Commercial Office space Over supply

Shadow space haunts office market

Office vacancies, already high, are actually much worse because of untold "shadow" space -- space that's leased but empty.

By JENNIFER BJORHUS, Star Tribune

That section of empty cubicles, the conference rooms collecting cast-off office furniture ... for employees, they're dreary reminders of layoffs, consolidations and shelved expansion plans.

To real estate professionals, it's "shadow" office space -- space that's leased or owned but largely empty and not officially listed anywhere as vacant. And brokers are fretting about the buildup of unprecedented amounts of it around the Twin Cities. All that idle square footage will likely prolong the recovery of the area's hard-hit office sector, already struggling with high vacancy rates. Slow demand for new space will likely mean a dearth of new construction, and all the jobs and building material sales that go with it

http://www.startribune.com/business/98980004.html

Credit Check for Employment

let's take a look

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NEW YORK (CNNMoney.com) -- Falling behind on your bills? It could cost you a job.

An increasing number of employers are using credit checks to screen potential job applicants. So missed payments on your mortgage, car or credit card could keep you from getting hired.

According to a survey by the Society for Human Resource Management, 60% of employers are using credit checks when filling at least some of their openings. Only 35% reported checking credit in a 2003 survey, and only about 13% did so 1996.

http://money.cnn.com/2010/07/22/news/economy/credit_checks_for_job_applicants/index.htm

Housing Prices out of line with Income

Excellent article on Housing Prices from a blogger at political calculations

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"When exactly did the U.S. housing bubble begin?

Better yet, can you tell from the Case-Shiller Home Price Index when it began?

Take a look for yourself. Could it have begun in 1997, when house prices, after adjusting for inflation, bottomed? Could it have been in 2000, when these real house prices exceeded rents? Or was it in 2003, when real house prices began growing even faster than they had in the period from 1997 up to that point?

Here's what James R. Hagerty found when he asked the question of two housing and mortgage industry experts in November 2009. First, he asked Edward Pinto:"...........

http://politicalcalculations.blogspot.com/2010/02/better-method-for-detecting-housing.html

Adult Children Co-sign Loans for Parents

Adult children increasingly co-sign for parents' loans

Financial roles reverse due to rising debts, falling retirement funds

By Michelle Crouch

It's almost an American tradition: Kids in their 20s without a credit history have long turned to their parents to co-sign for them, whether it's for a first credit card, a car or an apartment lease. Now the credit crisis is turning that tradition on its head.

Financial advisers, credit counselors and lenders across the country say they've seen a surge in middle-aged parents who have damaged their credit asking their adult children -- usually in their late 20s or early 30s -- to co-sign loans and leases for them.

"I'm seeing this a lot more now than I did two or three years ago," says Laurie Giles, an elder life planning attorney in Shelton, Conn., and author of the "What Now?" book series. "A lot of times, it's parents who had stable jobs for 20 or 30 years who got used to living on credit, then they're suddenly downsized and they don't have strong savings built up, or their savings went down with the market. And their house isn't worth what they thought."

http://www.creditcards.com/credit-card-news/children-cosign-for-parents-1273.php

Jobs Jobs Jobs

let's take a look

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Payrolls falls in 27 states, Led by California

Payrolls decreased in 27 U.S. states in June, led by California and New York, signaling the slowdown in hiring is broad-based.

Employers in California cut staff by 27,600 workers last month and those in New York reduced employment by 22,500, the Labor Department said today in Washington. Tennessee, Arizona and New Mexico rounded out the five states with the biggest job losses.

The U.S. lost 125,000 jobs last month as the government cut temporary workers conducting the 2010 census and private payrolls rose a less-than-forecast 83,000, according to Labor Department figures issued July 2. The data signal companies are becoming reticent to hire as the economy cools.

http://noir.bloomberg.com/apps/news?pid=20601087&sid=aCrIFae7VFMg

FHA Tightens Credit Score Requirement

NEW YORK (CNNMoney.com) -- The once wide-open doorway to homeownership closed a teensy bit more this week when a key government agency announced a proposal to no longer allow mortgages for borrowers with very low credit scores.

The Department of Housing and Urban Development said that it intends to require borrowers to have scores of at least 500 to qualify for FHA-insured loans. The agency has not required a minimum score before.

The practical impact of this move will be extremely limited; during the second quarter of 2010, no FHA-insured loans were issued to borrowers with sub-500 scores. And, in fact, less than 1% of borrowers were below 580; most loans went to borrowers with scores above 620

http://money.cnn.com/2010/07/16/real_estate/tighter_FHA_requirements/index.htm?source=cnn_bin&hpt=Sbin

Debt collection broken

let's take a look

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Legislators pledge to fix state's 'broken' debt collection system

A day after a federal agency declared America's debt collection system "broken," two Minnesota lawmakers pledged to write legislation to better protect consumers.

By CHRIS SERRES, Star Tribune

A day after a federal agency declared America's debt collection system "broken," two Minnesota lawmakers pledged to write legislation to better protect consumers who are sued or jailed over their debts.

Sen. Ron Latz, DFL-St. Louis Park, and Rep. Joe Mullery, DFL-Minneapolis, said Tuesday that they intend to address a growing public concern -- highlighted in a continuing Star Tribune series, "Hounded" -- that debtors are being sued for money they don't owe and, increasingly, jailed when they fail to appear in court. Latz and Mullery plan to introduce a package of debt-collection reforms when the Legislature reconvenes in January.

The Star Tribune investigation found that the use of arrest warrants against debtors jumped 60 percent in the past four years, with 845 cases in 2009. Some debtors who were arrested said they were unaware they had been sued for their debts and were required to appear in court.

http://www.startribune.com/politics/98380794.html

Bogus Debt

Phantom debts, real anguish

By CHRIS SERRES and GLENN HOWATT, Star Tribune

Last update: June 30, 2010

The page was mostly blank. It contained only a name, three words and a series of tiny numbers. But in Minnesota's creditor-friendly court system, the page became the sole legal evidence that Darren Sabinske had defaulted on a

Citibank credit card nearly eight years ago.

Sabinske, a security technician from Albertville, was ordered to pay $7,595 to Debt Equities LLC of Golden Valley, whose business is collecting old debts. Sabinske insists he never owned a Citibank card but was soon to learn the frustration of trying to defend himself against a computer database that listed his name near that of the bank.

"All they had was a row of numbers," he said.

In the hands of the new breed of debt collectors, those rows of numbers have become gold mines. Firms with little known names, like LVNV Funding and Unifund CCR Partners, buy massive databases of unpaid debts for cents on the dollar, and then inundate courts with legal actions seeking to collect the full amount, plus interest and fees. These firms, known as debt buyers, base their claims on data up to 15 years old that can be impossible to verify.

http://www.startribune.com/projects/96995289.html

This is another example of debt collection gone awry. Anytime there is an attempt to collect a debt a debt collector is required to produce validation when asked. If they can't properly validate the debt they must cease collection activity. IF you have questions about debt validation contact credit-repair-houston.

Debt Collectors Automate

let's take a look

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As millions of Americans have fallen behind on paying their bills, debt collection law firms have been clogging courtrooms with lawsuits seeking repayment.

Few have been as prolific as Cohen & Slamowitz, a Woodbury, N.Y., firm that has specialized in debt collection for nearly two decades. The firm has been filing roughly 80,000 lawsuits a year.

With just 14 lawyers on staff, that works out to more than 5,700 cases per lawyer.

http://www.nytimes.com/2010/07/13/business/13collection.html?pagewanted=1&_r=1&hp

Debt Collector Harassment

Throughout the financial crisis and deepening recession, debt collectors have been harassing Americans, often under false pretenses, in order to scare up a quick buck. Frivolous debt-collection lawsuits have now become so pernicious and prevalent that they're drowning the court system, leading the Federal Trade Commission to call Monday for new state legislation that would staunch the rising tide of baseless debt claims.

Given the current balance of power in debt-collection cases, it's easy to scare people. AsThe New York Times outlines, some firms with a skeleton crew of lawyers now routinely file tens of thousands of debt-collection lawsuits a year via a largely automated process.

These suits are generally filed merely on the basis of Social Security number, address and date of birth, but this can be enough to freeze the defendants' bank accounts -- default judgment are common given that defendants' address information is often outdated or erroneous, and so the complaint doesn't reach them until after their court date -- and they can then be more easily pressured into paying something, anything, to make the problem go away.

Lawsuits are sometimes filed against the wrong people, critics say. Other times, they say, the amount owed is incorrect or includes questionable fees and interest that has been added to the balance.

http://www.huffingtonpost.com/2010/07/12/debt-collection-lawsuits-ftc_n_643920.html

2nd mortgage ticking timebomb

let's take a look

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Underwater homeowners are jumping onto an unexpected financial life raft that lets them escape crippling second mortgage debts and keep their homes -- Chapter 13 bankruptcy.

It's an unprecedented byproduct of the housing price collapse, says New York City bankruptcy attorney David Shaev of Shaev & Fleischman.

How it works is this: If the home is appraised at less than the value of the first mortgage, the owner can apply for permission in bankruptcy court to reclassify the second mortgage debt. That changes it from a secured debt, which must be repaid, into an unsecured debt, which does not have to be paid in full. The homeowner can then focus on paying off the first mortgage.

"This is the only time where you see such a huge percentage of houses worth less than the first loan, allowing us to basically get rid of the second loan," says Shaev, who estimates that 20 percent of his Chapter 13 clients who own homes qualify for this type of workout. "We're at a unique place in history."

The nation's banks could take a huge hit from the increased use of Chapter 13 protection. The big four banks, Wells Fargo, Citigroup, JP Morgan Chase and Bank of America, hold $435 billion of the $1 trillion in second liens outstanding, according to a new report by Amherst Securities. These banks are also the largest servicers of first mortgage loans.

Borrowers generally prefer loan modifications to bankruptcy. But desperate clients often arrive in Shaev's office after failing to reach agreements with their banks, despite new government efforts to encourage out-of-court deals.

Reclassifying a second lien helped Westchester homeowner Stuart S., who withheld his last name because of embarrassment about filing for bankruptcy, keep the home he bought for his wife and two children.

In 2005, at the height of the real estate frenzy, a professional appraiser valued his home at $850,000. When illness prevented his wife from working, Stuart obtained a $180,000 second mortgage. She planned to return to work, and the couple figured they could sell their home if they ran into financial trouble.

Instead, the financial crisis hit. Stuart's wife has been unable to regain the high salary she once enjoyed, and their house is now worth only $550,000 -- a stunning 35 percent drop in value that leaves them underwater on their $570,000 mortgage.

Before heading to bankruptcy court, Stuart tried to work out a deal with second-lien holder Wells Fargo.

Wells granted a temporary reduction, said Stuart, but then asked for full payments again. Unable to comply, he found a solution in bankruptcy court. Wells Fargo declined to comment.

"It's not a thing you want to do unless you're desperate enough," said Stuart S. "But I couldn't do anything by negotiating directly with the lender."

Second mortgages are dragging borrowers down for several reasons. First, homeowners with second mortgages are more likely to be underwater and to struggle to meet their first mortgage obligations. In addition, second liens average about 20 percent of the loan amount -- a significant chunk -- according to Laurie Goodman, senior managing director at mortgage-bond trader Amherst Securities Group.

The Obama administration has moved to address this crisis with its Second Lien Modification Program, or 2MP, announced with great fanfare earlier this year with a target of helping 1 million to 1.5 million homeowners.

The program, part of Making Home Affordable Program, has been slow to get off the ground.

The four major banks have signed on. But a JP Morgan Chase spokesman gripes that the bank is currently limited to working with borrowers for whom it services both the first and second liens, because the government's loan matching files won't be available until next month. This spring, Chase identified 1,251 accounts that meet the 2MP guidelines. More than 800 of those qualified without a trial period, and 593 sent in completed documents to Chase. Another 224 had worked out three-month trial deals as of late June.

"The housing problem is going to go on for years and years and years, and seconds are a major contributor to the problem," said Amherst's Goodman.

http://www.nypost.com/iphone/story.php?feed=business.xml&id=4.2.3142312766&pos=business_topstories_01

Credit Scores Sinking

If you have questions about your credit in general or your credit score in particular you are not alone. Give the folks at fix credit houston a call for a free credit repair evaluation. Millions of Americans have credit scores sinking to new lows. Figures provided by FICO Inc. show that 25.5 percent of consumers — nearly 43.4 million people — now have a credit score of 599 or below, marking them as poor risks for lenders. It's unlikely they will be able to get credit cards, auto loans or mortgages under the tighter lending standards banks now use.

ICO's latest analysis is based on consumer credit reports as of April. Its findings represent an increase of about 2.4 million people in the lowest credit score categories in the past two years. Before the Great Recession, scores on FICO's 300-to-850 scale weren't as volatile, said Andrew Jennings, chief research officer for FICO in Minneapolis. Historically, just 15 percent of the 170 million consumers with active credit accounts, or 25.5 million people, fell below 599, according to data posted on Myfico.com.

There is more here at the link: http://m.cnbc.com/us_news/38199287