U.S. Economic/Financial News

Foreclosure Crisis Expands Throughout U.S.A.

Nov. 10 (EIRNS)—A brief survey of some of the latest news shows that the foreclosure crisis continues to rage:

* The Arizona Republic reported that the number of foreclosures in the Phoenix area is up 566% over the same period last year. There were 7,139 foreclosures through October, compared to 1,072 last year. In the month of October, alone, there were 1,396 foreclosures.

* The Columbus Dispatch reported that Ohio has served 11 mortgage companies with subpoenas, seeking evidence of violations of anti-trust, civil rights, and consumer sales practice laws, as part of the state's approach to dealing with the foreclosure crisis.

* The real estate research firm Default Research reported that foreclosures in Seattle are up 21% over last year, but whistles past the graveyard because the foreclosure rate in Seattle is much lower than elsewhere in the country. In fact, Default Research's President Serdar Bankaci declared that, "The savvy investor knows that rental properties have become an excellent investment in King County."

* Boise, Idaho's Fox 12 TV reports that Idaho foreclosures rose by 13% in the third quarter from the previous quarter, making Idaho 17th in the nation in foreclosures.

* Bloomberg reports that all of the big banks that are now reporting huge losses on mortgage-related paper are paying the price for the $25 million that they spent on lobbying for the 2005 bankruptcy reform. Because fewer debtors can get their credit card debts liquidated in bankruptcy, more are walking away from their mortgages, instead.

Homeowners Robbed Once Again While They're Evicted

Nov. 6 (EIRNS)—Lost mortgage payments, overstated loan amounts, questionable fees are some of the ways in which mortgage lenders and servicers are looting people who are losing their homes to foreclosure, according to a study by Katherine Porter of the University of Iowa, who found questionable fees in almost half of the loans she examined.

The Department of Justice's Office of the United States Trustee last month announced plans to move against mortgage-servicing companies that engage in such tactics, and on Oct. 9, the Chapter 13 Trustee in Pittsburgh asked the court to sanction Countrywide, saying the company had lost or destroyed more than $500,000 in checks paid by homeowners in foreclosure from December 2005 to April 2007. Late fees on mortgage payments are a big business, with the New York Times reporting that such fees made up 11.5% of servicing revenues at Ocwen Financial, a big servicing company, in 2006, while Countrywide saw its late fees jump 20%, to 7.5% of servicing revenue the same year. "We're talking about millions and millions of dollars that mortgage servicers are extracting from debtors that I think are totally unlawful and illegal," O. Max Gardner III, a lawyer in Shelby, N.C., specializing in consumer bankruptcies, told the Times. "Somebody files a Chapter 13 bankruptcy, they make all their payments, get their discharge and then three months later, they get a statement from their servicer for $7,000 in fees and charges incurred in bankruptcy but that were never applied for in court and never approved."

Winter Heating-Oil Crisis Looms in Northeast

Nov. 5 (EIRNS)—Many low-income people in the Northeastern United States could be left without heat this winter, as international oil prices are heading toward the $100-a-barrel level.

Last winter, 1.5 million families in the region got assistance in paying their heating bills. The number is expected to surge this year, says the Wall Street Journal, and both state and federal lawmakers are scrambling to come up with emergency funds.

The Journal also reports that hundreds of smaller fuel dealers could go bankrupt, because their customers have fixed-price contracts, while the dealers' prices are skyrocketing.

Massachusetts Secretary of State William Galvin blasted Washington regulators for not taking swift action to deter hedge funds and speculators from helping to drive crude-oil prices to record levels. "This is going to hurt our economy in New England," said Galvin, noting that home heating-oil prices are already at record highs for this time of year in Massachusetts. Galvin dashed off letters to the SEC and other regulators, but has gotten no response to his concerns about the role of speculators in driving oil prices toward $100 a barrel, according to the Boston Globe.

Galvin has compared the current energy market to the subprime mortgage market before its recent collapse.

$100 Million Program Has Stopped Only One N.Y. Foreclosure!

Nov. 5 (EIRNS)—The New York State $100 million "Keep the Dream" program announced three months ago by Gov. Eliot Spitzer, to save homeowners from foreclosure, has helped exactly one homeowner so far, according to today's New York Post, and an earlier report in Long Island Newsday.

When the program was announced, officials expected to rescue 500 to 700 at-risk homeowners from the subprime catastrophe, Newsday said. Many homeowners have requested assistance, said an official of the New York Mortgage Agency, but only one homeowner has been actually able to qualify for the program. Crain's New York Business says that 1,250 homeowners in New York City alone are expected to lose their homes through foreclosure by the end of this year, which, the magazine says, is just the tip of the iceberg.