Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-60098 Tue, 28 Jun 2016 14:43:10 GMT U.S. Home Prices Continued Strong Growth in April, Case-Shiller Says http://implode-explode.com/viewnews/2016-06-28_USHomePricesContinuedStrongGrowthinAprilCaseShillerSays.html iehi-feed-60097 Tue, 28 Jun 2016 14:41:34 GMT Rent Freeze Approved For Second Consecutive Year In Historic Vote (NYC) http://implode-explode.com/viewnews/2016-06-28_RentFreezeApprovedForSecondConsecutiveYearInHistoricVoteNYC.html iehi-feed-60059 Thu, 23 Jun 2016 18:40:10 GMT Credit Suisse Tries to Overhaul Its Image, but Problems Remain http://implode-explode.com/viewnews/2016-06-23_CreditSuisseTriestoOverhaulItsImagebutProblemsRemain.html In March, in an effort to right the ship on the credit side of the investment bank, Credit Suisse named Brian Chin, the chief of structured finance, and David Miller, the chief of credit products, to be co-chiefs of Credit Suisse's global markets credit division. This is yet another big job for Mr. Miller, with lots of responsibility and high pay, but his appointment sends exactly the wrong message about the values and behavior that a Wall Street bank should be rewarding.

...

Mr. Miller, you may recall, was the bank's architect, starting in 2004, of a new syndicated loan product -- called a dividend recapitalization loan -- that allowed big-time real estate developers in the Western half of the United States to borrow based on the inflated valuation of their projects, pocket hundreds of millions of dollars in the form of dividends and lay the risk at the doorstep of new investors whom Mr. Miller and his team had lined up.

...

In the end, all of the loans blew up, and investors lost billions. Soured deals include $375 million in loans to the Yellowstone Club, an hour outside of Bozeman, Mont.; $250 million to the Tamarack Resort in Idaho; $540 million to Lake Las Vegas, a 3,592-acre golf community in Nevada; $275 million to Promontory, a 10-square-mile second-home resort outside Park City, Utah; $400 million to the Turtle Bay Resort in Hawaii; and $675 million to the Ginn resorts in Port St. Lucie, Fla.; Naples, Fla.; Boone, N.C.; and the Bahamas.

...

After each of the developments ended up in Bankruptcy Court, a federal bankruptcy judge admonished the Credit Suisse bankers by calling the loans "doomed to failure" from the outset... In September, Highland Capital won a $287.5 million judgment against Credit Suisse related to losses stemming from its participation in a refinancing of Lake Las Vegas before it went into bankruptcy; Credit Suisse is appealing the ruling, and the judgment has not yet been paid pending the appeal. Highland Capital affiliates are also suing Credit Suisse in New York State over additional losses related to other deals.

]]>
iehi-feed-60056 Thu, 23 Jun 2016 15:38:18 GMT Homeownership slumps, remains elusive for many Americans, study finds http://implode-explode.com/viewnews/2016-06-23_HomeownershipslumpsremainselusiveformanyAmericansstudyfinds.html Homeowners who lost their homes to foreclosure are still struggling to clear their credit records so they can buy another home. Meanwhile, some big banks have moved away from offering subprime and government-backed loans and have significantly tightened credit requirements despite low mortgage rates, making it that much harder for some potential homebuyers to get their foot in the door. "How much house can I afford?" is no longer the main question potential homebuyers need to consider; it's "How will I afford it?"

...

Although mortgage rates have remained well under 4% this year, it's not enough to drive homebuying to the levels that industry analysts had predicted. A shortage in inventory, tightened lending requirements and slow income growth are keeping many potential homebuyers on the sidelines, Zigas says, adding that high levels of student debt and a challenging job market for young people are dragging on demand for homes.

]]>
iehi-feed-60052 Thu, 23 Jun 2016 01:01:49 GMT Fed Warns on Commercial Real Estate, Stock Valuations http://implode-explode.com/viewnews/2016-06-22_FedWarnsonCommercialRealEstateStockValuations.html iehi-feed-60048 Thu, 23 Jun 2016 00:48:33 GMT In Amsterdam, the Housing Market Is Showing Signs of Overheating http://implode-explode.com/viewnews/2016-06-22_InAmsterdamtheHousingMarketIsShowingSignsofOverheating.html The Netherlands, the nation of tulipmania almost 400 years ago, saw prices in its capital city surge almost 21 percent in the first quarter. While the blame partly falls on a simple supply-and-demand imbalance, the signs are pointing to a potential squeeze...

In a market where almost half of properties are owned by non-profit corporations, mainly for social housing, there's just not enough coming on to the market to satisfy buyers. After falling about 14 percent in five years, prices have rebounded recently and are now above pre-crisis levels.

...

Another reason prices continue to skyrocket is that the Netherlands is relatively unique in still allowing buyers to borrow more than the value of the house -- no down payment necessary. That means as prices rise, buyers have less of a barrier to entry than in other markets, like London, where the size of a cash down payment is increasingly pushing first-time buyers out of the market.

]]>
iehi-feed-60038 Mon, 20 Jun 2016 14:29:51 GMT Economic Gauges Raise Specter of Recession http://implode-explode.com/viewnews/2016-06-20_EconomicGaugesRaiseSpecterofRecession.html Gut-wrenching gyrations in financial markets early in the year helped summon the specter of a new recession. Now, warning signs are coming mostly from the U.S. economy itself.

Hiring is slowing, auto sales are slipping and business investment is dropping. America's factories remain weak and corporate profits are under pressure. All are classic signs of an economic downturn, and forecasters have certainly noticed. In a Wall Street Journal survey this month, economists pegged the probability of a recession starting within the next year at 21%, up from just 10% a year earlier. Some economists think the risk is even higher.

...

Quarterly U.S. corporate profits have been declining on a year-to-year basis since late last year, according to the Commerce Department. The continuing balance-sheet squeeze is one reason Joshua Shapiro, chief U.S. economist at consultancy MFR Inc., pegs the odds of a recession in the next year at 50%.

...

The factory sector remains a special source of weakness. Overall industrial production, as tracked by the Federal Reserve, has declined on a year-to-year basis for the past nine months... since 1919, industrial production has never fallen for so long without an accompanying recession.

]]>
iehi-feed-60034 Mon, 20 Jun 2016 14:11:44 GMT Australia Slaps Chinese Home Buyers With New Taxes http://implode-explode.com/viewnews/2016-06-20_AustraliaSlapsChineseHomeBuyersWithNewTaxes.html As AFP notes, last year, leading apartment developer Lend Lease sold out more than Aus$600 million (US$445 million) worth of new units in Sydney's Darling Harbour in under five hours, with the Australian Financial Review reporting that one-third of buyers were foreign. Lend Lease said the sale broke local records but such reports have also fuelled calls for government action to protect Australian buyers.

Prior to Sydney's move, other Austrlian states had already implemented protections and in response to China's unprecedented influx of cash, the New South Wales, Victoria and Queensland state governments have introduced or are set to slap new property and land taxes on foreign buyers, sparking an outcry from developers fearful that they will flee to other markets such as New Zealand and Canada. "It is very bad. Without the Chinese nothing would ever get built," the country's richest man and head of prominent developer Meriton, "high-rise" Harry Triguboff told the Australian Financial Review last week.

]]>
iehi-feed-60024 Sat, 18 Jun 2016 01:12:11 GMT Angelo Mozilo Will Not Face U.S. Charges for Mortgage Fraud http://implode-explode.com/viewnews/2016-06-17_AngeloMoziloWillNotFaceUSChargesforMortgageFraud.html The Justice Department's pursuit of Angelo R. Mozilo, one of Wall Street's most recognizable names tied to the subprime mortgage crisis, is ending with a whimper.

After dropping a criminal investigation of Mr. Mozilo earlier, federal prosecutors recently decided against filing a civil fraud case against him, his lawyer, David Siegel, confirmed on Friday.

...

The decision by federal prosecutors to not proceed with a civil fraud case under the Financial Institutions Reform, Recovery and Enforcement Act is not too surprising, given the length of the review process.

The possibility of the Justice Department filing a so-called Firrea lawsuit against Mr. Mozilo came to light when Bank of America reached a $16.65 billion settlement of its own Firrea case in August 2014. The inquiry by the Justice Department of Mr. Mozilo was seen by some legal critics as a way for prosecutors to address complaints that little had been done to hold individuals accountable for the financial crisis.

Bank of America acquired Countrywide and assumed its liabilities in 2008, as the financial crisis erupted.

But lawyers for Mr. Mozilo argued a civil fraud case would duplicate the efforts of the Securities and Exchange Commission, which sued Mr. Mozilo and two other former Countrywide executives in 2009. On the eve of the trial in 2010, Mr. Mozilo and the other defendants reached a settlement that required the mortgage financier to pay $67.5 million in fines and restitution.

Over the last few years, federal prosecutors used the threat of a Firrea civil fraud lawsuit to extract tens of billions of dollars in settlements from other big banks. The law proved to a be a useful tool for prosecutors because of its 10-year statute of limitations for bringing a case -- much longer than the standard three- or five-year statute of limitations for most civil fraud lawsuits.

]]>
iehi-feed-60019 Fri, 17 Jun 2016 14:16:46 GMT America's Dying Shopping Malls Have Billions in Debt Coming Due http://implode-explode.com/viewnews/2016-06-17_AmericasDyingShoppingMallsHaveBillionsinDebtComingDue.html iehi-feed-60018 Fri, 17 Jun 2016 14:14:49 GMT Why there's a new kind of housing crisis http://implode-explode.com/viewnews/2016-06-17_Whytheresanewkindofhousingcrisis.html iehi-feed-60002 Wed, 15 Jun 2016 13:48:00 GMT London house prices up 14% in a year, ONS data show http://implode-explode.com/viewnews/2016-06-15_Londonhousepricesup14inayearONSdatashow.html iehi-feed-59989 Sun, 12 Jun 2016 20:41:47 GMT We're Rich! We're Rich! Are Inflated Asset Prices Like Real Wealth? http://implode-explode.com/viewnews/2016-06-12_WereRichWereRichAreInflatedAssetPricesLikeRealWealth.html iehi-feed-59968 Tue, 07 Jun 2016 20:12:11 GMT This Fannie-Freddie resurrection needs to die http://implode-explode.com/viewnews/2016-06-07_ThisFannieFreddieresurrectionneedstodie.html iehi-feed-59947 Sat, 04 Jun 2016 00:00:18 GMT A Suburban Experiment Aims for Energy Grid-Independent Homes http://implode-explode.com/viewnews/2016-06-03_ASuburbanExperimentAimsforEnergyGridIndependentHomes.html Since 2013, the Energy Department has certified about 700 homes as "zero-energy ready," meaning that the addition of a renewable energy system, generally solar, would offset most or all of its annual energy consumption.

With thousands more in the pipeline, said Sam Rashkin, chief architect of the building technologies office, the department expects to certify roughly 1,000 this year and 3,000 in 2017.

"We're on that inflection point on the growth curve," he said. "We're proving the business case to a growing number of builders in key pockets of construction around the country. It takes some really good examples by leading builders to showcase just how cost-effective and technically achievable these specifications are."

...

[Electric Power Research Institute, a nonprofit utility-funded group that is conducting the study on zero-energy homes] found a willing collaborator in Meritage, a leading builder of energy-efficient homes, and are expanding the test program to additional subdivisions in Southern California, the Central Valley and the Bay Area.

For buyers, part of the appeal of a home built to be zero-energy is that they do not have to change their behavior to save energy.

At Meritage, the company insulates every house with spray foam, sharply reducing the amount of heating and cooling needed, and allowing smaller or fewer units to be installed. Making the homes even more efficient are dual-pane windows that help retain or keep out heat (depending on the need), LED lighting and advanced water heaters that work by funneling heat from the ambient air into the water.

All of the test homes have SunPower rooftop solar systems, which are among the most efficient on the market. And because they were designed along with the houses, the arrays can be oriented for maximum production.

''

]]>
iehi-feed-59937 Thu, 02 Jun 2016 22:34:34 GMT Banks' Embrace of Jumbo Mortgages Means Fewer Loans for Blacks, Hispanics http://implode-explode.com/viewnews/2016-06-02_BanksEmbraceofJumboMortgagesMeansFewerLoansforBlacksHispanics.html The biggest U.S. banks are tilting toward these high-dollar mortgages as they overhaul loan operations. And jumbo loans, which were less important during the subprime-loan boom, are helping banks take on less risk, as mandated by regulators in the postcrisis era.

These loans, however, could put banks at odds with another federal regulatory mandate--one that says lenders should serve a racially diverse set of customers. As they approve relatively more jumbos, major banks are granting fewer mortgages to African-Americans and Hispanics than just before the crisis, a Wall Street Journal analysis found.

...

Jumbos, loans above $417,000 in most markets, are attractive because they typically feature high credit scores, big down payments and low default rates. And they aren't linked to the government programs that cost banks tens of billions of dollars in fines related to the subprime-loan debacle.

...

Just as the subprime customer was the ideal borrower for some banks before the crisis, the jumbo borrower is most appealing for many banks now. While the jumbo uptick isn't solely responsible for lending declines to some minorities, these loans epitomize the direction banks are turning their mortgage operations--toward safer, more-affluent customers who tend to be white or Asian.

The WSJ found that between 2007 and 2014 the proportion of all loans that went to Asian and White borrowers went from 70% to 75% of the total; the proportion going to Hispanic and Black borrowers fell by exactly the same 5% -- from a bit under 19% to about 12.5%.

]]>
iehi-feed-59936 Thu, 02 Jun 2016 22:22:38 GMT The Simple Reason The Fed Is Entirely Dow-Dependent Rather Than Data-Dependent http://implode-explode.com/viewnews/2016-06-02_TheSimpleReasonTheFedIsEntirelyDowDependentRatherThanDataDepende.html iehi-feed-59907 Sun, 29 May 2016 19:02:55 GMT Last Time this Happened, the Housing Market Collapsed http://implode-explode.com/viewnews/2016-05-29_LastTimethisHappenedtheHousingMarketCollapsed.html According to the Times: "Many say the sudden surge in hyperprice homes -- often built and sold by speculative investors -- is the ultimate bubble signal." And when was the last time this sort of pile-up happened? In 2007 and 2008, just as the housing market was beginning to spiral down and as the Financial Crisis was beginning to mature. So now, the same signs are popping up once again.

While overall home prices were still soaring in the first quarter, at the top 5% of the housing market, the bubble has begun to deflate, with prices down 1.1%, according to Redfin. In some cities, the very top end is starting to take some hits, including in Manhattan where a luxury condo boom has turned into a glut, and where prices have begun to sag.

]]>
iehi-feed-59889 Fri, 27 May 2016 14:17:18 GMT Wells Fargo Reintroduces 3%-Down Mortgages http://implode-explode.com/viewnews/2016-05-27_WellsFargoReintroduces3DownMortgages.html After being called out for its deceptive practices, the bank has scaled back on FHA backed mortgage lending in recent years. Wells Fargo accounted for just 2.5% of total FHA mortgages in 2015, down from 13% in 2010, and ultimately coming to this end game where the bank has a path forward without the FHA... Wells' own mortgage origination pipeline has been slowing down in recent years, and as such the corner office of the country's largest mortgage originator is desperate to find new and innovative ways to boost lending.

...

The new program partners with Fannie Mae in order to allow borrowers with credit scores as low as 620 to make as little as a 3% down payment and use income from family members or renters to qualify. Naturally, the intent is to make more loans to low and middle-income borrowers - in the process pushing up home prices countrywide - without going through the FHA.

]]>
iehi-feed-59887 Thu, 26 May 2016 16:55:52 GMT HUD: For many poor families, housing costs are ‘out of reach' http://implode-explode.com/viewnews/2016-05-26_HUDFormanypoorfamilieshousingcostsareoutofreach.html The affordable housing situation is bleak. So bleak that "in no state, metropolitan area, or county can a full-time worker earning the prevailing minimum wage afford a modest two-bedroom apartment," according to the report.

To afford a two-bedroom apartment at the current federal minimum wage of $7.25 an hour, a worker would need to work 112 hours a week, every week, according to the report. That means workers "would have no remaining time during the week for anything other than working and sleeping."

...

NLIHC proposes a formula reducing the mortgage interest tax deduction that benefits homeowners. For years, there have been various proposals to change the popular deduction. Whatever reform that might eventually be approved, the coalition wants a portion of the savings to go to affordable housing.

The main benefit of eliminating the mortgage interest tax deduction would actually be to allow home prices to fall to more affordable levels. Of course cutting a sacred "middle class" benefit (even if done so gradually that there'd be no nominal decline in home prices) is politically impossible.

Alternatively, they could make all consumer debt interest (i.e. credit card) tax-deductible. That would be fair.

]]>