THIS PAGE WAS LAST UPDATED ON July 28 2010 At 8:37 AM EST



Home Prices Post May Gains, but S&P Sees No Sustained Recovery


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ome prices in the United States rose in May on both a month-over-month and year-over-year basis, Standard & Poor�s reported Tuesday.

The S&P/Case Shiller 20-city home price composite increased 1.2 percent between April and May. The 10-city composite reading was up 1.3 percent.
Annual growth rates were even stronger. The 20-city composite climbed 4.6 percent compared to May 2009, while the 10-city rose 5.4 percent.
The gains posted in the latest installments of the closely watched indices were much larger than the market expected, but analysts warn that the plus-signs are only making a temporary showing, reflecting a strong spring selling season and the residual effects of the homebuyer tax credit.
�While May�s report on its own looks somewhat positive, a broader look at home price levels over the past year still do not indicate that the housing market is in any form of sustained recovery,� said David M. Blitzer, chairman of the index committee at Standard & Poor�s.
Blitzer says that since reaching its recent trough in April 2009, the housing market has really only stabilized at the lower level. He argues that more recent statistics on June�s existing and new home sales, as well as housing starts, are nothing to write home about.
�It still looks possible that the housing market might bounce along the bottom for the foreseeable future, before showing any real improvement that will filter through to the rest of the economy,� Blitzer said.
Economists across the country are echoing Blitzer�s concerns.
In commentary released to DSNews.com on the latest S&P/Case-Shiller readings, the chief U.S. economist at IHS Global Insight, Patrick Newport, said, �We expect [home prices] to rise for another two months, but then start to decline. In our view, the housing glut and foreclosures will drive the national Case-Shiller index down another 6 to 8 percent, with prices bottoming in 2011.�
Some 60 percent of real estate experts and economic strategists surveyed earlier this month by the analytics firm MacroMarkets LLC, which was founded by Robert Shiller, one of the creators of the Case-Shiller Home Prices Indices, forecast extended home price declines for the remainder of 2010.
Based on data from the May indices bearing Shiller�s name, the cities of Minneapolis and Atlanta led the way in month-to-month gains, up 2.8 percent and 2 percent, respectively. All but one of the 20 cities tracked for the study were in positive territory � all except Las Vegas, where home prices dropped another 0.5 percent in May.
Looking at the annual numbers, Las Vegas again was the biggest downer. There prices posted a 6.5 percent decline compared to May 2009. San Francisco recorded the largest year-over-year gain of 18.3 percent.






S&P/Experian Index Shows Mortgage Defaults Down 45% from 2009


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ata through June 2010, released Tuesday by Standard & Poor�s and Experian points to a declining trend in consumer default rates, with a reduction in first mortgage past dues leading the drop.

First and second mortgage default rates were 3.3 percent and 2.4 percent, respectively, as of the end of last month, according to the S&P/Experian index.
Default rates on first mortgages fell 5 percent from the previous month and have dropped 45.2 percent from a year ago, S&P says.
Second mortgage default rates are down 0.03 percent compared to May and 44.54 percent compared to June 2009.
The companies reported slight declines in default balances for bank card and auto loans as well, signaling that consumers are getting a better handle on their full financial picture and overall debt.
�The consumer credit picture shows encouraging progress as default rates continue to fall across major categories,� said David M. Blitzer, managing director and chairman of the index committee at Standard & Poor�s.
Blitzer added, �The data are consistent with reports that people continue to eschew debt and as the slow recovery from recession and financial turmoil continues. For the economy this is mixed news � better credit quality, as seen in this report is clearly positive. However, as reported earlier by the Federal Reserve, consumers credit use is declining, dampening the outlook for spending.�
The S&P/Experian consumer credit default indices are calculated based on data extracted from Experian�s consumer credit database, which is populated with individual consumer loan and payment data submitted by lenders to Experian every month. Experian�s data repository covers approximately $11 trillion in outstanding loans sourced from 11,500 banks and mortgage companies.















Banks Able to Weather Economic Stress, but Lending Still Tight:


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fter a good beginning in 2010, stress returned to the financial markets in the second quarter. But the credit rating agency DBRS says rising market stress is more manageable this time around for U.S. banks.

Economic stress was manifested in increasing concerns about sovereign credits and their potential impact on financial institutions, as well as growing doubts about the sustainability of the global economic recovery, DBRS explained.
The ratings agency says various economic indicators suggest that the recovery is slowing, including weakness in employment and housing markets across the United States.
Fortunately, this time the stress on U.S. financial markets has been more muted relative to the extreme stress after the collapse of Lehman Brothers in 2008, DBRS said. First
and foremost, the firm says, U.S. banks are better prepared. Earnings of many banks are recovering, and credit costs appear to be stabilizing.
Banks have bolstered their liquidity through debt issuance, reduced balance sheets, are less reliant on short-term market funding, and they�ve significantly increased cash holdings, DBRS noted. Based on the agency�s analysis, in early July, U.S. commercial banks had about 10.5 percent of their assets in cash, down marginally from a peak of 11.4 percent earlier in 2010, but still vastly above the level prior to the crisis that were typically around 3 percent.
Despite the increase in capital, DBRS says banks are still finding it difficult to grow loans. One inhibiting factor, according to the rating agency�s analysts, is that banks remain cautious about extending credit. Another cause is that loan demand remains weak, as borrowers are also being cautious in view of the uneven economic recovery.
DBRS points out that a strengthening in lending is typically a positive driver for bank earnings in a recovery. This cycle, though, such growth has remained elusive.
The Federal Reserve�s survey of senior bank lending officers in April 2010 indicates that there is limited easing of still tight loan underwriting standards, with loan demand consistently weak across most types of lending.
DBRS says it bank lending will remain elusive over the near-term, but is likely to strengthen towards the end of 2010, provided that macroeconomic conditions improve as the year progresses.











GSE Bailout: $146 Billion and Counting:


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he government�s bailout of just two companies � Fannie Mae and Freddie Mac � has surpassed what it cost to put the nation�s sprawling banking system back on solid footing.

As problems in the housing market pushed the two mortgage giants farther and farther into the red, the federal government stepped in, placing the companies in conservatorship in September 2008. The two GSEs, so far, have been given $146 billion to stay afloat, giving taxpayers an 80 percent ownership stake in the mortgage financiers.
Recent estimates from the Congressional Budget Office (CBO) put the tab for subsidizing Fannie and Freddie at $389 billion, when all is said and done. Lawmakers, who�ve been pushing for the GSEs� dissolution, argue that the figure is even higher � closer to $500 billion � while other market observers warn that if home prices continue to drop, the GSE bailout bill could jump to $1 trillion.
By comparison, 707 banks have received a total of $205 billion in bailout dollars. But thanks to a swifter-than-expected return to healthier balance sheets, banks have already repaid $142 billion, leaving just $63 billion outstanding but expected to be returned before long.
The nation�s two largest mortgage companies, on the other hand, continue to struggle and are proving to be the costliest �rescue� for taxpayers.
A recent article from the New York Times explains how home repossessions in greater numbers have significantly
expanded Fannie and Freddie�s role as landlord and are contributing to the escalating price tag of their bailout.
Fannie Mae and Freddie Mac took over a foreclosed home roughly every 90 seconds during the first three months of this year, according to the paper. Together, they owned 163,828 homes at the end of March � a portfolio Times reporter Binyamin Appelbaum described as a virtual city with more houses than Seattle, making the GSEs two of the nation�s largest landlords.
The bill for restoring and reselling just one of these repossessed homes generally costs the government about $10,000, after repairs are made, stolen appliances are replaced, and the inside and outside are returned to marketable condition, Appelbaum explained.
And until the companies find a buyer for the properties, regular maintenance must be performed. Fannie has contractors mow lawns twice a month during the summer, and pays them $80 each time, the Times article says, leaving the GSE with a monthly lawn care bill of more than $10 million.
The two GSEs laid out more than $1 billion for upkeep in 2009 alone, according to the paper.
�We may be behind many loans on the same street, so we believe that it�s in everyone�s best interest to aggressively do property maintenance,� Chris Bowden, the Freddie Mac executive in charge of foreclosure sales, told the Times.
Because property prices have fallen so far, Appelbaum, citing the two GSEs� financial filings, says by the time a repossessed home is resold, Fannie and Freddie on average recoup less than 60 percent of the money the borrower failed to repay. Losses are even greater in areas where prices have dropped the farthest, such as hard-hit markets in Arizona and Nevada.
As the costs continue to mount, lawmakers� calls for the administration to map out a strategy for weaning Fannie and Freddie off taxpayer support are getting louder.
Treasury Secretary Timothy Geithner has said a proposal for �fundamental reform� of Fannie Mae and Freddie Mac will come early next year.
















House Moves to Extend Tax Credit Closing Deadline:


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he U.S. House of Representatives passed a bill Tuesday that would give homebuyers who are eligible for a federal tax credit three extra months to close on their loans.

As the program stands now, qualifying homebuyers who were under contract by April 30 have until Wednesday, June 30 to complete the transaction. The House bill would extend that deadline to September 30.
The measure was overwhelmingly approved by House lawmakers in a 409 to 5 vote. But before anxious homebuyers can breathe a sigh of relief, it must also pass the Senate.
Senate Majority Leader Harry Reid (D-Nevada) has been pushing for an extension of the tax credit closing deadline in his own chamber. He introduced an amendment to a jobs and tax bill earlier this month that would have similarly pushed the cut-off date for the housing tax break out by three months.
Although senators seemed to widely support such an extension, the larger bill fell flat on the Senate floor last week � and the extra time for the tax credit fell with it.
Because of the sheer volume of applications lenders still have to process, some 180,000 buyers who have successfully met all other parameters of the tax credit, including being under contract by April 30, will miss out on the tax break, according to estimates from the National Association of Realtors (NAR). Approximately 75,000 of the transactions at-risk are distressed short sales.
Lenders have already begun notifying qualified applicants that their mortgages will not close by the June 30 deadline.
Speaking on the House floor just prior to the landslide approval, Rep. Sander Levin (D-Michigan), chairman of the House Ways and Means Committee, said, �We owe this to the people who have essentially followed the rule who are caught by a closing date.�
















Existing-Home Sales Dip in May but Remain at Elevated Levels:




Following two consecutive months of increases, existing-home sales fell slightly from April to May but were still significantly higher than year-ago levels, the National Association of Realtors reported Tuesday.

According to NAR�s report, existing-home sales were at a seasonally adjusted annual rate of 5.66 million units in May, down 2.2 percent from an upwardly revised surge of 5.79 million units in April. However, May 2010 closings were a whopping 19.2 percent above the 4.75 million-unit level of May 2009.
On a regional basis, NAR said gains in existing-home sales in the West and South were offset by a decline in the Northeast. Meanwhile, sales in the Midwest remained steady, the association said.
Although overall sales activity dipped on a month-to-month basis, NAR said existing-home sales were still at elevated levels in May due to buyer response to the tax credit. And Lawrence Yun, NAR chief economist, said he expects home sales to remain at these high levels for one more month.
�We are witnessing the ongoing effects of the homebuyer tax credit, which we�ll also see in June real estate closings,� Yun said.
Yun noted, though, that approximately 180,000 home buyers who signed a contract in good faith to receive the tax credit may not be able to finalize by the end of June
due to delays in the mortgage process, particularly for short sales. In addition, he said many potential sales are being delayed by an interruption in the National Flood Insurance Program.
NAR is supporting Senate amendments to extend the homebuyer tax credit closing deadline through September 30 for contracts written by April 30, and to renew the flood insurance program. �Sales and related local economic activity would have been higher without delays in the closing process or flood insurance issues,� Yun said.
Despite the minor drop-off in existing-home sales, total housing inventory at the end of May fell 3.4 percent to 3.89 million existing homes available for sale. NAR said this represents an 8.3-month supply at the current sales pace, down from an 8.4-month supply in April. While raw unsold inventory in May was 1.1 percent above a year ago, it was still 14.9 percent below the record of 4.58 million units in July 2008, NAR said.
As for prices of existing homes, NAR�s report was positive. According to the association, the national median existing-home price for all housing types was $179,600 in May, up 2.7 percent from the same month last year.
Regionally, existing-home prices surged in the West and inched up slightly in the Midwest and the South. The median existing-home price in the Northeast, though, fell slightly.
The positive growth in existing-home prices was partially due to a drop in distressed home sales. NAR said distressed homes slipped to 31 percent of sales in May. This was down 2 percentage points from the month prior and one year earlier when distressed homes made up 33 percent of sales.
Vicki Cox Golder, NAR president, said home prices have been stabilizing all year. �. . . the gain in home prices is a hopeful sign that the market is in a good position to stand on its own without further government stimulus,� she said. �Very affordable mortgage interest rates and stabilizing home prices are encouraging home buyers who were on the sidelines during most of the boom and bust cycle.�














New Index Finds U.S. Consumers in Financial Distress:


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hile the U.S. economy is showing signs of recovery, the average U.S. consumer remains in financial distress � despite a significant pullback in household spending.

These conclusions are among several key findings of the CredAbility Consumer Distress Index, a new quarterly measure that tracks shifts in the financial condition of the average American household and provides a comprehensive snapshot of the American consumer�s total financial picture over time.
The proprietary index is published by CredAbility, a national nonprofit credit counseling agency with 46 years of experience helping consumers in distress, long known as Consumer Credit Counseling Service of Greater Atlanta.
The agency just recently announced its name change to CredAbility � a move that better reflects the organization�s national presence as a credit counseling and education provider.
CredAbility�s new index uses a proprietary methodology that draws upon multiple data sets and analyzes consumers� employment, housing, credit, household budget, and net worth information.
The index is based on a 100-point scale where a level of 70 or below indicates consumer financial distress, which the organization defines as �the condition where an individual or household is financially unstable and needs to take immediate action to address their problems.�
For the quarter ending March 2010, American households� scored a 64.2 on the 100-point scale. CredAbility says this marks the seventh consecutive quarter of financial distress for the average American.
However, the index improved slightly compared to the previous quarter score of 63.9 � the lowest reading since 2006, the first year that the index covers. CredAbility attributes the modest quarterly increase to reduced household spending.
Based on the agency�s data, American households had their highest score � 78.7 � in March 2007. Since that
time, the index has dropped more than 14 points, led by rising mortgage delinquencies and foreclosures, and increased unemployment and under-employment, CredAbility says.
The index dipped below 70 � entering a state of financial distress � in September 2008, and has lingered in the mid-60s for the past six quarters.
�To gauge and test the index, we ran historical data from the beginning of 2006, when unemployment was low and the economy was growing,� said Mark Cole, CredAbility�s COO. �Our data show that the stress on household budgets was significant even then. The consumer had little to fall back on when housing and employment markets fell sharply.�
Cole says on the positive side, the distress index score has shown some signs of stabilizing over the last two quarters, which he says reflects both strengthening of household budgets and an improving employment market.
A more robust jobs market would certainly fare well for an American population enduring the aftershocks of the nation�s economic downturn � and for a housing industry still struggling with elevated delinquency numbers.
Scott Scredon, a spokesperson for CredAbility, explained to DSNews.com that the common denominator pushing consumers into a distressed situation is unemployment or diminishing income. Seventy percent of those counseled by the agency cite loss of job or income as the reason for their deteriorating financial situation � and for many this means the mortgage may go unpaid.
CredAbility provided credit counseling and education to more than 754,000 people across the United States last year. Of those, 120,000 were looking for help to stave off a foreclosure. Scredon says already, the number of borrowers CredAbility has assisted through the first three months of this year, puts the organization on pace to surpass the 2009 foreclosure aid figure by 5 percent.
Like most HUD-approved counseling agencies, CredAbility has direct lines into the loss mitigation departments of all major servicers. And, Scredon says that over time, CredAbility counselors have developed good working relationships with the servicing community, to the point that if they make that phone call on behalf of the homeowner, the servicer is assured there is a reasonable expectation that a solution can be reached.
One year after a consumer receives counseling services from CredAbility, the organization goes back and reviews credit reports and other data to check on their situation. Scredon says approximately 80 percent of those who�ve received foreclosure prevention counseling were still in their homes after one year.












Home Prices Gain 0.9% in April as Tax Credit Winds Down:


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ome prices nationally bumped up 0.9 percent in April compared to March, according to new data released by Integrated Asset Services, LLC (IAS) Tuesday.

That follows a 1.1 percent month-to-month gain recorded by the Denver-based valuation company in March, which represented the first time in eight months that IAS� home price benchmark inched into positive territory.
But even with the monthly increases, the IAS360 House Price Index is down 2.8 percent from April 2009, demonstrating just how sluggish a full recovery will be.
With April�s gain, IAS says home prices nationally are 23.9 percent below the peak hit in July of 2007.
Three of the four U.S. census regions registered respectable gains for the month of April, with the Midwest adding 1.9 percent to home values; the South, primarily on strength along its central corridor, 1.8 percent; and the West 1.1 percent. Only the Northeast, with a 0.7 percent decline � the region�s eighth in a row � lost ground for the month.
�Arguably, the housing market is in better shape today than it was a year ago, but it�s reasonable to think federal
tax credits have propped up home sales and prices to some degree,� said Dave McCarthy, president and CEO of Integrated Asset Services. �I�m concerned the end of government support could lead to renewed weakening in the market.�
Homebuyers who close on a deal by June 30 are eligible for the administration�s credit worth up to $8,000 for first-time buyers and $6,500 for existing homeowners. The deadline for signing contracts was the end of April. Many analysts believe demand may cool after the effect of the tax credit fades, which would put added pressure on the housing marketplace.
Also weighing on the near-term outlook is an estimated stockpile of more than 4 million unsold homes on the market, the highest number since July according to data from the National Association of Realtors (NAR).
Beyond that looms the so-called �shadow inventory� of homes that are in the process of foreclosure or are already seriously delinquent and will be soon heading down that pipeline toward REO status. Industry estimates vary as to pinpointing the exact number of properties lurking in the shadows � anywhere from 1 million to more than 7 million.
The latest report from Lender Processing Services (LPS), whose numbers are based on the company�s extensive national loan-level database, puts the total volume of non-current U.S. home loans � including those that are delinquent, in foreclosure, and REO � at just over 7.3 million.
McCarthy says he can�t discount the fact that the IAS360 index of home prices has turned positive after such a long stretch of down months, but �given all that�s in front of us, we can�t forget this improvement may be fleeting as well,� he said.













FHA�s Delinquency Rate Falls to 8.5%:


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t looks as though escalating past due mortgages may be a thing of the past for the Federal Housing Administration (FHA). The federal mortgage insurer�s delinquency rate dropped again in April, marking the third straight month of declines.

According to FHA�s latest operations report, as of April 30, 527,504 mortgages had spent at least 90 days in a delinquent status, yielding a serious default rate of 8.5 percent. That�s down from 8.8 percent in March and 9.2 percent in February.
The FHA is not the only government-backed mortgage business to see its delinquencies drop off. Fannie Mae said last week that the percentage of its loans 90 or more days past due dropped 7 basis points to 5.47 percent, while
Freddie Mac reported a 7 basis point drop between March and April to 4.06 percent.
FHA says it has paid 153,540 claims so far this fiscal year. Of those, 89,822 were loss mitigation retention claims, and 55,653 were for property conveyances.
During the month of April, the FHA received 215,578 applications for mortgage insurance, down 12.5 percent from the previous month. This total consisted of 150,935 purchase cases, 56,474 refinance applications, and 8,169 reverse mortgages. Seventy of the refinance apps were part of the agency�s Hope for Homeowners (H4H) program.
In April, the annual rate for single-family applications was estimated to be 2,296,400 � slightly below March, but roughly in the same range as the last several months.
The federal agency endorsed 126,316 mortgages in April with an aggregate face amount of $22.9 billion. Of these, 84,723 were purchase money mortgages, 36,082 refinance mortgages, and 5,511 reverse mortgages.
With respect to the purchase cases, 67,218 were for first-time homebuyers.
During April, 3,045 adjustable rate mortgages were endorsed � most having 5-year period terms.
At the end of April, FHA had 6,192,885 single-family mortgages in force with a scheduled outstanding balance of $820 billion.





Existing Home Sales Beat Expectations with 7.6% Jump:


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he National Association of Realtors (NAR) reported Monday that sales of previously owned homes rose 7.6 percent in April compared to March, reflecting a surge in activity as buyers sought to close deals ahead of the contract deadline of April 30th for the federal homebuyer tax credit.

Last month�s numbers pushed the annual sales rate to 5.77 million units, up from a 5.36 million sales rate in March. The newly released data far exceeded analysts� expectations. They were projecting an increase, but somewhere between a 5.60 and 5.65 million-unit sales pace. Last year at this time, the sales rate was on track to hit just 4.70 million pre-owned units for the year.
Although, the increase in existing home sales was widely anticipated and a welcome boost to a real estate market still trying to gain some meaningful traction, some warn that the gains recorded over the last couple of months (monthly sales rose 7.0 percent in March), will soon be retracted. With the tax credit, many homebuyers planning to make purchases during the summer season were likely prompted to move those decisions up. But Lawrence Yun, NAR�s chief economist, remains optimistic that a turnaround has taken hold.
�The upswing in April existing-home sales was expected because of the tax credit inducement, and no doubt there will be some temporary fallback in the months immediately after it expires, but other factors also are supporting the market,� Yun said. �For people who were on the sidelines, there�s been a return of buyer confidence with stabilizing home prices, an improving economy, and mortgage interest rates that remain historically low.�
Eli Tene, a real estate analyst, investor, and president of Panorex Realty in Los Angeles, has a different take. He says the positive news in home sales won�t last.
�I think we are due for another round of foreclosures. Interest rates will rise, and the perfect storm is forming that will lead to a possible spike in interest rates. When this happens, homes sales will have to suffer another negative impact,� Tene explained.
He added, �The housing market is witnessing movement in homes $500,000 or less, but home sales in the higher end are soft. Mortgage financing and approvals continue to challenge borrowers in all markets, despite low interest rates and prove to be a serious challenge and barrier to closing transactions in high-end markets.�
But at least for the short-term, NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Arizona, says that while purchasing traffic may be somewhat mixed, many buyers are staying in the market, even without the tax credit.
�Some Realtors tell us they are very busy with clients who are entering the market now as a result of improved conditions, while others are welcoming a slowdown from frantic market conditions in recent months,� Golder said.
Despite the increase in monthly sales figures, NAR says total housing inventory at the end of April rose 11.5 percent to 4.04 million existing homes available for sale, which represents an 8.4-month supply at the current sales pace. That�s up from an 8.1-month backlog in March.
Raw unsold inventory is 2.7 percent above a year ago, but remains 11.6 percent below the record of 4.58 million homes in July 2008, NAR noted.
�Although inventory levels remain above normal and much of the gain last month was seasonal, the housing price correction appears essentially over,� Yun said. �In fact, a majority of the markets have seen price gains recently. A return to old-fashioned responsible lending and buying will help the housing market avoid disruptive and painful bubble-bust cycles.�













HUD Lobbies for More Federal Funding to Stabilize Housing Markets:


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UD Secretary Shaun Donovan is asking Congress to release additional funds to help communities combat the ongoing effects of the housing crisis and home foreclosures. He says the Obama administration is committed to working with lawmakers to secure a third round of funding for HUD�s Neighborhood Stabilization Program (NSP).

The federal agency has disbursed $6 billion through NSP � $4 billion in the first round of funding in late 2008, and another $2 billion in early 2010. The money is awarded to state and local governments and non-profit developers to buy and rehabilitate or demolish vacant and foreclosed homes in their communities.
Some recipients have used the money to create land banks to assemble, temporarily manage, and dispose of foreclosed homes. The grants can also be used to offer downpayment and closing cost assistance to low- and middle-income homebuyers.
HUD says so far, the first round of NSP funding has touched 63,000 homes, by enabling acquisition, demolition, homebuyer assistance, and new construction. The initial NSP1 funds provided each state government with a �base allocation� of $19.6 million, without regard to varying degrees of need.
Donovan said HUD plans to reallocate funds awarded through NSP1 that have not yet been committed to specific projects, in order to drive more funding to hard-hit communities with high foreclosure and vacancy rates.
HUD estimates that 70 percent of the first round of NSP grants will be obligated to projects by the 18-month deadline set forth under the program � in September or October 2010, depending on the grant date. That would leave $1 billion that the agency could recapture.
Donovan explained that following a 30-day review period, funds that grantees have not yet committed to specific projects will be reallocated either to new grantees or as additional funds for first round recipients.
The administration is also asking Congress to give HUD more money for foreclosure counseling. Along with the first round of NSP funding, HUD received $150 million earmarked for advisory services to connect struggling homeowners with their mortgage servicer or lender to explore options for preventing foreclosure.
�HUD is committed to helping local communities recover from the blight and vacancies that have become visual symbols of difficult economic times.� Donovan said. �We have much more work to do to mitigate the impacts that foreclosures have had on local communities; however, innovative collaborations between local government, housing agencies, and non-profits and creative�uses of federal funds will�put us on the path to recovery.�














Consumers Are Taking Control of Their Finances:


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n light of the economic crisis, consumers are taking financial matters into their own hands by implementing
proactive spending habits and mortgage management strategies, according to findings from the Western Union Global Business Payments Money Mindset Index, a national survey of 3,000 consumers conducted by Englewood, Colorado-based Western Union.
Of those surveyed, 78 percent expect their financial situation to improve or remain unchanged over the next six months. In addition, the survey found that 73 percent of respondents are learning to cut back on their spending, 61 percent have switched to bargain retailers, and 39 percent have created a budget to ensure their spending stays on track.
The survey also found that many Americans are beginning to understand the impact their mortgage has on
their financial well being. Nearly half � 45 percent � of consumers with a modified mortgage understand that scheduling regular payments will help keep them current on their monthly payments, and almost one-third of consumers believe modifying their mortgage will improve their debt situation.
According to the survey, 34 percent of consumers have contacted their mortgage companies about loan modifications, and 9 percent have actually modified their loan agreements in the last six months. However, the survey found that approximately 50 percent of American consumers with a mortgage do not fully understand the requirements to qualify for a loan modification or refinance a mortgage, indicating a need for more education in this area.
Western Union said consumers� improved spending behaviors, coupled with the respondents� proactive approach to mortgage payments, paint a picture of positive money management behavior. This, the company said, demonstrates Americans� determination to take hold of their finances.
�The resilience of the U.S. consumer is clearly captured in the latest Money Mindset Index,� said David Shapiro, SVP of Western Union Global Business Payments. �With Americans understanding how to better manage their mortgage and spending, they are positioning their households to survive and thrive in this economy.�









Threat of Shadow Inventory Diminishing: Barclays


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nalysts at Barclays Capital say the industry�s ominous shadow inventory is close to topping out.

New research published by the firm says the supply of homes nearing REO status, defined as 90 or more days delinquent or in the process of foreclosure, will peak this summer and then begin falling gradually as the market becomes stable enough to absorb 130,000 distressed properties a month.
�While we expect REO levels to remain elevated, the trickle of homes from foreclosure into REO implies moderate levels of inventory reaching market,� Barclays said in its report.
The company estimates the current REO supply to be 478,000 and expects it to rise to 536,000 by late 2011.
Barclays� delinquency pipeline snapshot shows that as of February, there were 2.4 million mortgages at least 90 days past due and 2.1 million more already winding through the foreclosure process, which combined makes up a shadow inventory of 4.5 million.
It�s a daunting tally and could grow larger as foreclosure alternatives are exhausted, but Barclays� model forecasts 4.7 million distressed sales over the next three years, with 1.6 million coming in 2010, 1.6 million in 2011, and 1.5 million in 2012.
The research firm notes, however, that an orderly liquidation of shadow inventory will require both �more robust household formation and job growth.�
Some market indicators, though, are looking favorable. This week, Fannie Mae reported only a minor increase in its March serious delinquency rate � 5.59 percent versus 5.51 percent in February. RealtyTrac also reported a 12 percent month-to-month decline in default notices for April.
Barclays says this data supports its forecast that the industry is only a few months away from reaching peak levels of shadow inventory.









Major Banks Under Investigation for Mortgage Investment Fraud

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rosecutors are investigating eight major banks to determine if they provided misleading information to credit ratings agencies in order to deceive investors about the quality of mortgage-backed securities (MBS) they were selling.

New York Attorney General Andrew Cuomo has reportedly issued subpoenas to Citigroup, Goldman Sachs, Morgan Stanley, Bank of America�s Merrill Lynch, Credit Suisse, Deutsche Bank, Cr�dit Agricole, and UBS. According to news reports, the three major rating agencies � Standard & Poor�s, Moody�s Investors Service, and Fitch Ratings � have also been subpoenaed.
Credit ratings agencies have been blamed for missing the mark in assessing the quality of mortgage bonds that ultimately tanked when the housing market came crashing down.
Some critics say the firms knowingly inflated MBS ratings to appease the banks selling the bundled mortgages, since they were also the ratings agencies� clients for other financial services. Executives at two of the big raters, S&P
and Moody�s, have both publicly blamed the rat race of a competitive marketplace for their miscalculations.
But Attorney General Cuomo seems to think the ratings agencies were duped, and he�s putting Wall Street banks on the hook for flexing their big-business prowess to influence the agencies, and in turn investors and the market, to cloak sour mortgage deals as AAA-rated sound investments.
The federal Justice Department is also getting in on the inquisition. The Wall Street Journal reports that Citigroup, Deutsche Bank, Goldman Sachs, Morgan Stanley, and UBS, along with JPMorgan & Chase, are also being investigated by the U.S. Attorney�s Office in Manhattan for similar criminal misconduct related to information they provided to investors regarding collateralized debt obligations (CDOs) backed by mortgages.
The Journal says the companies have already been served civil subpoenas by the Securities and Exchange Commission (SEC), which is working hand-in-hand with federal prosecutors in Manhattan to build a case.
The raid on Wall Street all began with the SEC�s charges against Goldman Sachs last month, alleging that the firm defrauded investors about the investment quality of a CDO that hinged on the performance of subprime mortgages, all the while Goldman itself was betting on the loans behind the CDO to fail and making millions in the process, the SEC says.
A probe by a Senate investigative panel in late April concluded that big banks securities trading practices of packaging and repackaging the same risky mortgages into different CDOs served to spread the problems of the housing crisis to just about every corner of the nation�s financial market.

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Treasury Releases Details on Mortgage Program for Unemployed:


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he U.S. Treasury has issued a new Supplemental Directive introducing its payment relief program for homeowners who have lost their jobs.

The Home Affordable Unemployment Program (UP), initially announced by the administration in March, becomes effective July 1, 2010, and offers eligible unemployed borrowers a forbearance plan to temporarily reduce or suspend their mortgage payments for a minimum of three months.
To be eligible for UP, a borrower must meet the Home Affordable Modification Program (HAMP) eligibility criteria as well as be without a job and receiving unemployment benefits in the month of the UP forbearance plan effective date, and must request a UP forbearance plan before they become they miss three monthly mortgage payments. Servicers have discretion to require a borrower to have received unemployment benefits for up to three months before the start of the forbearance plan.
Borrowers who are unemployed and request assistance through HAMP must first be evaluated for an UP forbearance plan. Borrowers currently in a HAMP trial
period plan who become unemployed may receive forbearance under the UP plan if they missed less than three monthly mortgage payments before they entered the trial. These qualifying borrowers will be transferred from a HAMP trial into an UP forbearance plan immediately, without having to wait until they receive three months of unemployment benefits.
Homeowners previously determined to be ineligible for a HAMP modification may request an UP forbearance plan if they meet the eligibility requirements, but borrowers already in a permanent HAMP modification who become unemployed are not eligible for forbearance under the unemployment program.
The UP forbearance plan term must be three months or upon reemployment, whichever is less. Servicers may extend this period according to their investor/regulatory guidelines. The homeowner�s monthly mortgage payment must be reduced to less than or equal to 31 percent of their gross monthly household income and may be suspended in full.
Borrowers in an UP forbearance plan will be evaluated for a HAMP modification at either reemployment or 30 days prior to the UP forbearance period expiring, whichever happens first.
The newly released guidance for unemployed borrowers applies to first lien mortgage loans that are not owned or guaranteed by Fannie Mae or Freddie Mac or insured or guaranteed by a federal agency, such as the Federal Housing Administration (FHA), as explained to DSNews.com by the HAMP Solution Center.
A representative there explained that a program to provide assistance to jobless homeowners may be forthcoming from the GSEs, but UP is not applicable to government-owned loans.












Study Finds Americans will be Permanently Impacted by the Recession



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ike a ripple effect, the recent recession will impact Americans for years to come, according to a study released Monday by the Mortgage Bankers Association (MBA).

Conducted by Professor Joe Peek, Gatton Endowed Chair in international banking and financial economics at the University of Kentucky, and sponsored by the Research Institute for Housing America, the study � Household Reaction to the Financial Crisis: Scared or Scarred? � analyzed how Americans will respond to the current crisis in terms of consumer spending, saving rates, credit supply, and implications for the strength of the economic recovery.
�While Americans, and the American economy, are noted for their resilience, the current financial crisis and recession exceeded the devastation created by other post-World War II recessions,� Peek said. �Saving rates have risen substantially, and many Americans will continue to cut their spending sharply out of necessity, others out of fear of what the future holds. Since consumer expenditures account for about two-thirds of GDP, we are facing the �paradox of thrift� as households try to rebuild their net
worth, with the reduced spending likely to delay and weaken the recovery from the �Great Recession�.�
On the housing front, Peek said it is unlikely that the dramatic rise in loan delinquencies, home foreclosures, and bankruptcies will show a meaningful decrease, as high unemployment and low house prices are widely projected to remain for an extended period. In addition, he said the rise in problem loans will restrain banks� willingness and ability to provide credit.
According to Peek, America may unfortunately face the possibility of being caught in a vicious cycle. He said cutbacks in consumer and business spending are likely to contribute to a more anemic recovery, which in turn, will cause a deepened and prolonged weakness in spending and further undermine the recovery.
The longer the malaise in economic activity continues, the more likely diminished spending will persist. This, Peek explained, will adversely affect future economic growth and the standard of living. He said such headwinds to a strong economic recovery are likely to have lasting impacts on the values and behavior of the current generation, much as the Great Depression had on its generation.
�The severity and duration of the most recent downturn far exceeds what we have experienced in past recessions and has resulted in the disruption of millions of lives,� added Michael Fratantoni, MBA�s VP of research and economics. �We can�t know for certain at this point, but it is more than reasonable to prepare for a world that has been irrevocably changed by this experience. For the many reasons discussed in this study, we should expect hesitant homebuyers, cautious businesses, and conservative lenders in the years ahead.�
















Fannie Mae Requests $8.4B in Federal Aid after Q1 Loss




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ortgage giant Fannie Mae has reported a net loss of $11.5 billion for the first quarter of 2010. The deficit has prompted the GSE to ask the Treasury for another $8.4 billion in federal funding.

Last week, Freddie Mac requested $10.6 billion from the Treasury after it too posted another quarterly loss.
According to Fannie Mae�s earnings announcement, after adding in $1.5 billion of dividend payments to the Treasury, the Washington, D.C.-based company�s total Q1 loss attributable to common shareholders was $13.1 billion, or $2.29 per diluted share.
The negative column did narrow slightly, though, compared to the fourth quarter of 2009, when the GSE reported a net loss of $16.3 billion, or $2.87 per share, for common stockholders.
�Our first-quarter results were driven primarily by credit-related expenses, which remain at elevated levels due to weaknesses in the economy and the housing market,� Fannie Mae said in its earnings statement.
Like its sibling mortgage financier Freddie Mac, Fannie Mae also attributed the red on its balance sheet, in part, to new accounting standards that took effect January 1,
2010, which require the GSE to record the underlying assets of mortgage-backed securities (MBS) trusts and some liabilities held by the trusts on its own books.
Fannie Mae�s single-family serious delinquency rate increased to 5.47 percent as of March 31, 2010, up from 5.38 percent as of December 31, 2009. But the GSE says this delinquency ratio grew at a slower pace than in each quarter of 2009, and on a month-to-month basis, the March rate was down from 5.59 percent in February.
Total nonperforming loans in Fannie Mae�s guaranty book of business were $223.9 billion as of March 31, 2010, compared with $216.5 billion as of the end of last year.
The GSE acquired 61,929 single-family properties through foreclosure in the first quarter of 2010, compared with 47,189 in the fourth quarter of 2009. As of March 31, 2010, Fannie Mae�s inventory of REO homes was 109,989, carrying a total value of $11.4 billion. That compares to 86,155 REOs as of December 31, 2009, with a combined value of $8.5 billion.
During the first quarter of 2010, Fannie Mae purchased or guaranteed an estimated $191.4 billion in loans, measured by unpaid principal balance, including approximately $40 billion in seriously delinquent loans bought back from MBS trusts in March.
The GSE�s estimated market share of new single-family mortgage-related securities issuances was 40.8 percent in the first quarter of 2010, compared with 38.9 percent in the fourth quarter of 2009. Fannie Mae�s mortgage credit book of business was $3.18 trillion as of the end of March, compared with $3.23 trillion at the end of last year.
Fannie Mae said the risk profile of newly-acquired loans �remained strong.� For single-family loan acquisitions in the first quarter of 2010, the weighted average original loan-to-value ratio was 69 percent and the weighted average FICO credit score was 758.







Foreclosure Crisis Caused by Borrowers who �Overreached�:


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he true cause of the foreclosure crisis is up for debate. Did banks prey on unwitting consumers, or did households �overreach� and borrow more than they could afford? Economists at the University of Arkansas recently completed a study to answer that very question.

The study, The Foreclosure Crisis: Did Wall Street Practice Predatory Lending or Did Households Overreach?, found the latter to be true.
Although the researchers found some evidence of predatory lending, they concluded that a more accurate explanation of the foreclosure crisis was households who got in over their heads after borrowing more than they could afford. However, the researchers were careful not to excuse Wall Street banks, as reckless lending enabled households to become dangerously leveraged.
�Our evidence does not disprove or excuse reckless subprime lending by the large Wall Street banks,� said Tim Yeager, associate professor in the Sam M. Walton College of Business and lead author of the study. �We argue that there is plenty of blame to go around for the financial crisis. Both banks and consumers overreached. Banks extended too much credit to households, and households purchased more home than they could afford.�
Relying on massive datasets from private companies that compile information about demographics, real-estate properties, and foreclosures, Yeager and four other researchers created profiles of households who were in foreclosure during the third quarter of 2008. The researchers used a classification system to identify and examine the characteristics of these households, which they separated into 21 life-stage groups, each with specific demographic characteristics that tied them together.
The researchers then developed two categories of groups based on formulas for �excess foreclosure shares� and �relative default shares.� The first calculation determined, in absolute numbers, which groups accounted for the most foreclosures. The second calculation showed which groups had the highest likelihood of foreclosure.
By far, the group with the greatest excess foreclosure percentage was �Cash & Careers,� the most affluent generation of adults born between the mid-1960s and early 1970s. Members of this group had high household incomes, high education levels, high home values, and none to only a few children. In addition, members of this group were classified as aggressive investors, most of who lived in areas of rapid real estate appreciation, such as California, Nevada, Arizona, and Florida.
However, �Cash & Careers� ranked seventh on the list of groups most likely to default. At the top of this list were four groups � �Mixed Singles,� �Gen X Singles,� �Boomer Singles,� and �Beginnings� � characterized by low income and low net worth. Members of these four groups were most likely to be victims of predatory lending, the report said. But except for �Boomer Singles,� these groups showed up at the bottom of the excess foreclosure list.
�Although we did find evidence that low-income households had a higher statistical likelihood of foreclosure, most households in foreclosure were relatively affluent and well educated,� Yeager said. �Also, these household defaults were strongly clustered in southwestern and southeastern states, which is consistent with the overreaching-consumer explanation of the foreclosure crisis.�
Overall, the study found that most foreclosed households were not �duped� into bad loans. Rather, they were caught up in a housing price bubble in which both consumers and lenders were too aggressive.
Yeager said the policy implication from these results is that strong consumer protection laws, though necessary to prevent Wall Street banks from offering high-risk loans to the most vulnerable, will not be sufficient to prevent another financial crisis like the one the U.S. economy experienced in 2007 and 2008. He said the only comprehensive solution may be to pop housing bubbles, which is a much more complex task that would require the Federal Reserve to recognize and limit asset price bubbles.






















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.











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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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!



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.


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.

================================================================================
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
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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.
====================================================