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Jun. 30, 2011: View on how to fix the economy; More settlement news - and CW has cost BofA how much so far?
Rob Chrisman
[I am
away from the computer on a daily basis, and my access to e-mail
is sporadic and not timely. In my place are daily commentaries
from a series of very knowledgeable mortgage industry people
with different backgrounds, and they have been given very little
direction about what to write about – the latest is below. Our
views may or may not coincide, but I thank them for their time
in volunteering and helping out.]
This IS the economy,
stupid…
Over the past three
and a half years as I’ve watched my career get annihilated, my
savings accounts dwindle, waiting for the Great Punkin’ as it
were, it finally dawned on me a little over a year ago, this is
the economy, stupid! It has been mildly
amusing to fairly sickening to watch the City of San Jose not
unlike other municipalities whine and fuss over a 10% pay cut
while many of us have easily taken a 75% haircut and counting. It hasn’t escaped me either that we are
about forty six months into this financial crisis and we are
just now hearing and reading the call for emergency pay cuts not
to mention the budget cuts that have been littering the
headlines of late. Not without notable mention the most recent
headline on June 22, 2011 where the California State Controller
Chiang threatened to withhold California lawmaker’s paychecks
for not producing a balanced budget, and without much fanfare
unlike times in the past a short time later, June 28, 2011
(ahem!) the Mercury News reported Governor Brown had a budget in
hand he was sure to approve! Amazing
that our “public servants” can get along so well and settle
their differences now that is it their money that is being
withheld.
Without going through
all of the blame and rhetoric that we’re all nauseated hearing
one more time, I do believe that if we cannot stimulate the
economy, first through some sort of renewed confidence that
isn’t spelled QE3, with said confidence in fact it may lead to
new jobs and then the American public into at least considering
buying a home our lifestyles might JUST change as in a downgrade
and maybe change for the foreseeable future and possibly beyond.
My personal opinion, I look for home values to continue to
deteriorate another 10% at the minimum and up to 30% or worse
should we continue in this downward holding pattern we cannot
seem to shake. With Americans continuing to lose equity in their
homes, some losing half, or most of their savings riding out
their unemployment situation how can our lifestyles that we’ve
become so accustomed to stay at status quo when our resources
are tapped leaking like a sieve at unprecedented levels? Especially since we’ve been in an uptrend
with regard to the American lifestyles upgrading over the past
few decades? Some things or a lot of
things for that matter have got to give.
It is one thing to
complain, so what is the solution? Run to the mirror and deem
yourself accountable, we the American public are responsible for
the politicians we vote into office and allow, yes I said allow
to make laws that are not in our best interests but their own. We as the voting public need to consider
that MAYBE WE AS A NATION CANNOT AFFORD THE PRIVILEGE OF THESE
“PUBIC SERVANTS” SERVICES AND starting immediately elect
officials:
#1.
Have to ask the American people IF they can have a raise and not
vote their own raise in, automatic pay increases no less.
#2. Have the EXACT
same retirement program we have, no more lifelong pensions, are
you KIDDING me???
#3. Have the EXACT
same Health Care Program that they prescribe for all Americans
#4. Consider
increasing our expectations of said politicians and kick out the
candidates with DUI’s, Domestic Violence history, accepting any
favor whatsoever, ANY perverted behavior, there is never just
one cockroach, ANY cheating spouse, if you don’t have any more
self- control than that OR the nuts to tell your spouse you want
out, don’t try to run our country or your municipality clean up
your home front First!
#5. Any and all laws
said elected officials enact have the exact same consequence for
themselves as they vote to give to Americans
I received a call
from a former client that had a home paid for in another state,
took money out of that house and paid cash for another, upgraded
home they purchased and now are letting the first house which
they took cash proceeds from go back to the bank.
I’m not a huge fan of the banks but that is just not
right, we as Americans HAVE to find it in ourselves to do the
right thing even in the face of watching our corporation owned
and operated government do exactly to us and others the same
thing I am describing here in varying degrees, this HAS to stop
somewhere and it starts with us as individual Americans. My father’s generation, he’s 74 with all
its foibles did a lot of things right and to this day if you
shake my dad’s hand, whatever he shook on he’d rather die than
not keep his word. For us to get back the former reputation,
respect and dignity of our once pristine nation we need to act
accordingly and make sure our corporations and government are in
line with OUR values as a nation. Your
vote does count, what you say and do does too, everyone is
watching, your kids, family, neighbors, friends and colleagues!
Finally, some
unintended benefits came from this gut wrenching time and I can
say I’m better for it
- I appreciate my
family more than ever, all of them, even Uncle Art…
- I appreciate my four
year old car and don’t understand my previous obsession with
driving a newer one than my new one
- I may not ever be
able to buy Diesel brand jeans again, so I love the one’s I have
- I’m still in this
business and I thank God for every client, like my jeans I love
the one’s I have!
My boyfriend and I
were sitting at a table at his high school reunion, and he kept
staring at a drunken woman slugging down her drink as she sat
alone at a nearby table.
I asked him, "Do you know her?"
"Yes", he said,
"She's my old girlfriend. I understand she took to drinking
right after we split up those many years ago, and I hear she
hasn't been sober since."
"My God!" I said, "Who would think a person could go on
celebrating that long?"
Hee! Haw!
Lisa Melby
Firestone Financial
Group
www.lisamelby.com
Editor’s note:
Yesterday the press
was filled with accounts of the massive, partial, Bank
of America settlement. But companies involved in other
potential liabilities are closely following progress/resolution
between other companies.
For example, Ally Financial Inc. said it expects to incur a
$100 million second quarter charge to cover mortgage losses
posted by securitization trusts, and that it received subpoenas
from regulators related to "certain mortgage activities”
according to a filing with the SEC. In an updated prospectus
filed with the Securities and Exchange Commission, Ally said it
made payments to such trusts of $152 million in the second
quarter.
And returning to Bank
of America briefly, it has set aside $14 billion to meet
investors’ claims that loans packaged in mortgage-backed
securities before the financial crisis failed to meet promised
underwriting standards. As you might expect, this should
eliminate any profits during the 2nd quarter. The $14
B is the $8.5 billion non-agency settlement plus another $5.5
billion in charges to cover additional claims from
government-owned mortgage companies as well as other private
investors. In addition, BofA said it could eventually face as
much as $5 billion in additional claims over its underwriting
standards from other banks. So far, Countrywide has
accounted for more than $25 billion in losses at BofA – the
gift that keeps on giving.
Freddie Mac has
entered into a proposed settlement with whatever is left of
Taylor, Bean & Whitaker Mortgage and the creditors’
committee appointed in the lender’s bankruptcy proceeding.
Freddie Mac told the SEC that it will be granted an unsecured
claim in the TBW bankruptcy estate in the amount of about $1
billion, which represents its exposure to past and future loan
repurchases, but the mortgage financier estimates that it will
only see between $40 million and $45 million from that claim –
about 4 cents on the dollar! Freddie will also be entitled to
approximately $203 million on deposit in certain TBW bank
accounts relating to the company’s mortgage loans. The FDIC as
receiver of Colonial Bank, which went under in 2009 as a direct
result of the fraudulent activity going on at TBW, has already
handed over $150 million of this amount to Freddie. In addition,
the GSE will receive other mortgage loan receipts estimated to
be $6 million, but Freddie must pay a total of $61 million to
TBW and the trade creditors represented by the creditor’s
committee to settle their potential claims against the GSE.
If you’re interested,
visit my twice-a-month blog at the STRATMOR Group web site
located at www.stratmorgroup.com . The current blog
takes a look at near-term news for non-agency securities, such
as jumbo residential loans. If you have both the time and
inclination make a comment on what I have written, or on other
comments so that folks can learn what’s going on out there from
the other readers.
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