From: Tim Wilson, Head of Loan Origination for Wachovia Mortgage
Subject: Wachovia Mortgage, FSB to Discontinue Lending through Third Party Brokers
As you know, the mortgage industry is experiencing a very challenging market environment. Declining housing values, increased foreclosures, disappearing mortgage lenders, and a struggling secondary market are all symptoms of this market turmoil.
Wachovia Mortgage has evaluated its business model and decided to reposition its mortgage business. Going forward, we will primarily focus on customers who have relationships with the bank, and who are located in geographies where Wachovia branches are located.
As a result of our new strategic focus, Wachovia Mortgage has decided to discontinue lending through third-party, or wholesale mortgage brokers. This decision will be effective July 25, 2008, which will be the last date on which Wachovia Mortgage will accept loan applications from brokers.
This was a very difficult decision to make. Out of respect for the valued relationships we have had with numerous mortgage brokers over many years, we wanted to make you aware of this change as soon as possible.
If you have any questions about this change, please feel free to contact your local Wachovia loan representative. Thank you for your business.
The second quarter results included a $600 million ($374 million after-tax) addition to U.S. lending credit reserves that reflects a deterioration of credit indicators beyond our prior expectation, and a $136 million ($85 million after-tax) charge to the fair market value of the Company's retained interest in securitized Cardmember loans. The second quarter also included a tax benefit of $101 million primarily related to resolution of certain prior years' tax items.
Year-ago results included a $65 million tax benefit from the IRS related to the treatment of certain prior years' card fee income.
"Fallout from a weaker U.S. economy accelerated during June with consumer confidence dropping, unemployment rates moving sharply higher and home prices declining at the fastest rate in decades," said Kenneth I. Chenault, chairman and chief executive officer. "Consumer spending slowed during the latter part of the quarter and credit indicators deteriorated beyond our expectations.
Since the naked-short selling rule seems to have lost its effectiveness in the face of all the unduly pessimistic and negative earnings reports, we have decided to place a moratorium on negative news releases until further notice.
In Washington, one Democratic proposal would impose a 25 percent tax on "unreasonable" profits of the top five oil companies, which together made more than $120 billion in 2007, and put the money toward a trust fund for investment in alternative energy sources. Republicans say it's a gimmick that won't help at the pump and will discourage domestic oil production.
But Sen. Charles Schumer, D-N.Y., said the fervor for stock buybacks is a clear sign Big Oil isn't interested in new production or alternative energy.
"When you hear that," he said, "it screams out for a windfall profits tax.
Billy G is firing off again... I love this guy....
Pimco's Gross Says Fannie, Freddie Need Treasury
Let's be blunt: to the extent the Treasury suggests they'll never have to use their authority, that's a sham,'' said Gross of Pacific Investment Management Co.It's fallacious to suggest that the agencies could issue capital, preferred stock, without the co-participation of the Treasury. I don't think that's possible.''
Let's be blunt: to the extent the Treasury suggests they'll never have to use their authority, that's a sham,'' said Gross of Pacific Investment Management Co.It's fallacious to suggest that the agencies could issue capital, preferred stock, without the co-participation of the Treasury. I don't think that's possible.''
Pimco wouldn't buy the companies' stock without the Treasury's involvement, Gross said, in a Bloomberg Television interview from the firm's headquarters in Newport Beach, California.
Mortgage-backed bonds issued by Fannie Mae and Freddie Mac are ``an excellent buy'' compared with debt of the agencies, Gross said.
The dollar has fallen against nine of the most actively traded emerging-market currencies this year, and has registered declines of more than 20 percent against the Czech koruna, Polish zloty, Hungarian forint and Slovakian koruna.
WaMu and Wachovia did not make it to the sacred no naked short list.
Did BofA need to buy CountryWide to make it to that list.
Maybe that is the real reason BofA bought CountryWide - they were not big enough - Now they ARE!
Just watched that Billy G interview on BBerg...he lays it down.
I'm trying to imagine that its say 11am on some weekday (very soon) where FNM and FRE have thrown up their hands and said we're insolvent on a couple hours earlier.
What does anyone see unfolding? Does the US Treas have to do a co-announcement with them saying how much equity they are injecting?
"we wanted to make you aware of this change as soon as possible. "
But never-mind it's been discussed in detail for several weeks prior and that you've said nothing (officially) in the ensuing time makes that comment exactly worth nothing.
That it's share price remains above 10, let alone 5, is the real mystery...
BTW Ritholz has officially joined the deception crowd....even went as far as accusing me of calling him a "dick"-that he has removed most of my comments tells me all I need to know. He'd know if I called him a name-as many of you already know I don't play nice with comments.
You mentioned in the previous thread that Wachovia wasn't on the list because it's not a primary dealer. Could it also be that one of the "big fish" has an appetite for this "wittle fish"?
peAkcredit writes:
Every time my parabola detectors go off (like they are tonight in tech, gold and the U$D) there is a late announcement that Ben will be speaking at 10am for 3 or 4 hours in a previously unheard of but nevertheless regularly-scheduled fortnightly address to Congress.
Some day I expect to see him be run over by Mr Market down 500 points on it's way to a Rule80B halt. Ready to reflate that Whirly?
I talked to a guy who is a broker set to make a bundle--he specializes in hard equity loans. 12-13-14% First mtges. No more than 60% loan to value ratio. And his phone is ringinf off the hook. Lots of points too. (60% of now value, not peak value, so .6 x .7 = .42 of peak value.) Sounds just right to me.
This is properly priced risk at this time in Miami-Dade County.
His only problem is getting investors to invest at those rates. I said, you are the safest game in town actually. The houses aren't going to zero. If we go into GD II, even if some money is lost, much will remain, and I'm not sure that is true of the stock mkt, where values can drop to zero.
"Stop right there. House prices are declining. House values are the same as they ever were."
housing values are rising, as rents and incomes are still rising slightly. house values are however much lower, as much as 50% of asking prices in many areas based on historical rents and CAP rates. sales prices are falling sharply. once asking prices fall to meet actual values, the recovery can start to begi
I believe the bit about US Bank. They're little go-getters. They chased me into the supermarket last week trying to get me to open a checking account. Wouldn't let me go until I accepted a bottle of water. Great, now I owe them.
No offense to mortgage brokers, but the Internet kind of makes them obsolete anyway, doesn't it. People don't need middlemen when they can shop around easily on their own.
Commercial CAN go to zero, if nobody moves in before time and bandos destroy the bldg.
It would be unlikely for any significant number of houses to go to zero in Miami-Dade County When it gots really cold up north, there's going to be some migration. After all, you can use fans, and you can cool just one room if you haveta. My understanding of the frozen north is that you have to keep the pipes from freezing, so have to keep the temp above 32.
There are some who are praying for a really Andrew type destructive hurricane. I suppose a lot of insurers will refuse to pay on the grounds that the property wasn't worth anything anyway.
ades,
I am sure there was more financing, they were just doing the first trade for the most part.
They did have some go bad over the last two years, but I guess it was all over this year when the majority went south.
I will know more as the papers dig through the labryinth of legal filings. A lot of the investors had recorded percentage interests in the first loans, so there is a huge problem with the performing loans not getting paid with the (essentially) servicing partner in BK.
Of course the nonperforming investors what some of that money too;-}
Can you say legal mess?
It should be over just as real estate begins to recover.
Looks like aapl and wb are going to cause a black tuesday event at this rate.
I checked on the capital adequacy levels of some of these despised US banks that some think are going under and found them, as of end of March, very well capitalized. I would hesitate to make a firm and fast prediction but I would like to wager that NONE of them will go under. In fact they may all be super bargains.
Feckless: we don't need middlemen who just remove value from the deal. Good mortgage brokers are going off to die (and even 3 or 4 realtors too) and its not a good thing.
the only problem with FF rate cut is food is already too high and going higher. And the food banks are running out of food as their "customers" are increasing.
What would you rather see: a bunch of former home"owners" turned into renters and a slew of Americans going back to consuming only within their income levels
OR
a bunch of people starving in the streets?
I'm going with renters and lower consumption as my preferred outcome.
"They could cut them to nothing and it wouldn't make much difference"
Oh yeah. WM, WB, COF, NCC... all going to get wiped out and no one will notice as they get consolidated to larger institutions. There will be earnings power for all those institutions, eventually. In the short term they will take a beating.
Feckless Ness writes:
No offense to mortgage brokers, but the Internet kind of makes them obsolete anyway, doesn't it. People don't need middlemen when they can shop around easily on their own.
I heard this argument seven or eight years ago concerning commercial insurance brokers, but as far as I'm concerned I heard the last word from a risk manager who said "if I don't hire a broker, who's going to lie to the underwriter for me?"
Uncle B - or any other kind of broker or agent, for that matter.
Unless you're in a business that relies on connections or expertise you don't have and can't get on your own, what value does a broker/agent add in the Internet Age?
Feck: I think in many cases that borrowers and buyers are just deluding themselves in thinking they can arrange for themselves the best value. Problem it's just so hard to filter out all the noise.
People comparing mortages online? Give me a break. Lambs to the bait and switch slaughterhouse.
You're so right, Uncle B. My comments were predicated on the false expectation that people might actually shop around, educate themselves, learn to negotiate, etc., like I do. Silly of me.
We've become a nation of idiots, haven't we? Where's Ayn Rand when you need her?
Feck: In most cases they just can't do it as well as a good ethical "middleman." Plus for many of us our time is more valuable than that.
In the case of mortgages, you can educate yourself all you want, shop all you want, negotiate all you want, but most people when they get to the end of the process, if they've had the time and patience for it -- they just throw their hands up when the loan docs arrive and they're not as discussed.
I'm sure a good many of the commenters here would just sign in exasperation telling themselves its roughly what was discussed or believing when the originator told them it they made a booboo.
Many here would be savvy enough to just tell the originator to bugger off, but those same people would have probably found themseves a good ethical broker they can depend on to begin with. That's my feeling anyway.
Feck, if you're looking for Ayn Rand, she's on her way out the door.
Might be true when arranging a home mortgage. But you'd be surprised how utterly clueless most business owners are when it comes to commercial liability, worker's comp and the like. Commercial insurance brokers will not go the way of mortgage brokers, because the big insurance firms have no desire to do their business directly with the consumer, and 90% of small businesses are too cheap to hire risk managers. Trust me.
So if you haven your mortgage with one of these soon to be federal banks is there an opportunity to take a "write-down" and reset your loan to market value? My first is with Wachovia and my HELOC is with WaMU.
Option ARMs Throw Wrench Into Recovery
Asset Backed Alert, Harrison Scott Publications Inc. (July 18, 2008)
Another bout of agony is looming for the mortgage industry. Evidence is solidifying that about a year from now, a huge swath of so-called option adjustable-rate mortgages will default, wiping out many investors who hold bonds backed by the credits and dealing yet another setback to the already decimated home-loan industry. Option ARMs, which allow borrowers two or three years of monthly payments that fall short of the interest and principal due, could in fact experience losses that are far more severe than those already seen on floating-rate subprime mortgages and home-equity loans.
Option ARMs have actually been performing poorly for months, as over-leveraged borrowers increasingly find it impossible to keep up on their payments. But the troubles experienced so far are likely to pale in comparison to what's ahead - something many market players didn't see coming.
Of particular concern are loans written in 2006, when production of option ARMs was at its height and underwriting standards were at their loosest. Countrywide, the failed IndyMac and Washington Mutual were particularly active in writing and securitizing the credits. And they were often pooled into bond offerings by Lehman Brothers' Aurora Loan Services unit and Credit Suisse's DLJ Mortgage Capital.
Data isn't readily available on the volume of option ARMs outstanding, so the extent of potential defaults is difficult to pin down. As a matter of perspective, there were far fewer option ARMs written than subprime mortgages in recent years, but defaults are likely to hit a far-greater percentage of the loans. "It's a scary wild card," said David Castillo, a senior managing director at broker-dealer Further Lane Securities.
Further Lane projects that losses on securitized option ARMs could be as high as 75%. By comparison, projected losses on subprime mortgages generally range from 20-40%.
That's an ominous prospect, considering that troubles among subprime mortgages and even worse-performing home-equity loans have already been enough to send the worldwide credit market into a year-long slump that shows no signs of easing. In a typical subprime mortgage, a low introductory interest rate is replaced with a higher floating rate after two or three years, causing what is known as payment shock. That's when defaults typically occur.
How about the SEC investigate the fact that this news was all over the net weeks ago.
Yeah, and while they're at it, could they also investigate who it was who faxed a bogus letter from WCI CEO Jerry Starkey purporting to announce the sale of the company for $5.25/share?
Good local loan broker has local contact and accountability, need for referrals and repeat business
same for a good local Realtor
from an appraiser's point of view,
middlemen giving service to customers are added value expenses to a borrower/buyer. They know the locations, demographics, borrower, etc, should steer the loan to the right spot.
Not unlike a good salesman/woman at the clothing store, what suits you best?
Try to get an Internet middleman to
really work the file when there are underwriting questions, etc.
When the going gets tough, the Internet salesperson most likely just says bye and moves on. "Sorry, we can't help you". Then what do you do at the eleventh hour in a sale, purchase or re-fi?
That's where the local vs. Internet difference really is, minimizing the fall-throughs and blown-up refi's.
Can't eliminate them all of course.
Bank offers their own loan product, broker offers or offered multiple products which are declining in number and increasing in qualification requirements daily. (as noted here).
So we may be back to pick a bank and pick a loan, any term as long as it's 15 years, 20+% down, sterling credit, soon. 1965? That plus FHA.
I have found value in mortgage brokers on the commercial side. Good brokers can take a good overview of the capital needs and various income scenarios and come up with creative strategies for "packaging" the loans to various kinds of lenders.
We have also had them suggest modifications that allowed us to qualify for various programs and incentives (rural development for instance).
They have done this in a very quick way, sometimes hours (when we had been beating our heads against the wall for months), and allowed us to move ahead and get financing in place to move a project forward.
Now that has been a much much more arduous task since December (if not impossible). But it certainly hasn't been easier to go onto the internet and try to fid the money.
Wachovia bank is one of the most stupid and corrupt groups I have seen. They are such a group of bumbling idiots that they trip over their own feet when trying to pull a fast one on their customers?!
That they were still selling "pick a payment" mortgages until now is a prime example of this idiotic way of doing business, but I'd expect nothing more from them.
People comparing mortages online? Give me a break. Lambs to the bait and switch slaughterhouse.
What "we" Kemosabe? Speak for yourself!
Thank God you can still haggle at car dealerships (and elsewhere) and thank God you can buy a house without having to deal with corrupt transaction parasites...
Now that RE "Brokers" and Mtg. "Brokers" aren't unavoidable transaction parasites, those of us who are capable of handling our own paper pushing can do so without being forced to pay for grossly over-priced secretarial work.
Nearly inevitably, when I experiment with an "agent" of some kind who promises me the "value added" of their "expertise" I find I'd be far better off doing it myself - and that's assuming the cost is "free" in both cases. Pay someone for the privilege of a half-assed job finding me a "lame" deal? And it doesn't save me any time - I still have to do all my own reading and research of the fine print to be sure I'm not getting railroaded.
Of course, I also do my own major car repair. Using your "car mechanic applied to other industries" metaphor: A good body-repair person is a highly skilled expert (artist) and they pull down as much or more as a good many post-undergraduate white collar professionals (like 80+k/year). Your average grease monkey, not so much. Diesel mechanics pull down a pretty penny too. Of course, those guys all add considerably more tangible value than a transaction parasite.
Feckless is entirely right: the internet as market-maker replaces the real primary value and function of these 'professions'.
You are one house buyer out of ten though, just as you are one car owner with mechanic skills out of ten.
I'm with you on don't use and pay for the service if you don't need to, goes for any of services other people commonly use everyday.
Just as there are parasites in every field to prey on the gullible and less informed, there are agents and brokers who take pride in providing honest services to those who are not as expert.
Hah, that is why my sole scheduled re-fi hasn't closed.
I suspected. . .
Probably not first.
And I was first.!!
Damn U!
What a surprise.
How about the SEC investigate the fact that this news was all over the net weeks ago.
Those poor brokers. Maybe we should just call them brokes now.
Baby steps to bankruptcy
The mortgage broker business is just about done. My clock says a few minutes until midnight for these guys
But wait, I wanted to buy a house??
Summary:
Missed-
AXP
SNDK
TXN
(all down big AH)
Ok, consolidation. Interest rates/yields for saving will drop like a rock, and mortgage rates will skyrocket. Tuff times for banks and customers.
dun dun...DUN DUN DUN...DUUUUUUHHHNNN
Some day loans will be priced to reflect the risk they posses. This will help that process.
...............
Date: July 21, 2008
To: Wachovia Mortgage, FSB Brokers and AEs
From: Tim Wilson, Head of Loan Origination for Wachovia Mortgage
Subject: Wachovia Mortgage, FSB to Discontinue Lending through Third Party Brokers
As you know, the mortgage industry is experiencing a very challenging market environment. Declining housing values, increased foreclosures, disappearing mortgage lenders, and a struggling secondary market are all symptoms of this market turmoil.
Wachovia Mortgage has evaluated its business model and decided to reposition its mortgage business. Going forward, we will primarily focus on customers who have relationships with the bank, and who are located in geographies where Wachovia branches are located.
As a result of our new strategic focus, Wachovia Mortgage has decided to discontinue lending through third-party, or wholesale mortgage brokers. This decision will be effective July 25, 2008, which will be the last date on which Wachovia Mortgage will accept loan applications from brokers.
This was a very difficult decision to make. Out of respect for the valued relationships we have had with numerous mortgage brokers over many years, we wanted to make you aware of this change as soon as possible.
If you have any questions about this change, please feel free to contact your local Wachovia loan representative. Thank you for your business.
Isn't this what Indymac did shortly before they were closed?
As you know, the mortgage industry is experiencing a very challenging market environment. Declining housing values
Stop right there. House prices are declining. House values are the same as they ever were.
This confusion forms the very basis of the crisis...
The second quarter results included a $600 million ($374 million after-tax) addition to U.S. lending credit reserves that reflects a deterioration of credit indicators beyond our prior expectation, and a $136 million ($85 million after-tax) charge to the fair market value of the Company's retained interest in securitized Cardmember loans. The second quarter also included a tax benefit of $101 million primarily related to resolution of certain prior years' tax items.
Year-ago results included a $65 million tax benefit from the IRS related to the treatment of certain prior years' card fee income.
"Fallout from a weaker U.S. economy accelerated during June with consumer confidence dropping, unemployment rates moving sharply higher and home prices declining at the fastest rate in decades," said Kenneth I. Chenault, chairman and chief executive officer. "Consumer spending slowed during the latter part of the quarter and credit indicators deteriorated beyond our expectations.
Also see: IRS Issues Pension Yield Curve
http://www.buckconsultants.com/buckconsultants/Portals/0/Documents/PUBLICATIONS/Newsletters/FYI/2007/FYI_10_11_07.pdf
Wachovia, the bell tolls for thee.
Good point, Nemo. So are we supposed to be surprised that Wachovia is sinking?
Summary:
Missed-
AXP
SNDK
TXN
..
AAPL
MHK
MRK (pulled guidance)
...
But, there's a lot more in the AM - industrials CAT, DD & Airlines & WM, WB. Not setting up well tho...
SEC has just released a new regulation:
Since the naked-short selling rule seems to have lost its effectiveness in the face of all the unduly pessimistic and negative earnings reports, we have decided to place a moratorium on negative news releases until further notice.
In Washington, one Democratic proposal would impose a 25 percent tax on "unreasonable" profits of the top five oil companies, which together made more than $120 billion in 2007, and put the money toward a trust fund for investment in alternative energy sources. Republicans say it's a gimmick that won't help at the pump and will discourage domestic oil production.
But Sen. Charles Schumer, D-N.Y., said the fervor for stock buybacks is a clear sign Big Oil isn't interested in new production or alternative energy.
"When you hear that," he said, "it screams out for a windfall profits tax.
Unlike Indymac, Wachovia is too big to fail.
$445 billion in deposits.
Billy G is firing off again... I love this guy....
Pimco's Gross Says Fannie, Freddie Need Treasury
Let's be blunt: to the extent the Treasury suggests they'll never have to use their authority, that's a sham,'' said Gross of Pacific Investment Management Co.It's fallacious to suggest that the agencies could issue capital, preferred stock, without the co-participation of the Treasury. I don't think that's possible.''
Pimco's Gross Says Fannie, Freddie Need Treasury (Update1) - Bloomberg.com
...................
Pulling back from third party dealers might have helped Wachovia last summer. All the present difficulties were clearly visible then.
Some out of topic but very illuminating news:-
Pimco's Gross Says Fannie, Freddie Need Treasury
Pimco's Gross Says Fannie, Freddie Need Treasury (Update1) - Bloomberg.com
Let's be blunt: to the extent the Treasury suggests they'll never have to use their authority, that's a sham,'' said Gross of Pacific Investment Management Co.It's fallacious to suggest that the agencies could issue capital, preferred stock, without the co-participation of the Treasury. I don't think that's possible.''
Pimco wouldn't buy the companies' stock without the Treasury's involvement, Gross said, in a Bloomberg Television interview from the firm's headquarters in Newport Beach, California.
Mortgage-backed bonds issued by Fannie Mae and Freddie Mac are ``an excellent buy'' compared with debt of the agencies, Gross said.
The dollar has fallen against nine of the most actively traded emerging-market currencies this year, and has registered declines of more than 20 percent against the Czech koruna, Polish zloty, Hungarian forint and Slovakian koruna.
WaMu and Wachovia did not make it to the sacred no naked short list.
Did BofA need to buy CountryWide to make it to that list.
Maybe that is the real reason BofA bought CountryWide - they were not big enough - Now they ARE!
Just watched that Billy G interview on BBerg...he lays it down.
I'm trying to imagine that its say 11am on some weekday (very soon) where FNM and FRE have thrown up their hands and said we're insolvent on a couple hours earlier.
What does anyone see unfolding? Does the US Treas have to do a co-announcement with them saying how much equity they are injecting?
Thoughts?
"we wanted to make you aware of this change as soon as possible. "
But never-mind it's been discussed in detail for several weeks prior and that you've said nothing (officially) in the ensuing time makes that comment exactly worth nothing.
That it's share price remains above 10, let alone 5, is the real mystery...
BTW Ritholz has officially joined the deception crowd....even went as far as accusing me of calling him a "dick"-that he has removed most of my comments tells me all I need to know. He'd know if I called him a name-as many of you already know I don't play nice with comments.
Ciao
MS
They offered some wild and crazy stuff out there in the broker world back in the day.
I'm surprised (really, I am) that it took them so long to get the religion.
There'll be some interesting stuff that comes to the surface down the road.
Theme music:
YouTube - Pedro Carbone plays Chopin: Sonata No. 2 (part 3)
Nemo,
You mentioned in the previous thread that Wachovia wasn't on the list because it's not a primary dealer. Could it also be that one of the "big fish" has an appetite for this "wittle fish"?
Thanks in advance.
Zero!
It's fallacious to suggest....." Sir , have you no decency?
peAkcredit writes:
Every time my parabola detectors go off (like they are tonight in tech, gold and the U$D) there is a late announcement that Ben will be speaking at 10am for 3 or 4 hours in a previously unheard of but nevertheless regularly-scheduled fortnightly address to Congress.
Some day I expect to see him be run over by Mr Market down 500 points on it's way to a Rule80B halt. Ready to reflate that Whirly?
I talked to a guy who is a broker set to make a bundle--he specializes in hard equity loans. 12-13-14% First mtges. No more than 60% loan to value ratio. And his phone is ringinf off the hook. Lots of points too. (60% of now value, not peak value, so .6 x .7 = .42 of peak value.) Sounds just right to me.
This is properly priced risk at this time in Miami-Dade County.
His only problem is getting investors to invest at those rates. I said, you are the safest game in town actually. The houses aren't going to zero. If we go into GD II, even if some money is lost, much will remain, and I'm not sure that is true of the stock mkt, where values can drop to zero.
Terry, thanks for the Carbone. Very fine.
"The houses aren't going to zero."
Holding costs are the problem.
LawyerLiz,
We just had the largest private money guy in Arizona go bust. After he committed suicide.
They were charging 13-15% on hard money loans for commercial.
Now they are bust and the money is dust.
Only 27 of 70 loans still performing.
Litigation up the ying yang.
Still too early here.
You might be seeing something like a bottom where you are.
I note that metals were up again.
Sigh.
What really is happening is the dollar is dropping like a stone.
Someday this war's gonna end...
I'm beginning to think that if we're really only in the "third inning" then this is going to get pretty f@#*$@# hairy......
....................
BTW, it was a billion dollars worth of loans.
Firsts on commercial development projects.
70% LTV.
Wealthy investors.
AllenM,
Any idea what percent had mezzanine loans or secondary financing? I'm guessing the other 30% was cold hard cash right?
..................
was = wasn't
Wachovia's rates sucked anyway. And that stupid "pick a payment" plan? Freaking retarded.
Anyone here now doubt we'll see FF rate cuts, with the consumer falling apart in June (according to AMX) ? I didn't think so.
Here are some hard money sheets-
GMC Mortgage Capital - Commercial Quick-Submission
hit loan matrix for programs and rates..
Cramer says:
Wells Fargo
US Bancorp
BofA
JPM
"Fortresses" that showed him they're going to survive or thrive.
And he wasn't crossing his fingers behind his back when he said it.
It should have been "pick your method of death" plan...
how on earth is that stock still even trading?? Is World worth that much??
It must be to someone...
Ciao
MS
"Stop right there. House prices are declining. House values are the same as they ever were."
housing values are rising, as rents and incomes are still rising slightly. house values are however much lower, as much as 50% of asking prices in many areas based on historical rents and CAP rates. sales prices are falling sharply. once asking prices fall to meet actual values, the recovery can start to begi
40% down at 12-14%. Music to my ears. Thanks lawyerliz.
"Cramer says:
Wells Fargo
US Bancorp
BofA
JPM
"Fortresses" that showed him they're going to survive or thrive."
I agree. Stocks can be had much lower though.
Barely, good information about missed earnings. Here is a translation of what has happened in after-hours trading today:
Apple Computer -11%, company's value -15.7 billion
Merck -7%, -5.3 billion
Amex -11%, -5 billion
Texas Instruments -12% -4.7 billion
SanDisk -13%, -600 millio
Ok, consolidation. Interest rates/yields for saving will drop like a rock, and mortgage rates will skyrocket. Tuff times for banks and customers.
Tuff times for banks and customers, yes. But everybody else will be fine. Oh, wait...
barely-
They could cut them to nothing and it wouldn't make much difference. If no one qualifies and needs
Every day is friday now?
I believe the bit about US Bank. They're little go-getters. They chased me into the supermarket last week trying to get me to open a checking account. Wouldn't let me go until I accepted a bottle of water. Great, now I owe them.
No offense to mortgage brokers, but the Internet kind of makes them obsolete anyway, doesn't it. People don't need middlemen when they can shop around easily on their own.
Commercial CAN go to zero, if nobody moves in before time and bandos destroy the bldg.
It would be unlikely for any significant number of houses to go to zero in Miami-Dade County When it gots really cold up north, there's going to be some migration. After all, you can use fans, and you can cool just one room if you haveta. My understanding of the frozen north is that you have to keep the pipes from freezing, so have to keep the temp above 32.
There are some who are praying for a really Andrew type destructive hurricane. I suppose a lot of insurers will refuse to pay on the grounds that the property wasn't worth anything anyway.
ades,
I am sure there was more financing, they were just doing the first trade for the most part.
They did have some go bad over the last two years, but I guess it was all over this year when the majority went south.
I will know more as the papers dig through the labryinth of legal filings. A lot of the investors had recorded percentage interests in the first loans, so there is a huge problem with the performing loans not getting paid with the (essentially) servicing partner in BK.
Of course the nonperforming investors what some of that money too;-}
Can you say legal mess?
It should be over just as real estate begins to recover.
Looks like aapl and wb are going to cause a black tuesday event at this rate.
Someday this war's gonna end...
I checked on the capital adequacy levels of some of these despised US banks that some think are going under and found them, as of end of March, very well capitalized. I would hesitate to make a firm and fast prediction but I would like to wager that NONE of them will go under. In fact they may all be super bargains.
I really need to learn to short AAPL before earnings. They always tank, no matter what they announce.
Put your money where your mouth is, Jim. The stock market will open tomorrow at 9;30am sharp.
Some of us will be running the other way, fast as we can!
What does this mean for us with money in Wachovia bank? Not the mortgage division but the regular Wachovia bank.
Should we be getting nervous and maybe move the money somewhere else?
Feckless: we don't need middlemen who just remove value from the deal. Good mortgage brokers are going off to die (and even 3 or 4 realtors too) and its not a good thing.
post got cut off:
If no one qualifies and needs 20% DP I can't see how anything that F&F does will be relevant.
This B'berg headline was hilarious:
"20% down-payment requirement to make savers out of spenders"- from last week
As if it was going to magically occur overnight? Say it and it is so....
Ciao
MS
barely-
the only problem with FF rate cut is food is already too high and going higher. And the food banks are running out of food as their "customers" are increasing.
What would you rather see: a bunch of former home"owners" turned into renters and a slew of Americans going back to consuming only within their income levels
OR
a bunch of people starving in the streets?
I'm going with renters and lower consumption as my preferred outcome.
"They could cut them to nothing and it wouldn't make much difference"
Oh yeah. WM, WB, COF, NCC... all going to get wiped out and no one will notice as they get consolidated to larger institutions. There will be earnings power for all those institutions, eventually. In the short term they will take a beating.
meme,
got over 100K?
then start moving it. go to FDIC and review your coverage.
otherwise be prepared for a three day disruption.
Not saying panic, just be aware of potential outcomes.
Someday this war's gonna end...
What would you rather see: a bunch of former home"owners"... or a bunch of people starving in the streets?
That depends.
Who gets their stuff?
Feckless Ness writes:
No offense to mortgage brokers, but the Internet kind of makes them obsolete anyway, doesn't it. People don't need middlemen when they can shop around easily on their own.
I heard this argument seven or eight years ago concerning commercial insurance brokers, but as far as I'm concerned I heard the last word from a risk manager who said "if I don't hire a broker, who's going to lie to the underwriter for me?"
Plausible denial. That's what middlemen are for.
AllenM,
Sounds like a real mess....
I'm glad I'm not rich, the stuff i'd have to deal with
....................
Maybe we can do a quick pole here:
Has anyone ever felt they had received a net benefit from using a mortgage broker or real estate agent?
...crickets.
Uncle B - or any other kind of broker or agent, for that matter.
Unless you're in a business that relies on connections or expertise you don't have and can't get on your own, what value does a broker/agent add in the Internet Age?
Feck: I think in many cases that borrowers and buyers are just deluding themselves in thinking they can arrange for themselves the best value. Problem it's just so hard to filter out all the noise.
People comparing mortages online? Give me a break. Lambs to the bait and switch slaughterhouse.
What does this mean? No more loans for illegals? But where are they all going to live now?
Any bets for multiple bank failures this week?
You're so right, Uncle B. My comments were predicated on the false expectation that people might actually shop around, educate themselves, learn to negotiate, etc., like I do. Silly of me.
We've become a nation of idiots, haven't we? Where's Ayn Rand when you need her?
Feck: In most cases they just can't do it as well as a good ethical "middleman." Plus for many of us our time is more valuable than that.
In the case of mortgages, you can educate yourself all you want, shop all you want, negotiate all you want, but most people when they get to the end of the process, if they've had the time and patience for it -- they just throw their hands up when the loan docs arrive and they're not as discussed.
I'm sure a good many of the commenters here would just sign in exasperation telling themselves its roughly what was discussed or believing when the originator told them it they made a booboo.
Many here would be savvy enough to just tell the originator to bugger off, but those same people would have probably found themseves a good ethical broker they can depend on to begin with. That's my feeling anyway.
Feck, if you're looking for Ayn Rand, she's on her way out the door.
Where's Ayn Rand when you need her?
We need her?
Might be true when arranging a home mortgage. But you'd be surprised how utterly clueless most business owners are when it comes to commercial liability, worker's comp and the like. Commercial insurance brokers will not go the way of mortgage brokers, because the big insurance firms have no desire to do their business directly with the consumer, and 90% of small businesses are too cheap to hire risk managers. Trust me.
New thread. (Maybe I'm the last to know!)
So if you haven your mortgage with one of these soon to be federal banks is there an opportunity to take a "write-down" and reset your loan to market value? My first is with Wachovia and my HELOC is with WaMU.
I have a newco idea
Calculated Risk First Saving Bank
Business Plan - We have no shit on our book because we are new.
Product Offering
Get your 80:20 Mortgages here.
Unlike Fanny and Freddie we don't leverage 60-65:1
Need an auto loan; we only make loans on fuel efficient vehicles with a 25% downpayment.
We pay a fair interest rate for your saving.
Thanks for your business.
CEO George Bailey
Prospective investors contact Uncle Billy
Brokers are going the way of the dinosaur. What's the reason to use them now?
They offer the same products as a bank (full doc) for a much higher fee.
Wow, sue gets it.
Hi sue!
Anon... naw, just the bad or greedy ones. Urban legend.
...and it won't be a bank that just says this stuff to generate business... it will have big windows so everyone can look in.
Option ARMs Throw Wrench Into Recovery
Asset Backed Alert, Harrison Scott Publications Inc. (July 18, 2008)
Another bout of agony is looming for the mortgage industry. Evidence is solidifying that about a year from now, a huge swath of so-called option adjustable-rate mortgages will default, wiping out many investors who hold bonds backed by the credits and dealing yet another setback to the already decimated home-loan industry. Option ARMs, which allow borrowers two or three years of monthly payments that fall short of the interest and principal due, could in fact experience losses that are far more severe than those already seen on floating-rate subprime mortgages and home-equity loans.
Option ARMs have actually been performing poorly for months, as over-leveraged borrowers increasingly find it impossible to keep up on their payments. But the troubles experienced so far are likely to pale in comparison to what's ahead - something many market players didn't see coming.
Of particular concern are loans written in 2006, when production of option ARMs was at its height and underwriting standards were at their loosest. Countrywide, the failed IndyMac and Washington Mutual were particularly active in writing and securitizing the credits. And they were often pooled into bond offerings by Lehman Brothers' Aurora Loan Services unit and Credit Suisse's DLJ Mortgage Capital.
Data isn't readily available on the volume of option ARMs outstanding, so the extent of potential defaults is difficult to pin down. As a matter of perspective, there were far fewer option ARMs written than subprime mortgages in recent years, but defaults are likely to hit a far-greater percentage of the loans. "It's a scary wild card," said David Castillo, a senior managing director at broker-dealer Further Lane Securities.
Further Lane projects that losses on securitized option ARMs could be as high as 75%. By comparison, projected losses on subprime mortgages generally range from 20-40%.
That's an ominous prospect, considering that troubles among subprime mortgages and even worse-performing home-equity loans have already been enough to send the worldwide credit market into a year-long slump that shows no signs of easing. In a typical subprime mortgage, a low introductory interest rate is replaced with a higher floating rate after two or three years, causing what is known as payment shock. That's when defaults typically occur.
How about the SEC investigate the fact that this news was all over the net weeks ago.
Yeah, and while they're at it, could they also investigate who it was who faxed a bogus letter from WCI CEO Jerry Starkey purporting to announce the sale of the company for $5.25/share?
Call ing Inspector Closeau
ran the stock up to $2.65 premarket, until reality hit.
Good local loan broker has local contact and accountability, need for referrals and repeat business
same for a good local Realtor
from an appraiser's point of view,
middlemen giving service to customers are added value expenses to a borrower/buyer. They know the locations, demographics, borrower, etc, should steer the loan to the right spot.
Not unlike a good salesman/woman at the clothing store, what suits you best?
Try to get an Internet middleman to
really work the file when there are underwriting questions, etc.
When the going gets tough, the Internet salesperson most likely just says bye and moves on. "Sorry, we can't help you". Then what do you do at the eleventh hour in a sale, purchase or re-fi?
That's where the local vs. Internet difference really is, minimizing the fall-throughs and blown-up refi's.
Can't eliminate them all of course.
Bank offers their own loan product, broker offers or offered multiple products which are declining in number and increasing in qualification requirements daily. (as noted here).
So we may be back to pick a bank and pick a loan, any term as long as it's 15 years, 20+% down, sterling credit, soon. 1965? That plus FHA.
JMHO
I have found value in mortgage brokers on the commercial side. Good brokers can take a good overview of the capital needs and various income scenarios and come up with creative strategies for "packaging" the loans to various kinds of lenders.
We have also had them suggest modifications that allowed us to qualify for various programs and incentives (rural development for instance).
They have done this in a very quick way, sometimes hours (when we had been beating our heads against the wall for months), and allowed us to move ahead and get financing in place to move a project forward.
Now that has been a much much more arduous task since December (if not impossible). But it certainly hasn't been easier to go onto the internet and try to fid the money.
Here, it seems that relationships do matter.
So, yeah, I have found value in their services.
Agree with posters above. I think it's just the good auto mechanic problem applied to other industries.
UPDATE 1-New U.S. borrowing rules hit short sellers
| Reuters
WaMu is not on the list, is it?
p.s. It's a beautiful day!
Good-bye, and good riddance.
Wachovia bank is one of the most stupid and corrupt groups I have seen. They are such a group of bumbling idiots that they trip over their own feet when trying to pull a fast one on their customers?!
That they were still selling "pick a payment" mortgages until now is a prime example of this idiotic way of doing business, but I'd expect nothing more from them.
Uncle Billy Loves Naomi Klein:
People comparing mortages online? Give me a break. Lambs to the bait and switch slaughterhouse.
What "we" Kemosabe? Speak for yourself!
Thank God you can still haggle at car dealerships (and elsewhere) and thank God you can buy a house without having to deal with corrupt transaction parasites...
Now that RE "Brokers" and Mtg. "Brokers" aren't unavoidable transaction parasites, those of us who are capable of handling our own paper pushing can do so without being forced to pay for grossly over-priced secretarial work.
Nearly inevitably, when I experiment with an "agent" of some kind who promises me the "value added" of their "expertise" I find I'd be far better off doing it myself - and that's assuming the cost is "free" in both cases. Pay someone for the privilege of a half-assed job finding me a "lame" deal? And it doesn't save me any time - I still have to do all my own reading and research of the fine print to be sure I'm not getting railroaded.
Of course, I also do my own major car repair. Using your "car mechanic applied to other industries" metaphor: A good body-repair person is a highly skilled expert (artist) and they pull down as much or more as a good many post-undergraduate white collar professionals (like 80+k/year). Your average grease monkey, not so much. Diesel mechanics pull down a pretty penny too. Of course, those guys all add considerably more tangible value than a transaction parasite.
Feckless is entirely right: the internet as market-maker replaces the real primary value and function of these 'professions'.
Well, yeah, Scott,
You are one house buyer out of ten though, just as you are one car owner with mechanic skills out of ten.
I'm with you on don't use and pay for the service if you don't need to, goes for any of services other people commonly use everyday.
Just as there are parasites in every field to prey on the gullible and less informed, there are agents and brokers who take pride in providing honest services to those who are not as expert.