Some late breaking news on a Friday night:

WASHINGTON - The Bush administration is proposing a sweeping overhaul of the way the U.S. financial industry is regulated.

In an effort to deal with the problems highlighted by the current severe credit crisis, the new plan would give major new powers to the Federal Reserve, according to a 22-page executive summary obtained Friday by The Associated Press.

The proposal would designate the Fed as the primary regulator of market stability, greatly expanding the central bank’s ability to examine not just commercial banks but all segments of the financial services industry.

I honestly don’t know enough about this at this time to really say anything about it, but it sounds like a step in the right direction. Apparently details will be forthcoming on Monday.

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Tags: Bush Administration, federal reserve, Regulation
Categories: Congress and Government, Economics
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I know the market has been on the down side lately, but who could have imagined a house cheaper than a Cadillac Escalade? This house is starting at $32,204:

Actually, it’s a cardboard house and all the rage among tree hugger types. Given Arizona’s low rainfall it could even work well here. What do you think? Would you get one?

Photo from Houses of the Future.

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Tags: arizona, cardboard house
Categories: Humor and Fun
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This is a very common question I get from people these days. Finally, I found a video which makes it very clear for people and it’s from none other than Suze Orman. Now, regular readers of this blog know that I don’t always agree with her, but this time she’s hard to disagree with:

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Tags: ARM, closing costs, interest rates, refinance
Categories: Interest Rate, Mortgages
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Today I begin my weekly Thursday series rounding out the weeks major mortgage related events and stories from around the mortgage blog-o-sphere and beyond. This is where I try to make reading about mortgages more exciting than watching two female teachers fight in front of their students! So, let’s begin…

Polls and People

A recent poll by Rasmussen finds that 53% of Americans are opposed to a Federal bailout for homeowners. Last December Rasmussen had found that 54% of Americans blamed the individual borrowers for the mortgage crisis.

With those numbers on my mind I found it hard to watch a video on Mortgage Ciceron’s blog of a woman who lost her home because she was talked into one of those exploding ARM’s. Truly a sad sad story and a very heart wrenching vlog.

Back to the Future… Lisa Simpson’s Nightmare

Remember the Enron story and how Arther Anderson disappeared because of it? Well in an eerily similar story we have an investigator accusing KPMG of allowing, New Century Financial (subprime darling until 2006), to report a profit, rather than a loss. Will they never learn? Reminds me of Lisa Simpson’s confusion when Homer became a Springfield police officer “… if you’re the police, who’s going to police the police?” (Homer the Vigilante)

Down But Not Out

Of course the big news maker this week was the home price index showing record declines, Alex Stenback argues there is no such thing as a national real estate market. He breaks down the media headlines with great clarity. In the mean time, CNN Money has a great article on why now could be the best time to buy reale state.

Campaign 2008 Watch: Who wants to fix what, and how!

All three Presidential candidates had something to say this week about the mortgage industry and financial markets. McCain seeks common sense solutions with minimal politics and government involvement. Obama wants tighter regulation and blamed Bill Clinton among others for the mess we’re in. Hillary wants direct federal intervention.

I’d hate to close this post with a Hillary piece so let me tell you an engineer joke. To the optimist, the glass is half full. To the pessimist, the glass is half empty. To the engineer, the glass is twice as big as it needs to be.

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Tags: mortage blogs, news, roundup
Categories: Mortgage Roundup
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Former executives at New Century, which went bankrupt early last year, should be sued and so should it’s auditor KPMG. That is what a bankruptcy investigator is recommending. New Century as you may recall was the No. 2 sub-prime lender before it went down in flames in the Spring of 2007. An excerpt from Yahoo! Finance:

Michael J. Missal, a Washington, D.C. attorney appointed by a bankruptcy judge to probe years of accounting missteps by Irvine, Calif.-based New Century, said the company’s leaders turned a “blind eye” to the increasing risk of making loans to people with bad credit.

Operating out of a “brazen obsession” with cranking out mortgages, New Century ignored an alarming rise in signs of trouble with it loans, Missal said. He found the company engaged in seven improper accounting practices, including one that some witnesses said was recommended by KPMG.

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Tags: bankruptcy, Mortgages, new century, subprime
Categories: Mortgages, Subprime Mortgages
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Mortgage rates have been falling over the past few weeks. Here is a brief snapshot of how rates have been since the beginning of this year (data source: Freddie Mac):

It’s rather interesting that the 5/1 ARM was hovering between the 30 year and 15 year rates earlier this year and has recently returned to a similar position. Here are the highs and lows for the different loan terms:

1. 30 Year Rate High: Week ending February 28th at 6.240%
2. 30 Year Rate Low: Week ending January 24th at 5.480%
3. 15 Year Rate High: Week ending February 28th at 5.72%
4. 15 Year Rate Low: Week ending January 24th at 5.130%
5. 5/1 ARM Rate High: Week ending January 3rd at 5.780%
6. 5/1 ARM Rate Low: Week ending January 24th at 4.950%

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Tags: 15 year, 30 year, 5/1 ARM, mortgage rates
Categories: Interest Rate, Mortgages
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Short sales and bank owned properties (REO) seem to be in hot demand these days in the Phoenix area. Why shouldn’t they be? For many, these properties can make perfect sense plus there are lots of them to go around. According to Phoenix area real estate agent Jonathan Dalton there are currently over 5000 short sale homes listed in the Phoenix MLS and over 4700 REO’s. This represents almost 20% of homes currently on the market.

I’m not suggesting you should purchase short sales or bank owned properties, but if you should decide on making an offer here are four things you need to know:

1. Short Sales Want Quick Closes: While the actual short sale approval process may take several weeks, once the sale has been approved, the bank typically will go with the buyer who is able to close very quickly. Quick here means ten days or less. Hence, they give priority to cash offers if acceptable but if there are none, then they will accept the next quick close.

2. Obtain Credit Approval Before Making An Offer: Since you are more likely to have an accepted offer if you can close quick it is important that you as the buyer work with a lender that allows “credit only” approvals. This means you will have signed the initial loan disclosures, reviewed all loan parameters and decided on your loan. Additionally the lender will have collected all the necessary documents and provided a full underwriting approval. The only piece remaining at this point would be the property appraisal.

3. Obtain Commitment Letter From Lender: While getting pre-approved and submitting an LSR with your offer is important, I suggest you obtain a commitment letter from your lender. A commitment letter indicates that you have indeed been approved for the loan and are 100% able to finance the purchase. Lenders will typically only issue a commitment letter once the loan has been approved by underwriting (point 2).

4. Line Up Appraisal and Home Inspection: As I mentioned earlier, the bank will accept offers that can close within 10 days. This means you need to have a home inspector lined up to inspect and approve the property to your satisfaction. Additionally, your lender needs to have an appraiser ready to go in on very short notice. Time is of the essence here and you need to be prepared.

It seems like most the borrowers I’ve worked with recently are purchasing bank owned or short sale properties. It’s not that the loan process is any different than before, it’s just that there are enough “curve balls” to throw the process off track. That is why your lender needs understand your situation exactly. This is especially the case given tighter lending standards and the inventory of homes currently on the market.

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Tags: bank owned, commitment letter, short sales
Categories: Mortgages, Pre-Approved, Real Estate
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Beautiful.

We went up to Sedona, Arizona for a night away from suburbia and it was absolutely beautiful. The landscape never ceases to amaze me.

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Tags: arizona, sedona
Categories: Arizona, Humor and Fun
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Robert Novak, one of my favorite political commentators reveals the inside scoop on who made the decision to bail out Bear Sterns and why there is cause for concern. He says the decision was “approved in private by unelected officials” and reports that “a Fed official conceded privately this week that “we may have crossed a line” in jumping into Bear Stearns.”

His column today starts out making this claim:

The Federal Reserve’s unprecedented bailout of Bear Stearns was crafted not at the White House or Treasury, but in secret by a New York central banker whose name is unknown to Washington power brokers and was a Clinton administration presidential appointee.

Later on he says:

If they had blundered into financial failure, the community banks complained, they would not be bailed out, but instead investigated and prosecuted. “Too big to fail,” therefore, becomes “too big to be punished.”

For those not familiar, Novak is a respected conservative journalist who is noted for bringing to light the inner workings of the “Establishment”. So, it’s not paranoia that I’m passing along here.

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Tags: bear sterns, federal reserve, novak
Categories: Congress and Government, Economics
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… even Fed Chairman Bernake’s house has lost a lot of its value. According to Bloomberg:

March 20 (Bloomberg) — The U.S. housing recession has arrived literally on the doorstep of Federal Reserve Chairman Ben S. Bernanke.

Bernanke lives in Washington’s Capitol Hill area in a four- bedroom, 2,600-square-foot house he bought new in May 2004 for $839,000. Almost four years later, it may not be worth any more, according to real estate records and local agents.

Bernanke’s timing wasn’t the best — values in the area peaked a year later — and he is hardly alone among Americans living in an investment that’s turned cold.

I’m sure he’ll be just fine, but it’s apparent that everyone is affected by this.

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Tags: bernake, house value, Real Estate
Categories: Humor and Fun, Real Estate
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