Smalltownbanker

More Reasons to Break the Plastic Habit

Received the same letter from Citi on my Hilton Honors Card. Don't be surprised to see affinity partnerships evaporate completely as well as the rest of their good credit customers.

Taylor Bean: A Cautionary Tale for Ginnie Mae

I fail to see the point of this rehash of the work of others. You added nothing to it and made no noteworthy comment about it.

Cramer's Mad Money - Wells Fargo Changes the Game (4/909)

I knew there was some reason I never listen to anything Cramer has to say...

Credit Card Cancer

My dad took out a small loan in the mid-fifties to build the house I grew up in. He paid it off before he finished the house and it was the last loan he ever had. He saved money to buy what he wanted and waited until he could afford it to buy.

I wish I had been as wise as he was. The bank I worked for was closed this year. It is said that we were a victim of the downturn in the economy, even the FDIC agrees. That certainly is true to a point but did we properly underwrite credit and capacity? Did the appraisals of the collateral realy support the loans? If we and everyone else had acted prudently would we be in this situation?

I know that I spent more than I should have. I have borrowed for things I should have saved for. I did it and so did at least half of those who have posted here supporting the principles we know we should follow. We must change our ways but first we must admit that we are part of the problem, well at least most of us are...

If we listen to the President and try to spend our way out of this with our credit cards and HELOCs we will soon find ourselves even lower than today.

Bank of America Facing Mortgage Servicing Losses

Don't bet on Ross. More than 75% of American Home Mortgages' servicing portfolio in February 2007 was Option ARM product. I think he bought the weakest part of the company.

Fed Pushes Housing into Stronger Hands

Ban building? Which communist Nation are you guys from. If I own 20 acres and want to build a house on it why should you or some government agency have the right to tell me I cannot build. Get real. New housing starts that continue are in areas not impacted by the oversupply.

I am in an area that is overbuilt but new custome homes are still being built. I even have employees who are currently having homes built. Most new home starts are in markets not impacted by the oversupply.

The speculators that I see buying are buying with cash, most of which probably used to be in the stock market. They have taken that cash and feel that they can purchase good homes at great prices, hold them for a few years and make some money. Instead of decrying this practice you should be celebrating it as the makings of a potential bottom to prices. The foreclosure is not driving values down, the inventory is. If the inventory is purchased and becomes rental housing it will help to slow the fall of home prices.

I think your entire premise for this article is flawed.

The Danger in Financial Stocks in 2009

As a small town banker on the mortgage side I don't know a great deal about derivatives. I do know what their purpose is. My concerns are more direct. The credit card money market is getting tight. I spoke with the owner of a local tire store today who told me that my 800 credit scores would not get me credit to buy tires today through GE Money Bank where he goes to finance the purchases of customers who can't pay cash.

How long will it be before the credit lines start getting cut off that are already in existence for example on my credit cards, HELOC, etc?

Was the flow of credit improved by EESA/TARP or was the collapse just prolonged at an extraordinary cost?

Will any of the mortgage modifications done to date keep the buyers in the homes or will they all fail resulting in significantly higher losses than would have been incurred without intervention?

Are we fixing anything or just prolonging the pain?

How Will We Finance the MBS Fix?

I think the lack of knowledge is with the authors. It is amazing that two of you couldn't do better than this. They are purchasing the securities, not the servicing rights to the loans. No one has suggested that the government will begin servicing loans.

Banks Should Forget the Moral Hazard for Now

I have no problem with a lien holder/lender/servicer agreeing to modify a mortgage and accept a lower yield from the mortgage. I do have a problem with the government coming in and determining who gets it and who does not. This is the turning into the sinlge biggest social entitlement program in this Nation's history and both parties are buying into it. If they are using tax documentation to determine eligibility for the write down in payment and principal they will be helping the very criminals who committed fraud by overstating their income in order to qualify for the "liar loans."

This is not a solution but it will certainly be the largest and fastest redistribution of wealth in the history of the new USSA. The Uneducated Socialist States of America. A high percentage of these borrowers will never make their payments regardless of how low you make the payments. You are removing the only club which ever forced them to pay anything and that is the threat of being dumped out on the street. Remove that threat and you are penalizing every honest hardworking citizen who pays their bills and rewarding the deadbeats of society in the worst move in history.

I am a Republican but I recognize that the blind eye to this approaching storm was turned by my own Party with complicity from the Democrats as well. When John McCain came out in the 2nd debate talking about buying up votes, I mean bad mortgages, then modifying them so the homeowners could afford them. I walked out my front door, pulled up my McCain sign and threw it in the trash can. I had just listened to a "Republican" candidate for President propose the largest welfare program in history. If you think $300 Billion would cover it John, you are dreaming.

We need to get the government out of the way and let these deadbeats lose their homes so we can reach the bottom and start over.

Unintended Consequences - Fast Money Recap (10/6/08)

I have flipped past it before but never listened for more than a few seconds. I won't even buy a used car from someone who yells on TV.

This morning on Bloomberg I listened to a few minutes of analysis on why BofA needed to raise capital. Not one of them mentioned the $8.4 Billion predatory lending settlement they just entered into to get out of the Countrywide lawsuits. They haven't impressed me much either lately.

Can Cities Create "Foreclosure Sanctuaries?" [Housing Tracker]

What are we becoming? Sanctuary Citites for foreclosure, payoffs to everyone who is a victim of a natural disaster, payments to victims of terrorist actions, bailouts of people who purchased homes they could not afford. What are we really doing here?

Whatever happened to the nation our Fathers & I grew up in where you were responsible for yourself and individuals helped their neighbors when they needed it. Have you ever heard of the need for government assistance in an Amish Community? No, they take care of each other without Government intervention.

If we continue down this path we are doomed to become the next former super power in the History books. Every day I read about the bailouts. I hear people screaming that if you eliminate 100% financing no one will ever own a home. We are a nation of debtors and we are about to file the biggest bankruptcy case in the history of the World and the people running to become the leader of this nation are the weakest and least prepared yet. Where do we go from here?

Financial Stocks in a 'Divergent Phugoid'

Interesting, but I think the wind may be easier to overcome than the current market momentum.

Mortgage Brokers, RIP

In case you do not realize it, the vast majority of local Community Banks are also mortgage brokers. These Community Banks and other mortgage brokers are an integral part of the industry in the United States. If you really want to see the mortgage/housing industry collapse just eliminate the mortgage broker.

In 2003 when rates reached the point where they are now I worked directly for one of the top three lenders in the nation. Even with the brokers out there this industry giant was taking 120+ days to process and close an application to refinance one of their own loans. It would take years for the national lenders and banks to hire enough loan officers, processors, underwiters and closers to handle the volume that would be dumped on them if brokers went away, assuming that they would even want to. Keep in mind they will benefit tremendously from the constricted availability of mortgage loans.

Large banks and lenders like Bank of America, Wachovia, Citigroup, WaMU, Wells Fargo & Countrywide stink at customer service. Brokers exist because they are more capable of delivering the level of service the consumer wants and most of them care about that consumer, much more than the megabank does. Large wholesale lenders have the tools that will allow them to virtually eliminate fraud in the application process. They do not use them because up to this point the default rates have not justified the cost. That is changing and wholesale lenders are implementing more of these controls every day.

The "Mortgage Crisis" was not caused by brokers. The lax practices of the large wholesale lenders attracted a fringe element to the industry through the broker channel of loan origination because it was the easiest point of entry. Anytime there is a weakness that can be exploited for ill gotten gain it will happen, regardless of the industry. If wholesale lenders impose strict rule sets for their brokers, verify application data electronically using available technology and follow the rules, the industry can return to a normal, efficient and healthy opperating environment in a matter of months without stifling the entreprenuerial spirit that makes this a great industry to work in.

If wholesale lenders adopt sound underwriting and verification practices the bad mortgage brokers will go away very quickly without a single law being passed.

Out of the Credit Mess in 1-2-3: Blame, Blame, Blame

Brokers like your friend are to blame. Individuals who signed notes they could not afford are to blame. The mortgage giants who set the underwriting guidelines are to blame. Loan officers who knowingly ignored fraud and or participated in it are to blame. Law enforcement and Regulators who ignored mortgage fraud as a crime are to blame. Congress is not to blame but they will be to blame for destroying the industry with their actions after the fact. Fannie Mae and Freddie Mac are to blame. Wall Street is to blame for hiding the true risk of what they were selling. Loan officers who sold the wrong products to the wrong borrower are to blame. Realtors and Builders who hold way too much influence over the lending process are to blame. Appraisers who overstated value are to blame. Alan Greenspan and the Federal Reserve is to blame for holding rates so low for so long.

I am to blame also because I knew what was happening and did not lobby anyone to reign it in or establish controls. We are all to blame for the irrational exuberance which culminated in disaster. Everyone who is running for President is to blame as well because they all had a louder voice than I do and a podium from which to speak.