Housing Bubble Bursting?

[Randolph Kinney]

Lawsuit Accuses Missouri City of Fining Homeowners to Raise Revenue

PAGEDALE, Mo. — This spring, officials in this tiny city near St. Louis ordered Valarie Whitner to replace her siding; repaint her gutters, downspout and foundation; and put up screens or storm covers outside every window and blinds or curtains on the inside.

And that was before the list of demands moved on to her roof, fence and yard.

Ms. Whitner, 57, who works nights at a hospital, said she and her longtime partner felt swamped beneath the costs of paying for the city-mandated repairs and for fees, fines and court costs, which her lawyers say included at least $2,400 in violations. She took out a high-interest payday loan, which she still owes hundreds of dollars on and calls her “Pagedale money.”

“It was horrible,” Ms. Whitner said the other day from her living room, which she has decorated with do-it-yourself vases and paintings. “Pagedale just kept coming back to us, bothering us. At some point, this is all just a way for the city to make money. It’s the easiest way to make money.”

the aftermath of the fatal shooting of an unarmed teenager named Michael Brown by a white police officer in Ferguson, residents in this region described a pattern of mounting traffic fines, fees and arrests in the 90 municipalities that make up St. Louis County. Many such abuses were described in a scathingJustice Department report about Ferguson.

But the problems facing Ms. Whitner in Pagedale represent another issue: what many residents consider the abusive levying of fines or fees for minor nontraffic ordinances, often involving unsightly lawns or houses.

http://www.nytimes.com/2015/11/05/u..._th_20151105&nl=todaysheadlines&nlid=50329110

Government corruption at its finest: all for your health and safety too.

 

[Randolph Kinney]

Unaffordable rents?? Naw, can't happen.


Almost makes you wonder if they are using CU to value those rental units and market rents?

.

.

Well, if the federal reserve is the lender of last resort, Fannie and Freddie are the conduits for that policy. Banks are more regulated now and the loan volume reflects that. The GSEs are relaxing what they will buy from banks but the banks don't trust them so they don't lend to everyone.

Rents are rising because people have to live somewhere. All those who lost their homes or can't afford to buy a home are renters. Wall Street helps them out, even buying new homes to rent them out. That only makes sense when interest rates are near zero and the returns are too low in the stock and bond markets.

 

[Randolph Kinney]

Puerto Rico’s Debt Crisis and the 1975 Law Complicating Matters

To appreciate why it is proving so hard for Washington to help debt-burdened Puerto Rico, it helps to go back to 1975, the year New York City went broke, and consider the role played in that crisis by a prominent Republican senator from Texas named John Tower.

Fearing more financial failures in other municipalities, federal securities regulators wanted Congress to force states and cities to provide truthful financial information about bonds they were going to sell to raise money. But cities were having none of it, instead rallying around the Constitution’s separation-of-powers doctrine. The fight was resolved by Senator Tower, the first Texas Republican elected to the Senate since Reconstruction. He introduced a bill that kept the feds at bay.

As a result, the Securities and Exchange Commission has no power to make states and local governments submit to the same kind of scrutiny that companies must endure before sending their securities to market — which may help explain how a small, impoverished island like Puerto Rico managed to borrow $72 billion before the markets saw that it was insolvent.

Now there are signs that some policy makers see Puerto Rico’s troubles as proof that the S.E.C.’s hands-off approach to the entire $3.7 trillion municipal bond market is part of the problem and should be changed.

The lack of oversight — and transparency — is playing out in multiple ways in the Puerto Rico debt debacle. The island’s government has been unable or unwilling, or both, to provide Congress with accurate numbers that explain the island’s financial needs — a requirement for getting help from the United States government. Investors who stand to lose millions if the island defaults, or has to restructure its debt, complain that they, too, are in the dark about the island’s true financial picture.

http://www.nytimes.com/2015/11/05/b..._th_20151105&nl=todaysheadlines&nlid=50329110

I would love to see the U.S. Treasury submit to the SEC a financial disclosure statement along with the assumptions necessary to make the bond payments on the debt with rising interest rates, to sell the debt of this nation.

 

[Meandering]

From NAR

March 16, 2015

The gap between rental costs and household income is widening to unsustainable levels across the country. As more renters face steeper costs, it may put them even further away from home ownership, according to a new study released by the National Association of REALTORS®. NAR evaluated income growth, housing costs, and changes in share of renter and owner-occupied households over the past five years in metropolitan statistical areas across the U.S.

Over the last five years, a typical rent rose 15 percent, while the income of renters grew by only 11 percent, according to their research.

"The gap has worsened in many areas as rents continue to climb and the accelerated pace of hiring has yet to give workers a meaningful bump in pay," says Lawrence Yun, NAR's chief economist.

New York, Seattle, and San Jose, Calif., are among the cities where combined rent growth far exceeds wages, according to the survey.

"Current renters seeking relief and looking to buy are facing the same dilemma: Home prices are rising much faster than their incomes," says Yun. "With rents taking up a larger chunk of household incomes, it's difficult for first-time buyers – especially in high-cost areas – to save for an adequate down payment."

Meanwhile, those who were able to buy a home in recent years have been insulated from the rising housing costs since they were able to lock-in a low 30-year fixed-rate mortgage with a set monthly payment, according to NAR's study. As such, home owners were able to grow their net worth as home values increased and their mortgage balances went down.

"The result has been an unequal distribution of wealth as renters continue to feel the pinch of increasing housing costs every year," according to NAR’s study.

The markets that have seen rents rise by the highest amounts since 2009 are:

• New York: 50.7%
• San Jose, Calif: 32.38%
• San Francisco: 25.60%
• Denver.: 24.14%
• Seattle, Wash.: 22.26%

"Many of the metro areas that have experienced the highest rent increases are popular to millennials because of their employment opportunities," says Yun.

The key to relieve housing costs: Builders need to ramp up the supply of new-home construction, according to Yun. He estimates that housing starts need to rise to 1.5 million. Over the past seven years, housing starts have fallen far short from that historical average – averaging about 766,000 per year.

"With a stronger economy and labor market, it's critical to increase housing starts for entry-level buyers or else many will face affordability issues if their incomes aren’t compensating for the gains in home prices," Yun says.

http://realtormag.realtor.org/daily-news/2015/03/17/why-renters-may-be-in-trouble

Of course seeing income increases of 11% far exceeds the 2% stated by the government, but hey! It's real estate and everyone just makes up the numbers as they go along.

Fannie Mae (FNMA) Multifamily Mortgages Nationwide
The Federal National Mortgage Association (FNMA), commonly known as “Fannie Mae” offers federally guaranteed mortgages and is one of the largest multifamily loan programs in the country. Most Fannie Mae apartment loans are non-recourse (except standard carve outs) and properties are underwritten using its Delegated Underwriting Services (DUS) program to make sure that lending parameters are met. Loan collateral may be traditional apartments, affordable housing, senior housing, student housing, and manufactured housing communities. Loan amounts start at $750,000 and go up with terms between 5-30 years and amortizations up to 30 years.

Loan Type *Property Type

Fannie Mae (FNMA) Apartment, Affordable Housing, Cooperative Housing, Manufactured Housing, Senior Housing, Student Housing
Min Loan Amount $750,000
Max LTV 80%
Term Length 3-30 Years
Amortization 15-30 Years

Small Loan Program: The Small Loans product is for the purchase or refinance of existing, stabilized properties including: traditional, affordable housing, seniors housing, student housing, and manufactured housing communities. Properties must have a minimum of five units (50 pad sites for manufactured housing) and the Borrower must be a single-asset U.S. entity with all U.S. principals. Borrowers may also have foreign ownership interests, subject to proper structuring of the borrowing entity. Loan amount must be between $750,000 - $3 million ($5 million in eligible MSAs*). Maximum LTV is 80% for purchases and 75% for refinances with a minimum 1.25x DSCR requirement, but but this will depend on the collateral.**

• 
  * Eligible MSAs include: Baltimore, Boston, Chicago, Los Angeles, New York, Sacramento, San Diego, San Francisco, San Jose, Seattle, and Washington DC.

• 
  Recourse: Most Fannie Mae mortgages are non-recourse, except for standard carve-out provisions. Full recourse mortgages make the sponsors guarantying the loan responsible for any and all shortfalls between the loan balance and sales price in the event of default and foreclosure as well as any applicable legal and ancillary fees. Non-recourse means is that the Borrowers are not personally liable for the repayment of the loan and that the collateralized property and its cash flows would be the sole source of repayment of the debt in the event of a foreclosure. However, in the event the Borrower actively participates in an activity that could cause harm to the property, Lender, or investors, there could be springing recourse in some limited circumstances; this may include loan fraud, property transfer or subordinate financing without consent of the Lender, voluntary or collusive activity leading to a bankruptcy filing or failure to maintain SPE status, among other such actions.

 

[Randolph Kinney]

December Interest Rate Increase Is ‘a Live Possibility,’ Janet Yellen Says

WASHINGTON — The Federal Reserve could raise its benchmark interest rate in December as long as economic growth continues, two senior Fed officials said on Wednesday, hammering that message in repeated public remarks.

The economy is “performing well,” Janet L. Yellen, the Fed chairwoman, told the House Financial Services Committee Wednesday morning, adding that “it could be appropriate” to raise rates at the Fed’s final policy meeting of the year in mid-December. No decision has been made, she stressed.

The Fed’s messaging campaign made an impression on investors who have been slow to accept that the Fed may finally be ready to raise rates. Yields on two-year Treasury securities, closely tied to expectations about Fed policy, climbed to 0.84 percent, the highest level since the spring of 2011.

In effect, that means the Fed is already starting to tighten financial conditions even as officials wrestle over how soon to end a stretch of nearly seven years of near-zero short-term rates.

The Fed’s stimulus campaign has encouraged borrowing and risk-taking, which officials say have contributed to economic recovery and job growth. Those benefits will diminish as rates rise.

http://www.nytimes.com/2015/11/05/b..._th_20151105&nl=todaysheadlines&nlid=50329110

Will she or won't she? Place your bets, gentlemen, place your bets. Who is on the eleven, a natural. Seven come eleven, place your bets. A little insurance for "crap dice", who is on the field bet?

Unwinding all the hedge plays is going to come with maximum volatility.

 

[TD Morgan]

Why worry about the investors who stand to lose when they should be going after the borrowers and where the borrowed funds went... to fund on-going corruption.

Hundreds of thousands of Puerto Ricans (many who never learned English) are flooding into Kissimmee, Florida (a bedroom community of Orlando. Too many of them are uneducated and on the public dole, relying on the "cottage" Social Security disability industry to fund their move to the mainland. (I wonder how many of the use their inability to speak English as their disability.)

Entire towns in Puerto Rico are virtually boarded up due to government red tape that seeks to squeeze a few bucks out of everything that is done (not much unlike the Mafioso.) I suspect many of the "tourist corridor" store fronts are used to launder drug-money for the trade that goes through the island.

Puerto Rico’s Debt Crisis and the 1975 Law Complicating Matters

To appreciate why it is proving so hard for Washington to help debt-burdened Puerto Rico, it helps to go back to 1975, the year New York City went broke, and consider the role played in that crisis by a prominent Republican senator from Texas named John Tower.

Fearing more financial failures in other municipalities, federal securities regulators wanted Congress to force states and cities to provide truthful financial information about bonds they were going to sell to raise money. But cities were having none of it, instead rallying around the Constitution’s separation-of-powers doctrine. The fight was resolved by Senator Tower, the first Texas Republican elected to the Senate since Reconstruction. He introduced a bill that kept the feds at bay.

As a result, the Securities and Exchange Commission has no power to make states and local governments submit to the same kind of scrutiny that companies must endure before sending their securities to market — which may help explain how a small, impoverished island like Puerto Rico managed to borrow $72 billion before the markets saw that it was insolvent.

Now there are signs that some policy makers see Puerto Rico’s troubles as proof that the S.E.C.’s hands-off approach to the entire $3.7 trillion municipal bond market is part of the problem and should be changed.

The lack of oversight — and transparency — is playing out in multiple ways in the Puerto Rico debt debacle. The island’s government has been unable or unwilling, or both, to provide Congress with accurate numbers that explain the island’s financial needs — a requirement for getting help from the United States government. Investors who stand to lose millions if the island defaults, or has to restructure its debt, complain that they, too, are in the dark about the island’s true financial picture.

http://www.nytimes.com/2015/11/05/b..._th_20151105&nl=todaysheadlines&nlid=50329110

I would love to see the U.S. Treasury submit to the SEC a financial disclosure statement along with the assumptions necessary to make the bond payments on the debt with rising interest rates, to sell the debt of this nation.

 

[TD Morgan]

That sentence should have read WHEN, not IF apartment values fall sharply...

Driving down I-4 in Orlando, I noted there are thousands upon thousands of new MF units springing up on land that is right on the highway. Poor locations (unless people actually like highway noise) and I presume most of these are going to be bundled in the deals you are writing about.

Taxpayers could be on the hook for losses incurred by the mortgage companies if apartment values were to fall sharply.

Detractors argue that providing subsidized loans to deep-pocketed real estate investors isn’t in line with the mandate of the government-sponsored entities.


http://finance.yahoo.com/news/taxpayers-may-funding-billionaires-biggest-100000876.html

Unaffordable rents?? Naw, can't happen.


Almost makes you wonder if they are using CU to value those rental units and market rents?

.

.

 

[Randolph Kinney]

Why worry about the investors who stand to lose when they should be going after the borrowers and where the borrowed funds went... to fund on-going corruption.

Hundreds of thousands of Puerto Ricans (many who never learned English) are flooding into Kissimmee, Florida (a bedroom community of Orlando. Too many of them are uneducated and on the public dole, relying on the "cottage" Social Security disability industry to fund their move to the mainland. (I wonder how many of the use their inability to speak English as their disability.)

Entire towns in Puerto Rico are virtually boarded up due to government red tape that seeks to squeeze a few bucks out of everything that is done (not much unlike the Mafioso.) I suspect many of the "tourist corridor" store fronts are used to launder drug-money for the trade that goes through the island.

My bet is on the Syrian refugees. We have a big heart and a big wallet.

"Inscription on the Statue of Liberty"
Give me your tired, your poor,
Your huddled masses, yearning to breath free,
The wretched refuse of your teeming shore,
Send these, the homeless, tempest tost to me,
I lift my lamp beside the golden door.

Author: Emma Lazarus

 

[Randolph Kinney]

Shippers Warn of Overcapacity, Cancel Scheduled Voyages, Announce Profit Warnings

Maersk Line to Cut 4,000 Jobs as Market Deteriorates

After issuing a surprise profit warning last month, Maersk signaled it, too, was no longer immune to a combination of slowing global growth and massive container ship overcapacity on many routes.

http://www.wsj.com/articles/maersk-line-to-cut-staff-as-market-deteriorates-1446623156


Box Markets are in an Over-Capacity Crisis, Next Year Will be Worse

http://shipandbunker.com/news/world...-over-capacity-crisis-next-year-will-be-worse



Harper Petersen Shipping Index

 

[TD Morgan]

We may have a big heart, but our wallet is devoid of cash and our credit cards are reaching their maximum limits.

It is time we send the statue to China with the rest of our jobs and capital.

My bet is on the Syrian refugees. We have a big heart and a big wallet.

"Inscription on the Statue of Liberty"
Give me your tired, your poor,
Your huddled masses, yearning to breath free,
The wretched refuse of your teeming shore,
Send these, the homeless, tempest tost to me,
I lift my lamp beside the golden door.

Author: Emma Lazarus