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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.
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