PM puts housing on government agenda - TVNZ
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11
02
2008
 
American Home Mortgage can’t figure out who owns the mortgages — so destroy ‘em?Posted by: in HousingFiled under: Housing The fallout from the subprime crisis has gone from merely scandalous to the downright ridiculous. American Home Mortgage has files for 490,000 loans sitting in a warehouse (at a cost of $45,000 per month), and it can’t even figure out who owns the loans because they’ve been purchased and sold so many times since they were issued sometime after September of 2005. So American Home Mortgage has a brilliant idea for what to do with them: Burn them! Not so fast, say Wall Street investors who claim that the files can help them prove that they are their rightful owners. According to the Wall Street Journal(subscription required), “The Melville, N.Y., mortgage lender, which is liquidating its assets in bankruptcy proceeding, made the offer to counter opposition from former backers who said American Home’s plan to destroy the files endangered their rights to enforce the loans.” The fact that it’s hard to tell who owns the loans is an interesting symbol of how crazy the real estate market became: people were signing off on loans and it wasn’t even clear who the ultimate lender of the money was. This moral hazard was probably a prime contributor to rampant mortgage fraud. Filed under: Toll Brothers (TOL), Housing, Recession
Apparently Toll Brothers (NYSE: TOL) can’t even get co-founder and vice chairman Bruce E. Toll’s daughter to shut on the home she agreed to purchase from the company. In a related-party transactions disclosure in the company’s most current proxy statement, Toll told investors that “prior to fiscal 2007, the company entered into an agreement of sale to build and sell a condominium to Wendy Topkis, Bruce E. Toll’s daughter, and her husband for a purchase price of $2,468,075. In January 2008, the buyers informed the company that they did not intend to make settlement on the condominium. The company intends to pursue its rights under the agreement of sale.” Will the company go after the vice-chairman’s daughter in court? Now, that could lead to some interesting related-party transactions disclosures in future proxy statements.
11
02
2008
Cramer on BloggingStocks: Memo puts mortgage pain in stark perspectivePosted by: in HousingFiled under: Toll Brothers (TOL), Housing, Cramer on BloggingStocks, Recession
How bad is it out the in housing? It’s difficult to say, because we know that once you begin recognizing the problem, they say that you’re nearing a solution. But one of our terrific readers sent me this note over the weekend, which is a reality check to everything, acknowledging the cordoning off of whole areas around the country for mortgages. Who can do such a thing? The buyers? The sellers? The realtors? No, the personal mortgage insurers who were there to protect the banks from deadbeats but are themselves under siege. Last week they sent out this memo. When you overlay this list with the grades that Bob Toll gave the markets he is in last week on the Toll Brothers (NYSE: TOL) (Cramer’s Take) call, you know that we aren’t done lowering rates if we intend to beat this problem. There are several components to affordability, including the declining home price, mortgage money availability, household income and the price of the mortgage. We’ve got declining prices and steady household income — so far — but rates are still too high to move the needle on the 30-year fixed. (And yes, I still believe the rate would go down on a cut.) But this memo cuts to the availability of funds in the areas that are most needed. Without still-lower rates we’ll not be able to reduce the overhang in these markets, and you can anticipate that things will only get worse, not better. Of course, price could cure everything, and perhaps that’s the solution the Fed wants. Price, however, comes with a cost, and that cost is default, bankruptcy, foreclosure on the part of those already in homes, NOT just losses from the homebuilders trying to sell them. Here’s the memo, from the Mortgage Guaranty Insurance Company, with parenthetical annotations from the realtor: February 6, 2008 Dear Valued Customer: As a result of our ongoing evaluation of market conditions and loan performance, we are making a number of changes to our base underwriting guidelines and have created a new set of guidelines for areas exhibiting market weaknesses. The following underwriting guideline changes are effective for mortgage insurance applications received by MGIC on or after March 3, 2008. (Then it goes on to break down underwriting guidelines. FICO is very important…and it better be above 660! And if the appraiser says that the property is in a declining market [see list below], then many lenders wouldn’t touch it, as these loans right now can’t sell on the secondary market.) Here’s the list of restricted markets:
(One last note, many of these neighborhoods that are essentially being redlined are what I would describe as “on the cusp,” in that they were formerly undesirable areas to live in because of crime or substandard housing. That’ll make it doubly hard to reverse these trends. Just an observation, but these were areas of wealth creation that could sink right back to being not so hot again.) RELATED LINKS: Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com’s sites and serves as an adviser to the company’s CEO. At the time of publication, Cramer had no positions in the stocks mentioned.
11
02
2008
Prosper.com puts private lenders in touch with borrowersPosted by: in Products and ServicesFiled under: Good news, Products and services, Consumer experience, Next huge thing, Entrepreneurs, Personal finance
It works like this: First you register for the service, which the site says is fast, simple and free. Then, you create a loan listing that states how much you want to borrow and the interest rate you are willing to pay. Potential lenders can start bidding on your loan request as soon as your listing is created. As lenders compete to finance your loan, the interest rate can become more favorable to you. After your listing closes, if you have successful bids, apparently the funds are then deposited in your account. I believe Prosper.com acts as the intermediary for these deposits. Finally, fixed monthly payments are then automatically withdrawn from your account. Prosper.com claims that there are no hidden fees and that the loan can be paid off early without penalty. I can’t actually endorse this service because I have no personal experience with it but it sounds extremely interesting, and the site appears to be for real. I’d love to get some feedback from people who have successfully used this service. If it’s as valid as it appears to be, we just might have a new era of personal financing coming over the horizon. Filed under: Products and services, Consumer experience, Competitive strategy, FedEx Corp (FDX), United Parcel’B’ (UPS), UAL Corp (UAUA), Small business
As I read Joe Brancatelli’s (portfolio.com) article discussing airline baggage, I could not help think back to December when my girlfriend had her bags lost for over a week on a trip from Europe back to the states for Christmas. Inside this luggage we had all her clothes, as well as all of my family’s Christmas presents. Since she was flying into the states on Christmas Eve, and the airline lost her bags for a week, we had no presents to give out on Christmas, and by the time they showed up, on New Years Eve, the Christmas magic was pretty much lost. As we examined last week, airline delays last year were near an all time high, but as I mentioned in my article, the one thing that bothers me more than being late, is arriving without my luggage. While lost baggage rates stayed pretty steady last year, with 9 out of 1,000 passengers filing lost baggage claims, there are other reasons why we might should consider shipping instead of packing in the future. For one, you have to worry about paying fees for having luggage in excess of airline guidelines. Returning to Europe after Christmas I felt the pain of that rule. I won’t mention the airline name, but let’s just state that they had a 50 pound per bag rule, which I think is probably pretty uniform these days with major airlines. We’d 4 bags total, with two bags being over the limit. The result? $125 fee! I was definitely kicking myself for loading up on English books while I was home (which I still have yet to open)! The point? For $125 I probably could have just shipped the extra baggage and had a much greater possibility of the articles actually making to my place on time. Not only will shipping your baggage ahead of time possibly save you money, it also has the added beauty of freeing you from having to lug all those heavy bags around with you as you travel. On some airlines not only do you face the chance of extra fees for overweight bags, but you also have to deal with fees for taking more than two check-in bags. If you travel airlines that permit more than two check-ins, consider yourself lucky. Soon, passengers that are allowed two check-in bags might be part of the lucky crowd. Last week, United Airlines, UAL Corp (NASDAQ: UAUA) went so far as to lower the number of bags you’re allowed to check from two down to one. Now, if you want to check a second bag, be ready to add $25 onto the cost of your flight. I have to say, United is definitely in my “no fly” zone from now on. OK, so enough about the reasons why we should considering shipping our luggage, what are our options?
While FedEx and UPS typically come with a smaller price tag, some traveler prefer to use the luggage specialists because they feel they’ve a more personal connection with someone from the company when they need assistance. Brancatelli cites the case of airline traveler Andy Abramson, who is a fan of Luggage Forward, and states that they make it very easy for him in the event of last minute itinerary changes. I, personally, have never shipped my luggage. I’ve lost luggage several times, and definitely fell victim to fees for over packing my luggage, which I have usually just taken in stride, and promised myself that I would be more careful the next time i packed up my things. But, for sure, the next time I get ready to take a trip I know I’ll definitely be looking into all my options. What about you, our readers? Are you a frequent flier? Have you had bad experiences with your luggage in the past, and will you begin to take into account shipping in lieu of lugging your bags on your upcoming flights? ~ Here’s another good article on traveling by Mr. Brancatelli, “What I Learned on the Road This Year” ~ Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the on the web investment advisory service Investor’s Observer. Filed under: Forecasts, Products and services, Management, Industry, Consumer experience, Employees, Personal finance, Recession Inflation: “An increase in the amount of money and credit in relation to the supply of goods and services; An increase of the general price level; An excessive or persistent increase in wages and costs causing a decline in purchasing power.” Recession: “A temporary falling off of business activity during a period when such activity has been generally increasing.” (Source: Websters New World Dictionary, Third College Edition) Rather than an opinion piece, which is what I generally write, this tiny snippet is meant more as a discussion generator than a statement of my own economic view. I earnestly invite our readers to weigh in on the matter. Inflation or recession, are we now experiencing either or both? In the realms of higher finance and investment, the term “recession” is being deftly avoided, yet at street level we’ll tell you without question that local business activities are cooling. You’ve seen the numbers, disposable income is drying up. Are we being blinded to the rock bottom truth of the matter by domestic corporations which can underwrite their balance sheets with growth they’re accomplishing abroad, or are we finally paying the price for 30 years of sloppy consumerism which foolishly insisted on always buying goods from the cheapest producers possible? Inflation, on the other hand, is much harder to get a fix on. That seems to be because what we’re experiencing doesn’t fit the text book definition. If wages and benefits were increasing at a yearly rate of about 8%, then I think we’d have actual inflation. Unfortunately, what we’re seeing is merely an increase in costs to the domestic consumer. The wages part of the inflation definition has refused to keep up, hence our apparent tendency towards actual recession. So what is it folks, inflation or recession? Or is it a tiny of both? Personally, I’ve termed it; “World wide economic shake down,” and I think we’re just getting started on it. Filed under: Products and services, Consumer experience, Rants and raves, Competitive strategy, Toyota Motor Corp. (TM) Toyota Motor Corp. (NYSE: TM), in an effort to help lagging vehicle sales and reduce dealer inventory has decided to open loans to seven years [subscription required], expanding the repayment terms from the more traditional three or four year term. The longer amortization periods naturally reduce the car buyers’ payments, but there’s no mention of a more massive problem that’s very likely and the reason this has not been done before — cars depreciate rapidly! George Borst, chief executive of Toyota Financial Services, said at a financial-services conference in San Francisco that the company started offering seven-year automobile loans in late summer. These loans, which carry slightly higher rates than 72-month deals, (the previous stretch) have risen to represent 4% of all vehicles Toyota Financial Services lends money on. In one way, this could be looked upon favorably by Toyota vehicle buyers. The company has a great track record for building quality products. This reinforces that notion of dependability. However, cautious buyers should understand that this might not play out to their advantage. It is possible that some time in the fifth year, the loan will be upside down, meaning it will have an outstanding balance higher than the value of the automobile. What happens then? This could be another case of dealers charging more money (interest) to the poorest buyers, who are not aware of the impact these loans might eventually have. Reminds me of the mortgage mess. In hindsight, the government should have examined the mortgage industry and Wall Street’s business practices and risk. Who’s watching now? Sheldon Liber is the CEO of a small private investment company and the design and research principal for an architecture & planning firm.
11
02
2008
Hasbro (HAS) fourth-quarter profit rises on strong salesPosted by: in Products and ServicesFiled under: Earnings reports, Products and services, Consumer experience, Marketing and advertising, Mattel, Inc (MAT), Hasbro Inc (HAS)
For the quarter, the world’s second-largest toymaker reported that its profit jumped 24% up to $133.7 million, lifted by strong sales of its Transformers, Nerf and Furreal Friends product lines. Strong revenue gains offset weaker gross margins and lower U.S. earnings, and the company posted earnings of 84 cents per share. Analysts were expecting Hasbro show earnings of 81 cents per share in the quarter. Amid a challenging consumer environment, Hasbro announced a respectable jump of 16% in revenue to $1.3 billion, up from $1.1 billion a year earlier. Revenue during the period were helped by a 29% surge in its international sales that outpaced those in North America. Analysts, on average, forecast sales of about $1.22 billion, according to Reuters Estimates. Hasbro’s strong earnings figures were boosted by higher sales of both its Littlest Pet Shop animals and Transformers, Spider-Man products. Overseas sales rose to $489.2 million due to the dollar’s decline against international currencies, while North American sales saw a gain of 7.6% to $766.8 million. The toy maker also managed to avoid bad publicity and costs effects of toys recalled for excessive lead paint that hurt many of its competitors, such as Mattel Inc. (NYSE: MAT). Despite posting stronger-than-expected fourth-quarter earnings two weeks ago, Mattel had to face negative publicity related to the recall of millions of its toys due to safety and lead paint concerns. Fortunately for Mattel, higher international sales helped the company offset $42 million in costs for toy recalls. Despite losing some ground during the second half of last year, Hasbro stated its full-year net income climbed to $330 million, or $1.97 a share, up from $230.1 million, or $1.29 a share, a year ago. Full year sales also jumped to $3.84 billion from $3.15 billion a year earlier. So far investors are enjoying the company’s better-than-expected earnings as its shares are up 2.93% to $26.66. Though the stock was weak during the last few quarters of 2007, shares have been able to rebound since the beginning of this year and I expect to see further gains based on its positive quarterly numbers. Eliza Popescu is a financial writer for the on the web investment advisory service Investor’s Observer. Ponca City, We Love You writes “The Department of Justice has announced the indictment of former Boeing engineer Dongfan Chung on charges of economic espionage in the theft of company trade secrets relating to the Space Shuttle, the C-17 military transport aircraft, and the Delta IV rocket. Chung is a native of China and a naturalized US citizen. According to the indictment, Chinese aviation industry representatives began sending Chung ‘tasking’ letters as early as 1979. Over the years, the letters directed Chung to collect specific technological information, including data related to the Space Shuttle and various military and civilian aircraft. Chung allegedly responded in one letter indicating a desire to contribute to the ‘motherland,’ the DOJ said. It was not immediately clear how much, if any, damage the alleged espionage did to US national security but DOJ officials stated the cases reflect the determination of the Chinese government to penetrate US intelligence and obtain vital national defense secrets. ‘Today’s prosecution demonstrates that foreign spying remains a serious threat in the post-Cold War world,’ said Kenneth L. Wainstein, Assistant Attorney General for National Security” Read more of this story at Slashdot. |
So much for the old joke about “no one would buy from him except his family.”
TheStreet.com’s Jim Cramer states a guarantor’s map of newly restricted markets is shocking in its scope.
Prosper.com is one of the most incredible things I have ever seen and a grand statement of the pioneering spirit that keeps the wheels of prosperity in motion. 
There are the usual names, 
Shares of popular toymaker 
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