It really pains me to write this as I know some of the victims, but the destruction in Baton Rouge is only now becoming known. The Baton Rouge Business Report's Editor wrote today:
What we know right now is that the human toll is very real—and it’s being felt particularly hard in Baton Rouge, the city where Stanford’s investment division was born in the 1990s when a couple of former Merrill Lynch brokers hooked up, through a relative, with a Texas billionaire to form Stanford Group.
"How much local money is invested with the company isn’t known for certain. Area financial executives estimate between $200 million and $300 million is in the CDs under investigation and that Stanford’s entire Baton Rouge book is close to $1 billion. Moreover, they believe that Lafayette area investors have as much as $250 million in those CDs. The CD investments are probably gone, the best-case scenario being clients recovering 30 cents on the dollar. Think about it: roughly half-a-billion dollars has likely disappeared in an instant.
When the list of investors goes public—and it will—you’ll see a mix of the rich and [by B.R.’s standards] famous, as well as those folks Sarah Palin likes to call Joe Six-Packs, those working-class people who trusted Stanford Group to make the most of their hard-earned retirement savings. In a one-degree-of-separation city like Baton Rouge, I’ll bet Les Miles’ salary [assuming he’s willing to give it up] that you know at least one person on the list..." J.R. Ball Editorial
Sufficeth to say, several hundred million dollars disappearing suddenly from the Baton Rouge economy is huge. It won't surprise me at all if businesses and foundations collapse. My understanding is there are also some attorneys with something to worry about, as they steered their clients to Stanford.
Over on Tigerdroppings.com, the following comments were made:
"Meauxjueaux: 'These are not good hard working people getting wiped out. They are people who play the same get-something-for-nothing, get-monster-returns-with-no-risk game that the big boys do. They are just playing with smaller decks. Joe Sixpack owns just as much blame in all this mess as everyone else. I know these people. For the last 10 years I've heard everyone gush at cocktail parties about their "killer investments" and their "awesome flips" and their condos paid for by beach renters. Very few of the people I heard these stories from were actually of sound mind and reasonable investment strategy. Most were arrogant boasters."
"Tigerdog83: It's shocking to me that more people didn't see problems with this years ago. 8.25% returns on CD's from a bank in Antigua?"
"Bilj:dad had a friend try and reel him into this. Guaranteed an 11% return....as long as you leave your money in. stayed the fuck away from that"
"Tigerbaitn08: This guy (Referring to a bank CEO who supposedly gave him this info) knows what he talking about so I believe him, BTW, he specifically said $100M out of River Ranch and $800M out of BR as a whole."
"Camp Randall:I don't believe him. No way there is that much BR money in it. There's a lot but not 800 million. Edit: Nevermind. It is possible....at least 25 FAs in BR and the books are prob 50-600 million each. Yikes."
"Tigerdog83:I don't know. There are more LA people involved in this than you would think at first. I've already heard of one case for $4M in Shreveport. Multiply that times a couple thousand people and it might not be too hard to come to that amount."
"Venicetiger: I KNOW OF TWO PEOPLE AND $3.2 MILLION."
"Mr. LSU: I understand the amount is much larger than the $800 million in BR, I'm hearing it is much closer to 1.7 billion in the BR region. Included in that number are some of the wealthiest individuals in BR who tied up their entire investments with Stanford--one individual in particular had her entire fortune tied up, another individual lost over $23 million, and I know of a third who lost everything. All those names are names who are the upper crust of BR. A couple of attorneys said that they were worried that their clients businesses were going to fold because of the massive wealth loss they took and that one person was worried that over one hundred of their employees were going to be let go very soon. Also heard that several BR law firms invested their clients' settlement funds in those CDs."
When asked how law firms were investing client's money, Mr. LSU replied "Structured Settlement proceeds". He further states:
"Hossana is going to have some real problems because Jason Green was one of the major supporters of that Church and on the Board. The CDs were not insured by the US government. One of the wealthiest individuals in that of Louisiana was a victim in this thing and I understand she has lost almost everything. Also hearing a major B.R. developer was a victim. The victims in BR will be emerging over the next few weeks as the lawsuits start hitting federal court."
"Tigerbatin08: Check that!! I reconfirmed it today as I met with the CEO and Pres of Bank in Laffy, $100M in Laffy and $800M in BR so far and those figures are sure to increase."
Friday, February 20, 2009
Stanford: The Carnage Continues
A Jackson tradition comes to an end.
For years I, along with many others, have enjoyed going to Memorial Stadium and running up and down the steps as we attempt to punish ourselves on a regular basis. I've been out there running bleachers regardless of the weather. 104 degrees, 20 degrees, rain, sun, didn't matter.
Unfortunately, this tradition has come to an end thanks to a few changes made at the stadium recently. This week I went to the stadium for my weekly workout at lunch and voila, there was a heavy gate with a keypad in front of it, similar to those seen at apartment complexes. A quick call the to stadium revealed that the stadium is now closed off to runners. I spoke to the manager, Mike Marsh today and found out why the stadium is now closed to Jacksonians.
The new gates were funded by Homeland Security. Mr. Marsh said Homeland Security is tightening stadium access across the country. For some strange reason, Homeland Security seems to think a single person walking around an empty stadium (and thus, very visible) is more of a threat than someone who is able to "case" a stadium during a football game when he is hidden by 20,000 people. Mr. Marsh said that in order to qualify for the grant, management had to restrict access to the stadium during the day.
Mr. Marsh also said they were having a problem with homeless people walking around (never mind all the times I've been there I've never seen one), people leaving trash ( despite the 20,000 drunks trashing the place every Saturday night), and people running on the seats themselves (guess he hasn't been to an actual football game there. He might be surprised at the punishment dished out to those seats). I suggested he post a sign requiring runners to sign in on a list at the office and write down their license numbers but was told Homeland Security made that impossible. (My impression was he was not interested at all in accommodating local runners but instead was more than happy to pass the back off to the federal government).
I wrote this a year ago: "This town is getting to where you can't have any damn fun. Want to take your kids to play golf? Want to ride go-carts? Batting cages? Ride some rides? Forget it. Want to go to a water park without driving an hour only to find out it is filled to capacity? You are out of luck. Want to go hear some music and have a drink while enjoying a nice day the water as we used to do at the Dock? Don't bother. Want to go to a bar like the Subway in the old days and hear some music all night long? Mac don't want you to have fun. Feel like having a smoke or enjoying a cigar at a place where the owner allows you to do so? The Smoke Nazis want you to go to hell. Want to enjoy some greenery downtown? Don't worry about it as Watkins and his bunch bulldozed the last section of grass downtown instead of all the old buildings screaming to be torn down. Like the way development is spread out on I-55 North as you drive by the Deaf School? HA!! Duckworth wants a nice concrete jungle in its place."
Just one more thing we can no longer enjoy in Jackson.
Thursday, February 19, 2009
Market Ticker's Weekly Radio Show
Monday's at 3:30 PM, CST on http://www.market-ticker.org.
Someone finally said it. Greatness at CNBC.
About time someone called out Obama and his housing plan, as it's a complete joke and is going to disappoint many people and ruin the housing market if it passes as proposed. This video is great.
Wednesday, February 18, 2009
Uh-oh. Stanford Group and LSU/Ole Miss ties
Think the Stanford Group was just affecting some poor ole rich folk? Guess again. Standord had ties to several college football programs close to home.
Stanford sponsored the LSU cheerleaders as well as the squad at Ole Miss:
"10/03/2007 by www.LSUsports.net
BATON ROUGE -- Stanford Group Company has announced that it will become the Official Sponsor of the LSU cheerleading team.
This is only the second sponsorship of its kind granted by an institution, the first being Stanford’s sponsorship of the University of Mississippi cheerleading team last year which the company is continuing this season. This unique sponsorship provides scholarship funding for the LSU cheerleading program, as well as an internship program for qualified members of the squad to work at the company’s Baton Rouge office. Stanford Group Company is a member of the Stanford Financial Group, a global network of financial services companies."
http://www.lsusports.net/ViewArticle.dbml?SPSID=31765&SPID=2544&DB_OEM_ID=5200&ATCLID=1255897
However, the ties to LSU didn't just stop at sponsoring cheerleaders as two executives of Stanford sat on the Professional Advisory Council of the LSU Foundation. LSU Foundation website:
Mr. Jason Green
President, Private Client Services
The Stanford Group Company
445 North Blvd., 8th FloorBaton Rouge, LA 70802
W: (225) 381-0505
Fax: (225) 381-0650
1-800-982-0009
jgreen@stanfordeagle.comhttp://www.stanfordgroup.com/
Mr. Grady J. Layfield, CPA
Managing Director, Private Client Services
The Stanford Group Company
P.O. Box 3558Baton Rouge, LA 70821-3558
W: (225) 381-0600
glayfield@stanfordeagle.comhttp://www.stanfordgroup.com/
Stanford also sponsored numerous events at LSU and had additional ties to Ole Miss as well (One of its members sat on the Business School's Banking & Financial Advisory Board). Regardless of what the investigation finds, it is clear both LSU and Ole Miss will suffer from their association with Stanford.
Remembering Dr. Lisa Dedousis
This is the story from her local paper. She'd come down to Jackson to see her fiance for Valentine's Day.
"Med Center mourns 'model resident' doctor
Monday, February 16, 2009
Jersey City Medical Center is mourning the loss of a doctor that officials described as a "model resident," who had gone to Jackson, Miss. to be with her fiancé for Valentine's Day, but instead was killed in a horrific car crash last Wednesday night.
According to Jackson police, a Mercedes Benz collided head-on with a Chevrolet truck carrying Dr. Lisa Dedousis, an internal medical resident at the Jersey City Medical Center, and her fiancé, Dr. Mark Pogue, a third-year resident at the University of Mississippi's West Jackson Family Medical Clinic.
Mark Rabson, a spokesman for the Jersey City Medical Center said Dedousis, a first-year resident, was well liked by hospital staff.
"She was an outstanding medical resident and doctor," Rabson said. "When staff found out about the tragic accident we were all visibly moved and upset. She was a model resident and doctor and our thoughts go out to family and friends."
Rabson said the hospital is planning a remembrance service.
Dedousis' brother, Dr. John Dedousis, is a physician on the staff of the Jersey City Medical Center and has a private practice in Bayonne. Family members declined to comment yesterday.
The truck carrying Dedousis and Pogue crashed into an apartment building retaining wall and exploded, according to reports. Both were pronounced dead at the scene.
Emergency responders extricated Karen Irby, who was driving the Mercedes and her husband, Stuart. Witnesses said the Mercedes had been going "pretty fast."
CHARLES HACK " Jersey Journal Story
There is a Facebook page for remember her and Dr. Pogue: "Please pray for the families of the Dr. Mark Pogue & Dr. Lisa Dedousis"
Main post on this story: http://kingfish1935.blogspot.com/2009/02/no-title-for-this-one.html
No action for Jackson from Fenator Horhn
Fo much for that talking point. One of Fenator and current Jackfon Mayoral candidate John Horhn'f claimf if he can get thingf done for Jackfon in the legiflature. I'm ftill waiting to fee where thif legiflative proweff he bragf about if becaufe it fure hafn't been on difplay helping Jackfon lately. He couldn't even get hif bill to allow Jackfon refidents to vote on raifing their own falef tax out of committee:
"A bill that would allow Jackson residents to consider raising sales taxes has stalled at the state Capitol.
House Bill 1622 failed to gain enough support in the Senate Finance Committee today. Supporters said they will reintroduce the measure in another committee to try to keep it alive as the 2009 regular legislative session continues.
The bill would have allowed the city of Jackson to add a one percent sales tax on all items except hotels, restaurants, groceries, prescription drugs and purchases of large equipment such as vehicles and farm equipment." Clarion-Ledger story , Bill status on legislature's website
fo we are fuppofed to believe thif mover and fhaker of the legiflature who can't get a bill that would help hif campaign gain more credibility out of committee can fomehow get more for Jackson out of the legiflature when he if NOT a member of it?
But hey, forget Lake Hico and the fales tax. He goef to the right partief and fitf on a few boardf.
Tuesday, February 17, 2009
Poll: Should the French Plantation Scene have been included?
Latest poll question on JJ was whether the French Plantation Scene should have been included. The results were:
Should've been included. 8 (20%)
No. They were right to leave it out. 7 (17%)
Huh? 24 (61%)
Best qb ever.
How would you like to be a defensive back in coverage and have .19 looking in your direction? That would be scary. Starr was pretty good too. Click Here to Read More..
Monday, February 16, 2009
Wealth: Gone in three generations.
Mish wrote a very thought-provoking piece about the Chinese proverb that says wealth does not last three generations:
"Meaning: It's rare the wealth of a family can last for three generations (the 2nd may see the value of hard work, the 3rd, forget it)......
one of the 3rd generation children decided to carve out a career as a financial advisor. She made the following insightful observations:
1. Her grandparents did a fantastic job of consistently placing 10% of their monthly income into an equity investment over a 45 year period.
2. As they had generated sufficient capital to live off the dividend income there from, her grandparents had stuck with their equity investment throughout their retirement.
3. Unfortunately, her parents had failed to adopt a savings ethic and they had relied optimistically on their inheritances to generate their own retirement income.
4. The 3rd generation children (herself included) failed to comprehend the importance of generating an income and as a result were unable to adopt a savings plan or meet their own costs.
Time to start again.....
Another interpretation of the expression involves the changing role of attitudes towards debt and asset accumulation over time. This is how I see it:
Few alive remember the great depression. Most boomers headed into retirement have seen rising asset prices all their lives. Those boomers thought they could live off their houses and/or investments in the stock market, expecting prices to rise forever, even though it was mathematically impossible for that to happen. Now, headed into retirement, boomers are realizing they are actually savings poor given that asset prices have crashed.
Moreover, children who have seen their parents wiped out in bankruptcy or foreclosed on are going to have a completely different attitude towards debt than their reckless parents did. Expect to see more frugality from parents and their children alike.
Three generations from now the lessons of today will have again been forgotten and the cycle will repeat...." Interesting post by Mish
Sunday, February 15, 2009
No title for this one.
Update: Just got a credible but unconfirmed report on the speed of the Mercedes as that particular model has a black box that records the speed. All I will say now is it is less than three times the posted speed limit.
Original Post:
Everyone was shocked by the news late Wednesday night concerning the wreck involving Mr. and Mrs. Stuart Irby and two young doctors, Mark Pogue and Lisa Dedousis, who were engaged to each other. Everyone's hearts and prayers go out to the families of these people as they seek to pick up the pieces from this horrible tragedy. I am posting on this subject for one reason only and that is because I've heard some of the rumors and accusations flying around Jackson, and it's time to put a stop to some of them. Such rumors do nothing but smear people who did nothing wrong and hurt those who are grieving by giving them the wrong idea about what happened that night.
The facts reported so far and some other things I have learned from multiple sources are this:
1. The Irbys left the Jackson Country Club shortly before the wreck.
2. The car they were driving was claimed by witnesses to be speeding at over 70 mph. A quick view of the Mercedes supports this claim. The speed limit is 40 mph on that part of Old Canton Road. I've been in a head-on collision at 50 mph with an 18-wheeler and the damage was nothing close to that of the Mercedes, much less the truck. The impact was so hard the truck exploded almost immediately. Clearly the car was going much higher than the posted speed limit.
3. After the 911 call was made, 20 minutes passed before anyone from JPD or JFD showed up, even though there are two fire stations only a few blocks away.
4. Update: both have improved. See the Caring Bridge site for details on their conditions. Multiple sources have told me not to be surprised by the toxicology reports. The website Caring Bridge gives updates on their conditions and there is a guestbook if someone wishes to make any comments or prayers. Doctor sent this link to me about the scale used for comas and thought it might be useful for those of you reading the Caring Bridge site. GCS Scale
5. Time to dispel one rumor: the police turned off their lights when they called in the tag. Not buying this one and I tend to believe Mr. Vance of the JPD. JPD has a no-pursuit policy for such high-speed chases involving traffic violations, something understandable after the death of Mr. Fowler's daughter, Jamie Fowler Boyll. Also, at 70 mph or so, it would have taken the Irbys only a couple of minutes to get from South River Oaks to Newland. In that time a cop would have had to pick them up, follow them, call in the tag, have a supervisor recognize who they were, and call off the chase before the Mercedes entered the area where witnesses saw the wreck take place. It doesn't add up and it is very doubtful the police were able to do all of that within 60 seconds or so. Until someone can show some real evidence such as a copy of a database search with a time stamp for that plate, such speculation does nothing but upset the victims' families and give the appearance of some type of cover-up when none existed. Even if the police were chasing the Mercedes, there was very little they could have done in that little amount of time. The second WLBT video posted below delves into the chase issue.
6. An investigation IS taking place. Investigators were knocking on doors in the neighborhood Friday as I personally answered one of the visits. The crime scene van was parked nearby for several hours Friday. See the second WLBT video for story on crash reconstruction investigation.
The mere thought of someone rich and well-connected getting drunk and then driving so recklessly two doctors are killed shocks the senses. Families are ruined as two promising young doctors are dead, a third person may still die, and there are small children who face the prospect of not having a father or a mother (due to injuries and possibly jail). Both families need prayers. If it is clinically determined Mrs. Irby was drunk, then she needs to be prosecuted to the fullest extent of the law possible, including vehicular homicide. If she was drinking, she made the choice to start drinking and made the choices along the way to get behind the wheel. If she drove drunk and killed these two doctors, it's not a tragedy but an outrage and she deserves to be in jail for as long as the law allows. Under the law, a blood alcohol test is mandatory as there was a fatality so all the speculation and rumors will be put to rest soon enough. However, we've had enough death and need to say a prayer that both survive and the families of the deceased recover and receive comfort during this time.
Media notes and further comments:
WLBT story from February 12
WLBT video
WLBT story February 13
WLBT video
February 12 Clarion-Ledger story
February 13 Clarion-Ledger story
February 14 Clarion-Ledger Story
WLBT story on crash reconstruction investigation
Clarion-Ledger story on crash reconstruction investigation
A Facebook page has been set up for the deceased: Please pray for the families of the Dr. Mark Pogue & Dr. Lisa Dedousis
There is a Facebook page set up for the Irbys: Praying for Stuart and Karen Irby for those who are interested in praying for their recovery.
The message boards of the Clarion-Ledger have been filled with posts covering the full range of emotions as friends, family members, and readers have made their feelings known:
Some comments from family and friends of the deceased (I'm posting them because everyone is talking about the Irbys but frankly, the two young doctors no longer with us need to be remembered). The number of comments removed probably set a record for the website.
"was Dr. John Dedousis' daughter or sister. He is my doctor in Bayonne, NJ and he was closed due to a family emergency. It was in our Bayonne newspaper but hasn't given any details. My prayers go out to him and his family in this tragic time. I pray for everyone involved but also that justice is served here. God Bless The Dedousis' and Pogue Families, and, of course, I would be heartless if I didn't include the Irby's. Barbara Kuzminski 2/14/2009 9:29:06 AM"
"As Lisa's niece I'd like to take the time out to thank everyone who has been praying for my family as well as Mark's. They both are two amazing people, and this is a tragedy that we will all live with every day for the rest of our lives. Although the circumstances are devastating, it is important not to make assumptions about what happened that night. There were no BAC levels released, so making accusations does not benefit anyone, especially the families of those hurt. However, with that being said, traveling at that type of speed is out of control and unnecessary. Thankfully, her children were not in the vehicle, but if it was up to me, I would want to see her in handcuffs on her hospital bed. In my eyes, she is a murderer and should have to live with that guilt for the rest of her life. It is karma that will be the real punishment
Again, I appreciate everyone's comments who has mentioned my family as well as the Pogue's. They were two beautiful people,and are in God's hands now.
2/13/2009 5:48:22 PM"
"Dr. Mark Pogue’s biological father is deceased, but he has a strong loving step-father who is helping Mark’s mother weather this tragedy. Mark’s mother and step father do not live in Jackson but do live in the state of Mississippi. Mark’s mother is a nurse and a wonderful person who has given much to her local community and the state of Mississippi through many years of being a great mother and an accomplished nurse. Mark also has an older brother who is providing wonderful support to his mother at this time of their loss and sadness. Mark’s extended family from Mississippi to Virginia, Illinois to California are praying for and supporting his mother. It is so tragic that Mark’s and Lisa’s lives were taken at a young age. Both were soon to be full-fledged Internal Medicine Doctors and most important of all, to be married. We were so proud of Mark and his achievements and the wonderful and beautiful young lady (Lisa) that he was to marry. I am one of Mark’s great-uncles
2/17/2009 11:56:59 AM"
"Mark was my husband's best friend. Mark had known what it was like to have plenty (of money) in his lifetime and he had known what it was like to have no money (at one point in medical school things got so bad he was living in his car). He was an entrepreneur as well as a doctor, having once owned a home iv infusion business. He never judged anyone based on whether they had money or not. He was a person who valued character. Think if the tables were turned. "2 rich doctors kill philanthropist and his wife in wreck". He would want the facts to come out and then justice to be served. He would not want to be crucified simply because he was rich, and I'm sure he wouldn't want that for the Irby's. Mark, we love you, and miss you terribly. 2/15/2009 12:34:49 PM "
"My husband and I met Mark back in Philadelphia, MS around 1999 or 2000. At the time he was a lab tech. My husband, a doctor, was talking to Mark about a lab result one day, and realized the incredible intelligence Mark had. He suggested Mark think about going to med school. Mark was like...oh I'm too old to do that now! But my husband convinced him he was not too old and it could be a reality. So they investigated together what might the fastest way be to do this because the traditional route would cost a lot of extra years. Mark ended up starting med school in the Caribbean and then transferred to England. Then he did several rotations here in the states and ended up at UMC for his residency. We had wished that he did not have to go to Arkansas to work after residency because we wanted him to stay here. The whole time we knew Mark, he was the most loving, genuine, caring, and loyal friend a person could have. We love you Mark. You will always be in our memories.
2/13/2009 9:22:11 AM"
One of the more clueless comments came from someone a commenter called "Buffy":
"I am still upset that the fact that Karen can be charged with manslauhter. It was an accident, and she and her husband are such good people who are so refined. Shouldn't the fact that she killed 2 people be her punishment since she will have to live with that everyday? I don't know much about legal, but is there anyway she can avoid charges? I feel so bad for her and her husband is fighting for his life. She is so much younger than he is and obviously loves him, they need to let this situation bring them to their knees and take their marriage vows seriously. For richer for poorer, for better for worse, for as long as you both shall live. On Valentines Day as he fights for his life, I hope she will stand by her man no matter what condition he will be in the future. God Bless all who are involved.
2/14/2009 9:09:06 AM "
Then there is the typical tone-deafness at the Jackson Free Press with the headline "Jackson Businessman and Wife Hospitalized after Head-On Collision" over this article:
"University Medical Center officials confirmed today that they admitted Jackson business man Stuart Irby and his wife Karen after a head-on collision on Old Canton road around 10:30 p.m. last night.
Stuart Irby was in critical condition this morning; Karen Irby was in serious condition.
The Irby’s black Mercedes collided with a pick-up truck, according to WLBT, which burst into flames, killing both passengers. Officials have identified the truck’s passengers as UMC resident, Dr. Mark Pogue, and his fiancé, Lisa Dedousis, from New Jersey.
"Horrific is probably too light of a word to describe this accident," Jackson Police spokesman Jeffery Scott told WLBT. "There were two individuals inside the Chevy pickup who were subsequently burned to death after the collision."
posted by Ronni M on 02/12/09 at 03:33 PM."
Saturday, February 14, 2009
Friday, February 13, 2009
Melton: the noose tightens.
Nice to see someone at Omnibank isn't' asleep at the wheel. The Clarion-Ledger reported the local bank is suing Mayor Melton's wife for non-payment of a flood insurance policy:
"OmniBank has sued the wife of Jackson Mayor Frank Melton, saying the couple defaulted on a $301,967 home-equity line of credit they took out in 2007 on a Jackson home.
The default is due to failure to keep flood insurance on the property, according to the complaint filed Wednesday in federal court in Jackson.
But Melton said Thursday his flood insurance policy expired in December and he renewed it.
"They sue me every time I'm late on something. It's no big deal," Melton said Thursday while leaving his federal trial in Jackson in an unrelated matter.
But the bank said in the complaint that it purchased flood insurance on the property to protect its interest at a total cost of $2,961.83. The lawsuit says the Meltons owe for the insurance premium and interest from Jan. 22.
"OmniBank has requested reimbursement for such insurance, but no payment has been made and no insurance has been obtained to replace the policy purchased by OmniBank," according to the complaint...." Clarion-Ledger Story
Melton can claim he paid it all he wants but the paper trail doesn't lie and Frank is a known liar. I can guess one very good reason Omnibank is going ahead and suing for the balance of the loan itself and has something to do with Frank's first mortgage on his home.
The first mortgage on his home was a 5-year balloon note that became due in full in December (as reported in JJ and later on WLBT) to Bancorpsouth. The note has not been released according to court records yesterday. The Mayor has either not paid it and foreclosure proceedings will commence at some point or it was paid but the bank has not filed the released yet at the courthouse.
Omnibacnk probably is trying to get first in line at the courthouse for any recovery of a claim against Melton as Bancorpsouth has the first lien.
Earlier post on Meltons' first mortgage becoming due in full
Thursday, February 12, 2009
How we got here.
I first read this story in the Wall Street Journal in 2005 and remember how much it sickened me to read it as craziness abounded on almost every sentence. Reading it now is still a sobering experience in light of the current meltdown:
"As real-estate mania intensifies, the mortgage industry keeps making it easier to borrow. "Low documentation" loans are catching on, including ones where lenders simply take borrowers' word about their income and don't ask for pay stubs. Repayment terms sometimes are stretched as long as 40 years, to help shrink monthly payments. In the most common twist, lenders aren't requiring even token efforts to repay principal in the early years of a mortgage. Interest-only payments suffice. In some cases, borrowers can even pay less than that, allowing interest to pile up and be repaid later.
Skeptics worry that this easy-credit euphoria could end with a real-estate crash and waves of problem loans. Federal Reserve Board Chairman Alan Greenspan warned in June that housing prices in some areas appeared "unsustainable," adding that he was concerned about "the dramatic increase in the prevalence of interest-only loans." In a recent Wall Street Journal survey of 56 leading economists, 11 named a possible housing bust as their biggest worry for the economy.
For now, default rates are low and property prices remain strong. Many aspiring homebuyers are willing to try anything that stretches the amount they can borrow, since house prices continue surging while wages fail to keep pace. Aggressive lenders are enjoying the boom while it lasts...."
That is just the appetizer as Mr. Ray, a loan officer at the time, offered the "Freedom Loan" to his clients:
Fifty miles north of San Francisco, Benchmark is a small, fast-growing mortgage company that typifies the industry's current stampede into interest-only lending. Benchmark gets about 60% of its business from loans with such features....
In an interview, Mr. Aldridge scoffs at people who pay down their mortgages, month by month. (He is the owner of Benchmark)"That's just a way of transferring money to your heirs," he says. "As a borrower, I'd rather make smaller payments and have the money myself."......
Benchmark does much of its business in California, catering to welders, flight attendants and others who want to buy or refinance $500,000 homes. Callers hope to borrow most of the home's value, drawing on household incomes that average just $70,000 a year. At Benchmark, such middle-class strivers are greeted with open arms. True, they may be hard-pressed to cope with traditional mortgages that require principal repayment each month. But they can handle interest-only mortgages with smaller monthly payments....
If even that amount seems too steep, Benchmark offers something called the Freedom Loan. For the first few years, it lets borrowers choose between standard repayment terms -- and a "minimum payment" option calculated on a 1% teaser interest rate. For the first month, that option fully services the mortgage; after that, the interest rate climbs above 5% and the minimum payment covers only about two-thirds of monthly interest due...."
Such garbage loans were justified by the following pitch:
"Benchmark's top executives encourage such serenades. "We paint pictures," says Lance Diener, the company's executive vice president for sales. "This is all about people improving the quality of their lives. If you can save $800 a month on your mortgage payments, maybe you can buy that brand-new Cadillac Escalade...."
Read the rest. Its good. The REST of the story
Got the bubble-headed bleach blonde...comes on at five.....
Joe Kalahar of WLBT reported on the requests by Mississippi cities for their share of funds awarded to the states in the federal stimulus package that just passed Congress. The money quote from the story is here:
"Jackson, Meridian, Biloxi and Hattiesburg make up the bulk of the state's listed requests. But according to stimulus watch dot org, Natchez made the largest total request at nearly seven hundred million dollars and the largest single request for a project called the Forks of the Road Heritage Trail.
"I've checked with the mayor and city council, all the city officials, nobody has made a request like that for Natchez," said Rep. Robert Johnson, (D) Natchez.
But requests that are legitimate include four olympic size pools and seven splash parks for the city of Jackson...."
How many problems are there in this passage? Since Representative Johnson said no one made such a request for Natchez (the request at issue was for $600 million for ONE project), shouldn't Mr. Kalahar have asked the mayor and city council members WHO made the request? One would think that's a part of Journalism 101 but Mr. Kalahar just let that denial fly right by his pretty little head without checking it out with other officials. My favorite part of this story is where Kalahar calls FOUR OLYMPIC-SIZED POOLS and SEVEN SPLASH PARKS LEGITIMATE REQUESTS!!! Pools and splash parks are legitimate needs.
Maybe he hides in his little cubicle when he's not on assignment, but in case he hasn't noticed, there are MANY more pressing needs than seven damned splash parks for Jackson. Jackson has a water/sewer system in desperate need of an overhaul, roads falling apart, creeks that need dredging, and schools in need of repair. However, calling swimming pools and splash parks "legitimate" needs makes one wonder if he's even thinking about what he is reporting. I suspect he doesn't think critically, as I remember this story he did on Jim Hood and foreclosures a few weeks ago.
Jim Hood bragged about how he and other Attorneys General sought to have the bankruptcy laws changed so judges could alter mortgage contracts as he thought such modifications would keep homeowners from losing their homes. Kalahar gleefully (and yes, gleefully, I saw him report the story) reported:
"Hood says a simple change to the federal bankruptcy code could give judges the discretion to order a loan modification and keep families in their homes.
"Not let people get away with a free home or anything; just adjust their payment schedule and try and knock off some of these excess charges," said Hood....
If it passes, the code change could be a win-win for both the homeowner and the lender. (Kalahar's words, not Hood's, and he said it in a very cheerful manner as if he'd found some really good news for the audience)
"They want to agree because they want people to continue to live in those homes. They want people to continue to pay the debt," said Hood..." Story
Really? How do you know its a win-win for the lender? Because Hood told you so? Did it cross your mind that you might want to actually go ask......... a mortgage expert or an officer of the Mortgage Bankers Association whether this was true? Since I've worked in the mortgage business for over ten years, I think I know a little bit more than you or Mr. Hood about this matter and I can say on some authority this is not a "win-win" as you put it for everyone. What such a change will do is raise interest rates and require larger down payments from homebuyers at a time when the economy is weak.
When lenders set their rates, they use a pricing model that factors in the costs of the mortgage itself, the risk, the size of the down payment, and the ability to foreclose on the property in case of default. That is why the loan is considered to be secured. I realize you only learned to write stories in journalism classes but this is remedial finance stuff that millions of frat boys learn every day after sorority swap night while hung over. When you reduce the ability of the lender to recover on the security, the loan is now riskier. Because the lender doesn't want to get burned, he's going to require more money from the homebuyer for a down payment and probably increase the interest rates as his collateral now is less secure. Such a scenario is actually what is driving this housing crisis: lenders are failing because h0mes are worth less than what is owed to them when they are forced to foreclose. Before a lender will take such a position because of a change in the bankruptcy law, he is going to cover his ass before giving a seller a check for $300,000.
This is not sloppy reporting but rather an inability to think critically, ask basic questions, and do basic research. Before anyone thinks I'm being too harsh on this reporter, here is a story by Monica Hernandez in the same broadcast on a similar subject. Notice how she talks to a realtor, an owner of a mortgage company, a landlord, and a tenant thus covering all sides of the story. Story on renting. Contrast her reporting with the story by the other reporter who got a tingle down his leg while he told us gleefully how something harming homebuyers is a "win-win" for everyone and seven splash parks are a "legitimate" need.
Wednesday, February 11, 2009
That's the beauty of the poll
You have to know what I am talking about to even know how to answer.
Click Here to Read More..
A treat for you today.
JJ is posting a treat for you today as I found these clips of Ayn Rand, Objectivist philosopoher and author of Atlas Shrugged, appearing on Phil Donahue's show decades ago. Even at her advanced age, her wittiness and sharp intellect is on full display as she enjoys the give and take with Phil. She makes some statements conservatives today would do well to heed. Enjoy.
Tuesday, February 10, 2009
Market Ticker guy will be on KIM Waaaaaaaaaaaade today.
Check out the Market Ticker forums today. Pretty interesting stuff.
http://www.tickerforum.org/cgi-ticker/akcs-www
WSJ: "Bond fears are coming home to roost."
"Is a hint of economic nationalism creeping into debt markets? Recent European bond sales, including issues by Belgium and Spain, show investors sticking close to home. If that becomes a trend it could prove awkward for those traditionally dependent on foreign investors...."
Why do we care about Europeans buying more of their own bonds and less of ours? Its rather simple: Obama needs them to finance his deficit spending.
"But if international flows do decline, it could cause concerns for those reliant on overseas demand -- particularly as debt issuance surges to combat the financial crisis. The U.S., where foreign Treasury holdings as of November 2008 were 53% of total marketable debt, and the U.K., where overseas investors held 36.3% of gilts by the third quarter of 2008, should be watching closely."
Over half of our treasuries are purchased by foreigners. Japan and China account for two-thirds of THAT amount. Obama is playing with fire as Geithner angers the Chinese by accusing them of currency manipulation and the President pushes for "buy-American" only provisions in the stimulus bill. Considering Obama needs their money to finance his deficit spending, the last thing he should be doing is starting up a trade war. If the Chinese and other foreigners choose not to buy our treasuries, the yields will shoot up and cause the economy to really nosedive, as interest rates on homes, cars, and credit cards will rise. Of course, when you've lived in the ivory tower all of your career as Obama has, one might not realize that lesson at first.
FOOD FIGHT!!!!!!!!!!!
"Did any of y’all hear Gallo this morning?
February 9th, 2009 @ 2:13 pm - by lotus · 39 Comments
My impression is that the folo crowd may be a little light on Paul Gallo listeners, but somebody just called to tell me that on this morning’s show Gallo supposedly said that an “unnamed U.S. Senator” is being indicted in Scruggs II. Did anybody here hear that directly? If so, how did he phrase the whole sentence? What else did he say?
Pretty skinny limb to crawl out on, isn’t it? My caller interprets “unnamed U.S. Senator” to be a currently-sitting one (therefore not Trent Lott, Joe Biden, or Hillary Clinton — but possibly John McCain, I guess). I’m not inclined to narrow it that much myself, but then I’m also not inclined to believe Gallo knows more than anyone else outside the case. Anyhow, just curious whether we have any folo ear-witnesses . ."
"lotus says:
February 9, 2009 at 2:19 pm
My caller didn’t hear the show either but was told about it by a close relative, who quoted “an unnamed U.S. Senator” as Gallo’s exact description of this purported indictee."
"lotus says:
February 9, 2009 at 3:25 pm
Email from Alan Lange:
“FYI. I talked with Gallo. This was not nearly the case. He was openly conjecturing about what would’ve happened had Lott’s favor to DeLaughter paid off in a federal judgeship.”
Thanks, Alan. I’m still hoping for a direct ear-witness . . ."
"http://www.yallpolitics.com/ says:
February 9, 2009 at 6:26 pm
Jan,
I guess no good deed goes unpunished (yet again). You’d think I’d have learned by now in trying to help you. Though I didn’t expressly ask you not to post my email (as I certainly could’ve just posted the correction), I wrongly assumed you would exercise the discretion of an 8 year old and just fixed your error.
I have no real problem of you quoting me, but leave the context in tact.
Here’s the email . . .
“FYI. I talked with Gallo. This was not nearly the case. He was openly conjecturing about what would’ve happened had Lott’s favor to DeLaughter paid off in a federal judgeship.
My suggestion would be to kill the string, but thought you would at the very least want to correct it.
Alan”
Guess not."
"lotus says:
February 9, 2009 at 6:31 pm
Alan, I don’t understand this chip you’ve got about me, but what-evs."
"Alan @ Y'allPolitics says:
February 9, 2009 at 6:59 pm
Funny, Jan. I could say the same thing. Run my name in your search and EVERY REFERENCE from you about me is negative or just snotty in a real junior high school girl sort of way. And not in a “I disagree with you and be cool about it” tone. Tom and I don’t agree on a lot politically, but he’s always been straight up. Hence, no tension between us at all. In fact, quite the opposite. Candidly, I’d encourage him to seek out greener blogging pastures. I think you’d find out incredibly quick who has the real talent on your site. My sense is that he’s too good a guy to do that to you, but if he did, I’d predict about a 70%+ traffic fall off. But I digress.
You seem unable to disagree without being disagreable. I’ll let everyone else decide for themselves. I don’t know what gives. But after all of the time while you were getting started that I helped you and spent substantial time on the phone with you, helping you through tech snags, throwing you (lots of) traffic and exposure and helping you every way I knew how, the petty swipes and personal digs and just candidly the way you carry yourself toward me have just grown real old. That’s especially true because I don’t know the source of your bitterness. I don’t know if you do it to draw personal attention or extra traffic to make a buck, but it’s just old.
Trust me, I have now learned the lesson."
"lotus says:
February 9, 2009 at 7:07 pm
> sigh <"
http://www.folo.us/2009/02/09/did-any-of-yall-hear-gallo-this-morning/
Click Here to Read More..
Monday, February 9, 2009
Lets play a game.
Does anyone want to guess what local media outlet did not cover the recent closing of Realty Mortgage?
Click Here to Read More..
Stimuli, Good bank bad bank, and the Krugonauts
"none of this spending can possibly stimulate anything. Take for example $62.3 billion for transportation or the $91.3 billion to renovate schools. What happens after the schools are renovated and the potholes are filled? Where will the jobs come from? Do the schools even need to be renovated?
Taxpayers will eventually have to pick up the tab, either via taxes or a weaker US dollar....
The problem is not falling prices, the problem was the excess of debt that led to massive speculation and ever escalating prices. Krugman continues to put the cart before the horse in this regard. Indeed, Krugman Is Still Wrong After All These Years.
It is impossible for government to spend one's way to prosperity. Proof can be found in the failed practices of Russian and Chinese central planners over the years, and more recently the failed policies of Japan.The ultimate irony of the "Conscience of a Liberal" tag is that Paul Krugman is openly supporting policies that continue to destroy middle class America, while pretending otherwise..." Mish
Meanwhile over at the Wall Street Journal, George Meollan discusses whether Obama's stimulus plan will cause inflation and the effect it will have on the bond markets (worth reading) by asking the simple question about the stimulus plan: Who is going to finance it?:
"The Congressional Budget Office is predicting the federal deficit will reach $1.2 trillion this fiscal year. That's more than double the $455 billion deficit posted for fiscal 2008, and some private estimates put the likely outcome even higher. That will drive up interest costs in the federal budget even if Treasury yields stay low. But if a drop in world market demand for Treasurys sends borrowing costs upward, there could be a ballooning of the interest cost line in the budget that will worsen an already frightening outlook. Credit for the rest of the economy will become more dear as well, worsening the recession. Treasury's Wednesday announcement that it will sell a record $67 billion in notes and bonds next week and $493 billion in this quarter weakened Treasury prices, revealing market sensitivity to heavy financing.....
There is only one answer. The Obama administration and Congress will call on Ben Bernanke at the Fed to demand that he create more dollars -- lots and lots of them. The Fed already is talking of buying longer-term Treasurys to support the market, so it will be more of the same -- much more..." Who will buy the Treasuries?
Indeed, what will happen when trillions in Treasuries are dumped on the market while demand from China and Japan decrease as they deal with their own recessions? Supply and demand don't change in a recession and the price for treasuries will eventually drop, sending interest rates higher. What is Obama going to do when he gets his way and 18 months from now interest rates are at least ten percent? More deficit spending financed by treasuries becoming more worthless?
Meanwhile, over the Financial Times, Willem Buiter offers an intriguing idea (and one that Karl Denninger at the Market Ticker has advocated for some time): the government should capitalize several new banks with the bailout money instead of supporting banks that are likely to fail anyway:
"There is an alternative solution to the problem of valuing the toxic assets. It would not involve nationalising the existing banks. Instead the state would create one or more new ’good’ banks - all state-owned and state-funded to begin with. Effectively, some or all of the existing banks would become bad banks. The good banks would acquire the deposits and the good assets of the bad banks or legacy banks. The good assets are, by definition, easy to value. The creation of multiple good banks may be desirable to encourage competition.......
In my proposal, the existing banks would become the bad banks and retain their existing ownership structure. No government resources would be wasted propping up the valuations of existing assets. All government financial support would go to the new state-owned good bank. Even there, government guarantees would only be provided for new bank borrowing (if this is from the private sector) and for new bank lending and investment. There is no point here either in propping up the valuation of existing assets.....
As credit markets normalise and the economy recovers, the aggregate lending targets and the government guarantees for new lending and for borrowing from the private sector would be eliminated. In due course, but probably not before the third year of their existence, the privatisation of the new good banks could be contemplated. (I'm thinking sooner with a successful IPO)...." Good bank, bad bank
I like this idea as the main problem facing banks right now is the balance sheets. The toxic assets are becoming a black hole sapping our resources. Banks aren't going to lend if they are more worried about being gobbled up by their own debt. Creating some banks without the toxic assets albatross on their balance sheets will give our financial system some stability and put a stop to some of this madness.
Back to the Wall Street Journal where two economists argue the New Deal prolonged the Great Depression. Harold L. Cole and Lee. E. Ohanian write:
"So what stopped a blockbuster recovery from ever starting? The New Deal. Some New Deal policies certainly benefited the economy by establishing a basic social safety net through Social Security and unemployment benefits, and by stabilizing the financial system through deposit insurance and the Securities Exchange Commission. But others violated the most basic economic principles by suppressing competition, and setting prices and wages in many sectors well above their normal levels. All told, these antimarket policies choked off powerful recovery forces that would have plausibly returned the economy back to trend by the mid-1930s.....
Each industry created a code of "fair competition" which spelled out what producers could and could not do, and which were designed to eliminate "excessive competition" that FDR believed to be the source of the Depression......
These codes distorted the economy by artificially raising wages and prices, restricting output, and reducing productive capacity by placing quotas on industry investment in new plants and equipment. Following government approval of each industry code, industry prices and wages increased substantially, while prices and wages in sectors that weren't covered by the NIRA, such as agriculture, did not. We have calculated that manufacturing wages were as much as 25% above the level that would have prevailed without the New Deal. And while the artificially high wages created by the NIRA benefited the few that were fortunate to have a job in those industries, they significantly depressed production and employment, as the growth in wage costs far exceeded productivity growth. (Remember, Obama is making the stimulus plan union-only, thus ensuring higher wages)....
The downturn of 1937-38 was preceded by large wage hikes that pushed wages well above their NIRA levels, following the Supreme Court's 1937 decision that upheld the constitutionality of the National Labor Relations Act. These wage hikes led to further job loss, particularly in manufacturing....." FDR made the Great Depression worse
Enough reading for you?
THIS got someone banned?
Over on FOLO, Lotus discusses a story by Adam Lynch in the Jackson Free Press about the alleged persecution of Paul Minor by Karl Rove. Unfortunately, criticizing her posts can get you banned (as I found out when I fact-checked in a sarcastic manner her sources she used in a post bashing conservatives) as "word dawg" found out when he posted this:
"Word Dawg says: February 5, 2009 at 6:07 pmIf you look very carefully at all, you’ll see that every administration “politicizes” appointments of U.S. Attorneys, and if the chosen ones find lawbreakers in the other party, they generally go after them. This will happen in Obamaworld as every honest democrat will admit. Refer to the barrage of requests that Bush be prosecuted for “torture”. This is pure political stagecraft–a “politicized prosecution” if you will. As for democrats who complain of prosecution by republican us attys, it never has been a good defense to say, “I may have committed a crime, but you picked me out for prosecution for political reasons.” Juries, not us attys, found these folks guilty."
http://www.folo.us/2009/02/05/adam-lynch-the-sour-smell-of-corruption/
Lotus's response was:
"lotus says:
February 5, 2009 at 6:33 pm
Word Dawg, you hit me the wrong way on the wrong day, and you’re outta here."
Word Dawg was not hateful, insulting, or slanderous. For this mild criticism he was banned? Come on Lotus, as a lawyer and someone who was on the hot seat more than once in law school, I know from experience you are better than this. I mean, isn't this the sort of thing evil Republicans would do?
Sunday, February 8, 2009
I'm sick of Dr. Drew.
VH1 is currently broadcasting a program called "Sober House", sort of a halfway house for recovering celebrity addicts who appeared on "Celebrity Rehab". Its about time someone called a spade a spade and said Dr. Drew is a fraud for exploiting his patients.
First they appear on Celebrity Rehab. Some rehab. The program is only a few weeks long. Cellphones are allowed. Its coed. They get field trips. Visitation. Girls get to walk around in spaghetti-string shirts. This isn't rehab, its an extended sorority swap detox. Although Celebrity Rehab is pretty bad, Sober House is even worse as one can see from these clips. Former Guns & Roses drummer Steve Adler shows up at the facility with heroin and needles. Doesn't matter. He was still allowed to stay. Its all about the ratings after all. Unfortunately, Steve was just getting warmed up as the next day, he used heroin again and went on a nice drug trip that lasted several hours. During this episode, he walks around the house stoned, cusses staff out, throws things, and just makes a complete ass of himself(Its in the clips posted above.) until he was arrested by the police for possession of heroin.
Think THAT stopped the show from allowing him back in the "Sober House"? Hell no. Sure enough, Steve is back on the show again as the producers decided some ratings were more important than Adler's health.
"Sober House" is nothing but a way for tv to exploit addicts for our amusement. How Dr. Drew can defend these practices with a straight face shows how far our culture has declined as someone who has taken the oath "first do no harm" instead chooses to take the oath "first get some ratings". No serious recovery center such as the Sober House would allow an addict to wander around the house for 3-4 hours near the other addicts, much less let him return after getting arrested for drug possession. This show is not informative, its not cute, its degrading and is using the life-threatening problems these addicts face as a way to grab some nielsen shares. Its disgusting and Dr. Drew should be banned from tv. Click Here to Read More..
Saturday, February 7, 2009
Lawsuit filed against Realty Mortgage
The Mortgage Implode-O-Meter reports a class action lawsuit has been filed against recently-closed Realty Mortgage. The lawsuit seeks to recover what it claims are unpaid wages (suit asks for $75,000) between September of 2008 and October of 2007 for employees in its Kansas branch (Copy of lawsuit).
Click Here to Read More..
Folo is nauseated.
We now have a Matt Friedeman of the left as apparently Obama is not going far enough for Lotus over at FOLO. Never mind Obama has set off the right-wing blogosphere this week with his stimulus plan, foreign policy decisions, and appointments. Nope, its not good enough for the true believers who think of anyone not devoted to The Cause as an enemy. Check out these posts today:
"Sometimes I wonder why everybody worked so hard to elect Democrats (Part 2)
February 7th, 2009 @ 7:03 am by lotus · 5 Comments"
In that one she complains about some of Panetta's comments about the more controversial CIA programs. Part 1 has the best stuff though:
"Sometimes I wonder why everybody worked so hard to elect Democrats (Part 1)
February 7th, 2009 @ 6:49 am by lotus · 1 Comment "
Spending nearly a trillion dollars is not enough for her as she says it is "nauseating". Keep in mind all this money in the stimulus bill is IN ADDITION to what will be presented in Obama's 2010 budget. Considering her economic thinking is done for her by Paul Krugman, one shouldn't be too surprised.
What is she going to say in 18 months when Obama's spending collapses the market for treasuries, which he is counting on to finance his debt, and interest rates shoot to double digits, causing an even bigger economic meltdown? What is amusing is how quickly the netroots turn on Obama when he doesn't do exactly what they want when they want it. Typical spoiled brats. Never mind he now has access to classified information and economic information. Nope. All that matters is The Cause and reality be damned, even if he is meeting them 80% of the way.
What should be nauseating to even supporters of so-called stimulus spending is that LESS THAN TEN PERCENT of this bill targets infrastructure projects. CNBC reports:
"INFRASTRUCTURE:
--Senate -- $46 billion for transportation projects, including $27 billion for highway and bridge construction and repair and $11.5 billion for mass transit and rail projects; $4.6 billion for the Army Corps of Engineers; $5 billion for public housing improvements; $6.4 billion for clean and drinking water projects.
--House -- $47 billion for transportation projects, including $27 billion for highway and bridge construction and repair and $12 billion for mass transit, including $7.5 billion to buy transit equipment such as buses; $31 billion to build and repair federal buildings and other public infrastructures; $12.4 billion in rail and mass transit projects." CNBC Analysis
Not even $50 billion out of nearly $800 billion will be spent on what they claim is the main goal of the stimulus package: infrastructure needs. The rest is for social programs, pork, and bailing out the states. Now THAT is nauseating.
Friday, February 6, 2009
One of Horhn's lil votes.
http://billstatus.ls.state.ms.us/2009/pdf/history/SB/SB3041.xml
And before you Horhn clones start filling up my inbox, I gave Crisler and Archie a hard time in the last few weeks so none of this why does the Kingfish hate Horhn stuff.
Women are BRUTAL!!!
Thursday, February 5, 2009
Linda Harmon Arrested.
Tennessean Story
Related Posts:
Harmon accused of stealing from bank accounts
Update on Harmon homel
Former Jackson Socialite on the run
How do local banks & mortgage companies compare on defaults?
If links dont' work, see note at bottom of post.
The implosion of Realty Mortgage led me to do some research on what the default rates are for local mortgage lenders (I know, I'm such a geek.). FHA's Neighborhood Watch publishes basic default data for lenders on its website. The main benchmark to watch is the "compare ratio". If a lender has a ratio of 100%, its ratio of defaults is in line with national norms. If its 200%, then it is double the national norms. Data is also available for default rates in the last two years and how many payments were made for each loan before the first 90-day delinquency.
An examination of Realty Mortgage discloses a few interesting facts. It has a compare ratio of 111%. The level of default's for RM's loans were slightly above other mortgage lenders on a national scale and much higher than most mortage lenders in the Jackson-metro area. Compare Ratio Link 133 of the 2,972 FHA mortgages underwritten by Realty Mortgage were listed as being 90 days or more late at least once.
Clicking on the "total in default" number displays a screen where one can examine the defaults on Realty's mortgages by city and state. Mississippi had the largest number of defaults (defaulat is defined as 90-day delinquency) as it provided RM with nearly half of its defaults. Several facts are very interesting and give lie to the often-repeated claims in the media that the foreclosure crisis is because of subprime mortgages, adustable mortgages, no income loans, and predatory lending. In this case, the mortgages are issued only after the income and assets are FULLY documented. Unless programs such as Mississippi Home Corp's bond money for down payment assistance are used, down payment of 3% is required. Mortgage insurance is cheaper.
Unfortunately, these factors still show several common characteristics. Most borrowers had interest rates below 7%. The majority of the borrowers did not make payments for the first year before they went into default. The zip codes with the most defaults were 39212 (Jackson) and 39272 (Byram). Rest of default data
Examining the other local banks and mortgage lenders reveals some interesting facts:
Trustmark. Trustmark has a compare ratio of only 23%. Trustmark's mortgage default at a rate more than 75% below the national standard on FHA mortgages as only 7 of 692 mortgages were listed in default. List of Trustmark defaults
Regions. The compare ratio for Regions was slightly above Trustmark's at 38%. List of Defaults. Very few in Mississippi
Community Bank. Compare ratio of 50%. 2 out of 92 mortgages were listed as defaults. List of defaults
Bancorp South. Compare ratio of.................16%. Amazing. Nearly 2,000 mortgages were undritten and only eight defaulted. Someone has a good underwriting department. None were in the Jackson area. List of defaults
Mortgage Consultants. Compare ratio of 31%. Only 1 out of 151 FHA mortgages were listed as a default.
Bankplus. Compare ratio of 26% with only 3 of 151 FHA loans listed as being in default.
Advantage Mortgage. 81% compare ratio.
Homefirst Mortgage. 0% compare ratio. Nuff said.
The Mortgage Connection. 11% compare ratio. 1 out of 126 FHA mortgages in default.
First Mississippi Capital. 306% compare ratio (The Champ). 14 of 129 FHA mortgages were in default at some point.
Cimarron Mortgage. Compare ratio of 178%. However, this is skewed as Cimarron had only one mortgage listed as being in default out of 13 FHA mortgages.
Advanced Mortgage. The OTHER Champ: 0% compare ratio. No defaults.
Most local mortgage companies and banks are doing much better than the national averages in terms of FHA defaults. What is interesting is the rates were low, the income was documented, down payments were usually required, yet most of the borrowers defaulting couldn't even make it one to two years past closing before they went 90 days late at least once.
Note: If links do not work, use this pathway:
https://entp.hud.gov/sfnw/public/ > enter name of lender> select lender from list>
Realty Mortgage no more.
This was a sad week in Jackson as local mortgage company Realty Mortgage shuttered its doors due to its credit lines being shut off by Bank of America. Realty operated in several states with over three hundred employees. Charlie Myers started the business from scratch, scrimping and saving as he and others saw Realty become the largest private mortgage company in Mississippi. (Anyone who has heard him tell the story of RM started and grew is saddened by the sudden change of fortune for Mr. Myers and his employees.)
Realty operated as a "correspondent lender". Such a lender underwrites and funds mortgages using its "warehouse line" (a huge line of credit it has with a financial institution). Lenders such as Realty are expected to clear the mortgages on their warehouse lines within a few days by selling them to institutions such as Citi, Wells Fargo, Chase, and others (No relationship is implied between RM and these banks.) If the lender can not sell the mortgages, then it has to service the loans themselves. The issuers of the warehouse lines also constantly monitor the performance of the line. Such issuers do not like loans to stay on the line too long and have been known to cut the line of credit either partially or completely as it felt their was too much risk if too many loans took too long to sell. With the current credit crunch, there are fewer avenues for lenders such as Realty to obtain the necessary credit, regardless of financial strength, they need to operate.
Realty deserves some credit for making their employees available to WLBT and allowing us to see the more personal side of this story. Its a testament to Realty that it did so and notified the employees in the manner it did. Other lenders in similar straits have not behaved as well as employees have come to work only to find the doors locked and the paychecks bouncing.
WLBT Story
Great discussion thread on how warehouse lines work in the mortgage business. Pages 6-7 are real good: Discussion thread
Wednesday, February 4, 2009
All talk and no action?
State Senator John Horhn, currently a candidate for Mayor of Jackson, brags he can get things done in the legislature and he'll be able to get additional money from the legislature for Jackson. How exactly did Senator Horhn do in the currentl legislative session?
http://billstatus.ls.state.ms.us/2009/pdf/senate_authors/horhn.xml
Every one of his bills died in committee.
Tuesday, February 3, 2009
Will the Obama stimulus plan blow up the economy?
I'm going to hammer on the point that the Fed's printing of more money and Obama's stimulus plan is going to wreck the market for Treasuries and implode the economy even more as interest rates will shoot up as prices plummet. The Wall Street Journal published a story by Peter Evans today about the reaction of the bond markets to what our government is doing:
The mother of all market battles is just getting started.
In one camp is the federal government, which needs to finance large fiscal deficits as the economy slows. In the other, bond investors who are expected to purchase the flood of Treasury debt.
In recent weeks, investors have staged a small revolt, pushing down the price of 10-year Treasurys to get higher yields. While the 10-year rallied Monday, its 2.72% yield remains far above December's low of 2.07%.
The long-term Treasury yield plays a central role in the economy, heavily influencing lending rates to private borrowers. Right now, the Federal Reserve is keen to keep rates low to stoke a recovery.
But the strategy could backfire. High government spending -- the Congressional Budget Office expects the federal deficit to hit 8.3% of GDP this year -- and a fear of longer-term inflation engendered by the Fed's ultraloose monetary policy could spook Treasury investors.
Granted, for a while, the government can count on some level of market acquiescence.
First, headline consumer prices are likely to fall, with Merrill Lynch predicting 3.2% annual deflation by July. This pushes up "real" yields.
Second, even as Treasury issuance ramps up, it could be soaked up by segments of the market, such as households, wanting to increase their Treasury holdings from low levels. Drew Matus, U.S. economist at Merrill, says that, in 1990, $300 billion of households' $14 trillion in financial assets were in Treasurys. Of the $45 trillion they hold today, less than $100 billion are in Treasurys, leaving plenty of room for growth as nervous individuals get thrifty.
Perhaps the strongest near-term reason why Treasury yields might stay under control is that the Fed might step in and buy the bonds.
Last week, it said it would do so if it felt that would be "particularly effective in improving conditions in private credit markets."
But it is exactly that sort of policy that could freak bond investors over time.
If the Fed buys Treasurys with freshly printed money and starts to rekindle economic growth, it raises the risk of inflation -- the No. 1 enemy for fixed-income investors.
In essence, then, the bond market has to trust that the Fed can, and will, apply the brakes at just the right time -- a skill the central bank hasn't mastered in recent years.
"The market should be pricing in the risk that current fiscal and monetary policies will cause inflation down the road," says Michael Pond, strategist at Barclays Capital, which expects a 4.1% yield on the 10-year at the end of the year.
If the Treasury isn't careful, the current skirmish with investors could yet turn into a rout."
See the dilemma the Fed is in? One one side it is trying to keep interest rates low so as to stimulate private borrowing. On the other side it is printing more money because of poorly-thought out stimulus plans (keep in mind the Fed created over two TRILLION dollars in new money last year). It will be difficult if not almost impossible for the Fed to do both as investors will demand higher yields for Treasuries as they become worth less due to more spending (thank you Bush, Paulson, Bernanke, and Obama). If something doesn't change, a train wreck is coming.
The Kingfish will be on Fox 40 tonight.
Won't say what for but I CAN say you are going to die laughing when you see it. Enjoy.
Click Here to Read More..
Monday, February 2, 2009
FOOD FIGHT!!!
http://www.redstate.com/blackhedd/2009/02/02/bond-market-confusion/#comments
http://market-ticker.org/archives/764-Idiocracy,-Part-Deux-for-Today.html
Sunday, February 1, 2009
Hatin' on the Boss
Before you start hatin' on the Boss too much after his performance tonight at the Super Bowl, here are two clips showing how good he used to be. Enjoy.
Some people don't get it.
Little post from Tigerdroppings.com. Some people need a reality check.
"Backdrop: She's 63, her exhusband is 43. They divorced within the last year and their home is up for sale. This is not funny, I truly feel for this woman.
Had this conversation today:
She: I hope this house sells soon because I have to start making the payments come March 15th.
She: Well I think we might have a buyer. There's one couple, older, who likes the house and the neighborhood, but the husband likes another one better.
Me: Well, xxxxxx, I would run at the first offer you get. How much do you owe?
She: We owe $120k on it. It's listed at $254k, but I don't want to take less than $245k.
Me: Xxxxxx, why don't you drop it to $205k and get out from under it? You know pricing is going down for the next 6-8 months.
She: Oh, I want to hold out for much more than that. And after all, I do have a custom, walk-in pantry and a very open floor plan and....... (voice trails off as I turn my focus to the birds and critters and other sounds of impending spring...)
She continued on with our neighborhood is $120 / sf and the other house is $140 / sf and her is... blah blah blah.
Now keep in mind, that just yesterday I had a visit from 2 foreclosure investors and a RE agent because my house got inadvertently listed for sheriffs sale. You can buy BRAND SPANKING NEW in the ritsiest northshore neighborhoods right now for $120 / sf and that's headed to $100 if it's not there already.
I gave my best, "good luck", hopped in my truck and headed for work."
Market Ticker: Obama's plan wrecking the economy.
Karl Denninger writes a good post in the Ticker on how Obama's stimulus plan will stimulate interest rates and wreck the economy. Many people get so caught up in the liberal v. conservative or tax cuts v. increased spending debates they forget how the markets work:
"There is nothing "unstable" about any of this. Rates are going higher. Why? Gee, let's see, Obama says he's going to blow $1 trillion on a "stimulus" package, the other $350 billion of the TARP was released, the GAO says we're going to run well north of a Trillion in deficits, and people are wondering why the bond market expects the government to pay up in higher interest rates for the right to borrow more than 10% (and that's almost certainly a LOW estimate) of the total outstanding debt in one freaking year after having added 16% in the last one?
You're kidding, right? America is acting like a subprime credit-card customer who has decided to go nuts in the local "bigbox" electronics retailer, and the market is (appropriately) reacting to that by repricing RISK.......
The market determines all interest rates. ........
Treasury prints Ts to finance its operations but the guy who buys them is the guy who prints the money in exchange. Therefore every additional Treasury sale is no longer a debt sale, it is an act of printing money by the Central Bank and destroys the standard of living of everyone in The United States......" Read the rest of the Ticker. Its a good one.
For those of you who didn't get that or happen to be journalists, here is the plain-English version: the only way Obama can finance his increased spending is to issue more treasuries. The problem is, as they become worth less money because there are many more of them, the markets are going to quit buying them unless their yields increase (The relationship of bonds to yields is as the price of the bond falls, the yield or interest rate on them increases.) This will in turn force mortgage rates to increase as the interest rate on a mortgage is dependent on the 10-year treasury bond. Credit cards and other forms of lending will see their corresponding interest rates increase as well, further contracting consumer demand and thus damaging the economy some more.
Some members of Obama's economic team know this but Geithner was the person at the Fed who designed these bailouts that have wrecked the markets and caused the debt to skyrocket. Consequently it is probably unreasonable to expect Obama to deviate from his strategy of massive amounts of spending as Geithner will tell Obama provide Obama with economics he claims will make his plans work. In the minds of ivory-tower academics like Bernanke and Geithner, their plans are always perfect, its the execution of them by others that is always at fault (Notice how Krugman never mentions this in his missives to Obama that he is needs to increase spending much more than he plans.). Obama can stimulate away with is massive spending stimulus package and stimulate the debt as well but the market is going to stimulate the interest rates as the price of treasuries is stimulated all the way to zero. Click Here to Read More..
