Friday March 1 Housing and Economic stories

TOP STORIES:

The bailout success story that wasn't: TARP - (www.marketwatch.com)  Remember the Troubled Asset Relief Program, better known as TARP? When we last heard from the Treasury Department, on Jan. 23, TARP was being wound down. It was, in the estimation of Timothy Geithner & Co., a success: 93% of the $418 billion disbursed had been collected including $70 billion last year.  But hold the Champagne. It ain’t over till it’s over. The idea that TARP is somehow a wash because a few banks repaid the bailouts with interest is misleading. The reality is that bailed-out firms essentially wrote off their losses on taxes. As of Dec. 30, TARP was still owed $67.3 billion, including $27 billion in realized losses — which is to say, that money is gone and is never coming back. Now, TARP is losing money as it tries to exit the programs. A new report by SNL Financial shows the Treasury Department is taking a beating in auctions of the Capital Purchase Program, one of the pipelines through which bailout money flowed. The auctions essentially sell off TARP debt and equity to private investors. Unfortunately, investors aren’t really interested in zombie-bank debt. It’s been selling at an 8% to 20% discount. The last auction, on Jan. 25, met with a 35% discount. In all, the latest CPP auction cost taxpayers $104.5 million. There are additional and less hidden costs, of course. Ally Financial, the old automobile-financing company GMAC, is still $14.6 billion into TARP. 

Underwater Homes Remain a Dark Spot in the Recovery - (www.thefiscaltimes.com) When Sally Herigstad and her husband wanted to buy a house recently in their Seattle suburb, they ran into some unfriendly numbers. They owe the bank about $360,000 on their existing home, but a sale would bring in only the low to mid-$300’s:  they’d have to close the deal with a big check. So the couple went ahead and bought the house they wanted--and then rented the first. Still, Sally finds being a landlord a hassle. “If I could sell it and get my money out, I’d do it today,” she says of the first home.

Four in 10 Americans are living paycheck to paycheck, study says - (www.latimes.com) More than four in 10 Americans are living paycheck to paycheck and nearly one in 10 doesn’t earn enough to pay for essentials, according to a study released Tuesday. The survey, conducted for the Allstate insurance company by FTI Consulting Inc., underscored the conflicted emotions and attitudes about personal finances among ordinary people. It showed the challenges that people are facing in a soft economy and troubled labor market, but it also demonstrated that many people make unwise financial decisions even when they know better. The survey found that 59% of Americans say they generally know how to handle money and make the right financial decisions. But 47% of respondents said they’re saving less money than they should be.

Currency fears spread in Latin America - (www.ft.com) Latin America is going Brazilian. Previously, it was only Brazil, the region’s biggest economy, that complained about the competitive devaluations generated by money-printing in the west, the so-called currency wars. Now, however, as Japan joins the rush to print money and devalue, the more orthodox and free-trading Latin economies – investor darlings such as Mexico, Chile, Colombia and Peru – also fear catching a bullet. The issue may well dominate this week’s G20 meeting in Moscow, given that Asian exporters such as South Korea are also worried about currency appreciation. “Not all Latin American policy makers have used the term currency war,” says Luis Oganes, head of Latin America research at JPMorgan. But they “are expressing increasing concern and reacting to it”.

Fed should begin to wean markets off QE3 this year: Plosser - (www.reuters.com) The U.S. unemployment rate will probably fall quickly enough for the Federal Reserve to start trimming its asset purchases before the end of 2013, a top Fed policymaker said on Tuesday. "If my forecast is right and we are close to 7 percent unemployment rate near the end of this year, then I think we should at least to have begun backing off from our asset purchases if unemployment is declining at that pace," Charles Plosser, president of the Philadelphia Fed, told reporters after a speech here. "I think we would start tapering in some way and gradually sort of wean themarkets and us off the purchases to sort of wind them down," Plosser said

OTHER STORIES:

King Says Britain Faces Bout of Inflation as Growth Stays Weak - (www.bloomberg.com)

No Shirakawa Eulogies as JGBs Look Beyond Weak BOJ - (www.bloomberg.com)

India Posts $20 Billion Trade Gap in January, One of its Widest - (www.bloomberg.com)

India Posts $20 Billion Trade Gap in January, One of its Widest - (www.bloomberg.com)

Retail Sales in U.S. Increase at Slower Pace as Taxes Take Bite - (www.bloomberg.com)

Plosser: Fed Too Vague With Guidance on Future Path of Rates - (www.cnbc.com)

Kansas City Fed’s George Warns About Current Policy - (online.wsj.com)

Fed’s Lockhart Sees Bond Buying Continuing Into 2nd Half of 2013 - (online.wsj.com)

Worldwide mobile phone sales fell in 2012: Gartner - (www.reuters.com)

Dell Pressed to Sweeten LBO as T. Rowe Joins Opposition - (www.bloomberg.com)

No Agreement on $1.2 Trillion in Cuts as Deadline Nears - (www.bloomberg.com)

Thursday February 28 Housing and Economic stories

TOP STORIES:

Discover: Student Loans a 'Train Wreck' for Taxpayers - (online.wsj.com) Rising federal student-loan debt and potential changes to how such loans are treated under bankruptcy could be a "train wreck" for U.S. taxpayers, Discover Financial Services President Roger Hochschild said Monday. The executive, speaking at an investor conference in New York, defended his company's foray into the student lending market, stressing it adheres to high underwriting standards when approving loan applicants. However, he accused the federal government, which now controls the majority of student lending, of lax underwriting. "I actually think it's going to hit all of us as taxpayers in terms of what it does for the federal student-loan program and their utter and total lack of underwriting," Mr. Hochschild said. "But I do not think it will be a train wreck for Discover shareholders."

Gas hits highest price since October  - (www.usatoday.com) Another hit to consumers!!!   Gasoline prices have climbed past $3.60 a gallon nationally for the first time since October in the government's weekly price survey. The price of a gallon of regular unleaded stands at $3.611 in the survey released today, up 7.3 cents a gallon from a week ago and 3.6 cents from the same week last year, the Energy Informational Administration reports. Gas prices have steadily climbed since they hit a low of $3.254 for the week of Dec. 17. They haven't hit $3.60 a gallon since Oct. 22, the EIA pricing history shows.

Food Stamp Program Could Face Big Cuts - (www.cnbc.com) The approximately 47 million Americans who rely on the modern food stamp program could see their monthly assistance cut this year because a recession-era benefits boost is set to expire. People who receive food assistance — now known as the Supplemental Nutrition Assistance Program, or SNAP — got a raise starting in April 2009, as part of the American Recovery and Reinvestment Act. The increase in benefits, which amounted to about $80 more a month for a family of four, was part of a massive effort to help mitigate the worst effects of the Great Recession.

Justice Dept, states consider suing Moody's for bogus mortgage bond ratings - (www.reuters.com) The U.S. Justice Department and multiple states are discussing also suing Moody's Corp for defrauding investors, according to people familiar with the matter, but any such move will likely wait until a similar lawsuit against rival Standard and Poor's is tested in the courts. Inquiries into Moody's are in the early stages, largely because state and federal authorities have dedicated more resources to the S&P lawsuit, said the sources, who were not authorized to speak publicly about enforcement discussions. Moody's spokesman Michael Adler and Justice Department spokeswoman Adora Andy declined to comment for this story. Moody's in the past has defended itself against similar allegations, including a 2011 congressional report that concluded the major ratings agencies manipulated ratings to drive business.

REO-to-rental is superior to principal forgiveness - (www.ochousingnews.com) So how exactly does that invalidate the argument that this is a good private sector solution. What it does point out is the Fannie Mae almost botched it by imposing too many restrictions. The free market is working whereas the government regulated one is not. The Blackstone group, the biggest player in the new REO to rental market, has spent $2.5 billion in the last year purchasing 16,000 homes, a number that amounts to over $100 million per week. Property records show that many of the homes Blackstone has acquired in Fulton County over the last few months were purchased on the courthouse steps at the monthly foreclosure auction, or through short sales—when a lender agrees to accept less than the amount owed on a loan. The vast majority of these homes are not empty, but occupied by homeowners who fell behind during the great recession. Is that a bad thing? Blackstone probably kept most of these people on as tenants so they wouldn’t have to move. What’s wrong with that? The sale often represents the last nail in the coffin of foreclosure in Georgia, a non-judicial foreclosure state where there is very little opportunity or time to make good once a homeowner falls into default.

OTHER STORIES:

Corn Heads for Worst Run Since March 2010 as Output May Climb - (www.bloomberg.com)

G7 fires currency warning shot, Japan sanguine - (www.reuters.com)

North Korea Conducts Third Nuclear Test in Defiance of UN - (www.bloomberg.com)

Finmeccanica head arrested over India bribe allegations - (www.reuters.com)

Euro-Skeptic Grillo Pushes for Italy Debt Renegotiation in Vote - (www.bloomberg.com)

India Factory Output Unexpectedly Drops as Growth Ebbs: Economy - (www.bloomberg.com)

Japan's Amari: ADB Kuroda is qualified to lead BOJ - (www.reuters.com)

Manhattan New Condos Raise Prices Monthly as Demand Soars - (www.bloomberg.com)

Fed taking ‘forceful action’ on economy, Yellen says - (www.washingtonpost.com)

Wednesday February 27 Housing and Economic stories

TOP STORIES:

Arkansas law jails tenants who don't pay their rent - (www.rawstory.com)  Under a state law in Arkansas, renters can be imprisoned for failing to pay their rent. According to a report by Human Rights Watch, titled “Pay the Rent or Face Arrest: Abusive Impacts of Arkansas’s Criminal Evictions Law,” hundreds of tenants each year are taken to court, fined and jailed under the state’s “failure to vacate” law. “The failure-to-vacate law was used to bring charges against more than 1,200 Arkansas tenants in 2012 alone,” read the report. “This figure greatly understates the total number of people impacted by the law. The vast majority of tenants scramble to move out when faced with a 10-day notice to vacate rather than face trial — and with good reason.”

Grandmothers Worldwide Could See Pensions Shrink Thanks To OCWEN and Deutsche Bank  - (www.mfi-miami.com)  Unfortunately, hundreds of thousands of sweet little old ladies from around the world, most of whom are grandmothers living on social security and their pensions, are at risk of losing more money out of their pensions.  It’s not because of some thug armed with brass knuckles, a switch blade or even a gun, it’s from people wearing business suits who work in office buildings in Frankfurt, Germany and West Palm Beach, Florida, who for the sake of greed mismanaged hundreds of thousands of sub-prime mortgage loans that were sold into mortgage backed security trusts on Wall Street. Yes, I’m talking about Deutsche Bank, the largest bank in the world who acts as a trustee for nearly 40% of the sub-prime mortgage backed security trusts in the United States.  I am also talking OCWEN, the fifth largest mortgage servicer in the U.S. and the only one who is not subsidiary of a major bank and who has been gobbling up it’s competitors faster than Homer Simpson consumes doughnuts at a doughnut shop. While OCWEN has focused on gaining market share, the quality of it’s management  has declined to the point that it rivals only the Detroit Fire Department.

Fee increases are making FHA mortgages more expensive - (www.latimes.com) If you want to buy a house with minimal cash by using an FHA-insured mortgage, here's some sobering news: Because of an ongoing series of fee increases and underwriting tweaks, those mortgages are getting steadily more expensive and may not work for you. The Federal Housing Administration is the largest source of low-down-payment mortgage money in the country. Its minimum down is just 3.5%, compared with 5% to 20% or more from conventional, non-government sources. For decades, FHA financing has made homeownership possible for first-time buyers with modest incomes and credit history blemishes.

S&P Granted Top Grades to Doomed Lehman CDO as Downgrades Rose - (www.bloomberg.com) A unit of New York Life Insurance Co. issued a $1.5 billion collateralized debt obligation named after a Northern sky constellation in April 2007. The deal burst when it defaulted less than a year later. The Corona Borealis CDO, underwritten by Lehman Brothers Holdings Inc., is one of dozens of deals named in the Justice Department’s Feb. 4 lawsuit accusing the world’s largest credit- rating company of deliberately misstating the risks of mortgage bonds as it sought to keep its share of the booming business of repackaging home loans for sale as securities. Eastern Financial Florida Credit Union lost its investment after purchasing a portion of the Corona Borealis CDO, relying in part on Standard & Poor’s assessment of the securities, according to the Justice Department’s complaint filed in federal court in Los Angeles. The U.S. is seeking penalties against S&P and its New York-based parent, McGraw-Hill Cos. that may amount to more than $5 billion, based on losses suffered by federally insured financial institutions.

Spanish sentiment belies scandal and woe - (www.ft.com) Bond markets and bank analysts are warming to Spain again, despite the latest political scandal to engulf the government of Mariano Rajoy. The country’s debt is back in demand, shares have rallied and speculation over a sovereign bailout has subsided. Hardly a day goes by without a fresh assurance from Madrid that the Spanish economy is finally turning the corner. In the small Catalan town of Arbúcies, however, that corner has just moved further out of sight. After a long struggle with its creditors, one of the biggest local employers declared bankruptcy last month. Founded in 1964, Noge was one of several companies in town that specialised in making bodywork for bus manufacturers. As many as 93 workers now risk losing their jobs.

Greece cuts investments to hit Jan budget target - (www.reuters.com) Greece cut tax refunds and curbed public investments in January to offset a slide in tax revenues and meet its budget targets, the government said on Monday. Gross tax revenues fell 241 million euros short of expectations due to falling VAT receipts in the context of the country's crippling recession. Revenues sank 11 percent year-on-year to 4.42 billion euros. Hurt by the government's austerity program, Greek retail sales are plunging at double-digit rates, thus reducing indirect tax receipts. To compensate for the unexpectedly large decline, the government slashed tax refunds to 45 million euros, compared with a 311 million euro target. It also spent just 67 million euros on public investment projects, less than the interim 200 million euro target.

OTHER STORIES:

Weidmann Warns Governments Against Trying to Weaken Euro - (www.bloomberg.com)

G-7 Said to Discuss Statement to Calm Currency War Concern - (www.bloomberg.com)

Complex Investments Prove Risky as Savers Chase Bigger Payoff - (www.nytimes.com)

Fed Easy Credit Becomes Inside Debate Focusing on Escape - (www.bloomberg.com)

Home Prices Rise in 88% of U.S. Cities as Recovery Gains - (www.bloomberg.com)

EU Crisis Damage Seen in Worst Quarter Since Lehman Wake - (www.bloomberg.com)

Dell looks to calm shareholder concern over buyout - (www.google.com/hostednews/ap)

Companies Fret Over Uncertain Outlook - (online.wsj.com)

Obama to Propose Spending to Boost Jobs in State of Union - (www.bloomberg.com)

Tuesday February 26 Housing and Economic stories

TOP STORIES:

Americans Tapping Into Home Equity Again - (www.cnbc.com) Nearly 11 million borrowers are underwater on their mortgages, owing more than their homes are worth, according to CoreLogic, and yet home equity lines of credit are suddenly on the rise again. During the housing boom of the last decade Americans withdrew over $1 trillion in home equity. They did it through cash-out refinances, home equity loans, and home equity lines of credit. The latter allowed them to use their homes like an ATM. They spent the money on cars, televisions, vacations and fancy home upgrades. It was seemingly endless equity, until suddenly that equity was gone.

E-Mails Imply JPMorgan Knew Some Mortgage Deals Were Bad - (www.nytimes.com) When an outside analysis uncovered serious flaws with thousands of home loans, JPMorgan Chase executives found an easy fix. Rather than disclosing the full extent of problems like fraudulent home appraisals and overextended borrowers, the bank adjusted the critical reviews, according to documents filed early Tuesday in federal court in Manhattan. As a result, the mortgages, which JPMorgan bundled into complex securities, appeared healthier, making the deals more appealing to investors. The trove of internal e-mails and employee interviews, filed as part of a lawsuit by one of the investors in the securities, offers a fresh glimpse into Wall Street’s mortgage machine, which churned out billions of dollars of securities that later imploded.

Investors Are Being Bullied Into Buying Risky Assets, Which Are Doomed To Crash - (www.businessinsider.com) Legendary investor Jeremy Grantham has just published his Q4 2012 letter to GMO clients. Much of the letter is an extension of the extremely bearish message of his Q3 letter, in which he predicted GDP growth to decelerate from around 0.9 percent per year to 0.4 percent from 2030 to 2050. Those who are invested in today's markets, however, may find one part of his letter particularly frightening. In a section sub-titled Engineered Low Interest Rates, Grantham discusses the impact of the Federal Reserve's ultra-easy monetary policy.  He warns that asset price inflation will work its way up from asset class to asset class until things fall back into place through "exciting crashes."

New Mortgage Rules Could Hurt Homebuyers in California, New York – (www.thestreet.com)  New mortgage rules designed to create a more responsible mortgage market might end up hurting borrowers in states such as California and New York, where the price of real estate is expensive. The Consumer Financial Protection Bureau recently issued rules that require banks to verify that the borrower has an ability to repay the loan by looking at criteria such as a borrowers' income, employment status, credit history and other debt obligations. Banks will be offered greater legal protection if they make "qualified mortgages" -- loans that do not have excess upfront points and fees, have no toxic features such as interest-only loans, negative amortization and balloon payments, and where the borrower does not spend more than 43% of his income to pay down debt.

Homeowner Refinancing Act Resubmitted by Senators Menendez and Boxer - (www.mortgagenewsdaily.com) ``When FHFA recently expanded HARP eligibility to underwater borrowers, they continued to require lenders to distinguish between borrowers with less than 20 percent equity and greater than 20 percent equity in ways that left higher equity borrowers with greater costs and administrative burden. Although the GSEs lowered up-front fees for HARP loans with less than 20 percent equity, they left them in place for those with more equity. This created the economically indefensible situation in which borrowers with significant equity in their homes and presenting lower risk could face steeper costs in refinancing than borrowers with no equity whatsoever and therefore higher risk. These additional fees can be as high as two percent of the loan amount, or an extra $4,000 on a $200,000 loan.

OTHER STORIES:

DOUG KASS: 'I'm Getting The Summer Of 1987 Feeling' - (www.businessinsider.com)

Are Markets Becoming Too Complacent? - (www.cnbc.com)

Ten signs Wall Street's soul sickness grows worse - (www.marketwatch.com)

Housing Already Shows Signs of a New Bubble - (www.cnbc.com)

Good Drivers Often Pay More for Insurance: Study - (www.cnbc.com)

After S&P, Feds May Target Moody's Next - (www.cnbc.com)

Monday February 25 Housing and Economic stories

TOP STORIES:

Get Rich Quick Scheme, Rent Out Your Neighbor's Foreclosed House! - (www.palmbeachpost.com) A West Palm Beach woman is accused of commandeering her neighbor’s empty and foreclosed-upon home, renting it through Craigslist and collecting more than $13,000 in rent before the owner discovered the ruse and called the cops. Nathalie Heil, 30, was booked into the Palm Beach County Jail on Friday. Facing charges of grand theft and fraud, she was released Saturday after posting $6,000 bond. But Heil said she believes she has ownership of the house, stating that she filed what’s called “adverse possession” papers. The arcane Florida law, created hundreds of years ago, states that if a person claiming adverse possession stays in a home for seven years, paying taxes and caring for the property, they can take permanent ownership.

Evictions are driving long-time renters out of their homes - (www.sfbg.com) When the housing market bounces upward, Ellis Act evictions tend to hit long-term tenants whose monthly payments, protected by rent control, are a comparative bargain. Even if they've submitted every payment on time and upheld every lease obligation for 20 years, these renters can find themselves in the bind of being forced out. And they don't just lose their homes; often they lose their community. San Francisco has become so expensive that many Ellis Act victims are tossed out of this city for good. Enacted in 1986, the state law allows a landlord to stop renting units, evict all tenants, and sell the building for another purpose. Originally construed as a way for landlords to "go out of business" and move into their properties, the Ellis Act instead gained notoriety as a driving force behind a wave of evictions that slammed San Francisco during the tech boom of the late 90s. Between 1986 and 1995, just 29 Ellis evictions were filed with the San Francisco Rent Board; in the 1999-2000 fiscal year alone, that number ballooned to a staggering 440. Under the current tech heyday, there are indications that Ellis Act evictions are gaining fresh momentum. The San Francisco Rent Board recorded 81 this past fiscal year, more than double that of the previous year, and there appears to be an upward trend.

Subprime Is Back: Will This End Badly? - (www.cnbc.com) The subprime market for risky mortgage backed securities is hot again and its revival is exceeding many people's expectations, the chief market strategist at Rosenblatt Securities said. However, he expects it will end badly. The subprime mortgage crisis, which led to the financial crash of 2008, involved institutions making loans to those with poor credit who later had difficulty maintaining their repayment schedule. Wall Street brokerage firm Rosenblatt, which has been monitoring the situation since the last crisis, said the credit-led bull market is well under way. "The subprime market's revival is proving to be even stronger than we had anticipated," Brian Reynolds said, in a research note. "This is just a credit cycle, and it will eventually end badly like the others." Rosenblatt Securities has been worried before. It showed outrage when General Motors bought AmeriCredit car loans firm in 2010. The deal repeated the excesses of the last credit cycle, it said at the time, when GM had to hive off its financial subsidiaries which then needed taxpayers' money to survive.

Fed Governor Raises the Specter of a Bubble in Junk Bonds - (www.nytimes.com) Some financial markets are showing signs of overheated speculation as investors take larger risks in response to the persistence of low interest rates, a senior Federal Reserve official said in a speech on Thursday. The official, Jeremy C. Stein, a Fed governor, highlighted a surge in junk bond issues, the popularity of certain kinds of real estate investment trusts and shifts in bank balance sheets as areas the Fed is watching closely, although he played down any immediate threat to the financial system or the broader economy. “We are seeing a fairly significant pattern of reaching-for-yield behavior emerging in corporate credit,” Mr. Stein said in St. Louis. He added, however, “It need not follow that this risk-taking has ominous systemic implications.”

Why Americans still feel poor - (fortune.cnn.com) U.S. stocks have reached new highs, but most Americans probably don't feel any wealthier. That's because the prices of our homes have a bigger influence over how rich we feel and, therefore, how much we're willing to spend, suggests a recent study by the National Bureau of Economic Research. The findings clarify the big drivers of what economists call "the wealth effect," the idea that people spend more when they have more. This sounds pretty obvious, but the real barometer of wealth hasn't been as clear. In the past, as the Federal Reserve moved to buy up billions of dollars worth of bonds to stimulate the economy, Chairman Ben Bernanke said that higher stock prices boost consumer wealth. And in turn, the extra spending helps the economy grow.

OTHER STORIES:

Asia-Pacific Dollar Bond Sales Slump to 2013 Low as Costs Climb - (www.bloomberg.com)

Draghi move fuels currency war fears - (www.ft.com)

Currency Watchers Fawn Over Draghi - (online.wsj.com)

China trade, loan surge boosts economy, inflation lurks - (www.reuters.com)

Aso Says Pace of Yen Depreciation Too Fast as G-20 Set to Meet - (www.bloomberg.com)

Italy Vote Seen Inconclusive as Risk of Second Ballot Grows - (www.bloomberg.com)

China, Japan engage in new invective over disputed isles - (www.reuters.com)

China Trade Tops Forecasts in Holiday-Distorted Month - (www.bloomberg.com)

Japan Vows Foreign-Policy Response to Territorial Incursions - (www.bloomberg.com)

EU Nears Cuts in Budget in Bow to Cameron’s Thrift Demand - (www.bloomberg.com)

RBA Cuts GDP, Inflation Outlook on Currency, Investment - (www.bloomberg.com)

Japan Posts Back-to-Back Current-Account Deficit in December - (www.bloomberg.com)

Trade Deficit in U.S. Plunges on Record Petroleum Exports - (www.bloomberg.com)

Fed's Stein Sees Risks for Credit Markets - (online.wsj.com)

Friday February 22 Housing and Economic stories

TOP STORIES:

GSEs now permit unrestricted strategic default with no financial consequences - (www.ochousingnews.com) Most banks will now let borrowers off the hook if they complete a short sale. Of course, banks use the opportunity to demand the borrower liquidate other assets to repay the debt or they won’t approve the short sale. The main reason short sales take so long is because mortgage holders and borrowers fail to come to an agreement on how much money must be repaid. Many borrowers who fail to execute a short sale merely stop paying their mortgage and wait for foreclosure. They stop communicating with their lenders entirely, put their heads in the sand, and hope the debt disappears. Now the GSEs are providing another option. For those borrowers current on their mortgages, if for any reason they want to get out, the GSEs will accept a deed-in-lieu and not go after any other assets. This should open the floodgates for struggling loanowners to strategically default with no financial consequences. They will still endure a hit to their credit scores, but they won’t have to sell any other assets or repay the shortfall. It’s an outrageous tax subsidy to irresponsible borrowers.

Realtor faces charges in Aurora house burglary - (www.suntimes.com) A local Realtor has been charged in a residential burglary this week at a home on Aurora’s southwest side, police said. According to police, Dennis M. Malmgren, 70, of the 100 block of LeGrande Boulevard, Aurora, was charged with felony burglary after an incident around 3 p.m. Tuesday at a home in 800 block of Suncrest Drive. Malmgren and two other men were removing several items, including a kitchen stove, from the home without the consent of the real estate broker who was responsible for the property, police said. The two other men were not charged in the incident, and a full list of items removed from the property is not yet available, police said.

Three real estate agents and one developer charged in 15 mill fraud scheme - (www.activerain.com)  According to the indictment: Real estate agents Diantonio, Catarro, and Lockwood located properties in Wildwood and North Wildwood, New Jersey, for sale by real estate developers such as Morello. Diantonio, Catarro, and Lockwood caused real estate sales contracts to be created, which listed deposit monies from buyers that often were not collected. The conspirators also agreed that sellers such as Morello would pay kickbacks to the buyers of the properties without disclosing the kickbacks to the lending institutions funding mortgages used by the buyers to purchase the properties. The conspirators caused fraudulent documents to be signed at real estate closings, including U.S. Department of Housing and Urban Development Settlement Statements, which failed to disclose the kickbacks paid to the buyers or which falsely stated that a deposit toward the purchase of the property had been collected. Diantonio, Catarro, and Lockwood received real estate sales commissions for putting the transactions together.

Spain Borrowing Costs Rise Amid Corruption Allegations - (www.bloomberg.com) Spain’s borrowing costs rose even as it beat its maximum target of 4.5 billion euros ($6.11 billion) at a debt sale today as corruption allegations targeting the government threaten to reverse last month’s rally. The Madrid-based Treasury sold a total of 4.61 billion euros of debt, including a 2.75 percent 2015 note with a yield of 2.823 percent, compared with 2.476 percent the last time it was sold on Jan. 10. A 2018 note yielded 4.123 percent, up from 3.770 percent on Jan. 17, and it sold a 2029 bond at 5.787 percent, compared with 5.555 percent at its last 15-year benchmark bond sale on Jan. 10.

Commodity hedge funds lose 20% of assets - (www.ft.com) Commodities hedge funds surrendered at least 20 per cent of their assets last year after investors pulled out large sums following the sector’s worst annual performance in more than a decade, according to fund managers and investors. The average commodity hedge fund lost 3.7 per cent in 2012, according to a closely watched index compiled by Newedge, the biggest decline since the yardstick was created more than a decade ago and substantially worse than the 1.4 per cent loss of 2011. “It has been challenging for commodities,” said Fabio Cortes, manager of a commodities fund of funds for Oakley Capital. “The sentiment is very negative.”

FHA insurance premium hikes will impact high wage earners most - (www.ochousingnews.com) Housing markets in Coastal California are dominated by high wage earners. In the more affluent markets, the GSE conforming loan limit is $625,000, yet the FHA limit is $729,750. GSE conforming loans can be obtained with only 5% down with private mortgage insurance of around 0.62%. FHA loans previously could be obtained with 3.5% down with an PHA insurance premium of 1.25%. The FHA loan which only requires 3.5% down instead of 5% has been very popular despite the onerous insurance premiums because after a massive debt binge and severe recession, most potential homebuyers are still broke. The loan limits create large breakpoints where borrower costs escalate rather dramatically. Borrowing more than $625,000, the GSE loan limit, requires FHA insurance. At 1.25%, the cost is greater than property taxes here in California. Borrowing more than $729,750 requires 20% down and a higher interest rate. The 20% down requirement eliminates nearly all first-time buyers.

OTHER STORIES:

ECB Holds Rates as Stronger Euro Threatens Economic Recovery - (www.bloomberg.com)

Overhaul of rating agencies bogs down four years after financial crisis - (www.washingtonpost.com)

China Injects Record 860 Billion Yuan via Reverse Repos in Week - (www.bloomberg.com)

Jim Rogers Joins Bill Gross Warning on Treasuries - (www.bloomberg.com)

Draghi Counts Cost of Euro’s Salvation as Currency Rebound Bites - (www.bloomberg.com)

Draghi Signals Euro Strength May Damp ECB Inflation Outlook - (www.bloomberg.com)

PBOC Signals Inflation Concern as Economy Rebounds - (www.bloomberg.com)

Brazil’s Prices Rise at Fastest Pace in Nearly Eight Years - (www.bloomberg.com)

India Predicts Decade-Low Growth Amid Inflation Risks - (www.bloomberg.com)

Japan Radar Target Protest Is War Signal, Global Times Says - (www.bloomberg.com)

Carney Steals Show as BOE Seen Refraining From Stimulus - (www.bloomberg.com)

Eye-Stinging Beijing Air Risks Lifelong Harm to Babies - (www.bloomberg.com)

Thursday February 21 Housing and Economic stories

TOP STORIES:

Gym shoe tax could fund aid for dropouts - (www.chicagotribune.com) Buying a new pair of running shoes in Illinois could cost a quarter more if a measure to tax gym shoes gets traction at the Capitol. The idea behind the 25-cent shoe tax is to pump more money into programs that help high-school dropouts from low-income homes get jobs in the construction trades or get back on track to attend college. "There are young people everywhere that are looking for a positive outlet that they might not find otherwise," said Rep. Will Davis, a Homewood Democrat who's sponsoring the shoe tax. Business groups and shoe store owners aren't keen on the idea, suggesting the new tax will hurt the competitiveness of Illinois sneaker sellers. "They're already crossing the borders for many things," said Kim Clarke Maisch, Illinois' director of the National Federation of Independent Business. "They're crossing the borders for gambling, for example. We don't need any other reasons for them to travel elsewhere."

S.& P. E-Mails on Mortgage Crisis Show Alarm and Gallows Humor - (www.nytimes.com) The correspondence, made public in court documents late Monday, provide a glimpse at the inner workings of an institution that the Justice Department says fraudulently inflated credit ratings, with dire consequences for the entire economy. In a series of e-mails, tensions appeared to be escalating inside the firm’s headquarters in Lower Manhattan as it publicly professed that its ratings were valid, even as the home loans bundled into mortgage-backed securities, or M.B.S., were failing at accelerating rates. One comes from an S.& P. analyst in March 2007 borrowing from the Talking Heads song “Burning Down the House,” creating new lyrics: “Subprime is boi-ling o-ver. Bringing down the house.” S.& P. said prosecutors cherry-picked e-mails and that it would vigorously defend itself from “these unwarranted claims.” In another 2007 e-mail, an analyst responds to a question about his new job: “Job’s going great. Aside from the fact that the M.B.S. world is crashing, investors and the media hate us and we’re all running around to save face … no complaints.”

China’s January Data Gap Vexes Economists - (www.bloomberg.com) China’s campaign to upgrade its economic data, from plugging leaks to expanding sample sizes, is yet to tackle one gap: the month-long delay each year in releasing some key January numbers. Government agencies on Feb. 8 will report slower inflation of 2 percent and faster export growth of 17.4 percent, according to the median estimates of analysts for figures skewed by the timing of a weeklong Lunar New Year holiday. Data for industrial output, retail sales and fixed-asset investment won’t be publicly updated until March. The wait prevents analysts and investors from fully gauging growth in the world’s second-largest economy following the first acceleration in almost two years last quarter. While it’s not simple to account for the effects of a festival held on different dates each year, that shouldn’t keep the government from releasing data, according to analysts at Royal Bank of Scotland Plc and Mirae Asset Financial Group.

Postal Service says will end Saturday mail delivery - (www.reuters.com) The Postal Service plans to drop Saturday delivery of first-class mail by August in its latest effort to cut costs after losing nearly $16 billion last fiscal year, the cash-strapped mail agency said on Wednesday. The plan would save about $2 billion a year, the Postal Service said. The mail agency will still deliver packages six days a week and will not change post office operating hours. The Postal Service has been losing billions of dollars each year as it grapples with massive payments for future retiree health benefits and Americans' increasingly rely on online communications that drives down mail volumes. The agency has been seeking congressional approval to get relief from those prepayments and for a larger restructuring to reduce costs. But with no short-term legislative fix in sight, the Postal Service is getting more aggressive in testing its own authority to make cuts.

Monte Paschi loss could be up to a billion euros - (www.reuters.com) Board members at Monte dei Paschi are expected to say on Wednesday that Italy's third largest bank may have lost up to 1 billion euros on opaque derivatives trades, far higher than the initial estimate. The trades are at the center of a probe into former management of the bank which has deepened questions about the role of banking supervisors and the influence of local politicians ahead of Feb 24-25 parliamentary elections. A source close to the situation said the final loss, set to be announced after the market close on Wednesday, should be somewhere between the preliminary estimate of around 720 million euros ($974 million) and 1 billion euros.

OTHER STORIES:

U.S. 30-Year Bond Losses Pass 5% as Fed Price Gauge Rises - (www.bloomberg.com)

Germany Dismisses Hollande’s Call to Steer Euro’s Rate - (www.bloomberg.com)

Analysis: Euro overshoot will rekindle bloc-wide tensions - (www.reuters.com)

Europe Yield Backup Signaling Complacency Bringing a New Crisis - (www.bloomberg.com)

Analysis: Carried interest thrust again into tax debate - (www.reuters.com)

Netherlands AAA Outlook Cut as Fitch Cites Shocks to Economy - (www.bloomberg.com)

Japan Official Says BOJ Tools Sufficient as Shake-Up Looms - (www.bloomberg.com)

Abe Calls China Radar Targeting of Japan Vessel Provocative - (www.bloomberg.com)

Monte Paschi board to reveal extent of derivatives loss - (www.reuters.com)

Analysis: Euro overshoot will rekindle bloc-wide tensions - (www.bloomberg.com)

Health Insurance Companies Get in Shape for 2014 - (www.nytimes.com)