KeNo's Housing and Economic Portal: Tuesday June 21 Housing and Economic stories

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TOP STORIES:

Lenny Dykstra charged with car theft, drug possession - (sports.espn.com) Former New York Mets and Philadelphia Phillies star Lenny Dykstra was jailed Monday on grand theft auto and drug possession charges after being accused of using phony information to lease a car from a Southern California dealership. Dykstra, 48, was charged with 25 misdemeanor and felony counts of grand theft auto, attempted grand theft auto, identity theft and other crimes, said Jane Robison, a spokeswoman for the Los Angeles County district attorney's office. He faces up to 12 years in state prison if convicted. Dykstra was taken into custody during a hearing in San Fernando Superior Court on the new charges. He was jailed on $500,000 bail with a bail-review hearing set for Friday. His accountant and a friend were charged in connection with the alleged auto theft but not with drug crimes, Robison said. All three men are scheduled to be arraigned June 16. Prosecutors contend that the three men tried to lease high-end cars from dealers this year by providing phony information and claiming credit through a phony business called Home Free Systems.

Second-Mortgage Misery - (online.wsj.com) Nearly 40% Who Borrowed Against Homes Are Underwater. Almost 40% of homeowners who took out second mortgages—extracting cash from their residences to cover everything from vacations to medical bills—are underwater on their loans, more than twice the rate of owners who didn't take out such loans. The finding, in a report to be released Tuesday by real-estate data firm CoreLogicInc., illustrates the consequences of easy borrowing amid the housing boom's inflated prices. The report says 38% of borrowers who took cash out of their residences using home-equity loans are underwater, or owe more than their home is worth. By contrast, 18% of borrowers who don't have these loans were underwater. It's not clear how much cash withdrawn from homes during the boom was used to acquire luxuries such as expensive automobiles, and how much went to basic necessities, including tuition expenses, or renovations intended to raise a property's value. What is clear is that home-equity loans, which account for about 10% of the U.S. mortgage market, have been a headache for homeowners and lenders alike. Second mortgages refer to any loan taken out on a property that is subordinate to the first mortgage, and include home-equity loans or lines of credit.

Government's mountain of debt - (www.usatoday.com) Medicare: $24.8 trillion. Obligation per household: $212,500. The health insurance program for seniors is the nation's biggest financial challenge. The first of 77 million Baby Boomers turn 65 this year and qualify for Medicare. Enrollment will grow from 48 million in 2010 to 64 million in 2020 and 81 million in 2030, according to Medicare actuaries. That 33-million increase in the next 20 years compares with 13 million in the last 20. This demographic burst — combined with the addition of a prescription drug benefit in 2006 and rising health care costs generally — has created an unfunded liability of nearly $25 trillion over the lifetime of those now in the program as workers and retirees. That is the taxpayers' obligation, beyond what Medicare taxes will bring in or seniors will pay in premiums for Medicare Part B — also called supplemental coverage — that helps pay for doctor visits and other expenses outside the hospital.

Financial Overhaul Is Mired in Detail and Dissent - (www.nytimes.com) Nearly one year after Congress passed financial changes to rein in the banking sector, more than two dozen of the legislation’s rules are behind schedule, and no end to the wrangling over details is in sight. The delays come as regulators extend public comment periods on the rules, and as some on Wall Street and in Congress resist the changes. One result may be that many new safeguards do not take hold in earnest before the next election, an outcome that could open the door for newly elected officials to back away from the overhaul.

The rules are mandated by the Dodd-Frank financial regulatory law and range from curbs on executive compensation to consumer banking protection provisions to more transparency in the trading of derivatives, those complex financial instruments that contributed to the 2008 financial crisis.

Falling Mortgage Rates Spur Serial Refinancing - (www.cnbc.com) Andrew and Peggy Sheren can't resist a good deal, especially when it comes to financing their McLean, Virginia home. "We’ve gone from an interest rate from something like greater than 6 percent down to the lowest interest rate we currently have is three and an eighth percent," Andrew remembers. They have refinanced their home four times in four years, taking equity out only the first time for a renovation, but essentially cutting their interest rate in half. Negative economic reports of late have pushed the rate on the popular 30 year fixed to below 4.5 percent, the lowest this year and just about a quarter percent off the 50-year lows we saw last summer; adjustable-rate products are even lower. When investors see bad economic news, they pull money out of the stock market and park it in bonds. The price of bonds goes up, the yield goes down, and mortgage rates follow down. "If we see continuing demand in mortgage backed securities, we’ll see further pushes lower. If we see continued doses of bad economic news, the stock market taking beatings, we don’t see positive economic news, continually bad jobs reports and previous months of jobs reports revised lower as we saw last week, then rates will continue to push down as we see that," says Craig Strent, CEO of Apex Home Loans, a small mortgage lender in Rockville, Maryland.

OTHER STORIES:

China official says U.S. could pursue weak dollar policy - (www.reuters.com)

Food Prices Stay Near Record as Meat Costs Rise - (www.bloomberg.com)

Low Yields on Treasury Debt No Guarantee Financial Crisis Won’t Hit U.S. - (www.bloomberg.com)

Wall Street Probe Illustrates Clout of Levin’s Senate Investigative Panel - (www.bloomberg.com)

OPEC meeting: Maybe some sparks but little change expected - (www.washingtonpost.com)

ECB firefight leaves it exposed to Greek shock - (www.ft.com)

EU Banks’ Capital Deficit Means Greek Default Not an Option - (www.bloomberg.com)

IMF says EU faces tough decisions on Greece - (finance.yahoo.com)

Trichet Signals Endorsing Greek Bond Rollovers - (www.bloomberg.com)

Fed's Fisher: Lots of liquidity in economy - (www.reuters.com)

Fed Exit Should Start ‘Long Before’ Jobs Recovery Is Assured, Plosser Says - (www.bloomberg.com)