It's pretty tough out here

Well the good news is that many homes are selling for 50 to 60% of what they had sold for in 2005 to 2006. This really means that buyers have a lot of options available and they can now buy homes that were completely unavailable to them a mere 3 years ago. The other good news is that interest rates are insanely low, anywhere from 4.625% to 5.55% depending on the program, the down payment, the points, and your particular credit worthiness.

The bad news is that most banks are still looking for excuses as to why not lend to you. Buyers should do everything within their power to make themselves as mortgageable as possible since we have now reached what I call the "Perfect Storm" of Real Estate. We now have very low prices coupled with very low interest rates. This is an awesome time to buy if you can. Best of luck to all of you!

The Questionable Fairness of the Obama Stimulus Package

First the good news:

It's good to have a President that can assess a situation and move quickly to try to fix a known problem of enormous magnitude namely the Real Estate and Mortgage MESS. 

I am glad that many existing homeowners who have fallen on hard times will get the opportunity to remain in their homes because they now will be able to get their interest rates automatically reduced and may also get part of their loan balance forgiven. That sounds nice but it also reeks of a Giant Government "Gimme". What bothers me the most about this plan is that there is no way to separate the people who deserve a "hand up" with the people who are just getting a "Free ride".  I, personally witnessed many greedy home buyers who bought homes that far exceeded their current earning abilities yet they did so with impunity because the "System" in place was one of letting Capitalism run amok. It is the system still favored by NeoCon conservatives. Now don't get me wrong, there is something to be said for the market being able to self regulate itself based on overall profitablity coupled with supply and demand but the problem with greed is that it completely blinds all parties.

Now for the bad news:  Part of the "Stimulus Package" that the solid, fiscally conservative, law abiding, mortgage paying population will be paying for is the support of those same greedy people who felt that they deserved a "McMansion" complete with gunite pool and spa, yes folks, the very same people who had poor judgement in the first place.  

Let me make this very clear, I have a problem with bailing out greedy self indulgent people who shouldn't have bought what they bought in the first place!

I do not have a problem with people who, due to unfortunate circumstances such as health problems, the death of a loved one, a messy divorce or the loss of a job, end up needing a helping hand. These families need our help and I'm happy that the "Stimulus Package" will provide that "hand up".

In the past several months I have witnessed many good mortgage paying people unable to refinance their mortgage down to a lower rate because their equity has slipped away and lending regulations have gotten tighter than a tourniquet.  Our former Prez, Bush the 2nd, gave the banks billions and yet those very same banks suddenly won't lend to the very same people who have already proved that they can pay a mortgage on time. Now that is what I call UNFAIR.  If the government is so big on handing out billions where's my cut of the pie? Countless clients of mine can not refinance their mortgage to take advantage of the lower rates while countless numbers of people who haven't paid their mortgage in over a year are able to refinance with no closing costs into an outrageously low mortgage rate.  This is NOT FAIR. How about the government rewarding those people who did not contribute to the current mess? How about giving them a "Gold Star" and a means to participate in this giant government give-a-way? Anyone who has systematically paid their mortgage, on time, throughout this time in history, should get an automatic "Free Pass" that could be redeemed for at least a 1% interest rate reduction and maybe a cherry on the top which could be a $25,000 downward loan modification.  Now that would be a fitting way to reward people who did not contribute to the current mess we are in. What do you think folks?

Fundamentals are what count

I've been meaning to get this topic off of my chest for awhile so here it goes..... Everyone, including the papers, the pundits and now the politicians say we are in a bad economy, right? So why is it that when I call a company for service they don't get back to me or lose my information? I'll give you an example of this. I called a permit expediting company several months ago because I thought I needed professional help in legalizing a structure. I left not one but two messages w/the receptionist and I never received a call back. Here's another interesting story, I ordered an oil delivery for a home of mine that is tenant occupied and asked if I could purchase a service contract for said home. I was told that one of their service technicians would need to look the burner over before they would agree to give me a service contract to make sure that the burner had no real problems. I scheduled the appointment between the service technician and my tenant. I never received a follow up call to let me know if I would be eligible for a paid service contract. 6 Weeks later my tenant tells me that the heat just stopped working so I called back this company to schedule in a service call and they said that their service technician had no interest in fixing my burner even if I agreed to pay them in full for parts and labor. I was completely shocked that a company that is in the business of fixing oil burners had no interest in taking my money and fixing my heating equiptment.  I promptly called another oil delivery/service company and had my oil burner fixed w/in 4 hours at a total cost of $199. This excellent company is Taylor Fuel and I am now a grateful customer of theirs while the other company will be on my blacklist. What I really think is that good businesses have good fundamentals and some how they will weather the economic storm while businesses w/poor fundamentals will go out of business and it will not be the economy's fault it will be their own damn fault.

The same lesson can be applied to home buying. Fundamentals count. The reason we are in such a foreclosure mess is that the average home buyer threw fundamentals in the garbage. They just wanted what they wanted, when they wanted it, especially if their friend or cousin had it. I saw people get into bidding wars on 2 bedroom homes in so so locations. I saw buyers overlook their own inability to make a mortgage payment just so they could say they owned a home. 

Today's buyer is just plain afraid. They are afraid of making the same kind of mistakes that thousands before them made. They are afraid that they won't get mortgage financing. They are afraid that they will lose their jobs. I understand this fear however it was once said that "the only thing to fear is fear itself". Fear is there to make you think things through and not leap before you look which is a good and healthy thing. Fear that prevents you from making meaningful and positive decisions and choices is just baseless fear that paralyzes. Once you have analyzed a situation properly it is time to make a decision based on fundamentals and get on with it. Waiting for the sky to fall like "Chicken Little" is no way to live.  

Have a Happy Holiday Season!

Well it's that time of year again when most of our thoughts turn to holiday festivities and holiday stress. I have definitely noticed a more somber attitude this holiday season due to the overwhelming financial pressures that face most of us. Big retailers are having sale after sale and yet are selling less. Internet retailers are offering bigger and better bargains and even free shipping. It's a pity that there seems to be so much pressure on people to make sure that they buy plenty of gifts for everyone. Maybe it's time to return to simpler values like baking a plate of Christmas cookies and giving them as a gift instead of just spending more and more money that you don't really have to spend.

 One of the nicest traditions I have is that every year I get together w/an older woman that I became friends with while working at Fire Island back in the late  80's. I drive over to her home and sit awhile in her cozy living room and look at old photos and reminisce over people we knew who are no longer with us. We then go out to dinner at a local restaurant and talk some more. We usually give each other a very small gift like a poinsettia plant or a home baked batch of cookies.  We always have a lovely time just catching up with each other once a year over the holidays. I find that the gift of time is far more precious than any silly trinket or electronic  gadget that I probably don't need anyways.  Make time for the people in your life that are special to you for one day they may not be there anymore and all you will have to hold onto are the memories you made together.

If you are fortunate enough to have a roof over your head than you are more fortunate than most of this planet's inhabitants. Be thankful for what you've got even if it is less than you had hoped for. For better or worse we live in a country that idealizes "stuff" and the message we are constantly being bombarded with is that the more "stuff" you have the more successful you are. It's time we realized that "stuff" doesn't last only memories do. We are all just caretakers in this life. We buy jewelry, we buy homes, we buy cars and then we pass on and our "stuff" also gets passed on. We are just temporary caretakers and the best we can do is take good care of all that we have and realize that all we have is enough to be grateful for. 

So this holiday season give the gift of time and the gift of appreciation. That's the "stuff" that memories are built upon. Wishing you and yours a most joyous holiday season!

Hope over Fear

Our country finally did it, we chose hope over fear. A new day is dawning for America and it couldn't come at a better or bleaker time. We will have new leadership in the White House and we will have a thoughtful and intelligent President who was voted in by a majority of us. Things will not change overnight, it took time and many poor decisions to get us into the mess we are in now and it will take time and many good decisions to get us out of it. Still, this is really, really big history in the making and I couldn't be prouder to be an American then I am today.

What will this mean for the housing and financial sectors? It will mean that government will have an eye on the ball and will start to look out for the middle class instead of just big business, as usual. It will mean that consumer sentiment will start to become positive again. It will mean that foreclosures will no longer be on the rise but on the decline. It will mean that jobs will come to depressed cities like Detroit and Columbus. It will mean that banks will start loosening their tight grip on money and the credit will start to flow again into the hands of small businesses and home buyers. It will mean that our economy will start to create more good jobs instead of just outsourcing them out to foreign countries. It will mean that the super rich will start paying their fair share of taxes instead of the middle class bearing the burden. In short order, it will mean better times are ahead of us instead of just behind us.

Things are looking up, my friends, it is time to be hopeful again!

Tricks or Treats?

Well, my pretties, with Halloween approaching, it is time to think of Trick or Treating. When you are going door to door asking for candy, will your neighbors answer their door and hand you a treat or will they be chained to the door hoping to stave off foreclosure. These are awful times for many homeowners and while the average "Joe the Plumber" says that they do not want government interference in their lives it is time the government really does something to help out all the struggling homeowners who are barely holding on. More foreclosures mean more blighted neighborhoods and more people feeling suicidal and helpless. For years the government looked the other way as big business helped themselves to monstrous profits (and still do like Mobil/Exxon) at the expense of the little guy. 

You know what I consider an insult to American intelligence? Paltry economic stimulus checks that give some Americans between $100 to $1800. To further add insult to injury, our current President thinks that Americans who receive these checks should go out and spend them in this insipid hope that buying more consumer goods will beef up this dismal economy. What a complete pathetic joke. How about giving us "Real" economic stimulus checks like the 700 billion dollars that you handed out to the very same corporations who have been ripping us off?

Think about what the average American family could do with about $350,000? Now that would really help people and put our economy back on track. Foreclosures would dry up, consumer confidence would spread, money would be spent on housing, cars and other consumer goods. Small businesses would prosper once again and all would be right with our economy. The housing market would stabilize and new buyers would be able to get mortgages again. Older homeowners who previously could not sell their home would now be able to ride off into the sunset (into their Florida or North Carolina retirement homes). Blighted towns like Mastic Beach would come alive again and attract new buyers wanting to set down roots in a well priced beach community. All would be right with the world. Now, my friends, that's what I would call a real "Treat"!

How Safe is the Middle Class?

A couple of nights ago I was watching the news and heard that banking giant, Lehman Brothers would be filing for bankruptcy.  The other big news of the evening was that Merrill Lynch was probably going to be bought by Bank of America and that AIG (the insurance giant) was also in danger of going out of business.  

I receive an online publication called "The Mortgage Graveyard" and for the past year and a half more and more banks have been added to that list. I couldn't believe it when I was directly e-mailed, by my account executive at Indy Mac, last month, that they too were going out of business.  Right now there are very few banks left to do business with.  The real scary part of all of this is that if you happened to have over $100,000 in Indy Mac Bank, you were in danger of losing your money. 

Trying to get a mortgage in this lending environment is like pulling teeth. It's hard, uncomfortable and will cause you a whole bunch of pain and that's if you are lucky enough to find a decent dentist.  

Now,  you may ask why is it just the middle class that aren't safe?  My attorney and friend, Paul Barlow, neatly summed it up when he said  "the poor don't have any money to begin with and the rich always have money.  It's the middle class like you and me that always get squeezed".

He's right, the rich never have a problem buying homes and the poor are happy just to have a roof over their heads. It's the striving middle class that dream of home ownership and take the steps necessary to achieve those goals that are in danger of being squeezed out. It's also the middle class who will be losing their well paying jobs at "Lehman Brothers, Indy Mac, AIG, Merrill Lynch, etc".  Those nice middle class salaries will be very hard to replace in a failing economy, such as the one we have now, which was created by our wonderful Republican President George W Bush who has systematically catered to his very rich corporate cronies like Ken Lay who pilfered the pensions of the loyal, hardworking middle class employees of  Enron. I pray that we can get our country back on track and back on it's feet so that we can once more have a strong economy and a healthy environment.  Four more years of the same and we will be in for a depression instead of a hard core recession.

When the middle class feels safe and consumer sentiment is positive we all share in a strong economy.  We are anything but safe right now. These are, indeed, very scary times.