Stadium seat fails around the world.
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Wednesday, September 28, 2011
Tuesday, September 27, 2011
The World's Most Incredible Bridges
Starting with simple logs from fallen trees or a few stones strategically placed across a stream, bridges and humans have had a long history. Many are designed exclusively for people on foot or on bike; others are for use by cars, boats or trains. Some bridges connect continents; others are known more for their histories and the cultural interest they inspire.
“Few man-made structures combine the technical with the aesthetic in such an evocative way as bridges” wrote David J. Brown, a bridge historian and author of Bridges: Three Thousand Years of Defying Nature. With the help of Brown, and Judith Dupré, a structural historian and bridge expert, we’ve searched the globe for incredible specimens of architecture that span physical obstacles — better known as bridges.
The Singapore Helix Bridge, Singapore
The almost 1,000 foot long curved Singapore Helix Bridge connects Singapore's Youth Olympic Park with the new Marina Bay Sands integrated resort. Designed by architecture firms the Cox Group and Architects 61, and international engineering firm Arup, the Singapore Helix is the world's first bridge in the form of an interlocking double helix, and also utilizes lights to highlight its unique structure, Brown said. The bridge has viewing platforms, and also serves as a gallery.
Ponte Vecchio, Florence, Italy
Florence’s Ponte Vecchio (which means “Old Bridge”), crosses the Arno River, and is an inhabited bridge, common in Europe during the Middle Ages when merchants and residences occupied the space. “The Ponte Vecchio is more than a bridge. It is a street, a marketplace, a public square, and an enduring icon of Florence,” Dupré writes. Today, she said, the bridge houses gold shops and, on the top level, the “secret” Vasari Corridor that Renaissance nobility once used to cross between the Pitti and Vecchio palaces. The bridge is considered to be the first segmental arch bridge built in the West, according to the Encyclopaedia Britannica and “is an outstanding engineering achievement of the European Middle Ages.” Built in 1345, it required fewer piers than the Roman semicircular-arch design, as the shallower segmental arch offered less obstruction to navigation and freer passage to floodwaters. Its design is generally attributed to Taddeo Gaddi, better known as a painter and pupil of Giotto. During World War II, it was the only bridge in Florence spared from destruction by German bombs, because Hitler took a fancy to it.
Sundial Bridge, Redding, CA
Spanish architect and engineer Santiago Calatrava's Sundial Bridge stretches across the Sacramento River in Redding, California, linking the two campuses of Turtle Bay Exploration Park. Opened in 2004, the bridge for pedestrians and bicyclists also serves as a gateway to the Sacramento River Trail system, and its soaring backward-leaning mast with cables stretched like the strings of a harp, is a working sundial, said David J. Brown, a bridge historian and author of Bridges: Three Thousand Years of Defying Nature. The bridge is also environmentally sensitive to its setting. The free-standing construction allows the bridge to avoid impacting the nearby salmon-spawning habitat, as there are no supports in the water, yet its glass-bottom encourages public appreciation of the river, according to Turtle Bay Exploration Park. The Sundial Bridge is one of about fifty -- and the first built in the United States -- designed by Calatrava, writes Brown.
Leonardo's "Golden Horn" Bridge, Aas (near Oslo), Norway
Designed in 1502 by Leonardo da Vinci to span the “Golden Horn,” the famous waterway in Istanbul that separates Europe and Asia, the stone bridge was never built because the Turkish sultan feared that it was not technically feasible. A scaled down, laminated wood and stainless steel version based on the famous artist’s original plan is now a footbridge near Oslo, Norway. “For 500 years the beauty and symbolism of this graceful bridge remained an obscure drawing in one of Leonardo’s notebooks, until it was brought into being in Norway in 2001 by the contemporary artist Vebjorn Sand,” according to the website of The Leonardo Bridge Project, a global public arts project. Built in collaboration with the Norwegian transportation ministry, the bridge was the first civil engineering idea by Leonardo to be realized.
Millau Viaduct, Millau, France
Rising above the clouds, the Millau Viaduct is the tallest road bridge in the world, said Brown, a bridge historian and author of Bridges. With its loftiest pier higher than the Eiffel Tower, it was financed by the same company that built the famous French monument. Conceived by engineer Michel Virlogeux and designed by architect Sir Norman Foster, the cable-stayed bridge (in which the deck is supported from towers by a series of cables), comprises seven concrete piers and a steel deck, and spans more than one-and-a-half miles across the valley of the river Tarn near Millau in southern France. Completed in 2004 after only three years' construction, the Millau Viaduct was created to have the "delicacy of a butterfly," said Foster in news reports. "A work of man must fuse with nature. The pillars had to look almost organic, like they had grown from the earth," said the English architect, who was interviewed by a regional paper and quoted in a BBC news report.
Ponte Sant' Angelo, Rome, Italy
Ponte Sant’Angelo spanning the Tiber in Rome, one of the eight stone bridges the Romans are known to have built over the Tiber between 200 B.C. and A.D. 260, is the most celebrated of the six “massive beauties” still in use, said Judith Dupré, author of Bridges. “The Romans perfected the masonry arch,” she said, allowing them to span much greater distances than previously. “Much of Roman engineering genius is underwater, hidden from view, but their inventions — including the cofferdam, cutwater piers that divide water current, and pozzolano, a type of waterproof concrete—are still used today,” Dupré said. Ponte Sant’ Angelo, originally named for Hadrian, the emperor who reigned during its construction, leads to his mausoleum, Castel Sant’ Angelo, a popular tourist attraction in Rome.
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Senate leaders announce bipartisan agreement to avert government shutdown
Senate leaders agreed to a deal Monday evening that is almost certain to avert a federal government shutdown, a prospect that had unexpectedly arisen when congressional leaders deadlocked over disaster relief funding.
After days of brinkmanship reminiscent of the budget battles that have consumed Washington this year, key senators clinched a compromise that would provide less money for disaster relief than Democrats sought but would also strip away spending cuts that Republicans demanded. The pact, which the Senate approved 79 to 12 and the House is expected to ratify next week, is expected to keep federal agencies open until Nov. 18.
“It will be a win for everyone,” said Majority Leader Harry M. Reid (D-Nev.).
Minority Leader Mitch McConnell (R-Ky.) called the plan “a reasonable way to keep the government operational.”
Aides to House Speaker John A. Boehner (R-Ohio) said he will support the compromise.
The spending battle marked the third time this year that congressional acrimony has brought the government to the edge of calamity. In April, Boehner and President Obama reached a deal on funding for 2011 about 90 minutes before a government shutdown was to begin. On Aug. 2, just hours before the deadline, Congress gave final approval to legislation lifting the government’s borrowing authority, averting a partial shutdown and the potential for a default on the federal debt.
Although this week’s fight ended with days, rather than hours, to spare, it drained many in Congress, who thought it was a senseless fight. Reid summed up the feeling of many lawmakers when he quoted Sen. Johnny Isakson (R-Ga.), who said there was too little money in dispute to raise the specter of a shutdown and to halt payments to those affected by natural disasters.
“Let’s fight when there’s something to fight about,” Reid quoted Isakson as saying during a speech on the Senate floor.
At issue was a dispute over how to fund disaster relief, a concern that was heightened in late August after an earthquake struck central Virginia and Hurricane Irene caused flooding in the Northeast.
Although Democrats said the Federal Emergency Management Agency needed more funding, they agreed to accept a Republican plan to spend $3.65 billion in disaster relief money, $1 billion of which would have gone toward the budget for the current fiscal year, which will end Friday. Republicans, concerned about adding to the budget deficit, refused to support the funding without $1.6 billion in accompanying cuts. Their largest target was an auto loan program popular with Democrats, leading to the standoff.
The showdown between the two sides was averted on Monday, when FEMA said it could make ends meet through the end of the week. That led to an agreement that calls for the agency and other government disaster relief programs to forgo the $1 billion in proposed funding for this week. Beginning Saturday and running to Nov. 18, FEMA can begin to tap the remaining $2.65 billion for ongoing efforts.
With the House out of session this week, the Senate approved a resolution that will keep the government open through next Tuesday. The House is expected to approve that extension in a voice vote Thursday, which does not require all members to be present, and then approve the longer-term bill next Tuesday.
Some lawmakers from hard-hit states are unhappy with the compromise, saying that it would result in a slight delay in processing aid to victims, and that the overall total of FEMA funding wouldn’t be enough to account for the damage caused by the disasters.
“They would delay the process by punting back to the House,” said Sen. Roy Blunt (R-Mo.). The deal “also stripped $1 billion in disaster relief and provides less emergency funding for Missourians in the wake of record flooding and tornadoes,” he added.
The debate over the budget bill turned on sharp — and familiar — political lines that scuttled earlier talk that the two parties were going to tone down their attacks.
Republicans, particularly House conservatives, said they were unwilling to add to the federal deficit, even for disaster funding, and accused Democrats of overspending. Democrats used the debate to portray Republicans as “holding hostage” relief checks for those struck by tornadoes, flooding, forest fires and droughts, focusing much of their criticism on House Majority Leader Eric Cantor (R), who represents Mineral, Va., the epicenter of the earthquake.
Although the agreement lifts the imminent specter of a government shutdown, it will not resolve the fight over how much FEMA needs to help disaster victims and whether that money must be offset with spending cuts.
The White House has said FEMA will need $4.6 billion for the next fiscal year — a figure many Democrats say underestimates the agency’s needs.
Democrats will push to fully fund FEMA’s request and perhaps broaden it during negotiations over spending for the rest of the year, but they were split Monday over what the compromise would mean for future funding battles.
“This is a very big and important move. It says we met each other halfway. We saved the jobs,” said Sen. Barbara Boxer (Calif.), referring to the the auto loan program. “We figured out a way to fund FEMA that was acceptable to them. It’s a template. We have to figure out how to meet each other halfway here.”
Sen. Patrick J. Leahy (Vt.), whose state was hit hard by flooding from Hurricane Irene, said the deal would solve the disaster issue — but only temporarily.
“I’m concerned about the fact that we give blank checks to Iraq and [Afghanistan] and we don’t want to take care of America for Americans,” he said. “It’s wrong, it’s foolish and it will come back to haunt us.”
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Freddie Mac Loan Deal Defective, Report Says
Freddie Mac used a flawed analysis when it accepted $1.35 billion from Bank of America to settle claims that the bank misled it about loans purchased during the mortgage boom, according to an oversight report scheduled for release on Tuesday.
The faulty methodology significantly increased the probable losses in Freddie Mac’s portfolio of loans, according to the report, prepared by the inspector general of the Federal Housing Finance Agency, which oversees the company. Freddie Mac and Fannie Mae were taken over by the government in 2008 so additional losses would be shouldered by taxpayers.
The report also noted that the settlement with Bank of America in December was completed over the objections of a senior examiner at the agency. Freddie Mac officials did not want to jeopardize the company’s relationship with Bank of America, from which it continues to buy loans, the report concluded.
The agency official who questioned the loan review methodology contended that Freddie Mac’s analysis greatly underestimated the number of dubious loans bought from the Countrywide unit of Bank of America from 2005 to 2007. The deal between Freddie Mac and the bank resolved claims associated with 787,000 loans, some of which were repurchased by the bank, and cannot be rescinded.
“An effective mortgage repurchase process is critical in limiting the enterprises’, and ultimately, the taxpayers’ exposure to credit losses resulting from the financial crisis,” said Steve A. Linick, the inspector general who oversaw the report. “F.H.F.A. and Freddie Mac must do more to ensure that high-dollar settlements of repurchase claims are accurately estimated and in the best interests of taxpayers.”
When selling loans to Freddie Mac and Fannie Mae, Countrywide and other originators vouched that the mortgages met certain quality standards or characteristics, like accurately representing a borrower’s income or the appraised value of a property. These promises require mortgage originators to buy back at full value those loans that do not meet the standards.
Companies often review loans for possible buybacks after experiencing large numbers of defaults. Not all defaults, of course, occur after misrepresentations.
The inspector general’s report does not specify how much additional money Freddie Mac could have received from Bank of America had it used a more effective analysis. But the senior examiner who questioned the deal told the inspector general’s staff that Freddie Mac’s faulty process could cost the company “billions of dollars of losses.”
A Freddie Mac spokesman, Douglas Duvall, declined to comment, but said that it continued to believe its deal with Bank of America was “commercially reasonable based upon our internal evaluation and judgments.”
Because of the faulty methodology, Freddie Mac failed to review 100,000 loans from 2006 for possible irregularities, the report said. As of June 2010, some 93 percent of foreclosed mortgages from 2005 and 2006 had not been analyzed, eliminating “any chance to put ineligible loans back to the lenders for those years.”
The report also noted that 300,000 foreclosed loans originated from 2004 to 2007 and owned by Freddie Mac were not reviewed for possible claims. These loans have a combined unpaid principal balance exceeding $50 billion, the report said.
Freddie Mac’s review process was faulty, according to the report, because it did not change its analysis to account for new types of mortgages issued during the housing boom. These included mortgages that had rock-bottom interest rates initially — known as teaser rates — lasting three years to five years before adjusting upward.
The loan review analysis used by Freddie Mac focused on mortgages that went bad within two years, because historically that had been the period during which defaults related to possible loan improprieties were most likely to occur. Reasoning that the new types of mortgages with artificially low initial rates would probably lengthen the period before large numbers of defaults occurred, the senior agency examiner urged Freddie Mac’s management in June 2010 to review loans that experienced problems well after two years, the report said.
The company declined to change its methodology. At a July 2010 meeting of Freddie Mac’s credit risk subcommittee, a company manager told housing finance agency staff that loan repurchase reviews were “not the highest and best use of his limited resources,” the report said. Freddie Mac officials also disagreed with the concerns expressed by the senior examiner at the agency, the report said, “partly because they believed a change to a more aggressive approach to repurchase claims would adversely affect Freddie Mac’s business relationships with Bank of America and other large loan sellers.”
A few months later, the deal was made with Bank of America. As they considered the merits of the deal, Freddie Mac’s directors were told that it would improve the company’s “ongoing relationship with Bank of America.”
The $1.35 billion buyback deal was done despite questions about its review process from the company’s internal auditors, the inspector general’s report said.
Randy Neugebauer, a Texas Republican who leads the oversight and investigations subcommittee of the House Financial Services Committee, said: “After reading the I.G.’s report, I am concerned that F.H.F.A. is not exercising independent judgment. The American taxpayers deserve better than business as usual, especially when they have already spent $160 billion to keep Freddie and Fannie afloat.”
The report also noted that superiors at the agency declined to help the senior examiner prod Freddie Mac to expand its review process. One of those superiors, a senior manager who was not identified, told the inspector general that he had not opened the attachment to an e-mail from the senior examiner outlining problems with the company’s methodology.
Responding to the inspector general’s report, the agency said it continued to believe that the Bank of America settlement was “appropriate and reasonable.” But the agency agreed that it lacked policies and procedures where “an examiner has a safety and soundness concern” but encountered resistance in pursuing it. The agency said it would soon issue such policies.
The Federal Housing Finance Agency has suspended all future mortgage repurchase settlements affected by the methodology underlying Freddie Mac’s loan review process.
Last June, Freddie Mac’s internal auditors advised the company that its controls regarding the loan review process were “unsatisfactory” and said that “opportunities for increasing the repurchase benefit justify an expansion of our sampling approach” after the second year of the loan, the report said. A company official told the Freddie Mac directors that a more in-depth loan review could generate as much as $1 billion in additional revenue.
Two months ago, Freddie Mac began a more rigorous review of foreclosed, interest-only loans. In late August, it told the housing finance agency staff that the study showed 15 percent of the sampled loans — a higher figure than that in the Bank of America settlement — contained defects that might result in buybacks among originators.
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Monday, September 26, 2011
Fed bond-buying decision keeps mortgage rates at record lows
The Federal Reserve's plan to reinvest principal payments on some bonds into mortgage-backed securities is already contributing to the nation's record low mortgage interest rates, Bankrate said Thursday.
Bankrate said the Federal Open Market Committee seems to be taking direct aim at mortgage rates by shifting $400 billion from short-term holdings into long-term government bonds. The program, which begins Oct. 3 and runs through June, will involve longer-term Treasury securities with remaining maturities of six years to 30 years, and will be financed through the sale of shorter-term Treasurys with maturities of three years or less.
"This program should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative," the FOMC said in a statement following its two-day meeting.
Analysts also said anemic economic growth and European debt fears are keeping investors on the sidelines.
Rates are unlikely to increase until mortgage refinancing and purchasing activity picks up, Bankrate said.
"In order to get the most economic impact out of low mortgage rates, the pool of prospective refinancers needs to be expanded. Deeply upside-down homeowners, those with second liens or mortgage insurance, and lender concerns about buyback liability are all formidable impediments to refinancing," according to the firm, which aggregates rate data from across the country.
The Freddie Mac primary mortgage market survey showed the average rate for a 30-year, fixed-rate mortgage remained unchanged this week at 4.09%, while the 15-year, fixed rate dropped one basis point to a new record low of 3.29%.
Meanwhile, the five-year, Treasury-indexed hybrid adjustable-rate mortgage averaged 3.02%, up from 2.99% last week and down from 3.54% a year ago.
The one-year, Treasury-indexed ARM averaged 2.82% this week, up from 2.81% a week earlier and down from 3.46% last year.
"A sluggish economy and investor concerns over the European debt markets left mortgage rates largely unchanged this week," said Frank Nothaft, vice president and chief economist for Freddie Mac.
"Manufacturing activity in both the New York and Philadelphia regions contracted in September," he said. "Moreover, the Federal Reserve board reported that households lost nearly $150 billion in net worth in the second quarter, representing the first quarterly decline in a year."
Bankrate data show the 30-year FRM at record lows for the fifth consecutive week. The average rate for a traditional mortgage fell to 4.29%, from 4.32% last week, while the 15-year FRM declined to 3.42% from 3.44%.
In addition, the 5/1 ARM decreased to 3.05% from 3.07% last week.
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What New Jumbo Mortgage Rules Mean for Expensive Zip Codes
On Oct. 1, the size of mortgages eligible for purchase by Fannie Mae and Freddie Mac will shrink. That isn't necessarily a big deal in most parts of the country; the new lower limit of $625,500 — down from today's $729,750 — still is big enough to cover most homes in almost all markets in the United States.
Furthermore, mortgage bankers are stepping up with new money to cover those bigger loans, reports Mortgage Daily. "Programs here and there are popping up," says publisher Sam Garcia. He reports that some new lenders, including TMS Funding and New Penn Financial LLC, are launching programs that will make mortgages as big as $2 million available to lenders with good credit scores and enough cash to keep up with the payments. And many existing mortgage lenders currently will make those so-called "jumbo" loans and just keep them in their portfolios instead of selling them.
But those loans will cost more. Currently the difference between rates on so-called conforming loans and private-made loans is about 0.64 percent. Over the last two years that spread has been as low as 0.48 percent and higher than one percent, says Garcia.
So in some pricey places, the new limits will really pinch borrowers. Those limits vary from market to market and are determined in part by local housing prices. In expensive housing markets where prices have fallen, the limits will drop the most. Hardest to be hit, according to a new analysis by Move.com, will be San Diego, where loans up until $697,500 qualify for Fannie and Freddie until Sept. 30. On Oct. 1, that limit drops to $546,250, a $151,250 difference.
Folks there who want to borrow a bunch for a home will see their costs rise significantly. A San Diego homebuyer who needs $600,000 would pay $2,937 a month for a 30-year loan at today's rate of 4.18 percent, according to Bankrate.com. Starting next month, if rates stay stable and that borrower goes to a private lender, he would pay $3,155 a month. That's $228 more a month, or $82,080 more over 30 years.
Some buyers (and lenders) may try to get around that by piggy-backing loans; piling a smaller non-conforming loan onto a conforming loan.
Here are some other areas, most often searched on Realtor.com, that could see significant changes in their loan limits, according to the Move analysis.
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FHFA lacks staff to effectively monitor GSEs, report says
The Federal Housing Finance Agency lacks the staff to properly monitor the mortgage giants it has in conservatorship, according to a report by the Office of the Inspector General.
The report said the agency also failed to provide adequate oversight over default services legal issues.
The Office of the Inspector General for the federal regulator said the FHFA "has far too few examiners" to properly handle its examination system to monitor Fannie Mae,Freddie Mac and the Federal Home Loan Banks
The inspector general report also "identified shortfalls in the agency's examination coverage, particularly in the areas of real estate owned and default-related legal services," which it blames on the staffing shortages.
In another report, the inspector general said the FHFA over the past five years "repeatedly found Fannie Mae had not established an acceptable and effective operational risk management program despite outstanding requirements to do so." The auditor said the regulator hasn't exercised its power as conservator to force the company to do as much, and recommends the FHFA compel Fannie to establish stronger controls.
"Fannie Mae’s lack of an acceptable and effective operational risk management program may have resulted in missed opportunities to strengthen the oversight of law firms it contracts with to process foreclosures," according to the auditor's report.
"Given Fannie Mae’s history of noncompliance, (the Office of the Inspector General) believes that the agency must exercise maximum diligence and take forceful action to ensure that Fannie Mae meets the agency’s expectations in this regard. Otherwise, FHFA’s safety and soundness examination program, as well as its delegated approach to conservatorship management, may be adversely affected."
Fannie Mae declined comment.
Edward DeMarco, acting director of the FHFA, has said the agency is having trouble hiring experienced examiners because many don't want to move to Washington and there's the perception the government-sponsored enterprises will ultimately go away.
The FHFA has 120 examiners and plans to hire another 26, but "has expressed concern that its current hiring initiative will neither enable it to overcome its examination capacity shortfalls nor ensure the effectiveness of its 2011 reorganization," according to the inspector general report.
The agency wanted all the new examiners on board by the end of September, but now expects to have them all working by the end of the year.
The agency wants to assign 20 to 25 examiners to each examination team, yet is only staffing them with 13. The FHFA indicated only 34% of the 120 nonexecutive examiners are accredited federal financial examiners, and there is no accreditation program currently in place.
The federal auditor recommends the FHFA further study its staffing problems, implement an examiner accreditation program and use contractors to mitigate the shortage.
"Moreover, FHFA has not reported upon its examination capacity shortfalls in a systematic manner," according to the report. "Given FHFA's critical responsibilities, it is essential that it keeps Congress, the executive branch and the public fully and currently informed about its examination capacity."
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Global surveyors want greener appraisals
The issue of whether or not a property is more environmentally friendly when compared to neighboring homes is not currently taken into great account during the appraisal process.
It's a practice that should end, according to a recent white paper from the Royal Institute of Chartered Surveyors.
RICS is suggesting that, in cases when homes contain sustainability features such as solar panels or tankless water heaters, it should favorably impact the appraisal.
"A property’s sustainable status can cover a range of social, environmental and economic matters that can potentially lead to changes in demand and therefore affect value," said Ben Elder, RICS global director of valuation.
While RICS is most recognized in the United Kingdom, the independent land valuation association maintains a network of 100,000 qualified members and more than 50,000 students and trainees in 140 countries, including the United States.
Sustainability features can also include a home’s energy efficiency rating and green materials used in construction, but RICS says the concept needs to go even further.
For example, if the home is close to public transportation, it lowers the carbon footprint of residents. This should also make the property more valuable, the white paper states.
"When calculating a property’s worth, the market doesn’t always take the issue of sustainability into account, but this could also have been said for central heating way back in the 1970s when people weren’t convinced it was going to have a market impact," said Elder, who is expecting some industry headwinds.
"With the increased emphasis on green living and energy efficiency, it is highly possible that the market will need to adapt," he added.
Homes built in the aftermath of the U.S. financial crisis should be more efficient in their use of space and energy to address a renewed emphasis on cost-consciousness among homebuyers, New York-based residential developer Mitchell Hochberg, principal at Madden Real Estate Ventures, told HousingWire in an interview appearing in the September issue.
Homebuyers are willing to pay more to get green features because they realize the operating costs of the home long term are far more important than the potential additional costs associated with buying a green home, he said.
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Dodd-Frank Act a Favorite Target for Republicans Laying Blame
On the stump, words like “Obamacare” roll off the tongue. “Swap execution facility,” not so much.
That has not stopped Republican presidential candidates from using the Dodd-Frank Act, the sprawling regulatory effort to address the causes of the financial crisis, as their newest anti-Obama target for what ails the economy.
Republicans have repeatedly invoked the law’s 848-page girth — and its rules on, among other things, trading derivatives and swaps — as a symbol of government overreach that is killing jobs.
But in trying to turn Dodd-Frank into the new Obamacare, the disparaging term that opponents use to refer to the new health care law, Republicans are largely ignoring the basic trade-off that the financial law represents, supporters say.
“Dodd-Frank is adding safety margins to the banking system,” said Douglas J. Elliott, an economic studies fellow at the Brookings Institution. “That may mean somewhat fewer jobs in normal years, in exchange for the benefit of avoiding something like what we just went through in the financial crisis, which was an immense job killer.”
So far, only a small portion of the law, which was signed by the president in July 2010, has taken hold. Of the up to 400 regulations called for in the act, only about a quarter have even been written, much less approved.
Dodd-Frank aims to rein in abusive lending practices and high-risk bets on complex derivative securities that nearly drove the banking system off a cliff. It creates a bureau to protect consumers from financial fraud, cuts the fees banks charge for debit card use, and sets up a means for the government to better supervise the nation’s largest financial institutions to avoid expensive and catastrophic failures. And it calls for swap execution facilities, or exchanges on which derivatives and other complex financial instruments are traded.
Republicans say Dodd-Frank is the root of some of today’s economic problems. It has stopped banks from lending to “job creators,” they contend, and is a direct cause of high unemployment. “It created such uncertainty that the bankers, instead of making loans, pulled back,” said Mitt Romney, the former Massachusetts governor, speaking at a South Carolina rally over Labor Day weekend where he again called for the law’s repeal.
“I think part of that flows from the fact that the people who were putting that together, Dodd and Frank,” he continued, referring to Democratic lawmakers former Senator Christopher J. Dodd of Connecticut and Representative Barney Frank of Massachusetts, “as much as anyone I know in this country were responsible for the meltdown that we had.”
Mr. Frank demurs. “Their claims are literally based on nothing but misconception,” he said. “The legislation is very popular. Nobody wants to go back to totally unregulated derivatives. Nobody wants banks to go back to making loans without having to retain some of them. This is a debate that is being conducted for the right wing.”
Rick Perry, the governor of Texas, has also called for the repeal of Dodd-Frank. “We have to end it right now,” he said, on the same weekend in the same state as Mr. Romney. Newt Gingrich said it is “a devastatingly bad bill” that is “killing small banks, killing small business, killing the housing industry.” Representative Michele Bachmann regularly reminds voters that she introduced the first Dodd-Frank repeal bill this year.
Former Gov. Jon Huntsman of Utah agrees, but he wouldn’t stop there. He would also eliminate the Sarbanes-Oxley law passed in 2002, which set standards for corporate accountability in the wake of the Enron scandal.
The candidates could find that there are some political dangers to their deregulation strategy, as Republicans in Congress learned last year during the debate over the legislation. Then, opponents of measures to address the causes of the financial crisis found themselves rather easily painted as defenders of Wall Street financiers and the banking industry, rather than being on the side of borrowers and consumers. Mr. Obama has signaled recently that in the 2012 campaign he plans to portray Republicans as defending corporations and the wealthy.
These political risks probably account for the Republicans’ current effort to portray Dodd-Frank as an enemy of jobs rather than as a burden to banks. Most of the regulations included in the law fall on the big banks that were at the center of the financial crisis — Bank of America, Citigroup, Wells Fargo and JPMorgan Chase.
Those names rarely pass the candidates’ lips, however, as Republicans have turned Dodd-Frank into a piñata. Instead, they invoke community bankers — the small-town lenders who are more likely to be seen coaching a Little League team than wearing a pinstripe suit — as the beleaguered victims of overregulation.
Community bankers worry about Dodd-Frank rules setting limits on how much banks can charge for debit card transactions. Those rules have yet to go into effect. In the meantime, the bankers say, they have plenty of money to lend, but small-business owners are not asking for loans.
“There are a lot of qualified borrowers who don’t want to borrow, because they are not sure what is going to happen with the economy,” said R. Todd Price, president of the First State Bank of Mesquite, Tex. “I don’t know if that can be directly associated with Dodd-Frank,” he added. While the law “will put a whole lot more regulations especially on community bankers,” he said, “I think they’re yet to come.”
The arguments of the Republican candidates have some support among economists, particularly conservatives. Todd J. Zywicki, a senior scholar at the Mercatus Center at George Mason University, says that credit is the lifeblood of the economy, and that Dodd-Frank was designed to decrease access to credit. “Dodd-Frank is the thing that is most harming the economy right now,” he said. “Big business can deal with regulatory uncertainty, but it makes small businesses reluctant to take on risk and expand their operations.”
Unless Republicans capture the presidency and can also muster 60 votes in the Senate, it appears unlikely that Dodd-Frank will be repealed in full. Senate and House Republicans introduced such bills, but they have never been brought up for floor votes.
But there has also been relatively little resistance from Democrats in defense of Dodd-Frank. Federal agencies have been busy writing regulations to put the law into effect, but those efforts have not generated the widespread public debate that occurred when the legislation was debated in Congress. Without someone on the Democratic side actively fighting on its behalf, Dodd-Frank, for the moment at least, has been left without a champion.
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G.O.P. Urges No Further Fed Stimulus
Even though the financial markets have been counting on the Federal Reserve to take action, Republican Congressional leadership sent a letter to the Federal Reserve chairman on Tuesday evening urging it not to engage in further stimulus.
The letter was sent in the midst of a two-day meeting in which Fed officials are widely expected to undertake policies to lower long-term interest rates. That move would be intended to loosen up credit in hopes of promoting growth. The meeting ends Wednesday, and the Fed is expected to release a statement Wednesday at 2:15 p.m.
“We have serious concerns that further intervention by the Federal Reserve could exacerbate current problems or further harm the U.S. economy,” said the letter, signed by four of the top Republicans in Congress: Mitch McConnell of Kentucky, the Senate Republican leader; Jon Kyl of Arizona, the Senate Republican whip; House Speaker John Boehner of Ohio and House Majority Leader Eric Cantor of Virginia.
The Fed’s chairman, Ben S. Bernanke, has not said further stimulus was in the works, but economists and analysts have repeatedly asserted that they believe the central bank will announce more easing.
“I just don’t think the Fed will sit idly as momentum fizzles in this recovery,” said Dana Saporta, a United States economist at Credit Suisse.
Minutes from the Fed’s latest meeting revealed sharp dissent within the group of policy makers, so further stimulus is not necessarily a sure bet.
As the Republican letter notes, economists are divided on how much the move would help the stalled recovery. The Fed, after all, has tried several rounds of monetary stimulus in the last four years.
Republican Congressional leaders expressed not only skepticism that further easing would improve the recovery, but also concerns that such actions might be damaging.
“Such steps may erode the already weakened U.S. dollar or promote more borrowing by overleveraged consumers,” the letter from Republicans said.
Many economists, however, are unconvinced by these risks and argue that a weakened dollar would be good for the country because it would make American exports more attractive.
With unemployment at 9.1 percent and Congress unable to agree on fiscal policies that might encourage job creation, many advisers have been calling on the Fed to continue using whatever ammunition it has left.
The Federal Reserve is an independent body whose decisions do not have to be ratified by the president or Congress, and efforts to influence monetary policy are discouraged to maintain its credibility.
“Even if I agreed” with the Republican letter, Tony Fratto, a former adviser to President George W. Bush, wrote in a Twitter post, “I’d still disagree with the effort to put public political pressure on Bernanke.”
Over the years, there have been many efforts by members of both parties, from both the White House and Congress, to influence Fed policies, according to Allan H. Meltzer, a political economy historian at Carnegie Mellon.
Less than a year ago Michele Bachmann, a Minnesota congresswoman who is running as a Republican presidential candidate, sent a letter to Mr. Bernanke urging him to refrain from the last round of stimulus, which the Fed ultimately decided to do.
In recent months other Republican presidential candidates have stepped up their attacks on Fed policy, with Rick Perry, the governor of Texas, calling further easing “treasonous.”
Fed critics have said they are merely trying to counter pressure from Democrats for the Fed to do more.
“This is the most politicized Fed we’ve ever had,” Mr. Meltzer said. “They’ve been doing the Treasury’s work for quite some time, buying things like Treasuries and bonds. It’s no surprise that there’s political pressure coming from the other direction.”
The Federal Reserve was meant to be independent so that it would be shielded from short-term political interests, and Fed officials have repeatedly said they are unmoved by external political pressures. A Fed spokeswoman acknowledged receiving the letter on Tuesday evening but she declined to comment further.
Appearing to cave to political interests — on the left or the right — could compromise the Fed’s authority and jolt markets even more than a popular or unpopular policy decision.
If anything, Federal Reserve members seem to be trying show their ability to exert their own influence. Traditionally, Fed officials have refrained from commenting on fiscal policy except in the vaguest of terms, but in an August speech Mr. Bernanke called on Congress to avoid steep spending cuts in the near future. He also gave specific recommendations for fiscal measures to promote long-term growth.
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Fed Runs Risk of Doing Less Than Investors Expect
Investors have concluded that the Federal Reserve will announce new measures to promote economic growth after a meeting of its policy-making committee ends Wednesday. Long-term interest rates have moved as if the Fed had already spoken.
The central bank is often described as facing the choice of whether to do more to improve the economy. But the anticipatory behavior of investors means the Fed really faces a slightly different choice, one it has confronted often in recent years: whether to risk doing less than expected.
The overriding argument for action is the persistent weakness of the American economy, which has left more than 25 million Americans unable to find full-time work.
The Federal Reserve chairman, Ben S. Bernanke, who has made a series of unusual efforts to revive growth, has not discouraged speculation that he is ready to try again.
“I think the Fed has no choice but to act,” said Krishna Memani, director of fixed income at Oppenheimer Funds. “If the Fed were not to do anything having built market expectations to a pretty decent level, I think the markets would react quite negatively to that.”
But the Fed also faces mounting pressure against additional action, including strident criticism from Republican presidential candidates and divisions in the policy-making committee. Moreover, the options available to the central bank have less power to generate growth, a greater chance of negative consequences, or both, than those it has already tried.
Some close watchers of the central bank say investors’ behavior could let the Fed offer a token gesture now, postponing any larger move at least until its next meeting in November. After all, the Fed is reaping the benefits of action without the costs.
“There is no reason for the Fed to rush,” Lou Crandall, chief economist at Wrightson/ICAP, wrote in a recent note to clients predicting such an outcome. “It is in the Fed’s interest to milk the anticipation effect as long as possible.”
The move markets are anticipating is a new effort to reduce long-term interest rates, which would allow businesses and consumers to borrow more cheaply. Yields on the benchmark 10-year Treasury note fell to a record low of 1.88 percent at the start of last week, reflecting the Fed’s earlier efforts to lower rates and investors’ pessimism about the economy.
The hope is that an additional reduction in rates will provide a little more encouragement for companies to build factories and hire workers and for consumers to buy cars and dishwashers.
The Fed has held short-term rates near zero since December 2008, by increasing the supply of money.
To further reduce long-term rates, the Fed bought more than $2 trillion in government debt and mortgage-backed securities, reducing the supply available to investors and thereby forcing them to pay higher prices — that is, to accept lower interest rates.
The Fed could seek to amplify that effect by adjusting the composition of its portfolio, selling short-term securities and using the proceeds to buy long-term securities, which it predicts would further reduce rates.
An analysis by the forecasting firm Macroeconomic Advisers estimated that such an effort by the Fed could raise gross domestic product by 0.4 of a percentage point over the next two years, and create about 350,000 jobs. That is comparable to estimates of the impact of the central bank’s most recent aid campaign, the QE2, or quantitative easing, purchases of $600 billion in Treasury securities, which concluded in June.
Mr. Bernanke announced in August that the Federal Open Market Committee, the policy-making board, would meet for two days, extending its scheduled one-day meeting this week to include both Tuesday and Wednesday, to consider that and other options.
The Fed could take smaller steps, like promising to maintain current efforts longer. It may also consider options that could deliver a more powerful jolt to the economy, like increasing the size of its investment portfolio again. But more aggressive measures have little internal support.
The Fed, Mr. Bernanke said, is “prepared to employ these tools as appropriate to promote a stronger economic recovery in a context of price stability.”
He still commands a solid majority of his 10-member board despite the emergence of the largest bloc of internal dissent in two decades. Three members voted against the decision last month to declare an intention to hold short-term interest rates near zero for at least two more years, replacing a stated intention to maintain the policy for an “extended period.”
The central bank has also become a target of conservative politicians, with several Republican presidential candidates denouncing its efforts to increase growth. But even Mr. Bernanke’s internal critics dismiss these attacks.
“I don’t spend a lot of time worrying about what any one candidate says about us,” Richard W. Fisher, president of the Federal Reserve Bank of Dallas, told Fox Business Network in a recent interview. “The issue is to get it right.”
Of greater concern is the possibility that the Fed is nearing the limits of its powers. Interest rates are already depressed and, like a board mounted on a spring, pushing down gets harder as the floor gets closer.
Studies also have found the Fed’s success in reducing rates has not yielded the full measure of predicted benefits. Mortgages and small business loans may be cheap, but because lenders remain cautious, they are not easy to get.
The research firm Capital Economics said recently any renewed effort by the central bank would be unlikely to overcome those obstacles.
“We don’t expect it to have any dramatic impact on the wider economy because many households will still not qualify for loans at those lower rates,” it said.
The Fed also would face an increased risk of losing money on its investments.
And only so many Treasuries are available for sale. If the Fed sold all of its securities maturing in the next four years and bought only securities maturing in more than 17 years, maximizing its impact, it would end up with 70 percent of the available long-term inventory. That could interfere with the normal operations of insurance companies and other traditional buyers.
Laurence H. Meyer, a former Federal Reserve governor who now leads Macroeconomic Advisers, said he expected the Fed to conclude that the potential benefits outweighed these issues, but that it needed more time to hammer out details.
“We expect them to come out of the committee meeting feeling that they’ve decided and have a consensus to move in November,” he said.
Mr. Meyer suggested that the Fed could mollify the markets by announcing what amounts to a preview, by investing the proceeds of maturing securities — about $20 billion each month — in longer-term debt.
Such a move might not do much to move the economic needle, because the amounts involved would be minute by the standards of monetary policy, but it could be enough to preserve the valuable conviction that the Fed will do more soon.
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Fannie and Freddie Could Raise Fees in 2012
Analysts believe that the government may need to charge higher fees to lenders and increase mortgage insurance from borrowers in order to guarantee loans when they go ahead and overhaul Fannie Mae and Freddie Mac – a move that could lead to increased borrowing costs.
The government is trying to boost competitiveness within mortgage markets, and at the same time reduce their expenses over the next ten years by $28 billion.
Currently, government-sponsored enterprises (GSEs) purchase mortgages before packaging them into securities which are sold on to investors. As part of the transaction, GSEs ask for a “guarantee fee”, and this is set to be increased next year.
Such an increase, says the Wall Street Journal, would result in borrowers seeing a modest increase in their monthly repayments. If guarantee fees are increased by just 0.1%, as has been proposed by the government, a $220,000 mortgage’s monthly payments would rise by about 15%.
In order to reduce the risk to taxpayers, Fannie Mae and Freddie Mac would likely ask borrowers to take out additional mortgage insurance, as GSEs have been federally-owned since 2008.
However, any changes would have to be introduced gradually, says Edward DeMarco of the Federal Housing Finance Agency, in order to avoid causing any more harm to fragile housing markets.
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Tuesday, September 13, 2011
Bank regulators to unveil "living will" plan
U.S. regulators are set to vote next week on a final rule governing the plans large banks must draft on how they can be liquidated if they are heading toward failure.
The 2010 Dodd-Frank financial oversight law requires these "living wills," which are part of the government's new power to seize and break up large, failing firms.
The Federal Deposit Insurance Corp announced plans on Thursday for its board to vote on the final rule on Tuesday. It is drafting the rule with the Federal Reserve.
Regulators have to approve the plans once banks submit them. They can force changes to the structure of banks or other large financial companies if they believe the institution could not easily be liquidated once in trouble.
Former FDIC Chairman Sheila Bair, who left her post in July, had stressed the need for regulators to force banks to simplify their operations, such as by creating more subsidiaries, if the plans could not be easily executed.
The rule applies to banks with more than $50 billion in assets and to other large financial companies whose sudden failure could roil financial markets.
Proponents of this new power to seize and liquidate firms argue it will curb taxpayer bailouts and limit the sort of market turmoil caused by the 2008 bankruptcy of Lehman Brothers.
But analysts and market participants have expressed skepticism, saying the government would not let a large bank fail out of fear it would wreak havoc on the economy.
The banking industry raised some concerns about the earlier proposed version of the living will rule, which was released in April.
Banks such as Wells Fargo have said regulators need to do more to ensure that the plans remain confidential and not subject to disclosure through lawsuits or Freedom of Information Act requests.
Banking groups have also asked regulators to start off with a pilot program rather than subject all eligible institutions to the requirement right away.
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Monday, September 12, 2011
11 credit report myths
Most people have heard about the alligators in New York's sewers and the little kid with cancer who wants a zillion postcards. Unfortunately, those aren't the only myths floating around out there.
A lot of the things that people "know" about credit reports and credit scores have about as much validity as those monstrous Manhattan alligators.
Credit report myths
- Paying my debts will make my credit report instantly pristine
- Credit counseling always destroys my credit score
- Canceling credit cards boosts my score
- Too many inquiries hurt my score
- Checking my own credit report harms my standing
- FICO scores are locked in for six months
- I don't need to check my credit report if I pay my bills on time
- All credit reports are the same
- A divorce decree automatically severs joint accounts
- Bad news comes off in seven years
- I can always pay someone to fix or repair my credit
1. Paying my debts will make my credit report instantly pristine
A credit report is a history of your payments, not just a snapshot of where you are at the moment, says Maxine Sweet, vice president of public education for Experian, one of the three major credit reporting agencies. As the author of the popular Web column "Ask Max," she reminds people that you can't change the past.2. Credit counseling always destroys my credit score
Attending a credit counselor's debt management program is not considered negative in the scoring models."We don't want consumers to consider credit counseling to be detrimental to their FICO scores," says Craig Watts, public affairs manager at Fair Isaac Corp., the company that developed the FICO score.
However, if the credit counselor negotiates a lesser contractual obligation, the lender decides how it wants to report that. So if your $500 monthly payment is refigured for $300, the creditor may either legally report that as $200 in arrears every month or reward you for not filing bankruptcy by reporting the account as up to date.
"As long as the accounts are delinquent and not brought up to date, it will be viewed negatively by lenders," says Deborah McNaughton, owner of Professional Credit Counselors and author of "The Get Out of Debt Kit."
However, she says, "If everything is current, whether it's a home loan or not, they're not going to view it as negative. The FICO scores are not affected by it."
The credit score system ignores any reference to credit counseling that may be in your file.
Although credit counseling does not by itself influence your credit score, it is apparent on the report that you've been through, or are currently in, counseling -- and that is something individual lenders may not like. Or they might never know.
"If they looked manually at your credit report and saw that debts were being repaid through a debt management program, they probably wouldn't open a new account for you," Sweet says. Of course, "you shouldn't be opening a new account if you're in a debt management plan."
However, most lenders these days will never see your actual report.
"They don't look at reports manually anymore," Sweet says. "Some small creditors might, but most of any size use automated scoring systems of one model or another."
Once you've successfully emerged from credit counseling with your formerly tattered credit pieced back together, the history of consistent payments is what matters the most. "Even mortgage lenders will work with consumers who have successfully gone through debt management counseling and will work to get them a mortgage," McNaughton says.
3. Canceling credit cards boosts my score
Open accounts spell available, potential debt, so better to close them, runs the legend. But experts agree that most creditors want to see at least two or three pieces of active credit to prove you can manage debt responsibly.And, Watts chimes in, those unused cards lying in your jewelry box aren't wreaking havoc with your score.
"The myth is that they look ominous to potential lenders," he says. "Reality is that paying your bills on time and not being overextended is more important than having $5,000 worth of available credit on a card you're not using. We continue to evaluate this 'total credit limits' statistic, and we simply don't find it falling into one of those highly predictive areas."
On the other hand, extremes never look good. Opening one charge account occasionally to take advantage of a 10 percent offer is negligible. Going wild and signing up for five during the holiday season probably would invite a decreased score, he says.
4. Too many inquiries hurt my score
Once upon a time, this statement was true. But get with the times -- in this millennium, the credit agencies recognize a shopping mind-set when they see one. If a batch of mortgage or car loan inquiries arrives within 30 days, it doesn't count at all, Watts says."Outside that 30-day period, if we locate a mortgage or car inquiry that occurred 180 days ago, and then see more mortgage- or auto-related hits in the accompanying 14-day window, we err on the consumer's side and still assume she's shopping for one item," he says.
"We really feel like we are capturing the true consumer experience and not holding it against them for being an aggressive or smart rate shopper."
Furthermore, there's no such thing as some fixed number of points associated with these inquiries, Watts says.
"Inevitably, when a consumer or a lender evaluates a credit file, they think this item must be worth 20 points, this is worth 100 points," he says. "In reality, we design the FICO scoring model so that each credit report item is given a reasonable or statistically valid number of points."
In English, that means credit scores are designed to predict the likelihood that you'll fall seriously behind in repaying one of your creditors within the next two years. Some things have predictive value and some don't. Inquiries fall in the middle.
"They're not incredibly predictive, so they're in the model but they don't drive the boat," Watts says.
5. Checking my own credit report harms my standing
The reporting agencies distinguish between soft and hard pulls. When Target calls to check before issuing its line of credit, the agencies chalk that up as a hard pull and it counts against your score. Personal requests and credit counselors -- if they do it correctly (insist on this as part of your agreement terms) -- fall under soft pulls, which do not reflect negatively on the evaluation.
Using a company that promises credit reports as a perk can turn this myth into a self-fulfilling prophecy, however, McNaughton says.
Because they are merchants in disguise, their freebie costs you. Citizens must go directly to the three bureaus if they want a soft pull. Ditto FICO.
"Pulling your credit scores is quite empowering," says Watts. "You have a choice: You can either be very aggressive with your credit management and pull your score with some regularity or take a more passive approach once a year to see how all those credit cards are actually doing."
6. Credit scores are locked in for six months
Fair Isaac Corp.'s models are dynamic, meaning that your FICO score changes as soon as data on your credit report change."When we calculate a score, for all intents and purposes it then goes away and is recalculated the next time someone pulls your file," says Watts.
7. I don't need to check my credit report if I pay my bills on time
When the Consumer Federation of America and the National Credit Reporting Association analyzed credit scores in the summer of 2002, they discovered that 78 percent of the files were missing a revolving account in good standing, while 33 percent of files lacked a mortgage account that had never been late. Twenty-nine percent contained conflicting information on how many times the consumer had been 60 days late on payments."There can be a lot of other activity going on that you don't have any clue about," McNaughton says.
In her experience, 80 percent of all credit reports have erroneous information ranging from a wrong birth date to accounts you never applied for.
8. All credit reports are the same
Way wrong. These days, most creditors across the country do report their information to all three major agencies: Equifax, Experian and TransUnion.But "that was not true in the past," Sweet says.
And, because they are separate companies, the speed in which they update records isn't necessarily equal.
Additionally, the agencies use inquiry activity to update your address, phone numbers, employment status and the like. Because creditors typically pull only one company's report, it's possible that, say, TransUnion doesn't show your current address.
McNaughton says she's never seen a client yet for whom all three reports spit out the same records and scores.
9. A divorce decree automatically severs joint accounts
The judge may have rubber-stamped your plans to divide credit card, car and house payments, but that carries absolutely no legal weight with the creditors themselves, Sweet says."We see so many people who, a year or two after the divorce, are just outraged and hurt because their credit report reflects their ex-spouse's missed payments," she says.
Unfortunately, at that point, they are helpless to erase the damage.
Divorcing parties must contact the creditors and either close current accounts or have the booted name sign a letter of consent for this action. And assuming certain debts isn't a unilateral decision on your part, says Sweet. Creditors typically do a credit check on your name and if they don't deem you financially stable enough to assume that $30,000 car loan, for instance, they won't agree to remove the other person.
10. Bad news comes off in seven years
Some of it does. Chapter 13 (reorganization of debt) disappears seven years from the filing date. But if you filed Chapter 7 bankruptcy (exoneration of all debt), the window is 10 years from the filing date.On the good-news side, accounts in bankruptcy can be deleted seven years after the date of your first missed payment, so those individual pieces may disappear before the word "bankruptcy" on your report. And if you pay off or close an account that had no delinquencies or problems, it, too, remains on the record for 10 years rather than the previous seven, say Experian experts. Again, this means positive information hangs around longer, which benefits consumers.
11. I can always pay someone to fix or repair my credit
Yes, you can clear up erroneous information posted to your account, such as a repossessed car that you didn't purchase in the first place. But if you paid your Sears bill three months late in 2004, that's a hard fact.Companies claiming to fix your credit deliver on their promises by generating a flood of dispute letters to the credit reporting agencies, which in turn ask the creditor to verify or document the entry. If they cannot, the listing must come off at that time. But if the creditor later does verify or document it, the agency slaps it right back into the file after 30 days.
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20 Ways to Add Curb Appeal
If your home's curb appeal makes a great first impression, everyone -- including potential homebuyers -- will want to see what's inside. Check out these simple, low-cost improvements that you can do in a day, a week, or a month.
In a Day
Create perfect symmetry
Symmetry is not only pleasing to the eye, it's also the simplest to arrange. Symmetrical compositions of light fixtures and front-door accents create welcoming entryways. This door is flanked by two sidelights. The black lantern-style sconces not only safely guide visitors to the door, but also coordinate with the black door and urns.
Replace old hardware
House numbers, the entry door lockset, a wall-mounted mailbox, and an overhead light fixture are all elements that can add style and interest to your home's exterior. If they're out of date or dingy, your home may not be conveying the aesthetic you think it is. These elements add the most appeal when they function collectively, rather than as mix-and-match pieces. Oiled-bronze finishes suit traditional homes, while brushed nickel suits more contemporary ones.
Dress up the front door
Your home's front entry is the focal point of its curb appeal. Make a statement by giving your front door a blast of color with paint or by installing a custom wood door. Clean off any dirty spots around the knob, and use metal polish on the door fixtures. Your entry should also reflect the home's interior, so choose a swag or a wreath that reflects your personal style.
Do a mailbox makeover
Mailboxes should complement the home and express the homeowner's personality. When choosing a hanging drop box, pick a box that mirrors your home's trimmings. Dress up posted boxes by staining or painting the wooden post to match the house's trim and woodwork. Create structures for your box from materials found throughout the hardscaping. Warning: Consult a professional when designing and building structures.
Install outdoor lighting
Low-voltage landscape lighting makes a huge impact on your home's curb appeal while also providing safety and security. Fixtures can add accent lighting to trees or the house or can illuminate a walking path. If you aren't able to use lights that require wiring, install solar fixtures (but understand that their light levels are not as bright or as reliable).
Create an instant garden
Container gardens add a welcoming feel and colorful appeal to any home exterior -- quickly and affordably. You can buy ready-made containers from garden centers or create your own with your favorite plants. For most landscapes, a staggered, asymmetrical arrangement works best to create a dynamic setting.
Install window boxes
Window boxes offer a fast, easy way to bring color and charm to your home exterior. Choose boxes made from copper or iron for a traditional look, or painted wood for a cottage feel. Mix and match flowers and plants to suit your lighting conditions and color scheme.
In A Weekend
Make a grand entry
Even with a small budget, there are ways to draw attention to your front door. Molding acts like an architectural eyeliner when applied to the sides and top of the doorway. Notice how the white door casing makes this door pop.
Add outdoor art
Give your yard a little spunk by adding weather-resistant artwork. Choose pieces that complement your home's natural palette and exterior elements. Birdbaths, metal cutouts, sculptures, and wind chimes are good choices for outdoor art. Water sculptures not only function as yard art, but the burbling sounds soothe and make hot days feel cooler. Place fountains on level ground in optimum hearing and sight vantage points. Avoid spots in leaf-dropping range.
Add shutters or accent trim
Shutters and trim add a welcoming layer of beauty to your home's exterior. Shutters also control light and ventilation, and provide additional security. Exterior shutters can be made of wood, aluminum, vinyl, composite, or fiberglass. New composite materials, such as PVC resins or polyurethane, make trim details durable and low maintenance.
Add arbors or fence panels
Arbors, garden gates, and short sections of decorative fence panels will enhance your garden and the value of your home. These amenities can be found in easy-to-build kits or prefab sections you simply connect together. For best results, paint or stain these items with colors already on your house.
Create a new planting bed
Add contrast and color to your home exterior with a new planting bed. Prime spots are at the front corners of the yard, along driveways or walkways, and immediately in front of the house. When creating a new bed, choose features that will frame your home rather than obscure it. Opt for stone or precast-concrete blocks to edge the bed. Include a mix of plant size, color, and texture for optimal results.
Replace gutters and downspouts
If your home has an older gutter system, odds are it's also suffering from peeling paint, rust spots, or other problems that can convey a sense of neglect. Replace old systems with newer, snap-fit vinyl gutter systems that go together with few tools and require no painting. Copper systems, while pricier, convey an unmistakable look of quality.
In A Month
Tile your doorstep
Create a permanent welcome mat by tiling or painting a design that contrasts with the porch floor or front stoop. Not only will you not have to worry about replacing the mat when it gets ratty, but you can impress your visitors with your creativity.
Dress up the driveway
If your driveway is cracked or stained or has vegetation sprouting from it, you can upgrade it without doing a complete redo. First repair the cracks and stains (and kill the weeds), then dress it up by staining the concrete or affixing flagstones. If you need more room to move your car or park, add stone, brick, or pavers to the sides of the drive to widen it with flair.
Build a walkway
Well-designed walkways make your home feel warm and inviting. For a dramatic improvement to a straight concrete path, replace it with a contoured one made of stone or brick. For a less radical upgrade, apply a colored concrete resurfacer to the old walkway, then edge with brick or stone borders. Brick pavers offer traditional, classic beauty to the landscape of any home.
Upgrade railings
Porch and stoop railings can deteriorate quickly if not treated properly. If your railings are past their prime, look for quality wood or metal components to replace the existing material. As with other improvements attached directly to the house, make sure the color, scale, design, details, and material are compatible with the home's main features.
Renew paint, siding, and trim
An exterior facelift (new paint, siding, or trim details) automatically transforms the look of a home. Periodic maintenance of that exterior surface is the surest way to keep your house looking its best. Any obvious defects, such as cracked or rotting material, can downgrade the aesthetic and quickly turn away potential homebuyers. Once defects are repaired, look for ways to add personality with color, trim, or shingles.
Apply stone veneer
Nothing carries pedigree and permanence like stone. It's a great option for dressing up exterior features such as concrete foundations, column footings, and other masonry details. Natural and manufactured stone can be costly options for large expanses, but both are affordable and well suited for use as accent material..
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Wednesday, September 7, 2011
Fannie, Freddie refi market set to enter housing Twilight Zone
U.S. residential mortgage lending volume will struggle to reach the mid-$800 billion range in 2012, according to market research, as the recent boom in refinancings dries up at Fannie Mae and Freddie Mac.
Furthermore, the report from iEmergent, paints a picture of a housing market floating in its own Twilight Zone — a reality where "the distribution and location of local lending opportunities will continue to re-shape and reset the long-term home financing prospects and projections for most U.S. communities."
This year, roughly 838,400 Fannie and Freddie loans received a refinancing, according to data released by the Federal Housing Finance Agency.
In 2012, this market share is likely to dry up, according to the forecasting and advisory firm (click chart below).
Even more unfortunate, the other side of the mortgage origination — new home sales, is unable to fill the gap in business.
"Home affordability indicators have never been better, yet total buyer demand shows no signs of life," the iEmergent report states.
The reason for this forecast, according to the analysis, is that housing is in its own dimension of economic recession.
The nation's economy may be recovering, but in terms of housing, lack of jobs, lower income and continued high levels of negative equity, America's property ladder is missing more than a few rungs.
"The middle-class buyers on whom future home buying demand depends will continue to struggle to re-build their cash reserves, pay down their debts, and grope their way out of the shadows," the report states. "Their recovery will be very slow."
But there is a silver lining to the forecast that Fannie Mae, Freddie Mac will see higher purchases, yet very low refinance volume in 2012 (click chart below).
In the total originations market, outside of the government sponsored enterprises, iEmergent projections indicate purchase home loan volume might actually rise 0.3%. However, through 2012, mortgage originations as a whole will see less business.
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Another Fannie servicing portfolio up for sale
MountainView Servicing Group will help sell a $485 million servicing portfolio of Fannie Mae mortgages.
Nearly all of the loans in the portfolio are fixed rate and primarily located in Illinois. The average delinquency rate on the portfolio is 2.21%. Interest rates average 4.67%, and the average FICO score is 761. The portfolio also carries an average 30-basis-point servicing fee.
A spokesman for MountainView said the portfolio is being sold by a private mortgage bank but did not specify which one. Bids will be taken until Sept. 7.
So far in 2011, MountainView has helped sell more than $800 million in Fannie Mae servicing portfolios. In April, the firm began marketing a $262 million portfolio. It also sold a $110 million portfolio in January.
It is also marketing a $45 million portfolio of Ginnie Mae servicing rights. All of these loans are fixed rate with more than 78% of the mortgages located in California. The seller of these loans will be taking bids through Sept. 7 as well.
MountainView is a financial services firm specializing in asset management and valuation, among other services. It is also a subsidiary of MountainView Capital Holdings, a financial advisory firm to banks, thrifts and credit unions.
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Big banks could tighten lending following FHFA lawsuit: FBR Capital
The decision of the Federal Housing Finance Agency to sue major banks under representation and warranties clauses prompted Paul Miller with FBR Capital Markets to criticize the plan, saying it will likely further drain capital from the banking system.
Miller's criticism is pointed mostly to the unintended negative impact the lawsuit may have on the average American. As banks tighten purse strings further, for whatever reason, future qualified borrowers continue to stay on the sidelines.
Miller's analysis arrives days after FHFA announced it would sue 17 banks – including Bank of America (BAC: 7.40 +5.87%), Citigroup, (C: 28.78 +3.90%), Goldman Sachs (GS: 107.33 +2.65%) and JPMorgan Chase (JPM: 34.59 +3.44%) among others – for selling toxic mortgages that became part of the securitization process that eventually led to the housing market meltdown.
Miller wrote: "Because there is no centralized housing policy coming out of Washington, housing agencies (Fannie Mae, Freddie Mac, and Federal Housing Authority) are acting in their own self interest as opposed to that of the broader U.S. economy. For Fannie Mae and Freddie Mac, this means minimizing losses by digging through their loan books and pushing back loans barely delinquent on their mortgages under reps and warrants clauses."
Miller said suing banks for securitization issues would further pressure the housing markets, delaying a recovery and draining capital from the banking system, keeping many borrowers out of the market.
In his report, Miller claims "we believe the banks have developed overly cautious residential lending standards as a result of concerns over reps and warrants claims, even as they struggle to grow revenues."
His report estimates repurchase losses could reach as high as $121 billion, with 60% of those losses being incurred by the nation's top four banks – Bank of America, JPMorgan Chase, Wells Fargo and Citibank. That is up from previous estimates which said the industry would see $54 billion to $106 billion in losses, with the nation's top four banks facing 40% of those losses.
Keefe, Bruyette & Woods estimated that a remedy to the claims could cost the defendants as much as $60 billion, but added it's likely a settlement will be reached between mortgage originators and the FHFA for a smaller amount.
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US Economy Is Basically 'Still In Recession': Fed's Evans
-CNBC
The U.S. economic outlook has "clearly" deteriorated this year, and the continued softness of economic indicators shows that the headwinds facing the country are even stronger than thought, Chicago Federal Reserve President Charles Evans said on Wednesday.
"Conditions still aren't much different from an economy still in recession ," Evans, speaking at a seminar in London said.
He said the Fed faced significant challenges in overcoming the obstacles left behind by the financial crisis.
Evans, a voting member on the Federal Open Market Committee , said he believed central banks should focus on medium- rather than short-term inflation as many short-term effects such as fluctuations in food and energy prices were beyond policy makers' reach.
Given how "truly badly" the U.S. was doing on the jobs front, the Fed should consider more aggressive action, he said.
He did not explicitly call for more quantitative easing or bond purchases but called for "strong action."
"I argue that the Fed should seriously consider actions that would add very significant amounts of policy accommodation," he said. "Such further policy accommodation does increase the risk that inflation could rise temporarily about our long-term goal of 2 percent," he said.
The Fed Open Market Committee said in August that it would continue to keep its benchmark interest rate low for at least through mid 2013, acknowledging that the recovery it had hoped for had so far failed to take shape.
The Fed ended a $600 billion Treasury bond-buying program at the end of June.
Temporary inflation above 2 percent is not something we should "regard with horror," he said.
Evans said it was "painfully obvious" that large quantities of unused resources were an enormous loss to the U.S. economy, referring to the 14 million Americans unemployed today.
Some argue there are limits to what further accommodative measures can do, he said, adding: "I'm personally much more optimistic and don't want to subscribe to that pessimistic view."
"Monetary policy should be used more aggressively to try to increase aggregate demand," Evans said.
He added he fully supported the policies implemented by the Fed, but added that more needed to be done.
"We should not be afraid of such temporarily higher inflation results today...These are not usual times," Evans said.
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10 Major Architectural Failures
-CNBC
People make mistakes, and sometimes those mistakes happen on the job. Usually, the incident is corrected and the whole thing is forgotten within minutes. However, the workplace mistake is harder to ignore when the person who makes it is an architect. After all, when the teenager working the drive-thru window gives you a Quarter Pounder instead of a Big Mac, it causes a lot less trauma than when a 3,000-foot-long suspension bridge collapses into the Puget Sound.
In "The Yale Book of Quotations," the legendary American architect Frank Lloyd Wright is quoted as saying, “The physician can bury his mistakes, but the architect can only advise his client to plant vines.” While this statement from 1954 is still true today, it doesn’t take into account the architectural, design, and engineering errors that became possible in the decades after his death. Those mistakes have been bigger, costlier, and more spectacular than Wright could have imagined, and there are not enough vines in the world to hide them.
What are some of the more notable architectural failures in modern history? Click ahead to find out.
Aon Center
The Aon Center is the third-tallest building in Chicago. It was completed in 1973 and was originally named the Standard Oil Building. When it was completed, the building was a visual wonder to behold, thanks to the decision to sheath the entire structure in Italian Carrara marble. The building looked great, but its fetching exterior came at a very high price. Carrara marble is much thinner than building materials normally used to clad buildings, and in 1974 one of the slabs detached from the building and crashed into the roof of the neighboring Prudential Center. An investigation revealed the completely unsuitable marble was cracking and bowing all over the exterior. Ultimately, the building was refaced with granite at a cost of more than $80 million .
Playground at Pier One, Brooklyn Bridge Park
Most parents who take their children to the playground know the drill. Before putting their kids into a swing, they touch it first to make sure the seat, which has been sitting in the sun all day, isn’t too hot. However, the designers of the playground at Pier One in New York’s Brooklyn Bridge Park managed to overlook this principle when they designed three play structures for children to climb on, and built them out of steel. The domed structures regularly became too hot to touch, much less climb. Geoffrey Croft, president of New York City Park Advocates, measured their temperature at more than 127 degrees, and parent Roula Fokas observed, “You can fry an egg on them ." In July 2010,The New York Post reported the domes would be replaced with new equipment which, presumably, could be touched by anyone, at any time of year.
John Hancock Tower
The John Hancock Tower is a 60-story skyscraper in Boston that was designed by the I.M. Pei & Partners architectural firm and unveiled in 1976. Its striking, minimalist appearance won it accolades from the architectural community, but it was famously plagued with problems. One major issue the building encountered concerned its windows: They were falling out and crashing to the pavement hundreds of feet below. In the 1992 book "Why Buildings Fall Down," authors Matthys Levy and Mario Salvadori explained that this was due to unanticipated, repeated thermal stresses to the panels. Ultimately, all 10,000 windows would be replaced at a cost of $5 million. The John Hancock Tower encountered one other major problem. Skyscrapers are meant to sway in order to absorb strong gusts of wind, though the sway is normally not felt by the building’s residents. The John Hancock Tower, however, swayed so dramatically that it gave the occupants of its upper floors motion sickness. The problem was finally solved by Cambridge engineer William LeMessurier .
Vdara Hotel & Spa
When researching hotels for an upcoming trip, many potential guests hope to find certain amenities, such as a mini-bar, a gym, or close proximity to sightseeing. However, the Vdara Hotel & Spa in Las Vegas offers a unique accoutrement that neither its guests nor its architect anticipated—a death ray.
The hotel opened in December 2009 and featured a unique, curved structure. However, its design collected solar rays and beamed them to the hotel swimming pool area. Guests sunning themselves nearby were regularly singed, such as Bill Pintas, who claimed that the hotel’s impromptu death ray had burned his hair and melted the plastic bag he had with him .
Tacoma Narrows Bridge
The Tacoma Narrows Bridge was a suspension bridge that connected the port city of Tacoma, Wash., with the Kitsap Peninsula. It was the third-longest suspension bridge in the world when it opened to the public on July 1, 1940, but it closed four months later after a spectacular collapse.
The cause of the collapse was inadequate girders that were used to keep construction costs low. They failed to keep the bridge deck in place, allowing it to sway violently whenever a strong enough wind blew. This situation was already noticeable to construction workers, who nicknamed it “Galloping Gertie.” The name stuck when the general public crossed the bridge and noticed its similarity to a bucking bronco. It finally collapsed on Nov. 7, 1940, under the stress of a 40 mile-per-hour wind.
Lotus Riverside
The Lotus Riverside is a residential apartment complex in Shanghai consisting of eleven 13-story buildings. On the morning of June 27, 2009, one of them toppled over, just barely missing an adjacent building. Had it not missed, it might have caused one toppled building to topple into the next, creating a horrifying domino effect that, thankfully, did not come to pass. The cause of the collapse was attributed to excavation that was in progress to create an underground garage . The earth removed from beneath the building was dumped into a landfill near a creek, and its weight caused the river bank to collapse. Water from the creek then seeped into the ground, turning the building’s foundation into mud.
Ray and Maria Stata Center
The Ray and Maria Stata Center at the Massachusetts Institute of Technology (MIT) was designed by award-winning architect Frank Gehry. It opened in 2004 and houses the Computer Science and Artificial Intelligence Laboratory, the Department of Linguistics and Philosophy, and the Laboratory for Information and Decision Systems. It was hailed for its logic-defying angles and walls that challenged the laws of physics. Three years after it opened, MIT filed a negligence suit against Gehry, claiming design flaws in the $300 million building had caused major structural problems. Drainage issues had caused cracks in the walls. Icicle daggers hung pendulously from the roof like deadly sash weights. Mold grew on the building’s brick exterior. The school paid more than $1.5 million for repairs. A spokesman for the construction company, Skanska USA Building, claimed the company had tried to warn Gehry of problems with the design on numerous occasions, and had made repeated requests to use more suitable material. "We were told to proceed with the original design," the spokesman said . "It was difficult to make the original design work."
W.E.B. Du Bois Library
The University of Massachusetts Amherst is home to three distinguished libraries, which include the Music Reserve Lab and the Science and Engineering Library. However, the best known is the W.E.B. Du Bois Library, a 26-story structure that is the tallest library in the U.S .
Within two months of its opening, the building began shedding brick chips, a phenomenon known as spalling. There are various urban legends that persist about its causes, the most popular of which is that the architect who designed the building failed to take into account the weight of the books to be housed inside it. While no official cause of the spalling was given, 60,000 books had to be moved out of the building. It was later discovered the building was sinking into the pond-saturated ground on which it was built. However, YouMass, a helpful guide to life on the UMass Amherst campus, says this claim is overblown and describes the degree to which the building is sinking as “ not so much .”
Kemper Arena
Kemper Arena is an indoor stadium in Kansas City, Mo., that opened in 1974. It had been the site of the 1976 Republican National Convention and it won raves for its unique design. Rather than employ view-obstructing columns, the roof was suspended from trusses on its exterior. On June 4, 1979, the roof collapsed when a heavy storm battered the city. Fortunately, it wasn’t being used at the time, so there were no injuries or fatalities, but it was a shock to the city nonetheless. The roof had been designed to release rainwater slowly, in order to avoid flooding the nearby West Bottoms area. This caused rainwater to collect on top and pool anywhere the roof sagged, creating excess weight. Worse yet, the roof was suspended from hangers, and the strength of their bolts had been miscalculated. Once a single bolt gave way, many of the neighboring ones followed suit, ultimately leading to the roof’s collapse.
CNA Center
The CNA Center is a high-rise building in Chicago that opened in 1972. The 44-story building was designed by the firm of Graham, Anderson, Probst & White. It’s painted bright red, making it impossible not to notice. In 1999, a large piece of a window came loose from the 29th floor of the building and plunged to the ground, causing one fatality. The culprit was thermal expansion , and after an $18 million settlement every one of the building’s windows was replaced. Each window is still checked on a monthly basis to this day.
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