NJ unemployment rockets to 9.7%

Posted on September 17, 2009 by grim

From New Jersey Newsroom:

N.J. jobless rate climbs to 9.7 percent, highest in 33 years

New Jersey unemployment climbed to a 33-year-high of 9.7 percent in August but preliminary estimates show that job growth continued for a second month after 17 months of job losses.

As the jobless rate increased from 9.3 percent, 2,900 people found private sector jobs but 2,100 others lost government and schools position, making the overall jobs gain 800.

The state’s unemployment rate of 9.7 percent now equals the national jobless rate.

According to preliminary estimates from the Labor Department’s monthly survey of employers, nonfarm wage and salary employment in the Garden State increased to a total of 3,930,500 in August.

“In August, New Jersey’s private sector employers continued to add workers to their payrolls,” said Labor Commissioner David j. Socolow. “It is encouraging that New Jersey continued to see a four-month trend of private sector employment stabilizing and moving in a positive direction. But the unemployment rate demonstrates that there is much more to do to put New Jersey back to work.”

From the Star Ledger:

N.J. unemployment jumps to 9.7 percent, matches U.S. rate

The unemployment rate in New Jersey jumped from 9.3 percent to 9.7 percent in August, matching the national figure, the state said today.

“That is significant because we’re now at the same level as the nation, and we’re just shy of double-digit unemployment,” said James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. “There’s nothing positive. Most of the individual components are moving in the wrong direction.”

The state Department of Labor and Workforce Development said the total number of jobs rose by 800, though that number can be volatile. In the July report, the state said jobs rose by 5,600, but revised figures released today indicate the state actually lost 500 jobs in that month.

The private sector saw job growth of 2.9 percent in its second straight month of increases. Meanwhile, in the public sector — which is about a fifth of the size of the private sector — jobs fell by 2.1 percent.

From the NJ Department of Labor:

Private Sector Job Growth Continued in August Adding 2,900 Jobs; Unemployment Rate at 9.7 Percent, Continues to Match National Trend

August preliminary estimates showed that private sector employment in New Jersey continued an encouraging trend, as employers added 2,900 private sector jobs. Overall, employment rose by 800 jobs, as public sector employment declined by -2,100.

The state’s unemployment rate rose 0.4 percentage point in August to 9.7 percent, mirroring the national trend.

From the APP:

More jobs in N.J., but not enough

The monthly unemployment report showed the state added 2,900 private-sector jobs and lost 2,100 public sector jobs for a net gain of 800 jobs. It also showed the unemployment rate jumped from 9.3 percent in July to 9.7 percent in August, the highest rate since April 1977.
…
One caution flag: The state revises the figures each month, which can turn a stellar report into a lousy one. In July, for example, the state initially reported that the economy added 5,900 jobs. On Wednesday, it revised the figure and said the state lost 500 jobs.

Posted in Economics | 356 Comments

Money well spent or a “a questionable redistributive policy”?

Posted on September 16, 2009 by grim

From the NY Times:

Fight Looms in Congress on Tax Break for Home Buyers

When Congress passed an $8,000 tax credit for first-time home buyers last winter, it was intended as a dose of shock therapy during a crisis. Now the question is becoming whether the housing market can function without it.

As many as 40 percent of all home buyers this year will qualify for the credit. It is on track to cost the government $15 billion, more than twice the amount that was projected when Congress passed the stimulus bill in February.

In the view of the real estate industry and some economists, all that money is well spent. They contend the credit is doing what it was meant to do, encouraging a recovery in the housing market that is gathering steam. Analysts say the credit is directly responsible for several hundred thousand home sales.

Skeptics argue that most of the money is going to people who would have bought a home anyway. And they contend that unless it is allowed to expire on schedule in late November, the tax credit is likely to become one more expensive government program that refuses to die.

The real estate industry, including the powerful 1.1 million-member National Association of Realtors, wants Congress to extend the credit at least through next summer. The group hopes to expand the program to $15,000 and to allow all buyers, not just those who have been out of the market for at least three years, to qualify. The price tag on that plan: $50 billion to $100 billion.
…
Now the sponsor of the original Senate bill, Johnny Isakson, Republican of Georgia, is back with a new bill that would give a maximum $15,000 credit to any buyer who stays in a home for at least two years.

“The problem now is not first-time buyers, it’s the move-up market — the guy transferred from Chicago to Atlanta who can’t sell his house,” said Mr. Isakson, a former real estate agent.

Without a new and more generous credit, he warned, there would be a downward spiral of home sales and more foreclosures, provoking a second recession.

The real estate industry is lobbying heavily for the bill, but acknowledges that in an atmosphere that is less crisis-driven than last winter it will almost certainly have to settle for less.

Posted in Economics, Housing Bubble, National Real Estate | 213 Comments

Save housing, at any cost.

Posted on September 15, 2009 by grim

From the WSJ:

No Easy Exit for Government as Housing Market’s Savior

After a year of extraordinary interventions in the economy, the federal government is starting to pare its support for the private sector. It doesn’t look that way to Peter Lansing, president of mortgage firm Universal Lending.

The Denver home lender sees every day how dependent the housing market has become on the government. At the height of the boom, just 20% of Universal’s mortgages were backed by the Federal Housing Administration, an arm of the government that guarantees loans to borrowers who can’t afford big down payments. Today, the FHA accounts for more than 80% of his business. For Mr. Lansing, this represents a new way of life — more government, more paperwork, but also a lot of sales that wouldn’t have happened otherwise.

“Over 29 years in business, we’ve always thought of ourselves as being in the free-enterprise system. Today I think of myself as a government contractor,” Mr. Lansing says. “My business strategy is to get more of my employees to embrace that idea. Plan B would be to sell pencils on the corner.”
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Over the past year, the government has intervened heavily at essentially every stage of the home-buying process. In fact, more than 80% of the new residential mortgage loans made this year benefited from some form of government support, according to the trade publication Inside Mortgage Finance.

To keep funds flowing to the housing market, the government bailed out Fannie Mae and Freddie Mac last year and now effectively owns the mortgage finance giants and their combined $5.4 trillion in loan portfolios. To keep mortgage rates low, the Federal Reserve is on track to purchase nearly $1.5 trillion in debt issued or guaranteed by the government’s various mortgage arms and another $300 billion in Treasurys, which set the benchmark for home lending.

And to boost sales, the government also is offering $8,000 tax credits to first-time home buyers.
…
Yet the government’s efforts are the primary reason the housing market is functioning at all, economists and housing experts say, which makes an exit unlikely any time soon. Despite the signs of improvement, the housing market is still a shell of what it was during headier times. U.S. home prices are back around 2003 levels, having fallen by about one-third since their peak in the second quarter of 2006, according to Standard & Poor’s. Sales of distressed homes still account for about one-third of existing home sales, and prices continue to fall in some markets such as the Sun Belt states. In addition, relatively few “jumbo” loans are being made — those above the limits of what Fannie and Freddie will buy or guarantee.
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The government’s role in housing has a long pedigree. The 1930s gave birth to Fannie Mae and the FHA, which traditionally insured loans aimed at low-income borrowers. Freddie Mac was created in 1970. Since the housing crash, these players are in some spots the only game in town.
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That seems to have helped to put a floor under housing sooner than many officials expected. At the same time, it has created distortions in the market.
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If the Fed stops sooner than expected, it could jolt the mortgage market and short-circuit a housing recovery. Barclays’s Mr. Rajadhyaksha estimates that even if the Fed carries on as planned, mortgage rates will rise by half to three-quarters of a percentage point, simply because the Fed will cease to be as a big a presence in the market.
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Still, Ms. Gifford fears that the U.S. will pull back when the loans it’s backing start going bad. “I’m worried what the future could hold if we put all the eggs in one basket,” she said.

Posted in Economics, Housing Bubble, National Real Estate | 212 Comments

Movin’ Out!

Posted on September 14, 2009 by grim

From the Home News Tribune:

Cost of living and doing business pushing people to leave N.J.

Fanklin resident Jim Morano and his wife recently acquired a home in South Carolina after his wife’s sister and mother passed away.

The couple plans on keeping the home as a winter getaway, but they’re also wondering whether it should be their permanent residence because of New Jersey’s income-tax rates, among the highest in the nation. Both own small businesses.

“We’re kind of scratching our head,” said Morano, who has a Ph.D. in food science and a master’s degree in business administration. “If you already own a residence outside of New Jersey, at some point in time, the differential is going to pay you to leave.”
…
Adam Shapiro and Suzanne Hayes work out of Weidel Realtors’ Lambertville-New Hope, Pa. office. Shapiro knows firsthand about the moves across the river, since his and Hayes’ office in Lambertville moved to New Hope this year, leaving a kiosk in Lambertville.

“It’s a big issue, a major issue,” Shapiro said. “Property taxes are much lower in (Pennsylvania) than in New Jersey. I would say that of the people I have sold houses to that lived in New Jersey and moved to (Pennsylvania), at least 50 percent was due to the higher tax rates in Jersey and lower insurance rates in (Pennsylvania), including auto insurance.”

The state saw a deceleration of population growth starting in 2002 and a sharp acceleration in the number of residents moving to other states, according to a 2007 study by James W. Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University; Joseph J. Seneca, a professor at the Bloustein School; and Research Associate Will Irving.

Because of the overall net outflow of people since the start of the decade, New Jersey’s aggregate adjusted gross income was reduced by $7.9 billion in 2005, and the total annual state tax loss that year approached $539 million, according to the report.

Hughes said the bursting of the housing bubble slowed moves nationwide, but out migration from New Jersey has continued at a muted pace.

Hughes said the high cost of living here is a key reason why people are leaving. For example, while the median household income in New Jersey is 33 percent higher than the rest of the nation, the state’s median housing cost, including property taxes, is 56 percent higher, Hughes said.

Posted in Economics, New Jersey Real Estate | 328 Comments

Tending white elephants, sacred cows

Posted on September 13, 2009 by grim

From the NY Times:

Wanted: ‘Keeper of the Flame’

BARGAINS abound these days in the market for New Jersey’s most unusual, lavish and historic homes.

The Montclair home renovated with architectural treasures by Michael Strahan, the retired New York Giant, and his ex-wife Jean before their acrimonious divorce two years ago is now available for $4.75 million. The property was listed last year at $7.75 million, was reduced to $5.795 million in the spring and reduced again earlier this month.

A restored mid-18th-century farmhouse out in Morris County horse country — Chester Township — with barns, stables and a four-car garage set on 20 rolling acres is newly on the market for $2.5 million (although a year ago, when the high-end market still had some life, real estate agents suggested asking $3.5 million).

A Ridgewood house, built in the 1920s by a renowned glass artist, G. Owen Bonawit, as a replica of his French country estate, and featuring 42 of his stained-glass windows, is on the market for $999,999. The windows alone have been valued at $326,000 by Sotheby’s. The asking price is down $176,000 from May —a discount of more than half the value of the windows.

And yet, these houses wait — not just for a buyer who sees their value and can afford them but for a buyer who is also willing to assume a caretaker role, and be a “keeper of the flame,” as Peter A. Primavera, the president of the Cultural Resource Consulting Group, puts it.

Posted in New Jersey Real Estate | 44 Comments

NJ income drop steepest in nation

Posted on September 11, 2009 by grim

From New Jersey Newsroom:

N.J.’s median income down $7,214, biggest drop in nation

New Jersey’s median household income declined by $7,214 between 2006 and 2008, the largest dollar decrease in the nation, according to newly-released U.S. Census Bureau statistics, and that is providing campaign fodder for Republicans to attack Gov. Jon Corzine’s economic recovery efforts.

New Jersey, which had the highest two-year average income in the nation at $71,284 in 2005-2006, dropped to fifth at $64,070 in 2007-2008.
…
The state 10.1 percent decline in median income was exceeded only by Vermont’s 10.3 percent. No other state declined by more than 6.4 percent including neighboring Delaware, a 4.5 percent decline; New York, 2.2 percent, and Pennsylvania, 1.1 percent.

Posted in Economics | 104 Comments

Unemployment running out for Jerseyans

Posted on September 11, 2009 by grim

From the Record:

Unemployment benefits about to run out for thousands

An estimated 33,000 New Jerseyans will receive their final unemployment check Friday, and the state estimates that benefits will dry up for about another 3,500 to 4,000 each week through the end of the year as residents exhaust the unemployment insurance benefits available to them.

Help for the unemployed now rests on Congress, where legislation is pending that would extend benefits, likely for another 13 weeks.

In New Jersey, and many other states, out of work residents can collect unemployment for 79 weeks.

Posted in Economics | 176 Comments

Foreclosure wave hits NJ

Posted on September 10, 2009 by grim

From the Star Ledger:

N.J. foreclosure filings up 43 percent in July

Residential foreclosure complaints in New Jersey were up 43 percent in July over the same month last year, but dipped slightly from June’s high, according to data from the state judiciary.
…
Foreclosure filings were up by 50 percent or more in eight of New Jersey’s 21 counties: Monmouth, Atlantic, Bergen, Hudson, Sussex, Somerset, Hunterdon and Middlesex counties.

From the Press of Atlantic City:

Bad news on foreclosures catching up to New Jersey

Foreclosure filings kept surging in Atlantic and Cape May counties in August, even as they fell slightly nationwide.
…
Atlantic County foreclosures increased 26 percent in August after jumping 36 percent in July, while Cape May County saw increases of 25 percent in August and 34 percent in July.

Filings in New Jersey rose 29 percent from July to August after soaring 49 percent the month before.

“Part of the reason for New Jersey’s increase over the last two months is that the volume of foreclosure activity was so high over the last year or so that the Superior Court got behind in processing the paperwork,” Daren Blomquist, spokesman for RealtyTrac, said Wednesday. “Now they’re catching up with activity that under normal conditions would have shown up in previous months.”

From Bloomberg:

U.S. Foreclosure Filings Top 300,000 for Sixth Straight Month

Foreclosure filings in the U.S. exceeded 300,000 for the sixth straight month as job losses that boosted the unemployment rate to a 26-year high left many homeowners unable to keep up with their mortgage payments.

A total of 358,471 properties received a default or auction notice or were seized last month, according to data provider RealtyTrac Inc. That’s up 18 percent from a year earlier, and down 0.5 percent from July, the Irvine, California-based company said in a statement. One in 357 households received a filing.

Posted in Foreclosures, New Jersey Real Estate | 317 Comments

Beige Book – NY Area Real Estate

Posted on September 9, 2009 by grim

From the Federal Reserve:

The Beige Book – Second District – New York

Construction and Real Estate

Commercial real estate markets in the District were steady to somewhat softer since the last report. Manhattan’s office vacancy rate rose moderately in July and August, while asking rents continued to decline–rents on Class A properties are down roughly 20 percent from a year earlier, and that does not include increased concessions by landlords. Elsewhere in the District, however, office markets have generally been stable: vacancy rates rose modestly in Long Island, northern New Jersey and metropolitan Syracuse but edged down in Westchester and Fairfield Counties and in the Rochester area; vacancy rates held steady in the Albany and Buffalo areas. Asking rents on Class A properties are down modestly over the past year across most of the District. Industrial markets have been mixed but mostly steady.

The housing market has shown scattered signs of a pickup in parts of the District, though conditions have continued to weaken in New York City. A New Jersey contact notes signs of a mild pickup at the lower end of the resale market–helped by the homebuyer tax credit–but maintains that sales and starts of new homes remain flat at low levels. Prices are said to have firmed slightly in New Jersey’s resale market, though they remain substantially lower than a year ago. Similarly, Realtors across New York State report that prices rose in July but are running well below comparable 2008 levels.

In contrast, New York City’s multi-family market has continued to weaken. Manhattan co-op and condo prices have reportedly continued to fall in the current quarter. However, transactions activity, which had been exceptionally sluggish in the second quarter, has reportedly picked up in the current quarter, except at the high end of the market, where activity has evidently been constrained by tight credit. Prices of newly-constructed condominiums, which are mostly at the high end of the market, have been discounted steeply, reflecting a large inventory. The apartment rental market has also continued to deteriorate, especially at the high end: overall, asking rents are reported to be down 6 to 10 percent from a year earlier in August; moreover, landlords are typically waiving commissions and offering concessions, such as 1-2 months free rent.

Posted in Economics, New Jersey Real Estate | 41 Comments

Everything old is new again

Posted on September 9, 2009 by grim

From the AP:

New normal for home sales: Buyers have the power

The American dream of homeownership is still attainable. Buyers just have to deal with a new set of realities.

A year after the collapse of the housing market triggered the financial meltdown, lenders are demanding more money up front, high credit scores and proof of income. Paperwork must be in perfect order. Patience and persistence are required. And don’t even bother asking about a subprime mortgage.

It’s a vastly different set of rules from earlier this decade, when home prices soared and mortgages were easy to come by.

In some ways, it’s a return to the standards that emerged as the World War II generation bought its first homes in the suburbs: Buy what you can afford. Stick to a 30-year, fixed-rate mortgage. View your home as a place to live, not as a piggy bank.

For people trying to sell their homes, the standards are different, too: Be patient and maybe even lower your asking price, because the balance of power has swung strongly to buyers.
…
Nearly everyone in the real estate industry agrees on this much: Another dramatic boom-bust cycle isn’t likely soon. Albert Saiz, assistant real estate professor at the University of Pennsylvania’s Wharton School, expects that new regulations and a different consumer mindset will help real estate return to a more traditional cycle.

There will be some ups and downs, Saiz said, but in the long run, prices should move higher. “In the end, the United States is still growing,” he says. “We’re going to need more housing.”

Pava Leyrer, president of Heritage National Mortgage in Michigan, notes that the majority of people are still paying their debts. She’s confident the market will rebound once the unemployment rate begins to fall.

“I really can’t imagine we would go back to the same situation because it took an exact wrong mix of everything for that to occur,” she says. “If it ever did happen, I’ll be long dead.”

Posted in Economics, National Real Estate | 196 Comments

Recovery? Just who is hiring?

Posted on September 8, 2009 by grim

From the Record:

Employers not in hiring mood

Though the economy has shown signs of improvement, the region’s employers are in no hurry to hire, according to a new survey.

The Manpower Employment Outlook Survey found that only about 9 percent of employers in the New York metropolitan area, which includes North Jersey, expect to hire more workers during the fourth quarter of this year. About 12 percent are expected to reduce payrolls, and most of the rest expect to maintain their current employment levels.
…
Peter Weigang, manager of Manpower’s office in Wayne, said the employment market is awash in well-qualified job seekers.

“I’ve been doing this for 12 years, and this is the highest number of qualified professionals I’ve ever seen,” he said.
…
“Employers are really taking their time looking at the talent that’s out there because there are so many people available and companies are tight with their budgets,” Weigang said. “They want to be absolutely positive they’re making the right decision when they hire someone.”

Posted in Economics | 182 Comments

“What idiot was going to pay $6 million for that?”

Posted on September 6, 2009 by grim

Ok, so that last weekend open discussion ended up a disaster, but I’ve got hope that appendages, fluids, and the jacuzzi birthing parties are all behind us know. Let’s try this again.

“What idiot was going to pay $6 million for that?”

From the Star Ledger:
(who sent me a pre-cease and desist fair use nastygram the other day, be sure to click that link a dozen times so newspapers realize just how much traffic blogs push to their sites.)

The new estates on the block

Valet parking. Hors d’oeuvres. A financial-background check and a cashier’s check for $100,000 just to participate.

Potential bidders can expect all of that in an auction of the Froh Heim mansion, the Far Hills estate that once belonged to the town’s founding family. After going on the market more than a year ago for $8.9 million, the Mediterranean-style estate is to be auctioned this month to the highest bidder, whatever the price.
…
Heritage, based in Far Hills, bought the mansion for $2.1 million in October 2007 and spent more than $1 million on renovations, Jorgensen said. The company lowered its asking price several times, finally to $5.5 million, Jorgensen said.

“We’ve come very close to a couple of very serious people purchasing well over the 6’s,” she said, referring to prices of more than $6 million. “Had it been in different times, I don’t believe we’d be having this conversation.”

Maybe the last few functioning neurons in my head have checked for the weekend, but with a $2.1 million purchase, and $1m in renovations, I’m going to go out on a limb here and value the place at, oh, I don’t, know, $3.1 million maybe? What idiot considered this place at $6? What idiot priced it at almost $9?

Posted in General, New Jersey Real Estate | 192 Comments

Labor Day Weekend Open Discussion

Posted on September 4, 2009 by grim

This is the time and place to post observations about your local areas, comments on news stories or the New Jersey housing market, open house reports, etc. If you have any questions you wanted to ask earlier in the week but never posted them up, let’s have them. Also a good place to post suggestions, requests for information, criticism, and praise.

For readers that have never commented, there is a link at the top of each message that is typically labelled “[#] Comments“. Go ahead and give that a click, you might be missing out on a world of information you didn’t know about. While you are there, introduce yourselves to everyone.

For new readers that have only read the messages displayed on the main page, take a look through the archives, a substantial amount of information has been put online in the past year. The archives can be accessed by using the links found in the menus on the right hand side of the page.

———————————————-

Some insanely odd juxtaposition to start off the Weekend (this will be completely meaningless to you if you’ve never seen the movie American Psycho).

Richard Fisher – Head of the Dallas Fed
Miles Fisher – Son of Richard Fisher, Musician/Actor

Richard Fisher

From MarketWatch:

Dallas Fed chief sees ‘deflationary risk’ as pre-eminent

Federal Reserve Bank of Dallas President Richard Fisher said late Thursday that he anticipates businesses will continue to keep a tight rein on spending in the near future, as “markets are still a long way from having normalized.”

In remarks prepared for a speech at the University of California, Santa Barbara, Fisher said that for the immediate future, “the risk to price stability is a deflationary risk, not an inflationary one,” placing himself on the side of those policymakers who are still more worried about growth than the risk the Fed’s ultra-loose money policies will result in heated inflation.

Fisher said that based on a survey of CEOs at key companies, he believes the private sector is currently grappling with excess capacity, and “suffering from shock induced by the trauma of the crisis.” He termed the condition “post-traumatic slack syndrome.”

Miles Fisher

Great cover by Miles, although this might not be safe for work (stop watching by minute 2). Alot of folks recognize the American Psycho scenes, but fewer will recognize the smaller cues taken from the movie Wall Street. The soundtrack, This Must Be The Place (Naive Melody) by Talking Heads, was prominently featured in Wall Street (I don’t think it was in American Psycho at all), and who could forget Michael Douglas talking on the Motorola DynaTac. Floored when I saw this video, not only do I think the cover is great (I’m a fan of covers), but it melds two of my favorite movies and does it very well.

Posted in General, New Jersey Real Estate | 299 Comments

Losses lower for Hovnanian, revenue in the gutter

Posted on September 2, 2009 by grim

From K. Hovnanian:

Hovnanian Enterprises Reports Third Quarter Fiscal 2009 Results

This marks the 12th consecutive loss for the Red Bank based homebuilder.

Revenue fell by somewhere near 45% from $716.5m in the third quarter of last year to $387.1m for the current quarter.

On the positive side, at least the losses are getting smaller. K-Hov lost *only* $168.9m in the current quarter, lower than the $202.5m last year. Word on the street is cost reductions drove the savings, something about less hair gel.

On another note, does anyone know if Ara ever sold his home? I believe the last asking price on it back then was $7.2m, up from the $6.75m purchase price (2005).

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Update, looks like there is a sale on the tax records!

88 West River Road, Rumson NJ
Purchased: 9/24/2005
Purchase Price: $6,750,000

Sale Date: 7/10/2008
Sale Price: $5,600,000

Looks like Ara took a million dollar bath, so much for his bottom call, from Bloomberg:

Hovnanian Chief Says Housing Bottom Is `Very Near’
September 14th, 2007

“The bottom is very near but I think it’s going to stay along the bottom for a while before a recovery,” the 50-year- old Hovnanian said today.

Posted in New Jersey Real Estate | 257 Comments

Mortgage Bankers: Hard to do job without fast and easy money, need bailout.

Posted on September 2, 2009 by grim

From Bloomberg:

Mortgage Bankers Push for New Federal Loan Guarantee Program

Mortgage bankers are pushing Congress to expand the U.S. government’s support of the market by guaranteeing private-industry home-loan securities and replacing finance companies Fannie Mae and Freddie Mac.

The first step builds off the model for Ginnie Mae, the agency that guarantees payments on bonds backed by government- insured mortgages, according to a report today by the Washington-based Mortgage Bankers Association. The second part involves winding down government-seized mortgage buyers Fannie Mae and Freddie Mac and creating “two or three” new privately funded, government-chartered companies to back individual loans.

“We wanted to put forth a structure we think that has elements in it that respond to a lot of the discussion and debate on Capitol Hill,” Mortgage Bankers Association President John Courson said in an interview.

Putting the “full faith and credit” of the U.S. Treasury behind a portion of the $1.8 trillion non-agency mortgage market would help boost a once-dominant form of home-loan financing that almost collapsed in 2007 as delinquencies rose. The association, which represents about 2,400 lenders, mortgage brokers, commercial banks, thrifts and other companies, said the importance of housing to the U.S. “economic and social fabric” warrants a federal government role in mortgage liquidity.

“There’s a lot of white canvas that has yet to be painted on,” said Courson, who is also president and chief executive officer of Central Pacific Mortgage Co. in Citrus Heights, California. “. We don’t have all the answers. We just wanted to put a structure out there to guide the debate.”
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The new structure would remove the credit risk from the mortgages and leave investors with the interest-rate risk, the association said in the report. In a separate statement, the group said the government guarantee is intended only to support “products needed to keep the secondary market for core mortgage products liquid and functioning.”

Posted in Economics, National Real Estate, Politics | 212 Comments