Saturday, January 30, 2010

Sunday January 31 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Bank of America to release homes - (www.lvrj.com) Bank of America expects to release about 6,000 foreclosed properties into the Nevada housing market in 2010, or about 500 a month, an executive with the bank said Wednesday. It's part of the so-called "phantom inventory" of foreclosed homes being held by banks as they work out loan modifications and negotiate short sales, two of the more desirable alternatives to foreclosure. Throughout the country, estimates of homes being taken back by Bank of America range from 11,000 to 14,000 a month in the early part of this year to 29,000 to 35,000 by November and December, said John Ciresi, vice president and portfolio manager for Bank of America in Towson, Md. The system became "clogged" by a voluntary moratorium on foreclosures while banks met the requirements of President Obama's Making Home Affordable mortgage plan program and by state legislation requiring mediation before banks can start the foreclosure process, Ciresi said at a panel discussion sponsored by the Nevada chapter of the National Association of Hispanic Real Estate Professionals. Some homes are being held back from closing escrow because of Bank of America's fiduciary relationship with investors, he said. "Let's say you have a $120,000 property and you have a $110,000 offer from a cash buyer and a $120,000 offer on a VA loan," Ciresi said. "Do I take the higher offer and hope financing is approved?" Adam Fenn, president of Merit Asset Services in Henderson, said there's talk on Wall Street about a "double-dip recession," even as some data point to economic recovery. People are frustrated in their efforts to buy a home and there's not enough capital out there to finance purchases, he said. "It's kind of scary," Fenn said. "When you go for the highest and best offer, you get people bidding too high and the property ends up going back on the market. I think there's going to be a double-dip in values. They're going to go up and then come back down."

Obama to meddle with your retirement account? Administration considers forcing investors into Treasury debt – (www.wnd.com) The Obama administration appears to have come up with a novel way of financing trillion-dollar budget deficits – demanding IRA and 401(k) holders buy trillions of dollars in Treasury bonds. With the Treasury needing this year to see another $1 trillion in debt to finance the anticipated federal budget deficit, and the Federal Reserve about to discontinue its 2009 program of buying Treasury bonds for the Fed's asset portfolio, the Obama administration is scrambling to find ways to sell government debt without having to raise interest rates. Bloomberg reported Friday that Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Mark Iwry are planning to stage a public comment period before implementing regulations that would require private investors to structure IRA and 401(k) accounts into what could amount to a U.S. Treasury debt-backed government annuity. CNBC's Rick Santelli broadcast the rumor the same day from the trading floor during CNBC's "Power Lunch" show. Spokesmen from both the U.S. Treasury and Department of Labor confirmed to WND that the federal agencies about to enter a pre-regulation public comment phase on the proposed rule change. But the agencies are getting serious pushback from the mutual fund industry, objecting to what some financial planners see as a government attempt to divert hundreds of billions of dollars of private retirement accounts into federal government debt, regardless whether the investment in Treasury bonds is in the best interest of the retirement-oriented investor. On the Department of Labor website, the transcript of a Dec. 9 webchat with Borzi confirms the Employee Benefits Security Administration is about to issue a Request for Information on how annuity lifetime options should be structured into a wide range of defined contribution retirement plans, including 401(k)s. Under ERISA, the Department of Labor regulates approximately 700,000 private pension plans, with approximately $4.7 trillion in assets. "Lifetime Income Options," code words for annuities, are also listed in the Department of Labor's regulatory agenda for the Employee Benefits Security Administration, issued Dec. 7 and filed in the Federal Register. The government's argument is that IRA and 401(k) investors lost principal in the stock market when the Dow Jones Industrial Average plummeted from a closing of 14,164.53 on Oct. 9, 2007, to 6,547.05 on March 9, 2009.

You saw this one coming... Union’s Health Benefits May Avoid Health Care Cadillac Tax Under Proposal - (www.bloomberg.com) The U.S. Senate proposal to impose taxes for the first time on “gold-plated” health plans may bypass generous employee benefits negotiated by unions. Senate Finance Committee Chairman Max Baucus, the chief congressional advocate of taxing some employer-provided benefits to help pay for an overhaul of the U.S. health system, says any change should exempt perks secured in existing collective- bargaining agreements, which can be in place for as long as five years. The exception, which could make the proposal more politically palatable to Democrats from heavily unionized states such as Michigan, is adding controversy to an already contentious debate. It would shield the 12.4 percent of American workers who belong to unions from being taxed while exposing some other middle-income workers to the levy. “I can’t think of any other aspect of the individual income tax that treats benefits of different people differently because of who they work for,” said Chris Edwards, director of tax policy studies at the Cato Institute, a Washington research group that often criticizes Democrats’ economic proposals. Edwards said the carve-out “smacks of political favoritism.” Baucus, a Montana Democrat, is proposing to tax Americans whose health insurance is valued at a higher rate than what is offered to federal employees. About 40 percent of insured Americans have costlier benefits, and Baucus has said he is trying to set the level at which taxes would be imposed high enough so fewer people are affected.

Big Banks Accused of Short Sale Fraud - (www.cnbc.com) Just as regulators, lawmakers and all forms of financial oversight boards are talking about new regulations to guard against mortgage fraud and another mortgage meltdown, there appears to be yet a new mortgage fraud out there today, allegedly perpetuated by agents of, yes, the big banks. I was first alerted to this by Jeremy Brandt, the CEO of several companies that bring short sale agents, investors and sellers together. His companies include 1800CashOffer, HomeFlux.com and FastHomeOffer.com. Brandt has a huge network of short sale real estate agents, and over the past several months he's been receiving all kinds of questions and complaints about trouble with second lien holders. As we all know, during the housing boom, millions of Americans pulled cash out of their homes in the form of home equity loans and lines of credit. They also used "piggy back" loans in order to get even lower interest rates on their primary mortgages. Now, many of the borrowers in trouble, and many who are so far underwater on their loans that they don't qualify for any refi or modification, are choosing short sales as a way out. (Short sales are when the lender allows the home to be sold for less than the value of the loan). About 12 percent of all home sales by the end of 2009 were short sales, according to the National Association of Realtors.

Regulators seize three more banks in U.S. - (www.reuters.com) Regulators closed three U.S. banks on Friday, as deteriorating loans continue to claim community and regional banks reeling from the financial crisis. The Federal Deposit Insurance Corp said that Town Community Bank and Trust of Antioch, Illinois, and St. Stephen State Bank of St. Stephen, Minnesota, had failed. Other banks agreed to assume the deposits at those failed institutions. Barnes Banking Co of Kaysville, Utah, was also seized, and the FDIC created a bridge bank to protect depositors as they move their accounts to other institutions. The agency did not give the causes of their collapses. The FDIC has said that the pace of bank failures will remain elevated this year because of extensive loan losses tied to home mortgages and commercial real estate. Barnes Banking Co had about $828 million in total assets. Town Community Bank had about $70 million in assets, and St. Stephen State Bank had about $25 million.

Osborne to push for global bank levy - (www.ft.com) A Conservative government would push for a worldwide insurance levy on financial institutions, amid a growing outcry over banks paying what Barack Obama this week called “obscene” bonuses. George Osborne, shadow chancellor, said that it was “unacceptable” for banks to be paying large cash bonuses when they should be defending themselves against future disaster. On Friday, JPMorgan Chase, the US bank, kicked off the latest bank reporting season by announcing that it would pay $9.3bn (£5.7bn) in bonuses this year. Speaking to the Financial Times, Mr Osborne said that a Tory administration would support a new levy on banks – so long as it could be agreed by G20 countries – to protect the taxpayer from the costs of a future crisis. The aim would be to introduce a more permanent version of the bank levy announced by Mr Obama, designed to recover at least $90bn from up to 50 of the biggest institutions, including US units of foreign banks. The International Monetary Fund will report in April on the concept of a bank resolution fund – one of four options proposed by Gordon Brown at a G20 meeting last year. The prime minister’s idea of a Tobin tax, a small charge on foreign

Societe Generale Ordered to Stop Derivatives Trading in India - (www.bloomberg.com) Societe Generale SA’s Indian unit was ordered to stop selling or trading offshore derivatives by the nation’s capital markets regulator, which said the bank failed to provide fair and complete information about its trades. The Securities & Exchange Board of India gave Societe Generale, France’s second-largest bank, 30 days to reply or file an objection to the order, according to a statement posted on its Web site yesterday. The Paris-based company is the second overseas bank to be suspended from trading derivatives by the regulator in just over a month. Barclays Plc suspended sales of its exchange-traded notes linked to Indian stocks following a Dec. 9 order. Both banks gave incorrect details on the sale of so-called participatory notes, the regulator said. “Societe Generale completely failed in obtaining correct and complete information from the counterparties it deals with,” the regulator’s statement said. “Societe Generale is required to show cause as to why appropriate proceedings including cancellation of its certificate of registration as a foreign institutional investor should not be initiated.”

Massachusetts Senate Race a Health-Care Referendum or a Referendum on Anger and Abuse of Power? – (Mish at globaleconomicanalysis.blogspot.com) The special election is a health-care referendum, a reflection on widespread anger, and a reflection on abuse of political power, the latter not just about the Massachusetts Democratic Party. Anger is brewing everywhere to throw the bums out. Certainly Obama's decision to cram health-care legislation through no matter how poorly it is written does not help. Nor does his expansion of troops in Afghanistan sit well with the Democratic party, nor does the bloated military budget. On the Republican side, and with the "Blue-Dog" fiscal Democrats as well, his continuation of Bush's bailout policies have not played well. He is attempting to sidestep the bailout issue now with a tax on financial institutions, but by playing it both ways he looks disingenuous. Finally, Obama's viral support for unions is offensive to any clear-thinking person from either party, notably the Republicans but also the "Blue-Dogs". There are a lot of angry citizens, and a lot of reasons for citizens to be angry no matter what side of the aisle one is on. With Obama it has been politics as usual, only worse, frequently championing the worst ideas each party has to offer.

OTHER STORIES:

SEC subpoenas big banks over CDOs - (www.ft.com)

$8,000 tax credit: No e-file, long delays - (money.cnn.com)

Florida Freeze Cuts Produce Supply, Sends Prices Higher - (online.wsj.com)

Direct bids set to spark Treasury volatility - (www.ft.com)

Futures Bets on 10-Year U.S. Note Decline at Highest Since 2005 - (www.bloomberg.com)

Plugging into electric wheels in Detroit - (money.cnn.com)

Loan modifications: 66,465 ... and counting - (money.cnn.com)

Greek Deficit Plan Not Aggressive Enough, Goldman Sachs Says - (www.bloomberg.com)

Bernanke and the Beast - (www.nytimes.com)

Energy costs fuel 2009 consumer price rise - (www.ft.com)

Fed Stays Course Despite Worries - (online.wsj.com)

JPMorgan loan losses overshadow higher Q4 profit - (www.reuters.com)

NBC’s Slide From TV Heights to Troubled Punch Lines - (www.nytimes.com)

Verizon and AT&T Cut Price on Unlimited Mobile-Calling Plans - (www.bloomberg.com)

Credit Cards and Reluctant Regulators - (www.nytimes.com)

Wyclef Jean blasts 'baseless attacks' on Yele Haiti - (money.cnn.com)

7 major tax changes | Taxing bailed-out banks - (money.cnn.com)

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