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Everyone seems to be wagging their fingers right now at the banks for not learning the lessons of the S&L crisis in the 1980’s. 

Oh, Contraire.  As the Becker-Posner blog points out,  the banks DID learn lessons from the S+L crisis.  A grossly abbreviated summary:  thrifts and S&L’s made spectacularly bad loans, betting big on one asset class.  When the asset class (largely land and partly junk bonds) didn’t pan out, S&L’s started to die.  They were hyperleveraged, which should be legal.  What is incorrect is the explicit and implicit guarantees that the federal government makes to the millionaires that make big and unsustainable bets.

Without batting an eye, the government stood up to cover the bets that they made.  What’s more, without batting an eye, we subsidized incompetence, fraud, malfeasance, corruption, stupidity, greed, and idiotic regulation.  Regulation caused the S+L crisis: remember, the depression’s bank failures caused the government to severely limit the menu of products that Thrifts/S+Ls could invest in.  When the menu was expanded, it was still relatively limited.  The thrift managers didn’t have access to the entire market, just a basket of products and programs, suggested by lobbyists, and acceptable to the Carter administration.  FDIC insurance gives the government the right to be part of the conversation, as they become stakeholders.

Sound Familiar?

Betting big that land would continue to appreciate 20% and more, S&L’s allowed all sorts of land speculation in exchange for high interest rates.  Underwriting guidelines went from prudent to, "aww,hell, he says he’s good for it–what’s the harm?"  Somehow, nobody is willing to believe any market cycle can possibly come to an end.  Ever.  So when the land’s price and it’s utility got far enough apart, the market lost its appetite, and the S&L’s lost their capital.

Not wanting to let these thrifts implode, the government decided to give the millionaires money.  Lots of money.  Because, hey, we can’t let the banks collapse, now, can we?  They need the money, or else the capital markets will totally seize up!  Community banks were what we were saving in the 1980’s.

Today, it’s Joe Homeowner.  He’s the hostage–or front man–we must protect.  Because when we bail him out, we’re also going to see a bunch of bankers that made these investments breathe a sigh of relief.

And the beat goes on.

P.S.  Go Buckeyes.  And Jim Delany?  Come on, allow a playoff already.

When not rooting (in vain) for the Buckeyes to win the BCS championship game, Chris Johnson runs the Ten Day Team at First Ohio Home Finance

I have my feed reader down to a few hundred(!) items.  I’ve finally done what Athol suggests, and that’s to create a ghetto for feeds that add a little less fun to my day.

Anyway:  

Declining Markets-  We learn from Shailesh that appraisers can deem a market declining.  When that happens, I want MY BUYERS to know, and go in with eyes open.  (Ah, this reminds me of a story…about a Realtor that was incensed when my appraiser called and alerted me to the fact that it was a declining market.  I sold about 100 houses in my RE career.  This schmoe?  Ten.  But he pulls the expert card to sell his client up the river.) 

Robert Ashby on Goals 2008, another Genius post.  Goals–are sacred–near and dear to my heart.  And the year is only what you create it.

Ines on Client Expectations vs. the Industry Reputation.  "We choose our clients, and you, sir, are not among the chosen!"

From BloodHound:  The Todd Story.  A the bloviate Todd Kauffman, idiot among auditors walks into a hornets nest.  I feel for the guy.  This is comedy gold.

From Solo Technology: Windows ME is dead, again.

The Mortgage Cicerone on Rich People Have Big Libraries, Poor People have Big TVs.  I have really loved the Cicerone, and if you read just one blog, well, read me at Blown Mortgage.  But if you read two?  Read The Mortgage Cicerone.  He called GenuineChris cool and interesting…so.

That’s it for now.  I’m working on a post for Blown about how wholesale is broken.  As if you didn’t know.  But still, getting $15,000 in 180 days for a $271,000 loan that only generated…a total of 8631 in interest…not sustainable…not sustainable.

I’m going to chuck this theme over the weekend, and redo the whole site.  I won’t get to lenderama quality, but I’ll kick it up a notch.

See you Monday.

Email theme suggestions to themes@tendayteam.com

Go Bucks, right? Today, Mike is at New Orleans to make the pilgrimage that Tressel gets us two every other year or so. Let’s go Ohio, represent well. I have a feeling that we’re gonna lose the national championship game three years in a row, though. Still, if there’s a coach I’m happy to face, it’s Les Miles.

To business: 9 Ways for Realtors To Survive The New Market

The market is tough right now–that is a fact. Some of the characteristics of the market before are gone–there isn’t nearly as much confidence as there was in the past. But, if you’re a real estate professional, DEALING with the changing market is more viable than WHINING about the changing market. Yes, it’s changing, but there are STILL people that are going to have their best year ever. Here are some commitments some of the BEST realtors are making in 2008.

1. Focus on Hearth and Home: For Years the NAR conditioned Realtors to talk about the economic choices of the home buying decision. Now that we have less certainty, tell the truth, focus what CREATED the value–location, community, comfort, commitment.
2. Tell The Truth, Watch Your Spin: NAR Economist Lawrence Yun is paid to spin. His predictions are on record as being consistantly and horrifically wrong. Be careful when repeating them. There are a lot of opinions about the housing situation, but making everything a bowl of sunshine is not the answer. Even if you wind up being right–and the worst is behind us–nobody will believe you.
3. Stay Personally Positive: Enough said.  If you’re grousing about the market, you’re going to lose the game.
4. Market to HR Departments. People will still be moving. Columbus has some big companies, and a phone call to an HR department can get you in touch with inbound people that are on the hook to move. A professional, assertive call
5. MASTER the Short Sale Process: Bank of America, in this report, has indicated that they expect short sales to go WAY up. The process is predictable. There are lots of good places to learn short sale secrets.
6. Time to get into social networking: Both in person and off line, linked in and facebook matter. (I’ll be happy to add you if you want!) You’ll be surprised at who’s on both sites–and I myself earn over $2500 in commissions each month from the use of these sites.
7. Pay Close Attention to the last 90 days: A lot of time comps are going down quickly. The last 90 days matter. Lenders are requiring comps that are newer and newer.
8. Print off, then call, your past clients + sphere RIGHT NOW: I’ll let you know how it does in a week, but someone in my mastermind suggested this, and reports that they got 6 transactions ready by just checking in and seeing if past clients had any questions about what was going on in the news.
9. Create and Join a Mastermind Group: many heads are better than one. Surround yourself with positive, upbeat people that are in this business. Set goals. Be accountable.

If there’s anything I can help out with, chirs@tendayteam.com gets me, and you can ring my cell at 614-839-4850.

Due to an improved correspondent relationship, the Ten Day Team now has the ability to deliver conforming loans to the following states:

AL, AK, AZ, AR, CA, CO, CT, DE, DC, FL, GA, HI, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NY, NC, ND, OH, OK, OR, PA, PR, RI, SC, SD, TN, UT, VT, VA, WA, WI, WY

If you have a floundering deal that needs help, send it to us so we can help you kick off the New Year right.  Please call with any questions about the market, conditions or about your state.

Program of the Week:

10 Day Lease Option Refinances.

If you have done Lease Options this year, chances are FHA & Conventional rates are better than they’ve ever been.  With some of the more stable programs coming your way, it should be very possible to get your clients into their home.

Right now–even with the holidays–we’re still able to close loans by New Years.  Why not have an extra commission between now and the end of the year?  Why not make your seller and your buyer happy by exercising lease options?

Qualify your clients:

If they have had timely payment of rent and utilities (no more than 30 days late on either), chances are, they can qualify to purchase their home this year.

Call me if you’re into this at 614-839-4850.

This is currently running in Monster.com.

And I gotta know…who the people that admire Countrywide still are…?

Oh, Countrywide.

I couldn’t what qualifier the little cross referred to.

So I made my own:

Top Ten Groups Covered by Countrywide’s Asterisks

10.)  People that really believe that now is a great time to buy a house.

9.)  By people that currently are still on their teaser rate of 1.25% on their pay option arm.

8.) When selected from a group of other companies including: Enron, Haliburton, & BALCO

7.) People with a long term position against Bank of America

6.) Telemarketers that make their living calling the last ten people not on the Do Not Call list.

5.)  Nambla members thankful that there is finally a bigger stigma.

4.) Tanning Salons where high profile CEOs have been known to drop 100k.

3.)  Bloggers on the implode-o-meter selling adsense units.

2.) Ex Arthur Anderson employees, now that there’s a worse villain on their resume.

1.) Class Action Trial Lawyers just waiting for billion dollar settlements.

****ADD YOUR OWN HERE!!  DIGG, LINK, ETC!!!

Right now, Realtors are kicking the rear end of mortgage brokers with useful information online.  Sure, sure, a lot of what Realtors say is the tired and tedious “economic reason to buy a house,” which doesn’t fly right now, but there are a ton of fantastic agents blogging daily.  This list doesn’t even scratch the surface.

But mortgage people?  We have the doomers and gloomers,  the X broker, Lenderama, and Brian Brady.  But despite a ton of natural advantages that we lenders have in this industry–namely, the ability to close loans in many different states, the fact that compensation is (still) good, and yet…

…nobody bothers.  I think I’m one of three total blogs, regardless of quality, in Ohio, and the other one was started by me.  Having a conversation with great agents all over the country is fun, it’s ineresting, it’s profitable, and you can add value in many different ways.

So why don’t brokers/loan officers have as many (which means good) blogs?

Oh, and I’ve got a great post coming monday.

This post, written by Chris Johnson, originally appeared on Blown Mortgage ten days ago.

The phrase “Declining markets,” are going to become more and more important. Banks are being burned by the lack of appreciation in Midwestern areas like Indiana, Ohio, and Michigan, and imploded areas like Nevada and Florida. Loans aren’t performing because people in trouble can’t sell their homes for anything close to what they owe. And no bank wants to be around when the music stops, so at some point–sooner than you think–we see 25% down payments required on all conventional loans.

How it will unfold.

The presumption is that more problems are happening in the wholesale channel than the retail channel. This is probably true–how sane can it be to let 26 year olds control the financial future of millions of homeowners? To keep their exposure in an area low, the banks start by adding more stringent appraisal requirements. Usually, they request extra comparable sales by the appraiser comps), and the comps are within three to six months–in lieu of a year or so. The next slowdown is when a a lender makes an appraisal review mandatory for certain areas and loan programs. An appraisal review is essentially a second opinion, generally by an appraiser that makes absolutely certain the first appraiser’s work was valid. In practice it’s lower.

The appraisal rules may slow everything down, but they don’t stop lending. They do serve to weed out some of the inflated transactions and speculatory efforts that are part of Real Estate.

Regional Loan To Value–will it be contained?

The next things that banks do is restrict loan to value (LTV) within a geographic region or city. This started with subprime lenders like the late Southstar, BNC, Decision One and Option One cutting values in states like mine. As they were in their death throes, they thought they could assuage Bond traders by cutting LTVs in “high risk states” It did not work. Nobody wanted to be the last one to hold those risky bonds, so they died anyway. The trend is coming to conforming lending, and the markets affected are going to wither.

With MGIC posting its first quarterly loss in 16 years, the availability of mortgage insurance is in doubt. Likely, only the best borrowers will be able to get 90% loan to value loans at MI rates much higher than we are paying. With the MI companies acting as a gate keeper, and lenders squeemish, what’s next?

By restricting programs, banks are saying that the money that they have tied in these houses is an acceptable loss. You see Realtors saying that “the banks are only hurting themselves.” I’m sure that at this point, they are acutely aware that this will make it hard on them, and they know that their best return given the circumstances is going to be to restrict their NEW exposure to markets that will decline.

This isn’t an overreaction, it’s overdue. The future of the housing market is far worse than the present. Individual markets vary, and professionals that are willing and able to add value will prosper at the expense of their peers. The real question is what will the 26 year olds that feel entitled to a $100k a year job hustling points out of people over the phone do? (Links tongue in cheek).

See you Monday–happy Thanksgiving.

Chris Johnson is a Mortgage Loan originator in Westerville, OH.

Joe–you’re right.

So are you, Eric

And Athol? You’re a genius.

Every day I get the “expired” listings and the “back on market” listings. This is a habit that I got into as when I was a Realtor that helps me to stay connected with the market. I also call most of the back on markets as a way of getting business–if a loan officer calls, knowing you had an issue, willing to try to help…that’s a big source of what I do.

Anyway, it’s been happening more and more lately. There are a TON of back on market and expired properties without a photo. Not one. And it’s not a “I’ll get around to it,” issue, it’s a “we’ve had a listing for 210 days, and why isn’t it selling.”  The properties that expire do so because they can’t be perused by buyers, in their down time. No photo available. We see it way too much.

I have love for Realtors that are earnest, conscientious and doing their job. If you’re in the other category–and not putting a picture on a photo? I think that you should owe a couple of mortgage payments.

Part of me wants to start trolling for business by sending a postcard in big impact font: YOUR AGENT IS NOT DOING THEIR JOB AND DOES NOT CARE IF YOUR HOUSE SELLS OR NOT. CALL ME SO I CAN REFER YOU TO SOMEONE THAT CARES.

I am half serious. I might do this to help sellers, get business and stir the pot.

Bad idea?

This is inspired by this post….

Everything bad that happens in the Real Estate offices is exaggerated  in the mortgage broker business.  Everything.

Leads are a good example.  The call above that Jonathon posts is completely innocuous compare to the ones I got.

Last month:

“Hi, is this Chris Johnson?”

“Who’s calling please?”(it was a call center, I didn’t want to accelerate the calls).

(Aggressively) “Is this Chris Johnson or not?”

I hung up. Useless call, can’t serve clients in ten days if I respond to every call center moron.

Same number, two days later.  “Is this Chris Johnson?”

“Sure, why not.”

“Sure?  This is or isn’t?”

“Who is this?”

“Well, I want to do business with you, if you have the right attitude.”

“OKAY…”

“Do you want more business?”

“What’s the catch?”

“It’s pretty simple–either you want more business or you don’t.”

“Oh, I’m in. Site unseen.  My credit card number is 4219 4321 1456 5312 (a fake number).”

“You don’t have to get smart with me, you don’t know how this works, do you?  I’m with us hud, and we have buyers calling daily.”

“Daily?”  I say, incredulously.

“Are you doing all the business you can be doing?” he says.

Admiring his gumption, I said, “Get to the pitch–how can I help you?”

“Well, US Hud has buyers calling us off the hook, and we’re transfering them to select mortgae companies, one or two per zip code to blah blah blah.”

“OK, not interested, thanks.”

I hang up.

A call comes in. “Chris Johnson, I need to talk to Tony Coplen. (Tony’s the owner).

“Why”

“You just turned down business, and he needs to know that you’re doing…this”