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Contents 1 2011 1.1
7 February . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Mortgage webinar repeats (2011-02-06 08:49) . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Tax rules put burden on landlords (2011-02-06 08:52) . . . . . . . . . . . . . . . . . . . . .
7
12 current bills would impact HOA rules (2011-02-06 08:56) . . . . . . . . . . . . . . . . . .
8
Executive Decision: Bank of America (2011-02-06 09:05) . . . . . . . . . . . . . . . . . . . .
10
YouTube - Bank Bailouts Explained (2011-02-12 08:25) . . . . . . . . . . . . . . . . . . . .
10
Xtranormal | Bankster v. Deadbeat Debate (2011-02-12 08:43) . . . . . . . . . . . . . . . .
10
Buyers See Mortgage Rates Jump Above 5% (2011-02-12 09:00) . . . . . . . . . . . . . . . .
10
SEC brings fraud charges against three former IndyMac executives ÂŤ HousingWire (2011-02-12 09:17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
Tips: Get your tax paperwork in order (2011-02-12 09:48) . . . . . . . . . . . . . . . . . . .
12
Taxes lower than under Bush (2011-02-12 09:51) . . . . . . . . . . . . . . . . . . . . . . . .
13
Expert: Median price of houses could dip to $100,000 (2011-02-12 10:13) . . . . . . . . . . .
14
3 mortgage-crisis strategies (2011-02-12 10:39) . . . . . . . . . . . . . . . . . . . . . . . . .
14
Scottsdale council OK next step for revised Blue Sky plans (2011-02-12 10:47) . . . . . . .
15
Gray defaults on state land (2011-02-12 10:55) . . . . . . . . . . . . . . . . . . . . . . . . .
16
Social Security recipients need to act now! (2011-02-12 10:59) . . . . . . . . . . . . . . . . .
17
Obama Calls For End Of Fannie Mae, Freddie Mac (2011-02-12 12:19) . . . . . . . . . . . .
18
Desert Mountain Golf Club bought by members for $73.5 mil (2011-02-13 08:17) . . . . . .
20
Arizona Center marketed for sale (2011-02-13 08:24) . . . . . . . . . . . . . . . . . . . . . .
22
Websites explain job-hunt expenses that can be tax write-offs (2011-02-13 08:26) . . . . . .
23
Living Room Ready for Liftoff - Yahoo! Real Estate (2011-02-13 14:56) . . . . . . . . . . .
23
Market Commentary 02.14.11 (2011-02-15 08:31) . . . . . . . . . . . . . . . . . . . . . . . .
25
Market Commentary 02.15.11 (2011-02-16 05:13) . . . . . . . . . . . . . . . . . . . . . . . .
25
Equator launches three new modules for REO, short sales ÂŤ HousingWire (2011-02-18 20:06)
26
Phoenix-area bankruptcy outlook improves (2011-02-19 12:02) . . . . . . . . . . . . . . . .
27 3
4
Arizonans receiving little help from mortgage program (2011-02-19 12:48) . . . . . . . . . .
27
German rival buys New York Stock Exchange (2011-02-19 12:51) . . . . . . . . . . . . . . .
29
Are Home Sales Worse Than They Look? - Investors.com (2011-02-19 13:00) . . . . . . . .
30
Number of foreclosures in Valley rose in January (2011-02-19 13:09) . . . . . . . . . . . . .
32
Goodyear targets 2014 for mall (2011-02-19 13:23) . . . . . . . . . . . . . . . . . . . . . . .
33
Group OKs $34 million loan to build CityScape hotel (2011-02-19 13:26) . . . . . . . . . . .
34
Arizona’s economy on the rise, expert says (2011-02-19 13:48) . . . . . . . . . . . . . . . . .
35
Fed may reconsider plan to limit debit-card fees (2011-02-19 13:50) . . . . . . . . . . . . . .
36
Robb & Stucky files for Ch. 11 (2011-02-19 14:18) . . . . . . . . . . . . . . . . . . . . . . .
36
10 steps to a brighter financial future (2011-02-19 14:20) . . . . . . . . . . . . . . . . . . . .
37
Bernanke calls for nations to rebalance gaps in trade (2011-02-19 14:24) . . . . . . . . . . .
39
Shanghai, Guangzhou Limit Home Buying After China Orders Curbs - Businessweek (2011-02-20 08:38) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40
Yahoo! Finance - Financially Fit (2011-02-20 08:47) . . . . . . . . . . . . . . . . . . . . . .
41
Market upswing greeted by indifference (2011-02-20 14:52) . . . . . . . . . . . . . . . . . . .
43
Global Economy - G20 sceptics wait for shift in behaviour (2011-02-20 15:00) . . . . . . . .
44
Statute of Limitations on Debts (2011-02-21 11:11) . . . . . . . . . . . . . . . . . . . . . . .
45
Tax Liens - Tax Lien Certificates (2011-02-21 11:28) . . . . . . . . . . . . . . . . . . . . . .
61
Market Recap - week ending 02/18/11 (2011-02-22 18:31) . . . . . . . . . . . . . . . . . . .
63
Centerpoint project sold; summer debut planned (2011-02-23 06:35) . . . . . . . . . . . . .
63
Consumer credit-card gains touted (2011-02-23 08:28) . . . . . . . . . . . . . . . . . . . . .
65
Homebuilder stocks plunge after home price report - Bloomberg (2011-02-23 09:31) . . . . .
66
New Mortgage-Backed Securities Will ’Be Better:” Lew Ranieri - CNBC (2011-02-23 09:35)
67
Market Commentary 02/24/11 (2011-02-24 23:43) . . . . . . . . . . . . . . . . . . . . . . .
67
METALS-Copper posts big gain as energy prices stabilize | Reuters (2011-02-26 07:28) . . .
68
Obama Administration Proposes Fannie Mae, Freddie Mac Phaseout - WSJ.com (2011-02-26 09:44) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
71
Fannie and Freddie: The Saga in Charts. - MarketBeat - WSJ (2011-02-26 09:58) . . . . . .
74
Cash Buyers and Qualified Investors Prop Home Sales (2011-02-26 10:03) . . . . . . . . . .
79
Trustee-sale date set for resort (2011-02-26 10:33) . . . . . . . . . . . . . . . . . . . . . . . .
84
Number of troubled banks rising (2011-02-26 10:36) . . . . . . . . . . . . . . . . . . . . . .
85
Investors snap up foreclosure bargains (2011-02-26 10:40) . . . . . . . . . . . . . . . . . . .
85
Maricopa County home valuations fall 11% (2011-02-26 10:45) . . . . . . . . . . . . . . . .
86
Arizona’s banking industry improves (2011-02-26 10:49) . . . . . . . . . . . . . . . . . . . .
87
Sluggish new-home sales a drag on nation’s growth (2011-02-26 10:53) . . . . . . . . . . . .
88
Fannie, Freddie post losses (2011-02-26 10:55) . . . . . . . . . . . . . . . . . . . . . . . . . .
89
Gilbert land buy facing scrutiny (2011-02-26 11:01) . . . . . . . . . . . . . . . . . . . . . . .
89
Sectors spar over fee cap on debit use (2011-02-27 12:44) . . . . . . . . . . . . . . . . . . . .
90
Tips for transferring a credit-card balance (2011-02-27 12:56) . . . . . . . . . . . . . . . . .
92
Low-wage jobs lead economic recovery (2011-02-27 13:20) . . . . . . . . . . . . . . . . . . .
93
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Chapter 1
2011 1.1
February
Mortgage webinar repeats (2011-02-06 08:49) Organizers of an online seminar to discuss options for ”underwater” homeowners have scheduled a repeat performance. The ”webinar,” led by University of Arizona law professor and author Brent White, will focus on the practical and legal issues homeowners face when the balance of their mortgage far exceeds the home’s value. White first presented the webinar, which participants watch by logging in to a website, on Jan. 27. Registration for the event reached its 200-viewer capacity hours in advance, according to frustrated callers attempting to access the site. Sponsors Scottsdale Law Group and First Arizona Title have expanded the second webinar’s capacity to 600 but doing so required them to increase the admission price from $5 to $10. The first 200 people to register will only pay $5. The webinar is 3 to 4:30 p.m. Feb. 14. To register, visit hhttp://ow.ly/3QAet. by J. Craig Anderson The Arizona Republic Feb. 6, 2011 12:00 AM Mortgage webinar repeats
Tax rules put burden on landlords (2011-02-06 08:52) As if declining housing prices, tenant job instability and the occasional hailstorm weren’t enough, landlords now have something new to worry about: increased federal tax-reporting rules. Suppose you own a rental home and hire a plumber, painter or landscaping company to work on it. You might need to collect the Social Security number, Employer Identification Number or Taxpayer Identification Number for each contractor so you can issue them 1099-MISC forms early next year. If you neglect this new obligation, you could face penalties and possibly disallowed deductions, tax experts say. The new 1099-reporting rules for rental-property owners, which took effect Jan. 1, now apply when you pay $600 or more to any contractor in a calendar year. They also could include payments made to other types of entities, such as utilities for water or power service. ”The rental provisions specifically apply to individuals, who aren’t used to collecting this type of information,” said Mark Luscombe, principal federal tax analyst at CCH Inc. in suburban Chicago. 7
Barry C. Melancon, president and CEO of the American Institute of CPAs, said the new reporting requirements place paperwork burdens on many businesses, including mom-and-pop operations. ”It’s not something you’d do in the normal course of business,” said Melancon, who visited metro Phoenix last week. ”The vast majority of people aren’t aware of it.” The reporting requirements also could apply to people who own a vacation home and rent it out for just part of the year. In addition, landlords would be required to issue 1099s in January - weeks before most people get serious about filing their own income-tax returns. If some neglected to mail the forms promptly, that could trigger a ripple effect of delays. Although the new rules have been in effect barely a month, there are efforts to repeal some provisions, Melancon said. Even President Barack Obama seemed to criticize them when, in his recent State of the Union address, he cited ”a flaw . . . that has placed an unnecessary bookkeeping burden on small business.” Yet the president played a big role in turning that flaw into law. The rental-property rules stem from the Small Business Jobs Act of 2010, which Obama signed. Obama also backed the Patient Protection and Affordable Care Act, which requires businesses buying $600 or more in goods or services from other companies to supply 1099s to those entities and the IRS. The Senate has been moving toward repealing some business-reporting rules but not the one geared to landlords. ”If there was serious support for repealing that one, I would assume it would have been taken up at the same time,” Luscombe said. At this stage, landlords probably should assume and act as if the rules will be around for a while, suggests Elizabeth Hale, a CPA at eeCPA PLC in Phoenix. That means requesting Social Security, Taxpayer or Employer Identification numbers now, before you hire vendors for single jobs or ongoing work totaling $600 or more. ”Once you pay someone, it’s harder to get that information,” said Hale, who recently discussed the issue at a meeting of the Independent Rental Owners Council, a group of Arizona landlords. The rules also raise identity-theft worries for vendors ”because you’re giving out your Social Security and Employer Identification numbers all over the place,” Hale said. Landlords who employ a property manager should find out if the company is collecting the required numbers and issuing 1099s for work done on their rental units. Hale also cited another hassle looming for rental-property owners: the need to collect information and issue 1099s every time you buy an appliance, air-conditioning unit or other tangible goods worth $600 or more for a rental unit - part of the business-to-business law cited above. If not repealed, that requirement is set to take effect on purchases starting in January 2012. There’s currently an exemption for collecting information and issuing 1099s if you buy $600 or more worth of items from corporations. But starting in 2012, that exemption ends. These and other tighter 1099-reporting rules aim to close the ”tax gap” - the difference between what taxpayers truly owe and actually pay. The IRS believes many vendors have not been reporting their full income. But the rules come at a cost of increased hassles. ”They want you to have a 1099 now for everything,” Hale said. ”It’s like Big Brother is at work.” by Russ Wiles The Arizona Republic Feb. 6, 2011 12:00 AM Tax rules put burden on landlords
12 current bills would impact HOA rules (2011-02-06 08:56) Arizona lawmakers this session have proposed a dozen bills that would impact condo and home HOA rules and procedures. They include: 8
Bill Sponsor Status House Bill 2330: Places various restrictions on an HOA’s ability to have closed-door meetings, including requiring that all regularly scheduled committee meetings be open to all HOA members and that theboard of directors [mag-glass_10x10.gif] disclose publicly any decisions to join a lawsuit. Rep. Jack Harper, R-Surprise. Referred to House Government Committee. Senate Bill 1149: Requires an HOA to either provide free electronic versions of bylaws and other related documents or to charge no more than 10 cents a page for the documents. It also forbids an HOA from charging a fee to allow someone to display a for-sale sign. Sen. Andy Biggs, R-Gilbert. Passed Senate Government Reform Committee, goes to avote [mag-glass_10x10.gif] of the full Senate. Senate Bill 1170: Forbids an HOA from regulating any public roads within its community. Sen. Nancy Barto, R-Phoenix. Held in Senate Government Reform Committee. Senate Bill 1299: No longer requires that an HOA complaint include the first and last name of the person who observed the violation. Sen. Linda Gray, R-Glendale. Assigned to Senate Government Reform Committee. Senate Bill 1304: Requires a condo or HOA board to hold a vote open to all members for any annual assessment increase. The increase may only go into effect if it is approved by two-thirds of those who show up to vote. Sen. Leah Landrum Taylor, D-Phoenix. Assigned to Senate Government Reform Committee. Senate Bill 1326: Forbids HOAs from limiting flagpoles in backyards. Restricts limits that can be placed on flagpoles to rules that allow no more than two flags at once and restrict the pole’s height to no more than the building height. Sen. Frank Antenori, R-Tucson. Assigned to Senate Government Reform Committee. Senate Bill 1343: Requires an HOA to either provide free electronic versions of bylaws and other documents or to charge no more than 10 cents a page up to $250; restricts fees that can be assessed related to the transfer of condo interests. Sen. Frank Antenori, R-Tucson. Assigned to Government Reform Committee. Senate Bill 1468: Forbids a condo or HOA board from demanding or receiving any money as security for compliance with design guidelines. Sen. Ron Gould, R-Lake Havasu City. Assigned to Senate Judiciary Committee. Senate Bill 1537: Forbids an HOA from banning awnings intended to act as energy-saving devices; does allow for regulations of size, appearance. Sen. Al Melvin, R-Tucson. Assigned to Senate Commerce and Energy Committee. Senate Bill 1540: Forbids an HOA from prohibiting door-to-door political activity except from sunset to sunrise. Sen. Al Melvin, R-Tucson. Assigned to Government Reform Committee.
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by Alia Beard Rau The Arizona Republic Feb. 5, 2011 08:31 PM 12 current bills would impact HOA rules
Executive Decision: Bank of America (2011-02-06 09:05) [EMBED] Executive Decision: Bank of America An outlook on the future of mortgages, with Terry Laughlin, Bank of America Legacy Servicing executive. Executive Decision: Bank of America
YouTube - Bank Bailouts Explained (2011-02-12 08:25) [EMBED] YouTube - Bank Bailouts Explained
Xtranormal | Bankster v. Deadbeat Debate (2011-02-12 08:43) [EMBED] [EMBED] Xtranormal | Bankster v. Deadbeat Debate
Buyers See Mortgage Rates Jump Above 5% (2011-02-12 09:00) An improved economic outlook has led mortgage rates over the 5 % mark for the first time since April of last year. Long-term bond yields are also up, which has added upward pressure on mortgage rates. See the following article from The Street for more on this. Mortgage rates topped 5 % for the first time in nine months, Freddie Mac (FMCC.OB) said on Thursday, as positive economic signals have led the bond markets to price in higher inflation. Traditional 30-year fixed-rate mortgages hit 5.05 %, on average, during the week ended Thursday, up sharply from the prior week, which averaged 4.81 %. Those home loans are also up from a year-ago, when 30-year fixed mortgages cost 4.97 %. Shorter-term fixed rate mortgages also rose, as did adjustable rate mortgages pegged to U.S. Treasury bonds also rose, according to Freddie Mac. ”Long-term bond yields jumped on positive economic data reports, which placed upward pressure on mortgagerates this week,” Freddie’s chief economist, Frank Nothaft, said in a statement. He noted that rates are now at the highest level since April 2010. Recent economic data have shown increases in nonfarm productivity and improvements in employment data as the economy starts to regain its footing. The unemployment rate for January unexpectedly declined to 9 % from 9.4 % while nonfarm productivity in 2010 climbed 3.6 % – the biggest gain in eight years. Investors have moved from long-term bonds into higher yielding securities like stocks. The Dow Jones Industrial Average recently sailed past 12,000. Since mid-January, $18.4 billion has flowed into long-termmutual funds that invest in stocks, according to the Investment Company Institute. 10
But the changing rate environment also puts pressure on the housing market, which is still in a nascent recovery, held back by a backlog of foreclosures. The Obama administration and Federal Reserve have strived to keep interest rates low for as long as possible to stimulate home purchases and support pricing. by Lauren Tara LaCapra NuWire Investor February 10, 2011 Buyers See Mortgage Rates Jump Above 5 %
SEC brings fraud charges against three former IndyMac executives « HousingWire (2011-02-12 09:17)
The Securities and Exchange Commission charged three former IndyMac senior executives with securities fraud Friday. The regulator alleges Michael Perry, former chief executive at the failed bank, and former chief financial officers Scott Keys and Blair Abernathy filed ”false and misleading disclosures about the financial stability” of the company. They regularly received internal reports about IndyMac s deteriorating capital and liquidity positions in 2007 and 2008, but didn’t properly disclose that information to investors in the company’s annual report nor in marketing materials for $100 million in new stock. The Office of Thrift Supervision closed IndyMac in the middle of July 2008. The bank, which was based in Pasadena, Calif., filed for bankruptcy later that month. ”Truthful and accurate disclosure to investors is particularly critical during a time of crisis, and the federal securities laws do not become optional when the news is negative,” said Lorin Reisner, deputy director of the SEC s division of enforcement. The SEC contends the executives knew the company was in trouble in early February 2008 when IndyMac announced it would return to profitability and continue to pay preferred dividends that year without having to raise new capital. ”In late February 2008, Perry and Keys knew that contrary to the rosy projections released just two weeks earlier, IndyMac had begun raising new capital to protect IndyMac s capital and liquidity positions,” the SEC said. Perry allegedly also knew the bank’s capital and liquidity concerns were further weakened by ratings downgrades in April 2008 on bonds held by IndyMac. This left the company no choice but to suspend its dividend, according to the SEC, yet that information wasn’t included in the offering statements for the stock sale. The regulator also said Abernathy made false and misleading statements about the quality of the loans in six IndyMac issues of residential mortgage-backed securities worth $2.5 billion. Abernathy settled the charges without admitting or denying any wrongdoing, according to the SEC. In the complaint against Perry and Keys, the SEC seeks ”permanent injunctive relief, an officer and director bar, disgorgement of ill-gotten gains with prejudgment interest, and a financial penalty.” by Jason Philyaw HousingWire February 11, 2011 SEC brings fraud charges against three former IndyMac executives « HousingWire
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Tips: Get your tax paperwork in order (2011-02-12 09:48) So the federal income-tax filing deadline is getting closer, but you’re lacking key information. Where should you go to retrieve it, and what will it cost you? Below find some key pointers on obtaining what you need. Item/issue How to get it Other details W-2 forms showing last year’s pay If you haven’t received your W-2 by now, contact your employer. If you don’t have it by Feb. 16, call the IRS (1-800-829-1040) for help. You’ll need your Social Security [mag-glass_10x10.gif] number, dates of employment and employer’s name, address and phone number. The IRS will contact your employer and issue you a Form 4852 (substitute Form W-2) to fill out if you don’t receive your W-2 in time to make the tax deadline. But even if you don’t receive W-2s or other documents, that’s not an acceptable excuse for not filing. Tax transcripts The IRS doesn’t charge for transcripts, which are available for the current tax year and three prior years. These summaries come in two forms: Tax-return transcripts show most line items from your return as originally filed, including forms and schedules. Tax-account transcripts show later adjustments made by you or the IRS after you filed. Order at www.irs.gov (click on "Order a Transcript") or call 1-800-908-9946. Order through the mail using IRS Form 4506T-EZ. Businesses, partnerships and individuals who need data from other forms or a tax-account transcript must use Form 4506T. On online or phone orders, plan on five to 10 days to receive your tax-return transcript. Allow 30 days for orders requiring Form 4506T or 4506T-EZ. Forms such as 1099s and 1098s* Contact your bank, brokerage, mutual-fund company or other financial firm to retrieve these tax documents if they haven’t arrived. If you have signed up to access online statements, many financial firms will let you download your 1099s and 1098s from their websites. Capital-gain records showing your basis in an investment Basis is the amount of your investment on which you don’t face taxes. Check your statement or online account to see if your financial firm tracks this, or call the company. Basis reporting becomes mandatory starting in 2011 (for stocks), 2012 (mutual funds) and 2013 (bonds and options). Various entities can help you determine your fee, which can be helpful if your investment was made many years ago or you no longer have an active financial account. One source is Netbasis, a program from NetWorth Services in Phoenix (netbasis.com, 1-888-802-2747), which starts at $19.50 for one transaction. Tax-filing extensions If you can’t get your records together, request an automatic extension by filing Form 4868 by April 18, giving you until Oct. 17. With an extension, you still should estimate and pay your 2010 tax bill by April 18. Otherwise, interest and penalties could apply.
by Russ Wiles The Arizona Republic February 7, 2011 12
Tips: Get your tax paperwork in order
Taxes lower than under Bush (2011-02-12 09:51) Taxes too high? Actually, as a share of the nation’s economy, Uncle Sam’s take this year will be the lowest since 1950, when the Korean War was just getting under way. And, for the third straight year, American families and businesses will pay less in federal taxes than they did under former President George W. Bush because of a weak economy and a growing number of tax breaks for the wealthy and poor alike. Income-tax payments this year will be nearly 13 percent lower than they were in 2008, the last full year of the Bush presidency. Corporate taxes will be lower by a third, according to projections by the nonpartisan Congressional Budget Office. The poor economy is largely to blame, with corporate profits down and unemployment up. But so is a tax code that grows each year with new deductions, credits and exemptions. The result is that families making as much as $50,000 can avoid paying federal income taxes if they have at least two dependent children. Low-income families can actually get a federal payment from the income tax, and the wealthy can significantly cut their payments. ”The current state of the tax code is simply indefensible,” said Sen. Kent Conrad, D-N.D., chairman of the Senate Budget Committee. ”It is hemorrhaging revenue.” In the next few years, many can expect to pay more in taxes. Some increases were enacted as part of President Barack Obama’s health-care overhaul. And many states have raised taxes because, unlike the federal government, they have to balance their budgets each year. State tax receipts are projected to increase in all but seven states this year, according to the National Council of State Legislatures. But, in the third year of Obama’s presidency, federal taxes are at historic lows. Tax receipts dropped sharply in 2009 as the economy sank into recession. They have since stabilized and are expected to grow by 3 percent this year. But federal tax revenue won’t rebound to pre-recession levels until next year, according to CBO projections. In the current budget year, federal tax receipts will be equal to 14.8 percent of the gross domestic product, or GDP, the lowest level since Harry Truman was president. In Bush’s last year in office, tax receipts were 17.5 percent of GDP, just below their 40-year average. The lack of revenue, combined with big increases in spending, means the federal government will have to borrow 40 cents for every dollar it spends this year. The annual federal budget deficit is projected to reach a record $1.5 trillion. Lawmakers from both political parties vow to tackle the nation’s financial problems. Republicans in Congress promise big spending cuts, and Obama says he wants to reshape corporate taxes, closing loopholes to pay for lower overall rates. At the request of the Associated Press, the Tax Institute at H &R Block compared 2008 and 2010 tax bills for families at various income levels, showing how their taxes have changed since Obama took office. Many taxpayers are seeing their bills drop under Obama because of more generous tax credits for college students, working families, homebuyers and the working poor. Many of the changes were enacted as part of the big economic-stimulus package passed in 2009. Congress also extended Bush-era tax cuts through 2012. by Stephen Ohlemacher Associated Press Feb. 8, 2011 12:00 AM Taxes lower than under Bush
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Expert: Median price of houses could dip to $100,000 (2011-02-12 10:13) The service that lists Phoenix-area homes for sale is expecting the median home-sale price to drop as low as $100,000 during the next three months. The supply of homes flowing onto the market is increasing, while sales have declined, according to Bob Bemis, chief executive of the Arizona Regional Multiple Listing Service, which real-estate agents in the Valley use to list homes for sale. Bemis said those trends were likely to exert downward pressure on prices in the coming months. January’s median sale price was $110,000, the lowest it has been in about a decade. Home-sales activity in the Phoenix area declined by about 22 percent from December to January, the secondbiggest drop in the past decade for those two months, Bemis said. The worst decline was a 24.4 percent fall, from December 2008 to January 2009. The listing service noted 8,401 sales in December and 6,541 sales in January. Although down compared with December, January sales were 13 percent higher than they had been a year earlier, Bemis said. Meanwhile, he said, the number of homes being listed for sale increased by 30 percent from December to January. Based on those factors, and the fact that 70 percent of all January sales were foreclosure-related, Bemis said he had little choice but to conclude further price drops are imminent. ”You could easily see the median price go below $105,000 or even as low as $100,000,” he said. The January median home price has declined by 50 percent since 2008, when it was $220,000. ”We have a huge hole that we have dug ourselves into,” Bemis said. One reason the median price was so low, he added, was that there were few sales transactions in the middle range of the market, from about $250,000 to $700,000. Bemis referred to that group, to which he belongs, as ”the great, forgotten middle class,” because all activity is focused on homes at the low end of the price spectrum. He added that the market’s high end was a different beast altogether, with most homes being bought and sold for cash among the extremely wealthy. The market for upper-middle-class homes has been almost completely frozen because of scant buyer interest and difficulty obtaining loans. Bemis said that market would not start moving until problems at the low end had been resolved. It’s not likely to happen in 2011, he said. by J. Craig Anderson The Arizona Republic Feb. 9, 2011 12:00 AM Expert: Median price of houses could dip to $100,000
3 mortgage-crisis strategies (2011-02-12 10:39) WASHINGTON - Homebuyers will face potentially higher interest rates under any of three Obama administration options for reducing government support of the mortgage market, the price of ending the country’s dependence on financially teetering housing-finance giants Fannie Mae and Freddie Mac. The Treasury Department is scheduled to release a report today that lays out the three choices for winding down Fannie and Freddie and moving to a more privatized mortgage market, according to a number of people familiar with the administration’s approach. The 20- to 25-page report will not endorse any of the options, a decision by the administration designed to provoke a discussion about the role of government in housing finance without roiling the housing market or locking President Barack Obama into a particular solution. The report’s scenarios are: " No government role except for existing agencies like the Federal Housing Administration. " A government role that explicitly guarantees mortgages only when the market is in trouble. 14
" A government role at all times, although not through government-supported entities like Fannie and Freddie. ”Under any of the scenarios, there’s going to need to be more private capital in the housing system,” said Michael Barr, who recently left his post as assistant Treasury secretary to return to teaching at Michigan University Law School. ”That’s going to mean more pressure on interest rates.” The greater the government involvement, the milder the impact on borrowing costs. But more government involvement also places more taxpayer money at risk. A complete withdrawal by the government probably would end the popular 30-year fixed-rate mortgage or, at least, make it more expensive. Banks would prefer adjustable-rate mortgages that would fluctuate with the markets. Mark Zandi, an economist who has advised Democrats and Republicans, proposed the middle-of-the-road option of giving the government a role that insures mortgages only in catastrophic market conditions. That type of insurance would be paid for by homeowners, he said, and it ”would keep rates measurably lower, allow mortgage credit and would preserve the 30-year, fixed-rate mortgage.” The report comes as Republicans and Democrats struggle to find a way to repair the financing system for the nation’s $11 trillion housing market. The report is designed to have a soft landing on Capitol Hill. by Jim Kuhnhenn Associated Press Feb. 11, 2011 12:00 AM 3 mortgage-crisis strategies
Scottsdale council OK next step for revised Blue Sky plans (2011-02-12 10:47) The Scottsdale Planning Commission this week praised Gray Development Group’s scaled-down proposal for its Blue Sky apartment complex east of Scottsdale Fashion Square and showed no sympathy for stilldissatisfied adjacent property owners. All participating members of the commission voted to recommend City Council approval of modified development standards and an amended site plan as part of the city’s downtown infill incentive district. Commissioner Jay Petkunas did not participate in Wednesday’s vote because of a conflict of interest while Commissioner Michael Edwards was absent. Petkunas is a resident of the Safari Drive condominium complex, which is located east of the site. The commission’s decision included requiring Gray to play a leading role in initiating a study of east-west pedestrian connectivity between Scottsdale Fashion Square and development on the east side of Scottsdale Road. The move is aimed at making it safer for pedestrian crossing. Gray has made numerous changes to its proposal in response to negotiations with surrounding property owners, ST Residential and Triyar Properties. Both have filed legal protests forcing a supermajority vote of 6-1 for council approval. Blue Sky would be located west of ST Residential’s Safari Drive and north of Triyar’s retail center on the northeastern corner of Scottsdale and Camelback roads. The proposal includes shared vehicle and pedestrian access with Safari Drive, and additional parking for Triyar’s retail center. Randy Grant, spokesman for the adjacent property owners, said Gray’s proposal still reflects a ”lack of attention to the context of existing development” in the area. The property owners remain concerned about a ”dramatic” increase in height, density and mass of buildings, and believe Blue Sky would be a ”dominating presence” on Scottsdale Road. Gray chairman Bruce Gray said his company has never gone to the lengths it has with Blue Sky to appease neighboring property owners. He accused ST Residential of being unreasonably uncooperative. ”Everything they’ve asked, we’ve done and then they raise the bar,” he said. ”Shame on ST.” Gray’s original proposal included 1,196 apartment units and a maximum building height of 133 feet excluding an additional 15 feet for rooftop mechanical needs. The proposal now includes 749 units; three buildings, down from five; and a maximum building height of 128 feet, including rooftop mechanical. 15
The tallest building, along Scottsdale Road, would be just north of the Triyar retail center, while the other two buildings, including a second along Scottsdale Road and one along Arizona Canal, would have a maximum height of 118 feet. Commission Chairman Michael D’Andrea said Gray’s willingness to stick with its proposal and work with neighboring property owners is ”commendable” and it should no longer be concerned with trying to appease them. ”I’m seeing personal financial interest come before ... what’s best for the community,” he said. ”Now’s the time to stop worrying about the neighbors and make the project the best it can be.” Commissioner Erik Filsinger said the proposal has continually improved with every revision Gray has made, and that he is ”perfectly fine” with the project moving forward in the downtown infill incentive district. ”We’ve got developers taking advantage of the downtown infill incentive district, and that’s a good thing,” Commission Vice Chairman Ed Grant said. The council will consider Gray’s proposal at its Feb. 22 meeting. ”I think what we’ve heard clearly from both the city Development Review Board and Planning Commission is they support what we’ve done so far,” said Brian Kearney, Gray’s chief operating officer. ”They’ve given us a few suggestions to think about, particularly along the canal. We are certainly willing to look at that.” by Edward Gately The Arizona Republic Feb. 10, 2011 12:44 PM Scottsdale council OK next step for revised Blue Sky plans
Gray defaults on state land (2011-02-12 10:55) Gray Development Group is in default on land it bought in the Desert Ridge area in 2004. Vanessa Hickman, deputy commissioner of the Arizona State Land Department, said a default notice was sent in December for the 32-acre parcel on the northeastern corner of 56th Street and Loop 101. The default is the second for the Gray group and at least the sixth in the Desert Ridge area. The Gray parcel sold in May 2004 for more than $1 million per acre, making it one of the most expensive parcels the State Land Department ever sold. The department originally owned all land in the 5,700-acre master-planned development. Since 1993, it has been rolling parcels out for auction and subsequent development. But the recession has had a serious effect on land values - driving those who acquired land at the height of the market into default - and the department’s ability to sell parcels. Under the rules of state land sales, developers are on a seven-year payment schedule. When payments are missed, default notices go out. The notices trigger a 60-day period that gives developers time to make good on their deals. If they fail, the land reverts to the Land Department. Hickman said the state has not reclaimed the Gray parcel yet. Gray was scheduled to go before the Phoenix Planning Commission on Wednesday to amend the Desert Ridge Specific Plan as it pertains to the parcel. But that effort was withdrawn earlier that day. Gray’s previous default was on a 41-acre parcel north of Desert Ridge Marketplace. The company last year won a lawsuit claiming the master developer of Desert Ridge, Northeast Phoenix Partners, hindered its efforts to develop the parcel. by Michael Clancy The Arizona Republic Feb. 12, 2011 12:00 AM Gray defaults on state land
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Social Security recipients need to act now! (2011-02-12 10:59) In this mornings Call 12 for Action report, Social Security recipients now have more limited options. A new rule is on the books but you still have time to voice your opinion. It used to be that you could apply for Social Security at say 62, receive a lower monthly benefit amount for years, then give all the money back in order to start receiving a higher monthly benefit amount. And better still you could do this without owing Uncle Sam any interest. Well, with no notice at all that rule has changed and it’s causing big financial problems for some. ”I have received 15 checks.” Marshall Wozniak applied for monthly Social Security benefits last year at age 63. He only did it because he needed to show extra income on a mortgage application. ”I didn’t spend a penny of it. I put every check in a savings account. I always intended to give the money back.” By eventually giving the money back to Uncle Sam, Marshall would get $400 more a month starting at age 66, $1000 more a month if he waited to age 70! Social Security recipients like Marshall could utilize this ”payback” option several times in their lifetime and never owe a dime of interest. ”That is the only reason I applied, if that wasn’t in place I would have waited.” And now it looks like Marshall should have waited because in December Social Security changed the rules. Now recipients can only use the ”payback” option once in their lifetime and it must be within the first 12 months of when they start receiving benefits. ”And that cuts me out because I’ve been receiving checks for 15 months, so, I’m locked out for life.” That means Marshall, and many others like him, are now stuck with the lower monthly benefits that come from retiring early. And it’s money Marshall doesn’t even want right now. ”Our taxes will be higher, I may lose my VA health care, next year, because my income is higher.” But there’s still hope. Social Security may reconsider this rule change at the end of a 60-day public comment period. Hundreds of recipients have already made their feelings known at www.regulations.gov. Many are outraged that they received no notice of the change. ”I think the very minimum they should have done was send a letter, a mailing, to every social security recipient.” Social Security didn’t send that letter but the government is giving consumers a voice during this public comment period. But, the public comment period ends AT MIDNIGHT TONIGHT (Monday, February 7th). So, if you want to be heard on this issue, go to www.regulations.gov, click on PUBLIC SUBMISSIONS and type in the keyword: SSA-2009-0073. This will take you to the page where you can post your comments about this rule change, but again you have to do it by midnight. Marshall wanted to withdrawal his benefit before the change took place but changed his mind at the last minute. Then the rule change occurred and Marshall withdrew his application two days later. He is hoping Social Security will accept his withdrawal retroactive to before the change. We are working with the SSA on Marshall’s case and will keep you posted on how things work out for him and many others in a similar situation. [EMBED] by Dave Cherry Call 12 for Action - Feb. 7, 2011 04:58 AM Social Security recipients need to act now! 17
Obama Calls For End Of Fannie Mae, Freddie Mac (2011-02-12 12:19)
NEW YORK – The Obama administration outlined three options Friday to change the way home loans are financed, calling for the slow death of mortgage giants Fannie Mae and Freddie Mac and jumpstarting the debate over the future role of government in helping borrowers secure mortgages. If implemented, the proposals would likely make it more expensive for borrowers to buy a home and thus restrict the availability of mortgages. It also marks a significant departure from past government policies, which treated homeownership in America as a virtual right. ”The government must...help ensure that all Americans have access to quality housing that they can afford,” the administration said in its report to Congress, delivered as part of last year’s financial overhaul law. ”This does not mean our goal is for all Americans to be homeowners.” The troubled housing market – a legacy of the deep bust that followed a historic boom in which reckless lending and borrowing led to the most punishing downturn since the Great Depression – led to calls for the federal government to radically reform the way home mortgages are financed. There’s $10 trillion in outstanding home loan debt. Policy makers, bankers and investors agree that taxpayer-owned Fannie and Freddie should be wound down. But there’s no consensus on what should replace them. The first option outlined in the report calls for a private system in which lenders and investors fund new mortgages, with a limited role for existing federal agencies to subsidize home loans for the poor and other special groups, like veterans. The second proposal calls for much of the same, but it includes a government backstop for mortgages during times of market stress. If credit markets froze – like they did at the height of the crisis – the government would step in and guarantee new home loans. The third option outlines a much broader government role. Under this alternative, taxpayers would insure securities backed by home loans, which is what Fannie and Freddie already do. The administration’s outline explained the benefits and costs of the various options, but stopped short of endorsing any of them. Critics will likely say the administration punted. The 31-page outline says ”very little that is surprising or market-moving as it lacks specific details or...any extreme views,” mortgage bond strategists Greg Reiter and Jeana Curro at RBS Securities wrote in a note to clients. They were ”mildly surprised” at the lack of details, though. Analysts at Amherst Securities, led by Laurie Goodman, said in a report that the plan is ”largely a nonevent.” Along with federal agencies, taxpayer-owned behemoths Fannie Mae and Freddie Mac guarantee more than nine of every 10 new mortgages. They were effectively nationalized in 2008. Delinquencies on home loans they back have thus far cost taxpayers more than $150 billion. Their regulator, the Federal Housing Finance Agency, estimates Fannie and Freddie could need up to $363 billion in taxpayer cash through 2013, it said in an October report. ”We are going to start the process of reform now,” Geithner said in a statement. ”But we are going to do it responsibly and carefully so that we support the recovery and the process of repair of the housing market.” Geithner said it will take another three years for the housing market to recover. It currently suffers from a 18
high foreclosure and delinquency rate, low levels of homeowner equity, and an abundance of homes for sale without a corresponding number of interested buyers. After that, it will likely take two to three years for policy makers to come to agreement on the government’s role in funding home loans, Geithner said. The final step calls for new legislation. All told, Geithner said it will take between five to seven years to transition to a new system. Steps to take during that time to slowly wean the market off total government support largely revolve around making Fannie- and Freddie-backed mortgages more expensive, which would make loans not backed by taxpayers more desirable. This includes increasing the fees Fannie and Freddie charge to guarantee home loans backing securities; pushing them to require homeowners to purchase additional mortgage insurance or put at least 10 percent down; and reducing the size of individual loans that Fannie and Freddie could guarantee. But while the administration wants to decrease government’s role in funding home loans, it wants to increase federal subsidies for rental housing. Shaun Donovan, the secretary of the Department of Housing and Urban Development, said Friday that half of renters spend more than one-third of their income on housing, and one-quarter of renters devoted more than half, according to HUD research. Reactions from lawmakers ranged from pleasant surprise to muted displeasure. Rep. Barney Frank of Massachusetts, the top Democrat on the House Financial Services Committee, praised in a statement the administration’s support for increasing resources directed towards renters, but said it is ”not clear” whether lenders and investors alone could support the market in a way that makes mortgages affordable to borrowers. Rep. Ed Royce, a Republican from California who also serves on the financial services committee, said he was ”pleasantly surprised” that the administration wants to wind down Fannie Mae and Freddie Mac. ”The 800-pound gorilla in the room remains the level of government support in the mortgage market going forward,” Royce said in a statement. ”On that front, [the Obama administration] decided to punt.” Rep. Maxine Waters, a California Democrat and another financial services committee member, said she has ”concern” that the administration’s proposals ”may radically increase the cost of homeownership, and housing in general.” The theme of the report and subsequent conversations with administration officials stressed the Obama team’s desire to have a smaller government footprint in the mortgage market. ”The report’s takeaway message is that the U.S. housing finance system is likely to undergo major changes going forward, and with the likely outcome being a significantly smaller role for the U.S. government,” analysts at research firm CreditSights said in a note. The reality is Democrats want continued government support of mortgages backing securities. A fully privatized system would lead to higher costs for mortgages, but it would also nearly extinguish the risk posed to taxpayers and would enable resources currently devoted to housing to go to more productive channels, benefitting the economy in the long run, the administration noted in a nod to the predominant Republican position. A hybrid approach that calls for increased government support during times of market stress would enable the government to lessen the social costs from contractions in credit to borrowers. Maintaining government backing of home loans at all times ensures cheap mortgages, thus artificially inflating home prices and allowing resources to continue flowing to housing. This proposal also puts taxpayers on the hook for losses. But while observers say the administration appears to favor a robust government role – analysts at RBS Securities say government-sponsored entities and federal agencies will likely end up supporting 50-65 percent of the market – it’s not clear that one is needed. Firms would package home loans into bonds and Investors would buy them absent government guarantees, market participants said Friday. Mortgages would be more expensive, but only compared to today’s historically-low prices. Over time, they’d moderate to average levels, they said. In effect, Democrats’ argument that the cost of mortgages would skyrocket lacks merit, they said. ”The notion that the cost of these products would be extraordinarily high is predicated on the notion that we continue to accept no down payments on loans,” said Joshua Rosner, managing director at independent research consultancy Graham Fisher & Co. and one of the first analysts to identify problems at Fannie Mae 19
and Freddie Mac. Brett D. Nicholas, the chief investment and operating officer at Redwood Trust, a California-based real estate investment firm, said that with taxpayers backing 95 percent of new home loans ”there is no room for the private sector.” ”It’s a circular argument to say that, ’Well, the private sector is not there so oh my God rates are going to go up hundreds of basis points,’” Nicholas said. ”It’s just not true.” One basis point equals 0.01 percentage point. ”The fact is the private sector is there,” Nicholas added. ”We have capital. Lots of firms like us have capital. There’s trillions of dollars of demand from life insurance companies, banks, [and] mutual funds.” Last year, his firm sponsored the only private-sector security backed by new home mortgages and sold to investors. The deal contained more than $200 million worth of jumbo mortgages, industry parlance for home loans too big to be backed by the Federal Housing Administration, a government agency, or Fannie Mae and Freddie Mac. ”The dollars are there,” Nicholas said. ”There’s just no loans to sell to [investors] because they’re all going to Fannie, Freddie and FHA.” Rosner said that if borrowers start putting down 20 percent of the purchase price, investors would price in lower risks of default and snap up the securities. He added that getting borrowers to put that much down is good for the economy because it gets consumers in the habit of saving more and only being willing to buy a home once they were sure they could afford it. This would lessen the risk of a housing collapse and minimize costs to taxpayers, Rosner said, as opposed to the administration’s preferred approach of a continued government role, which he argues simply continues the current system of privatized gains and socialized losses. ”The administration is still not thinking of ways to incent proper behavior,” Rosner said. He added that the tax code could bring about many of his recommendations. by Shahien Nasiripour Huffington Post February 11, 2011 Obama Calls For End Of Fannie Mae, Freddie Mac
Desert Mountain Golf Club bought by members for $73.5 mil (2011-02-13 08:17)
Desert Mountain Golf Club Desert Mountain Golf Club’s Cochise course opened in 1988. Club members recently purchased the club’s assets from Crescent Real Estate Holdings for $73.5 million. Members of the exclusive Desert Mountain Golf Club in north Scottsdale have completed a deal with owner Crescent Real Estate Holdings to purchase the club’s six golf courses, all related facilities and about 500 acres of developable land for $73.5 million. The deal expands on an agreement in the Desert Mountain membership contract that would have required members to buy the club’s six golf courses and clubhouse facilities on March 1. 20
Member representatives described the expanded deal as an insurance policy against future changes to the club and its surrounding community of multimillion-dollar homes. Of particular concern, they said, was the large swath of adjacent land, which Crescent ultimately could have sold or developed for any number of residential or commercial projects. Dave Kaplan, who lives in the Desert Mountain community and has been a member of the club since 1997, said he was not surprised that 99 percent of the members who voted on the purchase deal favored it. Of the roughly 2,300 members, 90 percent cast votes, the club’s managers say. ”I strongly supported Desert Mountain’s global asset purchase, which accelerated the turnover process and ensured the future of our community,” Kaplan said. It’s no secret that dozens of high-end golf courses have struggled to remain private - or even stay open - in recent years. Some have addressed the economic problem by opening the fairways to public play. Superstition Mountain Golf and Country Club, near Gold Canyon in the far East Valley, is one of the area’s formerly private-only clubs that has been pursuing daily-fee golfers by opening up one of its two courses each day to non-members. Country clubs Red Mountain Ranch in east Mesa, Moon Valley in north-central Phoenix, Corte Bella in Sun City West and Quintero near Lake Pleasant all have altered their policies in recent years to allow some limited use by non-members. Desert Mountain members’ bigger concern, according to club President Bob Jones, was making sure the community’s vacant land would be developed for purposes that benefited the club and not just the property’s owner. ”They (Crescent) would have maintained control,” Jones said. ”They could have sold the land to another developer.” To make the deal work financially, Jones and other representatives of the buyers’ group obtained financing for a portion of the purchase price. The upshot of that decision was that instead of each member paying an expected $50,000 over many years via fee increases, each member was assessed a one-time fee of $16,500, which Jones said would be the only contribution ever required of them. He added that the group performed extensive due diligence before agreeing on the purchase price. The club has turned a profit every year since 2003, Jones said. He said that the final negotiated price was about one-third of the seller’s original asking price. ”The developer was hoping to get over $200 million from this deal,” he said. Kaplan said he and the other members knew in advance that they would have to contribute some cash, and that he did not consider the $16,500 a financial burden. ”I thought it was an amount that the majority of members were very comfortable with,” he said. MORE ON THIS TOPIC Desert Mountain Golf Club timeline 1986 - Desert Mountain is established in northeast Scottsdale. 1987 - Renegade, Desert Mountain’s first Jack Nicklaus-designed course, opens. 1988 - The club’s second course, Cochise, opens 1989 - The third course, Geronimo, opens. 1990 - The Cochise-Geronimo Clubhouse opens. 1993 - The Sonoran Clubhouse opens. 1996 - The fourth course, Apache, opens. 1997 - The Renegade Clubhouse opens. 1999 - The fifth course, Chiricahua, opens. 21
2003 - The sixth and final course, Outlaw, opens. 2010 - Members vote to purchase the club and related assets. 2011 - Ownership is transferred to club members. Source: Desert Mountain Golf Club by J. Craig Anderson The Arizona Republic Feb. 13, 2011 12:00 AM Desert Mountain Golf Club bought by members for $73.5 mil
Arizona Center marketed for sale (2011-02-13 08:24) General Growth Properties, which emerged from Chapter 11 bankruptcy protection in November, has put its high-profile Arizona Center development in downtown Phoenix on the block and could announce a buyer by March. The company declined to discuss the possible sale but its Chapter 11 reorganization note said it intends to focus on its regional malls going forward and shed properties, such as the mixed-use Arizona Center, that don’t fit the criteria. The company earlier transferred its 355,000-square-foot Park West Mall in Peoria to its planned community development arm, the Howard Hughes Corp., which was spun off to stockholders in November. General Growth plans to retain the Mall at Sierra Vista in Sierra Vista and the Tucson and Park Place malls in Tucson, which are traditional regional malls. The 18.5-acre Arizona Center consists of roughly 800,000 square feet of offices in two high-rises; 160,000 square feet of retail space, including an AMC Theatre complex, and a covered parking garage. The Arizona Center is technically owned by the city of Phoenix, which leases it to General Growth for a nominal sum under a government property-lease excise tax, or GPLET, agreement. The deal allows the Arizona Center to pay substantially lower property taxes because it is technically a government-owned property. The project is zoned for an additional 1.1 million square feet of offices, a 600-room hotel and 400,000 square feet of retail shops. General Growth Properties also is a part owner with Westcor parent Mecerich Co. in Arrowhead Towne Center in Glendale and Superstition Springs Center in Mesa. A buyer that has been mentioned for the 1.06 million-square-foot Arizona Center is the CommonWealth REIT of Newton, Mass. The real-estate investment trust has $6.7 billion worth of office and industrial properties in its portfolio, including six properties in Arizona, totaling about 925,000 square feet. They include Regents Centre in Tempe, the Blue Cross/Blue Shield building in Phoenix and the One South Church Avenue office building in Tucson. The company also declined to discuss the possible Arizona Center acquisition. The Arizona Center was developed by high-profile mall developer Rouse Co., whose projects include Faneuil Hall Marketplace in Boston and Harborplace in Baltimore. When it opened in 1990, it was touted as a retail and entertainment magnet that would draw people to downtown Phoenix and jump-start redevelopment of the central Phoenix business district. The city of Phoenix contributed the land, then worth about $8 million, and granted the developer $40 million in salestax rebates. But, the center never lived up to its grand potential. National retail stores such as Gap and Foot Locker eventually closed and were replaced with tourist-oriented shops and restaurants. In 2003 the mall’s food court closed and was converted into office space. General Growth acquired the Arizona Center in 2004 through its $12.6 billion acquisition of Rouse. The company filed for Chapter 11 protection in April 2009. by Max Jarman The Arizona Republic Feb. 13, 2011 12:00 AM Arizona Center marketed for sale 22
Websites explain job-hunt expenses that can be tax write-offs (2011-02-13 08:26) Several websites explain the criteria for taking a job-search tax deduction. - AARP: Lists six rules for taking a job-search tax deduction. www.aarp.org/money/taxes/info-07-2010/tax-tips-for-job-seekers.html. - Bankrate.com: Covers write-offs for individuals and tax-deduction rules related to looking for work. www.bankrate.com/finance/money-guides/deducting-job-search-costs.asp x. - eFile.com: Provides information about specific job-hunt tax deductions. www.efile.com/taxdeduction/employee-expense-deduction/job-search-ex penses.asp. - H &R Block: Discusses job-search tax deductions and qualifications. www.hrblock.com/taxes/tax tips/deductions credits/job searches.html by McClatchy-Tribune News Service Feb. 13, 2011 12:00 AM Websites explain job-hunt expenses that can be tax write-offs
Living Room Ready for Liftoff - Yahoo! Real Estate (2011-02-13 14:56)
Exterior of Fiekowsky’s Berkshire Home Exterior of Berkshire, Mass. home that cantilevers for 45 feet, 14 feet off of the ground Eirik Johnson for The Wall Street Journal
Friends praise the panoramic views and spare nature of the vacation home of Boston architect Warren Schwartz and his wife, Sheila Fiekowsky. But ”sometimes, there’s a feeling of, ’What is holding this up?’,” said pianist Eve Wolf. Boston architect Warren Schwartz designed and built a modern home of glass, steel and concrete in the Berkshires for himself and his wife Sheila, a longtime violinist for the Boston Symphony Orchestra. The three-bedroom home climbs to more than 30 feet, with views across the wooded hills and a rooftop terrace, where the Schwartzes watch the night sky in the summer. Ms. Wolf, who noted that she trusts Mr. Schwartz’s handiwork, isn’t the only visitor to have experienced a brief moment of uncertainty. A slim, 17-by-90-foot rectangular volume of glass and steel, the house slopes down a hill in the Berkshires before dramatically cantilevering for 45 feet. The great room floats 14 feet above the ground and has walls of glass on three sides with sweeping views of the surrounding, hilly countryside. The home’s poured concrete floor vibrates when the couple’s 65-pound Standard poodle, Oberon, bounds with enthusiasm after a ball. (Mr. Schwartz blames Oberon’s particular bounding style.) ”I thought it was going to be a ranch house,” said the 59-year-old Ms. Fiekowsky, a violinist who plays with the Boston Symphony Orchestra, admitting she, too, was nervous when her husband told her he wanted to have half the house float in the air. Mr. Schwartz, whose firm Schwartz/Silver Architects has completed projects for clients including the Massachusetts Institute of Technology and Princeton University, noted that the house’s cantilevered space is counterbalanced by a massive concrete basement hidden in the hillside. He said it’s ”overdesigned” for stability and can hold 60 people safely, plus several thousand pounds on the home’s rooftop terrace. A Cantilevered Glass House 23
Visitors walk through a long slice of hallway, past three terraced bedrooms, before arriving in the great room. Round, steel support beams painted white slice across the home’s glass walls at varying angles. Midway through the home, thin steel sheets that have been folded into steps connect the home’s rooftop terrace to the basement-and-patio level. Walls of frosted glass separate the 12-by-11-foot bedrooms from the hallway and translucent, honeycombed plastic doors slide away to reveal en-suite bathrooms. ”I wanted everything to be very light in color, light in structure, and feel as much as possible like floating,” said Mr. Schwartz, age 67. The décor, a high-low mix, is modern and minimal; a glass Le Corbusier table in the great room sits near an IKEA kitchen. The couple gravitated toward a color palette of black, grey, white and silver so the landscape outside would remain the star. (Even the dog’s black cage, partially covered in gray fabric, hews to the color palette.) Great room dining room Amid modern and minimalist decor, the landscape is the star of the great room. Eirik Johnson for The Wall Street Journal
This isn’t the first attention-grabbing home the couple has built. In the 1980s, they built second home No. 1 on their 18-acre Berkshire site: a striking octagonal, stucco-and-wood, castle-like structure featured in several architectural magazines. Their children grew up in it over the summers, when Ms. Fiekowsky plays at nearby Tanglewood, the orchestra’s summer home. But after more than 20 years, Mr. Schwartz said, the wood was weathering poorly and the house felt dated. With their children grown, Ms. Fiekowsky felt the call to create an adult home minus the swing set and basketball court of the previous building. Mr. Schwartz liked the idea of designing anew. They razed the octagonal house in 2007. Mr. Schwartz drew partial inspiration for the cantilevered space from a family trip to the Grand Canyon, where they had stood at the precipice of a cliff watching the sun rise, and doodled plans during his wife’s concerts. Being his own client gave Mr. Schwartz some freedom. The walls in the home, for example, are unpainted plaster, which he feels looks richer, and some doors were left unframed as part of the home’s minimalist look. ”Nothing was supposed to distract from the essence of the house and the power of the view,” he said. Bedroom Berkshire Liftoff Frosted glass walls separate the bedrooms from the hallway Eirik Johnson for The Wall Street Journal
The couple spent a little over $1 million to build and furnish the home, completed in 2009. Other owners in the Berkshires, a vacation spot that’s particularly popular in the summer, include the pianist Emanuel Ax, Massachusetts Gov. Deval Patrick and other Boston Symphony Orchestra musicians. Up the road, an 1,800-square-foot home built in 2005 sold for $266,000 last summer. The couple has hosted intimate wine receptions in the great room and catered cocktail parties on the rooftop terrace, complete with their neighbor’s black Angus cows wandering nearby. ”I was there during the most magnificent thunderstorm,” recalled Truman Welch, an Episcopal priest who lives near the couple’s main home in Newton, Mass., ”and it was like being in the middle of the storm.” 24
Last weekend, as gusts of wind lashed snow against the glass, Ms. Fiekowsky bribed Oberon with treats so he would show off his tricks. The only thing she’d change about the home? ”More closet space,” she said. Click here for more photos of the glass house by Juliet Chung WSJ.com February 1, 2011 Living Room Ready for Liftoff - Yahoo! Real Estate
Market Commentary 02.14.11 (2011-02-15 08:31) Monday’s bond market has opened in positive territory with the stocks mixed. The Dow is currently down 24 points while the Nasdaq has gained 5 points. The bond market is currently up 6/32, which should improve this morning’s mortgage rates by approximately .250 of a discount point from Friday’s morning pricing. There is no relevant economic data scheduled for release today, so look for the stock markets to be the biggest influence on bond trading and mortgage rates. The rest of the week brings us the release of six economic reports worth watching in addition to the minutes from the last FOMC meeting and two speaking appearances from Fed Chairman Bernanke. The week’s first release is one of the highly important ones when the Commerce Department posts January’s Retail Sales data early tomorrow morning. This report is very important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched quite closely. If tomorrow’s report reveals weaker than expected sales, the bond market should thrive and mortgage rates will fall since it would be a sign that the economy is not as strong as many had thought. However, a stronger reading than the 0.5 % increase that is expected could lead to higher mortgage rates. Overall, the most important day of the week will likely be Thursday with the CPI being released, but tomorrow and Wednesday will also be active days for mortgage rates due to the importance of the Retail Sales data and the number of events scheduled Wednesday. In other words, be prepared for an active week in the markets and mortgage rates, particularly the middle part of the week.
Market Commentary 02.15.11 (2011-02-16 05:13) Updated on 2011-02-15 11:14:45 EST Tuesday’s bond market has opened in positive territory following weaker than expected sales date. The stock markets have reacted negatively to the news with the Dow down 58 points and the Nasdaq down 14 points. The bond market is currently up 4/32, which with yesterday’s late strength should improve this morning’s mortgage rates by approximately .125 - .250 of a discount point. OpenClose Mortgage Software The Commerce Department announced January’s Retail Sales figures early this morning. They reported that retail level sales rose 0.3 % when analysts were expecting a 0.6 % increase. That means that consumers spent less last month than many had thought, making this data good news for the bond market and mortgage rates. Since consumer spending makes up two-thirds of the U.S. economy, consumer spending data is very important to the markets. Tomorrow morning has three economic reports scheduled that may influence mortgage rates. January’s Housing Starts is the first and will be posted at 8:30 AM ET, giving us an indication of housing sector strength and mortgage credit demand. It usually does not affect rates unless the results vary greatly from forecasts. Current forecasts are calling for an increase in starts of new housing. 25
January’s Producer Price Index will also be released early tomorrow morning. The Labor Department will release this important reading of inflationary pressures at the producer level of the economy. There are two portions of the report that analysts watch- the overall reading and the core data reading. The core data is more important to market participants because it excludes more volatile food and energy prices. It is expected to show an increase of 0.7 % in the overall reading and a 0.2 % rise in the core data. Good news for bonds would be a decline in both readings, particularly the core data as it would ease concerns about inflation that make long-term securities less attractive to investors. January’s Industrial Production report is the third release of the morning. It will be released at 9:15 Am ET tomorrow morning. This data gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities and can have a moderate impact on the financial markets. Analysts are expecting to see a 0.6 % increase in production from December to January. A smaller than expected rise in output would be good news and should push bond prices higher, lowering mortgage rates tomorrow. That is assuming that the PPI doesn’t give us any negative surprises. The minutes from last FOMC meeting will be released tomorrow afternoon. Traders will be looking for any indication of the Fed’s next move regarding monetary policy. They will be released at 2:00 PM ET, therefore, any reaction will come during afternoon trading. These minutes may indicate if there is a consensus amongst Fed members or if there is disagreement about their actions or inactions. This release may lead to afternoon volatility, or it may be a non-factor. However, the minutes do carry the potential to influence mortgage rates so they should be watched.
Equator
launches
three
new
modules
for
REO,
short
sales
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HousingWire
(2011-02-18 20:06)
Equator launched three new modules to help mortgage servicers better analyze loans and borrowers, as their foreclosure inventories show no signs of abating anytime soon. The provider of software for the default-servicing industry said its loan segmentation suite allows servicers ”to route the right loan to the right person early on in the delinquency to insure optimal outcome for the loan.” Equator said this module works with the 60- to 120-day bucket of delinquent loans and provides a workout path based on borrower, market and loan data accompanied by a new net-present value. To assist with an expected increase in the level of REO properties this year, Equator unveiled a REO segmentation module for managing disposition strategies. The company said the software produces a number of potential outcomes for the property, including rental, hold, quick sale, repair, donate or auction. Then the module determines expected proceeds for each possible disposition. ”Using Equator’s REO segmentation module will allow for consistent disposition strategy among outsourcers and internal asset managers as well as maximize net proceeds to the investor,” said Equator Chief Executive Chris Saitta. The Los Angeles-based company also unveiled a new invoice management module that increases efficiencies and ”provides unprecedented audit control.” by Jason Philyaw HousingWire February 18, 2011 Equator launches three new modules for REO, short sales « HousingWire
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Phoenix-area bankruptcy outlook improves (2011-02-19 12:02) Amid a stabilizing job market, the Valley’s bankruptcy picture in January improved for the ninth time in the past 10 months, with total filings dropping to a one-year low. But the 1,985 metro-Phoenix filings last month reported by the U.S. Bankruptcy Court in Arizona show many residents continue to struggle with debt - the latest filing count was still up 5 percent from January 2010. What has emerged is a mixed picture of improvement but at elevated levels, with Arizona seeing slower progress than the nation overall, where filings have touched a two-year low. Clearly, many Americans are doing a better job managing IOUs, but the overall debt reduction also stems from credit-card issuers tightening their eligibility rules and lowering credit limits on many customers, said Kevin Gallegos, vice president of operations at Freedom Debt Relief in Tempe. Unemployment and underemployment continue to be factors that cause people to seek assistance with debts or bankruptcy protection, he said. Arizona’s unemployment rate, which stands at 9.4 percent, has been trending lower in recent months, though employment gains have been weak. Chapter 7 bankruptcies, which give debtors a fresh financial start after assets are used to pay creditors, accounted for three in four Valley filings last month. Chapter 13 debt-repayment plans accounted for most of the rest. January bankruptcies for all of Arizona totaled 2,599 - also marking the ninth month of improvement in the past 10 months and the lowest total in a year. Still, Mark Winsor, a bankruptcy attorney at Winsor Law Group in Mesa, predicts filings will remain elevated this year. He cited recent reports suggesting Valley foreclosures could rise a bit this year compared with 2010. If that’s the case, Winsor said, lenders on home-equity lines of credit or other second loans could pursue borrowers after their homes foreclose, prompting those people to seek bankruptcy protection for remaining deficiencies. Winsor said he’s noticing more upscale bankruptcy clients, including those pursuing uncommon Chapter 11 filings. The bankruptcy trend nationally has improved more overtly. U.S. consumer filings in January declined 9 percent from a year earlier, reported the American Bankruptcy Institute and National Bankruptcy Research Center. The latest monthly tally of 92,669, down 22 percent from December, marked a two-year low. by Russ Wiles The Arizona Republic Feb. 15, 2011 12:00 AM Phoenix-area bankruptcy outlook improves
Arizonans receiving little help from mortgage program (2011-02-19 12:48) Even as Arizona’s share of federal money for a program designed to help homeowners avoid foreclosure has more than doubled, the program has been a failure, officials said. The program was meant to trigger many loan modifications, reducing the amount of money distressed homeowners owe. But so far, only one Arizona homeowner has obtained a loan modification under the year-old plan because banks have been reluctant to participate, officials said. Starting last February, the so-called Hardest Hit Housing program doled out hundreds of millions of dollars from the Treasury Department to the states facing the biggest foreclosure problems. Then, in December, the Arizona Housing Department received an additional $143 million, bringing the state’s total to almost $268 million. The one loan modification so far saved the homeowner a total of $40,000. 27
Arizona has always planned to spend much of the funds two ways. Most of the money is allotted for loan modifications that would reduce the amount some homeowners owed on their mortgages - as long as their banks also agreed to write off an equal amount. Also, the state would assist some homeowners who lost jobs or income, providing cash to help them make mortgage payments. But working out deals with lenders to spend the money has proven tougher than expected. Other states have also struggled. No homeowners have yet received loan modifications with principal reductions through similar federally backed programs in California and Nevada. The Housing Department began taking applications for the loan-modification program in September. It is about to begin taking applications for the second part of the program, which will cover mortgage payments for unemployed or underemployed residents for as long as two years. The funds help homeowners who can’t qualify for loan modifications because they aren’t working or aren’t earning enough. ”We have failed with this program so far, but we are going to make it work,” said Michael Trailor, director of the Arizona Housing Department. ”It’s been difficult to convince the big lenders to get on board, but we are making progress.” Loan modifications In Arizona, many people who couldn’t afford their mortgage payments also couldn’t refinance or sell because their homes were worth less than what they owe. Loan modifications are supposed to help. If lenders agree to lower a payment by changing the interest rate, changing other terms or simply forgiving part of the mortgages, owners can hang on to their homes. But although lenders are sometimes willing to cut interest rates - a separate federal program known as HAMP launched in April 2009 rewards them for doing so - many haven’t been as willing to forgive principal. Most of the Hardest Hit money is supposed to entice lenders. Borrowers who qualify can get as much as $50,000 in federal funds to pay down their mortgage balances. Their lenders must agree to write off a matching amount. Arizona housing counselors are prepared to organize the paperwork to make the deals less time-consuming for lenders. But banks have been reluctant. ”If banks aren’t willing to eat $50,000 to do a loan modification and keep a family in their home paying their mortgage, then they need to tell us what the major number is for making this program work,” said John Smith, president of the Mesa-based non-profit Housing Our Communities. ”Until then, this program is going to disappoint a lot of homeowners and the people trying to make it work.” More than 1,055 Arizona homeowners have completed an online form to see if they are eligible for the state’s loan-modification program. Almost 250 of those people then filed applications. So far 30 of homeowners have been approved by the state agency for the program. But those borrowers are waiting on decisions from their lenders. Only one borrower has succeeded so far. National Bank of Arizona approved the loan modification in January. The Phoenix-area homeowner declined to discuss his modification, but his mortgage principal was reduced by nearly $40,000 and his monthly payment by $240. His lender, National Bank, forgave $20,000 of his mortgage balance. Another $20,000 came from Arizona’s $268 million in federal funds. Officials said they are hoping for a breakthrough in the program. For the past several months, housing agencies in Arizona, California and Nevada have been negotiating with one of the nation’s biggest lenders to accept the principal-reduction loan-modification program. Trailor, of the housing department, said an agreement with that unidentified lender could happen in the next 30 days. Mortgage assistance Like the loan-modification program, the rules for the unemployment mortgage assistance are stringent to qualify. The program will have the same requirements as the loan-modification plan when it launches later this month: - Anyone who took out a second mortgage that wasn’t used to buy the home isn’t eligible. 28
- Borrowers must be able to show their income was cut through unemployment, underemployment, illness, death or divorce but must still have some income. - Borrowers must owe at least 20 percent more than their home is worth. - A homeowner must already have sought help through the federal Home Affordable Modification Program and been rejected. - Borrowers must live in the home for which they are trying to obtain a modification or receive payment assistance. - Monthly payments after a loan modification can’t exceed 31 percent of homeowners’ after-tax income. Trailor said the program has been slow to come into effect. It has taken nearly eight months to work out agreements with the big lenders for the Unemployment Mortgage Assistance program, though the program costs lenders very little and instead ensures they receive payments from borrowers who would otherwise be in foreclosure. The Hardest Hit Housing money came from the $700 billion Troubled Asset Relief Program that expired in October of last year. Arizona, California, Nevada, Florida and Michigan received funds from the Hardest Hit Housing fund. States may use the funds to cover administrative costs and mortgage-counseling fees and do not face specific rules or a deadline for spending the money because the Treasury Department wanted to seed innovative solutions. So far, innovation is taking time. ”The Hardest Hit program has been a challenge,” said Sheila Harris, an affordable-housing expert and former director of the state’s Housing Department. ”The Housing Department is really trying to work with lenders, but the banks have been reticent.” by Catherine Reagor The Arizona Republic Feb. 16, 2011 12:00 AM Arizonans receiving little help from mortgage program
German rival buys New York Stock Exchange (2011-02-19 12:51)
NEW YORK - On the tickers snaking above the New York Stock Exchange’s old wooden trading floor, the big news was the exchange itself. Deutsche Boerse AG would indeed be buying the Big Board, the electronic ticker said, confirming reports that broke last week. The acquisition by the NYSE’s German rival was another sign of capitalism’s gravitational shift away from New York. Duncan Niederauer, NYSE Euronext chief executive, appeared on the floor after the announcement Tuesday and reassured traders that their historic venue would not be going anywhere, but there were still plenty of mixed feelings. ”There’s a lot going on in here,” said longtime trader Ted Weisberg, pointing at his head. ”What’s sad is that you have an institution of this stature that for whatever reasons finds it necessary to be part of a larger organization, rather than a stand-alone organization.” The all-stock deal values NYSE Euronext at about $10 billion. NYSE Euronext shareholders would receive 0.47 share of the new company for each share they currently own. Deutsche Boerse shareholders would own 60 percent of the new entity. The combined company would be able to slash $400 million in annual operating costs and would be in a better position to compete against rivals that also are bulking up. The new company would be incorporated in the Netherlands with dual headquarters in New York and the German financial capital of Frankfurt. Underscoring the political sensitivity of the issue, a final name has not been settled upon. The takeover by a foreign rival is the latest seismic shift to strike the NYSE. 29
Founded in 1792 under a buttonwood tree, not far from its current building at Wall and Broad streets, the NYSE has had to revamp itself in recent years to fend off dozens of upstart electronic rivals offering faster and cheaper stock trades. The exchange transformed itself from a member-run organization into a publicly traded company in 2006 and bought a European rival the following year. And though the NYSE is the most famous place in the world for trading stocks, that business has been on a long decline, the victim of both regulation and new technology. The new company would derive the biggest chunk of its revenue - 37 percent - from trading in derivatives, sophisticated financial instruments that derive their value from other assets. ”We’ve already said we cannot rely on that business, which is what takes place on the floor that everyone sees every day. That cannot be our core strategy in the long run,” Niederauer said. This deal is politically sensitive because the NYSE’s headquarters have been a prominent patriotic symbol since the September 2001 terrorist attacks a few blocks away. An American flag flies over every trading station, and a black prisoner of war flag hangs over the entire floor. Domenic Digesaro, who runs a food cart just across from the exchange with an American flag sticker on the side, expressed shock that the deal could happen. ”I didn’t know people could buy into the stock exchange. I thought it was a U.S. thing,” Digesaro said. At a news conference unveiling the deal, issues of national pride were handled delicately. Niederauer and other NYSE executives sat in the exchange’s gilded board room in front of an American flag and next to a television screen showing German executives at a simultaneous news conference in Frankfurt. ”We have two centers of gravitation,” said Reto Francioni, Deutsche Boerse chief executive. Executives took pains to say the deal was a merger of equals, and Niederauer stressed that the Big Board long has had an international tilt. ”This is not like a U.S. and a German company are getting together. These are two very global companies getting together,” Niederauer said. The question of the NYSE’s continuing influence has come up prominently in debates about the new company’s name, with Sen. Charles E. Schumer, D-N.Y., insisting that the name begin with ”New York.” Niederauer said a name would be decided upon within a few weeks, and he joked that it would not follow the suggestion of a CNBC reporter who dubbed it the ”Big Boerse.” The biggest obstacle to closing the deal, the executives said, will probably come from European antitrust regulators concerned that the NYSE and Deutsche Boerse already own the two largest options exchanges in Europe. Still, Francioni and Niederauer expressed confidence that the deal would close by the end of this year. Many NYSE brokers and specialists own stock in NYSE Euronext and have notched sizable paper gains since word of the impending deal leaked last week. NYSE shares closed down 3.4 percent on Tuesday after surging 17 percent last week. Still, the sale is about more than money. ”As a shareholder, clearly you view this transaction through a different set of glasses than someone who has been here for 42 years,” Weisberg said. ”I came here and I stayed here because of what the institution represented. In that sense, it’s sad.” by Nathaniel Popper Los Angeles Times Feb. 16, 2011 12:00 AM German rival buys New York Stock Exchange
Are Home Sales Worse Than They Look? - Investors.com (2011-02-19 13:00) When trying to figure out which way the real estate winds are blowing, it helps to look at the numbers. But whose numbers? 30
Challenging home sales figures may be even worse than they appear, it’s feared, and demand for new
construction might lag longer than hoped. A new home goes up in Palo Alto, Calif. Builders have yet to see a turn in the housing market after the worst year for new-home sales in half a... View Enlarged Image The National Association of Realtors’ widely reported data show existing-home sales fell 5 % in 2010 to 4.9 million units. The group said an accelerating pace at the end of the year was promising. But data-tracking firm CoreLogic this week said it believes NAR’s figures overstate sales by 15 %-20 %, and that they actually slumped 12 % last year to a much more anemic 3.6 million. NAR says it believes CoreLogic’s analysis is wrong. But the trade group could end up revising home sales later this year anyway, once it settles on new benchmarking criteria, necessary because the Census Bureau has stopped collecting data on which NAR used to rely. ”At this point, we believe any data drift to be relatively minor, but must have a new independent benchmark to confirm,” NAR spokesman Walter Molony told IBD, noting that the group is consulting with outside experts. Changes Coming In Days Complicating things, NAR plans to release revised sales figures for the past three years when it issues January sales results on Wednesday. This will be the group’s annual fine-tuning based on the current forecasting models, Molony says. It won’t be a big downward restatement previously predicted by some bloggers and housing analysts. The sales pace tells how fast the housing market can burn off excess and distressed inventory. This has to happen before demand for new housing construction can broadly pick up, aiding the economy with jobs for everyone from carpenters to sellers of shingles. And it hasn’t happened yet. Fits And Starts Single-family home starts fell in January, down 19 % from a year ago and 1 % from December to an annualized rate of 417,000 in the Census Bureau’s report. In healthier times, the industry was starting about 1 million a year. Multifamily starts, however, shot up 80 % from December on apartment demand. Homebuilders had to scale back starts drastically in the housing bust that began in 2006 case is easy to see in sales figures.
why that’s the
Through past housing ups and downs, new-house sales held in the vicinity of 15 % of overall home sales. But this time they took a sharp hit, falling to just 7 % of all sales by 2009 and 6 % by 2010, based on Census and NAR data. Builders just haven’t been able to compete against prices on foreclosures and short-sales. 31
”High unemployment, weak consumer confidence and an oversupply of existing homes selling at distressed prices conspired to keep a lid on demand and pressure on new-home construction throughout much of the year,” Richard Dugas, CEO of U.S. homebuilding giantPulteGroup (PHM) told investors earlier this month. Overbuilding characterized the boom, particularly in certain notches of the Sun Belt such as Las Vegas and Florida. But prices have fallen so far in many places that homes are at their most affordable in decades. Still-high unemployment has reined in buying, however. So have tighter-than-before lending standards and worries about what’s next for the housing market. Builder sentiment remains low in the National Association of Home Builders’ monthly survey. The question of when new-home demand will return floats in a sea of still-troubled housing data. Was overbuilding so severe that the nation won’t need to boost its supply of single-family homes anytime soon? The health of the housing market varies by place. Recovery depends on how soon homebuyers absorb the extra inventory in each market. ”This (building) is going to be a lagging indicator,” said Eric Tyson, an author of books on real estate investment. ”It’s going to take time to work off that excess inventory that’s been constructed in many parts of the country.” Some larger builders think the housing market is bouncing along the bottom now. Many with cash or access to loans are buying up land at fire-sale prices, to bank for the eventual turnaround. Also, there’s doubt about that widening gap between NAR existing-home sales and Census new-house sales. Some real estate observers think it signals that NAR’s numbers are too high. CoreLogic says its data began diverging from the trade group’s in 2006. The firm says in a report that ”benchmarking drift” and other factors are leading to NAR over-reporting. Benchmarks Sought NAR tallies include sales from Realtors’ Multiple Listing Services, and make assumptions for sales outside that system, such as bulk investor deals and auctions. Key Census questions the group used in benchmarking are no longer being asked, Molony says. They are basically: Did you move this year? Did you buy or rent? So NAR is looking for new independent data it can use to benchmark and more frequently, perhaps annually rather than waiting a decade for each new Census, Molony says. Over such long spans it’s possible things like population shifts can skew figures. NAR’s last re-benchmarking was after the 2000 Census. by Kevin Harlin Investor’s Business Daily February 17, 2011 Are Home Sales Worse Than They Look? - Investors.com Dan.Eliot (2011-02-19 19:39:15) If you purchased a home in 2010, you may be eligible to claim the First-Time Homebuyer Credit, whether you are a first-time homebuyer or a long-time resident purchasing a new home. The purchaser must have been at least 18 years old on the date of purchase; for a married couple, only one spouse must meet this age requirement. Learn more: Home credit tips
Number of foreclosures in Valley rose in January (2011-02-19 13:09) Foreclosures continue to be the most important indicator for tracking metro Phoenix’s housing market. Foreclosures signal how many borrowers are losing homes to lenders or giving up and walking away because 32
they owe so much more than their house is worth. Also, the ups and downs in foreclosure filings signal lenders’ decisions that will affect the number of inexpensive homes for sale in the future and ultimately where home prices are heading in the region. Phoenix-area foreclosures climbed again in January, which wasn’t unexpected due to Bank of America’s lender moratorium expiring in December. So far, the number of foreclosure homes, or REOs, listed for resale by lenders hasn’t climbed. Lender-owned homes currently account for 18.8 percent of all Valley homes listed for sale, according to the Cromford Report. That’s down from 20 percent a month ago. The number of all homes listed for sale in metro Phoenix also has dropped to 42,000 this week, compared with 43,134 on Jan. 14. The number of pending sales for REOs has fallen about the same rate in the past month. Partially due to the drop in the supply of less-expensive foreclosure homes, metro Phoenix’s median home price is hovering around $109,500, up $1,000 from a month ago. The Arizona Regional Multiple Listing Service’s pending-sales index shows the region’s median price could drop to $100,000 in a few months. However, the Realtor group also readily acknowledges its index is less accurate for months farther out. Pre-foreclosures are the best leading indicator for tracking metro Phoenix’s housing market. Known as notice of trustee sales, pre-foreclosures include all new filings by lenders against borrowers who have missed at least three mortgage payments. In January, pre-foreclosures climbed by 1,000 to almost 6,500, the highest level since October, according to the Information Market. The increase is likely a signal of more foreclosures to come in the next few months. If lenders continue to foreclose and list REOs for bargain prices to resell them quickly, there’s a great chance Phoenix’s median home-sales price will fall to $100,000 in the next few months. Unfortunately, the federal government’s loan-modification plan isn’t helping nearly as many homeowners as expected. Lenders’ decisions also play an important role in those foreclosure-prevention efforts. HAMP update The federal Housing Affordable Modification Program is nearly 2 years old, and so far it has helped fewer than 27,000 metro Phoenix homeowners lower their mortgage payments to avoid foreclosure. At the end of 2010, about 5,000 homeowners were in trial modifications. The federal government defends the program but is frustrated with lenders. The $75 billion HAMP program was supposed to help 3 million to 4 million eligible homeowners facing foreclosure. It hasn’t failed to meet expectations only in metro Phoenix. The number of U.S. homeowners who have avoided losing their homes through HAMP is less than 1 million. Can something be done to overhaul the program and spend the money to help homeowners and struggling housing markets? by Catherine Reagor The Arizona Republic Feb. 16, 2011 12:00 AM Number of foreclosures in Valley rose in January
Goodyear targets 2014 for mall (2011-02-19 13:23) Phoenix-based developer Westcor will begin construction of the Estrella Falls mall as early as 2012, and the long-awaited regional mall is expected to open in 2014, Goodyear officials said Wednesday. Construction of the mall has been delayed three times. The Goodyear City Council approved the most recent delay in 2009, when Westcor said tenants were reluctant to commit to an opening date. Westcor paid Goodyear about $1.3 million in plan-review and permit fees in exchange for an extension into 2014. The company would have had to pay Goodyear $1.25 million this year if the project were stalled any longer. ”Westcor has confirmed for us that Estrella Falls mall will be here in Goodyear in 2014,” said John Fischbach, Goodyear city manager. ”We’re expecting that construction will get started next year.” 33
Macerich, Westcor’s California-based parent company, announced the move last week. ”We will, in fact, be developing in that Arizona marketplace because the time will be right for us to do it,” Macerich said in a statement. ”By the end of this year, we will pull the trigger on our Goodyear development.” The mall is planned northwest of McDowell Road and Bullard Avenue. Previous plans included tenants such as Dillard’s, Macy’s and Harkins Theatres. Westcor officials declined to comment on tenant commitments. Karen Maurer, a Westcor representative, said the company would not disclose retail companies until nearly a year before the project’s completion. Estrella Falls mall is projected to have about 1.2 million square feet of retail space. by Eddi Trevizo The Arizona Republic Feb. 17, 2011 12:00 AM Goodyear targets 2014 for mall
Group OKs $34 million loan to build CityScape hotel (2011-02-19 13:26) The developer of downtown Phoenix’s CityScape project has secured a $34.3 million loan from a non-profit board to help cover construction costs for the 242-room Palomar Hotel. This is the fifth loan RED Development has received for CityScape construction costs from the non-profit Phoenix Community Development and Investment Corporation, a participant in a U.S. Department of Treasury community-development program. RED has received more than $82 million in loans from the corporation for retail and office construction. The latest loan, which is good for seven years, covers a portion of the cost of the $90 million hotel, which is expected to be finished by next year. RED’s development manager, Jeff Moloznik, said opportunities for construction loans have narrowed due to the economic slowdown, which prompted RED to approach the corporation last fall. ”Effectively what we witnessed in the market is there’s this gap between the amount a developer like us can borrow, and the amount of money that can be loaned,” Moloznik said. Previously, borrowers could get a loan with a loan-to-cost ratio of 80 percent, enabling them to borrow more money to pay for the bulk of the project while leveraging equity for the remaining 20 percent, he said. The ratio has fallen, he said, to a 50 percent loan-to-cost ratio, which many investors find unappealing. This means the remaining 50 percent would be covered by an investor deemed, in loan terms, ”subordinate.” If the project fell apart, and the full loan wasn’t repaid, the subordinate might never recover the full investment. ”So we reached out to the (corporation) to bridge that gap,” Moloznik said. To receive the financing, RED committed to starting a $1 million endowment for low- to moderate-income students seeking four-year degrees at accredited universities. RED also agreed to work with the city to hire and train low-income workers to fill lower- to middle-management jobs at the Palomar. In turn, the city will create a customized training program, said Roberto Franco, president of the Phoenix corporation. The Phoenix corporation is an organization independent of the city, but three of its seven board members are city staff - Franco, an assistant community and economic development director; finance chief Jeff DeWitt; and deputy city manager Jerome Miller. The other four members are community leaders - George Dean of the Greater Phoenix Urban League, Pete Garcia of the Victoria Foundation, Patricia Garcia Duarte of Neighborhood Housing Services, and Don Keuth of Phoenix Community Alliance. The organization issues what are called ”new markets tax credit” loans, which are regulated by the U.S. Treasury and meant to fund development in impoverished areas. Most borrowers repay the loans before the seven-year mark, and then the corporation must fund new projects with the repaid money. The hotel at CityScape is benefiting from repayment of a $44.5 million loan for a warehouse at 51st Avenue and Mohave Road that Amazon.com moved into. Karen Leone, vice president and treasurer for the Phoenix corporation, said 23 loans in Phoenix had been issued under the federal program since the corporation board was organized in 2003. 34
Some projects that received loans were the Maryvale YMCA, the Hacienda Skilled Nursing Facility for children’s health care, and the rehabilitation of the former Phoenix Union High School for the University of Arizona College of Medicine-Phoenix campus downtown. According to Treasury, the federal program allows taxpayers to receive credits against their federal income taxes when they invest equity in community-development groups such as the Phoenix corporation. Treasury determines which organizations are qualified to handle the special loans. Treasury also pinpoints the low-income areas of a city where a project must be located to receive the special tax-credit loans. Those areas are determined according to the 10-year census results. In Phoenix, federal officials consider downtown a low-income area that qualifies for the corporation’s loans. by Emily Gersema The Arizona Republic Feb. 17, 2011 12:00 AM Group OKs $34 million loan to build CityScape hotel
Arizona’s economy on the rise, expert says (2011-02-19 13:48) It may not seem like much of a recovery for Arizonans hobbled by job losses or falling home values, but the state’s economy actually is improving at a solid clip. So says Nathaniel Karp, chief economist for BBVA Compass and one of the few bank economists who tracks conditions here. ”Arizona’s economic recovery is among the fastest in the country,” said Karp, speaking to BBVA Compass clients in Phoenix this week. ”And we’re seeing a faster recovery compared to a few months ago.” Karp acknowledged challenges remain for both Arizona and the nation. Arizona’s state budget is in particularly bad shape, including unfunded pension liabilities, he said. But he also pointed to relatively strong manufacturing gains and exports, especially in software and other technology items. Other positives include an increase in hours worked for Arizonans with jobs and moderating price declines for home values here. Karp predicted Arizona’s economy would grow 3.4 percent in 2011, better than his projected 3 percent expansion for the U.S. On the national economy, Karp sees continuing mild inflation and moderately rising interest rates, despite sharper price increases for oil and various other commodities. He doesn’t see commercial real estate bottoming until summer, but said confidence among business leaders had risen after Congress extended income-tax laws and signaled greater clarity in regulation. Another bank economist who spoke in Phoenix recently, Paul Kasriel of Northern Trust, also sees gradual economic improvement for the nation in 2011. In an interview, Kasriel said he expected the U.S. economy to grow 3.3 percent this year, helped by exports, consumer spending and a gradual uptick in lending. Housing and state/municipal finances will act as drags. He didn’t provide a forecast for Arizona’s economy. Kasriel sees mild inflation, along with slightly higher interest rates. He expects the national unemployment rate, currently at 9 percent, to dip to 8.6 percent by year’s end. ”I think the worst is over for housing, and it should show improvements by the end of the year,” he said. ”Housing now is a better buy than it’s been in 40 years.” While Kasriel doesn’t see a big drop in the unemployment rate, he said the employment picture had stabilized. ”If you’ve been able to hang onto a job for the last several years, there’s an increasing probability you’ll stay employed,” he said. ”We couldn’t have said that two years ago.” by Russ Wiles The Arizona Republic Feb. 18, 2011 12:00 AM Arizona’s economy on the rise, expert says
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Fed may reconsider plan to limit debit-card fees (2011-02-19 13:50) WASHINGTON - The Federal Reserve told Congress on Thursday that it may reconsider its proposal to limit the fee that banks charge merchants for debit-card transactions to 12 cents per swipe, the latest twist in a battle over billions of dollars. Fed Governor Sarah Bloom Raskin made the remark at a House hearing at which lawmakers of both parties attacked the Fed’s plan and asked her to reconsider, saying it would batter banks still reeling from the 2008 financial crisis. At a separate hearing, Fed Chairman Ben Bernanke said the central bank may drop an exemption its proposal would allow for smaller banks because it might leave them charging higher fees, putting them at a competitive disadvantage. The financial-overhaul bill that President Barack Obama and Congress enacted last summer ordered the Fed to issue rules that would set the fees at a reasonable rate. Currently, merchants typically pay between 1 and 2 percent of the transaction’s total and those charges average about 44 cents. The question of where to set the fees has triggered a lobbying battle pitting merchants and some consumer groups against banks and credit-card networks. The Fed’s proposed 12-cent cap would be a major victory for merchants. Associated Press Feb. 18, 2011 12:00 AM Fed may reconsider plan to limit debit-card fees
Robb & Stucky files for Ch. 11 (2011-02-19 14:18) High-end furniture retailer Robb & Stucky is the latest casualty of the sluggish economy and changing shopping patterns. The retailer, based in Fort Myers, Fla., maintains a design center and patio showroom in Scottsdale at 15440 N. Scottsdale Road. Robb & Stucky filed for Chapter 11 bankruptcy protection on Friday. The company employs about 1,300 people and isn’t contemplating store closings for now, spokeswoman Michelle Campbell said. Dan Lubner, president of Robb & Stucky’s hospitality-design division, said the company would use the Chapter 11 process to find a buyer for the company. Its stores will remain open as it navigates the sale process. ”At this time, we are focused on charting a path that will lead us into the future,” Lubner said. ”We are endeavoring to locate a buyer that will maintain the company’s brand standards, associates team and strong focus on customer needs and service.” The difficulties confronting Robb & Stucky stem from the challenges that have affected many real-estaterelated industries since the housing market began its slide in 2007. The home-furnishings industry was among the hardest hit by the significant decrease in consumer spending in the recent recession. The company has secured commitments for debtor-in-possession financing that will be used to fund operations pending the transaction. Founded in 1915 in Fort Myers as a one-store general merchandise emporium, Robb & Stucky has evolved into a nationally recognized chain of 30 stores in Florida, Texas, Arizona, North Carolina and Nevada. by Max Jarman The Arizona Republic Feb. 18, 2011 03:11 PM Robb & Stucky files for Ch. 11
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10 steps to a brighter financial future (2011-02-19 14:20) The annual income-tax filing ritual entails more than just calculating your tax liability. It’s also an opportunity to step back and assess your broader financial picture on a set schedule each year. Although solid planning goes well beyond tax issues, a careful check of your personal data for the past year provides a starting point to see whether you’re heading in the right direction. Here are some tips to evaluate your situation with the aim of improving things over the course of 2011: 1. Know where you stand. Take your financial pulse by examining your cash flow and net worth. Track income and expenses by compiling a monthly budget. Then list assets against debts to determine your net worth. Income-tax returns don’t provide a full picture of where you’ve been spending money, because not all expenses are deductible. But they can help show your income trend and highlight some large expenditures. 2. Look for tax savings. It’s mostly too late to make changes that can help shave your tax liability for 2010. But it’s a good time to start planning strategies for the future. Gale Northrop, a Charles Schwab branch manager in Peoria, suggests putting money in tax-sheltered retirement accounts as early in the year as possible. In fact, you still might be able to invest in an Individual Retirement Account and take a deduction for 2010, as IRAs offer one of the last remaining tax-saving tips for the current season. Now’s also a good time to ponder tax withholding. If you usually get a big refund, consider withholding a bit less so you have access to the cash earlier. ”Having access to the money throughout the year allows you to budget better,” said Ericka Young, a financial coach at Tailor-Made Budgets in Gilbert. She says that big refunds also represent interest-free loans you’re making to Uncle Sam. 3. Check your credit. Are your debts listed accurately and have you been paying bills on time? Track your progress by examining your credit reports, which include your payment history, debts incurred and other issues, such as bankruptcies and legal judgments, if any. You can order a free report each year from each of the three credit-reporting bureaus through annualcreditreport.com. It’s important to keep an eye on your reports because the information contained in them will affect your credit scores. 4. Improve your creditworthiness. If you don’t have a solid credit history, you’ll have problems securing loans on good terms. You also might find it tougher to rent an apartment, obtain insurance or even land a job, because banks aren’t the only parties that might check your credit records. The most direct indicator of good credit behavior involves simply paying bills when due and cutting debt over time. ”Reduce your credit-card debt by making above-the-minimum payments on your highest (interest) credit card first,” said Cynthia Fick of Financial Life Planners, an investment-advisory firm in Ahwatukee Foothills. After that, she suggests striving to pay off the card carrying the next highest interest rate while continuing to pay at least the minimums on all others. 5. Build up savings. With the economy so unsteady, it’s smart to have a reserve to cover emergencies or even living costs if you lose your job. Advisers used to recommend compiling enough cash to cover at least three months of living expenses. But many now suggest a bigger cushion because it can take much longer to find employment today. Young suggests a cash reserve equal to six months of expenses. 37
”That’s more achievable than 12 months, yet it still might take that long to find the job you want.” With your rainy-day fund in place, you can turn to longer-term saving and investing goals. Fick suggests that you watch spending and create money rules in conjunction with your spouse or significant other. ”For example, agree that neither one of you will spend over $400 without discussing it with the other first,” she said. 6. Boost retirement contributions. If you invest in retirement accounts such as IRAs and 401(k) plans, you don’t pay taxes on earnings until you withdraw the funds. That means you can benefit from decades of tax-sheltered growth. But tax deferral is just one reason to sock away money in retirement accounts. You also likely will receive employer-matching funds in the case of 401(k) accounts. Plus, you can reduce your taxable income by some, if not all, of the money you contribute to retirement accounts. In a recent study of women earning $75,000 or more in annual income, the MetLife Mature Market Institute found that nearly 2 out of 3 wonder whether they’ll have enough money to retire, and nearly half worry that they’ll outlive their assets. 7. Invest more aggressively. Many people currently are shell-shocked from past stock-market losses, and studies have shown women to be more cautious investors than men. This isn’t necessarily good, since women must build up more assets in preparation for retirement and other demands. If you won’t need to tap your account for many years, lean toward broadly diversified stock mutual funds, exchange-traded funds or other growth assets in a diversified portfolio. ”Invest wisely by having lots of different eggs in lots of different baskets,” Fick suggests. ”If you’re too conservative, mainly by sticking with bonds and certificates of deposit, you give up so much potential upside,” Northrop said. 8. Go electronic. The Internet has made it easier to conduct routine business. Look to deposit paychecks automatically and sign up for automatic bill paying. You’ll reduce the chance of theft, save postage costs and perhaps avoid late-payment fees. While you’re at it, sign up for electronic alerts that can notify you of unauthorized activity in your bank, credit-card or investment accounts. 9. Cover your assets. Everyone should prepare for the unexpected. In the insurance area, this includes car, health, disability and homeowners (or renters) coverage. Another type of insurance that may prove particularly helpful, especially for women, is long-term-care coverage, which pays for nursing-home, assisted-living and other types of care. Because women tend to live longer than men, they stand a greater chance of needing such benefits. 10. Add other protections. Then there’s estate planning. If you have children, a will is essential for naming a guardian to care for them in your absence. Another handy document is the financial power of attorney, which lets you to name someone to make money decisions on your behalf if you’re alive but incapacitated. The health-care power of attorney allows the same with medical decisions. Taking it a step further, you might consider setting up a living trust. Among other benefits, trusts let you leave assets to family members or friends in exactly the manner you wish, without subjecting them to the time, hassles or costs of probate-court involvement. These and other documents should be reviewed periodically, with beneficiaries listed properly. ”You should update them any time you have a major life change such as a birth, death, divorce, marriage or child turning into an adult,” said Susan Faris, founder of the Estate Plan Store in Phoenix. You should also make sure the documents can be located easily in a pinch. by Russ Wiles The Arizona Republic Feb. 19, 2011 12:00 AM 38
10 steps to a brighter financial future
Bernanke calls for nations to rebalance gaps in trade (2011-02-19 14:24) PARIS - Federal Reserve Chairman Ben Bernanke on Friday urged countries with large trade surpluses, such as China, to let their currencies rise in value to help prevent another global financial crisis. He also called on nations with persistent trade deficits, such as the United States, to narrow budget shortfalls and save more. Both steps would help balance trade and investment flows among countries, Bernanke said in a speech at a financial conference in Paris. Many countries worry about speculative money flooding their economies and inflating assets like real estate or stocks. ”None of these changes will be easy or immediate,” Bernanke said. The flow of capital and global imbalances more generally were expected to be on the table at the Group of 20 industrialized and emerging nations meeting in Paris, which began Friday and continues today. Bernanke and Treasury Secretary Timothy Geithner are representing the United States. ”If there is no stabilizing system, then you can have situation where like today, you have a two-speed recovery and demand is not optimally allocated around the world,” Bernanke said in a question-and-answer session following his speech. Emerging economies such as China are growing quickly, while industrialized countries such as the United States are expanding only slowly. In his call for a rebalancing of the global economy, the Fed chairman singled out no specific countries. Instead, he urged those with large trade surpluses to let their currencies rise freely, encourage consumers to spend more and rely less on export-led growth. That was a reference to China. Similarly, Bernanke said countries with sizable trade deficits must reduce government spending over time. This reference was to the United States. The Fed chief’s tone was milder than in a speech he gave in November when he struck back at China and other global critics for challenging the Fed’s $600 billion Treasury bond-purchase program. The purchases are intended to lower interest rates, lift stock prices and encourage more spending by U.S. consumers and businesses. Critics have said the bond purchases could help ignite inflation or speculative investment. China and some other countries called the purchases a scheme to drive down the dollar and give U.S. exporters an unfair edge. A lower dollar makes U.S. products cheaper. Emerging countries such as Thailand and Indonesia feared that falling Treasury yields would send money flooding their way in search of higher returns. Those markets could be left vulnerable to a crash if investors later decided to pull out and move their money elsewhere. In his November speech, Bernanke warned China that it and other developing nations were putting the global economy at risk by keeping their currencies artificially low. Bernanke struck a more professorial tone in his remarks Friday. He stressed that countries must collaborate to confront financial threats. And he didn’t specifically discuss the Fed’s bond-purchase program. Looking back at the global financial crisis, the Fed chief said the United States and other countries share blame. Countries with trade surpluses plowed money into mortgage and other investments in the United States, helping escalate their value. Bernanke said a paper he co-wrote and presented to the financial-stability forum in Paris confirms this. But he also said the United States failed to safely absorb money flooding in from emerging nations such as China, Middle Eastern oil countries and industrialized countries in Europe. by Greg Keller and Jeannine Aversa Associated Press Feb. 19, 2011 12:00 AM Bernanke calls for nations to rebalance gaps in trade 39
Shanghai, Guangzhou Limit Home Buying After China Orders Curbs - Businessweek (2011-02-20 08:38)
Feb. 21 (Bloomberg) – Shanghai and Guangzhou joined China s capital, Beijing, in announcing restrictions on home purchases, responding to property curbs imposed by the central government aimed at preventing a housing bubble. The two cities will ban local residents who own two or more homes from buying more property and non-local homeowners from making additional purchases, according to the state-run Xinhua News Agency and the Guangzhou Daily on Feb. 19. Other cities with similar plans include Nanjing and Harbin, Xinhua reported. China extended property curbs last month, including raising the minimum down payment for second-home purchases, telling local governments to set price targets on new properties and introducing taxes on residential homes in Shanghai and Chongqing. The central bank raised interest rates on Feb. 8 for the third time in four months. The housing market will be subdued in February because of the tightening of monetary and property policies, including new rules on home purchases, Shen Jianguang, Hong Kong-based chief economist at Mizuho Securities Asia Ltd., said in a note dated Feb. 18. China s property prices may fall by more than 5 percent nationwide this year, with first-tier cities seeing declines of more than 10 percent, he said. New Home Prices China s January new home prices rose from a year earlier in 68 of the 70 cities monitored by the government, defying the new property curbs, the statistics bureau said on Feb. 18. The measures by Shanghai and Guangzhou follow similar rules in Beijing, where the municipal government added a requirement for nonresidents to provide five years of tax documentation to buy apartments in the capital. Families not local to Shanghai can t buy property without showing they paid tax for at least a year, according to the Xinhua report on Feb. 19. January new home prices advanced 6.8 percent from last year in Beijing and climbed 1.5 percent in Shanghai, the statistics bureau said. Haikou had the biggest gain, surging 21.6 percent, and 10 cities had increases exceeding 10 percent. The price rise was largely due to expectations for stricter regulations ahead and will come to an end soon, Mizuho s Shen said in the note. Chinese Premier Wen Jiabao pledged to curb property speculation and add more affordable housing in his Feb. 1 Lunar New Year speech. The country needs to resolutely control the property market and keep prices stable, he said. China Vanke Co. and Poly Real Estate Group Co. are the nation s largest property developers. by Chua Baizhen and Paul Tighe and Jim McDonald Bloomberg News February 20, 2011 Shanghai, Guangzhou Limit Home Buying After China Orders Curbs - Businessweek
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Yahoo! Finance - Financially Fit (2011-02-20 08:47)
Never borrow against a 401(k). Avoid credit cards. Make a bigger down payment on your home or apartment to avoid paying extra mortgage interest. These are among the tried-and-true financial rules consumers have been told to live by for years. But now – with interest rates still low and credit staging a comeback – might be a good time to break them. This solid financial advice isn’t suddenly all wrong, but many of these axioms no longer result in higher savings or less debt. That’s because the economic recovery has opened up more exceptions and loopholes to standard advice, says David Peterson, president of Peak Capital Investment Services, a financial planning firm. Advisers, for example, typically discouraged clients from taking a loan from their 401(k) – but this is now the cheapest way to borrow money, with the average rate at 4.25 %, lower than most personal loans, to pay back debt they racked up during the recession. But as some parts of the economy have improved – equities are once again outperforming fixed income, banks are slowly returning to lending, and consumers are spending more – the rules for making and saving money are changing, at least temporarily. Here are four traditional money rules you can break – at least for now. 401(k) Loans Old school advice: Avoid taking one at all costs. Now: The most affordable loan available. For decades, borrowing from a 401(k) plan was synonymous to derailing retirement savings. But right now, the cheapest bank for many borrowers – especially those who feel secure in their job – is their own 401(k). Average interest rates on credit cards are 14 % and on home equity lines of credit 5.22 %. But a 401(k) loan charges a fixed average of prime (currently 3.25 %) plus 1 %, according to the Profit Sharing/401(k) Council of America. Approximately 90 % of employers offering 401(k)s permit employees to borrow from them, according to the PSCA, and the loans can last for up to 15 years. These loans make most sense for consumers stuck with high-interest credit card debt. In a year, a borrower can save around $800 in interest with a loan that eliminates a $5,000 balance on a card with a 20 % interest rate. And the money the borrower pays back goes into their 401(k) – not to a bank. Repaying can also be easier than it is with a regular loan, says Olivia Mitchell, professor at the University of Pennsylvania Wharton School, who recently coauthored a study on 401(k) loans. About 60 million people contribute to a 401(k), according to the PSCA; once a loan is taken out, any contributions made via automatic payroll deductions first go toward paying down the loan. But, there are still some pitfalls: If you lose your job or leave it voluntarily and can’t pay the loan back within 90 days you’ll be hit with federal income tax on the outstanding amount, plus a 10 % penalty if less than age 59 1/2. And you’ll need to reallocate some of what remains into higher-yielding equities until the account is made whole, to avoid missing out on potential gains, says David Wray, president of the PSCA. Roth IRAs 41
Old school advice: Convert a traditional IRA into a Roth to save on taxes. Now: Stick with the IRA. The Roth IRA’s appeal has always been that contributions, rather than withdrawals, are taxed, shifting the tax burden to pre-retirement instead of years down the road when taxes could be higher. Roth IRAs became even more user-friendly last year when taxpayers were allowed to convert from a traditional IRA regardless of income (the limit for conversions had been $100,000 modified adjusted-growth income). But in many cases, staying put in a traditional IRA will lead to bigger savings – especially for people five to 10 years away from when they plan to withdraw their money, says Peterson. Here’s why: It can take years of tax-free growth to make up the taxes incurred during the conversion. For example, someone who converts $100,000 from a traditional to a Roth IRA and pays $30,000 in taxes will need at least five years to make that money back – assuming a 7 % rate of return. And that doesn’t address the loss of compounding that would have occurred if that money didn’t go toward paying taxes, says Sheryl Garrett, a fee-only certified financial planner. There’s also less time to pay taxes on this conversion now. Savers who converted from a traditional IRA to a Roth IRA last year were able to spread the income from that conversion over 2011 and 2012. But now, all of the income from a conversion made in 2011 (and after) is taxable at once. Also, this conversion comes with the risk of getting bumped to a higher tax bracket during that year because the money counts as income – so converting might not make sense for someone whose budget is currently stretched thin. Instead, savers might now want to convert a smaller amount gradually once a year that won’t put them into different bracket, says Garrett. Mortgages Old school advice: Choose the mortgage with the smallest interest payments. Now: Go with more interest. Paying the least interest on a mortgage requires two steps: a down payment of at least 20 % and paying down the loan quickly. But both strategies can create a setback for a borrower – especially in still-uncertain housing and employment markets, says Chip Cummings, president of Northwind Financial, a training and consulting company for mortgage firms. With interest rates still low, instead of throwing most of their money into the home – where some of it could be lost if home values decline – consumers might want to make a down payment of 10 %. Keep the extra cash in an emergency fund in case of sudden job loss or unexpected renovations and take on the added cost of private mortgage insurance. PMI varies, but on average is 60 basis points. On a $300,000 30-year mortgage, a borrower keeps an extra $30,000 in cash and pays $1,800 a year just in PMI until he or she hits the 22 % equity threshold. What’s more, a 30-year mortgage, rather than a 15-year one, is one good way to build a savings safety net, says Keith Gumbinger, vice president at HSH Associates, which tracks the mortgage market. On average, monthly payments are 20 % to 30 % smaller with a 30-year mortgage, he says. That extra money could be stashed in savings for a rainy day or to pay the mortgage if you lose your job. Credit Cards Old school advice: Refrain from using them. Now: Swipe – with caution. Stashing credit cards in a bank safe deposit box or freezing them in a block of ice were commonplace for many consumers during the recession in an attempt to lower spending and take time to pay down cards. But now, it seems that in order to hold onto a good credit score and access to credit cards in case of an emergency, borrowers need to make more purchases using them. Prime borrowers who stop using their credit cards will find their credit lines slashed or closed – largely because their accounts are unprofitable since there’s no balance to charge interest on, says John Ulzheimer, president of consumer education for SmartCredit.com, a credit-monitoring web site. The median FICO score of borrowers with no trigger event, like a missed payment, who’ve been affected, is 770, according to a 2010 study by Fair Isaac. The result is a higher amount of credit card debt compared 42
to total credit limits available, a ratio that can contribute to about 30 % of their credit score. Use your credit cards at least once every three months – and pay the balance off in full each time – to avoid this, says Ulzheimer. by AnnaMaria Andriotis Yahoo Finance February 19, 2011 Yahoo! Finance - Financially Fit ronneyrocks (2011-02-20 21:12:48) Sign up in Launch jacking review and win an Ipad and many more.It provides excellent oppurtunities for Internet Marketers for their substantial income.
Market upswing greeted by indifference (2011-02-20 14:52) What if they threw a stock-market party and nobody celebrated? That seems to describe the current climate, in which a robust rally - one of the strongest ever - has been greeted with little fanfare and not much attention. If anything, distrust and wariness are better descriptions of the public reaction. Perhaps that’s not surprising given that plenty of Americans still aren’t convinced the recession has ended, what with a persistently high unemployment rate and soft real-estate values. Besides, frayed emotions still haven’t entirely mended from the shellacking the market took in 2008 and early 2009. But you also could argue the current mood is not exactly the reaction one would expect after a surge of 108 percent - the current gain for the broad-based Wilshire 5000 index since it bottomed on March 9, 2009. The more visible Dow Jones industrial average and Standard & Poor’s 500 are up 89 percent and 99 percent, respectively, since then, excluding dividends. If people are talking hot stock tips around the watercooler, I’m not hearing them. An ongoing investor-sentiment index compiled by the American Association of Individual Investors has slipped noticeably in recent weeks, although it’s showing investors still are generally more bullish than bearish. Cash flows into stock mutual funds have turned moderately positive in recent weeks, but that’s after investors pulled a net $29 billion out of stock funds in 2010 while pumping $246 billion into bond funds. Even President Barack Obama took a poke at the stock market during his State of the Union address, vowing not to expose Social Security recipients to the ”whims” of the market. This half-empty view of the market also was evident at a recent meeting of the Phoenix Chartered Financial Analyst Society, where guest money-manager commentators split sharply on where prices might be heading. In the bullish camp, David Goerz, chief investment officer at HighMark Capital Management in San Francisco, said he was optimistic about the economy and stocks going forward. He cited several economic catalysts that he believes remain in place, from inventory restocking and rising business spending to robust exports and resilient consumer spending. ”American ingenuity and innovation are as strong as they’ve ever been,” he said. David Tice, former portfolio manager of what is now the Federated Prudent Bear Fund, took an opposite position, predicting sharp drops for stocks and further price gains for gold and other commodities. The country needs to ”clean out the excesses,” he said, citing higher government debts as a big worry. ”The market will go down, in our opinion,” Tice said. Komal Sri-Kumar, group managing director at Los Angeles investment firm TCW, took the middle road. He sees strong growth for the economy more than the first half of 2011, due largely to stimulus efforts, to be followed by a slowdown starting around the middle of the year. Sri-Kumar also said he believed political turmoil in Egypt and other Middle Eastern nations could disrupt oil supplies enough to push up gasoline prices and put a damper on global economic growth. 43
Jason Trennert, chief investment strategist at New York-based Strategas Research Partners, said strong corporate earnings make him bullish for the next year or so. ”I wouldn’t be surprised to see new highs for the Standard & Poor’s 500,” Trennert said. But he also cited the overhang of rising government deficits and Federal Reserve monetary expansion as long-term concerns. ”Eventually, the bill will come due,” he said. In a comment that nicely captures the current mood on Wall Street, Trennert said he’s ”dancing until the music stops.” Concerns cited by pessimists aren’t easy to dismiss, especially with stock prices no longer in bargain-basement territory. Anytime anything doubles in price over a fairly short span, it should give investors reason to be cautious. Even so, the muffled yawns that have accompanied this advance are an odd sign, and probably a bullish one, because all this implies a lot of potential buyers haven’t moved off the sidelines. The lack of anything remotely resembling euphoria could mean the rally isn’t over yet. by Russ Wiles The Arizona Republic Feb. 20, 2011 12:00 AM Market upswing greeted by indifference
Global Economy - G20 sceptics wait for shift in behaviour (2011-02-20 15:00) If the French thought that chairing the G20 this year would involve smiling benignly as its members happily reordered the world economy around them, they will have been disillusioned by this weekend s meeting of finance ministers in Paris. Although the gathering cobbled together a set of economic indicators whose monitoring by the International Monetary Fund is intended to help rebalance the global economy, the difficulty in agreeing the list does not inspire confidence that the exercise will prompt G20 members to change their behaviour. In the face of determined and often solo opposition from China, the finance ministers did not mention foreign exchange reserves in the list of indicators. The communiqué also folded plans for specific guidelines on real exchange rates and current account balances into a broader commitment to monitor the external imbalance composed of the trade balance and net investment income flows and transfers, taking due consideration of exchange rate, fiscal, monetary and other policies . Christine Lagarde, the French finance minister who chaired the meeting, said: The negotiations have been frank and sometimes tense, but always respectful. It has not been simple. The agreement, she added, represented a spirit of compromise . Wolfgang Schäuble, German finance minister, said the outcome was a result which we all can live with . Participants said that with Tim Geithner, US Treasury secretary, at one end of the spectrum pushing for binding commitments and China at the other trying to remove all references to exchange rates, Germany manoeuvred itself into the position of being a conciliator. Mr Schäuble, who has faced criticism for Germany s own current account surplus, helped to persuade Xie Xuren, his Chinese counterpart, to accept a compromise that would not involve setting numerical targets. Mr Geithner declared himself happy with the outcome, but the episode will have done nothing to convince the many sceptics who say that the indicator debate will be just another episode in the long history of trying to use IMF analysis and moral suasion to achieve global rebalancing. Dan Price, an enthusiast for the G20 heads of government process who helped to set it up in 2008 when he was a White House official, lauded the remarkable success of the G20 in putting on the table for international discussion topics that major players once considered solely within their domestic discretion . 44
But even he conceded that progress is incremental rather than seismic . And most officials with inside experience of trying to use IMF analysis as a lever to achieve such goals as getting China to alter currency policy held out much less hope that agreement on the indicators would lead to real change. Ousmène Mandeng, head of public sector investment at Ashmore Investment Management and a former deputy division chief at the IMF, said the outcome of the G20 talks was a big disappointment , and that the communique sank to the lowest common denominator. Plans for greater IMF surveillance, he said, represented almost no advance on the fund s current functions. The fundamental problem is whether [IMF] surveillance is truly effective, Mr Mandeng said. If you look at the record you must conclude that it is not. He said the G20 should stop trying to create unenforceable obligations and instead think more creatively to change governments incentives. Another phenomenon on display was China s willingness to continue fighting on its own in the G20 if necessary. Though it generally dislikes being isolated in international discussions, Beijing was not put off by the concern shown by other emerging markets such as Brazil about the renminbi. Its determination suggests more struggles ahead. The outcome reveals how central China has become to global macroeconomic management and how much clout it has in international policy discussions, said Eswar Prasad, former head of the IMF s China division. With the rest of the G20 arrayed against it, China still managed to hold its own. by Financial Times February 20, 2011 FT.com / Global Economy - G20 sceptics wait for shift in behaviour
Statute of Limitations on Debts (2011-02-21 11:11) Below are the State Statutes of Limitations for various kinds of agreements. All figures are in years. Oral Contract: You agree to pay money loaned to you by someone, but this contract or agreement is verbal (i.e., no written contract, ”handshake agreement”). Remember a verbal contract is legal, if tougher to prove in court. Written Contract: You agree to pay on a loan under the terms written in a document, which you and your debtor have signed. Promissory Note: You agree to pay on a loan via a written contract, just like the written contract. The big difference between a promissory note and a regular written contract is that the scheduled payments and interest on the loan also is spelled out in the promissory note. A mortgage is an example of a promissory note. Open-ended Accounts: These are revolving lines of credit with varying balances. The best example is a credit card account. Please note: a credit card is ALWAYS an open account. This is established under the Truth-in-Lending Act: TITLE 15 > CHAPTER 41 > SUBCHAPTER I > Part A > § 1602 § 1602. Definitions and rules of construction(i) The term open end credit plan means a plan under which the creditor reasonably contemplates repeated transactions, which prescribes the terms of such transactions, and which provides for a finance charge which may be computed from time to time on the outstanding unpaid balance. A credit plan which is an open end credit plan within the meaning of the preceding sentence is an open end credit plan even if credit information is verified from time to time. Keep in mind, though, that the state statute of limitations on a credit card may come down to whether the agreement is in writing or not; whether it meets the required elements of a written contract. For instance, 45
in Missouri if the creditor is able to produce a written credit card contract, then the 10 year statute applies. If the creditor cannot show the existence of a written contract, then the 5 year statute would apply - credit card or not. Here is case law in Missouri to illustrate this point: In Capital One Bank v. Creed, 220 S.W.3d 874 (S.D. Mo.2000), the company alleged the parties entered into a contract, whereby the company would extend credit to the customer. The company alleged that the customer breached the terms of her contract by failing to pay the amounts for which credit was extended. The customer denied the allegations and asserted the affirmative defense that the action was barred by the statute of limitations. The appellate court ruled that the action was barred by the five year statute of limitations under Mo. Rev. Stat. § 516.120 (2000). The customer made a partial payment on December 2, 1999, and the company’s petition was not filed until January 3, 2005. The ten year statute of limitations under Mo. Rev. Stat. § 516.110 was not applicable because the company did not produce a written promise by the customer to pay money. Why should you care about the Statute of Limitations (SOL) When does the Statute of Limitations start on a debt? For Statutes of Limitations on judgments, go here. Want all of the information on this site in one handy book? Order creditinfocenter’s ”Good Credit is Sexy”.
State Oral Written Promissory Open-ended Accounts State Statute: Open Accounts AL 6 6 6 3 §6-2-37 AR 3 5 46
5 3 ยง16-56-105 AK 6 6 3 3 ยง09.10.053 AZ 3 6 6 3 ยง12-543 CA 2 4 4 4 ยง337 CO 6 6 6 47
3 ยง13-80-101 CT 3 6 6 3 ยง52-581 DE 3 3 3 4 ยง2-725 DC 3 3 3 3 ยง12-301 FL 4 5 5 4 48
ยง95.11 GA 4 6 6 6 ** ยง9-3-25 HI 6 6 6 6 HRS 657-1(4) IA 5 10 5 5 ยง614.5 ID 4 5 5 4 ยง5-222 49
IL 5 10 10 5 735 ILCS 5/13-205 IN 6 10 10 6 ยง34-11-2 KS 3 6 5 3 ยง84-3-118 KY 5 15 15 5 ยง413.120 LA 50
10 10 10 3 ยง3-118 ME 6 6 6 6 ยง14-205-752 MD 3 3 6 3 ยง5-101 MA 6 6 6 6 c.260, ยง2 MI 6 51
6 6 6 ยง600.5807 MN 6 6 6 6 ยง541.05 MO 5 10 10 5 ยง516.120 MS 3 3 3 3 ยง15-1-29 MT 5 8 52
8 8 27-2-202 NC 3 3 5 3 ยง1-52(1) ND 6 6 6 6 28-01-16 NE 4 5 5 4 ยง25-206 NH 3 3 6 53
3 382-A:3-118 NJ 6 6 6 6 2A:14-1 NM 4 6 6 4 ยง37-1-4 NV 4 6 3 4 NRS 11.190 NY 6 6 6 6 54
ยง2-213 OH 6 15 15 6 ยง2305.07 OK 3 5 5 3 ยง12-95 OR 6 6 6 6 ยง12.080 PA 4 4 4 4 ยง5525 55
RI 10 5 6 4 ยง6A-2-725 SC 3 3 3 3 SEC 15-3-530 SD 6 6 6 6 ยง15-2-13 TN 6 6 6 6 28-3-109 TX 56
4 4 4 4 ยง16.004 UT 4 6 6 4 78B-2-307 VA 3 5 6 3 8.01-246 VT 6 6 5 3 ยง3-118 WA 3 57
6 6 3 RCW 4.16.080 WI 6 6 10 6 893.43 WV 5 10 6 5 ยง55-2-6 WY 8 10 10 8 ยง1-3-105
** Georgia Court of Appeals came out with a decision on January 24, 2008 in Hill v. American Express that in Georgia the statute of limitations on a credit card is six years after the amount becomes due and payable 58
The material provided in this table for informational purposes only and should not be construed as legal advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Why should you care about the Statute of Limitations (SOL)? Every day, consumers pay off collection accounts and charge-offs which they do not have to pay off because the Statute of Limitations has already expired for the open account. Consumers pay off these accounts because the accounts still appear on their credit reports. This information can be a powerful weapon in unburdening yourself of old debts, as creditors have a limited time in which to sue you. Remember: the Statute of Limitations begins to run from the day the debt - or payment on an open-ended account - was due. Also, this has nothing to do with how long an negative credit item can remain on your credit report. To view these credit reporting rules, click here. Consumers also pay off these accounts when they are not on their credit reports. Even though an account was removed from their credit file, a collector watched their credit report for any activity (actually the computer was watching any credit activity). When the collector spotted the activity, he called the consumer for payment. All the consumer needed to say to the collector was, ”I have an absolute defense–the Statute of Limitations has expired.” The Statute of Limitations does not cause your debt to go away after it expires. If the creditor files suit, the consumer has an absolute defense. The consumer must offer the new evidence to avoid a judgement. The evidence will consist of papers the consumer files to support his claim. If the creditor sues you, and you do not prove to the court that the Statute of Limitations expired, you will have a lost lawsuit and a judgment against you. When does the Statute of Limitations start? You might be asking yourself, ”It has been such a long time since my ”open account” has had any activity. When does my Statute of Limitations started ticking.” There are various opinions on when the SOL starts (thanks to our board membernascar who is a paralegal and provided this opinion): • The first time you fail to make a payment on your account. • The credit card company sends you a demand letter for the full amount. Any can be true, depending on the credit card agreement. Here’s why: The length of the statute varies from state to state and depends on the type of agreement, i.e. oral, written, etc. The one aspect of a statute of limitations that is pretty constant throughout all of US states’ laws is when it begins to run. A statute of limitations, or limitations of action statute, begins to run when a cause of action accrues. In plain English, that means the statute begins to run when you have done something contrary to the terms of your agreement for which you can be sued. Most of the time, that ”something” is failure to pay your bill. When you don t make your payment on time, you have violated the terms of your agreement and you have given the creditor a cause of action. Some credit agreements include an acceleration clause which must be invoked before a creditor has a cause of action. The acceleration clause could be activated by the creditor sending you a demand for payment in full by a certain date. In these instances, you must fail to pay the creditor after it has invoked the acceleration 59
clause before the creditor has a cause of action, and the statute of limitations starts to run. You need to become familiar with the terms and conditions of your specific agreement to know for sure which event triggers a cause of action and thus, begins the running of the statute of limitations. In any case, if the creditor fails to sue you in the time allowed by the applicable statute of limitations, you have an affirmative defense against the creditor’s claim which can serve as a bar to recovery of the delinquent debt. Calculating When the Statute of Limitations (SOL) is Over 1. Take the date cause of action begins (date of last payment or demand letter): 2. Add the number of years of the statute of limitations in your state. Example: You last stopped paying on a credit card on Jan 15, 2001. The company sent you a demand letter for the full amount on July 15, 2001. The statute of limitations for credit cards (usually regarded as open accounts) in your state is 6 years. The date at which you are ”safe” from having a creditor sue you over this debt is: No Acceleration clause: Jan 15, 2001 + 6 years = January 15, 2007 Acceleration clause: July 15, 2001 + 6 years = July 15, 2007. Does a partial payment restart the SOL? Depending on what state you live in, if you make a partial payment, you could be postponing the Statute of Limitations’ taking effect on your collection account or charge-off. A collector might call you one day and say you waived your rights when you made a deal with the collection agency. Do not take anything a collector tells you for granted. Make them prove it to you, in or out of court. For about half the population, the Statute of Limitations started ticking the day they made the last payment for their account. Some states have laws which specify that a partial payment does not restart the clock on the SOL, unless there is a new written promise to pay. What that means is that you actually write out a new agreement with the orginal creditor and/or collection agency. If you live in one of these states, simply sending in a check doesn’t restart the clock. The statute of limitations is only extended by new written promise to pay in these states: Arizona, California, Florida, Iowa, Kansas, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nevada, New York, Texas, Virginia, West Virgina, Wisconsin. Please review the exact state statutes and the fine print associated with them before relying on this website’s info. Your situation may not apply. What state should I use in figuring out the Statute of Limitations? According to Ron Opher, of www.ron4law.com: In my opinion, the FDCPA applies, and so the only relevant jurisdictions are where the consumer signed the loan application and where the consumer currently lives (bank location is irrelevant). If those states are different, I believe the creditor has the choice of where to sue and can select the state with the longer SOL. There may also be an argument that the contract was signed ”under seal” which might lead to a longer Statute of Limitations than an ordinary contract. Summation: Even though a debt is an absolute promise to pay, if the Statute of Limitations expiring is in force and the creditor tries to force you to pay the debt, you have the right not to fulfill the promise (debt). You may also read the FTC’s publication on Time Barred Debts. 60
By CreditInfoCenter.com September 28, 2010 Statute of Limitations on Debts
Tax Liens - Tax Lien Certificates (2011-02-21 11:28)
While no one likes paying taxes, for some, the word ”tax” is synonymous with ”opportunity.” Taxes can sometimes be profitable. Just ask those who own tax credits or participate in tax lien auctions. In fact, a whole new industry has boomed from people that scour local auctions for real estate sales, caused by delinquent taxes. These forced sales, or tax lien sales, are becoming more and more mainstream and popular with the general public. What is a Tax Lien? In most jurisdictions, when a property owner is late on paying real property taxes, the county or municipality will issue a a tax lien on that person’s property. Certain states allow the tax lien to become a first lien on the property, which is then turned around and sold at auction as a tax lien certificate. After placing a successful bid, buyers of a government-issued tax lien certificate will then get one of two things:
1) A state-mandated yield from the lien, which the delinquent taxpayer must pay in order to release the lien, OR 2) Title to the property (after a certain amount of time, set by the jurisdiction) if the delinquent taxpayer fails to pay up. Individuals have been snapping up tax liens more and more because of these two benefits. A fixed percentage rate, mandated by a government agency, or the title to property at a substantial discount are incredible benefits rarely seen with other real estate transactions. Risks In Going It Alone The rewards of tax liens seem promising. Who would balk at the chance to pay a fraction of the cost for a new home, either to collect a fixed penalty from the homeowner or (in case of default) the property itself? However, what many tax lien buyers find out is that, if they did not do proper title and bankruptcy research, their tax liens can become worthless. 61
For instance, creditors and the IRS can take priority over tax lien holders in cases where the original owner of the property declares bankruptcy. In addition, many people purchase properties sight unseen, going just on the description posted prior to auction. Without actual inspections and geographical surveys, sometimes these deeds are worth little more than the paper they’re printed on. Imagine the surprise of a property owner in Texas who, at auction, thought he got a deal on 2 acres of property for $11,000... only to realize the property is completely flooded twice a year.
Yet institutions, like banks and credit unions, have always been able to overcome many of these conditions. Why? Because they had the resources to build relationships with local real estate agents, do the proper title searches and property inspections. These firms realized the potential in tax liens, provided they could ”cover their bases” and ensure each tax lien purchase was a sound one. Individual tax lien purchasers are often burned without doing full inspections of each property they purchase. At auction, tax liens are usually issued based on lot number. Purchasers have no idea whether they’re buying a four-bedroom house or a plot of dirt without inspecting the property. Physical inspections take time, energy and money, and often limits tax lien purchasers to properties within a small area. Participating in Auctions So who can participate in these tax lien sales? Anyone who can legally own property in the U.S. can participate in these sales. Tax lien sales are not for everyone, since purchases must be made in cold, hard cash. As is often the case, the County conducting the tax lien auction will require payment in full in cash within a pre-determied amount of time. Sometimes payment can be made in 48 hours, while others require payment in full on the spot. Thanks to the popularity of such auction sites as eBay, the realm of tax lien sales has also entered the internet age. Many County officials recognize the greater reach and appeal that these properties can have when published online. Several online auction sites specialize in distressed property sales, eliminating the need to show up on the day of the auction. Learn More About Tax Liens When purchasing a tax-distressed property online, be sure to still do your due diligence and homework prior to logging in and placing a bid. Review regional foreclosure listsregularly to find out the types of property currently available. You’d also want to verify the reputation of the authority conducting the auction on behalf of the County. [EMBED] Open publication - Free publishing - More tax liens by SaveWealth.com Tax Liens - Tax Lien Certificates
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Market Recap - week ending 02/18/11 (2011-02-22 18:31) After rising for several weeks, mortgage rates improved a little this week. The news on inflation was not as negative as investors may have feared, and the economic growth data was mixed. The most significant reports on growth, Retail Sales and Industrial Production, both fell short of expectations, which helped mortgage rates. While food and energy prices have been rising globally, overall inflation levels have generally stayed low. The big monthly US inflation reports released this week revealed that core inflation remained low in January, but that it has moved higher over recent months. January CPI was a tame 1.6 % higher than one year ago. Core CPI, which excludes food and energy, was only 1.0 % higher than one year ago. During the week, we also received an early sign that inflation may be higher down the road. The Prices Paid component of the Philly Fed index jumped sharply, reflecting that raw material costs rose. The question is whether companies will be able to pass along higher costs to consumers. The FOMC Minutes from the January 26 Fed meeting were released on Wednesday and contained no major surprises. The minutes revealed that disagreement was growing among Fed officials about the benefits of continuing the quantitative easing program which is scheduled to end in June. However, there was general agreement that the hurdle for altering the program remains very high, and investors continue to expect the Fed to complete the $600 billion in purchases of Treasury securities as originally planned. The Fed raised its forecast for 2011 GDP growth to 3.65 % from their prior estimate of 3.30 % in November. Perhaps the biggest surprise was that the Fed lowered its forecast for 2011 core PCE inflation levels. With all the recent evidence of rising prices, lower inflation predictions were not expected. Next week, Existing Home Sales will be released on Wednesday, and New Home Sales will come out on Thursday. Durable Orders, an important indicator of economic growth, will also be released on Thursday. Revised figures for fourth quarter Gross Domestic Product (GDP) will come out on Friday. Consumer Confidence and Consumer Sentiment will round out the Economic Calendar. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday, which might have a significant impact on mortgage rates. Mortgage markets will be closed on Monday in observance of President’s Day.
Centerpoint project sold; summer debut planned (2011-02-23 06:35)
Jack Kurtz/The Arizona Republic The Centerpoint development has stood dormant for years. Now, the project, renamed West Sixth, has a new owner and is back on a timetable for completion. The towers, near 63
downtown Tempe, may be ready for residents in August. The delay-plagued Centerpoint residential complex has been sold, with the buyer pledging to immediately resume construction on the two luxury high-rise buildings, convert them to apartments and complete the project so that tenants can start moving in beginning in late summer. Zaremba Group, a Cleveland-based developer, paid $30 million for the project in a deal with ML Manager LLC of Peoria that closed Friday. Zaremba will give the project a new name, West Sixth, to reflect its location just west of downtown Tempe. ML Manager is the successor to initial lender Mortgages Ltd., which had extended $135 million in financing on the project. ML Manager was formed to dispose of and maximize the revenue potential from bankrupt Mortgages Ltd.’s remaining assets. Zaremba had announced plans to buy the project last year but backed out over legal issues focused around liens placed on the property by unpaid contractors. The twin high-rise project at 111 W. Sixth St. broke ground in 2005, with developer Tempe Land Co. intending it as a high-end condominium complex featuring an upscale retail plaza, restaurants and a winery. When the developer defaulted, the project was taken over by ML Manager LLC and lingered in an incomplete phase, with nearby businesses and residents complaining that it had become an eyesore. The property failed to sell at a foreclosure auction in April. The project consists of 22-story and 30-story high rises. Phase I, focusing on the 22-story building, will be ready for occupancy by Aug. 1 and include mixed-use retail and restaurant space on the ground floor. Phase II, the 30-story residential tower, will be completed by December, Zaremba said. In total, the buildings will incorporate 375 apartments, which is also the number of condominiums that were originally anticipated. The West Sixth development will feature amenities such as a 9,000-square-foot fitness facility with a yoga studio, tanning beds and lounge. The complex’s resort-style pool area will feature cabanas, fire pits and barbecues. Apartment rental rates haven’t been announced. ”West Sixth offers unmatched amenities and will be the pinnacle for urban lifestyle,” said Kent Chantung, director of residential development for Zaremba Group, in a statement. Zaremba, which manages three other properties in the Valley, specializes in stabilizing distressed housing developments. ”West Sixth represents a significant contribution to growth and construction for the Valley and will expand Tempe’s standing as a significant metropolitan destination,” Chantung said. Zaremba is a third-generation family business that started as a home-remodeling business in 1920. MORE ON THIS TOPIC Centerpoint timeline 2005 July: Groundbreaking for developer Avenue Communities’ first two of four proposed 22-story towers near Mill Avenue and Sixth Street. The price per unit is expected to start at about $250,000. 2006 February: Attorneys for Phoenix question Centerpoint’s height, saying it would affect the safety of planes from Sky Harbor International Airport. October: Federal Aviation Administration gives the go-ahead for Centerpoint’s 30-story tower. 2008 June: Mortgages Ltd., the state’s largest private commercial real-estate lender, files for bankruptcy after the suicide of its CEO. Centerpoint, one of numerous of high-profile Valley developments backed by the lender, is in jeopardy. 64
December: Developers for Centerpoint had worked to get court approval for a second financier to back project. That effort does not result in financing and developer files bankruptcy. Second 30-story tower is about half finished. 2010 January: Towers in foreclosure with auction set for April. April: Towers fail to sell at auction, and ML Manager LLC, successor to Mortgages Ltd., readies to market towers for sale. Area merchants complain that towers are rundown and transients are entering them for shelter. September: Zaremba Group, a Cleveland-based real-estate firm, announced it was buying the complex for $30 million and planned to convert it into apartments. Tenants could be moving into 22-story Tower 1 by March, the developers said. November: Zaremba Group backs out of the deal. 2011 February: Zaremba Group. closes Feb. 18 on a new $30 million deal with ML Manager. Zaremba announces the properties will be renamed West Sixth and should be ready for tenants to move in by late summer. by Russ Wiles The Arizona Republic Feb. 22, 2011 12:00 AM Centerpoint project sold; summer debut planned
Consumer credit-card gains touted (2011-02-23 08:28) NEW YORK - Credit-card customers are facing fewer interest-rate hikes and forking over sharply less in late fees. A year after new regulations curbed a spate of questionable billing practices, federal officials say over-thelimit penalty charges have also been dramatically curtailed. The findings were released by the newly created Consumer Financial Protection Bureau, which will administer the regulations once it’s officially up and running this summer. The agency focused only on the impact of specific regulations and did not look at the full scope of costs customers pay for cards. For example, new credit-card accounts are now more likely to come with annual fees and higher interest rates. That could offset the savings noted by the consumer watchdog. The regulations have also greatly reduced available credit for riskier customers, the American Bankers Association said. The findings were part of three sets of data presented by the agency at a conference it hosted Tuesday on the first anniversary of the Credit Card Accountability, Responsibility and Disclosure (or CARD) Act. Here are some highlights: Fees and rate hikes Penalty charges overall are down. In January of last year, just before the regulations took effect, cardholders paid $901 million in late fees. That amount was more than halved to $427 million by November, according to the agency. Also, the number of accounts that were assessed late fees fell by nearly 30 percent. One reason for the drop in late fees is a new $25 cap on penalties. The fee can rise to $35 if there is a second violation within a six-month period. That helped bring the average late fee down to $23 from $35. Also, issuers can no longer hike rates on balances or in the first year after an account is opened, and cardholders must be given 45 days’ notice before the rate is hiked on new purchases. Before the regulations, about 15 percent of accounts saw rate hikes over the course of a year. Card-issuer policies A separate survey of the nine-largest card issuers found that two-thirds no longer charge over-the-limit fees. Before the regulations, card issuers often approved transactions that caused cardholders to exceed credit 65
limits. Customers would then be charged fees as high as $39. Now, they cannot be penalized for going over limits unless they opt for such transactions to go through. The dropping of over-the-limit fees shows ”much of the industry has gone further than the law requires,” said Elizabeth Warren, a Harvard professor who is charged with setting up the protection bureau. Still, she noted that some issuers responded to the regulations by looking for ways around them. That’s why the agency will focus on continuing to make information about card prices easier to understand, Warren said. Consumer understanding In another survey conducted by the agency, 30 percent of respondents said they were not familiar with the CARD Act, but most noticed changes it brought about, such as payments that are now due on the same day each month and statements with information on the projected interest costs of making only minimum payments. About a third of customers who noticed the new disclosures said it caused them to take action, either by making larger payments or by curbing spending. To sharpen consumer understanding of the cost of credit, Warren said, the agency will look at improving transparency without an ”overreliance on rules.” by Candice Choi Associated Press Feb. 23, 2011 12:00 AM Consumer credit-card gains touted
Homebuilder stocks plunge after home price report - Bloomberg (2011-02-23 09:31) LOS ANGELES (AP) Shares in homebuilders tumbled Tuesday following the release of a report showing home prices have declined across many major U.S. cities to their lowest levels since the housing downturn began. The Standard & Poor’s/Case-Shiller 20-city home price index fell 1 percent in December from November, with prices declining in all but one of the metropolitan markets tracked. Home prices dropped to their lowest point since 2006 and 2007 in 11 markets, including Atlanta, Charlotte, N.C., Chicago, Detroit, Las Vegas and Miami. Analysts expect further home price declines this year. That would put more pressure on homebuilders. They are counting on a strong spring home-selling season after seeing their sales fall sharply in the last half of 2010. In recent weeks, several large homebuilders reported sharp drops in home deliveries and contracts for new homes during their latest quarters. Shares in Meritage Homes Corp. fell $1.80, or 6.6 percent, to $25.54. The stock also was weighed down by Citigroup analyst Josh Levin’s decision to downgrade the stock to a ”Hold” from ”Buy.” He noted the stock’s price was nearing his price target of $28 and that he didn’t expect an upcoming analyst event to provide a boost to the stock. He still rates Beazer Homes USA Inc. and Toll Brothers Inc. ”Buy.” Beazer shares slid 28 cents, or 5.5 percent, to $4.89, while Toll Brothers Inc. fell $1, or 4.6 percent, to $20.84. Elsewhere in the sector, Hovnanian Enterprises Inc. fell 35 cents, or 7.8 percent, to $4.14; Ryland Group Inc. fell $1.22, or 6.4 percent, to $17.71; D.R. Horton Inc. slipped 83 cents, or 6.5 percent, to $11.97; PulteGroup Inc. shed 54 cents, or nearly 7 percent, to $7.24; KB Home fell 95 cents, or 6.5 percent, to $13.74. Lennar Corp. declined $1.13, or 5.4 percent, to $19.92; Standard Pacific Corp. fell 26 cents, or 6 percent, to $4.10; and M.D.C. Holdings Inc. slipped $1.34, or 4.8 percent, to $26.67. by The Associated Press February 22, 2011 Homebuilder stocks plunge after home price report - Bloomberg
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New Mortgage-Backed Securities Will ’Be Better:” Lew Ranieri - CNBC (2011-02-23 09:35) The residential mortgage-backed security market will reemerge beyond Fannie Mae and Freddie Mac, Lewis Ranieri, the ”father” of the trillion-dollar mortgage market, told CNBC on Wednesday. ”We have to, especially if you look at the Treasury plan, the three alternatives to the Fannie, Freddie and FHA are bank portfolios, which is why we created the mortgage security in the first place, ’cause it can’t fund housing on a blance sheet because it requires too much equity you can do some, but you can’t do most, Ranieri said. He continued, ”Covered bonds, which really don’t work for our type of mortgage in this country, 30-year loans. And the alternative is some form of a securitization, if not Fannie, Freddie, it’s got to be a RMBS, we just have to do it better this time.” Securization works pretty well for almost 30 years, he said. Looking back at the mortgage market, the housing crisis and the recession, Ranieri said, ”Starting in late 2002, the RMBS market starts to experiment with structures, not the traditional structures what they call afforablity products and they started experimenting with traditions for underwriting apprisals. As a result...RMBS grows almost overnight to be bigger than Fannie, Freddie and Ginnie Mae together,” Ranieri said. ”It goes from being 5 percent of the market to basically representing more than anything else, added Ranieri. by Gennine Kelly CNBC February 23, 2011 New Mortgage-Backed Securities Will ’Be Better:” Lew Ranieri - CNBC
Market Commentary 02/24/11 (2011-02-24 23:43) Thursday’s bond market has opened in positive territory again as this week’s rally extends to a third day. The stock markets are mixed with the Dow down 25 points and the Nasdaq up 11 points. The bond market is currently up 10/32, which should improve this morning’s mortgage rates by approximately .125 of a discount point. January’s Durable Goods Orders was this morning’s first report. It showed a 2.7 % increase in new orders for big-ticket items at U.S. factories. This matched forecasts, but if more volatile transportation related orders are excluded, January’s orders were much softer than expected. However, a significant upward revision to December’s orders has helped limit this data’s influence on bond trading and, unfortunately, made the news neutral towards mortgage pricing. The Labor Department announced that 391,000 new claims for unemployment benefits were filed last week. This was lower than the 410,000 that analysts were expecting to see, meaning it indicates strength in the employment sector and is negative news for the bond market and mortgage rates. Fortunately, the markets appear to be ignoring the news this morning. This is common unless there is a significant difference between forecasts and actual numbers since this release tracks only a single week’s worth of new claims. January’s New Home Sales report was the third piece of data posted this morning. The Commerce Department said late this morning that sales of newly constructed homes fell 12.6 % last month. That was a much bigger decline than was predicted, pointing towards housing sector weakness, which is good news for the bond market. But since this data covers only a small portion of all home sales in the U.S., its impact on mortgage rates is usually minimal. We also have the 7-year Treasury Note auction to watch today. Results of the sale will be posted at 1:00 PM ET, so any reaction will come during afternoon hours. Yesterday’s 5-year Note sale did not go so well, meaning we don’t have a lot to be optimistic about. Today’s sale is more important for mortgage pricing than yesterday’s was, so another weak auction could push mortgage rates slightly upward this afternoon. 67
The first of two revisions to the 4th Quarter GDP reading is scheduled for release early tomorrow morning. Analysts’ forecasts currently call for an annual rate of growth of 3.3 %, indicating that the economy was slightly stronger in the last quarter of the year than initially thought. It will be interesting to see where this figure falls and what its impact on the markets will be. Generally speaking, higher levels of activity are bad news for the bond market, while a sizable downward revision would be good news and could lead to improvements in mortgage pricing. The last piece of data this week is the University of Michigan’s revision to their Index of Consumer Sentiment for February late tomorrow morning. Current forecasts show this index not changing much from its preliminary estimate of 75.1. This index is fairly important because it helps us measure consumer confidence that translates into consumer willingness to spend.
METALS-Copper posts big gain as energy prices stabilize | Reuters (2011-02-26 07:28) * Copper rallies on easier oil, global equities jump * LME copper stocks continue to climb * Indonesian tin production seen down * Coming up: U.S. regional manufacturing data Monday (Recasts, adds New York dateline/byline, updates with New York closing copper price, adds graphic and analyst comments) By Chris Kelly and Melanie Burton NEW YORK/LONDON, Feb 25 (Reuters) - Copper posted its biggest daily advance in three months on Friday, as buyers for the industrial metal emerged after energy prices retreated from this week’s sharp rally, calming worries about inflation and the global economy. Copper remained off record highs at $10,190 per tonne in London and $4.6575 per lb, as investors remained concerned the turmoil in Libya could spread to other major oil-producing countries, causing energy prices to spike and hurting demand for industrial metals. "A lot of the trade this week is about oil," said Frank Lesh, broker and futures analyst with Future Path Trading in Chicago. "The fact that the crude isn’t higher and it appears to have peaked takes some of the inflation pressures off of the economies of the world." 68
London Metal Exchange (LME) copper for three-month delivery CMCU3 shot up $245 or 2.6 percent to close at $9,750 a tonne, its biggest one-day gain since early December. The active May COMEX copper contract HGK1 surged 11.15 cents to finish at $4.4550 per lb. Oil fell from highs on Friday after top exporter Saudi Arabia stepped up supplies, helping push global equities higher, although worries that expensive oil might threaten global growth kept those gains in check. [O/R] "Focus now is on the Middle East," analyst Arne Rasmussen of Danske Bank said. "Definitely the last couple of days we’ve seen this fear that rising oil prices would dampen global growth, but prices are a bit more stable today, so optimism is returning," he said. "People are suddenly realising copper below $10,000 might be a bargain." The easing fears over energy prices offset data showing the U.S. economy grew slower than initially estimated in the fourth quarter. [ID:nCAT005386] However, copper’s rally drew additional support from news that U.S. consumer sentiment rose to its highest in three years in February. [ID:nN25299682]. "Going into next week, we suspect that downward pressure on oil markets will likely continue, particularly as investors start to discount the likely fall of the Libyan leader," said MF Global in a research note. "This ... should provide a measure of support to both the metals and U.S. equity markets, at least until the next flashpoint appears on the radar." CHINA STOCKS Talk that Chinese market players are holding high inventories of copper has weakened the short-term outlook for the metal. 69
"Stocks on the LME and inventories held in China have been rising for some time," VTB Capital analyst Andrey Kryuchenkov said. "We expect that demand in China will pick up. Maybe in March or in the second quarter we will see a stocks drop," he said, adding demand for copper usually increases in the spring as construction activity increases. LME copper stocks extended a bearish trend in place since December of last year, rising by 4,150 tonnes to 416,825 tonnes, data released on Friday showed. MCU-STOCKS Copper inventories now stand at their highest level since July 2010. Stocks are up more than 19 percent since the Dec. 9, trough at 348,625 tonnes. (Graphic: link.reuters.com/suf38r ) "Current on-warrant LME stocks are now nearly 55,000 above the levels seen in mid-January, with almost all of the increase occurring in Asian warehouses," said Standard Bank in a note. In general, inventories have been rising in Far Eastern LME locations in recent weeks as metal is diverted from Chinese ports due to demand, which remains lackluster. [ID:nLDE71726P] However, weekly Shanghai copper stocks fell by 2,961 tonnes, data showed today. CU-STX-SGH Tin CMSN3 closed at $32,050 from $31,600, tracking back towards record of $32,799 from Feb 15. Indonesia’s state-owned PT Timah (TINS.JK), the world’s largest integrated tin miner, said Friday that first-quarter production would be lower than expected because of rains and rough seas. [ID:nL3E7DP18J] Metal Prices at 1913 GMT COMEX copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2010 Ytd Pct move COMEX 446.75 12.40 +2.85 444.70 0.46 LME Alum 2565.00 23.00 +0.90 2470.00 3.85 LME Cu 9760.00 255.00 +2.68 9600.00 1.67 LME Lead 2516.00 16.00 +0.64 2550.00 -1.33 LME Nickel 28190.00 685.00 +2.49 24750.00 13.90 LME Tin 32050.00 450.00 +1.42 26900.00 19.14 LME Zinc Cu
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2490.50 17.50 +0.71 2454.00 1.49 SHFE Alu 17095.00 40.00 +0.23 16840.00 1.51 SHFE Cu* 72590.00 1170.00 +1.64 71850.00 1.03 SHFE Zin 19250.00 110.00 +0.57 19475.00 -1.16 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Additional reporting by Silvia Antonioli in London; editing by James Jukwey, Jane Baird and David Gregorio) METALS-Copper posts big gain as energy prices stabilize | Reuters
Obama Administration Proposes Fannie Mae, Freddie Mac Phaseout - WSJ.com (2011-02-26 09:44)
The Obama administration outlined on Friday its plans to begin shrinking the government’s broad support of the nation’s crippled mortgage market, a process that officials said could take several years and would include phasing out Fannie Mae and Freddie Mac. Officials portrayed a housing-finance system that would include a role for both the public and private sectors, but would be different from the current system in that the government’s role would be smaller, underwriting standards would be tighter, and borrowers would be required to hold larger amounts of equity in their homes. The proposal offered a series of short-term steps that would help attract private capital into the mortgage market, including a reduction in the maximum loan sizes that Fannie and Freddie can purchase and gradual increases in the fees the mortgage companies charge lenders. Both of those steps could make it more attractive for lenders and investors to buy loans without government backing, but they could also raise borrowing costs for millions of Americans and weigh on the nation’s home-building industry. ”The cost of mortgages is probably going to go up, and homeownership is probably going to go down,” said Daniel Mudd, the former chief executive of Fannie Mae who is now CEO of Fortress Investment Group. ”Both of those things arguably could be a good thing.” The administration said it would support allowing maximum loan limits to fall to $625,500 from $729,750 as scheduled on Oct 1. It also said it would push to increase minimum down payments to 10 % on loans eligible for purchase by Fannie and Freddie. Insurance premiums charged on new loans backed by the Federal Housing Administration could also go up. Administration officials said the process of transitioning to a post-Fannie and Freddie world would take at least five to seven years, in part because the housing market remains too fragile. Many analysts say the process, which includes dismantling, moving, or reassembling the firms’ infrastructure, could take even longer. 71
The long-awaited proposal was thin on specifics about what would replace Fannie and Freddie, which the government took over in 2008, and which have racked up $134 billion in taxpayer losses. Instead, it outlined three options that were designed to frame what promises to be a prolonged and heated political debate over how to structure the nation’s $10.6 trillion mortgage market. The first of those would put the vast majority of the mortgage market in the hands of the private sector, where lenders would originate mortgages and securitize them without any government backing. The middleman role currently played by Fannie and Freddie would no longer exist. The government’s role would be limited to the FHA and a few other smaller housing agencies, and their reach would be sharply reduced from current levels. The FHA backed 20 % of all new mortgages last year. Some conservatives have called for such a private market. The second option, championed by a handful of economists, would also create a mostly private market with a limited government backstop that would primarily become active buying or guaranteeing loans in periods when private lenders retreated during financial shocks. The third option would create new privately owned companies to buy mortgages from banks and sell them as securities. Those securities would be explicitly guaranteed by the government as long as they meet certain criteria. The government would collect fees for that backing, just as the Federal Deposit Insurance Corp. insures bank deposits and regulates banks. These new companies would essentially replace some of the functions filled by Fannie and Freddie. An array of academics and industry groups have backed such a proposal, and senior Obama administration officials, such as Treasury Secretary Timothy Geithner, have publicly discussed its merits. The housing industry greeted the proposal coolly, and some mortgage industry officials criticized the administration for not providing more detail. ”It was a political football that they punted back onto Congress’s side of the field,” said Joseph J. Murin, the former president of Ginnie Mae, a government-owned corporation that guarantees payments on mortgages backed by federal agencies. Producing three different options, instead of one clear recommendation, reflects the fact that there isn’t a strong consensus within the administration or Congress, said Laurence Platt, a banking industry lawyer at K &L Gates in Washington. He described the proposals as ”Goldilocks and the three options one’s too hot, one’s too cold, one’s just right, but everyone disagrees which one is which.” But the administration’s approach did attract support from Republican lawmakers, who have said the White House has been slow to address Fannie and Freddie’s future. ”On a number of these areas, we’re going to be on the same page, and that was encouraging, and to see it in writing is equally encouraging,” said Rep. Scott Garrett (R., N.J.). Republicans face their own divisions over what kind of role the government should play in the market, while Democrats have generally said a federal backstop function is needed to ensure broad access to homeownership and the 30-year fixed-rate mortgage, in particular. Many industrialized nations don’t have institutions like Fannie and Freddie, and instead rely more heavily on their banking systems to fund mortgages. But some economists have noted that the mistakes in the U.S. private sector were far greater than the mistakes made by Fannie and Freddie. For example, private-label mortgage securities, which are not governmentbacked, have performed more poorly than those backed by the mortgage giants. Nearly 45 % of private-label loans originated in 2006 had been 90 days past due at least once, compared with 13 % for Fannie and Freddie, according to a report from the firms’ federal regulator published in September 2010. ”The part of the market that was the most private was also the worst,” said Michael Barr, a former assistant Treasury secretary who left the Obama administration in December. He said the report should help remind 72
lawmakers that the government has long had a role backstopping mortgages. ”People seem to think there’s a nostalgic world that we never had,” he said. Housing advocates voiced alarm over proposals designed to cede more of Fannie and Freddie’s role to the private sector. ”They’re bringing the fox to the henhouse,” said John Taylor, the CEO of the National Community Reinvestment Coalition. The proposals are likely to set off a furious effort by the financial-services industry to protect generous subsidies and seek out new revenue sources. Investors haven’t been willing to buy mortgages that don’t have government backing primarily because there haven’t been enough steps taken to overhaul the market for private-label securities, said Joshua Rosner, of investment-research firm Graham Fisher & Co. ”Investors are on strike,” he said. His clients would buy securities without government backing ”hand over fist” if the industry had adopted clear and transparent standards, said Mr. Rosner. ”The industry isn’t doing that, because it’s playing for a guarantee.”
by Nick Timiraos The Wall Street Journal February 12, 2011 Obama Administration Proposes Fannie Mae, Freddie Mac Phaseout - WSJ.com
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Fannie and Freddie: The Saga in Charts. - MarketBeat - WSJ (2011-02-26 09:58)
We admit it. It s hard for us to keep our eyelids propped open when Fannie and Freddie are brought up. We re sure we re not alone. Yet the government controlled mortgage giants are once again in the news, with the Obama administration s recently unveiled aproposal for winding them down. And given that this is MarketBeat, we figured we we should say something about these two crucial cogs in the not insignificant $10.6 trillion U.S. mortgage market. So we figured we d try to tell the story of Fannie and Freddie through some of the great charts The Journal has cobbled together in recent years on the two GSEs. The idea here is not that all the numbers will be completely up-to-date. (They can t be. These charts are from older stories.) But we just want to try to make sense of the Fannie and Freddie mess for you. But first things first. Exactly what do they do? The Journal s Nick Timiraos, who covers Fannie and Freddie seems to have the best plainspoken explanation we ve seen: For 40 years, the housing-finance system has featured a blend of public and private entities. Fannie and Freddie buy mortgages from banks and other originators, repackage them for sale as securities and make investors whole when borrowers default. Investors long assumed the two shareholder-owned firms had an implied federal guarantee, which let them borrow at below-market rates and facilitate 30-year fixed-rate loans. So what happened? Where to begin? Well we could go all the way back to the early 1930s when the U.S. first started getting involved in housing finance. (There s a great timeline on page 10 of this report.) But let s just start during our recent housing mania. During the housing boom, Fannie and Freddie, which were publicly traded private companies albeit with a fairly obvious backing of the Feds began losing market share in the profitable business of buying up loans, packaging them up into securities and selling them off to investors.
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The Journal reported that two companies, seeking to regain lost market share, loaded up on riskier subprime and Alt-A loans in 2006 and 2007 just as the housing market was starting to tank. As people began to have trouble paying their loans, some pretty ugly losses began to show up for Fannie and Freddie, like this.
Given the importance of Fannie and Freddie to the financial system like other large banks such as Citigroup, et al. the government didn t let them collapse. As a result the bailout of Fannie and Freddie became a sizable part of the bailout mania of recent years. Check out this chart from April 2010.
Now, as this particularly ugly recession got underway the flow of cash from to borrowers channeled through loans in the form of mortgage backed securities dried up almost completely. Nobody wanted to go near the mortgage market given how ugly housing looked. 75