Lisa's Blog

The Blame Game

Jay Epstein State Farm Insurance — Tue, 16 Feb 2010 13:44:15 -0800

As a former mortgage broker and small business owner, one who now works for a big bank that thankfully kept its nose clean through the frakus, I continue to be amazed at the stupid and ineffective laws that congress continues to try to put in place just to look like they are doing something; and, once again, I take offense at the way people in politics continue to thoughtlessly slander the mortgage broker.

"Mortgage brokers sold unaffordable mortgages to collect their commissions. Stock brokers made huge, risky bets to get big bonuses. And now that taxpayers rescued Wall Street, greed is making a comeback. - Daniel Mintz, MoveOn.org" This is just one quote from a political action organization. But the feeling it represents seems to permeate the political world. It's bipartisan!

The blame game is a nasty game. I don't generally like to play it.

But the comment about mortgage brokers makes me kind of miffed. He goes on to say that, "fundamentally it all came down to greed." I agree that it came down to greed; however, to blame our global economic disaster on mortgage brokers and stock brokers without even mentioning banks and their "loan officers" is simplistic and laughable.

Before I begin my four-paragraph rant below, let me make one thing very clear: When I refer to big banks, I am NOT talking about the small mortgage bankers who funded loans using their own lines of credit and then immediately sold the loans to the secondary market. Ok, that being said, here goes:

In a nutshell, the problem was and is the big banks - and their continued use of smoke and mirrors to hide what they've done and continue to do. Several years ago, the big banks began offering reckless and irresponsible mortgage programs and they spent millions promoting these irresponsible loan programs through their retail (their own loan officers and branches) and wholesale channels - offering huge incentives to smaller bankers and brokers such as an extra 3 points just for adding a 5 year prepayment penalty to the loan. Of course the bank's retail and wholesale channels sold the loans; and the salesforce was heavily compensated. Then the banks made billions and billions of dollars selling packages of loans to each other.

Next they decided to insure each other's multi-billion dollar packets of loans (CDO's); but the loan package bundles were so huge (10 billion to 100 billion or more) that they ended up insuring each other for more their own net worths!

Finally, when the loans that were incomprehensibly split into various packets started going bad and the banks needed the insurance to cover their losess, they didn't have the money to pay each other because they were all experiencing the same losses at the same time (and they had never had enough money to cover the losses they had agreed to insure anyway).

The bottom line? What happened to our ecnomny certainly isn't rocket science, but you have to get through a lot of smoke and mirrors to get to the truth. I think it really does boil down to greed - but it was and is the greed of the already wealthy big bankers who used their wealth to deflect blame to others while they continued playing their games.

And the worst part? Instead of taking the time to truly understand the problem, Congress is still playing too.

Happy to be Back

Jay Epstein State Farm Insurance — Sun, 14 Feb 2010 19:46:13 -0800

I've been away from ActiveRain for a while. And I've been away from the place where my first child was born. But I'm back!

I love Ukiah. I feel like it is the perfect place to raise my two boys and I also love that after moving away 11 years ago, my family and I have been able to come back. Thank you State Farm! I'm so looking forward to putting down new roots and working with my old and new friends and neighbors in Mendocino County.

Please join the new group I just started, Ukiah Valley Lounge. We can use the group to support each other here in Mendocino County!

$700 Billion Alternative

Jay Epstein State Farm Insurance — Sat, 27 Sep 2008 14:42:09 -0700

Here's an idea that should spark some debate:

Take $700 Billion and distribute among every American homeowner - effectively paying down up to 10% or so of every homeowner's outstanding mortgage balance. Couple this taxpayer/homeowner payout with a lender requirement to modify all 1st mortgage notes carrying an interest rate of 8% or higher to a lower rate. This provides instant equity and affordability for existing homeowners, stops the foreclosure process in its tracks and would offer immediate relief to our heavily depressed real estate market.

Bill Gates, Cindy McCain, Warren Buffet, Ted Turner, and the Bush Family can pool their vast resources with Exxon and Shell to bail the banks out.

Random Thoughts about Oil...

Jay Epstein State Farm Insurance — Wed, 06 Aug 2008 12:58:40 -0700

The big American oil companies post RECORD profits and all people seem to talk about is our horrible dependence on foreign oil. If foreign oil is costing so much, how are the oil companies posting record profits? Aren't profits what you get after you subtract expenses? So how is the $4.00+ cost of gas per gallon blamed on foreigners? What about the AMERICAN oil companies who are gouging us? Why isn't anyone protesting their greed?

WHAT AM I MISSING????

What's Wrong with this Picture?

Jay Epstein State Farm Insurance — Tue, 05 Aug 2008 12:59:46 -0700

I'm mid-way through a purchase loan. I've been advising this client ever since I helped his parents with a purchase transaction over two years ago. We have a great relationship.

A few weeks ago, he found a home and we began the purchase financing. I found excellent pricing at ING Bank. I was happy for him and he was excited about his great program and rate.

Two days ago, the borrower came across ING's retail lending website. I didn't even know ING had a retail branch! My borrower wasn't shopping me - he was doing due dilligence on the bank that was going to be his new lender. The bank I had introduced him to.

Their retail shop's rates are better than the wholesale side by a net spread of 1.5%!!!

Of course, I'm on the phone immediately to ING Wholesale to see what they are doing about it. Their response is complete ambivalence. They actually started insulting my salesmanship as a broker.

Hellooo!! There may still be some slimy snake brokers out there who would attempt to sell the borrower into sticking with them instead of taking advantage of a rate their brokerage can't touch, but I'm not one of them.

So here I am talking with my borrower on the phone and its going something like this:

He says, "Wow. I feel terrible. You've done so much for us and helped us so much."

I say, "Yes. Thank you for that. But I understand completely. If I were in your situation I would take that 5/1 arm at 5.25% with half the closing costs over the same loan program at 6% too. Let's keep in touch..."

Then I might say if I have the nerve, "...and maybe you could cut me a check for out of pocket expenses I've already had (the credit report and per loan fee I pay my cutting edge LOS)??"

Hey, I'm all for competition. And sometimes, retail pricing just works out better. But for a company that PORTFOLIOS all its loans to set its pricing so that the retail branch undercuts the wholesale side in such a way that all possibility of competition is completely stamped out - something is wrong with that.

Now that the Fed's rule has been modified to make sense and has passed, retail banks seem to be trying to force the brokers out of business in a more creative, passive-aggressive kind of way.

Wow. And this time it may work - on me anyway.

Letter to the Fed

Jay Epstein State Farm Insurance — Tue, 08 Apr 2008 19:36:57 -0700

Dear Board of Governors of the Federal Reserve,

My name is Lisa Epstein. I am founder and president (and broker of record) for JL Epstein, Inc. dba Leap Lending, a small 6-person mortgage brokerage based in San Diego, CA. I am writing because I feel compelled to comment on the potential new Fed rule as it relates to mortgage brokers and their loan originators. I have put off sending my comments in until today because every time I have sat down at the computer in an attempt to compose a thoughtful, well-rounded and cohesive letter that addresses every issue with this rule that I feel is SO important - I get overwhelmed with everything I want to say and so I have deleted every attempt thus far. However, today is the deadline to comment on Docket No. R-1305 and I know that I MUST at least try to convey my feelings about the true and often-overlooked-lately value of the services that mortgage brokers provide to the consumer. So here goes:

We, mortgage brokers, are actually running small businesses across the nation. We spend quite a bit at our local Fry's, Staples and Office Depots. We are self-employed and employers - adding valuable jobs to the marketplace. We contribute and volunteer at local charities, we sit on community improvement committees. We serve in local Chambers of Commerce. We are your neighbors, friends, and fellow church-members.

As a mortgage broker, I make it possible for my borrower to get the right loan program at a competitive interest rate because once I know the borrower's particular and unique financing situation, I am able to check with many lenders/investors on my borrower's behalf and get the very best loan program and rate available to that individual. Because of my ability to earn YSP, I am able to cut closing costs to a minimum and not charge any origination fees to the borrower and in some cases, I am even able to cover some or all of the regular closing costs for the loan! It is always the borrower's choice - and we talk about it - case by case - because everyone's situation and financing needs are unique. Then, many times, issues are uncovered during the process of the loan - issues with prepayment penalties, delinquents taxes, alimony or child support that we didn't know about at the time of application, sometimes there are liens that show on title that we were unaware of at the time of the loan application. These issues affect the potential new financing and possibly the loan program/loan amount/ysp. Requiring certain unchangeable disclosures upfront, before the loan process in complete is ludicrous in the real world process of obtaining a home loan. In many cases, if some of the proposed items are implemented, the mortgage broker could end up having performed an exceptional service on the borrower's behalf, representing hours and hours of work and end up with no compensation at closing.

We, mortgage brokers, help you (the consumer) in a myriad of ways and you are benefited most by the many choices we make available to you. When a consumer goes directly into a bank - the loan officer (who may not have ANY training at all in loan programs or financing strategies outside what that bank offers) will most likely offer the product that is being incentivised that week or month by the bank, without regard to client's needs or even looking outside the banks portfolio of products. Without brokers, the borrower's choices will be heavily limited. And the burden of searching for the right loan program falls completely on the borrower to go bank-to-bank looking for the right deal. So many borrowers would end up just taking what was offered. Where are the competition and the consumer choice in the above scenario?

On another note: to target YSP as if it is a bad thing for the consumer is baffling to me. Because of YSP, I am able to keep borrower's closing costs to a minimum. Again - this is an issue of consumer choice. The borrower gets to choose the lower PAR rate with origination (this is nice when seller is paying closing costs or there is enough room in a refinance to cover closing costs and origination) or a higher rate where it is sometimes possible for me as the broker to cover ALL the closing costs for a borrower. Moreover, forms of YSP exist in almost every business that I can think of: car sales, title, medical practitioners (doesn't the doctor receive UNDISCLOSED perks for prescribing that medication or using certain vendors?), banking (i.e. SRP which is NEVER disclosed to the consumer unlike YSP which is already ALWAYS disclosed), and the list goes on and on. The bottom line: consumer choice is extremely important in every industry. It keeps business competitive and when businesses are competing, it is always better for the consumer.

Finally, there is no doubt that we need to eliminate fraud and make the mortgage and home buying process easier and more consumer friendly and I wholeheartedly support every effort toward making this possible. But I believe that this proposed rule if adopted as written will end up making homeownership even farther out of reach for thousands of people, it does not make the process easier or more consumer friendly and it will effectively put me and thousands of other small business owners (mortgage brokers) out of business!

I know many others have written and I can only hope that they are more effective in addressing the proposed rule on a point-by-point basis. As for me, I am writing an emotional note, from my heart to say - please. Please, let's address fraudulent practices. Let's make buying a home less attorney friendly and more consumer friendly. Let's fix the industry related issues that we can, but let's NOT adopt new rules and regulations that will most assuredly and without a doubt put thousands of people out of business.

In closing, thank you for giving me the opportunity to comment on the proposed rule and for taking the time to read my letter!

Regards,

Lisa Epstein
Mortgage Broker and
Small Business Owner

Need Professional Help in Mountain View

Jay Epstein State Farm Insurance — Tue, 19 Feb 2008 15:44:51 -0800

My family and I just moved to Mountain View (Santa Clara County - Northern CA) from San Diego and I need to establish relationships with a top-notch local appraiser and an escrow company.

I prefer to work with honest, small, independent, local shops for both escrow and appraisal services. Do you have anyone you'd recommend who serves Santa Clara County?

Additionally, I'd love to get involved in the community and I would really apprceciate any referrals and info from local agents/brokers. I'm thinking I'll join the Mountain View Chamber of Commerce. Anyone else out there a member?

Thanks!

The Stimulus Package and King George

Jay Epstein State Farm Insurance — Tue, 12 Feb 2008 11:34:49 -0800

Given what the financial markets have been through in the last year, it is important to stay on top of new information as it becomes available. As you are probably aware, the "Economic Stimulus Act of 2008" has been passed by both the House and the Senate and now awaits the almost-certain Presidential signature expected tomorrow. After the signature, then what?

Well, in addition to the tax rebates you've heard so much about, H.R. 5140:

Raises the FHA and conforming loan limits to the lesser of $729,750 or 125% of an area's median home sales price.

Only six areas in the country will see the $729,750 limit: 5 in CA - the areas of San Diego, San Jose, San Francisco, Los Angeles/Riverside, Sacramento; and Hawaii is the other.
Other areas in the country will see an increase up to 125% of the median sales price or stay the same at $417,000.

The FHA and conforming loan limit increase is meant to be temporary and is set to expire December 31, 2008 (unless it is extended which wouldn't surprise me).
The new limits will most likely apply to owner occupied properties, 15 and 30 year fixed rate loan products, fully amortized (sorry, no interest only).
ARMs are being considered, but most likely will end up only with one type of ARM product (for example, 5/1 ARMs).
There will be strict credit guidelines and overlays including CLTV most likely restricted to 90% or less.
The limits will be effective as soon as they are signed and then it will be up to Fannie Mae to determine guidelines and pricing and the lenders to pass this on to borrowers.

While this is probably a positive step toward increasing liquidity in the markets, it is important not to over-promise the benefits. There is still a perceived risk in higher loan amounts and Fannie and Freddie will most certainly want to be compensated for this perceived higher level of risk. This would translate into higher fees being passed on to the consumer. Also, there is the question of how to package the new higher loan amounts at the secondary market level and who (what investors) will buy them and in what format.

Now we have only to wait for King George to add his special touch (as he has done to hundreds of bills before this one) before he signs it. It may be a completely different bill when it comes out of the oval office tomorrow.

$600 tax rebates -- what are they smoking?

Jay Epstein State Farm Insurance — Thu, 24 Jan 2008 20:07:39 -0800

They have even given it a name: The Stimulus Package.

The US deficit is predicted to reach $250 billion in 2008 BEFORE this "stimulus package" which will cost as much as an estimated $200 billion.

So $600 tax rebate per person is going to cure what ails the economy of this country?

Hmmmm. Will somebody please give me some of whatever Nancy and co. are smoking cause I'm going to need it.

Intermeeting Surprise Fed Rate Cut

Jay Epstein State Farm Insurance — Tue, 22 Jan 2008 15:58:50 -0800

In a surprise move this morning, the Federal Reserve lowered the Fed Funds Rate by .75% to 3.50%. This move was prompted by an emergency meeting last night as global equity markets sold off significantly due to foreign investors' fears of a US recession. It is very interesting to note that this morning's Fed cut was the first intermeeting Fed action since September 16, 2001 and the deepest one day cut since 1984.

While many believe that a cut to the Fed Funds Rate results in an immediate decrease to mortgage rates, this is not true. In fact, on several occasions in the past, a cut to the Fed Funds Rate resulted in mortgage rates going higher in following weeks. However, we are in uncharted waters now and turmoil and market panic are impossible to predict and do not necessarily follow the rules of history.

Currently we are enjoying mortgage rates at three-year lows, and we have actually seen rates improve already this morning, mostly due to the early morning US stock sell-off. Additionally, the LIBOR which was at 5.15% just a few weeks ago is now at 3.71%. In this sea of fear, here is some good news for the housing industry.

The bottom line is that if you have been considering a refinance or purchase lately, now is a good time to get the process started.

A Tale of Two Appraisals

Jay Epstein State Farm Insurance — Tue, 11 Dec 2007 23:01:03 -0800

Once upon a time there were two borrowers whose loans were set to close within a week of each other.

Borrower number one was fortunate that his Loan Officer worked with a wonderful appraiser named Mark. Now Mark was the ideal appraiser - conservative, but not too conservative. He used only solid comps and always made reasonable adjustments. When the Loan Officer submitted a loan with Mark's appraisal, she never had to worry about value. Appraisal Review? Bring it on.

Borrower number two, on the other hand, went to our LO mid-way through his transaction with an appraisal he had already paid for by a wicked appraiser we'll call Ron. Since the borrower had already paid for the appraisal, our heroine agreed to at least begin work with the existing appraisal. Upon review, she was crushed to realize that there was going to be a problem. Every one of Ron's comps crossed a major boundary! We're talking MAJOR boundary - as in the 163, 15 and 8 freeways. The poor Loan Officer couldn't even quote a rate to this client so sure was she that a review and value cut lay lurking in the shadows at the lender's corporate office.

Now for the Dicksonian Twist:

Our heroine sent both loans to the same lender - actually apologizing to her Rep for the shoddy appraisal that was sure to be a problem and not wanting her good reputation to be tarnished. But alas! True Blue Mark's appraisal was cut by more than 20% and Bad Boy Ron's break-every-major-boundary-rule appraised value held.

The End

*****************************************************************************************

Epilogue: Always true to her word and able to take value cuts in a single bound (thanks to a short period of really awesome rates, dude), our heroine was able to change lenders (and the new lender did not even review the good and solid appraisal) and grab a better rate for borrower number one at the same time! So, all the borrowers lived happily ever after, after all.

Crucified on Capitol Hill

Jay Epstein State Farm Insurance — Mon, 03 Dec 2007 20:41:06 -0800

Did you see CSPAN today? We (mortgage brokers) are in a PR nightmare. Have you heard what comes out of the mouths of people like Shanna Smith, President and CEO of the National Fair Housing Alliance and John Taylor, President and CEO of the National Community Reinvestment Coalition?

Everyone seems to want to place the blame for the mortgage meltdown on the mortgage broker and now that the media has found a scapegoat, our ability to earn a living is being threatened. Slimeballs are not unique to mortgage brokerages. They are in every industry.

Where are the NAMB lobbyists? NAR would NEVER stand for this. We are being crucified on capital hill.

Come on, Somebody must have seen CSPAN today!!

Jay Epstein State Farm Insurance — Mon, 03 Dec 2007 19:32:01 -0800

We (mortgage brokers) are in a PR nightmare. Have you heard what comes out of the mouths of people like Shanna Smith, President and CEO of the National Fair Housing Alliance and John Taylor, President and CEO of the National Community Reinvestment Coalition?

Where are the NAMB lobbyists? NAR would NEVER stand for this. We are being crucified on capital hill.

Does anyone else think the picture to the left needs to go?

Jay Epstein State Farm Insurance — Mon, 03 Dec 2007 19:08:58 -0800

No, I'm not talking about my picture. I'm talking about the group's picture to the left. Everytime I visit this group and see the picture of the guy with the bag on his head I am reminded of Abu Grahib. Am I the only one?

Teaser Freezers and Newton's Law

Jay Epstein State Farm Insurance — Sat, 01 Dec 2007 19:31:05 -0800

Our society is a capitalist one, admittedly a fragile yet firmly planted one, based upon the natural swings of our markets - financial and otherwise, all carefully manipulated by the shrouded-in-secrecy, all powerful Fed (anyone out there read The Creature from Jekyl Island??).

But all confidence in the Fed aside: President Bush is working with the big boys on a plan to aid defaulting borrowers. According to the Wall Street Journal, the main idea of this aid would be to get lenders to extend for a number of years the short term low rates that were offered on subprime mortgages, loans. They even want to name it something catchy like, "Teaser Freezer." Sounds good, right? What's wrong with helping out the little guy?

Well, right or wrong, every loan in these billion dollar defaulting portfolios was funded by investors, offered by brokers and lenders and chosen (yes I said chosen) by consumers. Every single funded loan put money in the pocket of a multitude of people: from the consumer to realtors, escrow officers, title reps, loan officers, brokers, lenders, account executives, warehouse lenders and investors.

If the consumer and the lending bank were the only ones being affected, I don't think we would be seeing the extent of government involvement we are seeing here. But the bottom line is that there is so much more at stake than the consumer losing his home or the value of a bank's lending portfolio. In fact the bank that lent the money, most likely already made a bundle on the loan and used that money to lend more. Most of the loans originated are sold to an investor and then packaged together in billion dollar hunks and ultimately sold on Wall Street. The Wall Street billion dollar buyers insure these investments. Some of the same banks who underwrote, funded and sold the loans in the first place are the ones who insure the billion dollar investments. Here is where the plot thickens. In fact, it gets so muddy that it is impossible to boil down to a recognizable state. Unchecked, we are in for it. I believe the word recession is a gross understatement.

BUT, as Newton's Third Law states, "Every action has an equal and opposite reaction." I believe that applies here. Where am I going with this? Well, when asked about the proposal on Friday, the President's press secretary offered some comforting news: Dana Perino said, "The president has been clear that no taxpayer money should be used for any sort of bailout."

So at last, here is my problem with the government's Teaser Freezer: Someone is going to pay. Every new law opens the way for a flood of litigation. And believe me, while Bush is trying to include the big players, it will be impossible to get everyone on board with his plan. Investors are going to lose big money and they will spend big money on high-powered attorneys to challenge the legality of the "Teaser Freezer" and get their money back.

And you can bank on this: taxpayers will foot the multi-million dollar bill to defend the law. Ironic isn't it?

Where are all the San Diego Mortgage Brokers?

Jay Epstein State Farm Insurance — Thu, 29 Nov 2007 23:28:43 -0800

Did anyone attend the CAMB event today?

Why YSP?

Jay Epstein State Farm Insurance — Thu, 29 Nov 2007 22:32:24 -0800

The other day, I was deeply concerned about HR 3915 passing the House as written, because it could very well have put mortgage brokerages like mine out of business. Why? Because as a rule, I earn my living from lender-paid Yield Spread Premium (YSP), not origination points from the borrower. And in these days of declining home equity and climbing LTVs, there just isn't room in the loan amount for the added cost of origination points. What borrower in this market can or will come in with cash to close a loan? Of course, some do - but it is rare.

Today was the annual San Diego CAMB (CA Association of Mortgage Brokers) mixer/event at the Marriot in La Jolla. The president-elect of NAMB (National Association of Mortgage Brokers), Marc Savitt, spoke at one of the break-out sessions and it was really neat to hear first-hand about the way they were able to get the verbiage banning broker YSP out of HR 3915 before it passed the House the other day. In addition to a lot of industry lobbying and letters from mortgage brokers, there was a NAMB phone call to an influential person and a very important ammendment authored by Congressman Gary Miller which replaced the offending verbiage. Of course there is still some offensive material in it (don't get me started about the legislation of underwriting guidelines...) but at least the worst is over for now.

In CA, where our average loan amounts are at least $350,000, I get a great rate for my borrower, 1% YSP from the lender and with no origination fee I'm able to keep closing costs to a bare minimum. I always talk with my clients about rates, origination points and yield spread premiums, and everyone of my loan officers does this also or they don't work with me. During the discussion, the borrower decides to take PAR pricing and pay origination points or take a slightly higher (it really is usually only very slightly higher) rate and not pay origination. Nine times out of ten, the borrowers would rather not pay origination fees when given the choice.

It really all boils down to consumer choice - and taking away consumer choices is never a good idea.

Bye, Bye Equity Line

Jay Epstein State Farm Insurance — Tue, 27 Nov 2007 23:21:08 -0800

For many years, Wells Fargo and Citigroup have been leaders in funding and servicing home equity lines across the nation - both in the retail and wholesale arenas.

According to CNNMoney.com, Wells Fargo announced today that it plans to liquidate $11.9 billion in home equity mortgage loans and the company is prepared to eat $1.4 billion in losses on the sale.

For Wells Fargo to SELL $11.9 billion in equity lines (that it has traditionally serviced and kept in its portfolio) and be prepared to eat $1.4 billion in losses on the sale is huge. The fact is that Wells may actually take an even bigger hit than they are anticipating! Combine this with Citi's troubles (millions in defaulting loans; most likely BILLIONS in defaulting CDO obligations) and I believe we are seeing the beginning of the end of the equity line for all but the full doc, lowest LTVs and highest credit scores.

Ok, not the end of the equity line forever, but at least for a while. Bye, Bye Equity Line (sounds like a sad song, doesn't it?).

The Eye of the CDO Storm

Jay Epstein State Farm Insurance — Tue, 27 Nov 2007 00:03:35 -0800

I just reread my first post tonight about the eye of the storm - it wasn't meant to be a sales pitch, but it does kind of sound like one on the re-read. :) My point was supposed to be that the mortgage market (and economy in general) is really in a funny spot right now and I don't expect the good times to last very long.

Check out the Wall Street Journal today. The issues with Citi are huge - I'm talking about CDO's - and the BILLION dollar obligations that some of these big banks have. Most of the population doesn't understand the significance of the CDOs. If you'd like a bit more info, check out my blog on the sleeping giant.

The Eye of the Liquidity Storm

Jay Epstein State Farm Insurance — Mon, 26 Nov 2007 23:25:16 -0800

Mortgage backed securities rallied today, and with some lenders, we saw rates on 30 year fixed, conforming full-doc loans at the best they have been in about two years. For example, a 30 year fixed loan with fully documented income and assets, conforming loan amount (less than or equal to $417,000), 80% or less loan-to-value, 700+ credit score, single family home, owner-occupied, no cash-out refinance or purchase would be *6% with no origination points.

If you've read any of my previous posts, you know how I feel about the trend of present market conditions. And while the scenario above may not apply directly to your situation; if you have even been considering making a purchase or refinancing lately, now is a good time to get the process started. We may be in the eye of the liquidity storm.

Depending upon how the market performs tomorrow we may see even further improvement, so definitely shoot an email over or give me a call if you have any questions or want to get the ball rolling.

Watch out for the Sleeping Giant

Jay Epstein State Farm Insurance — Fri, 09 Nov 2007 15:46:20 -0800

Today, Wachovia Corp announced a loss of $1.1 Billion in their Collateralized Debt Obligations, which are investments partially comprised of subprime mortgages and as a result, the stock market suffered losses.

By now, most of us have at least some knowledge that there is a liquidity crisis in the mortgage industry. Some may even understand that the crisis has been furthered by heavy downgrades on mortgage-backed securities.

What you may not have heard about yet; however, is truly a sleeping giant and could be devastating to both the stock and US bond markets.

Here is the issue: According to Business Week, companies such as American International Group (AIG), MBIA (MBI), and Ambac Financial Group (ABK) have made a lot of money selling insurance for "bonds that are backed by mortgages and the complicated investment vehicles that hold the bonds, known as collateralized debt obligations or CDO's." The insured companies are the big banks and other major investors and the insurance protects the investors in case the securities default. And as we are all aware, many mortgage backed securities and CDO's have been heavily downgraded recently. Some of these companies have insured several billion dollars worth of CDO's but have only a few hundred million in capital for possible payouts. Wachovia reported a loss today of $1.1 Billion and this may just be the tip of the ice-berg.

While you may not have heard of some of the companies above that offer this type of insurance, I would bet that you've heard of Citi, Barclays and Bank of America (yes, the same one that recently helped to bail-out Countrywide). And according to Business Week, these companies are some of the major players in the CDO market.

It will be interesting to see where the market goes and how all this unfolds. Here is a link to one of the Business Week articles I read:

http://www.businessweek.com/magazine/content/07_46/b4058047.htm.

Karma, Client Security and my Soapbox for Today

Jay Epstein State Farm Insurance — Mon, 29 Oct 2007 23:45:16 -0700

Realtors, Mortgage Brokers, Personal Bankers, CPA's, Escrow Officers, Financial Planners - we are all in an industry where social security and bank account numbers cross our desks many times on a daily basis. We have an obligation to ensure that our client's information is safe.

I've done more than one loan for my Realtor. My attorney is also my client. We have trusted each other with social security numbers, bank account information and more.

We all need to be able to rely on our financial partners to keep the personal information they collect on us and our families safe and secure. How angry would you be if you saw an unused copy of page two of your loan application in your Loan Officer's garbage can?

Treat your clients' personal information like it is your own. Ask your broker or office manager about privacy policies at your office. Stress to your young assistant the importance of shredding unused documents. Address clients' privacy and security issues on your website.

Being an Identity Theft victim is as easy as tossing a piece of scratch paper in the garbage can; and it is as easy as emailing your Social Security number to your Loan Officer.

Florida Referral

Jay Epstein State Farm Insurance — Fri, 24 Aug 2007 13:54:06 -0700

Is it legal for a Florida brokerage to pay a referral fee to CA brokerage?

The Need for Camaraderie

Jay Epstein State Farm Insurance — Sat, 09 Jun 2007 00:17:23 -0700

I started this group in an effort to foster a sense of camaraderie. I believe one of the many ways to stay professional and maintain the highest level of service is to stay current in your field. Building good relationships within the mortgage industry is important to me and I am truly interested in how other mortgage professionals in San Diego are doing.

By the way, this group's image was taken during a rare moment with my two boys running together on Wind and Sea Beach in La Jolla. Isn't that what living and working in San Diego is all about?

The Foreign Fed

Jay Epstein State Farm Insurance — Thu, 07 Jun 2007 23:15:31 -0700

As many of you are aware, this morning, New Zealand's Central Bank - their equivalent to our Fed - hiked rates to cool down their strong economic growth and fight inflation. Australia will most likely follow suit, and the European Central Bank hiked their rates just yesterday. The bond market is taking a beating and seems to be in a downward spiral. The Bond market lost 90 basis points today as traders sold off US Bonds and bought foreign bonds where they can get a higher rate of return.

What this means in terms of interest rates is that they are going to climb - higher and higher until something happens more favorably in the US Bond market. And to make this more personal - if you (or your clients) are in an adjustable rate right now, it is time to lock in - hopefully you haven't already missed the opportunity. This could have a "butterfly effect" and the market could get worse and worse over a period of days weeks or months. If investors have lost confidence in the US Bond market and continue to see greener pastures overseas -- the entire industry -- all of us will be affected.

If you are working with buyers - make sure their rate is locked in or will be soon. Waiting could mean disaster for your transaction.