Tuesday September 13 20916 Housing and Economic stories

TOP STORIES:

Airbnb Income: How It Can Mess With Your Mortgage 'Refi' - (www.wsj.com) Homeowners who rent rooms are facing additional scrutiny when applying for loans. Room-rental services such as Airbnb Inc. are blurring the line between residential and commercial property. That is causing problems for some homeowners looking to refinance mortgages. Big banks including Bank of America Corp. and Wells Fargo & Co. are subjecting some refinance customers who rent rooms to additional scrutiny. Some borrowers have been told they were no longer eligible for certain kinds of loans or would have to pay higher interest rates, according to the customers. “This is kind of novel,” said Jeffrey Naimon, a consumer-finance attorney and partner at law firm BuckleySandler LLP. “I don’t think the market has gotten its arms around it.”

Wiping out housing's 'zombies': Banks sell off foreclosed remnants of crash - (www.cnbc.com) Halloween isn't here just yet, but the zombies are already multiplying by the thousand — zombie foreclosures. After having left the worst remnants of the housing crash in foreclosure limbo-land, banks are now taking those vacant, foreclosed homes and selling them at a fast clip. They are the so-called zombie foreclosures. The result is that the numbers have shifted. Vacant homes in the foreclosure process are expected to drop 9 percent in the third quarter from a year ago, but vacant bank-owned properties are expected to jump 67 percent during the period, according to ATTOM Data Solutions. There are now just over 46,600 vacant bank-owned properties (known as REOs) littering neighborhoods nationally.

The Great Debt Unwind Beneath the Surface: US Commercial Bankruptcies Soar – (www.wolfstreet.com) Not that you would have guessed from the stock market, hovering at all-time highs, or from soaring junk bonds, even the riskiest paper: CCC-and-below rated junk bonds skyrocketed since their February 12 low as their average yield plunged from 21.6% to 13.5%. Even the S&P US Distressed High Yield Corporate Bond index has soared 57% since February 12. Those are miracles to behold. At the slightest squiggles of the market, the Fed goes into bouts of by now embarrassing flip-flopping on rate increases that demonstrate to the world that they have absolutely nothing else in mind than keeping the stock market inflated and keeping the biggest credit bubble in US history from unceremoniously imploding.

Consumer Credit Jumps By $18 Billion In July; Student, Auto Loans Hit $2.4 Trillion – (www.zerohedge.com) After last month the Fed reported that in June revolving, i.e. credit card, credit unexpectedly soared by $7.7 billion, the second highest monthly increase since the financial crisis, many were popping the champagne, ready to celebrate the return of the consumer's "animal spirits" who were out and about, and most importantly, charging it.  One month later, we find that the June revolving credit spike was even higher, rising by $9.2 billion following today's revision.  However, as a result, the July consumer credit grew by just $2.8 billion to start the third quarter, the smallest amount since February, suggesting that the prior month's spike may have been a one-time fluke.

Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert  - (www.wsj.com) U.S. aluminum executives claim Liu Zhongtian, founder of Chinese metals conglomerate China Zhongwang, used a factory in Mexico to game the global trade system.  Two years ago, a California aluminum executive commissioned a pilot to fly over the Mexican town of San José Iturbide, at the foot of the Sierra Gorda mountains, and snap aerial photos of a remote desert factory. He made a startling discovery. Nearly one million metric tons of aluminum sat neatly stacked behind a fortress of barbed-wire fences. The stockpile, worth some $2 billion and representing roughly 6% of the world’s total inventory—enough to churn out 2.2 million Ford F-150s or 77 billion beer cans—quickly became an obsession for the U.S. aluminum industry. Now it is a new source of tension in U.S.-Chinese trade relations. U.S. executives contend that the mysterious cache was part of a brazen scheme by one of China’s richest men to game the global trade system.

OTHER STORIES:

U.S. Stocks Hold Near Record High as Dollar Rebounds; Oil Climbs - (www.bloomberg.com)
Businesses Growing More Anxious as Elections Get Closer, Fed Survey Shows - (www.bloomberg.com)
No August Doldrums in Emerging Markets as Bond Sales Jump: Chart - (www.bloomberg.com)

Italy's Target 2 liabilities hit new record at 327 bln euros - (www.reuters.com)
Family Offices Back Away From Hedge Funds After Returns Decline - (www.bloomberg.com)

China Auto Sales Rise 24.5% on Rush to Beat Expiring Tax Cut - (www.bloomberg.com)
No Man’s Land for Greek Bonds as Tsipras Vacillates on Reforms - (www.bloomberg.com)