Tuesday, September 23, 2008

‘Free Put options’ - catalysts to Mortgage Mess

Despite constant efforts for the last one year, the FED is now forced to offer a $ 700 B plan to purchase the 'toxic-debt', a term for under-performing loans mostly mortgages in different forms. Also, the size of the prime mortgages defaulting now is higher than the sub-prime mortgages.

Analyzing the problem with a bottom-up approach, the underlying cause of the problem is what I call borrower’s 'free put option'. A homebuyer in America gets a ‘free put option’ when he takes a mortgage. He can walk away from the property leaving it to the bank, as the collateral is the property itself and nothing else. Most states will not allow the banks to go after the home buyer's other assets or future income.

Further, banks now are offering short-sale opportunities where even the credit-histories of home owners are not affected.

In the last decline of real estate market, in the early 90s, borrowers displayed patience thru the downturn and did not use these options, probably because their down-payment was higher at that time.

If the decline in home prices continues, more homeowners – even those who can afford to make payments - would like to use the option, thereby increasing the size of the 'toxic-debt', creating a vicious cycle.

Thursday, September 11, 2008

Key to a successful M-Commerce transaction

Besides the ability to carry your mobile phone across the countries like Visa, the process for an m-commerce transaction needs to be much easier than what it is currently.

Currently, you have to send a text message to a particular shortcode. For eg you send a text message/SMS with details of the merchant code and $ amount.

Thereafter a few more steps are required to confirm the transaction.

However, the process should be much easier for eg pointing your phone's camera (used as a reader) to the BarCode chart of the merchant, and pressing an authorization code and amount on the phone.

Or it could use the bluetooth capabilities of the phone to identify the merchant's bluetooth equipment connected to a wired network, and paying directly - rather than thru the text messages/SMS.

Sunday, September 7, 2008

Need for a single phone device

I still need the following phones at my home: a fixed internet phone from zingotel, a usb-drive based internet phone from magicjack which I carry with me when I travel, my cellular phone and an intercom phone for the building security and other residents to contact us.

I have not mentioned our landline and my family’s other cellular phones here.

Altogether, these are a lot of phones and sometimes we have to run around between the different rooms to reach these as we hear a ring.

A cordless / blue-tooth protocol and equipment to receive calls from all these to one phone device would probably be helpful.

Tuesday, September 2, 2008

Credit Card companies vs Mobile Commerce

Mobile Commerce has started picking up in Asia now, though still selectively. Here you are able to pay on vending machines and automated ticket counters by sending text messages from your cellphones. Your cellular phone companies act as the creditors / intermediaries between you and the vending companies.

This process of payment would become more popular once you are able to carry your mobile phone to other countries. As the telecom Industry worldwide consolidates, you would be able to use your mobile phones in different countries without changing a SIM card and seamlessly without needing your telecom company's help.

That would be a time when many more vendors would start accepting mobile commerce based payment systems.

Also, upcoming technologies like Vanu would make telecom transmission being done thru the software in your handsets. Eventually, it would lead to changing telecom companies a matter of downloading an exe file, rather than changing a SIM card or changing the handset (from GSM to CDMA network).