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In One Short Month, MBA Now Sees 2010 Morgtage Originations Plummeting By Even More
It appears the shit in housing is about to re-hit the fan. While in December, the Mortgage Brokers Association anticipated an already staggering 24% drop in mortgage originations, a mere month later they now see the drop to be 40%. And all this occurring with Q.E.'s MBS purchases set to expire in less than 3 months. With mid-term elections coming, someone better line up more bailouts, stimuli and subsidies pronto. The American dream of middle-class homeowner debt slavery must continue.
Lenders will underwrite $1.28 trillion in home loans this
year, down from $2.11 trillion in 2009, the Mortgage Bankers
Association said in its latest forecast. That would be the
lowest since $1.14 trillion in 2000. The forecast was downgraded from December, when the MBA
predicted originations would fall about 24 percent.
And if anyone still thinks Q.E. is ending...
Interest rates are expected to rise when the Federal
Reserve completes its pledge to support the mortgage securities
market with $1.25 trillion in purchases.
Not to worry - taxpayers, as usual, will come to the involuntary rescue:
The MBA on Tuesday also said it will also encourage
creation of a new type of government-guaranteed mortgage
security that would be backed by privately owned,
government-chartered "mortgage-credit guarantor entities" based
off existing U.S. mortgage finance giants Fannie Mae and
Freddie Mac.
Gotta love the dollar strength we have been seeing recently. Enjoy it while you can - Tim Geithner is about to make yet another public lie about how he "supports a strong dollar policy."
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Folks go broke slowly and then all at once ...
Another reason why the credit default swaps market still stands at about $40 trillion. The collapse of the house of cards still has a long way to go.
But it is going to start getting breezy.........
Breezy is right.
It would cost $ 745 Billion just to bring every current underwater homeowner to an equity position of ZERO !!
www.doctorhousingbubble.com
Which would have been a lot less expensive than Stimulus 1, Stimulus 2, soon-to-be Stimulus 3, AIG, TARP, PPIP, QE 1, soon-to-be QE2, etc.
Not that I support any of those, but if it were to be done, at least that would have been cheaper.
But I'm sure they'll get it right this time....
The American dream of middle-class homeowner debt slavery must continue.
Just what is this "middle-class" of which you speak?
I met him once. He lives in Iowa. Nice guy. Wife, 2.2 kids, bowling league.
There used to be another one, but I think he filed for Chapter 7 last year
Stop whining, the billionaires are doing fine.
Middle class: anyone with a job
nothing another trillion or two in QE cant fix
"The American dream of middle-class homeowner debt slavery must continue".
Ya right..... just rent for 30 years before you finally get to own the house and land you live in... I'd rather own at any price than have some landlord telling me I can't plant a tree or own a pet. Get real stop the anti-American BS..
very finacially savvy...ivy i assume
That's just plain bad economics. Dude, there are so many rentals around at the moment, it is the TENANT who is calling the shots.....not the landlord.
The landlords are so "up the duff" with mortgage, maintenance, and taxes, they NEED rental income, and it is a competitive rental market.
I rent in Manhattan, for a pittance of what the place would have cost 2-3yrs ago. Landlord leaves me alone just nicely......don't want the cash flow to dry up.
You can buy my house.... I sold a home in Californian in 2000
before the dot.com crash. Made lateral move to upstate NY where
prior to 2000, the real-estate prices had not appreciated by more
than 2-3% in 10 years. Since 2000, my house, which is on the
outskirts of nowhere, has been assessed every year. Bush's
tax cuts left the state short, and hence the county had to raise
prop and school tax. Bush's tax cut left me paying $3k/yr more
in taxes ( joy ! )
I now pay $7500/yr in property tax and a whopping $12,800/yr
in school taxes ( good thing I don't have kids ;-) ) So, it's
hardly the american dream.... I would have been better off
putting 5% down, at least I could walk now like so many
others...
I'm currenly paying $1,650/month "tax rent" to the city
and state. (Gee, that's only 100K every 5 years! ) But
I'm sure the state and city will give me back that tax money
I paid when I eventually sell the house for far less than
assessment....
My situation pales in comparison, but it is all relative after all. I did everything right: bought an affordable house and worked/saved my ass off to pay off my mortgage in preparation for retirement. Now I have the same "tax rent" problem and the same escalation of taxes, mostly for schools. And it's not even that I mind paying a fair tax. It's just that this is not a tax so much as a serial confiscation of private property by the state.
if you don't mind paying a fair tax then you don't mind
serial confiscation of private property by the state....
I have no idea why someone would junk fxguy's note....i'm in upstate NY and his statistics are accurate for what might be a very nice home; i'll guess it's worth 800k, which is a very, very nice home in upstate NY.
key is the ratio between property taxes of 7500 (these are county, town, local, sewer, water etc) and 12,800 (school).
So, you would rather pay a paper holder a mortgage every month just so you can pet a kitty and plant a fig then to be free of usury?
Yup -- because my HOA is so reasonable about planting things and owning pets.....then there's the Property Tax man....
"Owning" a home now just means you're renting a nicer place and don't have to pay damages or clean up when you leave.
A tumor named Marla! LoL. Funny. Is that you Mr. Chairman?
Question: if you were 89 and had a million dollar portfolio made up of 50% stocks and 50% fixed income what would you do?
I have been trying to convince my mother to become even more conservative but she believes the "green shoots" people. I could twist her arm, but I have chosen not to so far.
She owns some land but no gold or other commodities.
Sell stocks immediately.
First, explain the goverment is lying to her. Take her for a drive around town and highlight all the empty commercial real estate. Take her to a food pantry and have a conversation with the people who run it. Go to a woman's shelter and ask if they're busy.
Then suggest she put 1/2 her assets in physical gold and silver, and the other half in USD, Norwegian Krone, Canadian dollars, and agricultural ETFs.
IMO.
Somehow I really doubt this.
Once mid-range and higher prices start to drop, the 80% of the country that is still working will enter a buying frenzy.
This just happened with the low-end. People still want shiny houses in good school areas. Once prices start to fall, the game will be on again.
People always want shiny houses near good schools. But that is maybe 1% of the housing market.
The rest of the market is vapid McMansions in far away suburbs with sucky schools overrun with gangs, drugs and obesity. Where the upward pressure on gas and downward pressure of job prospects is looking like a perfect storm. Nobody with any brains wants those houses, and the stupid people who scarf them up anyway on the bounce will shortly (a few years) toss them right back on the market broken, unpainted and weeded over.
Yes, we remain locked in insanity. No, that will not continue.
Madness on a grand scale is brutally self-limiting.
cougar
Totally on the $$$, Cougar. Nice post--very true!
Even on the bearish sites, you see a lot of commenters who are pissed about housing prices not dropping as much as they think they should, not because they really believe that overall killing that inflationary beast would be good for the economy, but because they want to take out their own $125-150K (or less)mortgage.
Mid-High range prices HAVE been dropping. There is no buying frenzy and jumbo's are not exactly easy to come by these days. Jobs keep falling too...and nobody in these markets with half a brain believes today's prices won't be lower in a few months. It was fun going up, the anxiety of the reversal will steepen as the slo-mo train wreck continues.
This fish rotted from the tail up...
They're either flipping to take advantage of short term dislocations, or they're anticipating a recovery that is not going to come. I wouldn't anticipate that other people are going to flock to follow in this area once the recovery proves false. But what you've said does explain why markets don't rise & fall in a straight line (normally).
ROFLAMO
I think the bigger impact will be to the jobs market - there are a lot of people employed in the FIRE economy originating, underwriting, selling, mortgages. Those folks got a reprieve this year due to record low interest rates that spurred a mini-refi boom. At a 40% drop, a lot of those people are out on the streets.
Our FIRE economy depends on useless activities like this, without this activity we have nothing to fall back on.
Yep. If there IS any rationale for propping up the banks and RE, that's it - jobs. If FIRE collapses like it would have without gov't intervention to sustain the useless activities ... we'd have chaos.
yet every hedge fund i speak with is long out the whazzooo the home builders . With millions of foreclosed homes that need to be liquidated and increased pressure by lenders to allow short sales at ever higher discounts overlaid on what MBA says is a HUGE drop in mortgage demand would leave me believing home builders need about 6 months of zero new homes built to help clear the decks of unsold existing homes ( can you say XHB @ $8 again soon ? )
More like 14 months in the LA area:
http://www.doctorhousingbubble.com/foreclosure-box-the-most-comprehensiv...
agree ghost - too many folks I know jumped out of manufacturing and engineering jobs (as they vanished to China) and got cushy cozy housing realted jobs. Now they are stick here too as the drain hole widens !!!
The MBA is campaigning to maintain QE, low rates and housing-focused stimuli.
Expect them to be strategically releasing dire stats and analysis as we approach the supposed end of these gifts to the real estate industrial complex.
very good point Paul.
That was the MBA's plan for the post-Fannie/Freddie world, for the government to create and back 12 Fannie/Freddie's. These criminals just want to originate loans and have the government take the risk, they have zero interest in keeping any skin in the game.
True. These helpers just skim a cut off every deal they package up and float down the river. They were the front-line in the subprime housing bubble and their hands are filthy.
See mortgagemaxx.us and request MAX report if interested.
PD
Man this sh-t is so high its in orbit. Its going to keep
coming around and hitting the fan again and again.
Zombie Fed: Must continue to support all bubbles at all costs or Armaggedon is at hand.
Banksters: Who luvs ya babe! Where's my bonus?
Big Three: Need money now! Need money again! Need money...
RE cartel: Gotta a hot house to sell at low rates in great area! Get'em while they're hot.
Healthcare cartel: Here, let us write the legislation - you can trust us. Yeah, baby!
Financial reform: No doubt that the financial industry lobbyists can write the best laws.
Middle Class taxpayer: WTF!
Actually less originations is a positive for the mortgage market as there is less supply. This may allow the fed to slowly bleed their inventory on to the market. Or the fed can let Fannie and Freddie take it over and manage the process as it is not a trivial task to manage the MBS/treasury basis. Fnm fre fed. All same entity at this point. Let the gse's manage the basis and the fed can then focus on qe2 for treasuries and monetization of debt.
well bud, if the decline in loan originations is due
to economic and demand factors, i don't see how
the bleeding strategy works....
The Bad Bank(S) have been the scheme all along.....now with an unlimited Christmas eve funding line. Might get a tad bloated with just these three players. Ginnie will get in the game soon.
I keep hearing more and more people talking about rising interest rates.
It'll be interesting see how such a move impacts that -40% number.
qe carries on...current mbs purchases may end in march but a new program will begin in april...
on the other hand, if loans continue their dives off a cliff, then what will the fed buy?
giggitty