KeNo's Housing and Economic Portal: Friday September 9 Housing and Economic stories

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Harrisburg Moves to Forestall Default With $7.5 Million Loan – (online.wsj.com) Harrisburg, the financially strapped capital of Pennsylvania, will likely miss a bond payment next month if a deal to secure a $7.5 million loan falls through, a spokesman for the mayor said Thursday. Harrisburg officials are seeking to extend a lease on city parking facilities for 10 years in exchange for an upfront payment of $7.5 million from the authority that runs the properties. A group of financial institutions have offered to loan the authority the cash so it can make the lump-sum payment to the city. If that deal falls through, "the city would miss a bond payment,'' Bob Philbin, the city's communications director, said in an interview Thursday. The $3.3 million payment is due on Sept. 15. "Is the deal likely to fall apart? In our opinion, no,'' Mr. Philbin said. In addition to the bond payments, the city faces about $3 million in payroll expenses next month, said Harrisburg Comptroller Dan Miller. The city currently has $1 million in cash on hand. "September is going to be a very difficult time period,'' Mr. Miller said. "We are going to be short, unless they borrow money." Harrisburg has been weighed down by more than $221 million in debt tied to a troubled incinerator. A year ago, with Harrisburg facing a similar cash crunch, the state advanced the city financial aid that was to have been paid later in the year. The funding advance helped Harrisburg avoid a default, but its long-term fiscal problems remained unsolved.

BofA Again Sued Over MBS - (biz.yahoo.com) Bank of America Corporation (NYSE: BAC - News) has yet again been sued by Western and Southern Life Insurance Co. for $63 million losses incurred by the latter owing to BofA’s alleged role in misrepresenting mortgage-backed securities (MBS) that it sold to the insurer. Earlier in April, Western and Southern Life had sued BofA and claimed $225 million on MBS, which were sold to the insurer by Countrywide Financial Corp. BofA had acquired Countrywide Financial in 2008. Western and Southern Life is an insurance firm providing personalized services through more than 180 offices operating in 22 states and the District of Columbia. It is an affiliate of Western & Southern Financial Group, a Cincinnati-based financial services providing company. In the lawsuit filed in Hamilton County Common Pleas Court, Western and Southern Life has listed $134 million as the amount it had invested in MBS that it had purchased from BofA during 2006-2008. The company alleged that BofA had neglected its underwriting procedures in regard to MBS it sold to Western and Southern Life.

Hot Market for Houses Selling Under $10,000 - (www.time.com) A market for ultra-cheap homes has emerged in cities around the U.S., and the result is that in many cases it’s much less expensive to buy a house than it would be to purchase a new car. The Baltimore Sun reports that one in ten homes sold in Baltimore during the first half of 2011 was purchased for less than $10,000. The roughly 275 homes sold in that price range in those six months outnumber the tally of homes sold for $10K or under in all of 2009 and 2010 combined. More than 500 homes in the city, meanwhile, sold for $20,000 or less from January to June of 2011. In a dozen city neighborhoods, you won’t find a single home listed for more than $30,000. Why the rise in ultra-cheap home sales? For one thing, prices in cities like Baltimore have plummeted to the point that there are simply more homes listed today at sub-used car asking prices. In 70 Baltimore neighborhoods, average house prices dropped by 20% in a year, compared to overall price decreases in the region—suburbs included—of just 6%.

Orange County sales dollars fall to July low - (www.ocregister.com) The local multiple listing service reported that Orange County real estate brokers and agents had their slowest July in at least seven years. The combined value of all homes sold in Orange County last month's fell to the smallest amount for a July since 2005 due to lower sales and prices, new the Southern California Multiple Listing Service reported. The latest SoCal MLS report, based on home sales through the broker-run network, shows ...

· The amount generated from all Orange County home sales in July totaled just over $1.2 billion. That's 9% less than the total in July 2010.

· That's also the smallest amount generated from July home sales in records dating back to 2005.

The beautiful cloud of shadow inventory - (www.cnn.com) An ominous cloud is hanging over the housing market: Millions of distressed properties could be put up for sale at any moment, potentially adding to the glut of unsold homes that are already on the market and depressing home prices even further. But there is one glimmer of hope in this otherwise ominous scenario. A recent report from Standard & Poor's found that the time it would take for banks to purge all of this so-called "shadow inventory" from the market (through foreclosure sales, mortgage modifications and other measures) shrunk to 47 months during the second quarter, a significant drop from the 52 months it estimated for the first quarter of this year. The report also found that the total dollar value of the loans on these properties -- known as non-agency loans because they are not backed by Fannie Mae, Freddie Mac or the Federal Housing Administration -- also fell to $405 billion at the end of June from $433 billion three months earlier.