We seem to be having a national recovery in much of the media, but in the states themselves the numbers are refusing to cooperate.  I guess if you can have a “jobless recovery,” then you can probably have a national recovery without states being involved.

According to a wonderfully dizzying article on AL.com – All Alabama, the southern state is facing some roadblocks to the recovery of its housing market.  According to words used in the article’s headline, “foreclosures are crippling the state’s housing market, despite a national trend.”

Ready to have some fun?  Here goes…

First let’s tackle the easy stuff… home sales in Alabama are down by more than eight percent year-over-year, according to the latest CoreLogic report, and the average home’s price in Alabama fell by approximately three percent since last year.

That makes perfect sense, right?  Home sales, which represents “demand” fell, so home prices fell too.  That’s how it’s supposed to happen.  When demand goes down, prices go down.  When demand goes up, prices rise.

Well, except in our economy where up is down, down is up… where we recover on the news and inside the Beltway… but not on the actual streets in the towns where we all live and work.

CoreLogic’s data shows that in Nevada, home sales were down by 9 percent this year as compared with last, but the average price of a home in Nevada led the entire country, increasing by 22 percent!

And at the same time, in Illinois, the average home’s price fell by 1.8 percent since last year, but the volume of sales went up by 17.4 percent.  So, in Illinois, demand went up in a big way… while prices moved in the opposite direction.

Isn’t this great?  You’ve got to love this, it’s like a solar eclipse or something.  It’s not every day when you get to watch 10,000 years of economic principles get turned on their collective head… if that’s what is actually happening.

The AL.com article says it’s the distressed sales that are causing Alabama’s problem, with 18.4 percent of homes sold in the last 12-months classified as distressed by CoreLogic.  And to make matters worse, according to the article, a year ago only 15 percent of home sales in Alabama were distressed.

So, with distressed sales in Alabama rising, the state’s home prices can be expected to continue going down… and when home prices fall, more homeowners find themselves underwater, which leads to an increase in foreclosures… which in turn means more distressed sales as more foreclosed homes hit the market.

In Alabama, over 18 percent of homeowners are reportedly underwater, and based on that data, Alabama has the 17th highest percentage of underwater mortgages in the nation, and with its increasing volume of distressed sales, it appears as the percentage underwater is poised to rise.

However, once you factor in sales commissions and moving expenses, that percentage is probably closer to 23-25 percent, so that could affect the state’s ranking nationally… or maybe not… for the life of me, I can’t figure out why anyone cares about such national comparisons.  What possible difference does it make how bad your economy is doing in terms of how it compares with another state’s situation?

The point some are making is that in the states where the percentage of distressed sales decreased, home prices saw the largest increases.  Nevada, for example saw its percentage of distressed sales reduced to 43 percent, from 55 percent one year ago.

The question raised by AL.com is…

“… it’s not news that foreclosures hurt real estate markets. What is interesting, however, is that while foreclosure sales are down 23 percent nationwide over the past year, Alabama’s foreclosure problems have intensified.”

Yes, indeed, I would agree… that would be quite a conundrum, if it were true.  But, alas… none of this housing market data nonsense comes anywhere near “truth.”

AL.com reported that Alabama’s foreclosure inventory is down by 25.5 percent compared with last year’s numbers, and based on the state’s sales volume, it has 9.7 months worth of distressed inventory, which is supposedly, “one of the nation’s largest supplies of distressed homes, ranking ninth overall.”

And the percentage of Alabama homeowners who are more than 90-days delinquent on their mortgage payments only dropped by six percent since last year, and CoreLogic places Alabama in the bottom ten states in terms of its reduced percentage of seriously delinquent loans.

Of course, the fun thing about economists these days, is that you can find one to chime in whenever you feel it might spice things up a bit.  And along those lines, the AL.com article wrapped up with a quote from the chief economist for Associated Builders & Contractors who said “slow job growth in Alabama” should be blamed for keeping the state’s housing market from “heating up.”

Hey, thanks for that Mr. Chief Economist for builders and contractors.  That cleared up a lot.  So, you’re saying that people having jobs would be good for the economy… because… give me a minute… because then they’d have more money with which to buy the homes, am I right?  I’m right, I just know I am… this is so fun… it’s like college without the giant bong in the middle of the room.

Okay, so I can tell I’m going to need to connect the dots here… 

The reason the data makes no sense, is not because the fundamental principles of economics are no longer holding true, it’s because we’re not looking at a true market, we’re looking at a market that’s so distorted and manipulated by everyone involved that the numbers are getting wacky all over the place.

Like, the percentage of distressed homes sold in Nevada last year going down from 55 to 43 percent.  I actually visit Nevada fairly often, at least 3-4 times a year, and I can tell you from having seen the place up close and personal… just about all the homes in Nevada are distressed in one way or another.  They might not be classified as such, but that doesn’t change what they are.

Remember what new law caused foreclosures to fall by 80 percent in 2010… AB 284… that right!  Bank of America hasn’t sold a home in Nevada in like two years, for example.  I’ve written extensively about the fact that foreclosures will be starting up again, and they already have, but it’ll take a little while before the distressed sales numbers come to accurately reflect what’s really happening in Nevada, as opposed to what CoreLogic says is happening there at this moment.

In addition, if you’ve been following my blog, you also know that last roughly 50 percent of the homes bought in Nevada were all cash deals, and cash deals do not a real estate market recovery make, capisce?

One more time… the banks have slowed down their foreclosing in states that have made it harder or more risky to do so, such as in California as a result of the state’s new Homeowner Bill of RIghts.  And there are other states, where the courts are clogged to such a degree that it could take centuries for the foreclosure backlog to clear up, and you can see why pursuing foreclosures under those circumstances might be seen as less than productive by a bank or servicer, right?

None of this means that people are better able to make their mortgage payments, or that they’re less delinquent on their loans… or that people are any more credit worthy than they were a few years ago… or that they’re wealthier… or more willing to spend… or have increased access to credit… none of this has anything to do with CoreLogic’s methods of reporting on wether foreclosures are up or down.

So, Alabama is having a foreclosure crisis… why that’s news kind of escapes me, but if you weren’t already aware of that fact, I’m glad I could be of help filling you in like that.  But, so are most other states in varying degree, and the crisis isn’t going away anytime soon, just because we stop reporting on it… or stop sending out Notices of Default, or anything else that’s nothing more than the equivalent of playing Hide the Pink Mouse.

And that’s the truth.

Mandelman out.

Understandably, Connecticut has always had a bit of an inferiority complex.  Wedged in just north of high profile states like New York, New Jersey and Pennsylvania, while looked down on by the erudite Massachusetts, the only state that even talks to Connecticut when the states get together is Rhode Island.  And it’s no secret that the rest of the New England states, Vermont, New Hampshire and Maine refuse to consider Connecticut part of New England.

At one time New York was thinking about purchasing the state of Connecticut, since as a practical matter it already uses the state as overflow housing for the fans of its New York sports franchises.  The idea was actually on the table for a short time, but problems arose when the leader of the Connecticut delegation asked if someone could define the term, “public transportation,” and further friction arose when the Connecticut native had to ask someone to use the phrase, “bus schedule,” in a sentence.

So, for years Connecticut’s residents had to be satisfied that their state led the rest of the nation in only two categories: More Jeep Cherokees per capita, and highest percentage of residents that have vacationed in Europe more then three times.

Well, as of April of this year, Connecticut has finally made it into the top ten in the Foreclosure Bowl… the state managed to post an increase of more then 94 percent over last year with 2,334 homes being lost to foreclosure in April.  The impressive growth in homes being lost represents a three-year high, the state’s spokesperson told CTPost.com just last week.

Even more encouraging was that majority of the foreclosure growth came from early stage filings, indicating that Connecticut could hope to see its ranking improve in the coming months.  “We’ll never be a Florida or Nevada,” a Misquamicut homeowner admitted to me under the condition that I wouldn’t disclose his name.

“We all feel like with a little more long-term unemployment and perhaps a default by one of the counties in the EU, we could run neck and neck with a Maryland or maybe even come in a close second to a North Carolina.”

RealtyTrac Vice President, the ubiquitous Daren Blomquist, said he had “no immediate concern” related Connecticut’s newfound foreclosure prowess, which makes perfect sense since he’s not losing a home there.  On the other hand, a survey of the 2,334 homeowners who lost homes to foreclosure in April, all 2,334 reported concerns they described as “immediate,” having to do with where they were going to live.

Apparently forgetting that his company’s report had shown most of the foreclosure growth coming from “early stage filings,” Dumdum attributed the state’s top ten status to a backlog of “deferred foreclosures,” common in states using a judicial foreclosure process.

A local economist, which is the sort of thing one only finds in a place like Connecticut, Ed Deak, said there is anecdotal evidence that there are people failing to make mortgage payments, but continuing to live in their homes for years before receiving a foreclosure notice.

And here we go again… do you see what I’m saying about foreclosure data… it’s crap, because if a bank doesn’t want the numbers to be too high, it simply doesn’t send out foreclosure notices and I do mean for years in many instances.  So, we have no idea how many foreclosures there are in a given state, because all the baks have to do to make things look like they’re improving is hold back mailing out notices.

Deak also thinks that the increase in activity is happening because the banks are finally starting to deal with strategic defaulters, which tells me all I need to know about local economist, Ed Deak.  A man entirely preoccupied with “irresponsible deadbeats,” not making their mortgage payments who, in his view, should be out in the streets.

Both RealtyTrac and CoreLogic report that 15 percent of the homes in Connecticut are underwater, so if you factor in the costs of moving and real estate sales commissions, would make the real number about 20 percent… assuming sales remain at their current trickle.

Of course, should more homes find their way onto the market, alongside the new torrent of foreclosures and upcoming short sales, prices will again fall and the percentage underwater will rise further, thus increasing the number of foreclosures once again.

Oh, come on… tell the truth… this is so stupid it’s kind of getting fun, right?

Mandelman out.

Here’s some further evidence of the housing market’s and the overall economy’s inexplicable, but unstoppable recovery… in Maryland foreclosures in April were up by 154 percent year-over-year… home auctions were up by 199 percent compared with last year at the same time.

According to WUSA 9, Maryland’s foreclosure process is slower relative to other states, although I don’t know what difference that is making… do they mean to imply that more foreclosures are lurking in the relatively slow process?  One county was apparently up by an inconceivable 6800 percent, according to the story on the local news broadcast.

Once again, RealtyTrac’s Daren Blomquist was on then scene with a quote, saying…

“The other shoe is dropping in Maryland when it comes to foreclosure activity as foreclosures slowed down by the state’s foreclosure mediation law and faulty foreclosure paperwork are finally working their way through the foreclosure pipeline.”

Is it just me or is English a second language for Derwood?

Apparently, Maryland enacted a new foreclosure mediation law that went into effect in August 2010, and it caused some kind of dramatic drop in foreclosure activity.  My best guess would be that the new mediation program frowned on the use of “robo-signed” and other cartoonish and manufactured documents, and it seems to have taken almost three years to fix things to the point that banks and foreclosure mills feel secure enough in their documentation to return to the foreclosure circus in the state.

Seriously?  Is that right?  I mean, the new mediation law went into effect in August of 2010… and foreclosures are now spiking by triple digit numbers as summer is starting in 2013, right?  So, where was everyone in 2010, 2011 and 2012?  The way Dumdum and WUSA 9 are making it sound, these foreclosures aren’t new… they’re part of a backlog that’s been stuck in the mud of mandatory mediation for almost three years?

Dustin says RealtyTrac expects the wave of foreclosures to last all year and acknowledges that they, “may slow home appreciation in Maryland in the short term,” but he’s not worried about any sort of double dip in home prices as a result.

When Dingbat says these foreclosures “MAY slow home appreciation,” in Maryland… don’t you wonder what else he’s thinking they could possibly do, you know, if they didn’t put downward pressure on the state’s housing prices?  Like, do you suppose he thinks that perhaps these foreclosures might make home prices increase but he’s just not sure?

Anyway, the point I’d just like to make is do you see why I have so little confidence in the numbers of foreclosures that the various data providers report?

Here we have Maryland, and oh my goodness, look at what just popped up out of nowhere.  It would seem that there have been a big pile of foreclosures just hiding under the state’s mediation program for almost three years… so, for almost three years, the banks haven’t been foreclosing as they played the home version of the game, Paperchase.  That’s just great.

So, how do I know where the other undiscovered and unreported stockpiles of foreclosures are hiding as the banks wait until they feel like recognizing losses, having fixed the document problem to the degree that they can start booting people out of their homes once again?  The answer is… I don’t know where the shoe will fall next.  It could literally be stomping on homeowners anywhere, and only the bankers know for sure.

So, stop asking me to believe that anything reported about foreclosures decreasing means anything… obviously it doesn’t.

And one last thing… if I were the governor of a state that passed a foreclosure mediation law that went into effect in August of 2010… and foreclosures virtually came to a halt after that and remained like that for almost three years before starting up again… I don’t know about you, but I’d cry FOUL!

I’d ask the banks what they’ve been doing during their foreclosure hiatus, besides fixing fake documents and skirting the state law?  I’d be asking… well, have you been trying to work out modifications with all these folks over the last 30 months?

Because if not… and I’d bet you one shiny new nickel… it’s not… then I’d make the servicers stay after school and see who still qualifies for a modification at this point, as compared with who would have qualified had the modification been offered 30 months ago.

I’m sure, since the economy is growing like a weed according to the government reports and echoed by the mainstream media, it only stands to reason that many of those homeowners that were financially strapped two years ago are today back to work and making bank.  So some of those folks should be given another loan mod looksie, should they not?

Oh, hell… what difference does it make… blah, blah, blah… I’m just talking to myself over here.  Never mind, I don’t know why I even bother trying to making sense anymore.  Maybe I should just react like everyone else does when they read these fractured fairy tales, and just say…

“Wow, did you see the numbers of foreclosures in Maryland?  Hand me the remote, I think COPS is on Channel 5.”

Alrighty then… we’ll let you go back to bed then.

Mandelman out.

What makes a loan a “bad loan?”  I know there are lending practices defined as being predatory in nature that result in “bad loans,” but that’s not what I’m talking about.

According to the Center for Responsible Lending, “Predatory lending describes unfair, deceptive, or fraudulent practices of lenders during the loan origination process.”  So, when we talk about predatory loans, we’re talking about loans originated with any or all of the following being involved…

• Higher points or fees than the market is offering.
• Higher interest rates than the credit profile dictates.
• Knowingly based on a fraudulent appraisal.
• Hidden or undisclosed provisions (pre-payment penalties, rate caps, rate re-sets, etc.)
• Based solely on their future refinance with un-doable back-end debt to income ratios.
• Loans improperly made to protected groups (senior citizens, low income minorities, et al.)

Predatory loans are beyond “bad,” in my opinion, and those who are guilty of predatory lending practices should be criminally prosecuted and imprisoned… not as white collar criminals, but no differently than rapists or others who cause irreparable harm to their victims.  Taking advantage of a 75-year old woman in such a way that she ends up losing her home to foreclosure is a rape, to my way of thinking, and twenty years in a real penitentiary is getting off lightly, if you ask me.

MY QUESTION IS…

My question is, when none of those predatory practices apply to the origination of a loan, what else makes a loan a “bad loan?”  Are adjustable rate loans bad?  Assuming the borrower was told that the loan’s interest rate could go up, how often the rate could go up, and how far the rate could go up… then what’s the problem?

What about loans with introductory teaser rates?  Or loans requiring a balloon payment?  Are they necessarily “bad” in and of themselves?  Why?  As long as the borrower is told and understands what to expect, such as when the teaser rate will convert into a higher rate, what that will mean to the monthly payment, and when that will happen… why is the loan itself a “bad loan?”

Is it “sub-prime” loans that are “bad?”  Should we only be approving loans when people have 760 FICO scores?  I don’t think that’s right, personally.  There are many reasons that people have relatively lower credit scores, divorce being one of them… or maybe someone was injured and missed some payments because of being unable to work for a time.  I remember learning that my credit score was only 720 because I was using my credit card badly… or in other words, I was using it.

I used to use my Citibank American Airlines Visa for my business travel, and when I’d travel to Asia for two weeks at a time, or to London with my assistant, I could easily end up charging $20,000, which was very close to the card’s limit, and apparently that’s a bad thing to do.  It didn’t matter that when I’d return home, I’d send my client my expense report and pay off the card as soon as the check arrived… sometimes I’d pay it off twice a month… but it was still causing my FICO score to be lower than it should have been.

Countrywide and others made mortgages available to countless people who wouldn’t have been able to get them otherwise, and there are certainly a huge number of people still paying those loans back on time and as agreed.  So, was it the loans that were “bad,” or the lack of oversight and regulation as to how they were sold that was the real problem… and what should have been limited more stringently… besides the predatory practices listed above… I’m not talking about those type of things… we can all agree that those things are “bad.”

I’m asking because I can’t remember ever hearing anyone complain as a result of being approved for a mortgage… in fact, I seem to recall quite a bit of celebrating as a result of loans being approved.

Is it that we only judge a loan to be “bad” after it defaults, and because it defaults?  Assuming there are NOT predatory practices involved, is a loan “good” until it defaults and then it becomes “bad.”  And is it a “bad loan” because after it defaults we discover that the paperwork used in the foreclosure process is inadequate, missing or somehow fraudulent?  Does any of that make a loan “bad?”

This crisis saw home values drop faster than they ever had before, no one had a chance to react or get out of the way.  Consumer spending evaporated and before anyone realized it, we were on our way to losing eight million jobs, small business owners saw their incomes drop by up to a third, and it seemed like mortgage financing dried up overnight… because it did.

The reason I mention these factors is that our financial crisis and economic meltdown caused an awful lot of people to default on loans and many would never have defaulted had things gone differently… had the perfect storm been less perfect, if you will… or, if our government had handled anything competently over the last four years.

So, when their loans defaulted was it because of  “bad loans” or “bad economic circumstances?”

My wife and I, for example, took out an adjustable rate loan in 2006 when we refinanced our mortgage.  We’d always had a fixed rate mortgage, but by the summer of 2006, after Federal Reserve Chairman Greenspan had raised interest rates 17 consecutive times in an effort to cool down the economy, and the housing bubble had started to deflate as a result, we decided that it would soon be a safe time to look for a new home.

I hadn’t wanted to buy anything while prices were rising and homes were literally flying off the market often within a day or two of being listed.  We had been in our home for over 15 years and were certain to have plenty of equity even if prices fell by ten or twenty percent.  We bought it in 1990 for $340,000 but financed only $220,000, so after 15 years of payments, we only owed something like $180,000… and at the peak of the bubble, it appraised for $925,000.

I wanted to wait until things cooled down a bit to make sure that we didn’t end up overpaying during what was obviously a buying frenzy, pumped up by easy credit, incredibly low rates, and a population burned by the dot-com bubble’s demise that was now rushing to the supposed safety of residential real estate.  Houses, I was told by my real estate investing friends on more than one occasion during those years, could of course go down, but not down to zero… like Pets.com, they wanted to say… and I understood.

Anyway, in the summer of 2006, housing prices had stopped increasing and homes were staying on the market longer and longer, so we decided it was safe to start looking around.  We spoke to a realtor about what we should do to get the best price for our home and were told that kitchen remodels and some other cosmetic touches would be worth doing.  To finance the $75,000 or so in improvements, we decided to refinance our loan and take the money from the significant amount of equity we had in the property.

At the time, rates were up around eight percent for a 30-year fixed loan, so our mortgage broker suggested we take out the adjustable rate loan offered by Downey Savings, offered at a six percent rate that would be locked in for two years… after that it could adjust.  We were comfortable with the idea because we both felt that two years would allow for more than enough time to find our next home and sell ours.  Why make payments at an eight percent rate for the next two years, when we could make payments at six percent?

We also considered that if we didn’t find what we wanted, or decided not to move after all… we would simply refinance to a fixed rate loan.  Again, with plenty of equity and having owned our home for more than 15 years… there wasn’t really any appreciable risk involved.

Of course, as life would have it, our plans changed dramatically when health problems delayed our being able to look for homes, and by the following summer when we would have been ready, investors abruptly lost confidence in the ratings of residential mortgage backed securities, causing the secondary mortgage market to freeze, which started a free fall in home prices and tightening of credit that would end with the global financial crisis that we’ve all come to know so well.

We fixed up our home anyway, and looked around a bit, but never found a home we wanted to move into, at a price we thought reasonable, and when our adjustable rate loan was ready to adjust, I became nervous and wanted to refinance to a fixed rate.  We went to a Downey Savings branch and were told that we wouldn’t be able to refinance for various reasons that I didn’t really understand, except that the banker said that our home’s value had been to half of what it once was, at least.  The banker wasn’t sure of the specifics, but he was very candid, explaining that the bank wasn’t lending at that time… no matter what.

I was increasingly apprehensive as the adjustment date approached.  I’d heard the horror stories that were circulating and was sure that I’d be saddled with a higher payment than I expected with no alternative but to pay it or walk away from our home of 15 years.

And then our loan’s interest rate adjusted… going down to something like three or four percent and reducing our monthly payment significantly.  A year later it adjusted again… and again our rate went down.  At one point it was under two percent and our mortgage payment was only slightly higher than what you’d expect to pay for an expensive car.

Now, here we are some years later and our loan’s interest rate has adjusted upwards several times… it’s still not high enough to make the payment something we can’t handle, but it has doubled from its all time low.  What if it keeps going up next year and the year after… what if it reaches a point where we can’t afford it anymore, but also can’t qualify to refinance… and what if our servicer refuses to modify?  Just like the more than ten million before us, we’ll find ourselves at risk of foreclosure.

And should that situation come to pass, will our loan be at fault?  Will we then have a “bad” loan?

I’m sure our loan won’t be any different than all the rest we hear about all the time.  I’m sure MERS will have destroyed our chain of title.  I won’t be surprised when the bank’s lawyer refuses to show up with the original note.  I’m sure someone’s signature on something won’t be right and even though we live in California, I’m sure something will have been notarized in Brooklyn, New York… before I was born.

If our loan is in a securitized trust, I’m sure the date of its transfer will violate the Internal Revenue Code’s REMIC rules, and I’m confident that our servicer will have failed to comply with countless provisions found in the 600-page Pooling & Servicing Agreement (“PSA”).

None of that will surprise me, in fact I expect all of it and more to be the case.

So, will we then be correct to blame our situation on our “bad loan?”  Or, will we end up losing our home for the same fundamental reasons millions of others have… as a result of the same factors that took down Wall Street’s investment banks, forced General Motors into bankruptcy, and caused untold trillions in consumer wealth to disappear.

Will we become “irresponsible borrowers,” because we can’t repay our loan as agreed?  I knew our loan’s interest rate could adjust higher than the eight percent fixed rate alternative I was offered at the time, and there wasn’t anything predatory about our broker or lender.  Had someone told me that the loan I was agreeing to repay in 2006, would likely be the last loan for which I’d qualify, I wouldn’t have signed it.  But no one said anything like that.  No one knew what was coming the year after we refinanced.

I wasn’t gambling or thinking that home prices would always go up.  To the contrary, I knew they could also come down just as they had in 1991, right after we bought our home by the way.  All I was assuming was that the next 10 years would look something like the last 70… nothing more.  And I’d lived through bubble popping recessions  before, like the one that started in the Spring of 2000 and was made that much worse by the events of 9-11.

After that tragic day, I remembered President Bush telling the country to go shopping or take a vacation… and I remember doing exactly that.  First I went to Nordstrom, where I bought several new Tommy Bahama outfits and then a few days later we took off to Hawaii for a couple of weeks in paradise.  (Hey… when my president calls on me to take action, I take action.)

This recession, however, was nothing like that one.  This time no one went anywhere or bought anything.  This time around our bank closed the HELOC that we’d never even used… Citibank cut the credit limit on my Visa card for no apparent reason, and clients slashed budgets as they hunkered down hoping to survive the gathering storm.

I felt like I was like living through the first six black & white minutes of the Wizard of Oz and, like poor Dorothy and Toto, this time around it seemed no one was getting into their proverbial storm cellars in time.  This time around was absolutely terrifying, even without the flying monkeys.

Regardless, should our adjustable rate eventually cause us to default on our payments, will our friends and neighbors start talking behind our back, saying that we gambled and lost, as a result of our taking out one of those “bad adjustable rate loans?”  That would be ironic as I don’t even gamble when in Las Vegas.

Of course, when my bank refuses to modify my loan, I’m going to be on-fire-angry… like the white hot intensity of a thousand suns.  And when they jerk me around, lose my paperwork nine times, treat me like a deadbeat, and make my wife cry… I’m going to be a very unpleasant person with which to communicate.  I’m not just talking about suing them… in fact, suing them will be the absolutely pleasant part of my response to what has been their typical handling of such situations.

I’ll resolve to get up every morning, have my coffee, and then screw with my bank before going to work.  I’ve written 900 articles over the last four years… that’s just psychotic.  And I’m not proud… or tired.  To a bank, I’m the poster child for “reputational risk.”  You know those top three spaces on the first page of Google’s search results page… Yeah?  Well, that’s where I live.

But, having closely followed what’s happened in the courts all over this country related to foreclosures, I’ll also know that when I try to tell the judge about the robo-signer who signed the assignment of my deed of trust… or assert that my bank doesn’t know who owns my loan… or that the securitization process violated New York trust law, that he’s going to ask me what any of that has to do with my not having made any mortgage payments for the last three years.

Nevertheless, I’ll point out what investors are alleging in lawsuits I’ve read about online, and the relevance I’ve decided to attribute to a decision handed down by a Massachusetts Land Court in 2010.  I’ll highlight how the bank failed to comply with state law, explain why MERS could never hold the beneficial interest, and quote from the OCC’s Consent Orders about the “unsafe and unsound practices,” used by the bank.

In my mind at least, I’ll do all of that and more… but I’ll also know that at best, although I may succeed in delaying our eviction, we’ll be on a path to ultimately losing our home to foreclosure because no court of equity is ever going to rule that we get to keep our half a million dollar home while the investors who loaned us $300,000 gets stiffed.

It won’t matter to the judge whether Daffy Duck signed something, the notary was only 7 years old and used the wrong stamp, the bank lost an entire folder of paperwork, or the dates turned out to be wrong on every piece of paper involved.  Equity means fairness, and no judge will ever consider it fair that after defaulting on our loan, we got to keep the home for free.

These types of claims were the product of lawyers trying to throw sand into the gears of the mortgage industry’s foreclosure machine that has continued to chew up homeowners and spit them out without  consideration as to whether modification of their loans would prevent foreclosure.  And in many ways they succeeded… more loans continue to get modified and the plight of homeowners becomes more widely understood each year.  But, these arguments were never intended to produce financial windfalls for homeowners at the expense of investors.

Yes, there have been decisions in various courts that have resulted in delays of the foreclosure process, but out of the countless thousands of cases heard in our nation’s courts over the last five years, literally only a relative handful have ended by forgiving the debt owed by the homeowner while allowing that homeowner to remain in his or her home.

Litigation against a bank is never cheap, quick, easy or certain… in fact, it’s ALWAYS expensive, time consuming, difficult… and you’ll very likely lose, as the vast majority do.  Even the few that win are often appealed by the bank and overturned.  If we’ve learned anything since 2009, litigation to prevent foreclosure is no picnic, and it’s costly to do it effectively.

If someone tells you otherwise… they’re selling something.

So, if and when my turn to face foreclosure comes, I’ll also understand that not only is it a court of equity, but additionally, I’ll know that the judge doesn’t have the power to force the bank to modify my loan, even if he or she thinks that would be the fair thing to do.  The government’s program makes modification purely voluntary, and my servicer has to follow the rules set by Fannie, Freddie and other investors.

At the end of the day, loans weren’t written to be modified when not repaid, you can’t tell investors what they have to do with their investments… and no one in our government has shown any interest in changing any of that in the least.  

If this is what happens to my wife and I, it won’t be the fault of a “bad loan”… nor will I feel as if it’s my fault either… and although I might be angry at the bank for treating me poorly and not agreeing to modify my loan, the truth is… I never expected my bank to modify a loan that I was unable to repay anyway.  I wasn’t really expecting balloons and a marching band for defaulting on my loan.

I knew when I bought every car I ever owned that were I not to make the payments, someone would come and tow it away.  The idea of asking the bank who financed my car to lower my interest rate, extend the term or reduce the amount I owe… well, its never even occurred to me.

Even in my early twenties, when there were a few times that I couldn’t make my car payments, I handled it the mature and responsible way… the way everyone does… by hiding the car in my neighbor’s garage and working my butt off until I could catch up on the payments.

And although I won’t have liked the way my bank treated me on the phone, I’ll recognize that they’re probably a whole lot nicer to people whose payments are current, when they call in with questions.

How did things get this screwed up?

In the latter part of February back in 2009, a brand new President Obama, feeling the pressure of millions of Americans at risk of losing homes, spoke of a program that was going to save 3-4 million homeowners from foreclosure.  And he made it sound as if it would be easy… all we had to do was call our banks directly.  If we needed help, there’d be HUD counselors standing by to show us the way to our homes’ salvation.

He described a program that didn’t exist back then… and still doesn’t today.  The fact is that our government, after setting expectations that couldn’t be met, failed at every turn in the foreclosure crisis, so they gave $7.6 billion to the states “hardest hit,” to see what they could do to help homeowners avoid foreclosure. Three years later, roughly 6.6 billion of those “hardest hit funds” remains unspent.  It’s become painfully clear to anyone paying attention that no one has the foggiest idea what to do.

The failure to mitigate the damage caused by foreclosures has cost this country and its financial institutions an incalculable sum.  It will be decades before consumers, investors, and our society as a whole will recover from this period in our nation’s history.  And going on six years since it began, not only is the foreclosure crisis not over, but the end is not yet in sight.

However, the truth is that if homeowners are willing to gain a better understanding of their situations, if we’re willing to come to terms with the facts before us, no matter how distasteful they may be, then we can stop feeling powerless, lost in the stress of constant uncertainty, and regain control of our lives.  It’s time for each of us to chose a path that makes the best of a terrible situation, by putting us in the best possible  position going forward.

We may not be able to bring an end to the crisis nationally, but each of us can end it individually.  We can take our power back and take control of our lives.  

Will it be fair?  No, but fair is where you go to have popcorn and cotton candy… this country has never been particularly big on fairness anyway.  The Great Depression wasn’t fair to millions of Americans either, but it happened nonetheless.  Will you like it?  Maybe not, but there have been plenty of things I haven’t liked doing, but that I did anyway to improve my life in some way.

The truth is that you’ll never feel good about what has been allowed to happen to homeowners in this country since 2008, no one will.  But human beings have an incredible capacity to go on, even in the face of horrific adversity.  I had relatives that made it through the economic collapse of the Great Depression.  And I’ve known survivors of the Nazi death camps that went on to live lives filled with love, happiness and financial success.  And if they can do what they did after what they endured… then we can for sure get through this.

They say that what doesn’t kill you makes you stronger, so who knows… maybe we’ll all be even better off having learned the hard lessons of these past few years.

So, let’s get to work understanding the pros and cons of the available options when facing foreclosure.  By facing the reality of your situation, and gaining a solid understanding of the alternatives available to you, you’ll be able to choose the path that’s best for you and your family.  Then you can start working in a focused way to ensure that you get where you want to go, remembering that sometimes the way you win a tug-of-war is to let go of the rope.

So, the truth is that should my wife and I ever find that our loan has adjusted beyond our ability to repay it, and we’re facing foreclosure as a result, we’ll make sure we appraise our situation honestly, and choose the path that’s in our best interests… the path that puts us in the best possible position going forward… so we can get back to enjoying our lives together sooner rather than later.

I just thought you’d want to know my thoughts on the subject…

Mandelman out. 

In 2011, and in response to the “robo-signing” scandal that would eventually lead to the National Mortgage Settlement, Nevada became the first state to do something legislatively that served to reduce the number of foreclosures dramatically.

The bill, AB 284, required banks to sign affidavits stating that the person signing had personal knowledge of all documents related to a foreclosure, and it provided for a monetary fine for recording false documents in the county recorder’s office… things like that… and immediately after the bill became law foreclosures across the state fell by something like 80 percent.

Nevada’s Attorney General, Catherine Masto, was applauded by homeowner advocates all over the country for having the courage to stand up to the too-big-to-fail financial institutions and protect middle class homeowners.

It was never intended to be, nor would it prove to be, any sort of permanent solution to the foreclosure crisis in the state, and by March of this year, RealtyTrac reported that Nevada had seen a 334 percent year-over-year increase in notices of default being filed… a 17-month high also representing the highest in the country in February.

California’s legislature had tried to pass legislation favoring homeowners at risk of foreclosure in 2009, 2010 and 2011… but the bills all failed after being killed by the banking lobby in their various committees.  Then in 2012, in response to what had emerged related to the National Mortgage Settlement, California’s Attorney General Kamala Harris threw her considerable weight behind a series of bills that became known as California’s Homeowner Bill of Rights… and the new laws went into effect in January 2013.

Basically, California’s Homeowner Bill of Rights codified into law, the same sorts of rules and standards the servicers had agreed to in the settlement with the AGs from 49 states, and provided for a private right of action and statutory damages, so homeowners would be able to turn to the courts for relief in certain cases where the rules were broken.  Among other things, the new laws prohibited dual tracking, which is the practice of initiating a foreclosure while a loan modification is still being considered.

AGs, Masto and Harris

And as a result, California’s AG was heralded by homeowner advocates across the nation for her courageous stance in favor of consumers.

Well, now Nevada’s legislature is considering adopting its own Homeowner Bill of Rights, and in fact, the bill… SB 321… has already passed the Nevada State Senate and is headed to the House.

Somewhat similar to California’s version, SB 321 would provide additional protections for the state’s homeowners facing foreclosure.  It too would prohibit “dual tracking,” require lenders and servicers to inform borrowers of possible alternatives, render decisions on loan modifications, and provide a “single point of contact” to work with the homeowner before filing a notice of foreclosure.  If you’ve been following the developments related to the foreclosure crisis, it’s nothing you haven’t heard before, but bankers are still opposed, saying that in light of the National Mortgage Settlement and given the new rules issued by the Consumer Financial Protection Bureau, the legislation is simply unnecessary.

It’s a predictable and familiar argument, and one that I could argue either side of, but the national settlement’s servicer standards only apply to the five largest servicers, so a new state law would expand the same sort of protection to all servicers, and I don’t think that’s such a terrible thing.

However, both sides agree that the new Nevada law won’t save everyone’s home from foreclosure.  The fact remains that loan modifications are and will remain voluntary… they are granted at the sole discretion of the servicer… no one can force the modification of a mortgage in any state in this country.  If the servicer or investor determines that someone can’t afford to make the monthly payments offered by the terms of the modification, then ultimately that’s the final word on the subject and the foreclosure will proceed.

Bills like the Nevada Homeowner Bill of Rights really just attempt to force servicers to properly consider borrowers for modification prior to foreclosure, preventing homeowners from losing homes without giving them a fighting chance to renegotiate some sort of alternative arrangement.

In an imperfect world, it’s the sort of legislation that goes in the “better than nothing” category, and it has helped to some degree, I think… although admittedly it would be hard for me to prove objectively.

I’ve pointed out on numerous occasions in articles I’ve written over the last four years that the foreclosure crisis is a crisis people only come to understand once it touches their personal lives.  Until then, most people just think homes are lost to foreclosure because people either bought irresponsibly or just can no longer afford the home for whatever reason and nothing can change the outcome of a foreclosure.

Well, interestingly, Nevada’s proposed new laws to protect homeowners are being sponsored by Assembly Representative James Healey (D-Las Vegas) and Senator Justin Jones (D-Clark County), both of whom were recently personally affected by the conditions that have created the foreclosure crisis.

Healey found himself struggling to refinance his own home that, no surprise here, had lost considerable value since the recession began.  He told his peers in the state legislature that his bank had given him the runaround… he never talked to the same person twice… that it went on for over a year before he was told that he did not qualify to refinance… that he was told to stop making his payments… and ultimately agreed to a short sale, which was a process that took another nine months.

Oh, poor baby… I feel his pain and outrage, don’t you?  Go get ‘em Mr. Assembly Representative… you go girl… throw some of that political weight around.

Speaking to other member of the Nevada House of Representatives, he said…

“These are the types of stories we as legislators should not stand for.”

Absolutely right… but the thing is… it’s 2013 and you guys could have paid a bit more attention to the situation… oh, I don’t know… I’m thinking FIVE OR SIX YEARS AGO… you know, instead of the rest of the state’s residents having to wait until you end up having to short sale your own homes.

Politicians, I’ve come to realize, have a special gene that prevents them from feeling embarrassment, shame or humiliation because if I stood by and did nothing for five years as my constituents lost homes as has happened in Nevada in a wholesale way, I’d be a little sheepish starting a fuss just because it finally happened to me.

I wonder if, before Mr. Healey gets behind any legislation for the benefit or protection of women, minorities or undocumented workers, we’ll have to wait for him to become a woman, a minority or an undocumented worker.

The other sponsor of the bill, Jones, is an attorney who, when his grandparents found themselves unable to make the mortgage payments on their retirement home they had bought in 1995, figured he would be able to help them refinance and save their home from foreclosure without… I don’t know… maybe helping them out by giving them a few bucks every month just as my wife and I, along with my two brother-in-laws have done for my in-laws the last 10 years.

Anyway, he says the stress on his “Nana Tai and Grandpa Paul was enormous,” and after their servicer filed a Notice of Default, they decided to sell the home… so obviously they must have had equity in the property.

Why that’s just outrageous… you don’t mean to tell me that an older couple found they could no longer afford to live in the home they had bought for their retirement years, so they had to cash out their equity and downsize?  Heavens that’s unheard of, Senator Jones.  I share your outrage… what happened to Nana and Papa was just wrong.

It’s also something that happens to the elderly in this country… hmmm… how about every single day and many times each day to boot.

Oh well… I suppose it’s better late than never for these guys.  Maybe once the foreclosure crisis has spread so far that it gets a chance to impact every one of our elected representatives at both state and federal levels, we’ll finally see some changes that force this crisis to be handled in such a way that it actually ends, which will benefit us all.

It’s going to be a while longer though, because the higher up the food chain you are, the longer it will take before you feel the water rising.  And by the time this crisis personally impacts those at the top, we will have fallen a lot farther down economically than we are today.

But, at least I can have hope for the future, because no one is getting out of this crisis unscathed.

Until then… see you in the soup lines!  And please, remember me fondly when we’re all there.

Mandelman out.

~~~

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~~~

Please sir, can I have some more?

The 18 states designated as being those “hardest hit” by the foreclosure crisis were given a total of $7.6 billion in February of 2010.  The money was to be used by the states to help homeowners through various programs designed by the states and approved at the federal level.

As last year ended, “about $1 billion” of that money had been spent, according to the Treasury Department, and after trying to understand Treasury-speak for the last five years now, the fact that they included the qualifier, “about” in their sentence makes me believe it’s something less than that amount.

A spokesperson for Treasury, Andrea Risotto, commenting in an article about the lack of funds being used to help South Carolina homeowners that appeared on GreenvilleOnline.com this month, said…

“We have seen in South Carolina and across the country that many homeowners are reluctant to reach out for help because they are unsure of where to turn or may feel ashamed asking for assistance.  Many unemployed homeowners delay reaching out for help as they believe they are facing a temporary situation.”

That’s funny, Andrea… hysterical, actually.  Is that why you think many homeowners are “reluctant to reach out for help?”  Because they don’t know where to turn?  Because they’re ashamed asking for assistance?  Because they think they’re only temporarily losing their homes?  That’s why $6.6 billion of the $7.6 billion hasn’t been used to help homeowners more than three years after the funds were made available?

So, you’re saying that the reason so little of the money has gone to help homeowners… is actually the fault of the homeowners themselves?  You’re laying the blame for this travesty on the homeowners… again?  Good Lord… is there nothing that’s NOT their fault?

First they proved themselves “irresponsible borrowers,” buying homes they couldn’t afford.  Recently, its their “dour mood” that’s keeping consumer spending from helping our economic recovery include jobs becoming available.  I remember why they couldn’t get their loans modified back in 2009 – 2010, according to the Mortgage Bankers Association… because 99 percent couldn’t send in the proper paperwork.  And now… after better than three years, the majority are too stupid to have figured out where to turn for help?

Is that really your final answer, Andrea from Treasury?  Want to call a friend for help and try again?  Listening to you, it’s amazing these people can feed themselves and don’t end up just starving to death in the streets all over the country.

If so many people don’t know where to turn for help after three years, perhaps you should encourage those in charge of the state assistance programs to stop keeping the availability of assistance such a closely guarded secret.  Teach them how to leak the news to the media… you guys at Treasury are great at that sort of thing… or, maybe the state’s should consider running an ad or two… or telling housing counselors about the abundance of assistance so many are missing.

As to them being too ashamed to ask for assistance, why is it that they don’t feel too ashamed to march in the streets all over the country demanding fundamental fairness from banks who continue to make it inconceivably difficult to get loans modified.  It seems that millions aren’t too ashamed to ask their banks for assistance… so it must just be the state assistance programs that make people feel ashamed about asking for help saving their homes.

And as to your assertion that they think their trouble is only temporary… well, you just don’t make any sense  at all Andrea, my dear girl.  Once you’re more than a few months behind on your mortgage, the bank stops accepting your payments and starts the foreclosure process… but you think people aren’t coming forward because they think their troubles are only temporary?

Temporary troubles are all it takes to lose your home to foreclosure, Andrea.  And besides that… well, your whole thought process is so distorted on this topic that I’m afraid that if I continue to respond to your comments I’ll lose my ability to score with more than three letter words when playing Scrabble.   (Ummm… let’s see here… oh yeah, I’ve got C-A-T… your turn.)

Andrea also said, “We feel urgency to get this assistance out to homeowners while the need is still great,” which begs the question: When you use the word “urgency,” do you mean it like JFK felt urgency that we go to the moon in ’62?  Or, like Nixon felt urgency to get us out of Viet Nam in ’68?  Or, like I feel an urgent need to save more for my retirement?

The reason I ask is that I’ve spoken to quite a few homeowners at risk of losing their homes, and when they say they have an urgent need for help, I’m pretty sure they mean that by next Tuesday will be too late.

The same article about the situation in South Carolina also quoted Clayton Ingram, who apparently is a spokesperson for an organization that calls itself, SC Help, who said…

“We know we’re not reaching everyone who needs it, which is the sad part for various reasons.”

Not reaching homeowners losing homes, when assistance is available that could prevent them from losing their homes is “sad for various reasons.”  There are a variety of reasons why that is sad, Clayton?  You’re going to have to help me here, because I can only think of two reasons it’s sad.

1. Because people are losing their HOMES unnecessarily.  That’s certainly, at the very least, sad.
2. Because you’re going through life as an imbecile.  That’s also sad.  A mind is a terrible thing to waste.

You’re saying that you’ve got the money to help stop someone from losing a home to foreclosure, but your level of ineptness is so great that you can’t figure out in a state the size of South Carolina how to let them know that you could be helping them avoid the loss of the most important asset in their life?  That’s not just sad, Clayton… that’s tragic… almost like losing a limb is tragic.  Losing your favorite jeans jacket is sad, Clayton.  

Losing a home is a lot more than just sad for many people… losing a home when you didn’t have to lose it is an unthinkable travesty that might stay with you forever.  I don’t even like thinking about losing a car, if it wasn’t necessary that I lose my car.  But my house?  

Feel free to pray with me now… “Lord, if I ever lose my home, please let it have been something that was necessary and not just something that could have been prevented by a moron like Clayton.  Amen.”

South Carolina, by the way, didn’t spend a nickel of the hardest hit funds for the first year that the funds were available and Clayton explains that it was because, they “had to develop the program completely from scratch – which we did pretty quickly.” 
To Clayton, apparently a year is “pretty quickly.”  To a homeowner at risk of losing a home to foreclosure, pretty quickly is measured in days or weeks, certainly not months.  Within months, that homeowner life may have changed in ways that will last for years.

Fair enough though… there weren’t many pre-packaged or frozen food type homeowner assistance programs around that would address the needs of people caught in the foreclosure crisis, I’ll accept that.  But for the record… let me just assure everyone reading this that if I’m ever handed $295 million, I absolutely will NOT need a whole year before some of that money is used to save homes.  In fact, I’ll save homes within the first 90 days of the $295 million check clearing my account, I promise you that.

And if I don’t… you can cut off my feet at the ankles and force me to work as a dance instructor for the rest of my life, or give me a drug that lowers my IQ to the double digit number with which Clayton’s is working.

Okay, let’s move on…

Of course, South Carolina is no different than the rest of the states lately… people are saying that the number of foreclosures is falling.  How do they know that?  Well… um… er… well, because they just do, that’s why.  And since we want so badly to believe it, some of us do too.  It’s sort of like a faith thing.

First of all, according to the same GreenvilleOnline.com article, RealtyTrac says that the number of South Carolina properties EITHER in default, up for auction or already repossessed by the lender… fell from 10,685 during the last quarter of 2012… to 8,321 during the first quarter of 2013.  

This is the sort of statistical horse pukey that makes my hair hurt, and wouldn’t you know it… once again, it’s time for Fun With Stupid Statistics, brought to you by your friend and mine, RealtyTrac’s most often quoted VP, Daren Blomquist.

Oh Lord… it’s him again.  Well, here we go… 

Derwin is a guy who has full six-pack, but he’s lacking the plastic thingy that holds the cans together.  He often says things that make me realize he didn’t pay his brain bill.  Were he any slower, he’d have to be watered once a week.

Why does RealtyTrac have to publish numbers that include, “in default, up for auction or already repossessed by the lender.”  If we’re trying to figure out the number of foreclosures in order to make some sort of relevant comparison, I don’t need to know how many homes had already been repossessed by lenders during the fourth quarter of 2012… that’s a meaningless number… lenders could have repossessed those homes in 2009, I really have no idea, and the same goes for the number of homes “up for auction.”  Maybe those homes took two years to be ready to go “up for auction.”

To underscore the point he didn’t make with some even more worthless comparisons, the article quotes him breaking the same type of data down by county, as follows…

“In Greenville County, the number fell from 1,152 to 1,044, and Pickens County was down from 240 to 190, according to the same source.”

See what I mean?  His wheel is spinning, but the hamster has fallen off and died.

Derwood does concede that… “The real level of distressed properties in South Carolina is difficult to measure because the state requires foreclosures to go through the judicial system…”

And I’m sure that’s one of the reasons that it’s difficult to measure… I could come up with a bunch more reasons to add to that one, including RealtyTrac commingling of useless data points in order to produce statistics that are meaningless.  But, it’s not just RealtyTrac’s obfuscation of information that’s the problem, it’s the banks and servicers too… nothing about the reporting of foreclosure activity has ever gotten anywhere near clarity or consistency.  

Then, the article also points out that…

“The number of South Carolina foreclosure cases in the fourth quarter of 2012 was higher than during the depths of the recession, when it peaked at 10,550 in the third quarter of 2010.”

Oh, good grief… so how do we know that anything has gone down… or up… or is better or worse?  A little over three months ago, the number of foreclosure cases in SOuth Carolina was higher than when things were at their absolute worst?  But, a few months later someone wants me to believe that the worst is now behind us?  Okay, fine.  Believe whatever you want… and wake me when it’s over.

I don’t know why, but Doorknob also commented on the ineffectiveness of the programs using the hardest hit funds, saying…

“We’ve seen that for whatever reason it’s been difficult to gain traction across the country,” Blomquist said of the Hardest Hit Fund. “But at the same time we do still see a lot of homeowners that are still in trouble.”

Okay, stay with me because I can’t take too much more of this… it’s time for my Wheatena and Zwieback Toast with a glass of warm skim milk, and then it’s off to bed for me.

Hey, Dumdum… “for whatever reason it’s been difficult to gain traction across the country?”  The programs have only spent one billion out of $7.6 billion, while foreclosures have climbed into the millions all around us.  Is that what you mean by “hard to get traction?”  Well, thank you for that assessment, professor.  If you ask me, considering it’s been over three years, that’s almost running in place.

And it’s nice to know that you do at least SEE a lot of homeowners in trouble.  I’m sure that will make them feel better… not helping is one thing, but I do suppose that not seeing would be even worse.  Or maybe not… I have to think about that and get back to you.

Then, talking about South Carolina’s homeowner assistance program specifically, Dustin puts the icing on his cake, explaining…

“One issue is the criteria for qualification.  I think part of the reason is that program was really focused primarily on unemployed borrowers who are struggling.  And because the unemployment rates are now dropping, that is less of a stumbling block for people to make their mortgages than it was when that program started.”

Okay, so for those of you that were thinking that I was being too hard on Dimwit a few paragraphs ago, what do you think now… after that piece of almost indescribably obtuse insight?  The program’s been around for more than three years.  Three years ago, or even two years ago, unemployment was higher, but the program wasn’t any more effective then, so whatever he’s grasping at… he missed by a long shot.

And need I even comment on his view that unemployment has been dropping of late?  At the end of the first quarter of THIS YEAR, unemployment was UP IN 25 STATES, and FLAT IN 17… I just wrote about this issue yesterday, as a matter of fact.  And then there’s the issue of real wages, which have continued their downward slide.  Maybe Dunder has his own unemployment rate calculator under his bed.

After that he starts talking about HAMP and HARP, and he even throws out a statistic that says 35 percent of the homes listed as being in the foreclosure process are already vacant.  And how he knows that is one of those unsolvable mysteries I can’t even begin to comprehend.  Don’t even try to tell me that the servicers report that information after sending people to drive by the homes, because those same servicers are lucky when they can find a home with a loan they actually service.

Mr. Blomquist does say one thing that’s correct when he explains that the number of homeowners eligible for assistance from the hardest hit funded programs may be lower than it appears… and that’s almost always caused by nothing other than BAD PROGRAM DESIGN, which has been the point I’ve been making all along… ever since I started writing about the subject three years ago.

SC Help admits that it has changed requirements three times over the past three years in an effort to expand the program’s capacity to help homeowners, but since it hasn’t worked, I have to believe it’s at least in part because the changes were either too little, too late, or otherwise ill-conceived in some way.

I’ll tell you what hasn’t been the cause of the program’s tepid, at best, results… it hasn’t been because homeowners are too ashamed to ask for assistance… it’s not because no one knows of the program’s existence… and it’s certainly not whatever Darnel was babbling about.

SC Help’s Program Today…

Initially, the program only focused on helping the unemployed, but recent changes have expanded that focus to include the under-employed and self-employed people who have seen their incomes drop significantly as a result of the economy.  

The program also expanded eligibility to those whose hardship resulted from the death of a spouse, divorce, or a catastrophic health expense… all of which sounds pretty good to me, but I don’t have the details, and I’m very aware that the large print may giveth, while the small print taketh away.  

Assuming the homeowner qualifies, the article says, the program offers monthly payment assistance for up to 24 months, up to $36,000.  Mortgage payments are made directly to the bank.  And if a homeowner has fallen behind on his or her mortgage payments, assistance can include back payments up to $25,000 per applicant.  And if someone’s home can’t be saved from foreclosure, the program can provide a grant of $5,000 for transition to alternative housing.

The money is treated as a loan, but it’s a loan that is reduced by 20 percent each year the homeowner stays in the property, ending up with a zero balance at the end of year five.  

Like I said, it sounds like the program has come a long way in the right direction, unless I’m missing some onerous qualifying requirement undisclosed by the article.  And I’m not entirely discounting the possibility that inadequate marketing is a factor as well.  In fact, I’m confident the inadequacies involved are many and varied.

So, okay… fine.  But, now we’re sitting here going on 3.5 years since the money was made available… and that’s way past any acceptable training curve type excuses will be tolerated by anyone.  It’s time for the programs funded by hardest hit funds to help homeowners… not in tiny amounts, but substantively, stopping foreclosures with aggressive benefits and inclusive qualifying requirements.

It’s been long enough and surely we know what doesn’t work… after all, we’ve got huge amounts of experience implementing ineffectively designed programs.  Now it’s time to do something right… or step out of the way and let someone else in the house.

Mandelman out.

~~~

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Summerville, SC

Here’s what can happen when people get lulled into a false sense of security listening to the news stories about how our housing markets have rebounded and foreclosures are down… we risk losing the things that are helping homeowners.

When the foreclosure crisis began, and for the first few years as foreclosures continued unabated, foreclosure mediation programs were unheard of… in fact, it wasn’t until people realized that HAMP wasn’t really working as advertised and banks weren’t modifying loans in the numbers they should that states started considering making mediation part of the process.

I could be wrong about this, but if memory serves it was Nevada that was first to put in such a program for its residents… it didn’t work very well at first, but other states reluctantly followed suit… and finally after several years, the effectiveness of the various state programs has improved.

Still, and even with the problems faced by homeowners attempting to get their loans modified so widely known, it’s never easy to put a mediation program in place.  St. Louis and St. Louis County reportedly finally passed a mediation ordinance, “amid tales of chaos in the mortgage servicing business as foreclosures mounted.”

The main reason it’s so hard to get mediation programs approved is that bankers don’t like them, claiming that mediation programs only add costs, delaying foreclosures that are inevitable.  In Missouri, the industry is also claiming that varying rules in different counties are too difficult for them, which just sounds ridiculous to me. It’s mediation banker-people… sit down and see if a deal can be made.  Enough whining already.

The industry fights the creation of such programs, in fact the St. Louis and St. Louis County mediation program requirements are currently blocked by legal challenges filed by bankers still pending in Missouri’s courts.

However, contradictory to the claims that mediation is ineffective, a Missouri housing counseling agency, Beyond Housing, reported that before the bankers went to court to block the program’s implementation, 40 mediations were actually held and in all but three… an agreement was reached and homes were saved from foreclosure.

The agency also says that 950 foreclosures were filed in St. Louis and St. Louis County between the time the program went into effect and the bankers blocked it in the courts and roughly a third… 274 of those homeowners asked for mediation.

According to the St. Louis Post-Dispatch…

“Banks pay $350 for the mediation. The mediator can’t stop a foreclosure. But banks face $1,000 fines under the county ordinance if they refuse to mediate, or if the mediator says the bankers acted in bad faith. The fine in the city is $500.”

Beyond Housing’s CEO, Chris Krehmeyer says that Missouri’s homeowners are still losing homes to foreclosure that shouldn’t be lost, and like all the housing advocates I’ve ever heard speak out on the subject, claims that mediation is good for lenders because they lose less when modifying, blah, blah, blah.

He also points out that foreclosures also sell for 30 percent less than comparable homes, and that banks pay legal and maintenance fees for the homes they repossess.  And property taxes too, Chris… don’t forget the property taxes.

Of course, the problem is that Chris is ignoring the distinction between lenders and servicers… the difference being that servicers don’t pay the costs he’s referring to as those costs are paid out of the trust who holds the mortgages in pools of loans that are divided into tranches.  Certificate holders in the various tranches are entitled to a percentage of the cash flows produced by the payments on the loans.  The AAA tranches get paid first so lower tranches take the first losses… but regardless, certificate holders don’t own the loans or the homes.

Then there are questions about the accounting rules and who is required to recognize losses under what circumstances, to say nothing about the role of LPS as the default servicer and the foreclosure mill law firms that LPS assigns to handle foreclosures based on how quickly they handle such matters.

The point is, Chris has no idea who comes out ahead when comparing a modification to a foreclosure, and neither does anyone else… it’s a very fluid sort of calculation and can depend on the servicer’s financial condition at any given moment, and on what is forecasted in the near future for the housing market in the specific area of each home.

If the calculation assumes the home will re-sell quickly after foreclosure, it’s better for the investor’s financial return, but if the assumption is that the “REO Hold Time,” which is the term used by the industry, is going to be 24 months, then that means something entirely different for the numbers.

And that’s why attitudes about future housing markets are so important to those in government and the banking industry… the numbers look better if everyone believes that housing is recovering.  Such delusional thinking also has the tendency to cause homeowners to ignore the plight of those still at risk of foreclosure, which makes it that much easier for the lobbyists to slip in legislation to kill state mediation programs, among other things.

Missouri is just the latest example of such a strategy at work.  According to the St. Louis Post-Dispatch, this new bill to end the mediation program, “caught foreclosure counselors by surprise.”  The Post story also quoted Karen Wallensak, director of Catholic Charities community services, who said…

“It kind of sneaked its way through the Legislature and only caught our eye last week.”

Missouri homeowners had better wake up, and all homeowners should treat this like a wake up call, because mediation programs took years to get in place, and years to make as effective as they often are today.  Once these programs are gone, it’s extremely unlikely that they will ever return.

The bill, NOS. 446 & 211, has passed the Missouri House of Representatives and the state’s senate passed it with no changes, so if you want it stopped, you’d better waste no time contacting your Missouri governor’s office.  It’s time to make your voice heard, or the effects of foreclosures will be that much worse for that much longer.

And unless you believe that the foreclosure picture in this country somehow magically changed dramatically over the last month or two… you don’t want to wake up one day to find out you might need mediation… only it’s no longer there… and you’re on your own trying to get your loan modified by sitting on the phone with your servicer.

CONTACT MISSOURI GOVERNOR, JAY NIXON HERE!

Mandelman out.

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Mandelman Matters’ Trusted Attorney in Missouri is Dale Wiley… and you can get to know him here:

Stopping Foreclosures in Missouri with Attorney Dale Wiley

A Mandelman Matters Podcast

We all know what happened as a result of the mortgage market melt down that began during the summer of 2007… we’re still nursing our wounds, millions have lost homes, millions are still at risk of foreclosure.

We all remember TARP and the taxpayer funded bailouts of Wall Street’s largest investment and commercial banks almost like it happened yesterday.  And in 2009, what happened to homeowners that applied for assistance under President Obama’s Home Affordable Modification Program (“HAMP”), is legendary in its infamy, as documented in the $25 billion National Mortgage Settlement and numerous other well publicized lawsuits that have accused investment and mortgage bankers of positively shocking behavior.

But, here’s a story from the meltdown you probably haven’t heard before…

There is one mortgage originator and investor that should have stood apart from the rest… they did it right for their shareholders, bondholders and borrowers… and while others failed, they survived as a result.  They didn’t take TARP funds or any sort of tax-payer funded bailout… instead they took their losses, restructured the company, and protected their shareholders…  even taking the unheard of step of going around their contracted servicers, contacting borrowers and offering to modify loans, even after their servicer had denied modifications.

Their story is one everyone should know… it’s a tragic testament to how things could have been handled… and weren’t.

Today, they’re a fast growing company with a $100 million market cap, listed on the NYSE MKT, still led by the same CEO and president who founded the company in 1995… and to my way of thinking, it’s absolutely incredible that so few will have known  their story… until now.

The Back Story We All Know…

In 2009, homeowners believed that since taxpayers had bailed out the banks, now those banks would be required by the government to help them by modifying their loans so they could avoid foreclosure.  The president had said that his program would provide such assistance to 3-4 million homeowners, but after the first 18 months of HAMP had passed, the number of permanent modifications was only a relative handful.

That outcome alone would have been bad enough, but the situation was made infinitely worse as mortgage servicers, entirely unprepared to handle the volume of distressed homeowners applying for modifications, struggled with inadequate staffing and resources to implement a program, too quickly conceived, with rules in almost constant flux… and the result was nothing short of chaotic.

Loans weren’t written to be later modified for borrowers unable to repay them, and the industry’s foreclosure machine was not oriented to help borrowers in default avoid foreclosure.  To the contrary, law firm’s hired to handle foreclosures worked under incentives designed to reward faster and more efficient foreclosures, so homes could be put back on the market as soon after default as possible in order to minimize losses to investors.

It was a system that may have made sense in past years, before the summer of 2007 when investors around the globe became concerned that triple A ratings couldn’t be relied upon to accurately reflect risk, abruptly fled the markets for Residential Mortgage Backed Securities (RMBS) and related Collateralized Debt Obligations (CDOs), throwing the secondary mortgage market into a modern day ice age.  With the availability of credit for all mortgages having evaporated almost overnight, homes were now being pulled off the market as prices started falling faster than anyone ever imagined was possible.

When the nation’s homeowners awoke one Monday morning in September of 2008, the venerable Lehman Bros. had filed bankruptcy, a fate Merrill Lynch had only avoided by selling itself to Bank of America, their home’s value had fallen by 30 percent, give or take, and Wall Street’s investment banks were all potentially racing towards insolvency.

A few days later, the world’s largest insurance company, AIG, was being bailed out by the federal government after its downgrade from AAA triggered collateral calls tied to its issuance of Credit Default Swaps created a need for tens of billions in cash the company simply didn’t have on hand.

Home values falling so fast had left no one time to get out or refinance, and foreclosures were inevitable.  Discretionary consumer spending essentially stopped, as company layoffs accelerated at an alarming pace, putting an even greater number of homeowners into the foreclosure pipeline, and all of a sudden no one was sure that the world’s largest economy would be able to avoid another Great Depression.

By 2009, however, the actions taken by the federal government in conjunction with the Federal Reserve, had clearly signaled that we would not allow our financial system to implode, investors breathed a collective sigh of relief, but nothing changed for middle and working class homeowners who were losing jobs and homes in numbers not seen in generations.

President Obama, feeling the enormous pressure to do something to help stop foreclosures, had his plan ready within the first month of his presidency… he called it, Making Home Affordable, and he said it would save millions of homes through modification and refinancing… homeowners needed to simply call their banks directly or for assistance, a HUD counselor… and they would be able to save their homes.

In his speech that introduced the federal program he made clear that it was in everyone’s interest that foreclosures be stopped whenever possible and the federal government would now be spending $75 billion to ensure that’s precisely what would happen going forward.

When two stars collide, it’s called a supernova…

This new goal of modifying loans in order to avoid foreclosures whenever possible, however, collided into the industry’s established practices like two neutron stars and the the victims of the crash were homeowners in the millions.

It reached a point where nothing made sense to those closely following the crisis unfold.  Banks seemed to be incapable of doing almost anything right.  They were often unable to produce proof of the loan’s ownership… there were even cases of foreclosing on the wrong homes or attempting to foreclose on mortgages long since paid in full.  And it seemed unquestionable that foreclosures were routinely taking place even when the financial outcome would have been better for the loan’s owner had the loan been modified.

By 2010, the cries of homeowners were being heard by elected representatives in state and federal governments, and as the mainstream media became aware of what was happening, the cumulative effect of the headlines started having an increasingly negative impact on the public’s opinion of the nation’s largest banks.

The Impac Way Forward…

Actually, although few knew it… not all of the nation’s mortgage bankers were following the same path.

Impac Mortgage Holdings, Inc., led by founder and CEO, Joe Tomkinson, along with co-founder and president William “Bill” Ashmore, was dealing with the catastrophic situation in an unheard of way… by downsizing, taking losses, reinventing themselves… and looking to protect their shareholders by making sure their pools of loans stayed performing, which meant hiring and training new employees to modify loans in order to minimize foreclosures.

(Yes, you read that right… they contacted borrowers as the investor, and modified loans.)

Joe Tomkinson, CEO

William “Bill” Ashmore, President

The logic and good sense of Tomkinson’s plan is enough to renew one’s faith in the potential for financial executives to do things that are right and smart, instead of embracing non-disclosure until exhibiting strategy driven by greed.  The contrast between what we all saw happening on Wall Street and what Tomkinson and Ashmore were busy doing is so stark as to make one think the two might exist in different countries, if not on different continents.

To begin with, Tomkinson and Ashmore started to become very concerned about the housing market in 2006, but even more amazing is that they did something based on their concerns… they slashed loan originations by half to $12 billion, and cut their portfolio by 25 percent to $21 billion.  Had they not taken these steps when they did… had greed or willful blindness driven them to remain in the game so as to squeeze every dime from the marketplace until the last minutes before the meltdown… it’s highly likely that would not have made it through the storm, as so many others did not.

It’s remarkable that Impac’s senior management team had the intestinal fortitude, if you will, to pull back in 2006 the way they did… to prepare for the events that followed before anyone could be sure what was ahead… when the crisis would begin… how long it would last… or how severe it would be.  It’s one thing to be able to say you saw the bubble… I mean, I saw the bubble myself, but I certainly didn’t see it clearly enough to sell my home while it appraised for a million dollars.

As the private securitization market vanished along with the credibility of the ratings agencies, Standard & Poors, Moody’s and Fitch, Impac closed down its loan origination division, but management saw opportunity when others remained blinded by despair and the company transformed itself into a default servicing firm, and entered into a partnership with a start-up company that would become Auction.com.

In 2007-08, the partnership with Auction.com generated $45 million for Impac and today it’s the largest REO auction company in the world.  Impac also acquired Advantage Title, a title and escrow company, and grew the business to be one of the largest title firms in California before selling it for a profit in 2010.

They had made it through the hardest of times, and in late 2010, they were ready to create a new residential mortgage banking operation. Because of their successful interim investments in Auction.com and Advantage Title, they were able to launch the new business without the need to raise new capital.

Today, mortgage banking is once again Impac’s core business.  It’s approved by Fannie Mae, Freddie Mac and Ginnie Mae and has originated roughly $3 billion in conforming loans to-date.  Impac completed licensing requirements in 36 states and has 26 retail offices and three channels through which it originates loans… retail, wholesale and correspondent.

Impac now manages a newly originated portfolio of around $2 billion in conforming loans, but the company has also expanded to offer renovation financing, known as 203(k) loans, and recently started offering reverse mortgages and even jumbo loans.

Impac is a company once again on its way up and it’s not hard to see why… they did it right by putting the interests of its shareholders above all others, which drove them to do what others seemed to find impossible… making their loan modification efforts both effective and efficient.

And Impac never asked for… or accepted a nickel of TARP funds or any other tax-payer money.  They recognized that what was right for investors and shareholders was also right for the borrowers… and I think, considering what has transpired during this crisis over the last few years, that is something that deserves to be applauded and respected… at the very least.  Were it up to me, I’d make sure they were honored with some sort of national award… a statue on Wall Street even seems appropriate.

My Next Mortgage WILL BE an Impac Mortgage… No question about that.

I’m quite sure what they’ve done will also be rewarded, because I know where I’m going for my next mortgage… directly to Impac, and there are no ifs, ands or buts about it.  And I’m guessing that many will feel the same way once they’ve heard the story of Impac Mortgage, as well.  I can’t imagine anyone wanting to get their mortgage anywhere else?

Investors have already responded.  The company, although de-listed at one time and relegated to the pink sheets, is back on the big board of the NYSE MKT.  Its share price has risen by 750 percent since last year, reaching a 52-week high of $18, and recently trading in the $11 – $14 range.

I’ve known Impac’s General Counsel, Ron Morrison for the last several years, ever since I first heard about the company’s efforts to circumvent their servicers and modify loans.  (I wrote about it at the time here: Investors Tired of Servicers Not Modifying, Take Action.)

Ron Morrison, EVP and General Counsel

Ron’s always been willing to help me better understand various topics related to how the mortgage banking industry operates.  And I’ve gotten to know other Impac executives as I’ve learned a lot more about the company’s history and plans for the future.  Today, having come through the hard times, Impac’s 520 employees are very much a united force and that’s an advantage few companies can ever claim.

Recently I met with Impac’s CEO, Joe Tomkinson.  I expected that meeting to last an hour or so, but three hours later I felt like I’d spent the time talking with an good friend.  Like me, he served in the U.S. military, and I can’t recall meeting with anyone that I agreed with as much about everything.  And for those who think that the mortgage bankers didn’t lose money as a result of the meltdown that began in 2007, Joe’s very candid about it… Impac lost half a billion dollars… that’s $500,000,000… mostly as the result of its holdings of lower tranches of mortgage backed securities.

So, that means he protected other investors from losses while he watched his company lose hundreds of millions of dollars.  That’s not something just anyone would do without wanting some recognition at the very least, but Joe isn’t one that cares for the limelight.  On one call with shareholders during the worst days of the crisis, he remembers telling his audience that they should fire him as CEO.  Of course, no one wanted anything like that to happen… they knew what he and Bill had done.

In 2007, Joe even tried to offer solutions to those in Washington D.C.  He wrote a white paper and sent it to Rep. Frank, among others.  But no one listened… even his own elected representatives ignored him.

He’s one of the very rare individuals that just gets better and better the more I learn about him and there was a time not so long ago that I never would have imagined I’d ever say that about a mortgage banker.

I guess the moral of the story is… never stop learning and never say never.

Mandelman out.

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DON’T MISS NEXT WEEK’S MANDELMAN MATTERS PODCAST …

A Conversation with Impac’s CEO Joe Tomkinson

The Mortgage Banker Who Did Right by Shareholders & Borrowers

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FOR MORE INFORMATION… CLICK BELOW:

CONTACT IMPAC MORTGAGE

De-Nile is a river in Egypt, not a growth strategy.

I was reading about the 1930s…

Unemployment climbed from 3.2 to 8.7 percent… the year is 1930.  In 1931, the unemployment rate rises to 15.9 percent.  In 1932, unemployment continues upward to 23.6 percent, and in 1933 it goes to 24.9 percent.

In 1934, we are said to be starting on a road to recovery as unemployment falls to 21.7 percent.  In 1935, it falls again to 20.1 percent, in 1936 it’s down to 16.9 percent and in 1937 it falls to 14.3 percent.

Then in 1938, unemployment spikes back up to 19.0 percent, it is remembered as the “depression inside the depression.”  In 1939 unemployment edged back down to 17.2 percent.

Between January and April of 1930, stocks rose by 13 percent… and then fell from that high by 40 percent as of the end of that year.  On New Years’ Day of 1931, predictions that the economy would recover by the end of that year were in the news.

The fact is that throughout the decade that we refer to as the Great Depression our economic recovery was always “just around the corner” according to many “experts.”  What else would you expect “experts” to say?  That the ship is sinking, head for the lifeboats?  That would just make a bad situation worse.

The British economist everyone loves to either quote or debate, John Maynard Keynes, referred to our “animal spirits,” the unpredictable factors that impact both consumer and business confidence.  And in 2009, George Akerlof and Robert Shiller’s book, building on Keynes’ theory, titled: “Animal Spirits: How Human Psychology Drives the Economy,” claimed to “offer a road map for reversing the financial misfortunes besetting us today.”

As a result, there are an awful lot of people that would say just about anything if they thought it might improve our economy even temporarily.  Truth is not a factor in this discussion, we simply have to cheer people up in a big way and they’ll take it from there.

In case you wondered why you almost never see economic news that isn’t flagrantly cheerleading for recovery, it’s because there aren’t many people who would pay someone to tell the truth about our economic condition when the truth paints not so rosy a picture… since no one benefits from that sort of news being spread around town.

Fed Chair Bernanke’s quantitative easing is an attempt to create the same sort of confidence game solution to stimulating consumer spending… pump money into the financial system to increase liquidity and the stock market will soar the way an alcoholic revels when provided with an uninterrupted pipeline of booze.  That will make people feel richer and they’ll rush right out and start spending like they always have.  Next thing you know the increased consumer spending will cause employers to expand and presto… unemployment will fall.

Has it worked?  Not even a little bit.  Did anyone think it would work?  Well, I certainly didn’t and I wrote thousands of words explaining why, but I’m not claiming to be in any way special… I could easily make a very long list of those who said quite clearly that Bernanke’s plan could not succeed.  And without going into great detail, there are at least three reasons that should be simple for anyone to see and understand.

For one thing, our financial problems are not psychological, they’re real.  Our illness is not in our heads, we’ve actually got broken bones with which to contend.  We’re not depressed… we’re poorer.  A second factor is that we’ve fallen too far down for too long.  Hand me an extra ten grand today and I’m more likely to stuff my mattress with it than buy a new anything, fearful that the next rainy day will feel more like the storm of the century than April Showers.  And third, while the stock market may in fact be soaring to new highs, we all know how tenuous that sort of glee can be, and besides that, any new wealth the market is creating has been more than offset by the drop in home equity that we’re much closer to than the DOW or S&P 500.

So, the bottom line is Mr. Bernanke can keep easing until he turns blue, and he still won’t get the effect he’s dreaming of creating, no more so than will the unabashed cheerleading that continues to inundate the mainstream press with claims that our economic recovery is upon us and growing stronger every day.

A Look at Unemployment In the U.S. Today…

At the end of this year’s first quarter, unemployment was up in 25 states.  In 17 states it was flat.  According to “Mish” Shedlock, whose blog, Global Economic Analysis tracks our unemployment picture in great detail, based on numerous sources including the Bureau of Economic Analysis (“BEA”), sums it up as follows:

“The official unemployment rate is 7.7%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is.

U-6 is much higher at 14.3%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Digging under the surface, much of the drop in the unemployment rate over the past two years is nothing but a statistical mirage. Things are much worse than the reported numbers indicate.”

Long-term unemployment is the terms used to describe someone out of work for at least 27 weeks, but still looking for a job.  Understandably, after six months out of work, quite a few lose hope and stop looking.  Mish points out that 38 percent of the unemployed were classified this way during the first quarter of this year… until March when long-term unemployment went up to 40.2 percent.

The unemployment numbers reported in the headlines come from the BEA’s Household Survey… basically they call people and ask, among other things, who in the household is out of work, but has sought employment during the last month.  If someone has stopped looking for work, they’re no longer counted as being unemployed, rather they are considered no longer in the work force and this number is reflected in the “participation rate.”

According to Mish’s numbers, and his numbers can absolutely be trusted, over the last year, we stopped counting 1,693,000 people, while during the same period our reports showed the number employed up by 1,473,000, including those only employed part-time.

Here’s the problem in a bigger picture sense… Peter Ferrara writing for Forbes explains that since 2008, the U.S. population increased by almost 12 million people of employment age.  So, when you really look at the employment picture today, we’ve got 3 million fewer people working in this country, and if the participation rate today were the same as it was in 2008, even our happy headline unemployment rate as of December 2012 would have been 11.4 percent… instead of 7.8 percent as was reported by the U.S. Department of Labor in January 2013.

Even more sobering is that in December of 2007, our unemployment rate was only 4.9 percent.

Now let’s take a quick look at the numbers instead of the percentages.  As this year began, based on the Department of Labor’s report, there were 12.2 million Americans out of work… 2.6 million workers no longer looking for work… 2.6 million workers classified as “marginally attached,” meaning they want work and have looked for a job in the last 12 months… and 1.1 million referred to as “discouraged,” meaning they’ve simply stopped looking.

Run a tape of those numbers and you’ll find 15 million Americans not working as of the end of last year, and as a footnote to that statistic… 7.9 million Americans could be found in the column labeled, “involuntary part-time,” which means exactly what it sounds like… your hours have been cut so we won’t see you until next Thursday… hope you enjoy your time off.

According to the National Bureau of Economic Research, the longest recession this country has seen since the Great Depression was reported to last 16 months… the average recession since the 1930s lasted only 10 months.  Our Great Recession reportedly began in December of 2007 (and is said to have ended in June 2009, if you can believe that), but as of this month it’s been 65 months since then and not only do we have the downright awful unemployment picture just described, but in addition, over the last five years median household income has fallen by roughly 9 percent as the commodity price index (food, fuel, etc.) has risen by 20 percent.

And this is the performance of an economy being bailed out with untold trillions in corporate welfare, federal spending that’s up by 41 percent in five years, Fed Chair Bernanke’s ongoing and unprecedented quantitative easing, interest rates being kept at historic lows, the FHA financing home buyers with 520 FICO scores and what some might call a relative pittance as a down payment, and as I recall we’re still at war somewhere, aren’t we?

All of that and more… and this is what our economy looks like?  This is recovery?

Recently, economist Bill Conerly, who earned his PhD in Economics from Duke and has worked both as a professor and in the corporate world, writing for Forbes, forecasted the economy in 2013-14 to experience “light to moderate growth,” saying that there were both positives and negatives ahead.

Okay, so that’s fair enough, right?  I mean, that’s not exactly going out on any sort of limb in terms of a forecast.  Just about anything short of a complete catastrophe could happen and he could likely claim to have been at least partially correct.

So, what were Bill’s positives?

The first he phrased as our normal “tendency toward growth.”  As a nation, we’ve tended to grow in the past… and so, Bill forecasts… we probably will… you know… grow… in the future.

Now, I don’t know about how you feel about that sort of sentence being at the top of his list of “positives,” but when I read it, I fantasized momentarily about kicking Bill in his shins for having written it.  It’s about as non-specific as one can get, and if you have a doctorate in economics, with the resume of Mr. Conerly, well… I’m hoping for a little more frankly.

I “tend” to be healthy, but that’s not any sort of assurance that I will be next year, especially if I do unhealthy things.  It’s like Mark Zandi, the economist whose forecasts have predicted our recovery annually since the crisis began… it’s always, next year… then next year when it doesn’t happen then it’s coming the year after that.  Eventually, I suppose, he’ll be right.

Next in his list of positives was QE3… once again with Bernanke’s easy money machine.  Never mind that QE hasn’t accomplished anything thus far, Bill simply says that we haven’t given it enough time.  The thing is… QE has had enough time to have a significant impact on the equities markets.  So… what else should we expect it to do and why… I need details.

After that predictable little gem came, “available labor, equipment,” and by that I suppose he means unemployment is still high and therefore workers are “available.”  As far as “equipment” goes… I don’t even care what he meant by that.  If the United States of America has to list “equipment” at the top of the list of positives that will create economic growth, then we’re in even more trouble than I had thought.

And last he listed “low interest rates,” yet another factor that has been consistently present since 2008, and yet has failed to do much of anything except help pump up the stock market and leave retirees with essentially no interest income on which to survive their golden years.

After that, Conerly threw out three negatives… the first being “fiscal policy,” which he explained had to do with how the American people feel about the national debt and deficit spending, and how that will impact federal spending.  It’s an idea that I think should be presented with a laugh track from a sitcom.  It doesn’t matter whether Republican or Democrat, our government always spends more year over year… and many of the Americans yelling about the debt and deficit are members of the Tea Party that learned everything they know about government spending on Fox News.

The next negative was Obamacare… Bill says it’s causing “worry,” and I have to agree with him here… in fact, it’s causing a lot more than just worry.  My health coverage has increased by close to $1,000 a month since the president’s health insurance reform legislation passed into law, and I’m not just worried… I’m at risk from being less covered.  To keep the cost from killing me, we lowered our coverage to 70 percent, and if you’ve ever seen what 30 percent of a decent hospital bill looks like, you know it’s enough to break the bank all by itself.

And last on Bill’s list of negatives that could threaten our economic growth this year and next… are you ready for it… drum roll please… survey says: “animal spirits.”  Ding, ding, ding, ding.

Yes, following the crowd, Bill went straight for the Keynes econo-bible saying:

“Today the common mood seems to be dour, which itself depresses economic growth.”

So, it’s OUR fault once again?  We’re causing this with our dour common mood?  Damn it Bill… we’re unemployed, less employed or just plain poorer… our home values have been slashed by at least a third… our access to credit is about on par with where it was in the 1970s… we’re paying back student loans that look a lot like the balances of a mortgage… our parents and kids are moving back into our homes… and you’re blaming our anemic economic growth prospects on us… on the collective mood we’re in?

Well, fine… why not… after all, we caused the whole mortgage meltdown by buying homes we couldn’t afford, right?  We caused all that and now we’re so damn dour as a result that we’re threatening our nation’s “tendency to grow?”  Well, shame on us for being such a problem for the planet.  We’ll try to do better in the future.  Should we be apologizing to Goldman Sachs, you jackass?

Our Always Recovering Housing Markets…

I know, I’ve responded to this so many times, but once again we’re being told that our housing markets are defying gravity again and one thing I’ve learned is that when it comes to our home’s values, I suppose because we want it so badly… we’ll believe just about anything.

It seems that nary a month goes by without someone telling us that our homes are increasing in value and even though we should know enough to wonder how that could be when NOTHING ELSE has changed in the least, we run with it like we got the information on stone tablets engraved by the hand of God.

First of all… foreclosures are down?  What does that even mean?  Are we calling “foreclosures” what happens when a Notice of Default is sent to a borrower?  Or is it when a home is repossessed by a lender or servicer?  Or, is it when a home is sold at a trustee or sheriff’s sale?  I don’t even know anymore, all seem to be interchangeable depending on who wants to spin the news into a golden yarn.

Pre-foreclosure activity in California is up by 200,000 year-over-year, and while some states are seeing less foreclosure activity, others are seeing more… and this cycle has continued in the same way for the couple of years.  I saw data that said last month we had 143,000 foreclosures nationwide.  So, what’s new or encouraging about that?

You know, I could sit here and tear apart the nonsense about the crisis being over or foreclosures being behind us, but it’s just too silly to consider even as a possibility.  Two months ago, Lender Processing Services reported something like 3.3 million loans being in the seriously delinquent category.  The Mortgage Bankers Association puts that number at 2.38 million as of March of this year.  So, whatever the number you like, it’s a big one… so where did they all go… did everyone get a signing bonus and pay up their arrearages?  Nonsense.

Banks are slowing down in states that have made it tougher to foreclose… certainly.  They may also repossessing fewer homes at the moment, but these sorts of things aren’t an indication that borrowers aren’t still unable to pay their mortgages, it’s more likely an indication that banks don’t want to take on more losses than they have to.  And if fewer people are applying for loan modifications it’s because they’ve heard about the nightmare and don’t want any part of it.

Regardless, 245,000 homeowners were granted permanent loan modifications in the first three months of 2013, according to the latest report by the HopeNow Alliance, and during that same three months, there were 162,000 completed foreclosure sales and 472,000 FORECLOSURE STARTS, which represents a 30 percent increase over the fourth quarter of 2012!  Does that sound like the crisis has ended, or is even coming to an end?  Not to me.

Now, look at April home sales in Southern California for a moment.  According to Dr. Housing Bubble, the site that’s entirely dedicated to tracking the reality of Southern California’s housing market… Jumbo loans made up 26 percent of all sales, and all cash deals accounted for 33 percent of the total.  After that, FHA loans were used to finance 21 percent of homes sold in that month.  Got the total in your head already?  It comes to 80 percent of all home sales… does it look anything like a sustainable housing market to you?

Depending on whose numbers you want to believe, Southern California’s median home price increased by 28 percent in a year.  Now, the volume is VERY LOW, so price increases driven by a small number of sales at the bottom end of the market may mean… nothing.  But, even if you think volume doesn’t matter… homes increasing by 28 percent in a year is not sustainable.  In fact, that’s more than homes went up yearly during the last bubble.

All cash and jumbos alone represent 49 percent of the market… and who do you suppose was involved in those transactions?  I’m thinking investors (flipping anyone?) and rich people, no?  We should all understand by now that with inventories at record lows, as is the case today, the scarcity makes prices appear to rise as investors with tons of cash and fueled by low rates bid each other up to get what’s available.

In the Phoenix area, for example, where prices have increased by a reported 30 percent in a year, over half the sales are being driven by investors, and 40 percent of sales are all cash, but when half the market is being driven by one relatively small group, what do you suppose will happen when members of that group no longer see the opportunity for a quick buck they once did… and they pull out en masse?  Once again, Dr. Housing Bubble covered this topic quite thoroughly, and the writing is more than just on the wall.

And the rising prices are bringing more homes onto the market, and when supply goes up… what happens to prices, boys and girls?  Investor demand in the Valley of the Sun is already showing signs of waning, and since household incomes in Arizona have remained flat for better than a decade, it’s hard to imagine that what’s been going on there will continue much longer.  And with the FHA loans we’ve been depending on to replace the sub-prime mortgages that went away with the likes of New Century are about to get quite a bit more expensive in June, so we can guess where that volume is headed.

So, that’s enough for me, for the moment anyway… I wish we’d stop with the false bottoms and imaged recovery stories so we could actually concentrate on making some much needed improvements in how we’re handling our economic malaise, because that’s the only way we’re going to see any actual improvement in our quality of life.

Denial may help us sleep for a few nights, like giving a drunk alcohol makes him or her feel better too… but it’s always short lived and the hangovers only get worse when we wake up and discover that nothing substantive has changed.

Mandelman out.

Most of my regular readers know that I tend to take off for a couple of months each year… usually one is in the Spring and the other in late summer.  In past years I’ve known that it’s time for a break in the action because three things occurred: 1. I started writing articles and by the end of my third or fourth sentence I was typing, “blah, blah, blah.”  2. My ankles became swollen from sitting in my desk chair for far too long.  3. My wife politely threatened to leave me if I didn’t stop and take a break.

Anyway, this last hiatus began normally enough… it was time for Spring Training in Arizona and I like to go watch baseball in small venues and drink Bloody Marys in the morning.  This time, however, things didn’t work out as I planned and since I know many have been wondering where I’ve been for the last two months from the slew of emails I’ve received, I thought I’d explain what I didn’t want to explain at the time… and let everyone know that not only am I back, but I plan to be back with a vengeance… and a few other improvements.

Where have I been?

Well, as they say, life happens and these last couple of months were certainly proof of that for me.  First of all, as winter was ending my father passed away unexpectedly… he was almost 82 years old and although I realize 82 isn’t 52… it still seems a young age at which to go, these days.  He died quietly in his chair after asking for a glass of water.  He wasn’t sick in any specific way, he just sat down and passed away in minutes.  My friend who is a physician explained it to me by telling me what the first symptom of a heart attack often is… sudden death.

My father was a brilliant man and a wonderful father in many ways. and we had many wonderful years together.  We also had years that were difficult for both of us, and I’m sure that’s true for many sons of the men from my father’s generation.  We were very different people that came from very different times, and while we were the same in some ways, there were many things we couldn’t understand about each other.

My father, Julian, earned his AB in biochemical sciences from Harvard in 1952 and his PhD in physical chemistry from Polytechnic University of New York in 1960.  In 1961, the year I was born, by the way… he joined Bell Telephone Laboratories in New York City… today’s Bell Labs would be better known as Lucent Technologies.  Bell Labs, which was created in 1925 as the R&D company for the Bell System, accumulated over 31,000 patents including such simplistic things as the discovery of the measurement of sound and the LED.

As a member of the technical staff at Bell Labs, my father worked on the development of the batteries that were used in Telstar, the communications satellite launched by NASA from Cape Canaveral, Florida in July of 1962.  Before Telstar, live broadcasts from around the world were impossible… television networks had to wait for tapes to be flown over the Atlantic before events could be broadcast.  Telstar was the first satellite to send television signals between North America and Europe.

In 1963, my father was offered a position as assistant professor of water chemistry at the University of Pittsburgh.  In 1967, he rose to associate professor and in 1973, he became a full professor of environmental and occupational health at the University of Pittsburgh’s Graduate School of Public Health… before retiring emeritus professor in 1995.  In 1984, he also became associate director at the Center for Environmental Epidemiology and that same year he received a secondary appointment as professor in the School of Engineering’s civil engineering department.  And throughout his career, he was also a visiting lecturer at Harvard, and a visiting faculty member at University College London.

My father conducted extensive research in areas that included the hazards of wastewater, drinking water, air pollution and building interiors for the Environmental Protection Agency (EPA), the National Institute for Occupational Safety and Health of the Centers for Disease Control and Prevention and the National Park Service.  He was also a committee member for the Second International Congress on Environmental Information and Communication in Bayreuth, Germany, the International Society for Exposure Analysis and he served on the EPA’s committees on research, peer review and ground water recharge.

He presented his research lecturing at numerous academic institutions all over the world and most recently, his research was published in Science of the Total Environment, Environmental Epidemiology, Water Research, APCA (Air Pollution Control Association) Journal, Atmospheric Environment, Environmental Science and Technology, and the Journal of Exposure Analysis and Environmental Epidemiology.  And he was the lead editor of the book “Health Effects from Hazardous Waste Sites,” published in 1987.  (You should probably wait for the movie… I know I am… LOL.)

One of his more recently published books… one that he autographed for me and that I still have around my study somewhere… was titled, “Ground Water Re-charge Using Waters of Impaired Quality,” and when he asked me what I thought of it, I admitted that I couldn’t get past the Table of Contents.

I thought he would chuckle at that response, but he didn’t.  In fact, I’m sure it disappointed him… which was indicative of why he and I also had some difficult times that unfortunately stretched into years more than once.

Although he never actually stopped working, continuing his research and consulting all over the world, he did retire from teaching in 1995, and I flew home for the occasion.  At his retirement party I learned something I had never known or even imagined about his career… he had taught at the graduate school level for 34 years and never missed a single class… not even one class missed or re-scheduled in 34 years.  It’s an example of how different my generation is… I had people that worked for my firm that couldn’t even get through a month without calling in sick or needing a personal day at least once.

To commemorate his retiring from teaching I even edited together a video that he proudly showed at the party, that included old pictures that I had digitized, and featured footage I’d taken over more than a decade as my wife and I traveled on various vacations with my parents, both here in the U.S. and around the world.

It often wasn’t easy for my wife and I to get away on those vacations with my parents, but I felt it was important that we take advantage of the opportunity and so we made it happen no matter what was in the way… and I couldn’t be happier that we were able to do so.  It’s easy to let those types of opportunities pass by, and I’ve always tried not to let that happen.

The year of my father’s retirement, my parents celebrated their 40th anniversary.  My wife and I went back to Pittsburgh to throw my parents a surprise anniversary party.  It was held in a ballroom atop the William Penn Hotel, the city’s most prestigious address.  We had a large band playing music by Benny Goodman and others from days gone by, and with help from my younger sister and others, we managed to get over 100 of their closest friends to attend.

It was truly a memorable evening for everyone, and I was happy and proud that I was able to make it happen.  Plus, we actually surprised my father… no easy task… and my wife and I watched the grown-ups dance cheek to cheek until the wee hours of the night.

I suppose it’s at least somewhat normal, but the truth is that along with the wonderful memories of my father, there were also those that weren’t anywhere close to wonderful and there were years when we never even spoke as a result.  You see, my father was a Harvard man, and it is said that you can tell a Harvard man… but you can’t tell him much.

Once when I asked him to help me with my geometry homework, he spent three lined pages and at least an hour explaining to me how to arrive at Pi, which in case you don’t recall off hand is 3.14.  It’s called “THE GIVEN,” in every high school geometry problem ever written, meaning you don’t have to figure it out… they GIVE it to you.  By the time he was ready to help me with an actual problem, I was ready to strangle him to death right there in his study.

He told me that when he was at Harvard, he figured out Pi to 100,000 decimal points… using a slide rule.  I remember thinking at the time… how nerdy must my father have been back then to have sat in his dorm room at Harvard figuring out Pi to 100,000 decimal points with a slide rule… couldn’t he have gotten a date or gone to a party or anything but what he had done?  I was aghast at the thought.

In truth, what my father had in brains, he lacked in emotions.  And he could be very rigid in his thinking, especially when it came to me… unquestionably, he was much more flexible with my younger sisters.  I remember when I was 17, and my girlfriend since eighth grade had gone to England with her parents for a month.  I missed her terribly and called her a couple of times while she was there.  The bill was $44, and you might have thought it was $44,000 by the way my father reacted to it.

Some fathers would have made me work it off, mowing the lawn, or cleaning out the basement or whatever, but not my father.  His answer was to place a lock on the phones in the house, forbidding me from using them from that moment on without his advance permission and supervision.  And to a 17 year-old boy with a social life, that’s a sentence worse than death.

He also told me a story about when his own father had passed away, before I was born.  He said that when his father died, he was in Germany at the time, and he had only spent $6 on the call home.  And I remember thinking at the time… was in weirder that he remembered how much that call was, or that he had only spent $6 calling his mother upon the news of his father’s… her husband’s death?

I’m sure he wanted me to attend Harvard, something I was just not cut out to do when I was 18 anyway.  Some people know what they want to do at that age, but I didn’t.  So instead, I dropped in and out of college, and then at 19 joined the U.S. Air Force.

Now, in case you’re not aware, while some families would have no problem with this, joining the military is something that liberal, intellectual, East Coast Jews simply don’t see their children ever doing.  In fact, I’m pretty sure that I’d have been better off becoming a pot dealer or whatever, as long as I stayed in college, as far as my parents were concerned.

When I told my father I had landed a job as a copywriter at an ad agency, he considered what I had said for a minute and then replied, “Advertising… so, you make… hmmm… billboards?”

That was as close as he could come to getting his arms around what I had said… billboards.  He’d seen billboards before, although he might not have been able to recall where or when at that moment.  I had never had anything to do with a billboard in my life, but I knew there was no way I was going to be able to explain what an ad agency did to a man who only watched public television and listened to classical music, so I just said, “Right, like that sort of thing.”

When my father met my wife for the first time, we were engaged to be married and he had flown out to California to serve on some committee, so we all met for dinner.

As his martini arrived at the table he asked my wife, “So, Stacey… where did you go to school?”  My wife, who comes from a blue collar family that lived in inner city Chicago, replied with some pride, “Illinois State.”  To which my father said as he sipped his cocktail, “Oh… a state school.”  And we were off to the races.  To my father’s way of thinking, there was Harvard… and other schools.

My father was a very competitive person who was used to winning… but so was I.  And that’s not the healthiest kind of relationship to have between a father and son.

I started playing tennis when I was six years old and I remember he and I playing together when I was young… until I could beat him without any trouble.  After that, if I hit the ball anywhere but right to him he’d just stare at me in disgust and we stopped playing after that.  We used to ski together too… until I was a better skier and that was the end of that as well.

I remember when it would be raining and I’d ask for a ride to school, one mile away from our home.  He’d always say, “No.  I’m going the other direction.”  What he didn’t mention was that he was about to drive two miles away to his office, but to go even a mile out of his way  to keep me out of the rain was unthinkable to him.

When my daughter was born, I asked him what he thought he had sacrificed having raised three children and after considering my question he replied, “Nothing.”  And I knew he was telling the truth about that… he hadn’t sacrificed anything… he always did what he wanted to do and his family, meaning me as my sisters were in my mother’s jurisdiction, went along… period.  If I didn’t want to do whatever he had decided we were doing, then he’d just go do it alone.  The idea of compromising with his son was entirely foreign to him.

I think it’s a generational thing because I’m nothing like that with my daughter.  I knew when she was born that I wanted to sacrifice things for her… I like doing things that make her happy.  My father would never listen to music I liked while in the car, but I wouldn’t think of torturing my daughter like that.  When my daughter wants a certain pair of jeans, I like getting them for her… I know those things are important to kids.  My father wouldn’t have understood that sort of thinking at all.

I’m not trying to say that any of these things alone matter one way or the other, but collectively, they made for a relationship that could find itself strained unless it went his way.

His death was a shock and it took me almost a month before I was ready to share the news with others, mostly because I wasn’t ready to get flooded with the condolences calls and emails from friends, which is also why I haven’t written about it until now… I just wasn’t ready to talk about it… certainly not with a thousand or more people, if you know what I mean.

In some ways I wish we could have been closer, I would have liked to know more about why he was the way he was… more about his father who I never knew.  But I also know that he was who he was and that sort of closeness was just not something he could do.

After hearing the news of my father’s death, and while traveling back east, I managed to come down with the worst flu I’ve had… I think since I was maybe eight years old.  I got so sick so fast that I was actually stranded in a hotel unable to move, let alone  get myself to the airport to fly home.  My fever one night was 103.9 and I’m sure it went even higher than that for a few days.  I was coughing terribly and sweating through my bedding every few hours.  It was absolutely hell and all I could do was send text messages to my wife instructing her to contact my hotel and extend my stay and do the same with my car rental.

I literally could not get out of bed for four days, but finally I dragged myself to the airport and after missing one flight, I managed to make the next and I landed in Los Angeles at after midnight.  My wife picked me up and I went home where I remained in bed for another week or maybe even longer… I can’t really remember exactly, that’s how bad it was.

And right after that nightmare illness, my neck and shoulder… and then my entire right arm became so painful that I can’t even tell you.  I wanted to get back to my blog, but I couldn’t even sit in a chair without being in terrible pain, and typing was out of the question.  First I tried the chiropractor, and then the orthopedist who said I had a pinched nerve and tendonitis… and maybe a bone spur and possibly arthritis… this doctor threw the kitchen sink at me diagnosis-wise.  I tried the pills, the wraps, the ointments and the physical therapy, but nothing was helping and I was spending my days and nights in bed with my arm raised to rest on a pillow.  All I can say is thank the Lord for Netflix, or I would have gone insane.

After a couple of weeks of that, with my neck, shoulder and arm still hurting badly, we got some incredible news… our daughter was accepted at the University of California at Berkeley… or “Cal” for short.  Berkeley is rated as the #1 public university in the country, and depending on which list you look at, it’s right around #8 in the world.  They admit about 4,000 of the 60,000 students that apply, and I was… and am… about as proud of my daughter as a father can be.

So, pain or no pain, and with Spring Break just ahead, we now had to head up to the San Francisco/Oakland area to tour the campus and attend orientation… that sort of thing.

While in the Bay Area, a friend of mine that lives in San Fran suggested that I try his acupuncturist and while I might have been skeptical until then, my shoulder and arm were killing me and I was ready to try amputation if it would stop the constant pain.  And wonders of wonders it started to help… slowly, mind you, but at least there was progress, which was infinitely better than the weeks of pain I’d endured to-date.

It still hurts today as I sit here typing this post, but it’s improving and that’s what matters.  I’ve missed writing and am anxious to get back to exposing the misinformation and straightening out the convoluted crap we’re being fed by the mainstream media on a non-stop basis these days.

Things like:

• The foreclosure crisis is almost over and foreclosures are way down… NONSENSE.  Foreclosures may be down in some states, but not because things are getting better.
• The real estate market is on fire with home prices rising by some accounts faster than they did during the bubble… NONSENSE.  The only part of the housing market that’s going up is the bottom segment, which is the result of there being so few homes for sale and investors bidding up the few that are for sale.
• The mortgage market is on the mend… NONSENSE.  Our mortgage market is still nothing more than government guaranteed loans, like Fannie and Freddie… and FHA… VA… and that’s about it.  Jumbo loans are around if you have 40 percent or more down, an 800 credit score, and the appraisal by the bank comes in low enough.  Otherwise, the loans are falling out of the sale faster than fall leaves on trees in New England.
• The stock market is flying so the economy is recovering… NONSENSE.  Bernanke and his QE-Infinity crap is continuing to lift stocks and nothing else.  GDP hasn’t been affected at all, and as of March of this year, unemployment is up in roughly half the states in the country, and unchanged in 17 others.  QE has failed, unless the Fed’s mandate has changed from unemployment and inflation to elevating the DOW and the S&P 500.
• The bond market is still doing fine… NONSENSE.  The bond bubble that has resulted from Bernanke’s artificially low interest rates cannot last, and when interest rates rise, even slightly, look out below for bond funds.
• The problems in the EU have past… NONSENSE.  Not even close, we’re just watching the same artificial propping up of insolvent countries that’s been going on since 2009.  It can’t last and there’s no growth coming behind it.
• The fact is… absolutely nothing has changed for the better, at least nothing that matters… nothing that affects you or me for sure.  Bernanke’s plan to prop up the markets in order to increase household wealth and therefore spending as it lowers unemployment hasn’t done squat beyond inflating the DOW… and as we all know… what goes up… must come down.

And there’s much more that I could add, but the point is… I’m typing again.  And that means I’m back to work, but this time it also means some changes are coming to Mandelman Matters.  We have to do more to make things better for America’s middle class and particularly those fighting foreclosure and trying to save homes through loan modifications… and I plan to do more to help make things better… so stay tuned and find out how to “TAKE YOUR POWER BACK.”

I’m also launching a new section on Mandelman Matters called “Retirement Matters,” and it’s going to cover the topic that no one wants to think about… how do we start saving again so we can be more secure without market risk?  Look for articles and podcasts on the subject offering the information that Wall Street never mentions.

One More Thing…

Before I wrap up, however, I do want to say a few words about traveling to the East Coast in winter… good Lord, was it ever cold and miserable.  It’s no wonder I got so sick.  I grew up back there and I honestly don’t know how I or anyone else survives past the age of four or five.  I was staying at a hotel in Hoboken, New Jersey where I could park only thirty or forty feet or so from the lobby’s automatic door, and still to get from the car to the lobby was almost certainly life threatening.

I’d forgotten that it was even possible, but it was raining, snowing, sleeting and occasionally hailing simultaneously and from all directions.  It meant that on the way to my car, first I could soak my shoes stepping in a puddle of ice water and then watch them freeze solid walking through the snow.  It was so cold that it was even cold inside the car with the heater on high… the rental car was brand new but it seemed that I could feel the wind come right through the windshield and up through floorboards.

I decided that if a cop pulled me over for whatever reason and came to my window, I’d simply motion for him to come around to the other side and sit in the passenger seat in order to write me the ticket.  And if he didn’t like that option then he would be welcome to just shoot me in the head.  Either way, I’d understand… and be grateful.

Luckily, I suppose, I didn’t get pulled over… I didn’t drive extra carefully or anything… I’m sure it was simply because no cops wanted to write tickets with the wind chill factor making it feel something near thirty below.  If I were a cop in that part of the country, for me to pull you over you’d have to commit… at the very least… manslaughter.  Anything less serious than that would just have to wait until Spring.

I don’t know why or how anyone lives there or anywhere near there.  In case it’s the result of people lacking knowledge, let me be the first to fill you in… there are much warmer places you can live that are still part of this country.  It’s like people in Russia who live in Siberia… unless they’re sentenced there, don’t you wonder why they live there?

Here’s the deal… if you live in weather that’s colder than the temperature inside the penguin and polar bear exhibit at the zoo… unless you’re an Eskimo… or your parents were penguins… you should consider making a move.  What are you waiting for… global warming?

Frankly, I’m surprised there isn’t more violent crime in places that cold because if I’m outside in that sort of weather and you’re being a jerk, my mind figures I might as well kill you… just to stay warm.  No one has much patience after being soaked by the rain, covered in snow and pelted by sleet and hail.  I think about my daughter all the time… except then.  In weather like that all I think about is how bad my decision making skills must be to have landed me where I am.

Look, I love the outdoors.  In fact, that’s where you’ll find me whenever I’m not indoors.  But, there’s no reason to live where weather can be fatal to human life.  For sure our government should be moved to a warmer climate immediately.  How can we expect the idiots in congress to be able to make decisions in such weather.  I mean, many of them would still be entirely inept in Palm Springs, I realize, but at least some might have a fighting chance if they didn’t live in the equivalent of a meat freezer half the year.

And just last week, I was in Cleveland in the pouring rain… the sort of rain that requires your windshield wipers to be set on that annoyingly stressful high speed.  I drove through the downtown area and it looked like I was in a movie filmed in 1975 at the latest.  I think part of Cleveland is actually built in black and white.  Fewer than 400,000 now live in Cleveland, and I wasn’t the least bit surprised to learn that the city’s population has dropped over 17 percent since 2000.  What the other 83 percent are waiting for is beyond me.

Not to be insulting to the folks living there because it’s certainly not their fault, but… I really don’t think we actually need Cleveland… I mean, at all… as a nation.  It’s a city that’s obviously broken and I see no reason to try fixing it… I think we could just let it go… maybe lease the whole thing out to Disney… or to the casino operators in Las Vegas… or who knows… maybe Canada would be interested in making some kind of offer.  If not, I think we could just fence it off, delete its zip codes and forget it’s there.

To give you an idea of how bad things are in Cleveland, the median household income in Cleveland is right around $25,000 a year… basically it’s a city living at or near the poverty level.  In Ohio as a whole… let’s face it, a state that doesn’t exactly inspire thoughts of “economic prosperity,” the annual median household income is north of $45,000.  It’s crazy to even consider it, but if you can’t make it in Youngstown… you can always move to Cleveland.  It must be like living in a third world country… but with Medicare and a Major League Baseball team.

I haven’t been to Detroit as yet, but from what I’ve read, I’m thinking it could be the only place outside Haiti that makes Cleveland look desirable.  But as I said, I’ll have to get back to you on that.

Mandelman out.