As the housing market works to find a new direction, new data
shows short sales may be the way to go. The number of distressed
properties is on the rise and in some places, account for more
than half of all home sales in the first three months of 2012.
According to Washington Property Solutions, a third of all home
sales in Seattle and on the Eastside were short sales or
bank-owned properties. In Pierce and Snohomish counties the
numbers are even higher. 51% of home sales in Snohomish County
involved distressed properties. In Pierce County, it's 54%. Many
banks, including Chase and Bank of America, now have incentive
programs for homeowners to complete a short sale. Banks forgive
the debt, and the homeowner can pocket up to $30,000 to help
maintain the property and see the sale through.
California mortgage defaults fell to their lowest level in almost
five years as banks cut their backlog of distressed property with
more short sales, in which homes are sold for less than the
amount owed, DataQuick said. First-time notices of default
totaled 56,258 in the first quarter, down 8.5% from the previous
three months and 18% from a year earlier, the San Diego-based
data seller said today in a statement. Default notices are the
beginning of the foreclosure process in the most populous US
state. Short sales increased to an estimated 20% of deals, up
from 18% a year earlier. Areas in the state with median home
values of less than $200,000 had the most defaults, at 8.9 per
1,000 homes, almost four times the number in neighborhoods with a
median greater than $800,000, where the rate was 2.3 per 1,000.
Durable goods down
Durable goods orders tumbled 4.2%, the largest decline since
January 2009, the Commerce Department said on Wednesday after a
downwardly revised 1.9% increase in February. Economists had
forecast orders for durable goods, which range from toasters to
aircraft, falling 1.7% after a previously reported 2.4% rise in
February. Orders were dragged down by a 12.5% plunge in bookings
for transportation equipment — the most since November 2010.
Excluding transportation, orders fell 1.1% after a 1.9% rise in
February. Economists had forecast this category rising 0.5%. The
report added to signs that manufacturing exited the first quarter
with less momentum. Data last week showed industrial production
was flat in March for a second straight month, while some gauges
of regional factory activity weakened in April.
The plunge in orders for transportation equipment reflected a
47.6% drop in bookings for civilian aircraft. Boeing received
only 53 orders for aircraft, according to the plane maker's
website, down from 237 in February. Orders for motor vehicles
barely rose last month. Adding to the report's weak tenor,
non-defense capital goods orders excluding aircraft, a closely
watched proxy for business spending plans, fell 0.8% after an
upwardly revised 2.8% rise the prior month. Economists had
expected this category to rise 0.9% after a previously reported
1.7% increase. But shipments of non-defense capital goods orders
excluding aircraft, which go into the calculation of gross
domestic product, rose 2.6% after increasing 1.4% in February.
This suggests that growth in business investment in capital goods
increased in the first quarter, but probably not as much as in
previous periods.
MBA - mortgage applications down
Mortgage applications decreased 3.8% from one week earlier,
according to data from the Mortgage Bankers Association’s (MBA)
Weekly Mortgage Applications Survey for the week ending April 20,
2012. The Market Composite Index, a measure of mortgage loan
application volume, decreased 3.8% on a seasonally adjusted basis
from one week earlier. On an unadjusted basis, the Index
decreased 3.3% compared with the previous week. The Refinance
Index decreased 5.6% from the previous week, with the
Conventional Refinance Index decreasing by 6.1% and the
Government Refinance Index decreasing by 2.1%. The seasonally
adjusted Purchase Index increased 2.7% from one week earlier. The
unadjusted Purchase Index increased 3.6% compared with the
previous week and was essentially unchanged from the same week
one year ago.
The four week moving average for the seasonally adjusted Market
Index is up 1.23%. The four week moving average is down 0.67%
for the seasonally adjusted Purchase Index, while this average is
up 1.92% for the Refinance Index. The refinance share of
mortgage activity decreased to 73.4% of total applications from
75.2% the previous week. The adjustable-rate mortgage (ARM) share
of activity increased to 5.6% from 5.3% of total applications
from the previous week. Within refinance applications taken in
March 2012, 58.8% were for fixed-rate 30-year loans, 23.1% for
15-year fixed loans and 5.2% for ARMs. The share of refinance
applications for “other” fixed-rate mortgages with
amortization schedules other than 15 and 30-year terms was 12.8%
of all refinance applications.
Hundreds of banks struggling to repay TARP
A total of 390 banks, many of them community firms, still
struggle to repay a Troubled Asset Relief Program (TARP)
recapitalization fund with no clear exit plan, according to the
Special Inspector General of TARP. "The status of those banks is
one of the major issues facing TARP nearly four years after the
financial crisis," according to a SIGTARP report sent to Congress
Tuesday. There is still $118.5 billion outstanding under TARP.
The massive bailout package is expected to cost taxpayers $60
billion in the end, according to the most recent estimate. The
Treasury Department paid $204.9 billion in TARP Capital Purchase
Program money to 707 banks ranging from smaller operations in
local communities to global firms with more than $1 trillion in
assets. As of March 31, only 43% of the banks left TARP by
actually paying back the taxpayer. In September 2011, the
Treasury allowed 137 healthier banks to refinance their dividend
and capital repayments and exit TARP through a special program
called the Small Business Lending Fund.
Those remaining face a dividend raise to 9% in late 2013 from 5%
owed now. Of the 351 remaining banks that received funds through
the specific TARP CPP, one-third missed five or more dividend
payments and face formal enforcement actions by regulators.
"We've already recovered more than we invested in TARP's bank
programs through repayments and other income," said Treasury
Assistant Secretary Tim Massad. "Moving forward, while there's no
one-size-fits-all approach, you'll continue to see us make
significant additional progress winding down the program in the
year ahead through repayments, sales, and other methods." Law
required the Treasury to allow banks to refinance out of TARP.
Roughly $2 billion in bailouts were refinanced using the SBLF
program, equal to about 1% of the $245 billion spent through all
of the TARP bank programs. Capital levels at banks gone from the
program are in far better shape than those remaining. According
to SIGTARP, less than 4% of the banks able to refinance out of
TARP held a Tier 1 common capital ratio below 7%. Of those still
in the program, more than 20% have a Tier 1 level that low.
Banks in the Southeast and Midwest had the most trouble exiting
the program. SIGTARP recommended Treasury develop a clear exit
path to ensure as many community banks can exit the program as
possible and "prepare to deal with the banks that cannot." "It
is unclear how the remaining banks will exit TARP," said SIGTARP
Director Christy Romero. "Getting these banks back on their feet
without government assistance must remain a high priority of
Treasury and the federal banking regulators."
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