The Housing Bubble

This could be a busy real estate month for me. I’m hoping that some good foreclosure deals will appear this week next. If they don’t, we’ll wait until next year.

The Safety Net.
Living on Nothing but Food Stamps.

CAPE CORAL, Fla. — After an improbable rise from the Bronx projects to a job selling Gulf Coast homes, Isabel Bermudez lost it all to an epic housing bust — the six-figure income, the house with the pool and the investment property.

Real Estate in Cape Coral Is Far From a Recovery.

“It’s the one thing I can count on every month — I know the children are going to have food.” ISABEL BERMUDEZ, who has two daughters and no cash income.

Now, as she papers the county with résumés and girds herself for rejection, she is supporting two daughters on an income that inspires a double take: zero dollars in monthly cash and a few hundred dollars in food stamps.

With food-stamp use at a record high and surging by the day, Ms. Bermudez belongs to an overlooked subgroup that is growing especially fast: recipients with no cash income.

About six million Americans receiving food stamps report they have no other income, according to an analysis of state data collected by The New York Times. In declarations that states verify and the federal government audits, they described themselves as unemployed and receiving no cash aid — no welfare, no unemployment insurance, and no pensions, child support or disability pay.

Their numbers were rising before the recession as tougher welfare laws made it harder for poor people to get cash aid, but they have soared by about 50 percent over the past two years. About one in 50 Americans now lives in a household with a reported income that consists of nothing but a food-stamp card.

“It’s the one thing I can count on every month — I know the children are going to have food,” Ms. Bermudez, 42, said with the forced good cheer she mastered selling rows of new stucco homes.

* REAL ESTATE * JANUARY 4, 2010 * WSJ

Real estate faces a tough slog to recovery.
In the U.S., government aid to housing market is being phased out; commercial sector faces a glut of space.

Real estate, which sparked the global economic downturn in 2008, struggled to recover in 2009. But the path to a full return to health is littered with land mines that could send the sector spiraling downward again, possibly upending the nascent economic revival.

The past year’s progress in the housing market has relied on government programs that are scheduled to be phased out. The commercial real-estate market is faced with huge amounts of unoccupied space and a deluge of defaults and foreclosures that are putting new stresses on banks and other financial institutions already are on life support.

The outlook for 2010 is uncertain, at best.

On the bright side, U.S. housing markets stabilized in 2009 as the Federal Reserve’s policies drove mortgage rates to 50-year lows for much of the spring and autumn. Home prices posted six consecutive months of modest gains through October. The supply of foreclosed homes for sale has declined, in part the result of a program President Obama’s administration launched in February designed to keep at-risk borrowers in their homes.

But the underpinnings of the positive trends are fragile. The Fed brought down mortgage rates by committing to purchase as much as $1.25 trillion in mortgage-backed securities. That program, already extended once, is set to expire in March.

Rates could rise by a full percentage point after those purchases end, sapping any housing recovery, says Ronald Temple, portfolio manager at Lazard Asset Management. He predicts that prices could fall by 15% to 20% if the program ends as planned in March.

Home sales also have been supported by an $8,000 tax credit for first-time buyers. It, too, was set to expire in 2009 but was extended by Congress through the first half of 2010.

Someone had asked about Gary “15% is in the bag” Watts the other day. Here is his most recent forecast for 2010 (big change of tune…I’m about to turn bullish!):

We will continue to grind our way through a troubled market for quite some time, especially here in California. The Alt-A and Option ARM loans will be a huge problem in the coming years for California. Last year Option ARM recasts totaled $7.2 billion. Next year (2010) the number grows to $11.8 billion, $11.4 billion in 2011 and $18.2 billion from 2012 forward. What is sad is this “grinding” appears to be the better scenario. There are so many issues, on so many levels, that still remain unresolved. Because of this, we are all left with an unclear picture of our economy over the next few years. However, next year is fairly clear. There will be more real estate related problems and that will continue to keep a fairly tight lid on any significant price appreciation.

http://www.impactre.com/

ATLANTA, Jan 3 (Reuters) - A U.S. Federal Reserve economist called on Sunday for the creation of a new federal institution to backstop losses on asset-backed securities to prevent any future collapse of mortgage finance giants Fannie Mae (FNM.N) and Freddie Mac (FRE.N).

The government had to take over the mortgage finance companies in 2008 as a devastating financial crisis worsened. The two had been shareholder owned, but their congressional charters and Treasury lines of credit lent their debt securities a status just short of U.S. Treasuries in the eyes of investors.

“There ought to be government-backed ABS,” said Fed economist Wayne Passmore in a presentation to the American Economic Association.

http://www.reuters.com/article/idUSN0320287220100103?type=marketsNews

Missed the best part of that article!

Passmore and Fed economist Diana Hancock argued for the creation of an agency that would guarantee all forms of asset-backed securities. It would be capitalized by insurance premiums charged to financial institutions, much like the current Federal Deposit Insurance Corp system, Passmore said.

Fannie and Freddie, he argued, should also expand to securitize a host of new assets, like credit cards portfolios, that the private sector already handles. (Editing by Padraic Cassidy)

http://www.reuters.com/article/idUSN0320287220100103?type=marketsNews

Question: should I have kept an oversized Sta Claus stocking?

From Zero Hedge:

“This is your government. Your legal right to redeem your money market account has been denied.” by T.Durden 1/3/10

“At this point it is without doubt that even the government understands that when things turn sour, and they will, the run on the bank will be unavoidable: their solution - prevent money from being dispensed, when that moment comes.

“Money Markets are the easiest recourse that idiotic class of Americans known as “savers” has to give the big bank oligarchs, the Fed and the bubble-inflating Administration the middle finger.

“Could this action, whereby investors will no longer have access to money that historically has been sacrosanct and reachable and disposable on a moment’s notice, be the last nail in the coffin of money markets?

“The primary purpose of money markets is to provide virtually instantaneous access to a portfolio of practically risk-free investment alternatives: a typical investor in a money market seeks minute investment risk, no volatility, and instantaneous liquidity, or redeemability. These are the three pillars upon which the entire $3.3 trillion money market industry is based.

“Yet new regulations proposed by the administration, and specifically by the ever-incompetent Securities and Exchange Commission, seek to pull one of these three core pillars from the foundation of the entire money market industry, by changing the primary assumptions of the key Money Market Rule 2a-7. A key proposal in the overhaul of money market regulation suggests that money market fund managers will have the option to “suspend redemptions to allow for the orderly liquidation of fund assets.” You read that right: this does not refer to the charter of procyclical, leveraged, risk-ridden, transsexual (allegedly) portfolio manager-infested hedge funds like SAC, Citadel, Glenview or even Bridgewater (which in light of ADIA’s latest batch of problems, may well be wishing this was in fact the case), but the heart of heretofore assumed safest and most liquid of investment options: Money Market funds, which account for nearly 40% of all investment company assets.

“The next time there is a market crash, and you try to withdraw what you thought was “absolutely” safe money, a back office person will get back to you saying, “Sorry - your money is now frozen. Bank runs have become illegal.”

“This is precisely the regulation now proposed by the administration. In essence, the entire US capital market is now a hedge fund, where even presumably the safest investment tranche can be locked out from within your control when the ubiquitous “extraordinary circumstances” arise.”

Critics Doubt Latest Jobs Bill Will Really Produce Jobs. (AP)

When the Senate takes up a jobs bill later this month or early in February, the debate will center on whether it really will create jobs and be worth plunging the government tens of billions of dollars further into debt.

When the Senate takes up a jobs bill later this month or early in February, the debate will center on whether it really will create jobs and be worth plunging the government tens of billions of dollars further into debt.

Republicans scoff at the “Jobs for Main Street Act” title that House Democrats put on their $174 billion package last month. They refer to it as “son of the stimulus,” the $787 billion economic recovery plan of nearly a year ago that they say was ineffective at producing jobs.

In its last vote of 2009, the House narrowly passed the bill, 217-212, without a single Republican supporter.

Democrats tick off the job prospects from the House bill’s $75 billion in infrastructure and public sector spending: tens of thousands of new construction jobs, 5,500 more police officers, 25,000 additional AmeriCorps members, 250,000 summer jobs for disadvantaged youth, 14,000 part-time jobs for parks and forestry workers.

“Why don’t we just put everyone in the United States on the federal government payroll and call it a day?” counters Rep. Jerry Lewis, R-Calif.

US Business Loan Defaults Rise Again: PayNet
Monday, 4 Jan 2010 | Reuters

Severe delinquencies by small and medium-sized U.S. businesses on the loans, leases and lines of credit to finance capital equipment rose again in November as lenders remained reluctant to extend fresh financing, PayNet Inc reported on Monday.
Accounts behind 180 days or more, and unlikely ever to be paid, rose to 0.91 percent in November from 0.87 percent in October, according to PayNet, which provides risk-management tools to the commercial lending industry.

It was the 22nd consecutive monthly increase in loans so far in arrears they ultimately may have to be written off by lenders.

Accounts in moderate delinquency, or those behind by 30 days or more, rose in November to 4.33 percent from 4.19 percent in October, according to PayNet.

Vt. bankruptcy filings up 23 percent.

With more Vermonters out of work and having trouble making ends meet, bankruptcies in the state jumped 23 percent in 2009.

There were 1,541 bankruptcies filed in the state last year, 285 more than the previous year, according to the U.S. Bankruptcy Court in Rutland.

“The biggest thing right now is unemployment,” Rutland bankruptcy lawyer Rebecca Rice said. “I’m seeing a lot more people who’ve been unemployed a lot longer.”

Rice said exacerbating the situation is the fact that with job prospects so slim, many of her clients have given up on finding a job. She said “there’s no end in sight and they’re expending all their savings trying to stay on top of things.”

White River Junction lawyer Michelle Kainen said she hasn’t seen any evidence the economy is turning around.

Kainen said many of her clients are in a situation where one or both spouses are unemployed.

“I’m shocked when a husband and wife come in and both are employed,” she said.

She said bankruptcy has hit higher wage earners as well. Someone who loses a $50,000 a year job and is lucky enough to find a job at $35,000 is having trouble paying their bills, Kainen said.

She also said she’s seeing more mom and pop business bankruptcies.

The top 10 turds swimming around in the cesspool…

Judicial Watch Announces List of Washington’s “Ten Most Wanted Corrupt Politicians” for 2009 ~ Washington, DC

Judicial Watch, the public interest group that investigates and prosecutes government corruption, today released its 2009 list of Washington’s “Ten Most Wanted Corrupt Politicians.”

http://www.judicialwatch.org/news/2009/dec/judicial-watch-announces-list-washington-s-ten-most-wanted-corrupt-politicians-2009

Housing Animal Spirits to Be Banished by Prime Foreclosures.

Jan. 4 (Bloomberg) — Homeowners with the best credit are the next big risk for the U.S. housing market.

An increase in mortgage defaults among prime borrowers in 2009 is likely to accelerate this year, slowing the real estate recovery even as Americans become more optimistic about the economy, said Robert Shiller and Karl Case, the economists who created the S&P/Case-Shiller Home Price Index.

“There will be continuing foreclosures, and not just subprime, it will be prime mortgages,” Shiller, a professor at Yale University, said in an interview. “This is creating a huge shadow inventory of homes that are still owned, but they’re going to be on the market in the next year or so.”

The number of prime mortgages overdue by at least 60 days more than doubled in the third quarter from a year earlier to 838,000, according to a Dec. 21 report from the Office of the Comptroller of the Currency and the Office of Thrift Supervision. Unemployed homeowners struggling to pay their bills will default on their home loans and increase foreclosures, Shiller and Wellesley College’s Case said.

NY Times:

“Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes. As a result, desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences.”

“Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.”

http://www.nytimes.com/2010/01/02/business/economy/02modify.html?ref=realestate

Perhaps by critics they mean the HBB.

I took the challenge to research LaRouche’s credentials as an economist. He sounds just like the crack pot I thought he was, interlacing reasonable sounding echoes of arguments made by others with his personal brand of demagoguery.

Paradoxically, the words of Shakespeare’s Macbeth haunt me: “I begin to doubt the equivocation of the fiend that lies like truth.”

He believes that if governments do not play a strong role in directing national economies, the gap will be filled by several kinds of monopolies and cartels. It is because of this that LaRouche opposes Free Trade and globalism and supports protectionism.[50][56]

LaRouche maintains that supranational financial institutions such as the International Monetary Fund are committed to a policy of looting the living standards of the world’s populations through austerity and speculation, while contracting the actual productive base of these economies – a policy that he claims is a revival of the economic approach of the German central banker Hjalmar Schacht, who held office both before and during the Nazi government of Adolf Hitler. To remedy this, LaRouche proposes a new international conference, modeled on the Bretton Woods conference, for the purpose of reorganizing a bankrupt monetary system, and eliminating most of the presently unpayable debt. For example, he advocates the retroactive cancellation of all financial derivatives contracts. He proposes that new credits be created for very large infrastructure projects all over the world; LaRouche has published specific proposals for such projects in Europe, Asia, Africa, the Middle East, North and South America, and Australia. LaRouche considers it to be the unfinished mission of the United States of America to end any form of colonialism, which he associates in particular with the austerity policies of the International Monetary Fund in the post-1972 period.
…

Main Street Americans = Wall Street’s & K Street’s bagholders…

* The Wall Street Journal
* REVIEW & OUTLOOK
* JANUARY 3, 2010, 9:02 P.M. ET

The Biggest Losers
Behind the Christmas Eve taxpayer massacre at Fannie and Freddie.

Happy New Year, readers, but before we get on with the debates of 2010, there’s still some ugly 2009 business to report: To wit, the Treasury’s Christmas Eve taxpayer massacre lifting the $400 billion cap on potential losses for Fannie Mae and Freddie Mac as well as the limits on what the failed companies can borrow.

The Treasury is hoping no one notices, and no wonder. Taxpayers are continuing to buy senior preferred stock in the two firms to cover their growing losses—a combined $111 billion so far. When Treasury first bailed them out in September 2008, Congress put a $200 billion limit ($100 billion each) on federal assistance. Last year, the Treasury raised the potential commitment to $400 billion. Now the limit on taxpayer exposure is, well, who knows?
…

Actions speak far more loudly than words. Nonetheless, I am mystified about how the Fed could possibly use interest rates to pop bubbles which are invisible to their blindered eyes?

Fed Chief: Rate Hikes Must Be an Option

The U.S. Federal Reserve must be open to raising interest rates to pop asset bubbles, even though stronger regulation remains the best solution to prevent a repeat of the crisis, Bernanke said Sunday.
…
* JANUARY 4, 2010

Fed Chief Edges Closer to Using Rates to Pop Bubbles
Bernanke Sees Monetary Policy as Potential Antidote, but Blames Lax Regulation — Not Central Bank Policies — for Housing Crisis

Here is a promising development. Now if only we could end taxpayer-subsidized TBTF insurance for Megabank, Inc, perhaps the U.S. banking industry could also be shrunken down to a competitive scale of operation.

Broker Exodus Drains Firms’ Clients

The ranks of brokers at major Wall Street firms have been shrinking, along with those firms’ share of the retail-investing market. At the same time, independent financial advisers are growing in number and market share.

The bubble-blind bozos at the Fed are now trying to place the blame for the previously-invisible bubble on someone else’s plate:

The Fed Lays Blame On Everyone Else

Posted: January 4, 2010 at 5:05 am
24/7 Wall St

The Federal Reserve was not to blame for any of the financial events that caused the collapse of the credit markets late in 2008. It is the same credit collapse that caused Congress to create the TARP so that the Treasury could bail out the faltering American banking system.

Ben Bernanke, the Fed chief, said at a meeting of the American Economic Association that “Stronger regulation and supervision aimed at problems with underwriting practices and lenders’ risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates.”

That is a convenient truth that does not take into account the role that low interest rates may have played in the sharp rise of home prices. Many analysts have pointed out the Mr. Bernanke’s predecessor as head of the Fed, Alan Greenspan, was a proponent of variable rate mortgages. Those mortgages were a source, many economists argue, of unsafe home lending practices and the creation of mortgage-backed securities.
…

Puzzling development: Why does “better than expected” news on U.S. manufacturing result in a dollar sell off? Absent the twisted hand of Fed-engineered financial market distortion, shouldn’t a strengthening U.S. manufacturing sector lead to a stronger dollar?

From Bloomberg:

CURRENCY VALUE CHANGE % CHANGE TIME
EUR-USD 1.4424 0.0100 0.6946% 09:54
GBP-USD 1.6166 0.0014 0.0898% 09:54
USD-CHF 1.0301 -0.0051 -0.4931% 09:54
USD-SEK 7.0378 -0.1230 -1.7184% 09:54
USD-DKK 5.1591 -0.0380 -0.7321% 09:54
USD-NOK 5.6931 -0.0740 -1.2839% 09:54
USD-CZK 18.2140 -0.1721 -0.9360% 09:54
USD-SKK 20.8820 -0.1296 -0.6169% 09:54
USD-PLN 2.8366 -0.0262 -0.9169% 09:54
USD-HUF 186.4180 -1.9725 -1.0470% 09:54
USD-RUB 29.8950 -0.1400 -0.4661% 09:54
USD-TRY 1.4832 -0.0154 -1.0310% 09:53
USD-ILS 3.7520 -0.0185 -0.4906% 09:54
USD-KES 75.6000 -0.1750 -0.2309% 09:05
USD-ZAR 7.3325 -0.0578 -0.7818% 09:54
USD-MAD 7.8568 -0.0400 -0.5062% 09:54

Back from a very interesting trip to the East Coast. Had a chance to chat with a couple of HBB-ers (Polly and X-Philly) while back there. (Note to fellow HBB-ers: Your brethren and sister-en are even more fun when you talk to ‘em.)

Some observations:

1. There is still quite a glut of “for sale” signs in eastern Pennsylvania. This was especially true the closer in to Philadelphia one gets. And, judging from the looks of many of these places, they’re going to be a tough sell.

2. Dad and I took a day trip to Washington, DC. Coming into our nation’s capital by train is like taking a trip into Downtown Dumpington. The first aesthetically pleasing thing I saw was the inside of Union Station. The illusion of beauty didn’t last long. There’s quite a homeless encampment outside the station.

3. Baltimore (as seen from Amtrak) looked even worse. Block after block of abandoned, boarded up rowhouses. Sorry to say, but the best thing to do would be to bulldoze them. Too bad, because they were well-built structures.

4. The U.S. Capitol is an armed camp. Even saw a police officer with what looked to be a sniper rifle. All this for just a handful of tourists on a very cold day.

5. I flew and rode the train over the holidays. Guess which had the tighter security? If you guessed the Amtrak stations, you’re right.

Broke! Fixing America’s fiscal crisis
Reducing U.S. debt: Ideas from the Hall of Lame ~January 4, 2010:

NEW YORK (CNNMoney.com) — Only in the world of federal debt do tens of billions of dollars amount to little more than rounding errors.

Yet it’s the rounding errors that many lawmakers reach for when making impassioned speeches about reducing the debt.

Whatever merit their ideas may have, they don’t have a prayer of generating sizeable savings.

Sure, every little bit counts.

But “a little bit” doesn’t really move the needle when you’re talking about $12 trillion in accumulated debt, several trillion more expected over the next decade and tens of trillions more on top of that due to long-term shortfalls in Medicare and Social Security.

All told, the long-term fiscal shortfall could top $60 trillion over the next 75 years if nothing changes, said Robert Bixby, director of the Concord Coalition, a deficit watchdog group.

That’s why deficit hawks talk about the need to narrow the long-term “fiscal gap.” That’s a measure of how much money is needed every year starting now just to keep the debt-to-GDP ratio where it is today.

Estimates of that gap range anywhere from 4% to 9% of gross domestic product. In a $14 trillion economy, that means to close the gap altogether Uncle Sam would need to come up with $560 billion to $1.26 trillion a year.

Only 40,000 new laws for 2010…. slackers.

New Laws for 2010: No Texting, Trans Fats or Tanning Beds
2010 Also Allows Gay Marriage, Physical Therapay for Animals in New Hampshire and

Rules from tanning to texting: More than 40,000 new laws go into effect in 2010.

Beginning Jan. 1, 2010, Texas college freshmen and transfer students will need to be vaccinated against bacterial meningitis before they can live on campus. Restaurants in California can no longer use oils, margarine, or shortenings with more than half a gram of trans fat per serving. And stores in Louisiana can no longer sell lighters that appeal to children.

As always, a host of new laws take effect in the new year, ranging from the significant (same-sex couples will be able to marry in New Hampshire) to the bizarre (also in New Hampshire, physical therapists will be able to get certified to practice on animals).

More than 40,000 laws have been enacted by state legislatures in the past year, and at least 30 states have statutes that go into effect on New Year’s Day, according to the National Conference of State Legislatures (NCSL), which provides an annual round-up of such laws.

Among the more noteworthy:

Payday borrowers in Kentucky will be restricted to two loans of no more than $500 at a time, and payday lenders face tougher penalties if they lend to someone who has reached the maximum.

Oregon will require children under age 16 to wear a seat belt on any ATV or vehicle on public property, and will increase the fine for people riding a motorcycle without a helmet to $720.

In Texas, smoke detectors will need to be able to alert a hearing-impaired person if requested by a tenant.

In Montana, insurance companies will be required to provide coverage for autism-spectrum disorders.

2010: Key Year in the Inflation/Deflation Debate

”The government’s legal-tender money — the dollar — is now under question. While the commercial-banking fractional-reserve monetary engine is stalled with loan write-downs and bank failures, the Federal Reserve has expanded its balance sheet like never before. Man of the Year Ben Bernanke is deathly afraid of deflation, and John Maynard Keynes is a hero again. The inflation cake is in the oven, albeit not quite fully baked.”

~ Doug French

Woman Arrested for Punching Out McDonald’s Window Over McNuggets
January 04, 2010

TOLEDO, Ohio — Police say an Ohio woman punched through a McDonald’s drive-through window because she couldn’t get Chicken McNuggets.

Twenty-four-year-old Melodi Dushane has pleaded not guilty to a vandalism charge in Toledo. Police were called Friday to the restaurant where she allegedly became upset because chicken nuggets weren’t available.

Police say Dushane was treated for injuries, then jailed. She was released on a recognizance bond and ordered not to have contact with the restaurant. The phone number for her home address isn’t listed.

A manager at the McDonald’s declined Monday to discuss the incident.

A Fort Pierce, Fla., woman was cited last March on a charge of misusing 911 after calling three times to complain about not getting McNuggets she ordered.

Economic Report

Jan. 4, 2010, 10:11 a.m. EST

Construction down seven straight months
Nov. spending down 0.6%, close to consensus

By Greg Robb, MarketWatch

WASHINGTON (MarketWatch) — Spending on U.S. construction projects fell in November, marking the seventh straight monthly decline, the government reported Monday.

Overall, spending on construction projects fell 0.6% in November, the Commerce Department said. This was close to consensus forecasts of Wall Street economists.

Adding to the sense of weakness in the report, there was another large downward revision to the prior month’s data.
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To enjoy our complete interactive experience, please download a free copy of the latest version of Adobe Flash Player here.
Economic Outlook for 2010

Paul Gigot and the members of the WSJ Editorial Team discuss the new hopes for an economic turnaround. Video courtesy of Fox News.

The government said spending fell 0.5% in October, compared with the initial estimate of no change.

The trend of large revisions to the construction data in this recession has irked economists.

Year over year, construction spending is down by 13.2% in November.

One area of strength in recent months — spending on private housing — fell 1.6% in November. The sector had been bolstered by the tax credit for first-time home buyers that sparked some home buying this fall. The tax credit has been extended until next June and broadened to include almost all home buyers.

Spending on private commercial construction projects fell slightly in November for the eighth consecutive monthly decline. Non-residential construction is down 20.6% in the past year.

Economists said that tight credit and the weak job market are two factors in a grim outlook for private nonresidential construction in 2010.

Overall private construction spending fell 0.7% in November after falling 0.8% in the previous month. Year-over-year private spending is down 20.0%.

Government public construction spending fell 0.4% after remaining flat in October. Government spending is up 2.7% over the past year as the government has been spending money trying to stimulate demand.
…

Credit Suisse sued over resorts, $24 billion sought ~ Jan 4, 2010

NEW YORK (Reuters) - Credit Suisse Group AG has been sued by property owners who said the Swiss bank schemed to defraud investors in four luxury resort communities, including the bankrupted Yellowstone Club.

The lawsuit filed on Sunday in federal court in Boise, Idaho, seeks $24 billion of damages against Credit Suisse and commercial real estate firm Cushman & Wakefield Inc, and class-action status for investors and property owners.

The alleged losses relate to Yellowstone, a ski resort whose members have included Microsoft Corp Chairman Bill Gates, as well as to Lake Las Vegas resort in southern Nevada, the Tamarack resort in central Idaho and Ginn sur Mer on Grand Bahama Island in the Bahamas.

Credit Suisse spokesman Duncan King said: “We believe the suit to be without merit, and will defend ourselves vigorously.”

Cushman & Wakefield and a lawyer for the plaintiffs did not immediately return calls seeking comment.

According to the complaint, Credit Suisse violated federal racketeering laws by concocting a “loan to own” scheme that inflated the value of resorts and burdened the resorts and purchasers of homes there with too much debt.

Using appraisal methodology provided by Cushman & Wakefield, this scheme allowed Credit Suisse to win “enormous fees,” and ultimately foreclose on or take control of resorts at well below market value, the complaint said.

“The scheme has been a financial heist for Credit Suisse with no risk,” the complaint said.

Economic Report

Jan. 4, 2010, 10:11 a.m. EST

Construction down seven straight months
Nov. spending down 0.6%, close to consensus

By Greg Robb, MarketWatch

WASHINGTON (MarketWatch) — Spending on U.S. construction projects fell in November, marking the seventh straight monthly decline, the government reported Monday.

Overall, spending on construction projects fell 0.6% in November, the Commerce Department said. This was close to consensus forecasts of Wall Street economists.

Adding to the sense of weakness in the report, there was another large downward revision to the prior month’s data.

The government said spending fell 0.5% in October, compared with the initial estimate of no change.

The trend of large revisions to the construction data in this recession has irked economists.

Year over year, construction spending is down by 13.2% in November.

One area of strength in recent months — spending on private housing — fell 1.6% in November. The sector had been bolstered by the tax credit for first-time home buyers that sparked some home buying this fall. The tax credit has been extended until next June and broadened to include almost all home buyers.

Spending on private commercial construction projects fell slightly in November for the eighth consecutive monthly decline. Non-residential construction is down 20.6% in the past year.

Economists said that tight credit and the weak job market are two factors in a grim outlook for private nonresidential construction in 2010.

Overall private construction spending fell 0.7% in November after falling 0.8% in the previous month. Year-over-year private spending is down 20.0%.

Government public construction spending fell 0.4% after remaining flat in October. Government spending is up 2.7% over the past year as the government has been spending money trying to stimulate demand.
…

I guess the heloc homemoaners in Montana, have the same “equity rash” as in California, Arizona, Florida,…scratch, scratch, scratch…

Montana’s big sky views become bigger tax burdens:
By Kim Murphy, January 3, 2010 LA Times

“Abell already knew that property values in the Flathead — a new romping ground for Hollywood celebrities, sports stars and international CEOs — far exceeded what they were when he graduated from Whitefish High School. His 70-year-old house in the tax appraisal in 2002 was worth a stunning $553,900, thanks to its location right on the lake.

Now, though, the Montana Department of Revenue says Abell’s property is worth $2.64 million. The old cabin his brother’s living in? That one, because it sits on 4 acres, is worth $4.2 million.

Abell, who recently retired as president of the Whitefish Credit Union at the age of 70, just wrote a check for $9,200 for this year’s property taxes. He expects to owe at least twice that amount every year when the new appraisals take full effect in 2014 — an obligation that will quickly empty his modest retirement account.

His brother faces an annual tax bill of $30,462, which exceeds his entire annual income.”

PMI (Private Mortgage Insurance, Co.) Predicts Home Prices Will Continue Descent Through Q1 2011
Carrie Bay | 07.07.09
http://www.nrba.com/article.cfm?id=215

Also, I like to follow the pension investment world to gather real estate objectivity:
NCREIF -National Council Of R E Investment Fuduciaries

On front page of the of the Eau Claire Sunday newspaper, we have the headline “State, region see foreclosures jump”. To summarize, there were 30,642 foreclosures for 2009 and 25,541 in 2008 for Wisconsin, a 20% jump as noted on preliminary figures from ForeclosureAlarm dot com, a Madison based website which got the figures from court documents. For Eau Claire and Chippewa counties, the increase was the same. David FitzGerald, president of the Realtors Association of Northwestern Wisconsin said that foreclosures might keep rising nationally for 2010 because of high unemployment and teaser-rate mortgages.

By the way, on the back page of the second part of the newspaper, at www darwinawards com, (that commemorates those who improve our gene pool… by removing themselves from it) the award goes to two fellows in Belgium who used dynamite to make a withdrawal from an ATM. They were standing too close when the blast leveled the bank.

Oil rocketing up, still. At nearly $82 per barrel, things are starting to get interesting. It’s based solely upon speculation (and the dollar), but the economy doesn’t care what’s driving it. When J6P is already paying more than $3 per gallon on declining wages in the midst of a depression, this is garnering a bigger and bigger chunk of his take home pay. This does not bode well for the economy. $150 per barrel oil scored a TKO of the economy back in 2008, and I think that $100+ will do the exact same thing. This country just isn’t set up to handle those prices. That can change, but not without extraordinary amounts of pain for all involved.

2009 bankruptcies total 1.4 million as recession pushes filings toward historical highs.

RALEIGH, N.C. (AP) — U.S. consumers and businesses are filing for bankruptcy at a pace that made 2009 the seventh-worst year on record, with more than 1.4 million petitions submitted.

An Associated Press tally found 1.43 million filings, an increase of 32 percent from the previous year. There were 116,000 recorded bankruptcies in December, up 22 percent from the same month a year before.

Filings have been rising steadily each year since the beginning of 2006, shortly after Congress overhauled the U.S. bankruptcy system.

Bankruptcies surged to around 2 million in 2005 as consumers rushed to file before the new law took effect but then plummeted in 2006. They’ve been climbing ever since.

The West saw a particularly fast rise in 2009, with Arizona jumping 77 percent and Wyoming up 60 percent from 2008.

Rite-Aid December sales decline ~ Pittsburgh Business Times

Drugstore chain Rite Aid Corp. saw a decline in same-store sales in December, the company announced Monday.

For the four weeks ended Dec. 26, same-store sales were down 1.8 percent for the Camp Hill-based company. Total drugstore sales for the four-week period were down 3 percent, to $2.091 billion, compared with $2.155 billion a year earlier.

Year-to-date same-store sales for the 43-week period ended Dec. 26 were down 0.5 percent, with total drugstore sales down 2 percent to $21.22 billion.

Rite Aid (NYSE:RAD) reported its tenth consecutive quarterly loss in December. It saw a third-quarter loss of $83.9 million, or 10 cents per share, for the quarter ended Nov. 28.

Tweets, sexting “unfriended” in U.S. banned word list.

KANSAS CITY (Reuters) – If you recently tweeted about how you were chillaxin for the holiday, take note: Fifteen particularly over- or mis-used words and phrases have been declared “shovel-ready” to be “unfriended” by a U.S. university’s annual list of terms that deserve to be banned.

After thousands of nominations of words and phrases commonly used in marketing, media, technology and elsewhere, wordsmiths at Lake Superior State University on Thursday issued their 35th annual list of words that they believe should be banned.

Tops on the Michigan university’s list of useless phrases was “shovel-ready.” The term refers to infrastructure projects that are ready to break ground and was popularly used to describe road, bridge and other construction projects fueled by stimulus funds from the Obama administration.

And speaking of stimulus, that word — which was applied to government spending aimed at boosting the economy — made the over-used category as well, along with an odd assortment of Obama-related constructions such as Obamacare and Obamanomics.

“We say Obamanough already,” the LSSU committee said.

Also ripe for exile is “sexting,” shorthand for sexy text messaging, a habit that has caused trouble this year for public figures from politicians to star athletes.

Similarly, list makers showed distaste for tweeting, retweeting and tweetaholics, lingo made popular by users of the popular Twitter networking website. And don’t even get them started on the use of friend as a verb, as in: “He made me mad so I unfriended him on Facebook,” an Internet social site.

Male acquaintances need to find another word than “bromance” for their friendships, and the combination of “chillin” and “relaxin’” into “chillaxin” was an easy pick for banishment.

VOTED OUT

Also making the list was “teachable moment.”

“This phrase is used to describe everything from potty-training to politics. It’s time to vote it out!” said one list contributor.

“Toxic assets,” referring to financial instruments that have plunged in value, sickened list makers so much the phrase was added to the list, along with the tiresome and poorly defined “too big to fail” which has often been invoked to describe wobbly U.S. banks.

Similarly, “in these economic times” was deemed overdue for banishment due.

Also making the list — “transparent/transparency,” typically used, contributors said, when the situation is anything but transparent.

One list contributor wanted to know if there was an “app,” short-hand for “application” popularized by the mobile iPhone’s growing array of software tools, for making that annoying word go away.

And rounding out the list — “czar” as in car czar, drug czar, housing czar or banished word czar.

“Purging our language of ‘toxic assets’ is a ’stimulus’ effort that’s ‘too big to fail,’” said a university spokesman.

VDOT issues 678 layoff notices; Staffing reduction plan completed.

The Virginia of Department of Transportation started its final wave of position eliminations Monday.

To meet a required reduction of staffing to 7,500 full-time employees by July 1, 2010, the department started issuing 678 layoff notifications Monday.

“This final stage of staffing reductions has forced the agency to make challenging personnel decisions, but does fulfill its requirement to reduce staffing levels to 7,500 positions,” said David S. Ekern, VDOT commissioner. “We have strategically shifted our staffing structure to eliminate redundancies in administrative and business support functions while ensuring our emergency and incident response commitments can be met statewide. VDOT will be a stronger, more focused, more efficient agency as we progress into the next decade.”

These reductions are a portion of a three-part plan called the Blueprint for the Future.

In June 2009, VDOT reduced 450 hourly wage positions. The second wave of employee reductions took place in fall 2009. During that period, more than 500 full-time positions were reduced.

(Hwy wonders how long x2 al-Qaida operatives can live & sleep in a 100 sf rental @ $27,000…is it possible that they have “acquired” gps coordinates for this icon of sheikdom extravagance?)

January 04, 2010 Bloomberg
Dubai Opens Tallest Tower Partially Leased in Slump:

“While mainly residential, the building will have 37 floors of office and retail space.”

“Apartment prices in the tower, formerly known as Burj Dubai, have fallen to less than half of the 10,000 dirhams ($2,700) a square foot that they reached at the 2008 peak.”

Dollar carry trade makes a comeback today. Darn.

Has FPSS checked in with his/her predictions for 2010? Inquiring minds want to know.

Across many industries the cuts continue. Although the numbers may be reduced, in most cases it does not appear that many companies are counting on a quick economic rebound.

ALCOA to cut 90 jobs at Tennessee Operations
Voluntary severance packages offered
January 04. 2010

ALCOA is cutting 90 jobs at Tennessee Operations, the company told employees today.

The workforce reduction is necessary to “align workforce needs with business volumes for 2010″ in the plant’s Rigid Packaging Division location, the company said in a statement.

Management is working with local union representatives to minimize the number of layoffs, according to the company.

Real Estate Poses Risk to U.S. Recovery, Ryding Says

Jan. 4 (Bloomberg) — The commercial real estate market poses a threat to the U.S. recovery, said John Ryding, chief economist at RDQ Economics in New York.

“We have yet to see the full extent of those problems,” Ryding said today in an interview on Bloomberg Radio.

The housing market, which plunged the economy into recession, also remains fragile, Ryding said.

“Maybe housing credit has gotten ahead of itself,” he said. “I don’t think we’re out of the woods yet on the write- off situation.”

Regarding the labor market, “our feeling is we will see a small positive number” in the government’s report on non-farm payrolls in December, Ryding said. He didn’t provide an estimate.

Payrolls probably fell by 4,000 workers last month, the smallest drop since the recession began two years ago, according to the median of 66 economists surveyed by Bloomberg News ahead of a Jan. 8 Labor Department report. The unemployment rate may have climbed to 10.1 percent from 10 percent.

Blackstone’s Wien Sees GDP Growth, Unchanged Stocks.

Jan. 4 (Bloomberg) — Blackstone Group LP’s Byron Wien, who correctly predicted rallies in equities, gold and oil last year, said U.S. gross domestic product will expand almost twice as fast as economists forecast in 2010 while the Standard & Poor’s 500 Index ends the year unchanged.

An advance in stocks in the first half will give way to losses as the S&P 500 drops as low as 1,000 before finishing 2010 where it began, Wien said in his annual “Ten Surprises” list, published since 1986. As real economic growth climbs toward 5 percent, the Federal Reserve will start boosting interest rates in the second quarter, pushing its target for overnight loans between banks to 2 percent, he said.

“Even though the economy is strong and earnings exceed expectations, rising interest rates and full valuations present a problem” for stocks, said Wien, 76. “Concern about longer- term growth and obligations to reduce leverage at both the public and private level unsettle investors.”

Vietnam shuts down gold exchanges.

VietNamNet – All gold transactions on account will end and gold trading floors will be closed no later than March 30, 2010, in accordance with the Prime Minister’s decision.

Prime Minister Nguyen Tan Dung has decided to shut down gold exchanges within 90 days after December 30, 2009. This means that gold trading floors, where investors trade gold on account, will not be allowed to operate in Vietnam after March 30, 2010.

The decision has put an end to the long argument on whether to shut down gold trading floors and how to manage them.

The proposal to shut down gold exchanges was initially made by the State Bank of Vietnam, which believes that gold exchanges do not benefit the national economy and a lot of investors have lost all their money due to harassed gold investment deals.

The proposal faced strong opposition from gold trading floors’ runners and experts, who believe that such as decision violates current laws.

Other experts do not debate the decision to shut down gold exchanges and law violations, but they agree that it is not as difficult to manage gold exchanges as previously thought.

The Ministry of Finance announced that it was considering taxing gold investors. The announcement brought joy to gold investors who thought that taxation meant the permanent existence of the gold exchanges.

Darwin Award winners revealed.

Two bank robbers have been declared winners of the 2009 Darwin Awards after they blew themselves up while trying to crack open a cash machine.

The Belgian pair used so much explosive to get their hands on the money that they destroyed the whole bank building.

When police arrived at the scene, they found one of them with severe head injuries, and rushed him to hospital where he died shortly after arrival.

Investigators initially assumed that his accomplice had managed a getaway, but the second one’s body was excavated from the debris twelve hours later.

Wendy Northcutt, the founder of the annual awards, declared them the 2009 winners of the Darwin Awards, given to those “doing the most to improve the human gene pool by removing themselves from it”.

The bank robbers just edged ahead of their main rival Shawn Motero who was stuck in a traffic crawl in Florida when he needed to answer a call of nature.

With no toilet handy, he got out of the car before jumping over a concrete wall to find a more secluded spot.

Unfortunately, the 30-year-old had not realised he was on a bridge, and fell 65 feet to his death. Award organisers said it proved you should “look before you leak”.

In third place was the first ever woman to be nominated for the award. Rosanne Tippett drove her moped into a flooded river, despite the warning signs.

She was rescued by police, but died after jumping back into the river in an attempt to recover the two-wheeler.

Useful advice is offered on this program on how to stay off the receiving end of Megabank, Inc’s efforts to scam you.

Reporter’s Secrets To Smart Consumption 2.0

January 4, 2010
Listen to the Story

Fresh Air from WHYY
[39 min 3 sec]

For his reporting on online fraud and cybersecurity, Bob Sullivan received the Society of Professional Journalists Public Service Award in 2002 and an award from the Carnegie Mellon Cylab in 2003.

Before Microsoft was charged with monopoly and Facebook users debated the limits of public profiles, reporter Bob Sullivan was investigating computer crime, electronic privacy, and consumer affairs.

These days, you can read Sullivan’s solutions to “21st Century headaches” on msnbc dot com, where he runs a technology blog, The Red Tape Chronicles.

Sullivan’s new book, Stop Getting Ripped Off: Why Consumers Get Screwed And How You Can Always Get A Fair Deal, is a guide to informed consumption. He joins Terry Gross to talk about the traps consumers fall into when dealing with credit card and cell phone companies, banks, and an old favorite: car salesmen.

Sullivan is a New York Times best-selling author and a regular on CNBC’s On The Money, NBC’s Nightly News, and The Today Show.

IRS Proposes Tax Preparer Regulations.
Monday, 4 Jan 2010 ~~ Reuters

The U.S. tax agency will propose new rules to regulate paid tax preparers, including mandatory registration with the government and competency testing for those not already subject to professional exams.

With more than 80 percent of Americans using a tax preparer or software to complete their tax returns, the new rules are aimed at boosting standards within a fragmented industry and increasing revenue to the government, Internal Revenue Service Commissioner Doug Shulman said in a statement Monday.

“It’s critical to taxpayers and it’s also critical to the revenues of the country,” Shulman said in a briefing with reporters.

This war on terror is a joke ~ 03rd January 2010 (UK)

The great Jewish-American entertainer Tom Lehrer said he gave up writing satirical songs when he realised that nothing he wrote could compete with the reality of U.S. Secretary of State Henry Kissinger being awarded the Nobel Peace Prize after authorising the bombing of neutral Cambodia during the Vietnam War.

I wonder what Lehrer would say about President Barack Obama, who ordered two Cruise missile attacks on targets in Yemen a week before Christmas, allegedly killing 49 civilians, including 17 women and 23 children.

But now there’s speculation that the attack prompted Al Qaeda to send the 23-year-old suicide bomber they trained, Umar Farouk Abdulmutallab, on the Detroit-bound jet.

The old Lehrer joke wasn’t lost on the Iranians.

An official Tehran news website noted: ‘U.S. Nobel Peace Prize laureate President Barack Obama has signed the order for a recent military strike on Yemen in which scores of civilians, including children, have been killed.’

Now Gordon Brown gets in on the act, announcing a global terrorism summit in London on January 28 and £100 million in aid to Yemen to ‘combat terrorism’.

Watching Brown bluster on TV yesterday about what he’s doing to combat terrorism must have been a dispiriting experience for viewers.

It’s so obvious he seizes on this - as he did with the banking crisis - to parade before us as an international statesman.

Triangle loses 10,000 construction jobs. ~~ Triangle Business Journal

The Raleigh-Cary area shed construction workers at a faster clip than any other metro in the state in November, according to the Associated General Contractors of America, an Arlington, Va.-based trade group.

Raleigh-Cary shed 8,800 construction jobs during the month, bringing employment in the sector to 27,800, down 24 percent from November 2008, AGC reported.

Meanwhile, Durham and Chapel Hill shed 1,200 construction jobs in the month, a 12 percent decline from 2008.

In other metros, Charlotte dropped 9,400 jobs in November, down 19 percent from Nov. 2008, while Greenville and Wilmington gave up 700 and 1,900 jobs, respectively, for drops of 18 percent.

Nationally, AGC says, construction employment declined in 324 of 337 metros, as construction spending shrank by $137 billion in November, hitting a six-year low.

Isn’t this the definition of moral hazard

Jan. 4 (Bloomberg) — To understand the meaning of no good deed goes unpunished, Treasury Secretary Timothy F. Geithner can look no further than Wall Street where the banks that received the biggest taxpayer bailouts are seeking to reap trading profits from securities rescued by the government.

Only months after it was started, the U.S. program designed to purge debts of no immediate discernable value from the balance sheets of troubled banks has helped transform the frozen debt into a money-maker as the bonds have rallied. Bank of America Corp. and Citigroup Inc., who received 22 percent of the $418.7 billion American taxpayers loaned to troubled financial institutions, boosted holdings on their trading books of home- loan bonds that lack government guarantees while investors were raising cash for the program, according to Federal Reserve data.

Charlotte, North Carolina-based Bank of America along with Citigroup, Morgan Stanley and Goldman Sachs Group Inc., all based in New York, added a combined $3.36 billion of the debt, for which there were few buyers as recently as March, to their short-term trading assets during the third quarter, up 16 percent from the second quarter, the most-recent data show.

Prices of these securities may slump again, leaving the banks exposed to potential losses that the Treasury Department’s rescue plan was designed to mitigate, said Joshua Rosner, a managing director at New York-based Graham Fisher & Co., which advises regulators and institutional investors.

Prices may slump again, who cares, the FED will just buy them at 99 cents on the dollar. Weeee

Shit, wifey fell in love with a house today. 4/2/2 Sold for $460k in ‘06, our Realtor thinks $220k is reasonable — that’s about what it sold for in 1999. I’m slipping… The rental inventory here sucks.

HBB emergency conference NOW! Talk me off the ledge…

As tax collections in Wisconsin declined by a whopping $8.7 billion last year along with the recession, taxes as a share of state residents’ income dropped to their lowest levels since 1970, a new report shows.

The report Monday by the Wisconsin Taxpayers Alliance shows taxes accounted for 28.8 percent of state residents’ personal income in 2009, down from 33.7 percent in 2008. That was the lowest share of state income taken by taxes since 1970, said research analyst Kyle Christianson.

The federal, state and local taxes collected in Wisconsin dropped to $61.2 billion in 2009 from $69.9 billion in 2008 as the recession churned through the state’s economy. But the personal income in the state is still estimated by the federal government to have risen a modest 2.5 percent in 2009 to $212.6 billion.

OK personal income up 2.5% but total taxes down >10%. 1+2=3??? I wish they had a better breakdown of local state and federal.

Didn’t we all see this coming…

ATLANTA, Jan 4 (Reuters) - U.S. earnings inequality has continued to rise despite the hit to the wealthy from the country’s financial crisis, according to data from the Bureau of Labor Statistics.

The figures confound speculation among some economists that the worst recession since the 1930s might actually reduce the nation’s income gap because of its impact on the banking sector.
The top 10 percent of Americans take home between 40 percent and 50 percent of country’s total earnings, the data show.
“Inequality, by all measures, has increased,” said James Spletzer, economist at the U.S. Bureau of Labor Statistics. He was speaking at a conference sponsored by the Association for Social Economics.

Yeah, Obama is a socialist all right. Obamanomics is twice as good Reaganomics and the numbers prove it!
The Eddies’ of the world are our new masters.

Ouch. So the fed debt in the last two days of 2009:

12/29: 12,100B
12/30: 12,144B
12/31: 12,311B

$211 Billion jump in 2 days.

Happy New Year, all!

I’m off on a bit of an “epic” vacation to India. I’ll catch y’all whenever I get back.

It’s time the bubble-istas had a good time.

Me, my camera and my potty-mouth will be back in a “while”.

Hold the fort down for me!

BWAHAHAHicHAHAHicHAHAHAHAHicHAHAHic* (DennisN™)

Bankrupt in O.C., developer opens world’s tallest building:
January 4th, 2010, by Jon Lansner OC Register

“Dubai opened the world’s tallest skyscraper today, and in a surprise move renamed the gleaming glass-and-metal tower Burj Khalifa in a nod to the leader of neighboring Abu Dhabi — the oil-rich sheikdom which came to its rescue during the financial meltdown. Dubai is opening the tower in the midst of a deep financial crisis. Its oil rich neighbor Abu Dhabi has pumped billions of dollars in bailout funds into the emirate as it struggles to pay its debts.

Let’s hope Emaar does better at high rises in its own neighborhood than it did on investing in U.S. real estate. Emaar lost $1.6 billion buying Orange County homebuilder John Laing in 2006 — at the peak of the American housing boom. Laing is being liquidated in bankruptcy court.”

It seems like a great time to have global warming and not global cooling about now…

* The Wall Street Journal
* U.S. NEWS
* JANUARY 5, 2010

Cold Blast Spreads Shivers
Temperatures Plummet From Minnesota to Florida; St. Joseph, Mo., Hits Minus-16

By CHRIS HERRING and ANN ZIMMERMAN

An Arctic blast swept across a large swath of the U.S. on Monday, sending temperatures plunging from Minnesota to Florida and bringing a bone-chilling start to the first workweek of the year.

Growers in Florida kept a close eye on citrus groves, concerned that further cold could damage their crops, while icy roads gave children in Arkansas an extra day of winter break.

Temperatures fell below zero from the Great Plains to the Northeast, following a weekend of heavy snow. The reading of minus-16 degrees in St. Joseph, Mo., Monday marked the city’s coldest Jan. 4 since 1947, while minus-37 in International Falls, Minn., Sunday was the coldest there since 1911, said Frank Pereira, a meteorologist at the National Weather Service.

Dallas, Jacksonville, Fla., and Little Rock, Ark., fell nearly 20 degrees below their average temperatures for this time of year on Monday, he said.

The cold snap is one of the nation’s most widespread since January 1985, according to meteorologists at Accuweather.com. While the cold is expected to ease slightly starting Thursday, this winter is on track to be one of the coldest in the past decade or two, said Ken Reeves, director of forecasting operations at Accuweather dot com.
…

I’m looking for some opinions on my particular situation.

I’ve been renting an apartment in Tampa for 5 years. It converted to condo about 3 years ago. Someone bought it for $260,000 and I started paying them rent. Last week I was served foreclosure paperwork and found out the buyer hasn’t made a payment in about 6 months. Should I continue to pay them rent (I never signed a lease when they took it over)? Or should I contact the bank and start paying them?

BTW, I could probably purchase it now for $70,000.