Phil Grossfield's Blog

That’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

The 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.

It’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!

Let 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?!?!!!

What 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.

WABAMM!  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…

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.

I’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.

“DADDY, IT’S ST. PATRICK’S DAY!!!!!”  My son came into my room yesterday morning wearing every green shirt, pants and socks he could find, and, a green hat no less.  I got it tapered down a little (notice I used e a financial term to explain) and this was the result.  Not bad, eh?  He was so excited for St. Patrick’s Day…every day since Wednesday last week he was asking when the big day would finally get here.  Yesterday morning he woke me up at the crack of dawn (thank you very much) to tell me it had finally arrived…”DADDY, IT’S ST. PATRICK’S DAY!”  Then he slammed the door shut and ran downstairs to make a poster for the Leprechaun, which is proudly displayed in the picture to your right.  Now tell me that doesn’t bring a smile to your face.
HAVE A FANTASTIC DAY!

My Market Watch:  Bonds Up +16bps – Pricing Is Improved. The Fannie Mae 30-Year Bond is trading up +16bps since yesterday’s close. A lender’s rates/pricing improve when bonds are being bought.  Crimea is the headline once again…I’m sure you’ve already read that Russia has taken control. Crimea is now a part of Russia…it’s official. From my standpoint, I know nothing of Crimea other than rates/pricing have improved this morning.

Record Your Memories.  Yes, we can now record your memories, kind of. Memotos has created the Narrative, a camera with GPS technology that takes a picture every 30 seconds of any portion of your day. In fact, if desired, you can have it snap pictures of your entire day, and store them in an efficient, geographical and otherwise organized manner on a cloud-based server.  Therefore, you can effectively create a memory of your day in 30-second picture increments.  The technology is tiny, and attaches to your clothing. You simply clip to your clothes and look up the results later.

This technology would have been awesome for a day like yesterday. French toast breakfast and then a long stretch of games in the backyard including coloring and tic-tac-toe with the 6-year old on the right and hangman and scrabble with the 9-year old on the left.  Then the daily scramble to get out of the house and off to lunch, followed by a bare foot stroll along Torrey Pines State Beach. In fact, just to turn it on for the beach section of the day would have been cool. Sure, we took a few pictures with our phones, but how cool would it be to have a 30x30x30x30x30x30… account of that 90-minute stretch?  The remainder of the day was just as fun…swimming at the club, an ice cream break, and then home for BBQ dinner with the neighbors, complete with collective neighborhood puppy entertainment.  This was a memorable day…in a matter of typing I’ve memorialized it here. But having a photographic account of this day would be something I would love to be able to see.

Check out this 2-minute video about Memotos Narrative.

My Market Watch:  Bonds Down -6bps. The Fannie Mae 30-Year Bond is trading down this morning -6bps since Friday’s close. A lender’s rates/pricing worsen when bonds are being sold off although -6bps is not enough to make a significant difference.

Crimea continues to be in the spotlight…I’m not exactly sure why this news is so significant to Americans but I suppose there must be some oil or other interest our government is looking at. One interesting note is Crimeans got the opportunity to vote on whether to join Russia…95% were in favor of it. But if you dig a little deeper you learn that their only other choice was to be independent, not to return to the Ukraine. Anyway, how this affects pricing is yet to be seen.  Historically unrest in the world creates an unstable economic market for traders…usually this results in more bond trading since it’s a safer bet. We’ll have to wait and see what happens…

A New Way To Read.  I can read incredibly fast as long as comprehension isn’t taken into consideration. I always wanted to read faster, in fact long ago I took a speed-reading class…it taught how to read in chunks, you know, paragraph by paragraph. AND IT WORKED, I could read super-fast…but my comprehension got even worse…ugh!  So, I stuck to the old fashion way of reading.

Spritz has unveiled a new technology that let’s you read over 1,000 words per minute, that’s 800 words faster than the average. It works by bringing the words to you rather than the traditional method of moving your eyes across and down the page, which is extremely inefficient for your eyes. Spritz flashes the words on a screen in a specific way so your eyes won’t move. That is, the words come to you rather than you going after the words. Man, I wish I had that technology when I was in law school!  As soon as the technology is available for the iPhone I’m all over it. Here’s a good writeup on TechAdvisor if you’re interested.

My Market Watch:  Bonds Flat – Now Down Just -5bps.  The Fannie Mae 30-Year Bond is down -5bps since yesterday’s close.  A lender’s rates/pricing generally get worse when the bond is being sold off.  But -5bps is not enough to really affect pricing. Interestingly, Interbank has been issuing mid-day reprice improvements even when the market is flat.  I think this is a strategy to see how the market reacts to morning reports, and then positively adjust pricing if the bond remains stable. Since the bond is actually down this morning, I don’t expect any improvements to pricing at this time.

A-Wop-Baba-Lumop!  My daughter turned 9-years old this weekend and for her birthday we had a party at the house…she invited seven girls.  Being the Super-Mom she is my wife planned games such as charades and had a build-your-own-sundae-bar complete with fruit, whip cream and other and saucy toppings…yum!

For the main event of the party the girls piled into our family room to watch Teen Beach Movie…apparently this is the big thing because all seven girls knew all the words and the dance moves…this is when my wife and I looked at each other and rolled our eyes. The best I can do to describe it is to compare it to Beach Blanket Bingo of the 1960s.  But my generation watched Grease…the greatest of all-time. For the record, I was hopelessly devoted to Olivia Newton John, particularly when she did her Tell-Me-About-It-Stud song…I GOT CHILLLLLS…THEY’RE MULTIPLYING!!!!!

Teen Beach Movie	Beach Blanket Bingo
Grease – We Go Together	Grease – You’re The One That I Want

My Market Watch:  Bonds Up +13ps.  The Fannie Mae 30-Year Bond is up +13bps since Friday’s close.  A lender’s rates/pricing improve when the bond is being bought.

There are not many reports this week so look for geopolitical news to affect markets. As of now the bond is trading in a positive direction and I hope it stays this way. I just read that the one of the Fed members believes QE tapering should be accelerated…that kind of rhetoric doesn’t bode well for bonds.  If you recall, QE tapering is the process of decreasing the amount of bonds the government buys.  Traders shy away from buying bonds on the news of increased tapering. But so far bonds are holding well.  If I see significant trading going one way or the other I’ll let you know….