Another record shattered as problem loans rise

No surprise. The next mortgage reset/recast wave has been talked about on this blog many times in the past. It has now started. If you look at the infamous Credit Suisse chart of the mortgage reset schedule, there is an intermediate blip in the second half of 2009. It's the blips in 2010 and 2011 that should have everyone worried.

what happened to all the moron talk about the housing recovery????

In other news today... "The housing market has decisively turned for the better," said Lawrence Yun, the NAR's chief economist.

Seriously, you can't make this stuff up.

I'm interested in local numbers.

If this is allowed to continue, the fun part will be with the FDIC goes bankrupt.. causing banks to fail.. and causing people with wads of cash saved up lose it all. Bear-market investors cheering for more foreclosures and more failed home loans will eventually wind up poor like everyone else. There is no escape.

Massachusetts housing price adjustments ( in the $600k - $2mm ranges) have been quite sticky on the downside for the past two years. Potential Sellers clearly were counting on a better 2009 spring and summer season. This did not materialize. Expect to see many homes in this price bracket taken off the market soon and relisted next spring - again with an expectation that things will improve. A V shape recovery, however, is simply not in the cards for these home owners. Prices need to continue to soften or buyers will turn to renting. Builders also have little or no incentive to break ground for this pricing range. Overtime people will finally capitulate and realize its a new world out there. MA housing stock is still ridiculously overpriced.

For all those who point to existing home sales being up here is a breakdown, from the NAR, on the different price points

U.S. Existing Home Sales Yr/Yr
$0 - $100,000 Up 38.8%
100,000 - $250,000 Up 8.7%
$250,000 - $500,000 Down 6.2%
$500,000 - $750,000 Down 8.9%
$750,000 - $1,000,000 Down 10.6%
$1,000,000 - $2,000,000 Down 23.3%
$2,000,000 + Down 32.4%

There is obviously national numbers but it just goes to show how the hign end is hurting and you are going to see downward price pressures from higher end inventory in the future...everywhere...

I've spoken to a few realtors who tell me they're very busy with many buyers scrambling to get their $8k rebates. Too funny. One realtor told me he thinks prices in the suburbs might increase 10% or so in the next 6 months. He told me that over the phone so I don't know if he had a straight face.

there is so much more to go before this down cycle bottoms out...

yep. this stockmarket is detached from reality. the downswing is beginning. i don't get why bloomberg says sales increase means all is well..sales increase coz foreclosures increase and tax break..sales 7% increasing is not due to anything else. plus a note there are over 3 Trillion worth of homes that are at risk.

The FDIC is apparently already bankrupt:

"The FDIC Deposit Insurance Fund started 2008 with $53 billion. By March 31st of this year it had dwindled to approximately $13 billion. But there have been 56 bank and savings and loan failures since then. In fact, there were five bank failures last Friday.

So, how much is left of the Deposit Insurance Fund? A report published by Saxo Bank Research two days before the Colonial failure suggested that the DIF was down to $648.1 million. Colonial is expected to take a $2.8 billion bite out of the fund. And Community Bank of Nevada, which also failed on Friday, took a $781 million slice from the pie.

If that’s true, it means the FDIC insurance fund is technically bankrupt. But FDIC Chairman, Sheila Bair says it’s nothing to worry about. “The FDIC's guarantee is as certain as ever,” she says. “Our industry-funded reserves have covered all losses to date.”

There has been much talk circulating the internet of a bank holiday in the fall. Conspiracy theory? Maybe. A bank holiday; an overnight revaluation of the dollar; TARP 2.0 (then 3.0 and 4.0.....). Nothing would surprise me these days.

Dave: What would a 21st century bank holiday look like? A freeze on credit and debit cards? And who would revalue the dollar, exactly? Last I checked, the dollar had neither a foreign-exchange nor real-goods peg. The closest possible thing to a revaluation of the dollar would be if China revalued the Yuan relative to the dollar, but while this would raise the price of imports from China (and therefore the increase the cost of consumer goods), it's a far cry from "revaluing" the dollar.

noescape - simply not true for those with even a bit of financial sophistication to hedge that one out.

And the FDIC may well be technically bankrupt, but that's meaningless on that front - the govt will print money to fund it if necessary, so people will get their nominal dollars back. Note the use of nominal....

The FDIC has already been approved for $100B line of credit from the Treasury, with a $500B "emergency line" after that. They're far from bankrupt, however our fearless government is another story altogether.