Author: Matthew G. Saroff

Loan Servicers Under Stress

One of the funny bits of the current mortgage market is that even when the banks hold the loans, they don’t generally handle the money.

They pass this off to loan servicing firms, who send out the bills, collect checks, handle escrow, etc.

Well, it appears that they have to make payments of interest and principal to the loan holders for accounts up to 90 days delinquent, in addition to handling property tax payments, and as a result, they are taking a beating from the skyrocketing rate of delinquencies.

H/t HousingWire

Economics Update

The Bush administration is now, finally, predicting a slowing economy, with a GDP growth rate of 1.6%…though with a higher prediction of inflation at 3.8%, it’s a net contraction, which is why they are also predicting an increase in the unemployment rate.

Given this environment, it is unsurprising that home prices fell in May by 0.9%, 15.8% year over year, which is grim.

What is surprising is that Consumer confidence was up a bit, to 51.9 from 51.0, but even 51.9 is very pessimistic.

We may be seeing a bottom of consumer pessimism, which is different from seeing a bottom to the credit crisis.

The slowdown seems to be driving the price of oil down, as well as the price of retail gasoline, and falling energy prices seem to be bolstering the dollar versus foreign currencies, though the bad news on Japanese unemployment, a 2 year high, may have contributed to this.

Still, the banks are buying lots of money from the Federal Reserve to deal with the liquidity problems, $75 billion this time, so we ain’t out of the woods.

For your amusement, a cartoon:

No Bail for Wilkes

Brent Wilkes, who was convicted of bribing Randy “Duke” Cunningham, has been told that if he has a friend who wishes to post the $1.4 million for bail, his name must be made public.

This person, referred to as a former business associate, whoever he or she is, has made it clear that they would lose their job if their name became public, so I guess he stays in jail pending appeal.

If anyone has an idea who this person is, I want to know.

Ted Stevens Indicted

I’ll avoid the “tubes” and the “incredible hulk” jokes, as most of the ‘net does snark better than me.

In any case, he has been indicted on 7 counts related to concealing income from gifts from lobbyists and their firms, once again proving that it’s the cover-up that will get you.

Interestingly enough, the Republicans in Alaska are so corrupt they don’t have a replacement, with the most likely replacement, Sarah Palin, who is under investigation about misuse of power to get her ex-brother-in-law fired from the State Police.

Also note that the party can replace Stevens up to 48 days before the general election, so he could drop out.

That being said, I’ll enjoy some Schadenfreude, and you can donate to the Democratic challenger, Anchorage Mayor Mark Begich at my ActBlue page.

New Study: Kindergarten Red-Shirting Bad for Kids

There is a study by David Deming and Susan Dynarski that seems to indicate that delaying entry into first grade actually reduces academic achievement.

This is interesting,since the, “Boy Crisis” crowd, is aggressively holding boys back a year to deal with the delay in language development of young boys vs. young girls.

My, admitted anecdotal, information would suggest not to red-shirt.

My son, Charlie, is an Asperger’s child, and as such, he is socially delayed, and has issues with social issues with rules and conflict resolution, though he is performs at least one grade level above his age academically.

According to the red-shirting folks, his entry into first grade should have been delayed, which would have been a disastrous.

While he can be a handful when upset or frustrated, when he is bored, he’s like Plutonium.

Will the Last USAF Senior Staffer Pleas Turn off the Lights?

We have two more resignations of senior staff at the USAF, Ken Miller, special assistant for Air Force acquisition, and William Anderson, USAF logistics chief.

I think that the military in general, USAF specifically, need adult supervision to ensure that their procurement does not become too incompetent, and that their interactions with other services are too hostile, and this is blowback from Rumsfeld not giving a damn about this.

Another Day, Another Financial Term

This time, it’s “Covered Bond”, and Sec Treasury Paulson is clarifying regulation to make them more attractive in the United States. (They are more common in Europe, particularly, according to the Wiki, Germany)

The difference between this and more common mortgage backed securities is that the banks have to keep the mortgages on their books, and the bonds are specifically secured with these bonds.

I don’t think that this will make much of a difference.

Until house prices bottom out in absolute dollar terms, which means that inflation might save us, the housing market will remain sluggish to frozen.