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Archive for November, 2009

The System is Broke? Humpty Dumpty

I’m just quoting the conclusion of the article that was up on Calculated Risk over the weekend.  It was about a lot of the technical aspects of mortgage servicing and the way that mortgages are sold and bundled.    A couple of main comments and then read the conclusion below:

  • Many of the problems in the mortgage world are because of the way that the mortgage world is structured.   That means that it is going to take systematic and structural changes to get us back to a system that really works.
  • When there is a lack of accountability, things won’t work the way they are planned.
  • Do you think that this lack of accountability and lack of responsibility is part of the reason why short sales and foreclosures are so hard to get approved?   There is no incentive for the servicer to make the decisions that need to be made.

Check it out below…..

Tom Vanderwell

Calculated Risk: Thanksgiving Weekend Mortgage Litigation Roundup

In other words, as many of you suspected all along, “hoocoodanode?” was officially part of the plan for creating mortgage backed securities. Systematic and willful ignorance was incentivized. If Wall Street created a system where each bogus mortgage passed through the hands of a couple of intermediaries who had no ability to do any due diligence on the quality of the loan, then the end buyer of the loan would, legally speaking, be in a better position to collect than the original lender by virtue of BFP status. Did the mortgage broker tell the borrower the loan was fixed rate when it really wasn’t? Oh well, no way the mortgage pool trustee could have known about that after the loan passed through the hands of an originating lender, an unrelated depositor and a legally separate issuer.

Whether for better or for worse, this system is pretty clearly not playing out as intended
. BFP status does nothing to protect lenders from broke borrowers and half price houses, both of which were foreseen by knowledgeable people who were not willfully ignorant of details about loan origination. And even the limited protection of BFP status may not be available in cases that are actively litigated, since it won’t be hard to prove that everyone in the industry knew brokers were filling in the blanks on stated income loans with whatever numbers were needed to make the applications go through.

So I guess this is just one more reason why all the Fed’s ponies and all the Treasury’s men are not going to be able to put Humpty Dumpty back together again.

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    When Is It Best To Begin the Day’s Cat Skinnin’?

    Regardless of what many of us prefer to believe, our day to day effectiveness has much to do with when our days begin and end. Yeah, yeah, I know, Captain Obvious etc. With one eight month exception, when it’s been my choice, I’ve not been an early riser. Ever notice that those who wake up later and stay up past midnight don’t pester the livin’ crap out of you about the merits of their choice? Don’t feel like gettin’ in a word edgewise for awhile? Ask anyone with a rooster fetish about the merits espoused by their dawn worshiping cult, and you may remain silent for the duration.

    My theory has always been grounded in the empirical. As long as you’re not showin’ up for work late, then leavin’ early to make up for it, your 8-12 hours a day are still 8-12 hours a day. Kinda profound, don’t ya think? Still, the early morning crowers piously insist their hours are more productive than those beginning and ending later. They utter those words framed in a tone dripping with the unspoken accusation of ‘slacker’!

    Is the listing you just took, or the loan you just closed worth any more or less based upon when you get up and go to bed? Apparently so to many.

    I wanted to find out first hand. If one of our country’s most respected forefathers gave the idea legs enough to last for over a couple centuries, what was the harm?

    Made a deal with myself to rise at 6 AM for the entire month of November. It’s been an eye opener, as I’ve learned Ben Franklin was full of what comes out of the south end of a northbound bull. Well, maybe not totally. I am gettin’ more done by 9 due to all the obvious reasons provided by being up and more or less not comatose before the #$%&^in’ sun is up. My waking hours haven’t really changed much though, which is counterintuitive to what all the lying bastards have been tellin’ us for centuries.

    My kingdom for somebody to rationally explain the difference between rising at 8:30 AM and hittin’ the hay at 12:30 AM-ish, or 6 AM and going to bed at 10-something PM. I figure I’m gaining at most an hour a day, sometimes less if my workload or workout conquered me instead of, well, you get it. I’m only bitchin’ now cuz I’m still adjusting to it, and am tired of being tired. I’m almost surely gonna extend the experiment to the end of the year to be fair. Would love to hear your take on this — with one exception. PULLLEASE don’t come at me with the whole kumbaya chapter and verse about being one with God or the universe in the morning. I’m a preacher’s kid — got that one covered.

    I will tell ya one thing. That first cuppa coffee with just-ground beans is better at 6 than 2-3 hours later. I’ll be damned if I know why though.

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    The Social Media curve

    if Arthur Laffer can have a curve for taxes that defies the static revenue generation models in use at the time and since, then I can have one for social media. (Hat tip to my friend Scott Hack at Selling Greater Louisville for starting me down this road…)

    socialmediainbusiness

    The true reach and impact of a given social media aite has a lifecycle. A site starts as an ineffective blob and the sites promoters must somehow inspire a LOT of people to waste a LOT of time building it up. **cough**Twitter**cough** As they do it gains traction, but unless it hits “critical mass”, a point at which it is a household word and EVERYONE is using it and will not stop using it, then it will decline. **cough**Myspace**cough**

    For business purposes, since we are trying to maximize our ROI, my thought is that we only should spend time on those social media sites with enough RELEVANT traffic to warrant us spending our time on them. (Right now that is likely ONLY to be Facebook and then only where we can connect with our friends from the past effeciently and possibly get deals from them.

    Twitter, for all of its rabid followers is now IN MY OPINION in decline.

    **Eric ducks a tomato and few folks from NAR who are just now learning to spell the words “social media” (grin)**

    How do I know? The aforementioned Scott Hack told me last week that he was noticing that more and more twitterers are doing less and less tweets. He is an avid twitterer. So I took it upon my self to do my own marketing research over Thanksgiving.

    Of the many people in their 20s and 30s that I talked to, who were on Twitter, most (75%) planned on spending less time there in the coming year.Interesting to note that they STILL INTEND TO USE FACEBOOK.

    So then I went to the younger crowd (read: Nephews and nieces) Are they getting on Twitter? No, No and no…why? Because they have become comfortable with the Facebook platform.

    When I talk to the 35 to 45 year old crowd, they are climbing on Facebook to friend their kids and keep an eye on them, and then they get hooked and start meeting old friends from school and such…

    Add to all of this that posts to a site we both (Scott and 1) contribute to, RealEstateIndustryWatch.com have been regularly tweeted by us with diminishing results in terms of people clicking to the blog via a link.

    There is my anecdotal and certainly less than scientific social media market research pointing to the following:

    1 Facebook MAY be the first and likely only social media platform to hit critical mass ala how Ebay, Google, and etc did in their respective industries.

    2 Twitter is on the decline.

    3 From a business perspective, to maximize ROI, time spent on any of these should be minimal and focused directly on connecting with people who are already connected with you that you may have lost track of over the years OR on connecting with specific people via advertisement since Facebook style targeting allows for precise ads to go to precise audiences.

    Ok, my twittering followers and facebooking buddies, and all you social media geniuses and gurus that have poured the last 3 years of your collective lives into social media. Please show me where I am wrong.

    Where should we REALLY be spending our time in 2010?

    Fair warning, just because it is kewl, cool, or cuil (do y’all remember that search engine? they were supposed to put a dent in Google-snort), is no reason to spend time there for business purposes. You are throwing valuable cold calling time away…grin.

    Thoughts?

    How much time do you intend to spend on social media in 2010 and what is your expected return?

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    Where’s that inflation?

    I’ve been saying for a year now that inflation is down the road. I had predicted that we’d start seeing the first signs of it by the end of 2009. And I had said, in anticipation of inflation, the Fed would start raising interest rates, in order to draw out all the money it and the rest of what the federal government has pumped into the economy since the fall of 2008.

    But… there’s no apparent inflation yet. The CPI – however accurate that is – has increased at between .2 and .4 percent in July, August, and September.

    As a result, the Fed has contented itself with keeping interest rates low. But this can’t last forever can it?

    Where’s the inflation? Someone smarter than I please chime in.

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    A Question That Needs to be Asked More Often…..

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    A look back at the last decade in real estate, what I got right, what I got wrong — and where things go from here

    My friend Andrew Breese asked me to go through my own history, in light of both the real estate boom and the bust, detailing where I was wrong and where I was right.

    Very big job, and it would be a long essay to write, so I’ve elected to go through it in video instead.

    Click on the graphic below to watch the video.

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    Weblogging Clients

    I’m now writing on a few blogs. BloodHoundBlog, of course. But also my own firm blogs for criminal law and bankruptcy law.

    All this blogging can get a guy down, especially when you have to use WordPress’s web interface. I like the act of writing. I hate the act of logging into WordPress and blogging.

    So I’ve been looking for webblogging clients – tools you can use to interface with the blog, draft posts from your desktop, and post them without having to log into the actual WordPress site.

    I’ve been using ScribeFire for a few months, and it’s ok. It is a plugin that works with Firefox, whether on a Mac or a PC. The problem is that, so far as I know, the plugin hasn’t been re-written for Google Chrome. And I like Google Chrome because it is so fast.

    I recently did a little googling, and found some other clients. The best of the batch, which I’ve been using today, is called Ecto. Ecto is only available on a Mac. It’s light-weight, easy to use, has the ability to “cross-post” to different blogs, and also interacts well with WordPress’s various features, like scheduled posts, tags, and categories.

    It’s a little buggy. It’s crashed once on me today. I’m hoping that is fixed, because otherwise I like it.

    This post was written with Ecto, in fact.

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    For the Cosmic Record

    When presented with an ultimatum my first inclination has always been to go for the ‘or else’  end of the proposition— a defiant tendency that was pointed out  to me by more than a few black-hooded figures in charge of my early catechism. This probably explains  the abnormally high pain threshold I lug around to this very day. (Go ahead,  smack me across the knuckles with a ruler the next time we’re doing math together and see for yourself  how little I seem to care.)  I’m convinced this emotional dereliction has to something do with a mutated gene strand that skipped a few low risk taking generations in my inherent DNA.  Clearly, I was breech born under a bad moon.  I am a Virgo, they say,  but not by much.

    In the late 1960s, when the Age of Aquarius was recruiting the deflowered masses of my wayward generation, I found myself stalled,  hesitant to beam up to the mothership.  Manned with my own back alley (hearsay, to be sure)  knowledge of that dirtiest of deeds,  I actually did the arithmetic and concluded that  my parents must have lost the rhythm on, or around,  Thanksgiving Dinner, 1955.  Born in the late afternoon on August 23rd  the following leap year (and exactly three complete trimesters to the dinner bell hour later), I concluded that  had my mother only pushed a little harder during labor,  I could  have been a Leo.  But then again, if everyone hadn’t started drinking Cold Duck in the morning exactly nine months earlier, I probably wouldn’t have been…. at all.

    So hence, I mentally celebrate—in my sick,  sick head—two birthdays every year:  The day of my most  probable, mathematically correct Conception (Thanksgiving dinner, badda-bing),  and…. August 23rd, that so-called celestial cusp I barely missed by some late breaking water.  When someone asks me what astrological  ‘sign’ I am,  I simply spew out  my theory as posed above… and they usually go away.  It’s my own ultimatum of  sorts,  I suppose, to anyone who tries to get too close.  After all, I did come out feet first and tend to veer a little to  the left.  We breech babies are like that—a  bit contrary,  I am told.

    So dear friends, enjoy my Conception-Day tomorrow and to those of you born on October 1st …. Happy New Years! (Do the math.)

    G

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    What am I thankful for? That we surfed the payables and survived!

    This time last year, I crashed my car, totaling it. We used the insurance money to pay off our most urgent bills, so we weren’t able to replace it for quite a while. We had an old Mercury that I used until its lack of a working air conditioner made that impossible. After that, I rented cars when I needed to show. For three solid months I escorted buyers in an amazingly awful rented Ford Taurus. It was literally painful to drive — backache-inducing — but it was only $500 a month to lease.

    The last two quarters of 2008 and the first two quarters of 2009 were all action, no traction, so we lived by surfing the payables — paying nothing before it absolutely had to be paid, and paying nothing at all on bills that didn’t have to be paid — including the mortgage.

    And that’s a story that had a deferred happy ending. We got hit with a foreclosure notice much earlier than I was expecting. Business had picked up markedly by then, so we redeemed our pawn ticket earlier than we absolutely had to. Even so, it’s not an experience I would commend to anyone.

    We got hit with a couple of judgments over very late debts, but that’s just business. We’re current on everything current, and we’re chopping down the old-growth debts one-by-one. It’s not pleasing to me to be a dead-beat, but, while we might be late, we’ve never skated on a debt and we never will.

    Meanwhile, the world is young again. In the first five months of 2009, we didn’t make enough to pay the pet food bills. In the last seven months, we made enough to get current on the mortgage, to get current on our current accounts, to retire a bunch of past accounts, to buy me a new laptop and (as of today) a new iMac, and to put a decent used car under my buyer’s butts.

    Better still, we’ve been rolling on a six-figure pipeline for months — no hopes, no maybes, no blue-sky wishful thinking — and it’s been rolling along nicely. This year ends up being the second best year we’ve ever had, and next year promises to wipe the slate on our past, turning it into so much pre-history.

    I’m not bragging. We’re good at the things we talk about here, but I’ve never represented myself as a top producer — nor am I doing so now. We’re hard-working grunts on the ground, and we’ve been getting better at what we do just as the real estate market has learned to need better efforts. If we just keep at it, we may actually be able to retire someday. And if not? I don’t care. The idea of not working is alien to me, anyway.

    I love the woman I’m married to, and I love working with her, too. Even better, she loves me, and very often she even likes working with me. I love the home we live in, and I’m very grateful we didn’t lose it. I love my dogs and my computers and all the stuff I surround myself with. And I love you all, as well as I can (I know I’m a bad friend), the people who write here and who read and comment here.

    I have a great deal to be thankful for, this year in particular, but here’s the item at the top of my list: I am very grateful we didn’t go broke this year. It could be that next year we’ll be so prosperous that I’ll be bitching about my taxes. But for now it’s enough that we surfed our way through a tsunami of accounts payable and lived to tell the tale.

    My very best wishes to you and yours for a Happy Thanksgiving!

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    The Fed’s lucky this app wasn’t available two years ago

    Hello Bloodhoundbloggers.. It’s been almost a year since my last post and I’m feeling a little out of touch with the pulse of the market, which is the heart of this site. Since my last post, I’ve been involved in cell tower development in Las Vegas as a build-to-suit vendor for a wireless carrier, having started my company almost a year ago this month (And you thought the residential market was tough). Things are progressing in a positive direction although there is still more work to be done, but what spurred my writing muse (you can have her Geno when I’m done here) was a little app I bought for my iPhone last week.

    Normally, I’m more interested in the free apps geared towards saving me time in one way or another, but I must admit that I do enjoy playing NFL Madden 10 when I’m sitting in a zoning hearing. But as I found this one (www.zosh.com) – Video click here - I past over the $2.99 without a thought. Let me summarize what it does and how I use it:

    I receive numerous proposals and eFax’es on my iPhone as a PDF file (the app only works with PDF files) that require my signature. Some of them are minor, but necessary documents that need my approval when I’m on the road, in an airport or at a hearing (I have a laptop but don’t always have access to a printer or WiFi).. then I found this app.. The document comes to my inbox on the iPhone.. I forward it to mydocs@zosh.com (after you setup an account on the iPhone – make sure that you use the email address that you have defaulted on your iPhone as your login – makes it easier) and the forwarded PDF file will show up in the list of files once you open the app.

    Once Zosh is opened, find the file that you just emailed to zosh.com and open it. Now you can insert a signature, text or date. With the signature, you tap on the location of the document where you want to sign and a signature block opens up. Using your finger (Steve Jobs would be proud) you sign your mark and click ‘Done’. The image is on your document which can now be resized, moved, rotated or deleted to fit your needs. Once you’re done, click ‘Transmit’ and you’ll receive an email on your iPhone with an attached PDF file showing your signature. Once the finished product is in your inbox, just forward to the party requesting your signature and you’re done (more time for Madden). The quality of the final product is good enough for government work and the time it saves in finding a printer and fax machine on the road is invaluable.

    Since my initial testing last week, I’ve emailed blank PDF proposals to my zosh account and as I’m meeting with a prospective client or contractor, I can fill in the “blanks” with the “text” feature in Zosh. You could (although I haven’t done it yet) have the other party sign the document on your iPhone and with your signature, a meeting of the minds is in place without getting out a laptop, printer and fax machine, pretty cool app and a must for the real estate professional. To think about it, this little app could have brought down a few more banks if it was available in 2007.

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    Do you want to see Teri Lussier at her best?

    The girl can write.

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    Me and KJZZ: What’s up with the real estate market? Tune in Wednesday to hear my take on the topic

    I will be on KJZZ radio (91.5 FM) in Phoenix tomorrow from 11:30 am to Noon. I’ll be talking about the state of the real estate market, the impact of the real estate tax credit and the flow of international buyers into the Phoenix market.

    I think there will be an MP3 available, afterward, but you can stream KJZZ by clicking on this link.

     
    Further notice: Click here for a link to the broadcast.

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    New cameras for the Bloodhounds: My take is that the Panasonic Lumix DMC-ZR1 offers a lot of bang for the buck

    “If your car keys are with you, your camera should be with you.” That’s one of the mantras I preach at Realtors when I speak in public. The language of real estate is photography, and you cannot do your job properly if you can’t communicate what you’re seeing to your clients.

    Having a camera along solves a multitude of dilemmas. I see a lot of houses for out of state buyers, so the web sites I build for them can provide invaluable details about candidate homes. But there are all kinds of other benefits to always having a camera with you when you’re out of the office: Documenting benefits and drawbacks of specific neighborhoods, capturing on-the-spot images of red flag issues before the inspector transmits his report, etc.

    “But,” you may be be straining to expostulate, “my phone has a camera.” Believe me, I know. I see its output in the MLS way too often. Your phone has a bad camera, with a cheesy little lens — its focal length much too long for real estate — and a cheesy little image size. Someday phone cameras may be adequate for day-to-day real estate work, but that day is not today.

    We have a Kodak Digital SLR for listings and other high-end work, but, until lately, we have each carried a Fujifilm Finepix E500 for everyday photos. This was a reasonable price/performance compromise when we got them. They’re light in weight and they’re powered by AA batteries, so there was never any threat of running out of juice. The lens is only 28mm at its widest, which is adequate but not ideal. But those cameras were workhorses. Cathleen and I both rolled them over, call it around 15,000 photos each over the past four years.

    But all things come to an end. Cathy lost her Finepix recently, and mine is exhibiting the kind of noisome behavior that argues that it’s about to fail permanently.

    Time to go shopping. I’ve been following the Panasonic Lumix line of point-and-shoot digital cameras since I first heard about them in a post by Jeff Turner, a long time ago. I got to see one in action just lately, with buyers. Everything’s a trade-off, and we’re tossing nickels around like manhole covers right now. But we needed to upgrade, and the Lumix DMC-ZR1 seems to offer a lot of bang for the buck.

    What are we buying? The picture above is worth a thousand words: We want that 25mm lens. There are 24mm lenses out there, but they cost more. And, of course, on DSLRs you can get down to 10mm — but that costs a lot more. What we’re buying are everyday cameras intended to ride around with us every day. We need small, cheap and reliable, not the biggest, best and most budget-busting. We have the big Kodak for high-end work. These cameras are intended to pound out thousands of photos a year.

    But guess what? With a 12.1 megapixel maximum resolution, the Lumix cameras can deliver the high-end goods, if we need them to. And they will shoot HD video, as well, so we can leave the Flip video cameras at home.

    On Amazon.com, the price was about $222 each, not bad for the feature set. Not a huge financial heartbreak if you drop it or lose it, for that matter. The cameras should be here next week. I’ll post some photos to give an idea of image quality.

     
    More on real estate photography from the BloodhoundBlog archives: Choosing a camera, Composition is salesmanship, More on camera choices, What do you do with great property photos?, Photos from the whatever-it-takes school of listing. There is plenty more organized under the Photography category.

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    It’s Beginning to Look a Lot Like Christmas

    Oops, I mean More Riskless.

    Thanks to Jeff Brown for the tip.   Enjoy!

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    A World of Thanks…..Bloodhounds

    As we approach the end of this year, celebrating and reminiscing, dining and partying, worshiping and contemplating, I wanted to simply say thanks to all of you. You’re now all part of my world, and thus what you give spills over into that which I, too, am able to give.

    A very special thanks to Greg and Cathleen, who yoke us together, all of us, in our individual pursuits, foibles and moments of grandeur.

    Enjoy a bit of celebration about the world you Bloodhounds have helped shape. Remember our singular bond, notwithstanding our differences, to be bold and fearless in all our endeavors, seeking a taste of Greg’s Greekness if only for just moments at a time.

    Oh, in case you didn’t notice, I managed to sneak into the session around the 50 second mark to add a bit of my own musicality to the group. Happy Thanksgiving week to all of you!!

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