Archive for January, 2012

Don’t Expect Rise in National Home Prices Until 2013: Fiserv

Monday, January 30th, 2012
Fiserv is forecasting average U.S. home prices to fall by another 2.7 percent through the third quarter of 2012, before rising 3.8 percent by the third quarter of 2013. The company says the monthly mortgage payment for the median-priced U.S. home has dropped to $640, nearly 45 percent below the peak of the housing bubble. This improvement in housing affordability is expected to drive sales activity going forward, and while not enough to change Fiserv's predictions for the direction of prices at the national level, the company does foresee notable improvements in select markets.

Regulators Shutter Five Lenders

Monday, January 30th, 2012
State and federal regulators stepped in to shut down five lenders over the weekend, including one New York-based credit union and four FDIC-insured institutions - two in Tennessee and one each in Florida and Minnesota. Eastern New York Federal Credit Union in Napanoch, New York, is the first federally insured credit union to be liquidated in 2012, while the FDIC's failed-bank tally for the 2012 calendar year now stands at seven.

Wells Fargo Aims to ‘Lift’ Neighborhoods in Los Angeles, Atlanta

Monday, January 30th, 2012
Wells Fargo announced the launch of a new program, Neighborhood LIFT, which aims to bring reluctant buyers off the sidelines to help absorb excess inventory in two major cities. The bank established a goal of lending $10.5 billion to Los Angeles homebuyers and $1.3 billion to Atlanta buyers. In addition, Wells designated $15 million to assisting homeowners with down payments in Los Angeles and $8 million in Atlanta. The company chose to launch Neighborhood LIFT in Los Angeles and Atlanta because the two have high inventories of bank-owned homes.

GOP Candidates Are Wrong to Urge a Second Front War in Iran

Monday, January 30th, 2012
Omar Sobhani / Reuters -U.S. soldiers patrol in the eastern city of Jalalabad, Afghanistan on January 19, 2012.

The top Republican presidential candidates are trying to out-tough each other on Iran, calling President Obama too weak and threatening to use force. The prospect of war with Iran is usually discussed in isolation from the war we are already fighting in Afghanistan. That’s a big mistake, taking on a second war before finishing the one you’re in is a recipe for two disasters.

One hundred and fifty years ago, the United States was engulfed in its Civil War when the threat of a second war with Britain and France developed in 1862. Secretary of State William Seward urged the cabinet to declare war on the European powers for tilting toward the Confederacy. Seward pressed for an invasion of Canada. President Abraham Lincoln disagreed and famously said to Seward “one war at a time, please.”

With so many politicians and pundits now calling for using military force to keep Iran from acquiring nuclear weapons, it is wise to heed Lincoln’s advice. The first Republican president’s advice, of course, was ignored by our last Republican president, George Bush, who took his eye off the ball in Afghanistan in 2002 and 2003 to invade Iraq. Resources needed to stabilize Afghanistan after a quarter century of war were deployed to Iraq, and Afghanistan was shortchanged. The result was the revival of al Qaeda in Pakistan and the resurrection of the Taliban in Afghanistan. The 2007 surge in Iraq only made a bad situation much worse. More troops were desperately needed in Afghanistan by 2007 to halt the Taliban’s momentum, instead they went to Iraq. By 2009 President Obama had inherited a disaster in Afghanistan because his predecessor had neglected the “forgotten” war he had started.

A new military operation in Iran today—while NATO is still heavily engaged in Afghanistan—will have the same effect, only worse. Intelligence-collection capabilities now being used to fight the Taliban and al Qaeda would be immediately diverted to dealing with Iranian threats. If a conflict with Iran escalated beyond airstrikes to a naval struggle in the Strait of Hormuz, more resources would be diverted. Some argue a war with Iran can be kept limited but history shows that wars are inherently unpredictable, and while we can decide alone how a war starts it takes two sides to determine how it ends.

Moreover, an American military operation against Iran would almost certainly prompt Iranian retaliation and Afghanistan, Obama’s war now, would be particularly attractive target for Iran. Today most of western Afghanistan is relatively stable, unlike the south and east, and is lightly manned by Italian and Spanish NATO forces. The largest city, Herat, is connected to the Iranian electrical grid and there is considerable cross-border trade. But Iran has been quietly building connections to the Taliban for the past few years. It could easily help the Taliban destabilize the west rapidly and offer it sanctuary in eastern Iran. It could turn off the lights in Herat and elsewhere. It could stretch already thin NATO forces beyond their capabilities. A very difficult war in Afghanistan would become even more difficult, if not impossible. More U.S. troops would be needed, throwing into jeopardy Obama’s plan to downsize the commitment.

Shia Iran and the Sunni Taliban are not natural allies, they came close to war in 1998, but they are likely to work together against America if pressed. An American or Israeli strike on Iranian nuclear facilities would facilitate their rapprochement as Tehran seeks vulnerable openings. Senior Italian officials, with some 4,000 troops on a 300 mile long border frontier with Iran outside Herat, have told me they are horrified at the idea of a war with Iran and would immediately need substantial reinforcement.

The Kabul government, our ally, would find itself in the middle between two friends. President Karzai and his government have never been comfortable with America’s Iran policy. Karzai has tried hard to build a cooperative relationship with Iran, in part to offset Pakistan’s support for the Taliban. With Indian help a new highway linking Afghanistan to the Arabian Sea through Iran was opened in 2009; now it may be followed by a railroad. For the first time in its modern history Afghanistan has an alternative outlet for exports to the sea other than Karachi, Pakistan. With the Pakistan border closed since November, the Iran outlet has become even more critical. The Karzai government could collapse if it had to choose between Tehran and Washington.

Pakistan will not be so conflicted. It will side with Iran at least rhetorically and diplomatically. It will see the American decision to go after Iranian nuclear sites as a clear warning that it could be next someday. Pakistan’s deeply anti-American population will side with their fellow Muslims next door and its equally anti-American generals will be determined to build even more bombs to deter any American adventure in their country. The fastest growing nuclear arsenal in the world will grow even faster.

Whether you support Obama’s policies in Afghanistan or not, we are there now and will have tens of thousands of troops in place at least through the election and probably well beyond. We should keep Lincoln’s advice in mind.

Authors

Image Source: Omar Sobhani / Reuters

Hutchens, Senter & Britton Attorneys Receive Honors

Monday, January 30th, 2012
Three attorneys with Hutchens, Senter, & Britton, P.A. HSB) were honored with different accolades for their work in the industry. Terry Hutchens, a managing partner at HSB, has been selected by his peers for inclusion in the 2012 edition of The Best Lawyers in America. Hilton "Hutch" Hutchens and Sarah Miranda, an associate at HSB, have both been named to the 2012 North Carolina Super Lawyers list as "North Carolina Rising Stars." Miranda was also recently awarded an AV rating by Martindale-Hubbell for both legal ability and ethics.

Housing Will Soon Help the Economy, but Not by Much: Report

Monday, January 30th, 2012
The analysts at Capital Economics are holding fast to their forecast that the downturn in the housing market is drawing to a close. As a result, they say housing should soon start to boost economic growth, but as it now makes up only a small share of the economy, the sector is unlikely to add much more than 0.2 percentage points to annual gross domestic product (GDP) growth this year. In the fourth quarter of 2011, residential investment accounted for just 2.5 percent of overall GDP. That's down from the 2005 peak of 6.3 percent and the 1946 to 2008 average of 4.8 percent.

Warning To Democrats: Romney Is a Stronger Candidate Than You Think

Monday, January 30th, 2012
Reuters/Jim Young--U.S. Republican presidential candidate and former Massachusetts Governor Mitt Romney delivers a speech in Iowa.
Mitt Romney's strong performance in the second Florida debate deprived Newt Gingrich of his last chance to maintain the boost he got from his South Carolina victory. Unless something significant happens before January 31, Romney will beat Gingrich in the Sunshine State by a double-digit margin and regain his standing as the front-runner for the Republican nomination. After a quiet February, he'll deploy his edge in money, organization, and preparation to defeat Gingrich the way Grant defeated Lee—by inexorably grinding him down. And when he does, the Republican Party will have dodged a bullet, because the evidence indicates that Romney would be a much stronger general election candidate. It also suggests that President Obama faces a tougher reelection campaign than many now think.

Consider a January 26 Quinnipiac survey of the Florida electorate, beginning with President Obama’s standing in a state he carried by 3 points (51-48) in 2008. Forty-six percent of registered Florida voters approve of the way Obama is handling his job, while 52 percent disapprove. Forty-seven percent believe that he deserves to be reelected, while 49 percent do not.

Given this terrain, whose contours are perilous for the president, the difference between the two main Republican contenders is dramatic. Obama holds an 11-point edge (50-39) over Gingrich but musters only a tie (45-45) against Romney. The crucial different comes among Independents, where Obama leads Gingrich 50-33 but trails Romney 41-42. Forty-three percent of Florida voters rate Romney favorably overall, versus 37 percent unfavorable; for Gingrich it’s 32-50. On the issue voters regard as the most important—the economy—Romney has a 50-41 advantage over Obama (51-40 among Independents) while the president leads Gingrich 47-45 (52-39 among Independents). On what historically has been a key presidential trait—strong leadership—Obama leads Gingrich 51-41 but musters only a statistical tie (46-45) against Romney. And the president’s modest 5-point edge (47-42) over Romney on trustworthiness swells to an astonishing but hardly inexplicable 22 points (57-35) over Gingrich. I could go on, but you get the point: in the largest swing state, Obama is the odds-on favorite to demolish Gingrich but could well lose to Romney.

And Florida is no outlier. An average of major national surveys conducted in January gives Obama a modest 2.3 point edge (47.2 to 44.9) over Romney. Against Gingrich, the president’s margin swells to an average of 11.7 points (51.3 to 39.6). Bottom line: while Romney may be able to take advantage of the incumbent’s vulnerabilities, Gingrich almost certainly can’t.

The conventional wisdom is that the Republican nominating contest has already damaged Romney severely. There’s some evidence to support that view. According to the most recent NBC/Wall Street Journal survey, Romney’s unfavorable ratings among Independents have increased by 20 points over the past two months, and Obama now leads him by 8 points in this crucial group. But it’s hard to find much evidence of that trend in Florida, a state whose voters have much more information about Romney, negative as well as positive, than they did two weeks ago, and far more than do voters nationally. Romney’s support among Floridians is identical now to what it was three months ago. Voters interviewed after his defeat in South Carolina viewed him just as favorably as did those interviewed before that contest. And even nationally, adults interviewed in the most recent NBC/Wall Street Journal survey give Romney exactly the same share of the vote as they did last November (or last June, for that matter). As of now, anyway, Romney may be bruised, but the primary fight has not administered anything like a knockout blow to his general election prospects.

The other side of the conventional wisdom is that Obama enters 2012 in a strengthened position. There’s something to this: Many key indicators have risen measurably from the lows they reached last fall. For example, the NBC/WSJ poll found that 30 percent of Americans think the country is on the right track, up from only 17 percent in October. But that increase just takes us back to the split that prevailed in June of 2011. This is something of a pattern for Obama. His job approval is up 4 points since October but only stands where it was last June. The same is true for his personal favorability ratings. Approval of his handling of the economy stands at 45 percent—exactly where it was last April. And so on.

If Obama were running against Gingrich this fall, he’d win—barring outright economic or military catastrophe—because the former speaker will never be able to persuade a majority of the people that he has the right temperament and character to occupy the Oval Office. Pitted against Obama in January 2011, Gingrich was supported by 37 percent of the people, versus 55 percent for Obama. A year later, after introducing himself to a new generation of adults and refreshing the memories of their parents, he enjoys the support of … 37 percent of the people, versus 55 percent for Obama. Gingrich is a walking illustration of the maxim that you never get a second chance to make a first impression. (He has managed, however, to refute what I had previously regarded as a law of physics—namely, that a soufflé can’t rise twice.)

Against Romney, however, the race becomes much tougher. For example, while 47 percent of the people think that Obama is more competent than Romney, 47 percent think that Romney is more competent than Obama. And Obama’s job approval has not yet reached the level consistent with a general election victory.

Most important, the economic horizon for 2012 has darkened. The Federal Reserve Board, OECD, and the World Bank all predict slowing global growth, which is bound to dampen an export-led recovery in the United States. And the fourth quarter report issued on January 27 wasn’t exactly a blockbuster. GDP rose at an annual rate of 2.8 percent (a bit below expectations), but final demand rose by only 0.9 percent while inventories swelled. Consumer spending outpaced growth in disposable income, meaning that households spent more only by saving less. This can’t continue indefinitely: Over the past year, real actual tax incomes actually fell by 0.1 percent. Meanwhile, business investment grew at the slowest pace in two years. And as the Fed recently noted, the modest growth predicted for 2012 would not be enough to reduce unemployment significantly from current levels.

The Obama campaign would like to frame the 2012 election as a choice between two visions for the country. It’s not hard to see why. If the election is a referendum on the economy rather than a choice between candidates and ideologies, the evidence suggests that it would be a tough, hard-fought race decided by a margin narrower than the one Obama received in 2008. It also suggests that if the economy underperforms over the next three quarters, the incumbent could end up on the losing side.

Postscript. This morning, Gallup released the latest in its series of polls focused on twelve swing states—Colorado, Florida, Iowa, Michigan, Nevada, New Hampshire, New Mexico, North Carolina, Ohio, Pennsylvania, Virginia, and Wisconsin. Three results stand out. (1) President Obama blows out Newt Gingrich by 14 points in those states (and 12 points nationally). There is no credible evidence that Gingrich would be competitive with the president, let alone a stronger challenger than Romney. (2) Obama and Romney are statistically tied: it’s Romney 48, Obama 47 in the swing states and 48-48 nationally. And most important, (3): despite changes in the political environment, a more aggressive stance by the president, and the emergence of less than flattering information about Mitt Romney, the Obama-Romney contest hasn’t moved much in many months. Last October, for example, Romney led Obama 47-46 in the swing states. Since last August, Obama’s national support has moved in a narrow range between 46 and 48 percent; Romney’s, between 46 and 49 percent. This evidence supports the thesis that the 2012 presidential election will be hard-fought and close—unless there’s significant shift in the trajectory of the economy.

Publication: The New Republic
Image Source: Reuters/Jim Young

FAS Outlines Top 10 Property Preservation Predictions for 2012

Monday, January 30th, 2012
Field Asset Services (FAS), a provider of pre-foreclosure, REO, and renovation field services, has released its top 10 property preservation predictions for 2012, which focus on providing superior customer service, the need to take initiative to pre-empt future problems, and a demand for knowledge that will open communication and deliver results. Among the company's forecasts, institutional investors will begin to emerge as their interest in purchasing single-family residence REO properties increases, and innovation in the area of mobile technology will be necessary for vendors and contractors to work more efficiently from the field.

Homeowner Satisfaction Rate at 72%, Highest for Short Sale Purchasers

Monday, January 30th, 2012
Seventy-two percent of homeowners say they are satisfied with homeownership, according to a recent HomeGain survey of more than 1,400 homeowners. Among the 28 percent who said they were dissatisfied, nearly two-thirds cited price depreciation as the main reason for their dissatisfaction. HomeGain also assessed satisfaction levels by sales type and found that homeowners who purchased a home through a short sale were the most likely to be pleased with their choice, followed by those who purchased a foreclosed home.

Processing Delays Manifested: 39% Fewer Foreclosure Starts in 2011

Friday, January 27th, 2012
The number of foreclosure actions initiated in 2011 was down 38.7 percent compared to 2010, according to a new report from Lender Processing Services (LPS). The foreclosure inventory, on the other hand, remains near historic highs, at 4.11 percent. The numbers illustrate the impact of processing delays brought on by the robo-signing controversy, the impact of which remains strong in judicial states. LPS says half of all loans in foreclosure in judicial states have not made a payment in more than two years compared to 28 percent in non-judicial states.