I saw this T-Shirt the other day:

I think this guy Roy might have been the originator. Man, I haven’t laughed that hard in a long time. That is definitely BofA’s whole existence wrapped up in a logo. By the way, if you are a homeowner with a BofA loan that is getting jerked around in a loan modification or short sale, this is the person to email:  barbara.j.desoer@bankofamerica.com You will get a response from an executive level negotiator within 2 days… probably an answer on your loan mod or short sale within 2 weeks.

With this lovely logo from BofA, I thought about all the fun logos I could make with Fannie Mae’s logo. 

You have Fannie Mae’s Housing Bubble Logo:

And for the folks who have been foreclosed on by Fannie Mae you have:

But my real outrage right now against Fannie Mae is not about irresponsible lending or their resistance to saving homes from foreclosure, both of which they’re guilty of. It’s about how they sell their tens of thousands of REO’s across the country. First, it’s important to remember that Fannie Mae is owned by your Federal Government. Yes, the same Federal Government that is supposed to do things like promote the general welfare and secure the blessings of liberty. In fact, its the same Federal Government that did consumer friendly things like sue the NAR so agents could share more real estate data online. So, needless to say, I was shocked when I read through Fannie Mae’s contract that they force feed down Buyer’s throats when they want to purchase one of their properties. To be honest, it makes a Centaur of Bernie Madoff and Ken Lay look more consumer friendly.  

Here is the whole meal deal of the contract: Fannie Mae REO Contract

but, here are the cliff notes:

• First, there is all the standard REO stuff. “We don’t warrant anything, we don’t disclose anything, we don’t know anything.” This stuff is the same with every bank and has come to be expected.
• But in addition to that, there are all sorts of other terrible things to kill the human spirit. Things so bad, that BofA doesn’t even put them in their contract. Things like:
  • The Buyer has to pay all of Fannie Mae’s closing costs. They sneak that in item 10 paragraph b. In WA state, that costs my Buyers about $2K in extra fees. I hear it would cost them even more in other states.
  • The Buyer cannot sue Fannie Mae for Specific Performance. I’m no attorney, but the way I read this is that Fannie Mae can basically break the contract at any time, sell the home to someone else, and there is not a thing the Buyer can do about it.
  • If you don’t close on time, you lose your earnest money - period. In other words, if your lender doesn’t get the loan done on time, even if this is a preferred lender of Fannie Mae, the deal is dead and you’re out 2% of the purchase price.
  • If there’s back utility bills on the property, they’re all yours. Fannie Mae doesn’t pay them off (at least they don’t agree to it in writing).
  • They might not sign your contract till closing. In other words, Fannie Mae wants you to pay $450 for an inspection, $500 for an appraisal, $150 for a resale certificate, and any other upfront fees, with no guarantee they’ll actually sign the contract. You’re just supposed to take their verbal word that they’re good for it. The only problem is that paragraph 29 says that their verbal word is no good.

These tactics are something that I’ve come to expect from the likes of BofA, Chase, and the rest of the folks that get called into Obama’s office every other week for a scolding…. but perhaps before the Government gets too ambitious in scolding private entities, they should start by cleaning their own house. I’ve made a logo for that too:

Check this out! The White House has a Zestimate. It is valued at $310,228,000.

Here is the nearest Comp. Its a bit of a “down-size.”

I suppose if things get too bad we could always get a 95% LTV Cash Out Refinance on it, bundle it with the Washington Monument and Statue of Liberty, and sell it to the Chinese as a Mortgage Backed Security.  Well, then again, maybe the Chinese wouldn’t buy it anymore.

I dare you to give it your own estimate.

Visit msnbc.com for Breaking News, World News, and News about the Economy

After listening to this NPR story this morning, it once again reminded me about the importance of simplicity, trust, and doing business locally. While ”Prime” mortgages (the best of the best) have a default rate of around 2.7%, and sub-prime loans can have a default rate nearing 20%, the default rate on Amish mortgages is 0%. That’s right, this agrarian community with no electricity, let alone FICO scores, has the lowest credit risk in the entire country. Bill O’Brien of Hometowne Heritage Bank is a loan officer to the Amish:

“We’ve never lost any money on an Amish deal,” he says. “So, I’ll stretch my neck more for with them than maybe I will somewhere else.”

That’s right,  Hometowne Heritage has loaned out a $100 Million in mortgages to people with no W2’s and no credit history simply on their good word. Here’s how O’brien vets his Amish customers:

“I’ll find out who his dad was,” he says. “I’m also interested in who his wife’s father was. It takes a team to make a farm go.”

This incredible phenomenon got me thinking about another story I read recently in the Wall Street Journal where it was reported that one of the lowest default rates on sub-prime mortgages is with illegal immigrants:

Less than 5% of Bank of Bartlett’s ITIN loans are delinquent. Nationally, for loans more than 90 days in arrears, ITIN mortgages had a delinquency rate of about 0.5% last year, compared with 9.3% for subprime mortgages, according to independent estimates.

So, why are these two unlikely demographics the safest people to lend money too? I think it has to do with a few things:

• Family support.  Amish and immigrant families tend to have strong bonds. When a person gets in trouble, another steps in to help. If someone can’t pay the bills that month, a brother or uncle will help.
• Shame.  And I mean this is a good way. Many cultures are so ashamed not to pay a bill on time that they will do anything necessary to prevent it from happening. Americans used to be this way too. However, in recent times we have become so greedy, so laden with debt, and so nonchalant about our finances, bankruptcy or foreclosure has become just another blip on the radar screen of life.
• A Heritage of Discipline and Saving.  Many immigrant and Amish families have worked long hours and saved many years with the dream of owning a home. So, when they come to a point where they are able to afford that home, they treat it as a treasure - literally a dream home. During the Boom, most Americans could buy a house with no savings, no down payment, and in some cases, no job. Unfortunately, this crisis has taught us that people who obtain things easily will also let go of them easily.
• A sense of loyalty to the lender.  For the Amish, their loan isn’t securitized and sold on the secondary mortgage market (homes without electricity can’t be securitized). Rather, it’s kept by Hometowne Heritage Bank in Lancaster County, Pennsylvania. The Amish know that if they default on a loan that it affects their lender and the people in their community directly.

So in the end, maybe its not the credit score or the income verification that even matters. After all, most of the Amish and Immigrant loans were NINA loans (not because they didn’t have income, but because they didn’t have traditional income). Maybe it really comes down to just the character of the person. Which makes me wonder: What if local lenders started loaning again to local people with local money?  Could we avoid another sub-prime crisis?

Interesting: After a shooting at West Nickel Mines School in Lancaster County in which 5 school age girls were killed, the families of the victims responded by forgiving the family.  Many Amish visited with the killers widow and parents, one holding the killer’s father in his arms for an hour. The Amish even set up a charitable fund for the killer’s family - all of whom were not Amish.

Creative marketing or over the top?

….in preparation for this:                      

Its kind of hard to see, but my email and phone number are on every listing detail page on Redfin.com this weekend. Say a prayer for my sanity.

On Monday Redfin laid off 20% of its employees. I watched friends walk out the front door of our office.

I was humbled.

I talked to 3 or 4 of the people who were laid off. There was no bitterness - no hatred - but grace. They helped their successor with their newly acquired transaction. They called clients to let them know that it was a pleasure to work with them, but they had to transfer their transaction to someone else. They acted with the utmost class….

Few people would have acted this way. On Monday I was devastated - but on Monday, it became clear to me the Redfin would succeed -not necessarily because of the people still at the company (who are amazing in their own right), but because of those who departed from the company.

To those who have left - tomorrow will be lonely without you.

—-

“When written in Chinese, the word ‘crisis’ is composed of two characters–one represents danger, and the other represents opportunity.” ~ JFK

Inspiring.

As if this wasn’t enough. Countrywide has now found out that some schmuck employee of theirs has downloaded around 2,000,000 of their customer’s personal files containing financial info, SS #’s,  and addresses. They then sold it at below black market value.

Check out the letter I got in the mail from Countrywide (Click on Letter to Read):  

On a positive note, Lisa, a supervisor at Countrywide, told me that they would accept requests for payment for time spent cancelling accounts, monitoring credit, creating fraud alerts, etc. You can fax or mail your request for compensation to the hand written address and fax # I wrote at the bottom of the letter.

Bonus: I bought WaMu (WM) stock at $1.89 and Comstock Homebuilders (CHCI) stock at .44 this week. Stupid or Smart?