Posted by Moishe Alexander
Benchmark bank-to-bank
dollar funding costs set another record low on Wednesday while
sterling rates edged lower on the firm view that central banks
will keep extraordinary fiscal stimulus measures in place well
into 2010. London interbank offered rates for three-month dollars fell
to the lowest level ever at 0.26906 percent USD3MFSR= while
equivalent sterling rates edged down to 0.61250 percent
GBP3MFSR= from 0.61406 percent. Three-month euro Libor nudged up to 0.67500 percent
EUR3MFSR= versus 0.67375 percent, according to the latest
fixings by the British Bankers’ Association. For more Libor
fixings see [ID:nLI69219]. In the United States, three-month borrowing rates
USNYFR3M for U.S. banks fell to a record low of 0.2789
percent, down from 0.2885 percent on Tuesday, according to
ICAP’s New York Funding Rate. ICAP’s one-month NYFR USD1MFSR
eased to 0.2367 percent, not far off the record low of 0.2338
percent reached on Oct. 19 and down from 0.2385 percent on
Tuesday. Sterling Libor fell as minutes from the Bank of England’s
last policy meeting showed a three-way split with seven of the
BoE Monetary Policy Committee’s nine members voting to expand
the bank’s quantitative easing program by 25 billion pounds to
200 billion pounds. BoE policy makers also discussed the merits of cutting the
remuneration rate the BoE pays on commercial bank reserves in
the future, which could serve to ease policy as it would
encourage banks to lend more. “A reduction in this rate would bear down on short-term
market rates, perhaps shaving a few basis points off borrowing
costs,” said Stephen Lewis, chief economist at Monument
Securities in London. “Probably wisely, members decided that any easing in
monetary conditions achieved by this means would be on a scale
unlikely to make much difference to demand in the economy.
However, the MPC agreed to keep the remuneration rate under
review,” he said.
Moishe Alexander Lending Blog
GMAC was formerly the finance arm of carmaker General Motors
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Losses at finance group GMAC have risen by more than a half after bad debts increased at its mortgage business.
The company reported a loss of $3.9bn (£2.3bn) between April and June, up 56% on the $2.5bn loss it made a year ago.
The loss included a $1.2bn charge related to the firm’s conversion from a partnership into a public company.
GMAC has received billions of dollars of government aid to combat mortgage losses and to provide funds for Americans to buy cars.
In December last year, the government stepped in with a $6bn bail-out.
In May this year, the US Treasury announced that it would provide a further $7.5bn in aid.
“The company lives and dies by its federal government support,” said Sean Egan at Egan-Jones Ratings.
Excluding one-off charges, GMAC said its quarterly loss was $400m.
In the first quarter of this year, the company made a loss of $675m.
It had returned to profit in the fourth quarter of 2008 after more than a year of losses. However, those results were largely thanks to a one-off gain from a debt swap which reduced its interest payments.
GMAC was formerly the finance arm of carmaker General Motors. However, in 2006 it became an independent finance company after GM sold a 51% stake in the business.
In May of this year, GM further reduced its stake in the company.
Moishe Alexander has been watching this situation closely and will be reveiwing it from time to time.
Mortgage fraud is running rampant across the U.S., posing potential financial damage or ruin to homeowners and even the local community. The FBI reports that the illegal activity can have a domino effect on the local housing market and the economy at large.
Here are some tips for recognizing and preventing mortgage fraud:
For sellers
* Get references for real estate and mortgage professionals — and check them. Make sure they’re licensed with the state, county or city.
* Be cautious about selling your property, especially if it’s not currently on the market.
* Read and understand everything you’re asked to sign, and talk to an attorney if you need something explained.
* Don’t sign any documents with information left blank.
* Do not agree to an amount above your asking price, especially if you are asked to refund the difference after the closing or if the extra money is to be used for repairs or improvements that you know are unnecessary.
* Be wary of offers to “save” you from foreclosure. You may pay thousands of dollars in fees without reducing or eliminating your debt and could even end up losing your home. Work with your lender instead, and insist on getting a complete set of the closing documents.
For buyers
* Be extremely wary of “no money down/cash back at closing” investment opportunities.
* Do your homework. Check the sales history of the property — several sales within a short period of time could indicate inflated values — and have your own real estate agent or appraiser establish the value.
* Check with your local tax assessment office or recorder of deeds to make sure the seller really owns the property.
* Do not let someone else use your name or Social Security number to buy a property, especially if they offer to pay you for using it.
* Read and understand everything you are asked to sign, and talk to an attorney you have chosen if you need something explained.
* Do not sign any documents with information left blank or that contain inaccurate information, such as overstated income, source of your down payment, incorrect sales price, nature or length of your employment, intent to occupy the property as your primary residence, etc.
* Deal directly with the lender or the mortgage broker. Do not let a third party arrange your loan.
* Insist on getting a complete set of the closing documents.