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Freak Out and Get Your Rear-End In Gear

motivationMy Schedule…and A Little Extra:   Short weeks are weird for me…it doesn’t feel like Friday.  Not that I’m complaining, but it just feels off.  On that note, get your rear-end in gear and do something…NOW…read My Market Watch below….

My Schedule:  Available all day….

My Market Watch:  The Bond market is improving this morning and currently bonds are trading up about +16 bps since rates were published this morning…at this pace we could see a price improvement unless something stalls or reverses the trend.  Yesterday, the market made a correction – sometimes I have an affinity for stating the obvious, or so I am told.  Three mid-day rate changes for the worse came on the discovery that the Fed was discussing backing off Quantitative Easement “QE” policy.  In previous posts I mentioned that we are in an artificial market, that is, the Fed is employing a policy of buying lots and lots of bonds which artificially keeps rates/prices low.  This statement below challenges the continuation of that policy…from the Fed minutes which were released yesterday:

“Several others thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet.  One member viewed any additional purchases as unwarranted.” 

So, bond traders freaked out and sold off bonds and when that happened rates/pricing got worse…three times worse yesterday.  But even though bond traders freaked out, there’s no need for you to freak out…so don’t freak out…at least not about that.  Just because the Fed had a discussion about the continuation of the policy does not mean they will change things anytime soon.  From what I’m reading there is a consensus the policy will remain intact for most if not all of 2013.  But this year is going to race by…and if you’re not making plans and strategizing on how to get new business, and purchase business, you will find yourself in trouble when rates eventually go up…this I am sure of.  So, if you want to freak out about something, freak out about that and get your ass, I mean rear-end, in gear and do something about it…NOW.  My Disclaimer

My Fun Stuff:  collection of interesting and fun things  

Pitch Black; MDFA Extension

congress pitch blackMy Schedule…and A Little Extra:   Over the weekend we went to the movies with the kids and saw The Guardians. The premise is that Santa, the Sandman, the Tooth Fairy, the Easter Bunny and Jack Frost are “guardians” of children’s hopes and dreams.  They fight Pitch Black (the bad guy) from depriving the children of their dreams and replacing them with only nightmares.  In mortgage industry terms, Pitch Black is Congress.  Anyway, this kid movie has frightened my kids enough that at least one of them has been in my bed every night since.  But I continue to take these kids to movies like this so they will be prepared to deal with the frightening future of politics.  They need to battle Pitch Black too some day.

My Schedule:  I have a conference call at 10a and an appointment in Irvine at 11a.  That means I will be unavailable until after noon.  I’ll do my best to return calls and emails as quickly as possible.

My Advice:  Watch this – guaranteed to make you smile. J

My Market Watch:  Rates/Pricing are the same as yesterday but significantly less than Monday before the Fiscal Cliff deal was made.  I’m really disappointed in our Congress who waited until the last second to act and then slapped a used band-aid on the sore.  They acted just like a college student with a report due…they expertly procrastinated until the night before the report is due and then cut-and-pasted together a D+ effort before rushing to the classroom hoping to turn it in just before the teacher left for the day.  But, they did manage to get a few important things for our industry into the mix.  The one I’ve been mentioning in my previous posts is the extension of the tax reprieve for shortsales and foreclosures (Mortgage Debt Forgiveness Act).  For example, a homeowner who sells their house for $100,000 less than they owed has forgiven debt by the bank.  Normally the tax code would consider this forgiven debt as income and the homeowner would have to pay taxes on the $100,000.  The extension of the MDFA means they don’t have to pay that forgiven debt income tax.  This is a good thing.  Anyway, we should be grateful in our business that the Fed continues to commit to buying more bonds and this month they look to buy billions each day.  This will keep rates/pricing low and as one of my Broker friends pointed out, “it’s pretty obvious that the agreement to avoid the Fiscal cliff was weak;  however it takes investors a little while for the brain to catch up with their mouth….meaning, they rallied this morning on news that we avoided the fiscal cliff (that’s the mouth), but as they start to understand the consequences of reaching this agreement, they will start to realize (the brain) that it wasn’t to our advantage.   My opinion is that we will see rates decrease for a few more months, maybe 6-12 and then we are going to see an increase in rates to slow down home appreciation.”  I like it!  My Disclaimer

No Surprises Here; Need A Laugh?

VWlaughMy Schedule…and A Little Extra:   Happy 2013 y’all!  I was in the gym this morning early for spin class…I’m back on track baby…I’ve made the shift.  Need a laugh?  Watch this…guaranteed to make you smile.

My Market Watch:  Well, it’s not a good plan but it’s something.  I’m telling ya, this Congress is just not getting it done.  I mean geez, they knew the cliff was coming and they figuratively drove off anyway…then they pull a last-minute parachute with holes in it…the car will survive but it’s going to hit the ground hard.  I hope you’ve been paying attention to my warning regarding rates/pricing…as you can see pricing is worse by about 0.375-0.500…I hope you locked in early.  And it would have been worse but-for the Fed’s commitment to buying more bonds.  Congress makes me laugh.  Need a laugh?  Watch this…guaranteed to make you smile.  Let me know your thoughts….    My Disclaimer

My Schedule:  available all day….

RESOLUTIONS – Happy New Year!

HNY2013My New Year’s Resolutions:

  1. Be a better Dad…an ongoing challenge and one I will never stop trying to obtain.
  2. Be in better shape.  Although I already starting taking steps down this road, this is a priority.  I’m older now…45 years old.  If I want to drink more, which is always a goal, and if I want to be a better Dad (and a better more attractive husband) then I need to be in better shape.

That’s it.  If I can accomplish those goals, it would be a great 2013.  I was at a service yesterday and the speakers were all talking about the passage of time.  It got me thinking…a dangerous thing.

  1. The secret to life is enjoying the passage of time.  ~ James Taylor
  2. Wisdom is not the accumulation of information.  Rather, it is knowing when to ignore the information and follow your heart.  ~Phil Grossfield, 2012


My Market Watch:  It may sound the same but this is today’s My Market Watch…there is a huge push for the Fiscal Cliff plan to be passed into law and in my opinion there is a good likelihood something will happen today.  Here’s my analysis:

  1. Focus is on the Fiscal Cliff which dominates headlines and the market.
  2. There is no news on whether the plan will include a tax reprieve for shortsales and foreclosures.
  3. News/Statements/Reports indicating a plan will not be passed will affect stocks negatively and boost bonds which sustains or improves rates/pricing.
  4. News/Statements/Reports indicating a plan will be passed will affect stocks positively and bonds will suffer which will worsen pricing.  On news a plan has been reached I suspect our rates/pricing will take a significant hit.
  5. CNN – Significant Progress Made In Fiscal Cliff Discussions, Sources Say
  6. My Disclaimer

Operations; Forgiven Debt; Cookies Everywhere

cookiesMy Schedule…and A Little Extra:   The difficult thing about working out during the holidays is having a variety and abundance of cookies and cake and other sweet lovelies everywhere…EVERYWHERE!  Yesterday I worked out but the damn cookies are everywhere.  Well, I guess it’s better than eating the cookies and not working out, right?  After the holidays are over its back to moderation.  Well, using my definition of moderation I guess it’s going to be a little more drastic than that.

My Operations Update:  Operations is overwhelmed.  I know it’s not your concern…you just need to get what you need to get done.  But you should know that the holidays have put a stranglehold on Operations.  The staff is coming in early and staying late.  They are cranking out a record number of doc sets and funding figures.  Operations is already overbooked on docs and funding capacity for the remainder of the year.  Purchases are getting lots of love, particularly shortsale purchases…refis are taking a back seat.  I’m not asking you to back off because I understand your position, but I am asking for your understanding.  If you need help, bring it my way.

My Market Watch:  Once again Bonds are holding firm and opened with the same rates as yesterday and Friday…but once again I focus my attention on the Fiscal Cliff which has been and will continue to dominate the headlines and the market this week.  I have been hearing all sorts of things on the negotiations…too many things to list here.  Like you I’m just waiting to hear what they come up with.  One thing I thought was interesting is the concern over forgiven debt tax treatment for those doing a foreclosure or shortsale.  For example, if you shortsale today the remaining debt the bank forgives is not considered income and therefore there is no federal tax on that forgiven debt.  On Tuesday that reprieve ends, unless they include a provision in the Fiscal Cliff plan.  That particular provision will affect a lot of homeowners and our industry.  Again, when a Fiscal Cliff plan is put into place, or even the news that a plan will be put in place, expect the bond market to suffer as stocks jump on the news.  When that happens it means traders are pulling money out of the bond market to invest in stocks instead.  To what extent I don’t know but when bonds are sold off our rates/prices worsen.  Call your clients and discuss this with them.

Also, negative statements from the hill that no Fiscal Cliff plan will be passed will push stocks down and the bond market will  improve as a result…but this is short-term.  Remember what I’ve been saying…a Fiscal Cliff plan when passed will improve the stock market as traders pull money out of bonds to put into stocks.  Conversely, news that impedes the Fiscal Cliff plan will push stocks lower as traders invest in bonds and when that happens rates/pricing typically improve.  Be still my beating heart…if future news that a Fiscal Cliff plan is reached, or it is close, then bonds will tank…it’s going to be a roller coaster.  If you want to discuss with me, email or call….  My Disclaimer

My Schedule: Available all day.

Drag My Sorry Ass Out Of Bed

kingMy Schedule…and A Little Extra:   I’ll tell you why it was not easy to drag my sorry ass out of bed…but first let me start this post by saying I had a wonderful long weekend and I trust you did too.  Yesterday I received a lot of clothes…I needed clothes.  I also got a nice Starbuck’s coffee mug with pictures of my family all over it…that was my favorite gift (other than the hand-made drawings my kids made).  I also got a waffle-maker from the in-laws and that’s a pretty nice gift I must say…I’m the breakfast chef in my house so I’m looking forward to whipping up some Belgian waffles!  The other fun gift I got was a Slingbox from my bother-in-law.  I’m excited to try that out…it’s supposed to transmit anything from my TV (whether recorded or live) to my laptop, iPad and iPhone…I do love me some technology…I’ll try setting that up tonight.  The gift I gave myself was a new membership to a gym…yes, it’s time to get back into shape.  Now normally when I make a commitment like this I’ll set a start date such as New Years Day and then eat and drink profusely until then.  But I just can’t wait until New Years Day…it’s out of control.  So this morning I was up at 5:10a and in the gym by 5:45a for spin class.  And man, let me tell you it was not easy to drag my sorry ass out of bed this morning.  But now I have Belgian waffles on my mind, and more importantly, all the clothes I received yesterday are a size too small…hmmm, you think that was a hint?

My Market Watch:  Bonds are holding firm and opened with the same rates as Friday…but make no mistake, news on the Fiscal Cliff will dominate the market this week.  There are but 4 days left to come to a resolution and my guess is they’ll do it and when they do, expect the bond market to suffer and the stock market to  jump.  When that happens it means traders are pulling money out of the bond market to invest in stocks instead.  To what extent I don’t know but I do know when bonds are sold off our rates/prices worsen.  As I have repeatedly advised, take this opportunity to call your clients so you can explain the situation.  Make sure you put a disclaimer in there somewhere…just like I do….  My Disclaimer

My Schedule: Recovering but available all day.

Happy Holidays! Fiscal Cliff Vote Cancelled

holiday2013_2My Schedule…and A Little Extra:   In my house we have both Hanukkah and Christmas (guess which holiday came from my side of the family) and so we get two celebrations each year.  This year more than most I really enjoyed getting a tree since I was out-of-town and my wife went with the kids without me.  I’m just kidding…a little.  I do enjoy watching the kids decorate it though.  But more than anything, I truly enjoy having it in our family room…it’s nice (a picture of my family room on the left).  And after 10 years of marriage (or is it 11?) I’ve become comfortable to our own family tradition this time of year and now feel safe that I won’t explode into flames for being sacrilegious.  I truly enjoy this time of year.  But I hear a lot of grumbles…this time of year is particularly challenging in our line of work since lending timelines get too far extended while simultaneously the pressure to end the year strong bears down on us.  And then there’s the excessive shopping of unnecessary purchases (I’m going stocking stuffer shopping this afternoon…ugh).  But c’mon!  It’s a joyous time of year…a time when there’s a great reason to be happy and jolly.  My son asked me this morning how many more sleeps until Christmas…I told him two more sleeps until grandma and grandpa visit, then one more sleep till Christmas Eve and then one more sleep until its Christmas…four more sleeps!  I’m going to embrace the holiday, and damn it, I insist you do too! 


My Schedule: Available all day…need to buy stocking-stuffers this afternoon.

My Market Watch:  Bonds are doing better today which means pricing is better.  This is on the news that the vote in the House for the Fiscal Cliff Plan was cancelled…yes cancelled because there was not enough support and they knew it.  They would rather cancel the vote than surely have it denied.  As I have said, passing the Fiscal Cliff Plan will bode well for stocks, but not bonds.  Well, since the vote was cancelled, stocks are doing terrible and bonds are responding well.  The inverse relationship between the stock market and bond market is holding true.  Nonetheless, there is tremendous pressure for them to get something done so don’t be surprised to see something passed next week after the holidays.  When that happens I predict the stock market will jump and the bond market will worsen…that means rates/pricing will get worse.  So again, after the holiday weekend, I advise you take the opportunity to have conversations with your clients to explain the situation.  My Disclaimer

The Fiscal Cliff Explained

cremebruleeMy Schedule…and A Little Extra:   The “Fiscal Cliff” refers to tax increases and spending cuts to sharply reduce the deficit in 2013.  Without getting into the details, which I would have a difficult time explaining anyway, the new tax and spending laws, if not adjusted before the end of the year, will increase unemployment and ultimately put America into a major recession in 2013 – we’d be jumping off the “cliff.”  In short, there have been several compromises to tax increases and spending over the last several administrations…these compromises are set to expire.  We have to do something or the deficit will continue to rise at a daunting pace.  But our economy, and arguably the world economy, is as fragile as the topping on a delicate crème brulee…if we increase taxes and reduce spending too quickly and too sharply, most predict a very unfavorable outcome.  And that is why there are heated debates about we need to do and to what extent.  Please feel free to reach out to me…I’d love to hear your thoughts….

My Market Watch:  Bonds are holding steady currently down -6bps since rates came out.  All the focus is on the fiscal cliff discussions.  From what I’m reading, a successful fiscal cliff resolution would bode well for the stock market and is likely to worsen rates.  I would have some serious conversations with your clients now to explain the situation.  Moreover, you need to put your skill set to use by getting them to understand that locking in is protection guaranteed but floating is a dangerous game these days.  I trust you know how to do this expertly.    My Disclaimer

My Schedule: Available all day until 4:00p and then done.

I am Hopeful

abeMy Schedule…and A Little Extra:   Lincoln made me feel hopeful.  I forgot to mention that in my post yesterday where I drew an analogy between the 13th and 2nd amendments.  When I got out of the movie I was sad because Lincoln was shot and killed (spoiler alert!) but I felt hopeful because so much was accomplished.  The movie does a terrific job of illustrating just how difficult it was to pass the 13th amendment…after all there was a civil war still in process.  In a nutshell, there was tremendous pressure and desire to end the war and it was believed that trying to force passage of the 13th amendment would stammer the possibility of a cease-fire.  So, when I learned just how challenging it was to get the amendment passed, it gave me a sense of hope.  Yes, we have mental illness that has the capacity to destroy lives.  Yes, we have a violent culture in America that is growing.  Yes, we have gridlock.  But we have a legislative system that works if we can get together for the overall greater good.  I received a large number of comments on my post yesterday with varying opinions on gun laws, mental illness, constitutional rights and the like.  But I received only one opinion about what happened in Connecticut.  I am hopeful.

My Market Watch:  Heads-up this morning…the bond market is fluctuating.  The primary reason is renewed hope over discussions on the Fiscal Cliff which has given stocks a boost.  When stocks do well most traders are selling off bonds.  What that means to you is that rates/pricing might worsen…if you have a price-sensitive transaction and you are thinking about locking, this might be a good time to have a discussion with your borrower about locking in.  Why?  Because when bonds sell off the price worsens which makes lender rates/prices worse.  For now, it appears things have stabilized and maybe Cap Markets has already priced in these concerns.  Late this morning is a 5-year Note auction.  I think traders are pessimistic after an auction yesterday came in with a D rating which is not good.  It might be another reason why bonds were selling off.  My Disclaimer

My Schedule: Available all day until 4p and then done.

I Quit, Done, I’m Outta Here; Lincoln

My Schedule…and A Little Extra:   My wife cried uncontrollably, “Why!?!”  After the initial horror of grasping the loss of those precious young lives and the others affected, her mind like every parent immediately refocused on her own seven and four years old kids…the target age of the shootings.  Not safe at school…not safe at the mall…not safe anywhere.  When I was 7-8 years old I was practically independent…I rode my bike to school and even went to the mall…after all, Tron, Pac Man and Star Wars were waiting for me at the arcade.  Now you can’t let your kids go to the bathroom without worrying they’re in danger.  But shootings at school?  Unthinkable.

My way of dealing with it on Friday was to avoid the news…I concentrated on work.  On Saturday night my wife and went to the movies…we saw Lincoln. Yes we knew it was a heavy movie and probably not the right medicine but we really wanted to see it.  Good Lord…the previews at the movie were so extremely violent I swear I was uncomfortable from the get-go.  My wife was squirming in her chair…we kept looking at each other…what is wrong with us Americans?  We glorify violence…the more ghastly the better.  Maybe there is some sort of death-toll requirement in Hollywood, you know like a formula they came up with…‘if we have 12 people brutally murdered within the first 15 minute of the movie then the movie’s success is 15% more likely, 20% if we add a lot of blood and guts.’  The directors in Hollywood must have special meetings to contemplate the most gruesome and horrific scenes possible…and then they go for shock value beyond that.  Sure, maybe I was over-sensitive but the previews made us altogether uncomfortable…and then the first scene of the movie was the civil war.

The movie however was fantastic in every aspect and I can’t recommend enough that you go see it.  Lincoln and so many others dedicated themselves to the abolishment of slavery…it was morally reprehensible…evil.  And they barely passed the amendment…but they did.  Although the intentions of the 2nd amendment were honorable, I can’t help but think there is an analogy to the 13th amendment.  I mean, Lincoln worked to abolish slavery not only to free the bound, but also to free the unborn shackled.  Maybe it’s time we reconsider the 2nd amendment which indirectly guarantees more deaths of future Americans.  In modern times is the 2nd amendment necessary…is it outdated either in full or in part?

On Facebook I saw repeated comments like, “It’s ridiculous to live in this violent country where we encourage guns.  I’m outta here, done, I quit, I’m moving to Europe!”  My wife also expressed such concerns and said she wanted to move.  I participated in some respectful yet heated debates on Facebook about the 2nd amendment and gun control laws.  I argued that the statement guns don’t kill – people kill, is not relevant when you see stats like in the graphic below which was circulating on FB (I have not verified its accuracy).  One of my neighbor friends elegantly pointed out the right to bear arms has been guaranteed to our citizens for more than 200 years…it is very dangerous to start picking and choosing which constitutional rights to restrict.  I had another close friend and former law school classmate argue that it’s just not feasible to close the door on gun laws, it’s ingrained into our society and impossible to scale back we have enough guns on the streets in America to arm the nation for the next millennium.  But in my opinion, particularly when I see stats about handguns in America, something has to change…both legally and culturally.  Your thoughts?


My Market Watch:  Very little activity other than a D rating on an auction…might move bonds south and if so rates might worsen…I’ll let you know if anything changes….  My Disclaimer

My Schedule: Available all day.  J

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