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who strategically defaulted early on made the best choice - (www.ochousingnews.com) Three years ago, Susan and Dave Edwards stopped paying the
mortgage on their house in Palmdale, Calif.Asked how tough it was to walk out
the door to their home one last time, Susan says, “It wasn’t tough, it was
freedom.” “We’ve never not paid our mortgage, never, and we have been married
35 years, and we have always paid our bills,” she says. Strategic default is
never an easy choice. In my opinion, walking away
from mortgage debt is the best way to secure your children’s future.
Many didn’t heed my advice, and they are paying a heavy price for their
principled approach. Their mortgage was $340,000, but Susan says their home’s
worth had dropped to $190,000. “So we decided we just had to let it go,” she
says. “To walk away.” She says she and her husband were ashamed. “We didn’t
talk about it at all, and I didn’t want anyone to know,” Susan says. After the
bank foreclosed, their credit dropped, so they rented an apartment. “I would
have probably told you at that time, ‘I will never own a house again,’” Dave
says. But then Susan heard about a Veterans Administration home loan program.
Her husband was stationed in Korea during Vietnam. Even though they walked away
and foreclosed on their home, Susan thought they were good customers for a
loan. “Crazy, I guess, but I did,” she says. “Because I felt like we
were justified in what we did, somewhat. We weren’t going to do it again.” They
were pre-approved the next day. They bought a house just one mile from their
old one. Their new loan is $163,000 cheaper, with a 3.25% interest
rate. They now pay $1,150 each month.
Hollande Woes Deepen With Resignation Before Confidence Vote
- (www.bloomberg.com) French President Francois
Hollande’s government faces its first confidence vote over its
handling of the economy as Budget Minister Jerome Cahuzac’s resigned amid an
investigation into his finances. Cahuzac, 60, is the first minister to exit
since Hollande won power last May and is stepping down after a probe into
whether he had an undeclared Swiss bank account. Today’s confidence vote,
called by the opposition and unlikely to prevail because of Hollande’s
Socialist Party’s majority in the National Assembly, will follow a speech by
Prime Minister Jean- Marc Ayrault. “The French economy is paralyzed,”
Jean-Francois Cope, head of the opposition Union for a Popular
Movement, said today on I-tele television. “Our confidence motion is
intended as a wake-up call for the government.”
Freddie Mac Sues Multiple Banks Over Libor Manipulation - (www.bloomberg.com) Freddie Mac (FMCC) sued Bank of America Corp., UBS AG (UBSN), JPMorgan Chase & Co. (JPM) and a
dozen other banks over alleged manipulation of the London interbank offered
rate, saying the mortgage financier suffered substantial losses as a result of
the companies’ conduct. Government-owned Freddie Mac accuses the banks of
acting collectively to hold down the U.S. dollar Libor to “hide their institutions’
financial problems and boost their profits,” according to a complaint filed in
federal court in Alexandria, Virginia. “Defendants’ fraudulent and collusive
conduct caused USD LIBOR to be published at rates that were false, dishonest,
and artificially low,” Richard Leveridge, a lawyer for Freddie Mac, said in the
complaint, which was made public yesterday.
Cypriot banks on brink in Icelandic flashback - (www.reuters.com) A small island on the edge of Europe teetering
under the weight of its bust banks. Sound familiar? Like Iceland and Ireland before it, Cyprus is battling
to prevent an outsized and overextended banking sector from dragging the
country into the ground. Cyprus's parliament has overwhelmingly rejected a
proposed levy on deposits as a condition of a European bailout, throwing the
country's future into disarray. But the experiences of Iceland and Ireland show that however Cyprus
decides to deal with its crisis, pain is in store. While Reykjavik let banks
fail and introduced capital controls, making financing its economy difficult, Dublin nationalized
most of its financial sector, helping to quadruple its debt burden and ensuring
years of austerity.
South Africa Debt Ensnares Stores as Consumers Struggle - (www.bloomberg.com) Waiting for a friend at the Sandton City
shopping center in Johannesburg, Abey Ngijina holds a single bag of groceries.
The 55-year-old sound technician has cut his monthly food budget in half,
swapping branded goods for unbranded alternatives and buying less meat. Ngijina
is among the growing ranks of South
Africans who took out loans to cope with soaring grocery and
utility costs, and who are now forced to trim spending on those essentials to
repay the debt. These days, Ngijina devotes more than 40 percent of his 11,000
rand ($1,200) monthly salary to loan payments. The cutbacks are unwelcome news
for Shoprite Holdings Ltd. (SHP), Massmart Holdings Ltd. (MSM) and other
leaders of South Africa’s $72 billion retail sector.
Spending on food and clothing faces a hit this year, meaning less growth than Wal-Mart Stores Inc. (WMT) anticipated
in 2011 when it plunked down $1.8 billion to buy 51 percent of Massmart.
Millions
of nations homes still underwater despite slow housing recovery - (www.centralvalleybusinesstimes.com)
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