Tuesday, September 04, 2007

Bloomberg - "Fed, Blamed for Asset-Price Inaction, Is Told `Tide Is Turning'" (9-4-07)

"Federal Reserve officials, wrestling with a housing recession that jeopardizes U.S. growth, got an earful from critics at a weekend retreat arguing they should use regulation and interest rates to prevent asset-price bubbles. Otmar Issing, former chief economist at the European Central Bank, and Stanley Fischer, head of the Bank of Israel, were among guests at the Fed's summer symposium in Jackson Hole, Wyoming, to challenge the hands-off approach. Fed Governor Frederic Mishkin reiterated his view in a paper at the conference: Officials should only respond to the effects of asset prices on the outlook for economic growth and inflation."

CNN - "Subprime woes weigh on job outlook" (9-4-07)

"The mortgage crisis is likely to make many companies more cautious on the payroll front in the next six months - but some sectors will get hit harder than others. Employees at companies with closest ties to the housing industry (from construction firms to suppliers to financial service providers) are likely to see job losses and pinched pay growth, particularly in the West and Northeast, said Jeff Joerres, chairman and CEO of staffing firm Manpower."

Broker Universe - "What We're Hearing" (9-4-07)

"As we all know, the secondary market for most subprime and alt-A loans is closed (more or less) which means if a mortgage company is funding these products it has either a balance sheet to put them on or a ton of cash somewhere. If Wall Street doesn't open up its “buying window” soon it's safe to say there is no future for subprime, at least not the subprime industry we've known the past five years. Even back in 1998 when the subprime market cratered (thanks to the Russian debt crisis and Wall Street-influenced abuses on gain-on-sale accounting) someone was buying loans in the secondary. But with this debacle I have yet to see a financial institution step up to the plate. If things do not change, Wall Street should close all their trading desks and shutdown their conduits. I mean, what's the point? That said, we're also starting to hear reports that firms bottom-fishing in the scratch-and-dent loan market also are having trouble obtaining financing -- and so are non-banks that play in the low-balance commercial market…"

Reuters - "Novastar to slash 275 retail jobs, curtail lending" (9-4-07)

"NovaStar Financial Inc (NFI.N: Quote, Profile, Research) on Tuesday said it will eliminate jobs and slash retail lending to preserve cash after it was forced to cancel a $101.2 million rights offering. NovaStar said it decided not to sell rights to purchase $101.2 million of convertible preferred shares, after concluding it could not meet certain requirements in the current market environment."

Bloomberg - "Bush Hits Just Right Note in Facing Housing Mess" (9-4-07)

"President George W. Bush revealed last week his policy response to the mortgage crisis. His measured plan promises to help stabilize the markets without bailing out the investors and lenders whose profligacy created the problem in the first place. The good news for taxpayers and financial markets: The White House has produced its first big economic-policy winner in a long, long time."

Daily Herald - "Effects of housing bust far-reaching" (9-4-07)

"Walking through the gated community of Black Mountain Vista on a hill in Henderson, Nev., Thomas Blanchard offers a guided tour of real-estate woe. A row of stucco duplexes that recently sold for as much as $500,000 sit empty."

Los Angeles Times - "Is America really pro-bailout?" (9-4-07)

"President Bush announced his intention last week to reach out a hand to the 'many Americans' who 'may have been misled' in the sub-prime mortgage market. Two days earlier, presidential hopeful Barack Obama called for fining 'predatory lenders' to bail out 'hoodwinked' families. L.A. City Councilman Richard Alarcon wants a $5-million revolving fund to 'help homeowners on the verge of foreclosure.' The news media report on families losing homes, disabled owners facing foreclosure and newlyweds being tossed into the street."


Reuters - "Poor demand sidelines Freddie Mac mortgage issue" (9-4-07)

"Freddie Mac (FRE.N: Quote, Profile, Research), the second largest provider of financing for U.S. home mortgages, on Tuesday said it declined to issue one of its standard mortgage securities due to poor demand. After consulting its Wall Street underwriters, the company decided it would not issue a Reference Real Estate Mortgage Investment Conduit, or Reference REMIC, in September due to current market conditions, Freddie Mac said in a statement."

Bloomberg - "Construction in the U.S. Declines Most Since January" (9-4-07)

"Spending on U.S. construction projects unexpectedly fell in July by the most since January, indicating that the homebuilding slump continued to hold back economic growth at the start of the third quarter. The 0.4 percent decline followed a 0.1 percent gain the prior month, the Commerce Department said today in Washington. Figures for June were previously reported as a drop."

Bloomberg - "If Recession Comes, You Can Still Build Wealth" (9-4-07)

"If the U.S. housing bust triggers a recession, you can still profit in the financial markets. Investment advisers tell their clients to buy bonds when the stock market is in a prolonged tailspin. The conventional wisdom is that about 40 percent of your portfolio should be in bonds, yet that wouldn't give you complete sanctuary since corporate and mortgage debt has been pummeled as corporate borrowing costs increased when asset-backed securities were contaminated by defaulted subprime mortgages."

NAR - "When Helping People Achieve the American Dream Becomes a Personal Nightmare" (9-4-07)

"Would you welcome a complete stranger into your home or get into a car alone with someone you had just met? For Realtors® and other real estate professionals, these are everyday occurrences. Every job that requires interaction with the public involves some risk, which is why the National Association of Realtors® is reaching out to its 1.3 million members next week as part of its fifth annual REALTOR® Safety Week."

Orange County Register - "First American to cut 1,300 jobs" (9-4-07)

"Santa Ana-based title insurer First American announced this morning that it plans to cut about 1,300 jobs this month. The job cuts are in addition to 600 jobs eliminated earlier this year. The combined cutbacks will save about $108 million a year, First American said. With real estate transactions continuing to move slowly, the company said 1,400 of the 1,900 jobs will be eliminated in title insurance and services, for savings estimated at $66 million. It also plans to save $16 million by reducing executive benefits."

Real Estate Journal - "Investors Default On Home Loans" (9-4-07)

"Investors played a big role in pumping up home prices during the housing boom. Now, they account for an outsize proportion of loan defaults, mortgage bankers and builders say. A survey by the Mortgage Bankers Association found that mortgages on properties that aren't occupied by the owner -- mostly investment homes -- account for between 21% and 32% of the defaults on prime-quality home loans in Arizona, California, Florida and Nevada, states where overdue payments are mounting fast."

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