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  • The Easiest Hardest Mortgage Question Ever
    The below is correct. I round my monthly mortgage payment up and pay an additional $130 each month towards principal. The payment remains the same, but the portion of next month's payment to interest is smaller and the portion applied to principle is increased equivalent. MOST mortgage companies calculate interest on the monthly balance, not the original amortizing balance.

    On Jan 08 02:17 AM RatWatcher wrote:

    > Unlike credit cards, additional payments on a mortgage do not reduce
    > the required 'minimum' payment, which is fixed. Instead, the loan
    > matures ahead of schedule. Interest is charged only on the outstanding
    > principal balance...so, each payment after a one-time buydown has
    > a little less interest, and a little more applied to principal. Done
    > regularly (say, $100/mo additional principal) can significantly shorten
    > a loan and the total cost thereof.
    Jan 08 08:23 am |Rating: 0 0 |Link to Comment |View article
  • Dick Kovacevich on Banks and This Financial Crisis
    If all banks, especially those who call themselves “banks” but are really stock and investment houses, legalized casinos that allow us to take a risk in hope of financial rewards such as Bear Stearns, Lehman Brothers, Goldman Sachs, Morgan Stanley, Merril Lynch, would have acted in the same conservative manner as Wells Fargo & Co in NOT hawking, buying and selling derivatives and other highly risky investments, and did NOT do Option ARMS, and did a limited amount of subprime loans with good underwriting standards and caps on all overages at 150 basis points versus the unlimited and average amount of 600 basis points, we would probably NOT be in this financial meltdown. Sure, Wells Fargo & Co did plenty of loans that they probably shouldn’t have done, but a minute percentage as compared to most other major mortgage lenders.
    Dec 30 08:39 am |Rating: 0 -1 |Link to Comment |View article
  • The Problem with Option ARMs
    CORRECTION:

    - - attempted to shield themselves from criticism and cloak themselves in altruism by throwing a few - "million" - over to the Center for Responsible Lending.
    Dec 27 10:05 am |Rating: +1 0 |Link to Comment |View article
  • The Problem with Option ARMs
    I competed with Herbert and Marion Sandler and their company, World Savings Bank, for years and years. Your statement that “They clearly cared more about underwriting than most mortgage lenders, and they didn't found the Center for Responsible Lending as some kind of PR stunt” is completely inaccurate. Their standards were almost nonexistent. They would approve nearly anyone and give them whatever program or product they wanted, but pushed the product that threw-off the most money to WSB, the option ARMS. Most of their loans were originated, not by WSB employed loan originators that may or may not have understood the pitfalls of this toxic loan, but by slimy mortgage brokers who only care about making the sale and making as much money as possible from the particular loan they were pushing; most often, the Option ARM. WSB paid the highest commission and SRP on Option ARMS, not standard ARMs or fixed rate products.

    Here is a direct quote by Herb Sandler: “You have to understand how independent brokers work, they are the whores of the world.”

    Despite that distaste, World Savings made extensive use of brokers. By 2006, they were generating some 60 percent of its loan business, he acknowledged. He said he was compelled to do so because of brokers were a dominant force in the mortgage industry. Money trumped ethics once again for the Sandlers.


    I lost some business to these hucksters and snake-oil-salesman that were pushing this product, and at one-time the upper managers of our company went to the senior managers and requested that we be allowed to originate these loans, if even for the purpose of showing just how bad they were. When we were competing against this product and tried to tell buyers, Realtors, and builders how unethical the product was, they usually said we were just “bad mouthing” it because we couldn’t do them”. Our senior managers said NO, we would never do the Option ARM. The product was not good for our customers and was not good for our company and stakeholders. We didn’t like that answer, but it sure turned-out to be right. When the miscreant huckster team of Herbert and Marion Sandler sold out to Wachovia, one of their big selling points was the huge income they were making on these Option ARMS. When they became part of the Wachovia board of directors, they continued to press the origination of these loans and even convinced Wachovia to have it available to their bank branch originators. The bank branch originators hated the product and sold almost none of it.

    Going back to your statement “They clearly cared more about underwriting than most mortgage lenders, and they didn't found the Center for Responsible Lending as some kind of PR stunt”; you are seriously mistaken, they could not have cared less about their slimy, pathetic underwriting standards and absolutely, positively attempted to shield themselves from criticism and cloak themselves in altruism by throwing a few milling over to the Center for Responsible Lending. It was very cleaver on their part, not unlike the support and financial contribution made by Bernard Madoff, the huckster extraordinaire, master of the Ponzi scheme, that were made to legitimate organizations. The Option ARM product was a giant Ponzi scheme dependant on a house going up in value to refinance and pay-off the unpaid negative amortization on the Option ARM.

    Madoff and Herbert and Marion Sandler, three peas in a pod.
    Dec 27 10:01 am |Rating: +5 0 |Link to Comment |View article
  • Fear and Loathing in 2009
    Todd,
    Overall, good analogy of the upcoming market.

    I have to agree with the below comment. Wells Fargo originated and purchased through wholesale, broker-in, and correspondent, ZERO Option Arm loans; NONE. They wouldn't do them. The senior managers did not think the loans were good for its customers or good for WFC.

    True, they inherited a bunch with their Wachovia acquisition, but WFC already provided for $38 billion in Wachovia losses (after Wachovia ALREADY wrote-down billions on these loans). A $38 billion loss on $182 billion of mortgages "says" that 21% of these loans have NO value whatsoever, or 41% only have 50 cents on the dollar remaining. Even with the worse case forclosure on these types of loans, recapturing 50 cents on the dollar is a slam dunk. WFC will not come out unscathed, but they will be a strong survivor. The have the best senior management and a conservative lending mentality. Their loans are the highest performing in the industry. I panicked back in July and sold a bunch of their stock at $20.75 and have regretted it ever since. I wouldn't sell them short again.

    **********************...

    On Dec 24 09:41 PM E Nuff Sed wrote:

    > Wells-Fargo has already provided for 39 Billion losses on the 182
    > Billion mortgage book it has taken from Wachovia.
    >
    > Looks like you are assuming losses will be a lot worse than that.
    Dec 25 08:44 am |Rating: +2 -1 |Link to Comment |View article
  • How Will We Finance the MBS Fix?
    Your 957 word, 23 paragraph rhetorical oratory could have been summed up in a few sentences.

    The government’s proposal to buy up MBS has substantial unresolved issues. There is plenty of excessive work in servicing toxic loans versus well performing loans. The government is ill equipped to perform this task and customarily boggles these type of tasks. A small number of major banks and mortgage servicing companies are qualified and equipped to service the MBS purchased by the Feds such as Chase (JPM), Bank of America (BAC), and Wells Fargo (WFC). There may be a buying opportunity with one or more of these companies.


    Anthony, your picture, or mug shot looks like is was taken in the exercise yard of Attica Correctional Facility. The fact that you worked in marketing, originating, processing, closing, secondary markets, and even foreclosures does NOT make you a “subject matter expert”. A blind, one-armed monkey could and probably does do those small tasks on a daily basis.

    SHEESH!
    Dec 23 09:00 am |Rating: +2 -1 |Link to Comment |View article
  • Here Comes a Consumer Killer
    WHY would you have one nickle of debt at 7.4% interest unless you don't have the cash on hand to buy that burrito or IPod and not use your handy-dandy credit card?
    Nov 30 09:45 am |Rating: +1 0 |Link to Comment |View article
  • Three Financial Stocks Worth Holding
    I like Wells and JP Morgan Chase. B of A bit-off a little more than they can chew, especially with Countrywide. They could of had the "parts' of the company they wanted and little, if any, of the toxic loans. AND, they could of had it for pennies.
    Nov 30 09:24 am |Rating: +2 0 |Link to Comment |View article
  • Kovacevich's Delayed Retirement: Bove's Criticism is Totally Off Base
    Wells Fargo & Co has a great record for their merger and integration of other banks and financial institutions. When Norwest Bank merged with Wells Fargo, Norwest was the survivor. That merger is considered the best and smoothest mid-sized bank merger in history, masterminded by Dick Kovacevich who was CEO of Norwest at the time. He is still onboard and this merger is his baby. I am sure he will make this his "crowning achievement". Give him time, he has the best management team in the industry!
    Nov 07 11:28 am |Rating: 0 0 |Link to Comment |View article
  • A Dual Strategy to Balance Banking Sector Trade
    Your quote: "Knowing other banks will follow suit, JPM has taken a proactive lead to weaken their competitors. BofA and Wells have weaker balance sheets and more pressing needs. Both these companies are undertaking transformative mergers outside of their areas of expertise."

    **********************...

    I would disagree with the above statement. Wells Fargo & Co has a great record for their merger and integration of other banks and financial institutions. When Norwest Bank merged with Wells Fargo, Norwest was the survivor. That merger is considered the best and smoothest major bank merger in history, masterminded by Dick Kovacevich who was CEO of Norwest at the time. He is still onboard and this merger is his baby. I DON’T disagree that with the acquisition of Wachovia, Wells Fargo took on a bunch of stinky loans originated by Great Western; now they are going to have to do something about them. However, I think they have planned a $71 billion write down on these loans. No bank is immune from meltdown in this volatile market, but Wells Fargo is up 12% from this day last year, while at the same time, the Dow is down 27%.
    Nov 04 12:57 pm |Rating: 0 0 |Link to Comment |View article
  • Increased Government Investment in Banks?
    mik123
    Nov 04 08:47 AM

    If TARP states the money can not be used for acquisitions and can only be used for lending as Barney Frank stated Friday, I don't see how there will be regulatory approval on the PNC -Nat City deal. That's probably why you haven't heard of any other deals. National City can stand alone and save thousands of jobs. TARP was passed to help National City. Blah, blah, blah. . .

    Call Latourette, Barney Frank, Sen Shumer and your local house and senate representatives and demand National Citys share of TARP. Blah, blah, blah. . .

    **********************...

    YEA, Barney Frank, there’s a pillar of credibility and knowledge. I think he is one of the miscreants that got us into this mess. Yea, call Barney, call bleeding-heart Shumer, see what those two nincompoops can do for you.

    Sorry about the National City stocks you bought on the “recommendation” of 10 or so nitwits.
    Nov 04 12:21 pm |Rating: 0 0 |Link to Comment |View article
  • The Trouble with Rescues and Stimulus
    Wells Fargo’s Chairman, Dick Kovacevich, was fit to be tied at the meeting with Bernanke; he did NOT want to sign the documents giving the Feds any ownership or “say” in Wells Fargo & Co, he did NOT want the money.

    It took the rest of the CEO in attendance, especially Ken Lewis, to convince him to “go along” with the plan “for the good of others”. He was told that if he decided to “op-out” he would look like he was “un American”. He and the others were told by Bernanke that “they had little to say about it”, if they didn’t take the money and sign the agreement THAT DAY, they would suffer the consequences (in so many words). Treasury Secretary Henry Paulson basically told the bank CEOs that they had to accept the government stock purchases for the good of the U.S. economy.
    Nov 02 10:18 am |Rating: 0 0 |Link to Comment |View article
  • @VIC: Bill Ackman on Wachovia
    I'm long on WF and I'm not sure if I want their offer to go through or not. The Feds aren't going to cover or buy 100% of Wachovia's toxic loans and they probably have the most in the country just behind WaMu at #1 and Countrywide (B of A) at #2. If the incompetent dopes at Citi take Wachovia at a price higher than the Wells offer, Wells will have the opportunity to come-in and take the whole shebang 18 to 24 months from now. Buying Wachovia will not make the Citi higher-ups any smarter; they couldn’t run a 7-11 effectively.
    Oct 08 08:36 am |Rating: 0 0 |Link to Comment |View article
  • Time to Hoard Cash - Cramer's Mad Money (10/6/08)
    The FDIC has a little less than 4/5ths of a cent on hand for every dollar of deposits and 1.25 cents for every dollar of insured deposits. There is approximately $45 billion in FDIC’s capital fund that would be used to payback or cover insured deposits totaling about $4.29 trillion. There is approximately $2.1 TRILLION in uninsured funds. I doubt that people would get a “warm & fuzzy” feeling if they new the facts and assessed the risk. Cash is king; real cash in hand.
    Oct 07 09:20 am |Rating: 0 0 |Link to Comment |View article
  • Worrying About Large-Deposit Bank Runs
    I pulled all of my money out of my three banks yesterday. Now I have to find a safe, secure place to stash this $145.95. Any suggestions??
    Sep 27 09:07 am |Rating: 0 0 |Link to Comment |View article

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