Bush Says U.S. Economy Sound, People `Concerned' About Housing

``I'm concerned about the fact that Americans see their costs going up,'' Bush said today at a White House news conference. ``I know Americans are concerned about whether or not their neighbor may stay in their house.''

Although the nation's economic ``fundamentals are strong,'' the president said, his administration will ``consider all options'' to prevent a recession. He didn't give any specifics.
The economy has been battered by a slump in housing and a credit collapse caused by losses in the market for subprime mortgages. New York Senator Charles Schumer is among the Democrats in Congress and on the presidential campaign trail who have ripped Bush for what Schumer yesterday called the administration's ``serious mishandling'' of the economy and its response to mounting foreclosures.

Bush pointed to actions already taken to confront the housing slump. He and Treasury Secretary Henry Paulson earlier this month announced a plan negotiated with lenders and regulators to help as many as 1.2 million people keep their homes by freezing rates on some subprime adjustable-rate mortgages. He also signed legislation today to protect homeowners from being taxed on canceled debt when they refinance to head off a foreclosure.
Homeowners

``I made it clear we're not going to bail out lenders, and we're not going to help speculators, but we will help creditworthy people stay in their homes,'' he said.
Bush said he isn't troubled by Wall Street institutions turning to Asian and Middle Eastern governments for $25 billion to prop up balance sheets as they book losses on investments in securities that contain subprime home loans.

Morgan Stanley yesterday wrote down its subprime-infected mortgage holdings by $9.4 billion and received a $5 billion cash infusion from state-controlled China Investment Corp. Citigroup Inc., Bear Stearns Cos. and Zurich-based UBS AG also have received cash infusions from sovereign funds.

``I'm fine with capital coming in from overseas to help bolster financial institutions,'' Bush said today. ``What would be a problem is to say we're not going to accept foreign capital, or we're not going to open markets, or we've become protectionists.''
Subprime Losses

The losses from subprime mortgages are going to ``have to work through the system'' and Wall Street firms must be transparent about investments that have gone bad, he said. ``If there's some write-downs to be done, they need to do it now.''

The U.S. housing recession has slowed U.S. economic growth. The economy probably will slow this quarter to a 1 percent annual rate from a 4.9 percent pace in July to September, according to surveys of economists by Bloomberg News. Fed officials are predicting the expansion will slow to as little as 1.8 percent by the end of next year.

During the news conference, Bush congratulated Congress for finishing work on a ``good energy bill'' and making an adjustment to the tax code to prevent the alternative minimum tax from increasing levies on some 23 million households.

He expressed disappointment that lawmakers passed a measure to fund government operations in a catch-all spending bill. The legislation passed yesterday included funding for 9,800 pet projects of lawmakers, he said.

Florida Bad Credit Mortgage company Five Stars Mortgage provides alternatives to sub prime mortgages for their Florida clients.

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Financial Firms Hunt for cash

As Citigroup Inc. was dealing with billions of dollars in subprime bad credit mortgage-related losses and the departure of Chief Executive Charles Prince, it got an unexpected call from a prominent investment banker suggesting a merger with Bank of America Corp.
Citigroup's board dismissed the informal approach "totally out of hand," and no discussions have taken place, says a person familiar with the matter. "When you're looking for a CEO, that's no time for a transaction," this person says.
Bank of America says it never authorized a formal overture to Citigroup.

Citigroup's board, meanwhile, gave a green light to a smaller transaction -- a $7.5 billion capital infusion from an investment arm of the Abu Dhabi government. In exchange, the Abu Dhabi Investment Authority will receive a 4.9% stake in the form of convertible stock.
More broadly, the Abu Dhabi deal shows that after years of doling out money to corporate clients and consumers, financial companies now need some fresh cash of their own.
Faced with massive losses linked to the subprime-mortgage crisis and accompanying credit crunch, several of the nation's financial institutions -- from Wall Street investment firms to bond insurers -- are assessing their need for new sources of capital. And they are likely to intensify their fledgling efforts in coming months amid signs that they could face billions of dollars in additional losses as the mortgage-market fallout persists.

"It's a bitter pill to swallow to admit that the problems in the market have reached the point that companies that traditionally could fund themselves now need external sources of capital," says David Honold, who invests in financial stocks at Turner Investment Partners in Berwyn, Pa.

Of course, one way to tap external capital is to merge operations. The merger boom that fizzled out this summer was driven by cheap and plentiful financing in the debt markets and a booming stock market. With credit increasingly tight and the stock market looking shakier, Wall Street may now see a round of opportunistic deal making.

Bank of America, based in Charlotte, N.C., has long been one of the most opportunistic acquirers in the banking industry. In the past couple of years, it has scooped up retail bank FleetBoston Financial Corp., credit-card issuer MBNA Corp., wealth-management firm U.S. Trust Co. and, most recently, LaSalle Bank.

This wasn't the first time Citigroup received an overture involving Bank of America; it got a feeler from the bank several months ago, according to a person familiar with the matter. The latest one, though, was quickly disavowed. "Bank of America did not authorize any investment banker to approach any company over the last six weeks," a Bank of America spokesman said.

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What is a Bad Credit Mortgage Loan?

Five Stars Mortgage has posted an article explaining the mysteries of the bad credit mortgage loan.

Below is an exceprt from the article:

"Bad credit mortgage is no different from an ordinary mortgage except for the fact that it's given to people having a bad credit history. A bad credit mortgage serves as a boon for people having a bad credit history that could have happened due to non payment of debts in time, bankruptcy, black mark from any credit agency, court cases, or even in accurate information or credit fraud. Bad credit mortgage is also referred to as adverse credit mortgage, sub prime mortgage, non standard mortgage, poor credit mortgage or credit impaired mortgage. These are the same as bad credit mortgage refinace, bad credit mortgage home loans, and foreclosure refinance situations. Lenders generally shy away from people having a bad credit. But the situation has changed rapidly and many home mortgage lenders and bad credit mortgage company have sprung up that offer bad credit home mortgages to people having a bad credit history, with almost the same interest rates (just a marginal difference) and terms as in a normal mortgage loan. "

To read the entire article on bad credit mortgage loans in Florida visit: http://www.fivestarsmortgage.com/mortgage-articles/1/

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The nation's fourth-largest bank, which lost $1.3 billion in the third quarter tied to market turmoil, reported a $1.1 billion drop in the value of its asset-backed debt just in October alone.
Bankers' write-downs

The Charlotte, N.C.-based company said in a filing with the Securities and Exchange Commission that it's anticipating loan losses of $500 million to $600 million in the fourth quarter, citing anticipated loan growth and the impact of continuing credit deterioration in its loan portfolio.

"The expected credit deterioration will likely be focused in certain geographic areas that have recently experienced dramatic declines in housing values," the company's filing says.
At last check, shares of Wachovia dropped 1% on trading volume of more than 17 million shares.
Due to the October market deterioration, Wachovia's asset-backed collateralized debt obligations, or CDOs, experienced further declines in value in October 2007 by an amount it currently estimates to be approximately $1.1 billion pre-tax, the filing said.

In the third quarter, market losses totaling $1.3 billion pre-tax included $347 million of subprime-related valuation losses on CDOs.
As of Oct. 31, Wachovia said it had remaining exposure of $676 million to asset-backed CDOs, compared with $1.8 billion the previous month. Wachovia has exposure to subprime residential mortgage-backed securities of $2.1 billion, according to the filing.
Write-downs related to CDOs and subprime mortgage-backed securities totaled $1.11 a share during October, Wachovia said. Net write-downs for the third quarter were 35 cents a share.
The market for these assets "have remained extraordinarily volatile in the first week of November with additional rating agencies' downgrades ... and credit spread widening and illiquidity."

More write-downs coming out of Wall Street have heightened fears the fallout from the subprime turmoil is spreading deeper into credit markets. American International Group Inc. (AIG:
American International Group, Inc earlier this week joined the chorus of firms disclosing subprime-related losses.
"While it is unclear if these write-downs are enough, the remaining CDO exposure of $676 million is well below that of others," wrote analysts at Deutsche Bank in a research note on the Wachovia filing. They estimated that Morgan Stanley has $6 billion in CDO exposure, Merrill Lynch & Co. has $42 billion.

The analysts said the extra loan-loss provisions of between $500 million and $600 million are related to Wachovia's acquisition of mortgage company Golden West Financial. "As such, we believe the company is trying to get ahead of likely higher future mortgage losses in California," they wrote. Last year, Wachovia bought Golden West for $26 billion.

"Nevertheless, we consider this to be negative news," Deutsche Bank said. "Per the investment bank, management indicated that it would stay the course but we wonder if additional changes could be needed. Second, per Golden West, it now becomes even more obvious that Wachovia purchased the thrift at the wrong time of the cycle."

"Perhaps more important than the valuation write-downs is the need to build the loan loss reserves for credit quality deterioration," wrote Stifel Nicolaus & Co. analysts in a report Friday. "The need for additional valuation write-downs was becoming evident in recent weeks, so the Street knew it was coming. But the credit losses may not have been as expected."

The analysts lowered their fourth-quarter profit estimate for Wachovia to 55 cents a share from $1.10.

"Everyone keeps hoping that the worst is over, but we expect to see continued negative news as the fallout from the subprime lending spree spreads," said Walter O'Haire, senior analyst at financial research and consulting firm Celent.

"The hangover is not only painful, but there is no near end in sight," he said. "To complicate matters, there is still disagreement on how to best arrive at a 'market value' for various complex debt derivatives [and] securities, since almost no one wants to own the paper and there is little to no market for it today."

Stated income loan in Florida

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Merrill hedge-fund arrangement in question

After hitting five-year lows a day earlier, financial stocks continued to slide on Friday as investor concerns focused on Merrill Lynch and Washington Mutual. In the past few days, concerns seemed to shift from the companies' poor judgment and weak risk management to the possibility that business practices may not pass regulators' tests.

Shares of Merrill Lynch & Co. fell more than 7% Friday, retreating in the face of a Wall Street Journal report that the company has engaged in deals with hedge funds to delay when it had to record losses on risky mortgage-backed securities.

Washington Mutual may have to set aside some $412 million to $2.1 billion in extra reserves if a lawsuit filed by New York state's attorney general against the mortgage lender succeeds, a Keefe Bruyette & Woods analyst estimated on Friday.

U.S. stocks on Friday shifted in and out of positive territory as investors weighted a surprisingly strong October jobs report and an unexpected rise in factory orders against ongoing credit-related upheaval in financial stocks.

Deutsche's Mayo estimates $10 bln in fourth-quarter write-downs
Deutsche Bank analyst Mike Mayo estimates there will be more than $10 billion in new write-downs during the fourth quarter, including $4 billion each at Citigroup bln subprime hit, Goldman estimates

UBS may take a subprime-related hit of $5.2 billion in the fourth quarter, according to Richard Ramsden, an analyst at Goldman Sachs. He calculated the estimated write-down based on the performance of credit-default spreads since the end of September.

Senate Banking Committee Chairman Christopher Dodd says Merrill Lynch & Co.'s $161.5 million exit package for former Chairman and Chief Executive Officer Stan O'Neal may revive efforts in Congress to give shareholders more power to curb CEO salaries.

Meredith Whitney, whose downgrade of Citigroup Inc. shares helped wipe out $369 billion in U.S. stock market value, said she was the only analyst on Wall Street with the guts to say the bank may cut its dividend.

Commercial Mortgage Lender Five Stars Mortgage continues offering cutting edge products to the National Mortgage Markets. Hard Money Commercial Loans are also being offered by the Commercial Loan Provider.

Shares in Barclays fell as much as 8% to hit two-and-a-half year lows on Friday amid market talk of funding worries and speculation it is telling analysts to trim profit forecasts.

Men like Jim Chanos and Bill Ackman will be watching the collapsing share prices of companies such as Ambac and MBIA with a sense of triumph -- and the warm glow that comes from turning a fine profit. Both hedge-fund managers have long held short positions on the equities of one or other of these bond insurers -- known as monolines -- and have not been shy about condemning their business models or risk positions.

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S&P/Case-Shiller Home Prices Fell 4.4% in August

Home prices in 20 U.S. metropolitan areas slumped in August by the most in at least six years, a private survey showed today.

Values dropped 4.4 percent in the 12 months that ended August, an eighth consecutive decline, according to the S&P/Case-Shiller home-price index, which has data back to 2001.

The figures reinforce the view among Federal Reserve officials and Treasury Secretary Henry Paulson that the housing slump has further to go. Near-record inventory levels suggest sellers will continue to lower prices, posing a threat to consumer spending because homeowners will have less equity to borrow against.

This is really the No. 1 risk: a sustained, sharp decrease in home prices really squeezing consumers,'' said Meny Grauman, an economist at Scotia Capital Inc. in Toronto.

Economists forecast the gauge would decrease 4.2 percent, according to the median of 11 estimates in a Bloomberg News survey.

The group's 10-city composite index, which has a longer history, dropped 5 percent in the 12 months ended in August, the most since June 1991.

In a separate report, an index of consumer confidence declined to 95.6, the lowest since October 2005, from a revised 99.5 the prior month, the New York-based Conference Board said. The index was forecast to drop to 99, from an originally reported reading of 99.8 for September, according to the median estimate in a Bloomberg News survey of 70 economists.

Compared with July, home prices in the 20-city index fell 0.7 percent after a 0.4 percent decline the month before. The figures aren't seasonally adjusted, so economists prefer to focus on the year-over-year change.

``The fall in home prices is showing no real signs of a slowdown or turnaround,'' said Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, in a statement. ``There is really no positive news in today's report.''

Shiller and Karl Case, an economics professor at Wellesley College, created the home-price index based on research from the 1980s.

The index is a composite of transactions in 20 metropolitan regions. Fifteen cities showed a year-over-year decline in prices, led by a 10 percent drop in Tampa, Florida, and a 9 percent decline in Detroit. The area showing the biggest gain was Seattle with a 5.7 percent increase.
Fed Forecast

Most economists expect housing to extend its slump and continue to be a drag on economic growth as loan foreclosures rise and tougher lending standards make borrowing more difficult.
Traders and economists expect the Federal Reserve to cut its benchmark overnight lending rate between banks tomorrow by at least a quarter point. Policy makers on Sept. 18 reduced the interest rate for the first time in four years, to 4.75 percent from 5.25 percent.

Paulson said today it's too soon to call an end to the housing slump.
``We haven't hit the bottom yet in housing,'' Paulson said at a conference in New Delhi. Still, he added ``there is enough strength in the economy that we can grow through this.''
Homeownership in the U.S. has dropped the last four quarters, the longest string of declines since at least 1981, the Census Bureau said on Oct. 26. Also last quarter, a record 17.9 million U.S. homes were vacant.

Sales of existing homes dropped last month to the lowest level since record-keeping began in 1999. The decline to a sales pace of 5.04 million annual rate brought the inventory of homes for sale to a record high of 10.5 months' supply. The median price of resales fell 4.2 percent from a year earlier.

The price measure from the Realtors group can be influenced by changes in the types of homes sold. Because the S&P/Case- Shiller index and another gauge by the Office of Federal Housing Enterprise Oversight track the same home over time, economists say these more accurately reflect price trends.

Recent price cuts may not be enough to bring in some buyers. Pulte Homes Inc., the third-largest U.S. homebuilder said Oct. 25 that the reductions it's enacted didn't boost sales last quarter.

``Time has proven that no one can be sure when this particular downturn will end or begin to show signs of stabilization,'' Chief Executive Officer Richard Dugas said on a conference call. ``Since we are not sure how long this environment will stay this bad, Pulte plans to be prepared for the worst.''

First Time Home Buyer Loans and 100% financing mortgage loans are far more prevalant now more than ever. Five STars Mortgage continues to show clients how to use this buyers market to their advantage with bad credit mortgages.

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Banks can help in times of distress

Banks must step up and provide loans during times of financial market distress and also help homeowners who find themselves behind in their payments of unfavorable mortgages, said Eric Rosengren, the new president of the Boston Federal Reserve Bank.

There might even be some profit opportunities for banks if they can move into the market for subprime mortgages, Rosengren said. Many of the independent brokers who created the market for subprime mortgages have gone out of business in recent months.

"While the subprime market that was the epicenter of the problem is likely to continue to have difficulties, I am hopeful that financial institutions will play an important role in providing financing for many of the borrowers facing higher rates as their mortgages reset," Rosengren said in his first speech after assuming his new post in July.

"The most critical issue is that financing that supports responsible subprime lending continues," Rosengren said.

Subprime is the industry shorthand for mortgages that are not the highest quality. Many lower middle class families were able to buy homes with such loans, but the sector also includes mortgages for higher-priced homes.

Instead, the central issue was a lack of liquidity, as relatively low-risk financial assets traded between large financial institutions experienced the most difficulty.

Bank balance sheets expanded in August and September as securitization of subprime mortgages and other asset-backed commercial paper declined.

Rosengren said that "conservatively underwritten securitizations and asset-backed commercial paper will find acceptance by investors" but said this will take some time.

In his remarks, Rosengren did not dwell on the economic impact of the recent financial turmoil.
He said that the effect of the problems in housing on consumption has been muted to date.
But he said if housing prices fall further or if the price declines spread across the country, this "would increase the risk of a more adverse impact on consumption."

100% Bad Credit Mortgage Florida are still a viable product through Five Stars Mortgage specialized Subprime Home Loan products.

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trimmed staff at its alt-A/conventional mortgage affiliate

Earlier this year, when Merrill Lynch forked over $1.3 billion to buy subprime lender First Franklin Financial Corp., and some of its affiliates, a handful of executives were dancing in the hallways at National City in Cleveland. NatCity owned FFFC and, indeed, it would seem that they sold the subprime shop at the top of the market (and before the nonprime liquidity crisis reared its ugly head). But let's forget about FFFC for a moment. Does anyone see the irony of Merrill Lynch — known for selling stocks to America's wealthy — trying to make a buck by lending to credit impaired Americans? Let's not forget that Merrill was a major (and I do mean major) warehouse financier of non-banks plying their trade in subprime, including Ownit Mortgage, Mortgage Lenders Network and ResMAE, among others. What do all these lenders have in common? They all filed for bankruptcy protection. Some in the industry even speculated that Merrill was engaged in a plan to reduce the number of subprime lenders so that FFFC would have less competition, a thought that only a conspiracy theorist would hatch. One subprime executive who sold loans to Merrill told me that Merrill "was one of the most aggressive buyers of loans. They paid more than anyone and they did less due diligence." He blamed Merrill's woes on a top trader there, whose identity I'll get to in a future column as I continue to research the roots of this crisis. On Friday Merrill Lynch estimated that it will take $4.5 billion in credit-crunch-related writedowns (net of hedges) on subprime mortgages, collateralized debt obligations and leveraged finance commitments.

Five Stars Mortgage is an upfront mortgage broker business still providing the highest level of 100% bad credit mortgage loans in Florida and Nationwide. For details visit them on the web at http://www.fivestarsmortgage.com

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Fed cut sends long-term rates up

many would-be home buyers are about to be stripped of a misperception, namely the idea that when the Federal Reserve Board is cutting interest rates mortgage rates will fall as a result.

In a radio interview with Chuck Jaffe, MarketWatch senior columnist, McBride noted that the Fed is combating the economy, but some observers worry that its bigger-than-expected move might be opening the door to inflation, a concern which has pushed mortgage rates up slightly since the Fed's most recent move.

According to BankRate.com, the average 30-year fixed rate mortgage in the country currently carries a rate of 6.4%, which represents a reversal of course. The average mortgage rate had dropped below that level, to roughly 6.25%, in the two weeks leading up to the Fed announcement Sept. 18 that it was cutting the target for the federal funds rate to 4.75% from 5.25%.

McBride noted that the Fed's rate cut is bad news for long-term savers, as rates on certificates of deposit maturing in two or more years have fallen, while short-term rates have remained steady. This erases any risk premium that a saver gets for tying up money for a longer stretch of time.

Finance your Orlando Bad credit mortgage with 100% financing with Five Stars Mortgage before rates continue to rise!

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