My Perspective

I wanted you to see the lead article in The Mortgageland Journal’s December 1st edition before anyone else. Hope ya like it.

"Peek over your shoulder just a little and answer me this; how well did that greed-filled “me first” mind-set work out for everybody you knew this past decade? Our philosophy at Secret! University is different than most industry teaching/educational facilities. We’ll help you focus on the over arching concept of ‘doing the right thing’ for your customers as you operate – regardless of more immediate short-term $$$$ you can earn by working with your own checkbook balance interests first; you’ll last longer with our approach and actually enjoy your career! You do know we’re Number One with Google for mortgage industry education, don’t you? So … maybe we’re right!

What’s a “me first” attitude look like? You can spot it inside various industry discussion boards, with less than ethical questions like: Who still does SIVA @ Max LTV’s? Which wholesaler pays the most YSP out there these days? Or, what wholesale lender doesn’t submit a 4506-T?

It’s NOT all about how much money can you make off your customer’s loan needs! The sooner the originators out there, get that fact through their heads, the better for all of us." 

Ask yourself this: do you sell a product, a service, or a concept? Does a shoe store sell shoes, or comfort and status? Does an accountant sell auditing tasks/functions, or legitimacy and security? Does a politician sell tax cuts, or a better future? Guess what, I KNOW at Secret! University it’s a concept … this article spells out EXACTLY our concept, and precisely how I think down deep in my secret heart! Some who will read that piece will disagree with it, and some will even resent the thought … they are not friends of Secret! University like YOU are however, I want our friends to like and appreciate it, the clueless one’s … not so much. I learned a long time ago: “DON’T TRY AND TEACH A PIG TO SING, IT’S A WASTE OF TIME AND IT ANNOYS THE PIG”

After dinner and right about the time you were about to PLOP on the sofa and watch football yesterday, I got busy and hung the Christmas lights up on our main mortgage training center’s website. They don’t look perfectly centered this morning, but I was sooooo full, I couldn’t focus! I hope you had a wonderful Thanksgiving Holiday with Friends and Family, as I did.

I added this bold assertion to the site also " … we have the most experienced and knowledgeable teacher in the industry right here on our staff …." I will be interested to see what kind of a reaction something that forceful will generate … if you’ve got an opinion on it, please let me know!

Been thinking quite a bit about Secretary Paulson’s repeated assertion to me yesterday in his morning news conference, that I was ‘naive’ to believe, doing what TARP was intended to do, things would ‘magically’ change! What also struck me, was he seemed to say non-agency MBS’s (like non-prime securities) were not called MBS’s but actually ABS’s as he described, they’re gonna buy up ABS’s of credit cards, auto loans, business loans, student loans (and sorta under his breath ‘non-prime securitizations’ as well).

Later in the day Fox Business News reported: "Without fanfare, the Treasury Department posted to its Web site Tuesday details of a new program to rescue struggling financial institutions – the “Systemically Significant Failing Institutions Program” — then disclosed it also has created a third, unnamed program to provide them with government cash."  Yet another indication to me, they’re confused and making this stuff up as they go along, Ready, Fire, Aim!

But the REAL funny thing was when they pledged to buy up hundreds of billions of ‘agency’ MBS’s and MAGICALLY (that’s right HANK) MAGICALLY residential mortgage interest rates U.S. mortgage rates dropped by the most in at least seven years … ya see Hank fixing this mortgage stuff isn’t mysterous or magical, just foreign to you Mr. Secretary ’cause YOU don’t understand how this mortgage thingy works!! (and frankly as the former CEO of Goldman that does surprise me somewhat).

PLEASE buy up a bunch of what you call ABS’s of non-prime residential mortgage paper, so our industry can turn around on a dime, just like Fannie & Freddie did YESTERDAY in a matter of HOURS!!!

A couple of hours ago, before my breakfast, some of you may have seen the press conference Hank Paulson held to bring me up to speed with what’s going on at Treasury. Throughout his presentation he felt I was silly to have ever believed his whopping "3 page TARP demand" along with the urgent plea that it was an EMERGENCY which needed to correct the collasped Housing and Residential Mortgage industry. There was no doubt buying up those TOXIC troubled mortgage assets to free up the credit markets was essential to fix the teetering situation in the American economy! (on that point I happen to agree Hank).  

As you all know by now, Hank was actually teasing us, when he said over and over that housing and mortgage lending was at the core of our troubles, and he would save us all by fixing them – he’s done ZIP, NADA, NOTHING as far as buying up ANY of those troubles mortgage assets … not even one!

This morning he kept telling me, that I was naive to believe that story BUT now he’s got the answer! Their new plan is to buy up TOXIC securitized assets (ABS’s: car loans, credit card receivable, small business loans, student loans), and by golly THAT will release the credit markets and save us!

Sure thing Hank, if you think "I" am that naive to believe you’ll actualy do that, and that it is some sort of a solution – you’re way off base. The ABS market of which you speak, is about 1% the size of the one you initially planned to fix, so now you think planning to address this tiny area will be meaningful? YOU GOTTA STOP SMOKING THAT STUFF HANK!

From what I see so far, CHANGE YOU CAN COUNT ON actually means change-out one group of Inside the Beltway people, for another. On the one hand, I sorta like that since Washingtom insiders will be necessary for the new Administration to get things done quickly, if we were gonna get a bunch of inexperienced folks full of HOPE but not experienced in how to get thing done in Washinngton, as promised in the Presidential campaign, it might have been a disaster. Here’s my point:

I am Very very upset that the Treasury Secretary has totally avoided buying up those TOXIC Troubled Mortgage Assets – as promised Congress to even get the legal authority to do it, and US Americans, and thereby immediately making a market for new securitizations, and a 180 turnaround in Housing that would naturlly follow.

I am hopeful, the new group of insiders will ‘Hit The Ground Sprinting’ and spend the last half of the TARP money, for what TARP was originally designed to do … resulting in saving our industry that’s swirling the drain as we speak!

The player will show in this paragraph

What HUD calls this (very limited) 30 year overdue update to RESPA is: "HUD ISSUES NEW MORTGAGE RULES TO HELP CONSUMERS SHOP FOR LOWER COST HOME LOANS"

Many of you may recall back on Monday Marchy 17, 2008 HUD came out with it’s proposal to modify a small part of RESPA and I discussed it in some detail while I was reading it’s 138 pages here in my Blog. They had been working on it for more than 6 years.

HERE’s a link to their press announcement on this subject from Wedneday of this week, as well as this LINK to the actual text of the new Final Rules and legal requirements … YOU should read all of it (back when I was a 20-something LO, I would read stuff like this word for word, and my GPA and love of learning, schooling etc. was MUCH lower than yours anyday).

Remember our concept at Secret! University is for you to have a long and happy career in our residential real estate mortgage lending industry … so don’t be guided by other industry training educators who focus on you making more money for you, but instead try thinking our way … do what’s best for the customer and your career will thrive. And, by the way, none of those other trainers have been in this industry as long as I have anyway.  

STOP trying to impress your co-workers, friends, relatives, and customers with the fact that you have Google search skills that can beat any 10th grader in America (SO WHAT)! You won’t impresss ME if you can ‘look up an answer’ – I’ll only be amazed when I  know YOU KNOW THE ANSWER to lots of stuff like I do! <— that’s what pros do.

In case you didn’t happen to notice this Press Release we filed yesterday, I felt it could be a good idea to post it here as well.  I would like it for you to think about a class or two you would like to see us offer, that some of your associates might attend, and let me pknow please. 

"After Treasury Secretary Henry Paulson announced yesterday that the government will not use any of the $700 billion granted by Congress to purchase troubled assets (TOXIC MBS’s, CDO’s, etc.), thereby providing significant ‘turn-around’ immediate relief for the residential mortgage lending industry, which leaves our potential students with a lot more time on their hands for the forseeable future – so they’ve got plenty of opportunity for additional training; the timing seems perfect to announce an expansion of our training & educational curriculum here at Secret! University," said Peter Samuel Cugno, Chairman & CEO.

"Our new Virtual Campus area will be a combination of Live face to face classes or Webinar class lessons for out of area students, on specific areas of current interest."

"We’re beginning with one to 2 hours sessions on: How To Start a Mortgage Company from Scratch, Personnel, Problems Solving, How to Make Your New Company Phone Ring with Qualifiable Applicants, and Loan Officer Orientation & Training. Cugno went on to say. "And based upon the depth of experience of our faculty, we can quickly and easily offer up any lesson plan a student would like."

Fascinating, just fascinating. Hank explained " … although balance sheets continue to contain significant illiquid assets … we will not be buying any of the (TOXIC mortgage) troubled asset …." but instead we’re doing these 400 other things we think are better ideas …. yada yada yada …(a classic all-time Bait & Switch).

I sorta guess he didn’t think some of us had figured that out after all the stalling! One thing I did learn is that $115 Billion of that $250 Billion that was to be injected into many hundreds of banks, has already quietly happened (remember Goldman Sachs is a BANK now and it’s future Chairman & CEO (in 6 weeks) will be ‘good old Hank’, so I guess that’s a good thing!

This move drastically STOPS the jump-start to Housing and Mortgage Lending TARP was designed to do.

As I read more on today’s AIG additional BailOut money, I now understand that small portion of it that kinda sorta addresses some of their TOXIC Troubles Mortgage Assets, which their ivestmenrt division happens to own: "… the New York Fed also will lend as much as $22.5 billion to a new limited-liability company to fund the purchase of residential mortgage-backed assets from AIG’s U.S. securities- lending collateral portfolio. AIG will make a $1 billion subordinated loan to the new entity and bear the risk for the first $1 billion of any losses [Big Deal], the Fed said." 

Which translated means the NYFed is merely capatilizing a new division for AIG, so AIG’s new division can buy some of those TOXIC mortgage assets from the parent AIG to ‘give it breathing room’.  Although it doesn’t remove them from their Balance Sheet, nor change ownership from AIG to the Treasury as was Paulson’s plan in the first place! It’s simply merely and only – today’s version of 3 card monte!

It’s like re-arranging the deck chairs on the Titanic, and helps to avoid having the Treasury actually buy those BILLIONS of TOXIC troubled mortghages assets at AIG and elsewhere – which they mysteriously continue to evade.