Tuesday May 20 Housing and Economic stories

Top Stories:

No English? No income? No problem! - (news.bostonherald.com) - During the frenzied days of no-down-payment loans and cursory credit checks in the early 2000s, two out-of-state lenders gave more than $1 million in mortgages to a Dorchester woman who lives in public housing and barely speaks English, the Herald has learned. The loans, originated by New Jersey-based Equity One Inc. and the now-defunct Meritage Mortgage Corp., foreclosed last year, making 243-245 Washington St. and 16 Dacia St. among the 233 foreclosures to hit Dorchester in 2007, city and land records show. The foreclosures have also left the borrower, Angela M. Torres, 47, a mother of two who speaks only Spanish, in financial ruin and under scrutiny from the Boston Housing Authority, which subsidizes her Dorchester apartment. “I have nothing,” Torres told the Herald in Spanish last week. “I don’t have a business. I don’t have a car. I don’t have a house. I don’t have anything.” Torres said a Boston real estate broker, Eloy C. Mariluz, helped her buy the properties. Mariluz said he had nothing to do with the loans, even though he took a commission on the property sales.
Banks Hide $35 Billion in Writedowns From Income, Filings Show - (www.bloomberg.com) - May 19 (Bloomberg) -- Banks and securities firms, reeling from record losses resulting from the collapse of the mortgage securities market, are failing to acknowledge in their income statements at least $35 billion of additional writedowns included in their balance sheets, regulatory filings show. Citigroup Inc. subtracted $2 billion from equity for the declining value of home-loan bonds in its quarterly report to the Securities and Exchange Commission on May 2 without mentioning the deduction in the earnings statement or conference call with investors that followed. ING Groep NV placed 3.6 billion euros ($5.6 billion) of negative valuations in its capital account, while disclosing only an 80 million-euro depletion to income.
Auction-Rate Collapse Costs Taxpayers $1.65 Billion - (www.bloomberg.com) - The Culinary Institute is among hundreds of borrowers facing an unexpected rise in financing costs. Across the country, local governments and operators of hospitals and schools that issued about $166 billion of auction-rate bonds -- about half of all such securities -- have paid an estimated $1.65 billion in additional interest since the market soured in September, according to data compiled by Bloomberg. That money comes right out of the pockets of taxpayers, from New York to California, and organizations such as the Culinary Institute that are allowed to borrow in the municipal market.
Bill for taxpayers swells by trillions - (www.usatoday.com) - The federal government's long-term financial obligations grew by $2.5 trillion last year, a reflection of the mushrooming cost of Medicare and Social Security benefits as more baby boomers reach retirement. That's double the red ink of a year earlier. Taxpayers are on the hook for a record $57.3 trillion in federal liabilities to cover the lifetime benefits of everyone eligible for Medicare, Social Security and other government programs, a USA TODAY analysis found. That's nearly $500,000 per household. When obligations of state and local governments are added, the total rises to $61.7 trillion, or $531,472 per household. That is more than four times what Americans owe in personal debt such as mortgages.
Times Are Tough, Except in the Repo Business - (www.nytimes.com) - When a boat owner defaults on his loan, the bank hires Jeff Henderson to seize its property. The former Army detective tracks the boat down in a backyard or a marina or a garage and hauls it to his storage facility and later auctions it off. After nearly 20 years in the repossession business, Mr. Henderson has never been busier. “I used to take the weak ones,” he said. “Now I’m taking the whole herd.” Boating was traditionally the pastime of the well-off, but the long housing boom and its gusher of easy credit changed that. People refinanced their homes and used the cash for down payments on a cruiser, miniyacht or sailboat. From 2000 to 2006, retail sales for the recreational boating industry rose by more than 40 percent, to $39.5 billion, while the average loan amount more than tripled to $141,000.
What a Deal: Trash for Treasuries - (www.nytimes.com) - To grease the gears of the nation’s seized-up credit markets, the New York Fed in recent months created three new lending entities. Together, they allow banks and financial firms to swap up to $350 billion of securities they cannot sell for cash or United States Treasuries.
Angry Renter Dissed By WSJ - (www.angryrenter.com)
$10,000 Atlanta Houses - (www.lewrockwell.com)
Barney Frank's Bailout Mostly Benefits Banks - (www.prospect.org) – Clueless Frank falling hook, line and sinker to the bailout which primarily benefits lenders and banks.
Fed's Direct Loans to Banks Climb to Record Level - (bloomberg.com) - The Federal Reserve's direct loans of cash to commercial banks climbed to the highest level on record in the past week as money-losing lenders increasingly turn to the central bank for funds. Funds provided through the so-called discount window for banks rose by $2.8 billion to a daily average of $14.4 billion in the week to May 14, the central bank said today in Washington. Separately, the Fed's loans to Wall Street bond dealers rose by $75 million to $16.6 billion.
Fannie dropping standards, gov't looks other way - (money.cnn.com) – Yes, government simpletons/politicians scolding lenders and government for letting current mess happen. As the scold, they are turning the other cheek again.
Beazer's losses continue to mount; restates losses - (www.ml-implode.com)
Nothing Down and Banana Republic Loans Make a Comeback back by Government Sponsored Entities! - (www.ml-implode.com)


Other Stories:

Bush Administration Touts Current FHA Program - (www.ml-implode.com) - Called FHASecure, housing officials last week said that the product has helped 200,000 homeowners refinance their mortgages and avoid foreclosure."
California Luxury Home Prices Fall for Second Straight Quarter - (www.ml-implode.com)
Fannie Mae: Building The Underwater Mortgages Of Tomorrow - - (www.ml-implode.com)
The Real Alternative To Walking Away Is A “Back Door Cram Down” - (www.ml-implode.com)
The “Psychological Trauma” Of Foreclosure - (www.ml-implode.com)
Bail Out Housing to Salve Damaged Psyches - (www.ml-implode.com)

Lenders shedding foreclosed houses - (www.bcbr.com) - Financial lenders have found themselves in the home-selling business. "The biggest thing for a bank is that they want to sell the properties as quickly as possible because it's a nonearning asset," Peyok said. "Even if they take a slight loss it's better to take the money and invest it elsewhere, rather than have it sit idle in a home."
FDIC chief Bair Warns of Greater Housing, Credit Woes - (blogs.wsj.com)
Fannie Mae to institute very lax policy on down payments - (bizjournals.com)
Foreclosures Climb 65% as Loan Workouts Fall Short - (bloomberg.com)

Gold, Silver Futures Gain on Demand for Hedge Against Inflation - (www.bloomberg.com)
Dream of free trade becoming a dream - (www.theglobeandmail.com)
Do bank failures have to be so painful? - (www.econimist.com)
Don't believe Paulson - (www.seekingalpha.com)
Default on Your Mortgage and Stay in Your House - (www.seekingalpha.com)
Does this guy look like an Angry Renter? - (latimesblogs.latimes.com)
Another Alternative To Walking Away - (www.sandiegopredatorylending.com)
What’s next for the economy? Look at California - (www.financialweek.com)
It's going to cost more to make things - (www.financialweek.com)
Post-Subprime Economy Means Subpar Growth as New Normal in U.S. - (www.bloomberg.com)
The Valley is too dependent on housing - (www.azcentral.com)
More Atlanta homes at risk - (www.ajc.com)
Foreclosures hit ritzy houses, too - (www.rockymountainnews.com)
Subprime Meltdown Has Not Hit Cemetery Property - (www.cemeteryspot.com)

Is AIG the Citigroup of insurance? - (www.econimist.com)
Corporate deleveraging underway - (www.financialweek.com)
Emerging Market Stocks Erase 2008 Loss After Commodities Rally - (www.bloomberg.com)
California Luxury Home Prices Fall for Second Straight Quarter - (www.bloomberg.com)
Lenders provide incentives to not steal the furnace - (www.thestreet.com)
Pump price soars 17 cents in 2 weeks - (seattletimes.nwsource.com)

Fuel costs may thrust airlines into bankruptcy - (www.chicagotribune.com)
Retailers Downscale Their Luxury Lines - (online.wsj.com)
When a Loss Is a Gain - (online.wsj.com)

UBS $100 Billion Wager Prompted $24 Billion Loss in Nine Months - (www.bloomberg.com)
Slowdown causes Lowe's profit to slide 18 percent - (www.chron.com)
Banks want more retail funding. Easier said than done - (www.econimist.com)
Surf wear makers hit rough waters - (www.latimes.com)
Pain in store for shopping centers - (www.latimes.com)
Dairy Co-Op Faces Price Probe - (online.wsj.com)
Developers marketing home efficiency - (www.azcentral.com)
Colo. casinos report another revenue drop - (www.rockymountainnews.com)
Business aviation growth slowing, warns NetJets - (www.ft.com)

China Faces Economic Aftershocks - (www.washingtonpost.com)
Commercial market heading for 30% slump, warn property gurus - (www.independent.co.uk)
Vietnam raises interest rates to fight inflation - (www.forbes.com)
Australian dollar hits 24-year high - (www.ft.com)
Emerging Market Stocks Erase 2008 Loss After Commodities Rally - (www.bloomberg.com)

Financial Bettors May Be Making a Capital Blunder: David Pauly - (www.bloomberg.com)
Making ends meet on less than $15,000 a year - (www.chron.com)