Monday February 23 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Mortgage Fraud Suspect Found With $70G In Shoes - (www.foxnews.com) A suspect in a nationwide mortgage fraud scheme who fled the country was caught at the Canadian border with $70,000 stuffed in his cowboy boots and nearly $6,000 worth of platinum, authorities said Wednesday. Christopher J. Warren, 26, was arrested early Wednesday while entering the United States at Buffalo, N.Y. After he disappeared Feb. 3, Warren was charged with conspiracy, fraud and conducting a continuing financial crime. If convicted, he faces life in prison. Warren is the second of three fugitives to be caught in the ongoing fraud investigation of Loomis Wealth Solutions, a Roseville, Calif.-based investment company, and several related companies. Court documents alleged they defrauded investors and mortgage companies of $100 million since 2006. The fraudulent deals involved 500 homes and condominiums in California, Florida, Nevada, Illinois, Colorado and Arizona, according to Internal Revenue Service affidavits. Warren flew to Ireland on Feb. 3 on a chartered private jet, then traveled to Lebanon and Canada, acting U.S. Attorney Lawrence Brown said. U.S. Customs and Border Protection agents were on the lookout for him when he took a taxi from Toronto to the border at Buffalo. Prosecutors said Warren had photocopies of assay certificates showing the weight and purity of $1.1 million worth of gold, but it was unclear if he actually had ownership of that gold. They earlier had said he was carrying $1 million in Swiss bank certificates. Authorities believe Warren also had brought to Lebanon $4 million to $5 million in gold, which he had shown some of the flight crew, but that has not been recovered, Brown said. "He's a man of high style — all of it ill-gotten," the prosecutor said. Brown also said Warren was carrying two fake passports with an alias, and authorities previously said he had obtained a passport with another name and indicated he planned to go to Mexico. Warren had an initial court appearance in Buffalo on Wednesday, Brown said. He was represented by a federal public defender, Roxanne Mendez Johnson, who declined comment. Don Heller, Warren's lawyer in Sacramento, said he was disappointed that his client chose to flee, adding: "I think he will now pay the price." On Tuesday, authorities announced that a second suspect in the case, Garret Griffith Gililland III, 27, of Chico, had been apprehended in Spain in October. He is fighting extradition to the U.S. Authorities are still looking for Scott Cavell, 25, of Sacramento, who they said fled the country a day after Warren left. Lawrence Leland "Lee" Loomis, president of Loomis Wealth Solutions, has not been charged with any crime. His attorney denies any wrongdoing by his client. Brown said the investigation into the mortgage scheme was ongoing.

How financial crimes are handled in China - (www.marketwatch.com) A Chinese court has handed a death sentence to Li Peiying, a former chairman of Capital Airports Holding Co., for bribery and embezzlement of more than 100 million yuan ($14.6 million), according to a state media report. Li was given the sentence by the Jinan Intermediate People's Court in Shandong province in eastern China, after he was found guilty of seeking or accepting bribes for 26.61 million yuan while he was in office from 1995 to 2003, Xinhua reported. Li also misappropriated 82.5 million yuan from 2000 to 2003, according to the court, the report added.

Fannie to Expand Mortgage Rules for Realty Investors - (www.ml-implode.com) Excellent. The government has learned nothing, and it regrets nothing. Fannie Mae, the mortgage-finance company under U.S. government control, will no longer bar real- estate investors from qualifying for its loans if they already own four properties as it seeks to increase housing demand. The company will expand its limit for investor and second- home loans to as many as 10 properties per borrower, according to a Feb. 6 notice to lenders on Washington-based Fannie’s Web site.

Fannie Invites Speculators To Screw Taxpayers - (www.bloomberg.com) Fannie Mae, the mortgage-finance company under U.S. government control, will no longer bar real- estate investors from qualifying for its loans if they already own four properties as it seeks to spur housing demand. The company will expand its limit for investor and second- home loans to as many as 10 properties per borrower, according to a Feb. 6 notice to lenders on Washington-based Fannie’s Web site. “Bona-fide, experienced investors bringing significant equity to the table will play a key role in the housing recovery,” Brian Faith, a Fannie Mae spokesman, said today in an e-mailed statement. Since their September takeovers, Fannie and competitor Freddie Mac have loosened some underwriting rules and set policies for their loan servicers to rework more delinquent debt to aid the slumping housing market and lower their foreclosure costs. The companies, which own or guarantee almost half of the $12 trillion of U.S. residential debt, also have tightened guidelines and boosted fees for some loans to reflect their higher risks.

As Vacant Office Space Grows, So Does Lenders' Crisis - (www.nytimes.com) Vacancy rates in office buildings exceed 10 percent in virtually every major city in the country and are rising rapidly, a sign of economic distress that could lead to yet another wave of problems for troubled lenders. With job cuts rampant and businesses retrenching, more empty space is expected from New York to Chicago to Los Angeles in the coming year. Rental income would then decline and property values would slide further. The Urban Land Institute predicts 2009 will be the worst year for the commercial real estate market “since the wrenching 1991-1992 industry depression.” Banks and other financial companies have not had the problems with commercial properties in this recession that they have had with residential properties. But many building owners, while struggling with more vacancies and less rental income, will need to refinance commercial mortgages this year. The persistent chill in lending from banks to the credit markets will make that difficult — even for borrowers who are current on their payments — setting the stage for loan defaults. The prospect bodes ill for banks, along with pension funds, insurance companies, hedge funds and others holding the loans or pieces of them that were packaged and sold as securities.

Alleged Madoff victims may be vulnerable to other victims' claims - (www.latimes.com) Those who profited before suffering losses -- including retirees and charities -- could be hit with demands to give back cash in a settlement. Santa Monica retiree Bob Braslau considers himself a victim of accused fraud mastermind Bernard L. Madoff. But the court-appointed bankruptcy trustee, he fears, might consider him a beneficiary. Braslau was among the thousands who lost money when the Madoff fund collapsed amid allegations that it was a $50-billion Ponzi scheme. But because Braslau had taken out some proceeds over the years, he could be forced to return those earnings if a court determines they weren't real investment returns, simply money from other victims. "I do feel in jeopardy," said Braslau, a former aerospace engineer for TRW Inc. who invested with Madoff through Stanley Chais, a Beverly Hills money manager. "People are going to be frantic in trying to recover their money." Some of the charities and foundations that lost millions with Madoff are also potential targets in the gathering scramble to recover cash from those who profited to distribute among those who did not. Madoff, 70, has been under house arrest at his luxury Manhattan apartment since Dec. 11. The former Nasdaq chairman is reported to be cooperating with investigators while awaiting trial on securities fraud charges.

OTHER STORIES:

Obama to Form Auto Task Force, "Car Czar" Dropped - (www.cnbc.com) President Barack Obama will form a government task force for restructuring the struggling U.S. auto industry instead of naming a "car czar" with sweeping powers, a senior administration official said.
Japan's Economy in Biggest Dive Since 1974 - (www.cnbc.com)
China Commentary Blasts "Buy American" Plan - (www.cnbc.com)
Is This Recession Really Worse Than Others? - (www.cnbc.com)
GM reportedly to ask for more money - (www.marketwatch.com)
Trump casino may be headed back to court - (www.marketwatch.com) Bondholders may force company into Chapter 11, its third trip to bankruptcy court, report says.
TV-station operator Young Broadcasting files Chapter 11 - (www.marketwatch.com)
Peanut Corp. of America files for Chapter 7 bankruptcy - (www.marketwatch.com)

For Fastest Fix, Government Should Do NOTHING - (blogs.law.harvard.edu)
Obama eyes taxpayer subsidies for foolish debtors - (finance.yahoo.com)
Hawaii foreclosures up 174% - (www.starbulletin.com)
House Prices in U.S. Slid 12% in Fourth Quarter, Most on Record - (www.bloomberg.com)
Banks underestimating house price declines - (www.minyanville.com)
U.S. Houseowners Will Lose Up to $10 Trillion, Talbott Estimates - (www.bloomberg.com)
Government Bonds May Be Last Bubble: Jim Rogers - (www.cnbc.com)
Why the market gagged on Treasury's plan - (www.marketwatch.com)
Taking Apart the $819 billion Stimulus Package - (www.washingtonpost.com)
Will US bank recapitalization succeed? - (www.patrick.net)
Bailout cash leads directly to bailout fraud - (www.newsday.com)
Great Recession seen lasting 3 years, experts say - (www.reuters.com)
Laid-Off Foreigners Flee as Dubai Spirals Down - (www.nytimes.com)