Banks go "all in" betting on success of loan modifications - (www.ochousingnews.com) Lenders in California are placing their faith in the success of loan modifications. Of course, to them success can mean something different than what it means to a loanowner. Success to a lender can be defined as obtaining a few more payments prior to a short sale or foreclosure. With prices rising, lenders benefit two ways from loan modifications. First, they get cashflow from non-performing loans. They know this is likely temporary as about 50% of loan modifications fail each year, but some cashflow is better than none. Plus, since prices are rising, when they do finally approve a short sale or foreclose on the property, they will recover more of their original capital than if they were to foreclose today. Lenders are kicking the can and playing the amend-extend-pretend music. Lenders are determined not to clear the market. Due to their double incentive to wait that I described above, they will continue to modify loans over and over again until either they have the capital reserves to absorb the write down or until prices reach the loan balances when they can foreclose and get all their money back.
Greeks Can’t Find Euros to Buy Heating Oil With Winter Economy - (www.bloomberg.com) In the Greek mountain town of Kastoria, less than an hour from the Albanian border, Kostas Tsitskos, 88, can’t afford fuel to heat his home against the winter’s cold. So he and his son live in a single bedroom, warmed by a small electric heater. “One room is enough,” said Tsitskos, who lives on a 734 euro-a-month ($971) pension and doesn’t have the 1,000 euros a month he needs to buy heating oil. Greece is facing a heating-oil crisis. With an economy that has contracted for five years and an unemployment rate at a record 25 percent, residents in northern Greece can’t heat their homes. Kastoria hasn’t received funds from the central government to warm schools and the mayor said he will close all 53 of them rather than let children freeze, a step already taken in a nearby town. Truckloads of wood are arriving from Bulgaria as families search for alternative fuels.
HOAs Hate Renters - (www.multifamilybiz.com) What do Homeowners Associations have against renters? That is the question being asked by renting lifestyle advocate Bill Deegan, the CEO of Renter Nation, the country’s only nationwide group “by, for and about residential renters.” Citing a troubling trend taking place in the United States by HOAs and local governments to limit the number of renters in single-family home developments, Mr. Deegan called these restrictions “misguided, discriminatory and based on societal and cultural stereotypes.” As recently reported by USA Today, HOAs and many municipalities across the country are basing these restrictions on the false premise that renters “bring down property values.” As Mr. Deegan asserts and as supported by respected university studies including those conducted by the University of Pennsylvania’s Wharton School, there is no empirical evidence to suggest that the presence of renters in a community cause property values to decline.
UBS Libor Fine Soars as Traders Bribed Brokers to Fix Libor Rate - (www.bloomberg.com) The U.S. government said the two men were part of a conspiracy to commit wire fraud from September 2006 to 2009. Hayes, 33, served as a senior yen swaps trader at UBS in Tokyo, while Darin, 41, worked as a short-term interest rates trader at UBS in Singapore, Tokyo and Zurich, the U.S. said. Prosecutors allege that Hayes and Darin “conspired with others known and unknown within UBS to cause the bank to make false and misleading yen Libor submissions to the British Bankers’ Association.” Darin didn’t respond immediately to a voice-mail message, and Hayes couldn’t immediately be reached. U.K. fraud prosecutors opened a criminal probe this year and last week arrestedHayes, according to people familiar with the matter.
FHA to Tighten Mortgage Programs - (online.wsj.com) The Federal Housing Administration said it will tighten mortgage standards for certain homeowners and limit the amount of money that can be borrowed through its popular reverse-mortgage program as the agency faces ballooning losses. Carol Galante, the FHA's acting commissioner, in a letter Tuesday to Sen. Bob Corker (R., Tenn.) said the changes would be implemented by Jan. 31. The changes include suspending the FHA's most popular reverse-mortgage option that allows Americans 62 or older to take cash out of their homes in a large, upfront payment. The agency will instead promote a smaller product called the Home Equity Conversion Mortgage Saver, which allows seniors to take less cash out of their homes.