Bank Charges May Surge as Mortgages Marked to Market (Update1)
By Elliot Blair Smith
The process will "put a lot of them out of business," Amaya says. "There's going to be some hard, short-term pain that needs to happen in order for us to start rebounding." (NOTE: It is true from a perspective, but not all the spectrum. Do we have a better choice? Even I can't promise, things are not so dimmed.)
Ernst Henry, 43, a respiratory therapist in Charlotte, North Carolina, responded as skeptically as Greenberg had after receiving a solicitation from NAD (National Asset Direct) early last year.
"My initial instinct was to shred the letter," he says.
NAD's Hussion says the company bought Henry's $149,900 loan on a four-bedroom rental property for $94,296, a 37 percent discount from the unpaid balance. Yet with the mortgage market collapsing and the appraised value of Henry's property declining, Hussion says she struggled to refinance the debt.
Henry balked at her offer to cut the principal by about $50,000, contingent on his paying $8,000 in closing costs.
"I'm giving you $50,000. Give me the eight, stop complaining!" Hussion says she told him, raising her voice.
That got Henry's attention.
"It made clear sense to me," he says now.
He took the offer.
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Ha! Ha! Ha! I've known that bankers increased their fees and FDIC charged more insurance premium on bankers already. See everyone has different perceptions, even with this long article. The section I am interested most in the article is the last few sentences quoted above which may be the least concern of the reporter.
Why? I am smiling at it with my appreciation on an experiment confirmation to some practical ideas which has proved there is no need to change the basic game rules as Obama has done or determined to do those Dem's bullshit plans.
Finally, there is a news repost. I can see someone is doing a partial vision of my ideas on a broader scale. It took at least 1 year for someone like NAD doing one of my ideas expressed here in AR, by one of the ways I have in my mind long time ago, in making money in this downturn market.
NAD is doing good in seeking profit. Look at the Bloomberg's report (web-link provided as above), those few last paragraphs pleased me so much. Seems Henry got the deal by reducing his loan principal amount from almost $150K to $99,900 and How much the NAD cost is? Did I hear "$94,296"?
Wrong answer! Anyone has "software" knowledge of real estate trust deed purchase knows that. Did you recall there is "$8,000" upfront fee from Henry? That fee is called "point" in terms of mortgage jargon or "Buy Down." So NAD's real cost is 86,296.00. However, the NEW loan interest is charged and based on what? Yes, you are right, it is $99,900, not $86,296 or $94,296.
So there is roughly a built-in (or call it "intrinsic") interest "surcharge" of 15% of Ernst's paper rate ($14K divided by $86K= 15%) as opposed to a banker's new loan. Say the real interest rate for NAD is 9.2% (APY) istead, if Ernst sees it clearly put 8% (APR) in his document. (now can you see what I said: "two sides of a coin" or a "win-win" situation by thsoe real estate gurus?)
Nothing in the report mentioning about old or new interest rates for Ernst as in Patricia Greenberg's case. I don't want to go into detail analysis about NAD's profit. All I want to say is NAD is doing great.
No matter what took place, every party involved here is naturally happier than yesterday. Ernst, NAD and the banker who sold NAD his note. (Nobody points a gun at his head to sign the contract of assignment, right?) That's the nature beauty of capitalist market. Unlike government interference, all the programs made by GWS or Obama incurred objections, complaints and injustice. In this case, anyone, including you reading my article, is going to blame anything? Tell me about it, please.
NAD is not good enough for me to grade them "excellent." They produced social or marcroeconomic effects, not only providing home owners "affordable" housing but also creating jobs, etc. However, NAD seems far behind my performance criteria: 1) making 100-150% profit immediately (NOTE: for charity reason, we may set the goal for 50-100% profit or less in a year); 2) cut the original homeowner's monthly payment in half. Why they miss the goals I set in November 2007? Simple, they are missing the other side of coin my vision has been on.
From my obersevation, a few people are working the way I figured out and they are probably on the other side of coin or both sides. They are doing great in the past five years. I can see their business expand from a certain area into nationwide, such as Worldplus (starting from California into the vicinity of states) or Harley (starting from Florida into Seattle). Probably, they are a private investor looking for their pot of "gold" by digging out others' trash. Sorry I have no way to know how they are doing, but I will assume they have made some real money to expand their business. They may not have a non-profit charitable cause in mind, to effectively help the poor folks while revitalizing our housing or national economy.
Well, I told you that it would be so simple and nature to rescue or revitalize our economy if those people in power could do it right. When I mentioned it 15 months ago, probably nobody will look at me without difficulty to have a "You are just Bullshit Bragging Yourself" idea kept popping up in his head. Now, NAD comes up and do it half way I have in my mind. I am so glad, even NAD just did it with the half performance or achievement I want.
I did it all by myself in the past with my successful cases, on a very local basis without influence to our national economy. So far, no case failed and all successful, to meet the above two criteria I set.
However, without the fund support from someone like DellaCamera, I am still down here in Texas and feel so sorry to be unable to do something as I said "to only provide real good, solid and practical stuffs to the weak publics."
Okay, so I told you, didn't I? Let me prove it to you. Please go back and read my article post here in November 2007: A Funny World (6-1): Talker with Lips, Doer with LPs
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花花世界走馬燈集(6-1): Talker with Lips, Doer with LPs |
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| 時事評論｜財經 | 2007/12/03 02:13 ｜ |
For an example, one of my neighbors had his home foreclosed on Nov. 6, 2007.
It is too late for me to work on when I knew it. There is only 3 days left for me actively and positively "attack" from the other side. [in fact, there is one business day since it is a weekend.] They owe a bank $82K that is the minimun bid amount on auction block.
The real market value is lower than $60K.
If they let me know earlier and give me at least 2 weeks to work on. It is very possible for them to stay at their home now. They may be able to owe a new loan of less than $40k and pay 50% less of monthly payments. It is a very possible practical goal for me to reach.
BTW, you guys may ask what's in it for me since you know I am very selfish and good at return calculations?
Ooh! you are smart to ask! Let me tell you, it won't make me feel guilty to my pre-set investment goal: 200% return in a year.
How can I do it? That' what I mean the other side of a coin: know the "sofeware" real estate well enough to set your own rules to play with a lender shark, not to follow theirs.
If I go out to help the general public with less funds those organizations have, believe me I won't talk about those public or private useless plans that are at the mercy of those greedy lenders.
I won't do lip service to give advice and comfort only.
Trust me I will use my expertise and the rational market forces to only provide real good, solid and practical stuffs to the weak publics.
In other words, the paper says, if the government tries to save taxpayers money, many people will lose their jobs and the whole economy will suffer.
The research note offers a solution any banker would love: The government should "estimate the highest price it can pay for the various toxic assets on financial institution balance sheets," then pay that price to buy them.
We figured Simon Johnson, a professor at the Massachusetts Institute of Technology, should argue it out by phone with Joseph LaVorgna, chief U.S. economist for Deutsche Bank and the man who wrote the paper.
*** *** ***
What you think about the above article releasing a honest Deutsche Bank economist Joseph LaVorgna's simple solution?
Well, to me, it is telling a truth; but it is a partial truth to a banker, not the whole truth to the people. Due to its confusion, I changed the title in my comment on other website into the topic as follows:
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Whom are going to be hurt by the bailout as the report claimed? The greedy bankers at Wall Street or the prudent Joe on Main street?
Mr. LaVorgna may have his good underlying assumptions. However, he is too narrow himself in Finance Ivy Tower (I don't want to say he has an invested interest in it) and doesn't see the whole true picture in terms of political-ecnomic viewpoints. Most likely, his statement is too absurd to assume CATS and PEOPLE are the same and on the same boat with the same fate.
Not true, the big ship may sink; but the small live boats are floating to survive, right? To me, the victims shall be those big reckless fat cats. Unless we the people let Uncle Sam keep doing what those fat cats want as LaVorgna believes, both of us will sink. We the people shall overcome if we can cut the ties to those too big to fail, in time.
Is there only this solution to lead the American people holding the bag? I doubt it unless Obama is unknowingly "cooperating" with Wall Street to do those "stimulus" plans figured out by Tim Gaithner and Pelosi.
If Obama can do the right things, most of American people is not going to be hurt. How can Obama do the right things besides his "big" socialist mouth? Well, you tell me what you think first. Then, I will use CDS (credit default swap) and the event of a projected event of California Monster Earthquake (or Katrina Hurricane) as example of analogy to explain the situation we are facing now.
It is very simple for You to clearly see through the mess and understand what I mean. You won't believe Joseph's solution by pointing out his simple-minded way of thinking and laughing at him by confidently saying: "We people won't get hurt."
It is a choice of us, or maybe Obama's.
See we are so different!
The VIP have their top priority: Bankers.
As to me, a VSP, I have my bottom line: the grass roots of our American society.
Well, they are up there in the sky (or sick) branches; I am down here to the core roots.
Well, they want to inflate ABS value and keep housing price flying up through TARP for them to play with as a toy game; I just want housing price falling down to earth like the dust rests fast and in peace to be a shelter affordable to our Main Street Mr. Joe and to be a solid ground for a new growth of our national economy.
 House |
Condo |
Total | |
| Total Homes for Sale | 264 | 26 | 290 |
| For Sale By Owner | 2 | 0 | 2 |
| Bank- & MLS-listed Foreclosures | 142 | 9 | 151 |
| Median List Price | $99K | $186K | $100K |
| Median Sold Price* | $90K | $205K | $92K |
| Median List Price/Sq. Ft. | $90 | $141 | $92 |
| Median Sold Price/Sq. Ft.* | $81 | $163 | $83 |
| Median Days on Redfin* | 76.5 | 82 | 77 |
| % Homes with Price Reductions* | 50.9% | 60.9% | 51.6% |
| Median # Reductions* | 2 | 1 | 2 |
| Median Total % Reduction* | 27.5% | 16.0% | 25.2% |
| % Sale to List Price* | 96.5% | - | 96.7% |
Well, they want to use government intervention to ease the gravity to increase the value, if any, of Trouble Asset (the first two letter of TARP.) I prefer to let the nature run its course, continue the driving inertia of the above curve in the case mentioned and finanlly and naturally go to an equilibrium, even the speed of falling has increased.
Well, they love to play a role as my rich grandpa did to my junior uncle: give monthly petty allowance to subsidize those misfortune in order to show they are "Big Brothers" with huge capability and so persistent charitable kindness. I will take a totally different approach to trust our people by giving them a lump sum of money, at least enough down payment or seed capital, to do or initiate whatever they want.
I mean I will try give them a "free and clear" permanent housing, if possible, instead of helping them pay rent. For example, in the case I referred to, that means I will give the poor a house of $25,000 immediately, not trying to keep the bubbled price of $338,000 up in the sky high and then try to "reduce" the principal or to "modify" the terms of loan in the name of my "mercy."
In other words, I will let them have no problem to go fishing by themselves, not give them a fish by me and pride myself by so-called "charity" or "government welfare plans" when they cry out of hunger. Please, with your deep kind and calm thoughts, take a good look at the article: Homelessness Official Wins Praise With Focus on Permanent Housing
Well, they love to show you that they are working hard day and night everyday to deserve the salary and hope; I am just a lazy guy who doesn't want to be a stock day-trader, did I say that before?
So to speak, different people, different position, different life style. I understand.
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the fed Bernanke: Fix banks first (Note: fix shall be changed into "feed") Fed chief says government's top priority is restoring financial stability to the system and that next year could be one for recovery. • 19 banks eligible for common infusion • Banks must give Fed notice of dividends |
Date Event Price Appreciation Source
| Feb 19, 2009 | Listed | $45,900 | -- | EBRD #40*****2 |
| Dec 30, 2008 | Sold | $36,000 | -79.1%/yr | Public Records |
| Aug 03, 2007 | Sold | $328,086 | -8.0%/yr | Public Records |
| Jul 25, 2005 | Sold | $388,000 | 22.2%/yr | Public Records |
| Aug 01, 2000 | Sold | $143,000 | 5.7%/yr | Public Records |
| Aug 26, 1991 | Sold | $87,000 | -- | Public Records |
| Taxable Value | |
| Land | $237,268 |
| Additions | $66,732 |
| Total | $304,000 |
| Tax (2008) | $5,792 |
(NOTE: For the same house, it would be much appreciated that I would be charged 20% interest on the base price of $30,000. It is much much much better than those Bullshit plans like Ms. Bair's "modification" plan that proposes to charge me 4% interest based on $350,000. I would be better off if our government people do nothing. Am I a nut without reason? Please tell me my reason leaves me, when and where? )
**** ****
I am probably able to get this house for anyone in San Francisco area for $25,000 or less (in AS-IS condition). See almost anyone can get this house free and clear without monthly payments, i.e. Uncle Sam pays at least $1,000 rent or tax credit EVERY MONTH for the family. The family has extra disposable money to spend to give business the opportunity to make profit.
What is the recession we are talking about all day long once stocks plumeted in the past 1 year like this one Consumer confidence plummets to new low in Feb. (AP) ? Who cares about tax credit as a big brother doing unto us a BIG favor? Everyone is willing to pay taxes; save your human power to process those tax credits, Big Obama spenders!
Obaman doesn't look things this way and tries to do the opposite. If we change our view and look the other side of coin, why we have to keep saying something like this: consumers grow more fearful?
Well, everything can be viewed from different angles. It depends on where you put your ass on or more politely which side of the table you sit.
My resolution is simple, lazy and natural as my philosophy of life. I will take "bottom up" approach to solve the current recession before those VIP turn it into other historical DEPRESSION by their "top down" approach taking care of those big fat cats first.
Give me just a tiny part of so-called Bush's TARP of $700 billions, or Obama's Revitalization (TARP II) of $800 Billions; or the coming next $400 Billions Spending legislation proposed by those DEM Congressmen last weekend. Say, just give me $200 million of fund. Let's see who is in much better position to IMMEDIATELY revitalize the economy. No mistake made here, it is a M(illions) instead of their B(illions.)
Who is right? Who is wrong? 看誰煩惱『揚湯止沸』一週造箭十萬支﹖看誰安怡『吃報紙看茶』釜底去抽薪﹖看誰陽剛雙節棍﹐過硬強力堵洪﹖看誰四兩太極﹐輕輕柔情可順水﹖
Don't even worry about it; History will tell if there is a Obama style of Hoover-Roosevelt Depression in the years to come.
AP - Americans' already battered confidence in the economy went into free fall in February, sinking to new lows as consumers grow more fearful over massive job cuts and shrinking retirement accounts.
Stanislaus leads state in home affordability
The new calculations show that Stanislaus's median-income families now can afford to buy 71.1 percent of homes on the market. Three years ago, just before the housing bubble burst, only 3 percent of Stanislaus homes were affordable to median-income families.
In Merced, the percentage hit 70.9 percent and in San Joaquin it is 66.4 percent.
It's great news for those wanting to buy homes, but lousy for current owners and those needing to sell. That's because homes have become so affordable due to plunging prices, not soaring incomes.
The National Association of Home Builders/Wells Fargo Housing Opportunity Index released today calculates that Stanislaus home prices peaked at $387,000 during the fourth quarter of 2005. The index shows median home prices plummeted to $160,000 - a 59 percent drop - by the fourth quarter 2008. The median income in Stanislaus County is $56,500.
*** My 2 pennies ***
This is the way as reported, in which we can solve housing downturn NATURALLY. That's the beauty of nature! It has been done without human artificial intrusion, interference and manipulations, am I right?
Spending randomly is NOT the way. Obamanomic is going to create more problems to it, not solving it.
Well, there is no free lunch. Obama's spending mania has to get some supports from taxpayers in addition to money, am I right? No big problem! Our DEM can wisely figure some ways out with beautiful sweet words and decent causes behind it. Don't believe me? Seems we can see the VMT Tax pretty soon, just right at the corner. Let's enjoy VMT!
BTW, what VMT stands for? Sure, you're right, it is not "Very Minimun Tax." It is a tax based on Vehicle Miles Travelled. Maybe, we are going to pay 25 cents per 4 miles we drive as proposed, i. e., $1 per 16 miles (NOTE: my 1990 Mercedes 560 has no problem to meet this standard. How about your Suburban?)
So, let you enjoy your saving by buying a energy-saving car that, thought compacts you and your family into a small box, gives you 40 miles per gallon; but don't forget to pay your share of $2.5 a gallon when you drive, Okay?
I love America and support Buy America enough to go for GM's Hummer or Suburban that either helping US economy in general as well as the 3 American automakers, or giving me an implied subsidy of $1.5 per gallon (you pay $2.5 minus my pay $1= reward of $1.5), right?
Don't argue with me that there is no consistency in Obamanomics, particularly its energy efficient car plan. It is very in line with Obama's master mind in dealing with financial crisis. What is that? Reward the bad and reckless, and punish the good and prudent. Well, that's maybe too strong for a nice guy as Barrack. Let me clarify it. I'd say he is not a person intending to do things like "privatize profits," but he is a big brother loving to take care of everyone, no matter good or bad, enough to do "socialize losses." In fact, He has a bigger heart, almost like a Bhuda who will scarify himself into Hell to rescue the worst person.
Let's say, he is trying very hard to stop housing price falling as Don Quixote was so brave to stand up with an ideological mind "social responsibility," like his supporters Kathleen Day of the nonprofit Center For Responsible Lending. She said in a report Some denounce Obama's homeowner rescue as unfair: "This is the financial equivalent of what Hurricane Katrina did to New Orleans. Did they know they were living below sea level? Yes. Does that mean we shouldn't help them? That's ridiculous."
(NOTE: Yes, it is absurd! I mean, Kathleen's opinion is the most ridiculous words I have heard recently, even I am a news subscriber and supporter to her organization. Well, it is a value she chosen. May I ask: "Kathleen, will you jump into a trouble water to help someone drowning if you don't know how to swim, i.e., you have no sufficient competency and may lose your life, too? That's REALLY ridiculous if I ask you so doing, right? Sorry, I am an individualist and capitalist, too selfish and realistic to dare to push you into the river, in the name of social responsibility.)
Well, let's forget home affordability for now and just pray to God give Barrack His All Mighty Power to house all people into a McMansion they can't afford as God gives his small cake to feed all the followers. At least, pray to God that He doesn't let the kind Obama kids prolong the recession into a Great Depression as FDR did 79 years ago.
As Ronald Reagon forgot, I don't remember anything. Did I work there in that little white cloudy house? Are you sure that was ME up there? How come I am down here? That's definitely not me!
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