More Turn Around Talk

You know, I said it first but John agrees with me :-)

Biz break: Cisco CEO foresees economic turnaround in 8 or 9 months, optimistic about stimulus plans - San Jose Mercury News

Biz break: Cisco CEO foresees economic turnaround in 8 or 9 months, optimistic about stimulus plans

Compiled by the Mercury News
Posted: 04/24/2009 01:50:43 PM PDT

This too shall pass: Cisco Systems CEO John Chambers said today he believes the global economy will begin to recover in December or January.

That view is based on the performance of the stock market and his personal experience, Chambers told reporters at a news conference in Mexico City. The remarks have no bearing on Cisco's financial results, he said.

Mixed Emotions

TEXAS BORROWERS RECEIVE RESTITUTION


DALLAS (Dallas Morning News) – As part of the largest predatory-lending lawsuit in history, Countrywide will use $8.4 billion to modify mortgage terms for 400,000 borrowers in Texas and ten other states who received unaffordable loans from the lender.

The settlement has reserved $7.5 million for Texas to distribute restitution payments worth $2,300 to help borrowers who already lost their homes or are near foreclosure — 120 days or more delinquent on payments.

About 3,260 Texans are eligible for restitution, according to a spokesman with the Texas Attorney General's office.

Under the settlement, borrowers could get the $2,300 payment if their first loan payment was due between Jan. 1, 2004, and Dec. 31, 2007, and they made six or fewer payments before losing their home.

For borrowers who can't afford to refinance their mortgage and have to leave their home through a foreclosure sale, the settlement provides relocation assistance of $2,000 per borrower.


My first impression is that we are a bunch of big irresponsible babies. We can't drive with coffee in our laps. We can't take responsibility for our MEGA consumption and ruin of the earth. Now we also can't be expected to actually read what we're signing. Who are these people that bought houses that they could only afford for 6 months?

I honestly don't know the extent of this lawsuit. I haven't read what the complaint was. I haven't done any research. All I know is that a few people that overextended without considering the consequences have now made getting a loan so hard that it's considered a heroic event!

I'm blaming it on all the Jocks in high school. The ones that would do anything to bed a cheerleader :-)

New Regulations Chase ALL Mortgage Loans Out of NY State

For the last few years - perhaps as many as eight or ten - there have been increasing reports of abuses in subprime lending. Folks that could have/should have qualified for a "better" loan, didn't. Credit worthy borrowers were charged multiple points and high interest rates. The consumer wasn't saavy, didn't speak the language, or didn't shop around. Sometimes there was even elder abuse.


Instead of holding fraudulent individuals and/or companies liable, various states have attempted to label "high cost loans" as fraudulent, usurious and have attempted to regulate them into extinction. The latest iteration is in the state of New York. New York's new regulations deem the investor [the ultimate purchaser of the note] liable for any irregularities in the loan.

Let's recap the flow of money; the loan is "originated" by one company, sold to the initial investor/bank/mortgage company who then re-sells it in huge blocks to the "investor". This final investor is often made up of retirement funds, investment pools and mortgage backed securities that are sold on the stock market.

Let's say you had your choice between two stocks with a similar return; Google stock or a mortgage back security - that may be able to sue you for sub prime loans buried in the portfolio - which stock would you execute?



I totally get that these states are trying to "protect" their voter base. The problem is that high cost loans have a place and making the investor liable just means that the investor won't spend their money there - any money. In our internet world, the liquidity market is not limited to geographic regions like the old community banks. Putting the investor at risk just makes the grass so much greener anywhere else.






New York Versus Freddie Mac: Round One

New York Versus Freddie Mac: Round One
By Peter G. Miller

It’s fight time in New York. On one side is newly-passed state legislation which sets tough standards for subprime and “high cost” loans and on the other is Freddie Mac, which says it won’t buy such loans in the state after September 1st, the day the new law goes into effect.

This is a big deal because if New York lenders can’t sell mortgages to buyers such as Freddie Mac, they simply won’t make such loans. You can guess what happens next: No subprime loans, no high cost loans, no buyers, no sales. A big chunk of the real estate market will close down.

Technorati Tags: subprime lending, lending meltdown, law of unintended consequences

Say Bye Bye to Mortgage Loans

WASHINGTON (Associated Press) – The Federal Reserve has adopted a new plan intended to curb shady lending practices that sent home foreclosure rates to record highs.

The plan will:
*prevent loans made without documentation of borrower’s income;
*require lenders to escrow money to pay taxes and insurance for risky borrowers;
*limit — and, in some cases, ban — prepayment penalties;
*prohibit lenders from making a loan without considering a borrower's ability to repay a home loan from sources other than the home's value;
*require mortgage advertising to contain information about rates, monthly payments and other features of the loan;
*require that lenders credit a mortgage payment to a homeowner’s account on the day it is received; and
*forbid brokers and others from "coercing or encouraging" an appraiser to misrepresent the value of a home.

Most of the rules take effect Oct. 1. Escrow requirements will take effect April 1, 2010.
More information is available on the Federal Reserve Board’s website.

PMI is getting harder and harder to find

Got this notice this morning:

May Mortgage Insurance Changes

Due to rapid changes with the availability of Mortgage Insurance coverage, we have added a summary starting on page 5 of Private Mortgage Insurance (Doc 6102). This document has been updated to reflect the changes outlined below.

It's getting harder and harder to get PMI and most lenders have limited/eliminated their second mortgages.

There are still ways to make it happen but, if you are in the middle of a transaction, make sure your lender is on top of the (often) daily changes.

Have you lost a deposit or had a transaction fall through due to last minute underwriting changes?