Peer Group Data

The banking industry has for decades collected data on various operations and financial ratios. It is relatively easy for a banker to compare his/her performance against peer banking companies. What is your operating ratio, expense load versus peers? Average loss on sale of a foreclosed home? Cost to deliver a specific service. That sort of thing.

Our ERC folks do a fine job of surveying the industry. But I cannot locate a resource to which all companies have contributed refined data used to develop objective comparative measures. Numbers are surely available but when I inquire within the industry, not much is available. One industry veteran referenced an excellent report from (I think) 2009 from ERC that was a one shot deal.

If such a report (a la the banker's Sheshunoff reports) exists, please direct me to it via a Comment. If not, let's work together to develop one. After all, our clients operate in highly competitive markets where this sort of resource, and the discipline that comes with it, is essential.

Overhang

There are now 4.1 million homes either 90+ days past due or in foreclosure. Add to that homes already owned by lenders, and we have a serious overhang issue.

The good news is that the rate of new problem loans has declined in the past year by half.

What steps are relocation managment companies, clients and vendors taking to deal with the impact of this issue? Process, use of data, home marketing, policy development all require attention in light of unprecendented, and lingering, affects of our housing challenges.

Use "Comments" if you want more information, and the source of the data.

150th Anniversary

Yes, this year is the 150th anniversary of the Civil War. It began in April, 1861 and ended in April 1865, after over 600,000 had died. (Adjusting for population, the same rate today would result in 6 million dead). Periodically, I will post historical items about the war, and share websites that offer perspective. Also, books - one historian has said more has been written about the Civil War than any event in US History. No wonder.

We are approaching the date of the First Battle of Bull Run (aka First Manassas) - July 21 1861, In this first great encounter of armies, Union and Confederate soldiers met not far from Washington DC. Ladies and gentlemen in their Sunday best packed picnic lunches and drove out the "watch the show". Nearly everyone in the north assumed the war would be short. Maybe even only one battle and those Rebs would come to their senses.

Instead, the spectators witnessed the reality of modern war, and a terrible defeat of Union forces. Nearly 5,000 casualties suffered, and a disorderly Union retreat, horrified and terrified the residents. They hurried back to DC in a panic, entangling with Union soldiers eager for escape routes. Only one year later, at Antietam nearly 5X the casualties would be suffered in 12 hours in a Union victory (just barely). The war would go on for another 31 months.

I recommend Ken Burns' The Civil War series, which will undoubtedly be shown on PBS stations near you, wherever you live, over the next year.

Reduction in Max Loan Guarantees Coming Soon

The federal government will reduce the size of loans eligible for government backing effective October 1.

As an emergency measure three years ago, Congress raised to as high as $729,750 the maximum loan amount that Fannie Mae, Freddie Mac and federal agencies could guarantee. Now those limits are set to decline in hundreds of counties across the U.S. as the government attempts to reduce its footprint in the mortgage market.

The new limits will vary by location, but will drop to $625,500 in top-tier markets such as New York, Los Angeles and Washington, D.C.

Contact us via "Comment" if you would like a list of reductions by major market.

FEMA and the Missouri River

FEMA issued a ruling in mid June that was effective retrospectively to June 1, 2011. The ruling appears to remove flood coverage under the National Flood Insurance Program (NFIP) for any home in the Missouri River basin.

You should check to see what sort of home inventory you currently own and/or manage in the affected areas, as you may be operating without flood coverage. Also, relocation companies should search their in-process home sale assignments for homes covered by the FEMA ruling.

Best not to be surprised by a coverage problem after a home has been acquired, or affected by a purchaser to whom disclosure is required.

(Did you know that the Mississippi-Missouri river system is the third ranking system on earth?)

Home Price Data Sources

I'm often asked my views on the real estate market. I have recently helped clients find and analyze several sources of data for presentations, interviews and RFPs. My impression is, even three years into the real estate downtown, many need help with understanding the high profile reports. So here are some comments on two.

Case/Shiller's home price trend is freqently cited to assess trends in home values. The index was developed by two very smart guys, one of whom predicted the real estate crash at least 3 years ahead of time. Case/Shiller tracks and reports on 20 cities to assess national trends - when reported (as today) the press surely takes notice, especially if it's a downer.

FHFA, fomerly known as OFHEO (I'm sure that helps!) reports its home price index (HPI) quarterly, and monthly in abbreviated form. The HPI reports changes in home values for the most recent quarter, year and 5 years. Instead of 20 cities, FHFA reports on 379 areas - called metropolitan statistical areas (MSAs). The data used to develop the HPI comes from 35 million Fannie Mae and Freddie Mac loans made.

While FHFA does not report trends on jumbo loans (homes above $700K), it does provide a much broader geographic reach than Case/Shiller. Further it ranks the top 20 and bottom 20 performing markets, and provides many good graphs and maps illustrating trends by region, by state, and other factors. FHFA is free.

Both are valuable, as are reports from LPS, DataPoint, Altos and others. One challenge for folks is "what do I do with all this information?" (that's where we come in at Hayden Moore)

History For The Day

The Roman Consul Cicero said those who do not learn History remain forever children. He was offering advice to prospective public servants of the Roman republic. With a far less grand entrance, I will periodically offer entries on our past that I hope you find interesting.

Our founders struggled through the summer of 1787 to create our Constitution. The delegates held meetings in secret presided over by George Washington. Hamilton and Madison played key roles. So did Ben Franklin. Jefferson and Adams were in Europe and did not participate except by (long delayed) letters.

When the new Constitution was published in September, there was an outcry from those who favored a weak national government and strong state governments. They saw the new structure as dangerous to state influence, launching a debate that has simmered ever since. Within ten days of publication, opposing anonymous essays began appearing in the newspaper. Hamilton, Madison and John Jay began writing responses over the pen name "Publius". These essays not only parried the critics, they provided a document to which we still refer for insight on the structure of our government. The collected essays became known as "The Federalist Papers".

The so-called Anti-Federalists and Publius debated in the newspapers for nine months, mostly in an effort to persuade New York State to ratify the Constitution. It didn't help that Gov. George Clinton, writing as Cato in opposition, was sharply opposed. One of the main objections of Clinton, Patrick Henry and others was the lack of a Bill of Rights.

In the end, the Constitution was ratified by 12 of 13 states, some by only a few votes. Several states - Virginia, New York, Massachusetts, New Hampshire - ratified but insisted that a Bill of Rights (which they went to great pains to list) must be added during the first Congress. James Madison drew up the first ten amendments that became our Bill of Rights.

Reading the exchange between the Federalists and Anti-Federalists, I was struck by the principled and disciplined arguements presented. Their guides were those in the past who succeeded, those who failed. They knew this was serious business: they were not merely conducting a philosophy seminar, they were making a nation.