I will be brief tonight because the market moving news will come out tomorrow when we get the GDP revision and then hear from the Fed.
I wanted to touch real quick on the reported second quarter "improvement" in the foreclosure data from MBA today.
Here is the headline from the piece above:
"CHICAGO (MarketWatch) -- The percentage of homes somewhere in the foreclosure process fell in the second quarter, the first drop since 2006 and the largest quarter-to-quarter drop since 2005, the Mortgage Bankers Association said Thursday."
Great news right? umm...Yeah until you take a look at July.
Before I continue let me note that I pretty have pretty much ignored all of the second quarter housing data because the tax credit distorted the numbers so badly.
We can now start paying attention to the data again because all of the tax credit buyers finished up in Q2.
As you can see below, Q3 sure isn't starting off on the right foot"
CNBC got a sneak peak of the July foreclosure numbers and they were flat out gruesome.
"The Realty Check got a first look at an upcoming report from Lender Processing Services which shows a huge jump up in foreclosure starts in July. "July showed an astounding 24.5 percent month-over-month increase in foreclosure starts, which dovetails with Treasury's latest report on HAMP [Home Affordable Modification Program] cancellations (approx. 50% according to Treasury's numbers)." It also reports that seriously delinquent (6 mos.+) cures have declined by 25 percent. Cures are loans that are made current again. So with fewer cures and more newly delinquent loans, that 90-day delinquency bucket is increasing, hence more foreclosures again."
It looks like foreclosures are once again starting to heat up. I can't even describe what a 24% increase in foreclosures is going to do to housing prices.
Making matters even worse is the fact that we are now heading into the slowest season for housing.
I am surprised the banks puked up this many new foreclosures all at once. To date they have sat on them in order to keep the number of outstanding foreclosures to a minimum in order to support housing prices.
If this new foreclosure trend continues it's going to be a long cold winter for the housing market.
I will be back with full coverage of tomorrow's big events. Hold onto your trading accounts, tomorrow could be a doozy.