KeNo's Housing and Economic Portal: Tuesday July 7 Housing and Economic stories

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TOP STORIES:

15,000 ignored foreclosures in Florida discovered - (www.dailybusinessreview.com) Key question is whether Miami-Dade County ignored these intentionally? Miami-Dade Circuit Court judge discovered more than 15,000 foreclosure cases filed this year haven’t been served. It’s the latest shoe to drop in a foreclosure crisis garnering nationwide attention, and an unwelcome discovery in the face of state budget cuts that produced layoffs for courts and clerks. The backlog is critical because cases where homeowners haven’t been served within four months are subject to dismissal. Civil Division Administrative Judge Jennifer D. Bailey made the discovery last month as she was taking stock of the circuit’s foreclosure load. She noticed 15,219 cases with no letters of correspondence, no answers and no motions to dismiss. “In other words, no service,” she said. The circuit is scrambling to find the root of the problem, which could jeopardize most of this year’s 17,000 foreclosure filings. Most of the cases still fall within the four-month window, but no program is in place to speed things up. If a foreclosure proceeds to a default judgment with no service on the defendants, it could lead to a title dispute down the road. Bailey said there is no sign that has happened so far but recognizes the potential for problems. The circuit adopted a foreclosure mediation program for owner-occupied properties through the nonprofit Collins Center for Public Policy in Tallahassee on May 1. As the fledgling program moved forward, lenders argued the center should start contacting borrowers after they’ve been served, said Collins Center president Rod Petrey. But Florida circuits don’t keep statistics on foreclosure service, which is why Bailey requested the statistics last month. “There’s no feedback loop that circles back to the court, and we were not able to wait,” Petrey said. The center contacts defendants in foreclosure after lawsuits are filed; it has received 1,689 Miami-Dade cases since May 1. Petrey was at a loss to say why foreclosure service is so difficult. Some, like Charles Taylor, president of Metro Process Servers in Miami, think the problem is on the clerks’ end. “I don’t think the bottleneck is in service. I believe the bottleneck is that they’re not equipped to handle this stuff,” he said. The crushing volume of foreclosures combined with clerk layoffs conspired to swamp the system. Home abandonment plays a factor in failed service, but the rate of home abandonment in foreclosure cases hasn’t been calculated. “No one really keeps those statistics,” said Alex Sanchez, president of the Florida Bankers Association in Tallahassee. “You would have to call every FDIC-insured institution and every non-bank” to get it.

US banking group attacks new agency plan - (www.ft.com) Of course they attack it, would you expect anything less from the banks that have raped American taxpayers? Proposals for a consumer financial products agency were on Wednesday attacked by the biggest US banking association as expensive, vague, contradictory and bureaucratic. The agency is emerging as one of the main battlegrounds on the Obama administration’s regulatory reform white paper but industry concerns are so far getting short shrift from many lawmakers. Edward Yingling, head of the American Bankers Association, told a hearing of the House financial services committee the creation of the CFPA, which would crack down on mis-selling of products such as credit cards and mortgages, was a mistake. “Rather than rewarding the good banks that had nothing to do with the current problems [it] will add an extensive layer of new regulation that will take resources that could be devoted to serving consumers and make it more difficult for small community banks to compete,” he said in testimony to the committee. Mr Yingling added the “very serious flaws” in the CFPA included severing the connection between consumer protection and soundness of institutions and saddling the industry with the fees to fund “yet another agency”. Bankers are also concerned about the lack of clarity on how a conflict between the consumer agency and banking regulators would be resolved. But Elizabeth Warren, a Harvard University law professor and a potential head of the new agency, told the hearing: “We have tried for 70 years to combine consumer protection in financial services with other financial services regulatory functions. This structure has not worked. “Consumers cannot compare financial products because the products have become too complicated,” she said. Ms Warren advocates simpler contracts on credit cards and mortgages

Pensioners abduct financial adviser after he lost their savings – (www.dailymail.co.uk) Pensioners battered a financial adviser with Zimmer frames before kidnapping and torturing him for losing £2million of their savings. James Amburn, 56, was ambushed outside his home in Speyer, western Germany, bound with masking tape and bundled into a car boot. ‘It took them quite a while because they ran out of breath,’ said Mr Amburn, who was driven to the Bavarian lakeside home of one of the gang. Another couple, retired doctors, joined the kidnappers in the cellar where Mr Amburn was chained and tortured for four days last week. ‘The fear of death was indescribable,’ he said. Mr Amburn was rescued when he sent a fax to release funds from a Swiss bank and scribbled a message on it for the receiver to call police.' Mr Arnburn, 56, described how two of his kidnappers, identified only as Roland K, 74, and Willy D, 60, hit him with a Zimmer frame outside his home in Speyer, west Germany before binding him with duct tape. He was bundled into the boot of a silver Audi saloon and driven 300 miles to the home of Roland K on the shores of Lake Chiemsee in Bavaria. As the financial advisor, who runs investment firm Digitalglobalnet, was bundled into the cellar another couple, retired doctors Gerhard and Iris F, aged 63 and 66, arrived to assist his kidnappers. Mr Amburn said: 'I had known these people for 25 years. I had no reason to be afraid. But as I went into my home I was jumped from the rear and struck. 'They bound me with masking tape until I looked like a mummy. It took them quite a while because they ran out of breath. When they loaded me into the car I thought I was a dead man. 'I was bleeding from my eyes, nose and my mouth. But the nightmare had only just started.' During his confinement in an unheated cellar, Mr Amburn claims he was burned with cigarettes, beaten, had two of his ribs broken when he was hit with a chair leg and chained up 'like an animal.' He says he was fed only two bowls of watery soup during his four days in the dungeon. 'I was led into the cellar,' recalled Mr Amburn, 'And I saw a folding bed and a WC reserved for me. They immediately went on about their money. 'I told them what I had told them before, that due to market conditions, unfortunately it was gone. 'I was struck. Again and again they threatened to kill me. The fear of death was indescribable. I never thought I would make it out alive. 'I tried to buy time, to ease the situation, but I didn’t know if night was day or day night. 'I told them that if I sold certain securities in Switzerland they could get their money and for this I had to send a fax to a bank in that country so funds could be transferred.'

JPMorgan Charges 5% on Credit-Card Balance Transfers - (globaleconomicanalysis.blogspot.com) The days of routinely using one credit card to pay off a balance on another have come to a close. JPMorgan is leading the way with the highest transfer fees of any of the major card companies. Please consider JPMorgan Charges 5% on Credit-Card Balance Transfers. JPMorgan Chase & Co. is raising some balance-transfer fees on credit cards to 5 percent, the highest among the nation’s largest banks, citing increasing regulations and costs after the U.S. put new curbs on the industry. JPMorgan, the biggest credit-card issuer, disclosed the increase in a notice mailed to customers this month that referred to “new federal regulations.” The New York-based lender starts charging more in August, just as the law designed to curb interest-rate increases, fees and marketing practices begins to take effect. The credit-card law President Barack Obama signed May 22 prompted warnings from industry executives that they’d be forced to raise fees, curtail credit and restrict consumer rewards. Hearings are scheduled today in Congress on Obama’s proposed Consumer Financial Protection Agency, which would have authority over increases like the one JPMorgan is planning, House Financial Services Committee Chairman Barney Frank said. “What Chase is doing is strengthening the argument for the new entity,” Frank, a Massachusetts Democrat, said in an interview today before the hearings. Banks should be able to impose fees to cover their costs, not to create a “new profit center,” he said. The rate increase at JPMorgan also affects cash advances, and fixed rates will become variable, the notice said. The bank didn’t specify the current average fee for balance transfers, and JPMorgan spokesman Paul Hartwick declined to say how many customers are affected. The notice says JPMorgan may choose to offer a lower transfer fee; Hartwick declined to elaborate on how customers might qualify. JPMorgan’s 5 percent fee tops the 4 percent that Bank of America Corp. implemented June 1, citing increasing costs. Bank of America ranks third by cards outstanding, according to industry newsletter the Nilson Report. “This is the highest balance-transfer fee in the industry,” said Bill Hardekopf, chief executive officer of LowCards.com, a Birmingham, Alabama research firm. “It is setting a new precedent that I’m afraid other issuers may follow.” Discover Financial Services Chief Executive Officer David Nelms said last week his Riverwoods, Illinois-based credit-card company will pull back “dramatically” on balance transfers. Nelms told analysts during a conference call the federal law would have “unintended consequences” for customers that might include fewer offers for balance transfers at discounted rates, and that the initial low “teaser” rate might last as little as six months. Some card issuers have been offering zero percent on balance transfers that last a year or more. A 5% credit card transfer fee seems rather steep, but it may depend on what rate one is transferring from and what rate one is getting. The concern might be transferring a large balance only to see the new card issuer raise rates. However, universal default has been eliminated, so banks will not be able to raise rates at will. I do know some who were taking advantage of low rates, especially cash at 0% offers, by maxing out the account at 0% then depositing the money in a bank earning interest, then paying back the loan before interest accrues on the card. To me it was not worth the hassle, but for some it was. Regardless, that's another practice that's ending. The moral of the story starting August when the new law goes into effect is, if you have a low rate, don't miss payments and you can keep it. Better yet, don't carry a balance month to month and you will not even care what the rate is.

More Bernanke, Mr. Issa, And The Media - (www.market-ticker.org) I'm done being nice about this. First, watch the following clip from CNBC (see link at left for access to video). It is quite clear, and explicit. This set off a veritable firestorm on CNBC, with various commentators coming in to defend Bernanke. None, however, was more odious than Jim Cramer, who said we need "a little less democracy." What? LESS DEMOCRACY Jim? Oh, I get it. You think that The Federal Reserve should be able to break the law any time it wants? That it should be able to, for example, buy Freddie and Fannie paper even though the clear black-letter law says it cannot? The Fed should be able to set up "Maiden Lane" LLCs like candy for the explicit purpose of hiding deteriorating assets which it also cannot legally purchase? And speaking of Bank of America, what happened about eighteen months ago? You remember that little company called Countrywide Financial, right? You remember that acquisition, yes? Was "special pressure" brought to bear on that one? That was "systemic risk" too, right? I sure as hell couldn't figure out why Lewis would close that transaction a few months after it was announced, given that by then it was apparent that their credit book looked like something that had come out of the back end of a dog. Was The Fed twisting arms on that transaction as well? I believe the record is quite clear, even without the Bank of America/Merrill incident when it comes to The Fed. I believe that the record documents that The Fed has committed to buy $1 trillion dollars of agency securities with printed money, monetizing them, in direct violation of The Federal Reserve Act as those securities do not have the full faith and credit of The United States. The United States has not taken formal responsibility for Fannie and Freddie debt precisely because those MBS are stuffed full of toxic assets, specifically, "assets" like the Citibank mortgages that we discovered todayare missing documentation (presumably that documentation is "missing" for a reason.) Should the US take Fannie and Freddie formally onto their book the government would immediate book about $5 trillion dollars in additional debt (on top of the roughly $6 trillion of real, external debt we already have), almost certainly triggering an instant credit downgrade. In addition it would make the US Federal Government directlyresponsible for all of the fraudulently-underwritten paper that institutions shoved at Fannie and Freddie through various deceptions and failures-to-disclose, said paper being exactly why Fannie and Freddie got in trouble in the first place!

So instead of the US Government taking care of these problems the right way, including investigating the fraudulent underwriting and jailing the responsible parties, The Fed simply "cheated", The Federal Reserve Act be damned. Empowered with his "God Complex" Bernanke seems to think that he can not only buy things that The Fed Charter explicitly does not allow but that he can also twist around SEC disclosure rules and even lie under oath before Congress! Remember, Bernanke was asked directly whether he pressured Bank of America to close that transaction in a Congressional hearing and he denied it - under oath. Perjury is a serious and indeed can be a criminal offense, and I would hope that Congress will pursue this matter to the fullest extent of the law.

Shriver: Most Californians don't want budget cuts - (finance.yahoo.com) Californians seem to want it all, says first lady Maria Shriver. They oppose billions of dollars in cuts to address the state's massive budget deficit but are not willing to pay more for the services they enjoy. The first lady, visiting Sacramento on Tuesday for the opening of an Abraham Lincoln exhibit at the California Museum, said people talk to her all the time about California's $24.3 billion budget shortfall and Gov. Arnold Schwarzenegger's proposed solutions. Schwarzenegger's proposed cuts include eliminating health care for nearly 1 million poor children, increasing class sizes in public schools, slashing in-home services for the frail and closing more than 200 state parks. "Don't close the parks, don't cut from education, don't cut from health care, don't cut from anything," said Shriver, amplifying what people tell her. "I say, 'We have a $25 billion deficit: What would you do?'" She said nearly everyone replies that they don't want to pay higher taxes and don't have any of their own ideas about what parts of government to cut. Shriver said making deep cuts to education and other core programs is not what her husband envisioned when he ran for office in 2003, but he is embracing the challenge. "It's not like Arnold came into this situation looking for a $25 billion deficit to cut. Nobody does," Shriver said. "People come in because they want to do good, and they want to grow a state and transform a state and help it grow." Shriver said no one can judge until they have their own solution for solving California's budget mess. "I'm not in his shoes and I don't walk this 24-7 and neither does pretty much anybody else," Shriver said. "I think people are all pretty much talking about the same thing -- trying to, you know, do the best they can in a very tough situation."

OTHER STORIES:

Fed In 'Cover Up' of BofA/Merrill Lynch Deal: Lawmaker - (www.cnbc.com)

Buffett: Economy Is In Shambles, No Sign of Recovery Yet - (www.cnbc.com)

US Urges China to Scrap Internet Filter Plan - (www.cnbc.com)

Nike Posts Surprise Profit Increase, Tops Expectations - (www.cnbc.com)

Cramer: Charges Against Bernanke Bad for Market - (www.cnbc.com)

Gold Rises on Speculation Renewed Inflation Will Spur Demand - (www.bloomberg.com)

U.S. Markets Wrap: Treasuries Fall on Fed Action, Dollar Rises - (www.bloomberg.com)

Most U.S. Stocks Rise on Durable Goods, Pare Gains on Fed - (www.bloomberg.com)

SEC Would Tighten Reins on Money Markets - (www.nytimes.com)

NYSE Loses Trades Fastest in a Year and Nasdaq Isn’t the Winner - (www.bloomberg.com)

ECB Lends Record 442 Billion Euros for 12 Months - (www.bloomberg.com)