40 States Sign Settlement

Post by Mike

Forty States, including Georgia, signed the Foreclosure Settlement with the big banks. This will limit their ultimate exposure and may free up lending in the States that agreed to the terms. Notice I said MAY FREE UP LENDING. As usual, the banks are the big winners in the settlement. They now know their ultimate exposure and can not be sued for more damage.

This will be held up as a huge win for the public, but in my opinion, the numbers are too small. The banks were loaned $700-billion when they were in trouble, but only agree to a $25-billion settlement for the damage they caused in the real estate sector.

Oh well... the golden rule... "He who has the gold, makes the rules..."

Housing Wire - 40 States Sign Settlement

Post by Mike

Here is an interesting chart that shows Georgia as being relatively stable as far as values are concerned. Before the crash in years 2000-2006 the state was in the 0-40% price change range. After the crash 2006-2010 we are in the -20-0% range, and for the 10 year period 2000-2010 we are still positive in the 0-40% category.

Loan modification plan actually gives the banks some cover.

Post by Mike
For a man that claims to care about the average Joe, this President is about to plow struggling home owners. Even this left leaning web site calls him on the plan and exposes how he will rob your 401k in the process. Please forward.

Naked Capitalism _ Obama gives the banks a get out jail free card.

Mitt Romney's State of The Union

Post by Mike
Okay, this is a man who understands the problem from a business perspective. There is no class warfare or HOPEY CHANGEY wishing for utopia. He gets it. These are excerpts from a speech made by Mitt Romney. His remarks are in bold. Read them and ask yourself who is best fit to address our current problems.

We’re just so overleveraged, so much debt in our society, and some of the institutions that hold it aren’t willing to write it off and say they made a mistake, they loaned too much, we’re overextended, write those down and start over. They keep on trying to harangue and pretend what they have on their books is still what it’s worth.


The banks are scared to death, of course, because they think they’re going to go out of business… They’re afraid that if they write all these loans off, they’re going to go broke. And so they’re feeling the same thing you’re feeling. They just want to pretend all of this is going to get paid someday so they don’t have to write it off and potentially go out of business themselves.”


This is cascading throughout our system and in some respects government is trying to just hold things in place, hoping things get better… My own view is you recognize the distress, you take the loss and let people reset. Let people start over again, let the banks start over again. Those that are prudent will be able to restart, those that aren’t will go out of business. This effort to try and exact the burden of their mistakes on homeowners and commercial property owners, I think, is a mistake.

Link here: Mitt Romney's State of The Union

Post by Mike
The AJC is reporting several major banks have reached a settlement of $25-billion for improper mortgage practices. Link to the story here: http://www.ajc.com/business/25-billion-mortgage-settlement-1314190.html

My question is... ARE YOU KIDDING ME? $25-billion? TARP was $700-billion and all they can muster is $25-billion?

The timing of this is somewhat suspicious. Expect to hear something about it in Huesein's campaign speech.

Hard data pointing to a loaded spring.

Post by Mike

Conditions are right for a big swing in the housing and real estate recovery, and here is hard data showing we are sitting on top of a loaded spring.

Last week I suggested that inventories, values and interest rates were at low levels. Today I found the following charts. The first one is from the U.S. Treasury and presented by the CFR. It shows how home prices have declined since the end of the recession as compared to the other post war recovery averages.

My theory is that the inventory was so large (and lending so loose in the boom) that working the mess through the pipeline had caused this deflation.

The next chart is from the St. Louis Fed. It shows M2, or the money supply. Obviously, the FED has been pushing money into the system. The only problem is it has not been reaching the broader economy, as shown in the third chart which is the velocity, or movement of money. 

While the FED has been doing it's part, the banking sector and corporate America appear to be sitting on piles of cash. Also notice the low interest rates.

Like a compressed spring, the tension is building in the system. At some point buyers are going to borrow, banks are going to lend, and all that money on the sidelines will spill into the market.

When that happens, you are going to see the bull return to the real estate sector. Why real estate instead of stocks? A few reasons - 1 - Wall Street has lost a lot of trust. 2 - Real Estate is depressed. People like to buy low and sell high.

Get ready, the real estate market will inflate again.  

Market inventory hits a three year low.

Post by Mike
A comparison of the last three years in the local real estate market may be indicating a market bottom. The attached is data pulled from the Albany MLS system.

First the bad news:
-Overall, the market has contracted by $25-million since 2009. Gross residential sales for that year in the Dougherty and Lee County markets were $125-million, while gross sales in 2011 totaled $100-million.

-Average sales price has also dropped in the same period from $146,824 to $134,155.

Now the good news:
-The total MLS inventory for the market at the end of December was a total of 779 properties. That is the lowest that number has been in three years.

Values are down, inventory is down and interest rates are down. The market could be on the edge of revival.


Click the image to enlarge the report: