Governors signs new foreclosure laws
A law signed into effect this week will regulate the foreclosure
industry and require foreclosure consultants to be licensed by
the state Department of Banking and Insurance. Governor Chris
Christie signed the Foreclosure Rescue Fraud Prevention Act on
Tuesday. In the scams, “counselors” would, for high upfront
fees, claim to raise a homeowner’s credit rating or change the
terms of their existing mortgage, or sign over a deed to someone
who promises to rent back the residence and in the future sell it
back to the original owner. The companies would then take out
additional mortgages on the properties without the homeowners’
knowledge, and in some cases falsify information on the loan
application.
The homeowners lose their fees, any equity they have built in the
house and frequently ownership of the house itself. Under the
law, the foreclosure consultants are prohibited from collecting
any fees — and are limited from charging excessive rates —
before completing the terms of the written contract and securing
relief for the homeowner. The consultant companies must also post
a bond with the state before conducting business, and are subject
to a $10,000 fine for the first offense and $20,000 for each
subsequent offense. The bill initially passed both the state
Senate and Assembly in June. But Governor Chris Christie
conditionally vetoed it over concerns a stipulation that would
require distressed properties to be sold for 82% of their fair
market value because it could inadvertently affect nearly all
distressed home sales. Now, the law states that only those sales
involving participation with foreclosure consultants qualify.
Governor Rick Snyder of Michigan also signed a series of bills
that clarify and improve the pre-foreclosure and foreclosure
process and will help keep Michigan residents in their homes. It
is a bipartisan legislative package that passed both chambers
unanimously. "This legislation helps protect families and
ensures the stability of Michigan communities," said Snyder.
"When foreclosures are prevented, homes are not vacated, families
are not displaced and townships, cities and counties do not lose
the tax base provided by home ownership." In September 2011,
there was one foreclosure filing for every 149 homes in Michigan.
Michigan also had the seventh highest foreclosure rates and
foreclosure filing totals in the US The related bills signed
Thursday include House Bill 4542, 4543, and 4544, which are now
Public Acts 301, 302 and 303. Lenders are now required to
provide written notice that includes a list of housing counselors
when foreclosure proceedings begin so homeowners can seek
immediate advice. Also, additional time has been added so
homeowners can potentially arrange for loan modifications in
order to prevent foreclosure. The legislation also removes the
mandate to publish pre-foreclosure notices in newspapers to help
prevent homeowners from being solicited by foreclosure rescue and
mortgage modification scams.
Obama's hand forced on Keystone pipeline
President Obama will be required to make a decision on the
Keystone pipeline project now that Congress appears to have
worked out a deal to extend the payroll-tax cut. The tax cut
bill includes language that would require Obama to make a
decision on the pipeline, now stalled in the approval process, in
60 days. The Canada-to-Texas oil sands pipeline, which would run
down the spine of the country, is strongly supported by
Republicans and the oil industry but loathed by many Democrats.
Keystone XL pipeline would move oil sands crude from the western
Canadian province of Alberta 1,661 miles2,673 km, to Port Arthur,
Texas. In between, it would cross Saskatchewan, Montana, South
Dakota, Nebraska, Oklahoma and Texas. The $7 billion project,
which involves linking up with an existing network, would feed
700,000 barrels a day of oil to various destinations, but chiefly
to refineries in the US Gulf Coast. The line could also help
drain growing oil supplies from the booming Bakken shale oil
field in North Dakota. Keystone XL received Canadian approval in
March 2010, but the US State Department, which had been widely
expected to approve the project by year-end, said in November it
needs to study new routes. That effectively delayed its decision
past the 2012 US presidential election. Obama was accused of
punting after facing grassroots opposition to the project from an
important segment of his base, the environmental lobby.
Republicans in the House of Representatives, incensed that the
White House was turning its back on a job-creating project,
introduced language in the payroll tax cut extension bill to
force Obama to make a decision on the pipeline. The
Democratic-led Senate agreed, including language in its bill.
The project would improve US energy security. These include the
Canadian government, the oil industry, some US Republican
lawmakers and politicians of all stripes from energy-producing
states, as well as unions such as the Teamsters. TransCanada has
said the project, which will result in the most advanced pipeline
ever built, will create 20,000 jobs in the United States at a
time of high unemployment. Getting more oil from Canada, already
the largest US crude supplier, would reduce reliance on the
Middle East and could make up for expected future shortfalls from
Mexico and Venezuela.
Foreclosures up 21%
Mortgage delinquencies stabilized in the third quarter, though
new foreclosures jumped 21.1% from last quarter according to the
Office of the Comptroller of the Currency. The OCC said mortgage
servicers "lifted voluntarily moratoria implemented in late
2010," when the robo-signing controversy initially came to light.
Newly initiated foreclosures, however, declined 11.8% from third
quarter 2010. Foreclosures in process made up about 4.1%, or 1.3
million loans, of the overall mortgage portfolio measured by the
OCC. That's up 0.5% from the second quarter and 7.6% from a year
earlier. First-lien mortgages current and performing changed
little in the third quarter, down 0.1 percentage points to 88% of
all loans in the OCC portfolio. Those loans made up about 87.5%
of the portfolio a year ago. Modifications declined 8.5% from
the second quarter to about 138,000. That includes a 23% drop in
mods through the Home Affordable Modification Program.
Third-quarter modifications reduced monthly principal and
interest payments by 24.4%, or $382. HAMP mods cut payments by
35.1%, or $567. The OCC report includes about 62%, or 32.4
million, of all first-lien mortgages in the US worth $5.6
trillion in outstanding balances.
Spending and incomes weak
Consumer spending rose just 0.1% in November, matching the modest
October increase, the Commerce Department reported today. Incomes
also rose 0.1%. That was the weakest showing since a 0.1% decline
in August. Both the spending and income gains fell below
expectations. Economists have said that solid increases in
spending could boost economic growth in the final three months of
what has been a disappointing year. Paul Ashworth, chief US
economist at Capital Economics, called the consumer spending
figure disappointing. He said it would probably mean lower
economic growth than had been expected. Rather than grow at an
annual rate of up to 3% in the October-December quarter, the
economy will likely expand at a rate of about 2.5% this quarter,
Ashworth says. That would still be an improvement from the 1.8%
growth in the July-September quarter. The weakness in incomes
reflected a decline in wages and salaries, the biggest component
of incomes, in November. The sluggish gain in spending was held
back by a 0.3% fall in spending on non-durable goods such as
food, clothing and gasoline. Spending on durable goods jumped
0.8%. It reflected the solid auto sales during the month.
Spending on services, which includes such items as medical
treatments and rent, rose a modest 0.1%. After-tax incomes
showed no growth in November.
The savings rate dipped to 3.5% of after-tax incomes, down from
3.6% in October. Both months marked the lowest savings rate since
late 2007. They show that consumers are having to tap their
savings to finance their spending because of the weak income
growth. The small rise in overall consumer spending was puzzling
given that other reports have shown solid holiday shopping this
season. Those reports had caused many economists to revise up
their growth forecasts for the current quarter. Analysts at
JPMorgan think the economy is growing at an annual rate of 3.5%
in the current October-December quarter. That would be up from
1.8% growth in the July-September quarter and would be the best
quarterly gain since the spring of 2010. Economists still expect
that growth to be driven by an improvement in consumer spending,
which accounts for 70% of economic activity. Spending rose at a
1.7% rate in the third quarter, more than double the
second-quarter gain. JPMorgan analysts expect consumer spending
to grow at a 3% pace in the current quarter. Even with the spurt
of activity at the end of the year, economists think growth for
all of 2011 will be a lackluster 1.7%.
Home prices dip in October
Home prices dropped 0.2% in October from the previous month, the
Federal Housing Finance Agency (FHFA) said yesterday. The
agency's seasonally adjusted house price index decreased 2.8%
from a year ago. The September measure was adjusted lower to a
0.4% increase from an initial 0.9% reading. The home price
index, calculated using data from Fannie Mae and Freddie Mac
mortgages, rose 0.2% in the third quarter on a seasonally
adjusted basis. October prices were 19.2% lower than the April
2007 peak for the index and are at levels comparable to February
2004. Only two regions, as measured by the FHFA, saw yearly
increases, albeit minimal. Prices rose 0.7% collectively in
Arkansas, Louisiana, Oklahoma and Texas, and inched higher by
0.1% in Alabama, Kentucky, Mississippi and Tennessee. Values
dipped the most from October 2010 at 5.5% in the Pacific region,
made up of Alaska, California, Hawaii, Oregon and Washington.
The FHFA is the regulator and conservator for Fannie Mae and
Freddie Mac.
Banks ready for Euro-crisis?
Banks in the United States are expected to survive any type of
financial crisis brought on by the euro in 2012, Capital
Economics said yesterday. But the Fed is prepared to step in and
prevent any meltdown akin to Lehman Brothers, if Europe's
troubles began washing up stateside, according to analysts at the
Toronto-based firm. The central bank "has a number of liquidity
facilities that were established during the financial crisis that
it can restart at a moment’s notice if banks need short-term
cash," analysts Paul Ashworth and Paul Dales wrote in a Capital
Economics report. "Indeed, through the currency swaps with other
central banks re-established at the end of November, the Fed is
already helping to provide dollars to European banks," they said.
The good news is banks have increased overall lending since
March, Capital Economics said. Even foreign banks are getting
into the act, boosting lending in America at a faster rate than
domestic banks. One indication of trouble would be a pull bank in
lending. "Any sign that they are turning south again would be
troubling," the research firm wrote.
Still, Capital Economics does not expect banks to suffer through
any euro crisis. The analysts expect US GDP growth to slow to
1.5% next year, not on euro-zone concerns, but on shaky US
consumer confidence. "The modest slowdown in economic growth
that we expect next year has more to do with less support from
fiscal policy and a belief that consumption won't continue to
grow at a faster rate than incomes," Ashworth and Dales wrote.
The analysts said US banks do not hold a large share of assets in
the eurozone and possess an even smaller share in European
countries that are in deep trouble. Still, the analysts are
watching US bank stocks and earnings to ensure their capital is
not shaken by shocks in the global financial system.
A law signed into effect this week will regulate the foreclosure
industry and require foreclosure consultants to be licensed by
the state Department of Banking and Insurance. Governor Chris
Christie signed the Foreclosure Rescue Fraud Prevention Act on
Tuesday. In the scams, “counselors” would, for high upfront
fees, claim to raise a homeowner’s credit rating or change the
terms of their existing mortgage, or sign over a deed to someone
who promises to rent back the residence and in the future sell it
back to the original owner. The companies would then take out
additional mortgages on the properties without the homeowners’
knowledge, and in some cases falsify information on the loan
application.
The homeowners lose their fees, any equity they have built in the
house and frequently ownership of the house itself. Under the
law, the foreclosure consultants are prohibited from collecting
any fees — and are limited from charging excessive rates —
before completing the terms of the written contract and securing
relief for the homeowner. The consultant companies must also post
a bond with the state before conducting business, and are subject
to a $10,000 fine for the first offense and $20,000 for each
subsequent offense. The bill initially passed both the state
Senate and Assembly in June. But Governor Chris Christie
conditionally vetoed it over concerns a stipulation that would
require distressed properties to be sold for 82% of their fair
market value because it could inadvertently affect nearly all
distressed home sales. Now, the law states that only those sales
involving participation with foreclosure consultants qualify.
Governor Rick Snyder of Michigan also signed a series of bills
that clarify and improve the pre-foreclosure and foreclosure
process and will help keep Michigan residents in their homes. It
is a bipartisan legislative package that passed both chambers
unanimously. "This legislation helps protect families and
ensures the stability of Michigan communities," said Snyder.
"When foreclosures are prevented, homes are not vacated, families
are not displaced and townships, cities and counties do not lose
the tax base provided by home ownership." In September 2011,
there was one foreclosure filing for every 149 homes in Michigan.
Michigan also had the seventh highest foreclosure rates and
foreclosure filing totals in the US The related bills signed
Thursday include House Bill 4542, 4543, and 4544, which are now
Public Acts 301, 302 and 303. Lenders are now required to
provide written notice that includes a list of housing counselors
when foreclosure proceedings begin so homeowners can seek
immediate advice. Also, additional time has been added so
homeowners can potentially arrange for loan modifications in
order to prevent foreclosure. The legislation also removes the
mandate to publish pre-foreclosure notices in newspapers to help
prevent homeowners from being solicited by foreclosure rescue and
mortgage modification scams.
Obama's hand forced on Keystone pipeline
President Obama will be required to make a decision on the
Keystone pipeline project now that Congress appears to have
worked out a deal to extend the payroll-tax cut. The tax cut
bill includes language that would require Obama to make a
decision on the pipeline, now stalled in the approval process, in
60 days. The Canada-to-Texas oil sands pipeline, which would run
down the spine of the country, is strongly supported by
Republicans and the oil industry but loathed by many Democrats.
Keystone XL pipeline would move oil sands crude from the western
Canadian province of Alberta 1,661 miles2,673 km, to Port Arthur,
Texas. In between, it would cross Saskatchewan, Montana, South
Dakota, Nebraska, Oklahoma and Texas. The $7 billion project,
which involves linking up with an existing network, would feed
700,000 barrels a day of oil to various destinations, but chiefly
to refineries in the US Gulf Coast. The line could also help
drain growing oil supplies from the booming Bakken shale oil
field in North Dakota. Keystone XL received Canadian approval in
March 2010, but the US State Department, which had been widely
expected to approve the project by year-end, said in November it
needs to study new routes. That effectively delayed its decision
past the 2012 US presidential election. Obama was accused of
punting after facing grassroots opposition to the project from an
important segment of his base, the environmental lobby.
Republicans in the House of Representatives, incensed that the
White House was turning its back on a job-creating project,
introduced language in the payroll tax cut extension bill to
force Obama to make a decision on the pipeline. The
Democratic-led Senate agreed, including language in its bill.
The project would improve US energy security. These include the
Canadian government, the oil industry, some US Republican
lawmakers and politicians of all stripes from energy-producing
states, as well as unions such as the Teamsters. TransCanada has
said the project, which will result in the most advanced pipeline
ever built, will create 20,000 jobs in the United States at a
time of high unemployment. Getting more oil from Canada, already
the largest US crude supplier, would reduce reliance on the
Middle East and could make up for expected future shortfalls from
Mexico and Venezuela.
Foreclosures up 21%
Mortgage delinquencies stabilized in the third quarter, though
new foreclosures jumped 21.1% from last quarter according to the
Office of the Comptroller of the Currency. The OCC said mortgage
servicers "lifted voluntarily moratoria implemented in late
2010," when the robo-signing controversy initially came to light.
Newly initiated foreclosures, however, declined 11.8% from third
quarter 2010. Foreclosures in process made up about 4.1%, or 1.3
million loans, of the overall mortgage portfolio measured by the
OCC. That's up 0.5% from the second quarter and 7.6% from a year
earlier. First-lien mortgages current and performing changed
little in the third quarter, down 0.1 percentage points to 88% of
all loans in the OCC portfolio. Those loans made up about 87.5%
of the portfolio a year ago. Modifications declined 8.5% from
the second quarter to about 138,000. That includes a 23% drop in
mods through the Home Affordable Modification Program.
Third-quarter modifications reduced monthly principal and
interest payments by 24.4%, or $382. HAMP mods cut payments by
35.1%, or $567. The OCC report includes about 62%, or 32.4
million, of all first-lien mortgages in the US worth $5.6
trillion in outstanding balances.
Spending and incomes weak
Consumer spending rose just 0.1% in November, matching the modest
October increase, the Commerce Department reported today. Incomes
also rose 0.1%. That was the weakest showing since a 0.1% decline
in August. Both the spending and income gains fell below
expectations. Economists have said that solid increases in
spending could boost economic growth in the final three months of
what has been a disappointing year. Paul Ashworth, chief US
economist at Capital Economics, called the consumer spending
figure disappointing. He said it would probably mean lower
economic growth than had been expected. Rather than grow at an
annual rate of up to 3% in the October-December quarter, the
economy will likely expand at a rate of about 2.5% this quarter,
Ashworth says. That would still be an improvement from the 1.8%
growth in the July-September quarter. The weakness in incomes
reflected a decline in wages and salaries, the biggest component
of incomes, in November. The sluggish gain in spending was held
back by a 0.3% fall in spending on non-durable goods such as
food, clothing and gasoline. Spending on durable goods jumped
0.8%. It reflected the solid auto sales during the month.
Spending on services, which includes such items as medical
treatments and rent, rose a modest 0.1%. After-tax incomes
showed no growth in November.
The savings rate dipped to 3.5% of after-tax incomes, down from
3.6% in October. Both months marked the lowest savings rate since
late 2007. They show that consumers are having to tap their
savings to finance their spending because of the weak income
growth. The small rise in overall consumer spending was puzzling
given that other reports have shown solid holiday shopping this
season. Those reports had caused many economists to revise up
their growth forecasts for the current quarter. Analysts at
JPMorgan think the economy is growing at an annual rate of 3.5%
in the current October-December quarter. That would be up from
1.8% growth in the July-September quarter and would be the best
quarterly gain since the spring of 2010. Economists still expect
that growth to be driven by an improvement in consumer spending,
which accounts for 70% of economic activity. Spending rose at a
1.7% rate in the third quarter, more than double the
second-quarter gain. JPMorgan analysts expect consumer spending
to grow at a 3% pace in the current quarter. Even with the spurt
of activity at the end of the year, economists think growth for
all of 2011 will be a lackluster 1.7%.
Home prices dip in October
Home prices dropped 0.2% in October from the previous month, the
Federal Housing Finance Agency (FHFA) said yesterday. The
agency's seasonally adjusted house price index decreased 2.8%
from a year ago. The September measure was adjusted lower to a
0.4% increase from an initial 0.9% reading. The home price
index, calculated using data from Fannie Mae and Freddie Mac
mortgages, rose 0.2% in the third quarter on a seasonally
adjusted basis. October prices were 19.2% lower than the April
2007 peak for the index and are at levels comparable to February
2004. Only two regions, as measured by the FHFA, saw yearly
increases, albeit minimal. Prices rose 0.7% collectively in
Arkansas, Louisiana, Oklahoma and Texas, and inched higher by
0.1% in Alabama, Kentucky, Mississippi and Tennessee. Values
dipped the most from October 2010 at 5.5% in the Pacific region,
made up of Alaska, California, Hawaii, Oregon and Washington.
The FHFA is the regulator and conservator for Fannie Mae and
Freddie Mac.
Banks ready for Euro-crisis?
Banks in the United States are expected to survive any type of
financial crisis brought on by the euro in 2012, Capital
Economics said yesterday. But the Fed is prepared to step in and
prevent any meltdown akin to Lehman Brothers, if Europe's
troubles began washing up stateside, according to analysts at the
Toronto-based firm. The central bank "has a number of liquidity
facilities that were established during the financial crisis that
it can restart at a moment’s notice if banks need short-term
cash," analysts Paul Ashworth and Paul Dales wrote in a Capital
Economics report. "Indeed, through the currency swaps with other
central banks re-established at the end of November, the Fed is
already helping to provide dollars to European banks," they said.
The good news is banks have increased overall lending since
March, Capital Economics said. Even foreign banks are getting
into the act, boosting lending in America at a faster rate than
domestic banks. One indication of trouble would be a pull bank in
lending. "Any sign that they are turning south again would be
troubling," the research firm wrote.
Still, Capital Economics does not expect banks to suffer through
any euro crisis. The analysts expect US GDP growth to slow to
1.5% next year, not on euro-zone concerns, but on shaky US
consumer confidence. "The modest slowdown in economic growth
that we expect next year has more to do with less support from
fiscal policy and a belief that consumption won't continue to
grow at a faster rate than incomes," Ashworth and Dales wrote.
The analysts said US banks do not hold a large share of assets in
the eurozone and possess an even smaller share in European
countries that are in deep trouble. Still, the analysts are
watching US bank stocks and earnings to ensure their capital is
not shaken by shocks in the global financial system.
