On Running Oneself Ragged

Twenty-four hours ... one thousand four hundred forty minutes ... eighty-six thousand four hundred seconds. That's all any of us has in a day. What we do in that time is up to us (well, to an extent). Cram in as much as you like, use a shoehorn if necessary; just make sure that what you do is done well and with your whole heart. Otherwise, what's the point?

Lately I've been stacking up commitments left, right, and sideways. For instance, son Kieran is now a Tiger Cub Scout ... which requires an "adult partner" ... which is, of course, me. (Oh, and I'm one of the den leaders, too.)


Daughter Kendall sooooo enjoys her ballet classes! She's quite the little performer, and she seeks to "make an impact" on people around her whether she's onstage or off. (I'm not totally convinced that she doesn't go through it all just for the flowers, though!)


And so where's the "me" time, you ask? Well, let's think that one through. I have the Realtor thing going on, which requires that I physically go and show houses, write contracts, facilitate inspections, attend closings, and such like that. I do the mortgage goddess dance too, in which a lot can be accomplished by phone, but I must meet up with clients at least twice in most cases (that's once to sign application documents and once at closing). On Mondays we have Kendall's ballet right after school and Cub Scouts of an evening, with supper shoved down somewhere in between. Weekdays during normal business hours, I'm expected to answer the phones and get loans done; weekdays after hours and weekends I'm supposed to be showing properties or holding open houses or something of that nature. Add in the June Cleaver stuff (cooking, cleaning, and laundry - not that I do any of those things with any sort of regularity), and I have to schedule things like eating and sleeping. (Thank goodness I can breathe while doing other stuff!)

Yes, I am busy beyond belief most of the time. Yes, I collapse every night and mentally chastise myself for things that I meant to do/should have done during that day but didn't. Yes, I fret about not exercising enough and not cooking for my family and not doing so many "typical mommy" things. It's all for the greater good, though (thanks, Grindelwald), or at least that's the line I use to pacify myself about it. I guess I'm trapped in a "if I don't do it, who will?" mentality. (I don't really know where it came from, but origin is less important than facility at this point.)

I am less concerned with having time for myself (usually) than I am about making sure that my children have what they need, looking after my clients, and just generally taking care of the world in general. One day (too soon, I hear), the children will be grown and gone with families of their own, and I'll get to retire (totally preferable to the "die with your boots on" scenario that I'm more likely to wind up with). I'll have "me time" then, won't I?

Hmm. Who knows what tomorrow will bring? Are there guarantees that I'll wake up in the morning, come back in one piece from that trip to the grocery store, survive the walk out to the mailbox?

Guess I'll go book a spa day!

Crash Goes The Mortgage Market

From the email inbox this week:

"Hi Donna,

Well, I've been hearing all the scare stories on the news and from my investment firm about the terrible situation in the mortgage industry these days. I know you have a better handle on it than probably most of the talking heads. Do you think there is going to be a problem with me getting a mortgage? I'm really sick of all the stories about banks backing out of mortgages at the last minute already! What is your experience these days? Of course I am nervous with having already put down a sizable deposit toward the house!

Thanks for any words of wisdom."


You would not BELIEVE how many emails like this I've had this week ... one client even emailed asking, "Am I going to lose my house?" (My reply, for the record, was, "As long as you're making the payments on time, no!")

You'd better grab a cup of tea or coffee or Jack and Coke or something ... this is going to take a minute! : )

People are always going to buy houses, and people are always going to refinance the houses they've got for one reason or another. The mortgage market isn't going to disappear. The feds are being rather myopic (IMHO) about it all, because if we flew airplanes or built cars, they'd be falling all over themselves to bail us out (but we don't, so they aren't).

What's going on now is essentially a crisis of confidence, but on an incredibly massive scale. Let's say that your asset portfolio includes a few accounts with a local brokerage -- your friendly neighborhood Waddell & Reed office, maybe (since I have a client who's a W&D broker, ha), a guy called Jim. You and Jim sat down and plotted your long-term goals and a strategy to reach them. The strategy included buying some mortgage-backed securities (MBS), because everybody knows that they're one of the most stable investment vehicles around -- after all, wouldn't you do pretty much anything to avoid foreclosure? Sure you would, and so would everybody else, which is what makes MBS so attractive. So you tell Jim to purchase MBS bits with a certain percentage of your portfolio amount, and to keep that amount level with each contribution you make to the account. Life is good!

One day you're listening to the news while puttering around doing something else, and you hear that there are a record number of foreclosures going on all around the nation just now. You think to yourself, "What? How can that be? And hey -- I'd better call Jim and tell him not to buy any more MBS for me." So you ring Jim, and you tell him, and he says okay. A couple of weeks later, you're watching the late news before bed, and you start hearing how subprime mortgages are total crap, and how they're horribly risky and it's some talking head's opinion that they should never have been available to anyone ever. The talking head goes on to say that subprime loans and loans with little or no income or asset verification (we call them stated-income or no-doc loans) are going to be the things that crash the whole mortgage market. "Oh, no," you think to yourself, "I've got to call Jim NOW and tell him to get rid of all the MBS in my portfolio!" So even though it's late, you hit Jim's beeper, and when he calls back you tell him that first thing in the morning, he's got to get rid of ALL the MBS you've got, so he does.

Now ... take you ... and multiply it by about 30 million individual investors, loads of life insurance and annuity companies, and a boatload of pension funds ... and see where the trouble comes from? You heard someone say something about something, and that initially set off a little bell that says okay, we won't buy any more of those ... then later you hear something more about it, and that sparks a panic in you to get rid of them before they do so much irreparable damage to your retirement and investment funds that you'll wind up living in a refrigerator box under an interstate bridge.

The scariest part of it is that this is eerily similar to the lack of confidence that led from the stock market crash of 1929 to a run on the local banks and then to the Great Depression. The biggest difference between then and now is that we have CNN, MSNBC, BloombergTV, and the World Wide Web to make sure that the hysteria can spread far and fast.

The truth of it all is that there ARE more foreclosures going on this year, and it IS a record number. However, what the talking heads aren't saying is that it's nearly the very same percentage of all outstanding home loans that's been foreclosed on every year for a long time. Look at it this way: if there are 100 mortgages made every year, and 5 of them go into foreclosure the next year, there is a 5% foreclosure rate. If there are 1000 mortgages made in any given year (a new record number!), and 50 of them go into foreclosure the year after that (also a new record number!), then yes, there are 10 times more foreclosures than there were last year ... OMG, eek, the sky is falling! Oh, but wait ... it's still a 5% foreclosure rate.

The fact is that the mortgage rates have been so low for so long that there are far more loans out there to be foreclosed. Since real estate prices have been up as well, mortgage loan amounts have gone up proportionately, which leads to a higher dollar figure in foreclosure than ever before. It's simply statistics, but Joe Average only knows what he heard from Peter Jennings -- that there are ten times more foreclosures this year -- and has the knee-jerk reaction that you had when you heard, resulting in your calls to Jim to get your butt out of those MBS right the hell now.

So why are so many mortgage companies going under? Why did Countrywide have to draw down $11.5 billion in credit lines this week? Why did the Federal Reserve bend its own very strict rules for Citibank and Bank of America? It's liquidity ... the ability to continue funding wholesale mortgage origination on a daily basis.

There is an event in Mortgage Land known as pooling, which is where loans are assembled by wholesalers from many different sources, then grouped together by the characteristics of each individual loan (credit score range, loan amount range, fixed or adjustable, loan term, and a bunch of other things) and sold in a pool into Fannie Mae or Freddie Mac. You want to understand what happens to a mortgage after the loan is closed in order to grasp the whole enchilada (and it's shredded chicken with ranchera sauce, yum).

Let's say that I'm the First National Bank of Donna, and I have $50 million that my board of directors has set aside to make mortgage loans. I set my retail rates and fees to be competitive with those of the other mortgage lenders around me, and I let people know that I'm ready to make loans. Soon, I'm a busy little mortgage maker, and before too long passes, I've loaned out all $50 million to happy homeowners. So ... now what? It's taken me eighteen months to loan out $50 million, all secured by real estate mortgages with terms varying from ten to thirty years. The local marketplace knows I'm here, and it knows I do a great job, and there are more people who want me to do their mortgages. I can either turn them away, telling them that it'll be ten to fifteen years before I have enough of my $50 million back to make them a loan ... or, I can sell them to someone else. At that point, I look through each file and make sure that it fits the rules that Fannie Mae and Freddie Mac have set down for notes that they will purchase, group them together by type, then box them up with a note on the top of each box saying what's in it. I can choose whether to continue to take the payments from my borrowers and hold their escrow accounts (known as "servicing retained"), or whether to kiss them off lock, stock, and escrow to someone else (known as "servicing released"). By selling the notes upstream to larger lenders (or in some cases, directly to Fannie Mae or Freddie Mac), I am constantly replenishing my $50 million loan proceeds account and making a premium (usually expressed as a percentage of the dollar amount of the loan) for each loan I sell. Ah, capitalism!

Everyone is having a rough time getting the international marketplace to remain jazzed about the American MBS enough to keep buying them. The UK is teetering on the edge of a similar meltdown (we exported our subprime and no-doc ideas to them, and it's jumping up to bite them on the posterior too, although their PM was most recently the Chancellor of the Exchequer, and as such has a clue and took swift and decisive steps to stop it there), which isn't exactly inspiring other nations to think our MBS are so great.

So, then, the short version of an answer to the question above is that if you have good credit (which we define by a credit score of 620 or higher) and easily documented income and assets (meaning that you can produce either pay stubs and W-2s showing what you make and/or tax returns that reflect your actual income and statements from your bank or investment firm or 401K in the US that indicate what you've actually got stashed - underwriters aren't typically excited in a good way about offshore accounts or money hidden in the name of a child), then no, you aren't going to have a problem getting a permanent mortgage. The rate may not be as low as what we've had over the last three years, but if you fit into the box that I just described, you're typically not going to have a problem getting a loan for your house (or your car or your boat or your college education or whatever).

The people who are going to have problems in the very near future (like starting last week, ha) are people who have some or all of these factors: low credit scores, high debt ratio, derogatory credit information (even if it's too old to impact the score), difficulty proving income and/or assets, and little or no assets in reserve after closing. There will always be FHA and VA loans, too, since they were created by an act of Congress. It's just that for certain chunks of society at large, getting credit is going to become rather difficult and it's going to stay that way for a while, maybe forever. At least it'll stop (or seriously curtail) this tendency we've had lately as a nation toward buying beyond our means. Homebuilders may not like it, but I really don't think it'll wind up being a bad thing.

Oh, and I haven't heard about any lenders backing out of things at the last minute. Lots of investors are performing major surgery on a lot of programs -- or suspending them altogether for the time being -- but most of them are doing that in response to their funding sources telling them they have to in order to continue having any funding liquidity at all. The only lenders that I know of who are "backing out" are ones who are slamming shut, and you can't really expect a loan to be funded by an entity that isn't there anymore. This has happened a couple of times in the last several weeks (although thankfully not to any of the files that I've got going), and the biggest end result of it so far is that the lenders who are still there are getting backed up with submissions being transferred to them to take up the slack. In the main it's a matter of more time spent waiting for underwriting attention, because suddenly the 25,000 files that were at XYZ have to go to ABC, DEF, GHI, JKL, and MNO, who were humming happily along but now have to accommodate an additional 5,000 files apiece.



One further note: Just because a lender goes under doesn't mean that anything awful is going to happen to a home loan that you've already got. The promissory note that you signed at closing binds the lender as much as it binds you, but it also binds that lender's "successors and/or assigns, as their interests may appear" (which is what shows up on your homeowner's insurance declarations page in the mortgagee clause, so if you've ever wondered what ISAOA/ATIMA means, there's your answer). If your loan payments include monthly escrows, you don't need to worry that those funds are going to be lost, because escrow accounts are federally protected and can't be seized by creditors or anything like that. Your servicing will transfer to another entity, but they have to keep to the note. Whatever your loan amount, interest rate, and maturity date were on the date you signed will stay the same. All that can change are your loan number, the name of the lender to whom you write the check, and the address to which you send that payment (or the website where you pay online). CAVEAT: If you've got an automatic draft set up, then you will most likely have to set it up again with the new servicing entity, because the banking system doesn't allow that sort of payment method to transfer without an overt act on your part.

Hope this helps; sorry it's such a book. Don't be shy about asking questions if you have them! If I don't know the answer, I'll find it for you.

Post-Summer Musings

I'm so sorry not to have bored you with musings since June, Fair Reader! This is what I worried would happen when I started this blog (well, one of the things anyhow), but no matter. We're all here together now, aren't we?

Last time we met, I was becoming ever more churlish at the Pollyanna-esque chipperness of Hector the Gate Agent at O'Hare. (We finally did get out of there, landing in Manchester nine hours late ... no word on what befell the other travellers who were using the same plane on subsequent flights.) Since then, we enjoyed England together as a family, Mark and I learned some things about Paris, and we discovered that one should *always* put one's duty-free purchases in one's checked luggage after clearing Customs if one has purchased anything in liquid form and means to carry it to one's final destination (otherwise, one will get home with perhaps less than what one spent $125 on at the duty-free, whether said purchases remain sealed in their duty-free bag with receipt plainly visible or not).

The twins started first grade last week, and K.C. started sixth grade. How are they old enough for that when they were born yesterday and we've had them forever??!! I feel so mortal.

"Oh, That Sucks."

That's what Hector The Gate Agent said to me earlier.

He saw us dragging into the departure lounge around 11:30, you see, and he comes over with this big smile all on his face, and he says, "Hi! How've you been since I saw you not all that long ago?" (Total cheese, and not just because he reeked of insincerity, but also because when I called his bluff and actually TOLD him how we've been, he suddenly found lots of other things to do.)

When I told him that the best part was that the stupid vouchers that he'd said were good in the bar were actually NOT good in the bar (and we therefore wound up with a $50+ bar tab that we could have done without), what did I get? An apology? No. An offer of reimbursement in trade for a receipt? No. Any sort of empathy at all? No.

I got, "Oh, that sucks."

D'you think maybe he's taking personality and sincerity lessons from George W. Bush?

Your Seats Are Confirmed ...

... however, apparently our flight is not.

It is 11:00 PM CDT and we are at O'Hare in Chicago. In fact, we've been at O'Hare in Chicago since 2:05 this afternoon - fully 25 minutes ahead of schedule. Amazing, eh? Yes! Fantastic! And we'd got our boarding passess at OKC, so we were feeling quite savvy in just hopping into the queue for the security point.

And then we got to the scary bit.

Oh, we had all the liquid and gelatinous substances in the proper and prescribed 3-1-1 format. We all took our shoes off, and each of us was holding our own boarding pass in our own passport, and I had the laptop halfway out of the wicked cool new rolling laptop carryon thingie I'd got at Circuit City, ready to stick it in its very own Dull Gray Security Tub for scanning. No, the scary bit started when we'd stood in the freaking line for 45 minutes, only to be told that our flight was "very, very late" and that we had to go back to the BMI ticket counter for a chat. Ever the intrepid travellers, we went.

Well, yeah. Apparently there's a mechanical failure on the plane that was supposed to leave Manchester at 11:05 this morning and get here at 1:05 this afternoon and then sit and wait for us to get on it and leave at 6:30 this evening and get to Manchester at 8:05 tomorrow morning and then sit and wait for kids to get on it and leave at 11:05 - but I think you get the point, yes? No, no, the scary bit is that WE ARE WAITING SEVEN AND A HALF HOURS TO GET ON A PLANE THAT HAD "MECHANICAL PROBLEMS" AND THEN FLY FIVE THOUSAND MILES ON THE STUPID THING.

Oh, but BMI coughed up $10 per traveller in food-court vouchers, so that's okay, isn't it? Hector, the guy at the ticket counter, told us they were good at the bar, too.

They aren't.

>sigh<

Get Me Outta Here.

Okay, so it's one more week until we're on a plane (well, two planes, but that's not the point). I have told everybody I work with (realtors, title kids, appraisers, wholesalers, etc.) that I'm going, and when, and my return date. So everybody has all their stuff done already in order for it to be accomplished while I'm still here ... right?

Wrong.

No, no, quite the contrary. Starting last Friday, I've had at least three calls a day about new deals. I'm not bitching, mind you, because I'd be in a right mess if the phone wasn't ringing. It's more that there is no way in hell that I'm going to get all these loans done, get the laundry done, get the house tidied, and get packed to go without being forced to either hire someone to help me or letting go of the eight shreds of sanity I've been so parsimoniously saving for this holiday.

What gnaws at me is the fact that the calls I'm getting are from people that have bloody well known for as long as six months that I'm leaving. Heck, some of them are people I talk to at least three times a week, and they know how jazzed I am about being somewhere else for a while. Instead of being able to have a nice, civilized wind-down during these last few days, I'm going to be beavering away like a rabid animal, trying to get everything accomplished. Adding insult to injury, I've had four different people ask me if I'm taking letterhead for pre-qual letters and if I'll have a scanner to send them (since I won't have an outgoing fax - I mean, I could use Uncle Brian's, but why would I do that to his phone bill?), and if I'll be able to receive faxes.

Let a girl have a break, already! ARGH!!

Cue the Alice Cooper track ...

Kieran and Kendall have successfully completed kindergarten! There was even an awards ceremony of sorts (but at least they didn't do that stupid graduation thing ... those just strike me as being ridiculous beyond belief, unless you're actually finishing a diploma or degree).

Every child got a reading award, as we'd spent the last three quarters reading a sent-home book every evening and signing off on a "we did it" sheet. Then each child got an award in a specific category: art, math, writing, or science, and four students from each class got a library award.

Kieran's award was in science. He likes to learn about and discuss things like robots, dinosaurs, bugs, and cause-and-effect. Kendall's award was in art, which is well-deserved judging solely by the number of works that she's done in various places around the house (different media - crayon, marker, pencil, pen - on walls, doors, tabletops, etc.).

Kendall with her Art award and Kieran with his Science award

Kendall and Kieran with their reading awards

We got totally and completely lucky in whatever draw there was to determine who got which teacher. Mrs. Crain and Mrs. Lewis are very different in their teaching styles, yet they are both quite effective and achieve fantastic results! They each ran different class schedules, yet were happy to coordinate activities (holiday parties and feasts, etc.) so that I could be with each of the twins at the right time, without having to choose one or the other. Besides being absolutely the best first school teachers we could have dreamed to have for Kieran and Kendall, they have gone far beyond and become friends as well. Ladies, a very special and heartfelt standing ovation to each of you for your warmth and loving and accommodation and caring ... and everything else.

Kieran and Mrs. Lewis

Mrs. Crain and Kendall

So, on to the great summer adventure ... our annual pilgrimage-in-reverse to England, where we will hang out with Mark's parents, visit Paris, travel to London for the launch of Harry Potter and the Deathly Hallows, go to the seaside, and anything else we can dream up. We're back at school on 15 August for Meet The Teacher day, and then first grade *officially* begins on 16 August. Woohoo!