Haven't had a bunch to say lately; a week ago today at midnight, I fell down the stairs in my home - landed with such a THUD it woke up one of the neighbors! 911, paramedics, ambulance, ER and I got to spend 4 days in the hospital! Hope your Christmas was better than that.

Started a new consulting assignment as a Forensic Auditor reviewing case files on Robo signing, improper/illegal foreclosures by organizations who actually recorded ownership documents transferring their "Rights, title and interest in and to the Note and Deed of Trust" of this borrower or that one when they had No Standing to do so! I am so surprised, I mean so stunned by what I see I'm shit-shocked.

Forget about what you and I have seen in CBS, NBC and ABC's Evening news - it's worse!!

Start Your Own Mortgage Company

The real estate market is beginning to settle down; at this point in the cycle people begin to think about opening their own mortgage operation. One key step is the proper hiring of Loan Officers (LO). Mainly since the Fall of 1998 when the Russian Ruble collapsed and there was an industry collapse, in it's wake LO's were taken on board by most as 100% commissioned sales people. Please don't make that mistake!

When you do that sort of thing, you end up with people who come to your company with LOTS of baggage from their former employer(s). Ethical issues that can kill your fledgling operation. For the 8+ decades before that (like when I started in the business), we were paid salary and a modest bonus when me met certain broad ranging goals.It's best to hire LOs that have NO mortgage or real estate experience, that way they get infected with your firm's ethics and integrity instead of being high paid commissioned salespeople who tend to be greed driven.

The central theme (the #1 reason) on why any customer will do business with your company is it's credibility in the community. You think this guy's got that?

SEC FINALLY Charges Former GSE Execs with Securities Fraud

"Six former executives at Fannie Mae and Freddie Mac are now facing securities fraud charges (that means JAIL)  for making misleading statements about the companies' holdings of subprime loans between March 2007 and August 2008. The Securities and Exchange Commission (SEC) alleges they fed the markets false information about the amount of risk on each company's books. Both GSEs entered into non-prosecution agreements (means prosecutor's WEAK) with the SEC and have agreed to cooperate in the litigation against their former executives ... in which each company agreed to accept responsibility for its conduct and not dispute, contest, or contradict the contents of an agreed-upon Statement of Facts without admitting any wrongdoing."

Ya know, it's stuff like this that makes my blood boil - years later they finally are about to be brought to justice, and the 'big-boys' always they get off. Now, don't get me wrong ... I'm not one of those 'occupado' 99%er people, but like you, I too am sick & tired of the major lack of aggressive enforcement of the laws we all see everyday.

I got a real kick reading the language they used in this article to try and sound not-guilty, some quoting of these exec statements: (no subprime, we only had...) “basically no subprime exposure,” subprime like” "expanded approval” "Alt-A loans" when actually Freddie Mac had $244Billion and almost 20% of Fannie Mae's portfolio was full of them! This isn't an inditment of the loan types, it's all about the FRAUD.

Rebuilding our Industry - Part 3

As we look forward to an uncertain new year, let me paraphrase the following from a news piece I saw this morning " ... in 1997 there was no Google. In 2002 there was no Facebook. There was no Twitter in 2004, and the iPad only made its debut in 2009. There is no indication that the pace of innovation will slow, so how can you plan for the future when the target is moving, and moving quickly?"You must get your head outta a sales/production mindset.

I think the word/concept for the year will be COMPLIANCE.

As a small/medium owner/operator of a mortgage brokerage or mortgage bank - few operators paid a whole lot of attention to this area, yet today there's 2+ dozen news laws and regulations that have been heaped on you just since this mess started a couple of years ago. Many of them still not fully written or even implemented yet ... and more to come!

Start paying close attention to industry news publications, read several of them on a regular basis so you can keep up with what's happening (among others - I have read the National Mortgage News - the dead-tree paper edition arrives at my home on Monday - weekly since 1982). 2012 and beyond to be owned by those that are picky on Compliance issues.

Rebuilding our Industry - Part 2

If you're a small/medium sized owner/operator, I'm sure yesterday's lesson about NOT running your company with hiring Big Commissioned 'salespeople' Promise Maker types, was a bit hard for you to swallow, especially if you used to be only an LO yourself and your employer was sales-production driven (therefore probably a terrible trainer). You've missed-out learning about the dozens of things your Promise Keeper department can do to make your firm excel. Once you think through thoroughly the concept of NOT paying a 6+ figure payroll to your LOs, but instead keep that money in house you'll like the idea.

You'll use that money to pay a first-rate salary to all your employees (the kind you would hope your wife, girlfriend,sister, Mom would get), plus modest bonuses now and then. And with the majority of that money, you'll spend a lot of it marketing and advertising your professionally & ethically operated mortgage company. With YOU directing how your company is seen my the public, you'll quickly discover that it is the company's credibility that attracts and keeps new applicants.

Better YOU show company ethics, morality and credibility than a Big Commissioned salesperson who is constantly challenging your understanding and enforcement of RESPA Section 8 as they bob-and-weave (shuck & jive) about how they compensate others for their referrals.

Given all the new laws and regulations that you need to pay close attention to, letting a salesperson (possibly) jeopardize your company future because you give them too much control, is just plain dumb.

A Step to Begin Rebuilding our Industry

As I sit here waiting for the private Mortgage Backed Security to get back in business and start securitizing pools of non-agency mortgage loans (not merely jumbos like today), along with (what I predict) the implosion of FHA (or at least a dramatic decline in its industry reach) along with the GSE’s start to drastically wind down their operations, we need to rebuild our industry from the ground up. Someone needs to provide all of us some guidance and rewrite how things need to be done differently moving forward … so I’ll start:

First off, the ‘commission for production’ model is seriously flawed. The consumer finance payroll method absolutely makes the most sense (something I’ve personally done, trained others to do, and provided instruction to my former students @ Secret! University).

This is an easy one, no more being a baby sitter for big commissioned salespeople who want to discuss their income regularly, etc. The employer simply sets a salary for each of the positions within the company. Occasionally this or that position is worthy of a nice bonus, so that is part of what personnel can expect from time to time (once they meet certain preset goals). Employer needs to incentivize Quality and NOT quantity.

This way, the Company focus is where it belongs – on the outcome of the loans, not mere production numbers. Good loan outcomes = Be Happy -- Lousy = Be Unemployed.

This Blog's Stats

Now that my blog is being run out of this ever-dreaded Google blogger - instead of my own company's server with WordPress; I have at last seen some of my previous readers have arrived, Thanks!

At November month's end we logged a 42% readership increase over the month before and for that I am appreciative.

Tell your friends about my blog; e-mail me any topic suggestion you would like me to address, it would be my pleasure to do so. Considering as hazy as the industry's future seems like right now, it can be challenging providing any guidance on how you should prepare yourself for after the fall-out - EXCEPT for a rather large handful of core ideas by former employees, consultant clients, and students and learned about directly from me. "Fall-out?" Yea, the coming dramatic landslide shrinking influence of Fannie/Freddie & FHA!

GSE's Gone Wild

"Fannie Mae and Freddie Mac spent roughly $640,000 this fall to send 100 of their employees to the annual convention of the Mortgage Bankers Association in Chicago, a decision their regulator defended amid criticism from GSE critic, Rep. Randy Neugebauer, R-Texas" ... in today's news ... looks like a perk to me, it's not about attracting more business!

Back in the day when my company was a Freddie Mac Seller/Servicer, I remember spending some fun time as a guest, with their President Phil Brinkerhoff (sp) in Chicago at the same MBA Annual convention. I vividly recall their spending money not unlike drunken sailors in their hospitality suite convention-long party - cuban cigars, etc. And at that time it's big sister was struggling with several quarters of losses with CEO Dave Maxwell (a guy I also knew then) @ Fannie trying to fix it, so baby brother Freddie had the better rates. But, don't get me wrong, I popped in on a party or 2 of Fannies also. This Congressman has hit the nail on the head, these execs tried last month to jam down gagging bonuses for themselves, they obviously feel entitled - what the hell it's not their money ... it's YOURS and MINE! Even their new regulators are already doing a crappy job of oversight so far.

Happy Thanksgiving Everybody

Just got the turkey out of the oven, they're starting to set out the treats, veggies, chips, dips etc. and company will begin arriving shortly, so I had a second to write.

Now that I have moved my blog here to Google's blogspot and away from our own server and Wordpress, I am hopeful I can put up my Christmas lights inside this software as well - may be a challenge or maybe easy and no problem ... we'll see this week end ... since this is when we put up our tree in the family room.

One more thing I am thankful for this year again, is my blog audience. Thank You All and have a Happy Day with your Family & Friends

banco de america

Have you been wondering what's up with this bank, like so many of us have been? Major LO's leaving, cutting mortgage broker channel, closing down their correspondent division, squeezing warehouse customers ... well, you'e right ... "it walks like a duck!" In a news piece I saw 10 minutes ago, I discovered these tidbits:

"(1). the company could face a public enforcement action if banking regulators aren't satisfied with recent steps taken to strengthen the bank
(2). it is in the process of reviewing its warehouse lending accounts and plans to shift over some of those relationships to its Merrill Lynch division.
(3). B of A has been operating under a memorandum of understanding since May 2009, following repeated disputes with regulators over the purchase of securities firm Merrill Lynch 
(4). finally -->> and a downgrade of the company's confidential supervisory rating."

Past Due Mortgages = 6,298,000

"There were 6,298,000 mortgages going unpaid in the United States as of the end of October, according to Lender Processing Services (LPS). It's a daunting number, but the data show that it's actually been on a fairly steady decline for nearly two years now. At the start of 2011, the total number of non-current mortgages in the U.S. stood at 6,870,000. In January 2010, it was 8,118,000. LPS' report indicates mortgage delinquencies are declining while the nation's foreclosure inventory is growing."

Wow! Talk about deceptive media spin, you’ve got to be kidding me. On the surface this sounds like a sizable improvement - since the lead is delinquencies are better!?

When a mortgage is ‘past due’ the industry calls it ‘delinquent’ – put a different way, it means the owner of the mortgage is not receiving their expected interest income at the same rate as promised to them.  A way to keep track of potential principal losses on the way when added to income losses right now. So let’s all remember lower delinquency means people are paying more promptly OR (in this case) the pool of REO’s has dramatically increased and they are no longer labeled as 'delinquent.'

So this could just as easily say … “Hey folks! There’s been a steady increase of foreclosures for nearly two years now – in fact, since January 2010 foreclosed homes have increased by some 2 Million!”

 

The Legacy Brains

The late comedian, George Carlin, was always one of my favorites; perhaps the best wordsmith in the genre. The residential mortgage lending industry's delicate term "legacy issues" as it relates to industry problems seems to me a bit Carlinesque; I think he might chuckle at the phrase.

Let's analyze what they mean by legacy issues. Typically that means everybody is subject one way or the other, to loan buy-back demands from upstream investors. Therefore what's smarter... tying your wagon to an established or a start-up operation? Mortgage brokers face buy-back demands from their wholesale lender. Those wholesale lenders face repurchase demands from the sorts of Bank of America, Wells Fargo, or Chase who potentially holds their loans. Even those mega banks are up against it facing down Fannie and Freddie. And lately everybody is getting a target painted on their backs by the MBS investor lawyers. So... yep you know what flows down-hill!

Why do I bring up this topic? Well, for several months (20) recently I tried to obtain funding for a vertically integrated 'start-up' company that included a residential mortgage banking operation. More than once, a potential equity partner/Investor has queried as to whether buying an existing mortgage operation might not be a wiser and less expensive way to proceed. My explanation is always the same. EVERY mortgage lender that is already in business is subject to a largely unknown quantity of risk, including the potential risk of enormously expensive buy-backs. The longer they've operated and the more successful they've been; the higher the risk exposure.

But what about those news articles and press releases lately announcing 'so and so' former exec has come out from hiding and is now about to start becoming involved with a new venture. You remember, they were the ones who were former 'big shots' at Countrywide, Option One, Encore, New Century, Saxon, Countrywide and others who significantly contriburted to the mess we're in today!

What's wrong with these guys? Well, exactly their problem is they have "Legacy Brains" - they still incorrectly believe a 'strong commissioned sales culture' is the way to go in the lender business. That was never a good idea. For my money you want those old-fashioned consumer finance types, they know commissions are big mistake, and the general sales culture notion should never be the smart way to operate. I must say I'm a trifle perplexed as to why I had trouble (especially with the exec team I had at hand)acquiring funding when folks with a production-first/ loan quality second, huge sales commissions mindset are being funded.

So, when someone talks about THOSE guys and says 'They're Back!' you shouldn't think 'Hooray!' instead ...  scream in terror and Run for the Hills! I would think that those old-fashioned consumer finance types, like me and my team, who realize that the tail should never wag the dog, would be a wiser choice for an equity partner/Investor. Am I missing something?

FHA Market Share Falling

"When financial markets seized up in late 2008, loans insured by the Federal Housing Administration accounted for 24 percent of residential originations. By last year, FHA market share fell to around 20 percent. Full-year 2011 FHA market share is on track to come in at around 16 percent."

This is an interesting news factoid along the lines of my mid-October comments about FHA, and why it needs to get out if the spotlight with high profile production. Other news pieces this week are talking about Fannie and Freddie moving along towards getting closed down! All is great news for the future for our industry.

As they move out, that should push the private securitization market into getting back to it - which is badly needed since it provides the diversification in products America needs!

What's Your Job Position Worth?

With so many of you considering new employment, or who have recently accepted a new position somewhere - this seemed like a good topic to cover ... What's your job position worth (as others read your resume they surely do have an opinion, what about your opinion?) - what do you contribute to the overall process of turning a stranger into a funded residential mortgage loan transaction? OK, so let's run through one, start to finish:

Customer visits Google and searches the term ... mortgage refi, bill consolidation, mortgage broker, mortgage banker, home loan, etc. and up comes 'Millions' of results, they close their eyes, point & click the link to where you happen to work, and study the website (which should contain the answers to 99% of their questions, concerns, etc.). During that review they're able to determine your firm does the type of loan which they're looking for (rate & term refi w/cash out), so they complete your on-line application and away we go!

Their first voice contact with anybody is probably a Loan Officer, who learns the customer is a regular ordinary average one; not somebody that wants an Exotic kind of loan, but a simple full doc 30/30 cash-out refi. The credit report gets pulled and they discuss its contents, customer receives a 'quote' (an important customer service/help-desk function) - and the customer submitted application & credit report is handled off to the processor, who will process/verify etc. and guide the package through the pipeline.

Over the next several days, (independent of the LO) she will order an independent field appraisal of the subject property, collect the additional necessary paperwork directly from the customer, open escrow (in a non-lawyer State, or via an attorney in those backward - early 20th Century East coast 'lawyer States' - all along verifying everything is genuine, as well as confirming the developing package will meet the standards of the lender/underwriter program (extremely vital job duties).

The escrow company personnel (or attorney if necessary) open up the title order, requesting a preliminary title report from the title insurance company and they send off for known mortgage lien 'pay-off' beneficiary statement(s), request and collect a loss payable endorsement on existing property hazard insurance, and otherwise get prepared to schedule a closing/signing of the customer documents (fast paced and detailed activities oversights are not permitted).

After preliminary title report, demand pay-off's' of mortgage lien(s) or others, real property appraisal, and all the final pieces of paper needed from the customer are received and everything is verified and analyzed by the processor (inside a presser cooker environment with an egg-timer on her now) - the transaction is presented to the lender/underwriter for approval. Processor continues to maintain close contact with applicant throughout the process, sort of like 'hand holding.'

Once received by the wholesale lender funding source, the underwriting department (account mgr/processors) re-confirms that all the pieces of paper are genuine and 'what they purport to be', that they are sufficient, and then makes the determination if the transaction exceeds the minimum standards of acceptability, approve the transaction by advising the mortgage broker company, and get the signing documents prepared for delivery to escrow for signing/closing (all highly stressful duties - errors are not acceptable - easy to lose your job).

As we move into the home stretch, the signing docs are shipped out to escrow (or attorney), the customer is scheduled to visit the escrow office for document execution (or if necessary a mobile closer/notary meets them at Starbucks, Denny's, or sets up a signing on the hood of their pick-up truck somewhere out in the countryside). Docs arrive at escrow (the clock's ticking), who now puts these pieces of paper all in order, get's everything signed and notarized properly, and returns back to the wholesaler/lender (except for the mortgage or deed of trust), awaiting a 'fed wire' of the loan amount (all has to happen same day). Once received, they get the deed or mortgage recorded with the proper County Recorder in the same County where the subject property is located, close their file with the HUD-1 balancing, and distribute the funds as directed by the wholesaler/lender.

Of course this fairy tale closing isn't what really happens, there are always multiple crises that happen along the way because too many people have to touch the transaction, and they make mistakes all the time. As you can see there's plenty of room for multiple train-wrecks with each closing; and there normally are!

Now as to cost/worth value (excluding all the possible problems that could have come up - this article would be 25,000+ words longer if I detailed all of them too): First, making the website credible and marketing it on the internet and elsewhere to attract customers, cost (in time & money) at least $X,000 per loan, the LO spent about 20 minutes of his/her time (LO and owner/operator have predetermined what that's worth and is paid after closing) the processor probably spent 60/90 minutes or so (typically the customer paid fee at closing is $450 for processing), credit report $15 (whether closes or cancels), appraisal fee $300 (several hours work/travel time non-refundable if loan doesn't close) and both must be uncompromisingly reliable. Two-way doc courier fee $50, escrow fee (180+ minutes spent at warp-speed) usually $650 (only if loan closes), in attorney State - attorney fee $500+ (non-refundable if doesn't close), preliminary title report (if loan cancels no charge unless done by a lawyer in an attorney State), mobile notary/signer/closer $125 (easily one or two hours works/travel time), lender/wholesale funding source (90+ minutes) is paid out of future customer paid interest and only after closing ... so ... are you overpaid or underpaid?

Are Our Industry Generals Fighting the Last War?

I was speaking with my lawyer the other day about my extreme degree of frustration in having been unsuccessful at raising $2.5 Million for a consumer residential real estate mortgage lending financial services family of companies, from a potential equity partner/investor after almost 1 1/2 years trying. I was telling him I had aggressively gone after investment bankers, private equity funds, angel investors, and mortgage banker lawyers and hedge funds - as possibilities of folks who could aim me in the right direction to acquire these funds so I can re-start my old firm and do (for the fifth time in my career) a non-bank holding company with several related wholly - owned industry subsidiaries who's synergy and cross quality control works perfectly together. It's been a home run for me and a handful of my clients in the past. I even reminded him (even though we've known each other for 25+ years) about the vast network of industry big-shots I have come to know and the numerous connections I still have within the ranks of the executive offices here in America, and yet I haven't yet come up with one! But, everybody 'knows a guy' .... BULL

He's a real sharp guy, he listen carefully to me, then he told me a story about Charles deGaulle... years before he was a General, back when as a young officer, he developed the concept of armored warfare just after the First World War, as a means to break the stalemate of trench warfare. Everyone else was still looking backwards trying to figure out how to improve trenches. He was fairly ridiculed at the time. A few years later, when everybody was still working on how to build better more effective trenches, the Germans had read about the papers deGaulle had written and said '... hey that's it - TANKS! that's a great idea'... the German Blitz creed was born!

De Gaulle was famous for 'fighting the next war' and not the last one, the mistake so many old Generals tend to do (looking the wrong way), and that's the core advice he gave me. To get out of this mess and invest in our industry's future - you've got to have forward looking vision. He said, "... Peter it's all about timing, maybe next week you come across a half dozen of them, the changing landscape needs to get one of those forward looking Generals to think and then Bingo!"

We need more Generals who are looking to fight the next war and not the last one for our industry to turn around.

No More Big Commissioned LO's

In 1966 when I started in the business it was with a 60 year old nationwide multi-billion dollar organization whose procedures were long-established. After 2 years of OJT plus formal training also, and for the entire 13 successful years I worked there, I managed, hired, and trained several hundred people the ‘company way.’ In 1979 When I left and opened up my own company – which I operated about 2 decades – I continued with many of the same formulas to do things, since it was all I knew! I closed it down (in large part because I got Cancer); subsequently operated as a consultant to owners of mortgage brokerage and mortgage banker firms, then opened up my own nationwide mortgage training school in cyberspace plus local face to face sessions as well. As both the consultant (which I still am BTW) and certified State licensed teacher, I taught those various processes, methods and techniques – which by then had almost a hundred years worth of experience working perfectly well.

Let me sum up one of those for you today: You can be shown how to hire what you would call a ‘processor’ with ZERO industry experience and/or contacts. Train her/him how to be both a processor and a 'junior underwriter'. Then take that salaried Promise Keeper utility individual and show them how to explain the available various loan programs to potential applicants, an activity you would call being a Promise Maker ‘LO’ – all on salary with a modest bonus here and there (buh-bye big gagging/choking commissions).

The result of this technique is you can control your payroll with the salary/bonus concept, saving the hundreds of thousands of dollars you would have otherwise wasted by paying it over to commissioned LO’s (that business model gained favor in 1998 - it's run its course now). With that huge savings, you can spend it on various advertising/marketing programs and buy yourself a couple of new Ferrari’s like I did.

Want to learn how?

What's a Couple of Billion here & there, right?

In today's industry news: "The Federal Housing Finance Agency Thursday morning released new estimates on the ultimate cost of bailing out Fannie Mae and Freddie Mac, cutting its worst case scenario projection to $311 billion from $363 billion.... " Sorta like it's nothing!

Ya know, it's almost like these guys have lost all perspective on what a Million dollars is - BTW it's a 9" high stack of $1,000 bills vs. a Billion dollars which comes in at the height of the Empire State Building! It's almost always accounting tricks anyway.

Why it Takes So Long Lately to Close Loans

This is the title of today's post by the Editor of the National Mortgage News, intended to generate some helpful comments for my friend Paul Muolo. Below I have copied my comment in response to his question, in case you don't watch his column/blog posts. Something to chew on.

I know the real reason for this situation today. It started with the industry meltdown during the Fall of 1998 – precipitated by the Russian Ruble’s worldwide collapse. LOADS of mortgage people were unemployed and when the smoke cleared there were a lot of good people looking for work. The industry was timid about hiring them again (salary + modest bonuses), thus grew the notion that big fat commissions are the way to go. From a new employers’ point of view, a great idea – no payroll risk (and since many of them were newly re-opening and climbing out of the ashes it made sense to them). THAT was the beginning of the end for the residential real estate mortgage industry. Too many people became ‘Promise Makers’ since the ‘Promise Keeper’ side of the business didn’t offer those outrageous commissions/bonuses. Those commissions and the widespread excessive use of YSP rarely used to help the borrowers, since it mostly was utilized as yet another bonus for the ‘Promise Makers’ – the result is today’s situation which has resulted in a weak field of ‘Promise Keepers.’

Fiscal Year 2011 is Over

I'm sure most of you know the Government's fiscal year ends September 30th - that way they can give us the numbers they want us to see in advance of any particular November election.

One set that interested me was/is the hefty decline in Ginnie Mae securitizations (Rural, VA & FHA), which I expected to increase after FHA changed their rules and now permit a lender to securitize pools of FHA insured loans in smaller amounts. Since its recent change, you can securitize a pool of ONE loan, so I figured production would increase. Frankly I can't wait until FHA production gets back in line and returns again to be the small sliver of industry originations (about 3%) where they have been since forever.

Fiscal year 2009 - $418Billion, 2010 - $413Billion; 2011 - $350Billion. Still a very long way to go, at least now it's going in the correct direction!

More on that 20 year old Information

"MAXIMIZING WEBSITE CONVERSIONS:  New research indicates that customers who complete loan applications online have high quality risk characteristics and a better closing ratio. The report noted that online application took nearly a quarter more clicks to reach at less successful website. But more successful sites generated eight times more loan volume."

This is another news piece I just now saw. Can anybody tell me why there would be "new research" providing data which my students and I knew almost 2 decades ago? As to that last sentence, here the astonishing answer - How about a Big Red Button on the main page of the website that says APPLY NOW (it could even be blinking if you liked).

Here's a photo of those that provided yesterday's data including the one's that wrote this report. This was taken when they went to their website class!

Wow - What a Revolutionary Idea - Nearly 20 years Later!!

First, let me please apologize if my boisterous laughter annoyed you earlier. I finished off reading a new article today about the internet when linked into mortgage lending and its value at the Bank of Idaho ( http://www.originationnews.com/on_features/bank-finds-value-data-1026912-1.html ). It was this particular quote from their Larry Bell Loan Manager, which made me wet myself in laughter ... ya know ROFLOL

“ ... he noted that automation in many cases has reached a point where there are some compelling reasons for both borrowers and lenders to use it."
 

I'm sorry, but since I developed from scratch and operated my own mortgage website and discussed it in detail daily on the NMN's Grapevine - step by step and how it worked, etc. Then later taught a class for 6+ years where mortgage brokers spent their hard earned money to attend (they drove in from NV & AZ plus 80% had to fly in from the East Coast!), learning how his valuable tool can take their shop to warp speed (back in the early '90's). Some of the attendees even bought one of our caps or sweatshirts to show off that they were alumni!

Sept 22nd Post Re-Visited

Even though my consulting assignment is now over, right before I posted my comments this past Wednesday, I called Tom (the "name's changed" guy subject of that post) and warned him that his big-brother affiliate core admin company (who I was told was a huge seller to banco de america) may be in trouble soon and I suggested he start looking around immediately to cover his ass if they look like they may go belly up because of banco de america.

I hope he'll do some research now to protect himself, unfortunately almost to a man, the Promise Maker types don't normally do that - I fear he'll sit and WISH Real Hard that my concern is overblown, which of course it may be. But, being able to jump ship to another affiliate program at a moments' notice would be smart.

If YOU are with one of those affiliate programs somewhere, better have a back up for yourself - you just never know in this environment.

Stuff on Internet ISN'T Forever

Yesterday I was talking with an old friend about my take on banco de america and I told him I wrote about them in my blog.  Dave said to me, what's it's url now?

Then it hit me, one problem with the Internet - and that's change (so stuff is NOT on the Internet forever like so many incorrectly think); gave him the url YOU are looking at now, I also gave him my old blog address http://americasmoneycenter.blogspot.com (it's still there on the Internet), it was active for 2 years, next (for almost 3 years) http://americasmoneycenter.com/blog I had this one on our company's website (which I shut down recently) - so all those posts are now gone, I'm sorry to say.

Bank of Italy's Successor

The saga goes like this: Couple weeks ago, we learned they were laying off some 30,000 employees. Last week we all heard about cutting back on ATM card usage (by charging customers a monthly fee), previously they had cut off all mortgage brokerage business, then tried to sell TPO operation (couldn't),  then yesterday announced they are going to shutter that division, again driving more customers away. Today I read they are closing down retail in six States! WOW

How do ya like your new ATM?

Taken together, these actions smell like they are doing whatever they can to maximize shareholder value (TBD insiders sell off and jump ship), as the 'Bank Tanks.' Saying that, let alone thinking that almost seems blasphemous. Makes me think back to the initial days of TARP I (right at the beginning of the explosion) when I asked Secretary Paulson to hire me to help develop solutions so TARP would give us all a big 'bang for our buck'  (Treasury used to read my blog back then), since it was obvious the Treasury didn't understand what they were doing. Today with 20/20 hindsight I see they never intended to take those 'toxic assets' off bank books, they just wanted control of a bunch of $$$, BTW Hank hired an old crony from Goldman anyway, who, it turned out didn't know 'jack' about what a residential mortgage loan even looks like!

Saw This Snipped in Industry News this Morning

Phoenix Home Sales for August Reach Five-Year High:  "August home sales in Phoenix surged to the highest level in five years with a total of 9,657 properties closing, according to the San Diego-based real estate analytic company DataQuick."

GUESS WHICH ONE'S FOR SALE!

I commented to Paul (Editor NMN) inside his 'Hearing' column the other day that I have noticed a significant increase in listings, open houses, closings, and foot traffic right on my street lately (I don't mean I noticed this back in August like this news reveal, but in the last month) ... so it looks like it's time for somebody to say in print WE'VE HIT THE BOTTOM in housing - there so you have it.

Too Big to Fail vs. Too Big to be Intelligent

All over the news here in So Cal the past couple of days is the notion that banco de America is about to access a $5 monthly fee to use your debit card in one of their ATM's - terminally stupid of them BTW.

Once the ATM was developed back in the early ‘70’s, Banks realized they could transfer many 'high touch' transactions to these machines. More accuracy, significant reduction in overhead (no longer needed would be 97% of their tellers, teller  supervisors and assistant operation officers) – all of those costs would be gone! Plus, they could have ATM’s anywhere, and everywhere where there wasn’t a brick and mortar branch. Next most bank hurried to get them deployed, actually BofA was one the slowest ones out here.

Now they’re saying they want to revert back to the pre-ATM overhead, driving many of their current debit card customers back into the bank, using their checking accounts instead of debit card.  Some idiot shot himself in the foot with this decision, no doubt.

Prison for former Countrywide employee

A former financial analyst for Countrywide Financial Corp. has been sentenced to hard time in prison. The sentence followed a guilty plea from the former employee for stealing data on 2.5 million Countrywide customers. Countrywide spent $1.2 million notifying the customers, $15.8 million on free credit monitoring and $13.4 million in civil litigation. In addition, each customer whose identity is stolen could receive $50,000!

Based upon what I have heard from LO's and Mortgage Brokers throughout my career doing this exact thing (but smaller in size of course), I would bet this story: 1). won't be seen by these bad guys, and 2). if they did see it, this wouldn't even be a deterrent as it should.

A Faulty Court Decision

Did you see this in today's industry news?

"Standard & Poor's, Moody's Corp. and Fitch Inc. won dismissal of a lawsuit alleging that their ratings of nonprime MBS were faulty and caused five Ohio public employee pension funds to buy into these money-losing investments."

What BULL -  Of course this Judge Should have known Better, those guys were surely at fault for their place in this mess. I hope this gets appealed!

Getting Uglier by the Day

The almost daily revelations in industry news about how sloppy, or non-existent many regulators, and government agencies have been and the degree of 'insider deals' so many of them have been engaged in, shows me the depth of corruption that’s been in our industry at the highest levels for some time. Watching how they blunder around lately only screams out that they’re still doing it! The old-boys network has been that way for far too long, looks like it gonna continue too!

Whatdoyouthink?

Name's Have Been Changed to Protect Privacy

At this point Tom’s one of the survivors, still here even after all this train-wreck the past few years. He worked out of his home/office, did his own processing and had a couple of LO’s that he paid (too much) commissions to (and went in debt big-time - living off his credit cards). He decided to take the ‘affiliate’ road, where he signed up with a large multi-State mortgage banker.  With the back office of their larger organization to help support him, since 99.9999% of what he knew about this industry is/was “selling” borrowers - a typical  Promise Maker. They filed a dba (in both his company and their own name), then they got lender license at Tom’s new commercial office space location. He basically became their branch manager. His ‘house’ overrides which he got, they deposited and bills were paid out of that one. Nearly independent (he kept a separate checking account from the one they had him use to pay overhead), quite a bit of this individual and personal commissions went in that one. That local secret slush fund one he used to continue to pay his LO’s the big gagging commissions they felt they earned (let’s say what they wanted, not necessarily ‘earned’), plus incidentals like copier repair, my small cash weekly fee, etc. He figured they were helping him, cost him nothing, so how could he make them play by the new compensation rules?

For 1 1/2 years, Tom’s had a processor (Muffy) he significantly overpays.  She’s quite detail oriented, knows how to run the office - in fact she does – since he has long lunch hours where they serve adult beverages. She could pound out up to a dozen loans monthly if needed, a real wiz! (I know it's hard to read sarcasm from text, but if you know me, than you know I was LOL as I typed that). 

Tom also has two 25+years on the job LO’s, both of them insist filling out a 1003 from an applicant, and collecting a full credit package is easily worth $10,000 a pop! All due to their Mellifluous Splendor!

So, I come across Tom's ad in the Pennysaver online looking for LO’s, I visit his office and explain (before I know this story) I’ll be happy to come to work for him, interview, hire and train the new LO’s he wants, (re)train his Processor, and do my best to enhance his knowledge in how to operate a going business (how to be a Promise Keeper) … because if all you know is LO stuff (how to be a Promise Maker), you’ll stumble badly when you need to spot problems developing, supervise and train personnel, and basically how to sidestep issues all owners face.

Tom took me on board @ 5 hours a day for three months (the assignment was an easy drive not too far from my home).  After almost month or so, he suggested I could do some of the work at the home computer

Are you in similar shoes yourself And could use a hand? E-mail or call me.