America’s Credit and Housing Crisis: New State Bank Bills, Marketoracle.co.uk


Seventeen states have now introduced bills for state-owned banks, and others are in the works.  Hawaii’s innovative state bank bill addresses the foreclosure mess.  County-owned banks are being proposed that would tackle the housing crisis by exercising the right of eminent domain on abandoned and foreclosed properties.  Arizona has a bill that would do this for homeowners who are current in their payments but underwater, allowing them to refinance at fair market value.

The long-awaited settlement between 49 state Attorneys General and the big five robo-signing banks is proving to be a majordisappointment before it has even been signed, sealed and court approved.  Critics maintain that the bankers responsible for the housing crisis and the jobs crisis will again be buying their way out of jail, and the curtain will again drop on the scene of the crime.

We may not be able to beat the banks, but we don’t have to play their game.  We can take our marbles and go home.  The Move Your Money campaign has already prompted more than 600,000 consumers to move their funds out of Wall Street banks into local banks, and there are much larger pools that could be pulled out in the form of state revenues.  States generally deposit their revenues and invest their capital with large Wall Street banks, which use those hefty sums to speculate, invest abroad, and buy up the local banks that service our communities and local economies.  The states receive a modest interest, and Wall Street lends the money back at much higher interest.

Rhode Island is a case in point.  In an article titled “Where Are R.I. Revenues Being Invested? Not Locally,” Kyle Hence wrote in ecoRI Newson January 26th:

 

According to a December Treasury report, only 10 percent of Rhode Island’s short-term investments reside in truly local in-state banks, namely Washington Trust and BankRI. Meanwhile, 40 percent of these investments were placed with foreign-owned banks, including a British-government owned bank under investigation by the European Union.

Further, millions have been invested by Rhode Island in a fund created by a global buyout firm . . . . From 2008 to mid-2010, the fund lost 10 percent of its value — more than $2 million. . . . Three of four of Rhode Island’s representatives in Washington, D.C., count [this fund] amongst their top 25 political campaign donors . . . .

Hence asks:

Are Rhode Islanders and the state economy being served well here? Is it not time for the state to more fully invest directly in Rhode Island, either through local banks more deeply rooted in the community or through the creation of a new state-owned bank?

Hence observes that state-owned banks are “[o]ne emerging solution being widely considered nationwide  . . . . Since the onset of the economic collapse about five years ago, 16 states have studied or explored creating state-owned banks, according to a recent Associated Press report.”

2012 Additions to the Public Bank Movement

Make that 17 states, including three joining the list of states introducing state bank bills in 2012: Idaho (a bill for a feasibility study), New Hampshire (a bill for a bank), and Vermont (introducing THREE bills—one for a state bank study, one for a state currency, and one for a state voucher/warrant system).  With North Dakota, which has had its own bank for nearly a century, that makes 18 states that have introduced bills in one form or another—36% of U.S. states.  For states and text of bills, see here.

Other recent state bank developments were in Virginia, Hawaii, Washington State, and California, all of which have upgraded from bills to study the feasibility of a state-owned bank to bills to actually establish a bank.  The most recent, California’s new bill, was introduced on Friday, February 24th.

All of these bills point to the Bank of North Dakota as their model.  Kyle Hence notes that North Dakota has maintained a thriving economy throughout the current recession:

One of the reasons, some say, is the Bank of North Dakota, which was formed in 1919 and is the only state-owned or public bank in the United States. All state revenues flow into the Bank of North Dakota and back out into the state in the form of loans.

Since 2008, while servicing student, agricultural and energy— including wind — sector loans within North Dakota, every dollar of profit by the bank, which has added up to tens of millions, flows back into state coffers and directly supports the needs of the state in ways private banks do not.

Publicly-owned Banks and the Housing Crisis

A novel approach is taken in the new Hawaii bill:  it proposes a program to deal with the housing crisis and the widespread problem of breaks in the chain of title due to robo-signing, faulty assignments, and MERS.  (For more on this problem, see here.)  According to a February 10th report on the bill from the Hawaii House Committees on Economic Revitalization and Business & Housing:

The purpose of this measure is to establish the bank of the State of Hawaii in order to develop a program to acquire residential property in situations where the mortgagor is an owner-occupant who has defaulted on a mortgage or been denied a mortgage loan modification and the mortgagee is a securitized trust that cannot adequately demonstrate that it is a holder in due course.

The bill provides that in cases of foreclosure in which the mortgagee cannot prove its right to foreclose or to collect on the mortgage, foreclosure shall be stayed and the bank of the State of Hawaii may offer to buy the property from the owner-occupant for a sum not exceeding 75% of the principal balance due on the mortgage loan.  The bank of the State of Hawaii can then rent or sell the property back to the owner-occupant at a fair price on reasonable terms.

Arizona Senate Bill 1451, which just passed the Senate Banking Committee 6 to 0, would do something similar for homeowners who are current on their payments but whose mortgages are underwater (exceeding the property’s current fair market value).  Martin Andelman callsthe bill a “revolutionary approach to revitalizing the state’s increasingly water-logged housing market, which has left over 500,000 ofArizona’s homeowners in a hopelessly immobile state.”

The bill would establish an Arizona Housing Finance Reform Authority to refinance the mortgages of Arizona homeowners who owe more than their homes are currently worth.  The existing mortgage would be replaced with a new mortgage from AHFRA in an amount up to 125% of the home’s current fair market value. The existing lender would get paid 101% of the home’s fair market value, and would get a non-interest-bearing note called a “loss recapture certificate” covering a portion of any underwater amounts, to be paid over time.  The capital to refinance the mortgages would come from floating revenue bonds, and payment on the bonds would come solely from monies paid by the homeowner-borrowers. An Arizona Home Insurance Fund would create a cash reserve of up to 20 percent of the bond and would be used to insure against losses. The bill would thus cost the state nothing.

Critics of the Arizona bill maintain that it shifts losses from collapsed property values onto banks and investors, violating the law of contracts; and critics of the Hawaii bill maintain that the state bank could wind up having paid more than market value for a slew of underwater homes. An option that would avoid both of these objections is one suggested by Michael Sauvante of the Commonwealth Group, discussed earlierhere: the state or county could exercise its right of eminent domain on blighted, foreclosed and abandoned properties.  It could offer to pay fair market value to anyone who could prove title (something that with today’s defective title records normally can’t be done), then dispose of the property through a publicly-owned land bank as equity and fairness dictates.  If a bank or trust could prove title, the claimant would get fair market value, which would be no less than it would have gotten at an auction; and if it could not prove title, it legally would have no claim to the property.  Investors who could prove actual monetary damages would still have an unsecured claim in equity against the mortgagors for any sums owed.

 

Rhode Island Next?

As the housing crisis lingers on with little sign of relief from the Feds, innovative state and local solutions like these are gaining adherents in other states; and one of them is Rhode Island, which is in serious need of relief.  According to The Pew Center on the States, “The country’s smallest state . . . was one of the first states to fall into the recession because of the housing crisis and may be one of the last to emerge.”

Rhode Islanders are proud of having been first in a number of more positive achievements, including being the first of the 13 original colonies to declare independence from British rule.  A state bank presentation was made to the president of the Rhode Island Senate and other key leaders earlier this month that was reportedly well received.  Proponents have ambitions of making Rhode Island the first state in this century to move its money out of Wall Street into its own state bank, one owned and operated by the people for the people.

Ellen Brown is an attorney and president of the Public Banking Institute, http://PublicBankingInstitute.org.  In Web of Debt, her latest of eleven books, she shows how a private cartel has usurped the power to create money from the people themselves, and how we the people can get it back.  Her websites are http://WebofDebt.com and http://EllenBrown.com

Ellen Brown is a frequent contributor to Global Research.  Global Research Articles by Ellen Brown

© Copyright Ellen Brown 2012

Disclaimer: The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of the Centre for Research on Globalization. The contents of this article are of sole responsibility of the author(s). The Centre for Research on Globalization will not be responsible or liable for any inaccurate or incorrect statements contained in this article.

http://www.marketoracle.co.uk/Article33365.html

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Piedmont Victorian – 5775 NE Garfield Portland, OR 97211


I recently toured a beautifully remodeled Victorian home in the Piedmont neighborhood in Portland, OR. Here’s a short video about the home, which is listed at $399,000:

This house really caught my eye from the moment I stepped on the front porch. Here is a photo gallery of pics I snapped with my phone while I toured the house with Joe:

This slideshow requires JavaScript.

The owners have taken great care in restoring and remodeling this house, with a great mix of classic and modern elements. Joe even told me how much time he spent filling the original posts on the porch, and it is a lot!

Financing for 5775 Ne Garfield

There are a range of home loan options available for this property. As I said in the video, it does qualify for FHA financing, which has flexible credit guidelines and financing for up to 96.5% of the home’s value. To learn more about financing this property, or any other in Oregon and Washington, feel free to contact me at 503.799.4112 or email jason@mypmb.us

You can learn more about this great home at the following website:

http://www.5775negarfield.com

Contact the listing broker,

Michael Rysavy
Oregon Realty
503.860.4705

Thanks for taking a minute to check out this property!

Jason Hillard

Mortgage Advisor MLO #119032

Pinnacle Mortgage Bankers

a div of Pinnacle Capital Mortgage Corp

1706 D St Suite A Vancouver, WA 98663

http://www.homeloanninjas.com/

NMLS 81395 WA CL-81395

Equal Housing Lender

What the heck does “loan-to-value” mean?


There are lots of terms we use in the mortgage industry that aren’t part of everyday parlance. Today, I’ll talk a little bit about “loan-to-value”, or LTV for short.

In fact, I have a video that’s less than 90 seconds long if you’re in a hurry:

Loan-to-value

So, just to recap what I said in the video, your loan-to-value is the percentage of your home’s value that you finance with your home loan.

Whether you a purchasing a home, or refinancing your existing mortgage, LTV is an extremely important factor in making an educated decision about your home loan.

I’ll give you an example:

FHA – When purchasing a home using an FHA home loan, you can finance up to 96.5% of the appraised value of the property. If you are refinancing, you have two options: “rate & term” or “cash-out”. Rate & term means you are refinancing to lower your rate or change the length of your loan. A rate & term refinance is capped at a 97.75% LTV for FHA. Cash-out FHA refinances are limited to 85 per cent of the value of your home. If your current mortgage is an FHA loan, you can refinance with an FHA streamline, which does not have an LTV limitation.

So your needs define your loan-to-value, which helps define what home loan program you are going to apply for.

If you would like to learn more about loan-to-value, other mortgage terminology, or home loans in Oregon and Washington, I invite you to visit my site or contact me. I am long on answers and short on sales pitches 🙂

Thanks for taking a minute to read this post!

Picture: Jason HillardJason Hillard – homeloanninjas.com

Mortgage Advisor in Oregon and Washington MLO#119032

Pinnacle Mortgage Bankers

a div of Pinnacle Capital Mortgage Corp

503.799.4112

jason@mypmb.us

1706 D St Vancouver, WA 98663

NMLS 81395 WA CL-81395

Equal Housing Lender

RATES WAY DOWN, APPS WAY UP… THAT’S GOOD, RIGHT?, by Diane Mesgleski, Mi–Explode.com


Last week mortgage applications rose a whopping 21.7% from the previous week according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey.  Great news for the industry to be sure.  Great news for the housing market?  Not so much, when you consider that the bulk of the applications are refinances, not purchases.  Refis rose 31% from the previous week, while purchases remain low. Actually they dropped a skooch.  Low purchase numbers mean continued stagnation in the housing market and continued increase in inventory as foreclosures continue to be added to the count.  Which means lower values. Kind of a vicious cycle.  Those of us in the mortgage biz were not surprised by last week’s numbers, since low rates spur refis and rising interest rates signal a purchase market.  You don’t even need to understand the reason why, you just know that is how it works. It is comforting to know that something is working the way it always has.

What is not comforting is the bewildered Fed chairman, and many baffled economists who don’t understand why the present policies are not working.  Even if rates could go lower it would not have an impact on the housing market.  There is no lack of money to lend, there is a lack of qualified borrowers.  And that situation is not improving with time, it is getting worse.   At the same time Washington is tightening their stranglehold on lenders with ever increasing regulation, then wondering why banks are not lending.  No matter what you believe should be the course, whether more regulation or less, you have to agree that government intervention has not and is not helping.

Has anybody else noticed, the only winner in this current climate are the Too Big To Fail banks?   They have plenty of cash, since they cannot lend it.  One article I read put it this way, their balance sheets are “healing”.   Sounds so soothing you almost forget to be angry.

There is one other factor in the current housing crisis worth mentioning: the lack of consumer confidence.  Nobody is going to buy a house when the prices are continuing to fall.  And even in areas where the prices are stable, people have no confidence in the economy or in Washington’s ability or willingness to fix it. They are simply afraid to make the biggest investment of their lives in this climate.   If our leaders would actually lead rather than play political games we might actually start seeing change.

But only if we give them another four years.   No wonder Ben does not think that anything will get better until 2013….now I get it.

Thoughts on the New Mortgage Insurance Premium for FHA loans – by Jason Hillard | homeloanninjas.com


(originally posted on October 2nd, 2010)

I have had this rolling around in my head for a few weeks now, and with the change in FHA mortgage insurance monthly premiums bearing down on us in a few days, I had to share my thoughts. We’ve been doing a lot of FHA loans in Oregon & Washington, as I’m sure is the case all around the country, and this change is going to affect a lot of people. (I apologize for the low quality of the video, I have successfully screwed my phone’s camera up!)

Again, everything that’s changing about the mortgage industry is done under the auspices of avoiding another meltdown, curbing foreclosures, and making the mortgage-backed security a good investment. So, if you have an insurance policy which is designed to avert the risk of a loan in default to the lender, why would you want the premium on that insurance policy to be collected over time?

From a simple risk-assessment perspective, it would seem that the more time you are exposed to loss, the greater the likelihood that it will happen. The fear is that homeowners will default on their loan payments, so why would you push more of the premium to the monthly payment side (rather than the upfront funding fee) if the reason for the policy is to protect the investor from people who default on those payments?

It seems like the reasonable position would be to get the premium covered from day one. This reminds me of when the downpayment requirement for FHA went from 3% all the way up to a whopping 3.5 per cent. Does that extra .5% really invest the homeowner so much more that it reduces their likelihood of default? I’m not saying their should be less “skin in the game”, but if that’s going to be your approach, why not really DO IT? Make the downpayment 5%, or make some portion of the upfront mortgage insurance on an FHA home loan payable from the borrower’s own funds?

It may just be that I am making the age-old mistake of applying logic to government policy, but I am thinking that the intended purpose isn’t really what we are being told.

You can read some related posts on FHA loans and mortgage insurance:

What is mortgage insurance?

We can do FHA down to 580 FICO, but should we?

Video: mortgage terminology – mortgage insurance

If you have any questions about FHA financing, mortgage insurance, or home loans in general, feel free to send us an email or comment on this post! And if you have any thoughts on why the monthly mortgage insurance premiums for FHA mortgages are increasing while the upfront funding fee is decreasing, we’d love to hear them!

Mortgage investor group wants loans ensnared in robo-signing snafu repurchased, by JASON PHILYAW, Housingwire.com


The Association of Mortgage Investors wants trustees of residential mortgage-backed securities “to hold servicers accountable for negligence in maintaining the assets of trusts.”

The Washington firm, which advocates on behalf of institutional and private MBS investors, said in a press release that the recently uncovered robo-signing debacle – first reported by HousingWire two weeks ago – “undermines the integrity and the operational framework of the housing finance and mortgage system as it exists today.”

Most of the nation’s largest mortgage lenders, includingBank of America, Ally Financial, formerly GMAC Mortgage, and JPMorgan Chase, have suspended foreclosures to amend faulty affidavits that may have been signed without looking at the documents or a notary present.

The AMI wants bond trustees to investigate the process and assure investors that mortgages bundled and sold into MBS are repurchased by the loan originators, who failed in their “fiduciary responsibilities [to] protect millions of American pensioners and retirees.”

“The capacity constraints at our nation’s largest servicers continue to be an issue of great concern to investors,” said Chris Katopis, executive director of the AMI. “We urgeAllyJPMorgan Chase, and all other servicers to invest the time and resources necessary to improve their operational infrastructure and to avoid situations where efficient mortgage servicing and collection practices are compromised.”

He said the may snafus may cause inaccurate legal filings for the mortgages and underlying properties in the MBS pools.

“The unfortunate and little-known consequence of these operational breakdowns is the destruction of capital needed to sustain fixed-income investors reliant upon cash flow from pensions and retirement accounts,” Katopis said.

Write to Jason Philyaw.