Sunday, October 31, 2010

Monday November 1 Housing and Economic stories


'Foreclosure Mill' Employees Got Gifts For Altering Documents - ( At a large Florida "foreclosure mill," a manager signed up to 1,000 documents a day without reading them and employees were given gifts to speed up foreclosure paperwork, according to depositions released today by the Florida Attorney General's Office. The news, also reported by Tampa Bay Online, comes as Bank of America, the nation's largest bank by assets, announcement that it would resume more than 100,000 foreclosures in 23 states after an internal investigation of its practices. Florida authorities are investigating the law offices of David J. Stern over how it handled foreclosure paperwork. As the AP notes, Cheryl Salmons, an office manager at the law offices of David Stern, "would sign 500 files in the morning and another 500 files in the afternoon without reviewing them and with no witnesses," according to Kelly Scott, a former assistant at the firm. The perks for good performance were considerable, according to Scott's statement.Tampa Bay Online notes office employees were lavished with gifts:

From $1.5 million down to $630,000 in Huntington Beach, CA - ( Huntington Beach is a fun city to be in. But like most Southern California cities, is still largely overvalued. The root of this housing crisis is based on massively overpriced real estate being leveraged with toxic mortgages. It seems like the toxic mortgages have wilted away because of Wall Street’s lack of appetite and their desire to steal money from taxpayers (a much easier source of income) yet prices in many areas still act as if thetoxic mortgage market was still in place. It is not. In California option ARMs have been removed from the repertoire of purchasing a home. Even in places that once were seen as “housing bubble proof” the correction is hitting fiercely even with “beach” in the title of your city name. Huntington Beach is the third largest city in Orange County with over 200,000 residents. Let us take a look at why prices are still too high in this beach city.

Mortgage Buybacks May Cost Lenders $120 Billion - ( Forced repurchases of soured U.S. mortgages may be the “biggest issue facing banks” even as errors in the foreclosure process draw attention to other industry risks, according to JPMorgan Chase & Co. analysts. Future losses from repurchases of home loans whose quality failed to meet sellers’ promises will likely total $55 billion to $120 billion, or potentially $10 billion to $25 billion for the next five years, the New York-based mortgage-bond analysts led by John Sim and Ed Reardon wrote in a Oct. 15 report. While a “firestorm of news” sparked by some loan servicers’ decisions to halt action on defaulted loans is drawing renewed attention to banks’ mortgage-repurchase risks, the foreclosure issues themselves are mostly “process-oriented problems that can be fixed,” the analysts wrote.

Pimco, NY Fed Said to Seek BofA Repurchase of Mortgages - ( Pacific Investment Management Co., BlackRock Inc. and the Federal Reserve Bank of New York are seeking to force Bank of America Corp. to repurchase soured mortgages packaged into $47 billion of bonds by its Countrywide Financial Corp. unit, people familiar with the matter said. A group of bondholders wrote a letter to Bank of America and Bank of New York Mellon Corp., the debt’s trustee, citing alleged failures by Countrywide to service loans properly, their lawyer said yesterday in a statement that didn’t name the firms. The New York Fed acquired mortgage debt through its 2008 rescues of Bear Stearns Cos. and American International Group Inc. Investors are stepping up efforts to recoup losses on mortgage bonds, which plummeted in value amid the worst slump in home prices since the 1930s. Last month, BNY Mellon declined to investigate mortgage files in response to a demand from the bondholder group, which has since expanded. Countrywide’s servicing failures, including insufficient record keeping, may open the door for investors to seek repurchases by bypassing the trustee, said Kathy Patrick, their lawyer at Gibbs & Bruns LLP.

Why should we pay taxes if borrowers don't pay mortgages? - ( Wall Street has raised its voice against any government moratorium on foreclosures, even as evidence mounts that banks systematically and illegally falsified documents in order to expedite hundreds of thousands, or even millions, of foreclosures. Documented examples of abuse include banks hiring contractors and what one Goldman Sachs executive referred to as “Burger King kids” to process thousands of foreclosure documents per week, all the while declaring to courts they were familiar with the cases. Lenders also falsified signatures, notary stamps, and tossed legal documents into the garbage. Every major bank is implicated in the widening scandal. Yet to the barons of Wall Street these examples of law breaking—what a number of state attorneys general have called a “fraud on the court”—are immaterial, and those who were evicted deserved their fate. Jamie Dimon, CEO of JP Morgan Chase, whose bank is implicated in the scandal, said this week in a conference call that there have been no accidental evictions. “We’re not evicting people who deserve to stay in their house,” the multimillionaire banker declared. “If you didn’t pay your mortgage, you shouldn’t be in your house. Period,” Walter Todd of the investment advisory firm Greenwood Capital Associates, told Reuters. “Everyone’s responsible for following the law. If we all don’t have to pay our mortgage, should we just stop paying taxes, too?” said Anton Schutz, president of Mendon Capital Advisers. Everyone has to follow the law except the banks, that is. Schutz added, “Your mortgage didn’t get to a robo-signer by accident, it’s because you’re not paying.... Krugman attempts to distinguish these claims by Wall Street with the position of the Obama administration, whose opposition to a moratorium on foreclosures the Times columnist suggests is a policy mistake. In fact, the White House is of one mind with the banks. In spite of mounting popular anger toward Wall Street—and the upcoming off-year elections—the Obama administration this week categorically ruled out any national moratorium on foreclosures, instead encouraging banks to review their own practices and carry through with foreclosures “as quickly as possible,” according to the Washington Post.


One Mess That Can't Be Papered Over - (

7 banks closed in Fla., Ga., Ill., Kan., Ariz - (

Hoenig Says Excessive Liquidity Can Lead to `Very Bad Outcomes' - (

Foreclosures Jam the Court System . - (

Subprime Debacle Act II - (

U.S. Infrastructure Spending: No Time to Get Cheap - (

Arguments For Restoring Top Tax Rates - (

A market with no mortgages - (

How Much Will Foreclosures Weigh Down Big Banks? - (

House Stealing - (

Fed Ignores Gold, Targets Higher Inflation And Plays With Fire - (

Saturday, October 30, 2010

Sunday October 31 Housing and Economic stories


Florida community feels ripple effects as paperwork issues stall foreclosures - ( IN FORT MYERS, FLA. The yellow stucco house at 1813 Oakley Ave. has blooming bougainvillea out front, a spacious yard out back and a buyer named Emilio Mamuyac who's smitten with the place and ready to move in. But he can't. Since early last month, the sale has been postponed three times as the mortgage finance giant Fannie Mae, which seized the home from a delinquent borrower, has faced concerns about whether the foreclosure was properly carried out. And as this deal and others like it languish, the effects are rippling across this community on Florida's west coast. Mamuyac has to continue paying rent for an apartment six miles down the road. Mamuyac's real estate agent hasn't been able to pocket his commission, nor has the seller's agent. Another home inspector loses out on work.

Witness: signatures were faked at foreclosure firm - ( An office manager at a Florida law firm under investigation for fabricating foreclosure documents would sign her name to 1,000 files a day without reviewing them and would allow paralegals to sign her name for her when she got tired, her former secretary said in a deposition released Monday. Cheryl Salmons, office manager for the foreclosure department at the law offices of David Stern , would sign 500 files in the morning and another 500 files in the afternoon without reviewing them and with no witnesses, said former assistant Kelly Scott in a deposition released by the Florida attorney general's office. The files were laid out on a conference room table for Salmons to sign, the former secretary said. "She doesn't review them. She just looks," Scott said. "The paper is going to be in the top folder so it's visible to her, and she knows exactly where she has to put her signature." Paralegals would then collect the files and swap them with each other, signing them as witnesses even though they had already been notarized and executed, Scott said. Salmons allowed some paralegals to sign her name for her, said the former assistant, who worked at the firm for a year in 2008.

Barney Frank Is Anything But On Housing - ( You would be hard-pressed to find a politician who is less frank than Congressman Barney Frank. Even in an occupation where truth and candor are often lacking, Rep. Frank is in a class by himself when it comes to rewriting history in creative ways. Moreover, he has a lot of history to rewrite in his re-election campaign this year. No one contributed more to the policies behind the housing boom and bust, which led to the economic disaster we are now in, than Frank. His powerful position on the House of Representatives' Committee on Financial Services gave him leverage to force through legislation and policies that pressured banks and other lenders to grant mortgage loans to people who would not qualify under the standards which had long prevailed, and had long made mortgage loans among the safest investments around. All this was done in the name of promoting more homeownership among people who had neither the income nor the credit history that would meet traditional mortgage lending standards. To those who warned of the risks in the new policies, Frank replied in 2003 that critics "exaggerate a threat of safety" and "conjure up the possibility of serious financial losses to the Treasury, which I do not see." Far from being reluctant to promote risky practices, Frank said: "I want to roll the dice a little bit more in this situation."

The New Tax Man: Big Banks And Hedge Funds - ( Nearly a dozen major banks and hedge funds, anticipating quick profits from homeowners who fall behind on property taxes, are quietly plowing hundreds of millions of dollars into businesses that collect the debts, tack on escalating fees and threaten to foreclose on the homes of those who fail to pay. The Wall Street investors, which include Bank of America and JPMorgan Chase & Co., have purchased from local governments the right to collect delinquent taxes on several hundred thousand properties, many in distressed housing markets, the Huffington Post Investigative Fund has found. In many cases, the banks and hedge funds created new companies to do their bidding. They gave the companies obscure, even whimsical names and used post office boxes as their addresses, masking Wall Street's dominant new role as a surrogate tax collector. In exchange for paying overdue real estate taxes, the investors gain legal powers from local governments to collect the debt and levy fees. At first, property owners may owe little more than a few hundred dollars, only to find their bills soaring into the thousands. In some jurisdictions, the new Wall Street tax collectors also chase debtors over other small bills, such as for water, sewer and sidewalk repair.

Forget The Foreclosures, Here's The Simple Thing That Is Crushing The Banks - ( A JPMorgan analyst suggests that the current maelstrom surrounding banks could cost the industry somewhere between $50-$120 billion, but arguably the fears here are being overblown. But there is a clear threat that is very easy to see: the economy is weak and banks don't have the business volume to make a lot of money. As credit specialist David Goldman observers, banks are still plowing more and more money into government securities -- the opposite of real banking activity. What should worry investors, rather, is the simple question: how can the banks make money when no-one wants to borrow and asset returns are imploding? The absence of viable investment opportunities for the banks is illustrated most poignantly by one data point, namely banks’ accelerating purchases of Treasuries. Bank purchases of treasuries spiked upward during the past several weeks just as the yield curve flattened and Treasury returns collapsed. It was one thing for banks to borrow at next to nothing and buy 2-year notes at 1%. The trade doesn’t make sense now. It is risky for banks to go far out the yield curve, but they seem to be doing so.


Wells Fargo Prepares For Tsunami Of Loan Repurchase Demands By Defrauded Investors - (

Government's mortgage subsidies are screwing families and houseowners - (

Why Germany Has It So Good -- and Why America Is Going Down the Drain - (

Our Culture of Financial Fraud and the Anger of the Honest - (Charles Hugh Smith at

Bank of America starts thaw in foreclosure freeze - (

Mortgage Investors Join Outcry Against Banks - (

The higher the price, the harder to sell the house - (
Shilling Thinks Housing Will Fall Another 20%, But Owners Will Get Bailed Out - (

The Second Leg Down of America's Death Spiral - (
They're still smoking our old dope in Australia - (

India: Manic buying before a likely panic collapse - (

Victims of robo-signing scandal won't get their houses back - (

Friday, October 29, 2010

Saturday October 30 Housing and Economic stories


A World Upside Down for Greeks - ( Giorgos Sofronas, 66, has run a small shop selling ladies’ bags in central Athens for more than four decades. This year, all of a sudden, the future became uncertain. Mr. Sofronas has seen his sales drop by 45 percent since the onset of an unprecedented debt crisis earlier this year that prompted the Greek government to increase taxes and cut public salaries, in return for a €110 billion, or $154 billion, rescue package from its euro-zone partners and the International Monetary Fund. The measures have sliced profit margins at businesses large and small and damped consumer demand. Watching shops closing one after another on his street has made Mr. Sofronas nervous, but he will not contemplate bankruptcy. “This business feeds nine people,” he said, referring to his family and five employees. “I can’t give up.” In Greece, small businesses — defined as stores or workshops employing fewer than 10 people, though many are one-person operations — account for 96 percent of all enterprises and employ around two million of Greece’s five million-strong work force. Many small businesses, particularly in Athens and on Greece’s many islands, support the tourism sector, a crucial part of the economy that is also reeling from the repercussions of the debt crisis.

Pittsburgh Deal to Fund City Pensions Put in Park - ( A plan to lease Pittsburgh's parking assets for 50 years has run into a roadblock, renewing questions about how the city will fund its pension plan. Pittsburgh's city council nixed a deal this week to lease its parking assets to a consortium led by J.P. Morgan Chase & Co. Instead, the council is proposing that the city's parking authority issue a 30-year bond and pay it off with parking-rate increases. Part of the proceeds would go to the pension plan. Mayor Luke Ravenstahl said Friday that he was opposed to that proposal. The city pension plan, which had an unfunded liability of $718 million as of August, could fall into state hands without additional funding. The issue underscores tensions around the U.S. as lawmakers, city officials and residents clash over how to pay debts. J.P. Morgan Asset Management and LAZ Parking offered the city $452 million to operate garages, lots and 7,000 metered street spaces for 50 years. Mark Weisdorf, who runs J.P. Morgan's infrastructure-investments group, said the consortium might amend its offer. "Clearly, we were disappointed," he said. "But we believe it's still a viable option."

U.S. foreclosure mess chills investors, clouds market - ( Investors who have been snapping up foreclosed homes are backing off in the wake of the U.S. foreclosure fiasco, driven by sagging inventory and fears over legal title, and some economists say the trend could hurt the overall housing market. With foreclosed properties accounting for a large portion of housing sales, and investors accounting for a large portion of buyers -- particularly in some key markets with very high foreclosure rates -- the implications for the broader economy could be serious. Investors who would buy, rehabilitate and then sell or rent foreclosures were playing a "huge role," in helping to clear the market, said housing economist Tom Lawler. But many of those investors are now staying on the sidelines. "We're like a plane flying around in a holding pattern, waiting to land," said Tony Alvarez, an investor in southern California who is currently renting out 40 former foreclosed homes. "Nothing is going on, and why? Fear has taken hold in the marketplace." Allegations that banks failed to review foreclosure documents properly or submitted false statements when they foreclosed on properties spurred a joint investigation by the attorneys general of all 50 states and triggered foreclosure moratoriums by some of the biggest U.S. lenders.

Bondholder ‘Immunity’ to Losses Challenged as Irish Bail Banks - ( Two years after assuring senior bondholders that they wouldn’t lose their money if banks failed, the Irish government is making the same promise again. This time, some bondholders are skeptical the government will bail them out with taxpayer funds, sending down the price of senior guaranteed debt for Anglo Irish Bank Corp. to 90 cents on the euro, according to pricing data compiled by Bloomberg, to account for the risk it might not be repaid in full. Some equity investors, including Neil Dwane, who helps oversee about $80 billion of equities as chief investment officer at Allianz Global Investors’ RCM unit in Frankfurt, are angry the pledge is being made at all. “It’s as if bondholders have diplomatic immunity from losses,” Dwane said. “Two years into this crisis we’ve learned nothing and done nothing. Bondholders have got to understand that they can lose money when they invest in banks.”

Sudden and Dramatic Drop in U.S. Home Prices - ( Clear Capital (, is issuing this special alert on a dramatic change observed in U.S. home prices. “Clear Capital’s latest data shows even more pronounced price declines than our most recent HDI market report released two weeks ago,” said Dr. Alex Villacorta, senior statistician, Clear Capital. “At the national level, home prices are clearly experiencing a dramatic drop from the tax credit-induced highs, effectively wiping out all of the gains obtained during the flurry of activity just preceding the tax credit expiration.” This special Clear Capital Home Data Index (HDI) alert shows that national home prices have declined 5.9% in just two months and are now at the same level as in mid April 2010, two weeks prior to the expiration of the recent federal homebuyer tax credit. This significant drop in prices, in advance of the typical winter housing market slowdowns, paints an ominous picture that will likely show up in other home data indices in the coming months.


U.S. Yield Curve Widens to Steepest Since September on Fed View - (

Rare Earth in BlackBerry to Prius Underscores Alarm Over Supply - (

U.S. IPOs Seeking to Raise Most Since July as Market Rebounds - (

Runaway commodity prices reach highs - (

BOJ Said to Consider Buying Lower-Rated Company Debt - (

Ireland Had Highest 2009 Euro-Area Deficit as Greek Data Delayed - (

German Business Confidence Unexpectedly Increases - (

China's Auto Sales Run Hot - (

Thursday, October 28, 2010

Friday October 29 Housing and Economic stories


Government job cuts ravage California - ( Weighed down by a struggling economy, government agencies in California shed 37,300 workers last month — more jobs than were lost in the private sector — as cities and counties made their biggest payroll cutbacks since at least 1990. What's more, analysts see more job cuts ahead as California faces an estimated $10-billion shortfall in the state budget that the next governor must address. Cities and counties, meanwhile, are still struggling with tepid sales and property tax revenue. "Local governments are adopting austerity measures," said Jerry Nickelsburg, an economist with the UCLA Anderson Forecast. "They don't have confidence that they're going to get money to do otherwise." Joe Galvez, 43, was hit with a double dose of government cuts. He lost his job with the Los Angeles County Public Works Department in 2007 and hasn't been able to find steady work since. And, he said his son's high school is so strapped for funding that it has asked parents to donate money for school supplies.

Brown Pledges College Admission for Illegal Immigrants - (Mish at Those of you considering voting for Brown in the California gubernatorial election need to consider this. “We have enough wealth to continue to have a great university and get every kid into this school that can qualify. Now when I say every young man and young woman, I mean everyone – whether they are documented or not. If they went to school, they ought to be here.” Brown is a fool. California has enough problems already. Hopefully this stupidity will cost him the election.

7 banks closed in Fla., Ga., Ill., Kan., Ariz. - ( Regulators on Friday shut down a total of seven banks in Florida, Georgia, Illinois, Kansas and Arizona, lifting to 139 the number of U.S. banks that have fallen this year as soured loans have mounted and the economy has sputtered. The Federal Deposit Insurance Corp. took over the banks, the largest of which by far was Hillcrest Bank, based in Overland Park, Kan., with $1.6 billion in assets. A newly chartered bank subsidiary of Boston-based NBH Holdings Corp. was set up to take over Hillcrest's assets and deposits. The new subsidiary is called Hillcrest Bank N.A. The FDIC and Hillcrest Bank N.A. agreed to share losses on $1.1 billion of the failed bank's assets. Its failure is expected to cost the deposit insurance fund $329.7 million.

Big Problem for Banks: Due Process - ( Earlier this week, Bank of America, the nation’s largest consumer bank, reported its third-quarter earnings. It was a very good quarter; putting aside an accounting charge — a very large, $10.4 billion accounting charge, admittedly — the bank reported $3.1 billion in profits. It was the third consecutive quarter that Bank of America had earned more than $3 billion. During the ensuing conference call Tuesday morning, there was the requisite chest-thumping fromBrian Moynihan, the chief executive, and Chuck Noski, the chief financial officer. But there was also something else: tough talk about two big legal problems the bank faces as a result of the subprime bubble. Not surprising, it was the latter that caught my attention. Like everyone else, I’d been reading with amazement the stories about one of those legal problems: the robo-signing scandal that has ensnared all the banks with mortgage servicing subsidiaries, Bank of America included. That’s the scandal in which a tiny handful of employees had signed — or allowed others to forge their signatures — on thousands of affidavits confirming that the banks had the legal right to foreclose on properties they serviced. In truth, they had often never seen the documents proving the bank had that legal right. In some cases, the documents didn’t even exist. As a result of the mounting publicity, many big banks had halted all foreclosures while they reviewed the legality of their affidavits.

Chicago faces crisis over pension funding, how to pay for it - ( Much has been made of retiring Mayor Richard Daley's plan to draw down reserve funds to balance next year's city budget and how it could burden his successor. But the chairman of the Finance Committee, Ald. Ed Burke, today talked about a far larger problem. One in four pension funds for city workers will go broke in the next decade, if current funding levels continue and markets don't improve, and all will be belly up by 2032 if nothing gives. "It's similar to watching the house burn down without turning on the fire hydrant," said Burke, 14th, during the first day of hearings on Daley's proposed $6.15 billion budget. "At the present time, the city pension funds are actually selling assets to meet obligations." Stabilizing employee pensions long-term would require greater employee contributions, higher taxes, major changes to the pension systems or a combination of those steps. Without relief, the city would have to about double its property taxes for the next 40 years to cover its pension obligations, said Gene Saffold, the city's chief financial officer. To cover the outstanding liabilities, each household in Chicago would have to pay $41,966, the report concluded. That's the highest per-home amount among U.S. cities.


G-20 to Avoid Competitive Currency Devaluations - (

G-20 Nations Split Over Geithner’s Trade Plan as Talks Near End - (

Geithner Push for Current Account Targets Split G-20 Nations - (

U.S. Proposes Benchmark for Limiting Trade Imbalances - (

Blinder Says Fed ‘Making It Up’ With New Stimulus: Tom Keene - (

Hoenig Says Excessive Liquidity Can Lead to ‘Very Bad Outcomes’ - (

International economy: A display of disunity - (

IMF Says G-20 Agreed on ‘Biggest Reform Ever’ - (

Fannie, Freddie bailout cost is likely to rise to $154 billion, agency projects - (

Pickup Sales Get a Boost From Surging U.S. Agriculture Industry - (