The Housing Bubble

Developments
WSJ dot com tracks the housing market with news, tips and analysis

* September 30, 2009, 1:27 PM ET

Q&A: Shiller Sees 5 Years of Stagnant Home Prices

Developments
WSJ dot com tracks the housing market with news, tips and analysis

* Real Estate News: Shadow Inventory, Corus Auction, Toll’s Sale
* September Rents Fall Further in Manhattan
* September 23, 2009, 1:33 PM ET

The Foreclosure Pain May Drag on for Years
By James R. Hagerty

(This is the first installment of a series of posts on the shadow market)

Delays in dealing with home foreclosures are stretching out the pain for the U.S. housing market, as we reported in Wednesday’s Journal. That has stirred lots of debate over whether it is better for the nation to face the pain of millions of foreclosures immediately – to get it over with fast — or to draw the process out over several years in hopes that the economy and housing demand will recover.

It looks like we’re taking the latter course, for better or worse.

The foreclosure process takes about twice as long as it used to for a variety of reasons, including efforts to modify loans to keep borrowers in homes, staffing shortages at loan servicers, bankruptcy filings and a “strategic rationale” by lenders hoping that home prices will recover, says Ivy Zelman, chief executive of Zelman & Associates, a research firm based in Cleveland. In states where foreclosure is a judicial process, it now takes about 19 to 29 months, she says, and in other states it takes 11 to 17 months.

While efforts to modify loans will help some borrowers, she says, they mostly will amount to “kicking the can down the road.”
…

Here is san Diego, houses are still getting 5-20 bids for houses under 350K. I will vomit later when I get time.

When is the socialist foreclosure moratorium lifted by the Kremlin?

For the curious, a 1-month decline of 11 percent occurs at an annualized rate of

Maybe by this time next year, Manhattan rental rates will look almost reasonable (e.g. in the range that one would pay to rent a four-bedroom home in San Diego).

Developments
WSJ dot com tracks the housing market with news, tips and analysis

* The Foreclosure Pain May Drag on for Years
* Real Estate News: Existing-Home Sales Fall, So Many Houses
* September 23, 2009, 5:07 PM ET

September Rents Fall Further in Manhattan
By Dawn Wotapka

Bloomberg News

A flurry of activity from bargain hunters seems to have slowed down the rate of rental declines in Manhattan, but the bleeding continues. The market in New York City’s priciest borough is at levels nearly 10% below 2008’s already depressed numbers. Rents across the Big Apple fell as much as 11% in September from August, according to this month’s Manhattan Rental Market Report, which taps data from more than 10,000 listings located below 155th Street and priced under $10,000 per month. It was released Wednesday by brokerage TDG/TREGNY. (Full report.)
…

Wisconsin State Journal runs story about why now is a great time to buy and cites the tx credit, also showing their poster boy, a law school student, from April buying a house he will share with roommates that will help pay the mortgage. The person is quoted as saying the credit really helped him decide to buy.

Quick records check today shows a different mailing address for the new owner of the property who had purchased in April.

If I recall, the credit is only for primary residence, not for income properties, right.

Should this get reported to the IRS?

* The Wall Street Journal
* AHEAD OF THE TAPE
* SEPTEMBER 24, 2009

Housing Recovery Obstacle: So Many Houses

* By MARK GONGLOFF

Investors expecting an upbeat chapter for housing should brace for a plot twist.

Two key pieces of housing data arrive this week, starting with August home resales, due Thursday from the National Association of Realtors. Economists think existing homes sold at an annualized rate of 5.39 million units last month, up 9% from a year earlier.

Both reports could add to a snowballing consensus that housing is rebounding. A vigorous recovery would be manna for the economy. Home sales spur purchases of fridges and lawn mowers, and rising prices make consumers wealthier and heal bank balance sheets.

But there are reasons to expect a halting recovery at best.

First, the recovery has leaned heavily on tax credits for first-time home buyers and the Federal Reserve’s buying of most new mortgages to keep rates low. The Fed on Wednesday said it would slow its pace of purchases, and the tax credit is set to expire in November.

Meanwhile, an unemployment rate pushing 10% and tighter credit standards are a drag on housing demand, offsetting high affordability.

More important, there are still too many houses on the market — 9.4 months’ worth of existing homes for sale in July, according to NAR data. The backlog is usually closer to six.

Nearly seven million housing units will eventually enter foreclosure, mortgage-backed-securities strategists at Amherst Securities Group, a brokerage firm that deals in MBS, estimated on Wednesday. That could add 1.35 years’ worth of inventory to the market.
…

Good morning from Phoenix. I am off this fine morning to play golf.

The economy here in Phoenix seems to be getting worse. Front page of the living section of the Arizona Republic has a long story on the family that got the “extreme makeover” house that is in pre foreclosure. The article says the house is 5,300 sq ft and the utility bills were 1,200 a month in the summer. To make matters worse they took out a 400K home equity loan and could not make the payments. Wow really?

A condo on the golf course that I play sold a couple months ago for 56K. I know someone who paid 215K for the same floor play in 2006. I don’t know how much lower prices can go.

My views of the asset market situation have some very good company.

Briefing

Unrepentant bears
The end is nigh (again)

Oct 1st 2009
From The Economist print edition
Pessimistic commentators remain anything but convinced by the stockmarket rally
…
“The bulls’ view of the world was that low bond yields and low inflation should cause high price/earnings ratios,” explains Mr (Albert) Edwards. But in his view the bulls were ignoring the corollary; that low inflation would lead to low earnings growth. When investors cottoned on to the subdued outlook for profits, as they did in Japan, the effect on share prices was dramatic.

Mr Edwards admits that he consistently underestimated the determination of the authorities to prevent a bear market. As they cut interest rates in response to each market wobble, the result was a series of bubbles, first in technology shares and then in housing.

The other bears agree, and see the recent market rally as simply the authorities’ latest attempt to prop up asset prices. George Magnus, an economic adviser at UBS, a big Swiss bank, says: “This recovery is entirely dependent on the unprecedented largesse of governments and central banks. Things may be better than last autumn when there was an imminent threat of a financial collapse but the recovery is built on very short-term foundations.” In particular, businesses emptied their inventories last year; manufacturing has enjoyed a rebound in recent months as companies have stopped slashing stocks, but Mr Magnus argues it is not self-sustaining.

Mr (David) Rosenberg says government incentive schemes have been behind the housing-market rally and the jump in car sales. Activity was similarly boosted in the fourth quarter of 2001 after the Federal Reserve slashed interest rates in response to the terrorist attacks on New York and Washington. But he points to the sharp slowing of American car sales in September after the cash-for-clunkers programme ended and thinks the same may occur in housing when a subsidy to first-time buyers expires at the end of November.

Because the recovery is so dependent on government support, the bears think it will soon peter out. Mr Edwards worries that the economy will start to turn down in the first half of next year. Mr Magnus thinks the global economy might be able to eke out a meagre growth rate but “if you don’t have credit growth operating, it is hard to sustain spending while unemployment is still rising.”

The bears argue that although governments may have stabilised the banking system, they have not been able to restart private-sector lending. In America bank lending has been falling rapidly over the past three months while in the euro zone broad-money growth has slipped to just 2.5% year-on-year (see the left panel of chart 2). In recent months consumers in Britain and America, two of the most heavily leveraged economies, have been repaying debt (see the right panel).

The problem, according to Mr Magnus, is that household balance-sheet problems tend to last. “They are often linked to property and property busts which take years to play out,” he says. Mr Edwards thinks the outcome will be a reverse of the 1990s boom, when rising asset prices boosted consumer confidence, spending and the economy. Now that share and house prices have dropped, consumers will increase their savings and reduce consumption, weighing the economy down.

The debt problem will act as a permanent drag on the hopes for recovery. Japan had lots of economic rebounds and stockmarket rallies in the course of the 1990s. Over the entire decade, however, the economy was sluggish and investors lost a large proportion of their money. The Nikkei 225 average, Tokyo’s best-known stockmarket measure, is still only a quarter of its peak, reached at the end of 1989.

The bears think many Western economies will face a similar period in the doldrums. “My forecast is not a V-shaped recovery or a W [a second dip, then recovery] but a long series of Us with periods of expansion followed by contraction,” says Mr Magnus. “There is a lot of volatility but the economy doesn’t really go anywhere.”

Just as monetary easing has not resulted in any surge in lending, the bears also think the fiscal element will run out of steam. “The fiscal stimulus has to end, because we can’t keep expanding the deficit,” says Mr Edwards. Either voters will be unwilling to sanction higher deficits, or the markets will take fright and push up bond yields, killing the recovery by a different method. British political debate is already dominated by the need to cut spending and raise taxes.
…

Finance and Economics

Economics focus
The dog that didn’t bark

Oct 1st 2009
From The Economist print edition

In a guest article, Beatrice Weder di Mauro, a member of the German Council of Economic Experts, argues that financial regulators need better incentives
…
Perhaps the biggest problem is something that economists call “time inconsistency”. Monetary policy is the best-known example of this phenomenon. Central banks try to anchor inflationary expectations by sounding tough. But if the private sector raises wages anyway, central banks are reluctant to tighten policy and cause unemployment. The knowledge that monetary policy suffers from this inconsistency over time undermines the credibility of the initial, hawkish announcement. The same sort of problem affects financial regulators and supervisors. They have incentives to announce a no-bail-out policy in order to encourage their charges to behave prudently. But as soon as crisis strikes, the optimal choice for policymakers differs from the pre-announced policy: the authorities will usually offer support. The banks anticipate this behaviour and run even more risks as a result.

Two other incentive distortions reinforce this bias towards bail-outs. The first is that most supervisors—with the notable exception of America’s Federal Deposit Insurance Corporation (FDIC), which both regulates deposit-taking banks and administers their insurance fund—do not put the capital of their own institution at risk. The second is that a policy of regulatory forbearance may save the supervisor as well as the bank: hiding losses in financial institutions from public scrutiny may also help conceal regulatory and supervisory failure.
…

So much gloomy news about the US housing market, so little time to post it all. Wouldn’t a true market capitulation provide welcome relief to this endless plague of agony and angst?

Developments
WSJ dot com tracks the housing market with news, tips and analysis

* September 25, 2009, 10:08 AM ET

‘The Forecast Calls for Pain’: Despite Hopes, Anxiety Bedevils Housing

By James R. Hagerty

This morning came a fresh reminder that foreclosures and anxiety still bedevil the U.S. housing market, despite many investors’ hopes for an imminent rebound.

As KB Home reported a $66 million loss for its fiscal third quarter ended Aug. 31, CEO Jeff Mezger gave this diagnosis: “While tentative indications are that some negative economic trends are slowing or leveling out to varying degrees in certain markets, the ongoing impact of and the potential for increased foreclosures and mortgage delinquencies, higher unemployment, tighter credit standards, and relatively weak consumer confidence make the timing and extent of a sustained rebound still uncertain.”

Or, as the blues singer Robert Cray put it more succinctly, “The forecast calls for pain.”
…

I’m thinking the “professional investors” driving the current housing market inventory squeeze may turn out to be tomorrow’s knifecatchers through the lens of the rear view mirror, when it finally dawns on them that there is no remaining end user demand into which they can unload their flip attempts.

Developments
WSJ dot com tracks the housing market with news, tips and analysis

* September 25, 2009, 9:11 AM ET

Shadow Market Part II: Banks Avoid Acquiring Foreclosed Homes
By James R. Hagerty

(This is the second installment of a series of posts on the shadow market.)

Banks appear to be resorting more often to a maneuver that helps them avoid acquiring property through foreclosure.

Before banks can acquire homes in foreclosure cases, there is a public auction, often at a county courthouse. These auctions are typically called trustee sales or sheriff sales. Normally, the lender or loan servicer (an entity that collects payments and handles administrative chores including foreclosure) makes a bid well above what investors are willing to pay for the home, and in those cases the bank ends up owning the property. It becomes part of the vast REO (real-estate owned) inventory that banks must sell off.

But sometimes the lender or loan servicer makes a bid low enough to tempt others to step in with a higher offer and win the auction. That has been happening more often lately in some parts of the country.

Sean O’Toole, chief executive officer of ForeclosureRadar.com, a research firm in California, estimates that in August 19% of homes sold in trustee sales in California went to investors rather than to a foreclosing lender, up from just 4% a year earlier.

In Adams County, Colo., part of the Denver metropolitan area, investors bought 16% of homes at trustee sales in the three months ended Aug. 31, up from 5% a year earlier, according to Jon Goodman, a lawyer in Boulder who invests in foreclosed properties. Mr. Goodman says more investors are bidding at these auctions because of “a shortage of regular inventory that works for fix and flips.” In addition, he says, some lenders want to avoid the hassles of acquiring, repairing and selling too many houses.

Andrew Katakis, a veteran investor based in Northern California, who regularly buys homes at trustee sales, confirms that competition from other investors is getting tougher. Lately it has been common for 15 to 30 investors to show up for such sales, compared with three or four at typical sales a few years ago. “Prices are getting bid up,” he says. When he acquires homes at trustee sales, Mr. Katakis aims to resell them within three months, though that isn’t always possible.

Mr. Katakis believes banks have become less eager to acquire homes partly because of new legal restrictions on evictions of owners or tenants. For one thing, banks are reluctant to become landlords. The banks also must consider the costs of acquiring and then selling the homes, including commissions to real estate agents or auctioneers and the costs of renovation, maintenance, insurance and taxes. All of those might absorb 25% to 30% of the value of the property, Mr. Katakis says.

Most buyers at trustee sales are professional investors who aim to resell the properties as soon as possible. So the house probably will be up for resale whether the bank or the investor takes it. But Mr. Katakis argues that professional investors typically are more nimble and efficient than banks in reselling property. If so, that could help us clear through the foreclosure mess a bit faster.
…

This morning I went to an out-of-the-way estuary in Clearwater to chill with nature. There was a homeless man wading and literally trying to grab fish with his bare hands. When he saw me coming he got out and ran away.

Just went to check out a soprano sax that was forsale, that I thought might be a deal. Not a deal, chinese stuff. But I found out later that the whole house was for sale (shouldn’t have used my bubbleboy email oops). There were people coming to the open house it seemed. $375K in Norfolk. Nicer than many others but I wasn’t feeling it. Lots of things added on.

It has been quite a while since I posted from the drug capital of the world, Humboldt county California.

Home prices here remain only 15% below the all-time peak, and I am seeing more sales than I have at anytime in the last 3 years. The latest feel-good article from a hack at our local rag sums it up well: Humboldt is special, different, etc. and that is why are prices relative to the rest of the state have moved very little:

http://www.times-standard.com/business/ci_13432325#

Makes me really sick. At this point, I won’t buy here and am trying desperately to move out of state.

Was just chatting with a buddy in So California this morning. His mother is in her late 80’s now, and still fairly active. She hasn’t worked in years, and her husband didn’t leave her with anything. Twenty plus years ago she transferred the title to her paid off home to her daughter who watches her financial affairs. Yup, you guessed it right!! Turns out the daughter borrowed heavily against the place at the top of the market, and she has been without a job now, for months. Apparently she’s been out shopping, Cathy Lee style, at the stores where someone’s playing the grand piano, etc., pretending to be a high roller. Wonder how many seniors have been played like this across Bubble land?

You can get a free ShamWow mop with your ShamWow order. Call Within The Next 20 Minutes Because The ShamWow Guy Can’t Do This All Day.

I find this comforting. BTW, you get more ShamWows than before, too!

Roidy

Today is the last day of the Austin City Limits Festival in Zilker Park. It’s a 3-day pain in the neck, cars parked solid lining the streets of Zilker neighborhood - you can’t comfortably go for a walk or ride a bike and can’t easily get access to the trail in the park.

Yesterday it was raining, so although the event went on, the advertising banner plane wasn’t droning overhead all day and it hasn’t started today. That’s good.

Friday afternoon for a while I was working in the yard and heard some music, nice. The problem is that after it gets going, the event has 8 stages with bands on all of them at once - even with breaks, there’s always 6 going. All we hear up here is cacaphony.

Tonight 8-10 for the grand finale, there will only be one band playing - Pearl Jam. (Last year was Foo Fighters.) Predictions are for thunderstorms, so the whole thing will probably be cancelled. Too bad, I’d like to hear Pearl Jam (as well as I can from my deck) and see the fireworks. Oh well. At least it will be over for another year.

FYI, just found what is the first mention I’ve seen of the Great Recession in the print media:

www [dot] msnbc.msn.com/id/33127705/ns/business-personal_finance/

well, i like to come on here every 6 months or so and update everyone on the other side of the world.

when let me catch you up….

i had a ‘working theory’ that a lot of the higher end real estate was being inflated by ‘equity locusts’ - people from us, canada, and spain who were taking out huge equity withdrawals from existing properties to finance purchases of 300k-500k homes in uruguay (and more).

why?

because the market here is ‘more or less’ cash and carry — that’s right no mortgages. recently there are some govbank backed loans for a few selected properites at much lower prices in areas targeted for rehab, but it’s a tiny fraction of the market.

so, the result of the crash up north should result in a healthy pullback in the market here right???? bzzzzt. wrong. (so far).

after a brief bought of uncertainty at the beginning of the year where things just sorta stagnated…(very few HAVE to sell, because no loans, low low taxes, and no need for insurance really their carry costs are incredibly low)

since then, an imploding argentina conversly has flooded the uruguay real estate market as a ’safe haven’ (i guess). property ownership rules are very good here for foreigners and the bank secrecy and relative stability are still things that the argentines (who are fleeing) and brazilians (who are doing much better still) are after.

the result is that, each month, especially the properties in the ‘destination’ locations (holiday spots) seem to defy gravity in the face of everything happening around the globe.

i was very early calling the property bubble and subsequent collapse in the us, and here i’ve been so early i’ve been basically “wrong” :)…so far…

it’s an interesting model though — no loans

it makes affordability tough, keeps prices down (a bit), and basically makes houses and property frequently an heirloom type of thing — even for homes you wouldn’t think of deserving the title by traditional standards. for expats like me, apartments are big sellers — especially for snowbirders who take advantage of the reversed seasons to live their own version of ‘endless summer’ without the fear/issue of squatters (which get crazy rights in this overly socialist country).

many of the apartments are up over 50% in price over last year in punta del este (a ritzy resort town down here). sounds bubblicious right? i said the same thing last year when they were up 38%

i guess it’ll end someday…in the meantime i’ll proudly wear the ‘bitter renter’ monicker

uruguay guy

Germany’s “Cash for Clunkers” program worked the way it did in the U.S. As soon as taxpayers stopped subsidizing people who turned in their old cars for more fuel-efficient new ones auto sales fell sharply.

The Germans didn’t call it “Cash for Clunkers.” “Scrapping bonus” was the term, and it ended September 2nd. Car sales promptly fell in September to half what they were in August. Many buyers are having second thoughts. They got rid of their paid-for older cars and now are saddled with car payments and higher insurance premiums.

Klunkers Kaput.

Here’s another California mortgage broker about to face the music.
http://www.sanluisobispo.com/news/local/story/870390.html

Great time for US consumers: America is on sale
One benefit of US recession is the boon to consumers:

NEW YORK (AP) — There has never been a better time to be a consumer.

The Great Recession has caused massive job losses and hardship for millions, but it has also fostered a shoppers’ paradise. Anyone who still has the means to spend can find unheard of deals.

Prices on everything from clothes to coffee to cat food are dropping, some faster than they have in half a century. Items rarely discounted — like Tiffany engagements rings — are now. The two biggest purchases most people make — homes and new cars — are selling at steep price reductions.

“This is the new normal,” says Donald Keprta, president of Dominick’s, a supermarket chain in the Midwest, which just cut prices by as much as 30 percent on thousands of items. “We aren’t going back.”

Consumers like Karen Wilmes, a mother of two in Hopkinton, R.I., relish the steals. During a recent trip to Shaw’s Supermarkets, she bought a basketful of goods, including Eggo waffles, Kleenex tissues and Betty Crocker cake mix. The retail price: $63.89. Wilmes paid $7.31 by buying items on sale and using coupons.

“The deals out there are unbelievable,” says Wilmes, 36, who writes the Frugal Rhode Island Mama blog, which tracks local and national bargains. “We can put the money I save toward something else.”

And she’s doing just that, but only when she can find another deal. Wilmes and her husband recently bought a Samsung television from Best Buy’s Web site for $1,299, about $300 less than she found at other stores. She also got free delivery and another $13 back from ebates.com, which receives commissions from online retailers for directing customers their way.

What’s happening now has been building for years. Wal-Mart Stores Inc. introduced “every-day low prices” many years ago. Amazon.com redefined the idea of bargain prices during the late 1990s when it helped introduce online shopping. After the 2001 recession, automakers introduced zero-percent financing to boost sales. McDonald’s “Dollar Meals” made fast food even cheaper.

Help with mortgages is difficult to come by
Firms that get tax dollars to help homeowners include some cited for abuses.
McClatchy Newspapers Sunday, Oct. 04, 2009

It took months for Iredell County’s Donna and Ronnie Fruia, who were going through a series of health crises, to get a loan modification.

Donna and Ronnie Fruia learned firsthand how difficult it can be to get help modifying a mortgage.

The couple from Troutman were in the midst of a series of health crises, and three members of the family - the couple’s son, Donna’s mother and Ronnie - were in the hospital.

That’s when Donna got a call that somebody from her mortgage company, CitiFinancial, had shown up in her husband’s hospital room, where he was recovering from a stroke.

“At the time, I couldn’t even really talk that good,” Ronnie said. “But he wanted me to sign a bunch of papers.”

The Iredell County couple had been trying to get a mortgage modification from CitiFinancial. The company, however, was pushing them to accept a modification that wouldn’t have cut their interest rate, they said.

Only after the episode in the hospital room and the involvement of state regulators did CitiFinancial cut the mortgage’s interest rate from 11.5percent to 5 percent, lowering their monthly payment from $985 to $602. The process took from the start of the year until July.

Housing advocates say the mortgage servicer industry has long resisted helping customers with modifications. Now, the federal government is engaged in a massive program that’s on track to send billions in tax dollars to an industry that has been criticized for abusive mortgage practices.

Some of the money is going to the very companies that judges or regulators have cited in recent years. The firms have been cited for badgering, manipulating or lying to their customers; sticking them with bogus fees; or improperly foreclosing on them.

Chateau Petrus ‘82 Fetches Record $94,000 at Hong Kong Auction

Oct. 5 (Bloomberg) — A 6-liter bottle of Chateau Petrus 1982, a vintage described by the seller as smelling of prunes and spices, fetched a record HK$726,000 ($94,000) at a sold-out auction of fine wines in Hong Kong, spurred by Chinese buying.

The imperial, the equivalent of eight standard bottles of wine, went to an unidentified Asian bidder after a tug-of-war of several minutes yesterday. All but five of the 1,010 lots offered over the weekend sold at auction, fetching a combined HK$61.5 million, compared with host Sotheby’s presale estimate of HK$47.8 million. The last five lots were sold privately after the auction, according to Sotheby’s spokeswoman Rhonda Yung.

Estimates don’t include a 21 percent buyer commission. Consignors’ charges vary.

“The lots were priced rather low, probably to attract buyers,” said George Tong, a Hong Kong-based toy-factory owner and wine collector who said he has a 5,000-bottle cellar.

Citing a three-bottle, double-magnum lot of Chateau Petrus 1989 with a top estimate of HK$280,000, Tong said the same wine recently sold for 7 percent higher in London. The Hong Kong lot fetched HK$387,200 at yesterday’s auction.

Ted Williams is the purest hitter in baseball. They are hitting his decapicated head with wrenchs to get it off a tuna can. I am sick.

He could have sat out that last double header (3 year WW11 veteran in prime), but didn’t. I mean preserve the LAST 400 BA.

Instead, he went 6/8 .406.

I am sick.

America is on sale…

“The Great Recession has caused massive job losses and hardship for millions, but it has also fostered a shoppers’ paradise. Anyone who still has the means to spend can find unheard of deals.”

http://tinyurl.com/ye4fhn6

About two years ago I figured I could loud up on 40 inch flat screens, Bose stereo systems, maybe a Jaguar XF series (3 years old, certified) for bargains.

But I did not forsee hourly rates going down for contract engineering and especially no overtime work. So I’ve been loading up on T-bills paying a whopping 0.4 percent (four tenths of one percent) annual yield.

I’ll pass up on the Jaguars and 40 inch screens for now and continue to be stingy on spending.

So my question is: Who is doing the buying? Obama’s gang in D.C.? Doctors? Dentists? Attorneys? Other than employees in health care, law, collection agencies, the foreclosure industry, and government, I cannot think of anyone who is not saving like a squirrel to gather up emergency-only spending money.

Renters, beware of debtbeat landlords. Is it possible for a renter to order a credit check on their landlord?

* The Wall Street Journal
* HOUSE TALK
* OCTOBER 2, 2009, 4:11 P.M. ET

What Happens When Landlord Stops Paying the Mortgage?

By JUNE FLETCHER

Q: Three years ago, I began renting a brand-new house. I want to stay here. But there are a lot of foreclosures in the neighborhood, and some of my friends who are also renters have had to leave when their landlords stopped paying their mortgages. I’m scared this will happen to me. What should I do if it does?

—Miami

A: RealtyTrac dot com has reported almost 430,000 foreclosure filings this year alone in Florida, so I understand your worries. But you have an added reason for concern: You live in a house that was built at the height of the housing boom. Home prices have declined precipitously since then. It’s quite possible that your landlord owes more than the house is worth. That heightens the temptation to stop paying the mortgage, and let the house revert to the bank.

Should that happen to you, section 702 of a federal law that was passed in May, the Protecting Tenants at Foreclosure Act, allows you to stay until the end of your lease, plus an additional 90 days. However, if the new owner plans to occupy the house full-time, he can terminate your lease immediately and give you 90 days to find a new place. Similarly, you’ll have 90 days notice if you are on a month-to-month lease. (Unless it is extended, this new law will end on Dec. 31, 2012.)

In order for you to enjoy this protection, however, you must be current on your rent. Unfair as it may seem when the landlord isn’t paying his bills, he still owns the property until it goes on the auction block. If you don’t pay what you owe, he can write to you giving you three business days to pay up or move. If you don’t, he can start legal action to evict you. If the court rules in his favor or you don’t respond to the lawsuit, you could be evicted within 24 hours.
…

* The Wall Street Journal
* OPINION
* OCTOBER 4, 2009, 6:56 P.M. ET

Time for a TARP Exit Strategy
The remaining $330 billion should go to deficit reduction.

By JOHN THUNE

A year ago our country was in the midst of a serious crisis, with large financial institutions teetering on the edge of bankruptcy. There was a very real danger credit markets would freeze and the economy would grind to a halt.

Faced with that threat, Congress passed the Troubled Asset Relief Program (TARP) to help stabilize the economy. Originally designed and proposed as a straightforward measure to help failing banks get toxic assets off their books while they regained their financial footing, TARP was subsequently used by the Treasury Department to acquire extensive ownership interests in private businesses.

Our financial markets are no longer in free fall and the crisis has receded. Yet we now find ourselves in a troubling situation where the federal government is a major owner of more than 600 U.S. financial institutions and banks, as well as two auto makers, an international insurance conglomerate, and numerous other businesses.
…
Without a date certain, the government’s unprecedented entanglement in the private sector could drag on for years with more vague reassurances from the Treasury department that things will change “soon.” If the administration cannot come up with a plan on its own, then Congress has a responsibility to act.

To that end I’ve introduced the Government Ownership Exit Plan, which would ensure that the federal government sells its ownership stake within a reasonable time frame. Whether we move forward under a plan developed by the administration or the legislative framework I’ve introduced is not important. It simply needs to be done.

We also need to ensure that any TARP funds recouped from the sale of assets are dedicated to deficit reduction, not more spending or more government takeovers. TARP was created in response to a very specific—and temporary—financial emergency. It was never intended to become a $700 billion slush fund for whatever business experiment the administration sets its eyes on.

This dangerous mixture of politics and industry is bad for business, bad for the economy, and bad for the American taxpayer. TARP has run its course. The time for ending it is now.

Mr. Thune is a Republican senator from South Dakota.

Oct. 4, 2009, 12:43 p.m. EDT

Greenspan predicts unemployment will hit 10%
Former Fed Chairman recommends against new stimulus plans

By Dan Gallagher, MarketWatch

SAN FRANCISCO (MarketWatch) — Former Federal Reserve Chairman Alan Greenspan predicted Sunday that the nation’s unemployment rate is likely to top 10% in coming months before the situation begins to improve.
…
“My own suspicion is that we’re going to penetrate the 10% barrier and stay there for a while before we start down,” he said.

Greenspan’s remarks came just two days after the Labor Department reported an unemployment rate of 9.8 percent, the highest jobless figure since 1983. See story

No new stimulus

Greenspan said lawmakers should not consider new stimulus plans in response to weak job figures and other “soft” data.

“Oh, no new stimulus for two reasons. One, only 40 percent of the first stimulus has been in place. And there is a considerable debate going on in the economics profession about how effective this stimulus package is,” he said. “So in my judgment, it’s far better to wait and see how this momentum that has already begun to develop in the economy carries forward.”
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Will California become America’s first failed state?

Los Angeles, 2009: California may be the eighth largest economy in the world, but its state staff are being paid in IOUs, unemployment is at its highest in 70 years, and teachers are on hunger strike. So what has gone so catastrophically wrong?

o Paul Harris
o The Observer, Sunday 4 October 2009
o Article history

Patients without medical insurance wait for treatment in the Forum, a music arena in Inglewood, Los Angeles. The 1,500 free places were filled by 4am. Photograph: John Moore/Getty Images

California has a special place in the American psyche. It is the Golden State: a playground of the rich and famous with perfect weather. It symbolises a lifestyle of sunshine, swimming pools and the Hollywood dream factory.

But the state that was once held up as the epitome of the boundless opportunities of America has collapsed. From its politics to its economy to its environment and way of life, California is like a patient on life support. At the start of summer the state government was so deeply in debt that it began to issue IOUs instead of wages. Its unemployment rate has soared to more than 12%, the highest figure in 70 years. Desperate to pay off a crippling budget deficit, California is slashing spending in education and healthcare, laying off vast numbers of workers and forcing others to take unpaid leave. In a state made up of sprawling suburbs the collapse of the housing bubble has impoverished millions and kicked tens of thousands of families out of their homes. Its political system is locked in paralysis and the two-term rule of former movie star Arnold Schwarzenegger is seen as a disaster – his approval ratings having sunk to levels that would make George W Bush blush. The crisis is so deep that Professor Kenneth Starr, who has written an acclaimed history of the state, recently declared: “California is on the verge of becoming the first failed state in America.”
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