Monday, July 25, 2011

Tuesday July 26 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

You are forced to pay your neighbor's mortgage - (finance.yahoo.com) A new federal program is offering aid with a sweet kicker: It doesn't need to be repaid. For the roughly four million homeowners who have fallen behind on their mortgage payments, the federal government is offering yet another remedy: free money to catch up on their loans. The effort, called the Emergency Homeowners Loan Program, is the latest in the federal government's efforts to slow down the flood of foreclosures a necessary step to a meaningful recovery in the housing market, says a Department of Housing and Urban Development official. For people who have lost their jobs, the $1 billion program offers loans of up to $50,000 that don't actually need to be repaid, if applicants meet certain requirements. The goal, says HUD, is to offer short-term aid to people who look like they'll be back on their feet soon. But critics say the loans may leave homeowners worse off in the long run. "This is a short run band-aid, a modest attempt to grapple with the severity of the situation," says Stuart Gabriel, director of the Ziman Center for Real Estate at the University of California, Los Angeles. Rolled out by HUD and the nonprofit housing advocacy group NeighborWorks America, the program is making loans with far better terms than anything on offer at a local bank. The loans are interest-free. Payments go directly to the lender for a portion of the borrower's monthly mortgage, including missed payments or past due charges. And when the assistance period -- which runs for up to two years -- ends, 20% of the loan is forgiven with each passing year. In other words, for qualified borrowers who stay in their home for at least five years after the assistance period and who don't fall behind on their mortgage again, this money doesn't have to be paid back.

‘Madness Abounds’ as Fake Candidates Confuse Wisconsin Recalls - (www.bloomberg.com) Wisconsin voters will choose among real and fake Democrats this week to challenge six Republican senators in recall elections that may derail the agenda of Governor Scott Walker. The primaries are the opening skirmish in a state at political war. The six districts in tomorrow’s races have Republicans running as Democrats, hoping to win the nomination and effectively render the Aug. 9 recall votes meaningless. On July 19, there will be two primaries and a full-fledged recall aimed at Democratic senators who fled the state in February in hopes of blocking the measure, which touched off weeks of protests across the nation. State election law allows open primaries, which means that voters can participate regardless of partisan affiliation. It also allows members of one party to enter another’s primary. The state’s nine legislative recall elections compare with a total of 20 across the nation since 1913, according to Joshua Spivak, a senior fellow at the Hugh L. Carey Institute for Government Reform at Wagner College in New York. If any recalls succeed, that will encourage more, McCabe [Mike McCabe, executive director of the Wisconsin Democracy Campaign, a nonprofit that advocates openness in government] predicted, including one that has been started against Walker, who cannot be ousted until he has been in office a year.

Union curbs rescue a Wisconsin school district - (www.washingtonexaminer.com) "This is a disaster," said Mark Miller, the Wisconsin Senate Democratic leader, in February after Republican Gov. Scott Walker proposed a budget bill that would curtail the collective bargaining powers of some public employees. Miller predicted catastrophe if the bill were to become law -- a charge repeated thousands of times by his fellow Democrats, union officials, and protesters in the streets. Now the bill is law, and we have some very early evidence of how it is working. And for one beleaguered Wisconsin school district, it's a godsend, not a disaster. The Kaukauna School District, in the Fox River Valley of Wisconsin near Appleton, has about 4,200 students and about 400 employees. It has struggled in recent times and this year faced a deficit of $400,000. But after the law went into effect, at 12:01 a.m. Wednesday, school officials put in place new policies they estimate will turn that $400,000 deficit into a $1.5 million surplus. And it's all because of the very provisions that union leaders predicted would be disastrous. In the past, teachers and other staff at Kaukauna were required to pay 10 percent of the cost of their health insurance coverage and none of their pension costs. Now, they'll pay 12.6 percent of the cost of their coverage (still well below rates in much of the private sector) and also contribute 5.8 percent of salary to their pensions. The changes will save the school board an estimated $1.2 million this year, according to board President Todd Arnoldussen.

EU Revives Buyback Idea as Crisis Hits Italy - (www.bloomberg.com) As exploding bond yields in Italy and Spain brought the crisis closer to the heart of the euro area, Europe’s search for answers took it back to proposals that were scuttled by Germany earlier this year. After a nine-hour meeting, the 17 euro ministers issued a six-paragraph statement pledging to flesh out details of a new strategy to end the 21-month-old crisis “shortly,” without setting a timeline. The decision to have another look at reinforcing the European Financial Stability Facility, the 440 billion-euro ($618 billion) bailout fund that was beefed up only last month, came after talks with bondholders over a “voluntary” rollover of Greek debt ran into a threat by credit-rating companies to put Greece in default. Finance ministers offered varying interpretations of the commitment to explore a wider range of options. For Dutch Finance Minister Jan Kees de Jager, who insists on getting bondholders to roll over Greek debt, the pledge includes the possibility of the “selective default” opposed by the ECB. Europe’s lunge back to basics came after Greek Prime Minister George Papandreou complained that a “cacophony” had sowed “panic” that overwhelmed the budget cuts that he pushed through his parliament amid street riots last month. The uphill struggle for solvency in Athens was dramatized by data yesterday showing the central government’s deficit widened 28 percent in the first half of 2011, with spending surpassing targets and revenue falling short. Rejected by Germany earlier this year, the buybacks would pare Greece’s debt burden of 142.8 percent of gross domestic product by enabling it to retire bonds at a discount.

Protecting Its Fannie: How Mortgage Giant Primed the Bubble, Covered Its Assets - (www.pbs.org) The Washington home of Fannie Mae. This so-called government-sponsored enterprise and its cousin, Freddie Mac, increases money for homeownership, buying home loans from banks and packaging them into securities to sell to investors everywhere. A new book, though, "Reckless Endangerment," argues that, for the past two decades, Fannie pursued profit for its own sake and bought riskier and riskier loans that pumped a housing bubble bound to burst. When it did, Fannie and Freddie failed. A federal bailout that has cost some $130 billion followed. We talked to co-authors Gretchen Morgenson, a Pulitzer Prize-winning reporter, and finance analyst Joshua Rosner, outside Fannie's headquarters. So, the main culprit of your story is Fannie Mae, right behind you there. Why Fannie Mae?

GRETCHEN MORGENSON, "Reckless Endangerment": It was a primary mover, a first mover in the process to relax lending standards, to go downhill into the sort of subprime morass that really got us into trouble.

OTHER STORIES:

Greek Default May Be 'Inevitable': Soros - (www.cnbc.com)

Japanese Land Prices Dropped for Second Year in 2010 - (www.bloomberg.com)

Why the American dream is only a dream for most - (www.doctorhousingbubble.com)

America: One Dollar, One Vote - (www.motherjones.com)

Eurozone Pledges New Steps to Help Greece - (www.cnbc.com)

Banks Easing Terms or Debt on Some Option ARM Loans - (www.nytimes.com)
The Swindler and the Mortgages
- (www.nytimes.com)

China Reserves Hit $3.2 Trillion; Lending Quickens - (www.cnbc.com)

Moody's Raises Red Flags at 49 Chinese Companies - (www.cnbc.com)

Australia Housing Drop Pits Local Bulls vs Foreign Bears - (www.bloomberg.com)

Australian house prices falling at better rate than 2008 - (www.smh.com.au)

Business of America: Lobbying, Not Production - (www.gjfreepress.com)

What history teaches us about the welfare state - (www.washingtonpost.com)

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