March 29, 2024

Economix Blog: Counting the Underwater Homeowners

Analysts have been celebrating various pieces of good economic news, including an uptick in consumer spending. But the housing hangover is still raging.

At the end of the third quarter, 10.7 million homeowners owed more on their mortgages than their home is worth, according to new data from CoreLogic. That is down but a smidgen from the second quarter, when 10.9 million homeowners were underwater. But it is still more than one in every five mortgages.

Those homeowners may continue to pay their note, but those who suffer a shock like job loss or illness are at a high risk of foreclosure because they are unable to downsize by selling. Some conservative economists have suggested that the housing market be left to heal itself, while liberals and, increasingly, centrists have warned that failure to intervene will severely restrict the economy’s ability to grow.

The 200,000 decrease did not represent homeowners whose home values suddenly recovered, but people who lost their homes. They were easy to find in a report on household debt by the New York Federal Reserve, which found that 264,000 people had a foreclosure noted in their credit report in the third quarter. The total of seriously delinquent mortgages increased for the first time since the third quarter of 2009.

Underwater, or negative equity, mortgages continued to be heavily concentrated in certain states. For the first time, Georgia, with 30 percent of its mortgages underwater, edged out California for a place in the top five states. No. 1 was Nevada, with more than half its homeowners owing more than the value of their property. Still, outside the top five states, 17.6 percent of homeowners over all are in that predicament.

Forty-five percent of borrowers have less than 20 percent equity in their homes, and almost 70 percent of those mortgages carry interest rates above 5 percent, while the current average rate for a 30-year loan is closer to 4 percent. Recent changes to Fannie Mae and Freddie Mac’s refinancing programs are supposed to make it easier for those homeowners, who number about 15 million, to lower their monthly payments.

Article source: http://feeds.nytimes.com/click.phdo?i=0f0d9f4190495ee9ebb0a616f0b46ce7

Soapbox: Scene Stealer: In Hollywood, a Decade of Hits Is No Longer Enough

Sure, there have been flops and missteps. But Mr. Horn, as Warner’s president and chief operating officer, has generally kept the studio on an unusually steady course by delivering hit after hit: “The Perfect Storm,” “300,” “The Departed,” “Happy Feet,” “Ocean’s Eleven,” “Sherlock Holmes,” “Million Dollar Baby,” “The Dark Knight.”

The most lucrative film franchise in Hollywood history, bigger even than “Star Wars” and James Bond, is Harry Potter. And Mr. Horn is largely the one to thank for that.

But in the coming days, Mr. Horn will ride — unhappily — into the sunset after being squeezed out of the studio to make room for a new generation of managers.

“The notion of my leaving, as you know, did not come from me,” Mr. Horn said in an interview. “I guess they wanted younger and better-looking management.”

There is nothing unusual, in Hollywood or any industry, about a star executive wanting to remain at the controls longer than a corporate parent would like. What has raised eyebrows in movie circles is the indelicate manner in which Time Warner, which owns the studio, has pushed Mr. Horn aside.

One of the longstanding codes of the movie business involves longevity and loyalty: Once you’re a made man, to use the Mafia term adopted by film folk, you’re allowed to write your own ticket for nearly as long as you want. Perhaps, eventually, you get a discreet nudge to step aside or move into a chairman emeritus-type of position. All the while, you are treated with deep respect.

Yes, it’s true that Mr. Horn was not enthusiastic about making “The Hangover,” the crude comedy that racked up $468 million in global ticket sales in 2009. But he is also the guy who drafted the blueprints for what has become Warner’s primary operating strategy — focusing on effects-filled event pictures, or “tent poles,” that resonate overseas.

Under his leadership, Warner has also been the No. 1 studio in market share for the last three years. (It has long been the biggest when measured by number of movies.) “You don’t get to be No. 1 because you rest on your laurels or won’t adapt to changing times,” Mr. Horn said. “You get it because you earn it year after year.”

Mr. Horn’s friends say a first slight from Time Warner came in 2009, when the company allowed news to circulate in the Hollywood trade press that it planned to renew the contracts of Mr. Horn and Barry M. Meyer, Warner’s chairman, for only two years instead of the typical three to five. “Humiliating!” was how Deadline.com, the Hollywood blog, summed up the move.

Then, last September, Jeffrey L. Bewkes, Time Warner’s chief executive, announced that he would keep Mr. Meyer in place for two more years — but stick to the planned parting of ways with Mr. Horn, whose consolation prize was a consulting gig. To replace Mr. Horn, the company created an “office of the president,” elevating three executives who had been angling for promotion: Jeff Robinov, Bruce Rosenblum and Kevin Tsujihara.

The upshot, say longtime industry watchers, is that Hollywood’s clubby, insular business culture is fraying as studios grow ever more corporate and answer to multinational companies that either don’t know the customs of Hollywood or don’t care about them. Columbia Pictures, Paramount Pictures, 20th Century Fox, Universal Pictures and Warner all answer to bosses in New York. Walt Disney Studios is the sole major film operation that has a local owner.

“It’s hard to leave,” Mr. Horn said. “But Jeff Bewkes, you’ve heard that name, he’s the big boss.”

In an e-mail statement last week, Mr. Bewkes said: “With his passion for compelling filmmaking, Alan helped lead Warner Brothers through one of the company’s most creative and successful eras in its long history. Even more importantly, Alan generously shared his knowledge of how to engage and excite audiences around the world with the Warners executives who will succeed him — a lasting contribution for which I will always be grateful.”

LOOKING back, Mr. Horn, who grew up on Long Island and got his Hollywood start working in television, is proud of a range of accomplishments, starting with Warner’s No. 1 status. “I’m especially proud of the people that I’ve worked with — the most first-rate, first-class group around,” he said.

Running Warner’s movie operation has been arduous, but he says he has relished the pressure. “It’s competitive and tough, and I have felt the weight of committing upwards of $3 billion of the company’s money on movie production,” he said. “But I like it.”

Mr. Horn declined to single out a specific movie as a point of pride, but he did name the filmmaker with whom he was most pleased to work: Clint Eastwood.

“I have tremendous affection for Mr. Eastwood,” he said, displaying the kind of public deference that has traditionally been part of the business culture in the movie capital. “ ‘Gran Torino,’ ‘Unforgiven,’ ‘Hereafter’ — all terrific,” Mr. Horn said. “Oh, and you can’t forget ‘Invictus.’ ”

He added, “Leaving would be easy if there wasn’t such incredible talent here.”

Article source: http://feeds.nytimes.com/click.phdo?i=78377ec8279dcbd05f86e71a549c69d7