by Bill James, CMC
Residential Bancorp
Canton, Ohio

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OCTOBER 2007

POTPOURRI by W H James, Jr., CMC, Board Chairman-Residential Bancorp, Canton, Ohio. September 10, 2007.

I absolutely don’t believe in vindictiveness or getting even with someone who has wronged you…having said that I believe if I were the executives of Countrywide Financial I would make an exception for the bureaucrats in Cleveland that advised the Plain Dealer of their refusal to accept Countrywide checks for mortgage recordings!  This ranks right up there with the most irresponsible/insane actions of which I am aware…to require “certified funds” from this company was an act of total irresponsibility, the total dollar amount by the way probably doesn’t exceed $500 to $600 per week.   By so doing, it increased the level of uncertainty and panic in a community that needs responsible and stable actions by its leaders…financially Countrywide could probably buy Cleveland!  What looney tunes we have in public service.  I think there is a law against “inducing panic in a public place.” 

On Wednesday, August 16^th I sat for two hours watching CNBC feeding the public some of the most irresponsible and inaccurate hog wash imaginable... some of the statements…”mortgage loans not available unless you have 20% down!”  “You can’t get a loan unless you have perfect credit”, “Major lenders teeter on collapse”… it went on and on in a steady stream of misinformation…and guess what?  NO ONE TRIED TO CORRECT THE DRIBBLE!  Today I finally heard the tail end of an interview with either an economists or retired lender, I couldn’t get his name.  He correctly and calmly stated…”This action we are seeing now is simply the first step in the journey back to responsible lending… it is long overdue”.  CNBC promptly cut him off with no comment.  I think he is absolutely correct.

I spent a few day in the Raleigh/Dunham, NC area in August.  The place is booming.  The newspapers are void of gloom & doom “real estate disaster” news.  Homes are selling and new construction is still a viable business.  The economy is rock solid with no hint of trouble.  They do have one serious and ongoing problem, lack of water.  Seems NC is in constant drought conditions.  Maybe Ohio can get in the water production, delivery sales.

The administration has announced a special mortgage program to assist homeowners who have the onerous adjustable rate mortgages that are burying our industry/country.  Those that can show they met their credit obligations prior to a massive increase in payments by way of their interest rate increase, can be eligible for a HUD refinance even if they are delinquent on their mortgage.  The program allows some very significant flexibilities.  After the first of the year FHA risk based mortgage insurance will also go in to effect (for closings after 12/31/07) with higher rates for some of the higher risk mortgages.

Our new president Kevin Patterson has given advance notice of an intense OAMB agenda for 2008.  Kevin is laying the ground work to try and amend some of the unfair and hurtful legislation now on the books.  A push for membership is underway and by year end our membership will consist of viable survivors of our mortgage industry and might represent the cream of the crop of the Mortgage Brokers in Ohio…

Finally fed chairman Bernanke should have the word…Fed Funds rates should be reduced.  There is good reason they should be reduced to 3% from present 5 ¼%.   At 3% the Bank Prime rate would be 6% and the 1 and 3 year treasury security should adjust downward to 3%+/- (1 yr) and the 3 yr security only about ½% higher.  This would make the ARM mortgage adjustments roll over at around 6%+/- for the standard product.  With a reductions of 2 ¼ % on Fed Funds rates in the next 6 months, a large segment of our economy could be partially salvaged.  1% Fed Funds rate was too low…51/4% is too high, a 3% rate is “Goldilocks”…Mr. Bernanke should heed these words by an unknown writer…”FOOLISH ARE THE GENERALS WHO IGNORE THE DAILY INTELLIGENCE FROM THOSE IN THE TRENCHES”.   The hopeful economic news we had been hearing, we are no longer hearing!

When I read Romeo Crennel was showing his dynamic coaching acumen and leadership by “flipping a coin” to decide the starting QB for the Browns first game, it confirmed imminent disaster.  The Pittsburg game then showed that disaster was not adequate in describing the 2007 Browns.  As I feared, the Cleveland staff ran Jamal Lewis 11 times and only ran the ball 16 times total!  You wonder why the Pittsburg defense ate the Browns alive.  Pittsburg ran the ball 46 times and delivered a balanced attack that the uncoached Browns couldn’t deal with.  Funny thing, I haven’t read 1 word from the sports writers about not giving Lewis the ball at least 25 times a game.  They continue to slam the Cleveland offense line for not giving Frye and Anderson 10-12 seconds to get off their passes that should be gone in 3 seconds.  My all time favorite quip from coach??  Crennel, when asked why he didn’t play Brady Quinn he replied, “What am I going to do?  Put him in and throw him to the dogs?  I didn’t think I should do that to him.”  Well coach that “kid” is making about $5 million dollars a year, started as a freshman at Notre Dame in front of 80,000 fans, did this for 4 years in the most competitive college football schedule in America and has shown he is head and shoulders above what you have in Frye and Anderson.  Watch this Cleveland coaching staff & leadership, they will wait until our team is totally destroyed and then put Quinn in to take the abuse.  I don’t say Quinn is the answer but compared to the other 2, he looks like Joe Montana and another thing, when he finally gets in, the sacks will be reduced to a normal number.  It Ain’t the line!  Clean house from general manager to ball boy.  There is a coach sitting out there that could take this Browns team to the play-offs.  He had a 14-2 record in 2006…hint.

Your comments wanted - email billj@bancorp.com

Bill James is Board Chairman of Residential Bancorp in Canton, Ohio and can be reached @ 330-495-6041.