[I am away from the computer on a daily basis, and my access to e-mail is
sporadic and not timely. In my place are daily commentaries from a series of
very knowledgeable mortgage industry people with different backgrounds, and
they have been given very little direction about what to write about - the
latest is below. Our views may or may not coincide, but I thank them for
their time in volunteering and helping out.]
This IS the economy, stupid...
Over the past three and a half years as I've watched my career get
annihilated, my savings accounts dwindle, waiting for the Great Punkin' as
it were, it finally dawned on me a little over a year ago, this is the
economy, stupid! It has been mildly amusing to fairly sickening to watch the
City of San Jose not unlike other municipalities whine and fuss over a 10%
pay cut while many of us have easily taken a 75% haircut and counting. It
hasn't escaped me either that we are about forty six months into this
financial crisis and we are just now hearing and reading the call for
emergency pay cuts not to mention the budget cuts that have been littering
the headlines of late. Not without notable mention the most recent headline
on June 22, 2011 where the California State Controller Chiang threatened to
withhold California lawmaker's paychecks for not producing a balanced
budget, and without much fanfare unlike times in the past a short time
later, June 28, 2011 (ahem!) the Mercury News reported Governor Brown had a
budget in hand he was sure to approve! Amazing that our "public servants"
can get along so well and settle their differences now that is it their
money that is being withheld.
Without going through all of the blame and rhetoric that we're all nauseated
hearing one more time, I do believe that if we cannot stimulate the economy,
first through some sort of renewed confidence that isn't spelled QE3, with
said confidence in fact it may lead to new jobs and then the American public
into at least considering buying a home our lifestyles might JUST change as
in a downgrade and maybe change for the foreseeable future and possibly
beyond. My personal opinion, I look for home values to continue to
deteriorate another 10% at the minimum and up to 30% or worse should we
continue in this downward holding pattern we cannot seem to shake.
With Americans continuing to lose equity in their homes, some losing half,
or most of their savings riding out their unemployment situation how can our
lifestyles that we've become so accustomed to stay at status quo when our
resources are tapped leaking like a sieve at unprecedented levels?
Especially since we've been in an uptrend with regard to the American
lifestyles upgrading over the past few decades?
Some things or a lot of things for that matter have got to give.
It is one thing to complain, so what is the solution? Run to the mirror and
deem yourself accountable, we the American public are responsible for the
politicians we vote into office and allow, yes I said allow to make laws
that are not in our best interests but their own. We as the voting public
need to consider that MAYBE WE AS A NATION CANNOT AFFORD THE PRIVILEGE OF
THESE "PUBIC SERVANTS" SERVICES AND starting immediately elect officials:
#1. Have to ask the American people IF they can have a raise and not vote
their own raise in, automatic pay increases no less.
#2. Have the EXACT same retirement program we have, no more lifelong
pensions, are you KIDDING me???
#3. Have the EXACT same Health Care Program that they prescribe for all
#4. Consider increasing our expectations of said politicians and kick out
the candidates with DUI's, Domestic Violence history, accepting any favor
whatsoever, ANY perverted behavior, there is never just one cockroach, ANY
cheating spouse, if you don't have any more self- control than that OR the
nuts to tell your spouse you want out, don't try to run our country or your
municipality clean up your home front First!
#5. Any and all laws said elected officials enact have the exact same
consequence for themselves as they vote to give to Americans
I received a call from a former client that had a home paid for in another
state, took money out of that house and paid cash for another, upgraded home
they purchased and now are letting the first house which they took cash
proceeds from go back to the bank. I'm not a huge fan of the banks but that
is just not right, we as Americans HAVE to find it in ourselves to do the
right thing even in the face of watching our corporation owned and operated
government do exactly to us and others the same thing I am describing here
in varying degrees, this HAS to stop somewhere and it starts with us as
individual Americans. My father's generation, he's 74 with all its foibles
did a lot of things right and to this day if you shake my dad's hand,
whatever he shook on he'd rather die than not keep his word. For us to get
back the former reputation, respect and dignity of our once pristine nation
we need to act accordingly and make sure our corporations and government are
in line with OUR values as a nation. Your vote does count, what you say and
do does too, everyone is watching, your kids, family, neighbors, friends
Finally, some unintended benefits came from this gut wrenching time and I
can say I'm better for it
- I appreciate my family more than ever, all of them, even Uncle Art...
- I appreciate my four year old car and don't understand my previous
with driving a newer one than my new one
- I may not ever be able to buy Diesel brand jeans again, so I love the
- I'm still in this business and I thank God for every client, like my
I love the one's I have!
My boyfriend and I were sitting at a table at his high school reunion, and
he kept staring at a drunken woman slugging down her drink as she sat alone
at a nearby table.
I asked him, "Do you know her?"
"Yes", he said,
"She's my old girlfriend. I understand she took to drinking right after we
split up those many years ago, and I hear she hasn't been sober since."
"My God!" I said, "Who would think a person could go on celebrating that
Firestone Financial Group
Yesterday the press was filled with accounts of the massive, partial, Bank
of America settlement. But companies involved in other potential liabilities
are closely following progress/resolution between other companies.
For example, Ally Financial Inc. said it expects to incur a $100 million
second quarter charge to cover mortgage losses posted by securitization
trusts, and that it received subpoenas from regulators related to "certain
mortgage activities" according to a filing with the SEC. In an updated
prospectus filed with the Securities and Exchange Commission, Ally said it
made payments to such trusts of $152 million in the second quarter.
And returning to Bank of America briefly, it has set aside $14 billion to
claims that loans packaged in mortgage-backed securities before the
financial crisis failed to meet promised underwriting standards. As you
might expect, this should eliminate any profits during the 2nd quarter. The
$14 B is the $8.5 billion non-agency settlement plus another $5.5 billion in
charges to cover additional claims from government-owned mortgage companies
as well as other private investors. In addition, BofA said it could
eventually face as much as $5 billion in additional claims over its
underwriting standards from other banks. So far, Countrywide has accounted
for more than $25 billion in losses at BofA - the gift that keeps on giving.
Freddie Mac has entered into a proposed settlement with whatever is left of
Taylor, Bean & Whitaker Mortgage and the creditors' committee appointed in
the lender's bankruptcy proceeding. Freddie Mac told the SEC that it will be
granted an unsecured claim in the TBW bankruptcy estate in the amount of
about $1 billion, which represents its exposure to past and future loan
repurchases, but the mortgage financier estimates that it will only see
between $40 million and $45 million from that claim - about
4 cents on the dollar! Freddie will also be entitled to approximately $203
million on deposit in certain TBW bank accounts relating to the company's
The FDIC as receiver of Colonial Bank, which went under in 2009 as a direct
result of the fraudulent activity going on at TBW, has already handed over
$150 million of this amount to Freddie. In addition, the GSE will receive
other mortgage loan receipts estimated to be $6 million, but Freddie must
pay a total of $61 million to TBW and the trade creditors represented by
the creditor's committee to settle their potential claims against the GSE.
If you're interested, visit my twice-a-month blog at the STRATMOR Group web
site located at www.stratmorgroup.com
. The current blog takes a look at near-term news for non-agency securities,
such as jumbo residential loans. If you have both the time and inclination
make a comment on what I have written, or on other comments so that folks
can learn what's going on out there from the other readers.