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Realtors coping with new rules requiring honest appraisals - (www.hometownannapolis.com) *** Sorry, but I believe the lenders/investors ought to be in charge of the appraisal. If I were a personal investor providing the loan to a homebuyer, then there is no chance in hell I am going to trust a realtor to get their own buddy to do the appraisal. If you don’t like it, then I am not providing loan money for the deal *** When Long and Foster Realtor Carrie Mock was selling an Eastport home this summer, she didn't expect it to appraise for $40,000 below the set contract price. Now Mock and other local real estate agents are coming out against a new code they said is leading to incorrect appraisals and even botched deals. The Home Valuation Code of Conduct, which took effect in May, aims to prevent Realtors and brokers from inflating the value of a home, which happened during the real estate boom and helped lead to its crash. Under the new rules, brokers are banned from choosing their own local appraisers. Now, appraisals must be ordered through appraisal-management companies. The Home Valuation Code of Conduct is part of an agreement struck between New York State Attorney General Andrew Cuomo and the Freddie Mac and Fannie Mae mortgage companies that handles most conventional loans. Those loans are considered conforming loans if they are worth $417,000 or less. The deal was brokered after Cuomo filed a lawsuit against an appraiser for caving to pressure from Washington Mutual to inflate home values. But Realtors like Mock said the outside appraisers are often unfamiliar with the local market, and that's causing discrepancies. To avoid losing the deal in Eastport, Mock said she got on the phone with the management company handling the appraisal for the Eastport home she was planning to sell for $650,000. After some negotiation, the appraisal was revised from $610,000 to $650,000, the amount the home recently sold for, Mock said. "I think real estate agents need to realize this is a very, very imperative part of our jobs now," she said. Cliff Rossi, managing director of the Center for Financial Policy, which is being launched at the University of Maryland's Robert H. Smith School of Business this fall, said he has "little sympathy" for Realtors who are coming out against the new law. He said standard appraisal practices require a "line of separation" between the loan-production staff and an appraiser. Rossi said that didn't happen and led to the overinflation of home prices.
Debt deflation laboratory of the Baltics - (www.telegraph.co.uk) Property prices in Estonia's Hanseatic capital of Tallinn have fallen by 59pc from their peak in the Baltic boom, a remarkable state of affairs for an EU country nestled against Russia on the most dangerous fault line in Europe. Cost per sq.m has dropped from €1,611 (£1,455) to €669 since April 2007, according to Ober-Haus Real Estate Advisors. Swedbank says up to 30pc of its mortgages in Estonia are in negative equity. Recent loans are in euros – not the local kroon. Professor Ülo Ennuste from Tallinn University says the private net wealth of Estonia's people has fallen below zero. I know of no other country in the world where this has occurred, though Latvia may be deeper in hock. Estonia's foreign debt is 116pc of GDP, second highest in Eastern Europe. It is not a good moment for the poster-child of the flat-tax revolution, but those crowing the end of "Margaret Thatcher's Baltic Model" neglect half the story. Estonia's euro peg is anything but free-market. It makes Tallinn dance, awkwardly, to Frankfurt's distant tune. It stoked the boom by enticing people to borrow cheap at eurozone rates: it is now prolonging the bust. The economy will contract by 14.5pc this year, twice as bad as Iceland (OECD forecasts). Industrial production has fallen 28pc. The unemployed receive half their former pay for a few months, then benefits fall to £12 a week. The shock awaits this winter. Chief victims will be ethnic Russians on the lower rungs of industry. Most governments would try to cushion the blow. Estonia is instead pushing through yet another austerity package to keep the budget deficit below the EMU ceiling of 3pc of GDP. Such is the totemic appeal of euro entry in 2011. "This is an absolutely mad policy," Mr Ennuste told an Open Europe Forum. "We're in a vicious circle where thousands more lose their jobs and don't pay taxes, so there have to be more cuts. We need fiscal relief packages at once. This makes nobody happy but the Kremlin." The government could spend more. The national debt is just 5pc of GDP. It chooses not to do so. Such ultra-orthodoxy shows admirable discipline. Estonians will be a shining example to us all if they pull it off – and hold their society together. "Estonia's credit rating (A-) is going to rise against other countries next year," said economy minister Johan Parts. "The next phase of the global crisis is how states are going to manage their huge deficits." Dag Kirsebom, the author of Hard Landing: a Fairy Tale of the Rise and Fall of the Estonian economy, said the elites had lost the plot. "They are complacent, and they shouldn't be. We're in a downward spiral but all they are focused on is joining euro. "The free-market model worked great for 15 years and then they ruined it with crazy lending. Did Margaret Thatcher say you should borrow money from Swedish banks to buy German cars? I don't think so. They screwed up, and now it is too late. They need to let the currency fall to reflect the damage already done."
Detroit: America's Supermarket Desert - (www.detnews.com) Colleen Rogers isn't looking forward to crossing the street to shop for even a few groceries. The store, a locally owned market, is convenient, just steps away from the beauty shop where she works on Livernois in Detroit. But what troubles her is its higher prices, lack of variety and the low quality of fruit, vegetables, meats and other food -- staples Rogers could find every day in abundance at the Farmer Jack store near her home that is about to close. "Sure, there's other grocery stores, but try finding something to eat in there," said the 34-year-old skin care specialist. "You can't buy quality food in the city anymore." The lack of major grocery stores has long been a quality-of-life problem in Detroit and one reason some families don't want to live in the city. Now, however, the situation is getting worse as the last two Farmer Jack stores in the city prepare to close by Saturday. If no grocery stores buy the Farmer Jack locations from the Great Atlantic & Pacific Tea Co., Detroit will be left without a single national chain supermarket, much less a Wal-Mart or Meijer superstore or a Costco-style warehouse store. Analysts say no other major city in America is such a supermarket desert. And it's not likely to change anytime soon. Recent efforts by city officials, developers and community activists to woo a supermarket have been unsuccessful. Major grocery chains, which generally operate with thin profit margins, say doing business in Detroit is no-win situation. High employee turnover, cost of security and loss from theft are often cited. The city's comparably low income rates preclude selling an abundance of high-profit, upscale items. The situation has left regular shoppers at the Farmer Jack stores -- one on East Jefferson and the other on Livernois at Seven Mile -- with two choices: drive the suburbs to shop if they have transportation, or buy groceries at smaller stores near their homes. "Why should we have to go elsewhere to find a trustworthy store?" asked Joe Lanier, a longtime shopper of the Livernois Farmer Jack who owns a nearby business. "It's ridiculous you can't buy all the groceries you need in Detroit." High cost of doing business: Within its 139 square miles, Detroit has 155 grocery stores, defined as various-size food markets with meat and produce. The city also has 1,000 convenience stores -- including gas stations and party stores -- that sell some type of food. A 2003 University of Michigan study of Detroit supermarkets showed there were only five grocery stores in Detroit with over 20,000 square feet. The report concluded that the city could support 41 supermarkets with at least 40,000 square feet of space based on its population and spending habits. Over the years, national chains have located in Detroit, only to pull up stakes and flee. There are a multitude of reasons, according to retail analysts, with the major deterrent being the high cost of doing business in the city. "Sometimes even the people that live in the neighborhood don't feel safe shopping in the store," said David J. Livingston, a supermarket expert from Wisconsin. "They'll drive right past that Detroit store to go to a suburban store where they feel more comfortable."
HSBC: Sun is Setting on Dollar Supremacy - (www.telegraph.co.uk) The sun is setting on the US dollar as the ultra-loose monetary policy of the US Federal Reserve forces China and the vibrant economies of the emerging world to forge a new global currency order, according to a new report by HSBC. "The dollar looks awfully like sterling after the First World War," said David Bloom, the bank's currency chief. "The whole picture of risk-reward for emerging market currencies has changed. It is not so much that they have risen to our standards, it is that we have fallen to theirs. It used to be that sovereign risk was mainly an emerging market issue but the events of the last year have shown that this is no longer the case. Look at the UK – debt is racing up to 100pc of GDP," he said. Crucially, China and rising Asia have reached the point where they can no longer keep holding down their currencies to boost exports because this is causing mayhem to their own economies, stoking asset bubbles. Asia's "mercantilist mindset" of recent decades is about to be broken by the spectre of an inflation spiral. The policy headache was already becoming clear in the final phase of the global credit boom but the financial crisis temporarily masked the effect. The pressures will return with a vengeance as these countries roar back to life, leaving the US and other laggards of the old world far behind. A monetary policy of near zero rates – further juiced by quantitative easing – is completely incompatible with circumstances in most of Asia, the Middle East, Latin America, and Africa. Divorce is inevitable. The US is expected to hold rates near zero through 2010 to tackle its own crisis. What is occurring is an epochal loss in the relative wealth and economic power of the old G10 bloc of rich countries compared to rising regions of the world. The euro, yen, sterling, Swiss franc and other mature currencies will be relegated along with the dollar in this great process of rebalancing, but the Greenback will bear the brunt.
Joe "You Lie" Wilson Voted To Provide Taxpayer Money For Illegal Immigrants' Healthcare in 2003 - (www.huffingtonpost.com) On Wednesday night, Rep. Joe Wilson [R, SC-2], shouted "You lie!" at President Obama when he said that the healthcare bill would not cover illegal immigrants. "The supporters of the government takeover of healthcare and liberals who want to give healthcare to illegals are using my opposition as an excuse to distract from the critical questions being raised about this poorly conceived plan," Wilson said the next day in a campaign fundraising video. However, in 2003, Wilson voted to provide federal funds for illegal immigrants' healthcare. The vote came on the Medicare Prescription Drug, Improvement and Modernization Act of 2003, which contained Sec. 1011 authorizing $250 million annually between 2003 and 2008 for government reimbursements to hospitals who provide treatment for uninsured illegal immigrants. The program has been extended through 2009 and there is currently a bipartisan bill in Congress to make it permanent.
Moodys Property Index Resumes Steep Fall in July - (www.bloomberg.com) Commercial real estate prices in the U.S. resumed a “steep decline” in July after showing signs of leveling off in June, Moody’s Investors Service said, as credit restrictions curtail lending and push landlords toward default. The Moody’s/REAL Commercial Property Price Indices fell 5.1 percent in July from the month before, Moody’s said today in a statement. The index is down almost 39 percent from its October 2007 peak. The decline in June was 1 percent. Commercial property sales this year may fall to an 18-year low. This latest set of numbers suggests no letup in that trend, said Neal Elkin, president of Real Estate Analytics LLC, a New York firm that partners with Moody’s in producing the report. “We are still vulnerable to moves on the downside,” Elkin said in a telephone interview. “As time passes, the distress and the stress among those who need to sell is growing.” Elkin cited figures from Real Capital Analytics Inc., whose data are used in compiling the report, showing the portion of sales classified as “troubled” -- those properties in or close to default -- almost doubled to 23 percent in July from March. That’s “something we’ve never seen,” Elkin said. Sales this year through July totaled about one-third of the year-earlier number, Moody’s Managing Director Nick Levidy said in the statement. The market averaged about 375 sales a month this year compared with almost 1,100 a month last year, he said. Office sale prices fell 23 percent from a year ago in New York, 27 percent in San Francisco and 22 percent in Washington, according to the report. South Affected: Prices of apartment buildings in the U.S. South have seen some of the steepest value declines, according to the report. Apartment prices in the region dropped 44 percent in the 12 months through June, almost twice the nationwide decline of 24 percent, and are now about half what they were two years ago. Florida apartment values tumbled 40 percent in a year, the report said. “That’s eye-popping,” Elkin said. The decline is being caused in part by “a ripple effect” from the overbuilding of condominiums in those markets, many of which are now competing as rentals, he said.
OTHER STORIES:
Sun Micro Losing $100 Million a Month, Ellison Says - (www.cnbc.com) Oracle Chief Executive Larry Ellison said Sun Microsystems is losing about $100 million a month as European regulators delay approving his company's $7 billion purchase of the struggling hardware maker.
Eric Janszen: Mission Accomplished – Part I: Wrecking of the world’s greatest economy - (www.itulip.com)
An Overview of Hyman Minsky - (www.boston.com)
Record Unemployment in California & Nevada -- (www.bloomberg.com)
IMF to Sell over 403 Tons of Gold - (www.rawstory.com)
Amazon as Walmart of the Web - (www.nytimes.com)
Portugal's Drug Policy: Treating, Not Punishing - (www.economist.com)
Wall Street risks red October as rebound looks frothy - (www.reuters.com)
Housing Risking Relapse - (www.bloomberg.com)
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