Colorado Association of Mortgage Brokers Convention
The Colorado Association of Mortgage Broker’s (CAMB) mission is to provide education, advocacy and networking opportunities to its members. This will result in members who are recognized service professional and will increase consumer awareness of and demand for the services provided by CAMB members.
Every September the CAMB holds a convention:
- To register, click here.
- To review the schedule, click here.
- To review the cost(s), click here.
Locations:
The Curtis Hotel
1405 Curtis Street
Denver, Co 80202
800-525-6651
Colorado Convention Center
700 14th Street
Denver, CO 80202
303-228-8000
Why the ads?
I was asked by a reader, what’s with the ads? I don’t plan on keeping the google ads for long. It’s only a test. I’m testing different placements. According to those that make money with ads, ad placement is key.
I did switch to a SEO based theme for wordpress. It looks marginally better than my previous site. If you hate the new look, please let me know.
Denver Homes and blogging
I ran a quick search in Google for the term “Denver Homes”
The top ten results that Google fetched is fairly interesting:
- The National Association of Realtor’s website, the heavyweights in the real estate game. They’ve been around for quite some time on the web circa 1997.
- A real estate agent’s site. On the web since 1998.
- recolorado.com, a consumer portal to the Colorado MLS. On the web since 1998.
- American Home Guide is 4th. Not sure what’s the purpose of this site. It’s not a real estate agent, broker, or company. On the web since 2003.
- A real estate agent’s site. Around since 2000.
- New Home Source, a site that basically allows you to search for properties with limited ads. Around since 1999.
- A real estate agent site. Around since 2004.
- House.Info allows you to search for properties. Around since 2005.
- A BLOG. Around since 2005.
- A BLOG. Around since 2006.
Conclusions:
- The real estate agents who’s site rank well, probably paid a substantial amount of money to get ranked well and to keep their rankings.
- The 9th ranked site for Denver Homes is run by Todd Carpenter, who runs a series of mortgage and real estate blogs.
- The 10th ranked site, was a blogging project of mine that I abandoned.
- Unless you’re site has been around on the web since the late 90’s or you plan on paying a ton of money to get your site optimized, plan on blogging.
- Google loves blogs!
If you’re savvy real estate agent in Denver and want to meet with me to discuss blogging and what it can do for your web presence, contact me for a consultation. If you’re a total dumbass who whines constantly and expects me to do everything, don’t bother contacting me.
Ben Stein’s take on the Market
I usually rely on Andy Rooney Ben Stein to make sense of whatever ails America. His self-effacing wit tends to overshadow his knowledge. He’s like the “very rich and very eccentric” grandfather we wished we had, the one who was wise beyond his years who spoke from the heart. My maternal grandfather fit this profile except there a distinct language barrier as he spoke Tagalog and I didn’t.
Earlier this month Ben Stein wrote a piece called How Speculators Exploit Market Fears. It discusses what hedge fund managers do to create action in the stock market. Rather than take snippets from the article, here’s the full article:
Here’s a fact: The speculators and hedge fund managers who run today’s stock market need market volatility in order to make money.
They can’t make enough money if the market stays flat or moves only a bit, so they like extreme and unexpected price movements. They especially like sudden, surprise movements down, when they can make money off stocks they borrow and sell — or, as they say, “sell short.”
Money Lust Satisfied
That’s what’s been happening the past couple of weeks. But it’s not interesting to say that the speculators are whipping the market around to satisfy their money lust. So the speculators themselves make up reasons for why the market is fluctuating, flog those reasons to the media, and then profit if some other speculators believe the jive reasons and jump in the way the manipulators want them to.
Supposedly, the market is “correcting” because of worries about the housing slowdown, and also because of fears that the debt markets that support mergers and acquisitions is drying up.
These are interesting theories, and people who don’t know a lot about the stock market or the economy might find them beguiling. What follows are a few truths that show how shallow these “reasons” for the stock market moves are.
Housing a Theory
Yes, the housing market has slowed from a spectacular bubble level to a simply pretty good level. Housing sales and starts are now about what they were in 2002, and no one thought we were in a housing depression then.
In any event, housing is only about 5 percent of the economy. If it falls by 15 percent, that would represent a fall-off of about .75 percent. That’s not trivial, but it’s also not the stuff of which recessions are made.
The fact is that there is no recession. The economy is suffering from a labor shortage, not a surplus of unemployment. The Fed is worried about excess demand, not slack demand.
Corporate profits set new records every day. Whatever’s happening in residential sales and building is simply not slowing down the economy. Why should a Boeing or a Merck or a Pfizer have any reaction to housing at all? Because the speculators sell everything they can when nervousness sets in — and for no other reason.
A Minor Major Mess
Subprime is a mess. But it’s a small mess. Subprime mortgages account for roughly 20 percent of mortgages even in the most heavily exposed states. About 20 percent of them are delinquent in some way. That’s 4 percent of mortgages.
Of these, maybe half, or 2 percent, will go into foreclosure. There will be roughly 50 percent recovery on sale of these. This is a loss of 1 percent in the mortgage market — a sum the lenders have already made many times over because of the hefty fees on those deals. In the context of the size of the U.S. financial sector, it’s nothing.
And why should a crisis in subprime drive down stocks in Mexico and Thailand? Again, because the speculators seek to create panic to make money by selling short, and they sell short everything.
There’s simply no connection between subprime and developed or developing nations’ stocks. This by itself shows the thin context of the selling wave late last month.
Money’s Still Cheap
What about the supposed drying up of loans for mergers and acquisitions by private equity firms? Well, here’s a good, simple test of just how valid that explanation is for stock market moves: The majority of private equity takeovers are financed with junk debt.
If there really were a major shortage of funds for these deals, the interest rate on the junk would skyrocket. Instead, while the rate has risen by about 150 basis points in the past month, the spread between junk and investment grade is now about 290 basis points, according to leading junk analyst Martin Fridson.
This is a lot lower than the year-end average of the spread from 2002 to 2006, and far below the almost 800 basis point spread during a true interest-rate crunch like the one after the tech meltdown in 2000-2002.
So that’s phony, too. Interest rates have risen, but not anything like what they’ve done in real crises. And besides, the Dow fell by about 550 points the week before last, yet not one of the Dow stocks is involved as either acquiror or acquiree in a private equity deal.
In short, money is no longer virtually free the way it was for private equity deals in the past year. But it’s not expensive by historical standards, either.
Spreading the Fear
In other words, it’s all the speculators trying to panic us so their sell programs will make money. And they’ll make money as long as they can spread their panic. When they can’t do that any longer, they’ll work the long side — and make up reasons for that, too.
In the meantime, the economy is strong. Profits are great, and interest rates are low and will stay that way. Don’t sell. With all the shrieking about the market, it only fell to what it was about five weeks ago — and we didn’t think we were poor then.
So let the speculators shout “fire.” As of right now, they’re not blowing anything but smoke.
Two quick points:
131+ mortgage companies have shut down. If you’re a consumer chances are you’ve never heard of these companies. If you’re in the mortgage business, you’ve probably heard of a fraction (i’d say 25%) of these companies. For the most part, those that bet on high risk loans (subprime, alt-a, non-owners, etc.) lost. The ones that bet on low risk loans (conforming) are still open for business.
However, one quick look at Google Trends and you’ll notice that countrywide, mortgage, credit, or liquidity don’t show up as “hot searches” in Google.
Sometimes you need Ben Stein to make sense of a nonsensical world.
Mortgage Primer: Your credit score
The mortgage industry is imploding. High risk mortgages to high risk borrowers are becoming extinct. Credit scores will be more important than ever. There are five major factors that calculate your credit score with each factor carrying a different percentage:
- 35% Payment History
- 30% Amounts Owed
- 15% Length of Credit History
- 10% New Credit
- 10% Types of credit
Notice the first 3, that’s 80%: How you pay, how much you owe, and how long you’ve been paying carries the most weight.
Having a good credit score is a commitment. The FICO score is a solid indicator of your debt/payment habit. Rarely have I seen a borrower who takes their debts seriously with poor scores. On the other hand if a borrower has poor credit, they’ve developed poor debt/payment habits. A few years ago I worked with a couple that had poor credit. They were in a bind and relied on me to help them improve their scores. It took a few months but I helped them clean up their credit with one caveat, that the next time I pulled their credit, I would hope to see their scores improve. A year later I pulled their credit, their scores never improved. They went back to their old habit of signing up for credit cards and maxing them out.
I’m not from Colorado therefore I recycle
Growing up in NY teaches you a nice lesson that each can of soda equals 5 pennies. You horde those cans then one day you haul a big frickin bag full of soda cans down to Waldbaums and get PAID. You were recycling and getting paid all at the same time. There’s one catch. You pay those five cents up front so a 6 pack of soda would really cost you an additional 30 cents.
As I’ve gotten older I hardly drink soda yet somehow the lesson of not throwing cans into the garbage has stuck. Ever since I moved to Denver, I received a big purple bin. It was picked up once a week by the city’s recycling service. Once a week all the cans, bottles, plastic, and newspapers I collected were hauled away. I’m probably paying for the service but I don’t seem to mind. If it can be reused, why not make the effort.
Apparently I’m part of a miniscule minority in Colorado:
U.S. recycling rate: 28.5%
Colorado recycling rate: 12.5%
That’s pathetic!
If you’re shocked, here’s the Denver Post article where I get these numbers.
Mortgage Primer: loans that Wall St. doesn’t like
Here’s a mortgage primer on which loans are no longer the flavor of the month on Wall Street. They’re the Michael Vick’s of the mortgage world, they were once very popular on but now nobody wants to be associated with them. Okay, that’s a little bit too harsh since these loans didn’t kill dogs. Then again, these loans have put families in dire straits so lets keep the Michael Vick analogy.
Loans the Wall Street doesn’t like:
- THE LOANS WITH THE REALLY REALLY REALLY LOW RATE AND LOW MONTHLY PAYMENT
- THE LOANS FOR BORROWERS WITH REALLY REALLY REALLY BAD CREDIT HISTORIES
- THE LOANS FOR BORROWERS WHO HAVE GOOD CREDIT BUT WHOSE OVERALL LOAN APPLICATION DOESN’T MEET FANNIE MAE OR FREDDIE MAC’S STANDARDS
- THE LOANS FOR BORROWERS WHO CAN’T REALLY REALLY REALLY SHOW HOW MUCH MONEY THEY’VE MADE OR HOW MUCH THEY HAVE SAVED UP
- THE LOANS FOR BORROWERS WHO REALLY REALLY REALLY DON’T WANT TO PUT ANY MONEY DOWN
- THE LOANS FOR BORROWERS WHO REALLY REALLY REALLY DON’T WANT TO PAY AN AMORTIZED PAYMENT
- THE LOANS FOR BORROWERS WHO REALLY REALLY REALLY WANT TO BUY A HOME THEY HAVE NO INTENTION OF LIVING IN
- THE LOANS FOR BORROWERS WHO REALLY REALLY REALLY MAKE A LOT OF DOUGH
- THE LOANS FOR BORROWERS WHO REALLY REALLY REALLY HAVE NO INTENTION OF LIVING IN THEIR HOMES FOR 15 to 30 YEARS
- THE LOANS WITH REALLY REALLY REALLY NO RISK
Also called: 1%, amortization »”>NEGATIVE AMORTIZATION, NEG AM, OPTION ARMS, PAY OPTION ARMS or
“A CAN OF WHOOP ASS WAITING TO HAPPEN”
Also called: SUBPRIME, NON PRIME, POOR CREDIT, 2/28s, 3/27s, or
“I GUESS THIS IS WHAT I GET FOR NOT PAYING MY BILLS”
Also called: ALT-A or
“SO I’VE GOT GOOD CREDIT AND A GOOD JOB BUT I’M PENALIZED FOR NOT SAVING ANY MONEY”
Also called: STATED INCOME, STATEDSIVA, SISA, NO DOC, or
“DON’T THEY HAVE LOANS FOR PEOPLE WHO DON’T HAVE JOBS?”
Are called: 80/20, 100% Financing, NO MONEY DOWN, 103%, 107% or
“I WANT A LOAN WHERE I GET TO KEEP MY MONEY IN CASE MY JOB GETS OUTSOURCED TO INDIA”
Also called: INTEREST ONLY, IO, or
“IF I LIKE PAYING DOWN PRINCIPAL MY PAYMENT GETS RECAST TO A LOWER PAYMENT EVERY MONTH”
Also called: INVESTMENT PROPERTY LOANS, NON OWNER OCCUPANCY, NOO or
“I’M GOING TO BE THE NEXT DONALD TRUMP”
Also called: JUMBO, NON CONFORMING, SUPER JUMBO, MILLION DOLLAR LOANS, ANYTHING OVER $417,000 or
“THAT’S PRETTY LOW FOR A RATE OF RETURN AND PRETTY HIGH FOR A MORTGAGE INTEREST RATE”
It remains to be seen if Wall Street still likes:
Also called: ADJUSTABLE RATE MORTGAGES, ARMS, 3/1, 5/1, 7/1, 10/1, TEASER RATE LOANS, HYBRID LOANS, BALLOONS or
“THE AVERAGE PERSON MOVES EVERY 5 to 7 YEARS, SO WHY SHOULD I GET A LOAN FOR 30 YEARS?”
Wall Street will always like:
Also called: FHA, VA, CONFORMING, FANNIE MAE, FREDDIE MAC or
“THE LOANS THAT MAKE UP THE MAJORITY OF THE AMERICAN MORTGAGE LANDSCAPE”
Pigs get fat, but hogs get slaughtered
The maxim “pigs get fat, but hogs get slaughtered” came up during a recent conversation I had playing golf at Hyland Hills, a municipal course off 36 and Sheridan in Westminster. I teed off with a friend but eventually our two some became a four some as the group behind us caught up.
One guy asked what I did for a living and when I told him that I worked as a mortgage broker he looked at me and said, “looks like the pigs got fat and the hogs are getting slaughtered.” It caught me off guard considering most people usually bandy that maxim around in a board room not on a golf course. After a second I regained my senses and said “don’t pigs and hogs have the same fate?” He responded with a laugh and when I told him that I don’t eat pork, he said “I don’t blame you, they live in filth!”
While the hogs are shutting their doors, the pigs are having some challenges. Countrywide took out a loan and recently they announced layoffs along with
Suntrust. Moreover, Capitol One just closed Greenpoint Mortgage.
Ironically, 2007 is the year of the PIG.
Protect Us from the W
Here’s a transcript from today’s press conference with George W Bush. He answers a question on sub-prime mortgage.
Q Sir, getting back to the credit crunch caused by defaults in sub-prime mortgages, should Fannie Mae and Freddie Mac be allowed to buy mortgages beyond their current limits, or play any additional role that could help revive mortgage finance?
THE PRESIDENT: As you know, we put up a robust reform package for these two institutions, a reform package that will cause them to focus on their core mission, first and foremost; a reform package that says like other lending institutions, there ought to be regulatory oversight. And therefore, first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options.
A simple YES or NO would’ve worked for me.
Protect Us from Hillary
With the Democratic National Convention looming, Hillary Clinton is making a splash. The former Park Ridge, IL native and now NY Senator (I still don’t know how New Yorkers voted for her instead of Rick Lazio) wants to protect people from going into foreclosure.
“I don’t think families should be lured into buying homes they can’t afford,” Clinton said.
Clinton blames adjustable rate mortgages as the culprit for all the foreclosures. She must be getting her data from all the housing bubble blogs which show advertisements from the mortgage companies they rail against.
There’s really no substantial way to protect people from getting sick, losing their jobs, or dying. These are some of the REAL REASONS why people go into foreclosure.
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