As much as I liked to see him squirm, I'd have liked the anchors to make him squirmier by asking him if by "self correct" he means unload his own stock by the boatload...
Really, what are the chances that underwriting will stop for long at "crazy" as the needle swings from "insanely stupid" to "prudent"? These people don't realize that it matters little what Fed does, they're going to be beaten up by the "invisible hand" without the Feds help.
Again, your fanaticism blurs your credibility. Hybrid loans have been around for years--I used one to buy my second home, a 7 year fixed rate which was 1% below the going 30-year at the time-- and they have been an important part of the financial product menu for many buyers over the years.
Stating general facts about the mortgage process may be extremely enlighting to those who have no backgound in the business, but the editorials come off as shrill and jaundiced to those who know better.
Producer, unclench thyself. What really blurs credibility all the way to Mozoville is using a single unverifiable statement beginning with "I used one" to leap to a conclusion about the lending practicies of an entire industry.
"important part" not the same as "good part" -- produce that data, producer, showing me how well these hybrid loans have worked for the lending biz and the consumer.
"Again, your fanaticism blurs your credibility. Hybrid loans have been around for years--I used one to buy my second home, a 7 year fixed rate which was 1% below the going 30-year at the time-- and they have been an important part of the financial product menu for many buyers over the years."
Yes, they've been around for years, but it's the explosive increase over the last few years that's the story.
But, of course, you know this better than I do. Why leave out the context?
producer, there's a long post on the CR archives by Tanta defending the hybrid ARM as a perfectly useful product. Our new readers may not have seen it, but I know for a fact you've been around long enough.
But the point, you know, is that Angelo decided the conversation was about the good old hybrid. Wonder why? Could it be that he doesn't want to talk about the Option ARM? Could it be that he wants us to think about that old 7/1 instead of the 2/28? Could it be that he is trying to imply that for a "generation" we have made ARMs with zero down? How long is a generation here? Are we talking about human generations, or cat generations, or gnat generations, or what?
I am honored to be inducted into the Ancient Order of the Shrill.
No doubt that there are lots of products out there that probably never should have happened. The question I have is how well educated where the consumers going into these loans? Tanta's post last week on ARM disclosure's and Reg Z was great. In the mortgage industry, how much time is spent educating consumers in plain language about the pros and cons?
I think that if the government is going to step in, it should be to regulate the education and information sharing around these products - not to curb the creation of the products themselves.
Caveat Emptor sounds fair. And who say's you can't learn anything from "The Brady Bunch"???
Countrywides Angelo R. Mozilo: [Subprime Meltdown] Is GREAT NEWS
In a session with Maria on CNBC Mr. Mozilo could hardly contain his confidence in the future success of his company. While talking about the subprime meltdown he said that it will cause pain in the economy and that will make the Fed cut rates. This sequence, he said, is great news. He is very happy that most of his competitors would be wiped out (some already are in the process). He repeated his prognostication of the great news that lies ahead for emphasis.
In the wonderful world on OZ that the US economy has been ushered into the Fed has the total control as to what it wants to happen in the economy. When the Fed starts to cut rates, to rescue the economy from pain, the while cycle of 2002-2005 will repeat and those were the wonder years for companies like Mr. Mozilos. Since the housing has already bottomed the next leg up would follow Feds rate cuts.
Is it time to sell my truckload of puts in Hopebuilders and Fraudentials (some prior GTC orders to sell CFC puts did go thru today)? Hell no. The fun has barely begun. My minimum target for puts is 10x since 02/20/07.
hmm, maybe finally someone will realize that it wont be a bad idea to make a basic finance math class a required subject in elementary, high school and college, so that people have to think about it for at least a decade during their school phase. so when they leave the school they can count 1+1 and read the small writing. ou i forgot we cant do that, the economy would suffer from low liquidity.
just look at the poor japanesse they are acording to an international study of finance investment knowledge third nation from the end of table when it comes to investment in stocks and other finance products. poor japanesse, how can they save so hard and not invest in stocks and other products, how are the bankers going to collect their fees and buy their porsches???
i mean lets face facts, if 60% of people are simple and are not able to handle their finances where is this world going to end up? i lived in former east block and i say this, communism has fallen not because capitalism was working, it has fallen because capitalism had better drugs (stocks derivates bubbles etc.)
Such an interesting post Revro: Japan third worst re financial education of the public. I wonder if you have a source for that or could expand?
This was good too:
communism has fallen not because capitalism was working, it has fallen because capitalism had better drugs (stocks derivates bubbles etc.)
One of those drugs being punky financial education?
It seems not too long ago that Mozilo was talking about how he had never seen a soft landing, and wasn't expecting one this time. Now, he sounds like a Realtor - it's a great time to buy (it will be worth much more in five years). Why the sudden change? Is Countrywide seeing a significant decrease in loan volume that might affect Mozilo's shares?
calmo, it was PR article for investment fond regarding management of wealth, in which the guys from PR took out certain parts of the IMF study and combined it to in the end look saying "bad bad japanese, they dont invest in our ou so successfull fond so that must mean they cant handle their finances and so they have little of finance knowledge"
regarding capitalism/communism i choose capitalism over communism but only from the same reason as Winston Churchil, "cause there is nothing better". definitly dont count me in with dotcommunist since i lived in former east block and it was not very funny to see entire countries being run by fools. for example do you remeber the guy beating with his shoe on the tribune in UN. well we had more of them on all levels of government.
yet it changes nothing on the fact that finance math should be mandatory so that the people are not raised as idiots one day going to the big world to sign things they dont understand and have no clue about
Revro,
Yes, I remember Nikita and what an unusual gesture that was...but taking your shoe off and beating it on the podium never caught on. Maybe others had more respect for their shoes...or maybe their feet were just pretty happy and comfortable with the shoes on. I don't remember any reports of fleeing press reporters on account of stinky socks...so serious then, they would have endured even the smell of rotting fish.
About this capitalist/communist thingie: Bill Gates has stated that he likes the new capitalism developing in China...unlike the Commerce Dept that has just slapped some tariffs on paper products and more to come apparently.
As much as I liked to see him squirm, I'd have liked the anchors to make him squirmier by asking him if by "self correct" he means unload his own stock by the boatload
I recorded and watched the Angelo segments. I think they did a decent job of presenting the criticism and he did a decent job of responding. I dont have enough information to know whether he is selling the shares he got when founding the company or he is selling option shares granted by his captive board, so I dont have an opinion. His comment is that if you sell shares, you will get criticized. For the critics, the only thing you can do is build a company and die.
The part I found interesting is that he stated that he was on the show to advocate for loose standards (self regulation). With all of the self serving prose we know.
He talked about how 90% of the sub-prime loans are performing and that, without the program, that 90% of the market would not own their homes. Tanta and CR don't need my help addressing that argument.
IMHO, I think he is worried. My guess is that he knows CFC needs appreciating home prices. So I finally added those CFC puts to my LEND puts.
None of these "exotic" products is inherently bad. There's SOME portion of the home buying public for which each of them is perfectly appropriate. The problem is that that portion of the population that has been granted access to such products has ballooned beyond all reason. That, at the end of the day, is the real problem.
The problem ia the mortgage originator who didn't follow the well-established rules/laws that govern prudent lending.
We don't need MORE laws on the books, we just need compliance with (and regulation of) the fair-lending laws which were, not coincidentally, passed immediately AFTER we went through a similar lending "crisis" in the early 1980's.
In medicine, doctors use specific drugs in the proper dosage to treat specific conditions. A good doctor knows not only when to treat, but also when NOT to treat, allowing the "tincture of time" it's opportunity to heal the patient.
Following the same analogy, the problem is many mortgage brokers simply COULDN'T say "no" to a prospective borrower (and their anxious realtor, thinking of how they'd spend THEIR commission, too), REGARDLESS of how credit-unworthy the borrower was. Some of these lenders were so irresponsible as to advertise that saying "no" was not in their vocabulary, or those with names like Green Light Financial. Once that decision was effectively removed from the broker's hands, then the job becomes a matter of finding the right product, and not deciding not to originate.
Worse yet, some brokers were putting otherwise qualified borrowers into loans with a higher YPS (AKA broker commission) EVEN IF they could qualify for a cheaper fixed-rate loan. This would be analogous to a doctor who prescribes a more expensive medicine simply because he gets a kick-back for prescribing.
Could it be that he doesn't want to talk about the Option ARM? Could it be that he wants us to think about that old 7/1 instead of the 2/28? Could it be that he is trying to imply that for a "generation" we have made ARMs with zero down? How long is a generation here? Are we talking about human generations, or cat generations, or gnat generations, or what?
Actually, he has talked about (defended the POA) but the fact is, as a mortgage banker, you have to defend everything that is not a fixed rate, 50% ltv loan to a lot of people who really don't know what they are talking about.
You and I have a significant disagreement about the value of a 2/28, whether subprime is really predatory lending, and whether it's ethical for borrower to take a risk on how and when they borrow, but I can hardly imagine any mortgage banking professional advocating in general against a hybrid ARM.
As much as I am wary of POAs, there is a place for that in the mortgage menu as well.
Mozilo is a lot of things, but he is not one of the "bad" guys in this industry. He has a great track record of providing meaning value for his customers as well as his shareholders, and that was proven well before this last 5 years of unprecedented appreciation.
As much as I liked to see him squirm, I'd have liked the anchors to make him squirmier by asking him if by "self correct" he means unload his own stock by the boatload...
Really, what are the chances that underwriting will stop for long at "crazy" as the needle swings from "insanely stupid" to "prudent"? These people don't realize that it matters little what Fed does, they're going to be beaten up by the "invisible hand" without the Feds help.
Again, your fanaticism blurs your credibility. Hybrid loans have been around for years--I used one to buy my second home, a 7 year fixed rate which was 1% below the going 30-year at the time-- and they have been an important part of the financial product menu for many buyers over the years.
Stating general facts about the mortgage process may be extremely enlighting to those who have no backgound in the business, but the editorials come off as shrill and jaundiced to those who know better.
Producer, unclench thyself. What really blurs credibility all the way to Mozoville is using a single unverifiable statement beginning with "I used one" to leap to a conclusion about the lending practicies of an entire industry.
"important part" not the same as "good part" -- produce that data, producer, showing me how well these hybrid loans have worked for the lending biz and the consumer.
"Again, your fanaticism blurs your credibility. Hybrid loans have been around for years--I used one to buy my second home, a 7 year fixed rate which was 1% below the going 30-year at the time-- and they have been an important part of the financial product menu for many buyers over the years."
Yes, they've been around for years, but it's the explosive increase over the last few years that's the story.
But, of course, you know this better than I do. Why leave out the context?
producer, there's a long post on the CR archives by Tanta defending the hybrid ARM as a perfectly useful product. Our new readers may not have seen it, but I know for a fact you've been around long enough.
But the point, you know, is that Angelo decided the conversation was about the good old hybrid. Wonder why? Could it be that he doesn't want to talk about the Option ARM? Could it be that he wants us to think about that old 7/1 instead of the 2/28? Could it be that he is trying to imply that for a "generation" we have made ARMs with zero down? How long is a generation here? Are we talking about human generations, or cat generations, or gnat generations, or what?
I am honored to be inducted into the Ancient Order of the Shrill.
No doubt that there are lots of products out there that probably never should have happened. The question I have is how well educated where the consumers going into these loans? Tanta's post last week on ARM disclosure's and Reg Z was great. In the mortgage industry, how much time is spent educating consumers in plain language about the pros and cons?
I think that if the government is going to step in, it should be to regulate the education and information sharing around these products - not to curb the creation of the products themselves.
Caveat Emptor sounds fair. And who say's you can't learn anything from "The Brady Bunch"???
Draw the line between 2 data points:
All possible mortgage products must sit firmly on this line
--
**** March 13, 2007 ****
Countrywides Angelo R. Mozilo: [Subprime Meltdown] Is GREAT NEWS
In a session with Maria on CNBC Mr. Mozilo could hardly contain his confidence in the future success of his company. While talking about the subprime meltdown he said that it will cause pain in the economy and that will make the Fed cut rates. This sequence, he said, is great news. He is very happy that most of his competitors would be wiped out (some already are in the process). He repeated his prognostication of the great news that lies ahead for emphasis.
In the wonderful world on OZ that the US economy has been ushered into the Fed has the total control as to what it wants to happen in the economy. When the Fed starts to cut rates, to rescue the economy from pain, the while cycle of 2002-2005 will repeat and those were the wonder years for companies like Mr. Mozilos. Since the housing has already bottomed the next leg up would follow Feds rate cuts.
Is it time to sell my truckload of puts in Hopebuilders and Fraudentials (some prior GTC orders to sell CFC puts did go thru today)? Hell no. The fun has barely begun. My minimum target for puts is 10x since 02/20/07.
Jas
hmm, maybe finally someone will realize that it wont be a bad idea to make a basic finance math class a required subject in elementary, high school and college, so that people have to think about it for at least a decade during their school phase. so when they leave the school they can count 1+1 and read the small writing. ou i forgot we cant do that, the economy would suffer from low liquidity.
just look at the poor japanesse they are acording to an international study of finance investment knowledge third nation from the end of table when it comes to investment in stocks and other finance products. poor japanesse, how can they save so hard and not invest in stocks and other products, how are the bankers going to collect their fees and buy their porsches???
i mean lets face facts, if 60% of people are simple and are not able to handle their finances where is this world going to end up? i lived in former east block and i say this, communism has fallen not because capitalism was working, it has fallen because capitalism had better drugs (stocks derivates bubbles etc.)
--
Tanta and the rest,
Do any of you gals and guys understand the fidelity of the debt business?
Just curious,
Jas
Such an interesting post Revro: Japan third worst re financial education of the public. I wonder if you have a source for that or could expand?
This was good too:
communism has fallen not because capitalism was working, it has fallen because capitalism had better drugs (stocks derivates bubbles etc.)
One of those drugs being punky financial education?
LOL!!!
It seems not too long ago that Mozilo was talking about how he had never seen a soft landing, and wasn't expecting one this time. Now, he sounds like a Realtor - it's a great time to buy (it will be worth much more in five years). Why the sudden change? Is Countrywide seeing a significant decrease in loan volume that might affect Mozilo's shares?
Outside of U.S. fixed rate mortgage just isn't that available at all.
calmo, it was PR article for investment fond regarding management of wealth, in which the guys from PR took out certain parts of the IMF study and combined it to in the end look saying "bad bad japanese, they dont invest in our ou so successfull fond so that must mean they cant handle their finances and so they have little of finance knowledge"
link (its in slovak:)
http://tvojepeniaze.pravda.sk/sk_dochodky.asp?r=sk_dochodky&c=A050801_090114_sk_dochodky_p01
regarding capitalism/communism i choose capitalism over communism but only from the same reason as Winston Churchil, "cause there is nothing better". definitly dont count me in with dotcommunist since i lived in former east block and it was not very funny to see entire countries being run by fools. for example do you remeber the guy beating with his shoe on the tribune in UN. well we had more of them on all levels of government.
yet it changes nothing on the fact that finance math should be mandatory so that the people are not raised as idiots one day going to the big world to sign things they dont understand and have no clue about
CRL's take on hybrid ARMs:
Page Not Found
Hmm, I wonder -- would mortgage brokers get higher fees for saver 7/1s or 2/28s? And how many 2/28s were sold in the runup vs 7/1s...
Ponzi loans are not good and caused the massive inflation in house prices. Now prices need to come down alot to reflect affordability issues.
Revro,
Yes, I remember Nikita and what an unusual gesture that was...but taking your shoe off and beating it on the podium never caught on. Maybe others had more respect for their shoes...or maybe their feet were just pretty happy and comfortable with the shoes on. I don't remember any reports of fleeing press reporters on account of stinky socks...so serious then, they would have endured even the smell of rotting fish.
About this capitalist/communist thingie: Bill Gates has stated that he likes the new capitalism developing in China...unlike the Commerce Dept that has just slapped some tariffs on paper products and more to come apparently.
As much as I liked to see him squirm, I'd have liked the anchors to make him squirmier by asking him if by "self correct" he means unload his own stock by the boatload
I recorded and watched the Angelo segments. I think they did a decent job of presenting the criticism and he did a decent job of responding. I dont have enough information to know whether he is selling the shares he got when founding the company or he is selling option shares granted by his captive board, so I dont have an opinion. His comment is that if you sell shares, you will get criticized. For the critics, the only thing you can do is build a company and die.
The part I found interesting is that he stated that he was on the show to advocate for loose standards (self regulation). With all of the self serving prose we know.
He talked about how 90% of the sub-prime loans are performing and that, without the program, that 90% of the market would not own their homes. Tanta and CR don't need my help addressing that argument.
IMHO, I think he is worried. My guess is that he knows CFC needs appreciating home prices. So I finally added those CFC puts to my LEND puts.
"Captain, I don't know how much longer I can hold it together" - Scotty
None of these "exotic" products is inherently bad. There's SOME portion of the home buying public for which each of them is perfectly appropriate. The problem is that that portion of the population that has been granted access to such products has ballooned beyond all reason. That, at the end of the day, is the real problem.
You're right: the loan product isn't the problem.
The problem ia the mortgage originator who didn't follow the well-established rules/laws that govern prudent lending.
We don't need MORE laws on the books, we just need compliance with (and regulation of) the fair-lending laws which were, not coincidentally, passed immediately AFTER we went through a similar lending "crisis" in the early 1980's.
In medicine, doctors use specific drugs in the proper dosage to treat specific conditions. A good doctor knows not only when to treat, but also when NOT to treat, allowing the "tincture of time" it's opportunity to heal the patient.
Following the same analogy, the problem is many mortgage brokers simply COULDN'T say "no" to a prospective borrower (and their anxious realtor, thinking of how they'd spend THEIR commission, too), REGARDLESS of how credit-unworthy the borrower was. Some of these lenders were so irresponsible as to advertise that saying "no" was not in their vocabulary, or those with names like Green Light Financial. Once that decision was effectively removed from the broker's hands, then the job becomes a matter of finding the right product, and not deciding not to originate.
Worse yet, some brokers were putting otherwise qualified borrowers into loans with a higher YPS (AKA broker commission) EVEN IF they could qualify for a cheaper fixed-rate loan. This would be analogous to a doctor who prescribes a more expensive medicine simply because he gets a kick-back for prescribing.
Robert, serves me right for not posting a link with my snark, but here it is -Angelo throw the stock ashore, halelujah!:
Countrywide Leads Insider Selling Spree | Follow the Money | Financial Articles & Investing News | TheStreet.com
Could it be that he doesn't want to talk about the Option ARM? Could it be that he wants us to think about that old 7/1 instead of the 2/28? Could it be that he is trying to imply that for a "generation" we have made ARMs with zero down? How long is a generation here? Are we talking about human generations, or cat generations, or gnat generations, or what?
Actually, he has talked about (defended the POA) but the fact is, as a mortgage banker, you have to defend everything that is not a fixed rate, 50% ltv loan to a lot of people who really don't know what they are talking about.
You and I have a significant disagreement about the value of a 2/28, whether subprime is really predatory lending, and whether it's ethical for borrower to take a risk on how and when they borrow, but I can hardly imagine any mortgage banking professional advocating in general against a hybrid ARM.
As much as I am wary of POAs, there is a place for that in the mortgage menu as well.
Mozilo is a lot of things, but he is not one of the "bad" guys in this industry. He has a great track record of providing meaning value for his customers as well as his shareholders, and that was proven well before this last 5 years of unprecedented appreciation.
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