Mike's Minute...

House Passes the Bailout Bill

noreply@blogger.com (Mike) — Fri, 03 Oct 2008 18:35:00 +0000

Image via Wikipedia

As Richard would have said on the Family Feud,

Survey says...

263 to 171

So we'll now have a law.

My question to you is this? Will it help? Will it hurt? or are we just spinning our collective wheels?

Comments are great but I'd love to see you get in on the video conversation.

To do so, play the video, then hit the reply button. That'll fire up your webcam (yeah, you need a webcam)

Seesmic is free and your comment will show up right along side everyone else.

The Bail Out Bill

noreply@blogger.com (Mike) — Fri, 03 Oct 2008 18:11:00 +0000

The House has passed the economic bailout bill 263 to 171

Mobile post sent by mikemueller using Utterli. Replies.

It's not a good thing

noreply@blogger.com (Mike) — Wed, 01 Oct 2008 14:35:00 +0000

When the head of your trade organization is facing fraud and embezzlement charges.

But that's what I read in the SF Chronicle this AM.

John A. Courson, 66, ran Central Pacific Mortgage out of Folsom, a suburb east of Sacramento, before it collapsed in February 2007, The Sacramento Bee reported this week. In July, he was named chief operating officer for the Mortgage Bankers Association of America in Washington, D.C., and is set to become the association's president in January.

The Mortgage Bankers Association is a trade organization for the benefit of the industry.

The association represents 2,400 companies and 370,000 people from mortgage companies, brokers, banks, thrifts and insurance companies. According to federal filings reviewed by the Bee, the association spent $2.2 million and employed nine lobbyists in Washington during the first six months of the year.

It's a great time to invest

noreply@blogger.com (Mike) — Tue, 30 Sep 2008 19:10:00 +0000

With the DOW down yesterday it might actually be a great time to buy certain companies at a discount.

That aside, I just had to share this skit from Saturday Night Live -
Remember it's a Great Time to Invest!

What happens on Wall St.

noreply@blogger.com (Mike) — Tue, 30 Sep 2008 18:35:00 +0000

Image via Wikipedia

I found this fascinating quote today:

Now, today, mortgage rates are opening flat, suggesting that markets are in a Wait-and-See Mode. Wall Streets knows that the defeated bill will re-emerge later this week and, when it does, expect traders to respond accordingly.Bill Lublin, MOVEPHILLY, Sep 2008

This is just another example that shows we are allconnected. (Like it or not)

Just a little ironic

noreply@blogger.com (Mike) — Fri, 26 Sep 2008 21:33:00 +0000

Come on, I know that made you smile.

Now that the reality is sinking in, is that a tear I see?

Sorry.

Sending the right message

noreply@blogger.com (Mike) — Fri, 26 Sep 2008 19:40:00 +0000

We all heard yesterday about WAMU. We all have our own opinions about Option Arms, government bail outs and so on.

This isn't about your opinion. It's about the message you may be sending out to your readers.

I wrote about the possible upcoming doom and gloom over a month ago. I even beat Dan Green to the punch. LOL

It's perfectly ok to warn the public, or even other professionals, but shouldn't that warning also have a good dose of reality?

If you blogged about how you closed your checking account before the Fed's closed them down, aren't you just like your uninformed neighbor or fellow tweeter?

The fact is that most everyone who had a deposit in Wamu yesterday has full access to their money today.

What would be your answer if your neighbor asked you, "Is it a great time to buy?"

It wouldn't be the Sleazy Salesman, "Hell Yes!"

Nor would it be the Ostrich, "Are you NUTS?"

I know, because you are a trusted professional, that you have a measured and correct answer to that question based on real facts and figures.

We live in interesting times these days. Remember the public is listening to what we say. Make sure you are sending the right message.

That's all I'm saying...

Chasing Wamu

noreply@blogger.com (Mike) — Fri, 26 Sep 2008 01:55:00 +0000

I was a Washington Mutual customer.

Then the news hit my feed reader. WAMU is gone.

I guess we could start the "Woo HOO!" jokes if you like...

Here's the view from the FDIC Failed Bank Page

It looks like Chase will be my new bank.

From the FDIC Press Release:

JPMorgan Chase acquired the banking operations of Washington Mutual Bank in a transaction facilitated by the Federal Deposit Insurance Corporation. All depositors are fully protected and there will be no cost to the Deposit Insurance Fund.
'For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks," said FDIC Chairman Sheila C. Bair. 'For bank customers, it will be a seamless transition. There will be no interruption in services and bank customers should expect business as usual come Friday morning."

BlogWorld Rocked

noreply@blogger.com (Mike) — Wed, 24 Sep 2008 19:06:00 +0000

Sorting through all the notes, all the video, all the pics, and all the cards.

Mobile post sent by mikemueller using Utterli. Replies.

What did I buy today?

noreply@blogger.com (Mike) — Wed, 17 Sep 2008 14:43:00 +0000

As a US Taxpayer, the argument can be made that the Federal Government is me.

What they do, they do for me. They are me.

Yesterday they bailed out AIG, a very large insurance company, for me.

I loaned AIG $85 Billion for 2 years and now own 79.99% of the company.

AIG is a worldwide conglomerate made up of hundreds of businesses all over the world. It's trading just above $2 a share right now, but six months ago it was closer to $50. If the stock goes back up to that level do you realize how much money I'm going to make?

Hey, I also own 100% of Fannie and Freddie, and guess what? They're under fifty cents right now!

Next I hope I bail out Taco Bell. Not for the stock appreciation, I just want in on the employee perks!

I hear the company bowling party is HOT...

Just saying...

Not with a 10 foot pole

noreply@blogger.com (Mike) — Wed, 17 Sep 2008 13:54:00 +0000

With the Merrill issue, the AIG Bailout. and other problems seemingly popping up daily, you would think the government would have it's hands full.

I guess not.

Yesterday they found the time to call a few people...

From the NY Post:

The fate of Washington Mutual remained in question yesterday as federal regulators recently called a number of banks asking if they would consider buying the nation's largest savings and loan should it eventually falter, sources told The Post.

How cool is that?

It sounds like they didn't find anyone yet. Don't hold your breath, they might not. WaMu has some issues.

Standard & Poor's cut WaMu's credit rating to junk status late Monday citing "increasing market turmoil," but at the same time acknowledged that WaMu's deposit base appears to be stable and the company has enough liquidity to meet all fixed obligations through 2010.

You'll note they said "fixed obligations". I believe that refers to the capital on hand that the Feds require as reserves for items deposited. That would be assets like Checking, Savings, CD and Money Market Accounts. Those are all performing assets.

What about the NON Performing Assets? Wamu is carrying a huge amount of Neg Am and Jumbo ARMs on their books. Many of these are NON Performing.

A potential buyer would know this. What they wouldn't know is the actual amount of NPA's they have due to the financial accounting shell game. (that's for a different post)

Then there's the investors in the company. Back in April, TPG (a private equity group) helped to pump 7 Billion dollars into Wamu in an effort to keep them afloat. They paid an average of $8 a share at that time. The stock was trading somewhere around $11 at the time, today it's closer to $2.

The Post reports that these investors at TPG are unlikely to take a loss and any buyer would also have to buy them out at their $8 a share price.

Understanding the Good Faith Estimate

noreply@blogger.com (Mike) — Thu, 11 Sep 2008 20:34:00 +0000

The Good Faith Estimate Scam.

Have you heard of it? It's out there.

Here's the truth: A loan officer can outright lie on the Good Faith Estimate (GFE).

Surprised? Don't be.

They can and some will lie to you for one reason: to get your loan.

There are a lot of bad people out there in all aspects of the real estate world, and there are a lot of good people as well.

The government had a great idea in mandating the GFE to all borrowers.

Unfortunately they also some left very large loop holes.

The Good Faith Estimate does not have to be accurate - AT ALL! Some of the most common tricks are:

Points and fees can be grossly underestimated or even omitted
Rates can be based on extremely short lock periods
Programs can be quoted that the borrower won't qualify for
Third-party fees can be grossly underestimated or even omitted
Prepaid expenses (e.g., taxes, insurance) are often manipulated to their minimum
Title and escrow charges can be grossly underestimated or even omitted

If you shop by rate, fees, or Good Faith Estimate only... ...chances are you are going to lose!

How do you protect yourself?

Do more than just look at the numbers. Ask for references, look at feedback, and know who you are dealing with.

My 68 Porsche and Fannie Mae

noreply@blogger.com (Mike) — Mon, 08 Sep 2008 17:31:00 +0000

I couldn't help but think about some of the similarities my restoration project ( a 1968 Porsche Soft Window Targa) and Fannie Mae have in common.

They both became private in 1968.

They both had the unspoken backing of factory support.

And currently, they both are not operating in the best of condition right now.

Then there's the difference.

If my car was really like Fannie Mae would I expect the factory that built her to swoop in, refurbish her , and once she's back in great condition to once again "privatize" her? Certainly not.

Yet, that difference is happening today in Fannie and Freddie. In essence the "factory" is taking back it's product, refurbishing that product, and hopefully once that product has been restored to it's running condition, privatizing that product once again.

Watch the VIDEO

And why are they doing this?

Because the secondary market is so incredibly vital to the marketplace that they had to. The secondary mortgage market is crucial to financial liquidity. In car terms, it wasn't running right, and was looking like it was going to throw a rod. The government stepped in and is rebuilding it before it blew up. And, as every Gear Head knows, it's better to rebuild a motor before it blows than afterwards. Make sense?

Who is Fannie?

noreply@blogger.com (Mike) — Sat, 06 Sep 2008 14:42:00 +0000

"And why should I care?"

To the average homeowner, they've never had to think about who Fannie or Freddie for that matter is. Now that Fannie is all over the news, (Fed bailout) everyone's talking about her.

First of all, her name isn't really Fannie, and it's not Fannie Mae either. It's actually Federal National Mortgage Association. You can see where how we shortened it from the first letter of each word (F.N.M.A.) and came up with Fannie Mae.

But the question remains,

"What does Fannie do?"

I could go on and on explaining the role Fannie and Freddie play. The simplest answer is that they provide liquidity to the mortgage marketplace.

How they do this, and the roles of the Loan Originator, the Lender, the Mortgage Backed Securities, the Investors, and all the other players is a little more complicated.

The New York Times has a great image that better explains these roles than I possibly could.

Click on the image and get to know her better. Ok, get to know her as she is today. Tomorrow she might be in for an "Extreme Makeover".

Bloomberg: Paulson Plans to Bring Fannie, Freddie Under Government Control
Wall Street Journal: U.S. Near Deal on Fannie, Freddie
Washington Post: U.S. Nears Rescue Plan For Fannie And Freddie
NY Times: U.S. Rescue Seen at Hand for 2 Mortgage Giants
LA Times: Fannie, Freddie takeover possible

The Last Pinky's Pizza Motorcycle Night

noreply@blogger.com (Mike) — Wed, 27 Aug 2008 18:51:00 +0000

After 40+ years, Pinky's Pizza will be closing on August 31st.

We motorcyclists, are not going to wait.

We're planning our going away night for Thursday, August 28th.

Pinky's Pizza in Walnut Creek has been a long time supporter of all forms of motorcycles. The owner, Tom Beisheim is an ex AFM / AMA racer. Tom has hosted motorcycle nights for BARF for quite a few years.

The Last Motorcycle Night will be Thursday, August 28th.

Pinky's is at 1379 S California Blvd. Walnut Creek, CA 94596

We're certainly going to miss the place. I'd like to invite you and anyone who rides in the area to stop by, have a beer, a slice of really great pizza, enjoy some fellow riders in conversation, and wish Tom the best of luck on our special night.

One way to earn higher interest...

noreply@blogger.com (Mike) — Tue, 26 Aug 2008 19:00:00 +0000

Put your money in a soon to be failed bank. Just make sure you are FDIC insured and you'll be safe.

I'm kidding of course, but there is also a bit of truth in that.

Washington Mutual just offered a 1 year CD that is paying a full 1% higher than anyone else. Why is that? Are they just trying to be nice? Are they "giving back to the community?" Have they made enough money this year already?

Or are they strapped for cash (capital) and need to raise some serious dollars?

That's more likely the case.

Wamu has a very large lending exposure in both California and Florida. Both of these states have experienced some of the highest yearly declines in value. That's not a good thing.

Wamu also has a high percentage of Alt-A and Option ARM loans on their books. Experts agree, this is the next wave of borrowers to default.

A homeowner that stops paying their mortgage becomes a Non-Performing Asset.

Here's what concerns me the most.

Prior to their collapse, many banks (Indymac is a prime example) offered high yielding CD's in a last ditch effort to raise capital.

I just hope I'm wrong. We need more lenders not fewer.

Was there a Bank Failure Today?

noreply@blogger.com (Mike) — Sat, 23 Aug 2008 00:57:00 +0000

If there was, the FDIC would have taken over at 5 PM or so today.

They have a list on their website: http://www.fdic.gov/bank/individual/failed/banklist.html

And yes, it looks like they closed

The Columbian Bank and Trust Company, Topeka, KS

Did you have money in the bank? Are you covered by the FDIC?

Did you know there's a hierarchy to who get's paid first?

Priority of Claims

In accordance with Federal law, allowed claims will be paid, after administrative expenses, in the following order of priority:
Depositors
General Unsecured Creditors
Subordinated Debt
Stockholders

Now depending on your point of view, a bank failure may be a good thing.

See: http://activerain.com/blogsview/652272/My-Bank-Just-Failed

Good Times!

My Bank Just Failed!

noreply@blogger.com (Mike) — Thu, 21 Aug 2008 14:27:00 +0000

That's a very real statement. According to banking experts we're going to hear it more in the near future. Scary Times!

But what happens if your bank does fail? What does that mean for you? What does it mean for your mortgage? What if you are in the middle of a Short Sale?

First of all, when a Bank does fail the F.D.I.C swoops in and takes over. They don't even ask. They show up on Friday at 5:10 PM in hopes of opening up again on Monday as a new Federal Bank.

The Fed's first job is to find out exactly what the bank has in assets and liabilities. Job # 2 is to make sure that those who have insured deposits have access to those should they wish to draw that money. The third is to start liquidating the banks assets to cover the bills.

When Indymac Bank failed in early July it gave many of us first hand experience on what happens and how. They were closed on Friday, opened on Monday and started handing out money to the insured depositors.

For those that have a Mortgage with the bank, there is no change in your note and terms. You still get to make those monthly payments. Sorry.

For those that had Uninsured Deposits in the bank - You may get up to 50% of your money back. Really! It may take a bit but the feds are working on it.

That may be good news for those that are working on a Short Sale with the bank. Why? Because the Feds are actively looking for anything that can convert to quick cash.

Case in point. We had a buyer looking at an Indymac REO (bank owned property). They made the offer and were told by the bank "We'll get back to you and let you know within 45 to 60 days".

The offer was made right before the bank went under. Suddenly they get a call from their Agent, "The bank has accepted your offer IF you can close in 11 days!"

This wasn't 45 days it wasn't 60 days, it was closer to 14. The dust hasn't settled on the bank failure but the Feds have lit a fire under certain files hoping to yield quick cash. They (the Feds) want their money back.

So if you have a short sale in progress - your banks failure may be a very good thing.

Is your bank set to fail? That's a hard one to say. One of the keys is the amount of Non-Performing Assets it holds on it's books. What's a NPA? The biggest pile might be the mortgages it holds that borrowers are no longer paying on. You might hear words like Subprime, Interest Only and Option ARM.

I'll explain more about the NPA in the next post. In the meantime you can read all about how they hide those assets on their books:

"Level 3, FASB 157, and My 10 Taxi's"

* All images courtesy of The Fail Blog one of the funniest sites on the planet!

Just a quick test for Lenderama

noreply@blogger.com (Mike) — Fri, 15 Aug 2008 13:08:00 +0000

We're conducting highly secret RSS testing for Lenderama.

Pay no attention to the man behind the curtain.

Obligatory Mortgage Reference: Have you seen this article?
http://www.reuters.com/article/fundsFundsNews/idUSN1251538220080812

Welcome to the beginning of the next wave of defaults.
When these start recasting their payments will double or triple.
Will they continue to pay?
Will they walk away?

"Another sign of borrower distress: One in eight is at least 90 days late on payments"

When it comes to HR 3221...

noreply@blogger.com (Mike) — Wed, 13 Aug 2008 14:54:00 +0000

The Media can be misleading.

Yeah I know, no surprise there!

But let's talk about HR 3221, H.R. 3221 or if you want to call it by it's really long name, the Housing and Economic Recovery Act of 2008

It was signed into law Monday July 28th, 2008. It was reported all over the world. it's the talk of the town. I've been interviewed on radio shows, quoted in articles and blogs. Ok, now what?

Just about nothing. We're waiting.
There's quite a few facets included in the bill that still need to be hashed out. Here's a quick peek at just some of the facts.

WATCH THIS VIDEO

The $7,500 Tax Credit

It's a tax credit (not a rebate). It's for purchases made between April 9, 2008 and July 1, 2009. It's essentially an interest free loan for 5 years that has to be paid back.

Down Payment Assistance Programs

HR 3221 wipes out the ability for down payment assistance on an FHA loan starting October 1, 2008. Think you have till then? Think again. The Lenders are already not allowing DPA on the loans they are accepting.

Skin in the game

FHA used to finance up to 97%. That meant that the buyer had to pony up the other 3%. As of October 1st, under the new rules, the borrower will have to 3.5%.

Reserve Requirements for Second Homes

Thinking about buying a second home? Vacation home? How about Rental Property. It's a great time to find bargains. How much liquid reserves do you have in the bank? There wasn't a minimum reserve requirement before. Now there is.

Have less than 30 % equity in the second home? You'll need to prove you also have 6 months worth of PITI reserves for both properties in the bank (liquid). Yeah I said SIX months! Have more than 30%? You'll just need to prove you have two months reserves.

Capital Gains Exclusion

Are you good at percentages? Remember when you were entitled to $250,000/$500,000 of tax-free gains from the sale of a home if filing separately/jointly provided you lived in the residence for at least 2 of the preceding 5 calendar years? Not any more.

Now that exclusion is calculated by taking the capital gains on the sale of the home and multiplying it by a ratio (percentage) of how long you lived in the home and how long you owned the home.

Loan Limits Increased!

Nope. Matter of fact, depending on where you live, FHA, Fannie and Freddie Conforming Jumbo loans will decrease.

The Mandatory Refinance at 90% of Present Value

I saved the best for last. First of all it's not mandatory. It's actually voluntary on the lenders part. Should a lender decide this is in their best interest, they'll still hold the note. They'll reduce the size of that note to 90% of the present value and that's what FHA will be on the hook for. Then again, nothing here is in concrete. The details still have to be hammered out by HUD. Until that happens, nothing really has changed.

So there you go. You know know more about HR 3221 than the next guy at the water cooler.

What should you do if you think any of these changes will involve you in the future? Contact your trusted mortgage professional today.

N.A.R. was there

noreply@blogger.com (Mike) — Wed, 06 Aug 2008 17:19:00 +0000

I'm not a Realtor. I don't have to be. I have a real estate license for the State of California, and theoretically I could sell real estate (but I don't).

A Realtor is someone who is a dues paying member of an organization, The National Association of Realtors or NAR for short. Not a member of NAR? You cannot call yourself a Realtor. Simple as that.

Like any organization, one of NAR's objectives is to help their members. That help might be in the form of legal matters, regulations, licensing, lobbying, education, or understanding new and emerging technology.

That's why I was a little surprised to see Keith Garner of NAR's Center for REALTOR Technology. Why? Inman's Real Estate Connect was all about bringing together technology and real estate professionals under one roof. The Palace Hotel was overflowing with Agents who understood how emerging technology could enhance their business.

It turns out Keith is a former programmer and understands tech better than most people.

For those that don't know there's a little "friction" between some of the Agents and NAR. Valid or not, Keith is doing a great job. He understands his departments role and is doing everything he can to help Agents adopt and use technology to their advantage.

Oh yeah, he does have a blog. Fancy that! http://blog.realtors.org/crt

Keep up the good work Keith!

Ben Bernanke and the Feds decide to...

noreply@blogger.com (Mike) — Tue, 05 Aug 2008 18:34:00 +0000

I know.

The suspense is killing me. (not)

Is it killing you? Okay, they decide to...

"The Federal Open Market Committee decided today to keep its target for the federal funds rate at 2 percent."

The official announcement came out moments ago. They do that by press release. Here's the actual link to the release: LINK

I sat around all morning wondering what they would do.

For the thinkers they are not so much concerned about the actual increase or decrease, but more about the tone of the text that goes along with it.

as in...

"Economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.

Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities, and some indicators of inflation expectations have been elevated. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.
Although downside risks to growth remain, the upside risks to inflation are also of significant concern to the Committee. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability."

Would you read this as rather tame and expected text? or maybe different?

What's your take?

Altos Research Real Data in Real Time

noreply@blogger.com (Mike) — Mon, 04 Aug 2008 12:47:00 +0000

One of my biggest issues with many of the facts and figures reported in the media is that they are based on Fuzzy Math.

Example: New Home Sales, which is the number of contracts signed in a prior month for a house that often times hasn't even been built yet. 40% or more of those contracts fall out (don't go to fruition).

Another issue I have is with old data. Reports that rely on information from months ago. Or broad based statements based on states and regions when we all know real estate is local, really local. Zip code local. That bothers people like Mike Simonsen as well. Altos Research compiles data in real time, as it happens, and serves it up locally.

Watch This Video

When Business Week wanted to do a story on the best and worst performing zip codes, they naturally turned to Altos Research.

Here's a sampling of the various Real Time Charts they produce for Walnut Creek, CA. I think you can see why the best in the industry turn to Altos Research for their data.

Real Estate Price Trends
The median single family home price as of August 03 2008 for WALNUT CREEK is $917,989
Explain this
WALNUT CREEK condo reports and zip-code level detail available for all subscribers. Subscribe today!

Housing Market Conditions
With a Market Action Index as of August 03 2008 at 19.40, WALNUT CREEK is currently a buyer's market.
Explain this

Home Sales and Demand Trends
The average property in WALNUT CREEK as of August 03 2008 has been on the market for about 84 days.
Explain this

Price Per Square Foot
The median price per square foot for homes in WALNUT CREEK as of August 03 2008 is about $429
Explain this

Homes for Sale
There are about 194 properties on the market in WALNUT CREEK as of August 03 2008.
Explain this

Can an Agent really be a Genius?

noreply@blogger.com (Mike) — Tue, 29 Jul 2008 14:17:00 +0000

The answer is YES they can!
So much in fact that they can attract other genius types, build a genius community, and dominate the blogging world!

Meet Lani and Benn Rosales, truly Agent Geniuses and winners of the Inman Innovator Award 2008 !

Photo Courtesy of Brad Nix

They'll be the first to say that it isn't about them , it's about their contributors. Currently at 27 and bound to grow.

In part, I agree with them. However they have created the community, they have opened up the conversation, and they have done everything they can to encourage the dialogue. Take their RSS feed for instance.

Benn has created a custom header and footer for every post that goes out encouraging readers to engage. It's always changing, always humorous and witty.
It's this kind of thinking that puts them in the Genius category!

Congratulations to AgentGenius! You really are.

Not a political post

noreply@blogger.com (Mike) — Sun, 27 Jul 2008 15:02:00 +0000

I felt the need to put that out there first as the video comes from Ron Paul.

This isn't about him, it's not about his views or his campaign.

This video was a part of a daily newsletter I subscribe to from financial Gurus. I started watching and at 1 minute in he started talking about something I had written about before, the Fed's Securities Lending Program.

That was back in March of this year and had to look up the post. I had used the analogy of my tomato garden to help explain the liquidity problem and how the Fed's were attempting to help increase liquidity.

The Fed's Securities Lending Program and my Tomatoes

While I stopped the video somewhere in the middle to look for my post, maybe I'll go back and watch it later. I'd be happier if you read all about my tomatoes first though. : )

Remember, this isn't about politics.

The exchange of Mortgage Backed Securities for Treasury Issues at face value is real stuff.