Countrywide Continues the Slow Bleed.

Countrywide takes a writeoff of $125-$150 Million in their re-structuring where they are laying off 20% of their workforce. Meanwhile Southern California home sales have dropped to their lowest since Dataquick began tracking home sale records in 1998.

A total of 12,455 new and resale houses and condos were sold in September in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties, according to DataQuick Information Systems.

It was the slowest month since the firm began keeping records in 1988, DataQuick said.

Finally rigorous process management comes to small residential construction

The larger home builders have always had large scale project and modern business processes for building homes. They are able to leverage large economies of scale to more efficiently produce homes. This enables them to produce a home at a lower cost than a typical general contractor isn't able to do as efficiently. A friend of mine built his own home and had to deal with the vageries of the New Mexico and his project management tool was his spreadsheet. Smaller builders cannot afford or often lack the knowledge to implement such systems. A Construction Management System can be difficult to implement. 6x6 Builder has developed a web based system for managing, estimating for the builders. Their online building cost estimator for general contractors that integrates construction cost estimating and control tools in a complete construction project management system. This means a couple of things. The contractor doesn't need to manage an expensive piece of software. Being web based, all the problems that a typical software installation would entail are eliminated. The monthly price is reasonable at $69. It provides a rather extensive feature list but it provides an organizational structure that most general contractors lack. Most general contractors are not known for their organized management skills. The web based system is feature rich since it allows you manage you business, sub contractors, estimates and more.

One particular feature I found interesting was the ability to use and generate master templates for project and then customize these templates for later use. This allows a contractor to work from an existing template, customize it and then save it as a general template. This provides a pretty serious advantage since it's a great starting point. Estimating is always a somewhat black art but with 6x6 Builder's web based solution it's a lot more accurate. The system can query the latest prices on materials, fire off request for quotes and more. There is an entire subsystem devoted to sub contractor management along with pre-written contracts. Working with the system during my 7 day trial, I can easily see how this system properly used can save a contractor a huge amount of headache and time. In fact I will certainly use it as an owner/builder for my next home.

It's the fundamentals Stupid

While Wall Street is rejoicing about the 50 basis points rate cut, I watched the talking the pundits discussing whether or not this would "save the housing" sector. It's unlikely to do that since the fundamentals of the housing market haven't changed. Properties are well out the reach of the average home buyer. In many California markets (San Diego, Bakersfield, Tattoine) properties were bid by people speculating in the market. Now that the easy credit is gone, there isn't anything supporting these prices. Prices will continue to moderate or stagnant for the next three years in California and the cutting of the discount rate isn't likely to change that little fact. In the end people need to be able to afford their monthly mortgage payment and you cannot do it with many California communities.

I hate to be a contrarian.

But given the state of the real estate market and mortgage market nationally, now is a good time to become a mortgage broker. Downtimes are the best time to enter any market. (It's the buy low part of the buy low/sell high). Many mortgage brokers have been forced from the market and quite frankly the marginal players have been eliminated. The California Mortgage Exam is one of the tougher exams national. Compucram offers a downloadable free trial of their California Mortgage Lending CompuCram® Exam Prep Software. This software prepares you for the California mortgage broker exam. It's downloadable and more importantly offers a guarantee to help you pass your mortgage exam.

Countrywide to lay off 25% of workforce.

Here's a game I like to play. When the CEO says that

[Mozilo] assured his audience that Countrywide's "proprietary technology" would help it meet its goal "to avoid any foreclosure." Countrywide invariably kept to "prudent underwriting guidelines," he said, to ensure that its adjustable-rate borrowers could handle the highest interest rates that might kick in during the life of their mortgage.

(Hat Tip LA Times)

It's time to short the stock. Their technology wasn't good enough to stave off the collapse off the credit market So they laid off 25% of their workforce. Oh yea they expect loan originations to be off by 25% this year. I am sure they are giving great RIF packages to those employees. Those that might remember I said the subprime market specifically in California would do EXACTLY THIS!

Credit Tips

The sudden collapse of the sub-prime market has made managing your credit even more important than before. The credit market is going to tighten up considerably in the future and managing your credit and improving your credit is going to be key to getting the best rate on a mortgage. Credit Tips offers a blog and series of videos dedicated to helping people who might have marginal credit, improve their credit. Improving your credit isn't a magic formula but rather it's due to the fact that people often have inaccurate information on their credit report. Many late payments aren't actually late because creditors don't face a penalty for reporting inaccurate information. Frank Bruno's blog covers his complete line of videos on managing your credit. He has launched a new video on disputing items on your credit report for verified items which launched June 29, 2007. His blog on credit tips which covers his videos and offers regular credit report tips.

Frank offers a pretty wide selection of videos and he is far more knowledgable about the specifics of the credit industry. This sort of insider knowledge is very very helpful since his techniques and tips are specifically geared to take advantage of both the current law on fair credit reporting act and the practices of the credit industry. Bruno's knowledge of the credit industry is a clear advantage in his videos and his blog. Having this information can help dispute items on your credit report, improve your credit score by 123 to 200 points and more importantly get you the accurate credit you deserve. I would encourage you to try his video and read his blog to get one leg up for your next mortgage application. His videos take a specific topic in dealing with your credit report and go in depth on the matter. This means he goes into far more detail than a blog devoted to generic advice on improving your credit.

Buying outside California

Charlotte real estate has been one of the better real estate investment opportunities in the last five years. The real question is after the housing slow down ends, where will be a good place to buy? The more important thing to remember is that real estate is a highly regional market. While things have decidedly cooled in Southern California, there are quite a few places where houses and homes continue to appreciate. Now is a good time to buy as you can see when you compare mortgage rates. They are still at an historical low. This means that owning a house is still within reach of many Americans. It just means that you need to do your research and invest in the right areas of the country - preferably ones that didn't get run up by real estate speculators.

Casey - He's like crack

I realize that the saga of Casey Serin is getting pretty old but I cannot help myself. Casey is like crack. In the lastest saga of Casey's meltdown - someone gave him $1000 so he decided to fly to Australia - leaving his wife behind. I promised myself I would get back to covering the less juicy sub-prime explosion in California real estate but watching someone as nuts Casey publically is too func

Casey Can't Quite Quit

He keeps changing the single page that is his web site. Currently it has in nearly completely greyed out letters the single sentence, "I'm sorry." This marks the 5th time he has changed the blog since closing it. I guess he thrives on the attention. One of his previous version had a complete list of his various media appearances. Viewing source on Casey's blog reveals his last two versions which he has simply commented out.
Here's a previous version

I am Facing Foreclosure Story is Over.

It will never be back as we knew it.

Advertisers: Feel free to cancel your PayPal subscription. I will be issuing pro-rated refunds this week.

Everybody: I'm very sorry to end like this. I wish I could say a lot more, but it all came down to choosing between my wife and this blog. As much as I resented having to make this choice, I love my wife and am trying to do the right thing. May God help me move on and help us rebuild our lives.

Thanks: to all the "haterz" (original, biggest, funniest) and to all the "supporterz" (original, longest, mixed) and everyone else who linked to me. You guys made the last 9 crazy months of blogging possible. (Sep 5th, 2006 - May 30th, 2007). Remember to keep it Sweet!

Press:

• May 14, 2007: Casey Serin: The world's most hated blogger? - CNET



• April 13, 2007: Real Estate Leaves One Investor High and Dry - ABC Nightline
  



• April 12, 2007: Spekulanten werden nun bestraft - Stern, a German news magazine
  



• April 7, 2007: Facing Foreclosure - Suzie Orman Show
  



• March 22, 2007: America's housing market - The Economist
  



• March 7, 2007:
  Central Valley Man Poster Child Of Mortgage Crisis - CBS 5 News
  



• October 31, 2006:
  On Rich Dad TV with Robert Kiyosaki
  



• October 22, 2006:
  10 mistakes that made flipping a flop - USA Today
  



• October 6, 2006: A would-be real estate mogul follows boom tips straight to bust - San Francisco Chronicle
  



• September 25, 2006:
  24 Years Old, $2 Million in the Hole - The Motley Fool
  



• Others include: NPR Radio, The Sacramento Bee, Local TV stations, and more...

More: My photos, videos (here, here and here) and podcasts are still up (for now).

You may contact me or join my mailing list here.

--

Casey Serin


"It's All Good!"

Last updated June 1st, 2007

Jesus Serin your wife is gonna kill you. Instead of actually quiting he keeps making small little changes to the blog. His need for attention is pathelogical!

Who would hire Casey Serin?

In yesterday's post I mentioned that Casey Serin'g blog is closed. The scuttlebutt is that Galina (his wife) finally pulled the contract he signed out and said "Get a fracking job." It then occurred to me who is going to give Casey Serin a job? I mean Googling an employee is a pretty standard practice these days. Wouldn't anyone who googled Casey Serin would find his Wikipedia entry, the News.com article claiming him to be the world's most hated blogger and the multiple cases of mortgage fraud that he committed? Wouldn't this make Casey Serin largely unemployable? I mean who is going to trust an employee who defrauded companies of hundreds of thousands of dollars? I wouldn't trust him with a burnt out match and I doubt the human resources of any major company is going to allow him to get a job there. That's leaves a small business stupid enough to hire someone as unethical as Casey. Last time I checked Enron wasn't hiring.
Update: The out of touchness continues
Anyone that has read Casey's blog realizes he is completely out of touch (leading explanation - bi-polar disorder) but he UPDATED his CLOSED BLOG.

Everybody: I'm very sorry to end like this. I wish I could say a lot more, but it all came down to choosing between my wife and this blog. In order to keep the marriage I had to kill my 9-month-old baby who was just beginning to walk and talk (meaning the blog starting to produce full-time income). As much as I resented having to make this choice, I love my wife and trying to do the right thing. May God help me move on and help us rebuild our lives in the right way

A blog that generated the tinest amount of income and he compares it to a baby. You Casey Serin are one sick fucking moron.

Casey Serin's Blog Closed

Mortgage fraudster Casey Serin has shuttered his blog I am facing foreclosure.

IamFacingForeclosure.com is over. It will never return.

Advertisers: Feel free to cancel your PayPal subscription. I will be issuing pro-rated refunds this week.

Everybody: I'm very sorry to end like this.

Thanks to all the supporterz, haterz and everyone who wrote about me. You guys made the last 9 crazy months of blogging possible.

You may contact me or join my mailing list here.

No doubt Casey's wife finally used that contract when Casey was unable to pull down $1,000/week steady income. I also suspect that someone close to Casey (it certainly wasn't Casey - he was clueless the entire time) realized that the numerous statements of mortgage fraud on the blog were just a lawsuit waiting to happen. Serin was the poster child for liars loans who bought 8 houses in several different states using no doc liars loans. IS the closing of the web site just prelude to avoid Cashcall? Or is it minimizing any potential legal liability? Who knows? More importantly who cares?

Wachovia Buys AG Edwards

In continue consolidation of the mortgage marketplace, Wachovia has bought AG Edwards for 6.8 Billion dollars. See Yahoo article here or CNN's coverage here. It's apparent that Wachovia is making it's play to become one of the big four essentially. It's been picking up regional banks left and right. The shock of the subprime market has left a lot of companies that previously wouldn't have considered a merger, gussing up the place and getting ready to be bought.

Subprime Feature Story

It seems as though the sub prime market in California seems to inspire feature story after feature story about someone who goes from rags to riches and then rags again. Bloomberg has a feature about someone who went from a manager at a warehouse for Target, became a salesperson for Costa Mesa based Secured Funding Corp. I am not sure how many more stories like these I can take. Quite simply the mortgage brokers in California were able to quickly package loans and sell them off to firms on Wall street or large banks

Under U.S. law, investors who buy mortgages or securities backed by them are typically not susceptible to lawsuits alleging fraud on the part of brokers.

I would encourage you to skip the obvious lead-in of the story and read some of the meat of the matter. The body of the article tells yet another sordid tale of the high pressure sub prime sales techniques. It seems nearly inevitable that some sort of new regulations regarding sales tactics, disclosures and appraisals will happen. With the new Democratic Congress these are sure to be more stringent than the previous Republican Congress.

Credit Management - Student Loan Consolidation

One of the most important elements in managing your credit is managing long term debt such as student loans or a second mortgage on your home. In my own case I have to be upfront, I did a very poor job of managing my student loans post graduation. One of the problems was the multiplicity of loans that took in my last two years of college. This meant that I often missed payments and in case of one loan, managed to completely drop the ball on it completely. I would have certainly benefited from student loan consolidation. This would have given me a single payment and single place to right a check. Consolidation would have also lowered my over all interest rate for the loans I had. The interesting thing of course was that this was well before the internet and before federal student loan consolidation was a common practice. Getting student loans consolidated back then was a time consuming process requiring multiple physical forms. Simply put it was really hard to do. This was too bad since this meant that I damaged my credit and made it harder to purchase my first home in California. By
consolidating my student loan debt I could have saved on the interest rate and my downpayment. As it was I bought my first California home with a 20% down payment.

Had I managed my student loan debt better I would have been able to purchase even earlier and would have enjoyed an even greater appreciation in my home's value. So to manage your credit, you should do the following.

• Consolidate your student loan debt into a single payment
  This will make it easy to track and manage your student loans. Having multiple loans with multiple vendors is the surest way to miss a payment.
  
• Set up an auto pay
  By autopaying the minimums+$1 on your student loan, you don't have to worry about the mail time or other inconvienences. By making the minimums+$1 you will show a payment history of paying more than the minimum and this will help with your credit. Additionally it will mean that you don't have to worry about the fiddle faddle associated with the mail.
  

This is a sponsored post.

Subprime Firm In OC beginning to collapse

The Orange Country Registrar has a great story about Quick Loan Funding -- largely famous as being an active player in the California sub-prime market and more importantly the founder Daniel Sadek is famous for having actor Eddie Griffith crash his Ferrari Enzo during a publicity stunt for his failed movie - Redline.

Those willing to wade through the article are more than welcome to read it HERE.
The article highlights one thing - much of the problem in the California sub prime market lies with the incredibly easy way it is to become a mortgage lender in California

Daniel Sadek played Orange County's subprime lending boom like a card shark dealt the ace and jack of spades.

Just five years ago he was selling cars.

Then, in January 2002, he anted up $250 for a state lender license and started selling home loans through his company, Quick Loan Funding.

That right $250 and a $25,000 surety bond and you can be a mortgage lender in California. It's more difficult to become a barber than it is to become a mortgage lender. Today Daniel Sadek has sold his fleet of exotic cars to keep his firm afloat. The staff has shrank from 700 to 125 and his loan volume has dropped to about 60 deals a month. In other words he's done. The firm had to buy back $29 million in mortgages last month (they are writing about $30 mil a month) with numbers like that his firm cannot last. Daniel's desperation was such that he has mortgaged every piece of property to the hilt to keep the firm going. Given the aggressive tactics used by Quick Loan Funding and the number of lawsuits they have currently (the number they will have as a result of the article. Articles like that always increase the number people that come out) - I just don't see this firm making it.

Managing Loans and Secured Loans

One of the principal reasons reasons people get Secured Loans is either debt consolidation or for temporary one time expenses. Most of the time these loans are small and not worth getting a larger homeowner loan. The essential problem that many people don't face when getting a loan is whether or not the loan is going to add to their overall debt load. Many people get a homeowner loan for debt consolidation but continue the overall spending that caused them to get into debt in the first place (for example paying off credit cards and then running them up again). If you are getting a loan for a one time expense such as home improvement, start with the kitchen. Kitchen home improvements yield the greatest return of any single home improvement. Typically you will see a great return on kitchen improvements

1. Plumbing and electrical - 260% Average Return on Investment: Consider repairing or replacing any defective plumbing or electrical items in your home. Make sure you have the right person for the job by getting several estimates.
   
2. Update kitchen and bath - 168% Average Return on Investment: Update kitchen and baths by resurfacing cabinets or painting with neutral color. Replace toilet seats, dated fixtures and drawer/cabinet handles. Freshly caulk and redo grout in countertops, sinks, tubs and showers.
   
3. Paint interior - 148% Average Return on Investment: Repair any damaged interior walls by patching all chips, holes and cracks; then touch up or repaint interior walls with neutral color.
   
4. Paint exterior - 76% Average Return on Investment: Repaint or resurface the outside walls of house, as needed. Patch and repair any damaged areas.
   

This is a sponsored post.

Countrywide Takes advantage of the Subprime Market Consolidation

According to this Washington Post article, Countrywide will be adding 2,000 new positions. In addition they will be adding 50 year mortgages and reverse mortgages to their product mix. The consolidation in the industry continues as many of the sub prime lenders in the marketplace continue to let people go. They expect consolidation so much so that they have launched Country Wide Careers. The recent layoffs in the marketplace mean that Countrywide can cherry pick some of the best professionals in the industry. On that note Accredited Home Lenders Holding Coa San Diego subprime lender, on Friday said it cut 1,300 jobs, or 31 percent of its staff, in the first quarter.

Loose lending standard are a global phenomenon

One of the most interesting things about the current credit markets is how global they truly are. Credit is truly global these days and it's interesting to find that easy credit might have been previously only regional in effect are global. For example in the United Kingdom and Scotland mortgages have been just as easy to get as in the United States. As a result, many people bought more home than they could afford and as a result of rising interest rates are now looking remortgage an existing ARM. Just as here in California secured loans against the homeowners residence are often quite popular as one way to consolidate debt.

In the United Kingdom, credit lending standards are already started to tighten up. Recent moves by the Bank of England have signaled markets to tighten up their lending standards. This is perfectly natural in today's environment. What's interesting of course is how the Feds action here in the States seemed to signal to global credit markets that it was time to tighten lending standards.

This is a sponsored post.

PNC Financial Services Group (NYSE: PNC - News) announced the acquisition of ARCS Commercial Mortgage

The company has 10 U.S. origination offices and has focused on the agency loan market for the past decade. ARCS originated more than $2.1 billion of loans in 2006 and services a portfolio of approximately $13 billion. Terms of the deal were not disclosed.

PNC said that ARCS will provide the bank with a complementary customer base and expertise, particularly in financing plans for multifamily dwellings. "Multifamily housing is one of the largest lending sectors in commercial real estate, and agencies are leading providers of permanent financing products for market rate and affordable multifamily projects," said William S. Demchak, PNC vice chairman and head of Corporate & Institutional Banking in a statement.

New Century Financial sells loan portfolio for less than 30 cents on the dollar

New Century Financial sold a 170 million dollar loan portfolio for less than 30 cents on the dollar to Ellington Management Group. Ellington Management is a hedge fund and this will be part of a growing trend of hedge funds, buyout firms and other Wall street firms trying to buy up sub prime assets as the market continues to collapse. New Century Financial will be selling its loan servicing units later this month. Carrington Capital Management, another fund manager, in early April agreed to buy the unit for $133 million unless a rival tops its bid.

Rockstart UP!

Payperpost.com has been running a video blog to chronicle their reality show and startup. The idea is pretty simple. Start a company and then chronicle the changes and challenges that start up faces. In many ways it's pretty compelling. You get to see the inside of a internet funded start up and can be pretty interesting. The current episode is episode number #20 and it's a complete list of outtakes from previous 9 months. It's not two bad as far as outtake reels go (Why didn't the group cake plough make it into the regular series?). Finding your voice in a video blog is just as hard as finding your voice in a regular blog. The current problem with the this episode, is that it's apparent very often people are mugging for the camera to make something interesting. It's far more apparent in an outtake reel where Ted blows multiple set-ups or his "I gotta yell stuff". That stuff is transparently done for the audience and has almost no real appeal to me. In fact the problem with this episode is that it's an outtake reel which means it's a random series of vingettes without a lot of context. Previous episodes have focused on one aspect or another of a startup (explaining your business proposition, sales, getting customers etc) On the other hand, it's apparent that Ted has done quite a bit of traveling (Gotta raise those first round funds) and I found that interesting in terms of getting something like Payperpost off the ground.

New Century Financial to shutdown home lending unit

New Century Financial is shutting down it's home lending unit (which it was shopping around for sale. Surprisingly no one seemed to think that jumping into the sub prime market was a good idea right now). The firings will take place tomorrow. This is on top of the 3,200 already let go. This means that New Century Financial will let go 70% of it's work force.


Related Article at Bloomberg
New Century Shuts Lending Unit as No Buyers Emerge (Update2)

New Mortgage Broker Directory

There is a new mortgage broker directory covering California. California Mortgage Brokers is a service offered by Personalhomeloanmortgages.com. They cover Mortgage Rates nationally and have a full listing of California Mortgage Brokers, available on the web. You can use the city and state navigation links to find your local city/state pages to find a broker in your specific area. They offer a nation wide directory of mortgage brokers and you can easily navigate by city for example (San Jose Mortgage Brokers or Pasadena Mortgage Brokers. After a bit of poking around I found both my first mortgage broker and my second mortgage broker based out of Irvine.



This is a sponsored post.

Countrywide hit harder than I expected

It's apparent that Countrywide was hit harder by the subprime marketi than we originally anticipated. I had originally thought based on their perfomance last quarter. The subprime part of Countrywide's portfolio drove down profit by 37% over the previous quarter. I had expected Countrywide's internal knowledge of the California market (and how cyclic it can be) to mitigate some exposure to the fall out in the subprime market. It's apparent that even Pasadena based Indymac isn't immune. "IndyMac, whose Alt-A loans aren't supposed to be as risky as subprime mortgages, reported its lowest profit in almost three years. Earnings fell to $52.4 million, or 70 cents a share, from $79.9 million, or $1.18 million a year earlier."

Media Reports:
Bloomberg on Countrywide's 1st Quarter 2007
CNN Money on Countrywide

Bank Account Returns

Typically your FDIC insured bank accounts aren't a great place to earn a decent return. One site, Savingsaccounts.com is looking to change that. It offers online banking interest rate comparisons at SavingsAccounts.com will help you find the best high yield online savings account or checking account.

What they have done is assemble in one location the best checking and savings accounts that have higher yields than typical 1% interest accounts. What I find interesting is that they have done a great job covering the various types of accounts available that yield from 2.29% to 6% rate of return. If you have money in your checking account, doesn't it make sense to have a decent rate of return on those funds? All banks offer online access and some have minimum requirements. The 6.00% rate of return actually has no minimums from HSBC online banking. It makes sense once your have consolidated your debt to begin earning a reasonable return on your checking or savings account.



This is a sponsored post.

Mortgage Fraud Analytics

Basepoint has recently launched two new services (Enhanced Fraud Review and Fraud Organizational Framework) which are designed to help eliminate mortgage fraud for originators. Both services will help identify and prevent the funding and purchase of fraudulent loans by incorporating proven best practices into the loan review process. According the to Tim Grace, president and CEO of Basepoint,

“The concept of Enhanced Fraud Review is simple. BasePoint helps companies pin-point those mortgage loans where fraudulent misrepresentations are most likely to exist using our market leading FraudMark™ scoring solutions. Then, using the Enhanced Fraud Review, we guide lenders and due diligence companies through an intelligent process for investigating those high risk applications, vetting out the actual misrepresentations and thus preventing fraud from slipping through. The guided process takes place in the form of an intelligent checklist that an underwriter completes, and which can dynamically adjust according to the underlying risk and information in the application itself.

The second service, Fraud Organization Framework, facilitates improved risk and fraud management systemically. Lenders and investment banks are focused now more than ever on controlling credit and fraud risk. Investment banks are implementing FraudMark™ scoring before sampling for due diligence and using Enhanced Fraud Review at their due diligence companies for each loan trade. To ensure that fraudulent loans never reach the point of purchase, lenders are implementing organizational structures that ensure higher quality loans are ultimately funded before being sold on the secondary market.

Using BasePoint’s service to define new risk management organizational structures, lenders can accelerate their success in minimizing fraud and risk. For investment banks, this service recommends the structure and staffing of the due diligence fraud review process. BasePoint’s new Fraud Organizational Framework is based on best practices in fraud management from within the mortgage industry as well as other areas of financial services including highly advanced organizational practices that have been developed in the credit card industry over the past two decades. BasePoint fraud consultants work with clients to design, introduce, and implement the right fraud management processes to achieve each organization’s fraud and risk management goals."

While Basepoint's software might be more effective than current measures (and in many cases far more effective) but the root case was the loose credit standards that epitomized this round of housing boom. On the other hand Basepoint analytics can help capture more subtle forms of fraud than simple income falsification. Mortgage fraud is often perpetuated by fairly sophisticated individuals who often practice it on a wide scale. This give originators a leg up on those individuals.

Related URLS:
Basepoint Analytics

Loans - Cover that shortfall

In my last post I covered foreclosure - what to do?. In this post I am going to talk about what to do if you just have a temporary shortfall. Sometimes secured loans are one answer. These are loans that are secured by personal or real property and typically have a higher interest rate. They can help you cover a shortfall or temporary loss of income. Sometimes you can make your mortgage payment but can't make your credit card payment. Other times homeowner loans are the way to go. Typically these are either seconds or home equity lines of credit. If your credit is good apersonal loans are the way to go, enabling you to consolidate expenses an other other options. In any case the best way to go is to consolidate your loans and reduce your expenses. Loans should be at best a temporary measure to help solidify your financial position. Successful management of your loans will enable you to improve your credit score, and qualify for lower interest rates on the future loans you might have.


This is a sponsored post.

Foreclosure - What to do?

Many people avoid the problem of home foreclosure, not realizing that proactive measures can save your house. Let's face it, it's embarrassing to be behind on your mortgage, but don't let embarrassment cause you to lose your house. Remember the mortgage holder doesn't really want to foreclosure on the home. Foreclosure is expensive and in today's market usually means that the lender is going to lose money. Furthermore foreclosures can have network effects driving down home values throughout a neighborhood. If a lender has additional loans out there it can adversely affect their portfolio. So here are some steps you can take

• Face the problem.
  This means immediately calling your lender when you know you cannot make your payment. Most people never bother to call the lender, treating it like a credit card vendor you are behind on. The vendor owns the majority stake in your home. Treat them like a partner, not a creditor you would rather avoid.
  
• You have options.
  You may have some options including negotiating a repayment plan, requesting forbearance and asking to restructure the loan.
  
  Under a repayment plan, a lender will give you a fixed amount of time to repay the amount you are behind by combining a portion of what is past due with your regular monthly payment. At the end of the repayment period, you will have paid back the delinquent amount.
  
  In the case of a forbearance, the lender will temporarily allow you to pay less than the full amount of your mortgage payment and may even exempt you from paying anything during the forbearance period.
  
  Typically you qualify for forbearance if you can prove that you'll be getting funds from a bonus, a tax refund or some other source that will let you bring the mortgage current at a specific time in the future. You may also qualify for a forbearance if your income has dropped temporarily.
  
  
• The environment has changed.
  When the real estate market was red hot, lenders were less likely to restructure or work with borrowers. Now that the market has cooled lenders are much more likely to work with home owners. Lender don't want to be in the realty business.
  
  
• There are non profit options.
  For example the Homeownership Preservation Foundation, a nonprofit organization based in Minneapolis, has established -- with a lot of funding from lenders -- a toll-free hotline at 1-888-995-HOPE (4673), available in English and Spanish. You can also get information by going to http://www.995HOPE.org.
  

There are options out there to avoid foreclosure, you just need to find them and face the problem.

Mortgage Prep

Most people just don't take the time to qualify for the best rate on their mortgage. That preparation starts about 6 month before you apply. Ideally you should check your credit at least a year in advance but by checking 6 months in advance and cleaning your credit then (by paying everything off) you can significantly improve your credit score and lower your rate. What do you do even if you have poor credit? There are a number of vendors available for bad credit mortgages for poor credit customers. By just doing the minimal amount of work cleaning your credit, you can improve the rate on your Mortgage. If your APR is too high or your ARM has reset, it might be time to consider a remortgage as an option.

So to improve your interest rate for your mortgage, the first clean your credit as best you can 6 months before applying for a re-finance or for your current lendor.



This is a sponsored post.

Blame it on the Rain

NAR attributes the worst month to month drop in existing home sales in 18 years to "unusually" bad weather in February. Well the weather was like it always was in February - cold and rainy. More than likely the increase of sales the previous three months was due to unusually warm weather. See the weather can be used as any excuse. How the world works they have an interesting metric for tracking new housing starts - remittances

Monthly remittances from the U.S. to Mexico have dropped every month since their peak of $2.6 billion in May 2006 -- shortly before new-home construction in the U.S. plunged. In February 2007, the latest month for which data are available, remittances to Mexico had slowed to $1.7 billion.

New housing starts have been coasting on builders using their existing permits to continue building. In other words they are building what they have already permitted but aren't seeking as many new permits.

H&R Block Leaving Mortgage Business - Oh yeah we are selling Option One too!

H&R Block has decided to sell Option One mortgage (the first provider of my very first mortgage) to OOMC Acquisition Corporation. The expected closing date is H&R Block;s fiscal second quarter. From Stockwatch

"It said the transaction excludes Option One subsidiary H&R Block Mortgage Corp, which it has decided will cease operations. This will result in around 25 mln usd in pretax charges for severance, facilities closure and other costs and a 16 mln usd goodwill impairment charge of around 16 mln usd in its fiscal fourth quarter."

Once again the bitter pill is coated with sugar. The real story here isn't that H&R Block is selling Option One. It's that it's leaving the mortgage business altogether. This particular story is very clearly a rehashed corporate PR which is designed to hid a huge fact in plain sight, namely that H&R Block is leaving the mortgage business. That fact is thrown in as throw away paragraph at the end.

Wells Fargo Beats the Street

Wells Fargo beat the earnings estimate. They did so on the growth of their commercial lending and a growth in deposits. It's also apparent Wells has managed their sub prime exposure proactively since 4th quarter 2006. I imagine the previous corporate experience with the California market's previous two real estate slow downs is one reason why Wells was able to manage the turn in the sub prime market. Wells did set aside 715 million for the softening home equity market. Earnings were reported at $.64/share


Here are the stories reporting on Wells Fargo's earnings.
Marketwatch:Wells reassures on subprime exposure, warns on home equity loans

Fremont General Sells Subprime Portfolio

Santa Monica based Fremont General is selling most of it's sub prime portfolio. The buyer is still undisclosed but there are some notable things about this deal.

• Fremont General is taking a 100 million dollar pretax loss.
  
• The deal is largely being underwritten by the sale of it's residential real estate assets to the same entity. "The Company alsoannounced that it has entered into exclusive negotiations with the same institution under an executed letter of intent to sell most of it's residential real estate business and assets." From PRNewswire
  
• After the sale the companies cash position remains strong with 1.5 billion in assets.
  

Fremont General will exit the sub prime market with this sale. The discount is pretty heavy but considering that the current subprime market has a foreclosure rate of 4%. Fremont General was smart to leave the market. Remember this is going to be the first year where ARMS are resetting to actually include principal. We can expect the ARM foreclosure rate to sky rocket in the upcoming years. This won't hit the California market as hard since the California economy is vibrant. I expect it to hit parts of Texas, Indiana, Georgia and other bid up secondary markets pretty hard.
Related Links:
Fremont General

Official Announcement of Fremont General's sale it's subprime portfolio

Wells Fargo Announce 1st Quarter 2007 earnings

I am waiting for the announcement. It looks like they are announcing EOD today.

Industrywide foreclosure rate was 0.54 percent in the fourth quarter, the highest in its 37 years of surveys.

Amidst the reporting that Countrywide was reporting an increase in foreclosures was the news that Countrywide was also increasing the number of loans that they were servicing. Additionally it was reported that foreclosures are now the highest ever recorded in 4th quarter 2006. For Countrywide having more loans in the pipeline is a clear sign that the long predicted consolidation in the marketplace is continuing. Countrywide as the largest US mortgage lender isn't immune to the effects of the subprime market but it's far more likely to weather the storm. Furthermore customers are more likely to chose vendors who are larger (and thus seen as more trustworthy). It's going to be interesting to see what Wells Fargo reports on April 17th.

1/3 of all ARMs in California will end in forclosure

One of the things I love is little tidbits that sometimes get buried in articles about the implosion of the sub prime market. This article is about how lawmakers are blaming mortgage bond investor should be held liable for deceptive loans. Well there is plenty of blame to go around for the sub prime market (starting with Alan Greenspan's decision to keep the prime artificially low). But four paragraphs in we get this little tidbit

Economist Christopher Cagan projected about a third of all adjustable-rate loans originating from 2004 to 2006 will default because of reset, when the initial "teaser rate" expires and borrowers must start making regular payments that include principal, he said in a study by First American CoreLogic released last month.
While many consumer and civil rights groups want government intervention, not everyone is pleased about any legislation costing taxpayer dollars.

"People have bought houses they can't afford, period," said Christopher Thornberg, economist and principal of Beacon Economics. "So unless the government is going to give them $100,000 to $200,000 each, what option do they really have?"

Given that sub prime East Bay borrowers who are sixty days late have risen from 4.29 to 12.23 percent, that rate adjustment is going to come as a complete shock.

The problem is of course is that there isn't a clean happy solution to the sub prime borrowing situation. It's going to end in foreclosures, tighter lending standards and an overall tightening of credit.

The Subprime Directive

For all the talk of the minimal effect the sub prime defaults are going to have, it's pretty apparent that the "minimal effects" are going to be larger than anyone has expected. Let's just look at the current closings and layoffs

• Loancity closed on 3/22/07
  
• Countrywide's subprime mortage defaults for 2006 may exceed the company's highest on record.
  
• New Century lays off 54% of their workers (this company is headed for the dustbin)and files for Chapter 11
  
• Aegis Lending plans to shutter its Sacramento office
  
• People's Choice (another sub prime lender) files for chapter 11
  

The shake out in California continues. You can bet that you will hear about it hear first (or nearly first). New Century was one of the ones that we reported on very early on (when I got a few emails about the situation there).

New Century Recieves C&D

Well you heard here first but now it's official, Irvine based New Century has received a Cease and Deist order from the State of California and Fannie Mae will stop buying their loans.

It's apparent that the chicanery over at New Century has gone well beyond simply foreclosures on the sub prime market.

"The filing also said the company has received cease-and-desist orders from California. The state alleges that New Century illegally failed to fund mortgage loans after closing."

Someone is going to jail.

Defaults begin sink companies

To quote Queen, "Another bites the dust". This time the mortgage company going under is Irvine based sub prime provider, New Century Financial Corp. It's creditors have cut it off as the defaults in the continue to rise. What's more telling is the percentage of sub prime loans, and their marketshare have skyrocketed in the last three years, going from 6% of the market to 22% of the market. Foreclosures and defaults will have a ripple effect throughout the California housing market.

The so-called sub-prime lending industry that specializes in loans to risky borrowers has been tormented for months by soured loans, creating huge losses and forcing about three dozen large lenders to be sold to other companies, to file for bankruptcy protection or to close operations altogether.

On Monday, New Century announced that the Wall Street firms that supplied its funding had either cut off fresh capital or were poised to do so, leading some industry observers to say bankruptcy was likely. The company's stock plunged $1.55, or 48%, on Monday to $1.66 before the New York Stock Exchange halted trading.

Less than a year ago, New Century shares were worth nearly $52 each.

As New Century's stock sank, those of other sub-prime lenders suffered too. Santa Monica-based Fremont General Corp. fell $1.30, or 16%, to $6.73. The firm said last week that it would exit the business under pressure from regulators.

Homebuilder shares also stumbled on fears that they will have fewer customers. Hovnanian Enterprises Inc. fell 6% and Pulte Homes Inc. dropped nearly 5%.

This is likely affect other mortgage providers with less exposures and will lead to a much needed tightening of lending standards. This will exert a downward pressure on California homes in several ways. First of expect more distressed sales of homes, secondly expect fewer offers on your home for sale since their will be fewer buyers competing for it.

See No Evil

Seeking Alpha has a bubble tracker and round up. Remarkably people who have a vested interest in saying things are GREAT continue to do so. Here's a great one from Idaho, ""Sales of single-family homes in the Treasure Valley in January were off 27% from Jan. 2006," yet according to Don Hubble of Hubble Homes, "We're optimistc." Talk about cognative dissonance.

Here's another report - this time in California in the Central Valley with an expert saying the housing bubble has adjusted

"The foreclosure market in California and the nation in 2007 may not be quite as intense as it was last year but many home buyers who used creative financing to get into their homes are still in danger of foreclosure, says Serdar Bankaci, founder and president of Default Research Inc. of Mt. Pleasant, Pa."

Look at that lead... "may not be quite as intense"? Based on what data? Let's take a t the actual data. Here's a great post at the OC Register
"RealtyTrac from Irvine reports ....

"California’s foreclosure total of 14,430 was the nation’s second highest and represented a 14 percent increase from the previous month. The state’s foreclosure rate of one new foreclosure filing for every 846 households registered slightly above the national average and 14th highest among the states."

So instead of cooling down - the foreclosure rate is actaully INCREASING in California.

Exclusive Luncheon for Loan Officers & Mortgage Planners!

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Study Debunks Boomer Urban Migration Myth

Study Debunks Boomer Urban Migration Myth . One of the things that many realtors were reporting that Baby Boomers were returning to cities from the suburbs. The information was largely based anecdotes such as the number of older adults in enrolled at City Colleges. The recent study indicates this is myth.

Corrections - Secondary markets are first.

It's becoming pretty apparent that housing market correction doesn't bode well for the secondary California markets. These are markets that have been bouyed up by the bubble but whose fundamentals just do not support the price appreciation. They are just outside the major markets and include Bakersfield and parts of the Central valley. Most analysts are predicting major prices declines in these markets. TO my mind this makes complete sense as real estate is always highly regional. These markets were quickly driven up as they were the only affordable housing in the area - the problem of course is that the price of gas means that living in Bakersfield and commuting to Los Angeles is an incredibly expensive proposition. Add in a negative amortization loan which is going up, combined with negative equity and you are setting the market for some sharp price declines in the medium term and stagnated appreciation (probably below inflation) for the next 10 years.

Mortgage Broker Shakedown continues

The California mortgage broker market continues it's shakedown. I have gotten four email reports of brokers closing their doors. I can only guess where this all gonna shake out. Companies to watch Aegis & New Century apparently

NAR 2006 Prediction WRONG!

Back in December of 2005 the National Association of Realtors (NAR) made a woefully wrong prediction. Thanks to Business Week for finding this gem:

PREDICTION: The national median home price will rise about 6.1% in 2006. Over a full year, it "has never declined since good record-keeping began in 1968." — National Association of Realtors, Dec. 12, 2005

THE REALITY: Through October, the median price of residential properties was down 3.5% from a year earlier.

The NAR was way off on this prediction. The median price decline is even worse if you take into account all the extra incentives that have been thrown on new home buyers. Don't trust the National Association of Realtors. Remember, David 'the shill' Lereah works there!