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A Crackdown on Law Firms

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Article source: http://www.nytimes.com/2014/08/24/realestate/a-crackdown-on-law-firms.html

Wonkbook: BofA’s record settlement may leave homeowners disappointed

Welcome to Wonkbook, Wonkblog’s morning policy news primer by Puneet Kollipara (@pkollipara). To subscribe by e-mail, click here. Send comments, criticism or ideas to Wonkbook at Washpost dot com. To read more by the Wonkblog team, click here. Follow us on Twitter and Facebook.


(Photo by Spencer Platt/Getty Images)

Wonkbook’s Number of the Day: $16.65 billion. That’s the size of the settlement between Bank of America and the Justice Department, the single-largest penalty a company has been levied by the government.

Wonkbook’s Chart of the Day: How much Obamacare premiums are increasing in your state.

Wonkbook’s Top 5 Stories: (1) Context on the Bank of America settlement; (2) protests calming in Ferguson?; (3) the Americans’ Ebola recovery; (4) promising pre-Yellen economic numbers; and (5) Ice Bucket Challenge politics and policy.

1. Top story: BofA’s $17 record billion settlement may not be as expensive as it sounds

Bank of America and DOJ reach $17 billion settlement over crisis-era mortgage securities. ”Bank of America on Thursday became the third Wall Street bank to reach a multibillion-dollar agreement with the Justice Department for allegedly misleading investors about the quality of bonds sold in the lead-up to the 2008 financial crisis….There is no specific carve-out to compensate investors, whereas funds are set aside to provide relief to homeowners and blighted communities….Almost $1 billion of the Bank of America settlement will go to states…whose attorneys general were investigating the bank or its Countrywide Financial or Merrill Lynch units. Those state prosecutors have earmarked that money for…retirement funds.” Danielle Douglas in The Washington Post.

On paper, the largest punishment against a bank for the mortgage crisis… ”The settlement, which includes $9.65 billion in cash and $7 billion in consumer relief, resolves civil investigations by government prosecutors, the U.S. said today….The agreement cements Bank of America’s status as the firm punished hardest for faulty mortgage practices. It eclipses Citigroup Inc.’s $7 billion settlement in July and JPMorgan Chase Co.’s $13 billion accord in November. Bank of America’s settlement also comes on top of its $9.5 billion deal in March to resolve related Federal Housing Finance Agency claims.” Tom Schoenberg, Hugh Son and David McLaughlin in Bloomberg.

…but less painful than it looks. ”The actual financial burden…may not exceed $12 billion….At issue is how much of the cost of the $7 billion in ‘soft dollars,’ or help for borrowers, the bank will bear….Some of the relief the bank will provide involves cutting the principal of a loan to make it easier for the borrower to pay. The dollar amount of that reduction gets credited toward what it needs to fulfill the settlement. But Bank of America wrote down many of its troubled mortgages years ago.” Peter Eavis and Michael Corkery in The New York Times.

Some ‘underwater’ borrowers could face huge tax bill if they accept help through settlement. ”In 2007, Congress adopted a law that spared homeowners from being taxed on the amount of the loan that was written off. But that tax break expired in December, and now that kind of relief can be counted as income by the IRS, an issue we wrote about in April….’That’s why the Department secured a commitment from Bank of America to pay a portion of the settlement — over $490 million — to defray some of this tax liability,’ U.S. Attorney General Eric H. Holder Jr. said….’And our settlement requires the bank to notify all consumers of the potential tax liability.’” Dina ElBoghdady in The Washington Post.

And few homeowners may benefit at all. ”Consumer advocates say relatively few people will be helped relative to the devastation triggered by the mortgage bonds, which fueled the worst financial crisis since the 1930s and threw millions of homes into foreclosure. Only a fraction of homeowners would be eligible for refinancing under the settlement. And the process by which people would qualify and receive aid could drag on for years, with payouts set to be completed as late as 2018. Those who have already lost homes to a foreclosure or a short sale — when a lender accepts less money from a sale than what the borrower owes — wouldn’t likely benefit at all.” Josh Boak, Pete Yost and Marcy Gordon in the Associated Press.

A similar JPMorgan settlement has had some disappointing results for homeowners. “As of 31 March of this year, five months after the settlement, JPMorgan only claimed verifiable modifications on 100 loans, for a grand total of $6m in credited relief – a little under 1% of the total it has promised. Even though the settlement provides a bonus credit for relief delivered within the first year, JPMorgan has decided to stretch things out.Community housing activists like the Home Defenders League have repeatedly questioned whether relief will ever materialize. ” David Dayen in The Guardian.

Under the deal, BofA can get credit for other firms’ mortgage aid.Bank of America Corp. can get credit toward its record $16.7 billion settlement of U.S. mortgage probes without doing a thing.  The lender, which jumped the most in 15 months in New York trading yesterday after agreeing to resolve government claims, pledged $7 billion in consumer relief in the deal. Some of that may be satisfied as borrowers get mortgage help from firms that bought their loans or servicing rights from the bank, according to terms on the Justice Department’s website. That can even apply to assets the bank already sold. Past U.S. settlements with big banks were criticized by investors and lawmakers after the companies got credit for borrower relief that might have occurred anyway or left other firms bearing the cost.” Jody Shenn and Hugh Son in Bloomberg

One group is left out: investors. ”One group of people who were harmed, the investors who purchased mortgage-backed securities and then took a beating, won’t be helped. Rafferty Capital Markets analyst Richard Bove, in a phone interview, said: ‘The shareholders are expected to pay for something they never did, while the people who committed the crimes suffer nothing, while the people harmed get nothing.’”Philip Van Doorn in MarketWatch.

Do these settlements normalize banks’ bad behavior? ”The constant drumbeat of settlements really does normalize misbehavior: If every bank is constantly settling charges of mis-selling mortgages, then mis-selling mortgages can’t really be that bad, can it? If every bank is constantly paying billions of dollars in fines, then paying billions of dollars in fines becomes less shameful. And if every bank is fined over and over again for the same conduct, then the attitudes of the bankers will shift.” Matt Levine in Bloomberg View.

Other financial reads:

BoA seeks to prove Buffett right after settlement. Hugh Son in Bloomberg.

U.S. judge calls Argentina debt swap illegal. Nate Raymond and Joseph Ax in Reuters.

Regulators struggle with conflicts in credit ratings and audits. Floyd Norris in The New York Times.

KRUGMAN: Inflation hawks are crying wolf. ”With very few exceptions, officials and economists who issued dire warnings about inflation years ago are still issuing more or less identical warnings today. Narayana Kocherlakota, president of the Minneapolis Fed, is the only prominent counterexample I can think of. Now, everyone who has been in the economics business any length of time, myself very much included, has made some incorrect predictions. If you haven’t, you’re playing it too safe. The inflation hawks, however, show no sign of learning from their mistakes. Where is the soul-searching, the attempt to understand how they could have been so wrong?” Paul Krugman in The New York Times.

COCHRANE: A few things the Fed has done right. ”As Federal Reserve officials lay the groundwork for raising interest rates, they are doing a few things right. They need a little cheering, and a bit more courage of their convictions….The Fed’s plan to maintain a large balance sheet and pay interest on bank reserves, begun under former Chairman Ben Bernanke and continued under current Chair Janet Yellen, is highly desirable for a number of reasons — the most important of which is financial stability. Short version: Banks holding lots of reserves don’t go under.” John H. Cochrane in The Wall Street Journal.

Top opinion

BAI: We want our politicians to act like LBJ. But not really. ”Obama…just doesn’t love the full contact sport of politics. He has no capacity for the inside machinations or tactical brutality we associate with a more sophisticated and celebrated president like Lyndon Johnson. What we really need, I guess, is an executive in the mold of a Chris Christie or an Andrew Cuomo or a Rick Perry, all of whom are more extroverted and more brazen about wielding their power as governors than Obama is — and all of whom, not incidentally, are now fending off prosecutors and investigations….This illustrates an interesting paradox of modern politics: We love this idea of the ruthless and effective political operator, right up until the moment we’re confronted by the reality.” Matt Bai in Yahoo News.

YORK: The right stuff. ”The very fact that Cantor felt it necessary to explain such an elementary truth of modern American politics speaks volumes about the present state of the Republican Party. Although the GOP has been successful at the congressional level, its candidates for president have lost the popular vote in five of the last six elections, in large part because they failed to attract many of the millions of voters who are not entrepreneurs. Unless things change, the landscape could look just as bleak in 2016.” Byron York in Foreign Affairs.

McARDLE: Legalize drugs, deal with the downsides. ”How much benefit can we expect from drug legalization? For the past few years, John McWhorter has been making powerful arguments that we should end the drug war that has fueled so many problems in the black community….At the same time, I want to be realistic about the potential benefits. If we legalize drugs, will the gangs, and all the attendant costs of the drug war, really go away? Here’s one optimistic piece of evidence: The murder rate in America seems to have plummeted dramatically since the end of Prohibition.” Megan McArdle in Bloomberg View.

ROHATYN AND GOLDMARK: Rebuilding America, one bridge at a time. ”States should be asked to decide whether they want to join a national infrastructure program of the kind we are proposing. Those whose legislature and governor decide not to could take advantage of a simple alternative….Placing primary responsibility for infrastructure renewal on the states could win support of more conservative legislators who generally oppose new investments or expenditures by the federal government….And having a universally accepted, existing mechanism available for use of their share of the funds would allow states to opt out if they, for whatever reason, do not believe such a program is in their interest.” Felix G. Rohatyn and Peter C. Goldmark Jr. in The Washington Post.

Kermit interlude: The Muppet takes the Ice Bucket Challenge.

2. The protests in Ferguson may be finally on the wane

Nixon orders National Guard to withdraw as protests calm down. ”Gov. Jay Nixon ordered the Missouri National Guard to begin withdrawing from this St. Louis suburb Thursday, the clearest sign yet that the violent clashes between police and residents may be subsiding after nearly two weeks of civil unrest. Nixon’s decision came four days after he first called on Guard troops to help contain the escalating protests over the police shooting of 18-year-old Michael Brown on Aug. 9. The nightly confrontations between protesters and a heavily armed police force wielding tear gas canisters and rubber bullets have attracted global attention.” Carol D. Leonnig and William Branigin in The Washington Post.

The gas is gone but the hot air remains. “Even though protesters and police are no longer clashing in the street, many battles have only just begun. While the relative calm is a welcome change from the nights of tear gas, rubber bullets and gunshot injuries, the glaring issues that were simmering under the surface before the city’s anger boiled over after the death of Michael Brown are still far from solved. Many residents are calling for a complete overhaul of the police department and politicians. A number of petitions are in place, and voter registration drives have become ubiquitous on the now calm streets.” Kathleen Caulderwood in International Business Times.

Who are the protesters getting arrested? A lot of out-of-towners. ”Since the protests erupted, people in Ferguson have insisted that the troublemakers are not from this community. Capt. Ron Johnson, the highway patrolman in charge of security here, said as much earlier this week….In fact, of the 51 people who were arrested Tuesday night and Wednesday morning, only one person was from Ferguson. The rest were from surrounding towns and faraway cities such as Des Moines, Iowa, Chicago and New York.” Jason Rosenbaum in NPR.

Activists and clergy may have been the biggest calming force in protests. ”Community activism and the work of local clergy were lauded by law enforcement officials as the primary influences that led to a relatively calm night of protests overnight in Ferguson. Missouri Highway Patrol Capt. Ron Johnson said protesters remained orderly and police did not fire tear gas or seize any handguns.” Kurtis Lee in the Los Angeles Times.

The conduct of the investigation could shape the future evolution of protests. “How long — and how deeply — the demonstrations will continue to run remained anyone’s guess after 12 days. Before delivering petitions Thursday that seek removal of St. Louis County Prosecuting Attorney Robert McCulloch from the case, African-American organizers warned of ongoing civil disobedience unless demands on their more expansive list are met.” Ken Leiser in the St. Louis Post-Dispatch.

Explainer: Here is everything police and witnesses said happened when Michael Brown was killed. Mark Berman in The Washington Post.

Supreme Court case to shape Ferguson investigation. “To most people, an 18-year-old unarmed man may not appear to pose a deadly threat. But a police officer’s perspective is different. And that is how an officer should be judged after the fact, Chief Justice William Rehnquist wrote in the 1989 opinion. The Supreme Court case, decided at a time when violence against police was on the rise, has shaped the national legal standards that govern when police officers are justified in using force. The key question about Wilson’s killing on Aug. 9 is whether a reasonable officer with a similar background would have responded the same way.” Eileen Sullivan in the Associated Press.

Charts: Blacks aren’t thrilled with Obama’s Ferguson response. ”Given that Obama’s approval ratings are generally underwater…when it comes to most issues these days, that might seem a small victory for the White House. But one emerging area to watch: how African Americans view his handling of the situation. While the CBS/NYT poll notes that 60 percent of blacks are satisfied with Obama’s response to the Ferguson shooting…that’s less overwhelming when you consider how hugely popular Obama is among African Americans in general. The latest Gallup numbers show that 86 percent of African Americans approve of the president.” Aaron Blake in The Washington Post.

Long read: How Al Sharpton became Obama’s go-to man on race. Glenn Thrush in Politico Magazine.

McCaskill to lead police militarization hearing. ”The hearing, which will be held by the McCaskill-chaired Financial Contracting Oversight Subcommittee, follows the Democrat’s calls for demilitarization in Ferguson, Missouri….The hearing will look into programs that have provided local police with military equipment….The use of war-zone equipment by police in response to Ferguson protesters has come under criticism from an array of politicians, including Attorney General Eric Holder, who visited Ferguson on Wednesday and met with McCaskill and other members of the Missouri congressional delegation.” Lucy McCalmont in Politico.

Other legal reads:

In Ferguson, young protesters are finding it’s not their grandparents’ protests. DeNeen L. Brown in The Washington Post.

Sexual-assault victims get campus advocates. Erica E. Phillips in The Wall Street Journal.

Why Jay Nixon missed his moment. Eli Yokley in Politico Magazine.

MENDELBERG AND BUTLER: Obama cares. Look at the numbers. ”As the predominantly black, disproportionately poor community of Ferguson, Mo., erupted in protest…critics excoriated President Obama for his failure to empathize….Mr. Obama’s defenders point to his second-term commitment to issues that touch the lives of poor communities of color, especially his initiative to assist young minority men, My Brother’s Keeper. But what both sides are ignoring is the president’s first-term record. A true measure of a president’s priorities lies hidden in plain sight in his budget proposals. Under that standard, Mr. Obama has been more committed to communities like Ferguson than any Democratic president in the past half century.” Tali Mendelberg and Bennett L. Butler in The New York Times.

LITHWICK AND WEST: Counselors, not protesters. ”Tthere is a crucial difference between the abortion opponents whose speech rights were feted by the court in McCullen and the garden variety protesters who can still be rounded up in free speech pens and summarily arrested on the streets of Ferguson: The court was careful to explain that the protesters in Massachusetts are not actually ‘protesters.’ They are ‘counselors.’ This presents an obvious solution for the outraged citizens who have taken to the streets of Ferguson and been met with tear gas, rubber bullets, and incarceration: rebranding. From this day forth you should consider yourself ‘sidewalk counselors.’” Dahlia Lithwick and Sonja West in Slate.

GILLESPIE: The libertarian moment in Ferguson. ”The politics of exhaustion — that desperate attempt to maintain an increasingly dysfunctional and disheartening status quo that is swelling the ranks of independents and driving down political approval ratings to historic lows—is giving way to new sets of conversations that are as urgent as they are overdue. Exactly how those conversations play out, especially in terms of partisan politics, is far less important than the fact they are taking place and moving the country forward to new areas of common ground.” Nick Gillespie in The Daily Beast.

HENNINGER: Ferguson, USA. “Economic growth is nonpartisan. But inner-city public education is totally partisan. Democratic politicians made a Faustian bargain with the teachers unions, and the souls carried away have been the black children in those doomed schools. What America’s Fergusons need — from L.A. to Detroit to New York — is a president, and a party, obsessed with growth and messianic about giving a kid what he needs to hold the job that growth provides. Maybe by the 100th anniversary of the Civil Rights Act.” Daniel Henninger in The Wall Street Journal.

Shocking interlude: Watch a fish scarf down a shark in one bite.

3. We don’t know why the two Ebola-infected Americans survived

Good news: Ebola-sickened Americans are cured. Bad news: We don’t know why. ”There is no cure for Ebola, and health officials aren’t entirely sure what treatment or combination of treatments worked for the American patients. They received an experimental drug known as ZMapp, but because the drug has not been tested in humans, there are no guarantees it was responsible for their recovery. ZMapp might have made the difference; or supporting treatments, including massive infusions of fluids, might have done the job on their own.” Sam Baker in National Journal.

Explainer: What’s the outlook for the 2 American Ebola survivors? Linda Poon in NPR.

Have a great day, dear, and don’t get Ebola. ”These procedures come straight from interim guidance from the Centers for Disease Control and Prevention. There’s a good reason they’re ‘interim’ — we don’t have a lot of evidence to go on yet….I wonder how effective the regime would really be if it were tested in an outbreak. How many people will an Ebola patient get close to before finally being ushered into a room with negative air pressure? Friends and family. At least a couple of nurses. One or more doctors. Several sick and vulnerable people in the waiting area, along with their companions. How do we know that the disease won’t spread to health care workers in the United States the way it has in Africa?” Brian Palmer in Slate.

68 Ebola scares in the U.S., zero confirmed cases. ”American hospitals and state labs have handled at least 68 Ebola scares over the last three weeks, according to the U.S. Centers for Disease Control and Prevention. Hospitals in 27 states alerted the CDC of the possible Ebola cases out of an abundance of caution….Fifty-eight cases were deemed false alarms after CDC officials spoke with medical professions about patient exposures and symptoms, but blood samples for the remaining 10 were sent to the CDC for testing, the agency told ABC News today. Seven of the samples tested negative for the virus and results for the remaining three are pending, the agency said.” Sydney Lupkin in ABC News.

Long read: Ebola threatens to hobble $13 billion in GDP, three countries. Pauline Bax, Silas Gbandia, and Elise Zoker in Bloomberg Businessweek.

Chart: This is how bad the Ebola outbreak has been in Africa. Julia Belluz in Vox.

For Ebola drug ‘market failure,’ would a prize speed development of treatments? ”In the U.S., drugs to treat rare diseases have become lucrative, thanks to tax incentives, special regulatory protection and a willingness by insurers and governments to pay for life-saving treatments. But Ebola, like many other diseases that are mainly a threat in less-developed countries, have been largely neglected by drugmakers….Most Ebola drug research has been financed by the U.S. government, she said, with Canada also pitching in. For Ebola, there may need to be more financial help to get research started and a reward for success.” Scott Hensley in NPR.

Other health care reads:

Malpractice reform: One of the nation’s most expensive ballot campaigns is heating up. Niraj Chokshi in The Washington Post.

Long read: As more hospices enroll patients who aren’t dying, questions about lethal doses arise. Peter Whoriskey in The Washington Post.

American employers are rethinking their role in workers’ health care. The Economist.

Most Obamacare exchanges got bigger. California’s is getting smaller. Dan Diamond in Kaiser Health News and California Healthline.

Animals interlude: Cats with watermelon.

4. Positive labor-market signs before Yellen’s speech

A rare sign of real economic confidence? ”According to a new Gallup poll, 58 percent of Americans say they are ‘completely satisfied’ with their job security. That’s not only higher than it has been since the recession; it’s also higher than it has been for two full decades….It’s easy to over-state the significance of these numbers; after all, a recent poll showed about half of Americans think we’re still in a recession. Clearly, Americans aren’t all that confident about the overall job market. But at least in their personal lives, it appears they feel some certainty has been restored.” Aaron Blake in The Washington Post.

Housing, jobs data bolster economic outlook. ”U.S. home resales rose to a 10-month high in July and the number of Americans filing new claims for unemployment benefits fell last week, signaling strength in the economy early in the third quarter. The growth outlook was further buoyed by other reports on Thursday showing factory activity in the mid-Atlantic region hit its highest level since March 2011 in August while a gauge of future economic activity increased solidly last month….Home resales have now increased for four straight months after the housing market recovery stalled in the second half of 2013 following a run-up in mortgage rates.” Lucia Mutikani in Reuters.

Despite rise in economic indicators, some areas of weakness remain. ”The Conference Board’s index of U.S. leading indicators…climbed 0.9 percent after a 0.6 percent gain in June….The median forecast of 49 economists surveyed by Bloomberg called for a 0.6 percent advance. Other elements of the economy remain challenged. Gains in wages since 2009 have barely kept up with a similarly tepid pace of inflation….Growth in the U.S. is projected to reach 2 percent this year, according to a Bloomberg survey of economists, supporting the Fed’s outlook that the economy will continue to require accommodative monetary policy even after the central bank winds down its unprecedented bond-buying program.” Victoria Stilwell in Bloomberg.

Why are jobless claims falling so fast? ”The improvement seems out of step with other labor-market indicators….Economists believe that one reason for a lower rate of layoffs is a labor market that has become generally less dynamic over the last few decades. Employers have become less likely to lay off workers over time, though they have also grown more cautious about hiring. Similarly, workers have grown more reluctant to change jobs, possibly stunting career development and earnings growth as a result. But more recently, most of the fall in jobless claims has been driven by a decline in the number of the newly laid off who don’t bother to apply for government benefits in a generally improving economy.” Jonathan House in The Wall Street Journal.

Private bankers left out of Jackson Hole meeting. “Economists and advisers from firms such as Goldman Sachs Group Inc., Morgan Stanley, Bank of America Corp. and other banks and hedge funds were long a staple at the Fed’s annual meeting in the Wyoming mountains. But top Fed officials have grown uncomfortable in recent years with the advantages conferred on private-sector economists from attending the high-profile event, where the world’s leading central bankers rub elbows with academics, journalists and others. As a result, the Kansas City Fed, which organizes the symposium, has been paring the list of private-banker attendees.” Jon Hilsenrath in The Wall Street Journal.

Central bankers wrestle with easy money amid uneven global recovery. “Federal Reserve officials…are waiting for more evidence that strong job gains can continue before they start raising short-term interest rates. Elsewhere, officials are debating whether to do more, not less….This leaves central bankers in an awkward position. Many worry the low interest rates they’re employing to encourage borrowing and spur growth could spark a new financial bubble….For now, they are depending on unproven regulatory policies to prevent another crisis and leaving low interest-rate policies in place.” Jon Hilsenrath in The Wall Street Journal.

Foreign banks the beneficiary of Fed’s exit strategy. “Unlike domestic banks, foreign banks don’t have domestic depositors to tap for funds, so they turn elsewhere for dollars. Money market funds make the funds available for a few hundredths of a percentage point. The foreign banks in turn park those loans at the Fed for 0.25% interest. They earn profits on the spread between the cheap cost of funds available from money market funds and the higher rate they get at the Fed. It’s a trade that domestic U.S. banks have been unwilling to make because they have to pay additional fees to the Federal Deposit Insurance Corp….By keeping a quarter-percentage-point spread in place between money market funds and commercial banks with its new system, the Fed is effectively keeping in place a structure that allows foreign banks to profit where domestic U.S. banks can’t.” Jon Hilsenrath in The Wall Street Journal.

Related: Developing nations anxiously watching Fed at Jackson Hole. Jamila Trindle in Foreign Policy.

Explainer: Five questions for participants at the Fed’s Jackson Hole conference. Pedro Nicolaci da Costa in The Wall Street Journal.

Other economic reads:

Why hotel, restaurant workers may soon get a raise. Quoctrung Bui in NPR.

Kayaking interlude: Giant humpback whale almost tail-slaps kayakers.

5. The politics and policy of the ALS Ice Bucket Challenge

It’s going to take a lot more ice buckets to fill the NIH funding gap. ”The ALS Association’s donation surge…won’t be enough on its own to fund the research and development that’s needed to eliminate this disease….The decline in NIH funding isn’t unique to ALS research. The agency budget, after reaching a peak of $31.2 billion in 2010, fell to $30.2 billion in 2014. And the NIH says its budget has effectively been cut by 22 percent in the past decade when accounting for medical inflation. Further, the sequester’s automatic 5 percent cut to the NIH resulted in 8 percent fewer research grants in the 2013 fiscal year compared to the previous year….Research is just one part of the equation. Then there’s actually the cost of developing drugs.” Jason Millman in The Washington Post.

Don’t expect U.S. diplomats, service members or House members to take the challenge. ”Lawyers at the State Department have banned American ambassadors and other high-profile foreign service officers from participating in the ice-bucket challenge…In a cable…to all U.S. diplomatic missions, the lawyers say it runs afoul of federal ethics rules barring officials from using public office for private gain ‘no matter how worthy the cause.’…A House oversight committee and the Department of Defense have also banned members from participating in the challenge, echoing the State Department’s concerns over ethical violations.” Associated Press and The Huffington Post.

Related: U.S. officials destroying evidence they took the challenge. Annalisa Merelli in Quartz.

Videos: ALS Ice Bucket Challenge leads to creative political trolling. Asawin Suebsaeng in The Daily Beast.

Oops: Lawmakers who took challenge voted (even if reluctantly) to cut funding. ”These contradictory decisions don’t necessarily make the lawmakers hypocrites. Many of them reluctantly cast that vote, and others are fine with funding ALS research so long as the funding comes from private sources and not federal taxes. But the contradiction does expose the curious ways in which government officials often end up dealing with problems they created.” Sam Stein in The Huffington Post.

Background reading: The cold, hard truth about the Ice Bucket Challenge: funding cannibalism. William MacAskill in Quartz.

Unique Ice Bucket Challenge interlude: Featuring a drone.

Wonkblog roundup

A drug naming dispute, with billions on the line. Jason Millman.

How much $100 is really worth in New York, Washington and Chicago. Niraj Chokshi.

Some homeowners could get hit with a whopping tax bill if they accept help through Bank of America’s settlement. Dina ElBoghdady.

12 years of data from New York City suggest stop-and-frisk wasn’t that effective. Emily Badger.

It’s going to take a lot more ice buckets to fill the NIH funding gap. Jason Millman.

Et Cetera

Profile: Prosecutor in Rick Perry case called ethical, fair. Andrea Ball in the Austin American-Statesman.

Net worth falls for majority as wealth grows. Carol Morello in The Washington Post.

Inversions push falls to Treasury’s tax man, Mark Mazur. Damian Paletta in The Wall Street Journal.

Florida same-sex marriage ban ruled unconstitutional, but decision stayed. Michael Winter in USA Today.

Long read: Paying NCAA college athletes — inside the legal battle. Paul M. Barrett in Bloomberg Businessweek.

Coal terminal decision highlights exports’ greenhouse-gas emissions. Bobby Magill in Climate Central.

Got tips, additions, or comments? E-mail us.

Wonkbook is produced with help from Michelle Williams and Ryan McCarthy.

Article source: http://www.washingtonpost.com/blogs/wonkblog/wp/2014/08/22/wonkbook-bofas-record-settlement-may-leave-homeowners-disappointed/

Picketers try to stop eviction at Springfield home

SPRINGFIELD, Mass. (WWLP) – Three weeks after a blocked eviction, Springfield community members returned to Alexander Richardson’s Upper Hill home to try and block Wells Fargo from their second attempt to get him out.

Some protesters were taken away from Richardson’s 68 Rochelle Street home, as police arrived late Friday morning. The substitute teacher, who begins work on Monday, told 22News that he has lived at the house for a long time, and if his home is taken away, he has no idea where he will go. Richardson said he is working with a Boston bank to get him a loan to buy back the house, but Wells Fargo wants him to leave before he can do so.

Tom Goyda, Vice President of Consumer Lending Communications for Wells Fargo, told 22News that Richardson had submitted an application to the bank, Boston Community Capital, less than a month ago, while the foreclosure itself was completed two years ago. He said that Wells Fargo gave BCC a price if they were interested in purchasing the house, but they have yet to hear back.

Goyda says that they had tried to work with Richardson for years, but were unsuccessful in finding a solution to keep him in the house.

“In mid-July, after losing a legal challenge, Mr. Richardson agreed to stop contesting the eviction and to vacate the property by July 25, 2014.  He failed to live up to that agreement and we unfortunately have had to move to evict him as a result. Since the foreclosure was completed, he also has turned down multiple offers of financial relocation assistance from Wells Fargo,” Goyda said in a statement sent to 22News.

Friday morning’s protest was organized by the Springfield No One Leaves coalition; a group that has held similar pickets at foreclosed homes across western Massachusetts.

Article source: http://wwlp.com/2014/08/22/picketers-try-to-stop-eviction-at-springfield-home/

Foreclosure proceeds against Amboy resident

The case between Amboy resident Dave Darby and Clark County appears to be nearing a conclusion.

On Aug. 15, a judge granted Clark County’s motion for a summary judgment against Darby that will allow the county to proceed to a tax foreclosure sale.

Frustrated by his inability to have a previous case heard in a federal court, Darby said he made the conscious decision to stop paying the taxes on his Amboy property and home. Clark County records show that Darby has not paid his property taxes since the first half of 2008. He now owes Clark County nearly $24,000 in unpaid taxes, penalties and interest.

As a result of Darby’s delinquent taxes, Clark County started foreclosure proceedings on his property, which he said he has owned since 1983. The property is located at 15717 NE Grantham Road, Amboy. His 4.7 acres, with a manufactured home, is valued at $154,712 by the county.

Taylor Hallvik, the attorney handling the case for Clark County, confirmed that the county’s motion for summary judgment had been granted. He would not speak specifically about Darby’s case.

“Generally speaking, after the summary judgment has been granted and the final motions is entered, the case is over,’’ Hallvik said.

Hallvik did say that Darby could seek an appeal.

Clark County Treasurer Doug Lasher said the county can’t proceed with the tax foreclosure sale for 30 days.

“We will start our process to bring it to a foreclosure sale,’’ Lasher said. “It will be a separate sale. The judge has ordered us to sell it and we will do that. My staff is working on a date to put that together.’’

Lasher said the property would be sold in an online auction. He said the details of the sale will be available soon.

Lasher said that Darby could also stop the foreclosure sale by paying the taxes owed as well as other costs that have occurred during the process.

“Those costs have accrued over a period of years because he hasn’t paid his taxes,’’ Lasher said. “It’s up to Mr. Darby. He’s been in control of this since the beginning, whereas with some people, it’s out of their control financially. It’s up to what he wants to do now.’’

In July, Darby was part of the formation of a Common Law Grand Jury. He said, “The Common Law Grand Jury is the only way we the people can change what is happening.’’

Darby admitted that such juries “died down about the time of the Civil War because the Constitution was done away with at that point. We became a corporation and after that the corporation decided they wanted to control the courts.’’

Darby said there are currently 27 members of the Clark County Common Law Grand Jury.

“We are accepting anyone who wants to join at any time,’’ he said.

Darby said the Common Law Grand Jury foreman, Vancouver resident Lowell Miller, advised him not to attend a July 1 court date. Instead, Miller and other members represented Darby at the proceeding.

“They told the court to stand down,’’ Darby said. “Judge (Gregory) Gonzalez ran our jury foreman out of the court and would not listen to our constitutional argument.’’

Darby wouldn’t reveal what his next step will be in his battle with the county.

In a prior interview with The Reflector, Darby said the county didn’t have the right to tax his property.

“You show me where it’s constitutional, and I will pay the taxes,’’ said Darby, who considers himself a natural born Sovereign citizen. “They (county officials) know they can’t do that because they know they don’t have the proof.’’

“I have proven through national and state certified documents that I have terminated all contracts with any and all corporate governments, which includes corporate Clark County,’’ Darby wrote in a recent affidavit. “I have regained my sovereign status to which I was constitutionally born into. Therefore, no unconstitutional (corporate) government has any jurisdiction over me without a formally signed contract between David A. Darby and the Clark County Corporate government.’’

Darby previously told The Reflector that even if his property is sold in a tax foreclosure sale, he doesn’t plan on leaving his property.

“I am not going to be taken from my land unconstitutionally,’’ he said.

For more information, Darby encouraged area residents to go to www.SovereignProject.com.

Article source: http://www.thereflector.com/news/article_834a4d86-27c9-11e4-9eab-0019bb2963f4.html

Wall Street’s hot new scam: Shady banking consultants absolve the banks that …

Promontory, PwC and other consultants were supposed to perform independent reviews of the foreclosure cases of 14 mortgage servicers, to determine the extent of errors, under an enforcement action by the OCC and the Federal Reserve. However, despite consultants being paid more than $2 billion by the banks, the reviews were a mess, eventually aborted in favor of tiny cash settlements for homeowners, as little as $300.

That discrepancy finally got the attention of Congress, who held hearings on bank consultants last April. The hearings focused on the lack of transparency in consulting contracts, and troubling hints of conflict of interest. The OCC promised to write clearer guidelines for consultants used in enforcement actions.

But nobody at the federal level bothered to investigate consultant activity to see whether it truly reflected objective analysis. So Lawsky, the head of New York’s Department of Financial Services (NYDFS), took the lead. He issued subpoenas to both PwC and Promontory last September, over their work for banks that facilitated illegal money-laundering transactions for countries under U.S. sanction, like Iran and Sudan.

The Bank of Tokyo-Mitsubishi UFJ hired PwC in 2007 to analyze its dollar-clearing operations. The report PwC eventually submitted did lead to the bank paying $250 million last year, due to at least 28,000 illegally cleared transactions with sanctioned countries and individuals. However, upon scrutinizing PwC’s work, NYDFS found that the consultant softened its report on Bank of Tokyo, at the bank’s request.

In the course of its review, PwC learned that Bank of Tokyo would routinely strip identifying information from its wire transfers involving sanctioned countries, masking the identity of the client. PwC originally included a statement in its report recommending that, had it known this previously, it would have undertaken a “forensic review” of Bank of Tokyo wire transfers. But when Bank of Tokyo objected to this statement, PwC removed it, instead writing that its methodology “was appropriate.”

NYDFS’ investigation turned up a host of other edits requested by the bank, most of which made their way into PwC’s final report, used to extrapolate the eventual fine against Bank of Tokyo. PwC deleted most of the discussion of Bank of Tokyo’s wire-stripping activities, including the English translation of the specific wire-stripping instructions, as well as the ways in which Bank of Tokyo would alter software code to evade oversight on its activities with sanctioned countries. In other words, while the purpose of this report was to gauge the extent of Bank of Tokyo’s illegal activities, PwC left out key evidence that proved the illegality.

NYDFS also found emails from a top PwC executive, repeatedly cautioning that adding information about Bank of Tokyo’s wire-stripping in the report would “only raise questions,” and would not “do anyone, especially the bank, any good.” This executive wasn’t reprimanded for looking out for the bank more than the integrity of the report, but he eventually became a partner at the firm.

As a result of this discovery, Lawsky’s agency fined PwC $25 million, forced a series of reforms at the consultant, and clawed back 20 percent of that particular executive’s salary. Most important, PwC’s Regulatory Advisory Services Group, which conducted the study, cannot take any new work from any firm regulated by NYDFS for two years. This effectively bans them from the industry, as NYDFS regulates every national financial institution in the nation.

This follows on an action by Lawsky last year against a division of Deloitte, imposing a one-year consulting ban for its lack of objectivity in work for Standard Chartered Bank. And under his new standards, NYDFS picks the independent monitor to review compliance. In fact, NYDFS just hit Standard Chartered with a $300 million fine yesterday for failing to comply with anti-money laundering reforms from a previous order. NYDFS’ independent monitor uncovered the noncompliance.

In a statement clearly intended for his fellow regulators, Lawsky said, “We are continuing to find examples of improper influence and misconduct in the bank consulting industry. As a regulatory community, it may well be advisable for us to take a hard look in the mirror … When bank executives pressure a consultant to whitewash a supposedly ‘objective’ report to regulators – and the consultant goes along with it – that can strike at the very heart of our system of prudential oversight.”

Federal bank regulators should pay attention. The consulting industry has become an attractive destination for those rotating out of government or Wall Street, a way to trade on past connections and reap benefits from it. No reasonable observer thinks that consultants chosen and paid by the banks they scrutinize can produce truly objective analysis. And they certainly cannot stand in for independent regulatory oversight. Yet the gravy train rolled along, until NYDFS decided to try to put a stop to it.

That it comes from Lawsky will likely rankle federal regulators, who have repeatedly been shown up by the one individual who dares to take his job seriously. But with additional revelations, even they will have to admit that “independent” consultants merely represent a layer of protection for banks, which ought to be stripped away if we want to truly deter financial misbehavior.

Article source: http://www.salon.com/2014/08/20/wall_streets_hot_new_scam_shady_banking_consultants_absolve_the_banks_that_pay_them/

Dwyane Wade’s Marital Home Once Shared With Ex-Wife, Siohvaughn, Facing …

Source: WENN

Source: WENN

His wedding is just days away, but somehow, Dwyane Wade and his ex-wife, Siohvaughn Wade, are still making headlines together.

According to TMZ Sports, the marital home once shared by the former couple and their children is facing foreclosure. Apparently, a payment has not been made on the $225,000 home for quite some time now. Siohvaughn still lives in the home and Dwyane’s people are saying that she received the home (and responsibility for the mortgage payments) in the divorce settlement. However, Siohvaughn eventually stopped making those payments, which is why the home is now facing foreclosure.

It’s probably only a matter of time before Siohvaughn comes forward demanding money from Dwyane to catch up on payments, but the Miami Heat star’s attorney argues that he is in no way responsible for the home. The bank sent a foreclosure notice regarding the South Holland home on Aug. 11

Article source: http://madamenoire.com/459969/dwyanes-wades-marital-home-shared-ex-wife-siohvaughn-facing-foreclosure/

Dwyane Wade’s Chicago Home In Foreclosure

Using the word Dwyane Wade and foreclosure in the same sentence would be just ludicrous … But it’s true.

According to documents obtained by TMZ, the Miami Heat champion stopped making payments on his Chicago home that he once lived in with his ex-wife, Siohvaughn and their two kids. Per the news outlet, the mortgage on the 7,800 square foot, 6 bedroom home was a cool 225K a month.

You might remember, following a nasty divorce battle, Wade and Siohvaughn finally reached a financial settlement last year. In the settlement, Wade’s ex got a huge chunk of change including the home. There must have been some miscommunication because not did Wade stop paying … But so did his ex-wife.

Per TMZ, the bank sent the foreclosure notice August 11.

Wade is set to marry Gabrielle Union on August 30, so hopefully he can get this settled before wedding the gorgeous actress.

Article source: http://hiphollywood.com/2014/08/dwyane-wades-chicago-home-in-foreclosure/

Protesters denounce sheriff’s eviction of disabled war veteran

SEATTLE – Dozens of protesters gathered Monday outside the office of King County Sheriff John Urquhart to show their outrage over the eviction of a disabled Vietnam War veteran from the West Seattle home where he grew up and later lost in foreclosure.

The veteran, Byron Barton, and his wife and adult son were evicted from the home Friday on Urquhart’s orders. Barton was then taken by ambulance to the Seattle VA Hospital because of his health condition. A crew also removed the Bartons’ furniture and other belongings from the home.

Urquhart said after Friday’s eviction, “There are no winners in this situation.” He says the new lawful owner of the home, Triangle Properties Development, has been the “victim of bureaucratic inaction” and he “won’t let politics ride roughshod over the rule of law.”

Urquhart also said that conditions inside the home were “dangerously unsanitary.”

Now Barton’s supporters are taking to the street to protest the sheriff’s actions. They marched outside Urquhart’s office Monday with signs and loudspeakers denouncing the forcible eviction.

Protesters say that Barton and his family were evicted illegally because the bank refused to renegotiate the terms of the mortgage. They also say that Triangle Properties Development refused to rent the home to Barton or any of his supporters.

The home, previously owned by Byron Barton’s mother, had been in the family for more than 60 years. Byron Barton grew up there and was married there.

Court records show the Bartons mortgaged their home in 2007, then subsequently refinanced the loan and took out a home equity line of credit, with loans totaling over $650,000.

The Bartons stopped making payments, apparently in 2011, and they defaulted on those loans. The Bartons filed two lawsuits in federal court to stop foreclosure actions, but both were dismissed.

Triangle Properties Development purchased the home at an auction earlier this year.

After the trustee’s sale of the property, the Bartons filed another lawsuit in state court, asking to void the foreclosure and for damages of $4.8 million and other miscellaneous amounts. That case is pending with a 2015 trial date expected.

Article source: http://www.komonews.com/news/local/Protesters-denounce-sheriffs-eviction-of-disabled-war-veteran-271733741.html

How changing loss recognition rules could restore lender solvency

Changing the timing of loss recognition for lenders could enable them to process their latent foreclosures, recover their capital, and regain true solvency again.

Why have lenders permitted millions of delinquent borrowers to squat for years? Why haven’t they processed foreclosures in a timely manner and recycled much-needed supply back into the housing market? The short answer is because processing foreclosures forces them to recognize losses they can’t afford to take, but what if that wasn’t their only alternative?Special_Home_Investment_Trust

In April of 2009, lenders convinced government regulators to allow them to value loans on their balance sheets based on financial models rather than current market value for those securities, thus beginning the era of “mark-to-fantasy” accounting. By allowing lenders to do this, they were able to avoid recognizing losses with the implicit assumption that they could hold these loans on their books until collateral value was restored and they would again have the option to foreclose and recover their original loan capital if the borrower was delinquent.

This set up circumstances where underwater borrowers had tremendous leverage to negotiate loan modifications because they knew lenders were powerless to foreclose. Lenders cut borrowers many good deals, often lowering their payments below comparable rental rates, thus creating the cloud inventory of underwater borrowers trapped in their homes. It also set in motion the big waiting game for prices to recover to peak valuations where the lender could get their money back and borrowers could enjoy reduced housing costs while they waited. It was an imperfect solution to a daunting problem.

But was that their only alternative? Under the current regulatory and accounting regime, yes, it was; however, changing one more arcane accounting practice could have provided yet another alternative, an alternative that would have allowed lenders to more quickly recover their capital, recycled the bad loans and removed the bad debts from the system, and eliminated cloud inventory.

regulators disclosure

Changed loss recognition rules

The current regulatory and accounting rules allow lenders to report loans at face value based on the assumption they will hold the loan on their books until it’s paid off, either by a sale or a foreclosure once prices of the underlying collateral reach the outstanding balance of the loan. If the lender forecloses, the current rules force them to value the newly acquired house at fair-market value rather than the fantasy value they carried on the loan. By simply allowing lenders to value the real estate using the same fantasy modeling, they could avoid loss recognition until the house itself was sold, thus they could avoid loss recognition at the time of foreclosure.planet_banks

But does that really solve anything? Aren’t they still holding an asset on their books at a fantasy value waiting for prices to recover? Yes and no. Such a rule change would provide lenders with two other alternatives to waiting for a full market recovery to recoup their capital:

1. They could treat the rental income as if it were an amortizing loan payment.

2. They could package these REO into a Special Home Investment Trust, and sell it off to Wall Street for a premium value.

The first option reduces their waiting time somewhat due to the reduced book value due to amortization, and the second option reduces their waiting time significantly as they can convert the real estate asset into either a share of a REIT or by obtaining a direct cash payment.

Keeping the loan alive by treating rent as a loan payment

There are millions of borrowers who aren’t paying their loans, even a modified payment offered to them. This is a completely non-performing asset tying up lender capital. Many lenders are accruing these missed payments and actually increasing the book values they pretend they will obtain some day. If that continues, they may be increasing their fictitious book values at a rate greater than the rate properties go up in value. In short, they will never recover their capital this way.

Foreclosing on these delinquent mortgage squatters would stop this runaway loan loss, eliminate the undeserved subsidy these squatters obtain, and restore faith in our property system of lending with threat of foreclosure for non-payment. It would also return a non-productive asset to productive use either as a for-sale home with a new loan or a rental property with a paying tenant.banker

On an accounting basis, lenders can keep the value of the loan on their books at par value, convert the income stream from rental into a mock “payment” on the loan. If they reduce the interest rate enough, nearly any rental income can be used to amortize even very large loans to zero over 30 years. Basically, they can take the rent, pretend it was a loan payment, and ignore the real value of the collateral. If they hold it as a rental long enough, they will pay off the amortizing loan.

Since the value shown on their books is declining, lenders don’t have to wait as long before they can sell and regain their capital to put into another loan. If the property is not severely underwater, the lender can book the rent as interest income and wait until prices reach full book value. This opens up new options for lenders to recover their capital or increase their profits.

Special Home Investment Trust

By far the fastest and most efficient way to recover lender capital is to foreclose on their non-performing loans, rent the properties (perhaps even to the former owners), package the properties into a REIT, and sell this REIT for enough to recover all their capital.

As banks convert more and more of their non-performing loans into real estate, they become less of a bank and more of a real estate investment trust (REIT). If they take all of their bad loans and create a special home investment trust (SHIT), they can dump their SHIT on Wall Street. We already know Wall Street is willing to buy this stuff; in fact, REO-to-rental companies are buying non-performing loans from banks specifically to foreclose, rent the properties, and securitize the income stream. By failing to do the same, lenders are making the same mistake that made the REO-to-rental business model work in the first place.

foreclosure_vultures

Investors buying shares in these new REITs are paying more than the liquidation value of the portfolios. In fact, they are paying premiums of 20% or more betting on continued rent growth. Rather than having to wait for the actual liquidation of the assets to regain their lost capital, the banks can get the capital from investors as they sell their SHIT in a REIT.

Look at this from an accounting standpoint:

First, lenders had a non-performing loan with a book value in excess of the collateral value of the property. That’s where we are today.first_banker

Second, they foreclose on the property and transfer this fictitious book value to the house which was the collateral. That’s where we could go if the loss recognition rules were changed.

Third, they rent the property and put the property into a REIT, so now they hold shares in a REIT on their books — but with one major difference. The REIT shares really are worth the original fictitious loan value because REIT investors will pay a premium equal to the lost value of the underlying real estate; thus lenders could sell off shares of the REIT and regain the full cash value they show on their books today.

If this premium didn’t exist, REO-to-rental companies wouldn’t be buying these non-performing loans and going through steps two and three above. That’s how they make money — at the expense of the banks.

In practice, this isn’t as clean and easy as I describe, but the basic business model works. The only reason banks can’t or won’t do this is because of the loss recognition rules imposed on them. Changing that rule would provide lenders with other options for recovering their capital. It would work to quickly eliminate much of the bad mortgage debt in the system that continues to burden borrowers, lenders, and the whole economy.

Is it time for a change?


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Irvine Renter
18-08-2014, 06:05

Further evidence the securitization of REOs is a profitable venture.

Rental market spurs bank competition

Gary Beasley, one of the earliest to build a corporate rental-home business amid the U.S. foreclosure crisis, said in a Bloomberg article that the birth of a bond market backed by the properties is compelling banks to lend more cheaply to firms like his.

“It’s nice to have the competition of securitization to make the banks want to keep their credit lines competitive,” said Beasley, co-chief executive officer of Starwood Waypoint Residential Trust.

“We basically went to Citi and said, ‘The market’s changed, we’d be interested in talking to you about getting more proceeds and cutting our rate. If you’re willing to entertain that, we’d love to talk to you about it. If not, we’re interested in perusing a securitization, because it’s just too compelling,’” he said.

On Tuesday, Starwood Waypoint Residential Trust (SWAY) announced it purchased two separate pools of non-performing loans for $218.7 million. The total purchase includes 1,294 non-performing loans and 146 REO homes.

“NPL purchases continue to be a great channel for acquiring single-family homes in our target markets at attractive discounts while enhancing equity returns through alternative resolutions,” Beasley said.


Reply

Irvine Renter
18-08-2014, 06:07

American Residential prices first REO-to-rental securitization

Just shy of two weeks ago, American Residential Properties (ARPI) presented itself as the newest player in the REO-to-rental securitization game, when it announced that it was bringing a $342.67 million securitization to the market.

At the time, the offering, American Residential Properties 2014-SFR1, was the third REO-to-rental securitization to hit the market in as many weeks, demonstrating the growing popularity of the asset class.

Now, American Residential has priced its securitization. The $184.66 Class A tranche, which received AAA ratings from Morningstar in its presale report, priced at 1-month LIBOR plus 110 basis points.

The Class B tranche, which received $35.93 million in AA+ ratings from Morningstar, priced at 1-month LIBOR plus 175 basis points.

The Class C tranche, which received $26.31 million in A+ ratings from Morningstar, priced at 1-month LIBOR plus 235 basis points.

The Class D tranche, which received $30.92 million in BBB+ ratings from Morningstar, priced at 1-month LIBOR plus 300 basis points.

The Class E tranche, which received $39.97 million in BBB ratings from Morningstar, priced at 1-month LIBOR plus 392 basis points.

And the Class F tranche, which received $24.45 million in BBB- ratings from Morningstar, priced at 1-month LIBOR plus 442 basis points.

The anticipated settlement date of the offering is August 26.

According to Morningstar’s presale report, 80.4% of the underlying portfolio is located in three states including Texas (36.9%), Arizona (29.1%), and North Carolina (14.4%). The average cost basis per property post-rehabilitation is $156,397. The average age of the properties is approximately 12 years and the majority of the properties have three or more bedrooms (97.5%).

Of note in Morningstar’s presale report was the vacancy rate of the underlying properties, which stands at 4.06% as of the cutoff date. In many of the previous SFR securitizations, the properties were 100% occupied on the respective cutoff dates.

Also of note in the ARP offering was the lower average rehab cost of the properties, which is $8,771. In previous offerings in the asset class, the average rehab cost has varied from $19,682 to $22,916.

But the properties that make up the ARP offering are much younger than the previous offerings, with an average year built of 2002. According to Morningstar’s report, 64.3% of the properties were built between 2001 and 2010.

As with the other SFR offerings, Morningstar cautioned on the limited history of the asset class as a potential concern for the bonds’ performance.


Reply

el O
18-08-2014, 07:38

“American Residential Properties 2014-SFR1, was the third REO-to-rental securitization to hit the market in as many weeks, demonstrating the growing popularity of the asset class”.
—————————————
LOL! Good one.

More like demonstrating the growing popularity of head’n for the exit-door.


Reply



Lee in Irvine
18-08-2014, 06:27

I watched the documentary about Hank Paulson and how he dealt with the economic crisis of 2008-2009. Excellent!

The best quote:

“Complexity is the enemy of transparency”


Reply

Irvine Renter
18-08-2014, 07:43

It’s difficult to read through the spin and apologizing, but the key facts are buried in the report.

July home prices down 2.4%, sales down 3.1%

Home sales for July decreased slightly from the previous month after increasing for four months in a row, according to the July 2014 RE/MAX National Housing Report released on August 14. Meanwhile, home prices fell marginally month-over-month but increased year-over-year.

The number of home sales for July dropped by 3.1 percent from June and decreased by 6.8 percent from July 2013. Even though home sales are down from last year, they are still higher than what they were in 2012. Even though home sales have experienced a month-over-month increase in four of the last five months, the RE/MAX July report found that the number of home sales went up year-over-year in only 13 out of the 52 metro areas surveyed. Tulsa, Oklahoma, had the highest increase at 9.8 percent.

“After a slow start to the year, 2014 home sales have been improving,” said Margaret Kelly, RE/MAX CEO. “Sales are following the expected seasonal pattern and are approaching the levels we saw last year. As inventory continues to build the recovery continues at a more stable and sustainable rate.”

According to the latest RE/MAX report, the median home price of $204,550 for July in the 52 metro areas was down 2.4 percent from June but up 7.9 percent from a year ago. July 2013 saw an 11.5 percent year-over-year increase in home prices, but growth was slower in July 2014 due to improved inventory.

July was the 30th consecutive month in which home prices increased year-over-year, according to RE/MAX. Overall, 44 out of the 52 metro areas surveyed reported a year-over-year spike in home prices with the largest increase happening in Miami, Florida, at 10.5 percent.

The average number of days on the market for each home fell by two days both month-over-month and year-over-year, RE/MAX reported. Low inventory combined with high demand has caused the drop in the number of days on the market for each home; the average days on the market has been below 90 in the 52 metro areas for 26 consecutive months.

RE/MAX reported that inventory of homes for sale in July inched downward by 1.1 percent from June and dropped by 3.5 percent from July 2013. The months supply of inventory, which is calculated by dividing the number of homes listed for sale at month’s end by the number of contracts signed during the month, increased slightly from 4.1 in June to 4.3 in July. San Francisco had the lowest months supply at 1.5.


Reply

el O
18-08-2014, 07:51

But… but… I thought London was “special”…

UK Property Prices Suffer ‘Largest Decrease Ever’ As London Real Estate Goes Into Full-Scale Collapse

Prices fell nearly 6% MoM in the overheated London market.

.. this is the largest decrease ever recorded by Rightmove at this time of year, and a lead indicator of a slower market in the second half of 2014. The price fall has been exacerbated by London recording a 5.9% drop, which is the largest of three consecutive monthly falls.

That news dovetails ominously with the rumors of “panic selling” in London as owners try to cash in on their overpriced houses at the very top of the market.

http://www.businessinsider.com/uk-property-prices-largest-decrease-ever-2014-8


Reply

Article source: http://ochousingnews.com/blog/changing-loss-recognition-rules-restore-lender-solvency/

Wayne Co. could reclaim nearly 20K auctioned properties over unpaid bills

Detroit? A Wayne County judge on Friday gave county officials the authority to take back nearly 20,000 tax foreclosed properties auctioned off to new owners who also didn?t pay bills.

The Wayne County Treasurer?s office said it wants to get tough on tax deadbeats, many of whom buy properties in bulk at the county sale and then milk them for rental income until foreclosed again.

The ruling was the result of the county?s first attempt to enforce a provision added in 2011 to the annual auction that requires buyers to stay current on tax bills. Generally, owners lose their properties after three years of delinquency.

?Once it goes through the foreclosure process we don?t want to wait three years until we do it again,? said David Szymanski, the Wayne County chief deputy treasurer. ?It is a simple fact we have to get serious about collecting taxes.?

But many of the about a dozen owners who appeared at Friday?s court hearing argued they should keep their homes because they never knew about the county policy.

?There are a lot of little people getting scammed,? said Marlon Thompson, who risks losing his eastside brick bungalow.

He bought the vacant, fire-damaged home in the winter from a real estate company that didn?t tell him about the $4,500 in 2012 taxes and fees due. He said he checked the county?s website at the time of the sale and didn?t see any 2012 debt.

Thompson said he has spent several thousand dollars rehabbing the home and is a few months from moving in. He said he can?t afford to pay the bill.

?(The county) should be able to look at individuals and companies,? Thompson said. ?Everybody else got bailed out around here. We are the ones who kept the city going.?

Wayne County Circuit Judge Robert Colombo Jr. said he was sympathetic with the property owners and noted the importance of hiring a lawyer when buying property because the county policy was spelled out in the property?s deed.

?What good does it do to foreclose on property to have people buy it and have people not pay their taxes,? Colombo said. ?This is a vicious cycle the treasurer is trying to stop.?

But owner Larry Sargent argued the county shouldn?t foreclose because of the city?s inflated assessments. Sargent said the house he bought last year for $500 is valued by the city at $22,000.

?Let me pay on what is actually the value of the house,? he said. ?Right now the assessed values are way out of range.?

Owners still have time to save their properties. The county isn?t going to seize them until January. County officials said they would still accept payment through mid-December.

After January, the treasurer will transfer ownership to the Wayne County Land Bank or the Detroit Land Bank. Land bank officials have said they will allow owners to reclaim the properties if they pay the outstanding bill, as well as a $500 processing fee.

It was not clear Friday what the land banks will do with properties whose owners refuse to pay.

A handful of investors are challenging the treasurer?s policy and their arguments will be heard separately by Colombo in the next several weeks.

The debt owed on the 20,000 properties wasn?t available Friday.

More than $80 million was owed on about 22,700 properties as of June. That represented 78 percent of the 29,000 properties auctioned by county treasury officials since October 2011. The vast majority are in Detroit.

The county added the provision in auction sales in response to a series of Detroit News reports about buyers who shed their tax debts by buying back their own foreclosed properties at public auctions. County officials said they hoped cities would enforce the rule and took action when few did.

Article source: http://www.detroitnews.com/article/20140816/METRO01/308160019/Wayne-Co-could-reclaim-nearly-20K-auctioned-properties-over-unpaid-bills