Rising From The Ashes

One of my closings this week involved a group of four people who have joined together to purchase foreclosed homes in an older neighborhood of Ypsilanti, Michigan (built in the 1960s). I've closed for them in the past. The criteria and formula they've devised works well in this particular area. So far they've purchased and renovated approximately 20 homes. While working in such a narrow area, they've effectively resurrected a previously run down neighborhood. You can see their work up and down the street. Turning abandon run down homes into desirable living areas has not only raised the value of other houses in the neighborhood, but it has caused a swelling of pride by other homeowners. In addition to being more involved in the beautification of their own homes, residence have for the first time begun forming a neighborhood association in an attempt to further their progress. A positive story in the midst of so many struggles.

What's The Plan (Uncle) Sam?

On Tuesday, Ben Bernanke and the Federal Open Market Committee (the central bank's lead policymaking group) begin two days of meetings to assess market conditions, review the effectiveness of current programs, and address future action plans in the housing, credit, and financial markets. The committee is expected to keep the Fed fund rate at its current zero to .25% range. With no more room to move (can't go less than zero) the Fed is considering other options for reducing long-term borrowing costs. But with investor reaction so wildly unpredictable, any move comes with a great deal of risk. The Fed is considering several ideas, including purchasing long term Treasury securities.

These Guys Still Don't Get It

Former Merrill Lynch chief executive John Thain is resigning from Bank of America after CNBC reported Merill's decision to move up year end cash bonuses (totaling $3 - $4 billion) days before its acquisition by Bank of America. The move conveniently came just before Merrill was about to report $15.45 billion in fourth-quarter losses (timing is everything, eh?). Thain has also come under fire for his lavish spending, which included $1.22 million spent in redesigning his office when he took over as CEO a year ago. The office included a $35,000 commode on legs (because who doesn't need one of those). In addition, Thain's personal driver netted a cool $230,000 for his one year of service. Thain's resignation comes as Bank of America execs were meeting to discuss his future (or meeting to try to find out if they could get a commode on legs too).

The deal to acquire Merrill Lynch has generally been regarded as a colossal debacle, and has already forced B of A to request billions of dollars more in bailout money. B of A will receive an additional $20 billion in funds over and above the $25 billion they've already received.

More Winter Fun

I resisted the overwhelming urge to skip my signing appointment and join the fun.

Mother Nature's Temper Tantrum

What a winter it's already been. The recent images of snow in Las Vegas and South Texas seemed surreal, but here in Michigan we've learned to expect challenging winter conditions. Yet even Michiganders have been caught off guard by what seems to be the worst winter we've had in decades. Almost a daily parade of snow, sleet, ice, wind, hail, and anything else Mother Nature can spew has made Michigan driving conditions a nightmare. Oh what fun to be a signing agent covering four large counties. I've been involved in a fender bender, been towed out of a driveway, hit potholes the size of moon craters, and performed more 360s than Dorothy Hamill. Last night the temperature was a not so balmy minus 14 degrees (no, that doesn't include the wind chill factor). The weather has made for some treacherous driving, but has also provided some beautiful scenes (see photos). So for all of you braving the frozen tundra to do your job and service your clients, stay warm and be safe.

2008 Foreclosures Up Over 80% From 2007

Did I say I was encouraged about 2009? See where your state ranked for 2008 foreclosures.

What's Your Outlook On 2009?

An optimist thinks the glass is half full. A pessimist thinks it's half empty. I'm a realist. I think the glass is twice the size that it should be. But forgive me if I'm leaning towards guarded optimism for the 2009 housing market. Good news has been rare and isolated but for the first time in years, there's encouraging news on multiple fronts. In addition to the anticipation and hope that comes with any new presidency, especially one as historic as this, interest rates are at a record low, an influx of funds has given hope to the mortgage and auto industries, and there are signs that the credit market is loosening up.

To be sure, not all the news is cheery. Treasury prices have risen, the stock market continues to be anemic, unemployment continues to rise, and the news from several companies planning to announce fourth quarter earnings this week is expected to be disappointing (sorry to bring you back down to earth. I said I was a realist). Still, after the last two years I think we can all be encouraged by some positive signs.

Thomas Jefferson's Lesser Known Declaration

10 Rules For The Good Life

Never put off till tomorrow what you can do today.
Never trouble another for what you can do yourself.
Never spend your money before you have it.
Never buy what you do not want because it is cheap; it will never be dear to you.
Pride costs us more than hunger, thirst, and cold.
Never repent of having eaten too little.
Nothing is troublesome that we do willingly.
Don't let the evils which have never happened cost you pain.
Always take things by their smooth handle.
When angry, count to ten before you speak; if very angry, count to one hundred.

Wall Street Has Had Better Years

As if the plummeting stock market wasn't enough to put a serious damper on Wall Street's year, last month Wall Street big shot Bernard Madoff was arrested on charges of perpetrating the largest fraud in history. Madoff bilked Wall Street investors of a staggering $50 billion. Madoff's actions have left possibly 10,000 plus investors in the lurch, some with devastating losses. In addition to investment companies, investors included elderly victims and charities. Though nothing more than a common Ponzi scheme (early investors paid off by money from later investors), Madoff carried it out to unfathomable proportions. Madoff managed to avoid suspicion by promising moderate gains and providing detailed bogus statements.

Scott Burns writes an interesting article that puts Madoff's $50 billion theft into perspective based on United States crime statistics.

Also: One victim's story here.

The New Credit Score Formula

Credit bureaus will soon be introducing the new FICO 08 score. Yeah I know, it's 09. The implementation of the FICO 08 score was delayed while Experian, TransUnion, and Equifax fought amongst themselves. Now that they've returned their attention to beating us up instead, TransUnion will begin offering the score in late January with the other credit bureaus to follow later in the year. The FICO score is factored into mortgage lending decisions more than 75% of the time and it's used by 90% of the largest U.S. lenders. The new score puts a higher weight on how much you're using your available credit. For those who carry a higher balance on your cards, you'll see a more significant negative effect on your credit score. The new score also reacts more negatively if consumers have only a few open & active accounts. To make matters worse, many credit card companies are lowering available credit lines and card limits, further damaging credit scores (feeling a little ganged up on?).

Three positives from the new credit score: small collection accounts under $100 are ignored, serious credit setbacks such as a charge-off or a repossession are less damaging as long as other factors are in good standing, and authorized user accounts (which some credit repair companies were using to artificially inflate credit scores) will only be factored in on a limited basis.

Money Well Spent?

It's good to know that the National Association of Realtors is doing so well that they could spend $1 million to enter a float in the Pasadena, California Rose Parade on New Year's Day. Considering the rate of foreclosures over the last two years, the float was rather ironically titled "Celebrating the Dream of Home Ownership for 100 Years." As if that wasn't enough, the presentation included an original NAR commissioned song composed by Charles "Killing Me Softly With His Song" Fox, written by Alan & Marilyn Bergman (Oscar for Yentl), and sung by Grammy-winning singer Steve Tyrell. Way to tighten your belts and buckle up NAR!

P.S. - There's no truth to the rumor that the NAR will be raffling off the float to one lucky foreclosure victim as their new home.

If You're Wondering Where I've Been...

Take a peek at the Detroit Signing Agent site and you'll see that I've been redoing the site (yes, again). Your input is welcome. So now that it's done (well, 90% done) it's back to blogging (but not right now, it's 5 a.m. and I need some sleep).