We've recently outgrown our 4 door sedan and decided it was time to upgrade to a SUV/Crossover.  We reserached and drove 5 of them before deciding on the Mazda CX-9.  Our insurance company offered a new car buying service through ZAG.  ZAG is a thrid party that negotiates pricing with dealerships and then offers you a "guaranteed, no-haggle price."  They email you a "Pricing Certificate" that you take to the dealership who then sells you the car at that price.  On ZAGs website (zag.com) it says "... allows us to guarantee upfront pricing and a sales experience that is fast, predicatble, and hassle-free."

 

We drank their cool-aid and built the car on their site that we wanted.  I researched the inventory at our local Tustin Mazda and found a 2009 CX-9 Sport Black with Black interior and power/heated seats.  ZAG's pricing showed that Tustin would give us $5,800 below invoice!  Not MSRP but, dealer invoice.  Our total price would be $22,971 for a car with a $31,000 sticker price.  I printed the Pricing Certificate and headed in to Tustin Mazda.  I sat down with the sales person, handed him the inventory for their website and the pricing certificate and said "I want this car at this price."  He went to talk with his manager and came back saying "I don't know where you got that inventory but we sold that car months ago.  We don't have any 2009's left but we can get close on a 2010 if you want."  I thought it was BS but said "fine, what's the price?"  I went outside with Cherish and Ainsley while he went to talk with a manager again.  While we were out there I spotted a Black, 2009 CX-9.  I checked the VIN and it was the exact one I had printed and asked to buy.  I went inside to see what they would come up with on the 2010 (just in case it was going to be really close in price) and wasn't going to mention the car out front right away.  They were $6,000 over what the $22,971 that we had intended to pay.  Not sure how they considered that "close" but, that's another story.  I then told him I saw the car outside so we went outside to verify the VIN and indeed, it was the exact car.  This is a perfect example of a bait and switch program; they have a car online for a certain price and when you get there, they try to sell you the newer model at more money while lying about their inventory.  Very disappointing from a dealership that has a good reputation.  

We went back inside while the salesperson asked about the car.  He came back about 10 minutes later to tell me that they couldn't sell it to me for my guaranteed, no-haggle price and that it was going to be $2,000 more.  I asked for his manager who came out and gave me some story about how ZAG messed up on the pricing.  I said, "I don't care who messed up.  This is a guarantee so, I want that car at that price."  I knew I was getting in to a losing battle so we walked out.

The next day I contacted ZAG and asked them if they were going to stand by their guarantee.  They said they would research the pricing and get back to me.  About an hour later they came back and said that the dealership was correct, there was an incentive that was being counted twice on ZAG's website and that the price was $1500 more, bringing it to $24,471.  I pushed them on the "guaranteed" price and they wouldn't do anything.  So, they say there is a guarantee but there is actually on guarantee.  They blamed the dealership for putting in the wrong price.  I searched and found that dealerships all across the country had the exact same price so it wasn't Tustin Mazda, it was ZAG's fault.

I ended up talking with Jim Feinstein, the owner of Tustin Mazda, and we talked through the issues.  He was a little upset when I told him I felt I had been a victim of bait and switch but, anyone reading this blog, tell me if you would have though anything different.  I provided a price (that they didn't want to honor) with a VIN number they looked up in their computer and then claimed it was sold months ago.  Only after I found the car myself did they cough up to the fact it was there and that they didn't want to honor the price.

Who is to blame?  Mazda USA?  Tustin Mazda?  ZAG?  I think ZAG.  I'm shocked that they wouldn't honor their guarantee!  How can you base your entire company on a simple guarantee and then not honor it?  I wonder what their investors would think if they knew that the single item that allows them to be in business is a lie.

I recommend staying away from ZAG.  It doesn't give you any guarantee and frankly, it added 3 extra days of headaches than if we had just went in to negotiate to begin with.

After all of our hassles, Jim and I came to an understanding and negotiated a good deal.  It wasn't the $22,971 but it was within a few hundres dollars.  We love our new car!

Today MSNBC.com has a front page (above the fold/scroll) headline: Mortgage modifications moving at snail's pace.

We've been discussing this since Dec. 11, 2008 on my blog here: http://www.4bcj.com/4bcj.com/post/2008/12/11/Wells-Fargo-Mortgage-Loan-Modification.aspx#comment. To date that blog has generated 40 comments from 5,546 page views and not one is from a happy Wells Fargo customer.  I've tried to get some media attention about the problem but no news outlet would respond to the idea. It's bigger than just "moving at a snail's pace," people are hurting their credit and losing their homes because of the recommendations from Wells Fargo to stop paying their mortgage!  Why isn't the media reporting that?  How about Chris Hanson doing a "to catch a predator" on Wells Fargo instead of going after the 7/11's in the world that are taking away lottery winnings (which is horrible too!).

Hopefully MSNBC's article will help everyone that is about to lose their home but, I wouldn't hold my breath if your mortgage is through Wells Fargo.

Starting in July, you can trade in your old "clunker" for a new car and receive a $3500 or even $4500 voucher. The purpose of this bill is to put more fuel efficient vehicles on the road and get rid of guzzlers. It sounds like a good idea but their oversites have failed to make it a great idea and therefore have failed completely.

What would have made it better?

• Why just improve gas mileage? Why not improve emissions too? A car from 1990 has a higher emissions standard than a 2010 model. Why not get rid of the 1990 car and get a cleaner burning car on the road?
• Why not use this as a time to help stimulate the economy and help the failing car manufactures? Since it’s the US tax dollars that are paying for the vouchers, why not have given an extra bonus for buying a GM, Ford or Chrysler?

 

There are so many problems with the implementation that the program is worthless. First, you have to trade in your old car for a new one that improves the combined fuel economy by at least 2 MPG for light duty trucks and 4 MPG for passenger cars. If you improve your truck or car by 5 or 10 MPG, respectively, you will get the full $4,500 voucher. Why is the 2/4/5/10 MPG a problem? Because, in 2008, they changed the way they rate MPGs of cars. Starting in 2008 the EPA changed the rating to be at a faster speed, faster acceleration, air conditioner on and colder outside temperatures. This means that the new car ratings are more accurate but what it really means is that the MPG rating for your "clunker" is going to be inflated and makes it almost impossible to achieve the improvements needed for the voucher.

My dad has a 1993 GMC Sonoma truck. It’s considered a light-duty truck and therefore requires a 2/5 MPG improvement for the vouchers. The best way to describe his 16 year old truck is to call it a clunker. The EPA says it gets a combined 18 MPG. In order for him to qualify for the $3,500 voucher, he will have to buy a vehicle that gets 20MPG or better. Good luck finding that in a truck. After calling the NHTSA, they recommended he buy a sedan or a hybrid truck. Get real! A GMC Sierra Hybrid starts at $39,365 and it’s rated at 21/22 MPG for a combined 21 MPG. The non-hybrid GMC Sierra starts at $20,350 and is rated at 15/21 MPG for a combined 18 MPG. That means a 3 MPG improvement costs $20,000. The improvement in emissions and gas mileage are virtually nil. The improvement over a 18 MPG GMC Sierra and his 1993 GMC Sonoma are a real 3 MPG improvement (real, not over inflated EPA ratings) and a huge improvement in emissions.

The government is not encouraging my dad to buy a new truck. Therefore they are not:

• Getting rid of a large polluting vehicle
• Improving real gas mileage
• Stimulating the economy.  For a bankrupt American car manufacture!

-FAIL-

 

 

Michael Savage, a talk show host, said to avoid "contact anywhere with an illegal alien... and that starts with restaurants... don't know if they wipe their behinds with their hands!" Wait, seriously? I guess I have it all wrong, only illegal aliens don’t wash their hands. And only illegal aliens can spread the disease.

Frankly, I'm appalled with the racism surrounding the H1N1 virus! I think people are scared of the virus and they are too emotionally stunted to express themselves so the only thing they can do is conjure up hatred. People are using this outbreak as a way to promote their racist agenda. I mean, who is going to complain about a racist comment here or there about the supposed dirty people that gave us this flu?

Hispanic people are not dirty, they are not sub-Human and they are not all illegal aliens. Let people know this kind of racism disguised as stupidity is unacceptable (here is a list of stations that stream Michaels Savage's radio show).

When need to work together to get past the H1N1 virus, not against each other.

We've all been in a movie theater, business meeting, fancy restaurant or even taking a test in school when someone's cell phone rings... and they answer it! I can't think of anything more frustrating than the ringer of a cell phone or shouting a conversation into a phone in an inopportune moment.

Restaurant owners, movie theaters and even schools are so frustrated with the problem that they buy illegal cell phone jammers for their establishments. Not only are they risking thousands of dollars in fines and a year in jail but they put every person in range of the jammer in danger of not being able to make an emergency call if necessary. The jammers also extend well past their intended area and disrupt emergency service’s communication. As a parent, I would be upset to hear that my child’s school was implementing such a dangerous device to combat the problem.

Soon there will be a safe, legal and elegant alternative: Zone of Silence. Zone of Silence is not a cell phone jammer and does not disrupt the cell phone signals in any way. Instead, it sets up a zone of a configurable size that communicates with software on the phone to limit functionality. A zone can be configured to control one or more of the following:

• Inbound calls
• Outbound calls
• Inbound text
• Outbound text
• Ringer volume
• Maximum screen brightness
• Whether or not the camera can take a picture
• And more!

911 emergency calls are always allowed.

The device can be configured to allow certain cell phone and numbers to not be restricted. Further, it can be configured to allow incoming calls from a certain number to a certain number. For example, a school can put in the student’s cell phone number and link it to their parents’ cell phone numbers so that the parents and students can still call and/or text eachother even if calls and texts are being blocked.

ZoS is safe because it allows 911 calls at any time without any intervention from the owner of the ZoS Device or the cell phone owner. It can also be turned off remotely by ZoS in the event of a natural or other disaster.

ZoS is legal because it doesn’t block or broadcast on regulated frequencies. It communicates with the phones over wi-fi and Bluetooth; both part of an unregulated spectrum.

ZoS is elegant because it allows such granular control of the phone functionalities and allows the ZoS Device owner to designate unrestricted phones. Unlike a cell phone jammer, it notifies the recipient that they have missed a call or text so that they walk outside the zone to return it.

The possible uses of Zone of Silence are endless! Schools can block inbound and outbound calls and text messages for students while allowing the teacher’s phone to be unrestricted. Theaters can block all calls, set the ringer to vibrate mode, allow text messages but set the maximum screen brightness to 50% so that the phone doesn’t annoy the other paying customers. Restaurants can block all calls and all text messages so that the patron will be notified of the missed call or text and they can walk outside the zone to return it. High security buildings can use ZoS Devices to block everything including the camera. Gyms can even install the ZoS Devices inside their locker rooms to stop the camera from taking pictures while still allowing all other features to function normally,

As Zone of Silence says: Own your zone.

Visit Zone of Silence to read more and fill out information on the Contact Us page to stay informed of progress.

Bravo! Bravo!

After the Quiznos Million Sub Giveaway fiasco, I was reluctant to give another food chain a try.  But, a friend sent me a link to a free mini-pizza at Pasta Bravo (a Southern California chain).  I filled out the form, joined their club and was emailed a coupon for a free mini-pizza.  Last night Cherish and I went there and were beyond pleased with the offer - I actually felt a little guilty about getting the free food.  This was the East Bluff location, 2 doors down from the Quiznos.  Not only did they give us the free mini-pizza with a smile but the gentleman that served us was friendly, personable and funny.  He had great customer service and made sure we enjoyed our food.  Any company would want him working for them.  I've only been to Pasta Bravo once before but I can promise you know that I will be back.

Pasta Bravo should be proud of the promotion and even prouder of their employee, Facundo.

You can read about my saga with the Wells Fargo Loan Modification department, and you you can read about how angy I am about my tax dollars going to bailout people while I continue to suffer over here.  But, how many of you are happy that you have a 30 year fixed mortgage?  I remember signing escrow papers on our current house and the lady had to do a quadruple take to see that we had a 30 year fixed.  She said she couldn't remember the last time she saw one.  That made me feel good that my parents taught me fiscal responsibility. 

I don't have to watch the news to see the financial crisis the country is in, I only have to turn to my friends that the mortgage companies have screwed.  Or the dozen people I have layed off in the last 12 months, or all my friends sending their resumes out.  I get angrier and angrier by the day about how everyone is hurting.  I feel bad that I still have a job and I have a fixed mortgage that I can afford (for now).  I'm not the one that got burned - or am I?  My last blog about my experience with the Wells Fargo Loan Modification department has generated quite a stir with at least 40 views a day and multiple emails from people in the same boat.  I started to write a new blog about the new economics and another rant about how I'm unable to take advantage of the low interest rates but was side tracked during my research.  I thought of an interesting situation: what if we had bought our current house and previous house with an interest only loan?  

Our first house was a modest 1000 sq. ft. in Southern California.  Interest rates were falling and prices of houses were climbing.  We looked at a house in a neigborhood we liked but decided to wait a few months and save more money for the down payment.  7 months later, the same houses had appreciated $70,000 - not even close to what we had saved (my losses started before I even bought a house!).  We quickly bought a great house in a great neighborhood while we could still afford one.  We had a 30 year fixed mortgage and refied after two years to bring our rate down to 5.325%, wow!  We lived there for about 4 years and then moved across town to a bigger house.  The previous house had appreciated by 100% so we had a good down payment for the new house.  Again, we went in to a 30 year fixed but interest rates were up and we locked in at 6.325%.  In the 7 years we've been paying a mortgage, I calculated that we have paid (hold on to your seat here) $208,000 in principal and interest!  Then I went back to look at the rates we could have got if we went interest only and calculated that we would have paid (only) $128,000!  This means that we have paid $80,000 more by paying principal at a higher rate than an interest only at a lower rate.  That $80,000 is real money, not paper money, not funny math but, actual money that came out of our checking account.

To add salt to the $80,000 wound, since our current house has depreciated enough that we are now upside down, we would have the EXACT same equity in our house if we had been paying interest only.  AND the banks and government would be trying to bail us out right now.  They would be helping us get a better interest rate.

I've never felt worse about my "fiscally responsible" 30 year mortgage until today.  How about the government help those who helped themselves?  All I want is to drop my interest rate to 5% and not have someone laugh at me when I say I have a high rate at 6.325%.  I'm not asking for the bank to lower my principal.

Tell me, why should I stay in my house?  The toughest choice is the right choice here.  If I were unemotional, I would walk away from my house and let the bank take it over.  In about 3 years my credit would be back up and I could buy something new at half of what they cost now.  That's the right move and I don't think I can do it.  We've poured too much time and work to make this house our home.  We're emotionally attached.  But, another year of our house declining and the government and banks pushing me aside and I will be pushed to walk away.  I won't be the only one doing it either.  Watch the economy collapse in to a dark abyss as the fiscally responsible people get fed up and walk away.

Update 8/4/2009:
Mortgage Modifications Moving At A Snails Pace. What a surprise! But, the real story isn't being reported... why isn't anyone reporting that Wells Fargo is hurting people's credit and taking away homes by telling everyone they won't help until they are late on payments? And then, after your credit has tanked, they deny a modification!

Interest rates are the lowest in four years, foreclosures continue to skyrocket, banks continue to crumple, taxes continue to go up and I want some help.  I have a fixed 30 year mortgage with Wells Fargo at 6.375%.  I have never missed or been late for a single payment in the 3 years we've had them.  Same story for the four years in our last house with a different loan.  I'm a wet dream for a bank in this economy.  With all the bad in their portfolio they need me.  Armed with that argument I called Wells Fargo this morning. 

 

After about 15 minutes on hold they took my information and a few hours later a local refinance specialist called me back.  I explained I was looking for a lower rate at with the same 30 year fixed and he told me he could get me a 0 point loan for 5.25%!  I was skeptical since he hadn't actually asked for my account number so I said: "Does that mean we qualify for a conforming loan".  He asked what my principal was and aftwerwards he said "oh, that changes it."  He did some quick looking up and came back with "It's the same rate with the special conforming (under 729k but over 417k), 0 points for 5.5%."  I nicely pointed out that that is actually a quarter point higher and he sort of shrugged it off.  Testing my luck I asked, "Do I have to have 20% equity in the house for that rate?" to which he replied "Yes."  Oops, another strike against him - as with everyone else, I don't have 20% equity anymore.  When we bought the house we put 26% down; zillow now says the house is worth $10,000 less than we owe on the house.  So, I personally have lost over $200,000 in the past 2.5 years and haven't asked the bank for anything.  Armed with yet another piece of this puzzle, I asked the salesman what my options are.  None, nada, zip.  Wells Fargo will not help me out.  He did give me another number to talk to the Loan Modification department.

Fast forward a few hours to the rude people in the Loan Modification department...

I talked with a lady there and started out saying that my interest rate was high and I wanted them to lower it.  She laughed at me and said "did you say it was 'high'".  Assuming she was high (in another sense) I said, "Yes, it's high.  Your bank offered me 5.25% this morning for 0 points but I don't qualify because I don't have enough equity in the house anymore."  She told me there was nothing they could do since I was a good customer.  Seriously!?  "There is nothing we can do because you are a good customer."  What the hell is wrong with the corporate world?  She said I would have to be deliquent on my payments in order to qualify for them to modify my interest rate.  She made it very clear that I have to continue to be a good customer and make my payments on time but that because of that, they can't help me out.

Wells Fargo would rather me walk away from them than help me with a lower payment.  And there isn't a person in the world that cares about my "plight."  Someone from Wells Fargo, please tell me why you want to get rid of a good loan on your sheets because you don't want to give me even a 6% loan?

In Sarah Palin's interview on Fox News (11/10/2008) she made mention about the bloggers in their parent's basement wearing pajamas.  Off topic: I guess it's only mamma's boys that can't get dressed or elite media in this world?  Back on topic: She said the book ban was a lie.  That "Harry Potter wasn't even published when [she] was the Mayor of Wasilla".  Unfortunately, that's not true.  She served two three year terms from 1996-2002.  The first Harry Potter book was released in the UK on 6/30/1997 and later in the US on 9/1/1998.  Clearly she was serving as Mayor during that time.

Maybe it was an oversight or maybe it's just another "fact" that she is trying to slip through us mamma's boys.  Either way, we need to keep her honest so we don't have to see her again in 2012.

".25%, interest only mortgage.  Only $105/month on $500,000".

Get real people!

 

The whole mortgage "crisis" upsets me to no end.  People are upset because they were taken advantage of, lenders are going under because people can't afford their loans any more, the media is in a frenzy and of course, the government wants to bail everyone out.  Well, not everyone.  Let me explain. 

My wife and I bought our house in August of 2006, just as the market started to decline in Orange County, California.  We sold our previous house and put every penny of equity in to the new house to keep our loan reasonable.  Both houses were mortgaged with a 30-year fixed loan.  When we signed the loan docs for our current house the escrow lady actually had to do a double-take that we had a fixed rate loan.  She said she hadn't seen one in ages.  Well, we signed the docs and didn't look back.  Our first house was at 5.875% and the new one was at 6.375% - ouch!  We knew we could afford it for the next 30 years and didn't have any risk that it would go higher.  While we were signing the loan docs for our second home with over 30% down, the people that bought our first house were signing a 0% down, interest only loan.  We were paying under $2000 a month for the first house that the new owners were paying over $4000 a month in an ARM!  The market was already coming down and with only paying interest on the loan they had to be delusional to think this was a good idea.

Less than 18 months later, the housing market has turned upside down. The people that have our house are trying to sell it at a loss of almost 30%!  When I say "the people" I actually mean "the bank".  Foreclosures are up all around the country where people just got in over their heads.  Our current house is worth about 10% less than what we bought it  for.  We are currently trying to refinance at a lower rate while keeping our 30 year fixed.  We can keep affording to pay what we have been for the last 18 months for the next 28 years but, if we can get a smart, lower rate then it would be criminal to not look.

Today Hillary Clinton proposed that we use $30 billion of tax payers money to help fend off foreclosures.  That means they will be helping the people who can't afford what they bought and the lenders that allowed them to borrow the money.  Why should my money go to help either of them?  I've already lost $70,000 in my house, how much more do I have to bleed for these people?  Has anyone else noticed that no one will put any blame on the people that accepted the loans?  It is always the lenders fault.  In my experience, it takes two to tango!  Just because a lender's marketing team slapped lipstick on a pig and called a negative ammoritization loan an "option ARM" doesn't mean that it isn't a pig!  These "option ARMs" actually gave the option to the borrow on how much they wanted to pay each month.  They could pay the full interest or just partial.  If they picked partial, the next month cost more because they tacked the unpaid interest on to the principal.   Remember, the people that took these loans were pretty dim bulbs, so if they get a mortgage bill that says "you can pay us $4000, $2500 or $1000 this month" which do you think they picked?  The next month the $1000 turned in to $1100 or more and eventually they get to the point that they can't even afford to pay only partial interest.  They then whine and complain that they were taken advantage of; that the lenders didn't disclose that they would pay more each month or that a 3 year ARM loan would turn in to a variable rate after... wait for it... yup, 3 years!

Banks are tired of foreclosing and are now working with people to give them better rates on the mortgages and to write off the lost value of the house.  Let's assume that someone  "bought" a house for $700,000 and, after paying an option ARM for 2 years owe $720,000 on the house that is currently worth $600,000.  They can't afford to make the payments and instead of foreclosing on them, the banks gives them a new mortgage for only $600,000 at a fixed rate that they can hopefully afford.  The bank takes a $100,000 loss on the property and the "owners" lose absolutely nothing!  Since I have a fixed rate loan, I'm the only one that lost money on my house.  The bank hasn't lost a penny!  We pay in full every month a week early.  Here's the part that angers me the most: the banks will deal with the people that signed these "exotic" loans to give them a better rate but, they won't drop my rate at all.  They don't even see that keeping us at a lower rate instead of making us go elsewhere will help their portfolio.  This is a case where the banks have not given enough power to the people on the phone to see the same vision of producing a better portfolio for the share holders.  Lowering the cost of the loan above only buys them a little time until they foreclose (and waste my tax dollars).  Lowering our interest rate gives them a guaranteed 30 year paycheck.  Instead, they would like me to go elsewhere with my loan!

Let's go back to the quote at the top: ".25%, interest only mortgage.  Only $105/month on $500,000".   I just can't make this stuff up people.  I wish I had my camera on me because this was an actual sign on the back of a truck that I followed a bit on the way home... today!  With everything going on, people are still selling these loans and people are still buying them!

Who's to blame?  The banks (and marketing departments) that allowed these loans, the people that signed the loan docs or the schooling systems for failing both of these people and letting them out in to the real world without any common sense or morals?  I think it's all of them.

This is a touchy blog because a lot of my friends are going to be hurt by this crisis soon.  For the last 2 years I've been telling all my friends and family that didn't own a house to go rent something and wait until Dec. 2009 to start looking for a house.  For the ones that did own something, I've been telling them to decide where they want to live for the next 10 years and either sell their place to get there or stay put; they were going to lose money no matter where they live so get somewhere they you want (and can afford) for a long time.  I really hope my friends don't get burned in this mortgage meltdown!

Here are my suggestions if the government starts to bail people out:

1. Don't help out anyone that has signed loan papers since August, 2007.  If they put themselves in a bad position after that date, they don't deserve my tax dollars.
2. If someone signed an "option ARM" and choose to pay any option other than the maximum payment for more than 50% of the time, don't help them.
3. Don't allow the lenders to put a foreclosed house up for sale for less than 2% of the last sold comparable house.  This punishes their horrible tatics and it protects the value of the houses around the foreclosed house.  If they break this rule, they lose any help the government offers and the difference between the 2% and what they sale for should be levied as a fine to be used to subsidize my property tax.
4. Fine any company that offers an interest only, no money down loan or any other "exotic" loan.  The fine should subsidize the tax payers money to bail everyone out.

Maybe those suggestions are harsh and delusional but dang it, it's my turn to be delusional!