Housing Doom

"The bill clamps down on conflicts of interest at the Federal Reserve, making the head of the New York Fed, for example, a position appointed by the president of the United States and not hand-picked by the very bankers the New York Fed is responsible for regulating," the Connecticut Democrat told reporters as he unveiled his bill. // Critics said the proposed governance change could weaken the central bank's independence. – Reuters¹

Well duh.  As we noted in, among other places, Doom's introduction to our recent Jesse / Ives Smith re-post, the NY Fed is actually pretty independent from the Fed Board itself, and within its present configuration with the great banks of Wall Street has about as much independence from Washington as Florence did from the papacy during the 16th Century.

IMHO even granting the Fed supervision over the Second District would be an improvement

LATER: Obama's FDR moment seems to be turning into his Andrew Jackson moment,⁶ if he's got the will.  Just the prospect of the first real regulation of Wall Street's IBs in decades will inevitably turn Dodd's proposal into a Superbowl of financial lobbyists.  Meanwhile, the Daily Bell has an article² on the Joseph Stiglitz Fed criticisms which has some nice things to say about the web.

The Fed is in such bad odor because the Internet has exposed its conflicted inner workings to people throughout the United States for years. Viewers, however, likely did not take the Internet's presentations seriously for a long time. But the advent of the financial crisis has changed this perception. By now, even, many may have found the Internet-based free-market interpretations of the Fed's mechanisms more compelling than the dry-as-dust socialist perspectives offered in manifold university textbooks or distributed plentifully by the Federal government and the Fed itself.

The WSJ actually asserts³ that "[t]he biggest winner in Mr. Dodd's bill appears to be the central bank." Murdoch's gang is ignoring the US appointment of the NY Fed Pres under the proposal so hard they might as well be staring straight at it.  The story's first paragraph is pretty ironic since up to now those same big banks were hardly being overseen at all.

WASHINGTON—U.S. Senate legislation aimed at overhauling regulation of finance would cost large banks billions of dollars, prevent them from taking certain risks and create a new regulatory infrastructure to oversee their activities.

Financial blogger Jr Deputy Accountant (JDA — great handle ) doesn't appear to agree with me.⁴ And Igor points out that I wasn't even the first up on this story with the "D" word.  Don't miss JDA's just-released post "Chris Dodd Taps the Fed's Secret Backdoor."

Notice you didn't hear a peep out of the NY Fed when a handful of clever Fed Presidents were campaigning to keep the Fed "independent" and free from political interference. JDA will ignore the fact that they gave that up about 18 months ago when they pledged whatever it takes to prop up everyone except Lehman Brothers as this is not about arguing over whether or not they are actually independent but criminalizing the NY Fed. Duh.

… and the plot thickens; this⁵ just in from Salon.

The Financial Times' Tom Braithwaite dropped this intriguing bomb:

The new proposal would bar appointments of Wall Street bankers as directors at the New York Fed.

I hadn't seen this news elsewhere, and it took a little digging to find the relevant text in the bill. And having done so, it's unclear that the bill specifies exactly what the FT is reporting.
…

Under the Dodd bill all class A and B directors will be appointed by the Board of Governors of the Federal Reserve System. …

Read the rest of this entry »

I  remember a few years back poking around some half-finished homes where the builder had gone into bankruptcy.  The homes were located in Queen Creek, AZ. The homes were poorly constructed, and weren't being helped by being left out in the weather.  Flooring had been warped by the rain, the roof underlayment was faded by the sun and a number of critters had moved in.  When I walked in, a bunch of pigeons flew out.

About a year later, another builder bought the homes and finished them off.  The walls were filled with bird nests and droppings.  Some places were black and damp, but I'm pretty sure the workmen just drywalled over it all.  I've always hoped that no one with severe allergies bought those things.

M has found a property that brings the whole critter issue up to a whole new level however.  He sent me the listing for the property at 36452 N. 105th Pl., Scottsdale, AZ. [MLS# 4333227] Here's a picture of this 4,759 sq. ft. beauty:

The listing says:

REO, Sold AS-IS, Home is incomplete in the beginning of construction, great for picking your own floor plan and upgrades. Beautiful mountain views, gated community, club house, community pool.

The Realtor comments states however:

[Realtor Remarks:  Please see documents tab to submit an offer.  Lockbox code XXXX. Buyer to verify all facts and figures. BEWARE OF BOBCAT LIVING IN PROPERTY.] Read the rest of this entry »

Maybe Obama can launch HALM, Help For Lawmakers: [Thanks L!]

The state's money problems are so bad that lawmakers are getting eviction notices and calls from collection agencies about their offices back home.

At least five state senators say they've piled up so much unpaid rent, sheepish landlords are asking them when the government plans to make good on its bills.

"He said, ‘Ira, I'm sorry,'" said Sen. Ira Silverstein, D-Chicago, recalling a visit from his landlord delivering an eviction notice. "And what am I going to do? I can't argue with the man."

While none of the lawmakers has actually gotten the boot yet, they are getting a taste of the frustratingly slow pace at which the state pays bills as it careens toward a $13 billion budget hole. It's a pain that's magnified exponentially for school districts, drug rehabilitation counselors and businesses awaiting tax refunds.

It isn't just the rent that's the problem: Read the rest of this entry »

It's said you have to kiss a lot of frogs to find your handsome prince. Researching on the web is the same. You have to read a lot of drivel to learn anything of worth.

Because I do wade through so much drivel in the course of a day, something has to be pretty awful for me to take note of it.  This "exceptional" piece however, caught my eye. I challenge anyone to figure out the thesis of Tiger Woods Practices in Isleworth FL, Nation's 2nd Worst Housing Market:

The recently scandalous Tiger Woods has finally picked his golf clubs back up. The golfer returned to the playing fields in Florida, in a neighborhood called Isleworth, a luxury golf community outside of his Orlando home. Not a coincidence, the golf course is headed by golf legend Arnold Palmer, who is also hosting Woods' first possible return championship, the Arnold Palmer Invitational.

Tiger took a break from the golf world after his personal life became top news last November. Golfing took a hit because Woods always drew in high revenue and attention, but his absence allowed other golfers to get a taste of victory.

"At this point, we still don't know," stated Scott Wellington to the associated press. "He has until next Friday to commit. But it was a busy day, for sure. We had a lot of calls, a lot of interest and we sold some tickets. It was interesting."

Florida was hit almost as hard as California when the housing market crashed. As of February, Florida had the second highest foreclosure rate in the nation with 54,032 houses under foreclosure. The 2009 fourth quarter negative equity estimates ranged around 47.8 percent of all present mortgages.

Isleworth, is in Orange County, which has faired better than others in Florida, but Orange County is still in sixth place in the state for highest foreclosure numbers. Isleworth represents true Floridian luxury. Membership of the country club is by invitation only. Looks like they haven't rescinded Woods' membership like some of his advertisers have.

My theory is that the original article was only supposed to be about Woods possible return to golf, but some editor said the article wasn't long enough.  The reporter was told to add two more paragraphs. With no more information on Woods available, she wrote about the location- and its foreclosure rate. The information lengthened the article, but left her with no discernible thesis. Read the rest of this entry »

Bank of America has done it again.  They have foreclosed on a homeowner that wasn't in default- and this time they kidnapped the parrot:

A Hampton woman is suing Bank of America, saying one of its contractors wrongly repossessed her home, padlocked the doors, shut off the utilities, damaged the furniture and confiscated a pet parrot, though her mortgage payments were on time.

Angela M. Iannelli, 46, suffered "severe emotional distress, embarrassment and ridicule" as a result of the company's "de facto foreclosure process and seizure proceedings," attorney Michael Rosenzweig wrote in the suit, filed Monday in Allegheny County Common Pleas Court.

The suit accuses Bank of America and its contractor, Ebensburg-based Snyder Property Services, of trespass, unfair business practices, defamation, libel and other offenses during the October foreclosure of Ms. Iannelli's home in the 5000 block of Fountainwood Drive. She is seeking an unspecified amount in compensatory and punitive damages.

Bank of America instructed Snyder Property Services to "enter, seize, padlock, 'winterize' and take possession" of Ms. Iannelli's house, the lawsuit said, cutting water lines and electrical wiring, pouring anti-freeze down her drains and "stealing" her pet parrot, Luke.

She returned home to find her locks had been changed, her furniture and carpets had been damaged, her belongings had been scattered and the bird missing. A notice on her door told her to contact Bank of America, which "initially falsely denied responsibility or knowledge of the invasion and refused" to help her, the suit said. The bank also acknowledged they knew the parrot's whereabouts, it said.

In further calls, Bank of America representatives told Ms. Iannelli they couldn't help her, told her to stop calling, said they were "tired of hearing from her" and put her on hold, told her to call back later and hung up on her, the suit said.

About a week later, Bank of America told her it had "made a mistake" and told her where she could find her parrot, but said she would have to travel to Ebensburg to retrieve it.

She eventually drove to Ebensburg to get her parrot back.

Mr. Rosenzweig said that, with the exception of one payment, Ms. Iannelli's mortgage payments had been on time. Bank of America had not sent her a notice of a 60-day deficiency nor given her 30 days to fix it, as state law requires, he said.

Read the rest of this entry »

Remember David Lereah, former chief economist for the National Association of Realtors? He was the economist we loved to hate. Where is he now?

Palm Beach County residents struggling to survive the worst housing crash since the Great Depression might soon be able to blame him in person: Lereah has applied for the position of president of Florida Atlantic University of Boca Raton.

Lereah, now head of a consulting firm in Washington, joins more than 40 candidates vying for the top job at FAU. Finalists are expected to start meeting with university officials in March. Lereah didn't respond to requests for comment.

Until recently, Lereah was the nation's real estate Cheerleader in Chief, a figure known for such comments as: "We feel confident that housing is landing softly" (2005); and "Housing bubbles pop. There's no risk of that happening here" (2005).

Lereah was roundly scorned by the business world when the bubble did, indeed, pop, and he could no longer get away with this sort of comment: "We've moved beyond the low for the housing cycle last fall" (2007).

Lereah resigned from the NAR in 2007. That same year, perhaps in a bid to hedge his bets, he penned, All Real Estate is Local: What You Need to Know to Profit in Real Estate — In a Buyer's and a Seller's Market.

 

In an e-mail, Lereah said he applied for the FAU post because believes his relationships and experiences with local, state and federal government, large financial institutions, Wall Street and the media would enhance "the university's brand, attracting quality professors and improving course curriculum." He said his contacts would also help out with fund-raising.

 

But Lereah noted that the still has a child in high school and is starting to think a move could be disruptive, so he's having second thoughts about the FAU job.

If Lereah does move forward with his application, he can send students to the bookstore for his previous works. They include his 2005 book, Are You Missing the Real Estate Boom? Why Home Values and Other Real Estate Investments Will Climb Through The End of the Decade — And How To Profit From Them. (The book was re-released in February 2006, as the market showed signs of strain, under the title, Why The Real Estate Boom Will Not Bust — And How You Can Profit From It.)

And how's this for irony? Read the rest of this entry »

The administration's Home Affordable Modification Program (HAMP) has been an unqualified failure. They are considering a new tact however- if at first you don't succeed, try and force the issue:

Feb. 25 (Bloomberg) — The Obama administration may expand efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the government’s Home Affordable Modification Program.

The proposal, reviewed by lenders last week on a White House conference call, “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed,” according to a Treasury Department document outlining the plan.

“It is one of the many ideas under consideration in the administration’s ongoing housing stabilization efforts,” Treasury spokeswoman Meg Reilly said in an e-mail. “This proposal has not been approved and there are no immediate planned announcements on the issue.” Read the rest of this entry »

One other thing, let this be a lesson to anyone who thinks they have an edge in the market. Whether you’re an individual or a professional math whiz like the geeks at AIG, you’re up against people like this everyday. Their sole goal at work is to legally make money. If that source of money happens to be you, too bad for you. – BusinessInsider¹

I believe he's talking to you, Mr. Calpers.  Igor merely asks, Why are you hanging around here when you could be reading Fishback?

UPDATE (2/25): Speaking Truth to Peasants² …

Feb. 24 (Bloomberg) — Goldman Sachs Group Inc., the most profitable securities firm in Wall Street history, is unpopular because some people envy its performance, said Jon Corzine, the company’s former chairman and chief executive officer.

Don's article is amazing.  Seems he pasted a June 2000 BL piece (long since deep-six'd at the source) into Word, of all things, and recently retrieved it to find that, in spite of SarbOx, some of the most nefarious horrors from the dot Com crisis are still with us.

Turns out you don't need much sophistication to fight financial corruption, just a memory.  Well done, guy

Oops! forgot you can embed most of the posts from these guys, so if you don't want to visit BI, here's the bad news.

Read the rest of this entry »

FICO is reporting a trend that may have a significant impact on the mortgage industry.  Given a choice between keeping the house or keeping the credit cards,  high FICO scorers are opting to hang onto the plastic: [Thanks L!]

According to the analysis in FICO Score Trends, recent repayment behavior across the financial services industry has shifted significantly from historical trends. In 2008-2009, bankcard accounts were just 1.6 times more likely to become 90 days delinquent than were mortgage loans. By comparison, in 2005 bankcard accounts were more than three times more likely to become 90 days delinquent. And for borrowers scoring high on the FICO(R) score's 300-850 score range, the level of repayment risk actually has become greater for real estate loans than for bankcards. In 2009, 0.3 percent of consumers with FICO scores between 760-789 defaulted on real estate loans, compared to 0.1 percent who defaulted on bankcards.

"We're identifying lending industry situations in FICO Score Trends that to our knowledge have never been seen before," said Dr. Mark Greene, CEO of FICO. "Economic instability is creating unknown risk in lenders' credit portfolios as well as counter-intuitive trends in consumer behavior. While the FICO 8 score continues to prove its unprecedented power in rank-ordering consumers for risk, even low-risk consumers are changing the value they give different credit lines. As the CARD Act goes into effect next week, it likely will create additional, unhelpful pressures on the banking business."

When James Truslow Adams coined the phrase American Dream back in 1931, the dream was a promise of prosperity, citizens of every rank feel that they can achieve a "better, richer, and happier life. Somehow though, the idea that the American Dream was a chance to work and make good morphed into the chance to own a home by any means possible.  Homeownership of the largest home possible seemed like a good idea when home values were rising above historical norms.  Now many Americans are taking stock of their financial situation and their housing and realizing that they have a new dream- financial solvency. Too often now people's homes are standing in the way. Read the rest of this entry »

"With fewer new loans going bad, the pool of seriously delinquent loans and foreclosures will eventually begin to shrink once the rate at which these problems are resolved exceeds the rate at which new problems come in," [chief economist of the Mortgage Bankers Association Jay] Brinkmann said. "It also gives us growing confidence that the size of the problem now is about as bad as it will get." – MW¹

This reporter's unique and ongoing ability to deliver positive spin in any situation is enough to give Pippa herself a complex.

Way back in August 2006, just when the downturn was gathering speed and long before anyone (including us) had so much as heard of subprime, we noted a Hoak piece titled "Slowdown restores balance in home real estate market: SELLERS NO LONGER HOLD ALL THE CARDS, EXPERTS SAY," wherein she was quoting an analyst as asserting: "The downside of real estate is better than the downside on just about anything else"

All we at Housing Doom can say to that is it's a good thing it was only RE that cratered, or we'd really be in trouble now

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[1]: "Mortgage woes get better … beginning of the end? Bankers report slower rate of delinquencies, foreclosures", by Amy Hoak, MarketWatch, February 19, 2010.