Monday September 8 Housing and Economic stories

Top Stories:

Breaking News: Treasury to Save Fannie, Freddie - (www.washingtonpost.com) Regulators Seek to Keep Firms' Troubles From Setting Off Wave of Bank Failures. The Bush administration yesterday prepared to take over the troubled housing finance companies Fannie Mae and Freddie Mac, after concluding the companies don't have enough capital to continue to play their crucial role funding home mortgages. Under the plan, engineered by Treasury Secretary Henry M. Paulson Jr., the government would place the two companies under "conservatorship," a legal status akin to Chapter 11 bankruptcy. Their boards and chief executives would be fired and a government agency, the Federal Housing Finance Agency, would appoint new chief executives. The action, which would be one of the most sweeping government interventions in private financial markets in decades, is planned for today, according to several sources.

Fannie Mae Mortgage Portfolio: $64.5 Billion in Alt-A or Sub-prime Loans. Why This is not a Conservative Bailout - (www.mybudget360.com) - As we inch closer and closer to a full fledged bailout of the two giant government sponsored entities, Fannie Mae and Freddie Mac it would be useful to dig into their financial statement to see how one of their portfolios’ is structured. Unfortunately the general public is under the impression that Fannie Mae somehow operated only in the ultra conservative world of traditionally fixed 30-year mortgage products.

Fannie/Freddie Nosedive in After-Hours Trading - (money.cnn.com) In any rescue, Treasury would likely have to borrow billions of dollars. Exactly how much it would cost taxpayers is impossible to gauge because of several unknowns

Pimco's Gross calls for broad housing rescue - (dailybriefing.blogs.fortune.cnn.com) Gross asking for government bailout to cover his bad bets. Gross has previously said he believes the Treasury will have to assist Fannie and Freddie in any efforts to raise new capital. His Pimco Total Return bond fund has major positions in mortgage-backed bonds issued by the government-sponsored enterprises, so it’s no surprise that he sees it that way. But now he’s calling on Treasury Secretary Henry Paulson to use federal funds to buy more housing-related assets, in the name of preventing asset-price deflation from spiraling out of control.

Loan Giant Overstated the Size of Its Capital Base - (www.nytimes.com) The government’s planned takeover of Fannie Mae and Freddie Mac, expected to be announced on Sunday, came together after advisers poring over the companies’ books for the Treasury Department concluded that Freddie’s accounting methods had overstated its capital cushion, according to regulatory officials briefed on the matter. Skip to next paragraphThe proposal to place both companies, which own or back $5.3 trillion in mortgages, into a government-run conservatorship also grew out of deep concern among foreign investors that the companies’ debt might not be repaid. Falling home prices, which are expected to lead to more defaults among the mortgages held or guaranteed by Fannie and Freddie, contributed to the urgency, regulators said.

Silver State is 11th failed bank this year (approx 1 month after John McCain’s son Andrew resigns from board) - (www.reuters.com) Yes, little more than one month ago, Mish reported that McCain's son resigns from Silver State Bank board. Why is it that the Bush family and the McCain family are so intertwined with failed banks and massive government and taxpayer assisted bailouts. Look up Neil Bush and Silverado, John McCain and Keating Savings and Loan and you will find many stories.

SF Wachovia Under Siege By People Facing Foreclosure - (www.ml-implode.com) - ACORN causing trouble and riling people up. Time for the guards to cage these monkeys (not the poor homeowners but the ACORN employees). Go back to 2003-2004 and you can find stories of the executives at ACORN pressuring politicians to make sub-prime loans available to minority borrowers. For more on activities of ACORN and embezzlement of funds, read the following blog. http://ajacksonian.blogspot.com/2008/08/of-acorn-and-organizers.html. Yes, billions of dollars in high risk loans were issued in 2003, 2004, 2005, and 2006 due to the lobbying of ACORN and other groups. Today's sub-prime mess? It can be directly traced to these very same activities that puts low income individuals who would not normally qualify for a loan at risk due to that lobbying. And who will benefit when these same borrowers go down? Why ACORN, et. al., as they would see this as 'social injustice' while it is not even 'sustainable living' for these individuals who take out such mortgages. Apparently the only 'green' cared about is that on dollar bills.

Long-Term Capital: It’s a Short-Term Memory - (www.nytimes.com) A FINANCIAL firm borrows billions of dollars to make big bets on esoteric securities. Markets turn and the bets go sour. Overnight, the firm loses most of its money, and Wall Street suddenly shuns it. Fearing that its collapse could set off a full-scale market meltdown, the government intervenes and encourages private interests to bail it out.Skip to next paragraph The firm isn’t Bear Stearns — it was Long-Term Capital Management, the hedge fund based in Greenwich, Conn., and the rescue occurred 10 years ago this month. The Long-Term Capital fiasco momentarily shocked Wall Street out of its complacent trust in financial models, and was replete with lessons, for Washington as well as for Wall Street. But the lessons were ignored, and in this decade, the mistakes were repeated with far more harmful consequences. Instead of learning from the past, Wall Street has re-enacted it in larger form, in the mortgage debacle cum credit crisis. In the wake of Long-Term Capital’s failure, Wall Street professed to have learned that even models designed by “geniuses” were subject to error and to the uncertainties that inevitably afflict human forecasts. It also professed a newfound respect for the perils of borrowing. Whether this wisdom endured may be judged by events of the past year, when not only Bear Stearns but also scores of banks and financial institutions have written off hundreds of billions of dollars — a result of blithe faith in models of the housing industry, not to mention a voracious hunger to do business on credit.

The Dark Side Of Reverse Mortgages - (www.ml-implode.com) - Reverse mortgages, targeted to older homeowners who may be house-rich but cash poor, are a bright spot in housing loans. With financial markets dry for all but the most stellar borrowers, and 77 million baby boomers crossing into retirement, the once relatively obscure loans are becoming commonplace.
But like many of the once-innocent loans that led to the current housing crunch -- such as adjustable-rate mortgages -- reverse mortgages have a dark side. Indeed consumer advocates hear echoes of the subprime lending crisis that has pressed the country into record foreclosures.

15,551 Foreclosures For Sale on Countrywide Website - (countrywide-foreclosures.blogspot.com)

Banks: Dominoes Ready to Fall - (www.thetrumpet.com)


Other Stories:

Volcker Says Finance System `Broken,' Losses May Rise - (www.bloomberg.com)
Bond Fund Manager Demands Bailout To Support His Profits - (dailybriefing.blogs.fortune.cnn.com)
House Price Decline Could Be Worse than Great Depression - (finance.yahoo.com)
Treasury to Outline Fan-Fred Plan - (www.ml-implode.com) - The U.S. Treasury is expected to announce early Sunday afternoon details of a plan under which regulators will effectively take ...
Fannie/Freddie MBS: Have You Ever Seen One? Bill Gross Must Not Have - (www.ml-implode.com) - Look at the big ‘ol black letters right below the Fannie Mae Logo and security description. That is what they call a ‘disclaime...
Update: Fannie/Freddie On Verge Of Gov't Takeover - (www.ml-implode.com) - The Wall Street Journal today is reporting Rep. Barney Franks has confirmed Paulson is stepping in, "a move that would essential...
Why first-time buyers should wait for house prices to fall further - (www.telegraph.co.uk)
One Part Shelter + One Part Investment = Crash - (www/nuwireinvestor.com)
Life After Foreclosure - (www.bankrate.com)

FDIC chief facing exceptional challenges - (www.sltrib.com)
Credit Crunch: The Sequel - (www.usnews.com)
Fla. AG: Former subprime exec gets prison term - (www.ml-implode.com)
Don't Say You Weren't Warned - (www.ml-implode.com)
Speculation doesn't explain the “overvaluation” of housing - (www.ml-implode.com)
Risky Loans Hurt Lender in California - (www.ml-implode.com)
U.S. Nears Rescue Plan For Fannie And Freddie - (www.ml-implode.com)
Columbia Bancorp shuts mortgage business - (www.ml-implode.com)
Treasury Is Close to Finalizing Plan to Backstop Fannie, Freddie - (www.ml-implode.com)
Achilles Heel, Shock Wave, Transformation - (www.ml-implode.com)

Rich cry poor: US housing crisis goes upmarket - (business.smh.com.au)
Foreclosures hit even high-end beach cities - (www.ocregister.com)
House relisting is selling 'stale fish' - (abcnews.go.com)
The Insane Optimism of Homedebtors - (images.businessweek.com)
Fed sees languishing demand for West's housing - (lansner.freedomblogging.com)
Still on Course for a House Price Crash in UK - (thescotsman.scotsman.com)
40% of buyers canceled new house purchases in July - (www.signonsandiego.com)

Paulson Plans to Bring Fannie, Freddie Under Government Control - (www.bloomberg.com)
U.S. Rescue Seen at Hand for 2 Mortgage Giants - (www.nytimes.com)
U.S. home foreclosures hit record level, boosted by California - (www.latimes.com)
Jobless Rate In August Hit A 5-Year High - (www.washingtonpost.com)
Loan Giant Overstated the Size of Its Capital Base - (www.nytimes.com)
Fannie, Freddie blind to the bubble - (www.ap.com)