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The share of home loans at least 30 days late dropped to 7.4 percent from 7.58 percent in the previous three months, according to a report today from the Mortgage Bankers Association. The rate peaked at 10.1 percent in the first quarter of 2010 and was last lower in the third quarter of 2008, when it was 6.99 percent.

]]> http://fundavalanche.com/mortgage-delinquencies-in-us-fall-to-lowest-since-2008-bloomberg/feed/ http://fundavalanche.com/allys-mortgage-unit-files-for-bankruptcy/ http://fundavalanche.com/allys-mortgage-unit-files-for-bankruptcy/#comments Tue, 15 May 2012 12:04:22 +0000 Batman http://fundavalanche.com/allys-mortgage-unit-files-for-bankruptcy/ Ally Financial’s ResCap mortgage unit filed for a prepackaged bankruptcy protection Monday, a move that the taxpayer-owned bank says will allow it to take another step to repay Treasury.

The ResCap unit, which operates under the GMAC Mortgage brand, was once one of the nation’s leading subprime lenders. Problems with those home loans for riskier borrowers and the sharp drop in the company’s core auto finance business forced Treasury to give it a $15.8 billion bailout in 2009, as part of its efforts to rescue the troubled auto industry and housing market.

The company, which started as the finance unit of automaker General Motors (, Fortune 500) under the GMAC name, changed its name to Ally following the bailout. Besides continuing its auto finance business, it now operates an online commercial bank.

Ally also said it is looking at a possible sale or other strategic alternatives for its international business.

The company said that it expects GMAC to continue to make and service mortgage loans while the bankruptcy process is completed. The portfolio of home loans it holds, now valued at less than half its original value, will be auctioned off as part of the bankruptcy process payday loan lenders.

GMAC said it will make a so-called "stalking horse" bid of $1.6 billion for those loans, but they are expected to draw a higher bid from investors.

"The action by ResCap will enable Ally to achieve a permanent solution to its legacy mortgage risks and put these issues behind us," said Ally Chief Executive Officer Michael A. Carpenter. "This action, along with pursuing alternatives for the international businesses, will allow Ally to focus 100 percent of its energies on further strengthening its already leading U.S. auto finance and direct banking franchises."

Treasury currently owns about 74% of its outstanding stock, and Ally has paid about $5.5 billion of the bailout back to Treasury through dividends and loan repayments. The company’s statement Monday said that upon successful completion of the bankruptcy auction and disposal of its international business, it should be able to have paid back about two-thirds of the government bailout. 

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The Journal, citing people familiar with the situation, reported that one of the executives is Ina Drew, who for seven years has run the risk-management division at the bank responsible for the loss.

The other two identified by the newspaper are an executive in charge of the London desk that placed the trades and a managing director on that team. The bank did not immediately return a message from The Associated Press.

The $2 billion loss, disclosed on Thursday by CEO Jamie Dimon, has been an embarrassment for the bank and led lawmakers and critics of the banking industry to call for tougher regulation of Wall Street.

Drew, one of the highest-ranking women on Wall Street, is the bank’s chief investment officer. She was paid $15.5 million last year and almost $16 million the year before, according to a regulatory filing.

The Journal reported that Bruno Iksil, the JPMorgan trader identified as the “London whale” because of the giant bets he placed, was also likely to leave, but the paper reported that it was not clear when that would happen.

On Friday, investors shaved almost 10 percent off JPMorgan’s stock price. Dimon said in a TV interview aired Sunday that he was “dead wrong” when he dismissed concerns about the bank’s trading last month.

“We made a terrible, egregious mistake,” Dimon said in an interview that was taped Friday and aired on NBC’s “Meet the Press.” “There’s almost no excuse for it.”

Dimon said he did not know the extent of the problem when he said in April that the concerns were a “tempest in a teapot.”

The loss came in the past six weeks. Dimon has said it came from trading in so-called credit derivatives and was designed to hedge against financial risk, not to make a profit for the bank.

Dimon said the bank is open to inquiries from regulators. He has also promised, in an email to the bank’s employees and in a conference call with stock analysts, to get to the bottom of what happened and learn from the mistake.

Dimon told NBC that he supported giving the government the authority to dismantle a failing big bank and wipe out shareholder equity. But he stressed that JPMorgan, the largest bank in the United States, is “very strong.”

A piece of financial regulation known as the Volcker rule would prevent banks from certain kinds of trading for their own profit. Dimon has said the trading involved in the $2 billion loss would not have fallen under the rule.

Rep. Barney Frank, D-Mass., told ABC’s “This Week” that he hopes the final version of the Volcker rule will prevent the type of trading that led to the massive loss at JPMorgan.

Dimon conceded to NBC that the bank “hurt ourselves and our credibility” and expects to “pay the price for that.” Asked what the price should be, Sen. Carl Levin, D-Mich., said that banks will lose their fight to weaken the rule.

“This was not a risk-reducing activity that they engaged in. This increased their risk,” Levin told NBC.

“So we’ve got to be very, very careful that the regulators here are not undermined by this huge effort to weaken the rule by putting in a huge loophole” that includes the trading involved in the JPMorgan loss, he said.

Addressing public anger toward Wall Street, Dimon said he wants a more equitable society and does not mind paying higher taxes. But he said attacking all of business is “very counterproductive.”

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There have been two and a half years of bailouts, on top of broken promises by Greece to reform. The result: a fifth year of recession and, this week, political chaos. Voters on Sunday favored parties that either oppose the terms of the country’s international bailout or want to renegotiate them. If it cannot get more rescue loans, Greece will go bankrupt and likely have to leave the eurozone, the currency union of 17 countries.

The question confronting leaders in Athens, Berlin and other eurozone capitals could soon be: What would happen if Greece left the euro? How much damage would that do?

Among the possible scenarios:

• GREEK CHAOS: Economists agree that Greece, where unemployment is 21.7 percent, would suffer even more if it left.

So Greeks would try to pull their euros out of their bank accounts — before they could be converted into a new currency worth far less. Owners of Greek stocks would sell. As markets plunged and deposits fled, banks would collapse.

To try to limit the drain, the government would probably have to close the banks while the new currency is introduced. It might also try to prevent people from moving euros out of the country.

Every Greek company that owes money in euros would see those debts grow much heavier. Many would go bankrupt.

• A BOUNCE-BACK: On the plus side, the weaker drachma would make Greek exports cheaper and more competitive and could help the economy start growing payday loans guaranteed no fax. Companies outside Greece might be attracted by the cheaper labor and real estate, encouraging them to move plants there.

Tourism would also get a boost: booking a room on a Greek island, for example, would become much cheaper for foreigners.

• CONTAGION: The great fear, some say, is that if Greece leaves, other troubled eurozone countries might do the same.

“The big danger is financial contagion,” said Dennis Snower, president of the Kiel Institute for the World Economy. “The question would be, what stops the Portuguese from doing something similar?” People might think “just in case, let me get my money out of the bank,” he said.

• MAYBE NOT: Not everyone agrees that a Greek exit would be a disaster. Greece is tiny, and it wouldn’t be a total surprise. The possibility of a euro exit has been hanging over markets since late 2009. Banks outside Greece have had time to write off their Greek investments — and not make any new ones.

“A year ago, I would have said it’s too risky, but the situation has changed,” said Commerzbank’s chief economist, Joerg Kraemer, citing the eurozone fund and ECB loans. “The combined fiscal and monetary shield is much higher than it was a year ago.”

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Avon, whose brands include Skin-So-Soft, Anew and mark, said Thursday that Coty told it in a letter that it was raising its offer to $24.75 per share from $23.25 per share.

The revised bid is a 15 percent premium to Avon’s Wednesday closing price of $21.60. Avon shares rose 1.3 percent to $21.87 in premarket trading Thursday.

Avon had rejected Coty’s $10 billion offer last month, but Coty has remained interested. It said in the letter to Avon that it wants to look at Avon’s books to confirm estimates and learn more about Avon’s ongoing bribery investigation and litigation.

Coty says it will withdraw its latest bid if it doesn’t receive a response by the close of business Monday.

Coty’s letter indicated Avon has said it is not interested in reviewing any proposal until after newly installed CEO Sherilyn McCoy has completed a review of all of Avon’s business operations.

On Thursday, Avon said its board will consider Coty’s letter in due course.

Founded in 1886, Avon became a fixture in households across the country as its legions of “Avon ladies” went door to door selling makeup to family, friends and acquaintances.

Now, Avon is in transition. McCoy, a long-time Johnson & Johnson executive, has been in place less than a month easy payday loans. She replaced CEO Andrea Jung, who had come under fire for failing to stem the company’s declines and wrap up the bribery investigation, which started in China in 2008 and has spread to other countries.

The company’s profit has shrunk over the past three years. It has frequently missed analysts’ earnings expectations and posted weak sales in some of its largest markets, including Brazil and Russia. Avon said last week that its first-quarter net income fell 82 percent, hurt by a bigger restructuring charge and higher commodity and labor costs.

Rumors of other possible bids for the New York company have been swirling. A media report last week said private equity firm Richmont Holdings is structuring an offer for Avon, but so far nothing has materialized.

Coty is controlled by German holding company Joh. A. Benckiser GmbH, which also operates consumer products company Reckitt Benckiser Group PLC. Reckitt’s brands include Air Wick air freshener and Clearasil skin care products. Benckiser is one of Coty’s financing sources, along with BOT Capital Partners and Berkshire Hathaway Inc.

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The company, by far the largest Internet and TV provider in St. Louis, reported a loss of $94 million, or 95 cents per share. A year earlier, the company lost $110 million or 97 cents per share.

Charter is gradually becoming less of a cable TV company and more of an Internet service and phone provider. Still, cable TV provides the biggest piece of its revenue, and the slow drop off of cable video customers has long vexed the company.

That trend changed in the March quarter as Charter added 20,000 video customers, bringing the total to 4.16 million, compared to a loss of 24,000 in the same period a year earlier. That was the first quarterly video growth in five years, said CEO Tom Rutledge in an investor conference Tuesday.

Rutledge said the company has been improving the quality of its TV picture signal and the number of channels. It will be offering 100 high definition channels by mid-year, he said. It’s also been raising prices; about 40 percent of its video customers saw a 3 percent price increase recently.

Loss of video customers is common story in the cable TV business, which is facing more competition as telecom companies role out video services, such as AT&T’s U-verse, in a broader geographic area. Charter’s strongest competition is from satellite TV companies, Rutledge said. Internet streaming services, such as Netflix, aren’t a big factor in cable TV subscriber losses, he said.

“Our video competitors often offer more channels, including more HD channels, and typically only offer digital services which have a better picture quality compared to our analog product,” the company said in a filing Tuesday with the SEC. Charter offers both analog and digital services. People using older TVs without a digital converter box receive an analog signal.

Despite the rise in customers, revenues from video dropped 2 percent, in part because fewer people are paying for premium channels or using its pay video-on-demand service.

Overall, Charter’s revenue grew 3 percent as demand for Internet and phone service increased. Charter added 141,000 residential Internet customers compared a 90,000 gain a year earlier. It added 31,000 phone customers, up from 24,000 last year.

While making money on its basic operations, Charter remains burdened by $12.8 billion in debt and faces continuing costs to upgrade its systems.

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While they aren’t new, these phony “we’ll-pay-you-to-shop”-type ads sprouted like online weeds during the recession as job-hungry Americans hunted for employment.

Law enforcement and some financial institutions say they’re spotting mystery shopping scam attempts — which involve phony checks deposited into a victim’s bank account — several times a week.

“We’ve been seeing it pretty frequently since 2005,” said Vanessa Oddo, finance loss prevention manager for SAFE Federal Credit Union in North Highlands, Calif. She said 200 to 300 suspect checks get brought in to SAFE branches every year.

Similarly, the Northeast California Better Business Bureau office said it gets two or three calls a day from consumers asking about mystery shopper checks they’ve received in the mail.

The losses can be anywhere from a few hundred to several thousand dollars, depending on how much was deposited into the unsuspecting shopper’s bank account.

There are plenty of legitimate mystery shopping companies, which hire individuals to drop in unannounced at retailers, hotels, fast food outlets, restaurants and other businesses to secretly evaluate customer service.

But the fraudulent kind typically operate as fake check scams.

Making contact by mail, email or phone, a fraudster posing as a mystery shopping company “hires” an unsuspecting consumer, who is promised payment after completing a “first assignment totally free credit score.” That assignment often involves sending a phony check to the consumer’s home, with instructions to deposit it in a bank account, keep a small amount as reimbursement, then wire the remainder to Western Union, ostensibly to report on the wire company’s “customer service.”

Ultimately, the phony check bounces, leaving the victim’s bank account dinged for the total amount, as well as wire transfer charges and potential bank fees.

“You see more of these during a recession, when people are searching for jobs or ways to (make) more money. Scammers plan on that,” said Dan Denston, executive director of the North America Mystery Shopping Providers Association, or MSPA, based in Louisville, Ky.

Even legitimate companies that hire mystery shoppers are not immune from scammers. National Shopping Service in Rocklin, Calif., one of at least 16 mystery shopper firms in California, said it, too, has been victimized by scammers who used the company’s name in fake-check scams.

“The majority of people getting these letters and falling for the scams were not even our shoppers. Unfortunately, they got scammed,” said Katy Gravatt, National’s operations manager.

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A Berkshire Hathaway shareholder questioned whether last year’s purchase of the Omaha World-Herald in Buffett’s hometown was a personal indulgence.

Buffett defends the deal and says he believes Berkshire will profit from its ownership of the Omaha World-Herald company and the Buffalo News. It’s just that the profits won’t be as good as they used to be guaranteed payday loan.

Buffett says newspapers are usually still the primary source of local information, and that’s an advantage in places where community is important.

Buffett acknowledges that newspapers face difficult competition from online news sources and have high costs, but says Berkshire’s newspaper deals should work out OK.

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