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Personal Finance News 10/2008



Gov't launches mortgage aid program (AP)
AP - The government kicked off a program Wednesday that aims to prevent foreclosures by letting an estimated 400,000 troubled homeowners swap their mortgages for more affordable loans.

Banks want to suspend accounting rule in bailout (AP)
AP - Congress has embraced an idea to help prop up the financial system: Give banks a break by letting them value their bad mortgage assets at a price they could fetch later, not now.

Once 3 pages, bailout bill now length of novel (AP)
AP - Two Saturdays ago, it totaled just three pages — the White House's request for $700 billion to rescue tottering financial institutions by buying their devalued mortgage-related assets.

UBS predicts battered profits to recover (AFP)
AFP - Switzerland's biggest bank UBS on Thursday said it would swing into profit in the third quarter, recovering from successive quarters of losses when it was forced to write down billions in bad assets.

30-year mortgages rise to 6.10 percent (AP)
AP - Rates on 30-year mortgages have risen for a second straight week, climbing to the highest level in a month.

Toyota announces zero-percent financing (AP)
AP - Toyota Motor Corp. has announced zero-percent financing on 11 models as it tries to woo would-be buyers sidelined by the consumer credit crunch.

AIG to focus on property, casualty insurance (Reuters)
Reuters - American International Group Inc , the insurer crippled by losses on bad mortgage bets, said on Friday it will focus on its property, casualty and foreign general insurance businesses.

2 firms selected for mortgage securities program (AP)
AP - The Treasury Department has picked two financial institutions to manage a program it unveiled last month to provide support for beleaguered mortgage-backed securities.

AIG to sell Japanese life insurance units (Reuters)
Reuters - American International Group Inc, plans to sell its three Japanese life insurance businesses, an AIG spokesman said on Saturday, in sale Japanese media estimated could top $9.5 billion.

Allianz, others consider buying AIG's Japan units: reports (AFP)
AFP - Germany's Allianz Group and other major insurers are considering buying American International Group's three life insurance units in Japan, news reports said Saturday.

Mortgage forgiven for woman, 90, who shot herself (AP)
AP - Mortgage finance company Fannie Mae said it is forgiving the mortgage debt of a 90-year-old woman who shot herself in the chest as sheriff's deputies attempted to evict her.

Regulator says Fannie, Freddie might sell bad assets (Reuters)
Reuters - Fannie Mae and Freddie Mac may sell some bad assets to the Treasury Department but a decision has not yet been made, the regulator of the two mortgage finance companies said on Sunday.

AIG to sell Thai bank, consumer finance units (Reuters)
Reuters - American International Group Inc (AIG) is to sell its Thai consumer finance businesses, including AIG Retail Bank and AIG Card, the head of the bank said on Monday.

Bank of America says to spend up to $8.4 bln on Countrywide (AFP)
AFP - Bank of America said Monday it was ready to spend up to 8.4 billion dollars to restructure the troubled mortgage loan portfolio of the recently-acquired mortgage lender Countrywide.

The Bailout: What Does Paulson Do Now? (BusinessWeek Online)
BusinessWeek Online - With the House of Representatives' Oct. 3 passage of the Treasury's $700 billion plan to stabilize the financial markets by buying up troubled mortgage-related assets, you could almost hear the sigh of relief spreading throughout Washington and Wall Street. After two weeks of nearly nonstop negotiations in which the bill repeatedly appeared to flounder, it was quickly passed on to President George W. Bush, who signed it into law within hours.

Bank of America settles suits over bad mortgages (AP)
AP - Facing a lawsuit over deceptive mortgage practices, Bank of America Corp. is agreeing to pay more than $8 billion to modify hundreds of thousands of loans to keep people from losing their homes.

Credit still tight as Europe governments scramble (AP)
AP - The jammed credit markets barely budged Monday as European governments scrambled to prop up their failing banks and investors waited for details on how, exactly, the Treasury will go about buying $700 billion of U.S. banks' mortgage assets.

Global recession can be avoided, says former IMF chief (AFP)
AFP - A global recession can be avoided with a coordinated plan to restore market confidence shattered by the US sub-prime mortgage crisis, the former International Monetary Fund chief said Tuesday.

Tax rules on borrowing from subsidiaries eased (Reuters)
Reuters - Regulators last week relaxed a rule allowing U.S. companies to borrow from their foreign subsidiaries, without triggering a 35 percent corporate income tax, in a move ease access to capital.

August borrowing drops at 3.7 percent rate (AP)
AP - Consumer borrowing fell in August for the first time in more than a decade as households, battered by rising job layoffs and the decaying economy, cut back sharply on their use of credit.

Consumer credit marks first fall since January 1998 (Reuters)
Reuters - U.S. consumer borrowing fell for the first time in more than a decade in August amid tighter credit markets, tougher lending standards and declining consumer spending, a Federal Reserve report showed on Tuesday.

McCain says he would buy up bad home mortgages (Reuters)
Reuters - Republican U.S. presidential candidate John McCain on Tuesday said that if elected president he would order the Treasury Department to buy bad home mortgages and renegotiate them to help homeowners in trouble.

MetLife releases third-quarter expected results (Reuters)
Reuters - U.S. life insurance company MetLife Inc on Tuesday said it expects to report income from continuing operations of $1.38 to $1.58 per share and premiums, fees and other revenues of $8.6 billion in the third quarter.

IndyMac's Fast-Track Mortgage Modification Program (BusinessWeek Online)
BusinessWeek Online - When Mark Akers got an offer from his mortgage lender in September to slash his monthly payments down to $2,500, from $4,200, he jumped at the chance. The Norco (Calif.) resident ran into trouble earlier this year after his wife got sick and he lost his job managing a factory that made doors for houses. The 53-year-old Akers could have become another foreclosure statistic if his bank, IndyMac, had not stepped forward to halve the interest rate on his fixed-rate loan to 3%, for a period of five years. ...

August pending home sales jump 7.4 percent: NAR (Reuters)
Reuters - Pending sales of existing U.S. homes unexpectedly jumped in August to the highest in over a year, data from a real estate trade group showed on Wednesday.

Spanish bank fund will acquire only top-rated mortages: official (AFP)
AFP - Spain's new 30-billion-euro bank rescue fund is aimed at acquiring top-rated mortgages in exchange for injecting essential liquidity into the credit market, a government spokesman said Wednesday.

UBS pulls plug on Mortgage Strategist, ABS trading (Reuters)
Reuters - UBS AG is halting its widely read weekly mortgage strategy report after more than 15 years of publication as the bank broadly scales down in the home loan business, including the closure of its asset-backed securities group, sources said.

Citi shrinks U.S. mortgage broker business (Reuters)
Reuters - Citigroup Inc will cut 500 mortgage-related jobs and slash by 90 percent the number of independent mortgage brokers it works with, the company said, as the U.S. mortgage industry broadly shrinks amid the housing crisis.

McCain housing proposal: Easier said than done (AP)
AP - Ordering the government to buy up bad mortgages to cut homeowners' monthly payments might sound good, but experts are skeptical. They say the plan John McCain is promoting is unlikely to solve the housing crisis that's pushing the economy toward recession.

AIG getting fresh billions from Fed, defends event (Reuters)
Reuters - American International Group Inc could get nearly $38 billion in fresh cash under a program announced by the Federal Reserve on Wednesday, as the insurer tried to fend off criticism of a lavish event held days after getting an initial $85 billion government loan.

BlackRock, Pimco bid to manage bailout assets: report (Reuters)
Reuters - BlackRock Inc and Pacific Investment Management Co (Pimco) are bidding to manage mortgage-backed assets in the U.S.'s $700 billion financial bailout, Bloomberg news agency said, citing people familiar with the matter.

The Fed, the Crisis, and Your Portfolio (BusinessWeek Online)
BusinessWeek Online - Financial advisers are usually an unflappable bunch. When the markets are wild, investors turn to their financial planners for calm, consistent advice: Stick to the plan, think long term, don't do anything rash. Advisers have studied their history and know that markets go up, down, and sideways; proper investing requires patience.

Obama slams 'risky' McCain mortgage plan (AFP)
AFP - Barack Obama slammed John McCain's plan to buy up 300 billion dollars in bad mortgages as "risky" on Thursday, and warned his White House rival was offering "erratic" leadership at a time of crisis.

McCain again raises Obama's ties with 1970s radical (Reuters)
Reuters - Down in opinion polls, Republican presidential nominee John McCain pressed his effort to raise doubts about Barack Obama's character on Thursday with a fresh attack on his Democratic rival's contacts with a former left-wing radical who became a college professor.

Japan's Yamato Life Insurance files for protection: report (AFP)
AFP - Japan's Yamato Life Insurance is in the process of filing for bankruptcy protection, Jiji Press reported Friday.

They Warned Us About the Mortgage Crisis (BusinessWeek Online)
BusinessWeek Online - More than five years ago, in April 2003, the attorneys general of two small states traveled to Washington with a stern warning for the nation's top bank regulator. Sitting in the spacious Office of the Comptroller of the Currency, with its panoramic view of the capital, the AGs from North Carolina and Iowa said lenders were pushing increasingly risky mortgages. Their host, John D. Hawke Jr., expressed skepticism.

China's communists set to approve key land reforms (AFP)
AFP - China's ruling Communist Party was expected Sunday to approve a major economic reform plan that would let farmers trade and mortgage their right to land and bolster the nation's food security.

HBOS says takeover by Lloyds TSB still on (Reuters)
Reuters - Britain's biggest mortgage provider HBOS Plc said the takeover of the bank by Lloyds TSB remained on, rejecting a report on Sunday that the deal had collapsed.

They Warned Us About the Mortgage Crisis (BusinessWeek Online)
BusinessWeek Online - More than five years ago, in April 2003, the attorneys general of two small states traveled to Washington with a stern warning for the nation's top bank regulator. Sitting in the spacious Office of the Comptroller of the Currency, with its panoramic view of the capital, the AGs from North Carolina and Iowa said lenders were pushing increasingly risky mortgages. Their host, John D. Hawke Jr., expressed skepticism.

Spain's Banco Santander buying rest of Sovereign (AP)
AP - Spain's Banco Santander SA is taking its New World expansion northward. Already with a major presence in Latin America, the Madrid-based bank on Monday said it is buying the three-quarters stake in Philadelphia-based thrift Sovereign Bancorp Inc. that it doesn't already own for $1.9 billion.

Bush, Paulson take new approach to economic crisis (AP)
AP - The Bush administration's latest effort to resolve the financial crisis embraces an approach it had resisted just a few weeks ago.

Survey: Blacks save much less in retirement plans (AP)
AP - In the midst of historic volatility on Wall Street there is a continuing trend of blacks saving and investing less than whites, according to a survey released Wednesday. The difference is attributed to various social and cultural reasons such as getting less exposure to personal finance concepts and advice.

JPMorgan profit plummets on loan losses (Reuters)
Reuters - JPMorgan Chase & Co's quarterly profit fell 84 percent, due to mark-downs on underperforming loans, but the results still beat analysts' forecasts.

JPMorgan profit sinks as credit deteriorates (AP)
AP - JPMorgan Chase & Co.'s profit tumbled 84 percent in the third quarter after it took big hits from souring mortgage investments, leveraged loans and home loans.

AIG lobbying to relax oversight rules: report (Reuters)
Reuters - Insurance giant American International Group Inc is spending money to lobby states to soften new controls on the mortgage industry, the Wall Street Journal said.

Merrill 3Q loss widens on mortgage-related charges (AP)
AP - Merrill Lynch says it third-quarter loss widened as it took more than $12 billion in charges from the sale of mortgage-related investments and fallout from the continued credit crisis.

McCain, Obama begin final sprint after last debate (Reuters)
Reuters - Republican John McCain and Democrat Barack Obama opened a 19-day sprint to Election Day on Thursday after a contentious final debate that featured aggressive attacks by McCain on Obama's campaign tone and tax plans.

September housing starts fall to new 17-1/2 year low (Reuters)
Reuters - Construction starts on new homes fell to a new 17-1/2 year low in September as builders scaled back amid a worsening housing slump and growing turmoil in financial markets that helped pushed permits for new homes to a nearly 27-year low.

Wall Street cuts losses amid bargain-hunting (Reuters)
Reuters - Stocks cut losses on Friday and the Nasdaq briefly turned positive as a search for bargains by investors tempered recession worries.

AP IMPACT: Mortgage firm arranged stealth campaign (AP)
AP - Freddie Mac secretly paid a Republican consulting firm $2 million to kill legislation that would have regulated and trimmed the mortgage finance giant and its sister company, Fannie Mae, three years before the government took control to prevent their collapse.



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