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January 15th, 2010

A Few Friday Notes: Looking Back at 2009 as it Bleeds into 2010



Sometimes there are so many good topics out there to write about that we just don’t have time to cover them all in depth. In the same vein as our weekly recap, I wanted to touch on several interesting topics that have been both relevant and interesting this week.

J.P. Morgan Earns More than Expected in Fourth Quarter of ‘09: Hey, at least they’ll have money to pay the new “financial crisis responsibility fee.” J.P. Chief Executive Jamie Dimon’s not-so-optimistic comments note some of their struggles that lay ahead:

“While we are seeing some stability in delinquencies, consumer-credit costs remain high, and weak employment and home prices persist. Accordingly, we remain cautious,” Chief Executive Jamie Dimon said in a statement.

As banks are clawing their way back to profitability, you  can be sure that any of their added costs — most notably the “financial crisis responsibility fee” — will find their way to consumers’ pockets. Dimon himself said “all businesses tend to pass their costs on to their customers.”

Will HAFA Fall Short Like HAMP? The Treasury’s latest weapon to battle the housing crisis is the Home Affordable Foreclosure Alternatives (HAFA) program. HAFA, an alternative to HAMP which focuses on short sales, “misses the mark, but has potential,” writes Gary Acosta of HousingWire.com:

If we want the program to succeed and short sales to become an effective option, HAFA must offer competitive incentives and lighter penalties. This starts with getting inside the minds of homeowners who have already done the math and concluded that the metrics associated with foreclosure work in their favor over the short term.

Who can blame them? The short sales relocation benefit doesn’t stack up to the “cash for keys” incentive and the savings afforded from living months in default and rent (mortgage) free. What else do these distressed homeowners have to lose? The industry hasn’t differentiated the credit impact and penalties between a short sale and foreclosure. Homeowners have no real motivation to be proactive.

Housing Socked With Some Ugly Numbers in 2009: It was a record-setting year in 2009 — not the good kind. Foreclosures peaked last year as 2.8 million U.S. properties were hit with a foreclosure filing. The national average saw 1 in 45 properties receive a foreclosure filing, and it grew as bad as 1 in 10 in Nevada. Towards the end of 2009, distressed properties made up about one-third of home sales.

Will foreclosures get any better in 2010? According to our friend Ben Barber at GetMortgageWise, massive foreclosure filings have been concentrated to far fewer states in 2009 than 2008, and the prospect of a great deal is luring many potential buyers (emphasis added):

As reported by RealtyTrac.com, more than half of all foreclosure-related activity in 2009 came from just 4 states:

  1. California
  2. Florida
  3. Arizona
  4. Illinois

More than 1.4 million filings made in 2009 are attributed to the above states. Furthermore, each ranks in the Top 10 for 2009 Foreclosures Per Capita.

Versus 2008, foreclosures are up 21 percent nationwide and that’s a big number, but a deeper look at RealtyTrac’s annual reports reveals a more positive undertone on the housing market.

  1. 40 states fell below the national Foreclosures Per Capita average in 2009
  2. Foreclosure activity fell on an annual basis in 10 states as compared to 2008

Readers: How will 2010 shape up in your opinion? Keep an eye out as we’re likely to dig deeper into some of these topics next week.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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