Monday Morning Cup of Coffee is a quick look at the news coming across the HousingWire weekend desk, with more coverage to come on bigger issues.
The arrests of two of the three most powerful men in state government on corruption charges, former Speaker Sheldon Silver of the Assembly and Dean Skelos, the State Senate leader, may be New York’s secret weapon to turning around the state’s giant affordability problem, according to an opinion piece in The New York Times.
The arrests allow the state’s third-most-powerful government official, Gov. Andrew Cuomo, to push through reforms of state laws and finally give the poor and those of modest means a better shot at being able to afford to live in New York City.
"The reforms involve the state’s rent-stabilization law and an obsolete tax break for developers. Both expire on June 15, and reforming them is an important goal of tenants’ advocates and of Mayor Bill de Blasio, who has made it his mission to preserve and expand the city’s endangered supply of affordable housing," the NYT piece said.
If properly executed, the government could finally help give some relief to more than 2 million New Yorkers in rent-regulated apartments.
What is normal anyway? That’s what a new report from Bank of America Merrill Lynch asked, citing that after surveying key economic and housing data versus long term historical averages, on almost every front, its sees subpar performance.
"Unlike two years ago, when double digit home price growth and negative real interest helped rationalize the tightening effects of taper talk, we see no such imperative for the Fed at this juncture.
"Consistent with the BofAML house view, which has a September rate hike expectation, with the risk that it is delayed, we see no imperative for the Fed to do anything but remain dovish for now. 'Normalization' can wait," the report said.
Currently, the report expects a return of what it views as a goldilocks scenario for securitized products, even if spreads are tight by post-crisis standards.
Also, levered carry trades are positioned to perform relatively well, and as a result, BofAML recommends remaining overweight the agency MBS basis, agency MBS derivatives and down in credit in securitized products credit.
At 2.11% on the 10yr, the agency MBS market seems well protected from both prepayment and extension risk.
The state of Virginia is planning to use the very controversial strategy of eminent domain to uproot homes of 35 families to improve Interstate 66, an article in the Washington Post said.
While the state has had transportation issues for some time, the state is growing, creating a greater need for a better road system. But the solution made by the state’s government is not being well received. Jeff Cox, president of the Dunn Loring Village Homeowners Association, Sonia Khurana, president of the Stenwood Homeowners Association and Ken Quincy, president of the Dunn Loring Woods Civic Association, had this to say in the piece:
But our communities have been in utter disbelief since learning that Transportation Secretary Aubrey Layne and the Virginia Department of Transportation plan to use eminent domain to uproot families in Dunn Loring and Merrifield. The scope of VDOT’s plans to take our homes through eminent domain is unprecedented.
The proposal includes the demolition of the homes of 35 families, the taking of land from another 200 parcels and the taking of play areas at Stenwood Elementary.
We believe there are ways to relieve congestion on I-66, but we reject the notion that the only or best way to do so is by using eminent domain and creating new toll lanes.
The correct and proper use of eminent domain is a debated topic across America. One of the most notable cases is in California. The city of Richmond has been debating the feasibility of using eminent domain for a while. Back in July 2014, the Richmond City Council rejected a resolution to terminate a contract with Mortgage Resolution Partners, the company that hatched a plan to seize underwater mortgages through eminent domain.
Not only is Wells Fargo (WFC) the biggest mortgage lender in the United State, but it also has another, more eccentric title. Wells Fargo owns the world’s loneliest bank, at least that's what an article in Mental Floss in calling it.
In 1998 at McMurdo Station, in Antarctica, Wells Fargo installed an automatic teller machine in order to help bring money to the country’s small and fluctuating population size.
"McMurdo’s population ranges from 250 to more than 1000. And like any small community, commerce is crucial. In order to patronize the coffee shops, general stores, bars, or post office, money is exchanged in what amounts to a closed economy. Some places only accept cash; others have a credit card minimum that’s hard to meet when you need just a couple of items."
McMurdo staff is trained to make simple repairs on the machine, and if needed, there’s a second ATM that can be cannibalized for parts.
"Naturally, we wondered what the consequences would be if someone lost their mind and had the financial resources to max out their daily withdrawal limit until they depleted the ATM of its cash reserves, ruining the economy of an entire continent."
One bank, Edgebrook Bank in Chicago, failed the week ending May 8, according to the Federal Deposit Insurance Corporation. The FDIC was named receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Republic Bank of Chicago, Oak Brook, Illinois, to assume all of the deposits of Edgebrook Bank.
