Sunday August 1 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Florida property insurance rate hikes coming - (www.orlandosentinel.com) Warren Kurtzman was elated when Gov. Charlie Crist vetoed legislation last month that would have made it easier for insurers to raise property insurance premiums. That's why it came as a shock when his insurer, HomeWise Insurance, informed Kurtzman two weeks later that the premium on his Delray Beach condominium unit is increasing by 42 percent – from $609 to $864 – this year. "I thought [the veto] was the greatest thing in the world," Kurtzman said, "and all of the sudden, I get this [notice] and I almost choked!" Despite Crist's veto, and four relatively quiet hurricane seasons, thousands of Florida residents are experiencing similar rate hikes this year. The reason: The veto doesn't end rate increases – regulators can continue approving or rejecting rate hikes. They've ordered some insurers to lower rates, rejected some rate hikes but have approved the vast majority.

Secret gold swap has spooked the market - (www.telegraph.co.uk) It takes a lot to spook the solid old gold market. But when it emerged last week that one or more banks had lent 380 tonnes of gold to the Bank of International Settlements in return for foreign currencies, there was widespread surprise and confusion. The news that a mystery bank has just pawned the family jewels gave traders a jolt – nervous about the sudden transfer of almost 20pc of the world's annual gold production and the possibility of a sell-off. In a tiny footnote in its annual report, the bank disclosed its unusually large holding of gold, compared with nothing the year before. The disclosure was a large factor in the correction of the gold price this week, which fell below $1,200 for the first time in more than a month. Concerns hinged on whether the BIS could potentially sell on this vast cache of bullion in the event of a default, flooding the market with liquidity. It appears to have raised $14bn for whoever's been doing the swapping – small fry on the currency markets, but serious liquidity in the gold market.

Politicians became addicted to real estate market - (www.newgeography.com) It worked for 10 years or so. The values of homes and other properties went up, and so did the city’s revenue. Developers paid fees to build residential and commercial units, buyers paid higher property taxes in the rising market, homeowners borrowed against their houses and spent freely, paying sales taxes along the way. All of the action sent streams of revenue to various levels of government, and much of the money found its way to the city’s coffers. Local politicians used the money to take care of donors with favorable deals, satisfy labor unions by expanding payrolls and paychecks for city employees, and provide basic services to enough voters to maintain the status quo. Now the revenue streams have dwindled, and there’s not enough for our politicians to finance their old scheme. There have been many reactions to our city’s challenges, but not much in the way of ideas. Our politicians have jumped from budget projection to budget projection, cutting here, threatening to cut there. Outside City Hall is a different story, as the populace begins to sense that this is all reaction with no basic idea. Whatever happened last week means nothing this week because the next budget report could prompt any sort of reaction from the politicians. There are no guiding principles or declared values—no ideas—for our city. This became clear to me when I realized that our City Councilmembers and our mayor used to send out all sorts of press releases back in the days of the real estate boom. There were notices that some project had been completed or another had just started. They almost always involved the expenditure of city funds, and went on about the politician who flipped whatever switches made the money flow. Now the money has dried up, and press releases are few and far between.

Credit scores sink to new lows - (www.latimes.com) Battered by unemployment and tighter lending standards, the credit scores of millions of Americans are sinking to new lows. About 25.5% of consumers — or 43.4 million people — had credit scores below 600 in April, according to FICO Inc. Historically, only about 15% of consumers — or 25.5 million — have had scores below that level, FICO said. Those in the middle of the spectrum have also declined. Moderate credit scores, between 650 and 699, fell to 11.9% from a historical average of 15%. Consumers with low credit scores will have increased difficulty obtaining credit cards and other loans, said Christian deRitis, director of credit analytics at Moody's Analytics. "Until the labor market turns around, people will remain unable to pay bills," DeRitis said. "Lowered consumption will only add extra friction to the economy."

Perfect Storm for Louisiana's Economy - (finance.yahoo.com) In the blink of an eye, the economic focus in Louisiana has shifted from recession recovery to avoiding actual and potential job losses piling up at a staggering rate. And there's very little that the state can do: The tally is due to the Obama administration decisions affecting petroleum, defense and space -- all coming together in a perfect storm. Last Tuesday, Northrop Grumman Corp., faced with tighter Pentagon spending and Obama administration priorities aimed at Afghanistan and away from the Navy, said it would shut its Avondale shipyard -- the state's largest industrial employer with about 5,000 workers -- in early 2013 after two military ships are finished. Another source of misery is the deepwater petroleum drilling moratorium in the Gulf of Mexico. The six-month "pause" that the Obama administration insists on could kill the drilling business off the Louisiana coast for years, industry and government officials warn. Of the 33 deepwater rigs in the Gulf when the Deepwater Horizon exploded, two found new long-term homes in Egypt and off the coast of Africa within a week -- just as the industry promised would happen. Louisiana State University economist James Richardson said a six-month moratorium could slash 18,000 to 20,000 jobs. With that prediction, consider that the entire state, at the lowest point of the post-2008 economic meltdown, had lost about 49,000 jobs.

OTHER STORIES:

House Sellers Slashing Prices, While Banks Mow the Lawn - (finance.yahoo.com)

U.S. Housing Market Sees Price Cuts, Rising Inventory - (www.time.com)

Federal Budget Simulator - Play along! - (www.crfb.org)

Life in corporate America - Smile or Die - (www.youtube.com)

CA court says MERS cannot transfer note for lack of ownership - (www.foreclosuredefensenationwide.com)

Jury convicts man who says 'Yahweh' sold him foreclosed house - (www.nydailynews.com)

Make money while destroying the economy - (www.dilbert.com)

Foreclosure crisis phase 2: the negative equity dilemma - (www.walb.com)

Over-Leveraged Pretenders Quit Paying; Lenders Allow Them to Squat - (www.irvinehousingblog.com)

Housebuyers Need Patience, Patience, Patience - (www.npr.org)

House Buying Applications Sink to 13 Year Low - (www.nytimes.com)

House Ownership To Drastically Decrease In America - (www.youtube.com)

Has Mortgage Electronic Registration System - (www.MERS) Ripped You Off? - (www.blog.hsh.com)

Is it time to storm the Bastille again? - (www.theautomaticearth.blogspot.com)
Bank Tax, We Hardly Knew Ye - (www.miller-mccune.com)
In South Florida, pace of repossession jumps 83 percent - (www.miamiherald.com)
N. Carolina foreclosure rate has nearly doubled in past year - (www.starnewsonline.com)

Saturday July 31 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Some Call it Transparency, Others Another Example of Government Waste - (abcnews.go.com) As the midterm election season approaches, new road signs are popping up everywhere – millions of dollars worth of signs touting "The American Reinvestment and Recovery Act" and reminding passers-by that the program is "Putting America Back to Work." On the road leading to Dulles Airport outside Washington, DC there's a 10' x 11' road sign touting a runway improvement project funded by the federal stimulus. [The cost of the sign, $10,000]. ABC News has reached out to a number of states about spending on stimulus signs and learned the state of Illinois has spent $650,000 on about 950 signs and Pennsylvania has spent $157,000 on 70 signs. Other states, like Virginia, Vermont, and Arizona do not sanction any signs. In response to questions by ABC News, Jill Zuckman of the Department of Transportation said, "The best estimate is that states have spent about $5 million of the $28 billion spent on road projects on signs – or less than .02 percent of overall project spending." At the center of the controversy are a series of guidelines provided to stimulus recipients. In the letter, Rep. Issa cites what he calls "perhaps the most overly political guidance on stimulus advertising" involving the Department of Housing and Urban Development and a stimulus recipient. According to investigators from the oversight committee, HUD provided the Office of Native American Programs with information on "signage requirements." The document suggested a sign template informing the public the projects had been, "Funded By: American Recovery and Reinvestment Act, Barack Obama, President."

To Protest Hiring of Nonunion Help, Union Hires Nonunion Pickets - (online.wsj.com) Billy Raye, a 51-year-old unemployed bike courier, is looking for work. Fortunately for him, the Mid-Atlantic Regional Council of Carpenters is seeking paid demonstrators to march and chant in its current picket line outside the McPherson Building, an office complex here where the council says work is being done with nonunion labor. "For a lot of our members, it's really difficult to have them come out, either because of parking or something else," explains Vincente Garcia, a union representative who is supervising the picketing. In California, one group is offering to pay $10 and up per hour to activists to hold signs in demonstrations against foam cups and plastic bags. In Atlanta, Timothy Baker, a 40-year-old unemployed warehouse worker, says his money-making strategy has been to walk picket lines for $8.50 an hour for the Southeastern Carpenters Regional Council. "It's something to do until you find something better." The union's Mr. Garcia sees no conflict in a union that insists on union labor hiring nonunion people to protest the hiring of nonunion labor. He says the pickets are not only about "union issues" but also about fair wages and benefits for American workers. By hiring the unemployed, "we are also giving back to the community a bit," he says.

Regulators close 8 U.S. banks with $2 billion assets - (www.reuters.com) - Regulators closed eight U.S.-insured banks with combined assets of $2 billion on Friday, raising the number of failed banks to 96 this year, said the Federal Deposit Insurance Corp. NAFH National Bank of Miami will take over three of the banks, which together had 23 branches and $1.39 billion in assets. NAFH is a newly chartered bank subsidiary of North American Financial Holdings, Inc, a bank holding company based in Charlotte, North Carolina. "Together with our planned investment in TIB Bank, today's transaction continues our progress toward building a strongly capitalized, high performing, regional bank," NAFH Chairman and Chief Executive Gene Taylor said in a statement. North American Financial Holdings says it raised $900 million in equity capital to invest in failed and undercapitalized banks. On June 29, it said it would invest $175 million in TIB Financial Corp in Naples, Florida.

Fight Now Looms Over Fannie, Freddie - (online.wsj.com) The fight over the changes to U.S. financial regulation was bruising. The coming debate over what to do with Fannie Mae and Freddie Mac promises to be even more contentious. The revamp of the nation's financial infrastructure, which will be signed into law next week by President Barack Obama, didn't address the fate of the mortgage-finance giants that helped fuel the housing bubble and were taken over by the government in 2008. So far, the U.S. has spent $145 billion to keep the companies afloat. Administration officials say they will outline a proposal to Congress by early next year and that intense discussions are under way on how the government should restructure its role in housing finance. The administration doesn't appear to have coalesced around an answer, according to the officials, though top advisers have indicated they see some continuing government role. Lawmakers from both parties have heavily criticized the public-private ownership model that led the once enormously profitable companies to fail spectacularly. However, few in Washington know what to do next. A Republican amendment to the financial-rules bill that didn't pass spelled out an exit plan for the government but didn't specify what would take the place of Fannie and Freddie, which own or guarantee a little over $5 trillion of the nation's $10 trillion of mortgages.

BP, feds clash over reopening capped Gulf oil well - (news.yahoo.com/s/ap) BP and the Obama administration offered significantly differing views Sunday on whether the capped Gulf of Mexico oil well will have to be reopened, a contradiction that may be an effort by the oil giant to avoid blame if crude starts spewing again. Pilloried for nearly three months as it tried repeatedly to stop the leak, BP PLC capped the nearly mile-deep well Thursday and wants to keep it that way. The government's plan, however, is to eventually pipe oil to the surface, which would ease pressure on the fragile well but would require up to three more days of oil spilling into the Gulf. "No one associated with this whole activity ... wants to see any more oil flow into the Gulf of Mexico," Doug Suttles, BP's Chief Operating Officer, said Sunday. "Right now we don't have a target to return the well to flow." An administration official familiar with the spill oversight, however, told The Associated Press that a seep and possible methane were found near the busted oil well. The official spoke on condition of anonymity Sunday because an announcement about the next steps had not been made yet.

OTHER STORIES:

5 places to look for the next financial crisis - (www.washingtonpost.com)

Municipal Bond Defaults at Triple the Typical Rate, Lehmann Says - (www.bloomberg.com)

U.S. bank results portend investment bank woes - (www.reuters.com)

Optimism Fades, as Do Stocks - (online.wsj.com)

China's Wen: "relatively fast" growth needed - (www.reuters.com)

Transaction tax may cool China housing: PBOC adviser - (www.reuters.com)

Bank stress tests to shed light on Europe's economic health - (www.washingtonpost.com)

Timothy Geithner's realm grows with passage of financial regulatory reform - (www.washingtonpost.com)

Calif. jobless rate dips to 12.3 percent in June - (www.bloomberg.com)

Holding Bankers’ Feet to the Fire - (www.nytimes.com)

The Men Who Ended Goldman’s War - (www.nytimes.com)

Apple Sets Up Cots for Engineers Solving iPhone Flaw - (www.bloomberg.com)

U.S. Orders BP to Reopen Gulf Well and Capture Oil After Tests - (www.bloomberg.com)

BP, scientists try to make sense of well puzzle - (news.yahoo.com/s/ap)

Friday July 30 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

U.S. homes repossessed by banks set to hit record 1 million this year - (www.washingtonpost.com) The number of American homes repossessed by banks hit a record high in the second quarter of the year, putting the number of foreclosures on track to hit a record 1 million by the end of 2010. Bank repossessions increased 5 percent from the previous quarter and 38 percent from the second quarter of 2009 to 268,962, according to data released early Thursday by RealtyTrac, an Irvine, Calif., firm that tracks the foreclosure market. But while the number of homes in the final stage of the foreclosure process increased, the number of new filings fell. Both default and auction notices were down on a month-over-month and year-over-year basis. The combination of bad news and good news can be explained by two seemingly contradictory trends that are the result of Obama administration efforts to encourage with lenders to help homeowners in distress. Over the past few months, lenders have been clearing out a backlog of homes that had been temporarily saved from foreclosure thanks to prevention efforts in 2009. And at the same time, they have been delaying foreclosure proceedings on homeowners with delinquent payments and instead trying to work with more aggressive loan modification strategies or to accept a short sale.

Signs of Risky Lending Emerge - (online.wsj.com) Shirley Davis, a 66-year-old retired phone-company administrator who lives in Brooklyn, N.Y., is more than $33,000 in debt, earns just $2,414 a month and filed for bankruptcy in June. Shortly before that, she ripped open an envelope from Capital One Financial Corp., which pitched her a credit card even though it sued her in 2006 to recover $4,470 she owed on a different card from the bank. "At some point we lost you as a customer and we'd like to have you back," the letter said. Ms. Davis said she was stunned. "Even I wouldn't give me a credit card at this point," she said. Even as lenders struggle to pull themselves out of the credit crisis, signs of a new and potentially dangerous infatuation with risky borrowers are emerging. From credit cards to auto loans to mortgages, the hunger for new business as the crisis ebbs is causing some financial institutions to weaken lending standards and woo borrowers who mightn't be able to pay. A spokeswoman for Capital One said customers who "fully settled" their old debts might get a credit-card solicitation "with appropriately conservative spending limits." The spokeswoman said, however, that doesn't mean "that a consumer will receive a card." Capital One won a court judgment against Ms. Davis for the money owed and she repaid it. Fannie Mae, seized by the U.S. government in 2008 to avert the mortgage company's failure, launched an initiative in January that allows some first-time home buyers to get a loan with a down payment of as little as $1,000. Securities firm Morgan Stanley Smith Barney, a brokerage operation jointly owned by Morgan Stanley and Citigroup Inc., is offering some clients home-equity credit lines of as much as $2.5 million.

Penny-Pinching Towns Put Police Out to Pasture - (www.aolnews.com) The sheriff will be walking the streets again in San Luis -- the oldest community in Colorado. But it's not a return to the Wild West; the town fired its entire police force to save money. Around the country other towns -- large and small -- are also eliminating their police departments. The Los Angeles suburb of Maywood, Calif., fired its officers, as did rural Bethel, Maine. Near Pittsburgh, Fallowfield, Pa., also voted to disband its police department. San Luis, established in southern Colorado in 1851, is facing a $750,000 budget deficit. The town of 740 residents has a median income is $20,875. It's about 225 miles from Denver. "We just did not have the money to pay these people," San Luis Mayor Theresa S. Medina said by telephone. She said firing the police chief and three part-time officers was expected to save about $10,000 a month in salaries, gas and car maintenance. The unanimous decision by the San Luis City Council on July 2 also saw the town's sole maintenance worker fired, leaving the town clerk as the only employee. At the monthly town meeting, the only opposition came from the police chief, Medina said. Discussions about a volunteer force didn't make sense because the town would have liability problems, she said.

US states widen the search in bond sales - (www.ft.com) California usually runs local newspaper and radio advertisements when it drums up interest in a bond sale. This year, though, the cash-strapped US state has been looking farther afield for investors. At least one of its offerings has involved telephone calls and flights to potential buyers as far away as Norway and Saudi Arabia. It is not the only state widening its search. Officials from Illinois and their underwriters, Citigroup, have also done a fair amount of globetrotting to woo investors in Europe and Asia to buy nearly $1bn of bonds, the price of which was due to be set on Wednesday. “Illinois has not done any offshore marketing since 2003,” said John Sinsheimer, director of capital markets for Illinois. The reason for all this foreign travel is that the states are marketing a type of debt – so-called Build America Bonds, subsidised by the government to finance construction projects – and hope to attract buyers who might be looking to diversify their bond portfolios. But they are doing this at a difficult time. After the worst recession for decades, the collapse of America’s housing market and a sharp jump in unemployment, state and local governments throughout the US have been struggling with ballooning budget deficits. Those deficits amounted to $89bn for the 2011 fiscal year, says the National Conference of State Legislatures.

Record Build-America Risk Premium Boosts L.A. College Costs - (www.bloomberg.com) Los Angeles Community College District, the largest two-year system in the U.S., plans to sell $900 million in Build America Bonds as the yield premium that investors demand on the debt rose to a record. The taxable offering include maturities of 32 and 39 years that may be priced to yield 255 and 270 basis points respectively above the benchmark 30-year Treasury, according to a person with direct knowledge of the sale. A basis point is 0.01 percentage point. The so-called spread rose to 207 basis points on average yesterday from about 150 three months ago, according to a Wells Fargo index that began last August. The reading comes as Treasury yields have fallen about 50 basis points since May 3 amid signs of a slowing economy. “Of all the ‘L.A.’ names, the community college district is the best name right now,” said Bud Byrnes, chief executive officer of Encino, California-based RH Investment Corp., which specializes in the state’s securities. “It’s really well regarded and trades well, but it’s getting tainted by the fact it has ‘L.A.’ in it.” The City of Los Angeles had its debt rating cut one level to Aa3, fourth-highest, by Moody’s Investors Service and one step lower, to A+, by Fitch Ratings in April on difficulties in balancing the budget of the nation’s second-largest city by population. The district, with 141,000 enrolled students on nine campuses, plans to use today’s federally subsidized issue for construction and renovation, including a so-called green- technology student union at Los Angeles City College and a performing-arts center at Los Angeles Valley College.

Oakland talks break down; layoffs for 80 cops - (www.sfgate.com) Oakland laid off 80 police officers Tuesday after negotiations between city officials and union leaders failed on one simple matter: job security. The police union demanded that the city guarantee that its officers would not be laid off for three years in exchange for giving up some pension benefits that would have eased the city's budget problems. City leaders, however, said it would have been irresponsible of them to agree to protect police jobs for more than one year because the city's budget problems are likely to worsen. "Every time you lay us off, there's a gun to the citizen's head as well," said Sgt. Dom Arotzarena, president of the Oakland Police Officers Association.

OTHER STORIES:

Goldman Reverses Euro Call, Sees Gains on Weak U.S. - (www.bloomberg.com)

Demand for financing leads global economic recovery toward 'wall of debt' - (www.washingtonpost.com)

Dealers Cut Bonds as Conviction in Rally Wanes: Credit Markets - (www.bloomberg.com)

U.S. Stock Bears Outnumber Bulls for First Time Since April ’09 - (www.bloomberg.com)

China Economic Growth Eases to 10.3% on Credit Curbs - (www.bloomberg.com)

Analysts Warn of Risks Threatening China’s Banks - (www.nytimes.com)

Spain Sells Maximum EU3 Billion of 15-Year Bonds at Auction - (www.bloomberg.com)

Fed Officials Saw No Need for More Stimulus in June - (www.bloomberg.com)

Fed: Should consider more easing if outlook worsens - (www.reuters.com)

Fed Leaders Show Division Over Deflation - (www.nytimes.com)

Fed Mulled Further Stimulus, Minutes Show - (online.wsj.com)

JPMorgan Net Rises 76% on Lower Credit Costs, Beats Estimates - (www.bloomberg.com)

AIG’s Golub Steps Down After Dispute With Benmosche - (www.bloomberg.com)

Goldman, SEC Discuss Catch-All Settlement - (online.wsj.com)

After Crisis, Show of Power From Dimon and JPMorgan - (www.nytimes.com)

BP Fixing New Cap Leak as It Prepares to Start Gulf Well Test - (www.bloomberg.com)

Thursday July 29 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Crisis Awaits World’s Banks as Trillions Come Due - (www.nytimes.com) Millions of people with private sector retirement schemes are likely to see their pensions reduced by as much as 25 per cent after the Government announced plans to change the way they are calculated. Pensions minister Steve Webb said there were plans to link pension payments to a lower measure of inflation. The existing system links pension increases to the Retail Prices Index which includes housing costs such as mortgage interest payments. But the Government plans to link it to the Consumer Prices Index instead, which is typically lower. The move would reduce the burden on pension schemes and is expected to be introduced next year. It would be applied to all final salary pensions, as well as payments made by the Pension Protection Fund – a lifeboat fund for workers who have lost their pensions – and the Financial Assistance Scheme, a Government compensation scheme. It follows the Chancellor’s announcement in the emergency Budget that most public sector pensions would be linked to CPI, which will also potentially save the Government millions of pounds. Mr Webb said the same should be applied to occupational pension schemes. “The Government believes the CPI provides a more appropriate measure of pension recipients’ inflation experiences and is also consistent with the measure of inflation used by the Bank of England,” he explained.

Deutschland uber alles does not mean a trickledown recovery in EMU - (www.telegraph.co.uk) Jean-Claude Trichet, head of the European Central Bank, last week cited thisWirtschaftswunder as evidence of durable recovery in Europe. It is no such thing. The OECD's leading indicators for June rolled over in Italy and France, as well as China and India. The IMF expects Spain's economy to contract by 0.4pc this year. It has lowered its forecast for the eurozone from 1.5pc to 1.3pc in 2011. "Downside risks to the recovery have risen sharply," it said. The ECB is barely on speaking terms with the IMF – the "Inflation Maximizing Fund" as it was dubbed in a Bundesbank memo. "The IMF has not caught up to the reality in Europe," said ECB über-hawk Jürgen Stark on Friday. Beware, this is the same insular ECB that raised rates in July 2008 on the eve of the Lehman crisis when half of Europe was already in recession, mistaking the deflationary oil spike for an incipient 1970s inflation spiral. Can one ever trust their judgment again? Yes, Germany is on the cusp of EMU "outperformance", but that is more curse than cure for Club Med laggards. Germany is benefiting from a currency that is as misaligned as China's yuan, though this mercantilist advantage is disguised within Europe's monetary union. Crudely, Germany is doing to Spain, Italy, and increasingly France, what China has been doing to the rest of the world – but more so – by holding down its exchange rate.

Why the Bond Markets are Signalling a Depression - (www.telegraph.co.uk) Something potentially momentous has happened in financial markets in the past two months. Virtually unnoticed, the yield on long dated pan-European sovereign debt has slipped below that on equities. So what, you might say; that's what happens when shares go down and bonds go up. But in fact this reversal in the traditional relationship between bonds and equities is an extraordinarily unusual event. It's happened only three times in the past 50 years. Alarmingly, all three of those occasions have been in the past decade. What are markets trying to tell us? There are two ways of looking at the phenomenon. Either it is an aberration, and therefore a buy signal for stock markets, or much more worrying, it marks the final death knell for Europe's 60-year love affair with equities, and therefore the start of a generalised retreat from risk that will see the economy stagnate or worse for perhaps decades to come.

Detroit's Do-It-Yourselfers Provide City Services - (online.wsj.com) Although he retired long ago, Eddie Edwards has found work that keeps him busy for much of the year: staving off blight on his block. This summer, the 63-year-old Mr. Edwards is chopping down tall weeds in empty lots and cleaning the alleyways behind his home and across the street. He also routinely takes care of the street sweeping, using just a broom and dust pan. "It is time-consuming," says Mr. Edwards, who spent his professional life molding glass into windshields and tail lights for Chrysler. "But I don't have anything else to do." Across Detroit, do-it-yourselfers such as Mr. Edwards are rolling up their sleeves and opening up their wallets to provide basic services that the financially strapped city can no longer manage on its own, from boarding up vacant homes to mowing lawns to maintaining parks. In some areas, residents also partner with city agencies or look to philanthropies for help. "My cellphone is full of people" who do upkeep on their own, says Brad Dick, deputy director of Detroit's General Services Department. Many think they are going it alone, he says. "They're always shocked they're not the only one." To serve an area of roughly 140 square miles, the city has 106 grass cutters, but also contracts with three vendors to mow vacant lots twice a year. If not for individual residents stepping in, Mr. Dick says, the city would be in much worse shape.

Price plunges on Sandra Bullock's former house - (www.ocregister.com) The asking price on the oceanfront Sunset Beach house that Sandra Bullock and Jesse James shared before their marriage crumbled has taken a plunge of $1,755,000. The 2-story house had a price tag of $6,750,000 when it went up for sale in April. Now it’s listed at $4,995,000. That’s a real speedy drop, but as I reported earlier today, James, who owns the 3,626-square foot house, is trying to leave Orange County and the L.A. area quickly, heading for Austin, Texas, where Bullock already lives. Their divorce in the wake of his cheating scandal has been finalized, but it’s also been widely reported that he wants his children to be able to continue their relationships with Bullock. A condo James owns near the Sunset Beach house is also on the market and the price on that was lowered to $1,195,000 from $1,290,000. James bought the house in 2003 for $3.5 million.

Highlights:

· The house, on a 40-foot by 90-foot corner lot, was remodeled from the ground up in 2002.

· The home has 4 bedrooms with in-suite baths plus a powder room and a large media room.

· There’s a glass-enclosed swimming pool with ambient mood lighting.

· The master bath shower has glass walls, for ocean views.

· A 3-car garage has a built-in tool crib and space for an extra car or workshop.

· No surprises here – the home has a “state of the art surveillance system with multiple security cameras, professional quality video and audio systems throughout.”

FHFA Proposes Rule Clarifying Fannie Mae, Freddie Mac Conservatorships - (www.housingwire.com) The Federal Housing Finance Agency (FHFA) sent a proposed rule to the Federal Register to clarify the terms of conservatorship and receivership. The rule would apply to operations at Fannie Mae, Freddie Mac and the Federal Home Loan Banks (FHLBs) under the Housing and Economic Recovery Act of 2008 (HERA). It aims to bring conservatorship and receivership operations into greater transparency and models many provisions in the Federal Deposit Insurance Corp.(FDIC) rules for conservatorships and receiverships, according to an FHFA statement. It comes at a time when the future of the government-sponsored enterprises (GSEs) is in question, with some calling for their eventual wind-downs. As HousingWire explores in the July magazine issue, a bill submitted in the House of Representatives details the timeline to take the GSEs out of conservatorship and eventually completely remove the government's guarantee of Fannie and Freddie.

OTHER STORIES:

Millions in UK to see private sector pensions reduced - (www.telegraph.co.uk)

Volcker Pushes for Reform, Regretting Past Silence - (www.nytimes.com)

The economy as confidence game - (www.washingtonpost.com)

Why you're not making more money than a decade ago - (www.marketwatch.com)

Is Now a Good Time to Buy a House? - (Charles Hugh Smith at www.oftwominds.com)

The Crisis & the Euro - (www.nybooks.com)

Housing Double Dip Appears To Be Underway - (www.forbes.com)

San Diego Explained: The Housing Bubble - (www.voiceofsandiego.org)

Microsoft, Fujitsu near deal: report - (www.cnbc.com)

J&J sued over children's drug recall: report - (www.cnbc.com)
French group may invest in Cameroon smelter - (www.cnbc.com)

GM drops plan for in-house financier - (www.cnbc.com)
Obama promises more aid for combat vets - (www.cnbc.com)

Illinois Stops Paying Bills, but Can't Stop Digging Hole - (www.nytimes.com)

Office Vacancy Rate in U.S. Climbs to 17-Year High as Jobs Recovery Slows - (www.bloomberg.com)

$3.5T in commercial real estate debt and $10.3T in residential real estate debt - (www.doctorhousingbubble.com)

V-shaped recovery, where art thou? - (www.csmonitor.com)

Housing Market Weighs on the Struggling Economy - (www.pbs.org)

Wednesday July 28 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

The Submarine Deals That Helped Sink Greece - (online.wsj.com) As Greece slashes spending to avoid default, it hasn't moved to skimp on one area: defense. The deeply indebted Mediterranean nation, whose financial crisis roiled the global financial system this year, is spending more than a billion euros on two submarines from Germany. It's also looking to spend big on six frigates and 15 search-and-rescue helicopters from France. In recent years, Greece has bought more than two dozen F16 fighter jets from the U.S. at a cost of more than €1.5 billion. Much of the equipment comes from Germany, the country that has had to shoulder most of the burden of bailing out Greece and has been loudest in condemning Athens for living beyond its means. German Chancellor Angela Merkel has admonished the Greek government "to do its homework" on debt reduction. The military deals illustrate how Germany and other creditors have in some ways benefited from Greece's profligacy, and how that is coming back to haunt them. Greece, with a population of just 11 million, is the largest importer of conventional weapons in Europe—and ranks fifth in the world behind China, India, the United Arab Emirates and South Korea. Its military spending is the highest in the European Union as a percentage of gross domestic product. That spending was one of the factors behind Greece's stratospheric national debt.

Mortgage Investors Turn to State Courts for Relief - (www.nytimes.com) Investors who lost billions on boatloads of faulty mortgage securities have had a hard time holding Wall Street accountable for selling the things in the first place. For the most part, banks have said they can’t be called out in court on any of this because they had no idea that so many of these loans went to people who lacked the resources to make even their first mortgage payment. Wall Street firms were intimately involved in the financing, bundling and sales of these loans, so their Sergeant Schultz defense rings hollow. They provided hundreds of millions of dollars in credit to dubious underwriters, and some even had their own people on site at the loan factories. Many Wall Street firms owned mortgage lenders outright. Because many of the worst lenders are now out of business, investors in search of recoveries have turned to the banks that packaged the loans into securities. But successfully arguing that Wall Street aided lenders in a fraud is tough under federal securities laws. This is largely a result of Supreme Court decisions barring investors from bringing federal securities fraud cases that accuse underwriters and other third parties as enablers.

Companies brace for end of cheap made-in-China era - (news.yahoo.com/s/ap) Factory workers demanding better wages and working conditions are hastening the eventual end of an era of cheap costs that helped make southern coastal China the world's factory floor. A series of strikes over the past two months have been a rude wakeup call for the many foreign companies that depend on China's low costs to compete overseas, from makers of Christmas trees to manufacturers of gadgets like the iPad. Where once low-tech factories and scant wages were welcomed in a China eager to escape isolation and poverty, workers are now demanding a bigger share of the profits. The government, meanwhile, is pushing foreign companies to make investments in areas it believes will create greater wealth for China, like high technology. Many companies are striving to stay profitable by shifting factories to cheaper areas farther inland or to other developing countries, and a few are even resuming production in the West. "China is going to go through a very dramatic period. The big companies are starting to exit. We all see the writing on the wall," said Rick Goodwin, a China trade veteran of 22 years, whose company links foreign buyers with Chinese suppliers.

Build America Program’s Impending End Prompts Plea to Senate - (www.bloomberg.com) U.S. state, city and county groups urged the Senate to extend the Build America Bond program, the part of the federal economic-stimulus plan that has driven down borrowing costs for public-works projects across the country. The move to push back this year’s scheduled expiration by two years faltered in the Senate last month. Republicans balked at the cost of the bill that included the measure, as well as extra Medicaid funding and unemployment benefits. Six groups, including those representing mayors, governors and state treasurers, urged Senators to prolong the bond-subsidy program. “Failure to take prompt action on a BABs extension may have immediate, unintended, and negative consequences for the market for BABs, both in the U.S. and overseas,” the groups said today in a letter to Senators Max Baucus and Senator Charles Grassley. Baucus, a Montana Democrat, is chairman of the Finance Committee, and Grassley, a Republican from Iowa, is the ranking minority-party member of the panel.

Borrowers Hit New Home-Loan Hurdles - (online.wsj.com) Dennis Davis has a nearly perfect credit score, equity in his home, considerable savings and a solid pension plan. But Mr. Davis recently found that his lender didn't want to refinance his mortgage. The problem? Mr. Davis's income-tax return showed he had taken a loss on an investment he made in a small, family-owned business. That was enough to raise doubts about his otherwise strong financial condition. Three years after the onset of the mortgage crisis, lenders continue to tighten credit standards. The initial moves were a natural reaction for a business badly burned by rising delinquencies and defaults. But conditions are now so tight that lenders are frustrating borrowers who have enviable financial situations but still can't easily satisfy lenders' rigid checklists. "The pendulum may have swung too far the other way," Scott Anderson, a senior economist at Wells Fargo Securities, said in a report last month. Some analysts thought that by this point in the business cycle, lenders would have started to relax credit conditions slightly after clamping down on the risky bubble-era practices. Instead, the screws are still tightening. That is partly because lenders are taking every precaution to avoid being forced to buy back loans from mortgage investors Fannie Mae and Freddie Mac in the event of default. When a borrower defaults, Fannie and Freddie typically buy the loan out of the mortgage-security pool and pursue a workout or foreclosure. But they can force lenders to repurchase loans when they find flaws in the way they were underwritten. Repurchases were a minor nuisance when defaults were low but have escalated over the past year.

State Budget Woes ‘Just as Tough’ in 2011, Fed Economist Says - (www.bloomberg.com) Tepid economic growth and demands for aid from ailing U.S. cities and towns will combine to make next year “just as tough” for state budget makers, according to Yolanda Kodrzycki, an economist at the Federal Reserve Bank of Boston. States have closed budget deficits totaling about $169 billion since July 2008 and still face a combined $127 billion gap through fiscal 2012, according to a report last month by the National Governors Association and the National Association of State Budget Officers. Fiscal recovery will be weighed down by “lackluster” economic growth of about 3 percent a year and the need to help local governments confronting falling property tax collections, Kodrzycki told governors gathered yesterday in Boston. “Next year is going to be just as tough” for balancing state budgets, Kodrzycki said on a panel on economic development at the National Governors Association meeting. Even if economic growth quickens, it’s not completely “translating into fiscal recovery,” she said.

OTHER STORIES:

IMF plans mega bail-out for next crisis- (www.ft.com)

New rules, big changes coming for financial world - (news.yahoo.com/s/ap)

Treasuries Tumble, Pushing 10-Year Yields Up Most Since April - (www.bloomberg.com)

China Boosts Net Oil Imports to a Record in June - (www.bloomberg.com)

Mortgage rates for 30-year loans fall to lowest level on record - (www.washingtonpost.com)

SEC pushes tighter market-making rules: sources - (www.reuters.com)

China’s Soy Imports Jump to Record on Argentine Row - (www.bloomberg.com)

China’s Trade Surplus Widens, Adding Pressure on Yuan - (www.bloomberg.com)

ECB set for rethink on bond purchases - (www.ft.com)

China says exports up 35 percent in June - (finance.yahoo.com)

Volcker Pushes for Reform, Regretting Past Silence - (www.nytimes.com)

Debt, Bank Troubles Leave U.S. Trailing in Job Growth - (online.wsj.com)

Bank of America Says Trades Were Wrongly Classified - (www.bloomberg.com)

Wall St. Hiring in Anticipation of an Economic Recovery - (www.nytimes.com)

Feds say new cap could contain Gulf leak by Monday - (news.yahoo.com/s/ap)

Oil hasn't hit South Atlantic, but its effects on business reverberate already - (www.washingtonpost.com)