KeNo's Housing and Economic Portal: Saturday February 5 Housing and Economic stories

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Mortgage Giants Leave Legal Bills to the Taxpayers - (www.nytimes.com) Since the government took over Fannie Mae and Freddie Mac, taxpayers have spent more than $160 million defending the mortgage finance companies and their former top executives in civil lawsuits accusing them of fraud. The cost was a closely guarded secret until last week, when the companies and their regulator produced an accounting at the request of Congress. The bulk of those expenditures — $132 million — went to defend Fannie Mae and its officials in various securities suits and government investigations into accounting irregularities that occurred years before the subprime lending crisis erupted. The legal payments show no sign of abating. Documents reviewed by The New York Times indicate that taxpayers have paid $24.2 million to law firms defending three of Fannie’s former top executives: Franklin D. Raines, its former chief executive; Timothy Howard, its former chief financial officer; and Leanne Spencer, the former controller.

Warning From S&P on Munis - (online.wsj.com) Downgrades of bonds issued by state and local governments could increase this year, according to a report to be issued Monday by credit-rating agency Standard & Poor's. The $2.9 trillion municipal-bond market has been thrown into tumult in recent months, in part because of growing fears that some state and local governments will default on their debt. Investors have pulled out record amounts from muni-bond mutual funds, while the yields on muni bonds, which move inversely to price, have hit their highest levels since the depths of the financial crisis. A downgrade of a government borrower would likely put downward pressure on the price of its bonds, resulting in higher borrowing costs and potential losses for investors. Standard & Poor's says it expects greater muni-market volatility this year, but cautions that a rise in borrowing costs wouldn't add to municipalities' credit concerns unless bond yields were to surge. While rating downgrades may increase in 2011 compared with recent years, S&P says the majority of state and local government borrowers will maintain their medium to high investment-grade ratings.

Rahm Emanuel Can't Run for Chicago Mayor: Court - (www.cnbc.com) A lawyer for Rahm Emanuel says the former White House chief of staff will appeal a ruling that says his name can't appear on the ballot for Chicago mayor. The lawyer, Mike Kasper, said that they will take the case to the Illinois Supreme Court. Earlier Monday, an Illinois Appeals Court ruled that Emanuel's name can't appear on the ballot for Chicago mayor because he didn't live in the city in the year before the election. The court voted 2-1 to overturn a judge's ruling to keep Emanuel's name on the Feb. 22 ballot. Those challenging Emanuel's candidacy have argued that the Democrat doesn't meet the one-year residency requirement because he rented out his Chicago home and moved his family to Washington to work for President Barack Obama for nearly two years. Emanuel has said he always intended to return to Chicago and was only living in Washington at the request of the president.

Foreclosures in Colo. mountains scaling record heights - (www.denverpost.com) Seven bedridden years after tumbling from a rooftop, Terry Counterman can walk again but could soon lose his Carbondale home in a foreclosure sale. "I've been sending them paperwork and forms for two years. Someone from the bank calls five, six times a day, telling me to send them more forms. I'm sending them all the money I have, and they say it's not enough," said the 63-year-old former roofing inspector, whose lender plans to sell his home of 30 years next month. "I didn't buy this place as an investment. I bought it as my home." On Garfield County's tally of foreclosures, Counterman's bank reports he owes about $67,000 on his loan. He's one of an unprecedented number of homeowners in Colorado's high country who are battling foreclosure. The crush of foreclosure filings in mountain communities continued through 2010, eclipsing not just the records from the previous year but the fallout from the formidable crash of the mid-1980s.

Licensed Realtor Indicted in Massive Mortgage Fraud - (www.enewspf.com) Six defendants were indicted January 12 on federal charges alleging that they participated in a $15 million mortgage fraud scheme involving more than 40 residential properties located in Chicago and south suburbs, federal law enforcement officials announced today. The defendants include two licensed realtors and a licensed loan officer who bought and sold homes, recruited others to act as residential purchasers, and allegedly caused various financial institutions to lose approximately $4.5 million on mortgage loans that were not repaid by the borrowers or fully recovered through subsequent foreclosure sales. According to the indictment, the lead defendant, Wanda Rivera-Burton, a licensed realtor, was employed as a loan originator and also owned a real estate company, Options-R-Us Realty, as well as co-owned B&W Investments and Property management, Inc., with co-defendant and loan officer Brenda Tibbs. Another defendant, Lynette Johnson, was a licensed realtor employed by Options-R-Us Realty and owned World Investment and Management, the FBI says. River-Burton, 39, of Chicago, was charged with seven counts of bank fraud, two counts of wire fraud, and one count of mail fraud in a 10-count indictment that was returned today by a federal grand jury. Tibbs, 55, of Tinley Park, was charged with two counts of bank fraud, and Johnson, 55, of Chicago, was charged with three counts of bank fraud and one count each of wire and mail fraud. Also indicted on one count of bank fraud each were Viktor Blanks, 51, of Oak Lawn, Dina Dunn, 48, of Chicago; and Nathaniel Maxwell, 34, of Chicago. All six defendants will be ordered to appear for arraignment in U.S. District Court.