Sunday, December 7, 2008

Loan Modification

My wife spent Friday night with a couple of girlfriends while I was dragging myself through the last shift of an awful week. She had some interesting news for a Saturday lunch. She told me one of her buddies, a property appraiser had sent Bank of America and appraisal on a home where the bank was offering to reduce the interest rate to 4.5 percent. All the home owner had to do was pay a few hundred dollars for the appraisal and sign the papers. Bank of America paid the costs of the refinance operation. "We're calling Wells Fargo!" my wife said with a gleam in her eye.
Then I read an item in Mish's Financial Monitor, a well known observer of the economy, one of those voices that sits outside the mainstream CC/Fox/WSJ arena. He had an item reporting that investors in Countrywide, the mortgage company bought by Bank of America in one of it's more stupid moments, are now fighting Bank of America's mortgage modifications. Investors in Country wide could legally force Bank of America to buy outright $80 billion dollars-worth of loans. This, because the investors in Countrywide are having their own stupid moment. Bank of America hasn't suddenly gone soft, it just figures it's better to keep people in their over priced homes paying a monthly nut, even a reduced one, rather than having them step away.
The investors in Country wide must be thinking this is their way to get paid off and escape the crisis, but instead if they block the loan modification program they will end up pushing more and more people out of their mortgages with predictable consequences. I shudder as I think of the estimates 600 homes in foreclosure proceedings in the Lower Keys. I have not added up the number myself let me hasten to add, but that is the number currently bandied about.
The thing that struck me about this story was that my economic mentor Ty sent me a complicated paper some weeks ago describing this dilemma precisely. The discussion mentioned the fact that most mortgages are being used to back investment packages that ultimately control the loan, and should the federal Government chose to modify the terms of the loans the holders of the investment packages can legally force the government to buy the loans outright. And guess what? Here it is- happening exactly as predicted!
This economic crises is much more far reaching and complex than a lot of people want to think it is. I hope we get a new set of l;eaders who can talk truth to us and invovle us in what they plan to do.

The Holiday Spirit

I don't suppose it comes as much of a surprise but a theme of the recent Thanksgiving business of giving thanks around the table involved being grateful for where we are. Anyone who wants blizzards and low gray skies for the November holiday might as well not show up in the Keys. This year the weather was perfect, around 75 degrees when the sun was up and only a little cooler as the sun sank out of sight.I think there were about 25 of us gathered around the table in the expansive home in Cudjoe Gardens. Everyone brought dishes as is the way, and of course there was too much to eat but I found my favorites in the corn pudding and baked mushrooms, even though my wife's spicy sweet potatoes elicited some interested enquiries.
It is easy enough to give thanks while sitting down to an overly full plate in shirt sleeves and we duly did just that, thanks for family and friends, for ease of living and so forth.To me the gathering had an air of unreality that belied the parlous nature of the economy and our own future in it. In some ways this sense of living through an interim, between the easy going past and a darker future puts me in mind of similar periods in history when human events took a sharp turn. As the sun set across the canal I heard voices raised, alongside wine glasses, in optimistic promises of whatever the future "we will pull through" and in quieter conversations I heard from people afraid of what may be to come in the next year. My buddy Robert, our host, is one of those that tend towards the optimistic side of the scale and he sat back after the round of thanksgiving with a beatific smile on his face as he watched his friends dig in.Robert moved to the Keys in 1976 lived on a boat, made friends and worked where he could. Once he had made it down here he knew he never wanted to leave. He used to tell me he didn't care if he never went north of the Seven Mile Bridge again. He has made it out of the Keys a few times and nowadays he's engaged to be married to a woman who positively revels in travel so he crosses the bridge more often than formerly. But Robert remains anchored in the islands, and he's seen lost of difficult times which gives him the confidence to know that the future won't be as bad as it could be. He keeps on keeping on,working for the Marine Sanctuary, organizing beach clean ups, educating boaters and keeping the Team Ocean program busy out on the waters of the Keys preserving the environment.Part of the getting-to-know-you routine of these kinds of gatherings is finding out where people are from. So there I am with almost no knowledge of any place between California and Florida and Robert is reminiscing with Rebecca about her home town in Wisconsin that goes by the unlikely name of Lake Geneva. Imagine my surprise when one of the people at the table not previously known to me sidles up and starts in about Northern California. She misses her artists cabin in the Santa Lucia mountains of the Big Sur coast where she lived wielding a potter's wheel and now her family ties have dragged her back to the Keys, where she lives pining away for a her California fog. I felt bad for her, but she's on her own, I'm glad I'm here. Even the egg nog tasted good, though perhaps the shot of rum accounted for that:Gradually the guests took their leave, the Swedes, the kid who cut me the most enormous slice of chocolate cake, the dude from keys Energy who explained how the tie line from the mainland works which answered a nerdy question that had plagued me for a while, and the unhappy California potter, among others,leaving Robert and Dolly along with the wife and myself to talk trash about the early departures. We actually didn't have anything to say about the other guests and i got instead to learn about something called Tivo, a way to record television programs off cable and watch them at a time of the viewer's own choosing. Technology still manages to surprise me. My wife and I have graduated to watching films downloaded from Netflix directly to the laptop in addition to ordering discs to view in the traditional way. I expect it won't be too long before video discs will be replaced entirely by electronic memory cells transmitted by wireless. I remember when video cassettes made their entry into my life and they seemed extraordinary with their ability to recreate television programs that used to be lost forever once broadcast.I have been viewing my neighborhood through the lens of distorted economics through which we are currently living and it seems as though the grasses are growing more rank by the day, "For Sale" signs are drooping and my sense of unease makes me excessively sensitive to these negative signs sprouting around the canals of the Lower Keys. This was a Thanksgiving that made me especially sensitive to how well off I am these days. I'm not alone:It's funny to me that I am chewing my lip worrying about the economy and a house up the street has a big hole alongside waiting for an in ground pool to be dropped in.More power to them I say, it is a job and work and money into the local economy for construction workers who aren't over worked these days. I keep seeing cement stilts on empty lots sitting there waiting for a home to be placed on them,and so far...nothing. The serenity of a Thanksgiving evening can't be that serene if you don't have a job.
We had planned an evening off in the bright lights of the big city but before we could get to Key West we got a call from Lisa and Jacques who wanted help, they said decorating their tree. These two are teachers with tenure in the district,they've moved to the Lower keys after many years of travel and adventure teaching around the world and they like where they are living and what they are doing. It was rather cool to be invited around to do what my (Jewish) wife and i never have done together: We decorated for a while and the wretched little lights worked just fine, which they never seemed to when I was a kid (before Lisa and Jacques were born) so we sat down and drank wine and ate some rather toothsome pumpkin trifle and wondered about the state of the world.I like their company because they are a happy couple and they make a serene and safe place to visit even at the holidays when tensions rise and people get short with each other. I can let my guard down and that for me is the value of Christmas. I hate the expectations of consumer shopping and I hate the misery that poverty brings with it at this time of year when parents are supposed to go over the top for their kids. I read somewhere that the average age of a homeless person in the US is ten years of age and that is so wrong it takes one's breath away.Jacques is a powerhouse, not just of wine drinking but also bio-diesel and his contribution to the greening of the Keys is development of a bio-diesel program for the school district. He has several degrees and a background in science and he managed to give me some modest explanation of bio diesel involving fat and lye and precipitation, which made me want to go out and buy a US military diesel powered motorcycle. I tried a chocolate cup cake instead.
The good vibes of Thanksgiving and tree decorating will have to carry me through the entire holiday season I guess and see me pop out the other end ready to face whatever credit crunch is squeezing our collective testicles in 2009. Friends are what will get us through. Friends and a job, that would be good to have.