1. Survey: Americans Want Mortgage Subsidies

    Posted by Michael • September 1, 2010 @ 8:40 am
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    Fun new survey data out from Rasmussen, regarding Americans and how they currently feel about government participation in the mortgage market:

    Rasmussen: Mortgage Survey

    See the glaring disconnect in the first two items? If fifty-six percent of Americans think the government should stay “altogether” out of the mortgage market, but seventy-nine percent want the mortgage-interest deduction to continue, then an awful lot of people have an awfully shallow view of what “government participation” means.

    If you don’t think that the mortgage-interest deduction amounts to a subsidy for homeowners, and therefore, is the very essence of “government participation” in the market, then you’re nuts. Take away that deduction, and see what happens to home prices. Mortgage qualification standards are based upon that federal tax deduction being there, effectively “helping” people make their house payments. If the deduction were to go away, qualification standards would necessarily tighten. Joe and Jane Sixpack wouldn’t be able to qualify for as high a mortgage payment as they could previously, as more of their gross income would now be going to taxes. Thus, over time, home prices would decline.

    For this survey to mean much, someone really ought to define “altogether.” Because to me, that’d mean the dissolution of Fannie, Freddie, and the FHA, as well as the removal of the mortgage-interest tax deduction. But that wasn’t what the Rasmussen respondents inferred, or were told. Obviously.

    What an idea, huh? Get rid of Fannie, Freddie, the FHA — who between them control 90 percent of the mortgage market these days — and the sacrosanct mortgage-interest deduction. You want to talk about a full-on house price collapse? That’d do it!

    Filed In: Homeownership, Mortgages, Statistics

    Permalink: Survey: Americans Want Mortgage Subsidies

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  2. FedReserve: Credit Conditions Reports

    Posted by Michael • August 29, 2010 @ 11:47 am
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    The stats junkies out there will undoubtedly want to take a look at this new website, courtesy of the Federal Reserve:

    New York Fed: U.S. Credit Conditions and Quarterly Report

    Look for the New York Fed to update its nifty Report on Household Debt and Credit every quarter. As of this writing, the first (and latest) report is for 2010 Quarter 2.

    Lots of charts there (viewable as JPEG or PDF) for the economics dorks among us!

    Filed In: Banking, Statistics

    Permalink: FedReserve: Credit Conditions Reports

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  3. Home (Free) on the Range

    Posted by Michael • August 27, 2010 @ 8:34 am
    3 Comments

    You want stimulus? Well, how ’bout the chance to go almost 15 months without a house payment?

    Thanks to cottony-soft (and FedGov encouraged) accounting standards, banks are loathe to foreclose on underwater properties. As a bank, realizing five- and six-digit losses is no fun. It tends to leave ouchies on your balance sheet, and more importantly, has a negative effect on management bonuses.

    Cause, meet effect:

    Defaulted borrowers were spending an average of 469 days in their home after ceasing to make payments as of July 31, so the financial attraction of strategic defaults increases.

    Four hundred days with no house payment? A fellow could save up quite a stash in his piggy bank, going that long without sending a check to the mortgage company.

    In any case, that tantalizing little snippet comes from an article at AmericanBanker.com.

    And speaking of homeowner savings, just imagine all the dutiful home care and maintenance being performed by all these “living free for now” borrowers — borrowers who know that one day the bank will be coming to throw their La-Z-Boy on the lawn and Master Lock all the doors. The question isn’t if, but when.

    Oh, I’m sure that leaky roof will get fixed. Any day now.

    Yes, indeed. Delaying foreclosures (most econ-types refer to it as “extend and pretend”) with schemes like relaxed accounting standards and FedGov-initiated can-kickings (HAMP much?) should work out just fine.

    Filed In: Homeownership, In the News, Mortgages, Statistics

    Permalink: Home (Free) on the Range

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  4. DTIs of HAMP Modification Recipients

    Posted by Michael • August 23, 2010 @ 8:18 am
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    Because I have become very much a financial hardass in my old age, I’ve been against FedGov’s HAMP program from Day One. (To show that I am an Equal Opportunity Hardass, I am virulently against taxpayer funds going to banks or other corporate entities, as well.)

    Still, I keep up with HAMP results (or lack thereof) because train wrecks this large are just hard to ignore. And also because watching FedGov throw piles of good money after bad is better entertainment than most primetime TV (which isn’t saying much).

    So here we go with the July batch of HAMP results:

    Financialstability.gov: HAMP Servicer Report — July 2010

    In particular, I’d like to call reader attention to a chart on page three:

    Aside from the inherent irony in finding numbers like this at a site called “financialstability.gov,” and ignoring the brazen injustice done by allowing any U.S. dot-gov entity to even use said domain, you have to be amazed — really amazed — at the financial condition of HAMPsters at large.

    With Numbers This Bad…

    What we see here is that for folks who’ve had their mortgages modified via HAMP, the median debt-to-income (DTI) ratios are downright scary.

    Think about this: The median back-end DTI for successful HAMP applicants, before their mortgages were modified, was almost 80 percent.

    After mod, the median back-end DTI is still almost 64 percent.

    So, at the median, having 64 percent of their pre-tax income going to debt payments is an improvement.

    And since part of HAMP qualification is supposed to focus on whether or not the borrower actually has a shot at staying in the house, presumably making payments to the bank from now until pigs fly, then you have to wonder just how bad the non-approved applicants’ DTIs are. (Almost half of the people who’ve applied to HAMP have been bounced from the program, for various reasons.)

    If having a 60+ percent back-end DTI after a modification is seen as “affordable,” then I probably don’t want to what “unaffordable” is.

    Yeah. Mortgage modifications or not, these are still defaults looking for a place to happen.

    Get Ya Some

    I’d step up to the trough and request a modification for myself — hey, who doesn’t want a “more affordable” mortgage PLUS the opportunity to stick somebody else with the bill? — but somehow I doubt that my front- and back-end DTIs of roughly ten percent would allow me to qualify for any sweet HAMP action. (Since I have no non-mortgage debt, both of my DTIs are equal.)

    Darn the bad luck, anyway. Savers and responsible folk? Shut out from reaping taxpayer largesse once again.

    Instead, we just get to pay for it.

    Filed In: Debt, Homeownership, In the News, Statistics

    Permalink: DTIs of HAMP Modification Recipients

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  5. Student Loan Default Rates

    Posted by Michael • July 21, 2010 @ 8:40 am
    1 Comment

    Those of you with an interest in default rates — student loan default rates, in particular — will want to set aside a few minutes to read the following:

    Chronicle Of Higher Ed: Student-Loan Default Rates: Understated

    Of course findings such as the following will come as a complete and utter shock to everyone (not!):

    According to unpublished data obtained by The Chronicle, one in every five government loans that entered repayment in 1995 has gone into default. The default rate is higher for loans made to students from two-year colleges, and higher still, reaching 40 percent, for those who attended for-profit institutions.

    One in every five loans that entered repayment in 1995 are in default? Yikes. That is nasty. As in, subprime nasty. This is worth mentioning because, according to the fine folks at S&P in July, 2009 …

    S&P now projects defaults on subprime loans issued in 2005, 2006 and 2007 at 11 percent, 30 percent and 49 percent, respectively.

    So the folks issuing student loans to pretty much anybody with a pulse still have some work to do to reach those vaunted levels we associate with subprime default rates. Keep at it, guys! You’re making progress!

    Back to the Chronicle piece:

    But it’s the high rates of default at for-profit institutions that are likely to get the most attention from members of Congress, who have recently raised concerns about the cost and quality of for-profit higher education. Fifteen years into repayment, two out of every five loans made to students who attended two-year for-profit colleges are in default.

    Boy — this would be really troubling to hear if we didn’t recognize that student loans are undoubtedly “good debt” meant only to help you reach your dreams!

    Filed In: Statistics, Student Loans

    Permalink: Student Loan Default Rates

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  6. $100k Workers: Paycheck to Paycheck

    Posted by Michael • July 16, 2010 @ 8:20 am
    6 Comments

    Well, for a minute there, I was almost felt a tinge of sympathy.

    Almost.

    CNBC: More Upper Incomers Living Paycheck to Paycheck

    The centerpiece finding of the above article, I’d say, is this juicy tidbit:

    Thirty percent of workers with salaries of $100,000 or more said they are living paycheck to paycheck, up from 21 percent last year, according to the survey of 4,400 workers nationwide.

    Overall, 61 percent said they always or usually live paycheck to paycheck, up from 49 percent in 2008 and 43 percent in 2007.

    I mean, those $100k salaries don’t go as far as they used to. Thankfully, we can be sure that the reason these folks are feeling stretched money-thin is that they’re cramming as much cash as they can into retirement savings, which can leave them FEELING as if they’re living paycheck-to-paycheck.

    Thirty-six percent said they don’t contribute anything to retirement savings, like a 401(k) or a IRA.

    As for short-term savings, 33 percent of those surveyed reported that they don’t put any money aside each month, up from 25 percent in 2008.

    Okay. Forget I said that.

    We’re screwed.

    Filed In: Saving, Spending, Statistics

    Permalink: $100k Workers: Paycheck to Paycheck

    6 Comments


     

     

  7. More Savings Data

    Posted by Michael • May 26, 2010 @ 8:10 am
    8 Comments

    In a bit of survey data that goes hand-in-hand with my “Who Is Saving?” post from a few weeks ago, the Employee Benefit Research Institute earlier this year released its 2010 version of the Retirement Confidence Survey:

    EBRI: 2010 Retirement Confidence Survey

    Among its more-distressing findings:

    • 27% of workers report having $1,000 or less in savings
    • 54% of workers report a total household value of savings and investments (excl. primary home and any defined-benefit plans) to be less than $25,000

    There’s a nice summary of the survey findings in the March 2010 EBRI Issue Brief (pdf).

    Filed In: Saving, Statistics

    Permalink: More Savings Data

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  8. New Study: Who Is Saving?

    Posted by Michael • May 14, 2010 @ 1:10 pm
    4 Comments

    I’m not sure why, but I really love it when I discover new studies on savings and debt.

    (Pretty sick, I know.)

    Somehow I missed this one — entitled “Who Is Saving?” — which showed up on the Consumer Federation of America’s website back in February:

    CFA: Who Is Saving? (pdf)

    Using data from the 2007 Survey of Consumer Finances, Catherine Montalto gives us a glimpse into who’s saving, and how much they’re putting aside for emergencies.

    I find it interesting (okay, more like terrifying, though certainly NOT shocking) that for families in my income range ($59,600-$98,199), only 32 percent actually save for emergencies. And of the ones who DO have savings or money-market accounts, the median value is only $5,000.

    It’s even worse for families in my age group: Of those who have savings accounts, the median balance is just $3,900.

    Yeesh. I gotta tell ya: Reading this makes me feel pretty good about my $15k of liquid savings that we recently completed.

    Be sure to check out the PDF above, and see where you stack up!

    Filed In: Saving, Statistics

    Permalink: New Study: Who Is Saving?

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