The Housing Bubble

Realtors Are Liars®

Schiff is right again on another market topic.

http://lansner.ocregister.com/2011/10/22/housing-market-will-get-much-worse/137313/

The Obama-Biden Plan

3. DIRECT, IMMEDIATE ASSISTANCE FOR HOMEOWNERS, NOT A BAILOUT FOR IRRESPONSIBLE MORTGAGE LENDERS
Over the past two years, Americans have lost 20 percent of the value of their homes. In some parts of the country home values have fallen by twice that amount. In combination with a rapidly deteriorating economy, that means more and more families are having a hard time meeting their monthly mortgage payments. At the same time, many states are considering property tax hikes that will burden homeowners still further. And millions of families who have seen the value of their homes fall below the cost of their mortgages need assistance in restructuring their mortgages to stay in their homes.

Barack Obama and Joe Biden’s plan provides direct relief to help America’s homeowners pay their mortgages, stay in their homes, and avoid painful tax increases while protecting taxpayers and not rewarding the bad behavior and bad actors who got us into this mess:

•Instruct the Secretaries of the Treasury and Housing and Urban Development (HUD) to use their existing authority to more aggressively modify the terms of mortgages: Barack Obama was an early champion of the HOPE for Homeowners Act that passed over the summer. In addition, Obama insisted that the financial rescue plan Congress recently passed include authority for the Secretary to work with servicers to modify the terms of mortgages for homeowners who played by the rules. Obama and Biden believe that both of these plans should be implemented aggressively and comprehensively. In addition, Obama and Biden are calling on Treasury and HUD to develop a plan to work with state housing agencies to coordinate broad mortgage restructurings. The Dodd-Frank legislation gives states broader authority to help struggling homeowners, and coordination is essential to ensure that state and national efforts are working in concert to help as many homeowners as possible at the minimum cost to taxpayers.

http://change.gov/agenda/economy_agenda/ - 55k -

Socialists are funny all over the world…

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Over-60 bedroom blockers ’should be taxed out of their homes’ to encourage them to leave …
Daily Mail | 20th October 2011 | Steve Doughty

25 million empty bedrooms across the country at a time when many are struggling…

Older people should be taxed out of their family homes to free up space for younger generations, says a report backed by Labour.

It argues that ‘empty nesters’ in their 60s are taking up too much room and should be ‘encouraged’ by a new ‘land tax’ to downsize to smaller homes.

The call comes from the Intergenerational Foundation, a left-leaning think-tank that aims to ‘promote fairness between generations’.

The Intergenerational Foundation says there are 25million unused bedrooms in the country and eight million ‘under-occupied’ homes. More than half of people aged over 65 live in homes with two or more spare bedrooms that could be used by young families, it adds.

For ‘Shock and Awe’ to work, this program will have to be much bigger (e.g. refis for everyone w/ F&F loans) than this pre-announcement announcement suggests.

Bloomberg
U.S. Refinance Fix Viewed as Unlikely to ‘Shock and Awe’ Economy
October 24, 2011, 12:23 AM EDT
By Lorraine Woellert

Oct. 24 (Bloomberg) — U.S. President Barack Obama, who tours foreclosure-ravaged Nevada and California this week, may face homeowners demanding bolder action as regulators prepare to release details of new housing proposals as early as this week.

Lawmakers and analysts briefed on plans by the independent Federal Housing Finance Agency estimate they will help less than 1 million borrowers — and perhaps as few as 600,000 — of the 11 million whose mortgages are higher than the value of their homes.
…
Obama introduced HARP in 2009 in a bid to prevent defaults among borrowers who have little or no equity in their homes and thus can’t qualify for refinancing. The goal was to stimulate consumer spending by allowing those homeowners to lower their interest rates and reduce their monthly mortgage payments.

Fewer than 895,000 borrowers have been helped by the program, far short of the nearly 5 million originally targeted. Most of those who got help had equity in their property.

While details of the program’s improvements remain under wraps, DeMarco told lawmakers this month that he was considering expanding HARP to borrowers who are more than 25 percent underwater.

Raising the 125 percent loan-to-value ratio may have limited impact, because fewer than 20 percent of HARP borrowers have loans worth between 105 percent and 125 percent of their property values, according to FHFA data. The rest have equity or are only slightly underwater, according to the FHFA data.
…
Investors, nonetheless, are braced for change. Returns on Fannie Mae and Freddie Mac mortgage-backed securities have trailed those on Treasuries by about 2 percentage points since the end of June, according to Barclays Capital index data.

Homeowners in Nevada, meanwhile, are hoping for relief, said Lon DeWeese, chief financial officer of the state’s housing division.

“Bold action by the president would be warmly received,” DeWeese said in a telephone interview.
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More suburban, middle class slide into poverty
Chicago Sun-Times | Updated: October 24, 2011 6:23AM | Francine Knowles

Fourteen months ago, Aurora resident Prentiss Bailey was going about happily living his life as usual.

He was employed at a printing company where he’d worked for 10 years—a job that paid $17 an hour and that with the consistent overtime and $4,000 and $5,000 annual Christmas bonuses he got, enabled him to take care of his family and enjoy what he considered a middle income life.

Today, he and his 10-year–old daughter live in a homeless shelter.

So does 33-year-old Robert Estes, also of Aurora.

“I had a job; we had what we needed,” said Bailey, as he sat inside the Hesed House shelter in Aurora where he now resides.“I was able to pay my rent. We were middle class.”

That was before he was laid off 13 months ago.

“Now there’s a lack of opportunity, a lack of jobs,” he said. “I didn’t think it would be this hard finding another job.”

Bailey, who for the first time in his life is receiving public aid, has lived at the shelter for about five months. Initially, he and his daughter slept on mattresses in a gymnasium-like room with others. Now the two share a small room in the transitional housing section of the shelter furnished with bunk beds.

“It was hard at first, but I’m glad I took that step,” he said, noting he’s receiving guidance on getting back on his feet from a case worker at Hesed House. He plans to enroll in truck driver training program to improve his prospects of landing work.

Estes, who’s been at the shelter for about six weeks, says after losing his $12.50-an-hour job at a local grocery store where he’d worked for two years, he hasn’t yet been able to find another one.

The economy is “pretty horrible,” he said. “You have people here of all ages that are struggling. Some people tell me how they used to make $20 bucks an hour, $25 bucks an hour. Now they’re here. Nobody wants to hire them.

“I always had my own place, my own car, bought my own food,” he said. “I was making it paycheck to paycheck. Then this happened, and it’s like a slap in the face. I’ve been working and paying taxes my whole life, and now all of a sudden I can barely get into the door for an interview. I’m a strong guy. I can work. I know I don’t belong here.”

“When I first started here in ’08, if we had 80 families, 90 families come in one distribution day, that was a big day,” said Marilyn Weisner, executive director of the pantry. “Now we have routinely 260, 280 families come,” said Marilyn Weisner, executive director of the pantry.

“One of the things that we’ve noticed is the family sizes have increased. We’re wondering if people aren’t moving in together because they’re struggling to survive.”

Census data suggests that is occurring. The bureau recently noted the poverty rate among young adults ages 25 to 34 living with their parents nationally was 8.4 percent, but that rate would be 45.3 percent if the poverty level was determined by their own income.

Catholic Charities of the Archdiocese of Chicago Chief Executive Officer Monsignor Michael Boland said among trends he has observed among the clients the group assists are “a lot more people coming today who have never come before to Catholic Charities or to a social service agency, people that are unemployed, underemployed. I think the recession has really hit a lot of people who were probably doing okay, but now are put below the poverty line. People are coming to us for emergency assistance, food, shelter, clothes. The numbers are extraordinary.”

At the Christian Outreach of Lutherans Food Pantry in Waukegan and Ingleside in Lake County, pantry operations manager Gayle Olson said she’s seeing more “people that don’t know where to go, how to get help, people that had been employed all their lives and now they can’t find a job and they don’t know how to get the resources they need like food stamps and medical coverage for their children, or help with the mortgage, rent or utilities.”

The poverty rate, stood at 21.2 percent in Chicago 2006, the year before the recession began, but climbed to 22.5 percent last year. By comparison, in the suburbs, the rate rose from 7.3 percent to 9.3 percent.

Boland noted Catholic Charities has seen requests for food in some Chicago suburbs rise anywhere from 110 to 150 percent, compared to about 25 percent in Chicago.

The U.S. Census Bureau sets the poverty level as:

†One individual: $11,344

†Two adults: $14,602

†Two adults and one child: $17,552

†Two adults and two children: $22,113

Since when has driving up share prices been part of the Fed’s mandate?

U.S. NEWS
OCTOBER 21, 2011

Fed Is Poised for More Easing
By JON HILSENRATH

Federal Reserve officials are starting to build a case for a new program of buying mortgage-backed securities to boost the ailing economy, though they appear unlikely to move swiftly.

The idea would be to target any new efforts by the central bank at the parts of the economy that are most severely impeding a recovery—the housing and mortgage markets—by working to push down mortgage rates.

Lower mortgage rates, in turn, could encourage more home buying and mortgage-refinancing, and help the economy by freeing up cash for consumers to spend on other goods and services. Mortgage rates are already very low, but some Fed officials believe they might be pushed lower. Moreover, Fed officials believe their past purchase programs helped to lift stock markets, by driving investors from low-risk investments toward riskier investments.

The Fed discussions occur amid broader efforts in the government to find ways to revive housing markets and stir refinancing.

“I believe we should move back up toward the top of the list of options the large-scale purchase of additional mortgage-backed securities,” Federal Reserve governor Dan Tarullo said in a speech Thursday at Columbia University.

A new Fed mortgage-bond-buying program isn’t a certainty. If inflation doesn’t recede as many officials expect, or if the economy picks up with surprising vigor on its own, such a program might not win broad support inside the Fed.

The most recent economic data have looked a touch stronger. In a report Thursday, for instance, the Labor Department said the number of people filing claims for unemployment insurance edged down last week.
…

We are starting to see a lot of “tribe on tribe” violence take hold in Libya

Soon to be ruled by another dictator. This time a hard line islamic radical.

Another Iran starting to emerge…?

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Interim ruler unveils more radical plans for Islamic law
The Telgraph | 23 Oct 11 | Richard Spencer

Libya’s interim leader outlined more radical plans to introduce Islamic law than expected as he declared the official liberation of the country.

Mustafa Abdul-Jalil, the chairman of the National Transitional Council and de fact president, had already declared that Libyan laws in future would have Sharia, the Islamic code, as its “basic source”.

But that formulation can be interpreted in many ways - it was also the basis of Egypt’s largely secular constitution under President Hosni Mubarak, and remains so after his fall. Mr Abdul-Jalil went further, specifically lifting immediately, by decree, one law from Col. Gaddafi’s era that he said was in conflict with Sharia - that banning polygamy. In a blow to those who hoped to see Libya’s economy integrate further into the western world, he announced that in future bank regulations would ban the charging of interest, in line with Sharia. ”

Interest creates disease and hatred among people,” he said. Gulf states like the United Arab Emirates, and other Muslim countries, have pioneered the development of Sharia-compliant banks which charge fees rather than interest for loans but they normally run alongside western-style banks.

It is going to get alot harder for FB who walk away…

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Credit scores poised to get more personal
Waterbury Republican-American | October 23, 2011 | Mary Ellen Podmolik

Many consumers applying for a mortgage will start sharing more personal information with lenders next year, like it or not.

FICO scores, the industry standard for determining credit risk in mortgages backed by Fannie Mae, Freddie Mac and the Federal Housing Administration, largely have been based on a person’s credit history. But in an attempt to develop a more well-rounded picture of a person’s finances, tools are being developed to help the lending industry dig deeper.

Fair Isaac Corp., or FICO, the company behind the widely used scoring formula, and data provider CoreLogic recently announced a collaboration that will result in a separate score that will be available to mortgage lenders. It will incorporate information that will include payday loans, evictions and child support payments. In the future, information on the status of utility, rent and cellphone payments may also be included.

Separately, in September the big three credit reporting agencies — Experian, Equifax and TransUnion — began providing estimates of consumer income as a credit report option. And earlier this year, Experian began including data on on-time rental payments in its reports.

Still, there is thought among researchers that consumer transparency, if it demonstrates both good and bad behavior, has its place.

“You’re trying to convince someone to loan you an awful lot of money at a low interest rate,” said Michael Turner, president of the Policy and Economic Research Council. “Only you know whether you’re going to pay it back. There is a harmony in this data exchange.”

Posted on Mon, Oct. 24, 2011
In struggling Nevada, losing faith with both parties
By Thomas Fitzgerald
Inquirer Politics Writer

NORTH LAS VEGAS, Nev. - The death of another family’s American dream shows in subtle ways: a front yard shaggier than the neighbors’; windblown leaves piled against a padlocked door; a foreclosure notice pasted to the garage.

“These people over here just walked away,” said Dave Johnson, gesturing toward the empty stucco-and-tile home next to his on Diazo Street.

Johnson and his wife bought their place for $249,000 41/2 years ago, when he had steady work as a truck driver. Now he has an agreement to sell the house - for $65,000.

“We’re going to go to Colorado and get a little place out in the country, nothing big, maybe five acres,” said Johnson, 38, who is also a tattoo artist and wants to open his own shop.

His struggles are common in the Rancho Buena Vista development and throughout this suburb that pushes up against the desert, where as many as 80 percent of homeowners have slipped “underwater,” owing more on their mortgages than their houses are worth.

Beyond lives upended, the bursting of Nevada’s real estate bubble has created political turbulence that will help shape the 2012 presidential race. A battleground in recent elections, the state has the highest number of home foreclosures in the nation and also the highest unemployment rate, at 13.4 percent.

President Obama is scheduled to visit Las Vegas on Monday to promote his jobs bill. But he may have already lost Johnson’s vote.

“I don’t know if I’m even voting again,” said Johnson, a registered Democrat who voted for Obama last time. “I put my voice out there, but it didn’t do any good.”

As for the Republican presidential candidates who debated Tuesday down on the Las Vegas Strip at the Venetian resort, with its indoor network of canals plied by gondoliers meandering past high-end boutiques, Johnson considers them “irrelevant.”

Obama carried Nevada, New Mexico, and Colorado in 2008, a pivotal cluster of 19 electoral votes nearly equal in weight to Ohio or Pennsylvania.
…

More local public unions raping the taxpayers - seems to happen everywhere…

http://www.phillyburbs.com - October 25th, 2011

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Municipal budgets outpace inflation

The cost of living has gone up 24 percent in a decade, yet municipal taxes have doubled, tripled and, in some cases, quadrupled in many boroughs and towns.

In Bristol Township, nearly a quarter of all health care expenses are dedicated to retired police, officials said. The town has more retired cops receiving health care coverage than active police, finance manager Gail Gordon said. Its health care budget was estimated at $4.3 million.

The number of employees isn’t necessarily the reason some plans cost more.

Falls budgeted $2.9 million this year for health benefits to cover 91 active and retired employees. Middletown provides coverage for 98 retired and current workers for less than half that amount, officials said. The reason: The people on Middletown’s Blue Cross Blue Shield plan agreed to a policy with higher deductibles, which the township reimburses. The change was forecast to save Middletown $866,227 per year.

But that savings will be needed to pay for the rising cost of its pensions, another major expense for area towns.

Middletown’s annual pension contributions rose $707,977 — from $409,132 to $1.18 million — in 2011.

Bristol Township’s rose to $2.4 million from $1.8 million the year before.

Nearly every community forked over significantly more for pension plans this year than last.

Bristol Township has half the number of employees that Bensalem has, yet it will spend nearly $1 million more on pensions this year, according to official documents. Township officials said they’re obligated to make payments guaranteed in police contracts that were signed years earlier.

Middletown has 52 police officers with an average salary of $97,694, according to township officials.

$100+ bn less to the top 1%ers if the mortgage deduction is eliminated…sounds like America could save a bundle with no harm done!

October 6, 2011, 4:10 PM ET

Want To Save $215 Billion? Eliminate the Mortgage Deduction
By Alan Zibel

Senate lawmakers said Thursday they want to be cautious about scaling back or eliminating the popular home mortgage-interest deduction to avoid further upsetting the troubled housing market.

The U.S. tax code provides generous subsidies to housing, including deductions for home mortgage interest, property taxes and an exclusion from all or part of capital gains taxes on many sales. Many academics favor eliminating or at least scaling back many of these subsidies, particularly the mortgage-interest deduction.

They argue that these tax incentives are expensive, provide an unhealthy subsidy to the housing sector, unfairly benefit the wealthy and fed the housing boom of the last decade. The Congressional Budget Office estimates that gradually eliminating the mortgage-interest deduction would save about $215 billion by 2021.
…

Eschewing Obama’s budget savings, politicians support mortgage-interest deduction
October 07, 2011 08:30AM

From left: President Barack Obama and Utah Senator Orrin Hatch

Though critics have long panned sections of the U.S. tax codes that subsidize housing and mortgages as overly expensive and unfairly benefiting the wealthy, policy makers at a Senate Finance Committee hearing were wary of changing any law that could do more harm to the fragile housing sector, the Wall Street Journal reported.

The mortgage-interest deduction tax code deducts taxes from mortgage interest and property taxes and excludes home sellers from the capital gains tax on most sales. Some say it facilitated the housing bubble, and the Congressional Budget Office has estimated that gradually abolishing it would save about $215 billion by 2021. Other research has shown eliminating the code would have a minimal affect on the nation’s homeownership rate.

With the federal budget under the spotlight in recent months, President Barack Obama proposed limiting the mortgage tax deductions to families that earn more than $250,000 each year. He said it would raise $400 billion over 10 years.

Nevertheless, to the delight of housing lobbyists, many politicians are wary. “With respect to the tax code, there are a number of proposals that would alter the treatment of housing, but any changes should happen only with the utmost care and significant transition periods,” said Utah republican Senator Orrin Hatch in a written statement for a Senate Finance Committee hearing.

Guv touts economic plan to Realtors
Also dodges liquor laws issue and expresses support for interconnect
by Andrew Kirk, THE PARK RECORD
Posted: 10/21/2011 04:47:32 PM MDT

Gov. Gary Herbert assured Park City real estate agents Thursday that he knows what they’re going through and he’s trying to help.

A former broker, Herbert reminded a ballroom full of agents at Canyons how difficult it was to be in the industry during Utah’s recession in the 1980s.

“I have the scars to prove it,” he said.

But Utah’s economy is growing three times faster than the national average and that will return stability to the marketplace.

“I’ve never been more optimistic about our future,” he said.

Herbert spent the majority of his time explaining his philosophy of how personal property rights and limited government support a strong economy and personal freedom.

“I’m a better governor because I was a Realtor,” he said. “Private property rights are the basis for freedom.”

The experience showed him the damage tight government regulation can do and taught him the importance of supporting small businesses, he said.

“If we can get the economy right, everything else takes care of itself,” he added. “It’s the rising tide that lifts all boats.”

As a former president of the Utah Association of Realtors, Herbert said he recognizes the power of the collective voice. He encouraged real estate agents to get involved in politics and support efforts to grow the economy and protect property rights.

The country’s financial situation is hurting Utah’s economy and its real estate market, Herbert acknowledged. But Utah can do its part to help the nation by limiting regulation in the state and setting an example for the nation.
…

“…the average mortgage deduction for Arizona homeowners was about $14,000 last year. That’s only a few thousand dollars more than the standard tax deduction.”

The upshot: Without a much larger mortgage deduction than $14,000, such as would be enjoyed by someone using a mortgage to finance a $1m+ home purchase, the MID has little effect on taxes owed.

Realtors decry potential loss of mortgage deduction
by Catherine Reagor - Oct. 21, 2011 04:28 PM
The Arizona Republic

Eliminating the mortgage-interest deduction is a looming option for cutting the nation’s budget deficit. Realtors are taking to the road to fight against that and other issues they believe will hurt the already ailing housing market.

Thursday morning, the National Association of Realtors homeownership bus, painted red, white and blue, rolled into Phoenix and parked in front of the wine bar and restaurant Postino on Phoenix’s Central Avenue. Local and regional NAR leaders, as well as several agents, were there to protest the potential loss of the tax deduction as well as lower loan limits on government-backed mortgages.

“The mortgage deduction is a hot button for not only Realtors but homeowners,” said Holly Mabery, of the Keller Williams Heartland Group, at the event.

According to NAR data, the average mortgage deduction for Arizona homeowners was about $14,000 last year. That’s only a few thousand dollars more than the standard tax deduction. The deduction essentially drops the taxable income of homeowners because they can deduct the interest they pay on their mortgage in a year.
…

Oct. 22, 2011, 1:48 p.m. EDT

Fed to try talking first with QE3 in reserve
By Greg Robb, MarketWatch

WASHINGTON (MarketWatch) — The Federal Reserve will try to give greater guidance to markets about its low interest rate policy at its November meeting while keeping more quantitative easing in its back pocket for use if if the economy starts to weaken, analysts said Friday after a wave of central-bank speeches this week.

Better economic data since the last Federal Open Market Committee meeting in late September will keep the Fed from buying more assets, said Michael Moran, chief economist at Daiwa Capital Markets America Inc.

The next step is more explicit guidance about the factors that back the Fed’s assessment that short-term interest rates will stay low until mid-2013, Moran said.

The guidance is expected to be something, though not exactly, along the lines laid out by Charles Evans, the president of the Chicago Fed, who has advocated that the Fed should spell out that it will keep short-term rates at zero until either the unemployment rate goes below 7% or the outlook for inflation over the medium term goes above 3%.
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Twelve Questions on Obama’s Refi Plan
http://blogs.wsj.com/developments/2011/10/23/twelve-questions-on-obamas-refi-plan/?mod=WSJBlog

HBB Movie Time! Something to do this weekend.

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‘Margin Call’ takes different view of a firm’s failure
BY GARY THOMPSON
Philadelphia Daily News

“Margin Call” solves the problem by staying focused on a single day in the life of a Wall Street investment firm on the eve of the crisis - when the firm realized that its giant inventory of mortgage-backed securities is essentially worthless, and needs to be dumped before the rest of the world wakes up (figuratively, literally, as this occurs overnight).

A lowly risk analyst (Zachary Quinto) looks at the books and discovers the ticking time bomb, prompting a gathering of the firm’s big shots (Simon Baker, Kevin Spacey, Jeremy Irons, Demi Moore, Paul Bettany), who plot strategy.

“Margin Call” isn’t an inquiry into the specifics of the mortgage securities, derivatives, etc. It’s more interested in the nature of institutions, and it shows that companies, like people, have an instinct for survival. The firm’s CEO (Irons) decides that self-preservation is the goal, and all other moral issues are subordinate.

Scapegoats are fired, hardworking employees let go, and those who remain are handed bonuses for shoveling mounds of poop securities to unsuspecting clients.

Here is where “Margin Call” shows its pedigree - writer-director J.C. Chandor grew up in the home of a Merrill Lynch exec, and wants to show what the process looked like from the point of view of a Wall Streeter, those who held their noses and executed the firm’s odious, economically destructive actions.

And yet, if you really look at “Margin Call” you can see Chandor making important criticism in small and subtle ways - that genius brains better suited to curing cancer are being squandered on zero-sum (or outright destructive) trading schemes, that compensation has become divorced from economic gain/productivity, and that the interests of Wall Street and Main Street are often unaligned. And when they are, Wall Street will save its own hide, every time.

I watched “Too Big to Fail” this past weekend. Great acting…Paul Giamotti as Bernanke was terrific.

Probably the best and most revealing line in the movie was when Bernanke and Paulson are having breakfast and they are discussing the possibility of BofA buying Lehman. Bernanke says something like this

“So you want me to lower the leverage requirements for a bank so it can buy a bank that was over leveraged?”

Very subtle comment but very illustrative of the fact that all they did was “kick the can” down the road.

From the Editors of American Banker

BankThink: Fed Attempt to Sugarcoat Foreclosure’s Effects Now Laughable

A Federal Reserve report published in July found that people who moved out of their homes after a foreclosure are “not likely to live in considerably lower quality homes than they did before.” The paper made Joel Sucher, a documentary filmmaker and BankThink columnist, wince.

“Was the Fed trying to convince itself that foreclosure isn’t that bad?” Sucher asks. “Would they roll out the pie charts and PowerPoint presentations and try to convince the rest of the financial community, Congress and the like, that homeowners don’t have to fear deterioration of lifestyle, maybe just a bit of downsizing?”

Whatever the intent, he finds the report risible today in light of the Occupy Wall Street protests: “Every day, there’s more evidence that homeowners aren’t simply settling for a move-in with relatives, or a cheap rental in some other part of town.”

This came through my e-mail. I apologize for not being able to supply a link.

Interest Rates remain Low and Demand for Property still High!!

04/28/04

As Interest rates remain low with an expected increase in the coming months, Buyers continue to quickly absorb most of the available properties for sale. The Federal Reserve has indicated that rates will rise soon. With the rush to lock in the low rates, properties both Residential & Commercial continue to sell and rise in price. Builders have also been affected with recent increases in construction materials such as concrete and steel, therefore driving prices higher. Expected increases in property values through-out the South Florida market are between 10-15% for year end 2004.

Sellers are enjoying brisk increase in values and selling for full or above full price in some transactions. The Miami area markets have seen properties double in price over the past 2-3 years and even quicker in some markets. As property owners can actually see and appreciate thier investments, unlike a stock certificate, its very unlikely that we are in a Bubble as some might argue. More and more investors have turned to Real Estate as their most solid investment.

If you are looking to buy or sell Real Estate contact Marcelo. With over 13 years experience in the South Florida Market, He knows this market extremely well. Call or email him now.

Florida’s home resales’ median price rises in October

October existing-home sales show markets cooling, says NAR
ORLANDO, Fla. — Nov. 28, 2005 — Home sales statistics from the Florida Association of Realtors® (FAR) show that home prices continued to rise but the number of sales fell in October, notably in southern areas directly impacted by Hurricane Wilma’s march across the state. Most insurers stopped issuing new policies when the hurricane neared Florida, and, following the storm, some lenders required a re-inspection of properties before they would release mortgage money.

Despite storm problems, however, the state’s median home price rose 28 percent in October to $241,000 from $188,800 in October 2004. In September 2005, the median price was $247,800. In October 2000, FAR records show the statewide median sales price was $116,100, resulting in an increase of 107 percent over the five-year-period.

Many Realtors across the state report gains in housing supply, giving buyers a larger selection of homes to consider. Statewide, a total of 16,029 existing single-family homes sold last month compared to 16,844 homes a year ago for a decrease of 5 percent, according to FAR.

The national median existing-home price in September was $212,000, up 13.4 percent from the previous September’s median price of $187,000, according to the National Association of Realtors® (NAR). In California, the statewide median resales price was $543,980 in September; in New York, the median price was $275,000; and in North Carolina, the average resales price was $208,097.

Interest rates for a 30-year fixed-rate mortgage averaged 6.07 percent in October, a slight increase from the average 5.72 percent in October 2004. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state’s larger markets, the Daytona Beach metropolitan statistical area (MSA) reported that 1,037 homes sold in October for an 18 percent gain over October 2004 home sales of 881. The median home price in Daytona Beach rose 35 percent over the same time period, from $165,000 in October 2004 to $223,300 in October 2005.

Shawn M. Goepfert, president of the Daytona Beach Area Association of Realtors and owner of Ideal Realty of Volusia, says that demand for Daytona-area homes is now catching up with supply. “We started 2005 off with only about 1,000 residential listings, really robust sales and it taking only about two or three weeks to get a contract,” Goepfert says. “That demand really pushed up our sales price, but in the last 30 days, our inventory has increased to about 3,000 residential listings.”

Other larger MSAs with strong sales and price increases include Jacksonville, with 1,504 home sales in October for a 38 percent gain over October 2004 sales numbers; and Tampa-St. Petersburg-Clearwater, with 3,735 homes sold for an increase of 4 percent over the same time period. Prices also rose in both markets over the year. In Jacksonville, the median price rose 20 percent to $191,600; in Tampa-St. Petersburg-Clearwater the median price rose 35 percent to $225,700.

Among the state’s smaller MSAs, Lakeland-Winter Haven posted a 24 percent gain in home sales in October, with 513 homes changing hands compared to 414 homes a year ago. The market’s median sales price rose 50 percent in October to $173,500; last year, it was $115,500.

“I think people have discovered our little secret,” says Peggy Daley, treasurer of the Lakeland Association of Realtors and a Realtor with ImperiaLakes Realty Services in Lakeland. “We’ve got the best of everything. People are moving here in droves from South Florida, plus people from the North keep coming down and quickly realize that we’re centrally located with easy access to Tampa or Orlando — but without the traffic.”

Other smaller MSAs that posted gains in the number of homes sold in October include Ocala, where 482 homes sold for a 15 percent jump; and Tallahassee, where 393 homes sold for an 18 percent increase. The median sales price in those markets also rose. In Ocala, it rose 38 percent to $159,200; and in Tallahassee, 19 percent to $172,700.

© 2005 FLORIDA ASSOCIATION OF REALTORS®

Florida Remains The STRONGEST Market in the USA!!!!

05/23/05

A recent survey from the National Association of Realtors (NAR) shows the 1st Quarter of 2005 showed STRONG gains year over year for Property Values in the Country. FLORIDA Cities took 8 of the Top 10 spots. The NAR’s quarterly report covers 136 metro areas. A record 66 of these have experienced double-digit jumps in home prices over the past year.The previous record was 62 in the last quarter of 2004. Only six areas showed a fall in prices and those declines were fairly modest.

Here are some of the Most Impressive Results.

http://www.marcelomerlo.com/PressRelease - 52k

TOP STORY
New fed program lets more
Floridians refinance homes
Revamped plan eliminates equity restrictions.

More Floridians can refinance under revamped federal program that kills equity cap

by Kim Miller
Updated 10:35 a.m.

More Floridians with underwater home loans should be able to refinance into a lower interst rate through a revamped program announced today that eliminates equity restrictions.

Rules of the previous program, called the Home Affordable Refinance Program, said homeowners couldn’t owe more than 25 percent on their loan than their home is worth.

That left out many borrowers who bought during the boom years and have since seen their property values plummet.

The new program also eliminates the need for a property appraisal in some circumstances.
To participate in the new program, homeowners must be current on their mortgage payments.

“Building on the industry’s experience with HARP over the last two years, we have indentifed several changes that will make the program accessible to more borrowers with mortages owned or guaranteed by (Fannie Mae and Freddie Mac),” said Federal Housing Finance Agency Acting Director Edward DeMarco. “Our goal in pursuing these changes is to create refinancing opportunities for these borrowers, while reducing risk for Fannie Make and Freddie Mac and bringing a measure of stability to housing markets.”

Today’s announcement also extends the end of the program through Dec. 31, 2013. The plan is only for loans sold to Fannie Mae and Freddie Mac on or before May 31, 2009.

Federal regulators will hold a press conference later this morning with more details on the revamp.

Mortgage lenders and servicers will be issued guidance on how to implement the program by Nov. 15. Industry participation in HARP is not mandator.

http://www.palmbeachpost.com/ - 93k -

Missing from Professor Sanders’ discussion: Who gets to pay for the New Mortgage Deal refinancings?

Opposing view: Let the mortgage market heal itself
By Anthony Sanders
Updated 15h 40m ago

According to the Federal Reserve, homeowner equity has fallen $7.25 trillion from the peak of the housing bubble. Millions of borrowers owe more on their house than it is worth, posing a clear and present danger to the economic recovery.

But what can we do to solve the negative equity problem? One idea comes from Sens. Barbara Boxer, D-Calif., and Johnny Isakson, R-Ga., who want Fannie Mae, Freddie Mac and the Federal Housing Administration to refinance all mortgages they hold or insure at current mortgage rates of about 4%. There would be no limits based on the current value of the house and no credit checks — the borrower need only be current for four months on a mortgage.

Would refinancing underwater borrowers to 4% solve the negative equity problem? In a word, no.

The purpose of such legislation would be to stimulate the economy by unleashing billions of dollars into the economy from mortgage refinancing. The Congressional Budget Office estimates that 2.9 million mortgages would be refinanced, and there would be 111,000 fewer defaults.

That might sound like a lot. But 2.9 million mortgages refinanced at 4% would only generate about $7.4 billion for the economy in the first year. That would add just one-tenth of 1% to personal consumption (and that’s if that money is spent and not saved).

A little bit more might come from the roughly 20% of mortgages held directly by lending institutions and not owned or insured by Fannie and Freddie. State attorneys general are leaning toward the Boxer-Isakson model in settlement talks with mortgage lenders and servicers.

The bottom line is that solving the negative equity problem is very difficult. Mortgage rate reductions won’t do much to prevent defaults or stimulate the economy. Only a massive write-down of mortgage principal could do that. While that sounds easy, bear in mind the size of the losses. Banks and the federal government do not have $7.25 trillion lying around to perform write-downs even if they wanted to.

The solution, unfortunately, is to let the housing and mortgage market heal itself. Economic growth and a reduction in unemployment will go a long way towards curing the negative equity problem. So be patient.

Anthony Sanders is a professor of real estate finance at George Mason University.

Home mortgage refinancing: Obama’s push to help “underwater” homeowners
By Lynn Sweet on October 24, 2011 8:41 AM

WASHINGTON–President Obama will announce new steps to make it easier to refinance for homeowners with high rate mortgages and homes worth less today than they were when purchased. Obama will make the announcement, aimed at “underwater” owners in Las Vegas, one of the cities hit the hardest in the foreclosure crisis. A deadlocked Congress will not need to approve any of the new rules announced Monday by the Federal Housing Finance Authority. The Obama move comes as interest rates are at record lows–but banks are reluctant to loan. The rules are intended to prod banks to re-fi.

from the FHFA:

In general, borrowers must meet the following criteria:

 The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.

 The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.

 The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.

 The current loan-to-value (LTV) ratio must be greater than 80%.

 The borrower must be current on the mortgage at the time of the refinance, with no late payment in the past six months and no more than one late payment in the past 12 months.

…

Whether or not you agree with these new measures, it looks as though Obama has the upper hand in the housing arena over his Republican rivals.

Obama’s Executive-Power Use On Housing Shows He Still Holds Some Cards
11:36 am
October 24, 2011
by Frank James

An advantage of being an Oval Office incumbent seeking re-election was readily evident Monday in President Obama’s roll-out of his administration’s latest effort to help struggling homeowners.

With many Americans either facing foreclosure and others, because of declining property values or much tighter lending standards, unable to refinance their mortgages to take advantage of lower interest rates, the Obama administration is doing extensive renovations of its current housing policies.

For example, some homeowners whose mortgages, backed by the government-sponsored entities Fannie Mae and Freddie Mac, are now significantly higher than their home’s market value will have the chance to refinance, something that’s been mostly impossible until now.

The president’s executive power allows him to actually put into effect real changes as opposed to merely proposing them which is pretty much all the Republican presidential candidates can do for now.

Of course, as Chris Arnold reported on Morning Edition, the GOP candidates haven’t offered much if anything in terms of specific housing proposals. Mitt Romney, for instance, essentially said at last week’s presidential debate in Las Vegas that the marketplace should be allowed to sort out the matter.

Many have noted the irony of the Republican presidential candidates in Las Vegas not taking the opportunity to spell out any real policies to address the nation’s housing crisis. Nevada has the nation’s highest foreclosure rate.

So the steps the White House announced Monday will allow Obama to campaign against his Republican rivals by contrasting his specific policy changes against the GOP’s field lack of any policies other than to stand by and watch.
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This was a waste of taxpayers money during a depression…..according to our prez who spent his load in libya to install sharia law….Brings back memories of Spook who said that was their ultimate goal.

http://newyork.cbslocal.com/2011/10/24/george-washington-bridge-turns-80/

The McRib is back:

http://www.usatoday.com/money/industries/food/story/2011-10-24/mcdonalds-mcrib-sandwich/50888872/1?loc=interstitialskip

MarketWatch dot com
Political Watch
High hurdle seen for increasing conforming loan limits in House
October 21, 2011, 1:38 PM

Higher limits on the size of government-backed home loans are facing a high barrier in the House of Representatives after winning approval in the Senate late Thursday.

Senators voted 60-38 late Thursday night to restore the size of loans that the government buys or insures to a maximum of $729,750. The limits dropped to $625,500 on Oct. 1. Senate lawmakers tacked the higher limits onto a federal spending bill that the chamber will vote on later this year.

Supporters say raising the limit will help boost the sagging real-estate market. But critics including Sen. Richard Shelby, an Alabama Republican, say higher-end homebuyers don’t need the help.

House Republicans are likely to stymie the Senate’s move and keep the limit where it is, according to one analyst.

“As House Republican leaders want to shrink the government’s role in housing finance, it is hard to see why they would advance legislation to make more of the mortgage market subject to government support,” MF Global Inc. financial services policy analyst Jaret Seiberg said in an email. “This is why we don’t expect the higher conforming loan limits to get through the House.”

The Senate’s move would raise the limit of loans that can be guaranteed by Fannie Mae, Freddie Mac and the Federal Housing Administration.

– Robert Schroeder

Real Estate Weekly Archives
Oct. 21, 2011, 2:00 p.m. EDT
Where home values will rise in year ahead: report
By MarketWatch

Housing markets in the Great Plains, including those in North and South Dakota, Texas, Wyoming, Nebraska, Louisiana and Iowa, are showing the most signs of strength these days, according to a recent report from Veros, a risk management and valuation services firm.

Bismarck, N.D., is expected to be the strongest market in the country in the year ahead, with housing values appreciating at a 5.6% clip, according to the company. Other markets projected to be among the strongest in the year ahead include Honolulu; Fargo, N.D.; Harrisburg/Carlisle, Penn.; and Pittsburgh. Washington, D.C., and Boston remain strong city markets.

But while not many markets are fully rebounding, at least a good number of them likely won’t see values fall at quite as rapid a pace as in recent years, according to the report.

“Overall, the recovery in the housing market is limited to just a few markets and is taking a long time to occur. The encouraging news is that many markets are no longer expected to be rapidly declining,” said Eric Fox, vice president of statistical and economic modeling for Veros.

The weakest U.S. markets are in Nevada, inland areas of California, Washington and Oregon, according to the report. The weakest market in the year ahead: Bakersfield, Calif., where foreclosures have been a huge problem.
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Oh my gosh, Oxide — what is that THING on the kitchen counter in the photos for the second house you are advertising today? I hope a child’s toy, and not an example of the local wildlife.

Baldwin on Occupy Wall Street, the Fed, the SEC
October 24, 2011, 1:41 PM

NEW YORK – Alec Baldwin, a known quantity in liberal circles, lent his star power to the Occupy Wall Street protest where he found himself defending the current banking system.

On a video posted on YouTube, Baldwin said the current Federal Reserve needs to do its job and that he doesn’t think it should be dismantled.

“I don’t know enough about what ending the Fed would ultimately mean for capital markets in this country because you have to have capital markets in this country,” he said. “You can’t not have strong capital markets in this country, or the country’s going to go down the tubes … I think most people want change in this country, but they don’t want the country to go down the tubes.”

As he waded through a crowd of protesters, the star of NBC’s “30 Rock” as well as numerous films criticized the Securities and Exchange Commission for not doing enough to root out corruption on Wall Street.

“One of the institutions that is problematic for us is the SEC,” Baldwin said. “They don’t do anything. They’re totally in the pockets of the banks. You want the banks to do what banks do. But when the banks (act) like they’re a hockey player that’s starts throwing their elbow in your eye socket, you want the SEC to throw the flag. The SEC never throws the flag.”

See Baldwin’s video here.

On separate video clip, Baldwin told a local news station he came down to see for himself what the protesters want and why they’re here, because he wasn’t satisfied with media coverage. That video clip is here.

– Steve Gelsi

So we found a more permanent rental here is SLO County. Signing he lease agreement Wednesday. Moving out of Grover Beach and into the village part of Arroyo Grande. Goodbye ocean view and WT neighbors, hello walkable streets, a warmer day-time temperatures and cheaper rent. It’s an old house that’s been added to: 4br/2ba with one of the bedrooms as a home office for me. Tons of over-priced homes for sale. We’ll wait it out, thanks, and if we like the area, we’ll pick one up much cheaper in three years.

But the best thing about the place is the enormous South-facing lawn. Now that we understand the cabbage worm and spittle bug life cycles from our recent arugula, lettuce and parsley crops, we’ll just have to figure out aphids, moles, gophers, locusts, etc. The high fence will at least keep the deer out. And the one that I just got won’t be bothering anyone anymore, “You won’t see him no more”. Now if I could just find a boar hunt. Damn, it feels good to be a renta.

MrBubble

The age-old debate between laissez-faire and interventionist approaches is alive and well during the unraveling phase of the housing bubble. Most suggestions by MSM-favored experts seem to support hair-of-the-dog housing bubble reflation, which I find quite puzzling; haven’t economists discovered irreversible processes by now?

The US needs to act on housing
October 14, 2011 1:22 pm
by Gavyn Davies

No-one can deny that the weakness of the housing market remains at the heart of the economic crisis in the US. In fact, it is the American equivalent of the sovereign debt crisis in the eurozone. The overhang of housing debt is forcing US households to run large financial surpluses in order to pay down their liabilities, just as the the overhang of sovereign debt in the eurozone is forcing governments to improve their financial balances. And that is resulting in weak economic activity on both sides of the Atlantic. The question of what should be done about it is now coming to the centre of the economic debate in the US. Diagnosing the problem is relatively straightforward. Solving it is not.

The story of the American housing bubble, told in the graph below, is by now a very familiar one. During the boom years up to 2006, the build up in mortgage debt was more than matched by the rise in house prices, so net worth in housing rose dramatically, by more than $8 trillion in less than a decade. (This is equal to 60 per cent of US GDP in 2006.) However, when house prices started to fall, this process was even more rapidly reversed. Net worth in housing has plummeted by $7.3 trillion in the last five years. This has left 22 per cent of US households holding outstanding mortgage debt which exceeds the value of their homes.

There is no end in sight to this problem. House prices appeared to stabilise in 2010, but now seem to be falling again, as the rising number of repossessions increases the overhang of unsold homes on the market. Although households are trying to pay down mortgage debt, this process is inevitably very slow, relative to the potential speed at which house prices could fall. Fears are mounting that the housing market is beginning to spiral downwards again.
…

Hair Bite of the dog cure for eurozone debt crisis?

FT dot com
October 24, 2011 7:15 pm
Hard line adopted on Greek debt loss
By Peter Spiegel in Brussels, Gerrit Wiesmann in Berlin and Hugh Carnegy in Paris
Greece debt crisis

European negotiators have asked Greek debt holders to accept a 60 per cent cut in the face value of their bonds, a hardline stance that far exceeds losses agreed in a deal between private investors and eurozone authorities three months ago.

The stance, delivered to a consortium of international banks at the weekend by Vittorio Grilli, Italian treasury chief and lead eurozone negotiator, is a victory for German-led northern creditor countries who have been pushing for Greek bondholders to accept far more of the burden for a second bail-out.
…

FT dot com
Last updated: October 24, 2011 5:21 pm
Obama to unveil help for homeowners
By Shahien Nasiripour in New York

US mortgage giants Fannie Mae and Freddie Mac will ease the refinancing process for distressed US homeowners, reducing fees and allowing borrowers who owe significantly more on their mortgages than the actual value of their homes to acquire new government-backed loans.

Their regulator, the Federal Housing Finance Agency, will change various parts of the nearly three-year-old Home Affordable Refinance Program, an initiative targeted at homeowners with negative equity in US-backed mortgages originally hailed as helping 4m to 5m borrowers refinance into cheaper loans. President Barack Obama is set to announce the plan in a speech later on Monday in Las Vegas, Nevada, one of the states hit hardest by foreclosures.

Until August, just 894,000 homeowners had taken advantage of the programme.

Perhaps double that number will eventually benefit from the program over the next two years, the FHFA said in a statement on Monday. The agency declined to specify whether that increase would come from the announced changes, which is expected to effect a much larger segment of borrowers, or whether that increase naturally would have occurred given present record-low rates. The White House, burnt by rosy housing market forecasts in the past, similarly declined to forecast the number of beneficiaries.

The fresh proposal comes as the Obama administration and the Federal Reserve struggle to jump-start a moribund housing market that continues to weigh down the economy and dampen consumer sentiment. More than two years after the US recession officially ended, home prices continue to fall, and are forecast to keep falling till the end of next year.
…

If you can’t hack it in Hell’s Kitchen, you might be able to build railway bridges in China even if you shouldn’t. From today’s Asia Times:

“China’s disaster-hit and scandal-ridden railways have succumbed to yet another shattering blow as it emerged that critical engineering work on a new line north of Beijing had been illegally outsource to a restaurant chef.”

The cook, who was part of a team of sub-contracted work to build two bridges and a tunnel as part of a $370 million project in Jilin province, freely admitted that he had no experience outside the kitchen. Those qualifications nevertheless put him in charge of bridge-builders who, unfortunately, knew just as little about construction.”

“Labourers toiling under the the chef’s woefully inexperienced oversight told local media in Jilin province that their suspicions were raised when they were asked to use boulders to fill concrete bridge supports that were themselves built with an obvious excess of san in the mix.”

“Outsourcing of construction projects by the original contractor is illegal by routine in China and embezzlement is known to be rife at each successive layer of sub-contraction. As money is creamed-off, it is “saved” through use of cheaper materials and cheaper workers - in reality, men with virtually no experience in construction.”

Lots of comments have been made about the shoddy construction during the U.S. housing bubble. That looks like small stuff compared to what may have been happening in China. I wonder if any of the largely vacant high rises in China were put up with such lax oversight.

A couple more paragraphs from the story:

“Last week, surveys suggested that some 70 percent of railway projects under construction in China have been either completely or partially suspended. As credit-tightening has hit local government debt has soared into the stratosphere, showed other surveys, workers have not been paid - in some cases not for six months.”

“Those findings are readily confirmed in cities like Hangzhou, where colossal rail projects lie half-finished and seemingly abandoned by workers who, just a few months ago, were swarming over the cities in their thousands.”

Looks like classic boom, bust except maybe even lower on the quality end.

http://market-ticker.org/akcs-www?post=196444

The bottom line on all the frauds. Wake up, Sheeple.

Topic
Great Recession
Monday, Oct 24, 2011 10:47 AM Pacific Daylight Time
Can Obama fix Geithner’s housing bust?
A new plan to help homeowners holds some promise, but comes after three years of abject failure
By Andrew Leonard

Moments before a conference call in which White House officials were set to explain their new plan to resuscitate the nation’s morbid housing sector, Dan Pfeiffer, President Obama’s communications director, got on the line and debuted the latest administration jingle: “We can’t wait.”

The gist: Since congressional Republicans are blocking any action on the economy, Obama has been forced to take matters into his own hands and do what he can via executive action. Case in point: the administration’s plan, announced Monday, to make it considerably easier for homeowners to take advantage of current phenomenally low interest rates and refinance their mortgages.

“Where Congress won’t act, this president will,” said Pfeiffer. “Every week going forward, you can expect the president to be making executive actions.”

So what took him so long? Shaun Donovan, secretary of the Department of Housing and Urban Development, and Gene Sperling, director of President Obama’s National Economic Council, then proceeded to make a yeoman effort to outline the various rules tweaks that they hope will unclog the refinancing pipeline, and, ideally, give the overall economy a boost. But the task couldn’t have been easy. Because on that very same morning, everybody who pays close attention to the housing sector was already buzzing over a blockbuster article by the Washington Post’s Zach Goldfarb detailing just how disastrous the Obama administration’s attempts to fix the housing sector have been.

Nobody comes out of Goldfarb’s story looking good, but Timothy Geithner looks especially bad. The responsibility for the failure to move aggressively to help struggling homeowners — whether those who were simply “underwater” on their mortgages (meaning that their houses are worth less than the their outstanding mortgage balance) or those who were actively facing foreclosure — gets blamed fairly definitively on the treasury secretary. Geithner was consistently more worried about the health of the financial sector than he was about the housing sector and actively discouraged Obama from diverting resources toward helping homeowners.

The administration ended up spending only a fraction of the $50 billion it had allocated for homeowner assistance, and to date, reports Goldfarb, “administration programs have permanently reduced the debt of just one tenth of 1 percent of underwater borrowers.”
…

Obama’s efforts to aid homeowners, boost housing market fall far short of goals
By Zachary A. Goldfarb, Published: October 23

It was a critical plan to jump-start the economy.

President Obama pledged at the beginning of his term to boost the nation’s crippled housing market and help as many as 9 million homeowners avoid losing their homes to foreclosure.

Nearly three years later, it hasn’t worked out. Obama has spent just $2.4 billion of the $50 billion he promised. The initiatives he announced have helped 1.7 million people. Housing prices remain near a crisis low. Millions of people are deeply indebted, owing more than their properties are worth, and many have lost their homes to foreclosure or are likely to do so. Economists increasingly say that, as a result, Americans are too scared to spend money, depriving the economy of its traditional engine of growth.

The Obama effort fell short in part because the president and his senior advisers, after a series of internal debates, decided against more dramatic actions to help homeowners, worried that they would pose risks for taxpayers and the economy, according to numerous current and former officials. They consistently unveiled programs that underperformed, did little to reduce mortgage debts owed by ordinary Americans and rejected a get-tough approach with banks.

Doing more to address the housing crisis may be crucial not only for an economy flirting with another recession but also for a president running for reelection.

After watching their homes’ values collapse in recent years, a quarter of all homeowners are “underwater,” owing more than their homes are worth. The president’s housing policy has caused a rift with political allies, such as black and Hispanic groups, whose members have been disproportionately hurt by the crisis.
…

Obama pledges new efforts to ease US home repossession crisis
Package of reforms will make it easier for struggling borrowers to refinance mortgages
By Stephen Foley, Associate Business Editor
Tuesday, 25 October 2011

Barack Obama launched a new effort last night to revive the moribund US housing market, in the hope of putting the world’s largest economy on a path to recovery and shoring up his shaky re-election bid.

Travelling to the state of Nevada, which has the highest rate of foreclosures in the US, the President promised a string of executive orders and administration actions to boost the US economy under the mantra of “We can’t wait” for a divided Congress to act. In the first wave of measures, the administration will make it possible for more borrowers to refinance their mortgages, even if price falls mean they have no equity left in their homes. Tackling the US foreclosure crisis is vital to improving the sinking fortunes of the country’s economy, analysts say, and critics of the administration have argued that trying to engineer a robust recovery without stabilising the housing market is like trying to build on quicksand.
…

Obama and the politics of the housing foreclosure crisis
Posted by Aaron Blake at 04:00 PM ET, 10/24/2011

President Obama is in Nevada today touting the federal government’s new program to ward off the foreclosure crisis. And there’s a lot at stake — mostly because of the states that have been hit the hardest by the crisis.

Data earlier this year from CoreLogic.com showed that nearly two-in-three Nevada homeowners owed more on their property than their homes were worth — a situation also known as being “underwater.” Nevada was followed by Arizona (51 percent), Florida (47 percent) and Michigan (36 percent) in terms of underwarter loans.

In other words, the four states with the highest percentages of underwater homeowners are all large states with major electoral vote treasure troves where both parties are likely to spend money in the presidential general election.

These are the voters, er, people that Obama’s new executive order, which will allow homeowners struggling to refinance their mortages at very low rates, is targeting.

If the program succeeds, Obama could reap some significant rewards in states that are central to his 2012 chances. There are 89 electoral votes to be had in Arizona, Michigan, Ohio, Nevada, Florida and Colorado alone — roughly one-third of the 270 electoral votes a candidate needs to win. (Obama won every one of those states, save Arizona, in 2008.)
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It’s not a bailout if it’s in your own state or Congressional district.

Why Politicians Don’t Want to Touch the Housing Crisis
By Molly Ball
Oct 24 2011, 6:49 PM ET 25

Republicans complain Obama’s new measures are a political ploy. But when it comes to housing, there may be no safe political ground.

Barack Obama would have you believe that Mitt Romney is a heartless zillionaire who doesn’t think the government should do anything about Americans losing their homes to foreclosure. Romney would have you believe that the foreclosure problem is yet more evidence of Obama’s failure to heal the economy.

Meanwhile, when the GOP candidates were asked about housing in last week’s debate, they all basically dodged the question. And Obama’s plan, announced Monday in Las Vegas, is being criticized as too little, too late, by some Democrats.

The housing issue, it seems, is a political hot potato — one every candidate can’t wait to toss to the next guy before it burns him up.

It’s one of those issues that confounds partisan equations and eludes easy messaging, because voters basically want to hear politicians say two contradictory things. They want the government to act to stem the tide of foreclosures. But they don’t want their money going to help those they see as irresponsible.

It was housing policy, after all, that spurred CNBC’s Rick Santelli to declaim the rant that’s credited with catalyzing the tea party movement in 2009. “How many of you people want to pay for your neighbors’ mortgage that has an extra bathroom and can’t pay their bills?” he railed.

But that sentiment coexists with the notion that something has to be done — that’s why Democrats pounced so gleefully on Romney’s statement last week that the government should “let [the foreclosure process] run its course and hit the bottom.” On Monday, White House Press Secretary Jay Carney took a shot at Romney’s statement, saying, “That’s not a solution.”

All of this has unfolded against the backdrop of Las Vegas, the nation’s foreclosure capital, where half-built subdivisions decorate the sprawling edges of the metropolitan area. The state’s governor, Brian Sandoval, and junior senator, Dean Heller, both Republicans, have both said they disagree with Romney’s hands-off position.
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Shilling Calls New Obama Housing Plan `Another Bailout’

Oct. 24 (Bloomberg) — Gary Shilling, president of A. Gary Shilling & Co., Doug Dachille, chief executive officer of First Principles Capital Management LLC, and Bloomberg Government analyst Nela Richardson discuss President Barack Obama’s new proposal to loosen home refinance requirements and its impact on the housing market. They speak with Pimm Fox on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg) (Bloomberg)

Obama’s Housing Plan May Help Him More Than Homeowners
Officials revamp the rules to allow underwater homeowners to refinance more easily
By Danielle Kurtzleben
October 24, 2011

President Barack Obama’s latest effort to tackle the housing crisis—unveiled Monday in Las Vegas—is as much about politics as it is economics. Frustrated by Congress in his attempts to boost the economy with new legislation, Obama instead is using his executive authority to tweak rules governing home refinancings. Under the new plan, the Federal Housing Finance Agency, the overseer of mortgage giants Fannie Mae and Freddie Mac, announced that the Home Affordable Refinance Program would undergo a series of changes aimed at encouraging more borrowers to refinance their mortgages. The new rules open the gates for more homeowners to refinance by removing the 125-percent loan-to-value ceiling for refinancing, meaning that some new borrowers whose loans exceed the value of their homes may now take advantage of historically low mortgage rates. But given the strict requirements that homeowners will still have to meet, the program’s effectiveness might still be limited.
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What I said…

Refi plan: If homeowners win, someone else loses
Kathleen Pender
Monday, October 24, 2011

The government’s new plan to let more underwater homeowners refinance their mortgage is a good deal for homeowners who qualify, but for every dollar they save in monthly payments, someone will lose.

That someone is whoever owns the mortgage being refinanced. Mortgage owners include Fannie Mae and Freddie Mac, the taxpayer-owned entities that own and guarantee home loans; the Federal Reserve, banks, insurance companies, pension funds, endowments and other investors worldwide.

From a cash-flow standpoint, “it’s a zero sum game,” says banking analyst Bert Ely.

Suppose a bank holds a mortgage paying 6 percent interest. If mortgage rates drop to 4 percent and the homeowner refinances, the bank will get back the outstanding balance, but will have to reinvest that money, almost certainly at a lower rate.

From the investor’s standpoint, it’s kind of like buying a five-year certificate of deposit yielding 5 percent. If three years later interest rates have dropped to 1 percent, you will be awfully glad you have that CD at 5 percent. If the bank could force you to redeem the CD early, you’d be hopping mad because you would have to reinvest at 1 percent.

Unlike CDs, most mortgages can be prepayed at any time. This is a big risk for mortgage investors.
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As I predicted…

FT dot com
October 24, 2011 11:18 pm
US mortgage bonds at six-month low

By Robin Harding in Washington and Michael Mackenzie and Shahien Nasiripour in New York

Prices for billions of dollars in mortgage bonds fell to their lowest levels in six months on Monday as traders bet that new measures to help distressed homeowners would lead to a wave of early repayments.

The price declines hit mortgage-backed securities sold with coupons – the return paid to investors – that are higher than current interest rates. Such bonds gained value earlier this year as investors sought higher-yielding assets, pushing their prices well above 100 cents on the dollar.

Following the announcement of Federal Housing Finance Agency measures designed to help borrowers refinance mortgages, the price of Fannie Mae-guaranteed MBS sold with a 6 per cent coupon fell by by more than half a point, pushing their yield up from 2.29 to 2.53 per cent. It was their worst one-day performance this year.

The price falls highlight the mixed effects of the FHFA action, because for every homeowner who refinances and enjoys a lower rate, there is an investor who loses out on higher income as mortgages – and the bonds they back – are repaid early.
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In case you were wondering where academic support for all the brilliant hair-of-the-dog U.S. housing market remedies originates, look no further:

FT dot com
October 23, 2011 10:32 pm
Why the housing burden stalls America’s economic recovery
By Lawrence Summers

The central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending. Most policy failures in the US stem from a failure to appreciate this truism and therefore to take steps that would have been productive pre-crisis but are counterproductive now with the economy severely constrained by lack of confidence and demand.

Thus even as the gap between the economy’s production and its capacity increases, fiscal policy turns contractionary, financial regulation focuses on discouraging risk-taking and monetary policy is constrained by concerns about excess liquidity. Most significantly US housing policies especially with regard to Fannie Mae and Freddie Mac, institutions whose purpose is to mitigate cyclicality, have become a case of disastrous procyclical policy.

Construction of new single family homes has plummeted from about 1.7m in the middle of the last decade to about 450,000 at present. With housing starts averaging well over a million during the 1990s, the shortfall in housing construction now dwarfs the excess during the bubble and is the largest single component of the shortfall in gross domestic product.

Losses on owner-occupied housing have reduced consumers’ wealth by more than $7,000bn over the past five years, and uncertainty about the future value of their homes and the inability to refinance at reasonable rates deters household outlays on durable goods. The continuing weakness of the housing sector is a major risk for US financial institutions, raising significantly the costs of the loans they offer.

In retrospect it would have been better if financial institutions and those involved in regulating them, especially the Federal Housing Finance Agency, recognised that house prices can go down as well as up, if more rigour had been applied in providing credit, if the government-sponsored enterprises (GSEs) had been more careful in monitoring those originating and servicing loans, and if there had been more vigilance about fraudulent behaviour.
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Yup.