News Alerts, Sept. 5, 2013, Evening Edition, 4 New Articles, Real Estate +, Don’t Miss Them

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  1. Regulators Repeat Exactly What They Did During the Last Housing Boom | The Baseline Scenario

    Which side do you come down on: 1) stricter standards to avoid the boom/bust cycle or 2) more relaxed standards where you’re assuming standards won’t be relaxed too far?James Kwak obviously comes down on the former.

    August 28, 2013. By James Kwak.The Dodd-Frank Act was supposed to require securitizers to retain 5 percent of the credit risk of the mortgage-backed securities that they issued, in order to reduce the risk of a repeat of the last housing bubble. Today, the federal financial regulators said, “Whatever,” and ignored that requirement. In particular, they created an exemption that would have covered at least 98 percent of all mortgages issued last year.

    Why? Because

    “adding additional layers of regulation would have contracted credit for first time home buyers and borrowers without large down payments, and prevented private capital from entering the market.”

    That’s according to the head of the Mortgage Bankers Association.

    This is the exact same argument that was made in favor of deregulation during the two decades prior to the last financial crisis, without the slightest hint of irony.

    Read the source article …

  2. Slowdown in real estate forces builders to cut prices and dole out freebies – Economic Times News Alerts, Sept. 5, 2013, Evening Edition, 4 New Articles, Real Estate +, Don't Miss Them

    Taper talk has done this along with India’s lack of proper preparations.

    By Ravi Teja Sharma. Sep 2, 2013, 06.45AM IST.

    There are signs the bubble will finally burst. …

    Builders are already offering made-to-measure payment plans. …

    The situation is very grim. The industry is in the ICU, and without corrective action it could very well slip into a coma, h says Sunil Rohokale, managing director of Ask group, which manages a PE fund that invests in residential housing projects across the country. The corrective action Rohokale suggests is deep discounts, of around 20% for the mid-segment and 30% in luxury housing, if developers want at least some of the buyers to return.

    Read the source article …

  3. Sober Look: Chart: QE3 is ineffective in growing credit in the US News Alerts, Sept. 5, 2013, Evening Edition, 4 New Articles, Real Estate +, Don't Miss Them

    Sunday, September 1, 2013.

    Based on the data from the Federal Reserve Bank of St. Louis here is a single chart that shows credit growth in the US is continuing to decline while the Fed’s balance sheet is expanding.

    Large commercial banks branched out into other revenue streams (other than creating loans). Their hot money went all over the world. Lots of it has been coming back recently though (because of the Fed’s tapering plans) causing the emerging markets problems with their currencies and current accounts.

    Read the source article …

  4. Wall Street analysts say Larry Summers is scaring the bond market – Quartz News Alerts, Sept. 5, 2013, Evening Edition, 4 New Articles, Real Estate +, Don't Miss Them

    By Matt Phillips. August 19, 2013.

    A slew of well-sourced Washington reporters…now write that former Treasury secretary Larry Summers is sitting in the catbird seat and likely to become president Barack Obama’s pick to run the US Federal Reserve after Ben Bernanke steps down, as he’s expected to do, early in 2014. Meanwhile, in the bond markets, the yields on US Treasurys are touching their highest level since 2011.

    Coincidence? Wall Street bond watchers think not. At BNP Paribas, Julia Coronado, chief economist for North America, noted that US bond markets seem to be assuming that Summers will get the job and may be a bit more aggressive about dialing back quantitative easing, the Fed’s $85-billion-a-month bond-buying program: ….

    …spooky for mortgage rates and a steady recovery.

    Read the source article …