The Norris Group Blog

Today’s News Synopsis:

According to the Labor Department, 19 cities in California have unemployment rates above 15 percent. CBIA reports the construction employment rate reached 27.1 percent in February. 113 servicers provided 170,000 permanent modifications in February. Statistics from 10 populated U.S. cities show that listing prices decreased by 1.3 percent last month.

In The News:

CNN - “35 cities suffer unemployment above 15%” (3-19-10)

“In fact, there were 35 metropolitan areas with unemployment rates at or above 15% in January. California and Michigan remain the hardest hit, with 19 cities in California showing rates above 15%, according to the Labor Department. Michigan logged the next highest number, with 6.”

CBIA - “Job Losses Continue to Mount in Construction Industry” (3-19-10)

“The construction unemployment rate reached 27.1 percent in February, a 14-year high as another 64,000 workers lost jobs during the month, according to federal employment figures. The large job losses in construction kept the nation as a whole from gaining jobs during the month. Most of the losses came in the nonresidential sector, with 53,500 losses during the month compared to 10,600 residential construction job losses.”

San Francisco Chronicle – “Credit scores can drop after getting loan help” (3-19-10)

“For borrowers who are making their payments on time but are on the verge of default, the Obama administration’s loan modification program can reduce their credit score as much as 100 points. That makes it harder to get a loan and can present a problem when applying for a new job. Housing counselors say it’s unfair, especially because the news often comes as a surprise to homeowners.”

Housing Wire – “FDIC Prepares $653m in RMBS Notes from Failed Bank” (3-19-10)

“The Federal Deposit Insurance Corp. (FDIC) is preparing a $653m structured financing offering, its third such platform, from assets seized from the failed Delaware-based Franklin Bank. The notes, which will carry an FDIC guaranty, are backed by prime residential mortgage-backed securities (RMBS), DebtWire reports. The deal is part of the Structured Sale Guaranteed Notes 2010 platform. It follows the pricing of $1.81bn of notes backed by 103 non-agency RMBS. The RMBS are collateralized by 5,101 mortgages (primarily performing) and some REOs with a total unpaid balance of $1.2trn, according to the pre-sale report.”

Housing Wire – “Fannie Requires Servicers to Offer Alternative for Failed HAMP Modifications” (3-19-10)

“The US Treasury Department launched HAMP in March 2009 to provide incentives to servicers for the modification of loans on the verge of foreclosure. Through February, the 113 servicers provided 170,000 permanent modifications and placed more than 1m borrowers into the three-month trial modification. Though, Treasury officials admit the program is not for everyone.”

Housing Wire – “Moody’s Hikes Expected Losses for Second Lien, Subprime and HELOC RMBS” (3-19-10)

“Moody’s Investors Service revised its loss projections for 2005-2007 second lien, subprime and HELOC-based US residential mortgage backed securities (RMBS). Moody’s now expects cumulative losses to average approximately 25-55% of outstanding balance for non-subprime closed-end second (CES) pools, 70-85% for subprime CES pools and 40-50% for home equity line of credit (HELOC) pools. The revisions represent more than a 50% increase for expected cumulative losses on non-subprime CES, and nearly a 20% relative increase for subprime CES and HELOC pools.”

Housing Wire – “Home Prices Still Falling as Houses Continue to Sit on the Market: Altos” (3-19-10)

“The median home listing price declined 1.3% in the Altos Research 10-city composite, continuing a seven-month-long run of declining list prices in February. And even though the listing time is generally decreasing, for-sale houses still tend to go unsold for the first 100 days. The 10-city home price composite index was $479,781 in February 2010, up from the January 2009 bottom of $470,017, but down 5.75% from last year’s peak of $509,030 in July. All of the 26 markets Altos Research studies experienced a month-over-month listing price decrease, ranging from a the smallest, a 0.2% decline in Miami, to a 4.4% decrease in San Francisco.”

Housing Wire – “Congress Told HAMP Will Cost $53bn Less than Expected” (3-19-10)

“The US Treasury Department initially planned to spend $75bn on the Home Affordable Modification Program (HAMP), but in a recent report to Congress, the Congressional Budget Office (CBO) projected the Treasury will spend a total $22bn on the program. This figure represents total expenditures from day one of HAMP until the program expires in 2012.”

Bloomberg - “Yale Cuts Hedge Funds to Hold More Private Equity, Real Assets” (3-19-10)

“Yale University, whose endowment is the top performer in the U.S., is cutting its target allocations in hedge funds to allow for bigger stakes in private equity and real estate, the asset classes that hurt the fund last year. Yale boosted the fund’s private equity target to 26 percent from 21 percent and its real assets allocation, which includes real estate and commodities, to 37 percent from 29 percent, at its June 2009 investment committee meeting, according to a report released yesterday. The report said Yale, in New Haven, Connecticut, anticipated capital gains in those asset classes.”

Looking Back:

One year ago, 5,032 new and resale houses and condos closed escrow in the Bay Area within a month. The interest rate for 30-year FRMs dropped to 4.98 percent. The FHA reported an increase in loan defaults.