US – FEDs Repurchase $300-$400 Billion Loans

September 26, 2011

With the FOMC announcement just one day away, the market consensus is that we’re getting Operation Twist. The key question remaining is the size and composition of the twist.

Economists at Goldman Sachs said in a note late Monday that they expect the Fed, in increasing the average maturity of its bond holdings to stimulate the economy, to purchase a net $300-$400 billion in 10-year equivalent debt — i.e., taking on the same amount of duration risk as $300-$400 billion of the current 10-year Treasury note.

The Fed owns $266 billion in Treasury notes and bonds that mature before the end of June 2013 — over the period during which it has signaled to keep rates exceptionally low — and another $232 billion that mature over the following year, Goldman notes.

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US – 10 million more mortgages set to default

September 26, 2011

Roughly 10.4 million mortgages, or 1 in 5 outstanding home loans in the U.S., will likely default if Congress refuses to implement new policy changes to prevent and sell more foreclosures, according to analyst Laurie Goodman from Amherst Securities Group.

At the end of the second quarter, more than 2.7 million long-delinquent loans, others in foreclosure and REO properties sat in the shadow inventory, more than double what it was in the first quarter of 2010 (Click to expand the chart below). With the market averaging roughly 90,000 loan liquidations per month, it would take 32 months, nearly three years, to move through the overhang.

And that number is contingent on no other loans going into default.

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US – Forecast for US Economic Growth Lower

September 26, 2011

The National Association for Business Economics has revised sharply lower its forecast for U.S. economic growth this year and next.

The association now forecasts 2011 GDP of 1.7 percent, down from a previous forecast for growth at an annual rate of 2.8 percent. For 2012, the group forecasts economic growth of 2.3 percent, down from the 3.2 percent it forecast in May.

NABE cites a laundry list of reasons for revising its forecasts lower, including low consumer and business confidence, uncertainty about future economic policies, a weak housing market and tight credit. The association’s panelists say they are also very concerned about high unemployment, the federal deficit and the European debt crisis.

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US – Pheonix Foreclosure Sale Rises Again

September 26, 2011

After dropping throughout 2011, the Phoenix area saw a jump in single-family home foreclosure sales in August, the W.P. Carey School of Business at Arizona State University reported Monday.

Last month, there were nearly 2,900 single-family home foreclosure sales in the area. That’s down from 4,000 in August 2010, but up from 2,500 in July of this year. Thirty-one percent of all existing home transactions were foreclosure sales in August. That comes after the share of foreclosure sales fell below 30 percent for the first time since spring 2009, the report showed.

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US – Marcus Millichap – Slow Growth Anticipated

September 26, 2011
  • Hiring flattened in August as the debt-ceiling gridlock gripped Capitol Hill and an Eastern Seaboard hurricane generated the first month of flat employment in 66 years. Fears of slow growth have now given way to suspicions of stagnation, compounded by the Fed’s incapacity to take substantive action and Congress’ inability to pass any resolute stimulus to bolster the economy. While risks of a “double-dip” remain significant, the economy will likely limp into the holiday season with high unemployment and a reticent corporate America awaiting clearer policy positions in Washington. That message could be delivered with the White House’s job plan on Thursday, but the highly fractious political stalemate may continue, limiting any government-spawned traction through the end of the year.

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US – JPMorgan Expect Single Family Price Drops Further

September 26, 2011

Home prices could dip another 6% to 7%, before hitting rock bottom in early 2012, according to analysts at JPMorgan Chase .  If that is the case, prices will fall about 37% from peak levels reached before the 2008 housing meltdown.

In the banking giant’s September home price monitor report, analysts said the outlook is bleak, noting persistently weak housing demand. The firm said existing home sales in July hit a disappointing annualized pace of 4.67 million units, while mortgage applications plunged 14% in August.

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US – Apartment Distress Falls in First Half of 2011

September 26, 2011

With $2 billion added in the second quarter of 2011, new additions to the distressed apartment pools have reached their lowest levels since the second quarter of 2008, according to the “Apartment Mid-Year in Review” report from New York-based research firm Real Capital Analytics (RCA).

As new distress was slowing, workouts continued to rise (nearly doubling the new additions to the distress pool). Overall distress in the apartment sector fell to $35.6 billion, which was down 5 percent from the end of 2010. A year ago, distress was at the peak of $40.1 billion. The sector’s cumulative distress of $68.5 billion is 48 percent worked out, which is a 40 percent increase from the end of last year.

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