Mortgage Blog

RateWatch - Something Odd Going On

2009-08-26T09:59:00.000-06:00

Market: We're flat, as in 0bps movement, so far today. We've been trading in a narrow range, with a push to the upside on bonds (down on rates) for a few days now. I find this exceedingly odd, and will attempt to explain why. Rates continue 5.25% or thereabouts on the 30-year, lower (and MUCH lower sometimes) on ARMs, which yes, are still out there and making good sense for many.

Analysis: This is a tough market to read. We are sitting right on the 100-day moving average (and the 200-day moving average). For weeks, every time we touched that line, we retreated strongly. Any news, even bad news, was interpreted in the most positive possible light, and bonds sold off. The stock market is strongly up since March, and though bonds have not fallen by the same amount, the general consensus (here, too) has been that rates were trying to rise and that it was only a matter of time before we saw 6% and higher again.

Well, now I'm not so sure. This is very odd behavior for the market. The last couple days there has been some decent economic news, home sales higher, Case-Schiller index higher in 95% of the measured markets, consumer confidence much higher than expected, durable goods orders higher (but with embedded weakness), and ordinarily this would mean a selloff in bonds, especially as we're right at the top of a trading range. And yet, and yet. We even had a huge 5-year treasury auction yesterday, but the bond market actually ROSE following that auction.

So here's my interpretation at the moment: I think there is a nagging suspicion in the market that there is some really, really negative news coming. I think there's a fear that this summer was irrationally exuberant in terms of calling an end to the recession. I think that means that we're going to hang out right here on interest rates until at least the $8000 first-time homebuyer credit goes away (loans must be CLOSED by November 30).

That's my read. I could be wrong. I'm holding out at least a 25% chance that there could be a big move down in rates before the end of the year. I also wouldn't be surprised to see a large move upward. But if I were betting, and hey, that's kind of what I do here every day, I'd bet on holding right here.

Chris Jones

City 1st Mortgage Services

801-310-3407

P.S. For you duplex buyer mortgage shoppers, just wanted to say that you'll need to be in underwriting (for conventional financing) by Monday unless you want to put 20% down. 80% becomes the loan limit on all duplexes as of Tuesday Sept 1. Just a word to the wise.

RateWatch - Waitin' on the World to Change

2009-08-19T15:52:00.001-06:00

Markets: Nothing much happening for the last few days. Up a bit, down a bit, with the general trend toward up. Rates still hanging out in the 5.25-5.375% range.

Analysis: It's the end of summer, and nobody is home. There is a lot of data coming out tomorrow, and there will be especial attention paid to existing home sales and initial claims. Mortgage shoppers, watch for that data to be better than expected, and for rates to move higher on very weak volume. Next week most traders will be back at their desks, but the real long haul of the final third of the year won't start until after Labor Day.

Only 126 shopping days left until Christmas. Just FYI.

Chris Jones

City 1st Mortgage Services

801-310-3407

RateWatch - What Goes Down Must Come Up

2009-08-14T08:36:00.000-06:00

Market: following last week's meltdown, we were due for move movement higher in the bond market, and we've been getting it all this week. Today we're up a modest 25bps, but that follows three out of four days of decent gains. We're not back to two weeks ago, but we're not far off it. Still at about 5.25% on the FHA, with conventional in that range as well, depending on, as you know by now, several dozen factors.

Analysis: markets are funny things. They'd be much more predictable if they weren't being operated by humans, who tend to overreact to everything. When economic data is less negative than expected, they buy things really fast, which leads to selling them equally fast when data is less positive than expected. Right now, it appears the economy is starting to bottom out, or at least the rate of descent is slowing. But it never slows in a gentle curve; there are bumps and bruises along the way. Those bumps are what we're seeing now. It's keeping rates generally down, and allowing us to lock on the dips.

Apropos of this, let me remind everyone that being able to lock your rate is a function of having a great deal of information about your loan already in the system when the opportunity presents itself. Don't be cavalier about this. Especially in the current regulatory climate, I need far more data about what we're doing with the loan than I once did. If I have it, I can lock very fast. If I don't, I can't lock at all. The best defense against losing your sought-for interest rate is to work with me to get you into a lock-ready position, then we can pull the trigger at the best time for you.

Chris Jones

City 1st Mortgage Services

801-310-3407

P.S. I just inked a contract with Scotsman Guide, one of the industry's oldest magazines, to write some articles for them. When they come out, I'll post a link, but they've accepted two articles so far, so be watching.

RateWatch - Summer Hatin', Not Having a Blast

2009-08-06T09:43:00.001-06:00

Market: We're down another 9bps today, over 100 from Monday's open. Today, if things hold, we'll see four straight days of red candles on the chart. As previously mentioned, there has not been a five-red streak on the bond market for more than three years. Records are made to be broken, but...

Analysis: Economic news has been less bad than expected for most of the week. The gummint is auctioning off $75 billion in treasuries next week. Traders are still vacationing coming into the fall session, and Congress is about to go on recess. Combine all this, and the markets are less jittery than they were, which pulls money from bonds and puts it into stocks, making interest rates rise. That's the explanation.

The real question is: is the recession over? Newsweek says so, for what that's worth, and there are some signs that we may have reached the bottom of the trough. Personally, I'm not so sure. If by "the end" you mean that things are not going to go on getting worse forever, and that we are seeing a slowdown - even a stop - in the decline, then perhaps this could be the end. If by "the end" you mean that the economy is going back on the offensive and a recovery has begun, then no, I think you're out to lunch. Most people think of the end of something as the point where that something stops and something new starts up. By that definition, not only is the recession not over, it hasn't really gotten started yet.

Lessons should be learned from the Great Depression, which this recession mimics in many ways. The decline was steep and sudden, but that's what we usually call a "crash". The thing that put the "Great" in "Depression" was the length of time before things came back to where normal would have been. That's what makes me more cautious here. I think it likely that we could be in this trough a very long time. It takes some years to undo the calamity we spent 30 years getting into.

Keep saving, keep paying off your debts, keep working even if you don't have anyone paying you. That's the way out, no matter what the broader economy is doing.

Chris Jones

City 1st Mortgage Services

801-310-3407

P.S. Apropos of this, I've finally posted something that's been percolating for a few months. It's called The Most Important Post of My Life, and I'd be grateful if you'll take a second to read it.

RateWatch - We Control the Market

2009-07-23T15:18:00.000-06:00

Market: We got hammered today because...well, because. We're down 59bps at the moment, and you can thank us here at the Chris Jones Branch of City 1st that it isn't worse. It was worse, but we fixed it. I will tell you how below. This translates to a rise in rates of .25% over the past two days.

Analysis: Employment numbers came in right in line this morning, followed by home sales numbers that are so anemic they'd be confined to bed in any other market. The stock market euphorically rose to over 9000 on this news. Whatever. Who can analyze this stuff?

But I know how to control it. This has been tested so many times now that it's as good as proved. We know here at the office that when we lock a loan, we reverse the market (this only works when the market is tanking). In the last two weeks we've done it several times. The market starts to fall, so we call up one of our loans and lock it. The second we do, the rally begins. Happens 100% of the time.

Why didn't we do something about the terrible crash of Black Wednesday two months ago? Funny you should ask. We TRIED. Lenders stopped accepting locks, so we couldn't get one down. We sent in the request, and it was eventually honored - at the open of the market the next day, which sparked the largest up day for bonds in several years. I'm telling you, it's a curse having this much responsibility.

But I promise you I will use it with discretion and wisdom. I also promise that your personal loan will not be the one we sacrifice on the altar of the gods of mortgage rates. We'll get someone else.

P.S. Thought I'd again thank all of you for following me, and let you know that it matters a great deal to me. Today I picked up a gig writing for the Scotsman Guide, somewhat because of RateWatch. You are all very important to me, and you do get service that's not available to just anyone. Thank you again, and welcome to our new signups. Hope you like it here.

RateWatch - Drifting, but Which Way?

2009-07-22T11:21:00.002-06:00

Markets: Yesterday was a good day up, and today is down only slightly, so it appears we might hold our gains. We gained 65 bps yesterday and have lost back 16 so far today, which on net is pretty good. For the uninitiated, there is a strong correlation between mortgage-backed securities (mbs) and mortgage interest rates. When mbs rise, rates fall, but the correlation is not 1-to-1. A 50bp move in mbs corresponds to at least a .25% improvement in rate price, which means about .125% better rate (see detailed explanation here). Usually. Not always. Not for every program. Not for every lender. Professional mortgage guys get paid for their services, and there's a good reason for that.

Analysis: Markets liked Ben Bernanke's testimony yesterday. He's forecasting more unemployment, and the conomy hitting abottom here and starting to climb late this year or early next. But he's also telling us that he sees a slow climb, with no huge bounce, especially in real estate. This is what is called an "L" recession, where things fall and then plateau at the new, lower level. I think that's a good analysis. I expect the same, for a good while, until US households shed more debt and build more cash. Right now it is the cash dearth that is starving the economy. That dearth has been created by huge appetites for debt. Eventually, all debt payments come a'cropper, and that's what is happening now. It will pass, if we're smart, and if the government doesn't insist on a recovery according to some electoral timetable.

Which is why I'd get my own house in order as fast as possible. We're not all that smart, and the government always acts according to electoral timetables. The basics still work, though, people. Save some, pay off your debt, find someone to help and help them. That's the way through.

Chris Jones

City 1st Mortgage Services

801-310-3407

Social Media and Real Estate, Vol. 1

2009-07-17T18:41:00.001-06:00

I only address this topic because I can't find a lot of good commentary out there about this specific subject. I'm also no great expert; my experience with social media is pretty small compared to the Great Lords of Twitter and the Ancient Kings of Facebook. I confess this.

On the other hand, since according to Mortgage Strategy only 19% of the real-estate industry is even kind of using social media (this from a tweet this morning), and from experience I can testify that 90% of that 19% is using it badly and doing harm to itself, I thought I might at least give my opinions about how social media might be used well in a real-estate context. I am certainly using these tools better than most in my industry, and that has translated into gigs at Zillow and the Daily Herald Newspaper, so apparently my ideas do not entirely suck. Take them for what they are worth.

Here's how I got to writing this:

From Seth Jenson, a really good Realtor in Colorado: "Chris, what do you think about Twitter vs. Facebook? Do you think I need to be on both?"

Seth-

Whoo. What a question.

Facebook is a terrific way for people to connect. I'm no huge FB-er; I have about 400 friends, which is not a big number by any stretch of the imagination. I don't spend a lot of time trying to find friends on FB, or I likely could have a couple hundred more. And maybe I ought to do that. Probably I ought to do that. But it depends on what I'm using Facebook for.

If I'm using Facebook to keep tabs on people I know - my family, my close friends here in town, a few of the guys I went to HS with - then I'm doing it the right way. You can't possibly keep track of the doings of 1000 people every day. Impossible. However, if one of the reasons for you to be on Facebook is that you want people to remember YOU, well, then you might want a few more friends. You'd want to update your status at least once a day, and probably more than once. These wouldn't all be real-estate updates. In fact, most of them would be about anything except real estate, and would be only for the purpose of strengthening relationships. It is those relationships that bring the referrals that make you successful, and coincidentally, it is those relationships that make your life richer and more rewarding, so that's a happy thing. Facebook makes strengthening those relationships easier than ever, so I would definitely be on Facebook.

Twitter is very different. I love Twitter, myself. I like Twitter better than Facebook. Where I post or comment about 5x a day on Facebook, I do that twice as much - or more - on Twitter. Twitter is a research tool as much as it is a communications network. I get a lot of my news from Twitter, most of my reading material, and have most of my online conversations there, even more than email. Now, again, it depends on what you're using the tool for. Twitter can be a huge and pointless waste of your time. It can also do you harm, I think. But if you use it with respect, I think it has the potential to be incredibly valuable.

Here are some examples. I am not a big noise on Twitter. I have fewer than 200 followers. I'm following only about 100 people. I determined when I got involved that I wouldn't try to amass a gigantic following until I had some idea what I was doing it for. I didn't know enough about Twitter to know what I was doing, so I figured I'd start by following some people that DID know, namely, those that have good blogs about social media. So I followed Amber Naslund, Olivier Blanchard, Beth Harte, and some others, and learned about what Twitter could do, and more importantly, what I should NOT do on Twitter.

Then I started using the search functions of TweetDeck - TweetDeck is an indispensable tool for using Twitter - to follow mortgage news. There were some interesting conversations that came out of that, which resulted in my following Tyler Osby, Dan Green, and Agentopolis and a few others. They are doing most of the blogging and commenting about what's going on in the mortgage industry. There were two or three other topics that I thought would be good (hobbies, etc.) so I started running searches on those as well. I've acquired my 160 or so followers through conversations, not spam. In fact, most of those that are following me would unfollow if I used Twitter to promote myself ad-style. But because I blog, many of them are reading what I write, and following them allows me to read what they write, get smarter, and engage them in conversation. Again, for me it is about the relationships. It's made me better at mortgages, even though I haven't spent a great deal of time on Twitter talking about mortgages per se.

Bottom line? Yes, you should be on Facebook and on Twitter. Figure out what you want these tools to do for you, and design a strategy to get them to do that. Expect it to take time. If you do it right, it will take a lot of it, and a fair amount of work as well. Farming does.

Good luck. Follow me on Twitter @chrisjoneslehi, or find me on Facebook at www.facebook.com/chrisjoneslehi.

RateWatch - What Goes Up, Must Come Down

2009-07-15T11:19:00.001-06:00

Market: Bonds are taking a hammering the last couple days (off 65bps today), with economic news better than expected. Empire State manufacturing numbers were, well, not UP, but a lot less DOWN than expected, and core CPI doubled from .1 to .2, so the stock market moved up and bonds are coming down. This takes rates higher. We're in the low 5% range and moving toward 5.5%.

Analysis: A manufacturing reading of 0 means that the industry is stable, so today's reading of -.55 is not good news except in the context of last month's reading, which was -.9.45. So things are looking up. Sort of. The inflation number continued to be higher, boosted by a spike in oil prices, but stripping that out the core CPI was still higher than expected, the second such inflation reading to the high side this week. Mortgage-backed securities have dropped about 100 bps this week so far, a now three-day negative run. We've given back most of what we got last week.

The economy is still in a shambles, but just as nothing goes up in a straight line, nothing comes down in a straight line, either. There are inevitable plateaus, and every plateau looks like a potential bottom, especially to a population starved for good economic news. In the macro sense, I hate to say this, but in the mortgage rate sense, I'm happy to report, that the economy is still moving the wrong way and doing so with some rapidity. We are not at the bottom yet. Repeat. NOT at the bottom yet.

Look for rates to make a small rise here, then drift back to where we were last Thursday, or even a skoshe lower.

Chris Jones

City 1st Mortgage Services

801-310-3407

RateWatch - It was the best of times, it was the worst of times...

2009-07-10T09:56:00.001-06:00

Markets: Doing well again today. Yesterday broke the string of 5 straight days of rising bonds and falling rates (we have never had, in the years I have been following this, 6 green days in a row, so it was expected), and today we've continued the trend of the past week. Rates continue to improve. We're very close to some exciting things in mortgage rates. Stay tuned.

Analysis: Folks, the economy is in the soup. The things that got us here didn't happen in four months, and they're not going away in four months, either. This morning @agentopolis (I love Twitter) put me on to this article about unemployment, predicting that we'll see it hit roughly 14% in the coming months. I heard a very convincing analysis last night that put the CURRENT unemployment rate at 20% right now, if you count everyone, which the government numbers do not.

Do not worry about this. You cannot stop any of it. Work hard. Do your job. If you lose your job, it happens. Call me and tell me. I know people. We're doing things. We'll help you if we can.

Find someone worse off than yourself - this will not be hard - and help them. There's no better cure for recession than a lot of people working hard to help each other. No, let me amend that. There is no OTHER cure for recession than a lot of people working hard to help each other. Be part of the solution where you are, and let the markets do what they will.

Have a good weekend.

RateWatch - Hmmmmm. Interesting.

2009-07-06T13:11:00.001-06:00

Market: We're up 19 bps so far today, picking up 3 bps every 45 minutes or so. Slow movement on heavy volume. That's pushing us back into the low 5% range on rates.

Analysis: This is really quite interesting. The government auctioned off $8 billion in 10-year notes this morning and the demand was very solid, both domestically and internationally. There was more money out there in that auction than there has been in years. That's a much different result than the auction of two weeks ago, let alone the one a month ago, which was disastrous. What it means is that there is a good deal of pressure in the market forcing bonds higher, and if you've been paying attention, and of course you have, you know that bonds moving up means rates moving down.

But it's more than that. Just the bond level is not entirely indicative of where rates are going to be. There's also the question of risk and liquidity on the bank side. The more liquid bank assets are, the lower they can set rates without exposing themselves to rate risk. As the credit markets froze up last year, banks had to raise rates to protect themselves, and had to chop programs until essentially only a-credit borrowers could qualify. It's too early to say that we've started the pendulum swinging back again, but today's auction was a thing that makes you go hmmmmmm.

We'll be keeping a close eye on the auctions later this week.

Chris Jones

City 1st Mortgage Services

801-310-3407

@PaulRevere: The what are coming? Is this really you?

2009-06-30T10:09:00.001-06:00

Over at #PDF09 (it's a new-media conference), there's lots of hoo-hawing over how world-altering Twitter and other social media are. I agree with all of this, but I have a caveat and a caution.

Caveat: the more possible sources of information, the more face-to-face contact will matter.

Caution: do not confuse your Facebook friends and your Twitter followers with people that will help you when it matters.

See what I mean?

Alec Ross said at PDF09 that Paul Revere would simply have tweeted instead of having to ride. Maybe he's right. But the genius of Revere was not that he communicated, but that the people in so many villages and towns knew him and trusted what he said. And let's not minimize this, either - a tweet is great, but a real man on a real horse riding through your town is a lot more attention-getting, and a lot more mobilizing. Revere wasn't interested in people knowing that the regulars were out, he was interested in people acting on that knowledge.

More timely: Iranians were tweeting and Facebooking and YouTubing like crazy, but the potential for revolution was only made real when they marched.

I believe that we're pushing over a very real threshold here with Twitter and other tools of social media. In most ways, I'm not really qualified to talk about this. I'm a mortgage guy, for Heaven's sake, not a consultant with Radian 6. What I know about Twitter and Facebook and FriendFeed and all that is just what I've observed myself and learned from an admittedly limited experience.

But in another way, I'm well placed for observing the effects of these things. I live in a small town, my office is less than a mile (2 stop signs) away from my home, and my life is interwoven with many of the little businesses that line Main Street. I know people that are well-versed in social media but not integrated into the place they actually live, and others that are ignorant of SM, but who have a vibrant place in the local community. I see the relative power of those personal, physical connections every single day, and with all due respect to Alec Ross, who is a much smarter guy than I am, I think that Paul Revere might still have chosen to ride.

This has lots of business and personal implications. My business is already ephemeral - nobody ever sees any of the money that changes hands in a mortgage transaction - and the electronic media I use for communication can only do so much to advance the relationships that I depend on for referrals. It's certainly easier for people to tweet me or email me a referral, but I've found that it's more likely that they'll give me one on the phone or in person. I become the product my company sells, and raving fans rave more often in the physical presence of the thing they're raving about.

As previously stated, I love Twitter and I'm an evangelist for social media. I think it is immensely powerful. But I do think we're running the risk now of having the engine revving at incredibly high speeds, but the clutch is engaged and the car is not moving. There are scads of information out there, more than ever before, coming at us at an impossible rate, yet our lives, the things we are and do, remain bounded by the same 24 hours and the same willingness - or unwillingness - to act.

What Half of the Day Do YOU Work?

2009-06-25T10:25:00.000-06:00

@TylerOsby asked a question this morning on Twitter - "how long do you work every day?" Apropos of this, I also read an article this morning by Tim Ferriss, who wrote The 4-Hour Work Week, about how he works, um, 4 hours a week. Obviously. But anyway, what I found was that I could not give a straight answer to Tyler's question. I've had trouble with this for a while, and it's getting worse.

On the surface, it seems simple. You work when you're working, and you aren't working when you're not working. Oh, if only. Here's an example: right now, am I working?

I don't know.

The blog, in general, is a marketing vehicle to let people know that I have a certain level of expertise in mortgages. I do. In fact, I'm very good at them. I've been doing them a long time, in several capacities, and I understand them well from many sides. But the part of this blog that establishes that credibility is primarily the RateWatch segment, which I love, but which this post is not. So is this post work or not?

Um.

There's so much more. In 20 minutes, I'm meeting with Nathan Larsen from Classic Books and Gifts to talk about a really innovative book contest we're putting together. There is practically no chance that this contest will pay me any money, though it is about 90% certain that I'm going to be headmanning it. It will take volumes of time and some money. Is the meeting work? It will be benefitting the bookstore. It will employ (eventually) many people. It has lots of outgrowth possibilities that could make many of the people I know better off. It's also fun. So what is this meeting? Work?

I'm going out to garden at some point today. Is that work? I spent half an hour reading articles this morning and some of those led to this post. Was that work?

I know there's all this fancy talk about balance these days, how to balance your professional and personal life, how to balance family with work, how to keep your different compartments separate and weighing about the same. Perhaps it's just me, but I find that philosophy so stupid my eyes cross. I can't for one second separate all the different parts of my life. Practically no activity that I engage in has no spiritual component. Practically every activity has some family aspect. When I'm with my family, much of the time, my phone is on and on my hip. Am I working? I'm on call. Isn't that working? On the other hand, when I'm sitting in the office, often I'm discussing the Jazz with my brother. Is that working?

Much of what I do every day produces no direct financial benefit. Nearly everything I do EVERY day produces some indirect financial benefit, and the part that doesn't produces other kinds of benefits in friendships, quality of life, larger vegetables, and suchlike. It's not a job, that's for sure. But isn't "work" the thing you add to the universe to stop it from going straight to crap? Am I not ALWAYS working?

I need help here, obviously.

So I told Tyler that my first communication with the outside world happens between 6:30 and 7am, and my last communication between 6pm and 11pm, depending on the day, which was true but not what he asked. He responded that that was a long day. I replied that everyone's day is that long; mine just has more in it than most people's. I got the sense, though, that that wasn't very satisfying to him. It wasn't all the way for me, either.

Can you help?

What to Do When You Lose Your Job

2009-06-18T17:56:00.001-06:00

I have a lot of good friends that have lost their jobs recently. Most of these guys are good workers, not at the bottom of the food chain, respectable guys with families and mortgages. They are middle managers, sales managers, warehouse managers, and they weren’t the only ones that went down with the ship - all the people under them lost their jobs as well - but now they’re in varying amounts of trouble and jobs are very, very hard to come by.

Additionally, I know a goodly number of people in my industry that are underemployed now, with the real estate market in disarray. Mortgage guys, title guys, Realtors, lots of us find ourselves with stretches of time and nothing in particular to do with them.

I have a suggestion. You lost your job. But you haven’t lost your ability. You can still work. Right now, there’s a lot of work out there. Why not do some of it?

First, let’s split jobs from work, so that this will make sense. A job I’ll define as something someone pays you to do. Obviously, we need to eat and we have mortgages to pay, so jobs are definitely attractive. I’m not disputing that. Work is anything you do that is productive, whether it pays or not. It therefore includes things like gardening and playing with children.

Second, let’s think about this a bit. We have no job. Nobody is going to pay us today to do anything. We’re going to apply for some jobs, send out our resumes, make some calls to our networks, try to find an open position. Guess what? There aren’t any. If there were open positions, we wouldn’t have had ours get eliminated (simplistic, obviously, but in general terms, when large chunks of the economy are firing, there aren’t going to be any open positions by definition). So resume fairs and Monster.com will only be so effective. It’s unlikely that we’ll find anything immediately, and even less likely that we’ll immediately find a job we want.

But we can still work. The economy is shrinking. Why is this? Do people need less food than they once did? Fewer cars? They only wear clothes half the time now? No, of course not. But there are two ways to stimulate the economy. One is to have people out there with money, looking to buy things. That’s where we once were, but the debt fairy has come for payment now, and the days of lots of free cash are over. The other is to supply things to the market that people will decide to re-task their money to buy. This is called supply-side economics, and it works a bit differently than we’re used to. But it still works.

Look, nobody stood around trying to figure out if there was something like a Rubik’s Cube to buy. Erno Rubik produced it, and people said “hey, that’s cool” and bought them up. What I’m suggesting is something like that. You want a job. There are no jobs. But if businesses were doing better, there would be jobs. So what you need is for businesses to be doing better.

How do businesses do better? They sell more things, produce more things. To do that, they need more workers, more ideas. They’re cutting costs to try to stay in business, but what they desperately need is a reason to hire people. They need work done, and they can’t pay for it until they get some money.

So make them some money.

We have incredible expertise. If you’ve been in management anywhere, you know how to do things, how to sell, how to buy, how to get people working together. Lots of the guys I know that are out of work are salesmen and marketers. They have huge amounts of experience, probably a lot more than most businesses could afford to pay them for.

So we don’t have jobs. We can still do work.

I work with a small group of people called the Main Street Gang, for want of a better name. What we do is go from business to business, mostly on Main Street in Lehi Utah, meeting the proprietors, looking for ways we can help. Sometimes we write reviews of their businesses and post them around on local sites, doing some web marketing. Sometimes the help we offer is more substantive. With the local bookstore, we had an idea that has now grown into a large enterprise, and has, it appears, some real potential. It should be very good for the struggling bookstore, and for several other related businesses.

There’s a local organic market. They need help. There’s a barbershop. It needs help. An appraisal management company. An insurance agency. My mortgage branch. A sign company. A restaurant. All these businesses could profit tremendously from the expertise that we can bring to the table. We can organize campaigns, consult, see areas where things could be improved. We come in as a consulting company and we do what we can to help. And we do it for free, because someone needs to do it, and the people that need it the most can afford it the least.

It doesn’t pay. It is, however, productive work. It makes us better. It keeps us sharp. It brings us into contact with dozens of small businessmen and women, the very people that are most likely to feel the returning surge of power in the economy and look to hire someone to help them to exploit it. Who are they most likely to look at first? Some of us have gotten jobs in the meantime, and still return to help out once in a while. When a job comes open where one of us is working, who are we most likely to recommend to the HR people? Right - someone we’ve worked with before, that we know and trust, and that has already demonstrated his willingness to work even when the payoff was pretty obscure.

We supply work and expertise and energy. We still have those things. We try to push the flywheel of the economy a bit faster on every turn. And we find that we’re happier. We’re having fun. We’re stopping a few people from joining us in the ranks of the un- and under-employed. So if you’re out there, having trouble finding a job, how about joining us? We could use you.

Now that you don’t have a job, why not do the work you always wanted to do? It just might be the best career move you ever made.

It's a Start for the Main Street Gang

2009-06-16T13:54:00.001-06:00

Lehi Utah is my home on purpose. I grew up outside Washington DC in a sprawling suburb, but spent a lot of time in the city and got to know it pretty well. I like cities. They’re fun. I’ve been to most of the big ones in the US (with the sole exception, I think, of Houston), and I like the unique character of each. Except Cleveland, but that’s another story.

But a city isn’t a big mass of people. A city is a very large conglomeration of smaller communities, that all happen to be in close proximity. Nobody knows “Manhattan”, no matter how long he’s lived there. He knows his deli, his bookstore, his side of the street. The ones that love New York the hardest are the ones that know their neighbors the best. Those are the people that build communities. The people I admire most are the ones that start making friends with the locals fifteen minutes after arriving.

Contrary to generally accepted ideas, this kind of community is just as possible - and just as critical - in Manhattan as it is in Lehi. In small towns, it’s easier to get to know the locals because those are the only people there, but smart people, those that are the most fun to be around, get to know the locals wherever local is. Maybe that’s harder when the local coffee shop is Starbucks instead of Beans and Brews, and the local burger joint is Burger King instead of Emmetts, but I wonder.

Most of you know that I am a relentless advocate for local business. I love small business in whatever locale, no matter how small. I have been known to drop a $20 bill on a lemonade stand. When I moved to Lehi about 5 years ago, it was the smallest city I had ever lived in by some hundred thousand people. I loved it immediately. I started shopping at Kohlers instead of Albertsons. I joined the Chamber of Commerce and got an immediate tour of historic Lehi from Carl Mellor, who runs the 120-year-old Lehi Hotel. I ate at Porter’s Place. It felt like home.

But I noticed that that wasn’t universal. Lehi was in the process of tripling in size over an 8-year period, and there was a lot of new housing going up with people in it that used Lehi like a hotel; they slept here and ate room service, but went to work somewhere else and generally took entertainment and meals in other cities. Part of that is Lehi’s fault - there is now a movie theater in town, but there wasn’t until recently, and the number of restaurants is tiny - and part of that is just bad luck, with the main arterial road in town being owned not by the city but by the state of Utah (hence largely unimprovable). The Home Depot in American Fork killed off Peck’s Hardware on Lehi’s State Street, and the WalMart and Lowe’s and Costco seemed poised to do the same to other local businesses, such as they were. I worried that Lehi would fail to maintain its character in the face of this chain-store onslaught. Worse, I feared that Lehi would lose its sense of community, the ties that bind people together with the places they live.

Let me add parenthetically that I love big business as well as small business. I shop at these chain stores, too (though not nearly as often as I used to). I have nothing against WalMart and Lowe’s, Applebee’s and Chili’s. This is not a rant against globalism and multi-national corporations. Far from it. I have, however, something else in mind. Money spent in your local community stays there far more surely than money spent in a chain store. It’s a more efficient delivery vehicle for value. If you want your local city to provide services, your local stores to thrive, and your local housing market to retain (or increase) its value, the best way to do that is to inject your money into the local economy, and you do that much more efficiently at Broadbent’s General Store than at WalMart (see the 3/50 Project for more). It’s not just good for the local business owners; it’s good for you.

So I moved my business to Main Street. I’d have gladly bought a building - almost did, though thank goodness I was denied the loan (the building later collapsed) - but I settled for renting the place at 60 West. That’s the address. 60 West Main. No suite number. No floor number. Heck, there’s only one room in the building, unless you count the bathroom. We all work in the one area, no walls, no cubicles.

Then I wanted to find a group of people that was committed to local business. Not just “yeah, we like it”, but “I stayed awake all night thinking of how to get more people to go to your store”. I wanted people around that were desperate to make a Lehi community. I had Jonathan Heaton and his excellent insurance agency. And Olivia Votaw of Girl With Red Lipstick. And Amy Jo Yates, a longtime friend. And for a long time, they was it.

So we decided to start knocking doors. Since then I’ve met Mark Wilson in the architect’s office next door (he’ll be the Lehi Rotary Club President in about two weeks), and Sebastian moved in one door farther down about a year ago with his sign company. Jonathan and his excellent insurance agency went in with me to also rent the building at 68 West, just next door. I met Bob Trepanier, who’s run Porter’s Place for a generation, and Charlie and Sterling, who put Charlie Boys’ Carolina BBQ in the cottage a couple doors down (get the beans). Then Nathan and Daniela Larsen put Classic Books and Gifts in on the corner, Lehi’s first and only bookstore. Pam Mayfield, one block down, cuts my hair in the Lehi Old Town Barber’s (look for the barber pole; if it’s twirling, she’s in). Fire Chief Dale Ekins (another Rotarian) owns the Pioneer Party and Copy, then there’s the Lehi Bakery (legendary square donuts). There’s Carl at the Lehi Historic Hotel (now the Rockwell Hotel), and down another block is Flowers on Main and the incredible James and Kris Belcher. That’s what we call the sunny side of the street.

On the shady side there’s Dave Lym’s insurance agency, and next door to him Pastor Chuck runs the Timp Baptist Church. There’s the Bridal Shop there that has been in that spot for almost 100 years. To the east, Emmett’s makes the best food in town (as long as you like burgers) and Ethel’s is the ice cream shop (real hard ice cream!). That place can give you heart failure if you don’t watch it. But just today, Allison’s Organics opened Lehi’s first organic market (between the tattoo parlor and the karate studio), so now we have some balance.

There’s something started here on Main Street. There’s a group here now that wants to see Lehi become something better, both what it used to be, and what it always wanted to be but never was. I’m just a Lehi Utah mortgage guy, and just one guy at that. Things aren’t so rosy out there for any of us. The economy is huge and much more powerful than I am. I don’t know how big a difference I can make.

But I’m encouraged by the last few weeks. There are only a few of us. But it’s a start. And we believe.

P.S. If I forgot you, you’ll have to remind me in the comments. I tried to get everyone, but again, I’m just a guy. And if you didn’t know that the Main Street Gang existed, if you didn’t know that anyone was organizing this kind of “Shop Lehi First” effort (kudos to Local First Utah as well for their work in this area), well, now you know. Join us (chris@lehilender.com, or tweet me @chrisjoneslehi).

RateWatch - Glimmer of Hope?

2009-06-10T08:48:00.001-06:00

Market: Still a drift downwards, but that drift has abated some and there appears not to be any strong force pushing bonds lower. The S&P continues to be unable to break through the 944 level, and there is bad economic news on the way, according to many sources. Add Fed buying to the mix, and we could see rates move a bit lower over the next month or so.

Analysis: Comment out of John Hancock is that bad economic news coupled with the expected Fed announcement on June 23rd of increased Fed buying of bonds will cause rates on mortgages to move lower in the 3rd quarter. Here's hoping. It is true that the subprime loan resets are mostly behind us now, which is causing the market to stabilize, but it is also true that the resets in Option ARMs are mostly still ahead of us, and those have a much larger capital volume than what we've gone through so far. Some are predicting another two yeras before the clouds begin to break in financial markets.

Personally, I think if you are prepared you shall not fear. Let us all get prepared then, shall we?

Cj
www.lehilender.com

Local Boy Makes Good!

2009-05-11T10:37:00.000-06:00

Market: As noted last week, rates have been drifting higher, but today has seen a reversal in the bond market and I would expect that we would get some of last week back. We're up about 35 bps, which is geekspeak for "about half of an eighth of a point" when lenders get around to giving it back to us. We've been frozen at this level all morning, so I don't think there's any real news making this push.

Analysis: We had a good-sized selloff in bonds last week, but honestly people, it's not as big a deal as CNN says it is. The MSM always trumpets a move in bonds - either direction - as a Sign of the Apocalypse or a Vision of the Rapture, and you just have to tune that stuff out. If the market moves dramatically, so that we're talking about a move of .25% or more, the big news will be something else, and any move in rates will be drowned in it, except here, because on RateWatch rates are all we care about. Seriously, there's no way Maria Bartiromo is watching the FNMA 4.0 30-year bond for indications of how the latest pirate attack affects your refinancing prospects. That's what I do.

If the talking heads are talking mortgages, that means there isn't any significant news moving things, which almost certainly means that the movement is tiny. Amplified and outsized by newsmedia, but it's a tempest in a teapot.

Tidbit: You can follow me on Twitter now (@chrisjoneslehi), and I got my first big hit today when @alphaconsumer, also known as Kimberly Palmer of US News and World Report, blogged about rates and points and cited yours truly. Kudos to @dellojoio (Enoch Chapman) for turning me on to the possibilities of social media. Utah mortgages may never be the same.

We've Moved

2009-02-12T11:02:00.001-07:00

For those just joining, or long-time readers, we've moved to our home site now and off Blogger. You can find us forever more at www.chrisjonesgroup.com, or www.thechrisjonesgroup.com, or www.lehilender.com and several others, all of which go, oddly enough, to the same place.

BUEK! RateWatch New Year's Eve!

2008-12-31T09:17:00.001-07:00

What is it with the "Eve-s" this year? Thanksgiving Eve was a
great day for rates, so was Christmas Eve, and now New Year's Eve sees
a bump down because of the Fed announcement that it will start buying
mortgage-backed securities in January. Remember how I predicted rates
would go lower?

Appears I was right.

There are limited - LIMITED - programs back under 5% today, but
this isn't the big move. Most traders are out for the holiday and I
predict most of the momentum on bonds will be after the new year.
We'll be RateWatching extra hard come next Monday. Stay tuned.

Meantime, if you want to know where your loan would be, rate-wise,
shoot me an email. You could call, but I might not get back to you
before the 5th.

BUEK! That's Hungarian for Happy New Year. No, really. It is. You can look it up.

RateWatch Wednesday

2008-12-10T18:37:00.000-07:00

Another bailout on the books, but nobody seems to know what it's going to consist of, except lots and lots of dough, though not as much as Detroit wants. The stock market therefore doesn't know what direction to go. That's good enough for bond traders, who are buying short maturities in quantities never before seen. Traders are willing to buy bonds that have ZERO interest, just to have some place to park their money. There's still a lot of progress that needs to be made in the credit markets, folks. Things are not back to normal. Not by a long chalk.

What does that mean to you? Well, bonds are still attractive, meaning that mortgage rates are low and still seeing downward pressure. This is probably a good place to address Secretary Hank Paulsen's comments about driving mortgage rates to 4.5%. Paulsen is not in charge of mortgage rates. He can direct the Treasury to buy billions of dollars' worth of mortgage-backed securities and drop the rates for those a ways, but banks will not then necessarily drop mortgage rates just because Hank says so. The international bond market is a whale of a lot larger than the Secretary's purchasing authority. Nobody I know is betting on rates being a great deal lower than they are right now.

That said, by virtue of being on this list, you can be added to our exclusive RateLocker program, where we watch for a specific rate for you, and when we get it, we lock it, so you don't have to be glued to CNBC all day (which, incidentally, wouldn't help much). It's a service we provide; it costs you nothing but a phone call.

For now: 30-year fixed, conventional, 20% equity, owner-occ, 720+ credit = 5.375% with FHA rates about the same (accomodates higher LTVs and worse credit scores and cash out).

Isn't This How We Got Here?

2008-11-18T18:34:00.001-07:00

Here's a fun one (from Mortgage Ledger Newsletter):

The CEO of K. Hovnanian Homes, Ara Hovnanian, recommended to Bloomberg TV that interest rates should be lowered to three percent for the 30-year fixed rate mortgages in 2009 provisionally.

In 2010, the rate would then increase to four percent with the future direction unknown.

Now, I can't believe that Hovnanian is ignorant of how this stuff works, so I want to ask him - who, exactly, should lower the rates? The government? The government, when last I checked, didn't set mortgage rates. The lenders? They can set the rates wherever they like already. Brokers? Brokers take the rates from the lenders.

I suppose, in theory, the government could buy so many mortgage-backed securities that mortgage rates would drop into the 3% range, but I can't see any way to make them stay there, no matter how much money the government spent. And believe me, $700 billion doesn't go anywhere near where you'd have to go to cut rates more than in half, which is what he's talking about.

He went on to say that the major problem in the housing market is affordability. Well, Mr. Hovnanian, you can cure the affordability problem much faster by chopping the prices of your ridiculously overbuilt stock than by spending a few trillion - of other people's money - to game the mortgage market.

Fortunately, the market ignored him. We're trading in a very tight range for the past week. Rates are holding almost steady, but did get fractionally better today.

Incidentally, if you live local to Lehi, you can start looking for my articles in the Lehi Free Press, as I've been asked to write a weekly financial column for them. It's called "Singin' in the Rain". Ideas would be greatly appreciated. I'm gonna get stuck for stuff to say, I just know I am.

Cj
801-310-3407

P.S. Just to remind everyone, we do loans in nearly every state in the Union, all programs that exist, including in-house underwriting of files down to a 540 credit score. We do FHA, VA, and conventional, purchase and refinance, cash-out and rate/term, owner-occupant and investor. If there's a loan program out there for what you're trying to do, we do it, and we do it in-house with our own underwriting. Just so you know.

P.P.S. And we love referrals. A couple of you have asked how to refer people to get them on RateWatch. Easy. Hit reply and give us their email address. Or you can go here and sign them up.

Waiting for the End of the World

2008-11-11T20:04:00.001-07:00

Well, okay, no. I'm not.

It might happen, but I'm not going to wait for it. The mortgage industry has stabilized pretty well, albeit with a very, very tiny product line, and we are starting to get market share from the collapse of other brokerages. That's a huge positive for us, and we have to thank Lail Chavez and especially Jonathan Heaton and Skylar Thomas for their referrals. Jonathan is a partner in the office next door, and Skylar became the top referring Realtor in Group history in less than a week. Thanks, guys.

Thought I'd post something about how to refer someone to us. Fact is, the phone is glued to my ear all day. If you are talking to someone that needs to discuss a mortgage with me, here's how the conversation will likely go:

Friend: I really should refinance my house. My rate sucks.

You: You should call this guy I know. He did my loan. He's really good.

Friend: Sounds great, maybe I'll call him.

You: I'll get you his business card.

And that will be the end of it. So If I could suggest something different, could I ask you to try this instead?

Friend: I really should refinance my house. My rate sucks.

You: I know the guy. You go see anyone else, you're crazy.

Friend: Maybe I'll call him.

You: Ha. Good luck with that. Nobody gets through his gatekeepers without a pass. The guy only works by referral. I have a back door, though, because I'm a client. I'll have him call you. He'll take my call.

And THAT'S how you give a referral. Best part of it is, it's true. I really don't take many calls from numbers I don't recognize. If I did, I couldn't get anything done. But if you call me, and you're a client, whatever you need goes to the top of the stack. You really do get special privileges by being a member of the Group. Remember, the Group is family.

Besides, it makes you look good, too. Everyone wants to be the person with the connections, with the pull, who can get things others can't. Well, if you're here, you're one of those people. Use that clout to help your friends.

Please Don't Vote

2008-11-04T14:22:00.001-07:00

I mean, don't vote if you don't know what you're voting for. Don't do it out of some misplaced sense of civic duty. You don't have to vote. If you don't know who's running, and/or you don't know anything about the ballot question, please, I beg you, don't vote on that issue.

People splutter at me when I says stuff like this, as if I'm spitting on the Constitution. As if most of them would know a passage from the Constitution from a line from Sidney Sheldon.

Urging people to vote, even if they don't know one thing about any of the candidates or issues, is exactly like urging people to take medicine - whatever medicine they can lay hands on - regardless of what the medicine is or whether or not they are sick. Just any random pill will do! It's your civic duty!

Bull. It IS your civic duty to know about the issues and the candidates. It is then your PRIVILEGE to vote. IF YOU CAN"T BE BOTHERED, PLEASE GET OUT OF THE WAY OF THOSE THAT CAN.

RateWatch Moves to BabyWatch

2008-10-23T10:03:00.001-06:00

Today is the due date.

No kid yet, but Jeanette has gotten serious. I've lost the pool now, but it would be nice to have the kid, as I am under the usual injunction (largely self-imposed) not to go anyplace I can't get back from in less than twenty minutes. We don't anticipate that this labor will take much time. The body knows the score, so to speak, and although Jeanette is not as young as she once was and doesn't have the physical strength she did, she is also wiser and tougher than ever, so she's not going to call for help until the baby is right on top of us. Usually we have the baby about the point that the unborn child's arrival starts to seriously impinge on everything else. I'm cancelling appointments, so that's the stage we're in.

And I got an email from a friend asking if I wanted to meet two 11-year-old Ukrainian kids in case we wanted to adopt them. I told him I didn't, knowing that once I did meet them, I'd be in real trouble. We've talked about adopting several times, but never got very close to actually doing it, mostly because we're still bringing new children into the house by ourselves, and a lot cheaper. Still, the fact remains that we have more to give. We have warmth and shelter and love enough for more than we have, even counting this one we don't have just yet. Though it's frequently close, we always seem to have enough money for them all, too. Should we not be willing, even eager, to sacrifice as much as necessary of this world's goods to care for those that have so little of them?

More later, as events warrant. Bonds are essentially flat. Rates have dropped again, to 6.25-6.375% on conventional, 6% on FHA.

Warning: Presidential Politics

2008-10-21T18:44:00.001-06:00

Occasionally, I have to post things when answering the same question one person at a time gets wearing. Some of you know I once had a role in Presidential politics, so I get asked my opinion on the election fairly often. Here is my opinion, for what it's worth.

I do not think Barack Obama is the spawn of Satan's bowels. But he is a persistently liberal
senator with almost zero significant life experience. I grew up on
Capitol Hill in DC and I have run a Presidential campaign. I know
some of these people personally. I don't think Democrats are scum
and Republicans are angels, I have no truck with political talk
shows (they make me tired), and I left politics because there
wasn't much place for a guy like me. I just couldn't hate people
hard enough. So take this for what it's worth.

More than anything else, this is what the election comes down to
for me:

McCain and Palin have both - BOTH of them - done hard jobs in
obscure places for practically no compensation. They have some
actual experience with the world that most people in the country
live in, and McCain has some experience with the worst the world
has to offer. Both of them are real people. They have problems, and
they make mistakes. Palin is the better of the two, mostly because
she's been a real person more recently, and her political career
consists of hard battles against corrupt rich people who still hate
her and want her drowned in the Bering Strait. But I also can't
find it in my heart to dismiss a guy that set his own broken arms
in a POW prison camp.

Obama and Biden, by glaring contrast, have ZERO relatable
experience in the real world. Neither has ever had a paying job of
recognizable substance outside of the government. Biden, for his
part, became a Senator almost 40 years ago, and his greatest moment
in the sun came when, while getting nine votes as a Presidential
candidate, he openly plagiarized Neil Kinnock in a campaign speech.
He has spent almost two-thirds of his live as a US Senator, and
never had a job. Obama's private-sector experience is smaller than
my 16-year-old son's. Neither of these men have any inkling what it
is like to be a real person. And they are both perfect - well,
Biden says silly things occasionally, but aren't those just lovable
personality quirks?

I don't know Obama personally, but I do know Biden. He is and
always has been mostly about himself. He's never had to work for a
living and is perfectly comfortable stealing other people's ideas,
work, speeches, what have you if he has a need for it, on the
perfect justification that he's important. Obama appears to me to
be the personification of the entitlement class, able to get ahead
mainly on the shoulders of others without proving in any serious
way that he's got substance. He became Senator through the
implosion of the GOP in Illinois (their candidate, after he got the
nomination, was caught in a sex scandal). He's had patronage and
shelter every step of the way in his political life. Although he
has rhetorical gifts, he has never used those gifts to take a tough
stand on any issue, never proposed a controversial bill - or even
held HEARINGS on one - never authored a paper on anything
moderately unpopular. His major contribution to American political
thought is a book about hope.

I would hire him. But I wouldn't put him on my City Council. And I
wouldn't hire Biden to walk my dog, and that's personal experience
talking. I wouldn't hire McCain, but if I didn't, he'd have a
competing shop open across the street in two weeks. I'd hire Palin
in a heartbeat, but in two weeks she'd have MY job.

That's where it is for me.

We talk a lot in this country about how we want our leaders to
listen to the little guy, to care what happens to the average Joe,
to have respect for regular folks. Then we elect people who have
never had to pay their mortgage by phone on the very last day of
the month and wonder why they seem so tone-deaf. But how could they
hear us? They don't live in this country. They don't speak the same
language we do.

We can debate political philosophy all day, and I like doing that
more than most. None of these candidates - with the possible (but
unprovable) exception of Sarah Palin - come anywhere near my idea
of what is right and proper for government to be doing. So I chuck
that. What I'd settle for is someone that once had something really
hard to do, and did it the best he could. Not emotionally hard -
being black in this country is hard, and burying your wife is
excruciating - but "you're going to hate me for this but I'm going
to do it because it's the right thing to do" hard. One pair has
that. One has not.

I guess the word for me is "courage". McCain and Palin have
courage, proven and demonstrated over and over. Obama may have it,
too, but how would we know? And Biden does not. Seems to me, this
is a time for courage. So I'm voting for that. It's little enough,
but it's something.

So, Jones, How Bad is It?

2008-10-06T12:43:00.001-06:00

This economy thing, I mean. The answer is, pretty bad, I think. A
tumbling stock market is very bad for nearly everyone, because not only
does it remove several hundred billion in wealth from people's 401(k)
and IRA accounts, it takes out huge amounts of bank reserves and
available expansion capital. And it hurts confidence in the economy,
which causes people to hoard, which takes money out of circulation and
essentially makes it impossible to ameliorate the conditions above.

The government is pretty close to powerless against the market, and always has been. Further evidence of this this morning.

My
advice remains: focus on the stuff you can control, work hard, be kind
to children and strangers, call your mother and tell her you're fine.
Put some seeds in a small pot in a sunny window and keep them damp. Do
real things that have lasting value. Pray. Pray very, very hard.
Exercise. Breathe deeply. Sing.

You should do this stuff even
when things are well. When, as right now, they are decidedly not well,
you should do them even harder.

Rates are falling, if you can get a loan. We can, as of this morning, do loans under FHA down to a 540 credit score instead of last week's 580, so for some of you, now's the time to get out of that subprime deal. Call us.

Bail Me Out

2008-09-30T21:22:00.000-06:00

Okay, so everyone's asking what I think of the bailout. Let me get this on the record: I don't know. The fact is, nobody knows. That's one really, really good reason to vote "no".

Most people are a lot like me; they don't really know what the bailout contains, so they're generally opposed to it because this is not what government is supposed to be doing (or, alternatively, this IS what government is supposed to be doing, but it should be doing it for ME, and not for other people, depending on your home base on the political spectrum). But they also recognize that something is very, very wrong with the world financial system, and the only people that seem interested or capable of doing something about it are the people in Congress. So we'd like to see something happen, and sooner rather than later.

Several comments need to be made here:

1. It's silly, and I mean really silly, to blame Republicans for the bailout not passing. If you're Speaker of the House, you have to get more than 60% of your own party on board. No, the GOP isn't helping you, or the President, who is supposed to be a member of their party. Guess what? Right now he's ideologically closer to you than to them, Nancy, a point which I guarantee you won't be emphasizing in the next 5 weeks.

2. Early reaction is that the Republicans are going to catch it for voting this thing down. Nah. There are two reasons this is incorrect: one, the fact is that most of the nation, and by far the majority of people likely to be voting in November, were not supporting this bill, and two, something is finally going to get passed, and if it's even marginally better than what failed, the GOP comes off looking like Horatio at the Bridge. This will not be good for the Democrats.

3. There is a lot being made of how this bill would cost taxpayers $700 billion. This is just silly. It wouldn't cost even close to that much. [note: I am not saying this to support the bailout. I am saying it because it is true. I don't like winning arguments using bad facts or bad logic, even if I can win that way. There are reasons not to vote for the bailout, but this isn't one of them.] The government would be buying assets (at least some of what they spend will buy straight mortgages, for instance), and those assets have value. In fact, they almost certainly have greater value than their cost. I predict that if the bailout finally passes, that the government will eventually turn a substantial profit on the deal. This is actually worse than if the government lost money, and I'll elaborate below.

4. There is at least one plan I have heard that makes much more sense (I think) than what was voted down on Monday. That plan would still authorize the expenditure of hundreds of billions, but would require that those billions be spent exclusively on the whole mortgage notes being held by banks, and not on the Collateralized Debt Obligations (CDOs)those mortgages ostensibly back, much less other debt that banks are holding. This does several positive things, in my opinion. First, it allows the government to demonstrably spend our money on things with real value. Not 100% of face value, I grant this, but some value. Even houses in downtown Detroit or suburban Cleveland have some value. The mortgages can be bought cheap and the value maximized by, second, negotiating the terms of the note with the homeowner when he's in default, to allow him to stay in the house. In a rising market, foreclosure is a good option for recovery of value. In a declining market, it sucks. It not only loses immediate value on the note itself, but it exacerbates the decline of property value across the board, further harming the asset value of your other mortgages. The government has been yammering at mortgage servicers to undertake this negotiative process; this plan would allow the government to just do it themselves. Second sub a, it would put shims under dropping property values by reducing foreclosures. Third, it would pour liquid cash into banks, which is desperately needed, and fourth, it would put a floor under the CDOs, because the bad mortgages that have destroyed their value would now be backstopped by the government. Those notes would therefore begin to trade again, and the machine would re-start.

This plan, I suspect, has no possible chance of being enacted. It would still have two bad effects; one, it would give government a huge windfall if it did its job properly and two, it still isn't what government should be doing with taxpayer money. But since it is going to do something with it, this seems the least harmful in the long run.

5. When the government makes money on an investment, it spend it on some pet project it couldn't get taxpayers to back. This is true at every level of government. Did you know that the Chrysler bailout in the 80s produced a $500 million windfall? No? YOu don't remember getting a check for your share? Darn right you don't. And if the government succeeds in getting this bailout to pass, and if it works, the government will get a profit that will dwarf the Chrysler windfall and make Exxon-Mobil look like a kid's lemonade stand. If the government gets these assets at .20 on the dollar, which seems likely, and they are worth .45 on the dollar, which, if the bailout is successful, also seems likely, the government will make a trillion-dollar profit. That money will not be paid out to you and me. It will instead be used to fund all the pet projects Congress can't get popular support for, like, most certainly, universal health care, among many many others. It will also lead Congress to believe that other intervention in other markets can have the same effect, and what you will get is socialism on a grand scale and the destruction of the free world. I do, in fact, predict that this is what will happen.

6. Europe is supposed to be immune to this cycle of crash and boom, because of its superior controls (read: socialism) provided by the government. Haha. Watch the news. The problems in Europe are worse, and they have no way to fight them. The EuroFed is only supposed to keep inflation in check, and has no mandate to stabilize markets. Oh, inflation is in check all right. It usually is when you have rising unemployment. The EU needs a bailout package as badly as we do, but they don't have any mechanism for getting one.

7. From a free-market perspective, the best thing to do is nothing at all, or to repeal some of the stupid regulations that contributed mightily to the current crisis. If the government will stop "rescuing" some things and not rescuing others, so that everyone knows they have to win or lose by these rules that exist right now, things will get worse very fast and better starting fairly shortly. I will lose my business, but I'm volunteering to do that if it will help convince the government to force the market to deal with its own problems. I'm not advocating some nebulous "hard time" for others; this would be my own financial ruin, despite my not having contributed in any way to the crisis. But it's the right thing and the best thing.

Instead, what we'll do is keep the comatose patient alive until all the organs fail at once and we have global meltdown and blood in the streets.

8. This brings me to the religious portion of this post, which you may skip if you don't care for that sort of thing. We know that this kind of financial meltdown is going to happen eventually. Most of us will have no idea it's happening until it's too late, which is why we are advised to be ready at all times. As the canary in the coalmine, so to speak, let me say that I do not think that this is the "big one". I think this is a head fake. It is a very clear, very obvious, somewhat painful warning that God is not kidding around when He tells us to be ready. But it is not going to be the beginning of the end. It is, however, the beginning of the beginning of the end. It is the day and a night and a day with no darkness. Right now, it's really obvious that the warnings we've been given to prepare are serious, but the signs will fade and things will go back to "normal", and we will forget, and the shock will be somewhat complete when, a few years from now, we get the three days of darkness and the tempests and the floods and the earthquakes. DO NOT FORGET. No matter what semblance of "normalcy" we get from whatever bailout passes, we must not forget. Get out of debt. Get food and water stored up. Lean on Christ and come to know Him well. Get close to the Spirit and listen to his voice. We have been warned.

And that's it for the longest post of my career. Let the comment wars begin.

Mama Dollar and Papa Dollar

2008-09-26T08:58:00.001-06:00

At this difficult and dangerous time in the financial markets, here are some words to live by:

"Now, we can get through this thing all right, but we've got to stick together."

A few years ago I bought BaileyBuilding.com, on the supposition that one day, there might be atime when the lessons of George Bailey in It's a Wonderful Life might come in handy. Well, here we are.

Don't lose your heads, folks. Don't panic. Take a deep breath, keep buying groceries, cutting your grass, and going to work on time. The sun rises every day, and nothing we do here - much less anything the bigwigs somewhere else do - is going to change that. Stick together. Be kind and even generous to one another.

Pop in Wonderful Life this evening, grab a bowl of popcorn, and relax.

Sunrise, Sunset

2008-09-15T13:52:00.001-06:00

Today is not about mortgages. Skip it if you don't read the personal stuff.

There's a wonderful song in the musical Fiddler on the Roof that bears the same title as this blog. On it's face, it's a wistful reminder that time moves pretty fast, and if you don't look around once in a while, you could miss it, as Ferris would say. But it's in a minor key, and all through the song, for me, anyway, is the ache that parents feel as their children grow and leave. It is not without joy, this process, and for us here, there is definitely more happiness than pain, but...still...

When did she get to be a beauty? When did he grow to be so tall? Wasn't it yesterday when they were small?

Today, in about half an hour, is the funeral of the kid next door. He accidentally killed himself riding his motorcycle at 100mph over the Point of the Mountain, and hit the back of another vehicle. He lingered in a coma for a few days, but then just couldn't make it. It was his second motorcycle accident in the last two years. He was 20. He shouldn't even have been here.

I was bathing my little 2-year-old when I realized that that kid once took baths in my tub. And then I was sobbing and holding my bewildered toddler. I've been doing a lot of that this last week.

My 16-year-old and 14-year-old sons are performing in Guys and Dolls, another musical, though one without nearly as much pathos. They've been fabulous and I've loved doing things with them. My father is also in it, which is a joy for me (and I hope for him). Still, I catch myself wondering when my children got old enough to play adults on stage, and watching my father and my son, knowing that a part of him has to be remembering when I was that age. Remembering oh, so clearly.

I've written before about my problems with the passage of time, and how much I dislike it, so none of these emotions are new and unusual. Somehow, though, this is different. The day after Layne died in the hospital, his good friend returned from his mission. Yesterday he spoke in church. I do not know how our neighbors could stand it.

What words of wisdom can I give them? How can I help to ease their way?

I'll sit in this funeral with my almost 17-year-old and cry. I'm crying now. What can I tell him? That I don't want him to grow up? But of course, that isn't true. I want him to grow up and get married and have children, just as I did, but I still want to tuck him i bed and carry him on my shoulders and know that the worst thing he'll have to face today is a bad dream. There are still little ones here. But holding little Nathaniel does not make me miss little Xander any less.

So, big Xander, little Xander, here is all the advice I have. We all go. Sometime, we all go. My father will go and I will not bear it well, as I know you will not when I go. But go we will.My father, though, will go doing what he should. I promise you, I swear on my life, I will do the same. Please, son, please, my dearest little boy, when you go, be where you should be, doing what God asks. You could give us no greater gift, nor do anything that would more powerfully draw the sting from your loss. We will all go. Please, when you go, go where we know we can find you.

But oh, don't go.

RED ALERT!

2008-09-08T10:00:00.001-06:00

The US government has taken over FNMA/FHLMC, fired all the management, and sent financial stocks higher by 10%.

MORTGAGE INTEREST RATES DROPPED THIS MORNING. BIG DROP. Repeat. BIG DROP.

It would be well to email me. chris@thechrisjonesgroup.com. If you closed a loan in the last three months, call me. If you closed last year or the year before, at ANY time, shoot me an email with relevant data (approx. credit score, annual income, address, current interest rate and loan amount, and when I can call you), and stand by.

Ehics? What's that?

2008-08-28T08:19:00.001-06:00

Wanted to make sure I pointed out a site I found linked from the What's Next Blog. The site is EthicsCrisis, and if you want some evidence that the world is going to Hell in a Handbasket, I offer this site as exhibit A.

There are examples of outright fraud, lying, theft, conspiracy, as well as more petty things like not reporting instances of the same, and even one or two - only two, that I saw - where the conduct is actually perfectly ethical. The confessions are anonymous, and some of them are certainly fabricated, but many of them are just too believable not to be real.

There are rating buttons below each one where you can indicate whether you think the conduct is Always Acceptable (1) or Never Acceptable (10), but I wonder about the ratings. All of the current average ratings are either 5 or 6. Either people really cannot tell anymore what is and is not ethical behavior, or the rating average mechanism is broken.

Maybe I'm naive, but I'm going with the latter. Surely we're better than this.

Some Couple Weeks (redux)

2008-08-27T08:14:00.001-06:00

Let's try this again.

A couple weeks ago when my computer went out, I learned to search local classifieds, especially Craigslist and KSL, and found, within one day, a faster, better computer that does everything I need except handle my TV tuner, for about half what I was going to have to pay on Ebay, plus there was no shipping.

The vacuum is still not fixed, but we have met a really great repair guy who understands customer service, a thing I really thought was dead. Meantime, there are other vacuums. I think. Not that we have one.

The car is still busted, but it was a great blessing that the belt did not break while I was stopped dead in Midvale in rush-hour traffic (two minutes before that), nor did it cause me to veer into the semitrailer cruising next to me, nor was I in one of the middle lanes, where I usually am. I could easily make my way over to the service lane in the middle of the freeway, Jeanette was almost instantly available (I was only about 10 miles from home), and during the 45 minutes I was there not only did my phone not die, but I was also unmolested by any police. We had the tow cables. Really, it was pretty easy.

About the chickens, well, there isn't that much great to say about that. However, we are in the process of replacing them, and who knows? We're getting a much larger run of chicks this time. They arrive the week of September 8, just in time for Ethan's 5th birthday (and the arrival back in the states of my parents-in-law). And here's something else. While we were contemplating whether to shoot the dog that killed our feathered friends, Alexander said "but somewhere there are probably little kids crying because they think their dog is dead. We can't make the disaster worse." It takes tragedy to reveal the heart of a person, and I am very proud to say that my son's heart remains as kind and decent as ever.

Addendum: yesterday, as I was driving west on Lehi Main Street in the evening, I was momentarily blinded by the sun and hit the car in front of me, pushing it into the car in front of it. My car still being drivable, I pulled off to the side and ran over to the poor little gal in her Civic to see if she was all right. She said she was, though she was weeping. Then I went to the Jetta in front of her to make sure he was okay, and he was. So we inspected his car. There was no damage. At all. He didn't get hit very hard, so that wasn't surprising. The front bumper of the Civic was also undamaged. So I went back to the rear of the Civic. Nothing. And I mean, nothing. I hit the car hard enough to push it, but there was no evidence of contact. On my car, the bumper had come loose, but since that first happened three years ago, that was nothing new.

Within 10 minutes, everyone decided to just let it go, and we all went on with our lives.

Black cloud lifted. On we go.

Some Couple Weeks

2008-08-26T07:45:00.002-06:00

Last week, my home computer gave up the ghost. I shut it down one night, and in the morning, nothing. No boot cycle. Nothing. That usually means a blown motherboard, though I couldn't tell you how it happened, so rather than go and get a new one and see if I could get all my components to work with it, I stripped the components and went and got another computer. If you're wondering why no blog for two weeks, no RateWatch, that's most of the reason. Reassembling all the data and all the programs is a process that is still going on. It takes forever and it isn't cheap.

Also last week, the central vac stopped working. Central vac is great, but it's biggest drawback is that if something gets jammed in the piping, you're screwed. It costs a good deal to get it out again, unless you are hugely fortunate and can do it yourself. Well, we have one or two kids here, and they have one or two friends, and things are constantly getting jammed. Sometimes we can get them out. Not this time. Not only that, but the guy comes out, fixes the problem, and within one day it starts again; exactly the same problem in exactly the same place. We haven't been able to vacuum the house in over two weeks. Maybe in your house that's livable; here, it is not. We need the vacuum every day. There is an oppressive and increasing amount of crap on the floor and it's starting to really weigh on Jeanette, especially, who has to be around it every day and can't really get it clean with a dustbuster.

Then last Friday, as I was driving home from the home office in Bountiful, just tooling along in the fast lane doing a relatively sedate 75, the the engine up and stops. I rolled to a stop about a quarter mile from the Bangerter highway exit - thank Heaven it wasn't much, much further north - over against the concrete dividers and tried to get it to start. No luck. I had to get Jeanette to come get me - fortunately she could - and tow me to my folks' place, where we could get the car over to the mechanic.

He called about half an hour later and told us the integrated timing belt broke and we'd have to spend about $500 just to find out if the car had any serious damage to it, which it probably did. A new engine costs $3500. I bought the car to be my primary transportation, leaving Elanor, our Dodge Stratus, for my wife, so she didn't have to drive our gas-guzzling 15-passenger van to the grocery store while the kids were in school. We had owned it for a little over two weeks.

Those things are a little tough to take. They hurt our wallets, which are none too fat to begin with, and they take up huge chunks of time, of which we have even less. They kill productivity, stop momentum, wear us out. But in the end, they're just things, and things we can mostly get along without.

But then yesterday morning, a stray dog got into our back yard. We were sitting down to scriptures when we heard him barking at our cats, so we sent Alexander, our animal lover (and our oldest and largest child) to shoo him away. Friendly dog. Didn't bark at him and wasn't mean.

A few minutes later, Xander came in white as a sheet and told us he thought the dog had killed all our chickens. We have ten chickens of all sizes and ages, all different kinds, many of whom were given to us by locals, but some we raised from eggs since the day they were hatched. They were all young, and just starting to lay. We built them a very sturdy coop and run, and were looking forward to a long cycle of egg production, something we really need. They had names. They had personalities. They were, like all living things that we come to know - animals, people, everyone - part of our family.

I say "were" because Xander was right. Silky, Xander's favorite, was lying in the middle of the run. Chickens don't lie down on their sides, except for one reason. The coop exterior door was open, and Honey, Charlotte's favorite, was lying in the doorway. Outside on the grass by the woodpile three of our bantams were scattered in a mass of feathers. When we opened the coop, we found the Chicklets, the three Buff Orpingtons we raised from the day they were born, all together as always, all dead.

Reconstructing, the gate had been left open and the dog - it was a bird dog breed - got through into the back yard, jumped up on the coop and broke into the run. It killed and ate one of the bantams, then killed Silky in the run while the rest of the flock tried escaping into the coop. But the dog followed, killed the Chicklets, who would, just like our three older boys, never leave each other no matter the danger, then killed Honey and in doing so knocked the door open, so the three remaining bantams escaped through the door. The dog caught them and killed them a few feet away. Because most of it happened inside the coop, we never heard a thing.

By this point, of course, the girls are weeping, and the rest of us are having trouble ourselves. We loved these birds. What made it worse was that we, all of us, felt responsible for not having protected them. They were in trouble and needed our help, and we weren't there. We knelt together as a family - nobody's going to school after this, I can tell you, not today - and prayed that God would forgive us for not being better stewards, and that He'd help us not hate the dog, who was just being a dog. Our family has had some shocks, and we've always prayed for help when they came, and our prayers are always answered.

They were this time as well. It was a terrible day, a very sad day, but we were comforted and it didn't end up being traumatic. We worked together to bury the chickens (except the one we ate - hey, it's what chickens are for), get the house cleaned up a little, get the garden back in shape. We pulled together and talked about what happens to us when we die. Fortunately, none of us have had to face that yet. But it's coming, and we need to be ready. And it turns out that our best egg layer survived the attack. Crispy is the one that knows how to get out of the run, and she did it when the dog attacked. She got bit - there are feathers all over - but she escaped. How she'll deal with being all by herself instead of part of a flock, we don't know, but we're very grateful she's still with us.

I don't know what this is all for. We're under a black cloud at the moment. We're not able to replace the car, and it will take months to replace the chickens. Huge amounts of time and money, feed and water, exacting care so that eventually - next March, now - we'll start to get eggs again. We can survive without another car, though it will hurt both our wallets and our free time, what little of each we have.

But we're here. All of us are still here. Thanner is still running around the house and laughing, and it's a school day. Life goes on.

Psalm 121:1. We'll make it.

At Least Oil Is Down Too

2008-07-22T12:25:00.001-06:00

Bonds rallied yesterday a little, but have given back all that
momentum and more today, so we're back to where we were Friday on
rates. At least oil is falling - we're more than $18 off the high and
still going.
There is a proposal out there being put together by a
private/public consortium of mortgage people and government regulators
that actually has some merit. It will be a couple of months before we
get the full details, but right now it appears that what we're looking
at is a plan to increase transparency in the packaging of mortgage
loans so they can be purchased. This would add confidence to the
secondary mortgage market, increase liquidity, and probably drive down
rates, especially for good borrowers.
This is the technical part, so skip it if you don't care:
mortgages are packaged in large groups for sale on the secondary
market. Primary lenders have used this packaging to shed loans from
the books and obtain new lending capital. However, up to the moment,
the packages of loans have been fairly opaque; that is, the secondary
financiers were never quite sure what it is they were buying. The
packages of securitized loans were often significantly heterogeneous,
and as the market has melted down, that has contributed to the
distress, because the lending institutions that purchased these
packages couldn't really tell what they were worth - they didn't know.
Some of the loans were fine, most of them, even, but many were
not. How many? Nobody knew. Was this package better or worse than
that one? Nobody knew. How much real exposure did the financier have
to market downturn? Nobody knew.
To a large extent, nobody knows now, either, which is why the
recent spate of better-than expected earnings from servicing banks has
been such welcome news. At least we're pretty sure the entire
portfolio isn't going to self-destruct.
This opacity does two things: one, it increases risk-based
pricing for good loans (20%+ equity, 720 credit, full income
documentation) while significantly decreasing pricing for bad loans,
and two, it allows lenders to make riskier loans, because they can then
package them with good ones and sell the whole shooting match as "A"
credit mortgages.
You're right, this is stupid.
What this proposal would do, then, is make it much easier for an
investor to tell what he was buying, because all the loans in any given
package would share characteristics. This will increase liquidity,
especially for good borrowers, and get some money moving in the
mortgage market again. Rates will fall for less risky loans.
Rates will, of course, rise for more risky ones, which will
emphasize things that need emphasizing, like having a job and some
money in the bank, and a history of paying bills on time. That will be
painful for some, but better on the whole for everyone.
Congress will then step in and prohibit risk-based pricing as
being discriminatory, and the entire market will collapse. But we will
have made a good try, and that's important.

FHA Guideline Changes

2008-07-15T09:59:00.001-06:00

Rates today are the same as yesterday.

What I want to take a minute to do is acquaint you with some of the new
rules for FHA loans that will be effective August 1. These are
critical to many borrowers, as FHA loans are currently substantially
better both in interest rate and in underwriting flexibility than
conventional financing.

Previously:

No loans approved less than 2 years from bankruptcy.

As of August 1:

No loans approved less than 4 years from bankruptcy, unless significant extenuating circumstances can be proved.

Previously:

No loans approved less than 3 years from foreclosure

As of August 1:

No loans approved less than 7 years from foreclosure

Previously:

Rental income allowed to offset liability for residence being converted to investment property (when purchasing a new home)

As of August 1:

Rental income disallowed on conversion to investment, unless 30% equity in the property.

There are more in the same vein. Please be aware of these changes.
Additionally, FHA is changing LTV requirements, cashout requirements
and reserve requirements for most loans, and altering the up-front
mortgage insurance premium required, although in this case, it is true
that many borrowers will now pay less than they otherwise would have.
So it's not all bad news.

Stay tuned for more. And as always, call with questions (801-310-3407)
or hit reply and we can get you the information you need.

Cj

Happy Birthday, Sis.

2008-07-10T10:25:00.001-06:00

She was supposed to be the last one of us, and she was about as close to perfect as you could ask for.

My sister Catherine Gwynedd was born 28 years ago today. Seems impossible that it's been that long, but it has. She is the fourth of what eventually became five sisters, the sixth of seven children. She has ebony-dark hair and creamy white skin, the only one of us that looks like that. She's thin and tall and pretty, sings like a canary and is perhaps the single most organized person I ever met.

So, as I said, she's perfect.

This drove her sister Allison - a grasshopper bracketed by ants - up a wall, understandably. If she hadn't been so cute, there might have been real trouble. As it was, and is, though, she's extremely hard to hate.

When she was about six, she met this kid from down the way named Scott, little Scotty Carlson I called him, and decided she was going to marry him. Scott never had a chance, for which thing, I think, he'll be eternally grateful.

All through my mission in Hungary, I kept hearing that she thought I was playing basketball (I was gone a lot for that). When I got back, we took a family picture and tucked in the sash of her dress was a little plastic sword from the dinner we had eaten right before that. I love that picture; it's my favorite family photo.

She sang at our Granny's funeral, a song so achingly beautiful and so appropriate to the woman she was commemorating that none of us that were there will ever forget it. Her voice continues soaring and beautiful, not an operatic voice, but one of the sweetest and purest lyrical soprano voices God ever made. Her Christmas CD that she gave me as a gift is on permanent rotation on my computer. Yep, even in the summer.

Now she's a mother and some of that organization has cracked 'round the edges, at it will, and she's had to learn as much about modern fighter aircraft as she knows about opera (Scott is an aerospace engineer), but she's still the one we all assume will be planning any big family event. Hoping she will, because, like everything else she does, it will be flawless.

I love you, Cath. Happy birthday.

Extra! Extra!

2008-07-08T07:47:00.001-06:00

You Read It Here First

Oil has lost over $8 the last two days. If the runup in crude
oil prices is, as has been contended often, mostly driven by
speculators and hysteria, let's all remember that hysteria works in
both directions. On the upside, it's called "irrational exuberance".
On the downside, it's called panic.
All commodities, actually, are down rather significantly from
their highs, including precious metals and even corn and wheat. It
appears that our capacity to grow things, find things, and innovate out
of needing things is, in fact, expanding. Shocker.
Bonds are up, the stock market is down, and despite FNMA and
FHLMC writing off another $42 billion in bad debt yesterday, both those
stocks are up this morning and there isn't any apparent worry that the
backbone of the mortgage system will collapse any time soon.
Fact is, the vast majority of homeowners will pay their bills on
time and repay their mortgages on schedule. There's a lot of hysteria
out there in the credit markets, but there are still good loans to be
had, and lots of good people that need them. Lenders need to add
really good loans to their portfolios, and are keeping rates relatively
low to attract them.
Here's the prediction: the sky is not falling. Oil will not hit
$150 a barrel this year. Gas will not reach $5 a gallon this year, or
next year. Mortgage rates will not hit 7% this year or next year. By
spring of next year there will be a significant, noticeable rally in
real estate. The world financial system will not collapse. Innovation
will explode.
You read it here first.

Cj

www.thechrisjonesgroup.com

Are We Growing Up?

2008-06-30T10:29:00.001-06:00

Hundreds of thousands of US soldiers returned from World War II to almost universal approval, parades, honors and public adulation. They were called America's Greatest Generation. The general most identified with this war was elected President by a huge margin.

Hundreds of thousands of US soldiers returned from Vietnam to a very mixed reaction, a good deal of public scorn, and honor largely only among each other. They were called America's Lost Generation. Nobody seemed to want to identify with this war, but among those that were publicly associated there was one President who resigned in disgrace, and one future unsuccessful presidential candidate whose Congressional testimony discussed participating in numerous war crimes.

Now we have Desert Storm, Desert Shield, and Enduring Freedom.

Well, the approval is back, and the honors are back. The adulation isn't there much anymore, but if you talk to a WWII vet, they never understood the adulation anyway. They just went and did a job, did the best they could, and came home. That's what our soldiers are doing now. There aren't many big victories (there were, but only for about two weeks), at least none that get reported, but neither are there defeats, or worse, victories that get reported as defeats. It's a workmanlike effort, a job that needs doing, so we do it.

It's almost like we've grown up as a country.

You can see this very well in the movies. WWII era movies are bloodless, heroic fairy tales. They aren't really about the war in any real sense. The war is a backdrop for John Wayne to make speeches. Not that these movies are bad, immoral, or fattening. They aren't. But they do very well reflect the ethos of the time, that the war was a good thing, a noble cause, and those that fought in it were to be honored and admired.

Fast forward to the 70s and 80s, and you get movies like Apocalypse Now and Platoon, which seem to have as their central character the war itself. The actors are merely foils for the war, powerless to resist its insanity, maimed and disfigured physically and emotionally by the senselessness of it. This, too, reflects an ethos and a public perception. It also reflects the contempt of many for the men that fought in Vietnam, though I should say there are many places and many people that rejected this contempt and held the fighting men in great esteem despite an avalanche of negative press. Nevertheless, it is fair to say that the hopelessness of these movies was born out of a similar public hopelessness, and a rejection of the WWII sanitization of the war.

Today we have something very different. On our airport concourses, we have people applauding our soldiers as they return home. We have entire neighborhoods ablaze in yellow ribbons. We have bands and tributes again, as we once did.

And yet, am I the only one that feels there might be something different about it all? We have heroic war movies again, like before, but Saving Private Ryan and Band of Brothers, while inspiring, in no way gloss over the horror that war brings to those that endure it. And yet, they still do inspire, not in spite of the horror, but in an odd way because of it.

I offer yesterday's church service as an example, that perhaps can illustrate what I mean. We had several addresses by former soldiers and the spouses of current ones. All said essentially the same thing, that they were proud of the service they rendered and were glad for the opportunity to serve their country. And all said something like this: "this is incredibly hard. It is extremely dangerous, and we don't take for granted that we'll be coming home. War is an awful thing, but there are things that are more awful, and ingratitude and cowardice are two of those things."

What I hear from the tributes and paeans of praise for our troops in this day and age is an almost adult understanding of the true meaning of the sacrifice being made on our behalf. Oh, there's still bravado and bombast in some quarters, as there is whining and self-pity, hopelessness and defeatism. But by and large, the majority of the country seems to have harnessed itself to the idea that there are noble deeds being done by ordinary men and women every day, and that those deeds should make us grateful that there are such men and women to do them.

America is home to not one great generation, but many. The first, perhaps, we took a bit for granted. The second we unfairly judged. This one, now, this one we see more clearly. They are heroes. Not Olympian heroes, without flaw or pain, but true heroes in the truest sense, men and women of extraordinary character and resolve, who make sacrifices on our behalf not out of necessity, as the previous generations did, but out of gratitude and a sense of duty. These are volunteers, not draftees. Is there any way to entirely comprehend the miracle of that?

We have grown up, as a people, and that is hopeful. I doubt we can ever appreciate in any completeness the miracle we witness every day. We benefit from it now in obvious ways, but we will reap the rewards of it for generations to come. This is an investment that will pay huge dividends for those that made it, and for the rest of us that are their comrades, if not in arms, then at least in spirit.

It is perhaps the most hopeful thing I've seen in my 40 years on this earth.

Happy Independence Week.

Fed Holds Firm

2008-06-26T08:21:00.001-06:00

The Federal Reserve tried to have it both ways yesterday, leaving
short-term rates right where they were, but talking about getting tough
with inflation. That leaves the Fed rate at 2%, making the Prime Rate
6%. As you know, because you are a faithful reader, Fed Rates and
long-term mortgage rates do not have that much to do with one another.
The long bond traders hated the news initially, but the stock
traders hated it even more and by the end of the day we were back flat
and repricing to the better.
So this morning we have the first tick down in certain rates we've seen in a month.
National Association of Realtors data this morning shows a 2%
increase in month-to-month sales volume for houses, most of that in the
markets like Vegas and the coasts, where house prices have dropped
significantly. But again, it's a sign of increasing activity.
My take? We're on the housing bottom. There will not be
significant national drops in home prices from here. It's not going to
get worse than it is. It is, however, going to stay bad for another
nine months, so there's a significant buying window here. Not that I'm
a real estate expert, mind you.

Same recommendation today, if you're going to buy, buy. Don't
try to time the market. It's a fool's game.

Change We Can Believe In

2008-06-12T21:01:00.002-06:00

I rarely do this, but I wanted to post a link to a really fantastic article. Tomorrow I'll post the results of an exchange between me and another fellow that does a market commentary. Usually, he's pretty good. Today, he was just silly.

I'm an optimist. I think things are going to get better. They're already enormously better for me than they ever were for my father, and they're better for my children than they've ever been for me. Not oil, not real estate, not credit markets are likely to change that.

A Lesson in Private Property Rights

2008-05-30T09:30:00.001-06:00

Look, it's not that they don't mean well. The courts really are trying. But the fact is that most judges do not understand how private property rights protect consumers. They consistently err on the side of "access for consumers" to data or markets, instead of protecting the incentives for providers to create that data or market in the first place.

To what do I refer? Glad you asked. Recently, the National Association of Realtors settled an antitrust suit with the Justice Department, agreeing to allow the government to strip its property rights in the name of "protecting the consumer". Seems that the multiple listing services the Realtors maintain were, in some markets, restricting access by unaffiliated Realtors to MLS data. The access is now to be granted to anyone, decision effective end of the summer.

Who created the data? The Realtors did. Who has the right to sell the data to whomever he pleases? No one, apparently. Is this going to result in lower commissions for Realtors? Possibly. Is this going to result in lower fees paid by buyers and sellers? Not likely.

Why? Here's the lesson: markets and repositories of data and other goods and services are created by Party A for one reason - to make a profit. The more that profit is protected, the more reason a party has to believe that his rights to the good or service will be protected by law, the more likely he is to create value by providing additional goods and services, and the more likely others are to start competitive enterprises to get some of the pie for themselves. If, however, there is no expectation that profit can be maintained or maximized, because by government whim property rights can be voided or involuntarily transferred, then creation will lessen and eventually disappear.

An example: you decide to open a lemonade stand. You buy the lemons, squeeze them, sugar the juice, get cups and ice and a cash box, and a small stand. You set up shop, and business is brisk. There are, however, customers that cannot come to your stand because they live too far away. You look at the profit in selling to them and decide that it doesn't make sense to service those people, because the transportation costs are too high. Along comes the government and says, no, not only do you have to service these people, you have to service them at the same price you charge everyone else. This will, the government says, lower the cost of the service for these people. Otherwise it isn't fair.

What do you do? Well, there are three options. One, you can continue to charge the same price and just lose money (in which case you are a hobbyist or a philanthropist, but not a businessman) or two, you can go out of business, or three, you can raise your prices for everyone, so that you can make the profit you were making before. Since option one is only available to a small number of people, the vast majority of us will choose options 2 or 3, which raises the cost of the lemonade for everyone (in the case of option 2, it raises it to infinity, since the lemonade isn't available at all at any price), exactly the opposite of what the government intended.

Government, and especially the court system, seems to view property rights as outmoded, as being unworthy of protection (except, of course, for movies and music), and even as restrictions on trade and competition. In effect, with most antitrust suits, the government is telling us that if it weren't for these pesky property rights, our costs would be lower and competition would flourish. In actuality, the reverse is true. As the kite falls when the "restricting" string is cut, so competition and choice disappear when the government fails to protect the rights of producers to the thing they produce. The string actually supports the kite, giving it resistance against which to rise with the wind. Property rights allow producers to have confidence that their work will be valuable. It is property rights that create competition, and the stronger those rights are, the better and more robust the competition will be, and the better the choice and the cost for the consumer.

This ruling, like so many, many others, ignores basic economics and property rights. It's bad for practically everyone.

Shocker.

P.S. For a brilliant exposition of this, see anything written by Hernando DeSoto, or try this book.

Why Rate Watch?

2008-05-02T09:05:00.001-06:00

Some have asked why I started sending out a Rate Watch email every morning. As if getting up at 5:30am were a pleasant thing (actually, if you try it, you find that it is, but that's another column for another day). Allow me to explain.

There are two reasons that come to mind immediately. The first one is selfish - I do this because it sets me apart from the other billion or so mortgage guys in the industry. I actually understand how the market works, and the products it produces. I understand how everything from the weather to CNBC reporting influences the mortgage rate you pay. No, I'm no prophet, and I can't always forecast accurately which direction rates are headed. I'm a tracker, not Nostradamus. But I know the landscape and I can help anyone with a mortgage, or anyone that works with people in real estate, save money on mortgage interest. It does little good to be that kind of professional if people don't know about it, and as usual in business, if you want people to know something about you, you have to tell them. Hence Rate Watch.

But the second reason is a better one, and that is that it's good for my clients. There are a dozen examples of clients of ours that scored an interest rate on their mortgage several ticks below the general market because of this service. We got together early, figured out what rate would make sense for them either for a purchase or for a refinance, and then we Watched until the rate came into play. And we locked it. Many on this list got a call at 3:50pm on a Friday, with an alert to lock. 90% of the loan officers I know have quit for the week an hour or so before that, but we're still in the saddle because it makes a difference to us what happens to our friends. Since we only do business by referral, everyone we work with is a friend, so we watch rates for every one of our clients.

You can get this kind of service, too. It's very simple. We need to have half an hour of conversation (okay, sometimes an hour to get the whole picture) to figure out what you want to do and the best way to do it. Then we get you on the Watch Sheet, and you not only get this email every day the market is open, but you also get a phone call when we reach your target and we have another five minute conversation to make sure we're still doing the right thing. It might take a year to hit the target you want. But if it saves you $30,000 in interest, wouldn't that be worth it? Especially since, let's be fair, you're not doing much of the work here. :-)

I sincerely want to have this conversation with as many people as possible. I didn't start in mortgages, I started in financial services, and I run my business differently than other lenders. What if, I thought, you could take the consultative practices of stockbrokers and attorneys and mate it with the pay-for-performance of the lending industry (so no hourly fees, and no paying just for advice)? You'd have something powerful and different. Welcome to the Chris Jones Group.

So if all you do is read these posts, we're glad you're here and we're happy to see you forever, especially if you like us and tell others about us. But if you really want the Full Monty, so to speak, you really owe it to yourself to send an email to chris@thechrisjonesgroup.com and let's start a conversation. There's so much more than just this blog. Don't miss out on the real power of Rate Watch.

Oh, right. The MARKETS. That's the point of this whole thing, isn't it. Well, folks, earnings season is over (better than expected), nonfarm payrolls lost only 20,000 jobs last month (better than expected), and the Fed is finished cutting interest rates, it appears. This is good news. It's Friday, it's May, and everywhere except Utah, where we had half an inch of snow on my tulips yesterday, Spring is in the air. Ice is off the Jordanelle and the trout are hitting everything in sight. And Charlie's Pit Barbecue just opened three doors down. Life is good.

Which means bonds are getting shelled, and rates are rising, but it's just too hard right now to be much disappointed about that, especially since the damage seems fairly minor. 30-year rates are splitting the gap at 6-6.125% (for 20% equity, 700 credit, and a job); FHA rates are lower by about .25%, and far fewer restrictions apply. We're going to lose some ground today, so if you're sitting on a rate, expect a call.

Have a great Friday. I'm buying.

Cj
www.thechrisjonesgroup.com

P.S. Spread the word. If you like this, and find it useful, pass it on. It would mean a lot to me.

P.P.S. I especially want to welcome today Renee Ferjo, my favorite California Realtor, whose email address I just reacquired. If you're buying or selling a home in or near Rancho Palos Verdes, go to www.reneeferjo.com. I promise, you won't be disappointed.

How Much Does My Interest Rate Really Matter?

2008-04-17T08:16:00.001-06:00

Inflation is the big problem this week, and it's pushed mortgage interest rates to their highest level in 2 months. Today's market news - bad earnings from nearly everyone and higher-that-expected jobless claims - should push bonds higher, but right now the market traders have decided that stocks are good and bonds are bad, and nothing is going to change their minds, apparently. So let's spend a moment talking about interest rates, and why they are NOT the end-all and be-all of mortgages.

First, interest rates aren't very high, on a historical basis. 6.25% sounds like a lot, but most people can remember 7.5% fairly recently, and some can remember 12%. Business still got done.

Second, let's look at the real difference between 6.25% and 6% mortgage interest rates. On a 30-year mortgage, beginning balance of $250,000, the payment difference is $41/mo ($1498 vs $1539). That's less than $500/yr, or .1% of the gross annual income of a typical homeowner for a home with that kind of loan. Suppose your company comes to you and says "in order to cut costs and keep the company alive, we're going to have to cut everyone's salaries. The cut will be .1%. Please don't kill us." Anyone going ape over that? Over what amounts to one family trip to Wendy's every month? Yet there are borrowers that have attempted suicide when their rate rose by an unexpected .25%.

Third, keep in mind that on fixed-rate loans, you pay with the house's money, to use a gambling term. Every year inflation rises, and that means that every year the effective payment on your mortgage DROPS. Know how we talk about "real dollars" as a way to price things? That, say, gasoline, despite its huge runup recently, is still cheap in 1975 dollars (costs less now than it did then, actually)? Well, in 2015, you're going to be paying your mortgage with 2015 dollars, and if things go the next 7 years the way they have the last 7, that will be the equivalent of paying only $1249, a $250/mo cut in real dollars, more than 6x as much as the difference between 6% and 6.25%.

Bottom line? Don't panic when rates rise. If you're refinancing, just hold your cards, tell us what rate you want, and we'll tell you when it gets there (hey, a stockbroker for mortgages - for FREE!). If you're buying, just buy. The cost of a new heater will be 25x as much as any difference in your interest rate, so don't waste energy on irrelevant things.

30-year rates at 6.25% this morning, although there are bonuses for credit over 720 and for larger loan sizes and for lower loan-to-value ratios, so you need to check with a pro to know where you are for sure. Bryan - still 6.125%. Hang in there.

Cj

P.S. Although we do this for free, we get up at 5:30am to do it and we'd be grateful if you'd do us the favor of passing along some names of other people that would like this service. We think Rate Watch is valuable, and if you do, let us know.

Hey - Is Inflation Bad for Me?

2008-04-15T08:25:00.001-06:00

Nothing impacts bonds more than inflation - not even the Fed - and today's Producer Price Index number, up 1.1% when .6% was expected, has been very bad for bonds. The core PPI, which is the prices paid to US producers exclusive of food and energy costs, was up .2%, exactly what was forecast. Because bonds are fixed-rate investments, inflation is the greatest threat to their value. When inflation rises, it erodes the return on bonds. Right now, inflation is seen as rising - and it probably is rising - so that's putting pressure on bonds. Bond rates and mortgage rates move together, loosely, so when bond rates rise, mortgage rates go with them.

One note here - if you already own a house, inflation is not necessarily your enemy. Your house value rises at least with inflation, and usually a bit better than that, and while a 5% move in gas prices takes a gallon from $3.00 to $3.15, it takes the value of your $250,000 house to $262,500. Maybe you'll end up spending an additional 12 grand on mayo and hot dog buns this summer, but I doubt it. There's no news so bad that there isn't something good to be made out of it. Just keep that in mind.

30-year mortgage rates are hovering at 5.875%, still well below historical norms, but up from last week. Rates have risen the last couple of days. However, just to point out the use of this service, one of our clients yesterday hit his rate target of 5.5%. We had that rate (in his specific situation) for about an hour, and because we were watching (and had been since roughly the first week in February), we got the lock down. We can do this for you, too, and for anyone else you know and care about. Just hit us back and let's talk.

What's an FHA Loan, Anyway?

2008-04-10T08:31:00.000-06:00

Welcome to those of you that are new, and it's a great pleasure for the Chris Jones Group to be able to provide this Rate Watch to you every day. No, really. We mean it.

Since the news is all over the map this morning - trade gap is widening, WalMart missed its earning target but raised its earnings guidance going forward, jobless claims dipped unexpectedly, the Bank of England (Fidelity Fiduciary BANK!) cut its rate to 5%, American Airlines isn't apparently an airline any more - and traders have no idea what to do, I thought I'd give everyone a paragraph on FHA loans.

The Federal Housing Authority (FHA) has a class of loans that it guarantees. The FHA doesn't make loans itself; instead, it guarantees them to the banks that do make them. Since the loans are guaranteed, the rate is usually lower than what you'd get in the open market (not always true), and that's a good thing. Additionally, FHA loans do not have rate penalties for cash-out refinance, and that's a VERY good thing for consolidators. FHA loans will go up to 97% loan-to-value (LTV) without penalties to the rate, and that is now the best deal in the market, and has no prepay penalties, and will accept loans from people with iffy credit. Sounds great, right? Well, there are a couple of drawbacks. One is that FHA loans carry monthly mortgage insurance, and you're going to pay it for 5 years unless you refinance out of it, no matter what your LTV is. After 5 years you can get rid of it if your balance is below 78% of the value of the house established when you did the loan. Another is that there are no provisions for any sort of stated income - it's full doc or nothing, and the debt ratios are very strict, which means self-employed people usually have a hard time getting these loans (because we have such great accountants). That's bad, but what's worse - much worse - is the Up Front Mortgage Insurance Premium (UFMIP - you think I could make up acronyms like this? Of course that's for real), which tacks on 1.5% of your loan amount to your closing costs. Remember that low interest rate? UFMIP adds about .5% to it because of the additional amount you have to borrow. So, bottom line, it's a good tool for some, but not the magic bullet for mortgage woes.

Probably more than you wanted to know. The market's flat. We did get a dip yesterday as the market priced in the news that Washington Mutual will no longer be wholesaling loans through mortgage brokers, but we're a lender AND a broker, so we don't care. We'll just use our own money. The 30-year fixed is pricing in at 5.75% at the moment for good credit borrowers. Don't expect a great deal of movement today. Kind of refreshing, actually. It's been like the floor of the Chicago Board of Trade here the last few weeks.

Cj

P.S. If you find this information useful, pass it on and let me know
(chris@thechrisjonesgroup.com) who else you know that would like to
receive it. We'll put them on our list.

Rate Watch

2008-04-03T10:00:00.001-06:00

Another ten Rate Watchers today. Welcome to all of you.

New day, new attitude. Chairman Bernanke's testimony was a mixed bag yesterday, and the markets were slightly disappointed that he didn't have anything to say about waving a magic wand and fixing things, so the Dow declined, but so did the bond market, neither of them very much. This morning the market is pulling back in stocks and rolling over into bonds, and we're getting some of our losses back there. This is a pattern, actually - early in the week we lose ground, then get it back later on. So expect things to move a little to the better today.

Still wavering between 5.875% and 6% this morning on the 30-year fixed rate. Please note, PLEASE note, that more than ever before your credit score is the driver on your rate, even on A-paper conforming loans. The negative hits for credit score start at 740. What I'm quoting is somewhere in the "high-normal credit" range, and there are about 40 different factors determining whether you can get this rate - or a better one. DO NOT go to BankRate.com or see a Ditech commercial and figure that you can get whatever you see there. Especially since you can get a professional to help you without it costing you a dime. There's a reason guys like me are still kicking a year into the worst mortgage market since the invention of money. Use us. That's what we're here for.

Cj

P.S. If you find this information useful, pass it on and let me know (chris@thechrisjonesgroup.com) who else you know that would like to receive it. We'll put them on our list.

What's This About FHA?

2008-04-02T08:45:00.002-06:00

Yesterday was the worst day for bonds in two months, as money poured out of the bond market and into stocks, leading to an almost 400-point gain on the Dow. Mortgage rates loosely follow bond rates, which rose from a low of 4.39 on Monday to 4.59 this morning on the 10-year treasury. That's a gigantic move, and it's pushed mortgage rates from 5.625% Monday to 6% this morning. I'd love to tell you that that means the worst is over, but I don't think it is. Until credit markets unfreeze, we're not going to be able to get substantially lower.

A word on FHA loans: the market currently seems perfectly happy to structure itself so that the government takes all the risk. Until a month ago, I was still of the opinion that FHA loans were a bad deal for the consumer much of the time. They carry mandatory mortgage insurance, and they also have an up-front fee of 1.5% of the loan amount tacked on to the closing costs. The tradeoff is that the rate is usually about .25% lower. Most of the time, that wasn't a very good trade. Recently, however, credit restrictions have tightened to such an alarming degree that for a large number of borrowers there simply is no alternative. We offer FHA loans, and we've been funneling more and more of our borrowers into them, especially those needing to consolidate debt. That's a trend I see continuing all this year.

There have recently been large increases in the FHA loan limits, and although these are only temporary (expire this year), they do provide additional impetus for financing through government loans. But even here, FHA has recently chucked their non-FICO-driven status, and now if you have a credit score below 580 - and don't scoff; there are millions of people in this boat - you won't get an FHA loan, either. There are no 100% loans any more, there are no loans below 80% LTV for those with worse than 680 scores (other than FHA), and now there are simply no loans at all for people below 580. Well, okay, there are loans for those people, but they are the hard-money variety.

In related news, it's true that foreclosures are rising and there are cheap houses available out there. It's also true that those houses are only going to be available to those with lots of cash and really good credit. That's simply the reality. So once again, there are ways to make money in this market, and those that make it will be those that were already making it. O be wise, what can I say more?

Cj

P.S. If you find this information useful, pass it on and let me know who
else you know that would like to receive it. We'll put them on our list. chris@thechrisjonesgroup.com

A Conversation About Congressional Meddling

2008-03-28T07:22:00.004-06:00

I spoke at some length to Chris Cannon, one of Utah's Congressmen, the other day, and I wanted to report on that conversation. I've said in this forum many, many times that the thing that could make this economic downturn a complete catastrophe - the ONLY thing - is mucking about by Congress. Well, it appears that the mucking about is inevitable.

The topics were three, essentially: what's going on with credit markets, what the effect of the raising of conforming and FHA loan limits will be, and what is happening with housing in general. I reverse order, here was my report.

The housing market is weak. There is still too much inventory (houses for sale) for the demand (buyers) to absorb them all. But that number is getting better. We're down to 9.8 months of inventory, which is the lowest in some time, and average sale price has dropped record amounts. In other words, the market is working. Is there pain? Sure. Markets always cause pain, but they cause it the same way surgeons do - they cut what's necessary and allow the body to heal as rapidly as possible. ONLY markets can do this. No government can do this kind of surgery without making the disease worse.

Going forward, I expect the government to take dramatic action that will completely change how the mortgage market functions in this country. It will not be a change for the better. Yes, it will likely keep rates low, yes it will probably make loan limits higher permanently and get rid of the "jumbo" classification (a silly division anyway - what's the risk difference between $416,000 and $417,500?), but it will both restrict credit availability in the standard mortgage market (in other words, if you don't have at least 10% down and a 700+ credit score, forget buying a house) and force people into government loans, FHA and VA, which carry large upfront costs, effectively reducing sale prices and home equity by 1.5%.

Secondly, conforming and FHA home loan limits have been raised, but not nearly as much in some areas as in others. In Salt Lake County, Park City, and (no kidding) Tooele, the new FHA loan limit is $729,750, the maximum allowable. In Davis County, the limit is $397,500, and in Utah County, the limit is $323,750. This means that a small house in Alpine is not going to be FHA available, but a $700,000 mansion in Tooele is. Only the government could come up with numbers like this. Bluffdale houses are eligible up to $730k; Lehi houses less than half that. Really, really stupid.

Conforming limits haven't been announced yet, but they're going to be similarly idiotic. There's a really good dissection of the unintended consequences of this government tinkering here; suffice it to say that unless the government reins in FNMA and FHLMC, there just won't be any sanity to how this process works. And increasing the loan limits, while directly good for FHA borrowers, is NOT good for conventional borrowers - it raises everyone's rates, and the credit and rate restrictions in the $417k+ market (supposed to be affected by the conventional limit rise), which will NOT go away, will make it so that nobody can get those loans at attractive rates anyway.

And thirdly, the credit markets are screwed up. There is a big gap now between the 10-year bond yield and the 30-year mortgage rate, a larger spread than we've seen in forever, and that is a reflection of the fear in the market about the subprime "crisis" and mortgage foreclosures. Markets need time to figure out what the real exposure is to failing loans. This process cannot - CANNOT - be improved by government intervention. Already we have the entrance into the market of private firms that plan to buy failing loans and renegotiate them. Those loans are being dumped right now for pennies on the dollar; they can be restructured to provide 50 cents or better. The market sees an opportunity here, meaning that it will immediately generate business to take advantage of that opportunity. These new players will do two things: backstop the potential loss for regular lenders and discover very quickly how many of these losses there are, and how big they are. The only thing the government can do here is to relieve regulation on these companies, making it easier for them to raise capital and get working. Nothing else will help.

It reminds me a lot of the broadband explosion in the US. I remember government hearings on forcing companies to deploy broadband according to some bureaucrat's timetable for rollout. The companies that were there resisted this regulation, and managed to stall any major government action. Of the five companies that were there for the hearings only two of them are still in existence in their form at the time; two are gone altogether, and one was bought by Qwest. The major players in broadband are not only completely different now than they were, they've also deployed broadband about five times as fast as government was mandating. As in most things, the government's action was not only stupid, it was predictably stupid. It cannot react fast enough. No government, however constituted, ever could.

Bottom line, as we always say here: there are really smart people out there. Get the &#$%^ out of their way and let them work.

Cannon gets this stuff; I wish I were sure that he was going to be able to make a difference. The urge to tinker is just so strong in government. Most people what run for office do so because they love power, and what good is power if you don't use it to make yourself look important?

Rate Watch

2008-03-28T07:19:00.001-06:00

This is a regular feature that's been going out every morning for the last couple weeks, and is attracting a following. Here it is for today:

More economic news today, and it was fairly benign for inflation, which is good news. Inflation erodes the attraction of bonds, since bonds are fixed-return investments, so low inflation reduces the necessity for high bond yields. High bond yields, for those just joining us, mean high interest rates, and mortgage interest rates are all we care about here.

I spoke at some length to Congressman Chris Cannon a day or so ago, and we discussed several things of note that I don't want to get into deeply here (check the blog at thechrisjonesgroup.com), but one thing I told him was that if Congress wanted to help, the best thing they could do was NOTHING. Markets rely on confidence, and uncertainty is perhaps the worst possible drag on an economy. The more Congress tinkers, the worse things will get. Period. Yeah, I know. It won't help, but at least I tried.

5.875% is par on the 30-year at the open, but remember the end of the quarter is Monday, so there could be large volatility the next two days. FHA par is lower by about .25%.

Cj

P.S. If you find this information useful, pass it on and let me know who
else you know that would like to receive it (chris@thechrisjonesgroup.com). We'll put them on our list.

Think of the Possibilites

2008-03-11T15:12:00.003-06:00

I never watched "Remington Steele". I was really too young to be interested in the show, and we didn't watch evening TV at my house, except on special occasions. However, I remember a snatch one episode, from way, way back in the past, that made a huge impression on me, and that I have never forgotten.

For those not in the know, Remington Steele was the show that made Pierce Brosnan a star. It starred the uber-cute Stefani Zimbalist, who was a real detective but couldn't get jobs because she was a woman. So she made up a fictitious male name, put it on the door, and presto! Business was good. Then a man shows up and says he's Remington Steele. Hijinks ensue.

Anyway.

I remember this one episode - just a piece of it really - where "Remington" (nobody ever does know his real name) tells Laura (Zimbalist) a story. Laura's house has just been blown up, and she's shaken and scared and weepy. So he tells her a story.

He laughs. "Markos," he says.

"Markos?" Laura questions, thinking she's going to find out his name.

"Markos Androkos," he says. "Little man. Neck so short he said it wasn't worth washing. Black mustache, thick like wire. A big smile with a gold tooth in it right here. Oh, boy, he worked us like dogs, he did. 'Harder, Xenos!' he'd scream to me. 'Work harder! Don't you want us all to be rich?! Hey? Hey?'" He laughed again.

Laura watched as he moved to sit down. "Markos."

"Had a little cargo ship- and family that seemed to include half of Greece. Oh, but he fed you well, and at the time, that was enough to keep his name in my book. He used to cram every crack in that ship with anything for anyone, so long as it got him another dollar closer to buying that bloody tanker. Night runs were a speciality."

"A smuggler," Laura realized.

"Oh, yes, and a damn good one. Oh, you'd love the party he threw when he finally bought that bloody tanker. Oh, God. Had his tooth all shined and gleaming and polished. Huh. And more food and music and wine than I'd ever seen in my entire life. 'Drink, Xenos! We are peasants,' he said, filling my glass for the countless time. 'But tomorrow-" Steele rises. "'Tomorrow, eh, tomorrow, we are tycoons, eh?'" Laura laughs at his story, at the little man he's describing so well.

"And were you?" she asks as he sits beside her, his expression darkening.

"Well, we all went down to the pier at dawn to watch it arrive. She wasn't out there more than two miles before an explosion in the engine room ripped through the side of the hull - and before we could believe what was happening, it sank like a stone. Since he was twelve, he wanted nothing else. And like that-" he snapped his fingers "-it was gone. No more. The pier became so quiet we could hear each other breathe." He chuckled. "And then Markos, he starts to laugh. And I don't mean a nervous titter, but a full bellied, spit in the sky, all out laugh. I couldn't bloody believe my ears. I was furious. 'Why are you laughing?' I screamed at him. 'Because, Xenos because from now on - everything is new again, eh? Eh? Just think of the possibilities.'" Laura smiles. "Think of the possibilities," he tells her.

The show aired in September of 1983. I was 15. And that story has stayed with me since.

So remember, no matter how bad things look, no matter what happens, just keep going. And when things are really, really bad -

Think of the possibilities.

Stop the Presses

2008-03-06T06:28:00.001-07:00

You didn't think I was gone forever, did you? Well, okay, kinda.

The below is cribbed by my father (attribution below), and reposted here for your enjoyment.

Stop the Presses
By Roger Schlesinger
Tuesday, March 4, 2008

Do I have a hot news story for you? Not exactly. I wrote stop the presses because I would like to see the news media stop reporting on the real estate industry until (a) they get it right; (b) they quit calling everything "the subprime crisis" (c) their stories are put into context (d) and that once in a while they give the other side of the real estate story and not just the one that makes the sky seem lower than the ground!

Enough already!

Real Estate is here to stay and probably is the best buy we have seen in years for three reasons, which are all related: the weak dollar, the net population growth and the fact that the inflation genie is out of the bottle. All three will help stem the tide of the nay saying that is flowing from your local or national news person. And these facts aren't made up, or taken out of contact or sensationalized to sell "The News".

Do we have a weak dollar? You betcha! Is this good for us? That is a matter of constant debate. However, weak anything usually isn't good. Then how can it help real estate?

This is number one of the three reasons why real estate is very desirable at this time. Before I go any further I wish to remind the reader that everything I say must be tempered by the three main words in real estate: location, location and location.

The Euro is now over $1.50 versus the dollar and this gives all those who hold Euros a giant discount on dollar denominated assets: real estate being a major one. Therefore we are having a buying spree by foreigners from various locations taking advantage of our real estate. Note: In the western United States Canadians are buying in ever increasing numbers in desirable second home locations. The Loonie, Canada's currency is now over $1.02 versus the dollar which is up from around 62 cents less than a decade ago. Increased demand is directly coming from the buying power of foreigners because of the weakness of the dollar versus their currency.

Second point is the net increase in population from the increase of births over deaths and immigration (measurable legal immigration). We are growing about 1,100,000 family units a year that need housing and we are currently ramped down to about 700,000 new units a year. Obviously with unsold new homes flooding the markets in some areas and generally existing in all markets to some degree the need for these additional units won't kick in for a year or so, but the need is not going away and the building will start again. Builders are poised to start building at the first sign of a bottom and the start of the real estate turn around.

Third and most important point is inflation. Simply put, the imbalance of supply and demand. This can come from either too little supply or too much demand or both. Look at the gasoline prices in this country. Generally it is believed that with China's entry into the 20th century the demand for oil and oil products has jumped dramatically thus causing a quick and large increase in the price. There is also the fact that OPEC is controlling the supply which helps create shortages and thus, higher prices. The same price action will occur again in real estate because of excessive demand and not enough supply.

The problem most people face is the fear of being too early or not getting the lowest price possible. Let me tell you why this is "fools gold" thinking. The average American will not find out that real estate has turned for 4 to 6 months after it happens. When real estate is purchased an offer from a buyer to a seller is accepted. The we have the escrow or closing period of any where from 30 days to 90 days, probably averaging about 45 days. Those who track real estate sales do so at the end of every month. If you buy something on March 15th and it closes May 2nd then those who report will get the info in June. You will know about it at the end of June which puts you about 4 months behind the buyer.

IF ENOUGH BUYERS ACT AT ONE TIME TO START A TREND you will miss the beginning and the prices that are "oh so affordable" now will be but a distant memory.

Lets look at the stock market and compare and contrast it to real estate. The stock market is the nations investment arena, or so say those connected to the market. In 2000 it self destructed and the world had come to an end. By 2007 it hit new highs thus completing an investment cycle. The real estate market is different to a degree and that is what makes it better. No one has to invest in the stock market and the reason they do is to make their money grow. That is the main purpose of the stock market as far as investors are concerned.

Real estate is a great investment to make your money grow but it also has a utility that the stock market doesn't possess: a place to live. Everyone needs a place to live and that gives the real estate market the edge, in my opinion, over the stock market. Forget the tax advantages of deducting the interest on the mortgage, or the tax free accumulation of money created by the $250,000 profit exclusion upon sale of an owner occupied house per person (husband and wife get $500,000), real estate is a real shelter, pure and simple. That is why my money is where my mouth is, so to speak.

The best thing that can happen is the rebounding of the real estate market and most of the problems that are hurting Wall Street would be gone. Loan portfolios would once again be worth face value and we could get on with the normal business of both banks and brokerage firms. This would really be a win, win situation.

Roger Schlesinger's Mortgage Minute is heard on hundreds of radio stations and daily on the Hugh Hewitt radio show and Michael Medved shows. Roger interacts with his hosts and explores the complicated financial markets in order to enlighten his listeners and direct them along their own unique road to financial freedom.

The Stupidest Thing I've Seen Today

2008-01-29T12:14:00.000-07:00

and brother, in my world, thats saying something. Remember I deal with underwriters all day.

The sky is falling again, as homeownership takes the biggest drop in history. Here's the story, complete with the most absurdly negatively biased graph since the invention of statistics. I suppose you can set up a bar graph with the zero point as 66.5% and the end of the x-axis as 69.2%, then calibrate it in .1% increments, but if you do that you're rather obviously trying to show something that isn't true. Of course it appears that home ownership is declining catastrophically, given the huge drop the graph shows. Of course this also is simply hilariously false, since homeownership until 2002 never once reached the current level, and we're off the all-time, amazing high, the greatest percentage of homeownership since the invention of land title by.....1.5%.

Please, please remain calm.

I'm really tired of repeating this, but you can elicit panic by using statistics as body blows on an already skittish public, because most people won't take a second to realize what the statistics actually mean. It's not really true that statistics lie; that's like saying that blood lies. It's just a thing. It can be used to heal, like in a transfusion, or it can be used to terrify, like in the Texas Chainsaw Massacre. Neither of those things is absolutely good or evil either. What IS evil is pretending that a massacre is really a transfusion, or vice versa, and using the blood to indicate something dishonest. THAT'S what this chart does, and it's what this article does.

Put another way, the only method of determining that home ownership has changed at all is to use very powerful computers and guess. There simply is no way - NO WAY - to have an accurate count of this stuff, and there's no way a human being could possibly tell the difference between 67.8% and 69.2% by simple observation. Try it. Pour 69 pennies out on your desk and then make another pile of 68, and invite someone to tell you which is larger.

I learned once that the difference between a .250 hitter and a .300 hitter is one hit every four games. In other words, the average person couldn't tell the difference, just by watching, between a guy struggling to stay in the majors and an all-star. Similarly, no way could anyone without a fleet of accountants tell the difference between the all-time high for home ownership and what we have today.

Yes, there are people who used to own houses that now don't. I don't like that any more than you do, and I'm sure those that have lost them like it even less. I spend all day every day trying to fix that problem, believe me. But the problem isn't nearly as bad as it's purported to be.

Ignore the blood spatter. In this case, all we have is a nosebleed.

Let's all give...

2007-12-31T09:52:00.001-07:00

a little New Year Cheer here for the western housing market, where sales volume was up 10% from October to November. That's pretty consistent with what we're seeing on the ground. I expect December's numbers (which we won't get until late January) to be even better.

Here's the article.

You'll have to read down to the seventh paragraph to find the news, though, because financial markets care a lot more about the northeast than the west. And, well, bad news sells.

But the news here isn't bad. There are houses starting to move, especially in lower price ranges, below $250,000. There's even decent activity in the higher ranges, and I expect spring to bring more of that. So help is on the way.

Hope you had a wonderful Christmas. I'll have more to say about that in the week here.

Hey, I Feel Fine, Myself

2007-12-20T10:41:00.000-07:00

Some of you know that we've had a bit of a rash of injury/illness here, so I thought I'd give an update on that, by way of blogging for the third day in a row for the first time in several months.

Brian Votaw, husband of Olivia, Empress of Marketing, blew out his knee and shattered his wrist a week ago. He had surgery on his knee where it was discovered that he had ruptured the patellar tendon, but no other significant damage was found. Shortly thereafter he had his wrist operated on and that was apparent much worse, but there are no external screws and he's home and resting, even if he's a little bit out of it because of the Percocet. Because she is a genius, she got the Potty Post out anyway, but the Christmas cards will be late. Forgive us.

Todd Yates, husband of AmyJo, Impressionist Extraordinaire, went into the hospital on December 6 for some relatively routine, if major, intestinal surgery. That seemed to go fine, but shortly thereafter he developed more serious problems with his gallbladder, so that had to be removed as well. His intestines may be reconnected, but his stomach hasn't realized that yet, so he's still on a very thin liquid diet and still in the hospital, and probably will be through Christmas. AmyJo, by consequence, hasn't been here for almost a week and things are about as fractured as they've ever been.

Also, Jason's computer blew. In trying to repair it/resurrect it/recover it, we have apparently blown the office computer as well, all of which leads me to the point where I'd almost just rather shut the whole works down until next Wednesday, and see if perhaps someone is available to assist me then.

But I won't. Sigh. I just can't bring myself to do that. So I'm here, in my 51 degree office by myself, with my Bob Cratchit gloves on. No kidding. We have no heat here.

God bless us, every one.

I'm Just a Little Black Rain Cloud....

2007-12-19T15:21:00.001-07:00

The mortgage lending bill that I have lambasted in these pages before had drawn some comment from others, and I wanted to point especially to Harry Rodas's excellent blog, where he also commented on it.

The absurdity starts with the federal requirement that lenders make sure a borrower can repay a loan. As if there were any possible incentive not to do that. Stupidity knows no bounds up there on the Hill.

I also want to take just one second to point something out. It's true that credit restrictions were very relaxed over the past few years, and that this allowed more people to get into houses than ever before. It is also true that some of these people are now being foreclosed on. The media reports every foreclosure as a national disaster on the order of the raid on Pearl Harbor, but I want to ask a question: suppose Mary Jones was able to move out of her apartment and into a residential neighborhood, remained there for two years, then found that when her rate adjusted (she hadn't improved her credit in the meantime, so couldn't refinance), that she couldn't make the payment and is now being foreclosed on and forced to move back to the apartment she left. Are you saying she shouldn't have been able to leave her apartment? Is that the contention? Which is worse - having to stay in an apartment forever (and some of these subprime borrowers, ladies and gentlemen, are going to have to do that, especially now), or getting two years of the American Dream, but having to give it back?

I just wonder.

Incidentally, on a $150,000 house, the Fed rate increases over the past 3 years have added $400/mo to the payment of any homeowner with an ARM. But it's my fault, as the mortgage lender, that the homeowner now can't make his payments. Whatever.

As Promised

2007-12-18T10:38:00.001-07:00

Very hard to blog at this point in the year. We are busier than we've been for months, and this without all the other obligations that Christmastime brings with it.

However, the Fed just proposed some new mortgage lending rules that I have to comment on.

First, most of the rules that are proposed are already law, at least in Utah. It's already illegal to put pressure on an appraiser to reach a particular value on a property. It's already required that mortgage brokers disclose their yield spread on the Good Faith Estimate as well as at the table. None of these sorts of changes will make any difference here, except perhaps to level the playing field a bit.

Second, many of the rules, such as "don't deceive people with low teaser rates" are welcome, and though they won't change anything here at all, because we already extensively educate our clients about neg-am, pay-option ARMs before we agree to do one, it will make it easier for us to compete with the other fellows in the industry that don't go though that education process. That sort of rule is long overdue, and I'm happy to see something done about it, though I strongly wish it weren't the government doing it.

Third, and sadly much worse, is the insistence of the Fed that subprime borrowers now qualify at the eventual adjusted rate instead of the initial payment rate. For the uninitiated, subprime loans are almost entirely what we call 2/28 loans, with a fixed 2-year period followed by the loan becoming adjustable. The new rules would require that our clients qualify for the loan using the eventual adjusted rate (as if you can know what that will be 24 months in advance) instead of with the payment they'll actually be making for two years. What it means in practice is that many of our borrowers - some 1/3 of our clients are subprime borrowers - will be unable to qualify for any financing at all. This rule is not just harsh, it's also unnecessary - more than 90% of subprime borrowers refinance out of their subprime loan before 3 years is up.

Fourth, and unfortunately worst of all, is that the new regulations will do away with stated-income loans altogether. And I mean all together, no more available, at any credit score, no matter what. If you are self-employed, one of two things is now true: one, you will have to pay to yourself (and therefore be taxed on) money for expenses that once were paid for and deducted by the business; or two, you will have extreme difficulty - enormous difficulty - getting a loan at all. For me, where I run a small business and deduct aggressively everything I can, using the business to pay for every allowable expense, and where as a result my personal taxes show a relatively small amount of income, I just lost my ability to get a home loan, or else I just gave myself about a 15% pay cut. Something like 20% of my clients are in similar situations.

Lovely.

Once, several thousand years ago, I was a stockbroker of sorts, and one of the reasons I left was the extreme difficulty of helping someone navigate all the arcane and ridiculous disclosure regulations the NASD and SEC put on purveyors of securities. The Potty Post, for instance, our most effective communication, would be impossible for a small securities firm to publish. They simply wouldn't be able to get it by Cerberus at the Fed in time to send it out with any relevance. The mortgage industry is getting to where it's much the same. There really doesn't seem to be anywhere anymore that a fellow can just do his job in peace.

Oh, Crap. Here we go.

2007-12-05T15:25:00.001-07:00

Just as I was berating Senator Clinton of New York for her lamebrained mortgage rate freeze proposal, President Bush announces his own.

I'll have more comments on this later, but for now, let me say the following: government cannot repeal the laws of economics. There will be individuals who, in the short term, will benefit from these proposals, but in the long run they and everyone else will get seriously screwed. That's a guarantee.

Last of the Red-Hot Markets?

2007-11-30T10:28:00.000-07:00

We've posted here several time that market trends and your personal situation do not necessarily coincide. Just because nationally things are a little dicey with real-estate doesn't mean anything about your house. And now, let you think we make these things up, here's a great article from CNN Money. Here's my favorite quote, mostly because it matches exactly something I've been saying here for months:

If you've owned a house for a while, you don't have to worry. The gains you've enjoyed in recent years are huge compared with recent price downturns.
Even if the median price of a single-family home in Miami, now $393,000, falls by 20%, the price on that house would still be about $20,000 higher than it was at the end of 2004.
"With all the sound and fury associated with the recent downturn, in the places with the most dramatic price declines, they've only erased a few quarters of appreciation," says OFHEO's Leventis. "Long term, prices still tend to go up."

Amen.

3 Pointer!

2007-11-28T10:36:00.000-07:00

Point #1: Across the country, the real-estate market is being seen as in complete collapse, so I thought I'd put some of those numbers in perspective:

if a $100,000 home appreciates 7% in a year, it increases in value to $107,000. This is seen as a relatively healthy increase in value, but nothing outrageous. If it then declines by 5% (which is the current level of annual decrease nationwide), it is worth....$101,650. That is, unless my math skills have really atrophied over Thanksgiving break, $1650 more than it was originally worth.

Yes, if you bought the house at $107,000, this is not comforting. Nevertheless, less than 5% of the US is living in a house purchased in the last 12 months, so the "collapse" of the real-estate market seems to me to be somewhat overblown.

Point #2: one of the major reasons the media cites for the destruction of the credit markets is foreclosures on houses with ARM loans, which loans have reset recently to much higher payments. I thought I'd just take a second to point out that those ARM rates are generally tied pretty closely to the Fed Funds rate, so the ARM resets are being massively augmented by the Fed itself and its ridiculous 17 straight rate increases over the last 3 years. I said several times while this was going on (2005) that the Fed ought to pause for a while, like a year, and see what effect its breakneck increases would have on the market. Doing what the Fed did is like trying to drive a semitrailer down the highway using only the rearview mirrors. Guess what? We're off the road now. And who is the Fed blaming? The tire manufacturer. Sheesh.

Point #3: if you live in Utah, there's still reason for hope in real estate (credit markets, by contrast, are national, not regional, so those problems, outlined in my last post, are still there and still nasty). See this article in the Deseret News today.

Upon Further Review

2007-11-20T12:08:00.000-07:00

I've been saying for a long time that things in the mortgage market are not as bad as they are being made out to be, and that might be true. And I am now forced to admit that it might NOT be true, as well.

Fannie Mae last week changed its accounting practices, almost certainly in an attempt to disguise the true number of foreclosures on its books. Today Freddie Mac announced that its foreclosures were going to cut its market valuation by almost 25%. We've seen lots and lots of losses by banks over the past little while, and the market has priced a lot of that in, but this is different. Fannie and Freddie are the mortgage clearinghouse for the entire industry. If they are forced to contract their services, then it won't matter any more if you have good credit or not, and it won't matter if you have cash or a job or a letter from the Queen of Sheba, you won't be able to get a loan at a decent interest rate.

And if that happens, we're not looking at a recession. We're looking at a depression.

Now, you know me, and I'm not an alarmist. I think everything will work out well in the end. The short term, however, is not going to be pretty, and I think that's established now. I have, therefore, some advice:

If you've been thinking about buying a house, or refinancing, or getting a line of credit, or anything at all real-estate related, do it now. Right now. Do not wait until Thanksgiving is over. Do not wait for the first of the year. Do it right now. If you have an ARM, get off it. Get off now. It doesn't matter how you have to do it or if your rate rises or if you have a prepay penalty. If you can get out of it, get out of it.

I had planned to stop working tomorrow at noon for the Thanksgiving holiday, which is my favorite. I will not be answering the phone over the weekend. But I will be answering email and if you text me, I'll get it. Email is chris@thechrisjonesgroup.com. Phone is 801-310-3407.

Please don't ignore this. I don't charge for advice, you all know this, and if your situation doesn't admit of help, I won't try to talk you into anything. But please call me and let's find out. And anyone you know that is in a similar way, have them call me, email me, as well.

Some Good, Some Bad

2007-11-07T16:57:00.000-07:00

A few random thoughts:

The edition of the Potty Post just coming off the presses is the best we've ever done. Period. I'm serious. You're going to love it. If you're not on our mailing list, send an email to olivia@thechrisjonesgroup.com
Elections were yesterday. We had all the incumbents win here in Lehi, and we have a new Mayor in Eagle Mountain (Friend of the Group Heather Anne Jackson!), and Friend of the Group Steve Turley won in Provo, and most of these races were acrimonious and nasty to one degree or another, but this morning everyone picked up his yard signs and life went on.
Meanwhile in Pakistan, Benazhir Bhutto is calling for a rebellion to oust General Musharraf, there's rioting by opposition groups in Tblisi, Burma is in shambles, and we don't even want to start talking about the political/social unrest in Sudan. I didn't get what I wanted yesterday, not by a long shot, but I have a lot more of what I want today than almost anyone else on earth. We are truly a very fortunate people.
Speaking of not getting what I want, the voucher-bill-turned-referendum-1 lost badly, which likely spells the end of the legislative school-choice movement in Utah for the near term. I've been involved with it fairly intimately for ten years, and still consider choice in education to be as basic a good idea as choice of breakfast cereal, a lovely thing that has resulted in an almost 80% drop in the real price of cereal over the last 25 years. Only in education is choice supposed to make things more expensive, and reduce quality. But the fight will go on. This is much like other battles we've been fighting for a generation; we've got the right of it, and eventually, we'll win.
This ought to be its own post, but there's a new anti-predatory-lending law being proposed in the halls of Congress that falls squarely under the heading of "this is what I warned you about" in a post a few months back, where i said that the only think that could really destroy the real-estate market in the US was Congress trying to "fix" things. HR3519 is a truly abysmally stupid piece of legislation, so it will likely not pass, at least not in present form, but oh, how tired I am already of people blaming the mortgage mess on me. Okay, not me, exactly, but mortgage brokers in general, of which I am one. If this ridiculous legislation passes, I'll have lots more time for blogging, because we'll be out of business, and thousands like me across the country. I'll keep you posted.

The Real Problem in the Market is....

2007-11-01T19:56:00.000-06:00

The Fed did cut by.25%, which means that the Prime Rate is back down to 7.5% and that the Fed is keeping its promise not to sit on the sidelines while things go south in the credit markets. The move was originally greeted with a run on bonds and a run up in the stock market, but this morning bad banking results and poor oil company profits destroyed confidence in the stock market and there was a serious buy-up of bonds. That will be good for mortgage rates tomorrow.

Unfortunately, it won't be good for very many borrowers. It is increasingly difficult for even good-credit borrowers to qualify for loans, to the point that we have one fine client that wants an 85% LTV, full doc, owner-occupied loan, with 660+ credit...and he can't get an approval. This is the way of things right now, and it's very dangerous for the economy, in my opinion. We told four clients today that we couldn't get them financing at the terms they needed to make the deal work. For one of them, that will mean that she has to sell her house, if she can. Another can't buy one, and the other two cannot refinance to lower interest rates. Yeah, I know about FHA loans. I also know about up-front and monthly mortgage insurance, which all FHA loans carry.

It's not all bad news on that front, as there are still good rates available for those that want to purchase houses (and have a good jobs and excellent credit), or that need to refinance and have 20% equity in their homes. But other than that, it's really tough out there.

We're still here. We will be.

Random Thoughts

2007-10-31T11:44:00.001-06:00

I've never been a fan of All Hallows Even. The tradition of the holiday, unlike most other holidays, does not appeal to me (although the tradition of All Saints Day, tomorrow, conversely does), and I'm not fond of evil, nor candy. Nor begging, comes to that. I do like costumes, and I suppose if we have to have a holiday just so we can we can dress up in fun ways I can put up with it. I could put up with it much more easily if we didn't have witches and werewolves and spiderwebs and the undead.
Despite this, I acknowledge Thriller remains the best music video ever created.
My wife and I continue to argue over the invention of trunk-or-treat. She loves it; I don't. She's right that it's faster, and that it's better overall for the little kids; I'm right that it defeats the purpose of decorating one's house and it's substantially less enjoyable for children over 10. I am also right that it triples the candy collection for the average child. That's where I'm hoping to eventually win the argument that trunk-or-treat is a sign of the apocalypse.
Incidentally, most people think that trunk-or-treat was invented for the purpose of keeping kids safe on Hallowe'en. This may be correct, but it is also true that there is no rise - NO rise - in child abductions, in child deaths or injuries, or in child-related accidents on Hallowe'en, and never has been.
Remember the "razor-blade-in-the-apple" scare that went around a while back? Never happened. Never. Nowhere. Not on Hallowe'en, not any other time, noplace at all. Remember how people used to poison kids by giving them arsenic-laced cookies as they came around trick-or-treating? I remember that, too. It just never happened. It was a complete fabrication, a myth, an urban legend with no basis in fact. None. Just FYI.
To my brother, congratulations on the Red Sox winning the World Series again. To Steve, congratulations on the Rockies' incredible run through the postseason. They got beat by a better team, that's all. They'll be back. But nobody will ever win 21 out of 22 in the last two weeks of the season and the first two rounds of the playoffs ever again. After getting swept in the World Series, the Rockies were 21-5 from September 15 to October 28. Impossible.
If the Utah Jazz play like they played last night all season long, they'll be a serious threat to win the NBA title. That was very, very impressive last night.
The Fed announces in half an hour whether it will cut rates again. I'll report later.

Happy St. Crispin's Day!

2007-10-25T09:57:00.001-06:00

Many of you (and all of you that drive Main Street in Lehi) know that we put up movie quotes on our big window for people to guess and win shakes at Emmett's (next door, more's the pity for those of us that would like to shed a couple pounds). We've posted "Go ahead, make my day" (Dirty Harry in Sudden Impact), "Supercalifragilisticexpialidocious", and "Remember, tomorrow is another day. (Scarlett O'Hara)" Usually it takes a day or two for people to guess (there are, after all, only 30,000 or so people that pass this office every day), but sometimes it takes longer. This time, much MUCH longer.

So I suppose it's fitting that this session's quote lated until yesterday, the eve of St. Crispin's Day. It is "We few, we happy few, we band of brothers", from this:

Enter the KING

WESTMORELAND. O that we now had here
But one ten thousand of those men in England
That do no work to-day!

KING. What's he that wishes so?
My cousin Westmoreland? No, my fair cousin;
If we are mark'd to die, we are enow
To do our country loss; and if to live,
The fewer men, the greater share of honour.
God's will! I pray thee, wish not one man more.
By Jove, I am not covetous for gold,
Nor care I who doth feed upon my cost;
It yearns me not if men my garments wear;
Such outward things dwell not in my desires.
But if it be a sin to covet honour,
I am the most offending soul alive.
No, faith, my coz, wish not a man from England.
God's peace! I would not lose so great an honour
As one man more methinks would share from me
For the best hope I have. O, do not wish one more!
Rather proclaim it, Westmoreland, through my host,
That he which hath no stomach to this fight,
Let him depart; his passport shall be made,
And crowns for convoy put into his purse;
We would not die in that man's company
That fears his fellowship to die with us.
This day is call'd the feast of Crispian.
He that outlives this day, and comes safe home,
Will stand a tip-toe when this day is nam'd,
And rouse him at the name of Crispian.
He that shall live this day, and see old age,
Will yearly on the vigil feast his neighbours,
And say 'To-morrow is Saint Crispian.'
Then will he strip his sleeve and show his scars,
And say 'These wounds I had on Crispian's day.'
Old men forget; yet all shall be forgot,
But he'll remember, with advantages,
What feats he did that day. Then shall our names,
Familiar in his mouth as household words-
Harry the King, Bedford and Exeter,
Warwick and Talbot, Salisbury and Gloucester-
Be in their flowing cups freshly rememb'red.
This story shall the good man teach his son;
And Crispin Crispian shall ne'er go by,
From this day to the ending of the world,
But we in it shall be remembered-
We few, we happy few, we band of brothers;
For he to-day that sheds his blood with me
Shall be my brother; be he ne'er so vile,
This day shall gentle his condition;
And gentlemen in England now-a-bed
Shall think themselves accurs'd they were not here,
And hold their manhoods cheap whiles any speaks
That fought with us upon Saint Crispin's day.

Henry V, by William Shakespeare, most recently in the movie Henry V, with Kenneth Brannagh in the title role. Worth the watch. I have a son named Crispin. We saw this very movie the day before he was born.

Next quote goes up tomorrow.

Best of times, Worst of times

2007-10-18T16:59:00.001-06:00

It's a closing week, which means that we're occupied here with four loans we expect to close by Friday (though it appears one of them might push to Monday). That leaves little time for blogging, so I'll just present a really good article about the credit markets that I read today. Here is a salient part:

The great risk is that the overall credit market freezes because lenders are afraid to lend.

And that's why recent news has been encouraging. The Federal Reserve has made extra short-term credit available to banks and is clearly willing to do more. And the Fed aggressively cut short-term interest rates in September, which greases the wheels for more lending.

In addition, the new fund that the major banks are proposing will ensure that the hardest-hit investors will be able to sell securities when necessary. Equally important, the fund will allow solid securities to be separated from those that are iffy.

There is good news out there. There is bad news out there. I believe that the hardest part of this market will be waiting for people to get some confidence back. Winter won't help.

Meantime, we're here and we answer any question you have, any time. No charge. 801-787-2162 or just email me at chris@thechrisjonesgroup.com.

A Graphical Representation of the Market

2007-10-12T12:28:00.000-06:00

Wanna know how bad things have gotten in the mortgage industry?

Try this:

To Market to Market to Do a Big Loan...

2007-10-10T09:50:00.000-06:00

What’s going on in mortgages:

Most of the problem this summer was panic, pure and simple. Secondary-market investors, those that provide liquidity for lending banks, were unsure how much risk they had taken on in purchasing exotic mortgages from lenders over the last couple of years, so they substantially contracted their purchasing, which got rid of a lot of those programs (if no one’s buying them, nobody’s selling them). The panic seems to have abated, and most programs that are here now we can expect to stick around. There will even be some expansion of programs over the next six months. The worst is over.

What’s happening to the home market:

Mostly, what’s happening (in Utah) is that no explosion of building can continue forever, unless you have a corresponding influx of population to support it. The population of Utah County is expanding, make no mistake, but not nearly as fast as houses were being built over the last few years. With skyrocketing home prices and new houses going up overnight, anyone that was looking to buy or build did so in the last couple of years. This released a huge amount of market pressure, and that pressure needs time to build back up. Expect small declines in price – especially for new homes – over the next six months, followed by a period of flat or slightly rising prices as the market builds back up some demand.

What’s still good:

Owner-occupied, good credit, cash down purchases
Non-owner, good credit, 10% or more down
100% first-time purchases
Any buyer with cash, good credit, and verifiable income

What’s iffy and/or more expensive:

100% refinances and purchases
Any stated-income programs (90% max LTV on investor)
Pay-option ARMs
Any buyer without documentable, seasoned cash in the bank

What’s gone:

Pay-option ARMs over 90%
100% stated-income programs
95+% stated investor
Pay-option investor purchases of new-built construction
Refinances of construction loans if the property has been listed

What’s back in play:

Seller carrybacks
Owner financing
Lease-options
Renting
Commercial building

That's where we are up to the minute, as I see it. Of course, this morning Citi Home Equity got rid of its last stated-income program, so maybe we haven't entirely arrested the slide after all.

Everything's Coming Up Roses

2007-10-09T21:37:00.000-06:00

The mortgage markets have really and truly returned to calm. We're seeing no more contracting of programs and LTVs, and no more elimination of loans where the borrowers were just fine a minute ago. That's really, really nice. Long may it last. I'll post a list of what's good and what's not later in the week.

I needed to post this. Most of you know - if you know me at all - that I hate the Yankees. The Bombers losing to Cleveland was just funny in all the most satisfying ways (though not as satisfying as the Rockies winning 17 out of 18 in what is absolutely the greatest run in major league history). Today, though, I read an article that really sums up the state of American sports, and maybe world sports. How can it be any fun for Yankees fans to watch their team spend as much on A-Rod as the Diamond Backs spend on their entire payroll? Even if they win, which they don't, thank Heaven?

You Aint Never Had a Friend Like Me

2007-10-01T18:03:00.000-06:00

I mentioned (on the Chris Jones Group blog) the fantastic auction description posted on EBay. I also promised to comment on it.

There are hundreds of places we communicate with people in today's society. Much of that communication is passive, for instance, your house. That communicates with people. What it looks like, how the yard is groomed, what door you choose for the front of the house. How you dress communicates (and very often not the way you think). We do think a good deal about this. Our business cards communicate. Our office decor. Our employees. The way we answer the phone. Practically everything communicates to the world something about ourselves.

And almost all of this passive communication says one thing very clearly: there is nothing about us that you should pay any attention to. We are just like everyone else.

We dress pretty much like everyone else, or else we dress the way people dress who are the way we think we'd like to be perceived. Our houses (in Utah especially) are brown/gray stucco garages with a house peeking out from behind. When we answer the phone, we say "hello", just like everyone else on earth, and at the office, we announce the name of the company and wait for the caller to do something. In good shops, we might also identify ourselves and ask if we can help, though this is rare. Our business cards are either just like everyone else's or they're so edgy (got an octagonal one the other day) that they are non-functional. Raise your hand if your voicemail message says anything other than "you've reached [your name here], I can't get to the phone right now (probably a lie - you chose not to get it, and is this actually information, anyway?), but leave me your name and your number and I'll get back to you as soon as possible (another lie, and an obvious one)."

Right. Thought so.

So here we come to this EBay listing. First off, it's incredibly long. INCREDIBLY long. It's one of the 5 or 10 longest scripts in the entire EBay universe. For all practical purposes, the script has nothing whatever to do with the item being sold. Nothing. It's a funny diatribe that sounds more like a Dave Barry humor column than an auction listing.

But what is the point of the listing? It is to sell the item. Not to describe the item, not to list the specifications of the item, but to sell the item. And this script sold the item for a price so outrageous the lister even commented on how silly it was that someone would pay that much for a generic pack of Pokemon cards. But someone did. The story, not the specifications, sold the cards. There's a lesson there.

We get told a lot here that it would be better if we advertised. We'd make more money, we're told. At least, we're told, we ought to tell people what we do for a living (The Chris Jones Group is not very informative, I admit). I have to admit that this makes a certain amount of intuitive sense. But my response is usually something like "who cares what I do? Why would anyone want to do business with me if all they know about me is my occupation?"

What we try to do here is create a story, or at least, create the desire to hear our story. My business cards used to say "Christopher Jones" and "The Chris Jones Group" and in really, really small type down in the corner it has my phone number. That's it. I got huge numbers of compliments and comments about those cards. Marketing people persuaded me to change, and since I did, nothing. Nothing at all. The cards are still plain-ish, but not as stark as they used to be. They're too normal. There's nothing very different about them. I'm the same as anyone else. Where the plain cards used to say "this is someone unusual - don't you wonder what his story is?" the new ones say "here is my contact information." Which one would you prefer?

You call my voice mail and you don't get any of the above. I change my voice mail every single day, tell you what day it is and what I'm doing that day, when I'll be free and can call back, and I give you at least two other ways to get in touch with me if you gotta have me right now. People sigh at me about my long messages (never more than 40 seconds), but wouldn't you rather know that I at least came to work that day? That I'm going to be in a meeting until 1pm and can't call you back before that? What number you can call if it's urgent? Isn't that better? I tell you a story about my day. You don't want to hear it, press #, but when you leave me a message, you might want to consider that if you tell me a story, I'll be calling you back first.

Our office is a story. The people in it are encouraged to tell stories about themselves when they deal with clients, with underwriters, with everyone. We put movie quotes on our window so people who drive by can try to guess the character and the movie. There's a lot of traffic out there, and most cars go by twice a day. Wouldn't you be curious who keeps putting outrageous quotes on his window? Guess what? People are. There's a story there. We have little comics posted for passers-by. We host seminars, free lunches, we have two blogs, we do all sorts of things to tell stories about ourselves in the hopes that the people who read them will want to tell us their stories in return. Because we realized some time ago that what we do here is not lend money. We have conversations. We tell stories. We write stories. We grant wishes. And we cannot grant wishes we never hear.

Poof! What do you need?

It's not advertising. It's communicating. That's what the great EBay listing did, and it's what we try to do. In the course of the conversation, we'll be happy to tell you what we do here. If we can help you, we will. Wouldn't you rather do business with someone like that?

A Post Actually About Mortgages

2007-09-18T13:26:00.000-06:00

Thought I'd post on this briefly - the Fed cut rates by .5% today, meaning that the Prime rate will be at 7.75% instead of the 8.25% it has been at. The stock market is reacting with joy and that's taking money out of the bond market, which is supposed to make mortgage interest rates rise.

But.

We just got a novel reprice from one of our lenders. Even though the bond market is moving the wrong way, the reprice was for the better. This confirms something we have long suspected, that mortgage rates are artificially high due to lack of liquidity in the secondary market, not because the bond prices justify it.

Additionally, yesterday IndyMac, one of the nation's largest lenders, added new programs and brought back stated-income programs that were on suspension. That's the first tangible sign that the mortgage pendulum is beginning to swing back a wee bit.

No way around it, though - the financial markets are FUBAR. We've no idea what's coming next. But it does appear that this crash might not be as horrible as CNN, et al. have been suggesting.

Why You Should Read Your Kids' Books

2007-09-17T12:25:00.000-06:00

When I was a senior in high school at jolly West Springfield High in Springfield, VA, I had a really good teacher. Her name was Kathryn Russell and she taught AP English.

I don't really know much about her as a person outside of class. She was probably about 55 years old - it's so hard to tell these things when you're a teenager; everyone that's not your age is your parents' age - and she had been teaching for some years. She lived close (most teachers do), but not in the richer part of town. I never saw her out of class.

Of all the teachers I have ever had in the public school system, she was the one that had the greatest impact on my life. [an aside: the school-based person that had the biggest impact on my life has to be Linda Rezek, but she was my Choir Director and a companion for three classes every year for four years. I never really thought of her as a teacher. She was one, but she seemed more like a trusted advisor than a teacher. I just realized this.] Mrs. Russell had a love of English and language and led us through it in a class that to this day is still the hardest English class I ever took. It was far, far harder, for instance, than the Honors Freshman English class I had at BYU, which, thanks to Mrs. Russell, I hardly even needed to attend to get an A.

The lynchpin of Mrs. Russell's class was the timed essay. We were assigned the standard "classics" to read in that class, like Lord of the Flies and Heart of Darkness (two books I profoundly disliked), but instead of just writing a paper on them at the end (which, however, we also did), we had to write a 30-minute timed essay 3 times a week on the chapters we were supposed to be reading at that point. These were grueling papers to write, establishing and defending a premise over about 15 pages a week, but by the end of the class, we could do them backward in Hebrew if necessary. Mrs. Russell told us that if we mastered this skill, not only would we be able to pass the AP English exam with ease, but we would find that most other exams got easier, too, since they depended heavily on argumentation and speed of analysis and defense in essay presentation. Spot on. I received many an A in college on exams that I had studied woefully inadequately for because I knew how to present what I did know in a compelling fashion.

She also gave me Cs. Not always, and not regularly, but occasionally and usually in critical spots. Then, as now, I had one or two things going on in my life. I had two hours every day of after-school choir practice, basketball and church work to do, a large paper route (meaning that I got up at 4am every day), in December a Christmas concert out of school every day, and from January to May every year I had 3 more hours of after-school play practice for the school musical. I tended to slack off in my school work occasionally. Mrs. Russell never let me get by with it.

Look, I can write. My stories won prizes once upon a time and my essays get published when I send them somewhere for the purpose. I always had a facility with combining words and presenting them on paper. My English papers were pretty good even when I didn't spend half my life on them. Mrs. Russell could have given me an A with perfect justification on most of the stuff I wrote, but instead of judging it against the capacity of other people, she gave me what my effort deserved. At first contact, I thought this monstrously unfair. Fairly shortly, though, I could see that she thought I was really good, and that if I learned to apply myself, I could be excellent. She demanded that excellence. I haven't lived up to it always, but I haven't forgotten. And sometimes I write something that I think she'd have really liked.

This morning I re-read Frindle by Andrew Clements, and marveled again at what a first-rate story that is. It's the best of Clements's work, I think - in this one the story is perfectly natural, and doesn't feel forced, as if the author once caught lightning in a bottle and is hoping to make it strike twice. Frindle is, quite simply, the best tween book I've read, and we have a lot of tweens in this house, and I've read a bunch. It's a great story no matter your age. It has all the classic elements, the plucky hero, the evil villain (who reminds me powerfully of Mrs. Russell, hence this post), and a great twist at the end. Mrs. Russell was a Lorelei Granger. She made all of us want to be better, even if we didn't know that's what was happening under the teenage carping.

I never found out what happened to her. I've wanted for a long time to find her and tell her how much her class meant to me, how much of my life (right down to this very blog post) has been influenced by the things I learned there. I heard that she had breast cancer about ten years ago, but the outcome of that I didn't know. Hang on...Google, however, knows all, and it found her as recently as last year teaching at George Mason University.

And hey, there's a phone number...

The Best Laid Plans of Mice and Men

2007-09-13T20:58:00.000-06:00

I meant to post on Monday, but I couldn't sleep the night before and spent a couple of hours on the stairs in my house praying and trying to be grateful that I have it better than most, however it feels like sometimes I could lose it in heartbeat.

So I didn't post.

I meant to post on 9/11 on the tragic and still almost unbelievable loss of that day. The year after I participated in the "Rolling Requiem", an hour-by hour tribute to the dead through the singing of Mozart's Requiem mass beginning at 8:17am in every time zone. I've not forgotten that day; nor, I suspect, have any of you.

But I didn't post.

I meant to post on Wednesday the 12th, a day where I passed a test that a few years ago I failed. I hadn't thought I'd come that far. I also learned several very important things that I want to share, but I didn't have time when I got home at close to midnight.

And here we are on Thursday and hey! I have time!

The markets are fairly settled. There's the distinct possibility of a Fed rate cut of as much as .5% next week, which would be a very aggressive move. It would ease the pressure on those that need to refinance out of adjustable rate mortgages (Fed moves directly affect ARMs), and that could help ease the fears in the secondary mortgage markets. Frankly, I can't tease out how the Fed affects the entire world economy, so I tend to pull for those moves that make it easier for me and my clients to get loans done. That usually means rate cuts. Forgive the bias. But I do think that is what the Fed should do.

In an effort to expand our product range and provide more services to our clients we have developed a couple of new programs that are related to, but are not, mortgage loans. One is a huge undertaking that I'll have a whole post about relatively soon, and the other is potentially the most useful mortgage add-on that I've ever seen. More about those later.

Get a Job, Da da da da, da-da-da-da-da

2007-09-07T09:34:00.000-06:00

No, not me.

The federal jobs report came out this morning, and it was baaaaaad. That's gooooood. Sort of.

I posted on this before, about how the employment picture has a great deal to do with bonds, because high employment is supposed to mean high inflation (how people can still be sold on this idea when we've had record low unemployment for years now and inflation has never crested 5%, I don't know, and you would have thought that the Carter years of 10% unemployment and 18% inflation would have killed that off, too, but whatever), and high inflation is bad for bonds, and what is bad for bonds is bad for interest rates, so bad employment numbers is good for bonds and therefore good for interest rates, not that we really want people to be out of work, but we're thinking primarily about ourselves here.

That was all one sentence.

I expect, given the huge move in bonds this morning, that we'll be back to 6 - 6.125% on the 30-year fixed by Monday. Maybe not; lenders have a habit of not being willing to move down nearly as fast as they move up, but the market move certainly isn't going to hurt anything. It is now virtually certain that the Fed will cut rates at its next meeting, and that is good for the economy as a whole, I believe.

Good news has been a long time coming in this part of the market, and it's all the more welcome now that it has.

Too Good Not to Mention

2007-09-06T21:18:00.000-06:00

Those who are regulars here know that I have a longstanding relationship with Harry Rodas, the Realtor with Century 21 Bushnell out of Orem. I have mentioned his blog before, but honestly, folks, it's fantastic. Especially if you're a Realtor or even considering real estate, there is priceless information on that blog. Highly recommended.

Additionally, I'd like to recommend a little different blog from a source I hadn't seen until tonight, and that's the blog at The Jubilee Project. The writing isn't fabulous, but the emotion is real and the commitment to a good life comes through so clearly that I found myself moved. Kindred spirits, halfway across the country. I love the Internet.

That's it. Just a couple things. Go back to what you were doing.

A Light Has Gone Out of the World

2007-09-06T21:02:00.002-06:00

Luciano Pavarotti died last night of pancreatic cancer. He was 71. He died in Modena at his house, with his wife and family around him, which is how every man should die. Especially this one.

All have gifts. Every man is given a gift. Some men are given gifts so enormous that they cannot be hidden, and Pavarotti had such a gift. He was the man that gave Giacomo Puccini's music the perfect incarnation, that made it alive. Whether you like opera or not, what Pavarotti did to the music he sang is simply magical.

If you don't believe me, I invite you to listen to his supernal recording of Puccini's Nessun Dorma from the opera Turandot. That is the sound that you hear when you and your true love embrace for the first time. I once put it on my mp3 player when I went out running, and I literally had to stop when it came on, because I was weeping. It's very hard to run when you're weeping. No other piece of music has ever made me feel like that.

Don't miss out. Pavarotti was the greatest tenor that ever sang Puccini. Get a recording, a candlelit room, and some quiet surroundings. You'll thank me.

And the Verdict Is....

2007-09-05T21:18:00.001-06:00

that the sky is not, in fact, falling. It turns out that the actual damage in the subprime market is being done by loans made only from 2004-2006, and that there are only a small percentage of those loans that are going bad, and that the total percentage of foreclosures in the subprime market is actually smaller than it was in 2000-2001 during the stock market crash.

The Fed, for its part, is not going to sit on its hands, and everyone expects a quarter-point cut at the Fed meeting later this month. That's probably not enough, but remember, it's not the effect of the move that will matter, but the effect of the interpretation of the move to mean that the Fed will not sit idly by and watch this be the worst Christmas season in the history of money.

This, in turn, has calmed things down across the markets and though many subprime lenders are still contracting on their programs, there's no serious degradation of the market any more, and liquidity is starting to come back into the secondary market.

Locally, even more hopeful, there's some sign of buying pressure in the $350-400k market in the Utah area, a price point that has been absolutely dead over the last six months. No, that doesn't mean a return to the blaze of glory of 2005-2006, but it may mean a return to a normal market sooner rather than later. Think March, instead of 2009.

Meanwhile, it also appears that those who have good credit and a real job are realizing that there are still good deals to be had at good rates out there. The competition for properties is much less, with those lacking hard cash ceding the field to those that have it. There are a fair number of those people, and the 30-year loans are still in the low-mid 6% range, and that makes for some good buying opportunities.

Bottom line - things are bad, on a relative scale, but not disastrous. There are beginnings of a return to normalcy, and the potential of the return to a normal market early next year. Things could be much worse.

In the News

2007-08-17T08:46:00.000-06:00

It occurs to me that just because we see these things here because we subscribe to the Lehi Free Press and other bastions of the First Amendment, but many of you don't live in Utah, or if you do, you live in more civilized parts of it. Here's an article that came out recently.

Cj Mortgage Group Opens New Office

And here's another one. Note the quotation marks, please.

Rotary President Arrested

The Sky is Falling!

2007-08-17T08:30:00.000-06:00

Ah, okay, you know me better than that. Yeah, things are rocky, but not that rocky. Life is going to go on. For nearly everyone.

Apropos of that, I got a note from someone yesterday asking all sorts of questions about how the market turmoil affects him and his. he owns a house with some equity in California, has about $150,000 in equity (worst case scenario), but that used to be closer to $200,000. He has excellent credit but not the world's greatest income (though it's better than most). He's on an adjustable rate mortgage, fixed at 4.25% right now, but it goes variable in 30 months. Should he lock into a fixed rate? Will the market collapse and take his home with it? Doesn't the Fed care about little homeowners like us? What to do?

Here's most of my reply:

BYU1-

Whew. Long story, there. I'm happy to help however I can.

The bottom line is no, you shouldn't worry. This is not to say that there's no chance that the market could collapse, because there is. There always is. The chances are not very good, though, and you'd be more profitably employed worrying about something with a better chance of happening, like, say, BYU being unable to field a team this season because everyone has had Lisfranc surgery. :-)

I do think mortgage interest rates will rise over the next couple years. Your friend is correct that 2+ years is a long time, and worrying about that now is likely not going to do you much good, but my advice would be to seriously consider the fixed-rate market and figure out at what point it would make sense to refinance to a fixed loan. When the market hits that point - and you're welcome to email me anytime and ask - do the deal. If it doesn't get to that point, don't do anything.

This year, incidentally, I think 30-year rates are going to fall from here. We could hit 6% [par today is 6.25% - ed]. That's a real possibility. If that's your target, then that's something to watch for.

As far as the conforming loan limits go, I do not think they'll rise by enough this next year to get you under the threshhold. That's a bit of a jump to get from $417k to where you are. It's possible, but unlikely. The jumbo combined loan you'd have to do would be about .5% higher than the conforming rate, or you could split the loan again and stay under the line, whichever makes more sense.

As to the Fed, no, they don't care. More to the point, they're not supposed to care. I don't like the Fed much, I have to say, but that's not because they're heartless [the heartless Fed cut the symbolic discount rate by .5% this morning, not because that's really going to help much, but because it sends a message that Daddy is not going to sit idly and let the market collapse. The Dow responded by rocketing 300 points on the open, and that noise you hear is a sigh of relief in the credit markets. Remember, the amount of damage we're talking about in this "crisis" with subprime foreclosures is a half-day Wall Street hiccup. Most of the damage being done right now is happening because of panic, not actual financial pain - ed]. Fortunately for you, it's not the Fed that's going to determine your interest rate, but the 10-year bond market. All fixed-rate mortgages are loosely correlated with the 10-year (and, to a lesser extent, the 30-year) bond market. You want the price to rise and the yield to fall on that. We watch those pretty closely here, and again, you want info, email me.

Or better yet, my name's Chris Jones, I run my own brokerage in Lehi, UT, my phone # is 801-310-3407, and my email address is chris@thechrisjonesgroup.com. I also publish a blog (two, actually) at mortgageblogger.blogspot.com, where I talk about this stuff, though not as often as I'd like to. We publish a newsletter as well, and if you'd like, I can put you on our mailing list. Just need your name and address.

I hope this all helps. Any time you have a question, get hold of me and if I can, I'll answer it.

Best of luck.

To you, too. We're here to answer questions, even stupid ones. And yes, there are stupid questions. But we don't care about that.

Pardon the (Lack of) Postage

2007-08-16T11:39:00.001-06:00

One of the problems with a rapidly changing market is that we have to do three or four times the work to accomplish the same loan. This hasn't left me blogging time. But I will carve some out in the next day or two, because I really do have some thoughts about the direction of mortgages what that means to you and me. So stay tuned.

Market Update, BBQ Review

2007-07-30T12:48:00.000-06:00

After discussing the mortgage market over the weekend with Ray and some others, and seeing the fallout this morning from lenders who are abandoning the subprime market, I want to revise my earlier opinion of the state of the mortgage industry.

It sucks. Thank you.

Essentially, what we're seeing is a pullback in extendable credit to borrowers under a 620 credit score, and to a certain extent to those under 700. Cash remains king, as it has been for a year now. LTV requirements are up, available lenders are down. Wells Fargo just shuttered its subprime wholesale division, meaning that independent brokers like me cannot use them for loans below 620 scores. They maintain that division for retail - for their own lending operations - but they will not work with brokers on that side of the line any more.

They aren't the only ones. We're seeing that from Citimortgage and from many many others. There are still loans out there to be had. But if you don't have 5% equity or perfect 720+ credit, it's a very dicey proposition.

Oddly, we're doing a fair number of second mortgages, and we're also seeing a serious pullback in those markets. There is a chance that by the end of the summer, you won't get a second mortgage under a 660 credit score, and none at all over 95%. Just a word to the wise.

The Annual Client Barbecue was a roaring success again this year, much credit to Olivia, who plans these things, and to the wives of the Group, especially Jeanette and Ellen. We had some indeterminate number over 100 people there (it's really hard to count when there are about 50 kids under 10 running about), and a good time was had by all, especially those that attended.

Remember to reserve a Friday/Saturday in mid-January for the next super bash - The Twelfth Night Invitational and Charity Ball. Watch this space for more.

Random Thoughts

2007-07-25T21:59:00.001-06:00

I'd love to be doing this more often than once every couple months, but I won't promise it will happen, so here are just some things I've been thinking about.

The mortgage industry is fairly healthy, on the whole, and the subprime "collapse" doesn't really amount to too much from our vantage point. However, markets are funny things, and they respond to press and atmosphere fairly sensitively. The press is bad and the atmosphere in the mortgage industry is like a graveyard - okay, well, then like the house right next to the graveyard, which isn't itself a harbinger of death but still gives you the creeps. Lenders are scrutinizing even our fairly solid loans far more than ever before, creating delays and increasing stress and cost for our clients. It's frustrating.
No, the market isn't "bad". But it's not good. I would still advise buying, and inexpensive money can still be had, but caution is recommended. And solid, professional advice.
Utah needs rain really badly. This sort of pretend rain of the last couple of days is worse, almost, than nothing.
It's been interesting to watch the SuperLiga games over the last couple of days. SuperLiga is an 8-team soccer tournament between Mexican-league and MLS teams. So far, the MLS is 1-0-2, and the LA Galaxy (sin David Beckham) beat CF Pachuca last night 2-1 in a cracking good match. The interesting thing is that most of the fans in the tournament so far are cheering for the MLS teams. Granted, the games are being played in the US - but when the US national team plays here, especially against Mexico, it's an away game. Not, it appears, in this competition. Local teams seem to have captured the fan base much better than the national team has. It's curious.
Say what you like about J.K. Rowling and her writing ability (and I'm in agreement that she's not creating great literature), Harry Potter is a towering literary figure, and quite possibly the most recognized character in a book since Jesus. And for my money, the most annoying since....since....okay, there's never been a protagonist or antagonist as annoying as Harry. 'Long about chapter 20 of this last book, everyone in my family was rooting for a serial killer to wipe out him and Ron and Hermione so Ginny Weasley could run off with Neville Longbottom. Alas.
Maybe it's just me. But given the travails of the cycling world, I have to comment and ask a question. In the last couple of days, we've lost four riders from the Tour de France, two of them among the greater names in the sport, one of them the leader of the 20-stage race after stage 16. First, the comment: the cycling authority has incredible guts. Sending these guys home is akin to ejecting one team's starting running back in the Super Bowl. It's just totally impossible. No other sport inflicts such damage on itself during its marquee event, no matter what the provocation. But now, the question: what for? Does anyone really care if these guys are doping? Isn't it practically impossible to catch them doing it? Is there some reason why we care to try?

Pray for my Uncle Kumen, and my mother, both recently hospitalized with heart problems, both now released and doing, as far as we can tell, quite well.

And pray for rain.

Stretched Too Thin

2007-06-13T11:43:00.000-06:00

Once upon a time, I was a young man.

No, really. It's true.

We were all young once. And youth is great. One of the best things about being young is that it seems everything is still in front of you. When you see this most is when you talk to high school kids, kids that are old enough now to have a sense of what they are going to want to do, want to be in the future, but as yet no sense of mortality. They have no sense of, as CS Lewis says, how soon the tether begins to pull, how fast one begins to say "I just won't get to that." They think they can do anything.

And they can. But they cannot do everything. Ay, says Hamlet, there's the rub. The young are all potential, with every branch of the tree still above them. It does not occur to them that choosing one branch means that there are whole sides of the tree they will never climb.

I have a high school kid in my house right now, and he's a great kid. He has essentially unlimited potential. He gets (get this) straight A's. Whatever is possible to humans is possible to him.

I remember that very well. I remember an endless string of "student has enormous potential" on my report cards. The "you are a royal and chosen generation" speeches. The valedictory addresses where we heard "we are the future". I remember all that so very clearly. I also remember choosing politics right out of school. What I do NOT remember is someone saying to me "this means you are not going to be a lawyer, and you need to understand that." I remember deciding that I didn't have time to lift weights every day. I do NOT remember anyone saying to me "you will now never dunk a basketball in this life." I married Jeanette, and I therefore did not marry anyone else.

Every one of those positive choices carries with it a negative choice as well, or more accurately, thousands of negative choices. By negative, I do not mean to imply "bad". I do not think I would like legal work, so I am, in retrospect, glad that I chose to work for Dixie Thompson's campaign instead, even though she lost (a pattern often repeated). I married Jeanette because I wanted to, and I've not regretted that decision for one second. By negative I rather mean that for everything I decided to do, there were thousands of things I then decided not to do. Some of those things I wouldn't have liked much. Some of them I would have loved.

This occurs to me most powerfully whenever I perform on stage. I am a good singer and a decent actor, good enough for community theater or even light professional theater in certain character roles. I love theater. Something happens on stage that is more magical than words can describe. And although I am decent, I could have been quite good. Could have. At the very least there are dozens of productions I could be involved in anyway. If I chose. But I made different choices.

I chose to have a job - actually, I chose to own a company. I chose to have a family. A large family. I chose to remain a devout, hymn-singing religious fanatic in a church that would demand that I serve in it several hours a week. I chose the Chamber of Commerce (mostly for my job) and the Rotary Club (mostly for Steve Roll, but that's another post). I chose to remain active in politics and to go to my kids' concerts and recitals and to spend time with my wife. These are not bad choices. But they are choices. They have meant that some things that I dearly love I cannot do.

Nobody tells you this when you're young. I wake up one day and realize that my "potential" period is over. There are some heights I won't reach, even on the branch I chose to climb. We have seven children, but we will not have ten. I will not be President of the United States, or even Senator. I will not be on the cover of Fortune magazine, and we will not be in the Fortune 500 here at the Group. I will not even be in Utah Business Magazine's "Forty Under 40" feature edition. This is not meant to be a litany of disaster, but it is sad. For me, it is sad. What happened to all that "unlimited potential"?

When I was 22, I won the BYU one-on-one basketball intramural championship. Last basketball season, when our church team's starting point guard fouled out in the championship game, I was the one that needed to take over and get the team into the offense to give us a chance to win. And I couldn't do it. I was too slow, didn't have a good enough handle, just wasn't physically able to do what the team needed me to do. The worst part is I know that once, I could have.

Physical limitations we are familiar with and we discuss on a fairly regular basis. We see them in front of us in professional sports as the stars rise and fall. To an extent, then, we have "priced that in" to our experience. It feels terrible, but inevitable. But there are other things that we don't price in and don't discuss - things like the middle manager that realizes he's being passed by younger men on their way up the ladder, and that he will never rise to the top. Remember Bob Paar (Mr. Incredible), sitting in that cubicle at the insurance company, knowing that this is all there is for him. One of the reasons I love that film is that I can understand that feeling.

For Bob, though, he still is Mr. Incredible and with a little work, he really can throw huge robots down the financial district. That's what makes that movie so great - Bob does what I want to do, what so, so many of my friends wish they could do. See, we used to be Mr. Incredible, too, only for us, once we got into the cube farm, we lost a lot of our super powers. Bob Paar is just pretending to be like everyone else, when he's really still a superhero. But we're not pretending to be normal. Not anymore.

Now, we really are.

This post started to be about why I have trouble blogging regularly, but the simple explanation is not for me, obviously. Thank goodness I have a training class today where I don't have anything serious to learn, and I can do this. I love blogging. I love writing. Oh, that I could do it more often. I wonder often if I became a better person, more organized, more disciplined, if that would allow me to fit everything in. But I hear a voice, way in the back, reminding me that this level of activity once was impossible, too. There are always branches that can't be reached. There always will be. I will never be able to do everything.

I started to write that I wish someone had told me this when I was younger, but then I knew. I wouldn't have believed them.

CJ

P.S. I re-read this and see that it is fairly relentlessly depressing. I am not depressed. Really. I can't ignore that there are heights I won't reach and dreams I won't see realized, no matter what I do, but I am also very cognizant of the fact that I am already on top of mountains I hardly dared to believe I could climb. I'm not sad about the choices I made, and I wouldn't change them. That doesn't mean a certain amount of "what if" doesn't occur to me every day. Doesn't it to you?

A Death in the Family

2007-04-26T16:48:00.001-06:00

Rachel Eve McCumber, born on Monday, died on Tuesday afternoon, daughter and third child of Benjamin and Melissa McCumber, who are both clients and friends.

I was privileged to attend the funeral, where there were many things said for comfort and from grief. I have no idea what it is to lose a child. I have no idea what it is even to lose a close family member. We have been richly and impossibly blessed all the days of my life. I was therefore impressed by the remarks made by many who spoke at the funeral of this little girl.

"We do not know God's ways. We cannot tell what it is that He is doing. But we trust Him. He loves us." - Ben McCumber

"I promise you that peace will come. It may take its time, but it will come." - Bishop Beck

"I am so grateful for the Spirit of God that can give me peace even when everything hurts so terribly." - Melissa McCumber

and my personal favorite:

"Melissa and Ben are so good, should we be surprised that their children are perfect?" - Bishop Barry Gardner

She who was behind us, to come after us, is now gone before us. All she was sent here to do she has done.

The hall wasn't exactly full of people; it's very difficult for people to get off work on such short notice and in the middle of the day, and of course this little precious one would have no friends here of her own, so there was only a goodly amount of family, and a few others of us lucky enough to know about the service, and that was all. There wasn't any announcement of the funeral, just a couple of small paragraphs in the obituaries that Leslie Christofferson, another close friend of the Group, called us about, thinking it was Ray and Chrys's child. God moves. Mysteriously, but He surely moves.

All of us there were affected by this little soul, though we never knew her. She will not do any of the things in this life that we do, but perhaps some of us will do things differently because she was here. Isn't that more important?

One tiny lesson I learned from this: as I reached home after the funeral, my wife told me that the southbound entrances to the freeway were blocked off. It seems the Vice President of the United States is in town to give a commencement address, and in order to facilitate his movement, the freeway has been cleared, so that his long, black limousine might pass unimpeded.

This roadblock has caused a great deal of traffic jamming in its wake, and stuck in the jam is another long, black limousine, this one carrying a small plastic box with the tiny body of a little girl inside. Close behind it is a small old car in need of some repair, where the parents of that little girl will sit for another couple of hours, looking into the curtained back of the hearse at the resting place of their daughter.

I am strongly of the opinion that the roadblocks should be placed rather differently, if they are to reflect the true rank and stature of those going south today.

Sleep tight, little Rachel. We will tend your tulips for you.

I'm From Virginia

2007-04-16T13:01:00.000-06:00

You're watching the Virginia Tech coverage, so I won't repeat any of that stuff. But I have some comments and some questions.

1. The person most likely to hate his life for the longest period after this is the chief of campus police at Virginia Tech.

2. This is by far the longest-duration shooting in history. It took roughly three and a half hours.

3. During this entire 3 and a half hours - 210 minutes - the shooter was not confronted with one other person with a weapon, with the possible exception of right at the very end.

4. Virginia Tech is a weapons-free zone.

5. Weapons-free zones are also known as "target-rich environments" by people that want to shoot other people.

6. How on earth does someone shoot a dozen people in one part of the campus, take an hour and a half, get a latte, go all the way across campus and take 30 or so more lives?

7. May God Himself bless the incredibly fast response of the Salt Lake City PD at Trolley Square. I think it is now possible to see how monumentally unusual that kind of speed is.

8. It takes an unbelievably long time to kill 32 people.

9. What almost always stops a shooting is the presence of other people with guns.

10. Even the experts - even security experts - admit there is absolutely no way to "secure" a campus and make sure that the students are safe in the event of a shooting. This is not a problem that can be eliminated altogether and it CANNOT POSSIBLY be prevented by a government that still allows any sort of civil liberties.

11. It has always been true that you have one good method of defense against being shot by someone: have the means to defend yourself. I'd add one more: hang around with people that can defend you if you don't want to do it yourself.

12. My wife and I both just looked at each other and confessed that if this kind of thing happens at our kids' school, part of us will hope that our children are the ones that are killed, instead of someone else's. We're ready. We know our kids are on loan to us from a God that knows their names, and that He's going to want them back. They're ready, too. Our family knows where to find God in time of trouble. We also know so very well that most people don't. We're not asking for it. We love our children as much as any parents. But this life is not the beginning, and it's not the end, and we're all going to come into it and leave it at some point. Dying in bed after 20 years of pain is not necessarily better than being shot while protecting someone else - and I know my sons. They'd be protecting someone.

13. That said, if I can find a school where it is broadly known that every teacher is licensed and trained to carry a weapon on campus, my children are going to go there no matter what it costs us.

14. Many people are going to be angry and/or horrified by things I've written above. Post what you like in the comments about it. My way is not the only way.

15. God keep you and yours safe. If you read this, Diana, call me. I know you live hundreds of miles from Tech, but I just wanna check.

This is Not Thechrisjonesgroup.ORG

2007-04-13T12:36:00.001-06:00

I got a question today from a client that was unhappy with her origination fee, so I thought it might be well to repeat my opening of the kimono on the subject.

Just wanted to make something clear about how the origination fee stuff works. Obviously, all mortgage people get paid. Some get paid more than others. Some are even worth it. I get paid pretty well for the industry, and I think I earn it. I also pay most of it out to all the people I have helping me, so very little of it ends up in my pocket, but that's another story, and a personal choice. Not relevant to our discussion.

Mortgage people get paid in two ways - one, they charge origination fees, and two, they get paid to re-sell the mortgages on the secondary market. The first fee is transparent. It's stated clearly on the Good Faith Estimate. The second is not. It is supposed to be disclosed per federal law, but it often isn't (it's a fairly new law). In essence, mortgage people are able to hide how much they are really making on a deal by raising the interest rate and "lowering" their fees. Most people only look at the transparent fees and don't think that .125% on the interest rate is that big a deal.

Well, it is.

I worked on a deal this morning where I'm competing with a lender that does not charge origination. Lots of people like that. I'm going to win, though, because I know the borrower and I know that the additional .25% in interest the other lender is charging (in order to make the money she wants) is going to end up costing the borrowers more than $10,000 in additional interest over the life of the loan, and several times that if they are really trying to get rid of their debt.

This is a business. We're not a charity. We get paid to do this. Well, okay, not THIS, exactly, because blogging is kind of a freebie, but we get paid to find people the best loans there are. And we do that. From 5:30am to 8pm every weekday.

Also wanted to mention that I'm going to be on the Geoff Beckstrom show on grapevineradio.com from 3pm to 4pm today, right after I get out of my Rotary District Conference. Busy day. And fun.

Chicken Little Grows Bigger

2007-04-12T14:01:00.000-06:00

But it doesn't matter very much. The National Association of Realtors says that it forecasts the very first drop in average home sale price EVER. That's right. Never in the history of the NAR has the average year-over-year sale price dropped, but the forecast is that it will this year.

By .7%. That's not 7%. It's point seven percent. In other words, a $300,000 house would decline in value by $210.

It is perhaps accurate to say at this point that the sky doesn't appear to be falling.

It's also clear from the report that most of the decline, piddly as it is, is coming from the East and West coasts, where the declines are as large as 10%, and not from the flyover states (hooray!), where there are only a few places declining and most rising a little. Utah appears to be headed for a 7% increase this year, which ought to be in the top 10 in the nation. Nobody's going to get rich quick at 7%, but that's a decent return nonetheless.

Of course I should mention here - per usual - that none of this data has any relevance to YOUR house. Within a place as small as Lehi, there are massive variances in property valuations, including both increases and decreases. Get professional help.

Apropos of that, please visit www.harryrodas.com. Harry, as most of you know, is our Realtor of choice bceause he's the best there is. He's running a contest where you can win tickets to the July 4 Stadium of Fire show in Provo. It's always a great show, and Harry is generously giving away those tickets and other prizes to those that enter. Do it.

This isn't an argument. Yes it is. No it isn't.

2007-03-29T15:46:00.000-06:00

The following is what is known in ancient times as an argument. An argument, as advanced in a very funny Monty Python sketch, is a series of statements meant to support a proposition. In this case, one of our readers has advanced an argument, and I have rebutted, with supporting evidence. I tis not an argument in the modern sense, which is two or more people yelling at each other interrupted by commercials. Comments one way or the other are invited.

IP Freely (his own moniker) comments (paragraphing edits have been made for readability):

Hey Chris, I have a small comment, and a question; and please do not think I am trying to put you down, but man, are you insane? I have read a few of your blogs, and frankly, I think that you are a nice guy, but you seem to do two very opposite things at the same time no less; you in one hand are putting yourself out there as a good loan officer, as someone that knows the system, the programs, and all that jazz on the mortgage business, and in the other hand, you put yourself down all the time, you say things like: "this guy helped me out with money when I was broke" or "I was closer to forclosue than I would like to admit" and many other things (I don't have the time to look them up).

I admire your blunt honesty and cander[sic] on those matters, but in my opinion, if you want more people to call you up and trust you with their finances, then you should try a bit more to be the guy that someone would trust with their financial issues, and believe me, people pick up on these things, if you do not look like someone that has his own finances taken care of, then what kind of advice can you give? you can't have it both ways, how can you ask your readers to give you advice on how to run your own business (you did just that in a couple of your blogs) and then expect them to trust you to take care of their financing.

[I]t's counterproductive, you need to look like that guy that doesn't need anyone elses advice, you need to be the guy that knows so much about finances that not only he has a thriving and expanding business but that his advice is worth more than gold!!!!!!! not like that guy who doesn't know what to do next.

[L]ike I said before, I think you are a nice guy, I am telling you this because some times I read your blog and think: "is this guy self-destructive? doesn't he realize that to attract business he HAS to be a rock or at least appear to be one?"

[A]nyways, I hope you take this comment for what it is and in the spirit it was written on[sic].
I P freely | 03.28.07 - 12:33 pm

I do, IP, and I'm very glad you commented. I can see that you are trying to help me, and I appreciate it.

In my experience, there are two ways you can behave as a businessman. You can attempt to control the message and act as if you have all the answers, or you can admit you're pretty much like everyone else and give up the illusion of being in control of everything, and allow your clients to invest themselves in assisting you (like, say, posting critical things on your blog). For some, the first way works. For me, the second does. It's just about that simple.

I may turn out to be utterly up in the night about this, but it seems to me that our clients are not stupid, and they have a fast read on who I am - and who I am not. I have myriad weaknesses, some of which are readily apparent. Why attempt to hide them?

I also have strengths, many of which are also readily apparent. I don't try to hide those, either. I don't claim to be a poor writer or speaker. I also don't claim to be OCD about organization. I am someone that people readily follow. I have also in the past led some of those followers into places they'd rather not have gone (though I always made sure they could get back out again, even if I couldn't). I made the same mistakes lots of people make with money. I know what those mistakes cost. I know how to repair them, and how to avoid them, and best of all how to live with them and not feel like the world is coming to an end.

Here's a question for you, Mr. IP Freely: you've seen the film "You've Got Mail", right? In that film, a dear, hardworking, intelligent and resourceful lady has to shut down her shop. We get to see deeply into her emotional state when she does it, and we get to see that she's not the best businesswoman on earth (consider the staff she hires). If that woman came to you with a book recommendation, would you take it? Does the fact that she's "failed" at business make her less of a compelling person? Less trustworthy?

No, it makes her more human. Since humans are, presumably, the target market, that would seem to be a good thing. Most people prefer to do business with people who are like them. Do you like her less because she's not perfect, or more?

You make a good point that people also want to do business with those that are competent to advise them in their area of concern. But do you think that regular readers of this blog will believe, because I know what it's like to lose a business, that I therefore am less able to explain to them that their 580 credit score is only going to be good for a 95% loan, and then only under certain conditions? Do you think that because I mentioned that I once found myself in a desperate financial position because I invested my professional life in a longshot startup company that this makes me less likely to be able to sort out the last 3 years' business tax returns on a self-employed borrower with two companies? Maybe you do think this. Maybe the general public thinks this. I don't see many signs of it, frankly.

Perhaps it's simply my long exposure to politics, where your skeletons are going to come out of the closet singing and dancing, so it's better to give them some time on the floor right up front. Perhaps it's an attempt to remind myself that although things look pretty good now, there are many men of better brain and character who worked much harder and got far less, and I ought to have a little humility about what success we've acheived. Perhaps this costs us business.

Perhaps.

We get all of our business from referrals. We don't do any advertising. Our clients are a fairly exclusive group of people that have one thing in common - they like us. Our letters of recommendation routinely make mention of the fact that we will do whatever it takes to make the deal work, that we assisted the writer out of what seemed like a hopeless situation. Guess why they know we can do that. We've been there. The pressure of it doesn't scare us. Neither do we look down on them because they made mistakes, because we made the same ones.

I freely admit that because of this we do not get to sit in a big office behind a fancy desk and have a servant wheel us around. We do not get to take over the bank in a crisis. But then, I never wanted to be Mr. Potter.

This is the Bailey Building and Loan, here, and I decided fairly recently to just be George Bailey, since that was undeniably who I was inside. And then I decided that like George, I'd try to be the same outside as I was inside, because that left me less to keep track of. I might not present to the world a perfect picture of a successful, brilliant businessman, but that suits me, because what you see is true.

I did try it the other way before, incidentally. Back when I ran a branch office for a major securities broker/dealer, I was the King of the Universe. You were lucky just to get into the same room with me, let alone be the beneficiary of my brilliant investment advice. But it was a crock and I knew it and so did everyone else. It felt false because it was false.

Despite the fact that I am fallible and imperfect, the fact is that I am the fellow you want to see if you need help. There is no one that will work harder or with greater skill and persistence to get you the loan that you need. But I don't want to say this; I want my clients to say it. And they are saying it, or we wouldn't be in business. More briefly, what they are saying is "I trust this guy." Maybe that doesn't get me mortgage business from millionaires. But I'd rather be the richest man in town.

Apropos of that, I ask for the business advice of my clients because they are brilliant people. A good portion of my clients are members of the Lehi Area Chamber of Commerce and run their own businesses themselves. My experience is that not only do my clients have a huge number of great ideas, but they also refer us more when they feel that they have a vested interest in the business, when we implement their ideas - and even when we don't but we asked for their opinion. Again, I COULD pretend to be The Man, but who would I be kidding? And how much great advice would I miss out on?

Honestly, I'm glad you posted your comment. You aren't the first one to comment on this rather odd way of positioning ourselves. Thanks for giving me a chance to explain.

And as always, if you think I'm all wet, the comments are open.

Chris Jones Watch

2007-03-27T16:15:00.001-06:00

Just so we can keep up on these things, The Chris Jones Group is now #1 and #2 on Google under "Chris Jones Group", and Chris Jones (our Chris Jones) has moved up to #45 under "Chris Jones".

Thanks to all of you.

On the Chris Jones Watch, the #1 Chris Jones continues to be the Chris Jones Coalition, a bluegrass band that sadly, I don't like. I like bluegrass, but not this bluegrass, mostly because it appears I don't sing well. Moving into the top 10 is Chris Jones the wildlife artist (#5) - careful, my art is creepy and weird - and a brand-new Chris Jones that does a webcomic (#9). A bad one. Apparently, I can draw, but I have no sense of humor or taste. The same one of me at #7 also does a site of children's illustrations, much more tasteful.

Keeping the Keys to the Castle

2007-03-27T15:56:00.000-06:00

Here's a service we can offer that we don't often talk about, but that is directly related to what we've been discussing with regard to subprime mortgages: how to keep from being foreclosed on.

Now, we here don't have a great deal of experience with foreclosure personally (although we got closer once than we'd like to admit, so it's not as if it's a totally foreign experience), but we are connected with a great outfit that specializes in loss mitigation, which is a fancy term for "how to keep your house when the bank wants you out of it". Surprise, the best way to deflect this sort of unwanted attention is communication with the lender.

But not with just anyone at the lender. There are two parts of a lender's operation, and one of them is not going to be friendly. Talk to the other one. In the even that you should need to, call us (801) 787-2162 and we'll connect you with Karen Eggett, the resident expert on the subject. She's fantastic.

And we have other resources, too. We can help.

Just in time, here's a CNN article on the subject with some tips at the end.

http://money.cnn.com/2007/03/26/real_estate/losing_the_house/index.htm

Now That We're Growing Up

2007-03-26T17:03:00.000-06:00

Since there's been some lively debate on this blog for the last few posts, I thought I'd take a second and outline the rules of engagement.

1. The comments are going to be moderated. I am the moderator. Swear at me if you like; nobody will see it but me.

2. Everyone that takes the time to post a comment is going to be respected, by me, and by everyone else. If you have a problem with that, tough. I like the people that read this blog. I want them to continue. Disagree all you like, but nobody here is an idiot, or will be treated like one.

3. No ads. This is MY blog. You want to advertise, get your own blog and see if anyone comes to read it.

That's pretty much it. I like debate very much, arguments are welcome, and if I do something stupid, I'm a big boy and I'll own up to it. But I also write this blog to inform as much as to pontificate, and aside from the Fed Governors, I do try not to assume that everyone else is completely moronic. I ask the same from you.

Blaming the Victim

2007-03-21T16:04:00.000-06:00

I guess this blog is now just going to be about subprime mortgage absurdities.

The top 5 subprime lenders in the US are going to have to testify before Congress, and no doubt they are going to be castigated for ripping people off. No doubt they will be threatened with anti-"predatory lending" legislation. No doubt they will be blasted with data like this (from this article from CNN):

Throughout the nation, the subprime loans recently made are performing very poorly. "What we're seeing is subprime 2006 loan originations are going delinquent much more quickly," said Bob Visini, vice president of marketing for First American LoanPerformance. "2006 is way ahead of previous years."

And that sounds horrible, doesn't it? But here's the truly absurd part of this - this CANNOT be the lenders' fault. This is the fault of the BORROWERS who are lying to the lenders about their capacity to pay. How do I know this? Because subprime loans are almost universally 2/28 loans, that is, they are fixed for 2 years before they adjust. Quickly, what is 2006 + 2? Well, it isn't March of 2007. In other words, these defaults are not the work of nefarious lenders that trap borrowers into loans that adjust and kill them. These defaults are the work of nefarious borrowers, and the lenders are actually the ones being harmed the most by them. Well, the lenders and the other borrowers that would like to get credit but now cannot find anyone to lend to them (they should call us; we know where the money still is).

Sen. Chris Dodd is going to be blaming someone in his hearings. Which group is going to take the blame? I'll bet it won't be the one that can vote.

Am I the Only One That Gets the Irony?

2007-03-19T16:52:00.000-06:00

More of the sky is falling, and the collateral damage is getting larger. And sillier.

Here's this gem from CNBC today:

For the sake of argument, let's set aside the issue of whether lenders were deceitful or predatory, or whether the government encouraged this kind of behavior. I know I'm going to get lots of comments about 25-year-old idiots with $45,000 salaries buying McMansions and giant plasma screens and fancy cars that they couldn't afford. But I suspect that many people who are in trouble now were mostly trying to buy into a safe, stable neighborhood with good schools. The real-life choice for many families in bubble markets isn't between a fancy McMansion and a modest older home. It's between a house in a school district that works, and a house in one that doesn't.

Hey, as long as we're going to force people to send their kids to crappy schools, why don't we give the government control of more stuff so that these same people can shop at crappy grocery stores, too? And when they try to escape, we can blame the lenders for trying to get their money back.

Here's a quick-and-dirty on this deal. The government is being asked (politely, and not insistently at this point) to bail out homeowners who default on their mortgages. Why are they defaulting? Because, as the terminally confused Berkely economist Brad DeLong argues, there is some sort of "systemic failure" in the mortgage industry. What that failure is is totally unclear to me, and I do this for a living. Of course, it might be hard for me to see because none of my clients have ever been even 30 days late on their mortgage (and this is no accident), but I digress.

But I agree with the quote above that most people who are defaulting were really not trying to buy into something outrageous. A top mover of families in my experience is how good the school is that their kids will be going to. Houses in poor neighborhoods usually have bad schools, which depresses their property values, which brings in more low-income people, which further reduces the quality of the schools, and so on. This is a hugely negative spiral aimed directly at starter families and people who are struggling. And the spiral is at least exacerbated, if not outright CAUSED, by the lack of school choice - the ability of poorer families to get their kids into better schools without having to pay private school freight to do it.

In other words, the government is now being asked to step in and fix a problem its own monopoly caused. Oh, the irony. So, so easily fixed. Of course, the people most interested in supporting the NEA and the public-school monopoly are the same ones screaming for the government to do something about mortgage defaults, and the same ones that claim most vociferously that they are on the side of the poor and downtrodden. Bull.

I'm not going to dispute that these people CARE about the poor, but I am going to contend that the policies they advocate seem almost perfectly designed to make sure those that are poor stay poor, and to make the consequences of their poverty as harsh as possible. Quick quiz: where is it more livable for the poor, Detroit or Delhi? That would be Detroit, for those scoring at home. And why is it more livable in Detroit? A) because of massive US government handouts to the poor or B) because Bill Gates and his entrepreneurial ilk essentially tripled the US economy by making the PC so easy to use my 3-year-old can do it. And that would be B. The case can convincingly be made that US entrepreneurs are the only people making things better for the poor in Delhi, too, but this isn't the space to do that.

The US government should not be in the business of bailing people out of their mortgages. It should, however, be in the business of removing those ridiculous and counter-productive regulations and monopolies that make it so much harder for people to afford the things they want to buy. Start with dismantling the public-school monopoly. That'd be a great start right there.

We Have Nothing to Fear but Fear Itself

2007-03-14T11:25:00.000-06:00

Lots of chatter about the crashing housing market. Time for some perspective.

Market booms and market panics are caused by the media. Left to themselves, most investors will do different things. There are market herds, and market trends, but there rarely will be panics or booms unless CNBC (or what have you) is fueling them. So it is with this.

The only thing that could cause a major housing downturn in is panic over a 15% decline in markets where the average gain over the past 4 years is over 30%.

Stay with me here:

House starts at $100,000
30% increase in 2003 is $130,000
30% increase in 2004 is $169,000
30% increase in 2005 is $219,000
30% increase in 2006 is $286,000
15% decrease in 2007 is $243,000

Pardon me while I weep uncontrollably for investors in Phoenix. Or even St. George. All I see in the part of Utah where people actually live is a solid, if unspectacular, housing market where there are still an unholy number of buyers out there for houses where families actually live (as opposed to, say, Herriman). We never had 30% increases here, and we're not going to have massive declines.

Please to remember a couple of things: one, the VALUE of your house is irrelevant unless you're selling it, and two, the payment is not tied to the value of the house. If you could make the payment when you bought it, you still can. We're not seeing falling wages anywhere.

The ARM thing is massively overblown. Most ARMs are fixed for longer than a year (and sub-prime ARMs are 2 years at a minimum), so the housing speculation that drove buying last year is not having any but a tiny impact on default rates today. Today's defaults are the product of buying two years ago, and there is NO MARKET IN THE USA where default rates are high and home values are lower now than in spring 2005.

I'm struggling to figure out what the reason for panic is. And I do business with New Century. Or did.

So, Who Makes the Diapers?

2007-03-08T07:28:00.000-07:00

Harry Rodas, Realtor extraordinaire, tells me he's in blog withdrawal because it's been three weeks since I posted. Harry, this one's for you.

As most of you know, I have two blogs: The MortgageBlogger, which is mainly about (what else) mortgage and real-estate-related stuff, and The Chris Jones Group Blog, which is almost an online diary of what's going on in my head. I leave it to you which is more interesting, but both blogs have about the same readership, which rises and falls with the frequency of my posts. It's been some time since I was able to get to posting, so readership is understandably off quite a bit.

This makes me sad, because I know there are a fair number of regular readers, and I know how hard it is to acquire them in the first place, and how difficult it is to re-acquire them once they're gone. The fact that this has been an incredibly hard month business-wise is not particularly relevant. It's like I tell my appraisers: I'm sorry that your brother is in the hospital and that your car broke down and that your computer crashed. I have a client that needs the appraisal done right now - can you do it or not? I'm sure everyone is concerned about the business trying to purchase a building and hire three new staff and finish two investment projects and wrap up a major charity event, while restructuring internally and deciding whether to become a full-fledged brokerage (with all the licensing and regulation that entails), but the bottom line is, if I'm not posting, there's nothing to read.

This morning, my 9-month-old has decided that he can't go back to sleep at 5:30, so I'm up at the kitchen table and there's not really anyone to call, even on the east coast, and I'm just not into reviewing the pipeline and checking the status of the loans there, especially since nothing's going to have changed since I left the office at 10:10 last night, so why not blog?

I've discussed in the past several issues that have come back to the forefront recently, such as the need for an offseason in the rythym of life (read the post after that in September last year as well), and the one that most currently plagues me, the curse of the Big Idea. In short, that one is outlined neatly by the plot from Family Man and other movies of the same ilk. High-powered, relatively self-absorbed executive gets chance to see what he's missing by being stranded either in a remote location or an alternate reality, and discovers that there's more virtue in changing diapers than changing Wall Street.

On the surface, how could anyone disagree with that? I have seven children (one of whom is at this moment destroying the family computer), and I like doing things with them and am never happier than when I am. I do not and have not for a long time needed to be a high-powered executive of anything. I don't drive a fancy car and I don't have cheap women and yes-men following me about. I don't live in a huge, sprawling mansion. We don't have a lot of money and what we have we give away with both hands and a smile. So what's the problem?

The problem is this: someone has to make the diapers. That's it. Family Man gets stranded in an alternate reality and has to change diapers and drop kids off at school, then go to his job at the tire store instead of going from boardroom to boardroom putting together a multibillion-dollar merger. Perhaps this is a noble calling. But the question remains: who, then, is making the diapers? Not changing them. Making them. Who is it that put together the giant conglomerate that makes the diapers so cheap that a guy who sells tires can afford them? And why is it that his work is less noble than the fellow's that profits from it?

I've gone back and forth on this stuff until I'm raw from thinking about it. I once desired to be a multi-millionaire and have fast cars and expensive penthouse office space. Jets, that sort of thing. I grew out of that after child number three. But I also spent month after bleak month out on the campaign trail away from my family trying to get a good man elected President. The compensation was on the thin side of fair, but it was important work and someone had to do it. Meantime, my kids started exhibiting psychological problems and I saw my wife once in five months. So should I have bagged it and gone home? But who would have replaced me? Who would have done what needed to be done so that hundreds and thousands of other men could stay home with their kids instead of having to be out working?

When I last started a business, I did it for the purpose of helping my brother, mainly. It was, at its peak, a relatively growing concern. It looked for a while like it might make it. It didn't. Honestly, I didn't work hard enough at it. I should have done more of the crap work that protects businesses from the government - the threat that kills more businesses than any other. But I didn't. I stayed home. I piddled. I did the important work of changing diapers. In consequence several dozen people ended up out of a job when the doors closed.

Swearing that I would never do that again, I took up being a loan officer full time, working for other people. First it was a large company, then a smaller one, and finally a company that essentially allowed me to be a Company of One. That suited me. Of course, within a short period, I had to hire some staff, because I really am good at this, and the more loans you have, the harder it is to do them all yourself. If I work, I get loans. I worked.

So the Group swelled to three, and stayed there for two years, until one particularly rough patch last February when it seemed to me that the Group needed to restructure to accomodate the growing side-businesses of the members, and that essentially made the Group a one-man band again. There's a freedom in that, knowing that the only person, the only family depending on me to do my job is my own. Nobody else's kids need me to get out of bed in the morning, or to stay at work instead of taking my kids fishing.

I got to do more fishing. That was good.

It was too good to last. Problem is that there's no "off" switch, and the volume knob is really more like a directional switch - it's either rising all the way to infinity or it's falling to nothing. It's pretty hard to figure out how to get just a couple of loans. Do what you have to to get a couple of loans and if you are good at it, you'll get seven instead, with more coming. This is a good problem to have, but it's a problem, make no mistake. The hours get longer, the fishing trips shorter and then they stop altogether. And if I do flip the "off" switch, I better have pleanty saved up to prime the pump again until I can get more loans in - it takes at least 60 days from the first expression of interest to the check in the bank.

The way out, of course, is to grow. Hire staff. Change locations. Become a player. Run, in fact, a business. Despite being burned over 80% of my body last time, I felt compelled to do it. I like creation. The prospect of building something that lasts and that is excellent excites me. I feel that the Group can really become something like that. With grave reservations, I decided last December to start looking at becoming a full brokerage, buying a building, and hiring the people necessary to build a company that was the best in the world at something.

Those reservations were not unfounded. My father and I scheduled four times to go ice fishing this winter, and never went. There were lots of reasons, not all of them work-related, but work always factored. Last night my wife pried me out of the office at 10, where I'd been since 7am (metaphorically, since some of my work takes me out and about). I ate dinner with the family and went right back to work. Spent no time with the kids. That's been the pattern for more than a month. Why would I do this?

For many reasons, some of them selfish, some of them not. But in essence, I'd do this so that 19 (currently) families will have someone they can trust and count on to watch over their money and get it to them when they need it so they can keep their houses. I'd do this because although I am good at this, I am not great at it, and cannot be great without a team. I'd do this so that five other families besides my own will have a job that allows them flexibility to take care of their families and enough money to make that possible. SOMEONE has to do this. Is there no nobility in it, whatever the Hollywonks say?

Secrets of Investing Part Deux: The 3 Cs

2007-02-19T17:15:00.000-07:00

Last time we discussed the First Secret of Investing: Cash is King. You don't need to read that one to understand this one, but it wouldn't hurt you. Go ahead. I'll wait.

"Tall, and tan, and young and lovely, the girl from Ipanema goes walking..."

All done? Then on we go.

Today we're going to discuss the 3 Cs of mortgage loans: Credit, Capacity, and Collateral.

Actually, I lie. Today we're only going to discuss Credit. It's long enough for a whole book, let alone a blog post.

Credit: essentially, we're talking here about the three credit reporting bureaus, Transunion, Equifax, and Experian. There are other reporting agencies, but they're not used by any of the lenders I work with. These three bureaus exist for the purpose of making your life miserable. Haha. Actually, they exist to make money, like all companies do, and that should be borne clearly in mind when appying for credit, and even more clearly when disputing an incorrect item on your credit. They are in the business of making money. You are not their client; the financial institution - the lender - is. The lender wants every piece of information it can get, especially anything derogatory, and this puts the bureaus at cross-purposes with you, unless your credit is perfect.

But I digress.

Your credit scores will range from 300 to 850 according to the book, but in reality, nobody has an 850 and nobody has a 350. The lowest score I've ever seen is a 418, and the highest is an 832. Nearly everyone has a score between 550 and 720. Roughly, the scores break down like this: 720 and up is perfect, 680-720 is good, 620-680 is average, 580-620 is fair, and below 580 sucks. You'll not get a conforming loan below 620, and not usually below 660. The score that counts is the middle score of the three, or the lower of two if you have only two. If you have only one, you're going FHA, but that's another column.

How does one get a 700 score? The short answer is "don't miss payments". This, however, presupposes that you a) have payments and b) know that "missing" one means to be more than 30 days late making the payment to the lender. If you pay for everything in cash, this will HURT your credit score. It also presupposes that you know what payments not to miss. Cell phone companies, utility companies, cable companies, DISH network, insurance companies, and those sorts of people do not report to credit bureaus until you go to collections (usually after 90 days of not paying them). Paying these people on time is a fine thing to do morally, but it will not make any difference to your credit score. On the other hand, ALL credit card companies, car loan companies (except for the hard-money people), student loan companies, and home lenders report every month (well, okay, student loans report every 90 days). If you have to miss a payment, miss them is this order:

1. cable company
2. utilities (especially in the winter -they really can't cut you off)
3. insurance
4. student loans
5. credit cards
6. car loans
7. home loan

Lenders figure that if you're going to miss a payment on something they could repossess, like a car or a house, then there's nothing that will get you to repay, and your credit will get slammed.

That covers credit defense. Let's talk about credit offense, building your score. There are a number of factors that contribute to your score along with lates, including your balance-to-limit ratio, your credit line depth, and length of time for established lines. You want your balances between 25 and 33% of the line limit. Paid off cards are great, but they'll hurt your score, especially if you haven't used them for a while. You want continuous activity on your lines. Credit depth refers to the number of lines open, and you want at least one of each kind of line - mortgage, installment (car, furniture), and card. Ideally, have a couple of the latter. You will need at least 3 lines, and you're not going to be docked for open lines unless you top 8 or 9.

Length of time established means that you want a couple of trade lines open when you're 18 and never closed. The longer the better. This also means you shouldn't pay your car off early. Refinance it, if you have to (though this is not always wise), but don't pay it early. Also, believe it or not, if you have an old collection account (over 2 years old) you should NOT pay it off until after you have the loan you're applying for. New activity on old derogatory credit will hurt your score.

When in doubt, ask a professional. 801-310-3407. Ask for Chris.

One other thing. I posted recently on the "Free Credit Report" hoopla, to the effect that you shouldn't believe everything you read or see on TV. Your credit score is MY credit score, that is, the score I get when I pull your credit, not the score you get when you do. Don't waste your money. My score's going to be different, and it isn't going to hurt your credit worth mentioning to have me look. You can pull your own credit, then tell me what your score is, at which point I will smile and ask if I can pull your credit as well. Little-known fact - lenders allow me to upload MY credit to their systems, not yours. If it doesn't have my name at the top of it, it's useless to me except as background information. And since I'm going to give you your scores and review the report with you, you might as well wait.

Yes, Diana, that means I can help you and Ben out. Call me.

See why we're not going to deal with the other 2 Cs today? Wasn't that enough?

Upon Reflection, Maybe Not

2007-02-16T09:54:00.001-07:00

Ben Bernanke's been practically dislocating his arm patting himself on the back for engineering a soft landing for the economy (defined as "any set of economic circumstances that don't cost me my job"), when today the new housing start information comes out and shows a massive decline. Housing starts were off almost a third from their highs of two years ago, down over 20% from December of last year, and 15% over last January. Ouch.

Most likely, builders are waiting for their massive inventory to clear before starting a bunch more new houses, and this information, like all such economic data, means a whole lot more if you live in Ohio than it does if you live in Utah. The sky is not falling. But it might behoove Atlas to be a little less hawkish on rates and start discussing the possibility that the economy is not as red-hot as previously supposed.

Meanwhile, the information was good for bonds and things are improving fractionally for all those of you buying and refinancing. There's no cloud that has no silver lining.

About That Free Credit Report...

2007-02-15T09:30:00.000-07:00

I recently became aware of a cute little money-making venture being conducted by credit reporting agencies. For those just joining us, there are three major bureaus: Transunion, Experian, and Equifax. They have each got their own rules for reporting and for scoring, but in general, your score is between 300 and 850. Over 580 is okay, over 620 is decent, over 660 is good, over 700 is excellent, over 750 is perfect. Loosely speaking.

Point #1: don't get fooled by the cheerful and expansive fellow on TV telling you about freecreditreport.com. Don't buy it. You have to subscribe to their "credit monitoring service" in order to get your report and your score. It's not free. It's not priceless. It's worthless.

Point #2: everyone got all excited about federal regulations that require that everyone be entitled to a free credit report every year. That's not necessarily a bad thing; I think everyone ought to get a credit report fairly regularly and check it closely. You can get one that really IS free at www.annualcreditreport.com. What you can't get is your score, unless you pay for it. DO NOT DO THIS. Your credit score obtained from these sources - from ANY of these sources - will not tell you one useful thing about your credit score. Each type of lender has a set of filters that apply to credit reporting, and those filters change your score. Your credit card company, your auto lender, and your mortgage broker will each get different scores when they pull your credit. Ours tend to be the lowest. But the fact is, no matter what your credit pull tells you your score is, I can't use that credit report and I can't rely on that score. It has no value whatever. None. Do not waste your money.

Point #3: this one is all about my side of the deal. When I pull a credit, I send a fair amount of information to the credit bureaus. What they do with that information is interesting. Mostly, they just use it to give me back a credit score. But they also have been using the information to sell to interested parties - mortgage telemarketers - because mortgage lenders pulling credit means person needing financing, and those "leads" are being converted to telemarketing phone calls. At the Chris Jones Group, we've learned to dodge this on behalf of our clients. We just send the wrong telephone number. But be warned, if you apply for credit, you might be exposed to a telemarketing list. That is, if you apply for credit somewhere else.

Harry Rodas Exposes

2007-02-15T08:58:00.000-07:00

For those more interested in lighter, not-necessarily-mortgage blogging, I direct you to my post on the Chris Jones Group Blog about the four recent holidays we've passed through.

But here, I'm going to talk about title issues.

Harry Rodas, Realtor extraordinaire, recently blogged about a title insurance issue that I think needs more emphasis. There are certainly a large number of documents to sign with regard to any closing of a transaction. Reading all these documents is time-consuming and incredibly boring. Nevertheless, if you are buying or selling any piece of real estate either you need to read all the documents or you need a professional who has read them. I recommend reading them yourself, but good mortgage and real-estate professionals - and good title people - will be happy to walk you through them.

For me, I rely on Harry to know everything there is to know about how real-estate transactions work, and what the laws and protections are for my clients. It's one of the reasons I love to work with Harry. I perform the same service with my clients about how mortgages work. Get help. You won't regret it.

We Now Return You to Our Regularly-Scheduled Program, Already in Progress

2007-02-07T07:10:00.000-07:00

It’s been two weeks since I blogged, my longest hiatus in some time. I would like to tell the things that have happened to make that pause necessary, but somehow this isn’t the time. Perhaps it will dribble out over the next while.

I’m sitting at my kitchen table feeding Life cereal to my 10-month-old, Nathaniel, and it’s 6:30am. He’s been up for an hour, torturing his mother, who has gotten sick from lack of sleep and a massive onslaught of kid germs, so she’s back in bed and it’s my turn. This suits me, as I’ve been awake for half an hour thinking about the potential ramifications of a 67-point drop in the credit score of one of our clients. Maybe the deal will still work. Maybe not. Should I care that much?

Nevertheless, I do.

We’ll be making some changes here at the Group over the next few weeks. There will be new faces, old faces in new places; the Group is growing and changing, going after new markets and altering our approach to old ones. We’ve never done any advertising, and that might change this year. We’ve decided to double our business in 2007, which is going to require new methods and systems, a new image, and especially new ways of thinking and acting on the part of Chris Jones.

I’m not a good businessman. I never have been. My father before me was not, neither was his father. Businessmen have to care more about the success of the business than they do about the feelings of the people that work there, including themselves. That’s a hurdle I haven’t successfully jumped. I try to collaborate where I should be leading. I put off execution where I know feathers will get ruffled. I have come to realize this to be profoundly selfish – it does my employees, my partners and my friends no good to allow bad decisions to stand just because changing them will cause short-term headaches. The wound has to be washed out and bandaged. Hurts like crazy. Still has to be done, or the long-term effects will be greatly worse.

I have killed businesses that way, through inaction.

Not this one.

We’ve built something here, and I do mean WE have built something, everyone who has participated in the journey so far. The Group has become more than a mortgage operation, more than a place to find money for a house. We’ve become moderately successful. It’s time to drop the “moderately”.

We’ll be expanding our line of seminars to include credit and investment. We’ll be purchasing a building in Lehi to serve as our permanent base of operations. We’ll start showing up at trade shows and other events of that nature. Heck, we might even have a logo or something, although that seems pretty radical to me.

The Chris Jones Group has always been about having conversations with our clients, doing for them whatever it takes to help them reach their dreams. I was interviewing someone the other day and he asked me what I get out of this business, as in, why this instead of selling widgets or whatever? I hadn’t thought about it, at least not for some while. But my answer was this – I am a gardener by nature. I love to help things grow. I love to take bare soil, add water and sunshine and seeds and see living things come up. A gardener is a creator, and like all gardeners, I love to create beautiful things. With this business, through the creation of beautiful things for our clients, we also can create something beautiful and lasting for ourselves.

We’ve done pretty well. We will do better.

Watch this space, as they say, for more.

Pay it Forward

2007-01-24T16:27:00.001-07:00

One of my good friends yesterday told me that in the 15 years he'd known me, he had never once seen me refuse a request for help from anyone, including offering it to some who never asked. I mentioned that to another friend who said that about covered it for him, too. I thought those comments incredibly generous and some of the nicest things anyone has ever said about me. It's true that we do a great deal of charitable work here at the Group, but today I thought I'd take a second and mention some of the huge number of people that have helped ME, perhaps by way of explanation about why I feel compelled to pay things forward.

Steve Stockdale, for instance, who once paid off a debt I owed back when my stock brokerage was fading into the sunset. Paid off a collection, in fact. I know he never told me about it; it's possible that he doesn't even know that I know. But I do, and I'm grateful.

Dr. David Harrison and his wife Stephanie, who have treated not only me but everyone in my immediate family to free dental care for the last 20 years. No kidding. Absolutely FREE, and without one single word about it to me. Just today I had my teeth drilled (the upper #1 was decaying under the filling), and he not only took another x-ray to make sure that he didn't have to drill TWO teeth (he didn't), he spent his 45 minutes - for the second time in two weeks - and made sure that the procedure was done absolutely correctly, with extra base over the nerve to keep me from having serious discomfort later. It worked. He never said a thing about it. He never does. He is an incredibly generous, kind, and gentle man, and I love him. You should call him if you need dental care, because the "care" part can't possibly be done better anywhere else. He's at 801-969-1802, and Stephanie might even answer the phone when you call.

Ellen Hadfield, who watches my children for nothing to let my wife do volunteer work at the local charter school. This is no small favor. I do not have quiet children, nor few of them.

Sean Snorgrass, who for Christmas bought my entire family dinner at Rib City, and last week went to the gun show in Salt Lake and bought me two boxes of .303 ammunition for my Enfield WWII rifle. And then refused to let me pay him.

Seth Hawkins, who once gave me an envelope filled with money - some three or four hundred dollars - when we were so broke we couldn't turn the heat on. Seth and Michelle, themselves, have never been wealthy by the world's definition, but they are the picture of class and compassion, not to mention determination. Seth once picked mangoes off a tree and sold them on the street corner in Puerto Rico to get food for his family. He tells the story that the mangoes weren't ripe enough to eat, but some stranger stopped and bought them all. There are people like this all over the world.

Barry, Richard, and Bryce Gardner, who were out cruising the neighborhood one day and saw that I needed help. We had just moved into this house, had all our life's possessions still in the garage, and Jeanette had just fallen into the crawl space onto the concrete and spend half a day in the hospital after being cut out of her clothes and rescued by the Lehi Paramedics. I was sick, most of the kids were dead tired, and I was sitting in the garage on the steps and just couldn't move another step. Up the driveway come these three huge men with great smiles on their faces and start picking up boxes and carrying them in. Two, three boxes at a time. In fifteen minutes, they cleaned out the garage, and without saying a thing except "you're welcome", shook my hand, went back off down the driveway, got into their truck, and left. I still choke up thinking about it, how bad we needed that help and how cheerfully it was given.

My mother and my father, my mother-in-law and my father-in-law. There is no possible way to match their generosity to me and my family. There are far, far too many instances to list. I have to get work done, after all.

My wife. Oh, Jeanette. What could I do without you?

There are more, and no doubt there are thousands of instances I can't remember or never knew about, people all over who go about doing me service and taking care of me (I am really kind of like a little kid sometimes) that I never notice and couldn't repay if I did. These people are out there in your life, too, you know. It might do us all good to make a list like this once in a while.

Thank you, all of you. May God bless you.

Once More with Feeling

2007-01-18T22:11:00.000-07:00

I was just finishing up my blog earlier today when my computer, which is possessed by the devil, decided to spontaneously reboot. Having lost everything, it's taken until now for me to be able to get back to the blog, but I wanted to mention something that happened today simply because of how unusual it was.

We're putting together the Pontificating Potty Post, and we have a plethora of photos from Twelfth Night. Olivia took most of them with her new digital camera, a lovely Kodak. Unfortunately, although the files, when you transfer them to your computer, look like they are standard .jpg files, they aren't. They don't print. Our printers can't read more than one of them at a time. This is a complication.

Steve, who is the office dogsbody and general fix-it-up chappie, started working on the problem at about 2pm. By 4, it was apparent that the problem was the picture format, so he called Kodak tech support to see if he could get the problem fixed. The tech, bless her heart, stayed on the phone with him for almost half an hour helping him navigate some new software and a host of other things until he could import photos into Publisher directly from Kodak EasyShare, even though Publisher is not one of the programs they support. It was an unusual effort from somone that couldn't possibly benefit from going the extra mile. Kudos to Kodak.

Unfortunately, all her help was useless, because in the end the pictures still wouldn;t print more than one at a time. So Steve printed them one at a time, scanned them back in, and THOSE files print just fine, thanks. So the Post will be late. But it will get there.