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Welcome back to the velocity of money, this is Michael J. Barnes, joining me in studio Dan Havey and Brett Fallon on this lovely Christmas Eve we’re happy that those of you out there listening and still be here with us. We just talked about essentially the process regarding your mortgage lender and having standing, which is a legal term. Which was a little complicated Dan. I’m not going to lie to you
That is why all the information is on the website, Mortgageanswerman.com
And you can also go to velocity financial.com. There is a link there to Dan’s website, you can also call in and get more information at 480 velocity, quite frankly I would bet money that there is nobody left at the office right now. Its Christmas Eve, but leave a message, by golly, we will make sure somebody calls you back. You can also call an 800 number its 888-Mod-Info now Dan is talking about breaking these mortgages down and eventually selling them off to Bangladesh and in different tranches. Some of the servicers are actually in India of all places, if you have a mortgage that you’re having trouble with and you need to call somebody to get help. You are actually calling India to talk to somebody about your mortgage here in Phoenix. I don’t really know why, but none the less, Brett. You wanted to address this from a financial advisor standpoint
Yes, I am pretty immersed in this because what Dan was describing in these collateralized debt obligations and ease CDOs etcetera. Does get a little complex, I think I can clarify it may feel that a does this apply to me, is this something I should consider in my own strategy. It works like this, this is true for most people who took out a mortgage in the last couple of years. You start your mortgage and get your payment book and you are writing a check to bank “a” and then you get a note maybe 35, 45 or 65 days into this loan that. Says thank you for your business you are now writing your checks to bank “XYZ”. Your payment to bank “XYZ” that is exactly what was happening
When you slice it up this way, and you get it spun off Wall Street wanted their piece of profitability right? The mortgage industry was running rampant in terms of profitability. And so Wall Street says hey I want a piece of that and I know how we can do it we can sell mortgage-backed securities asset backed securities. Well there safe that’s the way Wall Street was selling these to the investing public, yeah there safe as long as housing values keep going up 15% a year, which is completely unrealistic it’s an asset class just like any other asset class. Its cyclical, what goes up does come down in any investment asset class.
So people wanted to put the blinders on, they paid no attention to that. As property values declined and all of these Wall Street firms that are today bankrupt and is no longer in business they were leveraging that debt meaning they were by borrowing more money to buy more debt. So for this collapse is all about, how does it affect you the individual. How does it impact you the mortgage holder, It impacts you by saying does this strategy makes sense, should I refinance can I get a better rate or should I look at a loan modification option. That’s the simple answer.
You go to the website and you do your due diligence then you call the guys at Velocity, the team at velocity and you start working through the process, because I can tell you this from a financial advisory perspective. Its all about efficiency; investment efficiency, tax efficiency, and interest rate even conceive all these things are combined in that is how you win the financial game, that’s how you stay ahead of the recession. That is how you create your own velocity of money; you have got to make the call. We have to look at these efficiencies.
Gosh, that is a great endorsement; I think we should use that for a commercial for us. I appreciate it and I don’t really pay you to say those things. For more information, its 480 velocity. Thank you again Brett for that great endorsement and for the great relationship over the years the great advice you’ve given me and my clients. So you’ve got all the way down to where the money is broken down. Dan explained it on a technical level, you kind of broken down little bit that we actually get to the point of the CDO? Actually explained that the CDO represents?
Well yes, we did the CDO is a whole bunch of mortgages that a rating firm decided all had the same credit class Well let me ask you a question and I’m sorry may just cut you off, I have heard a lot of buzz about these rating firms not having a standard
I will interject on that one because that is absolutely correct, the is rating firms standard and poore, Moody’s, Fitches. These are the companies that are responsible to call a security or bond or CDO as A paper all the way down to C paper. Its actually rated all the way from AAA to BBB, the low rating. BBB is you’ve heard the term junk bond? That is what that means they don’t call them that so much anymore. It’s not politically correct to say junk-bond but you’ve heard them say high yield.
After Milkin went to jail, the scandals and all these things, so yes there is a politically correct spin that is associated with it. So now these rating agencies have been called into question their objectivity, they been called into question as to how they arrived at this rating, they’ve been called into question on all these things so that investors are sitting out there saying okay so these ratings are bogus, how cheap can I get a Senate seat in the state of the Illinois?
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