A sad memorial and lots of news to keep up on...

My grandson Oliver's Angel Day was July 25, 2008. He was only seven months old when he was taken from us. I miss him so, and that pain and sorrow lingers always just below the surface.....thank you to all for remembering my family in your prayers....

Now, in a press release by the Federal Reserve on July 14th, the final rule to amend Regulation Z (Truth in Lending) was outlined. The important bullets include:
Lenders are prohibited from making a loan without regard to the borrower's ability to repay the loan from income and assets OTHER THAN the home's value. And, in the future, the homeowner does NOT need to prove that a lender violating this prohibition by demonstrating that it is part of a "pattern or practice."
Creditors are required to verify the income and assets they rely on to determine the borrower's ability to repay.
Prepayment penalties are banned if the payment can change in the first four years of the loan. For higher priced loans, the prepayment penalty period cannot last for more than two years. This is a far stricter rule than originally proposed.
Creditors are required to establish escrow accounts for property taxes and homeowner's insurance for all first-lien mortgage loans.
Creditors and brokers are prohibited from coercing a real estate appraiser to misstate a home's value.
Companies that service mortgage loans are prohibited from engaging in certain practices, such as pyramiding late fees. Servicers are also now required to credit the consumer's loan payment as of the date of receipt.
Creditors must provide a good faith estimate of the loan costs, including a schedule of payments, within three days after a consumer applies for any mortgage loan secured by a consumer's principal dwelling. Currently, only early cost estimates are required. Consumers cannot be charged ANY FEE, except a reasonable fee for obtaining the consumer's credit history, until they have received the early disclosures.
Advertising must become more truthful and can no longer present as being "fixed", when indeed the rate can change under the fine print.

These new rules take effect October 1, 2009. The single exception is the new escrow requirement, which has been extended to 2010, to allow lenders to establish new escrow systems, as needed.
And, just as important, President Bush signed into law the most aggressive package to combat the country's housing crisis on July 30th. I am waiting for someone smarter than me to break the sections down and explain in simple English before I relay the news to you!
So, 'til next time, it's all good!

The Mortgage Aid Plan in Washington Moves Ever Slowly Forward!

Last week, The Wall Street Journal reported that US Senate lawmakers, increasingly aware of the role of housing and the economy will play in the upcoming elections, took a major step towards passage of a broad package of legislation Tuesday.

They voted to limit debate on the package that includes tax relief, a program to refinance up to $300 billion in mortgages for cash-strapped borrowers and change the FHA to ease the agency's ability to assist homeowners.

Both Democrats and Republicans are expected to support the bill, despite the threat of a veto from the White House.

Part of the bill calls for lenders to voluntarily write down the value of a distressed loan in order for the homeowner to qualify for the new FHA-backed loan. In return, borrowers would have to share future appreciation with the federal government.

In other news, Countrywide's troubles mount as officials in three states filed separate legal actions against the mortgage lender. Bank of America is expected to purchase the Countrywide Financial Corp. by July 1st. California, Illinois, and Washington have filed in their state courts, alleging that Countrywide used "misleading marketing practices" to steer buyers into "risky and costly loans" to satisfy Wall Street's call for loans that could be packaged into securities. The state of Connecticut is expected to follow shortly by filing its own suit, alleging that Countrywide is "falsely promising refinancing opportunities and lying to consumers about possible risks", says Connecticut Attorney General Richard Blumenthal.

And, lastly, Fannie Mae and Freddie Mac, have scrapped the restriction of demanding higher down payments from buyers whose properties are located in a "declining" market area. Fannie Mae's senior vice president , Marianne Sullivan, said the policy was reversible because of improvements to the company's automated underwriting systems, allowing it to "assess each loan more precisely."

And, so, 'til next time, it's all good!

Homes Sales Rising in Hard-Hit Areas

Well, I have some good news and some bad news.

First the good news - home sales are up in inner-city Detroit.

The bad news is the homes are all foreclosures, for the most part. Sales are also up sharply in Las Vegas, Sacramento, Ca., and Fort Myers, Fl., as investors snatch up these properties at rock bottom prices - knowing that the value has nowhere to go but up!

Thomas Lawler, a housing economist in Virginia, says sellers "have moved into the acceptance mode" and homes are being priced to sell quickly. He says, "I think it is the first stage of good news for the market."

It is believed that the nationwide inventory of foreclosed homes is nearly half a million homes. Many lenders were slow to slash prices, hoping to avoid huge losses. But, more lenders are deeply cutting prices, as the cost of taxes, insurance and upkeep grow.

For the first four months of 2008, home sales in Detroit, excluding suburbs, were up 48% from a year earlier!

This information came to us from the Michigan Association of Realtors. The average home price dropped 56%, and many feel that there will be no further price drops.

Visit our webpage, Detroit Properties Available, to find a bargain for yourself before the gravy train moves on!

Also, on a happy note, some top US bank regulators are proposing that New York Attorney General Andrew Cuomo's plan to address inflated appraisals should be dropped. It is believed that his plan unfairly penalizes the appraisers, rather than the brokers and lenders that threaten to blacklist appraisers that cannot "hit" value.

It is also believed that Cuomo's plan would add hidden costs and fees to an already overpriced mortgage cost system.

Comptroller of the Currency, John Dugan, suggests that Cuomo's plan violates federal law. He states, "The code would impose a dramatically different new set of operational standards for appraisal practices on a national scale that would conflict with and effectively supersede the comprehensive federal scheme established by Congress."

How I love to end the week on a happy note! 'Til next time - it's all good!

FHA to the rescue!

Forbes.com reports that the savior of the mortgage mess will be the FHA, in partnership with lenders willing to work with it. Lenders are scrambling to become FHA approved, as the Federal Housing Administration is fast becoming the bank's best friend.

Some major US lenders are again enticing risky borrowers with attractive terms and as little as 3% down. Wells Fargo is looking for borrowers, with some help from the federal government.

Though "FHA delinquencies tend to be quite high," states Alex Pollock, former president of the Federal Home Loan Bank of Chicago. "They are substantially higher than the prime market - not as high as the subprime market, but nonetheless quite high. You're in a sector of the market that is by definition risky."

Bill Glavin, special assistant to FHA Commissioner Brian Montgomery, expects the FHA to increase loan volume by 162% in the fiscal year 2008.

From Wells Fargo to Countrywide to Bank of America, lenders are actively promoting FHA-insured loans through all of their sales channels.

The FHA's role in the market "will clearly fill the void of subprime financing," says Vicki Wagner, an analyst at Standard & Poors. Wagner said an FHA loan "by definition, looks and acts like a subprime loan."

On the same note, Cyril Moulle-Berteaux, managing partner of Traxis Partners, LP, a NY-based hedge fund firm, writes in his Wall St. Journal On-Line op-ed that "The Housing Crisis is Over", as of May 6th.

His indicators:

• Though being at the bottom does not indicate a return to booming prices, the trend is no longer getting worse.
  
• This current housing bust is the better part of three years old. Home sales peaked in July, 2005. He quotes home sales down 63% from peak levels of 1.4 million. When adjusted for population growth, housing starts are off 50%, falling to 1982 levels.
  
• Residential construction is near 15 year lows.
  

How, then, is the crisis over? Homes are once again affordable and unsold inventory will continue to decline and will peak out in a couple of months.

So, all of that sounds wonderful to me! And, we are FHA approved in 14 counties! So, give us a call when you get to be an FHA lender!

And, 'til next time, it's all good!

Say It Isn't So!!!

The latest word out of Washington, D.C., last week states that the downward trend in the housing market will continue until early next year!

That consensus is far gloomier than the one just a few months ago, when it was thought that the bottom would be reached in late summer or early fall of this year. But, the economists who convened at the spring construction forecast conference of the National Association of Home Builders disagreed. The association's chief economist David F. Seiders says, "Foreclosures keep getting worse. Where in the world does it stop?"

The latest S&P/Case-Shiller Home Price Index shows that new and existing home prices fell 12.7% in February 2008 from just a year ago.

For those trying to sell their home, that means adding incentives like seller financing or lease options, pricing their home below the competition (which is nearly impossible with all the bank owned properties on the market!), and marketing aggressively.

But not all economists have such a gloomy outlook on the future of the housing market. Nariman Behravesh, chief economist of Global Insight believes that there is now a substantial amount of capital out there to fix the subprime mess.

And, James Glassman, managing director of J.P. Morgan Chase & Co., believes the current mess is partly due to creditors overreacting to the subprime mortgage crisis, leaving only those with cash saved able to buy homes. He states that the overall economy is sound and the crisis will subside as credit becomes freer and home prices stabilize. "The wheels aren't coming off the wagon," he said.

And, so, take your pick of whose opinion is correct.....and, 'til next time, it's all good!

Another Loan Assistance Program for Homeowners is in the works in Washington....

From today's Wall Street Journal comes another possible program to assist the struggling housing market and those families a step or two away from foreclosure.

This plan would allow homeowners to receive federal loans to pay down as much as 20% of their principal. The plan was introduced by the Federal Deposit Insurance Corporation to help stem the rising tide of foreclosures.

The success of the program hinges on the willingness of mortgage servicers and investors to agree to restructure those loans in trouble, as well as to pay the financing cost of making a federal loan.

The FDIC believes that "only the federal government is in a position to help arrest the downward cycle in housing markets by facilitating temporary aid to borrowers facing financial difficulty and encouraging widespread restructuring of unaffordable mortgages."

The FDIC Chairperson, Sheila Bair, did acknowledge that the firms willing to service the program would receive some benefit. But those same firms would be required to cover the financing costs and would have to subordinate their own claims to the federal government if they choose to take part in the program.

Right now, the Bush administration, lawmakers, and industry and consumer groups are in the process of being briefed on the program by the FDIC. Ms. Bair states that she cannot foretell a response, but hopes the program will receive bipartisan support.

And I say - please pass this program and any other ones on the table to get this economy moving again!
So, 'til next time, it's all good!

Interesting Facts from Then and Now.....

Earlier this month, the Wall Street Journal online Guide to Property reported a new problem with a growing number of borrowers. Those that can afford their mortgage payments are also walking away from their homes. Economists are hoping that this is just a small issue, but the numbers appear to be gaining. Homeowners are deciding that they no longer want to pay on homes with negative equity; that is, they owe more on the property than the current value.

Especially hard hit are those who purchased property to flip, and the tough credit market has made it next to impossible for would-be sellers to find buyers.

Walking away from a home used to be seen as a last resort, but the trend appears to be taking hold nationwide. Also, the number of suspicious fires at homes due to be foreclosed upon is on the rise. California seems to have the largest number of fires per capita on soon-to-be foreclosed on properties.

On a happier note, the Congress appears to be closer to putting through some programs to assist delinquent borrowers in an effort to revive the housing market.

The current administration has been under steady pressure to pass additional legislation to help struggling homeowners. Mr. Bush is wary of government over reaction and insists on moderate expansion of federal assistance for lower-income home buyers only.

Lawmakers are hoping to put through some plans that would prompt lenders to take some loss, though not as much as if the property were to be foreclosed on. Progress on the bills is expected to become more aggressive after the Congressional Easter Break.

So, 'til next time, it's all good!

It's not just mortgage payments that are behind anymore....

Americans are not just behind on their mortgages anymore....now we can't pay our car payments or our heating bills, either.

Besides leading the nation in home foreclosures, Nevada has seen a 50% increase in deliquent utility accounts from one year ago. In New York, there has been a 12% increase in deliquent utility bills in the last 90 days. Many of the midwestern states do not allow heat to be shut off during the winter months, so families use the opportunity to let the bill slide for a month or two so they can pay their mortgage and/or car payment.

With Michigan having the highest unemployment rate in the nation, and some of the highest heating costs, families are struggling to keep up with their utility payments.

Though it seems that natural gas is super expensive to heat with, propane and heating oil are even worse! And, because the companies that furnish propane and heating oil are generally smaller and not regulated, they do not offer shut off protection programs.

Last spring, 1.2 million households were without heat after being shut off for nonpayment. Those families were an average of $850 behind on their payments and many were unable to scrape together the balance due before this winter hit and so still do not have heat!

Mark Wolfe, executive director of the National Energy Assistance Directors' Association, states "We're back at the point of crisis again this winter." Congress is considering adding $1 billion to the existing $2.57 billion funding for heating assistance under the Federal Low Income Home Energy Assistance Program.

Gosh, I can't wait for spring!

'Til next time, it's all good!

Deb

Who is going to help Michigan?

I have talked before about Michigan helping Michigan....it is a point that I cannot stress enough, it seems.

We opened our doors two years ago in April, and have contacted literally thousands of Michigan companies. We asked for one or two orders per month from each of our new contacts....not too much to ask, is it? One or two orders per month from each of our new contacts would not put their current appraisal company out of business and would give us the boost in sales that we need as a relatively new startup. We received some response to our request, but not nearly enough!

I say again - "If Michigan won't help Michigan, who the h*ell will?"

Every business in Michigan has the responsibility to help each other, or none of us will survive! Send us work - we will not disappoint you! Get out of your comfort zone a couple times a month - it will do you good to talk to and to meet new people!

On the same note, Senator Clinton announced in January her plan to assist homeowners that are in jeopardy of losing their homes to foreclosures; the Mortgage Refinancing Initiative Act. Clinton says that those states with the highest foreclosure rates will receive the greatest assistance. (Michigan is number 1 - not something to be proud of in this case!)

Clinton's plan includes a 90 day moratorium on subprime foreclosures, a five-year freeze in rates on subprime adjustable rate mortgages, and $30 billion in assistance to states and communities to fight foreclosures and offset the costs associated with mounting home vacancies.

Clinton states that any plan to jumpstart the economy is useless without tackling the foreclosure crisis.

And, I state, Amen to that!

So, 'til next time, it's all good!

Deb

21 Lenders Being Sued for Causing Foreclosure Mess

Hhhmmm, this is an interesting twist on the whole real estate mess.

The city of Cleveland, Ohio, is suing 21 of the nation's top lenders for violating Ohio's public nuisance law. Mayor Frank Jackson, along with his Law Director Robert Triozzi have announced that the city is seeking damages from the lenders for their part in the mortgage meltdown currently plaguing the US.

Jackson and Triozzi allege that underhanded lending practices have wreaked havoc on Cleveland's neighborhoods, creating a public nuisance.

Mayor Jackson claims that it is extremely costly for a city to rebound from the declining tax revenues caused by the fallout of foreclosures and believes that the 21 lenders should be responsible for partial reimbursement to the cities affected by their reckless lending practices.

The 21 defendants named in the suit are as follows:

Ameriquest Mortgage Company
Bank of America Corp.
Bear Stearns Companies
Citigroup, Inc.
Countrywide Financial Corp.
Credit Suisse (USA)
Deutsche Bank Trust Company
Fremont General Corporation
GMAC-RFC
Goldman Sachs Group
Greenwich Capital Markets, Inc.
HSBC Holding, PLC
Indymac Bancorp, Inc.
J.P. Morgan Chase Co.
Lehman Brothers Holdings, Inc.
Merrill Lynch & Co, Inc.
Morgan Stanley
Novastar Financial, Inc.
Option One Mortgage Corporation
Washington Mutual, Inc.
Wells Fargo & Company

This is the second lawsuit of its kind filed in 2008. The City of Baltimore also announced that they are suing Wells Fargo Bank, claiming that the lender harmed Baltimore's African American and minority communities and created high rates of foreclosure with unscrupulous lending practices.

So, the band plays on....
'Til next time, it' all good!
Deb

Bank of America buys Countrywide Home Loans and FHA certification for appraisers no longer necessary!

WOW! Big news day for the appraising business, folks!

On Friday, Bank of America announced that it is purchasing Countrywide Home Loans for a mere $4 BILLION. The purchase is certainly to rescue Countrywide from bankruptcy after the crash of the sub prime housing market.

For appraisers that have been long time Countrywide/Landsafe vendors, this raises some big questions. Will Landsafe continue to manage appraisal assignment for Countrywide and, if so, in some sort of diminished capacity?

LSI handles appraisal assignment for Bank of America - will all of the appraisal assignments be turned over to them? I contacted the chief appraiser at LSI, George Vann, on Friday via email and asked these very questions. He replied that he does not know at this time what will happen to the appraisal assignments or how, if at all, the appraisal process will be restructured.

This will be interesting....I have always believed that Landsafe was a huge conflict of interest for Countrywide, as they openly owned the company. What is the point of having an outside management company assign your appraisals, if the company is not "outside" at all?

Even bigger news - I received a bulletin from HUD/FHA on Wednesday that I had to read over and over and am still not sure that I am reading it correctly. If I am, it states that effective February 7, 2008, there will no longer be ANY FHA certification necessary for FHA appraisals! In other words, any state licensed appraiser will be able to perform FHA appraisals!

The bulletin goes on to say that the FHA certification process was found to be duplicative and therefore, unnecessary.

WOW! That is a bombshell.....and has both good and bad connotations for appraisers. Those that are already FHA certified are certain to lose some business to licensed appraisers that may not really be qualified to perform an FHA appraisal. On the other hand, FHA appraisers will no longer have to worry about falling behind on their own personal FHA mortgages and being removed from the FHA roster as a result.

I am putting the link to the bulletin here, as well as the little paragraph that I believe states that any licensed appraiser may perform an FHA appraiser come February 7th.

http://a257.g.akamaitech.net/7/257/2422/01jan20081800/edocket.access.gpo.gov/2008/pdf/08-8.pdf

All- Department of Housing and Urban Development24 CFR Part 200[Docket No. FR-5112-F-01] RIN 2502-AI53TITLE: FHA Appraiser Roster Requirements; Final AGENCY: Office of the Assistant Secretary for Housing--Federal Housing Commissioner; HUD.ACTION: Final rule.DATES: Effective Date: February 7, 2008 SUMMARY: This final rule explicitly conforms the eligibility requirements for applicants to the Federal Housing Administration (FHA) Appraiser Roster to longstanding HUD practices, as well as to existing nationwide industry practice. Only appraisers on the roster may perform required appraisals of properties that are to serve as security for FHA-insured single-family mortgages. Among other requirements, the current regulations require that an applicant must be a state- licensed or state-certified appraiser and pass a HUD examination on FHA appraisal methods and reporting. This final rule codifies HUD's longstanding practice and the nationwide practice that such certification or licensing comply with national criteria for education, experience, and passage of a state-administered examination. This final rule also eliminates the requirement for applicants to pass a HUD test on FHA appraisal methods and reporting, because the test has become duplicative of the national examination requirements for state licensure and certification and, therefore, unnecessary.

Take a look and let me know if that is what you read into this, too!

Big news day! And, as always, 'til next time, it's all good!

An unbelievable story of fraud rocks Bear Stearns in Atlanta

With a scheme that reads like a made for TV movie, a group of young and not so young hustlers managed to convince Bear Stearns to give them $6.8 million in real estate loans!

One of those loans was a mortgage to Calvin Wright and his wife for 1.8 million. With fraudulent papers, companies, and cohorts to back him, he is documented at Bear Stearns as being an investment banker, and papers show his wife to be a top officer at a marketing firm. The documentation shows that Mr. and Mrs. Wright were earning upwards of $50,000.00 per month, with assets to back them of roughly of $3 million. In reality, Calvin Wright is a telephone technician and earns about $100K per year, and his wife does not work outside of the home at all!

The FBI states that mortgage fraud cases now make up 28% of their workload, as compare to 7% in 2003. (2003 is probably just about when all these schemes were being cooked up!) Suspicious Activity Reports, which lenders are required to file, are up 700% from 2000 and 2006.

Estimates show that losses from mortgage fraud could total a record $4.5 billion for 2006, which is up 100% from the previous year. In some regions, it is widely thought that fraud accounts for about half of all foreclosures.

But, who is to blame for all this mess? There is no simple answer, and no one entity that is responsible. The fraud necessarily needs a lender, sometimes a broker, the criminal that is either forging documents or creating shell companies, appraisers that are willing to inflate values for a cut of the loan, and support companies such as the ones that produce the forged documents.

The stated income loan was truly a calling for deception, hence, it's nickname, the "liar's loan". A recent review of such loan documentation revealed that 60% of the loan paperwork overstated income by 50% or more.

Many lenders outsourced the verification process to brokers and competition became fierce to speed up the process and volume of paperwork that passed over each desk to keep business with the lender.

Overall, the most unbelievable aspect of the Atlanta scheme is that it was, in large part, perpetrated by a 23-year-old college dropout named Gregory Jerome Wings, Jr. aka G-Money. His cohorts included a young club owner, and a director of an underground documentary called "Crackheads Gone Wild", a tale of drug addiction gone overboard.

Maybe the lenders need to hire street folk to sniff out the scammers. I would bet that a large percentage of Atlanta's population knew who Gregory Jerome Wings, Jr. really was - and I'm sure some street folk would talk for some cash in hand.

So, the scheme went like most others. First, find some borrowers with good credit to apply for gigantic loans, using stated income terms, false income documentation and asset statements. Then, find a mortgage broker who was willing to submit the false documentation. Lastly, find an appraiser willing to over value the property. (It is important to note that no appraisers were indicted when the case was finally cracked - it was never found that the appraisers got any extra cut or dividend for over appraising the property - they were just desperate for work to stay alive!)

The same week that Mr. Wright obtained his $1.8 million dollar mortgage from Bear Stearns, he also obtained a $1.9 millions mortgage on a second property near Atlanta. This time the lender was BankFirst, a unit of Minneapolis-based Marshall BankFirst Corp.

Mr. Wright's attorney states that the crimes were incredibly easy, and as Mr. Wright made more and more cash, it was not difficult for him to talk other young people into joining him in his scam. Luckily, some Atlanta residents became suspicious when properties in their areas started selling for sky high prices and then were never occupied, and alerted authorities. One homeowner who assisted in exposing the fraud now carries a loaded handgun in his truck at all times. "We are putting people in prison for many, many years. This is serious stuff."

Though skeptics claim that this relatively inexperienced group of thieves should never have been able to carry this scheme on for so long and to such a high degree, the chagrined prosecutors for the lenders claim that these schemes were very sophisticated, an claim that they had no reason to doubt the authenticity of the forged and falsified documentation.

I am quite certain that many more tales like this one are going to come to light in the coming months. I sincerely hope that this will pretty much be a thing of the past by the third quarter of 2008 and the market will return to normal. Although "normal" may be quite different than it was five or ten years ago.

And, hats off to the appraisers who refused to play the game of grab the money and run! We will be the ones still standing when this whole mess is behind us and will no only not be in jail, but working again!

So, 'til next time, I say, it's all good!
Deb

More on the SEC probe into appraisal inflation for Washington Mutual

This is a sad, sad, state of affairs!

The SEC is investigating banking giant WaMu for allegedly having its loan officers pressure their appraisal management company, eAppraiseIT LLC, to increase values on properties that came in too low to make the loan.

An email has surfaced in which eAppraiseIT's president wrote that the company would "roll over" and submit to WaMu demands for higher appraisals. Later, in another email, he stated that the bank was in violation of federal regulations, which prohibit pressuring appraisers for value.

And, do you want to know what the saddest part of this whole mess is? eAppraiseIT LLC only pays $135.00 to the appraiser for a full single family 1004. So, for a third of the normal fee for an appraisal, some of these appraisers broke their own USPAP regulations just to get work in house. Which, sadly, is what sometimes happens when appraisers are desperate for work.

Appraisers have families that need to eat - they have house payments, car payments - children that expect a Christmas, just like everyone else.

Appraisal management companies were formed to put an end to hand picking appraisers and manipulating property values. Well, obviously, the situation has not changed, except that the honest appraiser is either not going to get any work at all, or be paid 1/3 of his entitled fee, while the crooked management company walks off with the rest.

Should be interesting to see how the rest of the story unfolds.....

And, 'til next time, it's all good!

USB and WaMu struggle to pull out of mortgage crisis

In articles released on the same day, mortgage giants Washington Mutual and USB AG both reveal massive losses and plans to regain footing in the mortgage market.

Of the country's top five mortgage lenders, Washington Mutual has the most at risk, with 29% of it's 2006 mortgages in the high cost category, mostly subprime, and an additional 15% backed by homes other than the owner's primary residence. WaMu has revealed that it expects a fourth quarter loss for 2006 due to a $1.6 billion goodwill write-down on its home-loans business. Shares have fallen almost 60% in the company's stock in the past 12 months.

Speculators are wondering whether banks such as J.P. Morgan Chase & Co. will look to buy out WaMu, as they have long been seeking to expand on the west coast. Also under speculation is whether Chief Executive Officer Kerry Killinger should still be running the company.
And, finally, WaMu announced that it will cut an additional 3,000 employees as it gets out of the subprime mortgage business altogether.

USB AG has announced that it will take a $10 billion writedown and is trying to sell a chunk of itself to the government investment arm of Singapore and an unnamed Middle Eastern investor. The fact that USB has always been considered a conservative lender is sparking even further alarm on Wall Street about the real effects of the mortgage meltdown.

USB is Zurich based and was formed from the 1998 merger of SBC Corp. and the Union Bank of Switzerland. It employees nearly 83,000 employees and reported a net profit of 12.26 Swiss francs in 2006. USB has never posted a full-year loss, mainly due to the strength of its wealth-management operations. It is unknown at this time if that record will hold for USB for 2007. Chief Executive Marcel Rohner states "This is a very bleak outlook" for the U.S. housing market. He is referring to the fact that banks and other lenders are looking overseas for investment help in this mortgage crisis, which could make for national security problems in the future.

Well, despite all of the gloomy news, I believe 2008 will be good for all of us in real estate as we all become more involved and creative in ways to clean up this mess!

And, so, as always, 'til next time, it's all good!

Fannie Mae and Freddie Mac encouraged to investigate loans from WaMu

Washington Mutual and eAppraiseIT are under investigation by Fannie Mae and Freddie Mac due to prodding by New York State Attorney Andrew Cuomo for allegedly pressuring appraisers to inflate value on properties.

At an investor conference in New York, WaMu said the outlook for the mortgage industry next year is bleaker than many believe, while shares of WaMu and other mortgage companies drop even further.

WaMu shares are down 56% this year and at their lowest point in more than seven years. WaMu, the country's biggest savings and loan, was the 6th largest US home mortgage lender in this year's first nine months.

Mr. Cuomo directed Fannie and Freddie to appoint examiners to look particularly at mortgages acquired from WaMu and any other loans made on the basis of appraisals by First American Corp.'s eAppraiseIT LLC subsidiary. Last week, his office filed a lawsuit against First American, alleging it violated federal and state laws by allowing WaMu to control the selection of appraisers hired to assess collateral for loans.

First American said last week the suit "has no foundation in fact or law."

WaMu said it will continue to ensure its operations comply with all applicable laws. WaMu also said both Freddie and Fannie have confirmed that they are continuing to purchase loans from WaMu "in accordance with their existing contracts."

Mr. Cuomo's staff isn't just looking at WaMu loans. He believes pressure on appraisers and inflated appraisals appear to be a very widespread problem in the industry.

Fannie Mae and Freddie Mac said they will both cooperate with the investigation.

Information Potpourri

Some tidbits of current information!

• GMAC's loss grows to $1.6 billion as mortgage revenues fall. The auto and home lender division partly owned by General Motors continues to drag down the automaker's bottom line.
• Citigroups shares fall 4.9% due to problems with the mortgage and debt market. The combined losses are estimated to by more than $30 billion, and many worry that more losses are in Citigroup's future.
• The new relief bills for homeowners that were being touted in Washington have either stalled or dropped from the radar. So far, only one relief program, the FHASecure program, has been put into action, but with strict regulations. It is feared that the program will not help those homeowners most in need of assistance to keep from losing their homes.
• Did you know of a piggyback credit card scheme that offers those with excellent credit to be paid to open accounts as authorized users for those with not such good credit? Then, the authorized users show an excellent FICO score and can qualify for the mortgage they would not normally be approved for. Industry experts state that much of the current foreclosure mess is due to score-inflation fraud.
• Homeowners that are current on their mortgage are not eligible for any loan modifications. So, even though the homeowner may be acting diligently in foreseeing a future problem in making their payments, the lenders will not even consider them for modification until they are at least two months behind in their payments. Even though recommending someone to stop paying their mortgage sounds like bad advice, lenders are afraid that those that are current on their mortgage will take advantage of the modification system though they do not need it. Loan mods are expected to account for 5 to 10% of all loan activity over the next 12 to 18 months.
  
  Well, despite the bad news, I still say, 'til next time, it's all good!

Winter is nearly here!

I found a great, easy check list to see if your home is prepared for the winter cold. Remember your outrageous gas bills from last winter? These 4 steps can help reduce your heating bills by a few percentage points per month, which can add up to hundreds of dollars, depending on how unending our winter is this year!

• First, make sure that all of your exposed plumbing is adequately wrapped. Though the wrapping itself will not save money on your heating bill, it will keep your pipes from bursting and costing you a lot of money for repairing the significant damage to your home. Heat tape should be applied to all exposed pipes, and exterior faucets should be drained and their water source turned off.

• The proper insulation is the key to energy savings. Determining the type of insulation to use depends on a number of things. What type of home, how old is your home, how high are your ceilings, do you have a basement, and what type of heating/cooling system you use. The higher the R-value of the insulation you use, the greater the insulating power.
  

• Caulk those windows and doors! If you're very ambitious, install weatherstripping on all doors and windows after you caulk them to cut drafts down drastically!
  

• Don't forget to change the filter on your furnace. Many thermostats are now programmed to tell you when the filter has 500 or more hours of use on it. When the thermostat is flashing "filter", don't ignore it. Check the filter - it may or may not need changing. If it looks gray, then change it. Filters are relatively inexpensive and help your heating/cooling system work much more efficiently.
  

So, 'til next time, it's all good!

So, let's talk about the other victims of the subprime meltdown....

Not to be forgotten in the midst of the mortgage slowdown are all the brokers, loan officers, processors, and administrative staff that have lost their jobs and are now, ironically, struggling to pay their own house payments!

Since August 2007, scores of lenders have down sized their staffing or disappeared altogether.
Countrywide's Full Spectrum Division laid off 6 employees from it's Troy office; the staff was only 16 total to begin with.

Franklin Mortgage Funding in Southfield laid off 120 employees in 2007, Aegis in Troy let 25 people go, Option One in Novi eliminated 30 positions, and American Home Mortgage in Farmington Hills has lost 25 employees.

More layoffs are announced daily, as more lenders face liquidation of their subprime divisions. Lehman Brothers Holding, Inc., closed its subprime division altogether, laying off 1,200 workers at 23 sites. In Scottsdale, 1st National Bank Holding Company closed its wholesale home mortgage unit and cut 541 jobs. Accredited Home Lenders Holding Company added 1,600 more employees to the unemployed roster.

Banking giant HSBC closed a main financing office and cut 600 jobs in August of this year.

All told, more than 40,000 workers have lost their jobs at mortgage lending institutions. A senior analyst with Celent, a Boston-based financial research and consulting firm states "It's far from over. The subprime lending collapse will continue to ripple through the financial sector."

When the market was booming, mortgage lending jobs were often lucrative even to those with little experience. Many that have lost their jobs are returning to the work they did before the housing boom, or enrolling in classes to learn an entirely new trade.

We often forget that it is not just the families losing their homes that are suffering these days!

So, let's try to all be supportive of each other!
And, I still say, 'til next time, it's all good!

U.S. Treasury Secretary Henry Paulson comments on current housing correction

There just is not any good news for those of us in the real estate industry, on any facet, these days.

Last Tuesday, U.S. Treasury Secretary Henry Paulson gave a sobering speech at the Georgetown University Law Center. His gravest point was that the decline in the housing market poses "the most significant current risk to our economy."

He went on to say that the housing correction is not turning around as quickly as it previously may have appeared, and "it now looks like it will continue to adversely impact our economy, our capital markets, and many homeowners for some time yet."

It is not only the subprime borrowers having trouble paying their mortgages, he explained, by many other homeowners are having problems as the prime mortgage rates also increase.

Mr. Paulson has come out in favor of developing a uniform national licensing and monitoring system for mortgage brokers to alleviate future meltdowns. He is skeptical of legislative efforts to complete ban such practices as prepayment penalties. He believes that each homeowner's case has to be judged appropriately.

He also warns about too much government intervention to bail out lenders or property speculators, as such actions tend to lead to repeat offenders, rather than cleaning up the problem. He is encouraging lenders to work with their customers that are in arrears and attempt to rework their loans to an affordable level.

And, I say, if Michigan survived the 1980's, we will come back from this, also!
And, so, 'til next time, it's all good!

Political finger pointing in the mortgage meltdown....

The Democrats and the White House are still bickering over the best way to assist the many homeowners facing foreclosure due to interest rate resets and job loss.

The Democrats, including House Financial Services Committee Chairman Barney Frank, Senator Charles E. Shumer of N.Y., House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, have proposed a temporary increase in the portfolios of Fannie Mae and Freddie Mac, along with creation of a position that would oversee a limitation on foreclosures.

Republicans, including the President, have fired back at Democrats for not taking action legislatively. They say that they have heard a lot of talk from Congress, but no action and no plans on the table.

Republicans also are not in favor of creating a new position to oversee the foreclosure problem, and believe that Housing and Urban Development Secretary Alphonso Jackson and Treasury Secretary Henry Paulson are doing enough to alleviate the problem by meeting with mortgage counselors, lenders and servicers.

So, the beat goes on....

As always, 'til next time, it's all good!