Wednesday, January 31, 2007

Concorde Acceptance

Looks like we lost another one today?

From Brokers Universe comes the following:

Concorde Acceptance in Dallas
Closed their doors today.

From Brokers Outpost comes the following:

Just received a message from a Concorde A/E stating they are out of business... any one know more about this?

Got the email today, too. Weird. I just closed two loans with them two weeks ago. They had a pretty good N/O/O 100% program.

DeepGreen Financial - GONE!

According to National Mortgage News DeepGreen is DONE :

Second-lien originator DeepGreen Financial, Cleveland, has gone out of business, according to officials close to the situation.

From their website (which no longer works) I found the following cached from Google:

Life is full of expenses...
home equity line of credit or home equity loan from DeepGreen Financial is a great way to pay for education, home improvement and life’s other big expenses like a new car or wedding. And, because the interest you pay may be tax-deductible2, it’s ideal for debt consolidation and often a better choice than a credit card
Housing Wire has learned that Cleveland-based Deep Green Financial Inc., an online home equity lender, has shut its doors.

The company was founded in 2000 and originated more than $5 billion in home equity line facilities to more than 65,000 customers in 47 states. In 2004, DeepGreen received the Inman Innovator Award in the Mortgage Technology category, recognizing the company for its technology platform.

The company provided consumer direct lending services through its website and through partners such as LendingTree, Priceline and Costco.

In 2004, DeepGreen was acquired by Lightyear Capital, a private equity investment firm based in New York City that invests in financial services businesses and other selected industries. The firm manages $2 billion in assets, including The Lightyear Fund, a $750-million private equity fund.

Monday, January 29, 2007

"$1 trillion in adjustable rate mortgages (ARMs) will reset this year"

Trouble on the horizon? From the Central Valley Business Times :

ARMs could clobber homeowners

SACRAMENTO January 29, 2007 7:37am

More than $1 trillion in adjustable rate mortgages (ARMs) will reset this year bringing higher monthly payments and a corresponding increased risk of foreclosure to thousands of homeowners, says Patrick McGilvray, president of the Home Buying Center, LLC, a Sacramento firm that buys homes directly from owners.

Analysts are divided on what this change will mean for the American and global economies, but many families and commentators are worried, says Mr. McGilvray.

Many Californians, and their counterparts in the rest of the country, live paycheck-to-paycheck and, because of unrestrained credit card spending, actually spend more than they make every year, he says.

He points to statistics from real estate information company DataQuick Information Systems of La Jolla that say in 2000 only 18.9 percent of homebuyers in the Sacramento region purchased properties using ARMs. This number dropped in 2001 to 12.1 percent, but spiked to 65.1 percent in 2004, and 72.8 percent in 2005. The number for 2006 was 62.5 percent.

Friday, January 26, 2007

Price per square foot plummets!

According to the current numbers maintained by Kern the price per square foot in Kern County is now down to $169.00.

This takes the price per square foot back to the levels of Summer 2005. That is a lot of equity that has vanished! Also, the price per square foot has now declined in 5 of the last 7 months. I spot a trend and this trend is not your friend.

For all those locals who are claiming that we have reached a "permanent plateau" look no further than the chart of land prices in land strapped Japan!

The link to their website will take you to a chart of prices from July 1994 to January 2007. Here is an important note they make on their website:

"While average home price is an interesting barometer, price per square foot is more accurate in determining sales trends."

"New home sales plunge by largest amount in 16 years"

From today's Bakersfield Californian on-line edition:

The Associated Press Friday, Jan 26 2007 7:36 AM

Last Updated: Friday, Jan 26 2007 7:36 AM

WASHINGTON — Sales of new homes plunged in 2006 by the largest amount in 16 years as the nation’s housing industry suffered through a sharp contraction after five boom years.

The Commerce Department reported that sales of new single-family homes totaled 1.06 million units for all of 2006, down 17.3 percent from the all-time high for sales of 1.28 million units set in 2005.

After setting sales records for five straight years, sales of both new and existing homes suffered sharp declines last year, and that has caused ripple effects throughout the whole economy.

Last year’s plunge in new home sales was the biggest drop since a 17.8 percent drop since the recession year of 1990. Sales of existing homes fell by 8.4 percent to an annual rate of 6.48 million units, it was reported Thursday. That was the biggest decline in the sale of previously owned homes since 1989

Thursday, January 25, 2007

Is Argent Mortgage Next?

From Brokers Outpost comes the following:

Posted - 01/25/2007 : 8:31:52 PM
Argent Mortgage will be closing their doors Feb 1st.
I really really liked them too. :[

Posted - 01/25/2007 : 8:33:37 PM
wow, where'd u hear that? R u an employee of Argent

Posted - 01/25/2007 : 8:35:04 PM
WHAT?????????? WOW! Next? Just saw a posting that Equibanc is closed too. I didn't know until today.
Darin Ferraro

Posted - 01/25/2007 : 8:35:23 PM
If you are wrong we will fry you

Posted - 01/25/2007 : 8:40:20 PM
LOL fry me? gosh i shouldn't be wrong then huh? Well, i heard a few weeks ago Argent was put on the auction block and if no one bought them, the owner was going to file BK and close. Guess that rumor was true.No i'm not an employee @ Argent, i'm guessing the AE for our office informed our office manager today.And the AE didn't indicate whether their just changing into Ameriquest or not.

Dropping like flies

Thanks to mozo maz for the tip, Millennium Bankshares is closing down their mortgage business:

Millennium Bankshares shutting down mortgage business

Millennium Bankshares will wind down its mortgage banking business to focus solely on core banking services, the company announced Thursday.

Bank officials say they will delay the release of their year-end financial results until they can determine the costs that will be incurred to close down the mortgage subsidiaries.

The charges would be taken in the fourth quarter of 2006, according to the Reston-based bank, which has seven branches in Virginia, including five in Northern Virginia.

"We were concerned about future volatility in earnings as a result of the soft housing market and wanted to eliminate, going forward, the risks normally associated with mortgage banking activities," says Carroll Markley, Millennium's CEO, in a statement.

Millennium (NASDAQ: MBVA - News) also said Thursday that it will realign some of its branches.

In the second quarter, the bank intends to move offices in Reston and Great Falls to a newly constructed office in Sterling, part of fast-growing Loudoun County. The move is subject to regulatory approval.

"The new site will allow us to expand our footprint into a county in which we have not had a physical presence and one which holds much promise," Markley says, adding that the realignment is expected to lower operating expenses.

Published January 25, 2007 by the Washington Business Journal


Per their Website :

Wednesday, January 24, 2007

Mandalay Mortgage

Is Mandlay Mortgage the next to go?

Lots of chatter at Brokers Universe :


Nice comments jackass. I know a lot of the sales people there and I wish them the best. From what I can tell they are going out with class and funding all loans that have been sent to itsacycle January 24, 2007

wow. thats what i have been hearing for the past couple of weeks by I love this job, horah! January 24, 2007

Yes. I am a former employee and I have spoken to several current employees today and there have closed their doors. They were a great group of professionals but these are brutal times especially for the mid to small size subprime lenders. There will be more to closings to come.

There are a lot of people who think it is cool to say that these closings are not important but it effects a lot of lives and will eventually come back to haunt the Brokers that they have served.

Just my two cents.
by Loanpro07 January 24, 2007

Twin 31 Story Condo Towers Get OK

From the Bakersfield Californian, comes an update on the planned twin 31 story condo towers:

Plan for high-rise towers at CSUB gets OK

By JENNY SHEARER, Californian staff writer Wednesday, Jan 24 2007 11:19 AM

The future landscape at Cal State Bakersfield may include high-rise towers with condos and a hotel.

Crisp, Cole & Associates received conceptual approval for its mixed-use project from the California State University system’s Board of Trustees today.

Crisp & Cole University Towers features twin 31-story structures with luxury condominiums, a four-star hotel and conference center, office space, retail center and parking.

“I am absolutely elated,” developer Carl Cole said about getting conceptual approval.

The project will be “the flagship of the universities in the Cal State system once we get this going,” he said.

The towers’ estimated cost is between $300 million to $400 million.

They would be on the southwest side of campus.

The university wants to pursue this project or one with similar components, including a hotel, if negotiations with Crisp & Cole don’t pan out, according to the project proposal given to the Board of Trustees.

The project would help develop student employment and internship opportunities in management, communications, accounting and marketing, according to Cal State Bakersfield.

It could be a stimulus for establishing new or expanded business majors, including merchandising, marketing, retail, business and residential, restaurant and hotel management.

The proposal includes a 700-space parking garage, which may costs $14 million.

The towers are the second of three proposed public-private partnerships.

In November 2006, trustees gave conceptual approval to Gregory D. Bynum & Associates’ four- to six-story office building project. Bakersfield Adventures for the Mind, an interactive children’s museum, is the final proposal.

Trustees will consider it at their March meeting.

California foreclosures increasing fast

From the Central Valley Business Times :

Foreclosures were up nearly seven-fold in the fourth quarter of 2006 and the number of notices of default, the first step in the foreclosure process, were up 145 percent compared to the figures from a year earlier, according to real estate information company DataQuick Information Systems of La Jolla.

According to DataQuick, 6,078 were foreclosed in the fourth quarter of 2006, compared to 874 a year earlier.

There were 37,273 notices of foreclosure filed in the state in the last three months of 2006, the largest number since 1998, says DataQuick.

In 2005’s fourth quarter, 15,196 notices of foreclosure were filed, the real estate information company says.

A notice of foreclosure begins the lengthy foreclosure process. Only a minority of homes that state the process are actually auctioned off. Sales, refinancings and other maneuvers can keep homes from the actual auction block.

DataQuick is a unit of Vancouver, B.C.-based MacDonald Dettwiler and Associates.

Monday, January 22, 2007

Notices of Default

Looks like the expected acceleration of NOD (notices of default) postings has begun. Last week there were 110 NOD's filed in Kern County. Two years ago we were lucky to see 10 a month.

Times have changed, the FB's and the speculators are no longer able to ring the register and place their home on the market with a 20 year old real estate mogul and walk off with a lifetime of earnings.

Here is a website site with a great primer on the NOD process.

Looking through today's newspaper we find an example of the end of the NOD process - the dreaded Trustee Sale:

OSTAC NOTICE OF TRUSTEE'S SALE T.S. No: B339375 CA Unit Code: B Loan No: 20655074/ORTEGA AP #1: 143-302-04-00-5 T.D. SERVICE COMPANY, as duly appointed Trustee under the following described Deed of Trust WILL SELL AT PUBLIC AUCTION TO THE HIGHEST BIDDER FOR CASH (in the forms which are lawful tender in the United States) and/or the cashier's, certified or other checks specified in Civil Code Section 2924h (payable in full at the time of sale to T.D. Service Company) all right, title and interest conveyed to and now held by it under said Deed of Trust in the property hereinafter described: Trustor: MARIBEL ORTEGA Recorded April 28, 2006 as Instr. No. 0206104764 in Book --- Page --- of Official Records in the office of the Recorder of KERN County; CALIFORNIA , pursuant to the Notice of Default and Election to Sell thereunder recorded October 13, 2006 as Instr. No. 0206254393 in Book --- Page --- of Official Records in the office of the Recorder of KERN County CALIFORNIA. Said Deed of Trust describes the following property: YOU ARE IN DEFAULT UNDER A DEED OF TRUST DATED APRIL 24, 2006. UNLESS YOU TAKE ACTION TO PROTECT YOUR PROPERTY, IT MAY BE SOLD AT A PUBLIC SALE. IF YOU NEED AN EXPLANATION OF THE NATURE OF THE PROCEEDING AGAINST YOU, YOU SHOULD CONTACT A LAWYER. 121 OLD DROVERS LANE, BAKERSFIELD, CA 93307 (If a street address or common designation of property is shown above, no warranty is given as to its completeness or correctness). Said Sale of property will be made in as is condition without covenant or warranty, express or implied, regarding title possession, or encumbrances, to pay the remaining principal sum of the note(s) secured by said Deed of Trust, with interest as in said note provided, advances, if any, under the terms of said Deed of Trust, fees, charges and expenses of the Trustee and of the trusts created by said Deed of Trust. Said sale will be held on: FEBRUARY 13, 2007, AT 10:00 A.M. *AT THE FRONT ENTRANCE TO CITY HALL 1501 TRUXTUN AVENUE, BAKERSFIELD, CALIFORNIA At the time of the initial publication of this notice, the total amount of the unpaid balance of the obligation secured by the above described Deed of Trust and estimated costs, expenses, and advances is $146,733.80. It is possible that at the time of sale the opening bid may be less than the total indebtedness due. Date: January 16, 2007 T.D. SERVICE COMPANY as said Trustee, FRANCES DEPALMA, ASSISTANT SECRETARY T.D. SERVICE COMPANY 1820 E. FIRST ST., SUITE 210, P.O. BOX 11988 SANTA ANA, CA 92711-1988 We are assisting the Beneficiary to collect a debt and any information we obtain will be used for that purpose whether received orally or in writing. If the Trustee is unable to convey title for any reason, the successful bidder's sole and exclusive remedy shall be the return of monies paid to the Trustee, and the successful bidder shall have no further recourse. If available, the expected opening bid and/or postponement information may be obtained by calling the following telephone number(s) on the day before the sale: (714) 480-5690 or you may access sales information at TAC# 746814C PUB: 01/22/07, 01/29/07, 02/05/07 (10171744)

What happpend here? This home was purchased on 12-31-01 for $69,000. Someone was obviously using their home as an ATM as they now owe $146k.

Saturday, January 20, 2007

"We are overbuilt"

From KGET 17 News comes the following video from the local builders conference on Janury 19, 2007. A few comments:

"We are overbuilt"

"Sales down 30% and inventory up 50%"

"Big concern is the time bomb loans"

"77% of buyers begin their buying search online"

Friday, January 19, 2007

Equibanc is no more?

Thanks to Max for the tip. Looks like equibanc is no more. Per their Website :

For Immediate Release

Wachovia recently conducted an intensive strategic review of its mortgage business which has altered the company's approach to the origination of non-conforming loans. As a result, Wachovia has elected to close EquiBanc Mortgage - Wachovia's only business dedicated solely to non-conforming loans.

If you have any questions, please contact your Account Executive.

Thursday, January 18, 2007

Home sales plummet in Kern

From today's Bakersfield Californian :

Home sales plummet in Kern

Prices are expected to keep sliding as city 'ready for fall'

BY RYAN SCHUSTER, Californian staff writere-mail: Wednesday,

Jan 17 2007 7:10 PM
Last Updated: Wednesday, Jan 17 2007 7:13 PM

Home sales in Kern County were down 30 percent in December from the same month a year earlier, while foreclosures increased 37 percent during the same period, according to reports released Wednesday.

The numbers appear to be the latest sign of a home market downturn.

"It is a normal correction. What is abnormal about it is the size of the correction," said Steve Cochrane, the senior managing director of Moody's, who has studied the local real estate market. "It was to be expected, but the longer the boom lasted, the steeper the downside."

Moody's predicts that home prices in Bakersfield will decline 5.5 percent in 2007 and 6.6 percent in 2008. Business 2.0 magazine recently listed Bakersfield as one of 10 housing markets in the nation "ready for a fall," using some of the numbers compiled by Moody's

But local appraiser Gary Crabtree said the local market is not all that bad.

"The market is reasonably stable," Crabtree said. "Pricing is pretty stable. New construction prices are continuing to drop, but that is to be expected after home builders made so much money in the last couple years."

The median sales price for existing homes in metropolitan Bakersfield was $281,000 in December, down from $291,349 in December 2005, Crabtree said.

"That's nothing earth-shattering," said Crabtree, who said he is forecasting a 5 percent to 6 percent decline in local home values in 2007.

The number of notices of default in the Bakersfield area has increased from 33 in December 2005 to 179 in November and 243 last month, Crabtree said. He said notices of trustee sales are also up considerably.

"What we are seeing is the direct result of the creative financing that has been put in place over the last three years by lenders," Crabtree said. "If we see a big spike in foreclosures, that's going to add more supply to the market."

There were 3,181 listings on the market in Bakersfield last month, up 53 percent from December 2005, Crabtree said.

Looks like Mr. Crabtree has increased his potential loss for this year. See this post where he claimed 5% down next year.

Wednesday, January 17, 2007

Funding America, no more...

Thanks to cpaone for the tip. Looks like Funding America is, well, no longer funding America from their website:

Due to current market conditions in the mortgage industry, Funding America has decided to discontinue accepting any new business.

Effective immediately, all loans in our pipeline will be processed out of our Houston location and we will work to close those loans in as smooth a manner as possible. For questions concerning any loans that are currently in process, you should contact our processing team at (866) 782-0100 Ext.1931, 1928, 1924 or 1933 for further information and status.

From our start nearly two years ago, Funding America has provided countless opportunities for numerous team members, brokers, investors, and home owners to have a more successful life.

Thanks to all of you for your support.

Funding America

Tuesday, January 16, 2007

New Listing! (Sort Of)

Fromt this week's Business Week Magazine the relisting game. What a scam! What kind of profession promotes this kind of trickery? -

Agents are pulling houses off the market and then presenting them as new offerings

Real estate agent Ross Simone wasn't attracting any potential buyers for a house in Mechanicsville, Md., that had sat on the market for months, so last November he took action. He pulled the house out of the regional database of active listings and then immediately reinserted it, changing the property ID number used to track properties over time. The result: The house appeared to be hitting the market for the first time. "It's in the best interests of my client [the seller]," Simone said in a November interview. "I started doing it consistently this year. I do it as much as I can."

What's perhaps more surprising is that in some regions, the local MLS does nothing to prohibit relisting a house in a way that makes it appear new on the market. In Atlanta, for example, First Multiple Listing Service Inc. charges sellers' agents just $25 to withdraw a listing. When they then relist the home, it shows up on "hot sheets" of homes that are fresh on the market. A buyer's agent who investigates can see that the house was for sale before, but not for how long. First MLS President Cantey Davis acknowledges that the system could give buyers a wrong impression of how long a home has been for sale but says he has received a "minuscule" number of complaints about it.

ResCap cuts 1,000 jobs,cites tough mortgage market

Looks like more pain and credit tightening from Reuters :

DETROIT, Jan 16 (Reuters) - ResCap, the holding company for the real-estate financing business of GMAC, said on Tuesday it would cut 1,000 jobs -- about 7 percent of its work force -- in a cost-cutting triggered by a slack U.S. housing market.

ResCap said it would incur a charge of about $10 million as a result of the job cuts, but expected to save $65 million in 2008 as a result of the reduction in its payroll.

The company said in a filing with U.S. securities regulators that it would cut 800 jobs by October and eliminate another 200 unfilled positions. The majority of the jobs would be cut in the first and second quarters of this year, ResCap said.

General Motors Corp. (GM.N: Quote, Profile, Research) completed the sale of a 51 percent stake in GMAC to an investor consortium led by Cerberus FIM Investors LLC in November.
A GMAC spokeswoman said the parent company had begun an effort to integrate ResCap more closely about a year ago in a bid to cut costs across its lending operations.
In its filing with the SEC, ResCap cited slower mortgage originations, a weakening trend for U.S. home prices and weakness in the sub-prime sector of the lending market as reasons for the job cuts.

"Now that we are a stand alone company, we continue to look at these kinds of opportunities to better utilize our resources," GMAC spokeswoman Gina Proia said.
ResCap had about 14,000 employees before the job cuts, Proia said

Sunday, January 14, 2007

Dream home for sale

Looks like my dream home is on the market. This home is located at 2606 Eagle Crest. I first spotted this home a few years ago while playing golf at Seven Oaks. It was on the market for a few years and it finally sold for $1,400,000 on 2/26/04. It is now back on the market and it looks like the new owner is trying to make a "sweet" profit. The home is listed for $2,300,000.

How much will it sell for and how long will it take?

Option One responds to scprofessor's email

After I posted the story of Option One acting in a compassionate way scprofessor engaged the Chief Operating Officer in an email exchange. I think the items discussed are excellent. Here is the email exchange:

I read with interest your response to the Business Week article that criticized the alleged predatory practices of your employer (see it at ).

I speak from a position of experience, having served as a transactional insider during the two previous downturns in California's real estate economy ('79-'83 and '90-'94). I think it is simpler to cut to the chase rather than beat around the bush. Plain and simple, sub-prime lenders like Option One have, through loose and predatory lending practices, and with the assistance of the entire real estate community, abandoned prudent lending practices in favor of the creation of imaginary suicide loans designed to put unqualified borrowers into situations where they have little chance of paying their debt in accordance with its terms and conditions.

I would have thought we'd learned something from the savings and loan crisis. Your attempt to defend Option One fails for one specific reason. They are a direct and active participant in schemes like putting idiot borrowers in situations where they borrow more than 100% of the purchase price utilizing negative amortizing variable interest loans. Talk about a solution headed for disaster. This didn't happen when lenders made loans that would be retained in their own portfolio. The excuse that prudent lending practices can be abandoned because the originator quickly dumps the paper on the secondary market is idiotic and will result in taxpayers like me having to pay for this mess once Option One and other sub-prime lenders go out of business because of their willing participation in a scheme designed to promote fraudulent lending activity.

Turning a blind eye to situations where subordinate financing serves as a substitute to an alleged buyer down payment simply doesn't cut it. What ever happened to lender requirements that necessitated us of a "verification of deposit" form? In my humble opinion I'd be looking for a new job. Option One, like a number of other sub-prime lenders is going to be added to the list of failed sub-primes maintained at .


Teji Singh wrote:I got this e-mail today....

Interesting enough, our response is being read. However, the issue that irresponsible lending has caused an issue with many borrowers stays prevalent. So, it is not Option One that is the issue, all of sub-prime is being targeted and compared to the savings and loan crisis.


scprofessor: Date: Sun, 14 Jan 2007 07:07:33 -0800 (PST)
Business Week Article Response
To: Teji Singh, Robert Chaffin, Christine Sullivan

You are correct and I submit it is a fair comparison. There is some clear responsibility here that can't be avoided. That is acting as a willing participant in fraudulent lending practices. Those ultimate purchasers of mortgage backed securities are not going to be barred by any sort of limitation of action time line because their time doesn't begin to start for the initiation of their recovery until they, through their exercise of reasonable prudence, discover (or should have discovered) the fraud that has been committed. Hiding behind terrible industry practices like "income stated" loans just isn't going to cut it. We've all heard stories about the McDonald's shift worker who claims a $100,000 income on his loan application. Underwriting practices that ignore the unrealistic nature of such a claim, do not excuse the exercise of common sense.




Teji Singh wrote:


As a servicer of non prime loans we are constantly looking at ways to assist our borrowers. That was the purpose of the response, that was not how we were portrayed in the article. As a servicer, we are not looking at foreclosing (that is a lose/lose proposition) rather discovering innovative ways of assisting (albeit after the fact). But, I do appreciate you reading the response and reaching out to contact me.



scprofessor: Date: Sun, 14 Jan 2007 08:02:04 -0800 (PST)From:Subject: RE: Business Week Article ResponseTo: Teji Singh, Robert Chaffin, Christine Sullivan

As you no doubt sense, I've been in your position and done your job. The patchwork attempts relative to workouts don't solve the problem that could have and should have been handled at the time or origination. One of the joys of academic freedom is, having tenure; I can freely speak my peace without fear of repercussions. You and other executives at Option One cannot and I understand that.

My sense is that unless the industry has gone through even more changes than when I left it in 1995, you are a salaried employee. Back in the good old days, all who worked for lenders were. That salary provided us with an incentive designed to promote loyalty to our employer. Today many who work on the loan origination side of the house base their income on a commission. No production means no income. What a paradox. I need to act as a loan officer. However if I exercise prudent lending practices I'm going to be cutting my income. The result, as we see it, is the quality of paper that is created is not as represented.

I don't blame you. I certainly don't blame any loan servicers. But let's face it. Each day you see the results of this situation first hand. Crappy loans that never should have been written. Deals that just don't make sense now and didn't make sense when they were made. And of course lack of loyalty means the responsible employees are now working for the competition, continuing to make crappy underwriting decisions. It has to and needs to be stopped. I'm thinking RESPA II is going to be one hell of a restraint on the mortgage business. But a necessary restraint.

Take care,

Saturday, January 13, 2007

Downtown Condo Tower A Failed Project

Who could have predicted that Bakersfield, another Valley town, would have no need for a massive downtown condo project? Look no further than Sacramento and the recent shutdown of the Saca Tower. See the recent story in the Sacramento Bee. Look at the picture in the Bee story, other than their project looking nicer, the outcome is exactly the same. Take a few minutes to read the readers comments at the bottom of the Bee story.

From today's Bakersfield Californian comes an update on the failed downtown condo project. Looks like another out of town investor, this one from San Diego, has become the greater fool in their search for "gold" in Bakersfield:

Artie Niesen, owner of Front Porch Music, is tired of it.

Jan Fulton, owner of Spotlight Cafe, is frustrated by it.

And downtown resident Dennis Harrison is just plain mad about it.

The "it" in question is a virtual junk yard adjacent to the old Padre Hotel downtown that includes discarded refrigerators, rusting hot water heaters, mounds of gravel, piles of scrap metal, broken beer bottles and used diapers, all visible behind a temporary chain-link fence at 19th and H streets.

It's disappointing enough that Pacifica Enterprises LLC, the owner of the partially refurbished Padre building, appears unable to commit to the project, say area business owners.

Friday, January 12, 2007

"Option One... a compassionate, humane approach"

Looks like Sub-Primer Option One is a little upset with an unflattering Business Week Story :

ARMs And Foreclosure: Option One Begs To Differ

"The foreclosure factories' vise" (News & Insights, Dec. 25/Jan. 1) was wrong to mention a mortgage foreclosure recently experienced by borrowers who had a loan with our company. There's absolutely no association between the borrowers' situation and the story's premise that mortgage services are using predatory tactics to harm consumers.

The article grossly misrepresents, solely as late charges and attorney fees, an amount it states was owed on the loan. The fact is, the actual amount owed would have consisted almost entirely of past-due principal and interest and amounts advanced on the borrowers' behalf for real estate taxes and insurance. The borrowers also received and signed disclosures from their broker as well as additional plain-language disclosures from Option One Mortgage (HRB ) indicating that they understood how an adjustable-rate mortgage works, contrary to what the article contends.

No one wins when a borrower loses a home. As a top-rated servicer, Option One did all the right things to help the borrowers get back on track toward curing their loan default and repaying their debt.

While the reasons for foreclosures, such as bankruptcy, job loss, and divorce, remain outside the control of the servicer, there are remedies. At Option One we will continue to focus on keeping people in their homes through early intervention, workout plans, and a compassionate, humane approach.

Teji Singh
Chief Servicing Officer
Option One Mortgage Corp.
Irvine, Calif.

About That Short Housing Slump…

From the January 22, 2007 edition of Business Week Magazine :

Has housing hit bottom? Not if history is any guide, says Hugh Moore, a partner at Guerite Advisors, a money manager in Greenville, S.C. Using data from the seven previous housing cycles since 1959, Moore concludes that the sector will fall further—and land hard. Take housing starts. In the past, they fell an average 51% from peak to trough. So the current downturn, with housing starts off about 30% from the January, 2006, peak has further to go. And it may meet recession on the way. That's because in six of the seven cycles, when starts fell more than 25% from their most recent peaks, the economy tanked.

Another gloomy stat: In the same seven cycles, the amount people spent on new housing as a percent of gross domestic product fell an average 28% from market peak to trough. Worse, in six cycles, recession kicked in when the ratio fell more than 10% from its most recent peak. In this slump, Moore says, that ratio has fallen 10.5% from its fourth-quarter peak.

History also shows housing corrections take an average 27 months. Thus, the current doldrums may linger a year or more. "It's just going to be this slow, grinding drain on the economy," says Moore, who adds that month-to-month housing stats producing relief rallies are "just noise."

By Mara Der Hovanesian

Tuesday, January 09, 2007

Another one?

Looks like another one has dropped out of the rat race? Origen Wholesale Lending has the following post on their website:

Origen is transferring its Wholesale Lending operation, effective immediately, to its select correspondent partners. The same real estate mortgage products remain available through these select Correspondent partners throughout the country, and Origen’s chattel operations for brokers, retailers, and correspondents will be unaffected.

If you have real estate loans already in progress with Origen, they will be processed through our Texas funding group, subject to clearing all stipulations and conditions. You can get updates on their status as well as discuss any outstanding requirements by calling (877) 998-9090.

If you received a Wholesale Quick Look approval prior to January 8th, 2007, you have until January 16th to get a complete packet faxed to (888) 855-4326. You can get updates on their status as well as discuss any outstanding requirements by calling (877) 998-9090.

For your future manufactured housing real estate applications, we suggest you work with one of Origen’s Correspondent partners:

Also per Brokers Outpost comes the following comments: Have they closed their doors???? Anyone taking over their loans???

Another Sub Prime Down

This one was fast. It went from rumor to fact in one day. No point in posting the rumors when you can post the facts:

Popular Financial Gets Smoked :

WASHINGTON, Jan 9 (Reuters) - Popular Inc. (BPOP.O: Quote, Profile , Research), Puerto Rico's largest banking group, said on Tuesday its U.S. consumer finance unit will exit the wholesale subprime mortgage origination business, resulting in charges of $39 million.

The San Juan-based company, parent of Banco Popular, said that as part of a restructuring, Popular Financial Holdings Inc. will instead focus on profitable businesses, and merge support functions with Banco Popular North America.

The company is the latest of many to curtail or get out of U.S. subprime originations, which involves lending to consumers with less-than-stellar credit histories.

Profits in the sector have shriveled due to increasing competition for a shrinking pool of borrowers, and amid signs that defaults and delinquencies are rising.

Popular plans to incur the charges in the fourth quarter of 2006 and first half of 2007. It disclosed the charges, which include $20 million of impairment, in a regulatory filing.

"Future of housing market debated"

In today's Bakersfield Californian Ryan Schuster reports on the local housing market. The report title includes the words debate. However, after reading the report I found very little debate. It is just a series of quotes by people who make money when you sell your house. There is no counterpoint or statement by anyone else. I would like to "debate" this story and provide a rebuttal of this items presented.

Sources used

The reporter quotes Jon Busby who has zero credibility with this blogger. Busby was on a Channel 17 news special at the peak of the bubble in the Summer of 2005 and claimed that prices will go up 10-15% for the foreseeable future. Prices are down since that point in time. By making this statement he has been discredited as nothing more than a cheerleader.

As has been pointed out numerous times on all the national bubble blogs; the USC Real Estate Center is funded by the real estate industry. Hardly independent. They have been cheerleading all the way up during this boom.

Only one paragraph was used to "debate the opposition"and no one was actually quoted. Not much of a debate here.

Credit contraction

No mention was made of the continued contraction in loose lending standards. As pointed out by this blogger (and many other bubble bloggers) 7 sub-prime companies have gone bust in the last 30 days with several others rumored to be going under. A significant portion of the purchases made in this town during the boom were made by those with less than stellar credit. Even a minor adjustment in the credit requirements will price more households out of making a home puchase. This will place the supply/demand curve even further out of whack than what it already is.


The article makes mention that inventory is down 13% from the month before. This happens every year - inventory decreases during the winter months. What matters is that inventory is up 53% year-over-year (YOY). Our prices will be down in 2006 primarily because our supply of homes outpaced our demand last year. This year we begin with even more supply and with credit contraction we will have even less demand. Not one of the "experts" quoted in the article mentions this.

Straw man

I have noticed that many "experts" who did not call the top in the housing market are resorting to a straw man agrument:

A straw man argument is a logical fallacy based on misrepresentation of an opponent's position. To "set up a straw man" or "set up a straw-man argument" is to create a position that is easy to refute, then attribute that position to the opponent. A straw-man argument can be a successful rhetorical technique (that is, it may succeed in persuading people) but it is in fact misleading, because the opponent's actual argument has not been refuted.

Notice the straw man agrument here "It is not taking this gigantic nose dive everyone was predicting." Everyone was predicting? Gigantic nose dive?

The goal here is to make the other side seem so extreme that they are immediately discredited by these sorts of outlandish statements.


When I read this comment by Crabtree :"Sellers have come to the realization that the party is over and they can no longer get the prices they were expecting before. We've reached a plateau and that plateau is holding" this reminded me of a similar comment made by Irving Fisher in 1929 just before the depression and the stock market crash of 1929:

The stock market crash of 1929 and the subsequent Great Depression cost Fisher much of his personal wealth and academic reputation. He famously predicted, a few days before the Stock Market Crash of 1929, "Stock prices have reached what looks like a permanently high plateau."

There are many other issues not addresses in a detailed manner - Will investers and their false demand return to the market? Our median price is still 8 times household income - Will this number come back to the pre-boom level of 3 times income? And so on....

Monday, January 08, 2007

Report: California leads nation in foreclosures

From the Central Valley Business Times :

California was one of the hardest-hit states by foreclosures in 2006, leading the nation in the number of foreclosure actions, according to a report Monday by a Fair Oaks company that tracks the industry.

California topped the nation with 157,417 foreclosure filings, up 94.3 percent over 2005’s 81,012 filings, according to

Colorado, with 68,310 foreclosure filings, was up 55.4 percent over 2005’s 43,951, the company says.

Texas had 106,845 foreclosure filings in 2006, up 35.2 percent over 2005’s 79,001.

One out of nearly every 2.2 foreclosures in the United States happened in the Southwestern states, according to

Nationwide, nearly one million (970,948) foreclosure filings were reported for the year, up more than 51 percent from just over 641,000 in 2005, according to’s internally compiled numbers. The company does not reveal its data methodology.

“Home inventories now are dropping and markets are improving,” says Alexis McGee, president of “That means relief to overextended homeowners who bought homes they couldn’t afford with the help of little money down and low teaser-rate mortgages.”

"Although it’s impossible to know exactly when we hit the bottom on the price correction, I firmly believe that when the market heats up again this spring, we’ll look back at this winter season as our best buying opportunity in six years,” says Ms. McGee.

Mr Magoo, err... Ms McGee, we wil check back with you in a few months to see if your cheerleading paid off.

Friday, January 05, 2007


This beautiful home (LMAO, look at that plant in the front yard) is about to be an REO. The owner needs to sell and is looking for a buyer to participate in their short sale. Per the Craigs List listing :

$214900 3+1 NEED TO SELL ASAP

Take advantage of this 3 Bd 1 Bath PLUS DEN 1265 sqft. w 2 car garage home. New tile in kitchen, bathroom and den. Seller is in default and must sell now! Bring all offers! Priced for quick sell! Great for first time buyers. We can also help you get pre qualified.

please feel free to call us at 800-635-4799



The facts, you say. Purchased 2/25/05 for $180,000. Hope to see everyone there?

Its Official

Per Secured Funding's website :

"Dear Valued Customers,

Based upon market conditions and limited product availability, we are ceasing wholesale operations. We have stopped accepting new applications, and will have until the 12th of January to fund out the pipeline. We appreciate your patience as we undergo this transition.

Thank you for your support"

Add one more to the dead pool...

Thursday, January 04, 2007

More pain ahead for the shady lenders

From this weeks Business Week Online:

Bankruptcy Boot Camp

How one man is training an army of lawyers to fight predatory lenders

Every week at least two homeowners walk into the office of Boston bankruptcy attorney David G. Baker looking to get out from under their mortgage debt. That's an alarming increase for a sole practitioner like himself. "I've never before had clients who walk in and say: `I just can't afford my house anymore,'" he says. "It's a little scary."

Baker needed to bone up on the intricacies of new mortgage products. So he signed up for Bankruptcy Boot Camp, the brainchild of O. Max Gardner III, the go-to guy for consumer bankruptcy attorneys across the country. The idea is to get lawyers familiar with the latest strains of mortgage abuse, then to educate them about federal laws that protect their clients. Baker now knows how to renegotiate mortgages and avoid a foreclosure. "People can ask lenders to restructure their loan," he says. "But that's something they keep from you because it's not in their best interest

Since Gardner launched the program in August, 82 attorneys have attended the 12-hour-a-day, four-day program held at his 160-acre Lizmere Farm in western North Carolina. It's a family operation: Gardner is the only instructor, and his wife does the cooking. He charges $7,775 a pop, but the lawyers don't seem to mind. Says Kathy Cruz of the Cruz Law Firm in Hot Springs, Ariz.: "It wasn't anything like law school. Boot Camp teaches what you need to know in the trenches."

It's inevitable that some homeowners get hurt in a downturn, especially those who have to sell unexpectedly and can't ride out the market. But experts say the pain will be broader and deeper this time around. In the past few years, millions of Americans bought homes they couldn't afford, lured by exotic mortgages that advertised no money down and low monthly payments--for a limited time only. As housing prices cratered and interest rates rose, borrowers got squeezed. The result: One in five subprime loans issued in 2005 and 2006 will fail, according to the Center for Responsible Lending.


Gardner and his growing cadre of lawyers say the lending system is largely to blame. While some people carelessly got in over their heads, lenders bear responsibility for extending too much credit to unsophisticated borrowers. Worse, abusive players fail to credit mortgage payments, then charge huge late fees. Before the Bankruptcy Reform Act of 2005, most attorneys just filed the necessary paperwork to work out the inevitable Chapter 13 plans. But Gardner's model advocates scouring for violations that occur during the lending process and while the borrower is in bankruptcy protection. "My goal is to train an army of attorneys to take the fight right to the creditors and their Wall Street aiders and abettors," says Gardner. "They wanted reform, and we're going to give it to them."

Thanks to Perfect Storm for the tip

Central Valley seen as stable

Central Valley Business Times has a very rosy forecast from CBIA. I will review at year end to see how close they were:

California’s housing production in 2007 is expected to continue “taking a breather” from the pace set in 2005 and 2004, the California Building Industry Association says.

The new home market will slowly return to what the CBIA says are historically normal levels.

CBIA Chief Economist Alan Nevin forecasts that housing starts for single-family homes, condominiums, and apartments should total between 155,000 and 170,000 this year, about the same or slightly lower than in 2006.

He says it will be a “perfectly tolerable year” for builders.

That’s well short of the 220,000 new housing units the state says are needed to meet population growth, according to the CBIA.

“I see a nice stable market, certainly not anything like the craziness of 2005,” Mr. Nevin says of the Central Valley north of Bakersfield.

“But the market is growing. I look at places like Modesto and Merced and I see a stable growth there because the employment base is growing,” he says. “So you’ll see a nice steady type of market in the northern Central Valley.”

Wednesday, January 03, 2007

Another One Goes Down?

More rumors on the brokers blogs (see previous post on rumors becoming reality). These guys are in the trenches and have been feeding this blogger with all the latest on the sub prime arena.

According to these Brokers Secured Funding Appears to have meet the same fate as all the others:

There website has been hacked. I wouldn't think that a company that is a going concern would let their website stay like this all day?

From Brokers Universe they ask who is next and they receive the following comment:
"Secured Funding closed its doors today. My guess of next 3 are Resmae, Fieldstone, and no offense, Investaid. Add to those as many glorified correspondent "lenders" as you want. If the lender is not doing their own securitizations or owned by someone that does, trouble is a coming"

Over at the Brokers Outpost someone mentions the website hacking and receives the following statements:
" know of someone whos trying to get his loan funded with them as we speak. Cant get anyone on the phone..."
"shitty thing to do since they closed down today"

Also, from Brokers Universe comes the following comments :
"Secured Funding Gone?
Read a post on another board that Secured Funding shut down today. There was also an email from a rep posted there confirming. True? Anyone know?"

"Here is copy and paste of email:

Hello, I have just been informed that Secured Funding will discontinue and close the Wholesale Division effective today Wednesday 3, 2007. This means that you will need to look elsewhere to complete your loan.

Thanks for the opportunity for being your lender of choice for your second TD’s.All loans currently in process will need to have all PTD Conditions in our office in order for loan docs to be sent out. All loans must fund by January 12, 2007. Should you need to please contact Rhonda for loans in process her contact information is below for you.Have a Great New Year!"
Tony FernandoSecured Funding by thereishopeyet January 3, 2007 "

"The cycle is turning"

From Bloomberg comes an analysis of the current mortgage market:

"the cycle is turning"

Tuesday, January 02, 2007

MLN Video - Employees told to box and leave

From Eyewitness News Conneticut Channel 3:

Conn.-Based Lender Stops Funding New Loans
Employees Leave Office With Boxes In Hand

ROCKY HILL, Conn. -- Hundreds of workers in Rocky Hill left the office of a billion-dollar national company with boxes in hand and tears in their eyes.

Mortgage Lender's Network, headquartered in Middletown, recently stopped funding new loans.

The company is a wholesaler that funds loans set up by local brokers.

Although the company has not publicly commented on how this will affect employees, Channel 3 Eyewitness News reporter Eric Parker said that workers leaving the Rocky Hill office Wednesday said they were told to bring their belongings with them.

"We're not going to get paid. We keep our benefits for two weeks, and we're not going to have a severance package. They're just sending us on our way and saying, 'Take care of your families,'" said MLN employee Melissa Goyette.

Employees of the company told Eyewitness News that the company is closing after losing a large financial backer and the failure of a last-minute bid to raise cash. According to the workers, as many as 700 employees could lose their jobs. The company employs about 1,000 workers.
The company was in the middle of building a new location in Wallingford that was to open later in the year.

Wallingford officials said that they are unsure what the company's announcement means for the future of the new office space.

Mortgage Lender's Network officials did not return Channel 3's calls requesting comment. The state Banking Department said that it heard that the company was struggling, but that it has no indication that the company will close altogether.

The company's workers said they expect to know within two weeks if there's any chance of saving their jobs.

Goyette said that in the next two weeks she's going to "sit and wait and send out my resume."

If you have more information about the company's closure or if your loan was affected by the company's decision to stop funding new loans, e-mail Eyewitness News reporter Eric Parker.

Single Family Starts PLUNGE

From the Central Valley Business Times website : Bakersfield DOWN over 50%

Single-family housing starts plunge 37 percent

California builders started 37.7 percent fewer single-family homes in November 2006 than they did a year earlier, according to figures released Tuesday by the California Building Industry Association.

Single-family starts were sharply lower across most of the Central Valley with only the Yuba City-Marysville metropolitan area seeing a gain. It posted a 24.6 percent year-over-year increase.

While comparisons to November 2005 were almost uniformly down, there were some metro areas that saw increases over October 2006 numbers, the CBIA says.

Homebuilders’ continuing efforts to reduce their standing inventory and the Thanksgiving holiday are cited by the CBIA as reasons for the slump.

When multi-family housing starts are included in the mix, overall housing production dropped by 9 percent in November compared to October and by almost 34 percent when compared to November 2005, the California Building Industry Association says.

In November, permits were pulled for 5,989 single-family homes statewide, down 3 percent from the previous month and down 38 percent from November 2005, while multifamily housing starts — condos and apartments — totaled 3,723, down 17 percent from the previous month and down 26 percent from November 2005.

In the Central Valley, most markets saw sharp declines in single-family housing starts in November, compared to a year earlier:
• Bakersfield, down 51.4 percent
• Chico, down 48.5 percent
• Fresno, down 61.6 percent
• Hanford, down 13.2 percent
• Madera, down 64.1 percent
• Merced, down 70.2 percent
• Modesto, down 43.8 percent
• Sacramento, down 42.1 percent
• Stockton, down 3.3 percent
• Visalia-Porterville, down 4.2 percent
• Yuba City-Marysville, up 24.6 percent

Credit is getting very tight

Per their website:

Mortgage Lenders Network, USA is not currently funding loans or accepting new applications through the Prime and Non-Prime Operating units. We are currently exploring strategic alternatives for the Wholesale Business Lines.

If you have questions regarding loans that were in the pipeline, please contact your Regional Production Office or your Business Development Manager.