Amy Knows Salem-Keizer!

2012-01-27T09:15:00.000-08:00

HOW DO I SAY THIS?

It seems as if everywhere you look, there's nothing but good news about the real estate market. Even at the conference I attended most recently in Phoenix, all the buzz was about how the market is healed.

Now that started to give me pause, because the attendees at this conference are the cream of the crop in real estate - the top 3% of agents in the nation. And I know you all thought I was just a Negative Ninny four years ago when I said this downturn would last much longer than just a season. So, NEVER wanting to be wrong, I had to come back and put this information into context, because this "feeling" everyone was having just didn't seem to square up with the numbers.

First of all, we've come off a year that included a Foreclosure Moratorium. That moratorium has allowed about 49 months worth of inventory to stockpile. It's commonly referred to in the press as the Shadow Inventory. These are homes in some stage of foreclosure; everything from being 60 days late to being sold as a vacant house on your street.

Secondly, many of the Realtors I talked to in Phoenix were reporting they were having low inventory, multiple offers and sometimes offers over asking price. How could that be, I wondered. A closer look tells the story.

Many of these agents were from some of the hardest hit states in the nation; places like Florida, Arizona, California and Ohio. In some cases, real estate has dropped up to 87% from it's high point in '05 and '06. It's no surprise that investors are coming and grabbing up these deals. That combined with that moratorium I spoke about - and you can see how it would "feel" like everything in just ducky!

What we've known for quite a while, though, is that this is going to be a see-saw recovery. Up and then down and then up again. And we all know that real estate is local. So I thought it would be helpful if you could see exactly what's going on in our market.

Here's a map of the 6 major zip codes in the Mid-Willamette Valley. As you can see, we've got some work to do here in the Valley before we start talking recovery.

While this map is a little tough to take, the good news is our real estate market never fell like values did in the states of Arizona, California or Florida. And besides - we're Oregonians....tough to the core!

Amy's 2012 Real Estate Predictions

2012-01-10T12:48:00.000-08:00

2012 Predictions!

Can I just say, 2011 was not my favorite year....not at all. But it's in the books, and I'd say as a benchmark, we've got some good things to look forward to in 2012. So lets focus on real estate!

1. We have historically low interest rates. If you're thinking of buying or refinancing - do it!

2. Nationally, home prices should be stabilizing. Locally we are expecting another dip in prices, because of our large dependence on government and our school district for employment.

3. The number of sales per year seems to have stabilized. We seem to have found the normal "set point" for the Mid-Willamette Valley.

4. We will see rising inventories as foreclosures again become more of a force in the marketplace.

5. Distressed properties will be an increasing part of the sales pie.

6. Improved Short Sale processes at the lender level will help even more families avoid foreclosure.

7. Homeownership rates will continue to fall, providing an opportunity for investors to purchase and provide housing for local families.

8. Foreign and domestic investors will make up about 25% of the buying market.

9. First time homebuyers will make up a signifcant portion of the market.

10. Buyers are still looking for a bargain; both in price and presentation.

All in all, we expect more of the same. In a way, that's good news. I'm often asked, "what is it going to take to turn this around?" My answer is always the same, "jobs." And that's what it is. No one is going to risk buying a home if they're worried about their job.

We're also advising our clients that given where we are, any real estate decision needs to be put in the context of about a 15 - 20 year plan. And No, I'm not kidding. It's really going to take that long.

Hopefully this gives you some insight into what to expect. We're here if you have questions, and we want to put the word out that we're available to come speak to any group who might want more insight into the Valley real estate market or the in's and out's of Short Sales.

Please don't hesitate to call. We're here to advise in all things real estate!

Happy New Year!

Housing Market: What’s Behind and What’s Ahead

2011-12-26T15:25:00.001-08:00

The housing market in 2011 was a year that saw changing trends and breaking records.

Mortgage Rates

15- and 30-year fixed mortgages hit record lows during 2011. via money.CNN.com

Freddie Mac’s Primary Mortgage Market Survey showed the interest rate for a 30-year fixed-rate loan averaging 3.91% last week, the lowest in the 40 years of the survey’s history. The average interest rate for a 15-year fixed-rate mortgage was 3.21% — also a record low.

Mortgage rates are expected to remain low well into 2012.

Greg McBride, a senior financial analyst at Bankrate.com, commented that “for well-qualified buyers interest rates should be no impediment to home buying in 2012.”

Foreclosures & Loans

There were 14% fewer foreclosure notices served in November year-over-year. via Business Week

The rate of foreclosure filings slowed considerably in 2011, as banks and servicers responded to the documentation and processing challenges from 2010.

The foreclosure liquidation rate is anticipated to rise next year. via Zillow.com

With the settlement between the states’ attorneys general coalition and the major lenders and servicers coming to a head, Zillow sees an increase “either in conjunction with a settlement… or, alternatively, in the aftermath of the settlement effort falling apart.”

Home Values

The slide in home values since 2008 slowed in 2011. via International Business Times

Zillow projects that home values will fall 35% less this year than in 2010; and the Case-Shiller Home Prices indices show that the rate of decline slowed from the second quarter of this year to the third quarter (from 5.8% to 3.9%).

Home values will likely fall a bit more to finally bottom out in 2012.

Jonathon Miller, president and CEP of Miller Samuel, predicts that the decline will be considerably less than this year.

Home Sales & Starts

In 2011, new single-family home sales are on pace to hit a record low of 301,000. via Business Week

On the flip side, however, existing home sales rose to 4.42 million this fall, the highest in 10 months.

Total home starts (houses and apartments) jumped 9.3% month-over-month. via Internation Business Times

This rise from October to November represents the fastest pace in more than 18 months. Although single-family home construction remains stalled, Fitch Ratings projects a 6.7% gain in residential housing starts next year.

Confidence

The Housing Market Index rose to 21 from last month’s 19. via Mortgage News Daily

The National Association of Home Builders (NAHB) surveys its members monthly to compile the index. Although not huge, 20 is the highest the index has been since May 2010.

Are Home Values Finally Stabilizing?

2011-12-19T10:13:00.001-08:00

Zillow Real Estate’s latest market report says maybe

On a year-over-year basis, the Zillow® Home Value index declined 5.1 percent. Zillow reports that “the rate of monthly depreciation has stabilized around -0.2 to -0.3 percent over the last few months.”

Of the 156 metropolitan statistical areas covered by Zillow, while 95 showed monthly depreciation in home values, 39 areas actually saw an increase in monthly home value this past October. Twenty-two (22) areas remained flat.

The nine markets that saw the largest year-over-year home value increases from October 2010 to October 2011?

Tulsa, OK— one-year price gain of 6.2%
Oklahoma City, OK — one year price gain of 3.1%
Lincoln, NE — one year price gain of 2.7%
Madison, WI — one year price gain of 1.3%
Honolulu, HI — one year price gain of 1.3%
Fort Collins, CO — one year price gain of 1.3%
Fort Myers, FL — one year price gain of 0.4%
Pittsburgh, PA — one year price gain of 0.4%
Boulder, CO — one year price gain of 0.2%

Another sign of stabilization is the decline in the foreclosure liquidation rate — at 8.1 out of every 10,000 homes being liquidated as of October, 2011 — down from the all-time high of 10.7 out of every 10,000 homes in October, 2010. That’s a drop of nearly 25 percent.

For more details on the Zillow Home Value Index and the latest Zillow Real Estate Market Report, check out these articles:

U.S. Home Values Continued Fall in October; Rate of Decline Stabilizes (MarketWatch)
Real Estate Markets: Top 9 Gainers in 2011 (Huffington Post)
A Bit of Good Real Estate News? (Realty Times)

The Housing Market One or Two?

2011-12-12T09:20:00.001-08:00

Analysts disagree over definition and future of the market

Last week, while some real estate analysts offered a somewhat rosy outlook regarding “stabilizing home prices for non-distressed property,” several industry experts from news sources argued that you cannot simply split the market in two pieces — distressed and non-distressed to paint the picture you want.

So what’s the bottom line? Is the market flat, dropping or rising?

Month over month, CoreLogic report that home prices overall fell 3.9 percent in October, and the S&P/Case-Shiller home price index was down 3.9 percent in September (which represents a three month running average of both distressed and non-distressed sales).

Removing the distressed sales(foreclosures and short sales) from CoreLogic’s analysis, however, home prices fell just 0.5 percent in October.

The Wall Street Journal noted that for the first nine months of 2011, non-distressed property prices were relatively stable, with only a two to three percent decline year over year. A real estate analyst from Barclays, a proponent of looking at the two market segments separately, feels that if the pricing trend continues (distressed pricing dropping while non-distressed pricing stabilizes), it could have the effect of “stabilizing something else: home-buyer confidence.” Only time will tell.

For more details, see:

This blog post on HSH: Home prices may be more stable than we think
CNBC Real Estate Reporter Diana Olick’s article, Are There Really Two Housing Markets?
WSJ mortgage and housing writer, Nick Timiraos’ post: Why Home Prices Are (and Aren’t) Stabilizing

More and More Experts Say Principal Reduction Is the Answer

2011-12-05T08:00:00.001-08:00

Why does the head of Fannie Mae and Freddie Mac refuse to consider it?

Last week, a group of Democrats from the House sent a letter to Edward DeMarco (who currently heads up the agency (FHFA) that oversees Fannie Mae and Freddie Mac) asking for a better answer as to why he refuses to implement a principal reduction program at Fannie and Freddie.

The letter cites industry experts, all of whom advocate principal reduction as necessary to bring the housing market and economy out of the dumps, including:

Chairman of the Fed, Ben Bernanke
a former Chairman of the Council of Economic Advisers
a former Vice Chairman of the Fed
a former Special Inspector General for the Troubled Asset Relief Program

Even Greg Lippman, the former Deutsche Bank AG trader who made a fortune betting against subprime mortgages, has weighed in on the side of mortgage reduction. Now chief investment officer for a New York-based hedge fund, Lippman wrote a letter to investors saying “principal reductions are necessary to help ameliorate the housing crisis.” (For more on Lippman’s perspective and additional expert opinions, read this Bloomberg News article.)

DeMarco claimed in a Nov. 16^th hearing that his agency has “concluded that the use of principal reduction within the context of a loan modification is not going to be the least-cost approach for the taxpayer.” (For a great summary of DeMarco’s exchange with Rep. John Tierney (D-MA), read this post on Fire Dog Lake.)

According to the Democrats behind the letter, DeMarco has too long been spouting “superficial excuses about why principal reduction programs are not feasible at Fannie Mae and Freddie Mac, despite a growing chorus of economists and other experts who believe these programs serve the long-term interests of taxpayers.”

Felix Salmon, an award winning financial journalist, boils the likely real reasoning behind DeMarco’s stance down to the following:

If we [the FHFA]do principal reductions, the accounting conventions finally grow some teeth, and we’re forced to take a write-down. Since we don’t want to recognize reality and take that write-down, we’re simply going to avoid doing principal reductions instead.” (read Salmon’s full post on “Ed DeMarco’s Obstructionism” here)

The Democrats’ letter calls for DeMarco to provide documentation that proves there are statutory provisions preventing FHFA from letting Fannie Mae and Freddie Mac reduce mortgage principal. In addition, they asked DeMarco for an analysis that compares the financial implications of foreclosures with the cost of debt reduction. DeMarco’s deadline to provide these documents is December 9^th.

Holiday Mortgage News. More of the Same

2011-11-28T08:51:00.001-08:00

Rates continue to hover near historic lows

The short holiday week saw little change in mortgage rates.

According to Mortgage News Daily, the Best-Execution Rates for Friday, November 25^th ranged from 3.875% (“very few”) to 4.125% (“some”), with most seen at 4.0%. Realty Times reported the results of Freddie Mac’s Primary Mortgage Market Survey for the three-day week:

30-year fixed-ratemortgage averaged just under 4.0%, down from 4.40% a year ago
Average rate for 5-year adjustable-rate mortgages (ARMs) reached a new low of 2.91%, down from 3.45% last year
Average rate for 1-year ARMs was 2.79%, down from 3.23% last year

Although home sales were slightly up in October, according to the National Association of Realtors (NAR), they could have been even better had there not also been a high number of failed sale contracts in October. NAR’s chief economist attributes the failed contracts in part to appraised values not matching the negotiated sale price and to tight credit standards.

Time to Be Thankful For Housing Market News?

2011-11-21T09:44:00.001-08:00

Recent forecasts predict better times ahead in 2012

Although small, a slight uptick in the housing market next year is predicted. A survey by MacroMarkets of more than 100 economists and industry experts shows they expect home values to go up — just a little. About .25 percent in 2012 and a total of 1.1 percent through 2015.

Slowing the recovery down are the many foreclosures clogging the market. A recent article in Money Magazine notes that Freddie Mac predicts that in 2012, 4.8 million homes will be sold in total, while there are more than 5 million homes for sale. The market considers six months of housing inventory to be healthy — more than a year’s worth of inventory is a sign that the going will be tough to return to healthy market conditions.

For buyers and sellers in 2012, the recommendations are to “think small” and “price smart.” For buyers, looking at smaller properties mean smaller loans, smaller payments and smaller home costs overall (energy, water, etc.). For sellers, working with — and listening to — an experienced Realtor when it comes to setting the sale price of their home is critical. According to Trulia, about 25 percent of homes it tracks has reduced its price at least once, by an average of about eight percent.

And of course, for homeowners not looking to sell, now is the time to look at refinancing, as mortgage rates continue to hover at all-time lows. Considering that just recently 15-year mortgage rates were more than half a point less than 30-year mortgage rates, a homeowner who could afford the higher payment could refinance a $250,000 mortgage with a 15-year loan and save more than $100,000 over the life of the loan compared to a 30-year mortgage.

The Battle Over Principal Reduction Rages On

2011-11-14T08:47:00.001-08:00

States, including NY and CA, push to include assistance for underwater loans

The latest settlement proposal between the states’ coalition and five major banks after 11 months of talks includes financing support for underwater loans, including refinancing, principal write downs and other forms of assistance. According to CoreLogic, about 22.5 percent of all residential mortgages are underwater.

Multistate talks to craft a settlement with the major banks stalled a few weeks ago when California State Attorney General Kamala Harris withdrew. Harris pointed to the combination of the banks’ demands for broader immunity from litigation and penalty for their earlier “abuses” along with the inadequate relief proposed for homeowners whose loans are underwater as unacceptable to protect the interests of California and California homeowners.

Earlier this month, Harris stated that she thinks the head of Fannie Mae and Freddie Mac should “step aside” if he will not approve principal reduction for underwater loans. PICO, a California community organizing network, pointed out in a press release that Fannie and Freddie “continue to keep more than one million California families trapped in unsustainable debt.”

The talks, led by Iowa State Attorney General Tom Miller and supported by the Obama administration, had recently increased the suggested penalties from $20 billion to $25 billion. The additional $5 billion, paid directly to state and federal governments, is intended for eligible victims of the five participating banks’ foreclosure processes — restitution payments are estimated to be between $1,500 and $2,000.

In addition to Harris, attorneys general from several other states including New York, Massachusetts, Nevada, Minnesota, Kentucky and Delaware have stated that they don’t feel that the proposed $25 billion settlement is adequate to protect their states’ homeowners.

Gathered from the following sources:

California Pulls Out of Foreclosure Talks (WSJ)
States near foreclosure deal with banks (Reuters)
Kamala Harris, California Attorney General, To Fannie And Freddie Head: 'Step Aside' Over Mortgage Crisis (Huffington Post)
Should Fannie, Freddie Write Down ‘Underwater’ Mortgages? (WSJ Blogs)

Obama Announces Expanded HARP Program

2011-11-07T09:10:00.001-08:00

Two years later after its debut, how has the Home Affordable Refinance Program changed?

Last month, President Obama announced that the Home Affordable Refinance Program (HARP) was being revised and expanded.

HARP was introduced in 2009 as a measure intended, according to a statement by the President, to “make it possible for an estimated four to five million currently ineligible homeowners who receive their mortgages through Fannie Mae or Freddie Mac to refinance their mortgages at lower rates.” In the two years since HARP’s debut, not quite one million homeowners — or 20 to 25 percent of the intended beneficiaries — have received HARP assistance.

As reported on HSH.com, there are two notable changes in the HARP guidelines, impacting borrower qualifications and lender obligations.

Elimination of LTV caps — The original guidelines for qualifying borrowers capped the loan-to-value (LTV) ration at 125 percent. The revised guidelines eliminate this cap, which is good news for borrowers in hard hit states including Nevada and Arizona, where some LTVs exceed 200 percent.

Elimination of Reps and Warranties — The other significant change is the elimination of some representations and warranties for HARP-participating lenders. By transferring certain lender obligations in the case of a loan going bad from the lender to the government, the government is encouraging more banks to participate in HARP, offering homeowners more options and access to loan modification choices.

Tim Manni, managing editor at HSH.com, comments in his post that he anticipates these changes helping Fannie Mae and Freddie Mac (as only mortgages through either of these institutions are eligible for HARP) as well as the loan orginators, who are now able to take on more debt with less risk. Manni does not, however, see these revisions having a noticeable impact on the housing market’s biggest problem: distressed borrowers and shadow inventory. Borrowers who are behind or seriously delinquent are not eligible and REO held out of the market will not be impacted by the expanded guidelines.

Unexpected Results in Home Sales

2011-10-31T07:32:00.001-07:00

New home sales slightly up, while pending home sales are slightly down

The annual pace of new home sales increased a bit more than expected in September, rising 5.7 percent from the previous month. At the same time, although economists had forecast a 0.4 percent gain, contracts for pending home sales declined in September by 4.6 percent.

First time buyers are behind the slight rise in new home sales, as evidenced by the proportion of lower-priced, entry-level homes under contract. Bob Nielsen, chairman of the National Association of Home Builders (NAHB), notes “these consumers are very dependent upon federal policies and programs that support homeownership, such as the mortgage interest deduction and low-down payment mortgage options.”

The number of home buyers able to take advantage of historic low mortgage rates and pricing on existing homes is limited by the combination of low consumer confidence, high unemployment and limited access to credit. Nonetheless, although pending home sales declined from the previous month in the largest month-to-month change since April of this year, the National Association of Realtors (NAR) monthly index shows a year-over-year increase of 6.4 percent.

For more details, read these articles:

Bloomberg.com: Sales of New U.S. Homes Hits Five-Month High
NAHB: New-Home Sales Rise 5.7 Percent in September
Business Week: Purchases of New U.S. Homes Increase More Than Forecast and Pending Sales of U.S. Existing Homes Unexpectedly Decrease 4.6%
Inman: Pending home sales index rises from one year ago

DISTRESSED HOMEOWNERS - CONSIDER CHANGING COURSE

2011-10-27T13:34:00.000-07:00

Foreclosure fears foster true grief.

Reports of foreclosures by the millions have been in the news so much over the past few years that to some, it might seem like the new normal. As a real estate professional, in the trenches with financially stressed homeowners every day, it never feels like business-as-usual.

The prospect of losing ones home is a major source of grief, and often, goes hand in hand with other tragic setbacks like; job loss, divorce, death of a loved one, mounting medical bills or skyrocketing mortgage payments.

Unfortunately, the first stage of grief is denial. That’s even more the case when the threat of foreclosure is looming.

No one wants to talk about financial trouble—even when millions of others are in the same position. It’s completely understandable. But for homeowners who are behind on mortgage payments, decisive action is often the most critical step toward ensuring the best possible solution.

As a real estate professional who has earned the Certified Distressed Property Expert (CDPE) designation, I help homeowners everyday deal with the grief and uncertainty that accompanies the prospect of losing a home. In the process, I can help homeowners get on a path toward financial solvency.

If you or someone you care about would like to change the course of a life that’s facing foreclosure, I can help. Please contact me today at 503-371-5209 or www.amymcleod.net.

A LESSON FOR EVERY CLASSROOM

2011-10-24T15:28:00.000-07:00

A lesson that should be taught in all schools . . And colleges....

Back in September of 2005, on the first day of school, Martha Cothren, a social studies school teacher at Robinson High School in Little Rock , did something not to be forgotten. On the first day of school, with the permission of the school superintendent, the principal and the building supervisor, she removed all of the desks out of her classroom.

When the first period kids entered the room they discovered that there were no desks.

'Ms. Cothren, where're our desks?'

She replied, 'You can't have a desk until you tell me how you earn the right to sit at a desk.'

They thought, 'Well, maybe it's our grades.'

'No,' she said.

'Maybe it's our behavior.'

She told them, 'No, it's not even your behavior.'

And so, they came and went, the first period, second period, third period. Still no desks in the classroom.

By early afternoon television news crews had started gathering in Ms.Cothren's classroom to report about this crazy teacher who had taken all the desks out of her room.

The final period of the day came and as the puzzled students found seats on the floor of the deskless classroom, Martha Cothren said, 'Throughout the day no one has been able to tell me just what he/she has done to earn the right to sit at the desks that are ordinarily found in this classroom. Now I am going to tell you.'

At this point, Martha Cothren went over to the door of her classroom and opened it.

Twenty-seven (27) U.S. Veterans, all in uniforms, walked into that classroom, each one carrying a school desk. The Vets began placing the school desks in rows, and then they would walk over and stand alongside the wall. By the time the last soldier had set the final desk in place those kids started to understand, perhaps for the first time in their lives, just how the right to sit at those desks had been earned..

Martha said, 'You didn't earn the right to sit at these desks. These heroes did it for you. They placed the desks here for you. Now, it's up to you to sit in them. It is your responsibility to learn, to be good students, to be good citizens. They paid the price so that you could have the freedom to get an education. Don't ever forget it.'

By the way, this is a true story. And this teacher was awarded Teacher of the Year for the state of Arkansas in 2006.

Please consider passing this along so others won't forget that the freedoms we have in this great country were earned by U. S. Veterans.

Senate Votes to Raise Loan Limit

2011-10-24T06:45:00.001-07:00

Hoping that higher conforming loan limits will help housing market

Last week, the Senate voted to approve the high-balance conforming loan limit to $729,750 in wealthier neighborhoods, as part of a larger spending bill.

As of October 1, 2011, the largest conforming loan (loans that are eligible to be purchased or guaranteed by Fannie Mae and Freddie Mac) limit returned to $625,500 after several years of a temporary extension to $729,750.

There is a ways to go yet before the higher limit becomes an actuality. The approved measure is attached to a spending bill brought to the Senate by Robert Menendez, D-NJ. If that larger bill is approved by the Senate, it then has to pass through the House of Representatives. The Republicans, who control the House, have decidedly different ideas as to how to stir up the housing market and economy, including eliminating Fannie Mae and Freddie Mac not expanding their eligible loan pool.

In a post in the Wall Street Journal, Edward Mills, an analyst for FBR Capital Markets, is reported as saying that “given the strong bipartisan support in the Senate, the chances of the re-raise are well above 50%.”

Foreclosure Activity Brings Both Good News and Bad

2011-10-17T07:09:00.001-07:00

What more foreclosures and longer processing times may mean for the housing market

(map from RealtyTrac.com)

RealtyTrac® reported that foreclosure activity in the third quarter was up slightly (less than 1 percent) from Q2, and down 34 percent from the same period last year. September activity was down 6 percent from August, marking the 12^th month in a row that foreclosure activity has decreased from the previous month.

An Associated Press article (found on NPR.org) notes that “A pickup in foreclosure activity also means a potentially faster turnaround for the U.S. housing market. Experts say a revival isn't likely to occur as long as there remains a glut of potential foreclosures hovering over the market.”

Although foreclosure filings may be on an upward trend, the foreclosure timeline seems only to be lengthening. According to RealtyTrac, foreclosures were completed in an average of 318 days in Q2, while the process took 336 days on average to complete in Q3. New York state’s average for completing a foreclosure was the highest in the country at 986 days. Compare that to Tennessee, where a foreclosure process averages about 94 days from beginning to end.

Take Control of Closing Costs

2011-10-10T10:27:00.001-07:00

Expert tips on evaluating and managing the cost of your mortgage

As mortgage rates continue to stay at record lows, the costs of obtaining a mortgage are going up — according to Bankrate’s annual survey of closing costs, the average origination and title fees have jumped 8.8 percent from August 2010 to August of the this year.

Closing fees are not set in stone, and savvy mortgage shoppers can often reduce these costs or spread them out over time to minimize the financial burden. Remember to be cool as ICE in negotiations, and you might save yourself some money:

ITEMIZE —make sure every single fee is identified and explained. Ask your lender to break down grouped fees line by line and to explain any fees that are unclear.

COMPARE —all lenders are not created equal. Compare loan costs from different lenders, and weigh the loan parameters as well. Low cost and no-cost loans often end up costing a lot more in the long term through higher rates and/or stiffer penalties.

EDUCATE —make sure you understand each fee and which ones have more play. Often “lender’s fees,” which can include loan-origination, administrative costs, wire-transfer, mortgage insurance application fee, among others, are the most negotiable. Third-party fees, fees that are passed through from another service provider to you, are less likely to be negotiable.

All experts agree, one of the best things you can do when applying for a mortgage is to request a Good Faith Estimate (GFE) from at least three different lenders. GFEs are a written estimate produced by lenders estimating all anticipated closing costs. Lenders are required by law to provide as accurate a GFE as possible to the inquiring borrower within three days after receiving a mortgage application.

For more tips on closing costs, visit these resources:

Zillow.com: Curbing Closing Costs and Understanding Mortgage Fees and Closing Costs
SayEducate.com: How to Reduce Your Closing Costs
BankRate.com: Is no-closing-cost mortgage for you?
Real Estate on MSN.com: 2011 closing costs survey: Which states have the highest, the lowest?

Mortgage Rates Continue To Hover At Record Lows

2011-10-03T06:37:00.001-07:00

For qualified buyers, fixed and adjustable mortgages are more attractive than ever

RealtyTimes reported that Freddie Mac’s weekly mortgage survey, the first since the Fed’s Operation Twist announcement last week, found the average rate for conventional 30-year fixed mortgages to be at an all-time low of 4.01 percent.

As Ed Ferrara pointed out in RealtyTimes, these low rates are a reflection of the slow pace of the economic recovery. Nonetheless, this still offers home buyers in the position to buy (and borrow) an expanded opportunity to take advantage of the rare double whammy combination of low rates and low home prices.

FHA mortgage rates, which are ideal for borrowers whose credit is not the best, remain slightly higher than conforming mortgage rates. Given the easier credit qualifying, along with more inclusive policies regarding using approved gifts, housing grants and bonds for the transaction, these mortgages have been on the rise.

HSH.com’sweekly Mortgage Rate Radar puts the average rate for 30-year fixed-rate mortgages at 4.13 percent. Keith Gumbinger, HSH.com’s vice president, noted that while the lower rates may help spur some additional economic growth,

“if the programs are successful, the economy will begin to grow more strongly, and that would tend to firm up interest rates over time. As such, the lowest mortgage rates as a result of the Fed program are likely to come sooner than later.”

The low rates seem to be spurring increased refinancing activity, but not yet having the hoped-for impact on purchase loans. Inman News reports that the Mortgage Bankers Association’s weekly survey shows refinancing requests up 11.2 percent from the week ending September 16^th to the following week. Demand for new purchase loans rose 2.6 percent from the previous week, to reach about the same level as the same time last year.

Fed Announces Operation Twist

2011-09-26T09:13:00.001-07:00

New plan focuses on mortgage rates; experts’ response is mixed

After a two-day closed door policy meeting last week, the Federal Reserve announced its latest effort to stimulate the economy: “Operation Twist.”

The crux of the plan is to put downward pressure on long-term interest rates by shifting $400 billion from short term Treasury holdings to longer term Treasuries.

Writing for MarketWatch, David Weidner explains that driving long-term interest rates even lower than they have been could help banks by increasing financing activity and generating more fees and transactions. Moreover, he adds, “many homeowners on the edge of being underwater on their home loans would have an opportunity to cut their housing costs. What the banks lose in profit margins — they are currently borrowing for nearly nothing and lending for 4% or more — would potentially be offset by fewer bad loans.”

Economic and housing industry experts are not convinced the outcome is going to turn out to be what the Fed expects and wants it to be. Interviewed for an article in Forbes Magazine, Steve Blitz, senior economist at ITG Investment Research, said that “borrowing is about confidence. If I’m uncertain about growth in my income, I’m not going to go get a mortgage.”

At the same time, as noted in an article on Zacks,

“While all eyes remained fixed on the Federal Reserve’s announcement, data about a surge in the existing-home sales in August was hardly factored in. According to the National Association of Realtors: “Total existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 7.7 percent to a seasonally adjusted annual rate of 5.03 million in August from an upwardly revised 4.67 million in July, and are 18.6 percent higher than the 4.24 million unit level in August 2010.”

Zacks’ article concludes with Lawrence Yun, NAR chief economist, observing that although some of the upswing in existing-home sales in August could be attributed to delayed sales from earlier in the year, “favorable affordability conditions and rising rents are underlying motivations.”

REAL ESTATE INVESTING - OPPORTUNITIES & TAXING MATTERS

2011-09-20T11:11:00.000-07:00

Hi Everyone I'm privileged to be jointly presenting a real estate investing seminar with Michael Blanchard CPA of Johnson-Glaze & Co., P.C. This should be a time chock full of information about how you can take advantage of this real estate market and the investment opportunities. Topics will include an update of the Salem real estate market, evaluating properties and deal considerations, managing taxes, and more. Please consider joining us........it's Free!

WHEN: September 28th, 2011 6:30 - 8:00 pm (doors open at 6:00pm)

WHERE: Best Western Mill Creek Inn (Across from Costco, off Hawthorne)
3125 Ryan Drive SE Salem, OR

WHO: RSVP PLEASE TO Michael Blanchard by telephone or email:
503-390-7880
michael@johnsonglaze.com

Can't wait to see you there!

NAR Offers Recommendations to Federal Agencies

2011-09-19T07:48:00.001-07:00

A three prong approach to helping the housing market recover

In a recent article, the Associated Press reported that RealtyTrac Inc.’s latest data show bank actions against defaulting mortgage holders rose 33 percent in August from the previous month. As the existing and future inventory of foreclosed upon, or real estate owned (REO), properties continues to loom over the housing market, the National Association of Realtors (NAR) issued a letter to federal agencies urging more backing for loan modification programs, as well as lending initiatives and short sale support.

Responding to a request for input from the U.S. Department of Housing and Urban Development, the Federal Housing Finance Agency and the U.S. Department of the Treasury, NAR sent a letter strongly advocating that the government work to expand financing opportunities. NAR outlined three major areas it feels would have the most and best impact on the housing market:

Providing financing opportunities to qualified borrowers — to both relieve the current REO inventory and help forestall adding to the inventory.
Strengthening pre-foreclosure programs such as loan modification and short sales).
Overseeing and encouraging the disposition of REO inventory — utiliizing local expertise (e.g., contractors, real estate brokerages, professional property managers) as needed.

While stressing that financing should be provided to qualified homebuyers according to strong underwriting guidelines, the letter pointed out that private capital supporting the mortgage market has all but disappeared in the last three years — and that the lack of financing opportunities powers lowering home values, which increases the volume of upside-down mortgages and thus the number of homeowners facing default and foreclosure.

Is A Low Appraisal Putting a Spoke in Your Deal?

2011-09-12T06:29:00.001-07:00

5 tips from the experts to help keep your transaction alive

A recent article from RIS Media discusses the increasing percentage of real estate deals that are getting snagged when the appraisal comes in lower than expected. According to the article, this past June and July alone saw 16 percent of real estate professionals reporting a sale cancellation as a result of low appraisals.

What can you do?

1. Negotiate with the seller to lower the price — clearly the simplest solution, though not always the easiest. The earlier in the transaction you address this, the more leverage you may have. Consider that this summer the average home sale took 88 days. Your seller may be willing to balance time against dollars.

2. Ask the seller to carry a second mortgage for the difference — this solution means that the buyer incurs more debt, although it doesn’t cost the seller any more.

3. Do your research — do you have any reason to contest the appraisal? Check the appraisal management company and specific appraiser’s credentials. Find out what comparables were used and don’t be shy about asking to see a list of recent comparable sales that justify the agreed-upon sale price.

4. Ask for a new appraisal — if your research uncovers some doubt or discrepancy, ask the lender to conduct a second appraisal. You might be charged for it, but if your research is convincing enough to you to think one is warranted, it might be worth the money.

5. Order your own, independent appraisal — this can go either way, as the bank will most likely ask the original appraiser to say whether they agree or not with your new one. If they don’t agree, the bank could request another, third, appraisal, or just reject yours altogether. On the other hand, if they agree with your new appraisal and the disputed factors you present, the original appraisal might be adjusted.

For more information, read these articles:

Weak Appraisals Hamper Home Sales, Experts Say (Realtor Mag)
Five Ways to Fight a Low Appraisal (RIS Media)
Low Appraisal Killing a Deal? Here’s What to Do (Realtor Mag)

Housing Market Once Again Regional

2011-09-05T09:48:00.001-07:00

Mixed recovery signals a return to localized shifts and trends

The S&P/Case Shiller home-price index, released last Tuesday, showed a 3.6 percent increase in home prices from the first quarter of this year to the second. According to the index, however, the average home price year over year dropped 5.9 percent for the first six months of this year compared with last year.

Average home prices are performing differently across the country — The S&P/Case-Shiller index tracks 20 “MSAs” (metropolitan statistical areas), of which, according to David M. Blitzer, Chairman of the Index Committee at S&P Indices, “eight bottomed in 2009 and have remained above their lows. These include all the California cities plus Dallas, Denver and Washington DC, all relatively strong markets. At the other extreme, those which set new lows in 2011 include the four Sunbelt cities – Las Vegas, Miami, Phoenix and Tampa – as well as the weakest of all, Detroit.”

Mortgage rates continue to stay at record lows for the entire country — Last Thursday, Freddie Mac released the results of its Primary Mortgage Market Survey® (PMMS®), which showed that the average rate for a 30-year fixed mortgage hit an all-time low (at least as far back as 1971) in August of 4.15 percent.

Demand for purchase loans remains down — The Mortgage Bankers Association revealed in a separate survey that, despite record low mortgage rates, demand for purchase loans remains lower than it has been since the 1990s.

Blitzer also noted that “these shifts suggest that we are back to regional housing markets, rather than a national housing market where everything rose and fell together.” In this buyer’s market, that means paying more attention to local sale price trends as cities and areas rebound differently around the country.

WHO CAN YOU TRUST ANYMORE?

2011-08-30T15:08:00.000-07:00

Renewed trust for tough times

Does it feel like trust is one of the major casualties of the economic meltdown of 2008 – followed by the “Great Recession,” the “Jobless Recovery” and now the threat of a “Double Dip Recession?”

Weren’t we assured that home values were destined to go up and up and up?

There have been lots of promises that help is on the way—and lots of warnings of scams and schemes that have only served to confuse the matter. So where’s a homeowner who’s underwater or overleveraged to turn?

Here’s the bottom line: the choices that homeowners make when they feel they are at the end of their rope will have ramifications for years to come on their ability to qualify for credit, their job prospects, their security clearance and their overall finances. When a family’s financial trajectory is rapidly heading in a negative direction, there’s no substitute for the helping hand of a knowledgeable expert who has the integrity, the experience and the training to reverse the course—someone who is tapped into regulatory initiatives and can separate fact from fiction.

It is my mission to serve as a credible source of information and perspective to homeowners who have found themselves in a tough situation and need help sorting through their options. That’s why I sought out the Certified Distressed Property (CDPE) designation—the most renowned and recognized credential in the distressed property field, and it’s why I continue to stay on top of regulatory and industry developments that impact options available to homeowners who are struggling with their current financial situations.

My message to homeowners who do not know where to turn: there is hope. Foreclosure is not inevitable and neither the government nor your bank wants to see that happen. No one expected to find themselves on the brink of foreclosure, but I have worked with countless clients who have managed to turn their financial trajectory around and get on a path of financial recovery.

It CAN be done! And it would be my privilege to help.

MORE MONTH THAN MONEY?

2011-08-08T16:30:00.000-07:00

Handling the Stress of an Unaffordable Mortgage Payment

Whenever I research the latest foreclosure and distressed property statistics, the sheer number of Americans facing the stress of losing their homes amazes me. It is my goal to help as many homeowners I can either stay in their homes or relieve the burden of their mortgages. Knowing that there are so many that need my help is a driving force for me to continue doing what I do.

In fact, I just released another report that I’ve made available on my website today. It explains the CDPE designation and lists 10 options that homeowners can take advantage of to relieve the stress that comes with owing their mortgage lenders more money than they can afford to pay. You can find it at www.amyhelps.info.

The report also draws a contrast between short sales and foreclosures. Unfortunately, there’s a growing trend of “strategic defaulters” who think it’s smart to let their home go into foreclosure. As any one who follows this blog knows, there is nothing strategic about foreclosure; it’s one of the most long-lasting, negative financial challenges you can go through.

I’m excited about acting as a resource for more homeowners who have questions about what they should do. As always, if you know homeowners who may need my help, have them contact me immediately! Together, we can put them back on the path to financial stability.

Contentment - What's That?

2011-08-03T09:29:00.000-07:00

As many of you know, I am a huge Dave Ramsey fan. I was a Financial Peace University leader when he first brought out the program and I currently serve as one of his Endorsed Local Providers. No one has so consistently taught debt-free living like Dave Ramsey. But not only does he teach it, he lives it out.

Our entire office was laughing in the Spring when we were making reservations on-line to see him live in Portland. I was buying tickets for my whole team, so it was an investment I wanted as a tax write-off. As you would expect, I normally use my business credit card for those kinds of things. We burst into much raucous roaring laughter when Dave's system would not accept my card - it would only take a Debit Card! Now that's integrity living.

Dave recently started a movement called the Great Recovery. You can access information about it at www.greatrecovery.com. Included is a video from his kick off event that I would strongly encourage you to watch. In these times, all of us need Dave's positive kick in the pahtootie! I warn you; prepare yourself to be inspired.

In the meantime, as a person participating in the Great Recovery, I received this email from Dave, and I wanted to share it with you.

Recovering Contentment
Becoming content and stressing less.

It's tough trying to keep up with the neighbors. They have a newer car and a brand new SUV. They have kids in the best private school in the state.

The only time you see them is when they're talking to the landscaper or carrying bags in both hands into the house from their daily trip to the mall. You half-heartedly smile, wave and glance back at your 10 year-old car that needs a few repairs and a good washing.

"We are holding our own GREAT RECOVERY in the small town of Morrisville, Missouri. I am the Class Coordinator and we have 50 attendees in the class!"

—Troy from Facebook

Appearances are easy to maintain, until the truth catches up. Ken and Barbie next door with the "perfect" life are in debt up to their eyeballs. Ken is stressed beyond belief at work, trying to close every deal because he needs each one of them to make his payments. And Barbie's migraines are back because she's losing the fight to keep up with the other private school moms, who are fighting to keep up with their neighbors.

Peace is a beautiful thing. Resting in who we are and what we have is worth far more than we imagine. How can we be content? How can we rest? Trust. If we trust that God loves us completely and unconditionally, and He'll provide no matter what, we can be content. Consider the lilies and the birds. Remember?

"Then he said to them, 'Watch out! Be on your guard against all kinds of greed; life does not consist in an abundance of possessions.'"

— Luke 12:15

In Hebrews 13:5, we read this. "Let your conduct be without covetousness; be content with such things as you have. For He Himself has said, 'I will never leave you nor forsake you.'" He won't leave us! We can be content. We have money, but we don't love it. It doesn't have us. The kids aren't being tortured taking their PB&J to lunch and wearing hand-me-downs from their cousins. And we're not really missing anything at the theater anyway. Let's approach life like Paul.

Philippians 4:11-12
"Not that I speak in regard to need, for I have learned in whatever state I am, to be content: I know how to be abased, and I know how to abound. Everywhere and in all things I have learned both to be full and to be hungry, both to abound and to suffer need."

What Now?
Are you trying to keep up with the neighbors? If so, why?
Are you making a payment on something you can get rid of?
Are you actively trying to educate yourself on how to get out of debt?

If you haven't committed to learning how to handle money God's way, find an FPU class near you.

To Your Contentment,
Amy

2011-07-20T17:07:00.000-07:00

Handling the Stress of an Unaffordable Mortgage Payment

2011-04-22T15:35:00.000-07:00

I'll admit it - I love everything about Easter!

I attribute much of this to my Lutheran background and all the beautiful events that we are reminded of during the Lenten season.

I love Ash Wednesday and the reminder of how much we need a savior.

I used (!) to love the 40 days of Lent, and keeping up with my Catholic friends who were "giving up" something for Lent. Chocolate was always the biggie among us. What were we thinking?!?

I love Palm Sunday and the pagentry of Christ riding triumphantly into the City. I love receiving my palm and putting it in our home behind the mirror. It reminds me all year long of Christ our King.

I love Holy Wednesday and thinking about Jesus praying in the Garden of Gethsemane. How many of us have let a friend down in a moment of need? And even so, our Savior shows grace, yet again, to his 3 friends who chose to nap while he needed their prayers.

I love Maunday Thursday, Christ's last meal with his dearest friends. What must they have talked about? What events of the last three years were they reliving? How did they encourage one another about the events that were to unfold? Was the heart of Judas racing? Did he have any second thoughts? I wonder on Maunday Thursday.

I love the austerity of Good Friday in our church . There's an absolutely barren alter; no flowers, no gold adornments, no choir. Just the cross draped in black cloth, a crown of thorns hanging from the center post. There is an erie silence that compells my prayers for forgiveness.

And finally Easter Sunday. Outside, the church cross is covered in bright flowers. Kids are running everywhere. Inside the sanctuary is filled with Easter Lillies and bouquets of every kind of white flower you could think of. The cross....oh the cross, is now gloriously adorned in the purest white stole.....lillies surrounding its base. Jesus is alive!

I love everything about Easter - especially Jesus.

Christ is Risen.......He is risen indeed.

Happy Easter.

"DON'T TAKE MY WORD FOR IT!"

2011-04-07T13:37:00.000-07:00

Some weeks are just more challenging in real estate. Last week was one of those weeks for me!

We've been in this adjusting real estate market for nearly four years now, but all of a sudden I've had a rash of sellers who don't want to hear the realities of the market.

So here's the low-down!

Homes are selling! There seems to be a pervasive myth that homes aren't selling. Well, they are. But it might not be at the price you had in mind. So strap up if you need to sell.

And that's my next subject: the need to sell. This, ladies and gentlemen, is not the market of 2004, 2005, 2006 or even 2007. We will never see that again in our lifetime. What this market and this economy is requiring from all of us is a paradigm shift from our "wants" to our "needs," especially in real estate. If you don't NEED to sell, then don't! It's no fun having your house clean all the time, strangers walking through it and waiting for an offer that just won't come if you're over priced. Plus, you probably have neighbors that do NEED to sell. Excess inventory doesn't help anyone.

What will help all of us is if we can take a deep breath and accept our new reality. This market will not be turning around for a long time. When this down-turn began four years ago, I was accused of being "negative" because I suggested it wouldn't be over by next spring! Well here we are, 4 years later, and now I get emails that go something like this: "we wish we had listened to you two years ago about the housing market." Dang, I wish they had too.

And while I wish I could report to you that we are near the bottom, I can't. We are counseling our clients to look 10 - 15 years out as they consider their real estate options. As recently as March my viewpoint was backed up by the owner of RE/Max International when he stated in his address to the RE/Max International Convention, that "we aren't even half way through this cycle in the market."

Cue: Groan loudly. I know, I know. But wouldn't you really rather know so you can plan accordingly - or change your plans if you need to??? Isn't that what a real professional does for you, is show you what's coming so you can get a jump on it? Wait, let me guess.....you don't want to believe me again. Heck, I don't want to believe myself.

So since I know, there's a lot of knashing of teeth right now, I thought I'd give you a link from the Distressed News Service, so you don't have to take my word for it. Once you've read the article (clear to the end!), please feel free to call me with any questions. There are many opportunities in real estate......you just have to know where they've shifted too!

HOME PRICES TO DOUBLE DIP IN THE WEST

Ciao for Now!

What's Up Pussycat?

2011-03-21T16:33:00.000-07:00

There's an old song from the 60's (I think....if my memory hasn't failed me!), and it seems to describe our current real estate market and the reporting that's being done on it lately.

"What's up Pussycat? Whoa, ah, whoa ah, Whoa."

My clients tell me often how confusing the market is right now; headlines saying sales are up, but there are "For Sale" signs everywhere, in every neighborhood.

Take a look at this recent article in the REALTOR magazine. It really explains what's happening in our marketplace, and from a source who would want to paint a rosie picture if they could.

Existing Home Sales Fall in February

There are many factors affecting the stabilization of the real estate market. According to Dave Leniger, Co-Founder of RE/Max International, we're in for a see-saw recovery; some periods up, followed by some periods down. And in his opinion, were not even half way through this declining market. (I know it's a downer, but how can you make good financial decisions if you don't know the truth????)

We're trying to keep up on all the variables affecting the market, so don't hesitate to call or email us to get the skinny, 'cause we most likely will be chasing this cat for a while.

Ciao for now.

Will You Shift Your American Dream?

2011-03-02T09:10:00.000-08:00

Secretary of the Treasury, Timothy Geithner has said that the government played a role in bringing down the housing market. But what's really interesting is that the reform that's being proposed will require a "shift of what many believe is the American Dream."

Click on this link to read more:

Government Role in Bringing Down Housing Market

What are your thoughts? Do you think, as a homeowner or future homebuyer that you should be shifting your American Dream?

Homeowners Defrauded

2011-02-24T08:59:00.000-08:00

As a little girl, my Mom used to preach to me that "crime does not pay." To take it even a step further, she said, "if you're gonna be a criminal, you better make it big. Don't spend your time in jail over something small. A million bucks would be a good start!" Now I don't want you to think my Mother (one of the straightest arrows I ever knew) was advocating for a life of crime! Quite the opposite....I believe in those Happy Days of the '60's she was trying to set the bar so high it just looked unattainable!

Well it seems she should have set that bar higher. In this article it seems some criminals in the mortgage market were able to break through my Mother's barrier and defraud home buyers and distressed property owners of millions of dollars. Take a read:

FBI Cracks Down on Mortgage Fraud

These are interesting times in the real estate market, and Salem, OR real estate isn't immune from these sorts of scams. Don't ever hesitate to call our office if you're a first time homebuyer or a current homeowner with any question you might have about real estate or mortgage offers.

Enjoy the snow!

Loan Modifications Not Working - Surprise!

2011-01-27T09:18:00.000-08:00

This comes as no surprise in our office that Loan Modifications have had an anemic impact on this market. There's lots of reasons; far too many for this blog report. But needless to say, short sales are another alternative. Please read the article, and feel free to call me for further details.

http://www.dsnews.com/articles/tarp-inspector-generals-report-says-hamp-is-failing-2011-01-26

For more information on real estate in the Salem, OR area, visit my website at www.amymcleod.net

TITLE INSURANCE IS SOOOO BORING...OR NOT?

2010-11-03T16:06:00.000-07:00

Good Grief - there's so much about real estate in the news these days, it's hard to keep up. Lots of inventory to pick from, historically low interest rates, foreclosures, short sales, hanky-panky at the banks during foreclosure proceedings, and on and on and on.

So, why, you say, would Amy need to talk about something so boring as title insurance. Who even knows, really, what it is or does? I think I signed something the last time we closed on a loan, but there was a pile of papers 4" thick. Who knows what all was in those documents?

EXACTLY!

But these days my friends, you need to know. (you really needed to know every time you signed, but hey - we all trusted. And now look look at the pickle we're in!)

In Oregon, our sellers customarily provide the new buyer with a Warranty Deed. The long and the short of it is that this is the most common form of Deed. This deed conveys title, and covenants that the Seller has the right to sell and has good title free from encumbrances except as stated. Title insurance, that is purchased at the time of closing, is just that - an insurance that's there as a safety net for the buyer in case there is some sort of mistake and the title is transferred with an encumbrance discovered after closing. It's a great system.

So - what's the big deal? The big deal is that many of you are contemplating a purchase of some of this great priced foreclosure property. The price is right, the interest is good, and lets face it, not all of them are trashed. Sounds like an opportunity.....and it is. There's just one small catch.........

That small catch has to do with the lenders selling the foreclosed property. Many of them use their own Addendum to the real estate sales contract. Contained in those addendum's is language often expressing that the seller is conveying the title to the buyer by means of a Special or Limited Warranty Deed, Quit Claim Deed or Bargain and Sale Deed. So??????

Each of those deeds has their own limitations on how much the "seller/lender" is representing with respect to how clear the title is. As an example; the Special Warranty Deed promises that the Seller/Lender will defend the title to the property back to the acts of the Seller only! That means the Lender says "I know this title is clear for as long as I've held it since the foreclosure." WOW - there could have been a lot going on prior to that short period of time!

Does this mean you should be afraid to buy a foreclosed property? Not at all. But it does mean you need to take precautions.

Deal with a reputable Realtor who reads and understands the possible impact of the addendum's you might receive from a Lender/Seller. Insist on a reputable title company or escrow attorney to handle the search of title. Be sure that there is title insurance in place. If it's not paid for by the seller, then you as the buyer should buy it for yourself. And seek the advice of an attorney if there's any confusion on this issue, or any other issue in a real estate transaction.

Hope that gives you an idea about why title insurance certainly is not boring. In this crazy new real estate world we're in - we've all got to be better informed and more vigilant about protecting our interests as we proceed through any transaction.

Call/email/or Facebook me if you have questions. Now go make lemonaide out of all those lemons!

P.S.: Thanks Ted :)

WRONGFUL FORECLOSURES - WHO GOT IT RIGHT?

2010-10-22T14:31:00.000-07:00

We've been working daily in our office, over the last two years, to try and understand what keeps happening in the real estate/mortgage market. It seems as if weekly there's some new crisis, issue or program that we have to unpack and try and understand for the benefit of our clients.

The most recent bomb came in the form of assertions that there were "robo-signers" signing literally hundreds of foreclosure documents without benefit of review. Oh that that was the real problem. Having a little inside information on what the real issue was, I watched with interest as the BIG mainstream media outlets played this story.

And then to my delight, my local news publisher asked if he and I and Shel Perrigan, a Loan Examiner, could sit down and discuss what was going on in the mortgage market now. Could we ever!

The results of that meeting led our publisher, Lydon Zaitz to do an OpEd piece that actually captures exactly what the problem is. I've included the link so you can read his very direct and clear piece on the foreclosure mess.

As this story has been breaking, I keep hearing over and over, "well they didn't make their payments anyway, so who's really concerned about a robo-signer, or whether they fully reviewed the documents or not." Hmmmmmm.......

Once you really know the in's and out's of what has been happening, there's reason to be concerned. Each of us are just one administrative mistake away from a potential foreclosure (although admittedly that is not the bulk of the problem). But more than that, why have any rules? Why have any contracts (which is what a mortgage is), if any violation by one party means the other party can violate terms of the contract at will.

This is a serious issue. So far, Oregon's Attorney General has taken a "wait and see" position. I hope after reading Lydon's OpEd you might be compelled to contact your State Representative or the Attorney General's office and see what they might do now to protect the rights of Oregonians.

Beyond that, we will get through these times. I'm reminded of the stock we all come from everytime I look at the Pioneer on top of our Capital. We're tougher than all this! Now here's the piece:

http://keizertimes.com/?p=3465

Avoid Foreclosure in Salem, OR

2010-10-19T16:30:00.000-07:00

Short sales provide better solution for families and communities

HAFA is a government-sponsored initiative overseen by the U.S. Treasury Department and administered by Fannie Mae. It assists all Home Affordable Modification Program (HAMP)-eligible homeowners in avoiding foreclosure, specifically through short sales or deeds-in-lieu of foreclosure.

“This is the first government program that gives incentives for short sales and lays down the process for short sales,” Charfen said. “More importantly, HAFA has brought more attention to short sales and that means banks, REALTORS® and the government are paying attention to short sales.”

REALTORS® should see the benefits of HAFA. “Many times REALTORS® spent time educating the consumer with little or no support. With the government stepping forward on this issue, it puts short sales in the forefront,” he said. “We’re already seeing banks that have added staff to process short sales and they’re stepping up the process so it doesn’t take as long.

“Short sales are so much more beneficial than a foreclosure. Previously we saw seven out of 10 properties in foreclosure were never listed,” Charfen added. “With a short sale, it offers a dignified solution to a family in financial crisis. You see less deterioration in the homes, less property values falling and it helps the overall community. With every foreclosure in a community, we can see property values for surrounding properties decline as much as nine percent.”

“HAFA has been a long time in coming,” he continued. “It’s been a huge collaborative effort with the government and many other organizations. There is no silver bullet to solving the foreclosure crisis and there’s no question that we’re going to continue to see increases in defaults. HAFA offers the real estate market a chance to move forward and stop the decline in property values.”

-Originally published on PAR's Just Listed
http://www.parjustlisted.com/archives/4214?utm_medium=email&utm_campaign=de036dde76-RSS_EMAIL_CAMPAIGN&utm_source=PAR+Just+Listed+Daily+E-News#utm_source=feed&utm_medium=feed&utm_campaign=feed

WHAT? - 27.2% Drop in House Sales. Who Knew?

2010-08-25T10:07:00.000-07:00

Don't fall over in shock. 27.2% drop in housing sales and me blogging twice in one week, unheard of! But such shocking news being blasted everywhere requires this response!

Let me just say this, "Who Knew?" And the answer is, we did.

I'm just going to tell you I need to blow off some steam after listening to all the news reports yesterday. These same "reporters" were telling everyone in April, May and June that sales had made record increases over the previous year. As they were speaking then, I was yelling at my TV, "the 1st Time Home Buyer Credit stupid!" But did anyone listen. No! Especially not sellers.

Sellers heard the news and assumed the market was back. And for a moment, for some, it was. Unfortunately when most of us have visions of the market being back, it's at pre-2007 crash levels. The reality was, reporting those increases "over the previous year" referred to a market that was already way down in 2009.

So where are we today? While 27.2% sounds awful, it is simply a reflection of the 1st Time Home Buyer Credit ending. It's a reflection of a real estate market that is trying to normalize after being tampered with - again. It's a reflection of a real estate market that is often quieter in July because of families finishing up sports programs and taking vacations. And it's a reflection of a real estate market that is going to continue to decline a bit, until we clear out the distressed property inventory and improve the job picture.

And where does this leave you my friend? If you're a buyer, buy! You have 4% interest rates, home values that have nearly rolled back to pre-2000 pricing and inventory abounds. We even found that buyers buying now may do better on pricing than the value of the $8,000 tax credit. So what are you waiting for???? There is one caveat to buying, though. Buy with plans to be content in your home for about 12 - 15 years. No more musical houses!

If you're a seller, sell quickly. This market is projected to continue it's decline through 2012. Time is your enemy. To my Boomer friends, consider moving up your retirement plans. This is going to be a long slow recovery. Losing another chunk of your housing value, and then trying to down size in 5 - 10 years might not be the best plan. Call for my insights. My honey and I have been having long discussions over this very topic. Do you really want to vacuum the 2400sqft house when you're 65 and 70? How 'bout the weed-picking on the 1/4 ac lot? Think about it!

Think about it, you say. Let's be honest, these are confusing times. Most of us have never lived through an economic period like this. So when you hear this kind of news, CALL and get some good interpretation, and most of all, context for it. Your situation may call for action, or it may call for you to sit still. Either way, we're here as your Housing Counselors.

Lastly, don't be afraid. This housing market will correct itself when the job market improves. So lets put all our efforts and emotion into banging the drum on the legislative steps about JOBS. That's the key to cleaning up this mess.

Now - lets go have a glass of cyber-wine and take a deep breath!

ONLY A CRAZY PERSON WOULD BUY IN THIS MARKET!

2010-08-23T08:33:00.000-07:00

WOW - it must have been summer, because time certainly got away from this amateur blogger!

That being said, what is going on in the real estate market now?? Everyday a person picks up a paper, listens to a news report or surfs the internet and finds nothing but confusion. Let me just say, it's not as confusing as it might seem. Most of the stories you hear or read carry little or no context, and certainly don't come from a local perspective.

Here's an example from just the past couple of months. Beginning in April 2010, reports were that sales were up. May, sales were up and, suprise, June sales were really up. Well no duh - it was the rush to close sales for the First Time Home Buyer Credit. Now, reports are that sales are down. Again I say, "Duh." First Time Home Buyer Credit is over!

So what should a buyer do? The burning question on everyone's mind is, "Should I buy now?" And let me respond ever so clearly, "YES!"

Well that sounds just crazy, doesn't it? And I have to be honest. I was having a hard time knowing whether to advise buyers to buy now or wait. That was, until I heard from an economist, that this is exactly the time you should be buying. Sound Crazy? Read further.

Only about once every generation (about every 35 years) does the gas literally go out of real estate values. Now I'm not talking a little 6 month downturn. I'm talking about an all out crash. In my most recent memory, this type of event has occurred during the Great Depression, In the late 70's/early 80's (remember 18% interest only - I do), and then now.

That gas going out is when your Aunt Tilly bought her home in San Diego for $9,000 and can now sell it for $350,000. That gas going out is when my Honey and I bought our first house in 1982 for $40,000 and it's now worth $200,000.

So what do you think this gas-out will bring? Combine these prices with a 4.5% interest rate and you've hit the jackpot baby!

But there's one little catch and this is where great Realtor's can help you with your buying decisions. That catch is the same one I've talked about before - changing your paradigm about what your house is. This home is a place for peaceful enjoyment, privacy and a place to build memories...for a VERY long time (read 15 - 20 years). It is no longer your ATM or the family's 3rd income earner. Contentment needs to reign supreme in your home.

Hope that helps. And now lets bring on the Fall!

2010-06-24T14:50:00.000-07:00

GRANDMA MUST HAVE SPOKEN TO FANNIE MAE!

It's been a few weeks, but in my last blog I told you my Grandmother would have rolled over in her grave while 60 Minutes was doing their piece on strategic defaults.

You remember, that was the little piece of journalism telling the world how financially solvent couples were simply deciding not to pay their mortgages because the new neighbors got the same houses for much less. The "Why Should I Have to...." cry was echoing off my vaulted ceiling out of the television speakers.

Well, apparently Fannie Mae, one of the larger loan insurers, doesn't much like the idea of strategic defaults either.

Fannie Mae announced policy changes on Wednesday that will have a dramatic effect on the ability of borrowers who have defaulted on their loans to receive future Fannie Mae insured loans - and they insure a bunch.

Under the changes, a defaulting borrower who has the ability to pay, OR who did not complete a work-out alternative in good faith (read Loan Modification, Short Sale or Deed in Lieu of Foreclosure) will be ineligible for a new Fannie Mae backed mortgage for a period of SEVEN (yes, I said seven) YEARS!

That's a long time. Hmmm, lets see; seven years ago I had children at home, who were still a ways away from High School graduation (now they're both gone and one is married!). Seven years ago was a different decade. Seven years ago was a different President and a different economy. Do you get my drift?

So what's Fannie Mae's goal here? Read further....."We're taking these steps to highlight the importance of working with your servicer. Walking away from a mortgage is bad for borrowers, bad for communities, and our approach is to deter the disturbing trend toward strategic defaulting." says Terence Edwards, Executive Vice President for Credit Portfolio Management (obviously someone important I guess).

And there you have it. What I would refer to as the goverment's version of Grandma's wooden spoon. I'm not out there with some folks who are pointing the finger at everyone in trouble on their mortgage, declaring they were foolish to take these risky loans. Lets be honest. This market has tanked in our area about 25%. So unless you have 30 - 35% in equity, you yourself are one life event away from being in the same boat.

That being said - it makes me sick when people are gaming the system for personal gain at great expense to the rest of the community - and that's what these strategic defaulters are doing. (May I just remind everyone that when you signed your mortgage contract you did not say you would pay UNLESS the house dropped in value? You said you'd pay until the obligation was met or until you sold the property......'member?????)

So friends, lets all do our part to help right this real estate boat. We all have a stake in it. To preserve the right to future borrowing, under reasonable rate and terms, protect yourself if you find defaulting on a mortgage becomes your reality. Contact your lender (but check what they tell you with other local advisors), contact a Realtor who has the CDPE or CDPD designation, contact Consumer Credit Counseling for help with a loan modification (it's free). All these people can explain your options....those that will keep as many possibilities open to you in the future.

But most of all, don't expect to bank the mortgage payment while "strategically" defaulting on your loan. It could cost you a lot more than just a low credit score.

DID I JUST HEAR THAT ON 60 MINUTES?

2010-05-12T15:12:00.000-07:00

Did you just see what I saw on 60 Minutes Sunday night? If you didn't, then here's the link. It's really worth 12 minutes of your life to see this clip titled "MORTGAGES, WALKING AWAY": http://www.cbsnews.com/video/watch/?id=6470184n

My mouth was hanging open after watching the report. I don't even know what to say, except that this clip speaks to so many things that are going on in our culture right now.

There is no question that there were some shady mortgage brokers, some shady Realtors, some borrowers who pushed beyond their limits during the building of the real estate bubble. But it wasn't everyone.

And now our real estate market is in such a place that people who made responsible choices are often just one life event away from dealing with a house that's not worth what was paid for it. But does that mean you just walk away?

I say no. There are so many options. Renting, loan modifications, short sales, and then finally, foreclosure....to name a few. But what this report does, is make celebrity of a shoulder shrug that will affect us all.

Two couples, who for no other reason than they don't want to pay for a house that's now overpriced, are choosing a strategic default.

A young married couple, still employed, who see no sense in paying on a house that's worth less than what they paid for it and a 50ish couple who's house has lost about 75% of its value. They don't see how they'll ever recover the equity in their lifetime.

Both couple's in the piece seem to have forgotten there are real people behind those "evil" banks. People who loaned their life savings, their retirement portfolios and their investments, so that most of us could have a home far better than our parents or grandparents had.

And although the walk-away is easy, and the featured young couple's credit will be repaired in 7 - 10 years, I wonder if we'll have investors, at reasonable interest rates, who will provide the kind of cash we've become accustom to in the mortgage market? Would you put your stash into mortgage backed securities with a generation that has the attitude toward a contractual agreement that was displayed in this piece?

And don't think I'm letting the 50 year olds off either. I'm not. We all seem to have forgotten that a mortgage is a contract to pay....and there is no clause that says, "but only if the market continues to appreciate."

Oh, and don't even get me started about the so called "counselors" who have made a business of helping people get over their fear and guilt about walking away. Really?

I've said many times in the last 3 years, how fortunate I felt, to have had a Grandmother who lived through the Depression, and at the same time was a storyteller. I heard many stories of how that generation survived our last financial turmoil. And the lesson? They survived. Wait, scratch that thought. THEY THRIVED! My Grandmother lived on to own property again, to build a successful business (when women didn't really do that!), and to enjoy a comfortable retirement. I'm so grateful she passed on her perspective to me. Along with that perspective came the lesson that, "if you are nothing else, be a person of your word."

Too bad both those couples didn't know my Grandma.

Your thoughts?

THE BEST WAY TO ROB A BANK IS TO OWN IT! says Author William K. Black

2010-02-24T10:00:00.000-08:00

From Bill Moyers Journal Page:

The financial industry brought the economy to it's knees, but how did they get away with it? With the nation wondering how to hold the bankers accountable, Bill Moyers sits down with William K. Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980's. In this 30 minute interview, Black offers his analysis of what went wrong and his critique of the bailout.

http://www.pbs.org/moyers/journal/04032009/watch.html

I look forward to your comments and any questions.

Your friend,

Amy

How Serious Is The Foreclosure Issue?

2010-02-18T11:22:00.000-08:00

Foreclosure on your home is an extremely serious issue. Unfortunately, many people do not realize the extent or the severity of this financial nightmare until it is too late. Foreclosure on your home will result in the loss of your rights as the homeowner and also presents many legal challenges.

The foreclosure process on the home begins when a homeowner has neglected to make their required monthly mortgage payments. A homeowner , in most cases, will be delinquent on their mortgage payment anywhere from 90 to 120 days. In today's economic climate, many homeowners are finding it difficult to make their mortgage payment and as a result are facing foreclosure.

Once the homeowner moves beyond 90 or 120 days without curing the delinquency, the mortgage lender will initiate action to legally foreclose on the home. The homeowner will be served with a foreclosure complaint by the court. Once you have been served with the foreclosure complaint your next steps are vital in trying to save your home from foreclosure.

Service of the complaint is often the point at which many homeowners choose to ignore their mortgage lender and the foreclosure action. In most cases, homeowners are unaware that once served with a foreclosure complaint they must respond in order to preserve their legal rights and to enable them to take steps to try to save their home from foreclosure or take the steps to sell it.

In most states, the homeowner has a specified period of time by law to respond to the foreclosure complaint of the mortgage lender. It is highly recommended that you seek legal counsel to understand your legal rights as the homeowner and to explore your alternatives in resolving the foreclosure action.

Lenders, even during the foreclosure process, can work with the homeowner to help them save their home. Your lender will require you to submit information to possibly help you modify your mortgage loan. A loan modification may help you to cure your delinquent payments and may even lower your payments or rate over the life of your loan. There are also government programs that you may qualify for if you are experiencing financial hardship and facing foreclosure.

If you are unable to modify your mortgage loan or qualify for assistance then you have other options to help you avoid foreclosure. You may be faced with the fact that you will need to sell your home. In this case a short sale may be an option. Check with a real estate professional who has received advanced education and certification, like the Certified Distressed Property Expert designation, for your options.

Again, it is vital that you seek legal counsel and keep the lines of communication open with your mortgage lender. Although the lender has begun the process of foreclosure they can still work with you to try and find an alternative if one exists.

If you ignore the foreclosure of your property or are ignorant of the law and your rights you will lose your home. It is crucial to understand the serious nature of foreclosure and take action to save your home and your legal rights.

Don't hesitate to call our office for more information, and referrals to the many professionals who can help.

REALTOR MYTHS - PART 1

2010-02-16T17:05:00.000-08:00

Ya know, everything in real estate has changed. But the one thing that hasn't seemed to change is all the myths around Realtors; how they work (or do they?), what motivates them, or even more sinister - just what are their motivations, AND just how much dad gum money do they really make?

Just when you think you've found out everything you need to know about the "dirty, little secrets agents don't want you to know" from a bazillion of misinformed and, in all fairness, probably well meaning Web sites, here's what you really need to know.... starting with my favorite - - -Realtors are always late!

Out of my Marine Corps training came the lesson; "To be early is to be on time, to be on time is to be late, to be late is unacceptable!" So you can see how I roll !

Every person, whether a client or not, deserves respect. So there's no excuse for habitual tardiness among professionals. I've even picked a Doctor who sees me in his office - ON TIME! (His Dad was a Marine....do you think that changes things?!?)

Respect is providing what is promised. Anytime, we as professionals don't honor that promise, then we've put our own interests above our clients. Not OK.

Agents who don't practice respect, first by honoring your time, are just simply not professionals. Get rid of them. Believe me, there are plenty of us who treat this business as a profession by first giving you the respect you deserve, as evidenced by the honoring of your time.

So, don't make the assumption that all Realtors can't keep time. The Pro's will !

I'll see ya on the other side!

THINKING OF REMODELING?

2010-02-03T13:46:00.000-08:00

If you're like me, it doesn't look like we can escape the projects in our house anymore by moving every couple of years! I'm so disappointed. It sure was a great strategy that worked for over a decade!

But now the smart money is on buying a house for the right reasons; shelter, quiet enjoyment, a place to build family and memories....and after a LONG time - maybe some equity. Wow, how things have changed.

So that LONG time we'll all be spending in our houses, means we need to get better at taking care of them, keeping them updated and making sure they're repaired before things get out of hand.

A good strategy starts with a good Home Inspector. You're probably familiar with the home inspection process, if you've bought a house in the last few years. But did you know it's really important to have your home inspected regularly while you live in it? Ideally you'd have it looked over every year, but for sure have your favorite inspector out at least every 3 -5 years. He'll help identify those things that are starting to cause problems; like moss on the roof, leaking gutters and bushy plants that can easily lead to bigger (read "more expensive") projects if left untouched.

With the inspectors report in hand, you now have your "honey do" list. And that list most likely will include those projects that are perfect for the DIY'er and those that are , well, NOT!

Great home projects are things like pulling back barkdust from your siding (6" of foundation is what the inspector wants to see). Just that little job will keep the critters from snacking on your siding. Purchase vent wells from your favorite home improvement store to keep that barkdust away from the vents and out from under the house.

How 'bout those gutters. Have you cleaned them? Are they draining into a drain pipe or right down the foundation? It's that gutter water that's helping water run into your crawl space - creating unwanted moisture. Find some splash blocks to draw the water away from the foundation while you're at the store as well.

How about that slight shade of green on the roof? The dreaded beginnings of moss. QUICK - get it while you can. That little bugger will be working it's way under the shingles of your roof as quick as it can!

Furnace filters are another often forgotten home maintenance item that leads to BIG dollar costs if ignored. HVAC technicians tell us the filters should be changed every month....and those that aren't are costing you efficiency and money, as well as wear and tear on that very expensive piece of equipment that goes out at the least opportune times! So change that filter!

Lastly, the bushes. Keep those lovelies 6 - 12" off your siding. Rose bushes, rhododendrons, azaelas and any other "woody" bush provides a nice little bridge for those darling carpenter ants and wood boring beetles we all know and love in the Northwest.

So there it is. The short list that starts with a Home Inspector. Give us a call if you need a referral, and then strap on the carpenters belt!

See you on the other side!

2010-01-20T09:07:00.000-08:00

Don't we all wish we had a crystal ball right now. But who's got it? During a recent interview on MSNBC, Robert Schiller of Case-

Schiller said this real estate market is not behaving similar to any past market that we've seen. Great....so now what???

So here's what we know:

We have record low interest rates.....but not forever.

The Feds have stepped up their purchase of Mortgage Backed Securities. In essence, they are the money behind the mortgages being issued. Last week they purchased $14B in MBS, whereas the most recent prior purchases were around $9.5B. But this pot of money will not last much longer.

The Fed now has $113B left of their $1.25T allotted commitment, with the buying program set to wrap up on March 31st. The Fed's purchases have helped home loan rates stay historically low - and although there has been some buzz about an extension of the program, it seems unlikely that will come to fruition.

When the Fed purchases stop, home loan rates will be very susceptible to moving higher - so if you or someone you know is thinking of selling/purchasing or refinancing.....I can't make it any clearer than to say...."Get the Lead Out!" Rumor has it that interest could bounce at least a point to 3 points higher when the Fed's stop providing the mortgage money.

Well so much for Amy's crystal ball. I wish we could see further into the future to know what we're facing....but for now we can only see out about as far as the Spring.

So, don't hesitate to call us if you need help making sense of this, or if you need a referral to a lender. We're here to help with all your real estate needs.

Till next time,

Amy :)

2009 REAL ESTATE REVIEW

2010-01-14T15:32:00.000-08:00

Happy New Year Friends. Were you as glad as I was when 2009 was over? Like all good Americans, though, we always take an opportunity in the New Year to look forward with renewed hope and expectation. And that's the position I'm taking this year.

But before we look forward, lets take a quick review of real estate in the Willamette Valley for 2009.

One bit of good news is that sales basically stabilized from 2008 to 2009. There were 5954 sales in 2008 and 5869 in 2009. That represents a drop of only -1.43%....really very small, all things considered.

Inventory also seems to be stabilizing, although it had a larger % change at -8.64%. There were 6760 listings in 2008 and 6176 in 2009....a slight float down.

But our average sales price has continued to move in the wrong direction. If you were selling in 2008, the average homes was sold at $240,780. In 2009 that price moved to $214,219. OUCH! Them there's some real hurtin' dollars at an approximate overall drop of 10%!

That's very reflective of what happens, though, when there's a First Time Homebuyer Tax Credit. Hey, guess what? The First Time Homebuyers came out and bought! So that may be more reflective of a market that has 50% of the sales attributed to those buyers.

Hardest hit for price drops were Keizer (12%), Northeast Salem (10%), Southeast Salem (12%), and South Salem (10%).

On the upside....Interest is phenomenal. Whether you're buying or refinancing, there couldn't be a better time, as interest rates hover around the 5% mark (+/-). And it is expected to stay low at least for the better part of 2010.

First Time Homebuyers got a little bonus time toward qualifying for the $8000 First Time Homebuyer Tax Credit. But they must have their homes under contract by April 30, 2010 and closed by June 30, 2010.

During the first program, we saw a lot of Buyers procrastinating until October (with a deadline of 11/30/2009). Encourage your friends and family - who want to take advantage of this program NOT to wait. Those buyers who did, ended up competing for homes -and probably paying a higher price than if they'd have come in earlier.

Move-up Buyers also got a little $6500 bonus. Main critieria is that you have lived in your primary residence for 5 years and are moving up. What a deal!

As always, please call us if you need a referral to a Mortgage Professional.

Well that's it.....2009 in review. Thank Heaven.

As I look back, I'm reminded that what's important, bottom-line, is our family, our friends, our health, and knowing that Annie was right....."The Sun Will Come Out Tomorrow!"

See you soon!

It's A NEW YEAR in Real Estate!

2010-01-05T14:06:00.000-08:00

Happy New Year! It’s our hope at the McLeod Group that you had a wonderful Christmas and New Year’s holiday with your family and friends.

The McLeod Group is looking forward to a great 2010. The “Experts” tell us the recession ended in the Fall of 2009…..and that is great news. As a leading indicator, we’re looking forward to what that actually means in the real estate market.

Right now there are several positive signs.

First, we have the benefit of the First Time Homebuyer Tax Credit. The credit has been extended to homes put under contract as of April 30, 2010. As we reviewed our statistics for December, we noticed the greatest activity is still in the under $225k categories.

Second, interest is amazingly low. I know for some of you, a 5ish interest rate almost seems normal. But for those of us with a few more years of wear and tear – 5ish is LOW! We can give credit to the Fed’s for helping out by buying Mortgage Backed Securities. We’re expecting to see those rates last into the summer.

Now for a few challenges……

The job market is still dicey. Here in Salem the concern is over the effects of Measures 66 and 67 – whichever way the vote goes.

We’re also keeping an eye on the “shadow inventory” of distressed properties held by the banks. Distressed properties are those homes that are behind in payments at least two months, but on whom the banks have not yet filed a foreclosure notice. Word on the street is that the number is about 15 MILLION nationwide…..and that the banks may begin releasing them to the market in the early summer. That could have a dramatic effect on home values this year.

So what does this all mean for you and I?

Most of us have lost any memory of past real estate markets. But looking back can help us put this market back into some perspective.

We’ve entered a time that forces us to see our houses first as a home. They are no longer the ATM machine we were used to. So finding value in the benefits of homeownership will come from things other than a continuous cash flow – like privacy, quiet enjoyment and building memories with our family.

We’ve also entered a time when our homes will once again appreciate at more normal percentages; 3 – 4% is a more likely reality….once we hit bottom.

We are seeing an increase in lenders expecting sellers to provide a home that is pest free, dry rot free and safe. Selling “As Is” has no meaning to a lender. Pragmatically, if we want their money, we have to dance to their tune.

Lastly, change has become the norm in the real estate market. Nearly weekly there are new requirements, new advisories, new rules. Keeping an open mind and a willingness to be flexible will make the navigation of this real estate market that much less stressful.

Please stay tuned for additional posts as our team makes an effort to keep you up on the new changes in the real estate market.

If you have any questions, don’t hesitate to call or email us. We’re here for any real estate question you may have.

Wishing you and yours a very Happy New Year!

BLOOMBERG REPORT: "BANKS TAKING LOSSES ON SHORT SALES"

2009-12-07T13:26:00.000-08:00

Hi Friends,

We've been talking about this in our office (and here) for nearly a year now. That is, the need to address the rising amount of homes in distress. We've experienced a tremendous increase in homes underwater, and I having been raving about the alternative of short sales to foreclosures for awhile.

Check out this article from Bloomberg. Reports are that the mountain is finally moving a bit....and we certainly have seen that in our office injust this past week....especially with loans at Wells Fargo.

Hold on to your mustard seeds. We have faith that this market will turn around. But we've all got to roll our sleeves up.

http://www.bloomberg.com/apps/news?pid=email_en&sid=a_NoPFp0r8Y4

See ya on the other side.

2009-11-25T13:59:00.001-08:00

Hey everybody -

If you're like me, you might feel like you're on some kind of a roller coaster - up and down, up and down - when it comes to understanding this real estate market. Good news, bad news, bad news good news.

Just today, I ran across a great video and article that I think pretty much sums up what is causing so much "good" news, in spite of what you may be seeing you your neighborhood.

Enjoy it at and the related article at:

http://finance.yahoo.com/tech-ticker/article/yftt_378885/Housing-Bottom

And please don't hesitate to call me with any questions you have.....we're in a "W" style recovery and that definately affects when you may want to consider selling and/or buying.

2009-09-22T09:19:00.000-07:00

ON CONFUSION:
I wanted a perfect ending. Now I've learned, the hard way,
that some poems don't rhyme, and some stories don't have a clear beginning, middle, and end. Life is about not knowing, having to change, taking the moment and making the best of it, without knowing what's going to happen next. Delicious Ambiguity........................Gilda Radner
Yep Gilda, that's exactly how I'm feeling these days. And let me tell you, this housing poem "don't rhyme!"....or does it?
If you're feeling confused about why everyone seems to be saying the "recession is over," yet there still are an amazing amount of houses for sale in your neighborhood, then take a look at the link I came across. Best I can tell, this is the most comprehensive explanation about why our housing market is not leading us out of this particular recession.
http://www.realestateeconomywatch.com/
As always, don't hesitate to call me with your questions.
Here's to our confusion!
Amy McLeod, CRS, GRI, CDPE
Oregon Principal Broker
RE/Max Equity Group, inc.
503-371-5209

What Should We Make Of This Uptick in Real Estate Sales?

2009-08-24T10:19:00.000-07:00

Hey Everyone:

I was surprised to see so much encouraging news this week-end, out of the real estate market. I had my suspicions though! And then serendipitously, Anthony Mirhaydari writes a great article on the "why." I've copied it so there's no challenge with the link. He does a great job encouraging us to be judicious in our euphoria!

As always, call me with any questions.

Housing crisis set to enter new stage
Posted Aug 21 2009, 07:11 PM by Anthony Mirhaydari
Rating:
Filed under: housing, Anthony Mirhaydari

The march of good news continues for housing. Existing home sales jumped 7.2% between June and July -- the largest increase in over a decade and the fastest pace in nearly two years -- according to the National Association of Realtors (NAR). Prices are down 15% compared to last year.
A combination of cheap distressed properties, seasonal trends, low interest rates, and tax credits for first-time buyers is working its magic. But a number of issues have me worried that instead of an end to this epic housing nightmare -- we are about to enter a new stage.
Bing: More on home prices
The first problem is that the current buying trends are by no means normal with a large percentage of sales focused on foreclosures, short-sales, or other forced transactions rooted in financial distress.
According to a survey by Inside Mortgage Finance, only 10% of overall sales are coming from what could be considered a normal sales process. It's no wonder, with the Mortgage Bankers Association (MBA) reporting Thursday that more than one in eight mortgage holders are in some stage of delinquency or foreclosure. RealtyTrac reported that July foreclosures jumped 7% compared to June. In a situation like this, with the impetus on the seller to unload quickly, prices will naturally gravitate lower.
This brings us to the second issue: The change in focus from subprime borrowers unable to refinance loans because of falling home values to prime borrowers unable to pay their bills because of job loss. According to the MBA survey, 58% of new foreclosure starts originated in the well-to-do prime loan category, up from 44% last year. Meanwhile, subprime borrowers were responsible for only 33% of foreclosures, down from 49% last year. As foreclosures affect a larger and larger swath of the population, it will only add to the number of properties on the market.
The third problem is the looming wave of loan resets in 2010 and 2011. As you can see in the chart above, a large number of prime, Alt-A, and Option ARM borrowers will be facing the prospect of higher payments just as the housing market digests the fallout from the subprime problem of 2007 and 2008. Notice the pleasant dip in reset activity for 2009. Plus, should the economy actually start recovering, the Federal Reserve could be forced to raise interest rates during this period.
And finally, we have the inventory issue. Despite the uptick in sales, the inventory of existing homes for sale actually increased 7.3% to 4.1 million last month. I have talked about a "shadow inventory" of homes owned by people just waiting for a smidgen of good news to list their homes. Now we see the dynamic in action: Lawrence Yun, the NAR's chief economist, said the increase was the result of "some held back inventory coming back to the market."
It's also worth mentioning the crisis of confidence that is set to develop as the peak buying season ends and prices reaccelerate their downward slide. In its latest survey, Zillow found that a full 81% of homeowners believe their home won't fall in value over the next six months. Adding to the perception that people are losing touch with reality, only 60% believed the value of their home had fallen over the last year; when 83% of all homes actually lost value during that time.
The cold chill of falling home equity awaits many Americans this winter -- just in time for the holiday shopping season. Not only does this spell trouble for homebuilders like D.R. Horton (DHI), the U.S. Home Construction ETF (ITB), and the S&P Homebuilders ETF (XHB), but for aspriational retailers like Coach (COH) and big toy manufacturers like Arctic Cat (ACAT) as well.
Disclosure: The author does not own or control a position in any of the funds or companies mentioned.
Anthony Mirhaydari is a researcher for the Strategic Advantage investment newsletter. He can be contacted at anthony.mirhaydari@live.com. Feel free to comment below.

THE REAL SKINNY ON THE REAL ESTATE MARKET

2009-08-19T16:51:00.000-07:00

Hey Friends,
I know it's been a long time since I blogged, but frankly I've been busy trying to sort out what's been going on in this crazy market.

It's confusing. One day the paper says the recession is over and the housing market is rebounding. The next day I would get the statistics from the Fed's and they said just the opposite.

I had formulated my own opinions, but I am always double checking myself.

So today, here came an article from our founder; Dave Liniger. Dave has one of the best real estate minds I know, so I think it's valuable for you to see what he sees.

His article is as follows. Let me know your thoughts.

Liniger in Chicago: 'Demand Will Come'

CHICAGO - Demand built on demographics and population – rather than questionable lending policies – will spark the next wave of strong home sales in the U.S., Dave Liniger told nearly 700 Affiliates at the 2009 RE/MAX Summer Conference for Broker/Owners and Managers on Monday.
The confluence of two massive population groups – 80 million Baby Boomers born from 1946-1964 and 74 million Millennials born from 1980-1995 – will fuel a huge increase in transactions from 2012 onward, the RE/MAX International Chairman and Co-Founder said at the conference's Opening General Session. Immigration and minority household trends will add to the upturn, he noted.
As the Millennials, who are 15-29 now, reach their prime homebuying years – the average first-time buyer is 33, though that number appears to be trending downward – the Baby Boomers will be selling and downsizing. The rise in demand will drive the market upward, Liniger said.
"Very good years are coming," he said, adding that RE/MAX International – through technology, training, social media and other initiatives – will help Broker/Owners and Associates connect with these consumers.
Being successful todayFor the time being, though, local markets will stay as they are, Liniger said. In fact, unemployment and a second wave of foreclosures in 2010 and 2011 are likely to make things worse before they get better. He urged Broker/Owners to help their Sales Associates close transactions through distressed properties, REOs, first-time homebuyers and investors. His constant theme: Affiliates cannot sit back and wait for a quick turnaround – because it's not coming.
"I'm not negative; I'm realistic," he said. "If you're not realistic, you can't make the adjustments you need to make in order to survive and prosper."
Liniger said RE/MAX leaders have met many times with key lenders and government officials to push for foreclosure solutions and a standardized and streamlined short-sale process.
He also called the Certified Distressed Property Expert (CDPE) course the best training he's ever encountered. More than 6,000 RE/MAX Associates have earned the designation, he said, and others should consider it.
"Short sales are the key for the next 18-24 months. Our people must be trained to handle them," he said, noting that true recovery simply isn't possible until the foreclosure problem is solved.

What Happened to Our Credit Scores?

2009-05-04T10:05:00.000-07:00

A credit score of 680 used to mean something. Now, according to Bankrate.com the best rates and mortgage programs go to consumers with 700+ credit scores. Less than 700, and you may see additional fees.

The ever-changing landscape of credit markets and the economy is making the challenge of credit worse. Even a consumer who pays their debts faithfully may have seen a falling score.

So what's the cause? Some reasons include older and more established cards may have been closed due to lack of use. Credit limits may have been dropped. How much cash is left after paying debts on a monthly basis may also contribute.

So what is one to do?......besides getting debt free (yahoooo!!!)

1. Understand how credit works. People assume that if they pay their bills on time, everything will be all right. Although that's generally accurate, it's only part of the equation.

2. Credit & Debt Optimization; consumers need to look for ways to reduce credit card balances, thereby strenthening the credit score. Reduce interest rates, or move balances to lower rate alternatives.

3. Review credit at least three or four times a year. Monitor for changes that may have occured without anyone's knowledge

4. Last but not least - get debt free .... oh, I already said that!

(thanks to RisMedia Real Estate 5/2009 issue)

2009-04-30T10:09:00.001-07:00

Honing my skills at "tweeting," blogging, & Facebook! Phew - that's a lot of technology right there!

SURVEY SAYS......

2009-04-21T11:01:00.000-07:00

I was recently reading my favorite real estate publication when I came across an article titled,

"SURVEY: Owners Still Overvalue Homes." (RISMedia Real Estate/April 2009)

By the numbers, this is what their survey found:

Close to 50% of homeowners think their houses should be priced 10% to 20% higher than their sales agents have recommended.
Fewer than 20% of agents nationwide are reporting that homebuyers are telling them that homes on the market are priced fairly.
Almost 60% of agents say potential buyers are telling them that home asking prices are too high.

Our own Willamette Valley Multiple Listing Service shows most sales in the Salem/Keizer area are occuring at about 90% of asking price!

Looks like we have an expectation gap!

Here's the bottom line; if you want to sell, most likely, get ready for some tough news - and let's not kill the messenger!

On the upside - think what you can buy!!!

The Real Status of Our Market

2009-03-16T14:12:00.000-07:00

For more information please feel free to visit:

www.StopSalemForeclosures.com

We are here to help and offer information for those you know who may be in need.

TOUGH LOVE IN REAL ESTATE!

2009-02-16T13:53:00.002-08:00

Friends, I'm here today to give you a little "tough love" when it comes to real estate.

And here's why:

Recent real estate figures stack a pretty tall deck against speedy sales and big profits in many markets, including ours. The National Association of Realtors' research estimates more than a 10 month supply of properties currently on the market across the U.S. Our market is no different.

I'm hopeful that a little tough love now will mean we can work together to solve this challenge, rather than against eachother. So here it comes.

Lending standards have tightened up significantly....but there are still buyers out there. There are a few tried and true things you can do to cature that one buyer for your home.

First: Decide if selling right now is absolutely necessary. If not, then don't! Putting your property on the market "to see what happens" is sure to find mostly disappointment. Our market will rebound, and when it does, you'll be far better selling then.

Second: When setting your price, consider multiple angles, Solds, Pending - what buyers were willing to buy in the last 30 days, and Active - who is your competition and where are they placed on the pricing scale?

Third: Be aggressive in your pricing strategy. You get only one chance to make a first impression. The greatest interest in a property comes in the first "weeks" (yes, I said weeks - not months) it's listed.

Lastly, prepare your home to be seen. Put those knick-knacks, quirky paintings and the alter to your wedding away! These personal items are challenging for buyers to look past so they can envision themselves living in your home. Consolidate and simplify, creating even greater value and appeal for your home.

That's it my friends. You've been loved up!

I'm off to a seminar this week - one that will allow me to assist homeowners who are in trouble on their mortgages....so look for an update next Monday.

Enjoy

TOUGH LOVE IN REAL ESTATE!

2009-02-16T13:53:00.001-08:00

MAYBE I NEED A DUNCE CAP!

2009-02-12T14:06:00.000-08:00

Listening to all the talking heads, you'd think we Realtors need a dunce cap. In spite of the "opinions" of those on your television, I think you should be buying real estate (shocking, I know!) Wait, I can explain.

First, thanks to near record low interest rates, and home prices that have moderated, the number of potential buyers who can afford to buy has increased! According to data compiled from the 3rd quarter of 2008, 56.1% of all new & existing homes sold were affordable for families earning the median income. That's way above the 40% of families who could afford a home at the peak of the market!

Second, Housing still remains the way for most of us to build wealth. Now that really sounds crazy, doesn't it. A recently released report by Harvard University's Joint Center for Housing Studies indicates that even though housing has it's ups and downs, the average homeowner is dramatically wealthier than someone who rents. This holds true among all age groups.

Lastly, WE WILL SURVIVE THIS MARKET CORRECTION! And as we do, our housing market with perform like a bouncing ball. With that in mind, none of us knows when the market (ball) will hit bottom, but when it does, WOW - that ball (market) will pop right back up before we know it. So, as I have before, I will remind you again...the rule is, "Buy Low - Sell High." Let's get to buying.

DARN THOSE NEW YEARS RESOLUTIONS!

2009-02-10T12:55:00.000-08:00

Are you like me, making new resolutions each year, only to find yourself about mid-February having failed again? In light of that, I thought I'd share some easy ones that may help with finances so we can all be in better shape in 2010.

AVOID DEBT. Boy, don't we all wish we'd thought of that one sooner. Try to pay more than the minimum amount on your credit card, even if it's only $1.00. Though it seems small, that $1.00 amount allows you to keep this resolution, adding to your success and building your confidence.

TRACK YOUR SPENDING...do it for just a week. This is like dieting. We all spend more than we are willing to admit to. Writing it down will allow you to know where you can cut back.

SAVE FOR RETIREMENT. If an official deposit is too much, drop a coin in a jar when you empty your pockets daily. Consider it a success, no matter how little or how much you save.

Starting with these simple goals helps all of us head in the right direction. We'll all be ready to build on our small successes in 2010.

2008-12-10T16:29:00.001-08:00

Hi Everyone:

Why is it in a crisis, everyone seems to forget the rule "Buy low, sell high?" Well, maybe it's because we've watched too much "Deal or No Deal" and keep thinking there's more, more more. I was discussing the historically low interest rates (in the low 5's for FHA - unheard of!) with my good friend Vince Ventura at Evergreen Mortgage. He shared an article with me that came from one of their Senior Loan Consultants. I hope it helps you understand why continuing to say "No Deal" to this market and these interest rates might be a huge mistake!

As always, feel free to call us with any of your questions concerning real estate. We can be reached at 503-371-5209 during business hours.

Enjoy!

From: Vince Ventura, Branch Manager
Evergreen Home Loans
3400 State Street, Suite G-780
Salem, Oregon 97301
(503) 588-2667 tel
(503) 588-2236 fax
(503) 932-4621 cell
(888) 821-9251 toll free
email: Vventura@EvergreenHomeLoans.com

From: Donald Burton Sent: Wednesday, December 10, 2008 11:43 AMTo: AllEMMCSubject: I'm waiting for my 4.5% mortgage the government promised....

Ginny Lee in our Seattle office forwarded me this article. Greed was a factor in the real estate meltdown. No one was immune. Now it seems that greed again, is playing a role as would-be homebuyers and refinancers are waiting for their gift from the government of a 4.5% mortgage. It's possible but they could be waiting a long time.....

4.5% Rates Possible?The news is abuzz about the Treasury lowering home loan rates to 4.5% to stem the foreclosure crisis but details have been lacking. The Treasury Department stated it is looking for additional ways to help the struggling housing industry and believes lower rates are needed.
This idea is similar to the November 26th announcement from the Federal Reserve where they indicated the intent to purchase up to $500 billion in mortgage-backed securities from Fannie Mae, Freddie Mac and Ginnie Mae. In addition they would buy another $100 billion in direct debt issued by those firms. The November news caused bond prices to spike higher and forced mortgage rates lower. Just like any commodity, whenever tremendous buying interest exists, prices rise. Mortgage rates fell almost 1/2% in rate following the announcement. However, the following week market forces continued and rates spiked a bit higher from the recent lows.
It is important to remember that there are no details to the Treasury plan as of yet. The Federal Government does not directly dictate home loan rates. Rates are determined by price movements of Mortgage Backed Securities (MBS), which compete for investor funds in the open market. The Treasury can buy mortgage bonds on the open market but remember that they are not the only entity buying and selling these instruments.
The Treasury is in a very tough position in trying to manipulate home loan rates. Creating a new Federal mortgage program could be very risky. How would rates be set, who would qualify, and can the funds be used for purchases and refinances are just some of the questions being asked. The other critical concern is implementing such a program without destroying the current mortgage securities market. Doing so could have the unintended consequence of causing additional economic turmoil.
Rates are not going to 4.5% with the wave of a wand by Hank Paulson or Ben Bernanke. As a matter of fact, the massive borrowing to fund the TARP program has a negative effect on rates. At this time, the announcement still leaves a lot of uncertainty. What we do know is that rates are at historic lows and house prices have moderated setting up a great scenario for people who need to refinance or are looking to buy a home. Waiting for rates to fall to 4.5% may leave people sorely disa

Ginny Lee
Senior Loan Consultant
Evergreen Home Loans

2008-12-08T08:46:00.000-08:00

Hi Everyone,

If you're like me, you're REALLY busy getting ready for the Christmas holiday. This year has been interesting, to say the least. This is the first Christmas my husband Greg and I have had an "Empty Nest." I never realized how much scurrying around I did so the kids would have that magical Christmas! This year, though, we've decided to merge the old traditions with some new ones. And it's been an exciting adventure.

One thing that never changes, though, is the reality of the real estate market. I recently came across an article at Bankrate.com that does the best job I've seen, of explaining pricing strategy.

I'd encourage you to read it in it's entirety. It explains why the worst news from your Realtor might be the very best news you could receive.

I can tell you this is the approach we're taking with our sellers. And what are they seeing in terms of results; selling in 2/3's the time the average Realtor takes, for 9% higher average sales price. That's a strategy worth talking about!

http://www.bankrate.com/brm/news/mtg/20081204-home-seller-price-cuts-a1.asp

If you have any questions about what you're reading, please don't hesitate to call my office at 503-371-5209.

Have a merry holiday season.

Amy

2008-12-01T11:25:00.001-08:00

Hi Friends,
Well as you might imagine, anyone in the real estate industry, who plans to survive this market correction, is staying very very focused right now....and I'm no exception!

In spite of that, I found this opinion from the New York Times, and felt it was important for all of you to be alerted. Please feel free to call us any time you need a referral to a reputable mortgage broker, we'd be happy to assist.

Happy Holidays!

OPINION November 24, 2008 Predatory brokers have returned, but this time as loan-modification companies, offering to work deals — for cash up front. http://www.nytimes.com/2008/11/24/opinion/24mon1.html?emc=eta1

What Really Happened to the Real Estate Bubble...

2008-10-14T10:47:00.000-07:00

"How AIG's Collapse Began a Global Run on the Banks
By Porter Stansberry October 4, 2008

Something very strange is happening in the financial markets. And I can show you what it is and what it means...

If September didn't give you enough to worry about, consider what will happen to real estate prices as unemployment grows steadily over the next several months. As bad as things are now, they'll get much worse.

They'll get worse for the obvious reason: because more people will default on their mortgages. But they'll also remain depressed for far longer than anyone expects, for a reason most people will never understand.

What follows is one of the real secrets to September's stock market collapse. Once you understand what really happened last month, the events to come will be much clearer to you...

Every great bull market has similar characteristics. The speculation must – at the beginning – start with a reasonably good idea. Using long-term mortgages to pay for homes is a good idea, with a few important caveats.

Some of these limitations are obvious to any intelligent observer... like the need for a substantial down payment, the verification of income, an independent appraisal, etc. But human nature dictates that, given enough time and the right incentives, any endeavor will be corrupted. This is one of the two critical elements of a bubble. What was once a good idea becomes a farce. You already know all the stories of how this happened in the housing market, where loans were eventually given without fixed rates, without income verification, without down payments, and without legitimate appraisals.

As bad as these practices were, they would not have created a global financial panic without the second, more critical element. For things to get really out of control, the farce must evolve further... into fraud.

And this is where AIG comes into the story.

Around the world, banks must comply with what are known as Basel II regulations. These regulations determine how much capital a bank must maintain in reserve. The rules are based on the quality of the bank's loan book. The riskier the loans a bank owns, the more capital it must keep in reserve. Bank managers naturally seek to employ as much leverage as they can, especially when interest rates are low, to maximize profits. AIG appeared to offer banks a way to get around the Basel rules, via unregulated insurance contracts, known as credit default swaps.

Here's how it worked: Say you're a major European bank... You have a surplus of deposits, because in Europe people actually still bother to save money. You're looking for something to maximize the spread between what you must pay for deposits and what you're able to earn lending. You want it to be safe and reliable, but also pay the highest possible annual interest. You know you could buy a portfolio of high-yielding subprime mortgages. But doing so will limit the amount of leverage you can employ, which will limit returns.

So rather than rule out having any high-yielding securities in your portfolio, you simply call up the friendly AIG broker you met at a conference in London last year.

"What would it cost me to insure this subprime security?" you inquire. The broker, who is selling a five-year policy (but who will be paid a bonus annually), says, "Not too much." After all, the historical loss rates on American mortgages is close to zilch.

Using incredibly sophisticated computer models, he agrees to guarantee the subprime security you're buying against default for five years for say, 2% of face value.

Although AIG's credit default swaps were really insurance contracts, they weren't regulated. That meant AIG didn't have to put up any capital as collateral on its swaps, as long as it maintained a triple-A credit rating. There was no real capital cost to selling these swaps; there was no limit. And thanks to what's called "mark-to-market" accounting, AIG could book the profit from a five-year credit default swap as soon as the contract was sold, based on the expected default rate.

Whatever the computer said AIG was likely to make on the deal, the accountants would write down as actual profit. The broker who sold the swap would be paid a bonus at the end of the first year – long before the actual profit on the contract was made.

With this structure in place, the European bank was able to assure its regulators it was holding only triple-A credits, instead of a bunch of subprime "toxic waste." The bank could leverage itself to the full extent allowable under Basel II. AIG could book hundreds of millions in "profit" each year, without having to pony up billions in collateral.

It was a fraud. AIG never any capital to back up the insurance it sold. And the profits it booked never materialized. The default rate on mortgage securities underwritten in 2005, 2006, and 2007 turned out to be multiples higher than expected. And they continue to increase. In some cases, the securities the banks claimed were triple A have ended up being worth less than $0.15 on the dollar.

Even so, it all worked for years. Banks leveraged deposits to the hilt. Wall Street packaged and sold dumb mortgages as securities. And AIG sold credit default swaps without bothering to collateralize the risk. An enormous amount of capital was created out of thin air and tossed into global real estate markets.

On September 15, all of the major credit-rating agencies downgraded AIG – the world's largest insurance company. At issue were the soaring losses in its credit default swaps. The first big writeoff came in the fourth quarter of 2007, when AIG reported an $11 billion charge. It was able to raise capital once, to repair the damage. But the losses kept growing. The moment the downgrade came, AIG was forced to come up with tens of billions of additional collateral, immediately. This was on top of the billions it owed to its trading partners. It didn't have the money. The world's largest insurance company was bankrupt.

The dominoes fell over immediately. Lehman Brothers failed on the same day. Merrill was sold to Bank of America. The Fed stepped in and agreed to lend AIG $85 billion to facilitate an orderly sell off of its assets in exchange for essentially all the company's equity.

Most people never understood how AIG was the linchpin to the entire system. And there's one more secret yet to come out...

AIG's largest trading partner wasn't a nameless European bank. It was Goldman Sachs.

I'd wondered for years how Goldman avoided the kind of huge mortgage-related writedowns that plagued all the other investment banks. And now we know: Goldman hedged its exposure via credit default swaps with AIG. Sources inside Goldman say the company's exposure to AIG exceeded $20 billion, meaning the moment AIG was downgraded, Goldman had to begin marking down the value of its assets. And the moment AIG went bankrupt, Goldman lost $20 billion. Goldman immediately sought out Warren Buffett to raise $5 billion of additional capital, which also helped it raise another $5 billion via a public offering.

The collapse of the credit default swap market also meant the investment banks – all of them – had no way to borrow money, because no one would insure their obligations.

To fund their daily operations, they've become totally reliant on the Federal Reserve, which has allowed them to formally become commercial banks. To date, banks, insurance firms, and investment banks have borrowed $348 billion from the Federal Reserve – nearly all of this lending took place following AIG's failure. Things are so bad at the investment banks, the Fed had to change the rules to allow Merrill, Morgan Stanley, and Goldman the ability to use equities as collateral for these loans, an unprecedented step.

The mainstream press hasn't reported this either: A provision in the $700 billion bailout bill permits the Fed to pay interest on the collateral it's holding, which is simply a way to funnel taxpayer dollars directly into the investment banks.

Why do you need to know all of these details? First, you must understand that without the government's actions, the collapse of AIG could have caused every major bank in the world to fail.

Second, without the credit default swap market, there's no way banks can report the true state of their assets – they'd all be in default of Basel II. That's why the government will push through a measure that requires the suspension of mark-to-market accounting. Essentially, banks will be allowed to pretend they have far higher-quality loans than they actually do. AIG can't cover for them anymore.

And third, and most importantly, without the huge fraud perpetrated by AIG, the mortgage bubble could have never grown as large as it did. Yes, other factors contributed, like the role of Fannie and Freddie in particular. But the key to enabling the huge global growth in credit during the last decade can be tied directly to AIG's sale of credit default swaps without collateral. That was the barn door. And it was left open for nearly a decade.

There's no way to replace this massive credit-building machine, which makes me very skeptical of the government's bailout plan. Quite simply, we can't replace the credit that existed in the world before September 15 because it didn't deserve to be there in the first place. While the government can, and certainly will, paper over the gaping holes left by this enormous credit collapse, it can't actually replace the trust and credit that existed... because it was a fraud.

And that leads me to believe the coming economic contraction will be longer and deeper than most people understand.

You might find this strange... but this is great news for those who understand what's going on. Knowing why the economy is shrinking and knowing it's not going to rebound quickly gives you a huge advantage over most investors, who don't understand what's happening and can't plan to take advantage of it.

Good investing,Porter Stansberry"

It's important to have all the information about the crazy situation that our money markets are in at the moment, so you can make the best decision possible for your family.

Best Wishes,
Amy

Grab Your Nine Iron & Pitching Wedge!

2008-07-10T11:17:00.000-07:00

Every summer golfers from the Salem-Keizer area band together for an afternoon of sun, fun, and most of all - golf! Keizer Young Life sponsors a shot-gun 9 hole golf tournament each year as an opportunity to raise support for the organization. Money that is raised goes directly to helping kids within the community go to summer camp at Young Life's Wildhorse Canyon in Central Oregon.

This isn't just any tournament! Golfers of all ages enjoy a BBQ dinner, KP & Long drive competitions, as well as a shot at the top team chance to putt for the Keizer Young Life famed plaid jacket - a Keizer Young Life Golf Tournament tradition.

This year's golf tournament will be held August 25th at McNary Golf Course. Registration begins at 3:30pm, with a shot-gun start at 4:30pm. A foursome for this event will only cost $150. Not really a golfer? No worries - you can participate in this event as well through sponsoring a hole for the tournament. Each hole sponsor will have a sign rider noting either you personally or your business for golfers to see as they approach each hole. Hole sponsorship costs $100.

No matter what - you're guaranteed to "Have Fun While Helping Keizer Kids!" If you're interested in registering for the golf tournament - or in sponsoring a hole, please visit the Keizer Young Life webpage: http://www.keizer.younglife.org/ for a registration form.

Thanks in advance for being a part of an organization that is near and dear to my heart!

LOST IN AMERICA!

2008-07-07T11:43:00.000-07:00

Well - it's been far too long since I last posted here. As with everyone, June brought a round of graduation parties, vacations and much needed sunshine.

Let me say, in the McLeod house, we're celebrating my daughter Anna's graduation from Portland State University....IN 4 YEARS! It's quite an accomplishment. When asked how I felt about this occasion, my answer was simple, "Like I've crossed the finish line!"

As a reward for her fine work, her Dad and I had the treat of taking her to Maui for a week (there's the sunshine). We thoroughly enjoyed our time together and I was even able to take a peak at a few real estate magazines. If you think things are expensive here, you oughta check out Maui! The average sales price is right around $469,000....and that's not beachfront!

At home, here's what we're seeing in the real estate market. FHA is currently our Knight in Shining Armour. With 3% down and lower credit scores allowed, this is the loan most of our buyers are using right now. For more information, give me a call for a referral to several quality Loan Officers in our area.

In the meantime, adopt my motto: "What doesn't kill ya, makes ya stronger." ARGGHHHH!

THIS SOUP'S FOR YOU!

2008-06-11T14:07:00.000-07:00

The second Wednesday of every month is the ever entertaining gathering of the Keizer Chamber of Commerce. The food is good, the fellowship is fun and the speakers are usually informative. Today was no exception. But one of my favorite activities is the opportunity to meet fellow business owners.

Today I had the privilege of sitting next to Susan Parker, the owner/operator of THE SOUP SHACK. She's developed some amazing gourmet soups. The soups are packaged, frozen and delivered directly to the customer.

When she said "delivery," my ears perked up. I heard from all around me how wonderful her soups are - so I thought I'd share her business with you, via her website. You'll find Susan at http://www.mysoupshack.com/.

Enjoy - and let me hear about your experiences with her product. I'm going for the Potatoe with Cheese & Ham!

Ciao for now.