MANDELMAN’S MONTHLY MUSELETTER – ISSUE 5.0
MANDELMAN’S MONTHLY MUSELETTER
1. How’s this for a headline in the Miami Herald: “As foreclosures in South Florida continue to skyrocket, more and more homeowners are turning to lawyers for legal help.”
And apparently, unlike the federal government and of course the banks themselves, the University of Miami Law School thinks it’s an excellent idea for homeowners to be represented by attorneys. So, the law school is now offering up its graduates to help people caught in the foreclosure crisis, as part of its Foreclosure Fellowship program.
This is so weird. I wonder if the California State Bar knows about this. Or the U.S. Treasury Department. Or Wells Fargo, Chase, Bank of America, or any of the trained chimps in the banking industry that have spent the last two years running around telling people they shouldn’t hire a lawyer to help them avoid foreclosure. How embarrassing for them.
The Miami Herald has reported that there are now six freshly trained attorneys that have been taught to represent clients in court, and to provide them with other alternatives, like the negotiations related to short sales and loan modifications. The legal representation is provided without cost to the homeowner, although each fellow receives $10,000 upon completion of the 180-day program.
Michael Froomkin is a University of Miami law professor, and the head of the fellowship program. He says that he became motivated to create a Foreclosure Fellowship program after learning of the thousands of foreclosure cases at Florida courthouses. As quoted by the Herald:
“When the foreclosure happens, the number of important legal defenses that may be available are not always obvious to people without legal training. Some of these options will buy you time, and some of these will do a lot more . . . even those that buy you time are a way of getting a lender’s attention and stimulating a negotiation.”
So, let’s see… the University of Miami Law School and Law School Professor Froomkin thinks homeowners should be represented by legal counsel when at risk of foreclosure, but Aurora Loan Services disagrees? Gee, I’m not sure whose opinion I should trust here: The law school and law school professor, or the company that stuffs and mails me my payment coupon each month, and can’t seem to answer their phone? Are you friggin’ kidding me?
Barbeth Foster is a recent graduate of the law school. He and his team of lawyers, supervise three law students, who signed up to work 15 hours per week. According to Foster:
“People don’t realize what options are available; they don’t have to roll over and take whatever is happening to them.”
They don’t? I certainly love this guy’s enthusiasm. Maybe someone should send him a homeowner whose mortgage is with IndyMac/One West Bank. Because isn’t that IndyMac’s/One West’s latest slogan…
“Roll over and take it, whatever it is. And leave the driving to us.”
It’s something like that… right?
2. Think the Great Recession is Over? Maybe it’s headlines like these that made you feel that way:
A. Stocks Soar As Bank Aid Ends Fear of Money Panic
B. Brokerage Houses Are Optimistic on Recovery of Stocks, Brokers in Meeting Predict Recovery
C. Brokers Believe Worst Is Over, Recommend Buying Real Bargains – Wall Street, in looking over the wreckage, has come generally to the opinion that high-grade investment issues can be bought now, without fear of a drastic decline.
The only thing is… chances are those headlines all appeared in print before you were born.
A. New York Herald Tribune, March 28, 1929
B. The New York Times, October 25, 1929
C. New York Herald Tribune, October 27, 1929
By April 1930, the stock market had gained 48% since its crash in October of 1929. By September 1930, many investors had started feeling the same sort of optimism many are feeling today.
“The economy is showing unquestionable signs of life.” U.S. Labor Secretary, September 12, 1930.
“We have passed the low point of the recession.” President of New England Council, September 13, 1930.
Over 75% of brokerage houses now recommend buying stocks. Brokers, business executives and even the general public are more optimistic. Wall Street Journal, September 14, 1930.
Those that were there say that investors lost more money in the rebound than they did in the initial crash of 1929! By 1933, the market had fallen 89% from the rebound high it reached in 1930.
(Hey, don’t get mad at me… I only do the reporting, remember… you guys do all the deciding.)
3. We Interrupt this Museletter to Bring You a Story from ABC News Correspondent, Bill Weir
A homeowner in the Phoenix lost their home to foreclosure, after they had hired a firm to help save it.
The firm they hired did succeed in getting the mortgage servicer to offer the homeowner a loan modification, but the homeowner turned it down saying that it wasn’t enough. They started the process in January. They completed their package and submitted it to their servicer in February. They were offered a modification in June. They declined it, and lost their home to foreclosure in July.
Bill Weir, a correspondent with ABC News, obviously sensing the opportunity for a smear story, showed up unannounced in the lobby of the loan modification firm hired by the homeowner. The firm’s owner, recognizing the familiar face of the ABC News personality, and seeing the film crew milling about, came out to greet them, invited them inside, and agreed to an interview.
They sat down to talk. The owner of the loan modification firm mentioned that he could see that the producer was concealing a small video camera, attempting to hide it by holding it down by his hip. He told the producer that hiding the camera wasn’t necessary and that he was free to bring it out and tape him out in the open.
The producer declined, saying only “that’s okay,” in response. It seemed strange, so the owner asked if they just wanted to create the illusion that it was a hidden, undercover camera. He got no response, but when the story aired there was no question about it… all of the footage appeared to have been shot from under someone’s jacket at hip level.
Well, all I can say is thank goodness for investigative journalists like Bob Weir at ABC News. Without professionals like Bobby… well, we might actually be shown the truth.
4. House Painting as a Career Choice. Or… The Future of the Mortgage Broker.
Being the self-proclaimed thought leading, out-of-the-box thinker that I am, I set out to do some out-of-the-box, thought leadership type thinking on the subject of what the future holds for mortgage brokers, and I think I’ve come up with something that hasn’t already been written about exhaustively in the press. If you’re a mortgage broker keep an open mind… the idea may grow on you.
Who has more experience with homes than you do? Oh sure, there are real estate agents and appraisers, but they never made any real bubble money anyway, so to most of them this meltdown just means spending more time carpooling the kids, or picking up a teaching job. And besides, homes are still going to be bought and sold, so they’ll be fine. Homes will still be financed too, of course, just not by you, so it’s you that has the real problem here.
There are quite a few other reasons why mortgage brokers should consider transitioning to the house painting industry… and in a sincere effort to be helpful, I thought I’d outline a few that came to mind, in order to help get the ball rolling.
12 Reasons Mortgage Brokers are Uniquely Positioned to Dominate the House Painting Industry:
1. You know where the homes are.
2. It’s a growth industry – Can’t buy or sell, might as well paint.
3. Leverage your existing knowledge of homes, and still get to talk about TARPs.
4. “Yield Spread Premium” replaced by “Premium Yield Spread”. The phrase now applies to choosing paint, but no one cares if it’s ever disclosed to homeowners.
5. Expertise in “refinancing” replaced with expertise in “refinishing”.
6. Skill using a calculator remains at a premium, and when lease on Mercedes or Lexus runs out a 1992 pick-up fits in culturally with new peer group.
7. Opportunity for predatory painting, so being bilingual still a plus.
8. Instead of competing with banks, you can submit a bid to paint them.
9. Relationships with real estate agents and brokers more valuable than ever.
10. Trade in “white-collar” job for “no-collar” job. Paris Hilton says: “Overalls are hot.”
11. Flexible hours, save on dry cleaning, work at home. (Not your home, perhaps, but “a” home.)
12. Painting & Decorating Contractors of America (PDCA) Est. 1884, offers scholarships, emphasizes safety, and provides networking opportunities at trade shows.
See, and I bet you thought I was going to be sarcastic, instead of thoughtful, insightful and caring, as I so clearly was.
(The above list was excerpted from, “The Future of the Mortgage Broker,” which is the feature story in the November issue of The Niche Report magazine. To subscribe to The Niche Report click here: Subscribe to The Niche Report Free!)
5. California Attorney General Jerry Brown Wants Answers About Foreclosures. Why, all of a sudden, do you suppose?
The Attorney General in California is Jerry Brown… remember him? He was the guy in politics that slept with pop singer, Linda Ronstadt, during the 1970s. Yeah, well Jerry wants some answers. Apparently, someone woke him from his nap and told him that there were a bunch of Option ARM mortgages that just might explode next year, causing a whole gaggle of new foreclosures.
Now, when I first read the story about how Jerry wrote a letter to all the major bankers asking them to give him a bunch of information I thought… oh look… how cute… he’s trying to learn. But then I thought… no, that can’t possibly be right. Then I thought… maybe he’s interested in changing something. But then I realized… nah, no chance of that!
So, why does Jerry care about future foreclosures all of a sudden. It would be like if Obama went on television tomorrow and was all of sudden interested in the economy. Wouldn’t that be spooky? Why does Jerry care? Why is he so interested? Why now? Jerry’s letter asked the bankers that received it for the following information:
- How many Option ARMS do you have in California?
- How many have experienced negative amortization and how much negative amortization?
- An explanation of the efforts taken to handle customer service concerns, including any increased staffing and a description of any notices to borrowers whose loans are about to reset.
- A detailed explanation of the loan modification plans developed for option ARM loans, including circumstances allowing for reduction of principal, and the possible amounts of principal reduction.
- If the plans for modifying option ARM loans have changed since the beginning of the foreclosure crisis, an explanation of the changes and the reasons for those changes.
Jerry’s letter went to Bank of America Home Loans & Insurance Wells Fargo & Company JP Morgan Chase & Co. Goldman Sachs’ Litton Loan Servicing, GMAC’s ResCap, Ocwen Financial, OneWest Bank, formerly IndyMac, American Home Mortgage Servicing, Saxon Mortgage Services and Select Portfolio Servicing.
Well, guess what… Jerry may run for governor again next year. You don’t suppose that’s why he’s asking these questions, do you? Not that they’ll be answered, mind you, and not that the bankers give a crap about California’s AG, unless maybe his ex-whatever-she-was was going to perform, “When Will I Be Loved” at the ABA Convention.
And then it came to me… Option ARMS… of course… RICH WHITE PEOPLE LOSING HOMES!
Remember the Rodney King riots in LA? I do. They went on all afternoon, and we were all safe in office-white Orange County watching everyone in South Central set everything on fire, with a little looting on the side. It was like watching a NatGeo special on the struggles of the inner city, or something close. Then at something like 4:30 PM, someone through a bottle across Wilshire… it landed in Beverly Hills… and the President called out the National Guard.
So, interesting dynamic at work here:
Sub-prime loans = Poor brown people. Option ARMS = Rich white people.
Foreclosures affecting rich white people? Members of congress are going to look like it’s the first time they’ve heard of the foreclosure crisis… what’s that you say… losing their homes… my, oh my… I did not know that.
Of course… I called this over a year ago. Next year’s an election year and he’s running… better batten down the hatches, which is a euphemism for “Better settle down the rich white people before running for office.” Up until now, when Jerry looked at the sub-prime mortgages in foreclosure all he said to himself was: “Big deal. What can BROWN do to me?”
WELL, THAT’S IT FOR ISSUE 5.0
of MANDELMAN’S MONTHLY MUSELETTER
But don’t worry… ISSUE 6.0 is only a few weeks away.