My Perspective

I continue to be seriously dIsappointed with the Treasury Department’s TARP actions. All I see is them hiring old croneys and building an empire of an Agency … no actual EMERGENCY buying of those troubled TOXIC mortgage assets (which is what will re-start our industry), it’s been like they’ve contracted ADD! Lots of running round in circles and talking about what they’re gonna do mananna. Even that $200 Billion in Bank capital injections, not one penny yet … fortunately the Chairman of the FDIC IS focused on homeowners (the core of today’s economic explosion!) and is developing a plan to aid them dirrectly, like her team has successfully done out here at IndyMac Bank ever since they took it over. I sent her an e-mail with guideines on what proper lending actually IS – in fact it was a link to my August 25th blog post titled The 3 C’s of Credit – just in case nonody there knew what that was!

I hope someone there took the time to read it carefully an dwill pull the trigger now!

As I sit here writing the lead article for The MortgageLand Journal’s November 1st edition, titled “How Nonprime Will Come Back,” I’m reminded how happy I was September 20th when the Treasury Secretary announced his $700 Billion TARP plan to relieve pressure on the financial markets, by purchasing TOXIC assets that are were clogging up balance sheets, and almost frozen the Capital Markets. His plan was an EMERGENCY, the widespread crisis had to be averted at once!

Next, the notion of taking a third of that $700 Billion, and instead making Big direct cash injections into a variety of sound commercial Banks nationwide (based upon the hope they would use it to lend), I liked a bit better (except for the lack of making it ‘mandatory’ for them to lend it out – that missing part seemed naïve to me) since that could be done in a matter of days, whereby pricing those TOXIC assets, making an offer to buy, a counter proposal, etc. until a deal could be finalized with a selling Bank, would take considerably longer.

Most of this I said in my last Blog post here, BUT my focus today is on it’s effect on our residential mortgage lending industry. The first stone that needs to be turned over before we can begin to get back to business, is for those TARP TOXIC asset purchases to get underway … as I explain in my next article.

Stay tuned, I’ll post it here before it goes out in our newsletter Saturday afternoon.

You’ll recall, weeks ago Treasurery Secretary Paulson, the Federal Reserve Chairman, the SEC Chairman and President Bush (all in panic mode) insisted the Sky Is Falling and we MUST get authority to unclog the financial markets! Those TOXIC assets needed to be removed from the balance sheets; their 3 page TARP proposal would be the answer!

Congress, after a lot of back and forth finally OK’ed the original 3 page TARP proposal (modified to almost seven inches of paper and nearly $200 Billion+ in PORK).

Next, Treasury decided that $250 Billion of the $700 Billion TARP originally called for, would instead be used to inject capital into many Banks nationwide. In fact $125 Billion of that would go specifically to nine (9) already chosen, solid, not in trouble Big Banks.

Again, more weeks have been racing by, and NOT one penny has been ‘injected’ into any bank yet, nor has even one offer/bid been made to purchase the first group of TOXIC assets! A large group of alumni from Goldman Sachs (Hanks croneys) have been hired to help BTW!

Makes me wonder what all the fuss was about! What about you?

PS: Sorry for all the technical difficulties lately, October 13th I described a bit of what’s happening in my personal life, that’s slowing me down, plus this Blog crashed somehow the theme code got corrupted; lost all my plug-ins, etc. Waiting right now for the individual that originally installed this, to contact me so I can engage him to re-install my original theme and all the plug-ins that came with the package I purchased from him. Having to learn all new software, since soooo many of my tried and true favorites won’t run on Vista, along with ongoing problems with my DSL (caused by Vista?) AND these pain pills!! Well things have been better at the Cugno homestead.

I’m happy to see Hank’s old crony from Goldman Sachs, under junior Under-Secrtary of the Treasury Neel Kashkari who’s been appointed as director of the Treasury’s “Troubled Asset Relief Program” (TARP)  “… has put together a team to identify troubled mortgage-back securities and whole loans to purchase as the agency readies to implement the TARP as quickly as possible while working to ensure high quality execution ….”

Sure would be nice if those team members have actual mortgage underwriting and servicing skills (unlike Neel), so they’ll have the necessary knowledge and experience to not only pull the trigger but to actually hit the target as wel!

Today’s a widely recognized National Italian Holiday, so I get to take a break from my frustrating life this past week.

First off, a week ago Saturday my Dell computer died; it was an ugly death too! I spent well over 30 man hours on the telephone over a period of the next 5ive days – wishing I could ‘understand’ the customer service people with AOL, A&T and Dell Computer, and their unique version of the Kings English! Some were in Manila, while most were in India … my frustration level grew and grew daily.

Turns out, I buy a brand new Dell superduper version with Vista! It’s very nice, EXCEPT I had to also buy new software to run on it and a new printer too! Loads of fun getting it all up, discovering which programs wouldn’t run on Vista, which cables and DLS connections needed to be ‘upgraded’ – an experience I know most of you have gone through … you know why it happened? I downloaded Microsoft Internet Explorer 8 ‘beta’ and then tried to get it back out of my computer.

Next, day before yesterday I bent down to pick up something in my living room, and twisted/pulled my back … Emergency Room doctor said I have ‘Lumbar Muscle Strain’ … on a one to 10 scale of pain, it was somewhere around a 12 I told him. Solution, rest and take the medicines he perscribed Ibuprofen 600 MG and Oxycodone w/apap 7.5/500 Tabs four times a day … a day and a half later, still hurts somewhat … BUT I’m melllooooooow :-}

IF Hank and the TARP kids actually get moving with their latest version of what to do with the $700 Billion they’ve had for 10+ days now (not buying those ’so called’ TOXIC assets – but instead directly injecting capital into Banks by becoming shareholders) … I don’t see why they’re delaying actually doing that? Hell, I can ‘buy shares in Banks’ via the Internet in 5 minutes!  Wonder why it’s taking them days and days? I’m starting to become angry with their inaction.

We saw stage one was to appoint an old crony to run the program, somebody with ZERO experience or knowledge about the underlying TOXIC assets (delinquent/ defaulted mortgage loans), so that surely is a bad sign to begin with.

Based upon the television and newspaper business news that seems to change hourly, right now it looks like none (or VERY Very very little) of the $700 Billion intended to fix the TOXIC asset situation, will actually purchase any of them (which on the one hand may be good, since the Treasury Department would have found itself hard-pressed to even ‘come close’ on a price to bid for them). Instead it looks today like they’re going on a shopping outing, and will be buying up chunks of various Banks – then as a major owner/shareholder I assume they’ll HOPEFULLY be able to dictate that these partially owned banks ‘get back into lending again’ (leaving those TOXIC assets to just sit there … not so TOXIC after all, huh?).

Therefore, as I had planned, a translation of the TARP section of the Emergency Economic Stabilization Act of 2008 (EESA) is really not worthwhile for my mortgage industry readers. It IS very likely that Public Law 110-289 (that became effective Oct 1st.) might be doing the needed heavy-lifting for our industry. 

Any Comments on my thoughts today?

“Goldman Alum to Run Bailout
 
Treasury Secretary Henry Paulson has picked former investment banker Neel Kashkari — who now serves as assistant secretary for international affairs — to lead the government’s $700 billion Troubled Asset Relief Program. The Treasury said Mr. Kashkari once headed the Goldman Sachs information technology security investment banking practice in San Francisco. He joined the Treasury late last year. Under the bailout legislation, whichever executive manages TARP must be confirmed by the Senate. The government could begin buying certain mortgage assets as early as mid-November.”

This news piece today, sent my blood pressure thru the roof!

Since the underlying individual loans inside these pools/bundles of TOXIC assets are the real problem, with that pedigree I can promise you Mr. Kashkari doesn’t have the first clue on HOW to determine what they might be worth today, next Thursday, mid-November, or after Hank is no longer with the Government (that’s about 10 or so weeks out). And, since he won’t know how to figure out what the loans are worth, then it easily follows whatever dollar amount of taxpayor money he offers to potential Seller #1 … will not be anywhere close to even a ‘good guess of value’ … the implementation of TARP already feels like a coming train-wreck.

Many of you already know the Emergency Economic Stabilization Act of 2008 (EESA) is now Law. At first glance is seems to have 3 sections:

TITLE I—TROUBLED ASSETS RELIEF PROGRAM (TARP)
TITLE II—BUDGET-RELATED PROVISIONS (Reporting Requirements)
TITLE III—TAX PROVISIONS (“Sweetners” – The Senate sweetned the package – and enlarged the legislation to 450 pages (from 106 pages) these last 3 days - by linking the rescue/bail-out plan to a temporary increase in the limit on federal deposit insurance to $250,000 from $100,000. The Senate also tied the package to a two-year extension of tax breaks that will save individuals and corporations about $149 billion over the next decade, a move popular among House Republicans. The provisions include $17 billion in credits for the development of solar, wind and other forms of renewable energy, among other interesting white-meat additions.

It’s my plan to study the TARP section over the week-end to try and make heads or tails out of it for you and others in our residential real estate mortgage lending industry … the overall ‘Economic Stabilization’ effect, you’ll hear on TV from many others far more qualified than I am in that area … stay tuned … as now we’ll be on to it’s implementation and then on to long over-due regulatory reform (the REAL scary stuff).

Let’s see, the latest TRICK word is ‘SWEETNERS’ (some of us still call that ‘PORK’ – $190+ BILLION on top of the $700 Billion!), and it looks like there’s plenty to go around!  … money for Carribean Rum Exporters, Nascar, Hollywood Producers  (in an economic stabilization package) … ya gotta be kidding me. Are ALL of these clowns so dam corrupt, they think even now, they’re bulletproof and can’t get fired? Who was it that once said (right before an election) THROW THE BUMS OUT? … I’m with him these days, it looks like.

Many of you have your own website and are struggling with who, where, how, when, why, etc. to SEO it, so you’ll potentially rank relatively high when your potential focused future customers search using the key words and phrases you feel would attract what you want to visit your website. As a non-tech person, but significantly anal about statistics (like many of my generation are about this lending industry), I too read all I can on this subject, and study our results to try and make them make sense to my brain; that’s tough usually.

I have some select data for you about our website for the calendar month of September. Last month, a full 45% of our website’s unique visitors were people who were referred to us from search engine results from our pals at Google, that’s up from 42% just 60 days ago. Translating that into what I care about as the boss, that tells me the ‘right sort of website visitor’ is reading various pages within our main website. They’re not blundering over it, looking for a bass fishing boat or something not relevant to what we offer … and that’s GREAT! WE WANT TO BE ‘THE’ AUTHORITY!

The next thought naturally is, do we have to offer what they want? If, BTW, you think ’sales’ is that singular answer, you’re completely wrong. In our case, our potential students/customers (mortgage brokers, mortgage bankers and loan officers) are a tough bunch … when times we good, I would hear  “we don’t need no stinking training”  (actually a neighbor of mine in Covina – Rick Garcia – was the actor who made that phrase infamous in Blazing Saddles!) then as economic times became more challenging, it was ” yep, you were right, we do need more training, but we’re broke and can’t afford it now” … lately it’s “what do you got that’s free?” My answer to those situtations is simply to continue to gain more experience and knowledge myself, so when they’re ready, we’ll be ready at Secret! University! to help. Mean while I want to reinforce that we’re the place to get what ever you/they need as it relates to our industry.

One really nifty thing our website stats tell me, is called Recent Visitor Map. I look at it from time to time, sort of like a small bit of mid-day receation. Among other things it shows me the last 25 or so of our main website’s visitors, which pages of our they looked at, and and where they’re located, and in some cases a lot of info on who they are … so get a load of this: In September we had among our Blog readers (besides YOU):

House of Representatives, The Treasury Department, the Internal Revenue Service, National Credit Union Administration, the American Bankers Association Inc., Congressional Budget Office, Fannie Mae, and Department Of Housing And Urban Development … so you’re among some pretty big big-shots that read the Blog from time to time … so if you’ve got something to say to people like these … LEAVE ME A COMMENT … they might pick up a good idea from you!