Christopher Shearer

Christopher Shearer

By David Wessel

Mortgage rates continue to fall, a boon to homeowners eager to refinance mortgages and to those courageous enough to ponder buying new houses. And, in an unusual development, rates on adjustable rate mortgages exceed those on 30-year fixed-rate loans, according to mortgage giant Freddie Mac.

Rates on 30-year fixed-rate mortgages fell to 4.78% in the week ended April 30, matching the one set in the week ended April that was the lowest since mortgage giant Freddie Mac began tracking the rate in 1971. The comparable rate a year ago averaged 6.03%. The decline, in part, reflects the aggressive moves by the Federal Reserve to push down mortgage rates by buying mortgage-backed securities and lending to Freddie Mac and its sibling Fannie Mae.

Freddie Mac said the fixed rate on 15-year mortgages averaged 4.48%, down from 5.62% a year ago and the lowest level since Freddie Mac began tracking this rate in August 1991.

"Although long-term mortgage rates eased slightly this week, ARM rates remain elevated relative to those fixed-rate mortgages," said Frank Nothaft, Freddie Mac vice president and chief economist. "For instance, interest rates for 1-year ARMs exceeded those for 30-year fixed-rate mortgages over the last two weeks; this is the first time this has happened since Freddie Mac began collecting data for ARMs in January 1984. One-year Treasury-indexed ARMs averaged 4.82% this week, down from last week when it averaged 4.91%. At this time last year, the 1-year ARM averaged 5.29%

Freddie Mac notes that house prices rose for the second consecutive month in February, the first back-to-back increase since April 2007, according to the Federal Housing Finance Agency. (Read a related post.) Among the nine Census divisions, six experienced positive gains in February, led by a monthly increase of 3.8% in the Pacific.

From Wall Street Journal 05-02-2009

Christopher Shearer

I love this song by Phil Collins made me think of my son I love so much, Jordan Christopher Shearer

Somewhere down the road, youre gonna find a place
It seems so far, but it never is
You wont need to stay, but you might lose your strength
On the way

Sometimes you may feel youre the only one
Cos all the things you thought were safe, now theyre gone
But you wont be alone, Ill be here to carry you along
Watching you til all your work is done

When you find your heart, youd better run with it
Cos when she comes along, she could be breaking it
No theres nothing wrong, youre learning to be strong
Dont look back
She may soon be gone, no dont look back
Shes not the only one, remember that

If your heart is beating fast, then you know shes right
If you dont know what to say, well, thats all right
You dont know what to do?
Remember she is just as scared as you

Dont be shy, even when it hurts to say
Remember, youre gonna get hurt someday, anyway
Then you must lift your head, keep it there
Remember what I said
Ill always be with you dont forget
Just look over your shoulder Ill be there.

If you look behind you, I will be there. I love you son.

Christopher Shearer

By Nick Timiraos

Associated Press
Bank of American and Countrywide offices in Pasadena, Calif., last year.

Bank of America is retiring the Countrywide name and rebranding the home mortgage lender as Bank of America Home Loans.

The Charlotte-based lender acquired Countrywide last July for $2.5 billion, as the housing market imploded, many of Countrywide's loans soured, and the Calabassas, Calif.-based lender struggled to find new sources of capital. Countrywide, founded in 1969, had been blamed for aggressive lending practices that helped, in part, to fuel the housing boom, and the company faces a federal investigation and several lawsuits concerning its business practices.

In launching the new Bank of America Home Loans brand, the bank said it would offer customers a one-page loan summary in "straightforward language" that would explain information on an individual's loans, including closing costs, interest rates, monthly payments and payment terms.

Bank of America's lending volume increased 79% in the first quarter from the previous quarter to $89.3 billion in mortgage and home equity loans, largely as a result of a boom in refinancing as rates fall to record lows. Bank of America was the only top-five lender in the fourth quarter that maintained its volume of jumbo loans, which are too large for government backing and which private investors have largely shied away from.

Wall Street Jounal 04-29-2009

christopher shearer

By Dawn Wotapka

Here's a sunny take on the bevy of empty condos cluttering up downtown Miami: The area may become a renter paradise.

Investors and second-home buyers account for a stunning 60% of the nearly 13,000 new condo units sold in downtown Miami since 2003, according a report by real estate consulting firm Condo Vultures LLC. It could become the largest concentration of tenants in the Southeast-if not the country, the firm says.

"There is an enormous number of unwanted condo units. The oversupply in downtown Miami is absolutely massive," says Brad Hunter, chief economist/national director of consulting for Metrostudy, a housing market research firm. "It's bearish for the market's health, that's for sure."

Things will likely get worse as developers try to unload another 10,000 new, unclosed units into one of the nation's worst housing markets, adds Peter Zalewski, a Condo Vultures principal who is also a real estate broker. Many residents are under contracts inked during better days, but with prices plummeting, foreclosures soaring and loans hard to come by, contracted buyers are afraid or unable to close.

As the market continues to sour, expect investors-especially bulk buyers eyeing a bargain-to snap up the units, Mr. Zalewski says.

If this happens-and many industry watchers think it will-the percentage of primary owners living in the area could dip below 35%, delivering the market another blow. The ratio of primary owners to investors and second-home buyers is key for buyers seeking financing. Jittery lenders, stung by losses to investors, have tightened their requirements for condo lending, viewing more owner-occupants as safer.

But there's a silver lining for all those renters. "They're going to have the opportunity to live in a brand-new luxury building for a very, very low rent considering the quality," says Mr. Hunter. "This is unprecedented."

--Wall Street Journal 04-29-2009

Christopher Shearer

Does anyone see anything wrong with the unions causing the car companies to be unprofitable, then when they are failing taking them over? Once the Union is the owner of the company, wouldnt that be a conflict of interest with thier union members? Would they be representing themselves as owner of the company or thier members that pay dues and have given the union's their power?

Isnt it beacuse of the high wages and consessions that the US unions demand the reason that the companies are NOT profitable. Then they are getting 55% ownership in the company for working Easter and not getting overtime until the worker has actually worked 40 hours? Does anyone see anything wrong with this picture?

Like to share an article from today's Wall Street Journal

By ALEX P. KELLOGG and KRIS MAHER

The United Auto Workers union would eventually own 55% of the stock in a restructured Chrysler LLC under the deal reached by the union and the auto maker, according to a summary of the agreement that was reviewed by the Wall Street Journal.

Fiat SpA "eventually" will own 35%, and the U.S. government and Chrysler's secured lenders together will end up owning 10% of the company once it is reorganized, that summary said.

The summary was distributed Monday evening at a gathering of union leaders in Sterling Heights, Mich. The deal was first disclosed Sunday night. The UAW aims for Chrysler workers to vote Wednesday on the proposed agreement, which requires changes to the union's current Chrysler contract.

According to the summary, Chrysler will also issue a $4.59 billion note to the health-care trust fund that the union will manage for retired workers. The agreement said Chrysler will pay $300 million in cash into the trust fund in 2010 and 2011, and increasing amounts up to $823 million in the years 2019 to 2023.

The trust fund will own a "significant" amount of Chrysler stock and will be allowed to appoint a representative to Chrysler's board, the summary said.

"While we realize the proposed sacrifices for UAW members are painful, we fought to maintain our wages, our health care and our jobs," UAW President Ron Gettelfinger wrote in a letter with the summary. The UAW summary also said the accord would provide the union with regular updates from the company on its long-term strategy and product plans.

In a separate agreement that paves the way for Chrysler to meet the U.S. Treasury Dept.'s deadline for a viability plan, Daimler AG said it agreed Monday to give up its remaining 19.9% stake in Chrysler LLC and pay as much as $600 million into the auto maker's pension fund.

That deal would end the relationship between Daimler and Chrysler except for supplier and customer relations. Daimler's 19.9% stake will be turned over to Chrysler's parent, Cerberus Capital Management LP.

The move allows Cerberus and Chrysler to intensify negotiations on a merger deal with Fiat. Chrysler needs the Fiat merger as well as cost concessions from its debt holders and the United Auto Workers to receive more U.S. aid and avoid bankruptcy. Chrysler and Cerberus also agreed to waive claims arising from Daimler's August 2007 sale of Chrysler to Cerberus.

Among the cost-cutting measures that the UAW leaders have accepted are a suspension of cost-of-living-adjustments and new limits on overtime pay. Workers will only be paid for overtime after they have worked at least 40 hours in a week. Chrysler workers will also lose their Easter Monday holiday in 2010 and 2011, according to the union summary.

Fiat has agreed to produce at least one small car in a Chrysler plant in the U.S., and to allow Chrysler to use a 3.0-liter diesel engine and a 1.4-liter gasoline engine in its vehicles. Fiat's investment, which the summary said Chrysler estimates is worth $8 billion, will "create 4,000 new UAW jobs in the U.S."

To ensure all Chrysler stakeholders are equally sacrificing to help the company recover, Chrysler will provide the UAW with quarterly updates and contributions by "executives, CEOs, dealers, suppliers and other constituents," the summary said.

The latest concessions would bring the UAW contract at Chrysler closer to the pay and benefits earned by workers at nonunion auto factories operated by rivals Honda Motor Co. and Toyota Motor Corp.

"This is the eclipse of the UAW. It's going to be a shadow of what it once was, I'm afraid," predicted Gary Chaison, a professor of labor relations at Clark University in Worcester, Mass., who was interviewed prior to the disclosure of all details.

The accord is likely to provide outlines for labor deals at General Motors Co. and possibly Ford Motor Co., said labor experts, dealing the union a broader setback. In addition to cuts in wages and benefits, the loss of working members and their dues due to factory closings, will shrink the union's clout and give it less money for organizing and political operations. On Monday, GM said it would eliminate 21,000 hourly-wage jobs.

"This will make it more difficult to do the things that the union is known for: organizing, political action, bargaining and community development," said John Russo of the Center for Working-Class Studies at Youngstown University.

UAW members are expected to ratify the latest round of cuts, believing a weaker contract in hand is better than the auto maker entering bankruptcy-court proceedings, in which a judge could throw out the labor contract altogether. A UAW spokesman said the ratification process is going forward and declined to comment further.

Bankruptcy is still possible at Chrysler if bondholders don't reach at agreement with the company that satisfies conditions laid out by the government. Neither Chrysler nor the U.S. Treasury Dept., which participated in the talks and approved the deal, would comment on the proposed accord.

The latest union concessions come on top of major givebacks on wages, retiree health benefits and job protections over the past few years with the Big Three auto makers. But those cuts proved inadequate in the face of the economic downturn and a steep drop in consumer demand for cars that pushed General Motors and Chrysler to the brink of bankruptcy.

Write to Alex P. Kellogg at alex.kellogg@wsj.com and Kris Maher at kris.maher@wsj.com

Printed in The Wall Street Journal, page A8B