BloodhoundBlog

There’s always something to howl about.

Month: March 2009 (page 4 of 5)

March 9, 2009

Why FHA Loans won’t be getting cheaper or easier…..

by

Mortgage Officer

Author website

When the subprime market imploded and people starting rushing to FHA, the “chant” was that FHA is the new “subprime.”   FHA originations skyrocketed and anyone who didn’t have a 700 credit score and a downpayment of 5 to 10% was quickly led into FHA.   I remember reading statistics of different banks seeing a 150% jump in FHA loans.

At that point, I had a sneaking feeling that we’d start seeing some of the losses that hit subprime translating over into FHA.   Well,guess what, we are.

The article cited below is about the fact that FHA is experiencing a substantial rise in what are called “Early Payment Defaults.”   What does that mean?   Substantially more of the newly originated FHA loans are having default issues than is typical.

What does that mean going forward?

  • Increased losses for FHA
  • Tightening underwriting guidelines for FHA loans.
  • Higher fees and rates for FHA loans

Fannie and Freddie are already in trouble and now we’re looking at the first signs that FHA is heading for trouble too.

Interesting times….

Tom Vanderwell

The Next Hit: Quick Defaults – washingtonpost.com

The last time the housing market was this bad, Congress set up the Federal Housing Administration to insure Depression-era mortgages that lenders wouldn’t otherwise make.

This decade’s housing boom rendered the agency irrelevant. Americans raced to aggressive lenders, seduced by easy credit and loans with no upfront costs. But the subprime mortgage market has crashed and borrowers are flocking back to the FHA, which has become the only option for those who lack hefty down payments or stellar credit. The agency’s historic role in backing mortgages is more crucial now than at any time since its founding.

With the surge in new loans, however, comes a new threat. Many borrowers are defaulting as quickly as they take out the loans. In the past year alone, the number of borrowers who failed to make more than a single payment before defaulting on FHA-backed mortgages has nearly tripled, far outpacing the agency’s overall growth in new loans, according to a Washington Post analysis of federal data.

Many industry experts attribute the jump in these instant defaults to factors that include the weak economy, Read more

March 8, 2009

“If I never make a single payment on my super-cheap FHA loan, do I still get my $8,000 tax credit?”

by

Suburban Phoenix Real Estate Broker

Author website

WAPO:

The last time the housing market was this bad, Congress set up the Federal Housing Administration to insure Depression-era mortgages that lenders wouldn’t otherwise make.

This decade’s housing boom rendered the agency irrelevant. Americans raced to aggressive lenders, seduced by easy credit and loans with no upfront costs. But the subprime mortgage market has crashed and borrowers are flocking back to the FHA, which has become the only option for those who lack hefty down payments or stellar credit. The agency’s historic role in backing mortgages is more crucial now than at any time since its founding.

With the surge in new loans, however, comes a new threat. Many borrowers are defaulting as quickly as they take out the loans. In the past year alone, the number of borrowers who failed to make more than a single payment before defaulting on FHA-backed mortgages has nearly tripled, far outpacing the agency’s overall growth in new loans, according to a Washington Post analysis of federal data.

Many industry experts attribute the jump in these instant defaults to factors that include the weak economy, lax scrutiny of prospective borrowers and most notably, foul play among unscrupulous lenders looking to make a quick buck.

If a loan “is going into default immediately, it clearly suggests impropriety and fraudulent activity,” said Kenneth Donohue, the inspector general of the Department of Housing and Urban Development, which includes the FHA.

The spike in quick defaults follows the pattern that preceded the collapse of the subprime market as some of the same flawed lending practices that contributed to the mortgage crisis are now eroding one of the main federal agencies charged with addressing it. During the subprime lending boom, many mortgage brokers and small lenders milked the market for commissions and fees by making as many loans as possible with little regard for whether they could be repaid.

Once again, thousands of borrowers are getting loans they do not stand a chance of repaying. Only now, unlike in the subprime meltdown, Congress would have to bail out the lenders if the FHA cannot make good on guarantees from its existing reserves. And those once-robust reserves Read more

March 8, 2009

No, Mr. President. I Won’t Stand Down.

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

I tried so hard to keep an open mind about this Obama guy.  The optimism of our people on Inauguration Day was infectious.  The snappy patter of the “three words” video had my toes tapping and heart filled with optimism.  Alas, the honeymoon is over.  I now stand firm in my belief that President Obama has “The American Experiment”  in his cross hairs with a bunker-busting Marxist bomb as the payload.

Obama’s defeatist attitude as President, which is markedly different than his optimistic attitude as a candidate, is permeating society as we know it.  Witness Tom Vanderwell’s observation:

…we are now in a situation where the government does own some of the banking industry and the debate should now be about the how and not the whether or not.

In fairness to Tom, he’s the messenger and not the message but I, for one, am not willing to model the American banking system after the 1982 Mexican coup.  I’m getting out my tin-foil hat and screaming from the street corners that nationalising (sic) the banks is unacceptable.  My comment to Tom:

Actually, it should be about the how not. How quickly can we break up these outdated institutions and get them in the hands of local, productive entrepreneurs?

As you might have guessed, Tom’s in complete agreement with me:

Absolutely. My point was that essentially we’re already nationalizing them, let’s focus on what we have to do to get them reshaped into the type of institutions that will actually work….

It’s not just the banks.  Wall Street had a small rally this past Friday morning.  The unemployment report came out and while the figures were gruesome, the Street expected this mess and shrugged it off until…

The leader of the (still) Free (but holding) World said that this is the worst news since the Great Depression.  His comment struck fear in the hearts of every trader at a post and prompted a 200 point reversal in DJIA fortune.  By the way, with the Dow under 7000, 200 points matters;  it’s a 3% swing.  Fortunately, those same scared traders ignored our Boy-Leader and focused on the fundamentals of the market; Read more

March 8, 2009

A few thoughts about freedom and real estate from the middle of an undisclosed cornfield

by

Rust Belt Realtor

Author website

I am Bloodhound hear me howl! Or, something like that.

I went to a farm forum yesterday and learned about the state of farming in Ohio. I think Ohio is returning to it’s agricultural roots. We are becoming the Green Belt, and I welcome that change. You have my permission to snicker at corn fields and pig farmers. You have my permission to make jokes about farm folk. You may snort behind your hands at the thought of working with the land in order to create a world of your own. We should all be so lucky. I’m not here to romanticize cornfields, but I can think of few people who live a life of more independence and take more risks than Ohio’s entrepreneurial farmers.

It got me thinking about my own life among the cornfields of Ohio, and my own sense of independence and freedom, and I wonder why it might be different for you.

We are all here, online- the great equalizer, btw- reading this. Maybe from a farmhouse in the middle of corn-fed world that your own hands and hard work have created, but maybe from a loft in a world of concrete that you did nothing to create. Most likely you are reading this from a tract home on a piece of dirt that will never produce for you. Wherever you are reading this, Welcome to your future. Now what?

Freedom is the reason I became a Realtor- my freedom, but also my client’s freedom. Wasn’t that part of the attraction for you? The freedom to think your own thoughts, have your own life, decide for yourself how you choose to live. I decide how many hours I work, how much money I make, where to spend that money- it’s all in my hands, I get to live or die by my own sword, just like you. So here’s my question: Why shouldn’t I take offense to an organization that is created for the purpose of restricting freedom? Or, more to the point, why wouldn’t you?

Why would you willingly allow someone to curtail that freedom? Why would you choose to follow Read more

March 7, 2009

I’ve taken the liberty of posting my “Mortgage Market Week in Review” here…..

by

Mortgage Officer

Author website

The Week We Woke Up

I’m going to deviate from the normal format this week, because I believe that this week has deviated from the normal that we’ve been experiencing lately.   I’m calling it the Week We Woke Up.

What did we wake up to?  A couple of things:

  • The fact that the debate on whether we’re going to have to nationalize some of the banks/financial institutions is pretty much a debate over semantics.   The announcement that the government now owns 36% of Citibank and that we had to spend some additional billions (how many has yet to be determined) to save AIG for the third time effectively said that we are now in a situation where the government does own some of the banking industry and the debate should now be about the how and not the whether or not.   This mess sent shock waves through the financial markets and virtually every bank saw their stock prices get “adjusted” accordingly.  There was a time this week that Citibank was trading for less than the cost of a Jr. Bacon Cheeseburger at Wendys.
  • The reality of GM’s scenario became a lot clearer and not in a way that was going to make the economy any healthier.  There’s a phrase in business accounting called, “A Going Concern.”   What does that mean?  Essentially it means that a business is generating enough income and has enough cash to continue in business.  Well, GM not only had some bad news in terms of sales, but they admitted that their auditors don’t believe that they can remain in business. That’s a pretty strong indication that GM’s condition is a lot worse than what we thought a couple of months ago.  What does the prospect of a GM bankruptcy mean?  Best case scenario – renegotiated contracts with the UAW and bond holders, substantial job losses and dealership closures.   Worst case scenario – total liquidation of GM and absolutely staggering job losses that will make Read more
March 7, 2009

Here’s Some Piss Poor Journalism For Ya

by

Database Marketing Expert

Author website

Since Greg welcomed me aboard BHB last week, ideas have been racing through my head.  What would I write about first?

CRM execution tactics? Too predictable.

Skinned cats? I’ll leave that to my favorite cat skinner.

Then it occurred to me last night:  why not dive right in with an example of why BHB and blogs like it are putting the traditional fish rag out of business.

I’m a sports fan(atic).  I find it to be the ultimate in reality television.

But whether your remote is hard-coded to ESPN or not,  you’re surely aware of the ongoing steroid crisis in professional sports.

This week’s Sports Illustrated features an article about a former football player named Tony Mandarich, commonly known as the biggest bust in NFL history.  However, two decades ago, SI ran a story proclaiming Mandarich as “The Greatest Offensive Line Prospect in the History of Football”.  This story was written by a journalist named Rick Telander.

Now, twenty years later, Tony Mandarich Book Deal is ready to say he’s sorry for using steroids.  So he looks up good old Rick Telander Spineless Jellyfish and lands himself a feature article advertisement.

Here’s the article, please keep a barf bag nearby:  “Tony Mandarich is Very, Very Sorry”.

And here’s my favorite paragraph from said article (via Telander):

“… He lied to me.  Lied to everybody… I knew he was using steroids… but all I could do was hint at my suspicions…”

Um, Ricky baby… you knew he was taking illegal steroids, cheating and gaming the system but you, a Senior Writer for the most respected publication in sports were POWERLESS to do more than “hint at your suspicions”?

Telander’s article goes on to reveal that

  • Mandarich was known at his local gym as the “Doctor”

So what Telander’s telling us here is that he could have easily broken arguably the biggest sports-related story of the decade if he simply noses around the gym a little bit to explain how/why…

  • Mandarich magically transforms from a 6′ 3″ HS kid who rode the bench on his JV team into a behemoth that bench presses 585 pounds and “runs like a deer” in college

Wait a second.  This blog is supposed Read more

March 6, 2009

Don’t miss Part II of Matt Carter’s gripping series on AR vs Move

by

Suburban Phoenix Real Estate Broker

Author website

I didn’t want to let this pass without remarking on it:

The second part of Matt Carter’s gripping series on the abortive takeover of Active Rain by Move, Inc. is up today.

I thought AR’s lawsuit against Move was a joke from the first, and there is nothing in the text to lead me to change my views.

But, man! The drama of it all! Matt Carter has the skeleton of a good book, a cautionary tale about what happens when the wide-eyed world of Web 2.0 comes up against a crew of grizzled Wall Street-trained veterans. Lo-tech don’t mean no-tech.

Here’s the moral, if you’re the skip-ahead kind of reader: Verbal agreements are not worth the paper they’re printed on.

Fascinating reading, both parts. Well worth your time.

Technorati Tags: , , , ,

March 6, 2009

Epiphany Marketing and Rocky Road ice cream…

by

Real Estate Renaissance Man

Author website

I have talked about and written on Mayoral Marketing before.  The basic premise of marketing, according to this theory, is to build a community of people who would elect you mayor.  This concept leads to some useful details on how we should go about marketing in order to accomplish this election.  (Hint: it’s a campaign)  The problem though, is that Mayoral Marketing explains the how of marketing, but not the why.  I know, the “why” seems obvious: the goal of marketing is to generate potential clients and closed transactions, right?  Wrong.  That’s the objective; that’s the end result to be gained.  But the question of “why” is a question of purpose.  Does everything that makes up the how lead to the objective.  In other words: what is the actual GOAL of our marketing?

The Epiphany Moment

The goal of marketing is to place us with the potential client at the moment of epiphany.  Let’s call this Epiphany Marketing.  What am I talking about?  Most people don’t just suddenly decide to buy or sell a house.  Usually, something else happens; they’re walking along when all of a sudden:

  • They hear that cousin Bernard just bought a house.  BAM! (moment of epiphany)  “If my dopey cousin Bernard can buy a house, I certainly can.”  At which point the good marketer wants to figuratively (if not literally) be standing right there in front of them.
  • They meet with their CPA and find out how big their tax liability is for the year.  BAM! (moment of epiphany)  “I need to buy a property and get some deductions… right now.”  Again, a good marketing campaign puts you there in their mind even as they have the epiphany.
  • They’re walking along and the beautiful, young wife says, “honey, you know I love you.  That’s why I’m so excited to be pregnant” … (wait for it) … BAM!!  “I need a bigger house!”  The goal of any good marketer, when that tender and touching moment arrives, is to be standing right there between the both of them.

This is alternatively known as Mind Share as well as Top of Mind Status – but I like Epiphany Read more

March 6, 2009

The Subprime Bank of America

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

Remember those impetuous, ne’er do well subprime borrowers and those greedy subprime lenders?  Writing about them is sooo… 2007 but I’m happy to report that both greed and reckless abandon are alive and well today….

…at Bank of America.

Remember Ken Lewis?  He’s that sober-faced, bespectacled CEO of the Charlotte-based behemoth that started out as North Carolina National Bank and the Bank of Italy in San Francisco.  Ken has presided over Bank of America since 2001.  Since then, he’s been binging on banks like a subprime borrower stripped equity out of the old ranch:  He bought Fleet Bank in 2004, MBNA in 2005, and ABN-AMRO, LaSalle Bank, and US Trust Company in 2007.

That wasn’t enough.  Like a subprime borrower addicted to Vegas, strippers, and shiny new Hummers,  he was having too much fun to see the market turn.  What did Ken do while the house of cards was a-tumblin’?

He bought Countrywide Financial, America’s largest mortgage originator.

Still, that wasn’t enough.  Like a crack-addict jonesin’ for a last hit on the pipe, Ken absorbed America’s largest securities brokerage, Merrill Lynch.  Just like the crack addict who spent his welfare check on that last hit, Ken took money from the government to cure his fix for power.

Wall Street doesn’t like what Ken’s done.  Since the bailout binge, BAC has dropped from $37 to about three bucks as it became America’s largest subprime lender/servicer (Countrywide originated a boatload of subprime, option ARMs, and Alt-A paper while Merrill’s First Franklin was in the top three of subprime lenders).  A guy that eschewed the whole “subprime” lending market jumped into the deep end, drunk with power.

Now, it’s not just Wall Street that’s calling for Ken’s head.  It seems that the unions’ pension fund managers are pissed off, too:

CtW Investment Group, which said its affiliated funds own 116 million Bank of America shares, faulted Lewis for not backing out of the merger or revealing Merrill’s losses in a timely manner, and letting Merrill pay $3.6 billion in executive bonuses just before the merger closed.

It said Lewis’ actions have contributed to a 90 percent drop in Bank of America’s share price Read more

March 5, 2009

If you’re in the Phoenix area on April 22 and you want to learn a whole lot about how to use Web 2.0 to promote your real estate practice — I’m in the Yellow Pages under chopped liver

by

Suburban Phoenix Real Estate Broker

Author website

I’m having an exceptional week.

On top of money work, I got the Universal Contact Form to the point where I can deploy new variations in seconds.

I’ve been playing Gooder games for fun — except the fun keeps turning into profit.

I worked out an algorithm for round-tripping data out of and back into Heap, making it possible to use rigorously self-populating forms to get existing databased prospects to scrub their own records. I did a small piece of this before Seattle, but I fleshed out the whole strategy this week.

That algorithm is general enough that it can be used to generate any kind of intelligent email: Any CSV file can become an email that uses a coded URL to self-populate a form that in turn produces other intelligent results: New database records, new CSV files, etc.

I hit upon — but have not yet implemented — a completely new way of organizing my sidebar at our Phoenix real estate weblog to make each WordPress Page its own quarterback in still more Gooder games — all of which, of course, are also Heap games.

I’ve been bugging Michael Wurzer at FBS Systems about making the FlexMLS IDX system responsive to coded URLs. If they will do this, I can build forms that can punch data into Flex just as I’m doing with Heap.

And today I worked out a way to take back the fattest third of the long tail from HomeZillTruGain at a cost in money and labor approaching zero dollars and zero cents. To the contrary, what I’m doing should actually pay us in added incremental SEO juice.

And the funny part is, I have two other long tail strategies that, so far, I’ve only implemented in pilot projects because those two do require a modicum of labor and I just don’t have the time to throw at them.

My thinking is that, by the time I’m done, I can plant three sloppy Bloodhound kisses on the first page of the SERPs for maybe 2,000 long tail keywords — maybe more.

And that’s just the stuff that I’m thinking about right now. The first quarter of 2009 Read more

March 4, 2009

The New 105% Refi Plan – What I know and What I don’t…..

by

Mortgage Officer

Author website

Okay, here’s the latest on what I know and what I don’t on the 105% refi plan.  I’m going to attempt to summarize a 10 page document, so I’m only going to hit the “highlights” of it:

The things that I know about the plan:

  • The loan to value is indeed max’d out at 105% but with a second mortgage, it can go higher than that (frankly unlimited) if the second mortgage holder will agree to it and if the second mortgage was already in place.   You can’t put a new second mortgage in place right now.
  • There are three “levels” of potential appraisals:  What Freddie Mac calls the “Home Value Explorer.”  or a new appraisal or the existing appraisal.   There’s some verbiage in the Freddie Mac docs about certifications that the lender has to make about the existing appraisal, so I don’t know what that involves yet.
  • The borrower’s mortgage payment history can have no 30 day late payments in the last 12 months.
  • The only loan that can be paid off is the existing first mortgage plus up to $2500 toward closing costs and escrows.
  • The new mortgage has to be done with the same servicer as the existing mortgage.  So, unfortunately for borrowers, you can’t shop around on this type of loan. Update on 3/9/2009 – per my conversation with Rhonda Porter, it appears that Freddie is saying they have to use the same servicer, but if the loan is currently owned by Fannie, then they can use anyone who sells to Fannie.   I was just on a conference call (internal) that said we expect to have more details from Fannie by week’s end.
  • There are some “kind of” confusing guidelines about mortgage insurance and my initial read of it says that there might be some questions on mortgage insurance.  If there was mortgage insurance, it sounds like there would need to be mortgage insurance again, but we don’t know that the mortgage insurance companies will “reissue” the insurance.
  • Primary residence loans that were sold to Fannie Mae or Freddie Mac are eligible.   There are other restrictions too.

The things that I don’t know (about the plan):

March 4, 2009

Biz Model Schmiz Model — It’s About Quality — The Rest Is Happy Noise

by

Real Estate Investments Broker

Author website

NASA hasn’t invented the device sensitive enough to measure the apathy I harbor for what business model other real estate firms use. In fact, taking it a step farther, I’d probably have to climb up several rungs on the ‘I care’ ladder to reach apathy on that subject. Fair enough?

Whether you like the model Grandpa used in 1951 or any of the new ones currently in beta testing, there’s one concept from which they all could prosper.

Old School mentoring. And before you stifle that yawn, ask yourself a question.

As a kid playing youth baseball, would you have been a better hitter if your coach had been an ex-pro ballplayer?

I coached under four former pro players, and trust me, the difference ain’t real difficult to discern. One of ’em had been a catcher in the Japanese minors a few years before hangin’ ’em up. Guess who always had the best catchers in the league? In the 13-14 league the pitcher with the hands down best change-up was the kid whose dad went to the ex-pro pitcher for help. Duh.

I wonder what Rodney Dangerfield would say if he was a newbie agent with an assigned mentor in the average real estate brokerage? I think I know.

“Hey — Take my mentor, please!”

For the years I spent as a broker-associate with a huge San Diego brokerage firm, I was able to observe first hand what passes for mentoring. Long story short? The office manager quietly pulled me into the office one day. Seems the agents in charge of the mentor program (usually around 24 new agents) were complaining to her because their charges were beating a path to my office for help. 🙂 Not being schooled in politically correct speech, I asked her why she was talking to me, and not grillin’ her ‘mentors’ as to why their students consistently ignored them so as to get the scoop from me.

She explained how I was undermining the mentor’s position of authority. I replied that their authority was possibly a figment of their imaginations. This was not well received. And for the Read more

March 4, 2009

Duality (minus the metamathematics)

by

Chicago Broker Owner Realtor | RE 2.0 Blogger

Author website

Most days I simply breathe, terminus. I place one foot in front of the other, chomp on whatever elephant is in the room—one bite at a time, and mind my own real estate business.  Occasionally,  I stick two cents worth of my neck out into the Social Networking traffic snarl… then quickly retreat and power-lock the doors after posting a terse one liner or two in the Comment section but  before the light turns yellow reminding me to STOP,  lest they find me out and veer into the HOV lane where yes, I sometimes poach alone.  The rest of the time I’m thinking of something decent to compose that doesn’t state the obvious or contribute to someone else’s conspiracy theory.

I’ve mentioned before that I only need to be 51% in favor of something to concur, though it’s not as easy as it sounds. I find myself  indifferent about so many things, in these,  my middle years, that I’m often unsure where I stand on even the simplest points or issues. Lobbying for those last few votes in my own head seems a waste of  electromagnetic energy better spent on, I don’t know…. apathy?  So here’s what’s been brining  in the mental stock pot since last I published here:

My economic survival instincts tell me I’m a conservative but my starving conscious contact still whispers liberal.

I can barely tolerate NAR but I sell real estate to make a living and thus, support the paper tiger.

I think I support NRA but I’ve never been too crazy about weapons.

I often get the two groups mixed up.

Same with AA and AAA.

I can’t stand the thought of cruelty to any animal but I love a T-bone steak,  rare.

I can usually recall the names on Facebook but not the actual faces.

I loathe the New York Times but enjoy The New Yorker.

I admire anyone who admits a mistake promptly although I’m generally intolerant of mistakes.

I prefer being a Buyer’s Agent over a Listing Agent any day of the week, especially Sundays.

‘The Take Away’ is the most powerful Closing technique  if you really want closure.

I don’t particularly like the genre Read more

« Older posts Newer posts »

Inventing Real Estate 2.0

Welcome to BloodhoundBlog, the national real estate industry marketing and technology weblog written by, for and about real estate professionals. Better yet, welcome to the wired world of real estate. We are busily inventing Real Estate 2.0 – technology, marketing, service and salesmanship. Like all Bloodhounds, we are smart, frisky and fiercely independent. We've built a spot on the earth – beloved over all – where each one of us can be who we are, no matter who that might be. We are committed to an idea of excellence that will flush the bums, the con-men and the crybabies out of the real estate industry. If you yearn to have your failures excused, your moral lapses absolved or your boo-boos kissed, seek elsewhere. But if you are sick to death of mediocrity – welcome home. Read all about us, subscribe to our feed and steel yourself for the hunt. We work hard, we play hard, we learn everything we can – and we bow to no one.

Media Contacts