Nov 20
Stem Cell Research
at UCLA
Dec 11
Christmas Shopping
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Next Week...
October 30
Margaret Rosenthal
"Avoiding the Pitfalls of California Employment Law"
Upcoming Programs...
November 6
Craft Talks
Marcia and Rick Brous
November 20
Dr. Owen Witte
Stem Cell Research Chief at UCLA
December 5
Joint Meeting with Santa Monica Rotary Club
Riviera CC
Activities...
December 11
Christmas Shopping Trip - Contact Mike Yousem
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This Week...
MORTGAGES, REAL ESTATE and FINANCES, at WVRC on October 23rd.
CURT SMITH led the Pledge. The Invocation was given by ED WRIGHT. It was by Phil Morris, the Rotary Club of Furnitureland, High Point, North.” It is good to recognize how different we are…and it is good to know that when you created each of us, you broke the mold…Even our thumb print and our voice track tell us how unique we are. Yet, we thank you that we can take these differences and mobilize them for the good of Rotary and our community. Bless us as we meet together. Thank you for our individuality and also our common bond.” Another good quote – thanks, ED.
There were no visiting Rotarians, but we had guests. PP STEVE SCHERER told us about JOHN HEIDT, who will be circularized today. MARK ROGO brought his assistant, Marina Curry. NIKKOLE VALDEZ came with Bryan Schofield. JR DZUBAK had his Special Guest, Julia Ware. And ED GAULD introduced his Special Guest, Reverend Susan Klein, who is the Rector at nearby St. Albans. The Head Table was introduced, but since they were all speaking later, they obviously didn’t want anything untoward to slip out beforehand.
PP DON NELSON introduced our Ambassadorial Scholar, Jin Kim. As background, This Rotary program is the world’s largest privately sponsored international scholarship program. Started in 1947, we average about 700 Scholars annually, who can attend Universities in almost 200 countries where Rotary clubs are active. While aboard, scholars speak to Rotary Clubs and Districts, schools, and civic organizations where they act as “Ambassadors of Goodwill”. Our program is considered better than the Fullbright, which is certainly a high standard. Jin then told us about his own activities. He is studying Electrical Engineering, and his undergraduate degree was earned in South Korea. He reminded us that the full name of his country is the Republic of Korea. He is very competitive with his older sister – and of course she has one advantage he can never overcome – she is married and has a baby! In his major, his particular specialty is Circuit Design. Jin’s English is excellent, and obviously he is a hard-worker.
LEAH VRIESMAN announced the coming Blood Donor Day – November 3rd, at three locations. Hacienda Hotel, just south of LAX, the Shriner’s Hospital in LA, and the Bellflower Salvation Army building. There is a new program available, so you can call ahead for an appointment, or on line at Rotary 5280.org – which is preferred. She then told us about the Five Surgeons. They were discussing, Who makes the best patient on the operating table? The first doctor liked Accountants – when you open them up, everything is numbered. The 2nd surgeon preferred Electricians – everything inside them is color-coded. #3 liked Librarians – everything inside them is alphabetical. #4 spoke for Construction Workers – those guys always understand if a couple of things are left over, and if the job takes longer than you said it would. This left #5, who shut them all up. “You’re all wrong – Politicians are best – they have no heart, no guts, no mind, and the head and the butt are interchangeable.” This litany was well received (that means they liked it)!
PP JIM DOWNIE is back home, and feeling better – but he has a ways to go, so do send a card or place a call, OK? On a more positive note, PP JIM COLLINS is to be honored tonight by the Boys and Girls Club of Venice for his long-time support. SEAN attempted to get PP JIM to defend himself, but his reticence (that means he weren’t willing to talk) cost him two hundred big ones. Is that called paying for your supper?
Once again we were provided some historical information (note, I didn’t say facts) about events that transpired on October 23rd. Starting back in 4004 years (BC), the Universe was created – AND also BC, in –42, Brutus’s army was defeated by Mark Antony and Octavian, causing Brutus to cut his own throat! I’ll bet you didn’t know the calendar goes back that far – certainly my Rolodex doesn’t. But the good news is that we now skip to less than a century ago, in 1929, when the Great Depression began its historic decline. In nearby 1956, the Hungarian Revolution made its brief appearance. And on this same 23rd of October, in 1965, the U.S. lst Cavalry Division along with South Vietnamese forces, launch an operation to destroy North Vietnamese forces in Pieku Province. But there is more: in 1976, President Jimmy Carter was interviewed in Playboy, stating ‘I’ve looked on many women with lust. I’ve committed adultery in my heart many times. God knows I will do this, and forgives me.” But moving now into our own Century, in 2001 the Provisional Irish Republican Army of Northern Ireland commenced disarmament after peace talks encouraged by President Bill Clinton. Wow!
ELLIOTT TURNER was our first Speaker. His talk was illustrated by a series of stick figures, who conversed about mortgages and how we got into this mess. The series takes us from scene to scene along the route to the ‘final destination’ of a mortgage. The applicant has no qualifications, but seeks a mortgage. The broker can of course help, since the bank actually lends the money. Later, the bank looks at this package of mortgages, and since some of them are OK, they figure the risk will be shared, particularly since maybe 2/3rds of the ‘package’ has been rated either A or B. Under their new interpretations, the really poor loans don’t have to be shown on their balance sheets. But aren’t we just moving our own junk around? Yes, but it’s good for the economy for everyone to have their own home.
Now we turn to the Accountant. Shouldn’t they be showing more transparency in their activities? No Way! Then suddenly, “Hey, we’re not receiving our monthly payment”. “Yeah, I meant to call you about that, but we’ve been busy”. “I thought we were supposed to be paid off first”. “Hey, I assure you, we are as disappointed as you are”. “But you told me housing prices always go up and the borrowers always refinance their mortgages.” “Yeah, that was a bad assumption!” “But this security was insured”. “Yeah, but there’s no way they can cover all these losses”. “So what am I supposed to tell my clients?” “Tell them you screwed up”.
Now, some numbers. According to the WSJ a month ago, 1 in 6 home owners are under water – that is, they owe more money than their house is worth. As many as twelve million are in this situation. 9.6 % of payments are a month or more late. Most of these bad mortgages were issued in 2006 and 07. Housing prices turn around slowly – the last drop, in the late 90’s, took four years to bounce back. Today it has gotten much more complicated to get a loan, with condominiums being toughest. In the past, a credit score of 640 to 680 would qualify you for a loan – today, you need between 720 and 740 to be eligible. This is probably the primary reason why we are having the present meltdown, and where we will go with this is anybody’s guess.
Elliott asked us to look at the reprint of a recent WSJ article dealing with California home prices. The article focuses on Los Banos, a town of 36,000 near the center of the Central Valley. Here, sales have increased by 65% over Sept. 07, but the sales prices are way down. Every fifth house is in some stage of the foreclosure process. Some say the government should buy these homes and reduce their value to today’s reality. Others contend that this would simply reward those who bought homes they couldn’t afford. And of course whatever is done will depend upon the length of the current downturn, which can only be a guess.
LEE DUNAYER came on briefly. He feels that we are at the end of the beginning, which means it will be quite a while until normal prices again prevail. Many present mortgages are based on a 3-5-7–10 year adjustable period, than settling on whatever the current economy demands. Some people have taken these, figuring they won’t be in the house that long anyway. Liar’s Loans were mentioned – these are those based on whatever the applicant tells the broker, without any verification. A Real Estate House, by the way, is what houses that have been foreclosed and are now owned by banks is called. Another problem today is appraisals – they are very tough, while they used to be easy.
Fannie May and Freddie Mac came increasingly into the insurance market – that is, guaranteeing mortgages for huge numbers of banks. Once they suddenly began to default, neither firm could keep up – thus the government buyout. The problem really started in 1999, when these packages of mortgages were first offered. Banks and insurance companies picked them up immediately, and sooner or later the defaults were bound to begin. In the last month, the inter-bank lending rate has skyrocketed, because the possible lender wasn’t sure that the bank they were lending to would be able to pay them back.
MARK ROGO came forward with the current, quite local, news. A major summary was passed out, and is excellent – but is it is far too detailed to be ‘outlined’ here. If you didn’t get a copy, and want one, I’m sure MARK will send one along. I will pick just a few highlights, if I may:
- Beverly Hills, to August 08 – aver days on mkt 64, 11 listing sold, Sales vs. List 106%+
- Westwood/Century City, days on mkt 26, 9 listings sold, sales vs. list 97.9 %, minus
- Brentwood, days on mkt 66, 10 listings sold, sales vs. list 95.1% minus
- Number of For Sale properties by month, Sept 06 to 08, 7% +
- Supply & Demand by month, Sept 06 to 08, 7% supply +, 6% demand +
- Average days on market, Sept 06 to 08, 77 days to 78 days.
- Number of For Sale Properties, Sept 06 to 08, 135 to 169, 25% +
- Number of new properties listed, Sept 06 to 08, 47 to 38, 19% minus
- Average days on market, Sept 06 to 08, 58 to 49, 15% minus
MARK reminded us that his figures deal only with Real Estate on the Westside.
Elliott, on the other hand, was speaking about national statistics. MARK does not like the LA Times – thinks they like to get hysterical over, for instance, defaults. We are reminded that if you miss just ONE payment over the entire life of your mortgage, you are, technically, in default. I’m sure we all agreed with his description of PP RON LYSTER in DEFAULT! The three stages of Foreclosure are first, a notice of default. If you miss 60 to 90 days, you get a notice of Trust Sale. After four to four and a half months, a notice of Foreclosure – and even then, you can still fix it by paying what is due.
In Beverly Hills, with 9,000 homes, in the last year there have been eleven foreclosures. In the Palisades, 2 homes and 3 condominiums foreclosed. So remember that we on the Westside are insulated. Even this past year, sales of single-family homes are up 2 to 3%.
MARK reminds us that all this will pass – but don’t be nervous, please!
ELLIOTT, LEE and MARK, thanks for your information. It’s a subject we all need to know more about.
Closing Words of Wisdom:
Good judgment comes from experience. But, unfortunately, experience usually comes from bad judgment.
