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BANKER LETTER
Volume 9: Issue 1
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Date: January 20, 2021
This letter is intended only for commercial real estate loan officers working for banks, credit unions, conduits, and hard money lenders. Today we’ll discuss where to invest and hedge now that inflation may be coming back. As always, we have lots of cute, clean jokes, funny pictures, and a sweet-sweet video of a groundhog eating some poor guy’s vegetable garden. You will grin.
Hey guys, if we make you chuckle today, won't you please-please-please refer a turndown this week to CommercialMortgage.com? Seriously, guys, this searchable portal is free, and it contains thousands of commercial lenders. You really are doing them a favor.
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Joke Du Jour
I asked my phone, "Siri, why am I so bad with women?"
She said, "I'm Alexa, you moron.”
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Why You Must Follow C-Loans on Facebook
You are missing important free training. It takes old man Blackburne four to five hours to write one of our popular blog training articles, but he can knock a short training article about commercial mortgage brokerage or commercial real estate finance (CREF) in minutes. In the past two weeks, he has written mini-articles on why banks hate blanket commercial loans, asset-backed securities, family offices, co-living properties, tuck-under parking, the net-worth-to-loan-size ratio, and an unknown, Federal government, mid-market PPP-like loan that can inject $5 million to $300 million into large businesses struggling to survive the coronavirus crisis.
To view these mini-lessons, come to the Facebook page for C-Loans. Look for a tab with three dots, “…”. The first drop-down selection is, “Follow.” Once you follow our Facebook page you will receive one or two free mini-lessons every week.
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- Today's Observation -
Disinflation is Dead. Long Live Inflation!
The United States has enjoyed disinflation since 1980, shortly after Japan’s debt bubble popped. Since 1980, the U.S. and European inflation rate has been steadily falling. Disinflation is different from outright deflation. Deflation means that prices are actually falling. Disinflation merely means that rate of the inflation is falling.
The COVID pandemic was the final nail in the coffin. Absent the well-conceived PPP loans (I have heard of few abuses), the United States might have lost 300,000+ otherwise-profitable businesses. Congress and the President helped these American businesses when they needed it most. In my opinion, the PPP Loan Program was amazingly successful.
The PPP Loan Program eventually cost the Federal government, however, over $525 billion. To make matters worse, the huge increase in the deficit just followed a $1.9 trillion tax cut by President Trump. Between the two stimulus programs, we broke the budget. The only solution was to have the Fed buy up our own debt.
Unfortunately the actions of the Fed worked too well. The U.S. economy soared. The unemployment rate plunged. Real average wages started to increase for the first time in several decades. The stock market soared. Despite COVID, the U.S. unemployment rate is still less than 6.9%. Deficits apparently no longer matter, at least in the eyes of Congress.
This is why you can bet that inflation will soon come roaring back. Have you noticed that home prices are soaring? No poop, Sherlock! Haha. Go get a huge mortgage at today’s ridiculously low interest rates and buy the biggest home you can afford. By keeping interest rates ridiculously low, the Fed is subsidizing home purchases.
If you can even find a home to buy… The big problem is inventory. Investors are snatching up homes without even seeing them. They are relying entirely on online videos. Investors are also paying all cash. Home prices were held in check for most of the past year by the fact that the homes were not appraising for their purchase price. Sellers were forced to reduce their asking prices so that their buyers could get mortgage loans.
No longer. Now more and more investors are simply paying all cash for these homes, thereby going around the whole appraisal issue. Folks, home prices today are an absolute steal. Buy a big home right away, if you need the extra space.
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Cat Talking Joke
This morning I saw a neighbor talking to her cat. It was obvious that she thought her cat understood her. I came home and told my dog. We had a good laugh.
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Yoda Joke
"Yoda, are you sure we're headed in the right direction?"
"Off course we are…"
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Confession Joke
Priest: "Do you have something to confess?”
Man: "I did something Father, but I am not sure if it was a sin."
Priest: "Did you enjoy it?"
Man: "Yes, Father."
Priest: "Then it was a sin.”
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Butt Joke
A group of butts is walking. The smallest struggles to keep up. “Sorry, I’m a little behind.”
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Now available online!
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Video - Groudhog Family's Garden
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Final Funny
An old guy was working out in the gym when he spotted an attractive young lady. He asked a nearby trainer, "What machine should I use to impress that lady over there?” The trainer looked him up and down and said, "I would try the ATM in the lobby."
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www.C-Loans.com
555 University Ave
Suite 150
Sacramento, CA 95825
P: (574) 210-6686
F: (916) 338-2328
CA DRE #1330173
NMLS #167100
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Tom Blackburne
General Manager
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