The country’s chief executive has announced an ambitious plan which represents a sort of present to house owners caught up in the country’s foreclosure crisis.
This particular plan is an outgrowth of something known as the Hope Now Alliance, which represents officials in both the public and private sectors. Under this particular deal, interest rates will be frozen for five years for individuals who would be risking foreclosure if their adjustable rates grew at the end of their lock-in period.
“Hope Now is an example of government bringing together members of the private sector to voluntarily address a national challenge without government subsidies and without government mandates,” said President George W. Bush.
According to the Commander & Chief, over one million million homeowners could eventually benefit, which is coordinated in part by Treasury Secretary Hank Paulson and Housing Secretary Alfonso Jackson.
The plan is voluntary, meaning that only those homeowners who ask for help will actually get it. By calling a toll-free hotline number, they can be put in touch with those who can assist them avoid foreclosure.
“Congress needs to temporarily reform the tax code to help homeowners refinance during this time of housing market stress. Under current law, if the value of your house declines and your bank forgives a portion of your mortgage, the tax code treats the amount forgiven as taxable income. When you’re worried about making your payments, higher taxes are the last thing you need.”
All in all, the real estate sector is suffering from the most severe slump in decades and may not recover for some time to come, sadly enouph.
Renowned writer and journalist Alex Veiga of the Associated Press reported
today that foreclosure filings across the country have gone up by almost fifty percent the previous month as compared
with September of last year. This distubing news has been caused because financially struggling home buyers who are already behind on their mortgage payments
have defaulted on their mortgages or have moved nearer to losing their houses to foreclosure, he reported.
His report was based data from a real estate information firm which specilaizes on this topic.
Unfortunately for both the home buyers and the countries’s economy as a whole,
the September figure is the 2nd highest total for filings in a one month period of time since the firm had started tracking monthly filings some 2 years prior.
The filings in question include default notices, auction sale notices as well as bank repossessions. Certain properties in question may have also received more than 1 notice if the owners have several mortgages.
As a general rule of thumb, borrowers must be sixty to ninety days past due on their mortgage payments before their lender will percieve them to be in actual default, the initial step of the foreclosure process.
If a house owner cannot find a way to get current on his or her payments, the house is then usually put up for auction, and if it does not sell, it ultimately goes back to the bank, sadly enouph.
The foreclosure ratio for the country last month was 1 foreclosure filing for every 557 households, according to the data.
According to the Oregon-based newspaper ‘The Building Team Forecast’,
Employment Growth in the country has been Decelerating for over twelve months, unfortunately.
In fact, the latest month (8/07) U.S. employment number (monus four thousand jobs) sent major ripples waves throughout the entire American economy.
According to the report in question, this was actually the first month-to-month decline in some 4 years, dating back to August of 2003. Much of the responsibility for this
drop has been laid on the steps of the now infamous subprime mortgage fiasco and the aftereffects of reduced business as well as consumer confidence in general.
All in all, the United States Year-over-year Job Growth was +1.2% as of August; Down from it’s Peak, according to the September 20 report by Alex Carrick.
There was some reason for optimism in the gloomy news, however.
The Toronto, Canada Stock Exchange’s primary index upticked higher yesterday after lower-than-expected U.S. jobless claims emboldened their investors and increased good feelings regarding the world’s largest economy.
It should be very interesting to see what happens in the job markets next month as the latest news is sure to send additional ripples throughout the global economy as whole.
According to the authoritative Bloomberg financial news network,
consumer confidence has dropped in recent weeks and
unemployment spiked last month to 4.6 percent from 4.5 percent previously. Employment growth slowed to about ninety thousand last month from 126,000 the previous month,
down from last year’s average of about 189,000 per month, unfortunatelt. In addition to this, growth in hourly earnings slowed to 3.9 percent las month as well.
What is causing the slow job growth rate and other negative economic statistics such as an increase in workers comp claims?
Well according to Bloomberg, a true authority on the subject, the worst housing recession in some sixteen years appeares to be badly reducing consumer confidence and therefore crucial spending as well as effecting employment numbers.
For example, sales of previously owned houses fell last month to the very lowest level in nearly 5 years! Furthermore, the glut of unsold houses rose to a sixteen year high
from a year earlier, down from a 9 year high of 4.3 percent in December 2006, the National Association of Realtors reported yesterday.
In addition, The credit crunch appears to be effecting employment numbers as well. For instance, Accredited Home Lenders Holding Company just last week stated that it would close over fifty percent of their operations and let go about sixteen hundred individuals,
sadly enouph. Just before that occured, SunTrust Banks Incorporated stated that it was goping to cut more than two thousand employees in 2007 as profit from retail & commercial banking alike falls.
As if that were not enouph, Weaker house prices also means slower automobile sales, according to the biggest American automobile retailer, Bloomberg reported.
The economic news is not all gloomy, however. Luckily, decreasing fuel costs have at least provided consumers with a certain amount of relief. The Price of regular gasoline fell from as high as $3.05 a gallon the previous month to $2.78 a gallon on Aug. 22. These Prices are still up thirty percent from their lows for 2007 of $2.14 a gallon on Jan. 24, however.
Did you ever notice the bizarre phenomenon of a firms’ stock going up in value after it announces layoffs or downsizing? According to an AP report by noted journalist Greg Bluestein,
Shares of the giant ISP EarthLink Corporation moved upwards over six percentage points today after the
they stated that they would be trimming about nine hundred or so positions (which is around fifty percent of their total work force), plus close down 4 offices in a major campaign to lower existing expenses.
In addition to these rather draconian measures, the firm stated that it will also repurchase some two hundred million dollars worth of their own stock as part of this restructering plan. Furthermore,
the Georgia-based firm declared that additional cuts may be announced as early as prior the year’s end.
All in all, the firm will close it’s offices in Orlando, Florida., Knoxville, Tennessee., Harrisburg, Pennsylvania. and San Francisco, California.
They will also reduce their profile in a couple of other locales around the country.
The firm claims it may save between twenty-five million to thirty-five million through the remainder of the year due to these actions. The firm now employs nearly two thousand individuals,
and they have been one of the leading ISP’s in the nation for some time.
According to an August story in the Reuters News network, the sinking (too strong a word?) United States housing market has caused an major surge in job losses at the country’s financial services firms,
and the end is nowhere to be seen, sadly enouph.
Of 2007’s cuts, a whopping 41% were connected to housing market woes, particularly the risky (and now extinct) subprime mortgage market. Employment cuts by real estate and construction firms were in excess of twenty thousand.
This figure is more than double that for the entire previous year.
Just in the past week alone, for instance, investment bank Bear Stearns Co’s, credit card issuer Capital One Financial Corporation
as well as mortgage lenders Countrywide Financial Corporation and First Magnus Financial Corporation have announced well over eight thousand mortgage-related employment cuts.
There seems to be a certain pattern in effect here: employment cuts are increasing as credit losses deepen.
Just recently for instance, the government’s Office of Thrift Supervision stated that troubled assets, or loans at least ninety days delinquent, rose at savings & loans it regulates to $14.2 billion in the 2nd quarter from $9.5 billion the year before.
In the meantime, home foreclosure filings surged ahead over ninety percent last month from a year earlier and rose nine percent from June, to 179,599, according to the Reuters news network and their sources.
It should be noted that it is only natural for mortgage workers to feel whipsawed. Nationwide, for instance, cut some five hundred positions just last week after having added nearly seven thousand positions from January to July, with increases in every single month.
Let’s hope we finally get some good news after all of these rather sad statistics.
Insurance firms are less liable for some specific kinds of workers’ compensation claims following
a policy change that was approved by the state Department of Banking and Insurance.
The change in question, which occured on July first, permits insurance firms to reduce their coverage as well as to
limit liability in those cases where an employer’s specific actions may have contributed to the accident.
All in all, Employers will be affected in 2 different waysaccording to the particular banking dept. which made this ruling.
For one thing, they will be more exposed to claims, since they will not have the coverage for some kinds of accidents. And yet
the policy change in question should save them from increase in premiums. Thus it has a downside and an upside as well.
The change was prompted by a Court decision late last year pertaining to a workplace accident and whether or not the workers’
compensation insurer had to shoulder the whole responsibility for paying the damages
that would result if insurers had to pay compensation for more of the claims.
Therefore the bureau, working with the insurers, edited the policy language somewhat to allow insurers to get around an additional liability, over and above the regular workers’ compensation payments.
Highly respected journalist and author Matt Woolsey of Forbes magazine recently compiled his list of the
priciest real estate markets in the country, and what a sobering list it really is.
Not surprisingly, New York City and LA top the list….. buyers there can expect the cost to be a million dollars or more for a house which could cost 50% less than that in other markets.
LA has just been ridiculous. For instance, in quarter one of 2001, about forty-two percent of the houses purchased there were available at the median earning household. Yet in the first quarter of 2007,
only some three percent of the houses sold there were affordable to those households earning the median income!
This information comes from the National Association of Home Builders as well as Wells Fargo Bank.
Matt pointed out that a decade ago, San Francisco was the only major real estate market that was above a 4.5. But today there are a staggering thirteen. Unfortunately, the more incronguent that prices are with income, the more potential buyers must turn to various credit sources to make up for
the market’s inherent unaffordability. This could realistically signal trouble later on. Just consider the current tightening of credit standards for instance. This may very well create problems for the markets trying to recover from a downturn.
Another contributing factor to a region’s unaffordability is certain local policies which increase the cost of building new houses.
Affordability has much to do with where a market is in its particular growth cycle. For instance 5 years ago Las Vegas was one of the countries’s most affordable cities, because of a flurry of development. Yet now, growth has slowed down enough so that fewer than twenty percent of all house sales last quarter were available to those households at the median income level.
A fascinating tidbit is that since the beginning of the century, Boston house prices have risen 16.7%. Median-income buyers who make up half the buying pool in 2000 now represent only 28% of it. By way of comparision, in Raleigh, North Carolina., house prices have grown by 37% in that span, and the share of median-income earners buying houses has dropped by only three percent.
The rest of top 10 most expensive real estate markets are San Diego, California, Miami, Florida.; Sacramento, California.; Las Vegas, Nevada.; Seattle, Washington.; Boston, Massachusetts & Orlando.
Here is a bit of good news for investors: According to the Reuters news network as reported on their website,
the University of Michigan Surveys of Consumers for the month of July showed that some sixty-six percent of
all consumers expect the unemployment rate to remain unchanged (or possibly decline), while another thirty
three percent of them thought that the jobless rate would rise in the coming year.
This information is relevent since Consumers’ employment expectations are a fairly reliable measure of worry
regarding future job and wage prospects, according to expert Richard Curtin of the Univ. of Michigan Surveys of Consumers.
He was quaoted as saying that “”Employment and wage growth rate are the leading factors that will ensure the continued expansion of consumer spending,”
He also stated that this is due to the fact that Consumer spending has been one of the top drivers of the American economic engine.
There are also concerns that the chaos currently happening in the housing market may result in an unfortunate slowdown of GDP growth.
Furthermore, Curtin was quoted as saying that non-farm employment has grown by an average of some 136 positions per month up to this point this year.
The unemployment rate is at 4.6 percent right now.
According to an August 6th editorial written by esteemed journalist Richard Burnett,
it was reported that the real-estate boom and it’s subsequent mass speculation combined with a lot of
”creative” financing that was not good solid accounting are pushing many investors as well as homeowners into bankruptcy.
California is one of the worst hit states. Florida is right up there too.
On a wider level, the sheer quantity of personal bankruptcies nationally is actually below the pace of the first six months of 2005, when Americans
inundated the system with filings in order to avoid the federal law that took effect that October, the pace is roughly back to what it was a decade ago.
B In addition to this, bankruptcy attorneys state that a large number of those nearing insolvency are trapped by huge mortgage debts.
Unfortunately, the victims include vacation-home buyers, condominium investors plus others who attempted to time the real estate market at it’s top. Sadly enouph, they also include
house buyers who overextended themselves by using ARM loans & small down payments to finance their properties. But as the interest rates have dropped,
certain borrowers’ monthly payments have gone up by nearly fifty percent, even while the estimated values of their houses have stagnated or even dropped.
This is certainly a major issue around the whole nation, according to the news story.
