News Alerts. Oct. 25, 2013. Evening Edition. #RealEstate

Linking ≠ endorsement. Enjoy and share:

  1. Jury Finds Bank of America Liable in Mortgage Case – NYTimes.com

    Bank of America, one of the nation's largest banks, was found liable on Wednesday of having sold defective mortgages, a jury decision that will be seen as a victory for the government in its aggressive effort to hold banks accountable for their role in the housing crisis.

    Moreover, the jury also found a top manager at Bank of America's Countrywide Financial unit liable, pinning some — if not all — of the responsibility for the bad acts on an individual.

    During the trial, federal prosecutors accused Rebecca Mairone, a top manager at Countrywide at the time, of having opted for quantity over quality in its mortgage-writing program, which resulted in the bank's churning out to unqualified buyers housing loans that were destined to fail.

    … with more than five years having passed since the start of the crisis, Mr. Hurson ["Daniel J. Hurson, a former federal prosecutor who represents firms and individuals in white-collar cases."] pointed out that it would be difficult for the government to bring more cases to trial because of the statute of limitations.

    "These cases take a long time in the pipeline," he said. "I do not think there will be a whole bunch of them."

    When Bank of America purchased Countrywide, we couldn't understand why they would make such a really bad buy.

    Source … http://dealbook.nytimes.com/2013/10/23/j ury-finds-bank-of-america-liable-in-mort gage-case-nicknamed-the-hustle/?_r=0


  2. SEC proposes 'crowdfunding' rules for start-up businesses – The Washington Post

    Entrepreneurs could use the Internet to sell a stake in their businesses to anyone in the country under rules proposed Wednesday by the Securities and Exchange Commission.

    The "crowdfunding" plan would dramatically open up an investment landscape now dominated by Wall Street firms and wealthy people, allowing fledgling businesses to gather small sums from mom-and-pop investors.

    The SEC unanimously approved the proposal after grappling with how to balance the needs of cash-strapped start-ups with the desire to protect unsophisticated investors from fraud.

    The plan, mandated by Congress, allows companies to raise up to $1 million a year. It sets limits on how much money people can invest — from $2,000 to $100,000 annually — based on their net worth and income. And it mandates that the funds be raised through a regulated portal or other intermediary.

    The article goes into the most detail about what could go wrong that we've seen to date in mainstream media.

    Source … http://www.washingtonpost.com/business/e conomy/sec-proposes-crowdfunding-rules-f or-start-up-businesses/2013/10/23/33125c b4-3bf2-11e3-a94f-b58017bfee6c_story.htm l


  3. Bruegel | The liquidity quandary

    Over the last two years European banks have been granted exceptional access to Central Bank liquidity at exceptionally easy conditions. Data shows clearly that they have made large use of it, although unevenly across Europe. This liquidity waterfall has been essential in preventing a complete collapse of the Eurozone financial system, at a time when the interbank market had frozen up and financial fragmentation was becoming the new normal of the Economic and Monetary Union. However, it also implies non-negligible risks going forward.

    Central bank liquidity is exceptionally cheap, but when banks will have to start replacing it with alternative funding sources this could be expensive. Euribor rates have recently started to rise, although very slowly, pointing to a tightening of borrowing conditions on the interbank market that could continue as long as banks pay back the LTRO funds. ECB's President Draghi himself hinted at this risk recently, on the occasion of a European Parliament hearing, when he pointed out that "while repayment of central bank credit is certainly a sign of normalization, the resulting reduction in excess liquidity can reinforce upward pressures on term money market rates". To the extent that Euribor rates are used as a reference benchmark by banks, a significant rise could translate into tightened borrowing conditions for the private sector which could have an impact on the recovery at a moment in which banks' lending is still depressed and the gap in terms of lending rates between North and South has not been reabsorbed.

    Source … http://www.bruegel.org/nc/blog/detail/ar ticle/1177-the-liquidity-quandary/


  4. Hangover from banks' use of short-term funding refuses to go away /Euromoney magazine

    Most people don't know where money comes from. It's mostly from re-lending endogenous (interbank) loans ultimately dependent upon central bank reserves in the US, of which there are huge excess reserves right now.

    This article covers Europe and is highly instructive.

    "The dangers of repo markets and collateralized lending and borrowing are the focus of a lot of debate and proposed regulation by the FSB and Basel, looking at downward valuations, sudden requirements to post more collateral and resolution bodies." [says Barney Reynolds, partner at Shearman & Sterling.]

    A banking source, who asked not to be named, puts it more bluntly: "If you're relying on repo funding as a key element of your core business in your business plan, then you're taking all the points that make repo risky and magnifying them."

    Source … http://www.euromoney.com/Article/3268732  /Hangover-from-banks-use-of-short-term- funding-refuses-to-go-away.html?single=t rue


If you are an investor in 1-4 unit properties in Arizona, California, Nevada, Oregon, Utah, or Washington, please do the financially responsible thing and make sure you have proper Landlord Insurance with PropertyPak™. We love focusing on real estate and the economy in general, but we are also here to serve your insurance needs.

Hill & Usher (PropertyPak™ is a division) has many insurance offerings. See our menu above for more info and links.

Did this post help you? Let us know by leaving your comment below.

Note: This blog does not provide legal, financial, or accounting advice. Seek professional counsel.

Furthermore, we, as insurance producers, are prohibited by law from disparaging the insurance industry, carriers, other producers, etc. With that in mind, we provide links without staking out positions that violate the law. We provide them solely from a public-policy standpoint wherein we encourage our industry to be sure our profits, etc., are fair and balanced.

We do not necessarily fact checked the contents of every linked article or page, etc.

If we were to conclude any part or parts of our industry are in violation of fundamental fairness and the legal standards of a state or states, we'd address the issue through proper, legal channels. We trust you understand.

The laws that tie our tongues, so to speak, are designed to keep the public from losing confidence in the industry and the regulatory system overseeing it. Insurance commissioners around the country work very hard to analyze rates and to not allow the industry to be damaged by bad rate-settings and changes in coverages. The proper way for people in the industry to deal with such matters is by adhering to the laws, rules, and regulations of the applicable states and within industry associations where such matters may be discussed in private without giving the industry unnecessary black eyes. Ethics is very high on the list in the insurance industry, and we don't want to lose the people's trust. That said, the industry is not perfect; but what industry is?

For our part, we believe in strong regulations and strong regulators.

We welcome your comments and ask you to keep in mind that we cannot and will not reply in any way or ways where any insurance commissioner could rightly say we've violated the law of the given state.

We are allowed to share rating-bureau data/reports and industry-consultant opinions but make clear here that those opinions are theirs and do not necessarily reflect our position.

Subscribe