Archive for April, 2009

Rates on 30-year mortgages tie record low (AP)

Thursday, April 30th, 2009 | Finance News

WASHINGTON – Rates on 30-year mortgages tied a record low this week, spurring refinancing activity as the troubled housing market moves closer to possibly hitting the bottom, Freddie Mac said Thursday.

Average rates on 30-year fixed mortgages, the most popular loan among home buyers, slid to 4.78 percent from 4.8 percent last week, Freddie Mac said. Last year at this time, the average rate on a 30-year mortgage was 6.06 percent.

The all-time low of 4.78 percent was recorded the week of April 2. Freddie Mac's annual survey dates back to 1971.

Low mortgage rates have led to more refinancing activity since rates first fell dramatically in the winter. Rates slid again after the Federal Reserve said last month it would buy $1.2 trillion in mortgage-backed securities and $300 billion in long-term government debt, which traditionally influences rates on 30-year home loans.

Frank Nothaft, Freddie Mac's chief economist, said the low rate means that those who refinance a $200,000 loan would save almost $212 in monthly mortgage payments and more than $2,500 per year.

Borrowers who refinanced during this year's first quarter reduced their mortgage payments by about $2.5 billion over the coming year, and half of borrowers who refinanced lowered their annual interest rate by at least 20 percent, according to Freddie Mac's quarterly Refinance Report.

With inventories apparently dropping and affordability rising, there are some positive signs, Freddie Mac said.

"The housing market may be edging toward a bottom," Nothaft said.

Freddie Mac also said the average rate on a 15-year fixed-rate mortgage was 4.48 percent this week, unchanged for the third straight week.

Rates on five-year, adjustable-rate mortgages fell to 4.80 percent from 4.85 percent last week — the lowest since Freddie Mac began tracking it in January 2005.

Average rates on one-year, adjustable-rate mortgages fell to 4.77 percent from 4.82 percent last week.

The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for every type of mortgage mentioned in Freddie Mac's survey except for the five-year adjustable rate mortgage, which averaged 0.6 point.

Freddie Mac collects mortgage rates from lenders around the country. Rates can fluctuate significantly.


SEC charges firm in New York kickback probe (Reuters)

Thursday, April 30th, 2009 | Finance News

U.S. securities regulators charged an investment firm and one of its executives in connection with a multimillion-dollar kickback scheme involving New York's largest pension fund, the Securities and Exchange Commission said on Thursday.

The SEC alleges that Dallas-based Aldus Equity Partners and one of its founding principals Saul Meyer participated in a kickback scheme in order to win investment business from the $122 billion New York State Common Retirement Fund.

The SEC and New York Attorney General Andrew Cuomo have launched a joint probe, and Cuomo's office said Meyer had surrendered to his investigators in New York City.

The so-called pay to play scheme has already ensnared Henry "Hank" Morris, the former state comptroller's top fund raiser, and David Loglisci, the pension fund's former top investment officer, who are charged with orchestrating the scheme to enrich Morris and other political allies and associates.

According to the SEC's complaint, Meyer caused Aldus to pay a shell company owned by Morris about $320,000 in fraudulent finder fees in exchange for which Loglisci caused the pension fund to invest $375 million with Aldus from 2004 to 2006.

A lawyer for Aldus Equity had no comment. Meyer's lawyer did not immediately return calls seeking comment.

The SEC and Cuomo also have charged Raymond Harding, the former leader of New York's Liberal Party. Hedge fund manager Barrett Wissman has pleaded guilty to a felony and agreed to forfeit $12 million and serve as a witness.

(Reporting by Joan Gralla in New York and Rachelle Younglai in Washington, D.C., editing by Gerald E. McCormick)


OfficeMax 1Q profit falls but beats expectations (AP)

Thursday, April 30th, 2009 | Finance News

NAPERVILLE, Ill. – Office-supply retailer OfficeMax Inc. said Thursday that profit fell 79 percent as weak demand from consumers and small businesses persisted. But cost-cutting efforts helped the retailer post results that sharply beat analyst expectations.

That sent shares climbing as much as 24 percent to a four-month high.

Still, OfficeMax said it expects 2009 sales to decline from year-ago levels.

Profit for the quarter that ended March 28 fell to $13.1 million, or 17 cents per share. That's down from $62.4 million, or 81 cents per share last year. Excluding costs related to closing stores and a tax benefit, profit totaled 23 cents per share.

Analysts polled by Thomson Reuters, on average, predicted a profit of 16 cents per share. Analyst estimates typically exclude one-time items.

Revenue fell 17 percent to $1.91 billion from $2.3 billion last year. Analysts predicted revenue of $1.95 billion.

"We continued to make improvements to our business and to contain costs," Chief Executive Sam Duncan said in a statement.

Contract sales fell 22 percent to $927.6 million, due to weaker sales from existing corporate accounts and tighter control on account acquisition. Retail sales fell 11 percent due to weaker small business and consumer spending.

The suburban Chicago-based retailer said April sales trends are worse than the first quarter, however, and OfficeMax expects sales to decline in 2009, due to the weak environment, from 2008 sales of $8.27 billion. Analysts expect sales of $7.37 billion.

OfficeMax has put in place a cost-cutting plan in an attempt to improve profitability amid slumping sales. Last year it suspended its quarterly cash dividend and cut jobs in an effort to trim $20 million in operating expenses from its budget.

OfficeMax shares rose $1.27, or 21.1 percent, to $7.28 in late-morning trading Thursday.


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