KeNo's Housing and Economic Portal: Tuesday November 23 Housing and Economic stories

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Maine Seeks U.S. Waiver for Blackstone's "Junk" Health Insurer - (www.bloomberg.com) Maine wants an exemption from the federal health-care law to keep a Wall Street-controlled insurer with a history of allegedly abusive practices from leaving the state. Mila Kofman, Maine’s insurance superintendent, asked the U.S. Department of Health and Human Services for a three-year waiver from the law’s requirement that insurers spend 80 percent of premium revenues on medical care. Without the waiver, Kofman said in a July 1 letter to HHS Secretary Kathleen Sebelius, HealthMarkets Inc. will probably drop its Maine policyholders, who represent a third of the state’s individual market. HealthMarkets, based in North Richland Hills, Texas, is 77 percent-owned by funds run by Blackstone Group LP and Goldman Sachs Group Inc. Maine’s request is the latest example of the difficulty the Obama administration is having enforcing the strictures of the Patient Protection and Affordable Care Act, passed in March. Although others have received waivers from the act’s rules, consumer advocates say the HealthMarkets group is different. “If you grant a waiver to a junk health-insurance provider that is among the worst in America, then you might as well not have a health reform at all because you’re never going to say no to anyone,” said Jamie Court, president of Consumer Watchdog, a California non-profit that has asked the Obama administration to deny waivers to a unit of HealthMarkets. “This is ridiculous.”

Condo, co-op and townhouse owners could end up paying their neighbors' bills - (www.latimes.com) People in condo, co-op and town house communities may have to pick up the slack for missed dues when other owners walk away from their homes or lose them to foreclosure. For those who have a lot of cash or can get credit, this could be an ideal time to buy a house — the foreclosure crisis has pushed prices down and interest rates are way low. But beware if you are looking to buy a condominium, co-op, town house or other property that's part of a homeownership group. Another side effect of the foreclosure crisis is that you could end up responsible for some of your neighbors' bills. That's because people in shared ownership communities chip in to pay the cost of maintaining the buildings and amenities such as swimming pools. Also, the funds, usually paid in monthly installments, are often used to pay for landscaping, as well as to insure the structures. But when individual owners in a group walk away from their homes or lose them to foreclosures, the bills end up getting split by the remaining homeowners.

Wow -- Check Out How Blatantly Our Government Misled Us With The October Jobs Numbers! - (www.businessinsider.com) But it turns out that there was a simple reason why the payroll numbers looked so good--a reason that had nothing to do with underlying strength of the jobs market. What was that reason? The government changed the "seasonal adjustment" it made to the payroll numbers--and, in so doing, boosted the number of "jobs" created in October by 100,000. Stephanie Pomboy of MacroMavens (via John Mauldin) explains: " 'The seasonal bar which the payroll data must jump was (inexplicably and dramatically) lowered from prior Octobers. " 'Thus, in October 2009, the BLS set the bar at 870,000 jobs, similar to the 840,000 it anticipated in October 2008. This year, by contrast, it lowered the bar to 768,000. Mumbo, jumbo, payrolls presented "an upside surprise" of 100,000.' Alan Abelson of Barrons (again via John Mauldin) adds the following: "According to John Williams at Shadow Government Statistics, the BLS' fiddling with the figures via what he calls 'seasonal-factor games' actually created 200,000 phantom jobs last month. John cites such finagling as the reason his prediction of an October decline and a rise in the jobless rate was wrong. It also explains why seasonally adjusted payrolls were revised upward by 110,000 in September, including 56,000 in August." In other words, it wasn't that there were a surprising number of jobs created in October. It was that the government changed its "seasonal adjustment" assumption in a way that made it look as though there were a surprising number of jobs created in October.

Bank of America Fights Pressure To Buy Back Mortgages - (www.nytimes.com) Bank of America on Thursday rebuffed claims by a lawyer for several big investors, including the Federal Reserve Bank of New York, that it should buy back troubled mortgages because the loans were made improperly. In its first response to the investor claims, Bank of America argued that the effort would have the effect of speeding up the foreclosure process and force it to evict more homeowners. The investors’ claims have become a major worry on Wall Street as the foreclosure crisis has escalated. A group of investors, including the Federal Reserve Bank of New York and Pimco, the money management firm, is pressing Bank of America to buy back a portion of some $47 billion worth of mortgages. They argue that Countrywide, a unit of Bank of America, has not been servicing the mortgages correctly and that the loans did not conform to underwriting standards. In a letter from its lawyers Thursday, Bank of America said the problems stemmed from the economic downturn rather than any underlying problem with how the mortgages were sold to investors. It called the investor claims “utterly baseless.” Signaling a much more aggressive legal stance, the bank also criticized the lawyer behind the effort, Kathy D. Patrick. It argued that a letter she wrote last month that was signed by clients was “written for an improper purpose, or in furtherance of an ulterior agenda.” Ms. Patrick did not immediately respond to calls seeking comment.

Taking on a Second Mortgage to Pay the Foreclosure Lawyer - (www.nytimes.com) For some Florida residents, the price of getting out of foreclosure will include taking on a second mortgage — payable this time to their lawyers. The new mortgage, which takes effect only if the foreclosure is dismissed and the homeowner’s debt to the bank is reduced, is controversial among defense lawyers, some of whom call it “creepy” and “crass.” Yet even they acknowledge it offers a solution to a vexing question: How do they get paid? After recent revelations that banks were sloppy in processing many foreclosures and in some cases lack standing to seize a house, potential clients seeking to challenge their lenders are flocking to lawyers. But while these distressed homeowners might have a case, they generally lack the resources to pay legal fees. Being in foreclosure usually means being broke. “We thought, ‘Why don’t we use a bit of ingenuity to find an affordable way to represent them?’ ” said Peter Ticktin of the Ticktin Law Group in Deerfield Beach, Fla. “It’s a new model, a new paradigm.”