Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20
Facebook (FB) AI Mega-trend Tech Stocks Investing 2020 - 10th Feb 20
The US Constitution IS the Crisis - 10th Feb 20
Stock Market Correction Continues - 10th Feb 20
Useful Tips for Becoming a Better Man - 10th Feb 20
Will CoronaVirus Pandemic Trigger a Stocks Bear Market 2020? Part1 - 9th Feb 20
Could Silver Break-out like it did in 2011? - 9th Feb 20
The End of the Global Economy - 9th Feb 20
Fed to Stimulate in Any Crisis; Don’t Let Short-Term Events Bother You - 9th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

The U.S. Housing Market Recovery is a Lie...

Housing-Market / US Housing Oct 13, 2014 - 12:36 PM GMT

By: Money_Morning

Housing-Market

Shah Gilani writes: Ben Bernanke began his tenure as Chairman of the Federal Reserve Board just as the housing bubble was peaking in February 2006.

He exited the post in February of this year after supposedly shepherding the country out of the Great Recession the mortgage crisis spawned.

He recently admitted the housing recovery is hitting a wall.


But this time, it's personal...

"Lenders have gone a little bit too far..."

The former Most Powerful Man in the World, who at the Fed dished out trillions of dollars to banks, admitted last week, "I recently tried to refinance my mortgage and I was unsuccessful."

When the audience at the convention in Chicago for the National Investment Center for Seniors Housing and Care heard Bernanke's remark to moderator Mark Zandi of Moody's Analytics, they laughed at what they thought was meant to be humorous.

Bernanke looked at the audience and said, "I'm not making that up." He added, "I think it's entirely possible that lenders have gone a little bit too far on mortgage credit conditions."

That stunning admission points to the fragility of what's already become a suspect housing recovery.

Bernanke, now a Washington D.C. Brookings Institute fellow-in-residence, gets as much as $250,000 to speak at events and has a net worth between $1.1 million and $2.3 million (according to Fed records). He was turned down when he wanted to refinance the $672,000, 30-year fixed mortgage on his Washington D.C. townhouse from 4.25% down to 4.19%.

Although Bernanke's FICO credit score isn't publicly known, it may not be as high as 735, which is what most lenders on conventional mortgages are demanding these days.

Or Bernanke could have been denied on account of a low appraisal, which is possible - although according to Zillow, the townhouse is estimated to be worth $968,486.

Or it could have been the former Chairman's past two years of "steady income history." After leaving the Fed, where Congress determined his salary (for 2014 the salary is $201,700), Bernanke may have had only periodic speaking engagements which lenders would not look on as steady income.

While no one is shedding a tear for Ben Bernanke, because in truth there are now lenders lining up to offer him mortgages, it's the rest of the great majority of the public that can't get mortgages, for any or all of the same reasons as Bernanke, that the country needs to worry about.

It's not possible for the housing market to sustain any kind of recovery if there isn't credit available to would-be buyers of homes. Since the mortgage crisis, lending standards have been pushed skyward by nervous lenders. Most of those mortgage lenders are banks that securitized pools of their own mortgages or sold mortgages they made to securitizers, who sold the packaged pools to investors.

The originators of those mortgages have been forced to buy back hundreds of billions of dollars of those mortgages when defaulting homeowners caused the securities they were packaged into to fall in value. This kicked in "warranties" that obligated lenders to buy back bad loans.

Where the Housing Market (Really) Stands Now

Mortgage origination data has been up and down, with housing recovery advocates pointing to the positive "up" numbers and recovery detractors pointing to the "down" numbers. In truth, a big jump up in mortgage originations isn't anything to clap about, any more than a drop in originations is especially telling.

What is telling is where we are in the overall mortgage credit picture.

According to the Mortgage Bankers Association, mortgage applications last week were approximately 43% below the same week back in October 1998. At the peak of the credit bubble, applications were twice the level they were in the same 1998 period.

The MBA's credit availability index came in at 116 in September, the lowest level since the 2008 crisis. The index peaked in 2006 at a staggering 900.

A new standards-based, credit availability index constructed by CoreLogic, points to 2014 as the toughest year in terms of standards since, again, all the way back to 1998.

It's been well-documented that the rise in housing since the mortgage meltdown has mostly been attributed to cash purchasers, many of them from overseas. There are also the institutional buyers who raise billions of dollars in the bond market to buy housing stock to rent homes and eventually package rental properties into securitized pools.

Sound familiar?

Without sufficient mortgage credit availability the incipient, already overblown, housing recovery will hit a wall and likely reverse course.

When the former Chairman of the Federal Reserve can't get a mortgage, there's trouble ahead for housing.

Up Next

The "housing recovery" we're being sold is a sham - a dangerous one. That's just one of the threats to our wealth and prosperity Shah is tracking. To get all of his Wall Street Insights & Indictments, free, click here.

Source : http://moneymorning.com/2014/10/13/how-the-most-powerful-man-in-the-world-got-his-mortgage-denied/

Money Morning/The Money Map Report

©2014 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules