MBS RECAP: Lackluster Effort from Mortgages


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4:00PM  : 
Quadruple Witching And Light Econ Data End The Week
Quadruple Witching is the market’s term for one of 4 days a year where stock index futures, stock index options, stock options, and single stock futures all expire. Basically, it’s generally thought that this can create a higher than normal amount of volatility, but historically, that assertion has been compounded by it’s usual occurrence on Fridays with limited or no data. Relative to the preceding three days this week, tomorrow is certainly light on data with only Consumer Sentiment and Leading Indicators reporting at 9:55 and 10am respectively. There will also be a weekly ECRI report, but we’d be shocked if it moved markets. There’s no Fed Speak tomorrow, but an FOMC announcement coming up next week as well as Bernanke’s quarterly press conference to consider as we stare at the the year’s best levels in the bond market, and a stock market that continues to teeter on melt-down.

3:48PM  : 
Lenders Sue Builders Over Bankrupt Development
(Reuters) – Three of the nation’s largest home builders, led by KBHome, will pay well over $200 million to settle legal claims by lenders related to Inspirada, a large bankrupt housing community near Las Vegas.
KBHome will pay lenders between $214 million and $225 million, and said it expects to incur a total obligation related to the project of $216 million to $240 million.
Beazer Homes USA Inc said it will pay between $15.7 million and $17 million, while Toll Brothers Inc said it agreed to a “cash settlement.”
The settlements require bankruptcy court approval, and were disclosed in separate U.S. Securities and Exchange Commission filings.
Inspirada is a nearly 2,000-acre master planned community in Henderson, Nevada. The project was once expected to have about 11,500 homes, but stalled as the Las Vegas housing market collapsed.
Las Vegas has the nation’s highest foreclosure rate among metropolitan areas with populations of at least 200,000, RealtyTrac Inc said on Thursday.
Home prices in the area are down roughly 58 percent in the last five years, the steepest drop among 20 U.S. markets tracked by the SP/Case-Shiller Home Price Indices.
Inspirada had been developed by South Edge LLC, a venture that includes several builders. KBHome has a 48.5 percent stake in South Edge, and Toll has a 10.5 percent stake.
KBHome said some other entities in the venture had not settled, including Meritage Homes Corp .
A lender group that included JPMorgan Chase Co , Wells Fargo Co and Credit Agricole pushed South Edge into an involuntary bankruptcy in December following a loan default.

1:30PM  : 
Reuters Poll: Housing to Remain in Doldrums
(Reuters) – The beaten-down housing market is expected to sink further this year and prices will virtually flatline in 2012, a Reuters poll predicted. While the economy has slowly been recovering from the worst recession since the Great Depression, a housing market rebound has remained elusive despite multi-billion dollar federal programs and record low interest rates. Home prices — as measured by Standard Poor’s 20-City Composite Home Price Index — will fall 5.0 percent in 2011 as a whole before finding a floor and rising just 0.5 percent in 2012, according to the median forecast of the 21 economists who provided price forecasts in the Reuters poll. The findings were bleaker than those of the previous Reuters housing poll in March, which saw prices falling 2.3 percent this year and rising 1.2 percent in 2012. A rise in “distressed” home sales at depressed prices has helped clear a backlog of homes for sale on the market, but a glut of homes for sale still remains. The rampant pace of foreclosures hitting the market has abated but is still grim with more than a quarter of homeowners owing more on their mortgage than what their homes are worth. This negative equity not only prevents homeowners from selling but these borrowers tend to be more prone to defaults and foreclosures.
“It is hard to see the housing market doing better until the massive headwind of foreclosures is removed and that will likely take a couple of years,” said Mark Vitner, senior economist at Well Fargo Securities in Charlotte, North Carolina. By the third quarter of 2011, the pace of U.S. existing home sales will only edge up to a 5.10 million annualized rate compared with 5.05 million in April, according to the median forecast of 22 economists who gave an outlook for sales. Forecasts for changes in the CaseShiller price index next year ranged widely, from a rise of 5 percent to a fall of 6 percent, highlighting the differences among economists on whether the housing slump has played out.

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