Nashville Title Blog

The Ant and the Grasshopper - One is a little different....Two Different Versions............Two Different Morals

2010-04-06T11:22:00.001-05:00

One is a little different.... Two Different Versions................. Two Different Morals

OLD VERSION:

The ant works hard in the withering heat all summer long, building his house and laying up supplies for the winter.

The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away..

Come winter, the ant is warm and well fed.

The grasshopper has no food or shelter, so he dies out in the cold.

MORAL OF THE STORY: Be responsible for yourself!

MODERN VERSION:

The ant works hard in the withering heat and the rain all summer long, building his house and laying up supplies for the winter.

The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away.

Come winter, the shivering grasshopper calls a press conference and demands to know why the ant should be allowed to be warm and well fed while he is cold and starving.

CBS, NBC , PBS, CNN, and ABC show up to provide pictures of the shivering grasshopper next to a video of the ant in his comfortable home with a table filled with food.

America is stunned by the sharp contrast.

How can this be, that in a country of such wealth, this poor grasshopper is allowed to suffer so?

Kermit the Frog appears on Oprah with the grasshopper and everybody cries when they sing, 'It's Not Easy Being Green.'

Acorn stages a demonstration in front of the ant's house where the news stations film the group singing, 'We shall overcome.' Rev. Jeremiah Wright then has the group kneel down to pray to God for the grasshopper's sake.

President Obama condemns the ant and blames President Bush, President Reagan, Christopher Columbus, and the Pope for the grasshopper's plight.

Nancy Pelosi & Harry Reid exclaim in an interview with Larry King that the ant has gotten rich off the back of the grasshopper, and both call for an immediate tax hike on the ant to make him pay his fair share.

Finally, the EEOC drafts the Economic Equity & Anti-Grasshopper Act retroactive to the beginning of the summer.

The ant is fined for failing to hire a proportionate number of green bugs and, having nothing left to pay his retroactive taxes, his home is confiscated by the Government Green Czar and given to the grasshopper.

The story ends as we see the grasshopper and his free-loading friends finishing up the last bits of the ant's food while the government house he is in, which, as you recall, just happens to be the ant's old house, crumbles around them because the grasshopper doesn't maintain it..

The ant has disappeared in the snow, never to be seen again.

The grasshopper is found dead in a drug related incident, and the house, now abandoned, is taken over by a gang of spiders who terrorize the ramshackle, once prosperous and once peaceful, neighborhood.

The entire Nation collapses bringing the rest of the free world with it.

MORAL OF THE STORY: Be careful how you vote in 2010.

The puprose of a business is not to provide jobs!

2009-12-05T01:40:00.000-06:00

The purpose of a business, small or otherwise, is NOT to provide jobs to the populace. The purpose of a business is to make money for the owners. For some reason, President Obama and the Democrats (i.e. liberals) believe that the existence of a business is to provide jobs regardless if they are needed or not. This sounds a lot like a government job. Hire people to do nothing. Forget about being efficient. I would love to hire more people because that means that I have more business and need more employees! Which means that I am making more money! How horrible will that be!?!?!

At this weeks “Job Summit” that President Obama held, he actually was criticizing businesses, particularly small businesses, for doing more work with less workers. WOW, how horrible it is to be more productive!! President Obama stated that was bad and needed to change! He wants businesses to hire people just to hire people not because they are needed. No wonder the government is so inefficient and bloated.

This week just shows how President Obama, and the people who he has surrounded himself, have no idea how to run a business. No one in his administration, including Obama, has ever run a business; met a payroll; or had to make the hard decision to layoff or hire.

They have no idea how to fix the economy or the unemployment problem because they have never been outside of Washington or the halls of academia.

The best way to solve the unemployment crisis is for government to GET OUT OF THE WAY!

If the President wants to know what it will take to get business hiring again, the solution is fairly simple.

Cut taxes (real taxes not the campaign promise kind). This will put more money in people’s pockets and, they will start spending again.

Deregulate! Contrary to the popular myth, deregulation DID NOT cause this economic crisis. Actually, it was the governments medaling in the economy that directly caused it through FNMA, Freddie Mac, and Congress not doing their job.
Allowing businesses to FAIL!!! There is no such thing as “too big to fail” for a business. This is a myth made up by “BIG business” and regulators to allow them to get government bailouts. There is nothing wrong with bankruptcy!! Even after the government took over GM and gave it billions in “loans”, GM still filed for bankruptcy. All that did was screw the shareholders and creditors; and payoff the unions.

It is really sad that during the 2008 campaign many people said the Presidency does not lend itself well to on the job training. Unfortunately, that has proven true. I just hope that we can survive it!

Title Agents Warned of CFPA Impact on Business!

2009-08-27T11:11:00.000-05:00

I received this today from ALTA's Justin Ailes:

Yesterday, representatives of the U.S. Chamber of Commerce (USCC) warned more than 200 participants during a conference call the negative impact the proposed Consumer Finance Protection Agency (HR 3126) will have on the business community, including the title insurance industry.

Featured speakers were Ryan McKee, senior director of the USCC, and Jason Matthews, director of congressional affairs of the USCC.

McKee offered an overview of the proposed CFPA, which would vastly regulate a large portion of the business community. This includes any business that provides flexible payment options to customers and any company that provides service to financial institutions, such as settlement service providers and title insurance.

"Bottom line, no matter where you are in the chain, even if you have no direct interaction with the consumer, you would be regulated by the new agency," McKee said.

Click here for more on the CFPA, such as a list of town hall meetings on the CFPA, ALTA's one-pager explaining the proposed agency, and the proposed powers the agency could wield.

Primary supervision and enforcement authority over the consumer financial protection functions currently performed by the federal bank regulatory agencies and the Federal Trade Commission (the "FTC") would be transferred to the CFPA, including exclusive authority over all related research, rulemaking, guidance, supervision, examination and enforcement activities. Accompanying this transfer of authority would be the transfer of exclusive rulemaking and examination authority to the CFPA for the consumer protection provisions in at least 16 existing federal consumer protection laws, including the Real Estate Settlement Procedures Act ("RESPA") and the Truth-In-Lending Act ("TILA").

McKee explained that the agency could issue any new regulations regarding the types of services that can be offered and also would have the authority to conduct costly examinations of businesses to verify compliance. She said the CFPA also could require standardized reports from businesses, including title agents, at any time. This would require new technology to produce the reports.

"If approved as written, the federal government will tell consumer what they can buy and will tell businesses what products they can offer," McKee said. "Complying with the CFPA would impose new costs on any company involved with consumer finance transactions and these costs will be passed on to the consumer. There will be restricted access to credit at a higher price."

Fees also will be levied on small businesses and title agents to fund the agency. McKee said the CFPA would be able to decide who pays what without any congressional review.

"In effect, it can decide what its expenses are and how bit it wants to be," she said. "There's no guidance in the current language on who pays what."

The USCC has commissioned a study to see what impact the fees will have on small businesses, McKee said.

After McKee summarized the CFPA's potential impact, Matthews provides a view from what's shaping up on Capitol Hill.

"I am seeing that they intend to sweep up the entire industry and create a regime that is breathtaking," Matthews said.

Once Congress returns from its summer break Matthews expects action on the CFPA to speed up. He said Sept. 23 is the target date for the House Financial Services Committee to take action, and expects some modified version of the bill to be sent to the Senate.

"Fundamentally, we are opposed to a standalone agency; we are working to make improvements where we can in the House to get the most problematic provisions removed," Matthews said. "Then work with Senate to continue massaging the bill."

He said he had a series of meetings with Democrats and Blue Dogs that have expressed some level of discomfort with the proposal.

"Specifically, they are worried about the preemption clause that would allow state attorneys general to bring suits based on violations of the CFPA and the scope of what businesses are covered," Matthews said.

He suggested business leaders contact their congressional representative to let them hear that the proposed CFPA needs significant modification before it hits the President's desk. Some key targets include Democratic members of the Senate Banking Committee, including Tim Johnson (S.D.), Mark Warner (Va.) and Michael Bennet (Colo.)

"The play will be in the Senate and the good thing about the banking committee is that it has a number of moderates who can influence how this debate turns out," Matthews said.

As suggested above, please contact your representative to relay your concerns about the proposed CFPA. You can click here for a list of August Town Hall Meetings of members of Congress. If you need help finding and contacting your elected representatives or to set up a meeting to express your concern about the CFPA, click here. Check out this outline of the powers of the proposed CFPA and this ALTA one-pager with talking points on the impact on the title industry.

Never in a America!?!?!?! Only at Barack-N-Large!

2009-08-27T09:30:00.010-05:00

We say this all the time. This or that would never happen in America...not in THE United States of America!

So what are some things that we say would never happen in America? How about government take over certain industries? How about the government asking citizens to snitch on fellow citizens? All these "Czars" who answer to only the President? Or...government run health care?

These are things that we thought would never happen in America. But, they are!

Since, January 20th, 2009, these things have become a reality. The government take over of GM and Chrysler. The President FIRING the chairman of GM...a private company! The government tried this during WWII, but the Supreme Court said that it was unconstitutional in the steel mill cases. How is it constitutional now??????????? Why isn't anyone with standing (i.e. a GM stockholder) file suit to stop them?????

The summer, the White House ask citizens to snitch on their neighbors if they heard "fishy" comments about the health care "reform". How old school Soviet is that!!!

And now, the administration wants to take over the health care and "reform" it. Which really means a giant leap towards a government run health care. So much for incrementalism. Of course, if you disagree with them or question the over 1000 pages of HR3200, you are a racist or right-wing terrorist.

What is really disturbing is that I feel that the real America is slipping away; and, it has been for the last 40 years. But, instead of a gradual decline, I think that we have gone over the cliff!

I am going to take the President Obama at his word. He stated in the debates that you should judge him by who he surrounds himself.

I have looked at who is surrounding himself with and it scares the hells out of me! I have order Saul Alinsky's book Rules for Radicals. This is one of Barack Obama's heroes.

I am going to read it and report on it on this blog and compare it to how the Obama Administration is running their presidency. Something tells me that it will be like reading Adolf Hitler's Mein Kompf and comparing how the Third Reich operated.

In the movie WALL-E, the controlling entity was a company called Buy-N-Large. My wife came up with another controlling entity...Obama administration called Barack-N-Large. They are trying to control everything and everyone. Then, I took it one step further. The main character is called WALL-E which stands for "Waste Allocation Load Lifter-Earth class".

Now, I came up with a new name for WALL-E for the Barack-N-Large era.

WALL-E stands for WE ARE LOSING LIBERTY - EVERYONE!!!!!!!

Working for the government

2009-08-21T10:21:00.001-05:00

Thomas Jefferson warned against "labor[ing] sixteen hours in the twenty-four" just to "give the earnings of fifteen of these to the government...."

Apparently, the memo didn't get to Washington, DC. According to the Cost of Government Day (COGD) report, prepared by Monika Ciesielska for the Center for Fiscal Accountability, a project of Americans for Tax Reform, Americans this year worked from Jan. 1 to Aug. 12 -- a staggering 224 days -- just to cover the cost of government. This is nearly one month more than last year (July 16) and the first time COGD has pressed into August.

Of course, Cost of Government Day is only a national average. Some states are worse than others. Connecticut, New Jersey and New York had the highest cost of government. In Connecticut, COGD is Sept. 7 -- Labor Day, appropriately enough. Meanwhile, Alaska had the earliest COGD -- July 11.

Given that spending through July skyrocketed by 21 percent ($530 billion) over 2008 and that Washington has amassed a revised 2009 budget deficit of $1.6 trillion -- almost quadruple 2008's $459 billion -- the taxpayer overtime hardly comes as a surprise. The government will burn through 61 percent of national income this year just to fuel itself. Hardly a bright dawn to the promised "new era of responsibility."

For everyone that is taking the bar!

2009-07-28T12:55:00.004-05:00

The 23rd Bar Exam:

Please let me write down the correct answers; Let me fill in the “bubbles”.

I renew my hope; Lead me along the fact patterns for the MBE’s sake.

Even when I go through the longest essay, I fear no question for You are with me;

Your number 2 pencil and blue book—they comfort me.

You prepare a table before me in the presence of my proctors; You anoint my head knowledge; my brain overflows.

Only correct answers and luck will allow me to pass and be an attorney all the days of my life, and I will practice in the state and be admitted as long as the Tennessee Supreme Court allows as long as I live.

Amen.

Title Insurance Protects Your Investment

2009-04-17T09:39:00.004-05:00

During the closing process, make sure you add an Owner’s Policy of Title Insurance to your Loan Policy

After a months-long search, you finally find your family’s dream home—a safe neighborhood and great schools, and a big backyard for the swimming pool you plan to build. You move in and hire a contractor, but a few days into construction the contractor finds an underground utility line running right through the middle of your backyard. You check your title insurance policy, and find out that the title search did not discover the easement. What do you do?

Here’s another scenario. After retiring, you decide to downsize and buy a smaller townhome on a golf course. A month after you move in, a man knocks on your door and claims he is the real owner of your home. Upon further investigation, you discover that the sellers weren’t the real owners, but people posing as the owners. They searched the public records for a home with out-of-state owners, forged and recorded a fictitious deed, then sold the property to you before the real owners (or you) discovered the scam.

Sound farfetched? Both of these scenarios really happened. To protect your investment from these and other serious problems, make sure you have title insurance.

Title Insurance 101

Title insurance insures that the title to your property is clear, with no known liens or encumbrances, such as unpaid property taxes, recorded liens, or street and sewer easements. If a title defect is discovered after the policy is issued, such as an undiscovered easement or forged deed, your title insurance company will seek to resolve it.

It is worth noting that no matter how far back the title issue goes, a title claim is filed against the property’s current owner of record. For instance, there might be a missing heir from a previous owner who comes forward after the property was bought and sold several times to different owners. The claim would be filed against the property (and current owner), even though the claim is from the past.

Another important fact that the majority of buyers don’t understand is that there are actually two types of title insurance policies—a Loan Policy, which protects the lender, and an Owner’s Policy, which protects the homebuyer.

Loan Policy vs. Owner’s Policy

The Loan Policy insures the lender for the amount of the mortgage loan. All lenders require title insurance before they will even issue a loan. If a title defect is later discovered, resulting in a claim, the insurance company will indemnify the lender up to the outstanding balance of the loan. A Loan Policy affords no protection for the homeowner.

For a one-time fee at closing, you can obtain an Owner’s Policy, which protects your investment for as long as you (or your heirs) have an interest in the property—even a hundred years from now. In many areas of the country, the seller actually pays for this coverage.

Here’s an example: Let’s say you buy a house for $200,000, with 20 percent down and a mortgage of $160,000. The lender will insist on a Loan Policy to cover the $160,000 loan. For an additional premium, you can obtain an Owner’s Policy to cover your $40,000 investment.

To take it a step further, let’s say that a number of years down the road, a major title loss occurs. At that time, the mortgage balance is $120,000. The Owner’s Policy would then cover you for up to $80,000. But without an Owner’s Policy, you would get nothing.

One Out of Every Three Transactions Has a Title Issue

What kinds of problems do title professionals look for? They research the complete history of a property by scouring through public records and their own title plants to ensure there are no hidden problems. If they find an issue, they take care of it—typically without you even knowing about it. Or, if the problem is not easily resolved, they will notify you before you close.

Title issues occur with surprising frequency—in an estimated one out of every four residential real estate transactions. The job of the title professional is to ensure that you have a timely and trouble-free closing by avoiding the risks associated with title problems.

But, as the above stories illustrate, occasionally there are unforeseen problems with the title after you move in. Fraud and forgery are the most common problems that go undetected in a title search, but there can also be unrecorded easements, mistakes in the public record or title claims by unknown heirs. Owner’s title insurance protects you for not just the amount of the claim, but for your legal expenses as well.

Back to the Opening Stories

Let’s go back to the real-life stories at the beginning of the article. In the case of the utility easement, because the homeowner had obtained an Owner’s Policy, their title insurance company paid to have the underground utility relocated so they could build their swimming pool. For the retired couple who were victims of forgery, their title insurance company negotiated with the out-of-state owners, and reached a settlement so the couple could remain in their home.

Let’s face it—you certainly have more than enough to think about during the closing process when purchasing a new home. For peace of mind that comes from knowing your investment is protected, for as long as your own your home, be sure to obtain an Owner’s Policy in addition to your Loan Policy.

What is everybody's problem with AIG?

2009-03-17T14:42:00.008-05:00

I am so tired of these "holier than thou" politicians. From the president and "don't blame me" congressional leaders (Frank, Dodd, and et al) saying that they are appalled by the bonus that AIG has given to its' employees.

First off, these employees had contracts dictating that they were due these bonuses. What is the president and congress want to do? Re-write and/or ignore legally binding contracts?

Well, in short, YES! They want to do this with AIG and in bankruptcy court (The Cramdown Bill) with allowing BK Trustees and judges to arbitrarily change people's mortgages (i.e. contract) between the lender and the borrowers. So, this is no big surprise.

But, the surprise is that Obama and Geithner KNEW about them BEFORE the bailout in September!!!! These bonuses were from contracts in April of 2008; and, Geithner was the architect of THE BAILOUT!!!

Second, Schumer, et al, want to take ALL of this money back. They want to confiscate this money, which was legally earned, from the recipients. Now, you can say that AIG received money from the feds.

But, in the rush to pass the TARP bill in September, the feds did not put ANY restrictions on it!!! Well, when you do not put any restrictions on the money, AIG could do anything that they wanted, including paying bonuses and making payments to foreign banks.

Obama, Geithner, Barney Frank, Chuck Schumer, et al, only have themselves to blame! This is what happens when you rush to over correct the market and throw bad money after bad decisions.

As the old saying goes, "garbage in....garbage out".

What we need is CASH!!!!

2009-02-05T11:15:00.007-06:00

President Obama said in the New York Times said that he rejected the argument that more tax cuts are needed in the plan and that piecemeal measures would be sufficient, arguing that Americans made their intentions clear in the election.

He said, "I reject these theories, and so did the American people when they went to the polls in November and voted resoundingly for change"

I totally disagree! People did not vote for the pork-filled "stimulus" package. If he would remember, he ran on a tax cut for 95% of Americas. I guess that he forgot.

What this ecomony needs an influx of cash!!!

We, the consumers, need more money in our pockets and confidence that we can do it what we want. The economy is paralyzed.

People are not confident that they will have a job or money to pay bills. No one is buying anything and hoarding their money. Corporations are saving for the next shoe to drop.

The only way to make an immediate impact on the ecomony and give a boost is to cut taxes, both for individuals and corporations.

First, there needs to be tax cut for ALL TAXPAYERS!! Not a refund check of our money. A refund check is a one-time thing that most people pay a bill off or save it. It does not get into the stream of commerce. A tax cut is (or should be) permanent that people can count on for years to come and can budget, plan and SPEND!!!!

Second, there needs to be corporate tax cut. The U.S. has the highest corporate tax rate IN THE WORLD!!! It needs to cut to at least 25%. This will affect the economy two fold. First, corporations do not "pay" taxes. The consumers pay it when the buy from companies. Secondly, it will allow companies to have more money for investing in employees, equipement, supplies, expansion, etc.

Third, eliminate the capital gains tax!! This is the most regressive tax. It punishes achievement and discourages investment. Why invest when you are going to be taxed at 15%? People should be rewarded for putting their money and talents at risk.

The President wrote this in an opt-ed piece in the New York Times, "this recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse. The Action Americans Need."

He is totally wrong!! If Congress and the President would do these three things, it would immediately help the economy. That is the action that we need, NOW!

I do not want President Obama to succeed.......

2009-01-24T22:09:00.015-06:00

Now that Obama administration has begun and Congress is in session, I am worried by what I have heard from these two branches of government. The 1 TRILLION dollar "stimulus" package will not stimulate anything. It is another big government spending spree and pork barrel projects.

THE GOVERNMENT CANNOT SPEND US OUT OF A RECESSION!!!

Despite what history teachers or what you may have learn in school, the FDR's New Deal did not get us out of the Great Depression. The US did not get out of the Depression until World War II had started, as you can see by these graphs.

As you see, the unemployment rate under FDR did not get below 20% until 1941 after we had began to shift to a war economy.

All the propaganda that we have heard our entire lives about how great the New Deal was is totally false.

That may be a surprise to most of you.

Now, let us look at what happens when you CUT TAXES and CUT SPENDING! Look what happens after the evil Bush tax cuts.

Every important economic indicator went up! GDP, Investment, S&P 500, JOB CREATION! I was part of that. I started my company in 2002 and added 5 jobs to the economy. Since the election, I have had to cut my staff by 40%!!!

Government spending is not the answer. We need to cut taxes AGAIN! Every time that Congress does it. The economy gets better! Income rises! Receipts to the government increase! Government is not the solution. It is the problem. Remember, the reason that we are in this recession is because Congress did not do their job in properly overseeing the Fannie and Freddie. They pushed risky loans on lenders. And, when the Congressional Republicans tried to fix it, the Democrats (Barney Frank and Chris Dodd) shot every reform down.

Now, WE, the taxpayers, are stock holders in Bank of America and other financial institutions.

No where in the world has socialism (and that is what this "stimulus" is) has ever worked.

Name me one country.......................................................................................................................

I am waiting........................................................................................................................................

Good thing I did not hold my breath!

I do not want President Obama to succeed if he implements the policies that he espoused in his campaign. There are over 53 MILLION people that did not vote for him and his policies. I will support President Obama if he cuts taxes and reduces government spending.

But, I better not hold my breath.

'Twas the Night of the Christmas Closing

2008-12-24T14:21:00.001-06:00

The Christmas Closing

‘Twas an hour before closing and the agents were tense,
To close Christmas Eve just didn’t make sense.
But the Seller was booked on the 6 o’clock flight,
And he warned, “there WILL be a closing tonight.”
The agents agreed because business was dead,
And visions of commission checks danced in their heads.
The loan was approved by the lender’s good grace,
Everyone knew ‘twas a borderline case.
The Buyers divorced, remarried again,
Divorced once more, and now were just friends.
The loan package complete to the closer was carried,
With instructions to close before they remarried.
The title policy arrived via UPS,
From page on through sixteen a terrible mess.
An improper legal, 3 judgments, 2 liens,
But a few lines on page seven looked pretty clean.
The title was cleared and the closing was set,
But to finish today was not a sure bet.
The closer dashed in waving her HUD,
It was covered with white-out, coffee and crud.
But down in the corner you barely could see,
The Buyer still owed a buck thirty-three.
So the closer extracted a bill from her compact,
And the agents agreed to the rest…on a contract.
To add some interest the Seller revealed,
To everyone’s horror-the well wasn’t sealed!
And, oh yes, he wanted to change the disclosure,
His mother just died of radon exposure.
Everything else in his house was okay,
His cracked floors and walls were always that way!
About that time the Buyer chimed in,
“We’d like to continue, but before we begin,
I noticed these papers-I’m likely to blame,
But I gave my agent my wrong legal name.
And one more thing I had hoped to avoid,
Does it really matter if I’m self-employed?”
About this time the closer exploded,
She pulled out a gun and said it was loaded.
Everyone froze and sat there amazed,
She frothed at the mouth and her eyes were both glazed.
More rapid than eagles her curses they came,
She bristled and spouted and called them bad names.
“The closing is off, do I make myself clear?
Merry Christmas to all, Now GET OUT OF HERE!”

A rose by any other name....Congressional Hearings

2008-12-09T13:00:00.015-06:00

First, let me apologize for being so far in between entries. I had to get over my election depression and realization that life will go on, just maybe a little slower business-wise.

Today, I am at home with a sick child which allowed me to watch the Fannie & Freddie hearings. All I can say is how do these people walk?!?!?! These people have a Co-Jones (pronounce as if it was Spanish).

The Dems are still trying to deflect the blame to someone else, as well as, Franklin Raines et al.

I truly enjoyed watching Rep. John Mico (7th-FL). He spoke directly to Mr. Raines and told him that he was the problem. He directly asked him how much money that he had made during his tenure as head of Fannie. He said, without apology, NINETY MILLION DOLLARS ($90,000,000)!!!! That is right! Eight digits!!

I know that this is not news. But, it is the first time that is came from the donkey's mouth. (I know that the saying is for a horse, but he is a Dem).

These former heads of Fannie/Freddie all admitted that better underwriting standards would have prevented this mess. BUT, they do not take any blame for lowering the regulations or the underwriting standards! How can they do that with a straight face?!?!?!

Then, they had a question from a sympathetic Dem on the committee. This representative asked, "was it just a perfect bad storm that the housing market collapsed? Would having a 30% drop in home values cause such a situation?"

Good questions!! Except, THE only reason that we have a collapse of the housing market and a 30% decrease in home values is because of the lax underwriting standards (i.e. no verification of income, assets, etc.), Community Reinvestment Act (CRA) and pushing from congress and Fannie/Freddie to make these type of loans!!

Of course, the Dems and the leaders of Fannie/Freddie do not take the blame, who is to blame? As always blame the Republican held congress. However, they do not take any credit/blame for blocking any effort to regulate Fannie/Freddie. Fannie had its' own lobbyists and representatives killing every bill. They went on the hill and said everything is hunky and dory. Of course, that was not the case.

This ins not going to change under the Obama administration and the "NEW" congress. Remember, the Obama was involved with ACORN pressuring banks to make these exact type of loans. The Dems are in the pocket of Fannie and Freddie. I think that we will revisit these things again; however, just under a different name.

What's in a name? that which we call a rose

By any other name would smell as sweet....

or it could be like putting lipstick on a pig!!

What Obama really believes -- The Constitution has "negative liberties" and We need "redistributive change"

2008-10-27T09:07:00.010-05:00

This day and age of the Internet can be a blessing and a curse. Today, I believe that it is a blessing because people's interviews and beliefs survive. The current media, who have turned a blind-eye toward Barack Obama's true beliefs, cannot keep these suppressed. Here are two AMAZING and DISTURBING interviews that Obama has given.

The first one is from a 2001 interview with the Chicago public radio station, WBEZ. In this interview, Obama speaks of the Civil Rights Movement; and, how the U.S. Supreme Court did not go far enough. He believes that the Court should have done "redistributive change"; and, the Constitution has "negative liberties".

What he means is that the government does not have enough rights to protect us from ourselves. I know that Obama taught constitutional law and should know that the U.S. Constitution IS a limiting document. Any rights the government has come from the PEOPLE! That is the way our founding fathers wanted it. They wanted to limited government intervention into our lives. They had lived under the oppression and taxation without representation under King George III of England. They did not want to live in a NANNY STATE!!!

Please click here to here the interview. It is really opens your eyes straight into what kind of change Obama REALLY wants!

http://www.youtube.com/watch?v=iivL4c_3pck

Here is a partial the transcript from that interview:

"You know, if you look at the victories and failures of the civil-rights movement, and its litigation strategy in the court, I think where it succeeded was to vest formal rights in previously dispossessed peoples. So that I would now have the right to vote, I would now be able to sit at a lunch counter and order and as long as I could pay for it, I’d be okay, but the Supreme Court never entered into the issues of redistribution of wealth, and sort of more basic issues of political and economic justice in this society.

And uh, to that extent, as radical as I think people tried to characterize the Warren
Court, it wasn’t that radical. It didn’t break free from the essential constraints that were placed by the Founding Fathers in the Constitution — at least as it’s been interpreted, and Warren Court interpreted it in the same way, that generally the Constitution is a charter of strong negative liberties: [It] says what the states can’t do to you, says what the federal government can’t do to you, but it doesn’t say what the federal government or the state government must do on your behalf.

And that hasn’t shifted, and one of the, I think, the tragedies of the civil-rights movement was because the civil-rights movement became so court-focused, uh, I think that there was a tendency to lose track of the political and community organizing and activities on the ground that are able to put together the actual coalitions of power through which you bring about redistributive change. And in some ways we still suffer from that."

The second in 1995, where he is talking about his book Dreams From My Father. He is speaking of his disdain for white suburbanites who do not want to pay more taxes to take care of the inner cities. Obama admits his Redistribution of Wealth is to SAVE the African American community SO HE CAN ENSURE HIS OWN SALVATION! (and Our Countries Salvation) He compares the plight of African Americas to the ethic genocide's of Bosnia and Africa. He blames all of African-American's problems on "ONE GROUP" who suppresses them. And He says WHITE people don't want their taxes to help black children.

These are HIS words not mine. Listen, it takes only about twelves minutes to hear the who interview; but, it is well worth the time.

The Declaration of Independence and the U.S. Constitution clearly state the all rights granted to the government come from the PEOPLE!! NOT THE OTHER WAY AROUND!!!

Would the Last Honest Reporter Please Turn On the Lights?

2008-10-23T09:52:00.002-05:00

I found this article on The Drudge report. It is a commentary written by a DEMOCRAT JOURNALIST!!!! I could not have written it better myself. I just wish that it would get more play around the country. That is so refreshing to find ONE honest journalist in the country!! He should win the Pulitzer!!!

Would the Last Honest Reporter Please Turn On the Lights?
By Orson Scott Card

Editor's note: Orson Scott Card is a Democrat and a newspaper
columnist, and in this opinion piece he takes on both while lamenting the current state of journalism.

An open letter to the local daily paper — almost every local daily paper in America:

I remember reading All the President's Men and thinking: That's journalism. You do what it takes to get the truth and you lay it before the public, because the public has a right to know.

This housing crisis didn't come out of nowhere. It was not a vague emanation of the evil Bush administration. It was a direct result of the political decision, back in the late 1990s, to loosen the rules of lending so that home loans would be more accessible to poor people. Fannie Mae and Freddie Mac were authorized to approve risky loans.

What is a risky loan?

It's a loan that the recipient is likely not to be able to repay. The goal of this rule change was to help the poor — which especially would help members of minority groups. But how does it help these people to give them a loan that they can't repay?

They get into a house, yes, but when they can't make the payments, they lose
the house — along with their credit rating. They end up worse off than before. This was completely foreseeable and in fact many people did foresee it. One political party, in Congress and in the executive branch, tried repeatedly to tighten up the rules. The other party blocked every such attempt and tried to loosen them.

Furthermore, Freddie Mac and Fannie Mae were making political contributions
to the very members of Congress who were allowing them to make irresponsible
loans. (Though why quasi-federal agencies were allowed to do so baffles me. It's as if the Pentagon were allowed to contribute to the political campaigns of Congressmen who support increasing their budget.)

Isn't there a story here? Doesn't journalism require that you who produce our daily paper tell the truth about who brought us to a position where the only way to keep
confidence in our economy was a $700 billion bailout?

Aren't you supposed to follow the money and see which politicians were benefiting personally from the deregulation of mortgage lending?

I have no doubt that if these facts had pointed to the Republican Party or to John McCain as the guilty parties, you would be treating it as a vast scandal. "Housing-gate," no doubt. Or "Fannie-gate."

Instead, it was Senator Christopher Dodd and Congressman Barney Frank, both
Democrats, who denied that there were any problems, who refused Bush dministration requests to set up a regulatory agency to watch over Fannie Mae and Freddie Mac, and who were still pushing for these agencies to go even further in promoting sub-prime mortgage loans almost up to the minute they failed.

As Thomas Sowell points out in a TownHall.com essay entitled "Do Facts matter?" ( http://snipurl.com/457to] ): "Alan Greenspan warned them four years ago. So did the Chairman of the Council of Economic advisers to the President. So did Bush's Secretary of the Treasury."

These are facts. This financial crisis was completely preventable. The party that blocked any attempt to prevent it was ... the Democratic Party. The party that tried to prevent it was ... the Republican Party.

Yet when Nancy Pelosi accused the Bush administration and Republican deregulation of causing the crisis, you in the press did not hold her to account for her lie. Instead, you criticized Republicans who took offense at this lie and refused to vote for the bailout!

What? It's not the liar, but the victims of the lie who are to blame?

Now let's follow the money ... right to the presidential candidate who is the number-two recipient of campaign contributions from Fannie Mae. And after Freddie
Raines, the CEO of Fannie Mae who made $90 million while running it into the
ground, was fired for his incompetence, one presidential candidate's campaign
actually consulted him for advice on housing.

If that presidential candidate had been John McCain, you would have called it a major scandal and we would be getting stories in your paper every day about how incompetent and corrupt he was.

But instead, that candidate was Barack Obama, and so you have buried this story, and when the McCain campaign dared to call Raines an "adviser" to the Obama campaign — because that campaign had sought his advice — you actually let Obama's people get away with accusing McCain of lying, merely because Raines wasn't listed as an official adviser to the Obama campaign.

You would never tolerate such weasely nit-picking from a Republican. If you who produce our local daily paper actually had any principles, you would be pounding this story, because the prosperity of all Americans was put at risk by the foolish, short-sighted, politically selfish, and possibly corrupt actions of leading Democrats, ncluding Obama.

If you who produce our local daily paper had any personal honor, you would find it unbearable to let the American people believe that somehow Republicans were to blame for this crisis.

There are precedents. Even though President Bush and his administration never said that Iraq sponsored or was linked to 9/11, you could not stand the fact that
Americans had that misapprehension — so you pounded us with the fact that there
was no such link. (Along the way, you created the false impression that Bush had lied to them and said that there was a connection.)

If you had any principles, then surely right now, when the American people are set to blame President Bush and John McCain for a crisis they tried to prevent, and are
actually shifting to approve of Barack Obama because of a crisis he helped cause, you would be laboring at least as hard to correct that false impression.

Your job, as journalists, is to tell the truth. That's what you claim you do, when you accept people's money to buy or subscribe to your paper.

But right now, you are consenting to or actively promoting a big fat lie — that the housing crisis should somehow be blamed on Bush, McCain, and the Republicans. You have trained the American people to blame everything bad — even bad weather — on Bush, and they are responding as you have taught them to.

If you had any personal honor, each reporter and editor would be insisting on telling the truth — even if it hurts the election chances of your favorite candidate. Because that's what honorable people do. Honest people tell the truth even when they don't like the probable consequences.

That's what honesty means . That's how trust is earned.

Barack Obama is just another politician, and not a very wise one. He has revealed his ignorance and naivete time after time — and you have swept it under the rug,
treated it as nothing.

Meanwhile, you have participated in the borking of Sarah Palin, reporting savage attacks on her for the pregnancy of her unmarried daughter — while you ignored the story of John Edwards's own adultery for many months.

So I ask you now: Do you have any standards at all? Do you even know what honesty means?

Is getting people to vote for Barack Obama so important that you will throw away everything that journalism is supposed to stand for?

You might want to remember the way the National Organization of Women threw away their integrity by supporting Bill Clinton despite his well-known pattern of sexual exploitation of powerless women. Who listens to NOW anymore? We know they stand for nothing; they have no principles.

That's where you are right now. It's not too late. You know that if the situation were reversed, and the truth would damage McCain and help Obama, you would be loving heaven and earth to get the true story out there.

If you want to redeem your honor, you will swallow hard and make a list of all the stories you would print if it were McCain who had been getting money from Fannie Mae, McCain whose campaign had consulted with its discredited former CEO, McCain who had voted against tightening its lending practices.

Then you will print them, even though every one of those true stories will point the
finger of blame at the reckless Democratic Party, which put our nation's prosperity at risk so they could feel good about helping the poor, and lay a fair share of the blame at Obama's door.

You will also tell the truth about John McCain: that he tried, as a Senator, to do what it took to prevent this crisis. You will tell the truth about President Bush: that his
administration tried more than once to get Congress to regulate lending in a responsible way.

This was a Congress-caused crisis, beginning during the Clinton administration, with Democrats leading the way into the crisis and blocking every effort to get out of it in a timely fashion.

If you at our local daily newspaper continue to let Americans believe — and vote as if — President Bush and the Republicans caused the crisis, then you are joining in that lie.

If you do not tell the truth about the Democrats — including Barack Obama — and do so with the same energy you would use if the miscreants were Republicans — then you are not journalists by any standard. You're just the public relations machine of the Democratic Party, and it's time you were all fired and real journalists brought in, so that we can actually have a news paper in our city.

What is the deal with the stock markets?!?!?!?

2008-10-10T10:52:00.005-05:00

There seems to be a real big disconnect between reality and the markets. They are acting totally irrationally. There is not a logical reason for the dramatic drop in value. I believe there is a "lemming" affect going on here. One market feeds of the other...Europe after the U.S.; the U.S. after the Asian markets. It is a vicious cycle fueled by panic. But, what is causing the panic????

The credit crisis is not the only factor. So, what is it?

I have a theory. Is it the fact that Barak Obama is leading our presidental race???? Do the markets fear an Obama presidency? I believe so. His socialistic policies are scaring the heck out of them. Theses investors are selling without regard to profit or losses.

GMAC is selling at $6.00!!! Six bucks!!! That is ridiculous!!! This is the time to buy! I mean, what is $6.00? That is what you pay for a cup of coffee! Not a blue-chip stock!

The market keeps falling and Obama keeps leading. I just cannot let the connection go. There is no other "reasonable" explanation.

So, what do we do??? Buy!!! AND, ELECT McCAIN/PALIN!!!

2nd Debate and the reaction

2008-10-08T13:41:00.010-05:00

I do not know what debate the political pundits were watching last night. Every one of them said that there was "nothing new" and McCain did not do what he had to do to "change the momentum". The lead headline on the Drudge Report was a blaring "BORING!".

I have been active in politics for over 20 years; and, I have run for public office. What I saw last night was an energetic McCain. He was giving specifics and attacking Obama on every issue and question asked. I think that he did do what he needed to do. He laid the ground work for the next debate and the last days of the campaign. He should not of brought Ayers, Wright, et al, because he would have been attached for bringing up things that had nothing to do with the questions. It would of been a "no-win" situation for him. He and Palin can bring these things up in advertisements, stump speeches, and the final debate.

He introduced the buying of the loans of people who have negative equity in their homes that were caused by overly ambitious appraisals. These people are upside-down in their homes. They can't sale or refinance. However, McCain's proposal is NOT new! He first brought this up back in APRIL! Also, these so-called talking-head "experts", were "shocked" at this proposal. They thought that this was an additional $300 billion expenditure. I did not take this way. I took this to mean that he was going to use the money of the wonderful $700 billion bailout to implement this plan.

You know what? I was RIGHT and the "experts" were WRONG! Today, on McCain's campaign site, they have the details of this plan. GUESS WHAT! They are going to use the existing money already allocated. Click here to see the Homeownership Resurgence Plan:

http://www.johnmccain.com/Informing/Issues/Read.aspx?guid=b9af0d4c-9c0e-4a97-b27f-19df8cfec83d

I LOVE BEING RIGHT!

Anyway, I think that the McCain definitely WON the debate last night. Obama is employing the same strategy that he used in the democratic primary. He is running out the clock. He believes that as long as he does not do anything outrageous. He will coast to the finish line. This strategy almost cost him the nomination. I hope that he continues because this time ALL of the delegates (electors) are voted on in ONE night!

Then, we will be inaugurating President McCain and Vice-President Palin! WOW, that sounds GREAT!

Here, Piggy, Piggy - Part II

2008-10-06T16:04:00.004-05:00

As you know, a lot of other interests not related to mortgage finance or liquidity of markets were included in the bill as $150 billion in spending was added to attract support for the measure including:

1. $18 billion in clean-energy tax credits
2. $8 billion for hurricane and flood victims
3. $192 million to provide a 98% excise tax cut on imports of rum from Puerto Rico and the U.S. Virgin Islands
4. $397 million in incentives for film and TV companies
5. $2 million to exempt children’s wooden practice arrows from a 39-cent excise tax
6. $49 million for fishermen affected by the Exxon Valdez oil spill
7. $33 million for economic development in American Samoa
8. $4 million to train mine-rescue teams
9. Over $100 million for businesses on Indian reservations
10. $331 million for short-line railroads
11. $100 million for NASCAR
12. $148 million for the U.S. wool fabric industry.

Who knew this was what was wrong with the economy!?!?! I am SO GLAD that Congress acted so quickly. It really help Wall Street so far!

WHATEVER!

Tuesday's Debate

2008-10-06T11:36:00.011-05:00

First off, I am so glad that Congress passed the bailout law because it is really helping the stock market. NOT!!!!!!

I cannot remember that last time the market was below 10,000!

Now, what McCain needs to do on Tuesday at the debate.

First, he needs to bring to light the FACT that the Republicans tried to reform FannieMae and FreddieMac starting back in 2001. President Bush realized that they were becoming a problem. In 2004, Fannie was under fire for accounting scandals that rivaled Enron and Worldcom. No convictions and no action from Congress. In fact, the House held hearings on it, the Democrats defended Fannie and Freddie (while they were receiving LARGE campaign donations from them) and the Republicans wanted reform. The Democrats would not let it out of the committee. In 2005, John McCain, himself, filed a bill that would have prevented the crisis that is happening right now. The Democratically controlled Congress would not even bring it to a vote.

Secondly, he needs to link Obama, Acorn, and all his other questionable associations. Also, Obama and Acorn can be linked to the Fannie and Freddie debacle. Obama was Acorn lawyers while they were forcing banks into making questionable loans to unqualified borrowers.

It is time to take the gloves off, and release the "hockey mom" pit-bull!

Mortgage Meltdown and Financial Crisis explained in video.

2008-10-05T23:32:00.012-05:00

I received an email back in February, 2008. Attached was an anonymous power point explaining (what we thought at the time) was only the mortgage meltdown. This mortgage meltdown led to the current financial crisis. I have taken this power point (cleaned up some of the language) and added the music of Pink Floyd's Money.

Stick figures work their way through the tangled web of the mortgage process. They start with the home buyer and go all the way to where we find ourselves today. They take the complicated and make it simple.

Please enjoy and post any comments.

Bailout bill/law....now what? Here piggy, piggy!

2008-10-04T12:28:00.010-05:00

One of my employees ask me yesterday how this bailout bill affects us. I acutally had to think for a minute. How does this affect this industry and us personally?

As for the industry, I HOPE that it will allow some of the lenders to loosen up the lending practices. Congress and the President says it will free up credit. However, for the lenders that keep their own paper, it does not affect them at all because they do not rely on the secondary market to buy loans and free up their lines of credit. Now, for the lenders that originate loans and sale their paper, it should immediately allow them to free up the credit lines and make more loans.

What really scares me about this law is the part where a judge can change a contract between a lender and borrower (i.e. the note and deed of trust). Under the new law, a bankruptcy judge can throw out the terms of the loan and reconstruct the terms. For instance, if the current loan terms are not favorable to the borrower, the judge can lower the interest rate or lengthen the term. Whatever it takes to make the borrowe able to make the loan payments. THIS IS INCREDULOUS! In America, we have the freedom to contract. There is not any uneven barginning power between the parties. By federal law, the borrower always has three days to rescend the loan FOR ANY REASON! If they did not like the terms of the loan, they could back out. Now, a judge is going to say that the borrower is too stupid to know what they were doing! As I have said before, over the last six years, I have closed over 5000 loans. Every borrower was told what the terms were; and I told them that they could cancel the loan for any reason. I am truly concerned that a judge can have such power.

With the bill in general, I have a HUGE problem with the amount of pork attached to it. The Senate added so much pork to it that it overwhelmed the original intent. There is pork for wooden arrows and wool research. John McCain lost a great opportunity. He should have voted "NO"; and, exposed all the wasteful pork and earmark spending. He should have said that he knows that we need to do something; BUT, this is not the way to do it. Either pass the bill as is; or, write a new bill that will pass.

How does it affect me and other households personally? I really do not know, yet. I hope that it will help my business with more closings; more home sales; and more refinances. But, that remains to seen. Hopefully, I will be able to blog about that later and be pleasantly surprised. However, I do not see in this bailout law.

How to fix it!

2008-09-30T12:35:00.004-05:00

Here is how to fix the financial crisis.

Suspend "mark to market" accounting. This will eleviate the credit crunch, IMMEDIATELY! This can be done by the President without Congressional approval
REPEAL SORBANES-OXLEY! This was a bad law in response to another crisis. Remember, Enron and all those guys. As a side note, I think that it is interesting to have a law named after a man serving time (Oxley).
Have a loan-out not a bail-out. Have these troubled or credit crunched institutions BORROW the money from the Fed. Don't just give them the money for the bad business and bail them out. Allow them to borrowe the money at the Fed rate plus 2% for 5 years.

All this from ONLY 5% of all loans out there. Amazing how such a small part of the financial markets can mess it up for everyone.

Old Article is prophetic!

2008-09-30T09:24:00.005-05:00

A friend of mine sent me this old article from September 30, 1999, by Stephen A. Holmes. It totally forshadowed everything that we are going through with the finanical crisis.

Please read and enjoy.

September 30, 1999
Fannie Mae Eases Credit To Aid Mortgage Lending
By
STEVEN A. HOLMES

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders. The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.
''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''
Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''
Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.
Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.
Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites. Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.
In contrast, the number of non-Hispanic whites who received loans for homes
increased by 31.2 per cent. Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.
In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.
The change in policy also comes at the same time that HUD is investigating llegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.

Wow, it is like reading Mein Kampf in 1933, uh.

The Deal and the Do Nothing Congress

2008-09-29T09:33:00.008-05:00

Trying to digest the bail out deal. On its face, it seems adequate.

However, one of the problems in this whole deal, it how the congressional leaders (Nancy Pelosi, Barney Frank, Harry Reid, Chris Dodd, et al) come out like they are saving the country while blaming the Bush administration. Meanwhile, totally ignoring their role in this whole mess.

Congress has oversight over Frannie and Freddie not the administration. It is Congress' job to monitor them; and, Congress turned their eyes away from the impending problem. It was not like that they were not warned. Alan Greenspan told them about it over two years ago. McCain even introduced a bill to correct the problem. Congress did nothing. Not only did they not do anything, they encouraged Frannie and Freddie continue and escalate their practices.

Now, as I have said before, there is plenty of blame to go around, including the current and past administrations. But, the fact that the democratically led "do nothing Congress" are trying to ride in on their white horses to save the day and take credit for everything is ridiculous! However, this is how they have acted for the two years that they have had control.

Flap their lips, but do nothing.

I am not crazy or alone in my thoughts.

2008-09-23T14:16:00.002-05:00

Here are some articles that I read AFTER I wrote my blog. Actually, the mortgage meltdown was written as an article last year.

This one is by Drew Zahn on WorldNet Daily:

http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=75717

This one is by Kevin Hassett on Bloomberg:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0

Bailouts and the market

2008-09-20T13:24:00.003-05:00

I had a closing last night; and, my clients ask what effect the current situations with Merrill-Lynch, Lehman, and AIG will have on my industry. I told them that the current crisis is the continuing ripple effect from the mortgage meltdown from this time last year.

In August of 2007, my company had a near record month. The following September was a near record low for closings. In other words, the bottom fell out of the real estate market. We had a mortgage meltdown. There were hundreds of mortgage companies imploding and closing. These were all the "evil" subprime and non-conforming lenders that you have heard about.

However, what usually do not hear is that most of these "B-C" lenders is that they were owned by the big banks and financial companies. Here are a few: Equibanc owned by Wachovia, Equifirst by Barclays, Option One by Lehman, America's Wholesale Lender and Full Spectrum Lender by Countrywide, and First Franklin by Merrill-Lynch.

With this combination of the subprime meltdown and the mortgage backed securities, it is no wonder that Merrill-Lynch and Lehman failed. The bad loans made and almost worthless securities that they invested made it an impossible situation for them to stay solvent.

There may still be some fallout from the mortgage backed securities, but it may not only be in the U.S. China owns a lot of these securities as well. We will have to wait and see when or if the other shoe drops.

Who is the blame for credit crunch and mortgage meltdown?

2008-09-19T13:03:00.000-05:00

Who is to blame for the credit crunch and Wall Street meltdown? I believe that there is plenty to go around. There are four parties that should share the majority of the responsibility. They are the government, lenders, brokers/realtors, and the homeowners. The burden is not equally distributed. I believe that the less of the burden falls on the brokers and realtors than on the others. Let us look at each and see what their role was.

First is the government. The federal government has been for the last 10 years wanting more homeownership, especially for the lower income people. Every President (Bush 41, Clinton and Bush 43) in their State of the Union Addresses have all profoundly stated this with resounding applause from everyone in the gallery regardless of which side of the isle they sat? For whatever reason, lower income people seem to have less than stellar credit. So, to qualify them for loans (regardless if they are back by the government), you have to loosen the criteria for qualifying for the loan. Congress (Barney Frank et al) did nothing to rope in the run-amuck GSE’s (Fannie Mae and Freddie Mac).

With pressure from Washington, comes our next participant, the lender. The lenders hearing what our elected officials wanted began creating so very creative loans and greatly relaxed their lending criteria. Some of these loans include 2/28 and 3/27 ARM’s, 100%, interest only, buy-downs, and my favorite “pick-a-pay”. You have heard these advertised for the last 5 years. I know that some of these loans have been around for a longtime, but for a very sophisticated client. However, the problem arises when the wrong type of borrower gets one of these loans; and, they are not very discipline in the managing their money.

With these loan programs in hand, the lender sends out their account managers to mortgage brokers to sell them. The mortgage brokers can now refinance very marginal borrowers and help the Realtors© sell more homes. Of course, the Realtors© get really excited because they have a new batch of clients to go after. Working together, the mortgage brokers and Realtors© sell these loans to this new batch of home buyers. Now, as I said before, the realtors and mortgage brokers are less to blame than the other parties. Blaming them is like blaming a car dealer for selling the Pinto when Ford was building it and the government pushing for higher mileage cars.

The last party is that of the borrower or buyer. This party has seemed to receive no or very little blame at all. They get the most sympathy and some are looking to be bailed out. The media and Congress think that these people are ignorant and had the wool pulled over their eyes. I disagree. Every closing that me or my company has done over the last five years (which is almost 5,000), those borrower knew exactly what kind of loan that they were getting and what the conditions were. They new the risk and took it. Their life situation may have changed; or, more than likely, they did not follow the advice given to them about not running up their debt again. Now, they want to be bailed out.

There is plenty of blame to go around. This is a major correction cycle. The best way to get through it is to ride it out. The worst thing that could happen is for Congress to make a knee-jerk reaction and pass some over bearing law that will REALLY kill the industry.