Consider this Op-Ed in the Wall Street Journal from the chairman and CEO of M&T Bank Corporation - Robert G. Wilmers. M&T Bank Corporation is an independent commercial bank holding company.
This op-ed was adapted from his speech at the company's annual shareholders meeting last month.
What about Fan and Fred Reform?
Tuesday, May 4, 2010
Friday, April 16, 2010
Interactive Graph - The Fed's $1.25 billion MBS purchase
Very Interesting Interactive Graph
The Fed's balance sheet showing what kind of debt it holds. Red represents US Treasury Securities. The chart shows how - starting in about March of 2009 and finishing in about March of 2010 - the government purchased more than $1 trillion (I believe the final number was $1.25 trillion) in Mortgage Backed Securities, MBS.
Click Here - WSJ Blog Article - and interactive graph
So the government bought up a bunch of toxic mortgages, to save the financial system - and they largely succeeded.
This does not mean that $1.25 trillion dollars will be flushed down the drain. Even if every one of the loans in the MBS portfolios goes bad, the foreclosure process allows the first mortgage holders to recover their investment. Banks (or now the Fed) that hold the first mortgages recover the money by either:
1) Selling the property through the foreclosure process at a county Trustee auction, or
2) Becoming the owner of the property themselves and selling them on real estate market.
In the first case, they get all their money. In the second case, they only get a fraction (maybe 50%, on average) since the 1st is worth less than the market value.
In many cases, there are junior loans on the property as well (2nd, 3rd trust deeds, etc). The junior loan holders usually get NOTHING in foreclosures or short sales. They may still hold the note against the borrower (who has now lost his or her home), but it is very difficult to collect from the borrower by any kind of legal judgment.
The Fed's balance sheet showing what kind of debt it holds. Red represents US Treasury Securities. The chart shows how - starting in about March of 2009 and finishing in about March of 2010 - the government purchased more than $1 trillion (I believe the final number was $1.25 trillion) in Mortgage Backed Securities, MBS.
Click Here - WSJ Blog Article - and interactive graph
So the government bought up a bunch of toxic mortgages, to save the financial system - and they largely succeeded.
This does not mean that $1.25 trillion dollars will be flushed down the drain. Even if every one of the loans in the MBS portfolios goes bad, the foreclosure process allows the first mortgage holders to recover their investment. Banks (or now the Fed) that hold the first mortgages recover the money by either:
1) Selling the property through the foreclosure process at a county Trustee auction, or
2) Becoming the owner of the property themselves and selling them on real estate market.
In the first case, they get all their money. In the second case, they only get a fraction (maybe 50%, on average) since the 1st is worth less than the market value.
In many cases, there are junior loans on the property as well (2nd, 3rd trust deeds, etc). The junior loan holders usually get NOTHING in foreclosures or short sales. They may still hold the note against the borrower (who has now lost his or her home), but it is very difficult to collect from the borrower by any kind of legal judgment.
Friday, April 9, 2010
Litigation Victory for US Families - Chinese Drywall Case
Seven Virginia families won a $2.6 million award in New Orleans - reported by the Wall Street Journal on Friday, 4/9/2010.
The families sued Taishan Gypsum Company Ltd., a Chinese State-Owned drywall manufacturer. Taisan did NOT appear in court to defend itself.
See the WSJ article for more details.
The families sued Taishan Gypsum Company Ltd., a Chinese State-Owned drywall manufacturer. Taisan did NOT appear in court to defend itself.
See the WSJ article for more details.
Saturday, April 3, 2010
US Regulators - Remove Defective Chinese Drywall
Most of the drywall complaints come from Florida, but the defective drywall made its way to many other homes throughout the US.
IF YOU HAVE THE STUFF, GET RID OF IT!
The defective drywall from China emits sulfide fumes. Homeowners have complained of the stink of rotten eggs, corrosion of appliances, and health problems such as bloody noses, headaches, and respiratory issues.
See this Wall Street Journal article from 4/3/2010 for more details.
IF YOU HAVE THE STUFF, GET RID OF IT!
The defective drywall from China emits sulfide fumes. Homeowners have complained of the stink of rotten eggs, corrosion of appliances, and health problems such as bloody noses, headaches, and respiratory issues.
See this Wall Street Journal article from 4/3/2010 for more details.
Wednesday, March 24, 2010
Metro Denver Job Growth Study
the Metro Denver Economic Development Corporation (Metro Denver EDC) released its fifth annual Industry Cluster Study, a competitive analysis of industries leading the region's future economic growth.
The industries in the cluster are: Aerospace, Aviation, Bioscience, Broadcasting and Telecommunications, Energy, Financial Services, Information Technology.
Link to Web Article
The industries in the cluster are: Aerospace, Aviation, Bioscience, Broadcasting and Telecommunications, Energy, Financial Services, Information Technology.
Link to Web Article
Thursday, March 11, 2010
New FHA Rules - a price worth paying
The FHA announced a tightening of its mortgage underwriting rules in late January of 2010. The policy changes are designed to shore up the FHA's capital reserves and help the agency do a better job of managing risk.
Some of the changes:
- mortgage insurance premiums going up from 1.75% to 2.25%
- increases minimum down-payment to 10% for low credit scores (580 or less)
- reduces permissible seller concessions from 6% down to 3%
First time home buyers may be affected (those who have not yet established their credit history, for example).
For the entire article, see the following link from REALTOR.org
http://www.realtor.org/rmonews_and_commentary/articles/2010/1003_fharules
Some of the changes:
- mortgage insurance premiums going up from 1.75% to 2.25%
- increases minimum down-payment to 10% for low credit scores (580 or less)
- reduces permissible seller concessions from 6% down to 3%
First time home buyers may be affected (those who have not yet established their credit history, for example).
For the entire article, see the following link from REALTOR.org
http://www.realtor.org/rmonews_and_commentary/articles/2010/1003_fharules
Monday, March 8, 2010
What do HUD and FHA do?
US Department of Housing and Urban Development - HUD
Mission Statement:
HUD's mission is to increase homeownership, support community development and increase access to affordable housing free from discrimination. To fulfill this mission, HUD will embrace high standards of ethics, management and accountability and forge new partnerships--particularly with faith-based and community organizations--that leverage resources and improve HUD's ability to be effective on the community level.
http://portal.hud.gov/portal/page/portal/HUD/about/mission
FHA - Federal Housing Administration
The Federal Housing Administration, generally known as "FHA", is the largest government insurer of mortgages in the world. A part of the United States Department of Housing and Urban Development (HUD), FHA provides mortgage insurance on single-family, multifamily, manufactured homes and hospital loans made by FHA-approved lenders throughout the United States and its territories. While borrowers must meet certain requirements established by FHA to qualify for the insurance, lenders bear less risk because FHA will pay the lender if a homeowner defaults on his or her loan. FHA has insured over 37 million home mortgages and 47,205 multifamily project mortgages since 1934. Currently, FHA has 5.2 million insured single-family mortgages and 13,000 insured multifamily projects in its portfolio. Clearly, FHA provides a huge economic boost to the country in the form of home and community development, particularly in today's challenging financial climate.
Mission Statement:
HUD's mission is to increase homeownership, support community development and increase access to affordable housing free from discrimination. To fulfill this mission, HUD will embrace high standards of ethics, management and accountability and forge new partnerships--particularly with faith-based and community organizations--that leverage resources and improve HUD's ability to be effective on the community level.
http://portal.hud.gov/portal/page/portal/HUD/about/mission
FHA - Federal Housing Administration
The Federal Housing Administration, generally known as "FHA", is the largest government insurer of mortgages in the world. A part of the United States Department of Housing and Urban Development (HUD), FHA provides mortgage insurance on single-family, multifamily, manufactured homes and hospital loans made by FHA-approved lenders throughout the United States and its territories. While borrowers must meet certain requirements established by FHA to qualify for the insurance, lenders bear less risk because FHA will pay the lender if a homeowner defaults on his or her loan. FHA has insured over 37 million home mortgages and 47,205 multifamily project mortgages since 1934. Currently, FHA has 5.2 million insured single-family mortgages and 13,000 insured multifamily projects in its portfolio. Clearly, FHA provides a huge economic boost to the country in the form of home and community development, particularly in today's challenging financial climate.
Saturday, March 6, 2010
Fannie Mae and Freddie Mac
Who are Fannie Mae and Freddie Mac? Sunday July 13, 2008
Fannie Mae -- the Federal National Mortgage Association -- and Freddie Mac -- the Federal Home Loan Mortgage Corporation, while privately owned by shareholders are congressionally-authorized, "government sponsored enterprises" (GSEs) regulated by the U.S. Department of Housing and Urban Development (HUD).
As the largest sources of home financing in the U.S., Fannie Mae and Freddie Mac, as regulated by HUD, are charged by Congress with "providing stability and liquidity in the secondary mortgage market, providing secondary market assistance relating to mortgages for low- and moderate-income families, and promoting access to mortgage credit throughout the Nation, including underserved areas." Both Fannie Mae and Freddie Mac fund residential mortgages by purchasing loans directly from lenders, such as mortgage bankers and depository institutions, and holding these loans in portfolio or by issuing mortgage-backed securities that are sold to a wide variety of investors in the capital markets.
While Fannie Mae and Freddie Mac are privately owned corporations, their status as congressionally authorized, government sponsored enterprises, empowers them with certain privileges including being exempt from paying state and local taxes (except property taxes) and enjoying access to a $2.25 billion standing line of credit from the U.S. Treasury Department. The Treasury Department, at the urging of the Federal Reserve may now temporarily increase this line of credit, in order to help Fannie Mae and Freddie Mac through their current economic problems.
The other two government sponsored enterprises are the Institutions of the Farm Credit System, which include the Agricultural Credit Bank and Farm Credit Banks, and the Federal Agricultural Mortgage Corporation (Farmer Mac). Both of these GSEs provide agricultural real estate interests with the essentially the same services Fannie Mae and Freddie Mac provide to the home mortgage industry.
On September 7, 2008, James Lockhart, director of the Federal Housing Finance Agency (FHFA), announced that Fannie Mae and Freddie Mac were being placed into conservatorship of the FHFA. The action is "one of the most sweeping government interventions in private financial markets in decades". As of 2008, Fannie Mae and the Federal Home Loan Mortgage Corporation (Freddie Mac) owned or guaranteed about half of the U.S.'s $12 trillion mortgage market.
Sources:
http://usgovinfo.about.com/b/2008/07/13/who-are-fannie-may-and-freddie-mac.htm
http://en.wikipedia.org/wiki/Fannie_Mae
Fannie Mae -- the Federal National Mortgage Association -- and Freddie Mac -- the Federal Home Loan Mortgage Corporation, while privately owned by shareholders are congressionally-authorized, "government sponsored enterprises" (GSEs) regulated by the U.S. Department of Housing and Urban Development (HUD).
As the largest sources of home financing in the U.S., Fannie Mae and Freddie Mac, as regulated by HUD, are charged by Congress with "providing stability and liquidity in the secondary mortgage market, providing secondary market assistance relating to mortgages for low- and moderate-income families, and promoting access to mortgage credit throughout the Nation, including underserved areas." Both Fannie Mae and Freddie Mac fund residential mortgages by purchasing loans directly from lenders, such as mortgage bankers and depository institutions, and holding these loans in portfolio or by issuing mortgage-backed securities that are sold to a wide variety of investors in the capital markets.
While Fannie Mae and Freddie Mac are privately owned corporations, their status as congressionally authorized, government sponsored enterprises, empowers them with certain privileges including being exempt from paying state and local taxes (except property taxes) and enjoying access to a $2.25 billion standing line of credit from the U.S. Treasury Department. The Treasury Department, at the urging of the Federal Reserve may now temporarily increase this line of credit, in order to help Fannie Mae and Freddie Mac through their current economic problems.
The other two government sponsored enterprises are the Institutions of the Farm Credit System, which include the Agricultural Credit Bank and Farm Credit Banks, and the Federal Agricultural Mortgage Corporation (Farmer Mac). Both of these GSEs provide agricultural real estate interests with the essentially the same services Fannie Mae and Freddie Mac provide to the home mortgage industry.
On September 7, 2008, James Lockhart, director of the Federal Housing Finance Agency (FHFA), announced that Fannie Mae and Freddie Mac were being placed into conservatorship of the FHFA. The action is "one of the most sweeping government interventions in private financial markets in decades". As of 2008, Fannie Mae and the Federal Home Loan Mortgage Corporation (Freddie Mac) owned or guaranteed about half of the U.S.'s $12 trillion mortgage market.
Sources:
http://usgovinfo.about.com/b/2008/07/13/who-are-fannie-may-and-freddie-mac.htm
http://en.wikipedia.org/wiki/Fannie_Mae
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