Monday December 29 Housing and Economic stories

TOP STORIES:

GMAC's Merkin, Ascot Fund sued over Madoff investments - (www.marketwatch.com) J. Ezra Merkin put his own hedge fund money in Madoff’s hedge fund and pawned the results off as his own. New York Law School filed an investor lawsuit against J. Ezra Merkin, chairman of lender GMAC Financial Services, one of his funds and its auditor on Tuesday over investments made through Bernard L. Madoff Investment Securities LLC, whose founder has been charged in a massive Ponzi scheme. The lawsuit, filed in U.S. District Court in Manhattan, alleges recklessness, gross negligence and breach of fiduciary duties by Merkin, who also heads money-management firm Gabriel Partners; the fund, Ascot Partners LP; and its auditor, BDO Seidman LLP. The complaint alleges Merkin abdicated his responsibilities and duties as Ascot's general partner and manager in entrusting substantially all of its assets - $1.8 billion - to the Madoff firm and that Seidman failed to recognize "red flags" at the Madoff firm. "As a proximate result of Merkin's bad faith breach of fiduciary duty, plaintiff and other class members have sustained damages, suffered mental and emotional distress and have lost most, if not all, of their respective investments in an amount yet to be determined," the lawsuit said

Home Buyers Turn to USDA for Mortgages – (online.wsj.com) - When Erick Moore first read about the USDA's Rural Development Guaranteed Loan program, he says he imagined it would be "restricted to some little farmhouse." Instead, the 33-year-old computer programmer moved last month into a four-bedroom, three-bath home in Fuquay-Varina, N.C., 17 miles outside Raleigh. The house sits on nearly one acre and features a brick facade, 10-foot ceilings and hardwood floors. "I couldn't believe it until we closed," says Mr. Moore, who paid only $1,200 out of pocket to move into the $228,000 home. The seller contributed $5,000 in closing costs, and Mr. Moore rolled the 2% fee charged by the USDA into the loan. Mr. Moore, who owned a home in St. Louis before he relocated to the Raleigh area last year, says a 60% drop in his stock portfolio made it difficult to come up with a down payment. He directed his Realtor to show him only homes that were eligible for the USDA program.

So Why Do We Want To Bail Out This Houseowner Again? - (www.nuwireinvestor.com) So do we still think a foreclosure moratorium is a good thing? Here is an actual listing on Craigslist: http://tampa.craigslist.org/hil/apa/958697241.html
I HAVE A 3 BEDROOM HOUSE THAT I AM LETTING GO, IT SHOULD BE ATLEAST ANOTHER YEAR BEFORE THE COURT WANTS THE KEYS, SO I AM RENTING OUT THIS HOUSE WITH NO CREDIT CHECK AND ON A MONTH TO MONTH TERM, SO NO ONE IS LOCKED IN, IT IS A CHEAP WAY FOR YOU TO SAVE MONEY. THE HOUSE HAS NO APPLIANCES BUT YOU CAN GO TO CRAIGS LIST AND GET FREE ONES UNDER THE FREE STUFF. CHECK OUT THE LINKS BELOW. IF YOU ARE INTRESTED PLEASE E-MAIL ME. ALSO THERE IS NO SECURITY DEPOSIT AND THE HOUSE IS ON A 1/4 ARCE. YOU CAN E-MAIL ME DIRECTLY AT JOEYCARLO@******** FIRST COME FIRST SERVE. THANKS JOE. This guy Joe is asking $499 a month for this house, which is ridiculously low, so I’m sure that he won’t have a problem finding a tenant to take him up on his offer. Obviously he has no intention of using the rental proceeds to pay his mortgage, and is planning to take full advantage of the system for as long as he can.

Condo Meltdown: $30 million site sold at auction for $100 - (www.dailybusinessreview.com) Developer Homero Meruelo’s plans for a $300 million condo project officially ended Monday with a lender’s $100 bid during a foreclosure auction at the Palm Beach County courthouse. The Merco Group’s principal had been fighting a foreclosure lawsuit by Eastern Financial Florida Credit Union on a 4.5-acre West Palm Beach site where he planned to build Palladio Terrace for more than a year. Meruelo had managed to win postponements of several previously scheduled auctions. But Monday, he wasn’t even aware an auction had taken place, he confirmed in a phone interview. “No one bid on it?” he asked after learning the site went back to the lender for $100, the minimum Eastern Financial had to bid in order to retrieve the property. During the auction, the attorney for Eastern Financial said the lender was willing to bid up to $30 million. No bidder came forward with a counteroffer to the $100.

Taxpayers furious over bailouts - (money.cnn.com) Many Americans are outraged that their money is being spent to rescue irresponsible mortgage borrowers. Still, that probably won't stop government officials. Ask most Americans whether they're in favor of spending taxpayer dollars to help delinquent mortgage borrowers and you're likely to get an emphatic "No!" But the government didn't ask its citizens before it committed hundreds of billions of taxpayer dollars to guarantee loans through various foreclosure prevention initiatives such as FHASecure and Hope for Homeowners, which let troubled borrowers refinance expensive mortgages into more affordable loans. Nor did it take a vote before it agreed to fund the new streamlined mortgage modification programs for loans backed by Fannie Mae and Freddie Mac. And now there is the possibility that some of the hundreds of billions of dollars allocated for the Treasury's Troubled Assets Relief Program will go towards bailing out borrowers.

Realtors seeks Federal housing market manipulation - (www.politico.com) he Realtors are pushing several proposals to stimulate and stabilize the housing market, including making permanent the higher caps on the loan size that Fannie Mae, Freddie Mac and Federal Housing Administration can take on. Last year’s economic stimulus package temporarily lifted it to $729,750, but new rules for 2009 will lower the cap by more than $100,000. The Realtors also would like the upcoming economic stimulus to expand the first-time home buyer tax credit passed earlier this year to apply to all home buyers. And they’re asking Congress to eliminate the current repayment requirement, arguing that more people will use it if it’s a straight tax break. The National Association of Home Builders and the mortgage bankers also are lobbying hard for the higher conforming loan limits. “In the current economic downturn, Fannie Mae, Freddie Mac and FHA are the only significant sources of housing finance liquidity. … The operational and market challenges that would result from a loan limit decrease would also perpetuate additional market disruptions,” the three groups wrote congressional leaders. The home builders have their own plan, around which they’ve launched an inside-the-Beltway campaign. Their proposal includes beefing up the home buyer tax credit to a maximum of $20,000 for any buyer’s primary residence. The mortgage bankers, meanwhile, are lobbying just as hard against one proposal as they are for increasing the loan limits. Democratic Sens. Richard J. Durbin of Illinois and Chris Dodd of Connecticut have called for the stimulus to include a change in the bankruptcy code to allow judges to reduce distressed homeowners’ mortgage interest and principal.

Defaulted Australian couple served with legal documents via Facebook - (www.telegraph.co.uk) n what may be a world first, lawyers from Canberra law firm Meyer Vandenberg persuaded a judge in the Australian Capital Territory's Supreme Court to allow them to serve the documents over the internet after repeatedly failing to serve the papers in person. Lawyer Mark McCormack came up with the Facebook plan after it became clear that the couple did not want to be found. Carmel Rita Corbo and Gordon Poyser had failed to keep up repayments on a $150,000 (£44,000) loan they had borrowed from MKM Capital, a mortgage provider. The pair had ignored emails from the law firm and did not attend a court appearance on Oct 3. Mr McCormack said the pair had "vanished". So he looked to Facebook, better known for its tendency to break up marriages and ruin careers, for inspiration. "It's somewhat novel, however we do see it as a valid method of bringing the matter to the attention of the defendant," McCormack said. "It's one of those occasions where you feel most at home with what you know and I myself have a Facebook account."


OTHER STORIES:

Western Digital to slash 2,500 jobs - (www.latimes.com) Hard drive maker Western Digital Corp. said today it plans to cut 2,500 jobs, or about 5 percent of its global work force, and will reduce executive pay in response to weakening demand for its products because of the economic turmoil.
Hollywood figures snared in Bernard Madoff's alleged fraud - (www.latimes.com) Screenwriter Eric Roth, Steven Spielberg and Jeffrey Katzenberg are among those who suffered losses in the investment manager's alleged $50-billion Ponzi scheme.
Morgan Stanley loses $2.37 billion in quarter - (www.latimes.com) Morgan Stanley said today it lost $2.37 billion during its fiscal fourth quarter as it took a range of losses on assets amid one of the roughest quarters for investment banks.
Public mood darkens on job fears: Reuters poll - (news.yahoo.com/s/nm) A recession-mired economy and growing job insecurity have shaken American confidence in the future despite an upbeat view of President-elect Barack Obama's performance, according to a Reuters/Zogby poll released on Wednesday. The Reuters/Zogby Index, which measures the mood of the country, dipped to 90.5 in December from 93.3 in November as seven of the 10 measures of public opinion used in the index declined.
Citibank lends bailout cash from US taxpayers to poor Chinese - (news.xinhuanet.com)
IRS to help houseowners refinance or sell houses - No help for renters - (news.yahoo.com)
Who will Bail Out State and Local Governments? - (www.newgeography.com)
0% Interest Rates And 100 Year Mortgages Coming Soon - (www.geldpress.com)
Foreclosures soar 76% to record 1.35 million - (money.cnn.com)
Record House Price Slide in Southern California - (www.businessweek.com)
Monterey County's declining property values mean lower tax revenue - (www.montereycountyweekly.com)
Will The Madoff Debacle Finally End The "Who Could Have Known?" Era? - (www.huffingtonpost.com)
How Madoff cost my family a job, a 401k, and a worthy cause - (www.marketwatch.com)
The End of Retirement? - (www.informationclearinghouse.info)
Commercial real estate grim - (www.nytimes.com)
The Mortgage Meltdown Video - (www.cbsnews.com)

Morgan Stanley Loss Narrows to $2.37 Billion - (www.cnbc.com) Morgan Stanley says it lost $2.37 billion during its fiscal fourth quarter as it takes a range of losses on assets amid one of the roughest quarters for investment banks.
Refinancing Drives Mortgage Applications Up - (www.cnbc.com)
Citigroup to Merge Corporate, Investment Banking - (www.cnbc.com)
OPEC Ready for Historic Oil Cut to Rescue Prices - (www.cnbc.com)
Honda Falls on Profit Fears, Nissan Cuts Output - (www.cnbc.com)
Retail Tracker Raises Holiday View, Citing Wal-Mart - (www.cnbc.com)
General Mills Posts Higher-than-Expected Profit - (www.cnbc.com)