From the Columbian:
Two Creeks was meant to bring luxury living to east Clark County. Instead its upscale Camas townhouses continue to bring financial ruin for its developers and to cost those who backed the project millions. Now 29 unsold homes, out of 31 built near the Camas Meadows Golf Course in 2006, are heading to […]
From the Portland Business Journal:
Wells Fargo & Co. has raised the credit requirements for people seeking some types of home loans, the company confirmed Friday.The San Francisco-based bank will require higher credit scores for potential home buyers seeking loans that cover 95 percent or more of a home’s value. The bank didn’t give further details.Wells […]
We’ve been talking about the tighter lending standards for a while. Here is a little evidence of it from the MailTribune:
The Federal Reserve reports that more banks are tightening lending standards on home mortgages, other types of consumer loans and business loans in response to a spreading credit crisis.The Fed reported Monday that the percentage […]
Arthur, who has $434,000 in commercial paper that’s been frozen since August, plans to reject the proposal because he’s not willing to give up his right to sue to recover his money sooner. Under the agreement reached Monday, the 30- to 90-day debt will be converted to new notes maturing as late as 2017.
“I’m going to sue,” said Arthur, 52, who invested proceeds from the sale of his Alberta farm on the advice of broker Canaccord Capital Inc. “I want all my money back; you can’t sell somebody something and then not deliver on the product.”
About 1,400 Canaccord clients collectively hold $269 million of the frozen commercial paper in their accounts, according to the brokerage. Its chief operating officer Mark Maybank said yesterday in a telephone interview it is working on a “relief program” for clients.
“We don’t have the ability or the capital base to buy it out directly from our clients,” he said, from Ixtapa, Mexico.
“I’m optimistic that we’re going to be able to post a successful restructuring, identify market participants, potential buyers that we can work with to address the needs of our clients.”
Investors like Arthur, who include a university student, energy executives and a retired flight attendant, have the power to scuttle Canada’s biggest debt restructuring if they vote against the proposal.
The plan requires the support of a majority of noteholders, who must forego their right to legal action.
Noteholders will be asked to vote on the restructuring of asset-backed paper on April 25 in Toronto, the committee in charge of the restructuring said late yesterday. Each holder will have one vote.
Under Canadian bankruptcy rules, the more than 1,500 individuals and at least 100 corporations and money managers who own the commercial paper.
“We want to avoid having the noteholders endure more anguish than is necessary,” said Toronto lawyer Purdy Crawford, who spent almost seven months crafting the pact and now plans to meet investors in five cities to sell it. “The alternative to this plan is the liquidation of some or all of the conduits, which as I’ve said would lead to substantial losses.”
A defeat of the planmay lead to a collapse of $32 billion in asset-backed paper, which is also held by some of the biggest pension funds and lenders such as the National Bank of Canada.
Some individual investors say the Crawford plan leaves them with two unappealing options: recover most of their money when the notes mature within nine years.
Or they can try to sell the debt once trading begins, assuming the plan is approved. The debt may trade at 60 cents to 80 cents on the dollar because of the decline in credit markets, according to analysts.
Murray Candlish, 51, a retired hog farmer in Daysland, Alta., says he can’t wait nine years to get his $350,000 investment back.
“We trusted these people to put our savings into something that was safe”.
“Why is it, that the subprime loan crisis has such a rippling effect on many sectors of the economy?” “Why are even companies outside the USA also affected by the U.S. mortgage crisis?” These are some of the questions being asked by millions of people around the word. So - why are the subprime loan […]
After being laid off from her job as an events planner at an upscale resort, Jo Ann Bauer struggled financially. She worked at several lower-paying jobs, relocated to a new city and even declared bankruptcy.
Then in December, she finally accepted her parents’ invitation to move into their home — at age 52. “I’m back living in the bedroom that I grew up in,” she said.
Taking shelter with parents isn’t uncommon for young people in their 20s, especially when the job market is poor. But now the slumping economy and the credit crunch are forcing some children to do so later in life — even in middle age.
Financial planners report receiving many calls from parents seeking advice about taking in their grown children following divorces and layoffs.
Kim Foss Erickson, a financial planner in Roseville, Calif., north of Sacramento, said she has never seen older children, even those in their 50s, depending so much on their parents as in the last six months.
“This is not like, ‘OK, my son just graduated from college and needs to move back in’ type of thing,” she said. “These are 40- and 50-year-old children of my clients that they’re helping out.”
Parents “jeopardize their financial freedom by continuing to subsidize their children,” said Karin Maloney Stifler, a financial planner in Hudson, Ohio, and a board member of the Financial Planning Association. “We have a hard time saying no as a culture to our children, and they keep asking for more.”
Bauer’s parents won’t take rent money or let her help much with groceries. She’s trying to save several hundred dollars a month for a house while working as a meetings coordinator.
Editor:
This story will be repeated in countless Familes.
Sadly, we have many Boomers and Echo Boomers that are totally broke and will never be able to grab a high paying job - again.
The difference in this downturn, as opposed to other ‘Depressions’, is that folks have no savings, they have maxed credit cards, their home is losing value so fast that they can’t get any more lines of credit - food prices are skyrocketing, taxes are going parabolic, services are being cut, jobs are being slashed, student loans are harder to get, retail is stalling, and the endless War in Iraq is costing TRILLIONS of dollars.
Happy Days are here again.
Mortgage insurers, whose backing is required for borrowers who can’t afford the traditional 20% down payment on a home, have already flagged nearly a quarter of the nation’s ZIP codes where they refuse to insure some home loans.
That encompasses a wide variety of neighborhoods: McMansions in Scottsdale, Ariz.; luxury Miami condos; 1960 ranch houses in Flint, Mich.; and early 20th century kit homes in Metuchen, N.J.
The entire states of California, Florida, Arizona, Michigan, Ohio and Nevada — which have seen the highest foreclosure rates and the worst price declines — are blackballed on some mortgage insurers’ lists.
Banks that have lost billions because of bad bets during the housing boom are now reverting to strict lending standards not seen in nearly 20 years, according to industry data and interviews with lenders.
For new home buyers and those seeking to refinance, it can mean higher down payments and a higher bar for credit scores, among other requirements. The toughest restrictions are in markets where home prices are falling, though regions where property values are rising are not immune.
“We’re in the midst of an epic, broad, sweeping change in the mortgage industry,” said Chris Sipe, a loan officer with America East Mortgage in Frederick, Md.
The reluctance to extend credit comes despite a flurry of government initiatives, including steady interest rate cuts by the Federal Reserve, intended to make it easier for would-be borrowers and those facing interest-rate resets on their mortgages.
Lenders’ growing leeriness threatens to dampen sellers’ already soggy prospects for the spring home-buying season — and that means more pain for the already battered housing sector and the broader economy.
In recent weeks, mortgage insurers have flagged more than 9,600 ZIP codes in at least 34 states where they won’t insure certain types of home loans — those for investment properties or second homes, those with riskier adjustable-rate or interest-only mortgages, or for buyers making down payments of less than 3%.
Editor:
This is a TRAGIC blunder that will only hasten the demise of the U.S. economy.
JUST as people need some breathing room - the oxygen is shut off.
All those people that actually WANT to buy a home, could now be out of the market - and lending even more losses and NON-SALES to the horrid numbers we already have.
The unemployment stats are about to go through the ROOF, as job creation is going to drop off a cliff.
The impact on NYC - and the downturn in the Financial Industry will kill off thousands of jobs.
Just the lost jobs at Bear Stearns will be a crippling hit to the Big Apple’s bottom line.
31% of GDP of NYC is dependent on the paper shufflers in the Financial Sector.
Citigroup said Thursday it will use its $7.3 billion in unsecured U.S. bank credit facilities to repay debt maturing this year.
The funds will also be used to provide financing to its core commercial franchises, it said. CIT will continue to actively seek additional funds and explore and execute on the sale of non-strategic assets and business lines.
“Our decision today is a result of the protracted disruption in the capital markets as well as recent actions by the rating agencies,” said Chief Executive Jeffrey M. Peek.
More….
The Great Unwind has begun, Citigroup Inc. strategists warned on Wednesday.
In a rare move to calm investors’ nerves, British financial authorities stepped forward on Wednesday to quench a string of “unfounded rumors” that had sent some financial stocks in London into a tailspin.
The Financial Services Authority said it had started an investigation into whether some traders spread rumors about British financial institutions over the last few days and might have profited from the decline in the stocks’ share prices. Separately, the Bank of England, which almost never makes public statements about specific lenders, denied rumors that it met or scheduled to meet with executives at a British bank to discuss potential liquidity problems.
The twin moves come days after the U.S. central bank’s extraordinary rescue of Bear Stearns and illustrates the lengths authorities are going to on both sides of the Atlantic to prevent a crisis of confidence in the financial sector from spiraling out of control. A day after Wall Street soared in response to a Federal Reserve interest rate cut, markets in Europe and the United States fell again, with the Dow Jones industrial average down 1.6 percent in afternoon trading.
“It reveals how nervous the authorities are that rumors can actually bring serious problems to a financial institution,” said Alistair Milne, senior lecturer at Cass Business School in London.
( Editor - check out Naked Shorting and other nasty practices - some really hard edged trading going on, methinks).
Trading rooms were buzzing with rumors Wednesday morning that HBOS, the largest mortgage lender in Britain, was in trouble. The speculation had wiped about £3 billion, or $6 billion, off its market value before the Edinburgh-based lender could deny them, saying it had “ready access” to funding.
The pound was badly hit on Wednesday following rumours that HBOS could be in financial difficulty as well as speculation that the Bank of England may cut interest rates next month rather than in May.
Bank of England policymakers voted 7-2 to freeze interest rates at 5.25 percent earlier this month, minutes of their meeting showed.
The BoE’s nine-member Monetary Policy Committee (MPC) opted to leave its key lending rate unchanged at the meeting on March 5-6 after a quarter-point reduction the previous month.
The minutes, alongside market turmoil and continued credit constraints, mean the BoE is likely to come under increased pressure to cut rates sooner rather than later.
Also weighing on the pound were labour market data which showed a smaller-than-expected drop in jobless numbers.
“The greatly increased risk of a 25 basis point base rate cut to 5.0 percent next month following today’s dovish minutes, and softer-than-expected unemployment and earnings, is helping underpin euro/sterling” said Robert Howard, analyst at Thomson IFR Markets.
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