Eastern Savings Bank

Eastern Savings Bank is not doing well these days according this news report.

The Eastern Savings Bank of Hunt Valley, MD was listed as having a Texas ratio of 222.74, meaning it had twice as many bad loans as assets and surplus.

Repeated calls seeking comment from Eastern were not returned.

If I had money in this local Maryland bank, I'd be quick about withdrawing it. FDIC could someday soon show up on a Friday evening at Eastern Savings Bank.

Remember FDIC is $100,000 per named relationship, not $100,000 per account for deposit accounts. Click here for more information. Be sure not to end up like the100's of customers at Indymac who got this backwards.

In other local bank news, it is reported that First Mariner Bank has an informal agreement with Federal Reserve Bank of Richmond to improve operations.

Many banks nationwide are suffering from the mortgage crisis, and of all Greater Baltimore's banks, First Mariner has taken one of the biggest hits. The bank lost $10 million last year and has an informal agreement with the Federal Reserve Bank of Richmond to improve operations. The last time the bank was in the black was in the first quarter of 2007, when it eked out a $100,000 profit. First Mariner got slammed on alternative-A loans, called "alt-A" loans -- mortgages to buyers who had decent credit but provided little or no verification that they had the income to pay back the loans. First Mariner sold the alt-A loans to investors, but had to buy back millions of dollars' worth of loans when borrowers defaulted on them.

Also in the article they talk about selling the Towson and Ocean City branches. Would it also be fair to speculate overhead jobs are at risk?

Feel free to send me anonymous tips regarding local businesses, banks, housing, etc...


UPDATE:
In fairness to Eastern Savings Bank I'm posting this link to a Baltimore Sun article where Eastern says it's sound. I've had a few dozen hits from this bank today so if anyone would like to send me an anonymous tip or official statement, I'd be glad to post it.

Baltimore County Maryland June 2008 Sales Analysis

Sales Analysis at this link or browse below

http://spreadsheets.google.com/pub?key=pOGnlvbfCjFLNV1RXhYVpUw

Fannie Mae and Freddie Mac insolvent?

First Bears Sterns, then Countrywide, and earlier this week Indy Mac. All gone. Rumors are floating around that Lehman Brothers is next. Interesting isn't it? How prices go up over 100% in 5 years with loans that people were unable to afford and somehow things would be fine. Seriously where were the risk management folks who work at these firms? Those of us who sold at the top saw this yet professional people paid to look for things like this missed it. Guess it goes to show you that human nature is greed overshadows stupidity.

Now we have both the Fed and Treasury saying in public that no one is too big to fail. This is code for "we know that all these banks are zombies and need to fail but we are trying to hold it together till after the election."

Today both Paulson and Bernanke are in front of the House Banking committee testifying on why they want more powers to do something in this environment. Congress is very reluctant to do anything as they are not sure what to do as this is a election year and doing nothing is better than doing something to make it worse.

Yesterday recently retired Fed Reserve President of St. Louis, Bill Poole came out and said the obviously that basically the GSE's Fannie and Freddie Mac are insolvent.

Chances are increasing that the U.S. may need to bail out Fannie Mae and the smaller Freddie Mac, former St. Louis Federal Reserve President William Poole said in an interview. Freddie Mac owed $5.2 billion more than its assets were worth in the first quarter, making it insolvent under fair value accounting rules, he said. The fair value of Fannie Mae's assets fell 66 percent to $12.2 billion, data provided by the Washington-based company show, and may be negative next quarter, Poole said.

``Congress ought to recognize that these firms are insolvent, that it is allowing these firms to continue to exist as bastions of privilege, financed by the taxpayer,'' Poole, 71, who left the Fed in March, said in an interview.

This caused the stocks of both firms to start cliff diving this week to record lows as it's becoming inevitable that the Federal Government is going to have to bail them out and nationalize the firms.

This is HUGE. Like bigger than the bill for the Iraq war huge. This is stock market crash and will cause a depression huge.

If you think prices are dropping now, if these 2 firms go under homes drop to cash value. Not the normal 3x the value of the home as you leverage through a loan but what's in your pocket if you can find a buyer to give you cash. Basically your 300k home could theoretically drop to 60k. And that's if you can find someone with 60k in cash. It could take years and years for the system to recover from this as the banks would have to keep all home loans they make on there own books for the life of the loan.

Both CNN/Fortune and the Wall Street Journal discuss the scenarios and let me just say it's grim. This would likely lower the credit rating of the entire US government.

Makes you have to sit and wonder, in the face of this all if you have cash maybe it's a good idea to get it in a safe place and wait out this storm. Believe me real estate prices are not even at the cusp of a flattening they will drop way lower.

We have to many pressing issues coming up as a country and rescuing a bunch of speculators from the last couple years is going to go to the bottom of the list. Oh and you think we can bail out Fannie and Freddie without raising taxes? No way, they will go up, lowering housing prices more as people has less take home pay. Add in the fact this will also increase inflation as the dollar continues to go down in value and you have wonder where is this all going to end?

Livid discussion about Buyer/Seller reality over at Jamie's Blog

Just wanted to point out the very vivid discussion that's been going on today over at the Sun's Real Estate Wonk Blog. The topic is on the current standoff going on between buyers and sellers, especially it seems in the city. Looks like some folks that have bad expectations are going to be sorely upset as they are not going to make a fortune in real estate. I know it's hard for sellers to get this but the mindset has changed, the tools of the buyer are empowering them not you and unless your at 2003 prices your not going to find a sucker to be your bag holder.

Indy Mac stops taking loans.....the ALT-A meltdown begins

As we start the 3rd Quarter, I'm sure your happy realtor has been telling you the subprime crisis is over and that you need to buy because in Baltimore everything goes up forever because everyone is rich with excellent credit.
It does not matter that price went up over 100% in 5 years...we all are rolling in the dough.

Indymac halt retail and wholesale loans. (hat tip CR)
They also have a note to shareholders and stakeholders on the Indy Mac's blog that is well...grim.


In this environment, where either there are no bids for most of IMB’s mortgage loans and securities or the bid/ask spreads are abnormally wide, “fire-selling” assets would actually deplete capital further.





Well folks guess what? We are just starting the 4th inning. First we had the banks writing down the subprime portfolio's. This is your people who had problems paying bills or other situations that caused them to have a low credit score.
But actually that's just the beginning. The ALT-A loans are even bigger and could be the thing that brings down the whole system.

Those of you in the downtown neighborhoods are very familiar with these loans, in fact without them you would not see the 600k rowhome that less than a 5 years ago was going for 100k. Why? WELL it was all based on a bold faced LIE!

Alt-A or LIAR loans or Stated income loans are basically this. You tell the bank that you want to buy this property. You tell them that you make 200k but do not want to "prove" it because your a tax cheat hiding money from the IRS. Due to this goofy idea that the property will appreciate faster than what you really made a year(63k Baltimore metro median) you and the bank wink and nod at each other because your both under the impression that your going to get rich off the deal.

Suddenly you get called out on it. People wake up and ask, who in there right mind is going to pay 500k for a rowhome in Baltimore City?

I mean even if your married and making a combined 200k a year what are the chances with that income you don't have other loans and debt? Oh and 500k rowhome means you owe the city of Baltimore around 12000k a year in property taxes. That's an extra 1000 bucks a month on top of your outstanding lein. What about having a kid? City schools? C'mon they refuse to fix them because that would mean the people in charge would have to be fired thus meaning that they'd have to admit they are incompetent fools.

Oh and those of you still holding on the the 500k row mansions that were under construction for 700k 2 years ago........might as well give the keys back to the bank.....chances are that it might be a decade before you get a buyer. I can guarantee in a 2 years when the people that know what they are doing come in and do a rehab 2x as nice as yours and can sell it for under 300k your going to wish you lowered the price a long long time ago. The folks that wanted to buy are gone. What's left are people who do the math or folks that the banks will not give two nickels to rub together.

Happy 4th of July picnic discussion time

Just want to remind all of you on this Independence Day weekend as you go to picnics and talk to your neighbors and friends do not forget to bring up the fact that the worst of the housing market is yet to come.

Many of you folks on the sidelines 2 years ago were mocked, made fun of, looked at in disbelief that you could not afford to buy a house that met your expectations.

What a difference 2 years makes. Today those of us with cash saved up, no credit card or HELOC's bills up to our ears can be the seen as the smart ones, while the folks who you privately wondered how in the hell can they afford this place avoid the subject completly. Why? Because well they CANNOT afford the place.

I wanted to share some stats with you about Baltimore County today. Take a look at this story about the addition of government staff to help with the forecloures going on. The irony of all this is next year is going to be an interesting one for local governments. I predict layoffs as the transfer tax boom of the past couple years drops off the radar.


Baltimore County Q1 Foreclosure Events = 938

Baltimore County had 930 foreclosure events in the first quarter of 2008, a
9.5 percent dip from the end of 2007 when there were 1,028. But those numbers
are in contrast to a year ago, when first-quarter foreclosure events totaled
236.

Wait a minute.....I thought this only happened in the city?

“I’m receiving a lot of calls from people who never thought they would be
faced with foreclosure,” Foreman said.

Ok...well it only happens in the poor and predominently lower class African-American neighborhoods.

First-quarter foreclosures events were highest in Dundalk with 95. But
Randallstown and Owings Mills were second and fourth at 85 and 71. Reisterstown
tallied 31 in the first quarter. Together, the three northwest corridor
communities accounted for 20 percent of county foreclosures.

Reisterstown? I thought that was the land of millionares, that's where all the Raven's players live!

Harvey agrees. “We have heard from everyone. From very modest income homeowners
to folks with the $600,000 house in the valley. It also impacts your ability to
rent because of [bad] credit ratings.”

Yeah this is true but you cannot squeeze blood from a turnup. I mean how else are you going to pay off credit cards from Nordstrom and your lease on your Lexus?

Homeowners also need to take control and look at cutting spending,
officials say. “What are we willing to do to help ourselves? The programs will
help if we work together,” she said. “Buying a house is so important – the
biggest purchase you’ll make in your whole life – you need to educate yourself
before you buy a home.”

Have a good holiday folks and be safe the County and State Police are out in
force, need the revenues!

Former Raven McCrary taken by Real Estate Developer

Usually I do not miss stories like this one of former Baltimore Raven Mike McCrary being taken by a sleazy developer for over 3 million dollars.

Michael McCrary had known Edward Giannasca for half a decade, and, until the former Baltimore Raven realized that he'd been cheated out of millions, he thought of the longtime developer as a stand-up guy.

McCrary trusted Giannasca so much that, with few questions asked, he handed him a $3million check three years ago for a real estate project that would convert a building in New Orleans into condominiums.

Giannasca, though, betrayed that loyalty, pocketing along with his other partners about $12 million in insurance money after Hurricane Katrina spoiled the deal and telling McCrary that the insurance claim they'd filed had been denied, a Baltimore circuit judge ruled Wednesday.

The judge ordered Giannasca and others, including developer Stuart C. "Neil" Fisher, to pay $33 million in damages to McCrary, who says he'll use his experience as a cautionary tale for current and former NFL players.

So Mike like a lot of people drank the real estate koolaid and felt he had to get "in". Although this is obviously a lot of money and a more high profile case, the same thing happened thousands of times over the region in the last couple years.

I can relate to Mike as I also had to resort to hiring a lawyer to get back what was mine in a real estate deal. This happens way more often then most of you would think. It's why when you sign a boiler-plate MAR contract the realtors want to sign your rights away and go to mediation. Remember it's your contract and your money. Demand your right to sue in case something goes wrong. It's the only way to protect yourself and keep those who want to cut corners and helps remind those involved that they need to do the deal right.


Now I'd like to offer advice to those of you looking to buy real estate. Don't go in with just any old realtor. Get someone with a lot of experience and even then investigate and ask around. Real Estate seems to attract snakes and they are interested in their own bottom line, not necessarily yours.

"It was my first dealings in real estate, in terms of a major project. I learned a lot. I relied on a personal relationship and trusting the person, rather than on good business sense," McCrary said.