Archive for March, 2010
US employers won’t hire enough workers this year to lower the jobless rate much below the level of 9.7% reached in February, three Obama administration economic officials said today.
The proportion of Americans who can’t find work is likely to “remain elevated for an extended period,” Treasury Secretary Timothy Geithner, White House budget director Peter Orszag and Christina Romer, chairman of the Council of Economic Advisers, said in a joint statement. The officials said unemployment may even rise “slightly” over the next few months as discouraged workers start job-hunting again.
“We do not expect further declines in unemployment this year,” the officials said in testimony prepared for the House Appropriations Committee. They predicted the economy would add about 100,000 jobs a month on average — not enough to bring the jobless rate down substantially.
The number of Chicago-area homeowners who have received permanent mortgage loan modifications under the federal Home Affordable Modification Program increased by 50% in February, but the pace at which temporary modifications are being granted appears to be slowing.
The shift is by design. For the past few months, the Obama administration has pressured mortgage servicers to speed up the rate at which they are making temporary HAMP modifications permanent. It also has altered the guidelines and wants servicers to grant trial modifications based on full documentation, rather than a borrower's stated income, to make it more likely that borrowers can have their temporary loan terms made permanent.
Almost 8,100 delinquent Chicago-area borrowers have received permanent mortgage loan modifications, the Treasury Department reported Friday, based on February data from loan servicers. In January, 5,381 local residents were enrolled in permanent modifications.
An additional 43,215 Chicago-area borrowers were in trial loan modifications, a 1.2% increase from January. In the prior month, the volume of trial modifications increased almost 6%.
A Haitian citizen was sentenced to 17 years in federal prison following his conviction last year in a mortgage-fraud case that resulted in more than $9m in losses to Phoenix-area banks.
Mario Bernadel was found guilty in September of 19 counts of mortgage and related fraud for a two-year scheme in which he bought 37 properties with fraudulent loan documents and received cash back at the closing. Bernadel used the money to purchase several homes and luxury vehicles, the Justice Department said Tuesday.
Bernadel, who is a legal U.S. resident, will be deported to his native Haiti after he completes his sentence.
Seven others were also charged and pleaded guilty for their involvement with Bernadel in the mortgage fraud and will be sentenced in the next few months, the Justice Department said.
The cost of home ownership increased slightly in Manitoba and the rest of Canada in the last three months of 2009.
And the cost is expected to keep rising this spring as buyers scramble to close deals ahead of expected higher interest rates, new mortgage rules and new taxes in the key national markets of B.C. and Ontario, according to RBC economist Robert Hogue, author of the bank's quarterly Housing Trends and Affordability report.
Even though house prices were up just about everywhere in Canada in the fourth quarter, affordability declined only modestly.
"That is largely because of exceptionally low mortgage rates," Hogue said.
The Bank of Canada has pledged to keep its key overnight rate at 0.25%, where it has been since last spring, until the end of the second quarter. But economists anticipate it will begin rising as early as July, which will further erode housing affordability.
Anxiety surrounds Tuesday's Federal Open Market Committee (FOMC) meeting as the central bank's year-long mortgage-backed securities (MBS) purchase program nears its scheduled March 31 close, opening the door for mortgage rate increases and surprising market fluctuations.
The Fed spent billions of dollars on MBS guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae weekly for the past year, topping out its portfolio at $1.25trn.
As the program ends, investors and analysts are speculating that mortgage rates could rise – and rise fast.
"It's a trillion-and-a-half-dollar check that won't be there as the Fed withdraws from the market," said Pimco's Bill Gross in a recent interview. "How that affects the markets, I just don't know. I'm not eagerly anticipating the answer, but I think it holds some surprises in 2010 – not just in mortgage securities but stocks as well. We could miss the money, put it that way."
The mortgage services arm of Australian investment services group Perpetual yesterday rejected claims that its operations do not comply with licensing rules.
It insisted legal work it performed on behalf of financial institutions was being done by qualified lawyers.
The company's mortgage services subsidiary, Perpetual Mortgage Services, which provides mortgage processing and settlement services to some of the country's leading lenders, has come under scrutiny from property lawyers and conveyancers following a bungled outsourcing deal with Australia and New Zealand Banking Group (ANZ).
Perpetual spokesman Michael Woods yesterday defended the business against the attack from the Australian Institute of Conveyancers (AIC) and the Law Institute of Victoria.
"Perpetual Mortgage Services Pty Ltd does not engage in legal practice," Mr Woods said in an e-mailed statement. "Perpetual provides mortgage processing services for customers. To the extent that these services involve legal work of any kind, it is carried out by…qualified Australian lawyers."
Sometimes it seems that the world would work better if more people thought like engineers. Sure, there would be less music and art and fewer people (because it would be harder for couples to hook up). But the world would also come with a version number, so everyone would know that it was a work in progress. And there would be other benefits, too.
I embarked upon this line of reasoning because I had an interesting experience over a recent weekend. I was called upon by a local Robotics Institute to judge a contest where 28 teams of high school students from the eastern US and Canada came together with their robotic creations to compete for prizes and recognition. I came away very impressed and feeling a little bit better about a country that seems to be kicked around quite a bit when it comes to science and math education.
I know we need to do a better job of preparing our kids for a highly technical future, but I was thrilled to know that there are some kids out there who really get this stuff. And it wasn’t just that they knew about software for automation or the physical construction of a robotic device within certain design criteria or even about managing complex machine control via software and sensors. The really cool thing about these kids is that all through the design process, they actually expected things would go wrong.
After the initial design was put down in their engineering notebooks, the rest of the exercise was mostly about watching things go wrong and fixing them in a way that didn’t break something else. Some kids ran out of time before they worked all the bugs out. But even those 'engineers' could tell you what they would have tried next, if given the time. I was thrilled.
“This is how things should be approached,” I exclaimed to the other judges, both of whom were professional engineers who simply looked at me and blinked as if they were seeing someone gushing over the fact that the sky was blue. This is how engineers think, I reminded myself.
Wouldn’t it be great if our political leaders thought more like this?
Unfortunately, when we speak of political engineering, we usually mean gaming the system to create an outcome that benefits a special interest instead of one that makes the world a better place. As we watch the government duke it out over healthcare and financial services reform like players in a giant game of pub sumo wrestling, we get no indication that anyone is seriously considering the long term outcome of their work or that there might be a version 2.0 somewhere down the road.
No, when it comes to politics, the players are out to “fix” the problem quickly, preferably before the next election. A real engineer would not do well in this environment. In fact, according to the National Association of Professional Engineers, there is only one licensed professional engineer currently serving in Congress (Joe Barton, P.E.(R-TX), holds a B.S. degree in engineering from Texas A&M University and a master's degree in industrial administration). There are a handful more that have engineering degrees, but aren’t practicing engineers.
I bet if you put a bunch of mortgage technologists in charge of the regulations, you’d come up with something like…well, like MISMO. Granted, it took a long time to bash out these standards and they’re still under construction and they likely always will be, but they work and they’ve put the vast majority of industry players on the same page. Big win.
Of course, in this case, the industry knew exactly what the inputs would be and what outputs were expected and so they worked together to connect the dots. The kids building robots didn’t have that luxury. They had to make assumptions about how their robot would function in the real world, test to the point of failure and then come up with new plans. Even then, they were unsure of what they would be competing against until the day of the competition, so they had to create contingency plans there as well.
Our political leaders don’t have to guess what problems exist in their districts. They have plenty of people to tell them, including lobbyists, community organizations, such as ACORN, and other special interests. Sometimes, they get feedback from the people most likely to be affected by the laws they make, but too often that feedback comes after the law is already on the books. By then, there’s no easy way to fix it.
If engineers were in charge, they would put a big red “Redo” button on the side of every new law, making it easy to get to the next version in the case of unintended consequences. Wouldn’t it be great if we could hit a redo button on some recent legislation affecting our industry? What would you delete?
