KeNo's Housing and Economic Portal: Wednesday October 6 Housing and Economic stories

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Bank Of America Debt Collectors Called Borrowers "F___ing N__ger" And "Punk" To Get Them To Pick Up The Phone - (www.businessinsider.com) Bank of America has been busted using some seriously outrageous tactics to try to collect debts so small they're barely worth the paper they're written on. It wasn't until ABC News ambushed BOFA CEO Brian Moynihan Michael-Moore style outside his office that the firm finally responded by firing its debt-collection firm.

Third world America - (www.macleans.ca) Collapsing bridges, street lights turned off, cuts to basic services: the decline of a superpower. In February, the board of commissioners of Ohio’s Ashtabula County faced a scene familiar to local governments across America: a budget shortfall. They began to cut spending and reduced the sheriff’s budget by 20 per cent. A law enforcement agency staff that only a few years ago numbered 112, and had subsequently been pared down to 70, was cut again to 49 people and just one squad car for a county of 1,900 sq. km along the shore of Lake Erie. The sheriff’s department adapted. “We have no patrol units. There is no one on the streets. We respond to only crimes in progress. We don’t respond to property crimes,” deputy sheriff Ron Fenton told Maclean’s. The county once had a “very proactive” detective division in narcotics. Now, there is no detective division. “We are down to one evidence officer and he just runs the evidence room in case someone wants to claim property,” said Fenton. “People are getting property stolen, their houses broken into, and there is no one investigating. We are basically just writing up a report for the insurance company.” If a county without police seems like a weird throwback to an earlier, frontier-like moment in American history, it is not the only one. “Back to the Stone Age” is the name of a seminar organized in March by civil engineers at Indiana’s Purdue University for local county supervisors interested in saving money by breaking up paved roads and turning them back to gravel. While only some paved roads in the state have been broken up, “There are a substantial number of conversations going on,” John Habermann, who manages a program at Purdue that helps local governments take care of infrastructure, told Maclean’s. “We presented a lot of talking points so that the county supervisors can talk logically back to elected officials when the question is posed,” he said. The state of Michigan had similar conversations. It has converted at least 50 miles of paved road to gravel in the last few years.

Government tries to prevent falling prices, but prevents true price and growth - (online.wsj.com) The more the government tries to prevent prices from finding an equilibrium, the longer it will take for the economy to begin growing again. A decent house has long been a symbol of middle-class American family life. Practically, it has been a secure shelter for the children and provided access to a good public education. And financially, it has been regarded as a safe store of value, a shield against the vagaries of the economy and a long-term retirement asset. All that seems a distant memory for the millions of American families who must confront the decline in the value of their homes. The pressure to meet mortgage payments on properties that have lost value has been especially shocking for those who have lost their jobs in the Great Recession. Their houses have become a ball and chain, restricting their ability to seek employment elsewhere. They cannot afford to abandon the remaining equity they have in their houses—and they can't sell in this miserable market. New home sales, pending home sales, and mortgage applications are down to a 13-year low, despite long-term mortgage rates that plummeted recently to an average 4.3% before rising slightly. New home prices have fallen by an average of 30%. According to David Rosenberg, chief economist at Gluskin Sheff, this has reduced home occupancy cost to 15% of family incomes, down from the conventional 25%. The fall in house prices has eaten away at the equity Americans have in their homes. About 11 million residential properties have mortgage balances that exceed the home's value, notes Mr. Rosenberg.

GMAC Spotlight on 'Robo-Signer' - (online.wsj.com) They are called robo-signers, putting their names on thousands of documents tied to mortgages facing foreclosure. Now, under pressure from borrowers, banks are halting foreclosures where the documents are signed by these employees. This week, mortgage-servicing giant GMAC Mortgage Co. halted foreclosures in 23 states due to questions about documents signed by one of its robo-signers, Jeffrey Stephan. Until now, Mr. Stephan was an anonymous middle manager whose job is to sign affidavits, assignments of mortgages and other documents that establish a bank's ownership of a mortgage, thus giving the bank the right to foreclose. But, as revelations come to light about how Mr. Stephan and other robo-signers do their jobs, a picture is emerging of a foreclosure process that critics say is just as flawed as the lax lending and perverse incentives that created the lending crisis. In two sworn depositions given by Mr. Stephan over the last 10 months, he said that assistants brought as many as 500 documents a day to this desk at GMAC's office in Fort Washington, Pa. Some months, he would sign more than 10,000 documents related to home foreclosures. By signing the documents, he was stating that he had personally reviewed the details of each case. The problem is, according to depositions Mr. Stephan gave in December and June, he didn't really look at each case. In fact, he assumed that all the details were correct, and just signed off on each one. Mr. Stephan also noted that, when he joined GMAC in 2004, he went through a training program that lasted three days.

Federal Reserve Destroying Your Savings For Your Own Good - (finance.yahoo.com) It might seem like prices are rising wherever you look, from medical care to college tuition. Yet to the Federal Reserve, they might not be going up fast enough. The Fed says a little more inflation might be just the thing to start a chain reaction that would ultimately create jobs -- and avoid a spiral of falling prices that could damage the economy. In a statement Tuesday, the Fed avoided directly mentioning the dreaded word "deflation." But it signaled its concern that today's very low inflation might lead to actual price drops. The Fed, meeting for the last time before the midterm elections, said its measures show inflation is "somewhat below" desirable levels for the economy. That may sound strange, because inflation is often made out to be an economic evil. And it can be, when it gets out of control. But its opposite can be even worse. Once deflation takes hold, it can wreck an economy. Workers suffer pay cuts. Corporate profits shrivel. Stock values fall. People, businesses and the government find it costlier to pare debt. Foreclosures and bankruptcies rise.

Foreclosure, REO sales account for 67% of Phoenix house buying - (www.housingwire.com) In August, the greater Phoenix area witnessed the second highest level of foreclosure home sales activity this year, according to research by the Arizona State University W.P. Carey School of Business. Out of the 8,790 total resales, 3,990 (or 45%) homes were foreclosure sales —where the transaction occurred at a county auction. There were 3,865 foreclosure sales in July and 3,085 in August 2009. Coupled with REO sales, foreclosure activity made up 67% of recorded home buying activity for the month of August, according to the report.

Irish Government Loses Another Supporter, Collapse Imminent - (www.businessinsider.com) Some quick Ireland news to bring you. The ruling coalition has lost another supporter (via Lorcan Roche Kelly), MP Mattie McGrath of Tipperary South, bringing the coalition's majority to a razor thin 82-80. Once again, as with when it lost a supporter on Friday, it comes down to spending decisions. A collapse of the government seems imminent, which is exactly what the country (and all of Europe) doesn't need right now.