Jay Thompson wrote about the NAR’s foray into the world of controlled finances over a year ago…Eric Stegemann brought the topic up while at RE BarCamp-Phoenix, indicating it was his understanding that after a few delays, its a go. Fascinating implications.

The largest trade organization in the United States, with all its lobbyist power, is for all practical purposes a lender.  Yes, yes, NAR and the Realtors (INSERT COPYRIGHT SYMBOL HERE) Federal Credit Union (RFCU) are separate and apart in all the right places but I love the messaging coming off the article on realtor.org:

Because operations will be on the Internet, REALTORS^® FCU will be sensitive to the work habits and lifestyles of REALTORS^®, most of whom are independent contractors who are compensated by commissions.”

All REALTORS^® and their families are eligible to become REALTORS^® FCU  members. REALTORS^® employees and staff, including NAR, state and local boards and associations, and NAR’s institutes, societies and councils are also eligible. REALTOR^® clients and customers, such and home buyers and home sellers, are not eligible.

Whats clear:

A year ago, pre-credit crisis, this was a borderline *yawn*, today its stands to be a pretty big deal.  Access to a credit union is a real benefit, yielding –>credit<– to its members using  their own underwriting guidelines, separate and apart from Big Bank or gov’t regulated programs.

Mortgages for those of self-employed and commission based income ilk don’t (really) exist in the mainstream anymore.  My opinion, which isn’t usually positive when it comes to NAR’s moves is just that, positive.  RFCU stands to provide real benefits to the member contingency, substantiating the dues to be a Realtor (INSERT COPYRIGHT SYMBOL HERE).

Whats speculation:

Right now, clients and consumers are not eligible as the RFCU is careful to not trip the line hypocritic with their hard stance against banks getting into the real estate sales industry.  But I can only wonder how ‘Americas Largest Trade Orgaization’ might choose to flex their lobbyist muscles in the future? NAR can actually compete with Big Bank lobbyists on Capitol Hill.

If the banks won’t lend in a common sensical fashion (a common theory), then consumers can’t buy…if consumers cant buy, then Realtors can’t pay NARs dues…NAR loses income and voices…

Does this ‘force’ NAR’s hands to get in the mortgage game?  The argument is compelling and someone needs to check the Big Banks actions.  The irony of NAR, recently accused of anti-competitive practices by the Dept of Justice, chipping away at The Banks increasing monopolistic nature would be great theater.

Do they push to allow clients access to RFCU mortgages?  Now that’s a neatly marketable reason of solid tangible value to use a Realtor (INSERT COPYRIGHT SYMBOL HERE).

(I know health benefits are important too…thats another subject for another day…)

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NAR Dipping Into The Mortgage Pool?

This entire post is based on The California Association of Realtors 2008 Home Seller Survey (released in July 2008, I just happened upon the PowerPoint presentation a few days ago) but the statistics are just as relevant today, if not more so…Granted this survey is but a snapshot of an industry, yet pictures are worth thousands of words…You can read the entire survey here.  (All statistical references in this post are derived from the aforementioned survey).

Public perception of the real estate professional and the greater industry is amongst the lowest of any on record.  Consumers are looking for an alternative to the ‘traditional’ Agent and they’re defining what this alternative is, yet relatively very few professional are heeding this demand and actually providing a tangible solution.  This Survey demonstrates to me that 90% of Agents are not providing what the consumer wants…and it is ALL ABOUT THE CONSUMER.

Personally I know alot of fantastic real estate professionals.  Genuinely great people, passionate, always striving to better themselves, their clients, the industry they serve and represent…they’re worth every penny they command…they dont suck…I’m just a sucker for a good title (no pun intended).  I could fill this page dropping names like Jay Thompson, Kris Berg, Missy Caulk, Bill Gasset and 30 others nobody has heard of as examples of who I consider to be the vanguard of where this industry should look to as ministers of positive change.  Unfortunately, they’re in the minority and a few good apples don’t ripen the bunch.

Agent Perception:  I can Has Consumer!

Talk to most any real estate professional and they will tout their expertise, knowledge and marketing prowess as the main reason you should retain their services.  Most will maintain that commission rates (should) mean very little to the consumer and they’re worth every penny.

Consumer Reality: You Suck!

According to the respondents:

Number One factor considered when choosing an Agent?  Lowest Commission.

Last reason?  Most knowledgeable. <– If this doesn’t snap you into reality, nothing will.

You’d best start putting your knowledge out there if you hope to attract a client…get a blogsite that rocks, start dropping neighborhood knowledge, get a killer IDX solution…substantiate your value!!  The days of being a prude with your listings and expertise until you had an executed contract are over.

I can find out more than you know.

~70% of respondents polled on ‘Information from The Internet vs Information from Agent’ indicated that the Net provided information that was as useful, ‘different’ or more useful than an Agent.  I can only surmise that ‘different’ means information an agent couldn’t or simply didn’t provide.  In the Age of Information, lack thereof is akin to being useless.

The ~31% that said The Net provided less useful information than an Agent are part of a 50% declining trend over the past 5 years.

You’re still (a) very necessary (evil?).

~95% of respondent sellers still used an agent, which makes perfect sense.  I often state that: While technology won’t replace a good real estate Agent, the Agent that properly utilizes technology will replace Agent that doesn’t.

Consider- 74% of 1st time respondent sellers considered not using an Agent, up 46% from 2007.

You can’t market your way out of a brown paper bag.

Of the reasons given for using an Agent only 7% said it was for ‘Better Marketing Exposure’.  Ummm, isn’t this what an Agent’s core value proposition is supposed to be, to market property?  Consumers clearly do not believe Agents can effectively market their property…yet online and offline marketing is the 1st and 3rd highest reason for choosing an Agent.  This is a huge disconnect and opportunity at the same time.

84% of respondent sellers are searching online and 96% Agents polled use print advertising. Helllllooo!?!  Can you say poor ROI, waste of money?  Newspapers and other print media are going out of business because less and less people read them.  Advertising in these dinosaurs is of almost no value going forward.

Only 57% of agents use multiple photos or a virtual tour as part of an online home listing.  This just blows my mind.  I’d guess that 50% of the 57% that actually use multiple photos look (kinda) like these:

Proper Feng Shui can do wonders for a small space.

Extra long chain for convenient access to light.

Sweet shower curtain stays with home!

Thanks to MLS Trash Can for the pictures.  Descriptions by me.

Seriously, an agent who can’t manage to market a property with quality photographs should have their license suspended on principle alone.

You’re being perpetually judged.

97% of respondents interviewed 3 or more Agents.  50% interviewed 6 or more Agents.  Consumers are getting more and more finicky about who they hire.  Agents better step up how they present themselves.  Better have an impressive resume and a killer suit = a slick engaging blogsite & robust IDX solution.

Here’s a scary thought (depending on who you are):

Consumers are lurking on your blog, stalking your FaceBook page, following your Twitter stream, viewing your Flickr account, reading your answers on Trulia, Zillow & ActiveRain, evaluating your IDX, the quality of your multi-media marketing, processing how you engage comment threads and otherwise perpetually judging you under the cloak of anonymity.

How are you representing yourself in public and when you don’t think anyone is looking?

The silver lining in this post could be that ‘The Bar’ is so low in a consumers eyes, those Agents willing to set aside their perceptions and confront reality are in a great position to capture some huge marketshare.  Take this information and use it to your advantage rather than deny its validity.

Many Agents are out there cleaning up despite this ‘depressing’ market…Find them, reach out to them, study their successes…I find the most successful people in life are more than willing to share their successes and help others get there too.  Reciprocity is still alive and well..

To hear more, check out this interview with Tim Harris…

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Survey Says…Realtors Suck

However, there are some interesting facts to consider besides traditional logic…

Contrived Attrition?

The ironic part is that the forces that helped bring this market to its knees may be the same that build it back up.  Let me explain…

Back in July 2008 I questioned whether some of ‘this’ wasn’t a bit contrived…I still do.

These two posts written in July 2008 speculated on possible alternative reasons Fannie and Freddie stock was plummeting…special note to the link citing the  Financial Accounting Standards Board decision to favor a simpler accounting method for Qualified Special Purpose Entities that serviced mortgages into securities for the benefit of adjusting distressed borrowers ARM’s.  What?  In a nut shell, at the end of the day, lenders wouldn’t be able to bury losses from the public’s eyes like they used to and their financial reports would suffer.

Coincidentally or not, on July 6, 2007 the SEC eliminated the ‘Uptick Rule‘ which was implemented in 1938 to curb the type of concentrated short selling of stocks where speculators make money when the stock price drops.

New accounting methods for financial institutions will show increased losses on paper, naturally priming the pump for plummeting stock prices.  Sans uptick rule, speculators smell bearish conditions and short stocks with fervor, driving companies and portfolios values into the ground.

By October 2008 blood was in the streets and investors start shorting financial institutions stocks in historical volume, acting as if they were…going out of business…? Fannie and Freddie are sequestered from the chaos.

Conventional money (401(k), Mutual Funds, regular people etc) got the hell out of the way and out of the market.  Institutional investors ate each other for lunch. Everything went ‘Pear Shaped’.  Many stocks are today worth less thah 50% of their value from 18 months ago.

The Government announces plans that they are going to Bailout ‘the worthy’ using a hodge-podge of methods, some useful others akin to little more than a circle-jerk, including buying preferred and common shares of these floundering financial (and related industry) behemoths that are ‘too important to fail’.

The Return of ‘Favorable’ Accounting and Keeping The Bears on a Leash…

March 10th 2009…The Dow surged 6%+ on the following news (Courtesy Wall Street Journal)

Federal Reserve Chairman Ben Bernanke said in a speech it was important to address the valuation of illiquid assets. Banks want leeway in accounting for illiquid holdings, and investors were encouraged by Mr. Bernanke’s statement, though he said that he wouldn’t support the suspension of mark-to-market rules.

“Bernanke said the magic words — that the Fed was considering looking at accounting standards,” said Fred Dickson, market strategist at D.A. Davidson.

It would appear after looking at yesterdays market swing that the accounting standards that Mr Bernanke is alluding to will favor banks, shoring up value in investors eyes, hence the mini-rally. Were his words transcribed as ‘We’ll let you get back to some creative accounting soon’

Barney Frank also stated the SEC may reinstate the ‘uptick rule’ as early as April, which has to re-establish overall market confidence by keeping the Bears on a bit of a leash, mitigating the extreme volatility.

Is it That Crudely Simple?

Was this all contrived to flush out all of the ‘toxic’ securities faster rather the wade in the muck for years?  Where the floodgates purposely opened only to close them back up when the time was right?

I’m often asked when I think the real estate and mortgage market will bottom out.  My answer usually coincided with the end of the 2-5 year period after NINJA (No Income/Asset/Job) loans were banished from the marketplace…around September 2007…so September 2009 is when support could naturally start to manifest.

There are now a myriad of artificial factors suggesting this ‘time to bottom’ could be ‘moved up’.  Coupled with the news yesterday, it very well could be sooner (end of ‘09) rather than later (end of ‘12).

A real sign that the markets are back on track would be when lenders will get back to sensible underwriting standards.  From 2002 to 2007 mortgage underwriting was as fast and loose as a brothel in Amsterdam.  2008-current, you can’t pull a pin out of a lenders ass with a John Deere tractor they’re so tight.  There is a middle ground, which is a topic for another post…

I’m not here to call the beginning of the end to these crazy economic times, there is still a looong way to go with many details to be worked out and ups/downs in front of us…I just can’t help but wonder aloud if aspects of this ‘economic meltdown’ weren’t contrived to push the crap out of the system quicker, knowing full well there would be (justified? acceptable??) collateral damage…It sounds ridiculous to say, yet resonates as plausible to the (my) mind…

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Contrived Attrition? Washingtons Play in The Fall and Rise of Wall Street

I openly laud some of the principles behind MObamanomics, such as:

“It will not help speculators who took risky bets on a rising market and bought homes not to live in but to sell” and “It will not reward folks who bought homes they knew from the beginning they would never be able to afford.”

Speculators should understand and realize the risk of riding an asset up and down.

MObamanomics looks to be far more proactive than reactive too, allowing consumers to qualify for assistance before they default on their mortgage (and lenders take a loss).  Though not by design, mandating that a consumer default before receiving help actually incentivizes them to do just that.

This is by no means a comprehensive analysis, rather the parts I can wrap my head around for now.  For what its worth, President Obamas plan is more aggressive than I had anticipated and he should be commended for having the cajones to step out there where many wouldn’t.

Risky loans, these aint no stinkin risky loans…

MObamanomics will allow Fannie and Freddie to restructure and/or refinance consumers with higher (than 80%) LTV loans on their primary residence that are already within their portfolio.  This aspect of the plan will increase the size of the conforming loan pool where consumers can swim…and thats a good thing.

Fannie and Freddie are typically barred from lending above 80% of a homes value or purchase price without Mortgage Insurance attached (that adds significant dollars to ones monthly payment -more on this below-) because mortgages with LTV’s above 80% are deemed risky by ‘the industry’- Heh.  20% LTV’s are risky with poor underwritng standards.   I’m sure that every mortgage that gets modified under this program will come with a borrower that can prove their income, has a solid credit score, a job and a few months worth of payments in the bank…what a novel concept.

Curious to how the plan will accomodate consumers who find themselves in homes worth less than what they owe.  Whether Fannie and Freddie or any lender will restructure a mortgage that is worth 125% of a homes value remains to be seen.

$75,000,000,000 in grease money…

Part of the $75B in The Plan will be used to subsidize the reduction of a consumers mortgage payment to as low as 31% of their monthly income.  The lender will initially need to make enough in concessions to get the payment down to 38%, then the government will match the lender dollar for dollar to get the payment down to 31% of a borrowers monthly income.  Someone did their research here, ‘discovering’ that high payment to income ratios are the number one cause of mortgage defaults.

The methods a lender uses to get borrowers payments down to 38%/31% could involve stretching out the term (from say 27 to 40 years), lowering the rate and/or the principle balance.  How they do this on an individual basis, when numerous loans were bundled together and sold to investment vehicles like mutual funds seems like a challenge to say the least.

The money will come in the form of $1000 when a lender initially agrees to modify a loan with another $3000 available for the next 3 years.  Many pundits will scoff at the idea of feeding the hand that supposedly slapped everyone…but this is 2009, traditional public facing politically correct economic strategies aren’t likely to work.  Traditional back door politics are in order here, gotta pay to get them to play son.  In any case I applaud the transparency.

MObamanomics shall also subsidize the mortgage insurance premiums that are typically required for Conforming loans with LTV’s higher than 80% at no charge to the consumer.  If the consumer defaults, the government picks up the difference above 80.01% of the value of the home.   This is actually a good idea that will directly benefit the consumer.

Alas, if the cost to concede exceeds the cost to foreclose I can’t see a lender using their moral compass over their financial one.

Borrowers who have lost their jobs or make far less than they did when they initially acquired the mortgage, are probably beyond help.

In the end, its still a voluntary program…lenders can cherry pick the situations they want to work with.  I fear the only way to make lenders play above aboard is the real threat of granting bankruptcy judges (with proper education) the ability to mandate certain loan modifications.

$200,000,000,000 in new money…

Supposedly there’s $200B on the table (up from $100B) for Fannie and Freddie to lend out, increase their portfolio size and remain solvent.

I suspect there will be stringent underwriting guidelines, as there should be, but I would implore the regulators to consider such crazy ideas like lending up to 103% of a homes purchase price for primary residences.  This sort of forward thinking, IMHO, would really jump start the purchase market.

All in all, I like where MObamanomics is going, it represents some solid first steps. Now there is more than just hope, there is a strategy…

…and there will need to be many more such steps to pick up the slack from the STAGGERING list of lenders no longer lending through various channels…

334. Perfect FHA - Wholesale
333. EquiFirst
332. Residential Loan Centers of America
331. CU National Mortgage
330. Colonial National Mortgage - Wholesale
329. U.S. Mortgage Corp. - Retail
328. First Interstate Financial - Wholesale
327. Realty Mortgage Corp.
326. Vertice
325. USA Home Loans - Wholesale
324. SunTrust Mortgage - FHA Wholesale
323. New South Federal Savings Bank - Wholesale
322. First Federal - Wholesale
321. 21st Mortgage - Wholesale
320. J.B. Nutter & Co. - Wholesale
319. Homebridge Mortgage Bankers - Refinance.com
318. 1st Republic Mortgage Bankers
317. Superior Mortgage Corp - Wholesale
316. Wall Street Financial Corp - Wholesale
315. Fairfield Financial Mortgage Group
314. Chase Prime - Wholesale
313. Sunshine & Madison Mortgage Corp
312. Liberty One Lending
311. Frontier Investment Co.
310. BankUnited - Wholesale
309. Solstice Capital Group - HSBC
308. MortgageIT
307. HCL Finance Inc. - Wholesale
306. LIME Financial Svcs. - Wholesale
305. Mortgage Network Inc. - Wholesale
304. Fortes Financial - Wholesale
303. HSBC Mortgage Corp. - Wholesale
302. CBRE Realty Finance
301. Franklin Bank, SSB
300. Mortgage Lion, Inc. - Wholesale
299. HMS Capital, Inc.
298. American Sterling Bank - Wholesale
297. CTX Mortgage Co. - Retail
296. Equity One Commercial
295. Coldstream Financial Svcs.
294. Banco Popular North America - Wholesale
293. Ace Mortgage Funding, LLC
292. E-Loan
291. Gateway Bank, F.S.B. - Wholesale
290. First Call Mortgage Co.
289. Downey Savings and Loan - Wholesale
288. Prospect’s Metrocities Mortgage - Wholesale
287. ComCor Mortgage - Wholesale
286. Chevy Chase Bank - Wholesale
285. Washington Mutual - Retail and Warehouse
284. Hometown Commercial Capital
283. Mid Atlantic Capital LLC
282. Kemper Mortgage, Inc.
281. Liberty Mortgage Funding Co.
280. Freddie Mac
279. Fannie Mae
278. Pacific Community Mortgage, Inc. - Gold Reverse, Inc.
277. Homecomings Financial, LLC
276. Thornburg Mortgage
275. CSB Mortgage
274. Carteret Mortgage Corporation
273. Accredited Home Lenders, Lone Star Funds - Wholesale
272. Western Residential Mortgage
271. Liberty Home Lending
270. Equipoint Financial Network, Inc.
269. Ideal Mortgage Bankers, Ltd. - Wholesale
268. Silver State Bank - Wholesale
267. Irwin Union Bank & Trust Co. - Wholesale
266. SunTrust Bank Equity Wholesale
265. Wachovia Mortgage, FSB - Wholesale
264. Lehman Brothers SBF
263. IndyMac Bancorp
262. Mortgages Ltd.
261. Wilmington Finance - Wholesale
260. Accredited Home Lenders, Home Funds Direct
259. Assured Lending Corp. - Wholesale
258. Homewide Lending Corporation
257. Vanguard Mortgage & Title, Inc.
256. Chase Home Equity - Wholesale
255. Chase Subprime - Wholesale
254. Evergreen Investment & Carnation Banc
253. Casa Blanca Mortgage/Shearson - Wholesale
252. Guaranty Bank - Correspondent
251. Citi Residential Lending
250. Montgomery Mortgage Capital Company
249. E*Trade Wholesale Lending
248. Shearson Financial Network, Inc.
247. American Bank Mortgage Group - Wholesale
246. AmeriBanc Corp.
245. Washington Mutual - Wholesale
244. Century Bank, F.S.B. - Wholesale
243. Diversified Mortgage, Inc.
242. National Wholesale Funding
241. Centennial Mortgage and Funding, Inc./Award Mortgage
240. Fidelity Home Mortgage Corp.
239. LMI Funding, Inc.
238. Millennium Mortgage - Wholesale
237. Origen Financial, Inc. (Correspondent)
236. CitiMortgage - Home Equity Wholesale
235. Bear Stearns Residential Mortgage
234. East West Mortgage Co. of VA
233. New Vision Residential Lending
232. Washington Savings Bank, F.S.B. - Wholesale
231. Macquarie Mortgages USA Inc.
230. Global Mortgage, Inc.
229. Unique Mortgage Solutions (UMS, LLC)
228. First Franklin - Merrill Lynch
227. First National Mortgage Sources
226. Resource Mortgage (Wholesale)
225. KH Financial
224. Lydian Mortgage
223. OMG Wholesale Lending
222. Saxon Mortgage (Wholesale)
221. Beazer Mortgage Corp.
220. Allpointe Mortgage (Broker Program)
219. Popular Warehouse Lending
218. Allied Lending Corp. (Wholesale)
217. BF Saul Wholesale Lending
216. Community Resource Mortgage
215. Lehman/Aurora Loan Services
214. Residential Mortgage Capital
213. Maverick Residential Mortgage
212. Countrywide Financial Corp.
211. First NLC Financial Services
210. First American Bank (Wholesale)
209. Soma Financial
208. National City Corp. (Wholesale)
207. Heartland Wholesale Funding
206. Homefront Mortgage Inc.
205. PNC Bank H.E.
204. Family First Mortgage Corp.
203. First Fidelity Financial
202. BSM Financial
201. 1st Choice Mortgage
200. Wescom Credit Union
199. Coast Financial Holdings/Coast Bank
198. WaMu (Subprime)
197. First Madison Mortgage
196. Southern Star Mortgage
195. TransLand Financial
194. Secured Bankers Mortgage Company (SBMC)
193. ComUnity Lending
192. Delta Financial Corp
191. BayRock Mortgage
190. Empire Bancorp
189. Option One - H&R Block
188. Citigroup - FCS Warehouse
187. Charter One (Wholesale)
186. Wells Fargo - Home Equity
185. Paul Financial, LLC
184. Webster Bank (Wholesale)
183. Fieldstone Mortgage Company
182. Tribeca Lending Corp. (Wholesale)
181. WAMU Comm. Correspondent
180. Marlin Mortgage Company
179. Countrywide Specialty Lending
178. UBS Home Finance
177. MortgageIT-DB (Retail)
176. Edgewater Lending Group
175. ResMAE Mortgage Corp.
174. Citimortgage Correspondent (2nds)
173. AMC Lending
172. Liberty American Mortgage
171. Exchange Financial (Wholesale)
170. FirstBank Mortgage
169. Bank of America (Wholesale)
168. Diablo Funding Group Inc.
167. Honor State Bank
166. Spectrum Financial Group
165. Priority Funding Mortgage Bankers
164. BrooksAmerica Mortgage Corp.
163. Valley Vista Mortgage
162. New State Mortgage Company
161. Summit Mortgage Company
160. WMC
159. Paragon Home Lending
158. First Mariner Wholesale
157. The Lending Connection
156. Foxtons, Inc.
155. SCME Mortage Bankers
154. Aapex Mortgage (Apex Financial Group)
153. Wells Fargo (various Correspondent and Non-prime divisions)
152. Nationstar Mortgage
151. Decision One (HSBC)
150. Impac Lending Group
149. Long Beach (WaMu Warehouse/Correspondent)
148. Expanded Mortgage Credit Wholesale
147. The Mortgage Store Financial
146. C & G Financial
145. CFIC Home Mortgage
144. All Fund Mortgage
143. LownHome Financial
142. Sea Breeze Financial Services
141. Castle Point Mortgage
140. Premium Funding Corp
139. Group One Lending
138. Allstate Home Loans / Allstate Funding
137. Home Loan Specialists (HLS)
136. Transnational Finance Wholesale
135. CIT Home Lending
134. Capital Six Funding
133. Mortgage Investors Group (MIG) - Wholesale
132. Amstar Mortgage Corp
131. Quality Home Loans
130. BNC Mortgage (Lehman)
129. First National Bank of Arizona
128. Chevy Chase Bank Correspondent
127. GreenPoint Mortgage - Capital One Wholesale
126. NovaStar, Homeview Lending
125. Quick Loan Funding
124. Calusa Investments
123. Mercantile Mortgage
122. First Magnus
121. First Indiana Wholesale
120. GEM Loans / Pacific American Mortgage (PAMCO)
119. Kirkwood Financial Corporation
118. Lexington Lending
117. Express Capital Lending
116. Deutsche Bank Correspondent Lending Group (CLG)
115. MLSG
114. Trump Mortgage
113. HomeBanc Mortgage Corporation
112. Mylor Financial
111. Aegis
110. Alternative Financing Corp (AFC) Wholesale
109. Winstar Mortgage
108. American Home Mortgage / American Brokers Conduit
107. Optima Funding
106. Equity Funding Group
105. Sunset Mortgage
104. Nations Home Lending
103. Entrust Mortgage
102. Alera Financial (Wholesale)
101. Flick Mortgage/Mortgage Simple
100. Dollar Mortgage Corporation
99. Alliance Bancorp
98. Choice Capital Funding
97. Premier Mortgage Funding
96. Stone Creek Funding
95. FlexPoint Funding (Wholesale & Retail)
94. Starpointe Mortgage
93. Unlimited Loan Resources (ULR)
92. Freestand Financial
91. Steward Financial
90. Bridge Capital Corporation
89. Altivus Financial
88. ACT Mortgage
87. Alliance Mortgage Banking Corp (AMBC)
86. Concord Mortgage Wholesale
85. Heartwell Mortgage
84. Oak Street Mortgage
83. The Mortgage Warehouse
82. First Street Financial
81. Right-Away Mortgage
80. Heritage Plaza Mortgage
79. Horizon Bank Wholesale Lending Group
78. Lancaster Mortgage Bank (LMB)
77. Bryco (Wholesale)
76. No Red Tape Mortgage
75. The Lending Group (TLG)
74. Pro 30 Funding
73. NetBank Funding, Market Street Mortgage
72. Columbia Home Loans, LLC
71. Mortgage Tree Lending
70. Homeland Capital Group
69. Nation One Mortgage
68. Dana Capital Group
67. Millenium Funding Group
66. MILA
65. Home Equity of America
64. Opteum (Wholesale, Conduit)
63. Innovative Mortgage Capital
62. Home Capital, Inc.
61. Home 123 Mortgage
60. Homefield Financial
59. First Horizon Subprime, Equity Lending
58. Platinum Capital Group (Wholesale)
57. First Source Funding Group (FSFG)
56. Alterna Mortgage
55. Solutions Funding
54. People’s Mortgage
53. LowerMyPayment.com
52. Zone Funding
51. First Consolidated (Subprime Wholesale)
50. SouthStar Funding
49. Warehouse USA
48. H&R Block Mortgage
47. Madison Equity Loans
46. HSBC Mortgage Services (correspondent div.)
45. Sunset Direct Lending
44. Kellner Mortgage Investments
43. LoanCity
42. CoreStar Financial Group
41. Ameriquest, ACC Wholesale
40. Investaid Corp.
39. People’s Choice Financial Corp.
38. Master Financial
37. Maribella Mortgage
36. FMF Capital LLC
35. New Century Financial Corp.
34. Wachovia Mortgage (Correspondent div.)
33. Ameritrust Mortgage Company (Subprime Wholesale)
32. Trojan Lending (Wholesale)
31. Fremont General Corporation
30. DomesticBank (Wholesale Lending Division)
29. Ivanhoe Mortgage/Central Pacific Mortgage
28. Eagle First Mortgage
27. Coastal Capital
26. Silver State Mortgage
25. ECC Capital/Encore Credit
24. Lender’s Direct Capital Corporation (wholesale division)
23. Concorde Acceptance
22. DeepGreen Financial
21. American Freedom Mortgage, Inc.
20. Millenium Bankshares (Mortgage Subsidiaries)
19. Summit Mortgage
18. Mandalay Mortgage
17. Rose Mortgage
16. EquiBanc
15. FundingAmerica
14. Popular Financial Holdings
13. Clear Choice Financial/Bay Capital
12. Origen Wholesale Lending
11. SecuredFunding
10. Preferred Advantage
9. MLN
8. Sovereign Bancorp (Wholesale Ops)
7. Harbourton Mortgage Investment Corporation
6. OwnIt Mortgage
5. Sebring Capital Partners
4. Axis Mortgage & Investments
3. Meritage Mortgage
2. Acoustic Home Loans
1. Merit Financial

List courtesy of The Mortgage Lender Implode-o-Meter

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Obamas Aggressive Mortgage Recovery Plan is Unveiled

What the hell is this?  My kindergarten drawing of what happened to the mortgage industry and why so many homes are in foreclosure or heading there.

The black dots represent the relative amount of people who have/need a mortgage.

The gray circle represents the size of the pool of available mortgage programs prior to ~August 2007, i.e. the sub-prime and Alt-A market.

The white circle represents the size of the pool of available mortgage programs today going forward, i.e. Conforming and FHA.

The gray circle has since evaporated.  No new sub-prime or Alt-A loans available.

There are far less people who fit into the white circle.

That leaves a bunch of black dots that cannot get a mortgage anymore.

If you’re a black dot that has a sub-prime or Alt-A ARM and it adjusts for the worse, dont have the credit/financial strength to qualify for a Conforming or FHA loan (fit in the white circle), your stuck.  Pay the higher monthly payment, sometimes as much as 50% higher, or lose the home to foreclosure.

Thats leaving a bunch of houses empty.

End of story.

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Circles, Dots and Mortgages

And…I’m back, with my longest title and quite a rambling, yet thoughtful post.  Although I could have posted here and there, I just haven’t been compelled to do so.  When the itch would hit, I’d often read well articulated similar opinion else ware.  Anyway…

Before I get started, a quick note:  Inman Connect NYC 2009 is just around the corner (…this Wednesday, Jan 7th 2009, this post has been sitting on draft for about 2 weeks, whoops…).  No, I’m not speaking, but I will be there so if you were on the fence about going, you can officially go buy your tickets now.  The day prior to Connect NYC 2009,  REBarCamp NYC is a go as well at the Mariott Marquis on Jan 6th.  <<–A Cannot Miss.

So, I’ve been running my mouth about this word called ::Transparency:: for a few years now.  When you wax philosophic on a topic for so long, watching it manifest in the main stream elicits redemptive emotions.

What is Transparency?  The word has a far reaching and fascinating taxonomy depending on what the corresponding topic is. Generally, its a noun that suggests that the given topic can be seen and understood clearly with little left to the imagination. Transparency fosters a greater sense of awareness around a given topic.  Most people will say that greater transparency regarding a given topic is generally a good thing.

So, is Transparency a good thing for business?

On paper, as an ideology, Transparency represents practices performed in a more truthful, enlightened and thus positive light.

In practice, in real life, Transparency tends to compromise established industry’s, institutions and individuals ability to continue to function as they traditionally have, more often than not with extreme deleterious consequences to a rigid status-quo.

You can’t handle the truth! - Colonel Nathan Jessup.

Copious amounts of raw disseminateable data, a byproduct of our progression into the The Information Age, has catalyzed the virility of Transparency creating fast moving paradigm shifts that corporations and industry stalwarts are simply unprepared to handle.  Transparency exacerbates underlying ‘issues’ and causes rapid disintermediation to legacy industries like ::wait for it:: real estate (and mortgage).

The writing has been on the wall for years now:

• From 1997, Clayton Christensen’s The Innovators Dilemma articulates that a ’successful company with established products will get pushed aside unless managers know when to abandon traditional business practices.’
• From 1999 Blown to Bits states that “the Internet and other technological innovations are changing the basic structures of most industries and simply destroying the remainder.” and “Increasingly, your customers will have rich access to a universe of alternatives, your suppliers will exploit direct access to your customers, and your competitors will pick off the most profitable parts of your value chain. Your competitive advantage is up for grabs.”

Transparency has brought many an industry to its knees.  While it seemed like a good idea at the time, it’s clear today that the money that was printed to create the Mortgage Backed Security Market created a bubble that popped.  Consequentially bubble based business models are taking it on the chin, drawing out the knee jerk reaction of indiscriminate cost cutting.  As a business, trimming unnecessary fat is very prudent right about now, but what shouldn’t be ignored is investing in the type of innovation required to compete for future discerning consumers (and agents).

Today, more than ever, its time to ‘abandon traditional business practices’ if you want to stay in business much less maintain a competitive advantage.

Back in late 2007, I quickly rambled about three topics that represent vanguard of the future of real estate:

1. Compensation reformation or divorcing real estate commissions is coming, since inter-broker compensation can be handled outside of the traditional MLS…A different version of the same thing isn’t a viable solution and mass adoption of isn’t probable considering the openness of the technology landscape, 2007-08 forward.
2. Zillow and Trulia aren’t it either…Both well funded 3rd party destination real estate information websites business models revolve around advertising. Advertisers pay money to players like Z & T because consumers are carousing their sites, not an agents or brokerage, so it would seem fair to say that both entities would like to keep the consumer there. This isn’t a knock against either company, they do what they do and make no bones about it, however their respective agendas don’t line up with the individual agent…
3. An application (technology, widget, et al.) that allows for a real estate professional to ’share’ their valuable information and market their services to others within similar spheres, while insuring an acceptable assurance of reciprocity has yet to be identified…though it should involve a strategy that implements an open Social Networking Optimization framework that allows birds of a feather to flock and fly together…

1)  Compensation reform (initially) on the Broker to agent level (CGI splits, desk fees) is manifesting out of brute downward pressures on the market: depressive home values, heavy inventory and lack of credit.  These conditions are pushing many agents out of the industry and causing the best agents to become rather brand or franchise agnostic, perpetually asking:  What have you done for me lately?  Loyalty means little in a Bear market.  Broad compensation reform between agent and consumer is an inevitability.

2)  My overall point that the agendas of the Zillow’s and Trulia’s of the world don’t line up with the individual agent brokerage is shared and expounded on (far better than I could) by my very smart friend Rob Hahn. How long is it before a critical mass of the best agents adapt to open their own (very virtual) brokerages, adopt these types of sites as primary marketing channels, utilize their superior products and services in place of the expense of affiliating with a broker-franchise-brand that provides diminishing, even negative value?

3)  The ‘open web’ proliferated by the likes of Facebook Connect and Google Friend Connect offer the ‘open Social Networking Optimization framework’ described above on highly scalable and cost effective levels.  Aggregating and sharing granular information has never been faster, easier or cheaper with free communication syndication platforms like blogs, Twitter, FriendFeed and FeedFuze.  Agents that have learned to harness these tools and services don’t need to work for a major brand to succeed.  They are becoming the brand.

Instead of dismissing these thought threads and seemingly diminutive products and services, real estate Franchises and Brokers would be wise to listen, adapt and adopt before they trip the line irrelevant.  Over the past couple years a new position within the social spheres of the online real estate industry has popped up:  Director of Social Media.  It’s a fancy name for someone who knows how to communicate online using the products and services mentioned above.  Broker-Franchises should also seek ‘Social Media Directors’ and promote them from within their current contingencies.  They represent a worthy investment as these folks have learned how to leverage information and create conversation around themselves and/or their business far more effectively than traditionally expensive marketing campaigns…they represent the future of real estate.

The generation that will pull this recession up from the depths knows nothing but the internet and how to communicate with the world using its cornucopia of social products and services.  Tech savvy consumers will only connect with similarly tech savvy real estate professionals.

To tie this all together, I don’t believe the real estate market will simply correct without major Transparent changes from and by the people who serve it.  With money continuously being printed and infused into our economy, when things do turn inflation will be hard to control.  Real estate is usually a sound hedge against inflation, as real assets typically rise in value in relative correlation with inflation percentages.  These aren’t ‘usual’ times.  When real estate values do stabilize (aka bottom out), monetary inflation will likely increase at a hefty tick, further diminishing the buying and borrowing power of most people.  Tough times are still ahead, there is no quick fix.  Consumers will demand (and need) great service for less cost, or they simply won’t buy.

The agent and business who ends up succeeding in this market will be the one who kept one eye on cutting costs and the other on investing in innovative resources, specifically industry relative content syndication applications like the examples mentioned above, and other similar technologies that promulgate Transparency.  On the upside, these tools and technologies are rolling out cheaper and better than their predecessors…evaluate, adapt and adopt…or start looking for a new career.

::Done Rambling::

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Pending Death and Future Living. Transparency, Technology, Social Media, Business Strategy, With Some Economics Sprinkled On Top

Between all the yelling and screaming three points are compelling to me.

1.  The FBI is investigating every company that is ripe for or has already received a ‘Wall Street Welfare Check’ (aka bailout), for fraud.

Whats does this mean to me?  The politicians have called in the hounds to flush out a few scapegoats.  Considering there is a very fine line between a ‘high risk investment’ and ‘fraud’, there is a lot of chalk dust being kicked up right now, blurring those lines.  Yesterdays ‘investment’ looks to become tomorrows ‘fraudulent transaction’.

Politicians, never afraid to insert sharp objects into the dorsal side of public adversity (even if it was very recently a friendly opportunity), appear to be on a witch hunt, ready to burn the C-Suite executives that ran their personal beltway lobbyist cash machine Company’s on Wall Street at the stake in an epic public spectacle.

Seems to me that Washington will blame this entire mess on the ‘monsters’ they helped create and took gobs of cash from (legally of course), still profit from it all and then claim they did everyone a favor by cauterizing losses now instead of letting the bleeding continue at a far higher cost.

2. The S.E.C. has banned short selling on over 1000 different financial institutions.

Shorting stock is the equivalent of betting that a companies stock price will fall, and profiting from that fall, should it happen.  Short selling is the reason you hear people say that you can make money when the market is going up and down.   Heavy ’shorting’ tends to drive down the price, value and thus liquidity of a company.

Apparently a vast majority of the the recent ’shorts’ came from overseas, most specifically London’s and Dubai’s markets.  London has also initiated a similar ban.  Is it possible that there is a case of ‘economic terrorism’ here?  I’m not usually one for conspiracy theories, and usually brush off such notions for what they’re worth, but this one has me thinking…it is plausible.

The government could never lend credibility to this theory even if it were true or our entire economy would sink faster than the Titanic.  Consumers would withdraw all their money from financial institutions, go all 2nd Amendment and bear arms, looting and rioting would probably ensue.

A more likely explanation lies in the fact that if the Government is going to write a check to bailout a company, they don’t want anyone ‘riding down’ their investment any further.  In any case, banning a practice that’s been part of a capitalistic ‘free’ market almost since its inception is…interesting?

3. Warren Buffet is back in the game.  He made a $5B investment in Goldman Sachs which would lend one to believe that one of history’s savviest, fundamentally sound investors believes the market is at bottom or damn near close.

The deal was a sweet one for Berkshire Hathaway…Buffett paid a low price, got a high return (yield) and insulated it all with attractive warrants that are already well in the money, all for Wall Streets strongest name, Goldman Sachs.  Maybe the man with a name and credibility almost as big as his wallet can infuse some much needed confidence into our battered economy.

Whatever happens from here forward, getcha popcorn ready…it’s going to be great theater.

Aside: Someone better watch Lou Dobbs before he goes postal and starts ‘offing’ politicians.  Lou’s pretty pissed about all this.

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Political Fear and Loathing on Wall Street

No comment on why rates a slightly higher today even though Treasuries are lower…Maybe I need an abacus.

In any case, rates are still low but trending higher.

Conforming 3 Year ARM

Conforming 5 Yr ARM

Conforming 15 Year Fixed

Conforming 30 Yr Fixed

Wholesale direct Conforming rates and pricing shown are based on the variable factors below:

• Primary Residence
• Purchase or Rate Term Refinance
• Single Family Residence
• Loan To Value Ratio <80%
• Credit score <720
• Debt To Income Ratio <42%
• Loan Amount $100,000 to $417,000
• Fully Documentable Income and Assets

For a detailed explanation and definitions click here.

Information is derived directly from wholesale mortgage banks inter-daily program and pricing sheets and is deemed reliable but not guaranteed.

Mortgage rates and pricing may change up to 3 times daily, check often.

Rates and Pricing Provided by RateSpeed…

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Wholesale Conforming Mortgage Rates and Pricing 9/18/2008

Blood in the streets folks, watch your step…

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Yet Another ‘Black Monday’ on Wall Street

Rates bumped up considerably late today losing everything they gained yesterday afternoon.  Expect sideways adjustments for awhile as Wall Street gets its bearings back about it.

In any case, rates are still low low low…

Conforming 3 Year ARM

Conforming 5 Yr ARM

Conforming 15 Year Fixed

Conforming 30 Yr Fixed

Wholesale direct Conforming rates and pricing shown are based on the variable factors below:

• Primary Residence
• Purchase or Rate Term Refinance
• Single Family Residence
• Loan To Value Ratio <80%
• Credit score <720
• Debt To Income Ratio <42%
• Loan Amount $100,000 to $417,000
• Fully Documentable Income and Assets

For a detailed explanation and definitions click here.

Information is derived directly from wholesale mortgage banks inter-daily program and pricing sheets and is deemed reliable but not guaranteed.

Mortgage rates and pricing may change up to 3 times daily, check often.

Rates and Pricing Provided by RateSpeed…

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Wholesale Conforming Mortgage Rates and Pricing 9/16/2008