The Fed Does It Again: $80 Billion Secretive “Bank Subsidy” Program Uncovered, Providing Bank Loans At 0.01% Interest, Tyler Durden, Zero Hedge Blog

he Fed does it again. Following consistent allegations that the Federal Reserve operates in an opaque world, whose each and every action has only had a purpose of serving its Wall Street masters, led to repeated lawsuits which went so far as to get the Chairsatan to promise he would be more transparent, Bloomberg’s Bob Ivry breaks news that between March and December 2008 the Fed operated a previously undisclosed lending program, whose terms were nothing short of a subsidy to banks. Says Ivry: “The $80 billion initiative, called single-tranche open- market operations, or ST OMO, made 28-day loans from March through December 2008, a period in which confidence in global credit markets collapsed after the Sept. 15 bankruptcy of Lehman Brothers Holdings Inc. Units of 20 banks were required to bid at auctions for the cash. They paid interest rates as low as 0.01 percent that December, when the Fed’s main lending facility charged 0.5 percent.” 0.01% interest is also known by one other name: “outright subsidy.” It doesn’t get any freer than that: 0.01% interest on one month cash. Just how close to a complete implosion was the financial system if 0.5% interest seemed too high? Not surprisingly, this program was widely used: “Credit Suisse Group AG, Goldman Sachs Group Inc. and Royal Bank of Scotland Group Plc each borrowed at least $30 billion in 2008 from a Federal Reserve emergency lending program whose details weren’t revealed to shareholders, members of Congress or the public…Goldman Sachs, led by Chief Executive Officer Lloyd C. Blankfein, tapped the program most in December 2008, when data on the New York Fed website show the loans were least expensive. The lowest winning bid at an ST OMO auction declined to 0.01 percent on Dec. 30, 2008, New York Fed data show. At the time, the rate charged at the discount window was 0.5 percent. “ Yes, that Goldman Sachs. The same one that perjured itself when it said before the FCIC that it only used de minimis emergency borrowings. Just how many more top secret taxpayer subsidies will emerge were being used by the Fed to keep the kleptocratic status quo in charge?
From Buisnessweek:
“This was a pure subsidy,” said Robert A. Eisenbeis, former head of research at the Federal Reserve Bank of Atlanta and now chief monetary economist at Sarasota, Florida-based Cumberland Advisors Inc. “The Fed hasn’t been forthcoming with disclosures overall. Why should this be any different?”
Congress overlooked ST OMO when lawmakers required the central bank to publish its emergency lending data last year under the Dodd-Frank law.
“I wasn’t aware of this program until now,” said U.S. Representative Barney Frank, the Massachusetts Democrat who chaired the House Financial Services Committee in 2008 and co- authored the legislation overhauling financial regulation. The law does require the Fed to release details of any open-market operations undertaken after July 2010, after a two-year lag.
Records of the 2008 lending, released in March under court orders, show how the central bank adapted an existing tool for adjusting the U.S. money supply into an emergency source of cash. Zurich-based Credit Suisse borrowed as much as $45 billion, according to bar graphs that appear on 27 of 29,000 pages the central bank provided to media organizations that sued the Fed Board of Governors for public disclosure.
New York-based Goldman Sachs’s borrowing peaked at about $30 billion, the records show, as did the program’s loans to RBS, based in Edinburgh. Deutsche Bank AG, Barclays Plc and UBS AG each borrowed at least $15 billion, according to the graphs, which reflect deals made by 12 of the 20 eligible banks during the last four months of 2008.
And even now, we don’t know how much these individual subsidies were:
The records don’t provide exact loan amounts for each bank. Smith, the New York Fed spokesman, would not disclose those details. Amounts cited in this article are estimates based on the graphs.

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The usual excuse is used: the purpose of the program was to prevent the Ice-6ing of shadow markets
One effect of the program was to spur trading in mortgage- backed securities, said Lou Crandall, chief U.S. economist at Jersey City, New Jersey-based Wrightson ICAP LLC, a research company specializing in Fed operations. The 20 banks — previously designated as primary dealers to trade government securities directly with the New York Fed — posted mortgage securities guaranteed by government-sponsored enterprises such as Fannie Mae or Freddie Mac in exchange for the Fed’s cash.
ST OMO aimed to thaw a frozen short-term funding market and not necessarily to aid individual banks, Crandall said. Still, primary dealers earned spreads by using the program to help customers, such as hedge funds, finance their mortgage securities, he said.
One name stands out: Goldman Sachs.
The New York Fed conducted 44 ST OMO auctions, from March through December 2008, according to its website. Banks bid the interest rate they were willing to pay for the loans, which had terms of 28 days. That was an expansion of longstanding open- market operations, which offered cash for up to two weeks.
Outstanding ST OMO loans from April 2008 to January 2009 stayed at $80 billion. The average loan amount during that time was $19.4 billion, more than three times the average for the 7 1/2 years prior, according to New York Fed data. By comparison, borrowing from the Fed’s discount window, its main lending program for banks since 1914, peaked at $113.7 billion in October 2008, Fed data show.
Goldman Sachs, led by Chief Executive Officer Lloyd C. Blankfein, tapped the program most in December 2008, when data on the New York Fed website show the loans were least expensive. The lowest winning bid at an ST OMO auction declined to 0.01 percent on Dec. 30, 2008, New York Fed data show. At the time, the rate charged at the discount window was 0.5 percent.
More on Goldman:
As its ST OMO loans peaked in December 2008, Goldman Sachs’s borrowing from other Fed facilities topped out at $43.5 billion, the 15th highest peak of all banks assisted by the Fed, according to data compiled by Bloomberg. That month, the bank’s Fixed Income, Currencies and Commodities trading unit lost $320 million, according to a May 6, 2009, regulatory filing.
The source of the data: a FOIA lawsuit, just because the plebs knowing where billions of their money goes is not really in the best interests of the lords.
The bar charts were included in the Fed’s court-ordered March 31 disclosure under the Freedom of Information Act. The release was mandated after the U.S. Supreme Court rejected an industry group’s attempt to block it
So there it is again: a secret bailout program used to “rape” the peasantry by the entitled kleptocrats, which nobody thought would be exposed, and would allow those in control to lie blatantly to Congress. But have no fear: the wheels of justice are turning: instead of having those who rape millions under house arrest, we get the spectacle of those who allegedly rape one. The former, after all, are just a statistic.
And how long before the peasantry just snaps from the barage of endless lies?

Vacation homes slowly make a comeback, by J. Craig Anderson ,

The market for multimillion-dollar vacation homes has experienced a slow but steady recovery since the housing market crashed, with a slight increase in sales of luxury getaways for the ultrarich each year.

But builders and sellers of vacation properties aimed at the upper middle class said they are struggling to find a marketing pitch that will resonate with prospective buyers who still have the means but seem to have lost the will.

Jim Chaffin, a Colorado recreational real-estate developer, was among a group of panelists who spoke earlier this month about the challenges that vacation-home sellers face at a time when the only thing wealthy Americans feel inclined to flaunt is their frugality.

Chaffin, chairman of Aspen-based Chaffin Light LLC, said the challenge is on developers to construct a more relevant, persuasive pitch that keys into would-be buyers’ desire to feel smart, responsible and practical.

“It is no longer because you can or because you deserve it,” said Chaffin, speaking on the May 19 panel at the Urban Land Institute‘s 2011 Spring Council Forum in downtown Phoenix.

Chaffin and others said luxury vacation-home developers are likely to shift their focus from straight sales to lower-cost alternatives such as timeshares, fractional ownerships and private residence-club memberships – all of which allow consumers to vacation in style for considerably less than the cost of buying a luxury vacation home.

In addition, they said, future vacation-home developers will need to build in places that are easily accessible from major metropolitan areas, set in breathtakingly beautiful locales and offer a compelling experience in addition to a pretty view.

Drew Brown, chairman of Scottsdale-based developer DMB Associates Inc., who moderated the Urban Land Institute panel discussion, said that timeshare and fractional-ownership projects have struggled along with traditional sales in the current recession.

Brown said that is likely due to public perception that timeshares, fractional shares and club memberships are difficult to resell if the owners want or need out of the deal.

Panelist Chuck Cobb, chief executive of Cobb Partners, a Florida-based investor in resort properties, said resort-community developers and operators still have a long way to go toward recovery, with a huge inventory of vacation homes yet to be sold.

He said the most successful among them likely will offer a range of options for buyers, renters and traditional resort guests.

Vicki Kaplan is a Scottsdale-based real-estate agent who represents buyers and sellers of fractional-ownership shares in vacation villas at the Rocks Luxury Residence Club, a resort community in north Scottsdale managed by Troon Golf.

Kaplan, of Arizona Best Real Estate, said that the resale market for fractionals has been slow lately and that it can take up to a year to find a qualified buyer.

Fractional ownership differs from timeshare in several ways. Unlike timeshare buyers, fractional owners actually purchase a portion of the vacation-home or condo.

Private residence clubs are another variation on the timeshare concept. With residence clubs, participants buy a membership that entitles them to a certain amount of guaranteed vacation time at the resort.

Buyers of timeshares, fractional shares and residence-club memberships all must sell their stake in the resort community on the open market to be released from monthly homeowners’ association or maintenance-fee obligations, which can be considerable. At the Rocks, the standard fraction is one-seventh, which entitles the owners to a guaranteed six weeks of occupancy each year.

They can stay even longer and can use any of the resort’s seven fractionally owned villas as long as no one else is using them.

In addition, the resort community participates in a “reciprocity program,” administered by Timbers Resorts, a fractional-ownership and private residence-club resort operator based in Carbondale, Colo.

The program allows owners to stay at any of the company’s nine participating resort communities, which include locations in Colorado, California, Mexico and Italy.

Kaplan said fractional shares in the Rocks have sold recently for under $200,000 – considerably less than the developer’s original sale price of $325,000 to $335,000.

The monthly HOA dues, which cover maintenance plus services comparable to a high-end resort and spa, is about $900 a month, 12 months a year.

Kaplan said the recession has made it much easier for owners to take advantage of the reciprocity program because sister Timbers communities aren’t as likely to be fully occupied at any given time.

Still, Kaplan was quick to point out that fractional ownership is not for everyone. When talking to potential buyers, she spends a good portion of the time explaining the downside of buying a fractional vacation-home share.

Kaplan said she would much rather have prospects walk away than buy and later realize they made the wrong decision for their particular lifestyle.

For instance, she said, fractional owners can’t book six solid weeks at their villa in the winter, so if the buyer is looking for a winter home, a fractional is not a good fit.

About two years ago, banks stopped offering mortgage loans on fractional purchases, Kaplan said, so today’s buyer must be willing and able to pay cash.

“It’s not an easy product to sell,” she said. “It’s a niche market.”

Reach the reporter at or 602-444-8681

Bank-Owned Backlog Still Building, by Carole VanSickle, Bryan Ellis Real Estate News Letter

At present, banks and lenders own more than 872,000 homes in the United States today[1]. And that number, twice the number of REOs in 2007 and set to grow by around 1 million in the years ahead as current foreclosures move forward, is starting to make a lot of real estate professionals pretty nervous. Although home sales volumes are up, many experts fear that the growing backlog of foreclosures and the necessity of getting them off the balance sheets is going to create a “vicious cycle” of depressed home values that cannot make a recovery until the foreclosure backlog is reduced – and that could take many, many years as some forecasts predict that 2 million homes will be REO properties before the bottom truly hits.

Nationwide, Moody’s analytics predicts that the foreclosure backlog could take three more years to clear and that home values are likely to fall another 5 percent by the end of 2011. However, the firm predicts a “modest rise” in prices in 2012, which has some people thinking that the situation might not be quite as bleak as it seems. However, regional analysis is going to be more important than ever before for real estate investors. For example, while hardest hit areas like Phoenix and Las Vegas are finally starting to work through their backlogs as prices get so low that buyers – both investors and would-be homeowners – can no longer resist, real estate data firm RealtyTrac recently released numbers indicating that New York’s foreclosure backlog will take more than seven years to clear[2]. Currently, it takes an average of 900 days for a property to move through the state judicial system. This means that while New York City may be, as some residents and real estate agents insist, impervious to real estate woes, the state market could suffer mightily in the years to come as those foreclosures slog through the system.

Do you think that a 5 percent drop in price in the coming year followed by “modest gains” sounds terrible, or does that just get you in the mood to buy?

Bryan Ellis Real Estate Blog

Fannie Mae Homepath Review, by

Government mortgage financier Fannie Mae offers special home loan financing via its “HomePath” program, so let’s take a closer look.

In short, a HomePath mortgage allows prospective homebuyers to get their hands on a Fannie Mae-owned property (foreclosure) for as little down as three percent down.

And that down payment can be in the form of a gift, a grant, or a loan from a nonprofit organization, state or local government, or an employer.

This compares to the minimum 3.5 percent down payment required with an FHA loan.

HomePath financing comes in the form of fixed mortgages, adjustable-rate mortgages, and even interest-only options!

Another big plus associated with HomePath financing is that there is no lender-required appraisal or mortgage insurance.

Typically, private mortgage insurance is required for mortgages with a loan-to-value ratio over 80 percent, so this is a pretty good deal.

HomePath® Buyer Incentive

Fannie Mae is also currently offering buyers up to 3.5 percent in closing cost assistance through June 30, 2011.

But only those who plan to use the property as their primary residence as eligible – second homes and investment properties are excluded.

Finally, many condominium projects don’t meet Fannie’s guidelines, but if the condo you’re interested in is owned by Fannie Mae, it may be available for financing via HomePath.

Note that most large mortgage lenders, such as Citi or Wells Fargo, are “HomePath Mortgage Lenders,” meaning they can offer you the loan program.

Additionally, some of these lenders work with mortgage brokers, so you can go that route as well.

Final Word

In summary, HomePath might be a good alternative to purchasing a foreclosure through the open market.

And with flexible down payment requirements and no mortgage insurance or lender-required appraisal, you could save some serious cash.

So HomePath properties and corresponding financing should certainly be considered alongside other options.

But similar to other foreclosures, these homes are sold as-is, meaning repairs may be needed, which you will be responsible for. So tread cautiously.

Don’t Be Fooled Again! by Brett Reichel,

Many people will tell you that an Adjustable Rate Mortgage (ARM)  is horrible, and something a borrower should never take out.  A friend recently stopped by worried that his ARM was adjusting and that his payment would go through the roof.  We analyzed his paperwork and found out that his interest rate would be going down by MORE THAN 2 PERCENT!  This made a big impact on his payment!

The ARM’s that were bad were:

  • Sub Prime loans where the rate was artificially low
  • Had super short introductory periods like two years or less
  • Had a pre-payment penalty that was in force longer than the first adjustment of the loan
  • Had a payment that didn’t even cover their interest

These loans were definitely toxic.

The difference between today’s ARM’s?  Today’s ARM’s are much safer and better loans.  If you think you are only going to be in a property for 5, 7 or 10 years, you can find an ARM that has a fixed rate time frame that matches!   Here are features to look for in an ARM:

  • A fixed rate period that is the same or longer than the time frame you are planning on staying in the house.  If you think you’ll be there for five years, get a 5 year fixed ARM, or a 7 year fixed ARM.
  • Caps or limits to how high the interest rate a go to both at each adjustment and for the life of the loan.
  • Low margins.  What’s a margin?  Essentially, it’s the lenders “mark up” over the cost of their funds.  The lower the margin, the lower your future interest rate.
  • Most importantly, a lower rate than a 30 year fixed rate loan.  If you are sharing the interest rate risk with the lender, you should get a break in your costs.

 Recent customers of mine who are moving to a new town for just five years, will be saving over 1% in interest rate compared to the thirty year fixed rate loan.  For them this means about $100 per month!  For $100 a month, they can buy their loan officer a steak dinner every month for getting them such a good deal!

Don’t be fooled by so-called experts.  ARMS are a great deal IF MATCHED to the correct situation.  Thirty year fixed rate loans are great, but sometimes an ARM is a better option.

U.S. Real Estate Delinquencies Top 10% for First Time, Morgan Stanley Says, By Sarah Mulholland ,

Delinquencies on commercial mortgages packaged and sold as bonds surpassed 10 percent for the first time last month, according to Morgan Stanley.

Payments more than 30 days late jumped 26 basis points to 10.15 percent in April, Morgan Stanley analysts said in a report yesterday. While the pace of increase has slowed since the middle of last year, that’s partly because delinquencies are being offset as troubled loans are resolved. The rate of borrowers missing payments for the first time has been constant for the past four months, the analysts wrote.

“The bottom line is that loan performance is not yet exhibiting significant improvement,” according to the analysts led by Richard Parkus in New York. “Many market participants have come to believe that credit deterioration is more or less over, and were caught off guard by April’s rise.”

Delinquency rates for loans bundled into securities during the bubble years, when property values peaked amid lax underwriting, have reached 10.37 percent for 2006 deals and 13.26 percent for those in 2007, according to Morgan Stanley.

Borrowers with maturing debt taken out during the boom are still struggling to retire loans, according to the report. About 63 percent of commercial mortgages in bonds scheduled to mature in April paid off on time. That rate dropped to 33 percent for loans taken out from 2005 through 2008, the analysts said.

Sales of commercial-mortgage backed securities are rising after plummeting to $3.4 billion in 2009 from a record $234 billion in 2007, according to data compiled by Bloomberg. Wall Streethas sold $8.6 billion of the debt in 2011, compared with $11.5 billion in all of last year, the data show. Sales may reach $35 billion this year, according to Standard and Poor’s.

Property Values Down

New bond offerings provide financing to borrowers with maturing loans. Still, property values are down 44.6 percent from October 2007, according to Moody’s Investors Service, making it difficult for property owners to come up with the difference when repaying the debt.

Loans originated after 2005 had weaker loan characteristics,” Parkus said in a telephone interview. “On top of that, they were done at the peak of the cycle so they didn’t benefit from any price appreciation prior to the crisis.”

To contact the reporter on this story: Sarah Mulholland in New York

To contact the editor responsible for this story: Alan Goldstein at

Strategic Default: Inconceivable Assumptions Suddenly Conceivable, by Tim Rood,

Until recently it was generally believed that only a small fraction of Americans would willingly choose to skip their monthly mortgage payment, aka “strategically default”, when they found themselves stuck in a negative equity situation.

The logic driving this belief was based on the notion that borrowers wouldn’t want to damage their credit profile or deal with the social stigma surrounding a public foreclosure. The assumption that most underwater borrowers will continue making their monthly payments (absent a life event) is factored into the analytics of risk managers, buyers and sellers of mortgage related assets, servicing managers, and regulators across the country.

What if this assumption is wrong? Is that inconceivable?

It wasn’t long ago when conventional wisdom convinced us that lenders would never make loans to borrowers that had virtually zero likelihood of being able to pay the loans back. In a 2010 study conducted by the Cato Institute, it was estimated that there were over 27 million Alt-A and subprime loans in the system by mid-2008. That’s approximately 50 percent of all loans in the market.  Remember when we thought home price would never fall on a national level? Never been done and won’t ever happen, right? That assumption was shattered when home values nationally dropped between 30-50% from their peak in 2006, wiping out roughly $7 trillion of home equity in the process.

Fannie Mae recently published it’s latest National Housing Survey and exposed disturbing patterns and sentiments with American homeowners. For example,  46% of borrowers are “stressed” about their underwater mortgage, up from 11% in June 2010. That’s an alarming four-fold increase in three quarters. That statistic becomes even more concerning when viewing the sheer number of borrowers faced with negative equity. At the end of 2010, which doesn’t include the home price declines seen in 2011, CoreLogic estimated that 11.1 million homes, or 23.1 percent of all homes with a mortgage, were underwater. Think about those two stats this way – every morning, 46% of the estimated 11.1 million underwater borrowers wake up and debate why they should keep paying their monthly mortgage payment. Further weighing on borrowers is that  47% of borrowers surveyed reported higher household expenses than the year before…

From that perspective, it doesn’t seem inconceivable that our assumptions might be off base again. Is principal forgiveness the answer?

Probably not, and here’s why. Remember how many folks HAMP was supposed to save by giving them new loan terms? The number touted by the administration was over 4 million. In reality, the number is likely to come in around 500-750,000 permanent modifications. Imagine the scenario when a government sponsored principal reduction program is announced. Out of the 11 million underwater borrowers – you’ll probably get three times as many borrowers applying for relief. Maybe one tenth of them will actually qualify and be granted a principal reduction. In the meantime, some 20+ million applicants would have stopped making payments to “qualify” or be considered for qualification. How many of them will be able to or even want to get current again after they are turned down?

Like it or not, we have got to find ways to stabilize home prices, reward responsible behavior among existing homeowners, and encourage home buying. I don’t see any ideas on the table that would accomplish any of these objectives…. and the effects are starting to show up in data.

Did you order the appraisal yet? – The Ideal Home Loan Process

Awhile ago I produced a video about some conversations between certain Realtors and my team.

I also wrote a nice long post about the subject, and Realtor professionalism in general, on my site.

I like to go back and watch the video from time to time because it makes me laugh, and that is a rare commodity in today’s Real Estate market. While I was watching it, I thought I would share with the audience here what I consider to be the ideal home loan process, and exactly how the appraisal fits in to that timeline.

1) Pre-application Consultation – Ideally, home loan applicants would sit down with a competent, licensed Mortgage Professional 6 months before they intend to enter the market. Many people have unique circumstances regarding credit, income, employment, etc., and 6 months is usually enough time to work through issues to present the best possible loan file to underwriting.

2) Gathering of Essentials – Before you apply, you should gather your last 30 days paystubs, 2 most recent bank statements, last 2 years Federal tax returns with w2s & 1099s, & most recent retirement statements. And, if applicable, any divorce decrees, award letters, child support orders, and last 2 years business tax returns for self-employed/business owners.

3) Fill out a Loan Application – When it’s time to fill out a loan application, do so with somebody you trust and get along with. You will be speaking with your loan officer a lot over the course of the coming weeks, so you might as well make sure that those conversations are with somebody you like and who is professional. They should clearly explain your loan terms, and all of the disclosures that need your signature so that you feel comfortable with the agreement you are entering into.

4) Behind the Scenes – This is where the real work starts. Your Loan Officer and his/her team will be verifying and documenting your income and assets, dissecting your credit report, pre-approving you through automated underwriting, ordering a preliminary title report and title insurance, and many other things that are just as exciting as they sound, but necessary. This prepares your file to be ideally what we call a “one touch” file in…

5) Underwriting – Despite the possibility of unexpected snafus, underwriting can still be a fairly smooth process if you have chosen the right Loan Officer to work with. Depending on underwriting turntimes, in a couple of days you should have a conditional approval. Think of this as the “to-do” list that you and your Loan Officer must complete before your loan documents can be drawn up.

6) Conditions – You will work with your Loan Officer to get all of the “to-dos” done and submitted to the underwriter. Once you are sure that all conditions can be satisfied, this is when you would order the…

7) APPRAISAL! – Your Loan Officer will order your appraisal through an Appraisal Management Company. Depending on the company used, and the demand for appraisals, this process will take a few days to a week. It has to be completed within 10 days, but it usually doesn’t take that long. Assuming the appraisal comes in at an acceptable value, the next step is to order the…

8 ) DOCS! HOORAY!! – The docs, or loan documents, are the paperwork you sign at closing. These include the final application, disclosures, the note, and sometimes your last 2 years tax returns need to be signed (if you e-filed the previous 2 years). Next step is…

9) FUNDING!!! – There will be some “prior-to-funding” conditions, but most of the time its standard escrow items. The escrow company sends all of the documents you signed at closing to the lender, and the lender reviews those documents for accuracy and completeness. If everything is ship-shape (which it should be if you are working with the right people), then you can…

10) MOVE IN!!!!! – Time to pay for pizza and beer in an attempt to trick your friends into helping you move.

And there you have it, the ideal home loan process. Each individual loan carries its own set of circumstances, so it isn’t out of the realm of possibility that your process might deviate from these 10 steps. However, if you select the right person to work with, you should have a good idea of what you are up against from the beginning.

Jason Hillard - @homeloan_ninja

Jason Hillard

If you have any questions about Real Estate financing in Oregon or Washington, or the home loan process in general, feel free to shoot me an email at or check out the wealth of information at! I started the site because I continue to be appalled by the complete lack of reliable information about home loans in the mainstream media. I sincerely hope it is a true resource that helps to educate everyone to become a better home loan consumer.

Oregon Real Estate Waned has just posted a new buyer: SG 16

SG16  is an experienced  real estate investor  looking for real estate investment opportunities in the Portland metro market.   This investor is an all Cash buyer and will not need bank or lender approval to finalize any agreement made.

For more information regarding this buyer and others.  Visit at

Fannie vs. Freddie Earnings; Loan Limit Reduction Ahead; Jumbo Market Chatter; Think Tank Opinion on GSEs, by Rob Chrisman. Mortgage News Daily

Yesterday I went through denial, anger, bargaining, depression, and acceptance – which are now the 5 stages of buying gas.

Incidents of mortgage fraud dropped from 2009 to 2010. Either that, or incidents rose – it depends who you ask. FRAUD. Regardless, Florida took the “top” honors, followed by New York, California, New Jersey, and Maryland (No. 5).

The FDIC’s chairman Sheila Bair will indeed be stepping down when her term expires, as has previously been announced. Cake and soda pop will be served in the FDIC’s cafeteria on July 8th – no gifts please.

Fannie & Freddie recently released results that appear to point to the different focus in the past of their two companies. One reader wrote, “Freddie Mac reported its first true net profit in almost two years, earning $676 million in the first quarter and not asking the taxpayer for more money. But Fannie reported at $6.5 billion loss for the quarter, and asked Treasury for $8.5 billion in taxpayer money. From my vantage point, the difference rests in the amount of Countrywide business that Fannie bought in the past – CW was Fannie’s best customer for several years, selling Fannie a variety of A-paper, alt-A, pay option ARMs, and other products. I bet that if you take Countrywide out of the equation, Fannie would show similar results to Freddie. But last year Fannie agreed to one lump sum from BofA to settle the bulk of buyback claims – good for BofA, bad for Fannie.”

Last month the Cato Institute published its opinion of the agencies, and it is making the rounds. “Foremost among the government-sponsored enterprises’ deleterious activities was their vast direct purchases of loans that can only be characterized as subprime. Under reasonable definitions of subprime, almost 30 percent of Fannie and Freddie direct purchases could be considered subprime. The government-sponsored enterprises were also the largest single investor in subprime private label mortgage-backed securities. During the height of the housing bubble, almost 40 percent of newly issued private-label subprime securities were purchased by Fannie Mae and Freddie Mac. In order to protect both the taxpayer and our broader economy, Fannie Mae and Freddie Mac should be abolished, along with other policies that transfer the risk of mortgage default from the lender to the taxpayer.”

Who is going to teach your staff about NMLS? Be sure to scroll down a little for news on NMLS and Federally regulated institutions! NMLSTraining

For any jumbo mortgage fans, here is some chatter: Jumbo

By the way, at this point the conforming loan level in the higher-priced areas will indeed drop to $625,500 from $729,750. Although it is not set in stone and could be subject to some political wrangling, few doubt that it will drop. Here is Fannie’s memo stating the loan limits Fannie along with the FHFA’s.

Aventur Partners & Aventur Mortgage Capital appear to be turning some heads in the jumbo world. Led by the former co-founder and CEO of Thornburg Mortgage (Larry Goldstone) is developing a new mortgage company specializing in jumbo lending. Past and current legal nightmares aside, Thornburg-style companies certainly have their fans in the business, and the former vice president of Thornburg, David Akre, is the serving COO at Aventur.

“Soldiers do not march in step when going across bridges because they could set up a vibration which could be sufficient to knock the bridge down.” Fortunately not every housing market moves in exactly the same direction and in the same magnitude, but Zillow posted some housing numbers that certainly would make a bridge shake a little. There seem to be dozens of house price indices, but the one from Zillow yesterday showed that home values posted the largest decline in the first quarter since late 2008. Home values fell 3% in the first quarter from the previous quarter and 1.1% in March from the previous month, and Zillow reports prices have now fallen for 57 consecutive months. Our economy needs job & housing, housing and jobs, to truly recover, and although mortgage rates continue to be low, the expiration of the housing tax credit and the continued flow of foreclosures hitting the market aren’t helping prices. Detroit, Chicago and Minneapolis posted the largest declines during the first quarter of the top 25 metro areas tracked by Zillow, while Pittsburgh, Dallas and Washington posted the smallest declines.

As an interesting side note to this, housing is certainly more affordable than any time in a few decades, but credit, appraisal, and documentation standards remain tight (many would say they should, and if they were in place 5 years ago we wouldn’t have these issues). One report mentioned that the average credit score on loans backed by Fannie Mae stood at 762 in the first quarter, up from an average of 718 between 2001-2004.

Franklin American relaxed its conventional condominium guidelines to allow established condominiums with 200 units or more to be approved through DU Limited Review or CPM. FAMC also tweaked its policies for “Purchase of a short sale/foreclosure or REO – Appraisal Requirements” (added the requirement for a full appraisal if the borrower is purchasing a property sold under a short sale in addition to transactions where the borrower is purchasing a foreclosure or REO), required that utilities must be on at time of appraiser’s inspection, and revised the income documentation guidelines for borrowers employed by an interested party to require a written VOE in addition to the most recent 30 day paystub. FAMC announced the introduction of the Conforming Fixed Rate 97 product which allows loans up to 97% through DU, with certain restrictions.

GMAC Bank Correspondent Funding, echoing FHA Mortgage Letter 2011-11 on the subject of Refinance Transactions, refined its stance on the use of FHA TOTAL Scorecard to underwrite Credit Qualifying Streamlines (will continue to be eligible) and determining the mortgage basis on a Cash-out transaction when a borrower is buying out ground rent. GMAC also reminded clients that the Freddie Mac Relief Refinance Open Access product has been discontinued, and after tomorrow several of its loan program codes will no longer be available. GMACB will not purchase loans where LP feedback states Open Access.

Wells’ wholesale notified brokers about changes to its “Compensation and Anti-Steering: BYTE Fee Details Now Accepted, Compensation and Anti-Steering: Appraisal Fee Reimbursement, and Best Practices to Avoid FHA Case Number Cancellation. WF’s broker clients were also reminded not to delay in learning about the NMLS Federal Registration*, given a new address for the “Change of Servicer” notifications, updated the processing fee for Guaranteed Rural Housing loans and curing TIL material disclosure errors, and reminded of the final documentation delivery address for VA loan Guaranty Certificates and Rural Development Loan

Note Guarantees.

*Three months ago the Board of Governors of the Federal Reserve System, Farm Credit Administration, FDIC, National Credit Union Administration, OCC, and OTS announced the opening of the Nationwide Mortgage Licensing System and Registry for Federally Regulated originators. “All originators (company and loan level) who are federally regulated will have 180 days to complete the SAFE Act requirements and register with the federal S.A.F.E. registry. One should not delay, as at the end of July all federally regulated originators will be required to provide their NMLS Loan Originator and LO Company ID’s: FederalNMLS

Out in California, First California Mortgage is looking for someone to lead its new Multi-Family division. The person will be handling the full range of processing and monitoring activities associated with the multi-family housing program, along with cultivating new and enhancing established relationships with realtors, builders, community groups/clubs and associates resulting in new loan originations and referrals. In addition, the person will be securing new Agency lending opportunities, working primarily with Freddie and Fannie. (The complete list of duties and requirements is too lengthy for this commentary.) If you’re interested, or know someone who is, contact Shannon Thomson, Director of Human Resources, at

Parkside Lending, a west coast wholesaler, reminded its brokers that it will fund Non-owner high balance purchase loans up to 80% LTV up to $625,500 through its Freddie Mac Super Conforming product line and subject to other restrictions. Parkside also allows broker/owners to select individual compensation plans for each of their branch offices. “This means one branch could be at 1.0% monthly comp contract while another is at 1.5% monthly comp -and so on, as long as they are under separate branches as recognized by DRE.”

Wall Street continues to see good interest by investors in mortgage products, “…buying from all investor types…Japanese, Real Money and Central Banks have been the largest – the market continues to under estimate the short base…,” which is another way of saying that Central Banks and investment firms have an enormous amount of cash to be put to work. And specifically for mortgages, banks have been very large buyers of MBS (per the H8 data). Monday was very quiet, with the 10-yr yield closing at 3.14% and MBS prices a shade better/higher as there is still a flight to safety bid on continued worries about European debt issues – particularly related to Greece.

Just before the funeral services, the undertaker came up to the very elderly widow and asked, “How old was your husband?”

“98,” she replied. “Two years older than me.”

“So you’re 96,” the undertaker commented.

She responded, “Hardly worth going home, isn’t it?”

Reporters interviewing a 104-year-old woman:

“And what do you think is the best thing about being 104?” the reporter asked.

She simply replied, “No peer pressure.”

I’m happy to announce that I will be writing a twice-a-month blog that you can access at the STRATMOR Group web site located at Each blog will address what I regard as an important topic or issue for our industry. My first blog, for example, considers the near and longer-term outlook for jumbo lending. Since you can comment on my blogs, I’m hoping each topic I address will generate a thoughtful dialogue.

Mortgage News Daily

Report: Residential market hits double dip, by Wendy Culverwell, Portland Business Journal

The U.S. residential real estate market experienced a dreaded “double dip” in April, according to Clear Capital, as a leading index dropped below the prior, post-recession market low set in March 2009.
Truckee, Calif.-based Clear Capital monitors the residential real estate market. It found that nationwide home prices dropped 5 percent in April compared to one year ago and are down 11.5 percent over the prior nine months, a rate of decline not seen since 2008.
Clear Capital’s Home Data Index for Portland dropped 10.1 percent compared to a year ago while Seattle prices dropped 12 percent in the same period.
Clear Capital also said distressed properties, including foreclosures, represented 34.5 percent of the market in April.
Locally, distressed properties represented 31.1 percent of the Portland market and 27.4 percent of the Seattle market, it said.
“The latest data through April shows a continued increase in the proportion of distressed sales that are taking hold in markets nationwide,” said Alex Villacorta, director of research and analytics. “With more than one-third of national home sales being (distressed), market prices are being weighed down as many markets have not regained enough footing to withstand the strain.”
Clear Data said the nation’s five best markets are Charlotte, N.C., Washington D.C., Tucson, Ariz., Dallas and Philadelphia.
The five worst markets were Detroit, Hartford, Conn., Milwaukee, Wisc., Cleveland and Chicago.

Read more: Report: Residential market hits double dip | Portland Business Journal

Wendy Culverwell

Home Affordability Reaches Generational High, by International Business Times

If you have good credit and savings, now is a great time to buy. According to, “Homes are more affordable than they’ve been in the past 35 years.”

Not only have home values fallen in many key markets, making homeownership more accessible to the average buyer, interest rates are at historic lows, meaning that once a home is purchased, monthly payments are smaller than in our recent past.

Zillow notes that “today’s median home buyer can expect to pay about 17% of his monthly gross income on his mortgage, compared to a 25% average since 1975.”

In the 1980’s, when interest rates were dangerously near 20 percent, this would take up nearly 45 percent of a buyers gross monthly income. In comparison, today’s rates are an extreme bargain.

The main road block to homeownership at this time is access to credit. Although nearly one-third of all home purchases in recent months have been all-cash, that leaves the majority of the market shares requiring financing.

The tightening of lending standards in recent years, though, has been in direct response to the subprime lending trend during the housing boom.

Federal Reserve research indicates that a quarter of all mortgages in 2006 were subprime. This means that these loans were made to borrowers with credit scores below 620-660 and who were unable to put down the traditional 20 percent.

Today, buyers need credit scores in the 700s, with the higher the better. According to Zillow, “Applicants with FICO scores under 620 were virtually unable to get loans at any rate, thus being effectively excluded from the home-buying market. And those with FICO scores below 620 represent almost a third of the population.”

There has also been a return of the 20 percent downpayment. This is in your best interest, as it means savings when it comes to closing costs. “The difference between a 10% and 20% down payment means she now has to save up another $17,220 in addition to any closing costs.” (Zillow)

So, while it is more difficult for many homeowners to get into the market in today’s economy, for buyers who have good credit and adequate savings, homes may never have been more affordable.

Home sweet home? Now is the time to leverage your home equity, says Thrivent, by Staff Report, Alexandria Echo Press

Given the economic turbulence of the past several years, the greatest asset that many Americans have is their home. With interest rates still near historical lows, now might be the time to tap into your home equity to help consolidate debt, embark on a home improvement project, start an emergency savings fund or even help pay for college.

Home equity loans and home equity lines of credit (HELOCs) are two of the most common ways for homeowners to borrow money by leveraging the equity they have in their home. Each offers its own unique benefits and both can offer considerable tax benefits, according to Thrivent Financial Bank.

The first step in determining which home equity product is right for you is to answer one simple question: How will I use the money?

“Many people are aware that now might be a good time to borrow against the equity in their home,” said Jill Aleshire, executive vice president of Thrivent Financial Bank. “However, slowing down and taking a closer look at how to best use that equity is the best thing you can do to start the process. “

Thrivent Financial Bank offers the following tips to help you decide if tapping your home equity is the right choice for you.

Appreciating assets

Home equity loans and HELOCS are meant to improve your long-term financial well-being, so think about how best to use the equity toward assets that will increase in value (appreciating assets). Ask yourself, “Will this earn value in the long run?” A college education or a home improvement project can be justified as appreciating investments if they result in a higher lifetime income or property value.

Emergency reserve savings

Home equity loans and lines of credit can be a good option if you are in need of protection against job loss, medical emergencies or home and vehicle repair.

First-time debt consolidation

One of the most common uses for home equity loans and lines of credit is debt consolidation. Because the interest paid may be tax-deductible and the interest rates can be lower than many creditors’ rates, some homeowners borrow against the value of their home to pay off debt.

Needs, not wants

Using your hard-earned equity for extraneous purchases is not a good use of your loan. If you don’t need the funds now, consider waiting to take out a home equity loan until you have a specific need. Borrowing once against the equity in your home can be a great way to strengthen your finances if used wisely, but be careful not to make a habit of borrowing. Limiting your loan spending to needs, not wants, is a good way to keep yourself in check.

Mr. Bevilacqua and the “Brooklyn Bridge Problem”, by Phil Querin,

From the same court that brought us U.S. Bank Association, Trustee v. Ibanez, earlier this year, it now appears we will soon hear from the Massachusetts Supreme Judicial Court again. This time the issue deals with what happens to title after a bank completes a procedurally improper foreclosure.

Ibanez ruled that a foreclosure by U.S. Bank was invalid because at the time of the foreclosure it did not actually own the mortgage foreclosed upon. Thus, the Ibanez ruling set up the next logical issue for the court: If the bank conducts an invalid foreclosure, can it then “launder the title” by transferring it to a “bona fide purchaser” and thereby give that buyer better title than the bank received?

The Massachusetts case of Bevilacqua v. Rodriguez raises this very question. In that case, following its invalid foreclosure, the bank sold the property to Francis Bevilacqua, a developer, who then built four condominium units on it. In an effort to establish clear title, he then sued the prior owner who had been foreclosed. The owner did not appear and defend in the case. Nevertheless, the Massachusetts Land Court, in 2010, per Judge Keith C. Long [yes, the Ibanez trial judge. – PCQ], held that Mr. Bevilacqua’s effort to use the state’s quiet title statute “…most often used when there is a genuine dispute as to which competing title chain (each with a plausible basis)….” was without merit since Mr. Bevilacqua had “…no plausible claim — just a deed on record derived solely from an invalid foreclosure sale….”

Putting a finer point to this conclusion, Judge Long elaborated as follows:

The first reason it has no merit is the most obvious. By its express terms, G.L. c. 240, § 1 et seq. [Massachusetts’ “try title” statute – PCQ] only applies “if the record title of land is clouded by an adverse claim.” G.L. c. 240, § 1 (emphasis added). Here, there is no cloud, and certainly none that would give Mr. Bevilacqua standing to assert it. A cloud is not created simply on someone’s say so. There must be, at the least, a plausible claim to title by the G.L. c. 240, § 1 plaintiff. See Daley v. Daley, 300 Mass. 17 , 21 (1938) (“[a] petition to remove a cloud from the title to land affected cannot be maintained unless both actual possession and the legal title are united in the petitioner”) (emphasis added). Otherwise, in the classic example, a litigant could go to the registry, record a deed to the Brooklyn Bridge, commence suit, hope that the true owners either ignored the suit or (as here, discussed more fully below) could not readily be located and be defaulted, and secure a judgment. As shown on the face of his complaint, Mr. Bevilacqua has no plausible claim to title since it derives, and derives exclusively, from an invalid foreclosure sale.

In short, you can’t create something from nothing. Or, as noted by Judge Long above, and again by Justice Ralph Gants of the Massachusetts Supreme Judicial Court, during oral argument on Monday, May 2, 2011, accepting the argument that Mr. Bevilacqua had acquired marketable title, would create “the Brooklyn Bridge problem,” i.e. permitting persons (or banks) with no colorable title, to sell anything into the marketplace, and thereby magically turn bad title into good. Alchemy disappeared in the Middle Ages. You can’t spin straw into gold, even if you’re a Big Bank.

Judge Long was not without sympathy for Mr. Bevilacqua, as “…he was not the one who conducted the invalid foreclosure, and presumably purchased from the foreclosing entity in reliance on receiving good title — but if that was the case his proper grievance and proper remedy is against that wrongfully foreclosing entity on which he relied….” In other words, “Sue the bank.”

My Analysis. Why Judge Long stated that he had “great sympathy” for Mr. Bevilacqua may have been because his purchase from the bank was in 2006. Back then, the real estate market was on fire, and the worst one could say about purchasing a property out of foreclosure was that it was simply capitalism working in the marketplace. Not so today. Since 2006 we have been regaled with story after story about illegal bank foreclosures. In most of these cases, the illegality was due to the fact that during the easy credit days of 2005 – 2007, banks securitized millions of loans with such fervor that they lost track of the true ownership of the paper. MERS, the electronic registration system that took the recording process “underground,” provided a perfect cover at the time. But when the foreclosure crisis hit, the banks realized they’d lost track of their loans, and thinking no one would notice, oftentimes, foreclosed homeowners without actually owning the mortgages foreclosed upon.

Under general common law rules in virtually all states, a “bona fide purchaser,” or “BFP,” is one who buys property in good faith, pays full and fair consideration, and has no notice of claims against the title. In most instances, the BFP prevails over all other competing claims. But under the Massachusetts’ Land Court ruling in Ibanez in January of this year, the type of foreclosure conducted by U.S. Bank was invalid, since it did not own the loan at the time. Thus, the bank never acquired title from the homeowner it ostensibly foreclosed. The inescapable conclusion therefore, must be that the bank had nothing to convey to Mr. Bevilacqua. To rule otherwise would mean that one can spin straw into gold.

So while Mr. Bevilacqua may have appeared to be a genuine BFP back in 2006, he still cannot prevail, since he acquired nothing from the bank in the first place. To rule in favor of Mr. Bevilacqua would reward the bank for conducting an illegal foreclosure. Moreover, Mr. Bevilacqua was not without a remedy – it was just against the bank that sold him the property – not against the foreclosed homeowner. It is for this reason that Judge Long concluded that while Mr. Bevilacqua certainly had equities on his side, his “…proper grievance and proper remedy is against that wrongfully foreclosing entity on which he relied.”

The Oregon Federal Bankruptcy Court has reached a conclusion similar to Massachusetts’ Ibanez decision, upon which Judge Long relied in his Land Court decision in Bevilacqua v. Rodriguez. Our version of Ibanez is the case of Donald McCoy , III v. BNC Mortgage, et al., No. 10-63814-fra13, where Judge Alley ruled that an illegal foreclosure is “void,” which means that the bank acquired nothing. Thus, the question begs to be asked: “If presented with the same title question as in Bevilacqua, would the Oregon courts reach a decision similar to Judge Long’s?”

Well, we will just have to wait. In the meantime, we can see what the Massachusetts Supreme Judicial Court decides in Bevilacqua. The answer (hopefully) will be that the Massachusetts high court will affirm Judge Long’s Land Court decision. There really is no other conclusion that can be reached. It is likely that in Oregon the local title companies already realize this, which explains why [as discussed in my post here – PCQ] it is currently declining to insure title to buyers – even BFPs – in those cases where the seller is a bank that acquired the property through a nonjudicial foreclosure.

Conclusion. Hopefully, we will not have to wait long before the Massachusetts Supreme Judicial Court rules on Bevilacqua v. Rodriguez. The smart money is on the consumer. I say this for the following reason, relying upon a couple of old legal concepts: First, one cannot convey title to property one does not own. Second, before one may be a grantor, they must first be a grantee. Neither event can occur when an illegal foreclosure precedes a conveyance from the bank. Under McCoy, the foreclosure sale is void. Thus, the bank acquired nothing and has nothing to sell.

How can the banks extricate themselves from this apparent conundrum? Here are some real world suggestions:

Conduct legal foreclosures going forward!
As to those foreclosures performed illegally, go back to the borrowers and obtain a quitclaim or bargain and sale deed. Sure it might cost a couple of bucks, but that pales in comparison to the $1.5 billion Bank of America (for example) paid last year in legal fees.
As to those borrowers in foreclosure, where no sale has yet been conducted, take back a deed-in-lieu of foreclosure. This approach works because there would be no illegal foreclosure sale to cast a shadow over the quality of the title when it is conveyed out into the marketplace.
And for those borrowers trying to short sell their homes, lenders should speed up their consent process so that the transactions are completed in the same time frame as equity sales – say 45-60 days. This way, title to the property is never tainted by an illegal foreclosure. The deed never goes to the lender in the first place.
All of the above approaches avoid the illegal foreclosure problem and the resulting clouded title problem. Equilibrium in the housing market would return and prices would become stabilized. Reasonable appreciation would resume and equity would grow. Until this occurs, we are destined for years of stagnation in housing.

So why don’t the Big Banks get their act together and adopt some or all of the above approaches? I have one answer: Because the servicers, many of which are owned or controlled by Big Banks, do not seem interested in resolving these problems quickly. As I have noted in my recent post, the servicers’ business model is neither designed nor intended to move quickly, because they make more money by going as s-l-o-w-l-y as possible, ultimately dragging borrowers through the entire foreclosure process. Even with short sales, quick consents only limit the amount of late fees and other charges such as forced placed insurance, that servicers can pile on in order to later recover them from their co-conspirators, the Big Banks.

Phil Querin is an attorney that specializes in Oregon Real Estate law. He has a blog in which he shares a wealth of information at

Eco-Friendly Living On The Cheap: Book Review: ‘Green Barbarians: Live Bravely on Your Home Planet’, by Tara-Nicholle Nelson,

I come from a family of more or less unwitting feminists. My grandmother consciously taught me from early childhood that women should always own their own homes and are responsible to have education and career enough to support their children on their own — whether they think they need to or not.

My mother’s philosophy is somewhat less altruistic: Children must go to daycare as soon as you can send them.

While I suspect this was a credo born out of her personal preference for adult company and work-world accomplishment over the daily ups and downs of full-time, at-home parenting, she couched it in terms of health advice for kids: being surrounded by their snot-nosed compatriots in preschools and daycare builds the immune system, she’d say, citing my own pediatrician’s assertion that an overclean, pet-free house was probably the source of my laundry list of childhood allergies.

It seems that Ellen Sandbeck, author of “Green Barbarians: Live Bravely on Your Home Planet,” would agree with my mom and my doctor on this point, given her book’s premise that our 21st-century, super-sanitized, compulsively consumerized and convenient-at-all-costs social and domestic standards are actually making us sicker and driving us nuts, in one fell swoop.

(Even my grandmother, a cleanliness nut and public health nurse who washed her steering wheel at the end of every workday and never wore her work shoes in the house, might be persuaded by Sandbeck’s throwback, commonsense, enough-already! approach.)

Though the term “barbarians” might seem extreme, Sandbeck explains upfront that she means it in only the kindest, gentlest, sense of the term, as it was used by the ancient Greeks and Latins to indicate one “who was not of the dominant culture, and who was therefore considered strange or bizarre.”

Accordingly, she defines the “Green Barbarian” lifestyle as referring to “those who define themselves by what they do and what they create, what they save and what they preserve, rather than by what they buy and what they consume.” It’s an eco-friendly lifestyle, with a frugal slant and a little bit — OK, a lot! — of a renegade/anti-“Big Business” edge.

Sandbeck urges readers not to be afraid of dirt and used things, but to be very afraid of corporate-driven cultural messages to buy, buy, clean and then buy some more. Become a “Green Barbarian,” she urges, by “(using) your mind, hands, and heart to make a better life for yourself and for those you love.”

Then, Sandbeck proceeds to show you how.

She gets started by detailing the results of her own self-education campaign, with which she empowers readers to cut through the advertising hype and distinguish between things they really shouldn’t fear (like spiders, SARS and sharks) and the things they should (handgun violence, drivers who are drinking or texting, and environmental degradation).

Then, Sandbeck breaks down her definition of bravery, which she considers an essential element of Green Barbarianism, as a mental state that has released the fear of dirt, runny noses, intestinal worms and stinky odors and even, dare-she-say, embraced these ostensible evils in light of overwhelming data showing that these things are good for us — and that the fear of them is bad for us.

Sandbeck cites data that shows synthetically scented air fresheners may actually cause illness while dust, dog hair and other items, which we once thought were bad for us (think: chocolate and eggs), are actually health-enhancing.

Sandbeck surfaces similar data-backed, surprising, green barbaric living principles for kitchen, bathroom, body (including dirt — yes actual dirt! — as a soap alternative, in a pinch), health, children and even pets. Along the way, she addresses common, real-life problems and offers “Green Barbarian”-style solutions.

Stinky house? Don’t spray a freshener — bake a pie! Upset that your teenaged son takes less-than-thorough showers before wiping off on your white towels? Don’t be — the friction of the towels accounts for most of the germ removing power of showers anyway. So chill out and get him some brown towels.

And Sandbeck’s not afraid to let you know what common cleanliness concerns are well-founded — especially when it comes to pediatric health. Circumcision does turn out to have some serious health advantages; vaccinations can prevent death and maiming via the mumps, whooping cough and the like; and honey really can cause fatal botulism in infants, despite its multiple holistic health advantages for older kids and adults, Sandbeck allows.

Long story short, if you’re that type of person who believes strongly in the five-second rule for dropped food, you’ll love this book and the numerous, money- and sanity-saving suggestions it provides for managing your home, your health and your life in a brave, green way. But if you’re the germophobic sort, like my grandma, who actually threw her back out just before her 80th birthday cleaning the top of her fridge (the top?!), then you probably will benefit from this book even more! It’s highly actionable, and so earns its keep.

But more importantly, it can free you from the tyranny of oversanitization and hypochondria that can cost you thousands of dollars and previous moments of your life. And it does so in Sandbeck’s funny, sane, super-well-researched voice full of life lessons from her father, whose hypochondria crippled him from fully living the last 50 years of his life, her own release of sani-stress from her family’s life, and the freedom and fun of their embrace of the “Green Barbarian” lifestyle.

Tara-Nicholle Nelson is author of “The Savvy Woman’s Homebuying Handbook” and “Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions.” Tara is also the Consumer Ambassador and Educator for real estate listings search site Ask her a real estate question online or visit her website,