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Banks Face New Rules on Foreclosures from Skeptical State Judges

November 13, 2010 Leave a comment

As banks resume foreclosures and claim to have added safeguards to their processes, it’s been left up to state court judges to decide whether they buy what the banks are saying.

Many judges haven’t.

The Washington Post, for instance, spoke with some judges in New York who estimated that they’re dismissing about 20 to 50 percent of foreclosure cases due to documentation flaws. The state’s chief judge issued a new rule last month requiring lawyers handling foreclosures to verify that all documents in the proceeding are accurate—and lawyers filing bad documents could face “penalties of perjury.”

The Wall Street Journal noted this week that across the country, other state courts have also tried to enforce some measure of quality control:

The Maryland appeals court’s new policy permits judges to require lawyers to testify to the validity of the underlying affidavit in a foreclosure case. Judges also can order notaries public to appear in court or appoint special masters to review foreclosure documentation.

Ohio’s Cuyahoga County Court of Common Pleas said last week it would give servicers and lenders 30 days to ensure that they have filed proper paperwork—or else their cases will be dismissed. The court, which covers Cleveland, also said judges will require lawyers in residential foreclosure cases to file affidavits swearing that they have taken “reasonable steps” to verify the accuracy of documents filed to the court.

In Florida, the Journal noted, a judge has been forcing lawyers to defend the fees that law firms charged to homeowners—and in one case found that a firm had signed off on $1,630 in fees when the number should have been $175.

But even within a state, judges’ positions vary. In the same state, one foreclosure defense attorney complained to the Post that “the banks themselves have slowed down, but not the judges. … They are the robo-signers.” (That’s also the sentiment in a piece published in this week’s Rolling Stone about judges who preside over what are called “rocket dockets.”) Here’s more from the Post:

In a cramped, makeshift courtroom, Broward County Judge Victor Tobin was signing off on uncontested foreclosure cases as fast as a clerk could keep them coming, only a few seconds per file.

“Batter up,” he said as he finished one stack and eyed the next. With scores of cases remaining on the day’s “rocket docket” earlier this week and tens of thousands more awaiting judgment in this courthouse, there was little time to pause.

On the other side of the state, in a Sarasota County courtroom, another judge on a recent day was taking a dramatically different tack. Impatient with attorneys for lenders trying to seize hundreds of homes, fed up with their sloppy paperwork and errant practices, Judge Harry Rapkin dismissed 61 foreclosure cases in that single day – a quarter of those awaiting his approval. While the plaintiffs could re-file, it would mean hefty fees and significant delay.

Outside of the courts, other efforts to hold the banks accountable are ongoing. Iowa’s Attorney General, who’s leading a 50-state foreclosure probe, told Bloomberg this week that the investigation is “on a fast track.” He hinted that any agreement with the banks would require that they put more resources to servicing and improve loan modification procedures.

The Senate Banking Committee also announced the first congressional hearing focused on the foreclosure scandal. Bank of America and JPMorgan Chase officials are scheduled to testify at the hearing, scheduled for next Thursday.

by Marian Wang ProPublica, Nov. 11, 2010, 12:51 p.m.

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Sugar soars to 30-year high as supply fears grow

November 3, 2010 Leave a comment

Macro photograph of a pile of sugar (saccharose)

Macro photograph of a pile of sugar (saccharose)

By Jack Farchy in London

Published: November 2 2010 19:22 | Last updated: November 2 2010 19:22

The price of sugar has jumped to a 30-year high as the Brazilian harvest has tailed off sharply, hardening expectations of a shortage.

Traders believe that prices could soar over the coming months as the market faces a supply shortfall driven by smaller-than-forecast crops in important growing countries from Brazil to Russia and western Europe.

At the same time, inventories are at their lowest levels in decades. “All buyers we see are buying on a hand-to-mouth basis,” said Peter de Klerk of Czarnikow, the London sugar merchant.

That has pushed prices up sharply, with raw sugar futures in New York soaring 135 per cent from a low of 13 cents in May.

On Tuesday ICE March sugar rose 4 per cent to a peak of 30.64 cents a pound, surpassing the level reached in February and rising to their highest point since 1980, when prices jumped to nearly 45 cents.

The dramatic rise in sugar prices is causing headaches for policymakers. While sugar is widely available in the west and its price is rarely considered, it is an essential source of cheap calories in emerging economies, where surging sugar prices are driving food inflation.

On Tuesday India’s central bank raised benchmark interest rates for the sixth time this year in an attempt to curb inflation.

New Delhi has emerged as a crucial factor in the sugar market, as India’s harvest is expected to be large, but the government is still debating how much sugar to allow the country’s industry to export. Traders expect India to authorise exports of 1m-2m tonnes starting in December. Anything less, or even a delay to the decision, could send prices spiralling higher, traders warn.

“They need to start selling additional volumes by mid-December, otherwise the hole in the market is getting wider,” said Mr de Klerk.

The latest move up in prices was triggered by a spell of dry weather in Brazil, which dominates the global sugar trade with about half of world exports.

Unica, the country’s cane industry association, said last week that production was down 30 per cent in the first half of October from 2009, while Kingsman, a consultancy in Lausanne, has downgraded its forecast for the Brazilian crop by 2.3 per cent. “If Brazil is going to have a lower harvest it makes it that much harder to fill the deficit,” said Jonathan Kingsman.

Many observers believe Brazil’s sugar harvest will be smaller next year, as farmers are forced to replant ageing cane.

“For the sugar market, fear about Brazil is worse than fear about India, which drove the price to 30 cents last year,” Jean-Luc Bohbot, head of trading at Sucres et Denrées, one of the largest physical sugar traders, said last week.

“Anything affecting Brazil will have a direct impact on trade flows.”

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ELECTION WEEKEND ‘TERROR’

November 1, 2010 Leave a comment

 Source: CNNAt least two U.S. airports were on high alert Friday after investigators found a suspicious package on a plane in the United Kingdom the night before, a law enforcement source with detailed knowledge of the investigation said.

The suspicious package, which contained a “manipulated” toner cartridge, tested negative for explosive material, the source said, but it led to heightened inspection of arriving cargo flights in Newark, New Jersey, and Philadelphia, Pennsylvania, and a UPS truck in New York.

Police also were investigating a suspicious package at the distribution center of an airport in East Midlands, in the United Kingdom, an airport spokesman said. Authorities said they could not immediately connect that investigation to the ones unfolding in New Jersey, New York and Pennsylvania.

Authorities seemed most focused on inspecting cargo planes.

Investigators were examining two UPS planes that landed at Philadelphia International Airport and another at Newark Liberty International Airport in Newark, New Jersey, said Mike Mongeot, a UPS spokesman.

Read Full Article Here…

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FRAUDCLOSURE: “MBS INVESTORS ARE CALLING THEIR LAWYERS”

October 21, 2010 Leave a comment

This is a Bloomberg interview with Chris Whalen. It outlines serious problems for the banks as they are being asked to buy back fraudulent mortgages.

Watch on youtube

He says it will take two election cycles to get rid of the criminals in DC. He also says that state governors and state governments will stop foreclosures and ask people to continue paying their property taxes but not pay their mortgages.

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Wall Street Sees World Economy Decoupling From U.S.

October 4, 2010 Leave a comment

By Simon Kennedy – Oct 4, 2010

Wall Street economists are reviving a bet that the global economy will withstand the U.S. slowdown.

Just three years since America began dragging the world into its deepest recession in seven decades, Goldman Sachs Group Inc., Credit Suisse Holdings USA Inc. and BofA Merrill Lynch Global Research are forecasting that this time will be different. Goldman Sachs predicts worldwide growth will slow 0.2 percentage point to 4.6 percent in 2011, even as expansion in the U.S. falls to 1.8 percent from 2.6 percent.

Underpinning their analysis is the view that international reliance on U.S. trade has diminished and is too small to spread the lingering effects of America’s housing bust. Providing the U.S. pain doesn’t roil financial markets as it did in the credit crisis, Goldman Sachs expects a weakening dollar, higher bond yields outside the U.S. and stronger emerging-market equities.

“So long as it doesn’t turn to flu, the world can withstand a cold from the U.S.,” Ethan Harris, head of developed-markets economic research in New York at BofA Merrill Lynch, said in a telephone interview. He predicts the U.S. will expand 1.8 percent next year, compared with 3.9 percent globally.

That may provide comfort for some of the central bankers and finance ministers from 187 nations flocking to Washington for annual meetings of the International Monetary Fund and World Bank on Oct. 8-10. IMF chief economist Olivier Blanchard last month predicted “positive but low growth in advanced countries,” while developing nations expand at a “very high” rate. He will release revised forecasts on Oct. 6.

‘Partially Decoupled’

“The world has already become partially decoupled,” Nobel laureate Joseph Stiglitz, a professor at New York’s Columbia University, said in a Sept. 20 interview in Zurich. He will speak at an IMF event this week.

Sixteen months after the world’s largest economy emerged from recession, the U.S. recovery is losing momentum, with factory orders falling 0.5 percent in August and unemployment forecast to increase to 9.7 percent in September from the previous month’s 9.6 percent, according to the median estimate of 78 economists in a Bloomberg News survey.

Their predictions don’t include another contraction, with growth estimated at 2.7 percent this year and some indicators showing progress. Orders for capital goods rose 5.1 percent in August and the number of contracts to purchase previously owned homes increased 4.3 percent; both were higher than forecasts.

China Manufacturing Accelerates

Even so, emerging markets are showing more strength. Manufacturing in China accelerated for a second consecutive month in September, and industrial production in India jumped 13.8 percent in July from a year earlier, more than twice the June pace.

“It seems that recent economic data help to confirm the story of emerging-markets outperformance,” said David Lubin, chief economist for emerging markets at Citigroup Inc. in London.

The gap in growth rates between the developing and advanced worlds is widening, he said. Emerging economies will account for about 60 percent of global expansion this year and next, up from about 25 percent a decade ago, according to his estimates.

The main reason for the divergence: “Direct transmission from a U.S. slowdown to other economies through exports is just not large enough to spread a U.S. demand problem globally,” Goldman Sachs economists Dominic Wilson and Stacy Carlson wrote in a Sept. 22 report entitled “If the U.S. sneezes…”

Limited Exposure

Take the so-called BRIC countries of Brazil, Russia, India and China. While exports account for almost 20 percent of their gross domestic product, sales to the U.S. compose less than 5 percent of GDP, according to their estimates. That means even if U.S. growth slowed 2 percent, the drag on these four countries would be about 0.1 percentage point, the economists reckon. Developed economies including the U.K., Germany and Japan also have limited exposure, they said.

Economies outside the U.S. have room to grow that the U.S. doesn’t, partly because of its outsized slump in house prices, Wilson and Carlson said. The drop of almost 35 percent is more than twice as large as the worst declines in the rest of the Group of 10 industrial nations, they found.

The risk to the decoupling wager is a repeat of 2008, when the U.S. property bubble burst and then morphed into a global credit and banking shock that ricocheted around the world. For now, Goldman Sachs’s index of U.S. financial conditions signals that bond and stock markets aren’t stressed by the U.S. outlook.

Weaker Dollar

The break with the U.S. will be reflected in a weaker dollar, with the Chinese yuan appreciating to 6.49 per dollar in a year from 6.685 on Oct. 1, according to Goldman Sachs forecasts.

The bank is also betting that yields on U.S. 10-year debt will be lower by June than equivalent yields for Germany, the U.K., Canada, Australia and Norway. U.S. notes will rise to 2.8 percent from 2.52 percent, Germany’s will increase to 3 percent from 2.3 percent and Canada’s will grow to 3.8 percent from 2.76 percent on Oct. 1, Goldman Sachs projects.

Goldman Sachs isn’t alone in making the case for decoupling. Harris at BofA Merrill Lynch said he didn’t buy the argument prior to the financial crisis. Now he believes global growth is strong enough to offer a “handkerchief” to the U.S. as it suffers a “growth recession” of weak expansion and rising unemployment, he said.

Giving him confidence is his calculation that the U.S. share of global GDP has shrunk to about 24 percent from 31 percent in 2000. He also notes that, unlike the U.S., many countries avoided asset bubbles, kept their banking systems sound and improved their trade and budget positions.

Economic Locomotives

A book published last week by the World Bank backs him up. “The Day After Tomorrow” concludes that developing nations aren’t only decoupling, they also are undergoing a “switchover” that will make them such locomotives for the world economy, they can help rescue advanced nations. Among the reasons for the revolution are greater trade between emerging markets, the rise of the middle class and higher commodity prices, the book said.

Investors are signaling they agree. The U.S. has fallen behind Brazil, China and India as the preferred place to invest, according to a quarterly survey conducted last month of 1,408 investors, analysts and traders who subscribe to Bloomberg. Emerging markets also attracted more money from share offerings than industrialized nations last quarter for the first time in at least a decade, Bloomberg data show.

Room to Ease

Indonesia, India, China and Poland are the developing economies least vulnerable to a U.S. slowdown, according to a Sept. 14 study based on trade ties by HSBC Holdings Plc economists. China, Russia and Brazil also are among nations with more room than industrial countries to ease policies if a U.S. slowdown does weigh on their growth, according to a policy- flexibility index designed by the economists, who include New York-based Pablo Goldberg.

“Emerging economies kept their powder relatively dry, and are, for the most part, in a position where they could act countercyclically if needed,” the HSBC group said.

Links to developing countries are helping insulate some companies against U.S. weakness. Swiss watch manufacturer Swatch Group AG and tire maker Nokian Renkaat of Finland are among the European businesses that should benefit from trade with nations such as Russia and China where consumer demand is growing, according to BlackRock Inc. portfolio manager Alister Hibbert.

“There’s a lot of life in the global economy,” Hibbert, said at a Sept. 8 presentation to reporters in London.

Asset Bubbles

The increasing focus on emerging markets may present challenges for their policy makers as the flow of money into their economies risks fanning inflation, asset bubbles and currency appreciation. Countries from South Korea to Thailand have already intervened to weaken their currencies, along with taking steps to restrict capital inflows.

Stephen Roach, nonexecutive Asia chairman for Morgan Stanley, remains skeptical of decoupling. He links the optimism to a snapback in global trade from a record 11 percent slide in 2009. As that fades amid sluggish demand from advanced economies, emerging markets that rely on exports for strength will “face renewed and formidable headwinds,” he said.

“Decoupling is still a dream in much of the developing world,” said Roach, who also teaches at Yale University in New Haven, Connecticut.

‘Year of Recoupling’

The Goldman Sachs economists argue history is on their side. The U.K., Australia and Canada all continued growing amid the U.S. recession of 2001 as the technology-stock bust passed them by, while America’s 2006-2007 housing slowdown inflicted little pain outside its borders, they said. The shift came when the latter morphed into a financial crisis, prompting Goldman Sachs to declare in December 2007 that 2008 would be the “year of recoupling.”

The argument finds favor with Neal Soss, New York-based chief economist at Credit Suisse. While the supply of dollars and letters of credit that fuel international commerce dried up during the turmoil, that isn’t a problem now, so the rest of the world can cope with a weaker U.S., he said.

“Decoupling was a good idea then and is a good idea now,” Soss said.

To contact the reporter on this story: Simon Kennedy at skennedy4@bloomberg.net

To contact the editor responsible for this story John Fraher at jfraher@bloomberg.net

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