“Bond Market News and Perspective for Mortgage Professionals”

Tuesday, April 28, 2009

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Case Shiller Home Price Index in 20 U.S. Cities Declined by 18.6% in February compared with a record 19 percent decline the month before. The decline slowed in February for the first time since 2007, amplifying signals that the market may be stabilizing. The gauge has fallen every month since January 2007, and year-over-year records began in 2001. All 20 cities in the index showed a year-over-year price decrease in February, led by a 35 percent drop in Phoenix, a 32 percent decline in Las Vegas and a 31 percent slide in San Francisco. Fifteen of 20 major metropolitan areas posted price declines of more than 10% from a year earlier with the Sun Belt continuing to be hit hardest. Nationally, home prices are at levels similar to the third quarter of 2003.

The Conference Board Consumer Confidence Index Increases to 39.2 in April, up from 26.9 in March. The Present Situation Index increased to 23.7 from 21.9 last month. The Expectations Index rose to 49.5 from 30.2 in March. Consumers’ appraisal of present-day conditions improved moderately in April. Those claiming business conditions are “bad” declined to 45.7 percent from 51.0 percent, while those claiming business conditions are “good” increased to 7.6 percent from 6.9 percent.

 Bond Report: Treasurys gain as flu, bank fears spark flight to safety. Treasury gains may be limited before the sale of a record $35 billion in 5-year securities. The government said on Monday it expects to issue $361 billion in debt in the current quarter, more than previously estimated due to continued financing for the Federal Reserve’s multiple programs to ease strains in the credit markets, government spending to spur economic growth, and lower tax receipts, the Treasury said.

FOMC begins 2 day meeting today, announcement expected at 2:15 tomorrow. Investors will be paying close attention to any comments regarding the evaluation by officials of the impact of the Fed buying Treasurys on borrowing costs.

Fed Relies on Bank Reserves to Fight Inflation When U.S. Economy Rebounds Federal Reserve officials are relying on interest paid on bank reserves to help stem inflation once the economy stabilizes, spurring some former insiders to intensify their warnings that consumer prices may soar.

.Swine Flu, the Last Thing Economy Needs Right Now  A prepared last year said that a severe flu pandemic, resulting in some 71 million deaths, could cost the global economy $3 trillion and trim 4.8% from world-wide gross domestic product. The report was written before the financial crisis moved into full swing. At that time, the International Monetary Fund’s forecast for 2009 global growth was 3%. , now predicts a 1.3% contraction for this year and continued weakness into 2010.World Bank report Its latest forecast

.Mortgage Cram-Downs Stripped Out of Rescue Bill  Cram-downs are kaput in Congress.Legislation to give bankruptcy judges the power to reduce home mortgage debt–by “cramming down” the principal–doesn’t appear to have enough votes and will be stripped out of a broader housing bill in the Senate.

 

Obama to Unveil Mortgage Incentives. The Obama administration on Tuesday will unveil a fresh set of incentives for mortgage servicers to help strapped homeowners, a senior administration official said.

WSJ

 

.Fall in Home Ownership Hits Hardest Among Blacks, Young Home Buyers  As one might predict, the Census report on home-ownership rates, which came out yesterday, shows that fewer Americans own homes this year compared to last. The home-ownership rate was 67.5% in the first quarter, the lowest since the second quarter…

 

Economic Calendar for upcoming releases:

Posted in HEADLINE NEWS, MORTGAGE RATES | No Comments »

2009-04-21 11:32:39.428 GMT

By Kim-Mai Cutler

 

     April 21 (Bloomberg) — Treasuries rose as U.S. stock-index futures declined and Bank of New York Mellon Corp. said its first-quarter earnings fell 51 percent.

     The Federal Reserve plans to buy notes maturing from February 2016 to February 2019 today and notes maturing in three to four years on April 23 as part of its efforts to push down borrowing costs. BNY Mellon, the world’s biggest custody bank, said the decline in equity markets eroded recordkeeping and money-management fees.

     “This is further evidence that the financial sector will remain in the doldrums for some time and will be a drag on growth,” said Nick Stamenkovic, a fixed-income strategist in Edinburgh for RIA Capital Markets, a securities broker for banks and institutional investors. “It looks like Wall Street’s going to open lower and that’s going to support Treasuries.”

     The 10-year note yield fell three basis points to 2.81 percent as of 7:10 p.m. in New York, according to BGCantor Market Data. The 2.75 percent security due in February 2019 gained 7/32, or $2.19 per $1,000 face amount, to 99 15/32. A basis point is 0.01 percentage point.

     Ten-year notes rose 30/32 yesterday, pushing yields down 11 basis points, the most since March 18, when the Fed announced its plan to buy Treasuries.

     The MSCI World Index slid 0.7 percent. Futures on the Standard & Poor’s 500 Index dropped 0.5 percent.

To contact the reporters on this story:

Kim-Mai Cutler in London at +44-20-7673-2805 or kcutler@bloomberg.net

Wes Goodman in Singapore at +65-6212-1568 or wgoodman@bloomberg.net

To contact the editors responsible for this story:

Nicholas Reynolds at +81-3-3201-8676 or nreynolds2@bloomberg.net

To contact the editor responsible for this story:

Justin Carrigan at +44-20-7673-2502 or jcarrigan@bloomberg.net

 

  U.S. Regulators Put Emphasis on Loan Quality in Tests (Update1)

2009-04-21 11:57:58.352 GMT

By Craig Torres

 

     April 21 (Bloomberg) — Regulators conducting the stress tests on the 19 largest U.S. banks are increasingly focusing on the quality of loans they made after finding wide variations in underwriting standards, a regulatory official said.

     Supervisors concluded that banks’ lending practices need to be given as much weight as macroeconomic scenarios in determining the health of each bank, the official said. The approximately 200 examiners poring over the banks’ portfolios have found widely differing standards for mortgages and other loans, the person said.

     The expanded criteria for the stress tests will make it easier for regulators to separate out vulnerabilities caused by bad management from those stemming from broader economic factors. Treasury Secretary Timothy Geithner has said he’s prepared to make management changes in any firms requiring “exceptional” amounts of fresh taxpayer funding.

     “There was a heavy assumption” that soaring loan defaults in recent months were caused by the recession, said Kevin Petrasic, who served at the Office of Thrift Supervision from

1989 to 2008 and is now an attorney at law firm Paul Hastings in Washington. “If they find out that these were business decisions, that, in an odd way, is probably a good sign because you can fix this. There are very hard lessons to be learned.”

To contact the reporter on this story:

Craig Torres in Washington at +1-202-654-1220 or ctorres3@bloomberg.net

To contact the editor responsible for this story:

Chris Anstey at +1-202-624-1972 or canstey@bloomberg.net

 

  Geithner Tells Board TARP Has Enough Funds for Bank Rescues

2009-04-21 13:32:17.750 GMT

By Rebecca Christie

 

     April 21 (Bloomberg) — U.S. Treasury Secretary Timothy Geithner said the Troubled Asset Relief Program has enough money for bank rescues even under “conservative” estimates, Treasury Secretary Timothy Geithner said in a letter to the plan’s oversight board.

     Geithner reiterated the Treasury’s view that about $135 billion is still available for bank rescues. This includes about $590 billion that has been allocated so far for various TARP activities, as well as $25 billion in repayments that the Treasury expects this year.

     “We believe that even under the conservative estimate of available funds described here, we have the resources to move forward implementing all aspects of our Financial Stability Plan,” Geithner said in the letter to Elizabeth Warren, the chair of the Congressional Oversight Panel, which meets today on Capitol Hill.

     The Treasury first put forward these estimates in late March. In the letter, Geithner said it’s possible the Treasury may have even more money remaining, depending on how many banks repay TARP and whether the housing program uses its full allocation.

     “Our projections anticipate only $25 billion will be repaid” over the next year, Geithner said. This figure is “lower than many private analysts expect,” he said.

     Geithner’s letter comes on the same day as a separate report on the rescue program prepared by Neil Barofsky, the special inspector general for TARP. Barofsky said his office has six audits underway about various elements of the program.

     One of these inquiries is looking into federal assistance to Bank of America, which has benefited from three different bank rescue programs, and Treasury’s decision to extend aid in connection with Bank of America’s acquisition of Merrill Lynch.

The audit was expanded to include the other eight large banks that received TARP funding in October 2008, the report said.

To contact the reporters on this story:

Rebecca Christie in Washington at +1-202-654-1273 or Rchristie4@bloomberg.net

To contact the editor responsible for this story:

Posted in MORTGAGE NEWS, THE FED | No Comments »

Large Cities Ranking – 2009 New Geography Best Cities for Job Growth

2009 Size Rank	Area	2009 Weighted INDEX	2008 Nonfarm Emplymt (1000s)	Size 2009	Size Movement	Overall Rank 2009
1	Austin-Round Rock, TX	87.7	778.5	L	1	6
2	Houston-Sugar Land-Baytown, TX	85.4	2,609.6	L	2	9
3	San Antonio, TX	82.0	849.8	L	4	20
4	Fort Worth-Arlington, TX Metropolitan Division	78.3	877.5	L	5	30
5	Dallas-Plano-Irving, TX Metropolitan Division	78.0	2,102.1	L	7	32
6	Seattle-Bellevue-Everett, WA Metropolitan Division	77.2	1,457.8	L	4	34
7	Salt Lake City, UT	76.5	640.2	L	-4	36
8	Raleigh-Cary, NC	74.6	513.5	L	-7	38
9	Oklahoma City, OK	72.9	576.8	L	21	44
10	Portland-Vancouver-Beaverton, OR-WA	70.0	1,020.8	L	1	55
11	Omaha-Council Bluffs, NE-IA	66.8	468.2	L	21	72
12	Washington-Arlington-Alexandria, DC-VA-MD-WV Metropolitan Division	66.6	2,424.3	L	9	76
13	Northern Virginia, VA	65.0	1,305.5	L	4	84
14	New York City, NY	62.3	3,760.2	L	8	95
15	Denver-Aurora-Broomfield, CO	58.5	1,228.0	L	5	113
16	Boston-Cambridge-Quincy, MA NECTA Division	56.1	1,696.4	L	21	118
17	Putnam-Rockland-Westchester, NY	55.7	579.9	L	14	121
18	Charlotte-Gastonia-Concord, NC-SC	55.5	841.5	L	-13	125
19	Honolulu, HI	54.0	451.5	L	-4	132
20	San Jose-Sunnyvale-Santa Clara, CA	53.6	902.9	L	13	134
21	Rochester, NY	53.2	518.1	L	40	137
22	Las Vegas-Paradise, NV	52.5	894.9	L	-14	142
23	San Francisco-San Mateo-Redwood City, CA Metropolitan Division	51.6	982.3	L	6	144
24	Bethesda-Frederick-Rockville, MD Metropolitan Division	51.5	573.0	L	27	145
25	Nashville-Davidson–Murfreesboro–Franklin, TN	50.1	748.6	L	-7	153
26	Orlando-Kissimmee, FL	49.8	1,056.8	L	-20	154
27	Virginia Beach-Norfolk-Newport News, VA-NC	48.5	760.9	L	8	160
28	Kansas City, MO	48.3	564.1	L	8	164
29	Pittsburgh, PA	47.6	1,138.9	L	24	169
30	Buffalo-Niagara Falls, NY	47.1	548.3	L	30	174
31	Philadelphia City, PA	46.6	661.4	L	31	176
32	Columbus, OH	46.4	933.5	L	7	178
33	St. Louis, MO-IL	46.3	1,341.9	L	19	179
34	Nassau-Suffolk, NY Metropolitan Division	46.2	1,255.5	L	8	180
35	Indianapolis-Carmel, IN	44.3	898.5	L	-12	197
36	Hartford-West Hartford-East Hartford, CT NECTA	44.2	552.7	L	4	199
37	Louisville-Jefferson County, KY-IN	42.7	611.0	L	-11	204
38	Cincinnati-Middletown, OH-KY-IN	42.5	1,028.6	L	12	207
39	San Diego-Carlsbad-San Marcos, CA	42.4	1,283.4	L	7	208
40	Miami-Miami Beach-Kendall, FL Metropolitan Division	41.6	1,039.3	L	-12	216
41	Atlanta-Sandy Springs-Marietta, GA	41.6	2,374.1	L	-25	217
42	Richmond, VA	41.6	616.9	L	-17	218
43	Phoenix-Mesa-Scottsdale, AZ	41.4	1,813.1	L	-29	223
44	Jacksonville, FL	40.9	609.9	L	-25	227
45	New Orleans-Metairie-Kenner, LA	39.5	528.9	L	-32	234
46	Memphis, TN-MS-AR	39.2	628.4	L	-8	237
47	Newark-Union, NJ-PA Metropolitan Division	38.5	1,024.2	L	10	241
48	Minneapolis-St. Paul-Bloomington, MN-WI	38.3	1,754.4	L	0	242
49	Birmingham-Hoover, AL	37.9	518.7	L	-5	244
50	Fort Lauderdale-Pompano Beach-Deerfield Beach, FL Metropolitan Division	37.2	759.8	L	-23	253
51	Milwaukee-Waukesha-West Allis, WI	37.0	837.3	L	3	254
52	Chicago-Naperville-Joliet, IL Metropolitan Division	37.0	3,778.8	L	-3	255
53	Bergen-Hudson-Passaic, NJ	36.5	897.2	L	5	258
54	Edison-New Brunswick, NJ Metropolitan Division	34.4	1,010.1	L	-7	269
55	Camden, NJ Metropolitan Division	32.9	526.7	L	-10	277
56	Los Angeles-Long Beach-Glendale, CA Metropolitan Division	32.6	4,008.1	L	0	279
57	Riverside-San Bernardino-Ontario, CA	31.5	1,189.6	L	-33	283
58	Tampa-St. Petersburg-Clearwater, FL	31.2	1,206.6	L	-15	285
59	Warren-Troy-Farmington Hills, MI Metropolitan Division	29.4	1,093.9	L	6	294
60	Sacramento–Arden-Arcade–Roseville, CA	28.8	863.2	L	-26	297
61	West Palm Beach-Boca Raton-Boynton Beach, FL Metropolitan Division	28.2	539.4	L	-20	301
62	Oakland-Fremont-Hayward, CA Metropolitan Division	27.1	1,011.6	L	-3	304
63	Santa Ana-Anaheim-Irvine, CA Metropolitan Division	26.2	1,453.0	L	-8	306
64	Cleveland-Elyria-Mentor, OH	24.4	1,033.7	L	0	309
65	Providence-Fall River-Warwick, RI-MA NECTA	21.7	557.5	L	-2	318
66	Detroit-Livonia-Dearborn, MI Metropolitan Division	8.9	739.7	L	0	335

 

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