Thursday May 7 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Florida banks fail to maintain abandoned houses - (www.sun-sentinel.com) Banking lobbyists have quietly crafted a measure in the Florida Legislature that would prevent cities and counties from forcing the banks that hold mortgages on properties in foreclosure to maintain those properties until they have actually acquired the title to the land. With tens of thousands of homes across Florida left abandoned, government officials from Miami to Orlando have responded by sending crews out to mow lawns, clean pools and do other basic work and billing the banks to pay once they take possession of the property. The state's banking industry wants to put a stop to the practice. Banking lobbyists have quietly crafted a measure in the Florida Legislature that would prevent cities and counties from forcing the banks that hold mortgages on properties in foreclosure to maintain those properties until they have actually acquired the title to the land. That foreclosure process can take six months or more. Banking industry lobbyists hope to tack their language on to other legislation in the waning days of this year's legislative session, which is scheduled to end on May 1. The language, written by the Florida Bankers Association, would also prevent cities from establishing registries to keep track of all the foreclosed homes in their area. "It's a big issue," said Anthony DiMarco, a lobbyist with the bankers association, whose members include Bank of America, SunTrust, Wachovia and many others. Local ordinances aimed at making banks maintain foreclosed properties -- typically by allowing cities to impose liens or other charges on the land -- "sound great," DiMarco said, "but until we take title, we're not supposed to do anything with the property -- we don't own the property." But the industry group's maneuvering has sparked an uproar among cities and counties that say abandoned homes and businesses must be maintained to ensure they don't drag down surrounding communities.

The Problem With Forced Arbitration - (www.fairarbitrationnow.org) Most Americans don't know that they are bound by forced arbitration. Buried in the fine print of employment, cell phone, credit card, retirement account, home building, and nursing home contracts are mandatory arbitration clauses. Just by taking a job or buying a product or service, individuals are forced to give up their right to go to court if they are harmed by a company. Because the private system of forced arbitration benefits companies - and disadvantages consumers and employees - more and more industries are using forced arbitration to evade accountability. In arbitration, there is no judge, jury or right to an appeal. The arbitrators do not have to follow the law, and there is no public review of decisions to ensure the arbitrator got it right. Moreover, contracts typically name the arbitration that must be used – the one preferred by the company. Forced arbitration frequently costs more than taking a case to court, and can cost thousands of dollars. Individuals often have to pay a large fee simply to initiate the arbitration process. Then in order to arbitrate, individuals sometimes have to travel thousands of miles on their own dime. In the end, the loser (usually the individual) often pays the company’s legal fees. Forced arbitration strips our most basic rights and makes many employee and consumer protections unenforceable. The laws that protect us from discrimination based on age, sex, religion, race, disability, and unequal pay for equal work, such as the Civil Rights Act and the Equal Pay Act, become meaningless and unenforceable in arbitration. Employees lose important protections for blowing the whistle on waste or fraud or for fighting retaliation for taking the family medical leave, for example. Consumers cannot sue for negligence, defective products or scams. Even if a retirement account disappears, a home is dangerous and defective, or a loved one suffers harm in a nursing home, a forced arbitration clause means there is no right to take the company responsible to court.

GM Retirees Watch, Worry as Day of Reckoning Nears - (www.cnbc.com) John Martinez, a former autoworker, feels as though he is watching his future sink as General Motors slips closer to failure. Pressured to take an early retirement in April, Martinez had been pinning his hopes on GM's once-generous pensions and health-care benefits to help look after his four children and his disabled father, also a GM hourly retiree. But with the 100-year-old industrial icon teetering on the brink of bankruptcy, Martinez and the nearly 1 million other Americans who rely on the automaker for healthcare and pensions face new risks and heightened uncertainty. "It's scary. It's like I don't know my future," Martinez, 51, said at his house in Lincoln Park, a working class suburb of Detroit. "If they go bankrupt, I'm at their mercy." Martinez is looking for a new job but remains cautious about his prospects of finding something quickly in Michigan where the jobless rate led the nation at 12.6 percent in March. "I never wanted to leave GM. I am still too young," Martinez said. "If I lose any more, I don't know if I can sustain mortgages and bills."

US Economy Needs Interest Rate of Minus 5%: Report - (www.cnbc.com) An ideal interest rate to help the US economy to cope with the recession would be a negative 5 percent, the Financial Times reported on its Web site, quoting an internal Federal Reserve analysis. It said the analysis was based on a so-called Taylor-rule approach, which estimates an appropriate interest rate based on unemployment and inflation. Fed policy makers meet for two days starting Tuesday, but are widely expected to hold fire and assess the effects of the measures already taken to boost the economy. "We see little reason to expect major policy changes," Goldman Sachs economists wrote in a note to clients, quoted by Reuters. In March, the US central bank announced plans to inject an additional $1.1 trillion into the economy, buying mortgage debt and Treasurys. As rates cannot be cut below zero, the Fed's internal research suggests it should maintain unconventional policies that provide stimulus roughly equivalent to an interest rate of minus 5 percent, the Financial Times wrote.

Thain Says BofA Merrill Statements Not True: Report - (www.cnbc.com) Bank of America made inaccurate statements about its role in the bonuses and losses at Merrill Lynch, former Merrill Lynch Chief Executive John Thain told the Wall Street Journal in an interview. "The suggestion Bank of America was not heavily involved in this process, and that I alone made these decisions, is simply not true," John Thain told the paper. Merrill awarded bonuses just days before Bank of America completed its acquisition of the Wall Street investment bank and brokerage on Jan 1. Several U.S. lawmakers are pushing for a probe into Bank of America's purchase of Merrill.

Billionaire accused of 'looting' posh Mont. resort - (www.idahostatesman.com) A federal bankruptcy judge on Wednesday delayed a civil trial on creditors' claims that the exclusive Yellowstone Club in Montana was looted by its former owner. In the years before the mountain resort he founded spiraled into bankruptcy, Tim Blixseth lived a jet-setting life of luxury, bankrolled largely by a $375 million loan made to the club through Credit Suisse. After transferring the bulk of that 2005 loan to his private accounts, Blixseth and his former wife, Edra, bought plush airplanes, sprawling estates in France, Mexico and Scotland and a private island in the Caribbean. But with the club now more than $400 million in debt, its creditors say the loan should never have been diverted. The club, which has a private ski hill on 13,600 acres, counts former Vice President Dan Quayle and Microsoft's Bill Gates among its more than 300 members. The creditors are seeking to have the loan declared illegal and for Blixseth to return the money he received. They also want Credit Suisse to return to the club $146.4 million in principal and interest already paid. "Enticed by the riches available from Credit Suisse, the Blixseths chose to breach their fiduciary duties (and) abandon the Yellowstone Club," creditors' attorney Thomas Beckett wrote in documents filed with the court. In another brief, Beckett described Tim Blixseth as "looting" the club prior to transferring control to Edra Blixseth as part of their divorce settlement last August. The pair built the club in the late 1990s on former U.S. Forest Service land near Yellowstone National Park. As the trial opened Wednesday, Blixseth's attorney asked for his client's case to be heard at a later date and separated from the creditors' claims against Credit Suisse. Attorney Joseph Grant said hundreds of thousands of pages of documents in the case were made available only Tuesday night, hobbling Blixseth's defense. "We're not talking about hardship. We're talking about a fundamental denial of due process," Grant told the court. U.S. Bankruptcy Judge Ralph Kirscher said Blixseth would be given another week to prepare, but would not receive a separate trial as his attorneys requested. He said pushing ahead with a trial immediately could have left the case open to appeals. "It is with great reservation that I do this," the judge said. "I feel I have no choice." The Yellowstone Club filed for bankruptcy protection in November. Its members and creditors blame Blixseth and Credit Suisse, a Swiss investment bank that received $7.4 million for arranging the loan. In recent years, the Swiss investment bank packaged more than $2 billion in loans to at least six luxury resorts now in financial trouble. Some of those deals - including the Yellowstone Club's - were marketed as a way for resort owners to extract massive and early "profit dividends" before the developments were completed.

About 20% of Asia Hedge Funds Shut Since January 2008 - (www.bloomberg.com) Almost 20 percent of Asia-Pacific hedge funds closed in the 15 months to March, with the rate set to accelerate as rising operating costs hit smaller managers, according to London-based AsiaHedge magazine. In 2008, 129 funds were shuttered in the region, the most in at least eight years and more than double the number in 2007, according to a statement from the magazine, which tracks more than 1,000 hedge funds. Another 17 closed in the first quarter. “Many of the smaller shops we see closing today started life on a shoestring budget and lacked staying power in the area of operating capital,” said Ed Rogers, chief executive officer of Rogers Investment Advisors Y.K., a Tokyo-based hedge-fund advisory firm. “It is unfortunate, but not surprising, to see these funds being forced to close not because of poor performance, but because of poor business planning.” Hedge funds globally are reeling after they lost 19 percent on average last year and investors withdrew $155 billion, the worst performance since Chicago-based Hedge Fund Research Inc. started keeping records. With falling fee income, they’re also struggling to spend more on improving reporting and risk management to retain investors.

Taxpayers lose thousands in pre-foreclosure sales - (www.9news.com) It is not your typical "everything must go" garage sale. A new trend called pre-foreclosure or foreclosure sales offer deals for some, but often costs taxpayers thousands of dollars, according to mortgage experts and real estate agents interviewed by 9Wants to Know. The sales offer everything from the kitchen sink to countertops, cabinets, toilets, the hot water heater and the furnace from a home. Homeowners hold the sales ahead of foreclosure in an attempt to make money before they leave the house. Some loans require the government to cover the loss when a homeowner defaults on a loan. When homeowners sell appliances and other fixtures in the home, its value decreases. The government covers the gap between what the home is worth and what the bank can sell it for, and that money comes directly from taxpayers. Often the pre-foreclosure sales are advertised on the Internet classified ad site Craigslist. "House is only three years old, selling EVERYTHING in it!" read one ad posted in late March for items inside a Green Valley Ranch home near East 43rd Avenue and Orleans Street in Denver. A woman 9NEWS later found out is Heidi Hayes, 27, offered oak kitchen cabinets, bathroom sinks and cabinets, toilets, a water heater and a furnace for sale on Craigslist. "Everything must go," the ad said, "we are leaving next week." 9Wants to Know showed up with hidden cameras at the house the day after the ad was posted and found a half dozen people there, some were removing items from the house.



OTHER STORIES:

Verizon Profit Beats, Helped by Alltel, Wireless - (www.cnbc.com)
SF Bay Area rents down for second quarter - (www.sfgate.com)
Mortgage defaults hit record in CA, SF Bay Area - (www.sfgate.com)
GM Confirms Plans to Cut Jobs, Eliminate Pontiac - (www.cnbc.com)
More Cuts at GM - (www.cnbc.com)
End Of The Road For Pontiac - (www.cnbc.com)
The Next Great Bubble? China - (www.gurufocus.com)
Beware of Fake Bank Profits - (www.inflation.us)
Bank profits mask coming storm - (www.atimes.com)

Chrysler, Unions Make Progress as Deadline Looms - (www.cnbc.com)
Japan Cuts Economic Outlook Amid Recession - (www.cnbc.com)
Hamptons House Prices Drop 23% on Wall Street Firings - (www.bloomberg.com)
Beware The False Bottom in Housing - (www.minyanville.com)
Jobs, housing data undermine recovery hopes - (www.finance.yahoo.com)

Stress Tests Show One Bank Would Need More Capital - (www.cnbc.com)
Week Ahead: Stocks in Tug of War—but Trend Looks Up - (www.cnbc.com)
Northern Rock 'Sold by End of Year': Report - (www.cnbc.com)
49,256 Foreclosures in SF Bay Area - (www.patrick.net)
Falling prices are the solution! - (www.viewfromsiliconvalley.com)
Optimism and the world economy - (www.economist.com)
Global recession worst since Depression - (www.news.yahoo.com)

Tax the heirs of the rich at least of few of them - (www.csmonitor.com)
Economist Explains How We Dug a Hole With Credit Cards - (www.miller-mccune.com)
Time to Get Rich Quick - (www.Again) - (www.nypress.com)
The Case for a Federalism Amendment - (www.online.wsj.com)

Monday June 9 Housing and Economic stories

Top Stories:

Banks can't find their borrowers - (www.dailybusinessreview.com) - As home foreclosure cases piled up in his court, Miami-Dade Circuit Judge David C. Miller began to notice more affidavits from mortgage lenders stating they couldn’t locate the borrowers. “The ones that caught my attention very early on were the ones that said they didn’t have driver’s license information or they didn’t have employment information for the borrower,” the judge said in an interview. “Did someone just walk in off the street and say, ‘Gimme money?’ ” the judge asked sarcastically. “I don’t think that’s possible.”

Fed to pick your pocket again, this time for Lehman - (www.rfdoc.com) - If you missed how your pockets were picked in April, get ready for round two. Lehman is next. Lehman was reportedly exploring options with the Fed. Read the saga of the BS bailout and give me one good reason we should bail out another brokerage firm.

Hard lessons on getting house loans with no money down - (www.latimes.com) Prado tells her story without a trace of self-pity and only a bit of blame for the mortgage broker who she says gave her a hard sell. She acknowledged that she stated her monthly income as $7,500 on the loan application -- nearly double what she was actually earning in her job as a clerk at a food processing company and a second part-time job. Still, she was confident the payments would not be a problem. At the time, her husband (who declined to be interviewed for this story) was earning $20 an hour as a carpenter as builders turned the area's broccoli fields into housing developments.

Overdue loans to Florida banks quadruple - (www.tampabay.com) - The housing downturn continues to crush Florida bankers: Overdue loans, mostly real estate related, have nearly quadrupled the past year in the Sunshine State.

If that were not enough, the state's lenders have unusually low cash reserves to protect against mortgage defaults. And 41 percent of Florida-chartered banks were unprofitable the first three months of this year. That's twice the number of banks that bled red ink last year.

Did Rep. Richardson fraudulently overstate her income? - (www.blownmortgage.com) - A big question to ask out of this Richardson specuvestor mess is how far did the Congresswoman push the envelope to qualify for this second, foreclosed home in Sacramento? Did she falsify her income on a loan statement to qualify for the 100% loan that financed the now-defaulted home? Specuvestor Casey Serin is under investigation by the FBI for loan fraud tied to falsifying his income on loan documents after his much-publicized real estate speculating ‘career’ fell apart in the early days of the housing slowdown. Did the Representative do the same to acquire the Sacramento home?

Mortgage non-disclosure is trouble for Richardson - (www.thehill.com)

Rep. Laura Richardson (D-Calif.) could face fines for leaving a heavily indebted mortgage off her financial disclosure statement, according to campaign finance experts. A review of Richardson’s 2007 financial disclosure shows that she failed to report her Sacramento home mortgage as a liability even though she owed $40,000 more than she paid for the home, which was purchased in January of that year. By the end of 2007, Richardson had accumulated $575,000 in total debt after failing to make payments on her original $535,000 mortgage, according to Sacramento County records. Her office did not return repeated calls seeking comment for this story. It also has not responded to questions about how Richardson was able to loan her congressional campaign $77,500 while continuing to default on several properties.

Still waiting - (www.ml-implode.com) - "Physical signs of Kara Homes Inc. are fading as other builders construct homes in its former developments. But many prospective buyers who lost tens of thousands of dollars have yet to see any money from the bankruptcy case."

Other Stories:

Analysts Stink...Listen to Bloggers - (www.ml-implode.com) - I read several bloggers each day along with the mainstream media. Many bloggers have nailed specific stocks for well over a year...

Real-Estate Woes of Banks Mount - (www.ml-implode.com) - Lenders Dumping Bad Loans at Discount; Regulators See Losses Continuing Federal regulators warned Thursday that banking-industr...

Pressure Points in the Bank Bust – (www.ml-implode.com) - ``The Texas Ratio is calculated by dividing non-performing loans at a bank, including those 90 days delinquent, by their tangibl...

FDIC sees bigger bank failures - (news.yahoo.com)

Mortgage Distress Shifts to Prime Borrowers - (www.housingwire.com)

Northern CA From Subprime to Negative Equity Epicenter - (mrmortgage.ml-implode.com)

The Great Risk Dispersion that Wasn't - (optionarmageddon.ml-implode.com)

Wall St layoffs bite New York real estate - (www.reuters.com)

Fed Governors Openly Question Bernanke's Competence - (Mish at globaleconomicanalysis.blogspot.com)

Job Losses and Surge in Oil Spread Gloom on Economy - (www.nytimes.com)

Housing downturn is a boon for some renters - (msnbc.msn.com)

Foreclosure glut helps Habitat for Humanity in Michigan - (www.mlive.com)

Foreclosures hit a record high -- more coming - (biz.yahoo.com)

House foreclosures set record in first quarter - (money.aol.com)

Recession Fears Reignited - (online.wsj.com)

Household Real Estate Assets Declined $431 Billion in Q1 - (calculatedrisk.blogspot.com)

Household net worth drops by $1.7 trillion - (money.cnn.com)

Equity in Americans houses falls to historic low - (msnbc.msn.com)

Regulators give bleak forecast for banks - (money.cnn.com)

Crude Leaps Nearly $11, In Fresh Hit to Economy - (online.wsj.com)

Oil Prices Raise Cost of Making a Range of Goods - (www.nytimes.com)

Americans' net worth took a dive in the first quarter - (www.latimes.com)

Two Fed Bank Presidents Warn About Lending to Securities Firms - (www.nytimes.com)

Equity in Americans’ homes falls to historic low - (www.ap.com)

U.S. Payrolls Fall, Unemployment Rate Climbs to 5.5% - (www.bloomberg.com)

Equity in Americans’ homes falls to historic low - (www.msnbc.msn.com)

U.S. Slowdown Frustrates Teens Seeking Summer Jobs - (www.bloomberg.com)

More dip early into funds for retirement - (www.boston.com)

Despite Interest Rate Cuts, Foreclosures Hit Record High - (www.washingtonpost.com)

(www.economist.com) sees 95 percent chance of US recession - (www.businessweek.com)

Oil Rises to Record on Weakening Dollar, Morgan Stanley Outlook - (www.bloomberg.com)

Stocks Signal That Crisis Isn't Over - (online.wsj.com)

Oil Rises to Record on Weakening Dollar, Morgan Stanley Outlook - (www.bloomberg.com)

Moody's, S & P and Fitch agree to deal on fees - (www.latimes.com)

Lenders and mortgage insurers pull back - (www.bankrate.com)

More dip early into funds for retirement - (www.boston.com)

Banks Say Auction-Rate Investors Can't Have Their Money Back - (www.bloomberg.com)

Wealthy Americans Under Scrutiny in UBS Case - (www.nytimes.com)

Chilly May for Puget Sound-area real estate; prices keep sliding - (seattletimes.nwsource.com)

Countrywide Friends Got Good Loans - (online.wsj.com)

Countrywide’s Buyer Isn’t Blinking - (www.nytimes.com)

National City Is Under U.S. Scrutiny - (online.wsj.com)

A.I.G. Falls Under S.E.C. Scrutiny - (www.nytimes.com)

Lehman May Raise $5 Billion of Capital, Person Says - (www.bloomberg.com)

MBIA, Ambac Lose Top Bond Ratings - (online.wsj.com)

Real-Estate Woes of Banks Mount - (online.wsj.com)

Continental will eliminate jobs, reduce capacity - (www.latimes.com)

Ford to cut white-collar salary costs by 15% - (www.chicagotribune.com)

Airlines Rush to Go Small - (www.nytimes.com)

Owner of Philly's 2 dailies misses debt payment - (www.ap.com)

Medvedev Raises Specter of Depression, Faults U.S. - (www.bloomberg.com)

Australian House Prices Fall Most in Five Years on Higher Rates - (www.bloomberg.com)

Russia Takes Critical Tone on Economy - (www.nytimes.com)

Medvedev puts blame on US for financial crisis - (www.ft.com)

Bundesbank raises inflation forecast sharply - (www.ft.com)

Asia powers, US voice 'serious concern' on oil spike - (news.yahoo.com/s/afp)

China Lifts Banks' Reserve Requirements Up to 17.5% - (www.bloomberg.com)

Trichet Leads Shift From Growth to Beating Inflation - (www.bloomberg.com)

India's Inflation Jumps to 8.24%; Fastest Since 2004 - (www.bloomberg.com)

Asian banks faced with inflation dilemma - (www.ft.com)

Big trouble for Philippine economy as prices surge - analysts - (www.cnbc.com)

Japan estimates subprime losses at $8 billion - (www.chicagotribune.com)

Pay It Back if You Didn’t Earn It - (www.nytimes.com)

Oil price crisis: world powers trade blame, skirt responsibility - (news.yahoo.com/s/afp)

Trail of Bad Loans Leads to the Couple Next Door - (www.nytimes.com)

Famous in foreclosure, too - (www.sfgate.com)

Dollar dilemmas - (www.economist.com)