Wednesday January 5 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Bill would allow Indiana cities to declare bankruptcy - (www.courier-journal.com) A plan backed by Gov. Mitch Daniels would allow local governments in Indiana to ask for a state takeover and declare bankruptcy if necessary. Daniels says he hopes there won't be many local governments that seek bankruptcy, but says the state needs to have the law clarified and on standby in case it happens. Republican state Sen. Ed Charbonneau of Valparaiso is sponsoring a bill to outline the procedure. His bill would allow a local government in financial trouble to ask the Indiana Distressed Unit Appeals Board to appoint an “emergency manager” to run the government. The emergency manager would have the power to cut the budget, renegotiate labor contracts, and approve or veto contracts, expenses, loans and hiring. The bill states that if the emergency manager can't turn around the local government's finances, the unit would be allowed to seek federal bankruptcy protection. The State Board of Accounts in recent audits has questioned the abilities of the city governments in Gary and Lake Station to “continue as a going concern” because of continued high city spending despite significantly reduced city revenues because of statewide property tax caps. I salute this bill and look forward to the bankruptcy of a handful of Indiana cities. Gary has a population of around 100,000 and is Indiana's fifth largest city. Lake Station has a population of about 14,000.

Robo-signing paperwork problems hit California, slow foreclosures - (www.centralvalleybusinesstimes.com) The foreclosure robo-signing controversy continued to play a major role in foreclosure activity through the end of November, even spreading to non-judicial states like California, slowing the pace of foreclosures, according to a report Wednesday from ForecosureRadar Inc., a Discovery Bay-based real estate information company. A number of foreclosure statistics have dropped to levels not seen since 2008 as a result, the report says. “Without news of a corresponding drop in delinquencies, or a major increase in foreclosure alternatives, it is hard to find any reasonable explanation other than robo-signing and the likely self-imposed slow-downs that ensued to complete procedural reviews and other changes at the major servicers,” it says.

Southern Indiana town may file for bankruptcy protection - (www.indianalawblog.com) Facing a debt of $1.45 million over a long-delayed sewage plant project, the Floyd County town of Georgetown has taken the first step toward what would be an unprecedented move for an Indiana municipality — filing for bankruptcy protection. Whether Georgetown could do that, however, is in dispute. State officials say Indiana law doesn't authorize a town to declare bankruptcy. Georgetown's leaders “have no authority” to declare the town bankrupt, said Brian Bailey, general counsel for the Indiana Department of Local Government Finance. Bailey cited a 1994 update to the federal bankruptcy code that says a municipality “must be specifically authorized” by state law to be a debtor, and no Indiana law does that. (Kentucky law authorizes its local governments to file for bankruptcy, but none have ever done so.) Georgetown Town Council President Billy Stewart said there may be no other option. “There's no way for Georgetown to pay” its debts, he said. “We don't have it.” Look for Georgetown, Indiana population approximately 3,000 to see bankruptcy protection if allowed.

Law would let cities declare bankruptcy - (www.nwitimes.com) State Sen. Ed Charbonneau, R-Valparaiso, is sponsoring Senate Bill 105, which would repurpose the Indiana Distressed Unit Appeals Board from providing property tax cap relief to supervising direct management of a local government. Gary twice has won DUAB permission to charge the highest property tax rates in the state to bring its city budget into balance. Under Charbonneau's bill to restructure DUAB, the council and executive of a local government could jointly seek to be designated a "distressed unit" if it meets one of eight financial criteria. Or, a coalition of a government's creditors owed more than 30 percent of the unit's anticipated annual revenue could ask DUAB to declare a local government distressed.
If DUAB agreed the local government were distressed, DUAB would appoint an "emergency manager" with the powers of both the council and executive, who could slash the budget; renegotiate labor contracts; review salaries; approve or veto contracts, expenses, loans and hiring; and audit the books -- all independently of the government's elected officials. The emergency manager would not be allowed to raise taxes and would be required to work with elected officials to develop a financial plan for the future, according to the legislation.

Senator Sanders's Socialism - (economix.blogs.nytimes.com) When the rumpled, plain-spoken Senator Bernie Sanders of Vermont spoke virtually nonstop for more than eight hours on Dec. 10 to explain his opposition to tax cuts for the rich, he quickly became a YouTube and Twitter celebrity. Bernie Sanders of Vermont, a sharp critic of the Federal Reserve, forced its disclosure of details of its lending and bailout practices. A majority of Americans polled earlier this year by New York Times/CBS News,Bloomberg News and USA Today/Gallupalso opposed these cuts, and many cheered him on as he spoke. President Obama’s firm support for a compromise on the tax cut — which Congress approved late Thursday night — helped swing many voters back into approval, but the debate publicized the issue of economic inequality. Senator Sanders, who describes himself as a democratic socialist, describes the United States economy as “socialism for the rich.” Earlier in the year, he allied with Representative Ron Paul, Republican of Texas, to win support for new legislation requiring an unprecedented level of disclosure of the Federal Reserve’s specific emergency lending activities. With that process of disclosure now under way, Senator Sanders can offer details from the Fed’s “bailout files” to substantiate his claim that the $700 billion Troubled Asset Relief Program was pocket change compared with the trillions of dollars in low-interest loans the central bank provided both to American corporations and foreign agencies.

OTHER STORIES:

State guarantees of bank bonds mean poor pay taxes to keep the rich rich - (www.policyexchange.org.uk)

For the middle class, bad times even during good times - (www.newsitem.com)
Interest rate rise means 3m home debtors could struggle to pay mortgage - (www.telegraph.co.uk)

Why 2011 is not the time to buy a house in California - (www.doctorhousingbubble.com)

2011 outlook: Housing falls another 15% to 30% - (www.finance.yahoo.com)

Property Taxes Keep Rising as House Values Keep Falling - (www.dailyfinance.com)

More see walking on mortgage as viable plan - (www.msnbc.msn.com)

Why New York Foreclosures Are Grinding to a Halt: paperwork - (www.4closurefraud.org)

Australian mortgage stress increases in 2010 - (www.abc.net.au)
Buying foreclosed properties south of the - (www.Canadian) border - (www.vancouversun.com)

Trippy Real Estate Visualizations - (www.fastcodesign.com)

Tax deduction for mortgage interest could be on the chopping block - (www.latimes.com)

The Next Housing Bubble - Is This the Perfect Storm? - (www.oyetimes.com)

Congress Threatens to Sow the Seeds of Our Next Banking Crisis - (www.huffingtonpost.com)

Tuesday January 4 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Strapped Cities Hit Nonprofits With Fees - (online.wsj.com) Facing budget gaps and an aversion to new debt and taxes, states and local governments are slapping residents with an array of new fees—and some are applying them to nonprofits. That marks a sharp departure from long-standing tax exemptions mandated by state law or adopted on the theory that churches, schools and charitable organizations work alongside governments to provide services to the community. The issue is on display in Houston, where some flood-prone roads are in such disrepair that signs warn drivers, "Turn around, don't drown." Houston's taxpayers in November narrowly voted to adopt a "drainage fee" to raise at least $125 million a year toward the cost of improving roads and storm-water systems. The city will charge fees to property owners, and it won't grant exceptions to churches, schools and charities.

Head of L.A.-area business group resigns amid scandal - (www.latimes.com) William Mitchell is leaving the Better Business Bureau of the Southland because of his health, not criticisms of the group's rating system or his $400,000-a-year salary, a BBB official says. The head of the Southern California chapter of the Better Business Bureau has resigned amid a scandal over the group's letter-grade rating system and controversy over his high pay. William Mitchell, a 26-year employee of the Better Business Bureau of the Southland, is leaving because of health concerns, said Bob Richardson, the chapter's director of operations. The national organization, which issues ratings to businesses supposedly based on how fairly they treat consumers, has been criticized in recent months for giving businesses better grades if they became dues-paying members.

Bailed-Out Banks Slip Toward Failure - (online.wsj.com) Nearly 100 U.S. banks that got bailout funds from the federal government show signs they are in jeopardy of failing. The total, based on an analysis of third-quarter financial results by The Wall Street Journal, is up from 86 in the second quarter, reflecting eroding capital levels, a pileup of bad loans and warnings from regulators. The 98 banks in shaky condition got more than $4.2 billion in infusions from the Treasury Department under the Troubled Asset Relief Program. When TARP was created in the heat of the financial crisis, government officials said it would help only healthy banks. The depth of today's problems for some of the institutions, however, suggests that a number of them were in parlous shape from the beginning. Seven TARP recipients have already failed, resulting in more than $2.7 billion in lost TARP funds. Most of the troubled TARP recipients are small, plagued by wayward lending programs from which they might not recover. The median size of the 98 banks was $439 million in assets as of Sept. 30. The median TARP infusion for each was $10 million, federal filings show.

How the City of Bell hit rock bottom - (www.latimes.com) In 1993, 39-year-old Robert Rizzo arrived in town trailing the vague whiff of scandal. For a time he seemed like the man the working-class city needed — until he became an 'unelected and unaccountable czar.' The new boss kept his office spartan and impersonal, the walls stripped of photos, the desk conveying no hint of his life beyond the red-brick walls of City Hall. It was 1993, a bleak, recession-bit year, and Robert Rizzo arrived in Bell trailing the vague whiff of scandal. His last city administrator job, in the high desert city of Hesperia, had ended badly, with accusations that he'd steered city improvement funds toward salaries. But the Bell officials who hired him did not dig deeply into his past. They needed someone fast, and Rizzo, then 39, came cheap. His starting salary was $78,000, which was $7,000 less than his predecessor had made. "He was willing to work for the least amount of money," said then-Councilman Rolf Janssen. "That was what attracted me and several other council members."

New fee for California businesses with delinquent taxes - (www.latimes.com) More than 90,000 California businesses could be hit with fees of up to $925 a year starting next week if they don't pay their back taxes to the state quickly enough. A law passed this year directs the California Board of Equalization to assess the fees on unpaid liabilities after giving the taxpayer a 90-day notice. Taxpayers can avoid the fee by settling their obligation before the 90 days are up. The Legislature and Gov. Arnold Schwarzenegger approved the fee to cover costs to the state of securing back taxes. The Board of Equalization collects state sales and use taxes and hears appeals on franchise and personal income disputes. The new collection fee ranges from $185 a year (for a tax bill of up to $2,000) to $925 a year (for a bill of more than $50,000). Installment plans are available for taxpayers who can't pay the full amount immediately. The board can waive the fee if the back taxes accumulated because of factors beyond the taxpayer's control.

OTHER STORIES:

Florida ‘Hard Freeze’ May Damage Orange Crop, MDA Says - (www.bloomberg.com)

Investors Seeking to Dump Bonds at Record Rate: Muni Credit - (www.bloomberg.com)

QE2 Joins Eisenhower Yields in 1% Returns for Bonds - (www.bloomberg.com)

Consumer-Backed Bond Sales Dwindle as TALF Ends: Credit Markets - (www.bloomberg.com)

Billion-Dollar Babies Return - (online.wsj.com)

Stock Investors Look on the Bright Side - (www.online.wsj.com)

BOJ Member Concerned About Fed Easing, Minutes Show - (www.bloomberg.com)

China’s Premier Says Housing Curbs Weren’t Well Implemented - (www.bloomberg.com)

New Voters May Sway Fed Actions - (www.nytimes.com)

For Tough Fed Call, Even Hindsight Is Not 20-20 . - (www.online.wsj.com)

Microsoft Tablet Aimed at Fighting IPad Faces Long Odds in Vegas - (www.bloomberg.com)

U.S. Retailers Hurt as East Coast Storm Thwarts Shoppers - (www.bloomberg.com)

Monday January 3 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Lenders' high bids at foreclosure auctions defer true accounting - (www.denverpost.com) Claremont's numbers show 293 home sales so far in the fourth quarter to outside investors in the 10-county metro area, compared with 2,898 homes offered at public-trustee auctions. Lenders can determine who gets a home in foreclosure based on what they bid. Most bid the unpaid mortgage amount, plus delinquencies and fees tied to the foreclosure. Given that so many homes in foreclosure lack any equity, that formula keeps investors away. Lenders who want to sell a home usually set their bid close enough to the market price to draw a buyer, taking the hit. "Banks are not pricing these things to sell them at the auction," said Rick Sharga, a senior vice president with RealtyTrac, a California provider of foreclosure data. Sharga said his analysts think the only logical explanation for above-market price bids is a change in accounting rules following the financial crisis. Banks don't have to record their assets at market value, so by bidding high, they can delay taking write-offs and losses. "The lenders wouldn't have to write down the value of these assets until they resold them," he said. Owning the properties gives lenders more control over when they recognize a loss, making it easier to meet quarterly earnings targets or comply with regulatory requirements, Sharga said.

Families Swap Houses to Stop Foreclosure - (foreclosureblues.wordpress.com) “But what’s all this about swapping homes?” I asked myself as I dug into the press release. As it turns out, the release was touting a new (and free) service being offered by an entity known as Home Lease Exchange LLC. In addition to boasting offices in Phoenix and San Jose, Calif., Home Lease Exchange appears to be the creative force behind the ForceYourLenderToModify.com – a domain name that doesn’t exactly conjure up thoughts of compromise, good-faith negotiating, etc. Here’s how Home Lease Exchange’s new service works: A borrower whose foreclosure is drawing near leases – under very generous terms – his or her home to another borrower who (a) lives nearby and (b) is also facing foreclosure. The long-term lease will deter buyers at trustee sales, leaving the servicer and/or bank to deal with the REO and its tenants, Home Lease Exchange explains. According to the release, this plan “creates amazing leverage for homeowners with their lenders, because under President Obama’s Helping Families Save Their Homes Act, tenants have the right to stay in their homes through the term of their lease, as long as the lease is entered into before complete title to the property is transferred.”

College Education Bubble Already Exists - (www.forbes.com) The overwhelming cultural consensus of the post-WWII generation was that if you are middle-class, then you simply must own your own home and your children must go to college. Out of that cultural consensus emerged a complex system of tax breaks and special lending deals designed to make sure that the number of Americans who bought houses and bachelor's degrees was as high as possible--or maybe more so. Many people now understand that this system of tax-and-lend has created a multigenerational housing bubble. But only a few have noticed that a very similar tax-and-lend system has also created a multi-generational higher education bubble. Bubbles arise in nature when some sort of film, bolstered by surface tension, contains a pocket of air under greater pressure than the general atmosphere. Bubbles arise in markets when some factor external to the market (usually tax engineering or a regulatory mandate) creates a pocket of concentrated capital in which asset prices rise well above levels that can be justified by the assets' underlying value.

New Era of Cooperation Between White House and Big Business - (www.robertreich.org) Jamie Dimon, chairman and CEO of JPMorgan Chase & Co., praises the President’s agreement with Republicans to extend the Bush tax cuts. “If we’re going to strengthen our economy and grow jobs, this type of outreach — and cooperation between the administration, Congress, and the private sector — are critical,” says Dimon. Dimon met last week with the President. Thirty other CEOs are meeting with him today. Dimon’s compensation over the last three years has averaged $21,991,394 a year. The tax deal agreed to between President Obama and the Republicans will give Dimon and extra $1,179,000 next year, according to an analysis by Citizens for Tax Justice.  The bank Dimon heads was also the beneficiary of the giant Wall-Street bailout of 2007 and 2008. JPMorgan Chase & Co, along with other Wall Street banks, also poured millions of dollars into a lobbying campaign to water down the financial reforms Congress considered earlier this year.

showdown with state employee unions - (www.jsonline.com) "Anything from the decertify all the way through modifications of the current laws in place," Walker said at a luncheon sponsored by the Milwaukee Press Club at the Newsroom Pub. "The bottom line is that we are going to look at every legal means we have to try to put that balance more on the side of taxpayers and the people who care about services." Union supporters did not like the idea one bit and sought legislation in the lame-duck session that would tie Walker's hands. It was a done deal. The votes were there in the house. In the Senate it was 18-14 in favor. Or so everyone thought. Amazingly, at the last moment, two democrats including Senate Majority Leader Russ Decker switched votes sending the bills up in flames.

OTHER STORIES:

The Great Housing Reset Continues - (www.theatlantic.com)

An inconvenient housing sector - (www.reuters.com)

Republicans, Theodore Roosevelt, and the estate tax compromise - (www.latimes.com)

Not taxing the wealthiest - (www.washingtonpost.com)

20,000 Sacrificed In Annual Blood Offering To Corporate America - (www.theonion.com)

More evidence O.C. house prices falling again - (lansner.ocregister.com)

House prices fall dramatically - (www.charlotteobserver.com)

Amazing Satellite Images Of The Ghost Cities Of China - (www.businessinsider.com)

China Bubble: More interesting data and analysis - (www.unconventionaleconomist.com)

Opening the Bag of Mortgage Tricks - (www.nytimes.com)

Nouriel Roubini buys $5.5m apt in NYC with massive adjustable loan - (www.telegraph.co.uk)

The Government's favored minority - (www.progressive.org)

Banks' resales of houses illustrate price drop - (www.philly.com)

Will Mortgage Rate Rise Help Buyers With Cash? - (blogs.wsj.com)

Newly Built Ghost Towns Haunt Banks in Spain - (www.nytimes.com)

Sunday January 2 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

US house prices continue to plummet - (www.centralvalleybusinesstimes.com) Home prices in the U.S. declined for the third month in a row in October, according to real estate information company CoreLogic (NYSE: CLGX) of Santa Ana. National home prices, including distressed sales, declined by 3.93 percent in October 2010 compared to October 2009 and declined by 2.43 percent in September 2010 compared to September 2009. Excluding distressed sales, year-over-year prices declined by 1.5 percent in October 2010 compared to October 2009. "We are continuing to see the weakness in home prices without artificial government support in the form of tax credits. The stubborn unemployment levels and seasonality are also coming into play," says Mark Fleming, chief economist for CoreLogic. "When you combine these factors with high shadow and visible inventories, the prospect for a housing recovery in early 2011 is fading." Prices dropped even more in most Central Valley markets tracked by CoreLogic for the report -- but not everywhere. In its words (HPI is its “home price index”):

Banks Push Fed to Curb Borrowers' Right to Rescind Mortgages - (www.bloomberg.com) Mortgage firms are pressing the Federal Reserve to curb homeowners’ right to invalidate loans based on flawed documents -- a right consumer groups say is one of the few weapons borrowers have to battle unfair lending. Consumer groups and industry lawyers say a rule under consideration by the central bank would make it harder for borrowers to exercise their right of “rescission,” which forces a lender to relinquish a lien on a mortgaged property. They said the number of rescissions has grown in recent years as a result of the foreclosure crisis and allegations that mortgage documents were fabricated or processed improperly. Ken Markison, regulatory counsel at the Mortgage Bankers Association, said the change would save lenders money. “Greater clarity will help avoid unnecessary litigation and reduce costs,” Markison said.

Florida: Miami Mayor Faces Recall - (www.nytimes.com) Mayor Carlos Alvarez of Miami-Dade County faces a recall after opponents gathered enough signatures to force an election. The drive came after the county raised the property-tax rate to balance its budget. The county commission must call an election in 45 to 90 days, Harvey Ruvin, clerk of courts, said Tuesday. Recalls are also being sought in Chattanooga, Tenn., and Omaha after proposed tax increases. Please check out the Recall Mayor Alvarez initiative. Under Mayor Alvarez’s watch, Miami-Dade’s unemployment rate rose to 14.4 percent – almost 5 percent higher than the national average. At the same time, the Mayor’s proposed budget calls for “hiking property tax rates 14 percent.” Voters need to regain control. Mayor Alvarez needs to be RECALLED!

Mayor Alvarez May Challenge Recall Effort - (www.miami.cbslocal.com) The math for Miami-Dade Mayor Carlos Alvarez is stark. A recall effort aimed at him has certified nearly twice the number of voter petition signatures needed to force a countywide recall election by next spring. Alvarez said Wednesday, “I believe the voters have a right to vote on this issue. However I will not give up my right to challenge something that is wrong.” He says his legal team has found discrepancies with notary stamps and signatures but concedes it is not likely enough to derail a recall election. At the heart of that effort, organized by auto tycoon Norman Braman, is anger over the property tax rate hike recommended by Alvarez, and approved by county commissioners three months ago. Alvarez defended his position. He said Wednesday, “I have preserved the fire department, number one, the police department, number two, the parks department and social services. If people are upset because some of them got tax notices and their taxes went up slightly so be it. But at the end of the day I have to live with myself.”

Dems end lame duck session after failure to pass union contracts - (www.host.madison.com) Democratic Gov. Jim Doyle's administration announced last week it had completed negotiations on 17 contracts covering 39,000 state workers ranging from teachers to janitors. The deals included no pay increases, factored in 16 furlough days Doyle ordered state employees to take in the current state budget and called for 5 percent increases in health care contributions. The contracts have been a hot issue for Walker. He demanded Doyle's staff stop work on the agreements last month, saying they could hamstring him as he grapples with a $150 million deficit in the current fiscal year and a $3.3 billion shortfall in the next two-year budget. He wants state workers to make deeper concessions and even suggested he would consider abolishing state employee unions after he takes office. Democrats pushed on despite Walker's demands, saying he's not the governor yet. But no one realized that former Senate Majority Leader Russ Decker, D-Weston, wasn't on board.

OTHER STORIES:

Where does our money go? The Cost of War - (www.costofwar.com)

Mortgage loan foreclosures slowed by robo-signing scandal - (www.ourbroker.com)

House sellers still slashing prices in San Francisco - (www.bizjournals.com)

Sacramento prices continue to decline - (www.sacbee.com)

MLS forbids Redfin from telling true asking price history in Sacramento - (blog.redfin.com)

Orange County still largely in a housing bubble - (www.doctorhousingbubble.com)

California's house price recovery could be faltering - (latimesblogs.latimes.com)

Shadow Inventory Dampens Winter Market - (www.nytimes.com)

CA foreclosures ease, but sales sag because prices still too high - (www.pe.com)

WikiLeaks: "Systemic Insolvency Is Now The Problem, Global Bank Bailout Needed" - (www.dailybail.com)

Geithner: National foreclosure moratorium would hurt house prices - (www.housingwire.com)

Americans living on financial fault lines - (www.contracostatimes.com)

Mortgage servicing suffers from endemic principal-agent conflict - (www.4closurefraud.org)