KeNo's Housing and Economic Portal: Tuesday December 7 Housing and Economic stories

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Michigan Forbids City To Seek Municipal Bankruptcy - (www.nasdaq.com) A spokesman for the Michigan state treasury said Thursday that municipal bankruptcy isn't an option for Hamtramck, the small city near Detroit that earlier this month asked the state for permission to file for the process. No Michigan local government has ever filed for municipal bankruptcy, Stanton said, a rarely used tool that allows cities and other local governments to deal with creditors and extract concessions from its unions. Instead, Michigan has offered Hamtramck, a city of 23,000 residents, three options. One is a low-interest loan from the state for a maximum of $3 million, to be paid back over 20 years. The second is a tax-anticipation note, or TAN, which would allow Hamtramck to borrow up to half of whatever it collects in property-tax assessments in a given year; it would have to be repaid in 12 months. The third is a fiscal stabilization bond, which would let the city borrow up to 3% of its assessed value. Bill Cooper, the city's manager, said that Hamtramck is currently evaluating the options the state gave it, but he is "not very optimistic these options will work for us" because "we don't need to take on any more debt." "We have a survival deadline here," Cooper said, noting that, if things continue on the current course, Hamtramck could run out of money by Jan. 31 and be unable to make payroll or pay bills. Cooper said the state's options essentially require Hamtramck to borrow more money, and much hinges on the city's ability to win its lawsuit against Detroit. "It pushes the problem down the road," he said.

Don’t Just Tell Us. Show Us That You Can Foreclose. - (www.nytimes.com) AFTER examining their foreclosure practices for flaws in mortgage documentation and other procedures, many of the nation’s largest banks have resumed — or will soon resume — trying to evict defaulted borrowers. JPMorgan Chase, for example, told investors this month that it had extensively reviewed its foreclosure controls, trained personnel in the unit and started new procedures to ensure that all legal requirements would be met when it moves to seize a property in default. “If we find any foreclosures in error, we will fix them,” JPMorgan Chase said. But while banks may have booted a few robo-signers and tightened up some lax procedures, one question at the heart of the foreclosure mess refuses to go away: whether institutions trying to take back a property can prove they even have the right to foreclose at all.

Hedge fund FrontPoint hit by $3 billion in redemptions - (www.reuters.com) FrontPoint Partners, a $7.5 billion hedge fund currently embroiled in the U.S. government's fast-moving insider trading probe, has been asked to return $3 billion to its investors. "The deadline for year-end redemptions has elapsed and we have received approximately $3 billion in total redemption requests," FrontPoint co-chief executive officers Dan Waters and Mike Kelly said in a letter sent to investors on Friday. Reuters obtained a copy of the letter. A spokesman for FrontPoint declined to comment. About half of the redemption requests were related to FrontPoint's healthcare portfolios, which executives decided to liquidate. The portfolios were allegedly at the heart of one of the government's probes, people familiar with the matter said.

F.H.A. Rule Changes for Mortgage Borrowers - (www.nytimes.com) HOME buyers with sketchy credit who are unable to qualify for conventional mortgages may now find it more costly and difficult to obtain loans insured by the Federal Housing Administration. New rules that went into effect this month adjust the two types of mortgage insurance paid by consumers for loans insured by the F.H.A., which is part of the Department of Housing and Urban Development. One change raises the annual insurance premium, paid monthly by the borrower, setting it at 0.85 percent to 0.9 percent of the loan balance, depending on the down payment or equity owned; the amount used to be 0.5 percent to 0.55 percent. The other change lowers the one-time upfront insurance premium that borrowers must pay, to 1 percent of the loan balance from 2.25 percent. The upfront premium is paid in a lump sum at closing or added to the loan balance, unlike the monthly premium, which is paid over the life of the loan in addition to the interest and principal.

Facing layoffs, newer Newark police officers protest union's favorable treatment of senior officers - (www.nj.com) Even as Newark’s police officers facing layoffs publicly voiced their frustration with their union leadership, a state appellate court issued a ruling that could end their jobs as early as Friday. Union officials say they are doing all they can to prevent the layoffs, but contend the city has forced them into a corner. And one union official said older officers wouldn’t give "a dime" to prevent the layoffs. Meanwhile, the court set a hearing for today on the city’s request to immediately end a 10-day stay on the layoffs granted last week by a lower court, said Derrick Hatcher, president of Newark’s Fraternal Order of Police. If the city prevails at Friday's hearing, Mayor Cory Booker’s plan to layoff 167 police officers could go into effect immediately, said Hatcher. A city spokeswoman did not immediately reply to a request for comment. "An officer who has been on the job 15 years is not going to fight for you," James Stewart, the union vice president, told the group outside. "Veteran guys are not giving up a dime," he said.