What REALLY caused this mess?

This is an interesting video which gives a pretty convincing argument, albeit a highly biased one. Take a look HERE and see what you think about what caused this current mortgage crisis. I must note that the 2nd half is more or less politically motivated and is obviously a McCain fluff piece. However, the base message to be taken away is a common theme of mine--unintended consequences of legislation. A great concept (getting people into houses) morphed into something that no one could have forseen. I am not a fan of this highly partisan mess we call Congress. For that matter, I wish our "leaders" (a very loose term!) would read the book "Term Limits" by Vince Flynn. No, I don't recommend such a radical course of action, but I sure wish our "officials" in DC would remember that they are elected to serve our country--not to pad their pockets or focus solely on re-election.

Wow, this really turned into a political rant! That was not my intention but when you see the mess that we're in today, it burns me up and blame is shared across the board-from DC to NY to unscrupulous lenders, etc. It's a mess, but hopefully this bailout bill will manage to somehow put us back on solid financial footing. We'll see; not so confident that it will be the 'magic bullet' needed but as the talking heads are repeating "Something needs to be done". Something, indeed....

What's next?

"What's next" could reference any number of ominous issues out there--Hurricanes, news reports, home sales reports, etc... I have been a relentless "cheerleader" of sorts for our industry and I have to admit that I am discouraged to know that I have no clue where we're going. While I still know that it's an amazing time to buy (rates are SO low-so are prices!) it's becoming so tough to get a loan. First-time homebuyers will lose the ability to obtain down-payment assistance on October 1st and other new loan requirements kicked in with the passing of the much-heralded Housing Bill. The takeover of Fannie and Freddie by the Feds has stabilized credit & rates dropped considerably, but we're in further uncharted waters with a proposed new bailout of the entire financial landscape. Mr. Obvious states "If financial conditions fail to improve for a protracted period, the implications for the broader economy could be quite adverse." My response to Bernanke is DUH! Long and short we have events that have not been seen since the Great Depression. This plan will enable the government to buy bad mortgages and other troubled assets held by banks & other financial institutions. The theory? If they get rid of the debts it will make them more stable so they will be more inclined to lend, which is the main issue at this point. The problem? I expect our "Do Nothing" Congress to add 'garbage' to the bill at the further expense of "We the people". They've done so much to ease gas prices, right?

Guess who caused this financial mess?

You need to read THIS ARTICLE to see the answer. You may be surprised; I sure was!

Ahoy there!

Okay, so the Economy is quite the story this week. But fear not, I have just the thing to take your mind off the rise and fall of the market--it's "Talk Like A Pirate" day yet again! Have fun and Hoist your Pirate flag and join in a collective ARRRRRRRR!!!

Downpayment Assistance (DPA) Eliminated. Now what?

October 1st may mean nothing to you, but to mortgage professionals/realtors, etc. it marks the end of Downpayment Assistance (or DPA). The new Federal Housing Bill ended this program. DPA allowed the Seller to bump their sales price anywhere from 3-6% to enable the buyer to receive 3% downpayment as required by FHA and up to 3% in closing costs. Nothing wrong with that scenario; someone wants to sell their home and someone wants to buy it (but they may not have enough money saved for a downpayment). As long as 1) the buyer can afford this home and 2) the property will appraise for the added value then the transaction makes sense. What is the problem? Well, I have heard that 1 in 3 homes using DPA were among the thousands that were foreclosed of late. With that info, I can understand the desire to delete this program so that banks lose LESS money! How can we fix this system? This video explains a bit, but again, how do you account for the huge numbers of losses as it relates to DPA? Perhaps you could base DPA amounts on credit scores/risk but other than that, what can you do? Anyone have any ideas?

Short & Sweet...

I guess my main economics news is that we really need to get those buyers off the fence-rates will most likely continue to go up over the course of the Summer; I expect we'll see 7% for the 30-year by Fall. Lenders still have tight standards for loans; the main 'traffic' I am hearing about relate to short-sales or foreclosures. I guess those monster law firms are rolling in clover since they have a lock on the foreclosure business. Other than that, we're here and ready to handle your closing business, be it residential (purchase OR refinance) and/or commercial. Why us? Excellent service, prompt return calls/emails and honest answers. How can I help YOU?

Another thought on oil prices-if the dollar had remained strong in relation to other currencies, a barrel of oil would only be around $70-80. Rate cuts helped our economy, but hurt the dollar. Expect rising rates!

Spending and small towns

I find it interesting to read articles about the "Economic Stimulus Checks" that have been paid to-date. As you remember, this wealth redistribution program was supposed to push people to spend money to boost our economy. Well, just like ethanol, it has resulted in some unintended consequences again! Not that this is a bad thing, but it's not what the politicos really wanted--People have increased costs; most are using it as a cost of living boost. Sure, some people finally got that 32" Flatscreen, but most are simply filling their tanks or their grocery buggies. Speaking of economic stimulus, we really didn't find much at the outlets over the holiday weekend, though Joey found 2 pairs of Nike shoes for only $30 each and my daughter bought yet another Webkin (parents in the know understand... probably one of the best marketing coups I have ever seen! Makes 'beany babies' pale in comparison). I do have to praise small towns though-we stayed at our friends' place near Ellijay, but also went up to Blue Ridge. It turned out that they had an arts & crafts festival so we got to wander around and see some neat stuff. We also had the BEST Kettle Corn I have ever had in my life! Perfect balance of sweet/salt-I still keep thinking about it : ) Another anachronism? We saw the new Indiana Jones movie at the Swan Drive-in (one of FOUR still open in GA). Great time, the grounds were packed in! Sounds like Indy will rake in the highest $$ for the Summer. So see, SOMEONE is having success!