KeNo's Housing and Economic Portal: Friday April 29 Housing and Economic stories

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TOP STORIES:

Someone has to stop the Federal Reserve before it crushes Main Street - (www.marketwatch.com) Someone has to stop the Federal Reserve before it crushes what remains of America’s Main Street economy. In the last few weeks alone, it launched two more financial sector pumping operations which will harm the real economy, even as these actions juice Wall Street’s speculative humors. First, joining the central banking cartels’ market rigging operation in support of the yen, the Fed helped bail-out carry traders from a savage short-covering squeeze. Then, green lighting the big banks for another go-round of the dividend and share-buyback scam, it handsomely rewarded options traders who had been front-running this announcement for weeks. Indeed, this sort of action is so blatant that the Fed might as well just look for a financial vein in the vicinity of 200 West St., and proceed straight-away to mainline the trading desks located there. In any event, the yen intervention certainly had nothing to do with the evident distress of the Japanese people. What happened is that one of the potent engines of the global carry-trade — the massive use of the yen as a zero cost funding currency — backfired violently in response to the unexpected disasters in Japan.

Republicans begin to chip away at Fannie, Freddie. Good! - (www.reuters.com) Republicans in the U.S. House of Representatives have started to chip away at housing finance giants Fannie Mae and Freddie Mac, taking the first legislative steps to reduce their role in the $10.6 trillion U.S. residential mortgage market. The House Financial Services subcommittee responsible for overseeing Fannie Mae and Freddie Mac approved eight narrowly crafted bills late on Tuesday and early Wednesday targeting the two firms, including one that would sharply cut the pay of their executives. Republicans are pushing hard to curtail the two government-controlled firms as part of a broad effort to scale back the government's involvement in housing. Democrats are more sympathetic to a continued, but smaller, government role. The votes, largely but not entirely along party lines, marked the first concrete steps in what is expected to be a years-long process of winding down Fannie Mae and Freddie Mac.

Florida's shadow real-estate inventory ranks No. 1 in US - (www.miamiherald.com) Unlisted homes in limbo could threaten Florida’s fragile recovery. The forecast could be dim for the Sunshine State as a looming market of distressed and discounted homes threatens a struggling recovery. According to a new report from the National Association of Realtors, Florida’s “shadow inventory” ranks No. 1 in the nation with 441,461 homes statewide. California is in second place with 227,961 homes. Shadow homes are ones in limbo — bank repossessions, those with delinquent loans, and ones in foreclosure that are not yet listed for resale. The size of the shadow is grim news for Florida’s home values, which could take a dive as the properties are listed and start trading hands for cheap. Palm Beach County’s median home value has proven fragile in the past year, slipping under $200,000 in January before rebounding in February to $205,400. “That cloud just keeps hanging over us,” said Tim Becker, director of the University of Florida’s Bergstrom Center for Real Estate Studies, referring to the shadow inventory. “The question right now is: When will the homes come on the market and over what period of time?” Becker said Florida’s shadow inventory is so much larger than other states’ because of the rampant real-estate speculation that occurred during the boom, as well as the state’s judicial foreclosure system. Florida requires every foreclosure go through the courts, which have a 322,724-case backlog of foreclosures. “There are only so many cases you can do in a day, only so many you can process,” Becker said. Adding to the logjam is the robo-signing muddle and collapse of the Law Offices of David J. Stern, which handled tens of thousands of foreclosures in the state.

Could a Government Shutdown Hit Housing? - (blogs.wsj.com) If the federal government shuts down, the housing market could face a bit of a screwball just as the spring sales season gets underway. The Federal Housing Administration plays a key role providing low down payment mortgages to the housing market. Last year, it accounted for as many as half of all mortgages for home purchases, according to research firm Zelman & Associates. The FHA is particularly popular with first-time home buyers because it requires minimum down payments of just 3.5%. The New Deal-era agency doesn’t actually make mortgages. Instead, it insures lenders against the risk of a default for loans that meet its standards. But if the federal government shuts down, the FHA won’t be insuring any new loans. Banks will still be able to make FHA loans, but they’ll have to fund and hold onto those loans until the government re-opens for business.

Pelosi A "No" Vote On Budget Deal? - (www.businessinsider.com) It seems hard to imagine, but The Hill is reporting that a surprising number of "leadership" Democrats in the House will vote "no" this afternoon on the FY 2011 budget deal. More surprising, The Hill reports that former House Speaker Nancy Pelosi might also vote against the enabling legislation. Here's the report: House Democratic leaders are prepared to buck President Obama with a ‘no’ vote on the 2011 spending deal he struck with Speaker John Boehner (R-OH). Two members of the House Democratic leadership team, Caucus Chairman John Larson (D-CT) and Vice Chairman Xavier Becerra (D-CA), told The Hill they would oppose the legislation, while Minority Whip Steny Hoyer (D-MD.) said he might vote ‘yes’ but has not committed to supporting the bill. Minority Leader Nancy Pelosi (Calif.) has kept silent on her position, and senior Democrats said they have not been told how she plans to vote. “We’ll see,” is all Pelosi would tell The Hill when asked her position late (Wednesday).