THIS PAGE WAS LAST UPDATED ON March 11th 2010 At 8:27 AM EST



Foreclosure filings issued to U.S. homeowners have fallen for the second straight month. According to new data released by RealtyTrac Thursday, default notices, scheduled auctions, and bank repossessions were reportedon 308,524 properties in February, or one in every 418 homes. That�s a 2 percent decrease from January, when foreclosure activity dropped by 10 percent.
But RealtyTrac�s CEO James J. Saccacio cautions against reading too much into the brief reprieve. �This leveling of the foreclosure trend is not necessarily evidence that fewer homeowners are in distress and at risk for foreclosure,� Saccacio said, �but rather that foreclosure prevention programs, legislation, and other processing delays are in effect capping monthly foreclosure activity � albeit at a historically high level that will likely continue for an extended period.�
February�s numbers are still 6 percent above the level reported one year earlier. But while it marked the 50th consecutive month of year-over-year increases in foreclosure activity, Saccacio said it�s the smallest annual increase his company has seen since January 2006.
According to RealtyTrac�s February 2010 U.S. Foreclosure Market Report, 78,683 properties became REOs during the month, a 10 percent decrease from the previous month. Bank repossessions were down nearly 15 percent from their peak of more than 92,000 in December 2009.
Looking at RealtyTrac�s rundown of the states with the highest foreclosure rates in the nation, the same usual suspects sat at the top of the list. For the 38th month in a row, Nevada ranked the highest, despite a 7 percent decrease in activity for the month and a 30 percent drop compared to February 2009. One in every 102 Nevada housing units received a foreclosure filing in February � still more than four times the national average.
Arizona and Florida documented nearly identical foreclosure rates, with one in every 163 housing units receiving a foreclosure filing in both states. Despite a nearly 21 percent decrease in foreclosure activity from the previous month, Arizona�s rate was statistically slightly higher than Florida�s rate and ranked second highest among the states.
California came in at No. 4, with one in every 195 homes in the state in some stage of foreclosure last month. Michigan�s foreclosure rate ranked fifth highest, with one in every 226 housing units receiving a foreclosure filing.
Other states with foreclosure rates among the nation�s 10 highest were Utah (one in every 275 housing units), Idaho (one in 296), Illinois (one in 305), Georgia (one in 331) and Maryland (one in 407).
Metro areas in the Sun Belt states of Nevada, Florida, California, and Arizona continued to dominate the top 10 highest metropolitan foreclosure rates, with Las Vegas taking the top spot.







Loan modification scams are on the rise, but HUD is taking action to put these con artists out of business.

Preventloanscams.org was recently launched by HUD in partnership with the Loan Modification Scam Prevention Network, a national coalition of public and private enterprises led by the Lawyers� Committee for Civil Rights Under Law. The Web site was created to provide homeowners with a single destination to report alleged scammers.
�Homeowners at risk of foreclosure can be easy prey for home loan modification scammers,� said John Trasvi�a, HUD assistant secretary for fair housing and equal oppportunity.
Trasvi�a said dishonest individuals often lure vulnerable homeowners into foreclosure rescue scams by making false promises, frequently claiming they can lower mortgage payments or stop the foreclosure process. Instead of receiving help, these troubled homeowners lose time and money, he explained.
Through Preventloanscams.org, complaints filed online are added to a national complaint database and are forwarded to the appropriate law enforcement center for review. In addition, HUD has directed its local fair housing and housing counseling grantees to begin reporting alleged loan modification scams via the Web site.
Before the launch of Preventloanscams.org, federal, state, and local government agencies could not share complaint data with nonprofit organizations. However, the new system allows for better analysis of trends across jurisdictional lines, which HUD says will likely lead to an increase in private enforcement action filings.
The network estimates that this online tool will assist approximately 50,000 homeowners affected by loan modification scams. Clearly, the creation of this national complaint database is a major step in the fight against loan modification scams.











The percentage of borrowers at least 60 days past due on their mortgage increased for the 12th straight quarter, hitting 6.89 percent by the end of 2009, according to new data released by TransUnion Tuesday. That�s an all-time high in the credit bureau�s study, dating back to 1992.

This statistic, which is traditionally seen as a precursor to foreclosure, increased 10.24 percent from the previous quarter�s 6.25 percent average. Compared to the year-ago delinquency rate of 4.58 percent, past due mortgages are up a staggering 50 percent, TransUnion said.
The Chicago-based company called the recent slowing in the pace delinquency increases �short-lived.� What was starting to become a trend came to an abrupt end in the fourth quarter, when the mortgage delinquency rate accelerated instead of decelerated as it had done since the beginning of 2009.
Based on TransUnion�s analysis, borrower delinquency rates last quarter continued to be highest in Nevada (16.19 percent) and Florida (14.93 percent). North Dakota (1.84 percent), South Dakota (2.46 percent), and Alaska (2.84 percent) continued to produce the nation�s lowest mortgage delinquency rates.
Areas showing the greatest percentage growth in delinquency from the previous quarter were the District of Columbia (+20.2 percent), Louisiana (+17.7 percent), and Delaware (+14.8 percent). Unlike last quarter, no state showed a decrease in mortgage delinquency rates from the previous period.
The news was not altogether bad, though, as bright spots appeared at the metropolitan level. Thirty-eight metro areas showed a decrease in their mortgage loan delinquency rates since third quarter, with Corvallis, Oregon heading the pack. This compares to only 27 metros that showed a quarterly decrease in delinquency last year between the third and fourth quarters.
�Variations in delinquency highlight the fact that the recession and the eventual recovery are both regional phenomena tied for the most part to localized house price conditions and unemployment levels,� said FJ Guarrera, VP of TransUnion�s financial services business unit.
�We�re not out of the woods yet,� Guarrera added. �The continuing rise in foreclosures, in conjunction with low consumer confidence in the housing market, continues to hinder housing value appreciation and impede recovery in the mortgage industry. Furthermore, there is wave of adjustable rate mortgages (ARMs) that have yet to reset.�
For these reasons, Guarrera explained that TransUnion�s forecasts for 2010 are slightly more pessimistic than they have been in the past. The credit bureau is expecting the 60-day mortgage delinquency rate to peak between 7.5 and 8 percent over the course of this year.
With regard to regional forecasts, Nevada is still anticipated to experience the highest mortgage delinquency rate by mid-2010, reaching as high as one in five mortgage borrowers.













Federal Reserve Board Governor Daniel Tarullo urged lawmakers Friday to craft reform legislation that would give regulators the authority to collect a broader range of data from lenders, including details of their loans and securities. It�s insight the governor says is needed toaccurately assess large financial firms� risk and ward off another crisis where the collapse of any one institution sends the system into a tailspin � as was the case when Lehman Brothers went under in 2008.
�The recent financial crisis revealed important gaps in data collection and systematic analysis of institutions and markets,� Tarullo said in prepared testimony before a subcommittee of the Senate Banking Committee. �Remedies to fill those gaps are critical for monitoring systemic risk and for enhanced supervision of systemically important financial institutions, which are in turn necessary to decrease the chances of such a serious crisis occurring in the future.�
Tarullo explained that the Fed has already initiated some new data collection and analytical efforts in response to the latest financial meltdown � including loan-level details on banks� largest exposures to other banks, nonbank financial institutions, and corporate borrowers. The central bank has also begun collecting data on lenders� trading and securitization risk.
�The Federal Reserve has made large investments in quantitative and qualitative analysis of the U.S. economy, financial markets, and financial institutions,� Tarullo said.
But Tarullo argued that most of the information the Fed collects from financial institutions relies on the firms� voluntary cooperation. He noted that the Paperwork Reduction Act requires approval from the White House
Office of Management and Budget in order to collect data from more than nine entities � red tape that Tarullo says �can delay the collection of important information in a financial crisis.�
He says regulators need information more frequently than banks� regular quarterly reporting, as well as better quality data to develop a true picture of how tightly knit some of the largest firms are to one another and the risk those relationships and common exposures could pose.
Tarullo proposed making such information available across the spectrum of federal agencies, as well as private sector participants who could assess and �raise their own concerns about financial trends and developments.�
�The current arrangement, in which different agencies collect and analyze data, cooperating in cases where a consensus exists among them, can certainly be improved,� Tarullo said. �Regulators have been hampered by a lack of authority to collect and analyze information from unregulated entities.�
The Fed governor told committee members that it would be up to Congress to decide which regulators should collect and analyze firms� systemic risk data, noting that the collection and analysis function should be separate from �decision-making.�
Tarullo threw his support behind the creation of a council of existing financial regulators to monitor systemic risks and coordinate a federal response to emerging threats, rather than creating a new and separate agency for this purpose. Under this approach, he said, the supervisory and regulatory agencies would maintain most data collection and analysis. Coordination would be handed over to the council, which should also have authority to establish data collection requirements beyond those conducted by its member agencies.
The Fed governor�s proposal is in line with the financial reform bill already drafted by the House, which makes an inter-agency council responsible for policing systemic risk and maintains the central bank�s power to implement economic policies to that end.
The Senate Banking Committee, on the other hand, is in the process of putting its own financial reform legislation to paper, and it�s leaning in the opposite direction � creating a new agency to monitor widespread risk within the financial system and stripping bank supervisory duties from the Fed and other regulators.












With tumbling property values leaving nearly a quarter of borrowers owing more on their mortgage than the home is worth, some may find it tempting to walk away even if they are financially able to keep makingpayments � either to get out from under the debt completely or to force the servicer�s hand for a modification. This idea of �strategic default� has become a universal concern within the industry, but one New Jersey company says it has a plan to counter such calculated flights of exodus.
According to the Loan Value Group LLC (LVG), it�s time to pay current borrowers to stay that way. The company introduced a new program this week that helps lenders and servicers identify borrowers at risk of walking away and implement an incentive program in which the homeowner receives a monetary �reward� if they remain current on their payments without changing the terms of the original mortgage note or reducing principal.
The Responsible Homeowner Reward (RH Reward) program was developed on a foundation of behavioral economics and employs patent-pending technology developed by LVG. The firm evaluates each individual borrower�s propensity to strategically default (as distinct from the risk of affordability default) based on a dozen criteria, including negative equity, income, and geography, and then determines the optimal size of each �reward.�
This financial compensation is awarded to the homeowner when the terms of the loan are satisfied and the mortgage is paid, although the reward can be applied to pay off the mortgage if the property is sold. If the borrower subsequently defaults after enrolling in the program, the reward is never paid, costing the loan owner nothing, LVG explained.
The company says the desired outcome for all parties is to create an incentive for the borrower that positively influences behavior, at a cost to the lender that is far cheaper than every other option, including the overall cost of a foreclosure, principal reduction, or loan sale.
In addition, LVG noted that typical loan modifications can take up to four months, but a borrower receiving an RH Reward can be closed in days after being selected to participate in the program. RH Reward can also legally be implemented for both securitized and unsecuritized loans without penalizing either the borrower or security holder.
Loan Value Group says the program is being launched with one of the largest investors in consumer and mortgage debt in the United States. The client, who requested anonymity during the rollout phase, has purchased and sold over $5 billion of debt since 2008, LVG said.
The social stigma attached to foreclosure has changed dramatically as the housing crisis has gained momentum, and defaulting strategically is not as frowned on by the general public as it used to be. Recent studies have shown that when a borrower is upside down on the mortgage by as much as 20 percent, they are far more inclined to simply walk away from the property.
According to the Loan Value Group, there are more than 10 million homes in the United States with substantial negative equity � representing nearly $2 trillion of mortgage debt. That�s an unsettling number that might feel inclined to take flight.
















New borrowers are asking their lenders for adjustable-rate mortgages (ARMs) these days, what with all the bad publicity paid to ARM resets in the face ofsoaring foreclosures. Indeed, their appeal in the past has been the rock-bottom borrowing costs that come with them initially, but with rates for fixed mortgages sitting at record lows themselves and the industry�s continued focus on �sustainable mortgages,� ARMs are losing their appeal.
An annual report on the ARM market published by Freddie Mac Tuesday shows adjustable-rate mortgages accounted for just 3 percent of all conventional home purchase loans in 2009. That�s the smallest piece of the pie for ARMs since at least 1982. At that time, information from the Federal Housing Finance Agency shows they made up 62 percent of all new mortgages.
�Fixed-rate lending has dominated the home mortgage market over the past year because of the 50-year low in interest rates for this product and the comfort that a fixed principal-and-interest payment assures the consumer,� said Frank Nothaft, Freddie Mac�s VP and chief economist.
While ARM lending has been limited, Nothaft says those consumers who prefer an ARM generally have many lenders and products to choose from. Lenders who offer ARMs are seeing more interest for hybrids as opposed to annually adjusting ARMs, according to Freddie Mac�s study.
The GSE says the most offered product in its survey was the 5/1 ARM, which has a fixed rate for five years and then adjust annually afterward. The survey shows more than four out of five ARM lenders quoted rates for 5/1 loans.



Mortgage companies with significant claim rates against the Federal Housing Administration (FHA) mortgage insurance program were the focus of an initiative announced Tuesday by Kenneth M. Donohue, HUD

inspector general, and David H. Stevens, FHA commissioner. As a result, HUD office of inspector general (OIG) subpoenas were served to the corporate offices of 15 mortgage companies, demanding documents and data related to failed loans which resulted in claims paid out by the FHA mortgage insurance fund.
�The goal of this initiative is to determine why there is such a high rate of defaults and claims with these companies and whether there is wrongdoing involved,� Donohue said. �We aren�t making any accusations at this time; we have no evidence of wrongdoing, but we will aggressively pursue indicators of fraud.�
The companies served with OIG subpoenas include:
1st Advantage Mortgage
Alacrity Financial Services, LLC
Alethes LLC
American Sterling Bank
Americare Investment Group, Inc.
Assurity Financial Services, LLC
Birmingham Bancorp Mortgage Corporation
D and R Mortgage Corporation
Dell Franklin Financial LLC
First Tennessee Bank N.A.
Mac-Clair Mortgage Corporation
Pine State Mortgage Corporation
Security Atlantic Mortgage Co.
Sterling National Mortgage Company Inc.
Webster Bank
The direct endorsement companies were identified from an analysis of loan data, focusing on companies with a significant number of claims, a certain loan underwriting volume, a high ration of defaults and claims compared to the national average, and claims that occurred earlier in the life of the mortgage. The OIG wants to know why these loans failed, and these are key indicators of problems at the origination or underwriting stages.
The initiative was prompted, in part, by Stevens. He was alarmed by the number of claims against the FHA insurance fund by a number of poor performing companies and reached out to the HUD OIG for assistance. As part of the President�s financial fraud enforcement task force, Donohue said Tuesday�s activities reflect the task force�s commitment to seeking information on red flags that may arise from data analysis.
�We are taking risk management extremely seriously,� Stevens said. �In addition to the policy changes we are implementing and additional changes we plan to announce later this month, we need to hold FHA lenders accountable for the high rates of defaults and claims against FHA.�
The investigation will be conducted by the OIG�s audit and investigation staff. Together, the staff will assess why these companies have high default rates, especially at this unprecedented time when the FHA mortgage insurance program represents such a significant percentage of mortgages currently in force in the United States.
In this new approach, the OIG is focused on corporate offices rather than individual branch offices. This, the department says, is a starting point for more detailed reviews if abuses are uncovered, and more probes are anticipated to follow.
�The FHA market share has skyrocketed,� Donohue said. �Our job is oversight. We work for the American taxpayer. Each loan on this list will be thoroughly examined, and we will track down the reasons why it failed. Once we determine the causes, we will look to see whether there is a need for further review or remedial action.�
As the mortgage landscape has shifted, Donohue said the OIG wants to send a message to the industry that the department is watching very carefully, and it is poised to take action against bad performers.












Record-low interest rates have helped to boost home sales, shrink inventories, and bring a hint of stabilizationto housing markets across the country, but they�re beginning to rise, with rates for some conventional mortgage products up more than a quarter of a percentage point within the past month.
Real estate practitioners, mortgage investors, and even some federal officials have expressed concern that rates will go even higher when the U.S. central bank stops buying mortgage securities early this year. According to minutes released this week of the Federal Reserve Board�s closed-door December meeting, Fed policymakers have already begun debating whether the program should be extended, to ensure the already-fragile housing recovery maintains its course, but the decision has left a dividing line down the central bank boardroom.
The Federal Reserve has said it will end its purchases of mortgage-backed securities (MBS) from Fannie Mae,
Freddie Mac, and Ginnie Mae on March 31, but the decision wasn�t unanimous. The Fed�s meeting records show that a �few members� think the exit date is too soon and will cause mortgage rates to shoot up and demand for home purchases to falter. Others though argue that the MBS program and the Fed�s backing should be scaled back with the improved outlook for the economy.
Over the past year, the U.S. central bank has purchased nearly 75 percent of the mortgages that Fannie, Freddie, and Ginnie have securitized. It currently holds just over $900 billion of these MBS bonds, and says by the time the program ends it will have bought a total of $1.25 trillion.
On Wednesday, federal banking regulators, including the Federal Reserve, issued an advisory to the nation�s financial institutions, warning them to ensure procedures and practices are in place to minimize their risks from loans and an increase in financing costs when interest rates do rise.
The government has already moved to reassure the market that the Fed�s withdrawal of its support won�t have as big a sting as some fear. In late December, the Treasury pledged �unlimited support� to Fannie Mae and Freddie Mac, and lifted the mandate that the two companies begin selling off large chunks of the securities they hold.
But some investors aren�t convinced. Ronald Temple, portfolio manager at Lazard Asset Management, told the Wall Street Journal that if the Fed stops buying mortgage bonds, we should expect mortgage rates to rise by at least a full percentage point. He says that combined with high unemployment and still large numbers of foreclosures could push home prices down as much as 20 percent.

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Homeowners in the United States were more optimistic about the future of the housing market last quarter than they have been in 18 months, according to the Zillow Q3 Homeowner Confidence Survey.

According to the Seattle-based company�s study, 41 percent believe their home�s value will increase in the next six months. An additional 43 percent say their home�s value will remain the same, with only 17 percent expecting their home�s value to drop.
�Homeowners are clearly confused about the housing market, and with good reason,� said Stan Humphries, Zillow�s chief economist. �Home values in different parts of the country have shown varied performance in the third quarter. While we have definitely seen some stabilization in recent months, there is a high likelihood that home values will see further declines driven by an increasing number of foreclosures coming into the market and, possibly, rising interest rates after the first quarter of next year.�
Humphries says the federal tax credits for homebuyers have the potential to stimulate demand and bring about a bottom sooner but, even so, he believes markets are unlikely to see a sustained period of significant appreciation in real terms.
�It seems that homeowners are still working under the assumption of a V-shaped recovery to home values when a long, L-shaped recovery is more likely,� Humphries said.
Regionally, homeowner confidence was all over the map in the third quarter, as home values in some parts of the country stabilized while other areas saw continuing declines.
Homeowners in the Northeast were the most cynical about home values over the past year, although the region posted the highest percentage of homes increasing in value during that same time period, Zillow said.
One in five Northeastern homeowners believes their own home gained value in the past 12 months, according to Zillow�s survey. But in reality, the company�s market analysis shows that 31 percent of homes in the region increased in value.
Homeowners in the West were the least realistic in the country, with 28 percent believing their own homes� values increased in the past 12 months. According to Zillow, only 17 percent of homes in the region actually increased.
Nationally, 25 percent of homeowners believe their own home�s value increased in the last 12 months. Zillow says 22 percent of U.S. homes actually gained value, while 72 percent depreciated.
The company also noted in its study that the level of pent-up supply � a component of the industry�s so-called shadow inventory � remained relatively steady from the second quarter to the third. Nearly 31 percent of homeowners surveyed by Zillow indicated they would be at least �somewhat likely� to put their home up for sale in the next 12 months if they see signs of a real estate market turnaround. That figure is up slightly from 29 percent in Q2.
Homeowners said that hearing more general good news about the economy, the ability to sell their home for more than they paid, and evidence of increasing home sales in their local market would be the primary indicators of a real estate turn around.









The delinquency rate for commercial mortgage-backed securities (CMBS) predictably climbed again in October. The latest index from Fitch Ratings puts delinquencies in this secondary market sector at 3.86 percent, an increase of 28 basis points from the previous month. Moody�s Investors Service places it even higher, at 4.01 percent.

Hikes were recorded across all property types. Fitch�s analysis shows that hotels are performing the worst, with 6.81 percent of these mortgagors behind on their payments, a 17 percent increase compared to September.
Hotels were followed closely by the multifamily sector with a delinquency rate of 6 percent. Retail had the third highest percentage of properties in default, at 3.55 percent. The delinquency rate for industrial properties was 3.09 percent.
Although the office delinquency rate was the lowest in Fitch�s study, at 2.29 percent, it recorded the largest month-over-month increase, up 19.4 percent. Fitch hung
the blame for the office segment�s jump on three individual newly delinquent high-dollar loans, each worth more than $50 million. The ratings agency said the largest of these troublesome assets is a $165 million loan to Maguire Properties Inc. in Southern California.
According to Susan Merrick, managing director and U.S. CMBS group head at Fitch, continued job losses will be especially disruptive for the commercial office sector. �With the looming possibility of leases expiring on space under-utilized by companies that have downsized, office performance may not reach a trough for a few years,� Merrick said.
Fitch-rated commercial loans that are at least 60 days delinquent or in foreclosure tally 1,910, worth a collective $17.8 billion, the agency reported.
Moody�s reported similar sharp climbs in delinquency rates for hotel and office properties. The agency said the hotel rate skyrocketed to 6.2 percent, an increase of 25 percent from September. Office defaults were up 17 percent, posting a delinquency rate of 2.7 percent for the sector last month.
Based on Moody�s analysis, the multifamily housing sector is the worst-performing among commercial properties, with a delinquency rate of 6.47 percent.
According to Moody�s CMBS delinquency rates have grown by 36 basis points on average for the past six months. The agency says that�s �significantly higher� than the 21 basis points average for the previous six month period.
�The October increase is in line with the steady rise in the delinquency rate over the past five months,� said Nick Levidy, managing director at Moody�s. �We anticipate the rate to increase further.�









Some lenders are moving to liberate their balance sheets of so-called toxic real estate loans that have led to billions in write-downs as property values have plummetedand defaults have soared. According to multiple media reports, a number of banks have sold off portfolios of these underperforming assets in recent months � and although they must initially absorb the losses incurred from the discount sales, it sets the stage for much healthier numbers.
According to CNN, Marshall & Ilsley unloaded nearly $500 million of at-risk loans during the first nine months of the year. The regional bank headquartered in Milwaukee, Wisconsin also has operations in the hard-hit real estate markets of Florida and Arizona.
Georgia�s Synovus Financial Corp. got rid of some $339 million in troubled commercial development loans and mortgages in the third quarter alone, and has plans to sell another $261 million by the end of the year, CNN reported.
Some banks, particularly large ones, have expressed reluctance in selling off their bad loans, in hopes that property values will recover, the economy will turn around sooner than later, and these assets will start producing again. This seemed to have been the prevailing sentiment earlier this year when the Obama administration was pushing banks to clean up their balance sheets by selling off distressed assets through the Public-Private Investment Program (PPIP).
Bank of America, though, looks to have departed from this mindset. According to a recent American Banker report, BofA has sold at least three pools of nonperforming pay-option adjustable-rate mortgages (ARMs) it inherited from Countrywide, each ranging from $10 million to $15 million.
GlobeSt.com reported just last week that The Carlton Group, an international real estate investment bank that specializes in commercial and residential loan sales, is currently taking bids on a $144 million portfolio of nonperforming condominium loans and REO assets in Florida and Alabama for what the firm calls �a major financial institution.� The company has previously announced it was marketing a nine-state portfolio worth $350 million, GlobeSt.com said.
The CNN report cites a study by SNL Financial that shows banks collectively sold nearly $1 trillion worth of 1-4-unit residential mortgages during the second and third quarters of 2009. That�s more than twice the amount sold during 2007 when the U.S. housing market was just beginning to show signs of strain, the news agency said.
Operating banks trying to offload distressed assets are now competing with the FDIC for buyers. As receiver of the many lenders who�ve gone under since the nation�s economic downturn, the federal agency retains the assets not purchased by the acquiring institution and sells them off later at deep discounts to recoup some of the cost it incurs from the failure.
The Bizjournal Web site Portfolio.com said in a story posted this week that the FDIC sold a $14 million commercial loan originated by the failed Integrity Bank for $4 million to a Norwegian investment fund.
According to the news site, the FDIC has auctioned off 3,768 commercial mortgages so far this year. The face value of both the performing and nonperforming loans was $1.8 billion � they were sold, on average, at 32 cents on the dollar, Portfolio.com reported.



Due to take effect on January 1, the amended regulatory requirements of the Real Estate Settlement Procedures Act (RESPA) are intended to improve the disclosures borrowers receive when applying for a mortgage.

HUD announced Friday that the staff of its Mortgagee Review Board (MRB) has been urged to exercise restraint in enforcing the new RESPA requirements during the first four months of 2010.
This restraint is to be used in considering an action against Federal Housing Administration (FHA) approved lenders who have demonstrated they are making a �good faith� effort to comply with RESPA�s requirements. HUD has also asked other federal and relevant state agencies to exercise the same 120-day restraint in enforcement for non-FHA originators and settlement service providers who have shown they are making an effort to abide by RESPA�s new rules.
The determinant of whether a mortgagee has made a �good faith� effort will be made by MRB staff, who will consider whether the company has relied on the new RESPA rule and other written guidance issued by the HUD. The extent to which the mortgagee has made sufficient investment and commitment in technology, training, and quality control designed to comply with the new rule will also be evaluated while making this determination.
Shaun Donovan, HUD secretary, said, �We will work with those who are making an honest effort to work with us as we implement these important new consumer protections. While we will not delay implementation of RESPA�s new requirements, we are sensitive to the concerns of the industry as it integrates these new rules into their day-to-day business practices.�
Under HUD�s new regulations, lenders and mortgage brokers will be required to provide consumers with a Good Faith Estimate (GFE), clearly disclosing key loan terms and closing costs. Additionally, agents will be required to give borrowers a new HUD-1 Settlement Statement, which will clearly compare consumers� final and estimated costs. These documents be required starting January 1. While the new RESPA rule became effective on January 16, 2009, the mortgage industry was granted one year to incorporate these changes.
HUD says it will continue to work with the mortgage industry to help mortgagees comply with the new RESPA rule.
By improving the disclosures borrowers receive when applying for a mortgage, and by promoting comparison shopping, HUD believes its new RESPA regulation will save consumers an average of nearly $700 in mortgage costs.

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The influx of foreclosed homes on the market is grabbing the attention of investors.

According to a homeownership survey released Wednesday by Move.com, the number of consumers interested in investing in real estate has doubled since March 2009. The number of buyers planning to purchase a home as an investment property increased to 12.1 percent, compared to 5.6 percent just seven months ago.
Buyers purchasing foreclosures account for 25.3 percent of those interested in purchasing a home, the survey said. Of these buyers, 42 percent are purchasing properties as investments.
As investment properties, 13.2 percent of buyers intend to convert foreclosures into rentals, 11.3 percent will fix them up for resale, and 17.4 percent plan on using the property to house a family member until the home can be sold for a profit, according to the survey.
Through a combination of deeply discounted purchase prices and stable appreciation rates over the next five years, the Move.com survey found that foreclosure buyers are expecting to profit from their purchase.
Paying 20 percent or less than market price for a foreclosure is expected by 58.2 percent of buyers, while 38.5 percent expect to receive a 25 percent or greater discount.
Appreciation of the property is also expected by these buyers, with 73 percent anticipating a 10 percent or greater appreciation in the next five years, and 28 percent expecting an appreciation of 20 percent or more during this time. The Federal Housing Finance Agency�s (FHFA) purchase index indicates that homes have appreciated an average of 15 percent nationally since 2004, according to Move.com.
The survey also uncovered the motivating factors behind a buyer�s purchase of a home. While 23.6 percent of buyers are concerned that prices are as low as they will go, 18.7 percent had a desire to take advantage of foreclosure bargains. With 21.2 percent of buyers aiming to take advantage of the greater selection of homes for sale in their local neighborhoods, 14.2 percent fear an increase in interest rates.
�This latest Homeownership Survey validates what many had hoped to see in the housing markets � affordable prices and ample inventories are restoring the appeal of real estate to investors while providing opportunities for first-time homebuyers to enter the market,� Errol Samuelson, Move, Inc.�s chief revenue officer, said. �In today�s environment, regardless of whether you�re an investor or interested in purchasing a home to live in yourself, residential real estate is a more attractive investment today for many than it has been in recent years.�
First-time homebuyers are also taking advantage of the low prices and �deals� currently associated with residential real estate. Almost 10 percent of consumers say they plan to buy a home in the next two years, and 48.3 percent of these will be first-time buyers.
The survey explained that perceptions related to affordability have improved in the last four months, but said most Americans are still unaware of how affordable homes are today. In June 2009, 76.4 percent of Americans said they thought a family earning the national median income of $52,029 could afford 50 percent or fewer of the homes for sale in their area. Today, only 50.4 percent of Americans continue to believe this. In reality, households earning the national median income can afford approximately 70 percent of homes listed for sale on Move.com�s network of real estate Web sites.
�In the past year, affordability has improved significantly, especially for first-time homebuyers, and is higher now than at any time the past two decades,� Samuelson said. �Even more encouraging is that 34.1 percent of survey respondents said they expect median income families will be able to afford more than 50 percent of the homes in their neighborhood a year from now. This sentiment is especially true with people ages 18 to 34, the nation�s next group of first-time homebuyers.�
The Move.com survey also showed consumers responses to the federal government�s involvement in housing issues, their fear of foreclosure, and how the economy may be impacting homeowners. This homeownership survey is based on approximately 1,004 interviews completed in October. With more than 9.3 million monthly visitors to its online network of Web sites, California-based Move, Inc. claims to be a leader in online real estate.











Home prices have plummeted 40 to 60 percent from their recent peaks in some California and Florida markets, where the big bubbles of the last housing boom have popped with haste and brutal force.

Although home purchase transactions are generally up in all geographic markets, it�s these areas with the steepest price declines where buying activity is most pronounced, according to the latest market report from Integrated Asset Services, LLC (IAS).
Dave McCarthy, president and CEO of IAS, a default management and residential collateral valuations company headquartered in Denver, Colorado, says the data clearly indicates that �there is some bargain hunting going on.�
Frugal buyers may want to seal the deal sooner than later, though. Based on the company�s IAS360 House Price Index, home prices in some of those low-priced California and Florida markets jumped considerably from August to September.
In Fresno, California, where prices have plunged 42.5 percent since 2006, they rose 5 percent in September compared to the month prior. San Bernardino, California saw its average home prices go up 4 percent in September, and in San Joaquin, California prices gained 3.9 percent. Property values in these two metro areas have dropped 60 percent from 2006 peaks.
In Hernando, Florida home prices have fallen 46 percent from peak levels, but between August and September, prices rose 2.6 percent. In Lee, Florida, where home values are down a staggering 69.5 percent compared to 2006 peaks, they added back 1.2 percent in September.
According to IAS, the gains in these previously hard-hit counties largely offset the noticeably downward trend for many other regions around the country. Overall, national home prices fell 0.6 percent in September, IAS said in its monthly study.
But compared to the 3.1 percent nationwide decline for the same period last year, IAS said September�s modest drop indicates the typical seasonal downturn has been somewhat delayed.



The U.S. Senate voted Wednesday to extend and expand the popular first-time homebuyer tax credit. The measure cleared the chamber with a vote of 98 to 0.

It now goes to the House of Representatives for approval. According to a statement from House Majority Leader Steny H. Hoyer (D-Maryland), it will be brought �to the House floor for a vote as early as tomorrow [Thursday].�
The bill is widely expected to pass the House as well, and then needs only President Obama�s signature.
The $8,000 tax break for first-time buyers, which was set to expire at the end of this month, would continue until April 30, by which buyers would have to have signed a contractual purchase agreement, but not closed on the sale. Another 60-day cushion beyond the end of April would be allowed to complete the closing.
The measure removes the first-time-only stipulation, though, opening the benefit up to existing homeowners who�ve lived in their current residence for at least five years but want to relocate to a new primary residence. The incentive amount for those buyers is $6,500.
The income limits for both first-time buyers and existing homeowners would be $125,000 for individuals and $225,000 for couples � up significantly from the current first-time buyer thresholds of $75,000 per individual and $150,000 per couple.
The tax break would only be offered on homes priced at $800,000 or less, and beneficiaries who sell the home or stop using it as their primary residence within three years would be required to repay the credit.
The housing tax credit expansion was appended to a larger bill that also included an extension of unemployment insurance benefits and provisions that allow companies to apply net operating losses to previous years� numbers in order to reduce their business tax.















Transaction prices of commercial property sold by institutional investors rose in the third quarter for the first time in more than a year, suggesting that the U.S. commercial property market may have finallyfound a bottom, according to the MIT Center for Real Estate in Cambridge, Massachusetts.
The center�s transactions-based index (TBI) rose 4.4 percent from the second quarter, the largest increase since before the market downturn began in mid-2007. While the price index is now 36.5 percent below its 2007 peak, it is not as low as the 39 percent deficit seen last quarter.
�One quarter does not a trend make, and we are still well below normal trading volume,� David Geltner, director of research at the MIT center, said in a statement. �Nevertheless, this is the strongest sign of a bottom that we�ve had in two years.�
He noted that not only did the price index show gains, but that transaction volume grew substantially for the second quarter in a row, reflecting the first increase in market sentiment in two years.
The demand index, which tracks the prices that potential buyers are willing to pay, posted its first increase after eight consecutive quarters of decline, with a 12 percent jump.
The MIT affiliate publishes not only the price index based on closed deals, but also compiles separate indices on the demand side and the supply side of the institutional property market.
�The demand index can be considered a gauge of market sentiment, at least among the all-important buy-side of the market,� explained Geltner.
That index fell steadily for eight quarters, down to a level 48 percent below its mid-2007 peak last quarter. Now it is back up to a level only 42 percent below peak.
Combined with a continued decline in the supply-side index, which gauges the prices property owners are willing to accept, the upsurge in demand led to the strong increase in transaction volume and the beginnings of a reliquification of the market, the MIT Center for Real Estate said.
The supply-side index was down 2.5 percent in the quarter, a level 32 percent below its 2007 peak.
The TBI tracks the prices that institutions such as pension funds pay or receive when transacting commercial properties like shopping centers, apartment complexes, and office towers.
















Pending home sales rose again, marking eight consecutive monthly gains for the National Association of Realtors� (NAR) forward-looking sales indicator � the longest streak since measurement began in 2001.

NAR�s Pending Home Sales Index, based on contracts signed in September, rose 6.1 percent compared to August�s reading, and is 21.2 percent higher than September 2008. The gain from a year ago is the largest annual increase on record, raising the index to its highest level since December 2006, NAR said.
Lawrence Yun, NAR�s chief economist, said the momentum comes from the government�s homebuyer tax incentive. �What we�re witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month,� Yun said.
Proponents lobbying for an extension of the homebuyer tax credit say the accelerated pace of sales transactions could continue if Congress moves to extend and expand the housing tax break this week, as promised.
According to Yun, if the increased home-purchase demand can be sustained, home values will stabilize sooner rather than over-correcting.
NAR estimates that approximately three million renters are now financially well-qualified to buy a median-priced home � a sizable, pent-up demand that Yun says is just waiting to be tapped.
Yun added, though, that strong near-term reports should not be overstated. �We�re clearly not out of the woods because an excess of homes remains on the market despite recent improvements,� he said. �Although current inventory is getting closer to price equilibrium, foreclosures will continue to enter the pipeline. An extended and expanded tax credit would help absorb this incoming inventory.�

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The Obama administration�s top economist and housing czar have joined forces to persuade lawmakers to pass three key measures they said would further �stabilize the housing market.�

Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan released a joint statement Thursday urging Congress to extend the popular First Time Homebuyers Tax Credit, secure funding for the planned Housing Trust Fund, and retain higher loan limits for federally backed home mortgages.
�These three measures provide comprehensive support to our recovering housing market and continued access to affordable housing,� Donovan told the legislators. �While extending the tax credit and higher loan limits will help promote homeownership, funding the Housing Trust Fund will provide assistance to renter households impacted by the economic crisis.�
Geithner and Donovan struck a favorable chord with housing industry groups, particularly on the extension of the current higher loan limits on Fannie Mae, Freddie Mac, and Federal Housing Administration mortgages.
Representatives of the Mortgage Bankers Association, the National Association of Home Builders, and the National Association of Realtors sent House leaders a letter Thursday, praising the higher limits as �a key component of the economic recovery efforts because they help make affordable loans available� for a greater number of prospective homebuyers.
�Even though the temporary limits do not expire until the end of this year, obtaining financing is already becoming more difficult and expensive for many borrowers,� the letter said. �Therefore, we request Congress extend the limits as soon as possible so as not to jeopardize the fragile recovery.�
The trade groups also agreed with the administration on an extension of the Homebuyers Tax Credit, which is set to expire on November 30. The $8000 incentive has widely been praised for stimulating sales of housing stock and stabilizing market values that had seen big drops in the recent U.S. economic downturn.
�This credit has brought new families into the housing market and contributed to three consecutive months of rising home prices nationwide,� Geithner and Donovan said Thursday in calling for its renewal for a �limited period.�
�In extending the credit, we urge Congress to include strict measures to combat tax fraud and protect responsible homeowners,� they added.
The third measure seeks to pin down funding for the Housing Trust Fund, which was created by Congress last year to assist very low-income families find adequate housing. �While the president�s budget proposed to fund the Housing Trust Fund for $1 billion, and fully offset it within the budget, today the administration is announcing that it will actively work with Congress to identify a specific offset to assure that level of financing for the fund,� Geithner and Donovan said.
There is no indication of when Congress might take up the three proposals for consideration and voting. Several key senators, however, expressed their support this week for the extension of the Homebuyer Tax Credit, suggesting that measure would likely pass swiftly once brought to the lawmakers� floor.








Senators Say Homebuyer Tax Credit Is "In the Bag"
The U.S. Senate�s chief Democrat, Majority Leader Harry Reid, said Wednesday that his party has reached a consensus to extend the first-time homebuyer tax credit. The party support isn�t one-sided, though. The chamber�s foremost Republican, Sen. Mitch McConnell, also acknowledged that most senators support the measure. The harmony comes with yet another makeover for the tax break measure - the amount has been reduced, deadlines loosened, and more than just first-timers would be eligible.


Distressed Asset Sales from Crisis Will Be Big, but Market Slow to Develop
10/21/2009 By: Darrell Delamaide

While the market for distressed assets from the financial crisis may be the biggest since the savings & loan disaster of the 1990s, it is taking longer to develop and it may be next year before asset sales begin in earnest.

A recent report by Ernst & Young said a broad spectrum of buyers are simply waiting for the dam to burst and unleash a highly anticipated wave of deals, according to Commercial Property Executive.

In the wake of the S&L crisis, the Resolution Trust Corporation (RTC) forced the sale of bad assets and quickly set market-clearing price levels. In the current crisis, by contrast, there are very few deals other than one-off distressed sales. The government�s public-private partnership to handle asset sales has been slow to get off the ground as sellers are weighing their options.
Once sales do begin, Ernst & Young expects the market to be highly competitive from the outset. About 35 percent of investors polled in a survey claim to have return requirements above 20 percent and an equal number are aiming for returns in the 10 to 15 percent range.

About 47 percent of the respondents to the survey believe that a significant increase in commercial mortgage defaults will begin before the end of the fourth quarter, while just over 30 percent believe the market is already witnessing significant default activity. About 20 percent don�t expect major default pressure to come to bear on the market until next year, according to Ernst & Young.

A little more than half of respondents, 53 percent, purchased distressed or nonperforming loans in the past year and a half, with 47 percent staying out of the market.

More than 45 percent of those responding said they were looking at commercial whole loans as their primary target, followed by 18 percent looking at residential and land loans, and 11 percent looking at residential acquisition and development (A&D) and construction loans. Commercial and residential mortgage-backed securities and loans backed by hotel assets each appealed to fewer than 10 percent of respondents.

In the meantime, Commercial Property Executive reported, Oklahoma City-based loan sale advisor First Financial Network plans to sell $150 million in loan participations on November 3 on behalf of the FDIC from four failed banks in receivership.

First Financial Network regularly offers packages of loans and loan participations as a conduit for the FDIC, which tries to get the maximum value from the assets.


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Foreclosures of Rich and Famous People
Published on Tuesday, September 22, 2009, 8:16 PM Last Update: 18 hour(s) ago by Kimbrough Gray
Category: All Articles � Economy and Politics
Although the rich and famous are rich and famous, it doesn�t mean that they are impervious to the popping of the real estate bubble. Many have succumbed to real estate woes as of late.

Ed McMahon had tabloids a talking when his real estate troubles became front page news last year. The now deceased celebrity attributed his dollar difficulties to alimony paid out to ex-wives and the economic downturn.

Aretha Franklin set the record straight about her exclusive Detroit suburban home. It went into foreclosure due to non-payment of property tax. She could have lost her $400,000 home to foreclosure due to $445 in back property taxes that accumulated into $20,000, since 2005. She said it was an oversight by her attorney. Once alerted of the situation, the Queen of Soul satisfied the debt.

Amber Frey, infamous ex-mistress of convicted murderer Scott Peterson lost her home northern California home to foreclosure. At auction, the asking price was over $200,000 less than the original purchase price. No one snatched up the deal at a low $305,000. She ended up surrendering the property to the bank.

Fantasia of American Idol fame came close to losing her home in Charlotte, North Carolina. The R&B singer settled with her Florida lender just days before the auction was scheduled to sell her pond-front home.

Extreme Makeover scandal hit the Harper family home in Atlanta, Georga when it went into foreclosure and would have been sold had it not been for ... even more ... generous donations. The most expansive Extreme Makeover ever seen was completed with much dedication, sweat and effort by volunteers, along with a deluge of donated dollars. Taking out a $400,000+ loan for a construction business that went belly up put the Harper�s home in harm�s way.

Laura Richardson, California Congresswoman, fell behind on property tax and mortgage payments in 2008. To the disdain of Sharon Helmar who sold it to her, the Long Beach home went into foreclosure and was sold. Neighbors noted that she did not keep up the lawn or take out her garbage.

Sports figures are not unfamiliar with foreclosure, either. Latrell "Spree" Sprewell, former NBA guard known for choking his then Coach P. J. Carlesimo, lost his 70-foot yacht and his Milwaukee home to foreclosure. Assessed at a mere $668,000, the home�s value was nowhere near what most other sports professionals in his pay range own.

Jose Conseco experienced women woes, which caused him to lose his expansive 7,300 square foot Encino, California mansion. At least, that�s his story. He said he lost $7 to $8 million on his two divorces that left him hard up for cash and was unable to pay his mortgage.

Not to anyone�s surprise, Michael Vick�s home was in foreclosure, since he was in prison and no longer could come up with the cash. Once NFL�s highest paid player, the dog-fight diva was convicted and was to serve 23 months in prison. He was released earlier this year to serve out the rest of his sentence in home confinement.

Evander Holyfield, famous for his fight with Mike "I�ll Bite Your Ear Off" Tyson, had his Fairburn, Georgia home in foreclosure. He was also behind on child support payments to a mother of one of his eleven children, and being sued for not paying $550,000 he loaned he owed to a consulting company.

Michael Jackson (King of Pop), MC Hammer (Hammertime fame), Veronica Hearst (Randolph Hearst widow), Scott Storch (previous hip-hop producer), Damon Dash (hip-hop mogul), Doug E. Fresh (rap icon), Vin Baker (former NBA star), Wyclef Jean (Fugees� frontman) and other famous actors, performers and sports professionals have all experienced foreclosure.

Ki graduated from UT with a CS degree. Now he works with Austin real estate. He has a website allowing buyers to search Austin MLS listings. He also keeps an updated blog on Austin Texas real estate.



Congress Faces Pressure to Extend Home Purchase Tax Credit
10/14/2009 By: Darrell Delamaide
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Pressure is mounting for Congress to extend the $8,000 tax credit for first-time homebuyers, currently scheduled to expire November 30, and perhaps extend it to all buyers.



The New York Times quoted Moody�s chief economist Mark Zandi as saying that by the time the credit expires, it will have been responsible for sales of 400,000 new and existing homes, out of a total 1.4 million sales.

Zandi warned that the impact of letting the credit expire, coming just as sales of foreclosed homes are rising, would increase downward pressure on home prices and jeopardize the economic recovery.

While the current amount of the tax credit and the income caps for claiming it are likely to remain in place, the credit may be extended to all homebuyers, according to Democratic leaders in Congress.

House Speaker Nancy Pelosi said at a recent press conference that extension of the homebuyers� credit is under consideration. �And the question is, would that be just first-time homeowners or would you open it up to other purchasers of homes?� she added.
The other question, according to Rep. Charles Rangel (D-New York) is how long it should be extended for.

A recent survey by Zillow found that nearly one in five prospective first-time homebuyers (18 percent) said extending the $8,000 tax credit would be the primary influence on their decision to buy a home before the end of 2010.

That would equate to 334,000 buyers in the period from December 1, 2009 to November 30, 2010, if the credit is extended for a year.

In the Zillow survey, a further 25 percent of those queried said the tax credit would be a �significant influence� in their decision to buy, while another 27 percent said it would have �some influence.� The remainder, 31 percent, said it would have no influence.

Zillow calculated that if the credit were extended, a total 1.86 million first-time homebuyers would purchase homes in that period. If all were able to take advantage of the full $8,000 tax credit, this could mean up to nearly $15 billion in tax credits.

Zillow chief economist Stan Humphries said the tax credit would have a substantial impact if it motivated 334,000 additional home buyers. �Their addition to the market next year could make the difference between a robust annual increase in home sales and a flat or negative change in home sales relative to this year,� he said.

However, he noted, that has to be weighed against the cost, since four of five prospective homebuyers would probably proceed with a purchase even without the tax credit.

In the meantime, the House has voted 416-0 to extend through 2010 the benefits of the first-time homebuyer tax credit to military, intelligence, and diplomatic personnel who have been outside the United States on active duty for at least 90 days in 2009.


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Countrywide REOs Fall to Early 2007 Levels as Housing Market Recovers
10/13/2009 By: Darrell Delamaide
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The number of foreclosed homes currently on offer by Countrywide has fallen to early 2007 levels, indicating that the housing market is recovering and may be poised for a rebound.

The Countrywide Foreclosures Blog reports that there are currently 5,959 foreclosed homes being offered for sale on the Bank of America/Countrywide Web site, compared to the peak of 21,500 in November 2008.


The four states with particularly severe foreclosure problems � California, Florida, Arizona, and Nevada � show a similar pattern, with the number of lender-owned properties falling to two-year lows in October.

Countrywide, which financed 20 percent of home mortgages in 2006, remains a bellwether for the market. Now part of Bank of America, it remains the largest mortgage company in the country.

The lender�s total REO asking price in October was $941 million. The average asking price per property was $150, 915, ranging from $62,935 in Michigan to $423,963 in Hawaii.

By far the largest contingent of REOs was in California, where Countrywide had 1,278 properties for sale for a total of $300 million, or an average asking price of $234,431.

Second-place Florida had 400 REOs for sale for $52 million in total, or $129,028 on average.


Banks� Commercial Mortgage Denial Worries Fed
10/09/2009 By: Adam Weinstein
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The Federal Reserve last month secretly expressed concerns that U.S. banks are dragging their feet in an �extend and pretend� philosophy to avoid booking losses on their ailing commercial real estate loans, the Wall Street Journal reported this week.



In a late-September report presented to financial regulators, the Fed said that because those banks �are slow� to acknowledge losses on rent defaults and lower property values, the government should prepare for a new avalanche of housing-related losses by banks that remain highly leveraged in the commercial sector. �Banks will be slow to recognize the severity of the loss � just as they were in residential,� the Fed presentation concluded, according to the Journal report.

The paper noted that the presentation�s author, real-estate researcher K.C. Conway of the Atlanta Federal Reserve Bank, did not represent a formal opinion by the agency. But it said concerns about a second, commercial-related property downturn are beginning to circulate throughout the Fed. Bill Dudley, the New York Fed�s president, echoed those worries in a speech he gave Monday. �More pain likely lies ahead for this sector and for those banks with heavy commercial real estate exposures,� he said.
The Journal�s own analysis underscored that sentiment. According to the paper�s estimate, more than 800 banks that are highly leveraged in commercial real estate set aside only 38 cents in cash reserves for every dollar they held in bad loans through the second quarter. By contrast, the banks held four times that amount in reserves at the beginning of 2007.

Conway�s report said the news would only worsen over the next year or more. He said vacancy rates for apartments, retail space and warehousing were already greater than they�d been during the last real-estate bust in the 90�s. He also projected 45 percent losses in commercial real estate for 2010.

As a result, many banks are extending loans when they come due, even if the underlying properties are �underwater� and the loans couldn�t be made now. They�re forestalling losses on their portfolios out of �capital concerns�.

That�s �an extend-and-pretend philosophy by banks to forestall hits to their balance sheets that might occur,� Patrick Phillips of the Urban Land Institute told the Journal.

Of particular concern to Fed regulators are �interest only� loans, the commercial paper most likely to be toxic. The borrowers repay interest on a monthly basis but not principal. With interest rates so low, most of those borrowers are now staying current, Michael Straneva, Ernst & Young�s real-estate head, told the paper. �But the question is whether the loans will get paid off when they come due,� he said.

Plenty of banks are willing to pretend that those loans will get paid, said Matthew Anderson, of the research firm Foresight Analytics.

�It�s like taping paper over a hole in the wall,� he said


Mortgage rates near record lowA tlanta Business Chronicle - by Jeff Clabaugh
Long-term mortgage rates are near the lowest levels since Freddie Mac started keeping track in 1971, with the average 30 year fix falling to 4.87 percent this week.

That�s the lowest 30 year average since falling to 4.82 percent in May. A year ago, 30 year fixed-rate mortgages were averaging 5.94 percent. Rates have been below 5 percent for four straight weeks now.

Shorter term fixed rates are even lower, with the average 15 year fixed rate mortgage at 4.33 percent.

"Long-term mortgage rates eased further this week," said Freddie Mac (NYSE: FRE) chief economist Frank Nothaft. "Compared to a year ago, consumers could shave almost $134 off their monthly mortgage payments on a 30-year fixed-rate loan for $200,000 by refinancing."

Low rates are attracting both buyers and existing homeowners. The Mortgage Bankers Association reports a jump in mortgage applications last week, led by an 18 percent surge in applications to refinance an existing mortgage.



10/7/2009 - Thursday�s bond market has opened flat despite early stock gains and stronger than expected unemployment data. Stocks are rallying with the Dow up 80 points and the Nasdaq up 25 points. The bond market is nearly unchanged from yesterday�s close, but we will likely see an improvement in this morning�s mortgage rates of approximately .125 - .250 of a discount point due to strength late yesterday.

The Labor Department reported this morning that 521,000 new claims for unemployment benefits were filed last week. This was lower than expected and the lowest total in approximately nine months. This is considered bad news for bonds, but fortunately this data is not considered to be highly important and has had little impact on this morning�s mortgage rates.

Yesterday�s 10-yeat Note sale actually went very well. Investor demand was strong, indicating there is still an appetite for U.S. debt. The bond market moved higher after the results were posted yes terday afternoon, but the rally fell well short of what would be expected. This could be a result of concerns about today�s 30-year Bond sale, or could mean that there is strong resistance at current prices. I am thinking the latter, which is the reason for the conservative approach towards mortgage rates. Theoretically, bonds could still move higher, pushing mortgage rates lower. However, until we are able to break below current levels, I am staying on the conservative side as rates will almost always spike higher faster than they move lower.

There is no monthly or quarterly economic data scheduled for release today. Look for any swings in stock prices to affect bonds, particularly since we are heading into corporate earnings season. Today�s 30-year Bond sale probably will not heavily influence mortgage rates this afternoon, but it does have the potential to cause rate changes. I believe its potential negative impact on rates is greater than its likely posi tive impact. This means that a strong sale today may lead to minor improvements to mortgage pricing this afternoon, but a weak sale could lead to a noticeable increase in rates.

Tomorrow morning brings us the only factual economic data of the week, but it is one of the least important reports we get each month. August�s Goods and Services Trade Balance will give us the size of the U.S. trade deficit, but usually does not lead to significant movement in bond prices or mortgage rates. It is expected to show a $32.9 billion trade deficit.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Lock if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.



Feds Spent $1.2 Trillion to Keep Fannie, Freddie, Others Afloat in FY 2009
10/07/2009 By: Adam Weinstein
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The U.S. Treasury and Federal Reserve pumped a total of $1.2 trillion in investments into the U.S. mortgage market in fiscal 2009, according to a report by the government last week.



The Federal Housing Finance Agency gave a full accounting of the infusions so far � most of them to the troubled government-sponsored mortgage enterprises Fannie Mae and Freddie Mac. But in a speech at the New England Mortgage Bankers Conference in Providence, Rhode Island, the agency�s acting director, Edward DeMarco, argued that another three quarters of a trillion dollars was available if necessary.
The amount already spent remained impressive, however. By the fiscal year�s end on Sept. 30, the Treasury Department had given Fannie and Freddie $96 billion in cash for preferred stock shares, and another $181 billion to purchase underperforming mortgage-backed securities from the firms.

The lion�s share of the outlays, though, came from the Fed�s coffers. The national bank has paid $885 billion for mortgage securities, most of them issued by Fannie or Freddie, and also has given the GSEs $131 billion to buy up their debt obligations.

DeMarco called these infusions a �considerable backstop� and said they empowered the firms to play �a critical role in bringing some measure of liquidity to the mortgage market.

In a separate development, Freddie Mac warned prospective buyers of its foreclosed properties that bids needed to be in by Oct. 30 to collect on an offer that would cover part of the sale�s closing costs. Freddie has 34,700 in real estate owned properties.

Buyers also must close on their homes by Dec. 31 to qualify for the closing cost discount.

�Every home shopper should know there are only 30 days left to save potentially thousands of dollars in transaction costs when they buy a HomeSteps home,� Freddie vice president Chris Bowden said in a statement.

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Wednesday�s bond market has opened in positive territory despite a lack of factual economic data being posted today. The stock markets are showing minor gains after a strong two-day rally. The Dow is currently down 24 points while the Nasdaq has slipped 2 points. The bond market is currently up 15/32, but I don�t think we will see much of a change in this morning�s mortgage rates as lenders wait for today�s debt sale before making any adjustments.

There is no relevant economic data scheduled for release today, but we do have the 10-year Treasury Note auction to contend with. This sale will give us an important measure of investor interest in longer-term U.S. debt, particularly from international buyers. If there is a strong demand in the sale, we should see the broader bond market rally and mortgage rates move lower after the results are posted at 1:00 PM ET. However, a lackluster interest in the sale would likely lead to higher mortgage rates this aftern oon.

The only semi-relevant economic news scheduled to be posted tomorrow are weekly unemployment figures from the Labor Department. They are expected to say that 540,000 new claims for unemployment benefits were filed last week. This would be a decline from the previous week. However, unless there is a wide variance between the actual number and the forecasted number of new claims, this data will likely have a minimal impact on bond trading and mortgage rates.

The 30-year Bond auction is tomorrow also. It is less important to mortgage rates than today�s 10-year Note sale, but its� announced results can influence bond trading enough to revise mortgage rates slightly tomorrow afternoon. The same principals apply as today�s sale. A strong demand is good news for bonds while a weak sale could lead to higher mortgage rates late tomorrow.

The only factual economic data of the week will be posted Friday morning. August�s Goods and Services T rade Balance will be released that day, but is not likely to cause much of a change in mortgage pricing. It will give us the size of the U.S. trade deficit, but usually does not lead to significant movement in bond prices or mortgage rates. It is expected to show a $32.9 billion trade deficit.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Lock if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.


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Banks to Bailout FDIC under $45 Billion Plan
09/30/2009 By: Carrie Bay
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The FDIC�s insurance fund, which protects consumers� deposits, is heading for broke and according to the federal agency, it will stay that way until 2012. The FDIC is asking insured institutions to prepay three yearsworth of quarterly fees in order to refill its coffers and cope with many more bank collapses to come.

The proposal is expected to yield $45 billion, and the FDIC says without this extra cash its funds will be completely wiped out by next year. The regulator�s board also voted to adopt a uniform three-basis point increase in assessment rates effective on January 1, 2011, and extend the restoration period from seven to eight years.

More than 120 bank failures since the economic crisis began have diminished the FDIC�s deposit insurance fund (DIF) to its lowest level since the savings & loan crisis of the last decade, making it increasingly taxing for the agency to mitigate institutional losses. And the regulator sees a bumpy road ahead still � FDIC officials say the cost of bank failures between 2009 and 2013 will be about $100 billion, compared with an estimate of $70 billion made in May, with most of the failures expected this year and next.
FDIC Chairman Shelia Bair assured depositors that their money would always be �100 percent safe� since the agency has a credit line with the U.S. Treasury of up to $500 billion, though she says she would rather not tap in to it.

�It�s clear that Chairman Bair needs to take action,� said James Frischling, president and co-founder of NewOak Capital, an investment advisory, asset management, and capital markets firm in Manhattan. �The FDIC needs to replenish its fund and has few real choices,� Frischling said.

According to Bair, the banking industry has substantial liquidity to prepay assessments. As of June 30, FDIC-insured institutions held more than $1.3 trillion in liquid balances, 22 percent more than they did a year ago.

�The decision [reached by the FDIC board Tuesday] is really about how and when the industry fulfills its obligation to the insurance fund,� Bair said in an FDIC statement. �In choosing this path, it should be clear to the public that the industry will not simply tap the shoulder of the increasingly weary taxpayer.�

The FDIC said its proposed arrangement is less likely to impair banks� lending than a one-time special assessment � which would have cost the industry $5.6 billion in a single blow, after already paying an identical special assessment to the agency earlier this year. But according to a report in the New York Times, the plan �would almost certainly wipe out the industry�s earnings for this year.�

�It�s important that the industry itself takes the first step in fixing the situation,� agreed Frischling. �Chains are as strong as their weakest link and the banking sector is in jeopardy with the FDIC being forced to step in as a result of the actions by industry participants.�



New Housing Crash Looms as Shadow Inventory Climbs past 7 Million: Analysts
09/25/2009 By: Adam Weinstein
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The housing crash is about to come back with a vengeance, as 7 million new foreclosure properties are about to hit the market, analysts at Amherst Securities Group LP said this week.



The New York-based mortgage-bond analysts called that number � which is about five-and-a-half times larger than 2005�s national tally of delinquencies and foreclosures � a �huge shadow inventory� that threatens to further destabilize a housing market that had shown signs of righting itself over the summer.

Despite some recent optimism, many market observers now agree on several factors that are expanding the nation�s shadow inventory. Loan modifications, legal wrangling, redefaults and bank practices have delayed foreclosures while actually worsening many homeowners� positions.

As a result, the analysts say a so-far undisclosed glut of homes is about to come to light, and it�s likely to further depress values and sales.

�There�s going to be a flood [of bank-owned homes] listed for sale at some point,� John Burns, a real-estate consultant based in Irvine, California, told the Wall Street Journal this week. He expects prices to decline another 6 percent this year. The analysts at Amherst predicted an 8 percent drop, while a Sept. 11 report by Barclays forecasted a further 13 percent drop, saying the worst of the crash is �decidedly underway,� with increased foreclosures sapping �the strength of the recovery in all but the most optimistic of scenarios.�

One cause of the problem, the Journal says, is unintended fallout from �well-meaning efforts to keep families in their homes.� Foreclosures have been stalled by state moratoriums, as well as by lenders and servicers who are using the time to determine if troubled borrowers are eligible for loan modifications.
�We are going to see a spike from now to the end of the year in foreclosures as we take people out of the running� for modifications or other alternatives to foreclosing, a Bank of America Corp. spokeswoman told the Journal, adding that government pressure to stem foreclosures had reduced their foreclosure sales to �abnormally low� levels.

But as many proposed modifications result in higher monthly payments or other terms the borrowers don�t like, more potential foreclosures are getting held up in court, too. That�s what happened to Debra and Arthur Scriven of Columbia, South Carolina, who told the Journal that Citigroup had attempted to foreclose on them 15 months ago. Since then, the lender offered a modification they felt was unfair, and their situation has stalled as they await a date for a hearing in foreclosure court.

But evidence is mounting that even when modifications are successfully written, the likelihood of a borrower defaulting again � and heading for foreclosure again � is alarmingly high. That�s because even a significant reduction in interest or principal can�t save a homeowner who�s underwater or overleveraged. Modifications have made �not much� of a difference in the shadow inventory, the Amherst analysts� report said. �And many of these borrowers would default later, if they remain in a negative equity position,� they added.

Banks, too, are contributing to the shadow inventory problem. Fearful of the added costs of acquiring foreclosure properties and trying to sell them, many banks have simply declined to foreclose on some of their most non-performing borrowers. According to a report by LPS Applied Statistics, banks hadn�t even begun the foreclosure process on 1.2 million properties that are 90 days or more past due. In July, 217,000 mortgages that hadn�t seen a payment in a year still weren�t being foreclosed on � a number that�s more than doubled since last year.

Lenders have also scaled back their bidding at the public auctions and trustee sales that usually precede a bank foreclosure. That�s letting outside investors pick up the properties at a deep discount: According to the research firm ForeclosureRadar.com, 19 percent of homes sold in August in California trustee sales went to investors and not lenders � a 500 percent increase in the past year.

What this all means, the Amherst analysts say, is that the shadow inventory will soon eclipse the economy�s recent sunny outlook.

�The favorable seasonals will disappear over the coming months, and the reality of a 7 million-unit housing overhang is likely to set in,� they said.


Forclosures hit new record in metro Atlanta
10:14 am September 16, 2009, by Henry Unger
Home foreclosures hit another monthly record in metro Atlanta.
There were 12,207 foreclosure notices in September covering a 13-county region, according to Equity Depot data. That�s up from 9,930 in August. The notices published this month are for public auctions scheduled for October.
�It hasn�t leveled off yet,� said Barry Bramlett, president of Equity Depot. �We�re seeing older loans that typically tell you it�s related to the economy and joblessness.�
The previous record was 11,925 in June, according to Alpharetta-based Equity Depot. (www.equitydepot.net)
With three months remaining in the year, a new annual record already has been reached.
So far, there have been 87,679 foreclosure notices, Equity Depot said. For all of last year, the previous high, there were 79,484.
In September, Fulton led the pack with 2,666 notices, followed by Gwinnett with 2,304. DeKalb posted 1,770, followed by Cobb with 1,474 and Clayton with 994.

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What a Home Will Be Worth in 2012

Georgia
Metro: Atlanta-Sandy Springs-Marietta
What a Home Will Be Worth in 2012: $182,199
Q4 2008 price: $182,000
Projected price change by MSA*: +0.1%
Projected price change by state: +0.3%

Atlanta, the capital of Georgia, has seen its home price declines slow. Prices dropped about 1% in March from to the previous month but were down 16% from a year earlier. The Atlanta metro is home to many of the nation�s largest companies including Delta Airlines, CNN, Coca-Cola, and Home Depot.

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Atlanta is not on the list

Local Market Monitor Predicts Markets for Best and Worst Home Price Performance
09/10/2009 By: Mandy Huber

Cary, North Carolina�s Local Market Monitor announced the release of its third quarter Home Price Forecast on Wednesday, which predicts local market behavior for over 300 U.S. housing markets. The forecast identifiesstable markets with opportunities for growth as well as markets where home prices continue to drop.

The forecast identified the top 10 markets with the best expected performance in home prices, with populations greater than 600,000. They are:

� Baton Rouge, Louisiana
� Buffalo-Niagara Falls, New York
� Dallas-Plano-Irving, Texas
� Fort Worth-Arlington, Texas
� Houston-Sugar Land-Baytown, Texas
� Little Rock-North Little Rock-Conway, Arkansas
� Omaha-Council Bluffs, Nebraska-Iowa
� Pittsburgh, Pennsylvania
� San Antonio, Texas
� Syracuse, New York

These markets, where home values are expected to remain level, are among those markets that did not experience a large housing boom and have had relatively small job
losses over the past year. Generally, home prices in these areas are below the U.S. average and reflect areas where the recession has had a relatively mild impact. Dallas, San Antonio, and Omaha have all experienced a 1.6 percent job loss over the past year, and jobs in Baton Rouge have actually increased.

�While home building activity nationally is down 35 percent from last year, some of our top markets are doing relatively better,� said Ingo Winzer, president of Local Market Monitor. �Building permits were off only 20 percent in San Antonio and Omaha, and they were up 10 percent in Buffalo.�

The 10 largest markets with the worst expected performance in home price are:

� Fresno, California
� Las Vegas-Paradise, Nevada
� Miami-Miami Beach-Kendall, Florida
� Orlando-Kissimmee, Florida
� Phoenix-Mesa-Scottsdale, Arizona
� Portland-Vancouver-Beaverton, Oregon-Washington
� San Jose-Sunnyvale-Santa Clara, California
� Stockton, California
� Tacoma, Washington
� Tucson, Arizona
� West Palm Beach-Boca Raton-Boynton Beach, Florida

These markets are among those that have previously experienced large price booms and are expected to have the largest declines in home value over the next year. This is in large part attributed to speculative buying including the consequences of the inflated housing construction on the local job market and investor portfolios.

�Right now, a good market is still one where home prices aren�t going down,� said Ingo Winzer. �However, this will change as the recession eases. Next year we�ll see good price increases in many markets.�


Current Events: Recovery?

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Greetings!

The stock markets continued to rally in August. However, the rally was definitely showing signs of "topping." Nonetheless, the mainstream media were enthusiastically saying that the economy is recovering. Perhaps that is so. However, with the REAL unemployment rate at over 20%, and with HUNDREDS of additional banks in danger of failing, I am not ready to pop the cork on some champagne and celebrate the end of the current depression. We shall see.

As always, we will begin by looking at some numbers:



1) Dow: 8/1/09: 9,171.61

9/1/09: 9,496.28 (+3.54%).

2) S&P: 8/1/09: 987.47

9/1/09: 1,020.62 (+3.36).

3) Nasdaq: 8/1/09: 1,978.50

9/1/09: 2,009.06 (+1.54 %).

4) Oil: 8/1/09: $69.45/barrel

9/1/09: $69.96/barrel (+0.7 %).

5) Gold: 8/1/09: $953.80/oz.

9/1/09: $951.50/oz. (-0.24 %).

6) Silver: 8/1/09: $13.95/oz.

9/1/09: $14.87/oz. (+6.6%).

7) Amex Gold Bugs Index (HUI): 8/1/09: 360.40

9/1/09: 357.22 (-0.8%).

8) Philadelphia Gold and Silver Sector Index (XAU): 8/1/09: 148.62

9/1/09: 147.04 (-1.0 %).

9) Individual mining stocks followed by this newsletter:

a) Goldcorp (GG): $37.69 to $36.46 (-3.26%).

b) Agnico-Eagle (AEM):$58.55 to $57.40 (-2.0 %).

c) Yamana (AUY):$9.49 to $9.20 (-3.05 %).

10) Dow/Gold Ratio: 9.98/1



OTHER NEWS AND NUMBERS

Unemployment/Wages/Net Worth:

The Bureau of Labor Statistics reported that a total of 247,000 jobs were lost in July. It also claimed that the jobless rate declined from 9.5% to 9.4%. The media trumpeted this as a great improvement. Shadow Government Statistics (SGS) contends that seasonal distortions in first-time claims for unemployment benefits and in the ISM manufacturing index are consistent with 600,000 jobs lost in July. The government wouldn�t lie to us, would it?

Official government unemployment rate is 9.4%. SGS estimates that the true number is now 20.6% when one counts "discouraged" workers, those who have stopped looking for work. Robert Chapman�s estimate is 20.8%. The highest recorded level of unemployment during the Great Depression was about 25%. We�re in a depression.

During the next few months, about 1.5 million Americans� unemployment benefits will run out. Congress has already extended the eligibility period for collecting unemployment benefits. In most states, unemployed people can collect benefits for 72 to 79 weeks. There are now calls for Congress to enact a law extending benefits again. Bet that it will happen.

A recent Monster Meter Poll revealed that more than one-third of U.S. workers surveyed admitted to having only one week or less of savings to cover living expenses if they were to be laid off from work. Think about that. A third of U.S. workers are a week or less from being broke. If they have credit card balances, they are broke!

According to the Commerce Department, wages and salaries fell by 4.7% from July, 2008, through the end of June, 2009. This represents the biggest drop since record-keeping began in 1960. U.S. personal incomes fell by 1.3% in June, 2009. Household net worth has declined by $13.9 TRILLION from Q3 2007 through Q1 2009. Please stop for one moment. Take a deep breath. Think about that. Almost $14 TRILLION in imagined wealth... gone...into thin air. Gold hasn�t evaporated into thin air...EVER!



Significant mass layoffs in August:

1) Jefferson County, Alabama: 2,376;

2) Mohawk Industries: 400;

3) U. S. Postal Service: May close 1,000 branches;

4) State of Hawaii: 1,100;

5) Kindred Healthcare: 573;

6) City of Dallas: 850;

7) IBM: 493;

8) Kaiser Permanente: 1,200;

9) Blue Cross/Blue Shield of Oklahoma: 200;

10) Blue Cross/Blue Shield of Illinois: 650;

11) AOL: 2,000;

12) AAA: 300;

13) Tomkins: 1,600+;

14) Sun Microsystems: 10,000 possible layoffs;

15) AIG Consumer Finance: 900;

16) Samsung 500;

17) Lockheed Martin: 800;

18) Ryan Air: 600;

19) Sovereign Bancorp: 517;

20) Sand Springs Steel Mill: 300;

21) St. Jude Medical: 200;

22) Stora Enso Paper Mill: 1,100;

23) Merced County, California: 200+;

24) Kumho Tires: 706;

25) North Carolina Department of Corrections: 972;

26) Rockwell Collins: 600;

27) Farmers Insurance: 1,304;

28) Whirlpool: 1,100;

29) M&I Bank: 154;

30) Ethan Allen: 250;

31) Toyota: 4,700.



Federal Reserve (FOMC):

Official Statement From August 11-12 Meeting:

"Information received since the Federal Open Market Committee met in June suggests that economic activity is leveling out. Conditions in financial markets have improved further in recent weeks. Household spending has continued to show signs of stabilizing but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing but are making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve is in the process of buying $300 billion of Treasury securities. To promote a smooth transition in markets as these purchases of Treasury securities are completed, the Committee has decided to gradually slow the pace of these transactions and anticipates that the full amount will be purchased by the end of October. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen."

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U.S. District Court Judge Loretta Preska ordered the Federal Reserve to reveal the identities of the institutions to whom the Fed awarded roughly $2 trillion in discount "stimulus" loans. Among other things, the Fed had argued that the information should not be subject to disclosire because it involved "trade secrets." Although the judge had ordered the Fed to reveal the information by August 31, the judge agreed to stay her order so that the Fed could file an appeal to the Circuit Court of Appeals.

The Fed has taken the position that revelation of the banks which received "stimulus" money would "stigmatize" them and would threaten them and the entire U.S. economy. The Fed also argued that disclosure threatened "irreparable harm to these institutions and to the board�s ability to effectively manage the current, and any future, financial crisis."

I have a number of reactions to the pending Freedom of Information Act lawsuit against the Fed. First, if things are so bad that disclosure of the identities of the "stimulus" money recipients will threaten the banks and the economy, then things must be far worse than we are being told. If so, the entire fiat currency/fractional reserve banking system is operating on nothing more than smoke, mirrors, dancing bears, trick ponies, jugglers, and clowns.

My other reaction is this: The Fed is a private banking cartel. It has created TRILLIONS of dollars out of thin air. It has bestowed it upon the Wall Street insiders, and upon some foreign banks. It is not bailing out the smaller banks, nor does it help individual taxpayers. However, the taxpayers will ultimately be on the hook for any money our government has borrowed from the Fed. It is Orwellian to think that the taxpayers are being told the equivalent of "Just shut up! You have no right to know what we are doing!"

It is not only time to audit the Fed. It is time to END THE FED! All the Fed has done since 1913 is to debase the dollar so much that it has lost more than 95% of its purchasing power. Oh, and there are the two depressions which the Fed has caused...you know, the one in the 1930s and the one we have now!

I almost forgot. "Helicopter Ben"Bernanke has done such a wonderful job as Fed Chairman that President Obama has nominated him for a second term!



Consumer Price Index (CPI):
As of August, 2009, the official government rate was slightly negative (- 2.10%). Shadow Government Statistics (SGS) estimates that the real rate is +5.44%. The government excludes key items such as food and energy from its "core inflation" statistics. Evidently, humans have no need to eat, heat or cool their homes, or drive to work.

2009 Q2 Gross Domestic Product (GDP):

Official government rate is -3.90%. SGS rate is -5.93%.

Treasury International Capital (TIC) Data For June, 2009:

The U.S. Department of the Treasury released Treasury International Capital (TIC) data for June 2009. The next release, which will report on data for July 2009, is scheduled for September 16, 2009.

Net foreign purchases of long-term securities were $90.7 billion.

Net foreign purchases of long-term U.S. securities were $123.6 billion. Of this, net purchases by private foreign investors were $105.2 billion, and net purchases by foreign official institutions were $18.4 billion.
U.S. residents purchased a net $32.9 billion of long-term foreign securities.
Net foreign acquisition of long-term securities, taking into account adjustments, is estimated to have been $71.3 billion.

Foreign holdings of dollar-denominated short-term U.S. securities, including Treasury bills, and other custody liabilities decreased $19.5 billion. Foreign holdings of Treasury bills decreased $11.3 billion.

Banks� own net dollar-denominated liabilities to foreign residents decreased $82.9 billion.

Monthly net TIC flows were negative $31.2 billion. Of this, net foreign private flows were negative $27.7 billion, and net foreign official flows were negative $3.5 billion.



Treasury Bonds and Government Debt:

Evidence is mounting that the Federal Reserve has been buying even larger quantities of U.S. Treasury bonds than reported in the media. The bank has been buying the bonds either directly or through proxies, including several foreign central banks. Legitimate foreign demand for Treasuries has fallen, so the Fed is emerging as the "buyer of last resort." The Fed creates more dollars out of thin air, at no cost, and then buys the bonds. We, the sheeple, are on the hook for the principal and the interest. The Fed�s actions are tantamount to monetizing the debt. The Fed is putting the United States at risk of having hyperinflation and a currency crisis.

Treasury Secretary Tim "Turbo Tax" Geithner recently asked Congress to increase the nation�s $12.1 TRILLION debt limit. He said that this is "critically important," but he did not specify by how much the debt limit should be increased. He merely reminded Congress that it has never failed to raise the debt limit "when necessary." A TRILLION here, a TRILLION there... pretty soon you are talking about real money!



FDIC Bank Closures/Banking Issues:

August: 15 bank closures. Year to date: 84 bank closures. Since the financial crisis began in 2007: 112 bank closures. Some analysts have alleged that the FDIC may not be "officially" reporting all bank closures. Over 400 banks are now on the FDIC�s list of troubled banks.

Colonial Bank, based in Alabama, was shut down by the FDIC on August 14. The bank was the largest American bank to fail since Washington Mutual collapsed in 2008, and the fifth-largest American bank failure ever. Colonial�s assets were bought by BB&T.

The failure of Colonial Bank will deplete the FDIC�s deposit "insurance" fund by $2.8 billion. As of mid-August, just prior to Colonial�s failure, the FDIC had about $648 million remaining with which to "insure" depositors� accounts for up to $250,000. You do the math. Of course, our government will prop it up and give it more money because the FDIC, itself, is "too big to fail."

Bloomberg has reported that more than 150 banks have 5% or more of their assets in "nonperforming" loans. According to Walter Mix, a former California bank regulator, "At a 3% level, I�d be concerned that there�s some underlying issue, and if they�re at 5%, chances are regulators have them classified as being in unsafe and unsound condition." The biggest banks with "nonperforming" loans of at least 5% are Marshall & Ilsley and Synovus Financial Corporation.

J P Morgan Chase expects to see 10% losses in its credit card "portfolio" in Q3 2009. In 2005, Congress passed a law making it harder for consumers to declare personal bankruptcy. You don�t think that the banks might have anticipated what was going to happen, do you?!

Richard Bove is a prominent bank analyst who frequently appears on CNBC. He recently predicted that we will see 150 to 200 more bank failures before the current crisis is finished. Meredith Whitney, another CNBC regular, has predicted that at least another 300 banks will fail. Here is my reaction: The current crisis is far worse than the S & L crisis of the late 1980s and early 1990s. A total of 745 banks failed back then. Does it seem likely that we will see fewer bank failures than during that crisis?



July 2009 Residential Construction Data:

1) Building Permits:

Privately-owned housing units authorized by building permits in July were at a seasonally adjusted annual rate of 560,000. This is 1.8 percent (�1.4%) below the revised June rate of 570,000 and is 39.4 percent (�1.8%) below the July 2008 estimate of 924,000.
Single-family authorizations in July were at a rate of 458,000; this is 5.8 percent (�1.1%) above the revised June figure of 433,000. Authorizations of units in buildings with five units or more were at a rate of 84,000 in July.

2) Housing Starts:

Privately-owned housing starts in July were at a seasonally adjusted annual rate of 581,000. This is 1.0 percent (�8.5%)* below the revised June estimate of 587,000 and is 37.7 percent (�5.1%) below the July 2008 rate of 933,000. Single-family housing starts in July were at a rate of 490,000; this is 1.7 percent (�7.1%)* above the revised June figure of 482,000. The July rate for units in buildings with five units or more was 80,000.

N.B. All housing data obtained from the U.S. Census Bureau.



Real Estate:

According to First American CoreLogic, as of the end of Q2 2009, more than 15.2 million U.S. mortgages (32.2% of all mortgaged properties) were in a negative equity position. An additional 2.5 million mortgaged properties were nearing a negative equity position. Nearly 38% of all residential mortgages are either in negative or near negative equity status. The aggregate value of the loans in a negative equity position was about $3.4 TRILLION as of the end of Q2 2009.

In California, about 42% of all mortgaged residential properties were "underwater" as of the end of June, 2009. Here are some other problem states: 1) Florida: 49.4%; 2) Illinois: 29.4%; 3) Arizona: 51.0%; and, d) Nevada: 65.6%. These numbers show us the percentage of mortgage holders who cannot sell their homes these days unless they are willing to take a loss. If they are able to sell, they will have to pay additional money when they close.

According to Realty Trac, Inc., one out of every 355 U.S. households got some sort of a foreclosure notice or filing during July. A total of 360,149 properties received a default or foreclosure notice in July. The top states for foreclosures were California, Florida, Arizona, Nevada, Texas, Georgia, Ohio, and Michigan. Realty Trac reports that about 1.5 million U.S. households received at least some sort of foreclosure notice during the first half of 2009.

The median price of a U.S. home dropped 15.6% during Q2 2009. This was the biggest drop since 1979. Home prices dropped in 129 out of the 155 metropolitan areas surveyed by the National Association of Realtors. At $55,700, Saginaw, Michigan now has the lowest median home price in the United States. Honolulu has the highest median price at $569,500.

There is still a "shadow inventory" of residential housing. Simply put, banks have either been unable or unwilling to sell some of the distressed and foreclosed properties which are on their books. As long as the homes are not sold, the banks are not having to write down their losses. The delinquent borrowers will also incur additional fees. The banks are able to inflate the value of the assets on their books. In California, the "gap" between the number of foreclosed properties and those actually listed for sale during the first half of 2009 suggests a shadow inventory of about 40,000 homes for that time period. Some homeowners have reported that they have not heard anything from the banks which hold their mortgages, even though they have fallen months behind in making payments!

Commercial real estate values in the United States have fallen by 36% since their peak in October, 2007. During Q2 2009, commercial real estate activity reached its lowest level in 15 years.

The National Association of Realtors (NAR) is predicting that office rents will fall 14.1% in 2009 and 10% in 2010. The NAR is also projecting that industrial space rents may drop 11% this year and about 12% in 2010. The NAR believes that retail space rents will fall 6.1% in 2009 and 4.9% next year.

Architectural firm billings are directly tied to real estate activity. The Architecture Billings Index (ABI) had fallen to 37.7 in June. In July, the Index went up to 43.1, a reading which indicates some improvement. However, any reading under 50 is indicative of contraction in demand for architectural services.



Autos:

Ford Motor Co. believes that the current recession is ending. Ford�s chief economist said that we have "...hit the bottom and the economy has stabilized and poised for some modest improvement." The company intends to increase its production by 26% during the second half of 2009.

General, I mean, Government Motors (GM), announced that it is also going to increase production during the second half of 2009. The company believes that vehicle sales are "turning around."

Toyota Motor Corporation announced that it suffered a Q2 2009 loss of $819 million. The company is attempting to reduce its costs and increase sales of "green cars" such as the Prius. Toyota has also announced that it will close its factory in California. About 4,700 people will lose their jobs. However, due to the "ripple effect," it is estimated that as many as 20,000 jobs will be lost in California due to the plant closure.

The Japanese government has implemented some incentives in order to help increase domestic car sales. Nissan Motor Company reported a 16.5 billion yen loss during Q2. However, Honda reported a 7.5 billion yen profit for Q2.

The U.S. government announced that its "Cash for Clunkers" program would end on August 24, 2009. The program�s $3 billion budget has been depleted after only one month. We have given the big banks TRILLIONS of dollars. Only $3 billion for autos? For more on the "Cash for Clunkers" program, please see my article entitled "Broken Windows And Cash For Clunkers" in this issue.



Markets:

All of the U.S. stock markets continued to rally in August. The Dow closed the month at 9,496.28, a monthly gain of +3.54%. The S&P closed at 1,020.62 (+3.36%), and the Nasdaq at 2,009.06 (+1.54%). The stock market rallies have been characterized by relatively low volumes, a circumstance which would lead one to believe that there is still a lot of money on the sidelines.

During the first half of August, 2009, corporate insiders bought $62.2 million of their own companies� stock. However, they sold $2.2 BILLION of their companies� stock. This was 17 times greater than the normal percentage of selling. Insider selling was greatest in the tech sector. Corporate officers and directors have inside information about their companies. If they are selling like crazy, what do they know? What do you think that they think is going to happen? Does that sound like "green shoots" to you?!

The current stock market rally began in mid-March. Several prominent technical analysts (Dr. Robert McHugh, Bob Hoye, Roger Wiegand) are predicting that it will end between September and the end of November. Under the classical Dow theory, we are still in a counter trend rally within a secular bear market in stocks. We are NOT in a secular (long-term) bull market. Extreme caution is advisable. More on this in the Closing Thoughts section of the newsletter.

California Update:

California recently issued IOUs to various individuals and businesses to whom the state owed money. However, many banks have refused to redeem the IOUs. In the meantime, the state, in its benevolence, has hit the recipients of the IOUs with state income tax bills. One small business owner was paid IOUs for a $27,000 bill owed by the state. She couldn�t get the IOUs redeemed at any banks, but the state charged her with sales tax on the transaction. She had to dig into her own pocket to pay the tax bill. Meanwhile, she is stuck with worthless pieces of paper. She and other small business owners have filed a class action lawsuit against California. Among other things, they are contending that California is unlawfully taking their property without just compensation, in violation of the 5th Amendment. I agree with them.

In mid-August, California announced that it would stop issuing IOUs as of September 4, 2009. Instead, the state intends to sell at least $10.5 billion in new debt in order to finance its operations. Lending more billions to California...that certainly sounds like a great investment, doesn�t it?

California has derived a lot of revenue from the cargo containers which come in and out of the Long Beach port. From 2007 to 2008, cargo traffic declined by about 12%. Based upon the container numbers for the first six months of 2009, traffic is now on pace to drop by more than 27% this year. If the present trend continues, container traffic levels will be headed for levels not seen in almost ten years. The drop in container traffic is a clear indicator of reduced economic activity in both California and the rest of the United States.



International Tidbits:

Eurozone consumer prices have declined by 0.7% in July. The Eurozone economy contracted by 0.1% in Q2 2009. However, recent media reports are saying that France and Germany have emerged out of recession. Eurozone unemployment is still on the rise. The ECB has kept its key interest rate at 1.0%, a record low.

The Telegraph recently reported that the German government is bracing for a "second wave" of the financial crisis. Many German banks are flirting with insolvency. Hartmut Schauerte, Economic State Secretary, recently said that the German government is working to try to offset a potential credit crunch. However, he also said that if the government�s efforts fail, "...we are going to see dozens of credit collapses."

The Bank of England has announced plans to increase Britain�s money supply by at least 50 billion pounds. Translation? We are going to debase our currency and "competitively devalue!"

U.K. unemployment has risen to 2.44 million, the highest level in 14 years. Unemployment claims have risen for 17 consecutive months. The official government unemployment rate is 7.8%.

Since 2008, former British Prime Minister Tony Blair has been a top "advisor" to J P Morgan Chase. It is said that Morgan CEO Jamie Dimon personally recruited Mr. Blair to work with the bank. Now, English regulators are investigating allegations that JP Morgan Chase has commingled customers� money with its own money. It is alleged that the amount in question is 8.5 billion pounds. Mr. Blair has made millions since leaving office. J P Morgan Chase made an official statement: "We have no comment."

ING Groep NV reported that its Q2 profit fell by 96%. The Dutch-based financial company has cut more than 8,000 jobs and plans to sell as much as 8 billion euros in assets in order to boost capital.

The Baltic Dry Index has fallen by more than 35% since its early 2009 high. One of the reasons for this is that China has slowed down its efforts to "stock up" on iron ore. The Baltic Dry Index is considered to be a leading indicator for economic activity and for commodity prices.

Because of the global collapse in shipping, many container ships are sitting in ports around the world. It has been estimated that about 10% of the global container fleet is now idle. Compounding the problem is that about 1,550 new container ships were ordered during the "glory days" of shipping, just a few years ago. Those ships are now being delivered at precisely the time when demand has dropped off a cliff. Most of the major shipping lines have already incurred millions in losses. Hapag-Lloyd reported a Q1 loss of 222 million euros. Maersk lost $373 million during Q1. NOL, based in Singapore, lost $245 million, and South Korea�s Hanjin lost $110 million during the same period.

China�s stock market sold off quite heavily on the last day of August. The Shanghai Composite Index, the SSEC, fell nearly 7%, reaching a three-month low. The Chinese banks and the stock market have been in "bubble mode" lately. It now appears that the Chinese government may attempt to limit economic growth and choke off speculation in the stock market by tightening bank lending.

Russia�s economy contracted by 10.9% during Q2 2009. This was Russia�s worst contraction on record. The contraction was worse than the market had expected. In related news, President Dmitry Medvedev said that the Russian economy is hitting a"�dead end." He went on to say that Russia will "...have to take decisions about changing the structure of our economy." The official government forecast is that Russia�s GDP will decline by 8.5% in 2009. Declining energy prices and exports have hurt the Russian economy. Interestingly, despite its economic problems, Russia continued its recent pattern of increasing its gold reserves. During July, Russia added 600,000 ounces. Russia now has at least 18.3 million ounces of gold. We only know what they tell us.

The Japanese economy (GDP) expanded by 3.7% during Q2 2009. This is to be contrasted with a decline of 11.7% during Q1. Exports increased by 6.3% over the prior quarter. However, Japanese unemployment is still expected to rise to a record 5.8% by 2010. Hmm... a jobless recovery? Where have I heard that before?

Japan�s Democratic Party won a landslide victory over the Liberal Democrats. The Liberal Democrats had governed Japan for all but 11 months since 1955. The Democrats ran on a populist platform. Among other things, they advocated government handouts for families with children and farmers, a higher minimum wage, and they promised to rebuild the economy. Sound familiar?




Better Than Expected News:

The Conference Board, a research organization, reported that its index of leading economic indicators rose by 0.6% in July. The index has now risen for four straight months. The Board believes that the recession has "bottomed out" and GDP "could grow this quarter." The Board�s index is comprised of a total of ten indicators, including employment data and the stock market. Six of the ten components went up in July.

The TJX Companies, Inc., operators of T.J. Maxx and Marshall�s, reported record sales for Q2 2009. Net sales increased 4% to $4.7 billion for the quarter, and comparable store sales increased 4% over last year�s gains.

AIG reported a net profit of $1.82 billion in Q2 2009. Hmm... we gave them over $150 billion in bailout money, and all they could manage was a measly $1.82 billion profit?

The Conference Board Consumer Confidence Index went up in August. The Index now stands at 54.1, up from 47.4 in July. O.K., so consumers are feeling a bit better. Consumption constitutes about 70% of U.S. GDP. Are people spending more? Nope! Take a look at the retail numbers listed below!

Laura Tyson is one of Barack Obama�s top economic advisors. She recently announced that she believes that we "...may have hit stability, we may be in the beginning of an upturn." Paul Krugman, another top Keynesian economist (borrowing is good/saving is evil), said that "it�s quite possible, though not certain, that retrospectively, we�ll say that the recession ended in July or August, maybe September."

Tyson and Krugman did disagree about one thing. Tyson thinks that no second "stimulus" package is needed. Krugman says that another is needed. This might seem like a silly question, but, if the recession is over, why would we need another "stimulus" package?



Worse Than Expected News:

The federal deficit reached a record $1.3 TRILLION in July, 2009. The deficit increased by $181 BILLION in the month of July. Tax revenue during the past three quarters has fallen by $350 billion, or 17% compared to the same period last year. Individual tax receipts are down by 22%, and corporate tax receipts are down by 57%. The CBO projects that the budget will hit a $1.8 TRILLION deficit by the end of 2009. Naturally, our Congress critters want to INCREASE deficit spending!

Consumer bankruptcies have increased by 34% compared to July, 2008. The American Bankruptcy Institute projects that we will see 1.4 million bankruptcies this year.

U.S. consumer credit outstanding fell by $10 billion in June. Commercial bank lending contracted by $64 billion in July. That translates into a 12% annualized contraction. Individuals are saving and paying off debt. Businesses aren�t borrowing as much as before, and banks are reluctant to lend. We are seeing credit contraction (deflation) and monetary expansion (inflation) at the same time.

U.S. initial jobless claims rose to 558,000 during early August. Not long before that, a number of market pundits had pronounced that "the recession is over" because initial jobless claims had declined during an earlier time period. Hmm... I wonder what they are saying now?



Corporate and Retail News:

The National Retail Group, a retail industry organization, projects that the average family with school-age children will spend 8% less on "back-to-school" shopping this year.

Lowe�s, the big home improvement chain, reported that its Q2 2009 net income dropped by $179 million compared to Q2 2008. Lowe�s chief rival, Home Depot, also reported a year-on-year drop in net income from $1.2 billion to $1.12 billion.

Q2 earnings also declined at Target , Nordstrom , Macy�s , Saks, Dillard�s, Abercrombie & Fitch, and J.C. Penney. During Q2 2009, Saks posted a net loss of $54.5 million. Target reported a 2.7% drop in sales. Costco reported that its same store sales dropped 7% in July. Gap, Inc., reported an 8% decline in sales. The American consumer has cut back.

Reader�s Digest announced that it would file for Chapter 11 bankruptcy protection. The company was founded in 1922 and has struggled ever since the internet became so prominent in peoples� lives. During 2008, circulation had dropped by 12%. Recently, the company had to default on a $27 million payment on its corporate debt. I remember reading the Reader�s Digest at my grandparents� house during the summers in rural Arkansas. My grandmother subscribed for years. It seems that the old order passeth.

The Institute for Supply Management (ISM) reported that the service sector contracted at a faster rate in July, 2009. The ISM�s index declined from 47 to 46.4 from June to July. Normally, a reading of below 50 indicates a contracting economy, and readings of more than 50 indicate growth.

Newspaper ad revenue fell by 16.7% in 2008. Unfortunately, the situation is worse this year. Based upon current data, we are headed for a 17.3% decline in 2009. Some major newspapers have already reported declines of 30% this year. Overall, revenue is down to 1965 levels. What were you doing in 1965?



Oil:

Oil began August at $69.45 per barrel. It ended the month at $69.96 per barrel, a slight gain.

Dr Fatih Birol is the chief economist at the International Energy Agency (IEA) in Paris. He is a believer in the peak oil theory. Full disclosure: So am I. According to Dr. Birol, the world is heading for a catastrophic energy crisis. He believes that most of the major oil fields in the world have passed their peak production. Dr. Birol recently warned that higher demand for oil combined with stagnation or decline in supply could derail hopes for a worldwide economic recovery.

In a recent interview, Dr. Birol indicated that most governments around the world are acting as if they are oblivious to the impending problems posed by peak oil. He said that, "One day we will run out of oil, it is not today or tomorrow, but one day we will run out of oil and we have to leave oil before oil leaves us, and we have to prepare ourselves for that day. The earlier we start, the better, because all of our economic and social system is based on oil, so to change from that will take a lot of time and a lot of money and we should take this issue very seriously."



The Dollar:

China sold $25.1 billion in Treasury bills during June, 2009. In a recent article, the Chinese "People�s Daily" stated that China is in "...urgent need of altering the structural imbalance of its foreign exchange reserves, so that the value of reserve assets could be preserved and increased." The article expressed concern about the devaluation of the dollar. It also stated that China must have a "certain amount of gold reserves, a strategic national asset, to serve as a strong prop or backing at critical moments..." Chen Jiaxing, the author of the article, also said that China should keep a certain portion of its reserves in "stable currencies" in order to "hedge against dollar devaluation." He also said that China has "no choice" but to shrink its U.S. Treasury holdings.

French President Nicolas Sarkozy recently gave a speech in which he said that said the U.S. dollar cannot remain the dominant world reserve currency. Sarkozy said, �The political and economic reality of a multi-polar world will eventually have to be transmitted on the monetary level...A multi-polar world can�t count on only one currency.�

PIMCO is the world�s biggest manager of bond funds. In a recent report, one of the company�s portfolio managers wrote that he thinks that the dollar will weaken as the U.S. pumps �massive� amounts of liquidity into the economy. He alleged that the dollar is in the process of losing its status as the world�s reserve currency. He recommended that investors should "... consider whether it makes sense to take advantage of any periods of U.S. dollar strength to diversify their currency exposure." That�s very interesting. However, given that PIMCO is in the bond selling business, something tells me that the company probably won�t be recommending gold bullion as an investment!



Precious Metals:

Gold essentially traded "sideways" during August, a month when the precious metals normally display seasonal weakness. Gold began the month at $953.80 and finished at $951.50. Interestingly, silver started the month at $13.95 and finished at $14.87, a gain of more than 6%. In most years, one expects to see higher prices from this point forward. September is usually a strong month for gold and silver.

About two years ago, the Chinese government made it legal for Chinese citizens to buy silver. The Chinese government had already been actively encouraging the Chinese people to buy gold. Now, the Chinese media have been running a commercial emphasizing the fact that silver is a lot cheaper per ounce than gold. The Chinese people have always loved the precious metals, especially silver. They understand the value of tangible assets. It doesn�t take much imagination to think of what could happen to the price of silver if the Chinese begin buying a lot of physical silver.

For years, there has been informed speculation that Germany has lent its gold reserves to (or swapped them with) the United States. Respected gold analyst James Turk wrote about this back in 2001. Several months ago, newsletter writer Jim Willie reported that the Germans had recently demanded that all their gold bullion be shipped from the U.S. back to Germany.

A recent development has added weight to the evidence that Germany may not actually be in possession of all of its physical gold reserves. Max Keiser is a film-maker, broadcaster and former broker and options trader. He recently posted a video on the internet in which he claimed that the German Bundesbank has admitted to him that Germany�s gold reserves are actually in the custody of the United States. The Bundesbank had previously denied this. You can find the video on YouTube.

Chris Powell, Secretary-Treasurer of the Gold Anti-Trust Action Committee (GATA), has commented that Keiser�s revelation raises the question as to whether Germany�s gold is even in U.S. custody any more. Given the United States� history of selling, leasing, and swapping its gold reserves in order to artificially suppress the gold price, it is conceivable that Germany�s gold has met the same fate.

Late in August, the Bundesbank issued a statement in which it admitted that some of its gold reserves are outside the country. It denied having informed Max Keiser that all of its gold reserves had been swapped or were on loan. The Bundesbank insisted that it is "common practice" among central banks to have at least some of their gold reserves on loan or in use for various purposes.

Governments and central banks operate under as much secrecy as possible, so it is unlikely that we will see anything about this story in the mainstream media. However, it has the ring of truth to it. One thing is certain: As Chris Powell has put it, the Bundesbank�s most recent statement confirms that Germany�s gold reserves are "in play."

Gideon Gono, Zimbabwe�s central bank governor, has proposed that his country should introduce a gold-backed local currency. He said," ...what I am calling for is the guarded reintroduction of the Zimbabwe dollar where such a new currency will be backed by credible, tangible and locally available assets such as gold, diamonds or platinum, among several other possibilities." Mr. Gono said that the government would establish a committee to "ascertain and certify the quantity of gold or diamonds produced to back the issuance of local currency." Zimbabwe is rich in natural resources, including precious metals and diamonds.

In mid-November, 2008, Zimbabwe had an inflation rate of 79,600,000,000%! It took a mere 24.7 hours for consumer prices to double! It would now appear that Zimbabwe has recognized that a commodity-backed currency is the best option. It is sad for me to have to admit that a nation governed by Robert Mugabe is talking about enacting more responsible monetary policies than those currently being discussed in the United States!

For more on the precious metals, please see my article on gold and silver in this issue.



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If This Is A Recovery, Why Doesn�t It Feel That Way?

As the summer of 2009 draws to a close, we continue to hear that "Happy Days are here again." The stock markets have continued to go up. The media are saying that the real estate markets are bottoming. Consumer confidence rose in August. Ben Bernanke has supposedly done such a good job at saving us from a depression that President Obama has nominated him for another term as Fed Chairman. Perhaps we are headed for better economic times. However, why doesn�t it feel that way?

Robert Prechter is a well-known financial analyst who is best known for two of his predictions, one good, and one bad. During the early 1980s, at a time when almost everyone was proclaiming the "Death Of Equities," he said that we were headed for a bull market in stocks. He was absolutely right. Early in this decade, Mr. Prechter predicted that gold was most probably going to go down in price. That prediction was not as good as the earlier one, as gold has soared from $250 per ounce to about $950 per ounce this decade. Nonetheless, Prechter is a highly intelligent man, and his writings are always thought-provoking.

Mr. Prechter has been a pioneer in the study of what he calls "Socionomics." The basic thesis is that social mood drives financial, macroeconomic and political behavior, rather than the contrary. In other words, Prechter takes the position that current events do NOT drive financial and economic behavior. Instead, social mood drives events. Prechter�s theory is still a subject of much debate, but it has gained "traction."

There may be something to the socionomics theory. It makes a lot of sense. Look at what happened back in the late 1990s with the "dotcom" bubble. The public definitely drove that mania. The so-called fundamentals certainly had NOTHING to do with the bubble. Most of the companies in which people "invested" had no earnings, and no real prospects for long-term earnings. Stock prices were driven almost entirely by social mood, as reinforced by the fawning financial media which proclaimed the birth of a "new paradigm."

Have there been other similar historical examples where social mood drove events? How about the tulip mania in Holland during the 1630s? John Law and the Mississippi Bubble from 1718 to 1720? The South Sea Bubble in 1720? The real estate bubbles of the 1920s and the early 2000s? I would argue that there have been many times when social mood, rather than economic fundamentals, has driven financial events. If socionomics has any validity, then what are the implications for us now? What is the current social mood in America?

The Consumer Confidence Index has risen slightly. One might think that this was a positive sign. However, it is very clear that we are now entering very socially divisive times. In my opinion, the recent "town hall meetings" were just the proverbial "tip of the iceberg" as far as America�s social mood is concerned. Those who have dismissed the protesters as phony, "astroturf" malcontents are missing the boat. There is a significant percentage of the American public which is very worried and unhappy with the direction in which they believe the nation is headed. One may agree or disagree with the policies of the current administration in Washington. However, one cannot ignore the fact that the current social mood is not reassuring.

The public�s discontent is also reflected in the poll numbers. The most recent Rasmussen poll indicated that that 32% of the nation�s voters strongly approve of the way that President Obama is performing his job. However, forty-two percent (42%) Strongly Disapprove. That is the highest level of Strong Disapproval yet recorded for President Obama. It gives him a Presidential Approval Index rating of -10. Congress� disapproval ratings are even worse. This should be a warning to our current leaders, but many of them seem contemptuous of anyone who questions anything they wish to do.

Gerald Celente is the proprietor of The Trends Research Institute, a private future trends forecasting company. His motto is,"Current Events Form Future Trends." From this, I would infer that Mr. Celente might disagree with Mr. Prechter�s belief that the social mood alone drives future events, and not the reverse. However, from his writings and his speeches, it is very clear that Mr. Celente attaches a great deal of importance to understanding the prevailing social mood as a factor which determines future trends.

During the late 1980s, Mr. Celente became well-known for having predicted that, due to social unhappiness, we would see a third party movement by the 1992 presidential campaign. He even suggested that Ross Perot was the type of person we could expect to see leading such a movement. This was at a time when most people were not even mentioning Mr. Perot as a potential candidate. He has made other accurate predictions.

Mr. Celente also believes that the recent protests in the United States have been REAL, and not "astroturf." He points to the high unemployment numbers and says that, "When people lose everything, they lose it!" He says that the Second American Revolution has begun. He is predicting that we will see food riots and tax rebellions by 2012. We have already seen some tax revolts, as evidenced by the so-called "Tea Parties" earlier in 2009. In the Atlanta area, one of the biggest counties in Georgia recently tried to raise property taxes. The proposal met with so much opposition that the politicians had to "back off." They are now cutting the county budget.

Academic economists can point to all the positive "leading indicators" they want. Politicians can claim that the worst is over. Realtors can claim that real estate prices have bottomed. Stock market bulls can proclaim the dawn of a new secular bull market. Larry Kudlow can talk about the "King Dollar. " I�m sorry, but something doesn�t sound right. Something doesn�t feel right.

I must confess that I am thinking that the REAL unemployment number is more than 20%, and it is likely to increase. I am thinking about the fact that nearly 38% of all residential mortgages are now in negative or near negative territory. I am thinking about the hundreds of additional banks which will fail during the next year or two. Most of the bank failures will involve smaller regional banks which primarily lend to real estate borrowers and small businesses.

I am wondering what desperate people will think and do when they lose their jobs, their homes, and their businesses. I am wondering what will happen when a lot of people have lost everything.

If this is a recovery, perhaps that is why it doesn�t feel like one.





































Banks Say They�ll Keep Lending Tight
08/24/2009 By: Carrie Bay
Banks tightened standards for all types of loans in the second quarter, the Federal Reserve reported last week. Financial institutions also told the Fed that they plan to maintain strict lending standards until at least the second half of 2010.

The only category of loans where banks reported greater demand was prime residential mortgages. It was the second consecutive quarter that consumers� requests for these seemingly low-risk loans have increased.
About 35 percent of senior loan officials surveyed said they tightened standards for prime mortgages and none of the 51 responding banks said they relaxed their credit criteria for prime home loans.

Nearly all of the survey respondents said that lending standards were currently tighter than average for both prime and subprime mortgages.

Industry observers say banks have finally realized they�re holding a lot more risk on their loan books because of the housing boom and subsequent downturn, and are now reassessing their requirements for future lending.

But even with stricter credit criteria, a recent Treasury report shows that lending is beginning to pick up.

During the month of June, Treasury officials say that the 22 banks receiving the most federal aid, including the nation�s largest institutions, increased loan originations for residential mortgages and home equity lines of credit (HELOC). The increase, the Treasury said, was driven largely by new home purchases.



Insiders: The Chinese Dragon Will Go Bullish on U.S. Mortgages
08/17/2009 By: Adam Weinstein

The People�s Republic of China � a communist-led nation with a strikingly different perspective on property ownership than the U.S. � stands poised to buy up to $2 billion in American mortgage securities, and would use the American government�s own stimulus dollars to grease the deal, sources with inside knowledge said Monday.

�The Chinese government is always trying to seek a more ideal way to invest in U.S. assets rather than purely buying U.S. government bonds all the time,� one of the sources told Reuters.

That insider also said China Investment Corp., a $200 billion sovereign wealth fund, anticipates a U.S. housing comeback and is willing to grab some relatively safe bottom-dollar assets with help from the federal Public-Private Investment Plan (PPIP). That means the Chinese investment firm could receive U.S. taxpayer money to help facilitate its purchase of toxic mortgage securities from American bank ledgers.
What�s more, China Investment Corp.�s own contribution is mostly U.S. dollars, too. Reuters noted that CIC�s $200 billion fund derives from $2 trillion in foreign exchange reserves held by the Chinese � a majority of which are held in U.S. government bonds.

So profound is the angst about America�s recession that most investors and regulators aren�t at all concerned about the Chinese government possibly using American money to buy up U.S. assets. CNN Money summed up the general consensus on Wall Street about the move: It would be �a huge endorsement� for an Obama administration bailout plan that�s floundered so far.

�Given the might of China,� one analyst told CNN, �it would be encouraging if we could get a player of that size and magnitude stepping to bid for some of these toxic assets. It would be a psychological plus.�

The pluses would be more tangible for some U.S.-based private equity firms. Nine of those groups � which include capital giants like Alliance Bernstein, BlackRock, Invesco and Marathon � have been tapped by the federal government as managers of the PPIP program. And the firms are heavily courting the People�s Republic: One or more of those U.S. teams is in line for a Great Leap Forward in profit margins if they are anointed to manage the Chinese foray into the mortgage-backed securities market.

The deal is nothing more than a vaporous possibility now, so no one seems to have calculated just how beholden U.S. taxpayers might soon be to China. But that didn�t stop some from offering their predictions on the financial commentary boards.

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Sinking Fast: Nearly Half of U.S. Homeowners Will Be Underwater By 2011

08/06/2009 By: Adam Weinstein

Are you a homeowner? Are you underwater in your mortgage? If not, just wait: You probably will be.

Two separate studies this week show an explosion in the number of single-family, owner-occupied homes that are now worth less than what�s owed on their mortgages. And one says that nearly half of U.S. homeowners will be in the same boat before the nation�s economic crisis recedes.

�For many,� that report says, �the home has morphed from piggy bank to albatross.�

Equifax and Moody�s Economy.com estimate that falling home values left 16 million homeowners, about 24 percent
of the nation�s total, with negative equity at the end of June. That�s six million more than this time last year.

A report by two Deutsche Bank analysts came up with similar figures, estimating that about 26% of U.S. homeowners were underwater. Even more ominously, they projected that 25 million homes overall � 48% of the market � will be worth less than the mortgage balance by early 2011, when they expect prices to stabilize.

�We project the next phase of the housing decline will have a far greater impact on prime borrowers,� Karen Weaver and Ying Shen wrote in the report.

That outlook conflicts with recent signs of a bottom and recovery in housing markets. As DS News reported earlier this week, the Treasury department�s chief economist said increased home sales and lower inventories are �easing downward pressure on house prices,� and the recession�s �grip on the economy is easing.�

Instead, things still are likely to get worse before they get better, suggested Mark Zandi, the chief economist for Moody�s Economy.com.

�That such a high proportion of homeowners are underwater is testimony to the severity of the foreclosure crisis and the risk that it still poses to the broader economy,� he said.



7/26/2009 - Georgia is 6th in the nation in foreclosures.

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QUICK FACTS ON THE U.S. ECONOMY:

Unemployment:

Official government rate is 9.4%. Shadow Government Statistics (SGS) estimates that the true number is now 20.5% when one counts "discouraged" workers, those who have stopped looking for work. Robert Chapman�s estimate is 20.4%. The highest recorded level of unemployment during the Great Depression was about 25%.

FDIC Bank Closures:

June: 9. Year to date: 45. Since financial crisis began in 2007: 72. Some analysts have alleged that the FDIC may not be "officially" reporting all bank closures.

Real Estate:

The National Association of Realtors (NAR) estimates that 33% of all existing home sales in May were "distressed." In other words, they were homes which were in foreclosure. The NAR also reported that many pending home sales have not been closing because home appraisals have been too low to support the necessary financing.

The Census Bureau and HUD reported that new home sales fell by 0.6% in May. Home sales were down by 32.8% in May on a year-on-year basis. The Commerce Department estimates that there is currently a 10.2 month inventory of unsold new homes.

Trend Setting States: They are the first to set the stage for others.

Governor Arnold Schwarzenegger recently told the California legislature that,"California�s day of reckoning is here. Our wallet is empty. Our bank is closed. Our credit is dried up." In order to cope with the crisis, he has proposed severe budget cuts. Here are a few of the proposals: 1) Reduce the education budget by BILLIONS; 2) Lay off hundreds, and possibly thousands, of policemen and firemen; 3) Lay off 5,000 state employees and cut the remaining state employees� salaries by 10%; 4) Close many state parks; 5) Release thousands of prisoners early; 6) End all financial aid for 200,000 university students from low income families; and, 7) Sell numerous state-owned buildings, including the famous San Quentin penitentiary.

Why should those of us who do not live in California care about what is happening out there? Because what is happening there is what may very well happen in New York, Florida, and many other states which have out of control budgets, skyrocketing unemployment rates, and collapsing revenues. A recent news story indicated that 15 states have run out of money with which to pay unemployment compensation benefits. The number is expected to double within the next year. California isn�t the only state which is running out of money.


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If you would like the property list, click on "Mailing List" on the left side of the home page. Due to daily changes, I cannot update the web site fast enough, and the properties are sent as a separate attachment. If you complete the requested information, look for the list in MS Word format within 24 hours.

If you don�t have much to be thankful for, be thankful for some of the things you don�t have.
Walk down memory lane ..........................................................

A little house with three bedrooms and one car on the street, A mower
that you had to push to make the grass look neat. In the kitchen on the
wall we only had one phone, And no need for recording things someone was
always home.

We only had a living room where we would congregate, Unless it was at
meal time in the kitchen where we ate. We had no need for family rooms
or extra rooms to dine, When meeting as a family those two rooms would
work out fine.

We only had one TV set and channels maybe two, But always there was one
of them with something worth the view. For snacks we had potato chips
that tasted like a chip, And if you wanted flavor there was Lawson�s
onion dip.

Store bought snacks were rare because my mother liked to cook, And
nothing can compare to snacks in Betty Crocker�s book. The snacks
were even healthy with the best ingredients, There was no label with a
hundred things that made no sense.

Weekends were for family trips or staying home to play, We all did
things together even go to church to pray. When we did our weekend trips
depending on the weather, No one stayed at home because we liked to be
together.

Sometimes we would separate to do things on our own, But we knew where
the others were without our own cell phone. Then there was the movies
with your favorite movie star, And nothing can compare to watching
movies in your car.

Then there were the picnics at the peak of summer season, Pack a lunch
and find some trees and never need a reason. Get a baseball game
together with the friends you know, Have real action playing ball and no
game video.

Remember when the doctor used to be the family friend, And didn�t need
insurance or a lawyer to defend, The way that he took care of you or
what he had to do, Because he took an oath and strived to do the best
for you.

Remember when the country was united under God, And prayer in schools
and public places was not deemed as odd. Remember when the church was
used for worshipping The Lord, And not used for commercial use or for
some business board.

Remember going to the store and shopping casually, And when you went to
pay for it you used your own money.? Nothing that you had to swipe or
punch in some amount, Remember when the cashier person had to really
count?

Remember when we breathed the air it smelled so fresh and clean, And
chemicals were not used on the grass to keep it green. The milkman and
the bread man used to go from door to door, And it was just a few cents
more than going to the store.

There was a time when mailed letters came right to your door, Without a
lot of junk mail ads sent out by every store. The mailman knew each
house by name and knew where it was sent, There was not loads of mail
addressed to present occupant.

Remember when the words "I do" meant that you really did, And not just
temporally till someone blows their lid. There was no thing as no one�s
fault; we just made a mistake, There was a time when married life was
built on give and take.

There was a time when just one glance was all that it would take, And
you would know the kind of car, the model and the make. They didn�t look
like turtles trying to squeeze every mile, They were streamlined, white
walls and fins and really had some style.

One time the music that you played when ever you would jive, Was from a
vinyl, big holed record called a forty-five The record player had a post
to keep them all in line, And then the records would drop down and play
one at a time.

Oh sure we had our problems then just like we do today, And always we
were striving trying for a better way. And every year that passed us by
brought new and greater things, We now can even program phones with
music or with rings.

Oh the simple life we lived still seems like so much fun, How can you
explain a game, just kick the can and run. And why would boys put
baseball cards between bicycle spokes, And for a nickel red machines had
little bottled cokes.

This life seemed so much easier and slower in some ways, I love the new
technology but I sure miss those days. So time moves on and so do we and
nothing stays the same, But I sure love to reminisce and walk down
memory lane

====================================================
SEVEN CHARACTER TRAITS OF SUCCESSFUL PEOPLE
====================================================
1. They are hard working. There is no such thing as easy
money. Success takes hard work and people who are willing
to do it.

2. They are honest. Those who are successful long-term are
the honest ones. Dishonest people may get the first sale,
but honest people will get all the rest!

3. They persevere. How many success stories will go untold
because they never happened? And all because someone quit.
Successful people outlast everybody else.

4. They are friendly. Have you noticed that most successful
people are friendly and people oriented? This endears them
to others and enables them to lead others to accomplish the
task.

5. They are lifelong learners. Successful people are people
who stretch themselves and grow continually, learning from
all areas of life, including from their mistakes.

6. They over-deliver. The old statement of under-promise
and over-deliver became famous because it made a lot of
people successful, including the richest man in the world -
Bill Gates

7. They seek solutions in the face of problems. Problems
are opportunities to do the impossible, not just complain.
Successful people are the ones who find solutions.
====================================================
Chris Widener is a popular speaker and writer as well as
the President of Made for Success, a company helping
individuals and organizations turn their potential into
performance, succeed in every area of their lives and
achieve their dreams. To order Chris�s audio series,
Extraordinary Leaders Seminar, go to
http://www.yoursuccessstore.com and save 40% or call 877-
929-0439!
====================================================
Neal Boortz represented Property Systems back in the early 90�s in a major law suit which we settled through Neal�s efforts. In fact we were his last client as he went with WSB about the same time that he represented us.

He is quite a guy and I think you will find his speech interesting to say the least.

FF
--------------------------------------------------------------------------------
If you don�t have time to read this now, please print it out and come back to it. Read it all the way through, as there are impt. points near the end!
Subject: Some Texas straight talk

It is the season of commencement speeches. Many are boringly
predictable. Neal Boortz, a Texan, lawyer, Texas Aggie, now nationally
syndicated talk show host from Atlanta is an exception. Agree or not you
will find his views thought provoking. It would have been particularly
entertaining to witness the faculty�s reaction.

Neal Boortz Commencement Address:

I am honored by the invitation to address you on this august occasion.
It�s about time. Be warned, however, that I am not here to impress you;
you�ll have enough smoke blown your way today. And you can bet your
tassels I�m not here to impress the faculty and administration.

You may not like much of what I have to say, and that�s fine. You will
remember it though. Especially after about 10 years out there in the
real world. This, it goes without saying, does not apply to those of you
who will seek your careers and your fortunes as government employees.

This gowned gaggle behind me is your faculty. You�ve heard the old
saying that those who can - do. Those who can�t - teach. That sounds
deliciously insensitive. But there is often raw truth in insensitivity,
just as you often find feel-good falsehoods and lies in compassion. Say
good-bye to your faculty because now you are getting ready to go out
there and do. These folks behind me are going to stay right here and
teach.

By the way, just because you are leaving this place with a diploma
doesn�t mean the learning is over. When an FAA flight examiner handed me
my private pilot�s license many years ago, he said, �Here, this is your
ticket to learn.�EThe same can be said for your diploma. Believe me, the
learning has just begun.

Now, I realize that most of you consider yourselves Liberals. In fact,
you are probably very proud of your liberal views. You care so much. You
feel so much. You want to help so much. After all, you�re a
compassionate and caring person, aren�t you now? Well, isn�t that just
so extraordinarily special. Now, at this age, is as good a time as any
to be a Liberal; as good a time as any to know absolutely everything.
You have plenty of time, starting tomorrow, for the truth to set in.
Over the next few years, as you begin to feel the cold breath of reality
down your neck, things are going to start changing pretty fast .
including your own assessment of just how much you really know.

So here are the first assignments for your initial class in reality: Pay
attention to the news, read newspapers, and listen to the words and
phrases that proud Liberals use to promote their causes. Then compare
the words of the left to the words and phrases you hear from those evil,
heartless, greedy conservatives. From the Left you will hear "I feel."
>From the Right you will hear "I think." From the Liberals you will hear
references to groups --The Blacks, The Poor, The Rich, The
Disadvantaged, The Less Fortunate." From the Right you will hear
references to individuals. On the Left you hear talk of group rights; on
the Right, individual rights.

That about sums it up, really: Liberals feel. Liberals care. They are
pack animals whose identity is tied up in group dynamics. Conservatives
and Libertarians think -- and, setting aside the theocracy crowd, their
identity is centered on the individual.

Liberals feel that their favored groups, have enforceable rights to the
property and services of productive individuals. Conservatives (and
Libertarians, myself among them I might add) think that individuals have
the right to protect their lives and their property from the plunder of
the masses.

In college you developed a group mentality, but if you look closely at
your diplomas you will see that they have your individual names on them.
Not the name of your school mascot, or of your fraternity or sorority,
but your name. Your group identity is going away. Your recognition and
appreciation of your individual identity starts now.

If, by the time you reach the age of 30, you do not consider yourself to
be a libertarian or a conservative, rush right back here as quickly as
you can and apply for a faculty position. These people will welcome you
with open arms. They will welcome you, that is, so long as you haven�t
developed an individual identity. Once again you will have to be willing
to sign on to the group mentality you embraced during the past four
years.

Something is going to happen soon that is going to really open your
eyes. You�re going to actually get a full time job! You�re also going to
get a lifelong work partner. This partner isn�t going to help you do
your job. This partner is just going to sit back and wait for payday.
This partner doesn�t want to share in your effort, you�re your earnings.

Your new lifelong partner is actually an agent. An agent representing a
strange and diverse group of people. An agent for every teenager with an
illegitimate child. An agent for a research scientist who wanted to make
some cash answering the age-old question of why monkeys grind their
teeth. An agent for some poor demented hippie who considers herself to
be a meaningful and talented artist . but who just can�t manage to
sell any of her artwork on the open market.

Your new partner is an agent for every person with limited, if any, job
skills ... but who wanted a job at City Hall. An agent for tin-horn
dictators in fancy military uniforms grasping for American foreign aid.
An agent for multi-million-dollar companies who want someone else to pay
for their overseas advertising. An agent for everybody who wants to use
the unimaginable power of this agent�s for their personal enrichment and
benefit.

That agent is our wonderful, caring, compassionate, oppressive
government. Believe me, you will be awed by the unimaginable power this
agent has. Power that you do not have. A power that no individual has,
or will have. This agent has the legal power to use force deadly force
to accomplish its goals.

You have no choice here. Your new friend is just going to walk up to
you, introduce itself rather gruffly, hand you a few forms to fill out,
and move right on in. Say hello to your own personal one ton gorilla. It
will sleep anywhere it wants to.

Now, let me tell you, this agent is not cheap. As you become successful
it will seize about 40% of everything you earn. And no, I�m sorry, there
just isn�t any way you can fire this agent of plunder, and you can�t
decrease it�s share of your income. That power rests with him, not you.

So, here I am saying negative things to you about government. Well, be
clear on this: It is not wrong to distrust government. It is not wrong
to fear government. In certain cases it is not even wrong to despise
government for government is inherently evil. Yes ... a necessary evil,
but dangerous nonetheless ... somewhat like a drug. Just as a drug that
in the proper dosage can save your life, an overdose of government can
be fatal.

Now let�s address a few things that have been crammed into your minds at
this university. There are some ideas you need to expunge as soon as
possible. These ideas may work well in academic environment, but they
fail miserably out there in the real world.

First that favorite buzz word of the media, government and academia:
Diversity!

You have been taught that the real value of any group of people - be it
a social group, an employee group, a management group, whatever - is
based on diversity. This is a favored liberal ideal because diversity is
based not on an individual�s abilities or character, but on a person�s
identity and status as a member of a group. Yes it�s that liberal group
identity thing again.

Within the great diversity movement group identification - be it racial,
gender based, or some other minority status - means more than the
individual�s integrity, character or other qualifications.

Brace yourself. You are about to move from this academic atmosphere
where diversity rules, to a workplace and a culture where individual
achievement and excellence actually count. No matter what your
professors have taught you over the last four years, you are about to
learn that diversity is absolutely no replacement for excellence,
ability, and individual hard work. From this day on every single time
you hear the word "diversity" you can rest assured that there is someone
close by who is determined to rob you of every vestige of individuality
you possess.

We also need to address this thing you seem to have about "rights." We
have witnessed an obscene explosion of so-called "rights" in the last
few decades, usually emanating from college campuses.

You know the mantra: You have the right to a job. The right to a place
to live. The right to a living wage. The right to health care. The right
to an education. You probably even have your own pet right - the right
to a Beemer, for instance, or the right to have someone else provide for
that child you plan on downloading in a year or so.

Forget it. Forget those rights! I�ll tell you what your rights are! You
have a right to live free, and to the results of your labor. I�ll also
tell you have no right to any portion of the life or labor of another.

You may, for instance, think that you have a right to health care. After
all, Hillary said so, didn�t she? But you cannot receive health care
unless some doctor or health practitioner surrenders some of his time -
his life - to you. He may be willing to do this for compensation, but
that�s his choice. You have no "right" to his time or property. You have
no right to his or any other person�s life or to any portion thereof.

You may also think you have some "right" to a job; a job with a living
wage, whatever that is. Do you mean to tell me that you have a right to
force your services on another person, and then the right to demand that
this person compensate you with their money? Sorry, forget it. I am sure
you would scream if some urban outdoorsmen (that would be "homeless
person" for those of you who don�t want to give these less fortunate
people a romantic and adventurous title) came to you and demanded his
job and your money.

The people who have been telling you about all the rights you have are
simply exercising one of theirs - the right to be imbeciles. Their being
imbeciles didn�t cost anyone else either property or time. It�s their
right, and they exercise it brilliantly.

By the way, did you catch my use of the phrase "less fortunate" a bit
ago when I was talking about the urban outdoorsmen? That phrase is a
favorite of the Left. Think about it, and you�ll understand why.

To imply that one person is homeless, destitute, dirty, drunk, spaced
out on drugs, unemployable, and generally miserable because he is "less
fortunate" is to imply that a successful person - one with a job, a home
and a future - is in that position because he or she was "fortunate."
The dictionary says that fortunate means "having derived good from an
unexpected place." There is nothing unexpected about deriving good from
hard work. There is also nothing unexpected about deriving misery from
choosing drugs, alcohol, and the street.

If the Left can create the common perception that success and failure
are simple matters of "fortune" or "luck," then it is easy to promote
and justify their various income redistribution schemes. After all, we
are just evening out the odds a little bit.

This "success equals luck" idea the liberals like to push is seen
everywhere. Democratic presidential candidate Richard Gephardt refers to
high-achievers as "people who have won life�s lottery." He wants you to
believe they are making the big bucks because they are lucky.

It�s not luck, my friends. It�s choice. One of the greatest lessons I
ever learned was in a book by Og Mandino, entitled "The Greatest Secret
in the World." The lesson? Very simple: "Use wisely your power of
choice."

That bum sitting on a heating grate, smelling like a wharf rat? He�s
there by choice. He is there because of the sum total of the choices he
has made in his life. This truism is absolutely the hardest thing for
some people to accept, especially those who consider themselves to be
victims of something or other - victims of discrimination, bad luck, the
system, capitalism, whatever. After all, nobody really wants to accept
the blame for his or her position in life. Not when it is so much easier
to point and say, "Look! He did this to me!" than it is to look into a
mirror and say, "You S.O.B.! You did this to me!"

The key to accepting responsibility for your life is to accept the fact
that your choices, every one of them, are leading you inexorably to
either success or failure, however you define those terms.

Some of the choices are obvious: Whether or not to stay in school.
Whether or not to get pregnant. Whether or not to hit the bottle.
Whether or not to keep this job you hate until you get another
better-paying job. Whether or not to save some of your money, or saddle
yourself with huge payments for that new car.

Some of the choices are seemingly insignificant: Whom to go to the
movies with. Whose car to ride home in. Whether to watch the tube
tonight, or read a book on investing. But, and you can be sure of this,
each choice counts. Each choice is a building block - some large, some
small. But each one is a part of the structure of your life. If you make
the right choices, or if you make more right choices than wrong ones,
something absolutely terrible may happen to you. Something unthinkable.
You, my friend, could become one of the hated, the evil, the ugly, the
feared, the filthy,, the successful, the rich.

Quite a few people have made that mistake.

The rich basically serve two purposes in this country. First, they
provide the investments, the investment capital, and the brains for the
formation of new businesses. Businesses that hire people. Businesses
that send millions of paychecks home each week to the un-rich.

Second, the rich are a wonderful object of ridicule, distrust, and
hatred. Few things are more valuable to a politician than the envy most
Americans feel for the evil rich.

Envy is a powerful emotion. Even more powerful than the emotional
minefield that surrounded Bill Clinton when he reviewed his last batch
of White House interns. Politicians use envy to get votes and power. And
they keep that power by promising the envious that the envied will be
punished: "The rich will pay their fair share of taxes if I have
anything to do with it.�EThe truth is that the top 10% of income earners
in this country pays almost 50% of all income taxes collected. I shudder
to think what these job producers would be paying if our tax system were
any more "fair."

You have heard, no doubt, that in the rich get richer and the poor get
poorer. Interestingly enough, our government�s own numbers show that
many of the poor actually get richer, and that quite a few of the rich
actually get poorer. But for the rich who do actually get richer, and
the poor who remain poor ... there�s an explanation -- a reason. The
rich, you see, keep doing the things that make them rich; while the poor
keep doing the things that make them poor.

Speaking of the poor, during your adult life you are going to hear an
endless string of politicians bemoaning the plight of the poor in . So,
you need to know that under our government�s definition of "poor" you
can have a $5 million net worth, a $300,000 home and a new $90,000
Mercedes, all completely paid for. You can also have a maid, cook, and
valet, and $1 million in your checking account, and you can still be
officially defined by our government as "living in poverty." Now there�s
something you haven�t seen on the evening news.

How does the government pull this one off? Very simple, really. To
determine whether or not some poor soul is "living in poverty," the
government measures one thing -- just one thing. Income. It doesn�t
matter one bit how much you have, how much you own, how many cars you
drive or how big they are, whether or not your pool is heated, whether
you winter in Aspen and spend the summers in the Bahamas, or how much is
in your savings account. It only matters how much income you claim in
that particular year. This means that if you take a one-year leave of
absence from your high-paying job and decide to live off the money in
your savings and checking accounts while you write the next great
American novel, the government says you are �living in poverty."

This isn�t exactly what you had in mind when you heard these gloomy
statistics, is it?

Do you need more convincing? Try this. The government�s own statistics
show that people who are said to be "living in poverty" spend more than
$1.50 for each dollar of income they claim. Something is a bit fishy
here. just remember all this the next time Peter Jennings puffs up and
tells you about some hideous new poverty statistics.

Why has the government concocted this phony poverty scam? Because the
government needs an excuse to grow and to expand its social welfare
programs, which translates into an expansion of its power. If the
government can convince you, in all your compassion, that the number of
"poor" is increasing, it will have all the excuse it needs to sway an
electorate suffering from the advanced stages of Obsessive-Compulsive
Compassion Disorder.

I�m about to be stoned by the faculty here. They�ve already changed
their minds about that honorary degree I was going to get. That�s OK,
though. I still have my Ph.D. in Insensitivity from the Neal Boortz
Institute for Insensitivity Training. I learned that, in short,
sensitivity sucks. It�s a trap. Think about it - the truth knows no
sensitivity. Life can be insensitive. Wallow too much in sensitivity and
you�ll be unable to deal with life, or the truth. So, get over it.

Now, before the dean has me shackled and hauled off, I have a few random
thoughts.

* You need to register to vote, unless you are on welfare. If you are
living off the efforts of others, please do us the favor of sitting down
and shutting up until you are on your own again.

* When you do vote, your votes for the House and the Senate are more
important than your vote for president. The House controls the purse
strings, so concentrate your awareness there.

* Liars cannot be trusted, even when the liar is the president of the
United States. If someone can�t deal honestly with you, send them
packing.

* Don�t bow to the temptation to use the government as an instrument of
plunder. If it is wrong for you to take money from someone else who
earned it -- to take their money by force for your own needs -- then it
is certainly just as wrong for you to demand that the government step
forward and do this dirty work for you.

* Don�t look in other people�s pockets. You have no business there. What
they earn is theirs. What your earn is yours. Keep it that way. Nobody
owes you anything, except to respect your privacy and your rights, and
leave you the hell alone.

* Speaking of earning, the revered 40-hour workweek is for losers. Forty
hours should be considered the minimum, not the maximum. You don�t see
highly successful people clocking out of the office every afternoon at
five. The losers are the ones caught up in that afternoon rush hour. The
winners drive home in the dark.

* Free speech is meant to protect unpopular speech. Popular speech, by
definition, needs no protection.

* Finally (and aren�t you glad to hear that word), as Og Mandino wrote,
1. Proclaim your rarity. Each of you is a rare and unique human being.

2. Use wisely your power of choice.

3. Go the extra mile ... drive home in the dark.

Oh, and put off buying a television set as long as you can.

Now, if you have any idea at all what�s good for you, you will get the
hell out of here and never come back.

Class dismissed.


====================================================
START LIVING IN PRIME TIME by Denis Waitley
====================================================
Prime time is that period between 6 and 10 p.m. during
which most of the general public watches television.
Commercials in prime time are the most expensive,
approaching a million dollars per minute. Your real success
in life will take a quantum leap when you stop watching
other people making money in their professions performing
in prime time, and start living your own dreams and goals
in prime time. Time is the ultimate equal opportunity
employer. Time never stops to rest, never hesitates, never
looks forward or backward. Life�s raw material spends
itself in the now, this moment, which is why how you spend
your time is far more important than all the material
possessions you may own or positions you may obtain.
Positions change, possessions come and go, you can earn
more money. You can renew your supply of many things, but
like good health, that other most precious resource, time
spent is gone forever.

Each yesterday, and all of them together, are beyond your
control. Literally all the money in the world can�t undo or
redo a single act you performed. You cannot erase a single
word you said. You can�t add an "I love you," "I�m sorry",
or "I forgive you", not even a "thank you" you forgot to
say. Each human being in every hemisphere and time zone has
precisely 168 hours a week to spend. And some of the most
precious hours occur in prime time.

Consider this: most of your daytime hours are spent helping
other people solve their problems. The little time you have
in the evenings and on weekends is all you have to spend on
yourself, on your own dreams and goals, and personal
development. Some thoughts to ponder:

* Have supper with your loved ones at least two to three
times per week. It�s the best time for casual conversation
to listen to what those close to you feel is important in
their lives. Mealtime is a time to dialogue.

* A television set is an appliance. It should be used, at
most, for two hours at a time. It should be off, unless
specific programs of interest are selected. It should not
be used as a one-eyed baby sitter. For the most part, TV
exposes us to negative role models.

* Instead of watching television why not read a good
fiction or non-fiction book, write a letter, engage in a
hobby or craft, call a friend or someone in need of
encouragement on the phone, network on your computer, go
out to an ethnic restaurant, a home show, an
entrepreneurial show, a musical recital, a play, a fitness
class, or cultural event. Take an art or photography
class. Use prime time to live the kind of life others put
on layaway.

Action Idea: If you and your family/friends watch TV, try
not turning it on for one week. When you do watch TV,
reduce by 50% the amount of time you spend watching it.
Concentrate your evenings and free time engaged in hands
on, real life experiences, you can touch, feel, smell and
engage all your senses in. Instead of virtual reality,
insist on the real thing.


Subject: MOTHERS...

For those lucky to still be blessed with your Mom this is beautiful. For
those of us who are not, this is even more beautiful.

The young mother set her foot on the path of life. "Is this the long way?"
she asked. Moreover, the guide said: "Yes, and the way is hard. In
addition, you will be old before you reach the end of it. But the end will
be better than the beginning." But the young mother was happy, and she
would not believe that anything could be better than these years. So she
played with her children, and gathered flowers for them along the way, and
bathed them in the clear streams; and the sun shone on them, and the young
Mother cried, "Nothing will ever be lovelier than this." Then the night
came, and the storm, and the path was dark, and the children shook with
fear and cold, and the mother drew them close and covered them with her
mantle, and the children said, "Mother, we are not afraid, for you are
near, and no harm can come."

And the morning came, and there was a hill ahead, and the children climbed
and grew weary, and the mother was weary. Nevertheless, at all times she
said to the children, "A little patience and we are there So the children
climbed, and when they reached the top they said, "Mother, we would not
have done it without you." And the mother, when she lay down at night
looked up at the stars and said, "This is a better day than the last, for
my children have learned fortitude in the face of hardness. Yesterday I
gave them courage. Today, I have given them strength." And the next day
came strange clouds which darkened the earth, clouds of war and hate and
evil, and the children groped and stumbled, and the mother said: "Look up.
Lift your eyes to the light." And the children looked and saw above the
clouds an everlasting glory, and it guided them beyond the darkness.
Moreover, that night the Mother said, "This is the best day of all, for I
have shown my children God

And the days went on, and the weeks and the months and the years, and the
mother grew old and she was little and bent. Nevertheless, her children
were tall and strong, and walked with courage. And when the way was rough,
they lifted her, for she was as light as a feather; and at last they came
to a hill, and beyond they could see a shining road and golden gates flung
wide. And mother said: "I have reached the end of my journey. And now I
know the end is better than the beginning, for my children can walk alone,
and their children after them."

And the children said, "You will always walk with us, Mother, even when you
have gone through the gates." And they stood and watched her as she went on
alone, and the gates closed after her. And they said: "We cannot see her,
but she is with us still. A Mother like ours is more than a memory. She is
a living presence."

Your Mother is always with you. She is the whisper of the leaves as you
walk down the street; she is the smell of bleach in your freshly laundered
socks; she is the cool hand on your brow when you�re not well. Your Mother
lives inside your laughter. And she�s crystallized in every teardrop. She�s
the place you came from, your first home; and she�s the map you follow with
every step you take. She�s your first love and your first heartbreak, and
nothing on earth can separate you... Not time, not space...not even death!

PASS THIS ON TO ALL THE MOTHERS and CHILDREN YOU KNOW. MAY WE NEVER TAKE
OUR MOTHERS FOR GRANTED.


====================================================
FUNDAMENTAL PRINCIPLES FOR OVERCOMING WORRY by Dale
Carnegie
====================================================
The following Principles are reprinted from Dale Carnegie�s
best-seller "HOW to STOP WORRYING and START LIVING" and are
also available in the "Golden Book." His wisdom is as
important today as it was when it was first published in
1948. The following summarizes many of his recommendations
for controlling worry.

1. Live in "day-tight compartments."
2. How to face trouble:
a. Ask yourself, "What is the worst that can possibly
happen?"
b. Prepare to accept the worst.
c. Try to improve on the worst.
3. Remind yourself of the exorbitant price you can pay for
worry in terms of your health.

Basic Techniques in Analyzing Worry

1. Get all the facts.
2. Weigh all the facts ? then come to a decision.
3. Once a decision is reached, act!
4. Write out and answer the following questions:
a. What is the problem?
b. What are the causes of the problem?
c. What are the possible solutions?
d. What is the best possible solution?

Break the Worry Habit Before It Breaks You

1. Keep busy.
2. Don�t fuss about trifles.
3. Use the law of averages to outlaw your worries.
4. Cooperate with the inevitable.
5. Decide just how much anxiety a thing may be worth and
refuse to give it more.
6. Don�t worry about the past.

Cultivate a Mental Attitude that will Bring You Peace and
Happiness

1. Fill your mind with thoughts of peace, courage, health
and hope.
2. Never try to get even with your enemies.
3. Expect ingratitude.
4. Count your blessings ? not your troubles.
5. Do not imitate others.
6. Try to profit from your losses.
7. Create happiness for others.

The Perfect Way to Conquer Worry

1. Pray.

Don�t Worry about Criticism

1. Remember that unjust criticism is often a disguised
compliment.
2. Do the very best you can.
3. Analyze your own mistakes and criticize yourself.

Prevent Fatigue and Worry and Keep Your Energy and Spirits
High

1. Rest before you get tired.
2. Learn to relax at your work.
3. Protect your health and appearance by relaxing at home.
4. Apply these four good working habits:
a. Clear your desk of all papers except those relating to
the immediate problem at hand.
b. Do things in the order of their importance.
c. When you face a problem, solve it then and there if you
have the facts necessary to make a decision.
d. Learn to organize, deputize and supervise.
5. Put enthusiasm into your work.
6. Don�t worry about insomnia.
====================================================
Dale Carnegie authored many books and audio programs,
including How to Stop Worrying and Start Living and How to
Win Friends and Influence People. To order the How to Stop
Worrying and Start Living audios and save 20%, go to
http://www.jimrohn.com and click Monthly Specials or call
800-929-0434.
(c) Dale Carnegie & Associates, Inc. 2003. All Rights
Reserved.
====================================================