Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
| Last | Change | Percent | |
| S&P Futures | 1685.0 | -7.5 | -0.44% |
| Eurostoxx Index | 2913.5 | -9.5 | -0.32% |
| Oil (WTI) | 102.8 | -0.2 | -0.21% |
| LIBOR | 0.248 | 0.000 | 0.10% |
| US Dollar Index (DXY) | 80.22 | -0.307 | -0.38% |
| 10 Year Govt Bond Yield | 2.63% | -0.02% | |
| Current Coupon Ginnie Mae TBA | 105.4 | -0.3 | |
| Current Coupon Fannie Mae TBA | 104.7 | 0.1 | |
| RPX Composite Real Estate Index | 200.7 | -0.2 | |
| BankRate 30 Year Fixed Rate Mortgage | 4.28 |
Markets are lower ahead of Continuing Resolution Weekend. Personal income rose .4% in August, while personal spending rose .3%. The prior months were revised upward. Bonds and MBS are up.
The government’s new fiscal year begins on Tuesday, and unless Congress comes up with a way to keep the lights on the government will shut down. You have all-out war between Democrats and Republicans and a civil war in the Republican party. Here is the state of play: The House passed a continuing resolution that funds the government through the end of the year, but it contains language that de-funds obamacare. The Senate passed a continuing resolution that funds the government through the end of the year, but it removed the obamacare language and sent it back to the House. So that leaves Boehner with 3 possible outcomes: 1) He can convince the Tea Party Republicans to go along with a clean continuing resolution, 2) He passes a bill with primarily Democratic party support (and that support won’t be free, plus it will probably cost him the Speakership), or 3) He attempts to pass a clean CR and it fails, which shuts down the government. Democrats are confident that any shutdown will be a replay of 1995, where the public sided with Clinton. How to handicap it: I think the fact that the Republican leadership is so vocal against the rebellious Tea Party republicans is important and it brings them on board. #1 is the most likely scenario, followed by #2. If we do have a shutdown, it will be short.
If the government shuts down, what does that mean for the mortgage markets? Ginnie Mae will be open for business, according to HUD’s contingency plan from 2011, which supposedly would be used in this case. I have yet to see what FHA will do. Bottom line, I don’t foresee any major disruptions to the financial markets. Macroeconomic Advisers estimates that a 2 week shutdown will lop .3% off of 4Q GDP. Mark Zandi of Moody’s estimates that number to be 1.4% if it goes 3 – 4 weeks. (Mark, you didn’t get the Treasury Secretary gig – you don’t need to keep carrying water for the Administration).
Pending Home sales fell 1.6% in August, according to the National Association of Realtors. The NAR blames the drop on an acceleration of home sales in early summer, as buyers accelerated purchase decisions as interest rates began to rise. The NAR is anticipating 2014 sales to be flat with 2013 and median existing home sale prices to increase 5% – 6%. Note that almost half of all home sales right now are all-cash transactions and that number is usually close to 20%. So even if existing home sales are flat next year, year over year, the mortgage business could still improve markedly as distressed / cash sales run their course.
The number of loans in the process of of foreclosure at the end of the second quarter decreased 40% to 744k. This is an interesting statistic, MBA estimates the shadow inventory of homes to be 3.3 million. I know MBA also includes 90 day DQs, which may account for some of the difference – 90 day DQs in judicial states which haven’t been permitted to move to the foreclosure process yet. Other tidibits – the overall percent of loans that were seriously delinquent fell from 15% a year ago to 3.8%. Almost 91% of all loans in the report were current and performing.
Does the high shadow inventory number necessarily mean that cash sales will continue to be half of all existing home sales? Probably not. Professional investors who bought property for rentals are noting the increase in prices, and will certainly think about ringing the register. They won’t be selling to other professional investors, so that inventory will be coming soon. Plus, as we have seen in the D, many of these homes will be bulldozed, not sold.
Filed under: Morning Report |
All Things in Moderation 
Regarding the CR, Boehner and Reid should make a deal that whatever the other body sends over gets a vote. I.e. Reid took the House CR and had the full Senate vote to amend it. Boehner should put what the Senate sends back before the House and either give it a straight up or down vote or let the full House vote to amend it.
Also I think there are some side games going on with the Senate CR where the sequester caps are being busted.
Speaking of the sequester, it appears that the White House can still find extra funds in the budget when it’s a priority:
If there was indeed “untapped money” then that’s pretty much admitting that sequester hysteria was a sham.
LikeLike
If there was indeed “untapped money” then that’s pretty much admitting that sequester hysteria was a sham.
great point…
LikeLike
The rhetoric is out of control:
Yes, when you don’t get your budget funded, it’s the same as being impeached.
LikeLike
I’m travelling through Sunday so I will have very little opportunity to piss people off here.
Sorry.
LikeLike
I’m betting #1.
not based on any insider knowledge. just a gut feeling.
LikeLike
The rhetoric is out of control
Quite! And I’m not quite sure how the author thinks the debt ceiling showdown “snuck up”, since they’ve been talking about it off and on ever since they raised it the last time.
At least he didn’t invoke the Holocaust.
LikeLike
http://www.theonion.com/articles/man-who-understands-8-of-obamacare-vigorously-defe,34022/
LikeLike
That was good, nova.
LikeLike
JNC, thanx for the link on PBGC/PBGT at PL.
LikeLike
No problem.
LikeLike
Worth noting:
“FHA needs $1.7 billion taxpayer subsidy
By Dina ElBoghdady, Friday, September 27, 10:57 AM E-mail the writer
The Federal Housing Administration must tap $1.7 billion in taxpayer money at the end of the month to cover its losses — a first for an agency that has been self-sustaining since its creation in 1934.”
http://www.washingtonpost.com/business/economy/fha-needs-17-billion-taxpayer-subsidy/2013/09/27/dd70ef90-276b-11e3-b3e9-d97fb087acd6_story.html?hpid=z4
LikeLike