Some design related stuff for you; a 1956 Modern in Houston

Here are a few pictures of some inspired modern interior design for you to drool over as I have already:
I thoroughly dig the framed old brick wall. It's like a window to the history of the home.

Link is here.
There are some real nice photos of living room interiors there.





One other one:
This is a more truly contemporary living room. I really like the treatment of the fireplace wall area, as you knew I would. These specific walls in homes can become such horrible disasters, and this one has been well done.

Link is here.




Also on a separate but related note - I wish I lived in Houston, or could wiggle my nose and make this house appear in Salt Lake:












It's been listed a few times, and has also changed realtor hands once or twice. Asking price is in the low to mid $400K range. Here, that house would be almost twice that. More pictures here.

Interesting story about the architect there also. Worth a short read.

What builders are doing to the market:

From The Bakersfield Californian:

Deeply discounted new homes go on sale Saturday in two northeast Bakersfield communities, an event that has inspired stakeout tactics in some would-be homeowners and a measure of concern among those who paid full price to live in the neighborhoods.

D.R. Horton Inc. is selling homes at up to a 50 percent discount in 23 Southern California developments starting this weekend. One home plan, formerly listed for $380,000, has been reduced 48 percent to $199,990, according to a company sales flier.

Industry observers said the sale is a drastic measure, and a sign of the impact large national builders have had on the local homebuilding market. ‘They do things that we’ve never seen before,’ custom homebuilder Phil Gaskill said of his national competitors. ‘They overproduce homes when the market’s hot. And then when it’s not, they slash prices to move (inventory).’”

Jon Hess is betting on securing one of those bargains. He set up camp in front of the Contessa’s Vineyard II sales office Sunday, and was still in line Friday afternoon.

‘I think it’s a good value,’ Hess said of the model home he had in mind. Still, he was realistic about what this kind of sale might say about the health of the real estate market. ‘Who knows?’ Hess said. ‘Maybe by this time a year from now it’s going to be worth half of what I paid for it.’

At least one Lavender Trails homeowner, Billy Abney was worried Friday that the sale might further depress the value of his home, which he estimates has fallen $60,000 to $70,000 since he bought in the summer of 2006.

The 2,600-square-foot home plan he bought for $371,000 is being offered for sale at $230,000 this weekend.

Mr. Abney, your home is worth $140,000 less than when you bought it a year ago, not $60,000 or $70,000.

This is a tactic used by large home builders, especially the publicly traded ones, and is probably the thing to be most cautious about when buying a home from them. This week it's this price, but if the sales office doesn't sell everything in a timely manner, look out for the discounts. Think about it - if you could buy a brand new home for $50K less, right across the street from where a guy is selling that exact same floor plan, lived in, for which he paid $50K more, which one are you going to buy, and what is the "new appraised value" for BOTH homes. It's the lower amount. If the guy who has lived there for a year bought with little or no money down, he likely now owes more than what it will appraise for. This effectively kills the neighborhood, and will cause an upward spike in foreclosures, not abate them, as the builder will tell you.

If you owe more than it's going to appraise for, you can't sell or refinance without having to come out of pocket for the difference. Not cool.

Back to some Architecture: Palmer/Krisel Butterfly Houses

NOTE: FOR MORE ARCHITECTURE STYLE ARTICLES ON THIS BLOG, CLICK HERE.

William Krisel came onto the Mid Century Modern scene as an architect fairly late in the game. guys like Rudolph Schindler and Richard Neutra were garnering a lot of the attention in the 50's, when Bill Krisel came to Palm Springs as a recent USC grad.

Krisel retired as a practicing architect 20 years ago. But he notes that he was "just a bit surprised" to be asked again recently to create plans for the little butterfly-roofed, post-and-beam structure that became a kind of signature Palm Springs residence half a century ago. In fact, if a developer follows through, a whole new colony of reproduction Krisels could rise in the desert. See Here.

Working with the Alexander Construction company in the 1950s, Krisel saw 2,500 of his tract houses built in Palm Springs, nearly doubling the size of that city. Whole neighborhoods of his original homes still exist, as if in a time warp.

Wide, curving streets front gardens behind which Krisel carefully angled the houses in varying positions on their 100-foot-square lots. He alternated styles of roofs, so that each house looked different from its neighbor. A casual observer still might take these streets for charming communities of custom-built homes, but all were mass-produced and have the same floor plans, Krisel says.

He helped to break the mold for affordable housing not only in Palm Springs, but also in the west San Fernando Valley in the 1950s.

"Before that, affordable tract houses were tacky, low-ceiling cracker boxes with holes poked out for windows," he says.

Over the years, his legacy seems to be the butterfly roof, an engaging and revolutionary design for the time, where the roof line is inverted to be lower in the middle, rather than higher. This does a couple of things. From an exterior standpoint, this look was very different from what had been the norm up til then: either flat toppers, or the more traditional peaked-middle roof. For newer times, the design lends itself well to water collection and conservation, as the water from the entire roof can be collected via one spout, and then used for irrigation, or other gray-water recycling as that becomes more popular and affordable. From an interior standpoint, the roof line lends itself to more dramatic interior spaces in the center of the house, and more possibilities for light at the outer edges of the floor plan, where bedrooms were typically located.

The construction technique for this type of roof lends itself well to hollowed out, open floor spaces in the public areas of the home. And that is a concept that was revolutionary at the time, and still very sought after now. Designing for southern California, Krisel was able to blend outdoor and indoor spaces, letting the open floor plan of the public spaces flow out to courtyards, gardens and pools.

With updated construction materials and techniques, the butterfly roof is a practical and easy way to differentiate a home design. And even here in the Mountain West, home buyers name the blending of outdoor and indoor spaces as being very important in their decision to buy a home. Done correctly, they don't leak, and as I mentioned, water collection is very easy, as people begin to turn to more "green" building designs and methods for their homes.

As a design concept, Alexander Construction wasn't sure of the appeal, and only gave Krisel a few lots to build his homes on, as a test. Obviously, his designs were readily accepted, and he went on to be an iconic figure in modern architecture, though not with the name cachet of the Schindlers and the Neutras.

What Bill Krisel did was bring modernism to the masses. Before him, only the wealthy could build modern homes, commissioning well-known architects and the costly materials they used. Krisel packed excellent architecture into houses of modest size, made of modest materials, and he did it on a very thin dime.

Not only were his test houses accepted, but they sold faster, and made more profit for the construction company. They sold for $20,000 then, and today, you can buy one of the originals in Palm Springs for about $900,000 on a 100 x 100 suburban lot. Or you can buy plans and have one built, with 21st century amenities. From an appraised value standpoint, comparing apples to apples, that new-construction home would also cost you about the same - $900,000 to $950,000.

Here in Utah, you could build this style of home, even using original plans purchased from Krisel, for a lot less. Of course, one of the complaints about houses from the 50's, and consequently, of house designs from the 50's, is the lack of storage space. With a new-construction project, this would be easy to alleviate.

I like the Butterfly Houses. Wanna build one? I know somebody who could help you do that....

Just sayin....

More Pictures: San Lorenzo Rd, Palm Springs .

And speaking of photos

An update over at UtahModernHomes.com now shows a cache of photos used as inspiration for the project. They are separated into exterior and interior shots.

Also, later this week there will be a new article from the NY Times on the appeal of modern architecture and it's value in reference to actual home value (appraised value) in the marketplace. It reinforces the idea that value is gained and maintained in more appreciable ways than simply the presence of square footage. If that square footage isn't useful, then it's ... well... not useful, and therefore, what use is it??

Just sayin.

Jingle Mail

Apparently, this is the new catch phrase among mortgage lenders. It refers to what is starting to happen with home-owners who are now simply mailing the keys to the house to the mortgage company along with a note, saying, essentially,

"Hey, remember that note you sent asking me about my last payment? Well, you actually DID receive my LAST payment, 2 months ago. And here's the keys, too. Bye."

Funny, but not really.

New Item at UtahModernHomes.com

I've posted a new article and a new page over at the UtahModernHomes.com site

Go take a look, we're starting to get some traction with this project, and are starting to get pretty excited about getting it up off the ground.

Thanks for listening to the cross-promotion.

Whew!! THAT was fun...

Wow... the Christmas holiday was a good one for us, nicer than other recent times. I always like giving presents more than getting them, and it was a good year for that. It was nice to actually surprise kids for a change. The Wii was a hit, and a total surprise. It was a surprise because all the kids, and ThatOneWife as well, know how I generally LOATHE the gaming consoles and the gaming industry in general. If you have been a reader for a while, you'll remember how genuinely Piss-ed off I was when Mrs. ThatOneGuy brought it home this summer. And how I was pissed off at my brother for having talked her into it while I wasn't there. The Big Wanker.

I was side-swiped by my absence. Oh well. Frankly we could package up all the other consoles (of which we have a few) and send them to Outer Mongolia for the poor kids, and just stay with the Wii. I don't think that's going to happen any time soon. You have to pick your battles.

Anyway, it was a good surprise. We'll see if it was at my expense, and the expense of my sanity. But if it's at the expense of school grades or normal social interaction, that's not going to stand. So my view is that it is there to lose.

Anyway, I was also able to generally surprise the Mrs. too. Although one gift was spoiled by an overly verbal and informative youngster who lives at our house.

But all in all, there were some surprises for everyone.

And in a fit of succumbing to the thought that my credit cards hadn't yet had their complete workout, I went and bought myself some skis on Christmas eve. This is something I had talked about for the last few years, and had never done anything about. I skied on the ski team when I was in high school, and I kept skiing for some years afterward, but being a somewhat expensive sport, kids and other career pressures always came first and it had been several years since I had skied. The last skis I bought were 210 centimeters long and were not the newer "shaped" skis - so that should tell you something about how long ago that was.

With one daughter into snowboarding, begging me to take her over the last three years or so, I finally decided to get going with it again. She has had some trouble with her mom this year, and was reaching out for some acceptance and somebody to give a damn about her for a change. Which is hard because she tends to bring some things upon herself in that regard. But it's hard to sit by and watch it happen without making a concerted effort to at least do something to let her know she is cool and swell, and has value in our family.

Then there are two others who have been wanting to give it a try, and it was a good opportunity to let That One Daughter be the cool older sister and do some teaching and mentoring, etc.

So we piled in the car last night and headed up the hill to Snowbird. My skis weren't mounted and ready for me, but the other kids weren't going to wait, so we all went up and had a good time. She was the consummate older sister and was a total trooper with the younger ones just learning. When you learn to snowboard, you spend a fair amount of time on your arse in the snow - it's pretty easy to get disheartened with the whole thing. But she was right there with a hand up, and the right encouragement when it counted and made the younger ones feel like they did a great job. Which they did.

My skis will be done today, and I look forward to getting up there with them all again soon so I can show them that people who ski rather than snowboard are cool folks too, and not a bunch of old fuddy-duddies. I guess that impression remains to be earned.

On another note, I had several people who read here send me an email wishing us all a good holiday, and a few others did so through direct comments to posts as well. I thank each of you, and send back the same wishes to you all.

And finally, I mentioned last week that I was preparing an update for the UtahModernHomes.com site. Obviously, if you're a susbscriber there, you know that hasn't wuite happened yet. However, it is coming, in the form of a short piece called "Edifice Complex", which will look at our obsession with oversized homes, as if that's the only factor used to provide the impression of value. Bigger is better. Except not really.

Busy Times

So, I've been letting this place slide a little in an effort to concentrate on some work things getting done on time. One of the issues I have with this time of year is that everything gets more difficult, with people wanting their stuff done before the end of the year, there is also more time pressure on my personal life, with concerts, gift-buying, getting other gifts into the mail, planning a little fete between Christmas and New Years, etc. And then there's the inevitable head cold that shows up. Great.

All this does nothing very good to my general grinchiness for this time of year, either.

In general, it gets to the point where it paralyzes me for a while, and it's hard to care about many of those things...

But that's okay, I'm coming out of it now, and things are looking up. I have more energy, physically and emotionally. Which is why I am back here now.

So, on to some other things then. The Lehi/Frank Gehry project got a big spread in the weekend paper here again this week. Which brings me around to this. It's a little announcement for our own modern home project in the Salt Lake Valley. It's a soft launch right now, but as I get a couple of other things done shortly, I'll make it a much bigger deal. For now, it's a web site - and from there it will spring-board to a bigger presence in this town.

There are more things going on, and I'll post more design-related stuff tomorrow, along with a very good "On My Hard Drive" thing as well...

Until then, then.

Michael Jackson Neverland Ranch Appears in Foreclosure Report

This has been reportedly in process for some time. But its actual appearance on the report makes it pretty concrete...

All you need to bring it out of Foreclosure is the $22,000,000 to cure the default.

Liz Taylor - here's looking at you.






click it to big it.

Why Mortgage Lenders Didn't Care About a Borrower's Ability to Pay

"With defaults at record levels, people have begun to question why underwriting standards became so lax during the housing boom. The answer is relatively simple: mortgage lenders were looking at the bottom line, not the borrower."


original article

Won't you take me to... FUNKYTOWN... I mean, Levittown...

So there was a short period of time last night between getting home and food hitting the table, and in that lag time, I was mindlessly watching a crap sitcom I NEVER watch. Watching it reminded me why it's not in my TIVO season pass list.... but that's another story for another day.

Anyway, during the ubiquitous scene in the bar where the characters talk smack to each other and try to be funny, one of them was wearing a T-Shirt. It said "Welcome to Levittown."

I would not have thought twice about this, or even knew what the reference was, except for one thing. Yesterday was the 60th anniversary of the first family to move into Levittown. And it's significant.

Well, it's marginally interesting anyway.

Okay, it's only interesting in light of the fact that in addition to this anniversary, yesterday was also the blessed day upon which the first baby-boomer applied for her Social Security benefits.

So back to Levittown, and why it's interesting.

Its hard to imagine that the US suburb has only existed for such a short amount of time, yet it has so drastically changed the way we think, act, and interact with one another. Thanks Mr. Levit, and Levittown, for inventing the middle class ghetto.

For those of you unfamiliar with Levittown’s history - it's the first planned suburb. To be clear, it was far from being the ‘first suburb’, as people seem to be fond of saying, but was instead the first to be planned in the manner that has become the American standard for suburban living. Namely, a crap-load (that's a technical architecture term - I swear) of houses that look alike, are cheaply built, allow for maximum visibility of the family (American made) car, and provide a rectangle of grass to be watered and mowed (or you’ll be ridiculed by the neighbors, and your invite to the block party will get ‘lost’).

Long story short, Levit bought some old potato farms on Long Island, turned developer, and constructed something like 2,000 cookie-cutter low-cost homes. Each had a yard and all that, and they were lined up on winding streets that were meant to be reminiscent of (one would assume) the ‘natural’ suburbs that were inaccessible to so much of the population (I call them ‘natural’ suburbs for lack of a better word - but I’m referring to those that were unplanned).

The houses were then placed on the market, and sold at fairly low costs - The Cape Cods that first became available in 1947 — with four rooms, one bathroom and among other modern amenities, white enameled metal cabinets, a Hotpoint electric range in every kitchen — were offered for $6,990, and 800-square-foot ranch homes went for $7,990 - especially compared to the traditional suburb, in particular to veterans (WWII and Korean?) and their families - basically creating the image of the ‘American Dream’, in terms of quality of living (house with a garage, family car, a $65 monthly mortgage payment, 2.5 children, etc, etc).

And so now Levittown is 60 years old - October 2007 marks 60 years since the first residents moved in - and things have changed. Now there are Levittowns all over the country - not in name, but definitely in appearance. But what’s become of the original? Well it’s apparently gone through the changes one would expect, becoming home to McMansions (and wannabees) created by people expanding and adding to the existing original homes until they were unrecognizable.

This has brought up a discussion in the original Levittown about whether or not the last remaining ‘original’ homes should remain preserved - but I would like to propose a better question: was Levittown successful? Is it worth preserving?

In the US we’re obsessed with creating history, as ours is a young country and an even younger culture - but should we really cling to ‘American’ things just because they’re of this country, regardless of their actual merit?

While this is obviously a broad question, I believe it applies particularly to architecture and the U.S.’s acceptance of architectural mediocrity as tradition. Is the suburb still relevant? Is it still a legitimate way to plan communities? Is it good?

Just wondering.

As an aside, it is noted that Billy Joel grew up in this development, as did Bill O'Reilly...

Small(ish) world

The US Mortgage Crunch that turned into a US Capital Market crunch that turned into the Worldwide Credit crunch serves to bring lots of things to light.

The British Bank, Northern Rock, holding lots of US Mortgage-backed securities, and a large British residential lender, has struggled like more than 150 other US lenders and banks. Smelling blood in the water, Cerberus (a group I have written about here on several occasions), and a similar company named JC Flowers, run by former Goldman Sachs exec Chris Flowers, have stepped up their bid for taking over the bank.

They intend to leave the bank open and running, leaving a "strong British presence" on the bank's board.

They believe the current credit crunch will be temporary. And when that is the case, those with ability and capital can pick through the trash to find the gems. As mentioned earlier here, Cerberus owns several lenders here in the US, as well as their recent acquisition of Ford Motor Co.

Flowers, along with two US banks, has a $50 per share bid in to buy Sallie Mae, the US Government sponsored student loan co. Their bid WAS $60 per share, but they lowered that to $50 earlier this week, stating a lack of fundamental performance on the part of the company, and general market conditions.

The Canadian luxury home market goes from hot to hotter

Canadian luxury home activity gives new meaning to global warming – this part of the world is enjoying a hot upper tier market.

The first seven months of this year have seen Canadian luxury home market sales jump in major markets from Victoria to Toronto. “The consumer appetite for luxury property has been insatiable,” says Michael Polzler, Executive Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada.

“Unabated demand throughout the year has created tight market conditions in a number of blue chip neighborhoods. Limited availability of product has, in turn, placed mounting upward pressure on housing values. As a result, the million dollar home no longer holds the same cachet it once did and in larger markets such as Vancouver, Calgary, and Toronto, it’s simply a starting price.”

The table below reflects the strength of the upper tier housing market in six major Canadian cities.

Popular Local Sports Broadcaster Caught in Mortgage Fraud Scheme

Or something like that.

Channel 2 news (CBS) here in SLC reported last night that their sports reporter Dave Fox had entered a Plea in Abeyance in a mortgage fraud scheme that supposedly had him falsifying documents and statements related to the over-inflation of a home in the hoity-toity-and-at-the-same-time-very-mealy neighborhood called the River Bottoms in the Provo area.

Fox's plea is essentially a guilty plea without admitting guilt. His lawyer paints him as the victim, and the court has agreed to dismiss the charges (Failure To Occupy/Communications Fraud were the official charges - as it is in most mortgage fraud schemes) in return for Fox's testimony against the several other participants.

Fox wasn't on the news broadcast last night. I wonder how long, if ever, it will take for KUTV to put him back on the air.

Court documents help tell the story, which goes far beyond Fox. The documents show that Fox and Atkin intentionally, knowingly or recklessly devised a scheme to defraud another. Court documents show the two men falsified home loan documents to make money on a quick resale. Joe Christensen, director of the State Insurance Fraud Division, said, "This is the first level of a multi-level investment that involves millions of dollars and fraud and more than a dozen people."

Investigators say it's a big case involving at least a dozen people who allegedly conspired to inflate the value of real estate they bought, sold and borrowed money on.

What's even more interesting to me are the comments that accompany the news story as posted over at rival station (and LDS Church-owned) KSL (NBC).

read the story and check the comments

And coming shortly to this spot: a post about "chair porn" and a post on Jaco Pastorius, bass player who changed the face of modern jazz forever, who died 20 years ago last Friday. Sadly.

The FED lowered rates, why didn't my mortgage payment go down?

So, the FED lowered two rates yesterday, and the S&P 500 index is up about 3.5% over the two days... so this is a good thing right?

Ask yourself this question - "what does that mean to me?"

If you answered with some form of "now the rate on my variable-rate mortgage will go down...", you should realize that your variable rate mortgage is tied to an INDEX, not the FED rate. more than 90% of variable rate loans are tied to the LIBOR, which is short for London Interbank Offered Rate.

As the LIBOR goes, so goes the rate on your mortgage.

Have you been watching the news on the LIBOR lately? I didn't think so.

Here's a snap-shot:

The British Bankers' Association said the overnight LIBOR -- the interest rate banks charge each other -- remained steady at 6.47% on Monday. The rate, however, remained significantly higher than the 5.87% rate seen on Thursday and Friday. Three-month and twelve-month LIBOR rates set fractionally lower than on Monday, the association said.

From 5.87% to 6.47% is more than a half-point move in the WRONG direction. Overnight. The London folks were sitting on the sidelines watching the Great American Credit Fiasco, thanking their lucky stars that they hadn't been sucked into it, then they realized they HAD been sucked into it when it was noted how many British and European institutional lenders and banking organizations were SHAREHOLDERS in the very same American funds that were now showing themselves to be nothing more than junk bonds.

When they discovered that, the LIBOR went from 5.87% to 6.47%.

And if you have a one-month LIBOR loan (the rate is calculated every month), your rate moved .6%. Overnight.

I bet that was fun.

And in the category of "It's not the rate, it's the program", here's something else...

The FED lowers the rate to try to bring some capital back into the markets, which, if you have been watching the markets in the last two days, you know it HAS, but here's The Thing:

No institutional bank/buyer (who has money available) is going to put its money back into the bond market until the big lenders can prove that they are making responsible loans that will perform and not end up in foreclosure. It's that simple. And as long as those institutions AREN'T buying loans in the secondary market, the lender who made the loan has to keep it, tying up money that could be freed up and loaned out again. This KILLS any lender that isn't THE MOST CONSERVATIVE LENDER ON THE PLANET.

For example, yesterday, Countrywide said they are OUT of any kind of loan business that is not Super Prime, in an effort to convince the market that they are making responsible loans now, please buy them. This is the same Countrywide who, in the last three weeks has borrowed more than 20 BILLION dollars in an effort to stay afloat and make loans.

Until the banks begin to trust lenders again, it doesn't matter what the rates are.

Compared to 12 months ago, there are about 25% of the loan programs available now that were available then. Some may say that's a good thing - we'll see how many lenders exit the business. I can tell you that banking industry layoffs are putting a drag on the economy. Couple that with looming foreclosures, BKs, which will surely follow, and we might be looking at a perfect storm.

My advice for people in the markets: I hope you were holding significant gold futures. Seriously.

Obama Got it Wrong

On Monday morning, presidential candidate Barack Obama published an editorial calling on lawmakers to corral the "predatory mortgage brokers" who got all these people into trouble by closing bad loans for them."

If you ask most people, they will tell the same general story.

Here's one or two bullet-point things people (including Obama) need to understand before they start using their platform to spread fear:

Mortgage brokers are solicited by lenders. Lenders create and publish loan programs, and employ sales executives to go out and sell those programs to brokers. That's not to say all brokers are blameless, though.

Part of the process lenders use in establishing loan programs, and loan interest rates, is the potential appetite for closed loan files using a particular program. That means the lender (with the exception of a VERY few) intends to sell the loans in a pool of similar loan profiles. This is called "sale into the capital markets". The loans are then packaged into VERY large securities instruments, called MBS's, or "Mortgage Backed Securities", and shares in them are traded every day on Wall Street's bond market. The ups and downs of the bond market are what determine the prevailing interest rates on a day to day basis.

Mortgage brokers are the low man on the totem pole. Loans are never closed in the name of the broker (as the lender), but rather, the loan documents show the LENDER as the mortgagee. It was their loan program, they underwrote the file, collected specific items from the borrower, evaluated the collateral, and agreed finally to lend the money to the borrower.

Further, in MOST cases, the borrower signed a veritable RAFT of paperwork outlining every jot and tittle of the loan terms.

So there's the background information that will hopefully help make my next comment make sense to you.

Here's what Obama SHOULD have said:

There shouldn't be ANY government bailout of anyone in this case. Rather, lawmakers should be going to the lenders (the mortgagees) on these bad loans, and to the original capital market buyer/investor of the loan package, and put into place the following policy:

Foreclosure is not an option for most of the homeowners in certain loan programs, and under certain conditions. Instead, dear lender, you will identify any and all files that have fraud in them at all, and you will take the necessary steps to cure that fraud - if it was the buyer who perpetrated the fraud to take advantage of the system, they will have no recourse. Credit reporting changes will be made to be more stringent and punitive to these buyers, if there is a provable case for such.

(We will need a system whereby buyers can be classified and qualified.)

However, if it is shown that a good borrower has been stuck in a loan that is too punitive in its terms, you will have to modify the note attached to that loan, and you WILL put into place workout terms that are generally acceptable. You will carry these notes for these buyers and you will not foreclose.

Lenders who profited GREATLY from the origination and sale of that security should be forced to now rescue buyers in their program, because it is obvious there were contagious flaws in the program.

There should also be standards within the mortgage lending industry that outline what kinds of terms are allowable, and what are not. For example, a purchase transaction should not be allowed to be originated on any variable interest rate loan without a certain minimum credit score, without putting verified money down. There are lots of examples of what should be allowed and what should not.

And guess what - the MARKET is moving in this direction already. The problem is not that there are not loans to be had out there. It is that those who used to buy loan pools in the secondary market are not buying ANY pools, almost no matter what the profile of the pool. That leaves the lender without the necessary capital to pay off the old mortgage and originate a new one. Secondary buyers are even shying away from Commercial mortgage paper, not just residential.

So, the FED, in the last two weeks, did two things - first they bumped cash into that secondary marketplace, providing needed liquid capital, then they lowered their internal interest rate - the one used to lend short term money to banks. The FED has also set the table of expectations now for the third and final action they may take: the lowering of the interest rate you and I care about.

The expectation is certainly there at this point for the FED to lower that rate at their Sept 18th meeting. The volatility in the stock market over the last two days has to do with this expectation.

We shall see. I don't think interest rates are the problem, and some would even note that the foreclosure rate is not that big a problem either. The problem is enticing the secondary big-money buyers that the pools they may potentially buy will offer sufficient return through timely payments made by homeowners. They are scared kitties right now.

Needless to say, the heyday has passed where one could get a loan by simply possessing the ability to fog a mirror. Now you're going to have to prove yourself. Credit score isn't ALWAYS indicative of that. Many thought it was. Obviously that was flawed thinking, espoused by lenders eager to make as much money as possible. Time to pay the piper.

A Frank Lloyd Wright renovation in Rye, NY

Here are some pictures from a VERY tasty renovation on a Rye, New York Frank Lloyd Wright home:

More Talk about Hedge funds/private takeovers...

So, sorry for the absence. Frankly, there isn’t too much to say for me right now - just tryin to keep my nose down and be successful. These things are tougher these days than past times. One of those things.

A while ago I mentioned the purchase of Chrysler by Cerberus Capital, a private equity fund. I also mentioned that they had significant holdings, not the least of which is the company that owns the local CBS affiliate here in the Salt Lake area.

Today, it was announced that Cerberus has also just finalized the purchase of Option One mortgage from H&R Block. The price was the total of current assets, minus $300 million. To industry insiders, this is no surprise, and we knew it had been in the works for some time. I friend of mine who worked for them told me there was motion in that direction back in February - and I imagine it had been going for a lot longer than that.

A little research turns up the information that not only do they now own Option One, a very large national subprime mortgage lender, but they also own Aegis Mortgage, which runs (ran) a subprime lending arm, and GMAC financial services, a company that started out as an industrial bank in support of General Motors. Since its inception, GMAC has grown into the mortgage lending business by starting or buying companies like WMC Mortgage, another subprime lender. With its current holdings, Cerberus owns a large chunk of the subprime mortgage origination business in the country.

This interests me for more reasons than the obvious - I work in mortgage lending, and it interests me that private fund managers are seeing the same business opportunities in the "dent & scratch" world of mortgage lending, that many other private citizens see in the foreclosure market nationally right now. There is great opportunity to pick up homes from damaged or distressed owners right now, just as there is opportunity in picking up lenders from distressed owners or monetary investors.

Yesterday on the news I listened to a story about how the traffic in these acquisitions has increased in the last 12 months - so much so that there is some concern out there over a possible collapse of hedge funds or private investment funds. It’s because some of these deals have become so large that many, or most, funds can’t afford to walk in to the closing table and slap cash on the table anymore. These deals are financed through banks and letters of credit. There is concern that in order to attract the lending business from these fund managers, some very basic and logical approval steps get overlooked. It frankly looks a lot like what the residential lending landscape looked like 24 months ago. If you had a pulse and a last name, you could pretty much get a mortgage loan. The same is true right now for these fund managers, and banks are falling all over themselves to get that private equity fund business for the bank.

The problem is that the worst loans are made in the best of times. The cycle always churns, and we may be in for a big problem in the future.

And on another note... this is a test post for a new application called ByteScout Post2Blog... from what I can see, if it posts correctly, the application has no provision for assigning or editing categories to a post... perhaps it’s there and I just don’t know it yet...

And one more:

Forgot to mention:

I lamented a while ago that I had to find out about the listing for sale of the only Frank Lloyd Wright house in Utah from the pages of the uppity Architectural Digest magazine. I (finally) found more info on the web, at the Save Frank's Houses web site. I would link it, but it's hard to say how long that info would be up over there, so here it is anyway:

The Stromquist Residence (1958)
1289 E. Canyon Creek Drive
Bountiful, UT 84010

When Mr. Stromquist was a boy in Illinois he had an opportunity to hear Mr. Wright speak at a public gathering. Mr. Wright's style and philosophy made a lasting impression on the young Stromquist, so much so, that when it came time for the Stromquists to put down roots, they immediately thought of Mr. Wright to design a house for them. When Mr. Wright invited them to come to Spring Green in 1957 they were delighted. It was a meeting of kindred spirits and plans were soon generated to proceed.

The house design is based on a diamond module, best suited to take advantage of the spectacular site in the foothills of the majestic Wasatch Mountains. It offers everything that Mr. Wright treasured: seclusion, serenity, and unity. From its vantage point in a lush glade above the Valley of the Great Salt Lake it offers spectacular vistas across the valley and the mountains. In the evening the setting sun ignites the western sky.

The property is located on a ten-acre site at an altitude of 6,000 feet and consists of the main house, an office/laboratory/garage annex, a gardener's shed and a barn. The main house features three bedrooms, two bathrooms, a kitchen, semi-formal dining, laundry, utility room, two fireplaces, and two balconies. The living room is partially furnished with three origami chairs and built-in settees. New Frank Lloyd Wright Foundation-sanctioned area rugs, handmade in Nepal, grace the living room, entry hall, and study. The bathrooms are clad in granite; clerestory windows provide natural lighting. The master bedroom has its own fireplace and French doors that lead to a secluded balcony. The kitchen has granite work surfaces and backsplashes, a Bosch cook top/oven and a Subzero refrigerator. The two guestrooms are completely furnished. Heating is provided by a Wright-designed combined radiant/forced air system that utilizes two natural gas furnaces. The total square footage is 3,000.

In an ongoing effort to preserve and maintain the house, Mr. Stromquist authorized measures that will safeguard the property for years to come. His foresight in acquiring the adjoining parcels of land to the east and west will ensure that the unique setting of the house will not be compromised by encroaching developments. The property is minutes away from major transportation hubs, world class winter sport venues and summer activities.

$3,880,000

The house comes partly furnished, as Wright was famous for not only designing the house, but also the furnishings to accompany it. There are some origami chairs among the furnishings (Wright notes that he was indeed influenced by some eastern design techniques).

Here is the Google Earth jpg of the location - if you want to explore that with your own copy of google earth, plug in the address, leaving out the "east" from your entry.











Here are the rest of the pictures. If you want to see them bigger, just click them.






















Thank you for your patronage - I know you care.

The Market needs to regulate itself; and the consumer needs to be accountable

This isn't going to go well if the government feels the need to meddle.


From Bankrate.com. “On April 17, the House Financial Services Committee held a hearing called, ‘Possible responses to rising mortgage foreclosures.’ Of a dozen witnesses, none were mortgage servicers, the people whose companies collect mortgage payments, deal with delinquent debtors and initiate foreclosures. The committee didn’t call any lenders, either.”

“David Berenbaum, executive VP of the National Community Reinvestment Coalition, suggested a…mandated temporary halt in foreclosures.”

“A mortgage servicer might have responded by asking who would pay the accumulated interest payments during a moratorium. The servicer, the investors who own the loan, the borrower? If it’s the latter, is that fair? Or would the taxpayers pick up the tab?”

“George Miller, executive director of the American Securitization Forum, warned that ‘policies designed to further regulate subprime lending or provide relief to borrowers’ could cause investors ‘to shun the market altogether and cut off mortgage credit for worthy subprime borrowers.’”