it’s been a fairly light week for economic data, but we did have the release of the Mortgage Monitor for February from Black Knight Financial Services (aka LPS Data & Analytics), the nearly all graphics report on the mortgage crisis which we’ve  been reviewing for years, so after we take a quick look at the data from the regular monthly government releases, we’ll take a look at a handful of graphs and pictures from that report and see what they tell us about homeowners with mortgage trouble…

February Consumer Credit Grows at a 6.4% Annual Rate on Student Loans

the first release we saw last week was the G.19 Release on Consumer Credit for February from the Fed, which you might recall we tracked monthly a few years ago when student debt issued by the federal government was growing at a 50% annual rate…in February, total seasonally adjusted consumer credit increased at a $16.49 billion annual rate to $3.13 trillion, which would work out to a 6.4% growth rate over a year…however, the revolving portion of that, which would be like credit cards, decreased by $2.4 billion, a 3.4% annual rate, to $854.2 billion, while non-revolving credit, which includes loans for autos, yachts and college but not real estate, rose by $18.9 billion to $2,275.3, an annual rate of 10.1%….January’s seasonally adjusted credit increase was revised to $13.80 billion instead of the previously reported $13.70 billion, with a $0.2 billion decrease in revolving credit and a $14.0 billion increase in non-revolving credit…the Zero Hedge bar graph below shows the seasonally adjusted monthly change in non-revolving credit outstanding in red and revolving credit monthly in blue since the beginning of 2011, with negative changes pointing down…the black line sums the two to track the headline change in credit that this release reports on…

Feb 2014 consumer credit from ZH

the unadjusted data show that total credit outstanding has actually fallen since December with revolving credit contracting sharply, as one might expect during the post holiday winter months…the abbreviated table below, excerpted from the second table in the report, shows the actual level of credit outstanding in billions of dollars by type and by holder at year end for each year from 2009 to 2013, and then also at the end of January and February…note that revolving credit outstanding in February fell $18.5 billion in these preliminary figures, after falling $21.1 billion in January, as consumers paid for their holiday credit card purchases, and that revolving credit, which is mostly car and student loans, jumped $33.0 billion in January but rose just $3.8 in February…in the revolving credit section, we can also see the rapid expansion of student debt from $223.1 billion in 2009 to $764.0 billion as of February in non-revolving consumer debt originating with the Federal government, which are student loans originated by the Department of Education…the pdf of this report puts total student debt from all sources, including private student loans without government guarantees, at $1,225.6 billion at year end, with more recent data on the aggregate unavailable..also note that were it not for the student loans, non-revolving credit would also have been negative year to date…

Feb 2014 consumer credit 2

February Job Openings at 6 Year High

on Tuesday, the Job Openings and Labor Turnover Summary for February from the Bureau of Labor Statistics indicated a 299,000 jump in the number of job openings in February, which brought the number of unemployed per opening down to 2.5, the lowest level since July 2008…seasonally adjusted job openings rose from 3,874,000 in January to 4,173,000 in Februarya six year high which is 2.9% of total employment, up from 2.7% of the labor force in January, when even seasonally adjusted openings may have been held back due to the brutal weather…almost all of the increase in February openings could be accounted for by the 204,000 additional positions in the professional and business service sector, where they now have 816,000 openings for jobs that could be anything from programmers to janitors, and the 110,000 new spots added by the retail sector, where openings rose to 489,000 unfilled slots…on the other hand, openings in durable goods manufacturing fell 12,000 to 143,000…

this release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and ‘others’, which include retirements and death…in February, seasonally adjusted new hires totaled 4,587,000, which was up slightly from 4,516,000 million hired or rehired in January, while the hiring rate as a percentage of all employed was unchanged at 3.3%, same as it was for the past 5 months…..seasonally adjusted hiring increases were strongest in accommodation and food services, where hiring rose by 23,000 workers to 695,000, while hiring in health care and social assistance fell by 35,000 to 440,000….total separations, on the other hand, were down by 35,000, from 4,419,000 in January to 4,384,000 in February, while the separations rate as a percentage of total employment was unchanged at 3.2%…thus hires minus separations would work out to an increase of 203,000 payroll jobs, a bit more than the revised 197,000 jobs reported for February in last weeks jobs report

in breaking down the seasonally adjusted job separations, we find 2,382,000 quit their jobs in February, up from 2,368,000 in December, as the quits rate, considered an indication of worker confidence, remained unchanged at 1.7% of total employment…unsurprisingly, workers in accommodation and food services had the highest quitting rate at 4.0%, as 497,000 of them quit in February, 53,000 more than quit in January, while the number who quit jobs working in retail fell by 23,000 to 398,000…in addition, another 1,523,000 were either laid off, fired or otherwise discharged in February, down from 1,596,000 in January, while the discharges rate remained at 1.2% of all those employed…only unadjusted discharge data is given by industry, so unsurprisingly the largest drop in layoffs was in retail, where discharges fell to 161,000 from the 357,000 that were laid off in January..…meanwhile, other separations, which includes retirement and death, were at 383,000 in February, up from 341,000 in January, for an ‘other separations’ rate of 0.3%, up from 0.2%….our FRED graph for this report below shows job openings in blue in thousands monthly since  January 2005, and monthly hires in orange and monthly separations in violet over the same span…note that when separations in purple were above orange hires we were losing jobs…also, of the two major components of separations, the count of layoffs and firings is tracked in red, while the number of those quitting their jobs monthly is shown in green…you can also view an interactive of this graph at FRED, where you can step through the data for each month by moving your cursor across the graph…

Febraury 2014 JOLTS

February Wholesale Sales Rise 0.7%; Inventories Up 0.5%

another release we saw at midweek was on Wholesale Trade, Sales and Inventories for February from the Census Bureau, which reported that seasonally adjusted sales of wholesale merchants rose 0.7% (+/-0.4%) to $436.1 billion from the revised January estimate of $433.1 billion and were up  3.1% (+/-1.6%) from a year earlier…the January preliminary sales estimate was revised downward $0.1 billion but was still 1.8% lower than December, suggesting a weaker 1st quarter for wholesalers…sales of durable goods were up 0.1% (+/-0.5%) over January and were up 2.9 percent (+/-1.1%) from February a year ago as wholesale metal sales rose 1.9% while lumber wholesale sales fell 2.9% and computer equipment wholesale sales fell 2.7%…sales of nondurable goods were up 1.2% (+/-0.5%) from January and 3.3% (+/-2.6%) higher than a year earlier as sales of petroleum and petroleum products were up 4.0% while sales of farm products fell 4.6%…meanwhile, seasonally adjusted wholesale inventories were valued at $518.3 billion at the end of February, 0.5% (+/-0.4%) higher than the revised January level and 4.7% (+/-0.7%) above last  February’s level, while January’s preliminary estimate was revised upward $0.3 billion or 0.1%…wholesale durable goods inventories were up 0.7% (+/-0.4%) in February and up 5.9 percent (+/-1.1%) from a year ago, with inventories of computer equipment up 2.2% and wholesale inventories of professional and commercial equipment and supplies up 1.4%…inventories of nondurable goods were up 0.1% (+/-0.5%) from January and up 2.9% (+/-1.2%) from last February, as inventories of farm products were up 2.7% while inventories of petroleum were down 2.6%…finally, the closely watched inventory to sales ratio of merchant wholesalers was unchanged from January at 1.19%, while up slightly from the 1.17% ratio of last February…

March Producer Prices Rise 0.5% and are 1.4% Above a Year Ago

on Friday, the Bureau of Labor Statistics released the composite Producer Price Index for March, which in addition to reporting on selling prices received by producers for finished, intermediate and raw goods, it now includes prices for services, and construction sold for personal consumption, capital investment, government purchases, and export….the seasonally adjusted headline producer price index for final demand rose by 0.5% in March after falling 0.1% in February and is now up 0.6% for 2014 and 1.4% higher than a year ago, the greatest year over year increase in 7 months…the index for final demand for services rose 0.7% after falling 0.3% in February, while the index for final demand goods was unchanged after rising 0.4% the previous month…core producer prices for final demand goods, which exclude producer prices for food and energy, rose 0.1% in March, as finished foods rose 1.1% while final demand energy fell 1.2%…major factors in the increase in wholesale food prices were a 7.2% increase in prices for pork and a 4.6% increase in grain prices, while a 15.7% decline in the price of LP gas and a 7.0% decline in No 2 diesel fuel weighed on the final demand energy index…in finished goods other than energy, only textile house furnishings, which fell 5.2% in price, and Industrial chemicals, which fell by 2.0%, saw price changes greater than 1.0%…meanwhile, of the 0.7% jump in prices for final demand services, roughly three fifths of it was due to a 1.4% increase in margins for final demand trade services, a measurement of changes in margins received by wholesalers and retailers; of that, the largest jumps were an 8.1% jump in margins for flooring and floor coverings retailing and a 4.7% increase in margins for chemicals and related products wholesaling…

Foreclosure Starts, Mortgage Delinquencies, and New Mortgages All at New Lows in February

lastly, as we mentioned in opening, we’ll now take a look at the Mortgage Monitor for February from LPS, aka Black Knight Financial Services, which we usually follow for its thorough graphics presentation on mortgage delinquencies and foreclosures, without spending much time on the other areas that this 30 plus page report covers, which includes mortgage modifications, home sales and prices, homebuyer credit ratings and a host of other special mortgage related topics as they come up….but this week we’ll start by with the widely cited news from this month’s Mortgage Monitor that new mortgage originations were at their lowest since their records began, at least a 14 year span that includes the worst of the housing bust….BKFS assures its clientele that home sales remain stable because cash sales now account for almost half of all transactions, and complains the reason for the decline in new mortgages is that credit standards have remained tight, so borrowers with lower credit scores have difficulty getting a mortgage…whatever the reason, it looks like individuals who need a mortgage are being squeezed out and replaced by investors and corporations with cash…the first graph below, from page 4 of the pdf presentation, shows that this decline in new mortgages is a fairly recent phenomena that seems to have begun last summer when the threat of a Fed pullback caused interest rates to spike…as recently as last spring, new mortgages were being issued at a 800,000 a month rate, but as of this report new mortgages have collapsed to under 300,000 a month…there may be some seasonality in play here, as this data is not seasonal adjusted, but it’s clear that last February still saw an elevated level of new mortgages…also note by the color coding that the lion’s share of mortgages (FHA/GNMA. VA, & GSEs), are government backed, with “other mortgages” in orange and TBD (To Be Determined) approvals in light blue accounting for just a sliver…

February 2014 LPS originations

shifting our focus back to the monthly data on delinquencies and foreclosures, BKFS reported that 1,115,000 mortgages, or 2.22% of the total outstanding, remained in the foreclosure process, which was down from 1,175,500 home mortgages, or 2.35% of all loans that were in foreclosure in January and down from 3.38% in February last year; these are homeowners who had a foreclosure notice served but whose homes had not yet been seized, and February’s total was the lowest percentage of homes in foreclosure since 2008…in addition, they reported new foreclosure starts were also at a multiyear low of 91,993, while in a separate report, RealtyTrac reported total foreclosure filings, including default notices, auctions and bank repossessions, were at the lowest since the 2nd quarter of 2007…in addition to homes in foreclosure, BKFS data showed that 2,991,000 mortgage loans, or 5.97% of all mortgages, were at least one mortgage payment overdue but not in foreclosure in February, down from 3,140,000 homeowners, or 6.27% of those with a mortgage, who were more than 30 days behind in January, which gives us a total of 8.17% of all mortgages either delinquent or in foreclosure in February…of those who were behind on their housepayments in February, 1,242,000 home owners, or 2.48% of the total, were seriously delinquent, which means they were 90 or more days behind on mortgage payments, but not in foreclosure at the end of the month….combining those seriously delinquent with those homeowners who were in foreclosure, we find that 4.70% of all homeowners remained in serious trouble at the end of the month… 

the graph below, from page 22 of the Mortgage Monitor pdf, shows the percentage of active home loans that were delinquent monthly since 1995 in red and in green the percentage of mortgages that had been in the foreclosure process monthly over the same period…obviously, the percentage of homes in foreclosure in green has been falling fairly steadily over the last two years and at 2.22% in February is now just over half of the October 2011 peak of 4.29% of mortgages in the foreclosure process…but notice we’re still 5 times the pre-crisis foreclosure inventory of 0.44% from December 2005 that’s highlighted on the graph, so the percentage of homes in foreclosure is still a long way from normal …similarly, with delinquent mortgages shown in red at 5.97% of all mortgage outstanding in February, we’re down nearly 43% from the 10.57% of mortgages that were delinquent but not in foreclosure in January of 2010, but still well above the December 2005 delinquency percentage of 4.27% noted on the graph…the seasonality of mortgage delinquencies is also apparent in the track of the red graph, wherein they usually begin to increase at the begiinning of the school year and peak during the holidays, and then decline at the beginning of the year as homeowners catch up on all their bills after holiday shopping…in the face of higher heating bills this winter, we’re surprised that decline in delinquencies has remained pronounced as it is…

February 2014 LPS delinquent and foreclosure by month

the next graphic is a map from page 23 of the pdf which shows the percentage of homeowners who are either seriously delinquent or in foreclosure in each county in the US; those counties in the darkest red, including most counties in New York, New Jersey, Florida and Maine, have over 10% of their homeowners with a mortgage that is still in serious trouble; on the other hand, those in the darkest green, including many in N Dakota and other resource boom area,s approach zero percent of their homeowners either more than 90 days late or in foreclosure…

February 2014 LPS delinquent and foreclosure map

the next graph below, from page 17 of the mortgage monitor pdf,  gives us a count of the number of foreclosures initiated each month by the number of months that the homeowner was delinquent when the foreclosure was first initiated, with the number foreclosed in each given delinquency bracket on the left margin…in dark blue, we have the number of homes that were 6 months overdue when foreclosure was started, in orange we have the number 5 months delinquent when foreclosure was initiated, in teal blue, foreclosure starts in the 4 month bracket, while the 3 month delinquency bracket is in violet and the 2 month delinquents who were foreclosed on are in red…we can see early on in the mortgage crisis many homeowners were having foreclosure proceedings initiated after falling 3 months behind, and now most are delinquent for 6 months or more before foreclosures are started…BKFS wants us to note that there’s been a large drop in foreclosure starts primarily in the 2 and 3 month delinquent brackets, which they blame on new rules from the Consumer Financial Protection Bureau…  

February 2014 LPS foreclosure delinquecy bucket

this next bar graph, from page 18 of the Mortgage Monitor, breaks out the number of mortgages becoming seriously delinquent each month and compares that to the number of foreclosures started in that same month…the number of foreclosure starts monthly is shown by the blue bar, while the number of delinquent mortgages that deteriorated to serious, ie, first became more than 90 days late, is shown in red for each month…the blue line on the graph shows that the ratio of serious deterioration to foreclosure starts is at the highest level since 2010, and that also is in part because of delays imposed on the foreclosure process by CFPB rules…the number of seriously delinquent mortgages is actually down in February after remaining in the same narrow range over the previous 5 months, while the number of foreclosure starts has been dropping monthly since October, raising the ratio…

February 2014 LPS foreclosure vs deterioration

the last two graphics relate to the lengthening period of time that those are in foreclosure remain mired in the process…the graph below, from page 19 of the pdf, shows the historical pipeline ratio for judicial states, where a court proceeding is necessary to complete a foreclosure, in blue, and the same ratio in non-judicial states, where such a proceeding isn’t necessary for the banks to have the the home seized, in red….as the graphic indicates, the pipeline ratio is computed by adding those homes that are seriously delinquent to those already in foreclosure and dividing that by the average number of completed foreclosures per month over the previous 6 months; what that results in is the average number of months a problem home loan would be in the “foreclosure pipeline” at the current pace of foreclosure in each state before the foreclosure process on all seriously delinquent homes is completed…obviously, early on in the crisis, the process was much longer for judicial states, with their average reaching 118 months and the foreclosure pipeline ratios reaching 50 years for New York and New Jersey, but as we can see on the graph, the difference has closed as judicial states have moved to speed the process…still, the pipeline ratio now averages 51 months, or more than 4 years for judicial states, and 45 months and rising for non-judicial states…the reason for the increase in the foreclosure pipelines recently is not so much delays in court anymore but procrastination on the part of the mortgage servicers and banks, possibly because they’ve experienced quite a bit of deterioration in the properties they’ve seized, and would rather have them occupied by delinquent homeowners than ravaged by vandals…as of February, seriously delinquent homeowners have averaged 481 days in their homes since first becoming seriously delinquent, while those in the foreclosure process have been delinquent on their mortgages for an average of 956 days without a foreclosure sale… 

February 2014 LPS pipeline ratios

in the final plate, from page 20 of the Mortgage Monitor, we have a map showing the average length of time a home in foreclosure has been delinquent for each county in the US, and as the heading indicates, the average nationally is now greater than 2.6 years…in those counties shown in red, properties have remained in the foreclosure pipeline for an average of  1,200 days or more since they first became seriously delinquent on their mortgage…and although the scale indicates that those counties shown in green could have been delinquent as few a zero days, we know that’s not precise because homeowners who have never been late in paying on their mortgage would not be in foreclosure..

February 2014 LPS foreclosure days overdue map

(the above are the comments that accompanied my regular sunday morning links emailing, synopses which in turn were mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links that accompanies these commentaries, most from the aforementioned GGO posts, contact me…)