Friday April 3 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Condo owner, 83, with onerous mortgage is set to walk away - (www.marketwatch.com) Question: My FICO is 725 and I'd like to keep it that way. But I have a bad loan on my condo, which is declining in value. As the value goes down, the principal loan amount is going up. Some $11,000 has been added to the principal since I got this loan. In the last year, I have lost everything in the stock market. To keep current in all my responsibilities, I took money out of the market at the same time it was falling. I had extra expenses during the year. I took on credit-card debt to keep current in everything. For months I tried to get the lender to modify the loan but was unsuccessful. Now my lender has been taken over by another bank, which means the new bank acquired all those old loans for probably 30 cents on the dollar. They could modify loans if they wanted to. When I called, I was asked how far behind I was on my payments. When I told them I was up to date, they said, "Well, this is difficult." So I stopped making payments last month. Now I have their attention. But I destroyed my investment portfolio and my retirement to keep current in everything, so even if they wanted to modify my mortgage, I may no longer qualify. I have decided my best option is to leave my condo and go live in a vacation property which I own debt-free. I still have a lot of credit-card debt but most of it is at very favorable interest rates. Will the fact that I have stopped paying on my mortgage allow my credit-card companies to change the terms, the percentage I'm charged? I am paying as agreed on all of them.

Up in Smoke: The Deposit Vanishes - (www.nytimes.com) SOME of the buyers who thought they would be moving into new condominiums in the region this year are finding that those plans are in ruins as they are being forced to walk away from the hefty down payments they made a year or more ago. They can’t complete their deals because the mortgages they lined up before the credit crisis took hold have evaporated and they can no longer get financing. Elizabeth and James Pham put all their savings into the deposit they made on a $956,990 two-bedroom apartment at Maxwell Place, a new development in Hoboken, N.J. They signed an agreement for the apartment in 2005, put down $93,199 and were preapproved for a mortgage for the rest of the purchase price. But when their closing date arrived last September, several banks told them that to get a mortgage, they would have to increase their 10 percent down payment by another 15 to 25 percentage points. With no way to come up with that much money, the Phams notified the developer, Toll Brothers, that they could not get financing for the apartment. Toll Brothers declared them in default and kept their deposit. “It would take us another 15 years to save that money again,” Ms. Pham said. The Phams, who have two children, a 4-month-old and a 2 ½-year-old, live in a two-bedroom in Hoboken that is smaller than the one they had hoped to move into in Maxwell Place. But they borrowed on their equity there to help put together the deposit on the new apartment. The rest of the deposit came from Mr. Pham’s work as a real estate agent, income that has all but dried up in the current market. “If we tried to sell our apartment, we wouldn’t make enough to cover the cost of selling it, so we’re really stuck,” said Ms. Pham, who works as a benefits manager at a professional services firm. Ms. Pham said that the developer “made no attempt to work with us; they wouldn’t even return my phone calls.” She added that the sales manager had declined their offer to help find another buyer for the apartment and had told Ms. Pham that “not getting our deposit back was just business.” A spokeswoman for Toll Brothers declined to comment because the Phams have filed a lawsuit to try to get their money back.

Bank of America Stuck With Real-Estate Chief's Unsold House - (www.bloomberg.com) Barbara Desoer, who runs the largest U.S. housing lender, can speak from experience about tumbling property prices: She couldn’t sell her own home. Desoer, 56, put her 4,500-square-foot house in Charlotte, North Carolina, on the market Aug. 1 for $1.675 million. She had just been named head of Bank of America Corp.’s real-estate unit, Countrywide Financial Corp., in Calabasas, California. The home, which she and her husband bought in 2000 for $1.15 million, sold in December for a price that wasn’t made public. The buyer: Bank of America, according to a proxy the lender filed March 18. Now the house is for sale again, at $1.295 million, $380,000 less than the original asking price, according to listing agent Allen Tate Realtors. “The scary thing is the amount of inventory we have right now,” said Ed Baesel, a Charlotte real-estate broker with Cottingham Chalk Bissell Hayes. At the current pace of sales of $1 million-plus homes in Charlotte’s most expensive neighborhoods, it would take more than six years to sell the homes on the market, he said. Million-dollar homes are finding few buyers as increasing job losses, slumping stock prices and declining property values cut demand for new and existing U.S. homes. Home prices fell 12.4 percent in the fourth quarter from a year earlier, the most ever for an index compiled by the National Association of Realtors. In the Charlotte area, home to Bank of America, home sales have posted double-digit percentage declines every month since June 2007, according to the Carolina Multiple Listing Services. Not Alone: Desoer declined to comment beyond information in the proxy, Bank of America spokesman Dan Frahm said. Bank of America isn’t the only company stuck with an executive’s house that didn’t sell. AT&T Inc. bought Chief Executive Officer Randall Stephenson’s San Antonio, Texas, home for $1.7 million after relocating him to Dallas, according to a regulatory filing on March 11. AT&T spokesman Michael Coe declined to comment yesterday when asked whether the house was still on the market.

Half of us have one month of cash cushion if laid off - (seattletimes.nwsource.com) Americans are in a collective state of financial depression as many admit they could cover their bills for two months at most if suddenly jobless, a nightmare more and more worry may come true. A group of surveys found a growing number of consumers are a few paychecks away from a household collapse. Even as many scramble to shore up savings, rainy-day funds are being depleted to cover food and energy bills, mortgage and car payments. A large number of households said they couldn't tolerate even one missed paycheck. "This is flashing so bright-red," said Paul Ballew, senior vice president of Nationwide Insurance. "Roughly 60 percent of the population was ill-prepared (financially) before the meltdown." A MetLife study released last week found that 50 percent of Americans said they have only a one-month cushion — roughly two paychecks — or less before they would be unable to fully meet their financial obligations if they were to lose their jobs. More disturbing is that 28 percent said they could not make ends meet for longer than two weeks without their jobs.

They Think They Deserve Those Bonuses - (www.cnbc.com) The logic behind the AIG bonuses perplexes most people. We've gone from wondering who would give out these rich rewards to asking who is brazen enough to take one for imperiling the world economy. Barney Frank and Andrew Cuomo have issued or threatened subpoenas that could help name (and therefore, presumably, shame) recipients from AIG's financial products division. That's the great mystery of the bonus fiasco: Don't the recipients feel any sense of responsibility? Here I think I can offer a tiny bit of enlightenment. By a strange quirk of fate, I live in a waterfront suburb of Manhattan popular with the middling level of the financial elite, the kinds of people who get $1 million bonuses—and feel very entitled to them. The worst trick of the credit bubble, a trick made crueler by the bubble's long life, was to convince so many that the money they made was more than an opportunity—it was a benediction. Not that a lot of my neighbors have been feeling so blessed lately. For the financial community, the crisis is entering its third year. It's becoming clearer that our way of life is changing irrevocably, and there's more than a little antagonism about who's to blame. There's a civil war raging out here. It's not a class war in the traditional sense. It is a conflict between the haves and the used-to-haves. One side of our town is filled with the shock troops of the overleveraged economy. These are the people most upset about Obama's $500,000 salary cap. They are Goldman guys and Morgan Stanley folks, hedge funders who levered up, investment bankers who packaged aircraft leases, and private-equity guys who rolled up insurance companies.

GM, Chrysler May Need ‘Considerably’ More Aid - (www.bloomberg.com) General Motors Corp. and Chrysler LLC may need “considerably” more than the $21.6 billion in aid they requested, which was based on optimistic recovery plans, said Steven Rattner, the Treasury’s chief auto adviser. President Barack Obama’s auto task force is assessing proposals from GM and Chrysler to decide whether to recommend U.S. assistance or tip the carmakers into bankruptcy. Rattner made the comments yesterday on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend. The task force will give its “sense of direction” by March 31, Rattner said. The companies have received $17.4 billion since December and asked for the additional $21.6 billion in aid last month, an amount that depends on achieving turnaround plans that are “somewhat ambitious,” Rattner said. “It could be considerably higher, I won’t deny that,” Rattner said, when asked whether U.S. aid sought could rise. “Like all management teams they tend to take a reasonably, slightly perhaps, optimistic, view of their business. So it could be more, I can’t rule that out.” Greg Martin, a GM spokesman, said yesterday its restructuring plan has “a conservative outlook.” The company will continue working with the task force “and we’ll keep them informed of our liquidity needs,” Martin said in an e-mail.

U.S. credit card defaults rise to 20 year-high - (www.reuters.com) U.S. credit card defaults rose in February to their highest level in at least 20 years, with losses particularly severe at American Express Co (AXP.N) and Citigroup (C.N) amid a deepening recession. AmEx, the largest U.S. charge card operator by sales volume, said its net charge-off rate -- debts companies believe they will never be able to collect -- rose to 8.70 percent in February from 8.30 percent in January. The credit card company's shares wiped out early gains and ended down 3.3 percent as loan losses exceeded expectations. Moshe Orenbuch, an analyst at Credit Suisse, said American Express credit card losses were 10 basis points larger than forecast. In addition, Citigroup Inc (C.N) -- one of the largest issuers of MasterCard cards -- disappointed analysts as its default rate soared to 9.33 percent in February, from 6.95 percent a month earlier, according to a report based on trusts representing a portion of securitized credit card debt. "There is a continued deterioration. Trends in credit cards will get worse before they start getting better," said Walter Todd, a portfolio manager at Greenwood Capital Associates. U.S. unemployment -- currently at 8.1 percent -- is seen approach 10 percent as the country endures its worst recession since World War Two, leaving more than 13 million Americans jobless, according to a Reuters poll of economists.





OTHER STORIES:

The Big Takeover - (www.rollingstone.com)
San Francisco Bay Area House Prices Dip Below $300,000 - (www.bloomberg.com)
Bay Area house median falls below $300,000 - (www.sfgate.com)
Americans fear house price drop accelerating - (news.yahoo.com)
Spring Sale: House Sellers May Flood the Market Soon - (www.nbcphiladelphia.com)

Canada's National Post: The End of America? - (www.nationalpost.com) Ron Paul Predicts 15 Year Depression - (www.ft.com) China Keeps the Faith in US Treasuries, Dollar - (www.marketwatch.com)Gold Bugs Triumphant, Terrified About US - (www.marketwatch.com) Worst Over? Are you kidding? - (www.businessinsider.com) Treasury Unveils Details of Plan to Relieve Banks of Toxic Assets - (www.washingtonpost.com) Women Needing Cash Go From Jobless to Topless - (news.yahoo.com/s/ap)Ron Paul's Statement on AIG Bonuses - Unconstitutional! - (bullnotbull.blogspot.com) Israeli Soldiers Admit to Deliberate Killing of Gaza Civilians - (www.timesonline.co.uk) London Police Fear Violent Protests At G-20 - (www.iht.com) Global Anxiety over Manufacturing Declines - (www.nytimes.com) The Fed Crosses the Rubicon... - (www.marketwatch.com)...Print Trillions Now, Worry Later... - (www.latimes.com) ...The Nuclear Option - (www.sirchartsalot.com) Banks Cite Two Paths to Disaster, Thanks to Federal Intervention - (www.washingtonpost.com)A.I.G. Sues U.S. for Return of $306 Million in Tax Payments, Some Involving Tax Deals in Offshore Havens Using Taxpayer Money to Pursue Lawsuit - (www.nytimes.com)
Fed Monetized Debt When Foreign Debt Holders Stop Buying - (www.geldpress.com)
Debt Man Walking - (www.japanfocus.org)
The Fed vs Savers - (www.patrick.net)
How to create a financial crisis - (www.examiner.com)
Former IMF economist: housing may not bottom for another two years - (www.pbs.org)
Ron Paul March 18, 2009 House Floor - (www.youtube.com)

We should fire everyone at AIG - (www.nytimes.com)
Oh THAT'S why we are bailing out AIG - (thelastgoodidea.blogspot.com)
Too True To Be Funny - (www.caglecartoons.com)
Another Hidden Flaw In Ownership - (www.patrick.net)

Saturday December 27 Housing and Economic stories

TOP STORIES:

Houseownership Without Equity: What's It Worth? - (www.truthout.org) It costs roughly $3,000 a year to insure a kid through the State Children's Health Insurance Program (SCHIP). Head Start costs around $7,500 per student. The Women, Infants and Children (WIC) nutrition program checks in at about $750 a head. These numbers are worth keeping in mind in the context of plans for helping homeowners facing foreclosure. All three programs are arguably great success stories, improving the health care of lower-income children, increasing educational opportunities and providing good nutrition at the start of life. All three programs could also be expanded to serve more people if the funding were available. These programs will likely be expanded as priorities of the new administration and also as part of a stimulus package in which almost any type of spending will help to boost the economy. Nonetheless, it will almost certainly be the case that the programs will still not be large enough to fully meet the demand for their services. In this context, it is worth asking how much taxpayers should be willing to spend to keep a homeowner in a home in which they have zero equity. Unless we discuss this question in a serious way, then we are speaking nonsense when we talk about plans to deal with the foreclosure crisis. The reality is that almost all of the millions of families facing foreclosure have zero equity left in their homes. That is why they face foreclosure. If they still had equity in their house, they would borrow against it and meet their mortgage payments.

Let the Banks Fail: Why a Few of the Financial Giants Should Crash - (www.alternet.org) So far, much of Washington’s ad hoc, ham-fisted response to the economic crisis has been based on the dictum that the financial institutions must be prevented from taking their losses. That should come as no surprise. Big finance’s lobbyists have been all over the "bailout" (it should be bailouts, plural) from the very start, Wall Street pumped piles of cash into the elections — AIG, recipient of tens of billions in taxpayer largesse, ponied up $750,000 for both the Democratic and Republican conventions — and the whole thing’s been designed by "free-market" ideologues who came to Washington directly from Wall Street. But the hard reality is that the institutions that created this mess have to take their losses — no doubt huge losses in many cases — if we're to have any chance of avoiding a deep recession that drags on for years. Some will be wiped out in the process, but propping up firms that have massive -- and not entirely known -- quantities of so-called toxic securities on their books only delays the inevitable day of reckoning.

A Second Mortgage Disaster On The Horizon - (www.cbsnews.com) When it comes to bailouts of American business, Barney Frank and the Congress may be just getting started. Nearly two trillion tax dollars have been shoveled into the hole that Wall Street dug and people wonder where the bottom is. As correspondent Scott Pelley reports, it turns out the abyss is deeper than most people think because there is a second mortgage shock heading for the economy. In the executive suites of Wall Street and Washington, you're beginning to hear alarm about a new wave of mortgages with strange names that are about to become all too familiar. If you thought sub-primes were insanely reckless wait until you hear what's coming. One of the best guides to the danger ahead is Whitney Tilson. He's an investment fund manager who has made such a name for himself recently that investors, who manage about $10 billion, gathered to hear him last week. Tilson saw, a year ago, that sub-prime mortgages were just the start. "We had the greatest asset bubble in history and now that bubble is bursting. The single biggest piece of the bubble is the U.S. mortgage market and we're probably about halfway through the unwinding and bursting of the bubble," Tilson explains. "It may seem like all the carnage out there, we must be almost finished. But there's still a lot of pain to come in terms of write-downs and losses that have yet to be recognized."

Israeli firms among losers in Madoff investment scam - (www.haaretz.com) The huge $50 billion fraud allegedly perpetrated by Bernard Madoff, possibly the largest in history, has reached Israel, too. Among those invested in Madoff's funds and Ponzi scheme are an impressive list of Israeli insurance companies: Harel, Clal and the Phoenix. Estimates of the insurance firms exposure are NIS 40 million for Harel, tens of millions of shekels for the Phoenix and approximately NIS 12 million for Clal. The Technion also has lost money from its own exposure to Madoff and his scheme. It invested funds it raised from donations with Madoff and may have lost NIS 25 million. Madoff, 70, was the former chairman of the Nasdaq, and treasurer of the board of trustees at Yeshiva University and chairman of the university's business school; he managed investment funds with over $17 billion in assets.

Hungry lobbyists look to Obama's stimulus package for a handout - (www.star-telegram.com) Since President-elect Barack Obama laid out plans for the largest injection of federal spending into the economy since the New Deal, just about everyone has started angling for a piece of the action. With estimates of the package, which will be considered by the new Congress starting in January, topping out at anywhere between $500 billion and $1 trillion, ailing sectors such as home builders and sellers, airlines, railroads — and, yes, the auto industry — view the stimulus as a means to get healthy again. That includes the air-conditioning industry, America’s libraries and even catfish farmers. All of them, and many more, have deployed lobbyists on Capitol Hill in hopes of benefiting from the spending spree. "The ever-increasing cost of the yet-to-be-seen stimulus is like chum in the water for lobbyists circling to snap up some taxpayer cash for their clients," said Steve Ellis of Taxpayers for Common Sense, a watchdog group.

Bank of America Stock Could Fall to $9: Analyst - (www.cnbc.com) This stock has gone down hard in recent months and is trading around $13 now. Could they be the next Citigroup??? Bank of America was rated "underperform" by Friedman, Billings, Ramsey Group analyst Paul Miller in a note, citing the bank's "thin tangible common equity" as a chief concern. The stock could fall as low as $9, the analyst said. Bank of America's shares closed at $14.1 on Monday, down 5.5 percent. The stock has tumbled 66 percent so far this year. Bank of America's equity ratio is too low, Miller wrote, leading him to expect that the bank will have to raise a "substantial" amount of capital, diluting existing shareholders. "We recommend that investors stay away from the stock until this initial raise is complete," Miller wrote in the note.




OTHER STORIES:

Detroit papers drop home delivery to 3 days a week - (news.yahoo.com/s/ap) Beset by falling revenue, Detroit's newspapers announced Tuesday that they plan to offer only three days of home delivery and will push their online editions instead, making the city the largest in the nation to have its daily papers undergo such a makeover.
Obama says economic ammunition running low - (news.yahoo.com/s/ap) President-elect Barack Obama says the Federal Reserve is "running out of the traditional ammunition" to deal with a recession.
TNT discovered at famed Paris department store - (news.yahoo.com/s/ap) Police acting on a warning Tuesday found a bundle of dynamite inside a Paris department store at the height of the Christmas season, and a group demanding that France withdraw from Afghanistan claimed responsibility.

Loan Modification Push Will Affect Securitized Mortgages: Fitch - (www.housingwire.com) - Loan modifications will grow to 15 percent of 2005-2007 vintage securitized mortgages over the next twelve months from virtually none, according to a report released Tuesday morning by analysts at Fitch Ratings. The agency said it has received a number of inquiries on proposed changes to transaction documents that expand the servicer’s ability to do modifications, a sea-change in how investors are looking to manage mortgage-related investments
Corruption in the Bailout Plan - (www.bankimplode.com) - Video about Kash and Paulson’s bullsh!t
BankUnited Victim of Fake Press Release - (www. thetruthaboutmortgage.com) - As if things couldn’t get any worse for BankUnited, its stock trading at a mere 32 cents, its regulator demanding it raise a hefty amount of capital, and now this. The Coral Gables, Florida-based bank and mortgage lender was the victim of what they say was a fake press release, involving a handful of companies claiming to be working with BankUnited on loan modifications
US houses lose $2 trillion in value during 2008 - (money.cnn.com)
House prices will crash further 15% in England next year - (www.telegraph.co.uk)
60 Minutes Blows the ALT-A Loan Story - (yourmortgageoryourlife.wordpress.com)
AIG Sells $39.3 Billion in Assets to NY Fed's Fund - (www.cnbc.com)
Pfizer's 40 Year Run Of Hiking Dividend Ends - (www.cnbc.com)
Auto Bailout Anger: Everyone Should Just Chill Out - (www.cnbc.com)
Evidence that the Fed Caused the Housing Boom - (www.mises.org)
Fannie Mae to Let Renters Stay in Foreclosed Properties - (www.washingtonpost.com)
Anatomy of a bank failure: When the liquidators come calling - (www.charleston.net)
FDIC chief sees housing pain into 2010 - (www.usatoday.com) 2025: What to expect - (www.mg.co.za)
Buffett: People Thought I Was Running Ponzi Scheme - (www.cnbc.com)
Goldman Posts $2.1 Billion Loss, But Shares Rise - (www.cnbc.com)
Consumer Prices Take Another Record Plunge - (www.cnbc.com)
Holiday Shoppers Remain Tightfisted- (www.cnbc.com)

Fidelity National Unveils Ultimatum on LandAmerica Deal - (www.housingwire.com) - Fidelity’s message was essentially: If the acquisition is not approved quickly, Fidelity’s deal is off and LandAmerica’s reinsurance protection goes away entirely. That certainly puts pressure on the players to act before the holidays — and it puts pressure on LandAmerica, which can do little other than wait and see how the next week plays out."
Housing Starts in U.S. Fell 18.9% to 625,000 Pace - (www.ml-implode.com) - "Construction starts on housing fell 18.9 percent last month to an annual rate of 625,000 that was the lowest since the governme...
Alan Greenspan's collapsing reputation - (www.ml-implode.com)
Bush Administration Gets Close to Auto Bailout Deal - (www.cnbc.com)
Ford Executive: No Short-Term Liquidity Problem - (www.cnbc.com)

Thursday July 10 Housing and Economic stories

Top Stories:

Banks find way to cushion losses - (http://www.ft.com/) Gains can be recorded as health worsens. Banks are set to cushion the blow of more credit-related losses by using an accounting rule that enables them to record exceptional gains when their financial health deteriorates. The method, which has allowed US and European banks to add more than $8bn in paper profits, faces increasing opposition from investors, analysts and credit rating agencies.
Under the rule, introduced in February 2007 after lobbying from banks, financial companies are allowed to use “mark to market” accounting on their own debt. As a result, if the price of their bonds and notes falls, banks can record a gain equal to the difference between the original value of the debt and its market price. In past months, the rule has helped banks including Lehman Brothers, Citigroup, Goldman Sachs, Morgan Stanley and Merrill Lynch to boost profits

Omen Predicts Stock Market Crash? - (http://www.cnbc.com/). A little discussion around the Hindenburg Omens that have been happening the past few weeks. I have followed these over the past 7-8 years and have found it to send some false signals. Thanks to Robert McHugh’s story on The Past Performance of the Hindenburg Omen Stock Market Crash Signals 1985 – 2005 for the table below.
(1) In April 2004, the Fed pumped $155 billion in liquidity from the last week in April - right after the Hindenburg Omens were generated - to the third week of May, a 22 percent annual rate of growth in M-3, to stave off a crash. Even with the liquidity, the market still fell 5.0 percent.(2) The 12/23/1998 signal barely qualified, as the McClellan Oscillator was barely negative at -9, and New Highs were nearly double New Lows. Had this weak signal not occurred, condition # 5 would not have been met. This skin-of-the-teeth confirmation may be why it failed. It says something for having multiple, strong confirming signals.(3) This signal came close to having two confirming signals, which may be why as a non-cluster signal, it produced a strong sell-off.

Squeeze cuts off private equity profit source - (http://www.ft.com/) Boo hoo. The private equity groups have not been able to add new debt to companies solely to pay themselves a dividend. Even as leveraged finance markets show signs of stabilising and with €31.6bn of new loans sold in the first half of this year, banks and other investors are no longer willing to fund dividend recaps. Not a single such deal has been done this year. Private equity funds enjoyed unprecedented liquidity in debt markets before the credit crunch, driven in Europe particularly by the emergence of institutional investors and complex investment vehicles. This allowed buy-out groups to secure cheaper funding for their companies, and to take profits out much sooner than they had in the past.

Bowyer: The Coming Obama Recession - (http://www.cnbc.com/) Very slanted story from a Larry Kudlow (who was a cocaine addict and has absolutely no credibility) contributor. Everyone’s been so busy searching for the alleged Bush recession that they’ve missed what the markets are trying to tell us about next year. As the attached chart shows (courtesy of Professor Mark Perry’s Carpe Diem blog), the current bear market corresponds fairly well with the drop in the probability of a McCain victory. I don’t think that the current Dow bear market was caused by last August’s credit crunch. Nor do I believe it’s being caused by a recession that is allegedly starting right now (having failed to appear in the first or second quarter). Stocks are forward looking; when they drop now, it means investors are worried about things that are coming later – 6 to 9 months later. In other words, they’re worried about Obama.

Top CFTC investigator resigns - (http://www.ft.com/) Comes as regulator probes oil market. Ironic as he is leaving to become a partner in an energy and derivatives firm. The departure of Gregory Mocek, the director of enforcement at the Commodity Futures Trading Commission, comes as the regulator is under growing political pressure over the role of speculators in record energy prices. The CFTC is conducting a nationwide investigation into crude oil trading practices and that is expected to be continued by Mr Mocek’s replacement, Stephen Obie, who was associate director of the the Division of Enforcement and Regional Coordinator of the agency’s New York Office. Mr Mocek had served more than six years as the top investigator for the agency. He will soon become a partner in the energy and derivatives markets practice group at the law firm McDermott Will & Emery.

Market leaves housing flippers flopping - (http://www.tampabay.com/) - Someone, please put this guy in a Turkish prison for the rest of his life. This guy should not be allowed to continue working in Real Estate or keep his existing properties and 401K account: As the market began to cool in 2006, it became harder to flip houses, and questionable transactions began to surface. Lepzinski and his wife Peggy, 49, sold several houses to the elderly father of a St. Petersburg loan officer who had done prison time for fraud and theft. The father, who lives in New York, said he knew nothing about the transactions or how his name ended up on high-interest mortgages that required no down payment. Last summer, a Lepzinski-owned home in St. Petersburg that had sat vacant for months with no buyers suddenly sold for $630,000 — far more than comparable sales — to an 82-year-old retired trucker living on Social Security. Lepzinski declined to talk about that or other transactions. On Feb, 23, the Lepzinskis filed a Chapter 7 liquidation bankruptcy. Their petition listed nine properties on which the lenders had foreclosed, repossessed or taken the deed in lieu of foreclosure. Contrary to the image Lepzinski cultivated of successful real estate investor, his petition showed no income for 2007 and negative income of $151,577 in 2006. Even at the peak of the boom in 2005, his income was minus $218,320. In all, the Lepzinskis owed $1,547,705, including nearly $190,000 in credit card debt to American Express, Target, Home Depot and others. Among their individual creditors was a neighbor who had loaned them $97,800. "You make me out to be evil and I'm the victim — am I not the one who went into bankruptcy?'' Lepzinski asks a reporter.

Celebrity foreclosures show extent of housing woes - (http://www.signonsandiego.com/) – No new information, just another take on celebrity foreclosures. Tabloid magazines like to reassure us that celebrities are just like us – they go grocery shopping, take their dogs for a stroll around the neighborhood, even pump their own gas. These days, that can also hold true when it comes to the plummeting real estate market. Several celebrities have dealt with foreclosure issues on their luxurious estates and many more have had to drop their asking prices, putting some high-profile faces on a growing problem: the real-estate meltdown is now hitting every socio-economic class.

Losses from the Financial Crisis Now Up to $1.6 Trillion - (http://www.cnbc.com/) - I was this morning on CNBC’s Squawk Box being interviewed – in part - by the legendary Mohamed El-Erian (co-CEO of Pimco) who is the lead guest for the show this morning. Mohamed is a friend/colleague and one of the most thoughtful and deep thinkers about financial markets and the global economy combining analytical academic rigor, senior policy experience (a decade long at the IMF) and the deepest and most sophisticated knowledge of financial markets."

Austin Area Foreclosures Rising - (http://www.housingdoom.com/) - In more evidence that the national housing troubles are hitting Central Texas, one of every 133 homes in Travis County was posted for foreclosure in the first six months of the year — compared with one in 265 homes in 2001. The same trend prevailed in Williamson County, where one of every 95 homes was posted for foreclosure this year, compared with one in every 225 homes in 2001.
The calculations by Foreclosure Listing Service Inc. are a new way to look at the region’s rising foreclosures, which are higher than they were in 2004, when Central Texas was still in the doldrums of the tech bust.

Funny Story of the Week: Realtor Ethics Missing? - (http://www.housingdoom.com/) – This story is funny, and maybe a bit ironic. On my recent trip to the Realtor.com website I thought I’d check out their "Why use a realtor?" link. The 4th paragraph from the bottom advertises their "Code of Ethics". I love the fact that when you click the link it says "404 Not Found".

Bank of America CEO: Recession "feel" may last year – (news.yahoo.com/s/nm) – Funny how no one wants to use the official “r-word” so they are all dancing around the subject. They will wait until a new president is in place and then make the announcement that the recession began last year J



Other Stories:

Fannie and Freddie: Lets Call the Whole Thing Off - (http://www.seekingalpha.com/)
Freddie Mac, Fannie Mae Plunge on Capital Concerns - (http://www.bloomberg.com/)
Mortgage Fears Cast Shadow Over 2 Agencies - (http://www.nytimes.com/)

Northwest to trim staff by 8 percent to cut costs - (news.yahoo.com/s/nm) – Airline woes continue to snowball.
BofA may assume all Countrywide debt-CreditSights - (news.yahoo.com/s/nm) Bank of America Corp (BAC.N) is primed to assume all debt of the former Countrywide Financial Corp, independent research firm CreditSights Inc said, a move that would alleviate worries of Countrywide bondholders. CreditSights analyst David Hendler issued his assessment on Wednesday, the day after a regulatory filing that showed how the second-largest U.S. bank was treating some of Countrywide's debt obligations. Bank of America bought the largest U.S. mortgage lender last week for about $2.5 billion. "Countrywide's bank credit facilities have been repaid and its outstanding debt has been assumed by an indirect subsidiary, created and wholly owned by B of A," Hendler wrote. "Our view continues to be that B of A will ultimately honor the outstanding indebtedness from (old) Countrywide, based on our discussion with the company following this filing, as well as our prior analysis."
New Home Inventory Drops In The Eye Of The Beholder - (http://www.ml-implode.com/) - "Floyd Norris of the New York Times accuses Treasury Secretary Henry Paulson of "whistling past the graveyard"- and he has a poi...
IndyMac stops new loans, to cut work force by half - (biz.yahoo.com)
IndyMac Press Release - (investors.indymacbank.com)
IndyMac Faces Rush to Withdraw - (http://www.nytimes.com/)
IndyMac Wreck Could Lead to S&L Pile-Up - (http://www.thestreet.com/)
Fed Report on Inflation Prompts Moderation in Interest Rates - (http://www.ml-implode.com/) - "Mortgage interest rates dropped slightly during the week ended July 3 according to results of the Primary Mortgage Market Surve...
A Brief History of IndyMac Stock - (http://www.ml-implode.com/)
Foreclosures bringing cases of fraud to light - (http://www.signonsandiego.com/)
Build Your Own House, Cheap - (http://www.moremarin.com/)
Housing Costs Considering Transportation - (htaindex.cnt.org)
Loan Pains Turned Site Into a Hit - (Not patrick.net) - (http://www.nytimes.com/)

Teflon Faith Under Siege - (http://www.ml-implode.com/)
The Government's Macroeconomic Series: X-Files, Dilbert, or Resource Constraints? - (http://www.ml-implode.com/)
Loan Modification Myths and Facts - (http://www.ml-implode.com/)

Cool Tool: Housing + Transportation Affordability Index - (http://www.ml-implode.com/)
Indymac Sells Branches to Prospect, Makes Funding Loans Difficult - (http://www.ml-implode.com/)

Analysis: Are financial investors driving up the cost of commodities? - (http://www.ft.com/)
Housing Rebound, My Ass - (http://www.seekingalpha.com/)
Pending house sales fall 4.7% in May - (biz.yahoo.com)
How Wall Street Helped Create a Crisis - (dealbook.blogs.nytimes.com)
The US housing crisis will continue well into 2009 - (http://www.guardian.co.uk/)
Fed To Continue Giving Free Money To Friends - (http://www.bloomberg.com/)
House price drop necessary: Fed - (http://www.theaustralian.news.com.au/)
Paulson says U.S. house foreclosures to stay high - (http://www.reuters.com/)

Stocks fall as oil prices rebound - (http://www.ap.com/)
Dollar falls against euro - (http://www.ap.com/)
Oil rises as Iran test fires missile, inventories fall - (http://www.marketwatch.com/)

Bernanke Floats Bigger Fed Role - (online.wsj.com)
Fed ready to extend bank aid - (http://www.ft.com/)
Fed Sees Turmoil Persisting Deep Into Next Year - (http://www.nytimes.com/)
Heavy credit card use boosts consumer borrowing in May - (http://www.chicagotribune.com/)
Consumer Spending Slide Killing Madison Avenue - (http://www.nypost.com/)
Weak economy forces festivals to rethink, cancel - (http://www.chicagotribune.com/)


US hopes of housing recovery subside - (http://www.ft.com/)
Fannie Mae Pays Record Yield Spreads on Sale of Two-Year Notes - (http://www.bloomberg.com/)
Hedge Funds Fell 0.75%, Worst First-Half Performance - (http://www.bloomberg.com/)
SEC Says Debt-Rating Firms Sacrificed Quality for Profit - (online.wsj.com)
Study Finds Flawed Practices at Ratings Firms - (http://www.nytimes.com/)
Federal regulators prepare to tighten mortgage rules - (http://www.latimes.com/)

Key US ad spending forecast cut by half - (http://www.ft.com/)
Fannie, Freddie Downgraded by Derivatives Traders - (http://www.bloomberg.com/)
Mortgage Lender Faces Rush to Withdraw - (http://www.nytimes.com/)
Alcoa's 2Q profit sinks 24 percent on higher costs - (http://www.chicagotribune.com/)
Steve & Barry's headed for bankruptcy - (http://www.newsday.com/)
Siemens cutting 17,000 jobs - (http://www.chicagotribune.com/)
Retail Chain Said to Face Bankruptcy - (http://www.nytimes.com/)

Trichet says inflation hits labour markets - (http://www.ft.com/)
Recession fear weighs on Ireland’s banks - (http://www.ft.com/)
U.K. Mortgage Rates Surge, Consumer Confidence Slumps - (http://www.bloomberg.com/)
Britain's economy is coming unglued quickly - (http://www.iht.com/)
Foreclosures' financial strains take toll on kids - (http://www.usatoday.com/)

Thursday June 26 Housing and Economic stories

Top Stories:

Vital Part of Housing Bill Is Brainchild of Banks - (www.washingtonpost.com) A key provision of the housing bill now awaiting action in the Senate -- and widely touted as offering a lifeline to distressed homeowners -- was initially suggested to Congress by lobbyists for major banks facing their own huge losses from the subprime mortgage crisis, according to congressional staff members and bank officials. Credit Suisse, a large investment bank heavily invested in mortgage-backed securities, proposed allowing hundreds of thousands of homeowners to refinance their mortgages with lower-cost government-insured loans, relieving financial institutions of the troubled debt. After the bank proposed this to Congress in January, it became known as the "Credit Suisse plan" among congressional staffers and lobbyists. It later formed the basis of housing provisions in both the House and Senate.
Bank of America, which is acquiring Countrywide Financial, the country's largest mortgage lender, followed with a similar and more detailed proposal, principal negotiators on the legislation said. In approaching congressional aides, the lobbyists suggested that banks take less than full payment for the distressed loans on their books. But the measures would allow financial institutions to get cash out of foreclosed properties that would otherwise sit on their books as dead weight.
High Medicare Costs, Courtesy of Congress - (www.nytimes.com) On Wal-Mart’s Web site, you can buy a walker for $59.92. It is called the Carex Explorer, and it’s a typical walker: a few feet high, with four metal poles extending to the ground. The Explorer is one of the walkers covered by Medicare. But Medicare and its beneficiaries aren’t paying $59.92 for the Explorer or any similar walker. In fact, they’re not paying anything close to it. They are paying about $110. For years, Congress has set the price for walkers and various medical equipment, and it has consistently set them well above the market rate, effectively handing out a few hundred million dollars of corporate welfare every year to the equipment makers.
Calif. attorney general sues Countrywide Financial - (www.ml-implode.com) – First Illinois, now California. Funny how CA AG did not sue until days before the merger with BofA. When Countrywide was a CA corporation, CA was fine with all the lending practices. Now that they are ready to move HQ out to the East Coast, time to sue. "Countrywide Financial Corp. is accused of using misleading advertising and other unfair business practices to trick borrowers i...
Countrywide's Licenses Revoked By State of Washington - (www.ml-implode.com) - Gov. Chris Gregoire says the state is pulling the license of Countrywide Home Loans to write loans in Washington and that invest...
Illinois to Sue Countrywide, CEO Mozilo - (www.cnbc.com) The lawsuit is the first known case of a state authority charging Countrywide, the largest U.S. mortgage lender, for actions related to the housing crisis. It also comes on the same day the company's shareholders are expected to vote on its sale to Bank of America. The acquisition is expected to close on July 1.
Illinois attorney general says she'll sue Countrywide Financial - (www.latimes.com)
Chrysler Taps $2 Billion Line of Credit - (online.wsj.com) Chrysler LLC tapped a $2 billion credit line from its owners, Cerberus Capital Management LP and Daimler AG, to bolster the auto maker's liquidity amid a painful downturn in U.S. sales that is stretching its resources.
California Police Gone Wild: Charity carnival scrapped because of police fees – (www.insidebayarea.com/argus). First Vallejo police/fire department cause Vallejo to file for bankruptcy. Now Police departments are padding their pay by mandating police coverage (rather than private security) at town events. But a carnival fundraiser the group had planned to begin Thursday in Fremont has fizzled because of high police fees, organizers said. The carnival was set to start at the Hub shopping center, but league Executive Director Shirley Sisk said the hoped-for take of up to $30,000 through the weekend was offset by an expected $21,000 bill from Fremont police for security. Gorman said his understanding is that the police department wanted seven officers, two gang task force members and a dispatcher at the Hub event at time-and-a-half pay rather than private security that Butler typically hires at a fraction of the cost.
The Market Created the Money, Not the State - (www.brookesnews.com) – Of course, this conservative think-tank would never blame the Republican Admin or the Fed for creating this credit mess due to lowering interest rates to 1%.
Marshals Make Millions Serving Foreclosure Papers - (www.ml-implode.com) Last year, John T. Fiorillo earned almost twice as much as University of Connecticut women’s basketball coach Geno Auriemma and more than 10 times the salary of Gov. M. Jodi Rell. The Bristol resident grossed more than $2 million, but not by coaching a team to the Final Four or running state government. Fiorillo is a self-employed state marshal who serves legal papers to people about to lose their homes through foreclosure. Fiorillo’s bounty can be attributed to his relationship with two law firms — Hunt Leibert Jacobson and Reiner, Reiner and Bendett — that have a virtual monopoly on the burgeoning foreclosure market.
CIBC likely to take big Q3 writedown - (www.reuters.com)
GMAC's $60 Billion Deal Loses Confidence as Mortgages - (www.bloomberg.com)
Rebate checks diverted to pay $2B in debts - (www.usatoday.com) About $2 billion in economic stimulus rebate checks are being confiscated to pay overdue bills for child support, student loans and back taxes, the government says. So far, 1.8 million rebate checks have been intercepted by Treasury Department computers showing that individuals owe money to federal or state governments.


Other Stories:

Profits seen off more than 10 percent - (www.bloomberg.com)
Consumer confidence fell sharply in June - (www.latimes.com)
Chapman University forecasters say U.S. is in recession - (www.latimes.com)
Home Not-So-Sweet Home - (www.nytimes.com)
Communities suffer as foreclosure rate rises - (www.msnbc.msn.com)

Phoenix Commercial Real Estate Financier Files Bankruptcy - (www.ml-implode.com) - Mortgages Ltd. filed for Chapter 11 bankruptcy Monday night, under pressure from a borrower that earlier had filed a petition ...
$200 oil? - (www.ml-implode.com) - "If Israel bombs Iran, $200 oil is a distinct possibility. Both look more likely given recent developments."

You Might Want To Think Twice Before Gutting Your Preforeclosure - (www.ml-implode.com) - "We’ve heard tale after tale of bitter homeowners stripping their homes in foreclosure, prior to losing the home. Now they migh...
American Express Says Late Payments Rising Faster Than Expected - (www.ml-implode.com) - ``Business conditions continue to weaken in the U.S. and so far this month we have seen credit indicators deteriorate beyond our...
Mr Mortgage Update: Ultimate Fannie/Freddie ‘Con’ Job - (www.ml-implode.com) - Now, the big guns have come out to weigh in. Today, Bloomberg released a detailed story on just how little demand there is for t...
Mark to Misery in the cash equivalent fund biz - (www.ml-implode.com) - "A bond fund closed down yesterday and it brings up another interesting dilemma that few people if anyone wants to address, incl...
Case-Shiller home prices - (www.ml-implode.com)
Taxpayers Helping Bank Of America Finance Countrwide Deal - (www.ml-implode.com)
Mortgage Rates Continue to Set New 2008 Records, Applications Fall - (www.ml-implode.com)
Man with a Tan Needs a Plan - (www.ml-implode.com)
False Housing Turnaround Expectations - (www.ml-implode.com)
Senate ethics committee proposes Senators disclose their mortgage details, may now be investigating Dodd and Conrad - (www.ml-implode.com)
Countrywide shareholders set to vote on BofA takeover - (www.ml-implode.com)
Update: Vanguard operations illegal? - (www.ml-implode.com)
Politico Gets Mortgage Answers from Senators - (www.ml-implode.com)
Senate seen approving [BofA/CFC] rescue bill - (www.ml-implode.com)

Oil Declines After Supplies Rise for First Time in Six Weeks - (www.bloomberg.com)
Treasuries Decline; Fed May Shift Focus to Fighting Inflation - (www.bloomberg.com)
Gold Futures Decline on U.S. Inflation Outlook; Silver Steady - (www.bloomberg.com)
U.S. Stocks Advance Ahead of Fed; JPMorgan, Jabil Circuit Climb - (www.bloomberg.com)

Durable Goods Orders in U.S. Are Unchanged; Ex-Transportion Decline 0.9% - (www.bloomberg.com)
Consumer confidence fell sharply in June - (www.latimes.com)
U.S. Economy: Home Sales Fall, Durable Goods Orders Stagnate - (www.bloomberg.com)
Stagflation fears vexing for Bernanke - (www.chicagotribune.com)
Fed Vacancies Pose Challenge - (online.wsj.com)
Economist forecasts softer landing - (www.ft.com)
Rethinking the Country Life as Energy Costs Rise - (www.nytimes.com)
Chapman University forecasters say U.S. is in recession - (www.latimes.com)
Bernanke May Halt Rate Cuts, Shift Focus to Inflation Concern - (www.bloomberg.com)
Whatever Happened To Inflation Targets? - (www.forbes.com)
Approval Is Near for Bill to Help U.S. Homeowners - (www.nytimes.com)
Hedge Funds Fear Backlash From Congress - (online.wsj.com)
Speculating on why oil, gasoline prices are soaring - (www.latimes.com)
Short Interest Increases on the Nasdaq - (online.wsj.com)

Oil May Cost Jet Makers Orders - (online.wsj.com)
Illinois to Sue Countrywide - (www.nytimes.com)
Barclays to Raise $8.9 Billion to Shore Up Capital - (www.bloomberg.com)
Pump pain hits independents - (www.signonsandiego.com)
Lowe's Weighs Increases - (online.wsj.com)
Eurozone growth fears as inflation bites - (www.ft.com)
Trichet: ECB determined to combat inflation - (www.marketwatch.com)
New Zealand Consumer Confidence Falls to 17-Year Low - (www.bloomberg.com)