KeNosHousingPortal.blogspot.com
TOP STORIES:
House of Cronies: Is Freddie Mac Incompetent or Corrupt? - (www.theatlantic.com) It's becoming clear that Freddie Mac offered Bank of America a sweetheart deal in a case that suggests not only incompetence, but also something between cronyism and regulatory capture. Three years since the collapse of Lehman Brothers, we're not any closer to purging the rot at the heart of our financial-regulatory complex. Last December, Bank of America agreed to pay $1.35 billion to Freddie Mac for nearly 800,000 faulty mortgage loans that Freddie had bought from Countrywide, which has since been acquired by BofA. The full story, as told by the inspector general of the Federal Housing Finance Agency (i.e.: FHFA, Freddie's regulator), is a classic tale of institutional corruption. The background is that Countrywide, then the country's largest originator of exotic mortgages, sold 787,000 loans to Freddie Mac. Under the terms of the sale, if it later turned out that some of those loans were defective, Freddie could sell them back to Countrywide for their full face value. Many of those loans were indeed defective due to inflated appraisals, fictional stated incomes, or other reasons. By 2010, many of these mortgages had gone into foreclosure. This gave Freddie the option to sell the defective loans back to Bank of America, which then owned Countrywide. But proving that hundreds of thousands of loans were defective was a lot of work. Freddie only reviewed some of them, relying on a poor methodology that dramatically underestimated the number of defective mortgages. This increased losses to Freddie Mac -- losses that will eventually fall to Treasury and taxpayers. SWEETHEART DEAL FOR BANK OF AMERICA: In its review, Freddie Mac focused on loans that defaulted within two years. But in the Countrywide portfolio, foreclosures tended to peak in the fourth year.* And so you get this picture, from a 2011 report by Freddie's internal auditor. What you're seeing is that Freddie's review process (the black line) looked hardest at the bucket of loans containing 16% of total foreclosures. It mostly ignored the bucket containing 70% of the foreclosures. By comparison, this is a bit like searching for a lost salt shaker and spending more time looking on the roof than in the kitchen.
Real estate agent squatted in Laguna Beach client's house - (www.latimes.com) A Laguna Beach homeowner reported to police that she believed her real estate agent was squatting in her vacant home while the sale closed. The woman reported on Sept. 25 that she and the Realtor who had helped her sell her Loretta Street home had a "falling out" during escrow, according to Laguna Beach Police Lt. Jason Kravetz. She could not fire the real estate agent because she was contractually obligated to continue with the sale, Kravetz said. The woman reported that documents that required her approval had forged signatures on them. After noticing this, she went to her home to retrieve a key from the lockbox, Kravetz said. It was when she arrived that she noticed that cable and gas were set up for the home, indicating someone was staying there. She reported that she saw her real estate agent's desk and chairs inside her home, indicating he may have been using her home as an office. Detectives are investigating, Kravetz told the Coastline Pilot. Charges have not been filed.
Brokerages Sitting on Your Cash, Paying You 0% - (www.smartmoney.com) Investors running for the sidelines may end up in brokerage accounts that bear some unpleasant surprises. It's what every panicked investor will tell his or her broker during a diving market: Put it in cash. The brokers are happy to oblige. But some people are finding that their money winds up in the equivalent of brokerage-world limbo, a place that makes even today's paltry bank rates seem high. Indeed, so-called sweep accounts -- also known as core or cash-management accounts at some brokerages -- are earning, on average, about 0.04 percent. That's $40 of interest a year for every $100,000. Brokers argue that sweep accounts were never meant to be the 21st-century equivalent of the passbook account. "It's not meant for savings," says Steve Austin, a spokesperson for Fidelity Investments. But in many instances, that's exactly what they have become. Although no one knows exactly how much money is sitting in sweep accounts, experts estimate the figure could easily be upwards of $600 billion.
Ron Paul and Occupy Wall Street protest agree: Bribery Killed America - (dougwead.wordpress.com) Now what are all of those people doing camped out on Wall Street? Are they socialists? Commies? Anarchists? Left, right? For some reason the television news people don’t like them, which makes me sympathize. What’s going on? I’ll explain. Let’s say you are a young couple, newly married, anxious to get your piece of the American dream. And let’s say you decide to open your own hamburger stand. Your first obstacle will be a maze of federal regulations. They are all well intended, helping out the disabled, protecting the environment, providing for workers’ health. The problem is that there are too many of them and they cost too much. When I worked in the Bush Senior White House I saw the major companies come in and lobby for these REGS. They wanted them to be required for small businesses too, even businesses with five employees. Why? Because it would knock out the Mom and Pop operations who couldn’t afford them. By driving up costs they could assure that they would have a monopoly on hamburgers. But let’s say your parents mortgage their house and get you the start up money to pass that test.
Corruption though lobbying is extremely profitable, and is killing America - (www.economist.com) MUCH as some businesses whine about government intrusion, others do pretty well out of it. An index based on the amount of lobbying that American firms do has outperformed the broader market since its creation in 2008; data going back to 1998 show that it has done better over the longer term, too. The index is produced by Strategas, an investment-research firm. A first effort, to rank firms on the amount they spend on lobbying, was no use: it just corresponded with the largest firms. Strategas now looks at the intensity of lobbying—expenditure as a percentage of assets—to create an index of 50 firms that is revised quarterly. In aggregate the results have been stunning, comparable to the returns of the most blistering hedge fund. The index has outperformed the S&P500 by 11% a year since 2002 (see chart). There have been bumps along the way: the index fell sharply in 2008 and again this summer, when debt-ceiling brinkmanship raised the prospect of government austerity. But at other times, it seems remarkable that companies would do anything but lobby.
Anti-Wall Street protests spread nationwide - (www.sfgate.com)
Fannie Mae Ignored Foreclosure Misdeeds - (www.nytimes.com)
Willing buyers seek reasonable sellers - (www.patrick.net)
California sellers still expect unrealistic prices - (www.doctorhousingbubble.com)
On Wall Street, a Protest Matures - (www.nytimes.com)
How to end global recession: yes, spending, and financial reform - (www.www.project-syndicate.org)
The Case for Using Predator Drone Strikes Against Wall Street Executives - (rudepundit.blogspot.com)
Irish house prices plummet to 58pc of peak - (www.independent.ie)
No comments:
Post a Comment