By Joel Persinger
YourRealEstateDude
Earlier this month U.S. Comptroller of the Currency, John C. Dugan, while speaking at a panel discussion with other government big wigs, shared some data from a new government report. Referring to loan modifications, he said, “After three months, nearly 36 percent of the borrowers had re-defaulted by being more than 30 days past due. After six months, the rate was nearly 53 percent, and after eight months, 58 percent." Knowing a good sound bite when they hear one, the media did what the media does best. It beat the drums until people all over began looking at loan modifications as if they were just the latest creative way for crooked real estate agents and lender to rip people off.
National TV news programs have aired investigative stories, newspapers have published damning articles and radio talk show hosts, including a very popular fellow here in San Diego, have launched into tirades bemoaning the evils of loan modifications and why they don’t work. Are all these media “know it alls” right? I hate to burst their inflated egos, but the answer is, “NO.”
Loan modifications are exactly what their name implies. They modify the terms of a borrower’s loan. That is the limit of what they do. They do not modify that borrower’s spending habits or alter that borrower’s understanding of how money works. Those changes in behavior are left to the borrower to undertake on his or her own. Borrowers who make changes to their lifestyle and adjust their spending do just fine once their loan terms have been modified. Others, and apparently the number is upwards of 58%, continue to live as they did when they got themselves in trouble in the first place. So, within a few months they find themselves in trouble again. What amazes me is that anyone is actually surprised by this fact.
Have you every met anyone who got themselves into deep credit card debt and decided to refinance their home to pay off the credit cards? Did you know that most of those folks charge the credit cards back up within months of being bailed out? Refinancing to pay off the cards only addresses the symptoms and leaves the disease of poor financial habits to rage on. Loan modifications are no different. Therefore, if you have your loan terms modified, you must understand that some lifestyle changes may be required in order for you to make the payments. If you simply continue spending as you always have, you will likely be in trouble again in just a few months. It’s that simple.
If you think I’m wrong, just go to a financial seminar sometime. You will quickly learn that the overwhelming majority of Americans wouldn’t know a family budget if it hit them in the face. We may teach reading, writing and arithmetic in school, but we don’t teach how money works or how to be successful using it. Those lessons are taught by parents, most of whom have no idea what they’re doing either. So, here’s the bottom line on loan modifications: If you want to keep your house rather than sell it or lose it to foreclosure, a loan modification may be just the ticket for you. However, you MUST address the spending habits that got you into trouble in the first place by putting in place a family budget and sticking to it.
Thursday, December 18, 2008
Monday, December 08, 2008
Can You Get Your Loan Modified Yourself?
By Joel Persinger
YourRealEstateDude.com
Loan Modification is a hot topic among folks who are struggling financially and hoping to find some way to afford rising house payments. Not surprisingly, a cottage industry has come to life for the purpose of negotiating loan modifications for those who need them. But, what exactly is a loan modification and why would you need someone else to get it done for you?
When lenders are faced with situations in which borrowers are either unable to make their payments or soon will be, only three choices present themselves: foreclose on the property, allow the homeowner to sell the property for less that what is owed (a short sale) or modify the terms of the loan so that the homeowner can make the payments. In both a foreclosure and a short sale it is a certainty that the lender will take a significant loss. However, by modifying the terms of the loan, the lender can preserve the amount of principle owed by altering terms such as the interest rate charged or the length of the loan. The lender wins by minimizing losses and the homeowner wins by avoiding the loss of the home and the financial devastation resulting from a foreclosure.
Over the past week I have been asked about loan modifications by a number of people. Each one told me that such things were not possible. When asked how they came to such conclusions, each one said, “I’ve already tried to get my lender to do that and they won’t help me.” The point they were missing is that some things simply do not lend themselves to the idea of doing them yourself and negotiating a loan modification is among them.
Approaching a lender to modify the terms of a loan is like standing in line at the airport to board a flight. Homeowners fly coach and must wait in long lines and deal with grumpy airline employees when they finally reach the service counter. Real estate and mortgage brokers fly business class. The lines are shorter and the airline employees are nicer, but the service is still marginal, at best. Attorneys, on the other hand, fly first class. They await their flight in the first class lounge, board the plain first and sit in the cushy seats being served by their own personal flight attendants.
As the analogy above illustrates, attorneys enter the negotiation with your lender through a completely different door and deal with completely different people than you do. This is because lenders are afraid of attorneys and you don’t frighten the lender at all. When you call asking lenders to modify your terms, they feel like you’re asking for a favor that they don’t owe you. An attorney approaches the problem differently. The attorney reviews your entire file looking for any mistakes the lender made in the process of selling you the loan. Then the mistakes are bundled into a legal club, which the attorney begins beating the lender over the head with until the lender finally says, “Uncle” and agrees to the modification. This is why my office employs attorneys to negotiate loan modifications for our clients.
So, can you get your loan modified successfully by yourself? Probably not, and if you do manage it, you will likely have gotten less of a modification than you might have gotten if you had used a qualified attorney. Remember, the lender’s employees are looking after the lender, not you. You will need someone who is trained and knowledgeable in your corner if you are going to have any chance of winning.
YourRealEstateDude.com
Loan Modification is a hot topic among folks who are struggling financially and hoping to find some way to afford rising house payments. Not surprisingly, a cottage industry has come to life for the purpose of negotiating loan modifications for those who need them. But, what exactly is a loan modification and why would you need someone else to get it done for you?
When lenders are faced with situations in which borrowers are either unable to make their payments or soon will be, only three choices present themselves: foreclose on the property, allow the homeowner to sell the property for less that what is owed (a short sale) or modify the terms of the loan so that the homeowner can make the payments. In both a foreclosure and a short sale it is a certainty that the lender will take a significant loss. However, by modifying the terms of the loan, the lender can preserve the amount of principle owed by altering terms such as the interest rate charged or the length of the loan. The lender wins by minimizing losses and the homeowner wins by avoiding the loss of the home and the financial devastation resulting from a foreclosure.
Over the past week I have been asked about loan modifications by a number of people. Each one told me that such things were not possible. When asked how they came to such conclusions, each one said, “I’ve already tried to get my lender to do that and they won’t help me.” The point they were missing is that some things simply do not lend themselves to the idea of doing them yourself and negotiating a loan modification is among them.
Approaching a lender to modify the terms of a loan is like standing in line at the airport to board a flight. Homeowners fly coach and must wait in long lines and deal with grumpy airline employees when they finally reach the service counter. Real estate and mortgage brokers fly business class. The lines are shorter and the airline employees are nicer, but the service is still marginal, at best. Attorneys, on the other hand, fly first class. They await their flight in the first class lounge, board the plain first and sit in the cushy seats being served by their own personal flight attendants.
As the analogy above illustrates, attorneys enter the negotiation with your lender through a completely different door and deal with completely different people than you do. This is because lenders are afraid of attorneys and you don’t frighten the lender at all. When you call asking lenders to modify your terms, they feel like you’re asking for a favor that they don’t owe you. An attorney approaches the problem differently. The attorney reviews your entire file looking for any mistakes the lender made in the process of selling you the loan. Then the mistakes are bundled into a legal club, which the attorney begins beating the lender over the head with until the lender finally says, “Uncle” and agrees to the modification. This is why my office employs attorneys to negotiate loan modifications for our clients.
So, can you get your loan modified successfully by yourself? Probably not, and if you do manage it, you will likely have gotten less of a modification than you might have gotten if you had used a qualified attorney. Remember, the lender’s employees are looking after the lender, not you. You will need someone who is trained and knowledgeable in your corner if you are going to have any chance of winning.
Monday, November 24, 2008
Being Thankful in Difficult Times
By Joel Persinger
YourRealEstateDude.com
Like almost every morning at the Persinger home, this morning was a study in chaos. The phone was ringing, the kitchen was bustling, my daughter couldn’t finder her favorite jacket, my son was rushing around the house with his backpack hung over his shoulder, his basketball gear in one hand and a half-eaten “something” that nobody could identify in the other. My wife was threading in and out between the children trying to get ready for work and I was just doing my best to stay out of the way. When all was said and done, the house was quiet once again. My wife was on her way to work, my kids were both in school and I had settled into my office with a hot cup of tea and a chance to check out the financial news before starting, what was certain to be, a very fast and furious day.
Two cups of tea and two hours later, the day was beginning to take shape. I had accomplished a few key tasks, put out three small fires and taken a look at the financial news. As usual, the financial news was bad. Citigroup was going down the tubes, like so many other financial institutions, a government bailout using your taxes and mine was in the works, and home sales were down again by about 3.1%. When you consider that news of that sort is a daily occurrence at present and that the majority of our clients are folks who are forced to sell their homes because of financial woes, the weight of the economic news can be almost too much to bear at times.
I was thinking about that fact and working on my third cup of tea when the phone rang. It was one of our clients who had just been informed that her house had finally closed escrow. She and her husband had been forced to sell for less than what they owed and it had taken nearly four months for the lender to approve the sale. The lady had just lost her home and did not receive a dime from the sale of the property, yet she thanked me for getting it sold and spoke of how grateful she was that she and her family would be moved into their rented home before Christmas.
That conversation reminded me that we live in the greatest country on the face of the Earth. Sure, people are losing their homes to foreclosure. No matter how you slice it, that is a sad thing. But, in my office alone, we have sold or are currently in the processes of selling a great many pre-foreclosure properties and not one of our clients has missed a meal or been forced to sleep on the street. Every one of them is simply moving from one house to another.
As I write this, Thanksgiving is only a few days away and I cannot escape the feeling that the client who just called me has set a shining example of what it means to be thankful. She is thankful for what she has, even though it may not be what she wants. Here’s hoping that you and I will do as well. Happy Thanksgiving!
YourRealEstateDude.com
Like almost every morning at the Persinger home, this morning was a study in chaos. The phone was ringing, the kitchen was bustling, my daughter couldn’t finder her favorite jacket, my son was rushing around the house with his backpack hung over his shoulder, his basketball gear in one hand and a half-eaten “something” that nobody could identify in the other. My wife was threading in and out between the children trying to get ready for work and I was just doing my best to stay out of the way. When all was said and done, the house was quiet once again. My wife was on her way to work, my kids were both in school and I had settled into my office with a hot cup of tea and a chance to check out the financial news before starting, what was certain to be, a very fast and furious day.
Two cups of tea and two hours later, the day was beginning to take shape. I had accomplished a few key tasks, put out three small fires and taken a look at the financial news. As usual, the financial news was bad. Citigroup was going down the tubes, like so many other financial institutions, a government bailout using your taxes and mine was in the works, and home sales were down again by about 3.1%. When you consider that news of that sort is a daily occurrence at present and that the majority of our clients are folks who are forced to sell their homes because of financial woes, the weight of the economic news can be almost too much to bear at times.
I was thinking about that fact and working on my third cup of tea when the phone rang. It was one of our clients who had just been informed that her house had finally closed escrow. She and her husband had been forced to sell for less than what they owed and it had taken nearly four months for the lender to approve the sale. The lady had just lost her home and did not receive a dime from the sale of the property, yet she thanked me for getting it sold and spoke of how grateful she was that she and her family would be moved into their rented home before Christmas.
That conversation reminded me that we live in the greatest country on the face of the Earth. Sure, people are losing their homes to foreclosure. No matter how you slice it, that is a sad thing. But, in my office alone, we have sold or are currently in the processes of selling a great many pre-foreclosure properties and not one of our clients has missed a meal or been forced to sleep on the street. Every one of them is simply moving from one house to another.
As I write this, Thanksgiving is only a few days away and I cannot escape the feeling that the client who just called me has set a shining example of what it means to be thankful. She is thankful for what she has, even though it may not be what she wants. Here’s hoping that you and I will do as well. Happy Thanksgiving!
Monday, November 17, 2008
Frustrated With The Short Sale Process?
By Joel Persinger
YourRealEstateDude.com
A large percentage of the homes currently sold in San Diego County are either pre-foreclosures (also called “Short Sales”) or foreclosures (also know as REOs). That being the case, the average buyer will run into a ton of these properties and likely make offers on many. While the REOs can be frustrating because the banks that own them are difficult to deal with, the short sales can be challenging because of the length of time it takes to negotiate them to a successful conclusion.
When a property is being sold for less than what is owed to the lender, the term that is used to describe it is, “short sale.” Short sales require that the lenders agree to take a loss on the sale of the properties. Consequently, homeowners do not have much control over whether their properties actually sell. The control is in the hands of the short sale lenders. Some lenders are easier to deal with than others. But, it is fair to say that all lenders hope to mitigate their losses by selling the properties for as much as possible.
Buyers approach short sales because they want to get a deal and lenders sell properties short because they want to get as much money out of the house as possible. They know that if they foreclose, they will receive far less. The parties often do not agree. So, the negotiations go on and on until the two parties come to some agreement that meets both of their goals. This process can take months and many buyers simply do not want to wait.
I checked with one of our clients the other day to see how her search for a new home was going. She is working with one of my agents in North County. When I spoke with her my first question was, “How is my agent treating you.” She said, “We’re doing great. I’m just frustrated with the short sale process.” A few questions later and I discovered that she was mostly frustrated by the length of time it takes to get a short sale transaction to close escrow. Still, she is hanging in there because it is very likely that she will get a terrific deal on the house.
If you are thinking about buying a short sale property, you must be prepared for the fact that the process is confusing, lengthy and challenging. You should also prepare yourself for the reality that you may work on a short sale purchase for months only to have it fall apart and never get the house. I have one client currently who has been attempting to buy the same house for about a year. It should be noted that in that particular case the house and lot are one of a kind! Still, long negotiations and long escrows are the norm for short sales. You need to know that before you get involved in one.
On a positive note, some of the best deals you will find are short sales. This is because many buyers don’t try to buy them because they’re difficult. That leaves you to take advantage of the situation by being one of the few buyers who will hold out long enough to succeed. As my grandfather used to say, if you want to be successful, find out what everyone else is doing and then do the opposite.
YourRealEstateDude.com
A large percentage of the homes currently sold in San Diego County are either pre-foreclosures (also called “Short Sales”) or foreclosures (also know as REOs). That being the case, the average buyer will run into a ton of these properties and likely make offers on many. While the REOs can be frustrating because the banks that own them are difficult to deal with, the short sales can be challenging because of the length of time it takes to negotiate them to a successful conclusion.
When a property is being sold for less than what is owed to the lender, the term that is used to describe it is, “short sale.” Short sales require that the lenders agree to take a loss on the sale of the properties. Consequently, homeowners do not have much control over whether their properties actually sell. The control is in the hands of the short sale lenders. Some lenders are easier to deal with than others. But, it is fair to say that all lenders hope to mitigate their losses by selling the properties for as much as possible.
Buyers approach short sales because they want to get a deal and lenders sell properties short because they want to get as much money out of the house as possible. They know that if they foreclose, they will receive far less. The parties often do not agree. So, the negotiations go on and on until the two parties come to some agreement that meets both of their goals. This process can take months and many buyers simply do not want to wait.
I checked with one of our clients the other day to see how her search for a new home was going. She is working with one of my agents in North County. When I spoke with her my first question was, “How is my agent treating you.” She said, “We’re doing great. I’m just frustrated with the short sale process.” A few questions later and I discovered that she was mostly frustrated by the length of time it takes to get a short sale transaction to close escrow. Still, she is hanging in there because it is very likely that she will get a terrific deal on the house.
If you are thinking about buying a short sale property, you must be prepared for the fact that the process is confusing, lengthy and challenging. You should also prepare yourself for the reality that you may work on a short sale purchase for months only to have it fall apart and never get the house. I have one client currently who has been attempting to buy the same house for about a year. It should be noted that in that particular case the house and lot are one of a kind! Still, long negotiations and long escrows are the norm for short sales. You need to know that before you get involved in one.
On a positive note, some of the best deals you will find are short sales. This is because many buyers don’t try to buy them because they’re difficult. That leaves you to take advantage of the situation by being one of the few buyers who will hold out long enough to succeed. As my grandfather used to say, if you want to be successful, find out what everyone else is doing and then do the opposite.
Thursday, November 13, 2008
How does loan modification work?
By Joel Persinger
YourRealEstateDude.com
The problems in the housing and lending markets have caused the births of several new “industries” designed to help struggling homeowners address their financial woes. One such approach is called, “Loan Modification.” This is a process by which a negotiation is undertaken with the lender, usually by an attorney, for the purpose of renegotiating the terms of the loan. It should be clearly stated that the overwhelming majority of successful loan modifications DO NOT include a reduction in the amount of principle owed. The figures I have been quoted from a number of experts indicate that less that 2% of loan modifications include a principle reduction.
The loan terms are generally what are modified. For example: the lender may agree to reduce the interest rate, change the loan from an adjustable to a fixed rate of interest, lengthen the overall life of the loan (from 15 years to 30 years, for example), wave any late fees, tack the amount of late payments owed onto the end of the loan and so on. But, the one thing the lenders are least likely to do is reduce the total amount of principle you owe.
I’ve mentioned the principle reduction a couple of times because this is precisely what scam artists promise. The crooks understand that distressed homeowners are looking for a way to owe less on their homes. So, they promise to get the lenders to reduce the principle in order to entice the homeowners into the scam. As I was writing this column, I received a call from a homeowner who had been referred to me for a loan modification. She was shocked when I told her the truth about principle reduction. “I just spoke to some guy who told me he could get my loan amount down by half,” she said. “He told me to write him a check and he would get it done, guarantied,” she told me. After she had calmed down, she expressed her utter amazement that people take advantage of struggling families in that way. Unfortunately, I was not amazed.
On November 3rd, the California Attorney General announced the arrests of three members of a fraud ring who preyed on desperate Southern California homeowners by falsely promising to renegotiate their home loans. Instead these scam artists ripped them off for thousands of dollars while their homes fell into foreclosure. Among the other things these folks are accused of, is telling their victims that their mortgage loans had been renegotiated when they had not been. They told the homeowner that the lenders needed a “good faith” payment to secure the new accounts. Homeowners made payments to accounts under business names such as “Reinstatement Department” or “Resolution Department” that made it appear as if the payment had been applied toward the loan. According to the California Association of Realtors who reported the story, Bank records indicate that more than $700,000 was stolen from homeowners who fell victim to this scheme.
Loan modification can be a wonderful opportunity and it should be explored by struggling homeowners who wish to remain in their homes and avoid a short sale or foreclosure. Still, it is important to do your homework. There are some wolves in sheep’s clothing out there and the last thing I want you to be is their victim.
YourRealEstateDude.com
The problems in the housing and lending markets have caused the births of several new “industries” designed to help struggling homeowners address their financial woes. One such approach is called, “Loan Modification.” This is a process by which a negotiation is undertaken with the lender, usually by an attorney, for the purpose of renegotiating the terms of the loan. It should be clearly stated that the overwhelming majority of successful loan modifications DO NOT include a reduction in the amount of principle owed. The figures I have been quoted from a number of experts indicate that less that 2% of loan modifications include a principle reduction.
The loan terms are generally what are modified. For example: the lender may agree to reduce the interest rate, change the loan from an adjustable to a fixed rate of interest, lengthen the overall life of the loan (from 15 years to 30 years, for example), wave any late fees, tack the amount of late payments owed onto the end of the loan and so on. But, the one thing the lenders are least likely to do is reduce the total amount of principle you owe.
I’ve mentioned the principle reduction a couple of times because this is precisely what scam artists promise. The crooks understand that distressed homeowners are looking for a way to owe less on their homes. So, they promise to get the lenders to reduce the principle in order to entice the homeowners into the scam. As I was writing this column, I received a call from a homeowner who had been referred to me for a loan modification. She was shocked when I told her the truth about principle reduction. “I just spoke to some guy who told me he could get my loan amount down by half,” she said. “He told me to write him a check and he would get it done, guarantied,” she told me. After she had calmed down, she expressed her utter amazement that people take advantage of struggling families in that way. Unfortunately, I was not amazed.
On November 3rd, the California Attorney General announced the arrests of three members of a fraud ring who preyed on desperate Southern California homeowners by falsely promising to renegotiate their home loans. Instead these scam artists ripped them off for thousands of dollars while their homes fell into foreclosure. Among the other things these folks are accused of, is telling their victims that their mortgage loans had been renegotiated when they had not been. They told the homeowner that the lenders needed a “good faith” payment to secure the new accounts. Homeowners made payments to accounts under business names such as “Reinstatement Department” or “Resolution Department” that made it appear as if the payment had been applied toward the loan. According to the California Association of Realtors who reported the story, Bank records indicate that more than $700,000 was stolen from homeowners who fell victim to this scheme.
Loan modification can be a wonderful opportunity and it should be explored by struggling homeowners who wish to remain in their homes and avoid a short sale or foreclosure. Still, it is important to do your homework. There are some wolves in sheep’s clothing out there and the last thing I want you to be is their victim.
Home Sales are Picking Up!
November, 3 2008
By Joel Persinger
YourRealEstateDude.com
Just because the media is all up in arms over the economy, doesn’t mean that everything is going badly. The economy is having a tough time, but in the real estate world, things are beginning to look up.
The California Association of Realtors recently reported home sales figures for the month of September. According to the Association, “Home sales increased 96.7 percent in September in California compared with the same period a year ago, while the median price of an existing home fell 40.9 percent. Statewide sales in September edged past the 500,000 threshold for the first time in more than two years, rising 2.3 percent compared with August and 96.7 percent compared with a year ago.”
C.A.R. President William E. Brown said, “This dramatic increase in sales owes as much to market weakness a year ago in the early stages of the credit crunch, as it does to the growth of sales in September this year. Similar increases occurred in the early 1980s when the market was climbing out of a comparatively steep downturn in sales.
It is true, that much of the increase is due to the terrible condition of the market the previous year, but we should not forget that this year’s market could be just as bad as the previous year’s, but its not! On the contrary, real estate sales are showing the kind of gradual improvement that can be expected when recovering from the damage done by the disintegration of the mortgage market. It may not be anything worth throwing a party over, but its one solid step in the right direction and some believe it is a harbinger of things to come. Association President Brown said, “We expect the market to register significant year-to-year percentage gains in the coming months as current sales are compared against extremely low numbers that prevailed during the fourth quarter of last year.”
Nobody can state definitively that the housing market is on the rebound. There simply is not enough data available to tell. Still, a year over year increase in sales of almost 100 percent in September is unquestionably good news. If nothing else, it tells us that sales are increasing and that the San Diego real estate market, while injured, is not dead!
By Joel Persinger
YourRealEstateDude.com
Just because the media is all up in arms over the economy, doesn’t mean that everything is going badly. The economy is having a tough time, but in the real estate world, things are beginning to look up.
The California Association of Realtors recently reported home sales figures for the month of September. According to the Association, “Home sales increased 96.7 percent in September in California compared with the same period a year ago, while the median price of an existing home fell 40.9 percent. Statewide sales in September edged past the 500,000 threshold for the first time in more than two years, rising 2.3 percent compared with August and 96.7 percent compared with a year ago.”
C.A.R. President William E. Brown said, “This dramatic increase in sales owes as much to market weakness a year ago in the early stages of the credit crunch, as it does to the growth of sales in September this year. Similar increases occurred in the early 1980s when the market was climbing out of a comparatively steep downturn in sales.
It is true, that much of the increase is due to the terrible condition of the market the previous year, but we should not forget that this year’s market could be just as bad as the previous year’s, but its not! On the contrary, real estate sales are showing the kind of gradual improvement that can be expected when recovering from the damage done by the disintegration of the mortgage market. It may not be anything worth throwing a party over, but its one solid step in the right direction and some believe it is a harbinger of things to come. Association President Brown said, “We expect the market to register significant year-to-year percentage gains in the coming months as current sales are compared against extremely low numbers that prevailed during the fourth quarter of last year.”
Nobody can state definitively that the housing market is on the rebound. There simply is not enough data available to tell. Still, a year over year increase in sales of almost 100 percent in September is unquestionably good news. If nothing else, it tells us that sales are increasing and that the San Diego real estate market, while injured, is not dead!
Fixing the Housing Market
October 17, 2008
By Joel Persinger
YourRealEstateDude.com
There is an old saying that goes like this, “Lord help us when the day comes that a politician can outthink an entrepreneur.” Over the last seven or eight weeks I have given this saying a great deal of thought. Bank after bank has failed, the stock market has been riding a rollercoaster that has frightened most everyone and politicians everywhere have been promising to fix everything, even though in large part, they helped create the problems in the first place.
All of this turmoil has given rise to an election year in which throngs of people seem to be gravitating toward more and bigger government. But, can the government really fix things? Are politicians truly adept at solving the very problems they bring about? The simple and direct answer to these questions is, “No.” The actions taken by politicians are in direct proportion to the number of votes they feel might be gained or lost as a result. Thus, such actions are generally calculated to make voters happy rather than to offer real solutions. After all, the problem being solved is political damage control.
By contrast, entrepreneurs are always looking for ways to provide solutions to problems in order to make a living by doing so. This means that the solution MUST address a real problem and provide a real, workable solution in order to be a success. This is precisely why there has never been and will never be a politician who can outthink an entrepreneur, and this is precisely what is great about this country. We are a country of inventors, a nation of entrepreneurial thinkers, a people who love a good puzzle and have the talent and skill to solve it. Our forefathers new this and had the good sense to stay out of the way. They knew we needed a government, but they also understood how oppressive governments can be. So, they rebelled against the tyranny of the English aristocracy and created a governmental structure meant to support free thinking and the free flow of the inventive and entrepreneurial spirit that is America.
So, if we fast forward to 2008 and compare the solutions to the problems in our current real estate market, we find that government solutions don’t work any better now than they did when the country was formed. Government, at all levels, has floundered in its attempt to address the issues affecting the real estate market. In fact, while more than one “government bail-out” has been implemented, none have accomplished the goals set out for them. Worse yet, none of these government solutions are self-supporting. They all spend money that the government doesn’t have.
In the meantime, free thinking business folks have hammered out real solutions that work, make money and create jobs. Here are just two examples:
Loan modification: One new company with a mission to negotiate the restructuring of home loans on behalf of homeowners who cannot make their mortgage payments is Debt Advisory Alliance. They are a private company which, by all reports, is having significant success in helping their clients stay in their homes by negotiating a modification of the terms of their home loan directly with the lender. My staff and I attended a meeting with this company last week and we were very impressed!
Short sales: Some enterprising real estate brokers have made a science out of helping people by negotiating directly with the lender in order to get their homes sold for less than what is owed. The key is that some brokers have become experts at this and are quite successful at negotiation away much of the bad consequences that would normally afflict the homeowner after the sale. Such things include, negotiating away the lender’s option to chase the homeowner for the balance of the money owed. Since we work with an investor who buys short sales, this is a good chunk of the business that we do in my office. So, I know that it works.
While nobody has a perfect solution for the problems that face the real estate industry, it has been my experience that quick thinking entrepreneurs will end up providing the answers, while quick talking politicians will only manage to get elected or re-elected. Keeping that in mind when you’re looking for someone to help you or when you’re heading to the ballot box could make finding real help a whole lot easier.
By Joel Persinger
YourRealEstateDude.com
There is an old saying that goes like this, “Lord help us when the day comes that a politician can outthink an entrepreneur.” Over the last seven or eight weeks I have given this saying a great deal of thought. Bank after bank has failed, the stock market has been riding a rollercoaster that has frightened most everyone and politicians everywhere have been promising to fix everything, even though in large part, they helped create the problems in the first place.
All of this turmoil has given rise to an election year in which throngs of people seem to be gravitating toward more and bigger government. But, can the government really fix things? Are politicians truly adept at solving the very problems they bring about? The simple and direct answer to these questions is, “No.” The actions taken by politicians are in direct proportion to the number of votes they feel might be gained or lost as a result. Thus, such actions are generally calculated to make voters happy rather than to offer real solutions. After all, the problem being solved is political damage control.
By contrast, entrepreneurs are always looking for ways to provide solutions to problems in order to make a living by doing so. This means that the solution MUST address a real problem and provide a real, workable solution in order to be a success. This is precisely why there has never been and will never be a politician who can outthink an entrepreneur, and this is precisely what is great about this country. We are a country of inventors, a nation of entrepreneurial thinkers, a people who love a good puzzle and have the talent and skill to solve it. Our forefathers new this and had the good sense to stay out of the way. They knew we needed a government, but they also understood how oppressive governments can be. So, they rebelled against the tyranny of the English aristocracy and created a governmental structure meant to support free thinking and the free flow of the inventive and entrepreneurial spirit that is America.
So, if we fast forward to 2008 and compare the solutions to the problems in our current real estate market, we find that government solutions don’t work any better now than they did when the country was formed. Government, at all levels, has floundered in its attempt to address the issues affecting the real estate market. In fact, while more than one “government bail-out” has been implemented, none have accomplished the goals set out for them. Worse yet, none of these government solutions are self-supporting. They all spend money that the government doesn’t have.
In the meantime, free thinking business folks have hammered out real solutions that work, make money and create jobs. Here are just two examples:
Loan modification: One new company with a mission to negotiate the restructuring of home loans on behalf of homeowners who cannot make their mortgage payments is Debt Advisory Alliance. They are a private company which, by all reports, is having significant success in helping their clients stay in their homes by negotiating a modification of the terms of their home loan directly with the lender. My staff and I attended a meeting with this company last week and we were very impressed!
Short sales: Some enterprising real estate brokers have made a science out of helping people by negotiating directly with the lender in order to get their homes sold for less than what is owed. The key is that some brokers have become experts at this and are quite successful at negotiation away much of the bad consequences that would normally afflict the homeowner after the sale. Such things include, negotiating away the lender’s option to chase the homeowner for the balance of the money owed. Since we work with an investor who buys short sales, this is a good chunk of the business that we do in my office. So, I know that it works.
While nobody has a perfect solution for the problems that face the real estate industry, it has been my experience that quick thinking entrepreneurs will end up providing the answers, while quick talking politicians will only manage to get elected or re-elected. Keeping that in mind when you’re looking for someone to help you or when you’re heading to the ballot box could make finding real help a whole lot easier.
FHA’s New “Hope for Homeowners” Program
October 14, 2008
By Joel Persinger
YourRealEstateDude.com
With all the news about the recent Wall Street bail-out, you may have forgotten the Federal Housing and Economic Recovery Act that was signed into law by President Bush earlier this year. As a quick reminder, this Act was designed to provide ways for struggling homeowners to stay in their homes and avoid foreclosure. One of the key components, which became available this month, is the FHA Hope for Homeowners program.
Hope for Homeowners is a program designed to provide homeowners a way to: reduce the amount they owe on their homes, refinance their existing loans into FHA-insured mortgages, stay in their homes and avoid foreclosure. For lenders, the hope is that this program will provide another viable option for mortgage lenders wishing to avoid costly foreclosures. But, make no mistake, the lenders will take a hit.
Among other things, the program requires mortgage lenders to write off a portion of what is owed to them. This amount could be significant since the program requires the property to be re-appraised. The original lender is then required to “write down” the current loan to a maximum of 90% of the home’s new appraised value. For example, if a lender is owed $500,000 on a home which has been dropped in value to $400,000, the lender would be required to accept 90% of the $400,000 (or $360,000) as full satisfaction for the debt. That means the lender would have to agree to take a $140,000 loss in this example. This may sound ridiculous, but given the losses lenders are currently taking in foreclosure, participating in this program may make good business sense.
At the end of the day the lender at least receives some payment, foreclosure is avoided and the homeowner gets a new, FHA-insured mortgage for around 90% of the home’s current value. Many homeowners may find that this program will work for them and allow them to stay in their homes while reworking their home loan into a much more manageable payment. However, this program will not work for everyone and it does have other requirements and drawbacks.
Among the things homeowners should know are these: only 30-year fixed rate mortgages are offered, the home loan the borrower wishes to replace must have been originated on or before January 1, 2008, the home must be owner-occupied and the original lender must agree to take the loss. In addition, the homeowner must agree to share any current or future equity in the home with the federal government. That means, when the homeowner sells, Uncle Sam is going to take his cut.
For more information on this program, homeowners can call the Hope Now Alliance at 888-995-HOPE or visit the U.S. Department of Housing and Urban Development website at http://www.hud.gov/.
By Joel Persinger
YourRealEstateDude.com
With all the news about the recent Wall Street bail-out, you may have forgotten the Federal Housing and Economic Recovery Act that was signed into law by President Bush earlier this year. As a quick reminder, this Act was designed to provide ways for struggling homeowners to stay in their homes and avoid foreclosure. One of the key components, which became available this month, is the FHA Hope for Homeowners program.
Hope for Homeowners is a program designed to provide homeowners a way to: reduce the amount they owe on their homes, refinance their existing loans into FHA-insured mortgages, stay in their homes and avoid foreclosure. For lenders, the hope is that this program will provide another viable option for mortgage lenders wishing to avoid costly foreclosures. But, make no mistake, the lenders will take a hit.
Among other things, the program requires mortgage lenders to write off a portion of what is owed to them. This amount could be significant since the program requires the property to be re-appraised. The original lender is then required to “write down” the current loan to a maximum of 90% of the home’s new appraised value. For example, if a lender is owed $500,000 on a home which has been dropped in value to $400,000, the lender would be required to accept 90% of the $400,000 (or $360,000) as full satisfaction for the debt. That means the lender would have to agree to take a $140,000 loss in this example. This may sound ridiculous, but given the losses lenders are currently taking in foreclosure, participating in this program may make good business sense.
At the end of the day the lender at least receives some payment, foreclosure is avoided and the homeowner gets a new, FHA-insured mortgage for around 90% of the home’s current value. Many homeowners may find that this program will work for them and allow them to stay in their homes while reworking their home loan into a much more manageable payment. However, this program will not work for everyone and it does have other requirements and drawbacks.
Among the things homeowners should know are these: only 30-year fixed rate mortgages are offered, the home loan the borrower wishes to replace must have been originated on or before January 1, 2008, the home must be owner-occupied and the original lender must agree to take the loss. In addition, the homeowner must agree to share any current or future equity in the home with the federal government. That means, when the homeowner sells, Uncle Sam is going to take his cut.
For more information on this program, homeowners can call the Hope Now Alliance at 888-995-HOPE or visit the U.S. Department of Housing and Urban Development website at http://www.hud.gov/.
The Bail-Out Passed! Are The Problems Fixed?
October 6, 2008
By Joel Persinger
YourRealEstateDude.com
By late morning on Monday San Diego time, I had received three telephone calls from folks lamenting the fact that the stock market had taken an almost 800 point dive. This, in spite of the fact that the much touted government bail-out plan had actually passed both Houses of Congress just days before. Although I desperately wanted to say, “I told you so,” I decided to wait a bit longer to find out if the markets would level out by the end of the trading day. All things considered, it was worth the wait. By the end of the day the Dow had climbed back up a bit, but still closed down some 328 points and below the 10,000 level for the first time since October 2004.
What this means for real estate in San Diego County remains to be seen. But, what it teaches us about government bail-outs and market reactions would fill volumes. The financial markets react to most things one way or the other and overreact to just about everything. Many thought that passing the bail-out plan would spur Wall Street to new heights based upon a new found confidence in the American and worldwide economies. No such result has materialized. Some seemed to feel that government intervention was a panacea that would cure the ills of suffering homeowners across the nation. I suspect that this will fail to come to pass as a direct result of the bail-out as well.
The unfortunate fact is that government, in most cases, is not the answer to what ails us. Even in the rare instances in which government is the answer, any effect government action such as the bail-out may have doesn’t typically materialize for quite some time. However, there are three things that are fairly certain to come out of such government intervention: Politicians can brag about having done something, money will be skimmed off by the wrong people and probably not get to the right people, and the very practices which got us into this mess in the first place will remain unchanged and unaffected.
If you disagree with my thinking, consider this; the same Congressional leaders who legislated and leveraged us into a high risk system in which borrowers who could not pay the money back were given loans, are still in power today. If that isn’t enough, those same leaders have just been given almost a trillion dollars more to waste. Still, they are only half of the problem. The same average Americans who took out crazy loans so they could use their homes like ATM machines or who lived off of the equity in homes they should never have been able to buy in the first place, are going to have their actions validated and be officially dubbed “victims” by a political process all too eager to buy a vote. Thus, they will not only be allowed to repeat their actions, but will most likely be encouraged to do so once more.
So, if you want a prediction from a fellow who knows real estate, here it is. If you were thinking about buying because prices are low and there are hundreds of distressed homes for sale, have at it. The situation is not likely to change any time soon.
By Joel Persinger
YourRealEstateDude.com
By late morning on Monday San Diego time, I had received three telephone calls from folks lamenting the fact that the stock market had taken an almost 800 point dive. This, in spite of the fact that the much touted government bail-out plan had actually passed both Houses of Congress just days before. Although I desperately wanted to say, “I told you so,” I decided to wait a bit longer to find out if the markets would level out by the end of the trading day. All things considered, it was worth the wait. By the end of the day the Dow had climbed back up a bit, but still closed down some 328 points and below the 10,000 level for the first time since October 2004.
What this means for real estate in San Diego County remains to be seen. But, what it teaches us about government bail-outs and market reactions would fill volumes. The financial markets react to most things one way or the other and overreact to just about everything. Many thought that passing the bail-out plan would spur Wall Street to new heights based upon a new found confidence in the American and worldwide economies. No such result has materialized. Some seemed to feel that government intervention was a panacea that would cure the ills of suffering homeowners across the nation. I suspect that this will fail to come to pass as a direct result of the bail-out as well.
The unfortunate fact is that government, in most cases, is not the answer to what ails us. Even in the rare instances in which government is the answer, any effect government action such as the bail-out may have doesn’t typically materialize for quite some time. However, there are three things that are fairly certain to come out of such government intervention: Politicians can brag about having done something, money will be skimmed off by the wrong people and probably not get to the right people, and the very practices which got us into this mess in the first place will remain unchanged and unaffected.
If you disagree with my thinking, consider this; the same Congressional leaders who legislated and leveraged us into a high risk system in which borrowers who could not pay the money back were given loans, are still in power today. If that isn’t enough, those same leaders have just been given almost a trillion dollars more to waste. Still, they are only half of the problem. The same average Americans who took out crazy loans so they could use their homes like ATM machines or who lived off of the equity in homes they should never have been able to buy in the first place, are going to have their actions validated and be officially dubbed “victims” by a political process all too eager to buy a vote. Thus, they will not only be allowed to repeat their actions, but will most likely be encouraged to do so once more.
So, if you want a prediction from a fellow who knows real estate, here it is. If you were thinking about buying because prices are low and there are hundreds of distressed homes for sale, have at it. The situation is not likely to change any time soon.
Monday, September 29, 2008
Why the Bail-Out May Not Matter
By Joel Persinger
YourRealEstateDude.com
As of this writing, the House of Representatives, under pressure from constituents who vehemently opposed the 700 billion dollar bail-out of the country’s financial system, defeated the measure on a vote of 226 to 207. Both Democrats and Republicans opposed the measure in large numbers. Stocks tumbled on the news with the Dow losing nearly 800 points. But, what does this mean for the real estate market?
To answer this question, let me take you back in time. In spite of what you may have heard, the U.S. Congress has been pressuring Fannie Mae and Freddie Mac to increase the availability of home loans to low income families for many years. That is how the “sub-prime” market was born. Many high ranking members of government argued against the expanding of such lending practices without success. Most notably, then Treasury Secretary Snow made such arguments and urged Congress to change its ways and further regulate Fannie and Freddie back in 2001. Former Fed Chairman Greenspan did the same some time later. In fact, for the past seven years, members of the current administration have been warning Congress that the financial system might well collapse under the strain if Fannie and Freddie were not reigned in. Congress did nothing. Thus, if we are honest about it, we can clearly see that Congress’s effort at forcing our financial system to provide loans to those who have no way to pay them back was a recipe for disaster.
Now that we’ve figured that out, we must ask why the same Congress which refused to address the coming train wreck, even after having been warned repeatedly, is now attempting to use the White House’s proposed bail-out for the purpose of rescuing the failed system they refused to correct. Instead of allowing the marketplace to replace homeowners who cannot pay their mortgages with new homeowners who are financially sound, many in Congress would like to keep those who cannot pay in their houses by passing the cost along to the taxpayers. In order to accomplish this, the news has spread the notion that nobody can get loans because lenders aren’t lending and banks are collapsing all over the place. Nothing could be further from the truth!
The truth is that homebuyers are buying! Prices are low, interest rates are great and the banks which are strong because they did not get involved with the sub-prime market are happily lending to qualified buyers. In addition, the banks which are failing are being gobbled up by banks which are financially strong. I had money in Washington Mutual and guess what… my money is still there because a strong bank purchased WAMU when it failed.
Our financial system is working, but it isn’t pain free. People who acted wisely are winning and those who acted foolishly are losing. That is how life works and if the government stays out of it, the market will heal itself. The problem is, you don’t win an election by letting people experience the natural consequences of their choices.
Does the bail-out really matter? The answer is both yes and no. If you are trying to win an election, then perhaps the answer is yes. If you are concerned about the health of the market and the future of our country, then the answer is a resounding no. If left alone, the real estate and financial markets will take care of themselves.
YourRealEstateDude.com
As of this writing, the House of Representatives, under pressure from constituents who vehemently opposed the 700 billion dollar bail-out of the country’s financial system, defeated the measure on a vote of 226 to 207. Both Democrats and Republicans opposed the measure in large numbers. Stocks tumbled on the news with the Dow losing nearly 800 points. But, what does this mean for the real estate market?
To answer this question, let me take you back in time. In spite of what you may have heard, the U.S. Congress has been pressuring Fannie Mae and Freddie Mac to increase the availability of home loans to low income families for many years. That is how the “sub-prime” market was born. Many high ranking members of government argued against the expanding of such lending practices without success. Most notably, then Treasury Secretary Snow made such arguments and urged Congress to change its ways and further regulate Fannie and Freddie back in 2001. Former Fed Chairman Greenspan did the same some time later. In fact, for the past seven years, members of the current administration have been warning Congress that the financial system might well collapse under the strain if Fannie and Freddie were not reigned in. Congress did nothing. Thus, if we are honest about it, we can clearly see that Congress’s effort at forcing our financial system to provide loans to those who have no way to pay them back was a recipe for disaster.
Now that we’ve figured that out, we must ask why the same Congress which refused to address the coming train wreck, even after having been warned repeatedly, is now attempting to use the White House’s proposed bail-out for the purpose of rescuing the failed system they refused to correct. Instead of allowing the marketplace to replace homeowners who cannot pay their mortgages with new homeowners who are financially sound, many in Congress would like to keep those who cannot pay in their houses by passing the cost along to the taxpayers. In order to accomplish this, the news has spread the notion that nobody can get loans because lenders aren’t lending and banks are collapsing all over the place. Nothing could be further from the truth!
The truth is that homebuyers are buying! Prices are low, interest rates are great and the banks which are strong because they did not get involved with the sub-prime market are happily lending to qualified buyers. In addition, the banks which are failing are being gobbled up by banks which are financially strong. I had money in Washington Mutual and guess what… my money is still there because a strong bank purchased WAMU when it failed.
Our financial system is working, but it isn’t pain free. People who acted wisely are winning and those who acted foolishly are losing. That is how life works and if the government stays out of it, the market will heal itself. The problem is, you don’t win an election by letting people experience the natural consequences of their choices.
Does the bail-out really matter? The answer is both yes and no. If you are trying to win an election, then perhaps the answer is yes. If you are concerned about the health of the market and the future of our country, then the answer is a resounding no. If left alone, the real estate and financial markets will take care of themselves.
Is The Proposed Market Bail-Out a Good Thing?
By Joel Persinger
YourRealEstateDude.com
Sept 22, 2008
A few days ago the Secretary of the United States Treasury proposed a massive bail-out of U.S. (and foreign) financial institutions. The details of the plan are sketchy at best, but the initial price tag was estimated at around 700 billion dollars at the time it was announced. This is in addition to the already astronomical costs associated with bailing out insurance giant A.I.G and financial hulks Fannie Mae and Freddie Mac.
Apparently, the idea is for the government to buy up all the bad mortgages out there and use tax-payer money to do it. That way the banks, which made the foolish decisions to provide shaky loans in the first place, won’t have to suffer the consequences of their foolishness. The U.S. tax-payer will simply pick up the tab and along with it, the risk of failure. According to the Secretary of the Treasury, this is a good thing.
Some members of Congress want to provide a bail-out plan for homeowners as part of the package. If John and Jane Doe can’t make their house payments, the Congress believes that its only fair that the tax-payer step up to the plate and make sure that John and Jane don’t have to suffer the consequences either. Never mind the fact that, in many cases, John and Jane are not victims at all, but rather, folks who made foolish decisions and dug themselves into a financial hole. But, we can’t let them fail! That would be un-American… wouldn’t it?
There was a time when Americans held the deep and abiding belief that the opportunity to succeed also included the opportunity to fail. Immigrants came to this country from all over the world in search of the very opportunity provided by that strong belief. Only in America did every person have the right to embark upon the dream of owning a business, buying a home and enjoying prosperity without government interference in the form of unfair taxation and crushing regulation. However, it was implicit in the design that having an opportunity to take a crack at success came with the very real risk of ending in failure.
That is not today’s America. In today’s America, people are not supposed to succeed too much, lest they be taxed and their money distributed to those who have failed. In today’s America, people are not supposed to fail. If they do, they can count on the government to give them some of the money it has taken forcefully from those who have succeeded. Dear reader, this is the essence of socialism and it bares no resemblance to the freedom upon which this nation was built. While it may serve to prop up the real estate and financial markets in the short term by controlling what happens at the top, it has every possibility of eliminating opportunity and freedom by destroying the foundations at the bottom.
YourRealEstateDude.com
Sept 22, 2008
A few days ago the Secretary of the United States Treasury proposed a massive bail-out of U.S. (and foreign) financial institutions. The details of the plan are sketchy at best, but the initial price tag was estimated at around 700 billion dollars at the time it was announced. This is in addition to the already astronomical costs associated with bailing out insurance giant A.I.G and financial hulks Fannie Mae and Freddie Mac.
Apparently, the idea is for the government to buy up all the bad mortgages out there and use tax-payer money to do it. That way the banks, which made the foolish decisions to provide shaky loans in the first place, won’t have to suffer the consequences of their foolishness. The U.S. tax-payer will simply pick up the tab and along with it, the risk of failure. According to the Secretary of the Treasury, this is a good thing.
Some members of Congress want to provide a bail-out plan for homeowners as part of the package. If John and Jane Doe can’t make their house payments, the Congress believes that its only fair that the tax-payer step up to the plate and make sure that John and Jane don’t have to suffer the consequences either. Never mind the fact that, in many cases, John and Jane are not victims at all, but rather, folks who made foolish decisions and dug themselves into a financial hole. But, we can’t let them fail! That would be un-American… wouldn’t it?
There was a time when Americans held the deep and abiding belief that the opportunity to succeed also included the opportunity to fail. Immigrants came to this country from all over the world in search of the very opportunity provided by that strong belief. Only in America did every person have the right to embark upon the dream of owning a business, buying a home and enjoying prosperity without government interference in the form of unfair taxation and crushing regulation. However, it was implicit in the design that having an opportunity to take a crack at success came with the very real risk of ending in failure.
That is not today’s America. In today’s America, people are not supposed to succeed too much, lest they be taxed and their money distributed to those who have failed. In today’s America, people are not supposed to fail. If they do, they can count on the government to give them some of the money it has taken forcefully from those who have succeeded. Dear reader, this is the essence of socialism and it bares no resemblance to the freedom upon which this nation was built. While it may serve to prop up the real estate and financial markets in the short term by controlling what happens at the top, it has every possibility of eliminating opportunity and freedom by destroying the foundations at the bottom.
Monday, September 15, 2008
Should the Government Bail Out Lehman Brothers?
By Joel Persinger
YourRealEstateDude.com
If you’ve been follow the business news, you must be amazed at the number of historic events that have occurred in 2008. Bear Stearns collapsed only to be rescued by the U.S. Government, Countrywide Home Loans was saved by Bank of America, Fannie and Freddie were bailed out by Uncle Sam last week and this past weekend, Lehman Brothers filed for bankruptcy and Merrill Lynch decided to sell out to Bank of America. Wow, what a year!
With what the presidential candidates have both dubbed a “financial crisis” upon us, the news is full of talking heads on every side of the issue. Some say the Government should come to the rescue of Lehman Brothers just as it has for other companies. Others say, “Let the free market system heal itself.” Meanwhile, the stock market is going nuts and the news media is circling the story in a feeding frenzy like so many ravenous sharks smelling blood.
To figure out what should be done to fix this mess, we need only think about what kind of financial system we have in this country. It’s called capitalism. In a free market, capitalistic system companies rise and fall depending upon their financial success or failure. The strong survive and the weak do not. When failing companies collapse, they are absorbed by stronger companies, which often provide the same services in a more effective and successful way then did the failing companies they purchased.
Take Bank of America for example. Obviously, Bank of America is in a better financial position than both Countrywide and Merrill Lynch. Otherwise, how could Bank of America buy the two failed firms? Somehow I suspect that if Bank of America actually ends up with both of these companies, home loans and investment products will still be offered to its customers. Even if nobody rescues Lehman Brothers and it goes down the tubes after 158 years, investors will still be able to invest and homebuyers will still be able to secure a loan. So, what exactly have we lost with the collapse of theses poorly run, failed companies? That’s right… we’ve lost a few poorly run, failed companies. Maybe I’m crazy, but that’s a good thing, isn’t it?
My Grandfather always said, “Joel, if you want to be successful, find out what everyone else is doing and do the opposite.” Grandpa was right. If you want to see the opportunities in today’s marketplace, you must turn away from the idiot box and look at what is positive in the financial world. Remember, the news media does not exist to inform you. It exists to make money, period. It sells more advertising and makes more money by pushing sensational stories. Where do you think the old saying, “If it bleeds, it leads”, came from? I spent 18 years in the broadcasting business. Believe me, I know.
There is a lot of great economic news that you should know about. Here are some examples from today’s news: the price of oil is down under $100 per barrel, investors are putting their money into bonds, mortgage rates are down because investors are buying bonds, home prices are very low, home buyers are buying all over town, the home loan business is picking up and real estate sales are improving.
The economy is not collapsing, the sky is not falling and if Lehman Brothers goes out of business it’s because it should! As tax payers, we should not; we must not continue to bail out poorly run, failing companies. Let the market do what it is meant to do. The strong will survive and the weak will be absorbed by the strong. That is called a free market. That is called capitalism, and it works.
YourRealEstateDude.com
If you’ve been follow the business news, you must be amazed at the number of historic events that have occurred in 2008. Bear Stearns collapsed only to be rescued by the U.S. Government, Countrywide Home Loans was saved by Bank of America, Fannie and Freddie were bailed out by Uncle Sam last week and this past weekend, Lehman Brothers filed for bankruptcy and Merrill Lynch decided to sell out to Bank of America. Wow, what a year!
With what the presidential candidates have both dubbed a “financial crisis” upon us, the news is full of talking heads on every side of the issue. Some say the Government should come to the rescue of Lehman Brothers just as it has for other companies. Others say, “Let the free market system heal itself.” Meanwhile, the stock market is going nuts and the news media is circling the story in a feeding frenzy like so many ravenous sharks smelling blood.
To figure out what should be done to fix this mess, we need only think about what kind of financial system we have in this country. It’s called capitalism. In a free market, capitalistic system companies rise and fall depending upon their financial success or failure. The strong survive and the weak do not. When failing companies collapse, they are absorbed by stronger companies, which often provide the same services in a more effective and successful way then did the failing companies they purchased.
Take Bank of America for example. Obviously, Bank of America is in a better financial position than both Countrywide and Merrill Lynch. Otherwise, how could Bank of America buy the two failed firms? Somehow I suspect that if Bank of America actually ends up with both of these companies, home loans and investment products will still be offered to its customers. Even if nobody rescues Lehman Brothers and it goes down the tubes after 158 years, investors will still be able to invest and homebuyers will still be able to secure a loan. So, what exactly have we lost with the collapse of theses poorly run, failed companies? That’s right… we’ve lost a few poorly run, failed companies. Maybe I’m crazy, but that’s a good thing, isn’t it?
My Grandfather always said, “Joel, if you want to be successful, find out what everyone else is doing and do the opposite.” Grandpa was right. If you want to see the opportunities in today’s marketplace, you must turn away from the idiot box and look at what is positive in the financial world. Remember, the news media does not exist to inform you. It exists to make money, period. It sells more advertising and makes more money by pushing sensational stories. Where do you think the old saying, “If it bleeds, it leads”, came from? I spent 18 years in the broadcasting business. Believe me, I know.
There is a lot of great economic news that you should know about. Here are some examples from today’s news: the price of oil is down under $100 per barrel, investors are putting their money into bonds, mortgage rates are down because investors are buying bonds, home prices are very low, home buyers are buying all over town, the home loan business is picking up and real estate sales are improving.
The economy is not collapsing, the sky is not falling and if Lehman Brothers goes out of business it’s because it should! As tax payers, we should not; we must not continue to bail out poorly run, failing companies. Let the market do what it is meant to do. The strong will survive and the weak will be absorbed by the strong. That is called a free market. That is called capitalism, and it works.
U.S. Government Takeover of Fannie & Freddie
By Joel Persinger
YourRealEstateDude.com
As a card carrying tax payer who dreads the ever increasing involvement of government in our day to day lives, I must admit to having a feeling of foreboding as a result of Sunday’s government takeover of Fannie Mae and Freddie Mac. Uncle Sam raced in with a pot full of money (yours and mine) to prop up the ailing companies which have experienced record losses. I should also mention that the CEOs of both companies are being bounced out the door.
The U.S. Government (that means you and I) will purchase some $1 billion of preferred shares in each company in an effort to make this deal work. You and I have apparently also pledged to provide as much as an additional $200 billion to help Fannie and Freddie deal with the heavy losses they’ve already suffered as a result of defaulting mortgages. When asked how much you and I, as tax payers, will eventually have to pay for this deal everyone says, “I don’t know.”
The “plan” places both companies into a conservatorship. What does that mean? Well, it means that the management of the companies will be controlled by the Federal Housing Finance Agency, also known as the FHFA. It also means that the U.S. Congress will now have its fingers in the Fannie and Freddie cookie jar to a much greater degree than ever before. This is the same Congress that can’t agree on where to have lunch on any given day let alone how to effectively manage the tax payer’s money.
While my knee jerk reaction is to slam the whole thing as just another unwanted intrusion by the government into affairs that it neither understands nor has the capability of addressing, it appears that the financial markets are rather keen on the idea, at least for the moment.
Financial markets around the world surged this morning as a result of the news and just about every talking head on the planet is predicting lower interest rates for home buyers and greater stability in the lending market. Even the loan officers and loan manager in my office seem to be feeling rather positive about it.Who knows, it may provide some needed breathing room for the financial markets in the short term. Just the same, I will reserve judgment for a while. In my experience, markets which are allowed to heal themselves come back stronger and healthier as a result. However, when the government inserts itself and takes on the mantle of, “Lord of the Marketplace” rather than allowing a holistic healing to take place, a new and greater set of problems are not far behind.
YourRealEstateDude.com
As a card carrying tax payer who dreads the ever increasing involvement of government in our day to day lives, I must admit to having a feeling of foreboding as a result of Sunday’s government takeover of Fannie Mae and Freddie Mac. Uncle Sam raced in with a pot full of money (yours and mine) to prop up the ailing companies which have experienced record losses. I should also mention that the CEOs of both companies are being bounced out the door.
The U.S. Government (that means you and I) will purchase some $1 billion of preferred shares in each company in an effort to make this deal work. You and I have apparently also pledged to provide as much as an additional $200 billion to help Fannie and Freddie deal with the heavy losses they’ve already suffered as a result of defaulting mortgages. When asked how much you and I, as tax payers, will eventually have to pay for this deal everyone says, “I don’t know.”
The “plan” places both companies into a conservatorship. What does that mean? Well, it means that the management of the companies will be controlled by the Federal Housing Finance Agency, also known as the FHFA. It also means that the U.S. Congress will now have its fingers in the Fannie and Freddie cookie jar to a much greater degree than ever before. This is the same Congress that can’t agree on where to have lunch on any given day let alone how to effectively manage the tax payer’s money.
While my knee jerk reaction is to slam the whole thing as just another unwanted intrusion by the government into affairs that it neither understands nor has the capability of addressing, it appears that the financial markets are rather keen on the idea, at least for the moment.
Financial markets around the world surged this morning as a result of the news and just about every talking head on the planet is predicting lower interest rates for home buyers and greater stability in the lending market. Even the loan officers and loan manager in my office seem to be feeling rather positive about it.Who knows, it may provide some needed breathing room for the financial markets in the short term. Just the same, I will reserve judgment for a while. In my experience, markets which are allowed to heal themselves come back stronger and healthier as a result. However, when the government inserts itself and takes on the mantle of, “Lord of the Marketplace” rather than allowing a holistic healing to take place, a new and greater set of problems are not far behind.
Tuesday, August 26, 2008
A Matter of Perspective
By Joel Persinger
YourRealEstateDude.com
My wife can testify to the fact that she is not a Monday Night Football widow and she generally does not have to fight me for the remote in order to watch something other than sports. I must admit to being a basketball fan. But that is mostly due to the fact that our son plays basketball and we enjoy watching his team play. Still, once every four years, I turn into a sports nut. I find myself glued to the Olympic Games just as if I were a die-hard sports fan all year long.
Over the last two weeks I have enjoyed watching many Americans stand on the podiums and receive their medals. I could not resist standing every time our national anthem was played and I was so proud of each and every athlete. But, in spite of the grandness of the Olympics, the one event which touched me most did not happen in China. It was not the result of a hard won race or the spectacular flips and spins of gymnastics. It didn’t involve a swimming pool, a diving board or a track meet. In fact, it was a simple passing of the keys rather than the spectacular awarding of the medals. It was the quiet reading of the Scriptures rather than the triumphant playing of the anthem. There was no fan-fair and there were no fireworks. No records were broken and no international stars were born. And I suppose it should be noted that it happened in Mexico, not in China. No, this was a simple event that involved three families and three small houses.
It seems that there are poor people just to the south of us who do not watch the Olympics. A stalwart group of folks from our church discovered this some years back and decided to make a trip to Mexico each year to build houses. They built three while the Olympics were taking place. Frankly, the houses they built would be little more than tool sheds to you and me. But, to the families who had no home before those little houses were built those homes might as well have been mansions.
When the builders returned they brought video with them. They told the stories of the people and we watched as they cleared the land, laid the foundations and built the three little one room houses. When the houses were finished and painted so beautifully, one red and two yellow, the leaders of each home building team held a little ceremony. They prayed over the new houses, gave the heads of the families each a Bible and handed them the keys to their new homes. To see the looks on the faces of those families, you might have thought they had just been given gold medals. Somehow, I just could not resist standing.
Sometimes I look around and I feel like I’m missing out on things. The fellow down the street has a nicer car and one of the folks in my office has a bigger house. Why did that guy win a gold medal when I had hopes of doing so when I was young? But, then I have the chance to hear the stories of people who are so grateful for so little and I find myself realizing just how selfish I can be. Sure, the real estate market is down and people are having a tough go of it. But, I live in one of the richest cities in the richest state in the richest country in the world. Perhaps it’s time for me to take stock of just how blessed I really am. How about you?
YourRealEstateDude.com
My wife can testify to the fact that she is not a Monday Night Football widow and she generally does not have to fight me for the remote in order to watch something other than sports. I must admit to being a basketball fan. But that is mostly due to the fact that our son plays basketball and we enjoy watching his team play. Still, once every four years, I turn into a sports nut. I find myself glued to the Olympic Games just as if I were a die-hard sports fan all year long.
Over the last two weeks I have enjoyed watching many Americans stand on the podiums and receive their medals. I could not resist standing every time our national anthem was played and I was so proud of each and every athlete. But, in spite of the grandness of the Olympics, the one event which touched me most did not happen in China. It was not the result of a hard won race or the spectacular flips and spins of gymnastics. It didn’t involve a swimming pool, a diving board or a track meet. In fact, it was a simple passing of the keys rather than the spectacular awarding of the medals. It was the quiet reading of the Scriptures rather than the triumphant playing of the anthem. There was no fan-fair and there were no fireworks. No records were broken and no international stars were born. And I suppose it should be noted that it happened in Mexico, not in China. No, this was a simple event that involved three families and three small houses.
It seems that there are poor people just to the south of us who do not watch the Olympics. A stalwart group of folks from our church discovered this some years back and decided to make a trip to Mexico each year to build houses. They built three while the Olympics were taking place. Frankly, the houses they built would be little more than tool sheds to you and me. But, to the families who had no home before those little houses were built those homes might as well have been mansions.
When the builders returned they brought video with them. They told the stories of the people and we watched as they cleared the land, laid the foundations and built the three little one room houses. When the houses were finished and painted so beautifully, one red and two yellow, the leaders of each home building team held a little ceremony. They prayed over the new houses, gave the heads of the families each a Bible and handed them the keys to their new homes. To see the looks on the faces of those families, you might have thought they had just been given gold medals. Somehow, I just could not resist standing.
Sometimes I look around and I feel like I’m missing out on things. The fellow down the street has a nicer car and one of the folks in my office has a bigger house. Why did that guy win a gold medal when I had hopes of doing so when I was young? But, then I have the chance to hear the stories of people who are so grateful for so little and I find myself realizing just how selfish I can be. Sure, the real estate market is down and people are having a tough go of it. But, I live in one of the richest cities in the richest state in the richest country in the world. Perhaps it’s time for me to take stock of just how blessed I really am. How about you?
Tuesday, August 12, 2008
More on the Foreclosure Rescue Bill
By Joel Persinger
YourRealEstateDude.com
While the world is focused on the Olympic Games and parents are focused on getting their kid back into school, many families are focusing on the Housing and Economic Recovery Act of 2008 and whether it might help them keep their homes. Real estate and lending professional are also scrambling to figure the thing out and are only getting it piece by piece.
That said, here are some new pieces to the already complicated puzzle. According to a number of reports, homeowners must meet the following criteria in order to have a chance of being helped by the new law: the loan must be on their primary residence, the loan must have been originated between January 2005 and June of 2007 and the payment must add up to 31% or more of the homeowners gross monthly income.
There are additional FHA requirements as well. For example: the borrower must pay an annual fee to FHA in the amount of 1.5% of the loan amount as an insurance premium. If the homeowner sells the property within on year of making the deal, FHA keeps 100% of the profits realized from the sale. If they sell after one year FHA gets 90%. The percentage keeps dropping in increments of 10% until it reaches a 50% split after five years. The bottom line is, the government may help you to keep your house, but it won’t be for free. You’re going to have to pay up sooner or later.
Just like the problems it’s trying to solve, this law is complicated. Real estate and lending professionals are learning more about it every day and so far, it looks like it may be helpful for some folks. But, it won’t help everyone. Many of the people who are currently in trouble with their mortgage or whose mortgage interest rate is soon going to adjust, will not be helped by this legislation. This is particularly true when the property in question is a rental or a second home. Another sticking point is that all of the fixes require the lenders to agree to take hefty losses. As a result, it’s not surprising that many prognosticators are predicting that short sales and foreclosures are going to continue for some time to come.
While it’s not a perfect fix, it is a fix and it will help many people. In fact, for the right people in the right situation this new “bail out” plan could be a dream come true. So, if you think it might help you or someone you know, the best place to start is with your lender or your Realtor. Just don’t forget that there are other available options in case this one doesn’t work for you.
YourRealEstateDude.com
While the world is focused on the Olympic Games and parents are focused on getting their kid back into school, many families are focusing on the Housing and Economic Recovery Act of 2008 and whether it might help them keep their homes. Real estate and lending professional are also scrambling to figure the thing out and are only getting it piece by piece.
That said, here are some new pieces to the already complicated puzzle. According to a number of reports, homeowners must meet the following criteria in order to have a chance of being helped by the new law: the loan must be on their primary residence, the loan must have been originated between January 2005 and June of 2007 and the payment must add up to 31% or more of the homeowners gross monthly income.
There are additional FHA requirements as well. For example: the borrower must pay an annual fee to FHA in the amount of 1.5% of the loan amount as an insurance premium. If the homeowner sells the property within on year of making the deal, FHA keeps 100% of the profits realized from the sale. If they sell after one year FHA gets 90%. The percentage keeps dropping in increments of 10% until it reaches a 50% split after five years. The bottom line is, the government may help you to keep your house, but it won’t be for free. You’re going to have to pay up sooner or later.
Just like the problems it’s trying to solve, this law is complicated. Real estate and lending professionals are learning more about it every day and so far, it looks like it may be helpful for some folks. But, it won’t help everyone. Many of the people who are currently in trouble with their mortgage or whose mortgage interest rate is soon going to adjust, will not be helped by this legislation. This is particularly true when the property in question is a rental or a second home. Another sticking point is that all of the fixes require the lenders to agree to take hefty losses. As a result, it’s not surprising that many prognosticators are predicting that short sales and foreclosures are going to continue for some time to come.
While it’s not a perfect fix, it is a fix and it will help many people. In fact, for the right people in the right situation this new “bail out” plan could be a dream come true. So, if you think it might help you or someone you know, the best place to start is with your lender or your Realtor. Just don’t forget that there are other available options in case this one doesn’t work for you.
Monday, August 04, 2008
What does the new housing bailout bill do?
By Joel Persinger
YourRealEstateDude.com
The recent signing of the Housing and Economic Recovery Act of 2008 by President Bush has a great many distressed homeowners clambering to find out how much help the new law might actually provide. Many of these folks are desperate to find some way to keep their homes and are hopeful that this new law might provide some new options to help them do it.
Like most laws passed these days, this new housing act makes changes in many areas. Among other thing; it raises the conforming loan limits, increases regulation of Fannie Mae and Freddie Mac, modernizes some FHA programs, creates some tax incentives, establishes new licensing requirements and gives birth to something the House of Representatives called the “Hope for Homeowners Program.”
During the run up to the signing of this bill, just about every news story that I saw focused more on the possible bailout for distressed homeowners than on any other part of the bill. This is precisely because the law provides an opportunity for some distressed homeowners to refinance their existing high interest rate loans into new, affordable FHA-insured loans based upon the current market value of their homes. That’s right… current market value. If the home was worth $600,000 when you purchased it and it’s only worth $400,000 now, the new loan would be based upon the $400,000 current value. It sounds like a miracle! Still, there are some limitations that you should know about.
While the program appears to be a good one, there are some hitches that borrowers should be aware of before they dive in. First of all, this program is not available to everyone. In order to be eligible, borrowers must have taken out their current loan on or before January 1, 2008. They must also certify that they did not intentionally default on their original mortgage or any other debts as well as declare that they did not provide false information in order to obtain the loan. If the borrower has been convicted of fraud or has previously defaulted on a government loan that borrower is not eligible. The borrower must also meet other standards established by the program’s governing board, including documenting income by use of the borrower’s two most recent tax returns. But, the biggest obstacles for the homeowner to overcome are these: the borrower’s current lender has to agree to take the loss and the borrower has to agree to share any future equity they may gain the home with the government on a 50/50 split. Like my grandfather used to say, “There’s no such thing as a free lunch.”
Still, if you’re trying to save your home, this new law and the program it provides may just be the ticket. But, be careful, get lots of advice and remember that this is new to those in the real estate industry too, and it may take a while before we “experts” have a full grasp of all the possibilities.
YourRealEstateDude.com
The recent signing of the Housing and Economic Recovery Act of 2008 by President Bush has a great many distressed homeowners clambering to find out how much help the new law might actually provide. Many of these folks are desperate to find some way to keep their homes and are hopeful that this new law might provide some new options to help them do it.
Like most laws passed these days, this new housing act makes changes in many areas. Among other thing; it raises the conforming loan limits, increases regulation of Fannie Mae and Freddie Mac, modernizes some FHA programs, creates some tax incentives, establishes new licensing requirements and gives birth to something the House of Representatives called the “Hope for Homeowners Program.”
During the run up to the signing of this bill, just about every news story that I saw focused more on the possible bailout for distressed homeowners than on any other part of the bill. This is precisely because the law provides an opportunity for some distressed homeowners to refinance their existing high interest rate loans into new, affordable FHA-insured loans based upon the current market value of their homes. That’s right… current market value. If the home was worth $600,000 when you purchased it and it’s only worth $400,000 now, the new loan would be based upon the $400,000 current value. It sounds like a miracle! Still, there are some limitations that you should know about.
While the program appears to be a good one, there are some hitches that borrowers should be aware of before they dive in. First of all, this program is not available to everyone. In order to be eligible, borrowers must have taken out their current loan on or before January 1, 2008. They must also certify that they did not intentionally default on their original mortgage or any other debts as well as declare that they did not provide false information in order to obtain the loan. If the borrower has been convicted of fraud or has previously defaulted on a government loan that borrower is not eligible. The borrower must also meet other standards established by the program’s governing board, including documenting income by use of the borrower’s two most recent tax returns. But, the biggest obstacles for the homeowner to overcome are these: the borrower’s current lender has to agree to take the loss and the borrower has to agree to share any future equity they may gain the home with the government on a 50/50 split. Like my grandfather used to say, “There’s no such thing as a free lunch.”
Still, if you’re trying to save your home, this new law and the program it provides may just be the ticket. But, be careful, get lots of advice and remember that this is new to those in the real estate industry too, and it may take a while before we “experts” have a full grasp of all the possibilities.
A Good Alternative to Foreclosure
By Joel Persinger
YourRealEstatetDude.com
With all the talk of increasing foreclosures, and fears of banking failures such as that which occurred with Indymac Bank and the worries surrounding the general stability of the lending market, more and more people I meet are asking probing questions about possible alternatives to foreclosure. One such alternative is the “Short Sale.”
Short sales were last used extensively during the market down-turn of the 1990s. A short sale occurs when property values have declined to the point that homeowners owe more on their properties than the properties themselves are worth. When that happens and a homeowner can no longer make the required payments, the two most common results are foreclosure or selling the home for less than what is owed on it with the permission of the lender. The latter is called a short sale.
If you are keeping your eye on the market in San Diego, you have probably noticed that a significant percentage of the homes currently for sale in the county are distress sales. Many are foreclosures, but a large number are short sales. This may be due to the fact that a short sale can do far less damage to your credit rating than simply going through a foreclosure.
According to an article published on the CBS News website in June of 2007,
“While in both cases, short sale and foreclosure, the delinquent mortgage will negatively affect (the seller’s) credit rating, at least short sellers avoid having a “debt discharged due to foreclosure” on their credit reports. Mortgage and credit experts say that, after bankruptcy, having a foreclosure on your credit report is the worst result and will reduce your credit score by over 250 points. You could also have to wait up to three years to qualify for a mortgage at a reasonable rate.
The article goes on to state that a short sale will generally be report as, “a pre-foreclosure in redemption… and can result in a credit score reduction of 100 points or less.” According to CBS News, “People who successfully complete a short sale may also qualify for a mortgage at a reasonable interest rate in as little as 18 months.”
Given the current market and the large number of distressed sellers in San Diego County, many real estate offices, including my own, have focused on helping sellers in financial distress complete short sales. This is simply because a short sale is often a far better alternative than a foreclosure. So, if you or someone you know is in financial distress and facing foreclosure, a short sale may be a better way to go. A qualified, experienced real estate professional should be able to help.
YourRealEstatetDude.com
With all the talk of increasing foreclosures, and fears of banking failures such as that which occurred with Indymac Bank and the worries surrounding the general stability of the lending market, more and more people I meet are asking probing questions about possible alternatives to foreclosure. One such alternative is the “Short Sale.”
Short sales were last used extensively during the market down-turn of the 1990s. A short sale occurs when property values have declined to the point that homeowners owe more on their properties than the properties themselves are worth. When that happens and a homeowner can no longer make the required payments, the two most common results are foreclosure or selling the home for less than what is owed on it with the permission of the lender. The latter is called a short sale.
If you are keeping your eye on the market in San Diego, you have probably noticed that a significant percentage of the homes currently for sale in the county are distress sales. Many are foreclosures, but a large number are short sales. This may be due to the fact that a short sale can do far less damage to your credit rating than simply going through a foreclosure.
According to an article published on the CBS News website in June of 2007,
“While in both cases, short sale and foreclosure, the delinquent mortgage will negatively affect (the seller’s) credit rating, at least short sellers avoid having a “debt discharged due to foreclosure” on their credit reports. Mortgage and credit experts say that, after bankruptcy, having a foreclosure on your credit report is the worst result and will reduce your credit score by over 250 points. You could also have to wait up to three years to qualify for a mortgage at a reasonable rate.
The article goes on to state that a short sale will generally be report as, “a pre-foreclosure in redemption… and can result in a credit score reduction of 100 points or less.” According to CBS News, “People who successfully complete a short sale may also qualify for a mortgage at a reasonable interest rate in as little as 18 months.”
Given the current market and the large number of distressed sellers in San Diego County, many real estate offices, including my own, have focused on helping sellers in financial distress complete short sales. This is simply because a short sale is often a far better alternative than a foreclosure. So, if you or someone you know is in financial distress and facing foreclosure, a short sale may be a better way to go. A qualified, experienced real estate professional should be able to help.
Can Congress Fix The Problems With The Housing Market?
By Joel Persinger
YourRealEstateDude.com
Everywhere I go these days people ask me what I think will happen if Congress passes all the “Fixes” and “Reforms” it is promising in order to “help struggling homeowners” in the current housing crunch. Since so many folks have asked, I thought it might be nice for me to give the question some consideration.
So far, Congress has proposed relief for struggling home owners, a tightening of regulations for mortgage lenders, punishing the lending industry in one form or another, making it more difficult for high risk borrowers to get loans in the first place, saving Freddie & Fannie as was done a week or so ago and so on, and so on. Among the most recent proposals is a plan to bail out those homeowners who can’t pay their mortgages. Of course, nobody seems eager to mention that the money to bail these folks out must come from somewhere. So, who do you think is going to pay for it? It’s not a trick question. The answer is, you. The tax payer is going to pony up the coin for any such deal that becomes law.
I’ve been sitting back quietly watching those in government wrestle with the problems of the housing and lending market for a while now and since I have been asked so often lately about my thoughts on the issue, I have come to three inescapable conclusions:
- While it could be debated whether the government had any part in getting the housing market into its current troubles, it appears to be an absolute certainty that no-one in the government has the vaguest idea how to fix them.
- The old political axiom, “When in doubt, grand stand” has never gone out of style. Only in politics can so many supposedly grown men and women madly scurry around in a frantic attempt to look good while actually knowing and accomplishing nothing and still manage to get paid for it.
- The use of smoke and mirrors is not exclusive to flashy Las Vegas magicians. Government types know that if they keep the public off balance by proposing useless “Fixes” long enough, the market will eventually correct itself. The sad truth is that nobody in government is actually trying to fix anything. They’re just trying to rack up the highest number of “Fixes” so they can take credit for fixing it when it finally gets around to fixing itself. Never in my 50 years of life have I ever seen government actually attempt to fix anything without making things much worse in the process.
So, what are we left with? First, government is not going to fix this. It will fix itself if we just let it. Second, if government actually tries to fix it, it will get worse. Third, the market is supposed to do what it is doing. It spiked upward and needed to correct downward. So, it went down and it will continue to do so until it is done correcting for the spike. Like the old saying goes, “What goes up must come down.” And lastly, there is no painless way out of this. Uncle Sam is not really our long, lost, rich Uncle and he can’t bail us out every time we blow it. Some times we just have to fend for ourselves.
Do you own your house or does it own you?
By Joel Persinger
YourRealEstateDude.com
When I was a kid my mother used to caution me not to put more food on my plate than I could eat. If I didn’t listen and ended up sitting at the table, stuffed to the gills and unable to finish my supper, she would look at me with a disapproving scowl and remark, “Your eyes are too big for your stomach, young man.” These were words I heard many times growing up and they taught me more than the obvious lesson they were meant to teach. Among other things, I learned that gluttony and bad consequences go hand-in-hand.
In today’s American society, many of us have failed to learn that our eyes are often bigger than our stomachs, or in many cases, our bank accounts. Even if we did learn it as kids, every aspect of our culture rails against that lesson and entices us to have more and bigger regardless of the consequences. As Brian Buffini (a popular business coach) is fond of putting it, we are driven to “…spend money we don’t have buying things we don’t need to impress people we don’t even know.”
Just yesterday I had the opportunity to talk to an old friend at church. He was brimming with excitement as he announced to me that he and his wife had finally purchased a home. I have seldom seen him so excited. He told me all about the house itself, how excited he and his family were and then finally, about the deal. To his credit, he had really done his homework. He had established a family budget, investigated the current real estate market, determined exactly what his family could afford, and then and only then gone shopping for a home. As a result, he made a fabulous purchase. His new home is just what they need as a family, exactly what they can afford and best of all, they own it. It doesn’t own them. Many other folks cannot say the same.
As I write this column, Realtors, attorneys and credit experts all around the country are working to help thousands and thousands of families who are upside-down on their homes. How did so many people end up in such a mess? I submit that it is a result of never having learned the simple lesson my mother used to preach, “Only take what you can eat, Son. Remember, your eyes are often bigger than your stomach.”
YourRealEstateDude.com
When I was a kid my mother used to caution me not to put more food on my plate than I could eat. If I didn’t listen and ended up sitting at the table, stuffed to the gills and unable to finish my supper, she would look at me with a disapproving scowl and remark, “Your eyes are too big for your stomach, young man.” These were words I heard many times growing up and they taught me more than the obvious lesson they were meant to teach. Among other things, I learned that gluttony and bad consequences go hand-in-hand.
In today’s American society, many of us have failed to learn that our eyes are often bigger than our stomachs, or in many cases, our bank accounts. Even if we did learn it as kids, every aspect of our culture rails against that lesson and entices us to have more and bigger regardless of the consequences. As Brian Buffini (a popular business coach) is fond of putting it, we are driven to “…spend money we don’t have buying things we don’t need to impress people we don’t even know.”
Just yesterday I had the opportunity to talk to an old friend at church. He was brimming with excitement as he announced to me that he and his wife had finally purchased a home. I have seldom seen him so excited. He told me all about the house itself, how excited he and his family were and then finally, about the deal. To his credit, he had really done his homework. He had established a family budget, investigated the current real estate market, determined exactly what his family could afford, and then and only then gone shopping for a home. As a result, he made a fabulous purchase. His new home is just what they need as a family, exactly what they can afford and best of all, they own it. It doesn’t own them. Many other folks cannot say the same.
As I write this column, Realtors, attorneys and credit experts all around the country are working to help thousands and thousands of families who are upside-down on their homes. How did so many people end up in such a mess? I submit that it is a result of never having learned the simple lesson my mother used to preach, “Only take what you can eat, Son. Remember, your eyes are often bigger than your stomach.”
Monday, June 23, 2008
Is the market picking up?
By Joel Persinger
YourRealEstateDude.com
It seems that the burning question on everyone’s lips this past week has been, “Is the market picking up?” I don’t know if you have been asking that question, but it certainly has been asked of me at least once per day for the last week or so. As a consequence, I started asking other people and here is what I heard.
An agent I spoke to who works at another office told me that he was thrilled that his clients had the opportunity to buy homes at lower prices. But, he was finding that the prices were being “bid up” because every property that his clients expressed an interest in had received multiple offers. Consequently, by the time the properties sold, the discount was gone.
Even non-agents reported similar opinions regarding the current market’s trend. When I stopped by the office and spoke to our Transaction Coordinator, she seemed genuinely excited to report that things were picking up and the number of escrows being closed seemed to be increasing. One fellow at church began telling me that his offers on short sales were not moving foreword as rapidly as he would have liked. So, he and his wife began looking at bank owned properties only to find that a bidding war was underway at any they seemed to find interesting.
Obviously, my poll was not conducted in any scientific way and certainly the sample of people polled was tiny by any measure. Just the same, I found it fascinating that everyone I asked expressed an optimism regarding the real estate market that I have not heard for quite some time. Buyers seemed to feel that the time to buy had arrived and agents expressed a guarded optimism associated with the fact that they actually had clients to work with and properties for their buyers to buy.
All that having been said, available statistics do not appear to agree with the optimism expressed by my sampling. I wouldn’t let that dampen the prospects though. The available statistics are forever and always several months old. Therefore, what is really happening in the marketplace happens before anyone can conclusively prove that it is actually happening. That’s why we have talking heads on the news and guys like me who write columns like this one.
The bottom line is this. No one knows definitively if the market is picking up. But, it sure seems like it and we can all hope that what appears to be happening really is.
YourRealEstateDude.com
It seems that the burning question on everyone’s lips this past week has been, “Is the market picking up?” I don’t know if you have been asking that question, but it certainly has been asked of me at least once per day for the last week or so. As a consequence, I started asking other people and here is what I heard.
An agent I spoke to who works at another office told me that he was thrilled that his clients had the opportunity to buy homes at lower prices. But, he was finding that the prices were being “bid up” because every property that his clients expressed an interest in had received multiple offers. Consequently, by the time the properties sold, the discount was gone.
Even non-agents reported similar opinions regarding the current market’s trend. When I stopped by the office and spoke to our Transaction Coordinator, she seemed genuinely excited to report that things were picking up and the number of escrows being closed seemed to be increasing. One fellow at church began telling me that his offers on short sales were not moving foreword as rapidly as he would have liked. So, he and his wife began looking at bank owned properties only to find that a bidding war was underway at any they seemed to find interesting.
Obviously, my poll was not conducted in any scientific way and certainly the sample of people polled was tiny by any measure. Just the same, I found it fascinating that everyone I asked expressed an optimism regarding the real estate market that I have not heard for quite some time. Buyers seemed to feel that the time to buy had arrived and agents expressed a guarded optimism associated with the fact that they actually had clients to work with and properties for their buyers to buy.
All that having been said, available statistics do not appear to agree with the optimism expressed by my sampling. I wouldn’t let that dampen the prospects though. The available statistics are forever and always several months old. Therefore, what is really happening in the marketplace happens before anyone can conclusively prove that it is actually happening. That’s why we have talking heads on the news and guys like me who write columns like this one.
The bottom line is this. No one knows definitively if the market is picking up. But, it sure seems like it and we can all hope that what appears to be happening really is.
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