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Treasury: HAMP not working
We've reported the failure of HAMP many times before, but now even senior insiders are piling on. Neil Barofsky, special inspector general for the Troubled Assets Relief Program (TARP), said in a report issued yesterday that Treasury now expects only 1.5 million to 2 million homeowners to get mortgage relief (as opposed to the 4 million it initially claimed). So far, fewer than 200,000 have actually graduated from the trial program into a permanent modification, and the inspector general's report warned that many borrowers are at risk of redefaulting on their mortgages even after receiving help under the federal program; many owe significantly more than their homes are worth, or have second mortgages or other debts. Barofsky expressed skepticism that offering modifications was a meaningful goal. In a response included in the report, Herbert M. Allison, assistant Treasury secretary for financial stability said the program "should be measured by how many eligible homeowners are able to are able to avoid the pain and stigma of foreclosure by reducing their mortgage payments to affordable levels while either remaining in their homes or transitioning with dignity to more suitable housing. The number of permanent modifications is one element, but not the only element of gauging the success." Huh? So the problem is not that it's failing, but rather that Barofsky is not measuring its lack of success the right way? Even Treasury knows that's nonsense, which is why Allison added that permanent modifications are only one way to help struggling homeowners, noting servicers' own foreclosure prevention initiatives and alternatives such as short sales. I should also note that permanent modifications that do not include meaningful principal reduction will in all likelihood fail.
Pay Czar on the rampage again
White House pay czar Kenneth Feinberg, who has clamped down on executive compensation at the nation's biggest bailout firms, now has a new target: any firm that accepted a government lifeline. Unveiling a bold new initiative Tuesday, Feinberg said he would examine compensation paid to top executives at 419 companies made between October 2008 until February 2009, a period when the nation's financial system was teetering on the brink. Feinberg is asking each company to provide information on bonuses, retention awards and all other compensation for their senior executives and next 20 most highly-paid employees within 30 days. Among those likely to endure the greatest scrutiny would be employees at Goldman Sachs, JPMorgan Chase and Morgan Stanley. All three Wall Street firms are known for paying multi-million bonuses to top performers as well as senior executives in any given year.
To date, Feinberg's efforts have been focused on the seven firms that required an "exceptional" amount of government assistance. Two of those firms -- Citigroup and Bank of America -- have since repaid all of their bailout funds to the government though. On Tuesday, Feinberg set 2010 compensation for executives at the remaining firms under his authority -- AIG, General Motors, its former finance arm GMAC, Chrysler and Chrysler Financial. Total pay for those executives would decline by 15% this year, with a larger portion of their compensation coming in the form of stock, according to Feinberg. It is unclear whether those firms may put up a fight. Others have questioned whether Feinberg will have the legal authority to renegotiate some of these employee payments. Besides, it's all very well to flog the finance companies, but aren't there more important things to concentrate on, like jobs? And do we really need to spend money on a "pay czar? "
Oh good...another government fix
Treasury Secretary Tim Geithner told Congress yesterday that the Obama administration hopes to propose legislation to fix the nation's housing finance system within months. The government currently finances almost all home mortgages, thanks to its 2008 takeover of Fannie and Freddie. Geithner acknowledged that devising a new system to finance U.S. house purchases would be a "complicated, consequential" process. He emphasized that he hasn't "seen an ideal model" to replace the current arrangement, which is widely viewed as undesirable because of its role in inflating the housing bubble and the conflict between Fannie and Freddie's profit-seeking and public policy missions. But with the Senate moving ahead on reform of bank regulation, "we're at a point to begin" the process of shaping housing-finance legislation, Geithner said. "I don't see why it should take years."
Given the haste of Congress in passing other fixes that make no sense and cost a fortune, he's probably right...lets just paste together something that everyone hates and ram it through! While some Republican plans would eventually remove the government from the mortgage business altogether, Geithner said he believes there is "a quite strong economic and public policy case" for federal mortgage guarantees of some sort. He cited the need for "a stable housing finance market." Geithner said the administration will solicit comments starting next month from "a wide variety of constituents, market participants, academic experts, and consumer and community organizations."
MBA - Refinance Applications down
The Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending March 19, 2010, and on an unadjusted basis, the Index decreased 3.9 percent compared with the previous week. The Refinance Index decreased 7.1 percent from the previous week and the seasonally adjusted Purchase Index increased 2.7 percent from one week earlier. The unadjusted Purchase Index increased 2.8 percent compared with the previous week and was 15.0 percent lower than the same week one year ago. The four week moving average for the seasonally adjusted Market Index is up 1.9 percent. The four week moving average is up 3.6 percent for the seasonally adjusted Purchase Index, while this average is up 1.2 percent for the Refinance Index. The refinance share of mortgage activity decreased to 65.0 percent of total applications from 67.3 percent the previous week. This is the lowest refinance share observed in the survey since the week ending October 30, 2009. The adjustable-rate mortgage (ARM) share of activity increased to 4.8 percent from 4.6 percent of total applications from the previous week.
Existing homes sales mixed
According to the National Association of Realtors, existing-home sales declined slightly in February, with modest gains in the Northeast and Midwest offset by softer sales in the South and West. Finalized transactions that include single-family, townhomes, condominiums and co-ops, slipped 0.6 percent nationally to a seasonally adjusted annual rate of 5.02 million units in February from 5.05 million in January, but are 7.0 percent higher than the 4.69 million-unit pace in February 2009. Total housing inventory at the end of February rose 9.5 percent to 3.59 million existing homes available for sale, which represents an 8.6-month supply at the current sales pace, up from a 7.8-month supply in January. Raw unsold inventory is 5.5 percent below a year ago. Single-family home sales declined 1.4 percent to a seasonally adjusted annual rate of 4.37 million in February from a pace of 4.43 million in January, but are 4.3 percent higher than the 4.19 million level a year ago. The median existing single-family home price was $164,300 in February, down 2.1 percent from February 2009. Existing condominium and co-op sales rose 4.8 percent to a seasonally adjusted annual rate of 650,000 in February from 620,000 in January, and are 30.3 percent above the 499,000-unit pace in February 2009. The median existing condo price was $170,200 in February, down 0.2 percent from a year ago. Lawrence Yun, NAR chief economist, said “Although sales have been higher than year-ago levels for eight straight months and home prices are much more stable compared to the past few years, the housing recovery is fragile at the moment. A lack of affordable housing inventory is holding back sales and pressuring prices to be bid upwards in many California markets."
American decline?
David Murrin, author of "Breaking the Code of History," says the passage of the health care law shows that the US empire is declining. In their expansionary phase, empires force people to go out, seek risks and fend for themselves, Murrin said. Then they lose that spirit and become soft, he said, spotlighting the dismantling of the British empire after the war, when the National Health Service, which ensures universal health coverage in Britain, was created. "This (empire decline) is actually a dead-set course that societies get into and it will happen very quickly I'm afraid. As you start to build a system it becomes cohesive because of its success… the fractures in the American system I think are more apparent than ever," Murrin added. China's rise will be much faster than most people anticipate as the country's military prowess increases, he said. "We all know there's going to be a change, the surprise will be the pace of that change," Murrin said, noting that "all empires when they decline they underestimate their challengers." "You have a lot more males in China then you do in the west," he said, noting that 56 percent of the Chinese society was male, because of the country's policies to control population and because of traditions which value males more than females. "What that means is that they're far more risk-oriented than a society in the West…if you look at conflict and your ability to risk your males in conflict," Murrin explained.
Above Post Written by: Chris Mclaughlin with Short Sale Riches.com
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