Recession Worse Than Prior Estimates, Revisions Show

My thoughts are that since the homeowner lost so much equity, the economy simply cannot get better until home values nudge up some. The bankster made so many painful mistakes, yet most of the big banksters made a profit with all that TARP, AIG and foreclosures under their belt. The banksters will continue to do good but sales of MBS are dead maybe forever.The question is who in their right mind will buy a home loan after they lied to us so badly and for so long. People simply cannot trust these banksters any more. I understood that when a loan is rescinded by TILA in the extended 3 years and if the bankster does not rescind the interest is retained by the borrower

Recession Worse Than Prior Estimates, Revisions Show (Update1)
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By Bob Willis

July 31 (Bloomberg) — The first 12 months of the U.S. recession saw the economy shrink more than twice as much as previously estimated, reflecting even bigger declines in consumer spending and housing, revised figures showed.

The world’s largest economy contracted 1.9 percent from the fourth quarter of 2007 to the last three months of 2008, compared with the 0.8 percent drop previously on the books, the Commerce Department said today in Washington.

“The current downturn beginning in 2008 is more pronounced,” Steven Landefeld, director of the Commerce Department’s Bureau of Economic Analysis, said in a press briefing this week. The revisions were in line with past experience in which initial figures tended to underestimate the severity of contractions during their early stages, he said.

The updated statistics also showed that Americans earned more over the last 10 years and socked away a larger share of that cash in savings. The report signals the process of repairing tattered balance sheets following the biggest drop in household wealth on record may be further along than anticipated.

Spending Slumps

Consumer spending, which accounts for 70 percent of the economy, decreased 1.8 percent in last year’s fourth quarter from the same period in 2007, exceeding the prior estimate of a 1.5 percent drop. Purchases also began sinking sooner than previously projected, registering their first decline at the start of 2008 rather than in the second half.

Treasuries headed higher after the report, while stock- index futures declined. Benchmark 10-year note yields were at 3.58 percent at 8:51 a.m. in New York, from 3.61 percent late yesterday. Contracts on the Standard & Poor’s 500 Stock Index were down 0.3 percent at 979.

Residential construction fell 21 percent during the period, almost 2 percentage points more than previously reported, aggravating what was already the worst slump since the Great Depression.

The Commerce Department also reported today that the economy contracted at a 1 percent annual rate from April through June after shrinking at a 6.4 percent pace in the first quarter, the most since 1982. The decline in the first three months of the year was previously reported as 5.5 percent.

Recession’s Start

The National Bureau of Economic Research, the accepted arbiter of U.S. business cycles, last year determined the recession started in December 2007. The private group is based in Cambridge, Massachusetts,

Today’s updates are part of comprehensive revisions that take place about every five years and are more extensive than the changes announced at this time each year. Figures as far back as 1929 can be revised.

Over the most recent period, the third quarter of 2008 underwent one of the biggest changes, going from a 0.5 percent decrease in gross domestic product to a 2.7 percent drop. The new reading better illustrates the effect the September collapse of Lehman Brothers Holdings Inc. had on the economy and credit markets.

The deeper deterioration last year underscores why Federal Reserve Chairman Ben S. Bernanke and his colleagues at the central bank cut the benchmark rate to a record low and extended credit to non-banks for the first time since the 1930s.

The new GDP data also help explain why the unemployment rate shot up 2.3 percentage points last year, the biggest annual jump since 1982.

2001 Recession Milder

The revisions showed that the 2001 recession was less severe than originally estimated, reflecting a smaller decline in business investment. The economy actually grew 0.1 percent from the fourth quarter of 2000 to the third quarter of 2001, erasing the 0.2 percent drop previously reported.

Personal income was revised up over the last decade, after the government boosted its adjustments for the underreporting and non-reporting of income using more recent data from the Internal Revenue Service. The increases in the most recent years reflect gains from rents, interest and proprietors’ income. The government changed the way it accounts for natural disasters, such as Hurricane Katrina, eliminating much of the prior volatility in income calculations.

More Savings

Higher incomes and less spending translated into bigger savings. The savings rate for 2008 was revised up to 2.7 percent from 1.8 percent. The rate shot up to 5.2 percent in the second quarter, the highest level since 1998.

The government revised corporate profits down for 2006-2008 and up for 2004 and 2005.

Finally, Commerce shifted food services, which include meals purchased at restaurants or served in schools, out of the food category. As a result, the Fed’s preferred inflation gauge — which tracks consumer spending and excludes food and fuel — was pushed up by 0.2 percentage point for the three-year period from 2006 to 2008.

The costs of meals away from home are not as volatile as fresh food, the government said, and therefore services should be included in the measure commonly known as the core index.

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

FHFA Sees Securitization Inappropriate for FHLBs

Author: JL Semidey
Comment:
FHFA Sees Securitization Inappropriate for FHLBs
By DIANA GOLOBAY
July 31, 2009 9:13 AM CST
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The practice of securitizing mortgages, while freeing up capital for more loans, is not the financing answer for Federal Home Loan Banks (FHLBs) financing, according to reports out of the Federal Housing Finance Administration (FHFA).

The securitization market is too volatile in the wake of massive loan defaults and competition from Fannie Mae (FNM: 0.58 +1.75%) and Freddie Mac (FRE: 0.6125 +2.08%) is too strong for securitization to prove a profitable business segment for FHLBs, FHFA director James Lockhart noted. The banks offer secure loans — or advances — to members. Lockhart said the FHLB system remains sound and the joint and several guarantee is strong.

His comments arrived on the first anniversary of the Housing and Economic Recovery Act of 2008, which set up FHFA.

His comments on Thursday addressed concerns facing the FHFA, Fannie Mae, Freddie Mac and the 12 FHLBs. Questions facing the securitization market range from payment methodology to the future of securitization in the US.

Lockhart noted challenges ahead for the FHLBs, including managing capital prudently given some exposure to private-label mortgage-backed securities (MBS), finding the best way of providing system support for individual FHLBs and ensuring more consistency in financial disclosures and accounting.

As “high levels of delinquencies triggered downgrades in the private label securities, it has presented significant challenges for investors, including Fannie Mae, Freddie Mac and the Federal Home Loan Banks,” Lockhart said. “Currently 65% of the carrying value of private label securities in the FHLB system are below investment grade, downgraded or on negative watch. This compares to only 20% in those categories at the end of 2008.”

The FHLBs’ exposure to private-label securities varies considerably among the FHLBs and has impacted their retained earnings, accumulated other comprehensive income and GAAP capital, according to Lockhart. As of March 31, 2009, the FHLBs held $64bn of private-label MBS. These securities had a fair value of $49bn, or $0.76 on the dollar.

“We have been working with the 12 FHLBs regarding valuing their private-label MBS,” Lockhart added, “an issue that has significant consequences for them. As they adopted early the new other- than-temporary impairment rules, we worked with them on the adoption of a common platform for accounting.”

He indicated an FHFA report on FHLB securitization recommends FHLBs not be allowed to securitize mortgages at this time. Instead, the report reccomends participation in a program called MPF Xtra, through which the FHLBs serve as a mortgage purchase conduit, selling the mortgage loans immediately to government-sponsored enterprises (GSEs), rather than acquiring the loans on their portfolios.

Under this mortgage program, members do not credit enhance loans or receive any credit enhancement fee for these loans, the FHFA noted. Instead, a FHLB facilitates loan sales between members and a third party, and performs other services and functions in return for a fee.

The FHFA’s report concluded that while FHLB securitization could enable the FHLBs to purchase a larger volume of conforming mortgages from members and increase the availability of mortgage credit, FHLB securitization of mortgages would best be considered after government agencies have developed their recommendations concerning the future of the mortgage-related government sponsored enterprises based on market conditions that exist when that effort is completed.

The push for securitization among GSEs but not FHLBs seems to enforce a consensus that emerging policies have begun to “waffle”on when securitization practices are acceptable.

HousingWire’s own Linda Lowell recently explored the phenomenon of “full-tilt policy schizophrenia” in comprehensive coverage last week.

“You’ll find elected representatives coming out of one hearing where they excoriate bank execs for not lending, and going into another where they tenderly commiserate with the bank exec apparently threatened by another branch of government for trying to ensure taxpayers got value and not systemic mayhem for their investment,” Lowell wrote.

She noted banks this environment may soon want room to waffle, too. The push may be for some form of housing GSE that underpins primary and secondary mortgage markets similar to Fannie and Freddie. Under the new accounting rules, Lowell said, the best mortgage banking play may be to make conforming loans and sell them into GSE MBS, taking gains on sale and booking servicing assets and pushing the cost of capital onto the GSEs’ plate.

Write to Diana Golobay.

Disclaimer: The author held no relevant investments when this story was published.

Downtown Fort Myers condo has 32 stories, and one lonely tale Condo can get spooky for tower’s only family

editors note: I would put a pit bull in the yard with some motion detectors,

DICK HOGAN • DHOGAN@NEWS-PRESS.COM • JULY 30, 2009
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Victor Vangelakos lives in a luxury condominium tower on the Caloosahatchee River. He never has to worry about the neighbors making too much noise.
There are no neighbors.

Vangelakos, 45, his wife Cathy and their three children are the only residents in the 32-story Oasis I condo on the east edge of downtown Fort Myers.

The 45-year-old Weehawken, N.J., firefighter bought the condo from Miami-based The Related Group for $430,000 and closed on it in November. He planned to make it a vacation getaway and eventually his full-time residence when he retires in four years.

But prices have fallen hard since the real estate bubble burst in early 2006. Only a handful of those who put down deposits on the tower’s units actually closed on the deal. Those who did have swapped their Oasis I units for condos in Oasis II next door.

Vangelakos didn’t, because he was unable to convince his lender to agree to the swap, said Betsy Lu McCoy, vice president and associate corporate counsel for Related.

That leaves the Vangelakos family splitting their time between New Jersey and a creepy, surreal life in Oasis I.

They’re the only ones using a well-appointed clubhouse, but they can’t watch the big plasma TV.

“We haven’t found the remote controls,” Victor said.

Pause for a moment anywhere in the building during the day and the silence is deafening.

At night, Vangelakos said, they often hear people on the grounds or even inside the building itself. It’s not hard to break in one of the many entrances.

Once, late at night, “Somebody banged on our door,” Vanelakos said.

It wouldn’t have been hard to find the person in the otherwise darkened building.
“At night,” he said, “you can see our TV from the street.”

Especially popular for intruders is the swimming pool, Vangelakos said. They heard people there one night “and the next day all our chairs were in the pool.”

His relationship with Related is testy at best. Once, he said, when management turned off his water to fix a leak in a pipe, “we came back 10 days later and the water was off but our TV was on.”
ictor Vangelakos lives in a luxury condominium tower on the Caloosahatchee River. He never has to worry about the neighbors making too much noise.
There are no neighbors.

Vangelakos, 45, his wife Cathy and their three children are the only residents in the 32-story Oasis I condo on the east edge of downtown Fort Myers.

The 45-year-old Weehawken, N.J., firefighter bought the condo from Miami-based The Related Group for $430,000 and closed on it in November. He planned to make it a vacation getaway and eventually his full-time residence when he retires in four years.

But prices have fallen hard since the real estate bubble burst in early 2006. Only a handful of those who put down deposits on the tower’s units actually closed on the deal. Those who did have swapped their Oasis I units for condos in Oasis II next door.

Vangelakos didn’t, because he was unable to convince his lender to agree to the swap, said Betsy Lu McCoy, vice president and associate corporate counsel for Related.

That leaves the Vangelakos family splitting their time between New Jersey and a creepy, surreal life in Oasis I.

They’re the only ones using a well-appointed clubhouse, but they can’t watch the big plasma TV.

“We haven’t found the remote controls,” Victor said.

Pause for a moment anywhere in the building during the day and the silence is deafening.

At night, Vangelakos said, they often hear people on the grounds or even inside the building itself. It’s not hard to break in one of the many entrances.

Once, late at night, “Somebody banged on our door,” Vanelakos said.

It wouldn’t have been hard to find the person in the otherwise darkened building.
“At night,” he said, “you can see our TV from the street.”

Especially popular for intruders is the swimming pool, Vangelakos said. They heard people there one night “and the next day all our chairs were in the pool.”

His relationship with Related is testy at best. Once, he said, when management turned off his water to fix a leak in a pipe, “we came back 10 days later and the water was off but our TV was on.”

Change In Arizona Foreclosure “Anti-Deficiency” Law Has Homeowner Advocates Howling

I have seen no clear path out of the mess we are all in and the blood letting continues. I have seen hundreds of people lose their homes in just the last few week alone and it gets even sadder when the borrower is sued by parties who do not own the loan. Barkleys bank, which is a British bankster has entered into the playing field they bought some 1.5 billion or more of Bear sterms dept in the BK court and they are foreclosing homes everywhere, they seem to have also purchased Homes Eq, a servicer, these loans have no chain of title and therefore are not owned by anyone. Most likely they were underwritten by AIG and the CDO was paid off in a swap. Excuse me sometimes it is difficult to understand all this stuff but its all a huge sham going on.

The article below speaks to some of this sham.
home equity theft reporter gives an editors note followed by the original write up. The pot seems to be boiling over in AZ now.

Change In Arizona Foreclosure “Anti-Deficiency” Law Has Homeowner Advocates Howling

In Phoenix, Arizona, The Arizona Republic reports:
A new law passed by the Arizona Legislature that makes homeowners liable for tens of thousands of dollars on homes lost to foreclosure is now the focus of an intense repeal battle. An amendment to the state’s foreclosure laws, passed in the recent legislative session, was designed to protect small community banks from people buying speculative new homes they can’t sell for a profit.
***

Real-estate lobbyists and attorneys for homeowners are working to have the law repealed before the Legislature adjourns after completing its work on the budget. Banks are pushing hard to keep the amendment in place. If the new rules stand, they go into effect Sept. 30.
***

The amendment was made to the state’s anti-deficiency law, passed in the mid-1980s, which kept lenders from recovering anything more than the home on a typical residential foreclosure.(1) About two dozen states have anti-deficiency laws. Some small speculators have been using the anti-deficiency law to protect their other assets. Under the new law, a homeowner must live in a house for six consecutive months to establish residency and to be covered by the anti-deficiency law. Homeowners who lose a home to foreclosure, and who fail to meet the six-month residency requirement, will be liable for the difference between the foreclosure sale price and the original loan. For example, if a lender forecloses on a home with a $400,000 mortgage balance and can only resell the home for $200,000, then the borrower still will owe the lender $200,000.

New law triggers fear for housing

It holds some owners liable for debt, even in foreclosure

by Catherine Reagor – Jul. 26, 2009 12:00 AM
The Arizona Republic

A new law passed by the Arizona Legislature that makes homeowners liable for tens of thousands of dollars on homes lost to foreclosure is now the focus of an intense repeal battle.

An amendment to the state’s foreclosure laws, passed in the recent legislative session, was designed to protect small community banks from people buying speculative new homes they can’t sell for a profit.

But the impact of the change is much larger. It makes some homeowners in foreclosure liable for the difference between their mortgage and what their lender can recoup from reselling the house. In the current housing market, the difference is generally more than $100,000 on the typical Valley foreclosure.

Real-estate lobbyists and attorneys for homeowners are working to have the law repealed before the Legislature adjourns after completing its work on the budget. Banks are pushing hard to keep the amendment in place. If the new rules stand, they go into effect Sept. 30.

The new law would affect any Arizona homeowner in foreclosure who has not lived in the home for six straight months. This might include landlords, second-home owners and investors who bought homes hoping for quick resales and big profits. Once the home is sold in foreclosure, the homeowner would have to pay back the remaining value of the loan, minus the proceeds from the foreclosure sale. Currently, Arizona homeowners, including investors, who lose a house to foreclosure take a big hit on their credit scores but aren’t usually required to pay back lenders.

The new law isn’t retroactive, but those facing foreclosure now could be affected if the lender doesn’t foreclose and take back the home until after Sept. 30. Under the new law, lenders will be able to garnish wages and go after other assets to recover the money.

In metropolitan Phoenix, where home values have dropped 45 percent and foreclosures are at record highs, that amounts to millions of dollars.

“This won’t just impact investors. This law will hurt retirees who live in Arizona less than half of the year, or people from the Valley who own second homes up north,” said Tom Farley, chief executive of the Arizona Realtors Association. “Arizona is No. 2 for foreclosures now. If this law isn’t changed, the state could lead the nation for bankruptcies next year.”

Opponents of the new law say it will force homeowners to file for bankruptcy to protect their assets from lenders.

They also believe it will encourage more lenders to foreclose instead of trying to work out loan-modification deals with borrowers.

Some housing market watchers say the change could also deter investment in the state’s housing market, which would be a blow to the economy.

State Sen. Steve Pierce, R-Prescott, backed the legislation, SB 1271. He said in June testimony that the changes to the anti-deficiency statute are to help community banks that lend to investors hiding behind the current laws.

Pierce described scenarios in which investors had speculative homes built but couldn’t sell them and then camped out in them for a few days to claim them as primary residences so they wouldn’t be liable for the lender’s losses.

Under current Arizona foreclosure law, a homeowner doesn’t have to live in a home for a certain amount of time to claim it as a primary residence. In most cases, if homeowners can prove they receive mail at a residence, it’s enough proof of their residency.

Who is protected

The amendment was made to the state’s anti-deficiency law, passed in the mid-1980s, which kept lenders from recovering anything more than the home on a typical residential foreclosure. About two dozen states have anti-deficiency laws. Some small speculators have been using the anti-deficiency law to protect their other assets.

Under the new law, a homeowner must live in a house for six consecutive months to establish residency and to be covered by the anti-deficiency law.

Homeowners who lose a home to foreclosure, and who fail to meet the six-month residency requirement, will be liable for the difference between the foreclosure sale price and the original loan.

For example, if a lender forecloses on a home with a $400,000 mortgage balance and can only resell the home for $200,000, then the borrower still will owe the lender $200,000.

Opponents argue that while the new law may have been aimed at people having speculative homes built in small communities, it will have many unintended victims. Among them: people who bought second or retirement homes in Arizona and are struggling now because of the recession. Most of those people will fall behind on second-home mortgages before losing their primary residence. But if they owe too much on their second homes, lenders could go after their primary homes and all other assets to recoup the loss.

“There won’t be a lot of sympathy for the big investors, but the problem becomes legally working out who is an investor,” said Jay Butler, director of Realty Studies at Arizona State University.

Butler said he was at a meeting last week with real-estate agents who were “shocked” the legislation passed. “Lenders that shouldn’t have made the loans to investors in the first place,” Butler said, “are trying to cover up their own mistakes with this new law.”

Investors at risk

Many blame investors for the Valley’s housing boom that led to the current crash.

During 2005, investors were behind almost 40 percent of all of metro Phoenix’s home sales. Foreclosures started to climb in 2007 when investors couldn’t sell the houses for a profit and let them go into foreclosure.

“There are investors and speculators taking advantage of the (anti-deficiency) statutes,” said Tanya Wheeless, president of the Arizona Bankers Association. “When investors were making lots of money flipping houses, they never called up their lender and offered to split the profits. Now, investors are losing money and trying to hide from their responsibility of the losses.”

Opponents say the new law won’t affect the sophisticated investors who buy homes through limited liability partnerships that protect their personal assets.

Farley of the Arizona Realtors Association admits the broader impact of the legislation was a surprise. “If you have a second home in Flagstaff,” he said, “and fall behind on payments because your spouse has lost their job, lenders can foreclose and garnish your wages and put liens on your bank accounts and your primary home.

“What about parents who buy homes for their children to live in while going to college? If something happens to them in this tough economy, they could lose both their homes. And really, how many second-home owners can show they have lived in their vacation home six months straight?”

Last-minute lobbying

Real-estate lobbyists are working overtime to have the law killed before the Sept. 30 deadline.

A new bill must be written that repeals or reverses SB 1271. However, the Legislature is in a special session, and Gov. Jan Brewer would have to amend the purpose of the special budget session to hear the new legislation. She has amended the session once so far to include renewable-energy credits.

The Realtors Association asked Brewer last week to amend the current session and is looking for a legislator to back a bill to kill the changes to the anti-deficiency law.

If that plan doesn’t work, the new rules could not be changed until next year’s session.

Wheeless said she’s surprised so many groups are shocked by the new rules, because SB 1271 went through full hearings.

“The legislation was fully vetted and out in the open for those who opposed it to weigh in,” she said. “Our intent is to protect homeowners who live in their residences.”

Arizona attorneys are already receiving calls from lenders that want to know about the new law.

“I got a call from an out-of-state lender that is considering holding off on a foreclosure until after September 30,” said Phoenix real-estate attorney Marc McCain. “The lender thinks this investor has the income to pay the mortgage but is walking away from a home because he can’t sell it and just doesn’t want to keep paying for it.”

The new law could also lead to costly lawsuits.

“If the legislation isn’t repealed, it will probably end up being hashed out in the courts between lenders and borrowers,” Butler said. “The typical homeowner probably doesn’t have the money to fight a big lender, particularly if they are already facing foreclosure.”

Frank threatens banks to stop foreclosures

Frank may have some pity for the blood let but to drive us to the BK courts is a horrid concept, who wants to do BK when the lender is a fraud and does not own the note at all in my issue they cannot stand up, not even in the civil court. So Hey Frank get a grip, and put on the thinking cap.

Frank threatens banks to stop foreclosures

By ANNE FLAHERTY

The Associated Press

Wednesday, July 29, 2009; 2:30 PM

WASHINGTON — A senior House Democrat threatened banks Wednesday that if they don’t volunteer to save more homeowners from foreclosure, Congress will make them.

In a sternly worded statement, Rep. Barney Frank said Congress will revive legislation that would let bankruptcy judges write down a person’s monthly mortgage payment if the number of loan modifications remain low.

Frank, chairman of the House Financial Services Committee, also said his committee won’t consider legislation to help banks lend unless there is a “significant increase” in mortgage modifications.

Frank’s statement was aimed at adding momentum to a deal struck Tuesday between Treasury Secretary Timothy Geithner and more than two dozen mortgage companies. The two sides agreed to set the goal of adjusting 500,000 loans by Nov. 1.

But it was far from clear whether that would happen.

Loan servicers say they are still trying to play catch up to a deluge of customer requests by hiring and training thousands of new employees. Banks also are trying to sort through which customers face a legitimate financial hardship.

Also, many loans have been bundled and sold to investors as securities, complicating efforts to modify the terms.

Congress tried earlier this spring to pass legislation that would give people a chance to keep their homes by filing for bankruptcy. But while President Barack Obama said he supported the measure, he did little to see it through and it was defeated amid an aggressive lobbying effort by banks.

The measure failed in the Senate by a 45-51 vote, falling 15 votes short of the 60 needed to overcome procedural hurdles.

“People in the servicing industry and in the broader financial industry must understand that if this last effort to produce significant modifications fails, the argument for reviving the bankruptcy option will be extremely strong, and I think there is a substantial chance that the outcome will be different,” Frank said.

Desperate state may sell Capitol buildings, others

I then wonder if the state will go through foreclosure, I would suggest the State seek out a good foreclosure lawyer like mine, I know that the loan mods do not work but since this is the state they just may do a good mod, for sure they have sliced and sold the note that places the state in a good position to fight, I liken this to my own case with very much the same situations. I feel so much pity for the prisoners who will be run by some private company rife with the traditional American Greed as seen on tv. Hold on top your hats and your homes help is here. Do the fight right and you will be just fine. The battle has not even began, just yet.

Desperate state may sell Capitol buildings, others

Under GOP plan, government would pay to lease back most of the sites
by Matthew Benson and JJ Hensley – Jul. 29, 2009 12:00 AM
The Arizona Republic
Call it a sign of desperate times: Legislators are considering selling the House and Senate buildings where they’ve conducted state business for more than 50 years.

Dozens of other state properties also may be sold as the state government faces its worst financial crisis in a generation, if not ever. The plan isn’t to liquidate state assets, though.

Instead, officials hope to sell the properties and then lease them back over several years before assuming ownership again. The complex financial transaction would allow government services to continue without interruption while giving the state a fast infusion of as much as $735 million, according to Capitol projections.

For investors, the arrangement means long-term lease payments from a stable source.

Once any deals are approved, money could begin flowing into state coffers in as little as 90 days.

The plan has bipartisan backing, but that doesn’t make the prospect of paying rent for buildings once owned free and clear by taxpayers any easier to swallow.

“We’ve mortgaged the legislative halls,” said an exasperated state Rep. Steve Yarbrough, a Chandler Republican. “That just tells you how extraordinary the times are.

“To me, it’s something we’re going to have to do no matter how much we find it undesirable.”

Last good option?
Earlier this month, Republican Gov. Jan Brewer vetoed such sale/leaseback provisions along with most of the rest of a fiscal 2010 state budget plan sent to her by the Legislature.

But the provisions are expected to return as part of a GOP-led legislative budget proposal surfacing this week. Although Brewer spokesman Paul Senseman called sale/leaseback deals “one of the governor’s least favorite options,” he conceded the likelihood that they’ll play a key role in any plan to close a state shortfall estimated at $3.4 billion.

The state may have little choice. Reserves already have been drained, easier fiscal gimmicks are virtually tapped out, and there’s no political will for spending cuts of the size and scope needed to close the deficit.

“This is the predicament we find ourselves in,” said Tom Manos, a Brewer budget adviser. “We’ve exhausted the better options.”

State properties now being considered for sale and leaseback include the House and Senate buildings, the Phoenix and Tucson headquarters of the Arizona Department of Public Safety, the State Hospital and the state fairgrounds, according to a document obtained by The Arizona Republic. Some prison facilities also are under consideration.

In total, the list comprises 32 properties that, if built from the ground up, come with a combined replacement value in excess of $1 billion.

The properties were chosen based on attractiveness to investors, buildings the state would be unlikely to walk away from, such as prisons or other facilities that provide essential government services.

Only one state property thus far is targeted for outright sale: the state Agricultural Laboratory in Phoenix.

‘We need the money’
The state has conducted sale/leaseback deals in the past, though rarely.

This is different. Manos believes it would be the first time the state has sold and leased back state buildings with the intent of using the revenue to fund general operations rather than particular projects.

“We need the money,” said Senate Minority Whip Linda Lopez, a Tucson Democrat. “You’ve got to find it somewhere.”

Under the most recent legislative proposal, the state would seek a series of lease arrangements spanning as much as 20 years. Deals that would generate the targeted $735 million in revenue would mean state lease payments totaling $60 million to $70 million a year, according to budget analysts.

Over two decades, that would equate to at least $1.2 billion in lease payments. Once the leases had expired, the state would again take ownership of the properties.

House Majority Leader John McComish called the payments preferable to a tax increase, as proposed by Brewer, or alternative fiscal schemes such as selling future income from state Lottery sales in exchange for a lump-sum payment.

“What are our choices?” asked McComish, a Phoenix Republican. “We could cut more, or we could raise taxes more. Borrowing over the long term, we think, is better for the people, better for the economy.”

Private prisons
While the state is looking to sell and lease back selected properties, it also may try to contract out the operations of some prisons. The concessions provision is expected to be included within the new budget proposal, and legislative analysts believe it could generate as much as $100 million (on top of the sale/leaseback revenue) for state coffers. Private, for-profit prison operators would bid for the right to manage selected facilities, but the state would maintain ownership.

The concept concerns prison officials, who worry whether a private operator would be equipped and trained to handle the state’s most hardened criminals. In a letter to Brewer last month, Corrections Director Charles Ryan wrote that a private operator would pay lower wages and provide less training.

Bernanke: This may be worse than Great Depression

The homeowner lost 60 to 75 percent of their value in this enigma, thus I do not see how we can get back to where we should be without getting our value back. How can we ever trust the government and the Wall Street banksters ever again, with our hard earned wealth. The government seems to be wanting to continue on the too big to fail, and the too small to help process. Well, if they would actually help the homeowner to get a proper loan to live in their homes I think this is the only way out the big banks are mainly foreign banks, they will never really work for us. The housing market is dead for now and modifications are not working in the benefit of the home owners.

[link to www.marketwatch.com]
The Fed
Jul 26, 2009, 10:21 p.m. EST

Bernanke: This may be worse than Great Depression

Fed chief says growth will resume at 1% in the second half of this year

By Greg Robb, MarketWatch

WASHINGTON (MarketWatch) — Federal Reserve Board Chairman Ben Bernanke discussed the economy with average Americans on Sunday, saying the current financial crisis could be even more virulent than the Great Depression.

“A lot of things happened, a lot came together, [and] created probably the worst financial crisis, certainly since the Great Depression and possibly even including the Great Depression,” Bernanke said at the start of a town-hall meeting in Kansas City.

Bernanke defended the Fed’s extraordinary moves, which have included slashing interest rates to zero, pumping billions of dollars to keep credit markets open, and buying Treasurys and mortgage debt to keep long-term interest rates low.

“I was not going to be the Federal Reserve chairman who presided over the second Great Depression,” he said.

The event is being televised over three nights, beginning Monday, by U.S. public television network PBS. Members of the public, screened by PBS, were able to ask questions.

Many questioners expressed unhappiness with the “too big to fail” doctrine. One asked when Bernanke would get around to firing the leadership of banks that had to accept government assistance.

Another participant said the only thing that was clear to him in the whole crisis was that his small business was “too small to save.”

At first, Bernanke tried to argue that the Fed moved to save big banks to protect the global economy, but by the end, Bernanke simply agreed that “too-big-to-fail has got to go.”

First-of-its-kind meeting
The dialogue marked the first time that a sitting Fed chairman has sat down to answer questions on the record from the public. For the first 80 years of its existence, Fed officials operated under the rule that the less said, the better.

But recent economic research has indicated that Fed interest-rate policy actually works better if the public understands its basic thrust. This has led the Fed, in fits and starts, to try to open up.

The results at the town hall meeting were choppy at times, although Bernanke seemed to get better as the event went along.

The first questioner admitted she didn’t “have a clue” what the Fed did. It is doubtful that Bernanke’s laundry list response — the Fed is monetary policy maker, bank supervisor, crisis manager and consumer protector — helped her very much.

Asked when “this [recession] is going to end,” Bernanke said growth would return in the second half of 2009, likely at a 1% pace. The unemployment rate won’t peak until next year, he said.

The Fed has put the “pedal to the metal” to try to get the economy growing at a faster pace.

Maybe because his earlier answers were on the scary side, Bernanke then tried to be a cheerleader, saying that the U.S. economy “couldn’t be held down” and would eventually return to a strong growth pace.

Strong-dollar booster
One odd moment came when Bernanke said he was a supporter of the Obama administration’s “strong dollar” policy.

Fed officials typically steer clear of commenting on currency issues.

“We think the dollar should be strong, and the best way we think to get a strong dollar is to have a strong economy,” Bernanke said.

“Our whole strategy right now is to get the economy out of doldrums and back onto a growth path that will attract foreign funds and keep [the dollar] strong,” Bernanke said.

When asked about Bernanke, top Fed officials often use the word “decent” to describe him. This trait seemed to shine through and by the end of the event, at which point Bernanke was evoking gentle laughter from the audience.

Asked about the stock market, Bernanke said he was worried about getting sued for malpractice.

Bernanke has some other “never done before by Fed chairman” events under his belt. Earlier this year, he spoke at the National Press Club and took questions from the audience. And he took an interview for the CBS news program “60 Minutes,” which included a walk down Main Street in Dillon, South Carolina, his hometown.

Bernanke did try to connect with the audience. When one member of the audience said he had been laid off and then found work, Bernanke stopped and congratulated him.

Asked what keeps him up at night, Bernanke explained he would probably get a good sleep tonight, saying: “I’m pretty tired.”

Greg Robb is a senior reporter for MarketWatch in Washington.

State targets foreclosure-rescue scheme; Port St. Lucie woman recounts its failure

Editors Note: We knew in advance that this sort of practice would bilk millions from home owners, greed upon greed here, just the nature of the human mind. Whereas I fell pity for the victims, its a huge measure of ignorance and lack of common knowledge which causes these things. On the other hand my question is where are the lawsuits with the lenders who bilked billions? why are the banksters getting away?

By SUSAN SALISBURY
Palm Beach Post Staff Writer

Tuesday, July 21, 2009

WEST PALM BEACH — Port St. Lucie resident Dawn Barnum was having a difficult time making her $2,169-a-month mortgage payment when she received a telephone call offering what seemed like a solution.

The caller told her she was pre-approved, and he could straighten out her mortgage nightmare by getting her lower payments within 30 to 45 days. Barnum, 52-year-old massage therapist, gave the company, FHA All Day.com a check for $3,200. But the company performed none of the promised services, and couldn’t be reached, she said.

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“I was being hasty. I wanted a quick fix,” Barnum said Tuesday.

Barnum is one of hundreds of consumers duped by what Florida Attorney General Bill McCollum said Tuesday is one of the worst scams he has ever seen, taking as much as $1 million a month from desperate homeowners and doing nothing to help them.

McCollum’s office filed a lawsuit Monday in Palm Beach County Circuit Court seeking an injunction against four related South Florida companies that allegedly charge up-front fees as high as $5,000 for loan modification services to homeowners facing foreclosure.

The companies owned by Jason Vitulano, 34, of Boca Raton, previously operated in Delray Beach and Boca Raton, but are now based in Deerfield Beach. In addition to FHAAllDay.com, they are Safety Financial Services Inc., Housing Assistance Law Center and Housing Assistance Now.

“This is the worst type of thing, taking advantage of people who are the most in trouble,” McCollum said Tuesday. His office has received 314 complaints from consumers in Florida and other states such as California and New York. Seven complaints were from Palm Beach County residents.

Friday his office will ask a judge to shut down the companies.

Some consumers received robo calls from the companies that started with a recording of President Obama saying, “All across this state there are families that have done everything right who are now seeing their home values plummet.”

Then one of the companies’ representatives would come on the line offering to save the homeowner from foreclosure.

McCollum said of the robo calls, “It all part of the scheme. It’s part of the scam. It was designed to mislead. This is top to bottom, one of the worst scams I have ever seen.”

Florida law prohibits foreclosure rescue firms from taking any money until the company has completely performed what it agreed to do, McCollum said. The law also requires a written contract to do a loan modification or foreclosure rescue, he said. It’s also illegal to use anyone’s recorded voice without permission.

The Attorney General’s Economic Crimes Division estimates that the companies may have bilked consumers of as much as $8 million since March.

The lawsuit seeks a permanent injunction prohibiting the defendants from charging up-front fees, restitution on behalf of all victimized consumers, civil penalties of $15,000 for each violation of the Foreclosure Fraud Prevention Act and reimbursement for the investigation’s cost.

The Web site for FHAAllDay.com stated the company was no longer accepting applications and a phone mailbox was full and unavailable for message.

As for Barnum, who paid $350,000 in 2005 for a house she estimates is now worth $200,000, she’s seeking a loan modification through her bank. When she realized she had been deceived, she said, “I was very angry at myself.”

I believe the next shoe has dropped

We are seeing an up tick in Lawyers getting wins in cases. Seems that the Judges are finally getting it. There are so many causes of action a litigant can take but it must be done with a good Lawyer. We have been working so hard for so long only now are we beginning to see changes in our favor, I am so happy to begin to see this it must be very pleasing for the home owners. Definitely the banks and other money lenders must be very worried of the fact that we have brought the fight to their doorstep and some of us are beating them back. Personally I have no real regard for the Basnksters that have plundered so many families. I am also seeing alot of commercial properties for rent, I therefore would think that many of these business owners cannot pay the dept note. Here is something I found on Neils` Site:

Pretender lenders and lawyers for pretender lenders should take warning. The operation described in this article is virtually identical to the operation used by pretender lenders.

N.Y. Claims Collectors of Debt Used Fraud

By JONATHAN D. GLATER
Tens of thousands of New York consumers had money seized by creditors using court orders that had been obtained by fraud, the state’s attorney general said Wednesday — and the money should be returned.
According to a lawsuit filed on Tuesday in New York Supreme Court in Buffalo, lawyers and debt collectors obtained more than 101,000 court orders that were improperly issued, allowing them to seize, on average, $5,474 from each consumer.
The lawsuit asserts that consumers were never properly notified and were not given a chance to defend themselves in court; creditors won default judgments. The total amount of money seized exceeded $500 million, according to the attorney general’s office.
“Our legal system is defined by due process and the guarantee that every New Yorker will get the chance to defend him or herself in court,” Andrew M. Cuomo, the attorney general, said in a statement. Not providing notice of legal proceedings, “undermined the foundation of this system.”
The two collections agencies and 35 lawyers and law firms named in the lawsuit, which lawyers for Mr. Cuomo’s office filed on behalf of the state’s chief administrative judge, Ann Pfau, all used one company, American Legal Process, of Lynbrook, N.Y., to notify consumers of debt collection proceedings.
But American Legal Process did not give people proper notice and instead “repeatedly and persistently falsified” statements that it had, according to the attorney general. In thousands of cases, a lawyer for Mr. Cuomo’s office stated in a court filing, individual American Legal Process employees claimed to have delivered notices of collections proceedings to different people in different locations at the same time.
When consumers did not appear in court, lawyers for creditors obtained court orders allowing them to take consumers’ money directly from bank accounts or to garnish wages.
A lawyer for American Legal Process, Corey Winograd, did not immediately return calls.
The attorney general brought criminal charges against American Legal Process and its chief executive, William Singler, in April. Those proceedings are continuing, according to Mr. Cuomo’s office.

Congessman Burton: You Didn’t Want To Make Any Of This Public! Why Not? Paulson Hearing