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Articles
The Threat of ‘Sidelined’ Home Sellers, WSJ
How many homeowners have been sitting on the sidelines during the housing downturn, waiting for massive price plunges to pass?...“What’s going to happen to the household that wanted to move three years ago and didn’t want to sell into a declining market?” says Michael Fratantoni, an economist at the Mortgage Bankers Association. “There’s a lot of those folks out there, and once we start getting a couple months of good news, there’s going to be a flood of listings from these people.”...many of these sidelined sellers continue to cling to unrealistic views about how much their homes are worth. It’s bound to become an issue in all neighborhoods as more mid-to-high end homes go into foreclosure or attempt a short sale, setting prices at a lower level.
The prospect of home-price stabilization is raising that question in some of the nation’s housing markets, say real-estate agents, who report an uptick in listings from “sidelined” sellers testing the waters.Over the past year, there’s been plenty of speculation about if and when banks will begin to list more foreclosed homes for sale. But these sidelined sellers represent another potential source of “shadow” inventory.“The number of people coming back on the market as sellers is moving up,” says Pat Lashinsky, chief executive of real-estate brokerage ZipRealty, Inc. At the same time, “buyers are looking, but they’re not buying,” he says. The inventories of unsold homes increased in June, according to the National Association of Realtors, to 8.9 months of supply at the current sales rate, up from 8.3 in May.
By Nick Timiraos, July 27, 2010 WSJ
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Madoff Investors Brace for "Clawback" Lawsuits, WSJ
Trustee Pursues Account Holders Who Withdrew More Than They Deposited;
The court-appointed trustee recovering money for Bernard L. Madoff's victims is preparing a wave of new lawsuits seeking to wrest funds away from investors who also were duped by the Ponzi scheme.In an interview, Irving Picard said he could wind up suing about half the estimated 2,000 individual investors he has called "net winners" from their dealings with Mr. Madoff. Such investors withdrew more from Mr. Madoff's firm than the amount of principal they invested."The people who made money, who got more, have made money at the expense of the people who didn't," said Mr. Picard, who has the power under federal bankruptcy provisions to pursue money withdrawn from Bernard L. Madoff Investment Securities LLC before it collapsed in December 2008 and redistribute the funds fairly among victims.
By Michael Rothfeld, July 26, 2010 WSJ
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Would Raising Taxes on Rich Kill Their Spending? WSJ
Just when things were returning to normal for the rich, along come the tax increases.President Obama and a majority of Democrats in Congress are pushing to let the Bush administration tax cuts expire for people earning more than $200,0000. It is claimed that allowing tax rates to reset (meaning to rise) for income, capital gains and dividends would raise $55 billion to $60 billion in new tax revenue.Republicans and an increasing number of moderate Democrats say that raising those rates will hurt spending and thus choke off any economy recovery. After all, the top 5% of earners (those earning $210,000 or more) account for a third of all consumer spending.How much would it hurt?
By Robert Frank, July 23, 2010 The Wealth Report/WSJ
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Report: Foreclosures Reduce Home Values by 27%, WSJ
On average, a foreclosure reduces the value of a house by 27%, says a new paper from an economist at the Massachusetts Institute of Technology and researchers at Harvard University.In the study, which is due for publication in the American Economic Review, MIT economist Parag Pathak and Harvard researchers John Y. Campbell and Stefano Giglio conclude that a foreclosure puts a much bigger dent in a home’s value, compared to a forced sale as a result of bankruptcy or the death of the owner.Mr. Pathak says he’s not surprised that there’s a discount due to foreclosure, but says, “It is surprising that it’s so large,” according to a press release. The paper uses data on house transactions in the state of Massachusetts over the last 20 years.
By Nick Timiraos, July 26, 2010 WSJ
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The Roller-Coaster Ride Called a Short Sale, NYT
Some advertised short sales seem like bargains, but most are priced just a little under market — low enough to generate interest from buyers, but not too low to raise objections from lenders.Short sales, however, are not for the faint-hearted. While there is a possibility for a good price, there is also a good chance that the deal will not go through. Many cooks are involved in this stew. The buyer must negotiate the price with both the seller and the seller’s lender. At the same time, the seller must negotiate with the lender on the terms for forgiving the amount still owed on the mortgage. Meanwhile the bank is negotiating fees for lawyers and brokers. The process can take six to nine months.
WITH property values down by as much as 30 percent in New York City, some homeowners who bought at the height of the market are finding themselves underwater and are being forced to sell their homes in short sales.“Short sales are happening and they’re all over the map,” said Melissa Cohn, the president of the Manhattan Mortgage Company. “We’re seeing multimillion-dollar foreclosures and short sales that no one ever anticipated in New York City.”Jonathan J. Miller, the president of the appraisal firm Miller Samuel and a market analyst, said that 2010 might well be dubbed the Year of the Short Sale nationally. “A short sale is going to be the only way for many people who bought at the peak and who are now underwater to move on with their lives if they have to relocate or downsize,” he said.
By Vivian S. Toy, July 23, 2010 NYT
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