A little off topic here – Misguided Media Issues

   Well we have all by now heard the radio commercials advertising rates at 4.875% for 30 years with no fees.  How can they do this?  Well the answer is clear they can not do it unless you fit the prefect scenario.  What they do not tell you is in order to get a the loan they advertise you have to have a great fico score, great equity in the subject property, great debt to income ratio, not hits on you credit report in the past ten years, solid employment history and a loan amount between 375,000 and 417,000.  Needless to say most people will not fit into this box.  What the commercial did accomplish is that it made it possible for the company that paid for it got you to call them to see what they could do for you. 

  I have to ask why we the people do not demand more from the Media and all Politian’s.  Politian’s like to tell us they are going to help but they repeatedly fall short of telling us the details of how they are going to help and their actual actions are even less.  I have done several postings about the misguided Media and they have gotten many responses asking for details so less look at some statements within the last week. 

Obama – Obama makes a speech and in it he claims that he is going to help small business get loans.  That sounds great, now keep in mind sound bits are not sworn testimony.  What he failed to tell us is any of the loan details for the loans he is trying to help with.  Such as loan amounts, terms, guarantees and limitations.  So basically he told us what we wanted to hear and told us nothing at the same time.  Why is this acceptable?    

Gore – This man has got to be the biggest con man on the plant.  I voted for Gore over Bush and I am happy to say that now I am glad he did not get into office.  This man is making millions on “Global Warming” with no facts to back up his statements.  A man recently asked him about the scientific team that now states the facts do not support the claims of Global Warming and Gore’s response is childish at best.  Gore did not answer the man’s question but rather asked a question back, “do you think the polar bear’s are endangered?”  The man’s response was that the polar bear population is increasing for which Gore asked the same question again verbatim. 

  This is unbelievable that Gore can make the statements that he does and profit what he does while living a lifestyle that he tells everyone else not to do.  Has Gore reached Athlete status?  I would have to say without absolutely!  We all know that professional athlete’s cheat on their wives and sports reporters look the other way so they can continue to speak with the athlete in question.  No one will say it but we all know it true. 

  Gore recently said that 40% of the Antarctica ice has melted.  So where did it go?  Are we shipping ice to the Moon?  Selling it on the black market to aliens?  This is absurd!  The answer is clear and on line if anyone would bother to look it up and yes I am calling out the Media and anyone that believes in this Gore stuff.  I know the people that will tell me I am wrong will not spend the time to look anything us so here is so info from which to start from below.    

  While the news focus has been on the lowest ice extent since satellite monitoring began in 1979 for the Arctic, the Southern Hemisphere (Antarctica) has quietly set a new record for most ice extent since 1979.

 This can be seen on this graphic from this University of Illinois site The Cryosphere Today, which updated snow and ice extent for both hemispheres daily. The Southern Hemispheric areal coverage is the highest in the satellite record, just beating out 1995, 2001, 2005 and 2006. Since 1979, the trend has been up for the total Antarctic ice extent.

 While the Antarctic Peninsula area has warmed in recent years and ice near it diminished during the Southern Hemisphere summer, the interior of Antarctica has been colder and ice elsewhere has been more extensive and longer lasting, which explains the increase in total extent. This dichotomy was shown in this World Climate Report blog posted recently with a similar tale told in this paper by Ohio State Researcher David Bromwich, who agreed “It’s hard to see a global warming signal from the mainland of Antarctica right now”. 

 Indeed, according the NASA GISS data, the South Pole winter (June/July/August) has cooled about 1 degree F since 1957 and the coldest year was 2004.

 This winter has been an especially harsh one in the Southern Hemisphere with cold and snow records set in Australia, South America and Africa. We will have recap on this hard winter shortly.  See full story here.

  The system is not perfect and the flees come with the dog but people please do not follow your leaders, the media or even your pressuring friends into financial demises.

Stay Tuned…

  Housing Inventory Snapsot was provided by Sigrid Ortega of Beachside century 21.  Sigrid can be reached at 714-290-3700 if you are looking for a home, want to sell a home or have general questions regarding the current state of Real Estate. 

  Mortgage rate have slipped a bit this week ending down -153 bps this week.  This down turn results in a little higher mortgage rates.  Mortgage rates provided by Mike Mortrud of Emerald Coast Investments.  Mortrud can be reached at 714-596-5410 if you should have any mortgage questions.

  Well what a week.  Why is Obama continuing to make statements about the mortgage industry without all of the facts?  Obama is shaming lenders for not doing Loan Modifications which must make one of his largest supporters squirm.  Obama received huge amounts of money from George Soros.  We all remember Sen. Chuck Schumer making his cowardly statements about Indymac Bank and hiding behind is executive status to escape legal repercussions.  Obama’s supporter Soros formed came in and cleaned up on the former IndyMac Assets. 

  From the information that I can gather the former IndyMac Mortgages have receive fewer loan modifications than any other lending institution.  How can this be?  Well it is like this, the FDIC guaranties up to 87% of a mortgage.  This leaves the Lender with only a 13% risk.  We have all seen that the FDIC will take over a back that falls below what they have stated a lack of reserves.  Simple math shows us that loan modifications put all banks a risk of take over from the FDIC due to lack of reserves. 

  George Soros purchased most of the IndyMac assets and they are held under the name of One West.  So why is it that we have heard nothing from Obama about One West?  Is One West Obama’s Halliburton? 

  Obama has a standing offer to come to my office and have a beer to discuss fixing this mortgage mess.  We have lived the Mortgage Industry for over 20 years and have seen the rise and fall.  I have written many postings about the lack of understanding of the Mortgage Industry by the Media, the Public and now clearly the Obama Administration.  With all due respect we are the “A Game.”  The only thing that makes sense is if there is a stalemate between people that truly make policy and until someone blinks we are all going to suffer.  In either case it is time to get the country moving again.  Put aside all personal agenda’s and get the economy moving again. 

  As more and more people lose their jobs due to the economy there will soon be more and more crime as people become desperate to survive.  The future picture here is not good on its current course.  We have ideas and we know they will work. Shaming Banks, Job Summits, Town Hall Meetings, Flying all over the World all look good but get nothing done in terms of the economy.  It is time to get to work, we are here and ready.  We have on the pulse experience and no agenda other than restoring the economy.  Let’s get busy!

  Below is a letter issued by the Federal Housing Commissioner, David Stevens, addressing the FHA Condominium Policy.  

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

WASHINGTON, DC 20410-8000

ASSISTANT SECRETARY FOR HOUSINGFEDERAL

HOUSING COMMISSIONER

November 6, 2009                                     MORTGAGEE LETTER 2009-46 A

TO: ALL APPROVED MORTGAGEES

SUBJECT: Temporary Guidance for Condominium Policy

In Mortgagee Letter 2009-46 B, the Federal Housing Administration (FHA) announced the permanent baseline guidance for condominium project eligibility. This Mortgagee Letter (ML) waives five provisions of that guidance and serves as a temporary directive to address current housing market conditions. This temporary guidance is effective for all FHA case numbers assigned on or after December 7, 2009 through December 31, 2010, except as noted for the “Spot Loan” Approval Process. FHA reserves the right to modify, suspend or terminate the guidance contained in this document if analysis of condominium mortgage performance indicates that the insurance fund is at risk.

I. “Spot Loan” Approval Process

Mortgagee Letter 2009-46B eliminated the Spot Loan Approval Process as defined in Mortgagee Letter 1996-41 for all FHA case number assignments effective on or after December 7, 2009. However, to address concerns involving the volatility in the condominium market, the new effective date for the elimination of this practice is for all FHA case number assignments on or after February 1, 2010. FHA may perform additional monitoring to ensure compliance with the “Spot Loan” Approval Process.

II. FHA Concentration Requirements

The FHA concentration requirement defined in ML 2009-46 B will be increased temporarily to 50 percent.

Exceptions to 50 percent Concentration Level. The FHA concentration may be increased up to 100 percent if the project meets all of the basic condominium standards plus the additional items stated below:!

• The project is 100 percent complete and construction has been completed for at least one year, as evidenced by issuance of the final or temporary/conditional certificate of occupancy for last unit conveyed;

• 100 percent of the units have been sold and no entity owns more than 10 percent of the units in the project (for projects with fewer than 10 units, single entity may own no more than 1 unit);

• The project’s budget provides for the funding of replacement reserves for capital expenditures and deferred maintenance in an account representing at least 10% of the budget;

• Control of the Homeowners Association has transferred to the owners; and

• The owner-occupancy ratio is at least 50 percent.

Note: New construction and conversions are not eligible for this exception.

III. Owner-Occupancy Requirements

At least 50 percent of the units in a project must be owner-occupied or sold to owners who intend to occupy the units. For proposed, under construction, or projects still in their initial marketing period, FHA will allow a minimum owner occupancy amount equal to 50 percent of the number of presold units.

Vacant or tenant-occupied real estate owned (REOs), including properties that are bank owned, may be excluded from the calculation of the required owner-occupancy percentage (should be removed from both the numerator and denominator).

IV. Pre-Sale Requirements

In the case of new construction, the pre-sale requirement defined in ML 2009-46 B will be reduced temporarily to 30 percent. Per ML 2009-46 B, the pre-sale percentage must be documented as follows:

• Copies of sales agreements and evidence that a mortgagee is willing to make the loan;

• Evidence that units have closed and are occupied; OR

• Information from a developer/builder that lists all of the units already sold, under contract, or closed (e.g. a spreadsheet, chart, or listing used for the company’s own tracking purposes) that is accompanied by a signed certification from the developer (Attachment F of ML 2009-46 B).

V. Florida Condominium Project Approval

All requests for approval of condominium projects located in Florida will require submission to the Atlanta Homeownership Center for review, under the HUD Review and Approval Process (HRAP). These projects are not eligible for approval using the Direct Endorsement Lender Review and Approval Process (DELRAP), defined in ML 2009-46 B.

If you have questions regarding this Mortgagee Letter, please call the FHA’s Resource Center at 1-800-CALLFHA (1-800-225-5342). Persons with hearing or speech impairments may access this number via TDD/TTY by calling 1-877-TDD-2HUD (1-877-833-2483).

Sincerely,

David H. Stevens

Assistant Secretary for Housing-

Federal Housing Commissioner

  Today we are faced with an economic situation that is bleak at best for most of us.  Unemployment is at an all time high, the government is spending money that they do not have, Federal Level closed door deals are being made almost hourly and yet no one is the media is covering any of this with facts. 

  Why is it that the Media would rather trash the way Sarah Palin looks than what she is saying?  David Letterman continues to trash Palin and crossed the line with his commits about her daughter and life style yet no one is covering this?  We later find out that Letterman is living a double life himself and little is even said about it when compared to Palin.  Yes Letterman is not running for a public office but when you live in a glass house should you be throwing stones? 

  Newsweek has now jumped into the tabloid news by taking yet another cheap shot at Palin and the cover says it all.  I am not a Palin supporter but what is it that is important to us as citizens of the United States in terms of media coverage?  Obama himself to this date still has not released his IQ scores or college transcripts yet people think he is the smartest president ever.  In terms of the mortgage, housing or banking I think not!  Before you all pile on yes I have offered my entire staff to help the current administration fix this issue and I have heard nothing so far.

  Lobbyist will have no room at Obama’s table might be correct but they sure seem to have a bedroom in the Whitehouse.  Timothy Geithner was the NY Fed Chairman when the first TARP funds where leased and right in the middle of things yet he claims he has no knowledge of where the fund went.  How can this be and where is the Media?  Why? And why the double standard? 

  The lack of true journalism is a serious issue and yet most of us seem to be caught up in the gossip more than the facts.  The road to recovery is going to be a long journey and it will only be made longer if be can not all get on the same page.  Even our own President seems to be working on some kind of frequent flyer program specials.  With today’s video conferencing it is simply not necessary to fly all over the place.  Needless to say the carbon foot print generated is unnecessary.   

  We are on a course that will bring back double digit home mortgage rates soon which will extend the road to recovery greatly.  It is time to review some US financial history before we completely repeat it.  Whether you agree with me or not please do look back at the Carter administration and its policies.  Google is a good place to start.

Stay Tuned…..

  Bernanke sees moderate U.S. growth in 2010, ’significant economic challenges to remain & the outlook for inflation likely to remain subdued for some time’.  Bernanke’s remarks on the economy were more detailed than recent statements by the policy-setting Federal Open Market Committee, but were similar in nature.  Bonds improved on the news which is good for mortgage rates.  Currently the 4.5% note is at 101.97 1:02 pm and we have seen little from the Lenders in terms of better rates.  Imagine that. 

Stay Tuned…

  The FHA audit is in and it looks great when compared to Fannie Mae & Freddie Mac in our current economy.  The FHA audit shows that FHA has more than double the minimum amount of capital required. 

  FHA mortgage guidelines continue to remain less restrictive than Fannie Mae or Freddie Mac mortgage guidelines, imagine that.  FHA currently requires only 3.5% down payments with no real minimum credit score required.  The Banks in most cases have a minimum FHA fico overlay of 650 which is unbelievable when compared to a conventional mortgage head to head.  The lowest down payment conventional loan that I am a where of requires a minimum  5% down payment and a minimum 720 fico score.  Hardly comparable.  

  Fannie Mae & Freddie mac continue to lose money and will soon need additional Federal Funds.  Fannie & Freddie leadership should speak with David Stevens, Head man at FHA, to see how he is running things.  You can few the FHA audit yourself at this link http://www.box.net/shared/xdnnpprajt.   

  Mortgage news continues to be reported incorrectly  as some Media outlets claim FHA needs Federal funds.  This should be yet another RED FLAG that Brokers did not cause the Mortgage Meltdown. 

  We all get caught up with our day to day life’s and for the younger generations, do not take for granted what it took to get the freedoms that we all enjoy today.  We all need to take a few minutes and remember these people.  Never forget these people below and the price that they paid for our freedom.  Our Freedom is a serious issue that needs to be protected at all times and at whatever cost! 

  I have received several responses asking why I am making the connection between the mortgage industry and politics.  Well the answer is this.  Currently the Obama administration has appointed several Czar’s to watch over many industries / companies.  The whole Czar thing is unbelievable to me as it is a communist approach.  Currently the Banking Czar / Fed’s are telling the bank CEO’s that they will reduce their bonuses regardless of their financial standing.  It is huge and people are missing the message. 

  Yes the banks received bailout funds, raised our interest rates, lowered our credit limits and are making it hard to get a loan and this all sucks!  The problem here is that the average person does not realize how the banking business works.  So I will break it down in simple form.  Banks receive deposits and pay simple interest on these deposits.  The deposits are used to make loans to people and this is where the banks make their money.  Monthly account charges, overdraft fees, bounced check fees, ect are all fees charged in order to process paperwork.  People seem to forget that there has to be a person processing this paperwork that receives a paycheck with all of the required insurances and taxes.  Not to mention an office, phone, fax, computer, copy machine, office supplies, postage and all other required supporting systems.  This all cost real money and it adds up.

  Banks make money from lending money.  Yes I said it from making loans.  Here is the problem, banks also lose money from making loans that go bad.  To date, I have not seen, read or even heard a single Media outlet report this correctly.  Not CNN, FOX, MSNBC or a local TV or Newspaper.  They all report pieces but never enough to connect the dots.  So are the backs stock piling money?  Absolutely!  They have been put into a position to do so because the FDIC can do an audit at anytime and deem them underfunded and take them over just as they have done to over 100 banks since this meltdown began. 

  So what does that mean?  Just as many people have suddenly lost their value in their homes the banks have lost too.  The banks make loans based upon a percentage of deposits.  A loan is then made to a borrower on a property and the borrower repays the bank or lender with interest.  This is how the system works.  It a borrower defaults on a property then the bank has to foreclose on the property and then the property is then sold and the bank collects the proceeds to cover their lost revenue and fees.  Believe it or not the bank is to return any additional moneys collected from the sale to the borrower if there is any. 

  The problem here is that with the sudden real estate collapse that has hurt so many people has also hurt the banks balance sheets.  The FDIC requires the banks to hold in cash reserves enough money to cover a foreclosed properties note value.  Not current value but the notes value.  That means the value of the property plus in cash reserves the difference need to note.  This is important so here is an example, if the bank is holding a note with a balance due of $300,000 and the property’s value is now only $200,000 the bank has to hold in cash reserves $100,000 to cover the full value to the note.  Now times this but all properties foreclosed or not and then you will get an idea of what I am talking about. 

  Foreclosures are what makes it into the media but the FDIC will use foreclosed and current notes when they do their audits so it is simple to see that most banks are borderline as best with their balance sheets.  So where does this leave the banks?  Every bank is doing everything that it can to raise funds to pay back TARP funds that they may have received.  So they can get back to doing business their way and not the way the Fed’s want them to do so.  This is why we have outrages credit card interest and new found check account fees.  Until the banks get out from under the Fed’s thumb we are going to have to live with a horrible economy. 

  So what is the answer to fix the current economy?  This is so simple that I do not understand why our elected lenders can not see the answer for the lobbyist.  There are three major things that need to be addressed in order to get us on track. 

Healthcare – This is a serious issue as everyone should have health coverage.  Health cost can be cut 50% is we simple limited the malpractice suits.  If there was limits on the lawsuits then insurance cost would be less and heath cost would be less.  The current Healthcare from does not address malpractice and why not?  Lawyers wrote the bill and they will not cut themselves out. 

Economy  -   I know there has been a ton of money spent and I have not seen a dollar in my pocket, has any average person?  All of this money spent has done little for the average man.  We just had the largest collapse in real estate values in history.  The money would have been better used as insurance if a bank actually imploded.  The FDIC rules need to be relaxed here for a limited time in order for the banks to work their way out of this mess.  Giving the banks money does little to make them work their way out.  If you put the banks in a position to work their way out then more loans will get done as this is the primary source of income for the banks.  Needless to say there would be more people working to process these loans and more people workings because the loans were done.  This is not rocket science.

Environment – The environment is important to everyone.  Global warming needs to be studied for a while longer before we enter into any treaty that requires us to pay money to lesser countries.  Al Gore speaks about a science group that pointed out Global warming.  These same scientist have now said that Global warming may have been caused due to sun flares.  If the sun was to hiccup we would feel it in Global temp.  We need to think about this issue a bit more.

Right & Wrong – Just a few days ago there was a horrible incident at Fort Hood.  This is a clear situation of how gun control dose not work.  No one on base other than the MP’s are suppose to have guns yet this guy had a gun has affected hundreds of lives.  The gun was not the problem the person was and if you think bad people will not have guns then think again.  Aside from the guns the Media is focused on the gunman and why he did it.  Why is the countless family members and victims that have had their lives impacted by one gunman’s selfish and cowardly act.  The Media covered the countless people who had their homes foreclosed and taken from them.  Why are they not covering the people who lost their lives or the families that are now forever changed.  Why and why the double standard. 

Unemployment – Obama told us that if he did not get his stimulus package put through that unemployment would go to 8%.  We are now over 10% unemployment.  The America’s infrastructure of bridges, utilities and pipelines are failing and yet no real money is being spent here?  With Obama, the green president, why isn’t any of the stimulus funds being spent on improved sewer systems if nothing else?  Every year countless tons of raw sewage goes into our waterways and no one says a thing?  Why?  And why the double standard?  Think about all of the jobs rebuilding the countries infrastructure would create and the tax dollars would follow.  Again not rocket science here.  And yet our elected leaders, people we voted to put in office, can not see this.  Why? And why the double standard?