Nashville Real Estate Forum

Weekend Market Update

Oct. 16-17, 2010

Strong earnings from Google powered the Nasdaq and Standard & Poor's 500 indexes higher on Friday, giving a boost to the technology sector as the Internet-search giant hurdled the $600-per share mark.

Google jumped $60.52, or 11%, to $601.45, its highest close since January after the company posted a 32% rise in its third-quarter profits, topping analysts' expectations. The climb in the company's stock boosted its market capitalization by $19.1 billion as investors were encouraged to see Google finally indicating progress in developing other significant revenue streams beyond its dominance in online-search advertising.

However, the Dow Jones Industrial Average slipped 31.79, or 0.29%, to 11,062.78, hurt by disappointing revenue at General Electric and weakness in financials as worries persisted over the foreclosure crisis.

The 10-year Treasury note closed at a yield of 2.58%.

The fate of one of the major players in the mortgage meltdown was determined on Friday as Countrywide Financial Corp. co-founder Angelo Mozilo agreed to a $67.5 million settlement to avoid going to trial on civil fraud and insider trading charges that alleged he profited from doling out risky mortgages while misleading investors about the risks.

Here is what amazes me about Mozilo's deal: he will not pay a dime of the $67.5 million! Read details of how Mozilo wrangled this---about four paragraphs down, after I put in my perspective on how Countrywide operated in seemingly its heyday.

Countrywide aggressively and wildly bought its way into market share in the middle years of this decade, sometimes offering loans that contained no profit for the company and rolling out the so-called "option ARM" mortgages that gave borrowers four payment choices, including less than interest-only and negative amortization.

At times being in the role of retail competitor with Countrywide, I could see their reps were often lying to customers or were giving away loans to get market share. It was inevitable to us that Countrywide could not continue to exist with this business model, which was almost something of a pyramid scheme, its payoff being deferred into a future that never materialized.

At the community bank where I worked at that time, we had access to Countrywide's products and used some of their no-documentation, no-employment loans. However, we refused to make the Option ARMs as they were clearly outrageous and traps for borrowers.

Two other former Countrywide executives also settled before trial next week on charges filed by the Securities and Exchange Commission. But employment agreements that protect the men from lawsuits involving the failed lender mean Bank of America Corp., which bought Countrywide in July 2008, will pick up the tab, according to an Associated Press story.

The settlement announced Friday spares the executives the risk of a verdict that could have been used against them in lawsuits by shareholders, or by prosecutors if a criminal probe into their activities leads to charges.

It also gives the SEC the right to brag about what it said is the biggest financial penalty ever against a public company's senior executive. The agency has been criticized for doing little to prevent much of the risky behavior that led to the financial meltdown and for failing to detect Bernard Madoff's massive investment fraud.

The payments come on top of an $8.4 billion settlement Bank of America made with 12 states in 2008 over Countrywide's lending practices. The company also agreed in August to pay $600 million to end a class-action case from former Countrywide shareholders.

The penalty represents a striking turn for Mozilo, the son of a Bronx butcher who 41 years ago co-founded what grew into the nation's largest home loan originator. In 2006, Countrywide was writing one in six of the nation's mortgages, totaling more than $490 billion, court records showed.

Call me with any questions about the market or to pre-approve you for a purchase loan or to run a free analysis of what a refinance---with cash out or not---would mean for your financial bottom line. Gary Moore 615-579-8658.

30-Year Conventional Fixed

4.0% $200,000-$417,000

15-Year Conventional Fixed

3.5% $200,000-$417,000


30-Year FHA-100% VA

4.0% $100,000-$393,300


30-Year Jumbo Fixed

5.25% $417,001-$900,000

(Interest-only available-Call me)

THDA Great Start

4.8% $100,000-$393,300

4% of sales price Gift

Call for free pre-approval and to discover

the best financing for you!

...by Gary Moore

Mortgage Planner, First Community Mortgage

...a subsidiary of First Community Bank

Cell: 615-579-8658 Toll-free fax: 866-321-6513

Quote of the Day

"Anyone who has never made a mistake has
never tried anything new." --Albert Einstein

Visit my real estate website:

http://www.RealCarte.com

Visit my mortgage website:

http://www.BrentwoodHomeLoan.com

(0% points, 1% origination. Market Update informs consumers and Realtors on market trends, offers subjective opinions and is not a quote for a unique borrower.)