Fannie Mae and Freddie Mac underwater refinances up for first time since February

Fannie Mae and Freddie Mac allowed more than 28,000 underwater mortgages refinancings through a government program in June, up roughly 12% from the previous month and the first increase since February.

The Home Affordable Refinancing Program launched in March 2009 to allow current borrowers who owe up to 25% more on their mortgage than the home is worth refinance into lower monthly payments. So far, roughly 838,400 Fannie and Freddie loans received a refinance, according to data released by the Federal Housing Finance Agency Thursday.

The June total is the first increase since February, when HARP refis increased from 41,000 to 47,000. Totals declined every month since. In June, 23,000 of the HARP recipients held a loan-to-value ratio between 80% and 105%. More than 5,000 held an LTV between 105% and 125%.

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Walk away from your mortgage? Time to get 'ruthless'

Here's another article on strategic default.  It's the second one today.

No way, say an increasing number of underwater homeowners who are voluntarily choosing to "walk away" from their home loans, a practice known as "strategic default."

Jon Maddux, CEO of YouWalkAway.com, reports 10% more clients this year to his company, which advises people how best to handle the walk away process.

Charles Gallagher, a real estate attorney in St. Petersburg, Fla., has also seen an uptick.

And a recent survey by home finance company Fannie Mae found that while only about 27% of homeowners would even consider walking away, that's up from 15% last year.

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Home clearance sale coming from 'desperate' sellers

I'm not surprise some owners have to sell due to divorces, deaths, or job transfers.  You could also put that some people need cash and want to sell before their equity drops further.

Accelerating price drops: Home prices have already reached their lowest level since the housing bubble burst, and are now at 2002 levels. Sellers will feel the pressure to make deals before their homes lose even more value.

Bloated inventory: There are boatloads of homes on the market, more than eight months worth at the current rate of sales. Many are distressed properties -- short sales and bank repossessions. Such homes are selling at discounts up to 50%.

Tight credit: Some homebuyers still can't obtain mortgages, limiting demand.

Unemployment: While the job picture has brightened, unemployment is still around 9%. People without jobs don't buy homes, obviously, but high unemployment also rattles working people. Lacking the confidence that their jobs are secure, they may not look to buy.

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Missed payments on mortgages jump to 6.4 million in April

 "It's not over, until it's over" 

I think you'll see more people walk away from their mortgages.

Mortgages 30 or more days delinquent or in foreclosure totaled 6.38 million in April, a 2.3% increase from the previous month, according to Lender Processing Services 

The LPS "first look" monthly mortgage performance report showed a sudden increase in troubled loans in April after an 11% monthly drop in March. However, delinquencies are still 16.3% below levels seen one year ago. Overall, 7.97% of all loans in the LPS database are 30 or more days delinquent.

Of the 6.38 million properties in 30-day delinquency or worse, 4.2 million are not in foreclosure. There are also 1.9 million loans 90 days or more delinquent but not in foreclosure.

How may of the 6.38 are really going to be cured?  This is a huge shadow inventory.

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High Oil Prices Complicate Housing Recovery

Most economists think the rise in fuel costs will deter output growth rather than boost inflation. That is because higher energy costs leave less money available to spend on other goods. Given the slack in labor markets and capacity, higher fuel costs won’t translate much into higher wages or prices that would push up core inflation.

The oil-related drag on output, however, means fewer jobs. And faster job growth was a key support for housing in 2011. Every $10 rise in oil prices, if sustained, subtracts a one-half percentage point from gross domestic product growth. Every 1% increase in GDP translates into about one million new jobs. So, if oil prices don’t reverse, the drag on GDP growth could mean 500,000 fewer new jobs created over the course of 2011.

Of course, fewer jobs mean fewer new workers going out on their own. Household formation is the main determinant of housing demand. Curb formation and you curb home sales. That is why the housing outlook looks more precarious than it did just a few weeks ago.

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Hiring Intentions at U.S. Employers Improving, Manpower Says

This is only a drop in the bucket.  We still have lost 8 million jobs during this recession.

Seven of every 10 employers surveyed said they anticipated staff levels will be unchanged in the first quarter, little changed from the same period in 2010.

Fourteen percent said they expect to expand payrolls, up two points from this year’s first quarter, while 10 percent projected a drop, down from 12 percent.

Not ‘Robust Enough’

While consumer demand is improving, it’s currently not strong enough nor does it have “the prospect of being robust enough to open the doors to hiring in a bigger way,” Joerres said.

This is why the housing is going to have a hard time turning around, the economy is weak and not providing the jobs need to spur housing demand.  It's going to be a long recovery, if we don't fall back into recession.

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House fails to extend unemployment benefits

If this the extension doesn't pass, then I would expect to see some downward pressure on rents and consumption data.  

Federal jobless payments, which last up to 73 weeks, kick in after the state-funded 26 weeks of coverage expire. These federal benefits are divided into tiers, and the jobless must apply each time they move into a new tier.

Congress has extended the deadline to file those applications four times in the past year. The last jobless benefits extension -- which lasted six months and cost $34 billion -- faced a lot of opposition on deficit conscious Capitol Hill before it finally passed in mid-July.

The $12.5 billion bill that was on the floor Thursday needed two-thirds approval, or 275 votes, a tough hurdle. The vote was 258 to 154.

Still, the bill was the opening salvo in what's likely to be a highly charged debate on extending the safety net for the nation's millions of unemployed. While the next step is unclear, it's possible the extension will resurface in a larger bill, such as one that would extend the Bush tax cuts.

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Weekly jobless claims up 2,000 to 439,000

 Jobless claims still haven't decreased.

Analysts surveyed by Econoday expected claims to rise to 445,000 with a range of estimates from 430,000 to 457,000. A Briefing.com survey put the number of jobless claims at 440,000, and economists polled by MarketWatch expected 445,000.

The four-week moving average declined by 4,000 to 443,000 claims from a revised average of 447,000, according to the Labor Department data. The seasonally adjusted insured unemployment rate was 3.4%, down slightly from a revised 3.5%.

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The labor picture is slightly improving

The initial jobless claims dropped to a 4 month low.  However, this number must in the in low 300,000's for several years before the overall labor picture improves.  And with a high underemployment rate it puts pressure on housing prices.

The Labor Department said Wednesday that initial claims for jobless aid dropped by 24,000 to a seasonally adjusted 435,000. Many Wall Street economists expected a smaller decrease.

The four-week average of claims, a less volatile measure, fell 10,000 to 446,500. That's the lowest level for the average since the week that ended Sept. 13, 2008, just before the financial crisis intensified that weekend with the collapse of Lehman Brothers.

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Government job cuts ravage California

These jobs are probably just he start and will put pressure on the housing market just like jobs losses in the private sector, since 2007.  With state budget shortfalls, growing pension costs, and now increasing medical costs there will be layoffs.  In addition, the global warming taxes and surcharges start January 1, 2012 which will greatly impact housing costs and rents costs.

What's more, analysts see more job cuts ahead as California faces an estimated $10-billion shortfall in the state budget that the next governor must address. Cities and counties, meanwhile, are still struggling with tepid sales and property tax revenue.

"Local governments are adopting austerity measures," said Jerry Nickelsburg, an economist with the UCLA Anderson Forecast. "They don't have confidence that they're going to get money to do otherwise."

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California unemployment rate stays unchanged at 12.4%

This really hurts the demand for housing, because without jobs or working part-time can't purchase homes.  I'm trying to find the underemployement rate.

California, which has the nation's third-highest jobless rate, lost 63,600 jobs last month, with losses largely from the construction and government sectors. L.A. County's unemployment rate is 12.6%.

Orange County's unemploymenty rate was also unchanged at 9.6%. That area added 4,600 jobs in government and education and health services. The government job gains were related to the beginning of the school year, the EDD said.

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Unemployment: Initial claims still moving sideways

Again for the labor market to start the recovery this figure needs to be in the low 300,000's.

Initial claims for unemployment aid rose by 13,000 to a seasonally adjusted 462,000, the Labor Department said Thursday. It was only the second rise in two months.

A separate report from the Commerce Department showed the trade deficit widened in August by 8.8 percent to $46.3 billion. The gap grew because of a 2.1 jump in imports, driven by demand for foreign-made semiconductors, generators and other types of industrial machinery Exports edged up a slight 0.2 percent

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slowest growth in the number of new households since the second World War

According to IHS, there are two, actually: The fall in immigration and the growing number of young people moving back in with their parents amid a frustratingly tough job market. These factors have contributed to slowest growth in the number of new households since the second World War.

The underlying reason why inventory remains unnervingly high is essentially the same however you see the troubled housing market: Overall economic weakness – in particular, unemployment, which federal officials last week reported was unchanged from August at 9.6%.

Here are some more detailed stats

Admittedly, the trends in immigration and "doubling up" aren't easy to track. Hard data on immigration does not exist, but IHS points out that households headed by those foreign born under the age of 35 dropped by 338,000 in 2009.

What's more, it appears more young people are moving back in with their parents or doubling up with others to save money. The number of households headed by 15 to 24 year-olds fell by 124,000 in 2009 from the previous year, while the number of households with six or more people increased by 355,000 or 8% during the same period. In fact, the number of households headed by all younger age groups – those in the 15 to 24, 25 to 34 and 35 to 44 age brackets -- fell in 2009, while the number in all the older age brackets increased.

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Employers in U.S. Cut More Jobs Than Forecast in September

With out jobs there can't be a recovery or even a normal housing market.

Employers cut staffing by 95,000 workers after a revised 57,000 decrease in August, Labor Department figures in Washington showed today. The median estimate of economists surveyed by Bloomberg News called for a 5,000 drop. The unemployment rate unexpectedly held at 9.6 percent.

Longest Since 1948

The jobless rate has equaled or exceeded 9.5 percent for 14 consecutive months, surpassing the 13-month period from mid 1982 to mid 1983 as the longest span of elevated joblessness since monthly records began in 1948.

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Roubini Sees 40% Chance Of Double-Dip; Volcker Predicts 'Prolonged' Unemployment

I knew about the comments from Roubini, but I didn't know about the comments from Volcker.

"This has not been an ordinary recession," Volcker, who chairs the president's Economic Recovery Advisory Board, said in a Toronto speech Thursday, according to Bloomberg, and he added that it's "very difficult to find a sector in the American economy that has any spark to it."

And today the Gallup Unemployment rate came out today. Some experts are stating that we have until 2014 before this are back to pre-recession norms.

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Gallup Unemployment now 10.1%

What's worse is that the underemployment is now 18.8% and increasing.  This is put pressure on housing prices.

PRINCETON, NJ -- Unemployment, as measured by Gallup without seasonal adjustment, increased to 10.1% in September -- up sharply from 9.3% in August and 8.9% in July. Much of this increase came during the second half of the month -- the unemployment rate was 9.4% in mid-September -- and therefore is unlikely to be picked up in the government's unemployment report on Friday.

And

However, Gallup's monitoring of job market conditions suggests that there was a sharp increase in the unemployment rate during the last couple of weeks of September. It could be that the anticipated slowdown of the overall economy has potential employers even more cautious about hiring. Some of the increase could also be seasonal or temporary.

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Initial claims at 445,000 this week

It was better than expected, but this number needs to be in the 300,000's for unemployment picture to get brighter.  And as long as unemployment is a problem pressure will be on housing prices.  8 million jobs have been lost in this recession.

Instead, Wall Street economists forecast that initial claims for jobless aid rose by 2,000 to 455,000 last week, according to a survey by Thomson Reuters. The Labor Department will issue its weekly report Thursday at 8:30 a.m.

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Economy, jobs expected to remain weak through 2014

High unemployment and poor economic conditions will keep pressure on housing prices for a very long time.

"It's going to take many years before you get back to anything approaching full unemployment, and 2014 is probably too early," said Hatzius, speaking at a conference held at the Newseum in Washington. The conference was sponsored by the left-leaning think tank and advocacy group Demos.

Some on the panel predicted unemployment will tick upward before it heads lower. And Feldstein predicted that housing prices could fall even further, especially as more underwater homeowners give the banks the keys to their homes, increasing the supply of available ones.

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For the Unemployed Over 50, Fears of Never Working Again

This is bad for two reasons. 1) These are usually the higher income earning people who spend money on items that (like homes or remodeling) helps to stimulate the economy 2) These are the people that usually have mortgages and are at risk of default.

Forced early retirement imposes an intense financial strain, particularly for those at lower incomes. The recession and its aftermath have already pushed down some older workers. In figures released last week by the Census Bureau, the poverty rate among those 55 to 64 increased to 9.4 percent in 2009, from 8.6 percent in 2007.

Now this is the scary part.

Older people who lose their jobs take longer to find work. In August, the average time unemployed for those 55 and older was slightly more than 39 weeks, according to the Labor Department, the longest of any age group. That is much worse than in August 1983, also after a deep recession, when someone unemployed in that age group spent an average of 27.5 weeks finding work.

At this year's pace of an average of 82,000 new jobs a month, it will take at least eight more years to create the 8 million positions lost during the recession. And that does not even allow for population growth

With people working longer to retirement and a large population entering the workforce in the next 8 years.  This will reduce the demand for housing and some family unit may consolidate during recession.

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Jobs picture gets worse in 27 states

With unemployment so high the demand for housing will remain low. 

The national unemployment rate may have only ticked up slightly in August, but on a state-by-state basis, the jobs picture continues to look a lot more grim in places like Nevada, Michigan and California.

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