How Oxford Funding would like to make money - (FYI ONLY)

The Math Behind This Genius

Assume a $220,000 home, where buyer puts 10% down and has a $200,000, 30-year fixed rate mortgage at 7%. The LENDER is about to default on its credit lines from liquidity issues and is desperate to off load its mortgage portfolios and raise cash. Nobody will touch its defaulted loans, so to stave off bankruptcy, it begins liquidating PERFORMING LOANS.

Oxford Funding steps in with an offer of say, 70% and a quick closing. Lender is saved from bankruptcy, greatly relieved, and readily agrees to the fast, discounted closing. Oxford invests $140,000 for the $200,000 mortgage. Oxford collects 7% of $200,000 in interest ($14,000/year) or 10% return on ITS invested capital while it holds the mortgage. Sometime down the road when the market returns to normal, Oxford resells the loan for $200,000 face value, pocketing an additional $60,000 in capital gains!!! Just add ZEROS to the number for a mortgage loan “portfolio” in the millions or billions…

As more mortgage lenders are taken to the cleaners, Oxford’s takeover activity will keep returns strong as it takes advantage of historic opportunities to capitalize on the largest tumble in the U.S. Mortgage Market since the late 1980’s. Sometimes, portfolios are classified as “sub-performing”, as the borrower has been making partial payments, interest only or has fallen behind in payments. These loans can typically be purchased at even greater discounts, and Oxford Funding has the management talent and ability to restructure the loans; forgiving portions of past interest or late fees, tailoring solutions to help the borrower get ahead of the curve, ultimately bringing them current and performing. Oxford can then either resell the loans at face value to traditional lenders, or keep the assets for larger profits over the term of the loan.

“The frenzy in the markets is exciting because "dislocations" can occur in pricing”. – Warren Buffett

Some experts have compared the Oxford business model to that of buying and reselling foreclosure properties, only better. Industry Pioneer J.T. Cloud says:

“Why buy a foreclosed property on the court house steps at a 15-20% discount to true value, and inherit the problems associated with real estate management, when you can buy the LOAN on that same property, directly from the lender who is desperate to off load the paper, at a discount of 40-60% or more!”

(http://www.oxfordfunding.com/)

US budget deficit set to hit $410bn

By James Politi in Washington

Published: February 4 2008 15:02 | Last updated: February 4 2008 15:02

The Bush administration on Monday blamed the slowdown in the economy for a projected increase of the US budget deficit to a near-record level of $410bn this year, or 2.9 per cent of gross domestic product.

The expected jump in the deficit was announced as George W. Bush sent to Congress a $3,100bn federal budget for 2008 – the last and largest of his eight-year presidency.

The spending plan, which is likely to set off an intense tug-of-war with Democrats who control Congress, includes a 7.5 per cent increase in funding for the US military to $515bn and a cut in government healthcare programmes such as Medicare, which serves the elderly, and Medicaid, which serves the poor.

The 2008 budget estimates that the deficit will rise from $162bn, or 1.2 per cent of gross domestic product, in 2007, to more than double that amount, or $410bn, in 2008 and $407bn, in 2009. This reverses a trend which has seen a gradual reduction in the US fiscal gap from a record deficit of $413bn in 2004. When Mr Bush took office in 2001, the US was recording a budget surplus.

The increase in the deficit was largely pinned on the slowdown in the US economy, which has forced the administration and Congress to agree on a $150bn package of measures to stimulate the economy through rebate cheques to consumers and investment incentives for businesses.

“The primary reason for increasing deficits in the near term is the president’s economic growth package and an expected slowing of receipt growth, due to an expected reduction in corporate tax receipts from recent high levels,” the 2008 budget said.

John Spratt, a South Carolina Democrat who chairs the House budget committee, was quick to offer his reaction to the plan. “Today’s budget bears all the hallmarks of the Bush legacy - it leads to more deficits, more debt, more tax cuts, more cutbacks in critical services,” Mr Spratt said.

Copyright The Financial Times Limited 2008

(http://ft.com)

Weekly Jobless Claims Jump; December Consumer Spending Slow

Thursday, Jan. 31 2008

WASHINGTON -- U.S. consumers, battered by harsh economic crosswinds, spent less in December than at any time in the past 15 months while applications for unemployment benefits soared last week, two more signs the economy is weakening.

The Commerce Department reported Thursday that consumer spending edged up just 0.2% in December -- the year's peak shopping season -- down sharply from a 1% gain in November. It was the weakest performance in this area since spending fell by 0.1% in September 2006.

Meanwhile, the Labor Department reported that the number of laid off workers filing applications for unemployment benefits soared by 69,000 to 375,000. That was the highest level for jobless claims since the week of Oct. 8, 2005, when the economy was dealing with the disruptions caused by Hurricane Katrina and the other Gulf Coast hurricanes.

The increase in jobless claims was more than triple what economists had been expecting although part of the increase was blamed on technical difficulties in adjusting the figures around the Martin Luther King Jr. holiday.

But private economists said they believed the figure was accurately pointing to a weakening in the job market that reflects the significant slowdown in the overall economy. Ian Shepherdson, chief U.S. analyst at High Frequency Economics, said he believed the underlying level of jobless claims currently is around 350,000, an indication of a deteriorating labor market.

The unemployment rate rose significantly in December, going up to 5% from 4.7% in November. That was the biggest one-month increase since the period immediately following the September 2001 terrorist attacks. The January unemployment figure will be reported on Friday.

The weakening jobs market is keeping labor cost pressures contained. The Labor Department's Employment Cost Index posted a 0.8% rise in the final three months of last year. Wages and salaries were up 0.8% and benefit costs, which include health insurance and pensions, rose by 0.9%.

The 0.2% rise in consumer spending looked even worse when price changes were removed. Inflation-adjusted spending did not increase at all last month, following a 0.45 rise in November and a 0.1% decline in October.

The report on spending confirmed earlier reports by retailers that last year was the worst year for holiday spending in five years as consumers, worried about the economy and hit by tighter credit, a wave of home foreclosures and soaring energy prices, sharply reined in their shopping despite the best efforts of retailers to boost sales with discounted merchandise.

The Federal Reserve on Wednesday cut a key interest rate by a half-point, the second large move in less than a week as the central bank signaled it was prepared to do whatever is needed to combat the weakening economy.

The Senate is working to follow the lead of President George W. Bush and the House in developing an economic stimulus package to speed rebate checks to millions of homes in an effort to prop up consumer spending and ward off a recession -- or at least make it a short and mild downturn.

The report on consumer spending showed that personal incomes rose by 0.5% in December, the best showing since a similar increase in September.

An inflation gauge tied to spending that is closely watched by the Federal Reserve posted a 0.2% rise in December and left prices, excluding energy and food, up by 2.2% over the past 12 months, slightly higher than the 2% upper bound of the Fed's comfort zone.

(http://www.foxbusiness.com)

G.O.P. Exodus in House Bodes Ill for Fall Success

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By CARL HULSE and DAVID M. HERSZENHORN
Published: January 31, 2008

WASHINGTON — A swelling exodus of senior Republican incumbents from the House, worsened by a persistent disadvantage in campaign money, threatens to cripple Republican efforts to topple the Democratic majority in November.

Representative Tom Davis, a moderate from Northern Virginia, on Wednesday became the fifth House Republican in the last week to announce that he would not seek re-election.

That puts the roster of retirees at 28, one of the highest numbers recorded for the party in the House.

With only five Democratic seats opening so far, party strategists and independent analysts say the disparity in open seats — typically the most competitive House fights, as voters oust relatively few incumbents — makes it highly unlikely that Republicans could seize the seats necessary to regain the House. The current House has 199 Republicans and 232 Democrats, with four vacancies to be filled by special elections.

“The open-seat situation is so lopsided as to deny Republicans any chance of taking back the House in 2008,” said David Wasserman, who analyzes House races for The Cook Political Report, a nonpartisan publication.

Compounding their problems, Republicans face a worrisome financial gap in comparison to House Democrats. New fund-raising figures to be made public on Thursday will show that the national campaign committee of the House Democrats ended 2007 with $35 million in the bank and $1.3 million in debt. The Republicans’ committee had $5 million in the bank and $2 million in debt.

Senate Democrats, who intend to report $29.4 million in the bank with $1.5 million in debt, are expected to be comfortably ahead of Republicans in the holdings of their campaign committees as well. The National Republican Senatorial Campaign Committee would not make its year-end fund-raising figures available on Wednesday.

Republicans concede that they are in a difficult spot.

“It is a challenge,” said Representative Tom Cole of Oklahoma, chairman of the National Republican Congressional Committee. “What this does is make it more difficult to have offensive opportunities when you have to defend what you have.”

Mr. Cole said Republicans believed the presidential campaign would ultimately motivate their voters and donors and help them oust Democrats who in 2006 gained seats in Republican territories.

If Senator John McCain of Arizona wins the presidential nomination, Mr. Cole said, that could help Republicans in areas with significant Hispanic populations combined a strong antispending message that appeals to the party’s base.

Mr. McCain is also closely tied to a push for an overhaul of immigration policy that raised the prospect of permanent legal residency for some illegal immigrants. That could dilute the anti-immigration message that House Republicans have seen as one of their most effective weapons.

Mr. Davis is a veteran of the class of 1994 that thrust the Republicans into control of the House. He forged a reputation as an independent while he was the senior Republican on the House oversight committee, occasionally challenging the Bush administration. He represents a suburban district that Democrats view as a seat that could most easily fall in to their hands, along with open districts in Illinois, New Jersey, New York and Ohio.

Mr. Davis said his return to life in the minority party was just one factor in deciding to leave, saying he wanted a sabbatical from politics to look into other opportunities. The congressman, who oversaw the House Republican campaign operation in 2000 and 2002, acknowledged that the landscape for his party was not promising.

“There isn’t any question it is going to be a tough year,” he said.

Four of the 28 Republicans who are so far leaving the House quit before their terms ended. They will be replaced in special elections before November, giving the winners of those races at least the technical mantle of incumbency in the general election.

That leaves 24 open Republican seats, though leaders of both parties expect at least a few more Republican retirements as state filing deadlines arrive. The high point for end-of-session Republican retirements is 27 in 1952, according to Congressional records.

Democrats were reveling in the departures.

“Clearly, it’s a sign that they see no prospect of Republicans regaining control of the House in the near future, and in fact the trend seems to be heading in the other direction,” said Representative Christopher Van Hollen of Maryland, chairman of the Democratic Congressional Campaign Committee.

The financial disparity buoys Democrats, as well, particularly when Republicans have historically held an edge in raising money. Political strategists say money follows money, meaning that low Republican fund-raising totals discourage donors and encourage giving to Democrats.

It is not just the party organizations with such a differential. Individual Democratic candidates are faring very well. Representative Melissa Bean, an Illinois Democrat who has been a top national target of Republicans the last two elections, has $1.3 million in the bank. Her challenger, Steven Greenberg, a businessman, has $60,000, though he is wealthy and is expected to spend some of his own money in the fall campaign.

In the Senate, Republican retirements have also shifted the playing field, with six Republicans leaving and no Democrats retiring so far.

“We are still nine months away, and things just keep getting better,” said Senator Charles E. Schumer of New York, chairman of the Democratic Senatorial Campaign Committee.

(http://www.nytimes.com)