Friday, May 04, 2007

Marin Brokers Getting the Pink Slip

Just as flies are drawn to a poop, people flocked to selling real estate and mortgages when times were good. But now brokerages are shutting down and brokers are being laid off. Even here in immune Marin:
Layoffs have hit two prominent Marin mortgage brokerages this spring, signaling a shift in the local real estate market and a trickle-down effect credited to the subprime lending fallout.

San Rafael-based Paul Financial LLC gave 36 employees walking papers Wednesday, company officials said. Of those, 25 were based in San Rafael. The company employs about 180 full-time workers in offices in San Rafael, Santa Rosa and Irvine.

Late last month, Novato-based GreenPoint Mortgage laid off 70 employees, nine of whom worked out of the company's Novato headquarters, officials said. GreenPoint employs approximately 2,800 people, about 570 of whom work in Marin.

The real estate market has experienced a slowdown, said Don Maxon, mortgage loan officer and assistant vice president of Bank of America Mortgage in Larkspur.

"I just see the market as being very changed," she [Donna Barron, principal of the San Rafael-based investment mortgage strategy firm the Barron Group] said. "It's not the market it was. I have reps that have the territory from Healdsburg on down who say most of the brokerages have closed down. Clearly the ranks of the brokerage industry have been hit significantly."

A spokeswoman for GreenPoint said the lender was feeling the effects of tighter credit restrictions imposed by investors buying its loans - restrictions prompted by trouble in the subprime lending market.


Anonymous Anonymous said...

well those layoffs clearly won't imact the local real estate market. If they are marin residents then they are rich and were only working because they liked it and not because they needed the money. They wipe their butts with money and so losing their job won't interfere with them paying their mortgage.

If they weren't rich then they don't live in marin, and the mortgage they won't be able to pay will likely be in Sonoma county.

All is well. This is god's country.

May 4, 2007, 2:21:00 PM  
Anonymous Anonymous said...

"If they are marin residents then they are rich and were only working because they liked it and not because they needed the money. They wipe their butts with money and so losing their job won't interfere with them paying their mortgage."

Perhaps they could also " save the environment" by burning money to fuel their volvos.

May 4, 2007, 4:47:00 PM  
Blogger Lisa said...

This article was front & center on the Marin IJ today, which was good to see.

The mortgage mess will spread like the plague. The starting point may have been Subprime, but this will impact everyone.

And jobs at title companies and mortgage brokerages are good-paying white collar jobs. Trickle down to restaurants, dry cleaners, car wash, movie theatres, etc.

May 4, 2007, 5:32:00 PM  
Anonymous Anonymous said...

Wait a minute I left my violin around here somewhere...

May 4, 2007, 6:24:00 PM  
Anonymous Anonymous said...

After all those rich people go bust, that's when I move in and buy the choice properties.

May 4, 2007, 7:54:00 PM  
Anonymous Anonymous said...

I found the following comments on next week's Fed move on interest rate. If the Fed cuts rate next week, I wonder whether the RE would be rescued. Or, the situation is just being put off for a much bigger problem later on.

*** A FED, M3, and Inflation Commentary ***

M3 money inflows are running at a triple Fed projected rate for the year. The Fed had set a policy goal of increasing M3 by 10% per year for 3 years. Last year was year 1, and they were slightly over 10% This is year 2, and as of the end of April, they have already hit their 10% objective. What do they do now? If they continue at the prior 4 month pace, they will end up at a 30% M3 money inflation rate.

The top economists at Goldman Sachs, Merrill Lynch, and UBS have all come out publicly and have said that Bernanke is WRONG about interest rates having to rise to curb inflation. Their models ALL agree that the Fed should cut interest rates 3 times this year.

So, why is Bernanke so diametrically opposite in his stance?

Because he is inflating the money supply at an insane pace in order to avoid a recession ... and printing huge amounts of money is INFLATIONARY. This puts him in between a rock and a hard place. Is his plan to float lots of inflationary money, keep it high to stimulate the economy, and then use a higher interest rate as a braking mechanism so inflation doesn't get out of control?

He is facing a predicament where he has to keep inflating M3, and if he now lowers interest rates, inflation will get out of control.

Is he is now concerned that he can't do both without losing control over inflation, what are his options?

Has he backed himself into a corner?

Bernanke's problem is that if he lowers interest rates, he will have to Stop inflating M3 and the money supply. That has been his chief weapon to stimulate the economy in the face of a bad housing situation and sub-prime loan problems.

Next week's FOMC meeting announcement will be one of the most watched events by Institutions, Goldman Sachs, and Merrill Lynch for the past 12 months. (I posted no charts today ... just this "food for thought" commentary.)

Marty Chenard
80 Botany Drive
Asheville, NC 28805
Tel: 828-296-1200

May 4, 2007, 8:01:00 PM  
Blogger beebs said...

I doubt that cutting interest rates will help housing.

May 4, 2007, 10:15:00 PM  
Anonymous Anonymous said...

Layoffs in the mortgage banking world is nothing new. It is a common practice to contract just like they expand, based on market conditions.

This should be no surprise to anyone, and it isn't a bell signaling any particular collapse in the area. It is another data point in the slowdown, which has happened before in RE market declines, due to loan volumes. I would be willing to bet that these companies were still riding a little "fat" around the waste in staff numbers.

May 5, 2007, 2:31:00 AM  
Anonymous Anonymous said...

In Fact,

You will see great appreciation in Marin!

Very soon numbers will go up and up!

Marin is disconnected from the "fundamentals".

The rich and richer are here and make Marin very special.

Get in now, if you can.

May 5, 2007, 2:48:00 AM  
Anonymous Anonymous said...

"Layoffs in the mortgage banking world is nothing new"

Well, I disagree with what that comment implies, which is "no big deal" on these layoffs... uh, uh fella..

No, layoffs in a normal economy, when the consumer's number 1 expense (housing) is not hyper-inflated might not be a big deal, but we're just seeing the start of this layoff thing.. However, this time, most households, because of housing costs, no longer have those same rainy day funds set aside to ride this one out. Nope, these layoffs, and the ones that will follow will hurt… both psychologically and financially..

I never, normally, would look at layoffs as a good thing and I do feel for the families affected by this; however, this is certainly no surprise…. I hope they didn't believe their own hype and planned accordingly.. doubt it, but..

Related to this, and as a follow up to an earlier discussion on this blog, don't you know that a good portion of commercial real estate leases are for RE related businesses.. lenders, brokers etc.. So the popping of this housing bubble will cause a spillover, no question. It's just a matter of time… see the attached NY Times article on the bubbliest of all commercial RE locals… lenders putting a pinch on making loans based on “rent growth”..

35-40% haircut here in Marin.
50% haircut elsewhere..

Bank on it..


May 5, 2007, 6:59:00 AM  
Anonymous Anonymous said...

And, as Lisa noted, other businesses, with commercial leases, that feed off of an appreciating housing market will also be impacted by this crash.. Discretionary spending places like like restaurants, car dealers, beautiques etc etc will all feel the affects of this deflating bubble..

Can you say "consolidation"... It will be widespread and wicked... The good news is this consolidation will happen across the board, including here in Marin...

Remember, the last ounce of vanity and ego around here is tied to the individual's home, so everything else will be sacraficed to hold onto it, especially those $150 dinners and facials...


May 5, 2007, 7:19:00 AM  
Anonymous Anonymous said...

Rock > Federal Reserve < Hard Place

May 5, 2007, 7:54:00 AM  
Anonymous Anonymous said...

Was talking to a fellow the other day, didn’t know him. We exchanged pleasantries which included what we both did. Turned out he was a Mortgage broker (in Marin). I asked him how business was figuring it would be swirling around the drain. He said it was great. When I said I was surprised he said all his clients were very rich that they did short term adjustable and refied’ every year, he said that rates were up some this year. There was a hint of worry in his voice but just a hint. The only sense I could make of this, rich people not having fixed rates, was that either these people were continually taking equity out of their long owned houses or they just wanted the low rates always knowing they have the money to go into fixed or simply pay it off after selling other investments which currently return more than they are paying in interest. He did note that appraisals are coming in considerably below where they were last year.

May 5, 2007, 9:17:00 AM  
Anonymous Anonymous said...

No No. I predict total collapse for these Marin County richies.
When they receive their well-deserved haircuts, you can bet that they won't be able to pay $150 for it.

Bank on it..


May 5, 2007, 10:12:00 AM  
Blogger Marinite said...

Next week's FOMC meeting announcement will be one of the most watched events by Institutions, Goldman Sachs, and Merrill Lynch for the past 12 months.

The state of affairs vis the money supply and the interest rate conundrum (i.e., "being stuck between a rock and a hard place")has been around for a while now, for at least the last few FOMC meetings. Why is this next meeting in particular so interesting?

May 5, 2007, 11:04:00 AM  
Anonymous Anonymous said...

Guess I should sign in to avoid the sophomoric baloney just posted with my name at the end (that last "Matt" post was not me).. perhaps I'm hitting below too many bubble belts..


May 5, 2007, 4:59:00 PM  
Anonymous Anonymous said...

the vast majority of "loan Brokers" and "mortgage Brokers" are actually licensed as real estate sales agents,and are NOT "real estate brokers".you need a couple of years experience as a salesperson, a bit more education,and the ability to pass a test equivalent to an 8th grade final to become a licensed broker.Brokers are generally a lot better educated and knowledgeable than salespeople(sigh).

May 6, 2007, 7:54:00 PM  
Blogger Marin Resident said...

If you own real estate in "southern" marin you will always make money on your investment. This area has no place to built more housing, there is a TON of money in the area, the schools are top notch and everyone that lives in the city eventualy wants to move into south marin. You may see a flat appreciation every once in a while, but you can almost bank on a 5% to 10% gain, show me that gain with your other invesments that also give you a tax write off.

If you have convinced yourself that renting will make you richer than owning, you have some twisted thoughts. Almost every person out there who is worth a million or up, has allot of that to credit to their real estate purchases. If you can show me renters that have become rich from their choice to rent, I would love to see that.

If you think you made the right choice not to buy real estate in the last 5 years, then you are way off base also. This will hold true in future years also.

On the other hand you need to stay in what you can afford and if payments are to high for you, than renting is the best choice. I love renters, they pay my mortgages for me while I make money off the banks money while paying off an appreciating asset. I will take that any day over giving my money to someone else to pay off their asset.

May 21, 2007, 4:25:00 PM  

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