The Housing Bubble

“Florida’s growing nightmare: Crumbling foreclosures in legal limbo, ignored by banks”

http://www.tampabay.com/blogs/venturebiz/content/floridas-growing-nightmare-crumbling-foreclosures-legal-limbo-ignored-banks

How Banks Become Bad Neighbors

http://www.sun-sentinel.com/news/local/bad-neighbor-banks/fl-bad-neighbor-banks-limbo-20120429,0,2098022.story

Wake up Neo…

The matrix has you.

Off to bed…really enjoyed yesterday’s bits bucket. You all were on fire!

‘Octomom’ files for bankruptcy, owes $30K in rent

SANTA ANA, Calif. (AP) — “Octomom” Nadya Suleman filed for bankruptcy Monday, saying in a court filing that she has as much as $1 million in debt.

Suleman wants a fresh start and said in a statement that filing for bankruptcy is what’s best for her children, according to the Orange County Register.

“I have had to make some very difficult decisions this year, and filing Chapter 7 was one of them,” Suleman said.

The La Habra mother of 14 reports up to $50,000 in assets in federal court filings, which means she owes more than 20 times her net worth.

Suleman is filing Chapter 7 bankruptcy, which means a court-appointed trustee would liquidate her assets to pay off creditors before she is discharged from most of her debts.

Among others, Suleman owes money to her father, the city’s water department, DirecTV and Whittier Christian School, where at least some of her children are students.

Suleman also owes more than $30,000 in rent payments on her four-bedroom house.

The home’s owner, Amer Haddadin, says his own credit has suffered as he allowed the home to go into foreclosure proceedings by not making the mortgage payments.

A foreclosure auction that was scheduled for Monday has been postponed for a week.

Suleman was in financial dire straits before the January 2009 birth of her octuplets brought her notoriety.

She lived with her mother in a three-bedroom house in Whittier that was in foreclosure proceedings at the time of the octuplets’ birth.

The unemployed single mother had been supporting her six other children with the aid of food stamps and Social Security disability payments — sources of income that she continues to rely on.

Since the birth, she has cut deals with media outlets and posed in tabloid photo spreads to get by, touting a book and exercise videos that never materialized.

She earned $5,000 for promoting spaying and neutering for an animal rights group and was paid to take a beating in celebrity boxing matches.

In 2009, Suleman declined a million-dollar offer to appear in pornography.

Last month, semi-nude photos of Suleman ran alongside a paid interview in a British publication — a photo spread she defended in the tabloids, saying she wasn’t ashamed of it.

All Suleman’s children were conceived through in vitro fertility treatments. Her octuplets are the world’s longest-surviving set.

Realtors Are Corrupt®

Judge: Counselor, why are you asking to have this foreclosure dismissed?

Deadbeats lawyer: Your honor, the plaintiff can not prove who owns Mr. Deadbeats loan.

Judge: (to Wells Fargo attorney) Well counselor?

Wells Fargo attorney: Your honor, do you think we would have loaned Mr. Deadbeat $425,000 on a house that he purchased for $125,000 in 1999 when he earns an annual salary of $42,000 if we knew who he was supposed to pay back?

Why wait for summer?

May Day Eve Quickly Turns Ugly In San Francisco

A day that is expected to be filled with anti-establishment protests all around the globe began early last night with a roving band of “anarchists” smashing car windows and store fronts in San Francisco’s Mission District. The mini-riot (which was technically on April 30, but still) may have started as a “ruckus street party” organized by Occupy Oakland protesters who invaded their sister city last night, but whoever was responsible appeared to show little regard for the property of either the 1% or the other 99.

http://news.yahoo.com/may-day-eve-quickly-turns-ugly-san-francisco-091023433.html

REVIEW & OUTLOOK
Updated April 9, 2012, 6:53 p.m. ET

Treasury’s Run Around DeMarco
Tapping TARP to pay Fannie Mae for another housing bailout.

If you can’t roll over Ed DeMarco, run around him. That’s the Obama Administration’s latest ploy, as it tries to arrange one more election-year housing bailout.

Mr. DeMarco is the career civil servant who drew the short straw and ended up as the acting chief of the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac. He’s legally bound to balance three priorities: preserve and conserve Fan and Fred’s assets to protect taxpayers, keep the institutions running while Congress figures out what to do next, and maximize assistance for homeowners to minimize foreclosures. That last imperative isn’t supposed to come at the expense of the other two.

But don’t tell that to the Obama Administration, which has been hounding Mr. DeMarco to unleash Fan and Fred to write down the principal on millions of home mortgages. Mr. DeMarco has resisted on grounds that it would hurt taxpayers. For this effrontery, Democrats in Congress have tried to get Mr. DeMarco fired and even New York Federal Reserve chief Bill Dudley has lectured his less august fellow regulator to get with the Obama program.

Treasury Secretary Timothy Geithner joined the pressure campaign late last month by telling the Senate there’s a “very strong economic case” for writedowns in some circumstances because they might “increase overall recovery to the investor and the taxpayer.” He’s encouraging Fan and Fred to “take another look at the math,” and he implied the two want to help, if only Mr. DeMarco would let them.

Maybe Mr. Geithner has been too busy with Europe to know what FHFA has already done to help troubled borrowers. Since they went into government conservatorship in 2008, Fan and Fred have completed more than 1.1 million loan modifications and one million “foreclosure prevention” transactions, including forbearance plans, short sales, deeds-in-lieu and more. The toxic twins have also done 10.4 million refinancings, 1.1 million under the Administration’s Home Affordable Refinance Program.

Mr. DeMarco has resisted principal reductions because their impact is uncertain and perhaps costly. FHFA’s research shows that if a borrower is in distress, writing down a mortgage can often cost more money for taxpayers than other loss-modification strategies. Economic models also can’t capture the risks of moral hazard.

About 80% of borrowers with Fan and Fred-backed loans that are underwater—with a home worth less than the mortgage—continue to meet their monthly payments. Why should taxpayers subsidize people who can afford to pay? And what would happen if taxpayers subsidized people who aren’t paying? More homeowners might stop paying if they know the government will reduce their debts too.

Since Mr. DeMarco won’t budge, Treasury is now proposing to make him an offer he can’t refuse. The Administration wants to take a chunk of the $20.9 billion in leftover TARP funds and use it to subsidize mortgage writedowns through its Home Affordable Modification Program. Hamp targets delinquent borrowers or those who can demonstrate financial hardship, and it includes both Fan- and Fred-backed borrowers and those with private-label mortgages.

Setting aside the moral hazard, are these the right people to help? Doubtful. Deutsche Bank researchers found that borrowers who miss three or more mortgage payments “are 70% more likely to re-default” after a year than borrowers who are current at the time the loan is modified.
…

I admittedly am a dunce at Washingtonian maths, and hope someone who works inside the beltway can help me out here. The claim is that the F&F principal reduction program would give 691,000 underwater borrowers principal reductions worth $51,000 on average.

Elementary school multiplication shows that
691,000*$51,000 = $35,241,000,000 (35.241 billion U.S. dollars). Since this would be a reduction in money currently owed U.S. taxpayers, how would it only cost them on the order of $3.8 bn?

Federal housing regulator postpones decision on principal reductions
By Vicki Needham - 04/30/12 05:51 PM ET

The nation’s top housing regulator who oversees mortgage giants Fannie Mae and Freddie Mac blew past his self-imposed Monday deadline to decide whether to offer homeowners write-downs of their loans.

Edward DeMarco, acting director of the Federal Housing Finance Administration (FHFA), had said he would make a final decision on whether the government-controlled firms would offer mortgage principal reductions to borrowers who are underwater on their loans and current on their payments by the end of this month.

But the agency acknowledged it would need more time and didn’t say when a decision would be made.

“FHFA continues to work on its principal forgiveness analysis and is in discussions with the Department of the Treasury,” an FHFA spokeswoman said in a statement.

“A final determination on the Treasury proposal for triple investor incentives for HAMP [Home Affordable Modification Program] Principal Reduction Alternative (PRA) is being deferred until we conclude these activities.”

House Democrats have kept the heat on DeMarco to consider reductions of mortgage principal to help borrowers and, inevitably, shore up the battered housing market.

Maryland Democrat Elijah Cummings, ranking member of the House Oversight and Government Reform Committee, and panel member John Tierney (D-Mass.) have called on DeMarco to provide more information about his refusal to reduce mortgage principal for homeowners.

In February, Cummings and Tierney wrote a letter to DeMarco saying that data he submitted to Congress in January showed that principal reduction would save taxpayers billions of dollars compared with allowing those with underwater mortgages to go into foreclosure.

DeMarco has said he prefers principal forbearance because it is less risky to Fannie and Freddie, which have already received more than $150 billion in taxpayer help to stay afloat.

But he did signal a willingness to consider the policy based on further review, which is still under way.

“A key risk in principal forgiveness targeted at delinquent borrowers is the incentive created for some portion of the current borrower population to cease paying in search of a principal forgiveness modification,” he said.

During a recent speech at the Brookings Institution, DeMarco said the FHFA’s recent reexamination of reducing mortgage principal for underwater borrowers could save upward of $1.7 billion under a plan put forward by the Treasury Department as part of HAMP.

He argued that even if the agency chooses to move forward, reducing principal would affect fewer than 1 million homeowners, a fraction of the estimated 11 million who are underwater on their loans nationwide.

The FHFA estimates of the Treasury plan show that about 691,000 eligible homeowners would receive, on average, about $51,000 in loan forgiveness. Using a principal reduction program would save $9.9 billion, compared with $8.2 billion under the current version of HAMP.

The costs to taxpayers of Treasury’s incentives programs would be about $3.8 billion, according to the FHFA analysis.
…

May 1, 2012, 12:02 a.m. EDT
Warning: Fiscal icebergs ahead
Commentary: Without action, massive drag on economy is coming
By Irwin Kellner, MarketWatch

PORT WASHINGTON, N.Y. (MarketWatch) — Unless Congress and the president take action soon, the ship of state will run into massive fiscal restraint come the New Year.

Seven months from now, taxes will rise while spending will be cut — each by sizable sums. This restraint will be imposed even though the great majority of economists would argue that the economic recovery is so precarious that, if anything, the reverse would be called for — that is, lower taxes and more spending.

Let me give you an idea of the magnitudes. Taxes are scheduled to go up by a whopping $500 billion, while spending is set to drop by more than $130 billion.

On the tax side, one-third will come from the expiration of the Bush tax cuts of 2001 and 2003. Another 25% will occur as a result of the end of the temporary payroll tax cut, while another 25% will emanate from the expiration of the AMT patch.

The rest will come from tax hikes related to Obamacare, the end of the 2009 tax extenders and a rather sizable jump in the estate tax. There is something for everyone; I call it taxmageddon.

And if this were not a blow to the economy’s solar plexus, consider the drop in spending mandated to occur at year-end under current law. The $130 billion will also affect a broad swath of the country, from defense, to Head Start, to Pell Grants, as well as to states and local governments.

Put the tax hikes and spending cuts together, and they amount to a thumping 4% of our gross domestic product. A speed bump this size would be enough to slow a healthy economy; a weak one such as we are now experiencing could very well stop short and go into reverse. In other words, back into a recession.

And don’t think for one minute that this scenario will not unfold until 2013. It will very likely become noticeable sooner — say around Election Day.

It does not take a rocket scientist to figure out why.

Aware that these icebergs loom on the economic horizon, most companies will shelve many planned expenditures, including hiring. For their part, consumers are likely to husband their resources by keeping their wallets tightly closed. This means, of course, a drop in retail sales.

Don’t look to monetary policy for much help. Federal Reserve Chairman Ben Bernanke already has the pedal to the metal when it comes to monetary ease. The money supply is growing rapidly while interest rates are about as low as they can go.

Besides, the banks are still parsimonious when it comes to extending credit, while both consumers and business are deleveraging; everyone, it seems, is trying to lighten his or her debt loads.

This brings up an important part of economic theory I would like to remind you of, and it is that monetary policy works best in restraint. When it comes to stimulus, it is necessary but not sufficient. In other words, you can yank on a string but you can’t push on it.
…

Got a teaching gig for the rest of the year; working everyday, teaching 4th grade. Little steps…long term subbing beats regular subbing; even though it means I won’t be working at my kids’ school for the next 6 weeks; which is where I have been working on making inroads. So that will have to wait while I answer another door of opportunity.

Doing a good job for the teachers I work for (and being popular with their students) pays dividends; and hopefully 6 weeks will make me a much better known entity to another school administration and its group of teachers. I am stoked, even though it is but for a short time.

Can I buy a house now? I wonder if it would be more , assuming I am interested in buying in order to lower my monthly expenses. Which sounds most prudent?

1)Try and get a fha loan; putting 3% down and having a lower PITI than the $1000/mo. I pay in rent. I see marginally livable looking pads, in the right district zoning for the kids, offered up by Fannie, for instance, for 80k. Yes I would be kicking the tires before purchasing a foreclosure.

2) I could pay cash for such digs and avoid most of my monthly rental expense. But risking 80k in its totality does not sound as enticing as putting 3k (equal to first, last, deposit on another rental) at risk, even if buying outright would be lowering the monthly nut much more; it would effectively wipe out the savings account.

3)Keep renting and try to work as much as possible to avoid losing all of our savings. When I get a full time job and have held it for a couple years; think about buying then.

In an atmosphere of falling prices, putting but 3k down allows an “out”; (known here as “walking”). But if the market has really hit bottom for starter homes here, which is not likely I know. However, some historic metrics have been met due to the bubble bursting. Places that went for 250k in 2006 are now being sold at 100k (3x median income has been achieved for the low end of the market; also 100x rent). Right now we pay 1k for a home that would sell for 100k.

I am skeptical and wonder if the FHA would really loan to me (if there are still no-doc federal programs as Ben has said). Because I have a job, savings, down payment of 3% to 20% or more, and 725 FICO. Income, not so much,

So should I wait, buy a shack for cash, or jump into a loan from whence I know not where the long-term income will come from….

There is never a better time to own Treasurys than on days when investors the world over are feeling anxious. It seems like this kind of serially renewed enthusiasm for Treasurys could go on for a few more years to come.

Treasury prices rise after news of Spain recession
April 30, 2012

NEW YORK—Investors bought U.S. government bonds Monday after fresh worries emerged about Spain’s economy.

Spain said it was back in recession for the second time in three years. Investors worried that Spain might need a rescue as Greece and Ireland did. But rescuing the fourth-largest economy in the 17-country euro zone could prove to be too expensive for Europe’s bailout funds.

U.S. Treasurys are viewed as one of the safest investments in the world and usually rise in value when investors are anxious.
…

ECONOMY
Updated May 1, 2012, 4:04 a.m. ET

Europe, in Slump, Rethinks Austerity
By DAVID ROMÁN in Madrid and STEPHEN FIDLER in Brussels

Spain has joined seven other euro-zone nations in recession, according to data released Monday, providing new evidence that austerity policies are failing to spark confidence in the region’s economies ahead of a week of expected anti-austerity protests and a string of important national elections.

Spain’s economy contracted for the second quarter in a row and the country’s banking sector suffered a widespread credit downgrade, piling further pressure on the government. WSJ’s Sara Schaefer Munoz analyzes its options. Photo: Getty Images

Almost every piece of new economic data in recent weeks has reinforced the impression that swaths of the European economy are contracting.

The worsening economic picture is raising political tensions around the euro zone—both French and Greek elections this weekend are expected to castigate incumbents. A growing number of politicians, led by François Hollande, the Socialist candidate in the French presidential ballot, and by Italian Prime Minister Mario Monti, have called for a shift in the focus of policies toward growth and away from austerity. Their calls have been reinforced by the weakness of many euro-zone economies, which some economists argue undermines the contention that cutting budgets pays dividends in increased economic confidence.

Among the 17 euro-zone nations, Spain joined Belgium, Greece, Ireland, Italy, the Netherlands, Portugal and Slovenia in recession. Outside the bloc, the U.K., Denmark and the Czech Republic are also in recession.
…

Bank of America isn’t bullish on Merrill Lynch anymore.

BUSINESS
Updated April 30, 2012, 9:00 p.m. ET

BofA to Cut From Elite Ranks
Pressure on Costs Expands Wave of Job Reductions to Investment Units at No. 2 Bank
By DAN FITZPATRICK And DANA CIMILLUCA

Amid the banking industry’s relentless belt-tightening, even Bank of America Corp.’s moneymakers aren’t safe.

The Charlotte, N.C., company is planning about 2,000 staff cuts in its investment banking, commercial banking and non-U.S. wealth-management units, said people familiar with the situation. Those operations were vastly expanded with Bank of America’s 2009 purchase of Merrill Lynch & Co.

CEO Brian Moynihan is trying to show he can bring costs under control.

The reductions are significant because of whom they target: the high-earning employees whose efforts helped Merrill Lynch account for the bulk of Bank of America’s profit since the financial crisis.

The cuts come on top of a plan announced last year that will see Bank of America eliminate 30,000 jobs over three years in its consumer banking divisions. The bank employed 278,700 people as of March 31.

The move is the latest effort by Chief Executive Brian Moynihan to show investors he can bring expenses under control at a time of sluggish U.S. growth and revenue-reducing federal regulations. Personnel expense at Bank of America rose 17% between 2009 and 2011—a period in which revenue dropped 22%.

The No. 2 U.S. bank by assets already is facing a wave of high-profile defections in its institutional businesses, such as investment banking, amid Wall Street’s annual post-bonus job-hopping season. The upheaval comes as investors are pressuring banks to rein in expenses without giving ground competitively. Despite a 46% rise this year, Bank of America shares have lost a third of their value in the past year, amid questions about the industry’s profit outlook.

Other banks such as UBS and Goldman Sachs Group Inc. also are struggling to bring down costs and retain talent. In the second half of 2011, two dozen global financial firms set plans to cut 103,000 jobs.

Some of Bank of America’s cuts are part of a multiyear overhaul called Project New BAC, after the bank’s ticker symbol. The bank has told regulators it could sell off parts of its U.S. franchise or its U.S. trust business if economic conditions were to worsen significantly, according to people familiar with the situation.

Bank of America declined to comment.
…

Luckily, since it’s different in NYC, none of this news of a new wave of layoffs in the banking sector has any implications for home prices.

Large layoffs loom on Wall Street
By Stephen Gandel, senior editor April 30, 2012: 6:00 AM ET

Latest wave of financial industry cuts could eliminate 21,000 jobs, rivaling the financial crisis.

FORTUNE –Perhaps the only thing more broken than Wall Street’s business model is its staffing strategy.

After adding thousands bankers in the past two years, financial firms again appear to be on the verge of cutting that many positions and then some. Consultants and Wall Street recruiters say banks could eliminate nearly 21,000 jobs from their securities divisions in New York alone. Worldwide cuts could be even larger. Recruiters say big banks are in the process of finalizing their downsizing plans, and that layoffs could start soon.

The latest round of job cuts could rival those that happened during the financial crisis. Back then, which was less than four years ago, Wall Street eliminated 28,000 positions. But that round of downsizing included the collapse of Bear Stearns and Lehman Brothers, and the biggest crisis in the financial markets since the Great Depression. By comparison, the stock market is up this year, and just last week banks reported better than expected earnings for the first quarter. What’s more, at the same time large firms are firing, many smaller investment banks have been staffing up. As a result, overall employment on Wall Street might not drop as much as it did after the financial crisis.

“Hiring is going on, it’s just not by the big banks,” says a top Wall Street recruiter Gary Goldstein, who runs Whitney Partners.
…

NYC real estate poised to collapse

http://www.cnbc.com/id/46310822

Hey Slim your parents telephone story made the Consumer Reports,
CR link

Many, if not most of us, have the picture of a healthy economy being the following:

Well, according to The Economist, there is an economy which has these factors - Germany. Much of the rest of the world, the IMF and the financial industry, are all focused on making money from debt and the alchemy of financial products which are mostly logical constructs and sophisticated bets. The Economist article discusses the applicability of the “German Model” to other countries.

What Germany offers the world
Other countries would love to import Germany’s economic model. But its way of doing things is a lot less amenable to export than the wares it produces
Apr 14th 2012 | BIELEFELD | from the print edition
The Economist

Omnipresent but obscure, family owned but by no means puny, Beckhoff is among thousands of “hidden champions” that account for much of Germany’s prowess as a manufacturer and exporter. Its sales leapt 34% to €465m ($608m) last year. It is aiming for €2 billion by 2020. Beckhoff exports more than half its output. But its manufacturing is mainly in high-wage, rule-bound Germany.

Largely thanks to its Beckhoffs, Germany looks like a bright exception to the dispiriting rule among developed economies. True, its economy contracted more than those of most rich countries during the 2008-09 world recession (see chart 1). But the jobless rate rose by less than in all the others, peaking at 7.9%. And nobody talks about downgrading Germany’s AAA credit rating; it can borrow money for practically nothing.

Hans Beckhoff, boss of the automation company that bears his name, does not come off as a throwback. His silver-grey hair is modishly long, his collar unbuttoned. But some of his habits seem distinctly old-fashioned. Take his approach to debt: he’s against it. Investment in the company is funded by him and his three siblings, the only shareholders. It is the same with nearby Miele, a 113-year-old maker of kitchen equipment and white goods, with annual sales of €3 billion. This is not the most efficient way to run a company. With more leverage Mittelstand firms could boost their pre-tax profit by several points, notes Armin Schmiedeberg of Bain, a consultancy. He thinks they are wise not to.

The point is not to maximise short-term profit, says Markus Miele, a managing director at his firm, but to aim at “where we want to be when we hand over to the next generation.” Mr Beckhoff says he fends off monthly offers to buy his company. Lack of financial ambition goes along with the observance of unwritten sumptuary laws. “Families behind the Mittelstand live in an acceptable, modest and healthy way,” says Mr Beckhoff.

But it is another matter to excel in high-end capital goods or to assign to enterprise, unions and the state roles that Germany has been practising, with disastrous interruptions, for more than a century. During the crisis Italy introduced a short-time working scheme like Germany’s, but the results were disappointing: Italian firms and their workers could not mimic Germany’s ordered flexibility. Germany can offer lessons in how to get back into shape; but the essence of its model is rooted too deeply to be copied with ease.

http://www.economist.com/node/21552567

I’ve been wondering about the schizophrenic housing market. I too notice that some houses come on the market for just a few days before they go under contract. Other houses of similar style will sit for literally years with nary an offer.

So, what’s the difference? Price and location. And one more biggie - potential depreciation. The houses that sit I’ve noticed tend to be in areas that have more foreclosures and tend to be poorer. But even houses in these areas will get snapped up if prices are low enough to take away the sting of future depreciation.

I’ve talked to a couple of people over the past few years who bought house and then had to sell for unforeseeable reasons (divorce, moving for work). What’s common in their transactions was that they were able to sell without too much of a loss - 10-20K below the buying price. They jumped right back into the housing market because they didn’t get particularly burned.

However, larger losses would have likely soured them on owning or even driven them to strategic default. So now, it seems to me, that for NAR at least, trying to get houses to credibly bottom - which means dealing with the shadow inventory, not just a media blitz - would probably be in their interest. And it would align with buyer interest too. Credibly-bottomed house prices would allow people to buy houses even in more marginal areas and allow them to be confident that they won’t lose too much money if they have to sell in the next 5-10 years.

How things change - I remember when Alan Greenspan was called “The Maestro” by an adoring public. Now, the public impressions I tend to get are more those of recklessness and cluelessness. It would have been hard to imagine back in the heady days of the tech bubble and the early days of the housing bubble that Greenspan could ever be held in such low esteem.

I Saw the Crisis Coming. Why Didn’t the Fed?
By MICHAEL J. BURRY
Published: April 3, 2010
The New York Times

ALAN GREENSPAN, the former chairman of the Federal Reserve, proclaimed last month that no one could have predicted the housing bubble. “Everybody missed it,” he said, “academia, the Federal Reserve, all regulators.”

But that is not how I remember it.

[...]

As a nation, we cannot afford to live with Mr. Greenspan’s way of thinking. The truth is, he should have seen what was coming and offered a sober, apolitical warning. Everyone would have listened; when he talked about the economy, the world hung on every single word.

Unfortunately, he did not give good advice. In February 2004, a few months before the Fed formally ended a remarkable streak of interest-rate cuts, Mr. Greenspan told Americans that they would be missing out if they failed to take advantage of cost-saving adjustable-rate mortgages. And he suggested to the banks that “American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage.”

Within a year lenders made interest-only adjustable-rate mortgages readily available to subprime borrowers. And within 18 months lenders offered subprime borrowers so-called pay-option adjustable-rate mortgages, which allowed borrowers to make partial monthly payments and have the remainder added to the loan balance (much like payments on a credit card).

Observing these trends in April 2005, Mr. Greenspan trumpeted the expansion of the subprime mortgage market. “Where once more-marginal applicants would simply have been denied credit,” he said, “lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately.”

http://www.nytimes.com/2010/04/04/opinion/04burry.html?_r=1&hp

I had a financial planner explain to me how mutual funds take their fees - daily. The average is 1.8% a year divided by 365 and that is charged to the original contribution daily. They have other charges as well. Right now I wish the banks paid an average 1.8% on GICs.

With banks still overlevered, profits now being eroded again, tons of stimulus just holding the line, and now probable global recession - I wonder if I will have to pay interest to a bank to hold my GICs.

Recession, Depression, or - - ?

“Why U.S. house prices won’t recover”

http://www.marketwatch.com/story/why-us-house-prices-wont-recover-2012-05-01

The big lie?

A housing price recovery is dramatically lower prices by definition.

The second big lie?

They attempt to characterize falling prices in the past tense.

Nice try marketwatch.

So “Octomom” is bankrupt.

You could have knocked me over with a feather, when I heard the news. Never saw that coming…..

Paul Krugman is doing an AMA over on Reddit. Thought some might be interested in reading his responses.

“The $300 million was a direct payment to the state that Bondi can decide how to use. To make a suggestion, go to http://www.MyFloridaLegal.com.”

I am going to http://www.MyFloridaLegal.com. and suggest Pam Bondi send Ben Jones of thehousingbubble@gmail.com $1 million of the $300 million so he can continue to keep some Floridians out of foreclosure by having people talk them out of buying overpriced houses that they can not afford.

Bondi wants input on spending $300 million in foreclosure cash

by Kim Miller

Attorney General Pam Bondi is giving Floridians until May 14 to submit suggestions on how to spend $300 million that was part of the nationwide attorneys general settlement with banks announced in February.

Florida got a total of about $8.4 billion worth of mortgage relief and cash from the agreement, which was between 49 attorneys general and five banks, including JPMorgan Chase, Wells Fargo, Citigroup, Bank of America and Ally Financial.

The $300 million was a direct payment to the state that Bondi can decide how to use. To make a suggestion, go to http://www.MyFloridaLegal.com.

“Florida is one of the hardest hit states in the country in terms of foreclosures, and I’d like to hear from Floridians about ways we can help homeowners and offset the devastation caused by the foreclosure crisis,” Bondi said in a press release Monday.

The settlement agreement says the $300 million can be used for a range of activities such as hiring housing counselors, establishing state and local foreclosure assistance hotlines, creating state and local foreclosure mediation programs, providing legal assistance, and training and staffing of financial fraud or consumer protection enforcement efforts.

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Tags: foreclosure, foreclosure settlement, Foreclosures, Palm Beach, Palm Beach County, pam bondi, real estate

This entry was posted on Tuesday, May 1st, 2012 at 7:11 am and is filed under Florida economy, Foreclosures, Housing affordability, Housing boom. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Interesting, data just came out yesterday from the Commerce department: Units available for rent are dropping, and units available for sale are dropping (Homeowner vacancy rate - definition on p. 12 of link). It varies around the country, there are increases in some areas and decreases in others.

On the other hand, it does look like a return to more historical norms. Without seeing the data for the 70s and 80s that is.

NOTE: PDF

RESIDENTIAL VACANCIES AND HOMEOWNERSHIP IN THE FIRST QUARTER 2012

http://www.census.gov/hhes/www/housing/hvs/qtr112/files/q112press.pdf

Hey Alpha, I just got back from a lovely, beautiful jog on the beach, and as soon as I sat down, I thought, “I need to complain about high house prices.”

So here I am.

Hmmmm…..look what’s being considered in Spain.

“Rajoy is now considering a program to protect banks’ capital by getting bad assets off their balance sheets. To do this in a way that strengthens the banks, though, the government will need to put in money — money it doesn’t have. If it taps funds set aside to guarantee deposits — an approach that is being debated — this would only increase financial risk with one hand while reducing it with the other.”

So with almost 25% unemployment their answer is to create a huge vulnerability in the people’s dwindling deposits? There it is again….the transfer of wealth to cover their bad risks.

Just posted a paragraph about Spain. Here is the Bloomberg article it’s from: Spain’s Slump Means Europe Must Rethink Tough-Love Policy

http://www.bloomberg.com/news/2012-04-30/spain-s-slump-means-europe-must-rethink-tough-love-policy.html

Agent in Secret Service scandal has Rochester connections

http://www.democratandchronicle.com/article/20120501/NEWS01/305010047/Arthur-Huntington-Roberts-Weslyan-College-Secret-Service?odyssey=tab|topnews|text|Home

Agent in Secret Service scandal has St. Pete connections

http://www.tampabay.com/news/publicsafety/secret-service-agent-reported-at-heart-of-scandal-once-wore-st-petersburg/1227769

WHOA! It’s fate. All men that leave Rochester must come here, then go there.

My destiny is to be with a Columbian prostitute.

One of my former students is in jail with a NEGATIVE commissary balance. How exactly do you get credit in jail?

Dow at four year high. How is that cash and that diatribe against dollar cost averaging working out for you? Phhhht!

U.S. housing demand is dying. You can stick a fork in this bubble now or later, but the fundamental, demographic-based demand that drove it is gone for good.

Homeownership Rate in U.S. Falls to Lowest Since 1997
By John Gittelsohn - Apr 30, 2012 11:56 AM PT
Blocks of Cuyahoga County are filled with vacant and stripped homes on Feb. 2, 2012 in Cleveland, Ohio. Photographer: Benjamin Lowy/Getty Images
Graham Fisher’s Rosner on U.S. Housing Market

Keys hang on the wall of a five-bedroom row house for sale in the Logan Circle neighborhood of Washington, D.C. The homeownership rate probably will settle around 64 percent, where it stood from about 1965 to the mid-1980s, because credit conditions are similar to that era, according to Patrick Newport , U.S. economist with IHS Global Insight.. Photographer: Andrew Harrer/Bloomberg

The U.S. homeownership rate fell to the lowest level in 15 years in the first quarter as borrowers lost homes to foreclosure and tighter inventory and credit kept buyers off the market.

The rate dropped to 65.4 percent from 66 percent in the fourth quarter and fell a full percentage point from a year earlier, the Census Bureau said in a report today. That is the lowest level since the first quarter of 1997, and down from a record 69.2 percent in June 2004.

Mounting foreclosures are displacing borrowers, while a lack of inventory has kept home sales from accelerating amid record affordability, the National Association of Realtors reported April 19. Stricter mortgage standards are also limiting purchases as rental demand surges, said Paul Diggle, property economist with Capital Economics Ltd. in London.

“Although house prices and mortgage rates have fallen to a level that makes buying preferable to renting, ongoing problems accessing mortgage credit are preventing many households from taking advantage,” he wrote in a note today.

The U.S. apartment vacancy rate fell to 4.9 percent in the first quarter, an 11-year low, according to New York-based Reis Inc. (REIS) The vacancy rate for rental homes was 8.8 percent in the first quarter, compared with 9.7 percent a year earlier, the Census Bureau said in today’s report.
Home Vacancies

Of the estimated 132.6 million U.S. homes, 18.5 million, or 13.9 percent, were vacant in the first quarter. A year earlier, about 19 million homes were vacant, according to the report. That includes homes for sale or rent or held off the market, and vacation properties used seasonally.

“Both homeowner and rental vacancy rates dropped during the first quarter, which obviously bodes well for housing,” because shrinking inventory will boost rents and spur demand for new homes, Stephen East, an analyst with International Strategy & Investment Group LLC, wrote in a note to clients.

Homeownership may fall further and repossessions may increase this year as lenders step up foreclosures after a $25 billion agreement by the nation’s largest loan servicers in February to settle allegations of improper practices. Foreclosure filings fell to the lowest since 2007 in the first quarter as banks slowed actions before the settlement, according to RealtyTrac Inc.

The ownership rate may drop below 64 percent by the end of 2015 and stay there for years, Scott Simon, the mortgage bond head of Pacific Investment Management Co. in Newport Beach, California, said in an e-mail today.

“It will be lower by 2017,” he said. “It will be lower in 2020.”
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Going, going, gone.

THE NEXT AMERICA
Census: More in U.S. Report Nontraditional Households
By Doris Nhan
Updated: May 1, 2012 | 6:41 p.m.
April 30, 2012 | 10:46 a.m.

Married straight couples with families now make up less than half of U.S. households, marking the first time the group has dropped below 50 percent since census data on families was first collected in 1940.

The April report provides a first look at household and family data from the 2010 census and indicates a stark rise in nontraditional homes in America.

Though the U.S. has gained 11 million households since 2000, traditional husband-wife family households now comprise just 48 percent of them. The bulk is of family homes with a single head of house, nonrelated households, and people living alone.

Between 2000 and 2010, the percentage of growth for all types of households, except for husband-wife, was in the double digits. Husband-wife households with children actually fell by 5 percent over the same period, the only group to decline.
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Homeownership Rate Down Again – Time to Rethink Policies Promoting Homeownership?
By Michael Kraus on April 30, 2012

According to new information from the Census Bureau, the U.S. homeownership rate fell again in the first quarter of 2012. The overall rate is now 65.4%, down from 66% in the fourth quarter of 2011. This is the lowest level in fifteen years. Homeownership peaked at a rate of 69.2% in the summer of 2004.

The number of Americans owning homes has dropped largely as a result of foreclosure, and will likely to decline further as banks begin more foreclosures. Foreclosures were down in 2011 due to increased legal scrutiny over the legality of many foreclosures. Following the mortgage settlement, it seems likely that foreclosures will increase in the coming year. RealtyTrac reported last week that foreclosures were up in the majority of U.S. metro regions, and foreclosure starts are rising as well. A Bloomberg article today quotes Scott Simon, the head of mortgage bonds for PIMCO, as saying that as many as 6 million more borrowers will lose their properties over the next five years.

The vast majority of those that lose their homes will become renters (they will have to live somewhere). The concept of REO to rental schemes has become popular of late, and if these plans are successful, they would sop up a large chunk of housing inventory (I am skeptical that massive REO rental programs will be successful due to the logistical complexities of managing large numbers of rental properties). Nevertheless, the shadow inventory of unsold homes not on the market is potentially huge. Nobody really knows how many homes are in shadow inventory, but estimates range from 1 million to 10 million homes.

It also seems likely that many lenders are holding REO properties off the market in order to prevent a freefall in home prices. Delaying the sale of these homes helps banks avoid immediately marking the homes to their new market value. If banks had to mark all these properties to their market value immediately, their bottom lines would take a massive hit. Delaying this process allows banks to spread the losses over a longer period of time. What this all boils down to is a massive excess supply of housing.

At the same time, there is a lack of demand for these homes. Unemployment, lack of consumer confidence, falling home prices, low rates of household formation, demographic trends, and tight credit all depress the demand for homes. This imbalance in supply and demand ensures continued declines in home values.

All of this leads to a larger question: should the United States continue to pursue a policy of promoting homeownership at all costs?
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ECONOMY
May 1, 2012, 5:26 p.m. ET

Fannie Mae Tried Loan-Forgiveness Programs
By ALAN ZIBEL And NICK TIMIRAOS

Fannie Mae conducted small tests to reduce loan balances of homeowners who owned more on their mortgages than the properties were worth in 2010.

But the mortgage-finance company didn’t expand the pilot programs after concluding they were difficult to operate and the benefits weren’t clear, according to a letter from the firm’s federal regulator.

The loan-forgiveness pilot programs, some of which haven’t previously been disclosed, were outlined in a letter sent in April by the Federal Housing Finance Agency to Democratic lawmakers.

They come as the agency, which oversees Fannie Mae and the smaller mortgage agency Freddie Mac, considers whether to accept new funds made available by the Treasury Department to allow some troubled homeowners to receive principal forgiveness. Proponents of principal forgiveness argue that reducing loan balances for troubled homeowners could reduce the chances that those loans default.

Two banks participated in different programs, Wells Fargo & Co. and Citigroup Inc. The Wells Fargo program cut loan balances of borrowers who received a loan modification through existing government programs.

But by the end of last year, the loan performance of 200 underwater mortgages whose balances were reduced hadn’t differed from a control group of borrowers who received standard loan modifications that don’t reduce principal, according to a letter from Alfred Pollard, the FHFA’s general counsel. Fannie chose to terminate the pilot with Wells Fargo in March 2011 due to certain data-keeping errors, he wrote.

A more complex pilot program with Citi, which included a “shared equity” component that would have allowed Fannie and Citi to share in any future home-price gains for homes owned by those who received principal forgiveness, didn’t move beyond the planning stage.

Fannie officials determined in mid-2010 that it wouldn’t be able to implement the program until spring 2011 due to operational concerns, according to company emails obtained by the lawmakers. Mr. Pollard said in his letter that Fannie proposed an alternate, more straightforward program that Citi wasn’t interested in.

Fannie’s loan-forgiveness pilot programs, “to the extent they were begun, ended due to complex operational issues involving system changes, accounting considerations and the interest level of Fannie Mae’s partners,” wrote Mr. Pollard.
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May 1, 2012, 4:47 PM

Plot Thickens on Mortgage Write-Down Debate
By Alan Zibel and Nick Timiraos

Fannie Mae conducted small tests to forgive debts of homeowners who owed more on their mortgages than the properties were worth in 2010. But the mortgage-finance company didn’t expand the pilot programs after concluding the programs were difficult to operate and the benefits weren’t clear, according to a letter from the firms’ federal regulator.

The letter, released Tuesday, disclosed that Fannie developed pilot loan write-down programs with Citigroup Inc. and Wells Fargo & Co. in 2009 and 2010 but they either didn’t launch or barely got off the ground.

Fannie’s loan-forgiveness pilot programs, “to the extent they were begun, ended due to complex operational issues involving system changes, accounting considerations and the interest level of Fannie Mae’s partners,” Alfred Pollard, the Federal Housing Finance Agency’s general counsel, wrote in a letter to Reps. Elijah Cummings (D., Md.) and John Tierney (D., Mass.).

The letter, written in April, was released as the regulator considers whether to accept new funds made available by the Treasury Department to allow some troubled homeowners to receive principal forgiveness.

Messrs. Cummings and Tierney have for months accused the FHFA’s acting director, Edward DeMarco, of obstructing efforts to forgive debts of under-water borrowers. They have been probing Fannie’s pilot programs since earlier this year, when a former Fannie employee called attention to the issue.

They suggested in their own letter Tuesday that the FHFA shelved the Citi pilot for ideological reasons. “This was not merely a missed opportunity, but a conscious choice that appears to have been based on ideology rather than Fannie Mae’s own data and analyses,” the lawmakers wrote.

Mr. DeMarco quickly took issue with the lawmakers’ assertions.

“Having just received a copy of your letter regarding principal forgiveness, I wish to convey my disappointment with this letter, the failure to contact FHFA to address your concerns, and the release of selective elements of the proprietary and confidential materials you received,” he wrote. “I strongly disagree with any characterization of FHFA’s work or motives as anything but in keeping with the professionalism expected of this agency.”

The housing regulator has been under pressure from Congressional Democrats and the Obama administration to reconsider its opposition to loan-write-down programs.
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ECONOMY
Updated April 30, 2012, 10:53 p.m. ET

Freddie, Fannie Departures Escalate
By NICK TIMIRAOS

Concerns are growing about departures at mortgage-finance giants Fannie Mae and Freddie Mac, a situation that some executives argue is making it difficult to manage the companies and their $5 trillion mortgage business.

The latest sign came Monday when Freddie said that Anthony Renzi—the executive who oversees the single-family mortgage business, by far the company’s largest and most complex division—would leave this month to take another job in the industry.

Mr. Renzi, who has spent two years at Freddie, joins a growing list of industry veterans who have departed over the past year. The chief executives of both Fannie and Freddie have said they plan to leave this year. In the past two years, dozens of senior managers, many with long tenures, have left.

Worries over compensation and low morale are playing a role in prompting Fannie and Freddie employees to look elsewhere. Freddie last month revamped the way it pays its employees amid concerns that Congress might sharply cut pay for rank-and-file workers at the companies, after scrapping bonuses for senior executives.

Charles E. Haldeman Jr., Freddie’s chief executive, said in an interview that attacks from Congress, second-guessing by regulators and the lack of a game plan for the firm’s future have hindered retention efforts and have “made it much more difficult to operate as a business.”

In an email to employees, Mr. Haldeman said Monday that his own successor would be named “very shortly.” The frontrunner for the job is Donald Layton, the former chief executive of online brokerage firm E*Trade Financial Corp. and an outside director of American International Group Inc., according to people familiar with the matter. The board is also considering Gerry Pasciucco, who oversaw the winding down of the troubled AIG Financial Products division, and Shekar Narasimhan, who runs a housing-finance consultancy.

Freddie warned of “disruptive levels of turnover at both the executive and employee levels” when it reported its 2011 financial results in March, and it warned that “could lead to breakdowns in many of the company’s operations.”

The exodus of top talent began shortly after Fannie and Freddie were taken over by the government in 2008 through a process known as conservatorship. With the job market in the Washington area improving for the financial-services sector, the departures are becoming more frequent and potentially destabilizing.
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NY REGION
Updated May 1, 2012, 10:11 p.m. ET

Protest Hits City Targets
Occupy Falls Short of General Strike
By PERVAIZ SHALLWANI, JESSICA FIRGER and ALISON FOX

Occupy Wall Street activists march through Midtown with arms clasped during the May Day demonstrations in New York City on Tuesday.

Thousands of Occupy Wall Street protesters fanned out across New York City Tuesday, heralding a fresh start for the anticorporate movement after months of inaction but falling short of a goal to convince large numbers to ditch work for a day.

The demonstrations were bolstered by some large city labor unions, which obtained permits for the protest but didn’t support organizers’ call for a general strike. As many as 6,000 people were in Union Square in the afternoon, before marching to the Financial District, a law-enforcement official said.

At least 50 people were arrested for offenses ranging from disorderly conduct to a 24-year-old man who allegedly wrote the world “shame” on the side of a building at 545 Fifth Ave., a law-enforcement official said.
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