Friday News Snippets

Click graph to enlarge.

It is not much, but this is definitely a positive report.

This graph shows the saving rate starting in 1959 (using a three month centered average for smoothing).

Although this data may be revised significantly, this does suggest households are saving substantially more than during the last few years (when they saving rate was close to zero). This is a necessary but painful step ... and a rising saving rate will repair balance sheets, but also keep downward pressure on personal consumption.
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Mortgage applications surge 30%.

U.S. mortgage applications jumped last week as record low interest rates spurred a surge in demand for home refinancing loan.

Refinancing accounted for 78.5% of all applications.

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Commercial loan losses starting to escalate.

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Economy

Americans' Spending Slows, Confidence Remains Near Low as Job Losses Mount American consumers’ spending slowed in February and their confidence remained near a three-decade low this month, reflecting the toll of a deteriorating job market.

Jobless Rate Climbs Above 10% in Three More U.S. States as Slump Spreads The number of U.S. states with a jobless rate exceeding 10 percent almost doubled in February as the worst employment slump in the postwar era spread.

Weds News Snippets

Existing home sales vs new home sales through Feb 09.

For a number of years the ratio between new and existing home sales was pretty steady. After activity in the housing market peaked in 2005, the ratio changed. This change was caused by distressed sales - in many areas home builders cannot compete with REO sales, and this has pushed down new home sales while keeping existing home sales activity elevated.

For a healthy market, the distressing gap between new and existing home sales will probably close.

Good chance new home sales will bottom in 2009?

Because the data is heavily revised, we won't know until many months after the bottom occurs. Also, we need to distinguish between growth rates and levels. Any bottom would be at a very grim level, and any recovery would probably be very sluggish because of the huge overhang of existing homes (especially distressed homes).
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HOPE for Homeowners, The foreclosure-prevention plan passed last summer.

In the five months since it's been in effect, has helped exactly one homeowner to avoid foreclosure. This despite Congress having made $300 billion available to back these loans and estimating that the program would benefit as many as 400,000 families.

"As it stands now, we've only gotten 752 applications," said Federal Housing Authority spokesman Brian Sullivan. "And only insured one loan. Needless to say, the program isn't working terribly well."

Nonetheless, the House of Representatives recently approved an updated version of HOPE as part of the bankruptcy-reform bill that is a keystone to President Obama's Homeowner Affordability and Stabilization Plan. But it was no overhaul to the program; the changes are very subtle.

Dashed expectations

The original program called for lenders to voluntarily refinance delinquent mortgages by reducing the principal balance on loans to 90% of a home's current market value. The new 30-year, fixed-rate loans would then be backed by the FHA.

Under the new plan, lenders would only have to write it down to 93%.

Borrowers who owed $220,000 on a house valued at $200,000, for example, would need their mortgage balances reduced to $180,000 to qualify for an original HOPE for Homeowners refi. That's a $40,000 write-off. Under the new plan, lenders would have to forgive $34,000.

Lenders simply won't do that very often.

They prefer to use term extensions or interest rate reductions to help make mortgage payments affordable for at-risk homeowners. As a result, most of the big lenders refused to participate in the program, which was strictly voluntary though heavily encouraged by the Bush and Obama administrations.

"Writing down principal is the last thing you want to do because you have to realize the loss immediately," said Paul Leonard, a spokesman for the Housing Policy Council, a coalition of mortgage lenders.

No volunteers.

The program has also failed, Leonard added, because of the conditions and limits the program imposed. Borrowers, for example, had to agree to pay the government 50% of any future profits they made from selling the property.
Under the new version of HOPE, borrowers would no longer have to split any earnings with Uncle Sam.

Other changes include incentive payments to servicers of $1,000 to induce them to participate.

The Congressional Budget Office now projects that HOPE for Homeowners could help just 25,000 mortgage borrowers over the next 10 years at a cost of $675 million.

Despite those modest numbers, Leonard said that the members of Housing Policy Council want to keep HOPE for Homeowners on the table even though the administration's Homeowner Affordability and Stabilization Plan does much more than HOPE.

Besides reducing mortgage payments through interest rate reductions or term extensions, HASP provides for lowering mortgage principals - the only thing that HOPE offers.
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GOP Housing Plan Would Tackle Mortgage Fraud.

House Republican leaders plan to unveil a housing package that would increase the tax credits available for home buyers and would direct law enforcement to crack down on mortgage fraud.

(Note: What a surprise the GOP's answer to the housing crisis is tax credits and to activate the police)

Under the proposal, borrowers refinancing their mortgage would be eligible for $5,000 to help cover closing costs or to reduce their principal balance. The plan also revives a $15,000 home buyer tax credit proposal that Republicans pushed last year. This time, the proposal would require the borrower to have at least a 5 percent down payment.

Both programs would expire in July 2010.
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Banks’ Hidden Junk Menaces $1 Trillion Purge.

The U.S. government wants to clear as much as $1 trillion in soured loans and securities from bank balance sheets with its latest bailout plan.

That might prove a short-term respite. No sooner might the Treasury Department mop up those assets than $1 trillion or more in new ones spring up to take their place.

That is due to the potential return of assets held in so- called off-balance-sheet vehicles that banks may soon have to put back onto their books. The end result may be that banks are in no better shape to increase lending even after the government bailout.

At the end of 2008, for example, off-balance-sheet assets at just the four biggest U.S. banks -- Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. -- were about $5.2 trillion, according to their 2008 annual filings.

The hidden assets that may return to banks consist of mortgages, credit-card debts and auto loans, among others. Over the years, banks bundled them together and sold them to investors as securities.

Whether these assets are “troubled” or “toxic,” their return to bank balance sheets could slow efforts to get credit flowing again. After all, banks shed the loans to make their balance sheets look smaller, allowing them to hold less capital to act as a buffer against losses. Until a couple of years ago, that boosted profits
It also helped inflate the credit bubble, even as these accounting maneuvers made it harder for investors and regulators to see how much risk banks actually faced.

The tangled web that banks wove over the years will take a long time to undo.
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Analysis from the International Monetary Fund.

Expects world output to shrink by between 0.5 per cent and 1 per cent this year and the economies of the advanced countries to shrink by between 3 and 3.5 per cent. This is unquestionably the worst global economic crisis since the 1930s.
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California home prices drop nearly 41% from year ago.

The median price of existing single-family homes in California dropped 40.8% in February from the same month in 2008, according to statistics released today by the California Assn. of Realtors.
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Home prices nationally continue to fall, and are no longer confined to just the ‘sand’ states.

As of January 2009, more than 700, or nearly three-quarters, of all metropolitan markets were experiencing home price depreciation, up significantly from 254 markets experiencing depreciation in December 2007 and 394 in June 2008.
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These guys have a clue this time?

UCLA economists are coming out with a new forecast today that offers a grim picture of the year ahead. Nationwide, the unemployment rate will worsen -- peaking late next year at 10.5%.

UCLA says the economy will begin to grow slowly by the fourth quarter of this year.
That's when residential construction should also begin to turn around.

Consumer prices should snap out of a downward trend the second half of this year, but disposable income rates will not match the high levels of 2004 until 2011.

Monday News Snippets

Signs of Life from the Real Estate Market

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In ZIP codes across the country, as once-inflated property prices bottom out housing sales are increasing.

No. 1 Fairfield, Calif.

ZIP: 94533 Metro area: Vallejo-Fairfield

Annual home sale increase: 226%

Fourth-quarter sales: 342

Median home price: $179,500

Median home price change: -19.0%

Nondistressed sales percentage: 17%*

No. 21 Deltona, Fla.

ZIP: 32738Metro area: Deltona-Daytona Beach-Ormond Beach

Annual home sale increase: 2%

Fourth-quarter sales: 126

Median home price: $104,500

Median home price change: -13.0%

Nondistressed sales percentage: 40%

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Treasury's toxic asset plan could cost $1 trillion.

The Obama administration's latest attempt to tackle the banking crisis and get loans flowing to families and businesses will create a new government entity, the Public-Private Investment Program, to help purchase as much as $1 trillion in toxic assets on banks' books.

The plan on toxic assets will use the resources of the $700 billion bank bailout fund, the Federal Reserve and the Federal Deposit Insurance Corp.

The toxic asset program will have three major parts:

_A public-private partnership to back private investors' purchases of bad assets, with government support coming from the $700 billion bailout fund. The government would match private investors dollar for dollar and share any profits equally.

_Expansion of a recently launched Fed program that provides loans for investors to buy securities backed by consumer debt as a way to increase the availability of auto loans, student loans and credit card debt. Under Geithner's plan for the toxic assets, that $1 trillion program would be expanded to support purchases of toxic assets.

_Use of the FDIC, which insures bank deposits, to support purchases of toxic assets, tapping into this agency's expertise in closing down failed banks and disposing of bad assets.

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Mortgages May Be Near the Bottom

Mortgage rates are unlikely to go much below the average 4.75% on a 30-year they were at Thursday, partly because there are fewer lenders.

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Foreclosures last year were up 81% from 2007 and 225% from 2006.

Banks repossessed more than 850,000 properties in 2008 compared with about 404,000 in 2007.

Houses in some stage of foreclosure totaled 303,410 in December, up 17% from the previous month and up nearly 41% from December 2007. These filings came despite (foreclosure) moratoriums.

US foreclosure rate 2008 1.8%2008 Properties with filings 2,330,483Change from 07 to 08 81.2%

Florida foreclosure rate 2008 4.5%2008 Properties with filings 385,308Change from 07 to 08 133.1%

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Bad to the Bone

Banks are holding truly bad assets that are surely worth something, but not worth anywhere near the marks banks have placed on them.

Someone from the Treasury, the FDIC, and/or the Fed will be buying something troubled that may once have even resembled an asset.

We have an estimated $2 trillion in “bad assets” out there, the vast majority tied in some way, shape or form to residential or commercial mortgage credit. Which means that any argument over the real value/intrinsic value/future value of a debt/security/asset — call it what you will — ultimately comes down to a question of what you believe about the underlying collateral.

Investors have clearly spoken in terms of what they believe that collateral to be worth.

And it’s far less than what many banks can afford to sell at.

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Newspapers Wade Into An Online-Only Future

As the business model for newspapers cracks apart, there are those who are lamenting and those who are inventing.

TGIF News Snippets

*Click Graph to enlarge

2007-2008 Home Sales price changes in selected areas (Red) and with Bank REO sales added in (Black)
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Bankruptcies

The courts expect bankruptcy filings will increase by 27 percent this year to 1.2 million as more people face foreclosures and other financial problems caused by the poor economy.
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Foreclosure Tactic

Do you know that your have the legal right to make the lender provide proof that they own the note? Do you know that you can even contest the foreclosure even after the lender has taken the property back?
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Mortgage rates are low.
So are approval rates.

Even with more credit-worthy applicants seeking loans, banks are reluctant to give them the money, despite near record low mortgage rates.

Mortgage interest rates are already flirting with record lows and the Federal Reserve's move to buy up government debt will send those rates even lower. But it doesn't look like it will get any easier for borrowers - even those with good credit.
Bankrate.com reported Thursday that the average interest rate on a 30-year fixed mortgage fell to 5.29%, compared with 5.37% in the prior week. In January, rates fell as low as 5.28%.

Data does not even reflect the Fed's Wednesday announcement that it will purchase $300 billion in long-term government debt.

"This is a big commitment made by the Fed," said Mike Larson, a real estate analyst for Weiss Research, "like going all in in poker. The Fed is buying anything and everything to drive down rates."

The 10-year Treasury yield is used to help calculate 10-year mortgage rates, so as the yield falls, the corresponding mortgage interest rate follows.

Larson said he would not be surprised to see mortgage rates drop into the 4.5% range soon. If they do, that would surpass the 4.7% loans available just after World War II, the cheapest mortgages in American history, according to Larson.

However, one expert cautioned that mortgage rates may not fall as quickly as Treasury yields.

"Mortgage interest rates no longer move in lockstep with Treasurys," said Keith Gumbinger of HSH Associates, a publisher of mortgage information. "A half-point drop in Treasury yields will not translate into a half-point drop in rates. But there will be a big downdraft on rates."

Even before the Fed's move, rates were low and many borrowers were trying to take advantage of them. Applications for mortgages jumped 21.2% last week compared with a week earlier, according to the Mortgage Bankers Association (MBA), with homeowners seeking to refinance their old, higher interest rate loans accounting for nearly 73% of all applicants.

Most people who apply for loans generally receive them, according to Gumbinger, who said the pull-through rate - the percentage of applicants whose loans are approved - has been running about 60%.

Still, that's significantly lower than the pull-through rate the MBA recorded during the height of the housing boom a time when lenders set the bar for mortgage borrowers very low. In 2005, for example, more than 66% of all applicants were approved. In 2003, nearly 79% got their loans.

It's not like borrowers back then were more qualified. They were not. Credit scores for those who actually receive mortgages have been on the rise during the past few years.

Borrowers with scores of 750 or above accounted for 38% of loans issued during the second quarter of 2008, compared with just 23% two years earlier, according to the MBA. Those with low credit scores of 650 or less represented only 15% of loans during the first three months of 2008, compared with 28% during the first quarter of 2006.

During the bubble years, many borrowers weren't asked to prove income or assets or demonstrate that they could afford to repay their loans. Indeed, in many cases, it was obvious that they could not. So, they were given low teaser rates they could manage for the first couple of years and, after that, the thinking was, they could refinance the loan and start the process over again.

The housing bust ended all that and the people applying for loans now are of much better credit quality. But underwriters are so tough today that they still reject four of every 10 loans.

Sharp underwriting"The underwriters are being so careful," said Steve Habetz, a mortgage broker based in Connecticut. "The minutia they're asking applicants for is amazing."

He had a couple with a 750 credit score looking to refinance a loan, which would leave the clients with a 60% loan-to-value ratio; in other words, an excellent credit risk.

"It took weeks to get approval," said Habetz. "They kept asking for more and more detail about his assets."

Underwriting standards are so stringent, according to Gumbinger, many potential mortgage borrowers don't even bother considering buying a home because of all the hoops they have to jump through. "Borrowers understand they have to be better qualified to get a loan now so they don't even bother to try," he said.

They must repair their credit or come up with bigger down payments if they want to buy a home.
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$1 trillion in new liquidity.

Right now, there is about $800 billion plus currency in circulation sitting in wallets, purses and cash registers around the country. Another $800 billion is sitting in a vault at the Federal Reserve Board, for a total monetary supply of about $1.6 trillion. In a vault? Yes. When Congress voted the TARP program to bail out banks, the banks actually took only a small part of the money. The rest they used to offset losses on their balance sheets while letting the Fed hold onto the money.

Why didn't the banks want the money? Because they're not about to make loans in this economy. They're more than happy to let the cash sit at the Fed earning them interest. (The Fed decided to start paying interest last November).

So now the Fed will, in essence, be creating another trillion of money supply to sit in the vault alongside the $800 billion already there. The new money will remain idle for the same reason the old money has because banks won't make loans in this environment.

And what of the money that is going out the door to buy Treasury bills? Those selling Treasuries won't run out and spend the money on flat-screen TVs. With higher taxes coming up next year and the economy in the tank, they won't spend it or lend it they'll probably just turn around and buy more T-bills.

Think of a parking garage filled with cars. The cars' owners leave them in the garage, because it's a bad day with rain and snow and conditions aren't suitable for driving. Similarly, banks and consumers leave their money in the vault at the Fed or in their bank accounts or under the mattress.

When conditions improve, though, all those metaphorical cars will suddenly be taken out for a drive. All at once.

Weds News Snippets

Can you say Action?

See the 1st draft of Martha's new video by clicking here.

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Fannie Mae Refinancing Volume Jumps to $41 Billion in February

Nearly three times the refinancing volume the company experienced during the month of January and the largest refinancing volume in nearly a year.
Fannie anticipates that volumes will increase even more as millions of additional homeowners become eligible to refinance under the President's Making Home Affordable plan. ====================

Home Affordable Refinance

Fannie Mae launched its Home Affordable Refinance initiative earlier this month as part of the President's Making Home Affordable plan.

Key features include:

*Additional Flexibilities: Most borrowers refinancing an existing FannieMae loan will not be required to buy new or additional mortgageinsurance if the loan at the time of the refinance is more than 80percent of the home's value. Existing mortgage insurance must becarried forward to the new loan.

*In addition, Fannie Mae can refinance loans up to 105 percent of a home's value with this new flexibility, so even borrowers who are "underwater" -- who owe more than their home is worth -- may be able to refinance. This will expand the number of borrowers able to take advantage of lower interest rates that reduce monthly payments, or refinance into a more sustainable mortgage.

*Streamlined Processing: Beginning April 4, all 1,600 lenders and 29,000 mortgage brokers using Fannie Mae's Desktop Underwriter(R) platform will be able to process an application to refinance any existing Fannie Mae loan, allowing for greater lender origination capacity, more consumer choice and easier refinancing for borrowers.

**What Borrowers Need to Know:

- To qualify, your mortgage loan must be owned by Fannie Mae.- You must have a solid payment history on your existing mortgage.- The expanded refinance flexibility ends in June 2010.

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Mortgage Rates Down This Week

Thirty-year fixed mortgage rates, which had been hovering around the 5.25% mark for about a month, are down to 5.14% this morning on Zillow Mortgage Marketplace. Purchase mortgage rates have had a few other small dips in the past week. =======================

Encouraging Signs of Life in the Real Estate Market .

ZIP codes across the country, as once-inflated property prices bottom out housing sales are increasing. =======================

Fannie Tightens Its Conditions for Backing Condo Mortgages

Just as a flood of new condominiums are scheduled to hit the housing market this year, Fannie Mae has added restrictions making it more difficult for developers to sell their units.

The government-backed mortgage-finance company stopped guaranteeing mortgages in condo buildings where fewer than 70% of the units have been sold, up from 51%. In addition, the company won't back loans for sales in buildings where 15% of current owners are delinquent on association fees or where more than 10% of units are owned by a single-entity. ======================

Housing: Two Bottoms

There will be two distinct bottoms for housing:

1) First single-family housing starts and new home sales will bottom.
and then followed some time later ...
2) Prices for existing homes will bottom.

Monday News Snippets

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FORECLOSURES

Nationwide, the number of households threatened with losing their homes in February rose 30 percent from 2008 levels, and 6 percent over January levels, according to RealtyTrac. In Florida, one out of every 188 homes is in some stage of foreclosure, with an increase of 13.79 percent since January and 42.97 percent since February 2008.

The Top 10 Foreclosure States as of February:

1. Nevada: 1 in 70 homes
2. Arizona: 1 in 147 homes
3. California: 1 in 165 homes
4. Florida: 1 in 188 homes
5. Idaho: 1 in 358 homes
6. Michigan: 1 in 360 homes
7. Illinois: 1 in 369 homes
8. Georgia: 1 in 389 homes
9. Oregon: 1 in 446 homes
10. Ohio: 1 in 451 homes

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Foreclosed Properties Overcome Their Bad Reputation

Fed by foreclosures, used home sales are actually climbing in some regions. But that’s taking business from new home builders, whose sales fell to a four-decade low in January–a 77% plunge from their peak in summer 2005.
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Mortgage 'Cramdown' Plan Hits Turbulence in Senate

The bill, which has already passed the House, would allow judges to write down mortgage debt for people in bankruptcy court. Democratic leaders have long sought such a "cramdown" provision for homeowners.

The bill needs 60 Senate votes to clear a procedural hurdle to passage, and Democratic aides say they are several votes shy. They had hoped the bill would reach a vote before the April recess but it has yet to be scheduled. Senate aides involved in the talks say that timing may slip further.

"The momentum has swung against cramdown," said Sen. Bob Corker (R., Tenn.).

The House bill is already substantially weaker than one crafted by senators several weeks ago. It limits cramdowns to existing mortgages; loans made in the future wouldn't qualify. Bankruptcy judges can write down a primary mortgage only if the borrower can show efforts to modify the loan were made prior to filing for bankruptcy.

Separately, the American Bankers Association on Friday raised alarms about a little-noticed part of the bill, saying it would let a borrower end up owning a house for a fraction of the purchase price if the lender breaches certain federal disclosure rules.

The industry said the House version of the bill would force judges to invalidate a lender's claim in bankruptcy for committing minor and accidental errors, such as understating a finance charge by as little as $36.

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Freddie Mac: 30-year mortgage rate falls to 5.03%

Freddie said Thursday the 30-year fixed-rate mortgage average fell from the previous week to 5.03% with an average 0.7 point for the week ending March 12. In the previous period, the average was 5.15%, and the year-ago average was 6.13%. New home sales fell 10.2% in January to the slowest pace since records began in January 1963 while pending existing home sales slowed by 7.7%, the weakest since the series began in January 2001.

More recently the Federal Reserve noted in its March 4th regional economic report that residential real estate markets remained in the doldrums in most areas, with only scattered, very tentative signs of stabilization.
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Freddie/Fannie Results ower, & Freddie Puts Restrictions on Refinances

Home-mortgage company Freddie Mac reported a loss of $23.9 billion for the fourth quarter and said it will need a $30.8 billion injection of capital from the U.S. Treasury.

The company said it expects its provisions for losses on mortgage defaults to remain high this year and that it is likely to require further funds from the Treasury. Freddie had a loss of $2.45 billion in the year-earlier quarter.
For all of 2008, Freddie reported a loss of $50.1 billion, compared with a year-earlier loss of $3.1 billion. The losses over the past two years exceed the total of about $42 billion earned by the McLean, Va., company from 1971 through 2006. Freddie blamed the losses largely on rising mortgage defaults and declines in the value of derivatives used to hedge against interest-rate risks and other securities.

Fellow mortgager Fannie Mae last month reported a $25.2 billion loss for the fourth quarter.

The Treasury has agreed to provide as much as $200 billion of capital apiece to Fannie and Freddie in exchange for senior preferred stock. The Treasury already provided $13.8 billion to Freddie late last year, and Fannie has asked for $15.2 billion of capital under the same program.

Meanwhile, a new mortgage-refinancing program offered by Freddie as part of the Obama administration's foreclosure-prevention plan doesn't allow borrowers to shop around for the lowest fees. Any borrower with a Freddie-backed loan who wants to refinance under the program needs to do so through the company that services his current loan.

Fannie Mae, said borrowers with Fannie-backed loans will be able to seek refinancings under the program from more than 30,000 lenders nationwide. While Fannie is letting borrowers shop around, those deemed a higher risk are hit with fees that can total 3% or more of the loan balance. Freddie's maximum fee on these refinancings is 0.25%.

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Mortgage Investors Call for Changes in Rescue Plan

Investors who hold billions of dollars of residential mortgage-backed securities are pressing the Obama administration to make changes in its housing rescue plan.

Many of the four million borrowers the administration hopes to help through its loan-modification program have mortgages that were packaged into securities and sold to investors world-wide. Roughly $1.9 trillion of mortgage loans outstanding as of Dec. 31 had been packaged into securities that don't carry government backing, according to Inside Mortgage Finance. Thus far, servicers have been more reluctant to modify those loans than mortgages they own.

Home-equity loans and other second mortgages are an issue because such debt is junior to first mortgages. Some investors and analysts say that mortgage servicers may find it in their own financial interest to modify the first mortgage and not touch the related home-equity loan or line of credit.

Roughly half of delinquent subprime borrowers also have a second mortgage, according to Credit Suisse Group.

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Home-value insurance?

EquityLock Financial, a company based in Utah, offers contracts – as opposed to insurance policies – that agree to pay homeowners if they lose money when they sell later, an amount equal to the percentage of the downturn of their local market, based on an agreed-upon home-price index.

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Who knows the right price, Martha?

Homebuyers, home sellers, and real estate pros don't always agree on what a property is worth, and many buyers thinking that sellers and licensees set the price too high. According to a survey by HomeGain.com Inc., 63 percent of homeowners believe the price their practitioner recommended was too low. About 45 percent of sellers think prices should be 20- to 30-percent higher, and 14 percent believe their home should be priced 30 percent higher.

Meanwhile, 21 percent of homebuyers say homes are overpriced up to 10 percent; 32 percent say prices are 10 percent to 20 percent too high; and 6 percent say homes are overpriced by at least 20 percent. Only 18 percent of potential homebuyers believe properties are priced fairly.

News Snippets

Neustar has been named to Forbes Magazine’s “25 Fastest Growing Tech Companies” list for 2009.

No. 17 NeuStarNeustar provides clearinghouse and directory services to the communications industry. Customers include communications service providers, Internet service providers, mobile network operators and cable television operators.

(note to Martha) Neustar is the registry for the .us ccTLD in our domain biz. Oh, they are also the TLD registry for .biz

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Household Net Worth Sees Record Fall

The net worth of American households fell by the largest amount in more than a half-century of record keeping during the fourth quarter of last year.

The Federal Reserve said Thursday that household net worth dropped by a record 9 percent from the level in the third quarter. The decline was the sixth straight quarterly drop in net worth and underscored the battering that U.S. families are undergoing in the midst of a steep recession with unemployment surging and the value of their homes and investments plunging. Net worth represents total assets such as homes and checking accounts minus liabilities like mortgages and credit card debt.

Family net worth had hit an all-time high of $64.36 trillion in the April-June quarter of 2007 but has fallen in every quarter since that time. The record 9 percent drop in the fourth quarter pushed total net worth down to $51.48 trillion, a level that is 20 percent below the third quarter 2007 peak.
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Can Marijuana Help Rescue California's Economy?

Democratic State Assembly member Tom Ammiano introduced legislation last month that would legalize pot and allow the state to regulate and tax its sale — a move that could mean billions for the cash-strapped state.

Pot is, after all, California's biggest cash crop, responsible for $14 billion in annual sales, dwarfing the state's second largest agricultural commodity — milk and cream — which brings in $7.3 billion annually.

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CRAMDOWN UPDATE

The bankruptcy loan modification legislation, a key part of the president's housing policy, is (get used to it) held up in the senate while leadership looks for sixty votes to break a filibuster of the bill. The legislation, which is opposed by the mortgage loan industry, would allow bankruptcy judges to modify primary home loans so borrowers can afford to pay them; currently, primary home loans are the only loans that judges cannot adjust during bankruptcy proceedings.

A Democratic senate aide, who wouldn't speak on the record while negotiations are on-going, tells me that Senator Dick Durbin, who is managing the legislation, needs to find a few Republicans to support cloture. After that, the bill will come to the floor -- it could be as soon as next week or after the Easter recess. More from the aide...

We are working with groups on all sides, major lenders, credit unions, Democrats and Republicans in an effort to try and get this language to a place where we can pass it. Opponents of the bill want to narrow it to only sub-prime mortgages, and that's pretty much a non-starter. Every argument opponents of the bill have offered is the same old song and dance, same stuff we've been hearing from the mortgage lenders for years. Doing this will increase rates across the board. Not true. Doing this will cause a flood of people going into bankruptcy, not true. Bankruptcy attorneys who support the bill and [Attorney Generals] who support the bill all say that bankruptcy is not a good thing, nobody wants to declare bankruptcy, [but this bill is necessary]. The opponents are not offering any alternatives.

Negotiators have already agreed to limit the provision to only mortgages issued at the time the bill is enacted, so future mortgage holders couldn't take advantage of the provision.

The usual suspects in the GOP are being approached -- Spector, Snow and Collins, as well as less frequently seen compromise players like Tennessee's Bob Corker and Florida Senator Mel Martinez. Martinez, whose state has one of the worst foreclosure rates, should be receiving a lot of pressure from his constituents to get behind the legislation.