MidSouth Bank has raised about $5 million in a stock offering begun in March, a level that’s well beneath the $15 million maximum the Murfreesboro lender set, but in line with what its chief executive said his expectations were.
Lee Moss, chairman and CEO, said today is the last day the bank will receive payments for the public offering, which began with current shareholders then opened to the general public. He said the total will likely ring in at slightly more than $5 million, and that the bank had expected to raise between $5 million and $6 million.
“It will keep us well in excess of all the regulatory capital ratios for a well-capitalized bank,” Moss said.
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Faisal Shahzad lived on the downslope side of affluence in the small Connecticut hamlet of Shelton. On Monday, while Shahzad sits in a jail cell in downtown New York City, a judge is scheduled to foreclose on his home, clipping Shahzad’s last attachment to the American dream.
Like many other homeowners across the U.S., he used his house as a piggy bank. Shahzad, who is accused of trying to detonate a Nissan Pathfinder in the center of Times Square last week, took out a second mortgage on the home just months before he left the country for what prosecutors say was a stretch of bomb-making training in Waziristan, Pakistan.
That second mortgage gave him access to a $65,000 credit line, secured by the tidy three-bedroom suburban house he bought in July 2004 for $273,000. Though the frothy real estate market was flinging around cheap money, Shahzad put down the traditional 20%, financing a mortgage balance of $218,400 at a 4% interest rate.
The 30-year-old had a steady job as a financial analyst at Affinion in Norwalk, Conn. He was trading up from a condo he had recently sold. He seemed like a good risk.
And for years, he was. Sure, he repeatedly tried to sell the house, listing it for the boom-time price of $399,000 just one year after buying it — but who didn’t try to hit the real-estate jackpot? And while others were draining their homes of equity, Shahzad stayed away from extra mortgages and loans for the first few years he owned the house. He married Huma Mian, added her name to the deed in December 2007, and kept mailing off his mortgage checks each month.
So when he approached Wachovia Bank in January 2009 for a $65,000 loan secured by his home, no red flags were raised. They approved the money, and he suddenly had a line of credit. Wachovia, now Wells Fargo, did not return calls requesting comment.
Three months later, Shahzad would become a U.S. citizen. Four months later he would leave his job. Five months later he would stop paying his mortgage and leave for Dubai and, eventually, Pakistan.
The house sat empty after he left. In September 2009, Chase (JPM, Fortune 500) initiated foreclosure proceedings, saying Shahzad owed them $200,673.49. Chase, and its local attorney, declined to comment on the case instant payday loan no telecheck.
Connecticut state marshal Mark Pesiri served the papers on the abandoned home, in accordance with Connecticut procedures.
"I don’t get too many up there," Pesiri said.
It’s true. There’s hardly a For Sale sign or foreclosure notice to be seen along the three-mile stretch of Long Hill Avenue that Shahzad lived on. His 7-year-old, grey-sided house is the noticeable exception. There’s a lockbox on the front door at #119, where the lawn is erratically mowed and trash has accumulated in front of the garage door.
Two days after the foreclosure papers were delivered, Chase hired appraiser Scott Iadarola to inspect the property. He valued it at $245,000, putting Shahzad $20,673.49 under water — meaning Shahzad owed the banks that much more than his property was worth.
Shahzad — listed as Faisal "Zhahzad" in the legal filings — never responded to any of these notices and or court actions. He was in Pakistan, where he has told investigators he was studying bomb making. When he returned in February 2010, without his wife or children, he didn’t make up his missing mortgage payments, or try to execute a short sale, or even return the keys. Instead, he rented an apartment 13 miles away in Bridgeport, Conn.
Two months later, he would allegedly drive a Nissan Pathfinder loaded down with fertilizer, propane tanks, gas cans, fireworks, clocks and wiring, and leave it smoking on a street in Times Square.
Meanwhile, the interest meter on his Shelton home kept ticking. And, as many American homeowners now understand far too well, home prices kept falling. When Shahzad house was reappraised on March 15, 2010, Iadarola declared the property to be worth just $240,000 — 12% less than Shahzad paid for it six years ago.
And so on Monday, when Shahzad’s case is scheduled to appear before a judge in Connecticut Superior Court, he will be just one more of the millions of American homeowners who hasn’t paid his mortgage in more than a year and is sitting on a debt — in this case, $37,870.38 — that outstrips the value of the home buried beneath it.
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The University of Houston and the Dublin Institute of Technology in Ireland have signed a five-year memorandum of understanding to explore new methods of cooperation in research, instruction and academic exchange in a variety of areas with a focus on energy.
The university said it has been in talks with DIT for the past two years.
As part of the MOU, the two schools will examine opportunities for credit transfer, faculty collaboration and joint funding.
DIT has about 20,000 students and provides technology education to the doctoral level.
A Phoenix restaurant is making waves with its menu in Manhattan. St. Francis, 111 E. Camelback Road, was among a handful of new restaurants nationwide to garner the attention of the James Beard Foundation.
The national nonprofit annually nominates chefs, restaurants and entrepreneurs across a variety of categories as part of its efforts to support and promote the culinary arts around the country. St. Francis was selected among a group of 31 restaurants nationwide as a “Best New Restaurant” nominee for an annual James Beard Award. It was the only restaurant in the state to be nominated in that category, but among a number of Valley properties to be recognized by the organization.
Although the restaurant didn’t make a second round of cuts in the competition — nor did any other Arizona eatery — St. Francis chef and owner Aaron Chamberlin said he’s thrilled that his restaurant has received the accolade.
“It’s really the Oscar award for the restaurant industry. We feel very lucky to be recognized, and it reassures us that we are doing the right thing,” Chamberlin said.
Chamberlin opened the restaurant in partnership with his brother, David, a principal Chamberlin Associates, a property development company, last fall.
After buying the former office of a well-known Valley architect, investing almost $1 million in renovations and creating an indoor-outdoor facility with an authentic wood-fired oven, the pair set out to serve the central Phoenix area. Despite the economy, the restaurant has managed to create a buzz and develop a following all while keeping its neighborhood feel near Brophy College Preparatory and St. Francis Xavier Catholic Church, restaurant’s namesake.
“We are front and center on Camelback and when you drive by you see us. That helps, but it’s important that we deliver and serve our customers every day,” Chamberlin said.
The restaurant specializes in a range of food and spirits, from an on-tap beer and a sandwich to a glass of red or white wine and dinner entrees including wood-fired pork chops, pot roast and roasted salmon salad. The restaurant also recently added a business lunch, with three courses of the chef’s choice, for $18 with a 30-minute in and out guarantee.
Chamberlin said that since the James Beard nomination was announced in February, it’s been hard to gauge how much business has been driven by the attention pay day loan lenders.
But Chamberlin, whose led food operations at establishments including La Grande Orange, Chelsea’s Kitchen in Phoenix and the Ritz Carlton in San Francisco, said it’s important not to be swayed by glitz and glitter.
“My business can win all kinds of awards, but if it’s not making money, I am not in business anymore,” he said.
In addition to St. Francis, a number of other restaurants and culinary personalities initially were selected by the James Beard Foundation, but none were tapped to continue on in the competition.
They include: Kevin Binkley of Binkley’s Restaurant in Cave Creek, Beau MacMillan of elements at Sanctuary Camelback Mountain Resort and Spa in Paradise Valley, and Silvano Salcido Esparza of Phoenix’s Barrio Cafe for Southwest’s Best Chef; Vincent’s on Camelback, Outstanding Restaurant; Tarbell’s, Outstanding Wine Service; Janos Wilder of Tucson’s Janos, Outstanding Chef category; Sam Fox, president and CEO of Scottsdale-based Fox Restaurant Concepts, Outstanding Restaurateur.
Steve Chucri, president and CEO of the Arizona Restaurant Association, said it’s a tribute to the state’s food culture that so many businesses have garnered attention from New York.
“This is really something that we are especially proud of in the food industry here and to have this kind of critical success given the economy,” Chucri said.
“Restaurants are a very competitive group, but we are also family when it comes to seeing each of us succeed,” Chucri said.
Arizona’s reputation continues to grow. Two Valley chefs have been invited to create meals at the prestigious organization for a hand-picked roster of guests.
On July 7, chef-owner Gregory LaPrad of Quiessence Restaurant at The Farm at South Mountain, will take his interpretation of modern American cooking to New York.
Peter Deruvo, chef at Sassi Restaurant, has been invited to cook at The James Beard House on July 21.
A list of final nominees can be viewed at: www.jamesbeard.org/awards under the “2010 Award Nominees.” Arizona’s nominations during the competition’s first-round can be viewed at “2010 JBF Restaurant and Chef Award Semifinalists.”
Fixing millions of gas pedals and brakes and convincing customers their vehicles are safe could end up being the least of Toyota’s challenges. Some experts think the price tag from legal settlements could end up topping the company’s estimate of $2 billion in recall costs.
There are already more than 30 U.S. lawsuits filed against Toyota involving the problems with its gas pedals alone, according to Craig Hutson, senior investment grade analyst at Gimme Credit, a bond research service firm. And there are more lawsuits are in the works.
"Lawyers are champing at the bit to get at these guys, and the company has come out and largely admitted mistakes in respect to these issues," said Hutson. "It’s hard to put a dollar amount on it, but multi-billion dollar costs are not out of the realm of possibility."
Hutson isn’t alone in worrying about how much lawsuits could hurt Toyota. Credit rating agency Moody’s cited the litigation risks when it warned Tuesday that it might downgrade Toyota’s credit ratings.
The company also faces at least one class action suit involving problems with the brakes on 2010 models of the Prius and other hybrid vehicles. Toyota announced a recall for those hybrids Tuesday.
New reports of problems with the steering of its Corolla could mean more lawsuits against Toyota.
Safety experts estimate official complaints involving Toyota gas pedals show there have been 19 fatalities involving the recalled vehicles.
But Gary Robb, an attorney in Kansas City who is looking at filing cases, says he believes that number will increase significantly as people look more deeply into accidents for which no cause was ever determined.
"We’ve had so many calls from so many people now that this news has come out," he said. "Accidents that were heretofore attributed to driver error are very likely due to a malfunction of the gas pedal. There’s going to be dozens of those incidents arising."
Cases involving death or serious injury will likely be handled in individual lawsuits.
Suing to reclaim lost value. Robb said he’s also looking at a class action case to try to recover billions of dollars he claims were lost in the resale value of the recalled vehicles. He said his experts estimate total losses could be in the $6 billion to $8 billion range paydayloans. "For many people their car is their second largest investment," he said.
Other experts suggest that the loss in resale value is not as high as Robb’s figure, but that it is still likely in the billions.
Kelley Blue Book, a leading used-car value service, is lowering its estimated prices for the recalled models this Friday by 2.5% to 3.5%. That’s enough to lower the value of each vehicle by between $250 and $800.
The National Highway Transportation Safety Administration estimates that more than 6 million U.S. vehicles are affected by the recall. So based on Kelley Blue Book’s estimates, the overall loss in resale value is likely to be at least $2 billion.
Toyota wouldn’t comment on its legal exposure from the recalls. As to the reduction in resale value by Kelley Blue Book it said, "Historically Toyota and Lexus vehicles have held their value very well relative to other vehicles. We expect that to be true in the future as well."
It’s not clear whether courts will allow plaintiffs to collect that much money. James Henderson, a law professor at Cornell University, said legal precedent is against them.
But Henderson does think the recall opens Toyota for a rash of new personal injury cases. He added that if it is determined that Toyota knew of problems with the gas pedals and did not warn a driver involved in an accident, the company could be hit with punitive damages.
Hutson said beyond the cost of any jury verdicts or settlements, the lawsuits have the potential of causing continued damage to Toyota’s reputation, keeping the problems and company’s failures in the news. That could cost the company additional sales going forward.
He said if any documents come out which prove Toyota engineers knew something needed to be fixed, it will be difficult for Toyota to ever regain consumers’ trust.
"When your image is one that has been largely built on quality and dependability, you can’t afford that kind of smoking gun," Hutson said.
The St. Louis Council of Construction Consumers gave a Best Practice Award for the renovation of the historic Woolworth Building in midtown St. Louis.
The $8 million renovation project was completed last year. Involved in the project were McCormack Baron Salazar, S.M. Wilson, Trivers Associates, Christner, Fox Architects, Big Brothers Big Sisters, Craft Alliance and Grand Center.
In addition, the council gave the following Best Practice Awards for:
— Design effectiveness for the Ameren Training Center in St. Louis. Recipients were AmerenUE, Burns & McDonnell, and Kozeny-Wagner.
— Pre-project planning for BJC St. Peters Hospital. BJC, BJC St. Peters, Pratt Design, Tarlton, Murphy, Sachs, KJWW, and LEAN Project Consulting payday loans for people with bad credit.
— Partnering for the SSM St. Clare Health Center at Fenton. SSM, Alberici, and HGA.
The council also presented the Construction Industry Safety Excellence Award to Nooter Construction.
Finally, the council presented the following Diversity awards:
— Organization of the Year to Metropolitan Sewer District.
— Minority/Woman Business to BAM Contracting.
— Diversity Champions. Deborah Henry of St. Louis Community College, and Scott Wilson of S.M. Wilson.
A blizzard paralyzed the region Saturday, putting a serious dent in a weekend that was supposed to be filled with holiday events and lots of shopping.
The storm started dumping snow quickly after 10 p.m. Friday, just as the last of the last-minute shoppers left supermarkets, malls and shopping centers across the region.
Ritchie Highway in Glen Burnie was nearly impenetrable as shoppers rushed in to the many shopping centers along the road to buy what they needed for a weekend stuck in the house. The usual toilet paper, bread and milk shared space in the car with Christmas tree and greens bought at the highway’s many tree lots.
By Saturday morning, most people were staying off the road and the cancellations kept pouring in. So far, the Baltimore Symphony Orchestra’s Holiday Spectacular, a musical review known for its dancing Santas, was still on. The BSO’s Web site said it wasn’t making a decision until 11 a.m. on whether to cancel Saturday’s shows personal loan for poor credit. The Ravens didn’t wait long to make a change, announcing Friday the football game had been moved from 1 p.m. to 4 p.m.
But many retailers weren't about to change their plans despite the storm. This is the busiest weekend of the year for the Sound Garden in Fells Point. The music store was open early Saturday and already had customers milling about its aisles before 10 a.m.
Manager Alex Ashkenes send customers an e-mail telling them the parking lots was plowed and Thames Street was clear. He encouraged shoppers to support local independent businesses.
Reached by phone, Ashkenes was optimistic about the day. He would remain open as long as the weather didn't get too treacherous.
"There are people walking about in Fells Point," he said. "I expect the other stores to open."
Option-ARMs: File under, "It sounded good at the time."
These exotic mortgages allowed homebuyers to come to closing with little cash and choose, monthly, how much to pay: interest and principal, interest only, or a minimum amount less than the interest due.
Of course, the last option is the one 93% of option-ARM buyers selected, according to a new report released this week by Standard & Poors.
But eventually, everyone has to pay the piper.
Nearly all of the 350,000 option-ARM borrowers owe more than when they first bought their homes thanks to the unpaid interest accumulating. And many loans written during the first big wave, which started in 2004, are getting ready for their five-year reset, when they become standard amortizing loans. Additionally, some newer loans will reset early if the accumulated interest has pushed the loan-to-value ratio above 110% to 125%.
That means borrowers are about to start paying very hefty prices for their homes. In one scenario outlined in the S&P report, the payment on a $400,000 mortgage jumps from $1,287 to $2,593.
25% default rate
But that doesn’t just spell bad news for borrowers. Some industry pessimists say the looming default problem could have the power to derail the nascent housing market recovery. "The crux of the matter is that as soon as these mortgages recast, the history is that they will default," said Brian Grow, one of the S&P report’s coauthors.
And the newer the loans, the worse they will perform, the report said. The last year that any option-ARMs were issued was 2007. In the first 20 months after issuance, this vintage of option-ARMs had an average default rate of just over 22%.
That includes all option-ARMs issued in 2007. But if you calculate default rates for only 2007 option-ARM borrowers who are now underwater, the default rate jumps to 25% after just 20 months, according to S&P.
So, while there may not be an awful lot of these loans out there, their high default rates will have an outsized influence on housing markets, adding to already bloated foreclosure inventories and driving prices down further.
Bubble markets
And the markets where they’ll produce the most foreclosures are still among the most vulnerable in the nation.
Option ARMs were most popular in bubble markets — California, Nevada, Florida and Arizona — where double digit home annual price increases put the cost of buying a home out of reach.
In fact, 60% of these loans went to residents of California and other Western states, places where prices have fallen the most, according to report coauthor Diane Westerback. "The geography is negative for these products," she said.
Many borrowers in these places could only afford a home if they chose the option ARM. Many counted on continued hot market conditions to add value to their homes. The extra equity could then be tapped to pay their bills.
We all know how that worked out.
Home prices in many of the markets where option ARMs are most concentrated have fallen 30%, 40% or more. When the loans recast, most borrowers will find themselves severely underwater.
"Because borrowers of [options ARMs] are in a much worse position," said Westerback. "You’ll see defaults rising very rapidly."
And most option ARM borrowers will not be good candidates for refinancing or mortgage modifications because their loan-to-value ratios will be far too high. Under the administration’s Making Home Affordable program, for example, mortgages with balances that exceed 125% of the home’s value are not eligible for help.
Not so white lies
There is another little problem that many option-ARM borrowers seeking refinancing would face: "Upwards of 80% of were stated-income loans," said Westerback.
These are the so-called "liar loans" in which lenders did not verify that borrowers earned as much money as they said they did. Lenders may not be able to modify mortgages because many of the borrowers’ income could not stand up to the scrutiny. Borrowers may also not want to go through underwriting again because they could be held legally liable for deliberate inaccuracies on their original applications.
Add to those conditions the still fragile economy and high unemployment rates, and you have a recipe for disaster.
Beth Daniels had a big problem.
Orders were coming in for her "Around the Table" conversation games, so she ordered a lot of inventory. Then she and her husband, Tom Daniels, looked at each other. "How are we going to come up with the money for this?" she asked. "We were in crisis mode for sure."
Daniels found the answer in the Missouri Small Business Loan program, run by the state Department of Economic Development.
Daniels, of Eureka, invented a series of games consisting of questions printed on cards. They are designed to get conversations started, with questions such as "What’s the funniest hair style ever?" Or "What’s the one thing you can’t live without?" There are varieties for families, grandparents, teens, camps and buddies.
Daniels, an occupational therapist turned work-at-home entrepreneur, just landed a contract with Cracker Barrel restaurants, and she expects sales of over $100,000 this year. But she has to pay to produce the games before she can sell them.
The Missouri Small Business Loan program provides loans of $2,500 to $25,000 to companies with five or fewer employees. The state allocated $2 million for the program this year, and less than half of it has been lent.
Daniels got a $25,000 loan at 3 percent interest. Problem solved.
More information on the loan program can be found at http://ded.mo.gov.
Ford Motor Co said on Thursday it will increase production over the rest of the year after a surge in sales triggered by the U.S. government’s “Cash for Clunkers” sales incentive program.
Ford has emerged as one of the clear winners from the $3 billion sales program, which offers rebates of up to $4,500 for consumers who trade in older and less fuel-efficient vehicles.
But like other automakers, Ford was caught off guard by the incentive-fueled jump in sales that began in late July and raised the prospect that the battered industry had hit bottom.
In response, Ford said on Thursday it will build another 6,000 Focus sedans in the current quarter by adding overtime and a Saturday shift at an assembly plant in Wayne, Michigan.
And a second plant in Kansas City, Missouri, will drop plans to shut down for two days later this month and increase output of the Escape small SUV by another 3,500 vehicles.
The moves take Ford’s third-quarter output in North America to 495,000 vehicles, up 18 percent over a year earlier.
The No. 2 U.S. automaker also set a fourth-quarter production target of 570,000 vehicles. That would represent a 33 percent annual gain.
“I think we were surprised by the speed and the urgency with which consumers went to dealers,” said Ford sales analyst George Pipas quick cash.
The output gains will translate into higher revenue for Ford, the only U.S. automaker to have avoided bankruptcy. Shares were up 2.2 percent to $7.87 in afternoon trading.
Ford posted a sales increase for July, its first since late 2007, and the automaker has been gaining U.S. market share.
In a sign of its momentum, Ford has also taken 16 percent of the deals made under the Cash for Clunkers program, compared with a retail market share of 13 percent this year to date.
“Ford and some Asian brands have been the biggest beneficiaries of the vehicle trade-in program,” Standard & Poor’s equity analyst Efraim Levy said in a note for clients.
FORCED TO MOVE EARLY
Ford had previously planned to detail production plans in early September but said it had been forced to act earlier because sales remained strong in early August.
Other major automakers have also raised production. General Motors Co GM.UL said it will spell out stepped-up production plans for the rest of 2009 by the end of August.
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