My personal background for those that are unfamiliar with me or my background is as follows:

I started in the early 70’s with Kislak Mortgage, then went to Mid-States Mortgage, started my own FHA approved mortgagee

company

in Coral Gables with a partner named Randy Nagler in 1977, actually did some market trading in a little mortgage company stock

 named

Countrywide when it was less than $2- a share (it may be back there soon) and I was friends with one of the co-owners named

 Ray Malzo

who subsequently sold out his shares. We lost the business (1st Atlantic Funding) in the early 80’s, which was a very tough time

 for the mortgage

 industry, and my 1st experience in losing a fairly substantial company. I then started a business from home called The Mortgage

 Clearing House,

 grew the company a little bit, which I started with the wife, got divorced, got and lost another partner and then built the company

 into 12 offices

 and over 500 employees, only to lose it again to another market crash.
As Jimi Hendrix might say, “Are you experienced?”

So I do have some experience in seeing mortgage markets crash!!!

Then looking at the market and where I saw it headed, I started Vortex Capital Corp. to work primarily with the retail side of banks

 in funding

residential mortgages…so now that we have a little history, let’s go back to what this is all about…and why a lot of people seem

 to ask me some of the following questions…

When is it getting better?
I don’t think we have seen by far all that we are going to see…if the estimates which range from as low as 400 billion to 1 trillion in

 losses is somewhat accurate then what we have seen, is only a little or as much as 1/3 or as little as 15-20% of what lies ahead…

What are the signals left for us…?
I believe that there are a handful of major items that will determine by the end of January, what will really happen and that what

has happened is almost minor in comparison to what we might see in the future…

Let’s take them one by one…

#1-Countrywide-
This is the largest mortgage banking company in the world, their November figures are down 40% in originations and closings…
They released figures saying they had 170 million dollars in sub-prime loans and that 25% were in some sort of technical default???
Do you believe all that comes of their marketing machine?? C’wide’s stocks almost tanked at a lil over 8 and has surged a little…
But remember that are 95% institutionally owned,
And their chairman Angelo Mozilo owns, are you ready???

¼ of 1% of ALL the outstanding stock!!!

They are being investigated by an almost unlimited array of senators, governors, attorney generals, and other investigators!!!
And they haven’t even fully been investigated for what I believe could turn out to be:
Misleading advertising
Bait and switch
Paying unconsiousable fees to inside employees that are not revealed on the HUD’s
Stock sales
Sale of 51 billion dollars worth of questionable loans to the Federal Home Loan Bank in Atlanta
Big Question-is Countrywide going down?
Will the government let C’wide go down???
YES, YES, YES…as far as I am concerned they are down, they will be broken up and Bank of America will reap

the big part for their 2 billion dollars
When?
As soon as year end is in along with 4th quarter story along with letting go a major portion of their employees in the

 months ahead since their volume is so low
Look for the stock to go below $8 during the 1st quarter of 2008 and subsequently fail somewhere in 2008 along with

a huge scandal
Just think if I had held on, I could have made $$$ even at the $2 I paid 30 years ago!!!

#2 Washington Mutual
This is a disaster in the making, their stock is way down and this is what they possess in their portfolio not including

fixed rate and normal adjustable loans:

$$$ 170 billion dollars worth of:
Pay Option Arm’s
HELOC’s
Sub-prime loans
Credit card debt

And,

They have admitted to taking 2 billion dollars worth of payments and adding them to the mortgage balances of borrowers

 so they are not in default…

REMEMBER: those are payments only not mortgage amounts
Look for WAMU to be broken up and sold, they just dismissed 3000 workers and I wouldn’t want the job of running this mess
Oh I almost forgot, they just got a cash injection of 2.5 billion to tide them over…good at math…figure what a 5% default rate

 would be for the numbers above???

#3 Ahhh…CITIBANK
My personal opinion is that their losses for the year of 2007 are in the 40 billion dollar range
Remember that Citi and Merill Lynch created CDO’s and every bank in the US and the World jumped on the bandwagon

except for Chase (hopefully)
How much they admit to remains to be seen…but they took 7.5 billion from the Arabs, sold 2 of their buildings in NY for another

 couple of billion and leased them back and…
Gave up the status as the biggest bank in America to Bank of America
They won’t fail BUT it don’t look good…the government will bail them out no matter what!!!

#4 Wachovia
They are eating it big time for owning World Savings
If the “A” market goes south, and in all likelihood, it will, this spells huge trouble for Wachovia
The pay option arms were only the second stupidest loans put out exceeded only by WAMU’s ability to put out ever stupider loans

The government may not bail out Wachovia, but will let it get sold if it goes down that way

5-Fannie Mae and Freddie Mac
Who knows what the real carnage is???
One thing for sure…the US government needs these two so at any cost, they will remain an important fixture in the conforming

 loan market, however: they will not allow them to close loans, such as:
Sub-prime
Alt A
Jumbos
No income No assets
Any slick cutesy product
And:
They will probably not buy a loan under 720 after the 1st of the year
Their year ends will be disastrous, but they will always be here


6-everyone’s 4th quarter and year end

Not every bank or mortgage company, or PMI company, or investment banking company will be cited directly in this report but:
The year end results for the following industries will be carefully scrutinized:
Re-insurers
Private mortgage insurance companies
Banks
Investment bankers
Rating companies
Mortgage bankers
Builders
And so on…

7-the PMI companies
My opinion is that they are technically bankrupt; the losses are astronomical and wait to see what they want from borrowers before

they will insure a loan in 2008 and beyond and the credit scores they will demand

So when is it getting better?
I guess no less than 3 years, some places 5 years and in some places: Never
And exactly what does better mean???
Does it mean that my condo that was worth 500, which I only paid 300, that if I am lucky I can sell it today if I am lucky for 250!!!
BUT, when the market heals…I will get my 500 more or less??? RIGHT!!!
HELL NO!!! It just means that there will be buyers, and the value will be whatever number is sustainable when there is a market…
There could be another 10-30% of value to be dropped
How much have we dropped already???
I say close to 1/3 of values have fallen, but hey, I am in Florida, so maybe in some lil cow town somewhere, somehow the

values have

stayed the same or have actually gone UP;
I get calls telling me that, “our values haven’t dropped at all”
For your sakes, and you know who you are, I submit this:
BLIND WE BE, AND GLADLY WOULD WE BE BLINDER!!!
I hope you are right and I am wrong!!!

So, can the government stop this???
STOP WHAT…THEY ARE THE CAUSE…

1st of all we don’t even know how big it is???
This could be a bigger mess than Iraq!!!
Do you honestly believe that the banks and the others are telling the truth???
Mortgage pools are now being sold for 10-20 cents on the dollar!!!
You figure it out…I can’t!!!
The carnage is beyond comprehension…and I believe we will see some problems with the “A” and Alt “A” borrowers in the

next 6 months…that will add a few trillion to the mess…

Stop it…the US Government will need to have the printing presses running 24/7
Remember: 3-5 years minimum for stabilization

Are the lenders telling the truth?

I don’t believe even they know the truth, YET,
and how do they value, or account for:
Loans that don’t pay
Loans that might pay
Falling values
Soaring delinquencies
Soaring foreclosures
Borrowers not paying real estate taxes
and
If they knew the TRUTH, would they tell???
We don’t have any adolescents reading this, do we???
And if you believe what politicians say and in fairy godmothers, then of course they would tell us the truth…
But, only
IF THEY KNEW IT THEMSELVES!!!

This is all great…can I sell my house???
Only, if you are on serious medication can you get anywhere near a fair price for your property in today’s market as

comparable sales are nearly non-existent

I believe economically, that we are headed to a depression; I mean full recession…damn,
And we all hate to hear that DEPRESSION word
No one is buying, short sales will be rampant
And a great deal on a short sale could be an OK deal in a year
And
A shitty deal in 2-3 years

Ft Myers Florida is about as depressed as this market can be,
A nice 3 bedroom pool home with a 2 car garage in what is a reasonably nice neighborhood…from a bank repo or a short sale?

How about under 100???

My friends, it can very much get much worse and we haven’t seen it hit the better neighborhoods yet…

I have a friend with a house worth 1.2 million, sold it 3x and the financing fell apart 3x at 1.2 million…
Want a great deal, NOW at 800???
Same house… really gorgeous… BUT,

Next year, could it be worth 650, Hell, I don’t know but maybe!!!

NOW THE BIGGIE…will they eliminate
MORTGAGE BROKERS and PAR PLUS???

They didn’t, not by design eliminate mortgage brokers, but effectively, everyone’s greed has changed the market and we will

 not ever see it the same again!!!

FOR THAT YOU CAN BE SURE…
MY OPINION…
OTHER THAN GOVT LOANS AND CONFORMING LOANS…

PAR PLUS IS DEAD!!!
There I said it!!!

There will always be a place for mortgage brokers to help people with conforming loans (720 MINIMUM, coming soon),
GOVERNMENT LOANS,
Hard equity loans,
Commercial loans
And to some degree non-conforming loans…

How about par plus…think of the logic…

Why would I pay someone extra to send me a borrower who lied, for a property he can’t afford, from a broker who cooked the

 value, the income and the assets, and who knows what else and pay him some of my money for the privilege of getting an

uninformed, unhappy customer for my bank…?

NOW BEFORE EVERYONE JUMPS ON MY CASE

That’s not my opinion, just the opinion of a lot of lenders who don’t have the balls to take blame for their own:
STUPIDITY
GREED
SLOPPY UNDERWRITING
PROGRAMS
GREED
ETC, ETC…

SO, THOSE LENDERS SAY,

“My inside retail loan officers are honest, don’t commit fraud, I don’t have to pay them as much and I WILL BANK ON THEM

INSTEAD OF THOSE !#@$^%&*% F_______ING STUPID GREEDY MORTGAGE BROKERS WHO CAUSED ME ALL MY

 PROBLEMS, IN THE 1ST PLACE!!!”

So, the attitude is there, it’s not going away;
Perception is 95% of what you need to make it the truth…

There are and were great, honest, hard-working, sincere, professional mortgage brokers out there…and there are a lot of

 wonderful people who work for the banks as well…

BUT!!!

There are also some lying, cheating unprofessional inside employees in the banks all the way up to the top; who will stop at

nothing to keep closing loans and pushing their employees to close loans no matter what
BUT…
The perception is STILL THERE that RETAIL is better than WHOLESALE!!!

A famous Polish dissident wrote over 50 years ago named Stanislaw Lec,
“Greatness is measured by the distance from the crime”

In writing this I didn’t want your approval just your attention,
I am far from the smartest guy in the world or have the best contacts, or inside information, but I know that my little company

 Vortex Capital is positioned to help the broker community close loans through the ability to send loans to the RETAIL channel

 of a large national bank, that luckily I signed on with this bank many years ago…

We MIGHT not make as much as we used to, but:
But, Here’s what we can do:
Sub-prime including jumbos and stated and investors
And by the time you blink your eyes whatever of that is left in the wholesale channels could and probably will disappear …

Thanks for your time!!!

If you would like to write back after reading this with any comments, I can be reached at:
Coleman Weeks -Dustin Gold wrote this
(239-287-5177)  
Colemanweeks@msn.com            Back to lastchance