The Homeowners Consumer Center is encouraging any U.S. homeowner nationwide to contact the Law Office of M. E. Ludt, LLC, if they are seeking mortgage legal advice, pre-foreclosure help, foreclosure defense, or to negotiate a better mortgage. The Law Office of M. E. Ludt, LLC also assists with loan servicing nightmares, where the bank or loan servicer has not properly applied mortgage payment to the homeowner’s account and as a result the homeowner is now in default. For more information homeowners seeking these types of services are strongly encouraged to contact the Law Office of M. E. Ludt, LLC at 1 (888) 364-8844, or to contact the group via their web site at http://MELudtLaw.us.

The Homeowners Consumer Center is one of the best branded homeowners advocates in the United States, and the group rarely endorses any firm offering homeowner services. Tragically, with so many millions of individuals, or families struggling to save their homes, all too often homeowners are bombarded with confusing information regarding available mortgage relief programs and not knowing who they can trust for legitimate legal assistance. For this reason the Homeowners Consumer Center is endorsing The Minneapolis based Law Office of M. E. Ludt, LLC for an unsurpassed nationwide legal service for homeowners seeking a loan modification, foreclosure defense, or a mortgage workout. For more information please call the law firm of M.E. Ludt at 1 (888) 364-8844.

The Homeowners Consumer Center states, “The foreclosure defense attorneys of the Law Office of M. E. Ludt, LLC are a nationwide team of attorneys that offer comprehensive mortgage representation. Their representation includes local of counsel attorneys in ALL 50 STATES. The Law Office of M. E. Ludt, LLC and its nationwide network of attorneys will represent you in court, mediation hearings, and or during the entire loan renegotiation process.” The Homeowners Consumer Center is urging homeowners seeking a loan modification, foreclosure defense, or mortgage workouts to utilize the unequaled talents of the Law Office of M. E. Ludt, LLC in all US states. For more information please contact the Law Office of M. E. Ludt, LLC at 1 (888) 364-8844 or go to http://MELudtLaw.us.

Matthew Ludt, the senior attorney at the Law Office of M. E. Ludt, LLC stated, “We understand how important your home is to you and your family. We take the time to review your situation and give you an honest and realistic assessment of the options available to you before considering an agreement for services. Your home is one of your most precious assets. Our toll free number is 1 (888) 364-8844 and our website is http://MELudtLaw.us.?

The Homeowners Consumer Center says, “We know there are millions of homeowners that are struggling to hold onto their home due to income or expense hardships. We also know many of these homeowners have already received a default notice, or threatening lenders from their mortgage company, or homeowners have received paperwork about a foreclosure. In other situations the homeowner simply wants to get a loan modification, with the help of a reputable law firm, with a network of attorneys nationwide. If this is you, we are encouraging you to call the Law Office of M. E. Ludt, LLC at 1 (888) 364-8844.” http://HomeownersConsumerCenter.Com

More Mortgage Press Releases

A unique but exceptionally effective Real Estate marketing synergy has emerged among the Realty and Interior Design industries and it?s rapidly enhancing the success of Real Estate marketing across the United States.HMDgives.org is enabling Realtors and Mortgage Brokers to gift free interior design services in order to attract potential home buyers and deliver unexpected value.

Inspired by companies like Tom?s Shoes which donates one pair of shoes to needy children for every pair sold, HMDgives creates a similarly generous dynamic among home buyers. When working with an HMDgives Real Estate partner a home buyer receives the gift of free interior design for any one room ensuring maximum beauty and value is derived from life?s largest investment. Should they purchase more rooms or ongoing consultation 15% of subsequent interior design fees go directly to organizations benefiting the homeless and those at risk of becoming homeless.

Boston Real Estate Broker Michelle Villari offers free interior design services as an unexpected gift to home buying clients. “I go above and beyond for my clients and that level of service doesn’t stop at closing. Being able to offer free interior design services is a great way for my clients to immediately add equity value to their new home.?

Scottsdale AZ based Mortgage Lender Sean Wohland of Amerifirst Financial says of his firm?s HMDgives campaign, ?it?s a completely unique proposition in the marketplace, which means it catches the eye of potential home buyers.? Sean?s multi-state mortgage company offers free interior design with every rate quote throughout much of the Western US.

Downtown at 91 Franklin Street in Boston?s financial district Residential Mortgage Services is handing out gift certificates for free interior design at their new Boston headquarters location. Ravi Pahuja Sr. Mortgage Banker with RMS says ?anyone can call, email or drop by 91 Franklin Street for a rate quote on a new home loan or mortgage refinance and receive a gift certificate for free interior design services. Our clients receive the lowest available mortgage rates plus free interior design.?

There?s no cost and no obligation for Realtors, Mortgage Lenders and several types of Realty oriented service providers to gift free interior design services to prospects and clients. HMDgives is one of those extremely rare propositions in the marketplace where everybody wins.

Amanda Zettel CID is founder and Principal Interior Designer for HMD, one of America?s largest and most prolific residential interior design firms. Amanda describes HMDgives.org as ?a deliberate effort to pursue new clients in a way that positively impacts the communities we serve. We aspire to be an interior design firm that creates value above and beyond our outstanding products and services.?

By all measures, the approach is working. Homemade Design has welcomed hundreds of new clients across 42 states in 2012 without paying a single penny on traditional advertising, instead choosing to disperse advertising dollars in the form of in-kind donations and loss leader promotions that are effectively investments in the lifetime value of a client.

HMDgives.org is seeking exclusive Real Estate industry partners in major markets all across the US. There?s no cost or obligation and HMDgives makes it extremely easy to give the gift of free interior design. It?s even easier to raise funds that assist homeless adults, children and especially veterans and their families who need support to get through tough times.

About HMDgives.org

HMDgives.org is a national network of Real Estate and Interior Design professionals who gift interior design services to home buyers in order to assist the homeless. HMDgives is sponsored entirely by Homemade Design Corporation (HMD), one of America?s leading national residential interior design firms. For more information visit http://www.HMDgives.org and http://www.HMDhome.com

Americas Watchdog’s Homeowners Consumer Center is the premier consumer advocacy organization in the United States, focused on protecting homeowners, and the American dream of home ownership. Americas Watchdog’s Homeowners Consumer Center is typically at the forefront of taking on banks, or US mortgage lenders for less than ethical practices. It is an extreme rarity when the Homeowners Consumer Center actually commends, or recommends a product, or a business, especially when it comes to the mortgage lending industry. However, in the case of American Interbanc, the Homeowners Consumer Center, strongly endorses and encourages homeowners with excellent credit in California to use American Interbanc because this mortgage lender consistently offers the best possible mortgage interest rates, for individuals wishing to refinance their home, or to purchase a home. The Homeowners Consumer Center says, “American Interbanc is the best priced, most honest, and ethical lender in the United States, and we strongly encourage all California homeowners, or home buyers to compare American Interbanc’s daily rate sheet, that is posted on their web site, and compare their rates to anyone else. To qualify for American Interbanc’s home refinance, or home purchase mortgage products, the borrower must have very good credit, and verifiable income.” For more information about American Interbanc, homeowners or individuals can call them at 1-800-724-0004 or visit their web site at http://www.americaninterbanc.com

The Homeowners Consumer Center’s endorsement of American Interbanc is not just limited to the state of California. American Interbanc’s unsurpassed mortgage products are also available to individuals, or homeowners wishing to refinance, or purchase a home in Pennsylvania, New Jersey, Massachusetts, Washington, and Utah. http://HomeownersConsumerCenter.Com

Related Home Loan Press Releases

Money Mole, one of the largest and most experienced life insurance brokers on the web, have years of experience helping customers find the best deals for their individual needs, from companies across the UK. With an influx of insurance providers flooding the internet, a member of their team explains how to pursue the most thorough policies at the best prices.

?Life insurance is often a concept shrouded in confusion. Many do not consider it a necessity in the same way they would car or home insurance, yet it is the only way of providing your dependents with financial security in the unfortunate event of your death. There are different types of insurance but naturally those that offer the most thorough policies are unlikely to be the cheapest. Nevertheless there are always options for anyone who can only afford to set aside a small portion of their budget.?

1. Shopping around to find the best quote can be the most cost effective way of obtaining the right cover. Insurance premiums vary, and it is worth waiting to find the one offering the best price for your personal circumstances. The experts at Money Mole have worked hard to create an easy to use site that provides users with access to quotes from a large number of life protection providers.

2. Making adjustments to your lifestyle can dramatically reduce your life insurance costs. The team at Money Mole have issued advice for their customers outlining that one of the most successful ways of doing so appears to be to give up smoking. Those who have stopped smoking for a year can expect to benefit from much lower costs.

3. Money Mole have announced that there is still a number of people who do not select the right amount of cover. They would strongly recommend customers to look into existing employment or mortgage policies to see what they may already be covered for in order to avoid paying for what is not needed.

4. Anyone keen to keep the costs of life insurance to a minimum, who is unsure of when the best time would be to take out life insurance, would be advised to do so sooner rather than later. Typically, life insurance becomes more costly the older a person gets so once decided upon it would be logical to act as soon as possible.

5. There are two main types of life cover, level term and decreasing term insurance. Of the two, decreasing term insurance is the cheaper option. However, it is worth bearing in mind that in the event of the person?s death, the pay-out decreases, whereas with a level term policy, pay-outs stay at the same amount throughout the agreed time.

Based in Essex and London, MoneyMole is one of the UK?s largest financial brokers. Specialising in providing customers with a range of financial services including the arrangement of secured loans, unsecured loans, re-mortgage, or life insurance, the company have a trusted reputation for helping people from a range of financial backgrounds.

Shaw, licensed in accident, casualty, health and life insurance services, brings 13 years of experience to his position at Foundation Financial Group.

?I am excited about this career opportunity with Foundation Financial Group and I am looking forward to being a part of the company,? Shaw said.

Shaw, who hails from Rochester, N.Y., is an avid sports fan and spends his free time coaching youth baseball. He will work from Foundation Financial Group?s Rochester center, located at 1 South Washington St., Suite B.

?We are pleased to have Kevin join our growing insurance team,? said David Gueterman, chief operations officer of Foundation Financial Group?s subsidiaries. ?Kevin has more than a decade of experience in our industry and we are enthusiastic about his future with our company.?

Foundation Financial Group announced the opening of its insurance services division in January 2011.

About Foundation Financial Group

Foundation Financial Group, one of the nation?s fastest-growing financial services companies, specializes in mortgage lending, property and casualty insurance, life insurance, retirement services, personal taxes and corporate tax services. Foundation Financial Group operates seven regional centers in Atlanta; Charlotte, N.C.; Dallas; Jacksonville, Fla.; Raleigh, N.C.; Rochester, N.Y.; and Savannah, Ga., as well as a branch network of retail storefronts in Dayton, Ohio; Indianapolis; Kansas City, Mo.; Toledo, Ohio; and St. Paul, Minn. Foundation Financial Group offers mortgage refinancing and first-time buyer lending through traditional financing, as well as Federal Housing Administration and other government-backed home loan programs. Foundation Financial Group enjoys an A+ rating from the Better Business Bureau, the highest accreditation the BBB gives an industry-leading Federal Housing Administration compare ratio. For more information, call 866-334-1001.

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For additional information, interview and image requests, contact The AXIA Public Relations Firm at 866-999-2942, ext. 700.

Related Home Loan Press Releases

Marabella Commercial Finance, Inc. originates permanent financing for two 1031 Net Leased Walgreen Pharmacies in the first and second Quarter of 2012 and receives conditional approval for third Walgreen property. Marabella is also hopeful to receive conditional commitment for a fourth Walgreen refinance in second quarter of 2012.

Marabella Commercial Finance, Inc. refinanced a Walgreen with a loan amount of $ 2,800,000 that had a Tenants In Common Entity. This was a difficult transaction due to the fact that most lenders do not favor TIC Entities at this time in the commercial real estate cycle. Marabella arranged a Quasi Portfolio / Institutional Non-Recourse loan with standard carve-outs, an amortization of 25 years and a fixed rate term of 10 years. The interest rate was locked for 10 years at approximately 6.13%. This transaction funded in January of 2012. The owner of the Walgreen property was located in Beverly Hills, CA and Marabella met the owner at our satellite office in Beverly Hills to assist with the structuring and processing of the loan.

Marabella Commercial Finance, Inc. funded a $ 4,353,000 loan for a Walgreen corporate leased pharmacy. The Buyer for this transaction was involved in a 1031 exchange transaction. The Borrower requested a long fixed rate loan term and amortization. Marabella Commercial Finance, Inc. arranged a CMBS loan with a 30 year amortization and a 10 year fixed rate. The rate was locked at 4.90% for the full 10 years. This loan was Non-Recourse with Standard Carve-Outs. This loan was applied for on around February 27, 2012 and funded on approximately April 16, 2012. Thus from the time the Borrower applied for the loan to the time the loan funded was a total of 48 days. Timing was very important to the Borrower since he was involved in a 1031 Exchange and the seller gave him a very short window for his Due Diligence / Financing Contingency period so exceeding this time frame could have jeopardized the Buyer / Borrower?s Good Faith Deposit that was given to the seller of the store. Marabella assisted in the processing of the loan which enabled the buyer to meet his 1031 exchange requirement and close in a smooth and stress free manner.

Marabella Commercial Finance, Inc. arranged an acquisition permanent loan of $ 4,500,000. This was also a CMBS loan and had similar loan terms to the previously mentioned CMBS Walgreen loan.

Vi Pavlicevich of CLIMB Real Estate Group sees a bright future for San Francisco’s Mission Bay. Searching for the perfect place to raise her young family, Vi turned to Madrone and Mission Bay as a quieter alternative to the bustle of downtown, with the added bonus of convenient transportation to stay in touch with the urban lifestyle she adores.

Starting a family requires several things: super human energy, nearly endless patience, and if you’re lucky a loyal support network to help along the way. It’s also an experience that’s best shared with family and close friends. As a Bay Area native, Vi Pavlicevich knew that San Francisco was the only place her young family belonged, the only question left was where to settle down. After surviving three Chicago winters, returning home and setting up roots in the right neighborhood was key. In such a dynamic and fast paced city, making the best financial investment on a home would also be important, setting the family up for fiscal well being or potential struggles down the line. With a keen eye for a bargain and a family in her priorities, San Francisco’s Mission Bay leaped out as the clear destination.

Vi was raised in the Bay Area originally, but moved with her high school sweetheart, later to be her husband, to Chicago for his job in 2008, right at the onset of the financial crisis. As Vi explains, ?The cost of living was very affordable. We were able to purchase a 48th story home in a 50 story building, and pay around $ 400,000 for a home that would have been easily over a million in San Francisco.? Chicago’s lagging real estate market meant prices for homes were at an all time low, with home prices at 60-70% of their previous sales prices. As an interested investor, Vi took advantage on this unique opportunity to heavily involve herself with the growing market for distressed property resale. By taking a proactive approach in locating and predicting future mortgage values on a huge array of homes, she became a seasoned veteran in foreclosure and short sell properties.

Having succeeded in her multiple investments in Chicago, Vi returned to her home city in 2011, looking for a comparable neighborhood; a place where she could buy a home and watch her investment increase in value. Her time in Chicago had taught her first hand: ?buying a home is not only choosing the place you are going to live, it is an important financial investment.? Selecting a home that will increase in value over its life is an essential part of the home buying process.

With a passion for urban lifestyle, Vi looked for a luxury highrise that would fit her needs. A lacking inventory in new construction meant that the choices were limited, with developments like One Rincon Hill, One Hawthorne, and the Infinity in her sights. However, one development stood out from the rest. With its high end finishes, convenient location, waterfront views, and very affordable cost per square foot, Bosa’s Madrone made the most sense for Vi and her husband, Ariel. Ariel, who works at a hedge fund in the financial district, felt that ?buying in Madrone has a clear investment purpose. At $ 550 per square foot, Madrone is a true bargain, compared to the average of around $ 850 per square foot to other downtown highrises.? Predicting fast growth in the Mission Bay neighborhood, Vi and her husband anticipated an upside to their investment in 3-5 years.

As Vi puts it, ?Madrone is very much the luxury brand for homes at the moment. Like a high-end sedan, luxury comes standard. Unlike other developments, there are not multiple packages on offer – you don’t get to pick finishes. Everything is high end and comes standard.? This screamed ‘strong investment’ to Vi and her husband. As one of the first people to purchase at Madrone, signing her contract in July of 2011, Vi had the opportunity to look at all the available floorplans, investigating every unique unit: units with park side views, bridge side views, and the high rise homes. Eventually she decided on the townhouse option, noting the spacious floorplan, and accompanying affordable price tag as incredible values in San Francisco.

?Madrone was built at exactly the right time. Expectations from a developer stand point are incredibly positive, especially as the San Francisco market continues to heat up,? according to Vi. For the first time in nearly 4 years, developers are regaining confidence in the new construction market, meaning even more new development announcements to come. Although details are scarce now, Bosa is planning a third development along the Mission Bay creek, and with the current demand for new homes, Vi expects construction to begin within the next 3 years.

Right now Madrone is selling quickly with many of the 329 available units in contract. Even with high pre-construction sales numbers, Vi has noticed many potential buyers timid to buy before seeing the actual units. ?Those with vision can see a valuable investment, especially with the market trending in the direction it is. As inventory lags demand, people will be more inclined to look to Madrone further into the year.?

With her passion for real estate, Vi has turned her focus to helping first time home buyers find their dream home, using her skills as an investor to her advantage. Throughout her career at CLIMB Real Estate Group, she’s noticed that a lot of buyers live and work in the South Bay, but are interested in the urban lifestyle of San Francisco. Clients tend to want to take the time to familiarize themselves with the city first before settling on a final neighborhood to live in. ?I take a lot of first time home buyers through all the different neighborhoods of San Francisco to find the one most suitable for them.

What’s most important is finding the most comfortable environment.? Vi has noticed that her clients, and tech workers especially, are drawn to high rises and new construction, with an appreciation for the social scene in SOMA. Mission Bay has become very valuable to tech workers working in the South Bay, being so close to Caltrain, which offers easy morning commutes. Without the fevered pitch of morning traffic, many Mission Bay residents can count on catching up on reading or work every morning on their trip to the South Bay.

Vi sees a bright future for Mission Bay, with property values to rise with the development of the surrounding neighborhood. Recent additions include a brand new school in Mission Bay, the new UCSF campus, as well as numerous parks and housing developments. Vi doesn’t predict Mission Bay will to turn into the suburbs though: ?It will feel more neighborhood-y, with walking distance to restaurants and tons of new commercial properties. Throw in the easy access to Muni, and Mission Bay will be a real up and coming neighborhood.? Building along the waterfront is expected to keep growth at a medium pace, with San Francisco’s planning committee pledged to keep the waterfront district as renovated and beautified as possible. Vi envisions the Mission Bay in five years as a blend of South Beach and Mission Bay North.

Having just celebrated her baby boy’s first birthday, Vi is looking forward to moving into her new Madrone home and taking advantage of the roomy floorplans and nearby parks. To speak with Vi about buying a new home in the city or to get an insider’s perspective on Mission Bay, you can drop in and see her anytime at the Climb Real Estate design center, or get in contact via email at vi(at)climbsf(dot)com.

About Climb Real Estate Group: Climb Real Estate Group is a full-service general real estate brokerage with an emphasis on the purchase, sale, rental and marketing of select residential new developments, commercial and premier resale properties. We concentrate in condos, high rises, lofts and homes in South Beach, SOMA, South Beach, Mission Bay, Rincon Hill, Potrero Hill and Central Waterfront. Our focus is on urban-style properties, specializing in new construction, historic loft conversions, live/work spaces, Victorian flats, modern condominiums, and stylish single-family homes. We also have exclusive access to Off-Market Listings, Foreclosures and Developer Specials.

More Mortgage Press Releases

Average rates on the most popular types of mortgages were mixed over the last week, according to HSH.com’s Weekly Mortgage Rate Radar. The average rate for conforming 30-year fixed-rate mortgages fell by 1 basis point (0.01 percent) to 4.02 percent, a tiny drop that was nonetheless sufficient to produce yet another new record low rate. The average rate for conforming 5/1 hybrid ARMs increased by 1 basis point, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.97 percent, just above last week’s record low.

“Mortgage rates continued to drift sideways, but even small moves downward can produce new records from present low levels,? said Keith Gumbinger, vice president of HSH.com. ?That fixed rates are still creeping downward is a bit of a surprise and is a plus for home shoppers and refinancers.”

Rates will likely be nudged upward somewhat in the coming weeks. “Congress instructed Fannie Mae and Freddie Mac to increase the loan guarantee fees that lenders pay starting no later than April 1,” noted Gumbinger. “Since it can take upwards of 60 days to get a loan to closing, some lenders have started to pass these costs along already, and more will do so in the weeks just ahead.” The new fees can potentially increase the interest rate by one-eighth of a percentage point or more.

Average mortgage rates and points for conforming residential mortgages for the week ending January 17, according to HSH.com:

Conforming 30-year fixed-rate mortgage

According to the US Bureau of Labor and Statistic?s most recent ?Employment Situation? report released in December 2011, unemployment rates recently hit their lowest point in two years, which Credit Card City predicts will have major implications for consumer spending in 2012.

Specifically, these lower unemployment rates are anticipated to result in the following primary impacts on consumer spending throughout the New Year:

Easier Access to Lines of Credit ? As consumers re-enter the workforce, their ability to meet minimum payment requirements on existing mortgages, loans and other lines of credit will improve, resulting in an overall improvement in credit scores. As the qualifications of these consumers improve, new lines of credit will become easier to access when compared with the tightening of credit restrictions that has occurred over the past several years.

Higher Credit Card Balances ? Interestingly, the Christian Science Monitor points out that, ?Consumers incurred 154 percent more credit card debt during the third quarter of 2011 than the same period in 2010.? Overall, this translates to an increase of $ 64 billion being carried as credit card debt, with no indication that this trend will be slowing down in the future as wallets loosen and the number of qualified borrowers in the market increase in the face of improving employment opportunities.

Increased Discretionary Spending ? The rise in employment, paired with greater access to capital and credit lines, will likely lead to higher consumer discretionary spending as many buyers find themselves with extra income to spend for the first time in years. Automobiles, electronics, furniture and other home goods are all categories in which we expect to see growth in 2012.

Of course, predictions about 2012?s economic prosperity aren?t all rosy. Concerns about the debt situation in Europe, persistently low mortgage rates and the low likelihood of additional stimulus measures in the politically-charged 2012 election season are all expected to play a role in holding 2012?s economic growth to the same sluggish levels as in 2011.

As a recent analysis by forecasting giant Kiplinger suggests:

?Data will show that the economy grew at an annual rate of 3% or more in the last quarter of 2011 but that the pace will slow again early in 2012 and pick up only slightly by the end of the year. A sustained recovery is still not under way, more than two years after the end of the Great Recession.?

However, these predictions aren?t all ?doom and gloom?, as the same report anticipates that both business sales and retail spending will increase by 6% in 2012. As job creation expands and businesses again become willing to invest in new equipment, inventory and large scale capital projects, it is likely that consumer spending ? and overall economic health indicators ? will continue to improve, even if this doesn?t occur at the pace some analysts would prefer.

Overall, Credit Card City anticipates seeing a stronger buying environment than has been present in the past few years, as a result of both improving employment opportunities and a loosening of the credit access restrictions that have prevented many consumers from accessing capital in the past. For more information on the specific types of credit that may be available ? as well as regular updates on the financial sector and credit trends ? visit the Credit Card City website.

Credit Card City is an online credit card marketplace that helps individuals and businesses find the right credit card that suits their spending habits. We provides unbiased information and news about credit cards and related products and services so that consumers and businesses can learn about the latest credit trends, special offers and promotions available in the credit card industry.

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More Mortgage Rates Press Releases

By now, nearly everyone knows that the financial meltdown of 2007, and the subsequent recession, began with the collapse of the housing market and the subprime securities market, the funder of millions of mortgages.

Understanding exactly what happened, and why, has been the subject of a good deal of academic work, much of it pointing in different directions. Solving this riddle, though, is more than an academic exercise: The answers could well shape public policy and the regulation of financial markets for some time. One reason academics and policy makers have had difficulty understanding how the meltdown occurred is the lack of detailed, usable records of financial transactions in the corners of the financial system that were most affected by the crisis.

“Lots of stories circulate, but there is little data to tell whether these stories make sense or not. Our goal was to change this state of affairs by bringing in new data that can shed light on some of these important questions,” says Stefan Nagel, associate professor of finance at Stanford?s Graduate School of Business.

That uncertainty led Nagel and two colleagues to amass a database of 15,000 separate transactions by major money market funds as well as security lenders. When analyzed, the data indicated that the main trouble spots were not in places where many observers had suspected them to be.

The timing and magnitude of events leading up to the crisis indicates that more was going wrong than just failures in the mortgage market and a so-called “run on repo” (repurchase agreements), which some researchers point to as a prime cause of the collapse.

Where the crisis began

Subprime mortgages started to deteriorate in January 2007 ? eight months before the panic that hit that August ? and those losses were not large enough to have caused so much systemic damage.

One factor frequently discussed is the rapid expansion and subsequent collapse of the shadow banking sector, a collection of investment banks, hedge funds, insurers, and other non-bank financial institutions that replicate some of the activities of regulated banks, but are supervised differently.

In the years leading up to the crisis, these institutions held a wide variety of loans, including residential mortgages, auto loans, and credit card loans, which traditionally were held by the commercial banking sector. Instead of being financed by deposits in commercial banks, the loans were funded by repurchase agreements, popularly called “repos,” and asset-backed commercial paper or ABCP.

Repos and ABCP are both short-term lending instruments. In the case of ABCP, a company or group of companies will sell receivables to a bank, which, in turn, will issue them to its investors as commercial paper. The commercial paper is backed by the expected cash inflows from the receivables. Repos are very short-term collateralized loans that work something like this: A dealer sells securities to investors, with a promise to buy them back for the same price plus a premium. The size of the premium depends on the perceived risk.

Starting in 2007, the shadow banking system suffered a severe contraction. Why this happened is poorly understood, but a popular theory is that a lot of the short-term funds received by shadow banks prior to the crisis took the form of repurchase agreements and that many of these repos were backed by securitized mortgages as collateral. According to this view, the shadow banking system collapsed when money market funds and other cash lenders became concerned about the quality of the collateral that backed repos and withdrew their funding.

That led to a “run on repo” akin to the bank runs that plagued commercial banking prior to the introduction of deposit insurance. But Nagel says the focus on the repo market as a major culprit in the financial crisis is an error.

How bad assets entered the banking mainstream

In a recently revised working paper, now under review for publication, called “Sizing up Repo,” he and colleagues Arvind Krishnamurthy of Northwestern University, and Dmitry Orlov, a PhD student at the Stanford Graduate School of Business, argue that ?the ‘run on repo’ by money market funds and other cash lenders was confined to a small slice of the repo market.?

The vast majority of repos were collateralized by safe government securities, they say, not riskier securitized mortgage products. So while the ‘run on repo’ may have contributed to the problems of a few repo borrowers that were relying heavily on repo with riskier collateral, in general, ?the ‘run on repo’ was a sideshow,” Nagel said.

Instead, much of the short-term funding for securitized mortgage products, and the bulk of its contraction during the crisis took place in the asset-backed commercial paper market. According to Nagel, the risk of backing those assets was largely borne by commercial banks, which helps explain how solvency problems moved from the shadow banking system into the regular banking sector.

Many commercial banks took a page from Enron’s playbook and created special purpose vehicles that allowed the banks to keep risky assets on the balance sheets of the vehicles instead of on their own, Nagel said. As a result, it was difficult for investors or regulators to know that the banks still effectively bore the risk of these securities.

But when those securities went bad the vehicles could no longer find buyers for their commercial paper. At that point, the poisoned assets migrated to the balance sheets of the commercial banks, depleting their capital, moving the bad debt from the shadow banking system ? the vehicles are part of it ? to the conventional banking system.

Using raw information from quarterly filings by money market funds to the Securities and Exchange Commission, the researchers were able to examine transactions by the 20 largest money market fund families, covering some 80% of the assets in the industry. The researchers analyzed 15,000 individual repo transactions, taking about a year to code and extract the data from the SEC filings.

They found that, before the market contracted, money market funds held $ 2.3 trillion in assets, and about $ 400 billion in repos. The vast majority of these repos were backed by safe securities issued by the U.S. Treasury or other government agencies. Only about 10% were collateralized with riskier assets such as securitized subprime mortgages, not nearly enough to cause a systemic crisis, a very different conclusion than that of other researchers.

Nagel believes the work indicates a need for closer scrutiny by regulators of the market for commercial paper, and the use of special purpose vehicles that pull significant assets off institutional balance sheets.

Related Mortgage Press Releases