Bank of America will notify participating cities that properties are available before they are listed on multiple listing services. The company will set the prices with no haggling allowed. If it all works according to plan, the result may be that cities have an easier time buying foreclosures, redeveloping them and then reselling them to homeowners in neighborhoods hardest hit by the housing crisis. Also, communities will be able to buy multiple properties in a single transaction and Bank of America will designate one employee as the "point person" for a community, in an effort to streamline the process.
"We're balancing our desire to work with communities that are struggling to stabilize with our fiduciary duty to the investors that hold the paper on all these properties," says Rob Grossman, senior vice president of community affairs for Bank of America. "We will offer them the best price."
How do you view the actions of Bank of America giving cities, not private buyers, the inside skinny on new foreclosures. Is it a positive, or negative? Fair, unfair?
The bad news has been the worst economic recession since the 1930s. The good news is the housing market has been showing some signs of leading the nation out of that recession. A new report from Harvard University's Joint Center for Housing Studies is banking on demographics to bring back the battered housing market.
The uncertainty, though, lies in predicting the timing, speed and depth of a housing recovery that hinges on the reversal of so many variables-including rising unemployment, sinking home values, and tightening mortgage credit-and their impact on immigration trends and demand among younger home buyers.
The Echo Boomers are entering their peak household formation years of 25-44 with more than five million more members than the baby boomers had in the 1970s. The Echo Boom generation-which is five million people larger than the Baby Boomers-is believed to be high enough to drive the housing industry's growth "for the next 10 years." However, echo boomers "will likely enter the housing market with lower real incomes than people the same age did a decade ago," and therefore might be more open initially to rental housing and starter homes.
Meanwhile, as the leading edge of the baby-boom generation reaches age 65, demand for retirement housing will rise. Increased longevity among those born before World War II will also lift demand for assisted living facilities. How this demand is expressed will depend importantly on how much, and how quickly, these households can rebuild their recently decimated wealth.
The Harvard report has numerous charts and other data that hopefully will assist you and your clients find your Way Forward!
The Federal Reserve Board on Monday announced the execution of a Written Agreement by and among Riverside Gulf Coast Banking Company, Riverside Bank of the Gulf Coast, both of Cape Coral, Florida, the Federal Reserve Bank of Atlanta, and the State of Florida Office of Financial Regulation.
Under the agreement, Riverside Bank is required to take specific steps to implement certain policies and procedures. It requires the bank to retain an independent consultant, acceptable to the Federal Reserve and the Division of Financial Institutions, to conduct a review of staffing needs and the qualifications and performance of all senior managers. A compliance committee, composed mostly of people who are not executive officers or principal shareholders, will monitor the bank’s compliance with the agreement.
The bank has not violated any regulations or laws, and there are no penalties involved.
Last week, Brazilian businessman Marcelo Lima of Sao Paulo, Brazil, applied to buy Riverside Bank of the Gulf Coast with the state Office of Financial Regulation. If the deal goes through, Elmer Tabor bank chairman said, "There's not going to be any name change, management change, all that will be the same and Riverside will move forward." Both OFR and the Federal Reserve would have to approve any purchase, he said.
If you need an attitude adjustment take four minutes and watch the video. While the rest of sit around working it appears that Matt Harding has done a jig all over the globe. Matt spent 14 months visiting 42 countries in order to produce "Where the Hell is Matt?", a video featuring Harding (and anyone else he could rope into it) doing an incredibly silly, high-energy dance in some of the most breathtaking scenery around the world.
I ask: Who accomplished more or "something important" between him and "us"?
The scenery alone and imagining the people he met along the way gave me quite a bit to think about.
If you enjoyed the video...."Matt's outtakes" are hilarious copy and paste the link below into your browser:
http://www.youtube.com/watch?v=tT8jA_pps3o
The songs are "Praam" and the "Dance Outtakes Song."
*To silence the music and watch the video, go to the top left corner of the Jukebox and click on the stop button. Enjoy!
Lawmakers criticised the three largest credit rating agencies for their role in the worst financial crisis in decades, and the agencies admitted they didn't see it coming.
Representative Henry Waxman (D-CA), chairman of the House Oversight and Government Reform Committee said, "The story of the credit rating agencies is a story of colossal failure". Rep. Waxman blamed the rating agencies and federal regulators for putting the entire financial system at risk and betraying the public trust.
Rep. Waxman's committee is investigating the credit crisis and put much of the blame on those agencies. According to documents(Below)Waxman distributed at the hearing, Moody's Chief Executive Raymond McDaniel told directors that Moody's was facing a dilemma in trying to maintain both market share and ratings quality. McDaniel told directors that industry competition forces rating agencies to provide the lowest credit enhancement needed for the highest rating, which "can place the entire financial system at risk."
The three biggest ratings agencies, S&P, Moody's and Fitch, Inc.; made huge profits for giving top ratings to the securities. The agencies apparently relied on ever increasing home prices for the confidence they placed in the mortgages. Two of the agencies, S&P and Moody's, have now downgraded thousands of their previous top ratings.
Documents also revealed that a portfolio manager with big mutual fund company Vanguard Group Inc told Moody's over a year ago that the rating agencies "allow issuers to get away with murder." Though some say that the economic crisis could not have been foreseen (Moody's CEO McDaniel calls the last several weeks "unimaginable"), the committee cited E-mails and internal presentations revealing that at least some executives, employees, and investors voiced misgivings about the debts being evaluated. One S&P employee joked in an instant message exchange, "It could be structured by cows and we would rate it."
Below is a list of the documents that the House Oversight Committee reviewed, trust me when I say its some eye opening information. Click here for a preliminary hearing transcript.
For those who like to know.......How did we get here?
Between 1909, when John Moody set up shop, and the 1980s, most of the analysis that Moody's and S&P did was of securities issued by either corporations or governments. Unlike asset-backed securities, corporate bonds are dynamic -- there is an active management (usually with a visible track record of past behaviour) making decisions that can make it more or less likely that bondholders will be repaid.
If poor decisions are made early in the life of the bond, there is time and scope for different decisions to offset these.
Conversely, the amount of risk in a corporate or government bond remains fairly constant through its life -- a disastrous move that destroys the firm and makes repayment impossible is theoretically just as possible in the last year of its term as in the first.
Mortgage-backed securities, on the other hand, represent a vastly more complex valuation and risk-assessment challenge. While many mortgages are pooled together, there is very little information about the past behaviour of the borrowers -- the track record that an investor can infer from the resumes of a corporate issuer's CFO and CEO is absent.
Some of this data becomes available as the pool of mortgages gradually becomes "seasoned" and defaults take place. But then an additional problem arises -- the pool of mortgages underlying a security is static, and once money is lost from a default, it cannot be recovered from outperformance elsewhere. Most securitised mortgages or debt assets build in a buffer to cover defaults. But whether this is too little (or too much -- insurance is "wasted" because there are fewer defaults than expected) only becomes known over time, as variability lessens and value converges on a particular combination of defaults by some underlying borrowers, early repayment by others, and "normal" repayment by the rest.
The complex mathematics in any thorough attempt to model a mortgage-backed security becomes exponentially more daunting for CDOs, where returns are tiered, many different securities or elements of securities are combined and the equation is further complicated by an "active" manager with some scope to shuffle differently performing underlying assets between various tranches and issues.
It now seems fairly clear that the models the ratings agencies used to justify the lofty investment-grade credit ratings they gave to many mortgage-backed securities and CDOs were woefully inadequate, based as they were on the very different world of corporate and government bonds. This is why the rating agency models failed to detect any reason for the credit ratings for most mortgage-backed and debt-backed securities to be lowered until months after the sub-prime crisis had erupted. Traditional credit analysis will become more significant again.
The fact is that S&P and Moody's became more experienced and adept at rating complex securities, largely by learning from the way older issues evolved, they refused to revisit ratings for older issues with this knowledge, leaving existing ratings in place.
By the time the music stopped last year, the ratings agencies were therefore major contributors to the opacity, confusion and lack of trust among participants in markets for debt-backed securities, rather than the providers of impartial fact-based opinion they aspire to be. That is why it is going to take years for Moody's and S&P to fully regain the confidence of the market.
Of course, none of this would have mattered had not a great many US investors, including some of the most illustrious names in finance, all been willing to believe that they really could get something for nothing, and not be left with any exposure to unpleasant underlying risks.
Roger Lowenstein, author of When Genius Failed, wrote a terrific article in this past weekend’s New York Times Magazine if you'd care to read more, but from my persepective I don't think people are going to blindly take the advice of the rating agencies anymore, how about you?
Give people a tax cut or rebate as in a standard fiscal stimulus package, the government would distribute to taxpayers mortgage foreclosure vouchers. These vouchers can be used either by homeowners to pay mortgages on homes in severe danger of foreclosure, or to help homebuyers to purchase foreclosed homes.
As with other stimulus packages, these vouchers would be distributed to taxpayers based on their incomes with those with the lowest incomes receiving the largest vouchers and those with incomes of, say, over $200,000 receiving nothing at all. ... The vouchers, however, could only be fully used by homeowners facing foreclosure or interested in buying a house in foreclosure.
For the majority of taxpayers who cannot use them, the vouchers could be sold on a secondary market... These vouchers would likely sell at a discount, perhaps of about 25%. Since the plan will increase demand for foreclosed housing, it will stop the fall of housing prices, thereby helping to end the housing crises and starting the economy on the road to recovery. ...Instead of a rescue scheme that relies on the benefits trickling down from Wall Street to Main Street, the benefits of this plan will trickle up from Main Street to Wall Street.
The Trickle-Up Plan would ... help keep people in their homes and create demand for housing currently in foreclosure. By doing so, it will help stop the fall in housing prices, and also increase the value of the lowest elements of the mortgage backed securities - precisely what governments wants to do.
The PNC Financial Services Group, Inc. (NYSE: PNC) and National City Corporation (NYSE: NCC) today announced that they have signed a definitive agreement for PNC to acquire National City for $2.23 per share, or an aggregate fixed amount of approximately $5.2 billion in PNC stock. Additionally $384 million of cash is payable to certain warrant holders. Total consideration approximates National City's market capitalization as of the close of business on October 23, 2008. National City shareholders will be entitled to 0.0392 share of PNC common stock for each share of National City.
The PNC Financial Services Group, Inc. (NYSE: PNC) and National City Corporation (NYSE: NCC) today announced that they have signed a definitive agreement for PNC to acquire National City for $2.23 per share, or an aggregate fixed amount of approximately $5.2 billion in PNC stock. Additionally $384 million of cash is payable to certain warrant holders. Total consideration approximates National City's market capitalization as of the close of business on October 23, 2008. National City shareholders will be entitled to 0.0392 share of PNC common stock for each share of National City.
PNC plans to issue to the U.S. Treasury $7.7 billion of preferred stock and related warrants under the TARP Capital Purchase Program subject to standard closing requirements. The U.S. Treasury Department approval of PNC's participation enables PNC to further strengthen its capital position, resulting in an estimated pro forma Tier 1 capital ratio for the combined company of approximately 10 percent.
"The acquisition of National City will increase our core deposit base to $180 billion, making PNC the fifth largest U.S. bank by deposits. At a time when core funding is key, we see our deposit strength as an important success factor. Upon closing the transaction, we will implement our successful business model and execute our strategies for managing risk, achieving cost efficiencies and growing high-quality revenue streams," said James E. Rohr, chairman and chief executive officer of PNC. "We believe this strategic combination will continue PNC's efforts to build capital strength and shareholder value. We are also gratified that we have been selected to participate in Treasury's Capital Purchase Program, which has helped to put this transaction on a very solid footing."
The transaction has an estimated internal rate of return to PNC of more than 15 percent and is expected to be accretive to PNC's earnings in the second year. PNC's fair value adjustments and provisions for future losses of National City's current loan portfolio will bring the cumulative impairment of these loans to approximately 17.5 percent. PNC will continue to liquidate non- core and impaired loans.
"The combined company will have greater scale and scope, enhancing service to our customers and communities and providing greater opportunities for our employees. This transaction is about two companies that fit well together in terms of geography, products and services," said Peter E. Raskind, chairman, president and chief executive officer of National City.
Upon closing the transaction, Raskind will be appointed a PNC vice chairman, and one National City director will join the board of the combined company.
In addition to ranking fifth nationally in deposits, the combination with National City is expected to place PNC fourth among U.S. banks in number of branches. It will give PNC the No. 1 deposit share position in Pennsylvania, Ohio and Kentucky and will rank the company No. 2 in Indiana and Maryland.
PNC expects to incur merger and integration costs of approximately $2.3 billion. The transaction is expected to result in the reduction of approximately $1.2 billion of noninterest expense through the elimination of operational and administrative redundancies.
Under terms of the agreement, PNC will acquire all outstanding shares of common stock of National City in a stock-for-stock transaction, which has been approved by the Boards of Directors of both companies. In connection with the transaction, National City has issued to PNC an option to acquire 19.9 percent of National City's common stock that becomes exercisable under certain specified circumstances. Corsair Capital, LLC, which owns approximately 7.8 percent of outstanding National City common shares, has agreed to vote all National City common shares it owns in favor of the deal and otherwise support the transaction. After closing, PNC intends to merge National City's banking affiliates into PNC Bank and they will assume the PNC Bank name. The merged entity will have its headquarters in Pittsburgh.
Based on PNC's closing NYSE stock price of $56.88 on October 23, 2008, the transaction values each share of National City's common stock at $2.23. The aggregate consideration is composed of a fixed number of approximately 92 million shares of PNC common stock. Additionally $384 million of cash is payable to certain warrant holders.
The transaction is currently anticipated to close by Dec. 31, 2008. The merger is subject to customary closing conditions, including both PNC and National City shareholders and regulatory approvals. Citigroup Global Markets Inc., JPMorgan Securities, Inc. and Sandler O'Neill + Partners, L.P. acted as financial advisers to PNC, and Wachtell, Lipton, Rosen & Katz acted as its legal adviser. Goldman Sachs acted as financial adviser to National City and Sullivan & Cromwell LLP acted as its legal adviser, and Cravath, Swaine & Moore LLP acted as legal adviser to the Board of Directors of National City.
CONFERENCE CALL AND SUPPLEMENTARY INFORMATION
Rohr and Chief Financial Officer Richard J. Johnson will hold a conference call for investors at 10:00 a.m. Eastern Time today regarding the announcement of the acquisition. Investors should call 5 to 10 minutes before the start of the conference call at 800-990-2718 or 706-643-0187 (international). The related presentation slides to accompany the conference call remarks may be found at http://www.pnc.com/investorevents. A taped replay of the call will be available for one week at 800-642-1687 and 706-645-9291 (international), conference ID 70844287. In addition, Internet access to the call (listen only) and to the presentation slides will be available at http://www.pnc.com/investorevents. A replay of the webcast will be available on PNC's Web site for 30 days.
The conference call may include a discussion of non-GAAP financial measures, which, to the extent not so qualified during the conference call, is qualified by GAAP reconciliation information that will be made available on PNC's Web site under "About PNC - Investor Relations." The conference call may include forward-looking information, which along with the presentation slides and this news release, is subject to the cautionary statements that follow.
National City Corporation, headquartered in Cleveland, Ohio, is one of the nation's largest financial holding companies. The company operates through an extensive banking network primarily in Ohio, Florida, Illinois, Indiana, Kentucky, Michigan, Missouri, Pennsylvania, and Wisconsin and also serves customers in selected markets nationally. Its core businesses include commercial and retail banking, mortgage financing and servicing, consumer finance and asset management. For more information about National City, visit the company's Web site at nationalcity.com.
The PNC Financial Services Group, Inc. (http://www.pnc.com/) is one of the nation's largest diversified financial services organizations providing retail and business banking; specialized services for corporations and government, including corporate banking, real estate finance and asset-based lending; wealth management; asset management and global fund services.
As the financial crisis hits Main Street America, nearly one in six US homeowners are finding themselves in the same position, threatening the US economy with a new wave of foreclosures and bankruptcies.
About 12-million US homeowners owe more than their homes are worth, compared with 6,6-million at the end of last year and slightly more than three million at the close of 2006, said Mark Zandi, chief economist at Moody's Economy.com.
"At the root it's 'the' problem," said Zandi. "If you're going to put your finger on the one thing that's gotten us into this fiasco, it's the fact that millions of homeowners are under water on their homes." Already, US consumer spending is slumping as homeowners find they can no longer take equity out of their homes to fund their lifestyles.
In a slowing economy, it doesn't take much to push an underwater mortgage into default.
"When you're under water and you have some kind of hit to your income or some kind of unintended expense, that's when you default. And so now we've got this noxious mix of millions of people under water and quickly rising unemployment," Zandi said.
Wasteland
Cape Coral, built over swampland near Fort Myers on Florida's palm-fringed Gulf Coast, was fertile ground for the real estate boom, which peaked across much of the United States three years ago.
It is now a wasteland, with barren strip malls, a bloated inventory of unsold or abandoned homes and ubiquitous for-sale signs that speak volumes about the plunge in housing prices and surge in mortgage defaults that triggered the US credit crunch last year.
With current home prices likely to decline on average by another 10%, Zandi said there will be 14,6-million homeowners underwater by September next year.
"House prices have collapsed and you've got many homeowners who bought homes in the last three years who put very little down or have been borrowing against their homes," said Zandi. "That's causing this to rise very rapidly."
Economists like Zandi worry that the underlying housing crisis could eventually prove much more costly to the US taxpayer than the $700-billion the US government has pledged to recapitalise banks and buy up distressed debt from financial institutions.
"The government is going to have to start filling this negative equity hole and that's just going to be a direct cost to taxpayers," Zandi said. "This is going to be the really costly part, I think, for taxpayers."
While the US government has focused its rescue on banks, it has done little to help individuals who are struggling to pay their mortgages, apart from the Hope Now programme, which has facilitated a few hundred thousand mortgage restructurings.
The government may have no option but to step in, especially if a rising tide of foreclosures and fall-off in property and other tax revenues endanger municipalities and local governments and force some into bankruptcy.
Both presidential candidates have outlined plans for relief for distressed homeowners but critics say they have been short on details and there appears to be little consensus about how best to help homeowners who are underwater.
Give people a tax cut or rebate as in a standard fiscal stimulus package, the government would distribute to taxpayers mortgage foreclosure vouchers. These vouchers can be used either by homeowners to pay mortgages on homes in severe danger of foreclosure, or to help homebuyers to purchase foreclosed homes.
As with other stimulus packages, these vouchers would be distributed to taxpayers based on their incomes with those with the lowest incomes receiving the largest vouchers and those with incomes of, say, over $200,000 receiving nothing at all. ... The vouchers, however, could only be fully used by homeowners facing foreclosure or interested in buying a house in foreclosure.
For the majority of taxpayers who cannot use them, the vouchers could be sold on a secondary market... These vouchers would likely sell at a discount, perhaps of about 25%. Since the plan will increase demand for foreclosed housing, it will stop the fall of housing prices, thereby helping to end the housing crises and starting the economy on the road to recovery. ...Instead of a rescue scheme that relies on the benefits trickling down from Wall Street to Main Street, the benefits of this plan will trickle up from Main Street to Wall Street.
The Trickle-Up Plan would ... help keep people in their homes and create demand for housing currently in foreclosure. By doing so, it will help stop the fall in housing prices, and also increase the value of the lowest elements of the mortgage backed securities — precisely what governments wants to do.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
Acquires 
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