The Tycoon Report

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127. Phillip (1 year ago) Is this Spam?

     Although I do agree with you on these people who got cought up in this mess,you never mentioned anything about the assholes who started this whole scam.the brokers. I think what really pisses you off is that you may have been one of those idiot republicans that invested in one of these co. and got burned when the stocks fell if so ,serves you right.

126. Andrew (1 year ago) Is this Spam?

     Hang on, wasnt the main promoter of ARMs one 'A. Greenspan?' Im sure I remember him saying how low ARM rates were and being surprised that more Americans didnt have them (when he was trying to stimulate the economy after the 2000-02 recession). He should be in jail now.

125. Harrison (1 year ago) Is this Spam?

     Hey, Dylan,
     
     I am a real estate broker, and have been asked to assist some homeowners in straightening out their messes. In researching the background of their mortgages, one thing has become crystal clear. There are numbers of people out there who have used their homes as money-churning machines. They have refinanced their homes several times, each time taking out the equity in the form of cash. To do what? Go on a South Seas vacation? Buy two new cars? Play the lottery? What? It's patently clear that none of it went into investments or any vehicle that could give them income to pay back the mortgages. Maybe all of the "poor" homeowners out there were not sold a bill of goods, but went in with eyes wide open, and made their own mess.
     
     
     
     Here is a classic example: Client A bought a house a few short years ago for $177,000 with 25% down. Six months later, he refinanced it for $220,000, taking out his 25% down payment plus and taking out more money than the house was worth. About a year after that, he refinanced again, this time for $249,000. And last year, he refinanced for $299,000. Each time he refinanced, his interest rate was lower than the previous loan, but the time to adjustment was shorter. So, he risked his home for greater and greater cash out, while giving himself not much time until the adjustment began. Hopefully, he put the money in a sock, because it will probably be quite a while before he is able to borrow again.
     
     
     
     Client B came to me crying that he had been "led down the primrose path", but in my research, I discovered that far from being an innocent, he actually perpetrated fraud on two mortgage companies. He bought the home in 2002, with an adjustable rate mortgage, but he put lots of money down. He refinanced the house a year and a half later to a lower rate, with (guess what?) more cash out than he put in initially. Two years ago, he got two mortgages from two different lenders which he closed on the same day. Together these mortgages equalled almost 200% of the value of his home. Guess he thought that if he could take big cash out the first time, why not get two mortgages with big cash out and make a home run. When I asked him why he had done it (medical bills? college tuition? what?), he simply said he thought it would be a good way to generate some spectacular cash. Hey, buddy, got a message for you -- IT'S FRAUD, plain and simple. So besides getting his home in foreclosure, he's also facing a round with the law. I doubt he will win.
     
     
     
     I have also dealt with some customers who were just trying to get a home of their own. Those I feel sorry for, because they were unsophisticated and didn't take the time to have the documents examined by anyone who wasn't unsophisticated. The result is the same -- a long time before they can buy again.
     
     
     
     I was raised with the thought, "If it's too good to be true, it probably is." If the interest rate you are offered seems too good to be true, you want to run in the opposite direction. In my years in the real estate business, I have seen many of these kinds of programs offered and sold to the public. The banks win, usually the homeowner loses. The banks are greedy, their mortgage originators are greedy, everyone wants it NOW, and most are not really willing to work for it. Appraisers appear to have been willing to overappraise houses, and some real estate brokers didn't much care what happened after the closing. Banks may go bankrupt, mortgate brokers are closing their doors left and right, appraisers have suddenly become much more cautious, and the real estate brokers may be run out of town. Boo hoo!
     
     
     
     Meanwhile, the industry is asking all of us to take on yet another risk -- bailout money. I don't think so.
     
     
     
     Nice column -- interesting read. Keep on keeping on.
     
     
     
     Harrison

124. walt (1 year ago) Is this Spam?

     Totally agree - cautious people have lawyers read the fine print and expore the 'meaning' of obscure terms and conditions - there are NO surprises - whoever WROTE the contract terms in the first place is protecting the leader by stating "exactly" what will or will not happen to the contract terms under whatever future conditions materialize for that contract - means people who don't "understand" the contract are definately either type A or B - Walt

123. sungjin (1 year ago) Is this Spam?

     Dear Dylan,
     
     I have be a reader of the Tycoon report for some time now and consider myself to be a supporter of your operation for its no-nonsense approach to business and investing. I also admire your qualifications as an expert in your field. Those feelings however, do not excuse the direction of your most recent column. I should qualify my comments by saying that I do not disapprove of your political beliefs, muddled though they may be in an impression of the Conservatism that somewhat juvenile and simplistic. Your personal politics are your business, and that is precisely the point . I simply don't care who you think will make a better candidate because it is painfully obvious to any literate person that you have only a cursory understanding of contemporary American politics.
     
     To put it bluntly, I am embarassed for you. Your amateur insights on politics and political issues simply does not interest me. Writing about your personal politics undermines your credibility and make you look foolish.
     
     One specific issue I have with the column is that it seems a bit out of date. You seem to have not read anything about the Republican primary race in over a month. It also seems to avoid any real discussion of substantive issues. While you bring up candidates, your polemic is devoid of any sort of substantial discussion of policy issues related to business or commerce, which leaves the reader with a sense that you simply don't know enough to really comment. My suspicion is that your political aptitude is limited to sound bites from cable news shows, thus making you, like many Americans, ill-suited to effectively make judgments about government and politics. As a Republican myself, I find this sort of discourse counter-productive and ultimately damaging. It also makes me question your intelligence and judgment.
     
     I firmly believe that you believe that you are a Conservative, but I also sense that you do not entirely have an concrete understanding of what that entails. Your personal beliefs are just that: personal. I don't care if you secretly believe that you are the Queen of France or Superman as long as you provide sound insights on investment and keep your downright bizarre private beliefs to yourself.
     
     If you wish to write about politics, get a blog and spew away like every other moron with an internet connection. Please leave the Tycoon Report as it was; a spectacular newsletter that does not apply amateur-ish views on politics in order polarize it readers for the sake of inspiring flame wars on your comment boards. It weakens your brand and destroys the credibility that you have built for your service. I know others might feel as I do.
     
     Best wishes,
     
     A loyal reader

122. Margaret (1 year ago) Is this Spam?

     Thank you for this article. I totally agree - why should the rest of us who were prudent, studious, thoughtful and fair bail out the greedy pigs who a) sold the mortgages and b) the "keep up with the Joneses" losers who bought them? Yeah, the American dream is to own your own home. But let's face it, there are a lot of folks out there who can't manage credit card debt much less pay a mortgage and take it seriously. I resent having to bail out either the lenders or the borrowers. If you can't afford something, then save your money and wait until you can. Or make do with what you have and be grateful you aren't living in some 3rd world country with civil wars, bad weather, earthquakes, etc. We are spoiled rotten and seriously need to put things in perspective. Having a house is a huge responsibility, one that not all people are cut out for. I don't feel sorry for the folks who bought something they couldn't afford - they should have known better. And it burns me to no end to think that the greedy pigs on Wall St. who created this mess are going to continue to get a bail out. I think that the banks should be forced to "fix" all the toxic mortgages, and all the brokers who are out of business should stay that way. People need to take responsibility and READ THE FINE PRINT before they sign away their hard earned money.

121. Trent (1 year ago) Is this Spam?

     Dylan: Your sentiment is all well and good, but what about the Countrywides of the world who are getting a bailout for creating the mess in the first place? Every time the Fed cuts rates, that is a bailout for the Wall Streeters who created the conditions for the mess. According to your logic, the little guy suffers the consequences, but the corporate aristocracy laughs as they are bailed out of bankruptcy, which is where they rightfully belong.

120. Ron (1 year ago) Is this Spam?

     Except for the opening "Republican" statement I agree with your tenor. Nail the thieves and show little mercy for the owners of a second and maybe a third house who gambled for big profit and lost (I live in Las Vegas and know that losing hits your wallet - and shouldn't hit others).
     
     
     
     My big complaint with Repubs and to a lesser extent with Dems is that they protect the really biggies....at my expence, ie: CEO's, CFO's and the hedge funds. Their pay is way out of balance with true company growth, and my voting has no effect on their largess.
     
     
     
     A little background: I sat next to Mario Gubelli on a flight from San Francisco to Vegas about 10 years ago. I had just sold off one of his mutual funds. Prior to the sale I had numerous letters to the head of the fund. One of my complaints (10 years ago) was that too many of the CEO's of companies in the fund were getting higher and higher saleries and options...based on the fact that "other" CEO's yearly take was on average higher and they wanted to match the raises. I asked the head of the fund to oppose those terms. He said that inspite of the breath of the funds holding, it wouldn't make any diference! He couldn't convince other fund managers to support him.
     
     
     
     Shame, I fully support higher pay/options ONLY when the CEO's directions lead to company gains based on a minumin of 2 years growth, not based on one good quarter.
     
     
     
     I explained this to Mario and he laughed. I also spoke to him about how I believed the "golden parachutes" were not in stock holders interests. Let them eat cake when they produce over at least a two yeaar period and hardtack/water if the results aren't additive over time. I pulled the other fund and will never give any company of his a dime.
     
     
     
     Ron Ames
     
     
     
     PS: I'm the one who sent you the Morningstar article about overpay of company executives.

119. craig l (1 year ago) Is this Spam?

     I agree with you, but. When I loose capital in the market, it's because I've made a bad decision. I don't expect the govt. to bail me out. But this stupidity that has become the credit crisis, is threatening the viability of our whole economy.

118. DONNA (1 year ago) Is this Spam?

     Dylan , I agree w you 100% and it's about time people started revolting. I sold my 3 houses in 2002. 1993 was a great year for real estate buying! I was young & though not at my intellectual peak at the time, was well aware of what I was doing.( Now that I look back , I was pretty smart... and lucky ! ) Anyway, afterwards I rented the cheapest apartment I could find while plotting my next purchase. Thanks to "subprime mortgages",I am still sitting in this same cheap, crappy, 2 room rental 5 yrs later, waiting for all this to boil over. Yeah, I could have gotten a subprime too, but knew better! First off all, anyone stupid enough to pay these prices should be examined. Second, anyone who signed up for a subprime KNEW WHAT THEY WERE DOING & DESERVE WHAT THEY GET! I fail to believe that no one warned them. Everyone knows the motto "that if it seems to good to be true, it probably is ". Heck, if I knew I was going to be bailed out, instead of being trapped in my "U-STORE IT BIN WITH A BATH " for 5 long yrs, I too would have gotten a subprime . Because of subprimes, I am now stuck here even longer, waiting my turn. NOT FAIR!. And shame on the government for bailing out the idiots, while the rest of us sit around on our thumbs and watch. Seems like it doesn't pay to use your noodle anymore.

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