Lawler: Fannie, Freddie Delinquency Rates and REO by State for March

From economist Tom Lawler:

Last Friday FHFA released its GSE “Foreclosure Prevention Report” for Q1/2012, which has data on Fannie Mae’s and Freddie Mac’s foreclosure prevention activity, foreclosure and other “home forfeiture” activity, delinquencies, and REO. Starting with last quarter’s report, FHFA began showing individual state data, for folks who like to track such things. Here is the report.

Included in the report is the number of delinquent loans by length of delinquency. In some states the percentage of “seriously delinquent (90+) loans that have been delinquent for a year or more is astonishingly high. Below is a chart showing the serious delinquency rate for combined GSE conventional SF mortgages by state broken out by length of delinquency.

Click on graph for larger image.

Florida, of course, is still “off the charts” in terms of its SDQ rate, and 73% of the seriously-delinquent SF loans in Florida have been delinquent for a year or more.

For the combined GSEs, states with the highest “really super-seriously” delinquency rates – i.e., 365+ -- at the end of March were Florida (8.15%), New Jersey (4.27%), Nevada (3.65%), Illinois (2.84%), New York (2.83%), Maine (2.68%), and Maryland (2.54%). For Maryland vs. Virginia “fans,” the “really super-seriously” delinquency rate in Virginia in March was 0.56%.

FNC: Residential Property Values increase 0.6% in April

In addition to Case-Shiller, CoreLogic, and LPS, I'm also watching the FNC, Zillow and other house price indexes.

FNC released their April index data today. FNC reported that their Residential Price Index™ (RPI) indicates that U.S. residential property values increased 0.6% in April (Composite 100 index). The other RPIs (10-MSA, 20-MSA, 30-MSA) increased about 1.0% in April. These indices are not seasonally adjusted (NSA), and are for non-distressed home sales (excluding foreclosure auction sales, REO sales, and short sales).

The year-over-year trends continued to show improvement in April, with all four composite indexes down about 2.4% compared to April 2011. For the 10, 20, and 30 city indexes, this is the smallest year-over-year decline in the FNC index since 2007 (five years ago).

Click on graph for larger image.

This graph is based on the FNC index (four composites) through April 2012. The FNC indexes are hedonic price indexes using a blend of sold homes and real-time appraisals.

Some of the month-to-month gain is seasonal since this index is NSA. The key is the indexes are showing less of a year-over-year decline in April. If house prices have bottomed, the year-over-year decline should turn positive later this year or early in 2013.

The April Case-Shiller index will be released next Tuesday, June 26th.

NAHB Builder Confidence increases slightly in June, Highest since May 2007

The National Association of Home Builders (NAHB) reports the housing market index (HMI) increased 1 point in June to 29 (May was revised down to 28, so this was unchanged). Any number under 50 indicates that more builders view sales conditions as poor than good.

From the NAHB: Builder Confidence Rises One Point in June
Builder confidence in the market for newly built, single-family homes gained one point in June from a slightly revised level in the previous month to rest at 29 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. This is the highest level the index has attained since May of 2007.
“While the June HMI is in keeping with our forecast for gradually improving single-family home sales this year, recent economic reports that have shown some weakening in the pace of recovery likely factored into the marginal gain,” said NAHB Chief Economist David Crowe. “In addition, builders across the country continue to report that overly tight lending conditions and inaccurate appraisals are major obstacles to completing sales at this time.”

In June, the HMI component measuring current sales conditions rose two points to 32, which is its highest level since April of 2007. Meanwhile, the components measuring sales expectations in the next six months and traffic of prospective buyers held unchanged at 34 and 23, respectively.

Regionally, the HMI results were mixed in June, with two areas of the country posting gains and two posting declines. The Midwest registered a five-point gain to 31 and the West registered a four-point gain to 33, while the Northeast and South each posted two-point declines, to 29 and 26, respectively.
HMI and Starts Correlation Click on graph for larger image.

This graph compares the NAHB HMI (left scale) with single family housing starts (right scale). This includes the June release for the HMI and the April data for starts (May housing starts will be released tomorrow). A reading of 29 was at the consensus.

Housing Investment and Construction Graphs

Spanish Bond Yields above 7.25%

From the WSJ: Spanish Yields Surge; Greek Relief Wanes
Spain's 10-year government bond yield soared above 7% and equities lost early gains ...

"Greek election results are unlikely to resolve euro-zone uncertainty," said Barclays. "Instead, the focus should shift to the June 28-29 EC summit, the likely renegotiation of the Greek austerity package, and to Spanish yields."
Here are the Spanish and Italian 10-year yields from Bloomberg. The Spanish 10 year yield is up to 7.28%, and the Italian 10 year yield is at 6.16%.

Note: The preliminary results of the independent Spanish Bank Stress Tests are due today. This is the results of the tests by Oliver Wyman Ltd. and Roland Berger Strategy Consultants.

On Thursday, June 21st, there is a meeting of the euro zone finance ministers, and the following week, starting on June 28th, is a two day European summit in Brussels.

Sunday Night: Asian Stocks and US Futures Up

The election in Greece was THE story on Sunday. New Democracy received the largest percentage of the vote - around 30% - and they still need to form a coalition government. There is no way they can meet the terms of the memorandum - so even if a government is formed, this will blow up again without further concessions. Meanwhile the Greek economy is collapsing and the unemployment rate is at record levels. Very sad.

For a few questions about what comes next, see from Joseph Cotterill at the Financial Times Alphaville: Greece, the post-election questions

• At 10:00 AM ET on Monday, the June NAHB homebuilder survey. The consensus is for a reading of 29, unchanged from May. Although this index has been increasing lately, any number below 50 still indicates that more builders view sales conditions as poor than good.

The Asian markets are up tonight. The Nikkei is up about 2%, and the Shanghai Composite is up 0.5%.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P 500 futures are up about 9, and Dow futures are up 90.

Oil: WTI futures are up to $85.21 (this is down from $109.77 in February) and Brent is up to $99.20 per barrel.

Summary for Week Ending June 15th
Schedule for Week of June 17th
For the monthly economic question contest (three more questions for June):

FOMC Preview: QE3 now or later?

Some analysts think the FOMC will announce QE3 this week, others think the FOMC will wait until August or September.

It is also possible that the Greek election will influence some FOMC participants to wait until "Operation Twist" ends in a few weeks and then see what happens.

Usually the Fed provides pretty clear signals in advance of additional accommodation, but this time the smoke signals have been a little confused. From Tim Duy: Communications Failure
Reading Cardiff Garcia's preview of next week's Fed meeting, I was struck by [a] chart from Nomura

The extensive discussion of options with arguments for and against reminded me of the fog that hangs over this next meeting. We really have no idea what the Fed is going to do or why they are going to do it. Reasonable analysis ranges from nothing to massive quantitative easing.
Goldman analysts recently put the odds of QE3 this week at 75%, from Goldman economist Sven Jari Stehn on June 8th:
Although the uncertainty is significant, our model points to a probability of easing of 75% at the June meeting. Moreover, financial conditions are critical: were European stress to ease between now and the meeting the estimated probability of easing could drop to around 50%. Conversely, any further tightening in financial conditions from here—such as turmoil surrounding the June 17 Greek election—would push up the likelihood of easing in June.
I think the odds of QE3 are very high, but I'm uncertain on the timing. One key is changes in the FOMC financial projections that will be released this week.  Here are the projections from the April meeting.

The following April chart shows when participants projected the initial increase in the target federal funds rate should occur.

Appropriate Timing of Policy FirmingClick on graph for larger image.

"The shaded bars represent the number of FOMC participants who project that the initial increase in the target federal funds rate (from its current range of 0 to ¼ percent) would appropriately occur in the specified calendar year."

I expect some movement towards later years - and that would be an argument for QE3 this week.

The following table shows the FOMC's projections for GDP. Given the recent weak data, I'd expect the June projections to be lower for 2012 than the April projections.

GDP projections of Federal Reserve Governors and Reserve Bank presidents
Change in Real GDP1201220132014
April 2012 Projections2.4 to 2.92.7 to 3.13.1 to 3.6
January 2012 Projections2.2 to 2.72.8 to 3.23.3 to 4.0
1 Projections of change in real GDP and in inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.

It is also likely that the unemployment rate forecast will be unchanged or revised upwards. Currently the FOMC expects the unemployment rate to be in the 7.8% to 8.0% in Q4. Even that level argues for additional accommodation. At the same time, the recent inflation data suggests the FOMC's inflation forecasts will be revised down (or unchanged).

The data suggests the FOMC will announce QE3 soon. But it is hard to tell when, and maybe we will see some clearer signals tonight or tomorrow.

Report: Greece’s New Democracy projected to win, Expected to form government

From Reuters: Greek conservatives to win election: official projection (ht curious)
Greece's New Democracy conservatives are set to win ... The projection showed New Democracy taking 29.5 percent of the vote, with SYRIZA in second place with 27.1 percent. The Socialist PASOK followed in third place with 12.3 percent.

The result translates into 128 seats for New Democracy and 33 seats for PASOK, giving the two pro-bailout parties a slender majority in the 300-seat parliament.

New Democracy and PASOK back an EU/IMF bailout providing Greece with funds to stay afloat.
From the Telegraph: Greek election: Live
Official exit numbers are in, and New Democracy are on course to win. The numbers: ND 29.5pc, Syriza 27.1pc, Pasok 12.3pc, Independent Greeks 7.6pc, Golden Dawn 7pc, Democratic Left 6.2pc, Communist Party of Greece 4.5pc. These are numbers from Singular Logic, commissioned for the job by the Greek government.
This suggests New Democracy will be able to form a government. New Democracy's leader, Antonis Samaras, will try to change the terms of the bailout agreement, but generally supports the bailout - and strongly supports staying in the euro.

With the Greek economy in free fall, this just buys a little time until the next review shows Greece is far short of the bailout goals.

Greece: Exit Polls show close voting

The Greek media is reporting on some early exit polls. This shows that it is very close between New Democracy and Syriza:

New Democracy: 27.5% to 30.5%

Syriza: 27% to 30%

Pasok: 10 to 12%

The 1st place party gets a 50 seat bonus (out of 300 total seats) and the parties split the remaining seats by the percent of the vote (excluding all parties with less than 3% of the vote).

If ND wins, they will probably form a government with Pasok (it would be close with the 50 seat bonus). However if Syriza wins, no one knows.

Greece Election: Voting now, Polls close at Noon ET

Polls close at noon ET on Sunday and the first "safe" results are expected around 2:30 PM ET.

Meanwhile there is a forest fire raging near Athens.

A few stories ...

From the Athens News: Voting underway in crunch election
Voting in the second general election in as many months got underway at 7am [Athens time] on Sunday at over 20,000 polling stations in 56 constituencies across the country.
Polling stations will remain open until [12 PM ET].
Unofficial exit polls will be announced, via the media, by the country’s polling agencies shortly after the closing of polling stations.

The authorities expect the first official projections by [2:30 PM ET]. Counting should be completed in the early hours of Monday morning.
From the Financial Times: Greece vote set to end in stalemate
Greeks voted on Sunday in a second general election set to end in stalemate ... The centre-right New Democracy party had a three-point lead over the radical left Syriza coalition, but neither party would capture even 30 per cent of the vote, according to two private polls seen by the FT.
excerpt with permission
From the WSJ: Greeks Vote in High-Stakes Election
The vote is pitting the conservative New Democracy party—which mostly supports the country's latest European-led bailout—against its leftist rival, Syriza, which has denounced the deal and wants to tear up the austerity program that came with it.
From the NY Times: A Critical Vote in Greece on Its Standing in the Euro Zone
As world financial institutions braced for more political uncertainty and potential market turmoil on Monday, Greek political leaders said they understood the need to form a government as quickly as possible, no matter what the election results. ...

As they headed to the polls, Greeks were gripped by anxiety about the collapse of the economy and with it the middle class — and shaken by repeated warnings from European leaders that Greece’s exit from the single currency was likely. For many, the election was seen as a choice between hope and fear.
There will be no clear winner, and even if a government is formed, the path forward is uncertain.

Unofficial Problem Bank list declines to 919 Institutions

Note: The FDIC's official problem bank list is comprised of banks with a CAMELS rating of 4 or 5, and the list is not made public. (CAMELS is the FDIC rating system, and stands for Capital adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to market risk. The scale is from 1 to 5, with 1 being the strongest.)

As a substitute for the CAMELS ratings, surferdude808 is using publicly announced formal enforcement actions, and also media reports and company announcements that suggest to us an enforcement action is likely, to compile a list of possible problem banks in the public interest.

So this is an unofficial list of Problem Banks compiled only from public sources. (And only US banks).

Here is the unofficial problem bank list for June 15, 2012. (table is sortable by assets, state, etc.)

Changes and comments from surferdude808:
As anticipated, the OCC released its actions through mid-May 2012. That release and several failures contributed to some changes to the Unofficial Problem Bank List. In all, there were six removals and two additions. The changes leave the list with 919 institutions with assets of $354.0 billion. A year ago, 996 institutions with assets of $416.7 billion.

The removals include three action terminations -- Baylake Bank, Sturgeon Bay, WI ($1.1 billion Ticker: BYLK); First National Bank South Dakota, Yankton, SD ($415 million Ticker: FINN); and Woodlands National Bank, Hinckley, MN ($133 million). The three failures were Putnam State Bank, Palatka, FL ($169 million); The Farmers Bank of Lynchburg, Lynchburg, TN ($164 million); and Security Exchange Bank, Marietta, GA ($151 million).

The additions were Lifestore Bank, West Jefferson, NC ($294 million Ticker: LSFG) and Fidelity National Bank, Medford, WI ($89 million).
Summary for Week Ending June 15th
Schedule for Week of June 17th

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