KeNo's Housing and Economic Portal: Friday September 25 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Will Obama crack open ACORN Housing in his new found pursuit of the purveyors of mortgage fraud? - (www.examiner.com) On May 20th Obama signed the “Helping Families Save Their Homes Act and the Fraud Enforcement and Recovery Act” into law. This bill is designed to further help homeowners adjust their mortgages….Many of the subprime mortgages were given without checking consumers’ credit scores, allowing no down payments and allowing non-traditional income to be counted as income, in other words, people who were being paid under-the-table (not paying taxes on this) were allowed to count this income when applying for a mortgage. Furthermore there were many ‘exotic’ mortgages as they are referred to in the industry, such as paying interest only for a certain number of years which builds no equity for the consumer and does not pay down the principle of the loan. On top of this it does not provide the consumer with the reality of what the payments will be when the principle payments actually kick in. This is just one type of loan that caused a lot of people to have their homes foreclosed upon; they simply could not afford the principle payments once they finally came to be. Through the direct actions of ACORN Housing, banks were giving people who were not ‘normally’ creditworthy loans that had low interest rates at first but were adjustable. When the rates were adjusted up, the consumers simply could not afford the higher payments. The forcing of banks by groups like ACORN using the Community Reinvestment Act to give loans to people otherwise not able to receive them is a huge cause of the housing bubble and why so many have been forced into foreclosure. ACORN receives millions of dollars of taxpayer money to help people every year yet they are hurting these very people by aiding them in getting the subprime or exotic loans that have caused nothing but problems for the consumers, the banking industry and the economy overall and responsible taxpayers may now be included in this list. The non-partisan Consumers Rights League did an extensive in-depth investigation into ACORN Housing and their mortgage practices in 2008 which they submitted to Congress recommending at the very least that Congress investigate ACORN Housing’s mortgage practices. I implore you to read their full report here: http://www.consumersrightsleague.org/UploadedFiles/ACORN_AHC_Report.pdf To date there has been no investigation into ACORN Housing. Maybe now that Obama is seeking to prosecute all organizations that were involved with these practices, he will read the Consumers Rights League investigation and actually have the Department of Justice perform a further investigation? Maybe someone in Congress will actually think twice before giving more money to ACORN for housing activities? Actually Michelle Bachmann(R-MN) amended the Housing Bill to disallow any groups that have been indicted for voter registration fraud from receiving any money but Barney Frank(D-MA) changed that. I think ACORN Housing being involved in the mortgage crisis would have proven a bit more substantial as a reason to disallow more funds to be steered their way. In 2008 ACORN Housing began their own mortgage brokerage firm in Florida, Acorn Loans. One of their selling points to getting a mortgage is still listed on the ACORN Housing's website: “Flexible credit guidelines and income requirements including the use of non-traditional income” Correct me if I am wrong but isn’t getting paid under-the-table against the law? How does a person actually verify this income if they aren’t legally getting paid? Of course there is no other information on the website, if you are interested you actually have to call the number. ACORN Housing is proud to acknowledge that they are working with Bank of America (one of the banks that provided ‘exotic’ loans to ACORN’s consumers which aided in the foreclosure rates) and Fannie Mae. I don’t think I need to explain anything further about the corruption at Fannie Mae. Maybe that is why Barney Frank wanted to be sure that ACORN Housing still received taxpayer funds from the Housing Bill, otherwise he’d have to admit that a company he has protected for years is working with an organization of the type that his boss now wants to prosecute.

ACORN workers caught on tape allegedly advising on prostitution - (www.cnn.com) Two employees at the Baltimore, Maryland, branch of the liberal community organizing group ACORN were caught on tape allegedly offering advice to a pair posing as a pimp and prostitute on setting up a prostitution ring and evading the IRS. The video footage -- which has been edited and goes to black in some areas -- was recorded and and posted online Thursday by James O'Keefe, a conservative activist. He was joined on the video by another conservative, Hannah Giles, who posed as the prostitute in the filmmakers' undercover sting. The video shows the pair approaching two women working at the ACORN Baltimore office and asking them for advice on how to set up a prostitution ring involving more than a dozen underage girls from El Salvador. One of the ACORN workers suggests that Giles refer to herself as a "performing artist" on tax forms and declare some of the girls as dependents to receive child tax credits. "Stop saying prostitution," the woman, identified by the filmmaker as an ACORN tax expert, tells Giles. The other woman tells them, "You want to keep them clean ... make sure they go to school." Both women appear enthusiastic to help. Calls to ACORN's Baltimore offices were not immediately returned Thursday. A local spokeswoman told The Associated Press that both employees seen in the video were fired. "The portrayal is false and defamatory and an attempt at 'gotcha journalism,' " said Scott Levenson, a spokesman at ACORN's national offices. "This film crew tried to pull this sham at other offices and failed. ACORN wants to see the full video before commenting further." The conservative filmmakers unsuccessfully attempted similar ruses at the group's offices in Philadelphia, Pennsylvania, Los Angeles, California, and New York, Levenson said. Law enforcement officials in the Baltimore area wouldn't confirm whether they are investigating the alleged incident at the local ACORN office. However, authorities said that under Maryland law, such undercover video may not be admissible in court as evidence. CNN attempted to reach O'Keefe and Giles; O'Keefe was not available for comment and Giles canceled an interview scheduled for Thursday. ACORN -- an acronym for the Association of Community Organizations for Reform Now -- made headlines last year when Republican groups seized on allegations of voter registration fraud by the group in Florida and several other states, claiming its workers were trying to push the election in Barack Obama's favor. On Wednesday, arrest warrants were issued for 11 Florida voter registration workers suspected of submitting false information on hundreds of voter registration cards, according to court documents. The Florida investigation was triggered by ACORN officials who noticed irregularities in forms they were receiving. Founded in 1970, ACORN calls itself "the nation's largest grassroots community organization of low- and moderate-income people." The group says it has more than 400,000 member families organized into more than 1,200 neighborhood chapters in 110 cities. Besides voter registration, the group focuses on issues such as predatory lending, minimum wage and funding for public schools, according to its Web site. It also provides free tax-return preparation for low-income people and screening for state and federal benefit programs.

One Year After the Financial Crisis, The Consumer Economy is Dead - (www.mcclatchydc.com) One year after the near collapse of the global financial system, this much is clear: The financial world as we knew it is over, and something new is rising from its ashes. Historians will look to September 2008 as a watershed for the U.S. economy. On Sept. 7, the government seized mortgage titans Fannie Mae and Freddie Mac. Eight days later, investment bank Lehman Brothers filed for bankruptcy, sparking a global financial panic that threatened to topple blue-chip financial institutions around the world. In the several months that followed, governments from Washington to Beijing responded with unprecedented intervention into financial markets and across their economies, seeking to stop the wreckage and stem the damage. One year later, the easy-money system that financed the boom era from the 1980s until a year ago is smashed. Once-ravenous U.S. consumers are saving money and paying down debt. Banks are building reserves and hoarding cash. And governments are fashioning a new global financial order. Congress and the Obama administration have lost faith in self-regulated markets. Together, they're writing the most sweeping new regulations over finance since the Great Depression. And in this ever-more-connected global economy, Washington is working with its partners through the G-20 group of nations to develop worldwide rules to govern finance. "Our objective is to design an economic framework where we're going to have a more balanced pattern of growth globally, less reliant on a buildup of unsustainable borrowing . . . and not just here, but around the world," said Treasury Secretary Timothy Geithner. The first faint signs that the U.S. economy may be clawing its way back from the worst recession since the Great Depression are only now starting to appear, a year after the panic began. Similar indications are sprouting in Europe, China and Japan. Still, economists concur that a quarter-century of economic growth fueled by cheap credit is over. Many analysts also think that an extended period of slow job growth and suppressed wage growth will keep consumers — and the businesses that sell to them — in the dumps for years. "Those things are likely to be subpar for a long period of time," said Martin Regalia, the chief economist for the U.S. Chamber of Commerce. "I think it means that we probably see potential rates of growth that are in the 2-2.5 (percent) range, or maybe . . . 1.8-1.9 (percent)." A growth rate of 3 percent to 3.5 percent is considered average. The unemployment rate rose to 9.7 percent in August and is expected to peak above 10 percent in the months ahead. It's already there in at least 15 states. Regalia thinks that it could be five years before the U.S. economy generates enough jobs to overcome those lost and to employ the new workers entering the labor force. All this is likely to keep consumers on the sidelines.

Overspending on Debit Cards is a Boon for Banks - (www.nytimes.com) When Peter Means returned to graduate school after a career as a civil servant, he turned to a debit card to help him spend his money more carefully. So he was stunned when his bank charged him seven $34 fees to cover seven purchases when there was not enough cash in his account, notifying him only afterward. He paid $4.14 for a coffee at Starbucks — and a $34 fee. He got the $6.50 student discount at the movie theater — but no discount on the $34 fee. He paid $6.76 at Lowe’s for screws — and yet another $34 fee. All told, he owed $238 in extra charges for just a day’s worth of activity. Mr. Means, who is 59 and lives in Colorado, figured employees at his bank, Wells Fargo, would show some mercy since each purchase was less than $12. In addition, a deposit from a few days earlier would have covered everything had it not taken days to clear. But they would not budge. Banks and credit unions have long pitched debit cards as a convenient and prudent way to buy. But a growing number are now allowing consumers to exceed their balances — for a price. Banks market it as overdraft protection, and the fees it generates have become an important source of income for the banking industry at a time of big losses in other operations. This year alone, banks are expected to bring in $27 billion by covering overdrafts on checking accounts, typically on debit card purchases or checks that exceed a customer’s balance. In fact, banks now make more covering overdrafts than they do on penalty fees from credit cards. But because consumers use debit cards far more often than credit cards, a cascade of fees can be set off quickly, often for people who are least able to afford it. Some banks further increase their revenue by manipulating the order of a customer’s transactions in a way that causes more of them to incur overdraft fees.

US trade gap shows biggest jump 10 years - (www.ft.com) The US trade gap swelled by the most in a more than a decade in July due to a surge of imports driven by a jump in demand for foreign cars, oil and consumer goods, official figures showed on Thursday. The trade deficit grew by 16.3 per cent from June to $32bn, with exports trailing imports. The result surprised economists who were expecting the gap to remain flat near $27bn. The US trade deficit with the rest of the world has plunged by 51 per cent from a year ago, as both imports and exports fell amid the global recession. Analysts have called the smaller deficit one of the few bright spots amid the downturn, and it has eased some of the economy’s overall contraction. “Both exports and imports were meaningfully stronger than expected, consistent with the reactivation of activity notably in the manufacturing and tradables sectors after the lights briefly went out following the Lehman’s debacle,” said Alan Ruskin, a strategist at RBS Greenwich Capital. Imports jumped by 4.7 per cent to $159.6bn, signalling a welcome rise in domestic demand for car parts and computers. Much of the demand for car parts was spurred by the popular “cash for clunkers” car rebate programme, as auto makers ramped up production. Exports rose by 2.2 per cent to $127.6bn on greater global appetite for cars, engines and industrial goods. Joshua Shapiro, chief US economist at MFR, argues that exports will start to receive a boost from better economic conditions abroad and that the benefits from weaker imports will fade in the coming months. “A situation where trade volumes are growing but the US deficit is stabilising is a much better environment than what was suffered through recently, when the US deficit narrowed but global trade volumes withered,” Mr Shapiro said. The US continued to import goods from may of its preferred partners. Its bilateral trade deficit with China, Washington’s biggest and most politically sensitive shortfall, grew in July to $20.4bn. The US’s grade gaps with Japan and the European Union also grew, while the deficit with Mexico narrowed.

OTHER STORIES:

Now its the Ladybugs that are disappearing - (www.redorbit.com)
Federal Reserve: The Recession is Over! - (www.google.com/hostednews/ap)
As Cheaper Chinese Tires Roll In, Obama Faces an Early Trade Test - (www.washingtonpost.com)
Google Plans New Mirror for Cheaper Solar Power - (www.reuters.com)
Treasury Sees Millions More Foreclosures Ahead - (www.abcnews.go.com)
US Braces for a Long Flu Season - (online.wsj.com)
Cellphone Radiation Levels Vary Widely - (www.usatoday.com)