If This Stimulus Package Goes Through…
January 25, 2008 by Andy Kaufman · View Comments
…expect a big pickup in Bay Area real estate activity.
Besides its core purpose of providing tax refunds, the tentative package – which still has several hurdles to clear – essentially rewrites the definition of “jumbo” loan, raising the cap from its current $417,000 to as high as $729,750 in high-cost areas for one year.
The proposal would allow Fannie Mae and Freddie Mac to buy loans up to 125 percent of an area’s median home value – up to $729,750 – well above their current $417,000 limit. While the new limit would vary based upon how expensive an area is, almost all of the Bay Area would automatically merit the $729,750 cap by virtue of having medians above $600,000.
Fannie and Freddie are government-sponsored entities that inject liquidity into the mortgage market by purchasing loans and then either keeping them or packaging them into securities sold to investors – with a guarantee in case they default.
Ever since the credit crunch hit last summer, banks have been skittish about writing mortgages that don’t qualify for Fannie/Freddie backing. That’s why jumbos got so expensive relative to conforming loans, and jumbo borrowers needed to have good income, a big down payment and a stellar credit score.
Now what’s the catch, you say?
2. The new limits are supposed to only last for 1 year. Which means that if this passes, 2008 is going to be a mad sprint.
flickr photo credit reversezer0 tag: bay bridge (ironic eh?)
Reactions to Today's Bank of America/Countrywide Acquisition News
January 11, 2008 by Andy Kaufman · View Comments
Big waves continue to ripple across the mortgage & real estate industries, as people begin to digest the news that Bank of America agreed to buy Countrywide for $4.1 Billion in Stock.
I know what you’re thinking… $4 MORE billion after basically throwing $2billion down the drain a few short months ago. Don’t worry, they have a plan. They’re getting a little help from us taxpayers.
Huh?
That’s because Bank of America, which is solidly profitable, will be able to use some of Countrywide’s losses to offset its own taxable income. The tax break could total about half a billion dollars over the first five years, according to an estimate by tax guru Robert Willens, who left Lehman Brothers Friday after a 20-year run and will be in business as Robert Willens LLC starting next week.
Awesome, eh? At least the people responsible for creating this mess will pay dearly, right?
Think again, Countrywide CEO Anthony Mozilo is going to walk with a severance totaling $110 million and change.
Matthew at Blown Mortgage has a thorough analysis that I’d recommend checking out. As an REO agent, I found these points were of particular interest
The real question we all want to know is how bad is Countrywide’s loan servicing portfolio? Rumors creeping out on The Street is that Countrywide has a very serious REO problem they are not reporting as of yet.
In California alone, Countrywide’s REOs have risen from 2,361 to 4,051 – a whopping 72% increase in just seven months. What are these numbers gonna look like in 1-2 years? Any math geeks want to extrapolate that one?
Well, at least I know of a good team of REO listing agents. Memo to Bank of Countrywide America: check the contact info in the top right corner.
Continuing on…
Over on BloodHound Blog, Brian Brady argues Why Bank of America is the WRONG Buyer
BA is buying problems with this CFC acquisition. The CFC sales force will not mesh well with the button-downed arrogance the BA crew exhibits. My prediction? CFC originators flee the newly-formed entity in droves during 2008. Mortgage brokers will reject the new entity because of their lousy customer service.
Who’s perfectly positioned to benefit from this exodus? Why, Wells Fargo, of course.
Wells Fargo, the mortgage lender disguised as a federally-chartered bank.
Over on Mashable, Paul Glazowski take a different angle and explains how the news will affect the big tech ad networks
The figures comprising Countrywide’s contributions to the coffers of the abovementioned ad networks (Microsoft, Yahoo!, and, yes, Google) over the past few seasons are fairly impressive. According to a Nielsen/Netratings assessment for the month of August, Countrywide spent $34.77 million on online advertising. Several months later, the company, still on its fateful decline, was then found to have increased spending considerably. In November, Nielsen showed it to deliver a total of $57.6m in its marketing efforts on the Web.
& to lighten things up Paul Kedrosky cracks a funny, saying that
…why should I have more confidence that Ken Lewis and BofA have timed this infusion better than their last one? After all, since their $2-billion for 16% deal months ago the stock has fallen 50%. Let’s just say that as far as bottom-spotters go I put more faith in Sir Mixalot than I do in BofA’s Lewis & Co.
Ba dum bum ching!
graphic via The Mess That Greenspan Made
Beware of Foreclosure Rescue Scams
December 17, 2007 by Andy Kaufman · View Comments
As the number of Bay Area foreclosures quickly rise, the number of scam artists out there trying to prey on distressed homeowners in trouble is rising as well. Teresa Boardman of the St. Paul Real Estate Blog shared this video with us the other day and thought that I’d share it with you.
Even though I feel that this ad conveys an important message, I have to add that there ARE honest real estate investors out there who have the resources to create a win-win situation for distressed homeowners who wait until they’re neck deep in the foreclosure quicksand before reaching out for help.
The problem lies in that it’s exceedingly tough to figure out who the ethical investors actually are before signing away your deed. Also, even if someone is acting in good faith; do they have the experience to navigate through a complicated pre-foreclosure transaction?
The gurus smell blood and the foreclosure seminar circuit is booming and along with that comes scores of “investors” with little, or no experience.
It’s important to remember if you feel that you’re beginning to fall behind, the earlier you take action, the more options you’ll have. If you wait, your options will narrow along with any potential returns.
If you’re a homeowner who’s falling behind and is looking for information online, I’d recommend checking out The Foreclosure Report. Local mortgage broker, and all around dynamite person, Mike Mueller put this site together as an online resource for people in your situation. I’ll also be working on assembling resources for you on here, but The Foreclosure Report is a great place to start
Once you’ve done some research online, give a trusted real estate professional a call. Even if we can’t personally help you, we can probably point you in the right direction.
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