Traci Gregory, Financier

We are an FHA Direct Endorsed Lender

I’ve read with dismay about the people giving up their houses, going to credit counseling, trying to make ends meet.

The biggest bill most of us pay is for rent or for our mortgages, and for some reason the news makes it appear that there is no mortgage money when in fact there is quite a lot.

The credit crunch could affect mortgage money availablity, but it has not. 

I’ve been a mortgage banker for 20 years . . . and I know that refinancing a $250,000 mortgage that is at 7% ($1630/month)  to 6% or less ($1498/month)  would make a positive change in any budget.

• People with questionable credit can refinance with an FHA loan, even if their loan isn’t an FHA backed loan now.
• Streamline refinances are done with no appraisal, and in a lot of cases, reduced fees, to help homeowners stay in their houses.  For conventional AND FHA loans.

This is a time to hunker down, figure out how we’re going to get through the next few years, and giving up the time and money we have invested in our homes is not a good way to start a hard run!

I understand that Cobb County’s revenues for intangible taxes and real estate filing fees was averaging between $2 and $3 MILLION a month in 2007.  Now, they are at less than $300,000 a month.  Even the local government is feeling the pinch of the fall in real estate business.

I recommend that everyone who owns a home and is paying more than they are comfortable with look hard at all the options for refinancing and lowering their payments, particularly if they want to get into a 30 year fixed rate, plain vanilla, feel-safe-to-everyone mortgage.

I also highly recommend that the Real Estate Professionals in the area get more familiar with FHA and for people outside Cobb County, Rural Development loans.  THAT MONEY IS WAITING TO BE SPENT!

There IS down payment assistance money – for homeowners who don’t have cash to close.  We can revive the economy on a local level, but only if we don’t give up on it.

Fannie Mae and Freddie Mac into a conservatorship

According to the New York Times,Treasury Secretary Henry Paulson, Ben S. Bernanke, the chairman of the Fed, and James Lockhart, met with Daniel H. Mudd, the chief executive of Fannie Mae, and Richard F. Syron, chief executive of Freddie Mac to let Mudd and Syron know they didn't have jobs anymore and that the Federal Government is taking over Fannie Mae and Freddie Mac and placing them in conservatorship.

"The executives were told that, under the plan, they and their boards would be replaced and shareholders would be virtually wiped out, but that the companies would be able to continue functioning with the government generally standing behind their debt, people briefed on the discussions said.

"It is not possible to calculate the cost of any government bailout, but the huge potential liabilities of the companies could cost taxpayers tens of billions of dollars and make any rescue among the largest in the nation’s history."

Read the entire article at U.S. Rescue Seen at Hand for 2 Mortgage Giants

You need to understand that their rescue is throwing your tax dollars away to fix their mistakes.  Your grandchildren will pay for this . . . And you probably should start thinking about buying foreign currencies . . .

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? 

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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?

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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.

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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

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

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!

INNOVATIVE FINANCING

In the days where one only hears about the credit crisis and lack of liquidity, people are stymied on where to turn to finance their latest projects. While the reality is there has been a huge change in residential financing (probably for the better, and probably forever!) commercial lending programs have not been affected as much, although lately commercial lenders are finding it harder to sell their paper because of lack of liquidity in the market in general.

As it is harder to get the money to get projects off the ground, we’ve tried to stay ahead of the curve and maintain as many options for our borrowers as possible. While there are still straightforward choices like SBA loans and commercial loans for expansion, purchases and refinances, and Church loans based on tithing, we’ve found there are other forms of financing that aren’t as complicated or time consuming and for the most part also aren’t as costly as traditional financing.

I’ve added stockloans from Hedgelender to my portfolio of products and capital advances against credit cards.

The beauty of both programs is they are not based on applications, financial statements, tax returns or credit criteria. And they both fund VERY quickly.

Stock Loans can be used for any number of things, and can be made through a myriad of choices. Here are some highlights:

• Finance your real estate with interest-only repayment while still retaining participation in your stock portfolio;

• Refinance your MARGIN LOAN to remove the possibility of a call;

• Expand Your Business with interest-only repayment while still retaining participation in your stock portfolio;

• Diversity Your Investments while retaining beneficial ownership of your portfolio;

• Roll your Employee Stock Options into cash while continuing to participate in your stock.

Ironically, these loans run to the millions and sometimes tens of millions, and take 1/10th the time to process and fund. And, they are strictly based on the worth of the stock and the amount of shares traded; the ONLY collateral is the stock and . . . credit is NOT a criteria. Neither is purpose, as long as it is legal!

Capital Advances against credit cards is NOT a loan program - but is a purchase of future sales.

Like the stock loan, there is NO long application, financial statement requirement OR tax return requirement; Funds immediately based on credit card sales; factors ALL credit cards receivables - Visa, Mastercard, American Express and Discover.

Clients are using the money for expansion and renovation; Marketing and Advertising; purchase of new locations; Increases to inventory; purchasing much needed equipment Repairs and upgrades; buying out an existing partner; recapture of investment capital; even to pay bills and taxes.

Finer explanations and details are listed on my website PallasFinancier.Com.

Brad Inman on the collapse of the secondary housing market

Brad Inman is founder and publisher of Inman News.

In the afternath of the news about fannie mae, freddie mac and the NEW IndyMac FEDERAL BANK, Brad Inman made ten predictions about the collapse of the secondary housing market.

"...Those that do lend will revert to back-to-basics underwriting: perfect credit, large down payments, proof of income, personal character and good family upbringing.

"...Housing industry lobbyists will make the mortgage liquidity problem their number one policy issue in the next two years. They will argue that the sky is falling and it is.

"...Like so many parts of our American culture, the accessibility to unlimited and poorly scrutinized debt helped turn Americans into a sloppy group of consumers, which spawned greedy Wall Streeters, out of control lenders and starry-eyed investors."

Read all ten, and the rest of his article at Imagine housing without a secondary market

Quick Notes from all over . . . indictments at Bear Stearns . . . a new kind of black widow (!) and loans for foreign nationals again (hooray!)

The U.S. Attorney's Office for the Eastern District of New York handed down indictments for Ralph Cioffi and Matthew Tannin formerly with Bear Stearns.  You may or may not recognize them as the brains (if you will forgive me) behind the Bear Stearns High Grade Structured Credit Strategies Fund (begun  in 2003) and the Bear Stearns High Grade Structured Credit Strategies Enhanced Fund (begun  in 2006), both of which failed miserably earlier this year.

From the US Attorney's Office (Eastern District of New York) Press Release   "... The indictment alleges that by March 2007, the defendants believed that the Funds were in grave condition and at risk of collapse.

However, rather than alerting the Funds’ investors and creditors to the bleak prospects of the Funds and facilitating an orderly wind-down, the defendants made misrepresentations to stave off withdrawal of investor funds and increased margin calls from creditors in the ultimately futile hope that the Funds’ prospects would improve and that the defendants’ incomes and reputations would remain intact. " (italics all mine)

"... The subsequent collapse of the Funds during the summer of 2007 resulted in losses to investors totaling more than $1 billion."

CIOFFI was also charged with insider trading, as I understand it, for moving TWO MILLION DOLLARS OF HIS OWN MONEY out of the fund and into another.

Probably one that didn't fail, doncha guess?

Attorneys for the men maintain their innocence . . . Well, would they get paid otherwise?

Read the Press Release in its entirety here

I understand the FBI is investigating 19 other companies who were originating and securitizing sub-prime loans for accounting fraud, insider trading, and the failure to disclose true valuations.

Lovely

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July 6 2008 Update to Bear Stearns indictments

Dan Slater writes in the Wall Street Journal LAW BLOG: Bear Fund Managers Get Good Draw, Sizing Up Judge Block

So, Justice Carries a Swift Sword?  We'll See - Curiously, a poster named "Anonymous", says the sub-prime mess  . . . has plenty of people who deserve fines and jail time . . . BUT these guys are not the scapegoats we need."

Well, gee, they thought up the hedge funds, created them, bought the mortgage backed securities, and then (!) CIOFFI was charged with insider trading for moving TWO MILLION DOLLARS OF HIS MONEY out of the fund . . . leaving institutional investors in the fund with no warning . . . when they knew the fund was in danger.

They may not be the scapegoats we NEED, but it certainly appears they need to be in front of a judge for the way they ran that fund!

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Billed as social networking with a bite  (pun intended I suppose) the Black Widow Network is designed to send real estate investment deals direct to your in-box . . .

Other websites designed to take advantage of REOs and the possibility of making money off them are

• BiggerPockets.Com
• PropertyShark.Com
• Krunching.Com

If you're looking for deals - try them out -

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I've finally located three lenders that will work with Foreign Nationals.  So I'm taking those applications again --

Requirements include:

• Assets Held in Foreign Accounts must be in English and I need copies of statements for two months.
• Seller concessions are held to a maximum of 3% and are ONLY acceptable on second homes.
• Single Family Dwellings, PUDS, Warrantable Low and High Rise Condos are the properties . . . that means NO CONDOTELS
• FULL DOCUMENTATION ON INCOME AND ASSETS
• 30 year fixed, no prepayment penalty
• 75% maximum LTV

That's all I've got for today . . .  pax et bonum

...

Housing Economic Recovery Act advances in the Senate - Do they read the bills they vote on? Really?

FreedomWorks, American Conservative Union,  Americans for Tax Reform ,  Citizens Against Government Waste,    Club for Growth,  Competitive Enterprise Institute,  and the National Taxpayers Union   have come together to urge the Senate to say NO to the Housing Economic Recovery Act, commonly known as the Dodd-Countrywide bailout bill.

Here’s an excerpt from their letter:

“The Dodd plan creates a new housing trust fund that will collect more than $530 million a year through a new levy on Fannie Mae and Freddie Mac. The trust fund in turn makes these funds available to politically active community groups like ACORN outside the normal appropriations oversight.

“In addition, the Dodd plan creates a new $300 billion facility that allows mortgage lenders to cherry-pick their worst performing loans and roll them into the FHA, shifting 100 percent of the loan liability to the taxpayer.”

http://www.freedomworks.org/uploads/dodd-frank-coalition.pdf

The THREE HUNDRED BILLION DOLLAR BAILOUT went to the Senate Floor today and advanced in the Senate with overwhelming support.

I'm thrilled that they are shouting we don't need more taxes so that Countrywide and others are empowered to keep doing business as usual . . . (I say Countrywide because from all appearances Countrywide will be one of the prime beneficiaries of this bill due to the overwhelming business it did in the sub prime market.)

The Housing Economic Recovery Act, if passed, will, after adding  $300 billion to the taxpayer’s burden, probably send those banks' worst loans to the FHA, which, you guessed it, will create another FIVE HUNDRED MILLION DOLLARS IN TAXES ON GSE's. (GSE's are Federal Home Loan Banks, Freddie Mac, Fannie Mae, Ginnie Mae, Federal Farm Credit Banks, Federal Agricultural Mortgage Corporation.)

These same issues are supported by findings released earlier this week by the Congressional Budget Office’s (CBO) scoring of legislation.

"Mortgage holders would have an incentive to direct their highest-risk loans to the program," the agency noted.

But the Congressional Budget Office thinks the FHA plan might only have a modest impact.

Despite up to $300 billion in loan guarantees, CBO's analysis of the Senate bill projects demand for only $68 billion through 2011.

"CBO estimates that approximately 400,000 loans would be guaranteed under this legislation with an average loan amount of $170,000 each. Thus, CBO estimates that FHA would require about $68 billion in loan commitment authority through 2011 to implement the program. "(The legislation would authorize FHA to provide up to $300 billion in loan guarantees under the new program)

AND   "...35 percent of the loans refinanced through the program will eventually default anyway."

CBO estimates that enacting this legislation would increase revenues by about $8.0 billion over the 2009-2018 period, net of income and payroll tax offsets. Over that period, we estimate that direct spending from those proceeds would total about $7.2 billion. The additional revenues would thus exceed direct spending by an estimated $800 million." Read the full text of the CBOs findings

So they've figured out how to arrive at a surplus in the budget, rather than a deficit by creating this whole new way of life for originators, lenders, sellers, servicers  . . . How about we just SPEND LESS MONEY?? Isn't that what you do when you don't have it?  You spend less.

Where do revenues come from for the federal government?  Regardless of who writes that last check,  ultimately, revenues come from taxpayers . . .

These bills are NOT going to improve the quality of life for most people . . . they will help lenders, who knew they had a parachute when they made these risky loans (REMEMBER THE S&L BAILOUT - they were bailed out with tax dollars).

And it will help people who probably shouldn’t have gotten a loan in the first place and may not pay it back even after this second chance.

Write your representatives. 

Stand Up and Be Heard, or you’re going to be paying for it for the rest of your life.

And, sadly, so will your kids.

Construction To Perm Financing

To Paraphrase Montgomery Gentry of Country Music fame, CPs are

Gone like a freight-train, gone like yesterday
Gone like a soldier in the civil war, bang bang
Gone like a '59 Cadillac
Like all the good things that ain't never coming back
They're gone (gone) gone (gone) gone (gone) gone, gone

Well, they aren't completely gone . . . there are two lenders in the country who will do them.  Two!

The reasons aren't that complicated, the problem with doing a construction loan in a declining market is that when you get to the end of the construction period, your value may have decreased.

A year or two ago, you could have counted on appreciation, or at least seeing the project to completion having maintained value. With Fannie, Freddie and every lender left standing declaring various levels of decline in market value, and with the added expectation that it will continue for the unforeseeable future, no-one wants to risk a six month or one year project with no idea of where the value will fall when it is finished.

You and the bank could end up with a tremendous shortfall, and if you don't have the money to close, the bank has now built itself a spec house. Since most of them are practically real estate companies now, selling their foreclosures, they aren't going to go out and create a loan that has every indicator of going south.

So, postpone that dream house for a while, and look at all the new construction that is out there - and deeply discounted. It is a great time to buy a house, prices are depressed and interest rates are very low. It just isn't a good time to build a house.

I wish you the best in all you do.