Aug 14 Challengers Aug 15 Literacy Breakfast Aug 21 Afghanistan

Next Week... August 14 Corey Dantzler Boys & Girls Challengers Club Upcoming Programs... August 21 Afghanistan Experience Major Cramer, UCLA ROTC Other Programs... August 15 Literacy Breakfast, Lawry's September 21 WVRC-Auxiliary Summer Picnic, Eloise Siskel's home October 7 District Breakfast - LAX Westin Hotel October 12 Paul Harris Celebration, Medieval Times

This Week...
INTRO TO MORTAGES at WVRC on August 7th
Actually, the visiting exchange students from Japan were also featured, but more on that later. In the meanwhile, that former Hasbin, PP CHRIS BRADFORD came forward with the Pledge – and he did OK!  LENNY asked us for You Are My Sunshine, and we began to recall that it has at least two verses – this because President SEAN requested a song that he knew, and he did OK, at least at first.  Afterward, SEAN leveled a five-buck fine on LENNY – probably because there were indeed, TWO verses. PP STEVE SCHERER gave the Invocation, which was brief and to the point.

Steve Day & Mike Newman

We had two Visiting Rotarians, Rick and Marcia Brous, and while they paid for lunch, this was later refunded since they have become Special Guests! You will recall that they belong to the Madison, NJ Club, and both are Past Presidents. SUNNY of course came with LENNY, and MARIE ROLF was with us again. PP STEVE DAY had two guests, Marcia, and their son, Jeff. RAY ZICKFELD introduced “Marcia Days Mother, Margery.” PP JIM COLLINS daughter, Cathy Hession, came to be with the Japanese students. JR DZUBAK also had a Special Guest, Patricia Oliver. She has several qualifications – first, she is a double graduate of UCLA, with a BA and an LLB, and her son and JR’s son both attend elementary school together.

After we quieted down, PP MIKE NEWMAN rose to point out that we should maybe question the order of introduction of the DAY-ZICKFELD families.  He contended that this question came up because he, MIKE, practiced Family Law, and therefore he was sensitive (my word) to the possible slight to whoever was introduced second in the above-noted litany.  PP MIKE then suggested that a hundred dollar fine might be appropriate. At this very instant, PEGGY BLOOMFIELD leaped to her feet to remind one and all that since PP STEVE was seated at the Head Table, he could not be fined.

After some raucous laughter, PP MIKE persisted by reminding those who were still listening , “Could we at least hear Marcia’s answer?”  Laughter, again.  And Marcia finally replied, “What was the question?” That more or less ended this interruption.

Those seated at the Head Table included the aforementioned PP STEVE DAY, PP MIKE NEWMAN, PP HOMER NEWMAN, ELLIOTT TURNER, and LEE DUNAYER.  When asked the usual ‘fine-free’ question, none were particularly lucidatory (also my word) but it was apparent that all of them were appreciative of the honor of being placed in such a position of respect. Actually, ELLIOTT did bring a tear to the eye with his admission that “I’m just tickled pink to be up here.”

JACK HARRIS came forward to present some Inspiration.  Three ministers were gathered for lunch, and the subject of the weekly offering came up.  What is appropriate to give to the Lord?  The first answered that what he did was to draw a line in the sand, stand with one foot on each side of the line, and then toss the money up in the air.  Whatever lands on the right side goes to the Lord, and whatever lands on the left is mine.

The second minister allowed as how he had a similar method.  Placing a coffee table alongside, he tosses the money in the air, and whatever lands on the table goes to the Lord.  The rest he keeps.  After a pause, the third minister allows as how his method is somewhat similar to the other two.  He stands in the middle of the room, and throws the money up in the air.  Whatever God wants, he keeps, and the rest is mine. (Editorial comment – this well illustrates why WVRC needs at least a Rabbi, and maybe a Priest, as new members…)

President SEAN began an announcement about LEO TSENG – and LEO walked in at that very moment.  SEAN noted that LEO has served his Company, Merrill Lynch, for FIFTY  FIVE years!  SEAN then asked if it was true that LEO had mentored a number of people, including SHANE WAARBROEK, our current Club Secretary, and Grace Lynn, and LEO agreed that was accurate.  Next, SEAN noted that there was a celebratory luncheon set for tomorrow – and LEO, catching the drift of this interrogation, then said, “Yes, and all of you are invited.”  SEAN persisted, noting that neither SHANE or Grace would be present tomorrow, and thus he was fining them $2.00 for each year of Leo’s tenure, thus totaling $110 each

PP STEVE SCHERER came forward, and invited LEAH VRIESMAN to join him at the Podium.  He announced that LEAH had served the obligatory term of twelve months as a Yearling.  She has served on several projects, is now a member of the Board of Directors, and he invited her to Strike the Rotary Bell, thus signifying her graduation from Yearling status.  She struck, and it was done!  LEAH’s comment upon this moving induction, “Enjoy your lunch”.

CURT SMITH explained the Cell Phone collection he is promoting.  We were urged to turn in ANY AND ALL old cell phones.  Bring them to Rotary, and CURT can trade them for Calling Cards for our troops.  The project has already provided thousands of Calling Cards – and it makes it easy for the troops to call home. PP CHRIS BRADFORD was the first responder, so we are underway – it’s easy, and please keep it in mind, OK?

DAVID FRIEDMAN came forward, as a proud father, to announce that his daughter, Jordana – whom we have all met – has been awarded a NASA Internship!  This provided applause, PLUS a two-hundred-fifty buck fine, which was happily paid by LENNY.

Next up was our weekly History Lesson.  Now, for those of you not on my email mailing list, I should first confess that I have been known (occasionally, of course) to pass along unverified material.  But my REPORTING of President SEAN’S fable of last week stands as a monument to how easy I am to deceive.  Hillbillys, indeed!  But anyway, we are now told that Daniel O’Connell was born on August 6th, 1775.  SEAN feels related to O’Connell since both are Irish, and both studied in Continental Europe during insurrections.  SEAN'S studies were in France during the Algerian Insurrection, while Daniel O. studied in France during the Revolution. But, lest you suspect that I digress, the story now continues. Our subject was elected to Parliament in 1828.  Catholics were not allowed to serve in Parliament, but because he had so many followers, the law was changed.  He advocated Home Rule for Ireland – and so ends this tale.

PP STEVE DAY introduced our six Japanese Exchange Students. There were four girls, and two boys, and each one gave a brief bio, with their name, and school they attended.  As a history note, my daughter, Andrea, went to Japan over forty years ago.  I was pleased at her answer during her interview for the team.  “Andrea, you are tall, and many of the Japanese you will be with are short.  Will this bother you?”  Andrea’s reply, “I’ve been tall for a long time.”  And STEVE’S family has now had FIVE kids who haven been Japanese Exchange Students!  Anyway, STEVE and I escorted them yesterday afternoon after the meeting, first touring UCLA – ending at the Student Store, of course. Then we toured the Petersen Auto Museum, and ended up with ice cream at the Farmers Market.

STEVE’S son, Jeff, came along, since he had been with them in Japan, and he was a most helpful guide.  They are a lovely group of young people.  And I would add to what STEVE said during their introduction – this is a really good program, and children and grandchildren of Rotarians are eligible.  If your relatives are between 15 and 18, you should plan on their going – it’s a winner!

Our main Speaker today was ELLIOTT TURNER, and his subject was the Mortgage crisis we are now experiencing. ELLIOTT started by quoting from today’s Wall Street Journal – foreclosures in 2007 are much more frequent than in 2006 – and he added, this isn’t over yet, not at all.  What has happened is that people were allowed to finance houses at 103 to 106% of the purchase price, so closing costs (and profit) were built in. Since closing costs are 2%, the extra 4% is all profit!  This has hit particularly in outlying areas – the Inland Empire, for example.

All this was OK as long as housing prices were going up – but they stopped going up in the middle of last year.  As prices decline, there is no ‘cushion’, and thus you now need 20 to 25% down payment.  There are no longer any Home Equity lines. And, as an example, if you had a $500K Equity Line, and had used, say, $150K of it, the mortgage holder notified you that there was nothing above $150K now available. ELLIOTT has clients who are in the midst of a major remodeling of their home – and suddenly their line of credit is gone.  He has no solution to offer them.

Today you need a much higher FICO score – that’s your credit rating.  Before, you could get a prime loan with a 680 FICO – now you need a 720 with most lenders.  As an example of the tightening of the credit market, ELLIOTT used to have sixty sources for money – he now has eleven!  If you are buying Investment property, you used to be able to get 100% financing – today you can get maybe 75%.  Speaking historically – and ELLIOTT has been in this field since 1969 – he has never seen it so bad, and he thinks it will get a whole lot worse.  In other words, it will get a lot worse BEFORE it starts getting just bad.  And after that, of course, there will be a lot of bad – middle – time before prices recover. 

What he is talking about is the depletion of value in real estate.  ELLIOTT feels that people have used this up-up-up syndrome to finance many purchases, and now they are caught with high payments, but no way to continue making them.  We look at houses, often, as investments, unlike the Europeans, for example. This investment psychology really started in the 80’s.  Today, in the Inland Empire, for example, a family might be paying $3500 monthly on a mortgage, and now that their equity is exceeded by the house value, they tend to walk away from the house, and rent, instead.  So when the lender gets a house back, he must sell it – it is expensive to hold, and maintain, so selling is really his only option.  These are known as REO’s, Real Estate Owned properties.  These are rapidly growing in numbers in the Inland Empire, Las Vegas, Arizona, Florida, and in other parts of California. 

How did all this start – where did it come from? He asked LEE DUNAYER when mortgage-backed securities first came onto the market.  Before 1968 you went to your local bank to get a real estate loan. Now, with Wall Street heavily involved, money has been pouring in. The joke used to be that if you could fog a mirror, you could get a 100% loan. As an example, you could buy a 4000 square foot home in Temecula, with nothing down and maybe a 2% loan, fixed for the first year, and then beginning to increase. This psychology has been what has driven the home market. ELLIOTT estimates that if you had required, say, 10% down, you wouldn’t have sold more than a third of the houses!

I asked, once you make a loan, where do you place that loan?  ELLIOTT tells us that his firm, for example, would have credit lines of x amount with major lenders – Chase, or Wells Fargo.  They would then package these loans and sell them to one of their lenders. usually on a monthly basis. The lender, in turn, would sell them in pools – as an example, let’s say to the Cleveland Teachers Credit Union. Since the people who put their savings into the Cleveland Teachers, expected a return, of course, and this came from the people repaying the mortgages.  There is a whole range of investment vehicles that were funding these loans. 

This brought in LEE DUNAYER. First question, from MARIE ROLF. When did mortgage-back securities become an investment vehicle?  LEE responded with a brief history of Freddie Mac and Fanny May. Fanny May started in 1938 under the Federal Housing Administration and it was created to support a secondary market in mortgages. In 1968, Fannie May became a public company – and in 1972 Freddie Mac was created due to demand.  Selling of mortgages itself began in the late 1950’s.  Both companies guarantee the timely payment of their pools of mortgages – and note that these are conventional, not sub-prime, mortgages. 

At this point we pretty much ran out of time – but because of the wide interest in this whole subject, President SEAN promised that we would have another full Speakers time shortly.

—YOE, Ernie Wolfe

WESTWOOD VILLAGE ROTARY CLUB 2008 - 2009
OFFICERS: President  Sean McMillan President Elect Ed Gauld Vice President Mark Block Treasurer Don Nelson Secretary Shane Waarbroek Executive Secretary Ernie Wolfe, Jr. Past President Chris Bradford	DIRECTORS: Community Service Chair Leah Vriesman International Service Chair Mark Rogo Membership Chair Steve Scherer Vocational Service Chair Curt Smith Youth Service Chair J.R. Dzubak ..... ROTARY INTERNATIONAL PRESIDENT: Dong Kurn Lee DISTRICT 5280 GOVERNOR:    Chuck Anderson Redondo Beach Rotary