Bits Bucket for August 31, 2013
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Posted: 12:00 a.m. Thursday, Aug. 29, 2013
Quarter of underwater borrowers owe double their home’s value
By Kimberly Miller
Palm Beach Post Staff Writer
A quarter of Palm Beach County’s underwater homeowners owe twice as much on their mortgage as what their home is worth even as housing values rapidly climb.
According to a new report from the Seattle-based research firm Zillow, the level of negative equity overall is down countywide, dropping from 42 percent of mortgages in the second quarter of 2011 to 32 percent, or 79,940, this year.
This story continues on our new premium website for subscribers, MyPalmBeachPost.com. Continue reading/get access here »
“A quarter of Palm Beach County’s underwater homeowners owe twice as much on their mortgage as what their home is worth even as housing values rapidly climb.”
As long as they keep paying their monthly, where is the problem?
“As long as they keep paying their monthly, where is the problem?”
That’s so twentieth century.
“As long as they keep paying their monthly, where is the problem?”
As long as prices keep on rising they will have the incentive to keep paying the monthly, and so the question of “Where is the problem?” is answered in that the problems that plagued the lenders tends to get resolved as each FB check is sent to the lender and ends up in the lender’s coffer.
Rising prices keeps hope alive. Keeping hope alive keeps the checks rolling in.
The hope for an eminent domain action such as proposed by the City of Richmond may also serve to help keep the payments flowing, as transferring losses to mortgage investors could generate massive home equity wealth gains for homeowners. (See posts below on this subject.)
“as transferring losses to mortgage investors could generate massive home equity wealth gains for homeowners”
I think you mean reductions in equity “lost”. To the FB that is. The losses have already occured to the lenders.
Appeals court says White House visitor logs can be kept from public
By MARK TAPSCOTT | AUGUST 30, 2013 AT 2:35 PM
President Obama and his successors in the Oval Office are not obligated to make public the names of individuals visiting the White House, according to a decision of the federal Circuit Court for the District of Columbia made public Friday.
The case was brought by Judicial Watch, the government watchdog nonprofit that has been fighting a long legal battle seeking to force release of the White House visitor logs as public records under the Freedom of Information Act.
But in a decision that is drawing intense criticism from across the ideological spectrum, the circuit court said the president has a “constitutional perogative” not to tell the American people who he or his staff meets with in the White House.
The court said the president has such a prerogative because he is not covered by the FOIA and because of “special policy considerations” that allow exemption of visitor logs from classification as agency records subject to release under the public records law.
President Obama began making public some of the White House visitor logs in 2009, but refused a Judicial Watch request for all of the logs.
Administration spokesmen have often pointed to the partial release of the logs to support the president’s claim that his is “the most transparent administration in history.”
Judicial Watch President Tom Fitton was extremely disappointed by the decision, saying “a president that doesn’t want Americans, under law, to know who his visitors are is a president who doesn’t want to be accountable. The appellate court decision punches another hole in the Freedom of Information Act, the law which allows Americans to know what their government is up to.”
Fitton’s group is considering filing an appeal, which would be to the Supreme Court. There is no guarantee that the high court would accept the case.
“The legal gymnastics in this unprecedented decision shows that President Obama is not only one willing rewrite laws without going through Congress. And this legal fight, in which President Obama is fighting tooth and nail full disclosure under law of his White House visitors, further exposes his big lie that his administration is the most transparent in history. The silver lining is that at least the appellate court opened up the records of tens of thousands of White House visits that Obama was trying to keep secret,” Fitton said.
The Obama administration is not solely responsible for the status of the logs, however, as the court repeatedly cited in its decision a 2006 memorandum of understanding between President George W. Bush and the U.S. Secret Service, which has custody of the records.
http://washingtonexaminer.com/appeals-court-says-white-house-visitor-logs-can-be-kept-from-public/article/2534954 - -
Why don’t they build a subway line between Wall street and the White House?
because they’d have to ride in the subway cars with the unwashed masses.
Why?
Because they already have one between Wall St and Congress.
Literally.
http://www.belowthecapital.org/capitol/
Thanks!
I thought it was all settled when Cheney meet with oil execs to plan our national energy plan back in 2001.
“I thought it was all settled when Cheney meet with oil execs to plan our national energy plan back in 2001.”
Cheney wasn’t part of “the most transparent administration in history.” Meet the new boss, same as the old boss.
It’s so transparent, you can look right through and not see a damn thing.
It WAS settled when Halliburton moved to Dubai, only we, the peons, don’t know the details yet.
When QE ends what will be left to keep stocks levitating from crashing back to realistic valuations?
Isn’t a hollowed out, Potemkin economy just great?
But we need to give the PTB (from both parties) and our captains of industry credit. They’ve been steadily at it, chipping away a the economy’s foundations for decades, to get where we are now.
Parents should get after their kids to do more than just prep for college:
http://tinyurl.com/mw8p6wb
Interesting how one of the national dialogues ( via comment sections of articles and social media forums, as matter of fact-ly) is that we are sucking the big one on jobs. Next round of political clowns running for election will have to sharpen their job growth talking skills, yessirree.
My insurance guy was bragging his daughter is going to college for a degree in dance. If she doesn’t teach it, or make it as a choreographer, I guess she will get an MRS degree.
MRS=wife of real degree spouse
I’m sure there is a place or two she could dance and make plenty of money. Mostly ones.
1s with 0’s added in the private room
Heard today that my wife’s nephew is working toward a nursing degree. Good kid, military upbringing, disciplined, and has a plan.
He’ll be employed pretty much forever if he completes his schooling (which I have little doubt).
R.W. I agree that your wife’s nephew picked a very lucrative degree. Should keep him going for 20 to 30 years. And he can also be a contractor, rather than work at one place. There are health care job shops that do nurse travel type of work. I think there’s money in that. As a contractor he can make the big bucks fast and set a good amount aside and retire in his late 40s if he wants to, or go into another career.
Why recent nursing graduates can’t find jobs
August 23, 2013
by Nancy Ryerson , Staff Writer
“No new graduates need apply” — that’s the message recently accredited nurses are seeing on job listings around the country. Forty-one percent of employers hiring nurses are only looking for experienced candidates, a recent survey from CareerBuilder found. Meanwhile, registered nurses topped the list of jobs with the most openings, at more than 170,000 vacancies.
For many new nurses, the problem is timing. In 2000, roughly 70,000 nurses became registered. By 2012, that number had shot up to 149,000. But just as more fresh graduates entered the workforce, a weak economy has driven seasoned nurses to put off retirement and stick around. Now, untried nurses are having a hard time competing with more seasoned professionals. In the survey, when asked why recruiting nurses is a challenge, 24 percent responded “I need to hire experienced nurses, not new graduates.”
It doesn’t matter what the dialogue is or isn’t about. The real issue is the fact that no matter what problem or situation they are addressing, they are constantly treating the symptom and not the disease. It used to be said that you could always count on the US to get it right after trying everything else first, but we don’t even get it right any more. Without campaign finance reform, we will never see our way out of our problems. EVER.
Since stock market investors already anticipate the end of QE, the effect of taking away this artificial support is already fully reflected in prices.
stock valuations are way too high for my blood. lots of risk to the downside.
Contrarians say that pessimists such as yourself put a floor under potential losses. The more folks stay out of the market due to worries about downside risk, the more powerful will be the meltup when the last bear throws in the towel and joins the bovine herd of stock market investors.
Yeah, so hurry up and go all in so we can get this over with. I’ll just be…uhhh…over here watching.
Hadn’t I seen this very thread on U.S. stock valuations two years ago? With the very same posts?
“With the very same posts?”
No. It’s different this year, due to the protracted crash in the long-term bond market.
Hadn’t I seen this very thread on U.S. stock valuations two years ago? With the very same posts?
Yeah. Still waiting.
it seems the stock markets have become very political.
When QE ends what will be left to keep stocks levitating from crashing back to realistic valuations?
The same thing as now: lies.
Lies that people WANT to believe go over pretty well.
Whatever became of the Wall Street bulls who were regularly driving U.S. headline stock market indexes to record highs? It seems as though they have vanished from the planet!
According to the story below, bond yields jumped after August 2. In fact, the protracted increase in long-term bond yields started three months earlier, on May 2.
After tough August, stock market expected to face even scarier September
By The Associated Press
Published: Friday, August 30, 2013, 8:00 p.m.
Updated 13 hours ago
NEW YORK — August was tough on the stock market. Now, investors face an even scarier September.
Disappointing news on consumer spending helped pull stocks lower on Friday in a quiet end to the market’s worst month in more than a year.
The Standard & Poor’s 500 index closed August with a loss of 3.1 percent, while the Dow Jones industrial average lost 4.4 percent. Both had their biggest one-month drop since May 2012.
The month began on a high note. On Aug. 2, news that unemployment fell to its lowest level in more than four years helped lift the S&P 500 index to a record high of 1,709.67. Then things quickly changed.
Bond yields jumped, sending mortgage rates up, as investors began speculating that the Federal Reserve would withdraw some of its support for the economy as early as September.
An array of questions weighed on investors’ minds, said Lawrence Creatura, a money manager at Federated Investors.
The latest wild card is Syria. The possibility that the United States could strike Bashar al-Assad’s regime propelled oil prices to a two-year high earlier in the week.
“The Syria situation is a strong dose of uncertainty,” Creatura said. “And investors hate uncertainty.”
…
Market Snapshot
DJIA 14,810.30 -30.64 -0.21%
S&P 500 1,632.97 -5.20 -0.32%
Nasdaq 3,589.87 -30.43 -0.84%
Treasuries Drop for 4th Month as Economy Fuels Fed Taper Views
By Cordell Eddings - Aug 30, 2013 9:00 PM PT
Treasuries fell for a fourth straight month, the longest losing streak in more than two years, as signs of a mending economy supported the case for the Federal Reserve to moderate monetary stimulus.
U.S. five- and seven-year note auctions this week attracted the least demand in four years as a report showed the economy expanded at a faster pace in the second quarter than previously estimated. A smaller trade deficit and gains in inventories overshadowed the effects of federal budget cutbacks, damping haven demand. A report Sept. 6 is forecast to show U.S. nonfarm payrolls rose more this month than last.
“It’s clear to the market that the Fed is committed to scaling back its purchases of Treasuries, and as such, we are seeing a continuation of the move out of the asset class at these levels,” said Christopher Sullivan, who oversees $2.1 billion as chief investment officer at United Nations Federal Credit Union in New York. “We’ve had unambiguously better GDP and a slow but steadily repairing labor market that has changed views on the path of the underlying economy. People have been more reluctant to hold Treasuries.”
The benchmark 10-year yield increased 21 basis points this month, or 0.21 percentage point, to 2.78 percent in New York, according to Bloomberg Bond Trader data. The price of the 2.5 percent note maturing in August 2023 was 97 17/32.
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CREDIT MARKETS
Updated August 30, 2013, 7:32 p.m. ET
Treasury Bonds Post Fourth Consecutive Monthly Loss
Longest Monthly Losing Streak Since March 2011
By MIN ZENG
Benchmark U.S. Treasury bonds ended August on a down note, posting a fourth consecutive monthly price decline in the latest sign of investor anxiety over rising interest rates.
It was the longest monthly losing streak since the benchmark 10-year note posted seven consecutive monthly losses through March 2011.
An expected reduction in the Federal Reserve’s $85 billion monthly bond-purchase plan continued to weigh on prices. Since the start of May, yields on the 10-year U.S. Treasury note have risen more than a percentage point, amid worries that the central bank may pare back its bond purchases as soon as September. Bond prices fall when their yields rise.
“The market is correcting to get to levels which will reflect an end to the bond-buying program by the Fed,” said Gary Pollack, a fund manager at Deutsche Bank AG’s private-wealth-management unit. “Even though the tapering process has not even started, the market is looking ahead to a day without Fed support.”
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Is it too late now to unload falling-knife stock market investments bought when the S&P500, DJIA and NASDAQ were hitting new record highs on a daily basis?
S&P 500 Extends Worst Month Since May 2012
By Will Hadfield & Nick Taborek - Aug 30, 2013 1:19 PM PT
U.S. stocks extended the worst monthly drop since May 2012 as investors weighed prospects for an American military response to a chemical weapons attack in Syria. Oil and European shares fell while Portugal’s bond yields surged amid concern the nation won’t meet its deficit target.
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Here’s a prediction to cheer gold bugs:
Gold will climb to $10,000 when the correction comes, says SocGen’s Edwards
August 30, 2013, 9:01 AM
This just in: Societe Generale Strategist Albert Edwards sees a massive market crash on the horizon.
The S&P 500 index (SPX -0.32%) will tumble to 450. Investors will bid up haven assets like gold GCZ3 , which will climb seven-fold, and the 10-year Treasury note 10_YEAR , whose yield will fall below 1%, he writes in his latest note to clients.
Ok, so maybe it’s a given that SocGen’s biggest permabear is still, well, a bear. He made the same call back in April, and he’s had the S&P target of 450 as far back as 2010.
…
A massive market crash will destroy trillions of dollars. If trillions of dollars are destroyed then just where is the money going to come from to push gold up to $10,000?
Gold going to $10,000 would result from some sort of inflationary event. A market crash is not an inflationary event.
I found the prediction odd as well. You always have to wonder if these market prognosticators with MSM bully pulpits are predicting 100% opposite their private beliefs in order to encourage the masses to take the other side of their positions.
No doubt they are. They go on CNBC daily to talk up the very stocks they are selling. It’s disgusting.
It’s not at all odd if they want press coverage. You ever hear a guy get press time on CNBC who will say “stocks are probably not going to rocket up from here, or down, you should probably expect perhaps a 7% return annually from here over the next decade”?
Oh yeah, I heard such a thing on one of the networks…from Jack Bogle–it takes a guy like Bogle to be able to say something boring and still get press coverage…
The U.S. is not the biggest economic power anymore when you combine India, China, South Korea, and the emerging markets. They can and will do fine without the U.S. In fact, gold ownership in the U.S. is dwarfed by gold ownership in Europe. In turn, gold ownership in Europe is dwarfed by gold ownership in India and China (even counted separately).
WEEKEND INVESTOR
August 30, 2013, 5:58 p.m. ET
The Seven Deadly Sins of Investing
Financial crisis be damned—investors are still making the same mistakes the (SIC) always have.
By KIRSTEN GRIND
It has been nearly five years since the depths of the U.S. financial crisis, and investors have learned a lot since then. Or have they?
Despite the downturn that left many investors reeling from losses on everything from real estate to the stock market, when it comes to investor behavior—those hard-wired instincts that drive us all—little has changed, say psychologists and financial advisers.
Investors still make the kinds of mistakes that have gotten them in trouble for decades. They are wooed by the hottest new trend, they want to follow the crowd—consequences be damned—and they just can’t seem to pay enough attention to important details, such as the steep annual fees charged by many mutual funds.
“When it comes to money, we are operating as if we were in the jungle, having to deal with predators like tigers,” says Brad Klontz, a clinical psychologist and associate professor of financial planning at Kansas State University. “We have a caveman brain.”
There are ways to avoid these pitfalls. Investors need a hard and fast plan of their investment goals, they need to find a trusted adviser or family member to help weed through decisions and they need to stop paying so much attention to the short-term events that drive media coverage.
Here are the seven deadly sins of investing, in no particular order, and how to protect against them.
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Would U.S. military action in Syria be good or bad for Wall Street?
Obama says U.S. will take military action against Syria, pending Congress’s approval
By Ernesto Londoño, Updated: Saturday, August 31, 11:02 AM
President Obama said Saturday that the United States has decided to use military force against Syria, saying last week’s alleged chemical weapons attack there was “an attack on human dignity,” but that he has decided to seek congressional authorization for such a strike.
The announcement appeared to put off an imminent cruise missile attack on Syria and opens the door to what will almost certainly be a contentious and protracted debate.
As the U.S. considers military strikes against Syria, Middle Eastern allies seem hesitant to back such plans.
Obama’s remarks came as senior administration officials were making a fresh round of calls to congressional leaders on Saturday in an effort to bolster support for a potential military strike on Syria, officials said.
Secretary of Defense Chuck Hagel and Gen. Martin Dempsey, the chairman of the Joint Chiefs of Staff, were among the administration officials expected to speak to key members of Congress on Saturday afternoon, amid signs that the White House is close to ordering an attack on Syria to admonish it for its alleged use of chemical weapons last week.
“We’re continuing to weigh our options,” a senior U.S. official said. “We’re confident in our analysis that the United States and our allies can handle any contingencies that come as a result of military action should it be chosen by the president.”
…
Is there oil in Syria?
Close enough…did you notice oil prices rallying this week on the news of a potential response to the chemical weapons attack?
Obama has become delusional and should be Baker Act’ed both for his own safety and for that of the entire planet. Let ‘Potty-Mouth Joe’ run this goat-f**k-circus for the remainder of O-bomb-a’s term. He can’t be any worse and may be more entertaining to watch. Lets do it for the children.
Bashar al-Assad is being squeezed badly, and Israel would appreciate all of the Sarin stockpiles destroyed.
Geez, One might think everyone would appreciate Sarin stockpiles being destroyed…
How would those stockpiles be destroyed- by bombing them? I wouldn’t think the catastrophic, uncontrolled release of a stockpiled nerve agent would be the best way to destroy it. It seems that it risks gassing the same people that Obomba wants to save. That is assuming that anyone really has proof if nerve agents were used at all and then detailed information on where and how these weapons are stored. It does not appear that we have any of that information. All we appear to have are YouTube videos and verbal reports? http://www.youtube.com/watch?v=lmN5OLm59tM
Separate issue, clearly
I hate to tell you this, but over 14,000 DOW, is STILL record level.
Did your taxes go up or down this year? Ours definitely went up.
43% of Americans pay zero federal income tax
August 30, 2013, 2:15 PM
By Jonnelle Marte
The portion of Americans who don’t have to pay federal income tax dropped to 43% this year, a new analysis shows.
That is down from the notorious 47% figure from 2010, which was made famous by Mitt Romney during last year’s presidential election, says Roberton Williams, an economist for the nonpartisan Tax Policy Center, which released the estimates Thursday. “More Americans are paying taxes,” he says.
The ratio of Americans expected to pay no federal income tax dropped—and should continue to fall— because more Americans are working and making more money, pushing them out of the group of workers who don’t make enough money to be required to file a tax return, says Williams. (Families below the federal poverty level don’t have to pay income tax.) Other people’s tax liabilities grew after certain tax breaks, meant to stimulate the economy, expired. By 2024, only a third of Americans will pay no income tax, Williams estimates.
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My income’s gone down fourth year in a row. I finished paying the taxes on my huge IRA conversion to Roth. Now the big taxes are in the past. Took some stock gains this year since I needed the money to buy gold. My income for 2013 will be somewhere between 1/2 and 2/3 of my income for 2012. I prepared for the big tax hikes.
Ongoing thing is to buy movable, hidable assets. Gold bullion of course. Also am getting into Bordeaux. Got my first wine fridge.
“I finished paying the taxes on my huge IRA conversion to Roth.”
Ditto here. Glad I did my conversion when I did…our Roths are now worth about twice what they were when I converted. The only traditional retirement account we have left is my wife’s 401k match…her employer has a Roth 401k program, and every penny we have going in now is into that Roth.
And you can also convert non-deductible traditional IRAs every year, no matter what income level. I started doing this a couple years ago. In late December after the dividends are redistributed, I convert my Vanguard non-deductible traditional IRA to my Vanguard Roth IRA. In early January I start a new Vanguard non-deductible traditional IRA.
The amount that is taxable is the gain beyond the amount you funded. The rest is not taxable. It’s a very low cost thing to do. A very smart thing to do.
I think the contribution limit this year is $6,500 for over 50. So that amount will not be taxable at state or federal level when I convert it to my Roth.
Yup, the big tax bite is done!
Stories like this are bullcrap.
1st, they DID pay federal income tax. You work a W2 job, taxes are deducted directly out of your paycheck. Period.
You may get that money BACK AFTER you file year end taxes, but until then, it still comes out of your pocket.
Secondly, if you are so poor you get all your deducted pay back, you are REALLY effing poor.
Any if you think they are living the life of Reilly I dare you to try living on that income. You would go crying to your mommas in less than a month of trying to live on their income.
Year after year? You would end up in prison. With a miniscule few exceptions, NONE of you are tough enough to live like that.
That there are THIS many people living like this in this country puts lie to everything MSM tells us.
Income taxes were never ment to be paid by all citizens, only the top tier.
…and there is this.
Exactly.
U.S. third-quarter-growth forecasts get a haircut
August 30, 2013, 11:23 AM
The meager increase in consumer spending in July has quashed any optimism generated by faster second-quarter U.S. growth.
A handful of Wall Street firms chopped their growth targets for gross domestic product in the third quarter after the government reported Friday morning that spending rose a scant 0.1% in July, based on a preliminary estimate.
RBS slashed its prediction for GDP growth to an annualized rate of 1.5% from 2%; Macroeconomic Advisers cut its projection to 1.6% from 1.8%; Barclays trimmed its forecast to 1.6% from 1.9%; and Morgan Stanley reduced its estimate to 1.9% from 2.1%.
Before the disappointing spending report, economists surveyed by MarketWatch were forecasting a 2.4% growth rate in the third quarter. Now that forecast is likely to fall below 2%.
Just a day earlier, some economists pointed to the sharp upward revision in second-quarter GDP as evidence that the economy is ready to accelerate in the second half of 2013.
The government on Thursday revised growth up to 2.5% from an initial read of 1.7%. That was more than double the 1.1% pace of growth in the first three months of the year.
The second quarter, however, might have gotten a short-lived boost from sharply higher U.S. exports and business investment. Those categories seldom see strong back-to-back gains, so the current quarter, which runs from July to September, might not reap the same benefits.
…
Do you gamble in the international housing market with residential real estate “poker chips”?
Murtaza Baxamusa +1000
What does SD’s all-cash housing market mean?
By Lily Leung6 a.m.Aug. 31, 2013
Nearly 30 percent of San Diego County homes sold in July were purchased with cash, much higher than the historical average of 16 percent. What does the continuing high level of all-cash buyers tell about the state of San Diego’s housing market? Our U-T Housing Huddle panel, a group of real estate insiders, chimed in:
•Murtaza Baxamusa, directs planning and development for the Family Housing Corporation, of the San Diego Building Trades in Mission Valley:
It is indeed unfortunate for first-time home-buyers that speculative buyers consist of almost a third of home purchases in San Diego. This is because the latter drive up prices, often come from foreign sources, and outcompete bids with traditional financing. Some may argue that the presence of cash buyers signals strong market demand. But speculative buyers have blown bubbles in the past, and this time may be no different. If housing costs spiral unsustainably faster than family incomes and local employment growth, homes become poker chips for international gamblers, rather than dwelling units for San Diego families.
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Are rising rates killing the ‘Housing Recovery’?
‘Housing Bubble’ Deflated By Rising Rates
By Justin Maiman | Daily Ticker – 22 hours ago
As home loan applications slide and mortgage rates rise, the housing recovery is showing its age.
Bloomberg News features a story today that details the problems some potential home buyers are running in to across the country. Case in point, a Seattle couple, Amy and Ted Wilder, who decided to put their search on hold last May because of the sudden spike in rates. “We fell in love with a house for about $400,000 and thought we could afford it, and then we discovered it was $300 more a month than what we would have paid in February when we started looking,” Amy Wilder, 42, said. “The mortgage rates just pushed it too far.”
Yahoo Finance columnist Rick Newman has been tracking the rates and their effects.
“It immediately raises your out-of-pocket costs — if you got caught in this trap where you’ve been looking for a house for six months,” says Newman. “When you finally get the deal — mortgage rates are at 4.5% — you say whoa, my monthly payment just went up by a couple hundred bucks!”
So The Daily Ticker’s Aaron Task asked Newman: Is the housing recovery dead?
“I hope not… we’re starting to see the first signs that rising mortgage rates are, if nothing else, slowing the recovery.”
…
As someone here pointed out yesterday, with all-cash investor purchases accounting for north of fifty percent of U.S. home sales, do interest rates even affect home sale prices anymore?
“Yesterday?” I’ve been beating that drum for months and got nothing for my trouble but debt donkey insults.
Victim too?
Now how many times do I need to explain to you that private equity using other peoples money to buy excess empty houses is meaning less???
2 more times? 3x?
So long as all-cash investors dominate the red hot U.S. coastal housing markets, I don’t see why interest rates would matter.
Unless most of them pay cash to get the best deal they can but then need to turn around and immediately finance to stay liquid.
Given low interest rates and the huge tax subsidies in the mortgage interest deduction, it makes perfect sense for wealthy all-cash buyers to immediately turn around and finance.
At least some members of the House and Senate have the right idea, proposing bills to eliminate the myriad subsidies which helped create the Housing Bubble.
Whether they will ultimately have the cojones to override the onslaught of the real estate lobby remains to be seen.
Home-mortgage interest deduction at stake
By Kenneth Harney
Posted: Thursday, Aug. 29, 2013
Staff members of the House and Senate tax-writing committees are putting together legislative drafts that may determine the fate of real estate’s most prized tax benefits – first and second home-mortgage interest deductions, property tax write-offs, capital gains exclusions and others.
Both committees’ chairmen have promised major tax reform proposals this fall.
On the Senate side, Finance Committee Chairman Max Baucus, D-Mont., asked colleagues in both parties to submit recommendations. To provide senators political cover and deniability, the committee put all recommendations under a 50-year top-secret classification.
On the House side, Ways and Means Committee Chairman Dave Camp, R-Mich., instructed staff to move ahead with drafts, allowing the committee to consider a final tax reform bill in October.
So what’s really on the chopping block?
Here’s a quick overview: The House bill under construction seeks to reduce individual and corporate marginal tax rates across the board. Camp has said he wants to clear out deductions, exclusions and other long-time tax code subsidies enough to lower individual taxes to a top marginal rate of 25 percent, down from the current 39.6 percent. He also wants to eliminate the alternative minimum tax (AMT) and slash corporate tax rates.
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What I’ve seen is that they do exactly this…they refinance when they can. But, how much do you think they pull out?
I’ve seen 65-70% of their cost.
So, their cash purchase isn’t ultimately a cash purchase, nor is it completely leveraged….it’s more like 25-30% down.
New York to Seattle Buyers Tap Brakes After Rates Rise
By Prashant Gopal & Heather Perlberg - Aug 30, 2013 1:20 PM PT
Amy and Ted Wilder lost out in the bidding for several Seattle-area homes during the past six months, even with offers well above the asking price. After May’s sudden spike in mortgage rates, the Microsoft Corp. consultants put their search on hold.
“We fell in love with a house for about $400,000 and thought we could afford it, and then we discovered it was $300 more a month than what we would have paid in February when we started looking,” Amy Wilder, 42, said. “The mortgage rates just pushed it too far.”
A surge in borrowing costs to a two-year high is starting to cool demand from homebuyers as higher rates combine with surging prices to reduce affordability, according to data released this week. The biggest pinch is being felt in expensive markets such as Seattle and New York, where budgets already were stretched, leading to a more uneven national recovery.
Contracts to buy previously owned homes fell 1.3 percent last month, the biggest decline this year, the National Association of Realtors said two days ago. They slid 6.5 percent in the Northeast and 4.9 percent in the West, the data showed. The figures followed a report last week that July new-home sales plunged 13.4 percent, paced by a 16.1 percent drop in the West.
“There is a bigger monthly payment shock in the high-cost areas,” said Lawrence Yun, chief economist for the Realtors group. “Higher interest rates may pull demand out.”
…
“…up 23.3 percent from the same month in 2012…”
That’s right up there near the peak rate of home price appreciation in SoCal just before the 2007-08 crash.
High interest rates, tight housing challenge real estate industry
By GEORGE CHAMBERLIN, Executive Editor
Friday, August 30, 2013
To buy or not to buy, that is the question facing many potential homeowners as they watch mortgage interest rates tick higher along with home prices.
The biggest challenge facing the residential real estate industry here in San Diego County and many other places in California is the tight supply of homes for sale. The only way inventories can be increased is by existing owners putting up their homes for sale or homebuilders increasing production.
“More homes clearly need to be built in the West to relieve price pressure, or the region could soon face pronounced affordability problems,” said Lawrence Yun, chief economist with the National Association of Realtors.
Yun is suggesting the affordability equation will be affected by higher prices as the demand for homes grows with a limited supply available. The median price of a home sold in San Diego County rose in July to $483,800, up 23.3 percent from the same month in 2012, according to the California Association of Realtors.
At least one builder, KB Homes, is taking on the challenge to provide more homes. The company announced in August that it has acquired land for two new developments in Lakeside and La Mesa with construction to begin immediately.
“We’re very pleased to have secured these two prime parcels of land in one of the county’s most popular areas where there is a limited number of new-home communities,” said Steve Ruffner, president of KB Home’s Southern California division.
To be sure, developers have been hard-pressed to build in a market stressed by limited land, difficult financing and a consumer base uncertain about the timing and benefit of homeownership. But builders are positioning their properties to take advantage of a growing number of potential buyers.
“We believe the recovery is real and we are in the early stages of the rebound. Our average sales contracts per community are about where they were in 1997-1998, several years into the previous cyclical recovery,” said Douglas Yearley, CEO of Toll Bros., a developer of luxury homes with a community in San Diego.
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Pimco Sees Taper in Worst MBS Slump Since 1999: Credit Markets
By Jody Shenn - Aug 30, 2013 8:55 AM PT
U.S. government-backed mortgage bonds are heading toward their longest monthly slump since 1999 as concern mounts that the Federal Reserve will begin paring its debt purchases even as the steepest rise in home-loan rates in at least 40 years slows the housing rebound.
Securities guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae lost 0.33 percent through yesterday, heading for their fourth month of declines and bringing losses since April to 2.78 percent, according to Bank of America Merrill Lynch index data. For almost a year, the Fed has been adding $40 billion of bonds to its balance sheet each month from the more than $5 trillion market. It expanded the purchases in January to include $45 billion of Treasuries.
Investors led by Pacific Investment Management Co., manager of the world’s biggest bond fund, are bracing for the Fed to scale back its stimulus when policy makers meet next month, even after data the past week showed falling home sales and a slowdown in property appreciation. Average rates for 30-year mortgages reached a two-year high of 4.58 percent last week.
“We still believe that tapering is going to happen,” said Michael Cudzil, an executive vice president who specializes in mortgages at Newport Beach, California-based Pimco. “The Fed is looking at the progress seen in the data over a long-term period of time, rather than any one given month.”
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Where do some of America’s biggest, baddest banks get off in beating up on a small, impoverished city which is heavily populated by people of color?
Housing fix has strong enemies
By Michael Hiltzik
August 30, 2013, 7:17 p.m.
The federal government and the banking industry have failed to bring mortgage relief to homeowners in need. Richmond’s plan to use eminent domain would help fill the void.
Banks argue that the Richmond initiative is unnecessary because they already do their utmost to reach out to struggling homeowners. Above, protesters hold a banner outside Wells Fargo headquarters in San Francisco last month. (Rohan Smith, San Francisco Chronicle / September 1, 2013)
One way to judge the virtues of the city of Richmond’s initiative to use eminent domain to help its strapped mortgage borrowers is by the hysterical reaction of the banks and investors holding the mortgage loans.
Wells Fargo & Co. and Bank of New York have sued the East Bay city in federal court to throttle the plan even before its birth. (A court hearing on their request for an injunction is set for Sept. 13.)
They’ve enlisted federal regulators in their hand-wringing over the damage little Richmond (pop. 105,000) might wreak on the mortgage market nationwide. The real estate interests have even cajoled some of their housebroken congressmen, such as John Campbell (R-Irvine), into introducing legislation to stop Richmond in its tracks.
So there must be something to the city’s idea.
…
There’s only a handful of Richmond politicians. I’m thinking both carrots and sticks will be proffered, to bring them in line.
+1. Agree. The same folks who raised the Kelo petard are afraid of being strung up themselves.
Reminds me of how Occupy Wall Street scared them poopless. Tobin transaction tax? Take the money out politics? Quick, bring in some hippies!
There are even international investment banks piling on in the battle against Richmond’s eminent domain plan. I guess it should come as no surprise that the greater fools who invested in subprime mortgage loans to Richmond home buyers span the globe.
“I guess it should come as no surprise that the greater fools who invested in subprime mortgage loans to Richmond home buyers span the globe.”
They had to span the globe; The locals (those in position to be in the know) wouldn’t touch Richmond, would laugh at the idea of pouring money into Richmond.
But others? Hey, it’s California, the GOLDEN State. What could go wrong?
Look on the map: Richmond is but ONE INCH away from MoneyLand, aka Silicon Valley.
(Location, location, location.)
A guy I know has relatives living in Isreal and these relatives living in Israel have had promoted to them the idea that they should invest in apartment houses in (choke) Compton.
This is an idea that just might work out for promoters who are working the people living in Isreal but would not be all that successful if offered to the people who know anything at all about Compton.
If you read “Roughing It” by Mark Twain you will learn that as a newspaper reporter he was “encouraged” to write favorable articles about the varous mining companies that operated near the Comstock Lode. The articles were not written for local consumption (the locals knew all they needed to know), they were written to be used as “supporting evidence” by promoters touting to the Big Money East Coasters the merits of the investments that were being promoted.
Miight Compton become tomorrow’s eminent domain battleground?
Oh, it’s a battleground all right.
If Richmond were to be successful, there will be thousands of battlegrounds and the mortgage market would evaporate…You would get your cheap housing but you better have cash because home loans would cease to exist…
“You would get your cheap housing but you better have cash because home loans would cease to exist…”
I’m not buying it. As the Fed, Fannie Mae, Freddie Mac and FHA have demonstrated since the 2007 collapse of the subprime mortgage market, the government will find a way if private investors are not up to the task.
California economic history is littered with tales of locals scamming monied folks from elsewhere.
Another wonderful such tale is that of Walter Scott, aka “Death Valley Scotty,” who convinced wealthy investors back east to back his nonexistent gold mining operations in the area surrounding Death Valley. He enjoyed the good life for a number of years, living off the proceeds of his fundraising activities, before the scam was discovered.
If you enjoy this sort of story, I highly recommend a visit to Scotty’s Castle in Death Valley .
‘tomorrow’s eminent domain battleground’
Check this out, and note who they depict as vultures:
‘MRP, a politically-connected venture capital firm from California, recently hatched a plan to make millions by foreclosing on homeowners who are current on their payments. It sounds unbelievable, but its true. However, MRP cannot seize homes on its own, that’s why they are talking to the North Las Vegas City Council and elected officials in your area about using eminent domain to seize and foreclose on homes even in cases where homeowners are current on mortgage payments.’
‘Now they’ve gone too far. Sign the petition to tell your elected officials “Don’t Take My House!”
http://www.donttakemyhouse.com/
There is FAR more to this story than eminent domain.
It turns out the whole scheme was concocted by MRP and presented to the city.
http://www.latimes.com/business/la-fi-eminent-domain-20130831,0,7825224.story
Richmond is threatening to use eminent domain to remove troubled loans from mortgage bonds in order to write down the principal for homeowners. The novel plan, promoted by San Francisco investment firm Mortgage Resolution Partners, seeks to stop another wave of foreclosures in the working-class Northern California city.
The plan has drawn fierce opposition from the financial industry, which has banded together in a lawsuit challenging the city’s authority. In a new filing late Thursday, the plaintiffs accused the city and Mortgage Resolution Partners of cherry-picking the most valuable loans and forcing their sale at less than market value — so the firm can make a profit.
“http://www.don
ttakemyhouse.com/”Strategically strike out a few letters to find a hidden message:
http://donkeyhouse.com
“If you enjoy this sort of story, I highly recommend a visit to Scotty’s Castle in Death Valley .”
+1 I’ve got some great dark beer too.
using eminent domain to seize and foreclose on homes even in cases where homeowners are current on mortgage payments.’
Didn’t New Haven, CT already do this… and succeed courtesy of the Supreme Court?
“It turns out the whole scheme was concocted by MRP and presented to the city.”
Isn’t this yet another red herring? If the question is whether or not the scheme is legal, why does who concocted it have anything to do with it?
Perhaps MRP can sell their ideas to other municipalities that dot America’s landscape. It would be awesome to see Megabank, Inc lose this one, with widespread implications. Why shouldn’t the FBs win one every now and then, anyway?
“You would get your cheap housing but you better have cash because home loans would cease to exist…”
Would a single Fannie somehow work better than two did?
After a housing bubble, do Americans really need subsidized 30-year mortgages?
By Tim Fernholz @timfernholz
August 7, 2013
America, you built this. Reuters/Kevin Lamarque
There’s one important thing to remember about America’s housing-driven economic recovery: The government financed almost all of it.
Now American lawmakers are figuring out just how much it’ll pay for in the future—and whether it should cover the costs of the pricey 30-year home loans most Americans view as their birthright.
Today, the bulk of new mortgage loans are guaranteed by the US government. In the first part of 2012, it was nine in ten mortgages, up from three in ten in 2006. Fannie Mae and Freddie Mac, “government sponsored-entities” (GSEs), buy mortgages and bundle them into securities with a promise to cover the costs if borrowers stop paying the underlying loans—that’s the big subsidy. These securities are sold on the open market, providing a flow of financing to the mortgage lenders (the banks). The GSEs have functioned with implicit financial backing from the government since Fannie Mae—originally created in 1938 to help the US housing market out of the Great Depression—was privatized to pay for the Vietnam war.
The implicit backing quickly became explicit during the 2008 financial crisis, when many homeowners stopped making loan payments. The GSEs, on the hook for all those payments, were nationalized when it became clear they would go bankrupt otherwise. While that was hugely expensive, to the tune of $187 billion, today the lending business is brisk as home prices rise. Fannie and Freddie have paid some $132 billion back and look set to make another $60 billion this year.
Lucking into a hugely profitable securitization operation is pretty awesome, from the point of view of the government, but it’s not a good long-term plan. Reform efforts are now gathering steam, and yesterday (Aug. 6) president Barack Obama spoke up in favor of a plan that looks like the old system.
To be sure, the White House would get rid of multiple GSEs in favor of a single mortgage insurer, and it would demand far more money up-front and risk-sharing from private lenders. But the framework still maintains the goal of supporting America’s cherished 30-year fixed-rate mortgage—a global rarity, whose supporters fear it will be extinguished without government backing, especially if interest rates start to rise. Critics of that approach note that so-called jumbo mortgages—those that are too large for a federal guarantee—still exist in 30-year fixed-rate varieties, and are just slightly more expensive.
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Aug. 31, 2013, 8:05 a.m. EDT
10 things interns won’t tell you
They’ll get your coffee, but might spit in it, and post the pic on Twitter
By Maria LaMagna, MarketWatch
1. “You’re not giving me enough to do.”
It’s no secret that in today’s hypercompetitive internship market, students and recent grads are jostling for a chance at even unpaid stints where they’ll do little more than make copies or organize supply closets. Almost two-thirds of the class of 2013 participated in an internship or co-op, according to the National Association of Colleges and Employers, the highest rate since the group started tracking internship numbers in 2007. And nearly 50% of those internships were unpaid.
But at the same time, employers have strong incentives to keep these newbies happy. Because of recent changes in the work world (including an influx of 20-somethings who are still struggling to find full-time work), some companies are relying more than ever on these new, untrained hires; and others are relying on their intern pools to find and develop talent that can play bigger roles someday. And that means more mid-career professionals have to learn how to manage, recruit and work with them.
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Unpaid workers? Funny how business aren’t charities, but expect charity to be given to them.
How is the muni bond market holding up in the wake of Detroit’s bankruptcy?
Bonds
Detroit’s Bankruptcy Doesn’t Faze the Municipal Bond Market
By Brian Chappatta August 08, 2013
Photograph by Jeff Kowalsky/Bloomberg
Strange as it may seem, Detroit’s bankruptcy filing—the biggest ever for a U.S. city—doesn’t appear to have unnerved the $3.7 trillion U.S. municipal bond market. Tom Hamilton, finance director of Norwalk, Conn., had no trouble finding buyers for $21 million in general obligation bonds on Aug. 1. Localities from Washington State to Alabama to Massachusetts planned to sell $8.6 billion in debt during the first full week of August, the most since April.
The momentum defies predictions that the muni market would go into a deep freeze following the Motor City’s financial collapse and Detroit Emergency Manager Kevyn Orr’s plan to impose losses on some bondholders. “There’s not a lot of evidence to show this has been the death knell for GO [general obligation] bonds,” says Craig Pernick, senior managing director at Chevy Chase Trust, which oversees about $1.1 billion in munis.
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UPDATE 1-U.S. municipal bond funds report 14th week of outflows
Thu Aug 29, 2013 6:12pm EDT
By Lisa Lambert
Aug 29 (Reuters) - U.S. municipal bond funds reported net outflows $1.74 billion in the week ended Aug. 28, lower than the $2.14 billion of outflows in the previous week, according to data released by Lipper on Thursday.
It was the 14th week in a row of outflows, which kept the four-week moving average negative at $1.52 billion, said Lipper, a unit of Thomson Reuters.
Fears of interest rate hikes and nervousness about credit risk have led to a mass exodus from municipal bond funds, with outflows reaching a record high of $4.53 billion at the end of June. Detroit, which filed for the largest U.S. municipal bankruptcy in July, added to investors’ concerns.
Investors pulled $335.79 million out of high-yield funds, compared with $460.03 million the week before. Exchange-traded funds had net outflows of $24.79 million, after outflows of $114.85 million the previous week.
During the same week in August last year, municipal bond funds reported $602.32 million of net inflows, according to Lipper.
…
August 19, 2013
5 biggest municipal bankruptcies in the U.S.
Detroit is not the first major city, town, or county to file for Ch. 9 bankruptcy protection. In 2012 alone, Stockton and San Bernardino also petitioned for bankruptcy protection. Each had hundreds of millions of dollars in debt. From 24/7 Wall St., these are the five largest municipal bankruptcies in U.S. history.
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If the courts rule in favor of pension cuts, a new investing strategy will emerge for Wall Street megabanks:
1) Make subprime loans to cities in the good times, enabling them to rack up huge pension obligations.
2) Eliminate pension obligations in the bad times.
Heads we win, tails we win!
Judge to rule on San Bernardino bankruptcy, pensions loom
By Tim Reid
LOS ANGELES | Sun Aug 25, 2013 8:07am EDT
(Reuters) - The city of San Bernardino is expected to learn on Wednesday if it is eligible for bankruptcy protection despite the opposition of California’s powerful public pension system - an important test for the federal law used by Detroit and other U.S. cities burdened by pension payment costs.
Most observers expect federal bankruptcy judge Meredith Jury to rule that cash-strapped San Bernardino, 60 miles east of Los Angeles, is eligible for Chapter 9 protection, a year after it declared bankruptcy having effectively run out of cash to meet its day-to-day obligations.
A city of just 240,000, San Bernardino could be a precursor for what is shaping up as a central issue in the far bigger bankruptcy case of Detroit: whether an insolvent city can cut already-promised pensions for its workers and pay less into its public retirement funds.
In an unprecedented move, San Bernardino halted its biweekly payments to the California Public Employees’ Retirement System (Calpers) for an entire year after declaring bankruptcy last August.
San Bernardino has now resumed payments to Calpers, America’s biggest pension fund and San Bernardino’s largest creditor, but no city has ever halted employer payments to Calpers before. The $260 billion pension fund is the only party objecting to San Bernardino’s bankruptcy, saying that pension funds should not be treated like other creditors. Calpers may appeal the eligibility decision.
In Detroit, which last month filed for the largest municipal bankruptcy in U.S. history, estimated at $18.5 billion, the state-appointed emergency manager, Kevyn Orr, has already called for cuts to current and future pension benefits in any bankruptcy plan. Unions representing workers have objected to the bankruptcy by arguing that it contravenes benefits’ protection enshrined in Michigan’s state constitution.
LIKE A LAB TEST FOR DETROIT
In both San Bernardino and Detroit, the idea of cutting back pension payments has set up a high-stakes battle between Wall Street bondholders and state pension funds over how they are treated when cities run out of money - an issue that could eventually find its way to the U.S. Supreme Court.
“There is a real parallel between San Bernardino and Detroit,” said Michael Sweet, a bankruptcy attorney with Fox Rothschild in San Francisco, who is not representing any party in the San Bernardino or Detroit cases.
“Both cities have shown an appetite to take the pension issue head-on. If the judge rules San Bernardino eligible for bankruptcy, it opens the way for the city to propose a plan that could impair Calpers - which could put this little city ahead of what is happening in Detroit.”
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Pay everybody in promises whenever possible; It’s cheaper.
A promised dollar is the ultimate soft dollar.
A promsed dollar is best because:
1. If you plan properly it may end up that you won’t have to pay it.
2. If you do have to pay it then you still get the benifit of the time factor in that it will paid out sometime later and not immediately. The later the better (as suggested by the phrase “In the long run we are dead”).
And, The promiser is long gone when the promise must be delivered….
The dollars are also long gone when the promise must be delivered.
I should add this “investment strategy” has a long history of utilization in the private sector.
Airlines and Twinkies
U.S. NEWS
Updated August 29, 2013, 1:23 a.m. ET
Ruling Clears a Path for California City’s Bankruptcy
Judge Says San Bernardino Is Eligible for Chapter 9 Protection
By ERICA E. PHILLIPS
LOS ANGELES—A federal judge ruled Wednesday that the city of San Bernardino, Calif., is eligible for Chapter 9 bankruptcy protection.
The decision comes more than a year after officials in the southern California city of 213,000 residents about 60 miles east of Los Angeles declared a state of fiscal emergency and filed paperwork for bankruptcy protection.
That filing was the third in a string of municipal bankruptcy filings in California last summer, preceded by the Northern California city of Stockton and the resort town of Mammoth Lakes.
San Bernardino’s case is being closely watched by officials in financially troubled cities across the U.S. that are grappling with ways to scale back pension costs.
Last year, San Bernardino officials said the city faced pension costs of more than $26 million, and that employee costs—including pensions—accounted for roughly 80% of its annual budget.
In an unprecedented move, the city ceased making full payments to the California Public Employees’ Retirement System, the $254 billion statewide public pension fund known as Calpers, for several months after filing its petition.
City officials couldn’t be reached Wednesday afternoon for comment.
Calpers was the sole party objecting to the city’s bankruptcy filing. Federal Judge Meredith Jury heard arguments from both sides before issuing a final ruling on the matter.
After hours of argument and discussion, including strong dissent from Calpers attorney Michael Gearin, the judge finalized her ruling in favor of the city’s eligibility.
Calpers issued a statement Wednesday afternoon saying it was considering appealing the ruling. In the statement, Calpers promised to work with San Bernardino to “resolve its financial problems,” adding that it would also “aggressively pursue all past due contributions,” including penalties, from the city.
Once the eligibility ruling is finalized, the city is expected to negotiate with its creditors and produce a bankruptcy plan for the judge to approve.
The economic conditions that have forced California cities toward bankruptcy have eased greatly of late. Housing markets that contributed to the financial troubles of many of the cities are mostly on the rebound.
This is going to the Supreme Court…The fundamental question being;
Does Federal Bankruptcy Law “trump” state law…?? Seems to me that the common sense answer would be yes…If thats the case, a supreme court ruling in favor of Federal Bankruptcy Law would be a Game changer in the municipal bond market….
Another Game Changer would be for the municipal unions & Pension Funds….Up until now, Cal-Pers and the unions have felt impervious…Like I said…This could be a huge Game Changer with future ramifications which we just cannot get our arms around right now…
How ironic……..a few days after I was berated for listing “lead poisoning” as a policy option for dealing with invasive/destructive cats, NYC gives us a demonstration of what happens at the polar opposite end of the spectrum……
(Support of the policy notwhithstanding, yours truly has newer had to utilize it…….the -fixrs SOP is to capture the miscreant, and transplant him to a 1%ers neighborhood……the thought of cat pizz all over a bankster/realtor’s Lexus or Porsche amuses me……)
Let them loose in large buildings owned by one-percenters.
Do the same with rats if you get the chance. (Rats with lice are to be preferred over all other rats - with the possible exception of rats with fleas.)
Can rats carry bedbugs? That would be cool…
Team Obama Steps Up Racial Standards for Neighborhoods
By Chris Stirewalt
Published July 23, 2013 •
FoxNews.com
“Make no mistake: this is a big deal. With the HUD budget alone, we are talking about billions of dollars.”
– Shaun Donovan, Secretary of Housing and Urban Development, in a July 16 speech to the NAACP about a new regulation and database aimed at adding “protected classes” into predominantly white neighborhoods.
The federal government is getting serious about pushing racial and ethnic diversity into America’s neighborhoods–and is using big data and big money to achieve its aims.
A new interactive database will help regulators, local housing officials and individuals take action on a newly proposed regulation that would require agencies to “affirmatively further” the inclusion of minority residents in white neighborhoods.
Housing and Urban Development Secretary Shaun Donovan announced the database and regulation at last week’s NAACP convention, saying the Obama administration was battling “a quieter form of discrimination” that was “just as harmful” as long-outlawed segregationist practices, like racially restrictive property covenants.
The problem now, Donovan said, is that prospective minority buyers are not being encouraged to move into predominantly white neighborhoods with top-notch schools, government services and amenities like grocery stories, etc.
The goal here then is to continue to prosecute at a high rate incidences deemed proactively segregationist – Donovan touted 25,000 individuals in the past 3 years being paid damages under cases reported to the agency or independently investigated by HUD – but to add in a mandate for diversifying neighborhoods.
The old way was to punish exclusion. The new way is to punish lack of inclusion.
The punishment is also different. Rather than fines and prosecutions for those who sought to keep minorities out, the new penalty would be a withholding of federal funds from local and state government agencies dependent on HUD grants if they fail to push greater diversity. The way those agencies interact with developers, realtors, homeowners associations and others would need to reflect the federal push for diversity.
The old way was to punish exclusion. The new way is to punish lack of inclusion.
The report card comes in the form of the new maps, which use Census data to score communities on their racial and ethnic concentrations, as well as income and community services. Check out the Atlanta suburbs. South of Dekalb Avenue, the dots are mostly green – black residents – and north of Dekalb Avenue, the dots are mostly blue – white residents.
HUD wants a more even distribution of blue and green dots in the city and if you are planning a new subdivision or a realtor looking to sign potential buyers up for FHA loans, the dot distribution is something the Obama administration wants you to be mindful of. And your local zoning board, county commission or state real estate licensing bureau ought to be mindful too, since their funding could depend on it.
As for what happens if you live in a place like Brooke County, W.Va. where every dot is blue? Would the local housing authority have to recruit non-blue dots to the county in order to not risk federal funds? What if no holders of green dots want to come to live on Apple Pie Ridge Rd.?
What about all the green dots at the intersection of West MLK Blvd. and Crenshaw in Inglewood, Calif.? It will not presumably be necessary for local city planners to recruit blue dots for that map.
And what about the fact that the real estate purchases increasingly begin on the color-blind Internet? Would one need to declare the color of their dot before entering the search terms?
At a time when Americans are on high alert about government snooping and databases, and we have still unfolding before us at the IRS a story about how readily power can be abused for political aims, it would seem like a strange moment to put the federal government in the dot distribution business.
http://www.foxnews.com/politics/2013/07/23/team-obama-steps-up-racial-standards-for-neighborhoods/ - 27k
“The federal government is getting serious about pushing racial and ethnic diversity into America’s neighborhoods–and is using big data and big money to achieve its aims.”
Forced diversification could drive down market values in currently all-white wealthy enclaves. It could also result in a drop in test scores at the local schools, and another wave of white (and wealthy black) flight to new developments elsewhere.
This could be stimulative for new real estate development, so it’s all good!
“Forced diversification could drive down market values in currently all-white wealthy enclaves.”
That’s racist.
But that’s alright because it’s all racist.
Got dots?
Got reverse redlining?
Which is why owning real estate is for fools. This stuff is not real news. Section 8 was started by Richard Nixon’s signature. HUD, Fair Housing act, Equal Housing Opportunity, Community Reinfestment act (no typo from my part).
The American dream of being in a stable neighborhood of peace-loving people with the same values (no cRAP noise), has been dead for more than 40 years. Neighborhoods in many cities have become trashed. There are still pockets of decent low crime areas, but they too are not permanently low crime.
The real lesson is to just rent, keep moving on. Invest money in precious metals and stock index funds. In your golden years you can rent in the small strips of water view areas where the wealthy people live. Equivalent of $7,000 per month or more in today’s dollars will buy you a decent (temporary) neighborhood.
The real problem is lack of jobs.
Working people are too busy and too tired to do crime.
Actually the crime rate has fallen significantly over the years due to Roe Vs. Wade - meaning far fewer unwanted children have been born since R v. W. This was mentioned on the documentary “Freakonomics.”
The “American Dream” of home ownership is one of the biggest frauds on Americans.
Government wants people to go into debt and have 30 year mortgages. You become a captive obedient slave paying property taxes. And government at all levels finds it easier to trace where you are likely to be during any particular day. Your house which you are paying interest and property taxes on. Further, when you move into a single family neighborhood there is peer pressure to be like the neighbors - docile.
Corporations want people to go into debt and have 30 year mortgages. Banksters rub their hands with glee about the interest they will collect. Maintenance problems will be cured by buying from…corporations, such as HD. Insurance industry loves home ownership as well.
At the same time, there is more and more of a push to integrate “people of color” and opposite cultures into neighborhoods that have “no color.” Those people who think real estate is a way to retirement have drunk the Kool-aid given to them by the “progressives” in government and corporations. Real Estate is a declining asset for most of Americans.
Those who do take out loans are sanctioning most of the rotten things in society that they complain about.
In summary, anyone who buys a home with a mortgage is an all-American patriot; those who don’t are traitors.
+1
What “cash buyers”? We have private equity buying excess empty houses using OEM from lenders…… leaving 25 million excess empty houses.
“… leaving 25 million excess empty houses.”
How empty of value can mortgages be if their values are backed by empty houses?
Save the value of an empty house and you just might save the value of an underwater mortgage. Save the value of enough underwater mortgages and you just might save a lender.
And IMHO - bottom line, at the root - this is what all this is about.
It’s tough to sell to the homeowners or homebuyers who are hosed that it is in the National Interest to rescue lenders (of whom many of them blame for all their woes), but it is easy to sell to these same hosed homeowners and homebuyers that it is in the National Interest to rescue homeowners and homebuyers.
What color dots were in those 25 million excess empty houses?
Were they green dots or blue dots? I don’t even know what color Hispanic dots are.
Got dots?
Red? The red ink shade of red?
Do you know anyone who lost a bundle of money due to the Housing Bubble?
Need to sell fast? Turns out there are firms to help you do so, at least in the UK!
‘I lost 40pc on my quick house sale’
Many firms will offer to sell your house quickly – but some sellers are losing up to 53pc of their property value. Anne Baker lost £40,000 on the sale of her inherited home.
By Jessica Winch
7:05AM BST 08 Aug 2013
Anne Baker had been trying to sell an inherited property in Yorkshire for more than a year when she and her husband, Colin, turned to a firm that specialised in quick sales. The company, Gateway Homes, valued the property at £100,000 and offered to sell it within two weeks for a sale price to the couple of £75,000.
“We thought that was fair, as they took the legal costs and the hassle of selling off our hands,” says Mrs Baker, 57. But 10 weeks later the property had still not been sold, and the price was lowered to £60,000.
“The house was costing us in insurance and council tax bills, so we reluctantly accepted their offer and we completed within two days,” says Mrs Baker. “We were lucky that it wasn’t our main home, but the process was very stressful. I was ringing them at least once a week. We were disgusted with the way we had been treated; I certainly wouldn’t recommend it to anybody.”
For homeowners keen to sell quickly, a company that offers to buy your house in a matter of weeks at close to its market value can seem like the ideal solution.
There are more than 100 firms to choose from in the “quick house sale” market, all offering to buy property or find third-party buyers. In return, the vendor agrees to sell at a reduced price, usually forgoing between 10pc and 25pc of the property’s market value.
…
Fannie, Freddie Masking Billions Of Dollars In Losses: Internal Report
Reuters | Posted: 08/19/2013 8:59 am EDT | Updated: 08/20/2013 7:41 pm EDT
WASHINGTON, Aug 19 (Reuters) - Fannie Mae and Freddie Mac are masking billions of dollars losses because of the level of delinquent home loans they carry, a federal watchdog said in an internal report, and it said the companies should be required immediately to recognize the costs of some bad mortgages.
The report, written by the inspector general for the Federal Housing Finance Agency and reviewed by Reuters, said the FHFA’s timeframe for mortgage finance companies Fannie and Freddie to have up to two years to recognize the cost of mortgages delinquent at least 180 days was “inordinately long.”
The change in the accounting treatment of these delinquent loans potentially could require Fannie and Freddie, which have rebounded to enormous profitability in the past two years as the housing market recovered, to “charge off billions of additional dollars related to loans,” the inspector general’s report stated.
The FHFA, which regulates Fannie Mae and Freddie Mac, said the two are on track to implement the new standards within the next two years, and in a letter sent to the inspector general said it views the potential losses “to be reasonable.”
Fannie Mae and Freddie Mac were seized by the U.S. government in September 2008 as rising mortgage losses threatened them with insolvency. The mortgage companies have cost taxpayers almost $188 billion to stay afloat.
The majority of Fannie Mae and Freddie Mac’s losses are a result of guaranteeing mortgages that defaulted during the housing crisis. Fannie and Freddie have reduced their funds reserved to cover potential losses on bad loans due to the strengthening housing sector and higher home prices.
The FHFA noted the new accounting methods would involve “changes in a significant policy,” and as a result require a lengthy implementation period. The regulator consulted with Fannie Mae and Freddie Mac and has allowed the mortgage companies until Jan. 1, 2015, to make all of the adjustments, which will be rolled out in stages.
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Banks win another reprieve from post-crisis regs
By Stephen Gandel, senior editor
August 29, 2013: 5:00 AM ET
Regulators balk on a rule that was meant to insure sensible mortgage lending.
FORTUNE — Regulators have, once again, backed down on a piece of financial regulation put in place in the wake of the financial crisis. And that’s too bad.
On Wednesday, six government agencies, including the Federal Reserve and the Federal Deposit Insurance Corp., proposed relaxing a rule in Dodd-Frank that was meant to limit risky mortgage lending. The proposed alternative will make it easier for banks to pass off the losses they have on no-money-down home loans onto the federal government, at least for now, and investors.
It’s the latest change in rules intended to remove the threat of another financial crisis. In July, the Federal Reserve decided to scrap a related rule that would have forced banks to put aside additional capital when making subprime, as well as no-money-down, loans in order to cover potential losses.
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Is the big money exiting housing?
Sat Aug 31, 2013 10:24PM GMT
Mike Whitney, CounterPunch
According to a report by Goldman Sachs, approximately 57 percent of the homes that were purchased in the first quarter of 2013 were all-cash deals. In 2005, the peak of the bubble, all cash buyers represented a mere 19 percent of all transactions. The amount of investor capital pouring into housing is unprecedented. Moneybag speculators and Private Equity firms have been loading up on real estate like it’s going out of style, and for good reason; according to this week’s Case Shiller report, housing prices soared more than 12 percent in the last year alone which means that the return on investment rivals the red-hot stock market. Of course, there is a downside to the rising prices phenom as Yale professor Robert Shiller pointed out on Tuesday in an interview on CNBC. Shiller said:
Analyst Diana Olick summed it up more succinctly on her Realty Check blog on Wednesday. She said:
Okay, so the flippers and speculators are back and there’s a little froth in the market, but does it really matter? After all, no one’s complaining, right?
Right. Not yet, at least. But that’s just because the hot money is still pouring in and pushing up prices. Once the speculators realize that they’re not going to make the killing they thought, then the money’s going to dry up, most of the equity gains of the last year will be wiped out, and there’ll be a stampede for the exits. And judging by the weakness in mortgage applications -which according Mortgage Bankers Association (MBA) have dropped 16 percent since early May-and the sharp decline in new home sales-which according to the Commerce Department plunged 13.4 percent in July-that day may have already arrived. The drop in mortgage applications suggests that demand for single family construction was already weakening when the Fed announced its plan to scale back its asset purchases. The announcement just made matters worse by pushing mortgage rates higher and putting the kibosh on future sales. Here’s Olick again:
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