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The Federal Reserve will hear the first round of testimony next Thursday on the construction and dissemination of data provided for by the Home Mortgage Disclosure Act. The meeting will be held at the Atlanta branch of the Federal Reserve. Three other meetings are scheduled in the following weeks for Washington, DC, Chicago, and San Francisco.
HMDA data is freely distributed each fall through the Federal Financial Institutions Examination Council (FFIEC). The
If you are not struggling through negative equity, a looming prepayment penalty on a loan that you need to refinance, or in foreclosure, then tomorrow is a time to be thankful. Yesterday's Wall Street Journal tells us the harrowing story that almost one in four U.S. borrowers (23 percent) owes more on their mortgage than the value of their home. In Nevada, more than sixty percent are "under water."
Want to know more than you should about subprime lending? The New York Fed has all of your answers. Here are some of my favorite scary bits:
News reports would have you believe that servicers are doing their best to work out problem loans. The other day, Treasury announced that the HAMP program had realized its 500,000th loan modification.
The devil is in the details, though. These loan modifications, by and large, are merely short-term band aids. For borrowers with real problems, most of these modifications are not going to make a difference. Consider the breakdown on the nature of the loan modifications:
- 95,729 refinancings (Home Affordable Refinance Program)
- 362,348 three-month trial modifications (Home Affordable Modification Program)
- 1,711 permanent mortgage modifications. (HAMP)
You are reading that correctly. Of the 459,788 modifications recorded as of September 1, 2009, less than 4/10th of one percent of those actions resulted in a permanent modification. By and large, the efforts of HAMP are serving to put a
Morgan Stanley jumped into the subprime mortgage market in 2006. Now, they are getting burned.
We recently met in New York with representatives from a number of their departments. Their servicing staff was there for Saxon Mortgage. Morgan Stanley purchased Saxon in 2006 for $704 million. Saxon has been a "leading" subprime lender and servicer.
Morgan Stanley has already been hurt. In November 2007, they wrote down $3.7 billion in U.S. subprime assets. At
The Federal Financial Institutions Examination Council (FFIEC) released the new Home Mortgage Disclosure Act records for 2008 this week. The data, referred to as "HMDA data," covers 14.2 million mortgage loan applications and another 2.9 million mortgage loan purchases on the secondary market. Want to see what I am talking about? You can download the data here.
The HMDA data is released to help citizens understand how banks and other lenders are working in their neighborhoods. It was legislated through the Home Mortgage Disclosure Act, and it dovetails within the broader aims of the Community Reinvestment Act.
New legislation is on the table in DC that would counter the shortcomings of this data. HMDA is broken.
You can't solve a problem until you identify its essence. That is one of the challenges facing policy makers trying to get our economy back on its footing.
One of the root causes of the recession is the overhang that we are suffering through as so many bad mortgages slowly deplete the balance sheets of our banks. The troubles on Wall Street have spread to Main Street. Many of our communities have fallen hard and fast.
It was a time of fast lending. It was a time of loose underwriting. The share of subprime mortgages
Housing starts fueled by subprime loans appear to have reduced demand for mobile homes.
That is the conclusion of economists at the Congressional Budget Office, who in November 2008 put together a nice analysis of the demand for new housing for the next four years.
"Some subprime loans for permanent-site single family homes were undoubtedly made to borrowers who would have otherwise lived in mobile homes."
So chalk up another victim in the subprime housing crisis - the manufactured housing industry. The evidence in the marketplace is apparent, as builders like Champion and Fleetwood are struggling to keep their shares lists. Mobile home placements dropped to
Today it looks like Secretary Paulson will relent. An early report says that he is going to concede on the issue of CEO pay. In the arrangement, financial institutions that seek the federal government to purchase their distressed assets must agree to an as yet undetermined set of restrictions on the pay of their CEO and their boards.
This follows on some general outrage about executive compensation. One report shows that CEOs earn, on average, about 275 times what their rank and file employees make. That's a high number, much higher than in the era of industrialized economies with their labor unions. It is much higher than before globalization. With NAFTA, GAAT, and the rest, certain jobs and skillsets have been able to be utilized across greater spans.