The Banks I couldn't remember on Fox Business Network today

Hi everyone.. thanks for your patience! Sucks to forget your notes! OK, the "banks" (in quotes because they aren't really banks but facilitators) that I promised to get to you today after Your Questions Your Money. (Please check out the forum for thread on my web site at www.thebabbgroup.com and go to Forums, then Entrepreneurs to see what others have to say too)

Mercantile Commercial Capital in Altamote Springs, Florida - $500k to $7mn.. they work on the SBA 504 program, 10% collateral only needed, 5% interest for up to 25 years.. specializing in healthcare/day cares, restaurants, hotels, warehouses. They will look to see that you make about $1.20 for each $1.00 in debt.

Also California Bank and Trust which is setting records in lending.

Check them out!

Skewed Foreclosure Data

Skewed Data Creating Fear - Haven't We Had Enough of That?

The latest data released by Realtytrac, the leading online provider of foreclosure information (and darn accurate, which is more than I can say for various indexes that shall remain nameless -- for now...) shows that the month of April 2009 hit an all time high in foreclosure numbers.

Foreclosure filings, notice of defaults, auction sales and bank repos were reported as 342,038 in the US during the month of April - a 32% increase over April of 2008. The mainstream media (nawh, not them!) skewed this information and didn't explain WHY to the public.

Homes are selling at accelerated paces and the banks are (finally) helping most troubled homeowners (unless you are a "rich" jumbo borrower) - Condo Vultures recently reported on a news hit on Fox Business we did together that 2/3 of the inventory has been sold in the last year looking at number of homes on the market.

This is good news - so why does the data look so bad? For reasons the media won't tell you. The bad news is that one in 374 US housing units (note I didn't say primary owners, but UNITS - meaning investors are included here - something else the media won't tell you - far less actual FAMILIES are being affected by foreclosure than homes IN foreclosure) are in a state of default.

This number, 1:374 - is the highest since Realtytrac has collected data. So yes, that's bad. But there is more to this story.

Much of the activity in the foreclosure area right now is at the initial stages - bank repos are down - at their lowest levels actually since March 2008. The wonderful administration we've come to know and love decided that they'd institute a moratorium on foreclosure that is now lifted - which means banks are now allowed to process foreclosures again - and so as a survival mechanism (and contractual obligation) they have. THAT is why the number looks so bad but doesn't tell the entire story. They are artificially inflated.

The inserted heat map shows you the worst of the worst - the more red, the worse the foreclosure problem (source: Realtytrac)

So where is the getting good (if you're a buyer) and the market sucking (if you're a seller?)

Forget what the media tells you about that too. It isn't Florida. I am so tired of hearing Florida it is ridiculous! It's Nevada. 1 in 68 housing UNITS (see that word again? Remember I said investors? Yes this was the heaviest investor driven market in the nation) is in some state of foreclosure - 5 times the national average. Note though this is a 44% drop in bank repos from the previous month but default notices ALSO decreased! Yes, this is GOOD news. Is it up from last year? Yep, 111%. That's to be expected.

More investors are realizing they will be dead before the homes they own are worth what they owe (I'm one of them, I'm just foolish enough to wait it out anyway hoping I won't get hit by a bus tomorrow - oh and then there's the whole "I signed the paper" thing), and banks won't work with you unless it's your primary residence. Expect to see this happen even more in towns where lots of investors moved in. (By the way, anyone want to buy my homes in Bullhead City? Ill give you a good deal, I promise.) :-)

OK now onto Florida - it's 2nd highest -- not the highest -- in the nation. 1 in 135 UNITS is in foreclosure, about 2.7 times the national average and about half of what Nevada is dealing with. Repos are down 7% in Florida.. this is good. Total foreclosure activity though is up 75% from April of 08.

Foreclosure activity in California decreased 10 percent from March, but the state still has the nation’s third highest state foreclosure rate in April, with one in every 138 housing units receiving a foreclosure filing during the month. Total foreclosure activity in California was up 42 percent from April 2008.

After that is Arizona and Idaho - yep Idaho making news for the first time in awhile. I still recall a lady about six months ago trying to sell me 20 "units" there. I wonder where those "units" would be today. Probably on someone's default list. ;)

Here is another noteworthy fact you won't read about in the media. The top 10 states? Yeah, they make upa full 75% of the nation's foreclosure activity! The highest total is Cali (96,000), then Florida (64,000), Nevada (16,000) and Arizona (16,000).

What about metro areas? My "friends" over at a certain index fund seem to think they are all that matters, so let's take a look. Las Vegas is tops on the list BUT has a 20% decrease from the previous month. Not all bad news. 1 in every 56 units in Vegas is in foreclosure right now. If you are an investor, it might be time to arrange a short sale or get out of dodge.

Next? Oh boy, do I even go here? I got beat up pretty badly by Ft. Myers residents who weren't happy with me after a CNN hit, but yep -- Cape Coral/Ft. Myers is second in the nation - 1 in 57. They were #1, so congrats - you are now in the #2 spot. Again deals abound. Also in Florida? Miami at Number 9, and Orlando at Number 10.

California is still getting slammed too; Merced posted the third highest metro rate at 1:65; then Modesto at #4, Riverside-San Bernardino (where I grew up) at #5, Bakersfield at 6, Vallejo-Fairfield at #7 and Stockton at #8. Congrats Stockton, you also moved up the food chain. The message here? Unless you are buying in Cali where the jobs are (LA/OC), just please say no.

Below is a chart from Realtytrac showing more info than you might like to know about each state. These are the real facts folks - forget the networks -- this is the real stuff.

U.S. Foreclosure Market Data by State – April 2009

		Properties with Foreclosure Filings
Rate Rank	State Name	NOD	LIS	NTS	NFS	REO	Total						%Change from Apr 08
--	U.S.	65,456	76,608	100,559	35,512	63,903	342,038						32.25
29	Alabama	0	0	1,763	0	545	2,308						269.28*
32	Alaska	1	0	190	0	45	236						61.64
4	Arizona	4	0	12,595	0	3,646	16,245						39.77
21	Arkansas	168	0	1,295	0	401	1,864						45.06
3	California	52,909	0	30,441	0	13,210	96,560						42.13
9	Colorado	31	0	4,213	0	1,251	5,495						-9.29
19	Connecticut	0	1,695	0	119	360	2,174						25.01
39	Delaware	0	0	0	95	91	186						33.81
	District of Columbia	129	0	191	0	78	398						42.14
2	Florida	0	41,674	0	16,800	6,114	64,588						75.41
7	Georgia	0	0	7,809	0	3,712	11,521						21.68
23	Hawaii	117	0	497	0	70	684						216.67
5	Idaho	1,040	0	1,399	0	39	2,478						220.98*
8	Illinois	0	6,407	0	3,942	3,298	13,647						54.40
15	Indiana	0	1,682	1	2,215	1,121	5,019						-0.57
40	Iowa	0	0	287	0	344	631						9.36
37	Kansas	0	214	0	392	181	787						5.64
41	Kentucky	0	296	0	392	203	891						80.73*
38	Louisiana	0	1	0	896	228	1,125						78.57
43	Maine	0	99	0	125	24	248						-20.77
17	Maryland	0	2,351	0	601	661	3,613						-39.89
13	Massachusetts	0	3,790	0	759	706	5,255						-23.59
11	Michigan	0	0	7,270	0	3,560	10,830						-11.77
18	Minnesota	62	0	2,280	0	1,205	3,547						82.84
44	Mississippi	0	0	323	0	12	335						98.22
30	Missouri	1	0	1,672	0	1,025	2,698						-21.06†
47	Montana	0	0	12	0	49	61						-43.52
46	Nebraska	0	106	0	3	9	118						-79.86
1	Nevada	8,657	0	5,131	0	2,478	16,266						111.25
16	New Hampshire	0	0	678	0	357	1,035						62.23
22	New Jersey	0	3,349	0	1,041	644	5,034						-3.51
33	New Mexico	0	380	0	238	95	713						100.28*
36	New York	0	4,256	0	872	463	5,591						-1.01
34	North Carolina	648	0	1,371	0	1,063	3,082						-14.91
48	North Dakota	0	0	0	22	15	37						85.00*
10	Ohio	0	5,107	0	3,890	3,327	12,324						-4.69
35	Oklahoma	431	0	553	0	193	1,177						-30.76
12	Oregon	124	0	3,109	0	604	3,837						127.04
31	Pennsylvania	0	1,928	0	1,806	1,315	5,049						54.55*
25	Rhode Island	13	0	310	0	233	556						-4.63
28	South Carolina	0	1,111	0	501	697	2,309						180.56*
49	South Dakota	0	0	0	15	2	17						-50.00
24	Tennessee	0	0	2,090	0	1,380	3,470						-25.68††
27	Texas	12	0	7,153	0	4,149	11,314						-9.02
6	Utah	1,104	0	1,162	0	703	2,969						120.25
50	Vermont	0	0	0	0	2	2						100.00*
14	Virginia	5	0	4,214	0	2,035	6,254						5.16†
26	Washington	0	0	2,352	0	1,007	3,359						33.88
45	West Virginia	0	0	137	0	8	145						95.95
20	Wisconsin	0	2,162	0	788	911	3,861						71.98*
42	Wyoming	0	0	61	0	34	95						196.88

*Actual increase may not be as high due to data collection changes or improvements
† Collection of some records previously classified as NOD in this state was discontinued starting in January 2009
†† Collection of some records previously classified as NOD in this state was discontinued starting in September 2008

Fox Business Online videos & articles

Fox Business Online articles and videos:
http://www.fncimag.com/imag/At+Home.

http://www.fncimag.com/imag/At+Home/Foreclosures%3A+What+You+Should+Know
http://www.fncimag.com/imag/At+Home/Lifestyles+of+Renters+vs.+Buyers

Dani

Bank of Obama stopped doing Jumbo's

Houston, we have a problem. OK, nation, we have a problem. (yeah yeah Young Astronauts program from grade school, still a geek at heart)

I'm in the quest to refinance a property out in Cali that qualifies as a Jumbo mortgage. BofA is freaking me out with their delays, so I decided to do some of my own research. In most of the nation, a Jumbo is about $729,750 or above .. in some areas $417,000 or more to be considered a non conforming loan or a Jumbo. Before I get started, LTV is Loan to Value, which means the amount of principle balance of all outstanding mortgages divided by the value of the home by appraisals (see story on appraisers in my last blog!)

Bank of Obama and team has created a situation where if the government wont buy a loan, the bank won't lend it. End of story. I have the proof.

With the secondary market dead, Fannie, Freddie and Ginnie are getting lots of bucks from the government for conventional loans - those for less than the numbers I noted above. There is no political support for helping jumbo borrowers.

Let me say something right off the bat - I'm not for propping up any of them - but right now the government is yet again creating a gap between what they perceive as the haves and have-not's (there are no political bucks for helping so called rich people), and they are missing a tidal wave of foreclosures about to hit the market with jumbo borrowers unable to refinance. You think conventional homes caused a ruckus? Think what will happen when 15% of the bigger homes fall into foreclosure, too. Talk about devaluing home prices.

Lenders staged when loans would reset. Most in the conventional market are resetting first.. Jumbo's this year and next. Prices are still at least a point higher too on jumbo's than conventionals, even if you can get one. Most lenders want 75% LTV or BETTER! Yes, better. And lookout, but prepayment penalties are coming back!

So I thought it was my imagination that the jumbo market was getting tougher, and went out and did my own research. Thanks to my team of researchers, a lot of phone calls and some dirt digging, here is the scoop as of today on Jumbo mortgages - and who is doing what to even allow you to talk to them.

So here they are, the good, the bad and the ugly - 18 banks and the outcome of the hunt for a Jumbo:

Hanmi Bank (866-654-2664 – Amy Lee)
***Not approving any jumbo/non-conforming loans

Union Bank of CA (866-UB-LOANS, Option 1,3)
***Max loan amount is $417,000 (no non-conforming/jumbo loans)

HSBC (888-346-1717)
***Not approving any jumbo/non-conforming loans

First Commercial Bank US (949-654-2888)
***Stopped personal RE loans. Commercial and industrial only right now.

Bank of the West (800-563-1852)
***Max loan amount is $729,750.00

California Bank and Trust (866-840-4158)
***Not approving any jumbo/non-conforming loans

Citizens Business Bank (714-919-7131)
***Jumbo program only for existing customers

EverTrust Bank (626-854-9700)
***Not approving any jumbo/non-conforming loans

Wilshire State Bank (866-972-2265)
***Not approving any jumbo/non-conforming loans

Chinatrust Bank (949-262-7168)
***Not approving any personal RE loans at this time - commercial and industrial only.

Community Commerce Bank (714-314-9052, Randy)
***Commercial, Industrial, and Retail only right now. Special circumstances apply that will allow for personal RE loans (houses that are on joint residential and commercial zone, fire restoration of home that no other bank will touch, etc.) Other than special circumstances, no personal RE loans!!!

United Commercial Bank (866-821-3899)
***Not approving any jumbo/non-conforming loans…unknown when they will be in the future.

Farmers and Merchant Bank (866-649-3863)
http://www.fmb.com/
***Only 55% LTV on non-conforming loans but may be willing to consider more, credit dependent


Cathay Bank (949-559-7500)
https://www.cathaybank.com/
***Max LTV is 75%, current rate of 6.5


US Bank (800-365-5001)
http://www.usbank.com/cgi_w/cfm/personal/products_and_services/mortgage/home_mortgage.cfm
***95% LTV at 4.5-4.8% interest. -- They are currently ONLY doing this for EXISTING CUSTOMERS! What they say on the phone and what happens are entirely different.

Comerica Bank (866-476-6521)
http://www.comerica.com/vgn-ext-templating/v/index.jsp?vgnextoid=8888577d17a31010VgnVCM1000004302a8c0RCRD
***Here is what they say: Max LTV is 90%, if not in declining market, 80% if declining market. No fixed 30…only fixed 3,5,7, or 10 years. Refused to give interest rate unless I gave them actual numbers of potential loan. Upon further info, only if you give them $250,000 in "other business" (like CDs) will they talk to you.

Wells Fargo https://www.wellsfargo.com/mortgage/ -- not doing anything now.
***Max LTV is 70%. Offering 30 year fixed with no points at 6.5% (aprox., based on limited information). Offering 5 year fixed at 5.3%.

Affinity Bank - only doing conforming loans.

Who does that leave if you need to go to 75 or 80 LTV? Bank of America. And don't even get me started on these guys. That is another blog for another day!

Dani

Oh boy, here we go again -- with appraisers...

Think it's hard to get a loan? Thanks to the government, it might be juuuust about to get a littttle bit harder (sense any sarcasm?)

Home appraisers played a very big role in the build up and subsequent tear down of the housing bubble. I can tell you some stories from the trenches that would make you cringe and may even take the blame off of the Bush Administration (for awhile) on this whole "housing mess".

So let's look at how appraising works, and what role it has played (so far) in the housing business. Appraisers are generally retained by brokers or lenders. There are shady people in every business (mortgage brokerage companies are full of them) and these brokers (in particular, but lenders too) seemed to find people who would support numbers that they wanted to get deals done. Many of these numbers were overinflated. Appraisers are one of many on the long list of real estate food chain that get paid for a service that really either isn't needed, or could be done online very easily. Some have found Zillow to be more accurate than their local appraiser because Zillow isn't freaked about getting sued.

There are many, many written stories of collusion and fraud so I won't even bother to go into them here, you can google that and have hundreds of thousands of them from reputable sources. But here is the problem - the government.

See, appraisers pulled back after they took a lot of the heat from the inflated market. No one wants to go to the pen over a house appraisal that they made an extra $500 bucks on. They started doing the opposite - being VERY conservative on appraisals such that buyers would often have to come in with another 10 or 15%, just because an appraiser cut an appraisal to cover their asses - not because the house was really worth that but because it "could be later on" (some lenders creatively call this a declining market). This caused lots of sales that would have proceeded just fine to be yanked out from under the buyers and sellers.

Here is the catch. The government has decided it's in "everyone's best interest" to have yet another middleman in real estate (by the way, they already exist - they are called real estate agents - see my former book Commissions at Risk available on Amazon).

A new code of conduct will exist beginning May 1 that requires the nation's 60000 freelance appraisers and lenders and brokers to use Appraisal Management Companies (AMCs), which will prevent lenders and appraisers from actually talking to each other. No, Im not kidding (see previous blog about Countrywide fiasco that I personally went through with appraisers).

This gets better. See added onto the new rules are players in a game of rules that were broken years before and full of shady characters. There is one company exposed in several stories called NovaStar Financial out of Kansas City. This was a subprime lender during the boom and they were slapped on the wrist by three states for employing unlicensed brokers and charging unlawful fees (nawh.. mortgage brokers NEVER do that! See previous blogs about never using a mortgage broker!)

After its collapsed business (like many other brokers), they reinvented themselves into the -- yep --- AMC model and bought an appraisal company, and call themselves StreetLinks National Appraisal Services. One of the very same companies that led to the trouble to begin with is now going to be part of this new group that is designed to police the problem.

There are a few issues here.
1. Screening AMCs - who is going to do that exactly?
2. The communication between lenders and appraisers - it must exist for any deals to get done!
3. This gives appraisers even more power than they had before, and may kill deals particularly in the prime or jumbo markets
4. The government is involved - the fed housing officials will regulate (aHH!)
5. Added processes, and less money to the actual appraiser

So when you buy a house, it should work like this (well it shouldn't - it should be easier - but it has):
1. Borrower goes to get a mortgage or a refinance
2. Lender sends an order to an appraiser
3. Appraiser appraises, sends underwriter the appraisal
4. Bank does their "thing".

Now it will go like this:
1. Borrower goes to get mortgage/refi
2. Lender sends order to AMC
3. AMC sends to a local appraiser
4. After reviewing the appraisal, the AMC may seek changes on behalf of the lender (ah ha!)
5. Borrower pays $300 to $500 - and the AMC keeps half of the change

Do you think appraisers are going to work as hard to be as accurate when they aren't getting the full cash for the appraisal? My guess is we're just going to have even more ticked off appraisers who on top of feeling blamed for the mess (particularly the good ones who did their diligence and take this personally), are also underpaid.

Under the new rules, if AMCs are applying any 'undue pressure', they will be in violation of Freddie and Fannie rules and they will "take action". They will have immense power over freelance appraisers. To earn a living, most have determined that they will have to be part of AMCs preferred group, or most major banks won't use them - they will lose a lot of business.

Fannie and Freddie cannot even lend Grandma $200k to buy a house worth $400k - you think they can handle this too? Oh, and the taxpayers now own a big chunk of yet another government wasteful project that will not only hurt housing, but create yet another layer and another obstacle to get all of this inventory off of the market! All in an effort to save people from themselves -- which could easily be done by reading a contract. I know, crazy huh?

Small biz money not as hard to get as you might think

Since John Rutledge and I started taking the Entrepreneur calls on Fox Business Saturdays 1-2pm EST, we've had a lot of call-ins with people asking if it's "really hard" to get money, where they should go to get it, and what they need to do to make their dreams a reality. The focus of our show is all about not whining, and not waiting for people to come to you with aid - but to tap into the American spirit we see alive and well in so many viewers, emails, twitter followers, students, book readers and so on. This is not a very PC show, for those of you who have watched it. :)

I think one of the most common mistakes people make is listening to Washington. They're trying to get re-elected; with the exception of very few, they don't really care if you panic because they'll be seen as heros when you stop! So don't let them create the reaction! Yes, our 401ks suck. Yes, who likes logging into eTrade and seeing much of your portfolio wiped away? Or delaying retirement? Or having our houses under water? Or being late on our bills? I realized today that the market is only 5 years off from being at the level it was at when I first started investing! That is enough to make even sane rational people a bit (aka not politicians) freaked.

What we have to focus on is not letting the politicians who are telling us how bad things are so they can spend money for outrageous things like a World Trade Center in Montana and pig-stench research convince us that 1) this "spending" will help, or that 2) this is a sign of how bad things are. The only thing this is a sign of is how stupid our politicians are!

You watch our show, you may have read one of our books, bla bla.. and you want the bottom line. You want to know how to take your idea, get some CASH, and go for it. You may be in the boat that thinks money is harder to get these days than Hillary Clinton looking comfortable in stiletto's and a skirt, know this - it isn't. In fact, thanks to the Obama administration's pork-ridden bill (did I just say thanks? It isn't taxes, think of it as a big tip for Obama) the government has nearly $700 billion more to spend on small businesses. Yes, they'll try to tax it away from you later, but that shouldn't stop you from trying to earn it now. If you spend it all, there are no earnings left to tax. ;) (How is THAT for stimulus!?)

One of the most commonly asked questions is, what kind of loan can I get from the Small Business Admin?

First, know that the SBA doesn't lend. It backs banks that do. It makes it safe for banks to give you money, and right now, quite a lot of it at relatively cheap prices. Think of this as a Fannie/Freddie back in the days when F and F weren't run by morons (or no one was watching).

Go to the SBA.gov and look at the loan types, but here is a quick rundown of the types, and what you can get:

Community Express
250k
Price? Prime plus 2.25%
7 year loan, and you'll have an answer in 36 hours
No collateral
Focused on helping distressed communities

Express Loan
350k
50% SBA guaranteed; 50% bank or collateral
6.5% over prime (eek!)
36 hour turnaround time

Patriot
500k
2.25% over prime
Vet/active duty/reserves/guard/spouse
7 year loan
36 hour turnaround

7a) Capital, Land, Building
10 year loan, rates and time vary

Microloan 7m
35k, inventory, supplies, furniture
Can’t be used to pay existing debt or for real estate

CDC504
Long term
Brick and mortar only - sorry Internet businesses

In addition to this, check out whitehouse.gov in mid March for information on how you can get grants if you're developing clean technology, green "stuff" or anything else that someone like me won't use, but sure can get a lot of dough in this environment.

Most importantly, don't let the government get in the way of your dreams. The government is a buzz killer. Only YOU know your own worth - if someone tells you directly or indirectly you aren't worth the price, give them the finger. It isn't just easier said than done, I do it every day. Believe it or not, it can feel good.

And watch our show every Saturday. :) Thefoxdocs.com

Dani