Friday April 3 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Condo owner, 83, with onerous mortgage is set to walk away - (www.marketwatch.com) Question: My FICO is 725 and I'd like to keep it that way. But I have a bad loan on my condo, which is declining in value. As the value goes down, the principal loan amount is going up. Some $11,000 has been added to the principal since I got this loan. In the last year, I have lost everything in the stock market. To keep current in all my responsibilities, I took money out of the market at the same time it was falling. I had extra expenses during the year. I took on credit-card debt to keep current in everything. For months I tried to get the lender to modify the loan but was unsuccessful. Now my lender has been taken over by another bank, which means the new bank acquired all those old loans for probably 30 cents on the dollar. They could modify loans if they wanted to. When I called, I was asked how far behind I was on my payments. When I told them I was up to date, they said, "Well, this is difficult." So I stopped making payments last month. Now I have their attention. But I destroyed my investment portfolio and my retirement to keep current in everything, so even if they wanted to modify my mortgage, I may no longer qualify. I have decided my best option is to leave my condo and go live in a vacation property which I own debt-free. I still have a lot of credit-card debt but most of it is at very favorable interest rates. Will the fact that I have stopped paying on my mortgage allow my credit-card companies to change the terms, the percentage I'm charged? I am paying as agreed on all of them.

Up in Smoke: The Deposit Vanishes - (www.nytimes.com) SOME of the buyers who thought they would be moving into new condominiums in the region this year are finding that those plans are in ruins as they are being forced to walk away from the hefty down payments they made a year or more ago. They can’t complete their deals because the mortgages they lined up before the credit crisis took hold have evaporated and they can no longer get financing. Elizabeth and James Pham put all their savings into the deposit they made on a $956,990 two-bedroom apartment at Maxwell Place, a new development in Hoboken, N.J. They signed an agreement for the apartment in 2005, put down $93,199 and were preapproved for a mortgage for the rest of the purchase price. But when their closing date arrived last September, several banks told them that to get a mortgage, they would have to increase their 10 percent down payment by another 15 to 25 percentage points. With no way to come up with that much money, the Phams notified the developer, Toll Brothers, that they could not get financing for the apartment. Toll Brothers declared them in default and kept their deposit. “It would take us another 15 years to save that money again,” Ms. Pham said. The Phams, who have two children, a 4-month-old and a 2 ½-year-old, live in a two-bedroom in Hoboken that is smaller than the one they had hoped to move into in Maxwell Place. But they borrowed on their equity there to help put together the deposit on the new apartment. The rest of the deposit came from Mr. Pham’s work as a real estate agent, income that has all but dried up in the current market. “If we tried to sell our apartment, we wouldn’t make enough to cover the cost of selling it, so we’re really stuck,” said Ms. Pham, who works as a benefits manager at a professional services firm. Ms. Pham said that the developer “made no attempt to work with us; they wouldn’t even return my phone calls.” She added that the sales manager had declined their offer to help find another buyer for the apartment and had told Ms. Pham that “not getting our deposit back was just business.” A spokeswoman for Toll Brothers declined to comment because the Phams have filed a lawsuit to try to get their money back.

Bank of America Stuck With Real-Estate Chief's Unsold House - (www.bloomberg.com) Barbara Desoer, who runs the largest U.S. housing lender, can speak from experience about tumbling property prices: She couldn’t sell her own home. Desoer, 56, put her 4,500-square-foot house in Charlotte, North Carolina, on the market Aug. 1 for $1.675 million. She had just been named head of Bank of America Corp.’s real-estate unit, Countrywide Financial Corp., in Calabasas, California. The home, which she and her husband bought in 2000 for $1.15 million, sold in December for a price that wasn’t made public. The buyer: Bank of America, according to a proxy the lender filed March 18. Now the house is for sale again, at $1.295 million, $380,000 less than the original asking price, according to listing agent Allen Tate Realtors. “The scary thing is the amount of inventory we have right now,” said Ed Baesel, a Charlotte real-estate broker with Cottingham Chalk Bissell Hayes. At the current pace of sales of $1 million-plus homes in Charlotte’s most expensive neighborhoods, it would take more than six years to sell the homes on the market, he said. Million-dollar homes are finding few buyers as increasing job losses, slumping stock prices and declining property values cut demand for new and existing U.S. homes. Home prices fell 12.4 percent in the fourth quarter from a year earlier, the most ever for an index compiled by the National Association of Realtors. In the Charlotte area, home to Bank of America, home sales have posted double-digit percentage declines every month since June 2007, according to the Carolina Multiple Listing Services. Not Alone: Desoer declined to comment beyond information in the proxy, Bank of America spokesman Dan Frahm said. Bank of America isn’t the only company stuck with an executive’s house that didn’t sell. AT&T Inc. bought Chief Executive Officer Randall Stephenson’s San Antonio, Texas, home for $1.7 million after relocating him to Dallas, according to a regulatory filing on March 11. AT&T spokesman Michael Coe declined to comment yesterday when asked whether the house was still on the market.

Half of us have one month of cash cushion if laid off - (seattletimes.nwsource.com) Americans are in a collective state of financial depression as many admit they could cover their bills for two months at most if suddenly jobless, a nightmare more and more worry may come true. A group of surveys found a growing number of consumers are a few paychecks away from a household collapse. Even as many scramble to shore up savings, rainy-day funds are being depleted to cover food and energy bills, mortgage and car payments. A large number of households said they couldn't tolerate even one missed paycheck. "This is flashing so bright-red," said Paul Ballew, senior vice president of Nationwide Insurance. "Roughly 60 percent of the population was ill-prepared (financially) before the meltdown." A MetLife study released last week found that 50 percent of Americans said they have only a one-month cushion — roughly two paychecks — or less before they would be unable to fully meet their financial obligations if they were to lose their jobs. More disturbing is that 28 percent said they could not make ends meet for longer than two weeks without their jobs.

They Think They Deserve Those Bonuses - (www.cnbc.com) The logic behind the AIG bonuses perplexes most people. We've gone from wondering who would give out these rich rewards to asking who is brazen enough to take one for imperiling the world economy. Barney Frank and Andrew Cuomo have issued or threatened subpoenas that could help name (and therefore, presumably, shame) recipients from AIG's financial products division. That's the great mystery of the bonus fiasco: Don't the recipients feel any sense of responsibility? Here I think I can offer a tiny bit of enlightenment. By a strange quirk of fate, I live in a waterfront suburb of Manhattan popular with the middling level of the financial elite, the kinds of people who get $1 million bonuses—and feel very entitled to them. The worst trick of the credit bubble, a trick made crueler by the bubble's long life, was to convince so many that the money they made was more than an opportunity—it was a benediction. Not that a lot of my neighbors have been feeling so blessed lately. For the financial community, the crisis is entering its third year. It's becoming clearer that our way of life is changing irrevocably, and there's more than a little antagonism about who's to blame. There's a civil war raging out here. It's not a class war in the traditional sense. It is a conflict between the haves and the used-to-haves. One side of our town is filled with the shock troops of the overleveraged economy. These are the people most upset about Obama's $500,000 salary cap. They are Goldman guys and Morgan Stanley folks, hedge funders who levered up, investment bankers who packaged aircraft leases, and private-equity guys who rolled up insurance companies.

GM, Chrysler May Need ‘Considerably’ More Aid - (www.bloomberg.com) General Motors Corp. and Chrysler LLC may need “considerably” more than the $21.6 billion in aid they requested, which was based on optimistic recovery plans, said Steven Rattner, the Treasury’s chief auto adviser. President Barack Obama’s auto task force is assessing proposals from GM and Chrysler to decide whether to recommend U.S. assistance or tip the carmakers into bankruptcy. Rattner made the comments yesterday on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend. The task force will give its “sense of direction” by March 31, Rattner said. The companies have received $17.4 billion since December and asked for the additional $21.6 billion in aid last month, an amount that depends on achieving turnaround plans that are “somewhat ambitious,” Rattner said. “It could be considerably higher, I won’t deny that,” Rattner said, when asked whether U.S. aid sought could rise. “Like all management teams they tend to take a reasonably, slightly perhaps, optimistic, view of their business. So it could be more, I can’t rule that out.” Greg Martin, a GM spokesman, said yesterday its restructuring plan has “a conservative outlook.” The company will continue working with the task force “and we’ll keep them informed of our liquidity needs,” Martin said in an e-mail.

U.S. credit card defaults rise to 20 year-high - (www.reuters.com) U.S. credit card defaults rose in February to their highest level in at least 20 years, with losses particularly severe at American Express Co (AXP.N) and Citigroup (C.N) amid a deepening recession. AmEx, the largest U.S. charge card operator by sales volume, said its net charge-off rate -- debts companies believe they will never be able to collect -- rose to 8.70 percent in February from 8.30 percent in January. The credit card company's shares wiped out early gains and ended down 3.3 percent as loan losses exceeded expectations. Moshe Orenbuch, an analyst at Credit Suisse, said American Express credit card losses were 10 basis points larger than forecast. In addition, Citigroup Inc (C.N) -- one of the largest issuers of MasterCard cards -- disappointed analysts as its default rate soared to 9.33 percent in February, from 6.95 percent a month earlier, according to a report based on trusts representing a portion of securitized credit card debt. "There is a continued deterioration. Trends in credit cards will get worse before they start getting better," said Walter Todd, a portfolio manager at Greenwood Capital Associates. U.S. unemployment -- currently at 8.1 percent -- is seen approach 10 percent as the country endures its worst recession since World War Two, leaving more than 13 million Americans jobless, according to a Reuters poll of economists.





OTHER STORIES:

The Big Takeover - (www.rollingstone.com)
San Francisco Bay Area House Prices Dip Below $300,000 - (www.bloomberg.com)
Bay Area house median falls below $300,000 - (www.sfgate.com)
Americans fear house price drop accelerating - (news.yahoo.com)
Spring Sale: House Sellers May Flood the Market Soon - (www.nbcphiladelphia.com)

Canada's National Post: The End of America? - (www.nationalpost.com) Ron Paul Predicts 15 Year Depression - (www.ft.com) China Keeps the Faith in US Treasuries, Dollar - (www.marketwatch.com)Gold Bugs Triumphant, Terrified About US - (www.marketwatch.com) Worst Over? Are you kidding? - (www.businessinsider.com) Treasury Unveils Details of Plan to Relieve Banks of Toxic Assets - (www.washingtonpost.com) Women Needing Cash Go From Jobless to Topless - (news.yahoo.com/s/ap)Ron Paul's Statement on AIG Bonuses - Unconstitutional! - (bullnotbull.blogspot.com) Israeli Soldiers Admit to Deliberate Killing of Gaza Civilians - (www.timesonline.co.uk) London Police Fear Violent Protests At G-20 - (www.iht.com) Global Anxiety over Manufacturing Declines - (www.nytimes.com) The Fed Crosses the Rubicon... - (www.marketwatch.com)...Print Trillions Now, Worry Later... - (www.latimes.com) ...The Nuclear Option - (www.sirchartsalot.com) Banks Cite Two Paths to Disaster, Thanks to Federal Intervention - (www.washingtonpost.com)A.I.G. Sues U.S. for Return of $306 Million in Tax Payments, Some Involving Tax Deals in Offshore Havens Using Taxpayer Money to Pursue Lawsuit - (www.nytimes.com)
Fed Monetized Debt When Foreign Debt Holders Stop Buying - (www.geldpress.com)
Debt Man Walking - (www.japanfocus.org)
The Fed vs Savers - (www.patrick.net)
How to create a financial crisis - (www.examiner.com)
Former IMF economist: housing may not bottom for another two years - (www.pbs.org)
Ron Paul March 18, 2009 House Floor - (www.youtube.com)

We should fire everyone at AIG - (www.nytimes.com)
Oh THAT'S why we are bailing out AIG - (thelastgoodidea.blogspot.com)
Too True To Be Funny - (www.caglecartoons.com)
Another Hidden Flaw In Ownership - (www.patrick.net)