Finance Blog number 1

The value of Metro Vancouver building permits dropped by a third in November, driven mostly by a big drop in filings for multi-family housing projects, Statistics Canada reported Thursday.

Builders were issued permits for $446 million worth of work in Metro Vancouver, compared with $669 million the month before.

In its report, Statistics Canada attributed the decline to a decrease in multi-family permit applications, which were down across the province almost 50 per cent from the previous month. November, however, was also a record month for new-home starts in Metro Vancouver, according to Canada Mortgage and Housing Corp.

Builders started work on 2,704 new units during the month on permits already issued.

Statistics Canada also reported that the value of new Metro Vancouver homes also crept up 0.2 per cent in November from October on its new-housing-price index, thanks largely to strong market conditions in the Lower Mainland payday advance.

To the end of November, Vancouver’s new-housing-price index had increased 6.4 per cent.

To the end of November, Metro Vancouver builders had taken out $6.45 billion worth of building permits, a 4.7 per cent increase from the first 11 months of 2006.

Provincewide builders took out a total of $901 million worth of building permits in November, a 20 per cent decline from October, with a 6.5 per cent increase in non-residential permits to $290.5 million, offsetting some of the residential decline.

To the end of November, municipalities had issued $11.5 billion worth of building permits, a 7.1-per-cent increase from the first 11 months of 2006.

The Bush administration is working to combat the country’s severe housing crisis but there is no simple solution, Treasury Secretary Henry Paulson said Monday, adding that a correction in the housing market is “inevitable and necessary.”

Paulson said the country was facing an unprecedented wave of 1.8 million subprime mortgages that are scheduled to reset to sharply higher rates over the next two years. He said this raised the threat of a market failure and was the reason the administration brokered a deal with the mortgage industry to freeze certain subprime mortgage rates for five years to allow the housing market to recover.

“By preventing avoidable foreclosures, we will safeguard neighborhoods and communities and fulfill our responsibility of protecting the broader U.S. economy,” Paulson said in a speech in New York. “However, let me be clear: There is no single or simple solution that will undo the excesses of the last few years.”

Paulson said that the deal the administration brokered with the industry to freeze certain subprime mortgage rates for five years did not involve the use of any taxpayer money. Conservative critics have complained that the administration’s plan represented government intrusion in the operation of markets that would end up rewarding some people who had taken out risky mortgages.

In his speech, Paulson raised the possibility that some sort of “systematic approach” might need to be developed to help homeowners with other types of adjustable-rate mortgages that are resetting to higher rates http://payday-faxless.com. The current plan only involves subprime mortgages, loans offered to borrowers with weak credit histories.

The steep slump in housing has been a serious drag on the overall economy. There are rising fears that the country could topple into a recession. Those worries were heightened after a report Friday showing that the unemployment rate jumped to a two-year high of 5 percent in December with job growth slowing to a crawl.

Paulson called the current housing correction inevitable after what occurred during the five-year boom in which sales and prices climbed to record levels.

“After years of unsustainable price appreciation and lax lending practices, a housing correction is inevitable and necessary,” Paulson said.

He said that the correction was taking a toll on the economy that would continue for a period of months.

“It will take additional time for markets to regain confidence,” Paulson said. “The overhang of unsold homes will contribute to a prolonged adjustment and poses by far the biggest downside risk.”
Sourse

Mumbai: Public sector power producer National Thermal Power Corporation Ltd (NTPC) is raising Rs2,000 crore ($507 million) through a loan and a bond issuance to fund its capital expenditure.

NTPC has signed a loan agreement for Rs1,000 crore along with a bond subscription agreement for another Rs1,000 crore with state-run insurer, Life Insurance Corporation of India, according to a filing with the Bombay Stock Exchange (BSE).

NTPC said the proceeds of the loan and bond subscription with LIC would be used to finance capital expenditure of its power generation projects, coal mining business, renovation and modernisation activity as also the LNG business.

The door-to-door maturity of both the agreements is 11 years, the repayments to take place in 14 half-yearly instalments commencing after four years cash advance in one hour. The interest rate/coupon is linked to 10 year G-sec rate plus margin. The proceeds under these agreements are to be utilised before end-March 2008.

The coupon rate was at a margin above the yield on the 10-year government bond, NTPC said.

Sourse

Treasury Secretary Paulson’s plan to rescue subprime mortgages will be greeted with legal challenges by investors, lawyers predict.

The plan, announced last week, would stop rate increases on some subprime and adjustable rate mortgages. The holders of mortgage securities are anticipating revenue from those increases and may claim that the rate freezes are a breach of contract.

Because the plan is voluntary, legal experts say that the targets of investor lawsuits aren’t likely to be the federal government, which brokered the agreement no fax payday advance. More likely to be named as defendants are mortgage servicers — the companies which collect mortgage payments and decide when to foreclose. Many major banks have a mortgage servicing division.

“The only thing the government did was bring the parties together — the ones on the line would likely be the servicers,” a former general counsel to the Treasury Department, now a fellow at the American Enterprise Institute, Peter Wallison, said.

Sourse

Democratic state legislators announced plans Thursday to implement a package of bills aimed at slowing the tide of foreclosures and cracking down on dishonest lending.

Democrats asked Gov. Arnold Schwarzenegger to approve a special legislative session so they can enact the bills as soon as mid-December if the session is called immediately, Assembly Speaker Fabian Nunez said.The bills would increase the number of counselors to help troubled borrowers and require lenders to send homeowners a list of their rights. The package would also limit the types of loans and mortgage fees.

Assemblyman George Plescia, R-San Diego, said he agreed with targeting unscrupulous lenders but warned against too much regulation.

“We need to make sure we don’t overreact with legislation that makes it not a competitive market and adds cost to people who are buying homes,” Plescia said.

He pointed out that although about 20 percent of subprime loans have defaulted, many consumers were able to purchase homes because of such loans.

RealtyTrac, an Irvine-based company that tracks foreclosures, announced Thursday that California has the second-worst foreclosure rate in the nation, behind Nevada. California has by far the highest total amount of foreclosures. RealtyTrac reported state foreclosures increased 213 percent during October from the previous year.

Nunez called the rate of foreclosures in California a greater threat than long-term water shortages or health care reform, the other topics the Legislature is supposed to be addressing in special sessions the governor called in September.

Lawmakers so far have failed to reach agreement on either of those topics.

“It’s a more immediate crisis,” Nunez said of foreclosures. “You better believe this is the biggest crisis we’re facing today.”

The bills proposed by the Democrats would also call for a ban on prepayment penalties that keep some homeowners from refinancing.

Officials said some lenders have already started contacting borrowers with interest rates set to escalate beyond affordability, something the Democrats hope to legislate.

“That’s one of the things the industry has already done without a government mandate,” said Dustin Hobbs, communications director for the California Mortgage Bankers Association pay day loan. “We definitely want to work with the Legislature and government to work through this crisis. It’s going to take support from both government and industry.”

There are an estimated 2.3 million borrowers with poor credit records whose home loans are projected to reset at higher rates through the end of next year. There are fears many of those loans risk default, worsening the nation’s soaring foreclosure rate.

As California’s Democrats seek action on the state enforcement, U.S. Treasury Secretary Henry Paulson and federal banking regulators are working out the details of a plan to extend lower, introductory interest rates on home loans before they reset at higher levels.

Paulson and the regulators met Thursday morning with loan servicing companies —- which collect and distribute loan payments —- and other industry executives. A formal agreement had not yet been announced as of Thursday but could be unveiled early next month.

“We’ve all agreed that there should be some sort of standardized approach to reaching more homeowners faster,” said Treasury Department spokeswoman Jennifer Zuccarelli, who declined to name those at the meeting.

Federal regulators have developed differing proposals for what to do about the problem. Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., has been urging mortgage servicing companies to agree to widespread, permanent conversions of adjustable-rate loans to fixed-rate loans for homeowners who are current on mortgage payments but unable to afford loans at higher rates.

However, Bair’s proposal met resistance from the industry. Critics say companies would face lawsuits if they permit modifications that are not in the best interest of investors.

Sourse