Sam's TEAM Blog

The amazing thing about the blame game in the political arena is that the truth is the least of the rhetoric.

As the powerful, like Rep. Barney Frank, Sen. Chris Dodd and their ilk are eager to point the finger, they never seem to step up.  It is always someone else.  Frank and Dodd aren't the only ones, they're merely the latest to place saving face and power above honesty with the American people.

The current debacle holding US and world citizens attention is the mortgage meltdown is the fault of all in Washington, almost all on Wall Street and many across the country.

In Washington, too many are worried of losing position should the truth come out, fearful of recrimination if they "rat out" the responsible and banishment from the Halls of Power if they should lay the truth before the American people.

On Wall Street, the profit is the only motive.  The next deal the only focus.  Not getting caught chairless when the music stops.  The real thieves have already deposited their bonus check, transferred it off-shore and working the next deal.  This is where the FBI should start harvesting a bumper crop.

The American people by and large are unwitting, though willing participants while the music is playing.  Many are now "innocent" as children and whining to authority figures of their victimization.  They too were happy, pleased to be dancing while the music played.  Now without the sweet melody of ever increasing home values, the house as ATM Game has come to an end and the hangover is painful.

This entire debacle was started by good intentions - everyone deserves a home - to buy a constituency's support and vote, everyone qualifies for a loan - to please the Washington power brokers, everyone has a dream that deserves to be fulfilled - fill mine while you're at it for them.

As with any serious illness, the road to recover will be painful, perhaps very long unless the strongest medicine is taken NOW.

But for everyone pointing a finger of blame, there are 3 fingers of accountability pointing at themselves from their hand of accusation.

That familiar refrain from years past "Are we there yet?" is probably on the tongues of many as we navigate the financial waters in the continuing aftermath of the mortgage debacle.

The short answer is "No, we're not there yet".  There, would be the bottom of this deep sea dive searching for firm ground in unknown monetary territory.

As the gyrations of the oil and petroleum markets add to uncertainty in the markets, the financial world keeps waiting for the last shoe to drop.  We aren't there yet, but we are close, as mortgage rates scope through a fairly tight range in the mid 6% area.

We're not there yet, but many think we are close.  Even then, it will be several weeks, if not months, before we know we've risen off the bottom of the financial turmoil.

very good.  Yet buying share of mind isn't really difficult.  It's only marketing, using a sledgehammer to buy time and having a bank account large enough to pay the freight. 

So what's this about you ask.  This is about Paramount Equity Mortgage.

The state of Washington's DFI, the mortgage industry overseer in the Northwest's most populous state, served notice of their intention to eliminate household name Paramount Equity Mortgage from providing mortgage services.

Shocking?!?!???

Perhaps only in the absence of the question "What took regulators (the law) so long to take action?".

For reputable mortgage industry insider's jealousy was an element - but jealousy that some could behave in such a callous manner, essentially laughing in the face of the law, the rules, the regulations.  Envy existed too, but only for the voluminous Paramount Equity marketing budget and the share of mind notariety it generated.

Regulators are rightly suspicious of competitors complaining about one another.  Yet the tactics of Paramount Equity were pretty well known, as wary consumers have sought out comparisons from other lender options when something just didn't smell right in the Paramount transaction.

Washington DFI's filing ( Washington 12 pg statement of charges - the juicy allegations start on page 8!) sums up the allegations and provides the reasoning for the formal court filing revocation of Paramount's license in Washington.  The charges provide an unflattering and descriptive analysis of the company's behaviors.

The $500,000 minimum fine and complete restitution of injured borrowers losses only add to the severity of the dismissal of Paramount's ability to do business in Washington.

While the headline asserts deceptive advertising, persons with industry knowledge reading the 12 page court document should get a chin cushion for the anticipated gaping jaw drop.  Smelling salts advised, too. Gravity induced chin free fall can provide serious injury.

Unearned fees, charging discount points to lower the interest rate but not doing so or charging a fee which is not expensed out the other side is a serious violation of law, federal law.

So while the initial fireworks are sent skyward in Olympia, WA., the real show may be when HUD and the Feds, through the FBI and the US Attorney General's office investigate the reported violations of federal regulations.

This elongated Spring of 2008 has now stretched to Memorial Weekend. 

Today's high temperature didn't break 60 if the weather reports are to be believed....but believable weather forecasters are another oxymoron aren't they??  Imagine, if you were as inaccurate in your occupation as these electronic prognosticators.........

This year's inclement weather is the most daffy since my arrival in Portland in 1978.  Two years later, 1980, the eruption of Mount St Helens provided unusual weather, but that was tangible and understandable.  This Spring is just weird.  Well it is an election year, so maybe that's the answer.

Lawns seem longer than normal this year, the result of grass being too wet on weekends when mowing has been most appropriately accomplished.  That's my excuse anyway.

The Rufous hummingbirds are setting the aerial survey stakes.  This morning, two males were performing the acrobatic gymnastics in the front yard with a massive flowering cherry tree as the prize for the winner.  No word from the two birdhouse occupants on their judgement of the aerial combatants.

Today lunch with a new Realtor referral partner.  The chat??  Housing inventory, time on the market, price reductions, seller participation, credit score and loan guidelines tightening or at least in flux.

We covered other topics too, the news media pounding downer news - seldom if ever noting the positive items or reporting stories from all over the country but not locally originated, news developed on the cheap, but little expertise;  futile open house sitting over the weekend, potential buyers - but "we've got to sell our house first", "I'm not certain the market's bottomed out", "we're just looking right now".

We've become a society of sheep, no matter affiliation, creed, race, occupation, whatever, we're walking or running over the same ground, over and again.  Lots of knowledge, yet precious little wisdom.

Consumers are inundated by the news, snippets really, about this bad, that bad.  Heck, it's all bad.  Doesn't matter the subject.  It's just bad.  Bad, bad, bad.

In the Portland area, we're a comparative oasis in a vast sea of declining house values.  Yet we've declined, so little in comparison.  Portland area homes have "fallen" about 1/20 of the drop in the housing debacle's poster children of Las Vegas, Phoenix, Florida.  That's about 1% decline if there was a decline.

Yet we've the same emotional disorder - the sky is falling.  Well, it hasn't.  But more on that in another session.

It's a familiar story - a client for whom we just completed a refinance of her home has referred a friend to me for assistance.

The referral is gratifying, knowing that my TEAM's performance exceeded a client's expectations and now desire a dear friend to have a similar experience.

This new client will be a first time homebuyer having been a renter of many years, and understandably dubious of owning a home.  She'd convinced herself she was better off renting.  She was especially casehardened after years of renting and hearing numerous myths, and not just about homeownership, but of credit scoring, credit card use, and the list goes on.

Answering her questions one by one, it became apparent my new client wasn't aware of the tax benefits of homeownership - that mortgage interest and property taxes are deductible, for just a bit more than her rent, she could have been buying a home of her own.

One by one we're eliminating the falsehoods, even some downright lies.  We're also rectifying the twisted "rules", which border on gossip they've been so badly mangled on the street, by the media, by someone's misreading of a story.

The lesson, the know it at work spewing out credit advice isn't a professional and while they may be right, may in fact be wrong.... totally and completely.  Consult with a professional in credit or mortgage financing.

After all, don't avoid checking with a professional about a loan because of something you've heard.  If you do, then you have taken a NO, from someone who couldn't say "YES, your loan's approved!".

In the Northwest home values seem to be holding steady for the most part.

The Case-Schiller valuation model, which uses a proprietary comparison formula, indicates that Portland home values declined a paltry 2% year over year.  While any decline in home valuation is troublesome, Portland's home values are virtual stalwarts compared to Miami, Las Vegas, Phoenix and other areas where the declines were greater than 20%.

The Seattle statistic is a 2.7% decline year over year.

What is it about emerging from Winter's doldrums which sparks enthusiasm or at the least optimism in the human spirit??

My blog writings have focused almost exclusively on matters of finance and home finance specifically.

Against a backdrop of dark and gloomy media bashings about credit markets, mortgage foreclosures and most recently the quarterly earnings of General Electric falling short of expectations, today's sunny weather has put bounce in my step and a happy note to my internal music.

What is it indeed?

Birds are chirping.  Blossoms seem brighter than they were just yesterday.  While temperatures this morning were in the mid-30's, it did seem warmer, if only because the sky was blue instead of the foreboding shades of gray we've endured for months now.

As I left for the office this morning, outside my home, a massive flowering cherry tree in the front yard sports brilliant pink blossoms - a giant 20 foot pink pompom -  providing a powerful contrast to the clear blue sky.

Nature seemingly avoids getting caught up in the machinations of the business world.  The ups and downs of the Dow Jones Industrial Average or the mortgage bond markets evidently provide nature nothing of which to worry.

Can it get any better than this??

Yes.

I'll simply avoid listening or watching newscasts the rest of the day and that should do it.

In a word, the answer is YES.

The "R" word, once just whispered, is now spoken aloud.  Though yet to be academically confirmed, the predicator signs are all around.  Friday's unemployment number blew through the expected number and upward revisions January and February numbers are now forecast.

Defined as two consecutive quarters, or six successive months, of declining GNP (gross national product), we may well be headed for recession, made all the more probable by the media's pounding home of gloomy news.

Surprised??

Reports of rising foreclosures, increasing tardiness of debt payments, declining housing prices and tightening credit markets on most fronts would make any prudent person play close to the vest.

The impact of continued gloomy news undoubtedly has more than a few huddled in fear of a falling sky.  But rather shivering in the fear of the unknown, prudent buyers and investors are doing their homework and are prepared to snap up undervalued assets at bargain prices.

Imagine an amusement park's roller coaster.  It goes up, then down, then around, to repeat the cycle again and again with some minor variation for the thrill of the ride.  Well, so do economies, product cycles and virtually all things in life.

No one, with truly rare exceptions, has experienced consistent upward mobility without a pause or bump.  It is the dips or drops or pauses which make the run ups possible.  Companies, economies, product and asset categories all pause during the race - these are marthons, not sprints.

The challenge is determining how this current dramatic confluence of circumstances will work out.  When will this current malaise end and how will the turn around look are the unanswered questions.

For buyers, credit scores and behaviors remain the central and most important ingredient to rate and program options.  100% financing is virtually nonexistent, though there are ways of achieving the same effect.

Credit scores aren't the only factor.  Employment history, debt-to-income, earning history and housing history will all be factors weighing heavily on investors decisions.

Of ever increasing import are collateral values, that is the value of subject properties and to an extent, comparables.  These are the back drop on the stage of loan approval.  This is why foreclosure and distressed sales adversely impact not only purchases, but the refinance market as well.

For these reasons it is even more important to be associated with seasoned professionals and shunning the part-timer mortgage broker or the real estate agent whose experience is more of convenience than of a focused, serious professional. 

Hope does spring eternal, even in the face of a strong headwind such as we face on many fronts today.

The weather has taken a decidedly warmer turn over the past few days, though night time temperatures have consistently dropped into the 30's.

It is much the same for housing.  Spring brings optimism and hope.  So do what appears to be a bottoming of the markets, both in terms of deterioration of local housing - despite a reported decline in decline in sales prices - and stabilization of the credit markets.

Yet second looks in both arenas gives pause.

Local housing prices are a reflection of some of the urgency with which some sellers approach the market, perhaps of necessity and the near overwhelming inventory levels.

Meanwhile the lending arena is becoming more stable despite media reports to the contrary.  Lender guidelines have tightened considerably, yet many programs remain available for buyer's to utilize.  This is especially so if borrowers have prepared ahead of time.  By that I mean, consulted with a true mortgage professional who learns of their needs, goals, income and most critically surveys a client's credit score.  The latter is perhaps most critical.

If you're serious about purchasing a home or refinancing to reduce debt, shift equity advantageously or lower interest rate, working ahead of need is strongly advised and the smart thing to do.