Saturday May 30 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Tenant paid thousands in rent for condo that was in foreclosure - (www.tampabay.com) Tampa real estate agent Lori Polin played a key role in one of the state's "most dramatic" mortgage fraud schemes, according to Florida's attorney general. Polin is still an agent — and she's still engaged in questionable dealings, an angry tenant claims. Jeff Cole, who rented Polin's Tampa condo, says she collected over $14,000 in rent yet stopped making mortgage payments and did not inform him that the bank was foreclosing — an increasingly common problem for tenants in a tanking real estate market. Polin, who still has a $50,000 homestead exemption, also asked Cole and his mother not to tell the bank she was renting out the condo for fear it would kill a sale, he said. "She accepted rent for nine months while lying to her mortgage company about her occupancy status," Cole said. "She asked me and my mother to keep her little secret … to save her own a---." Polin, who works for ReMax Power Advantage in Tampa, did not return phone calls seeking comment. Jeremy Anderson, head of the office, would not comment. Even as Florida's real estate boom fizzled in 2006, Polin appeared to be one of the area's most successful agents. ReMax International gave her its Chairman's Club Award for agents with gross commissions of at least $500,000. But in 2007, the Pinellas Realtor Organization and many of Polin's fellow agents received an anonymous letter claiming that at least part of her success was due to alleged mortgage fraud involving nine houses in Pinellas and Hillsborough counties. Polin told the St. Petersburg Timesthen that she had done nothing wrong and was the victim of a "smear campaign" by jealous rivals. This fall, however, Attorney General Bill McCollum sued 10 companies and 15 individuals under Florida's Deceptive Trade Practices Act for their alleged roles in a $37 million fraud scheme. The suit said the co-defendants conspired with Polin and two other agents to inflate sale prices so they could obtain bigger loans and pocket "millions for their own personal use." Polin, 49, was not named as a defendant because real estate agents are exempt from the act and subject to other state laws. The Department of Business and Professional Regulation would not say if she is under investigation. In 2005, Polin got a $257,520, low-interest loan to buy a condo in Tampa's Westchase area for use as her primary residence. She signed a "borrower's occupancy rider" saying that she intended to live there and that the lender could demand full payment of the loan if she didn't. In August, Polin rented the condo to Cole, owner of a firm that helps arrange loans for environmentally friendly projects. Cole, 39, who moved to Tampa to be close to his mother, said Polin agreed to reduce the rent by $75 a month if he prepaid $10,800 for the first six months. He then went on a month-to-month lease at $1,875 because Polin was trying to sell the condo, whose value had plunged. "I knew she was upside-down on the property," Cole said, "but we didn't realize she was that far gone" until a foreclosure notice arrived in February. He said the notice was unusual in that it didn't list him and his wife as tenants. "The reason my name is not on it," he said, "is because the bank didn't know we were here." Cole said Polin told him that the bank had agreed to a short sale of $183,000 but that the deal would fall through if the lender knew she wasn't living in the condo. She asked him and his mother not to say anything to the bank. "I said, 'I'm not going to be part of your lie,' " Cole recalled. "I'm not interested in mortgage fraud except to the extent that I want frauds to be punished. I'm sick and tired of this mess and people and their greed." Foreclosure papers filed Jan. 30 by National City Bank show that Polin had not made a payment since September, about a month after the Coles moved in. In a letter to the bank, Polin wrote that her income had dropped 80 percent during the two years the condo had been on the market. "In any event," she added, "I have three contracts on this property, and National City has approved it for a short sale. The investor is sending their approval and it will be sold/closed by March 31, 2009."

Credit Card Industry Aims to Profit From Sterling Payers - (www.nytimes.com) Credit cards have long been a very good deal for people who pay their bills on time and in full. Even as card companies imposed punitive fees and penalties on those late with their payments, the best customers racked up cash-back rewards, frequent-flier miles and other perks in recent years. Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit. Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups. “It will be a different business,” said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks. “Those that manage their credit well will in some degree subsidize those that have credit problems.” As they thin their ranks of risky cardholders to deal with an economic downturn, major banks including American Express, Citigroup, Bank of America and a long list of others have already begun to raise interest rates, and some have set their sights on consumers who pay their bills on time. The legislation scheduled for a Senate vote on Tuesday does not cap interest rates, so banks can continue to lift them, albeit at a slower pace and with greater disclosure. “There will be one-size-fits-all pricing, and as a result, you’ll see the industry will be more egalitarian in terms of its revenue base,” said David Robertson, publisher of the Nilson Report, which tracks the credit card business.

Mass auctions of foreclosed homes not as successful as billed - (www.tampabay.com) It sounds like a great way to work off our housing glut: Banks hire a nationally renowned auctioneer to dispose of hundreds of foreclosed homes at once from hotel ballrooms in Tampa. And if you listen to the auctioneers, their sales success is stellar. Back in February, a company called Real Estate Disposition Corp. announced it had snagged bids for 131 of 176 homes on the block at the Grand Hyatt in Tampa. I thought I'd check up on REDC this week to see how many of those foreclosure homes actually closed. After studying the results, I feel duped. And you should, too. Leave aside the fact that REDC admitted later that only 75 homes actually sold on Feb. 7. When I plowed through the first part of the "sold" list and compared addresses against property appraiser records, I didn't find a single home that closed as of Thursday. Not one. REDC's spokesman maintained this week that the company's auction success rate nationally is 80 percent. Suppress your laughter if you must. I sat in on an auction in Tampa last year and was amazed how cheaply many properties sold. You hear about banks routinely ditching foreclosure homes for 60 cents on the dollar, but many of these were scarfed up for 30 cents. Turns out many never did sell. The banks either turned down the bid or the buyers had deceptively shallow pockets. For enlightenment, I turned to Michael Peters, who runs American Heritage Real Estate Auctioneers in Clearwater. Self-interested though he is, Peters is critical of these assembly-line auctions. According to Peters, there's no substitute for selling properties one at a time by enticing bidders to the actual home. But guess what: When buyers get to stroke the granite and flush the toilets, homes tend to sell better.

$8000 tax credit not actually for down-payment - (www.boston.com) Remember that promise that Shaun Donovan, HUD Secretary made at the Realtor mid-year meeting on Monday? The one about that the $8000 tax credit being made available for down payments? Well, the promise is broken. I got this notice from NAEBA headquarters this afternoon: According to contacts with both FHA and HUD, Mortgagee Letter 2009-15, which stated that first-time homebuyers would be allowed to use the tax credit for their downpayment, has been rescinded. On a phone call with FHA, Kim Kahl was told, "The mortgagee letter has been rescinded for the time being.” NAEBA President John Sullivan was told something similar when contacting HUD. Neither FHA nor HUD gave further details. I am not surprised. I think when HUD officials look at it, they see a buyer who needs that $8000 for a down payment as a buyer without enough reserve to be a homeowner. This may be a good sign for Federal lending policy, IMHO.

U.S. keeps California waiting on plea for debt backstop - (www.latimes.com) The Obama administration seems in no rush to decide on California's request for a federal guarantee on billions in short-term borrowing the state must undertake this summer. Then again, nobody in Sacramento was expecting an affirmative answer before Tuesday’s special election. Given the prospect for the stopgap budget measures on the ballot to go down in flames, there would be no point in aiding the "no" vote by telling voters that federal help was on the way. As reported last week, California Treasurer Bill Lockyer has formally asked the U.S. Treasury to provide a backstop for potentially tens of billions of dollars of short-term notes the state plans to sell beginning in July. (See Lockyer's letter to Treasury Secretary Timothy F. Geithner here.) Without such a guarantee, the state fears it will have to pay exorbitant tax-free interest rates on the debt -- say, 5% instead of 1% or 2% -- blowing an even bigger hole in the budget. Lockyer’s spokesman said today that the state was "continuing to have discussions with the administration and members of Congress" about the backstop request. A group of California cities and counties is asking for the same kind of guarantee on $335 million in short-term borrowing to occur in June, according to Paul McIntosh, executive director of the California State Assn. of Counties. The group tentatively includes Mendocino County, Redondo Beach and Chula Vista, according to the association’s letter to the White House.

TARP is a "sham" and a ripoff to taxpayers - (www.huffingtonpost.com) Did a TARP beneficiary accidentally speak the truth about the program to a reporter from theTelegraph? At first, the Daily Telegraph reported that Mark Patterson of MatlinPatterson, "a firm that invested in a Michigan bank with help from TARP," referred to the Troubled Asset Relief Program thusly: "The taxpayers ought to know that we are in effect receiving a subsidy. They put in 40pc of the money but get little of the equity upside," said Mark Patterson, chairman of MatlinPatterson Advisers. .. Mr Patterson said the US Treasury is out of its depth and seems to be trying to put off drastic action by pretending that the banking system is still viable. "It's a sham. The banks are insolvent. The US government is trying to sedate the public because they are down to the last $100bn (£66bn) of the $700bn TARP funds. They think they're doing this for the greater good of society," he said, speaking at the Qatar Global Investment Forum. That drew the attention of Joe Weisenthal of Clusterstock. But since then, the Telegraph has taken down the story! Weisenthal's on the case: We're still trying to get to the bottom of this one... this morning we linked to an article in UK paper The Telegraph, written by the aggressive reporter Ambrose-Evans Pritchard, which claimed that TARP investor Mark Patterson called the program a "sham" and a ripoff to taxpayers, even though his own firm had taken advantage of the program. Now the paper has taken the article down at the behest of Patterson's attorney, who claims the reporting was not factual. We went back and forth with the lawyer, who was a little evasive with the real story, though he sent us the following statement. Ok, so Patterson claims he didn't call the TARP a "sham". But what did he say? That's what we're trying to figure out.

US judges admit to jailing children for money - (www.reuters.com) Two judges pleaded guilty on Thursday to accepting more than $2.6 million from a private youth detention center in Pennsylvania in return for giving hundreds of youths and teenagers long sentences. Judges Mark Ciavarella and Michael Conahan of the Court of Common Pleas in Luzerne County, Pennsylvania, entered plea agreements in federal court in Scranton admitting that they took payoffs from PA Childcare and a sister company, Western PA Childcare, between 2003 and 2006. "Your statement that I have disgraced my judgeship is true," Ciavarella wrote in a letter to the court. "My actions have destroyed everything I worked to accomplish and I have only myself to blame." Conahan, who along with Ciavarella faces up to seven years in prison, did not make any comment on the case. When someone is sent to a detention center, the company running the facility receives money from the county government to defray the cost of incarceration. So as more children were sentenced to the detention center, PA Childcare and Western PA Childcare received more money from the government, prosecutors said. Teenagers who came before Ciavarella in juvenile court often were sentenced to detention centers for minor offenses that would typically have been classified as misdemeanors, according to the Juvenile Law Center, a Philadelphia nonprofit group. One 17-year-old boy was sentenced to three months' detention for being in the company of another minor caught shoplifting.




OTHER STORIES:

Foreclosures show more Tampa Bay home owners struggle with mortgage - (www.tampabay.com)
April Tampa Bay area foreclosures dip from March, soar from year ago - (www.tampabay.com)
House Price Drops Leave More Underwater - (www.finance.yahoo.com)
Rich default on luxury houses like subprime victims - (www.palmbeachpost.com)
Distressed property sales hit upscale condos - (www.latimes.com)
Bank-owned houses sell slowly on the coast - (www.mortgage.freedomblogging.com)
Sellers and buyers don't see eye to eye on pricing - (www.sfgate.com)
Down 58% in Aptos, CA 95003 - (www.patrick.net)
Fannie, Freddie in critical condition - (www.money.cnn.com)
Board to Ban Accounting Practice That Helped Lending Proliferate - (www.washingtonpost.com)

Commercial Real Estate Defaults: You Ain't Seen Nothing Yet - (www.businessinsider.com)
Aurora fights foreclosure blight by billing banks - (www.denverpost.com)
Housing crash bringing work to Lee County - (www.nbc-2.com)
The Geography of Jobs - (www.tipstrategies.com)
Bad Collateral - (www.jameshowardkunstler.typepad.com)
US banks scramble to repay bail-out cash - (www.ft.com)
Derivatives Market Declines for First Time on Record, BIS Says - (www.bloomberg.com)

Companies face higher hedging costs - (www.ft.com)
Agricultural Bank Raises $7.3 Billion in Bond Sale - (www.bloomberg.com)
German Investor Confidence Rises to Three-Year High - (www.bloomberg.com)
American Express Will Slash 4,000 Jobs, Take Charge - (www.bloomberg.com)
U.S. to Issue Tougher Fuel Standards for Automobiles - (www.nytimes.com)
Meltdown will leave vastly changed economy - (www.msnbc.msn.com)
Waking up from the American Dream - (www.mercurynews.com)
US Government Paying Houseowners to 'Walk Away' - (www.seekingalpha.com)
Guatemalan Attorney Predicts his Own Murder on YouTube - (www.dvorak.org)
Buffett’s Berkshire Scales Back Stock Purchases as Cash Erodes - (www.bloomberg.com)