Phil Grossfield's Blog

A LITTLE EXTRA…

Monthly Archives: July 2012

Big Week in Markets! Olympics – Bucket List Contest

My Schedule…and A Little Extra:  I love the Olympics.  If you’ve ever read my posts about American Idol, it’s a similar feeling for me…I love to watch people’s dreams come true.  But unlike American Idol, whose dreams often start from flipping burgers to an audition, the Olympians train their whole lives for this one moment.  It’s much more stressful and wonderful to watch.  I’m trying to get my kids into it…as long as I record the 5-hour show and fast forward to the good stuff it seems to be working.  My daughter wants to sign up for gymnastics all of a sudden…imagine that?!  |||  Michael Phelps came in fourth place…he’s never not medaled, right?  I saw an interview with him after the race and he seemed utterly confused, like he was in a dream, or rather a nightmare.  I’ve seen other interviews with him as well and he just doesn’t seem like he’s into it this time.  I heard he hasn’t trained as long as usual.  Very odd to me…the guys whole world is racing and it seems he’s not even present…like he’s distracted by something.  I bet when this is all over some story will come of it, something we don’t know.

My Mystery Lyric:  You’d think that people would have had enough of silly love songs — But I look around me and I see it isn’t so — Some people wanna fill the world with silly love songs — And what’s wrong with that?  I’d like to know, ’cause here I go…again!  Answer

My Market Watch:  Bonds bounced back this morning and rates look good.  This is a big week for the market.  First, there are two humongous meetings this week for Central Banks…the European Central Bank and ours at home in America.  Then on Friday is the big Jobs Report.  Although the Central Bank meetings could affect the markets drastically, the Jobs Report is one of those consistent market-movers you can rely upon to get the attention of all the investors.  I’ll be watching it all week, but suffice it to say the report usually has the traders ready to pull the trigger…which gun they fire is the question.  Everything depends on expectations building up over the next four days on what the report will indicate.  If traders feel the report will indicate economic weakness, then they’ll be trading all week with that in mind.  So, when the numbers are finally released on Friday, the big question is how different from expectations are the numbers?  You dig it?    Disclaimer

My Schedule: Available all day…working on month-end issues….


BUCKET-LIST CONTEST:   What’s on Your Life’s Bucket-List?  How about a $5,000 vacation to make your bucket-list wish come true from Hilton Garden Inn around the globe?!  Watch the video…its awesome and enter the contest at my wife’s TravelMamas website!


UPDATED DAILY:

Guideline Guidance to get a clean underwriting decision resulting in happiness and adulation, or, you could Ignore This and find yourself with a long list of conditions, a huge hassle, and massive frustration

My Procedures are updated daily – check it out…

BONDS DETERIORATING!

BONDS DETERIORATING!

A mid-day rate change is likely considering where the market is at this time!

The Fannie Mae bond just dropped 38bps.  This is usually enough to trigger a mid-day rate change for the worse by Interbank.  If you’re rate sensitive, this is a scary thing to see happen.  Please do your own research in deciding what to do…my email is only a courtesy.  Disclaimer

 


BUCKET-LIST CONTEST! Commentary of Comp Plans

BUCKET-LIST CONTEST:   What’s on Your Life’s Bucket-List?  How about a $5,000 vacation to make your bucket-list wish come true from Hilton Garden Inn around the globe?!  Watch the video…its awesome and enter the contest at my wife’s TravelMamas website!


My Schedule…and A Little Extra:
 Would further comp plan changes be so bad?  My post from yesterday regarding Franklin American’s changes and the CFPB spurred quite a bit of commentary…here are a few selections:

  • “Phil, I tend to find that every time something like this rolls out we do BETTER. Last year, we traded a “what can we get” model with one of consistency. I find that it is a lot easier to manage the business and earn more money when things are consistent. More often, it was us giving concessions to the consumer, not gauging. So long as they don’t roll out a low number making it difficult to profit with a moderate number of loans we’ll still have flexibility.  Secondly, if wholesale rolls in at 2.25 flat, do you know what retail margins would be? At least 0.5 point higher in my opinion.  Finally, for every one FAMC there are 50 lenders who see it differently.” Mike from Laguna Hills.
  • “Phil, it would give the banks a huge edge if we couldn’t have borrower paid.  They could destroy the broker market if they wanted to get aggressive on pricing.  This ultimately would hurt the consumer by limiting competition for their business and ultimately result in higher rates and costs for the consumer, which of course is what has happened to a certain extent already.”  Todd from San Diego.
  • “Hey Phil!  Here is what will happen if everyone does this.  The banks will end up stealing all the deals from us, if they want to,  and it will eliminate us being able to do no cost no fee loans.  We need to make no more than 1% to really do those and be competitive.  If this happens across the board then it is time to be a banker where they do not, at this time, have these rules in place.  They can sell any rate they want and not show SRP.  My buddy works at one of these small banks and he called me on a rate since he was being shopped.  I could do it making 1.000%.  His pricing was at a 2 point cost  to get it!  He talked to his manager and they made the exception just like in the old days.  This does not happen with us now as we just lower our margin like they did.  Of course if they make these changes we will not be able to perform.  It would be awesome if we could all be retail reps with each company.  I think that is what will happen soon and companies like yours will find a way to make it happen.”  Eric from San Diego.
  • “For those people who work in Beverly Hills, La Jolla, Fairbanks, Rancho Santa Fe or anywhere along the Pacific Coast this is great. But not for those brokers that work inland and the loan amounts are way smaller. So once again you make the rich richer and the poor poorer. Then you invite redlining in again in a whole new way. This does not work….You would think Washington D.C. could grow a brain with all those people with all their prestigious degrees they all seem to be totally moronic.”  Bernie from Encinitas.

My Market Watch:  Rates are considerably worse today.  Per my research the main cause is due to news in Europe that the European Central Bank has committed to buying struggling country’s debts.  But that in itself shouldn’t be enough to move the markets so drastically.  So what do I think you ask?  I think that negative-bond-news/positive-stock-news weighs more heavily than positive-bond-news/negative-stock-news.  That is, my opinion is news and reports motivating Capital Markets to worsen rates is more impactful than news motivating Capital Markets to improve rates.  Why you ask?  Because there is little room to go down and a lot of room to go up. As an analogy, when a football team is within the 5 yard line of the end-zone, and the defense gets a holding call, the penalty is half the distance to the goal line because there isn’t enough room to assess the entire 10 yard penalty.  But if the offense gets an illegal procedure call, the full 10 yard penalty is assessed because there is plenty of room.  Same thing here.  News/reports that induce  rates to worsen will be fully assessed whereas news/reports that induce rates to improve will only slightly be impactful.  I hope I’m making sense….  Disclaimer

My Schedule: Available all day….


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Guideline Guidance to get a clean underwriting decision resulting in happiness and adulation, or, you could Ignore This and find yourself with a long list of conditions, a huge hassle, and massive frustration

My Procedures are updated daily – check it out…

Would Further Comp Plan Changes Be So Bad?

My Schedule…and A Little Extra:  Would further comp plan changes be so bad?  I’m sure most of you heard about the changes to the comp plans that Franklin American announced yesterday.  In a nutshell, they eliminated borrower-paid transactions and fixed lender-paid comp at 2.250% for all their brokers on every loan.  So, if you wanted a comp plan of say 1.500%…too bad, you get 2.250%.  For all practical purposes, they have eliminated any competition regarding price, that is if you want to use Franklin.  This policy change was instituted in a reaction to Wells Fargo’s settlement with the Department of Justice.  Word is the decision was based on the concern over Disparate Impact and Disparate Treatment…if you’ve ever worked for a bank you might be familiar with these terms, if not, email me.  I don’t see how these issues affect lender-paid comp but I have not read any arguments explaining their position and the Consumer Financial Protection Bureau (CFPB) issued a similar warning recently.  So, there must be some validity to the argument.  Whether other wholesale lenders will follow suit is yet to be seen.  If comp does get fixed, would it be that bad?  If everyone had to sell the same price, wouldn’t your ability to get clients weigh more on your sales skills as a trusted counselor?  If you think about it, it might actually benefit our industry, no?  I’m not a fan of putting more rules in place…I’d rather see less, but if it goes the other way, it wouldn’t be so bad, right?  Your thoughts?

My Market Watch:  Bonds are down and rates are worse.  And, bonds were continuing to fall earlier but bounced back already since this morning’s rate publication.  Traders are reacting to positive news in Europe and lower jobless claims in America.  When traders feel the economy is stronger they would rather invest in stocks than bonds and when that happens rates generally get worse.  Obviously if there is positive news in Europe, traders feel more comfortable about global markets.  And if there are less jobless claims, then that’s a good sign for the local economy.  These feelings give traders more comfort to invest in stocks and bonds suffer as a result.  Make sense?  Disclaimer

My Schedule: I have a 10a appointment and will be difficult to reach this morning.  I will be available all afternoon….


UPDATED DAILY:

Guideline Guidance to get a clean underwriting decision resulting in happiness and adulation, or, you could Ignore This and find yourself with a long list of conditions, a huge hassle, and massive frustration

My Procedures are updated daily – check it out…

Am I A Wimp?

My Schedule…and A Little Extra:  Am I a wimp?  I got roughed up at my massage last night.  On the form I had to fill out there was a field for “why are you getting a massage.”  I wrote, “gift from my wife…want to relax.”  The massage therapist came in and repeated this to me.  My massage was anything but relaxing.  I think she was mad about something, or somebody.  She was a strong woman…in fact it was a little scary how strong she was.  Now, I don’t consider myself a wimp…I’ve had deep-tissue massages before…I know what it is.  But I didn’t want that this time and I was, in fact, pretty sore from working out a few days in a row.  I was reluctant to tell her to take it back a notch…after all I didn’t want her to think I was a wimp, right?  But I had no choice…I was wincing and holding my breath.  What the heck is going on?  First, I get terrorized by a would-be hair-stylist and then I get roughed-up by an over-zealous massage therapist.  I had a doctor’s appointment scheduled next week…I’m cancelling.

My Mystery Lyric:  Who’s to say — What’s impossible Well they forgot — This world keeps spinning And with each new day — I can feel a change in everything — And as the surface breaks reflections fade — But in some ways they remain the same — And as my mind begins to spread its wings
There’s no stopping curiosity
Answer

My Market Watch:  Bonds and rates hit all time highs yesterday.  Rates can’t get much better.  Even though there is no indication of rising rates, I highly advise you lock 45 days or more.  Why more?  Because when rates go up, and they will go up eventually, operations will be slammed since everyone will be pushing harder than ever to close their loans.  You might need more time.  If that happens, our Lock Desk will change its tune…they will not have the luxury of being as generous as they are now.  Make no mistake about it, Capital Markets will have no choice but to enforce strict adherence to the lock term and our relock policy will no longer be applicable.  And here’s the thing…with rates so low and pricing so good, you should have no problem locking in a longer term to protect your client and still be able to get the deal, yes?  Disclaimer

My Schedule: Available all day….


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Guideline Guidance to get a clean underwriting decision resulting in happiness and adulation, or, you could IGNORE THIS and find yourself with a long list of conditions, a huge hassle, and massive frustration

Stocks Down Bonds Up

My Schedule…and A Little Extra:  In the wake of the shootings last week at the premiere of the Dark Knight Rises, the Batman movies have been on all weekend.  Last night I watched Batman Begins.  It was the first of the Dark Knight trilogy and it reminded me why I loved it.  It was mysterious and cool to see the creation of the Batman and his accessories.  The second movie was more disturbing but is was intense and featured the late Heath Ledger’s mesmerizing performance of the wicked Joker.  The last movie as I said was good…it wrapped up the trilogy nicely…but man, it was wicked violent…I just don’t see why they had to take it so far.  |||  Tonight I’m getting a massage…this will be my second massage in 2 weeks.  I’m living the life, baby!  Actually, this is my Father’s Day present from my wife and today was the first available appointment.  Anyway, I’m thinking maybe I should make this a regular thing, you know, like every month or something.  Eh, maybe not.

My Market Watch:  Let’s keep it simple…trouble in Europe coupled with economic data in American is driving investors to bonds rather than stocks.  When traders sell stocks and put their money into bonds instead, rates get better and we’re seeing that this morning with great pricing.  Disclaimer

My Schedule: Available all day until 4:30p and then out….


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Guideline Guidance to get a clean underwriting decision resulting in happiness and adulation, or, you could IGNORE THIS and find yourself with a long list of conditions, a huge hassle, and massive frustration

My Procedures are updated daily – check it out…

CREEPY

CREEPY.  This morning in my daily post I wrote about the methodical shootings at a movie theater by a lunatic gunman in Colorado.  Jessica Ghawi was shot with some 75 others…she is dead at age 24.  Just 6-weeks earlier she nearly escaped another random shootingat a food court mall…it’s eerie.  I hope she LIVED these last 6-weeks…here are excerpts from her blog post about her experience 6-weeks ago:

What started off as a trip to the mall to get sushi and shop, ended up as a day that has forever changed my life … minutes later a man was standing in the same spot I just ate and opened fire in the food court full of people. Had I had sushi [instead], I would’ve been in the same place where one of the victims was found … I was shown how fragile life was on Saturday … I was reminded that we don’t know when or where our time on Earth will end. When or where we will breathe our last breath … I say all the time that every moment we have to live our life is a blessing. So often I have found myself taking it for granted. Every hug from a family member. Every laugh we share with friends. Even the times of solitude are all blessings. Every second of every day is a gift. After Saturday evening, I know I truly understand how blessed I am for each second I am given.  Click here to read her entire post.

Rates are good until Sunday night at 9:45pm PST.

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She’s Dead at The Dark Knight Rises

My Schedule…and A Little Extra:  I saw a pre-screening of The Dark Knight Rises last night.  I went to the 7:00p showing whereas all the other regular people in the world not as fortunate as me with a great connection had to wait until the premiere screening at midnight.  Thank goodness for connections.  Who knew if you attend the midnight premiere you could literally put your life in danger…some people actually died.  Such was the fate of Jessica Ghawi…she was shot dead at the midnight screening in Aurora, Colorado when a gunman burst into the movie theater and methodically began shooting people.  He killed at least 12 people and injured at least 50.  Jessica was an up-and-coming sports broadcaster and blogger who nearly escaped another shooting at a mall just 6 weeks earlier…can you believe that?!  But she wasn’t lucky enough this time…just 6 weeks later she is dead at the age of 24 at the hands of a lunatic gunman.  SOAPBOX TIME.  I realize there are crazy people out there and that violence is part of our history on this earth.  However, some cultures are more violent than others…what we bring into our lives affects us…all of us.  We live in a violent culture.  This movie is VIOLENT…VERY VIOLENT.  There was non-stop killing and by a variety of methods including drowning, hanging, neck-twisting, stabbing, suffocating, beating, bombing and of course shooting.  Now I realize I’m a hypocrite…I walked out of the movie with a satisfied feeling…I liked it.  I like science fiction and mythology and more often than not there is a fair amount of violent scenes.  The Lord of The Rings trilogy is my favorite movie of all time and it was nothing less than violent.  My point is that I’m part of the problem and it makes me feel a bit empty and sad.  I feel guilty for even seeing the movie now.  I feel sad that people got hurt and murdered…sad that their family’s will forever be affected…sad that some poor creature was so miserable that he felt compelled to open-fire on a crowd of innocent people out to enjoy the night…and sad that our society in many ways glorifies such behavior.  I feel sad for Jessica.  Read Jessica’s blog post about her near-death incident just 6 weeks ago.

My Market Watch:  Rates are better than yesterday and the 30-year bond is performing well and stocks are down this morning.  When traders feel the economy is weak they would rather put their money into bonds than stocks.  That makes sense, right?  Why would you want to invest in the stock market if you felt the economy was not performing very well.  Remember, this analysis by traders is day to day…hour to hour.  Right now, today, this hour, they are investing in bonds and pulling money from stocks to do so, at least in theory.  When traders invest in bonds, rates get better.  There you have it.  Let me know if you have any comments….   Disclaimer

My Schedule: Working from home this morning and in the field this afternoon….


UPDATED DAILY:                                                                                                     
Guideline Guidance to get a clean underwriting decision resulting in happiness and adulation…you could IGNORE THIS and find yourself with a long list of conditions, a huge hassle, and massive frustration

My Procedures are updated daily – check it out…

Exception Policy Revisited; The Secret To A Repeated Hit

My Schedule…and A Little Extra:  Our Exception Policy has been revised and is now back in effect.  Not much has changed except our internal process and the general policy of scrutinizing requests a little more.  Senior management essentially felt our exception policy was a bit too loose after having some problematic loans…they temporarily turned off the process until revisited.  Well, that didn’t take long and we are once again back in business and able to request.  One thing worth mentioning is if you are a broker sending in one of your first deals, then the exception will not likely be considered.  The policy is reserved for brokers that do consistent strong business with Interbank.  For details on how to request an exception, click here.  Let me know if you have any questions, okay?   ||| Want to make a movie or write a song that will be played for the end of all time every year like clockwork?   Simple.  Write it about a holiday.  Case in point…Katy Perry’s “Firework” song…tell me you didn’t hear that song on the fourth of July.  I heard that song about 20 times every day leading up to the fourth of July and they played it another 50 times on the fourth of July and even played it during the fireworks.  I’ll bet you $100 billion dollars they play that song every year for eternity….

My Mystery Lyric:  Do you ever feel like a plastic bag, Drifting through the wind, Wanting to start again?  Do you ever feel, feel so paper thin
Like a house of cards, One blow from caving in?  Do you ever feel already buried deep?  6-feet under screams but no one seems to hear a thing.
Do you know that there’s still a chance for you, Cause there’s a spark in you
Answer

My Market Watch:  Rates are a little worse than yesterday.  There was a “yes” vote to Spanish banks this morning but was tempered by a weak Existing Homes report.  It could be a rocky day today…I get the sense the rates are gonna move…if I had to bet, I’d say for the worse.  But don’t rely on me…do your own research and then let me know your thoughts….   Disclaimer

My Schedule: Working from home this morning and in the field this afternoon….


UPDATED DAILY:                                                                                                     

Guideline Guidance to get a clean underwriting decision resulting in happiness and adulation…you could IGNORE THIS and find yourself with a long list of conditions, a huge hassle, and massive frustration

My Procedures are updated daily – check it out…

TERROR Follow-up; LTV Exceptions

My Schedule…and A Little Extra:  I received a lot of responses to my TERROR At The Barbershop post yesterday.  Many asked what my hair looked like afterwards.  Well, not great to be completely truthful, but not disastrous.  Of course, that is little consolation to the years of life I lost with the stress of it all.  J |||  Please note, LTV exceptions have been temporarily eliminated…no exceptions for LTV will be granted for the unforeseeable future….  Let me know if you have any questions, okay?

My Mystery Quote:  So many of our dreams at first seem impossible, then they seem improbable, and then, when we summon the will, they soon become inevitable  — Answer

My Market Watch:  Rates are the same as yesterday morning.   Disclaimer

My Schedule: Working from home this morning and in the field this afternoon….


UPDATED DAILY:                                                                                                     
Guideline Guidance to get a clean underwriting decision resulting in happiness and adulation…you could IGNORE THIS and find yourself with a long list of conditions, a huge hassle, and massive frustration

My Procedures are updated daily – check it out…

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