| Stimulus deal promising; housing risks still plentiful
Analysts are currently trying to decide if interest rate cuts and a stimulus packages will help or hurt.
Mark Zandi, of Moody's Economy.com, sees Fed cuts and Washington's proposed tax rebates as a step in the right direction. Consumers with mortgages about to reset to new rates might now be able to hold onto affordable rates rather than facing payments they cannot tolerate. That should keep people from losing homes and pouring more houses for sale into an already glutted market.
Meanwhile, consumers may have lower interest rates on everything from credit cards and car loans to home-equity lines of credit and college student loans. But lenders are monitoring credit histories closely, so those who have overindulged may not find relief.
And the housing mess that's been weighing on the economy and stock market is far from over.
Report of probe hurts WaMu stock
Shares of Washington Mutual Inc., the nation's largest savings and loan, fell yesterday to an 11-year low after the company announced that federal regulators are investigating how it set values for mortgages sold to investors. Its stock dropped 4 percent yesterday, or 57 cents, to close at $14.10 on the New York Stock Exchange. The shares are down 69 percent this year. The SEC is examining loans that New York prosecutors claim may have been based on inflated home appraisals. The agency may also review how the bank accounted for the debts in its financial statements. "We are voluntarily and fully cooperating with the SEC's inquiry," Washington Mutual said in an e-mailed statement yesterday. The Seattle company said it looks "forward to bringing the facts to both the regulators and public." The Office of Thrift Supervision is also participating in the review, Washington Mutual said.
Real estate appraiser sues WaMu
Washington Mutual Inc. has been sued by a real estate appraiser who claimed her contract with the biggest U.S. savings and loan was terminated because she prepared appraisals that indicated market conditions were declining. California appraiser Jeniffer Wertz earned more than $100,000 a year doing two or three appraisals a day for Washington Mutual until May, when she refused to revise reports to falsely indicate market conditions were stable, according to a complaint filed Jan. 10 in California state court in Sacramento. A bank sales manager "insisted" Wertz "change her appraisal to indicate 'stable' market conditions so the loan could be approved," she said in the complaint. If Wertz didn't, she claimed, the sales manager said she would be "prevented from doing any WaMu appraisal work." The independence of appraisers has been raised as a potential factor in the subprime mortgage crisis.
Reverse Mortgage Sales Abuses Targeting Seniors is Topic of Hearings ...
SAN DIEGO, WASHINGTON, and IRVINE, Calif., Dec. 11 /PRNewswire/ -- On December 12, 2007 the Senate Subcommittee on Aging will hear testimony and consider evidence that details unlawful sales practices targeting seniors by Financial Freedom Senior Funding Corporation based in Irvine, California. The hearings, chaired by Senator Claire McCaskill (D-MO), come on top of lawsuits filed in California, San Diego involving the sale of Reverse Mortgage Products by Financial Freedom Senior Funding Corporation alleging excessive fees and use of proceeds to purchase additional financial products, such as deferred annuities. During the course of the hearings AARP will be unveiling a 200 page report which is an in depth study of the Reverse Mortgage industry, highlighting many of the sales practice abuses directed towards seniors.
Countrywide deal could give modest boost to mortgage industry
WASHINGTON, D.C. -- Bank of America's $4.1 billion rescue of Countrywide Financial could help stem economic turmoil by giving global investors more confidence in the battered U.S. mortgage industry.It also bolsters arguments that government intervention isn't the only way to assist struggling companies and settle nervous credit markets.But experts say it's nowhere near a complete fix for the U.S. housing mess, as investors are still jittery about looming losses in mortgage-related investments. The threat to homeowners isn't over yet, either, analysts say, as 1.8 million subprime mortgages made to borrowers with poor credit are scheduled to reset to higher rates this year and in 2009.“Hopefully this is a signal that things are a little bit better," in the housing and mortgage sector, said Torsten Slok, senior economist with Deutsche Bank in New York.Still, investors weren't too reassured on Friday.
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