Archive for the ‘Financial Services’ Category

No Easy Way Out

September 19, 2009

I love Doctor Housing bubble! The data he compiles is great!

-$1 Trillion in CA mortgages are underwater & swimming in the Pacific Ocean.

-42% have Negative Equity.

-$3Trillion total in US

-$1Trillion in Alt-A (Interest Only etc.)

-$182Billion in Option Arms

*50%+ are in Cali

*$20Billion~ BOA (CW)

*$42Billion~ Wells (World)

*$40Billion~ Chase (WAMU)

Short Sale a home you can’t afford and buy one for a deal that you can afford

Even though there were mortgage brokers that sold the option arm correctly by providing the proper education and disclosures most borrowers abused the product and did not save or invest the difference. If you haven’t been doing this start doing it NOW so you are prepared for your recast and if you can’t, get ahead of the game and do a short sale now.

While 88% have not yet recasted most borrowers are enjoying a 1% payment and a current interest rate of around 4%~ most commonly (MTA+Margin) or (LIBOR+Margin) Margin is fixed and usually ranges between 2-4%. (Review your loan docs or mortgage statement to obtain this information)

The problem lies when the option arm recasts and homeowners no longer have the OPTION of the minimum payment.

Well, I guess that wont be that big of a deal if the payment quadruples to 4%, right? 4% is a pretty low interest rate!

Oh, but wait! What about China? One would have to believe they want to start getting paid back their money by 2012, 2013 and that the LIBOR followed by the MTA will hit at least 4%.

Meaning (4%MTA+3%Margin) =7% septuple – octuple the payment!

Here is the ALT-A recasting schedule:

2009-2010 $6 Billion~/mo

2010-2011 $8 Billion~/mo

2011 $33 Billion~ /mo

“There’s No Easy Way Out There’s No Short Cut Home…”

…only a short sale

or will Lex Luthor – The Great Evil Mastermind of our time, be right?

Will someone nuke the San Andreas fault or will we have a big earthquake making California fall into the sea suddenly creating valuable beach-front property of the once barren desert? [shouting] “Miss Teschmaacher”

I don’t know which chart below is more scary…either way we are going to need superman

mortgage rate resets waves

MTL announcement and NY AIG Press release

October 10, 2008

Here is an announcement from MTL insurance company addressing the current financial climate.

Press Release distributed by the New York Department of Insurance about the AIG situation mentions some very important points about the safety of the regulated insurance industry.  Unlike the esoteric unregulated banking industry, Insurance companies have been held to a higher standard of accounting principles by the government and their own constituents in the insurance industry.

Please keep in mind that every topic below can be a longer conversation if you wish

Concerns you should have about where your money is safe, liquid, growing (tax Free):

Where is it safer?  Bank?  Stocks & Mutual funds?  Bonds?  Buried in home equity?  IRA or 401K or any government sponsored plan? Insurance?

Bank: Safe, yes (up to $250K in some cases now) ; Liquid , yes  ;  growth very little and not tax fee

Stocks & Mutual Funds: Safe, no; Liquid, no;  growth lots of ups and downs over the years, not tax free,  maybe get average of 9% before taxes

Bonds: Safe (somewhat); Liquid , no; growth moderate and sometimes tax free

Buried in home equity: Safe, no; liquid, no; growth, no  (home may go back up in value but the actual equity has no growth while trapped in home on paper)

IRA or 401K or most government sponsored plans: safe, YES, it is creditor proof and protected in bankruptcy, but usually people chose mutual funds;  liquid, no; growth – most of it could be owed in taxes.

All of the above will be examples of your dollars only being used in one place for one thing at a time.   The way to move ahead is to have your dollar working for you in many ways at one time.  A system to do this; is what you have set up in your permanent whole life insurance policy.

Whole life Insurance placed with a Mutual type company (no stock holders): Safe, Yes; liquid, Yes ; growth, Yes and tax free

* Troubles in the Finacial market and what type of companies have a track record of surviving extreme pressures in the market.

Fannie Mae, Freddie Mac and Banks:  there are commercial banks (such as Lehman Brothers) and FHA programs that do the majority of their business with other corporations. There are also banks that do most of their business with individual people like you and me (the Bank of America type).

Many of the Banks that are in trouble are because they have too many investments in low quality mortgage backed securities that aren’t worth what they paid for them.

AIG or American International Group is basically having their trouble because of Mortgage backed securities too.  AIG has a division that in a complicated way insures the investments in Mortgage backed securities and also owns a bunch of them as payment for their insurance to other banks that issued them.  We know the securities aren’t worth anything any more.  This is AIG’s problem now.  AIG does, on the other hand, have extremely healthy insurance companies that will be restructured or sold off to other companies.

Mutual Trust Life Insurance Company, like many other Life Insurance Companies has been doing good business for over 100 years.  Not many other industries can make the same statement.  MTL has been through the Recessions and the Great Depression along with the World Wars.  It makes sense to keep your money with the proven company/industry.

*   Some important points of Whole Life insurance:

Guaranteed Death Benefit. (But that is really not that important.) What should determine that is how much cash you want to stuff it with? Warren Buffett has the most life insurance on the planet. Once he maxed out the amount he could get on himself ; aka max human life value (MHLV) he started getting policies on everyone around him that he could establish an insurable interest on. He is the owner and beneficiary still just not the insured.

In the last 100yrs not more than a couple life insurance companies have failed yet 100s of banks have. He would rather put his money here than a bank backed by the FDIC (Except Wells Fargo of course)
-Guaranteed level premium for life of policy. (Perfect hedge against inflation)
-Guaranteed cash value base
-Judgment and creditor proof* (depending on the state you reside)
-Virtual will and trust by designating beneficiary.

-Virtual medical insurance (Accelerated Death Benefit; Meaning you can access DB now for major medical Expenses if needed)

-Virtual disability insurance (Pays for policy if you were to become disabled)
-Tax free growth and income

-Non-taxable dividends (return of premium)
-Velocity (liquidity, use and control) move the money by putting your dollars THROUGH the policy NOT TO it. (You literally can borrow the cash from it and it acts as if the money is still in there growing)
-Collateral (you can assign policy and use as collateral short term and long term)

Bottom-line one dollar can do 12 plus jobs by using the policy as a pass-through vehicle. Rule of thumb is you can front load it by 2.5 to 3x the annual premium. Anything above that the gov’t will turn into a modified endowment contract (MEC) and then it become taxable. The key is to stuff it right below the MEC threshold. It’s not going to get you 12 percent returns but it can be used as a safe, secure facility

Again take a look at the attached AIG Press Release from the NY State Insurance commission.  It outlines how secure and safe insurance companies really are…

September 29th 2008 Bailout

September 29, 2008

I am sure some astrologer will find some correlation between October 29th, 1929 and September 29th, 2008.

Although the DOW only dove 777 points -6.98% compared to the -12% in 1929 this is still horrifyingly close. NasDaq fell -9.14% and the S&P 500 fell -8.79% (so much for those that were selling the IULs)

Leadcritic has a good article that came out this morning on their blog however the best bailout article I have seen yet is on the Los Angeles Times website. Check out the graphic of the comparision with other federal programs:

Foreign Investors buying Real Estate for Pennies

June 29, 2008

I wish I still had some Euros, Swiss Francs, Singapore Dollars, or even some New Zealand Dollars…not only would you benefit from the purchasing power of the currency but the down real estate market. The two combined guarantee at least 50 cents on the dollar (or maybe even free in some cases) and exponential future returns.

I think Robert Prechter has a currency fund.

Identity Theft Prevention Tips Passed on From an Attorney

June 24, 2008

1.  The next time you order checks have only your initials  (instead of first name) and last name put on them. If someone takes your checkbook, they will not know if you sign your checks with just your initials or your first name, but your bank will know how you sign your checks.

2.  Do not sign the back of your credit cards.  Instead, put  ‘PHOTO ID REQUIRED.’

3.  When you are writing checks to pay on your credit card accounts, DO NOT put the complete account number on the ‘For’ line.  Instead, just put the last four numbers.  The credit card company knows the rest of the number, and anyone who might be handling your check as it passes through all the check-processing channels will not have access to it.

4.  Put your work phone # on your checks instead of your home phone.  If you have a PO Box, use that instead of your home address.  If you do not have a PO Box, use your work address.  Never have your SS# printed on your checks, (DUH!).  You can add it if it is necessary. However, if you have it printed, anyone can get it.

5.  Place the contents of your wallet on a photocopy machine. Do both sides of each license, credit card, etc.  You will know what you had in your wallet and all of the account numbers and phone numbers to call and cancel. Keep the photocopy in a safe place.  Also carry a photocopy of your passport when traveling either here or abroad. We have all heard horror stories about fraud that is committed on us in stealing a name, address, Social Security number, credit cards.

6.  When you check out of a hotel that uses cards for keys (and they all seem to do that now), do not turn the ‘keys’ in.  Take them with you and destroy them.  Those little cards have on them all of the information you gave the hotel, including address and credit card numbers and expiration dates.  Someone with a card reader, or employee of the hotel, can access all that information with no problem whatsoever.

Unfortunately, this attorney, had first hand knowledge because his wallet was stolen last month.  Within a week, the thieves ordered an expensive monthly cell phone package, applied for a VISA credit card, had a creditline approved to buy a Gateway computer and received a PIN number from DMV to change my driving record information online.

Here is some critical information to limit the damage in case this happens to you or someone you know:

1.  We have been told we should cancel our credit cards immediately. The key is having the toll free numbers and your card numbers handy so you know whom to call.  Keep those where you can find them.

2.  File a police report immediately in the jurisdiction where your credit cards were stolen.  This proves to credit providers you were diligent, and this is a first step toward an investigation.

3.  However, here is what is perhaps most Important of all.  Call the three national credit-reporting organizations immediately to place a fraud alert on your name and Social Security Number.

The alert means any company that checks your credit knows your information was stolen, and they have to contact you by phone to authorize new credit.

Now, here are the numbers you always need to contact about your wallet and contents being stolen:

           1.) Equifax: 1-800-525-6285 

           2.) Experian (formerly TRW): 1-888-397-3742

           3.) TransUnion: 1-800-680-7289 

           4.) Social Security Administration (fraud line): 1-800-269-0271


June 23, 2008

Hi this is Bill Lyons with this months P4P Newsletter.

-Behavorial Finance

-The Value of Financial Literacy

-Risk Management

-HELOCS and the cash crunch

Read Newsletter


May 7, 2008

It amazing me at how many people look at investment opportunities and don’t even take TAXES, INFLATION and DEBT into consideration. Those alone can make or break a deal!

This months P4P newsletter discusses those things and…

Buy-Sell Agreements

Indentity Theft

Creating an “Inheritance Portfolio”

The Soda Game


The Word on the Street about Life Insurance

May 5, 2008

What’s the word on the street? Permanent life insurance is a valuable asset for any financial portfolio. It provides a guaranteed death benefit and a guaranteed return on your premium that can help you build wealth.

View CNBC’s four-minute video where news anchors Dennis Kneale and Sue Herera interview two independent financial advisers who endorse the value of life insurance for every financial portfolio.

Eeyore, The Tortoise and the Scorpion, and more

April 14, 2008

Need A Financial Pep Talk? (Download PDF)

Where to Stash your CASH in this Market!

April 8, 2008

Wealth Building Strategies:

The Velocity Of Money – How to move your money throughout your own individual economy

The Dollar Multiplier Effect – How to get one dollar to do many jobs at once

Becoming Your Own Banker – Discover the extraordinary benefits of creating your own banking system through the vehicle of dividend-paying, permanent life insurance. Also see this previous post about Pirates of Manhattan.

Asset Protection, Risk Management, Guaranteed Cash Value, Velocity (Liquidity, Use and Control), Leverage, Tax Free Growth, Retirement and many more benefits.

The following article shows how you can take these proven concepts and turbo charge them into a strategy that works! 

%d bloggers like this: