Comments on Arizona Republic's Article, "Bankers fault themselves in meltdown"

The pen is mightier than the sword! After reading the article, Bankers fault themselves in meltdown" I had to send in my 2 cents. I believe the article and research behind it shows how the banking industry is still in denial and does not understand what they did to us! My letter to the republic writer, Russ Wiles is below.

Russ,
Thank you for your article, "Bankers fault themselves in Meltdown." I am glad to see more attention to this subject. However, I believe the bankers are still in denial about what happened and thus making things worse.
I am a valley Realtor and have been since 1995. I was in the trenches and my experiences over the past few years guide me to these beliefs.
This meltdown has can be blamed on many groups, including us Realtors, however, I believe the largest issues lie with the lending industry. I don't believe it was the pressure for home ownership that caused the meltdown, but the pressure for bank fraud. I don't believe interest only loans are the problem, nor do I believe 100% financing is the issue. When we look at 2 example buyers in 2007, both buying $300,000 home. If one was interest only, then 2 years later they owe about $292,000. At the same time another buyer puts 10% down and 2 years later owes, $263,000. In each case when the homeowner finds their home is now worth $140,000, they begin to question why they are working so hard to make these payments. They also begin to question why the value was so high and believe they have been scammed. Simple issues of life come along and push them over the edge to short sale, loan modification or foreclosure.
BUT WHY DID PRICES CLIMB SO HIGH? What I saw and what I believe is the following:
Loan officers started pushing "Sub Prime Loans" they make more money on them.
"Quasi Investors" stared buying 5 to 10 homes thinking they could flip them and strike it rich.
Demand for Sub Prime Loans increased because of Wall Street FRAUD.
Values went up to a point where most could not qualify without a "liar" loan, and most purchased liar loans not because they knew they were, but because the unlicensed loan officer sold them that loan. They make more money and can sell a larger loan amount in this case for this buyer.
Appraisers used comps from totally unrelated neighborhoods to get values higher.
People were making tons of money so the "rush for real estate" exacerbated things.
With this value run lasting about 4 years, even the biggest skeptical gave in to what was happening.
The only way to stop it was for lenders to stop lending. They did and that fed to the crash. Right now we are in a huge recovery. It has started in the lower end price ranges, but is quickly moving to higher value homes. Supply of Single Family Homes is 29,603 there are 16,033 pending home and 25,407 have closed escrow so far this year. It is easy to see the numbers are looking better. The inventory level is below 4 months when looking at the past months closings and right at 5 months when looking at closed YTD. We are in recovery. But, due to stricter mortgage and appraisal rules today, values continue to decline. WHICH IS HURTING THE BANKS MORE THAN ANYONE ELSE, except the tax payer.

Wow, I think I got off track. Lastly, I just want to say, when I look at what the bankers say:
1. "top answer... lax loan-underwriting standards" I say, BS, it was FRAUDULENT use of those standards by un-licensed loan officers.
2. "next most common response...political focus on encouraging home ownership" NO one told you to go to the masses and sell them fraudulent loans to increase home ownership. There were plenty of other options that would not have run up the market.
3. Then, "lax oversight of the mortgage industry." Finally, this should be number 1 through 7! Bingo!
The "unreliable and dishonest borrowers" that I mostly experienced then and now with the short sales, were investors! As I called them, "Quasi Investors" which is a term I use for someone that is not in the financial position to be an investor.
So many blame the public, I mean the borrower, for not reading loan documents. How many people do you think read their: health insurance plan, life insurance policy, auto insurance policy, prospectus for every company they invest in, research on their 401K and all related documents. I would believe the number of Americans who read ALL these documents would be in the less than 1% range. How can you blame a borrower. They get 2 weeks worth of solid reading and have to do it in 1 hour!!!! Oh and the mortgage company is usually getting those documents to title late, so they are rushed to get in and sign to close on time.
Anyway, I hope we can stop blaming issues that did not cause this problem. Focus on the ones that did and realize, when the market is hot is when you should make it more difficult to get approved. When the market is hot is when appraisers should be more stringent. Right now we need 100% financing, we need to take into consideration the difference between a trashed REO or Short Sale compared to a nice home when appraisals are done.

That's it, HAPPY MOTHER'S DAY!

Thank You and Make It A GREAT Day,

Jeff Cameron
Keller Williams Integrity First
480-502-7699
Jeff@AzREOConnection.com
www.TheCameronTeam.com
www.ArizonaBankDeals.com

FHA Lowers Loan Limits

FHA lowers limits on loans, an article from azcentral.com, reports that starting in January the new FHA loan limit for Maricopa County will be $271,050. The current FHA limit in the Valley is $346,250. So, for anyone interested in using an FHA loan to purchase a home - now is the time to do it. Every Arizona county will see their FHA loan limit drop to $271,050, except Coconino, where it will be $333,750.http://www.azcentral.com/arizonarepublic/business/articles/2008/11/19/20081119biz-catherine1119.html

Please call or email me with questions.
Staci McCarville
480-778-2614
staci.mccarville@prospectmtg.com

Interest Rates Back Down!

30 Year Conventional Fixed Rate Loan is at 5.75% today! Please call or email me for more information.

Staci McCarville
Prospect Mortgage
480-778-2614
staci.mccarville@prospectmtg.com

Mortgage Interest Rates depend on credit score, loan amount, loan to value ratio, and more. Please call to get a personalized rate quote.

NEEDED FHA MODERNIZATION AND LIMIT INCREASES

Below is a letter from National Association of Realtors thanking me for emailing the Senate regarding modernization of FHA and increasing loan limits. I suggest you all contact congress. This is what congress can do to help us. Create more demand for housing by creating more liquidity in the mortgage market.

Just my opinion...Jeff


Dear Jeff,
I want to personally thank you each of you for taking action on these latest Calls for Action in support of FHA Modernization. More than 90,000 REALTORS contacted the Senate urging passage of the Housing bill. On July 11th, the Senate voted 63 to 5 to approve the legislation. As a result of your efforts, HR 3221 creates affordable housing opportunities by setting loan limits up to $625,500 for Fannie Mae, Freddie Mac and FHA, and will stimulate housing demand with a temporary $8,000 home ownership tax credit. The bill also includes broad reform for Fannie Mae, Freddie Mac, and FHA, and creates a new FHA program to help homeowners at-risk for foreclosure.
This bill is critical to restoring confidence in the mortgage and housing markets and the nation’s entire economy. But it isn’t complete yet. Now, the bill goes to a conference committee before Congress can send it to the President. Negotiations begin over the next few days and weeks, and both House and Senate leaders hope to get the bill on the President’s desk before the August recess.
Of course, none of this would have been possible without members mobilizing in support of this crucial legislation. Our strong involvement included face to face meetings between members and their Senators and Representatives in their home states as well as in Washington, DC. NAR generated more than 250,000 e-mail messages and phone calls urging Congress to take action on the vitally important Housing bill.
By working “All Together” we have shown that when REALTORS stand united the American dream of homeownership is open to all. Thank you for your successful efforts!
Dick GaylordPresident NAR

WILL THE FEDS BAIL OUT FANNIE MAE AND FREDDIE MAC

A new leg in this 2 year old mortgage and real estate melt down. Fannie Mae and Freddie Mac have lost the markets confidence and they need capital to continue. It will take a Government bail out of some type to keep them afloat. However, the government is stating backing of new debt, but has not given any warranty of existing debt or equity ownership.


Paulson sees mortgage assistance as backup
By MARTIN CRUTSINGER,
AP
Posted: 2008-07-15 11:54:52
WASHINGTON (AP) - Treasury Secretary Henry Paulson said Tuesday the Bush administration has no immediate plans to extend emergency loans to mortgage giants Freddie Mae and Freddie Mac or to purchase the stock of the two companies. Paulson told the Senate Banking Committee that the assistance plan put together by the administration and the Federal Reserve over the weekend was intended to serve as a backup if needed.
http://money.aol.com/news/articles/_a/paulson-sees-mortgage-assistance-as/n20080715115409990039

FED MAKES CHANGES TO LENDING

The Federal Reserve is getting involved with controling the mortgage market.


Fed Plans New Rules on Home Lending
By JEANNINE AVERSA,
AP
WASHINGTON (July 8) - The Federal Reserve will issue new rules next week aimed at protecting future homebuyers from dubious lending practices, its most sweeping response to a housing crisis that has propelled foreclosures to record highs. Fed Chairman Ben Bernanke spoke of the much-awaited rules in a broader speech Tuesday about the challenges confronting policymakers in trying to stabilize a shaky U.S. financial system. To that end, Bernanke said the Fed may give squeezed Wall Street firms more time to tap the central bank's emergency loan program. To prevent a repeat of the current mortgage mess, Bernanke said the Fed will adopt rules cracking down on a range of shady lending practices that has burned many of the nation's riskiest "subprime" borrowers - those with spotty
http://money.aol.com/news/articles/_a/fed-plans-new-rules-on-home-lending/20080708082309990001

FEDS ARREST EX-BEAR STEANS EXECS OVER HOUSING COLLAPSE

I have spoken with many people who don't understand how investment bankers in New York caused the housing crisis. Let me give it a quick whirl.

As property values continued to climb in the early part of this decade, the risk for a sub prime loan temporarily diminished. Even if the borrower was in trouble, there home had appreciated and they could sell, payoff their mortgage and put some money in their pocket. Investment bankers approved more and more risky loans from lenders. Lenders created all kinds of funky mortgages. They were making a ton of money and every thing smelled of roses.
Investment bankers were selling these mortgages to all kinds of investment companies: Insurance, retirement, etc... There was a certain amount of risk given to a sub prime mortgage.
The demand for these investments grew. The investment banks said to the lenders, give us more. So, they created more niche products. Basically just started giving anyone a mortgage with out checking their income. The biggest problem was all the "investors," they were buying with no money down. They had no ability to repay the loan without a tenant.
The the wall came tumbling down. 10's of thousands of homes were bought by "investors" that could not make the payment. Thus where we are today.
What was criminal? The investment bankers were not disclosing to their investors, buying these loans, how the level of risk had increased. They sold them as mortgage backed securities. Not as "super crazy and risky securities."
In defense of the investment bankers, they may not have been aware of the fraud being committed by all the unlicensed loan officers.

just my opinion!

Jeff Cameron

Ex-Bear Stearns Execs Arrested
By TOM HAYS,
Posted: 2008-06-19 09:24:51
NEW YORK (June 19) - Two former Bear Stearns managers have been arrested, federal authorities said Thursday, becoming the first executives to face criminal charges related to the collapse of the subprime mortgage market. Matthew Tannin was taken into custody outside his New Jersey home on Thursday morning and Ralph Cioffi was arrested at his New York City home, the FBI said. Authorities in Brooklyn are expected to release details later Thursday on the case against the men, who are ex-managers of Bear Stearns Cos. hedge funds that collapsed last year. A law enforcement official told The Associated Press that an indictment naming the men was the result of a yearlong federal securities fraud investigation. The former executives are suspected of misleading investors about the risky subprime mortgage market, the official said, speaking on condition of anonymity because the outcome of the investigation is pending. http://money.aol.com/news/articles/_a/ex-bear-stearns-execs-arrested/20080619070909990001

Rates

30 year fixed 6.125%
15 year fixed 5.5%
5 year ARM 5.125%

FHA 30 year fixed 6.25%

Jumbo 30 year fixed 7.625%

Rates change often. Please call to get your personalized rate quote.

Staci McCarville
Indymac Bank
480-538-1402

Mortgage Rates

30 year fixed 6%
20 year fixed 5.875%
15 year fixed 5.5%
5 year ARM 5.25%

FHA 6.125%

Jumbo 30 year fixed 7.5%

Interest rates change many times a day and depend on many factors. Please call for a rate customized for your needs.

Staci McCarville
Indymac Bank
480-538-1402

Rates!

5.75% - 30 year fixed
5.25% - 15 year fixed
5.25% - 5 year ARM (same for Interest Only)

7.375% - Jumbo 30 year fixed (no points or origination fees)

6% FHA 30 year fixed

Rates change often. Please call or email me for a customized quote.

Happy Memorial Day!

Staci McCarville
Branch Manager
Indymac Bank
480-538-1402
staci.mccarville@imb.com

SCOTTSDALE LAGS VALLEY AS HOME SALES CLIMB

Yes, we are at 2 year highs when looking at the weekly sales here in the valley. Yet homes in Scottsdale are not moving. Most of that is about pricing. We see homes selling, and some at what I would consider over value prices, but we don't see the type of activity we would expect in Scottsdale. Why is there so much activity in the West valley? Two reasons: Prices and mortgage availability. Prices have come down dramatically and buyers are swooping in to pick up the good values. Plus with FHA raising their limits to $357,000 purchase price, that brings plenty of liquidity to that market.
FHA does not help most of Scottsdale. Two things are hurting the Scottsdale market: Prices and mortgages. Prices have come down, but not as low as they will go. I was out previewing for a client in McCormick Ranch last week. I looked at 12 competing properties ranging from $489,000 to $675,000. I capped it at $675,000, because there were plenty of other homes at higher prices that would have fit in this group. That was the point, this group of homes were very similar. Yeah, there were some variances and they were not all the same value. But none had a $200,000 variance in values. So, what I am saying is pricing does not represent value properly. The other issue is mortgages, this price range and higher price ranges put the mortgage in a JUMBO status. Interest rates on JUMBO are still very high and this is hurting demand. Maybe as prices come down we will see rates drop. The risk will be lessened as prices drop. Let's hope the banks respond with those lower rates.

Rates

30 Year Fixed 5.75%
5 Year ARM 5.25%
FHA 6%

Rates a couple of times a day. Please call for more information.

Staci McCarville
Indymac Bank
480-538-1402

Today's Rates!

Conventional
30 Year fixed 5.5%
40 Year fixed 6.125%
15 Year fixed 5.25%
7 Year ARM 5.375% (Interest Only same rate)

Jumbo 5 Year ARM 6.25%

FHA 30 year fixed 5.5%

All of these rates are quoted with 1% origination fee and $787 in lender costs. Rates can change a few times a day.

Please call for more information on our Indymac Bank Owned Properties!
Staci McCarville 480-538-1402