KeNo's Housing and Economic Portal: Tuesday February 14 Housing and Economic stories

Monday, February 13, 2012

Tuesday February 14 Housing and Economic stories

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Federal Mortgage Insurer Headed Toward Collapse - (www.theepochtimes.com) The Federal Housing Administration (FHA) is deeply insolvent and headed toward a financial crash like that of Freddie Mac and Fannie Mae in 2008, according to analysis from the American Enterprise Institute (AEI) released last week. “We are watching—in not-so-slow motion—the same gradual descent into insolvency that occurred with Fannie and Freddie a little more than three years ago,” reads the outlook for FHA authored by Edward Pinto, an executive vice president and chief credit officer for Fannie Mae until the late 1980s, and Peter J. Wallison, a general counsel of the U.S. Treasury Department during the Reagan administration. If you have tried to buy a home in recent years, you know that 20 percent is typically the required amount for a down payment on a mortgage. The only way to get around that is an FHA-backed loan, which requires as little as 3.5 percent down. The jump from 20 percent to 3.5 percent may seem like a boon to homebuyers, but it is also telling of a system warped by government intrusion.

A Mortgage Investigation. Really? - (www.nytimes.com) In the State of the Union address, President Obama promised a fresh investigation into mortgage abuses that led to the financial meltdown. The goal, he said, is to “hold accountable those who broke the law, speed assistance to homeowners and help turn the page on an era of recklessness that hurt so many Americans.” Could this be it, finally? An investigation that results in clarity, big fines and maybe even jail time? There is good reason to be skeptical. To date, federal civil suits over mortgage wrongdoing have been narrowly focused and, at best, ended with settlements and fines that are a fraction of the profits made during the bubble. There have been no criminal prosecutions against major players. Justice Department officials say that it reflects the difficulty of proving fraud — and not a lack of prosecutorial zeal. That is hard to swallow, given the scale of the crisis and the evidence of wrongdoing from private litigation, academic research and other sources.

JPMorgan CEO says foreclosure deal threatened - (www.yahoo.com) JPMorgan Chase & Co (NYSE:JPM - News) Chief Executive Jamie Dimon said President Barack Obama's decision to expand investigations into home lending and sales of mortgage securities could stop settlement talks with the states over foreclosure practices. "It has a pretty good chance of derailing it," Dimon said in a televised interview with CNBC from Davos, Switzerland on Thursday. Obama, in his State of the Union address Tuesday, said he has asked his attorney general to create a special unit of prosecutors to expand investigations into home lending and packaging of mortgage-backed securities. It is not clear how the new unit will be different from earlier investigations.

New Yorkers Face Downward Mobility - (www.bloomberg.com) About one third of New York City residents nearing retirement age won’t be able to quit or will have to rely entirely on Social Security because they have less than $10,000 in savings, according to a study released today. About 40 percent of New York workers had access to an employer-sponsored retirement plan in 2009, compared with the national average of 53 percent, according to the report by the New School’s Bernard Schwartz Center for Economic Policy Analysis. It was released by the Office of New York City Comptroller John Liu. “It’s going to mean a generation of retirees will do worse than their parents and grandparents,” Teresa Ghilarducci, the center’s director, said in a telephone interview. “This means a lot more downward mobility.”

The Ron Paul Media Blackout Is Back On - (www.theatlanticwire.com) After a brief spike in interest, the mainstream media coverage of GOP candidate Ron Paul is back to nearly nothing, according to the Pew Research Center's Project for Excellence in Journalism. This week, less than 5 percent of all campaign stories focused on Paul, the lowest point since Dec. 11. when strong performances in Iowa and New Hampshire helped stoke some interest. Over the same period, Paul's performance in the polls has only improved, going from the single digits to 12.7 percent, putting him nearly even with Rick Santorum, in the current RealClearPolitics average. But in Pew's weekly study, Paul has been heading in the opposite direction. Pew tracks a list of 52 mainstream news outlets across broadcast television, cable news, newspapers, radio and the 12 most popular news sites to measure exposure. As you can see from the graph below, the downward trajectory of coverage volume has been steep for Paul, as the star of New Gingrich rose following his decisivevictory in South Carolina and strong polling in Florida.