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Wells Fargo considers entering the option-ARM business


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2006 Jun 14, 7:56am   11,213 views  147 comments

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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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80   Jimbo   2006 Jun 15, 2:52am  

Robert,

If you want to debate the total cost spent on the automobile per user vs. transit users, please feel free to do so. I would prefer that you do it on the last thread, but we can have a multi-thread running debate on this if you prefer. I know this stuff, as it is one of my hobbies and I know a bunch of Urban Planners, including my wife. This is another case where the collected wisdom is simply wrong.

But you have to debate me with sourced facts and figures, not simply mudslinging. If you are just going to throw around insults, don't waste both of our times.

81   DinOR   2006 Jun 15, 2:53am  

Jon,

No actually that's a pretty good analogy b/c Wells can honestly say that they tried to "qualify" you for conv. fin. and you didn't fit that mold. So, rather than turn you over to THE wolves we turned you over to OUR wolves.

82   Different Sean   2006 Jun 15, 2:56am  

If you actually bother to research this, the Daimler-Benz factory in India actually has won several quality awards. I haven’t owned a car made there, so I can’t speak either from my first hand knowledge or your first class prejudice.

yeah, sorry, bad english humour, it's a running joke over there... you should have heard the trouble prince philip got into when he made a remark like that in a factory not very long ago...

interesting that all my stuff made in china seems to work just fine, plus the shanghai car plant quality, but astrid who spent her childhood in shanghai thinks that all chinese product is crap...

83   Peter P   2006 Jun 15, 3:00am  

never underestimate man’s need for status and esteem…

I do not care about status and esteem. Power is much better.

84   Different Sean   2006 Jun 15, 3:01am  

The owner of a Los Angeles car dealership is suing Mercedes-Benz; its $1.7 million car purchased in 2004 wouldn't run for more than 10 blocks without problems.

The car, a Mercedes-Benz AMG CLK-GTR Limited Edition Roadster, was supposed to be one of only five made. In the lawsuit, the owner of exotic car dealership Grand Prix Motors also alleges that six were actually made, reducing the value of his car.

well, there's the answer straight away -- cannibalise the 6th car for parts -- all problems solved at once...

85   Peter P   2006 Jun 15, 3:01am  

Some of these kids put several thousands of dollars in these things, basically all the money they made working their part-time jobs and whatnot. They learned a tough lesson.

A very good lesson nonetheless.

86   DinOR   2006 Jun 15, 3:02am  

skibum,

Thanks, it's a tired old phrase but it's worked (up unitl lately).

My local Doc. is looking into doing exactly that. If we pony up 5K each he could limit his practice to 100 patients and be able to net a decent amount but with a lot less headaches for him and more personalized attention for the patients. Personally I think it can work on a number of different income levels.

Gold Group 250 patients at 2k per year

Platinum Group 100 patients at 5K per year

Platinum PLUS Group 50 patients at 10K per year

and get back to practicing medicine?

87   Peter P   2006 Jun 15, 3:04am  

well, there’s the answer straight away — cannibalise the 6th car for parts — all problems solved at once…

LOL :lol:

88   skibum   2006 Jun 15, 3:04am  

RE: knighthood, the most repulsive recent example was Mick Jagger. Man, that guy's credibility has gone to zero. The so-called rebel of the 60's now accepts the ultimate token of establishment acknowledgement. As a comparison, David Bowie said no to the good Queen, as I understand.

89   DinOR   2006 Jun 15, 3:05am  

Oh I'm sorry! Is Platinum PLUS* already taken?

Well if that's the case whatever is above Platinum PLUS*

90   Peter P   2006 Jun 15, 3:06am  

Gold Group 250 patients at 2k per year

Platinum Group 100 patients at 5K per year

Platinum PLUS Group 50 patients at 10K per year

Make sense.

91   Peter P   2006 Jun 15, 3:07am  

RE: knighthood, the most repulsive recent example was Mick Jagger.

Can't you think of a better repulsive recent example? Mick Jagger is saint compared to _____ .

92   DinOR   2006 Jun 15, 3:10am  

Peter P,

I ain't goin' there.

93   Different Sean   2006 Jun 15, 3:11am  

keith richards wasn't too impressed with mick either... and anti-royalist comedians like adrian edmonson would never get an offer...

you'd think 'posh' david bowie would accept before mick, but they say mick has always been a secret climber...

i think you're more likely to get an offer if you have a big back-catalogue...

94   DinOR   2006 Jun 15, 3:12am  

I suppose after a fashion I've always considered Surfer X somewhat chivalrous and worthy of Knighthood.

Sir X Protector of Profanity?

95   Different Sean   2006 Jun 15, 3:17am  

The worst thing about it is that these guys go after stupid kids (college age or early 20s).

yeah, these are true ponzi schemes. the racehorse guy scammed a small number of well-off people who trusted him as a family friend moving in the same circles... their normal business sense was overridden by their personal trust...

the psychology of these things is amazing tho -- e.g. the real estate gurus and their $5000-$15000 courses -- they've perfected a spiel that they know will hook people every time -- they advertise about 'the secrets of the rich' etc and do a national roadshow and just keep reeling em in...

96   skibum   2006 Jun 15, 3:20am  

Sir X Protector of Profanity?

Sir Surfer-X, Duke of Profanity, Knight of the Order of patrick.net, Housing-Bull-Troll-Bane, Lord Protector of the BJR

97   Different Sean   2006 Jun 15, 3:22am  

I'll bet he know a lot of rhymes that start 'in days of old, when knights were bold...' at least

where is he, anyway? no point talking about him if he's not around...

98   DinOR   2006 Jun 15, 3:26am  

DS,

If Arthurian Scholars can still have heated debates after 700 years who are we as (mere mortals) to question Sir X's authority while he lives and breathes! There are spys all about us, I'd watch it if I were you mate.

99   Peter P   2006 Jun 15, 3:27am  

POVs 28 cents per passenger mile. Transit 73 cents.
Autos 3549 BTU/pass mi. Transit 3831.

I rather travel fewer miles. Auto or transit.

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.

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