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Personal Finance News 02/2009

Obama readies road map for new bailout spending (AP)
AP - President Barack Obama on Saturday promised to lower mortgage costs, offer job-creating loans for small businesses, get credit flowing and rein in free-spending executives as he readies a new road map for spending billions from the second installment of the financial rescue plan.

Ex-Fannie Mae programmer says not guilty of virus (Reuters)
Reuters - A 35-year-old computer programer pleaded not guilty on Friday to charges that he planted a computer virus designed to destroy all the data on 4,000 Fannie Mae computer servers the day he was fired from the company.

Obama stimulus plan faces changes in Senate (AP)
AP - A top Republican called for more mortgage relief and additional tax cuts in President Barack Obama's massive economic stimulus package as Democrats conceded privately they will drop items that have drawn bipartisan criticism.

Senator Dodd to refinance two Countrywide mortgages (Reuters)
Reuters - Democratic Sen. Christopher Dodd said on Monday he will refinance two mortgages that he took out in 2003 under Countrywide Financial Corp's VIP program and later triggered a Senate ethics investigation.

Republicans push low-rate mortgage in U.S. stimulus (Reuters)
Reuters - Republican lawmakers want a fiscal stimulus bill of nearly $900 billion to include a provision that would drive down mortgage rates to as low as 4 percent in an effort to jumpstart the moribund housing market.

Housing aid gaining steam in stimulus bill (AP)
AP - Homebuyers could see lower mortgage rates and get tax credits as part of a sweeping economic stimulus package being considered on Capitol Hill.

Citigroup to deploy $36.5 billion to boost lending (AP)
AP - Citigroup, under pressure to increase its lending, says it will spend $36.5 billion to issue mortgages, make credit card loans and buy mortgage-backed securities in the tight credit markets in the coming months.

Citgroup to deploy $36.5 billion to boost loans: report (Reuters)
Reuters - Citigroup plans to use some $36.5 billion of its U.S. government capital infusion for new mortgages, credit card loans and to buy mortgage-backed securities in the coming months, the Associated Press reported on Monday.

Entergy 4Q profit slips on tax, regulatory charges (AP)
AP - Entergy Corp. said Tuesday that its earnings fell 12 percent in the fourth quarter as the energy company recorded higher income tax expenses and regulatory charges in its utility business.

Citigroup to deploy $36.5 billion in capital (Reuters)
Reuters - Citigroup said it was using $36.5 billion in taxpayer bailout money to boost lending even as growing political outcry put pressure on the bank to end a $400 million baseball stadium sponsorship deal.

GMAC swings to profit on gain from debt exchange (AP)
AP - GMAC Financial Services said Tuesday it swung to a fourth-quarter profit as proceeds from a debt swap more than offset billions of dollars in losses at its auto-financing and mortgage businesses.

GMAC has $7.46 billion profit, main units still in red (Reuters)
Reuters - Finance company GMAC LLC, which won a government bailout in December, posted a $7.46 billion fourth-quarter profit on Tuesday as a gain from a debt swap offset billions of dollars of losses in its auto and mortgage units.

Pending home sales rebound (Reuters)
Reuters - Pending sales of existing U.S. homes rebounded in December, data showed on Tuesday, as buyers waded back into the market to take advantage of lower prices and mortgage interest rates.

Senate Republicans push alternative stimulus plans (Reuters)
Reuters - U.S. Senate Republicans on Tuesday offered their own, cheaper economic stimulus plans focused on tax cuts, pushing back against a nearly $900 billion Democratic plan they say encourages too much new spending.

Non-payers can hurt small businesses at tax time (AP)
AP - It's a bit of insult added to injury — small business owners who had non-paying customers in 2008 are likely to find they can't take the bad debts as deductions on their income tax returns.

Congress considers changes to mortgage aid program (AP)
AP - With fewer than 500 applications and only two-dozen homeowners helped so far, House lawmakers moved Wednesday to revamp a new program that was intended to help hundreds of thousands of borrowers avoid losing their homes.

American Home Mtg buys servicing rights from Citi (AP)
AP - Citigroup Inc.'s residential mortgage unit has sold servicing rights on 185,000 loans to American Home Mortgage Servicing Inc.

U.S. mortgage rates at highest level since December (Reuters)
Reuters - U.S. mortgage rates jumped to their highest levels since December in the latest week, complicating government efforts to bring mortgage rates down to levels that will spur demand and help the hard-hit housing market begin to recover.

Health care a safe haven now, but for how long? (AP)
AP - Investors who sought refuge in health care have reason to feel less queasy than most in a sick economy where no industry has been recession-proof.

Delphi seeks to end health benefits for retirees (AP)
AP - Troubled auto parts supplier Delphi Corp. has asked a bankruptcy judge to allow it to cancel health care and life insurance benefits for current and future salaried retirees, citing the steep downturn in the overall auto industry in recent months.

Geithner eyeing Fannie, Freddie rescue role: sources (Reuters)
Reuters - The Obama administration is mulling an expanded role for Fannie Mae and Freddie Mac as part of an overarching plan to stabilize the financial sector that will be laid out on Monday, sources familiar with the administration's thinking said on Friday.

Steps to help aging relatives handle finances (AP)
AP - If you dont' want to take over aging relatives personal finances altogether, family members can take steps to start helping:

CORRECTION: Feb. 5 American Home Mortgage story (AP)
AP - In a story Feb. 5 about Citigroup's residential lending unit, The Associated Press erroneously reported that Citigroup Inc. sold servicing rights on a loan portfolio to American Home Mortgage Servicing Inc. for $1.5 billion. American Home Mortgage Servicing says the dollar amount is not the outright sale price; rather, most of the $1.5 billion includes advances American Home Mortgage is making to the trusts that own the loans.

SEC looks to reassure investors (Reuters)
Reuters - Securities and Exchange Commission officials looked to reassure investors on Friday that they would reinvigorate the agency's policing of Wall Street, improve the quality of credit ratings and said they expect to bring more cases against mortgage fraud.

U.S. bank plan to offer asset support, mortgage help (Reuters)
Reuters - The Obama administration's eagerly-awaited bank rescue plan will offer to insure some distressed assets held by banks, authorize the government to purchase others, and spend up to $100 billion to buy and modify troubled homeowner mortgages, a source with knowledge of the plan told Reuters on Friday.

Fannie, Freddie to channel mortgage rescue: sources (Reuters)
Reuters - The Obama administration is crafting a mortgage-rescue program that would see Fannie Mae and Freddie Mac ease payments for hundreds of thousands of borrowers and offer a model for Wall Street to do the same, sources familiar with the plan said.

Life insurance stocks up on possible government aid (Reuters)
Reuters - Shares of U.S. life insurers rose sharply on Monday on expectations that some will receive long-awaited approval for capital injections from the government's $700 billion financial bailout fund.

One in eight lenders may fail, RBC says (Reuters)
Reuters - More than 1,000 U.S. banks, or one in eight lenders, may fail in the next three to five years as commercial loan losses rise, compounding problems from record mortgage delinquencies and soaring home equity loan defaults, RBC Capital Markets said on Monday.

Obama aide Summers: private capital has role (Reuters)
Reuters - A top White House economic aide said on Monday that the Obama administration would push private investors to buy compromised mortgage-related assets that are clogging bank balance sheets.

U.S. to lay out plan to sop up bad mortgage assets (Reuters)
Reuters - Treasury Secretary Timothy Geithner will lay out a rescue plan on Tuesday that will rely on public and private funds to take $500 billion of bad assets off banks' books, sources said.

Life insurance stocks fall on rating worries (Reuters)
Reuters - U.S. life insurer shares fell sharply on Tuesday as investment losses triggered rating agency concerns.

Economic crisis spurs personal finance classes (AP)
AP - High school teacher Daniel Jackson is reviewing lessons some adults would find difficult: mortgage loans, down payments, interest rates and closing costs. He tosses calculators to students, chastises them for not studying enough and urges them to apply problem-solving skills to decipher complex mortgage information.

Obama pushes stimulus and vows plan for housing (Reuters)
Reuters - President Barack Obama urged the Congress to quickly complete work on a huge economic stimulus bill passed by the Senate on Tuesday and promised more help soon for the foundering housing market.

Obama plan holds off on foreclosure rescue details (AP)
AP - To those on the front lines of the housing crisis, the Obama administration's pledge to spend $50 billion to combat foreclosures was a welcome change in the government's approach. But the actual plan won't be unveiled for at least a week and might not be enough to prevent the housing market's troubles from mushrooming further.

Obama turns on Wall Street (AFP)
AFP - President Barack Obama accused Wall Street of seeking an "easy" way out of the financial mire Tuesday after the announcement of his new industry rescue plan sent stocks dipping sharply.

U.S. mortgage applications slump to 8-year low (Reuters)
Reuters - Demand for U.S. mortgage applications tumbled nearly 25 percent last week, with requests for loans to buy homes sinking to an eight-year low, the Mortgage Bankers Association said on Wednesday, as potential buyers hold out for better terms and government help.

Mortgage applications tumble, U.S. trade gap shrinks (Reuters)
Reuters - The U.S. trade deficit shrank 4 percent in December, as the global financial crisis cut U.S. imports and exports for the fifth straight month, while U.S. demand for mortgages tumbled nearly 25 percent last week as potential buyers held out for better terms.

FBI may shift counterterror agents to anti-fraud (AP)
AP - With thousands of fraud investigations under way, the FBI is considering shifting agents away from counterterrorism work to help sort through the wreckage of the financial meltdown.

Advice for Young Investors (BusinessWeek Online)
BusinessWeek Online - Two 22-year-olds are just starting their careers and beginning to save and invest. One devotes half his salary to quickly paying off student loans, with the goal of saving money to travel the world. The other dabbles in stocks, while planning to buy a home. Which one is starting out on the right foot? Neither? Both?

Freddie Mac: rates on 30-year fixed mortgages fall (AP)
AP - Rates on 30-year-fixed mortgages fell this week, offering homeowners a chance to refinance their loans, Freddie Mac said Thursday.

Mortgage mess sinks development bank portfolio (AP)
AP - The Inter-American Development Bank, the largest lender for projects including roads and power plants in Latin America, lost $1.9 billion on mortgages and other securities as part of an unusually aggressive investment strategy, according to internal bank documents obtained by The Associated Press.

Little is absolute about absolute return funds (AP)
AP - When does "absolute" imply something that in reality is far less than certain?

Absolute return funds at a glance (AP)
AP - Absolute return funds use strategies common among hedge funds to try to ensure a modest return in good times and bad. Several mutual fund companies have introduced absolute return funds the past few years, pitching them as options to limit volatility. But as recent results show, there's no guarantee a fund will hit its target, or even avoid a loss. Here's a look at performance of some absolute return funds available to individual investors:

Stocks mixed after report of mortgage subsidies (AP)
AP - The stock market has made a late-day comeback, hoping that homeowners will get more help with their mortgages.

Obama eyes home loan subsidies in rescue plan-sources (Reuters)
Reuters - The Obama administration is hammering out a program to subsidize mortgages in a new front to fight the credit crisis, sources familiar with the plan told Reuters on Thursday, boosting financial markets.

Top U.S. thrift regulator Reich to step down (Reuters)
Reuters - The director of the U.S. Office of Thrift Supervision, which largely regulates mortgage lenders, will step down on February 27, the agency said on Thursday.

Administration weighs plan to lower mortgage rates (AP)
AP - President Barack Obama's administration is considering spending taxpayer dollars to cut monthly payments for homeowners on the verge of foreclosure, according to two people briefed on the proposals.

Lone Star, Goldman bid for failed Japan REIT: sources (Reuters)
Reuters - Lone Star , the Development Bank of Japan and Goldman Sachs Group Inc are among the final bidders for failed Japanese real estate investment trust New City Residence Investment Corp, two people familiar with the transaction said.

What's Holding Back Mortgage Modification? (BusinessWeek Online)
BusinessWeek Online - One supposed obstacle to sorting out the millions of mortgages that have gone bad is that the home loans have been bought by investment banks, bundled together into bonds, and sold to investors. This widespread process of "securitizing" loans makes it difficult to go back and modify the terms of individual mortgages so that strapped borrowers might be able to continue to make payments, according to mortgage industry experts. ...

Private Equity Going Cheap (BusinessWeek Online)
BusinessWeek Online - Speculation grew this week that Royal Bank of Scotland and Lloyds Banking Group will try to dump their private equity portfolios. The two British banks would join other financial companies, endowments, and pension plans forced to sell off positions in private partnerships because of financial pressures. With so many sellers, investors can buy into such funds for as little as 50% of asset value. "You can smell blood in the water," says Dan Deighan of Deighan Financial Advisors. ...

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