Wednesday July 30 Housing and Economic stories

Top Stories:

US Housing Prices Drop by Record 15.8% in May – (ap.google.com) A closely watched housing index shows home prices fell by the steepest rate ever in May, as the housing slump continued to deepen nationwide. The Standard & Poor's/Case-Shiller 20-city index, released Tuesday, is off 15.8 percent for May compared with a year ago, a record decline since its inception in 2000. The narrower 10-city index has fallen 16.9 percent, its biggest decline in its 21-year history.

Questionable religious tax exemptions for houses - (www.sun-sentinel.com) It's a remarkable home, even in an upscale Coral Springs neighborhood: 12,000 square feet, manicured grounds, a guest house, five-car garage and a pair of lion statues gracing the entrance. It's also tax-free. Owned by the Church of Bible Understanding in Philadelphia, the home and adjacent lot, valued at more than $3.2 million, are exempt from taxes on religious grounds. =Church representatives say they use the property to house missionaries working in Haiti and as a home for the church founder. The Broward County property appraiser granted the exemption in 2006, saving the church about $64,000 a year in taxes. In Broward, the value of properties considered tax-exempt for religious purposes totaled $1.8 billion in 2007, the last year for which complete data is available. While most were traditional churches and temples, the tax-free properties also included vacant land, parking lots and multimillion-dollar homes with golf course and water views, the South Florida Sun-Sentinel found.

Merril Unloads CDOs at .22 Cents on Dollar - (www.bloomberg.com) Merrill Lynch & Co. took the biggest step toward recovering from the worst financial disaster in its 94-year history by acknowledging that $30.6 billion of its holdings are worth barely a fifth of their original price and securing new capital amounting to a third of its market value. Merrill liquidated more than half of the mortgage-linked securities known as collateralized debt obligations that have saddled the company with $27 billion of write-downs since the beginning of 2007. To cushion the loss on the asset disposal, the firm raised $8.55 billion today by selling new shares for $22.50 each, 60 percent less than Merrill's stock price at the beginning of the year.

Fannie Mae's Political Immunity - (online.wsj.com) - President Bush is poised to sign the housing and Fannie Mae bailout bill, after the Senate passed it with 72 votes on the weekend. But an underreported part of this story is that Majority Leader Harry Reid refused to allow a vote on Republican Jim DeMint's amendment to bar political donations and lobbying by Fannie and its sibling, Freddie Mac

BBC: America's House Price Time Bomb - (news.bbc.co.uk) With the American housing market in its worst crisis since the Great Depression of the 1930s, President Bush is expected to sign into law a massive new government intervention designed to slow the slide.
The intervention would come as a little known quirk of US law threatens to drive down house prices even faster. Faced with seemingly never-ending falls in the value of their properties, some American home-owners are taking radical action; they are choosing to walk away from homes and their mortgages. In May 2006, at the height of the housing boom, Karen Trainer bought a $500,000 apartment in California - with money borrowed from her bank. By this year, Karen still owed $500,000 on her mortgage, but her apartment was worth $200,000 less. So she was deep in negative equity and, to make matters worse, the interest rate on her loan was about to increase. "I thought 'this is crazy'," Ms Trainer says. "It just does not make financial sense."

Lawmakers Now Pressing for Banks to Hide Losses Longer - (www.ml-implode.com) - The FASB is being pressured by the lawmakers to delay its time line on the revamped FAS 140 and FIN 46R. This of course help out the financial institutions by creating less transparency and delaying the inevitable probably due to a new tax payer bailout being drawn up that will channel more dollars to parties other than those who need it, the US citizens.

Frank calls for restructuring of the mortgage servicing industry if servicers fail to cooperate - (www.ml-implode.com) Frank’s message to servicers: Chairman Frank will hold a hearing in September to monitor the progress of loan modification by mortgage servicers.
Chairman Frank cautioned industry representatives: “I would hope that no one would be foreclosed upon between now and October 1st who would have qualified for this program had the effective date been immediate. And that is within your power to do. You can show some forbearance. October 1st is coming, begin the planning, begin the talking with people, but I think it would be a shame, an embarrassment to all of us if people were to lose their homes and the neighborhood deterioration were to be advanced and the economy would suffer because to satisfy CBO and other rules, we delayed this a couple of months. I earnestly hope that we can have that kind of cooperation.” Chairwoman Maxine Waters added, “As one who has focused on mortgage servicing from the outset of this crisis, I strongly support the Chairman’s call for forbearance until October 1st. It would be shameful for a single homeowner in California, or anywhere else hit hard by the foreclosure crisis, to lose their home if they could have been helped by this program but for this deadline.”

City to curb Fannie Mae, Freddie Mac investing - (www.paloaltoonline.com) As the mortgage crisis unfolds, the City of Palo Alto plans to stop purchasing Freddie Mac and Fannie Mae investments "until market confidence in these agencies returns."

No More Leases from Chrysler Financial - (www.woodtv.com) Leasing has been attractive in part because if the lessee doesn't opt to buy the vehicle at the end of the lease, the bank is responsible for selling it. And with the value of bigger vehicles falling, it can be a losing proposition for banks like Chrysler Financial. As an example, the lease on Appleberry's 2007 Chrysler Town & Country is just about up. The dealer said she would have to pay $17,000 to $18,000 to buy the vehicle at lease end. That number effectively represents what Chrysler believes it is owed after two years worth of payments. But if Chrysler tried to sell that vehicle at an auction, it is likely to get $11,500 or less, according to dealers - a loss of more than $5,000. "It does make sense for me when you put into a figure form," Appleberry said. "That doesn't make it easier for me."


Other Stories:

Consumer Confidence Hovers Near 16 Year Low - (www.bloomberg.com)
Our Empire of Debt is Collapsing - (www.oftwominds.com)
IMF: No End in Sight to Credit Crisis – (www.ft.com)

Fixed Rate, Prime Mortgages Dominate Market - (www.ml-implode.com) - "Demand for prime and fixed-rate mortgages increased during the second half of 2007, according to a report released today by the...
Home Prices Fall in May; Consumer Confidence Flat - (www.ml-implode.com) - Prices were down 15.8 percent from May 2007, including a 0.9 percent one-month drop in May alone. The 10-city price index, which...
FASB may delay off-balance sheet accounting change - (www.ml-implode.com) - "The Financial Accounting Standards Board, under pressure from lawmakers, will reconsider its timeline for a controversial rule ...
Why the government had to bail out the GSEs - (www.ml-implode.com) - "Expect more attempts to rescue the FIRE Economy, but don’t expect them to work."
Las Vegas - Miami home price death match - (www.ml-implode.com)
Can't Quit Worrying 'bout Fannie and Freddie - (www.ml-implode.com)
Judges and Foreclosure - (lawprofessors.typepad.com)
How One Borrower Beat the Foreclosure Machine - (www.nytimes.com)
Foreclosures as business opportunity - (www.youtube.com)
Worried Banks Sharply Reduce Business Loans - (www.nytimes.com)
Haitian strongman convicted of mortgage fraud - (www.cnn.com)
Rescap Update: Homecomings Cuts Equity Lending - (www.ml-implode.com)
Think the credit crunch is over? Ask a college student - (www.ml-implode.com)
Ratchet Provisions Soak Merrill Lynch, Will Sink WaMu - (www.ml-implode.com)
FDIC May Stall Paulson Mortgage Plan - (www.ml-implode.com)
Merrill to sell troubled assets, raise capital - (www.ml-implode.com)
Is Your Bank Safe? - (www.ml-implode.com)

Foreclosure Numbers Detail More Pain To Come - (money.cnn.com)
Credit crunch 'still worsening' - (news.bbc.co.uk)
U.S. Housing Slump Losses May Triple - (www.bloomberg.com)
U.S. housing losses pegged at $1-trillion - (www.theglobeandmail.com)
Jobless claims rise, house sales at new low - (www.thestar.com)
Price drops from seven to six figures - (latimesblogs.latimes.com)
Bargain hunters still shy of Orange County housing - (www.ocregister.com)
Our Empire of Debt Is Collapsing - (Charles Hugh Smith)
False Hopes Cling to New Housing Aid - (www.prweb.com)

U.S. Treasuries Decline on Speculation Worst Is Over for Banks - (www.bloomberg.com)
U.S. stocks bounce back as oil falls, consumer confidence rises - (www.marketwatch.com)
Dollar Rises to One-Month High as Confidence Gains, Oil Falls - (www.bloomberg.com)
What About The Renters? - (whatabouttherenters.blogspot.com)
Bank of Canada's Monkey See Monkey Do Policy - (Mish at globaleconomicanalysis.blogspot.com)
"BOHICA America" Weekend - (market-ticker.denninger.net)
Ron Paul on the Fannie-Freddie Fraud - (www.lewrockwell.com)

IMF sees no end in sight to credit crisis - (www.ft.com)
White House cuts GDP growth forecast - (www.latimes.com)
S&P/Case-Shiller 20-City Home-Price Index Fell 15.8% in May - (www.bloomberg.com)
Producers gloomy as slowdown spreads: survey - (www.reuters.com)
US credit crisis is hitting the wealthy - (www.ft.com)
New York City mayor warns of looming $2.3 billion budget gap - (www.chicagotribune.com)
US deficit zooming to half-trillion as Bush leaves - (biz.yahoo.com/ap)
No funds to lend to 40,000 students - (www.boston.com)
U.S. July Consumer Confidence Rose From 16-Year Low - (www.bloomberg.com)

Back down to earth for hedge funds of funds - (www.ft.com)
Banks' Woes Made Worse By Big Bets On Banks - (online.wsj.com)
Treasury, Banks Promote 'Covered Bonds' - (www.washingtonpost.com)
Could mortgages still be too easy to get? - (www.ocregister.com)
States Follow Federal Probe of Muni Derivatives, XL Filing Says - (www.bloomberg.com)
Credit crisis spreading in 'negative feedback loop': IMF - (news.yahoo.com/s/afp)
Bloated U.S. budget deficits may mean higher rates - (www.signonsandiego.com)
XL Capital to Raise Cash to Bolster Bond Insurer - (www.nytimes.com)
US credit crisis is hitting the wealthy - (www.ft.com)
NYSE responds to rise of algorithmic trades - (www.ft.com)
No funds to lend to 40,000 students - (www.boston.com)
Vacant-Property Fees Add to Mortgage Firms' Woes - (online.wsj.com)
Foreclosure-plagued cities gain sales - (www.boston.com)

Merrill Has $5.7 Billion of Writedowns, Sells Shares - (www.bloomberg.com)
Write-Down Is Planned at Merrill - (www.nytimes.com)
The Downfall of a California Dreamer - (www.nytimes.com)
Banks to Launch Covered Bonds - (online.wsj.com)
Mervyn's may file for bankruptcy protection: report - (www.reuters.com)
KKR in Fishbowl, Swims With Sharks - (online.wsj.com)
GM cuts truck production - (www.chicagotribune.com)

No quick fix for UK home loan crisis - (www.ft.com)
U.K. Mortgage Approvals Decline to Lowest Since 1999 - (www.bloomberg.com)
India Raises Rate More Than Expected to Tame Prices - (www.bloomberg.com)
Japan's economy shows signs of deterioration as jobless rate rises to 4.1 percent - (www.chicagotribune.com)
Sony issues profit warning after weak first quarter - (news.yahoo.com/s/afp)
U.K. CBI Retail Sales Index Declined to 25-Year Low in July - (www.bloomberg.com)
French July Consumer Confidence Declines to Record - (www.bloomberg.com)
Reports paint bleak picture for EU economy - (www.iht.com)

A New Way to Generate Mortgages - (www.nytimes.com)
Fannie Mae's Political Immunity - (online.wsj.com)