Sunday, August 1, 2010

Monday August 2 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

House Probe Finds 153 VIP Loans Went to Fannie Employees - (online.wsj.com) Countrywide Financial Corp.'s controversial "VIP" mortgage program made 153 loans to employees of Fannie Mae, the giant federally backed financial institution that helped fuel Countrywide's growth, according to a letter released Tuesday by Rep. Darrell Issa. Another 20 such VIP loans, which often provided mortgages on terms more favorable than those available to the general public, went to employees of Freddie Mac, another big government-backed buyer of mortgage loans, the Issa letter said. While it has been reported that VIP loans went to some top Fannie Mae officials, the latest information indicates that the activity was more widespread. In an interview Tuesday, Mr. Issa, of California, said the new information provides further evidence that Countrywide Financial was improperly trying to "curry favor and get an edge" by passing out financial favors. He says the dealings between Countrywide and Fannie Mae in particular contributed to the downfall of those firms and to the broader problems in the mortgage industry. In 2008, Fannie Mae and Freddie Mac were taken over by the federal government, which has spent about $145 billion to keep them afloat. Also in 2008, Countrywide was purchased by Bank of America Corp. The House Oversight and Government Reform committee, on which Mr. Issa is the ranking Republican, last fall subpoenaed the records of the now-defunct VIP program.

Lack of Sales Leaves Dubai Property Buyers Guessing - (www.bloomberg.com) A dearth of Dubai home sales and foreclosure auctions is stalling a recovery because buyers aren’t able to gauge how far prices have fallen during the market’s two-year slump. “There are very few transactions at the moment,” said Craig Plumb, head of Middle East research at broker Jones Lang LaSalle Inc. “We are not going to see the bottom of the market until we see transactions through the foreclosure process.” Home prices in the sheikhdom have dropped about 50 percent from their peak two years ago and Credit Suisse estimates a further decline of as much as 20 percent. Though at least 70 foreclosure cases have been filed under Dubai’s 2008 mortgage law, none has resulted in the sheikhdom’s first auction, said Jody Waugh, a partner at law firm Al Tamimi & Co. “People are only going to buy if they believe the price is realistic,” Plumb said. Data provided by the Dubai Land Department is too incomplete to provide a valuable guide to selling prices, he said.

Regulatory Bill May ‘Freeze’ Asset-Backed Market, Industry Says - (www.bloomberg.com) The U.S. financial-regulation bill may halt the already diminished market for asset-backed securities by increasing liability risk for credit raters, a securitization-industry group and bank analysts said. The legislation, set for signature by President Barack Obama, eliminates credit-rating companies’ shield from lawsuits when underwriters include their assessments in documents used to sell debt. Moody’s Investors Service and Fitch Ratings have already told Wall Street that because of an increased risk of being sued, they will no longer let underwriters use ratings in bond-registration statements. The change, if combined with an existing Securities and Exchange Commission rule that restricts sales of asset-backed debt without ratings in offering documents, will put a “flash freeze” on the market, said Tom Deutsch, executive director of the American Securitization Forum. His concerns are shared by analysts at RBS Securities Inc. “A number of transactions that had been planned for the upcoming weeks have been shelved indefinitely given this proposal,” Deutsch said in an interview yesterday. “The transactions legally cannot go forward.”

More than 40% drop out of mortgage-aid program - (www.usatoday.com) The number of homeowners dropped from the Obama administration's signature program to modify mortgages for cash-strapped homeowners is larger than the number of those receiving permanently lower monthly payments under the program. The program puts homeowners into five-year programs with lower monthly payments on their mortgages, but first they must provide proof of income and get through a three-month trial period making all payments on time. About 530,000 homeowners, or about 40% of 1.3 million borrowers enrolled, have had their lower mortgage payments canceled, the Treasury Department reported Tuesday. An additional 398,000 homeowners, or 30% of borrowers, have received the longer-term lower payments on their mortgages. To qualify, homeowners must be paying about a third or more of their monthly gross income toward their mortgage. They must have a property value less than about $729,000, and they must have incurred some sort of hardship.

News Alert: Sky Does Not Fall - (Mish at globaleconomicanalysis.blogspot.com) Maywoood, California outsourced all city services including police and fire. The unions predicted dire consequences. Well, not only did the sky not fall, but services have improved. Please consider A City Outsources Everything. Sky Doesn’t Fall. While many communities are fearfully contemplating extensive cuts, Maywood says it is the first city in the nation in the current downturn to take an ax to everyone. The school crossing guards were let go. Parking enforcement was contracted out, City Hall workers dismissed, street maintenance workers made redundant. The public safety duties of the Police Department were handed over to the Los Angeles County Sheriff’s Department. At first, people in this poor, long-troubled and heavily Hispanic city southeast of Los Angeles braced for anarchy. Senior citizens were afraid they would be assaulted as they walked down the street. Parents worried the parks would be shut and their children would have nowhere to safely play. Landlords said their tenants had begun suggesting that without city-run services they would no longer feel obliged to pay rent.

OTHER STORIES:

Weakening recovery brings deja vu - (www.latimes.com)

Housing Market Stumbles - (online.wsj.com)

No Sales Means No Jobs Means No Recovery - (www.businessweek.com)

Housing starts hit their lowest level in eight months in June - (www.reuters.com)

Obama's next focus of reform: Housing finance - (www.washingtonpost.com)

Hedge Fund Inflows Help Big Get Even Bigger - (www.cnbc.com)

Chinese Companies Raise Decade-High Amount in IPOs - (www.bloomberg.com)

European Bank Stress Tests Said to Describe Three Scenarios - (www.bloomberg.com)

Chinese Firms Snap Up Mining Assets - (online.wsj.com)

Carney Breaks With G-7, Lifts Rates While Talking ‘Like a Dove’ - (www.bloomberg.com)

Tianjin Says ‘Wait a Minute!’ to Wen as China Property Slumps - (www.bloomberg.com)

Official: 'Severe threat' as China oil spill grows - (finance.yahoo.com)

Italy Cracks Down on Mafia Money Laundering in Crisis - (www.bloomberg.com)

Bernanke Says Fed Is Prepared to Act as Needed - (www.bloomberg.com)

Bernanke Sees No Quick End to High Rate of Joblessness - (www.nytimes.com)

All eyes on Bernanke - (www.ft.com)

Weakening recovery brings deja vu - (www.latimes.com)

Housing Market Stumbles - (online.wsj.com)

Fed in Hot Seat Again on Economic Stimulus - (www.nytimes.com)

US home loan demand jumps; purchase demand rises - (www.reuters.com)

Bond Default Is About Too Much Debt, Too Little Time: Joe Mysak - (www.bloomberg.com)

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