Morning Report: Anticipating the end of the foreclosure moratorium

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Stocks are higher this morning on no real news. Bonds and MBS are down small.

The Biden Administration put out a press release in anticipation of the foreclosure moratorium which will expire at the end of July. Servicers will be required to offer new payment options with the goal of reducing P&I payments by 25%. HUD will offer 40 year terms and silent seconds to help, and FHFA will permit the GSEs to do the same. Missed payments will be tacked on to the end of the mortgage.

The Conference Board’s Index of Leading Economic Indicators rose 0.7% in June, which was below Street expectations. “June’s gain in the U.S. LEI was broad-based and, despite negative contributions from housing permits and average workweek, suggests that strong economic growth will continue in the near term,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “While month-over-month growth slowed somewhat in June, the LEI’s overall upward trend—which started with the end of the pandemic-induced recession in April 2020—accelerated further in Q2. The Conference Board still forecasts year-over-year real GDP growth of 6.6 percent for 2021 and a healthy 3.8 percent for 2022.” These numbers compare to the Fed’s estimate of 7% growth in 2021 and 3.3% in 2022.

Speaking of the Fed, the June projections showed 18 members saw no rate increases in 2022, while 7 did see a rate hike. However, if you look at the Fed Funds futures contracts, the market is forecasting a better-than-50% increase in rates.

17 Responses

  1. “The Biden Administration put out a press release in anticipation of the foreclosure moratorium which will expire at the end of July. Servicers will be required to offer new payment options with the goal of reducing P&I payments by 25%. HUD will offer 40 year terms and silent seconds to help, and FHFA will permit the GSEs to do the same. Missed payments will be tacked on to the end of the mortgage.”

    How much of an impact do you think this will have in terms of staving off foreclosures?

    Like

    • Given the rise in home prices, these homes will have 10% equity in them, so servicers are going to modify the loans, not push them to foreclosure.

      I think a lot of money has been raised to take advantage of a foreclosure wave that isn’t going to materialize.

      Like

  2. Imagine the reaction if Trump had done this:

    “U.S. urges Ukraine to stay quiet on Russian pipeline

    The Biden administration is asking an unhappy Ukraine not to make waves, as it nears Russia-Germany pipeline agreement.

    By BETSY WOODRUFF SWAN, ALEXANDER WARD and ANDREW DESIDERIO
    07/20/2021 03:54 PM EDT”

    https://www.politico.com/news/2021/07/20/us-ukraine-russia-pipeline-500334

    Like

    • They got bogged down in a technical and irrelevant debate over whether the bat coronavirus research the National Institutes of Health funded in Wuhan qualifies as “gain of function” research.

      If I were engaged on the question of the origin, I would think that is neither all that technical or irrelevant (at all).

      Bizarrely, it mentions Trump released a fact sheet without calling it intentional Russian misinformation or qualifying it with the fact Trump was a fascist authoritarian who hates minorities and tried to stage a coup . . . so I’m not sure what’s up at the WaPo. They seem to be losing the thread.

      Like

      • This is the key point I think, which totally support’s Rand Paul’s position:

        “But it doesn’t matter which “gain of function” definition you prefer. What everyone can now see clearly is that NIH was collaborating on risky research with a Chinese lab that has zero transparency and zero accountability during a crisis — and no one in a position of power addressed that risk. Fauci is arguing the system worked. It didn’t. Even if the lab leak theory isn’t true, what’s clear is that we need more oversight of this risky research, both in the United States and in China.”

        Like

        • Agreed. The usefulness of gain-of-function research on contagious viruses that cause illness does not seem to be worth the risk of (a) having it get out into the wild and start a pandemic while (b) providing no real benefit or knowledge expansion.

          Like

  3. Taibbi’s latest on student loans makes me feel a bit like Scott where you notice certain relevant things are omitted in the write up of a subject which you actually are familiar with to help drive a narrative.

    https://taibbi.substack.com/p/the-trillion-dollar-lie

    Related, more balanced piece:

    https://www.businessinsider.com/the-lawyer-who-became-don-quixote-of-canceling-student-debt-2021-5

    Like

    • I read it but, yes, and I thought about that. However, I’m not super-familiar with student loans. What was omitted that you noticed?

      That being said I’ve always thought the logic of making student debt un-cancelable seemed odd–why should we allow people to easily cancel out discretionary and often over-indulgent credit card spending but not student debt? Why wouldn’t you prevent the canceling of, say, student debt in excess of tuition? If Taibbi’s article talked about how they were working to cancel the debt over-and-above the costs of school.

      There’s also an argument for canceling interest on debt rather than principal, IMO. They often seem (to me, at a distance, not knowing the ins-and-outs) to be treated as substantially the same thing when there’s a clear difference in the usury and the original cost. Why should the credit card company also eat the cost of that flat-panel TV? And in the reverse, why should the interest on anything persist through (and perhaps during) bankruptcy?

      But my ignorance on the topic is admittedly vast.

      Like

      • Since most of the debt is now owed to the government, they have an interest in not allowing it to be dischargeable.

        The main thing I noticed is that while Taibbi was talking about cases on the fringe, he never went to the main issue which is non-dischargability of actual Federal student loans that paid for tuition. Those are still pretty much governed by the Brunner decision and the changes in the bankruptcy code from 2005.

        The headline is more false than true:

        “The Trillion-Dollar Lie
        Universities built palaces and financiers made fortunes in part through a lie: that student loans can’t be discharged in bankruptcy.”

        It’s not a lie that student loans can’t typically be discharged. It’s the state of the current case law based on the current bankruptcy code. The examples he gives are of outliers that don’t address the bulk of the debt.

        It’s almost identical to the roll that primary residence mortgages played in the 2008 financial crisis. Those can’t be “crammed down” in bankruptcy either.

        Going after lender for not being registered to do business in the state will work in the limited number of cases where they did that, but doesn’t address the heart of the issue. It’s sort of like the people who thought the MERS screw ups in 2008 would get them out of being foreclosed upon.

        https://www.rollingstone.com/politics/politics-news/an-extremely-long-metaphor-to-explain-mortgage-chaos-181448/

        https://www.rollingstone.com/politics/politics-news/a-victory-for-the-public-on-foreclosures-197739/

        Like

  4. The FBI sure has changed:

    “An FBI agent involved in the Michigan Governor Gretchen Whitmer kidnap and kill case was charged Monday after allegedly assaulting his wife after leaving a swingers’ party.”

    https://thepostmillennial.com/fbi-agent-involved-in-whitmer-kidnap-case-allegedly-attacks-wife-after-swingers-party

    Like

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