Implode-Explode Heavy Industries news feed Tracking the many faces of the global credit implosion. en-us iehi-feed-61751 Thu, 23 Feb 2017 00:27:07 GMT Prudential May Charge Wells Fargo as Fake-Account Fallout Spreads to Other Business Lines Prudential "has provided notice to Wells Fargo that it may seek indemnification," the Newark, New Jersey-based insurer said in a Feb. 17 regulatory filing, referring to their agreement to sell MyTerm life coverage to Wells Fargo customers. Prudential didn't quantify the sum that it might pursue.

Wells Fargo's sales practices are being scrutinized on multiple fronts after authorities fined the bank $185 million in September for signing customers up for bank accounts and credit cards without permission. On Wednesday, ProPublica said the firm placed the head of a mortgage-lending unit in Los Angeles, Tom Swanson, on leave while examining allegations some customers were charged to lock in low interest rates when the bank delayed applications.

Prudential suspended MyTerm sales through Wells Fargo in December ... That case, in which the ex-workers say they were fired for blowing the whistle on misconduct, is one of several Prudential headaches from the Wells Fargo relationship. The insurer is also facing a suit from a customer seeking class-action status. And regulators from New Jersey and California have announced probes.


ProPublica raised the separate concern about Wells Fargo's mortgage practices last month. Some branches in Los Angeles and Oregon broke with the company's policy of eating fees to lock in low interest rates when it was at fault for delays in mortgage applications, the publication said in its report on Wednesday, citing current and former employees. Swanson didn't respond to a message seeking comment.

Wells Fargo is conducting an internal review to ensure it handled rate-lock extensions consistently and with "customers' best interests in mind," company spokesman Tom Goyda said, declining to comment on Swanson. "While that process has not been completed and we can't discuss the results, we want this review to be comprehensive." The firm may take additional steps and "make things right for customers" as warranted, he said.

iehi-feed-61750 Thu, 23 Feb 2017 00:21:46 GMT U.S. home sales hit 10-year high, prices soar on low inventory U.S. home resales surged to a 10-year high in January as buyers shrugged off higher prices and mortgage rates, signaling rising confidence in the economy and bolstering expectations of a pickup in growth in the first quarter.


Though the nation's housing inventory increased from December, it remained near a record low. As a result, the median house price vaulted 7.1 percent from a year ago to $228,900 in January. That was the biggest increase since January 2016.

Demand for housing is being underpinned by a strengthening labor market, which is improving employment opportunities for young adults and, in turn, boosting household formation... But a persistent shortage of properties available for sale, which is lifting house prices, remains an obstacle to a robust housing market. That is likely to put pressure on homebuilders to ramp up construction.

Last month, the number of homes on the market rose 2.4 percent to 1.69 million units, still remaining close to an all-time low of 1.65 million units in December. Housing inventory was down 7.1 percent from a year ago. It has declined for 20 straight months on a year-on-year basis.

Economists say homebuilders are struggling to plug the inventory gap because of difficulties securing funding as well as shortages of land and labor. The NAR estimates housing starts and completions should be in a range of 1.5 million to 1.6 million units to alleviate the chronic shortage.

iehi-feed-61746 Wed, 22 Feb 2017 15:24:17 GMT Deutsche Bank Says Next Big Short Is on CMBS as Malls Suffer iehi-feed-61744 Wed, 22 Feb 2017 15:03:42 GMT Banks Retreat From Apartment Market Swelling supplies of apartment units are prompting big banks to pull back from new projects, forcing developers to scramble for capital, in a sign that the U.S. apartment industry headed for a downturn.

The apartment sector, which contributes some $284 billion to the economy annually, has been a winning bet for investors since the housing crash, as the economy recovered and more renters sought out units. Since 2010, average U.S. apartment rents have increased by 26%, according to data tracker MPF Research, a division of RealPage.

But fresh supply is beginning to overwhelm demand. More than 378,000 new apartments are expected to be completed in 2017, a 30-year high, according to real estate researcher Axiometrics Inc. In the fourth quarter of last year, 88,000 units were completed but only 50,000 of those were rented by tenants, according to MPF.

"Our business has radically changed," said Toby Bozzuto, president and chief executive of the Bozzuto Group, which owns or manages 59,000 apartments in cities across the U.S. "I haven't seen anything this seismically different since 2008, when credit dried up."

iehi-feed-61743 Wed, 22 Feb 2017 14:56:33 GMT Why Toronto (and Other Cities) Inflate Housing Bubbles to the Bitter End ``Home prices in Greater Toronto have become "dangerously detached" from economic fundamentals and are soaring simply on the belief that they will continue to soar, he wrote. "The market is far too hot for comfort."...

... Toronto is just an a example. There are many jurisdictions in the US that face similar budget problems, and the only thing that keeps them from falling deeper into a financial and fiscal sinkhole is the rich tax revenue that the local property bubble extracts from the economy. Homeowners and investors might grumble, but they usually put up with it, mollified by soaring property prices. So this system works until suddenly, it doesn't.

iehi-feed-61740 Tue, 21 Feb 2017 15:16:00 GMT Home Depot is Flying High Again The home improvement chain has benefited from a stronger economy and rising home values, which have encouraged shoppers to invest in their homes. Even as the company faced tough comparisons from the prior-year period, analysts expected it to perform better than the broader retail space due to this ongoing shift in consumer spending.

Indeed, the company's fourth-quarter comparable sales growth represented an acceleration from the prior quarter, even as it was up against a 7.1 percent increase from a year earlier. During fourth quarter 2015, the unseasonably warm weather allowed contractors and homeowners to continue working on outdoor projects through the winter.

iehi-feed-61724 Sun, 19 Feb 2017 18:59:15 GMT Expert: Australia headed for ‘economic armageddon' iehi-feed-61712 Fri, 17 Feb 2017 15:48:29 GMT Freddie Mac's Tough Spot: Turn Down a Loan to Trump's In-Laws? Kushner Cos. has apartment buildings from New Jersey to Maryland with more than $500 million in government-backed mortgages financed by Fannie Mae and Freddie Mac. That could put officials at those agencies in an awkward spot: If Kushner Cos. applies for a new loan, or wants to refinance, would Freddie turn them down? If Kushner Cos. fails to comply with the terms of a loan, will Fannie seek to foreclose on a property owned by the president's in-laws?


The FHFA is run by Mel Watt, appointed by former President Barack Obama. Watt's term ends in 2019, at which point Trump will pick a successor, though it's possible the president could try to remove Watt from office before then. FHFA spokesman Peter Garuccio declined to comment on potential conflicts, as did spokesmen for Fannie and Freddie.


Before loans are issued for large or unusual deals, representatives of Fannie set interest rates and review borrowers' applications that are submitted to the lenders. They don't do that for smaller, routine loans.

Freddie, however, examines all applications submitted to the lender, including scrutinizing the appraisal and applicant's history of payments on other loans. Depending on the review, Freddie representatives could adjust the interest rate quoted by the lender.

If Kushner Cos. fails to make Fannie-backed loan payments on time or violate other terms, Fannie employees would determine whether to foreclose. Fannie backs about $142.3 million of the outstanding loans.

iehi-feed-61709 Thu, 16 Feb 2017 20:49:44 GMT Explaining Foreclosure To Your Kids iehi-feed-61684 Mon, 13 Feb 2017 21:26:37 GMT Senate expected to confirm Mnuchin for Treasury secretary -- then he'll have a lot of work to do Once confirmed, he would face a packed agenda. A wealthy hedge fund manager and Hollywood movie producer, Mnuchin would be a key administration player on boosting economic growth. He would take office with some key looming deadlines, including a need to increase the debt limit next month and to decide by April 15 whether to label China a currency manipulator and possibly trigger a trade war.

"Under any objective standard, Mr. Mnuchin has ample experience, credentials and qualifications for this important position," Sen. Orrin Hatch (R-Utah) said Monday, decrying what he called "continual and pointless delays" of his confirmation by Democrats.


By March 17, Mnuchin would need to persuade Congress to increase the nation's debt limit. If he can't, he would have to start using a series of so-called extraordinary measures to extend the deadline for several weeks to avoid a U.S. default on its debt.


On the same day, he'd be scheduled to begin two days of meetings in Germany with finance ministers of the world's advanced economies at a G20 summit, amid a rocky start for Trump on international relations.

By April 15, Mnuchin would face a statutory deadline to inform Congress if the Treasury Department will label China a currency manipulator.

Trump promised during his campaign to direct his Treasury secretary to take that step, which would trigger negotiations to resolve the matter. If those talks fail, the U.S. could levy sanctions that might lead to a trade war.

Keeping currency exchange rates artificially low makes a country's products cheaper to buy abroad, boosting exports. China has faced allegations of manipulations in the past, but since 2014, financial markets have been pushing down the value of its currency and China has been trying to intervene to keep the value up.


And by the first week of June, Mnuchin would have to report to the White House about changes needed to financial regulations under an executive order Trump signed Feb. 3. The order directed the Treasury secretary to consult with regulators and review the Dodd-Frank Wall Street Reform and Consumer Protection Act, which Trump has pledged to dismantle.

iehi-feed-61676 Sun, 12 Feb 2017 23:44:45 GMT Why Falling Home Prices Could Be a Good Thing Suppose there were a way to pump up the economy, reduce inequality and put an end to destructive housing bubbles like the one that contributed to the Great Recession. The idea would be simple, but not easy, requiring a wholesale reframing of the United States economy and housing market.

The solution: Americans, together and all at once, would have to stop thinking about their homes as an investment.


People might expect home prices to go down instead of up. Homebuilders would probably spend more time talking about technology and design than financing options. Politicians might start talking about their plans to lower home prices further, as they often do with fuel prices.

In this thought experiment, housing prices would probably adjust. They would be somewhat cheaper in most places, where population is growing slowly. But they would be profoundly cheaper in places like super-expensive San Francisco.

That was the conclusion of a recent paper by the economists Ed Glaeser of Harvard and Joe Gyourko at the Wharton School of the University of Pennsylvania. The paper uses construction industry data to determine how much a house should cost to build if land-use regulation were drastically cut back. Since the cost of erecting a home varies little from state to state -- land is the main variable in housing costs -- their measure is the closest thing we have to a national home price.

According to them, a standard American home should cost around $200,000, a figure that includes the cost of construction, what land would cost in a lightly regulated market, and a modest profit for developers. In many places, that's what the prices roughly are. But for a few metropolitan areas like San Francisco and Boston, homes are wildly overpriced, leading to distortions in the economy and labor market.

... prices would still vary from place to place, based on demand and geography. It's easier to build in Phoenix (plenty of flat land), and harder in San Francisco (lots of hills and nearby water). But while building in the San Francisco metro area is more expensive than in other places, it's not that expensive. By the paper's calculations, a home in the San Francisco area should cost around $281,000.

The actual price for a standard home in the area is more like $800,000 (using 2013 data). The paper argues that most of that difference is caused by regulatory hurdles like design and environmental reviews that can add years to a project's timeline and suppress the overall housing supply. The result is overpayment on a grand scale for the few homes that do get built.

People are sure to quibble with the economists' calculations, but their general conclusion -- that an abundance of new homes would result in lower prices -- is not remotely controversial

Good article -- but not great (the reason being that the monetary-malfunction root of housing bubbles isn't discussed at all). Regardless, we've been making of the points in here for years; it's just interesting to see this sort of "anti-homeownership society" notion move more and more into the public consciousness.

iehi-feed-61646 Sun, 05 Feb 2017 21:55:39 GMT House flipping is back, with all its opportunities and risks More than 6 percent of home sales last year were "flips", according to a new report from Trulia. The real estate data website defines a flip as the selling of a home at least twice within a year.

That's the highest number in a decade, before the real estate bubble burst and the financial crisis of 2008. So could the housing market flip out again?


Other flipping hot spots [besides Las Vegas] include three Florida cities, three Tennessee cities, plus Atlanta, GA. On the west coast, Fresno, CA and Tacoma, WA also made the top 10.

McLaughlin tells CNBC most of the flipping activity is among luxury properties, or "upper tier, this premium tier as we call it."

iehi-feed-61642 Sun, 05 Feb 2017 15:29:32 GMT Theresa May abandons "homeownership democracy"; to offer more security for renters A major shift in Tory housing policy in favour of people who rent will be announced by ministers this week as Theresa May's government admits that home ownership is now out of reach for millions of families.

In a departure from her predecessor David Cameron, who focused on advancing Margaret Thatcher's ambition for a "home-owning democracy", a white paper will aim to deliver more affordable and secure rental deals, and threaten tougher action against rogue landlords, for the millions of families unable to buy because of sky-high property prices. Ministers will say they want to change planning and other rules to ensure developers provide a proportion of new homes for "affordable rent" instead of just insisting that they provide a quota of "affordable homes for sale".


The proportion of people living in private rented accommodation has doubled since 2000 and ministers will accept that housing costs "are hurting ordinary, working people the most". The average couple in the private rented sector now hands over roughly half their salary to their landlord each month and 2.2 million working households with below-average incomes spend more than a third of their incomes on housing.

iehi-feed-61637 Sat, 04 Feb 2017 03:43:12 GMT Treasury Secretary Nominee Steve Mnuchin Faces Heat In Attack Ad iehi-feed-61621 Thu, 02 Feb 2017 20:13:00 GMT Is President Trump Giving Bernie Madoff A Full Pardon? iehi-feed-61618 Thu, 02 Feb 2017 17:36:52 GMT GOP-Led U.S. Senate Confirms Unqualified Ben Carson As Secretary Of HUD iehi-feed-61589 Sun, 29 Jan 2017 01:06:47 GMT Tell the Senate: Oppose "foreclosure king" Steve Mnuchin iehi-feed-61579 Fri, 27 Jan 2017 21:49:23 GMT What Trump Treasury Secretary Nominee Steve Mnuchin Isn't Saying iehi-feed-61578 Fri, 27 Jan 2017 18:47:50 GMT Ex-Quicken Loans Executive Stabs Wife To Death iehi-feed-61571 Thu, 26 Jan 2017 23:01:08 GMT Uh-oh! Americans Are Flipping Houses Like It's 2006