June 30: View on how to fix the economy; More settlement news - and CW has cost BofA how

Mortgage and Lending with Global Home Finance Inc. NMLS ID:316441 NMLS ID:184176

[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


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

and colleagues!


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 have


-      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



Hee! Haw!


Lisa Melby


Firestone Financial Group





Editor's note:


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

meet investors'

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

mortgage loans.

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




. 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.