives to inflate appraised value,
the agency explained in a press statement. FHA says these
measures will help to protect and strengthen its Mutual Mortgage
Insurance Fund, which has fallen below the level mandated by
Congress, while enabling the agency to continue to fulfill its
mission of providing qualified borrowers with access to
homeownership. “Taken together, the changes announced today
will protect FHA’s insurance fund from unnecessary and
inappropriate risks while offering clear guidance to lenders
regarding HUD’s underwriting expectations,” said Carol J.
Galante, FHA’s acting commissioner. “FHA must continue to
strike a balance between managing risks to its insurance funds
and ensuring that FHA products are offered as widely as possible
to qualified borrowers,” Galante continued. “We hope that the
added clarity and certainty provided through these rules will
enable lenders to extend financing opportunities to larger
numbers of American families.”
Growth but few jobs
The National Association for Business Economics' industry survey
found that two-thirds of respondents expected no change in
employment at their companies over the first half of the year.
That was the highest share in recent quarters. Although the US
jobless rate fell to a near three-year low of 8.5% in December,
fewer businesses said they would hire more workers, compared with
the previous industry poll. The survey, which was conducted
between December 15 2011, and January 5 2012, found that 65% of
respondents expect gross domestic product growth to exceed 2%
between the fourth quarter of last year and the last quarter of
2012. That was higher than the 1.6% growth rate economists
polled by Reuters found. About two-thirds of the companies
surveyed said the European debt crisis would have little impact
on their sales over the first half the year, while 27% of
respondents said they expected to see a decline in sales of 10%
or less.
CMBS delinquency rate higher than 9% in 2011
The delinquency rate of loans in commercial mortgage-backed
securities (CMBS) bounced higher in December and remained above
9% all year. Delinquency rates were mixed across the five
commercial property types in December with hotel and multifamily
rates declining while office, retail and industrial rose.
Moody's Investors Service said the rate rose to 9.32% last month
from 9.27% in November and from 8.79% a year earlier. The
ratings agency said there were $3.7 billion of newly delinquent
loans in December, including Bank of America Plaza in Atlanta,
while $3.5 billion were resolved or worked out. The $1.4 billion
of new CMBS deals was more than offset by $5.5 billion of
seasoned loan dispositions and payoffs, pushing the CMBS universe
to $582.8 billion, analysts said. The $363 million loan that
went into arrears in Atlanta is the seventh largest delinquent
loan overall, according to Moody's. The delinquent rate in the
hotel sector fell to 12.96% from 13.54% a month earlier, while
multifamily declined to 14.44% from 14.88%, which remains the
highest rate among the core asset classes, Moody's said. Retail
delinquencies rose to 7.22% from 6.97% in November; industrial
climbed to 12.09% from 11.5%; and office increased to 8.65% from
8.39%. Moody's specially serviced loan tracker fell to 11.97% in
December from 12.1% the prior month.
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