Another one bites the dust - OwnIt Mortgage
I was out of town on the east coast for a little while catching up with friends, and going to the Army/Navy game in Philadelphia. Navy made it a 4 year sweep of both Army and Air Force…too bad they didn’t play that well when I was there. Anyway, I have quite a bit on my plate right now, but lets look at a few things.
First off, OwnIt Mortgage went down faster than a Pamela Anderson marriage. It appears that their website is already shut down… www.ownitmortgage.com I remember when this company hit the market, and now I got to see it go full circle. Here you go:
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From: OwnIt Mortgage Solutions [mailto:info@ownitmortgage.com]
Sent: Tuesday, December 05, 2006 4:26 PM
To:
Subject: Ownit Mortgage Solutions is Closing Its Doors
To view this email as a web page, go here.
December 5, 2006
To All Ownit Mortgage Solutions Friends and Partners in Business,
It is with deep regret that we inform you Ownit Mortgage Solutions will cease operations on December 6, 2006. For the past three years, we have pursued a mission to influence the mortgage industry toward increased affordability options for a changing market of home buyers. Change takes time, and we are saddened that the current unfavorable conditions of the mortgage industry did not afford us sufficient time to see our mission through.
We have been blessed with the opportunity to work with you over the past three years, and we wish each and every one of you success in your endeavors. We look forward to future opportunities to work with you again. Provided below are regional contacts for loan status: (I removed the contact info - SCMG)
Ownit Mortgage Solutions . 27349 Agoura Road, Agoura Hills, CA . 877-443-0405
This email was sent by: OwnIt Mortgage Solutions
27349 Agoura Road Suite 100 Agoura Hills, CA 91301 USA
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What I find really interesting is how this company, and the whole RE industry as a whole thinks they are doing people a favor by adding more ‘affordability options’. It is really simple…you either have, or make enough to afford something, or you don’t.
I can’t afford a new Ferrari F430 with the Novitec Rosso package right now. The only way I could afford one is if I either 1. started making a lot more money (must…blog…harder…) or 2. saved my money for a long, long time. Some ‘nice’ company on a ‘mission’ to help me ‘afford’ one by finding some way to stretch my current pay is NOT really doing me any favors in the long term. But hey, I could get into a Ferrari today and live the ‘American dream’! We’ll worry about tomorrow another day…
The same thing has happened to many with Real Estate. So many bought into homes they couldn’t ‘afford’ in the long term, but they could afford the interest only, or neg-am payment today. And that my friends is why we have a bubble. You can’t stretch the dollar forever…no matter what OwnIt or any other ‘helpful’ mortgage company tells you.
That brings me to my next point. See this story from the NYT. Look at this quote from a top mortgage executive at a major bank:
“We all should be proud as an industry,” Michael W. Perry, chairman and chief executive of IndyMac Bank, a lender in Pasadena, Calif., told his peers at the Mortgage Bankers Association’s annual convention in Chicago recently. “We have created an enormous amount of wealth for Americans.”
Yeah, I could’ve sworn the CEO of ‘whatever.com’ said the same thing a few years ago. These people have made sooo much money off the masses, what do you think they are going to say? Just like the stock market boom, there are a lot of people who made a killing in the RE and mortgage industries and will be set for life. BUT, there will be many more that are left clenching ‘old’ appraisals the same way stock-jockeys were left clenching Wall Street Journals from 1999.
I am working on a few things that I think you will find very informative. I have saved a LOT of information from when I was in the industry. I think it is time to peel back the curtain and let you see for yourselves what was REALLY going on. Look for these posts throughout the holidays.
Also…I just got my annual web hosting and URL bill in the mail. So if you need to do any Christmas shopping this season, help out the bloggers that you read by shopping through their e-tailers. I have Amazon.com on my site…so if you are buying any books, music, or electronics for anybody, going through my site is greatly appreciated. Every little bit helps!
Stay tuned…
SoCalMtgGuy
December 7th, 2006 07:06
Seems like it is very easy for these mortgage shops to go in and out of business.They see the writeing on the wall and know it is a good time to bail and maimize profits at this point. I’m sure we will see a lot more go under soon. I notice a lot of them are in califronia?
December 7th, 2006 07:49
What will be really interesting is all of the people who worked for these companies. Where will they go to work now. They either change professions or go unemployed. And I’ll bet none of them had a clue about what was coming, say two years ago. So none of them have probably saved any money for a rainy day. I predict recession for the OC.
December 7th, 2006 08:01
Good move putting Amazon on here. I think I personally keep them in business. I’ll link thru your site.
Happy holidays!
December 7th, 2006 08:09
Sebring Capital closed a few days ago also!
December 7th, 2006 08:50
The owners of OwnIt probably closed shop just before they would be forced to buy back too many bad mortages. I don’t know if they planned it, or it just played out well so far for them:
1) making loans to people who won’t be able to pay them back
2) selling the loan on the market for mortgage backed securities (MBS) while promising to buy back loans that turn bad in the first years
3) pocketing the fees connected with the loans
4) close shop when bad loans surface frequently due to the slowing housing market
5) leave the buyers in foreclosures and the MBS holder in the rain
If the prosecutor cannot prove intention to act so from the beginning, can the owners of OwnIt walk away free with their ill-gotten gains?
Regards,
Peter
December 7th, 2006 09:23
From the ‘old’ site on blogger….
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Robert Coté said…
The entire industry will be disintermediated and join the likes of travel agents.
Good to see new posts.
12/07/2006 3:54 AM
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Metroplexual said…
Me too, glad to see you back again. I am looking forward to your new stuff on what was REALLY going on. I am glad you are still out here. Alot of bloggers are disappearing or not posting alot because the psychological tide is turning or in some places has turned. I want to see this stuff chronicled so there is something for economists and historians to reference when the sh!te hits the fan for the FBs.
12/07/2006 5:37 AM
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SoCalMtgGuy said…
metroplexual,
That is what I hope will happen.
The problem the ‘bloggers’ are having, is that now that the media is saying everything they have been saying the past year or so…they don’t feel the need to say it.
I sort of/almost fell into that trap.
I wish I had the readership of say a major nationwide newspaper. I wish I could reach more people and let them know what is going on…but I still don’t think the masses are ‘ready’ yet. Going against the ‘RE is awesome’ machine would mean swimming against the stream and not following the sheep.
Thanks for the comments…
SoCalMtgGuy
12/07/2006 9:08 AM
December 7th, 2006 09:51
SoCalMtgGuy,
An additional point you should always emphasize - these “affordability” products do damage, because they raise the prices for everyone. Imagine that Ferrari still only makes 4000 cars/year, but that anyone can walk down to ScummyCarMtgCo and get a $300,000 option ARM auto loan - what will happen to the prices of Ferraris?
If you get time, I would be interested in an analysis of the “Fixed for five years at 0.25%” loans (Mortgage Pointer www.radioloan.com and at least one other). I did some rough mental calculations on the way to work, and it appears to me that the loan will reset before five years based on reaching the neg am cap - and then the FB will really be in trouble. It also seems to be a good loan for fraud (make min payments until loan resets, then declare bankruptcy).
Keep up the good work!
December 7th, 2006 09:56
Bearcat,
Exactly…you can change a ’standard’ and the people that are ‘in’ before the standard changes (I/O, neg-am, etc.), or that are ‘early adopters’ will make money IF they get out.
Like the post I did a few weeks ago about the fundamentals…they WILL return to the market.
I call it a new ’standard’ because when 80%+ of the loans being used in CA are I/O or neg-am when they were less than 1.5% just 5 years ago…you can see how a new ’standard’ has been set.
VERY few people could afford homes if they had to get a mortgage that paid principal…either fixed or ARM.
Stay tuned…
SoCalMtgGuy
December 7th, 2006 11:40
Employee of the month looks forward to great career at OwnIt Mortgage:
http://www.dallascap.com/bios/biosfrm.html
The CEO has money invested in the Olsen twins, and many other things. Two bad the OwnIt mortgage does not have the same sex appeal as two 20 year old billionaires.
December 7th, 2006 12:04
Nice to see I’m not the only Boat School grad who thinks this whole thing has been obscene. I firmly believe that this whole market drop is merely at the beginning.
I’d enjoy the chance to visit with you (SoCalMtgGuy) sometime, either on the phone, via e-mail, or in person (I am in San Diego)to learn more about what you are doing now. Feel free to e-mail me at the address I’ve left here.
BTW–as I flip through the current Shipmate, I am astonished at the number of graduates (many young classes, too)who have chosen to become non-productive members of society (Realtors)
What’s up with that?
Well…as time, tide, and formation wait for noone…I am now shoving off!
December 7th, 2006 12:20
Can you believe this dope from Annaly mtg praising lenders for giving out questionable loans to people who cannot afford real estate? The number of lawsuits coming down the pike aGAINST the entire RE clan is going to be enormous.
More and more shady operations hutting down means less dopes able to get toxic loans and the money dries up then the crash in prices.
December 7th, 2006 12:34
SoCal, would love to hear your views regarding first payment mortgage defaults. I’m seeing quite a bit of this both personally as well as checking out the local SD NOD listing. Any idea how common this is and how much it will impact the downturn?
December 7th, 2006 12:41
OCRenter…
It is getting much more common. A month or so ago I was talking to a buddy of mine that had 4 loans go 30, 60, 90, 120, default inside of 2-3 months. He was looking to leave the industry anyway…and those incidents made it even easier. Like me, he was a USNA grad and hated the shady aspects of the industry.
When people are getting loans with no skin in the game…who cares if they default. The BK doesn’t scare them…especially with all the people that will still do 100% loans to people 1-day out of BK.
SoCalMtgGuy
December 7th, 2006 14:52
I was reading the LA Times article about this outfit. OwnIt blames Merrill Lynch. Seems that Merrill Lynch cut off their funding, I guess you can’t really buy back all those loans afterall.
FYI. You might want to take a look in the FB Story Forum about a borrower I spoke to yesterday. She is 88 years old and just got an cash out Option ARM refi for $256,000. The lender is American Broker’s Conduit if you want to get an idea of who will be the next company to fold out of the blue.
December 7th, 2006 19:05
I have heard through the grapevine that Ownit had $500M in early payment default buybacks. They only originate $1,000M a month!!! There were rumors that place was a fraud-mill.
The LA times article detailing the closing quoted Kevin Panet, a former employee.
Crispy, you mentioned working with Panet at a former firm (on another blog). Panet worked at my firm about a year and a half ago. You still there?
December 7th, 2006 19:10
The email I posted was from a “friend” who worked with him at another company.
I think the company was WMC (now a unit of GE).
December 7th, 2006 19:11
“Rumors this place was a fraud mill” - Are there any sub prime houses that are not over run with fraud?
December 7th, 2006 19:27
Why Mr. Crispy, I’m surprised at you. Of course. The sub-prime brokers are doing a tremendous service to the community. A few rotten apples maybe but you might as well try to impune other upstanding memebers of the industry like David “almost done to a” Crisp. I even left an example; mortgagemadness.info on your blog.
Let’s do a More-Tech Fi-nancial autopsy:
[x] Flashy website
[x] Expensive offices
[x] Livin’ large
[x] Opaque business model
Yep, I’d put ‘em on my [x]mas list.
December 7th, 2006 19:40
I don’t work in Sub Prime. The “friend” is a family member who wishes to remain anon. No still a CPA. Not in any REIC related business!
December 7th, 2006 19:50
Per the Loan Officers forum or blog; the next Company to go down is:
“We also heard Sebring Capital has closed. We also heard MLN may be in the same boat.”
December 7th, 2006 21:45
Effective today, December 1, 2006 Sebring Capital will cease operations and no longer accept new submissions.
All loans that have an approval must close and fund by December 15, 2006. If you have any questions regarding loans in process, please call 800-716-6220.
We apologize for any inconvenience this may cause you or your borrowers. It has truly been a pleasure doing business with you.
December 8th, 2006 11:13
“(must…blog…harder…)” That’s the spirit!
I’ll be using your site to access Amazon as well.
December 8th, 2006 13:40
A question to ask: What did OwnIt do differntly from other subprime lenders? The follow-up question, if it was nothing significant: When can we expect the other subprime lenders to run out of money?
December 8th, 2006 19:26
The comments by the executive at IndyMac are absolutely ridiculous. This guy is a frickin’ buffoon.
December 9th, 2006 09:14
Heya SoCal,
I ordered $175 worth of movies from amazon via AnotherF@ckedBorrower’s link (got a little carried away with buying dark comedies, I’m afraid). Hope you get a little for it!
How’s the new gig working out for ya?
December 9th, 2006 11:09
If I could ask a stupid question, what happens to all the mortgages these now-defunct companies wrote?
December 9th, 2006 13:38
Idaho Spud….THANK YOU!!
Fiat Lux….
The loans are split-up between the security piece and the servicing piece. Even if the loan is sold, somebody has to service that loan.
Ever wonder why you get a letter in the mail telling you to send your mortgage payment to some ‘new’ place.
There will be some issues when the company goes under, but believe me, somebody owns that mortgage, and they will want their monthly paycheck. They will make sure that someobody is ’servicing’ that loan.
I hope this helps some…
SoCalMtgGuy
December 9th, 2006 17:26
Oh dear, another negative thought has crossed my mind. Must remember to cleanse with Jamba Juice.
That evil thought just won’t go away unless I post it here. WRT servicing, I’m sure this is a lot like any other backroom. I can see them engineering a diversion of payments and disappearing or worse; just plain screwing up. I know the fine print says that unless the lender gets the money the borrower is responsible so there’s gonna be a lot of finger pointing and confusion to go around when the waters get muddy.
SoCalMtgGuy, ever get up Camarillo way?
December 9th, 2006 18:27
Thanks SCMG, I knew that these loans were generally resold, but was unclear on the longterm implications.
Any way you look at it, this is just going to further muddy the already dank waters of the subprime mortgage pool. It’s not going to be pretty.
December 11th, 2006 13:18
I released today’s FREE report on Chicago. And it’s a fairly normal market - that’s strange for us CA natives… It joins prior FREE reports on Boston, Bakersfield, San Francisco, Seattle & Los Angeles.
thebubblebuster.com
December 12th, 2006 09:04
SoCal — love the photo — LOL.
December 13th, 2006 21:40
Go Navy! Beat Army! and Boston College!
Dean
USNA 88
December 13th, 2006 21:41
OH yeah, sales in socal down 25%. Soft landing my rear end.
Go Navy!
January 8th, 2007 16:31
Ownit Mortgage got OWNED
January 22nd, 2007 13:36
I worked with xxxxxxx when he was an AE at WMC Costa Mesa.
He started out in the Woodland Hills corp office as the training manager, basically compiling information referred to him from Subject Matter Experts. He was downsized when HR cleaned house in that department and was offered two choices: 1) stay in W. Hills as an inside BDA (Business Development Associate = AM) or 2)drive to Costa Mesa every day from Simi Valley and become a BDR (Business Development Repersentative = AE). Guess what he chose. Just because you compile a training manual doesn’t mean you have a clue about the mortgage business. The guy was NOT well-liked at WMC, mostly because he expected everyone around him to treat him like he was a seasoned BDR. He wasn’t. HE hadn’t earned it and didn’t have the experience or the knowledge to even BEGIN to earn it. He liked to throw tantrums when he didn’t get his way. He liked to make pretty graphs and charts to post at his little cube about where his sales were that week. He lasted about 8 months at WMC before getting the boot.
It’s only fitting that his termination consisted of being shipped off to a trade show. HR probably didn’t want to deal with his whining face to face, so they got him as far away from the office as possible before pulling the plug on it’s “spokesperson”.
Scheudenfruede!!
MUAHAHAHAHAHA!
December 2nd, 2007 01:38
Hannab…
This is one thing I definitely agree on…