Mike Mueller, Social Media.ist

You may have heard reference to the "Credit Window".
You haven't? You will soon because it's closing!

Don't worry, it won't close all the way, just part way.

Maybe a little explanation is in order.

The term refers to the availability and ease of granting credit.
You've read the headlines and heard of the Sub Prime Meltdown.

That is in a large part to having the window too wide open.

Flash back to just last year,

In a land far, far away...

• Those heart beat buyers tend to default on their loans and then the lenders start going under,

• Which drags down the Wall Street money guys,

• Which then wakes up Wally, the old man in the back room who's job is to open and shuts the window.

Ok, there is no "Wally" - he's a metaphor for the Free Market Economy and the forces driving it.
And there is no Mortgage Land either. But it did help paint the picture right?

The moral of the story is this:
The availability of credit (the power to borrow) is changing daily.
What was approved yesterday - may be denied today.

Rates and terms aside, here's an actual example of how the window is closing.
From an email I received today, 3/30/2007 from a Lender,

Full Doc:
CLTV 90.01 - 95%: minimum FICO is now 660 *

* That translates to if you have a FICO score of at least 660, AND you are able to go FULL DOC we may be able to get you a combo loan of up to 95%, but that means all your ducks better be in a row, all your T's better be crossed, and the sun better be shining on you that particular day. You'll also need to bring 5% of your own bucks to the table or all bets are off.

And now from an email I received a year ago on 3/31/2006, also from a Lender,

Stated Income:
100% LTV with scores as low as 580 *

* Loosely translates to "If you can fog a mirror, you can have a loan!" This is stated income documentation, one loan, and all with the score of someone who doesn't like to pay bills.

Can you see how the window is closing?

I know there's a big party in Oakland tonight!
It's the 50th birthday bash of the Oakland Chapter of the Hells Angels!

I know where the party is -
Foothill Blvd and 40th Avenue in Oakland.
I can bring my bike. I can bring my leathers too.  
But as a sport tourer, I may just seem a little out of place.

That, and I can't seem to find my invitation.

Oh well, Happy Birthday Guys and Gals!

Let me take you back to the 70's...

1977 to be specific.
I had just graduated from Las Lomas High School in Walnut Creek, CA.

It was a hot dry summer but more importantly I remember they called it a drought.
Technically a drought is more than one year. A single year is called a "dry spell".

This was a drought because it was the second in a row of unusually low rainfall in the winter, low snow pack runoff, and low reservoirs.

Although I was a pimply faced teenager back then, I distinctly remember people pulling up their vast lawns and planting native plants and shrubs.

Maybe because at that time I saw plants and shrubs as having absolutely no use to a teenager.

Golf courses watered only the putting greens, letting the rest of the grounds go dead.

I heard of something called Ice Blocking that some kids used to do at the local golf course as well that like the grass dried up but that shall go unmentioned.

Many houses didn't even replant. They just let their lawns go dry.

That brings me to DROUGHT 2007!

Sensationalism aside, I just heard the Santa Cruz area residents will have to abide to new regulations on mandatory water conservation.
There will be NO watering during the daylight hours!

I know that's not a big thing, but it's a start and it made the headlines.
Now that I am older, visioning back to those days in the late 70's of vast lawns of drab brownness, or whole yards and neighborhoods replanted with shrubs, how would a big drought today effect us today?

There are some very significant changes since the drought in 1977.
Almost everyone has drought resistant plants.
We have much fewer square feet of lawns.
Watering is usually done via an automatic sprinkler system that can turn on at any point in the day.
Over watering has been replaced by drip irrigation.
But I can't help but think how a severe drought would effect the housing market here in the bay area.

What do you think?

I just read a story in my local paper.

The local police here are warning Realtors about a registered sex offender. They say he hasn't yet done anything wrong but they are concerned.

Why?

Because this Bad Guy has been posing as a home buyer and visiting real estate offices and open houses.

But "Hey", you say, "This is America and all people are free to pursue the American Dream - right?"
That's not so bad right?

Well, let's see...

• He's also been found poking around the back of a real estate office unescorted. He probably came in through a Employee Only door.
• He's asked Realtors to recite scriptures to him.
• He's told Realtors that "God has chosen you to be my Realtor." How spooky is that?
  
• He's asked Realtors to see their personal homes.
• He told an agent that she was beautiful and that beauty is a sin.

I had to laugh as I sent out an email to wholesale reps this morning describing a difficult loan I was working on.

I laugh because of the H.D.C. (High Density Conversations) we use in the business.







Here's my scenario:

• Purchase, SFR, $1.9 Million, 63% LTV,
• SIVA, 1099, or possibly No Ratio,
• Assets sourced not seasoned,
• 615 Middle
• Prior NOD on 10/02.
• 1x60 9/02, 5x30 10/02, 8/02, 2/02, 9/01, and 8/01
• Sold and rented since.
• VOD, VOR, and LOE ready.
• Loan Contingency 3/30
• COE 4/18
• Need 2/28 or 3/27 with 2 or 3 yr PP

How's that for HIGH DENSITY conversation?
Did you get it all?

My wholesale reps did, we'll have our approval later today! 

Not Fished, but Phished.

I warned about this a while ago when a friend of mine was caught by a Phishing scam as he was selling something on eBay.  http://activerain.com/blogsview/48462/Ebay-Scam-Beware-Phishing

I warned that if they are scamming the sellers - just wait, they'll be scamming the buyers next.

And what do you know, this just popped up in my email! (click on the image to make it bigger)

You may notice that it looks just like an eBay email might.  
The first thing I noticed was the TO: address (undisclosed-recipients)
It also has eBay listed in many of the links (bottom of my screen) but those are all redirects.
They put the name in there to fool you.
DO NOT CLICK ON ANY HYPER LINKS

(click on the image to make it bigger)

I haven't bought or bid on anything in eBay in months.

I don't know who CoconutCabana007 is and quite frankly I don't want to know.
So what did I do?
I went directly to eBay (as in typed it into my browser letter by letter)
Remember: DO NOT CLICK ON ANY HYPER LINKS

My eBay account shows I don't have an issue.

Phishing is a scam.

The first rule of Phishing is that they want to appear familiar to you.  

No Matter how familiar  an email looks to you DO NOT CLICK ON ANY HYPER LINKS

Phishing is the bad guys way of getting you to provide your private information.Beware of anything coming from your bank, any bank,  PayPal, eBay, or even Active Rain that is unsolicited.

Once I knew it was a Phishing Incident (spoof) - I forwarded it to eBay.  
They don't like this stuff.  It gives them a bad name.  They'll go after them.  Here's their email address to report any sneaky stuff you come across.
spoof@ebay.com

So now I have to ask the question...

After all you just learned, did you click on that image to make it bigger?

Be careful out there!

Good News Walnut Creek!

I had reported that they had to sadly close their doors along with Sunrise Bakery due to a dispute between the landlord and PG&E. (original story)

Pinky's Pizza is back in business. 

The Power has been turned back on and they are open and functioning.  Tomorrow night is Motorcycle Night so I'll get the full details from Tom then.

In the meantime you can order by phone (925) 932-2728 or just walk in!

By the way, Tom has two web cams running. 

• One sits over the big screen TV LINK
• The other sits right on top of the cash register LINK
  
• Here's the web cam page: LINK
  

Remember to smile when your there!

Welcome back Tom!

+ + = ?

When we say the Fed's, we're talking about the FOMC.

That stands for the Federal Open Market Committee.
Sometimes they'll be called the Federal Reserve Board.
And then sometimes they are called other words to nasty to print here.

No matter what you call them they quietly go about their business.
They meet behind closed doors, they do very little interviews, and the twelve member board generally speaks through one voice, that of it's Chariman, Ben Bernanke.

With all this lack of fanfare and sensationalism, the entire business world watches and waits on their every move.

Let's put it this way,...
Take Britney Spears, Lindsay Lohan, Jennifer Aniston, Jessica Simpson, Angelina and Brad, Tom Cruise and his woman, end every other one not named here but had their picture on one of the grocery lines trash mag covers over the last year. Add everyone who didn't make the cover but had a picture on the inside.

Heck, just for good measure we'll even throw in Madonna!
Now let's roll them all into one person - and call that The Fed.

Now take everyone who watches Wall Street, everyone who works on Wall Street, everyone who invests in Stocks, Bonds, Mutual funds. Everyone who runs a company or has a part in running a company. Every business student, every business teacher, every business writer, every business reporter, every business watcher and reader. Add all pension and retirement watchers. Add every bank VP. Add just about every person in the world who is mindful of the business world and what goes into it.
Round them all up (picture the Verizon commercials with the mass of people lined up).
All these people are The Paparazzi.

They follow the Lindsay's, and Britney's everywhere they go.
They listen to everything they say.
By the time Jessica sneezes, the head office already has the report.
These people are ruthless in finding out what the Fed thinks, what the Fed's might do next.

Is that a good analogy?

And yet with all this hoopla, the Fed's really do just one little thing.
They set the Fed Funds Rate - that's the rate in which the Feds lend money to the big institutions.

Now just like, "Why Britney shaved her head", there's much more to the story than just that.
The Fed Funds Rate influences the Discount Rate which influences the Prime Rate, which influences the private school that K-Fed's kid is going to enroll in.  (I was just kidding about that last part)

But the Prime Rate effects you and me.
It's what our Home Equity Loan is tied to.
It's what our small balance commercial loan is tied to.
It's the loadstar of short term rates.

Do we need to become Paparaza of the Fed's?
No.
But we do need to mindful of what they are thinking and doing.
They'll be announcing today (11:15 AM Pacific Time) one of three things:

1. That they either have lowered rates,
   
2. They have raised rates or,
3. They have left rates the same.
   

The mindful people think they'll keep them the same, this time around.
Personally, I like this kind of stuff far better than reading the tabloids!

BTW: Did you get the connection of three pictures? 

I attended our local Realtor marketing meeting this morning. (CCRIM)

33 homes on the Caravan Tour, split into three different tours. They, the agents, are all viewing the houses now.

I'm back at the office.
(I only do financing, and strongly believe in doing one thing and doing it well)

But I was struck by an equal if not higher amount of price reduction announcements in the meeting. Picture 30+ agents, one after one, stepping up the microphone to announce price reductions. Some were admittedly happy that their sellers "had finally come to their senses", while others were almost pleading for someone to find a buyer before the listing contract expires.

As the general public, you may not realize it but there is a dynamic conflict between the "correct" list pricing and winning the listing agreement. The decision on who you choose to represent your house for sale oftentimes comes down to which Agent promises they can get you the most Dollars.

While shopping for anything is a good thing - there are some things it's very hard to legitimately shop for. Listing Agents and Mortgages are naturally the first two things that come to mind.

List your home blindly with the Agent who says they can get the most money for you and you'll also see your home languish on the market for the most amount of days. There is so much more to listing than your net.

Case in Point:

There are two comparable homes near me that went up for sale in the last couple of months.
One listed and sold in a matter of days.
It listed almost $40,000 less than the other one.
It was listed with a long time, seasoned, professional Agent.

The other one was listed by a smaller, newer Agent who promised much more in net proceeds.
3 Price reductions and almost 4 months later, they've now lowered themselves down to the price of the other house, but because it's languished so many days on the market it's hard to generate much interest in other Agents to show the house. It's still not sold. Meanwhile the sold house closed escrow on time and the new occupants are already settled in.

So which pricing model is right?

I'll say the same thing goes for Mortgages.
Try and shop by rates and fees and you will lose every time.

BTW: here are two important links to see homes either on broker tour in the area, or open this weekend in your area.
First is from the Contra Costa Realtors in Motion (CCRIM) site and shows this weeks caravan tour: LINK
The second is a great listing of all the open homes this weekend in your area: LINK