KeNo's Housing and Economic Portal: Friday February 4 Housing and Economic stories

Thursday, February 3, 2011

Friday February 4 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Nightmare on Wall Street - (www.huffingtonpost.com) In a ruling that could be historic, the Supreme Judicial Court of Massachusetts ruled against two fraudster banks, US Bancorp and Wells Fargo, who illegally foreclosed on homes. In short, the two banks stole homes to which they had no legal claim. This rattled stock markets, causing the broad-based KBW Bank Index to fall by 2.2%, with Wells Fargo's stock prices falling by 3.4% as markets began to recognize that "business as usual" theft of American homes by banksters will be subject to greater scrutiny. Tellingly, the banks have been arguing that they are following industry practice. The ruling in Massachusetts (one of the most respected Supreme Courts in the US) affirms that industry practice is fraudulent. Perhaps as many as 66 million mortgages (those tainted by improper industry recording procedures) could be affected by the ruling.

Homedebtor Tricks To Get Out of Paying Mortgage - (www.wsbtv.com) A Channel 2 Action News Investigation has uncovered a new scheme homeowners are using to avoid foreclosure. It involves canceling their own mortgage, and some homeowners told Investigative Reporter Jodie Fleischer it’s working. But at least one local official calls it fraud. The Internet is flooded with offers promising to help save your house. Susan Weidman started her research after losing her husband to a brain tumor. With mounting bills, she didn’t want to lose her home, too. “I didn’t really set out to think that I could possibly get a free house. I just wanted to stall,” Weidman said. Weidman said she hasn’t paid her mortgage in a year. She received several foreclosure notices but the sale never happened. “I’d like to think it was the paperwork I filed all right, because everything I filed was basically with fair warning and asking them questions that they refused to answer,” she said. Weidman filed several documents with the Cobb County clerk of court including a document that challenged the mortgage and another that revoked her power of attorney.

Responsibility: But Didn't The Borrower Sign The Mortgage? - (www.ourbroker.com) It hardly seems unfair. Aren’t borrowers responsible for the loans they take out? It’s not like someone is held at gunpoint and forced to accept the worst loan lenders can concoct. That’s the thinking of a considerable segment of the population, a segment represented in some of the email I receive as well as in the ethics classes I teach for real estate brokers. Borrowers, according to such logic, should not be bailed out. They signed up for a loan and if it had woeful terms it was the borrower’s job to know better. Let the market take its course; if people fail they’ll know better the next time. Besides, individual responsibility counts. It’s not up the government to rescue people who made bad financial decisions goes such thinking, especially real estate investors. As President Bush said in August 2007, “it’s not the government’s job to bail out speculators, or those who made the decision to buy a home they knew they could never afford.”

US Banks Report Phantom Income on $1.4 Trillion Delinquent Mortgages - (globaleconomicanalysis.blogspot.com) Robert Lenzner at Forbes writes US Banks Reporting Phantom Income on $1.4 Trillion Delinquent Mortgages. The giant US banks have been bailed out again from huge potential writeoffs by loosey-goosey accounting accepted by the accounting profession and the regulators. They are allowed to accrue interest on non-performing mortgages ” until the actual foreclosure takes place, which on average takes about 16 months. All the phantom interest that is not actually collected is booked as income until the actual act of foreclosure. As a result, many bank financial statements actually look much better than they actually are. At foreclosure all the phantom income comes off the books of the banks. This means that Bank of America, Citigroup, JP Morgan and Wells Fargo, among hundreds of other smaller institutions, can report interest due them, but not paid, on an estimated $1.4 trillion of face value mortgages on the 7 million homes that are in the process of being foreclosed.

Prime Southern CA Cities Tipping Downward - (www.doctorhousingbubble.com) It looks like certain mid-tier California markets like Culver City are starting to see some of this behavior. Culver Citynow has a flood of condos on the market selling in the $100,000 range which only a few years ago would have seemed nearly impossible. Yet as we now know with the California budget once reality hits prices have to come in line with revenues or cuts have to be made. Now these examples are becoming more and more common and I believe we will see a price correction in many of these markets in 2011. This is similar to the Beverly Hills home on the market in the $500,000 range. Today we will look at a home, an actual single family residential in Culver City that has cracked the $300,000 mark.