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STORIES:
Economists
say Stockton, Calif. won't be last U.S. city to go bankrupt - (www.cbsnews.com) Stockton, Calif. could become
the largest American city ever to file for bankruptcy on Wednesday. And
economists warn other large U.S. cities could be next. Stockton was a city with
big dreams. In the mid 2000s, it overhauled its marina, built new parking
garages, bought a new city hall, and put up a new arena. The housing market was
on fire, and tax revenues were pouring in, so the city took out $190 million in
bonds and loans to pay for the projects. "Everyone was still living high
on the hog," recalls Bradley Koster, who owned a bar downtown. "On
Friday and Saturday night, the hockey team played, and we packed the
place." But then the Great Recession came to Stockton. Unemployment is
nearly 20 percent, and the foreclosure rate is one of the highest in the
nation. Tax revenues have plummeted, and the city faces a $26 million deficit.
The bank just took back those parking lots and the future city hall.
Half
of loan modifications re-default within 18 months - (www.doctorhousingbubble.com) This is not a positive
rate. Keep in mind that if you looked at re-defaults say out to 36 months
the rate would skyrocket even further. Yet what this does is takes more
inventory off the market in conjunction with banks leaking out shadow inventory. In other words, in
the dark rooms of banking balance sheets, you have at the latest count 2.8
million Americans that are now 12 months or more behind on their mortgage
payments (if we add in those 90 days behind the figures jump even higher).
These properties are very likely to end up as foreclosures. Even if
stalling efforts are made, many will re-default. This is still an
incredibly high figure.
Investors
Buying Up the City of Oakland - (www.baycitizen.org)
Real estate firms turning
properties into rentals, becoming "massive landlords" in some
neighborhoods, critics say The rental
listing advertises a “gorgeous remodeled craftsman-style house”
with three bedrooms, two bathrooms, a converted basement, a large deck and a
backyard for $2,595 a month. Eight months ago, this West Oakland home was owned
and occupied by Theodros Shawl, a local chiropractor. Shawl bought the house in
2004, his first since emigrating from Ethiopia in 1990. Over the years, Shawl
said, he rebuilt the home’s foundation and replaced its aging plumbing and
electrical systems.
Are
rising house prices and low-cost Ponzi debt necessary for an economic recovery
- (www.ochousingnews.com) Everyone is focused on making house prices go
up. Banks need higher house prices to recover the capital they put into
trillions of dollars of toxic mortgages. Loan owners need house prices to go up
to avoid damaged credit from a short sale or foreclosure. Home owners want to
see house prices go up to feel rich. And politicians need to see rising house
prices to keep everyone happy and get reelected. Economists also play the game
by promoting the “wealth effect” of housing. By cloaking what’s really going on
with a comfortable euphemism, it becomes easy to ignore the fact we are really
talking about Ponzi borrowing inevitably leading to bubbles and severe
recessions when the Ponzi scheme unravels. So what evidence do we have that
housing was a giant Ponzi scheme? First, the daily posts I do have documented
more than a thousand properties where Ponzi borrowing was the owners method of
personal financial management. This was encouraged by lenders, and it went on
so long that many borrowers think a personal Ponzi scheme is just how finances
are managed. Credit is savings. Appreciation is income. Debt is wealth.
Free
$$$,$$$ for HELOC thieves get delayed. Government upset. - (www.housingwire.com) The Government Accountability Office found
principal reduction would help some struggling homeowners and criticized the Federal
Housing Finance Agency for delaying a decision to involve Fannie Mae and Freddie
Mac in the effort, according to a report released Friday. "Given the
December 31, 2013, deadline for entry into a HAMP permanent loan modification
and the lead time required for the enterprises to implement a principal
forgiveness program, it is critical that FHFA take the steps needed to
expeditiously make a decision about allowing the enterprises to engage in HAMP
principal forgiveness modifications," the GAO said in its report. In April, the
FHFA released initial
analysis of new Treasury Department incentives paying investors
triple for reducing principal on Home Affordable Modification Program workouts.
The agency found the GSEs would save roughly $1.7 billion, based on an analysis
of 700,000 GSE loans with loan-to-value ratios above 115%.
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