What banks will be left standing when the dust clears?

Countrywide’s Golden Boy Angelo Mozilo said a year or two ago that within a year the top ten banks would fall to the top 5.  I wonder if he thought his would be one of the first to go, or considered he would be charged with fraud before all the dominos fell.

Since Taylor Bean & Whittaker abruptly shut down last week, I’ve considered Mozilo’s remark and the possibility that there will only be one or two banks left in the mortgage business.  Since that is their money maker, I wonder how many will be left standing at all.

A great many banks are promoting incentives for their banks; Wachovia will give you a gift for referring a new customer, if you are a customer in fact.  Bank of American and Wells Fargo, both of whom are big in online banking have ongoing bank promotions as well.

But would you really choose a bank based on bank promotions?  It is probably a good idea to make sure the bank you choose is one that will be standing after the dust clears, you do want your certificate of deposit to maintain its value, and not have to collect from the FDIC!

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Taylor, Bean & Whittaker closing down

According to the Wall Street Journal, The FHA suspended Taylor, Bean & Whitaker Mortgage Corp. from making FHA loans, and “raised questions about the company’s business practices and financial disclosures.”

WSJ continues that TBW didn’t submit a required financial report AND failed to disclose “certain irregular transactions that raised concerns of fraud.”

Officials demurred from detailing the fraud, however Ocala.com reports:

The FHA said in a written statement Tuesday that Taylor Bean failed to submit its required annual financial report and failed to inform the FHA that TBW’s independent auditors ended their examination of the company when they found “certain irregular transactions that raised concerns of fraud.”

In addition to the loan suspension, the FHA is also recommending that two top company officials be temporarily banned from doing mortgage business with the federal government.

The FHA alleges that TBW President Ray Bowman and TBW Chief Executive Officer Paul Allen submitted false or misleading documents to the U.S. Department of Housing and Urban Development.

From the WSJ:

It seems Mr. Allen “submitted false or misleading information to Ginnie Mae concerning a delay in submitting financial reports. It said Mr. Bowman submitted two false certifications regarding information lenders are required to verify each year. Neither Mr. Allen nor Mr. Bowman could be reached for comment.”

TBW bought almost $30 billion in mortgages last year and that makes it the largest lender ever suspended by the  FHA. It is a private company but Inside Mortgage Finance lists it as the 12-largest lender in the US this year.

HUD Secretary Shaun Donovan announced: “Today, we suspend one company but there is a very clear message that should be heard throughout the FHA lending world: Operate within our standards or we won’t do business with you.”

An email sent to employees from Chairman of the Board Lee Farkas around 1:00 pm announced the company was closing, and they were to pack up and leave.  The email included the remark that Farkas had done everything he could to save the company.  Later they issued a news release that all loan origination operations had stopped, but they will continue to service loans.

Evidently TARP, HUD and Ginnie Mae are all looking closely at the activities of TBW, the Wall Street Journal includes a comment that independent auditor, Deloitte LLP, had resigned from that position with Taylor, Bean & Whittaker because of “irregular transactions” that raised concerns about fraud. There was no comment from Deloitte. The full Wall Street Journal article Ocala.Com’s full article

Is the housing crisis over?

The Associated Press says: “The percentage of U.S. homeowners who owe more than their house is worth will nearly double to 48 percent in 2011 from 26 percent at the end of March.”

Ironically, Deutsche Bank reports that “prime” loans that meet the guidelines of Fannie Mae and Freddie Mac will be the worst affected: As much as 41 percent will be underwater by the first quarter of 2011, up from 19 percent in 1Q 2009.

Good thing those loans are now available for modification – more and more people are considering the folly of paying a $500K mortgage for a $250K house.

Read the full article at AP

Freddie Mac PDF Home Affordable Modification Program

Fannie Mae Home Affordable Modification ProgramFannie Mae Home Affordable Modification Program


Three steps to a LOWER Mortgage Payment

Under President Obama’s Mortgage Rescue Plan (Safe Harbor Mortgage Modification Bill ) 9 Million mortgages are eligible for Mortgage Loan Modification, the $75 billion program to stop foreclosure for up to four million homeowners.

Mortgage companies are paid $1,000 for each modification & another $1,000/yr for up to three years. This is crucial to the economy. Without it, foreclosures will continue to grow & real estate prices fall. But, since the program began, millions more loans have gone into foreclosure.

Take advantage of the housing rescue incentives and modify your Fannie Mae or Freddie Mac mortgage.

Take control of YOUR home loan and prepare your BANK READY Modification Package. If you have a first and second mortgage, prepare a package for both loans.

Three steps to a LOWER Mortgage Payment!!!

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Fannie Mae and Freddie Mac Home Affordable Modification Programs Full Text Documents

Bush Nationalizes Housing Industry
Image by Mike Licht, NotionsCapital.com via Flickr

Fannie Mae Home Affordable Modification Program Fannie Mae PDF Home Affordable Modification Program Full Text

Freddie Mac PDF Home Affordable Modification Program Freddie Mac PDF Home Affordable Modification Program Full Text

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New rules on mortgage loan modifications from President Obama

Now borrowers who are current in their payments, but lack home equity, may be able to modify their mortgage loans to a lower interest rate.

Op Ed today muses:

Banks say they are overwhelmed by the clamor for relief and are working hard to meet demand. We have heard that before. In May 2007, a group of banks and loan servicers went to Washington to promise a solution for troubled borrowers. The problem has only gotten worse.  A more plausible explanation is that banks feel no great urgency to act.

They are being buoyed by immense government support.   And the Obama plan — which provides up to $75 billion in subsidies and incentive payments to help lenders and borrowers come to new loan terms — imposes no real penalty on lenders if the modifications don’t happen.

So instead of moving forcefully on foreclosure relief, the players in the mortgage chain — lenders, servicers and investors — have spent months parsing whether the incentives are adequate. Administration officials have spent countless hours clarifying the rules, trying to iron out the differences and pressing the industry to do more.

[emphasis mine]

There have always been banks that were great to work with when escrow problems showed up, getting payoff’s, payment information, etc.  And there have been banks that were the worst! to work with . . . I won’t name names, if you’ve tried to get something from your servicer you know whether or not they actually give any “service” to their customers.

I guess now they don’t have to think about their customers being the ones who write their paychecks . . . after all, Obama seems to have pen to checkbook at all hours of the day and night to assist lenders, and while he’s made laws about everyman’s mortgage being made manageable, apparently the incentives to the lenders to make them manageable just aren’t enough incentive.

Couple that with organizations who have absolutely no reason to impress you with customer service, because you are stuck with them until you pay off your mortgage or refinance, it looks like stalemate for the economy, after all.

If you’d like to see if you can have your loan modified, we’ll certainly do everything we can to get it done . . . DIY Mortgage Loan Modification

just what to celebrate on the fourth of July?

I continue to be amazed at the direction of President Obama’s stimulus bill . . . and the twists and turns of the economy regardless of Washington’s attempts to direct and control it.

In Georgia, I read the headline, “Construction on first Georgia stimulus transportation project to begin

And read how proud Governor Purdue is to spend $940,000 resurfacing four miles of U.S. Highway 19/State Route 3 “to create and sustain jobs”.

They’re going to need those jobs in Cobb County, where the property tax website reports that taxes are going up on homes due to the loss of the homestead exemption . . .

The ‘Governor’s Tax Credit’ for homestead property was NOT funded by the State legislature for 2009 which will result in an increase on your 2009 tax bill between $77.04 and $228.24 (depending on other exemptions you have or whether your Property is located within the city limits).  You can determine the exact amount your tax bill will increase in 2009 on this web site by locating the ‘Homeowners Tax Credit’ amount deducted on your 2008 tax bill.  If your taxes are paid from an escrow account through your mortgage lender, you may want to notify them so the escrow payment amount can be adjusted accordingly. [emphasis mine]

That’s in addition to whatever your income taxes will go up after the Stimulus bill pays $3,000 for each mortgage loan modification done by a lender in this country, and the bailout billions, and the interest on all that stimulation.  God knows I don’t have a calculator to figure that math.

I can calculate the amount of irony involved and estimate the anger when all those people who want the government to take care of everything learn that the government takes care of everything with money it takes from everyone.

The level of complacency in this country continues to astonish me as I everyone around me just wants to maintain the status quo, except of course those of us who’ve already lost it and are attempting to rebuild in a world we don’t recognize.  I was Chicken Little in August of ’07, when I wrote Sub-prime Meltdown?  What about My Meltdown? on Active Rain, and closed with this remark.

So now it is My meltdown. I don’t worry about my job anymore, or even about my industry. . . Now I’m worried about my country.

I don’t know that I have better info than those in Washington, or more brainpower, but I do believe

  • You aren’t too big to fail, and that includes countries as well as companies
  • If you do bad business, it should put you out of business
  • We are being dragged into a socialistic environment, and there aren’t enough people kicking and screaming about it.

There’s a poignancy about this “faded” glory image that strikes me as particularly relevant now.

In Obama’s fourth of July speech, he urged Americans to to tackle health care reform, foreign oil, the school system, and fix the economy.”That is the spirit we are called to show once more,” Obama said Saturday. “We are facing an array of challenges on a scale unseen in our time.”

Really?  How newsworthy.

Show me the money! Securities Financing, the last place the credit is easy.

Credit? Hardly.

Foreclosures aplenty.

Financial institutions and myriad other companies will continue to fail, and unemployment will remain high.

But, we’ve had a large increase in HedgeLoan applications over the past two weeks. Evidently people have decided that securities financing products and services have “weathered the storm”, and you know what?  We have.

Now more and more people are beginning to think that being able to have one’s stocks working for you at the same time you use the non recourse loan cash from securities financing for investments, debt restructuring, or other means of maintaining and strengthening financial health — is the only way to survive the economic storm.

If you’d like to “have your stocks and use them too”, consider a securities loan. We have a wide range of tailored securities loan products, including institutional “never sold or traded, stay in account” Premier for those who feel security is paramount.

Modify Your Mortgage, or walk away?

The lastest figures are that of the 30.4 million mortgages owned or guaranteed by Fannie Mae and Freddie Mac (and NOT sub-prime, but mostly A paper loans) 63%  more went into foreclosure during the first three months of 2009.  We’re now at 243,800 homes in foreclosure . . .

Loan modifications, forebearance and repayment plans, and short sales, done in the same period only totalled 87,000.

More than 150,000 families gave it up, and walked away from their homes.

A Wharton School study, performed by Grace Wong Bucchianeri found that renters may be happier than homeowners, and . . . the study was done in 2005. Before the big bust.

“The average homeowner, however, consistently derives more pain (but no more joy) from a house and home.” says Buccianeri.

For those of you who don’t want to be renters, and who are uncomfortable, if not down right miserable with your mortgage loan, there is a solution that doesn’t include bankruptcy, or the poorhouse.  You can prepare a mortgage loan modification package yourself, submit to your lender (or lenders, if you have a first and a second), and keep track of your progress online.


Created by members of the mortgage banking industry in response to President Obama’s mortgage rescue solution, the Safe-Harbor Mortgage Modification Bill, it is a true do-it-yourself system to prepare bank-ready documents, complete with your lenders contact information; print them, and follow up with your lender to see that your loan is modified.

The Safe Harbor Mortgage Modification bill allows for interest reduction, term increases (the length of time you are allowed to repay) and in some cases balance reduction.  The goal is to have your mortgage payment be at or below a 31% dti (debt-to-income) ratio, which is a far cry from the 50-55% dti allowed by some sub-prime lenders.

It allows the past due payments to be added back into the loan, in order to be able to get back on your feet sooner, and get busy paying those other bills that have been languishing, unpaid on your desk.

President Obama apparently believes that everyone should have a fixed rate mortgage, and this bill is for adjustable rate mortgage modifications, but I’m aware of fixed rate loans that have been adjusted due to hardship.

You can find definitions for all the above at Do It Yourself Mortgage Loan Modification Platform.  And, you can pre-qualify before you shell out the bucks, unlike those programs that charge $2,000 or $3,000 to have your loan modification done for you.


Alan Grayson: Is Anyone Minding the Store at the Federal Reserve?

unbelievable . . . Must Watch.

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