Wednesday, March 18, 2009

Bye-Bye to Obtaining a Mortgage on a Condo! The condo trap!

Condo market to be murdered by Freddie and Fannie.

Has so much capital ever before been wiped out by the stroke of a pen - and yes this is our government.

I bet you would not guess it is impossible to get a mortgage on a beautiful downtown condo! How is this possible? But Freddie and Fannie have some rule that if 10% of the building is still owned by the developer and the developer has these up for rent, a mortgage lender can not pass the mortgage to the GSE! In this market that means no mortgage. This means the developer cant sell his unsold units, the situation is not correctable. This is what has happened to me – as a result my condo is unsellable.

See WSJ story

Here is a letter I wrote to my congress person in the hope of finding out why we have this rule.

Dear Rep. Sue Myrick,

Inequitable Rules from Freddie and Fannie.

In 2003 I purchased a condo in The Arlington downtown Charlotte as an investment. In early 2008 I became very ill and became paralyzed and was forced to close my business (hopefully only temporally) in Matthews. Today my income is limited to Disability.

In October I asked Allen Tate to sell the condo. They valued the property at 850k. Today I have the property on the market at 650k. I have a mortgage with Bank of America for 440k. I have now begun the steps to hand the property over to them as I can no longer make the monthly payments.

The key appears to the GSE’s treatment of condo developments where the developer has a continuing interest. No lender will give a mortgage on the Arlington. There is some rule that if more than 10% is owned by the developer any mortgage is not insurable by the GSE’s. This ensures no condo is re-sellable.

So the only way I can sell my condo is to a cash buyer. I have spoken to the developer and he would love to sell the remaining properties he owns but he is caught is the same trap.

This makes no sense.

I have tried to contact Freddie, Fannie and numerous lenders. The GSE’s will provide me no information. The lenders confirm that they will not make loans.

If this is true these rules will have a very negative impact on the uptown condo market in Charlotte. I have come to terms with handing my condo over to Bank of America as I need to concentrate on my health. But it is my duty to my fellow citizens to bring this inequitable ruling by a government agency to attention of everyone.


Tuesday, March 10, 2009

The Ten Rules of Good Interviewing:

© Raymond May 2009
Tips for successful interviewing

OK your resume and cover letter were good enough to get you the interview! Can you get to the next step? Here are some thoughts to help you through the interview.

Rule 1. It is all about them, the hiring company, not about you.

They will only hire you if they believe that you will bring a benefit.

So work out how to convey how you can help the company! What benefit do you add! This could be a direct experience, could be local knowledge, you could be local and will not relocate later, could be many things, just do your best to identify what will hold you above the rest.

Companies are getting 100’s of resume for each job search, most are not qualified, and why are you qualified? Make it clear in your cover letter. I say “why can’t they read?” meaning why did you send a resume for this job? Most applicants are not qualified; it is all based on HOPE. If you are not qualified you will not get a response, but if you are – make sure it is clear! Why are you QUALIFIED?

If you don’t know what the company is looking for, why are you applying? (The “I was over qualified” excuse is over done!)

Rule 2. Keep it relevant at all times.

For example, how would you answer the classic icebreaker question? “Tell me about yourself?”

It is very easy to get off topic and just go wide. There are only two ways to answer this question. The first is to answer it with another question – make the interviewer do some work and actual ask what they want answered! So the question would sound like “what specially would you want to know about me?” Alternatively you could answer it with a personal marketing statement. Always have a short marketing statement prepared.

This is what it looks like, prepare a 3 part statement:Part 1 – One sentence summary of career to date.Part 2 – Accomplishment you are proud of that will capture the employer’s attention. (“while I was at ….)Part 3 – One sentence summary of what you want to do next in your career.

All employers are looking for the same three things:Skills, Experience and Stability

Make sure all your answer help the interview answer one of the three things!

Don’t ramble. Keep the length of your answers not too short and not too long, but just right. Don’t bore the interviewer!

Rule 3. Focus on personal accomplishments to highlight benefits you bring. Avoid general statements.

Prepare a list of as many accomplishments as you can come up with. Write these up in short paragraphs. You are going to get many questions in interviews that are skill, knowledge or behavioral based. For example, what’s the most difficult situation you ever faced on a job?Answer questions with examples, so you will be glad you did your homework. Remember rule 1 – it is all about them, how do you benefit them? How do your previous accomplishments and experiences benefit them?

Structure your answers using the STAR method:

“I was in this situation, I was given this task, I took the following actions and result was…”See how all the accomplishments you prepared for your marketing statement will be very useful?But be prepared to highlight the “intangible” using accomplishments. Saying you are a “good team player, good communicator, hard worker, cultural fit, internally motivated” with no context is hollow.

Rule 4. Be prepared for a resume review. The key will be to understand your career moves. Why you made the decision you have made.

Always key on the positive – for example, I left A to go to a better opportunity at A. Never be negative – for example, I could not stand my boss is a no no.

Be ready to answer the though questions, but be truthful. Be positive at all times.

Rule 5. Listening is harder and more important.

We were given two ears and only one mouth. Make sure you are engaged and when the interviewer is speaking you make it obvious that you are listening.

Rule 6. No Me Questions.

Bring up nothing that relates to you. Like “what is the pay” or “How much vacation do I get”…. These questions leave a very negative impression.

Rule 7. Do your homework. Blessed will be those that do their homework! Know everything in the public domain about the company. Read their web page or accounts if available.

Rule 8. Understand the objective.

Sometimes it is to continue the interview process and get a follow up interview, sometimes it is the decision maker interviewing you and you are trying to land the job.

You need to make sure you keep in mind what you are trying to answer:
Do you understand the opportunity? - ask good questions
Can you do the job?
Do you want the job?

Rule 9. Always be prepared to ask good questions.

Never pass on an opportunity to ask questions, the quality of your questions will greatly help your status.

Prepare questions before hand, use these 3 categories to help you:
- Questions about the job / opportunity
- Questions about the company, however never ask something that is publicly available.
- Questions about the interviewer, how about testing them with “tell me about yourself”

Sample Questions:
- What would you expect me to achieve in the first 6 months?
- Is there anything I can tell you about my qualifications that I haven’t said yet?
- What are the principal challenges I would face in this job?
- Why do you like working here?

Rule 10. Never forget Rule 1, it’s all about them!

Monday, March 2, 2009

History of Value at Risk or V@R

(c) Raymond May 2008

It was 1989, Angel Court, City of London the swaps trading floor for JP Morgan; Michael Einhoven recently replacing Connie Vostad as group head asked me into his office. With his feet on his desk and picking his nose he complained that he didn't understand all the risks that the group was running, was it not possible to have a single number that described these risks, rather than spread this, gamma that.

In the prior three years I had completed two large system developments using JP Morgan's mainframe infrastructure, the first captured all the Swap deal data and was used to operational support the business and produce accrual accounting results. The second supported mark-to-market accounting, gap analysis and position descriptions. The second system was way before its time, and found no takers, it was many years before any of these models became standard.

So I embarked on a project to describe the risks in the swaps business as a single number. Using a research document produced by Salomon Brothers that stated that all changes in the yield curve could be described in three parameters - as a parallel change in rates, a steepening and a humping. Based on this we generated our first simple number based on the square root of the squares of three simple observations - a 10 basis point parallel shift - a 25 basis points steepening and - a small 5 basis point humping in the middle.

I also began to collect in a spreadsheet all daily pricing parameters. Gradually as this data was collected, day by day options for calculating a more accurate representation increased. I asked our research group in New York if they could provide me with any help. Next thing I knew I was sharing my desk with Dr. Gustav. Together we generated a model to describe a position in terms of the two standard derivations loss based on historical rates. Very simply this stated " the amount of money that the portfolio's loss or gain due to market movements would not exceed 19 out of 20 days" - bingo we had the number! the Value at Risk (note we initially we set it at 95% confidence, the market has since moved to 99%)

I finally had this number which we dubbed Value at Risk in place at the end of 1991. I had developed a spreadsheet which all portfolio managers in the Swaps Group now used. This took a starting position from the mainframe in the morning, added all new deals and calculated the portfolio - inter-day position, daily profit and loss and final Value at Risk.

At the start of 1992 I left London to join the Trading desk in New York where my first task was to introduce my position spreadsheet to our US dollar operations. By 1994 I was the lead trader for US Dollars and one day I was summoned by the current top man Peter Hancock. Peter complained that he had a Value at risk for each currency but he had no overall Value at risk, and he needed one as soon as possible.

I took myself off the desk for a week and constructed a new spreadsheet which expanding the model for all currencies. The spreadsheet automatically extracted data from all the individual spreadsheets without the users even knowing and I was able to run a total picture by 4pm in New York. The results were presented daily at a risk management meeting which would be dubbed the 4:15 Meeting. The spreadsheet I developed would be called the "Ray May Spreadsheet" and would remain in place until eventually being replaced at the end of the 90's by a 40 million dollar project named "Pyramid".

JP Morgan Research Group released the Value at Risk model and the associated data to the general market as Risk Matrix in 1994 as part of a campaign to persuade Congress that derivatives where not a risk to the system following P&G and Gibson Greeting Inc large derivative losses.