Standard & Poor’s gave a higher credit rating to a set of bonds tied to homeowners with below average credit and just 3.4 percent of the equity in their homes than it did the United States of America.

Bloomberg News reported that the credit rating agency gave the AAA rating to 59 percent of Springleaf Mortgage Loan Trust 2011-1, a trust with $437 million in mortgage loans. In a document sent to investors the firm said the average credit score of the borrowers is 651, 60 points below the U.S. median, and that the loans represent a total of 96.6 percent of equity in the homes. [more]

The Justice Department is investigating whether credit ratings agency Standard & Poor’s improperly rated dozens of mortgage securities leading up to the financial crisis, the New York Times reported. The inquiry began before S&P downgraded the U.S. credit rating this month.

Specifically, the department has been looking into instances in which the company’s analysts wanted to award lower mortgage bond ratings but were overruled by S&P business managers, the Times said.
“[We have] received several requests from different government agencies over the last few years,” said Ed Sweeney, a spokesperson for S&P. We continue to cooperate with these requests. We do not prevent such agencies from speaking with current or former employees.” [more]

Standard & Poor’s today downgraded Fannie Mae and Freddie Mac to AA+ from AAA+ following its downgrade of the U.S. credit rating this past Friday night, the New York Times reported. The S&P explained that the newest downgrade was a result of the agencies’ “direct reliance on the U.S. government,” that they are under government conservatorship since the 2008 financial crisis. The New York Times noted that the agencies’ role is more important now than ever because mortgage bond investors are not buying many securities that contain loans without the guarantee coming from the government through the agencies. S&P also downgraded 10 of the 12 federal home loan banks. [more]

For the first time in 11 months, U.S. housing prices increased month-over-month for a second consecutive time in May 2011, according to the latest data from the Standard & Poor’s Case-Shiller U.S. National Home Price Index released today. The 20-city composite rose 1 percent from April to 140.95 — roughly the equivalent to housing prices earlier in the recession, in May 2009, and before the peak in June 2003; all metropolitan areas excepting Detroit, Las Vegas, Tampa and Phoenix posted housing price gains. Despite the modest price increases, the 20-city index is 4.5 percent below where it stood in May 2010, as 19 of the metropolitan areas posted losses, led by Minneapolis, Phoneix, Portland, Tampa and Detroit where prices plummeted at least 9 percent. Only Washington, D.C. posted a year-over-year gain, as prices rose 1.3 percent. — Adam Fusfeld [more]

U.S. home prices appear to have turned a corner this spring after a year’s worth of declines, but whether the housing market has truly bottomed out remains to be seen.
The Federal Housing Finance Agency said today that prices rose by 0.4 percent nationwide in May, which follows a slight uptick reported in April by multiple research firms. As of the end of May, home prices had fallen by 6.3 percent over the 12 months prior and stood at 19.6 percent below their April 2007 peak — approximately even with home prices from January 2004.

The FHFA’s numbers show a 0.2 percent increase in home prices in April, so it’s possible that the gradual acceleration in the May data could indicate the beginning of the end of the bleeding for U.S housing. However, analysts often note that housing data tends to improve only temporarily during the spring homebuying season. – Sarabeth Sanders [more]

Rendering of Ridge Hill Village

From the July issue: One of the condo buildings at Forest City Ratner’s long-delayed, mixed-use mega-project in Yonkers will soon be opening.

The $660 million project — which sits on 81 acres along the New York State Thruway and has been dubbed Ridge Hill Village — will include 1,000 rental and condo units. It will also include 1.2 million square feet of retail, 160,000 square feet of offices and possibly a hotel.

According to published reports, once complete, the project — which faced community opposition and legal hurdles — is expected to generate almost $24 million in annual tax revenue for the financially troubled city of Yonkers. It is also expected to generate $8.6 million in county taxes and $29.3 million in state taxes.

As of late May, the Horizon Group, the builder of the Monarch condo, which is set to open at Ridge Hill Village, had received deposits for 25 of its 162 units, according to the New York Times. Compiled by Omari Allen [more]

After sinking to their lowest crisis level in March, national housing prices posted modest gains in April, according to the latest Standard & Poor’s Case-Shiller U.S. National Home Price Index released today. The 20-city composite jumped 0.7 percent from March’s seasonally adjusted rate, and the index now stands at 138.84 where an index of 100 equals home prices in January 2000. Housing prices in April 2011 are roughly where they stood during the summer of 2003, and remain 4 percent below the 20-city composite in April 2010. “In a welcome shift from recent months, this month is better than last – April’s numbers beat March,” said David Blitzer, chairman of the Index Committee at S&P Indices. – Adam Fusfeld [more]

National housing prices have hit a new low, and economists believe the descent is far from over. House prices fell 4.2 percent in the first quarter of 2011, according to Standard & Poor’s Case-Shiller U.S. National Home Price Index, following a 3.6 percent decline in the first quarter of 2011. The index’s 20-city composite now stands at 138.16 (compared to the January 2000 basis of 100), more than 1 point below the previous recession low of 139.26 recorded in April 2009, and equal to national housing values in mid-2002. TRD [more]

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Professors Karl Case and Robert Shiller, founders of the Standard & Poor’s/Case-Shiller Index appeared on Bloomberg TV (click the image to see the video) to discuss the results of the most recent index, which showed a 3.3 percent decline in housing prices in February. Case said the U.S. housing market has already experienced a so-called “double-dip,” as housing prices plummeted from their 2006 highs, then rebounded briefly due to the homebuyer’s tax credit, and now the market has returned to previous lows. Case cited an “incredible decline” in households — “we’re not building any new houses, and yet vacancy rates are still going up,” he said — as a major area for concern. Meanwhile, Shiller said the 8.8 percent unemployment rate and the difficulties associated with getting financing are plaguing the market. Comments

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New York City-area home prices remained relatively flat in January, according to the S&P/Case-Shiller Home Price Index, released today. The report, which does not take condominium or co-op units into account, shows a 0.9 percent drop in home prices month-over-month (see full report below). Prices are down 3 percent from the same time period a year ago. This performance is in line with the overall momentum in the housing market nationwide. The index’s 20-city composite dropped 1 percent month-over-month and declined 3.1 percent from January 2010. David Blitzer, chairman of S&P’s Index Committee, said that the data show a protracted real estate slump. “The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery,” Blitzer said. “At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing.” TRD

S&P Report [more]