Depending on whether you look at CoreLogic or the 20-City Case Shiller Composite, Home Price Appreciation (HPA) was between flat and up 2.6% in the first quarter. New home sales in March were dismal and remain at historical lows. Builder confidence is still very low and mortgage applications continued to decline. The offset to the weak demand side is a reduction in distressed sales and inventory generally as well as some improvement in the jobs picture. Still, the entire real estate market, or at least the resi sector, feels like it is running out of steam. Most of the Fed's stimulus and asset inflation efforts have now run their course and there is not much air left to put in the bubble. Perhaps lenders are beginning to sense this. More domestic banks reported tightening lending standards in Q1 than in any quarter since early 2010. Much of this tightening related to non-traditional or sub-prime loans. We expect these to be the prevailing conditions for the next few months to maybe next year or two. The tightening in lending standards will provide opportunity for TFP. However, it is definitely a time to be a little defensive as it relates to LTVs, types of collateral, and insisting on being well compensated for risk born.

We also note that RealtyTrac reported the average time to complete a foreclosure nationwide increased to 572 days in Q1 from 564 days in the previous quarter. This is the longest foreclosure time since RealtyTrac began tracking this metric in 2007. This implies to us that a greater percentage of foreclosure activity is happening in slow/judicial states as most non-judicial, more-efficient states have worked through a lot of the inventory already. This reaffirms our focus on pricing loans and setting LTVs based significantly on the location of the collateral. Judicial states require longer times to foreclose, and, thus, loans are priced with higher rates and lower LTVs. California is a lot different than Texas in many ways!