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Wells Fargo considers entering the option-ARM business


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2006 Jun 14, 7:56am   11,259 views  147 comments

by HARM   ➕follow (0)   💰tip   ignore  

future Wells Fargo loan customers

Mortgage slowdown forces Wells Fargo to consider lending options

A few choice excerpts...

Wells Fargo Home Mortgage is looking to less creditworthy borrowers and other niches to boost lending amid an industry slowdown.

"We see a huge opportunity for Wells Fargo to play in that segment in a a very fair and responsible way," Cara Heiden, a co-head of Wells Fargo Home Mortgage, told American Banker.

...Looking to new customer groups to target also helps Wells try to offset the slowdown seen in the mortgage industry as interest rates rise and the pace of home sales declines.

The trade newspaper also said Wells might be considering offering controversial so-called option ARMs, which are adjustable-rate mortgages that give borrowers greater flexibility in repaying the loan but also incurs negative amortization so that the loan balance can actually rise over time.

Heiden told American Banker that option ARMs are an "excellent product" for some borrowers because they offer "wonderful flexibility."

Gee, I don't see *any* problem with Wells entering the NAAVLP biz right at this particular moment, do you?

Let's see: housing affordability in CA now at record lows/close to single digits (hard to say exactly how low, of course, because CAR refuses to release any Housing Affordability Index (HAI) numbers beyond last December). Plus, borrowers already showing signs of stress due to higher rates & option-ARM resets, delinquency & foreclosure activity is on the rise, many sub-prime lenders already laying off staff, etc...

Yup! Looks like a good time to get into the neg-am bid'ness to me!

Discuss, enjoy...
HARM

#housing

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100   Different Sean   2006 Jun 15, 3:30am  

just joking, i'm very loyal to sir surfer... or is it sir fer?

101   DinOR   2006 Jun 15, 3:51am  

Robert Cote'

Back in the late 80's early 90's before the "Helenites" completely lost their minds we had a chance to turn back. Then Gov. hopeful Denny Smith said he didn't really object to mass transit just that it didn't suit most peoples lifestyles. Most people don't just go back and forth to work. They may have to drop off or pick up children at daycare, shop for their families etc. I'd have to say I'm in that camp. No one would like to see it work more than me, but we've tried. Also there has been a fair amount of violent attacks on PDX light rail and that is not good advertising!

102   edvard   2006 Jun 15, 3:52am  

Transportation is strictly a person-per person basis. There is no easy access to a rail from Alameda. The cost per week would be roughly $7.50 a day, or $38 a week. The quickest is the ferry- $10 a day;$50 a week. Me and my wife carpool. Cost is roughly $26 a week combined. Thus for us at least, carpooling costs less than half of the equivelant public transit.

103   Different Sean   2006 Jun 15, 3:54am  

A very good lesson nonetheless.

For some, but not for others. Many of these kids actually thought they were taking charge of their futures.

what amazes me is the sheer repetitiveness in time of all these scams -- there seems to be no end to the takers, from teens through to whoever... there's a role for wiser heads in the community to counsel people against it, but everyone is so atomised these days...

but, the language and psychology they use can be extremely persuasive, and a lot of people don't have the critical ability to question the rhetoric...

104   DinOR   2006 Jun 15, 4:00am  

Robert Cote'

There is a very specific formula as to how the city, the police and the media deal with these attacks. Firstly if we hear about them at all it is weeks if not months afterwards! If at all possible they try to apprehend the assailants prior to showing the public the security cam tape. It's only when months have gone by and they have NOT got these clowns behind bars is any plea made with the public to identify these "teen male attackers" caving some poor guy's skull in (who is still in the hospital btw). They're not even robberies, it's more like a "thrill kill" with bystanders inside the car typically "joining in on the fun". No thanks, do you validate?

105   Different Sean   2006 Jun 15, 4:03am  

Absolutely! They pyschology involved is fascinating. That’s why I recommend “Without Conscience” by Robert Hare, Phd. A mindblower. Also check out the film, Enron: The Smarest Guys in the Room.

i've read 'around' this stuff for a while, and studied some psych. the interesting thing is that they are almost always male, and that the 'classic antisocial PD' is characterised as an impulsive violent criminal, when it is often likely to be a middle manager or salesman or some such. another buzzword is the 'narcissistic powerpath' in organisations, who tends to be glib and exploitative, in power but completely dysfunctional...

have to put that film on the list too...

106   Jimbo   2006 Jun 15, 4:07am  

Where did you get these numbers Robert? Does that include the cost of parking?

What is the value of a subsidized parking space in San Francisco? In the United States on average?

http://www.vtpi.org/tca/tca0504.pdf

Calculates that the average automobile in America has six "parking spaces" built for it at an overall cost of $3,000 per year. In San Francisco, you can rent a parking space for about $200/mo, so the free market value of a free parking space is $2400/yr.

Your POV of 28 cents/mile is laughably low. Even the IRS, an institution not known for its generousity, allows a 44.5 cents/mile deduction.

http://www.vtpi.org/tdm/tdm66.htm#_Toc18284958

Calculates the ownership cost of operating a vehicle, averaged out over the entire population at 34 cents/mile.

And these only include the direct costs born by the driver. The huge hidden indirect subsidy is in the form of free parking and medical costs due to all the injuries automobiles cause, which is passed on to others in the form of lost productivity at work and increased health insurance. Other externalities not borne by the driver include the increased congestion caused by their driving which negatively impacts everyone else and damages caused by pollution.

Total cost to operate a motor vehicle, including travel time is about $13k/yr. But if you want to spend your time and money on an automobile, far be it for me to object. What I do object to is the indirect subsidy that is provided to autmobile operators to the tune of $4k/year.

And we are discussing per user, not per mile. Transit users take shorter trips, on the average of 1/3 "Non-drivers travel about 1/3 as much as much as an average motorist (NPTS, 1995)" so you need to calculate your per mile costs for the automobile and multiply times three.

Let's start out by seeing if you can answer what the value of subsidized parking is. Also, either show me your figures or your sources for the 28 cents per mile cost of the automobile.

107   edvard   2006 Jun 15, 4:10am  

SQT,
the reason that Japan and Europe have great transit systems is because they've had them for decades, or in Europe's case, more than a century. The reason is as you mentioned- Higher population density. That kind of system would be too pricey in the U.S.
To play both sides though, the US actually had a decent train system circa 1930's. But two things happened: GM lobbied to introduce buses in metropolitan cities during the late 30's. Next came the " Eisenhower defense corridor:, which was simply another clever disguise of another US auto industry victoy, which was selling congress on the idea of immediate military transport of nuclear materials. Hence, the freeways we now have, which as predicted by GM and Ford, were the best thing to happen to them since the introduction of the internal combustion engine.
I'm all about developing new technology that develops vehicles that run on renewable or replaceable resources. Take the "evil" fuel consumption part out of the equation, and replace it with an alternative, the US transportation system would be perhaps one of the best in the world. I recall friends from England visiting a few years ago. They videotaped the freeway because to them it was amazing.

108   Different Sean   2006 Jun 15, 4:11am  

Prince Philip - is he that inbred german/greek wanker who hasn’t held a steady, productive job all his life

yes

(besides rogering the queen on a semi-regular basis)?

that's how he got the job.

the story's pretty fascinating actually, the greek royals were down on their uppers, he was a gadabout in paris, but the young elizabeth insisted on taking him (and had a huge sex drive apparently), so they had to frantically enlist him in the navy and give him a lot of grandiose titles straightaway, which might make someone who believed in progress on merit a little upset...

109   Different Sean   2006 Jun 15, 4:19am  

couldn't you grow sugar cane in the south, where it's hotter?

110   Different Sean   2006 Jun 15, 4:22am  

I recall friends from England visiting a few years ago. They videotaped the freeway because to them it was amazing.

watching 12 lane freeways is pretty strange...

and the cost of construction of all the tarmac and cement comes out of taxes too...

111   Jimbo   2006 Jun 15, 4:26am  

ww2, you say

Me and my wife carpool. Cost is roughly $26 a week combined.

Is this the total cost, including depreciation, insurance, etc? I think if you added up the total cost of ownership of an automobile, you would be astonished.

112   Different Sean   2006 Jun 15, 4:27am  

most econ maths is a waste of time, and politicians etc never pay any attention to it anyway...

the only reasonable economics is asking simple questions like, if i lower interest rates, will it cause a housing boom?

(when randy's away, the econ luddites will play, hee hee)

113   edvard   2006 Jun 15, 4:27am  

Sugar cane Vs Corn... Not sure if there is much of a diffrence in the final product. I have a book at home that goes into great detail on how to produce moonshine, a process that yields 200 proof whiskey, which of course you must cut to 60 proof or it will kill you. But at 200 proof, the stuff is pretty much ethanol. Sugar, Corn, or some variety of grain can be used either seperatly or combined to produce it. Whatever grows in the biggest abundance in the US would be the most ideal. Sugarcane only grows in very limited areas here; It needs to be HOT year round. That Vs corn that will grow anywhere and is somewhat temperature resistant.
I am very interested in the possibility of making non-medicinal hemp legal. You can make TONS of stuff out of it. Oil, Fuel, Plastics, clothes, rope, and so on. It would make a great fuel, and it grows lightning fast, and in most of the country. The ONLY reason it is illegal is because of William Randolph Hurst when he found out that a few companies found a way to make super-cheap paper out of it, thus making his empire of pulp plants obsolete, hence the production of "reefer madness" movies and lobbying in congress to ban it. Totally stupid.

114   Jimbo   2006 Jun 15, 4:28am  

The Alameda ferry is a lot more expensive than that. $10 is what they -charge- not what it costs. In February 2006 the ferry recovered 44.79% of its operating costs from passenger fares. That’s operating costs only. Fares would be closer to $40 to break even under normal business accounting. Ouch.

Very good, you have shown us that you know how to calculate the true cost of riding the ferry.

Now can you calculate the true cost of operating the automobile?

115   edvard   2006 Jun 15, 4:30am  

Jimbo,
The truck is 11 years old. Gas is $26 a week. It has 200k on the odometer. hardly anything has gone wrong with it. Perhaps $500 in parts have been replaced. I do all the work myself. I change the oil. Cost is roughly $7 for the oil and filter at Wal-Mart.
I don't care about depreciation. A vehicle to me is good as long as it runs reliably. I know people with toyota trucks with over 500k on them and still kicking. I know most people trade when they get tired of their car, which is like every 3 years. But I'm not that kind of person, so again for transportation costs, it is a person by person basis. In my case, driving is still way cheaper.

116   edvard   2006 Jun 15, 4:33am  

Oh- the truck was $8500 11 years ago, so if you stretched the vehicle costs out over 11 years, that's $772.72 a year so far. Pretty cheap if you ask me. I think you aught to count time as money too. I get to work in 15 minutes. It would take an hour or more by train. I save hundreds of hours a year at the very least.

117   Different Sean   2006 Jun 15, 4:34am  

Oil, Fuel, Plastics, clothes, rope, and so on. The ONLY reason it is illegal is because of William Randolph Hurst when he found out that a few companies found a way to make super-cheap paper out of it, thus making his empire of pulp plants obsolete, hence the production of “reefer madness” movies and lobbying in congress to ban it.

I've heard that. Can they breed low THC hemp for paper and textile production?

118   DinOR   2006 Jun 15, 4:34am  

WW2,

I'd heard that hemp is really a miracle fiber. You can even make work boots out of it! In so far as it being addictive or contributing to the drug problem all I can say is I've heard if you try to smoke it all you'll get is a terrible headache. Given the quality of alternatives available I don't ever see this becoming a problem.

119   Jimbo   2006 Jun 15, 4:34am  

Most people don’t just go back and forth to work. They may have to drop off or pick up children at daycare, shop for their families etc. I’d have to say I’m in that camp. No one would like to see it work more than me, but we’ve tried.

I have not owned a car for ten years and even with a child, I don't miss it. I live 1/2 block from three bus lines, a produce store is a block away, a butcher two blocks and Safeways is three blocks away.

About twice a month the wife rents a car for three or four hours from City Carshare for about $25 and goes to Costco and Trader Joe's. Every once in a long while we will rent a car or truck to go to Home Depot or for longer trips. I take a cab about once a month.

I figure we save $5,000/yr, conservatively. Put aside $5,000/yr and it starts to add up to real money after a decade.

Sure, not everyone prefers to live the urban lifestyle, but it is a choice almost everyone can make if they choose.

120   Jimbo   2006 Jun 15, 4:39am  

ww2,

What is your insurance cost, if you don't mind me asking? $770/yr depreciation, plus 26*52=$1352/yr fuel costs plus. Your maintenance cost of $50 is unbelievable, I am sorry to say. Even changing your oil and tires costs more than that.

Time is worth a lot, no doubt about it. The main reason I live close in is for the short commute. But you can't even get to the toll booth plaza in 15 minutes from Alameda during the day. Do you work at night or something?

Please time your door to door commute tommorrow so we can get an idea of how much time it really takes.

121   edvard   2006 Jun 15, 4:41am  

Dinor,
Hemp has almost no medicinal quality. You would have to smoke 2 metric tons to get the same effect of a single joint. I highly doubt people would partake of it anymore than smoking dried banana peels.

122   Different Sean   2006 Jun 15, 4:43am  

I get to work in 15 minutes. It would take an hour or more by train. I save hundreds of hours a year at the very least.

there's a trade-off in convenience, but it can work both ways. you can read on the train, and the train will cut through peak hour without stress, whereas the road system wll be completely logjammed... and it requires all your concentration not to have an accident...

what about tolls?

anyhow, if you add up your insurance and rego and consumables like oil and tyres and repairs (and fuel)... it costs me 2 Gs a year just to register and insure the car...

123   edvard   2006 Jun 15, 4:46am  

Sean,
I leave early so I avoid traffic. When you carpool in California, you don't have to pay tolls. I get home at 4:30, thus plenty of time to do the things I like doing vs sitting on a train. I've never had an accident. My insurance is cheap.
Lastly? I like to drive. While it is cheaper for me to drive, even if it were the same or more, I'd probably still drive. We are allowed life's pleasures you know...

124   DinOR   2006 Jun 15, 4:49am  

WW2,

Only 2 metric tons? Light it up dude!

Absolutely, farmers here in Oregon have tried to get some sort of exemption for years! To no avail. You know it could even provide "some" kind of re-birth in a U.S based textile industry. Wouldn't that be strange?

125   Jimbo   2006 Jun 15, 4:50am  

ww2,

The Bay Bridge alone is 11 miles long. At 50 MPH that takes 13 minutes to traverse. Maybe you don't drive the speed limit, though :-)

If you enjoy driving, that is fine, just don't try to make the economic argument when it doesn't really make sense.

126   Peter P   2006 Jun 15, 4:53am  

If you enjoy driving, that is fine, just don’t try to make the economic argument when it doesn’t really make sense.

I hate driving. But I live in the South Bay and I have no choice.

Also, too many scary people in the transit system here. SJPD should start arresting them.

127   Different Sean   2006 Jun 15, 4:54am  

We are allowed life’s pleasures you know…

like smoking cuban cigars!

i virtually did my second degree in the bus going back and forth to work, i could get through a fair amount of reading. not that the degree got me anywhere...

i've had a couple of scrapes in the car, another guy just pulled into me from another lane for some reason while i was going past. i bumped a guy's towbar once when i wasn't watching. but the comprehensive insurance will always be about 1 G every year regardless.

128   Jimbo   2006 Jun 15, 4:55am  

It has been fun talking about transit, probably my number one hobby, but I have to get Ava to the doctor. The poor thing is getting her shots today and daddy has to get her there (on the bus and walking).

I will check back later to see if anyone has offered any serious criticism of my analysis.

129   DinOR   2006 Jun 15, 4:56am  

Jimbo,

No offense but if I want to get lectured by the "commute police" all I have to do is pick up the phone and get the same from any number of my Portland friends that pretend they don't own a car. Especially when they are walking downtown. Pedestrians have over run the city and now cross any where they please against the light with the light whatever. Don't get me started about cyclists. Everyone stuck in urban hell has to create some kind of rationalization as to why their sacrifices are saving the world. If you choose to live THAT close in God love ya' but it's when your crowd hogs all the resources for "bike paths" and walking trails that lead no where is when we have a problem. People in Portland are getting militant about their pedestrian rights and I've heard about enough. No offense.

130   Different Sean   2006 Jun 15, 4:58am  

this one looks interesting:

Snakes in Suits : When Psychopaths Go to Work

131   Jimbo   2006 Jun 15, 5:01am  

The IRS calculates 43.5 cents per mile Robert. That is not close to 23 cents per mile, is 89% more!

AAA says that it is 56.2 cents per mile!

http://www.csaa.com/global/articledetail/0%2C%2C1008010000%257c4512%2C00.html?zip=94131

Here is another set of figures from AAA, which have cost per mile ranging from 37.6/cents per mile to 72.6 cents/per mile. And we have not even started to get into the costs not borne by the driver.

http://www.pacebus.com/sub/vanpool/cost_of_driving.asp

At least be intellectual honest. And you still haven't given me a source, nor attempted to estimate the value of free parking that car drivers recieve.

There Ain't No Such Thing As A Free Lunch.

132   Different Sean   2006 Jun 15, 5:02am  

if I want to get lectured by the “commute police”

maybe they're right when they tell you you're wrong!
(aopologies to denis leary)

133   Jimbo   2006 Jun 15, 5:12am  

Asking someone to calculate the total cost of automobile usage is a "value judgement"?

Please tell me you are making a pun...

134   Different Sean   2006 Jun 15, 5:14am  

it's late... i'm off... (add 17 hours to the timestamp for my TZ)

135   DinOR   2006 Jun 15, 5:27am  

Jon,

Folks that feel that strongly about their position on a "world without autos" really needs to move to Portland. They will be in very good company with all sour grapes and coffee crowd that line 23rd. St. flipping off everyone that drives by. Sour grapes? B/c when their company moves, transfers or just plain folds they refuse to "join the madness" and get a car so they move down the food chain (emp. wise) vice up.

136   DinOR   2006 Jun 15, 5:32am  

Robert Cote'

Thank you. As you are fond of saying PDX is a lightning rod and we have all the failed models to prove it. I think the Post Office even bought a few "Segway's" for delivery. Hm? Funny, just don't see them around anymore!

137   Peter P   2006 Jun 15, 5:36am  

New thread: Bay Area inventory observations

138   HeadSet   2006 Jun 15, 7:15am  

DS says:

whereas FDR got nothing but a cursory ‘thanks’ for entering the war and saving england from the hun (altho he did die inconveniently)…

Uh, England saved itself from the Hun. Then a group of English speakers (American, Canadian, British) pushed the Hun out of France. Of course, this was greatly aided by the Red Army putting pressure on the Hun from the other end of Europe.

139   Jimbo   2006 Jun 15, 9:04am  

Well no one has really added anything of note to the transit discussion.

Ava was such a brave girl, only crying for about 30 seconds during her shots, until I could pick her up. I gave her Tylenol about an hour before, I think that helped. She cried for like two hours after her first set of shots, when her mom brought her.

I am not trying to claim transit is the cheaper solution in all cases: it might make more sense to travel by automobile in Portland, where land is cheaper, trips are shorter, and the population is spread out more. I really have no opinion on it, not having spent any time with the studies. I do know that it is considered some kind of labratory of New Urbanism, which is a movement I am mostly symapthetic with.

But it really irks me when people complain about all the "subsidisies" that transit users get and then refuse to even admit that automobile users get subsidized, too. It smacks of hypocrisy.

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