Refinance Free Credit

Housing prices continued their freefall in January, according to an analysis of properties listed-for-sale in 22 major metropolitan markets across the country.

Nineteen markets saw their prices drop, with San Franscisco falling 3.6 percent in January alone, while only the New York metro saw prices rise; both Dallas and Phoenix remained flat, according to the report issued Thursday by real estate research firms Altos Research and Real IQ.

“Recent declines in mortgage rates will increase affordability and ultimately benefit the housing market,” said Michael Simonsen, CEO and co-founder of Altos Research, “but homebuyers may stay on the sidelines until they see evidence that housing prices have stopped declining.”

Inventories falling, days-on-market increasing
For-sale listed property inventories declined in every market over the most recent three month period, except in Miami where inventory increased 5.8 percent. Property inventories have declined by more than 10 percent in Chicago, Austin, Boston, Minneapolis, Denver, San Diego and Cleveland over the past three months, according to the report.

The report also found that the time-on-market increased in virtually all markets. Miami and Minneapolis experienced the longest time-on-market spans, with an average days-on-market of 144 in January.

Sixteen of 22 markets had an average days-on-market of over 100, although some markets demonstrated faster turnover; Denver led all markets with the fastest rate of inventory turnover at 61 days, followed closely by Dallas and San Diego at 80 days.

Denver’s days-on-market indicator, in particular, has fallen sharply in the past three months; the city has seen the measure of turnover decrease 39 percent during the past three months, while inventory has been reduced over 11 percent during the same period, the report found.

“We are seeing signs of stability in several markets as inventory growth slows and turnover increases,” said Stephen Bedikian, partner and research director for Real IQ. “The question is whether the effect of lower mortgage rates will be outweighed by the slowing economy. A great rate won’t help the home buyer that has lost their job.”

Click here to download the full report.

For more information, visit http://www.altosresearch.com and http://www.realiq.com.

Bear Stearns, bitten badly by the housing crash, is short more than $1 billion on subprime mortgage securities — a big bet by the investment bank that the woes that have driven a historic collapse in the mortgage market are likely to continue.

Bloomberg reported that Bear CFO Sam Molinaro said Friday that the New York firm’s “short” positions have jumped from $600 million at the end of November as the company has trimmed its positions in CDOs and underlying RMBS bonds.

From the report:

… Molinaro said today that one of the firm’s biggest mistakes was “not being conservative enough and bearish enough on the subprime market.” The firm has reversed “long” subprime trades that stood at $1 billion at the end of August, Molinaro said.

“There’s definitely a lot of short plays out there,” said Mark Adelson, a founding member of Adelson & Jacob Consulting in Long Island City, New York. Some subprime bonds “could easily be bad enough that they don’t pay off a penny,” said Adelson, a former Nomura Holdings Inc. mortgage analyst.

According to Bloomberg, company spokesperson Russell Sherman was quick to point out — after Molinaro’s remarks — that Bear’s short positions represent hedges on its long positions in mortgages.

It’s not easy being a press rep these days on Wall Street, obviously. The truth here is that $1 billion is a huge directional bet on continued market woes, from one of the firms that has been unlucky enough to have had a front row seat to most of the carnage thus far.

Accredited Home Lenders CEO James Konrath may want to take note of the above; the former subprime high-flyer said earlier this week it wants to “test the waters” sometime this year for a subprime-based RMBS issuance.

MGIC Investment Corp. said earlier this week that its mortgage insurance arm will pull back dramatically on underwriting new mortgage insurance in housing markets spanning 19 different states. In a policy update sent to customers February 6, MGIC vice president Sal Miosi announced a host of program changes effective March 3, designed to help the mortgage insurer weather what he called “challenging times.”

Among those changes: new restrictions on underwriting in so-called “restricted markets” identified by the insurer. MGIC has designated the entire states of Arizona, California, Florida and Nevada as “restricted markets,” as well as flagging various core-based statistical areas within 14 other states and the District of Columbia. (Click here to see MGIC’s updated restricted market list).

MGIC said it will no longer offer mortgage insurance on any loan where the LTV/CLTV is greater than 95 percent in its restricted markets, and eliminated loans on investment property, cash-out refinancing, and pay option ARMs completely from underwriting eligibility in these areas. Also, MGIC said it will not underwrite insurance on any expanded criteria or Alt-A/reduced doc loan product.

Even outside of its “restricted markets,” MGIC said insurance on loans where the LTV is greater than 95 percent will only be offered when the borrower’s credit score is at least 680; eligibility for mortgage insurance at all will require a minimum score of 620. For Alt-A loans, MGIC will only insure where LTV is 90 percent or less, and the borrower’s credit score in above 660.

In a filing with the SEC Thursday, the company said it expects the changes to “negatively impact MGIC’s volume of new insurance written.”

For more information, visit http://www.mgic.com.