THE BASIS POINT

Taxpayer Return on AIG & TARP, Market Roundup, New Rules For Foreclosures, Six Flags Bankrupt

 

I was on a roller coaster over the weekend just when amusement park operator Six Flags declared bankruptcy. Talk about a thrill. They said that the company will keep its parks open at least for now (they had 25 million visitors in 2008) but according to the Washington Post, the company is carrying $2.4 billion in debt. That is a lot of borrowing!

New Rules For Foreclosures
Well, everyone who is thinking about buying a house at a foreclosure sale in California can take a little break. The primary method of foreclosure in California involves what is known as non-judicial foreclosure that does not involve court action. When the deed of trust is initially signed, it will usually contain a provision called a “power of sale” clause, which upon default allows the trustee to sell the property in order to satisfy the underlying defaulted loan. The trustee acts as a representative of the lender to effectuate the sale, which typically occurs in the form of an auction. California’s 90-day foreclosure moratorium law goes into effect today, as the California Foreclosure Prevention Act, passed and signed in February, makes loan servicers prove to the state they have comprehensive loan modification programs in place – or be denied rights to foreclose on their own schedules.

Speaking of foreclosures in California, the CMBA reports that after July 1st for the most part it will be illegal to operate as a mortgage foreclosure consultant in California “unless the foreclosure consultant has obtained from the Department of Justice a Certificate of Registration as a Mortgage Foreclosure Consultant.” A foreclosure consultant must complete the application and provide all required documents to the Department of Justice, and it is best for existing foreclosure consultants to submit their application no later than…today! Check with the California Mortgage Bankers Association for more information.

Taxpayer Return on AIG & TARP
Are we (the tax payer) making any money from the AIG, TARP, and other government investments? Uh, kind of.

Market Roundup
Let us return to the current market. We did have some additional economic information on Friday in the form of the Michigan Consumer Sentiment Survey, which came out less than forecast but is still at its highest level in nine months. In addition, the markets are already very interested in next week’s Federal Open Market Committee meeting. Generally, Fed officials are unlikely to significantly boost bond-purchase programs but they could make other adjustments if rates continue to move higher due to bond supply & demand issues as well as an improving economy. It looks like investors’ expectations for an economic recovery, if they continue to push rates up, could end up delaying that same economic recovery!

What does this week hold for economic news? There is nothing today, and the 10-yr is at 3.76% and mortgage prices roughly unchanged, but tomorrow we have Housing Starts & Building Permits, PPI, and Industrial Production and Capacity Utilization The Producer Price Index measures changes in the prices of “intermediate” goods used by companies to produce finished products. On the 17th we have the Consumer Price Index (CPI) which measures the price change for those finished goods which are sold to consumers. And lastly on Thursday we have Jobless Claims, Leading Economic Indicators, and the Philadelphia Fed.

Daily Humor
A senior citizen said to his eighty-year old buddy, ‘So I hear you’re getting married?’

“Yep!”

“Do I know her?”

“Nope!”

“This woman, is she good looking?”

“Not really.”

“Is she a good cook?”

“Well, she can’t cook too well.”

“Does she have lots of money?”

“Nope! Poor as a church mouse.”

“Well, then, is she good in bed?”

“I don’t know.”

“Why in the world do you want to marry her then?”

“Because she can still drive!”

 

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