Lubrication in the world of Lending

Real Estate Financing: It's been a blood-bath out there, especially for my niche of $1,000,000 to $10,000,000 jumbo loans; there just hasn't been a home for them the past two years, but the world is starting to turn. I'm seeing a few banks going to $4m and $6m, with $1m equity lines. The trick is still in the qualifying, but we're seeing some players return. Still with brutal regulations/underwriting, multiple appraisals, and more regulations and/underwriting, it's still an uphill battle, but those with a strategy, clear vision and clear plan win the war. Let's talk, let's get it lined up and ready to strike. We have a six month window before rates start creeping up. Who do you know who needs a refi on loans greater than $729,500 in Marin, Sonoma or greater Bay Area? That would be a great referral for me. Pat Townsley, Broker. 415-310-0626

"Step right up and win some crap"

Navin R. Johnson struck it rich, but then lost it all in a lawsuit. He didn't have the additional challenges of the economy to turn his rags to riches to rags to riches story around when his parents were able to save him because their investments did well. Perhaps today, the story might not have ended as well is the parents' nest egg had been wiped clean by a global economic downturn. With people scared to put their few bucks into the bank for any term longer than 12 months for fear of loss and crappy rate of return, the opposite side of the banks, the lending divisions, will continue to stay low, only offering federally backed loans like the FHA purchase loans. Refis under $417,000 will remain decent, but those Jumbos won't loosen up until interest rates rise and banks can take a little more risk by receiving higher returns on those larger loans. Catch 22: You can't refi because rates must rise first, then once they rise, the rates won't justify a refi. When the economy is ready, the teacher will appear. Perhaps the teacher is here and we're gettin' schooled. www.ptre.net

We're All Ears!

As possibly noted in my brief mid-August update, there's not much "exciting" about the world of finance right now. No "hot rate" to motivate; nothing other than your existing loan becoming adjustable on a fully amortized 25 year loan. If you're looking to buy an owner occupied home, I believe rates are within a quarter of as-good-as-it-gets. This is that sweet spot. My client base has always been that $500,000 to $5M loan size for owner occupied homes. After that: Vacation homes, investment homes, units and commercial (in order of volume of historical closings for me. So, what do you want to talk about? I ramble on here endlessly. What are your thoughts, comments and questions about the real estate world, financing, banking and/or the economy or whatever is on your mind? Let's talk! My staff and I have some free time right now, and we're all ears. Pat Townsley & Associates, 415-485-1776. www.ptre.net

Dead Cat Bounce clarified

Thank you to the few who emailed me directly (regarding my recent DCB post), either confused by the "term" or origin of Dead Cat Bounce. I didn't create it! It's been around for a long time. In analyzing trends (particularly modeling stock trading), when a stock is falling in price and then regains some positive movement (at a line we may show as the lower band of resistance), this "bounce" of the resistance may only be temporary, and a bigger decline is coming. Someone picked a cat; if a cat was falling and hit the ground, it would bounce, then land and be done (might bounce more than once. So, when tracking a trend and it goes down, then a slight bump up, then another decline to a terminal floor, well, there you go, a Dead Cat Bounce. My parallel to this modeling is TODAY in the US economy, where we've just been beat down the past two years, and "suddenly" things are alleged to be getting better (but underlying this all is many more banks failing, millions of foreclosures about to happen, more write/charge offs for bad debts, more bankruptcies and more magical cash being pumped into the economy). It's just one of those sinking feelings, a slight calm before the next storm. Right now is where the risk takers are profiting from short term investments; a last huh-rah. Watch the money. Fix your monthly costs. www.ptre.net

Cash For Clunkers: America Bamboozled

Let's see, we'll increase taxes on everyone and then give that money back to the few people who have a credit rating to buy a new car earlier than they need to, creating higher levels of debt to those buyers plus increased insurance premiums, creating false demand for vehicles we don't need to create, thereby polluting more to make more cars, then pollution to dispose (destroy) of the perfectly good old cars, which were running just fine. What? Not enough taxes generated to fund this train wreck for a week? Let's just print more, or borrow it from somewhere else. Never mind the starving people, people out of work, people losing thier home or without health care; Let's get (trade) some new cars on the road. This is the worst shell game I've heard of since the deliberate dismantling of the American rail system in some 80 years ago. We're doomed to repeat history apparently and we'll look back, not too far off, and say "Who the hell thought that piece of crap plan up?" Follow the money. All of this has happened before, and it's all happening again.

Pray That We're Wrong: Dead Cat Bounce

I've been talking with several c-level colleagues in several financial industries (accountants, controllers, bank CFOs, statisticians) and I was just reading some recent economic forecasts out of China as well. First, I'll assume you heard about the global recession. Next we'll assume you've heard the recent "hype" that we've seen the worst of it and are turning a corner and that last week's "numbers" were good. What if the truth behind it all is that we're just on the first bounce of a bigger declining picture? Not to get all "conspiracy theory" on you, but there are many economic indicators and challenges that are being swept under the rug. The US is resilient, but we're being pumped up with invisible funds and unprecedented half baked federal programs. Follow the money. This is going to hurt. So, Buyer beware. More than ever, I believe it's time to tighten up and buckle down even harder. Proper financing of your properties is just one aspect of your overall financial plan. Let's discuss the options in today's market (while we still have one). Pat Townsley, Mortgage Broker. 415-485-1776, www.ptre.net

Working from Yosemite

Other than servicing the clients existing clients in progress, I spent a good chunk of the past month in Yosemite, hiking, exploring, bouldering and learning. There are a couple good public wi-fi spots in the valley including The Awahanee (strong wi-fi, but cell service is bad) and my favorite is just about anywhere near the employee housing between Housekeeping campgrounds and Curry Village; Strong signal, outdoors, bears, ravens, oh my. Mortgage rates pretty much did nothing, except for the high-balance conforming loans where lenders artificially and deliberately increased the rates there to slow down originations. Their portfolios are are too heavy with those loans, so they're pushing for the $417,000 and lower loans now, and of course, in Northern California (Bay Area in particular), that really doesn't help the housing market for sales or refi. Remember my post on "Dead Cat Bounce" about a year ago? I think we're in the bounce now. I'll comment on that next. Pat Townsley; 415-485-1776. www.ptre.net

Rates are coming down for the last time, now.

I've always stated that rates work in cycles, and from my view, the cycle comes every three weeks. Sure enough, three weeks ago rates spike... and the past two days and the past three hours we've seen rates dropping again. NOW would be a good time to take action. I don't want to sound cliche, but it's true. How many more times can rates hit this low band threshold? I think maybe one more time, bouncing off lower resistance of 4.5%. Let's do this.
Pat Townsley, Mortgage Broker. www.PTRE.net