KeNo's Housing and Economic Portal: Sunday October 31 Housing and Economic stories

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Florida community feels ripple effects as paperwork issues stall foreclosures - (www.washingtonpost.com) IN FORT MYERS, FLA. The yellow stucco house at 1813 Oakley Ave. has blooming bougainvillea out front, a spacious yard out back and a buyer named Emilio Mamuyac who's smitten with the place and ready to move in. But he can't. Since early last month, the sale has been postponed three times as the mortgage finance giant Fannie Mae, which seized the home from a delinquent borrower, has faced concerns about whether the foreclosure was properly carried out. And as this deal and others like it languish, the effects are rippling across this community on Florida's west coast. Mamuyac has to continue paying rent for an apartment six miles down the road. Mamuyac's real estate agent hasn't been able to pocket his commission, nor has the seller's agent. Another home inspector loses out on work.

Witness: signatures were faked at foreclosure firm - (www.signonsandiego.com) An office manager at a Florida law firm under investigation for fabricating foreclosure documents would sign her name to 1,000 files a day without reviewing them and would allow paralegals to sign her name for her when she got tired, her former secretary said in a deposition released Monday. Cheryl Salmons, office manager for the foreclosure department at the law offices of David Stern , would sign 500 files in the morning and another 500 files in the afternoon without reviewing them and with no witnesses, said former assistant Kelly Scott in a deposition released by the Florida attorney general's office. The files were laid out on a conference room table for Salmons to sign, the former secretary said. "She doesn't review them. She just looks," Scott said. "The paper is going to be in the top folder so it's visible to her, and she knows exactly where she has to put her signature." Paralegals would then collect the files and swap them with each other, signing them as witnesses even though they had already been notarized and executed, Scott said. Salmons allowed some paralegals to sign her name for her, said the former assistant, who worked at the firm for a year in 2008.

Barney Frank Is Anything But On Housing - (www.investors.com) You would be hard-pressed to find a politician who is less frank than Congressman Barney Frank. Even in an occupation where truth and candor are often lacking, Rep. Frank is in a class by himself when it comes to rewriting history in creative ways. Moreover, he has a lot of history to rewrite in his re-election campaign this year. No one contributed more to the policies behind the housing boom and bust, which led to the economic disaster we are now in, than Frank. His powerful position on the House of Representatives' Committee on Financial Services gave him leverage to force through legislation and policies that pressured banks and other lenders to grant mortgage loans to people who would not qualify under the standards which had long prevailed, and had long made mortgage loans among the safest investments around. All this was done in the name of promoting more homeownership among people who had neither the income nor the credit history that would meet traditional mortgage lending standards. To those who warned of the risks in the new policies, Frank replied in 2003 that critics "exaggerate a threat of safety" and "conjure up the possibility of serious financial losses to the Treasury, which I do not see." Far from being reluctant to promote risky practices, Frank said: "I want to roll the dice a little bit more in this situation."

The New Tax Man: Big Banks And Hedge Funds - (www.huffingtonpost.com) Nearly a dozen major banks and hedge funds, anticipating quick profits from homeowners who fall behind on property taxes, are quietly plowing hundreds of millions of dollars into businesses that collect the debts, tack on escalating fees and threaten to foreclose on the homes of those who fail to pay. The Wall Street investors, which include Bank of America and JPMorgan Chase & Co., have purchased from local governments the right to collect delinquent taxes on several hundred thousand properties, many in distressed housing markets, the Huffington Post Investigative Fund has found. In many cases, the banks and hedge funds created new companies to do their bidding. They gave the companies obscure, even whimsical names and used post office boxes as their addresses, masking Wall Street's dominant new role as a surrogate tax collector. In exchange for paying overdue real estate taxes, the investors gain legal powers from local governments to collect the debt and levy fees. At first, property owners may owe little more than a few hundred dollars, only to find their bills soaring into the thousands. In some jurisdictions, the new Wall Street tax collectors also chase debtors over other small bills, such as for water, sewer and sidewalk repair.

Forget The Foreclosures, Here's The Simple Thing That Is Crushing The Banks - (www.businessinsider.com) A JPMorgan analyst suggests that the current maelstrom surrounding banks could cost the industry somewhere between $50-$120 billion, but arguably the fears here are being overblown. But there is a clear threat that is very easy to see: the economy is weak and banks don't have the business volume to make a lot of money. As credit specialist David Goldman observers, banks are still plowing more and more money into government securities -- the opposite of real banking activity. What should worry investors, rather, is the simple question: how can the banks make money when no-one wants to borrow and asset returns are imploding? The absence of viable investment opportunities for the banks is illustrated most poignantly by one data point, namely banks’ accelerating purchases of Treasuries. Bank purchases of treasuries spiked upward during the past several weeks just as the yield curve flattened and Treasury returns collapsed. It was one thing for banks to borrow at next to nothing and buy 2-year notes at 1%. The trade doesn’t make sense now. It is risky for banks to go far out the yield curve, but they seem to be doing so.