Josh Rosner of Graham, Fisher didn’t predict the collapse of the housing market. He did something more perceptive than that. Back in 2001 (2001!) he identified the changes in the housing market that would lead to the collapse and warned of the possibility. He called his analysis “Housing in the New Millenium: A Home Without Equity is Just A Rental With Debt.” He saw things no one else at the time saw and he understood the implications. You should be able to find his paper here or here. From the summary:
This report assesses the prospects of the U.S. housing/mortgage sector over the next several years. Based on our analysis, we believe there are elements in place for the housing sector to continue to experience growth well above GDP. However, we believe there are risks that can materially distort the growth prospects of the sector. Specifically, it appears that a large portion of the housing sector’s growth in the 1990’s came from the easing of the credit underwriting process. Such easing includes:
• The drastic reduction of minimum down payment levels from 20% to 0%
• A focused effort to target the “low income” borrower
• The reduction in private mortgage insurance requirements on high loan to value mortgages
• The increasing use of software to streamline the origination process and modify/recast delinquent loans in order to keep them classified as ‘current’
• Changes in the appraisal process which has led to widespread over-appraisal/over-valuation problems
If these trends remain in place, it is likely that the home purchase boom of the past decade will continue unabated. Despite the increasingly more difficult economic environment, it may be possible for lenders to further ease credit standards and more fully exploit less penetrated markets. Recently targeted populations that have historically been denied homeownership opportunities have offered the mortgage industry novel hurdles to overcome. Industry participants in combination with eased regulatory standards and the support of the GSEs (Government Sponsored Enterprises) have overcome many of them.
If there is an economic disruption that causes a marked rise in unemployment, the negative impact on the housing market could be quite large. These impacts come in several forms. They include a reduction in the demand for homeownership, a decline in real estate prices and increased foreclosure expenses. These impacts would be exacerbated by the increasing debt burden of the U.S. consumer and the reduction of home equity available in the home.
Although we have yet to see any materially negative consequences of the relaxation of credit standards, we believe the risk of credit relaxation and leverage can’t be ignored. Importantly, a relatively new method of loan forgiveness can temporarily alter the perception of credit health in the housing sector. In an effort to keep homeowners in the home and reduce foreclosure expenses, holders of mortgage assets are currently recasting or modifying troubled loans. Such policy initiatives may for a time distort the relevancy of delinquency and foreclosure statistics. However, a protracted housing slowdown could eventually cause modifications to become uneconomic and, thus, credit quality statistics would likely become relevant once again. The virtuous circle of increasing homeownership due to greater leverage has the potential to become a vicious cycle of lower home prices due to an accelerating rate of foreclosures.
Rosner recently wrote an analysis of the state of the securitization market. It is superb. He argues that it is crucial to re-establish the securitization market. I disagree. But that doesn’t matter. What does matter is his superb analysis of the Dodd-Frank bill. First, he appears to have read it. Second, he shows how much the legislation relies on government agencies implementing the goals of the legislation. Third, he understands that that is not ideal. Fourth, he shows how even if the legislation is implemented according to its intentions, there are still lots of problems. It’s the best analysis I have read of the current state of the market and the likely impact of the financial reform legislation. A must read.
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Last night, at the Iraq Afghanistan Veterans Association gala in honor of David Gelbaum and Wes Moore, I was overwhelmed by the seemingly contradictory nature of American culture's relationship with its armed forces. Veterans organizations going all the way back to the American Legion after World War I -- and not just in the U.S. but in most other industrial societies as well -- have typically advocated for conservative politics, militarily assertive foreign policy, and economic policies based on rugged individualism. So the stereotype that the military equals right wing and peacenik equals left wing has some reality. President Clinton famously didn't click with the Pentagon, there's a strong correlation between military-base locations and conservative politics, and liberals were the first to voice opposition to the Vietnam and Iraq wars.
But there's also the reality that, internally, the values of a military unit are strongly communitarian ("I've got your back" is an army phrase after all), and the military is probably our nation's most unequivocally meritocratic institution. The wars that our country has fought during my lifetime have not been fed by overly ambitious generals but, rather, by overly reckless or, in some cases, timid politicians.
Last night at the IAVA dinner, the screen behind the podium showed statistics that the nation should be ashamed of: How much higher the mortgage-foreclosure rate is in military communities, how many veterans are unemployed, and what the suicide rate is among returned Iraq and Afghanistan vets. But these issues are the classic concerns of progressives -- and things that the reactionary right tries to keep out of the national conversation. And New York Mayor Michael Bloomberg told a story last night about a conversation he had with a veteran who understood why it was important that the mayor speak out for the rights of Muslim Americans to pray -- even in lower Manhattan.
As a longtime environmentalist, I still find it startling that the American military is the most important institution -- one with broad credibility and acceptance in all segments of American society -- that clearly understands the urgency of action on climate and clean energy.
I hoped that I would have sorted all this out after a night's sleep. I haven't. But I think that grappling with and gaining a deeper understanding of these apparent contradictions is very important work. Until we get beyond the half-true stereotypes that we rely on most of the time, I suspect we won't be able to reunite America.
eric seiger
Obama 2012 - Doug Schoen - Fox <b>News</b> | Mediaite
Fox News' Democratic analysts have thrown President Obama under the bus: Doug Schoen and Pat Caddell suggested this weekend that the Democratic Party must cut off its head to stand a chance in 2012. Schoen was back on America Live ...
Pulse <b>News</b> Now Free to Download | Android Phone Fans
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
First Solar <b>News</b>, Rumors: CIGS, Mercury, Tellurium : Greentech Media
First the news... Apollo Solar Energy (OTC: ASOE), a vertically integrated miner, refiner and producer of high purity tellurium (Te), announced a five-year purchase contract between Apollo Solar Energy and a major worldwide solar panel ...
eric seiger
Josh Rosner of Graham, Fisher didn’t predict the collapse of the housing market. He did something more perceptive than that. Back in 2001 (2001!) he identified the changes in the housing market that would lead to the collapse and warned of the possibility. He called his analysis “Housing in the New Millenium: A Home Without Equity is Just A Rental With Debt.” He saw things no one else at the time saw and he understood the implications. You should be able to find his paper here or here. From the summary:
This report assesses the prospects of the U.S. housing/mortgage sector over the next several years. Based on our analysis, we believe there are elements in place for the housing sector to continue to experience growth well above GDP. However, we believe there are risks that can materially distort the growth prospects of the sector. Specifically, it appears that a large portion of the housing sector’s growth in the 1990’s came from the easing of the credit underwriting process. Such easing includes:
• The drastic reduction of minimum down payment levels from 20% to 0%
• A focused effort to target the “low income” borrower
• The reduction in private mortgage insurance requirements on high loan to value mortgages
• The increasing use of software to streamline the origination process and modify/recast delinquent loans in order to keep them classified as ‘current’
• Changes in the appraisal process which has led to widespread over-appraisal/over-valuation problems
If these trends remain in place, it is likely that the home purchase boom of the past decade will continue unabated. Despite the increasingly more difficult economic environment, it may be possible for lenders to further ease credit standards and more fully exploit less penetrated markets. Recently targeted populations that have historically been denied homeownership opportunities have offered the mortgage industry novel hurdles to overcome. Industry participants in combination with eased regulatory standards and the support of the GSEs (Government Sponsored Enterprises) have overcome many of them.
If there is an economic disruption that causes a marked rise in unemployment, the negative impact on the housing market could be quite large. These impacts come in several forms. They include a reduction in the demand for homeownership, a decline in real estate prices and increased foreclosure expenses. These impacts would be exacerbated by the increasing debt burden of the U.S. consumer and the reduction of home equity available in the home.
Although we have yet to see any materially negative consequences of the relaxation of credit standards, we believe the risk of credit relaxation and leverage can’t be ignored. Importantly, a relatively new method of loan forgiveness can temporarily alter the perception of credit health in the housing sector. In an effort to keep homeowners in the home and reduce foreclosure expenses, holders of mortgage assets are currently recasting or modifying troubled loans. Such policy initiatives may for a time distort the relevancy of delinquency and foreclosure statistics. However, a protracted housing slowdown could eventually cause modifications to become uneconomic and, thus, credit quality statistics would likely become relevant once again. The virtuous circle of increasing homeownership due to greater leverage has the potential to become a vicious cycle of lower home prices due to an accelerating rate of foreclosures.
Rosner recently wrote an analysis of the state of the securitization market. It is superb. He argues that it is crucial to re-establish the securitization market. I disagree. But that doesn’t matter. What does matter is his superb analysis of the Dodd-Frank bill. First, he appears to have read it. Second, he shows how much the legislation relies on government agencies implementing the goals of the legislation. Third, he understands that that is not ideal. Fourth, he shows how even if the legislation is implemented according to its intentions, there are still lots of problems. It’s the best analysis I have read of the current state of the market and the likely impact of the financial reform legislation. A must read.
View Comments
Share
Print
Email
Last night, at the Iraq Afghanistan Veterans Association gala in honor of David Gelbaum and Wes Moore, I was overwhelmed by the seemingly contradictory nature of American culture's relationship with its armed forces. Veterans organizations going all the way back to the American Legion after World War I -- and not just in the U.S. but in most other industrial societies as well -- have typically advocated for conservative politics, militarily assertive foreign policy, and economic policies based on rugged individualism. So the stereotype that the military equals right wing and peacenik equals left wing has some reality. President Clinton famously didn't click with the Pentagon, there's a strong correlation between military-base locations and conservative politics, and liberals were the first to voice opposition to the Vietnam and Iraq wars.
But there's also the reality that, internally, the values of a military unit are strongly communitarian ("I've got your back" is an army phrase after all), and the military is probably our nation's most unequivocally meritocratic institution. The wars that our country has fought during my lifetime have not been fed by overly ambitious generals but, rather, by overly reckless or, in some cases, timid politicians.
Last night at the IAVA dinner, the screen behind the podium showed statistics that the nation should be ashamed of: How much higher the mortgage-foreclosure rate is in military communities, how many veterans are unemployed, and what the suicide rate is among returned Iraq and Afghanistan vets. But these issues are the classic concerns of progressives -- and things that the reactionary right tries to keep out of the national conversation. And New York Mayor Michael Bloomberg told a story last night about a conversation he had with a veteran who understood why it was important that the mayor speak out for the rights of Muslim Americans to pray -- even in lower Manhattan.
As a longtime environmentalist, I still find it startling that the American military is the most important institution -- one with broad credibility and acceptance in all segments of American society -- that clearly understands the urgency of action on climate and clean energy.
I hoped that I would have sorted all this out after a night's sleep. I haven't. But I think that grappling with and gaining a deeper understanding of these apparent contradictions is very important work. Until we get beyond the half-true stereotypes that we rely on most of the time, I suspect we won't be able to reunite America.
eric seiger
Obama 2012 - Doug Schoen - Fox <b>News</b> | Mediaite
Fox News' Democratic analysts have thrown President Obama under the bus: Doug Schoen and Pat Caddell suggested this weekend that the Democratic Party must cut off its head to stand a chance in 2012. Schoen was back on America Live ...
Pulse <b>News</b> Now Free to Download | Android Phone Fans
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
First Solar <b>News</b>, Rumors: CIGS, Mercury, Tellurium : Greentech Media
First the news... Apollo Solar Energy (OTC: ASOE), a vertically integrated miner, refiner and producer of high purity tellurium (Te), announced a five-year purchase contract between Apollo Solar Energy and a major worldwide solar panel ...
eric seiger
eric seiger
eric seiger
Obama 2012 - Doug Schoen - Fox <b>News</b> | Mediaite
Fox News' Democratic analysts have thrown President Obama under the bus: Doug Schoen and Pat Caddell suggested this weekend that the Democratic Party must cut off its head to stand a chance in 2012. Schoen was back on America Live ...
Pulse <b>News</b> Now Free to Download | Android Phone Fans
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
First Solar <b>News</b>, Rumors: CIGS, Mercury, Tellurium : Greentech Media
First the news... Apollo Solar Energy (OTC: ASOE), a vertically integrated miner, refiner and producer of high purity tellurium (Te), announced a five-year purchase contract between Apollo Solar Energy and a major worldwide solar panel ...
eric seiger
Josh Rosner of Graham, Fisher didn’t predict the collapse of the housing market. He did something more perceptive than that. Back in 2001 (2001!) he identified the changes in the housing market that would lead to the collapse and warned of the possibility. He called his analysis “Housing in the New Millenium: A Home Without Equity is Just A Rental With Debt.” He saw things no one else at the time saw and he understood the implications. You should be able to find his paper here or here. From the summary:
This report assesses the prospects of the U.S. housing/mortgage sector over the next several years. Based on our analysis, we believe there are elements in place for the housing sector to continue to experience growth well above GDP. However, we believe there are risks that can materially distort the growth prospects of the sector. Specifically, it appears that a large portion of the housing sector’s growth in the 1990’s came from the easing of the credit underwriting process. Such easing includes:
• The drastic reduction of minimum down payment levels from 20% to 0%
• A focused effort to target the “low income” borrower
• The reduction in private mortgage insurance requirements on high loan to value mortgages
• The increasing use of software to streamline the origination process and modify/recast delinquent loans in order to keep them classified as ‘current’
• Changes in the appraisal process which has led to widespread over-appraisal/over-valuation problems
If these trends remain in place, it is likely that the home purchase boom of the past decade will continue unabated. Despite the increasingly more difficult economic environment, it may be possible for lenders to further ease credit standards and more fully exploit less penetrated markets. Recently targeted populations that have historically been denied homeownership opportunities have offered the mortgage industry novel hurdles to overcome. Industry participants in combination with eased regulatory standards and the support of the GSEs (Government Sponsored Enterprises) have overcome many of them.
If there is an economic disruption that causes a marked rise in unemployment, the negative impact on the housing market could be quite large. These impacts come in several forms. They include a reduction in the demand for homeownership, a decline in real estate prices and increased foreclosure expenses. These impacts would be exacerbated by the increasing debt burden of the U.S. consumer and the reduction of home equity available in the home.
Although we have yet to see any materially negative consequences of the relaxation of credit standards, we believe the risk of credit relaxation and leverage can’t be ignored. Importantly, a relatively new method of loan forgiveness can temporarily alter the perception of credit health in the housing sector. In an effort to keep homeowners in the home and reduce foreclosure expenses, holders of mortgage assets are currently recasting or modifying troubled loans. Such policy initiatives may for a time distort the relevancy of delinquency and foreclosure statistics. However, a protracted housing slowdown could eventually cause modifications to become uneconomic and, thus, credit quality statistics would likely become relevant once again. The virtuous circle of increasing homeownership due to greater leverage has the potential to become a vicious cycle of lower home prices due to an accelerating rate of foreclosures.
Rosner recently wrote an analysis of the state of the securitization market. It is superb. He argues that it is crucial to re-establish the securitization market. I disagree. But that doesn’t matter. What does matter is his superb analysis of the Dodd-Frank bill. First, he appears to have read it. Second, he shows how much the legislation relies on government agencies implementing the goals of the legislation. Third, he understands that that is not ideal. Fourth, he shows how even if the legislation is implemented according to its intentions, there are still lots of problems. It’s the best analysis I have read of the current state of the market and the likely impact of the financial reform legislation. A must read.
View Comments
Share
Print
Email
Last night, at the Iraq Afghanistan Veterans Association gala in honor of David Gelbaum and Wes Moore, I was overwhelmed by the seemingly contradictory nature of American culture's relationship with its armed forces. Veterans organizations going all the way back to the American Legion after World War I -- and not just in the U.S. but in most other industrial societies as well -- have typically advocated for conservative politics, militarily assertive foreign policy, and economic policies based on rugged individualism. So the stereotype that the military equals right wing and peacenik equals left wing has some reality. President Clinton famously didn't click with the Pentagon, there's a strong correlation between military-base locations and conservative politics, and liberals were the first to voice opposition to the Vietnam and Iraq wars.
But there's also the reality that, internally, the values of a military unit are strongly communitarian ("I've got your back" is an army phrase after all), and the military is probably our nation's most unequivocally meritocratic institution. The wars that our country has fought during my lifetime have not been fed by overly ambitious generals but, rather, by overly reckless or, in some cases, timid politicians.
Last night at the IAVA dinner, the screen behind the podium showed statistics that the nation should be ashamed of: How much higher the mortgage-foreclosure rate is in military communities, how many veterans are unemployed, and what the suicide rate is among returned Iraq and Afghanistan vets. But these issues are the classic concerns of progressives -- and things that the reactionary right tries to keep out of the national conversation. And New York Mayor Michael Bloomberg told a story last night about a conversation he had with a veteran who understood why it was important that the mayor speak out for the rights of Muslim Americans to pray -- even in lower Manhattan.
As a longtime environmentalist, I still find it startling that the American military is the most important institution -- one with broad credibility and acceptance in all segments of American society -- that clearly understands the urgency of action on climate and clean energy.
I hoped that I would have sorted all this out after a night's sleep. I haven't. But I think that grappling with and gaining a deeper understanding of these apparent contradictions is very important work. Until we get beyond the half-true stereotypes that we rely on most of the time, I suspect we won't be able to reunite America.
eric seiger
eric seiger
Obama 2012 - Doug Schoen - Fox <b>News</b> | Mediaite
Fox News' Democratic analysts have thrown President Obama under the bus: Doug Schoen and Pat Caddell suggested this weekend that the Democratic Party must cut off its head to stand a chance in 2012. Schoen was back on America Live ...
Pulse <b>News</b> Now Free to Download | Android Phone Fans
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
First Solar <b>News</b>, Rumors: CIGS, Mercury, Tellurium : Greentech Media
First the news... Apollo Solar Energy (OTC: ASOE), a vertically integrated miner, refiner and producer of high purity tellurium (Te), announced a five-year purchase contract between Apollo Solar Energy and a major worldwide solar panel ...
eric seiger
eric seiger
Obama 2012 - Doug Schoen - Fox <b>News</b> | Mediaite
Fox News' Democratic analysts have thrown President Obama under the bus: Doug Schoen and Pat Caddell suggested this weekend that the Democratic Party must cut off its head to stand a chance in 2012. Schoen was back on America Live ...
Pulse <b>News</b> Now Free to Download | Android Phone Fans
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
First Solar <b>News</b>, Rumors: CIGS, Mercury, Tellurium : Greentech Media
First the news... Apollo Solar Energy (OTC: ASOE), a vertically integrated miner, refiner and producer of high purity tellurium (Te), announced a five-year purchase contract between Apollo Solar Energy and a major worldwide solar panel ...
eric seiger
Obama 2012 - Doug Schoen - Fox <b>News</b> | Mediaite
Fox News' Democratic analysts have thrown President Obama under the bus: Doug Schoen and Pat Caddell suggested this weekend that the Democratic Party must cut off its head to stand a chance in 2012. Schoen was back on America Live ...
Pulse <b>News</b> Now Free to Download | Android Phone Fans
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
First Solar <b>News</b>, Rumors: CIGS, Mercury, Tellurium : Greentech Media
First the news... Apollo Solar Energy (OTC: ASOE), a vertically integrated miner, refiner and producer of high purity tellurium (Te), announced a five-year purchase contract between Apollo Solar Energy and a major worldwide solar panel ...
eric seiger
Obama 2012 - Doug Schoen - Fox <b>News</b> | Mediaite
Fox News' Democratic analysts have thrown President Obama under the bus: Doug Schoen and Pat Caddell suggested this weekend that the Democratic Party must cut off its head to stand a chance in 2012. Schoen was back on America Live ...
Pulse <b>News</b> Now Free to Download | Android Phone Fans
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
First Solar <b>News</b>, Rumors: CIGS, Mercury, Tellurium : Greentech Media
First the news... Apollo Solar Energy (OTC: ASOE), a vertically integrated miner, refiner and producer of high purity tellurium (Te), announced a five-year purchase contract between Apollo Solar Energy and a major worldwide solar panel ...
eric seiger eric seiger
eric seiger
eric seiger
eric seiger
Obama 2012 - Doug Schoen - Fox <b>News</b> | Mediaite
Fox News' Democratic analysts have thrown President Obama under the bus: Doug Schoen and Pat Caddell suggested this weekend that the Democratic Party must cut off its head to stand a chance in 2012. Schoen was back on America Live ...
Pulse <b>News</b> Now Free to Download | Android Phone Fans
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
First Solar <b>News</b>, Rumors: CIGS, Mercury, Tellurium : Greentech Media
First the news... Apollo Solar Energy (OTC: ASOE), a vertically integrated miner, refiner and producer of high purity tellurium (Te), announced a five-year purchase contract between Apollo Solar Energy and a major worldwide solar panel ...
eric seiger
Obama 2012 - Doug Schoen - Fox <b>News</b> | Mediaite
Fox News' Democratic analysts have thrown President Obama under the bus: Doug Schoen and Pat Caddell suggested this weekend that the Democratic Party must cut off its head to stand a chance in 2012. Schoen was back on America Live ...
Pulse <b>News</b> Now Free to Download | Android Phone Fans
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
First Solar <b>News</b>, Rumors: CIGS, Mercury, Tellurium : Greentech Media
First the news... Apollo Solar Energy (OTC: ASOE), a vertically integrated miner, refiner and producer of high purity tellurium (Te), announced a five-year purchase contract between Apollo Solar Energy and a major worldwide solar panel ...
eric seiger
Obama 2012 - Doug Schoen - Fox <b>News</b> | Mediaite
Fox News' Democratic analysts have thrown President Obama under the bus: Doug Schoen and Pat Caddell suggested this weekend that the Democratic Party must cut off its head to stand a chance in 2012. Schoen was back on America Live ...
Pulse <b>News</b> Now Free to Download | Android Phone Fans
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
First Solar <b>News</b>, Rumors: CIGS, Mercury, Tellurium : Greentech Media
First the news... Apollo Solar Energy (OTC: ASOE), a vertically integrated miner, refiner and producer of high purity tellurium (Te), announced a five-year purchase contract between Apollo Solar Energy and a major worldwide solar panel ...
eric seiger
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