Blue Crossed?

Late in 2008, Blue Cross of Michigan pushed a last ditch plan on lame duck legislators to raise rates on individuals. The plan failed, but Blue Cross is at it again. They've proposed a 56% rate increase on individuals, a plan they say is necessary due to an increase in individual policies as more people lose their jobs and their employer covered insurance. Because that's just what the unemployed residences of Michigan need, a significant increase in expenses and unreasonable health care costs. Didn't we just have a huge conversation about affordable health care during this latest election year? Way to kick people when they're down. The Blues indeed...

The Value Of A Thank You

Just loved this post from Tina Biggers
(re-posted with permission):

The value of a thank you card has more power than most will fully understand. People tend to keep them for the visual reminder of how you made them feel. It's not so much what you say, but the feelings that you invoke when they read it. In general, our society seems to be quickly moving away from the handwritten word.

Most people enjoy receiving the handwritten card, but few actually do it themselves for other people. Every time you make a personal connection, you are networking. When someone goes the extra mile for you, send him a card. But when you send that thank you card remember to never, ever include your business card! The thank you card should be all about your gratitude, and never about pushing your business on someone who has not asked for it. The minute you include your business card, it becomes all about YOU and not the other person.

When loan signings started to drop off, I started another business that helps people to target market. Become an Appreciation Specialist and watch your businesses grow.

President Obama Announces Mortgage Relief Plan

And it's a whopper. Another $75 billion in spending. Details are still coming out, but much of the plan seems to be focused on incentives for lenders to assist borrowers who are underwater (owe more than the home is worth) and on principal reduction options. With more than 25% of Americans currently owing more than their home is valued, a principal reduction plan is a key component of the bill. The plan is much more ambitious than expected, and hopes to keep between 7 to 9 million people from foreclosure.

Is The Fed Chairman Paying Attention Now?

Ben Bernanke's childhood home sold in foreclosure sale.

A Few More Positive Signs

Home sales rose 6.5% for December, the Pending Home Sales Index rose to 6.3% (signed contracts scheduled to close in 2 to 3 months) thanks to 13% gains in the Midwest and the South, and several major lenders have postponed any further foreclosure proceeding while the U.S. federal government works out a banking stabilization plan.

You've Got (Jingle) Mail

No, it's not a Christmas card. Robert Franco at Source of Title recently posted about jingle mail. I have to admit I'd never heard the term before. It was coined to describe homeowners who walk away from their homes and mail the key back to their mortgage company. With the feeling that they're out of options, many homeowners in financial despair who owe more than their property is worth are choosing to simply allow their lenders to foreclose on them. But that choice comes with repercussions. A foreclosure causes serious long term damage to credit scores, which can affect your ability to rent an apartment, purchase a vehicle, affect your insurance rates, hinder your ability to purchase another home in the future, etc. And what many don't realize is that lenders may still have legal recourse for pursuing the mortgage balance. You may not be walking away from a thing.

Moody's estimates that about 12 million Americans (about 1 in 5 mortgage holders) are currently upside down on their mortgage.

Objects Are Smaller Than They Appear

Driving through Ypsilanti last week, I couldn't resist snapping a picture of the world renowned water tower. If you can't tell what it's famous for, you're not paying attention.

The world's most phallic building.

Oh, You Said Bailout, Not Blowout

After collecting $25 billion in bailout money, Wells Fargo thought it would be hunky dory to have a 12 night Las Vegas shindig starting this weekend at the Wynn and Encore Hotels for its top employees (previous all-expense-paid trips included helicopter rides, wine tasting, horseback riding in Puerto Rico and a private Jimmy Buffett concert in the Bahamas for more than 1,000 of the company's top employees and guests). Shockingly, the news of plans to continue the merrymaking tradition didn't go over so well (whodathunkit?). Wells Fargo has suddenly (and wisely) decided to cancel its party plans.

Are Appraisers Being Fair?

I don't pretend to know the intricacies of being an appraiser, but I continue to hear unsettling stories from borrowers about their appraisals on a daily basis. Appraisers that use bankrupt homes as comparables instead of making an effort to find non-bankrupt homes a few streets down or appraisers that value a home and then automatically apply an artificial 20% cut to that value.

This week a borrower told me their home was appraised at 40% less than it was just 12 months ago. Another showed me the comparables that were used and it was clear from even a layman's eye that these homes weren't anywhere in the same ballpark. Still another showed me how an appraiser used three comparables that were all much smaller and much older, then instead of taking the average of the three they just took the lowest one. How can that be? What's worse, many borrowers have said that the mortgage companies have a take it or leave it policy. The appraiser's word is final and indisputable. Should one individual wield that much power in the process without any checks or balances? Two or three years ago, many appraisers were throwing out any figure the lender wanted, now they're cutting values like it's a half off sale at K-Mart. Why can't we settle on a reasonable middle ground?

While President Obama talks about lowering mortgage costs, I can't help but feel that he's completely missing the mark. The fees I've seen since the subprime crash have been reasonable. This is not a shot at appraisers. I understand some of the difficulties they face. I understand that foreclosed homes are sometimes all they have. But it's the diminishing appraisals that are making it so difficult for people to sell or refinance their homes. That's what needs to be addressed.

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.