Real Estate Blog

Integrity Bank, based in Georgia, became the 10th bank this year to be taken in to receivership by the FDIC. A small bank, with about $1 billion in managed assets, Integrity is the latest victim of the mortgage market meltdown and credit crisis after a series of aggressive bets on loans in the Atlanta market.

From Reuters:

U.S. regulators on Friday took over Integrity Bank, which became the 10th bank to fail this year as the economy struggles under the weight of falling home prices and the credit crisis.

The Federal Deposit Insurance Corp said Georgia regulators closed the Alpharetta-based bank, which had $1.1 billion in total assets and $974 million in total deposits as of June 30.

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…

FDIC spokesman Andrew Gray said Integrity Bank pursued aggressive loan growth in the metropolitan Atlanta real estate market, especially in the construction loan area.

Falling real estate prices combined with inadequate risk management and poor lending practices led to significant loan losses and erosion of the bank’s capital, Gray said.

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Hat tip HP

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Lehman Brothers, the ailing Wall Street I-bank, is cutting up to 1,500 jobs in the face of the ongoing credit crisis. Not surprising as Lehman made the biggest bets in subprime during the boom and has massive exposure to further losses on its loan portfolio.

From the Wall Street Journal (subscription req’d):

An investment bank announcing layoffs in the current capital-market slump may not raise a lot of eyebrows.

But in the case of Lehman Brothers Holdings Inc. such news might carry a bit more weight. The company has been struggling to keep up with the losses it had to take in marking to market its mortgage assets, and is in talks …

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Lehman to cut 1,500 jobs

Perhaps one of the most misused phrases in the history of literature is the reference to a quote in Shakespeare’s play “Henry VI”, “First lets kill all the lawyers.”

The line is from The Second Part of Henry VI, act IV, scene ii, line 86; spoken by Dick the butcher, a follower of Jack Cade of Ashford, a common bully who tries to start a rebellion on which the Yorks can later capitalize to seize the throne from Henry.

The plan would be to take away the rights of common citizens but that would only work if they “killed all the lawyers.”

In the wake of the subprime crisis, there will be plenty of opportunities in litigation, foreclosure and bankruptcy actions over the next several years. We are all (or at least I am) screaming for action on going after those that overstepped rule of law.

But what about those who were hurt who can’t afford legal advice? With so many law firms working with financial institutions in the wake of the crisis, there is a potential conflict of interest.

That hurdle is “issue conflict”—the potential conflict of interest for any law firm that has lawyers representing banks, savings and loans, and other financial institutions.

But the need—arising from the subprime mortgage debacle and exacerbated by skyrocketing food and fuel costs as well as rising layoffs—is great. Mark Schickman, a partner at Freeland Cooper & Foreman in San Francisco who chairs the ABA’s Standing Committee on Pro Bono and Public Service, says one in every 160 homes is subject to foreclosure.

“It’s almost a losing battle trying to provide legal services to the poor,” he says. “Every time we think we’re making headway, something like the foreclosure crisis comes in and pushes us from the goal. Pro bono attorneys are coming out in droves for this. It’s really heartening.”

In the ABA Journal article Prime Aid, Subprime Crisis there is already a surge in such activity.

In April, the Association of the Bar of the City of New York’s standing Committee on Professional and Judicial Ethics issued an informal opinion (PDF) regarding homeowner representation by firms that represent financial institutions.

The Federal Reserve Bank of New York and the City Bar Justice Center are sponsoring a pro bono legal services effort called the Lawyers’ Foreclosure Intervention Network that pairs homeowners at risk of foreclosure with attorneys and certified law students.

It’s an encouraging development as well as good public relations effort for the legal profession.

I’ll have to crack open that dusty copy of Hamlet.

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[Shakespeare On Subprime] “First Let’s Kill All The Lawyers”

Thornburg Mortgage, the company famous for buying prime (then) jumbo mortgages (above $417,000) is struggling to survive. The company’s CEO calls the situation “precarious” and they continue to try to fight off the effects of a $3.3 billion first quarter loss and a secondary market that’s all but vanished.

Thornburg is classic proof that Bernanke’s containment theory was flawed at best and fraudulent at worst. Thornburg bought high-credit quality mortgages and got hammered by the credit crunch. Poor loan performance (many jumbo mortgages were mid-length adjustable rate mortgages between 5-10 years) coupled with investors heading for the aisles left the company awash in losses.

From Forbes.com:

“Our circumstances are somewhat precarious, to put it mildly,” Thornburg Chief Executive Larry Goldstone said on a conference call.

Sante Fe-based Thornburg Mortgage reported earnings of $412.3 million, or 84 cents per share, vs. $78.1 million, or 66 cents per share, in the year-ago period. This is respectable considering the firm’s aggressive fund-raising tactics, which increased the number of outstanding shares to 484.6 million common shares in the 2008 quarter from 119.3 million in the 2007 quarter.

…

Thornburg, which specializes in originating and investing in jumbo mortgages that are worth more than $417,000, has been hurting since the middle of 2007 when the U.S. housing market began to sour. In June, the firm admitted that regulators are investigating whether the firm can continue (see “SEC Probes Sickly Thornburg”) after it posted a $3.3 billion first-quarter loss.

Goldstone added that the mortgage securities market is not getting better, despite some speculation to the contrary.

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Thornburg on its last legs?

The banking sector had its worst quarterly performance in nearly twenty years as profits fell 86.5% across the sector. The weakening has forced the FDIC to begin replenishing the deposit insurance reserve this fall. The major loss in profits was tied to loan loss reserve provisions which require banks to keep additional cash on hand due to poor loan performance.

From Market Watch:

In the three months from April to June, banks posted their second worst earnings performance since 1991, the Federal Deposit Insurance Corporation said Tuesday.

Earnings for the quarter totaled just $5 billion, compared with $36.8 billion a year ago, a decline of 86.5%, the FDIC said in its second-quarter banking profile.

“The results are pretty dismal,” said FDIC Chairman Sheila Bair at a press conference.
Higher loss provisions were the main reason for the drop.

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Banking profits down 87%

Here is another guest post by Raoul Badde. Raoul Badde is an Ambassador to CAMB and has worked in all aspects of mortgage lending for over 8 years. He currently works with and advises mortgage brokers through www.your-ae.com. Enjoy! If you’d like to submit an article for publication here email me directly.

Before we get started I would like to direct you to two excellent posts:

• The 7 most important questions to ask your loan agent before starting the mortgage process
• 5 Ways to Know You Have a Legitimate Good Faith Estimate

These are perfect starting points for your basic loan originator interview.

Since the passing of the recent housing bill (HR3221) many of you may be asking more questions about FHA financing as an option. For those of you in the market for a new home you’ve likely been presented an FHA loan as a financing option.

If you currently have a mortgage and were looking to consolidate debt or get a little bit of cash-out, you might have been shown an FHA loan as a possible option.

If you are shopping for a mortgage of some kind right now and you have some “dings” on your credit, a loan officer may have brought this loan up as an option for you.

This post is going to be a little lengthy but it will all be useful information and will help you to navigate through the myriad of pieces comprised in an FHA loan.

1. Where did FHA Come from:

The FHA (Federal Housing Administration) was originally established in 1933-34 to give jobs to the Trades people of this country immediately following the Great Depression. It did so by encouraging existing home owners to take out home improvement loans for and put this group of people back to work. The original program was a tremendous success putting over $250 million dollars back into the Economy and working to stabilize the economy and workforces of our country.

In 1934 The FHA expanded its program to include financing for First Time home buyers and homebuyers of properties in distressed neighborhoods to help bring jobs and people back into areas deserted during the Depression. The FHA and its lending programs is once again looking to bring a similar stabilizing effect to our Housing market. We’ll see if it works.

2. Screen Your Broker/Loan Officer:

First: you need to familiarize yourselves with this little engine brought to you by HUD for people wanting to look up Authorized FHA Lenders (brokers). HUD requires that every loan officer that is working on an FHA loan is licensed, paid W-2 wages and works for a HUD sanctioned company.

However, there’s a little loop hole that allows a loan officer who is not “HUD Approved” to work as an assistant to the actual loan officer but they may not earn over $1000 or 1% AND by HUD’s definition and RESPA’s requirements you’re supposed to pay these assistance fees out of pocket (not out of proceeds or from broker credits).

My Advice: Stay away from these assistant led transactions.

If you can’t find the company you’re talking to on this search engine then you need to thank them for their time, inform of this fact, and move on.

What we’re seeing is a significantly more committed loan officer and company owner that is working above board and originating HUD business. These are people that will ace your 7 questions and point out the 5 ways listed above for you. Another piece to consider when selecting a broker for your transaction is whether or not they are a member of their state broker association. Members of these organizations are properly licensed, have taken the required continuing education courses for their state and are required to follow a code of ethics that they will be happy to share with you. Here in California the group is called: CAMB (California Association of Mortgage Brokers), they carry other similar such names in your states. You can start by looking for them here on the National Association of Mortgage Brokers (NAMB) site if you’re in another state.

3. Financing Options for FHA loans:

There are many different options available for you as a borrower when it comes to using & utilizing an FHA loan.

• You could obtain a cash-out loan for 95% of the value your home
• If you’re in a high cost area, depending on your loan amount, it could be lower @ 85%
• You could refinance an existing 1st and 2nd lien (both of which had been open for 12 months) together into a rate & term loan for 97% of the value of your home.
• You could in theory refinance a 1st lien and subordinate (leave in place) an existing 2nd lien if that lien holder would oblige your request (there is no CLTV cap under FHA).
• You could purchase a home with as little as 3% down (increasing to 3.5% on October 1st)
• You could get a gift for your down payment on your house
• You would still be able to obtain financing for a refinance or purchase even with some credit “dings” or lower fico scores (the market floor is around 580) without any big adjustments to your interest rate.
• You could leave collections and old delinquent cards in place in order to get your mortgage financing in place without having to pay off these items
• Your Program options include:
• 1/3/5/&7 year ARM’s
• 30 year fixed rate
• 15 year fixed rate
• This loan is only for 1st Time Homebuyers, Owner Occupant Homeowners and in some cases move-up buyers

4. The Truth about Mortgage Insurance:

Whether you have 40% equity in your home or you are buying a new house with 3% down you are going to be faced with Mortgage insurance. Now, the reason that FHA is able to offer some of the products it offers is because it is basically an insurance program. In fact, it’s insured twice: once up front at the closing of the loan and again every year, paid monthly, throughout the life of the loan.
As someone who is looking at FHA as a financing option, you have to be aware of the Mortgage Insurance.

1st: the Up Front Mortgage Insurance Premium (UFMIP) will always be 1.5% of the loan (Beginning October 1st- currently varies on FICO & LTV).

2nd: the Annual Mortgage Insurance or Monthly Mortgage Insurance (MMI) of .50% of the balance of your loan over a 12 month period will be with you for (nearly) the life of the loan.

There are two instances when you can remove the Monthly Mortgage Insurance coverage required by the FHA.

1. you have paid your MMI for a total of 60 months from date of closing
2. you have paid the original loan you took out down to 78% of what was originally borrowed.

There is a third quasi instance of removal whereby you obtain a streamline refinance (or FHA to FHA) loan within 3 years of your original loan and then you get a factor of your UFMIP returned to you but your clock starts over with respect to MMI.

If you obtain a loan with an amortization period of 15 years (15yr Fixed) then your MMI would be cut in half to .25% of your loan amount over a 12 month period.

When considering the options for the UFMIP you have the right to finance this additional cost and NOT affect your Loan to Value calculation. This would then be added to your loan balance and you would calculate your payment based on the new higher loan amount over a 30 or 15 year term.

You may also pay this UFMIP at closing out of your proceeds or as a closing cost. It may also be paid for by any credits you may have obtained in writing your purchase contract.

It will show up on your HUD (final settlement statement) as a closing cost charged to you as the borrower whether you are financing it or not.

5. The Real Deal about Points/Discount/Yield or rebate:

Your lender has many options when working on your loan and itemizing charges for your loan is just one of them. Closing costs for these FHA loans can, in some instances, be higher than on conventional loans. Appraisals are most definitely going to be a little more expensive because of certain requirements. Also, as there is a significant amount of additional paperwork required by your loan officer, you may find these loans to carry higher associative fees then on conventional loans.

In California lenders/brokers aren’t allowed to charge more than 5% in total fee inclusive of Title & Escrow, recording and other settlement charges. In HUD’s rule book, the limit for an Origination point is 1%. However, your lender or broker may be charging you a discount fee of up to 2% OR if you walk into a Bank Of America or Wells Fargo branch they may be collecting “yield or rebate” and not even disclose it to you. Brokers (especially in California) are required to show you every single fee that they earn, charge or deliver with respect to your loan closing. Retail (BofA, Wells etc.) aren’t required to show you many of these associated fees, so it can be very confusing to properly determine the true cost of your loan.

If you come across a Good Faith Estimate showing discount points being charged to you keep in mind that these may not be used to buy down the interest rate for your loan, your loan officer or broker could simply be pocketing these fees for themselves. So: make sure on your final settlement statement that if there are discount points AND you have agreed they are for the purposes of obtaining a lower rate that they are being paid out to the provider of the end financing and not to the broker/loan officer.

Appraisals typically cost about $500 in California because your appraiser is acting as a “mini” home inspector for the final lender. The appraisal will never substitute an actual inspection, but you will notice the appraiser poking and prodding where you may have never seen him do such things before. Don’t worry, it’s normal.

All other charges are the same as with any other type of loan. There are not special recording or processing fees involved with funding an FHA loan, if your lender/broker tells you otherwise you may do well to find another option. Typical Lender fees range from $700-1100 and typical broker processing fees range from $450-$600 per transaction.

As we head full steam into the wind that is the housing market of 2009 and beyond you can be assured that you will see many more Government loan programs in any many instances these will be the best priced, lowest cost option for your needs.

As with any financial lending product it is important to remember: do your homework and only work with those brokers most forthcoming about the process, their costs and the timing of the transaction.
Brokers that carry the seal of CAMB/NAMB or the Lending Integrity Seal should be given extra consideration for their willingness to uphold the ethics and best practices in their industry.

Raoul Badde
CAMB Ambassador

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Why FHA could be the loan to help you this year

It’s 48 hours of market report nirvana!

Guess what?

1. Home prices are falling. [shocking]

2. And prices during the spring market didn’t fall as much as the winter. [informative]

This is all very new and helpful [sarcasm].

Here’s a recap

• NAR’s existing home sales report was released yesterday. Interpretation not to be relied on based on past spin. Headlines don’t match content.

• the widely followed Case Shiller Index (bad news version) (good news version) who has not been able to kick start the trading of housing derivatives. Excludes, co-ops, condos, most foreclosures and new development.

• the GSE fueled OFHEO Home Price Index (good news version) (bad news version), issued by the agency that, ironically, was neutered by the GSEs during the housing boom for their mantra of creating “affordable housing.” Excludes new development and condos.

• the Commerce Department’s new housing start stats, which has some of the wildest and widest margin of error ever thought possible. This does not factor in cancellations, which in some markets have been as high as 100%.

Here’s a thought. Mortgages are more expensive and less accessible than two years ago. Until that changes, I wouldn’t expect real, measured improvement. Improvement will come eventually. Let’s deal with the situation at hand rather than all the focus of calling the turnaround correctly.

What especially drives me crazy has been the viewpoint that things are getting better based on rising activity and/or prices in the spring in certain markets. It’s called “seasonality.”

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[Bullish In Technicolor] Housing Prices Show More Weakness

With the rise of online video sharing over the last few years, you might be asking yourself the question “How do I effectively implement video to promote my business?”  After all it’s an important question since you have so many items in need of promotion. Whether it’s you and your real estate business, a specific home, the surrounding community or testimonials; video has the power to capture emotion while also conveying difficult concepts.

But I’m not telling you anything you don’t already know. I would guess the real reason most real estate agents would hesitate to implement video into their business stems from beliving video creation costs outweigh the benefit. Or you understand that self producing video takes skill and time. That’s not the case with SpotMixer a service from One True Media, which empowers businesses to expand their marketing reach through online video advertising.

SpotMixer enables users to create advanced video advertisements without having those advanced video production skills.  Their interface is simplistic, and offers the inclusion of pictures, audio and video. To start, SpotMixer offers over 300 eye-catching templates-even a category dedicated to real estate. All templates come with premixed transitions and music to make producing the video effortless. The background music can be easily substituted. Drag your photos or video to corresponding frames via the intuitive design process. Add text and/or voiceover with onscreen tools to improve your call to action. Once complete you’ll publish the ad and start your subscription. Plans range from $59 to $79 a month.

POSSIBLE IDEAS FOR A VIDEO AD
Persuasive video ads can be a powerful media when implemented correctly, here are 7 ideas explored:

1. Video testimonial: Include photos of families, smiles, voiceover of actual testimonial.
2. Neighborhood overview: Photos and video of park, row of homes, homeowner’s quotes about the neighborhood, map of downtown, closing video of you.
3. Home showcase: Video of approach to home, home photos, floor plan, closing video of you.
4. Community event: Video of event, photos, voiceover w/ history of event, closing video of you.
5. Sell Your skills: Photos of you in action, statistics, voiceover of skill and benefit to consumer.
6. Staging example: before and after photos, voiceover with music, staging statistics, closing video of you.
7. Charity: Charity event video, photos, text describing goals and your involvement.

 
I’VE CREATED MY VIDEO AD, NOW WHAT?

Once you’ve created your new video advertisement, you’ll appreciate the simplicity behind getting it seen via major online directories, guides, and listing services. Start by displaying the video ad on your site or others with the supplied embed code. Next look to Google TV Ads for increased exposure. 

SpotMixer has an easy post option designed to get your video placed into your Adwords account for use with Google’s TV ad service.  From there you’ll select the programs and channels to display your ad, set your budget and push live.  Then view the Placement Performance report to analyze detailed metrics including ad performance.

Also post that same video to YouTube.  If you’re looking for more exposure you may want to create a full video distribution strategy. Don’t worry it’s easier than you might think. SpotMixer allows you to download your video in MP4 format. Next go to a video syndication service such as TubeMogul to place your video on the top video sharing websites across the web at no additional cost.

TIPS FOR YOUR NEXT VIDEO AD

Truthfully the process is so simple you don’t need me to tell you much. But I should mention that the higher the resolution of your photos the better your finished output quality will be. Images should be standard JPEG (.jpg or .jpeg).  Also remember that you can include video in these ads. To start your video should be MPEG (.mpg or .mpeg), MPEG 4 (.mp4), QuickTime (.mov), Audio Video Interleave (.avi), or Windows Media Video (.wmv).  As Patty Nghiem, the VP of marketing for SpotMixer, mentioned in our interview including video or audio with SpotMixer is one way to enhance the ad.  For example, if your video ad is promoting a specific neighborhood in an ocean front town, video of crashing waves on the beach could be very compelling. If you are creating a video testimonial ad, you may show photos of satisfied customers while including a voiceover of the most gripping testimonial.

Other posts you may enjoy:

• Zipform Desktop Is Now Vista Compatible
• Zipform (Winforms) Is Fully Windows Vista and Apple Compatible
• Zillow Adds “For Sale” Listings
• Yugma Online Meetings for Real Estate Agents
• Winforms meets Microsoft Vista

Excerpt from:
SpotMixer: Creating Video Ads That Sell!

It’s one of my all-time favorite sayings and guiding principles and it works! “Simplify to multiply: do less and make more.”

Excerpt from:
Simplify to Multiply: Do Less and Make More

The research for this monthly market report is provided by Brad Rundbaken, of Diversified Resource Group, LLC, a real estate appraiser, consultant and investor with a stock brokerage background. He analyzes the Charleston real estate market using the Charleston-Trident MLS and inserts a lot of extra analysis on the national housing market. In fact, he crams it in there and he’s not afraid to share his opinions. He was terminated by his former employer (an appraisal firm) once he started publishing his market stats in 2006. However, honesty pays and he tells me his new venture is thriving.

Brad also runs a great blog. Here are the areas he covers and his methodology
…Jonathan Miller

View the entire report

Here are some of his observations pertaining to the overall Charleston market.

• The average sales price dropped 6.6% in the Tri-County region compared to the prior year quater.
• Q2 2008 sales are down significantly at -33.5% compared to the prior year quarter.
• Due to economic weakness and tighter credit conditions sales have slowed by 33.5% and inventory has grown 11.3% since last year in the Tri-County Region.
• Days on market has also increased by 31% since Q2 2007.
• The Tri-County Market spring quarter did not live up to expectations of many local realtors and experts. Many are being quoted that it will get better next year. Based on what? Higher interest rates and a economy in a recession?
• As inventory continues to rise the % Diff Sales to List Price has increased the most in Charleston County. This increase in the Discount can be attributed to buyers getting better deals on the higher end of the market which encompasses Charleston County in such areas as Mount Pleasant and the beaches.
• As I have stated before there is a “shadow inventory” that is not transparent in the MLS statistics that is very worrisome. I have seen months inventory in the years after completing Market Analysis Studies for developers.
• The CMR is very concerned about the high end of the residential market. These are the most risky loans to banks and inventory continues to build to extremely high levels.
• The CMR predicts the average price per square foot will continue to decrease in many areas until the credit markets get back to normal. It is important to remember that many upgrades, discounts and closing costs being paid by sellers often do NOT show up in the Market Matrix. Real estate often has visibility issues with regards to the true price trends. An appraisal or Market Analysis should provided more transparency if done properly.

Review the report for more details on the tri-county market area as well as many other market areas. Chocked full of data.

Read more:
City Of Architecture: 2nd Quarter 2008 Market Report For Charleston, SC

This quarterly market report is provided by Chip Wagner and Robert Headrick. I have had the pleasure of knowing them for a large part of my appraisal career. They are both very active in appraisal industry matters having held many leadership positions. Their respective firms have been covering the Chicagoland market since 1970 and as a result, they both have a wealth of insight. Their focus is on relocation, litigation and mortgage appraisals as well as slayers of appraisal myths. Chip and Bob author a series of market reports on the Chicagoland real estate market and Chip writes a column on our other blog, Soapbox called Chip Shots.

…Jonathan Miller

View the report

And their commentary…

What now?

In 32 of the 184 communities (about 17%), there was an increase in average sales price from second quarter 2007 to second quarter of 2008. Over 82% of the Chicagoland market has seen a decline in the average sales price.

Again, real estate is local, so some areas are doing better than others as we caution these statistics are macroeconomic data. And indeed, there are some pockets and many instances where prices have increased in the past year, but this is few and far between, not the norm.

Read the rest here:
Windy City Update: Chicagoland 2Q 2008

This quarterly market report is provided by Dr. Kevin Gillen, an economist at the Real Estate Department of the Wharton School and Fellow of the University of Pennsylvania. He analyzes the Philadelphia real estate market using the city’s real estate database through Hallwatch, a watchdog group. The results are published in a research paper called Philadelphia House Price Indices each quarter as a public service to the Philadelphia real estate community. Here’s his methodology [pdf].

Kevin does a great job parsing out the market and its a pleasure to share his results on Matrix —Jonathan Miller

Download the full report [pdf].

Read the Hallwatch article on the market: Philly real estate: fewer sales, higher prices in some areas

Here is one of the key points:

Although Philadelphia’s house prices may be resisting their continued declines, home sales continued their downward plunge this spring. Even though spring is normally the busiest time of year for housing transactions, only 4,546 dwellings changed hands under arms-length conditions this past quarter. This is a 25% drop from spring 2007, and a 42% drop from the housing boom’s peak in the summer of 2005.

More discussion concerning the report [Hallwatch.org]. Hallwatch is a private and independently maintained watchdog website that does a lot of in-depth, independent and investigative pieces on city politics, as well as real estate.

Source:
[Like Whipped Cream Cheese] Philly Real Estate: Fewer Sales, Higher Prices

Since the new iPhone and it’s 2.0.2 software came out, I have been lovin’ the new apps that have entered the fray. The power of GPS allows blending data and location into a nice neat package. And endless array of possibilities.

One of my favorites of the just released: the Trulia iPhone app (disclosure: I have been on Trulia’s Industry Advisory Board since its inception). But it’s not just for the iPhone.

I got a demo of the beta when I was at Inman Connect SF last month. I have to say, unequivocally, that the app is even better than “more cowbell.” Actually it’s incredibly easy to use, allowing me to see what is for sale in the immediate area, drilling down to property details and what open houses are available (inside joke: thanks so much for not calling them “open homes”). It also enables viewing the Trulia voices feed specific to the location.

Keep it simple, make it powerful.

In fact, I’ve really been iPhone App happy lately. I was turned on to two other apps by my friend Andrew, that I find myself using everyday (aside from “iSaber“) called Jott and Evernote. Awesome.

Proud father moment: My teenage son was out with a bunch of his friends and one of them pulls out an iPhone, exclaiming, “hey guys, check this out!” and began brandishing iSaber with it’s sound and light effects. My son looks at the kid and deadpans, “yeah, my Dad uses that one.”

More:
[iTrulia] Getting Mobile With Luke Skywalker, Etc.

Even with the cheerleaders trying to put a sunny face on the credit crisis we’re still not out of the woods yet. We’ve had another bank failure and we’re still looking at billions in write downs. But feel free to sing “the sun will come out tomorrow” if it makes you feel warm and fuzzy inside.

Some of the dour news of the day - just to make sure the message isn’t being lost on everyone.

From Market Watch:

U.S. stocks dropped on Monday, retreating from the last session’s strong gains, as oil remained near $115 a barrel and as concerns about mortgage giants Fannie Mae and Freddie Mac continued to weigh on investor sentiment.

“Financial stresses are still permeating global financial systems, despite massive accommodation from the Fed,” said analysts at Action Economics.

And Bloomberg:

AIG, the world’s largest insurer, tumbled 5 percent after Credit Suisse Group said the company may lose $2.41 billion this quarter on mortgage-related writedowns. Huntington Bancshares Inc. and KeyCorp each dropped more than 3 percent after Columbian Bank & Trust Co. became the ninth U.S. bank to collapse this year.

Morgan Stanley cut its year-end forecast for the S&P 500 on concern banks will report more credit-related writedowns and the global economic slowdown will curb profits at technology and industrial companies.

“Our biggest concern for 2009 earnings estimates is that a combination of global growth slowdown, declining operating leverage, a stronger U.S. dollar, less share count reduction and a long tail to dysfunctional credit markets will create powerful headwinds for what appear to very optimistic consensus expectations,” Abhijit Chakrabortti wrote in a note to clients dated yesterday.

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