KeNo's Housing and Economic Portal: Wednesday August 4 Housing and Economic stories

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TOP STORIES:

Mortgage Securities It Holds Pose Sticky Problem for Fed - (www.nytimes.com) The Federal Reserve provided most of the money for new mortgages in the United States last year, effectively lending more than $1 trillion to American homeowners. Now the legacy of that extraordinary intervention is hanging over the central bank as it faces growing demands for an encore to help revive the flagging economy. While officials and economists generally regard the program as successful in supporting the housing market, it has left the Fed holding a vast pile of mortgage securities — basically i.o.u.’s from homeowners — that it does not want and cannot sell. Holding the securities could cost the Fed a lot of money and hamper its ability to fight inflation, while selling the securities could drain needed money from the still-weak economy.

20% of Americans hit by major economic loss - (money.cnn.com) A new study released Wednesday estimates that 20% of Americans suffered a significant economic loss last year - the highest level in the past 25 years. The new Economic Security Index looks at the interaction of three key variables that have a direct bearing on a person's economic security: income loss, medical expenses and debt. The index, which tracks data since 1985, shows that economic insecurity has risen across all groups, not just among low-income families and those without much education. The index was constructed by Yale political scientist Jacob Hacker and a team of researchers, and the project was funded by the Rockefeller Foundation. The ESI defines people as economically insecure when their situation meets two criteria. First, within a year's time they have lost 25% or more of their available gross income. Available gross income is the money they have left over after paying for medical costs and debt.Second, they don't have enough in an emergency fund or other liquid reserves to make up the difference.

Countrywide VIP Loan Program Gave Fannie Mae Employees 'Sweetheart Deals' - (www.huffingtonpost.com) The former Countrywide Financial Corp. gave preferential loans to more than three dozen employees of Fannie Mae while the two giant housing enterprises were locked in an expanding, multi-billion dollar business relationship in subprime mortgages, documents show. Discounted mortgages written by Countrywide, once the nation's largest subprime lender, were granted to a far wider group of Fannie employees than the four top executives executives whose preferential loans were previously disclosed, according to Countrywide documents provided to Congress under a subpoena. Countrywide's VIP section, established to handle preferential mortgages for favored customers, serviced a variety of Fannie employees who handled Fannie's business of buying mortgages and selling mortgage-backed bonds. Recipients included an account manager, a lobbyist, underwriters, lawyers, a home loan manager, a sales executive and a credit risk manager. The documents reveal that when Countrywide was depending on government-sponsored firms to finance billions of dollars worth of subprime loans that touched off the housing meltdown, it was giving employees at the largest of those companies – Fannie Mae – sweetheart deals on their own home loans.

FHA only starting to tighten loan standards - (www.doctorhousingbubble.com) Last week HUD came out with laser focused ways of addressing its impending insolvency because of defaulting FHA insured loans. Now some of you were under the impression that something was already done to tighten lending standards given the precarious situation the housing bubble brought to our economy. Yet that is not the case and incredibly, what passes for basic due diligence today seems excessive because only a few years ago loans were given out to people making $14,000 a year and financing their $720,000 home purchase. FHA insured loans have become the staple of moving properties especially in areas like California. The 3.5 percent minimum down payment is all people can muster up and apparently this has caused further deterioration in this market.

A City Outsources Everything. Sky Doesn't Fall. - (www.nytimes.com) Not once, not twice, but three times in the last two weeks, Andrew Quezada says, he was stopped and questioned by the authorities here. Mr. Quezada, a high school student who does volunteer work for the city, pronounced himself delighted. “I’m walking along at night carrying an overstuffed bag,” he said, describing two of the incidents. “I look suspicious. This shows the sheriff’s department is doing its job.” Chalk up another Maywood resident who approves of this city’s unusual experience in municipal governing. City officials last month fired all of Maywood’s employees and outsourced their jobs. While many communities are fearfully contemplating extensive cuts, Maywood says it is the first city in the nation in the current downturn to take an ax to everyone.

Dramatic price reductions for house in Guerneville, CA - (www.patrick.net)

2010 Jan 23rd http://sfbay.craigslist.org/nby/reb/1566...3 $145,778

2010 Feb 21st http://sfbay.craigslist.org/nby/reb/1611...3 $125,000

2010 Mar 1st http://sfbay.craigslist.org/nby/reb/1623...3 $125,000

2010 Mar 9th http://sfbay.craigslist.org/nby/reb/1636...3 $81,600

2010 Mar 12th http://www.redfin.com/CA/Guerneville/148...3 $81,600

2010 Mar 17th http://sfbay.craigslist.org/nby/reb/1648...3 $81,600

2010 Mar 29th http://sfbay.craigslist.org/nby/reb/1666...3 $76,600

2010 Apr 21st http://sfbay.craigslist.org/nby/reb/1703...3 $76,600

2010 May 1st http://www.movoto.com/real-estate/homes-...3 $76,600

2010 May 3rd http://sfbay.craigslist.org/nby/reb/1721...3 $76,600

2010 Jul 1st http://sfbay.craigslist.org/nby/reb/1821...3 $72,800