The Housing Bubble

Housing is always a loss. Always.

“Big Shadow Inventory Lurks”

http://www.forbes.com/sites/afontevecchia/2013/04/30/home-prices-growing-at-pre-bubble-rates-on-bernanke-boost-but-big-shadow-inventory-lurks/

“CoreLogic data shows the number of foreclosed homes and the size of the shadow inventory is massive.”

With tens of millions of excess empty houses and housing demand fallen to 17 year lows, housing prices remain grossly inflated.

If you take on mortgage debt at current massively inflated housing prices, you’ll enslave yourself for the rest of your life.

“Debt is bondage.” ~ Suze Orman, May 11, 2013

“Why pay these massively inflated prices for a depreciating house? You’re getting ripped off if you do. Rent for half the monthly cost and buy a house later, after prices crater for 65% less.”

Washington Post - Pentagon poised to trim number of civilian furlough days, expand pool of exempt workers

“The Defense Department is poised to trim the number of civilian furlough days from 14 to 11 or fewer as it tries to find ways to deal with mandatory spending cuts, and is likely to let the military services expand the types of workers that will be exempt from the unpaid day off requirements, military officials say.

Defense Secretary Chuck Hagel is expected to announce a decision on the hotly contested issue as early as Tuesday, and officials said the final decision continues to be refined.

Defense officials said that at this point, notification deadlines and other administrative requirements make it difficult for the department to squeeze in more than 12 furlough days by the end of the fiscal year on Sept. 30. They said some senior leaders wanted to reduce the furloughs as much as possible, perhaps to nine or fewer.”

http://www.washingtonpost.com/world/national-security/pentagon-poised-to-trim-number-of-civilian-furlough-days-expand-pool-of-exempt-workers/2013/05/14/deab0e20-bc7e-11e2-b537-ab47f0325f7c_story.html

New York Times - Young Americans Lead Trend to Less Driving

“For six decades, Americans have tended to drive more every year. But in the middle of the last decade, the number of miles driven — both over all and per capita — began to drop, notes a report to be published on Tuesday by U.S. Pirg, a nonprofit advocacy organization.

People tend to drive less during recessions, since fewer people are working (and commuting), and most are looking for ways to save money. But Phineas Baxandall, an author of the report and senior analyst for U.S. Pirg, said the changes preceded the recent recession and appeared to be part of a structural shift that is largely rooted in changing demographics, especially the rise of so-called millennials — today’s teenagers and twentysomethings. “Millennials aren’t driving cars,” he said.

In fact, younger people are less likely to drive — or even to have driver’s licenses — than past generations for whom driving was a birthright and the open road a symbol of freedom. Research by Michael Sivak of the Transportation Research Institute at the University of Michigan found that young people are getting driver’s licenses in smaller numbers than previous generations.

http://www.nytimes.com/2013/05/14/us/report-finds-americans-are-driving-less-led-by-youth.html?hpw&_r=0

New York Times - Student Debt Slows Growth as Young Spend Less

“The anemic economy has left millions of younger working Americans struggling to get ahead. The added millstone of student loan debt, which recently exceeded $1 trillion in total, is making it even harder for many of them, delaying purchases of things like homes, cars and other big-ticket items and acting as a drag on growth, economists said.

The Federal Reserve Bank of New York, in a new study, found that 30-year-olds with student loans were now less likely to have debts like home mortgages than 30-year-olds without student loans — even though most of those with student loans are better educated and can expect to earn more money over their lifetimes. The same pattern holds true for 25-year-olds and car loans.

“It is a new thing, a big social experiment that we’ve accidentally decided to engage in,” said Kevin Carey, the director of the Education Policy Program at the New America Foundation, a research group based in Washington. “Let’s send a whole class of people out into their professional lives with a negative net worth. Not starting at zero, but starting at a minus that is often measured in the tens of thousands of dollars. Those minus signs have psychological impact, I suspect. They might have a dollars-and-cents impact in what you can afford, too.”

The weak economy and tight credit standards remain the main culprits preventing young people just establishing themselves from making major purchases. But millions now face putting a substantial share of their take-home pay toward past debts rather than present needs. Student loan debt leaves them with less money for things like clothes and restaurant meals. And it is even more likely to suppress purchases of more expensive items that need to be bought with credit. A poor job market is compounding the problem: the educational debt burden of many so-called millennials has sharply increased even as they are being forced to get by on significantly less income than the previous generation — a decline of about 15 percent in real terms since 2000, with much of that drop coming from the recession.

http://www.nytimes.com/2013/05/11/business/economy/student-loan-debt-weighing-down-younger-us-workers.html?ref=education

Obama’s underwater rescue

A single bureaucrat stands in the way of widespread foreclosure relief

By Eric T. Schneiderman / NEW YORK DAILY NEWS
Wednesday, May 8, 2013, 4:18 AM

A housing development in California sits unfinished in the wake of the Great Recession. (Great photo)

Such “principal writedowns” are a necessary and common-sense tool in the massive repair job that is needed to mend our broken housing market.

The 60% of American homeowners who carry loans serviced by Fannie Mae and Freddie Mac need and deserve the same kind of relief. Obama can deliver for these families by removing DeMarco, right now.

http://www.nydailynews.com/opinion/obama-underwater-rescue-article-1.1337579 -

obama kool-aid drinkers to blame Bush in 3….2…1…

Obama knee-deep in Nixon-esque scandal
Boston Herald ^ | May 13, 2013 | Joe Battenfield

President Obama’s second-term campaign slogan was “Forward,” but instead we’ve got cover-ups, congressional investigations and the government persecution of political opponents and reporters.

That sounds like “backward” to me. All the way to, say, 1972.

Who would have guessed that just a few months into his second term, President Obama would be compared to Tricky Dick. And by a liberal Massachusetts Democrat — U.S. Rep. Michael Capuano.

Republicans could not even have scripted this one. The agency most hated by voters, the Internal Revenue Service, admits to going on a Nixonian witch hunt against Tea Party and conservative groups during the re-election campaign.

This is a story even the most partisan Massachusetts liberal cannot defend. It’s so bad that even Ed Markey is calling for heads to roll.

Now we learn that the Justice Department has secretly obtained the phone records of Associated Press reporters and editors in what appears to be an investigation of an AP story that disclosed details of a CIA operation that stopped a terrorist attack.

Going after the Tea Party is one thing, but the media? What an outrage. Who knows, the press may get so mad they won’t laugh at Obama’s jokes during the next White House Correspondents’ Dinner.

Health care costs up 400%, housing in ANOTHER huge bubble, college costs at insane levels…

When does it all hit the wall????

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Insurers predict 100%-400% Obamacare rate explosion
Washington Examiner | 5/13/13 | Paul Bedard

Internal cost estimates from 17 of the nation´s largest insurance companies indicate that health insurance premiums will grow an average of 100 percent under Obamacare, and that some will soar more than 400 percent, crushing the administration´s goal of affordability.

New regulations, policies, taxes, fees and mandates are the reason for the unexpected “rate shock,” according to the House Energy and Commerce Committee, which released a report Monday based on internal documents provided by the insurance companies.

Next home $ crisis

Feds prop market
By JOHN AIDAN BYRNE
Last Updated: 12:25 AM, May 6, 2013
Posted: 10:37 PM, May 4, 2013

The seeds of the next housing crisis are being sown this spring, according to a former chief credit officer at Fannie Mae.

Despite the green shoots reported by the Case-Shiller index last week that home prices rose a blistering 9.3 percent in February from 12 months ago, Edward Pinto, a former executive at the government-backed mortgage business, says another crash can’t be too far behind.

Pinto faults Uncle Sam’s housing policy of guaranteeing 90 percent of new loans in the gigantic $6 trillion market through Fannie Mae.

He goes on to say the feds are providing billions in fat trading profits to Wall Street banks and artificially — but temporarily — propping up housing prices.

Sooner or later, he says, economic reality will catch up with this fairy-tale market, which will lead to another depressing housing collapse.

The fundamentals that matter most are falling behind the latest house prices. These include job and wage growth. And that’s amidst a surprise loosening in lending standards and tightened inventory because of the snail’s pace of moving foreclosed properties to market, says Pinto, a resident scholar at the American Enterprise Institute.

Astonishingly, as much as 50 percent of all mortgages today are issued with zero-down payments, which includes many refinanced homes for the banks’ better clients.

In the meantime, Wall Street powerhouses reap their windfall gains, trading these complex mortgage-backed securities.

The Street makes out like a bandit. In this game, banks accumulate nickels and dimes on each side of the trade, profiting on shifting interest rates, mortgage prepayments and other variables — but not on the “real” value of the underlying mortgages.

“The Street makes millions and millions of dollars on these securities,” Pinto told The Post.

“That’s the dirty little secret. The government guarantees repayment of principal and interest payments on a timely basis, regardless of what the borrower does on an individual mortgage level.”

Borrowers also get another lift. The Fed, scrambling to lower mortgage rates, currently near 3.5 percent, buys up $40 billion monthly in these mortgage-backed securities.

But Pinto doesn’t buy it. The trends are remarkably clear, stretching back 150 years through American real-estate history.

“When interest rates go up, which they inevitably will — and we seem to be at the bottom right now — they go up gradually but deliberately over a period of 20 to 30 years,” Pinto said, noting this long-term trend.

When that occurs, the housing market will be hammered again.

By his calculations, if mortgage rates rise from 3.5 percent to 6 percent, incomes would have to rise by 33 percent, or house prices would have to drop by 25 percent, to stave off an otherwise inevitable housing disaster.

Since personal incomes have been static since 2007, that part of the equation is hardly guaranteed. So a home price bust is not far behind, says Pinto.

http://www.nypost.com/p/news/business/next_home_crisis_lJoi2HNNojY2NGeDei8MsL - 78k

The great senior sell-off could cause the next housing crisis

By Jennifer Karmon

Thu, Mar 21, 2013 2:32 AM EDT

“It’s romantic for the first 15 years when you’re turning 65 and retired,” he says. “But aging in place among 90-year-olds? 95-year-olds?” Many of these people, he predicts, won’t realize that they can’t mow the lawn or pay for repairs until they’re really elderly, and the market for the their homes has collapsed even further. “My suspicion,” Nelson says, “is that many hundreds of thousands, maybe millions of those households in the 2020s to 2030 and beyond will simply give up the house and walk away.”

http://homes.yahoo.com/blogs/spaces/great-senior-sell-off-could-cause-next-housing-063235194.html - 93k -

“The Housing Market “Recovery” Is A Complete Myth”

http://seekingalpha.com/article/1151771-the-housing-market-recovery-is-a-complete-myth

With millions of excess empty houses, housing priced at massively inflated levels and housing demand lingering down at 17 year lows, there is no “housing recovery”. Besides, a “housing recovery” is dramatically lower prices by definition.

If you have a stake in housing, now is the time to get out while the getting is good.

What does Germany get from the currency union which would lead it away from adopting the Luther bargaining position (”Here I stand, I cannot do otherwise.”)

Bloomberg News
ECB Picks Fight With Germany on Bank Rescue Plans
By Jim Brunsden and Rainer Buergin
May 14, 2013

The European Central Bank set up a clash with Germany as Executive Board member Joerg Asmussen pushed back against the country’s incremental approach to building a banking union.

Asmussen called today for the European Union to create a central agency and a common backstop for handling failing banks by “the summer of next year.” This is in marked contrast to warnings from German Finance Minister Wolfgang Schaeuble that the bloc cannot venture into such territory without changing its current treaties, and should instead target a less ambitious, networked approach.

“We want a single European resolution regime together with a single resolution agency and a single resolution fund that is financed by a levy on the banking industry,” Asmussen told reporters in Brussels before a meeting of EU finance chiefs. This should happen in parallel with the ECB’s planned assumption of bank oversight powers next year, he said.

EU leaders began work on a banking union last year to break the cycle of contagion between nations and their banks that has plagued the euro area since the region’s financial crisis emerged in Greece in 2009. They started by giving the ECB oversight powers, and committed to accompany this with a single “mechanism” for bank failures.
…

They aren’t using the printing press, they are using psychology.

And ignore the man behind the curtain pulling those levers, please.

What causes home buyers to panic? Is this an example of mass insanity (aka mania thinking)?

When will the public finally understand what kind of swindlers these people are?

“Vernal real estate broker charged with forging termite inspection records”

http://www.deseretnews.com/article/865579795/Vernal-real-estate-broker-charged-with-forging-termite-inspection-records.html?pg=all

Bulletin U.S. import prices decline in April

May 14, 2013, 2:01 a.m. EDT
Philly Fed’s Plosser: Slow, then end, bond buys
Central banker says buys should be ended this year
By Steve Goldstein, MarketWatch

WASHINGTON (MarketWatch) — The Federal Reserve needs to slow asset purchases before stopping them, according to a policymaker talking about the central bank’s exit strategy for the first time since a major article was published on the subject.

The Federal Reserve should slow and then halt bond purchases when it’s time to exit from the central bank’s quantitative easing efforts, Philadelphia Fed President Charles Plosser said Tuesday from Stockholm. The Fed is buying $85 billion per month of Treasury and mortgage-backed securities.

Plosser isn’t a voting member this year on the interest-rate-setting Federal Open Market Committee, and his policies are consistently on the hawkish side of the spectrum. But he has played a key role in the Fed’s communication strategy.

“A precursor to an exit must be to slow and then halt the continued expansion of the balance sheet. This would not necessarily indicate that increases in the policy rate were imminent. Rather, it would indicate that efforts to increase accommodation were coming to a close,” Plosser said.
…

The Fed sure is engaged in plenty of discussion these days about taking away the punch bowl. Is it empty rhetoric, or do they mean business?

Google-Berg: Global Elite Transforms Itself For Technocratic Revolution

May 13, 2013

The secretive Bilderberg Group is currently undergoing a major transformation that will see it and other high profile networks merge under the banner of Google as the elite accelerates its plan to consolidate its technocratic agenda.

Put simply, Bilderberg is merging with Google under the stewardship of Google CEO Eric Schmidt, a regular Bilderberg attendee. Google’s annual Zeitgeist conference, which has been based at the Grove since 2007, immediately precedes the Bilderberg Group conference by a matter of days.

The direction in which this is all heading can clearly be surmised from remarks made by Eric Schmidt himself, who has repeatedly made it clear that he thinks privacy is a relic of the past and plans to turn Google into the ultimate Big Brother that makes George Orwell’s 1984 look like a children’s fairy tale.

“We don’t need you to type at all. We know where you are. We know where you’ve been. We can more or less know what you’re thinking about.”

“I actually think most people don’t want Google to answer their questions [...] They want Google to tell them what they should be doing next.”

“If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.”

“We need a [verified] name service for people,” he said. “Governments will demand it.” (Chinese-style Internet control).

“We know everything you’re doing and the government can track you.”

“We will know your position down to the foot and down to the inch over time…Your car will drive itself, it’s a bug that cars were invented before computers…you’re never lonely…you’re never bored…you’re never out of ideas.”

In numerous speeches, including those made at Google Zeitgeist, Schmidt has outlined his vision for a collectivist, permanently networked world in which individuality and privacy are ostracized and those who refuse to sign up to the new religion of transhumanism are shunned as sub-human savages.

That is the primary agenda now being formulated by Google Zeitgeist luminaries in concert with the Bilderberg Group, which shares many of the same members.

http://www.infowars.com/google-berg-global-elite-transforms-itself-for-technocratic-revolution/ -

“50 percent of voters 18-29 identifies as hipsters … Hipsterdom includes the fervent denial that you are a hipster or think highly of hipsters … Overall, 77 percent of those polled said they were not hipsters, 10 percent said they were, and an additional 13 percent noted that they were not sure … Of those polled, only 21 percent think PBR is actually a good beer.”

http://m.washingtonpost.com/blogs/compost/wp/2013/05/13/hipsters-are-mainstream-poll-finds/

Bloomberg guest analyst reported “areas with high levels of home debtor ship has much higher levels of unemployment and weaker local economies.”

“Don’t put too much money or faith into a house.”

“if you have to move for a job, rent”

“renting has too many powerful advantages over homeownership”

Buying a house in the current environmentputs you and your family in a weakened state. Enslavement to a massive mortgage payment for 30 long years to end up with nothing at the end is precisely what the system wants for you. Don’t debilitate and weaken yourself and your family. The calamitous events relating to housing have barely begun.

Uh-oh. Here comes another bubble.

Bankers: College debt bubble mimics housing bubble

“European Union governments want to shift the cost of rescuing troubled banks from taxpayers to the banks’ creditors”

Cause they know the taxpayers have already been raped and got nothing else to take.

Posted: 10:40 a.m. Tuesday, May 14, 2013

EU to shift bill for bank failures to creditors

By JUERGEN BAETZ

The Associated Press

BRUSSELS —

European Union governments want to shift the cost of rescuing troubled banks from taxpayers to the banks’ creditors, including the holders of large deposits as a last resort.

The finance ministers from the 27-nation bloc met Tuesday in Brussels to hammer out the new rules on how to fund bank rescues as part of their wider project to set up a banking union. The union is key to their plans to strengthen the financial sector avoid a repeat of the crisis.

“This is at the moment the biggest project for Europe,” said Dutch Finance Minister Jeroen Dijsselbloem. “It’s absolutely important to get it right.”

The bloc should move swiftly and get all elements of the banking union running by 2015, well before the initial deadline of 2018, added Dijsselbloem, who also chairs the meetings of the 17-country eurozone’s finance ministers.

Tuesday’s meeting focused on establishing a hierarchy of which bank creditors have to take losses — to be involved in a so-called “bail-in” — in case the bank needs rescuing. The ministers mostly agreed that banks’ shareholders and capital must take the first hit. After that, the pecking order becomes less clear, with junior and senior bond holders and, ultimately, all the banks’ clients on the line.

The ministers said holders of deposits of over 100,000 euros ($130,000) — the EU’s deposit insurance ceiling — could be asked to suffer losses. They said, however, that depositors would only be asked to take losses as a last resort and that there could be exceptions. All deposits below 100,000 euros must and will be “sacrosanct,” insisted EU Commissioner Michel Barnier, who is in charge of financial market reform.
——————————————————————————-

Irish Finance Minister Noonan Proposes Bail In Policy

May 7, 2013

Under the presidency of the EU, the Irish finance minister Michael Noonan(2012 Bilderberg attendee) has proposed making the Cyprus theft “bail in” using deposits over €100k policy for future bank collapses. The BIS sets the banking agenda and they want depositors raped when banks collapse along with using “bail ins” to pay for bankers remuneration (big bonuses) according to a recent paper. Judging by the state of European banks, a lot of people are going to have their wealth wiped out and everyone will be at the same wealth level in the Orwellian EUSSR.

Moving the burden

This year Jeroen Dijsselbloem, head of the group of 17 euro zone finance ministers, said that losses on bondholders and depositors could form part of future bank bailouts as euro zone officials seek to move the burden of bailouts away from taxpayers – as was the case in the Irish bailout – and on to private investors.

http://alternativeeconomics.wordpress.com/2013/05/07/irish-finance-minister-noonan-proposes-bail-in-policy/ - 64k -

http://newsroom.transunion.com/press-releases/transunion-housing-analysis-finds-mortgage-delinqu-1016827#.UZJifrXql8E

The summary quote from the article:

“The newer vintages are performing quite well, and even the older vintages, at one time deteriorating quickly, are now contributing new delinquent borrowers at rates nearly identical to the good-performing newer mortgages.”

AND

“It’s no longer a credit quality or home price depreciation issue, and we are not adding many new delinquent mortgage borrowers into the pool these days,” said Martin. “Instead, it’s an issue of the timelines to cure or foreclose. We are simply not draining the pool very fast; and the size of the ‘drain’ varies significantly by state.”

The pig is in the python folks. Some states are digesting faster than others.

Wanted: Workers to staff an economic recovery in Idaho

“A few years ago, Idahoans couldn’t find a job. Now employers may not be able to find workers. Now, with Idaho’s economy perking up, the state Department of Labor says Idaho faces a new problem: There may not be enough workers to fuel a robust recovery.

A confluence of demographic trends - a rising number of older residents not in the workforce, and a decline in workers ages 25-29 - threaten to mute the state’s comeback. “We may not flourish in the recovery,” says Bob Uhlenkott, the department’s chief research officer…….

Treasure Valley numbers show that residential construction levels are nearly back to prerecession highs, fueled by the reluctance or inability of homeowners to put their homes on the market at still-depressed prices. Some homeowners still owe more on their mortgages than their homes are worth.

In 2012, Meridian issued more than 1,000 residential construction permits for the first time since 2006. In Boise, single-family residential construction permits reached 568, just 20 short of the number issued in 2006.”

Benghazi is just a smoke screen diversion for taking away your overtime pay.

The House has passed a bill this week allowing employers to substitute comp days for overtime pay. At 1 to 1.

No time and half and in reality, no days off. (how many here have had problems taking comp days? Yeah, just about everyone I know.)

Google it.

We deserve the government we have.

As we saw with the housing bubble.

First sales drop. Then stop.

Then prices stop rising.

Then homeowners say “I am just not going to give it away…”

—————————-

The College Bubble Is Finally Bursting
Business Insider | 05/13/2013 | Rob Wile

Private colleges are offering record financial assistance to keep classrooms full, according to the Wall Street Journal’s Ruth Simon.

Some schools are seeing just 20% of the students they accepted enrolling, versus the usual rate of 33%. These schools have raised tuition discount rate — the price after grants and scholarships — to an all-time high of 45%.

Meanwhile, the median sticker price increased just 3.9% last fall, the smallest gains in 12 years. And at public schools, the sticker price climbed just 4.8%, also a 12-year low.

For the Washington Examiner’s Michael Barone, this makes it official: the college bubble has finally burst: Applicants are negotiating bigger discounts than they used to. Market competition has kicked in.

What has happened is that in a recessionary and sluggish economy potential customers have been figuring out that a college diploma may not be a good investment — particularly if it entails six-figure college loan debt that cannot be discharged in bankruptcy.

The Millennial Generation that voted so heavily for Barack Obama — 66 to 32 percent in 2008, 60 to 37 percent in 2012 — has had a hard time finding jobs, even with diplomas in hand. Especially if their degrees are in gender studies or similar fields beloved of academics. Moody’s Investors Service Managing Director John Nelson basically agrees, telling Simon, “we have hit a tipping point on price.”

Nixon’s in his grave thinking “and they impeached ME?”

KMOV anchor: The IRS is targeting me
By DYLAN BYERS |
5/14/13 12:44 PM EDT

Larry Connors, a veteran local news anchor at KMOV Channel 4 in St. Louis, says that the Internal Revenue Service has been targeting him since an April 2012 interview he conducted with President Obama — a fact that he dismissed as coincidence until the recent reports about the IRS targeting conservative groups.

“Shortly after I did my April 2012 interview with President Obama, my wife, friends and some viewers suggested that I might need to watch out for the IRS. I don’t accept ‘conspiracy theories’, but I do know that almost immediately after the interview, the IRS started hammering me,” Connors wrote on his Facebook page late Monday night.

According to his account, his questions for Obama touched on the economy and spending but were not exceptional in nature. But following “allegations that the IRS focused on various groups and/or individuals questioning or criticizing government spending, taxes, debt or how the government is run,” Connors now believes there may be a possible connection.”

Maryland Rental Rates Continue To Crater

http://picpaste.com/pics/ce4472da6607168ac386169011e1a88c.1368555580.png

I want to flip! Someone talk me down

By Diana Olick | CNBC – 4 hours ago

“Even as the stock market soars into record territory, real estate investment trusts (REITs) are shooting past it. U.S. REIT returns were more than three times those of the broader equity market in April, according to a new report from NAREIT, the REIT industry association. REITs have also outperformed the market in the first four months of this year.

“The REITs are direct beneficiaries of Ben Bernanke and his fellow global central bankers who are all following the same QE/currency debasement playbook,” said Alexander Goldfarb, of Sandler O’Neill. “Investors continue to scramble for total return, and that pressure is pushing up prices and thus compressing yield. REITs offer earnings and dividend growth as well as inflation protection.”

Institutional investors are especially drawn to REITs because they provide not just earnings growth, but strong dividend growth. REITs are required to distribute at least 90 percent of taxable income to shareholders in the form of dividends. Also, real estate is relatively inexpensive right now.

“Physical real estate is attracting institutional investors because there is a positive spread between how much it costs to finance real estate versus the income generated,” added Goldfarb.

In a private market without government guarantees, junk debt wouldn’t be a problem. It would explode, people would take losses, some might go to jail, and the situation would automatically adjust. But, with government guarantees somewhere along the line, implicit or explicit - well that is how one can put the right stamps on junk debt and get paid top dollar for it.

Ratings Shopping Revived in Asset-Backed Rebound: Credit Markets
By Matt Robinson, Jody Shenn & Sarah Mulholland
Bloomberg
May 14, 2013 12:41 PM ET

Almost six years after the start of the worst financial crisis since the Great Depression, bond issuers are again exploiting credit ratings by seeking firms that will provide high grades on debt backed by assets from auto loans to office buildings considered inappropriate by rivals.

Fitch Ratings isn’t grading a deal linked to a Manhattan skyscraper after saying investors needed more protection. The securities won top grades from Moody’s Investors Service and Kroll Bond Rating Agency Inc. Blackstone Group LP’s Exeter Finance Corp. got top-tier ratings from Standard & Poor’s and DBRS Ltd. in the past 15 months on $629 million of bonds backed by car loans to people with bad credit histories, even as Moody’s and Fitch said they wouldn’t grant such rankings.

n 1975, the SEC designated S&P, Moody’s and Fitch as Nationally Recognized Statistical Rating Organizations, or NRSROs, and required some investors to buy only securities stamped with the companies’ creditworthiness opinions.

http://www.bloomberg.com/news/2013-05-14/ratings-shopping-revived-in-asset-backed-rebound-credit-markets.html

Congressional Budget Office Estimates that deficit will drop to $642B this fiscal year. Which is about 17% of the total Federal budget.

http://money.cnn.com/2013/05/14/news/economy/deficits-falling/index

Florida man pleads guilty for taking people’s homes then renting them out

by Kim Miller

A 37-year-old man from Lecanto, Fla. pleaded guilty Friday to conspiracy charges in connection with a nationwide foreclosure rescue scam that coerced struggling borrowers to surrender their homes, which would then be rented out for profit.

Jason Sant, 37, operated the scheme with Mark Farhood, 49, formerly of San Diego, according to the Office of the Special Inspector General of the Troubled Asset Relief Program.

The duo co-owned Home Advocate Trustees, which also went by the names Walk Away Today, First Equity Trustees, Home Security Consultants, Sell Fast USA, Short Sale Buyer, USA Sell House Fast and USA Rental Housing. Their pleas were made in federal court.

They marketed themselves as buyers of distressed real estate, saying they negotiated with lenders to purchase mortgage notes at a discount after obtaining the deed from the homeowner. Once they had the property, they would rent it out to unsuspecting tenants and submit false mortgage modification applications after the home fell into foreclosure.

“As Sant and Farhood admitted in connection with their pleas, the businesses were a fraud, no such negotiations with lenders ever took place, and the scheme was merely a way for them to take possession of hundreds of residential properties at virtually no cost and then reap millions of dollars in profits by renting the homes to unsuspecting tenants,” according to a statement released this afternoon.

Farhood and Sant each face a maximum penalty of 30 years in prison when they are sentenced on August 2, 2013, and August 9, 2013, respectively.

This entry was posted on Tuesday, May 14th, 2013 at 3:30 pm and is filed under Florida economy, Foreclosures. 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.

As seen on CNBC today.

http://www.cnbc.com/id/100736121?__source=xfinity|mod&ticket=ST-117862-lQv7Z5SYATQTJg2P9has9n1N6gSTpViRk9O-20&rememberMe=null

The Canadian housing finance system is very different from the one that prevailed in the United States in the years before the U.S. housing bubble burst—but that might not be enough to avoid a major housing and mortgage crash in Canada.

When I write about that’ country’s housing bubble, the most frequent rebuttal is that comparisons with the U.S. bubble and bust are inappropriate because nearly all mortgages in Canada are “full recourse” loans—meaning that borrowers are on the hook for the full mortgage amount even in the case of a foreclosure.

Listing #13005151
$475,000 (LP)
$500,000 (SP)
Price/SqFt: 235.85
SP % LP: 105.26 12071 Alderbrook St, Moorpark, CA 93021 Sold
Beds: 3* Baths: 3 (2 0 1 0) (FTHQ) Sq Ft: 2120* Lot Sz: 4879sqft*
Area: SMP Yr: 1987

25k over list price Check out the lot size really small for this big house

The “Equity Premium Puzzle” is back.

What to watch: Stocks still better value than bonds
Adam Shell, USA TODAY; @adamshell
5:55 p.m. EDT May 14, 2013
nyse floor may 14 2013

NEW YORK — U.S. stocks, which hit another record high Tuesday, aren’t as cheap as they were when this bull market began in March 2009. But by one valuation measure, they’re still more attractively priced than the 10-year U.S. Treasury note, a fixed-income investment that investors flocked to during and after the 2008 financial crisis and Great Recession.

When valuing stocks on a price-to-earnings basis, the Standard & Poor’s 500-stock index is now trading at nearly 16 times its earnings over the past four quarters, roughly in line or a bit higher than the long-term average P-E ratio of 15.

But another metric, the so-called “earnings yield” on the S&P 500, makes stocks look like a better value relative to bonds, according to an analysis by Sam Stovall, chief equity strategist at S&P Capital IQ. The current earnings per share (EPS) yield of the S&P 500 is 5.4%, which is nearly three times as high as the current 1.95% yield on the 10-year Treasury note, the widest gap since 1955. Since World War II, the EPS yield averaged 1.6 times that of the 10-year U.S. government bond.
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That Vanguard REIT that FPSS suggested I not buy is up over 19% in one year. Go figure!

Is it safe to say that “Sell in May, go way” isn’t working any more, because this year is different?