KeNo's Housing and Economic Portal: Thursday August 5 Housing and Economic stories

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TOP STORIES:

Second Housing Crisis? Another $1T in Mortgages Backed by Taxpayers - (www.foxbusiness.com) With little fanfare, the U.S. Government has rapidly become the nation’s top backer of mortgages that require little or no money down, with taxpayer guarantees on them surpassing $1 trillion earlier this year, a FOX Business analysis shows. “Zero down” mortgages as high as $1 million have been backed by the Department of Veterans Affairs, which by law offers most of its loans with no down payment required. Such “no money down” jumbo loans were approved in higher-cost housing markets, VA officials said. The average VA loan is $207,000. The Federal Housing Administration alone has expanded loan guarantees to $865 billion in June, including some refinancings of existing loans – almost double the 2007 level -- according to an agency report. Such low- or no-down-payment loans, along with falling interest rates, have helped millions of low- and moderate-income homebuyers who might otherwise not have gotten a loan. But some housing-finance experts warn “affordable” mortgage programs at the VA, FHA and Department of Agriculture could be laying the groundwork for another housing crisis -- and additional taxpayer bailouts.

Home Vacancies Rise as U.S. Ownership Falls to Lowest in Decade – (www.bloomberg.com) About 18.9 million homes in the U.S. stood empty during the second quarter as surging foreclosures helped push ownership to the lowest level in a decade. The number of vacant properties, including foreclosures, residences for sale and vacation homes, rose from 18.6 million in the year-earlier quarter, the U.S. Census Bureau said in a report today. The ownership rate, meaning households that own their own residence, was 66.9 percent, the lowest since 1999. Lenders are accelerating foreclosures as borrowers fall behind in mortgage payments after the worst housing crash since the Great Depression. A record 269,962 U.S. homes were seized in the second quarter, according to RealtyTrac Inc. Foreclosures probably will top 1 million this year, the Irvine, California- based data company said in a July 15 report. “There are a lot of people losing their homes and either moving in with family or renting places to live,” said Patrick Newport, an economist with IHS Global Insight in Lexington, Massachusetts. “Foreclosures are still going up.”

Ex-Financial Regulators Get Set to Lobby Agencies - (www.nytimes.com) As the battle over toughened financial restrictions moves to a new front, the regulatory agencies that will create hundreds of new rules for the nation’s banks will face a lobbying blitz from companies intent on softening the blow. And many of the lobbyists the regulators hear from will be their former colleagues. Nearly 150 lobbyists registered since last year used to work in the executive branch at financial agencies, from lawyers for the Securities and Exchange Commission to Federal Reserve bankers, according to data analyzed for The New York Times by the Center for Responsive Politics, a nonpartisan research group. In addition, dozens of ex-government lawyers, who are not registered as lobbyists, are now scouring the financial regulations on behalf of corporate clients. “The headhunters are out in force” to recruit former government regulators as lawyers and lobbyists, said Lawrence Kaplan, who was a senior lawyer at the government’s Office of Thrift Supervision and now works on banking regulation at the Washington law firm Paul Hastings.

Greatest Depression in California: People Begin Living Without Electricity and Water - (www.infowars.com) Houses everywhere are going vacant. People don’t say goodbye, they don’t leave a number, they just disappear. With their disappearance we add another vacant house to the street. But families living in housing without utilities is a new sight for me to behold. I spoke recently with a rep from So Cal Edison who, full time contacts residence who have had their electricity turned off due to non payment. She has a negotiator sent in and they work on a reduced payment. It’s amazing to me, that now, it is becoming acceptable in California to camp out in your home. People are losing their homes, losing their cars and losing their dignity. How are we going to afford kids clothes and school supplies for the coming year? How can we expect families to pay for all these additional costs when the economy is in the shape it in. I ask myself this every day. http://www.gazette.com/articles/upwar… Requests for help paying utility bills surge upward. Light switches, furnaces and water faucets aren’t the typical gauges of economic health, but at Pikes Peak United Way’s 2-1-1 call center, they tell a tale of people who continue to struggle to pay their bills in a weak economy.

Obama Team Promises Housing Finance Reform Proposal by January - (www.washingtonindependent.com) Despite Republican objections, congressional Democrats did not include reforms of Fannie Mae and Freddie Mac or of the broader mortgage market in the Dodd-Frank financial regulatory reform bill — now law. The administration has promised comprehensive reform but thus far has not named any objectives, costs or goals. It’s hard to blame them. Reforming Fannie and Freddie might prove as complicated as reforming Wall Street. The two government-sponsored enterprises are currently backing around nine in ten new mortgages, propping up a weak housing market at a cost of hundreds of billions to taxpayers. Housing experts worry acting too rashly could crater the tentative housing recovery, but also note that the government, at some point, needs to re-regulate mortgage finance, reform Fannie and Freddie and let the private market take over. Back in April, the Treasury Department released a list of seven questions to this end, asking for experts to submit ideas for reform. Last week, Rep. Barney Frank (D-Mass.) said he will start work on a housing finance bill this fall. And today, the Obama administration announced it will hold a conference on Aug. 17, bringing together community groups, consumer advocates, housing industry figures and economists to contemplate how to fix the multi-trillion dollar market. In its announcement on the Conference on the Future of Housing Finance, the administration said it will have a housing finance reform bill ready by January — the first concrete date it has set, to my knowledge at least.