Finally! A MERS Lawsuit

So NY has filed suit against a number of big banks over MERS practices. I don’t know what kind of monetary damages for affected homeowners or how much in penalties might be in the mix. Maybe one of you can enlighten me. See link from PL HH: A.G. Schneiderman Announces Major Lawsuit Against Nation’s Largest Banks.”

The OK SCt recently took the unusual step of taking original jurisdiction of a pair of appeals of summary judgments in foreclosure cases with robosigning issues. In both cases Deutsche Bank was plaintiff and won by summary judgment at trial court. SCt released two unpublished opinions a couple of weeks ago remanding with instructions. As I understand it, they did not rule on the merits of the assignments at issue. But local attorney friends tell me it is notable that they took jurisdiction (as opposed to the typical assignment to a Court of Civil Appeals) and was quite unusual. They say the SCt is sending a message.

And what is going on with the supposedly imminent global states settlement with the banks on robosigning issues? john/banned says some AG’s have until February 6th to join, but beyond that I’m not sure of the status. Anybody have news?

So legal actions on MERS practices seem to be picking up steam. Will these lawsuits only catch the little guys? It seems to me that the big banks were the movers in setting up MERS and they had a duty to see that it functioned properly and legally if they were going to use its services. They did not, so should they now be penalized for that failure? Any thoughts on what is to come regarding MERS?

[Edited to add global settlement question.]

Morning Report

Vital Statistics:

Last Change Percent
S&P Futures 1334.5 11.8 0.89%
Eurostoxx Index 2498.3 20.2 0.81%
Oil (WTI) 96.86 0.5 0.52%
LIBOR 0.527 -0.004 -0.68%
US Dollar Index (DXY) 79.144 0.166 0.21%
10 Year Govt Bond Yield 1.90% 0.08%

Stocks are jumping on the payroll numbers. Nonfarm payrolls increased 243k vs 140k expectations and the unemployment rate dropped from 8.5% to 8.3%.  The payroll estimates were 100k lower, so it is a substantial surprise. The good weather played a part in the number.  206,000 workers were unable to work due to bad weather, which 224,000 below the average for January. The SPUs jumped 12 points on the number.  Bonds got clobbered, with the 10 year futures contract dropping  2 handles. The dollar rallied.

I had expected unemployment to stay steady or increase as the long-term unemployed re-enter the labor force.  These numbers seem to imply the recently laid-off are finding jobs and the long-term unemployed still aren’t looking.  The labor force participation rate has been steadily declining over the past 6 months, falling from 64.2% to 63.7%.

This report makes the bearish tone of the FOMC report even stranger. Given that the Fed’s view of the economy seemed at odds with the general economic indicators coming out of the government and the tone of business, I guess QEIII is coming whether you like it or not.  The Fed is almost paying you to borrow money. Refinance your mortgage.  When inflation returns you will look back at that 3.75% 30 year mortgage as the best financial decision you ever made.

Edit:

For those interested in where the financial markets see real estate pricing, Radar Logic (RPX) futures began trading yesterday on the CBOE Futures Exchange.  The Radar Logic index measures the price of real estate nationally using a complicated algorithm (much different than Case-Schiller).  The index number represents the price per square foot.  The following chart shows where the market is predicting real estate prices 5 years out.  Note:  the jagged behavior is due to the fact that Radar Logic does not seasonally adjust their data and the summer season is stronger than winter.

Chart:  RPX Index futures curve:

It looks like someone put up a calendar spread today (buying March ’13,  selling Sep ’15).

 

Bits & Pieces (Thursday Night Open Mic)

It’s a new video. This time, it’s Rick Santorum!

 

A new study links low I.Q. to prejudice, racism, and conservatism. To paraphrase my intellectual better, Forrest Gump: “I may not be a smart man, but I know what bullshit smells like.” A liberal quasi-dissents, but sort of agrees. The conflation of conservatism and racism is everywhere. Can you tell it’s an election year?

NASA films the dark side of the moon. No evidence of giant Transformers or secret moon bases.

What happened before The Big Bang? Johnny Galecki was unemployed! Bad-dum-dum! I’ll be here all week, folks.

Finally, they’re planning a broadway musical based on Back to the Future. About damn time.

You know what’s unbelievably cool? $1 billion dollars in profits. Emphasis on the unbelievable.

— KW


by Ashot
Somehow I feel like this video is perfect for the ATiM crowd.

And I thought this was funny, too.

Word of the day: Pettifog

George Will cracked open his thesaurus again. Seems 
like a good word for the occasional comment thread.

pet·ti·fog/ˈpetēˌfôg/

1. Quibble about petty points
2. Practice legal deception or trickery.

That is all.

Morning Report

Vital Statistics:

Last Change Percent
S&P Futures 1321.7 1.9 0.14%
Eurostoxx Index 2474.0 3.2 0.13%
Oil (WTI) 96.59 -1.0 -1.04%
LIBOR 0.5306 -0.007 -1.21%
US Dollar Index (DXY) 79.078 0.216 0.27%
10 Year Govt Bond Yield 1.83% 0.00%

Stocks are flat this morning, with a lot of data.  Productivity was up .7% and unit labor costs were up 1.2% for the 4th quarter.  Productivity was below expectations and costs were above.  Initial jobless claims were 367K vs 371K expected.  Continuing claims were slower than expected as well.  Stocks rebounded modestly on the numbers.

Corelogic reported its December Home Price Index and full year 2011. Home prices fell 4.7% nationally during 2011.  The worst states were Illinois, Nevada, Georgia, Ohio, and Minnesota.  Montana, Vermont, South Dakota, Nebraska, and NY reported the highest increases.

Today is the first Thursday of the month, which means retailers are reporting same-store sales. The winners so far appear to be Gap and Kohls.  Ann Taylor and Abercrombie and Fitch (Abercrumble) are bringing up the rear.

Facebook filed its registration statement last night. I have only skimmed the document, but a few things stand out.  First, there are two classes of stock – the B shares which have 10 votes per share and the A shares which have 1. Facebook is selling 5 billion of the A shares.  They did 3.7 billion in revenue in 2011 and have roughly 62% EBITDA margins.  Given the $100 billion price tag, this works out to 27x sales and 45x EBITDA.  Revenues are roughly doubling per year. It will no doubt make zero sense on any sort of reasonable valuation metric, but iconic companies like Apple and Google always trade rich.

Pulte Homes reported earnings this moring.  They are echoing the sentiment of the other homebuilders – noting reasons for optimism regarding profits, and a “growing sense of optimism” about the housing market in general. 4Q earnings were light, though.

Bits & Pieces (Wednesday Night Open Mic)

The days fly by. Already hump day, and I haven’t finished the stuff I meant to get done on Monday.

Startfire Sure Wears Less Clothes Than She Did When I Read Teen Titans (of course, she's not in the Teen Titans anymore).

The 5 Most Ridiculously Sexists Superhero Costumes.

Scientists say sugar is as toxic as alcohol, and there should be a drinking age for soda.

Some fly-by-night web startup called Facebook filed their IPO, which values the company at $100 zillion dollars.

Republicans direct police to detain documentary crew to keep them from filing a hearing on natural gas. Oh, that doesn’t make them look like a collect group of mustache-twirling Snidely Whiplashes.

And right under that on Dvorak, do you think Big Brother should be watching everybody? Well, now there’s an app for that.

Back to Starfire. How would someone even wear something like that? It would have to be painted on. Sheesh.

That’s it. Blessing and karma to all! — KW 

Citizens United? The Social Security Act is How you Buy Votes

 

Nothing new, but Medicare, Social Security and other so-called mandatory spending are busting the budget.  But that spending makes for a sizeable re-election war chest. 

 

Morning Report

Vital Statistics:

Last Change Percent
S&P Futures 1315.7 7.5 0.57%
Eurostoxx Index 2457.8 41.1 1.70%
Oil (WTI) 98.79 0.3 0.31%
LIBOR 0.5371 -0.005 -0.97%
US Dollar Index (DXY) 78.801 -0.477 -0.60%
10 Year Govt Bond Yield 1.80% 0.01%

Markets are rallying this morning on no real news.  Portuguese yields are again lower and have retraced the big spike from Monday. Amazon.com stunk up the joint last night with a miss on the top line and disappointing guidance.

In economic data, mortgage applications were down in January.  The ADP report suggests 170k jobs were added in January.  The bulk of the jobs were added in small business and services.  The January number was lower than expected.  December was also revised downward from 325k to 292k.  The takeaway is that the labor market is improving, albeit slowly.

The rumors are true:  Obama plans to do a no-questions-asked refi program for anyone who is current in their mortgage.  The program will be financed with a fee on banks with $50 billion in assets. The details have yet to be released, but the fee is probably going to act as a poison pill.  As I have said before, the flaw in the plan is the originator.  By definition, underwater loans are non-conforming (i.e. in contravention of FHA lending standards) and the government has the right to force the originator to buy it back.  Originators are not going to take that put-back risk for no compensation, especially when there are plenty of good quality mortgages to underwrite.  At any rate, banks are especially stingy with their warehouse lines these days, so originators are unable to make as many loans as they would like.  Nobody is going to tie up precious warehouse capacity with non-conforming loans that can end up back in their lap.

It raises the question whether Obama understands this problem.  My sense is that he does – that is why the poison pill bank fee was put in.  This is just so much political theater – a chance to make an election year point.  “See, I wanted to lower your mortgage payment, but those 1% bankster defending, do-nothing Republicans wouldn’t let me.”

Obama did roll out a pilot program on REO-to-rentals.  FHA will sell foreclosed properties in bulk sales to investors who will turn them into rentals.  It is an interesting idea.  The rub will be pricing and scalability. The Cleveland Fed has already weighed in on the idea for its area and admitted it probably won’t work in the Rust Belt, where population loss is driving up vacancy rates and properties are spread out.  This plan could work in dense places like South Florida and Las Vegas perhaps.  Pricing will be problem as well.  Currently, foreclosures are trading around 85% of Broker Price Opinion.  Professional investors are probably going to need larger discounts to generate the returns necessary to attract capital.  Since the government isn’t going to allow Wall Street Wiseguys to flip this stuff, they will require a multi-year holding period.  No pension fund or endowment is going to tie up capital for 3 years at a high single-digit rate of return.

Bits & Pieces (Tuesday Night Zilch)

I got nuthin’, nuthin’ I tell you. Some industrious moderator, please edit this post and add a link to a funny story from The Onion, preferably with pictures. Thanks!

— KW


Even The Onion didn’t have a whole lot going on, Kevin, but here you go:
Governor Romney’s watch is missing:

“I pledge to every single Hispanic-American—whether you came here from Mexico to start a new life for your family or fled the brutality of Castro’s Cuba—that if my watch is put back in its rightful place in the next two hours, I will consider the matter closed and no one will be the wiser.” With the watch still not returned at press time, Romney begged the nation’s Hispanics, “Please don’t make me call the—how do you say it? El policío? La policía? The appropriate authorities.”


And I don’t think I’ve linked to this video before:


–Michigoose

Birth Control, ACA, HHS, and the RC Church

Catholic Church Blasts HHS Birth Control Rule

By Emily P. Walker, Washington Correspondent, MedPage TodayPublished: January 30, 2012

 

 

WASHINGTON — The Catholic Church is protesting an Obama administration rule that requires nearly all employers — even Catholic ones — who provide insurance to their employees to include coverage of birth control services.

The United States Conference of Catholic Bishops (USCCB) has come down against the administration for not exempting all religious organizations from the rule.

In a video posted to the group’s website, USCCB president Archbishop Timothy Dolan said the “administration is on the wrong side of the Constitution” and that the rule to provide birth control is a violation of the First Amendment of the Constitution, which provides for the free exercise of religion.

Anecdotally, Catholics from the Midwest to the Washington, D.C., area said their churches addressed the issue in the past week via church bulletins that urged churchgoers to contact their members of Congress to support legislation to reverse the administration’s rule.

The Obama administration rule stems from a provision in the Affordable Care Act (ACA) that requires no-cost coverage for preventive health services. The Institute of Medicine (IOM) recommended that the Department of Health and Human Services cover the “full range of FDA-approved contraceptive methods” in order to prevent unintended pregnancies at no cost to the beneficiary, and that includes birth control.

The final rule, issued by the Department of Health and Human Services (HHS) on Jan. 20, says that starting on Aug. 1, 2013, health plans must cover all FDA-approved contraceptives, including hormonal contraceptives such as birth control pills, implanted devices such as intrauterine devices (IUDs), Plan B emergency contraceptives (the “morning-after” pill), and sterilization — all without charging a copay, coinsurance, or a deductible.

The plans will not have to cover abortions, however.

Churches and church-affiliated secondary schools are exempt from the rule, but other organizations with religious affiliations — including universities, charities, and hospitals — must comply. Such organizations petitioned HHS for an exemption after the preliminary rule was issued last summer. As a compromise, they have been given an extra year to comply.

“In effect, the president is saying we have a year to figure out how to violate our consciences,” Dolan said in a statement.

The Catholic Church opposes preventing conception by any artificial means, including condoms, IUDs, birth control pills, and sterilization.

Sister Mary Ann Walsh of the USCCB told MedPage Today that requiring Catholic providers to write prescriptions for birth control would be asking them to violate the church’s teaching.

“If you went to the Jewish deli, you can’t complain because it doesn’t have pork,” she said. “If you went to a Catholic hospital, you shouldn’t be surprised that that a Catholic hospital won’t prescribe contraception and sterilization.”

Walsh said the USCCB supports legislation authored by Rep. Jeff Fortenberry (R-Neb.) that would amend the ACA to permit health plans to refuse to cover specific items, such as birth control or services that “are contrary to the religious beliefs” of the entity offering the plan, without penalty. The bill, HR 1179, would allow those plans to still be considered “qualified health plans” and therefore able to be sold in the health insurance exchanges created by the healthcare reform law.

The bill has 102 sponsors, seven of whom are Democrats.

The Catholic Health Association of the United States declined a request for an interview, but pointedMedPage Today to a statement made by CEO Carol Keehan, who said the group is disappointed that HHS exempted only churches, but not religious hospitals, from its preventive services rule.

“The challenge that these regulations posed for many groups remains unresolved,” Keehan said in the statement. “This indicates the need for an effective national conversation on the appropriate conscience protections in our pluralistic country, which has always respected the role of religions.”

_________________________________________________________________

During the debate in 2009, The Bishops fought to have abortion not covered by ACA and the Catholic hospitals split with them (you can look that up).  The compromise finally went the Bishops’ way on abortion, as I recall.  Birth control, not including elective abortion, of course, remained in ACA, with an exemption for Churches, but not for RC employers or RC Hospitals (which presumably do not want that exemption, judging by 2009’s experience).  Is there some way the Bishops have been subjected to a sneak attack here, or was this a fight that was just going to happen once ACA was implemented, no matter what?  It seems to me that HHS is implementing ACA here as written.  Is there an executive overreach here that I am missing?  Was there reason to think a “church” included a “hospital” affiliated with the RCC?

Your collective input is required for my edification.