Tuesday, October 2, 2012

Wednesday October 3 Housing and Economic stories



TOP STORIES:

New Jersey Housing Suffers as Defaults Exceed Nevada: Mortgages - (www.bloomberg.com) Wendell and Margret Brady haven’t paid their mortgage in more than three years, withholding the money amid a foreclosure dispute on the couple’s 11-bedroom house in Morristown, New Jersey. The Victorian home, built in 1887 and owned by the retired couple for 38 years, is part of the growing backlog of properties facing repossession in the state, which now has the second-highest serious delinquency rate in the U.S. While shrinking nationwide, the pipeline of distressed real estate, or shadow inventory, is also growing in New YorkConnecticut, Maine and Pennsylvania because of state laws that slow the foreclosure process. The Bradys heard nothing from their lender from May 2011, until a letter arrived in the mail last week.  “This was like going back to day one,” said Margret Brady, 77, after she and her husband received on Sept. 15 the certified letter saying they must pay $223,730 by the end of the month or face losing the house. “It was like we hadn’t gone through any of the stuff of the last three years.” New Jersey’s judicial review of all foreclosures, which delays seizures to help borrowers, threatens to hold down prices for years as properties remain subject to repossession and then may be sold at a discount. That’s buffeting a housing market already hurt by unemployment that’s risen to a 35-year high.

Bankers nabbed in bid-rigging scandal - (money.cnn.com) A federal crackdown is proceeding quietly against bankers accused of systematically defrauding states, local governments and non-profits. Since 2009, federal authorities have secured 19 convictions or guilty pleas as part of the investigation, including seven since April. The cases have put a spotlight on the municipal bond market, an esoteric corner of the finance world where prosecutors say Wall Street firms have repeatedly used inside information to pad their bottom lines at the public's expense. "[T]hese complex, seemingly uninteresting backroom deals have a real impact on taxpayers," Richard Weber, head of the Internal Revenue Service's criminal division, said following the convictions of three former UBS bankers last month. Those implicated over the course of the investigation have come from firms including Bank of America, JPMorgan and General Electric. Government agencies have collected more than $740 million in penalties, restitution and other fees from the institutions involved.

Spain should seek aid, Greece needs more time to pay: IIF - (www.reuters.com) Greece will meet its nominal 2012 deficit reduction targets but faces growing strain because of the deepening recession, Finance Minister Yiannis Stournaras said on Tuesday as pressure grew on international creditors to give Athens more time to catch up. Forecasting that by 2014, the Greek economy would have shrunk by 25 percent since the start of the crisis, Stournaras said Athens would broadly meet a target of cutting the 2012 primary deficit, excluding debt servicing costs, to 2 billion euros in nominal terms. But he said the primary deficit figure would reach 1.5 percent of gross domestic product, compared with a previous estimate of 1 percent, as the recession bit and he repeated a plea for more time from the European Union and International Monetary Fund troika.

FedEx says economy is worsening, cuts outlook - (finance.yahoo.com) FedEx Corp. says the global economy is worsening and it's cutting its forecast for the fiscal year ending in May. The world's second largest package delivery company also said Tuesday that net income for the current quarter ending in November should fall well below last year's quarter. The stock lost about 2 percent in premarket trading. The Memphis, Tenn. company now expects to earn between $6.20 and $6.60 per share for the full fiscal year, compared with a previous forecast of $6.90 to $7.40 per share. FedEx is seeing a drop in demand for more expensive priority services. As the global economy has slowed, FedEx customers have switched to cheaper deferred delivery services. FedEx hasn't been able to cut costs fast enough to match the decline in demand.

Gross: Central banks, where bad bonds go to die - (money.cnn.com) The Bond King came out swinging against the most recent easing plans out of the Federal Reserve and European Central Banks on Twitter late Monday. The comments from Bill Gross, founder of investing firm Pimco, come just days after the Fed unveiled its plan for a third round of quantitative easing -- or QE3. The Fed will buy $40 billion of mortgage-backed securities each month for as long as the economy warrants it. A week earlier, ECB president Mario Draghi said the central bank is prepared to make "outright monetary transactions," or OMTs, in the secondary bond market to help alleviate strains on troubled European nations. Spain and Italy are expected to benefit from this plan. Gross isn't just talking (or tweeting as the case may be) tough. He cut the holdings of Treasury bonds to 21% at the end of August in the Pimco Total Return Fund (PTTRX). That fund is the world's biggest bond fund, with $273 billion in assets. Treasury holdings were at a peak of 35% in May and June.





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