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Greece Deal Triggers $3B in Default Swaps: ISDA - (www.bloomberg.com) A committee of credit-default swaps traders will expedite an auction to settle about $3 billion of contracts tied to Greece after the nation took steps to force investors to participate in the biggest sovereign-debt restructuring in history. Traders will hold the auction March 19 to “maximize” the number of bonds that can be used to set payout amounts, the New York-based International Swaps and Derivatives Association said on the committee’s website yesterday. Auctions, which set a recovery value on the underlying bonds, typically are held about a month after credit events are triggered. The viability of credit swaps as a hedge for about $257 billion of government debt was questioned after ISDA rejected a request on March 1 to declare whether the swaps were triggered because the restructuring effectively subordinated private investors to the European Central Bank. Banks, hedge fundsand institutional investors use swaps to protect against losses or to speculate on creditworthiness.
Legal skull-duggery in Greece may doom Portugal - (www.telegraph.co.uk) The Greek parliament's retroactive law last month to insert collective action clauses (CACs) into its bonds to coerce creditor hold-outs has added a fresh twist. These CAC's are likely to be activated over coming days. Use of retroactive laws to change contracts is anathema in credit markets. This might not matter too much if Greece were really a "one-off" case but markets are afraid that Portugal will tip into the same downward spiral as austerity starts to bite. Citigroup expects the economy to contract by 5.7pc this year, warning that bondholders may face a 50pc haircut by the end of the year. Portugal's €78bn loan package from the EU-IMF Troika is already large enough to crowd out private creditors, reducing them to ever more junior status.
Freddie Mac Faulted With FHFA for Oversight of Loan Servicers - (www.bloomberg.com) Freddie Mac and its regulator, the Federal Housing Finance Agency, need to do a better job supervising financial institutions servicing the company’s loans, according to the FHFA Office of Inspector General. FHFA hasn’t implemented regulations governing servicer oversight or paid enough attention to abuses uncovered by other federal regulators, Deputy Inspector General Russell A. Rau wrote today in a report. Five servicers, including Wells Fargo & Co. (WFC) and JPMorgan Chase & Co. (JPM), last month settled a lawsuit with state and federal authorities after investigations revealed the banks didn’t have the proper documents to seize homes. FHFA, which learned about the practices of Freddie Mac’s mortgage servicers in 2008, didn’t begin paying attention to them until August 2010, according to the report.
Foreclosure starts jump 28 percent in January - (www.reuters.com) Starts on U.S. home foreclosures shot up 28 percent in January, data provider Lender Processing Services (LPS.N) said on Tuesday in a report that suggested paper backlogs that had clogged the system were rapidly clearing. U.S. lenders had cut back on foreclosure after accusations of faulty foreclosure practices had surfaced in late 2010. Last month, five big U.S. banks reached a $25 billion settlement with the federal government to end a national investigation into claims of flaws in their foreclosure process, including allegations of so-called "robo-signing" of documents.
Fitch sees home prices as overvalued with potential for another 9.1% drop - (www.housingwire.com) Fitch Ratings said U.S. home prices are still overvalued and could fall another 9.1%, despite inching toward a point of sustainability. After evaluating data from the third quarter, Fitch said prices still have more room to fall with unemployment and gross domestic product numbers showing only marginal growth. In addition, tightened lending standards remain a hurdle for new buyers, and the $25 billion government settlement with the nation's largest mortgage servicers is expected to prolong the liquidation of distressed inventory over the short term. New lending standards continue to hinder housing activity with only borrowers who have equity in their property or sizeable down payments getting loans, the report said.
227,000 jobs added in January, Unemployment Rate 8.3% - (money.cnn.com)
More jobs, same unemployment rate - (money.cnn.com)
Jobless Claims in U.S. Rose 8,000 Last Week to 362,000 - (www.bloomberg.com)
Triple trouble in Europe, US and China brings out the bears - (www.telegraph.co.uk)
Foreclosures Jump 29% in January - (money.cnn.com)
3 Charts Worth Watching As Warning Signs – (www.ritholtz.com)
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