Fannie
Mae Regulator Pushes Refinancing for Underwater Loans – (www.bloomberg.com) HERE
WE GO AGAIN!! A U.S. regulator is starting a campaign to encourage as many as 2
million borrowers with mortgages backed by Fannie Mae and Freddie Mac to refinance with a government program
for properties that have lost value. Federal Housing Finance Agency officials
convened focus groups this year to find out why borrowers paying interest rates
as high as 7 percent hadn’t tried to lower their monthly payments through the
Home Affordable Refinance Program. They found many didn’t realize they were
eligible. “There’s a perception among
some that you’ve got to be delinquent in order to have some
government-sponsored program that can help you,” Edward J. DeMarco, acting
director of the FHFA, said in an interview. “What we want to do is correct that
misperception.” The effort, which starts today, could help boost the flagging
refinancing boom in the U.S. Applications have fallen 65 percent after interest
rates rose
more than a percentage point since May, according to the Mortgage Bankers Association. HARP applications, which account for 40
percent of all refinance activity, fell 54 percent in the same period,
according to the association.
Monte
Paschi Halts Coupon Payments on Three Subordinated Notes - (www.bloomberg.com) Banca Monte dei Paschi di Siena SpA said it suspended interest payments on
three hybrid notes after European authorities demanded bondholders contribute
to the restructuring of the bailed out Italian lender. The world’s oldest bank
said in a statement that it won’t pay interest on about 481 million euros ($650
million) of outstanding hybrid notes issued through MPS Capital Trust II and
Antonveneta Capital Trusts I and II. Under the terms of the undated notes, the
Siena, Italy-based lender is allowed to suspend interest without defaulting and
doesn’t have to make up the missed coupons when payments resume. “In the new
world we’re in, bondholders pick up the tab when they can be forced to,” said John Raymond, an analyst at CreditSights Inc. in London.
“State aid rules impose losses where possible.” European Union Competition
Commissioner Joaquin
Almuniatold
reporters on Sept. 7 the bank should receive final approval for its
restructuring plan within two months. The lender, which received a 4.1
billion-euro bailout, submitted a revised plan that more than doubles the
amount of new capital it intends to raise to 2.5 billion euros as it seeks to
repay the aid.
Bailed-Out
Nations Get Another Four Years of Merkel - (www.bloomberg.com) Southern
Europeans are facing four more years of Angela Merkel whether they like it or not. Majorities
of 82 percent in Spain, 65 percent in Portugal and 58 percent in Italy
repudiate the German leader’s handling of the euro area’s debt crisis, blaming
her for drastic cuts in social services, recession and record unemployment,
according to a German Marshall Fund poll released last week. The majority that
matters, in Germany, decided otherwise yesterday, putting Merkel back in charge
and saluting policies that have kept the currency union intact while at times
veering close to letting it unravel. Any concessions now are likely to come on
the margins: a little more money for Greece here, a little less austerity
there, without altering her determination at most to drip-feed aid to countries
that embrace tight budgets, wage restraint and export-oriented industry.
Analysis:
In policy debut, India central bank chief prescribes bitter pill - (www.reuters.com) India's
central bank governor Raghuram Rajan may raise policy rates again after
shocking markets by
increasing them in only his first meeting, signaling he is willing to risk
prolonging what is already the lowest economic growth in years in order to
quash persistent inflation. Raising the repo rate by 25 basis points to 7.50
percent as India stumbles through its worst economic crisis since 1991 puts
pressure on New Delhi to relieve supply-side bottlenecks in the economy,
such as poor infrastructure, that keep inflation high even when demand is soft.
That is a big ask for a weak coalition government, which also faces a general
election by May. Rajan is expected by many in the market to shift the RBI's
main inflation gauge to consumer prices from wholesale prices, putting India in
line with most big economies but pushing up near-term rate expectations.
Consumer price inflation was 9.5 percent for August, meaning the cost of living
is rising faster than interest rates. The wholesale price index rose 6.1
percent.
Why
$100,000 Salary May Yield Retirement Flipping Burgers - (www.bloomberg.com) It
seems like another life. At the height of his corporate career, Tom Palome was
pulling in a salary in the low six-figures and flying first class on business
trips to Europe.
Today, the 77-year-old former vice president of marketing for Oral-B juggles
two part-time jobs: one as a $10-an-hour food demonstrator at Sam’s Club, the
other flipping burgers and serving drinks at a golf club grill for slightly
more than minimum wage. While Palome worked hard his entire career, paid off
his mortgage and put his kids through college, like most Americans he didn’t
save enough for retirement. Even many affluent baby boomers who are approaching the end of their
careers haven’t come close to saving the 10 to 20 times their annual
working income that
investment experts say they’ll need to maintain their standard of living in old
age. For middle class households, with incomes ranging from the mid five to low
six figures, it’s especially grim. When the 2008 financial crisis hit, what
little Palome had saved -- $90,000 -- took a beating and he suddenly found
himself in need of cash to maintain his lifestyle. With years if not decades of
life ahead of him, Palome took the jobs he could find.
Merkel
must reach out to leftist rivals after poll triumph - (www.reuters.com)
Euro-Area Services Strengthen as Demand Improves - (www.bloomberg.com)
Euro-Area Services Strengthen as Demand Improves - (www.bloomberg.com)
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