Haha, knew that'd catch you. Actually this article is in regards to PMI and it's role in the credit crunch and today's business environment. I have alot of respect for Jim Cramer and his opinions............
Wall Street has been gyrating as it considers the Bush Administration's proposed economic stimulus plan and the Democrat controlled Congress's response to it. The plan is largely based on tax cuts for businesses and small cash rebates to individuals and families which Washington apparently hopes will be quickly spent rather than saved or used to pay down debt.
What is clearly missing in the current proposals is any mention of the terrible state of housing which started the current economic slide. Even if it doesn't single-handedly cause any recession that develops, it will certainly have been a major player.
There are a dozen places that the government could plug in and stimulate the housing/lending industry. The NAR recommended last week that the conventional lending limit imposed on Freddie Mac and Fannie Mae be raised by some $200,000 and the FHA reform bill which has been kicking around Congress for some time be quickly passed.
The GSEs themselves (Fannie and Freddie) have asked that their portfolio limits be raised temporarily so they might fund more loans and warehouse them until the secondary market improves enough to absorb the surplus.
There have been suggestions from other quarters that the government agree to guarantee some types of loans to aid in loosening up credit, but none of these suggestions seemed to have gained much traction with the Administration although members of Congress have endorsed a few of them. There seems to be a refusal on the part of the administration to "reward" borrowers and lenders for irresponsible behavior, no matter what the larger cost may be to the economy.
One of the more creative ideas for economic stimulus came late last week from Jim (Mad Money) Cramer who laid out his "Game Plan for Saving the U.S. Economy." His basic premise is that, with banks already taking such a beating because of their investments in sub-prime mortgages, if the insurers who backed these loans fail, there will be no bottom for bank stocks and thus the entire system would collapse. Therefore, Cramer concludes, the government needs to buy these private insurers.
He is talking about the companies such as MGIC and PMI which write the private insurance on residential mortgages with less than 80 percent loan to value and companies like Ambac that guarantee bonds, particularly municipal bonds. Cramer proposes that the insurance policies covering municipal bonds could be sold to Warren Buffett or the highest bidder while Washington would guarantee the insurance on loans at $.50 on the dollar. At most, even if every insured loan, some $500 billion worth, defaulted, the economy could be saved for a mere $250 billion. And, he added, most likely no more than half of the $500 billion would need to be covered.
Following this course of action the Mad Money Man says, would give the economy the certainty it needs. The banks that have been hard hit by sub-prime loses such as Citigroup, Countrywide Financial, and Merrill Lynch could measure their losses, build up their reserves and get back to the business of lending. Add a one point Federal interest rate cut above and beyond this plan and Cramer says the Dow would add 2,000 points in two weeks. Failure to follow the plan might lead to "the end of the world - or at least another 2,000 point decline in the market."
Scary scenario, but is he totally out in left field?
In a November Associated Press article credited to WJLA television, leading PMI insurer MGIC Investment Corporation admitted that they won't turn a profit again until 2009. The company has issued $196.6 billion in policies against individual home mortgages and by November 2007 had paid out $586 million in claims and expected to have a total payout of $875 million by the end of the year.
Industry wide there was a total of $776 billion in private mortgage insurance in force as of last September. The industry trade group, Mortgage Insurance Companies of America said that about 10 percent of the total mortgage loan market is subject to PMI. It felt, at that point that its members would face claims of between $1.2 billion and $1.5 billion in 2008, about twice the claims in 2006.
Another major insurer, PMI Group, saw its quarterly claims (apparently third quarter) rise 49 percent to $92.6 million and Radian Group lost $703.9 million in the same time period after write-downs and losses from subprime mortgages suffered through a joint venture with MGIC.
By the end of the year things were looking even dicier. Mark Anderson reporting in the Sacramento Business Journal on New Year's Eve stated that the default rate on privately insured mortgages rose in November to the highest level since the Mortgage Insurance Companies began keeping records. The industry trade group reported that 61,300 insured borrowers were at least 60 days late on payments by the end of that month, 35.2 percent more than were delinquent one year earlier and the first time the number had topped 60,000 since record-keeping began in 2001.
None of this means that the PMI insurers are about to go under. Some carry heavy cash reserves and groups such as the Mortgage Bankers Association seem to feel that the safety net is secure. We are just saying...
And those bond insurers such as Ambac are also facing problems. Ambac lost an AAA credit rating from Fitch last week and both Ambac and MBIA are facing additional review of their credit ratings by Moody's and Standard & Poor's. Each of the insurers have announced their intention to raise capital to keep or reinstate their AAA ratings but Ambac Friday ditched a proposed equity and equity-linked sale through which it had hoped to raise $1 billion.
Back to our original premise and one with which we think Cramer, and NAR, and maybe even Wall Street might agree. The President and Treasury Secretary Paulson should ditch the idea of giving away $800 lollipops to consumers and look at some of the underlying problems in the housing and credit markets.
Now now now children, in reality that last paragraph is true, but this is an election year and $800 lollipops get votes. Plus I got plans for my $800 lollipop. Oh damn, I aint getting $800, i make over 75k yearly. Well, guess I gotta go kick rocks
Thursday, February 7, 2008
RealtyTrac Report Confirms Foreclosures Skyrocketing
RealtyTrac® an Irvine, California based firm that bills itself as the "leading online marketplace" released its 2007 U.S. Foreclosure Market Report on Tuesday which revealed that, during 2007, more than 2.2 million foreclosure filings were logged against 1.3 million properties nationwide. Measured activities include default notices, auction sale notices and actual bank repossessions of real property. This is a 75 percent increase over the rate of filings in 2006, a figure that looks even starker when one realizes that 2006 was not a particularly good year for homeowners either. The 2007 figure is 149 percent higher than totals for 2005.
Furthermore more than 1 percent of all U.S. households were in some stage of foreclosure during the year, nearly double the rate .58 rate in 2006.
While the whole year was bad, the month of December was even worse. A total of 215,749 foreclosure filings were reported in that month, up 97 percent from December 2006. This brought the fourth-quarter 2007 total up to 642,150 filings on 527,740 properties. This was an increase of only 1 percent over the third quarter but was 86 percent above the total for the fourth quarter of 2006.
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RealtyTrac Report Confirms Foreclosures Skyrocketing
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RealtyTrac® an Irvine, California based firm that bills itself as the "leading online marketplace" released its 2007 U.S. Foreclosure Market Report on Tuesday which revealed that, during 2007, more than 2.2 million foreclosure filings were logged against 1.3 million properties nationwide. Measured activities include default notices, auction sale notices and actual bank repossessions of real property. This is a 75 percent increase over the rate of filings in 2006, a figure that looks even starker when one realizes that 2006 was not a particularly good year for homeowners either. The 2007 figure is 149 percent higher than totals for 2005.
Furthermore more than 1 percent of all U.S. households were in some stage of foreclosure during the year, nearly double the rate .58 rate in 2006.
While the whole year was bad, the month of December was even worse. A total of 215,749 foreclosure filings were reported in that month, up 97 percent from December 2006. This brought the fourth-quarter 2007 total up to 642,150 filings on 527,740 properties. This was an increase of only 1 percent over the third quarter but was 86 percent above the total for the fourth quarter of 2006.
It is worth noting that RealtyTrac data does not include mortgage delinquencies. Foreclosure activity is typically started when a mortgage is 90 days delinquent. According to the most recent delinquency data released by the Mortgage Bankers Association in December, 5.59 percent of all borrowers were delinquent on their mortgage loans during the third quarter compared to 5.12 percent in the second quarter and 4.67 percent one year ago. Many 30-or-60-day delinquencies are resolved before the loans enter any type of legal process, but if those third-quarter delinquencies are now aging into formal legal processes, foreclosure activities may be up sharply by the next RealtyTrac report.
James J. Saccacio, chief executive office of RealtyTrac stated, "The year ended with a monthly increase of 7 percent in December, making it the fifth straight month with more than 200,000 foreclosure filings reported and giving the fourth quarter the highest quarterly total we've seen since we began issuing our report in January 2005. And while filings were up 75 percent, the number of properties in some stage of foreclosure was up 79 percent, indicating that some properties may have just entered the initial stage of foreclosure in 2007 and could be going through the rest of the foreclosure process in 2008 - unless lender and government intervention efforts begin to gain more traction."
As has been noted elsewhere, especially during media coverage of the primary caucuses, Nevada has been especially hard hit by foreclosures. The state had the nation's highest rate for the year with 3.4 percent of its households entering some stage of foreclosure, more than three times the U.S. average. 66,316 filings were made on 34,417 properties during the year, twice the number of filings in 2006.
Florida was the second ranked state with a total of 279,325 foreclosure filings on 165,291 properties and more than 2 percent of its households entering some stage of foreclosure during the year. The filings were double the number reported in 2006 but filings in December were up a staggering 275 percent from December 2006 and fourth-quarter filings were 211 percent above those in the fourth quarter of last year.
Rounding out the top five states were Michigan, California, and Colorado with Ohio, Georgia, Arizona, Illinois, and Indiana not far behind. In each of these states more than 1 percent of households entered some stage of foreclosure during the year.
While several of the hardest hit states, notably Nevada, California, and Florida, were models of boom and bust economics, having gone through explosive growth and spiraling prices over the last few years, others such as Michigan, Indiana, and Ohio never got much benefit out of the housing bubble. Now they are not being spared the aftermath.
It would be interesting to know whether the patterns of foreclosure in the bubble states differ from patterns in non-bubble states. In other words, are those in foreclosure in Nevada, Florida, and California victims of subprime mortgages or overly exuberant investment activity while those in Michigan and Ohio are suffering the fallout from a generally rotten local economy?
Furthermore more than 1 percent of all U.S. households were in some stage of foreclosure during the year, nearly double the rate .58 rate in 2006.
While the whole year was bad, the month of December was even worse. A total of 215,749 foreclosure filings were reported in that month, up 97 percent from December 2006. This brought the fourth-quarter 2007 total up to 642,150 filings on 527,740 properties. This was an increase of only 1 percent over the third quarter but was 86 percent above the total for the fourth quarter of 2006.
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RealtyTrac Report Confirms Foreclosures Skyrocketing
2634 Views - Printer Friendly - Email This Story To A Friend
RSS COMMENTS(1) LINK HERE ADD NEWS TO YOUR WEBSITE
RealtyTrac® an Irvine, California based firm that bills itself as the "leading online marketplace" released its 2007 U.S. Foreclosure Market Report on Tuesday which revealed that, during 2007, more than 2.2 million foreclosure filings were logged against 1.3 million properties nationwide. Measured activities include default notices, auction sale notices and actual bank repossessions of real property. This is a 75 percent increase over the rate of filings in 2006, a figure that looks even starker when one realizes that 2006 was not a particularly good year for homeowners either. The 2007 figure is 149 percent higher than totals for 2005.
Furthermore more than 1 percent of all U.S. households were in some stage of foreclosure during the year, nearly double the rate .58 rate in 2006.
While the whole year was bad, the month of December was even worse. A total of 215,749 foreclosure filings were reported in that month, up 97 percent from December 2006. This brought the fourth-quarter 2007 total up to 642,150 filings on 527,740 properties. This was an increase of only 1 percent over the third quarter but was 86 percent above the total for the fourth quarter of 2006.
It is worth noting that RealtyTrac data does not include mortgage delinquencies. Foreclosure activity is typically started when a mortgage is 90 days delinquent. According to the most recent delinquency data released by the Mortgage Bankers Association in December, 5.59 percent of all borrowers were delinquent on their mortgage loans during the third quarter compared to 5.12 percent in the second quarter and 4.67 percent one year ago. Many 30-or-60-day delinquencies are resolved before the loans enter any type of legal process, but if those third-quarter delinquencies are now aging into formal legal processes, foreclosure activities may be up sharply by the next RealtyTrac report.
James J. Saccacio, chief executive office of RealtyTrac stated, "The year ended with a monthly increase of 7 percent in December, making it the fifth straight month with more than 200,000 foreclosure filings reported and giving the fourth quarter the highest quarterly total we've seen since we began issuing our report in January 2005. And while filings were up 75 percent, the number of properties in some stage of foreclosure was up 79 percent, indicating that some properties may have just entered the initial stage of foreclosure in 2007 and could be going through the rest of the foreclosure process in 2008 - unless lender and government intervention efforts begin to gain more traction."
As has been noted elsewhere, especially during media coverage of the primary caucuses, Nevada has been especially hard hit by foreclosures. The state had the nation's highest rate for the year with 3.4 percent of its households entering some stage of foreclosure, more than three times the U.S. average. 66,316 filings were made on 34,417 properties during the year, twice the number of filings in 2006.
Florida was the second ranked state with a total of 279,325 foreclosure filings on 165,291 properties and more than 2 percent of its households entering some stage of foreclosure during the year. The filings were double the number reported in 2006 but filings in December were up a staggering 275 percent from December 2006 and fourth-quarter filings were 211 percent above those in the fourth quarter of last year.
Rounding out the top five states were Michigan, California, and Colorado with Ohio, Georgia, Arizona, Illinois, and Indiana not far behind. In each of these states more than 1 percent of households entered some stage of foreclosure during the year.
While several of the hardest hit states, notably Nevada, California, and Florida, were models of boom and bust economics, having gone through explosive growth and spiraling prices over the last few years, others such as Michigan, Indiana, and Ohio never got much benefit out of the housing bubble. Now they are not being spared the aftermath.
It would be interesting to know whether the patterns of foreclosure in the bubble states differ from patterns in non-bubble states. In other words, are those in foreclosure in Nevada, Florida, and California victims of subprime mortgages or overly exuberant investment activity while those in Michigan and Ohio are suffering the fallout from a generally rotten local economy?
Homebuying Secrets. Can you really get a good deal on a home in today's market?
In a word - YES! Not yust yeah but HELL YEAH. More details to come but in this podcast last night we covered new loan programs average brokers don't know about and wont' tell you about. And also you will learn how to find a good loan officer and purchase no money down deals, get seller subsidies and why foreclosures are NOT always good deals. More often than not they're crap deals.
check it out
Click here to hear Homebuying Secrets Loan Officers don't want you to know
check it out
Click here to hear Homebuying Secrets Loan Officers don't want you to know
Wednesday, February 6, 2008
7 skills of highly effective investors
Kinda sorta, Mike Collins of rehablist.com put out this list of 7 skills for investors in 08. I'll post them below with my commentary in color.
Here are the 7 key skills you'll need for 2008...
1. Awareness. They were aware of the market shifting right under their feet. They didn't go "bubble" crazy and spread the fever. They were aware, not afraid.
A takeoff of this would be clear thinking, the ability to assess what's REALLY going on in the market and not react emotionally or irrationally. The ability to see shit for how hit really is. That's a very rare skill in today's society.
2. Adaptabilty. These savvy investors who are still profiting (some even MORE now) realize they have to adapt and overcome. When the market shifted, they shifted with it.
Yes! Adaptability, flexibitly whatever you wanna call it. You CANNOT be a 1 trick pony anymore you need skills and techniques to get deals close when they all of a sudden take a left turn.
3. Speedy Implementation. They spent very little time researching and more time taking action. They did not wait; they acted.
Speed also needs to be accompanied with agility!
Ready, Fire Aim!
4. They Take Their Marketing Education Seriously. Yes, this includes the "gurus". You need to be 100% committed to your education to stay ahead of the market.
To be a wealthy investor you've got to understand marketing. If you wanna live the fabulous life on Rolls Royce status then you MUST learn direct response marketing. If you're content with a Lexus then by all means stay put. If it aint broke don't fix it.
5. Never Hesitate to Invest In Their Education. Real millionaire methods come from being taught by the best.
6. Real World Testing and Tracking. Truly savvy investors know what works and what doesn't through testing and tracking. They have hard data and make results driven decisions to move their businesses forward.
7. Automation and Business Systems. If you are ever going to build true wealth and avoid stress you are going to have to learn how to automate tasks and put confusing processes into a simple system.
Pay people to do low dollar unproductive activities like cleaning, running errands, property mgmt etc while you focus on HIGH dollar activities that'll actually hit the bottomline. Work LESS earn MORE.
Here are the 7 key skills you'll need for 2008...
1. Awareness. They were aware of the market shifting right under their feet. They didn't go "bubble" crazy and spread the fever. They were aware, not afraid.
A takeoff of this would be clear thinking, the ability to assess what's REALLY going on in the market and not react emotionally or irrationally. The ability to see shit for how hit really is. That's a very rare skill in today's society.
2. Adaptabilty. These savvy investors who are still profiting (some even MORE now) realize they have to adapt and overcome. When the market shifted, they shifted with it.
Yes! Adaptability, flexibitly whatever you wanna call it. You CANNOT be a 1 trick pony anymore you need skills and techniques to get deals close when they all of a sudden take a left turn.
3. Speedy Implementation. They spent very little time researching and more time taking action. They did not wait; they acted.
Speed also needs to be accompanied with agility!
Ready, Fire Aim!
4. They Take Their Marketing Education Seriously. Yes, this includes the "gurus". You need to be 100% committed to your education to stay ahead of the market.
To be a wealthy investor you've got to understand marketing. If you wanna live the fabulous life on Rolls Royce status then you MUST learn direct response marketing. If you're content with a Lexus then by all means stay put. If it aint broke don't fix it.
5. Never Hesitate to Invest In Their Education. Real millionaire methods come from being taught by the best.
6. Real World Testing and Tracking. Truly savvy investors know what works and what doesn't through testing and tracking. They have hard data and make results driven decisions to move their businesses forward.
7. Automation and Business Systems. If you are ever going to build true wealth and avoid stress you are going to have to learn how to automate tasks and put confusing processes into a simple system.
Pay people to do low dollar unproductive activities like cleaning, running errands, property mgmt etc while you focus on HIGH dollar activities that'll actually hit the bottomline. Work LESS earn MORE.
How to find a good loan officer/broker
This is good info. You should always screen professionals you work with. Especially for a purchase as large as house. And especially when they stand to make thousands of dollars on the transaction. Make sure you do your homework and screen them properly. Interview the bamas to make sure you get a good one and one that works well with you.
10 home loan shopping questions
1. How large a home loan can I afford? This question will demonstrate the lender’s flexibility; how hard they’ll work to give you an accurate answer; and whether they’re willing to put you too deep into debt compared to others.
2. Which home loan gives me the lowest monthly payment? This will help identify the home loan that potentially maximizes your buying power. You’ll also learn if the loan officer is willing to volunteer information about the risks inherent in this home loan option.
3. Which home loan gives me the lowest interest rate? A good loan officer will clarify whether you mean the lowest initial rate (a feature of adjustable rate or hybrid type home loans) or for the life of the loan (a feature of fixed rate home loans). They’ll also explain the trade-offs between a loan with a low initial rate which is subject to increase and a fixed rate loan. They should also explain that loans featuring the lowest interest rate often involve higher up-front expenses and may be more difficult to qualify for.
4. Which home loan offers the lowest up-front costs? This is especially important for home buyers stretching to afford a down payment and closing costs. A good follow up question is to ask if the home loan features a prepayment penalty or other “hidden costs.‿ (Extra points for whoever volunteers this information without being asked!)
5. What are the trade-offs of choosing one of these loans over the other? You’ll not only learn more about your home loan options…but you’ll discover how helpful and knowledgeable the loan officer is!
6. What do you need to know about me to find the best home loan for my situation? A good loan officer will start gathering this information at the very beginning. If they’re not interviewing you, look out, their expertise is suspect.
7. Which loan program is best for me — and why? The best loan officer provides options — but leaves the final decision to you. However, they should be able to suggest a home loan best suited to your needs, and explain the reasons for their recommendation.
8. Describe your home loan process — how long each phase takes, and how often I’ll hear from you. You’ll want to learn about the team behind the scenes, and the level of service the lender is willing to provide. Pay the promises no mind. Get it in writing and verify it with past clients.
****9. How do you get paid — and does it vary from one home loan option to another? An honest loan officer will let you know how he or she is compensated. Such information will allow you to decide whether a loan officer’s compensation arrangement might be a factor which influences their home loan recommendations.
10. I like to check references. May I speak with 3 of your recent customers? Save this question for final candidates only. For privacy reasons, no one should provide customer information without getting permission. However, a standout loan officer will be able to provide references, because they’ve created trusting relationships
10 home loan shopping questions
1. How large a home loan can I afford? This question will demonstrate the lender’s flexibility; how hard they’ll work to give you an accurate answer; and whether they’re willing to put you too deep into debt compared to others.
2. Which home loan gives me the lowest monthly payment? This will help identify the home loan that potentially maximizes your buying power. You’ll also learn if the loan officer is willing to volunteer information about the risks inherent in this home loan option.
3. Which home loan gives me the lowest interest rate? A good loan officer will clarify whether you mean the lowest initial rate (a feature of adjustable rate or hybrid type home loans) or for the life of the loan (a feature of fixed rate home loans). They’ll also explain the trade-offs between a loan with a low initial rate which is subject to increase and a fixed rate loan. They should also explain that loans featuring the lowest interest rate often involve higher up-front expenses and may be more difficult to qualify for.
4. Which home loan offers the lowest up-front costs? This is especially important for home buyers stretching to afford a down payment and closing costs. A good follow up question is to ask if the home loan features a prepayment penalty or other “hidden costs.‿ (Extra points for whoever volunteers this information without being asked!)
5. What are the trade-offs of choosing one of these loans over the other? You’ll not only learn more about your home loan options…but you’ll discover how helpful and knowledgeable the loan officer is!
6. What do you need to know about me to find the best home loan for my situation? A good loan officer will start gathering this information at the very beginning. If they’re not interviewing you, look out, their expertise is suspect.
7. Which loan program is best for me — and why? The best loan officer provides options — but leaves the final decision to you. However, they should be able to suggest a home loan best suited to your needs, and explain the reasons for their recommendation.
8. Describe your home loan process — how long each phase takes, and how often I’ll hear from you. You’ll want to learn about the team behind the scenes, and the level of service the lender is willing to provide. Pay the promises no mind. Get it in writing and verify it with past clients.
****9. How do you get paid — and does it vary from one home loan option to another? An honest loan officer will let you know how he or she is compensated. Such information will allow you to decide whether a loan officer’s compensation arrangement might be a factor which influences their home loan recommendations.
10. I like to check references. May I speak with 3 of your recent customers? Save this question for final candidates only. For privacy reasons, no one should provide customer information without getting permission. However, a standout loan officer will be able to provide references, because they’ve created trusting relationships
WARNING: DON'T GET THAT LOAN UNTIL YOU READ THIS!
THIS JUST IN: THE NO BS. REAL ESTATE SERIES IS HERE!
On tonight's installment we'll be covering:
- The latest programs to buy a home with little to NO money
- Little known mortgage programs that keep you from getting screwed by those greedy loan officers who USED to do mortgages in the hot market
- How to buy a house and get the seller to not only pay your closing but your DOWN PAYMENT too!
- Questions you should ask EVERY loan officer BEFORE you let them run your credit. This will save your credit score!
- How to screen a realtor
- How to buy a home WITHOUT a realtor
- And much much more...................
On tonight's installment we'll be covering:
- The latest programs to buy a home with little to NO money
- Little known mortgage programs that keep you from getting screwed by those greedy loan officers who USED to do mortgages in the hot market
- How to buy a house and get the seller to not only pay your closing but your DOWN PAYMENT too!
- Questions you should ask EVERY loan officer BEFORE you let them run your credit. This will save your credit score!
- How to screen a realtor
- How to buy a home WITHOUT a realtor
- And much much more...................
Sunday, February 3, 2008
08 is my year
2008 is my phenomenon year. I'll post more about the phenomenon later. This year I've been bitten by the info marketing bug. Mainly small highly focused how to reports. I've got a wide background and and pulling some together, I just need a structure to do it.
Well I've been checking around and I've picked up a few products that I'll be reviewing here. InfoProduct Pro by Steve Mount, and The Ultimate Information Entrepreneur's Success Package! by Jeff Smith. So far, Jeff's Book is AWESOME. I'm working on 2 reports that'll be publishing and distributing this week. Both highly relevant and both I have personal experience with. Stay tuned for details...........
Well I've been checking around and I've picked up a few products that I'll be reviewing here. InfoProduct Pro by Steve Mount, and The Ultimate Information Entrepreneur's Success Package! by Jeff Smith. So far, Jeff's Book is AWESOME. I'm working on 2 reports that'll be publishing and distributing this week. Both highly relevant and both I have personal experience with. Stay tuned for details...........
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