As suspected here last week, long-term rates have stabilized: the all-powerful 10-year T-note in a broad range below 5.20%, mortgages 6.75-6.875%.
Everyone assumes the 10-year will make a run through 5.25%, and mortgages to 7.00%, but I don’t think we will stay that high unless there is worse news on inflation, or the global economy runs away from the central banks.
In the last week, the mortgage market has been glued to the demise of two Bear Stearns mortgage investment “hedge” funds. Their rise and demise tells the whole crazy-mortgage-credit story, abounds in black humor, and presages the untidy conclusion of an interval of excessive leverage in all markets.
The funds were created only 10 months ago, the larger fund named in ultimate hubris, High Grade Structured Credit Strategies Enhanced Leverage Fund. Bear raised $1.5 billion in capital, mostly from institutions, and then its geniuses borrowed to establish about $30 billion in mortgage derivative positions (short and long, some offsetting, about one-third of the position in tranches of CDOs made up of tranches of other CDOs, black boxes within black boxes.). The lenders were the usual suspects, clones of Bear: Merrill, Morgan-Chase, Barclays, Goldman, Deutschebank, Citi, and BofA, some with better security than others.
By May, Bear had lost the capital, and to meet margin calls sold the high-quality assets, then forbade investors to withdraw, and by last week faced a creditor mob threatening to seize the remaining derivatives and liquidate the two funds altogether.
Then it got worse. After much huffing, the creditors realized that a fire sale was not such a hot idea, because they all have clients invested in the same stuff that Bear has, and gazillions more in loans out to each other secured by that same stuff. If Bear’s trash sold for thirty cents on the buck, then that would be the value of their trash and the collateral securing their other loans. On Monday Bear’s lenders were talking about injecting their own money into the funds to prop them up, and all week long lurched back and forth between a collateral scramble and a negotiated workout.
In some ways, a routine end to a bad idea. But... look again.
In the 2000-2006 Wall-Street-pushed extension of mortgage credit on suicidal terms, I had assumed normal Wall Street operations: if you’ve got a client desperate for yield and self-deceptive about risk, sell ‘em what they want, and caveat emptor. The SEC protects widows and orphans; institutions are on their own. You may not cheat other institutions, but you have no duty whatever to save them from themselves.
The stunning thing in this Bear fiasco: these are the insiders in the suicidal mortgage credit game, Bear and all its lenders. These are the guys who offered to buy mortgage trash from Main Street in any quantity, designed bizarre structures to satisfy their co-dependent credit rating agencies, and sold them to feed the insatiable global demand for yield. Insiders entered the market for mortgage trash in the fall of 2006 when several million civilians knew that you might as well juggle nitroglycerine.
It never occurred to me that the insiders didn’t know what they were doing. So drunk on money and power that they didn’t know their incompetence.
As of this morning, rumor has Bear offering a self-rescue injection of $3.2 billion (double the initial capital), theoretically for pride. I believe that there is more going on. It is a serious accusation, but the Street has for months appeared to be in a conspiracy of silence, working to conceal the real value of $1.5 trillion in bad mortgage ideas created ’04-’06, abetted by the glacial pace at S&P and Moody’s to acknowledge their massive rating error. The Fed is just as silent, which may preserve calm for a time, but transparency is the only antidote to episodes like this one.
Consequences for “A” mortgage paper are likely to be beneficial, as frightened money moves to quality, but credit standards will be tight. The Bear adventure could catalyze a leverage meltdown in other markets, likewise beneficial to quality loans.
Friday, June 22, 2007
Thursday, June 21, 2007
Credentialing Required of Landlord Businesses Wanting Credit Reports
We are informing landlords and property managers about changes coming from all three of the major credit bureaus requiring the credentialing of businesses wanting credit reports. This process is quite lengthy, costly, and frequently denies small home-based businesses [such as “mom and pop” landlords] access to credit reports.
Because of increasing difficulties nationwide resulting from fraud, identity theft, risk of casual disclosure or access, and overall mishandling of credit reports, the credit bureaus are adding more rules and regulations for accessing credit files. The new regulations affect the entire tenant screening industry. All tenant screening companies will be requiring an on-site inspection prior to granting access to credit reports.
On-site inspections will be required annually for landlords conducting business from their residences. More stringent documentation may also be required of such landlords. The annual on-site inspection is conducted to verify separation of office space from living quarters; as well as separation of office equipment such as a fax machine, telephones, computers, locked filing cabinets, etc. This separation is required to ensure that landlords are NOT working from their kitchen tables where they may accidentally leave a credit report laying around where it can be casually viewed. The onsite inspection fee must be paid in full before the inspection can be ordered.
Landlords will be able to obtain credit reports only if they successfully pass an on-site inspection by an authorized representative of the credit bureau. The authorized representative of the credit bureau will take pictures of your home and/or office, your workspace, and will ask you several required questions, such as your Tax ID and/or business license, etc., at an average cost of $100 (the actual cost may be more or less depending on the credit bureau).
To assist landlords, especially those conducting business from their residences, many tenant credit reporting agencies are now providing landlords with recommendations for “approval”, “approval with conditions” or “denial” instead of providing a detailed credit report. This way, landlords can obtain recommendations over the Internet almost instantly without sacrificing the security of a prospective tenant’s credit report.
We want to inform you that there are other alternatives available which will provide adequate background and financial information upon which a landlord of any size can base his/her rental decisions. A credit report is no longer the primary document needed to make a wise rental decision. IntelliCorp can have everyone validated for their other products within a matter of 1 to 2 days with as little as a rental agreement as proof of a landlord’s business. And, they can do it for much lower costs.
Here’s what’s happening:
All three major credit bureaus are now requiring a thorough credentialing of businesses wanting to obtain credit reports. In this new credentialing process, small home-based businesses [such as “mom and pop” landlords] are often denied access to credit reports. Because a lot of our members and visitors fall into this category, IntelliCorp has been unable to provide this service to as many people as they would like.
Some relief has recently been granted by TransUnion, but they still require an on-site inspection of the landlord’s business.
Here are the newest requirements set forth by Trans Union:
An End User [the landlord] operating from a home office may be approved [for access to credit reports] only if each of the following conditions are met:
1. The on-site inspection must confirm physical separation of the business from the living quarters.
2. The End User [the landlord] is listed in either the appropriate category of a reputable public business telephone directory (e.g., Yellow Pages, yellowpages.com, 411.com) or a national or state trade association or a current copy of the End User’s telephone bill reflects the same company name and address as the End User’s application for membership and the bill reflects commercial rate charges.
3. The End User [the landlord] must still show proof of a business (e.g., business license, vendors license, IRS tax ID) in order to have access to credit reports.
The process to obtain a credit report can take up to 2 weeks. This is because of the added paperwork, calling of bank and trade references, and finally completion of the on-site inspection (which costs $60.00 or more). This in depth process is mandated by TransUnion and is something IntelliCorp had to implement to offer credit reports to any client.
Once a client/business [landlord] has jumped through all these hoops and passed successfully, the client [landlord] will be permitted to obtain credit reports and can run as many as needed without having to fill out any additional paperwork.
Remember, there are faster, far less expensive alternatives to this cumbersome credentialing process. IntelliCorp has the ability to provide a landlord of any size with sufficient background and financial data upon which s/he can base their rental decisions without the need for a credit report.
If you have any questions or want to purchase one of our discounted bundled packages, please contact Michael Moats at 1-800-539-3717 ext. 148. Please use promo code "LLA1" to receive the discounts shown below.
Bundled Package #1 - Comprehensive Package $21.95
(after passing the credentialing process)
(available to any landlord with a rental agreement as proof of their business)
Because of increasing difficulties nationwide resulting from fraud, identity theft, risk of casual disclosure or access, and overall mishandling of credit reports, the credit bureaus are adding more rules and regulations for accessing credit files. The new regulations affect the entire tenant screening industry. All tenant screening companies will be requiring an on-site inspection prior to granting access to credit reports.
On-site inspections will be required annually for landlords conducting business from their residences. More stringent documentation may also be required of such landlords. The annual on-site inspection is conducted to verify separation of office space from living quarters; as well as separation of office equipment such as a fax machine, telephones, computers, locked filing cabinets, etc. This separation is required to ensure that landlords are NOT working from their kitchen tables where they may accidentally leave a credit report laying around where it can be casually viewed. The onsite inspection fee must be paid in full before the inspection can be ordered.
Landlords will be able to obtain credit reports only if they successfully pass an on-site inspection by an authorized representative of the credit bureau. The authorized representative of the credit bureau will take pictures of your home and/or office, your workspace, and will ask you several required questions, such as your Tax ID and/or business license, etc., at an average cost of $100 (the actual cost may be more or less depending on the credit bureau).
To assist landlords, especially those conducting business from their residences, many tenant credit reporting agencies are now providing landlords with recommendations for “approval”, “approval with conditions” or “denial” instead of providing a detailed credit report. This way, landlords can obtain recommendations over the Internet almost instantly without sacrificing the security of a prospective tenant’s credit report.
We want to inform you that there are other alternatives available which will provide adequate background and financial information upon which a landlord of any size can base his/her rental decisions. A credit report is no longer the primary document needed to make a wise rental decision. IntelliCorp can have everyone validated for their other products within a matter of 1 to 2 days with as little as a rental agreement as proof of a landlord’s business. And, they can do it for much lower costs.
Here’s what’s happening:
All three major credit bureaus are now requiring a thorough credentialing of businesses wanting to obtain credit reports. In this new credentialing process, small home-based businesses [such as “mom and pop” landlords] are often denied access to credit reports. Because a lot of our members and visitors fall into this category, IntelliCorp has been unable to provide this service to as many people as they would like.
Some relief has recently been granted by TransUnion, but they still require an on-site inspection of the landlord’s business.
Here are the newest requirements set forth by Trans Union:
An End User [the landlord] operating from a home office may be approved [for access to credit reports] only if each of the following conditions are met:
1. The on-site inspection must confirm physical separation of the business from the living quarters.
2. The End User [the landlord] is listed in either the appropriate category of a reputable public business telephone directory (e.g., Yellow Pages, yellowpages.com, 411.com) or a national or state trade association or a current copy of the End User’s telephone bill reflects the same company name and address as the End User’s application for membership and the bill reflects commercial rate charges.
3. The End User [the landlord] must still show proof of a business (e.g., business license, vendors license, IRS tax ID) in order to have access to credit reports.
The process to obtain a credit report can take up to 2 weeks. This is because of the added paperwork, calling of bank and trade references, and finally completion of the on-site inspection (which costs $60.00 or more). This in depth process is mandated by TransUnion and is something IntelliCorp had to implement to offer credit reports to any client.
Once a client/business [landlord] has jumped through all these hoops and passed successfully, the client [landlord] will be permitted to obtain credit reports and can run as many as needed without having to fill out any additional paperwork.
Remember, there are faster, far less expensive alternatives to this cumbersome credentialing process. IntelliCorp has the ability to provide a landlord of any size with sufficient background and financial data upon which s/he can base their rental decisions without the need for a credit report.
If you have any questions or want to purchase one of our discounted bundled packages, please contact Michael Moats at 1-800-539-3717 ext. 148. Please use promo code "LLA1" to receive the discounts shown below.
Bundled Package #1 - Comprehensive Package $21.95
(after passing the credentialing process)
- Criminal SuperSearchOne (1) Single County Search
- Sex Offender Registry (all 50 states)
- Social Security Verification with Address History
- OFAC (Terrorist Database) Search
- One (1) state Eviction Search
- Credit Report from TransUnion
(available to any landlord with a rental agreement as proof of their business)
- Sex Offender Registry (All 50 States)
- Social Security Verification with Address History
- OFAC (Terrorist Database) Search
- One (1) State Eviction Search
- Bankruptcies, Liens and Judgments Search
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Our primary objective is to provide as many of the services and resources as we can at your fingertips that can help the landlord, real estate investor, property owner, or property manager make or save thousands of dollars each year. Landlord Association.Org provides everyone the information and services they need or want to become a success. Check out our Site Map for a full listing of what we have to offer you.
Feel free to Contact Us if you have any questions.
Check out our services:
| Home | About Us | Free Services | Member Services | Landlord Tenant Laws | Insurance for Landlords | Online Newsletter | Money Source | Affiliates | Links | Exchange Links | AddWeb Link Trader | Books & Reference | Buy Our Dictionary | Contact Us | Become A Member | Site Map |
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