Sunday, May 31, 2009

Monday June 1 Housing and Economic stories


Hooray For California, Propositions 1A-1E Go Down In Flames - (Mish at In April I hoped California, Please Send A Message! Today it happened. California voters soundly defeated Propositions 1A-1E in spite of teachers' unions and other misguided souls wasting millions of dollars in a last minute ad campaign to get Californians to tax themselves to death for the benefit of unions and other undeserving parties. California Ballot Propositions: Seven statewide ballot propositions were on a special May 19, 2009 election ballot in California. 1A-1E went down in flames according to the May 19, 2009, Proposition Results Map. 1F, a proposition to restrict legislative pay raises when there is a budget deficit overwhelmingly passed….. With this success (yes the failure to pass these propositions was a huge success) the budget deficit is $21 billion and counting. Had the measures passed, the deficit would have been $15 billion. At the time it was proposed, the propositions were supposed to close the deficit. The reality is California is losing $2 billion a month with no end in sight. Schwarzenegger is going to have no choice but declare another fiscal emergency. Let's see if the legislature can make some better choices this time, starting with reducing their own pay.

Automotive Pension Disaster; $42 Billion in Pension Promises Completely Unfunded - (Mish at Pensions are a critical unresolved issue in the upcoming GM bankruptcy. Either GM's unfunded pension obligations get dumped on taxpayers, GM pensioners see their benefits cut, or some combination thereof. Moreover, even though GM has yet to declare bankruptcy, note the Pension Benefit Guaranty’s Deficit Triples to $33.5 Billion. Pension Benefit Guaranty Corp.’s deficit tripled to $33.5 billion in the past six months as more companies canceled retirement plans amid the U.S. recession, according to the head of the government-owned corporation. The PBGC, set up to protect the employee pensions of bankrupt companies, will tell Congress that its financial condition may worsen amid the likelihood for more pension plan failures. In the first half of the fiscal year that began in October, the PBGC took on almost four times the number of participants as it did in all of 2008. The potential for General Motors Corp. and Chrysler LLC to end their plans has left the PBGC facing the prospect of adding 900,000 current and future beneficiaries. The PBGC, which pays retirement income to almost 44 million Americans, estimates that $77 billion of the automotive industry’s pensions are underfunded, with about $42 billion of that not funded at all. The PBGC’s board approved in February 2008 a new investment strategy to shift more money from safer Treasury securities to stocks, real-estate and private-equity with the potential for greater returns. The change was pushed by former Director Charles E.F. Millard, who is now under congressional investigation for his ties to Wall Street. “Millard’s actions were questionable and should be investigated further, but our main concern is that they are symptomatic of a much bigger problem,” Senator Herb Kohl, a Wisconsin Democrat and chairman of the Special Committee on Aging, said in a statement. “PBGC oversight structure is obviously inadequate if one person’s authority goes unchecked. At a time when we need PBGC more than ever, we have got to take concrete steps to strengthen the agency.”

Fed looks to supply for pointer on rates - ( The Federal Reserve is turning its attention to the impact of the economic crisis on the productive capacity of the US economy – an issue central to any assessment of when it might start tightening monetary policy again. Most officials think the crisis will have some impact on supply because of structural changes that make it difficult to reallocate workers to different sectors of the economy and restricted financing for new business projects. But the mainstream Fed view is that this impact will not be very large, possibly reducing trend growth from about 2.5 per cent to 2 per cent or fractionally higher for a few years. This relatively modest mark-down of the economy’s future supply potential suggests the Fed thinks that excess capacity will continue to put downward pressure on prices for an extended period even if a gradual recovery takes hold. This means the central bank may not be in any hurry to raise interest rates next year unless growth is stronger than it expects or inflation expectations independently move higher. However, the debate inside the Fed is still at an early stage and there is a range of views among policymakers about the supply-side impact of the crisis, which may be hinted at in forecasts released on Wednesday.

U.S. Considers Stripping SEC of Powers in Regulatory Overhaul - ( Scary, as the agency that was asleep at the wheel for so long and has caused the most damage (the Fed) is in position to get more power. The Obama administration may call for stripping the Securities and Exchange Commission of some of its powers under a regulatory reorganization that could be unveiled as soon as next week, people familiar with the matter said. The proposal, still being drafted, is likely to give the Federal Reserve more authority to supervise financial firms deemed too big to fail. The Fed may inherit some SEC functions, with others going to other agencies, the people said. On the table: giving oversight of mutual funds to a bank regulator or a new agency to police consumer-finance products, two people said. The 75-year-old SEC, chartered to oversee Wall Street and safeguard investors, has seen its reputation tarnished as some lawmakers blamed it for missing the incipient financial crisis and failing to detect Bernard Madoff’s $65 billion Ponzi scheme. Any move to rein in the agency is likely to provoke a battle in Congress, which would need to approve the changes, and draw the ire of union pension funds and other advocates for shareholders. “It would be a terrible mistake,” said Stanley Sporkin, a former federal judge and enforcement chief at the SEC. “Whatever the SEC has done or didn’t do, it is still the premier investor protection agency around.” Schapiro Determination: SEC Chairman Mary Schapiro’s agency has been mostly absent from negotiations within the administration on the regulatory overhaul, and she has expressed frustration about not being consulted, according to people who have spoken with her. She has pledged to fight any attempt to diminish the SEC, they said. Treasury Secretary Timothy Geithner was set to discuss proposals to change financial regulations at a dinner last night with National Economic Council Director Lawrence Summers, former Fed Chairman Paul Volcker, ex-SEC Chairman Arthur Levitt and Elizabeth Warren, the Harvard University law professor who heads the congressional watchdog group for the $700 billion Troubled Asset Relief Program.

California Rejects Schwarzenegger’s Budget Measures - ( California voters rejected a package of budget-balancing measures that Governor Arnold Schwarzenegger said were needed to keep a $15 billion deficit from widening to $21 billion. A proposal to limit lawmaker pay passed. “I respect the will of the people who are frustrated with the dysfunction in our budget system,” Schwarzenegger said in a statement from Washington conceding defeat. “In order to prevent a fiscal disaster, Democrats and Republicans must collaborate and work together to address this shortfall.” Five of the propositions were failing with 64 percent of the votes counted, according to California’s elections office. The losing proposals would have capped spending and extended temporary tax increases, directed future surplus money to schools, authorized bonds backed by lottery profits and diverted already dedicated revenue to the budget. Lawmakers put the measures on the ballot in February as part of a compromise to close what was then a record $42 billion budget gap. Since then, the deficit re-emerged as California’s economy, which on its own would be the world’s eighth-largest, worsened amid the national recession. “The longer we wait, the worse the problem becomes and the more limited our choices will be,” Schwarzenegger said.

Bankruptcies Swell Deficit at Pension Agency to $33.5 Billion - ( The deficit at the federal agency that guarantees pensions for 44 million Americans more than doubled in the last six months to a record high, reaching $33.5 billion, largely as a result of the surging number of bankruptcies among companies whose pensions it must now take over. The Pension Benefit Guaranty Corporation, as of October, had faced a shortfall of $11 billion. But the combined effect of lower interest rates, losses on its investment portfolio and the increase in the number of companies filing for bankruptcy protection resulted in a deepening of its estimated deficit, officials said Wednesday. Because the agency has $56 billion in assets — most of which is invested in Treasury bonds — it is not facing any prospect of default in the short term, officials said. “The P.B.G.C. has sufficient funds to meet its benefit obligations for many years because benefits are paid monthly over the lifetimes of beneficiaries, not as lump sums,” the agency’s acting director, Vince Snowbarger, said in a statementWednesday. “Nevertheless, over the long term, the deficit must be addressed.” The agency, created by Congress in 1974, is now paying benefits of about $4.3 billion a year to about 640,000 people. Employers nationwide with so-called defined-benefit pension programs pay insurance premiums to the agency in return for a promise that it will take over their pension plan if a company fails. On Tuesday, for example, the agency announced that it had assumed the pension plan once run by the Lenox Group, a bankrupt maker of tableware, giftware and collectibles based in Eden Prairie, Minn. Assuming control of pensions for this company’s 4,300 workers will cost the agency an estimated $128 million — the difference between what Lenox had in its pension fund and what the total estimated obligations are. With the bankruptcy of Chrysler and a possible similar move by General Motors, the agency is facing a record surge in demand. The new deficit estimate takes into account both pensions it has taken over in the last six months, and others it believes it will have to assume control of soon.

Japan’s Economy Shrank Record 15.2% Last Quarter - ( Japan’s economy shrank at a record 15.2 percent annual pace last quarter as exports collapsed and consumers and businesses cut spending. The contraction followed a revised fourth-quarter drop of 14.4 percent, the Cabinet Office said today in Tokyo. Gross domestic product fell 3.5 percent in the year ended March 31, the most since records began in 1955, confirming that the recession is Japan’s worst in the postwar era. Exports plunged an unprecedented 26 percent last quarter, forcing companies from Toyota Motor Corp. to Hitachi Ltd. to cut production, workers and wages. Stocks have gained 32 percent since reaching 26-year low in March on speculation worldwide interest-rate reductions and spending by governments will halt the slide in the world’s second-largest economy. “There was a collapse across the board,” said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo. Still, he added that there’s “light at the end of the tunnel” and the economy will resume growing this quarter as companies replenish inventories and stimulus plans at home and abroad take effect. The yen traded at 95.71 per dollar at 11 a.m. in Tokyo from 96.16 before the report was published. The Nikkei 225 Stock Average rose 0.4 percent. The first-quarter contraction was the most severe since records started 54 years ago. Economists predicted the economy would shrink 16.1 percent.


Southern California median home price falls to $247,000 in April - (
Housing: Recovering or Not? - (
Derivatives Market Declines for First Time on Record - (
Home Depot is ready, but shoppers aren't yet - (
U.S. housing starts, permits plumb record lows - (

World stocks lackluster after mixed US trade - (
Crude trades over $60 before inventories data - (
Euro up against the dollar to $1.3661 - (
U.S. Stock-Index Futures Gain as Exxon, Bank of America Advance - (
Another Bottom for Stocks Coming: Rogers - (
U.S. May Add New Financial Watchdog - (
U.S. Weighs How to Let Banks Give Money Back - (
Fed offers spur to buy bubble-era securities - (
Senate Passes Bill to Restrict Credit Card Practices - (
VIX Falls to Lowest Since Lehman Bankruptcy as VStoxx Drops 32% - (
Japan’s Economy Shrank Record 15.2% Last Quarter - (
China tightening controls on bank lending - (
In Japan, Secure Jobs Have a Cost - (

U.S. Economy: April Housing Starts Drop on Apartments - (
Mortgage applications rose 2.3% last week: MBA - (
Southern California median home price falls to $247,000 in April - (
Bank of America Raises $13.5 Billion in Sale of Stock - (
Hewlett-Packard Drops After Saying Slump Will Persist - (
New Auto Standards vs. Old U.S. Preferences - (
Jamie Dimon on the ‘Traumatic TARP Experience’ - (

Saturday, May 30, 2009

Sunday May 31 Housing and Economic stories



Providence Mayor Wants to Tax College Students - ( The mayor of Providence wants to slap a $150-per-semester tax on the 25,000 full-time students at Brown University and three other private colleges in the city, saying they use resources and should help ease the burden on struggling taxpayers. Mayor David Cicilline (sis-ah-LEEN-ee) said the fee would raise between $6 million and $8 million a year for the city, which is facing a $17 million deficit. If enacted, it would apparently be the first time a U.S. city has directly taxed students just for being enrolled. The proposal is still in its early stages. But it has riled some students, who say it would unfairly saddle them with the city's financial woes and overlook their volunteer work and other contributions, including money spent in restaurants, bars and stores. "We want to support the city as best we can, but financially is not really what we can afford to give," said Heather Lee, president of the Brown Graduate Student Council. "We're more able to provide labor, we're more able to apply the things that we're learning in the classroom, than we are to write a $300 check." Cities often look for revenue from universities to compensate for their tax-exempt status, and many schools already make voluntary payments to local governments. Providence's four private schools — Brown, Providence College, Johnson & Wales University and the Rhode Island School of Design — agreed in 2003 to pay the city nearly $50 million over 20 years. The idea of a student head tax has been floated before in other cities, generally to start discussions about collecting money from universities in lieu of taxes.


Barney Frank Wants Government To Enter Municipal Bond Insurance Business - (Mish at Some people never learn. Representative Barney Frank of Massachusetts is one of them. One might hope that Frank would have learned something from the Fannie Mae and AIG debacles. Sadly that hope is misguided. Barney Frank now wants the government to enter the municipal bond business. Please consider Cities Ask Treasury for $5 Billion to Fund Public Bond Insurer. The National League of Cities says it will ask the U.S. Treasury today for a $5 billion interest-free loan to capitalize a new municipal bond insurer it plans to create. The Issuers Mutual Bond Assurance Co. would be the first publicly owned U.S. financial guarantor. The $5 billion capitalization would make it the biggest in the industry, eclipsing MBIA Inc.’s capital base of $3.8 billion and the $1.1 billion of current market leader Assured Guaranty Inc. The company will apply to the Treasury for a ruling that its income be tax-exempt, said Cathy Spain, director of the League of Cities’ Center for Member Programs. “Fifteen shareholder-owned municipal bond insurers have failed because of the intense pressure to produce 15 percent to 25 percent annual returns for their shareholders,” according to a copy of the preliminary business plan the League submitted to Treasury. In response to the collapse of the bond insurers, a number of would-be replacements said they would enter the field. Rep. Barney Frank of Massachusetts, the Democratic chairman of the House Financial Services Committee, said in February that the federal government should enter the business. IMBAC, as the new insurer would be known, is asking Treasury for $3 billion in cash upfront. It said it would seek to insure only general obligation and essential-purpose revenue bonds. In its cash-flow projections, the firm said it would charge premiums equal to about 70 basis points on a 25-year bond. IMBAC said it would insure $20 billion in bonds during its first year in operation, $40.8 billion in the second year and $108 billion by the fifth year. The firm’s plan estimates that the business would require a staff of at least 30.  Pure Insanity: The IMBAC proposal is pure insanity. The government has proven it no idea how to price risk, and even if it did, government ought not be competing with private enterprise. Fannie Mae (FNM) and Freddie Mac (FRE) are proof enough. Warren Buffett previously expressed an interest in this area, even agreeing to reinsure debt of Ambac (ABK) and MBIA (MBI). If municipal bond insurance makes any sense at all, then let Berkshire Hathaway (BRK) sort it out.


Union reluctant to grab wheel in Detroit - ( Yes, because they know they will drive the company into the ground, and will not be able to blame anyone else.  The United Auto Workers union could end up owning a majority of Chrysler and a large stake at GM. But it's not happy about that. The current plans to restructure General Motors and Chrysler LLC will leave the United Auto Workers union in the driver's seat at both companies. But it appears that the union would rather be in the back seat. The UAW is set to receive a 55% stake in Chrysler through its union trust fund once that automaker emerges from bankruptcy. The trust fund will also likely get up to 38% of GM's stock as part of its reorganization. But that doesn't mean the union will be calling the shots at either company. In fact, UAW president Ron Gettelfinger said the union hopes to sell its stake in both companies quickly because he is more interested in raising cash to cover retiree health care costs than having an ownership stake in GM (GM, Fortune 500) and Chrysler.  "Let somebody else take the stock. Give us the money," Gettelfinger said at a recent press conference. "We are trading debt for equity, and what is the value of the equity? Let's be honest, it's zero today." Since the trust fund, and not individual union members or the union itself, will own the stakes in GM and Chrysler, it is expected that the UAW will not use its newfound role as a large shareholder to push for major changes at either company.


Some on Left Souring on Obama - ( When President Barack Obama speaks to the Notre Dame commencement Sunday afternoon, television cameras will search the sea of graduates, looking for turned backs and defaced mortar boards that abortion opponents will likely use to register their disagreement with the president.  But the attention to protests from conservatives who don’t support Obama – and almost certainly never would – could obscure the far more significant political threat he now faces.  Barely four months into his presidency, Obama is confronting growing dissatisfaction among members of his liberal base, who feel spurned by a series of his early decisions on issues ranging from guns to torture to immigration to gay rights.  The list got longer last week as Obama reversed his earlier decision to release photos of detainees abused in U.S. military custody and announced plans to try some terror suspects before military commissions – though on the campaign trail he railed against earlier versions of the tribunals.  A few, like MSNBC’s Rachel Maddow, have even hurled the left’s ultimate epithet – suggesting that Obama’s turning into George W. Bush.  The building anger comes at a critical moment – just as Obama’s about to announce his choice for the Supreme Court. Fulfill their dreams of a “liberal Scalia,” a firebrand from the left, and much would be forgiven.  But if Obama opts instead for a decidedly centrist nominee aimed at winning a large number of Republican votes in the Senate, the growing concern could develop into something more politically dangerous.  “Even though I think he can get away with a more centrist candidate, he has to be careful not to be spitting in the eyes of his base,” said Laura Murphy, a lobbyist and former head of the American Civil Liberties Union’s Washington office.


Your Credit Card Company Is Building A Psychological Profile Of You - ( The next time you apply for a credit card, your credit report and income will be only a part of the criteria used to determine your creditworthiness. For that matter, as long as you have the card, what you use it for will be noted and added to a growing set of data that makes up your psychological profile, which will then be referred to every time the bank  deals with your or reevaluates your risk as a customer. The New York Times Magazine takes a look at this new method of determining credit risk, pioneered by Canadian Tire executive J.P. Martin about 6 years ago. Martin's measurements were so precise that he could tell you the "riskiest" drinking establishment in Canada - Sharx Pool Bar in Montreal, where 47 percent of the patrons who used their Canadian Tire card missed four payments over 12 months. He could also tell you the "safest" products - premium birdseed and a device called a "snow roof rake" that homeowners use to remove high-up snowdrifts so they don't fall on pedestrians.  It's not just that what you buy reflects your socioeconomic level and current financial status, however; what Martin did was take the raw data and tease out personality traits that explained the the purchases while predicting future behavior. Why did birdseed and snow-rake buyers pay off their debts? The answer, research indicated, was that those consumers felt a sense of responsibility toward the world, manifested in their spending on birds they didn't own and pedestrians they might not know. Why were felt-pad buyers so upstanding? Because they wanted to protect their belongings, be they hardwood floors or credit scores. Why did chrome-skull owners skip out on their debts? "The person who buys a skull for their car, they are like people who go to a bar named Sharx," Martin told me. "Would you give them a loan?"  Lenders have been using this sort of data mining ever since, but until recently they've kept it on the down-low to avoid triggering any privacy fears from customers. Now, with billions of dollars of losses from formerly profitable customers (i.e. the slightly risker ones) who suddenly can't pay, the lenders are using their psychological data not only to screen for the "right" sorts of customers but also to try to convince the bad ones to pay off their debts.


Dr. Marc Faber: Capitalism Could Fail Like Communism - (  A sustainable recovery will occur only when the corporate system will be cleaned of losses and capitalism risks collapsing if this does not happen, Marc Faber, the author of "The Gloom, Boom & Doom Report," told CNBC Friday. The central banks will continue to print money at full speed, but long-term this strategy will lead to a fall in purchasing power and living standards, especially in developed countries, Faber said. The years 2006 and 2007 were "the peak of prosperity" and the world economy is not likely to return soon to that level, he added. "I think the final low in markets will occur when the system is cleaned out," Faber said.


Condo associations dying as fees dry up - ( Homeowner associations, the de facto local government in much of Florida, are getting desperate. Assessment payments are as low as 50 percent in some communities, causing some board members to consider measures that might include publicly shaming those who are delinquent.  "When I tell you it is an unadulterated nightmare out there, I mean it," said Harry Burnard, who owns Qualified Property Management in New Port Richey, plus a side business that fronts the dues and collects the debts. The problem exists nationwide, most notably in communities built during the boom years. "I haven't seen bake sales yet or carwashes," said association attorney Robert Tankel of Dunedin. "But I have suggested that people who don't pay need to consider doing that. Sell their flat-screen TVs." Things are so bad that the Southpointe condominium association in Orlando sent a letter to all of its members, listing units with unpaid dues. "I thought I'd be getting a lot more rotten eggs," said Malcolm Galvin, an attorney for the association. "I was kind of amazed that most of the feedback was favorable to the association." The urge to shame:  Most area attorneys are advising their boards against any kind of public humiliation. "The nature of communities anymore is that nobody knows their neighbors anyway," Tankel said. But it's been suggested at a lot of homeowner meetings. IKare community newsletter publisher Karen Uhlig, when asked if she would have a problem with such a practice, said, "Personally, not at all. But professionally, I'd have to check for legal advice." One of her clients, the Nassau Pointe townhome section of New Tampa's Heritage Isles, could be among the first to publicize delinquent accounts. "We've been tossing the idea around," said board member Barbara Adams. "We don't want to do it, but we're just having little choice when they ignore us." About 30 percent of her neighbors are not paying the $228 monthly fee. "In our community, it covers cable and water," she said. Dues also pay to landscape the grounds and repair the roof. Uhlig, who serves on two boards in her own Wesley Chapel community, knows associations that are filing liens over very small amounts. Tankel advocates suing quickly instead of waiting for banks to foreclose, essentially beating them to the courthouse steps. Some boards have members literally knocking on doors, a practice attorneys discourage. "You never know when you are going to meet Mister Doberman, or Mister 9-millimeter," Tankel said.


2 Firms Accused of Deceiving Consumers Seeking Debt Relief - ( The New York attorney general, Andrew M. Cuomo, sued two large debt settlement companies Tuesday, saying they had engaged in fraudulent and deceptive business practices and false advertising. Skip to next paragraphThe suits seek to enjoin the companies, Nationwide Asset Services and Credit Solutions of America, from many of their business practices, including charging customers before any settlement work is done. They also seek restitution and damages for dissatisfied customers.  “These companies claim to be the light at the end of the tunnel, but time after time they have shown that they only add to the burdens of Americans dealing with debt,” Mr. Cuomo said in a statement. Credit Solutions enrolled 18,000 customers in New York State in the last five years, earning $17 million in fees, but settled the debts of fewer than 2,000 of them, the attorney general said.  Nationwide signed up 1,981 New York residents in three years, the suit against it says, but only 64 completed the program. Twenty-seven of those ended up paying more than they originally owed because of Nationwide’s fees, the suit alleges. Mark Walling, a lawyer for Phoenix-based Nationwide, said he had not seen the suit. “My client denies any wrongdoing,” he said. Credit Solutions, based in Richardson, Tex., disputed liability over the complaints and practices in the suit, saying in a statement that they had largely occurred when the company was under different ownership in 2007.







"Deadbeats" Beware: The Credit Card Business is Changing - (
American Express to Cut 4,000 - (
China's Gold Reserves May Back Yuan  - (
5000 Cases of Swine Flu in US - (
Credit Card Defaults At Record Highs But Worst Is Yet To Come - (

S&P 500 Earnings Fall 90% - (
As Detroit Crumbles, China Emerges as Auto Epicenter - (
China’s Stockpiles Are New Sovereign Wealth Strategy, RBC Says  - (
Obama Reverses on Releasing Detainee Photos - (
Obama Considers Detaining Terror Suspects Indefinitely - (
Gitmo Detainee's 'Genitals Were Sliced With A Scalpel'  - (
Socialist Norway Thrives in Meltdown - (
One of the simplest explanations of Swine Flu is that it’s a laboratory escape - (


Southern California house prices down 51% from 2007 peak, falling - (

San Francisco price declines accelerating - (

Hamptons Houses Drop Most Since Records Kept - (

Housing Starts May Have a Way to Fall - (

Government Punishing Responsible People - (

Wary of U.S. debt, China shifts gears on investment - (

The Destructive Implications of the Bailout - (

Obama's Magic Bubble Deflator - (

Audit the Fed, Then End It - (

The Truth: Debt Means Financial Death - (thelastgoodidea.blogspotcom)

Banks "can't find anyone with authority" to talk to foreclosees - (www.dailybusinessreview)


Is Buying a House Catching Falling Knife or Inflation Hedge? - (Charles Hugh Smith at

Obama for Single-Payer Before He Was Against It - (

Credit Crunch Game - (

It Is Time For Vermont To Secede - (

Friday, May 29, 2009

Saturday May 30 Housing and Economic stories


Tenant paid thousands in rent for condo that was in foreclosure - ( Tampa real estate agent Lori Polin played a key role in one of the state's "most dramatic" mortgage fraud schemes, according to Florida's attorney general. Polin is still an agent — and she's still engaged in questionable dealings, an angry tenant claims. Jeff Cole, who rented Polin's Tampa condo, says she collected over $14,000 in rent yet stopped making mortgage payments and did not inform him that the bank was foreclosing — an increasingly common problem for tenants in a tanking real estate market. Polin, who still has a $50,000 homestead exemption, also asked Cole and his mother not to tell the bank she was renting out the condo for fear it would kill a sale, he said. "She accepted rent for nine months while lying to her mortgage company about her occupancy status," Cole said. "She asked me and my mother to keep her little secret … to save her own a---." Polin, who works for ReMax Power Advantage in Tampa, did not return phone calls seeking comment. Jeremy Anderson, head of the office, would not comment. Even as Florida's real estate boom fizzled in 2006, Polin appeared to be one of the area's most successful agents. ReMax International gave her its Chairman's Club Award for agents with gross commissions of at least $500,000. But in 2007, the Pinellas Realtor Organization and many of Polin's fellow agents received an anonymous letter claiming that at least part of her success was due to alleged mortgage fraud involving nine houses in Pinellas and Hillsborough counties. Polin told the St. Petersburg Timesthen that she had done nothing wrong and was the victim of a "smear campaign" by jealous rivals. This fall, however, Attorney General Bill McCollum sued 10 companies and 15 individuals under Florida's Deceptive Trade Practices Act for their alleged roles in a $37 million fraud scheme. The suit said the co-defendants conspired with Polin and two other agents to inflate sale prices so they could obtain bigger loans and pocket "millions for their own personal use." Polin, 49, was not named as a defendant because real estate agents are exempt from the act and subject to other state laws. The Department of Business and Professional Regulation would not say if she is under investigation. In 2005, Polin got a $257,520, low-interest loan to buy a condo in Tampa's Westchase area for use as her primary residence. She signed a "borrower's occupancy rider" saying that she intended to live there and that the lender could demand full payment of the loan if she didn't. In August, Polin rented the condo to Cole, owner of a firm that helps arrange loans for environmentally friendly projects. Cole, 39, who moved to Tampa to be close to his mother, said Polin agreed to reduce the rent by $75 a month if he prepaid $10,800 for the first six months. He then went on a month-to-month lease at $1,875 because Polin was trying to sell the condo, whose value had plunged. "I knew she was upside-down on the property," Cole said, "but we didn't realize she was that far gone" until a foreclosure notice arrived in February. He said the notice was unusual in that it didn't list him and his wife as tenants. "The reason my name is not on it," he said, "is because the bank didn't know we were here." Cole said Polin told him that the bank had agreed to a short sale of $183,000 but that the deal would fall through if the lender knew she wasn't living in the condo. She asked him and his mother not to say anything to the bank. "I said, 'I'm not going to be part of your lie,' " Cole recalled. "I'm not interested in mortgage fraud except to the extent that I want frauds to be punished. I'm sick and tired of this mess and people and their greed." Foreclosure papers filed Jan. 30 by National City Bank show that Polin had not made a payment since September, about a month after the Coles moved in. In a letter to the bank, Polin wrote that her income had dropped 80 percent during the two years the condo had been on the market. "In any event," she added, "I have three contracts on this property, and National City has approved it for a short sale. The investor is sending their approval and it will be sold/closed by March 31, 2009."

Credit Card Industry Aims to Profit From Sterling Payers - ( Credit cards have long been a very good deal for people who pay their bills on time and in full. Even as card companies imposed punitive fees and penalties on those late with their payments, the best customers racked up cash-back rewards, frequent-flier miles and other perks in recent years. Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit. Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups. “It will be a different business,” said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks. “Those that manage their credit well will in some degree subsidize those that have credit problems.” As they thin their ranks of risky cardholders to deal with an economic downturn, major banks including American Express, Citigroup, Bank of America and a long list of others have already begun to raise interest rates, and some have set their sights on consumers who pay their bills on time. The legislation scheduled for a Senate vote on Tuesday does not cap interest rates, so banks can continue to lift them, albeit at a slower pace and with greater disclosure. “There will be one-size-fits-all pricing, and as a result, you’ll see the industry will be more egalitarian in terms of its revenue base,” said David Robertson, publisher of the Nilson Report, which tracks the credit card business.

Mass auctions of foreclosed homes not as successful as billed - ( It sounds like a great way to work off our housing glut: Banks hire a nationally renowned auctioneer to dispose of hundreds of foreclosed homes at once from hotel ballrooms in Tampa. And if you listen to the auctioneers, their sales success is stellar. Back in February, a company called Real Estate Disposition Corp. announced it had snagged bids for 131 of 176 homes on the block at the Grand Hyatt in Tampa. I thought I'd check up on REDC this week to see how many of those foreclosure homes actually closed. After studying the results, I feel duped. And you should, too. Leave aside the fact that REDC admitted later that only 75 homes actually sold on Feb. 7. When I plowed through the first part of the "sold" list and compared addresses against property appraiser records, I didn't find a single home that closed as of Thursday. Not one. REDC's spokesman maintained this week that the company's auction success rate nationally is 80 percent. Suppress your laughter if you must. I sat in on an auction in Tampa last year and was amazed how cheaply many properties sold. You hear about banks routinely ditching foreclosure homes for 60 cents on the dollar, but many of these were scarfed up for 30 cents. Turns out many never did sell. The banks either turned down the bid or the buyers had deceptively shallow pockets. For enlightenment, I turned to Michael Peters, who runs American Heritage Real Estate Auctioneers in Clearwater. Self-interested though he is, Peters is critical of these assembly-line auctions. According to Peters, there's no substitute for selling properties one at a time by enticing bidders to the actual home. But guess what: When buyers get to stroke the granite and flush the toilets, homes tend to sell better.

$8000 tax credit not actually for down-payment - ( Remember that promise that Shaun Donovan, HUD Secretary made at the Realtor mid-year meeting on Monday? The one about that the $8000 tax credit being made available for down payments? Well, the promise is broken. I got this notice from NAEBA headquarters this afternoon: According to contacts with both FHA and HUD, Mortgagee Letter 2009-15, which stated that first-time homebuyers would be allowed to use the tax credit for their downpayment, has been rescinded. On a phone call with FHA, Kim Kahl was told, "The mortgagee letter has been rescinded for the time being.” NAEBA President John Sullivan was told something similar when contacting HUD. Neither FHA nor HUD gave further details. I am not surprised. I think when HUD officials look at it, they see a buyer who needs that $8000 for a down payment as a buyer without enough reserve to be a homeowner. This may be a good sign for Federal lending policy, IMHO.

U.S. keeps California waiting on plea for debt backstop - ( The Obama administration seems in no rush to decide on California's request for a federal guarantee on billions in short-term borrowing the state must undertake this summer. Then again, nobody in Sacramento was expecting an affirmative answer before Tuesday’s special election. Given the prospect for the stopgap budget measures on the ballot to go down in flames, there would be no point in aiding the "no" vote by telling voters that federal help was on the way. As reported last week, California Treasurer Bill Lockyer has formally asked the U.S. Treasury to provide a backstop for potentially tens of billions of dollars of short-term notes the state plans to sell beginning in July. (See Lockyer's letter to Treasury Secretary Timothy F. Geithner here.) Without such a guarantee, the state fears it will have to pay exorbitant tax-free interest rates on the debt -- say, 5% instead of 1% or 2% -- blowing an even bigger hole in the budget. Lockyer’s spokesman said today that the state was "continuing to have discussions with the administration and members of Congress" about the backstop request. A group of California cities and counties is asking for the same kind of guarantee on $335 million in short-term borrowing to occur in June, according to Paul McIntosh, executive director of the California State Assn. of Counties. The group tentatively includes Mendocino County, Redondo Beach and Chula Vista, according to the association’s letter to the White House.

TARP is a "sham" and a ripoff to taxpayers - ( Did a TARP beneficiary accidentally speak the truth about the program to a reporter from theTelegraph? At first, the Daily Telegraph reported that Mark Patterson of MatlinPatterson, "a firm that invested in a Michigan bank with help from TARP," referred to the Troubled Asset Relief Program thusly: "The taxpayers ought to know that we are in effect receiving a subsidy. They put in 40pc of the money but get little of the equity upside," said Mark Patterson, chairman of MatlinPatterson Advisers. .. Mr Patterson said the US Treasury is out of its depth and seems to be trying to put off drastic action by pretending that the banking system is still viable. "It's a sham. The banks are insolvent. The US government is trying to sedate the public because they are down to the last $100bn (£66bn) of the $700bn TARP funds. They think they're doing this for the greater good of society," he said, speaking at the Qatar Global Investment Forum. That drew the attention of Joe Weisenthal of Clusterstock. But since then, the Telegraph has taken down the story! Weisenthal's on the case: We're still trying to get to the bottom of this one... this morning we linked to an article in UK paper The Telegraph, written by the aggressive reporter Ambrose-Evans Pritchard, which claimed that TARP investor Mark Patterson called the program a "sham" and a ripoff to taxpayers, even though his own firm had taken advantage of the program. Now the paper has taken the article down at the behest of Patterson's attorney, who claims the reporting was not factual. We went back and forth with the lawyer, who was a little evasive with the real story, though he sent us the following statement. Ok, so Patterson claims he didn't call the TARP a "sham". But what did he say? That's what we're trying to figure out.

US judges admit to jailing children for money - ( Two judges pleaded guilty on Thursday to accepting more than $2.6 million from a private youth detention center in Pennsylvania in return for giving hundreds of youths and teenagers long sentences. Judges Mark Ciavarella and Michael Conahan of the Court of Common Pleas in Luzerne County, Pennsylvania, entered plea agreements in federal court in Scranton admitting that they took payoffs from PA Childcare and a sister company, Western PA Childcare, between 2003 and 2006. "Your statement that I have disgraced my judgeship is true," Ciavarella wrote in a letter to the court. "My actions have destroyed everything I worked to accomplish and I have only myself to blame." Conahan, who along with Ciavarella faces up to seven years in prison, did not make any comment on the case. When someone is sent to a detention center, the company running the facility receives money from the county government to defray the cost of incarceration. So as more children were sentenced to the detention center, PA Childcare and Western PA Childcare received more money from the government, prosecutors said. Teenagers who came before Ciavarella in juvenile court often were sentenced to detention centers for minor offenses that would typically have been classified as misdemeanors, according to the Juvenile Law Center, a Philadelphia nonprofit group. One 17-year-old boy was sentenced to three months' detention for being in the company of another minor caught shoplifting.


Foreclosures show more Tampa Bay home owners struggle with mortgage - (
April Tampa Bay area foreclosures dip from March, soar from year ago - (
House Price Drops Leave More Underwater - (
Rich default on luxury houses like subprime victims - (
Distressed property sales hit upscale condos - (
Bank-owned houses sell slowly on the coast - (
Sellers and buyers don't see eye to eye on pricing - (
Down 58% in Aptos, CA 95003 - (
Fannie, Freddie in critical condition - (
Board to Ban Accounting Practice That Helped Lending Proliferate - (

Commercial Real Estate Defaults: You Ain't Seen Nothing Yet - (
Aurora fights foreclosure blight by billing banks - (
Housing crash bringing work to Lee County - (
The Geography of Jobs - (
Bad Collateral - (
US banks scramble to repay bail-out cash - (
Derivatives Market Declines for First Time on Record, BIS Says - (

Companies face higher hedging costs - (
Agricultural Bank Raises $7.3 Billion in Bond Sale - (
German Investor Confidence Rises to Three-Year High - (
American Express Will Slash 4,000 Jobs, Take Charge - (
U.S. to Issue Tougher Fuel Standards for Automobiles - (
Meltdown will leave vastly changed economy - (
Waking up from the American Dream - (
US Government Paying Houseowners to 'Walk Away' - (
Guatemalan Attorney Predicts his Own Murder on YouTube - (
Buffett’s Berkshire Scales Back Stock Purchases as Cash Erodes - (