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Happy Easter!!
2008-03-22 14:02:00
The Bible says that on the third day he rose again, so here is a fitting song from Third Day… And since he rose again, this song from MercyMe is also fitting…
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The Fed is Now Lender of First Resort
2008-03-22 00:19:00
In normal times, the Federal Reserve is obligated to become the lender of last resort.  The Fed does so by supplying cash to banks requiring it to prevent a systemwide breakdown.  However, these are not normal times, are they? But for this crisis, the Fed has become the lender of first resort to a whole ...
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Term Securities Lending Facility (TSLF) Details Revealed
2008-03-21 16:49:00
The Wall Street Journal Economics Blog revealed the details of the Fed’s new “intervention” program, the TSLF.  Please go over there for a more complete review, but here are some of the highlights: In its first auction, the New York Fed will lend Treasurys to the 20 dealer banks against all collateral it accepts in its ...
More About: Securities , Details , Lending , Term

Fannie and Freddie OK?ed to Become Insolvent?
2008-03-19 15:02:00
I must admit this doesn’t make a lot of sense in the general scheme of things, however, with the Fed ready to step in and bailout everyone who is failing, it makes sense. Fannie Mae and Freddie Mac are having their capital requirements loosened by the Office of Federal Housing Enterprise Oversight.  Excuse me, but isn’t ...
More About: Freddie Mac

Fed Cuts Rates: 75 Basis Points
2008-03-18 19:38:00
The Fed has once again dropped the Fed Funds Rate, this time by 75 basis points bringing it down to 2.25%, less than recent inflation rates even with a flat CPI report. I am glad to see they didn’t drop the full 1.00% the markets began to expect this morning, so maybe the Fed does have ...
More About: Points , Rates , Cuts

What if the Fed Cut Rates Less Than Expected?
2008-03-18 17:23:00
This is an interesting question.  Many feel that the Fed appeases the markets, sort of like being the market’s call girl.  After, most rate cuts, especially the emergency rate back in January, definitely was designed to appeal to the markets, or at least appeared that way. But, what has the Fed rate cuts done besides keeping the stock market happy?  Take a look at some of these stats since the Fed started its current rate cut run back on August 17, 2007: The Reuters/Jefferies-CRB Index was up nearly 35% from August 31, 2007 to February 29, 2008 (33.6%) The US Dollar Index has fallen about 13% The S&P 500 is down around 10% So, what has the Fed rate cuts accomplished? Well, they likely prevented the S&P 500 from being down even more than 10%, but its moves have killed the dollar and is fueling inflation.  Believe me when I say that traveling abroad is getting extremely expensive with the euro up against $1.60.  (Side note the euros in my wall...
More About: Rates

Scary News: Federal Bailout of Homeowners Gaining Momentum
2008-03-18 15:10:00
Why is this scary news?  It opens all sorts of moral dilemmas.  Not to mention that most times when the government employs moves like these, generally it does more harm than good, at least initially. With the fallout from the Bear Stearn’s bailout and the liquidity problems plaguing Lehman Brothers as well (many wondering if they are next), the government will not hold back from efforts to “save the day”. The consequences of rising U.S. subprime mortgage defaults rates and falling U.S. house prices, combined with mark-to-market accounting, has become so severe that the Federal Reserve has resorted to financial tools last used in the Great Depression to staunch the crisis of confidence in financial markets that has seen liquidity evaporate. (Source News max) With the Bernanke and buddies running out of ammunition, Congress is going to be the next entity to step in most likely.  But, more than likely, they will screw things up, doing more harm to the c...
More About: Scary , Gaining , Momentum , Homeowners

How Well is Bernanke Doing?
2008-03-18 14:49:00
With the Fed seemingly doing everything possible to manage the financial crisis, just how well are he and the “Fed Gang” doing?  After all, it seems that every move they make fails to make anything more than a dent in the problem. Well, I am happy to say that I read an article that actually showed confidence in what has been done.  Newsmax posted this article that the shows most feel Bernanke is up to the challenge.  A straw poll of Fed watchers suggested many think Bernanke is doing a good job cleaning up a mess years in the making, from the bursting of a housing bubble that took a half a decade to build to a related implosion in subprime mortgage lending. …The Fed, under Bernanke’s guidance, has pulled out the stops in the past couple weeks to push liquidity into shaky credit markets. It has also cut benchmark lending rates from 5.25 percent to 3.0 percent since mid-September, with another big rate cut on tap at a policy meeting on Tuesday....

Will the Fed Eventually Pay Banks and Brokers to Borrow Money?
2008-03-17 18:55:00
That question may become more of a reality than not, though it would spell the absolute uselessness of the dollar as any means of currency, even in the US.  The Fed has come to the rescue yet again, doing nothing short of bailing out companies that would otherwise be insolvent and face liquidation.  In other ...
More About: Money , Banks , Brokers , Borrow

Fed Continues to Shoot Liquidity Anyway it Can
2008-03-17 16:39:00
There were two new initiatives announced by the Fed yesterday along wit the approval of the Bear Stearn’s/JP Morgan Chase deal.  Here is what they said, in Fed speak: First, the Federal Reserve Board voted unanimously to authorize the Federal Reserve Bank of New York to create a lending facility to improve the ability of primary ...
More About: Shoot

Is It Worth Living in South Florida?
2008-03-15 16:13:00
There is plenty of bad things to say about Florida these days, but there are also good things as well.  After all, Florida leads the nation, or at least ranks high, on a wide variety of lists. In recent news, there has been plenty of bad news for Floridians, particularly those in South Florida.  We were ...
More About: Living , Real Estate Investing , Worth

I have a Confession to Make
2008-03-14 16:01:00
With Eliot Spitzer being busted for leading a prostitution ring, leading to tons and tons of flak and talk of his hypocrisy, I felt I better come clean. In looking at the long tail of searches that people found the Florida Mortgage Report from a while back, “Florida Mortgage Sex” was one of the ways people ...
More About: Confession , Make

Does the CPI Need a Reality Check?
2008-03-14 14:37:00
This morning’s CPI (Consumer Price Index) data, one gauge on inflation, came in much lower than expectations which surprised the heck out of everyone, probably even those making the report.  But is reality different than what the numbers present? That’s a good question, and one that may not be answered in “data” for a while, but ...
More About: Reality , Check

Paulson’s Planned Policy Protects Future Problems
2008-03-13 14:34:00
Treasury Secretary Henry Paulson is planning to unveil the broadest blueprint to avoid the reoccurrence of the credit crunch.  The recommendations cover just about everyone involved in the mortgage process, from mortgage brokers to loan packagers to credit rating firms to regulators. “We aren’t singling out any group of market participants, because…there were mistakes made by all,” including regulators, Treasury Secretary Henry Paulson said in an interview yesterday, a day in which the stock market’s euphoria over the Federal Reserve’s latest initiative to free up the flow of credit gave way to some caution.  “Regulation needs to catch up with innovation and help restore investor confidence,” Mr. Paulson is planning to say today in a speech at the National Press Club, “but not go so far as to create new problems, make our markets less efficient or cut off credit to those who need it.”  (Source Wall Street Jo...
More About: Future , Policy , Problems

Don’t Lend to Gisele Bundchen, or Any Other Supermodel
2008-03-12 18:22:00
There is an interesting study presented by Enrichetta Ravina that studied an online lending market in which 7,321 borrowers posted 11,957 loan requests that included verifiable financial information, photos, an offered interest rate, and related context.  The study examined the interest rates and default rates based on appearances of the borrowers. Borrowers whose appearance is rated above average are 1.41 percentage points more likely to get a loan and, given a loan, pay 81 basis points less than an average-looking borrower with the same credentials. Black borrowers pay between 139 and 146 basis points more than otherwise similar White borrowers. However, in my sample such personal characteristics are not, all else equal, significantly related to subsequent delinquency rates - with the exception of beauty, which is associated with substantially higher delinquency rates. It certainly aids the argument that black borrowers are discriminated against.  It then raises the arg...
More About: Gisele Bundchen , Gisele , Supermodel , Lend

401k Withdrawal or Foreclosure: Which is Better?
2008-03-12 14:31:00
Many Americans are finding themselves facing potential foreclosure and lack any reasonable means to tap into money besides their 401k funds.  That presents a major dilemma, not just for current finances, but for the long-term financial picture as well.  Rather than debate whether or not these homeowners should have even been in the house in the first place, let’s just look at the choices they have remaining, neither of which are good. On the one hand, they can just stop making those mortgage payments and set whatever money aside in preparation for the inevitable foreclosure.  Believe it or not, this may make more sense than their other option.  While foreclosure is not a good outcome, their finances may not be totally destroyed in the process.  They may even keep enough liquidity in their control so they can survive in the longer term.  In many states, such as Florida, foreclosures take a long time and if the homeowner is able to live mortgage fr...
More About: Foreclosure , Withdrawal

Fed TAF Adds TSLF (Term Securities Lending Facility) for Further Bailouts
2008-03-12 00:07:00
The Fed’s Term Auction Facility, or TAF, has not done enough to bail banks out, so now they are adding a new bailout vehicle, the Term Securities Lending Facility, or TSLF.  With this new vehicle, the Fed can now dump another $200B into the banking system with the only requirement being securities that don’t amount ...

Banks Enjoy "Liquidity" Infusion by Fed, Refuse to Lend
2008-03-11 03:19:00
The Fed has been dumping money into the banking system through its TAF (Term Auction Facility) in an effort to spur more lending and ease the liquidity crisis.  Banks , however, are sucking up the cash and keeping it to themselves. Banks have already borrowed a total of $160 billion since the Fed started holding these auctions ...
More About: Enjoy , Infusion , Lend

Florida is in a Recession, But Not the Entire State
2008-03-11 02:55:00
There was an interesting take on individual states’ economies being in recession versus growth in the USA Today.  Florida was one of the states indicating being in a recession, but when you move over the state on the interactive chart, you can see that there are some parts of the state that are experiencing expansion ...
More About: Entire , State , Recession

Zillow Mortgage and the Zoriginator
2008-03-10 17:38:00
I am sure all of you have heard of Zillow by now and their Zestimate of what your home’s value is.  Now, they are entering into the mortgage arena and offering loan originators the opportunity to get “leads” from Zillow for $25 and Zillow runs a background check on the originator.  The question to be ...
More About: Mortgage

Is the Fed?s Term Auction Facility (TAF) Really an Equity Building Program
2008-03-09 00:47:00
The blogosphere is ripe with rumors and discussions of what the Fed’s TAF is really doing, or rather what it is, a bailout program in disguise.  Many varied thoughts and analysis can lead one to some very interesting conclusions. Steve Waldman’s theory is that the Fed’s TAF is basically designed to provide liquidity to banks until ...
More About: Building , Auction , Program , Term , Equity

My Crystal Ball Did Show the Future
2008-03-08 22:59:00
In my post back on December 28, I succumbed to the whims of a few whom wanted to know my outlook on 2008 and what predictions I had for the new year.  Well, several of those predictions have already come and gone. Here are the predictions that came true already… The dollar will see a rally before ...
More About: Future , Show , The Future , Crystal , Ball

Humorous Post of the Day?
2008-03-08 22:42:00
This post would probably be quite laughable if it weren’t true.  Treasury Secretary Paulson continues to talk about a strong dollar policy and its benefits, even while the dollar is breaking through to new lows.  Does he really think that his talking about a strong dollar will create a strong dollar?  “The strong dollar is ...
More About: Post , Humorous

Countrywide Under FBI Investigation
2008-03-08 22:26:00
As if Countrywide , and his leader weren’t in the spotlight enough for their troubles, the FBI is apparently investigating Countrywide for fraudulent lending practices and financial reporting.  The mortgage company is suspected of widespread fraud, which may have contributed to the subprime mortgage crisis that has rocked the U.S. economy. The investigation will examine underwriting and ...
More About: Investigation

A Lot of Things Happening?
2008-03-08 02:40:00
You may have noticed I have been quiet today, despite all the information I could be writing about.  There is a reason, actually a few. One, I am reviewing business taxes as they need to be filed by the 15th of March and I have 2 businesses I am already running (actually 3).  I am also ...
More About: Things

Did You Lose a Lot of Money On Your Mortgage Today?
2008-03-07 00:23:00
You have probably already heard my warnings on ensuring you are  dealing with a mortgage professional and not a mortgage idiot.  Can’t tell the difference?  Let me give you a clue. Mortgage idiots, despite knowing better (or not) focus on today’s headlines, last week’s data, yesterday’s data, and even the 10-year Treasury Note.  They have no ...
More About: Money , Today

Foreclosures Set New Records While Net Worth Drops
2008-03-06 20:44:00
News crossing the airwaves, or just cyberspace, talk about foreclosures reaching new heights as the net worth of America ns dropped for the first time since 2002.  With the stock market and real estate values plummeting, Americans are not worth as much at the end of 2007 as they were at the end of the third ...
More About: Foreclosures , Real Estate Investing , Net worth , Worth

My Dollar is Worth What?
2008-03-06 19:42:00
Just when you thought that the little piece of paper couldn’t lose any more value, it drops to new lows.  While it’s value continues to go down the toilet, it’s saving grace is it is too rough to wipe your butt with it. Yesterday saw the dollar devalued even more, setting new lows against the euro ...
More About: Dollar , Worth

FHA Limits for Florida Counties (March 5, 2008)
2008-03-06 17:40:00
Below is a breakdown of the new FHA Forward limits for every county in Florida as part of the foreclosure prevention/homeowner bailout program.  Green represents less than $300K, Blue is $300-400K, Orange is $400-500K and red is greater than $500K.  See the table for more specifics. County SFR Duplex Tri-Plex Quad ALACHUA $271,050 $347,000 $419,400 $521,250 BAKER 387,500 496,050 599,600 745,200 BAY 396,250 507,250 613,150 762,000 BRADFORD 271,050 347,000 419,400 521,250 BREVARD 291,250 372,850 450,700 560,100 BROWARD 423,750 542,450 655,700 814,900 CALHOUN 271,050 347,000 419,400 521,250 CHARLOTTE 296,250 379,250 458,400 569,700 CITRUS 271,050 347,000 419,400 521,250 CLAY 387,500 496,050 599,600 745,200 COLLIER 531,250 680,100 822,050 1,021,650 COLUMBIA 271,050 347,000 419,400 521,250 DE SOTO 271,050 347,000 419,400 521,250 DIXIE 271,050 347,000 419,400 521,250 DUVAL 387,500 496,050 599,600 745,200 ESCAMBIA 271,050 347,000 419,400 521,2...
More About: Limits , March , 2008

Florida Homeowners Foreclosure-Proof?
2008-03-05 20:19:00
There is an interesting dilemma occurring in South Florida , namely Miami-Dade and Broward Counties, and that is that it takes a long time to foreclose on properties, all the while the homeowner gets a “free ride”.  This includes multi-million dollar beachfront properties that could have a homeowner “squatting” in for as much as two years ...
More About: Foreclosure , Proof , Homeowners