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Personal Finance News 06/2009



U.S. consumer spending eases, income surges (Reuters)
Reuters - U.S. consumer spending fell in April from March, despite personal income posting the largest increase in 11 months, a government report said on Monday, showing activity in the second quarter getting off to a slow start.

GMAC bank unit denies paying unfair interest rates (Reuters)
Reuters - Ally Bank, the banking unit of auto and mortgage lender GMAC, on Monday denied competitors' complaints that it is paying excessive interest rates to attract deposits while on a government-funded lifeline.

US income rise fails to ignite consumer spending (AFP)
AFP - US personal income posted a surprise jump in April fueled by government stimulus and tax breaks but wary consumers were reluctant to spend in the midst of prolonged recession, new data showed Monday.

Mortgage delinquencies seen rising through 2009 (AP)
AP - The rate at which people are falling behind on their mortgage payments went up for the ninth straight quarter in the first three months of 2009, and is expected to keep rising through the end of the year, according to credit reporting agency TransUnion.

Fannie Mae sells $1 billion bills at lower rates (Reuters)
Reuters - Fannie Mae on Wednesday said it sold $1 billion in bills at lower interest rates compared with sales of the same maturities a week ago.

Sallie Mae CEO sees loan losses peaking (Reuters)
Reuters - Student lender Sallie Mae expects loan losses to peak in 2009, although charge-offs are likely to stay high, Chief Executive Albert Lord said at a conference on Wednesday.

U.S. recovery hopes face doubts on jobs, mortgages (Reuters)
Reuters - The United States may have hit a bump on the road to economic recovery, according to data released on Wednesday, with half a million private sector jobs lost in May and mortgage applications falling last week in the face of rising interest rates.

Sallie Mae CEO sees loan losses peaking in 2009 (AP)
AP - Sallie Mae CEO Albert Lord said Wednesday he expects loan charge-offs at the student lending company to peak in 2009 and remain high next year.

Abramoff, gov't disputing $500,000 tax refund (AP)
AP - Former lobbyist Jack Abramoff and the Justice Department are disputing a tax refund he recently received worth more than $500,000 and whether it should be used to pay court-ordered restitution or his family's massive debts.

U.S. bond manager pledges purchases in Fed's TALF (Reuters)
Reuters - Standish Mellon Asset Management LLC, a bond manager overseeing $55 billion, on Thursday said it would launch investments in a federal program to boost consumer and commercial mortgage debt markets.

Mortgage rates above 5 pct for 1st time in 3 mos (AP)
AP - Rates on 30-year home loans surged above 5 percent for the first time in nearly three months this week as investors pushed up rates on long-term government debt, which is closely tied to mortgage rates.

Ex-Countrywide CEO accused on fraud (AFP)
AFP - US regulators Thursday filed civil fraud charges against the former chief executive of failed mortgage giant Countrywide Financial, saying he misled investors about the company's risky loans.

Bond yields rise after better jobless claims data (AP)
AP - Bond yields are heading higher again, a troubling trend for potential homebuyers or mortgage holders looking to refinance.

Summary Box: Mozilo accused of civil fraud (AP)
AP - FORMER COUNTRYWIDE CEO CHARGED: The government has accused Angelo Mozilo and two other former executives of the fallen mortgage lender of civil fraud and insider trading. The three dispute the civil charges by the Securities and Exchange Commission.

Countrywide's Mozilo charged with fraud (Reuters)
Reuters - Angelo Mozilo, who built the largest U.S. mortgage lender, was charged with securities fraud and insider trading on Thursday, making him the most prominent defendant in investigations into the U.S. subprime mortgage crisis and housing bust.

SEC charges ex-Countrywide CEO Mozilo with fraud (AP)
AP - Angelo Mozilo, the man who rode the housing boom to build Countrywide Financial Corp. into a California colossus of high-risk mortgage lending, has been charged with civil fraud and illegal insider trading by federal regulators who accuse him of deceiving shareholders and profiting on confidential information.

Feds hunt fugitive broker (AP)
AP - A former Wall Street broker facing criminal charges linked to the subprime mortgage meltdown has become the target of an international manhunt, federal authorities said Friday.

Can't refinance? Try your congressman (AP)
AP - Can't afford your mortgage payment? If the bank won't take your call, your member of Congress just might.

Countrywide exec often warned about mortgage risks (Reuters)
Reuters - John P. McMurray made it clear to his Countrywide Financial Corp bosses that they were playing a dangerous game with risk. But they didn't listen.

ALL BUSINESS: Bond-market rout lifts mortgage cost (AP)
AP - The Federal Reserve announced a $1.2 trillion plan three months ago designed to push down mortgage rates and breathe life into the housing market.

Sunstone prepared to turn over W San Diego to bank (AP)
AP - Sunstone Hotel Investors Inc. said Sunday it will default on the June mortgage payment for its swanky W Hotel San Diego property and turn over the 258-room downtown hotel to lenders, after failing to lower interest payments.

A Housing Recovery: Not So Fast (BusinessWeek Online)
BusinessWeek Online - Stocks of homebuilders have had an impressive run recently, thanks to a stream of improving macroeconomic data, including home sales and consumer confidence, climbing an average of 38% since March 9. But will the recovery last? Recent gains in long-dated U.S. Treasury yields augur rising mortgage rates, while the likelihood of increasing foreclosures could further bloat the housing supply in the months ahead.

Massachusetts settles with mortgage lender (AP)
AP - A bankrupt California-based subprime mortgage lender has agreed to pay $10 million to settle allegations of unfair practices that contributed to the current spike in Massachusetts home foreclosures.

NY AG targets mortgage modification firms (AP)
AP - New York's attorney general says consumers do not have to pay upfront fees to companies that promise help in staving off home foreclosures.

Some bright spots emerge in tough job market (AP)
AP - Signs of stabilization in the job market are emerging, according to several private surveys, as restaurants, mortgage servicers and health centers step up hiring.

Countrywide exec warned on loans at Fed '06 meeting (Reuters)
Reuters - The chief risk officer of Countrywide Financial Corp, the poster-child company for the loose U.S. home loans that staggered the world economy, was warning against them even when it put him at odds with his own company -- and with Fed chairman Ben Bernanke.

The Fed's Mortgage Muddle (BusinessWeek Online)
BusinessWeek Online - Talk about a negative feedback loop: It looks like investors' expectations for an economic recovery could end up delaying that very scenario. Fear of inflation and concerns over the long-term impact of ballooning government debt have been driving up yields on 10-year U.S. Treasury notes, which reached 3.91% on June 8 before easing back to 3.84% the next day.

U.S. mortgage demand withers as loan rates spike (Reuters)
Reuters - Spiking U.S. mortgage rates drove down total home loan applications last week as demand for refinancing shriveled to the lowest level since November, the Mortgage Bankers Association said on Wednesday.

U.S. financial planner accused of $6 million fraud (Reuters)
Reuters - A U.S. money manager who ran a financial planning firm has been arrested on charges of defrauding clients of more than $6 million by stealing from their accounts, authorities said on Wednesday.

U.S. mortgage rates erase Fed's handiwork (Reuters)
Reuters - Mortgage rates leaped with bond yields in the past week to the highest since November, erasing strides made by a massive government program to help revive U.S. housing.

Mortgage rates rise again (AP)
AP - Rates for 30-year home loans jumped to the highest level in seven months this week, leading to a slowdown in refinancing activity, Freddie Mac said Thursday.

Sen. Dodd urges consumer finance protection agency (Reuters)
Reuters - U.S. Senate Banking Committee Chairman Christopher Dodd on Thursday called for creation of an independent consumer protection agency as part of wider reforms to the U.S. financial regulatory structure.

NJ mortgage company president guilty in $139M scam (AP)
AP - The former president of a New Jersey mortgage company has pleaded guilty in a $139 million fraud scheme that bankrupted his firm.

Higher rates, oil prices threaten US recovery (AFP)
AFP - Rising bond yields are taking a toll on home mortgage and corporate lending rates and together with jumping oil prices are threatening the expected US recovery from prolonged recession.

Court to determine if bankruptcy hearing needed (AP)
AP - The Supreme Court will decide whether student loans can be dismissed through bankruptcy with just a notice to the collector instead of a hearing proving that paying the money back would cause an "undue hardship."

U.S. home-builder sentiment slips in June (Reuters)
Reuters - U.S. home-builder sentiment slipped in June, a private survey showed on Monday, as higher mortgage rates and an ongoing credit crunch dampened expectations for the sector.

U.S. homebuilder sentiment lower in June (Reuters)
Reuters - U.S. homebuilder sentiment slipped in June, a private survey showed on Monday, as higher mortgage rates and an ongoing credit crunch damped expectations for the sector.

U.S. housing starts, permits jump in May (Reuters)
Reuters - New U.S. housing starts and permits rebounded in May from record lows as ground-breaking for multifamily units surged after tumbling the prior month, a government report showed on Tuesday.

Wall Street loses ground on recovery worry (Reuters)
Reuters - The Dow and the S&P 500 dropped to session lows on Tuesday, while the Nasdaq trimmed gains, as investors worried that the economic recovery's pace might not be as strong as initially hoped.

U.S. housing starts jump in May, inflation muted (Reuters)
Reuters - New U.S. housing starts and permits surged in May from record lows, while wholesale prices were muted despite higher gasoline prices, indicating the economy was moving closer to the end of a deep recession.

Obama to set up US consumer protection agency (AFP)
AFP - President Barack Obama plans to set up a federal consumer financial protection agency to shield Americans from predatory practices from credit card firms, banks and mortgage markets, an official said.

Treasury provides $3B more for foreclosure program (AP)
AP - The government will provide another $3.1 billion to a group of mortgage servicing companies as an incentive to modify loans to combat record levels of foreclosures.

Republican demands BofA-Countrywide loan emails (Reuters)
Reuters - Bank of America has a Wednesday deadline to disclose any special mortgage terms the bank's Countrywide Financial unit gave to politically influential customers over an eight-year period, a senior Republican said on Tuesday.

Meltdown 101: Reform plan's impact on consumers (AP)
AP - American consumers have fallen victim to one financial scandal after another in the past decade, from accounting fraud at Enron to illegal late trading by mutual funds to the subprime mortgage meltdown.

Housing Starts: Up is Better Than Down (BusinessWeek Online)
BusinessWeek Online - A greater number of general contractors have been dusting off work boots and hitching up tool belts. Single-family home starts jumped 7.5% in May, the third consecutive monthly rise, indicating that new home construction might be at -- or close to -- a bottom.

Rise in rates hammers mortgage applications (Reuters)
Reuters - U.S. mortgage applications fell for a fourth consecutive week, with overall demand plunging to its lowest level in nearly seven months, data from an industry group showed on Wednesday.

E-Trade plans stock offer, debt exchange (AP)
AP - Struggling online brokerage and bank E-Trade Financial Corp. is raising capital and exchanging debt as it tries to climb out from under mounting loan losses tied to souring mortgage investments.

Deutsche, Morgan tapped for AIA IPO role: sources (Reuters)
Reuters - Bailed out U.S. insurer American International Group has chosen Deutsche Bank (DBKGn.DE) and Morgan Stanley as joint global coordinators for the more than $4 billion IPO of its Asian life insurance unit, banking sources said on Thursday.

Sallie Mae shares soar on government contract (AP)
AP - Shares of Sallie Mae soared in premarket activity Thursday after the Department of Education selected the student lender and three other companies to service parts of $550 billion in outstanding federal student loans and future loans owned by the government.

Dems work to push banking overhaul quickly (AP)
AP - President Barack Obama's plan to transform the Federal Reserve into a super-regulator ran into skepticism Thursday from lawmakers who worry that the central bank is not the best suited to keep an eye on firms deemed so big and influential that their demise could hurt the economy.



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