Tuesday Report, January 25, 2011
Special to the Texas Low Income Housing Information Service
Litigation bears down on sleazy mortgage lenders, some of whom hope to destroy evidence and shred originating loan documents. Meanwhile, Bank of America sinks deeper in debt and home prices continue to slide.
Galveston finally gears-up to rebuild housing destroyed by Hurricane Ike.
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Judges to weigh mortgage document destruction
By Scot J. Paltrow Reuters January 23, 2011
Federal bankruptcy judges in Delaware are due to hold separate hearings Monday on requests by two defunct subprime mortgage lenders to destroy thousands of boxes or original loan documents.
The requests, by trustees liquidating Mortgage Lenders Network USA and American Home Mortgage, come despite intense concerns that paperwork critical to foreclosures and securitized investments may be lost.
A series of recent court rulings have increased the importance of original loan documents, holding that they are essential for investors to prove ownership of mortgages and to have the right to foreclose.
In the Mortgage Lenders case, the U.S. Attorney in Delaware has formally objected to the requested destruction because loss of the records “threatens to impair federal law enforcement efforts.”
Full story at: http://www.reuters.com/article/idUSTRE70M1YJ20110123
Bank of America loses $1.6 billion on mortgage troubles
By Rick Rothacker and Christina Rexrode Charlotte Observer January 21, 2011
Bank of America Corp. said Friday it lost $1.6 billion for common shareholders in the fourth quarter, as it continued to absorb charges related to its troubled mortgage unit. Brian Moynihan, completing his first year as chief executive, said he was disappointed by the results but that the bank is tying up old problems and moving ahead.
The Charlotte-based bank had already indicated that this quarter would be dismal, announcing earlier this month that it would pay billions to settle disputes with government-controlled Fannie Mae and Freddie Mac, who wanted Bank of America to buy back soured mortgages they sold to the agencies. But analysts today raised questions about another problem on the horizon: the disputes with private investors that are still remaining. Finance chief Chuck Noski said the reserves for mortgage-repurchase disputes, currently at about $5.4 billion, could rise by as much as $10 billion because of claims from private investors.
Home prices decline in November
By Alejandro Lazo Los Angeles Times January 25, 2011
The latest read on home prices, released Tuesday morning, shows fresh declines in the vast majority of the nation’s largest metropolitan areas. According to the Standard & Poor’s/Case-Shiller index of 20 metropolitan areas, prices of previously owned single-family homes fell 1.6% in November from the same time last year. The closely watched index fell 1% from October to November.
“With these numbers, more analysts will be calling for a double dip in home prices,” said David M. Blitzer, chairman of the index committee at Standard & Poor’s.
November home prices down fifth straight month: S&P
Reuters January 25, 2011
U.S. single-family home prices fell for a fifth straight month in November and a double-dip in home prices could be confirmed by spring, a closely watched survey said on Tuesday.
The Standard & Poor’s/Case-Shiller composite index of 20 metropolitan areas declined 0.5 percent in November from October on a seasonally adjusted basis, though it was not as sharp as the 0.8 percent fall expected by economists.
Prices have fallen 1.6 percent in the past year, sharper than the 1.4 percent predicted by economists polled by Reuters.
[End of story: http://www.reuters.com/article/idUSTRE70O2W920110125]
Taxpayers Paid Millions In Fannie, Freddie Legal Fees
By Tamara Keith NPR January 24, 2011
The collapse of mortgage giants Fannie Mae and Freddie Mac has so far cost taxpayers nearly $150 billion. Depending on what happens to the housing market, that number could get much higher.
But there’s interest in a smaller but still significant number: $160 million. That’s how much U.S. taxpayers have spent on legal fees to defend the firms and their former executives against pending lawsuits.
If you have a mortgage, there’s a good chance Fannie Mae or Freddie Mac had something to do with it. The firms buy mortgages from banks, bundle them up into securities and sell those securities off to investors.
Obama again mulls Smith as housing regulator: sources
By Corbett B. Daly Reuters January 20, 2011
WASHINGTON – U.S. President Barack Obama is leaning toward renominating Joseph Smith to oversee mortgage finance giants Fannie Mae and Freddie Mac, three sources familiar with the process told Reuters.
Obama late last year tapped the commissioner of North Carolina’s banks to be the director of the Federal Housing Finance Agency, a position requiring Senate confirmation.
The Senate Banking Committee in mid-December voted 16-6 to approve Smith for the post but the full Senate did not act on his nomination and it died when Congress adjourned its session in late December.
Full story at: http://www.reuters.com/article/idUSTRE70J7ON20110120
Warren nimble in building Consumer Financial Protection Bureau
By Kevin G. Hall McClatchy Newspapers January 25, 2011
WASHINGTON — The pieces are quietly falling into place to create a Consumer Financial Protection Bureau, designed to prevent the sorts of renegade lending practices that crippled the housing market and nearly brought down the U.S. financial system.
The idea for the bureau was the brainchild of Harvard University law professor Elizabeth Warren, who was named a special adviser to Treasury Secretary Timothy Geithner last year to help build the new agency from scratch.
The agency was created as part of last year’s Dodd-Frank act, the broadest revamp of financial regulation since the Great Depression. The new bureau, which consolidates powers that were spread among several bank and consumer regulators, must be up and running by July.
Warren has shown herself to be a shrewd tactician, bringing aboard big names and neutralizing opposition to the panel from Republicans who’d vowed to defund and defang it.
Contractor: Slow start will become ‘ripple effect’
By Amanda Casanova Galveston County Daily News January 23, 2011
GALVESTON — Billy Sullivan, of contracting company Sullivan Land Services, knows island residents are not happy with delays in a multimillion-dollar federal housing program. He knows, as one of two prime contractors from the county selected to oversee construction on nearly 1,300 houses destroyed during Hurricane Ike, just how important it is that those federal dollars stay on the island. “This is not just about rebuilding houses,” he said. “It’s also about putting money into the local economy.”
Full story at: http://galvestondailynews.com/story/206358
GHA board OKs talk to acquire parcels
By Amanda Casanova Galveston County Daily News January 25, 2011
GALVESTON — Joe Tramonte Realty and Guess Group Inc. will work with the Galveston Housing Authority to acquire up to 246 lots for the Scattered Sites Program, the board of commissioners decided Monday. The board unanimously voted to start negotiations on a contract that will allow the housing authority to acquire both improved and unimproved parcels for the housing program. The land will provide housing to both individuals and families with low and moderate incomes. Under the program, residents pay 30 percent of their adjusted monthly income on rent. The Guess Group Inc. is a Houston-based real estate services firm, while Joe Tramonte Realty is based on the island. The board also unanimously approved negotiating a contract with Charles Rencher Investments to start appraisals on the lots. Construction is slated to start on 50 scattered units after the board approved negotiating a contract with Sullivan Land Services, Hettig/Khan Holdings Inc. and DSW Homes. The contractors were approved to work on up to 200 public housing units. “Congratulations on moving this along,” Mayor Joe Jaworski told the board. “DSW and Sullivan are both locally based. This is good and keeping the jobs local.”
[End of story: http://galvestondailynews.com/story/206794]
Programs for homeless get $1.1 million
By Amanda Casanova Galveston County Daily News January 24, 2011
GALVESTON — Homeless assistance programs on the island received $1.1 million in federal funding this week. The Continuum of Care grants are renewals of funding that will provide transitional and permanent housing, job training, mental health counseling, health care, child care and substance abuse treatment for the homeless. The grants will go to the Children’s Center, the Gulf Coast Center and Women Opting for More Affordable Housing Now. “We’re very excited for the continuation of the funds and to be able to assist individuals in our community, especially in these economic times,” said Carolyn Rose, director of administrative services at the Gulf Coast Center. U.S. Housing and Urban Development Secretary Shaun Donovan awarded nearly $60 million in federal money to keep more than 200 homeless assistance programs in Texas operating.
Full story at: http://galvestondailynews.com/story/206642