Ed McMahon, Evander Holyfield at Risk of Foreclosure
The mortgage crisis spares no one, or so it seems.
First came news that pitchman Ed McMahon had defaulted on his $4.8 million mortgage with Countrywide. He explained his situation to CNN’s Larry King this way:
If you spend more money than you make, you know what happens. You know, a couple of divorces thrown in, a few things like that. And, you know, things happen.
![Holyfield: \"Not broke, just not liquid.\"](http://blog.smarthippo.com/wordpress/wp-content/holyfield_evander.jpg "Holyfield: \\"Not broke, just not liquid.\\"")
Then came news that heavyweight champion Evander Holyfeld was also at risk of foreclosure due to his defaulting on a $10 million loan from Washington Mutual.
In the case of McMahon, being famous does have its advantages, however. He claims to have been trying to sell his home for two years with no takers. But after news broke of his ordeal, interest in purchasing him home — asking price $6.25 million — is up. In case you’re in the market, Trulia has details regarding the property.
RE Blogworld Announced for September
Todd Carpenter has just announced RE Blogworld, a real estate and mortgage conference taking place September 19 in conjunction with Blogworld and New Media Expo (September 20 and 21) in Las Vegas.
Are you a mortgage professional and still not sure if blogging is for you? Todd offers the following advice:
In an environment where the prestige of being an agent or originator is no better than a used car salesman, there’s no better time to use blogging and new media as a platform for proving to your clients that you are different. I’ve seen it from my own efforts.
I couldn’t agree more. As real estate (Zillow, Trulia, Eppraisal) and mortgage (SmartHippo) information becomes more freely available to anyone with an Internet connection, the role of a broker is shifting as well. Reputation and trust are more important than ever, and blogging is one of the cheapest and most effective ways of building these. Whether you have an existing blog, or are thinking about it but not sure where to start, RE Blogworld should be on your calendar this September.
Check out the blog or subscribe to the RSS feed to keep up to date with RE Blogworld announcements.
California’s Next Mortgage Crisis
With California being particularly hard hit by falling home prices (a 26% drop in February compared to the previous year), Slate suggests the next wave will be prime borrowers simply walking away from mortgages that no longer make financial sense.
Lenders had no reservations about selling borrowers loans with rising payments that would be poisonous in a rising market. Now it seems borrowers have no reservations about leaving those lenders with the risks they begged to take.
You can read the full article here.
The Upside Down American Dream
The drop in real estate prices has left many Americans upside down — meaning they owe more on their mortgage than what their home is worth.
Morgan at blownmortgage.com observes that some of these people have no problem making their payments, but are wondering if they should just walk away anyway. He says that for some, The American dream is no longer home ownership; It’s getting out of their home.
Are you upside down? What do you think? Add your comments at the end of this post.
Zillow Mortgage is But a (Very) Small Step Forward
Zillow today launched a mortgage product, which lets consumers anonymously request quotes from loan officers and decide who they want to go with.
You can read more coverage on TechCrunch, Mashable, Lenderama and BusinessWeek.
We’ve always believed strongly that the mortgage process needs to change in the interest of consumers. That’s why we launched SmartHippo last September at the TechCrunch40 conference. But Zillow’s new launch leaves us feeling kind of flat.
To be sure, they are an improvement over lead generation sites like LendingTree or LowerMyBills, which essentially just sell off your personal data to the highest bidder. Zillow lets the consumer drive the process, but that’s where the differences end. So, in a sense, they are kind of like a LendingTree v 1.1. You still only get to see quotes from people in their network, and you still have no assurance that these quotes will be accurate.
SmartHippo, on the other hand, is a completely new way of shopping for a mortgage. We are open and transparent. You can find rates supplied by both banks and individual consumers, and we have a community feedback mechanism that allows people to share experiences with and rate lenders and brokers whether they are member of our site or not.
What do you think? Check out SmartHippo.com and let us know, and be sure to follow our demo at FinovateStartup on April 29th for something new.
Can’t Save? Blame Your Brain
The average American consumer has a negative savings rate — meaning they spend more than they earn. Why?
Fascinating new research is brought to light in a recent article in Money Magazine:
When you imagine choosing between making a quick buck or growing rich later, you know the right answer: Be patient and hold out for the bigger gain. But as soon as you face a real rather than an imaginary choice, the fast money seems irresistible.
New discoveries in neuroscience labs are helping to explain why it’s so hard to resist the allure of instant gratification. It turns out that your brain is much more aroused by $1 today than by $1 tomorrow. And $1 six months from now barely registers.
The article goes on to quote one of the study’s authors, Carnegie Mellon University’s George Loewenstein, as saying there may be an evolutionary component to our behavior when it comes to spending versus saving. It turns out that during hunter-gatherer days, people faced scarcity and learned to consume when they had the opportunity.
When it’s time to close a mortgage, many of us don’t always go with the option that offers the best long-term financial gain. For instance, we may choose to pay a higher interest rate over the entire term of a mortgage in order to save a small amount of costs at closing.
Now we have an excuse. We can blame our brain.
Home Equity Falls to Lowest Level on Record: Federal Reserve
According to an Associated Press report, home equity has now slipped to the lowest level since the Federal Reserve began tracking the statistic in 1945.
Homeowners’ percentage of equity slipped to a revised lower 49.6 percent in the second quarter of 2007, the central bank reported in its quarterly U.S. Flow of Funds Accounts, and declined further to 47.9 percent in the fourth quarter — the third straight quarter it was under 50 percent. That marks the first time homeowners’ debt on their houses exceeds their equity since the Fed started tracking the data in 1945.
The total value of equity also fell for the third straight quarter to $9.65 trillion from a downwardly revised $9.93 trillion in the third quarter.
Home equity, which is equal to the percentage of a home’s market value minus mortgage-related debt, has steadily decreased even as home prices jumped earlier this decade due to a surge in cash-out refinances, home equity loans and lines of credit and an increase in 100 percent or more home financing.
How much equity do you have in your home? How are you coping? Post your story in the comments.
A Subprime Primer - A Humorous Look at How Things Went so Terribly Wrong
This “story” has been making the rounds on the Internet. It offers a hilarious (yet somewhat accurate) view of how we got into the mortgage crisis. If you know who the original author is, please let us know so we can credit them appropriately.
Tip: If you’re having trouble reading the text due to its small size, click the “expand” icon in the lower right hand corner immediately below the graphic.
Caution: This animation contains language some may find offensive.
Fannie Mae, Freddie Mac: Appraisal Rules About to Get Stricter
Fannie Mae and Freddie Mac, the two largest buyers of mortgages on the secondary market, will be toughening up their home appraisal standards as of January 1, 2009.
What did appraisal standards have to do with the mortgage crisis? Up until now, the relationship between a loan officer or broker and a home appraiser has been pretty snug. In many cases, loan officers would pick individuals who would create inflated appraisal reports, making it easier for a consumer to qualify for a bigger loan.
Under the new rules, employees involved in issuing mortgage loans can no longer be involved in the appraisal process, and an independent organization will be set up to monitor appraisal practices.
New York Attorney General Andrew Cuomo, who had been investigating inflated mortgage appraisals, will now close the file.
Quicken Loans launches Quizzle
Quicken Loans this week launched Quizzle, an interactive site which offers consumers a simple view of their financial health, with tips on how to improve their situation.
Quizzle is the only place that gives you a simple understanding of your home and your money, all in one spot. You’ll get a free evaluation of your credit, home value, mortgage, budget and more, then get important tips on how to make the most of them (minus the confusing financial jargon).
Getting a free copy of your credit report (without having to provide a credit card number or subscribe to a service you’ll forget to cancel later on) makes the site worth it in and of itself. Add to that the other tools to help you make sense of your property value, budget and more, and Quizzle is definitely worth a spin.
This is also a very smart move on the part of Quicken Loans, who will be able to use the data consumers voluntarily enter to promote their products.
Have you tried Quizzle? What do you think about it? Post your feedback in the comments below.
« Previous Entries