Marc's Mortgage Matter's

Forrest Gump Explains Mortgage Backed Securities

Mortgage Backed Securities are like boxes of chocolates. Criminals on Wall Street stole a few chocolates from the boxes and replaced them with turds. Their criminal buddies at Standard & Poor rated these boxes AAA Investment Grade chocolates. These boxes were then sold all over the world to investors. Eventually somebody bites into a turd and discovers the crime. Suddenly nobody trusts American chocolates anymore worldwide.
Hank Paulson now wants the American taxpayers to buy up and hold all these boxes of turd-infested chocolates for $700 billion dollars until the market for turds returns to normal. Meanwhile, Hank's buddies, the Wall Street criminals who stole all the good chocolates, are not being investigated, arrested, or indicted.
Mama always said, "Sniff the chocolates first, Forrest, sniff the chocolates first.”

There is an e-mail making the rounds saying that, “It would be better to give cash or a present than a gift card this year. Stores across America are being scheduled to close after the Christmas season due to economic difficulties and bankruptcy, which would render most cards useless.” This is sobering: Circuit City closing 155 stores nationwide. Ann Taylor is closing 117 stores nationwide. Eddie Bauer has already closed 27 shops in the first quarter and plans to close up to two more outlet stores by the end of the year. Women's retailer Cache announced that it is closing 20 to 23 stores this year. Lane Bryant, Fashion Bug, and Catherine’s are closing 150 stores nationwide. Talbots & J. Jill will be shuttering all 78 of its kids and men's stores, plus another 22 underperforming stores. The Gap Inc. is closing 85 stores. Foot Locker is closing 140 stores. Wickes Furniture is going out of business. Levitz/BOMBAY is closed. The owner of Zales & Piercing Pagoda is closing 105 outlets. The Disney Store may close up to 98 stores. Home Depot is shutting down 15 core retail stores. Macy's is closing 9 stores. Video rental company The Movie Gallery is eliminating 160 stores. Gone are 33 Pep Boys stores. Sprint Nextel 125 retail locations. Ethan Allen Interiors is closing 12 stores, and Wilson Leather is closing all 260 mall stores. Pacific Sunwear will close its 154 Demo stores. The Sharper Image is in bankruptcy and 90 of its 184 stores are closing. KB Toys posted a list of 356 stores that it is closing around the United States as part of its bankruptcy reorganization. Dillard’s Inc. is shutting down 6 more stores. Starbucks: Starbucks will close approximately 600 company- operated stores in the U.S. Kirklands home décor will be closing nearly 130 stores nationwide. Linens 'n Things is closing 120 stores. Dell Inc. closed its 140 kiosks in the United States , and Liz Claiborne Inc. said it's closing the entire 54-store Sigrid Olsen chain. Lone Star Steak House is shutting 27 stores, Rite Aid 28 stores, and Big Dollar is closing 10 establishments.

Everyone is waiting to see what Barack Obama has got planned. We already know his economic plan. It's designed to help small businesses that make under $250,000 a year.................Like General Motors and Chrysler.

These are exciting times! This story just came across the news wires:

*SOMALIAN PIRATES APPLY TO BECOME MORTGAGE LENDERS IN HAWAII

*KASHKARI SAYS `SOMALI PIRATES ARE 'FUNDAMENTALLY SOUND'

*MOODY'S UPGRADE SOMALI PIRATES TO AAA

*SOMALI PIRATES IN DISCUSSION TO ACQUIRE CITIBANK

*FED OFFICIALS: AGGRESSIVE EASING WOULD CUT SOMALI PIRATE RISK

*FED AGREED OCT. 29 TO TAKE `WHATEVER STEPS' NEEDED FOR SOMALI PIRATES



Speaking of foreign things, crude oil hit its lowest level since May 2005, hitting $50/barrel. And apparently $2/gallon gas is popping up in various parts of the US . Oil has fallen $100 per barrel from its July record as the world economic crisis reduced global demand growth to its weakest in 23 years. This is exciting news for anyone with a car or a heating bill, not such good news for those hoping for widespread public support for alternative energy sources.

Seems the malls are quiet as is internet shopping. Best bet is sales and price cut finds. Good time to look closely at your credit card debt. Try to hold back and just buy the urgent needs. If you do need to shop of course, like Holiday needs keep looking for deep discounts. They are all over the place. Found something? Ask for a better price. My best bets are Walmart, and Century 21 Dept. stores.

How would you like to process and underwrite loans in Israel ? Their Minister of Development recently said that, “…low mortgage rates will help residents of the Qassam-ridden region afford to fortify their own homes in lieu of government funding.” In lieu of sufficient government funding toward the expansion of the fortification works, the Minister of Development “suggested offering the residents of the Qassam–ridden region low mortgage rates so they will be able to afford to fortify their own homes in light of the renewed rocket attacks on Israel 's southern region.” The proposal came after some objected to a request for an additional $132 million toward the outright construction of secure rooms in some 8,000 Gaza-vicinity housing units. Nice to live in the US …

Freddie & Fannie’s regulator unveiled a plan that could cut payments for hundreds of thousands of struggling homeowners to help reverse defaults. Homeowners facing foreclosure who are spending more than 38 percent of their income on mortgage payments could have monthly payments reduced by Fannie Mae and Freddie Mac in an effort to keep their homes. Since it is generally believed that mortgage defaults are at the root of the global credit crisis and the recession here in the US , steps like this are important to “put a floor under the housing market” and are a prerequisite to recovery. Companies like Indymac, Chase and BofA are halted foreclosures, but since Fannie Mae and Freddie Mac own or insure 31 million mortgages (58% of SFH’s), this is big news. Eligible homeowners must first be contacted (I don’t know all the exact criteria, although one is that borrowers need to be delinquent 90 days or more to qualify) and could see their mortgage rates cut, the life of their loans extended or their principal reduced in an effort to ease payments.

It will instruct servicers to change the terms of the loan so that the monthly payment (including principal, interest, taxes and insurance) would be lowered to 38% of the borrower’s income (income must be documented). This would be done in up to three steps: 1) the term of the loan would be stretched to 40 years. If the monthly payment is still too high relative to income, then 2) the interest rate would be reduced to as low as 3%. Finally, if the implied monthly payment were still greater than 38% of the borrower’s income, 3) forbearance could be provided on loan principal down to the current appraised value of the property. (However, the reduced principal would not be written off entirely, but instead would be payable as a balloon payment at sale or maturity of the loan.) Not an easy fix and only for those truly in dire straits it seems!

What Barack Obama has done is remove from every Jewish person, and indeed every member of any ethnic minority, the excuse that they cannot succeed because of prejudice. He has removed all excuses that they failed for any reason other than their own lack of exertion. That statement was emailed to me by a friend yesterday and I agree. Hopefully we will indeed see change.

The world's largest dealer of Lamborghini’s, Lamborghini Orange County in California , has shut down. Apparently 2,400 of them are made each year, and LOC sold only 10% of them. Lamborghini's separate sales company in the United States says the dealer closed because of its own mistakes, however, and not the economy. Right!

Following the problems in the financial sector in the U.S., uncertainty has now hit Japan.

In the last 7 days, Origami Bank has folded, Sumo Bank has gone belly up and Bonsai Bank announced plans to cut some of its branches. Yesterday, it was announced that Karaoke Bank is up for sale and will likely go for a song, while today shares in Kamikaze Bank were suspended after they nose-dived. In the meantime, Samurai Bank is soldiering on following sharp cutbacks, Ninja Bank is reported to have taken a surprise hit, but they remain in the black. Furthermore, 500 staff at Karate Bank got the chop and analysts report that there is something fishy going on at Sushi Bank where it is feared that staff may get a raw deal. Oh yes, and the Karma Sutra Bank is, well, never mind…