KeNo's Housing and Economic Portal: Thursday July 15 Housing and Economic stories

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TOP STORIES:

Fannie Mae gets tough on homeowners who walk away - (www.latimes.com) The mortgage giant plans to go to court against those who can afford to make their payments but decide it's not worth it. It also will limit their access to future loans. Taking aim at homeowners who are able to pay their mortgage but decide it's not worth it, Fannie Mae plans to go after them in court and to limit their access to home loans for seven years. The government-controlled mortgage giant said Wednesday that it would instruct the companies servicing its loans to recommend when it should pursue a so-called deficiency judgment — a court order requiring a defaulting borrower to pay any remaining unpaid portion of the loan after a seized home is sold. Lenders rarely employ court proceedings to pursue foreclosures in California, nearly always opting instead for a streamlined procedure involving a trustee's sale of the home. Under state law, however, lenders who opt for court proceedings can obtain a deficiency judgment if the mortgage was used to refinance a home, but not if it was used to finance a purchase.

Fit enough for Ironman but not for the MPD - (www.jsonline.com) Dave Orlowski can swim 2.4 miles. He can bike 112 miles. He can run 26.2 miles. In fact, the 54-year-old athlete can do all of these one right after the other - several times a year. He completed six Ironman triathlons last year, has done three so far this year and hopes to compete in yet another one in Klagenfurt, Austria, on July 4. Orlowski can also play a round of golf, as he did recently at a fund-raiser for the Make-A-Wish Foundation of Wisconsin. But this is something the guy won't do: He won't work for the Milwaukee Police Department. That's because the former homicide detective has been declared "permanently and totally incapacitated for duty." As an injured ex-cop, Orlowski has been paid nearly $500,000 in tax-free pension checks by the city since 1999. He is currently receiving $53,063 a year from the city Employees' Retirement System, plus full health benefits.

75% of modified home loans will redefault - (money.cnn.com) Most borrowers who have had their mortgages modified through a government-sponsored program will redefault within 12 months, according to a report released Wednesday. Between 65% and 75% of loans that are modified through the Home Affordable Modification Program but not backed by the federal government are likely to go bad, according to the report released by Fitch Ratings, a N.Y.-based credit-rating agency. The main reason these borrowers continue to struggle is that HAMP does nothing to solve the rest of their debt problems, the report added. "Many of these borrowers still have very heavy levels of other debt," said Diane Pendley, a Fitch managing director, "auto loans, credit cards and other expenses. The HAMP modifications reduce housing expenses down to 31% of income but do not touch these other obligations."

Baltic Index Has Biggest Weekly Drop Since 2008 on Iron Ore - (www.businessweek.com) The Baltic Dry Index, a measure of shipping costs for commodities, had its biggest weekly decline since 2008 as iron-ore demand weakened in the face of higher raw-material costs and lower selling prices for steelmakers. he index tracking transport costs on international trade routes slid 18 percent this week, according to the Baltic Exchange. That’s the most since the last week of October 2008. Today the gauge fell 90 points, or 3.2 percent, to 2,694 points, led by a 7 percent drop in rates to hire capesize vessels that typically haul iron ore, a steelmaking raw material. “Pressure on steel prices has impacted the capesize market as iron ore resets 23 percent higher for the September quarter,” Omar M. Nokta, head of research at Dahlman Rose & Co. in New York, wrote in an e-mailed note today. Capesize hire rates plunged 33 percent this week, the most since the week ended Oct. 17, 2008.

Soros tells Germany to step up to its responsibilities, or leave EMU - (www.telegraph.co.uk) Legendary investor George Soros has called on Germany to leave the euro unless it willing to embrace a growth strategy, describing Berlin’s austerity doctrine as a threat to democracy and political stability in Europe. "German policy is becoming a danger that could destroy the European Project. A collapse of the euro cannot be excluded," he told the German weekly Die Zeit. "Unless Germany changes policy, its withdrawal from the currency union would be helpful for the rest of Europe. At the moment Germany is pushing its neighbours into deflation: this threatens a long phase of stagnation, leading to nationalism, social unrest, and zenophobia. It endangers democracy," he said. Mr Soros saw the political effects of wage cuts first-hand during the Great Depression, and narrowly survived the Holocaust as a Jewish boy in Nazi-controlled Budapest. He has since dedicated much of his wealth to philanthropic works promoting freedom and pluralism across the globe, mostly through Open Society institutes. His comments reflect growing alarm in influential circles on both sides of the Atlantic over the 1930s-style policies of wage cuts and debt-deflation being imposed up the Club Med bloc, Ireland, and parts of Eastern Europe by the EU authorities, at the behest of Berlin.

Obama Is A 'One-Term President': Investment Pro - (www.cnbc.com) Barack Obama is a "one-term president" while the Republicans are likely to take over Congress after this year's elections, according to investor Howard Ruff, editor of the RuffTimes newsletter. With the latest NBC News/Wall Street Journal poll showing Obama's approval ratings at a new low of 45 percent, Ruff told CNBC that he thinks the president may not even run for re-election in 2012. "There's a very good chance he won't even be running the next time around. This is only a four-year president," he said. "There's an old saying, 'Never try to catch a falling safe,' and opinions about him are falling and eventually he's being abandoned by the American public, which rushed to his support," Ruff added. "Even the media's starting to say bad things about him." As a result, Republicans could regain control of both houses of Congress, or at least put a major dent in Democrat control, he said. That would further weaken Obama's position.