70,000 foreclosures in January

CoreLogic - 70,000 foreclosures in January

CoreLogic released its National Foreclosure Report for
January, which provides monthly data on completed
foreclosures, foreclosure inventory and 90+ delinquency
rates. There were 69,000 completed foreclosures in January
2012, compared to 80,000 in January 2011, and 65,000 in
December 2011. The number of completed foreclosures for the
previous twelve months was 860,128. From the start of the
financial crisis in September 2008, there have been
approximately 3.3 million completed foreclosures.
Approximately 1.4 million homes, or 3.3% of all homes with a
mortgage, were in the foreclosure inventory as of January
2012 compared to 1.5 million, or 3.6%, in January 2011 and
1.4 million, or 3.4%, in December 2011.

Nationally, the number of loans in the foreclosure inventory
decreased by 145,000, or 9.5% in January 2012 compared to
January 2011. The foreclosure inventory is the stock of
homes in the foreclosure process.  A property moves into the
foreclosure inventory when the mortgage servicer places the
property into the foreclosure process after serious
delinquency is reached and remains there until the
foreclosure is completed.  The foreclosure inventory is
measured only against homes with an outstanding mortgage,
rather than against all homes. Nationwide, roughly one third
of homeowners own their homes outright.

The share of borrowers nationally that were more than 90
days late on their mortgage payment, including homes in
foreclosure and REO, fell to 7.2% in January 2012 from 7.8%
in January 2011, but remained unchanged from December 2011.
The inventory of REO assets held by servicers nationwide
grew faster in January than the pace of REO sales, as
measured by the distressed clearing ratio.  The distressed
clearing ratio is calculated by dividing the number of REO
sales by the number of completed foreclosures; the higher
the ratio, the faster the pace of REO sales relative to the
pace of completed foreclosures.  The distressed clearing
ratio for January 2012 was 0.69, down from 0.80 in December
2011.   Highlights as of January 2012:

-  The five states with the largest number of completed
foreclosures for the twelve months ending in January 2012
were: California (155,000), Florida (86,000), Arizona
(65,000), Michigan (65,000) and Texas (57,000). These five
states account for 49.7% of all completed foreclosures
nationally.

-  The% of homeowners nationally who were more than 90 days
late on their mortgage payments, including homes in
foreclosure and REO, was 7.2% for January 2012 compared to
7.8% for January 2011, and 7.2% in December 2011.

-  The five states with the highest foreclosure rates were:
Florida (11.8%), New Jersey (6.4%), Illinois (5.3%), Nevada
(5.0%) and New York (4.7%).

-  The five states with the lowest foreclosure rates were:
Wyoming (0.7%), Alaska (0.8%), North Dakota (0.8%), Nebraska
(1.1%) and Texas (1.3%).

-  Of the top 100 markets, measured by Core Based
Statistical Areas (CBSAs) population, 32 are showing an
increase in the foreclosure rate in January 2012 compared to
a year ago, the same as from December 2011 when 32* of the
top CBSAs were showing an increase in the foreclosure rate
compared to December 2010.

Jobless claims fall

Initial claims for state unemployment benefits dropped
14,000 to a seasonally adjusted 351,000, the Labor
Department said. That took claims back to a four-year low
reached in February.  The prior week's figure was revised up
to 365,000 from the previously reported 362,000. Economists
polled by Reuters had forecast claims falling to 356,000
last week.  The four-week moving average for new claims,
considered a better measure of labor market trends, was
unchanged at 355,750.  First-time applications for jobless
benefits have been tucked in a tight range since
mid-February, a hopeful sign for the labor market, which has
enjoyed three straight months of employment gains above
200,000.  The jobless rate held at a three-year low of 8.3%
in February.  While the Federal Reserve on Tuesday
acknowledged the recent improvement in the labor market, it
remained concerned with the still-high unemployment rate.
The US central bank said it expected the jobless rate, which
has declined 0.8 percentage point since August, to
"gradually'' decline.  A Labor Department official said
there was nothing unusual in the state-level data and that
no states had been estimated.

The number of people still receiving benefits under regular
state programs after an initial week of aid declined 81,000
to 3.34 million in the week ended March 3 — the lowest
level since August 2008.  Despite the improving labor market
picture, long-term unemployment remains a huge problem and
about 43% of the 12.8 million out of work Americans in
February had been jobless for more than six months.  The
number of Americans on emergency unemployment benefits fell
53,415 to 2.88 million in the week ended Feb. 25, the latest
week for which data is available.  A total of 7.42 million
people were claiming unemployment benefits during that
period under all programs, up 36,392 from the prior week.

Defaults up

Default notices were filed for the first time on 58,886
homes last month, up 1% from January, though still down 7%
from February 2011, a report from RealtyTrac showed.  A
dozen states saw increases of 20% or more compared with the
year before, including Hawaii, Florida and Massachusetts.
Overall foreclosure filings - which include default notices,
scheduled auctions and bank repossessions - decreased 2%
from January to 206,900 homes, and were down 8% from
February 2011.  But there was a divide in the pace of
activity among the states, depending on the structure of
their foreclosure process, which suggested some of the homes
in the pipeline were starting to move.  Foreclosure activity
jumped 24% from a year ago in states where foreclosures must
be processed through the courts, known as judicial states.
Foreclosure times have stretched longer in judicial states,
contributing to the backlog. Meanwhile, activity tumbled 23%
in non-judicial states.  "We're seeing definite signs that
the foreclosure log jam that's built up over the last year
and a half is beginning to loosen up," said Daren Blomquist,
director of marketing communications at RealtyTrac.  "It's a
little difficult because it's not all happening at the same
time across the country.  Regionally and state by state,
we're seeing the numbers loosen up at different times."
Overall, banks seized fewer homes. Repossessions fell 4% to
63,834 and were down 1% from a year ago.

Inflation up

The Labor Department said its seasonally adjusted producer
price index increased 0.4% last month, quickening from
January's 0.1% gain.  Economists polled by Reuters had
expected prices at farms, factories and refineries to rise
0.5%.  Wholesale prices excluding volatile food and energy
costs rose 0.2%, moderating from January's 0.4% increase.
While that was in line with economists' expectations, it was
the third consecutive month of increases in core PPI.  The
Federal Reserve said on Tuesday the recent steep run-up in
oil and gasoline prices would push inflation up only
temporarily.  Overall produces prices were lifted by a 1.3%
increase in energy prices after a 0.5% drop in January.
Food prices dipped 0.1% after falling 0.3% the prior month.

In the 12 months to February, producer prices increased
3.3%, the smallest increase since August 2010, after
advancing 4.1% in January.  Gasoline prices rose 4.3%, the
largest gain in five months, after gaining 2.0% in February.
 Outside food and energy, producer prices were pushed up by
pharmaceuticals, which accounted for a third of the increase
in core PPI. A rise in prices for civilian aircraft also
contributed.  Passenger car prices edged up 0.1% after
falling 0.8% the prior month. Light motor trucks prices fell
0.4% after a 0.9% rise the prior month.  In the 12 months to
February, core producer prices increased 3.0% after rising
by the same margin the previous month.

Dodd Frank killing small banks

Community banks have a lot to fear from the Dodd-Frank
financial reforms, which could put half of them out of
business, former FDIC Chairman Bill Isaac said yesterday.
“The bigger banks can absorb it, the smaller banks
can’t,” Isaac, who is now chairman of Fifth Third
Bancorp, told Larry Kudlow. “I would not be surprised to
see half of the community banks in this country go out of
business if we don’t give some relief from Dodd-Frank for
them.”  Earlier Wednesday, Federal Reserve Chairman Ben
Bernanke said most of the provisions in the 2010 law were
aimed at the largest financial institutions and not
community banks.  “We will work to maintain a clear
distinction between the community banks and larger
institutions in application of the new regulations,”
Bernanke said in prerecorded remarks played at a convention
of community bankers.  However, Isaac called the sweeping
reforms a burden on community banks.  “I think that
Dodd-Frank is a terrible piece of financial legislation, he
said. “It didn’t address any of the causes of the crisis
that we just went through. It won’t prevent the next
crisis. It’s heaped volumes and volumes of
regulations.”

Isaac is also not a fan of the way the Fed’s current
stress tests, which are mandated under Dodd-Frank, are being
done. Since banks are required to capitalize on a
depression-era scenario, they either have to raise capital
or slow their growth or balance sheets, which he said many
are now doing.  “What they’re missing here is that when
you require banks to capitalize for a depression, it’s
going to be awfully hard to get this economy moving,” he
said.  The new banking regulations have also lead to the
tightening of lending standards, despite the fact that banks
have a lot of excess capital right now.  “Loan growth has
almost been non-existent for the past three years,” he
said. “It’s hurting the people who need the money the
most. It’s hurting small business. I think it is impeding
economic growth.”

WSJ - banks take more hits

A problem that bankers hoped was behind them—rising costs
to repurchase soured home loans they previously sold to the
government-backed mortgage investors Fannie Mae and Freddie
Mac—has instead bitten back with a vengeance.  Fannie and
Freddie asked banks to buy back $33 billion of loans last
year. That is up 10% from 2010, according to federal
securities filings the companies have made this month. The
banks don't typically pay the full amount but during the
second half of 2011, the companies collected $11.1 billion
from banks, compared with $6.9 billion in the first half of
the year.  The numbers shed light on the long-running battle
between mortgage-originators and the housing-finance giants
over how to split the tab for dodgy loans. The surge in
so-called putback requests adds to the pressure on banks to
contain costs at a time when revenue is weak amid soft
economic growth, low interest rates and tighter
regulations.

Fannie and Freddie, which don't make loans but package them
into securities that are sold to investors, can force banks
to repurchase loans found to contain faulty appraisals and
other defects. Several companies have reported an uptick in
buyback demands from Fannie in recent months. Wells Fargo &
Co. said it had increased its repurchase liability to $1.3
billion at the end of 2011, up from $1.2 billion at the end
of September, due to "higher than anticipated" demands from
Fannie. Wells Fargo, based in San Francisco, declined to
comment.  A dispute over large volumes of unresolved
repurchase requests prompted Fannie to say last month it
hadn't renewed an agreement that enables Bank of America
Corp. to sell loans to Fannie under agreed-upon conditions.
Bank of America bought Countrywide Financial Corp.—once
Fannie Mae's biggest supplier of home loans—in 2008.  The
dispute comes just a year after Bank of America paid $2.8
billion to settle some claims tied to faulty mortgages sold
to Fannie and Freddie, the government-sponsored enterprises,
or GSEs. 

Whistleblower wins $18 million

Whistleblower wins $18 million

Attorney Lynn Szymoniak had spent a career investigating
insurance fraud when a bank moved to foreclose on her Florida
home in 2008. Almost four years later, the fraud she said she
uncovered by combing through mortgage documents earned her $18
million.  Szymoniak, 63, is among six whistle-blowers who will
pocket $46.5 million as part of a $25 billion national
foreclosure settlement that state and federal officials reached
in February with five banks, including Bank of America Corp. and
JPMorgan Chase & Co. (JPM), according to the US Justice
Department.  Szymoniak’s examination, in which she relied on
her experience as an insurance-fraud investigator, led to her
claims against banks for submitting fraudulent documents to the
federal government asserting that they owned loans insured by the
Federal Housing Administration, she said.  The national
foreclosure settlement with the five banks, which resolves claims
of abusive foreclosure practices, provides mortgage relief to
borrowers, pays $1.5 billion to those who lost their homes to
foreclosure, and sets standards for how the banks service
mortgage loans.

As part of the agreement, whistle-blower claims are being settled
for about $228 million, according to court papers filed in
federal court in Washington. A group of six whistle-blowers will
receive $46.5 million out of that amount, said Alisa Finelli, a
Justice Department spokeswoman.  Szymoniak’s foreclosure case
began in July 2008 when Deutsche Bank AG (DBK), as trustee for a
mortgage securitization trust, sued to seize her Palm Beach
Gardens, Florida, home, which was once worth $1.3 million. The
bank couldn’t prove it owned her loan and claimed it had lost
the mortgage note, she said.  Szymoniak said she was first
alerted to problems in the paperwork on her foreclosure when
Deutsche Bank said it acquired her mortgage note in October 2008,
three months after the bank sued her over the loan.  “So I
began doing what I’ve done for years -- go out and
investigate,” she said. “It was pretty obvious to me that the
paperwork was fraudulent.”  Her work quickly uncovered
widespread document fraud in the mortgage industry, she said, and
eventually led to the filing of her whistle-blower cases in 2010.
 The whistle-blower claims resolved in the national settlement
include a case filed in Atlanta in 2006 in which banks are
accused of defrauding military veterans and the US government.
The banks violated rules under a Department of Veterans Affairs
program for refinancing mortgage loans by charging improper fees
to veterans, according to the complaint. The banks hid those fees
and obtained government guarantees on the loans, according to the
complaint.

Inflation leaps, gas leads

The Labor Department said its Consumer Price Index increased 0.4%
after advancing 0.2% in January. That was in line with
economists' expectations. Gasoline accounted for more than 80% of
the rise in consumer prices last month, the department said.
Outside the volatile food and energy category, inflation
pressures were generally contained. Core CPI edged up 0.1% after
gaining 0.2% in January. The February increase was below
economists' expectations in a Reuters poll for a 0.2% rise.  The
Federal Reserve said on Tuesday that the recent spike in energy
costs would likely push up inflation temporarily. Over the
long-term, inflation was likely to run at or below the its 2%
target, it said.

While the US central bank reiterated its expectation that
overnight interest rates would remain near zero until at least
through late 2014, it offered no clues on whether it would launch
a third round of bond buying or quantitative easing, to keep
borrowing costs low to stimulate the recovery.  Last month,
overall inflation was pushed up by gasoline prices, which soared
6%, the largest increase since December 2010, after rising 0.9%
in January.  Although surging gasoline prices are a strain on
consumers, they have so far not caused a sharp pull back in
spending, thanks to a strengthening jobs market.  Food prices
were flat last month after rising 0.2% in January. Food prices
were the weakest since July 2010.  Overall consumer prices rose
2.9% year-on-year after increasing by the same margin in January.
 Core consumer prices were last month restrained by apparel
prices, which fell 0.9% — the most since July 2006 — after
rising 0.9% in January. There were also declines in the prices of
tobacco, airline tickets and used cars and trucks.  But new motor
vehicle prices rose 0.6% after being flat in January. While
housing costs held up, owners' equivalent rent rose only 0.1%
last month after increasing 0.2% the prior month.  In the 12
months to February, core CPI increased 2.2% after rising 2.3% in
January. This measure has rebounded from a record low of 0.6% in
October and the Fed would like to see that closer to 2%.

Olick - Miami condos - bust or boom?

"South Florida real estate developer Martin Margulies has been
sitting on prime ocean-front property for five years, waiting for
the condo market to rise from the grave. When the market here
crashed in 2007, amid overzealous speculators and an abundance of
cheap and easy credit, condo construction ground to a halt. The
joke had been that the unofficial bird of Miami was the crane,
but that bird flew the coop. Apparently it is now swooping back
in.  'This is the moment because we're going to be delivering
this property next year, and so by that time there will be good
demand, there is good demand now,' says Margulies, who began
construction on a brand new high-end condo tower in December.
And he is right. Foreign buyers, largely from South America, but
also from Europe, Russia and China, are flooding into the Miami
area, and that has developers rushing to keep up with demand.
'The music started again in South Florida,' says Peter Zalewski
of CondoVultures, a Florida real estate data and investment firm.
'We have an arms race of developers moving into the marketplace
trying to put up condos or planned condos in anticipation of a
recovery in the next two years or so.'

And they are doing it fast. Twenty five new towers with 5200
units are proposed while there are still 4200 unsold units left
from the crash. Sounds crazy, but the foreign demand developers
and real estate agents are seeing now is just that hot.  'The
foreign buyer is coming in looking for wealth preservation or
taking advantage of the weak US dollar, or coming in because of
problems back home, whether it's Venezuela or Mexico with the
drug war,' says Zalewski, who has been watching and working this
market for the past decade.  Foreign buyers are investing as well
as foreign developers, like the Melo group, a family business
from Argentina. They began construction last August on the first
new tower in Miami in at least four years. A lot of people
thought they were crazy, but now the tide has decidedly turned.
The Melo's say they have pre-sold the entire building, and they
required buyers to put 50% down. Most of their buyers, again, are
foreigners with cash.

This new condo boom, while reminiscent of the recent one, is not
built on easy credit. In fact, credit is still very tight here,
especially for developers. Martin Margulies tried to get a
construction loan for his Hollywood project, the Bellini, but
could only get 50% financing along with putting up collateral. He
called that 'onerous,' and instead took out a personal loan,
using his massive art collection as collateral. He says he's not
concerned, as his buyers will be putting down 30% on one to four
million dollar units.  'The kind of buyers we get they don't need
financing, they're all cash buyers,' says Margulies. 'It's a
lifestyle they have, so they're not reliant on a bank to give the
money.'  Most of the foreign buyers in Miami are renting the
properties to locals who have either lost their homes to
foreclosure or whose credit is not good enough to get a home loan
in today's tough US mortgage market. The question now is, what
happens to all these renters when Florida's single family housing
market recovers and credit opens up again?

Will all these foreign investors want to unload their units at
the same time?  'You wonder if we're not kicking the can, where
we dealt with the problem at hand by dumping it off to foreign
buyers, and now as the domestic buyer starts to move back into
the marketplace, is that domestic buyer going to pay the same
price that the foreign buyer is willing to pay or take the same
chances that the foreign buyer is willing to pay?' asks Zalewski.
 It all sounds frighteningly familiar."

Industrial output down

The Federal Reserve said Friday that the output of the nation's
factories rose 0.3% last month. That followed even stronger
increases in January and December, which combined for the best
two month stretch since 1998.  Overall industrial production,
which includes output by mines and utilities, was unchanged.
Mining activity declined sharply and utilities were flat.
Factory output has risen 17.4% since the depths of the recession
in June 2009. It remains 6.7% below its pre-recession peak,
reached in December 2007.  Growth at US factories was a little
slower in February because auto production edged lower after big
gains in December and January. Manufacturers made more
electronics, energy products and electrical equipment.  Still,
manufacturing has strengthened substantially since last summer,
when it faltered because of global supply disruptions caused by
the Japan earthquake and tsunami. Factories are benefiting from
strong auto sales and growing business investment in machinery
and other equipment.

Sales up 14% in San Francisco

San Francisco Bay Area home sales grew 14.2% from last year in
February with the region recording 5,702 sales, up from 4,991 a
year ago, DataQuick said.  The San Diego-based real estate
research firm said sales are up over year-prior levels for the
eighth straight month, suggesting a tepid recovery could be under
way.  New and existing home prices continue drag, with the
February median of $325,500 down 0.3% from $326,000 in January
and 3.6% from $337,250 a year ago.  Prices in San Francisco hit
their peak of $665,000 in June 2007 before plummeting to $290,000
in March 2009 after the nation fell into a prolonged recession.
Much like the Southern California market, distressed home sales
accounted for half of the Bay Area's resale market in February.
Foreclosure sales alone made up 27.4% of all resales in the
market, while short sales represented 23.1%.  The average monthly
mortgage payment in the Bay Area hit $1,225 in February, down
from $1,233 in January and $1,440 a year earlier.

Obama to release emergency oil in front of election?

Britain is poised to cooperate with the United States on a
release of strategic oil stocks that is expected within months,
two British sources said, in a bid to prevent fuel prices choking
economic growth in a US election year.  A formal request from the
United States to the UK to join forces in a release of oil from
government-controlled reserves is expected "shortly" following a
meeting on Wednesday in Washington between President Barack Obama
and Prime MinisterDavid Cameron, who discussed the issue, one
source said.  Britain would respond positively, the two sources
said, and Cameron said a release was worth considering.  "We
didn't make any decision, this has to be discussed broadly. We've
got to look at this issue carefully, it's something worth looking
at. Short-term should we look at reserves? Yes, we should,"
Cameron said during a meeting with students in New York.  "We'd
both like to see global oil prices at a lower level than they
are."  Details of the timing, volume and duration of a new
emergency drawdown have yet to be settled but a detailed
agreement is expected by the summer, one of the sources said.
Other countries may also be approached by Washington to
contribute, a further source said, Japan among them.   Rising
world oil prices have pushed the cost of gasoline in the US up
sharply, threatening to stall economic recovery ahead of Obama's
bid for re-election in November.

Renting jeopardizing affordable housing

More Americans are renting houses instead of buying them, a trend
that could disrupt price affordability, analysts say.  With more
homeowners unable to secure mortgages and uncertain about future
finances, renting is the only sure-fire way to live in a
single-family property, according to Capital Economics.  But as
more Americans turn to home renting, the influx of demand is set
to squeeze the nation's rental supply, pushing monthly rents even
higher.  Paul Dales, senior economist with Capital Economics said
that rental vacancy rates will fall again in the future, pushing
prices up. The median rent is already up to $712 per month—well
above the average monthly mortgage cost of $647, Dales reported.
He estimates vacancies in the home-rental market will push
average rental rates up as much as 5% by early 2013, compared to
2.4% in January.  "We expect the annual rate at which rents are
rising will rise to 3% this year and remain at that level in
2013," Dales said. "Assuming that the economic recovery gains
firmer footing, in future years there is scope for rents to rise
by around 4% a year."

And as single-family renters head into the market, the supply of
rentals is unlikely to meet new demand.  This reality is playing
itself out in Denver, where the vacancy rate for home rentals
fell from 3.4% in the third quarter to 2.1% in the fourth
quarter. At the same time, the vacancy rate edged up slightly
from the 2% level reported in the fourth quarter of 2010.  "The
vacancy rate went up slightly year-over-year," said Ryan McMaken,
a spokesman for the Colorado Division of Housing. "That doesn’t
mean much, though, because when you’re looking at vacancy rates
below 3%, the bottom line is that the market is tight. For many
people, it’s not easy to buy a house right now, so they’re
renting.