Now a word from the Atlanta Federal Reserve Bank

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With last week's capital orders data giving signals of renewed growth in business fixed investment in equipment and software in the fourth quarter, the question turns to whether this growth will be sustained. So lets go to the Fed Reserve map for a survey of Southeastern businesses on what they plan to spend on capital orders within the next six months compared to the last six.

Of note, 36 percent of respondents indicated that they planned to increase spending over the next 6–12 months relative to actual spending over the past 6–12 months. Another 42 percent said they would leave their spending at about the same level (unchanged), and 22 percent indicated that their spending would fall. The difference between those planning to increase spending and those planning to decrease spending equals a net positive of 14 percent.

For those who planned to increase spending on new plant and equipment, the most commonly given reasons (respondents could select more than one reason) were that they expected growth in sales to be high (37 percent of those respondents), or they needed to replace information technology equipment (37 percent of those respondents). Also, 61 percent of those planning to increase spending indicated that at least some of that spending reflects investment that had been postponed because of the recession. Not surprisingly, for those who did not plan to increase spending, the most commonly cited reasons were the expectation of low growth in sales (cited by 47 percent of those respondents) and heightened economic uncertainty (cited by 39 percent of those respondents).

So where does that leave things? Probably with more questions than answers. For instance, the fact that about two-thirds of the firms that are planning on increasing spending are doing so because they had postponed capital expenditures during the recession would be consistent with some bounce in capital spending by businesses following the most recent recession. But how sensitive are firms to changes in economic conditions? Currently, we hear a lot anecdotally that cash is a high priority on firms' balance sheets as a precaution against economic uncertainty. If sales were to increase more than expected, how fast would firms rethink their investment spending plans?

Based on responses from 320 businesses across Alabama, Florida, Georgia, Mississippi, Louisiana, and Tennessee.

The groundhog has spoken

Punxsutawney (puhnk-suh-TAW'-nee) Phil has emerged to see his shadow before chilly revelers in Pennsylvania, meaning winter will last another six weeks.

FannieMae's Loan Workout Hierarchy

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The steps followed by the loan processors in examining what Loss Mitigation Options are available to you (the borrower).

Fannie Mae's loan workout hierarchy requires that you first determine if the Home Affordable Modification Program (HAMP) is appropriate. If the Home Affordable Modification Program is not appropriate, then consider other foreclosure prevention alternatives to resolve delinquencies.

View the Loan Workout Hierarchy fact sheet, which includes descriptions of each loss mitigation option.

Servicers Profit More by Foreclosing rather than Modifying

A new report from the National Consumer Law Center (NCLC) discloses that mortgage servicers – including many large banks – have found it cheaper to foreclose on homeowners than to offer loan modifications that would benefit homeowners and investors.

The result: Americans who might be able to stay in their homes under a loan modification plan are being moved right past that option and on to foreclosure.

The new NCLC report, “Why Servicers Foreclose, When They Should Modify, and Other Puzzles of Servicer Behavior,” reveals that servicers, unlike investors or homeowners, generally don’t risk losing money on foreclosures. In fact, servicers usually make money on foreclosures.

Underwater Mortgages & Guilt Double Standards

Corporations that walk away from underwater mortgages are called "smart" while individuals who do the same thing on a much smaller scale are called deadbeats. Why is that again?

Tishman Speyer Properties walks away from 11,232 Manhattan apartments because it can't pay its mortgage. That's good business. Rick Gilson, a college custodial supervisor in South Dakota, wants to walk away from the mortgage on his mobile home. If he does, he'll be a deadbeat.

Those two borrowers face the same financial dilemma: Their mortgages far exceed the values of their properties. Yet one gets to walk away without guilt, while the other can't.

Gilson is too scared to dump the mortgage on his mobile home. He owes $31,973, but the home is only worth about $14,000. "I have 12 years of money put into this property that I will never get out," said the 50-year-old Gilson, from Rapid City, S.D. "But I am still paying because this is what I have been told to do. That's what I think is right."

Until now, the focus of the real estate crisis has been on individuals. One in four U.S. homeowners, or nearly 11 million Americans, are underwater on their mortgages. In some parts of the country -- Florida, Nevada, Michigan, California and Arizona -- the share tops 40 percent.

Some experts say it makes sense for some people to walk away if they're deeply underwater, even if doing so could wreck their credit score for seven years. It may not be worth it to keep paying a mortgage when they can find comparable rental housing for considerably less money.

The argument against walkaways is that they will wreak economic havoc if a lot of people do it. Banks will have more bad loans on their books. They'll make fewer loans. Home prices will plunge more.

The rules are different, though, for the walkaway of all walkaways.

That title is reserved for what happened to one of New York's trophy properties, the 56-building Stuyvesant Town and Peter Cooper Village complex. Spanning 80 acres on Manhattan's east side, it's the largest single-owned residential area in the city. Its red brick buildings, built by Metropolitan Life in the 1940s for World War II veterans, are still a haven for the city's middle class.

Commercial real-estate firm Tishman and its partner, investment firm BlackRock, paid $5.4 billion to buy the property from MetLife in late 2006 -- right at the market's peak. They hoped to make money by converting rent-regulated apartments into luxury condos and raising rents.

Then the housing crash hit. The value now: $1.8 billion.  And you thought you overpaid for your house. "They made assumptions that things would grow to the moon, and things certainly did not," said Len Blum, a managing partner at investment bank Westwood Capital.

Tishman said last week that it was turning the property back over to creditors to avoid filing for bankruptcy protection. In recent weeks, Tishman failed to restructure $4.4 billion in debt, and couldn't find another buyer, according to a statement from the company.  Tishman exits the deal with a ding to its reputation, but it will be fine. It still has Rockefeller Center and the Chrysler Center in New York, and dozens of properties in cities worldwide. The company has about $33 billion in assets.  Residential homeowners wouldn't get off so easy.  For most underwater homeowners, the thought of walking away from their commitment is impossible to fathom. After all, it's part of the culture. Pay your bills. Uphold contracts.

University of Arizona law professor Brent White, who has written about mortgage walkaways, says societal pressures often trump what's actually legal. He thinks individual borrowers believe they are obliged to repay their loans even when it isn't in their financial interest.  "The problem is that we have a structure whereby corporations can walk away with impunity but individuals can't," White said.

Gilson reads what's happening 1,700 miles away in Manhattan and gets angry.  His mobile home started depreciating the minute he moved in 12 years ago, much as a car loses value as soon as you drive it out of the dealer's lot.  Three years ago, he bought a new home that he lives in with his wife. Since he can't sell the mobile home for anything near what he paid for it, he rents it out in order to make the $300.36 mortgage payment every month.  "I get so stressed over this," Gilson said. "It's like the elephant in the room and there is nothing you can do about it."  Gilson is frustrated that real-estate tycoons can default on a $4.4 billion mortgage, but he's not supposed to do the same on his $31,000 loan.

How can you blame him?

The Real Estate Market ain't what she used to be

At the beginning of the 21st century, most homebuyers had never viewed a home online; the three top home sale marketing methods were yard signs, newspaper ads and open houses; and nearly nine out of 10 buyers financed their purchase with a fixed-rate, 30-year mortgage.

In 1999, only 37 percent of buyers used the Internet in their home search. Today, 90 percent of buyers search online. Websites have evolved to give today’s buyers what they want – not just property listings, but multiple photos, online videos, mapping features and comprehensive neighborhood information.

Median home values over the past decade have increased more than 25 percent, from $137,600 in November 1999 to $172,600 in November 2009 (the most recent existing-home data available). Fewer people buy detached, single-family homes – 82 percent in 1999 compared to 78 percent in 2009 – but more people buy homes in suburban neighborhoods – 46 percent in 1999 compared to 54 percent today.

Buyers themselves have also changed, and married buyers make up a smaller proportion. In 1999, married couples bought 68 percent of all homes; in 2009, only 60 percent were married. Single men purchased 10 percent of all homes last year, compared to only 7 percent 10 years ago. Single women now represent 21 percent, up from 15 percent in 1999.

Some things haven’t changed. The median age for homebuyers last year was 39, just as it was in 1999. Neighborhood quality, affordability and convenience to work and school still rank as top priorities for buyers; and 80 percent of buyers still believe that owning a home is an investment in their future.

HEAVY 2009 RECORD FORECLOSURES

A total of 2,824,674 U.S. properties received a foreclosure filing in 2009, a 21 percent increase in total properties from 2008 and a 120 percent increase in total properties from 2007.