The Housing Bubble

Happy Hellloween ………maybe Americas will come to its senses on Tuesday….and we can have real change

Will UK’s cuts force poor families out of London?

By DAVID STRINGER The Associated Press

LONDON — It’s been at the heart of London’s identity for decades: Bakers and bankers live on the same city streets in patchwork neighborhoods where swank mansions sit in the shadow of grim tower blocks, and residents from all walks of life mingle in shops, schools and subway stations.

Now Britain’s debt-shredding austerity measures will slash housing benefit payments used to subsidize rents for the low-paid, threatening to price tens of thousands of poor families out of their homes and force them toward the fringes of the country’s capital — an exodus that could permanently erode London’s famed ethnic, economic and cultural mix.

Outspoken London Mayor Boris Johnson likens the plan to “Kosovo-style social cleansing.” Some fear London will become more like Paris, where rich elites monopolize the city center and the poor stagnate in decaying housing projects ringing the capital.

But in tough times, others wonder if Britain can still afford to help ordinary workers find homes in a city center that keeps getting pricier, even as the overall economy shows only sluggish growth.

As part of 81 billion pounds ($128 billion) of spending cuts announced last week to help wipe Britain’s crippling debts, limits will be placed on the amount given to the poor to help them pay their rent.

One estimate predicts an exodus of about 200,000 people from central London, with low earning families forced toward down-at-heel outer suburbs and far-flung commuter towns — leaving the capital’s streets reserved for the rich.

Good Morning. This was funny. Vincent Price, a Yale alumni, is one of my favs. http://www.hulu.com/watch/41410/saturday-night-live-vincent-prices-halloween-special

Here’s the one from last night. Vincent Price invites Judy Garland and her “m&m’s” in her pharma container.
http://www.hulu.com/collections/520/189401

I decided to do a little sleuthing on the St Paul house in the Star Tribune article posted by P-Bear yesterday and thought I would share the numbers.

2175 Princeton 55105
Sold in foreclosure: 9/17/2010 for $157,500
Zestimate 10/30/2010 $323,500
Last sold according to Zillow 9/1993
Last sold according to Ramsey Co 4/1/1992 for $95,000
2010/2011 tax market value $284,800

Hmmm, foreclosure after 18 years of payments.

Nothing to really say about it–Highland Park is one of the ‘nice’ St Paul neighborhoods and the location is just 3 blocks from the Mississippi and the river trail system. A steal based on recent pricing, gives me hope for the future. Still a lot of players that need to agree on valuation.

http://www.startribune.com/business/106354858.html?elr=KArksUUUoDEy3LGDiO7aiU

We’re running out of new homes in San Diego — less than 1,000 available for a county with on the order of 3 million residents. I wonder whether $212 is a good price or still too high; it gets confusing against the backdrop of a sliding dollar…

Another interesting statistic: If there are fewer than 1000 new homes spread over 116 new-housing projects, that adds up to fewer than 10 new homes per project. How can these guys even stay in business at that rate, not to mention with a continuation of 2006 pricing (”From the $700’s”)?

New housing inventory heading below-1,000 mark
Only 116 new-housing projects in the county at end of third quarter
By Roger Showley
Wednesday, October 27, 2010 at 6 a.m.

As the housing market nears its annual holiday hibernation, the new-housing sector has approached the sub-1,000 mark, according to MarketPointe Realty Advisors.

In its third quarter report, the local consulting firm found only 1,002 unsold homes on the market, two-thirds of which are attached. Two years ago, there were 2,622 units and last year at this time, there were 2,000.

“The fourth quarter stands to be an important one for trending,” the company says. “All of the ingredients are present for a strong quarter: historically low mortgage rates, lower inventory levels with no new product being built, and steady pricing.”

At the end of the third quarter, there were 116 new-home projects, one more than in the second quarter, but 20 less than a year earlier and down from 241 in the third quarter of 2008.

The sales rate was .32 unit per week, down from .55 in the second quarter as buyers were hoping to take advantage of tax credits. The sales was .43 in the third quarter of 2009 and .17 in the third quarter of 2008, when the subprime mortgage meltdown and other economic issues were roiling the market.

Pricing in the third quarter averaged $564,229 or $388 per square feet for attached homes, but MarketPointe said that figure was inflated by the large number of high-priced condos that sold downtown, where the average of $662,756 or $500 per square foot. Outside downtown, the attached average was $472,419 or $300 per square foot.

For detached housing, the average price was $603,744 or $212 per square foot.
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Ex-builder branches out to a new business:

In Quest for ‘Legal High,’ Chemists Outfox Law

By JEANNE WHALEN

ANTWERP, Belgium—When the housing market crashed in 2008, David Llewellyn’s construction business went with it. Casting around for a new gig, he decided to commercialize something he’d long done as a hobby: making drugs.

But the 49-year-old Scotsman didn’t go into the illegal drug trade. Instead, he entered the so-called “legal high” business—a burgeoning industry producing new psychoactive powders and pills that are marketed as “not for human consumption.”

http://online.wsj.com/article/SB10001424052748704763904575550200845267526.html

Does someone in the REIC pay Zilldo™ to lie about home prices?

New Zillow chief cites San Diego price trends as signs of hope in the market
Comments trail contradictory findings that prices are falling
By Roger Showley

Wednesday, October 27, 2010 at 8:26 a.m.

Spencer Rascoff, recently elevated to CEO of Zillow, talks about his company and the housing market with Rismedia’s Maria Patterson in an online story released Wednesday. In the final exchange, he mentions San Diego’s recent price trends as signs that the real estate picture is improving.

However, there is contrary evidence of prices stagnating or falling, as shown in the August price index from Standard & Poor’s released Tuesday, and from MDA DataQuick for September median prices.
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Brown’s lead shrinks, Whitman’s internals show dead heat
By Alexis Levinson- The Daily Caller | Published: 5:01 PM 10/29/2010

Alexis Levinson is a reporter for The Daily Caller. She left behind the eternal spring weather of Santa Monica, CA to attend Princeton University, where she studied comparative literature and worked as associate opinion editor for The Daily Princetonian.

A new public poll Friday indicates that Meg Whitman is closing the gap in the California gubernatorial race, and the Republican’s camp said internals are showing that the contest is a dead heat.

Democrat Jerry Brown is still ahead, according to the new Rasmussen survey, but his lead has shrunk to four points.

The Whitman campaign points to internal polls and says the race is even tighter. One of them shows the two candidates tied at 43 percent and the other has the Republican ahead by one point.
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“Brown’s lead shrinks”

Was he in the pool?

Ohio’s Cordray Asks for Affidavits by ‘Robo-Signer’
By Michael Riley - Oct 29, 2010 1:20 PM PT

Ohio Attorney General Richard Cordray asked judges in his state for copies of foreclosure affidavits filed in their courts that are signed by a woman he identified as a “robo-signer” for Wells Fargo Bank NA.

Cordray sent a letter to 133 judges asking for information on any cases that involved Xee Moua, a Wells Fargo vice president of loan documentation. Cordray sent a separate letter to Wells Fargo & Co. asking the bank to vacate any foreclosure judgment in Ohio involving incorrect affidavits.

Moua gave a deposition in a Florida case in March in which she testified that “statements made by her in sworn affidavits were false,” Cordray said in the letter. Moua said she wasn’t familiar with the books and records related to the transactions an affidavit covered, according to Cordray.

“These are crucial misstatements that are an affront to our legal system,” he wrote. “If you become aware of affidavits Ms. Moua signed in any foreclosure cases filed in your court, I would appreciate receiving copies of such affidavits.”

Tom Goyda, a spokesman for Wells Fargo, said the company’s policy is “to comply with all applicable state and federal laws and to follow required court procedures” and that executives “intend to cooperate” with Cordray’s inquiries.

Wells Fargo, the biggest U.S. home lender, said Oct. 27 that it will file supplemental foreclosure affidavits to courts in about 55,000 proceedings after finding some statements “did not strictly adhere to the required procedures.” The bank has said it chose to resubmit the documents out of “an abundance of caution” and that none of “these instances led to foreclosures which should not have otherwise occurred.”
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Wells Fargo’s foreclosures are jeered, cheered
Bloomberg October 31, 2010 04:00 AM

Wells Fargo has become both a target of foreclosure critics and an example of how the housing mess might be cleaned up. Ohio’s attorney general on Thursday chastised the San Francisco bank’s plan to submit supplemental affidavits to courts in about 55,000 foreclosure proceedings where some statements didn’t “strictly adhere to the required procedures.” (The bank said none of the paperwork problems led to foreclosures that shouldn’t have occurred.) In New York, Wells Fargo’s effort to foreclose on Tandala Mims’ two-family home was rejected by a bankruptcy judge, who said the paperwork was “questionable.” In the same week, Arizona’s top state lawyer held up Wells Fargo’s agreement on loan-modification procedures as a model remedy for a 50-state foreclosure probe, which will soon begin meetings with lenders. Bank of America, JPMorgan Chase and other banks have suspended some foreclosure sales and evictions in the wake of concerns that documents weren’t filed properly.
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Lenders skirt foreclosure rules
Local homes going on sheriff’s auction block despite problems

Sunday, October 31, 2010 03:01 AM
By Jill Riepenhoff
THE COLUMBUS DISPATCH

Jeff Barron, who did not want to give his affiliation, sits in the Franklin County Hall of Justice and checks a list of about 190 homes that were auctioned last week. Sales are continuing despite the discovery of problems with some foreclosures.

At least 55 Franklin County homeowners will lose their houses at an auction Friday despite the fact that their foreclosure cases appear to contain mistakes, omissions of critical evidence or questionable affidavits, The Dispatch found in a review of court documents.

The newspaper examined the files of more than 130 homeowners whose houses are slated for auction Friday. Half of the cases had issues that consumer advocates call troubling and should have raised red flags before a judge ordered the homes sold.

In 13 of the 50 questionable cases, the lenders failed to produce the promissory note, as required by law. The note is the legal agreement that spells out how much is owed, how the loan will be repaid and to whom it is owed.

The default judgments in 19 other cases were built upon sworn affidavits by people who appear to be “robo-signers,” lending-industry employees who aren’t verifying the amounts owed or the ownership of the mortgage and note, as required by law.
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Foreclosure defense: Court rules bank must prove ownership
Published: October 31, 2010

Following foreclosure moratoriums by PNC Bank, Bank of America, J.P. Morgan Chase, and Ally Financial, the settlement of deceptive marketing charges by Wells Fargo Bank, and the Attorney General’s investigation into faulty foreclosure practices at the Florida Default Law Group, the Law Offices of Marshall C. Watson, P.A.; the Law Offices of David J. Stern, P.A.; and Shapiro & Fishman, LLP., a Florida court ruled that banks must provide evidence of ownership when attempting to foreclose on a property.

On Wednesday, a three-judge panel of the 4th District Court of Appeal in West Palm Beach overturned an earlier summary judgment by Palm Beach Circuit Court Judge Thomas Barkdull, allowing repossession of a Boca Raton couple’s home by US Bank National Association. The foreclosure went through even though the lender did not provide an original note or other acceptable proof of ownership.

In the case of Guiseppe Servedio, the court ruled that banks must provide evidence they actually own and hold the mortgage when seeking to foreclose on a property. “Some judges have been lax about the rules of evidence,” stated Peter Snyder, his attorney. “I think that what this case says is you better have the original note.”

The decision comes following an earlier ruling against Deutsche Bank where the court stated that “[a] summary judgment should not be granted where there are issues of fact raised by [the] affirmative defense[s] which have not been effectively factually challenged and refuted.” In this matter, a homeowner asserted several defenses that were ignored by Deutsche Bank and the lower court.
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I don’t get how withholding supply from the market in order to make sure foreclosure paperwork is in order could depress home prices. Can someone please help me out on this apparent violation of the laws of supply and demand?

Treasury Links Foreclosure Ills to Lower Housing Prices
By SEWELL CHAN
Published: October 27, 2010

WASHINGTON — The uncertainty over the legal status of foreclosed homes in the nation could further depress home prices and delay the recovery of the housing market, the Obama administration said on Wednesday.

Phyllis Caldwell of the Treasury said Wednesday that the government believed the overall risks to the financial system were slim.

The warning came at the first Congressional hearing since the magnitude of the problem gained wide attention. Distressed properties make up one quarter of all home sales.

Revelations about paperwork shortcuts and so-called robo-signed affidavits, as well as the likelihood of protracted legal battles by homeowners and inquiries by state and federal officials, will hinder foreclosure proceedings and discourage prospective buyers, a Treasury Department official said.

“Together, these two factors may exert downward pressure on overall housing prices both in the short and long run,” said the official, Phyllis R. Caldwell, chief of the homeownership preservation office at the Treasury.
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Imagine having to pay a fee to a developer, over and over again, every time property changes hand. That’s a clever scheme. How do I get in on that one?

If you’re in the market for a newly built home, be on the lookout for a controversial cost called a private transfer fee. It has gotten the attention of Congress and could change how homeowners value their homes.

A private transfer fee, which is also known as a home-resale, capital-recovery or flip fee, is typically 1% of the sales price that a developer or a homeowners association collects at the time of a sale. It generally is directed toward capital improvements in a subdivision or condominium complex and is paid to a homeowners association.

But a growing number of developers are starting to charge a type of private transfer fee to cover the upfront costs of building streets and infrastructure in large residential developments. The fee, devised by Freehold Capital Partners, a New York-based real-estate consulting firm, kicks in every time a property sells, generally over a 99-year period.

WSJ: New-Home Buyers: Be Aware of Transfer Fee

Federal bailout oversight panel raises alarms over foreclosure crisis
By Brady Dennis
Washington Post Staff Writer
Wednesday, October 27, 2010; 8:41 PM

Members of a congressional panel charged with monitoring the government’s bailout programs expressed alarm and frustration over the potential repercussions of the unfolding home foreclosure crisis during a hearing Wednesday on Capitol Hill.

The hearing called by the bipartisan Congressional Oversight Panel was intended to examine the Treasury Department’s foreclosure prevention programs, but panelists focused much of their attention on revelations that some of the nation’s largest mortgage servicers routinely submitted faulty and even fraudulent paperwork as they undertook hundreds of thousands of foreclosures.

The panel’s chairman, outgoing Sen. Ted Kaufman (D-Del.), said in opening remarks that the problems “are already undermining investor and homeowner confidence in the mortgage market, and they threaten to undermine Americans’ fundamental faith in due process.”

The revelations last month forced lenders such as Bank of America, Ally Financial and J.P. Morgan Chase to halt foreclosures temporarily while they examined the problems. The uproar also has triggered numerous state and federal investigations, led more homeowners to challenge the legitimacy of their foreclosures and prompted large investors to threaten lawsuits and demand that big banks buy back failing loans.
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Just what the country needs: A Wall Street insider as president.

Government of the sheeple, by the plutocrats, for the plutocrats shall not perish from this earth!

Markets
Don’t Count Bloomberg Out for 2012 Just Yet
By Charlie Gasparino
Published October 20, 2010 | FOXBusiness

Mike Bloomberg for president?

Several top Wall Street executives think he would make a good choice, and in several private conversations with banking executives, Bloomberg himself isn’t ruling out the possibility, FOX Business Network has learned.

The possibility of the three-term New York City mayor running in the 2012 presidential election is still largely a Wall Street fixation. Several banking executives have privately prodded Bloomberg to make the run, possibly as an independent, while publicly Bloomberg has said he isn’t in the race, explaining that winning as an independent is still a next-to-impossible feat to pull off.
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Wall Street executives say it is doubtful that Bloomberg, who has also been rumored as a possible replacement to Treasury Secretary Tim Geithner who may step down sometime after the midterms, would challenge President Obama in a Democratic primary for the 2012 presidential contest. And given his socially liberal positions on abortion, gun control, not to mention his support for the building of a Mosque near Ground Zero in lower Manhattan, he knows winning a Republican primary might be just as difficult as winning the presidency as an independent.

That said, prodded by Wall Street bankers who are sick of class warfare coming from both policies and believe Bloomberg has done a good job managing New York City finances during difficult times, Bloomberg is keeping their hopes alive.

“He won’t rule it out, which is why Wall Street is still buzzing, and praying that he will run,” said another executive.

There is nothing better than a well-functioning market with a healthy rate of arms-length transactions to promote credible appraisals. When supply is withheld from the market by a few collusive players with overwhelming market power, appraisals tend to get artificially inflated.

Federal Reserve’s proposed home appraisal rules may not prevent inaccurate valuations

The rules would replace those imposed last year by Fannie Mae and Freddie Mac. Critics say they won’t lessen the system’s tilt toward cut-rate fees and short turnaround times.

By Kenneth R. Harney

October 31, 2010
Reporting from Washington —

You may have missed it, but the Federal Reserve proposed far-reaching new rules Oct. 18 that could affect home real estate appraisals — and millions of owners’ equity holdings — nationwide.
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Just look at how the outsourced jobs from America have improved the standard of living for foriegners:

MUMBAI, India (AP) — The Mumbai slum of Rafiq Nagar has no clean water for its shacks made of ripped tarp and bamboo. No garbage pickup along the rocky, pocked earth that serves as a road. No power except from haphazard cables strung overhead illegally.

And not a single toilet or latrine for its 10,000 people.

Yet nearly every destitute family in the slum has a cell phone. Some have three.

When President Barack Obama visits India Nov. 6, he will find a country of startlingly uneven development and perplexing disparities, where more people have cell phones than access to a toilet, according to the United Nations.

It is a country buoyed by a vibrant business world of call centers and software developers, but hamstrung by a bloated, corrupt government that has failed to deliver the barest of services.

Since there are no water pipes or wells here, residents are forced to rely on the water mafia for water for cooking, washing clothes, bathing and drinking. The neighborhood is rife with skin infections, tuberculosis and other ailments.

A large blue barrel outside a home is filled with murky brown water, tiny white worms and an aluminum drinking cup. To fill up two jerry cans costs between 40 ($.90) and 50 ($1.10) rupees a day, about one-third of the average family’s earnings here.

“If the government would give us water, we would pay that money to the government,” said Suresh Pache, 41, a motorized rickshaw driver.

Instead, it has issued demolition notices throughout the slum, which sits illegally on government land. Pache, whose home was razed 10 times, jokes that the destruction is the only government service he can count on.

Guess the residents there need a dose of Hope and Change. They should vote in all Democrats. Don’t they realize that???

Two good articles by Dean Calbreath on the robo-signer scandal appear in today’s dead-tree edition of the SD Union-Tribune. I will post later in the week if they show up on the website. Here is a passage:

Foreclosure Procedure in Review
Investors in mortgage-backed securities press lenders for buybacks

…after investigations discovered that some lenders were submitting faulty documents to support the foreclosures–including documents with falsified signatures, backdated notary stamps and misleading affidavits — judges throughout the country are taking a second look at foreclosures. New York, for instance, issued a regulation saying that lawyers must certify to the validity of the documents that they are filing.

The latest challenge comes from the investors in mortgage-backed securities, including some of the nation’s leading hedge funds, pension funds and mutual funds. The investors say that the lenders and their affiliates never should have sold them the securities in the first place, since they were much riskier than advertised. And the recent revelations, the investors say, show that the lenders have failed to service the loans properly.

BofA CEO Brian Moynihan made light of the investors’ concerns in a conference call. “If you think about people who come back and say, ‘I bought a Chevy Vega, but I want it to be a Mercedes with a 12-cylinder,’ we’re not putting up with that. .. We will diligently fight this,” Moynihan said.

But critics of the banks say that the recent revelations of how poorly the banks have managed the foreclosure process show that the investors could have just cause to complain.

“It’s very likely that the lenders will prevail, especially if they prove there were mistakes on the documentation that the banks were using,‘ said international real estate attorney Edward Mermelstein.
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During my mornining walk, I had a revelation.

Sarah Palin is the Tammy Faye Baker of politics.

“The Obama government shows no interest in jettisoning any of the accumulated ballast of the last half a century of boondoggles, bailouts and bunkum. Instead, with new health care and regulatory programs, it is adding to them. The current budget deficit is close to 10% of GDP, with no plausible plans to reduce it significantly. Instead, the political elite dream that they will ‘grow their way out’ of their financial problems. They count on stimulus to rev up their economy. But what do they have to ’stimulate’ with?’ ”

~ Paper Money Decline

Bill Bonner flits among his offices in France, England, the U.S. and elsewhere gets first-hand glimpses of what’s going on. He sees the French behaving like spoiled brats because the government must raise the age for state-paid pensions. He notices the English beginning to take matters seriously and tightening their belts. And the U.S.?

1000 signatures over eight hours exceeds two files per minute rate of robo-signing!

DEPOSITIONS SHED LIGHT ON ‘ROBO-SIGNERS’
Lenders’ workers had little financial acumen or grasp of papers they signed on foreclosures
DEAN CALBREATH * U-T
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The following is an abridged version of the deposition of Kelly Scott, legal assistant at a foreclosure mill in Florida. The deposition gives a glimpse of how quickly foreclosures are being processed.

“The paralegals in the firm were all notaries. They’d get all the pleadings and documents and once they were printed out, the senior paralegal would notarize the file and sign it. Then they would take them and lay them out on a long table. Then they would get stacked among each other, side by side, and Cheryl (office manager of the foreclosure department) would come twice a day, in the morning and midafternoon, and she would sign every single one of them.

“She doesn’t review them. She just looks. Cheryl would give certain paralegals rights to sign her name, because most of the time she was very tired, exhausted from signing her name numerous times per day. You have to understand that it was more than 500 files that she’s signing in the morning and another 500 in the afternoon.

“One borrower said they were notified that they were going to be evicted in 24 hours. And this borrower had just got out of the hospital and just had a baby. So I put her on hold and I went to see Cheryl to advise her of the situation because this lady had nowhere to go. And Cheryl instructed me that was not her problem or her issue and to transfer her to the reinstatement supervisor. I have no idea (how the reinstatement supervisor handled it. They will sometimes request payoff figures to reinstate the loan.

“Fannie Mae and Freddie Mac were the clients that came most to the office. (After one visit, the staff was tole) they need to pump out as much as they can for the month so they can meet the quota. What was the quota? I really wouldn’t know. But (were were told that ) the clients weren’t happy and we needed to pick up the speed.”

For the record, Fannie Mae and Freddie Mac deny they have quotas and attorney David Stern, who runs the firm, has challenged Scott’s veracity.

Yesterday I took my daughter trick or treating downtown. It was one of those setups where the Main St shops hand out candy for a couple of hours. Huge turnout. Lots of fun, even with the crappy weather.

A few kid-less friends joined us just to tag along. After, we all went out to dinner. At least tried. Every restaurant downtown was a zoo so we trecked out a few miles and went to a local California Piiza Kitchen type. Wait time? 2.5 hours for a table. I thought the hostess was joking, nope, that was the wait. No thanks. There was a Texas Roadhouse across the street. There the wait was better, but still 45 mins. 45 min wait with a 2 year old….not so good either.

We all ended coming to my house and ordered a couple of pizzas from Dominos. Which itself took about an hour to deliver since they were so busy. But at least at home my daughter has things to keep her occupied during the wait.

So here we are yet again in a tale of two worlds. The real world where I literally could not eat out due to the crowds. And the HBB world where it’s 1934 all over again.

Happy Halloween!

Anyone else passing out candy right about now?

BTW, my parent’s town limited trick or treating to two hours. Our is five hours long, so I am kind of envious.

Last year I had about 45 kids total. This year I am already up to 32 and we’re only one hour into it.

What happens to a ghost when he gets lost in the fog?

He is mist.

Does it make any sense for California to elect a billionaire governor with close ties to big money Wall Street interests at a time when many of its citizens cannot afford a pot to p!ss in? Note that it was the flood of easy mortgage loans from Megabank, Inc that put us into this pickle; why trust them now?

Meg Whitman and Jerry Brown locked in battle for broken state of California

Who will inherit Arnold Schwarzenegger’s poison chalice?

* Paul Harris in California
* The Observer, Sunday 17 October 2010

Meg Whitman Meg Whitman has put more than $100m of her own money into the California governorship race – and is still slightly trailing Jerry Brown.

The candidates fighting to become governor of California were faced with an unusual sight when they met last week for their final pre-election debate.

Moderating between the Democrat Jerry Brown, a liberal dubbed “Governor Moonbeam” when he held the position in the 1970s, and the Republican Meg Whitman, a former Silicon Valley chief executive, was an injured debate host, Tom Brokaw.

Brokaw, one of America’s most famous TV newsmen, had broken his ankle and he hobbled on stage on crutches. He could not resist comparing his condition with that of California. “We’re both broken at the moment,” he said. “The difference is that I hope to be repaired before the beginning of the year.”

The punchline lies in the cruel reality of the crisis facing California as it prepares to wave goodbye to Arnold Schwarzenegger, the former movie star who became its governor. He departs with catastrophic approval ratings but also a sense that the state’s problems were too big even for a “Governator”.

California, which once embodied a sun-soaked version of the American Dream, now has an unemployment rate of 12.4%, far above the national average. Its public education system is ranked bottom in the country. Its budget deficit is $19bn, and its government regularly has to issue IOUs. Some of its cities, such as Vallejo, have declared themselves bankrupt. A few people believe that a major metropolis, perhaps Los Angeles, could follow suit. With its sprawling suburbs and ample land, this state was at the centre of the property boom, and figures released late last week showed that it leads America in at least one thing: the rate of foreclosures.

Political commentators do not pull their punches when discussing the challenge that faces the next governor. “It is absolutely awful,” said Barbara O’Connor, a professor at the University of California at Sacramento. “Many voters’ fears here are basic. How will I keep my house? How will I feed my family? How will I keep my job?”
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Why big-time CEOs make terrible politicians

Government and business are antithetical. That’s not a flaw in the system — government exists to take on precisely those tasks the private sector can’t or won’t.

By Michael Hiltzik
October 31, 2010

California is poised once again to compete for the crown as the nation’s leading graveyard for business superstars trying to make the jump into politics.

With election day yet 48 hours away, it’s still possible that Meg Whitman and Carly Fiorina will prevail in their campaigns for governor and U.S. senator. But the betting and the opinion polls are pointing the other way. So as we face the likely, if not certain, wreckage of these two lavishly financed campaigns, it’s proper to ponder anew the following question: Why do big-time CEOs make such terrible politicians?
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If Megabank, Inc has to pay what it really costs to comply with legal requirements in foreclosure processing, how will they be able to afford those ginormous bonus payments to their managers?

Op-Ed Contributor
How the Banks Put the Economy Underwater
By YVES SMITH
Published: October 30, 2010

IN Congressional hearings last week, Obama administration officials acknowledged that uncertainty over foreclosures could delay the recovery of the housing market. The implications for the economy are serious. For instance, the International Monetary Fund found that the persistently high unemployment in the United States is largely the result of foreclosures and underwater mortgages, rather than widely cited causes like mismatches between job requirements and worker skills.

This chapter of the financial crisis is a self-inflicted wound. The major banks and their agents have for years taken shortcuts with their mortgage securitization documents — and not due to a momentary lack of attention, but as part of a systematic approach to save money and increase profits. The result can be seen in the stream of reports of colossal foreclosure mistakes: multiple banks foreclosing on the same borrower; banks trying to seize the homes of people who never had a mortgage or who had already entered into a refinancing program.

Banks are claiming that these are just accidents. But suppose that while absent-mindedly paying a bill, you wrote a check from a bank account that you had already closed. No one would have much sympathy with excuses that you were in a hurry and didn’t mean to do it, and it really was just a technicality.

The most visible symptoms of cutting corners have come up in the foreclosure process, but the roots lie much deeper. As has been widely documented in recent weeks, to speed up foreclosures, some banks hired low-level workers, including hair stylists and teenagers, to sign or simply stamp documents like affidavits — a job known as being a “robo-signer.”
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Boot camp for foreclosure lawyers
By Prashant Gopal
Bloomberg News
Posted: 10/31/2010 01:00:00 AM MDT

Consumer lawyers have been traveling to a remote 160-acre farm in the mountains of western North Carolina since 2006 to network, drink Scotch and prepare for legal combat in foreclosure and bankruptcy cases.

They arrive in groups of a dozen or so for a four-day boot camp where they learn how to protect their clients’ assets by exploiting the mistakes of creditors. Attendees these days are especially keen on strategies to fend off mortgage lenders and servicers seeking to seize their clients’ homes.

Their instructor is O. Max Gardner III, a 65-year-old bankruptcy litigator and grandson of a North Carolina governor, who was using flaws in mortgage servicing to stave off lenders years before cases involving shoddy paperwork spurred this month’s investigation of the industry by the attorneys general of all 50 states. He charges $7,775 for the program, which covers 3,000 pages of materials, lodging, food and unlimited wine, beer and single-malt Scotch.

“My time with Max changed the trajectory of my legal career,” said Nick Wooten, 40, an Alabama attorney who changed his focus from personal injury to bankruptcy and foreclosure after attending the boot camp in 2007. “Knowledge is power, and one thing he is able to give in his boot camp is a tremendous amount of knowledge about how the other side operates.”

Participants, who are admitted only after a background check confirms that they don’t work for creditors, gain access to a private e-mail distribution list where they share legal strategies, documents and advice. Linda Tir elli, a consumer-bankruptcy attorney in New York and Connecticut and one of the 599 people who have gone through the program, said she feels like she’s now part of a big law firm.

“It’s a fraternity,” Tirelli said. “We don’t see each other as competition. We want more attorneys to join because the more we have the better.”
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Federal program designed to help homeowners leaves many in foreclosure

The Freemans prepare to light the wood furnace at Friendly Haven Rise.
Photo by Zachary Kaufman

By Cami Joner
Columbian Staff Reporter
Sunday, October 31, 2010
By Zachary Kaufman
The Columbian

Joseph and Jacqueline Freeman at their Battle Ground-area farm, Friendly Haven Rise. The 10-acre farm and home have been on the brink of foreclosure since 2008, when the Freemans lost income from the farm business. The Freemans operate the farm like a school, where people pay to learn about raising crops and livestock and using tools.

Jacqueline and Joseph Freeman thought they were doing everything possible to keep from losing their Battle Ground house and farm when they obtained a temporary mortgage modification through a federal program in 2009.

But despite not missing a single month’s payment during 12 months at a “trial” reduced mortgage rate, the Freemans are worse off now than in late 2008, when their income fell dramatically due to canceled bookings at their farm-school business, Friendly Haven Rise.

Last month, the Freemans received a foreclosure notice from their lender, Wells Fargo, which said the couple’s mortgage is $23,000 in arrears. They feel betrayed by the federal program that was set up to help, Jacqueline Freeman said.

“We had no clue we were headed toward foreclosure,” she said. “We thought we were taking part in a national program that was helping people.”

The Freemans are not alone. They are among millions of American home owners who are frustrated with the Obama administration’s Home Affordable Modification Program, or HAMP, a $75 billion federal program that was supposed to be their salvation. Instead, the program appears to be failing droves of homeowners who, like the Freemans, have been drawn into trial modifications that leave them with more principal outstanding on their loans, less home equity and worse credit scores.
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Clark County homes in foreclosure
Third quarter (July-September)
2010: 1,451
2009 : 1,174
2008 : 751
2007: 374
2006: 180

Source: RealtyTrac, California

Home sales in county tumble 48 percent in July
Realtors cite end of federal tax credit
Clark County home sales dropped 48 percent in July, according to a housing report released Thursday.
By Cami Joner
Columbian Staff Reporter

Thursday, August 12, 2010

Clark County home sales plummeted in July, sparked by the end of a federal tax credit that ended in June, according to a housing report released Thursday.

Realtors say the 48 percent drop in sales from June to July has ushered in a new standoff between buyers and sellers, which are often banks holding defaulted mortgage loans. To minimize losses, the banks want the homes to fetch the highest price possible. But potential buyers — battered by falling investment portfolios, wage freezes and high unemployment — are still holding out for rock-bottom prices.

The face-off intensified just after the June 30 cutoff date for 2010 home buyers’ tax credits of up to $8,000, said Tracie DeMars, a Vancouver-based Realtor with Re/Max Equity Group Inc.

“People (potential buyers) are saying they are just going to wait now,” she said.
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* BUSINESS
* OCTOBER 31, 2010, 6:20 P.M. ET

Bank of America Tries to Straighten Out Mortgage Files
By RUTH SIMON And DAN FITZPATRICK

At five offices around the U.S., hundreds of Bank of America Corp. employees are slogging through 102,000 foreclosure files, trying to fix any problems.

The grunt work is slow. Just a “handful” of new affidavits were submitted to courts last week, a company spokesman says. Documents on “more than a handful” of restarted foreclosure actions will be handed over this week.

Cleaning up the mess is a huge challenge for the Charlotte, N.C., bank, a modest player in the mortgage-servicing industry before the 2008 acquisition of Countrywide Financial Corp. The takeover, encouraged by the Treasury Department, ballooned the size of the combined company’s servicing unit to 14 million loans from four million.

More than 85% of the bank’s 1.3 million mortgage customers now at least 60 days behind on their payments got their loans through Countrywide. The $4 billion deal also saddled Bank of America with technology problems, paperwork glitches and cultural tension. The servicing unit now has its fourth leader in roughly two years.

The acquisition “prevented a potentially dramatic negative impact on the U.S. economy,” says James Mahoney, Bank of America’s head of public policy. But the housing downturn “was far more severe than anybody had projected,” and the “sheer volume of delinquent loans required a massive buildup of systems and staff to deal with them.”
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Published: Sunday, Oct. 31, 2010 / Updated: Saturday, Oct. 30, 2010 10:43 PM
Paperwork woes plague many S.C. foreclosures
By Andrew Shain

COLUMBIA —

Across courts in South Carolina, judges say they are halting more foreclosures - as many as one in four -because lawyers for banks have incomplete documents or missing paperwork.

They also are starting to see the challenges to the authenticity of signatures on foreclosure documents that have made headlines in recent weeks.

“Everything happening in the paper is happening across the state,” said James Spence, the Lexington County master-in-equity, the judge who oversees foreclosure cases in that county.
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For all of you who worry about a Palin Presidency:

I would make a better prez than she would. Vote for meeeeeee!

Mightier than the ‘tea party’: The American non-voter

The real majority in the midterm elections will be those who just skip it. Non-voters are younger, poorer, less educated and more liberal than likely voters.

By Michael Muskal
October 31, 2010|3:12 p.m.

* THE JOURNAL EDITORIAL REPORT
* NOVEMBER 1, 2010

A Tsunami, or Just a Wave?
A transcript of the weekend’s program on FOX News channel.

Paul Gigot: This week on “The Journal Editorial Report,” as candidates make their final campaign push, a look at the most important races and why they matter, and some sleepers to watch for. Plus, lessons from the campaign–our panel’s take on what’s really driving voter anger, and their picks for the best, and of course the worst, moments of the election season.
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I had the TV next to me tuned to a soccer game on a Telemundo channel.

An anti-Whitman ad came on and of course it’s all in Spanish, voice and text. But at the end, the required disclaimer at the bottom… which says who sponsored the ad.. was in English.

what happened to this blog? did Ben take a hiatus?

question for anyone knowledgeable about mortgages.

Am considering buying a second home in VT. IT needs major renovation, but I may be able to purchase for 70-90k, which is far less than the ~$200k it would appraise for if renovated.

Is it possible to borrow an amount in excess of the purchase price, up to 80% of the appraisal? (obviously I am assuming that the appraisal is still higher than the purchase $, renovation need not withstanding).

Or am I better off just paying cash and taking a mortgage once renovation is complete?

Do you think realtors have something to be truly scared about this Halloween?

Megabank, Inc = Gulliver; state AG’s = Lilliputians

* BUSINESS
* NOVEMBER 1, 2010

One Probe, 50 States, High Stakes
By VANESSA O’CONNELL

DES MOINES, Iowa—From his office overlooking the gold-gilded Iowa State Capitol, Tom Miller is confronting the reality of how hard it is to get all 50 state attorneys general to agree on anything.

The 66-year-old Mr. Miller, up for re-election Tuesday to his eighth four-year term as Iowa’s top law-enforcement official, leads the nationwide investigation into the foreclosure mess that erupted in September. The attorneys general are scrutinizing whether home-loan servicers violated state laws against deceptive practices by submitting affidavits and foreclosure documents without confirming the paperwork’s accuracy.

The investigation could lead to civil charges and inescapable pressure on financial institutions to rewrite a mountain of mortgages. Already, there are signs that state officials are working together closely to gain more leverage over companies such as Bank of America Corp., Wells Fargo & Co. and J.P. Morgan Chase & Co.

Yet there also was a squabble over what to call the investigation, with some state officials preferring “inquiry” and others the word “effort.”

“I’m pleased when people are floating options and trying to look at alternatives,” Mr. Miller says with a smile and a shrug. “As long as they aren’t saying: This is the way it’s got to be.” In an interview last week, he pounded on a wood conference table in a show of mock aggressiveness.

While federal officials also are examining the use of “robo-signers” and other mortgage-servicing procedures, the legal quagmire that is slowing foreclosure sales and snarling courtrooms likely won’t end until the 50-state investigation is resolved.
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Poll shows ‘hurricane winds’ for Democrats
NBC/WSJ pollster: Results show ‘rebuke’ of last two years
By Mark Murray Deputy political director
updated 41 minutes ago 2010-11-01T03:00:10

Republicans remain on course to make substantial midterm gains across the country and to win control of at least one chamber of Congress, according to the final NBC News/Wall Street Journal poll before Tuesday’s elections.

Nearly 50 percent of likely voters prefer a GOP-controlled Congress, which is virtually unchanged from the poll taken two weeks ago; a plurality of all registered voters say it would be a “good thing” if Republicans were in charge of both the U.S. House and U.S. Senate; and almost two-thirds — including about half of Democrats — want to see a significant amount of change in the way President Barack Obama has been leading the country.

“This is a devastating set of data for the incumbent party,” says GOP pollster Bill McInturff, who conducted the survey with Democratic pollster Peter D. Hart. “It is a rebuke to the last two years.”

On Election Day, Hart adds, “The Democrats are about to feel the force of hurricane winds.”
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This is surreal.

* October 30, 2010, 5:00 AM ET

Number of the Week: 107 Months to Clear Banks’ Housing Backlog
By Mark Whitehouse

Number of the Week 107

107: How many months it would take to sell banks’ current and shadow inventory of foreclosed homes.

Banks’ vast pile of foreclosed homes doesn’t appear to be diminishing. That’s a troubling sign for the future of the housing market.

Back in April, this column tallied up all the foreclosed homes sitting in banks’ inventory, as well as the “shadow” inventory of homes in the foreclosure process or on which owners had missed at least two mortgage payments. At the time, we reported that at the current rate of sales, it would take 103 months to unload it all.

Over the past six months, that number has actually risen. Banks managed to pare down the shadow inventory, but largely by taking possession of foreclosed homes. As of September, they owned nearly 994,000 foreclosed homes, up 21% from a year earlier. The shadow inventory stood at 5.2 million homes, down 7% from a year earlier. Grand total: 107 months of inventory.

The numbers aren’t exactly comparable to the April analysis, as the providers of data have changed. The inventory data now come from RealtyTrac, the shadow inventory data from LPS Applied Analytics, and the sales data from Core Logic. But no matter how you slice it, the housing market faces almost nine years of foreclosure hangover.
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