The Housing Bubble

Real Estate May 5, 2011, 5:00PM EST
Foreclosure Hits Las Vegas’s High End
In some cases, banks are repossessing luxury homes. In others, owners are walking away from million-dollar mortgages

The view from Nicolas Cage’s former home in Las Vegas Ronda Churchill/Bloomberg

In Las Vegas, which has the highest foreclosure rate among large U.S. cities, the wave of defaults that began with subprime borrowers and the unemployed has spread to upscale homeowners who see no point in staying, even if they can afford to. “You feel like a sucker if you’re paying a $5 million mortgage on a house that’s worth $2 million,” says broker Zar Zanganeh.

In the first quarter, 30 homes in Clark County, which encompasses the Las Vegas Strip and surrounding residential areas, with mortgages exceeding $1 million were repossessed by banks or bought by third parties in foreclosure sales. That’s up from 20 homes a year earlier, according to ForeclosureRadar, a company that tracks defaults. Short sales, in which the bank agrees to accept less than the loan balance, and bank-owned properties accounted for about three-quarters of all home sales in the period, according to the Greater Las Vegas Association of Realtors.

About 100 homes in the county are listed for $3 million or more, a five-year supply at the current sales pace. One listing with Zanganeh’s firm, Luxe Estates Collection, is a never-occupied, bank-owned mansion overlooking a golf course designed by Jack Nicklaus in The Ridges, a community west of Las Vegas. The asking price is $3 million for the 8,550-square-foot house, which was repossessed in 2010 and had a $3.2 million mortgage from the Community Bank of Nevada, a lender seized by regulators in August 2009. Zanganeh is also handling a seven-bedroom home with a panoramic view of the Strip. Nicolas Cage, the Oscar-winning star of Leaving Las Vegas, paid $8.5 million for the house in 2006. It went into foreclosure in December 2009. The next owner, who property records show paid $4.2 million, has put the house on the market for $7.9 million—an “unrealistic” price, according to Zanganeh.

In Nevada, 23 percent of delinquent borrowers said they “strategically defaulted,” or walked away from their homes by choice rather than necessity, according to a January report by the Nevada Association of Realtors. “It’s folks that feel the hopelessness of it all,” says Rob Wigton, chief executive officer of the state association. “They’ve rolled the dice and lost.” The population of Clark County has fallen by about 16,000 from its estimated high of 1.97 million in 2008, according to the government-funded Nevada State Demographer.

Las Vegas home values have plunged 58 percent since the 2006 peak, the most of the 20 metropolitan areas tracked by the S&P/Case-Shiller Home Price Index. Prices fell 7.4 percent in March from a year earlier, to a median $125,950, the Las Vegas Realtors reported on Apr. 8. Almost 70 percent of Las Vegas area homeowners with mortgages were underwater at the end of 2010, meaning they owed more than the value of the property, according to CoreLogic (CLGX), a real estate information company. Among cities with a population of more than 200,000, Las Vegas has led the nation in the pace of foreclosure actions since November 2009, with one of every 31 homes being subject to a filing in the first quarter of this year, RealtyTrac, an information provider, reported on Apr. 14.
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Paris Reacts To Strauss-Kahn: Do French Elites Deserve Different Laws?
Posted by Bruce Crumley Saturday, May 21, 2011 at 9:48 am

There wasn’t anything particularly French about the enormous attention focused on the New York courtroom hearing Dominique Strauss-Kahn’s successful request for release on bail from Rikers Island imprisonment awaiting trial on charges of attempted rape. But given Strauss-Kahn’s origins and enormous (and now apparently finished) influence in French society and politics, it isn’t surprising much of France followed the May 19 bail proceedings live. However, the palpable urgency and outrage with which many people here longed to see DSK freed from jail—no matter how strict the conditions involved may be—does reflect a deeper reality and difference separating French and American society: the aversion and discomfort many French people still have at seeing members of their elite receiving harsh treatment regularly dished out to mere commoners.

A text like this will likely be accused of resorting to the kind of old, unthinking clichés that reinforce stereotypes, and mask changing realities and attitudes that make typecasting and person or group increasingly inaccurate. Despite that risk, it’s worthwhile at this point to note that a lot of the trans-Atlantic gnashing of teeth over the DSK affair has in part arisen from differing sensibilities over how elites are and should be treated in the U.S. and France. Mega-generalization number one: the French don’t at all mind seeing their rich and powerful forced to answer for dubious actions, or even submitted to humbling public scrutiny in the process. But they typically don’t like seeing the elite treated like normal people subjected to normal rules—much less handled common criminals (even when they’re suspected of common crimes).

Mega-generalization two: Americans, by contrast, have come to view the mobbing of errant public figures as one of the risks of–and prices to be paid for—obtaining fame, fortune, and/or power. The mass clamoring for a disgraced pol or celebrity to get the tar and feathering apparently deserved has become something of a national sport—and practiced with the same zeal (yet inverse emotion) Americans tend to hail public figures they judge positively.
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Phoenix-area housing auctions fast and furious
Valley foreclosure sales have a Wall Street feel
by Catherine Reagor - May. 22, 2011 12:00 AM
The Arizona Republic

Anthony Thomas held his iPad to his chest, clutched his cellphone in one hand and used his free hand to vault over the 3-foot fence around the food court in front of the Maricopa County Courthouse.

It was noon, but he wasn’t in a rush to get something to eat. He had seconds to bid on a Mesa foreclosure home that one of his firm’s clients wanted to buy.

The house was one of more than 100 that lenders intended to sell at auction that day. It was one of dozens that Thomas and his team were trying to buy.

Despite hopping the fence to get into position, and then upping the bid more than a dozen times, he didn’t win the auction. His client didn’t want to go higher than $90,000, and the Mesa house sold for $98,000.

On this day, a Thursday in late April, Thomas didn’t have time to linger. Another client wanted to bid on a house going up for auction at the next table. He weaved through the crowd and queued up with several other bidders to wait for the auctioneer to call out the address of the next house to go on the block.

Five different auctions can go on at the same time in front of the courthouse.

A record number of foreclosure houses were sold at these daily events, officially known as trustee-sale auctions, in metro Phoenix in April. The number of sales has been growing for months and the record pace is expected to continue through next year.
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Megabank, Inc is going to have to come up with a more prudent means of funding its outsized CEO pay than defrauding Uncle Sam. Perhaps they can convince the Fed to provide them with more zero-percent-interest discount loans which can be reloaned at “market rates.”

Will the Justice Department Prosecute Bank of America, JPMorgan, Wells Fargo for Mortgage Fraud?

The Huffington Post has revealed that a set of confidential federal audits accuse the nation’s five largest mortgage companies of defrauding taxpayers in their handling of foreclosures on homes purchased with government-backed loans. The audits conclude the banks cheated the government by overvaluing their losses on foreclosed homes and submitting faulty and defective documents to get federal reimbursement. According to the audit, the banks—Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial—violated the False Claims Act, which protects the government from fraudulent billing. The findings have been referred to the U.S. Department of Justice. [includes rush transcript]

Revitalizing Coleman Park: Where are the buyers?

By Andrew Abramson Palm Beach Post Staff Writer
Posted: 10:19 p.m. Saturday, May 21, 2011

WEST PALM BEACH — Ebonye Huggins was just what the city was looking for when it started a program to lure upwardly mobile West Palm residents back to the downtrodden Coleman Park neighborhood with the promise of new half-price homes.

Huggins, a recent graduate of Palm Beach Atlantic University, set her sights on a house on 22nd Street that cost the city $153,517. Under the program, the city would sell it to her for roughly half that amount. But when the bank said the house was worth only $52,000 - and would lend her only two-thirds of that - the deal died.

A year and a half after the city announced with great fanfare that it would build and rehab 60 homes in Coleman Park, only three sales have closed. Nine more homes are under contract but don’t appraise out.

The city has spent more than $3 million in federal stimulus money to buy five dozen lots and 19 new manufactured houses, most of which remain empty.

“It’s frustrating,” Mayor Jeri Muoio said. “We want homeowners in that area. From what I understand, (the banks) are under-appreciating the land. The houses are well-built and worth the money built for them.”

Skip McDonough, president-owner of Family Mortgage in Jupiter, has worked with West Palm Beach in previous revitalization projects. He said the bank appraisals are realistic, even generous.

“I can’t imagine the houses being worth more than $30,000 to $40,000 right now,” he said. “No matter how nice the houses are, you still have to cross over Tamarind Avenue to go anywhere, and that has as high crime as anywhere else.”

Uh oh, where was the end of the world supposed to start at 6 pm yesterday?

Iceland closes main airport amid volcano eruption

By GUDJON HELGASON The Associated Press

Updated: 6:36 a.m. Sunday, May 22, 2011
Posted: 4:21 p.m. Saturday, May 21, 2011

REYKJAVIK, Iceland — Iceland closed its main international airport and canceled domestic flights Sunday as a powerful volcanic eruption sent a plume of ash, smoke and steam 12 miles (20 kilometers) into the air.

Airport and air traffic control operator ISAVIA said Keflavik airport was closed at 0830 GMT (4:30 a.m. EDT), and no flights were taking off or landing.

Spokeswoman Hjordis Gudmundsdottir said the ash plume was covering Iceland, but “the good news is that it is not heading to Europe.”

In this image taken from amateur video, smoke from the Grimsvotn volcano, Iceland is seen from a plane Saturday, May 21, 2011. Iceland’s most active volcano has started erupting, scientists said Saturday, just over a year after another eruption on the North Atlantic island shut down European air traffic for days, but the impact of this volcanic eruption is not yet known. (AP Photo/Amateur video via APTN) ICELAND OUT, TV OUT

In my job I speak to over fifty different small businesses most weeks. I have doing my unofficial survey for the past 2 years. The states I had picked were VT, NH, CT, NY, NJ, MD, OH, PA, AL. FL. IL. WA. TN. The businessmen I speak to have been in business from 1 year to 38 years. They are all different types of business. Lately I am hearing a change in their telephone voice. They are now hurting, angry, disappointed, discouraged. I get the sense their souls are in pain but have nowhere to turn.
I usually add my sane knowledge which I have gained from hbb and it seems to make sense to them. Perhaps that is why the call me.

I do not know how to help them?

Unadulterated jealousy, pay the man….

Two influential groups are advising Constellation Energy shareholders to vote against the compensation package proposed for CEO Mayo A. Shattuck III.

Glass, Lewis & Co. and Institutional Shareholder Services, which provide guidance on proxy proposals and corporate governance issues, say executive pay at Baltimore-based Constellation was out of line with the company’s performance last year — the latest criticism of the company’s compensation practices.

Company spokesman Lawrence McDonnell said, “We respectfully and strongly disagree with their analysis.”

Shattuck’s total compensation last year was valued at $15.7 million, according to regulatory filings, up from $10.9 million in 2009. Much of the year-over-year increase came from changes in the accounting value of his pension and deferred earnings.

Excluding that accounting change of $4.9 million, Shattuck was paid $10.8 million in base salary, cash incentive, stocks, options and perks.

In a report published this month, Glass Lewis gave Constellation’s executive compensation a grade of F on a scale of A to F. It said Constellation pays its executives more than its peers while “performing moderately worse than its peers.”

Glass Lewis noted that the company earned a D in 2009 and another failing grade in 2008.

http://articles.baltimoresun.com/2011-05-18/business/bs-bz-constellation-executive-compens20110518_1_nuclear-development-venture-nuclear-power-business-constellation-ceo/3

Up by his bootstraps…

Mayo A. Shattuck III is the kind of guy put on earth to run companies and make multibillion-dollar deals, like last month’s $11 billion planned merger of the company he runs, Baltimore’s Constellation Energy Group, with FPL Group of Florida.

Shattuck was raised near Boston, the descendant of two Mayo A. Shattucks, both of whom attended Harvard. His father was managing partner of State Street Research & Management Co., an old Boston money manager, and he also ran Harvard’s endowment. Shattuck III, with his third multibillion-dollar merger under his belt, is now 51. His eldest son works at Goldman Sachs & Co. His name is Mayo A. Shattuck IV. The lineage is one of New England privilege, but it is also a pedigree that Shattuck III has sometimes chosen to flout

http://www.washingtonpost.com/wp-dyn/content/article/2006/01/08/AR2006010800728.html

Yahoo!! “spread to upscale homeowners who see no point in staying, even if they can afford to. “You feel like a sucker if you’re paying a $5 million mortgage on a house that’s worth $2 million,” says broker Zar Zanganeh.”

And just when is this going to hit the SF and Carmel areas of CA. Each week I see more and more open houses in the Monterey-Carmel area. It’s like a cancer. As soon as one or two houses go up in an area that is more desirable, you get another 5 to 10 appearing nearby. Open houses are not just one day now but two days or for the next two or three weekends.

Spent time yesterday to look at a house. Wanted to see three but the first one that had been on the market and been for sale for almost a year was off the market (priced 200K over asking). Reason, the owner (speculator) was going to try and lease it out to keep it occupied until the market conditions got better. It sits on an acre of land and water pricing is going up; in town you see more and more brown lawns. The second one has fallen out of escrow three times in the last 6 months, been reduced about $100K, and is under contract. The third which has been up for about 9 months and reduced about $200K needed at least $100K to bring it up to my living standards. It also had a pool and here in Salinas that means without being heated it could be used yearly with a wet suit or maybe 20 days without.
RE I was with said to put bids in at least $100K below asking, if rejected just rebid in two to three months at a lower price. She expects housing to bottom around 2014.

Interesting examples:
1) asking $850K, bought 8/94 for $300K been on the market
386 days with no price reduction. Other houses in area depreciating. A 3/2 (2900sq.ft).
2)A block away from the above listing, 4/3 (3100sq.ft.) on the marked 359 days, initial listing 5/2010 ($675K) and 4 price reductions later (1/2011) $599K.

Appraisal (2) $478K (1) $456K

Watching CBS Sunday Morning, which claims the secret to selling your home is - wait for it - STAGING! LOL!

House open today: (4/2.5) 2700 sq.ft. active 11 days at $635K. SFH gated $104/mo. gate fees. Sold 1/94 @ $405K. Foreclosed, Bank owned $700K (3/10). Four price reductions, two pending sales fell through, MLS sold @ $450K on 12/10. On 5/11 put on market @ $635K. RE appraisal is $530K.
I’m going to check it out. I think in this market $500K would pique my interest but more and more quality houses appearing on the market makes me want to hold off.
One house in Monterey that I saw a week ago is now having multiple showings but history shows 300 viewings in 90days so there are a lot of people out there looking. When I bid it will be one offer, firm. No bidding wars and no counters.

Union Chief Richard Trumka Fires Warning Shot on 2012 Campaign

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Trumka said the union would become more politically “independent” and selective in giving its support. “Our role is not to build the power of a political party or a candidate,” he said.

In the next few months, the AFL-CIO says it plans to focus efforts on recall elections in Wisconsin and other states that have tried to limit union rights. Then, the group will work to “hold elected leaders in Congress as well as the states accountable on one measure: are they improving or degrading life for working families?” Trumka said…

He said Obama has made a “strategic blunder” by letting deficit reduction talks eclipse an effort to push legislation to stimulate job growth.
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http://blogs.abcnews.com/thenote/2011/05/union-chief-richard-trumka-fires-warning-shot-on-2012-campaign.html

Short version: “Bring us some jobs or we pull our campaign money. ” This is no longer about gold-plated benefits. This is about just keeping the jobs. And if you ask me, the second-best means to reduce the deficit is to create jobs (the first being single-payer health care).

lol…

MONTICELLO — Sullivan County is expanding its annual tax auction to two days in response to a doubling of the number of properties expected to be sold for delinquent property, school and other taxes.

About 408 properties will be available, double last year’s roughly 200 properties. The count includes more single-family residences than usual, said county and town officials, including condominiums located in religious camps.

“I hate to see people lose their homes,” said Deputy Treasurer Nancy Buck. “It’s really disconcerting that we have that this year.”
Auction Properties

A year-by-year review of real estate auctions in Sullivan County.

2006 87

2007 112

2008 140

2009 215

2010 200

2011 408

Source: Office of Sullivan County Treasurer

The auction is set for June 22 and 23 at the Lodge at Rock Hill — which is itself the defendant in a foreclosure proceeding.

http://www.recordonline.com/apps/pbcs.dll/article?AID=/20110522/NEWS/105220332

Florida’s budget cuts stir job fears

By John Kennedy Palm Beach Post Staff Writer
Posted: 9:03 p.m. Saturday, May 21, 2011

TALLAHASSEE — The $69.7 billion state budget now before Gov. Rick Scott will send tremors through Florida’s struggling economy, with school districts, hospitals and other big employers soon cutting jobs and programs because of a sharp drop in taxpayer dollars, economists say.

Scott has generally praised the spending plan for shrinking government, cutting regulations and reducing taxes. He says it will spur private business expansion and fulfill his campaign pledge to create 700,000 jobs over seven years.

When you go back to the roots of how America became a rich Nation it was its strong middle class job base ,a balanced tax base and a somewhat balanced power based politically . The silent Majority were silent because they didn’t have their toes stepped on to much . Than you go into this cycle where America is undermined by the changing of these structures and Social Nets by
Corporate America ,Globalism ,price fixing Monopolies ,faulty immigration
enforcement ,Union corruption, Wall Street ?Banking greed and you name it .

Somehow the Power Brokers thought that they could depart from the balance and extract more from the worker bee ,while at the same time screwing the worker bee of benefits and their piece of the American
pie while outsourcing jobs and creating a manufacturing base in foreign countries .

Its pretty stupid to think that you can have free market capitalism if you have price fixing monopolies and all this Foreign interference and you take away the job base at the same time . It makes it impossible for the worker bee in the private sector to have power ,and it makes it impossible for Government to fund needs when you take the tax base out of the Country in the form of Jobs leaving .

But thats the problem ,every price fixing monopoly wanting to take more than the average middle class worker can afford . Capitalism would of put a cap on gouging .

Who ever thought this plan could sustain the middle class in America or even the upper middle class ? This is what happens when you have power groups or lobbyist getting their way with Politicians . It only took Wall Street/Banks about 8 years to screw up the financial markets after they got their way with deregulation and lack of supervision , the Health care industry is a joke and not sustainable , just as the real estate prices weren’t . Rigged and stacked decks designed to put more money in the hands of the upper crust of Society ,a outright betrayal of the Country
by the so-called Policy givers . All the mad-hatters or greedy entities got their way / Their hidden motives should of been clear ,but when your bribed your bribed . Our job based/manufacturing/tax based is creamed by China and other foreign Countries .

Who would think that this is anything but treason to America . It’s a National security problem to do such a thing ,to undermine a Nation
economically . These entities are guilty of Treason .

CAREERS
MAY 22, 2011

Money Lessons for Every High-School Graduate
By ZAC BISSONNETTE

When Felipe Matos enrolled in the New York Institute of Technology to study graphic design, he never thought that degree would be the very thing that prevented him from pursuing his dream career.

But more than $50,000 in student debt later, he has found himself working as an assistant building manager in New York City — with half his salary going toward debt repayment.

“In order to get into my field, I’d have to intern,” says Mr. Matos, adding that his dream job would be at Pixar, the cutting-edge animation studio. But in order to avoid defaulting on his loans, he has had to defer his dreams. “I often get depressed because I always wanted to make cartoons and 3D animations for a living but can’t,” he says. His debt load also is affecting his life plans beyond his career: “I have a very loving and serious girlfriend, but I’m afraid we can’t have kids or get married until we are in our late 30s.”
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There are tons of guides for what you should do with your money, but few draw the deeply rooted connection between how you manage money and how you manage your dreams.

It’s not easy to do both well, but if you want to make a good financial start, here are five things every high-school graduate should try to remember:

1. Debt is slavery: “The borrower is slave to the lender,” says the Bible. When you have monthly payments to make, your life choices are greatly reduced. You can end up chained to a job you don’t like — unable to take the low-paying, entry-level job in your dream field or pursue further education to gain the qualifications for the career you really want.
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2. College debt takes its toll: Going deeply into debt to pay for a prestigious college degree rarely pays off in the long run. Not only does it saddle you with a large, pressing debt that limits your options upon graduation, you’re not likely to be any more successful either.

A recent study by economists Stacy Dale and Alan Krueger found that, once you control for aptitude, career earnings don’t vary based on the college attended: if you’re smart enough to get into a brand-name private university, you’ll do just fine going to a state college. What will determine your success will be your aptitude and your work ethic, not the name on your diploma.
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3. Rich friends may be broke: When I was in high school, I hung out with a girl whose parents lived modestly and drove a beat-up station wagon that you could hear coming from a mile away. Our other friend drove a BMW Z3 — and made fun of the junky cars we drove. That upset the girl. “Look,” I said to her, “you have no idea whether his dad’s actually richer than yours. The car’s probably a lease, and their houses are probably leveraged to the hilt.”
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4. Materialism is misery: Lives of thrift and conscientiousness lead to less stress, greater enjoyment of the things we do have and a lighter carbon footprint. But most of our societal associations with wealth are deeply connected with materialism: luxury goods, power and status.
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Recognize the real benefits of wealth — freedom and flexibility — and don’t let the pursuit of its illusory trappings interfere with your ability to reap those rewards.

5. TV makes you feel poor: One of the fastest ways to make yourself better with money is to smash your television — or just watch it less.

A 1997 study by researchers Thomas O’Guinn and L.J. Shrum found that people who watch more TV believe that a higher percentage of Americans have tennis courts, luxury cars, maids and swimming pools.
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Sinking values prompting homeowners to consider strategic default as best business decision
Slight drop in strategic defaults unlikely to last as more people do the math, see they can’t recover and make a business decision to walk away from their mortgage, even if it ruins their credit

Marty Likier walked away from the mortgage on his Westmont townhouse. (Michael Tercha, Chicago Tribune / May 22, 2011)
By Mary Ellen Podmolik, Tribune reporter
May 22, 2011

Strategic default — opting to walk away from a mortgage you can afford — isn’t a new phenomenon in the housing crisis. But with home values continuing to decline, more owners are finding themselves in a position where they may see it as a savvy business decision to destroy their credit rather than wait years for prices to recover.

Marty Likier is one who knows the mental hurdles that have to be crossed to make the decision.

Likier put almost 20 percent down to purchase a $312,000 townhouse in Westmont in 2006 and lived there until two years ago, when he remarried and bought a home in Chicago Ridge. For a year he rented the townhouse. When a change in rules at the community meant Likier’s days as a landlord would end, he called his lender and asked if he could rework the loan, but he didn’t have enough equity left to refinance the $240,000 mortgage.

Likier, 55, took a long look at his finances and the combined monthly mortgage payments of more than $4,700 and decided last fall that the struggle wasn’t worth it.

He listed the townhouse for $249,000, figuring he would bring $20,000 to the closing table to facilitate a deal. The listing has since dropped to $179,000, which is lower than the unit sold for when it was built in 1999. He stopped paying the mortgage in January and recently was served with foreclosure papers.

Despite the fact that he and his wife are employed and have an annual household income near $150,000, he’s comfortable with his decision.

“I did a lot of soul-searching about whether it was morally the right thing to do,” he said. “I felt there was no moral obligation to make a payment. The contract says it’s a financial obligation, not a moral obligation.

“I was in a boat with a slow leak. It was manageable, but I know I was slowly sinking.”
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Foreclosure flood may not have crested yet
More than 4 million seriously delinquent borrowers are at risk
By John W. Schoen Senior producer
msnbc dot com
updated 5/20/2011 8:44:26 AM ET

If the national foreclosure crisis were a baseball game, we would be in about the top of the sixth. And we may have to go to extra innings.

Since the housing market peaked in 2006, some 6.5 million homes have been lost to foreclosure. There are likely another 4.3 million more homeowners who are “seriously delinquent,” meaning they are more than three months behind in their payments, according to data released by the Mortgage Bankers Association this week. Many of those homeowners will soon enter the foreclosure pipeline.

Though the pace of new foreclosures has fallen recently, that is largely the result of lenders choking on the torrent of paperwork created by the millions of foreclosures already in progress.

After lenders tried to speed the process and cut corners by “robo-signing” documents, bank regulators last month ordered them to clean up their act – saying those practices had jeopardized the “safety and soundness” of the banking system. Some 14 of the biggest mortgage lenders were ordered to come up with a plan to fix the problem within 60 days. When they do, analysts expect the pace of foreclosures to pick up again.

…the flood of people falling behind on their mortgages — due to exploding mortgage payments, job loss or other reasons — may have peaked. But those 4.3 million “seriously delinquent” homeowners have yet to receive foreclosure notices, which means the river has not yet crested downstream.
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There has never been a better time to buy in Oh-tucky:

A state of distress
Foreclosed homes and bank-owned properties have flooded the market, pulling home prices down and prolonging the recovery
11:55 PM, May. 21, 2011

Laura Schatz poses in the home she’s been trying to buy since February. The three-bedroom Pleasant Ridge house is being sold in a short sale, which means the home is being sold for less than the owner owes the bank _ and which the seller’s lender will have to sign off on for the deal to be realized. / The Enquirer/Carrie Cochran

Written by Lisa Bernard-Kuhn

Michelle Greene bought a foreclosed home in Covington for $30,100 late last year, and it’s worth $80,000 today.

Laura Schatz is thrilled to pay just $87,000 for a Pleasant Ridge fixer-upper, despite months of uncertainty on when the deal will close.

And Jeff Bardua of Independence is just glad to finally sell the house he’s been trying to unload for a year, even at a $42,000 loss.

Crazy deals like these are roiling the local housing market, turning the usually busy spring home-buying and selling season upside down.

“You could put a house on a credit card, some of them are coming in so cheaply,” says Rebecca Weber, a Realtor with Huff Realty.

Realtors say they’ve never seen the local market so bloated with distressed sales - with foreclosures, properties owned by the bank or homes in which the sellers are in line to take a loss. Some houses will go for as much as 40 percent discounts.

Median sale prices are at their lowest in years: Down 24 percent since 2006 to $106,000 in Southwest Ohio; off 6 percent to $126,000 in Northern Kentucky. So far this year, nearly one of every two homes sold in Southwest Ohio and one of every three in Northern Kentucky have been distressed sales.

Short term, distressed properties are dragging down all home prices. Longer term, they’re prolonging the housing market’s recovery and stalling an overall economic comeback.

“It’s probably going to take three to five years for things to get sorted out,” says John Glascock, economist and director of the University of Cincinnati’s Real Estate Center.
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Americans shed mortgage debt at record pace
By Dennis Cauchon, USA TODAY
Updated 5d 19h ago

Americans are reducing mortgage payments at a record clip, directing cash that once went for debt into consumer spending and savings.

Low interest rates, defaults and refinancings have shaved more than $100 billion off the nation’s annual mortgage bill — an amount comparable to all unemployment benefits for one year or this year’s Social Security payroll tax cut.

“This is a form of economic stimulus that goes to Main Street rather than Wall Street,” says Nicholas Carroll, a journalist on consumer finance and author of Walk Away From Debt for a Better Future. When freed from a mortgage payment, people’s first purchases tend to be necessities, such as socks and underwear, he says.

Homeowners have trimmed interest payments alone by 11% — or $67 billion a year — from the peak in 2008, according to the Bureau of Economic Analysis (BEA). The savings come equally from grabbing lower interest rates and reducing what’s owed by paying down principal or defaulting on loans.

The nation has slashed total mortgage debt from nearly $11 trillion at the mid-2008 peak to $10.3 trillion in the first three months of 2011, the BEA reports.

The trend shows no sign of slowing. About 9% of mortgage borrowers are behind on payments, and 4.6% of homes are in foreclosure, says the Mortgage Bankers Association.

Even so, homeowners are reducing mortgages far more slowly than they added to them during the housing bubble. Borrowers took on $1 trillion in new principal and $90 billion in extra interest in 2006 alone, BEA data show. Shrinking mortgage payments are a sign of the economy resetting in the housing bust’s aftermath.

“No one remained untouched, not homeowners, Wall Street, investors or the government,” says economist Sam Khater of CoreLogic, which tracks real estate trends. “One positive sign is that housing is becoming more affordable.”
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If an AK-47 is known as a Kalashnikov.
Then why isn`t an AR-15 known as a Stoner?

Eugene Morrison Stoner (November 22, 1922 - April 24, 1997) is the man most associated with the design of the AR-15, which was adopted by the US military as the M16.

The AK-47 is a selective-fire, gas-operated 7.62×39mm assault rifle, first developed in the Soviet Union by Mikhail Kalashnikov. It is officially known as Avtomat Kalashnikova. It is also known as a Kalashnikov, an “AK”,

“Based on an average loan size of about $200,000, there are about 1 million borrowers in default and under water.”

And by the way, if the U.S. economy is really getting $67bn in “mortgage default stimulus” due to rent-free loan owners, $200bn looks like a low-end estimate for the amount of mortgages in default.

UPDATE 1-US mortgage company urges plan for principal cuts
Fri May 20, 2011 12:14pm EDT
(Adds byline, comment and background)
By Al Yoon

NEW YORK May 20 (Reuters) - American Home Mortgage Servicing, one of the largest subprime mortgage servicers, is urging the U.S. Treasury to organize a plan to boost principal reductions for up to 1 million homeowners by unlocking loans from securities.

The servicer is asking for amendments to contracts that govern treatment of delinquent loans in mortgage securities. Currently, most contracts don’t allow sales of loans prior to foreclosure, and in many cases don’t permit a servicer to lower principal when a loan is modified.

American Home’s plan formalizes an idea it first floated within the industry more than two years ago. It hopes to draw more attention now as the government’s efforts to ease payments with loan modifications have had limited impact, foreclosures are still high and home prices have resumed falling.

American Home contends its proposal could provide a boost to the Obama administration’s Home Affordable Modification Program, in which many borrowers failed to qualify because a principal reduction would be needed, but not possible if a loan was tied up in a bond.

The plan “should provide a material benefit to borrowers by giving them the one last clear chance that HAMP was intended to provide, but appears unable to deliver to many homeowners,” American Home’s chief legal officer, Jordan Dorchuck, and others wrote to Treasury on Thursday.

There are about $1.25 trillion in loans contained in the so-called private-label mortgage securities packaged by Wall Street during the housing boom. The distressed balance is nearly $400 billion, with half of that representing loans that are both in default and whose loans are underwater, or bigger than the value of the property, they said.

Based on an average loan size of about $200,000, there are about 1 million borrowers in default and under water.
…

Real Estate Weekly
May 20, 2011, 5:47 p.m. EDT
One in nine mortgages at risk of foreclosure

One in nine homeowners with a mortgage was at risk of losing his home in the first quarter, according to the Center for Responsible Lending. For comparison, one in 32 mortgages was at risk in the first quarter of 2003.

Mortgages are considered “at risk” if payments are 60 days or more past due or they’re already in foreclosure, according to the group.

While the current number of at-risk borrowers is still high, the Mortgage Bankers Association this week released statistics that showed delinquency and foreclosure numbers may be improving: 12.31% of mortgages were in foreclosure or had at least one payment past due in the first quarter, but that’s down from 13.6% in the fourth quarter and 14.01% a year ago.

The numbers “point to a mortgage market on the mend,” said Jay Brinkmann, MBA’s chief economist.

Read more about the latest mortgage delinquency numbers, as well as a Home Economics column on why you may want to think twice before committing to a strategic default. Also, read about how mortgage disclosure forms are getting an overhaul in this week’s real-estate pages.

The most recent numbers are far from indicating a mortgage market that is healed, Brinkmann said. Yet they are somewhat promising: “Things are looking better than last year or the year before,” he said.

— Amy Hoak , Real Estate writer

Housing’s Downward Spiral Continues
03:20 pm
May 9, 2011

by Jacob Goldstein

When home prices fall, more people find themselves underwater on their mortgage — they owe more than their home is worth. That leads to more foreclosures and short sales.

All those foreclosures and short sales drive home prices down further. So the number of people who are underwater on their mortgage increases some more. Etc.

In other words: Five years into the housing bust, the percentage of underwater mortgages is still rising. Of all single-family homes with outstanding mortgages, 28 percent were underwater in the first quarter of this year, according to figures out today from Zillow.

The cycle doesn’t seem likely to break anytime soon. This morning’s WSJ reports:

Mortgage companies Fannie Mae and Freddie Mac have sold more than 94,000 foreclosed homes during the first quarter, a new high that represented a 23% increase from the previous quarter. More could be on the way: They held another 218,000 properties at the end of March, a 33% increase from a year ago.

Editorial: Home prices stumble badly
* Posted May 9, 2011 at 4:32 p.

Unemployment is typically the last economic indicator to recover from a recession, but even at 9 percent the nation’s jobless rate is positively brisk compared to another badly lagging sector of the economy — housing.

The rate of decline in home prices had been improving since it seemed to have bottomed out in 2009. But that upswing has come to an abrupt end.

The real-estate research firm Zillow says home prices dropped 3 percent in the first quarter of this year and fell 8.2 percent year-over-year. And, according to Zillow, 28.4 percent of homeowners are underwater on their mortgages, meaning they owe more than their house is worth.

Economists who had forecast the housing market would bottom out this year are now saying it will be sometime in 2012.

Acting as a drag on any recovery is the vast number of foreclosed homes selling — when they sell — at huge discounts. Fannie Mae and Freddie Mac sold 94,000 foreclosed homes in the first quarter but the mortgages giants have an inventory of 218,000 homes, up 33 percent from a year ago.

And all of this is getting expensive. Bailing out Fannie Mae and Freddie Mac from defaulted mortgages has cost $259 billion and Fannie Mae has just asked the government for another $8.5 billion.
…

One of these days in your travels, a guy is going to show you a brand-new deck of cards on which the seal is not yet broken. Then this guy is going to offer to bet you that he can make the jack of spades jump out of this brand-new deck of cards and squirt cider in your ear. But, son, do not accept this bet, because as sure as you stand there, you’re going to wind up with an ear full of cider.

– Sky Masterson, “Guys and Dolls”

Is real estate for suckers?
May 20, 2011 11:34 EDT
Are you a dope for buying a home in the U.S. right now?

If you need and want one, there’s no harm in that. Yet if you think it’s an investment that will actually appreciate, you’re taking a sucker’s bet.

During the bubble years, the “greater fool” theory prevailed. When you bought a home, you were confident that someone would buy it for a higher price than you paid. “Flippers” prospered from this mass psychology.

Right now, it’s a “lesser fool” market: You’re hoping that you’re not foolish for buying a depreciating asset in a troubled economic climate. Millions stay out of the market just to avoid the feeling of doing a fool’s errand.

Home prices are still dropping in many areas with no real bottom in sight. Zillow, the real estate tracking service, recently reported that first quarter prices were approaching the declines last seen in the Great Depression.

The U.S. home market is no longer in triage mode. It’s a train-wreck. Zillow said home prices “are no longer due to bottom out” this year. When will they, then? It may take years, and here’s why.

Anyone who bought during the bubble may never see any appreciation. Since most of them are “underwater” — the mortgage is more than the home’s value — they have no economic stake in the house. They may join a growing wave of “strategic defaults.” At least one quarter of the entire market is stuck in this way.

I’ve known several neighbors who’ve walked away. Why pay financing, taxes and maintenance on a property that isn’t likely to pay you back in the near future — if ever? It’s not an investment. The more you pay, the deeper you get into a sinkhole. Banks won’t re-value the home and lower your payment, so what’s the point? It’s simple emotional math.

Adding insult to injury are two more pieces of bad housing news. There are about $20 billion worth of mortgage resets coming due on adjustable-rate mortgages this coming year, my colleague Linda Stern reports.

If banks and mortgage insurers adhere to unusually high credit standards, millions won’t be able to refinance and will lose their homes.

On the high end of the market, the loss of federal mortgage guarantees for homes prices $729,750 and above, will hurt even more. Residents of expensive coastal states such as California, Connecticut, Massachusetts, New York and New Jersey may see prices plummet.

Will there be even more price declines as desperate sellers compete with highly-discounted bank-owned properties? In several markets, banks own from 40 percent to 56 percent of all properties (Detroit, Cleveland, Chicago, Minneapolis, Memphis, Tampa and Fresno), according to ClearCapital, a property information company.

With foreclosures at an all-time high, prices can only drop more unless bargain-hunting buyers come into the market en masse or the government brings back home buyer tax credits to stabilize the worst markets.
…

Bondi opposes potential bailout for underwater homeowners
May, 16 2011 9:49 AM
By Mary Shanklin, Orlando Sentinel

The attorney general of Florida — a state where almost half of all mortgaged homes are underwater — opposes efforts that would force the nation’s five largest mortgage servicers to reduce the principal on loans owed by struggling U.S. homeowners.

Attorneys general in all 50 states are part of a group now negotiating a settlement with the five lenders, which are accused of falsifying and otherwise mishandling loan documents and mortgage modifications. Florida Attorney General Pam Bondi is one of seven members of the group who oppose a key negotiating point: Cut the mortgage principal for qualified homeowners.

For example, a delinquent homeowner who owes Bank of America $200,000 on a house now worth $100,000 could find the mortgage’s principal amount reduced by an as-yet-undetermined amount through the general proposal under discussion — an appealing proposal for the 2 million Floridians with such “underwater” loans.

The federal government for about a year has been pushing banks such as BOA and Wells Fargo to reduce the mortgage principal for qualified borrowers in danger of foreclosure. But nearly all mortgage modifications still involve only interest-rate reductions or extensions of the loans’ terms — for example, converting a 30-year mortgage to a 40-year mortgage.

Bondi and several attorneys general from other states say principal reduction oversteps the mission of the group that is negotiating with the five banks, and she fears it could turn into a free-for-all of underwater homeowners. The Mortgage Foreclosure Multistate Group should stick to addressing the wrongdoings of loan servicers, she said, instead of trying to dictate how lenders modify problem home loans.

Pushing lenders to forgive part of their mortgage holders’ debt could encourage even responsible homeowners to stop making payments on their loans, in the hope they can eventually get their bank to erase part of their mortgage, Bondi wrote in a recent letter to the head of the working group.

“Some homeowners may simply default on their loan and use the States’ agreement to obtain a principal reduction — whether or not they actually made an effort to maintain their mortgage,” wrote Bondi, who serves on the negotiating group’s executive board.
…

His boot camps fight foreclosures
Bankruptcy lawyer teaches how to deal with mortgage meltdown.
By Rick Rothacker
Posted: Saturday, May. 21, 2011

SHELBY When allegations of “robo-signing” by mortgage servicers emerged last fall, Shelby consumer bankruptcy lawyer O. Max Gardner III wasn’t surprised.

Since the early 2000s, he had been worried about the deteriorating quality of mortgage loans, many with payments set to recast at unaffordable amounts in future years. And in a 2004 bankruptcy case, he had obtained a mortgage processor newsletter that detailed the outsourced assembly line that was being used to rapidly produce and notarize lending documents.

Gardner’s concerns led him to give seminars around the country to other lawyers about problems with the securitization process - the packaging of mortgages, car loans and other assets into securities for investors. In 2006, he shifted to holding “boot camps” for lawyers at his scenic farm in the South Mountains, about 60 miles northwest of Charlotte.

So far, 800 attorneys have passed through the nationally known program. Some of the trainees have been involved in uncovering recent allegations that bank-employed robo-signers had been improperly processing foreclosure documents. Now for the first time, Gardner will hold a boot camp in Charlotte. Running Thursday through Monday at the Blake Hotel, it will allow him to host about 28 lawyers, double the normal class size.

In a bankruptcy case, determining whether a lender actually owns a mortgage note and properly handled the paperwork is critical because a home loan is typically a consumer’s biggest debt, Gardner said in an interview last week in his Shelby law office, a historic family home known as Webbley.

“What we’re really doing is applying as much legal leverage as possible to really get the consumer and the mortgage servicer to modify that loan,” he said. “Nobody is trying to get a free home.”
…

I’m not making this up…

http://tinyurl.com/3g8sqbq

“In New York, retired transportation agency worker Robert Fitzpatrick, who spent “over $140,000 of his savings on subway posters and outdoor advertisements,” stood in Times Square at 6 p.m., Reuters reports.

When the hour came and went, he said: “I do not understand why …,” as his speech broke off and he looked at his watch.

“I do not understand why nothing has happened.

“Keith Bauer hopped in his minivan in Maryland and drove his family 3,000 miles to California for the Rapture, reports the Los Angeles Times.

If it was his last week on Earth, he wanted to see parts of it he’d always heard about but missed, such as the Grand Canyon. With maxed-out credit cards and a growing mountain of bills, he said, the rapture would have been a relief.”

May 17, 2011, 2:57 PM ET

Housing Weakness Is Mixed Blessing
By Kathleen Madigan

Housing has long been the whipping boy of the Federal Reserve. But not in this business cycle.

In the past, when the central bank wished to slow the economy, it raised interest rates which slowed the flow of credit to big-ticket sectors, especially housing. Once the Fed’s goal was reached, the Fed took its foot off the brakes. Lower rates stimulated housing again, creating jobs and renewing confidence.

The scenario can’t play out this time around in large part because the collapse of the housing and mortgage bubbles caused the last recession. That is why the unexpectedly large 10.6% drop in April housing starts should be viewed as a mixed blessing.

In the short run, the drop in construction will be a drag on growth of U.S. gross domestic product. In the long run, however, the sector can recover only if supply is drastically pared down to better balance with modest gains in demand.

New construction is competing with millions of foreclosed homes and properties out on the market by desperate owners. Since bulldozing foreclosed homes isn’t a popular option, the main way to reduce supply is to cut new construction.

The delay in a housing recovery, however, will make the Fed’s job harder. The U.S. economy seems to have stumbled in April. Not only did housing starts plunge, but industrial production was unchanged, dragged down by a 0.4% fall in manufacturing output. Auto production plummeted nearly 9% because of a shortage of parts from Japan.
…

MAY 19, 2011, 11:41 A.M. ET

Dollar Gains Vs Riskiest Rivals; Weak US Data Triggers Slowdown Fears
By Bradley Davis
Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)–The dollar staged a comeback Thursday against its most risk-sensitive rivals after weak U.S. manufacturing data led to fears of a global slowdown.

The disappointing U.S. manufacturing figures, compounded by weaker-than-expected U.S. housing data and leading economic indicators, led to a step away from higher-yielding assets.

“Weaker manufacturing activity in the U.S. could see weaker demand for commodities, which is why we’re seeing a bit of a pullback for,” riskier currencies, said Kathy Lien, director of currency research at GFT Forex in New York. “The market has not taken the news positively.”
…

There has never been a better time to watch and wait for home prices to bottom out.

RealtyPartner: Our Real Estate Market Still Isn’t Looking Too Good
New York, NY (PRWEB) May 21, 2011

The U.S. housing market has officially entered a double-dip recession. The housing market continues to under perform. The real estate values are still on the decline. Today, prices are on the verge of reaching new lows. The prices are pushed down due to the abundance of foreclosed homes on the market.

“Last year, the US real estate market showed signs of improving. Some economists forecast that housing would hit the bottom later this year. I for one beg to differ on the outlook.” — Mark Quinones, RealtyPartner’s Chairman and Founder.

Now, let’s take a look at these facts from RealtyPartner’s Research & Development:

11.4% of all U.S. homes (or 18.4 million homes) are vacant.

30% of the borrowers owe more than what their homes are worth

Real estate value fell by 3% in the 1st quarter, compared to the previous quarter

Mortgage companies Fannie Mae and Freddie Mac have sold more than 94,000 foreclosed homes during the first quarter, a new high (a 23% increase compared to the previous quarter)

In some cities, prices are half of what they were before the housing market collapsed in 2006 and 2007.

Over 4.5 million households have missed three monthly payments or are already in the process of being foreclosed upon.

The steep decline in home prices along with mortgage rates near their lowest levels in decades have helped make housing more affordable than at any time in the past 30 years.

Unfortunately, many potential buyers who could qualify for loans are worried that prices will fall further. Home owners are hesitant to put their own homes on the market when prices are dropping.
…

I expect the collapsing Chinese property bubble to spill over into the California and Australia housing markets. I base this conjecture on no more than a reasonable, faith-based hunch.

P.S. One of the wonderful aspects of bubbles is that it is just a matter of when, not whether, they will collapse. So long as you don’t get too specific with respect to timing, predicting a bubble’s collapse is a no-brainer.

China woes loom over local property market
Alison Bell
May 22, 2011 - 5:39PM

Australians are divided over whether it is a good time to invest in property amid falling house prices and signs that Australia’s economic bet on China may not be as safe as houses.

A survey of 2000 homeowners, first home buyers and investors found 48 per cent believe it is a good time to buy, according to listed home loan provider Homeloans Ltd.

But the other half do not share this optimism, with many believing that every time confidence in the market grows, economic conditions change and caution reigns, the company said on Sunday.

High living costs have eclipsed concerns over interest rate rises as the top worry for prospective buyers, and volatile prices and equity markets have also left them feeling cautious, Homeloans said.

The findings come as residential property values fell across all capital cities in April, providing further signs that Australia’s overvalued residential property market is continuing to deflate.

“The cracks are spreading on the facade,” he said, of China’s economic growth story.

“You’re seeing real estate firms shutter, sales offices closed down.”

“Some of the engine behind the boom is at least beginning to sputter.”
…

Don’t know if it’s reporting or cheerleading, but…

“Housing crash means bargains for some Sacramento area buyers”

http://www.sacbee.com/2011/05/22/3644881/housing-crash-means-bargains-for.html

What looks like endless home equity losses to some looks like opportunity to others.

Sunday, May 22, 2011
Housing crash means bargains for some Sacramento-area buyers
By Robert Lewis
Published: Sunday, May. 22, 2011 - 12:00 am | Page 1A
Last Modified: Sunday, May. 22, 2011 - 9:57 am

The Great Recession could not have come at a better time for Scott Marshall.

Just last week – as millions of Americans continued to struggle with unemployment and foreclosure – the 20-year-old Marshall moved into his first home: a three-bedroom, two-bath ranch on an Elk Grove cul-de-sac, which he bought for $115,000.

The financial nightmare of the past several years has turned into Marshall’s American Dream.

“This is more than I could imagine,” said a beaming Marshall, who bought his first house, dog and barbecue all in one week. “I thought I’d never be able to buy a home.”

Marshall’s experience highlights the reward at the end of a string of modern-day conditional clauses: If you have a job, if you aren’t underwater on a home, if your credit isn’t ruined and you have some cash, then you can find some ridiculous deals on property these days.

How much will $250,000 get you in this market? $500,000? What about $1 million?

The simple answer: A lot.

“The opportunities right now are amazing,” said Nadia Zierke, a Coldwell Banker agent, who helped Marshall find his home.
…

Stuck in a post-crisis gloom
By Robert J. Samuelson, Sunday, May 22, 4:09 PM

It may be time to move beyond pessimism. Ever since the financial crisis, Americans have wallowed in fear and anxiety. Understandably. Although a recovery — as defined by academic economists — started about two years ago, it hasn’t felt like one. Of the 8.7 million payroll jobs lost in the recession, only 1.8 million have returned. The recovery rivals the slowest since World War II and faces continued threats. High oil prices. Europe’s debt crisis. Unexpected inflation. Washington’s bickering over the federal debt ceiling.

All true. But it’s also true that the recovery seems increasingly self-propelled. Americans are shopping again, albeit with less fervor; exports are improving; companies are hiring. Massive government spending and the Federal Reserve’s low interest rates seem less crucial to growth. Although this is good news, the pervasive post-crisis gloom prevents us from acknowledging it.

Despite differences, all recessions share certain characteristics. One is the role of economic “imbalances.” Something in the economy goes to excess, and the “correction” depresses production, jobs and incomes. Inflation rises, and so the Fed quells it by increasing interest rates. Or companies overinvest in factories and office buildings; investment spending collapses when the surpluses become obvious. Or stocks reach artificial highs — and then crash.

Recoveries begin when the imbalances are overcome by the passage of time, other forces in the economy or government policies. This is happening now to three huge imbalances that abetted recession: consumer overspending (an imbalance between household purchases and incomes); the trade deficit (the imbalance between exports and imports); and the housing “bubble” (the imbalance between home prices and people’s incomes).

Let’s take them in turn.

During the boom years, Americans borrowed more, usually against higher home values; they saved less and spent more. The personal savings rate — the share of after-tax income saved — reached a low of about 1 percent in 2005. Spending flourished for cars, electronics, vacations and much more. Then, beginning in 2008, consumer spending plunged for 18 months when housing prices fell and personal credit tightened. Americans repaid loans or defaulted; they spent less and saved more.

Now, years of doing this (a.k.a “deleveraging”) have restored purchasing power. Debts have been reduced or eliminated; the savings rate has recovered to a 5 percent to 6 percent range. Consumers don’t have to divert a growing share of their incomes from spending. For example, consumer debt service (repayment of principal and interest) is less than 12 percent of disposable income, down from almost 14 percent in 2007, reports the Fed. The difference exceeds $200 billion in potential annual purchasing power.
…

It has been a rough tornado season this spring for the Midwest and the South.

U.S. NEWS
MAY 23, 2011

Twisters Rip Midwest
By DAVID KESMODEL

Tornadoes killed at least two people in the Midwest over the weekend, as twisters touched down in Kansas, Missouri and Minnesota, including one that struck a hospital.

In Joplin, Mo., St. John Regional Medical Center was evacuating nearly 100 patients after the hospital took a direct hit Sunday from a tornado, said Cora Scott, a spokeswoman there, according to the Associated Press. Patients were being taken to other hospitals. Ms. Scott said she didn’t yet have confirmation of deaths or injuries at the hospital.

Phone communications in and out of the city of about 50,000 people about 160 miles south of Kansas City were largely cut off.

A tornado struck the north side of Minneapolis on Sunday afternoon, damaging scores of homes and toppling hundreds of trees, the AP reported. At least 18 people suffered minor injuries.

Kansas Gov. Sam Brownback declared a state of emergency for 16 counties Sunday after tornadoes tore through the northeastern part of the state. A tornado around Saturday night near Reading, roughly 100 miles southwest of Kansas City, destroyed at least 20 homes and knocked out power and water service, Kansas authorities said.

At least one resident of Reading, a 53-year-old man, was killed and five others were injured. Authorities asked Reading residents to spend Sunday night in a shelter in the nearby town of Emporia.

“Our thoughts and prayers are with the family of the victim and everyone impacted by the storm,” Mr. Brownback said in a statement.
…

This is shaping up as one of the worst ever tornado seasons by death toll.

At least 30 killed by tornado in Missouri - coroner
KANSAS CITY | Sun May 22, 2011 11:49pm EDT

(Reuters) - At least 30 people are known to have been killed by a powerful tornado that plowed through the southwestern Missouri town of Joplin on Sunday, Newton County Coroner Mark Bridges told Reuters by telephone.

MARKETS
MAY 23, 2011

Officials Heighten Mortgage Scrutiny
By RUTH SIMON

State attorneys general are stepping up their investigations of mortgage-industry practices by probing for potential misdeeds when banks originated home loans and packaged them into securities, according to people familiar with the examinations.

New York State Attorney General Eric Schneiderman has issued subpoenas to four bond-insurance companies as part of his expanding probe of mortgage-securitization practices, people familiar with the matter said.

At the same time, California Attorney General Kamala D. Harris is expected to announce Monday a new law-enforcement effort aimed at mortgage-industry practices, people familiar with the initiative said. The effort will cover a range of activities, from loan origination to the packaging of mortgages into securities, and will include both civil and criminal prosecutions, these people said.

Mr. Schneiderman has issued subpoenas to units of Ambac Financial Group Inc., Assured Guaranty Ltd., MBIA Inc. and Syncora Holdings Ltd., people familiar with the investigation said.

The bond insurers aren’t the subject of the investigation, these people added, but have been asked to provide information about their dealings with banks that packaged mortgage loans into securities. Bond insurers provided guarantees on a variety of mortgage-related products and have suffered heavy losses as a result of the mortgage meltdown.

Mr. Schneiderman’s office has asked the bond insurers for information regarding claims paid to bond investors and about litigation and settlements the insurers have entered into with banks that packaged loans into securities, these people said.

An MBIA spokesman said the company plans to comply with the subpoena, which focuses on lawsuits filed by MBIA against banks that packaged loans into securities guaranteed by the company.

“Syncora did receive a subpoena from the New York Attorney General to provide certain information relating to mortgage loans, payments and potential settlements,” said a company spokesman, who declined to comment further.

A spokeswoman for Assured Guaranty declined to comment on whether the company had received a subpoena. “We support the Attorney General with their investigation, which will hopefully accelerate the resolution of mortgage-origination, -securitization and -servicing problems,” she said.

A spokesman for Ambac declined to comment.

The subpoenas are the latest sign of how state and federal officials are stepping up their scrutiny of the mortgage machine. Federal prosecutors, for instance, are using tools such as the Civil War-era False Claims Act in an effort to recoup government losses on soured mortgage loans. The tools available to Mr. Schneiderman include the state’s Martin Act, which doesn’t require prosecutors to prove intent to defraud. The Martin Act has been used by Mr. Schneiderman’s predecessors to address a variety of alleged misconduct by Wall Street.
…