The Housing Bubble

http://finance.yahoo.com/news/IRS-paid-513M-in-undeserved-apf-4212763607.html?x=0&sec=topStories&pos=6&asset=&ccode=

‘The Internal Revenue Service has paid out more than a half-billion dollars in homebuyer tax credits to people who probably didn’t qualify, a government investigator said Friday…The tax credit for first-time homebuyers was part of President Barack Obama’s economic recovery package enacted in 2009. In November 2009, Congress extended the credit and expanded it to longtime owners who bought new homes.’

‘The popular tax credit helped to stabilize the nation’s slumping housing market. But the extensions and expansion of the credit created a complicated system that made it hard for many taxpayers to determine which credit they qualified for, if any…More than 47,500 taxpayers claimed the first-time homebuyer credit even though there was evidence on previous tax returns that they had already owned a home…The report estimated these people claimed $326 million in credits.’

‘More than 13,400 taxpayers claimed the credit even though they had not yet purchased a home. These people listed future purchase dates on their tax forms. The report estimated these people claimed $97.8 million in credits. The IRS said it believes these estimates are overstated.’

‘More than 1,000 taxpayers said they purchased homes while they were incarcerated in prison, claiming $7.7 million.’

‘More than 2,500 taxpayers claimed credits for buying homes for which at least one other taxpayer also claimed the credit for buying. These taxpayers received $11.4 million.’

‘More than 2,700 taxpayers claimed credits for homes that were purchased before the tax credit went in effect. These taxpayers received $17.6 million.’

‘The IRS disallowed $531,134 in tax credits claimed by 96 taxpayers who were under age 18, making it unlikely they purchased a home.’

2009 story:

WESTON —

Looking to relocate? A nice home just hit the market in Weston.

If you long for a quaint, small place to put your feet up, relax, and never have to worry about getting lost in your own home, this abode might not fit your style.

Those who want their new digs to include a hair salon, private spa, home theater and a waterfall, however, can step to the front of the line. Interested buyers should also be prepared to have their wallets become $24.5 million lighter.

Even in the sour real estate market, sales in towns like Weston, Wellesley, Sherborn and Natick have fared well, said Dickerson, who, along with Julie Harrison, is the broker for the listing.

“We have seen no negative effects on the high-end, upscale sales since many homeowners are currently building $20 million-plus homes in neighborhoods as we speak,” she said.

Read more: http://www.metrowestdailynews.com/archive/x511160898/Weston-mansion-is-an-abode-above-all#ixzz1JgQKkmLA

Back on the Market:

http://www.redfin.com/MA/Weston/5-Willow-Rd-02493/home/8786171

Julie and Miss Dickerson are misinformed….

Have to wonder about the accuracy of their earnings reports…

Two of the city’s top delinquent landlords are not landlords at all. They’re banks.

City officials said Wells Fargo & Co. and Bank of America owe more than $80,000 in fines for allowing many vacant properties in foreclosure to fall into disrepair and blight neighborhoods.

Yet both banks, two of the nation’s largest, question whether they are responsible for the properties and tickets. Wells Fargo representatives, for example, said they don’t even know if they own many of the homes; Wells Fargo could be servicing a foreclosure for another bank, or acting as a trustee for a giant pension fund that holds the mortgage.
“It is confusing as to why we’re being fined,” spokesman Tom Goyda said about citations issued to the bank.

Now, with banks holding a record number of abandoned and foreclosed homes, many of those properties have become magnets for vandalism, arson, and drugs as banks and local officials try to sort out — and often dispute — who is responsible. Meanwhile, local government officials and taxpayers are left to clean up the mess.

“The problem is so big it doesn’t fit on my desk,” said William J. Good III, commissioner of Boston’s Inspectional Services Department. “I’ve never seen anything like it — maybe my mother once did during the Depression.”

http://articles.boston.com/2011-04-15/business/29422424_1_bank-of-america-employees-delinquent-landlords-wells-fargo

Cue talking pointwhich blames government for citizen’s bad behavior in 5…4…3…2…

Here’s an article with a chart showing the relationship between the prices of the raw material food is made from and the prices of the finished product.

Note how the raw materials line (crude, as the author calls it) regularly goes in and out of the zero line, and note how the current prices of raw materials matches up with previous peaks.

http://www.dailymarkets.com/economy/2011/04/15/producer-price-food-inflation-crude-high-and-volatile-vs-consumer-goods-low-and-stable/

Have a nice trip…..

Prices of new homes in China’s capital plunged 26.7% month-on-month in March, the Beijing News reported Tuesday, citing data from the city’s Housing and Urban-Rural Development Commission.

imarketnews.com/node/29203

This is way OT (but still somewhat finance related), but I just wondered if anyone else had been through this experience.

I’m getting married in about a year, and my family has significant assets that will be left to me. My father advised that I should look into getting a pre-nup to protect those assets in the event of a divorce.

So, this week, I stroll into the lawyers office with a simply list of things that I would like in a pre-nup. Basically, no alimony for either party, no party has any claim on inheritance in a divorce, and keep some assets separate in the marriage (I have significant stock/company holdings).

What I walked out with was a real education in how all this works. First off, the easiest request (no alimony) is a real nightmare. You can write it in, but that doesn’t mean that the court won’t set it aside. My attorney explained that family court is a “court of equity” not a “court of contracts”. My head really started to spin when he explained that if either partner stopped working “the chance of avoiding alimony goes down dramatically”. Huh? So, if I (or my wife) sits around and drinks beer all day I have a much better chance of getting alimony than if we are out trying to provide for the family? Come again…

The next thing that was surprising was the inheritance. I expected it to be a simple “I give up any rights in divorce to assets X, Y, Z” for both of us. Oh no, not at all so simple. First off, in divorce you’re not even supposed to have rights to either partner’s inherited assets. The lawyer told me “however, it will be litigated, and they will win, they always do”. Ok then..

Anyway, the end result is that we both need to setup special trust accounts to hold all these types of assets to try and prevent them from becoming contested property in divorce. Even if you go through all of that, there’s still a reasonable chance that the other party can get access to the assets, it just would be much harder (read: more legal fees).

Wow, what an education that meeting was. I felt like my head was spinning when I left, I expected this to be so easy (or even to have him tell me, “You’re already protected, you don’t really need to do anything”.) Not so much..

Just wanted to share the experience with others; it was quite enlighting (man, I hope I never have to go to divorce court; I can only imagine how much worse that would be). Also, the biggest piece of advice from the attorney was this “Never let your husband wife stop working, and, if you can’t stop that, make sure that they maintain all their professional licenses and continue to look for a job”. The problem is, if they stop working, it then becomes your problem (even with an alimony waiver, in many cases) to support them moving forward.

Unbelievable system; I can’t think of anywhere else in all of American law where contracts hold so little weight!

Realtors Are Liars

Gubmint bank is one giant red flag, but who cares? Nothing will come of it, they permanently attached to the gubmint tit.

~ Red Flags Popping Up All Over Bank of America
By: John Carney Senior Editor, CNBC.com

Bank of America [BAC 12.82 -0.31 (-2.36%) ] shares gave up more than 2 percent Friday on disappointing earnings. But a bad quarter may be the least of the bank’s worries.

The largest bank by deposits just lost its chief financial officer and just hired one of the most connected regulatory lawyers in the U.S.

Both events are alarming.

The bank says that Charles Noski requested to step aside due to family illness. There’s no doubt some truth in this: a family member is ill, and Noski probably volunteered his resignation. But it comes on the back of some very troubling developments:

* Earlier this month we learned that Bank of America’s announcement that the government had denied its insane request to raise its dividend had not been reviewed by Noski before it was made public. No one has offered a credible explanation for this lapse in internal controls.
* Bank of America recently announced that it was going to start charging some 5 percent of its credit card customers a brand new $59 annual fee. This is a breathtakingly obvious attempt to drive $180 million in profits through a loophole in Dodd-Frank—which prohibited interest rate increases unless customers were seriously delinquent, but left open the possibility of random fee hikes.
* Bank of America has been estimating for three quarters that it is more than two-thirds through the wave of repurchase requests on soured home loans, and that the total losses will not amount to more than $10 billion. This quarter it provided for just $1 billion in mortgage repurchase and litigation expenses—compared with $2.2 billion for JP Morgan Chase in the first quarter. Does anyone believe that the bank with exposure to Countrywide’s loans is better off than JP Morgan?

Foreclosure leaves North Palm couple’s belongings on street for thieves

By Bill DiPaolo Palm Beach Post Staff Writer
Posted: 2:53 p.m. Friday, April 15, 2011

NORTH PALM BEACH — Code enforcement officials responded Friday to protect furniture and other personal items that eviction officials placed in the driveway of a Lighthouse Drive home.

“People were like buzzards around fresh meat. At one point, there must have been a dozen cars. People were grabbing and taking everything,” said Chuck Huff, the village community development director.

People illegally sifted through mattresses, desks, lamp shades, dishes, books, golfing equipment and dozens of other items. Property piled on a person’s driveway is not open to the public without the owner’s permission, Huff said.

“It’s sad. My wife’s bowling trophies are somewhere in there. We’re a very sentimental family,” said Christopher James, the former owner of the home that was foreclosed on earlier this year.

http://www.palmbeachpost.com/news/foreclosure-leaves-north-palm-couples-belongings-on-street-1403994.html - -

abolish the Fed!

http://www.dailymail.co.uk/tvshowbiz/article-1377419/Bruce-Willis-sells-New-York-apartment-250k-loss.html

Bruce Willis has sold his New York apartment at a loss of more than a quarter of a million dollars. Willis bought the beautiful 20th-floor 3BR in one of Donald Trump’s luxury high-rises for $4.26 million in 2007. Now it seems he is so eager to get rid of it that he has accepted an offer, still going through contract, of just $3.95 million, a significant loss.

Quick check of r e a l t o r . c o m:

Gaithersburg MD, about 20 miles from the Washington monument. Long trafficy drive if you work in the city. If you work in the outer burbs — not too bad.

Under $100K range:
A bunch of 2-bed 1970’s conversion condos.

$100 - $175K range:
Not many condos in this range. Condos are either run-down conversions, or bubble-amenity yuppity condos. I’m not surprised. The conversion condos were built to be apartments, and the yuppity condos were built to be profit vehicles. In other words, as I guessed, nobody wants to build or to buy a condo for the sheer condoness. (at least not in the burbs.)
Some run-down rowhomes.
The occasional “handyman special” disaster SFH which needs $100K of work.

$210- 225K range:
Newer 2-bed bubble condos.
Nicer end-unit townhomes.
A couple small 1970’s starter SFH, but I don’t know the neighborhoods.
Newer 2-bed condos.

$240K - $250K range:
More townhomes.
Middle-class looking raised ranches on 0.2 acre — the type that were built by the millions in the 70’s and 80’s.

$270K range:
Lots of ultra luxury condos
Nicer bigger rowhomes (4 bed? I don’t know how you fit that in the floor plan?)

$310-325K range:
Still a couple hoity-toity condos at wishing prices.
Vast majority are still townhomes.
Starting to see more SFH. Little ramblers, small lots, wishing prices here.

$325K to $350K range:
No more condos, mainly because it’s 5 miles from the end of the Red Line.
Some hoity-toity row homes.
Now we’re getting into the better 3-4 bed SFH. by better, I mean better condition. They are still “regular” houses.

$350K to $500K range:
Many fewer homes altogether — 79 SFH, 38 rowhouse.

$425K: Restored Bungalow (read, small for the price)
$440K range: Still the same old-same old regular tract raised ranch or split level houses, but gussied up with a nice garage or larger lot or a flipper kitchen.
$450K range: I spot the first smaller McMansion, late 80’s vintage.
$500K range: Late 90’s vintage McMansions.

I didn’t see a single bubble McMansion under $500K except for bubble McTownhomes.
————

So what does this say for the DC pricing prospects? I would say that the $75K is priced well but they all need work. At $210 you’re starting to see ok townhomes but I think they are still 15% overpriced. Tract SFH are the most valued, but still overpriced by about $50K except for the occasional rare find (bleeding shadow inventory?) Anything built in the past 10 years is still at wishing prices. Let’s see if falling leaves brings falling prices.

Try not to catch yerself a falling knife…

Reuters Breakingviews
Five years from U.S. housing peak, still no bottom
Apr 15, 2011 15:12 EDT
By Martin Hutchinson

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

WASHINGTON — Five years on from their peak, there’s still no bottom in sight for America’s house prices. After rising from a trough in 2009, prices are falling again and market activity is very thin. It’s another complexity for monetary policymakers with an eye on inflation: hiking interest rates could further squash housing.

The housing bubble that inflated in the run-up to 2006 owed much to the Federal Reserve’s policy. During and after the 2001 recession, the Fed under Chairman Alan Greenspan held interest rates very low, and well below inflation. That coincided with a political environment and tax benefits — like the mortgage interest deduction — that encouraged home ownership, and was capped by financial technology that allowed mortgages to be repackaged and resold so that the original lenders retained no risk.

Yet thanks to low interest rates, the National Association of Realtors’ affordability index remained above its long-term average even as the ratio of the typical house price to income soared to unprecedented levels above five times, compared with a long-term average around three times.

Helped by a dose of bubble-induced fraud that stretched some mortgage borrowers even further, lower-quality subprime borrowers began getting into difficulty even as house prices were peaking. That was the beginning of the collapse that eventually swept through the mortgage securitization market and put the banking system in difficulty, causing a financial crunch and a sharp economic downturn.

The average house price tumbled 32 percent in the three years after the 2006 peak, by the seasonally adjusted S&P/Case-Shiller 20-city index. Initially, prices then rebounded remarkably quickly, turning up in June 2009 — around the time the recession bottomed and well before the peak in unemployment — and climbing 5 percent in the following 12 months.

But that turns out to have been a false dawn. Even cheaper money, extra tax incentives and higher loan limits at the now government-owned Fannie Mae and Freddie Mac and at the Federal Housing Administration helped produce the rebound, but it fizzled out in the months after the tax breaks were withdrawn in April 2010.

A renewed house price decline has set in, with the January reading of the Case-Shiller index 4 percent down from its mini-peak seven months earlier — although the index remains just above the post-crisis trough level.

Meanwhile, U.S. new home sales in February fell 28 percent from the previous year to a record low pace. The inventory of new homes rose to 8.9 months’ sales, although this is an improvement on the 12 months’ worth of stock two years ago. Existing home sales also declined slightly in February from a year earlier.

U.S. employment trends have turned positive in recent months, which will help prices. So will mild inflation, which increases housing affordability. But there are factors that point to a significant further decline. First, interest rates remain artificially low, and with inflation beginning to accelerate, they are declining in real terms. This has brought the NAR’s affordability index to an all-time peak of 192.3 in February. That suggests even the current level of house prices may be flattered by low mortgage costs.

Second, the already high level of reported housing inventories may not tell the whole story. Homes going through the foreclosure process and those that cannot currently be sold because the owners are underwater on their mortgages represent an additional, invisible overhang.

Looked at against history, American house prices are still well over 30 percent above the cyclical low in September 1993 in real terms, adjusting the long-running Case-Shiller 10-city index for inflation. On a more thorough analysis, economist Gary Shilling believes house prices have a further 20 percent to fall. That may be too pessimistic, but prices surely face headwinds from the foreclosure pipeline and high levels of inventories.
…

Do the Defenders of the Mortgage Interest Deduction ever acknowledge that it amounts to Welfare for the Wealthy, with the lion’s share of the tax reduction benefits accruing to the top 1%-ers who could afford to pay cash outright for their homes but don’t, in order instead to take welfare payments from Uncle Sam?

April 12, 2011, 3:15 PM ET

Budget Deal: Could the Mortgage Deduction Get Chopped?
By Shira Ovide

As the U.S. government looks under every rock for spending cuts, here’s an intriguing thought: What happens if Washington takes this opportunity to take down the tax break on mortgage interest?

“We believe there is a growing risk that the mortgage interest deduction could fall victim to the deficit reduction mantra,” MF Global said in a research note.

Deal Journal has this reaction: Yeah, right.

We know fiscal asceticism is the new black, but Congress doesn’t have the guts to take on the popular mortgage tax break, which defenders say makes the cost of homes within reach for Americans. The real-estate and mortgage industries also would fight tooth or nail if the deduction moves to the chopping block.
…

I don’t know if I personally would call the MID ‘regressive,’ so much as WELFARE FOR THE WEALTHY.

My version has a better ring to it, no?

April 6, 2011, 1:28 PM ET

IMF Calls Mortgage Interest Deduction ‘Regressive’
By Alan Zibel and Ian Talley

The U.S. should consider capping or cutting the popular tax deduction for mortgage interest as it prepares to debate what should replace mortgage giants Fannie Mae and Freddie Mac, the International Monetary Fund said Wednesday.

The IMF, in an analysis of housing finance systems around the world, said an Obama administration paper released earlier this year makes progress toward needed changes in the U.S. mortgage system. But the report criticized the U.S. for not tackling the popular tax deduction for mortgage interest, which the report termed “expensive and regressive.”

The U.S. government’s support of the housing market “has been pervasive but has not yielded many of the expected benefits to prospective or existing homeowners,” the report said. “It is clear that an overhaul is needed.”

“As a first step, we would very much recommend that the U.S. would at least cap the mortgage interest deductability,” said Ann-Margret Westin, an IMF senior economist and one of the authors of the housing report. She approved of the recommendation by the U.S. fiscal commission to halve the mortgage limit for deductions and to let it apply only to private residences, but the IMF said any such move would have to be undertaken over time.

The report is one chapter of the IMF’s larger annual Global Financial Stability Report that will be published in full next week.
…

This is to be expected. It helps if you realize the entire Congressional effort to take the Wall Street fraud perpetrators to task amounts to nothing but a Grand Kabuki Dance to entertain the sheeple.

The Roundup for April 15, 2011 »
Levin Report Postscript: Wall Street and Its Regulators Basically the Same Post-Crisis
By: David Dayen Friday April 15, 2011 2:01 pm

Yesterday, Carl Levin introduced his long and relatively effective report on the financial crisis. It focused on four major aspects: mortgage fraud, weak and deferential regulation, the credit rating agencies and investment bank malpractice with mortgage bonds.

Levin said that he referred some issues to the Justice Department for potential prosecution. But we can actually judge how these issues have been dealt with to this point. As Gretchen Morgensen and Louise Story laid out yesterday, the FBI scaled back its mortgage fraud investigations in 2008, even after highlighting the practice in a report as far back as 2005. On the regulation front, we’re eventually getting rid of the OTS, which was highlighted in the report. But their role in the heinous consent decree on foreclosure fraud shows that they remain the model for bank-friendly regulation at the federal level.
…

Overtaxed has already provided the answer to his (?) dilemma and that is not to marry. If he has assets and she doesn’t, when the marriage dissolves (which is likely these days), she will want and get some of those assets. Prenups are sticky anyway since if you put in all the clauses with real teeth the other party will feel affronted and you’ll be having the first of many big fights.
I’m an older person involved in business and the marriage which produced my children ended 17 years ago. I’ve had several relationships since then with other women, but have rebuffed all advances about marriage because I only want to keep company, not have my assets and my childrens’ inheritance basis compromised. Marriage for the specific mutual goal of raising children is the only valid reason for doing it and if Overtaxed is not doing it for that reason, then why give it any further thought…

…. all because of Lying Realtors….

We have cash, we have mobility and would love to buy us a shanty in lower Delaware but I cannot or will not walk away from high $$(high for me) employment for what is certain to be less opportunity there. All the dumps in New England(northeastern upstate NY, VT) are in foreclosure purgatory and “the market” is seized up there because prices are so absolutely grossly inflated. Kent and Sussex County Delaware have massive amounts of inventory. Massive…. most of it is new and the asking prices are grossly inflated even though they’re much more affordable to us. It’s a case of *bring your money with you* because you’re not going to earn much here which is the case with FL, AZ and NV. Even though I commuted back to NY from lower DE for two years, don’t think I could do it again in reverse(live in DE and work in NY during week). Commuting from NYC area back home to VT each weekend is less arduous than NYC to lower Delaware but still difficult. If only the Realtor Crime Syndicate weren’t price-fixing in VT, we’d make the move.

Patience is hard to come by but the choice is clear;

A) Continue saving and maintain mobility in the tri-state area

B) Empty bank account, lose mobility and be stuck in an area (New England? Delaware?) where economic opportunity is doubtful.

By 2004, the reality of this new economic paradigm of doubtful employment and ever lower wages dawned on us and we stand by it now. That paradigm will obliterate the Realtor Crime Syndicate effort to enslave the public by artificially inflating housing prices.

“Lots of ads on TV lately that are focusing on people who have the IRS on their A$$, many more ads than I remember seeing in the past.”

There was an expose’ a few days ago on one of the biggest companies cited above. The man running the ads and scam is located in Texas. Apparently he is under investigation in several states. One thing you will see from his tv espose’ tape is that he overly indulges on food.

Where have we seen this before???

—————————

HUD offering government-owned, foreclosed homes for only $100 down
St. Pete Times | Saturday, April 16, 2011 | Mark Puente, Times Staff Writer

Magan Landsiedel and Jeff Smolinski just bought a $133,000 home in Largo. Their down payment: $100.

A typical government-insured mortgage would have required $4,700 down; a conventional lender might have demanded more than $26,000.

But Landsiedel and Smolinski took advantage of a little-known U.S. Department of Housing and Urban Development program that lets people buy government-owned foreclosed homes for just $100 down.

Uncle Sam is looking for buyers for 3,451 homes like this in Florida.

Obama is rad. “Do you think we’re stupid”? I love it! He gets caught on the mike saying something the rest of us have been screaming for years. Could not be more perfect.

Until Debt Do We Part

“Debts must be paid. The alternative is default. The U.S. government’s debts cannot be paid. Yet voters cannot bring themselves to face the reality of default. There has always been a way to delay the day of reckoning. There has always been another central bank rabbit to pull out of the fractional reserve hat. There has always been a way to move the decimal points to the right on the asset side one more time, and move the liabilities off budget. There has always been a way to persuade lenders to lend the drunken government enough money for another night on the town.”
~Dr. Gary North

Gas prices could soon break July 2008 record
By Gary Strauss, USA TODAY

Gasoline prices, on the rise for more than three weeks, could top all-time highs by Memorial Day.

Nationally, a gallon of regular averages $3.81 — up 10 cents in the past week and nearly 96 cents above year-ago levels. Industry experts say prices could surpass July 2008’s record $4.11 as seasonal demand, speculators and political uncertainty in Libya and the Middle East propel crude oil prices.

“We could easily tack on another 30 to 40 cents a gallon,” says Darin Newsom, senior analyst at energy tracker Telvent DTN.

In some areas, gas has already hit those levels. In Los Angeles, regular averages $4.20 a gallon. In Chicago, it’s averaging $4.17.

Typically, prices peak around July 4, the height of the summer driving season. But escalating prices are already crimping demand and could derail vacation travel, says Tom Kloza, chief oil analyst at the Oil Price Information Service.

The fast run-up could mean a price plateau by Memorial Day — about six weeks earlier than normal, Kloza says.

Another homebuyer update:

As some of you may recall, I decided this past year to go back into the housing market, as I was originally going to relocate some 8 years ago.
The original plans were halted due to BID WARS here in the Tampa Bay Area, most specifically in Pinellas County.
Flipping was becoming a new form of “employment”. I didn’t even know what that was until I met a Condo Buyer who told me he had purchased several new units in Downtown Tampa. I asked how he could afford to buy all these? Was he finding tenants? NO. He was just “flipping them”.
The “end user” was going to end up paying the mortgage.
I was astounded that such a business model could exist in an American Banking system.
But, I digress.
I had a contract on a Freddie Mac foreclosure in October of last year.
We anticipated closing the sale before Thanksgiving, since I was an all-cash buyer. No problems. Did the home inspection. Bought a few pieces of furniture for the new place, ready to move in for the holidays.
Then, the former occupant filed suit, claiming , of course, that the Bank had no right to foreclose and that lack of payment did not constitute a reason for a foreclosure, etc.
My contract was “canceled”.
I rode by yesterday to see if the former “owner” managed to get the house back from Freddie Mac.
House is still vacant, but now, the plants are beginning to die and the appearance of being unkempt is starting to show.
It’s just another vacant property that hasn’t reached settlement.
It was vacant for about 6 months before it made it to the market and sat for several months before I made an offer on the house.
Another case of mortgage purgatory. Decay may be the ultimate owner.

Au $1485.00 Ag $43.05 Oil $109+ SWEET!
This must be a bubble!

Mortgage Problems Still a Big Drag on Bank Earnings ~ CNBC

If there’s one takeaway from the banks’ first-quarter earnings this week, it’s got to be this: Mortgages are still a real problem.

“We have homes sitting there for 500 days rotting that we can’t do anything about,” says Jamie Dimon, chief executive at JPMorgan Chase.

It became evident with JPMorgan Chase’s results on Wednesday. The company beat earnings estimates only because it made so much money trading commodities. The mortgage picture was grim — a $1 billion charge for the increased cost of mortgage servicing thanks to new regulations, and another $650 million for increased foreclosure costs.

“It’s more people, more costs, more compliance rules,” JPMorgan CEO Jamie Dimon told reporters on a conference call after the bank’s results were released. “It’s going to cost more money” to service mortgages and complete foreclosures.

Those costs rose while JPMorgan’s portfolio of residential mortgage loans shrank 12 percent.

In part, Dimon blames the rising costs on the fact that state attorneys general haven’t been able to reach a universal settlement with the banks on their mortgage servicing. He says it’s making the problem worse. “We have homes sitting there for 500 days rotting that we can’t do anything about,” he said. “That’s not good for anybody.”

Big Gubmint…We’re on it! Actually this may be a success in their eyes, could have been worse.

$513 million paid out in bogus home tax credits
Associated Press

WASHINGTON — The Internal Revenue Service has paid out $513 million in home buyer tax credits to people who probably didn’t qualify, a government investigator said Friday.

Most of the money — about $326 million — went to more than 47,000 taxpayers who didn’t qualify as first-time homebuyers because there was evidence that they already had owned homes, said the report by J. Russell George, the Treasury inspector general for tax administration.

Other credits went to prison inmates, taxpayers who bought homes before the credit was enacted and people who did not actually buy homes.

“The IRS has taken positive steps to strengthen controls and help prevent the issuance of inappropriate home buyer credits,” George said.

“However, many of the actions occurred after hundreds of thousands of home buyer credits had already been issued, including fraudulent and erroneous credits totaling millions of dollars.”

The popular credit provided up to $8,000 to first-time home buyers and up to $6,500 to qualified current owners who bought another home during parts of 2009 and 2010.

IRS spokeswoman Michelle Eldridge said the agency worked hard to enforce a complicated tax credit that provided nearly $29 billion to more than 4 million taxpayers.

This Tax Day, ‘Farms’ Owned by the Rich Provide Massive Tax Shelter

For all those feeling the pinch this Tax Day, rest assured America’s wealthiest one percent have no idea what you’re going through. Not only have they shaved a projected collective $121 billion off their income taxes thanks to Bush’s tax cuts for the rich but, thanks to misuse of agricultural tax breaks, many will not end up paying their fair share of property taxes either

Take Michael Dell, founder of Dell Computers and the second-richest Texan, who qualified for an agricultural property tax break on his sprawling 1,757-acre residential ranch in suburban Austin and saved over $1 million simply because his family and friends sometimes use the land as a private hunting preserve to shoot deer. Or take billionaire publisher Steve Forbes, who got more than a 90 percent property tax reduction on hundreds of acres of his multimillion-dollar estate in upscale Bedminister, New Jersey, just by putting a couple of cows out to pasture. They are not alone. All across the country, a huge number of America’s wealthiest are tapping into agricultural tax breaks—and none of them have to do any real farming to qualify.
Not only are agricultural tax breaks allowing wealthy landowners to shift their tax burden onto other less-affluent taxpayers but they are also helping bankrupt public schools, which derive the bulk of their funding from local property taxes.

http://www.thenation.com/article/159943/tax-day-farms-owned-rich-provide-massive-tax-shelter

Inequality
The 1% solution

MY COLLEAGUE and I have something in common: we both think concentrations of power in alliances between gargantuan business instititutions and gargantuan government institutions are generally terrible. My colleague and I don’t have much in common in how we analyse the formation of those concentrations of power, or what we think should be done about them. Another thing my colleague and I have in common is that we each think the other guy’s approach to this problem is hopelessly naive. And another thing we don’t have in common is that I largely agreed with Joseph Stiglitz’s article in Vanity Fair, which my colleague describes as an example of self-refutingly absurd liberal ideology.

To sum up the basic thrust of what I agree with in Mr Stiglitz’s piece: I think the rich are getting much, much richer, while regular people (in the developed world, which is what we’re talking about here) are at best treading water. I think that wealth brings power, and the fact that the rich are getting much, much richer relative to everyone else means that the rich also exert increasing influence over the economy, government and society. I think income mobility and equality of opportunity have declined in America over the past 40 years, to the point where America is now more segregated by class divisions than many European countries. I think a major reason for these shifts has been the increasing dominance, since the Reagan era, of an ideology that is indifferent to or actively celebrates inequality of income. I think this ideology is bad: bad for the economy, bad for society, bad for art and culture, bad for the moral character of those who subscribe to it. My chief difference with Mr Stiglitz is that I think his confidence that inequality will eventually lead to a vociferous political reaction against wealthy financial elites in America is misplaced.

http://www.economist.com/blogs/democracyinamerica/2011/04/inequality

Sorry if this has been posted before.

From the article
The Real Housewives of Wall Street

Christy is the wife of John Mack, the chairman of Morgan Stanley. Susan is the widow of Peter Karches, a close friend of the Macks who served as president of Morgan Stanley’s investment-banking division. Neither woman appears to have any serious history in business, apart from a few philanthropic experiences. Yet the Federal Reserve handed them both low-interest loans of nearly a quarter of a billion dollars through a complicated bailout program that virtually guaranteed them millions in risk-free income.

Why is the Federal Reserve forking over $220 million in bailout money to the wives of two Morgan Stanley bigwigs?

http://thehousingbubbleblog.com/?p=6422#comment-1912971

Sorry if this has been posted before.

The Real Housewives of Wall Street

Christy is the wife of John Mack, the chairman of Morgan Stanley. Susan is the widow of Peter Karches, a close friend of the Macks who served as president of Morgan Stanley’s investment-banking division. Neither woman appears to have any serious history in business, apart from a few philanthropic experiences. Yet the Federal Reserve handed them both low-interest loans of nearly a quarter of a billion dollars through a complicated bailout program that virtually guaranteed them millions in risk-free income.

Why is the Federal Reserve forking over $220 million in bailout money to the wives of two Morgan Stanley bigwigs?

http://www.rollingstone.com/politics/news/the-real-housewives-of-wall-street-look-whos-cashing-in-on-the-bailout-20110411

On a more positive note (not to downplay the above) on the A.M. radio today I heard a radio program highlighting being debt free and having the house PAID off.

The radio show host said that having a PAID off house is the “new’ BMW.

The theme of the show was highlighting People who had paid off debt and were now free and clear. Talk about being in the Twilight Zone, this was different.

One couple, $55,000 in debt erased it all in 21 months, had an emergency fund and were celebrating by going to Disney World. Ask me and they should have been saving that money too, especially because the wife was a public school teacher. The husband was a landscaper doing well installing patios in spite of the downturn. I think their key was going from ~$98,000 per yr. income to ~$108,000 income. The husband said his was the increase in income.

It was just strange listening to this on the radio.

More painful wrist slaps in store for Megabank, Inc?

Banks, SEC in talks to settle mortgage charges: report
Fri Apr 15, 2011 9:30am EDT

(Reuters) - The U.S. securities regulator is in talks with major Wall Street banks to settle fraud allegations relating to the sale of toxic mortgage bonds that helped unleash the financial crisis, the Wall Street Journal reported, citing sources familiar with the matter.

The first settlement with the U.S. Securities and Exchange Commission (SEC) could be reached as soon as next week, while some of the other deals could take months to work out, the WSJ said.

SEC’s negotiations with the banks include JPMorgan Chase, Citigroup Inc, Morgan Stanley, Merrill Lynch, now an unit of Bank of America, and UBS, according to the Journal.
…
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See how guys who follow Cramer end up? BwaHahahhahaHAHaHAhAHAHAaHHASAHAAHAAAAAA!!!!

Money & Company
Tracking the market and economic trends
that shape your finances.
Lenny Dykstra charged with bankruptcy fraud
April 15, 2011 | 1:39 pm
…
U.S. prosecutors Friday charged famed baseball outfielder Lenny Dykstra with bankruptcy fraud.

According to a statement by prosecutors, Dykstra was taken into custody at his Encino home Thursday night. The charge relates to fraud Dykstra allegedly committed involving the sale of items from a Ventura County mansion he owned.

“The federal charges stem from a bankruptcy case that Dykstra filed on July 7, 2009,” the statement said. “The criminal case filed in U.S. District Court alleges that Dykstra removed, destroyed and sold property that was part of the bankruptcy estate without the permission of the bankruptcy trustee.

According to prosecutors, “Dykstra admitted in a bankruptcy hearing to having arranged the sale of sports memorabilia and a dresser that were property of the bankruptcy estate; and Dykstra “ripped out” a $50,000 sink from his mansion and took granite from the mansion and installed it in an office he set up at the Camarillo airport after he had filed for bankruptcy protection.”

As his baseball career wound down, Dykstra gained success as a businessman, first with a luxury car wash in Corona that the ballplayer dubbed “the Taj Mahal” of car washes. He then expanded the business to other parts of Southern California and in 2007 sold it to investors.

Dykstra also took his head-first style to Wall Street after teaching himself financial analysis and striking up a friendship with CNBC “Mad Money” host Jim Cramer, who hired Dykstra to write a stock-picking column for his influential website, TheStreet.com.
…

* U.S. NEWS
* APRIL 16, 2011

The Confessions of an Inside Trader
By MICHAEL ROTHFELD, SUSAN PULLIAM and VANESSA O’CONNELL

LONG BEACH, N.Y.—Kenneth T. Robinson knew he should walk away. But in an interview with The Wall Street Journal, he says he just couldn’t stop trafficking in insider-trading tips.

It was September 2009—a full 15 years after he’d first gotten involved in an alleged multimillion-dollar fraud that ranks among the longest-running insider-trading cases in U.S. history. The scheme was showing serious cracks: One of Mr. Robinson’s two partners in the alleged crime, his close friend Garrett Bauer, had started throwing around big money—buying fancy homes in Manhattan and Florida and paying with millions in cash.

“I told Garrett it was stupid,” Mr. Robinson said in the interview. He urged Mr. Bauer that they all stop before the cops caught on.

But Mr. Robinson, flipping burgers one recent afternoon in his backyard on Long Island, said he failed to take his own advice. Within just a few weeks, he resumed trying to profit from inside information. “I didn’t think anyone would notice,” he said.
…
Mr. Robinson, the 45-year-old father of two young boys, said he never thought he would trigger their undoing with his own trading. “It didn’t seem like it would raise eyebrows when it wasn’t millions of dollars.”
…

Senate mortgage investigation blasts WAMU, Goldman
Published: Friday, April 15, 2011, 6:00 AM
Updated: Friday, April 15, 2011, 12:11 PM
Jeff Manning, The Oregonian
…
As hard as the report is on WAMU, it’s arguably harder on Goldman Sachs. It doesn’t quite go far as Matt Taibbi, the reporter who in a now legendary Rolling Stone article dubbed Goldman the “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

But it comes close. The report goes on at length about Goldman’s habit of selling billions of mortgage-backed trash while not revealing to its sucker-buyers that the investment bank was taking massive short positions on the same securities — in effect betting that they would lose value.

One one trade, the report said, “Goldman took 100 percent of the short side of the $2 billion (collateralized debt obligation) betting against the assets” it has just sold.

The securities, predictably, tanked, much to the buyers’ chagrin. Goldman, meanwhile, celebrated. Thanks to its short position, when the mortgage-backed securities lost value, Goldman made a cool $1.7 billion at its customers expense.