Six states continue to hold over 50% of all shadow inventory, which include:

Florida, California, Illinois, New York, Texas and New Jersey.  Current levels are 4 times higher than the peak of the housing in summer of 2006.

The highest concentration of shadow inventory is for loans with loan balances between $100,000 and $125,000, see chart.

In Boise, ID, year to date over 50% of home sales have been priced below $160,000.  However, available inventory priced below $160,000 in Boise is more than 50% less than it was last year at this time, sitting at 2.5 months of inventory.  These kinds of stats have to lead to a higher median price for the area, especially since foreclosures are declining so quickly.

Therefore, it is my professional opinion that home prices in the Boise ID region will increase significantly in 2012, as they are leading the rest of nation in the recovery by at least 18 months.

To date, Bank of America has paid Fannie Mae and Freddie Mac $2.6 billion to
settle demands from the GSEs that the bank buy back mortgages that have gone
sour, or were wrongly underwritten. Bank of America cited “ongoing
differences” with Fannie Mae over these repurchase claims as a rationale
for severely curtailing its dealings with Fannie. In December, the bank
underwrote just $3.5 billion of loans backed by Fannie, Freddie or Ginnie Mae
vs. $21.9 billion in December 2010, The
WSJ reports.

The practical implications of this decision is it will be harder for
consumers to get a home loan from Bank of America, which has already stopped
buying loans from third-party mortgage lenders. Citigroup is moving in the same
direction, according to a source in the mortgage industry. While other banks –
like Wells Fargo (WFC),
Sun Trust (STI),
BB&T (BBT) and US
Bancorp (USB)– are
stepping into the void, the decisions by BofA and Citi (C) are exacerbating the
problems many Americans are having trying to secure a loan, even those with
good credit scores and money for down payments. (See: Getting
a Mortgage Shouldn’t Be This Hard: Housing Finance Gets ‘Taken to Task’)

In Search of…Life Beyond Fannie & Freddie

By ending its activity in the so-called correspondent lending channel, Bank
of America is effectively saying it will only underwrite mortgages that are
originated in house. By stopping the sale of most loans to Fannie, the bank
will either be forced to hold those loans in its portfolio or seek an
alternative buyer.

Since 2008, the private secondary market for mortgage loans has effectively
dried up. Fannie Mae, Freddie Mac, FHA and other government-sponsored
enterprises back more than 90% of all home loans originated since the crisis.

Earlier this month, Treasury Secretary Tim Geithner laid out a plan to
significantly reduce the government’s role in the mortgage market, based on
three options, as The
NY Times reports:

• Eliminate any government
  guarantee for middle-class mortgages.
• The government would only
  back loans during times of financial distress.
• The government still would
  only guarantee mortgages if lenders first purchase a guarantee from a
  private insurer.

Bank of America’s decision to stop selling loans to Fannie
appears to be the case of one firm being fed up dealing with Uncle Sam’s
minions and the story may end here. Still, BofA may have unwittingly opened the
window to a fourth, private-sector solution.

If Bank of America is able to successfully originate loans and find a
private secondary market to sell them into, other banks may want of a piece of
the action too. Private firms like Goldman Sachs (GS), as well as hedge fund
and private equity investors might be interested in creating an alternative
secondary market, if the price is right, of course. This could take years to
develop, if it ever gets off the ground, but Geithner put a 5-to-7 year
timetable on his exit plan so there is plenty of time for the private market to
test the economics of such a scenario.

Ultimately, a private-based secondary market will almost certainly mean
higher fees and higher mortgage rates for consumers, and banks will almost
certainly continue to tighten lending standards in the hypothetical post-Fannie
era. Many will argue that’ll be money well spent if we can really kick the GSE
habit.

There’s a price to be paid for unwinding the
current system and, one way or another, U.S. taxpayers — the ones who bailed
out the big banks and are still on the hook for Fannie and Freddie — will
almost certainly end up with the bill.

Click on the image above to use RealtyTrac’s interactive map.

Idaho’s foreclosure rate ticked up slightly in January, by about 6 percent.  That’s according to new numbers from RealtyTrac, which analyzes housing and foreclosure data.

That said, the current rate represents a dramatic 68 percent decrease from January of 2011.  Moreover, Idaho’s foreclosure rate has now fallen to 16th in the nation, after remaining in the top ten for much of last year.

Nationally, the foreclosure rate ticked up by 3 percent from December to January, leading RealtyTrac CEO Brandon Moore to say there are signs “the frozen-up foreclosure process is beginning to thaw.”  That’s in the wake of last week’s $26 billion mortgage settlement between government officials and five of the nation’s largest banks.

Most of the top companies and government agencies five years ago have managed to either retain or expand their workforce, according to a new StateImpact analysis of data provided by the Idaho Department of Labor.

St. Luke’s Health Systems saw the largest growth, with its workforce of between 4,000 and 5,000 employees in 2005 increasing by about 4,000 by the end of fiscal year 2011.

That’s not to say there aren’t plenty of businesses and government agencies that cut jobs during that same time period. The biggest loser was Boise-based Micron Technology, which reduced its workforce by between 3,500 and 5,000. Albertsons/Supervalu, Hewlett-Packard and Potlatch Forest Products Corp also reduced their workforces.

Source: Idaho Department of Labor

The Idaho Department of  Health and Welfare, the fourteenth largest employer in the state, also saw it’s workforce dwindle in spite of a growing caseload. The Department administers food stamp, child welfare and Medicaid programs, among other social services and is currently making their case before the legislative budget committee to retain or increase their current staffing levels. We’ve made a sortable spreadsheet of Idaho’s top 30-plus employers–including the number of employees they have in Idaho–going back to 2005 here.

Idaho state employees don’t appear in one big chunk in the data, as each state agency is required to file their numbers separately. However, if taken as one entity, the state would finish well ahead of other employers in the state, with about 24,400 employees at the start of this calendar year, according the state controller’s office. That figure has decreased just slightly since 2005, and doesn’t include local, county or school district employees.

Employment data is reported to the state in ranges in order to reflect any changes that may have occurred over the year. It is calculated according to the federal fiscal calendar, which runs from September through October.

While that might be stating the obvious, it’s an important concept to reflect
on during the often-hectic holiday season. So this holiday season – regardless
of which holiday you celebrate or if you celebrate any – remember to focus on
and spend time with the people around you, including family, friends, and even
coworkers or clients.

When TV personality and kid expert Art Linkletter was asked about the idea of
spending time with loved ones this is what he said:

“I once asked a five-year-old what he would take with him if he were going to
Heaven. He replied, ‘I would take my parents because I think that up there they
would have more time with me’… nuff said.”

The good news is, it’s actually possible to slow time down in a way that
seems to lengthen special events like a day of fishing with your child or a
special dinner with a good friend. The key is to consciously honor the person
and the event as you experience it. To be in the moment.

In the days and weeks ahead, remember to recognize the people you care about.
You don’t need to do or say anything specific, nor do you need to spend any
money. You simply need to spend time with them. So consider setting aside two
hours one day for coffee with a friend. Or if you have children, make special
plans to take each one out individually for their own dinner. You can even set
aside a short amount of time each day to call some of your special clients to
see how they’re doing and personally wish them a happy holiday. And when you do,
avoid distractions like technology or worries about what else you need to do
that day.

After all, once the moment passes, you can go back to that checklist of
things to do. But you can never go back to that moment in time.

Economic Calendar for the Week of December 05 – December
09

There was good news, as the headline number for job creations in November came
in at 120,000, with 140,000 private jobs offsetting government losses. What’s
more, some upward revisions to the two previous readings added 72,000 more jobs
than had been reported.

Perhaps even more important, Hourly Earnings grew by just 0.1% – a number
that suggests no threat of wage-based inflation. Remember, inflation is the arch
enemy of Bonds and home loan rates because when inflation rises, investors in
Bonds demand a higher yield to offset the lost buying power inflation imposes on
a fixed payment. And as home loan rates are tied to Mortgage Bonds, this would
mean home loan rates move higher. So the Hourly Earnings number was good news
for Bonds and home loan rates.

Catching the markets by surprise was a rather sharp decline in the
unemployment rate to 8.6%, the lowest unemployment rate we’ve since March of
2009. While this is good news on the one hand, part of the decline stems from
the fact that 315,000 people were removed from the workforce because they
totally gave up looking for work. And with 13.3 million Americans still out of
work, more improvement is certainly needed here.

Similarly, the labor participation rate (which is currently hovering at a
30-year low at 64) needs to move above 66 or it will be difficult for the
economy to grow fast enough to lower our budget deficit. In fact, last week Bond
ratings firm Fitch issued a stern warning to the US, saying that our AAA rating
will be in jeopardy if we don’t soon do something to rein in our own
ever-growing budget deficit.

It is good news that we’re seeing some slow and steady improvement in
the labor market…and coupling this with other recent positive economic signals,
means we are not near a recession at the moment. But our economic health
remains fragile, and any external shock from Europe could easily disrupt the
economic improvement we are seeing.

The bottom line is that the uncertainty out of Europe – and the prospect of
additional Mortgage Bond buying (QE3) from the Fed – should continue to support
Bonds and home loan rates as they will benefit from investors looking for a safe
haven for their money. However, it is also unlikely that Bonds and home loan
rates will improve much further. Inflation, while not yet a problem, is still
elevated…and if it continues to creep higher, this will limit any improvement
home loan rates may see.

If you plan to use a mortgage for your next home purchase, you’ll want to keep your credit scores as high as possible. Credit scores play an out-sized role in determining for which mortgage product you’ll qualify, and to which rate you’ll be assigned by your lender.The higher your credit score, the lower your mortgage rate will be.

What Is A Credit Score?