Mortgage Chaos

Bits and Pieces

So, the Donald is going to bail out Ed McMahon on his $4.8 mil mortgage.

Wonder how many regular guys he could bail out with that kind of money? 

~~~~~~~~~~

Countrywide Financial Corp. is the subject of yet another federal investigation: the Federal Trade Commission (FTC) is investigating for possible violations of federal laws in the servicing of its $1.49 trillion loan portfolio.

Aren't they the ones foreclosing on McMahon?

~~~~~~~~~~

From the Associated Press:
After a full six months of investigating appraisals in the US, an independent federal agency known as the Appraisal Subcommittee says the nationwide system set up to monitor appraisers because of the savings and loan crisis (?) did little to prevent appraisers, real estate agents and mortgage brokers from colluding to inflate home prices during the housing boom.

There just don't seem to be any appraisers with a backbone in this country . . . I read everywhere that they were coerced into high values . . . Please.

~~~~~~~~~~

From the Wall Street Journal:
Are Obama's tax cuts The New Tax Welfare? Is he proposing to create or expand government spending programs disguised as tax credits?

I didn't know he had thought up tax cuts - I thought he just wanted to make sure we were all at a 54% income tax level, in addition to paying for capital gains, and, oh, yeah, when we die . . .

Pax et bonum

Unsecured business lines of credit - up to $200K

In order to grow you business, or even start up your business using credit, you may have found you were expected to have a corporation aged for two or more years.

I've found a company that provides a solution: they supply established, aged corporations that are free of any taxes, judgments or other liabilities.

The service includes all necessary procedures to transfer the corporation into your name as well as assigning a designated registered agent. 

They provide:

• all necessary corporate documents,
• articles of incorporation,
  corporate resolutions and minutes.
• and a free year of registered agent service.

As part of an aged shelf corporation purchase, you may draft and file any name change, amendments or annual statements at no additional cost (State filing fees will apply) so you aren't stuck with Ajax Plumbing as your corporation.

Finally, you will receive a report showing that the company you purchased is free of liens and you can now move on to start building your corporate credit.

Just like personal credit, business credit has a score, often referred to as a "Paydex" score issued by Dunn and Bradstreet (D&B).  A perfect Paydex rating is 80 or higher. 

If you are considering bank financing for a business, you will need to have an established Paydex score as well as good personal credit. 

With this Corporate Acquisition program, you get help building a perfect Paydex score for your new corporation before submitting loan applications to anyone. Improves your chances for approval greatly.

Once your established corporation is "bank ready" they will develop corporate credit for you thru their networks of banks.   

It isn't free, or even cheap . . . however, you can finance the majority cost if your personal scores are 680 or higher.

The "flow" is in the graphic below:

Don Henley's Dirty Laundry

Lyrics remind me of Ralph Cioffi and Matthew Tannin and how they treated their investors at Bear Stearns . . .

© Elektra Entertainment Group, 1982

You dont really want to know just how far its gone
Just leave well enough alone
Eat your dirty laundry

Kick em when theyre up
Kick em when theyre down
Kick em when theyre up
Kick em when theyre down
Kick em when theyre up
Kick em when theyre down
Kick em when theyre stiff
Kick em all around

Dirty little secrets
Dirty little lies
We got our dirty little fingers in everybodys pie
We love to cut you down to size
We love dirty laundry
We can do the innuendo
We can dance and sing
When its said and done we havent told you a thing

We all know that crap is king

Commercial Loans With NO PRE-PAYMENT PENALTY

30 year amortization, interest only loans available; there are no reserves and no impounds for taxes and insurance required. 

Rates are generally in the 6's!

This loan will work for odd property types:

• gas stations
• marinas
• golf courses
• gyms
• resorts
• industrial

This product is availablele for types of commercial properties, not just the odd types shown above:

• mixed use
• apartments
• self storage
• office

And, rates are better on these property types. 

LOAN SIZES-$1 Million to $30 Million

Loan to values are up to 75% on investor and 80% on owner occupied and multi-family. 

Full doc only, but they are non-SBA so qualifying and closing is a little easier and a lot quicker, as soon as 45 days from complete package. 

I.O.U.S.A. the Movie

Unbelievable . . . Extreme Makeover' house faces foreclosure

From AP, ASSOCIATED PRESS:

More than 1,800 people showed up to help ABC's "Extreme Makeover" team demolish a family's decrepit home and replace it with a sparkling, four-bedroom mini-mansion in 2005.

Three years later, the reality TV show's most ambitious project at the time has become the latest victim of the foreclosure crisis.

After the Harper family used the two-story home as collateral for a $450,000 loan, it's set to go to auction on the steps of the Clayton County Courthouse Aug. 5. The couple did not return phone calls Monday, but told WSB-TV they received the loan for a construction business that failed.

The house was built in January 2005, after Atlanta-based Beazer Homes USA and ABC's "Extreme Makeover" demolished their old home and its faulty septic system. Within six days, construction crews and hoards of volunteers had completed work on the largest home that the television program had yet built.

The finished product was a four-bedroom house with decorative rock walls and a three-car garage that towered over ranch and split-level homes in their Clayton County neighborhood. The home's door opened into a lobby that featured four fireplaces, a solarium, a music room and a plush new office.

Materials and labor were donated for the home, which would have cost about $450,000 to build. Beazer Homes' employees and company partners also raised $250,000 in contributions for the family, including scholarships for the couple's three children and a home maintenance fund.

ABC said in a statement that it advises each family to consult a financial planner after they get their new home. "Ultimately, financial matters are personal, and we work to respect the privacy of the families," the network said.

Some of the volunteers who helped build the home were less than thrilled about the family's financial decisions.

"It's aggravating. It just makes you mad. You do that much work, and they just squander it," Lake City Mayor Willie Oswalt, who helped vault a massive beam into place in the Harper's living room, told The Atlanta Journal-Constitution.

Feds move up from originators, go for IndyMac, Countrywide and New Century Mortgage

I've just heard today that those three, IndyMac, C'Wide and New Century have been issued subpoenas as the subject of a federal grand jury investigation. The Justice Department was focusing primarily on smaller operators thought to be defrauding homeowners and mortgage lenders . . . as if there could have been a coordinated effort across the country large enough to create the mess we're in. . . Now they've decided that it was fraud on the part of large sub prime lenders. According to Los Angeles Times, they have asked for e-mails, phone bills, financial records and other information. The Times said this is part of an investigation into whether fraud and other crimes contributed to the mortgage crisis.

I find this stuff small time compared to the creation of the programs that required a heartbeat and a signature to get a loan, but I'm just a loan officer . . . They didn't need fraud to lose money on those programs! There were such minimal requirements for loans an enterprising 12 year old could have made them work.

You already know about Countrywide and Angelo Mozilo, with the "friends of Angelo" mortgage program . . . interesting that the only "friends of Angelo" that we know about are politicians . . . who probably can't repay the favor for him now . . . too much daylight shining on their relationships . . . and you probably know by now that Countrywide is being sued in Illinois, Florida and California. I'm sure Cuomo will jump in there soon. After his win with Fannie Mae, he couldprobably take on any lender and win.

Countrywide and all its memories will fade though, except maybe for Angelo and anyone else who actually attends a trial. BOA bought it, and they'll swallow it whole. . . they're already changing the names of the divisions to "Anything But Countrywide".

I was surprised to hear that a court-appointed examiner has determined that New Century was involved in inappropriate accounting practices that inflated its profit and gave top executives the ability to acquire millions of dollars in undeserved or inflated bonuses. I guess I was surprised that I had not heard it sooner . . . I'm certainly not surprised at the charges.

They were not a lender that I sold loans to . . . they were quick to change program details, interest rates, etc, at the closing table and they only had to embarrass me once for me to take them completely off my list of possibilities. They filed Chapter 11 in April of 07 . . . and I felt almost the same way when I heard that news as I did when I heard Greenpoint had "bitten the dust." (What goes around comes around doesn't it? Couldn't have happened to anyone who deserved it more.)

The FBI is up to 21 cases against corporate and other large companies relative to subprime market defaults. They've inferred they want brokers, lenders, and now securities firms, hedge fund operators and credit rating agencies. The Securities and Exchange Commission (SEC) is reportedly working closely with the fibbies to find and charge anyone who may have contributed to the credit crises . . .but because of deregulation they're struggling with making criminal cases about the subprime debacle.

I've recently thought of two youtube videos I think I'd like to make . . . Bear Stearns indictees, set to the tune of Dirty Laundry, by Don Henley

You may listen to it in the next post

Dirty Laundry . . . Don Henley

Checklist || 101 Things to consider when you're becoming a real estate investor (originally published Sunday, April 02, 2006)

101 things?

There are probably 1,001 things you should think about, strategize and take care of before you become an investor - But you won't, you'll do them as they occur, because if you didn't, if you stopped and did all of them, you'd put off buying houses til the list was complete! And, I don't recommend that at all.

You should

Prepare Financially

Prepare Legally

Prepare Professionally . . . and that's what this list is about.

These are things that no one would ever dream could affect a loan decision . . . and, after 20 years in this business, I've seen all kinds of things that can affect a loan decision. And affect it in a bad way. So here are some problems I've had to overcome for my clients, and some suggestions on how to do that ahead of time, not when you have just lost an underwriting approval.

Cell Phones

Do you, like everyone else, run your business from a cell phone? They aren't listed as a business phone number in the phone book . . . they're hardly listed ANYWHERE. In the world underwriters live in, businesses have listings in a phone book . . . or they have listings in the yellow pages . . . So, you need to establish your business as a real business in another way: Flyers, newspaper ads that you have cut out of the paper and saved to your computer so you can use and reuse them, a photograph of that car of yours that has the big sign, "We buy Ugly Houses". You get the picture.

How do you answer the cell phone that is your business? "Hello" "Yeah" "Whats happenin?"

When a lender calls to verify employment, they want to know that the number they are calling is a real business, not the cell phone number of someone you've asked to verify your employment for you. . . There are only two ways to answer the phone when that happens, and you might as well get into the habit now, before you need to, and they are: "Ugly House Buyers" or even easier, with your name.

When someone calls and gets your voice mail, is it a message your child recorded for you and you left it? Is that really what you want your renters to hear? Or the advisors you are PAYING to help you become a successful investor? Appraisers? Inspectors? City and County Government officials? Your mortgage banker? Do you want them to know they've called the right number and are leaving a message to which you will respond? Or, do you want them to wonder what you're thinking?

Do you have 30 seconds of dramatic music BEFORE your message? Do you want them to hear music or the message? And, will they wait through the music to get to your message? Think about it.

Email

If you're like the rest of the world, you have an email address that came with your internet access, or that you picked up at a free service . . . If you have your own website, I have some suggestions about that too, but this is about email addresses.

If your email address is moneymamma@hotmail.com or j479reo4429@excite.com what are you telling people? Perhaps money momma does express who I am to my children . . . but it certainly isn't who I am to other professionals, particularly those who pay me! (Don't send me email there - I made that one up!)

And sweetemotion@yahoo.com may mean a lot to other Aerosmith fans, but it doesn't make me think you're serious about your real estate career.

My suggestion is that you think of a professional email address, that is as simple as possible to have someone type in the first time . . . true, once it is in an address book correctly, you're home free, but if it goes in wrong the first time, you have a chance of losing mail to it every time someone wants to get in touch with you. Combining letters and numbers is a great rule for passwords . . . it just isn't for email addresses.

WEB SITES

If you're going to get a website, there are a LOT of things to consider, and one of the most important is the domain name you buy. You probably already know that top level domain names are going to help in search engines, and that you want to put all the information you can into them.

My websites are named for what they are: Georgia Mortgage Money.Com, Stock Loans Blog.Com, etc. etc. Most people don't actually type those names into their web browsers, they find them on Google, or they hit a link they've got in their email. When they do have to type them, I've found that not everyone in the world can actually spell Mortgage . . . so they may not have been the most perfect choices, but they do say what I've got . . .

When you have houses 4sale.com, and you tell people your website is "houses4 (thats the number 4) sale.com" you may realize the 4 that looks good in the url, or that was all that was available when you bought the domain, may not have been the best idea in the world.

And my last thought about websites - I'm a .com snob. I think most people are programmed to type .com, not .net, not .bz, or .us . . . . they think of websites as dot.com.

I think taking a url name that is .net, because the one you really wanted is already sold is a bad idea. When we're busy, thinking, juggling phones, typing urls or emails into a keyboard, our brains push .com into our fingertips, with no conscious effort. If you're .net, chances are you're giving someone with the .com name some of your business, and perhaps lots of your email.

I do think that if you have a successful website you probably should buy the extensions, just so someone else won't buy them to pick up some of your business, but I think the fallout is more likely to go to the .com website than the .biz.

And a simple solution to both the email and the website name is . . . your name. I bought tracigregory.com specifically for the email address traci@tracigregory.com - is really easy to tell people, and easy for them to remember. I've since started adding things to it, it is after all a domain that gets traffic, so there might as well be something on it worthwhile! And I could buy 100 other domain names that mean something about what I do . . . investorstrategy.com, realestateinvestinginfo.com OR wealthbuildingthrurealestate.com . . . and point them to that domain so that I picked up the search engine business I want, but had a really easy to remember email address and domain URL.

Our job is to make sure you have the money to do what you want to do building your portfolio. Your job is to find houses that work for you. Just makes sense to work together.

Trace

News from all over, again . . . indymac, bear stearns, fannie, freddie, and the beat goes on and on and on

New Yorker editor David Remnick said the provocative cartoon was intended to satirize those [Obama's religion and other] rumors and those who traffic in them. In fact, the New Yorker is a publication that would be inclined to support Obama. New York Gov. David Peterson, the state's first black governor, condemned the cover as "one of the most malignant, vicious" magazine covers he's ever seen. The National Association for the Advancement of Colored People called it "tasteless, Islam-a-phobic, mean-spirited and racially offensive." The Obama campaign early on called the cartoon "tasteless" and "offensive" and even Republican presidential candidate John McCain referred to the cover as "inappropriate." Judge for yourself - I don't care for it at all.
Lehman Brothers' CEO Dick Fuld is seriously mulling a way to take itself private and out of the public eye
	Back in the news, Indicted former Bear Stearns hedge-fund manager Ralph Cioffi has hocked houses in New Jersey and Naples, Fla. to secure a $4 million bond, but saved the Southampton digs for the family. According to Assistant U.S. Attorney Patrick Sinclair the government is considering further criminal charges against two former Bear Stearns executives indicted last month related to the collapse of two hedge funds they oversaw.  In a court hearing in U.S. District Court in Brooklyn, Sinclair said "the government is indeed contemplating additional charges." Reuters for full story And, check this out!! According to the New York Post, Cioffi would like to start an independent hedge fund and may have some investors lined up . . . wonder if they'll still be there in 20 years . . . .
Fannie Mae and Freddie Mac . . . End of Illusions.  The Econonmist has a series of articles detailing the problems at Fannie Mae and Freddie Mac.  Now that we've jumped to trillions of dollars at their behest, surely the American Public will sit up and pay attention to what the federal reserve is doing to us by printing more and more money. Highly detailed, easy to understand . . . you should read every word. Hank Paulson, America’s treasury secretary, unveiled the emergency plan to save Fannie Mae and Freddie Mac, two mortgage giants that owe or guarantee $5.2 trillion.  He wants you to know how imortant it is so you won't mind paying for it . . . this isn't capitalization or free markets as we know them, this is nationalization and it will only create problems for the people who pay the bills.  That would be me and you . . .
The FBI had launched an investigation of IndyMac Bank for possible mortgage fraud shortly before the thrift was closed by regulators and placed into receivership, according to news reports. Fraud and they failed . . . they couldn't do anything right then could they?
Even though mortgage fraud for housing "doesn't seem quite as violent" as mortgage fraud for profit, it has its own consequences, according to a representative of the Florida Office of Financial Regulation's Bureau of Financial Investigations. Fraud for Housing is when a borrower commits fraud to get housing, as opposed to fraud for monetary gain. And that, my dears is life in my lane . . . I'm seriously thinking of Montana . . . horse, bedroll, rifle.  Sounds like the place to be to me!