KeNo's Housing and Economic Portal: Saturday July 23 Housing and Economic stories

Friday, July 22, 2011

Saturday July 23 Housing and Economic stories

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TOP STORIES:

State and local governments bleeding jobs - (www.reuters.com) U.S. state and local governments cut thousands of jobs in June, pushing their payrolls down to the lowest in five years, according to Labor Department data released on Friday, and analysts do not expect the losses to end any time soon. Local governments shed 18,000 jobs and state governments cut 7,000 in June. The level of local government employment -- 14.143 million employees -- is the lowest since June 2006. State government employment is the lowest since August 2006. "Today's employment report reflects continued belt-tightening at the state and local level and the trend we have previously noted, a trickle-down in budget cuts from the state to the local level," wrote Natalie Cohen, senior analyst at Wells Fargo Securities, in a research note.

Housing Recovery Stymied by Government - (www.bloomberg.com) Sue Stamper, a business owner in Sacramento, California, wants to buy a home. After mortgage- financiers Fannie Mae and Freddie Mac imposed the strictest loan standards in more than a decade, she doesn’t qualify. Pam Crawford of Lyon Real Estate is trying to sell a three- bedroom bungalow on Sacramento’s east side for $179,000, a third less than what it went for in 2004. She hasn’t found a buyer even after cutting the asking price by $10,000 two weeks ago. The two women, who haven’t met, illustrate the deadlock crippling the U.S. housing market five years into the crash: While a record share of Americans want to buy homes, U.S. policies, often working at cross-purposes, are making it more difficult. Government-controlled Fannie Mae and Freddie Mac have boosted standards so high that some people previously considered prime borrowers no longer qualify. That’s limiting a real estate rebound that also has been damped by a state attorneys general probe into foreclosure practices and an Obama administration loan-modification program that has fallen short of expectations.

Ireland May Be Next to Face Junk After Portugal - (www.bloomberg.com) Ireland’s credit rating may be cut to junk by Moody’s Investors Service after Portugal yesterday lost its investment grade rating, according to analysts. Moody, which slashed Portugal to Ba2 from Baa1, in April lowered Ireland’s credit rating to the lowest investment grade Baa3 and left country’s outlook on negative. The ratings company cut Portugal’s rating in part because the nation may not be able to return to debt markets in the second half of 2013. Ireland has been locked out of markets since September, and the yield on 10-year Irish bonds climbed to 12.44 percent today, a euro-area record for the country that agreed to a rescue package with the European Union and International Monetary Fund last November.

U.S. Lawmakers Mulling Fate of Fannie Mae Split on Government Housing Role - (www.bloomberg.com) The U.S. housing industry is finding political traction in Congress as it objects to plans that would wind down Fannie Mae and Freddie Macand eliminate any government role in mortgage finance. Two members of the House Financial Services Committee, Gary Miller, a California Republican, and Carolyn McCarthy, a New York Democrat, today introduced legislation to create a government-run replacement for the two mortgage finance companies, which originally were chartered by Congress. The measure directly challenges House Republican leaders, who have backed bills that would do away with the two companies and aim to minimize the risk that taxpayers will have to bail out future mortgage failures. “This ideological approach has resulted in a stalemate for years,” Miller said at a press conference. “It’s not getting us any closer to fixing the housing problem.” He and McCarthy were joined at the event by leaders from two of the industry’s most active lobbying groups, the National Association of Realtors and the National Association of Homebuilders.