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Personal Finance News 11/2008

Rep Frank targets mortgage service legal pacts (Reuters)
Reuters - Congress needs to tackle legal obstacles that prevent mortgage servicing companies from doing more to help distressed borrowers stay in their homes, the head of a U.S. congressional committee said on Wednesday.

Many mortgage indictments seen under Obama (Reuters)
Reuters - Federal criminal probes into mortgage lending will likely produce many indictments under Barack Obama's presidency, legal experts said on Wednesday.

Stocks plunge for third straight session (AP)
AP - An increasingly despondent Wall Street fell for the third straight session Wednesday as investors absorbed another series of dismal corporate reports and news that the government won't buy banks' soured mortgage assets after all. The Dow Jones industrials dropped more than 410 points, and all the major indexes lost more than 4 percent.

U.S. backs away from plan to buy bad assets (Reuters)
Reuters - The Bush administration on Wednesday largely abandoned its plan to buy up toxic mortgage assets and said it will focus its $700 billion financial bailout fund on making direct investments in financial institutions and shoring up consumer credit markets.

US shifts rescue away from buying toxic mortgage assets (AFP)
AFP - US authorities shifted the focus of a massive financial rescue plan, scrapping plans to buy up toxic mortgage assets and calling for help in restoring credit outside the banking sector.

Mandel: Paulson's Shift Is Just a Start (BusinessWeek Online)
BusinessWeek Online - Listening to Hank Paulson's Nov. 12 speech, one is impressed both by his flexibility and a barely controlled underlying sense of panic. In a few short weeks, the Treasury Secretary has gone from a bailout plan focused solely on using $700 billion to buy up mortgage-backed securities to one that may not spend any money at all on mortgage-backed securities. Instead, as he announced Wednesday, much of the remaining money will be used to support consumer loan markets that have frozen up -- credit-card debt, student loans, and auto loans. ...

Ranieri's Franklin Bank files Chapter 7 bankruptcy (Reuters)
Reuters - Franklin Bank Corp , the lender founded by mortgage securities pioneer Lewis Ranieri, filed for bankruptcy protection and plans to liquidate, after federal regulators seized its banking unit.

Mortgage rates drop for second week (AP)
AP - Mortgage rates dropped for a second straight week, reflecting the impact the weakening economy is having on financial markets.

Lenders criticize gov't mortgage aid program (AP)
AP - Hundreds of lenders told federal housing officials Thursday that a $300 billion mortgage aid program requires too many losses for consumers and lenders to realistically help 400,000 Americans avoid foreclosure.

Recession gloom raises stakes for crisis summit (AFP)
AFP - New US data Thursday showed an alarming drop in trade and Germany officially plunged into recession as gloom deepened ahead of a Washington summit on the worldwide economic crisis.

Budget deficit hits record; jobless claims surge (AP)
AP - The nation's financial picture grew darker Thursday, a day marked by breathtaking numbers: a quarter-trillion-dollar budget deficit for a single month and projections of up to $1 trillion for a year, a half-million new applications for unemployment benefits and a 900-point swing on Wall Street.

GSE chief says mortgage aid plan should be model (Reuters)
Reuters - U.S. mortgage finance companies should soon adopt a foreclosure prevention plan developed by Fannie Mae and Freddie Mac to ease loan terms for troubled borrowers, the companies' overseer said on Thursday.

Subprime: Borne of Sleaze, Bribery, and Lies (BusinessWeek Online)
BusinessWeek Online - It may seem like ancient history now, but not long ago the mortgage industry was turning ordinary people into millionaires. One of them was Sharmen Lane, a high school dropout who, like many other young women during the boom, found her way into an obscure banking job with the clunky title "mortgage wholesaler." Her experience -- and the experiences of other wholesalers like her -- offers a glimpse into the recklessness and indulgence that drove the industry to ruin.

Damage Control at Insurance Companies (BusinessWeek Online)
BusinessWeek Online - Individual investors aren't the only ones scared to look at their portfolios. Insurance giants are also watching their holdings wither, a situation that could have serious implications for their customers and the markets. The biggest independent life insurer, MetLife, reported total paper losses of $12.2 billion on its $340 billion portfolio. "You have to plan for things to be depressed for the next few quarters at a minimum," says Steven A. Kandarian, chief investment officer at MetLife.

Freddie Mac loses $25.3 billion, seeks US infusion (AFP)
AFP - Freddie Mac, one of the mortgage finance giants taken over by the government earlier this year, reported Friday a quarterly loss of 25.3 billion dollars as it asked for a fresh capital infusion.

Bush names prosecutor as TARP inspector general (Reuters)
Reuters - President George W. Bush intends to nominate Assistant U.S. Attorney Neil Barofsky to be the special inspector general for the Troubled Assets Relief Program at the Treasury Department, the White House said on Friday.

FDIC says plan could help 1.5 million keep homes (AP)
AP - Publicly breaking with the Bush administration's official stance, the Federal Deposit Insurance Corp. proposed Friday to use $24 billion in government funding to help 1.5 million American households avoid foreclosure.

Freddie seeks gov't aid after $25.3B loss (AP)
AP - Freddie Mac is asking for an initial injection of $13.8 billion in government aid after posting a massive quarterly loss Friday.

NY prosecutor picked to serve as bailout watchdog (AP)
AP - The young prosecutor tapped to monitor the $700 billion financial rescue plan has brought down Colombian drug traffickers, gone after swindling corporate executives and now heads the mortgage fraud unit for the U.S. attorney's office in Manhattan.

Bulk of top Merrill brokers to join BoA (Reuters)
Reuters - Merrill Lynch & Co said on Friday that the majority of its best-performing financial advisors will join Bank of America Corp when that bank buys Merrill at the end of the year.

Genworth in deal to buy bank, seeks TARP money (Reuters)
Reuters - Life and mortgage insurer Genworth Financial Inc said on Sunday it applied for capital under a U.S. government program, after reaching a deal to buy a bank, bringing it under federal regulation.

Postal Service investigates boss's VIP mortgage (AP)
AP - The Postal Service is investigating whether the nation's postmaster general improperly received a sweetheart deal on a mortgage from Countrywide Financial Corp., the chairman of the service's governing board said.

Freddie Mac could lose $20-$40 billion in 2009: Friedman (Reuters)
Reuters - Freddie Mac could post losses totaling $20 billion to $40 billion in 2009, hurt by higher credit costs and write-downs in mortgage assets, an analyst at Friedman Billings Ramsey said.

Sen. Durbin to seek mortgage bankruptcy change (Reuters)
Reuters - A senior U.S. senator on Monday introduced legislation to let judges alter the terms of distressed mortgages in bankruptcy cases, reviving a controversial proposal meant to help troubled homeowners, a said an aide to the lawmaker.

Nominee for overseer of bailout faces senators (AP)
AP - President George W. Bush's choice to be the federal watchdog over the $700 billion bailout for banks and other financial companies promised Monday to use his experience prosecuting mortgage and securities fraud to keep Congress apprised if the money is being misused.

Regulator halts Fannie housing fund contributions (Reuters)
Reuters - Fannie Mae , the largest provider of money for U.S. home mortgages, on Tuesday said its federal regulator suspended a mandate to set aside money for a housing trust fund.

Lawmakers press Paulson on bailout plan changes (AP)
AP - Faced with exasperated lawmakers upset by shifts in bailout strategy, Treasury Secretary Henry Paulson launched a spirited defense Tuesday of his handling of the $700 billion program and expressed fresh reservations about tapping the pool for mortgage guarantees to relieve skyrocketing home foreclosures.

Lawmakers, Treasury lock horns on foreclosures (Reuters)
Reuters - Treasury Secretary Henry Paulson and members of Congress clashed on Tuesday over the best use for the $700-billion financial bailout fund, with lawmakers demanding money to stem a national wave of mortgage foreclosures.

October housing starts at record low (Reuters)
Reuters - Construction starts on new homes fell to a record low in October, as did new applications for building permits, a report by the Commerce Department showed on Wednesday, signaling that the national housing downturn may extend well into the future.

Stocks flat as energy gains offset economic woe (Reuters)
Reuters - Stocks were little changed after the open on Wednesday as gains in energy and commodity shares offset diminishing prospects for a U.S. auto industry government rescue in a slumping global economy.

Mortgage application volume falls 6.2 pct (AP)
AP - Mortgage application volume fell 6.2 percent during the week ended Nov. 14, according to the Mortgage Bankers Association's weekly application survey.

Homebuilder, REIT shares tumble as recession spreads (Reuters)
Reuters - The shares of big U.S. homebuilders and real estate companies alike slumped on Wednesday as housing starts fell to a record low and concerns spread the commercial real estate market is going the way of residential.

Kashkari: Consumer credit help promising step (Reuters)
Reuters - Actions to support consumer lending could be a productive next step to help repair financial markets, Treasury Department financial rescue package administrator Neel Kashkari said on Wednesday.

Housing agency loosens foreclosure aid rules (Reuters)
Reuters - The U.S. Department of Housing and Urban Development will loosen terms of its foreclosure-prevention effort so that the program, meant to backstop $300 billion in home loans, can be more effective, the agency said on Wednesday.

MetLife says commercial mortgage portfolio safe (Reuters)
Reuters - U.S. life insurer MetLife Inc disclosed information about its commercial mortgage portfolio on Wednesday in an effort to soothe investors that have become increasingly skittish about investments by insurers in commercial property debt.

U.S. probing Golden West lending, sale: prosecutor (Reuters)
Reuters - The government is investigating if homeowners were misled by California bank and mortgage issuer Golden West Financial, which was acquired by Wachovia Corp -- another possible victim.

Senate to probe bond-ratings firms: report (Reuters)
Reuters - A U.S. Senate subcommittee is opening a probe into causes of the global financial crisis, focusing in part on whether bond-ratings firms, driven by conflicts of interest, boosted mortgage investments which have since collapsed, the Wall Street Journal said.

October's Drop in Prices and Housing Starts (BusinessWeek Online)
BusinessWeek Online - The current U.S. downturn continues to generate remarkable moves in economic data. Consider the reports on U.S. consumer prices and housing starts for October, released on Nov. 19: The headline consumer price index (CPI) registered its largest monthly decline in 61 years, while housing starts reached the slowest pace of activity in the history of this data series.

UK mortgage lending down 44 pct from a year ago (AP)
AP - Mortgage lending in Britain was down 44 percent in October compared to a year ago, further evidence the economic downturn is hurting an already weak property market, the Council of Mortgage Lenders said Thursday.

China fund in talks for stake in AIG unit: report (Reuters)
Reuters - A consortium led by sovereign wealth fund China Investment Corp is in talks to buy a stake of up to 49 percent in American Life Insurance Co, a unit of U.S. insurance company American International Group , the Nikkei financial daily reported.

Banks, raters face subprime lawsuits and new rules (Reuters)
Reuters - The U.S. subprime mortgage crisis has sparked more than 250 class action suits against Wall Street banks and rating companies and will lead to rising regulation in 2009, top litigators said on Thursday.

Fannie Mae, Freddie Mac to suspend US home foreclosures (AFP)
AFP - The two US mortgage finance giants, Fannie Mae and Freddie Mac, said on Thursday they halt home foreclosures until early January as they modify loans to help keep owners in their homes.

Fannie Mae, Freddie Mac halting foreclosures (AP)
AP - Mortgage finance companies Fannie Mae and Freddie Mac are suspending foreclosures for about 16,000 households during the holiday season.

Fannie Mae, Freddie Mac suspend some foreclosures (Reuters)
Reuters - Fannie Mae and Freddie Mac, the two biggest U.S. home loan finance companies, on Thursday said they would suspend foreclosures of occupied homes until early 2009, as the government moves to stem the tide of home losses plaguing the economy.

UK home repossessions up 12 pct in 3Q from 2Q (AP)
AP - Home repossessions in Britain jumped 12 percent to 11,300 in the third quarter from the previous quarter, the Council of Mortgage Lenders said Friday, more evidence that the financial crisis is taking its toll on households and the ailing housing market.

FHA-Backed Loans: The New Subprime (BusinessWeek Online)
BusinessWeek Online - As if they haven't done enough damage. Thousands of subprime mortgage lenders and brokers -- many of them the very sorts of firms that helped create the current financial crisis -- are going strong. Their new strategy: taking advantage of a long-standing federal program designed to encourage homeownership by insuring mortgages for buyers of modest means.

'Help' Can Be Costly (BusinessWeek Online)
BusinessWeek Online - The implosion of the subprime mortgage market has been a boon to loan-modification consultants who promise to help borrowers refinance and get back on the road to financial stability.

Your Life Insurance Policy May Not Be Protected (BusinessWeek Online)
BusinessWeek Online - With the financial system in crisis, investors increasingly rely on government guarantees to protect their money. Bank accounts are backed by the Federal Deposit Insurance Corp. and its $53 billion war chest. After decades on their own, money market funds now are backed by the U.S. Treasury. And life insurance policies and annuities? They're backed by state guaranty associations. There's only one hitch: The states have virtually no cash on hand and must rely on promises to pay made by healthy life insurers.

Ask AP: Importance of housing starts, honeybees (AP)
AP - American farmers have long worried about the declining population of honeybees, a key crop pollinator. But honeybees originally came from Europe, so can't U.S. farms get by without them — with a little help from good old American bugs whose ancestors were here before Columbus?

Obama may delay high-income tax-cut repeal: aide (Reuters)
Reuters - President-elect Barack Obama may consider delaying an election promise - to roll back tax cuts on high-income Americans - as part of his economic recovery strategy, a senior aide and an adviser said on Sunday.

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