Archive for the 'Mortgages & Loans' Category
Great First Step Mr. President: Here’s 3 More Things You Can Do.
February 19th, 2009 Categories: Buyers, Local Real Esate Sales Numbers & Things, Mortgages & Loans, Real Estate News, Sellers
Yesterday, President Obama announced his first step to stop the hemorrhaging of the housing market. It’s a good first step. (For the full speech, click here) After eight years of leaders who were throwing money at a problem, by either lowering interest rates or giving cash to bankers, a plan that has some real action is welcomed. This new approach is going to take a little getting used to. But bring it on.
One thing this plan isn’t going to do it save everyone. As it should be. The public is suffering from bail-out overload. The general public doesn’t want to help someone they think caused the problem in the first place. So before you pass judgment, read the goal of President Obama’s actions.
Why This Plan Will Help
If you bought a home after 2005 & possible 2004 after this year is out, you are upside down on your mortgage- meaning that you owe more on your mortgage than you can sell your house for if you were to put it up for sale. So– if you have a 3–1, 5–1 or 7–1 ARM– it will be almost impossible for you to refinance your mortgage if your short term interest rate is getting ready to mature. This plan will help you.
It’s aimed at people who are current on their mortgage, lost value in their home & need to refinance.
There are other parts of President Obama’s plan, but guidelines will be issues in early March- so stay tuned for what happens next.
Why This Plan Won’t Solve Everyone’s Problems
The plan is not targeted to people who who invested in a risky market & lost; or, to people who have jumbo loans outside the FHA limits. Many people aren’t going to get a free ride when they find out the limits on any loan adjustments they are offered.
This is a complicated problem & everyone isn’t going to like the results. We have to focus on solutions that make sense in the long term while curbing the short term crisis.
Foreclosures & short sales aren’t going to evaporate from the market overnight. We drove up housing prices to a place where the average buyer couldn’t afford to buy their first home. We had artificial housing prices driven by artificial mortgages. We have taken the artificial mortgages off the market. We are experiencing a free market that is adjusting the artificial housing prices. I worry that in our attempt to stop the foreclosure madness, housing prices won’t fall back to an affordable level for average people. The president’s plan may get to that affordable level– but at a slower rate. This plan won’t have any impact in the market for at least another 6 months. It won’t be until next year until the real estate market gets back on its feet. Will this program be the catalyst? I hope so.
Now that President Obama has taken the first step to stabilize the housing market, there are 3 more things he can do to advance the housing market for some marginal growth during the next four years. Keep in mind– the actions that President Obama has taken over his first month in office were to stabilize an economy in a free fall; his next step is to introduce policies at advance that economy.
Three Steps President Obama Can Take To Advance The Housing Market
As someone who works in this housing market everyday– I see first hand the issues people who are trying to buy a new home face. These are not people who are trying to game the market, or expect buy a new home & have 40% equity in their home in 3 years. These are regular people who are first time buyers, people who need more space because they are recently married or have increased their family size. While the rest of the world is in crisis– there are people around us who are just trying to live their lives.
A few years ago, these same people could have gotten a mortgage with little or no money down; they have good jobs & therefore were & still are good risks; they could sell their current smaller home to buy a larger one. Now the rules of the game have changed & they need some direction on how to play it. So these are my ideas.
1. Make It Easier For People To Buy Short Sale & Foreclosed Homes
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“Some People Have No Confidence in This Country”
July 13th, 2008 Categories: Mortgages & Loans, The Road Less Taken
Summer TV really sucks. It’s a great time to catch up on some really good TV with the On-Demand feature on my cable. Mad Men may be one of the best shows on TV– it’s a retrospect of corporate life in the 1960s– placed in the world of Madison Avenue Advertising.
In one of the episodes the big boss of this ad agency tells a story of the history of one the oldest and wealthiest families in 1960s Manhattan. The current monarchs grandfather once owned everything in Manhattan south of 76th Street, he explained, until he sold it all in the 1934 panic.
“Some people have no confidence in this country,” was his conclusion.
I couldn’t help but apply this to today’s current housing mess. Friday, the federal government seized IndyMac Bankcorp after a run on the bank led to the third largest bank failure in US history. This sparked a lack of confidence in Freddie Mac & Fannie Mae causing their stock to loose even more value on speculation that these companies would be next.
What is causing all this upheaval? It depends on who you talk to. The optimists say not true. While the pessimists say that Freddie and Fannie can’t support what’s coming.
Almost everyday, it seems, I have a conversation with my broker about the current real estate market. If I ever think that this world has gone mad, I just have to talk to my broker who reminds me that it’s all about perception. Even if, in this case, perception is reality.
Because, you see, if you believe in something long enough it becomes true. I’m not saying that this housing recession is a figment of your imagination– don’t get me wrong. But– we did see the housing market detriorate as the media focused on the bad thing that was happening. People who invest in the secondary mortages market ran for the hills. When the secondary mortgage market dries up, there is no new money for new loans, lenders are forced to tighten their belts. (I know its more complicated than that- but these are the basics)
What I see when I talk to people who worry about the market is that they are afraid. They are afraid that the market may go down further, they are afraid they may lose their job and they are afraid they are going to make a wrong decision.
But I also meet people who aren’t afraid. They see this market as an opportunity to buy in a neighborhood they couldn’t a few year ago. They don’t worry about their jobs, they know it will only get better. They follow the basic theory of buy-low, sell-high.
I think that this housing market is a true test of whether you see the glass as half empty or half full. Because you see, back in 1934, things were bad. Really bad. People jumped from windows for gosh sakes. No one knew if things were ever going to get better, yet the people who had confidence in this country brought it back. Many others were poor– unemployment was high. I won’t say they were pessimist– but it was hard for them to put food on the table, let alone buy a home. (I know this, my mother reminded me throughout my life. She was a child of the depression.)
Eventually things began to change. The federal government created jobs– people got back to work. They passed legislation to help Americans afford homes again. And one day at a time, America came out of its depression to went back to work to support a World War. (that’s another story!)
It’s only when we look back through history do we know the answers. We can’t see the end game in the middle of it. But it’s only by going through it do we get out of it.
So the question to ask yourself… How much confidence do you have in the future of America?
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Time To Get Answers: Tuesday April 22, 2008 Buyer Seminar
April 20th, 2008 Categories: Around Arlington County, Buyers, Mortgages & Loans, Nauck, Neighborhoods, Real Estate News, Shirlington
Save the dateâ
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Don’t Spend It All In One Place
February 14th, 2008 Categories: Mortgages & Loans, Real Estate News
This president loves to tell Americians to go out and spend money. So now you can. Donâ
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Is America Depressed?
January 23rd, 2008 Categories: Local Real Esate Sales Numbers & Things, Mortgages & Loans
I turned on the
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5 Reasons Why Bankers Should Never Sell Real Estate
January 8th, 2008 Categories: Buyers, Local Real Esate Sales Numbers & Things, Mortgages & Loans
The first week of 2008 has come and gone and I find myself busy with work. Which surprises me because itâ
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Freddie Mac Reaches Out
December 14th, 2007 Categories: Mortgages & Loans, Real Estate News, Sellers
Itâ
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Bush’s Rate Freeze: An Early Christmas Present or Coal in Your Stocking?
December 6th, 2007 Categories: Buyers, Mortgages & Loans, Real Estate News, Sellers
President Bush plans to announce, today, a compromise policy to freeze interest rates for some sub-prime mortgages for a period of 5 years.
Expect an afternoon joint press conference with the Treasury Department and members of the mortgage industry that negotiated this deal.
While the exact terms of the plans have not been officially announced, the Internet in buzzing with most of the planâ
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Let’s Take a Real Look At Interest Rates
November 13th, 2007 Categories: Buyers, Local Real Esate Sales Numbers & Things, Mortgages & Loans, Real Estate News
A few days ago I wrote a post on the history of interest rates over the last 30 years. I talked about trends and fluctuations. The chart from that post showed the trends in mortgage interest rates over the past 30 years have been in a steady decline and are now leveling of.
While itâ
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It Ain’t All Bad. A Historical View of Interest Rates
November 5th, 2007 Categories: Buyers, Mortgages & Loans, Real Estate News, Sellers
At least once a week my broker forwards an email to all her agents from the head of Prosperity Mortgage. In case you donâ
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