KeNo's Housing and Economic Portal: Sunday May 9 Housing and Economic stories

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Ohio "owner" rams house with his car - (www.springfieldnewssun.com) A local man reportedly facing foreclosure was arrested on multiple charges Tuesday, April 13, after he allegedly tried to knock his house down by ramming it with his car, telling authorities that he wished to destroy the house rather than turn it over to the bank, said Clark County Sheriff Gene Kelly. Steven Doak, 30, of 928 Firwood Drive, New Carlisle, was arrested on charges of inducing panic, disorderly conduct, reckless operation and two counts of driving under suspension, according to a sheriff’s report. Doak drove his SUV into a portion of the fence around the house, then rammed the rear of the home, causing “extensive structural damage,” according to the report. Several children were playing nearby, creating a potentially tragic situation, Kelly said. “He did cause panic in the community, people are very upset,” said Kelly. Doak reportedly told deputies he’d recently been served with foreclosure papers and wanted to destroy the home rather than let the bank have it, said Kelly. Doak then threatened to use a chainsaw on the home as well, according to the report.

Rural House Buyers Program Is Nearly Broke - (www.ktvu.com) This story begs one question… One the hell is the USDA doing providing rural loans for another subsidized government housing program? Another program to provide no down-payment loans, which as studies have continued to show, allows people to walk-away from homes with none of their own equity in the game.

A federal loan program that has helped hundreds of thousands of Americans buy homes in rural areas is about to run out of money, potentially crippling the real estate market in many small communities. Since last fall, the loans from the Department of Agriculture have fueled much of the real estate business in some parts of the country. Real estate agents are pleading with Congress to find a way to keep the money flowing until more funding becomes available later in the year. The program has doubled in size thanks to stimulus money, but now it appears to be a victim of its own success, largely because of the generous terms offered to borrowers. "It definitely helped me out," said Lisa Kartak, who closed late last month on a new three-bedroom house in Annandale, a small town 50 miles west of Minneapolis. "If I didn't get approved through them, I would have had to bring thousands of dollars to the table." The USDA's Rural Development program provides 30-year fixed-rate mortgages at market rates. Buyers do not have to put any money down, unlike loans from the better known Federal Housing Administration, which requires a down payment of 3.5 percent. And unlike FHA loans, there are no monthly mortgage insurance premiums in the USDA program.

Mortgage deduction: America's costliest tax break - (money.cnn.com) The mortgage-interest deduction is America's favorite tax break -- and it's also the costliest. Between 2009 and 2013, the government will lose out on nearly $600 billion because of it, according to the Joint Committee on Taxation. While there's no way to stabilize U.S. debt without making tough choices on the tax and spending sides of the ledger, some sacred cows are more sacred than others. And the mortgage-interest tax break is still deemed untouchable. Case in point: a new bipartisan tax reform proposal that has been gaining currency in policy circles. Co-sponsored by Sens. Ron Wyden, D-Ore. and Judd Gregg, R-NH, the proposal would simplify the income tax system, streamline the numbers of credits and deductions, and lower the corporate tax rate. But it doesn't touch the mortgage deduction.

Foreclosure rates surge, biggest jump in 5 years - (news.yahoo.com) A record number of U.S. homes were lost to foreclosure in the first three months of this year, a sign banks are starting to wade through the backlog of troubled home loans at a faster pace, according to a new report. RealtyTrac Inc. said Thursday that the number of U.S. homes taken over by banks jumped 35 percent in the first quarter from a year ago. In addition, households facing foreclosure grew 16 percent in the same period and 7 percent from the last three months of 2009. More homes were taken over by banks and scheduled for a foreclosure sale than in any quarter going back to at least January 2005, when RealtyTrac began reporting the data, the firm said. "We're right now on pace to see more than 1 million bank repossessions this year," said Rick Sharga, a RealtyTrac senior vice president. Foreclosures began to ease last year as banks came under pressure from the Obama administration to modify home loans for troubled borrowers. In addition, some states enacted foreclosure moratoriums in hopes of giving homeowners behind in payments time to catch up. And in many cases, banks have had trouble coping with how to handle the glut of problem loans.

Hard times in Paradise, AZ - (realestate.msn.com) In 2008, it looked as if Paradise Valley, the wealthiest, most exclusive community in Arizona, had neatly side-stepped the foreclosure crisis. Only 38 foreclosures were recorded in this 16-square-mile town that year. Indeed, the median home price for resale detached homes reached an all-time high of $2 million in mid-2008, according to MDA DataQuick, even as values plummeted elsewhere. "People were buying up million-dollar homes, tearing them down and rebuilding them," says Jay Butler, director of the Arizona Real Estate Center at Arizona State University's W.P. Carey School of Business. The fall: Last year, the bottom dropped out. Like many other luxury-home markets, Paradise Valley joined the foreclosure crisis late: As the economy worsened, companies lost clients and executives lost bonuses or jobs. Affluent residents ran through their savings and credit. And banks, once reluctant to foreclose on major depositors, started taking estates back.

Germany warns of 'Lehman' crisis if Greece defaults - (www.telegraph.co.uk) German finance minister Wolfgang Schauble has pleaded with his country's citizens to back a joint EU-IMF bail out for Greece worth up to €45bn (£40bn), warning that failure to act risks a financial meltdown. "We cannot allow the bankruptcy of a euro member state like Greece to turn into a second Lehman Brothers," he told Der Spiegel. "Greece's debts are all in euros, but it isn't clear who holds how much of those debts. The consequences of a national bankruptcy would be incalculable. Greece is just as systemically important as a major bank," he said. Mr Schauble said Berlin had scant room for manoeuvre over the bail-out given a likely court challenge by German professors but promised to "abide by the constitution". German backing failed to stop spreads on 10-year Greek bonds surging to 454 basis points over German Bunds, the highest since the launch of the euro. "Investors are not going to believe in a rescue deal until every 'i' it dotted and every 't' is crossed, " said Marc Ostwald from Monument Securities. "But there is also a deeper fear that Greece could bring down the whole pack of cards." An administrator of China's foreign exchange fund SAFE – the world's top investor – was quoted by Asia's newswire IGM-FX warning that Greece may set off a chain reaction in the eurozone, and that some states with big debts may default. "China is becoming concerned about Europe," said Simon Derrick, currency chief at the Bank of New York Mellon. "Greece is going to struggle to find anybody to buy its debt. There is no road-show in Asia, and it may pull out of its show in the US." IMF data shows that China and emerging markets have accumulated $4.8 trillion (£3.1bn) in foreign reserves. Roughly $1.7 trillion is invested in eurozone bonds. These rising powers will decide how Europe's drama unfolds.