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  • Thu, Oct 21 2010
  • 3:26 PM » Mortgage Mess: Shredding the Dream
    Published Thu, Oct 21 2010 3:26 PM by Business Week
    The foreclosure crisis isn't just about lost documents. It's about trust—and a clash over who gets stuck with $1.1 trillion in losses
    Click Here to Read the Full Article

    Source: Business Week
  • 3:26 PM » Election and Foreclosures
    Published Thu, Oct 21 2010 3:26 PM by Business Week
    Oct. 21 (Bloomberg) -- Bloomberg's Lizzie O'Leary reports on the increasing number of home foreclosures in Florida and the potential impact on midterm elections. (Source: Bloomberg)
    Click Here to Read the Full Article

    Source: Business Week
  • 1:37 PM » Philly Fed Index "steady" in October
    Published Thu, Oct 21 2010 1:37 PM by Calculated Risk Blog
    Here is the Philadelphia Fed Index: Results from the Business Outlook Survey suggest that regional manufacturing activity was steady in October. Although the broad survey measures showed marginal improvement this month, the new orders index continued to suggest weak demand for manufactured goods . ... The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, increased from a reading of –0.7 in September to 1.0 in October . The index had been negative for two consecutive months (see Chart). Indexes for new orders and shipments continued to indicate weakness this month: The new orders index increased 3 points but remained negative for the fourth consecutive month. ... Firms reported near steady employment again this month, but lower average work hours for existing employees. The percentage of firms reporting increases in employment (20 percent) narrowly edged out the percentage of firms reporting decreases (17 percent). The index for employment was slightly positive for the second consecutive month but increased just 1 point. Indicative of still weak activity, more firms reported declines in average work hours for existing employees (22 percent) than reported increases (16 percent). emphasis added Click on graph for larger image in new window. This graph shows the Philly index for the last 40 years. This index turned down sharply in June and July and was negative in August and September (indicating contraction). The index was barely positive in October, and the internals (new orders, employment) are still weak. These surveys are timely, but noisy. However this is further evidence of a slowdown in manufacturing. This was slightly worse than the consensus view of a reading of 1.8 (slight expansion).
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 1:37 PM » Weekly Initial Unemployment Claims: Moving Sideways
    Published Thu, Oct 21 2010 1:37 PM by Calculated Risk Blog
    The DOL reports on weekly : In the week ending Oct. 16, the advance figure for seasonally adjusted initial claims was 452,000, a decrease of 23,000 from the previous week's revised figure of 475,000 [revised up from 462,000]. The 4-week moving average was 458,000, a decrease of 4,250 from the previous week's revised average of 462,250. Click on graph for larger image in new window. This graph shows the 4-week moving average of weekly claims since January 2000. The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased this week by 4,250 to 458,000. The 4-week moving average has been moving sideways at an elevated level since last December - almost a year - and that suggests a weak job market. Note: most revisions have been slightly up over the last year or so. The average revision has been up just over 2,000, but the revision last week was up 13,000.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 1:37 PM » Foreclosure Fraud For Dummies, 4: How Could This Explode into a Systemic Crisis?
    Published Thu, Oct 21 2010 1:37 PM by The Big Picture
    (This is a series giving a basic explanation of the current foreclosure fraud crisis from Mike Konczal ; This is Part Four ; you should also see , , and Part Three) Right now the foreclosure system has shut down as a result of banks’ own voluntary actions. There is currently a debate on whether or not the current foreclosure fraud crisis could explode into a systemic risk problem that perils the larger financial sector and economy, and if so what that would look like. No matter what happens, the uncertainty about notes and what is currently going on with the foreclosure crisis is terrible for the economy. Getting to the heart of this problem so that negotiations can be worked out is important for getting the economy going again. There is little reason to trust what comes out of the servicers and the banks in whatever they conclude at the end of the month, and the market will know that. Only the government can credible clear the air here as to what the legal situation is with the notes and the securitizations. But I wanted to get some unlikely but dangerous scenarios on the table in which this blows up. Bangs, not whimpers. The kind where Congress is pressured to act over a weekend. I had a discussion with Adam Levitin about how this could explode into a systemic problem. Title Insurance Market Breaks Down First scenario involves title insurance. Specifically if title insurers decide to take a month off from writing title insurance even on performing and current loans to investigate what is going on with note transfers. If that happened there would be no mortgage sales (except for those involving cash) in the country. The system would simply stop. Everyone with an interest, from realtors to Wall Street to construction to huge sections of the economy, would face a major crisis through this short-term pinch. There would be a call for Congress to step in immediately. You can tell that the title insurance market, which is largely concentrated and also holding very little...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 1:37 PM » Foreclosure Nation
    Published Thu, Oct 21 2010 1:37 PM by The Big Picture
    Here is a fascinating graphic from the Washington Post about where in the US, by County, foreclosures have taken place, color coded by percentage. It is rather remarkable: > click for larger graphic Map courtesy of the Foreclosure data from CoreLogic | Cristina Rivero and Mary Kate Cannistra/The Washington Post ~~~ And with this post, we add the category , rather than select Credit/Legal/Real Estate each time . . .
    Click Here to Read the Full Article

    Source: The Big Picture
  • 1:37 PM » Answers to Your Questions on the Foreclosure Crisis, Part II
    Published Thu, Oct 21 2010 1:37 PM by economix.blogs.nytimes.com
    Thomas A. Lawler, a housing expert, answers a reader question about why the foreclosure process takes so long.
    Click Here to Read the Full Article

    Source: economix.blogs.nytimes.com
  • 1:37 PM » U.S. Economy: Leading Index Rises in Sign of Sustainable Growth
    Published Thu, Oct 21 2010 1:37 PM by Business Week
    The gauge of the U.S. economy’s prospects rose in September for a third month, signaling the recovery will extend into 2011.
    Click Here to Read the Full Article

    Source: Business Week
  • 9:08 AM » Slides from Presentation to White House Conference on Rental Housing
    Published Thu, Oct 21 2010 9:08 AM by real-estate-and-urban.blogspot.com
    Click Here to Read the Full Article

    Source: real-estate-and-urban.blogspot.com
  • 9:08 AM » Securitized mortgage loan or not, lenders are not restructuring
    Published Thu, Oct 21 2010 9:08 AM by Google News
    In a new paper, Agarwal, Amromin, Ben-David, Chomsisengphet, and Evanoff (2010) finally put to rest the widespread belief that securitization massively exacerbated the foreclosure crisis by preventing lenders from renegotiating loans. The authors show that the data do not support the argument articulated by Paul Krugman and Robin Wells in...
  • 8:52 AM » New Requirements for New York Foreclosure Lawyers
    Published Thu, Oct 21 2010 8:52 AM by NY Times
    New York’s chief judge issued a rule requiring lawyers handling foreclosure in the state to verify to the courts that all their paperwork is accurate.
  • 8:52 AM » Banks Face Two-Front War on Bad Mortgages, Flawed Foreclosures
    Published Thu, Oct 21 2010 8:52 AM by Business Week
    Shoddy mortgage lending has led bankers into a two-front war, pitting them against U.S. homeowners challenging the right to foreclose and mortgage-bond investors demanding refunds that could approach $200 billion.
    Click Here to Read the Full Article

    Source: Business Week
  • 8:52 AM » New York Fed Faces ‘Inherent Conflict’ in Mortgage Buybacks
    Published Thu, Oct 21 2010 8:52 AM by Business Week
    The Federal Reserve Bank of New York’s effort to recover taxpayer money used in bailouts during the crisis may be at odds with its mission to ensure the stability of the financial system.
    Click Here to Read the Full Article

    Source: Business Week
  • 8:52 AM » Deutsche Offers Dark Tidings on Housing
    Published Thu, Oct 21 2010 8:52 AM by Google News
    Deutsche Bank says the home market will remain brutal at least through 2011.
  • 8:52 AM » Markets Hub: Earnings and Foreclosuregate
    Published Thu, Oct 21 2010 8:52 AM by Google News
    In today’s video, we take a look at two big stories, earnings and the foreclosure mess, and how the latter may affect a still limping housing market.
  • 8:52 AM » Mr. Ice and the Origins of Robo-Signers
    Published Thu, Oct 21 2010 8:52 AM by Google News
    It sounds like the plot of a bad melodrama: Mr. Ice and a piece of 1680 English case law helped give rise to the Great FauxClosure crisis of 2010.
  • 8:52 AM » Florida activists read between the lines on foreclosure paperwork
    Published Thu, Oct 21 2010 8:52 AM by Washington Post
    WEST PALM BEACH, Fla. - Nearly a year before the national furor over foreclosures began, Lisa Epstein, a nurse, ran into three other amateur sleuths who separately were investigating shoddy practices at mortgage companies.
    Click Here to Read the Full Article

    Source: Washington Post
  • 8:52 AM » Major title insurer insists lenders vouch for foreclosure paperwork
    Published Thu, Oct 21 2010 8:52 AM by Washington Post
    The country's largest title insurer said Wednesday that banks and other lenders must vouch for the accuracy of their mortgage documents before the firm will write insurance for a foreclosure sale.
    Click Here to Read the Full Article

    Source: Washington Post
  • 8:52 AM » Seeking loan modifications shouldn't make homeowners target of scorn
    Published Thu, Oct 21 2010 8:52 AM by Washington Post
    Click Here to Read the Full Article

    Source: Washington Post
  • 8:52 AM » Foreclosure freeze could put security clearances at risk
    Published Thu, Oct 21 2010 8:52 AM by Washington Post
    The sudden moratorium on many foreclosures across the country has unexpectedly put some federal workers and contractors in jeopardy of losing their security clearances because of the heightened uncertainty clouding their finances, according to lawyers who handle these cases.
    Click Here to Read the Full Article

    Source: Washington Post
  • 8:52 AM » Wells Fargo dismisses foreclosure problems as analysts warn of paperwork issues
    Published Thu, Oct 21 2010 8:52 AM by Washington Post
    Banking giant Wells Fargo said Wednesday that its business shows no signs of the looming crisis some analysts fear the industry faces from shoddy lending and foreclosure practices.
    Click Here to Read the Full Article

    Source: Washington Post
  • 8:52 AM » Goldman considers paying back Berkshire's $5 billion investment
    Published Thu, Oct 21 2010 8:52 AM by www.smartbrief.com
    Warren Buffett's Berkshire Hathaway helped Goldman Sachs weather the worst of the financial crisis with a $5 billion investme --
    Click Here to Read the Full Article

    Source: www.smartbrief.com
  • 8:52 AM » Fuel shortage spreads across France as pension dispute continues
    Published Thu, Oct 21 2010 8:52 AM by www.smartbrief.com
    Officials have estimated that a third of French gas stations are out of fuel or close to dry as President Nicolas Sarkozy and --
    Click Here to Read the Full Article

    Source: www.smartbrief.com
  • 8:52 AM » FDIC's Bair: US Bank Rules to Be Stricter than Basel
    Published Thu, Oct 21 2010 8:52 AM by CNBC
    FDIC's Bair: US Bank Rules to Be Stricter than Basel
  • 8:52 AM » No Sign Foreclosure Problems 'Systemic': White House
    Published Thu, Oct 21 2010 8:52 AM by CNBC
    No Sign Foreclosure Problems 'Systemic': White House
  • 8:52 AM » Why Do Lenders Foreclose Rather Than Make Principal Modifications?
    Published Thu, Oct 21 2010 8:52 AM by Google News
    Tom Lawler, founder of Economic & Housing Consulting, and a former director and senior vice president at Fannie Mae, provides . I pickled that link up from Calculated Risk who highlighted one question. Here is a different question I want to discuss in more depth. Q: Why does it make more sense for a bank to foreclose rather than writing down the loan to keep people in their homes? I know many folks who can qualify, based upon current income and credit, for loans based upon the homes’ current market values. (Most homes are down 50% here from 2004-7.) However, the bank would rather foreclose than renegotiate with the current owner. Many of these folks are current on taxes, HOA, etc. Is it an issue of spite to discourage strategic defaults? A: This is a loaded question. While many lenders/servicers have not done a great job in dealing effectively with borrowers who are struggling to make mortgage payments, by the same token many borrowers whose home values have plunged and have made no payment for well over a year want the banks to write down their mortgage balance to today’s distressed-value levels, so that if home prices later go up, they can reap any future appreciation even if their home value remains below their old mortgage balance. Banks and lenders, not surprisingly, are not crazy about doing that! Instead, most offered modifications that are intended to reduce a borrower’s payment, but not in any meaningful way reduce the borrower’s mortgage balance. So let me state it differently: Suppose you had lent money for someone to buy a home for, say, $300,000 with a – crazy as it sounds – $300,000 mortgage. Property values then fall, and that person just stopped making any payments, and said that he/she wanted you to write down the mortgage balance to, say, $150,000, because that’s what the home is worth today. You counter with an offer to temporarily reduce the borrower’s interest rate to, say, 3 percent from 6 percent. But the borrower says, “Fuggedaboutit, I want...
  • 8:52 AM » Idea of the Day: Importance of Improving Teacher Quality
    Published Thu, Oct 21 2010 8:52 AM by www.americanprogress.org
    For more than two decades, policymakers have undertaken many and varied reforms to improve schools, ranging from new standards and tests to redesigned schools, new curricula and new governance models. One important lesson from these efforts is the repeated finding that teachers are the fulcrum determining whether any school initiative tips toward success or failure. Every aspect of school reform depends on highly skilled teachers for its success. This is especially true as educational standards rise and the diversity of the student body increases. Teachers need even more sophisticated abilities to teach more complex curriculum to the growing number of public school students who have fewer educational resources at home, those who are new English language learners, and those who have distinctive learning needs. One of the few areas of consensus among education policymakers, practitioners, and the general public today is that improving teacher quality is one of the most direct and promising strategies for improving public education outcomes in the United States, especially for groups of children who have historically been taught by the least qualified teachers. Teachers can have large effects on student achievement, as suggested by a recent large-scale study in North Carolina, which found that the differences in achievement gains for students who had the most qualified teachers versus those who had the least qualified were greater than the influences of race and parent education combined. These very large differences were associated with teachers’ initial preparation for teaching, licensing in the field taught, strength of academic background, level of experience, and demonstration of skills through National Board Certification, all of which are variables that could be directly addressed through policy. Unlike most high-achieving nations, however, the United States has not yet developed a national system of supports and incentives to ensure that all teachers are well prepared...
    Click Here to Read the Full Article

    Source: www.americanprogress.org
  • 8:52 AM » Analysis: Mortgage investors will have trouble fighting banks
    Published Thu, Oct 21 2010 8:52 AM by Reuters
    NEW YORK (Reuters) – Houston attorney Kathy Patrick represents a group of powerful mortgage investors trying to wring money out of Bank of America, but many legal experts say her chances of winning are slim. For the second time in two months, the Gibbs & Bruns partner has sent a letter to a big bank trying to get some measure of financial relief for her clients who hold $16.5 billion of home loans packaged into bonds. The investors say that many of the loans they bought should never have been sold to them in the first place, because they fell short of bondholders’ stated standards. They want the bank to buy back bad loans. The bank said it is not responsible for the poor performance of the loans, and outside experts agree. “Investors are taking a low percentage pool shot,” said Janet Tavakoli, a Chicago-based derivatives consultant who has been a long-time critic of the way banks packaged and sold mortgage bonds during the housing boom. “This will be a long drawn out process and (Patrick) could easily get stonewalled.” If so, then bank stock investors are panicking needlessly. Bank of America’s shares have fallen nearly five percent over the last two days, on fears that Patrick and her clients, including the Federal Reserve Bank of New York and BlackRock Inc, will force the lender to buy back billions of dollars of bad mortgages. Patrick sent her first letter in September to officials at the Bank of New York Mellon Corp, the trustee for the investment vehicles that issued the mortgage bonds, and it failed to get much attention. Bank of New York took no formal action and Wall Street investors hardly seemed to notice. On October 19, Patrick sent her second letter, this time to Bank of America. The letter puts the bank on notice, and if investors do not get what they want, they can declare an event of default, a prelude to suing the bank. OVERREACTION Even BlackRock CEO Laurence Fink, in a conference call to discuss the money management firm’s third-quarter earnings...
  • 8:52 AM » Why do people care so much about the minimum wage?
    Published Thu, Oct 21 2010 8:52 AM by Reuters
    Over at my old Time.com stomping grounds, Adam Cohen has written about the movement to have the federal minimum wage declared unconstitutional. This goes hand-in-hand with the emergence of the minimum wage as in the midterm elections. My question: Why do people care so much? For much of its recent history, the federal minimum wage hasn't even been all that binding. State minimum-wage laws have led to higher pay, or companies paid more on their own. the Labor Department, only 980,000 people made the federal minimum wage last year. Even when you add in the 2.6 million workers who made less (people like tip-collecting and just working for the summer), you still only wind up with 4.9 percent of all hourly-paid employees-- and just 2.9% of the total U.S. wage-earning workforce. Yes, it's true, in Econ 101 we all learn that price floors disrupt the most efficient allocation of resources in a marketplace. When it comes to low-wage workers, that leads to companies hiring fewer people than they would otherwise, leaving some folks who want jobs without them. But those who make it beyond one semester of economics find out that the world doesn't always work the way a rudimentary model would predict. In fact, in recent years to find explanations for in which higher wages do not, in fact, lead to lower employment. One theory: a higher wage forces employers to invest in their employees and figure out ways to make them more efficient (i.e., valuable). As Richard Florida , boosting efficiency in low-wage (mostly service sector) jobs is exactly what we should be doing right now. But I digress. Back to my original question: Why do people care so much about an economic policy that doesn't seem to have much of an impact on the economy? One reason might be because of the anchoring effect of the minimum wage. Even if only a few people are earning the minimum wage, its existence still sends a signal to the market that this is about what it should cost to hire an unskilled worker...
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