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Personal Finance News 10/2009

Lawmaker seeks group liability for rating agencies (AP)
AP - A key House lawmaker wants to make credit rating agencies — widely criticized for failing to give investors adequate warning of the risks in subprime mortgage securities that triggered the financial crisis — collectively liable for inaccuracies.

Mortgages rates dip below 5 percent (AP)
AP - Rates on 30-year home loans dropped below 5 percent for the first time in four months, but still remained above this year's record low, Freddie Mac said Thursday.

U.S. Treasury set to finalize home "short sales" plan (Reuters)
Reuters - The U.S. Treasury will soon finalize a plan to expand its incentives for mortgage companies to include "short sales" as a way to stem a rising tide of foreclosures, according to a Treasury spokeswoman.

IBM to buy Wilshire Credit's operating assets (AP)
AP - IBM Corp. says that its mortgage servicing subsidiary signed an agreement with Bank of America Corp. to buy the main operating assets of Wilshire Credit Corp.

Bank of America pledges halt on card rate hikes (Reuters)
Reuters - Bank of America said it will not raise rates or change terms on consumer credit card accounts ahead of reform legislation slated to go into effect early next year, according to a letter released by a lawmaker on Tuesday.

Fannie, Freddie plan to aid mortgage banks: report (Reuters)
Reuters - U.S. government-controlled mortgage finance companies Freddie Mac and Fannie Mae are working on a program to help independent mortgage banks get access to short-term credit needed to make home loans, the Wall Street Journal said, citing people familiar with the matter.

Mortgage applications surge to 4-month high (Reuters)
Reuters - U.S. mortgage applications surged last week to their highest since mid-May as consumers sought to take advantage of the lowest interest rates in months, data from an industry group showed on Wednesday.

Mortgage rates below 5 percent fuel re-fi boom (AP)
AP - Every dollar counts in this economy.

Obama loan relief plan hits goal early (AP)
AP - The Obama administration said Thursday that 500,000 homeowners have had their loans modified under its mortgage relief plan, reaching a goal set over the summer.

Mortgage rates remain below 5 percent (AP)
AP - Average rates for 30-year home loans stayed below 5 percent for the second-straight week, kick-starting refinancing activity, Freddie Mac said Thursday.

Meltdown 101: What is a short sale of a home? (AP)
AP - For a homeowner who needs to sell but has a mortgage balance higher than the property value, one option is something called a "short sale."

Home-Foreclosure Rescue Is Falling Short, Critics Say (BusinessWeek)
BusinessWeek - The Treasury Dept. is basking in the latest tally of homeowners getting a break through its core foreclosure-prevention program. But its data show the number of new mortgage modifications actually fell in September, and government watchdogs are raising concerns that the program is ill-suited to the problems of the housing market.

What's Ahead for Financials (BusinessWeek)
BusinessWeek - Financial-services stocks have come roaring back since their collapse last fall. Are the gains sustainable? For insight on smart ways to play such stocks now, Personal Finance editor Lauren Young spoke with Anton Schutz, manager of the top-ranked Burnham Financial Services Fund, which delivered an annualized gain of 14.3% over the past decade.

Watchdog doubts goals of Obama loan relief plan (AP)
AP - The Obama administration's effort to help homeowners avoid foreclosure may not achieve its goal of helping 3 million to 4 million borrowers and may simply delay mortgage defaults for many, a government watchdog group says.

3 tips to start building a college savings account (AP)
AP - A new survey by online brokerage TD Ameritrade says college is the top reasons teens save their money. The results were a pleasant surprise to educators who are focusing on getting personal finance taught in schools. The survey indicated 78 percent of teens say they want to share the cost of college with their parents.

JPMorgan, others to pay $100M settlement (AP)
AP - JPMorgan Chase & Co. and two other investment banks have agreed to pay $100 million to settle a lawsuit over their contribution to investor losses in the collapse of American Business Financial Services Inc., the bankruptcy trustee's lawyer said Friday.

What's Ahead for Financials (BusinessWeek)
BusinessWeek - Financial-services stocks have come roaring back since their collapse last fall. Are the gains sustainable? For insight on smart ways to play such stocks now, Personal Finance editor Lauren Young spoke with Anton Schutz, manager of the top-ranked Burnham Financial Services Fund, which delivered an annualized gain of 14.3% over the past decade.

AIG to sell Taiwan insurance unit for $2.15 billion (Reuters)
Reuters - American International Group is to sell its Taiwan life insurance unit for $2.15 billion, marking the largest disposal since a U.S. government bailout saved the insurer from collapse last year.

MBA: Foreclosures, unemployment to peak next year (AP)
AP - Foreclosures will peak by the end of next year and unemployment will climb above 10 percent as the housing market and U.S. economy grapple with the aftermath of the recession, the Mortgage Bankers Association's chief economist said Tuesday.

AP - Fed minutes: Officials were conflicted over program to drive down mortgage rates, aid housing.

$6.4M fine in Ohio for illegal practice of law (AP)
AP - The Ohio Supreme Court on Wednesday ordered two estate planning companies and their co-owners to pay nearly $6.4 million, the state's largest-ever fine for the fraudulent practice of law.

Fund managers face trial in mortgage market case (AP)
AP - Two former Bear Stearns hedge fund managers went on trial Wednesday in one of the few criminal cases brought against Wall Street executives in connection with the housing market collapse.

Fed officials were conflicted over revival program (AP)
AP - Amid uncertainties about strength of the budding recovery, Federal Reserve policymakers last month were conflicted over whether to expand or cut back a program intended to drive down mortgage rates and prop up the housing market, according to a document released Wednesday.

Foreclosures fall for second straight month (Reuters)
Reuters - U.S. mortgage foreclosure filings fell for a second straight month in September, but remained near a record high, amid ongoing and sweeping efforts to keep borrowers in their homes, a report released on Thursday showed.

41 people charged in mortgage fraud in NY (AP)
AP - Federal authorities have charged 41 people in a mortgage fraud involving tens of millions of dollars across New York state.

Ex-Bear Stearns manager did not lie: lawyer (Reuters)
Reuters - Former Bear Stearns hedge fund manager Matthew Tannin, on trial for fraud and charges he lied to investors early in the financial crisis, could not have foreseen problems in the subprime mortgage market in 2007, his lawyer said in opening his defense on Thursday.

Rates on 30-year loans inch up, to 4.92 percent (AP)
AP - Rates for 30-year home loans have inched up, but remained below 5 percent for the third-straight week as government efforts to aid the housing market continued to keep rates low.

AIG sees $1.4 billion loss on Taiwan unit sale (Reuters)
Reuters - American International Group Inc said on Thursday it expects to recognize a loss of about $1.4 billion on the sale of Nan Shan Life Insurance Co, its life insurance unit in Taiwan.

INSIDE WASHINGTON: Bank errors mar mortgage relief (AP)
AP - Towana Gooch, a single mom who lives with her 10-year old daughter, was on the verge of losing her town house in suburban Maryland after her mortgage lender kicked her out of a government loan modification program. The problem, she says she was notified, was a 7-cent error.

U.S. charges 41 in suspected mortgage fraud scheme (Reuters)
Reuters - U.S. authorities charged 41 people in a suspected mortgage fraud scheme that cheated lenders out of more than $64 million on more than 100 New York state properties, prosecutors said on Thursday.

IRS: Retirement contributions same for 2010 (AP)
AP - The maximum contribution limits for your 401(k) and other retirement plans will stay the same next year, the IRS says.

Firm: Calif. home sales up 1 percent from August (AP)
AP - The number of homes sold in California last month ticked up last month from August, as low mortgage rates and eagerness to cash in on a soon-to-expire tax credit fueled activity in a normally sluggish time for home buying, a tracking firm said Thursday.

Consumer sentiment falls unexpectedly (Reuters)
Reuters - U.S. consumer sentiment fell unexpectedly this month on persistent worries that the "dismal" state of personal finances would not recover quickly from the worst recession in decades, a report showed on Friday.

BofA swings to $1 billion loss (Reuters)
Reuters - Bank of America Corp posted a $1 billion third-quarter loss as consumer credit woes eclipsed investment banking earnings, underlining why the bank remains on a government respirator and sending its shares down 4.2 percent.

BofA, GE results weigh, indexes fall 1 pct (Reuters)
Reuters - U.S. stocks dropped sharply on Friday after quarterly results from General Electric Co and Bank of America Corp showed that an economic recovery may be slow and bumpy, denting a four-day rally fueled by earnings optimism.

Correction: Clorox executive compensation story (AP)
AP - In an Oct. 14 story about Clorox Co.'s executive compensation, The Associated Press reported erroneously that CEO Don Knauss received more than $1 million under the company's mortgage subsidy program over three fiscal years. The amount was slightly less than $1 million and reflected total relocation-related benefits, which included the mortgage subsidy program.

Audit questions FHA's ability to screen lenders (AP)
AP - The government's mortgage insurance agency is doing a poor job of screening lenders that enter the program, an internal audit has found.

UK to tighten mortgage rules, ban "liar loans" (Reuters)
Reuters - Britain's financial regulator plans to force mortgage lenders to check the income of all borrowers, scrapping so-called "liar loans" blamed for helping to fuel bad debt problems at the heart of the credit crunch.

AP - Administration unveils new effort to provide mortgage help for thousands of homeowners.

Government unveils new mortgage help (AP)
AP - The Obama administration is unveiling a new program to provide support to state and local housing agencies to provide help to thousands of home buyers and renters.

GE, Lumber Liquidator in consumer finance accord (AP)
AP - GE Money, the consumer lending unit of General Electric Co., and Lumber Liquidators, a hardwood flooring retailer, announced Monday a multiyear consumer financing agreement.

Ahead of the Bell: Housing Starts (AP)
AP - Construction of new homes likely posted a modest gain in September although the recovery for the troubled housing sector remains bumpy.

Housing starts up, permits fall in September (Reuters)
Reuters - New construction of U.S. homes rose by less than expected in September, held back by a plunge in ground-breaking activity for multi-family homes even as single family dwellings rebounded, according to a government report on Tuesday.

US home building shows new weakness (AFP)
AFP - US housing starts grew in September but the pace was softer than anticipated while permits for construction fell sharply, government data showed Tuesday, underscoring ongoing woes in the ailing sector.

Fewer home-building permits signal weakness ahead (AP)
AP - Applications for home building permits, a gauge of future construction, fell in September by the largest amount in five months — a discouraging sign for the housing industry.

Housing, price data points to sluggish recovery (Reuters)
Reuters - Softer-than-expected U.S. housing starts last month and a drop in prices paid at the farm and factory gate pointed to an anemic economic recovery, backing views that interest rates could stay low for a while.

Wall Street sinks as housing data offsets earnings (Reuters)
Reuters - U.S. stocks dropped on Tuesday, as disappointing data on the housing market outweighed strong earnings from bellwethers Apple and Caterpillar.

Stocks drop after mixed economic data, earnings (AP)
AP - A weak report on housing starts made investors nervous that the economy will be slower to recover even as profits at many companies exceed expectations.

Meltdown 101: Housing starts show industry's woes (AP)
AP - Housing construction is crawling out of its very deep hole, but no one expects it to reach the heights hit before the housing bubble burst — at least not for a very long time.

How the major stock indexes fared on Tuesday (AP)
AP - A disappointing report on housing starts made investors nervous about the economy Tuesday and sent stocks lower even as profits at many companies exceed expectations. Stocks retreated from 2009 highs after the Commerce Department said applications for home building permits fell in September by the largest amount in five months. That is a discouraging signal for future construction.

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