KeNo's Housing and Economic Portal: Tuesday February 16 Housing and Economic stories

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pending legislation to dramatically speed up the foreclosure process in Florida - (www.tampabay.com) If bankers get their way, Floridians facing foreclosure could be kicked out of their homes in as little as three months. The Florida Bankers Association, the 400-member-strong lenders' lobby, has presented state legislators with a bill to upend decades of Florida law and establish "non-judicial" foreclosures in Florida by July 1. What's a non-judicial foreclosure? Banks would accelerate foreclosures against defaulting homeowners by bypassing the courts. Judges would no longer rule on foreclosure cases. Some states — 37 in fact — already grant that fast-track foreclosure authority, including California, Georgia, Alabama and Texas. But Florida, with its plethora of vacation and retiree homes, has always been big on homeowner rights. If you're a financially strapped Florida homeowner — 62,719 Tampa Bay properties got foreclosure notices last year — the 53-page bill contains worrisome signs:

• Non-judicial foreclosures must conclude in no less than three months and no more than a year. Most Florida foreclosures take a year to 18 months to work through the courts these days, longer if a lawyer fights a successful rear guard action. So in 90 days banks can theoretically auction the home out from under you.

• The Florida Supreme Court's newly endorsed mandatory mediation for lenders and homeowners would effectively go bye-bye. The bill provides only for informal meetings between creditors and debtors.

• Even after homeowners are evicted, banks can still pursue them for unpaid mortgage debt. But banks will waive that right if homeowners avoid trashing or stripping the house before the new owner takes over.

Miami leaders fear a financial meltdown - (www.miamiherald.com) Though the fiscal year has barely begun, Miami leaders are bracing for a budget hole that could nearly wipe out the city's entire reserve. Facing a widening financial crisis, Miami leaders are already projecting a $45 million budget shortfall this year that could force the city to deplete its reserves and sell key assets to stay afloat. Rising costs, slumping property tax collections and ever-growing pension obligations are feeding a meltdown that's now forcing administrators to look for drastic new sources of income not needed since the state took over Miami's books 14 years ago. ``We understand the gravity of the situation,'' said Miami Mayor Tomás Regalado. The findings harken to the bleak days of the mid 1990s, when it was discovered Miami was using bond money shuffled through various accounts to try to cover a $68 million hole. Today, a reserve that brimmed with $141 million in 2003 could plummet to less than $10 million by the time commissioners are finished with this year's budget in September, projections show. If that happens, Miami will break its own financial integrity laws -- prompting some officials to fear another painful state takeover. ``Unbelievable,'' said County Commissioner Carlos Gimenez, who was Miami's city manager when its reserves peaked in 2003. ``They forgot the lessons of the past.'' The financial woes come as federal investigators continue a sweeping investigation of Miami's budget practices over the past four years, including questions over whether the city disclosed problems to bond holders.

SEC orders Miami to turn over its financial books - (www.miamiherald.com) The federal government has set its sights on Miami, launching an inquiry over a series of bond deals and money transfers this decade. In a sweeping investigation that could impact Miami's public projects for years, the U.S. Securities and Exchange Commission is probing the city's major bond offerings between 2006 and 2009 and questionable financial transfers used to balance the budget. A confidential SEC letter, FedExed to the city Friday and obtained by The Miami Herald, demands that Miami turn over reams of e-mails and internal documents showing how it was moving money around to shore up its bottom line -- as well as how it represented its financial picture to bondholders. The investigation represents the most significant scrutiny of the inner workings of Miami's financial operations since a budget crisis a decade ago led the state to take control of its checkbooks. ``It would be extremely disappointing if the city had engaged in that kind of behavior again,'' said Mitch Herr, the senior trial counsel for the SEC who prosecuted the earlier case against the city. That crisis ``should have been a wake-up call and should have resulted in stronger controls.'' Now, the city has been ordered to ``preserve all computer resources utilized by Miami, or any other persons working on or involved in any of Miami's activities, included but not limited to hard drives, floppy disks, servers, and all other means of storage.'' Also sought: internal communications from six high-ranking city officials, including City Manager Pete Hernandez and Chief Financial Officer Larry Spring. The inquiry comes on the heels of a Miami Herald investigation in July that explored the root causes of an emerging financial meltdown and focused on a series of questionable money transfers from capital-project accounts to the general fund.

Pennsylvania Capital Should Weigh Bankruptcy - (www.bloomberg.com) Harrisburg, Pennsylvania, the capital of the sixth-largest U.S. state by population, should skip a $2.2 million debt service payment due Feb. 1 and consider bankruptcy, City Controller Dan Miller said. Harrisburg faces $68 million in payments this year in connection with a waste-to-energy incinerator and should weigh Chapter 9 protection from creditors or state oversight through a program known as Act 47, Miller said today. Chapter 9 bankruptcy allows municipalities to reorganize rather than liquidate. The alternatives are to sell assets such as an historic downtown market; an island in the Susquehanna River that includes the city’s minor-league baseball stadium; and the city’s parking, sewer and water systems, according to a preliminary 2010 budget and an emergency financial plan submitted yesterday. “What I’m suggesting is we stop paying the debt service until we have a plan or we decide which way to go, in bankruptcy or Act 47,” Miller, a former city council member who became controller this month, said in a telephone interview. “I think it could save our assets instead of selling them.” Mayor Linda Thompson, who unseated 18-year incumbent Mayor Stephen Reed in a Democratic party primary last year to lead the city of 47,000, didn’t return a call to her office for comment. Thompson is scheduled to present her budget proposal to the city council tonight. The council has until Feb. 15 to adopt a final budget. Asset Sales, Fees: Management Partners Inc. of Cincinnati, a consulting firm hired to study the city’s finances, recommended selling assets, raising city inspection and recreation fees, and reopening city labor contracts.

Wisconsin may pioneer leveraged approach to manage risk - (www.pionline.com) The State of Wisconsin Investment Board is considering leveraging its $67.8 billion core fund to achieve an asset allocation equivalent to 120% of total assets over the next three years. The groundbreaking move — believed to the first effort to adopt an approach that a number of pension funds are weighing — would enable the board to reduce its equity exposure and increase allocations to lower-returning and lower-risk assets that offer greater diversification benefits while seeking to meet the board's expected actuarial return. SWIB officials discovered that, like many pension funds, Wisconsin's exposure to equity risk comprised 90% of the fund's volatility. The pioneering change also would position the fund to endure a period of high inflation and low economic growth, a scenario of growing concern for many investors. A first-time allocation to hedge funds is also possible, according to recommendations in an asset allocation study presented to the Madison-based board, which oversees a total of $78 billion.

Wisconsin gives nod to leveraging core fund - (www.pionline.com) State of Wisconsin Investment Board, Madison, today approved leveraging its $67.8 billion core fund to achieve an asset allocation of 104%, according to a statement from Vicki Hearing, public information officer. Under the new asset allocation approved by the board, the allocation could range between 100% and 106%, depending on the leverage employed. The new target allocation is 28% U.S. equities, 25% international equities, 26% fixed income, 7% TIPS, and 6% each private equity, real estate and multi-asset. Strategic Investment Solutions, the board's consultant, assisted in developing the leveraged asset allocation. The leverage would enable the board to reduce its equity exposure and increase allocations to lower-returning and lower-risk assets that offer greater diversification benefits while seeking to meet the board's expected actuarial return. The board, which oversees a total of $70 billion, would implement the leverage through use of synthetic futures and swaps, according to a December investment staff report to the board.