Tuesday, August 17, 2010

Wednesday August 18 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Housing limbo: Owners won't pay, banks won't evict - (www.kansascity.com) Millions of homeowners are trapped in a bizarre real estate limbo, living in houses but no longer paying for them, waiting and wondering if someone will help them - or throw them out. Some are victims of their own economic circumstances, unable to afford their mortgage and expecting to lose their homes if they can't get a break from their bank. Others are opportunists, choosing not to spend on a house worth less than they owe. Instead, they can live rent-free until their lender makes a move. The limbo phenomenon is a radical departure from previous real estate crashes, when there were far fewer troubled loans and banks moved speedily on those who fell behind on payments. Now many lenders simply can't keep up, and others appear reluctant to flood a weakened market with foreclosed homes. It all adds up to lingering instability for the housing market, as lenders slowly work through the backlog while homeowners endure uncertainty that could last months or even years.

Fannie and Freddie to be used to harm new buyers? - (blogs.reuters.com) Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama’s loan modification effort. HARP was just extended through June 30, 2011. The move, if it happens, would be a stunning political and economic bombshell less than 100 days before a midterm election in which Democrats are currently expected to suffer massive, if not historic losses. The key date to watch is August 17 when the Treasury Department holds a much-hyped meeting on the future of Fannie and Freddie. A few key points: 1) Republican leaders believe this is going to happen since GOPers and Democratic moderates in the Senate are unwilling to spend more taxpayer money on more stimulus. But such a housing plan would allow the White House to sidestep congressional objections and show voters it is doing something tangible about an economy that seems to be weakening.

Senate reform: Lazing on a Senate afternoon - (www.economist.com) GEORGE PACKER spends the opening passages of his New Yorker piece on the dysfunctionality of the Senate portraying a day at the institution in all its tedious, insipid glory. Democratic Senators kill time in chambers while Republicans use arcane 19th-century rules, meant to give legislators time to ride across town on horseback, to prevent committees from holding hearings after 2 pm. Senators deliver stem-winding speeches to the empty Senate floor for the benefit of CNN cameras. Quorum calls drag on for hours. When a bill comes up for a vote, dozens of ludicrous amendments are proposed with the aim of slowing it down: an amendment to prevent rapists and child molesters from using federal dollars to buy Viagra; an amendment to let senior citizens opt out of Medicare. (There is no actual discussion on the floor of the "world's greatest deliberative body".

Richest 400 (avg $340M income each) pay only 17% tax; middle class pays more - (www.huffingtonpost.com) The country is less equal today than it was just a decade ago thanks in part to the Bush tax cuts, Treasury Secretary Timothy Geithner said Wednesday.

"[T]he policies put in place by the previous administration, prior to this great recession, have left us with a terrible legacy of challenges," Geithner said during a discussion on fiscal policy at the Washington-based Center for American Progress. "And America is a less equal country today than it was ten years ago, in part because of the tax cuts for the top 2 percent put in place in 2001 and 2003." The Bush tax cuts, credited with job creation during the George W. Bush administration, are now credited with expanding the nation's ever-increasing national debt. More jobs have been destroyed than the tax cuts could ever claim to have created, and with the economy in a moderate recovery the tax cuts have become less an economic issue than a political one: Most Republicans, hoping to push their supply-side theories, want to extend them in hopes that the rich will spend, invest and create jobs in the process; Democrats, in an attempt to appeal to deficit-conscious voters, want them to expire so that the increased government revenue can be used to pay down the national debt.

Housing ATM Empty: HELOC Abuse Hits Record Low - (www.irvinehousingblog.com) Everyone in California loves that Piggy Bank in their house. Most people here are so kool aid intoxicated that they take the free money for granted. It is just another California entitlement. Americans in the second quarter tapped the smallest amount of home equity in a decade, showing households are focused on repairing tattered finances. No. It shows that households don't have any home equity left and that the housing ATM has been turned off. The writer of this article is implying the lack of mortgage equity withdrawal is a prudent choice of wise financial managers. Do any of you believe that? Owners took out $8.3 billion while refinancing prime home loans as borrowing costs dropped from April through June, down from $8.4 billion in the previous three months and the least in 10 years, according to a report today by McLean, Virginia-based Freddie Mac. Twenty-two percent chose to reduce loan principal, matching the third-highest rate since records began in 1985. Hurray! People are paying down their mortgages. Paying down debt is always the wisest choice. Debt is not tool, and sophisticated people do not use it to finance their daily lives. Posers do. Instead of extracting cash to binge on everything from cars to vacations as in previous recoveries, owners are refinancing to improve terms and reduce mortgage payments. The mending of household balance sheets means consumers will be in a better position to join the recovery once employment picks up. “It’ll put consumers on firmer ground going forward,” said Michael Bratus, an economist at Moody’s Economy.com in West Chester, Pennsylvania. “It’ll give consumers more confidence.”

"Too many houses, not enough buyers" WRONG! Prices still too high - (blogs.wsj.com) Tuesday’s pending home sales report is the latest indicator that the U.S. housing market is bogged down by an inventory problem: Too many houses, not enough buyers. Pending sales, signed contracts on the purchase of new homes tracked by the National Association of Realtors, were down 3% in June compared to May. That month saw a 30% drop in the index, after the April 30 expiration of the home buyer’s tax credit. The pending sales numbers point to more alarming home sales figures, wrote Credit Suisse analyst Dan Oppenheim in a note Tuesday. Mr. Oppenheim said that given the sales pace, we’re on track to sell 3.7 million homes total this year–-the lowest seasonally adjusted level of single-family existing home sales since the fall of 1996. Meanwhile, the home builders are still building homes, setting the stage for a serious inventory dilemma.

OTHER STORIES:

Record Low Mortgage Rates Do Little for US Demand - (www.cnbc.com)

Foreclosure Fee Feast - (www.sandiegoreader.com)

The rich and the rest of us - (www.salon.com)

Estate tax bills take aim at growing 'aristocracy of wealth' - (www.news.yahoo.com)

Debt Cemetery - (www.bullionbullscanada.com)

Robust GM Earnings May Bolster Bid to Go Public Again - (www.cnbc.com)

Study Looks at Tax Cut Lapse for Rich - (www.cnbc.com)

Sellers' satisfaction plummets as buyers get better prices - (lansner.ocregister.com)

There's Still This Huge Housing Bubble Yet To Pop In Australia - (www.businessinsider.com)

Could the government create a backdoor bailout? - (www.marketwatch.com)

Bailout of Housing = Bailout of Banks - (Charles Hugh Smith at www.oftwominds.com)

Morgan Stanley Sees San Francisco Housing Double-Dip, NY Gains - (www.businessweek.com)

Million dollar California foreclosures -- 35 examples - (www.doctorhousingbubble.com)

The Return of the $1,000 Down Mortgage - (www.washingtonindependent.com)

Freshman Dems Push To End The Filibuster, Face Dem Opposition - (www.talkingpointsmemo.com)

Credit history fraud: 2 charged in first-of-its-kind case - (www.washingtonpost.com)

Fighting parents' eviction, student wins rounds against Deutsche Bank - (www.latimes.com)

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