Phil Grossfield's Blog


Monthly Archives: December 2014

Firearms & Grateful Experiences

Firearms & Grateful Experiences.  I’m not a big fan of guns…but I did own one for a while when I was a law student in my third-year of law school.  You see, I was assigned by a Judge to work on a first-degree murder trial in Minneapolis.  The accused, Leonard J. Richards, was being prosecuted for killing his half-sister for insurance proceeds.  And, since Richards was already serving a life sentence for murdering his tax attorney,  I had to work at the Stillwater Maximum Security Prison.  So, every week after law school I would ride my motorcycle to Stillwater and go through security to work with Richards in the visitation room.  You can imagine my trepidation to be working with a convicted murderer who just so happened to have killed his lawyer.  Anyway, that’s another story for another time.

prisonDuring my visits other prisoners would enter an adjacent visitation room…there was glass in-between the sections of the large room.  Richards would point to a convict and explain what heinous crime he committed …and when I say heinous please consider the full meaning of the word.

gunsIt freaked me out to be near so many hideous repulsive “people
…the things human beings are capable of is mind-boggling.  It wasn’t long before I decided to get a gun.  I bought one and signed up for a class to learn how to shoot, etc.  It was a strange time back then.  The experience changed the trajectory of my life since I had planned to be a criminal defense lawyer.  In hindsight I’m thankful since nothing I have today would likely have occurred if I had chosen that timeline.  I guess that’s the meaning of this post…to be thankful for where I am and for the experiences along the way that got me here.

My Market Update – 12/29/2014

boredThe 30-year Fannie Mae bond is trading at par since Friday’s close.  Generally a lender’s pricing improves when the bond is being bought and gets worse when selling off.  Today neither is happening so you’d expect pricing to be the same as Friday’s close…and it is.

Not much is going on today and despite more economic reports tomorrow I don’t expect too much volatility unless some big news is revealed.  Simply put, there’s just not that much going on right now.  If that changes I’ll try to give you a heads-up…


MERRY CHRISTMAS!  Wishing you and your family the most wonderful Christmas!  And for those of you where English is a second language, I’ll say Merry Christmas to you in your first language.  And for those of you not celebrating Christmas, have a wonderful long weekend.  I think that about covers it!

xmas tree

My Market Update – 12/24/2014

The 30-year Fannie Mae bond is trading down just -2bps since yesterday’s close.  And yesterday’s close was UGLY.  We lost over 50bps in one day and rates/pricing are worse by nearly  a half-point.  Yesterday illustrates how a lender’s pricing worsens when the bond is selling off.  Don’t expect much activity today. Hopefully traders will try to take advantage of their gains by selling off in the days to come after the holiday.  Until then, worry not of such things and enjoy your time away from the industry.  Best wishes for a safe and relaxing holiday!

Passenger Shame!

passengershamePassenger Shame.  Flying this year?  I hope you don’t run into any of these people.  A former flight attendant reports on her Passenger Shaming Facebook Page the disgusting behavior of our fellow travelers.  Yich!  Check out the CNN video:

My Market Update – 12/23/2014

The 30-year Fannie Mae bond is trading down -36bps since yesterday’s close.  Generally a lender’s pricing worsens when selling off.  Today’s pricing is worse by about 0.100, less than an eighth from yesterday’s close.  But it could get uglier…

gdpWatch out!  ALERT!  Bonds are down -36bps which is +20bps worse since rates were published.  This is just close enough to warrant a mid-day reprice for the worse so if you were planning on locking today this is the time to do it…before Capital Markets pulls the trigger…

Stocks are responding well this morning to news that the GDP, Gross Domestic Product, was higher in the third quarter.  GDP measures the U.S. economy…it is everything produced by all the people and all companies in the U.S. and it is higher than it’s been in over 10 years.  That is a very strong report as to the strength of the U.S. economy and as we know, Traders love to invest in stocks when the economy appears stronger.  When traders invest in stocks it’s usually at the expense of bonds and since lenders publish rates/pricing based on the bond market it’s easy to see why rates/pricing are slightly lower this morning.

That’s My Dad!

stusantaThat’s My Dad!  I posted last week about my childhood visits to the Dayton’s (now Macy’s) Holiday Display in downtown Minneapolis.  I didn’t know it, but we actually got a group picture, my father included.  I never thought in a million years I would ever see my Dad (82) posing with Santa…but here it is, indisputable evidence of the same.  It just goes to show that anything is possible!

My Market Update – 12/22/2014

boredThe 30-year Fannie Mae bond is trading at par since Friday’s close.  Generally a lender’s pricing improves when the bond is being bought and gets worse when selling off.  Today neither is happening so you’d expect pricing to be the same as Friday’s close…and it is.

Not much is going on today and despite more economic reports tomorrow I don’t expect too much volatility unless some big news is revealed.  Simply put, there’s just not that much going on right now.  If that changes I’ll try to give you a heads-up…

Santa Quest

macysholidaySanta Quest.  I was so excited!  Every year when I was little my mom took me and my sister downtown Minneapolis to the Dayton’s (now Macy’s) Holiday Display.  I didn’t get much up-close interaction with this kind of stuff back then.  I even got to meet Santa!  I remember the feeling of confusion, like when Santa asked me what I wanted for Christmas and I said, “I’m Jewish…I don’t get anything.”  Despite the confusion, I loved the whole thing.

This year over the Thanksgiving break we went to Minneapolis to visit family.  My wife’s sister and her family live there and my entire family is there as well.  On a Saturday we decided to go downtown to the holiday display so our kids could experience it.  What fun!  And they were far less confused about things then I was at their age.  And on top of everything, we took a group picture with Santa.  Unfortunately I don’t have the evidence to support it, but this was the first time in my Dad’s 82 years he’s posed with Santa. 🙂

My Market Update 12/18/2014 AM

The 30-year Fannie Mae bond is trading up +14bps since yesterday’s close.  Generally a lender’s pricing improves when the bond is being bought.

YellenJanet Yellen, chair of the U.S. Federal Reserve, made some interesting statements at her press conference earlier in the week.  If you recall, I focused on her position with respect to the likelihood of interest rate hikes in 2015. Many factors will be taken into consideration with that day comes, including inflation, unemployment, etc.  Yellen’s position on inflation is interesting in itself.  She is regarded as one of the few economists willing to risk higher inflation as a strategy to battle unemployment.  Remember, bonds hate inflation and since the trading of bonds is directly affected by it, well, I think we should be paying attention to Yellen’s opinion on the subject.

Bloomberg Article: Yellen’s Inflation Lessons: Targets Matter, Oil Shocks Dissipate

Next week could prove to be a tough one for bonds and therefore our rates/prices.  I’ve been on the phone a lot lately and most Brokers/LOs are saying they’re busy now with closing deals but not particularly busy bringing new loans in with the holidays and all.  But if you have a loan that you’re considering whether to lock or float, I would advise you consider locking.

My Disclaimer

Tree Quest

search_xmas_treeTree Quest.  I never had the pleasure of searching for a Christmas tree as a child.  Don’t get me wrong, I had a wonderful childhood as a Jew…my mom made Hanukkah so much fun.  But unlike most kids, searching for a Christmas tree was obviously never part of my life.  I’ve had a lot of people over the years ask me if I ever got a Hanukkah bush…uh, no…nobody does that.

My wife is not Jewish and so, beginning with the holiday season 15-years ago when we met, the quest for a Christmas tree became an annual adventure.  And now, at 47-years old with a 9-year old and a 6-year old, the hunt for a Christmas tree has become a tradition…and I look forward to sharing it with my family every year.  But alas, not this year.  Hobbling around with a severely sprained ankle is not congenial with a tree crusade.  I had to bow out this year relying on my wife and kids to venture on their own in search of the perfect tree.

My family celebrates Hanukkah too.  My wife, without me ever asking, took it upon herself to ensure the tradition of lighting the menorah lives strongly in our home.  She buys the Hanukkah candles each year and sets the menorah up prominently.  How lucky am I?  I get to celebrate both holiday traditions with my kids and my wife, of which I am ever so grateful to share. 

My Market Update   12/18/2014 AM

The 30-year Fannie Mae bond is trading down -17bps since yesterday’s close.  Generally a lender’s pricing worsens when the bond is being sold off.

Our rates are directly related to the how well the bond market is trading…when bonds are being bought rates/pricing improve and when bonds are selling off rates/pricing worsen.  It’s as simple as that.  The complicated part is determining which factors will influence traders to buy or sell bonds.  One factor is the stock market.  Most of the time (but not always) there is an inverse relationship between stocks and bonds.  That is, when traders feel the stock market is too risky, they will invest in safer bonds instead. Inversely, when traders are bully on the stock market, they’ll sell off bonds to free up capital to invest in stocks.  This morning the stock market has been doing well and guess what is happening to the bond market.

JanetYellenThe reason traders are investing in stocks this morning is Janet Yellen’s statement yesterday about the likelihood of an interest rate hike.  Soon that will happen, but according to Yellen, not for a few more months.  That news gave traders enough reason to invest in stocks and the bond market is taking the hit.

Pricing is worse than yesterday morning…hopefully the bond market will stabilize and stop the southbound trend.  If you intended to lock today, you might want to watch the bond market carefully for signs of recovery of further selling.  I’ll do my best to keep on watch.  Let me know if you’d like to discuss…

My Disclaimer

HAPPY HANUKKAH! What’s A Brother To Do?

IMG_0519.JPGIt’s not broken, but it is sprained, and that’s good, I guess. Quite frankly, I really don’t care if its a strain, a sprain, or a fracture…I just want it to heal quickly. Everyone I’ve spoken to has an opinion about what heals faster. My doctor said a sprain can take 4-6 weeks and a fracture can be longer. A trainer I know said a sprain can take longer than a fracture…ugh. Without exercise I could go batty, and, I could get large(r). Aiaiyyaiiaii!

IMG_0520.JPGLet the record reflect, I’m not one of those people that does real well on a diet and without the ability to exercise I fear all the new clothes I’m going to receive for the holidays won’t fit in 3 weeks. That is, I like to eat. And, I like to eat things that aren’t typically found in many dieting books. Moreover, I celebrate both Hannukkah and Christmas which means there are twice the treats. This time of year I like to eat cookies… lots and lots of cookies. My Mother-In-Law makes serious cookies… back-from-the-olden-days-cookies if you know what I’m saying. What’s a brother to do?!?!!!


WABAMM – Taken Down Hard!!

IMG_0518.JPGWhat a B.E.A.U-tiful morning yesterday, particularly for a run. And after a nice pre-jog stretch my running partner Pongo and I started off. The first 5 minutes or so are always the hardest for me but then I always catch my wind. I freed Pongo from his leash as we entered the park. Man, I was feeling good…happy actually…and I thought this might be a good morning for an extra long journey.

IMG_0517.JPGWABAMM!  Next thing I knew I was face down in the wet grass. Pongo ran right through my legs in full speed and took me out. I wish I had a video of it as I imagine it would have made Laurence Taylor proud. However, as I got up I realized my ankle was tweaked. And as I tried to walk on it I realized it was likely more than tweaked. I’ve had many ankle tweaks throughout my illustrious career as an amateur basketball player but this ranks right up there with the best of them. After an entire day of staying off the wheel and icing it down, it’s no better…I’m headed for an x-ray. I’ll let you know…

Appraisal Hypocrisy!

It’s out of control, wouldn’t you agree?  The HVCC and Dodd-Frank rules seem ineffective in protecting the victim…the borrower. Instead, the result is a much more difficult loan process, paranoid appraisers, and borrowers who pay more for the appraisal and often times have to pay more than once.  But that’s just my opinion.

appraiserI’m sure many of you agree.  One such reader is my friend and OC broker Jeff Lazerson who writes for USA Today.  In his latest published article entitled “Appraisal Hypocrisy Hits Home,” he claims its far worse for borrowers in terms of appraisal costs and resulting valuations.  He says if you ask any veteran loan originator the number 1 reason transactions fall apart is low-ball appraisals, not what most people think which is tighter credit standards.  As he puts it, “the emphasis is now on volume, not quality.”  We’ve all seen this…an appraiser who is under-paid and now paranoid for getting scrutinized will low-ball the value when we can easily identify the overly conservative approach in his appraisal and counter it with different comps or an entirely new appraisal.  What a waste of time and money since lenders have virtually no power to influence corrections.

Equally frustrating to me is the inability of many lenders to transfer an appraisal or accept the same.  I don’t understand this.  After all, the borrower is paying for the appraisal…it’s theirs…they own it.  Yet many lenders will not accept a perfectly valid appraisal even if was performed just days previous by a respectable AMC.  This is particularly true of Jumbo investors whose wholesale broker clients must require the borrower to pay for another appraisal…and on a jumbo loan it’s typically more expensive and guidelines require two original appraisals for loan amounts >$1m.  In these circumstances I feel horrible for the borrower…it makes no sense!

I’d love to hear your feedback on this issue.  Check out Jeff’s article on USA Today:  USA Today “Appraisal Hypocrisy Hits Home” by Jeff Lazerson.

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