KeNo's Housing and Economic Portal: Tuesday November 2 Housing and Economic stories

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Chicago Sheriff Says NO to Enforcing Foreclosures - (www.4closurefraud.org) The sheriff for Cook County, Illinois, which includes the city of Chicago, said on Tuesday he will not enforce foreclosure evictions for Bank of America Corp, JPMorgan Chase and Co. and GMAC Mortgage/Ally Financial until they prove those foreclosures were handled “properly and legally.” Bank of America, the largest U.S. mortgage servicer, and GMAC, on Monday both announced rollbacks from their foreclosure moratoriums. The announcement by Cook County Sheriff Thomas Dart comes after weeks of damaging accusations of shoddy paperwork that may have caused some people to be illegally evicted from their homes. “I can’t possibly be expected to evict people from their homes when the banks themselves can’t say for sure everything was done properly,” Dart said in the statement. “I need some kind of assurance that we aren’t evicting families based on fraudulent behavior by the banks. Until that happens, I can’t in good conscience keep carrying out evictions involving these banks,” he added.

Private islands tough sell in current market - (seattletimes.nwsource.com) Though the San Juan Islands are recognized worldwide as prime real estate, even those with the money to consider buying an island are holding off to see if the island market will drop further. Think it's tough selling a house in this market? Try unloading an island. Vendovi Island, a 216-acre property seven miles north of Anacortes, has been on the market more than two years. The island, accessible only by boat or floatplane, features six beaches, a four-bedroom house and protected harbor. Vendovi has been marketed as one of the gems of the San Juan Islands by auction house JP King of South Carolina. But when it came to auction Sept. 30, the sole bid, for $3.3 million from a preservation trust, did not come close to the buyer's $14.5 million asking price or confidential reserve price set by owner David Fluke.

SoCal housing market 'on hold' - (www.ocregister.com) Southern California housing looks like a deer in the headlights, characterized as a market "that is recovering in fits and starts" amid continued economic uncertainty. The median price – or price at the midpoint of all sales – has been frozen at or just under $295,500 for three months. And although home sales in the region have declined for the past three months in a row, the decrease has been small. Transactions remain stuck in the 18,000-to-19,000 range. "Today's market can be characterized as much by activity that's not happening, as by the activity that is happening. We're seeing distress-selling, bargain-hunting and entry-level buying, while the rest of the market is still largely on hold," said John Walsh, MDA DataQuick president. Orange County had the smallest year-over-year sales decline in the region, with transactions down 10.7%. Regionwide, they're down 16% from September of 2009, and by as much as 23.7% in Riverside County.

Foreclosure freeze could put security clearances at risk - (www.washingtonpost.com) The sudden moratorium on many foreclosures across the country has unexpectedly put some federal workers and contractors in jeopardy of losing their security clearances because of the heightened uncertainty clouding their finances, according to lawyers who handle these cases. Employees with security clearances are monitored by the government for financial problems that would make them vulnerable to bribery or blackmail. And with many financial companies adopting some form of foreclosure freeze in recent weeks, it's taking longer for some delinquent borrowers to resolve their mortgage cases and put their troubles behind them, the lawyers said.This problem is especially acute in the Washington region, home to nearly a third of the the nation's 854,000 employees with top-secret clearances. "Resolving debt is more complicated when the lenders are in paralysis," said Dennis Sysko, a national security lawyer in Glen Burnie. "The longer it is unresolved, the longer the cloud remains." Lawyers in the Washington area said they are starting to field inquiries about foreclosure delays from workers who have security clearances or are trying to get them. Many don't know whether they should be elated or concerned by the turn of events.

Most shocking discovery yet about how banks hid their toxic mortgages - (www.slate.com) Since the early days of the current economic cataclysm, I have believed that we would, with some investigation, find the Rosetta stone that would demonstrate that the banks knew that the toxic mortgages they were packaging were, in fact, not viable financial instruments. This belief stemmed from my experience as New York state's attorney general. The AG's office had investigated enough subprime lenders to recognize the magnitude of fraud and the ubiquity of bogus credit analysis. Our efforts to expand our inquiry were stymied by the banks—and the Bush administration—which claimed we didn't have jurisdiction to pursue the inquiry into many of the major national banks. (We finally won, in June 2009, in a 5-4 ruling from the U.S. Supreme Court. The ruling was a bit late.) I saw enough to know that any investigator doing even a minimal amount of work would reach the same conclusion we had. And I knew that the credit departments of the major banks would have documented this shoddy analysis. This is why I encouraged all the investigators with whom I spoke to begin by demanding access to the documents that the credit departments of the banks examined. Some of these documents have emerged, and they tell quite a fascinating and appalling tale: These documents, from Clayton Holdings, a due diligence company retained by the banks, reveal that Clayton, after analyzing more than 900,000 mortgages, told the banks that about 30 percent of the loans being packaged into securitized products did not satisfy the banks' own underwriting standards. This meant that the securitized products were almost bound to blow up.