Sunday, July 3, 2011

Monday July 4 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Arizona couple renting backyard to pay bills - (www.ktar.com) A Litchfield Park couple has turned to renting out their large backyard in order to help them pay their bills. According to ABC15, realtor Dottie Sosnicki and her custom home-builder husband were struggling to pay the $5,500 monthly mortgage for their 17,000-square-foot home when they had the idea to allow people to rent their backyard for events. "I started telling people they could have parties, weddings, different things like that," [Sosnicki] said. The couple's backyard is a dreamscape for events, complete with a playground, pool, basketball court and even a miniature pony. Business has been on the rise as of late with groups mainly booking on the weekends, Sosnicki said. In order to book the palatial backyard, groups must have at least 35 attendees, charged at $10 per person, and must use the property for at least four hours.

Analysts say another wave of foreclosures could hit Las Vegas - (www.vegasinc.com) Falling home prices in Las Vegas and prospects they won’t recover soon may trigger a new wave of people walking away from their homes. That’s the concern of those who track the Las Vegas housing market, which is undergoing its own mini version of a double-dip decline in prices. Studies have suggested about one-fourth of Las Vegas foreclosures are so-called strategic defaults in which people walk away even though they can afford their payments. The prospect of falling prices, prices that won’t rebound for years and a weak economy may exacerbate the problem when many were hopeful that strategic defaults were dissipating. Real estate service Zillow said 85 percent of Las Vegas homeowners are underwater. CoreLogic pegged the numbers at 66 percent in a state that has led the nation in rate of foreclosure filings for more than four years. “I do have concern because as the prices go down further, it might provide more incentive for people to strategically default,” said Nasser Daneshvary, director of the Lied Institute for Real Estate Studies at UNLV. “They still owe the same amount of money to the banks, but I think it’s getting bad enough that the ethical issues become less important to people.”

In Spain and Ireland (and USA!), Private Borrowing Led to Public Debt - (www.nytimes.com) FIVE years ago, a survey of the euro zone would have shown two star countries. They were growing rapidly and running government budget surpluses. Their national debts were low. Other countries sought to emulate their success. Today, of course, the picture is far different. The two countries’ national economies are shrinking, not growing. Ireland has received a bailout from Europe, and while Spain can still borrow money, it is forced to pay at least two percentage points a year more than Germany, a spread the Spanish government says it cannot afford to pay indefinitely. At the time the two economies appeared to be impressive, there was one indication that could have provided a warning. Each country’s private sector was borrowing heavily overseas. Those loans were fueling rapid economic growth that, in turn, produced rising tax collections, allowing national governments to run budget surpluses. In principle, there is nothing wrong with debt-financed growth. What matters is whether the borrowed money is going to create productive enterprises and purchase valuable assets that will generate future profits to repay the debt.

Realestate scam that's devastating (improving) prices - (www.marketwatch.com) Question: My neighbor in Palm Springs, Calif., who claims to have millions or more in the bank, let his home with a $1 million mortgage go into foreclosure. A real-estate friend of his bought it from the bank and is renting it back to him. After one year, my neighbor plans to buy it back. It affects me as a homeowner because now we have a home in our community that shows a sale price for $600,000, instead of the current market of $725,000. How do I report such activities? —J. McK. Answer: This type of thing is more prevalent than most people realize. According to CoreLogic, a real-estate and mortgage data firm headquartered in Santa Ana, Calif., lenders will lose more than $375 million this year alone when they sell undervalued houses based on the price opinions funneled to them by unscrupulous real-estate agents. The scam is called “flopping,” and you are correct, it can have a devastating impact on property values because now, the “sale” becomes a comparable for all future appraisals of matching neighborhood properties. Like flipping, flopping is the intentional misrepresentation of house prices. But whereas flipping usually takes place when housing prices are rising, flopping occurs when values are depressed.

Affordable housing makes your house worth less - (www.suntimes.com) Martin Luther King famously once proclaimed, “I have a dream, that one day my children would not be judged by the color of the skin, but by the content of their character, and that they would have a right to a home at an affordable price.” Okay, that’s not exactly what he said. But an unusual coalition of financial institutions and community housing advocates has been arguing this. The Dodd-Frank Act, passed last year revamping rules for financial institutions, directed all bank regulators to issue a joint regulation defining a reasonably safe, well-underwritten mortgage. Their recent proposed definition for such a “qualified residential mortgage” has created a stir because it has strict guidelines such as a 20 percent down payment requirement and tight limits on the collective debt of the borrower. Rather than praising the definition of a good mortgage for ensuring borrower safety, consumer groups have criticized the regulation as being too strict, since banks would have to hold more capital against any loans that are riskier than qualified residential mortgages, meaning that financial institutions would charge more for mortgages with lower down payments. “This is a civil rights issue,” John Taylor, president of the National Community Reinvestment Coalition, said recently. Mortgage Bankers Association CEO David Stevens echoed the sentiment: “We still need to be able to make affordable mortgages that don’t just go to the wealthy, who can afford the biggest down payments and who have the most positive credit ratings.” Such a kind heart from a man whose organization has lost significant business in the past few years as mortgages to less qualified borrowers have dried up.

OTHER STORIES:

Paulson & Co. Sells Entire Holding in Chinese Timber Producer Sino-Forest - (www.bloomberg.com)

Corn Stocks Plunge as China Adds Brazil-Sized Crop to Usage - (www.bloomberg.com)

Cool reception for Greek debt plan - (www.ft.com)

Greek Hunt for Debt ‘Holy Grail’ Pits ECB Against Naked Banks: Euro Credit - (www.bloomberg.com)

HIGHLIGHTS-Euro zone finance ministers, officials - (www.reuters.com)

Greece faces power outages due to austerity strike - (finance.yahoo.com)

China Home Prices Cool as Government Steps Up Bid to Avoid Property Bubble - (www.bloomberg.com)

China’s Boom Beginning to Show Cracks, Analysts Say - (www.nytimes.com)

Debt Crisis May 'Overwhelm' Euro Zone - (online.wsj.com)

Europe Wrangles Over Greece - (online.wsj.com)

Professor Bernanke Warning of Japan Paralysis Meets Fed Chief Facing Same - (www.bloomberg.com)

Russia Holds Key Lessons for Greece on Default: Roland Nash - (www.bloomberg.com)

No comments: