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RESIDENTIAL LENDING NEWSLETTER

Volume 8: Issue 10 | October 11, 2019

You are receiving this letter because you are a client of either Blackburne & Sons or C-Loans, Inc. Removal instructions are below. Today we’ll discuss why interest rates keep falling. It’s NOT because of the Fed. We also have lots of cute, clean jokes, some funny pics, and a cute video of a dog being a drama queen. Make sure you catch my Final Funny at the very bottom.

Joke Du Jour

The psychiatrist was interviewing a first-time patient. "You say you're here," he inquired, "because your family is worried about your taste in socks?” "That's correct," muttered the patient. "I like wool socks.” "But that's perfectly normal," replied the doctor. "Many people prefer wool socks to those made from cotton or acrylic. In fact, I myself like wool socks.” "You DO?" exclaimed the man. "With oil and vinegar or just a squeeze of lemon?” 

Business Purpose Rental Home Loans in Most States

Click HERE to Apply Now!

What about YOUR state? If you have a real-life deal, we’ll hire our attorney to quickly research its availability.

The property has to be non-owner occupied, and the purpose of the loan must be for business. Remember, the nice thing about business purpose home loans from Blackburne & Sons is that our loans have a 30-year amortization, a 15-year term, and no prepayment penalty.

Call or email your favorite loan representative by clicking their picture:

(916) 338-3232

Communists Joke

Q: Why do communists only write in lower-case letters?

A: Because they hate capitalism.

Math Exam Joke

If I got 50 cents for every failed math exam, I'd have $6.30 now.

Fire Hydrant Joke

A fire hydrant has H-2-O on the inside and K-9-P on the outside.

Fifteen-Year Fix-and-Flip Loans for Residential Properties 

Man Cave Joke

Definition of a Man Cave: A room you're renting in your wife's house.

Thesaurus Joke

I own the world's worst thesaurus. Not only is it awful, it's awful.

- Today's Observation -

Why Interest Rates Keep Falling -

It's NOT the Fed

There are more than $16 trillion in Japanese and European bonds now selling at a negative yield. Can you imagine loaning $1,000,000 to the German Federal government, receiving no interest payments for ten years, and then only getting $970,000 back at the end? It seems unimaginable.

Interest rates in the United States resumed their downward march this week, and I predict that Treasury bond yields will eventually go negative.

You might think that the reason why interest rates are falling is because of the Fed. You're on the right track, but the central bank that is really stirring the pot is the European Central Bank ("ECB"). The population of Europe is old, and it is shrinking. Most countries in Europe are desperate for workers, and Sweden, Germany, and Norway are actively recruiting them.

Because the counties of Europe are withering, at least in terms of reproduction, the ECB must constantly inject fresh Euros into the EU economy; otherwise, the European money supply would contract like a black hole. Without Central Bank intervention, the money supply in Europe could easily shrink by 40% in less than six months. We saw this happen in 2008, at the beginning of the Great Recession.

In order to prevent the entire money supply of Europe from contracting into a black hole (the multiplier effect working in reverse), the ECB has been forced to constantly inject new Euros into the European economy. Many of these Euros end up in the hands of old gomers like me, and we hoard our savings because we are close to retirement.

Now old gomers are not going to keep one million Euros stuffed under their mattresses, so they take their cash down down to the bank and try to deposit it. "No, thank you," says the bank. "We have more than enough deposits right now. We don't have any place to invest them."

In fact, there are so many banks bidding to own German, Danish, Dutch, and Swedish treasury bonds, they have bid up the prices of the bonds so high that the yields are negative - say, a negative yield of 0.15% annually. 

Now back to our desperate old gomers. "You simply must take my cash, Mr. Banker. If bad guys learn that I am keeping one million Euros under my mattress, they will break in and kill me!" So the banker says to the depositor, "Okay, we'll accept your deposits; but we are going to charge you a negative yield of 0.5% per year." In other words, the old gomer is paying the bank one-half percent per year to hold his cash.

Then the banker invests in bonds with a negative yield of just 0.15%, and the bank profits off the 35 basis-point difference. A basis point is 1/100th of one percent.

European investors are going to keep buying U.S. Treasuries because our yields are positive. This will keep driving down U.S. interest rates for the foreseeable future. Sure, we'll have some periods when interest rates will spike back upwards; but the long-term trend for interest rates is still downward.

Stolen Office Joke

To whoever stole my copy of Microsoft Office, I will find you. You have my Word!

Are You Wise Enough To Pay Attention?

There are literally hundreds of private money mortgage companies out there today, and you can probably get a decent loan from most of them. But here’s the thing. Virtually all of these hard money shops are newbies (since 2009), and they are funds. The problem with hard money mortgage funds is that they don’t survive recessions. As soon as a recession hits, the investors rush to withdraw. Suddenly the hard money shop running the fund has no money with which to lend and earn loan fees. With little income coming in, the hard money shop closes.

Think I am full of beans? There were 300 hard money mortgage businesses in 2006. Fewer than ten survived.

Why do you care?

You have lost your relationship with these lenders! Success in real estate finance is all about relationships. Consider the fact that Blackburne & Sons has been in business for almost 40 years. We survived the S&L Crisis, the Dot-Com Meltdown, and the Great Recession. We were just about the only hard money shop in the country to remain in the market every day of the Great Recession.

Most of you will ignore this. The handful of wise investors and brokers will build a relationship with Blackburne & Sons. Winter is coming.

CB Radio Joke

I knew a guy named Roger... He was huge, about 10-4.

Glaciers Joke

Yellowstone tourist: "Look at all those big rocks! Wherever did they come from?"

Yellowstone guide: "The glaciers brought them down."

Tourist (cluelessly): "But where are the glaciers?"

Guide (wearily): "The glaciers ... have gone back for more rocks."

Too Busy to Broker Commercial Loans? Refer Them Instead!

We once paid a $21,250 referral fee. Here is our referral fee program.

Semi-Colon Joke

Did you hear about the semi-colon that broke the law? He was given two consecutive sentences.

The Blackburne List - Freshly Updated in 2019

The Blackburne List is a list of over 2,500 commercial lenders located nationwide. It is available for purchase for just $79.95. Is money tight? You can also buy one of our three Regional Lists (750+ lenders) for just $39.95.

Video - A Drama Queen (Make sure your volume is on)

Final Funny (PG-13)

Two guys grow up together, but after college, one moves to Michigan and the other to Florida. They agree to meet every ten years in Vero Beach to play golf. At age 30, they finish their round of golf and go to lunch. "Where you wanna go?” "Hooters.” "Why?” "Well, you know, they got the broads, with the big racks, and the tight shorts, and the legs …" "OK."

Ten years later, at age 40, they meet and play again. "Where you wanna go?” “Hooters.” "Why?” "Well, you know, they got cold beer and the big screen TVs and everybody has a little action on the games.” "OK." 

Ten years later, at age 50, they meet and play again. "Where you wanna go?” "Hooters.” "Why?” "The food is pretty good, and there is plenty of parking.” "OK."

At age 60, they meet and play again. "Where you wanna go?” "Hooters.” "Why?” "Wings are half price.” "OK"

At age 70, they meet and play again. "Where you wanna go?” "Hooters.” "Why?” "They have six handicapped spaces right by the door.” "OK."

At age 80, they meet and play again. "Where you wanna go?” "Hooters.” "Why?” "We've never been there before."

A member of the Blackburne Family of Companies

4811 Chippendale Drive, Suite 101

Sacramento, CA 95841

P: (916) 338-3232

F: (916) 338-2328

CA DRE #829677 // NMLS #103430