Saturday January 24 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Meet Lady Subprime - (www.washingtonpost.com) The French have the comely Marianne, the British have the fetching Britannia, and we have the welcoming Lady Liberty. May I now suggest, at least for the duration of the current recession, a new feminine emblem of our times: Marvene Halterman of Avondale, Ariz. At age 61, after 13 years of uninterrupted unemployment and at least as many years of living on welfare, she got a mortgage. She got that mortgage less than two years ago. She got it even though at one time she had 23 people living in the house (576 square feet, one bath) and some ramshackle outbuildings. She got it for $103,000, an amount that far exceeded the value of the house. The place has since been condemned. This tale, unfortunately as American as apple pie, was recounted recently in the Wall Street Journal. Since the story ran over a long, holiday weekend, it is possible that you, not to mention the occasional member of Congress or, God forbid, the various government regulatory agencies, missed it. It is the only possible explanation for why there have been no executions, never mind arrests.

Federal Mortgage Banks Show Stress - (www.washingtonpost.com) The mortgage crisis is seeping into one of the last dry corners of the mortgage business, the regional network of Federal Home Loan Banks, which provide U.S. banks with hundreds of billions of dollars in low-cost funding to support lending to home buyers. The little-known network has grown in importance as banks lose access to other sources of funding because of the credit crunch. The volume of outstanding loans provided by the home-loan banks has increased by 58 percent since the beginning of 2007, to more than $1 trillion at the end of September. But several of these banks hold mortgage-related investments that have plummeted in value. The losses are draining the capital foundations of the home-loan banks, forcing them either to reduce their lending -- making mortgages more expensive and harder to get -- or to raise additional capital. The money could come from taxpayers. The Treasury Department created a program in September that for the first time allows the home-loan banks to borrow directly from the federal government. That hasn't happened yet, but some financial experts said it's looking increasingly likely. A report from Moody's Investors Service this week, citing "the demonstrated importance of the [home-loan banks] to the banking system through the credit crisis," concluded that the government was likely to provide the necessary support to keep loans flowing.

Blood in the streets of Latvia - (www.nytimes.com) Latvia Is Shaken by Riots Over Its Weak Economy. Violent protests over political grievances and mounting economic woes shook the Latvian capital, Riga, late Tuesday, leaving around 25 people injured and leading to 106 arrests. Skip to next paragraphIn the wake of the demonstrations, President Valdis Zatlers threatened Wednesday to call for a referendum that would allow voters to dissolve Parliament, saying trust in the government, including in its ability to deal with growing economic problems, had “collapsed catastrophically.” For years, Latvia boasted of double-digit economic growth rates, but it has been shaken by the global economic downturn. Its central bank has spent a fifth of its reserves to guard against a steep devaluation of its currency, the lat, and experts expect a 5 percent contraction of the country’s gross domestic product in 2009. Salaries are expected to fall substantially, and unemployment is expected to rise.

Negative equity casualties - (www.inbusinesslasvegas.com) Adjustable rate mortgages and investors counting on appreciation fueled Nevada's rise to its spot as the foreclosure capital of the country the past two years. By the time the final 2008 statistics are calculated, the Las Vegas Valley is expected to have more than 25,000 foreclosures, according to SalesTraq's count. But in 2009 Las Vegas will start seeing a different wave of foreclosures from people who can afford their mortgages, says Mark Baker, a loan originator with Meridias Capital. "I am saying at some point people are going to walk away (from their mortgages)," Baker says. "The issue has nothing to do with bad loans. It has to do with equity." Baker says the $170,000 to $180,000 median price for homes today is where it should be if you look back 28 years and calculate 4 percent a year appreciation. Median home prices have fallen more than $100,000 in the past 18 months. "Our biggest problem is that people bought homes at the height of the market, and the problem is when the market will catch up to where it was, it may take 20 years for people to get their money back," Baker says.

Would You Pay $103,000 for This Arizona Fixer-Upper? - (online.wsj.com) This gives you an idea of Wall Street and Bank underwriting standards during the past 10 years. The little blue house rests on a few pieces of wood and concrete block. The exterior walls, ravaged by dry rot, bend to the touch. At some point, someone jabbed a kitchen knife into the siding. The condemnation notice stapled to the wall says: "Unfit for human occupancy." The story of the two-bedroom, one-bath shack on West Hopi Street, is the story of this year's financial panic, told in 576 square feet. It helps explain how a series of bad decisions can add up to the worst financial crisis since the Great Depression. Less than two years ago, Integrity Funding LLC, a local lender, gave a $103,000 mortgage to the owner, Marvene Halterman, an unemployed woman with a long list of creditors and, by her own account, a long history of drug and alcohol abuse. By the time the house went into foreclosure in August, Integrity had sold that loan to Wells Fargo & Co., which had sold it to a U.S. unit of HSBC Holdings PLC, which had packaged it with thousands of other risky mortgages and sold it in pieces to scores of investors. Today, those investors will be lucky to get $15,000 back. That's only because the neighbors bought the house a few days ago, just to tear it down. At the center of the saga is the 61-year-old Ms. Halterman, who has chaotic blond-gray hair, a smoky voice and an open manner both gruff and sweet. She grew up here, working at times as a farm hand, secretary, long-haul truck driver and nurse's aide. In time, the container of vodka-and-grapefruit she long carried in her purse got the better of her. "Hard liquor was my downfall," she says.

Time To Rethink The California Dream - (blogs.telegraph.co.uk) Is the image of California - sun-kissed, West coast paradise, immortalised in Beach Boy songs and subject of daydreams the world over - ripe for a makeover? Apparently so, according to a growing number of residents who are deciding the mythical Golden State lifestyle - all relaxed, surf-side, happy, healthy living with a touch of Hollywood glamour thrown in - is just that: a myth. Official figures show that for a fourth year running, more residents have left California than moved there from other states. According to census estimates, in the year ending July 1, 2008, the state lost 144,000 people, more than any other US state. California hasn't seen such a prolonged period of departures outweighing newcomers (from within the US, that is) since the downturn of the early 1990s. So what's gone sour? The nation's most populous state has, after all, proved a reliable magnet for seekers of dream-fulfilment, fame and fortune throughout history, from the Gold Rush of the mid 1800s to Hollywood and the Dot com boom. According to those leaving, a lot: soaring unemployment (8.4 percent, the third highest in the nation); the cost of living - food, petrol, taxes, rents, home prices (even with the property crash); congestion; overcrowding; bad schools; bad air; a state government inching ever closer to bankruptcy and the omnipresent threat of more cuts to public services and tax increases. Google "leaving California" and you find online forums for people doing exactly that.

Houseowner Bailout Rewards Irresponsibility - (www.cbsnews.com) Perhaps the best argument against a government bailout of underwater homeowners can be found in the character of Casey Serin, a 26-year-old would-be mogul in Sacramento, Calif. In hopes of getting rich quick, Serin took out $2.2 million in mortgages on eight houses, some sight unseen. He lost all of the properties, most to foreclosure, and says he's recently contemplated living on the streets. Serin achieved a measure of Internet fame by chronicling his failures at real estate speculation on a now-defunct blog, where an audience of so-called "haterz" spent endless hours critiquing his innumerable financial missteps. After selling his Web site to pay down his then-wife's credit card debt, Serin has had time to reflect on how he and other speculators contributed to the biggest housing bubble in history. "I personally don't believe in bailouts," Serin said in an interview this week. "If you don't get hurt, what's going to stop you from taking on the risk next time? You're interfering with the natural order of things." Too bad our elected leaders in Washington, D.C. aren't half as thoughtful as a failed housing speculator. The reality is, as I wrote in an earlier column, housing prices leapt too high, too fast, beyond what economic fundamentals permit. This is why house prices are falling back to earth. Speculators have moved on or, like Serin, are courting bankruptcy. Lending standards are returning to normal. Debt has given way to moderate thrift. The supply of homes exceeds demand in many areas; prices will stabilize only when homes become affordable again and excess inventory is sold. Unfortunately, our representatives seem unable to let a return to normalcy take place.

Circuit City liquidation sparks a Black Saturday - (www.latimes.com) More underwater Americans buying shit they don’t need. Marked-down merchandise attracts throngs to L.A.-area stores as the bankrupt electronics chain prepares to close. Shoppers eager to grab their share of discounted plasma TVs and Blu-ray DVDs lined up in droves today as Circuit City stores began liquidating their inventory. The bankrupt electronics retailer is shutting down its 567 U.S. stores and laying off 34,000 workers. By late morning, the line outside the Circuit City in Hollywood was almost 100 people long. Carlos Reyes, 24, and girlfriend Diana Anzora, 22, of Los Angeles, lined up to buy video games and DVDs. "I prefer Best Buy, and if it wasn't for the liquidation I probably wouldn't have come, especially this early on a Saturday," Reyes said. "We didn't know it was going to be such a big line."



OTHER STORIES:

Congress takes up debtor bailout plans - (msnbc.msn.com)
Response To Dean Baker's Approval of Obama's Plan - (ashizashiz.blogspot.com)
What's the Best Way to Fix the Economy? - (newsweek.com)
Economists differ on whether government spending help or hurt - (idahostatesman.com)
Price Drops to Continue - (online.wsj.com)
Dec CA Foreclosure Report - Defaults up 100% - (mrmortgage.ml-implode.com)
Goldman Sachs' Mind-Numbing NYC Real Estate Report - (curbed.com)
Manhattan Absorption Rate 12 Months Manhattan Real Estate - (urbandigs.com)
Guidelines reduce pressure to inflate house appraisals - (money.cnn.com)
Chase Latest to Exit Wholesale Lending; Anyone Left? - (housingwire.com)
Blood in the Streets? Nope. Red Ink. - (www.lewrockwell.com)

Taxpayers' generous gifts to banks - (PDF – www.ceoreportcards.com)
Unemployment checks are not sufficient to pay for health insurance - (PDF – www.familiesusa.org)
Hedge Funds, Unhinged - (www.nytimes.com)
Battered Hedge Funds Brace for More Pain - (www.washingtonpost.com)
U.S. 4th-quarter VC funding lowest in three years - (www.marketwatch.com)
Global slump casts a pall over Chinese New Year - AP
Cost of some EU debt protection reaches record levels - (www.ft.com)
Mexico’s central bank cuts rates by 0.5% - (www.ft.com)
Obama team seeks fresh approach to bank crisis - (www.reuters.com)
Obama Urged to Move Swiftly to Rescue Banks - (www.nytimes.com)
Warsh Won’t Succeed Geithner as New York Fed Chief - (www.bloomberg.com)
The End of Banking as We Know It - (www.nytimes.com)
Don't Bank on it - (www.nypost.com)
Bailout Is a Windfall to Bankers, if Not to Borrowers - (www.nytimes.com)
The Growing Foreclosure Crisis - (www.washingtonpost.com)