Posted by RESPA Dog

Doctors Alan Greenspan and Ben Bernanke, former and current Federal Reserve Chairmen, respectively, have declared the housing patient on the mend. Are they right, or is it a case of another early diagnosis (like Greenspan’s 1996 “irrational exuberance” diagnosis, over three years before the market’s top)?

I lean toward the view that the recent improvement in housing inventory and pricing is more about warm weather, lower interest rates and normal seasonal patterns than a sign of a true bottom. The pace of deterioration may have bottomed. But given the surge in empty houses for sale (see below) to an all-time high, I believe the most apt description for the current trend is “suspended animation.” Even if we’ve seen a turn in pricing and inventory, problems in subprime-lending land and housing-related employment remain ahead of us.

 

 

 

 

 

 

 

 

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Posted by Marc Rosenberg

Efforts by major banks and Wall Street firms to unload bad U.S. housing loans are speeding up a shakeout in the subprime mortgage industry.

As more Americans fall behind on mortgage payments, Merrill Lynch & Co., J.P. Morgan Chase & Co., HSBC Holdings PLC and others are trying to force mortgage originators to buy back the same high-risk, high-return loans that the big banks eagerly bought in 2005 and 2006.

Merrill demanded in December that ResMae Mortgage Corp. — which in 2006 sold it $3.5 billion in subprime mortgage loans, or loans to borrowers with poor credit records — buy back $308 million of loans whose borrowers had defaulted. In a filing this week for bankruptcy law protection, ResMae said those demands "crippled" its operations. The Brea, Calif., company said that repurchase requests were "severe and unexpected."

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