Congress approved mortgage relief for 400,000 struggling homeowners Saturday as part of an election-year housing plan that also aims to calm jittery financial markets and bolster the sagging economy. President Bush said he would sign it promptly, despite reservations.
The measure, regarded as the most significant housing legislation in decades, lets homeowners who cannot afford their payments refinance into more affordable government-backed loans rather than losing their homes.
It offers a temporary financial lifeline to troubled mortgage companies Fannie Mae and Freddie Mac — pillars of the home loan market whose losses have sparked investor fears — and tightens controls over the two government-sponsored businesses.
What began as a showdown between the White House and the Democratic-led Congress over how far the government should go in rescuing homeowners evolved into a bipartisan effort that could be the last such compromise before Bush leaves office in January.
In a rare Saturday session, the Senate voted 72-13 to send the bill to the president; the House passed it Wednesday.
Bush had withdrawn his veto threat earlier in the week over $3.9 billion in neighborhood grants. He contended the money would benefit lenders who helped cause the mortgage meltdown, encouraging them to foreclose rather than work with borrowers.
"Because of the Democratic Congress' delays and the need for action now, President Bush will sign this bill when he receives it, despite our concerns with some provisions, including nearly $4 billion to help lenders, not the homeowners this legislation is intended to serve," said Tony Fratto, deputy White House press secretary.
Many Republicans, particularly those from areas hit hardest by housing woes, were eager to get behind a housing rescue as they looked ahead to tough re-election contests. Treasury Secretary Henry M. Paulson's request for the emergency power to rescue Fannie Mae and Freddie Mac helped push through the measure. So did the creation of a regulator with stronger reins on the government-sponsored companies, as Republicans long have sought.
Democrats won cherished priorities in the bargain: the aid for homeowners, a permanent affordable housing fund financed by Fannie Mae and Freddie Mac, and the neighborhood grants.
"This is far more than sending a bill to the president's desk for his signature. It's sending a message to the American people that the Congress of the United States — despite an alternative reputation — can actually get things done, and can work together to achieve a good result," said Sen. Christopher J. Dodd, chairman of the Senate Banking, Housing and Urban Affairs Committee.
Still, Republicans weren't eager to celebrate. Bush was not expected to hold a White House signing ceremony, and Senate GOP leaders didn't mention it at a news conference following the vote. In the House, more than three-quarters of Republicans voted against the bill.
Dodd, D-Conn., said he had summoned administration officials to his office next week to demand that the foreclosure rescue program be put into place quickly.
The legislation takes several approaches to curing the ailing housing market.
It aims to spare an estimated 400,000 debt-strapped homeowners, many of whom owe more their houses are worth, from foreclosure by allowing them to get more affordable mortgages backed by the Federal Housing Administration.
The FHA could insure $300 billion in such mortgages, which would be available to homeowners who showed they could afford a new loan. Banks would first have to agree to take a large loss on the existing loans in exchange for avoiding an often-costly foreclosure.
The plan also is designed to relieve a broader credit crunch that has taken hold because of rising defaults and falling home values. To free up safer and more affordable mortgage credit, the bill permanently would increase to $625,000 the size of home loans that Fannie Mae and Freddie Mac can buy and the FHA can insure. They also could buy and back mortgages 15 percent higher than the median home price in certain areas.
The measure tries to prevent blight in areas hardest hit by the housing crisis, where waves of foreclosures have left properties sitting abandoned, dragging down property values and ruining neighborhoods. It sends $3.9 billion to such neighborhoods to buy and fix up foreclosed properties.
It goes far beyond addressing the current crisis, however.
The legislation overhauls the Depression-era FHA. It requires lenders to show how high a borrower's payment could get under the terms of his mortgage. It provides $180 million in pre-foreclosure counseling for struggling homeowners.
The Treasury Department gains unlimited power, until the end of 2009, to lend money to Fannie Mae and Freddie Mac or buy their stock should they need it. The Federal Reserve takes on a new "consultative" role overseeing the companies.
The measure includes $15 billion in tax cuts, including a significant expansion of the low-income housing tax credit and a credit of up to $7,500 for first-time home buyers for houses purchased between April 9, 2008, and July 1, 2009.
Democratic leaders, recognizing that the measure could be one of the last items to become law during what's left of their abbreviated election-year schedule, tacked on an $800 billion increase, to $10.6 trillion, in the statutory limit on the national debt.
Conservative Republicans were vehemently opposed to the bill, particularly the help for Fannie Mae and Freddie Mac. Critics charge the companies enjoy lavish profits in good times and wield their outsized political clout to resist regulation while depending on the government to bail them out should they falter.
Sen. Jim DeMint, R-S.C., delayed the final vote because Democrats refused to allow him a vote on a proposal to ban the companies from lobbying or making political donations to lawmakers.
"We can't have the people who are supposed to watch over these organizations getting money from these organizations," DeMint said. "At least if we're going to ask the American taxpayer to be on the hook for billions, possibly trillions of dollars, let's stop this."
Saturday, July 26, 2008
make money in real estate?
Is it still possible to make money in real estate?
With home prices continuing to plummet, many people have finally stopped seeing their family manse as a big bottomless bag of cash. But look beyond your front door, and you'll find some alternative real-estate related opportunities that are holding up despite the current economic downturn:
• Rural land: Rising food prices, demand for corn-based ethanol and a growing desire by many urbanites for a place in the country are making rural land more valuable. In 2007 over the year before, the average value of farmland rose 19.6% in Nebraska, 20.9% in Wyoming and 22.6% in Iowa, according to a survey by the Farm Credit Services of America. In his May 22 "Country Real Estate," column, Blue Grass, Va., land consultant Curtis Seltzer observed that asking prices for rural land "in most places seem to be holding their own, and are trending up in certain markets."
• Foreign real estate: Although home price growth is slowing around the globe, some countries are still on a tear, according to GlobalPropertyGuide.com. While none of these places may be your first choice for a vacation hideaway, in the first quarter of this year, home prices rose 29% in Slovakia, 28% in China, 15% in Bulgaria, 13% in Cyprus and 9% in Australia over the same period a year earlier.
• Dockominiums: With higher gas prices, the market for both dry and wet slips for small boats has been softening. Not so for the big yachts, meaning those over 80-feet long. Real estate brokers say demand for big-boat docks is so high that having one in the backyard can double a property's value. But you don't even need a residence attached to make money: At the Ocean Reef Club in the Florida Keys, a dockominium big enough for a 100-footer sold last year for $2 million; it had sold for $700,000 in 2004. The dock market is likely to remain buoyant: A study by yacht broker Camper & Nicholsons International says that there are 3,800 mega-yachts currently afloat, and predicts the number will grow to 5,000 in just two years.
• Fractional real estate: Many people who don't want to acquire and maintain a second home in a declining market still yearn for a vacation getaway. That's a big reason why fractional real estate, where an owner buys a deeded share of a residence, is gaining popularity. In many cases, developers are creating reservation systems that allow for spontaneous visits rather than locking owners into using the unit for only certain days of the year. They are also offering upscale amenities: Harborview in Nantucket, Mass., for instance, offers a private owners' lounge, access to boats, and organized beach activities. According to NorthCourse, a real estate advisory firm based in Parsippany, N.J., fractional real estate sales reached $1.98 billion in 2007, a 20% increase over the year before.
With home prices continuing to plummet, many people have finally stopped seeing their family manse as a big bottomless bag of cash. But look beyond your front door, and you'll find some alternative real-estate related opportunities that are holding up despite the current economic downturn:
• Rural land: Rising food prices, demand for corn-based ethanol and a growing desire by many urbanites for a place in the country are making rural land more valuable. In 2007 over the year before, the average value of farmland rose 19.6% in Nebraska, 20.9% in Wyoming and 22.6% in Iowa, according to a survey by the Farm Credit Services of America. In his May 22 "Country Real Estate," column, Blue Grass, Va., land consultant Curtis Seltzer observed that asking prices for rural land "in most places seem to be holding their own, and are trending up in certain markets."
• Foreign real estate: Although home price growth is slowing around the globe, some countries are still on a tear, according to GlobalPropertyGuide.com. While none of these places may be your first choice for a vacation hideaway, in the first quarter of this year, home prices rose 29% in Slovakia, 28% in China, 15% in Bulgaria, 13% in Cyprus and 9% in Australia over the same period a year earlier.
• Dockominiums: With higher gas prices, the market for both dry and wet slips for small boats has been softening. Not so for the big yachts, meaning those over 80-feet long. Real estate brokers say demand for big-boat docks is so high that having one in the backyard can double a property's value. But you don't even need a residence attached to make money: At the Ocean Reef Club in the Florida Keys, a dockominium big enough for a 100-footer sold last year for $2 million; it had sold for $700,000 in 2004. The dock market is likely to remain buoyant: A study by yacht broker Camper & Nicholsons International says that there are 3,800 mega-yachts currently afloat, and predicts the number will grow to 5,000 in just two years.
• Fractional real estate: Many people who don't want to acquire and maintain a second home in a declining market still yearn for a vacation getaway. That's a big reason why fractional real estate, where an owner buys a deeded share of a residence, is gaining popularity. In many cases, developers are creating reservation systems that allow for spontaneous visits rather than locking owners into using the unit for only certain days of the year. They are also offering upscale amenities: Harborview in Nantucket, Mass., for instance, offers a private owners' lounge, access to boats, and organized beach activities. According to NorthCourse, a real estate advisory firm based in Parsippany, N.J., fractional real estate sales reached $1.98 billion in 2007, a 20% increase over the year before.
Horry County penny tax
International Drive will connect Highway 31 to Highway 90 but the project gets funding from a capital projects sales tax known as 'The Penny Tax'. Twelve other projects are in line first and if the money runs out the dirt road is out of luck.
The county is obligated to finish the projects until the money runs out or until seven years is up whichever comes first.
If everything goes according to schedule the county will start these road designs by February of 2009.
Horry County will hold a workshop August 5, at 6 pm to address the Aynor overpass.
The county is obligated to finish the projects until the money runs out or until seven years is up whichever comes first.
If everything goes according to schedule the county will start these road designs by February of 2009.
Horry County will hold a workshop August 5, at 6 pm to address the Aynor overpass.
Friday, July 25, 2008
existing-home sales declined in June
After gaining in May, existing-home sales declined in June with many potential buyers on the sidelines, according to the National Association of Realtors®.
Existing-home sales-including single-family, townhomes, condominiums and co-ops — fell 2.6% to a seasonally adjusted annual rate of 4.86 million units in June from a pace of 4.99 million in May, and are 15.5% lower than the 5.75 million-unit rate in June 2007.
NAR President Richard F. Gaylord, a broker in Long Beach, Calif., said there is something of a quandary in the current market. “A recent online survey of Realtors(R) shows nearly a quarter of potential home buyers are waiting on the sidelines,” he said. “However, timing the market can be very tricky, which is why home buyers should always have a long-term view to build wealth.”
Total housing inventory at the end of June rose 0.2% to 4.49 million existing homes available for sale, which represents an 11.1.-month supply at the current sales pace, up from a 10.8-month supply in May.
Lawrence Yun, NAR chief economist, said first-time home buyers are critical to the health of the housing market. “About four in 10 homes are purchased by first-time buyers, which frees existing owners to trade up,” Yun said. “With many potential first-time home buyers on the sidelines, a first-time buyer tax credit would have a significant positive impact on both housing and the economy. Combined with permanent increases to mortgage loan limits and enhancing the FHA loan program, the housing stimulus package working its way through Congress would go a long way toward helping consumers and boosting the overall economy.”
The national median existing-home price for all housing types was $215,100 in June, down 6.1% from a year ago when the median was $229,000.
Yun said there is a downward distortion in the price data. “With short sales and foreclosures accounting for approximately one-third of transactions, it’s hard to make an apples-to-apples comparison with a year ago when they were only a minor portion of the market,” he said.
Despite the overall sales decline, unpublished snapshot data shows existing-home sales rising significantly from a year ago in Bakersfield, Calif.; Fort Myers, Fla.; and Las Vegas.
“Sales are now beginning to pick up in Orlando, Fla., Phoenix, and Oakland, Calif.,” Yun said. “Interestingly, sales fell in Atlanta, Houston, and Kansas City, Mo., despite affordable home prices and solid local employment conditions.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 6.32% in June from 6.04% in May; the rate was 6.66% in June 2007.
Single-family home sales declined 3.2% to a seasonally adjusted annual rate of 4.27 million in June from 4.41 million in May, and are 14.8% below the 5.01 million-unit pace in June 2007. The median existing single-family home price was $213,800 in June, which is down 6.7% from a year ago.
Existing condominium and co-op sales rose 1.7% to a seasonally adjusted annual rate of 590,000 units in June from 580,000 in May, but are 19.7% below the 735,000-unit level a year ago. The median existing condo price was $224,200 in June, which is 2.2% lower than June 2007.
Regionally, existing-home sales in the West rose 1.0% in June to a pace of 1.03 million but are 6.4% lower than a year ago. The median price in the West was $288,400, which is 17.2% below June 2007.
In the South, existing-home sales fell 3.1% to an annual rate of 1.85 million in June, and are 18.1% below June 2007. The median price in the South was $185,300, down 2.4% from a year ago.
Existing-home sales in the Midwest declined 3.4% to an annual pace of 1.12 million in June, and are 17.6% below a year ago. The median price in the Midwest was $175,300, up 2.8% from June 2007.
In the Northeast, existing-home sales fell 6.6% to an annual rate of 850,000 in June, and are 15.8% below June 2007. The median price in the Northeast was $256,700, down 12.6% from June 2007.
Existing-home sales-including single-family, townhomes, condominiums and co-ops — fell 2.6% to a seasonally adjusted annual rate of 4.86 million units in June from a pace of 4.99 million in May, and are 15.5% lower than the 5.75 million-unit rate in June 2007.
NAR President Richard F. Gaylord, a broker in Long Beach, Calif., said there is something of a quandary in the current market. “A recent online survey of Realtors(R) shows nearly a quarter of potential home buyers are waiting on the sidelines,” he said. “However, timing the market can be very tricky, which is why home buyers should always have a long-term view to build wealth.”
Total housing inventory at the end of June rose 0.2% to 4.49 million existing homes available for sale, which represents an 11.1.-month supply at the current sales pace, up from a 10.8-month supply in May.
Lawrence Yun, NAR chief economist, said first-time home buyers are critical to the health of the housing market. “About four in 10 homes are purchased by first-time buyers, which frees existing owners to trade up,” Yun said. “With many potential first-time home buyers on the sidelines, a first-time buyer tax credit would have a significant positive impact on both housing and the economy. Combined with permanent increases to mortgage loan limits and enhancing the FHA loan program, the housing stimulus package working its way through Congress would go a long way toward helping consumers and boosting the overall economy.”
The national median existing-home price for all housing types was $215,100 in June, down 6.1% from a year ago when the median was $229,000.
Yun said there is a downward distortion in the price data. “With short sales and foreclosures accounting for approximately one-third of transactions, it’s hard to make an apples-to-apples comparison with a year ago when they were only a minor portion of the market,” he said.
Despite the overall sales decline, unpublished snapshot data shows existing-home sales rising significantly from a year ago in Bakersfield, Calif.; Fort Myers, Fla.; and Las Vegas.
“Sales are now beginning to pick up in Orlando, Fla., Phoenix, and Oakland, Calif.,” Yun said. “Interestingly, sales fell in Atlanta, Houston, and Kansas City, Mo., despite affordable home prices and solid local employment conditions.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 6.32% in June from 6.04% in May; the rate was 6.66% in June 2007.
Single-family home sales declined 3.2% to a seasonally adjusted annual rate of 4.27 million in June from 4.41 million in May, and are 14.8% below the 5.01 million-unit pace in June 2007. The median existing single-family home price was $213,800 in June, which is down 6.7% from a year ago.
Existing condominium and co-op sales rose 1.7% to a seasonally adjusted annual rate of 590,000 units in June from 580,000 in May, but are 19.7% below the 735,000-unit level a year ago. The median existing condo price was $224,200 in June, which is 2.2% lower than June 2007.
Regionally, existing-home sales in the West rose 1.0% in June to a pace of 1.03 million but are 6.4% lower than a year ago. The median price in the West was $288,400, which is 17.2% below June 2007.
In the South, existing-home sales fell 3.1% to an annual rate of 1.85 million in June, and are 18.1% below June 2007. The median price in the South was $185,300, down 2.4% from a year ago.
Existing-home sales in the Midwest declined 3.4% to an annual pace of 1.12 million in June, and are 17.6% below a year ago. The median price in the Midwest was $175,300, up 2.8% from June 2007.
In the Northeast, existing-home sales fell 6.6% to an annual rate of 850,000 in June, and are 15.8% below June 2007. The median price in the Northeast was $256,700, down 12.6% from June 2007.
Thursday, July 24, 2008
inflation fears
Mortgage rates spiked this week on inflation fears, with the benchmark 30-year, fixed-rate loan soaring more than a quarter percentage point to a national average 6.63%, its highest level in nearly a year, Freddie Mac said Thursday.
"Market concerns about rising inflation, further weakness in the housing market and greater probability that the Federal Reserve will raise short-term rates this year all combined to push mortgage rates higher this week," said Frank Nothaft, Freddie Mac chief economist.
The 30-year loan hit 6.68% on Aug. 7, 2007, the last time it was this high. Despite turmoil in the financial sector, mortgage rates have largely held steady as demand for housing remains weak. Existing-homes sales are at a 10-year low, the National Association of Realtors said Thursday. See Economic Report.
Home-loan rates may also be pushed up as the yields on mortgage-backed securities have risen, as investors in those instruments may be more concerned about the housing market.
Mortgage bonds in an index tracked by Merrill Lynch yield about 151 basis points, or 1.51%, above Treasurys, a standard gauge of mortgage rates. The spread jumped to 160 basis points earlier this week, the most since March, when fixed-income markets seized up in light of a possible bankruptcy of Bear Stearns.
Recent jitters surrounding the financial stability of mortgage giants Fannie Mae (FRE 8.81, -1.99, -18.4%) could have made investors demand a better return for taking on more risk, increasing the spread between mortgage and Treasury yields.
The 15-year fixed-rate mortgage, a popular choice for refinancing, jumped to 6.18%, up from 5.78% in last week's Freddie Mac survey. A year ago the 15-year loan was at 6.37%.
Adjustable-rate mortgages leaped even more than their fixed-rate counterparts. The five-year, Treasury-indexed hybrid loan hit 6.16%, up from 5.80%. The one-year, Treasury-indexed ARM vaulted to 5.49% from 5.10%. A year ago the hybrid was at 6.30% and the ARM at 5.69%.
The two fixed-rate loans required the payment of an average 0.6 point to achieve the rate; the hybrid needed 0.7 point and the ARM 0.6. A point is 1% of the loan amount, charged as prepaid interest.
Nothaft said some of the key drivers to the inflation concerns were consumer prices jumping 1.1% (annualized) in June -- the largest increase since September 2005 on a year-over-year basis -- coupled with consumer prices growing at a 5.0% clip (on a year-over-year basis), the strongest since February 1991.
"Additionally, home prices fell 4.8% between May 2007 and 2008, according to the Office of Federal Housing Enterprise Oversight's monthly house price index. And new construction of one-unit homes fell to 604,000 units (annualized) in June, the slowest pace since January 1991," he said
"Market concerns about rising inflation, further weakness in the housing market and greater probability that the Federal Reserve will raise short-term rates this year all combined to push mortgage rates higher this week," said Frank Nothaft, Freddie Mac chief economist.
The 30-year loan hit 6.68% on Aug. 7, 2007, the last time it was this high. Despite turmoil in the financial sector, mortgage rates have largely held steady as demand for housing remains weak. Existing-homes sales are at a 10-year low, the National Association of Realtors said Thursday. See Economic Report.
Home-loan rates may also be pushed up as the yields on mortgage-backed securities have risen, as investors in those instruments may be more concerned about the housing market.
Mortgage bonds in an index tracked by Merrill Lynch yield about 151 basis points, or 1.51%, above Treasurys, a standard gauge of mortgage rates. The spread jumped to 160 basis points earlier this week, the most since March, when fixed-income markets seized up in light of a possible bankruptcy of Bear Stearns.
Recent jitters surrounding the financial stability of mortgage giants Fannie Mae (FRE 8.81, -1.99, -18.4%) could have made investors demand a better return for taking on more risk, increasing the spread between mortgage and Treasury yields.
The 15-year fixed-rate mortgage, a popular choice for refinancing, jumped to 6.18%, up from 5.78% in last week's Freddie Mac survey. A year ago the 15-year loan was at 6.37%.
Adjustable-rate mortgages leaped even more than their fixed-rate counterparts. The five-year, Treasury-indexed hybrid loan hit 6.16%, up from 5.80%. The one-year, Treasury-indexed ARM vaulted to 5.49% from 5.10%. A year ago the hybrid was at 6.30% and the ARM at 5.69%.
The two fixed-rate loans required the payment of an average 0.6 point to achieve the rate; the hybrid needed 0.7 point and the ARM 0.6. A point is 1% of the loan amount, charged as prepaid interest.
Nothaft said some of the key drivers to the inflation concerns were consumer prices jumping 1.1% (annualized) in June -- the largest increase since September 2005 on a year-over-year basis -- coupled with consumer prices growing at a 5.0% clip (on a year-over-year basis), the strongest since February 1991.
"Additionally, home prices fell 4.8% between May 2007 and 2008, according to the Office of Federal Housing Enterprise Oversight's monthly house price index. And new construction of one-unit homes fell to 604,000 units (annualized) in June, the slowest pace since January 1991," he said
Wednesday, July 23, 2008
Bush would sign the bill "rescue package"
President George W. Bush on Wednesday dropped a threat to veto a housing rescue bill, clearing the way for measures meant to shore up the worst U.S. home market since the Great Depression.
A White House spokeswoman said Bush would sign the bill because it is needed promptly to address a housing and credit crisis, despite concerns about a provision that would provide grants to communities to buy and repair foreclosed homes.
"We do not believe we have time for a prolonged veto fight," spokeswoman Dana Perino said.
Removal of the presidential veto threat spurred investors to snap up shares and bonds of mortgage finance companies Fannie Mae (FNM.N) and Freddie Mac (FRE.N), which would receive an emergency government lifeline under the bill.
Concerns over the health of the two government-sponsored but privately held companies, which own or have guaranteed almost half of the $12 trillion in U.S. mortgage debt outstanding, had dashed hopes for recovery in battered U.S. housing and credit markets. Analysts had warned of a financial catastrophe if they were to collapse.
Lawmakers have moved with unusual speed since the Bush administration proposed establishing a temporary financial backstop for the two companies just 10 days ago.
The House of Representatives was expected to approve the rescue package later on Wednesday; it would then go the Senate for final passage. Senate Majority Leader Harry Reid said he wanted to send the measure to the president on Wednesday, but cautioned Republican lawmakers could delay it.
TOO IMPORTANT
Treasury Secretary Henry Paulson said on Wednesday he recommended that Bush drop his objections because reforms for Fannie Mae and Freddie Mac, the nation's two biggest mortgage finance companies, were too important.
"What we're doing with the GSEs is orders of magnitude more important than any of the other parts of this housing legislation," Paulson told reporters at an impromptu news conference.
Shares of Fannie Mae and Freddie Mac surged after stock markets opened. Fannie Mae climbed more than 20 percent to $16.35 a share, while Freddie Mac was up about 12 percent at $10.87 a share in morning trading.
In a further sign market concerns about the companies are relaxing, risk premiums on debt issued by the two companies narrowed. Priya Misra, an interest rate strategist at investment bank Lehman Brothers, said the legislation "makes it easier for them to raise capital."
Fannie Mae on Wednesday sold $3 billion in short term debt at higher interest rates than a week earlier. The rates, however, rose less than a benchmark investors use to judge value, showing decent demand for the deal.
STRONGER REGULATOR
Lawmakers late on Tuesday put finishing touches on the legislation and congressional budget analysts put a $25 billion potential price tag on the provision to bolster Fannie Mae and Freddie Mac, which was drafted by the Bush administration and added to a bill that has been in the works for months.
The overall measure now has wide, bipartisan support in both the House and the Senate, Massachusetts Democratic Rep. Barney Frank, the chief architect of the bill, said on Tuesday.
The added measures would give beleaguered Fannie Mae and Freddie Mac access to an expanded credit line from the U.S. Treasury. In addition, it authorizes the Treasury to purchase equity in the two companies if necessary.
More broadly, the measure would set up a new regulator for the companies and raise the size of mortgage loans that they and the Federal Housing Administration can guarantee. It would permit the FHA to refinance up to $300 billion in mortgages facing foreclosure.
The new regulator for Fannie Mae and Freddie Mac, the result of years of debate over reining in the powerful government-sponsored enterprises, could have substantial authority over executive pay at the two companies if they were to tap into the new Treasury capital line.
In addition, the measure would empower the Treasury secretary to restrict dividend payments if they were to reach for the lifeline.
It would also give the Federal Reserve a "consultative role" in setting capital requirements and ensuring the financial soundness of the mortgage enterprises.
A White House spokeswoman said Bush would sign the bill because it is needed promptly to address a housing and credit crisis, despite concerns about a provision that would provide grants to communities to buy and repair foreclosed homes.
"We do not believe we have time for a prolonged veto fight," spokeswoman Dana Perino said.
Removal of the presidential veto threat spurred investors to snap up shares and bonds of mortgage finance companies Fannie Mae (FNM.N) and Freddie Mac (FRE.N), which would receive an emergency government lifeline under the bill.
Concerns over the health of the two government-sponsored but privately held companies, which own or have guaranteed almost half of the $12 trillion in U.S. mortgage debt outstanding, had dashed hopes for recovery in battered U.S. housing and credit markets. Analysts had warned of a financial catastrophe if they were to collapse.
Lawmakers have moved with unusual speed since the Bush administration proposed establishing a temporary financial backstop for the two companies just 10 days ago.
The House of Representatives was expected to approve the rescue package later on Wednesday; it would then go the Senate for final passage. Senate Majority Leader Harry Reid said he wanted to send the measure to the president on Wednesday, but cautioned Republican lawmakers could delay it.
TOO IMPORTANT
Treasury Secretary Henry Paulson said on Wednesday he recommended that Bush drop his objections because reforms for Fannie Mae and Freddie Mac, the nation's two biggest mortgage finance companies, were too important.
"What we're doing with the GSEs is orders of magnitude more important than any of the other parts of this housing legislation," Paulson told reporters at an impromptu news conference.
Shares of Fannie Mae and Freddie Mac surged after stock markets opened. Fannie Mae climbed more than 20 percent to $16.35 a share, while Freddie Mac was up about 12 percent at $10.87 a share in morning trading.
In a further sign market concerns about the companies are relaxing, risk premiums on debt issued by the two companies narrowed. Priya Misra, an interest rate strategist at investment bank Lehman Brothers, said the legislation "makes it easier for them to raise capital."
Fannie Mae on Wednesday sold $3 billion in short term debt at higher interest rates than a week earlier. The rates, however, rose less than a benchmark investors use to judge value, showing decent demand for the deal.
STRONGER REGULATOR
Lawmakers late on Tuesday put finishing touches on the legislation and congressional budget analysts put a $25 billion potential price tag on the provision to bolster Fannie Mae and Freddie Mac, which was drafted by the Bush administration and added to a bill that has been in the works for months.
The overall measure now has wide, bipartisan support in both the House and the Senate, Massachusetts Democratic Rep. Barney Frank, the chief architect of the bill, said on Tuesday.
The added measures would give beleaguered Fannie Mae and Freddie Mac access to an expanded credit line from the U.S. Treasury. In addition, it authorizes the Treasury to purchase equity in the two companies if necessary.
More broadly, the measure would set up a new regulator for the companies and raise the size of mortgage loans that they and the Federal Housing Administration can guarantee. It would permit the FHA to refinance up to $300 billion in mortgages facing foreclosure.
The new regulator for Fannie Mae and Freddie Mac, the result of years of debate over reining in the powerful government-sponsored enterprises, could have substantial authority over executive pay at the two companies if they were to tap into the new Treasury capital line.
In addition, the measure would empower the Treasury secretary to restrict dividend payments if they were to reach for the lifeline.
It would also give the Federal Reserve a "consultative role" in setting capital requirements and ensuring the financial soundness of the mortgage enterprises.
Tuesday, July 22, 2008
rates to increase
As predicted, rates were extremely volatile last week and when the dust settled rates edged up about .375% by week's end. While inflation and the GFE's troubles (Fannie and Freddie) were the big newsmakers last week, the week ahead will be focused on the housing market. But the big question is - Will rates stabilize or are we in for more volatility?
So what caused the volatility last week? Rates initially benefited from the news that the Fed authorized Fannie Mae and Freddie Mac to borrow directly from the Central Bank if they needed additional capital. However, on Tuesday the Producer Price Index (PPI) report revealed that year over year inflation soared in June, marking the highest posting since 1981. Add to that the Retail Sales report also released on Tuesday, showed retail sales increased much less than expected. The Retail Sales report seemed to indicate that consumers were holding back spending and diverting their money to pay for essentials. This belief seemed to have been confirmed on Wednesday, when the Consumer Price Index (CPI), which measures the prices that consumers pay for consumables, jumped 5%, the biggest jump since 1991.
Although the week ahead offers little economic news to curb inflation fears, bonds may actually benefit from a weak stock market. If the stock market tanks, it is possible that stock investors may seek the shelter of bonds, which may level or even push rates lower.
The bottom line: Expect the market to continue its volatility and rates to increase unless the stock market suffers from the bad economic news.
So what caused the volatility last week? Rates initially benefited from the news that the Fed authorized Fannie Mae and Freddie Mac to borrow directly from the Central Bank if they needed additional capital. However, on Tuesday the Producer Price Index (PPI) report revealed that year over year inflation soared in June, marking the highest posting since 1981. Add to that the Retail Sales report also released on Tuesday, showed retail sales increased much less than expected. The Retail Sales report seemed to indicate that consumers were holding back spending and diverting their money to pay for essentials. This belief seemed to have been confirmed on Wednesday, when the Consumer Price Index (CPI), which measures the prices that consumers pay for consumables, jumped 5%, the biggest jump since 1991.
Although the week ahead offers little economic news to curb inflation fears, bonds may actually benefit from a weak stock market. If the stock market tanks, it is possible that stock investors may seek the shelter of bonds, which may level or even push rates lower.
The bottom line: Expect the market to continue its volatility and rates to increase unless the stock market suffers from the bad economic news.
Surfside Beach smoking ban
The smoking ban is on the agenda for Surfside Beach town council changing it to a civil offense.
The Surfside Beach smoking ban took effect in October 2007.
The Surfside Beach smoking ban took effect in October 2007.
how to relieve America's home-foreclosure crisis?
As Congress heads into a critical week of votes on how to relieve America's home-foreclosure crisis, one of the toughest issues will be how to deal with the racial and ethnic dimensions of the problem. Minorities will be watching closely to see who gets the help.
There's broad support on Capitol Hill for shoring up government-sponsored home-mortgage giants Fannie Mae and Freddie Mac: They're too big to fail, many say. But there's much less consensus over what to do about people who are losing their homes, especially in poor, inner-city neighborhoods – or even over how to understand their plight.
The racial overtones of the foreclosure crisis are taking on a higher profile as Congress wrestles with the shape of a fix this week.
At issue is a proposed $3.9 billion in block grants to help states or local governments buy and demolish or rehabilitate foreclosed properties to try to stem urban blight. The money is expected to flow to minority neighborhoods, in particular.
While there are big gaps in available data, industry analysts expect that black and Hispanic homeowners will bear the brunt of the foreclosure crisis. But is it because they overextended and should not have been in the housing market to begin with? Or were they the unsuspecting victims of predatory lending?
"Black and Hispanic families have gotten a disproportionate share of subprime lending, and subprime loans are the driving force behind the foreclosures," says Katheen Day, spokeswoman for the Center for Responsible Lending, a nonprofit research and policy group based in Durham, N.C. "We know that black and Hispanic communities are hardest hit."
Subprime loans – loans made to homebuyers with less-than-perfect credit – were responsible for a large share of the foreclosures that started last year. And minorities received a hefty share of those loans. Just over half of African-Americans and 4 in 10 Hispanics who got a mortgage in 2006 had a subprime loan, according to a 2007 analysis by the Center for Responsible Lending.
Also, the areas hardest hit by home-loan crisis are heavily Hispanic. In seven of the 10 metro areas with the highest foreclosure rates last month, they represent at least one-third of the population; in two of them – Merced and Salinas-Monterey, Calif. – Hispanics make up more than half of the population. Their rates of homeownership are also high: More than half of Hispanic households owned their home in eight of the top 10 foreclosure cities, according to the latest census data.
African-Americans are also hit hard by the crisis, although they aren't concentrated in cities with the highest foreclosures. In only two of the top 10 metro areas – Fort Lauderdale, Fla., and Vallejo-Fairfield, Calif. – did they make up more than 10 percent of the population. Their homeownership rates also trailed those of Hispanics in all but Vallejo-Fairfield.
Still, African-Americans made up more than 20 percent of the population in metro Detroit, No. 13 on the list of top foreclosure cities by RealtyTrac, and in Miami, No. 15.
It is cities such as these – along with Cleveland, which felt the brunt of the housing crisis early – where the pressure is building for local politicians to come up with a solution.
Activist groups say this racial dimension to the problem puts a special responsibility on the federal government to relieve distress in these neighborhoods.
"The subprime lending debacle has caused the greatest loss of wealth to people of color in modern US history," says Amaad Rivera, lead author of a 2008 report by United for a Fair Economy. The Boston-based research group estimates that black/African-American borrowers will lose between $71 billion and $92 billion in the current foreclosure crisis, while Latino borrowers will lose between $75 billion and $98 billion.
"The difficulties have been concentrated in 'subprime' loans, which generally go to borrowers with limited or damaged credit, although there is evidence that some borrowers are shifted into the subprime category because they are African-American or Hispanic," said Rep. Barney Frank (D) of Massachusetts, who chairs the House Financial Services Committee, in a statement last week.
House Democrats say a new $3.9 billion federal program to help state and local governments buy up foreclosed properties would be part of the solution. The Bush administration has opposed such block grants on the grounds that "the principal beneficiaries of this type of plan would be private lenders – who are now the owners of the vacant or foreclosed properties – instead of struggling homeowners who are working hard to stay in their homes."
Still, House Speaker Nancy Pelosi said last week she doubts Mr. Bush will veto the housing-rescue package, which contains a separate provision he wants to strengthen the financial positions of faltering mortgage companies Fannie Mae and Freddie Mac. The disputed funds enable communities to buy up properties once on the revenue rolls that are now "taking the value of their neighbors' homes," she said.
Conservative Republicans worry that Democrats and the Bush administration are trying to resolve today's foreclosure crisis at too high a cost – now and in the future.
"Everyone realizes that it would be calamitous for Fannie and Freddie to fail, but give me a legislative package to ensure we're not here with a bigger bailout five years later, and I haven't seen that," says Rep. Jeb Hensarling (R) of Texas, who chairs the Republican Study Committee, the conservative wing of the Republican caucus.
In a bid to address the race-based fallout of the subprime mortgage crisis, the Federal Reserve Board is working with community groups to help stabilize neighborhoods where foreclosure rates are high. Home-vacancy rates increased sharply in 2006 and hit 2.9 percent in the first quarter of 2008, according to the US Census Bureau, diminishing the value of nearby homes and adding to the burden of local governments dealing with the fallout.
There's broad support on Capitol Hill for shoring up government-sponsored home-mortgage giants Fannie Mae and Freddie Mac: They're too big to fail, many say. But there's much less consensus over what to do about people who are losing their homes, especially in poor, inner-city neighborhoods – or even over how to understand their plight.
The racial overtones of the foreclosure crisis are taking on a higher profile as Congress wrestles with the shape of a fix this week.
At issue is a proposed $3.9 billion in block grants to help states or local governments buy and demolish or rehabilitate foreclosed properties to try to stem urban blight. The money is expected to flow to minority neighborhoods, in particular.
While there are big gaps in available data, industry analysts expect that black and Hispanic homeowners will bear the brunt of the foreclosure crisis. But is it because they overextended and should not have been in the housing market to begin with? Or were they the unsuspecting victims of predatory lending?
"Black and Hispanic families have gotten a disproportionate share of subprime lending, and subprime loans are the driving force behind the foreclosures," says Katheen Day, spokeswoman for the Center for Responsible Lending, a nonprofit research and policy group based in Durham, N.C. "We know that black and Hispanic communities are hardest hit."
Subprime loans – loans made to homebuyers with less-than-perfect credit – were responsible for a large share of the foreclosures that started last year. And minorities received a hefty share of those loans. Just over half of African-Americans and 4 in 10 Hispanics who got a mortgage in 2006 had a subprime loan, according to a 2007 analysis by the Center for Responsible Lending.
Also, the areas hardest hit by home-loan crisis are heavily Hispanic. In seven of the 10 metro areas with the highest foreclosure rates last month, they represent at least one-third of the population; in two of them – Merced and Salinas-Monterey, Calif. – Hispanics make up more than half of the population. Their rates of homeownership are also high: More than half of Hispanic households owned their home in eight of the top 10 foreclosure cities, according to the latest census data.
African-Americans are also hit hard by the crisis, although they aren't concentrated in cities with the highest foreclosures. In only two of the top 10 metro areas – Fort Lauderdale, Fla., and Vallejo-Fairfield, Calif. – did they make up more than 10 percent of the population. Their homeownership rates also trailed those of Hispanics in all but Vallejo-Fairfield.
Still, African-Americans made up more than 20 percent of the population in metro Detroit, No. 13 on the list of top foreclosure cities by RealtyTrac, and in Miami, No. 15.
It is cities such as these – along with Cleveland, which felt the brunt of the housing crisis early – where the pressure is building for local politicians to come up with a solution.
Activist groups say this racial dimension to the problem puts a special responsibility on the federal government to relieve distress in these neighborhoods.
"The subprime lending debacle has caused the greatest loss of wealth to people of color in modern US history," says Amaad Rivera, lead author of a 2008 report by United for a Fair Economy. The Boston-based research group estimates that black/African-American borrowers will lose between $71 billion and $92 billion in the current foreclosure crisis, while Latino borrowers will lose between $75 billion and $98 billion.
"The difficulties have been concentrated in 'subprime' loans, which generally go to borrowers with limited or damaged credit, although there is evidence that some borrowers are shifted into the subprime category because they are African-American or Hispanic," said Rep. Barney Frank (D) of Massachusetts, who chairs the House Financial Services Committee, in a statement last week.
House Democrats say a new $3.9 billion federal program to help state and local governments buy up foreclosed properties would be part of the solution. The Bush administration has opposed such block grants on the grounds that "the principal beneficiaries of this type of plan would be private lenders – who are now the owners of the vacant or foreclosed properties – instead of struggling homeowners who are working hard to stay in their homes."
Still, House Speaker Nancy Pelosi said last week she doubts Mr. Bush will veto the housing-rescue package, which contains a separate provision he wants to strengthen the financial positions of faltering mortgage companies Fannie Mae and Freddie Mac. The disputed funds enable communities to buy up properties once on the revenue rolls that are now "taking the value of their neighbors' homes," she said.
Conservative Republicans worry that Democrats and the Bush administration are trying to resolve today's foreclosure crisis at too high a cost – now and in the future.
"Everyone realizes that it would be calamitous for Fannie and Freddie to fail, but give me a legislative package to ensure we're not here with a bigger bailout five years later, and I haven't seen that," says Rep. Jeb Hensarling (R) of Texas, who chairs the Republican Study Committee, the conservative wing of the Republican caucus.
In a bid to address the race-based fallout of the subprime mortgage crisis, the Federal Reserve Board is working with community groups to help stabilize neighborhoods where foreclosure rates are high. Home-vacancy rates increased sharply in 2006 and hit 2.9 percent in the first quarter of 2008, according to the US Census Bureau, diminishing the value of nearby homes and adding to the burden of local governments dealing with the fallout.
Sunday, July 20, 2008
SC permits to hunt gators
Almost 1,500 hunters have applied for permits to shoot alligators during South Carolina's gator hunt this fall.
The deadline for applying was this week. Only 1,000 permits will be issued by a random drawing.
The Department of Natural Resources authorized the hunt to cull some of the estimated 100,000 gators in the state's waters. The season will run from Sept. 13 through Oct. 11.
Hunters may take only one gator and it must be more than 4 feet long. Hunters will not be permitted to shoot alligators until they have been captured and tied up.
The deadline for applying was this week. Only 1,000 permits will be issued by a random drawing.
The Department of Natural Resources authorized the hunt to cull some of the estimated 100,000 gators in the state's waters. The season will run from Sept. 13 through Oct. 11.
Hunters may take only one gator and it must be more than 4 feet long. Hunters will not be permitted to shoot alligators until they have been captured and tied up.
South is the fattest
The Centers for Disease Control and Prevention released a report Friday saying the South is the fattest area of the country.
They cite traditional diets that are high in fat, like fried foods, and a large concentration of rural residents and black women who tend to have higher obesity rates.
Here are the 5 fattest states according to the report:
1. Mississippi: 32%
2. Alabama: 30.3%
3. Tennessee: 30.1%
4. Louisiana: 29.8%
5. West Virginia: 29.5%
South Carolina was 7th
The CDC wants all states to be at 15% by 2010. The only state that came close was Colorado, the slimmest state at 19%.
They cite traditional diets that are high in fat, like fried foods, and a large concentration of rural residents and black women who tend to have higher obesity rates.
Here are the 5 fattest states according to the report:
1. Mississippi: 32%
2. Alabama: 30.3%
3. Tennessee: 30.1%
4. Louisiana: 29.8%
5. West Virginia: 29.5%
South Carolina was 7th
The CDC wants all states to be at 15% by 2010. The only state that came close was Colorado, the slimmest state at 19%.
Subscribe to:
Posts (Atom)