COP Says HAMP Remains FUBAR

According to the U.S. Treasury Department and HUD on Wednesday, 2,879 modified loans under the government's mortgage modification program (HAMP) were "cancelled" in March.

April 15, 2010
By Dees Stribling, Contributing Editor

According to the U.S. Treasury Department and HUD on Wednesday, 2,879 modified loans under the government’s mortgage modification program (HAMP) were “canceled” in March. That represents a spike in “cancellations” compared with February’s total of 1,499 and January’s of 1,005. In Treasury/HUD parlance, “canceled” appears to mean that most of the homeowners have defaulted on their new mortgages. Only a handful paid off the mortgages, presumably because they sold their homes.

And there will be more re-defaults to come. The Treasury/HUD report comes in the wake of another report by the Congressional Oversight Panel (COP) that essentially said that the government’s efforts to modify mortgages are negligible. “Too slow, ineffective and unaccountable,” was the actual phrasing by COP, though “doesn’t do squat” might be somewhere between the lines too.

More specifically, COP said that Treasury isn’t working fast enough to stop foreclosures; that there isn’t a clear way to measure success; and that temporarily lowing interest rates but not touching principal is a recipe for re-defaults. Money quote from the COP report: “The redefaults signal the worst form of failure of the HAMP program: billions of taxpayer dollars will have been spent to delay rather than prevent foreclosures.”

Beige Book Describes Modest Economic Improvement

Wednesday’s Summary of Commentary on Current Economic Conditions from the Federal Reserve, better known as the Beige Book for the Fed’s mellow choice of cover colors, painted a better–but still mixed–picture of the U.S. economy than in previous recent editions. Regarding real estate and construction, the book noted that “residential real estate activity increased, albeit from low levels, in most Districts, with the exceptions of St. Louis, where it was mixed, and San Francisco, where it was flat.”

Home prices have stabilized, at least, except in the New York and Atlanta districts, which saw continued small declines. Residential construction remained sluggish just about everywhere, fitting in with the new-normal “who needs any more houses?” paradigm.

Or commercial buildings, either. “Commercial real estate activity was slow across the nation,” reported the Beige Book. “Notable exceptions were Richmond, which saw an uptick in commercial leasing, and Dallas, where the sector was mixed and might be nearing bottom.”

Retail Sales See March Bump: Census Bureau

The U.S. Census Bureau reported on Wednesday that retail and food services sales stood at $362.2 billion in March, an increase of 1.6 percent from the previous month, and 7.6 percent above March 2009. Retail sales during the first quarter of 2010 were up 5.5 percent compared with 1Q09, which everyone admits was a miserable quarter indeed.

Virtually every kind of retail saw an increase month-over-month in March, with building material and garden equipment experiencing a spring bump of 3.1 percent and autos seeing a “massive incentive” bump of 6.7 percent. Though the price of gas is edging up, sales at gas stations were down 0.4 percent in March compared with February. Electronics was also a month-over-month loser, down 1.3 percent (not enough people buying iPads, maybe).

Wall Street continued its upward trajectory beyond 11000 on Wednesday, with a meaty 103.69 point gain for the Dow Jones Industrial Average, or 0.94 percent. The Nasdaq was up 1.12 percent, and the Nasdaq scored a 1.58 percent increase.