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The Dead Mortgage Cat Bounce Is Over
While earlier today the MBA came out with some absolutely ridiculous numbers namely that there was a 49.1% surge in mortgage applications in the week ended January 9, this was, as Stone McCarthy reported, due largely to seasonals. To wit: "The MBA's broad mortgage application index soared 49.1% last week. While we think much of the increase is a response to lower mortgage rates, we also think the application data are still subject to some holiday-related noise."
So what is really going on with that all important metric for the US housing market: mortgage originations? For the answer we go to the biggest mortgage originating bank in the US itself, Wells Fargo.
Here is the answer:
After dropping to a record low $36 billion in the first quarter, mortgage originations at the biggest mortgage lender jumped.... and are now back on a declining slope. In fact, the Q4 mortgage data was the second worst ever.
But that's in the past right. Surely there is much optimism for the future? Actually no:
- WELLS FARGO & CO EXPECTS Q1 2015 MORTGAGE VOLUME TO BE SIMILAR TO Q4 2014: CFO
Oh well, at least Russian billionaires will continue buying New York penthouses sight unseen for the foreseeable future. Wait, what's that... Oh.
Never mind.
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The BS is finite.
I have an important Fed-question...
Does Mr. Yellen pee standing up or sitting down? ;-)
Looney
You forgot about all that hot Chinese money from the booming construction trades where materials prices have been skyrocketing. What?,.. Really?,.. Oh, nevermind...
There are enough rich scared investors to keep it propped up for a while, and they don't need mortgages. Their spoils from the last 8 years have to go somewhere.
Aplications are meaningless, it's successful closings that count and those suck....
Knuckle dragging indeed. Applications are meaningless to the same extent job openings are irrelevent to hirings, architectural billing are unrelated to new commercial investment and Avatars are unrelated to the intelligence of the person posting his inane opinions. Just sayin'....
Yep, that's me, just a slope foreheaded neanderthal with zero experience in real life, yep, yep,yep....
Sorry, just felt like pickin' a fight as I had a client not take my advice yesterday and reduce a large short position in natgas. This is a good place to vent. Curious though, what's your personal R.E. holdings look like? I'm long both as a homeowner and a landlord and the only R.E. deal I ever regretted is the only one I ever sold (in 1998). So I guess my actions say I still like R.E. despite the shenanigans. Yourself?
18 acres of land my house sits on and a few sections of farm that was inherited by myself and my brothers. I used to own a few rentals but got out of it when real estate was bid up. nowadays I'm keeping my assets liquid......
Does Mr. Yellen pee standing up or sitting down? ;-)
Neither. Her/his/its body recycles all the waste, and it comes out of the mouth whenever it speaks.
Credit creation comes to a grinding halt.
The whole system is coming to a grinding halt right in front of our eyes.
Woar is the only option left for TPTB ,or they become TPTWere.
Yet war will also bring the system to a grinding halt, and they will still become TPTW.
The Geogia guidstones are their dream, after one too many pipes of chandoo.
I gotta go grind one.
You appear to be right on the "money". No crash, just a slow grind so far given the state of complacency everyone has been in. The panic has not set in so far but one does get the feeling the wheels are now wobbling.
Commodity crashes always seem to be the leading indicator. It just seems so obvious that one is not in economic boom times when real stuff is not in demand.
Looks like I need a new job...
BREAKING:
Caesars Says It Will File New Bankruptcy in Chicago Tomorrowhttp://www.bloomberg.com/news/2015-01-14/caesars-says-it-will-file-new-b...
Caesars Entertainment Corp. (CZR) will put its main operating unit into bankruptcy tomorrow in Chicago, setting up a showdown with creditors who filed their own case to keep the casino operator from closing a deal they say unfairly protects its interests at their expense.
Caesars announced its plans in a court filing today opposing the rival bankruptcy, which was filed by the dissident creditors Jan. 12 in Delaware.
"Caesar weak..."
"Koba, weaker..."
"Who filed the bankruptcy?!"
"Ceasar filed the bankruptcy!"
[Everyone draws their knives...]
Yeoch! Sounds like the sin is a little too pricey for the middle class in Sin City.
But, but, but .... Roman Empire did never file for bankruptcy.
[torch it]
Say hello to the war on "extremists."
State pensions at risk of default here?
If they do default, will you continue to bad mouth Gold?
Bigtime; the USG will have to intervene at some point.
I can think of a couple approaches:
USG can let prop values plummet. It would take a few years before pension funds fail in great numbers, simply because clearing out all the mal-investment will be a tedious process.
USG starts offering free/discounted houses in exchange for coverage of back taxes. There's a lot of shitty real estate out there that's been sitting on the market for a year or more. These places are dilapidating and may not even be worth saving, but say it's 'free' (for 10k in back tax) and people will borrow money to get one (provided it's not a ghetto neighborhood like Detroit).
The question is where will the money come from? Printed and borrowed for sure, with 15 year sub-prime loans on back tax liens. But it'll make the books look balanced for another couple years and that's all .gov cares about.
Neither party wanted the majority this past election because they're juggling two dozen hot potatoes. The next five years will be ugly.
If you used to have a house ....... you can keep that house you used to have ......yeah!
THe ONLY thing that can extend-the-pretend a little longer is the return of NINJA loans and the GOP won't let that happen under Obama (50/50 if a Repub was president). Even if they did the proles are proving smarter than TPTB take them for. I know of no working class folks in my area of SoCal who would take on a home at current prices. With 5% down your payment can be 25% or more over rent parity!!!
Housing Bubble 2.0 Popped last summer when the selling momentum disappeared. The only questions now are: How long the specuvestors hold before exiting? How quickly sellers adjust to reality? How quickly mortgage rates rise? It won't tak elong for downward momentum to intensify. The last few years were an even greater illusion than the first Bubble.
SoCal here, I agree.
See similar scenario in the south. LOTS of empty inventory in suburban and rural markets, 30%+ foreclosures, lots of vacant properties, metro areas have fresher stock, but prices across the board are pre-2006 levels. So lots of stuff is sitting.
That's why it could come down to give-aways for the sole purpose of keeping pensions funded.
A number of analysts have proposed razing properties to remove dilapidation and reduce inventory. The USG will probably encourage the practice before taking any actions that lower prices. After all, it will be very difficult for municipalities to raise revenue once values are reduced. That's a long, slow, politically poisonous process.
So they are suggesting plowing under every 3rd row of strip malls. Sounds vaguely familiar to other wonderful ideas.
https://books.google.com/books?id=RHINtHpq8p0C&pg=PA232&lpg=PA232&dq=dep...
Murray? is that you?
Yet not far from me in fantasy democrat socialist Kalifonria, Meritage is rapidly putting up some giant slop starting "in the low 700's" with "great schools, easy freeway access and nearby shopping". Packed in ugly mcmansions (I thought that was over), no yards, etc. Not far from that the other mega buiilders are cramming in new condo developments abutting a freeway -- geez, definitely like living on top of a SoCal freeway on one side and major streets on the other. Much better deals though starting in the low 500's. This crap isn't worth 50K in my view. Give these places 10 years as they fall apart and become section 8. Low 700's my ass.
Here ya go except that the photos are completely fraudulent. There are no yards and these things are crammed together.
http://www.meritagehomes.com/search/southern-ca/montrose/
or this garbage (also complete with fraudulent renderings), location -- other side of "sound" wall is a major freeway
http://www.drhorton.com/California/LA-Ventura-County/Claremont/serrano.aspx
Damn. 700-800 for that?
Here in mid-Atlantic many buyers see no point in an 'used' home that likely has hidden problems, bad layout/decor, lower sq ft and likely needs work when they can buy something new, energy efficient, and with a warranty (in spite of the fact that new units are so damn cheap and tacky).
The sales that do occur are either new, pristine used, or places with character in the city. Anything marginal sits.
Who could forget this in 2006:
http://www.10news.com/money/bank-offers-american-dream-to-illegal-immigrants
Time to dust off the old playbook guys? Obama has new customers for you.
just write a check for your house.
The way it should be!
Like banks have been doing it for centuries. Why not?
Polar vortex 2.0 hits last week and everybody files for a mortgage but they won't go shopping....... yeah right.
No Dark Pools, algos dying, retail is greying and buying nothing but pills, no millenial wants to be saddled with a house and can't given the education mortgage they already have, Chinese commodity boom is over, alternative energy taking the premium out of oil...not much but healthcare to be excited about in the next 10 years.
So that's all bullish right? Buy Stawks?
Yes, Double down on building applications but stay away from foreign arms manufacturing.
Alternate energy taking the premium out of oil? Are you kiddng? You mean like all those Tesla cars? Know anybody heating homes with "alternative energy" in Minnesota?
When will people understand one simple concept. Home's under sales contract do not equal sold homes and mortgage applications do not equal mortgage originations. But why should this be a surprise when the government has absolutely no concept of real economic transactions (i.e., when the entire process is complete and an actual sale and loan have been made) but rather manufacturers data to their desire. Look no further than their continued use and reliance on the cash basis of reporting financial information and complete and total disregard for unfunded liabilities (now in excess of $100 trillion).
The world's new GAAPs, if its not on the financial statements, I guess it's not there.
You forgot the other $303 tn in unfunded liabilities recentlly added.
Just keep pedaling faster.....but the wheels are gone......pedal faster dammit........ah ah ah
49% surge in applications. 99% of those were fradulent.
I applied for 1047 of these and was turned down each time. But hey, they Were applications
if those shylocks bastards would lower their rate they might get some refis. just checked bankrate the 30y mort is at 4.01%. Hell, everyone already got a better deal than that. The friggin' 10Y T is below 2% fer chissakes. get with the program wells fartgo!
The greedy fucking banks know exactly what they're doing... gotta pick up that extra margin to account for the surging delinquencies.
Look out below....
Bulls-eye! The Crash Will Be Telegraphed! LOL...
Dude, they won't go much lower than 4%. They never have, they never will..... I believe this QE crap is primarily for the recapitilization of bankrupt lenders.
All the FED has to do is crush rates, while the lenders keep lending at twice that rate, and they'll be in the black in a matter of decades.
Zombies!
Ding ding ding!!!
Greed baby greed
Time to juice the system... Zero down no income report loans a coming, again... The sheep will follow right along, 2ND,3RD&4TH mortgages.
When this sucker does blow, you will want to be in a shelter, the fall out will be wide spread!
FUBAR
in case anyone interested ... The Administration (HUD) puts out a monthly housing "scorecard" ... the december scorecard saw marked worsening of delinquencies
(october ---> november)
Prime 2.7% ---> 3.1%
Subprime 29.4% ---> 31.6%
FHA 9.9% ---> 10.8%
http://portal.hud.gov/hudportal/documents/huddoc?id=scorecard201412508c.pdf
did you get that NoVa?
NoVa?
i quit paying attention to anything he/she said after saying oil collapsing was "old news"
s/he just responded to a comment of mine on the jpm earnings thread. if it is the same person we had some fun over at calculated risk years ago and other places i can't remember. i did strongly disagree with her assertion that credit quality was improving at jpm. no, it is just that they dump their crap and get sued and also that temporary factors have slowed defaults but that they will pick up again soon. it's easy for jpm to make their five year charts look good because, well, everything sucked real bad five years ago.
The NoVa on Calculated Risk was a solid dude ... and died a few years ago (obit posted)
i'm sorry to hear that
mortgage apps up because rates/points moving down
"the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.89 percent, the lowest level since May 2013, from 4.01 percent, with points decreasing to 0.23 from 0.28"
http://www.mbaa.org/NewsandMedia/PressCenter/90392.htm
lunch break - good post on press release which seems to be somewhat factual on rates/points direction.
my firm (in 14 eastern states) has 35% Refi in apps from last week. So MBA weekly report is directional correct. I know the statistics people at MBA, and they are good people, honest. Unlike NAR.
Seasonality adjustments - always look at raw numbers as seasonality can be spun for political messaging.
30yr auction came in quiet at 2.43% WI; my prior thread had price action this morning and afternoon - my guess was wrong.
Good luck trading.
& I'm a dude, not a she :) I came to ZH about 3/4 years ago following Kliguy38 and others. but only a "member" for 1 year. used to be on the Yahoo SKF message board before it was ruined.
good luck trading
Seasonality?
It's well known home sales trend higher into the the summer months. Combined with the low mortgage rates I would expect steady to increasing activity over the next 6-9 months.
Sadly I see yet another housing bubble for McMansions in State U. Town. Which, of course, is stretching infrastructure. Which, of course, cannot be adequately funded thanks to ponzinomics.
Good Times, indeed!
t wait for the hot asian girls to move in next door tho their brothers will have to kungfu fight me .....I will beat them (shakes finger at them)
Mortgage apps are up because non-bank lenders are dropping the credit requirements for the borrowers. I have a friend that is a senior underwriter for a large lender and servicer that is owned by a hedge fund. They had a meeting in early December to go over new underwriting guidelines. The guidelines were as follows: previous foreclosures and bankruptcies will not be considered when a borrower is applying, applicant credit scores of 520 and above will be accepted, and if the applicant is self employed they only need to submit a bank statement as proof of income. No tax returns are required.
hmmm.... let me see if i qualify now:
Bankruptcy....check
FICO...fuck it, but check
fake income statements...fuck it again, but check
I'm looking forward to going out this weekend and buying an overpriced home! Maybe in this depression the bank will let me stay in my home foreva! without paying for it
So far, it seems that many (even ZH) have been focusing more on the demand side of the equation in real estate. With demand drying up, the focus is soon going to move over to the supply side of the equation... and there is a metric shit ton (MST) of supply that will be coming on line over 2015.
The similarities to oil are interesting. Everybody was focused on supply for the most part... until all of a sudden (it seems), people suddenly shifted focus to demand (or lack thereof). We see how that went for oil (cut in half and then some).
I think we'll see the same in real estate in 2015. It is already rolling over. Once it gains a little momentum to the downside, there will be a selling stampede. 3% down FHA and low interest rates will do NOTHING to help create enough demand to catch this falling knife.
2015 is going to be a fun one...!!
Excellent point; this summer will be fugly.
It's starting to roll down here now but it's hard to see because of limited inventory and season. It'll be obvious soon enough.
Oh, so we're back to this crap again... no doc loans, 08 all over again.
Get a new chrysler 300 with your home purchase and deferred payments on the package until your kids graduate college with two years of deferred-interest student loans (cuz two years are FREE).
Oh, so we're back to this crap again... no doc loans, 08 all over again.
Froman ,
Name that lender please ... looking to build and need a Jumbo , I fit their profile ... good bank acct. , willing to lie , bad credit.
Drug game is still strong for Wells Cartel. Get busted laundering drug money est $378B for just a couple of years in questions and pay less that 2% of yearly profit, then why would you do anything else.
Once that product makes the street, 1g equals 5 years in cell block D.
http://www.theguardian.com/world/2011/apr/03/us-bank-mexico-drug-gangs
I feel sorry for the people in Oil states like Texas who chased the housing market up while competing with institutions for price. It's a bubble created by the fed, but now they have the double wammy of oil tanking. Well at least they have a place to cry themselves to sleep at night, for now. I also wonder if property taxes will be lower in 2015 in those areas, the same or higher. I'm guessing the same or higher. To quote chris farley, "Man that sucks!"
We've goin' full retard, Batman.
Brace yourself.
Wait, I thought ZH didn't do seasonally adjusted?!
Diana Olick just reported on CNBS that refis were up 66%, new apps were up 24%.
This is not surprising since rates are closing in on all-time lows, so why not?
Besides, if you have a job, a credit score over 620 and cash in the bank for more than 2 months (I know, a banker told me this), you will get a loan if you meet the income requirements (around 30% of gross for PITI).
Since the banks have been offering 0% balance transfers on CCs for the past year, how many of these people transferred 10K or more at 0%, held in in their bank account for a few months and then said, "I'm a buyer?"
My guess, lots of them. I'm in the process of doing it myself.
FHA is only requiring 3.5% down, Fannie and Freddie rolling out 3% down loans. Banks making up the difference (profits) on points. Problem for the banks is going to be just like the government. When interest rates begin to rise (say 2017-18-19), and they're holding scads of loans at 4%, how the hell are they going to be paying out 6% on anything?
Interest rates rising is the death knell for both the banks and the government, so it will never, ever happen, unless they wish to commit hari-kari.
0% interest or anything approaching that works for a while, but after a year or so, you begin heading for an event horizon. Six years and counting is well beyond that event horizon. The Fed went full retard with QE3, starting in Sep-Oct 2013. That, I'd consider the end of time for them. Now, it's just a waiting game until the next crash. I'm holding for 2018. Why the fuck not? Who ever thought they'd keep it together for this long?
Bring on MOAR 0% BALANCE TRANSFERS, BITCHEZ.
(I actually added up all the money I could borrow from CCs, either at 0% or as cash at anywhere from 23-29% and the numbers scared me. More than enough for a 20% down payment on a decent (formerly) middle class home.)
I bought a house in Sept '13 at 4.625%
Rates had risen from 3.5% in the previous nine months. So....like.... I got hosed. The low rates stimulated prices upwards, while I was obl;iged to take the rate just at its peak. Talk about bad timing!!!!
So now I am refiing at 3.625%. Did I catch the bottom? I believe that the previous 3.5% bottom was a 30 year - 50 year - all time low?
I don't care. The reason i am writing this post is to cast aspersions on the Fed. You know....Spock to Captain Kirk....we must not violate the Prime Directive. You know...full employment AND stable prices. So for the mathematically challenged:
1/3.5 = 28% in nine months. I won't even bother to annualize that. And then we have a drop from 4.625% to 3.625 in the following 14 months, or about 22%. You know....nice and stable. On the other end, we looked at one house where the owner was trying to scam a 28% increase in two years according to the public records. Well....this is Washington, DC and it is all a mess, but really.
So Alan, Ben, and Janet.....like what happened to the Prime Directive? And by the way....go F yourselves.
I have to cut them a little slack as the Chinese and Russians were dumping Treasuries at record rates in the summer of '13. But they should have planned for that instead of keeping the flank of the United States wide open. Did I say go F yourselves earlier?
So like....maybe the Ruskies are dumping again. So like maybe I did catch the bottom.
One wouldn't suppose that the Chinese are turning their Treasuries in to crude, would you? I sure would if I were them.
You wanna fix the US? Trade Obama for Putin and the Chinese CB for Yellen et al.
Who cares if you catch the bottom on rates if you eat a 25-50% reduction in value?
Hope you plan on owning for a very long time....
I'm building ,, have a relative that's a GC ,, land is rolled in as the down pmt. ,, expect to borrow about 700k to build a house that appraises at about 1m , actually use 450k to build and spend the rest after putting some aside to make a few years of pmts... at 4.375 that's $3500/month/$42k/year ...
This whole business of real estate is bullshit through and through. I have been trying to sell my deceased mother's estate for two years now. I have been through two real estate agents who didn't do a damned thing. This last asshole I had was a school board member in the district where the property is located. Two years and right around $50,000 in expenses for taxes, remodeling and upkeep and not ONE SINGLE OFFER even after three price reductions. How can this be? There is no debt on the property and there has never been a mortgage on it...ever.
I saw what was happening. There were no offers because no one trying to sell I did what anyone would do. I went out on my own and found a buyer. I told the REA about and he said that this is bullshit and that I still owe him 6%. Umm, no, the contract expires when? 12-31-14 So I just waited him out and on 1-3-15 paperwork was signed and this buyer is not on his list of protected buyers so he can fuck off. The buyer I found is someone I know and have been friends with since childhood. We agreed on who was going to pay what and they agreed on paying all closing costs for the price I was willing to sell at which was a full third less than what it was assessed at because the assessed value is a pie in the sky dream so that you can pay MOAR taxes. Inspection was waived off. I went around and around with the local .govs and and after a year and half of being a persistant asshole, I finally got the reassessment done. Finally, the .govtards admitted that what they were taxing was off the charts full retard.
I had numerous go arounds with the state about who owns the water in the lake and state say they own it but there is no public access to that lake. One of the most ridiculous things I was told is that the state could take a helicopter and land it on the lake and then they have legal access to the water. The state owns the water. Really? If that is case, then why am I paying taxes on the lakebed? It's is unuseble property and shouldn't the state pay me rent for keeping their water on my land? I contacted three different real estate and threatened to sue the state and the attorneys said I would win but that the legal fees would likely outweigh what I would be awarded. I can only go back two years due to the statute of limitations in Wisconsin but the point was proven. Who really owns the land? Apparently not me.
I'll skip a lot of other things such my fight with the electric company. I've pissed off every simply by asking pertinent questions. I'm not a good sheep. I twisted them all into pretzels just by asking questions. These people are some worhtless peices of shit but we knew that.
But wait there is more, and for $29.95 plus S&H you can get the story. I will tell you for free. I got a phone call at 8 AM on Monday morning from an appraiser working for the banksters. The buyer has put 20% down and been approved for a mortgage because they have good credit. Paperwork has been signed and documents exchanged. This appraiser said he was going to be at the property the next morning at 9:30AM sharp and that he just needed to see the house. I live three hours away and it was -15F. Well, thanks for the heads up. The message stated that this appraiser thought I was the buyer. WTF? I have friends in that area who have a key to house but they are busy doing other things and you can't call and expect them go open the door so left it on me. Aww, for fuck sakes so off I went so I could frontrun this douchebag.
The Russian Mr.s M didn't understand why the sudden need to go there and asked, "I thought you already had it reassessed.". No, that is not how it works. I explained to her that an assessor works for the local government and assesses everything sky high so that there can be tax revenue for their tomfoolery and an appraiser works for the banksters and appraises everything low. I had to go defend yet again. Remember, I have no debt on that property but yet the impetus and cost is on me. That's straight up fucking bullshit and money out my pocket.
So the asshole banker appraiser calls me at 9:30AM and says "I'm just south of Rice Lake and I will be there in a half an hour. Sorry." I told that he wasn't going there in a half an hour and that it would take an hour at best. "Oh, no, I drive fast". OK dude, whatever. So an hour later the guy finally shows up and he says, "You were right about that and I am sorry for being late". Now I had him on the defensive but where I wanted him to be. I said that is OK and no big deal and do whatever you do. So he took a few pictures and I showed him around.
Finally the question came, "Why are you selling it for such a low price?". That's a good one. Well, because the price I offered is what the market will bear. Bid/offer and strike. The bank got concerned and that is why they sent this guy. I own this place outright free and clear and I should be able to sell at any price that I want to. End of story for that. What the fuck? The appraiser himself said that this appraisal business is a scam. He said it not me.
Here is why they are so concerned. It's a beautiful piece of property and this sale is going to create issues for the tax base because once the sale is completed it will be recorded. That sale will drive down real estate prices and if the neighbors are smart about it they will use that sale to go before the board of review on open book day amd ask questions. I am taking a massive haircut but it is worth it. I am taking one for the team on this. I think I have pissed off everyone from REA who don't know what MERS and Linda Green were and have no idea of what an MBS was or is. That is not my fault. And I don't care about your new school because my kids don't go there. AND you fuckers backloaded the 30 year bonds to the banksters to build that new school so that it is relatively inexpensive at first but it gets much more expensive as the years go on.
These people that I have dealt with live in a dreamworld that I don't get to a part of but yet have to pay for.
The RE market is about to hit a MAJOR air pocket...
sounds like Wisconsin
good writing. let us know as it goes. in westchester county, ny, there are so many million dollar "estates" that just wont sell. Those that could buy did, and the pool of buyers at that price range are gone. My house is about to sell, in conn, but I was surprised to find there are 300 foreclosed properties in this fine town ! Luckily this house is a gem, and location and price worked to sell it. But I went on zillow and clicked on -show foreclosed homes only- and I scanned the east coast........... wow, everywhere lit up. And I do mean everywhere.
Thank you. It's not that good of writing on my part and I could have edited much better but the message seems to be getting through and that is all that matters. It was written from the heart and it is the truth. It has been one heck an experience in real estate for me. I never wanted or expected this to be the way it has been. I only want it to be over.
Think I'm going to move into a sailboat.