I don't usually like to share my precious blog space to promote anyone but myself, I mean you're reading this for me right? But I have to make an exception. This guy saved my house from the most disgusting smell / thing.
I had a dead animal in the attic and the man who saved me was:
Bryce Muench
AIPM
805 499-5050
888 344-6567
bmuench@animalinsectpm.com
www.animalinsectpm.com
Thanks to Bryce, I'm rat free and smell free. Here's a shout out. Thanks my man. I certainly wasn't going to / couldn't do what you did.
Wednesday, March 16, 2011
Thursday, February 3, 2011
Will recovery come down to jobs?
I’m back. Sorry it’s been so long boys and girls but the Bear is out of hibernation. Looks like just in time to see a mountain of trouble starting to poke it’s peak out of the snow. Ok, that analogy sucked but I’m getting back into the flow.
Here’s a section taken from MSNBC’s column:
“The economy is strengthening, and will likely grow at a faster pace this year as more confident consumers and companies spend more, Bernanke said in prepared remarks to the National Press Club in Washington, D.C. But he warned that the growth won't be strong enough to quickly drive down high unemployment, and it could take several years before it returns to more normal levels.
“Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established,” he said.”
Well, it’s now February 3rd and finally I hear a bit of truth / fact coming out of Washington. Not that it matters. None of the people in charge or talking heads will come out and say the truth. WE’RE SCREWED. Maybe I’m being a little over dramatic but things are not good.
article
I feel justified that someone has backed up my claim that nothing is going to help this economy except for job creation. I’d go even further by saying we not only need job creation but GOOD jobs created. We need jobs to replace middle class jobs that we’ve been loosing over the past two decades. It’s been a coffee like drip for years but until this latest crash of layoffs it seems that everyone has opened their eyes to the fact that the middle class and the middle class job has been sent elsewhere.
We can create all the McDonald jobs we want but none of them are going to replace Ford jobs that a single employee can support their family. Ever since I can remember, I’ve always heard about jobs going overseas or to Mexico. It’s just now that things are starting to crash or people are noticing. I’m sure it has to do with the whole, “well it’s not happening to me so why should I care” mentality. Let’s call it the discount or Wall-Mart theory.
I’m not going to get into Unions VS Big Business and who’s caused what or reasons for workers making less and doing more. That’s for another post. Let’s just look at one example. I used to have a job at a Supermarket. One of the best reasons for working there was because of the great benefits. I was young and didn’t care or use these health benefits like many of the older workers or even how I would need them now, but they where good. I knew if anything happened I was taken care of. Well with the cost of health care going up and the “loss of profits” that the supermarkets where receiving, the health care that’s now provided to new workers is a fraction of what we used to have. And you have to work longer and harder to get to where you’re covered decently.
If you added 1 cent to everything at the market and put that towards heath care for the employees I bet the quality of life for the employees would increase and the quality of employee would increase because good workers would know that they’d be taken care of. What would the cost to the customers be? Even on a huge order, $1 or $2 maybe $3?
I see this as a three problem answer.
1) We don’t see the benefit
- We don’t hear about the horror stories that go on because of a lack of medical coverage. We see it when the grocery workers go on strike but what are they striking for. These workers need better ad men to sell us on why we should care, why it may cost us a little more and why it in the end benefits us.
2) We go for cheaper which in turn makes business cut from the workers
- That discount today may cost you your job tomorrow. Overly simplistic but over time it’s true. You keep needing the lowest price and going to the Wall-Mart’s of the world for everything, it’s going to eventually affect you. Unless there are means and ways to stop certain plateaus from being hit (which I don’t claim to know, this is for much smarter economic minds) the over search for cheaper goods will come back to bite you. If by finding cheaper workers and / or paying them less is going to be how a market lowers it’s prices then that will snowball into lower wages for employees who then will not be able to afford the things they need to buy who will look for cheaper homes who will spend less on cars, and so on. I’m not talking about a coupon sale. I’m talking about a total cut to costs, which almost always affects the employees (except the highest levels of management who’ll still make more year after year), that pushes down the average worker so that the grocery can sell toilet paper for 1 – 5 cents cheaper and get people to come to their market. Wal-Mart pays people with lower money and less benefits so they can offer cheaper prices.
3) It’s too late until it’s gone and affects us
- Touching back on the first answer, on average we won’t react until it’s too late. By the time jobs going out of this country really hit us, we where past the point of doing anything about it. Then when it’s your job that gets cut you sit there with your pink slip and wonder why you didn’t do anything before. It’s either human or animal nature to only care about your own situation. I bet it’s a higher form of living if you can think out what ramifications will happen if event “A” starts and you try to see what will unfold. No one hopes or expects their neighbor to loose a job but I wonder how many trips to Wal-Mart did it take to have Ralph’s workers make less and get less on benefits?
We’re a long way from recovery. The word in the street seems bleak. I will say that if anything, it’s encouraging to at least hear someone in the government say the words, WE NEED MORE JOBS. Now what will come next?
Here’s a section taken from MSNBC’s column:
“The economy is strengthening, and will likely grow at a faster pace this year as more confident consumers and companies spend more, Bernanke said in prepared remarks to the National Press Club in Washington, D.C. But he warned that the growth won't be strong enough to quickly drive down high unemployment, and it could take several years before it returns to more normal levels.
“Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established,” he said.”
Well, it’s now February 3rd and finally I hear a bit of truth / fact coming out of Washington. Not that it matters. None of the people in charge or talking heads will come out and say the truth. WE’RE SCREWED. Maybe I’m being a little over dramatic but things are not good.
article
I feel justified that someone has backed up my claim that nothing is going to help this economy except for job creation. I’d go even further by saying we not only need job creation but GOOD jobs created. We need jobs to replace middle class jobs that we’ve been loosing over the past two decades. It’s been a coffee like drip for years but until this latest crash of layoffs it seems that everyone has opened their eyes to the fact that the middle class and the middle class job has been sent elsewhere.
We can create all the McDonald jobs we want but none of them are going to replace Ford jobs that a single employee can support their family. Ever since I can remember, I’ve always heard about jobs going overseas or to Mexico. It’s just now that things are starting to crash or people are noticing. I’m sure it has to do with the whole, “well it’s not happening to me so why should I care” mentality. Let’s call it the discount or Wall-Mart theory.
I’m not going to get into Unions VS Big Business and who’s caused what or reasons for workers making less and doing more. That’s for another post. Let’s just look at one example. I used to have a job at a Supermarket. One of the best reasons for working there was because of the great benefits. I was young and didn’t care or use these health benefits like many of the older workers or even how I would need them now, but they where good. I knew if anything happened I was taken care of. Well with the cost of health care going up and the “loss of profits” that the supermarkets where receiving, the health care that’s now provided to new workers is a fraction of what we used to have. And you have to work longer and harder to get to where you’re covered decently.
If you added 1 cent to everything at the market and put that towards heath care for the employees I bet the quality of life for the employees would increase and the quality of employee would increase because good workers would know that they’d be taken care of. What would the cost to the customers be? Even on a huge order, $1 or $2 maybe $3?
I see this as a three problem answer.
1) We don’t see the benefit
- We don’t hear about the horror stories that go on because of a lack of medical coverage. We see it when the grocery workers go on strike but what are they striking for. These workers need better ad men to sell us on why we should care, why it may cost us a little more and why it in the end benefits us.
2) We go for cheaper which in turn makes business cut from the workers
- That discount today may cost you your job tomorrow. Overly simplistic but over time it’s true. You keep needing the lowest price and going to the Wall-Mart’s of the world for everything, it’s going to eventually affect you. Unless there are means and ways to stop certain plateaus from being hit (which I don’t claim to know, this is for much smarter economic minds) the over search for cheaper goods will come back to bite you. If by finding cheaper workers and / or paying them less is going to be how a market lowers it’s prices then that will snowball into lower wages for employees who then will not be able to afford the things they need to buy who will look for cheaper homes who will spend less on cars, and so on. I’m not talking about a coupon sale. I’m talking about a total cut to costs, which almost always affects the employees (except the highest levels of management who’ll still make more year after year), that pushes down the average worker so that the grocery can sell toilet paper for 1 – 5 cents cheaper and get people to come to their market. Wal-Mart pays people with lower money and less benefits so they can offer cheaper prices.
3) It’s too late until it’s gone and affects us
- Touching back on the first answer, on average we won’t react until it’s too late. By the time jobs going out of this country really hit us, we where past the point of doing anything about it. Then when it’s your job that gets cut you sit there with your pink slip and wonder why you didn’t do anything before. It’s either human or animal nature to only care about your own situation. I bet it’s a higher form of living if you can think out what ramifications will happen if event “A” starts and you try to see what will unfold. No one hopes or expects their neighbor to loose a job but I wonder how many trips to Wal-Mart did it take to have Ralph’s workers make less and get less on benefits?
We’re a long way from recovery. The word in the street seems bleak. I will say that if anything, it’s encouraging to at least hear someone in the government say the words, WE NEED MORE JOBS. Now what will come next?
Thursday, July 15, 2010
Solutions
So I realize while writing the last post I'm no better than the people who play Monday morning quarterback. Where are my solutions? I'm complaining about the world but what would I do.
I'm not Harvard educated economist. In fact my economy teacher in college said I wouldn't amount to anything. Maybe that's where my chip for the people are supposed to know and solve our problems come from. Economics are fluid. No one problem is the same as another. We can learn from the past but there are no exact fixes that apply to every situation. If that where true, we'd just need to start a war because that's truly what got us out of the Great Depression years ago. Wait, we are in a war...what, we're in fact in two wars? Oh, well...um.. maybe War isn't the way out or at least these wars. We're in multiple wars and we (the average person) is asked to sacrifice NOTHING. When we go to bed at night the furthest thing from our thoughts are the young men and women dying for us.
We might be able to solve our debt problems in a matter of months if we where to stop the major campaigns of both Iraq and Afghanistan. I hate to sound to simplistic but I don't see the bang for our buck. Most of the terrorist threats that we've been told that we've captured have been on our soil lately. I haven't heard of any plans that we've disrupted from over seas. Are we really fighting them over there so that we don't have to fight them over here?
Anyway, what would I do. If I had ultimate power, one of the first things that I would try is to put this TARP money in the hands of the borrowers and not the lenders. Recently the lenders where told that they where going to have to start lowering the principal owed on the loans. This is the last thing the lenders want to do. Even though they might be upside down on Loan to Value, they're hoping that one day the values will rise and they'll get their money back. They'd actually rather loose money on interest than they would on principal. Let's be real here. The banks where just as much of a culprit on the inflation of prices as anyone else. They allowed stated, 100% LTV, low FICO loans. The lenders where competing with themselves to produce more and more and make as much money as they could which meant the rise of prices would keep them making money the easiest and fastest. They weren't really lending their own money, they where putting it together and selling these unknown and unproven assets on the stock markets.
So screw the banks. Put this TARP money into the hands of the borrowers. Figure out, in very similar ways that they're doing rate mods, to see what it will take to lower the principal that people owe to get them at the 38 - 42% Debt to Income that the government feels loans should be at. By lowering the principal it will save the borrower on their monthly payment AND then make it much easier for them to sell their homes in the near future. They might even be able to make a small profit. Yes, it could be seen as the government giving away money but it will promote and allow for real estate movement in the private sector, not just foreclosing and shortselling people's homes to which only the lenders get to write off the losses. Write them off they are doing, it's very common for the lenders to now send the borrower's on a shortsale a 1099 for the difference of what they owe and what the lender actually got paid off. So you owe 150,000 on a house and it shortsales for 100,000; the lenders will send you a 1099 for that 50k difference. You're going to end up paying taxes on the 50k loss so that the lender doesn't. I'm sure it's more complicated than that but this is what the normal personal is experiencing.
Banks and investors would tell you that they'd loose lots of money on the principal, but I ask, how much is being lost on the the shortsale or foreclosures? How much money in interest and principal at the end of the day when a house sits on the market for six months?
This would promote sales by individuals and make it easier for them to get rid of houses on their own, really push people in and around the real estate business. They would spend more money and higher new processors and invest in their own businesses instead of not being able to pay for the bills.
Another thing I'd do is let knowledgeable people figure out helpful and sensible loan guidelines. There is a need for stated. there is a need for 95 or 100% financing. But make the more risky loans, not terribly worse in pricing but much more restrictive. There is no reason that that someone who qualifies with a full doc income and assets and huge FICO scores shouldn't be given the option to have a 100% loan. If someone can truly afford it, why not. What's more American than that?!
I think I owe it to not just complain, but to also bring to light the failures and possible successes that I see and think of. I'm getting tired and have a long day of fighting for my loans. I'm going to get a few winks but check back in. Let me know what you think we should do to fix and promote the real estate world.
I'm not Harvard educated economist. In fact my economy teacher in college said I wouldn't amount to anything. Maybe that's where my chip for the people are supposed to know and solve our problems come from. Economics are fluid. No one problem is the same as another. We can learn from the past but there are no exact fixes that apply to every situation. If that where true, we'd just need to start a war because that's truly what got us out of the Great Depression years ago. Wait, we are in a war...what, we're in fact in two wars? Oh, well...um.. maybe War isn't the way out or at least these wars. We're in multiple wars and we (the average person) is asked to sacrifice NOTHING. When we go to bed at night the furthest thing from our thoughts are the young men and women dying for us.
We might be able to solve our debt problems in a matter of months if we where to stop the major campaigns of both Iraq and Afghanistan. I hate to sound to simplistic but I don't see the bang for our buck. Most of the terrorist threats that we've been told that we've captured have been on our soil lately. I haven't heard of any plans that we've disrupted from over seas. Are we really fighting them over there so that we don't have to fight them over here?
Anyway, what would I do. If I had ultimate power, one of the first things that I would try is to put this TARP money in the hands of the borrowers and not the lenders. Recently the lenders where told that they where going to have to start lowering the principal owed on the loans. This is the last thing the lenders want to do. Even though they might be upside down on Loan to Value, they're hoping that one day the values will rise and they'll get their money back. They'd actually rather loose money on interest than they would on principal. Let's be real here. The banks where just as much of a culprit on the inflation of prices as anyone else. They allowed stated, 100% LTV, low FICO loans. The lenders where competing with themselves to produce more and more and make as much money as they could which meant the rise of prices would keep them making money the easiest and fastest. They weren't really lending their own money, they where putting it together and selling these unknown and unproven assets on the stock markets.
So screw the banks. Put this TARP money into the hands of the borrowers. Figure out, in very similar ways that they're doing rate mods, to see what it will take to lower the principal that people owe to get them at the 38 - 42% Debt to Income that the government feels loans should be at. By lowering the principal it will save the borrower on their monthly payment AND then make it much easier for them to sell their homes in the near future. They might even be able to make a small profit. Yes, it could be seen as the government giving away money but it will promote and allow for real estate movement in the private sector, not just foreclosing and shortselling people's homes to which only the lenders get to write off the losses. Write them off they are doing, it's very common for the lenders to now send the borrower's on a shortsale a 1099 for the difference of what they owe and what the lender actually got paid off. So you owe 150,000 on a house and it shortsales for 100,000; the lenders will send you a 1099 for that 50k difference. You're going to end up paying taxes on the 50k loss so that the lender doesn't. I'm sure it's more complicated than that but this is what the normal personal is experiencing.
Banks and investors would tell you that they'd loose lots of money on the principal, but I ask, how much is being lost on the the shortsale or foreclosures? How much money in interest and principal at the end of the day when a house sits on the market for six months?
This would promote sales by individuals and make it easier for them to get rid of houses on their own, really push people in and around the real estate business. They would spend more money and higher new processors and invest in their own businesses instead of not being able to pay for the bills.
Another thing I'd do is let knowledgeable people figure out helpful and sensible loan guidelines. There is a need for stated. there is a need for 95 or 100% financing. But make the more risky loans, not terribly worse in pricing but much more restrictive. There is no reason that that someone who qualifies with a full doc income and assets and huge FICO scores shouldn't be given the option to have a 100% loan. If someone can truly afford it, why not. What's more American than that?!
I think I owe it to not just complain, but to also bring to light the failures and possible successes that I see and think of. I'm getting tired and have a long day of fighting for my loans. I'm going to get a few winks but check back in. Let me know what you think we should do to fix and promote the real estate world.
Wednesday, July 14, 2010
Fed meeting and changes
The Fed meet. China drops. The news ain't good. Sometimes I feel like we'd have just the same luck, when it comes to listening to the "experts", as we would letting Paul the octopus prognosticate our economy.
At least with Paul, if he's wrong he'll make some damn fine calamari or tako (my mother's favorite sushi)!!!
I really hate to sound like a broken record. It's not like I look forward to coming up with new and exciting ways to tell you that the economy sucks. Most of you don't need me to tell that to you anyway. It's like the idiotic weather announcements on the radio, I know what the weather is I'm driving in my car or can look out the window. The same can be said about the economy, just look at your bank account or ask a friend how they're doing financially.
The news from China isn't all bad. In fact I think you can take it a few ways. The headline on Marketwatch.com was that China isn't going to see double digit growth for a while. But that's just the headline. As I always preach, you've got to read the article. It seems that China itself maybe the biggest contributing factor to its slowdown. It is not news that China has money. I've spoken with people who live there. Over the past few years, China's biggest issue is how to spread the nations wealth without devaluing their own monetary system. If a government is flushed with money, they can't just hand out checks. As we know, that's just for us broken economies to do :). Ok, not so funny, but take a chill pill; I'm not the one who broke our economy.
As I was saying, what does a Communist government do with all this money? They invest in infrastructure. I've learned of programs where the government is actually building and giving their people new homes. I'm not talking about luxury homes but they're better than the man-made huts that many of the rurally people are still living in. This is just a small example of how the government increases the standard of living of their people without devaluing their currency or allowing the poor rise up in class (for good or bad depending on your political views). Their investment in lower and middle classes also allows them to spend money on stuff that is produced by the rich. In my view this is a type of trickle-up flow of money. But who am I, I'm sure there are a lot more complex things happening. The big news is that China is slowing down some of these investments and "rolled back some of its growth-accommodative polices". These actions are to prevent a bubble and then subsequent burst such as we've experienced. Say what you will about the Chinese, at least their government sees the damage that some of these financial bubbles can create; and while a few people make a lot of money, when it comes time for the bubble to bust many people are hurt.
In the long run it seems that China may be doing the best thing for itself. Only time will tell. Who knows how this will affect our relationship. I don't feel it will hurt us, but it will at some point annoy us because they might tell us no to something. Whether it is when we reach our hands out for money or look for foreign investments which we would expect to be doing better but their rules keep them from exploding. There does seem to be a yin / yang that goes on. The bigger the boom, the bigger the bust. So China is still in play but they seem to be purposely gearing back they're expansion so that they don't go with what we are going through.
That leads us to what the Fed came out and predicted. I look back to different Fed leaders claiming that we're not in big trouble and we should be more concerned with inflation and maybe it's time to raise rates, etc. Meanwhile we had just hit the tip of the iceberg and none of them, even the most radical thinkers were thinking that we'd still be in this hole. Many on the board thought that this depression was going to be a V shaped economy where we see a very hard drop but once all is said and done, we'd have a nice bounce back up. How wrong they are / where. More and more is this recovery looking like it's going to be an L shaped recovery.
Speaking with some of my sources in the foreclosure and shortsale departments, we might only be a quarter of the way through with the homes that will either shortsale or get foreclosed on. Frankly, the heads of these companies don't know what to do. There is such a lack of inventory and most of the homes that are out there are just crap. Either they're way over leveraged or have been sitting so long that people have destroyed them or the homes where crap to begin with and people are now not caught up in the whirling dervish of an exploding market and see them for what they are. Besides, you can't just buy a fixer at a "fair" price, fix it up for thousands of dollars and expect to flip it and make a profit. I'm not saying this is impossible but it's just extremely hard to do.
The other fact that I've noticed is that if anything does come onto the market that's half way decent it's being snatched up like crazy. But not only does it need to be in good condition but priced right as well. You can have a gorgeous house but if you're 50k over value, more than likely you're not going to get what you're hoping to get. people are not going to be putting in that extra money. Especially when financing is such where you're already putting down 20%. People don't want to put down 20% and then the 50k that to property is overpriced. This all leads to 1) crap on the market that just sits and gets worse over time or 2) you need to be in the right place at the right time to snag one of the good home which you might be stuck overpaying for if you really want it. These are tough choices.
Real Estate is such a vital part of our economy. It's one of the last things that we "produce" and sell ourselves. With the Real Estate market not looking good, and other factors as well, the Fed has increased it's projections of unemployment to almost 10%. Here in California, and already in many states, this is not something that's new. We need to get jobs and have jobs created. That's why I'm for stimulus that actually helps hit people. We've seen what the stimulus packages have done for the banks. They've balanced their books and they continue to do business as usual but they're not doing what they where supposed to do with that money, which was help lend to the common person and make loans easier to obtain. I'm not saying that they should go back to stated, 100% neg-am loans; but some of these hoops that the lenders are making even the best clients go through is outrageous. All of this is of the fear that the individual lenders having to buyback loans. Well in my opinion the Fed backing up Fannie and Freddie to buy loans should have taken that fear away and made the lenders more apt to actually LENDING. That didn't happen and now the Fed money has come and gone. I hope that there will be an extension of the Fed buying of Mortgage Backed Securities (MBS).
The Fed is now admitting that this economic downturn will last a while. That's the biggest thing that I got out of the meeting notes. I think we're in uncharted territories and that no one really has a way to get out of this. But like any problem, the first step is to admit there is a problem and deal with it head on.
Time will only tell if the steps that China is making are the right ones or maybe too conservative. Opposite of the Fed. Maybe they should be acting more aggressively instead of a wait and see approach for each half assed idea.
At least with Paul, if he's wrong he'll make some damn fine calamari or tako (my mother's favorite sushi)!!!
I really hate to sound like a broken record. It's not like I look forward to coming up with new and exciting ways to tell you that the economy sucks. Most of you don't need me to tell that to you anyway. It's like the idiotic weather announcements on the radio, I know what the weather is I'm driving in my car or can look out the window. The same can be said about the economy, just look at your bank account or ask a friend how they're doing financially.
The news from China isn't all bad. In fact I think you can take it a few ways. The headline on Marketwatch.com was that China isn't going to see double digit growth for a while. But that's just the headline. As I always preach, you've got to read the article. It seems that China itself maybe the biggest contributing factor to its slowdown. It is not news that China has money. I've spoken with people who live there. Over the past few years, China's biggest issue is how to spread the nations wealth without devaluing their own monetary system. If a government is flushed with money, they can't just hand out checks. As we know, that's just for us broken economies to do :). Ok, not so funny, but take a chill pill; I'm not the one who broke our economy.
As I was saying, what does a Communist government do with all this money? They invest in infrastructure. I've learned of programs where the government is actually building and giving their people new homes. I'm not talking about luxury homes but they're better than the man-made huts that many of the rurally people are still living in. This is just a small example of how the government increases the standard of living of their people without devaluing their currency or allowing the poor rise up in class (for good or bad depending on your political views). Their investment in lower and middle classes also allows them to spend money on stuff that is produced by the rich. In my view this is a type of trickle-up flow of money. But who am I, I'm sure there are a lot more complex things happening. The big news is that China is slowing down some of these investments and "rolled back some of its growth-accommodative polices". These actions are to prevent a bubble and then subsequent burst such as we've experienced. Say what you will about the Chinese, at least their government sees the damage that some of these financial bubbles can create; and while a few people make a lot of money, when it comes time for the bubble to bust many people are hurt.
In the long run it seems that China may be doing the best thing for itself. Only time will tell. Who knows how this will affect our relationship. I don't feel it will hurt us, but it will at some point annoy us because they might tell us no to something. Whether it is when we reach our hands out for money or look for foreign investments which we would expect to be doing better but their rules keep them from exploding. There does seem to be a yin / yang that goes on. The bigger the boom, the bigger the bust. So China is still in play but they seem to be purposely gearing back they're expansion so that they don't go with what we are going through.
That leads us to what the Fed came out and predicted. I look back to different Fed leaders claiming that we're not in big trouble and we should be more concerned with inflation and maybe it's time to raise rates, etc. Meanwhile we had just hit the tip of the iceberg and none of them, even the most radical thinkers were thinking that we'd still be in this hole. Many on the board thought that this depression was going to be a V shaped economy where we see a very hard drop but once all is said and done, we'd have a nice bounce back up. How wrong they are / where. More and more is this recovery looking like it's going to be an L shaped recovery.
Speaking with some of my sources in the foreclosure and shortsale departments, we might only be a quarter of the way through with the homes that will either shortsale or get foreclosed on. Frankly, the heads of these companies don't know what to do. There is such a lack of inventory and most of the homes that are out there are just crap. Either they're way over leveraged or have been sitting so long that people have destroyed them or the homes where crap to begin with and people are now not caught up in the whirling dervish of an exploding market and see them for what they are. Besides, you can't just buy a fixer at a "fair" price, fix it up for thousands of dollars and expect to flip it and make a profit. I'm not saying this is impossible but it's just extremely hard to do.
The other fact that I've noticed is that if anything does come onto the market that's half way decent it's being snatched up like crazy. But not only does it need to be in good condition but priced right as well. You can have a gorgeous house but if you're 50k over value, more than likely you're not going to get what you're hoping to get. people are not going to be putting in that extra money. Especially when financing is such where you're already putting down 20%. People don't want to put down 20% and then the 50k that to property is overpriced. This all leads to 1) crap on the market that just sits and gets worse over time or 2) you need to be in the right place at the right time to snag one of the good home which you might be stuck overpaying for if you really want it. These are tough choices.
Real Estate is such a vital part of our economy. It's one of the last things that we "produce" and sell ourselves. With the Real Estate market not looking good, and other factors as well, the Fed has increased it's projections of unemployment to almost 10%. Here in California, and already in many states, this is not something that's new. We need to get jobs and have jobs created. That's why I'm for stimulus that actually helps hit people. We've seen what the stimulus packages have done for the banks. They've balanced their books and they continue to do business as usual but they're not doing what they where supposed to do with that money, which was help lend to the common person and make loans easier to obtain. I'm not saying that they should go back to stated, 100% neg-am loans; but some of these hoops that the lenders are making even the best clients go through is outrageous. All of this is of the fear that the individual lenders having to buyback loans. Well in my opinion the Fed backing up Fannie and Freddie to buy loans should have taken that fear away and made the lenders more apt to actually LENDING. That didn't happen and now the Fed money has come and gone. I hope that there will be an extension of the Fed buying of Mortgage Backed Securities (MBS).
The Fed is now admitting that this economic downturn will last a while. That's the biggest thing that I got out of the meeting notes. I think we're in uncharted territories and that no one really has a way to get out of this. But like any problem, the first step is to admit there is a problem and deal with it head on.
Time will only tell if the steps that China is making are the right ones or maybe too conservative. Opposite of the Fed. Maybe they should be acting more aggressively instead of a wait and see approach for each half assed idea.
Tuesday, July 6, 2010
Low rates and a failing economy
Rates are low. Very low. Most people think this is good. As far as someone refinancing or purchasing a house right now, this is good. You're not going to find better rates.
The rates should stay low. Low confidence in the stock market and a lack of jobs is creating a perfect storm for people to shelter their money in treasuries. This pushes the yield down and should mean low rates for a while. Mainly because I don't see where the public or private sector will be creating any new jobs soon. Don't forget we still have a massive Real Estate problem and tons of inventory that the banks have not unleashed or pushed forward on foreclosing. We're far from the end.
The economy is not there. Anyone who tells you that this economy is turning around doesn't know what they're talking about. We're in for a long year. If we can truly put Fed money into "green" research or the creation of "ideas" that will be the best way for us to get out of this mess. Eventually the RE market will correct itself but we've got a long way and many ups and downs before that happens. It's going to take people putting research into new ideas and hopefully there will be a spark that will set off a product that will need specialized employees that can offer good paying jobs. What that spark will be or in what direction of manufacturing, I don't know. But I'm thinking in the way that the Dot.Com boom was in the 90's. Sure there where failures at the end but look what we where left with. iEverything, internet, the digitalization of information and a slew of other products and money earning opportunities.
Back to low rates, yes we have low rates. Now is the time to check into refinancing or if you've been waiting to purchase, start looking. The problem there is that the banks are so tight with the money and guidelines that it's making it near impossible to qualify. Don't be dismayed if you can't get a loan Today. The tightening of guidelines is reactionary to how loose the guidelines where. Eventually you'll see some changes to the positive. It might not seem like it now. It might seem like you hear no a lot more than you hear yes, but in time things will loosen up. Just like the job market, it just takes a spark. It will take a few risk minded investors to roll out a Stated program that makes sense, and if they're successful others will follow. But it takes time for these people to 1) have the balls to create a good program with guidelines that will allow it to succeed, 2) the program must succeed and turn a profit, and 3) both one and two will take time to develop and show success. Even in a perfect scenario, if all these dominoes fall the way they're supposed to, it could take months if not years. I'd guess, from the roll out of a new product to the sale of the loan to the time they can be analyzed and finally confirmed as a success and for other to start copying them; you're looking at a year?
Meanwhile who knows what will happen between now and then. It's scary but for some reason I think there is a light at the end of this pit we're falling in. It's not going to be a fun fall and I might not be able to see the light, but I feel that we know what direction we're going to need to go into. The problem is not everyone, especially the people who actually make the decisions like lawmakers and their advisers and lobbyists, can agree on the same path to take to get to the light. This is where we might find the most difficulty getting to the end. Without a good plan that everyone can latch onto, it could cause us to be lost longer than we need to be or can afford to be.
The rates should stay low. Low confidence in the stock market and a lack of jobs is creating a perfect storm for people to shelter their money in treasuries. This pushes the yield down and should mean low rates for a while. Mainly because I don't see where the public or private sector will be creating any new jobs soon. Don't forget we still have a massive Real Estate problem and tons of inventory that the banks have not unleashed or pushed forward on foreclosing. We're far from the end.
The economy is not there. Anyone who tells you that this economy is turning around doesn't know what they're talking about. We're in for a long year. If we can truly put Fed money into "green" research or the creation of "ideas" that will be the best way for us to get out of this mess. Eventually the RE market will correct itself but we've got a long way and many ups and downs before that happens. It's going to take people putting research into new ideas and hopefully there will be a spark that will set off a product that will need specialized employees that can offer good paying jobs. What that spark will be or in what direction of manufacturing, I don't know. But I'm thinking in the way that the Dot.Com boom was in the 90's. Sure there where failures at the end but look what we where left with. iEverything, internet, the digitalization of information and a slew of other products and money earning opportunities.
Back to low rates, yes we have low rates. Now is the time to check into refinancing or if you've been waiting to purchase, start looking. The problem there is that the banks are so tight with the money and guidelines that it's making it near impossible to qualify. Don't be dismayed if you can't get a loan Today. The tightening of guidelines is reactionary to how loose the guidelines where. Eventually you'll see some changes to the positive. It might not seem like it now. It might seem like you hear no a lot more than you hear yes, but in time things will loosen up. Just like the job market, it just takes a spark. It will take a few risk minded investors to roll out a Stated program that makes sense, and if they're successful others will follow. But it takes time for these people to 1) have the balls to create a good program with guidelines that will allow it to succeed, 2) the program must succeed and turn a profit, and 3) both one and two will take time to develop and show success. Even in a perfect scenario, if all these dominoes fall the way they're supposed to, it could take months if not years. I'd guess, from the roll out of a new product to the sale of the loan to the time they can be analyzed and finally confirmed as a success and for other to start copying them; you're looking at a year?
Meanwhile who knows what will happen between now and then. It's scary but for some reason I think there is a light at the end of this pit we're falling in. It's not going to be a fun fall and I might not be able to see the light, but I feel that we know what direction we're going to need to go into. The problem is not everyone, especially the people who actually make the decisions like lawmakers and their advisers and lobbyists, can agree on the same path to take to get to the light. This is where we might find the most difficulty getting to the end. Without a good plan that everyone can latch onto, it could cause us to be lost longer than we need to be or can afford to be.
Friday, June 11, 2010
Stomach of Steel
There's a strange phenomenon happening these days. Maybe it's not so strange. People are going crazy. Not just because the economy is built on toothpicks and people are actually giving up on even looking for jobs but I think that instead of excepting the fact and the truths about the world, people would like to live a "crazy bubble" because in this bubble they can feel safe.
Let's go back a number of years. When I first truly understood rates and could watch them, day to day with some sense of accuracy and knowledge, I was a wreck. I'd watch as each day they'd change. Now when I talk about rate changes I'm not talking about interest rates I'm really talking about the rate pricing. That's why it's never good to ask me, "what did rates do today?" Because I'll give you an honest answer. And unless you're in the business, you won't really understand.
If I looked at the rates and the treasury yield, which has been the most accurate indicator of what rates are doing (not priced but whether they go up or down daily) I can give you an honest answer to the question, "What did rates do today?". There are only three answers to this question. Up, down, or (the unlikely) nothing. With these three words I could go into a five page essay each day on why they did what they did and where I think the rates / pricing are going from here. But that's not the question asked and my answer isn't really the answer you as the consumer are looking for. I assume you want to know what "interest rates" are doing each day. Let me tell you now, NOTHING. On a daily basis the actual rate you're going to get doesn't move. It takes weeks, if not months for interest rates to truly change. A change where I'd say 5% or 5.5%.
I bring this up because back in the day I'd look at rates everyday and see that there was an .125 better in rebate one day or a .25 worse in rebate the next, but in reality the rate I'd give the borrower is going to stay the same. It's gambling for money people. What's worse is you can't turn it off because everyday it changes and affects how you do business. Needless to say I became one of the many mice that follow these numbers as if they're life or death. Trying to figure out when the best day to lock would be so I could earn the highest amount of commission. It would kill you to lock with 1 point back and then the next day you see it at 1.125 back. Oh the humanity!! I lost an extra $500. The rate was the same, say 5%, so the borrower wouldn't know the difference. Because rates / pricing are on a sliding scale, I wasn't going to give a borrower 4.875% because now the pricing is .625 vs .5 back. It would be true the other way where I wasn't going to go up to 5.125 because now I'm making 5.125 and make 1.5 rather than the day before making 1.375. These are the back room games that we all play. It's so easy to get wrapped up into this that it only seems natural that when you are a Broker or Loan Officer you have to start this dance. But it kills you.
Pretend I just gave you a bunch of examples that included Loan Officers trying to juice everything out of their one loan and borrower's reading headlines written by people not in the business that are trying to use RATES HAVE LOWERED as marketing ploys for their banks. A huge cluster of annoyances and stupidity driven by irrational and uneducated thinking. Picture us having that conversation, while I go to the bathroom....
OK I'm back. So here's where I learned the secret. "It doesn't matter". None of it. It's all a distraction. It's all based on lies and greed. If you're a good broker, you should strive to make between 1 - 1.5% on your deals. The pricing will dictate what rate comes from that. If you get a file that is just impossible or you're putting in a ton of effort to make something happen or you're dealing with certain special situations or you just get lucky because the rates are so unbalanced that you luck into 2 points +/- I understand. All of what I just said, doesn't matter. Not to the borrowers. Not to Brokers or Loan Officers who have "pipelines" instead of one or two deals.
This was a long introduction to my main point of having a stomach of steel. For the past month, we've see rates but more specifically the treasury yields go up and down like I've never seen before. The past two days I've seen the rates go up sharply, so in layman's terms they went up .25% in rate (take a step back and really think about that one and how much that costs you). Then today, I've seen it all just come back down. Now the past two days I've gotten calls from LO's and borrowers who've been hearing about rates on the rise and we must find a way to lock the loans in. THIS IS LIFE OR DEATH FOR GODS SAKE!!! As one rude telemarketer told me once, "slow your roll."
For the past month I've been watching these changes. For the weak at heart or uneducated these movements would kill you on a daily basis. I've added this chart to show you what I mean. Look at where we're at today. Even over the last 5 days, there have been such swings that if you don't have faith that everything levels out and that this industry is like every other entertainment industry where there always has to be a story, you'd loose your marbles. BUT LOOK AT THE FACTS. Rates are the same now as they where in November. Yeah we saw a run up during the holiday season, but that's to be expected. I also expect that consumer spending will be up in the coming months. These notes of consumer spending going up will drive rates up in a false sense that the market is stabilizing and people are spending money again. I don't agree. People are spending money because they're not paying their bills or mortgages. If you miss a few credit cards or don't pay your rent / mortgage for a month, you suddenly have 2,000 to buy that new TV. Is your job situation any better, no but they can't take that TV away from you!!!
Just like the past two days, there where signs of recovery only to be blasted down again today by a real estate report that told the truth.
If you look at the first graph, you can convincingly say that rates have gone down over the last year. Maybe about .25% - .5%, at most. If you look at the rates on a daily basis, they haven't gone down. Take a look at the second graph. It shows the madness over the past 5 days. But look at where we started to where we ended. Maybe you could have gotten lucky on hit the low, but more often than not, you've already been sold on a rate so the tiny bit extra is what a good broker would call a bonus. If we've talked and we've agreed that 5% is the rate you're getting, but I choose to not lock a loan in, that's my gamble. I've certainly been on the wrong end of that gamble but sometimes you guess right but at the end of the day the borrower gets what is agreed upon, 5%. Obviously if rates get so much better that we now have to base everything off of a different rate level, things change. A year ago, I'd have quoted 5.25 and now I'm at 5%. Within those 30 - 45 days when a particular loan goes through it's very rare that the market would make such a volatile swing that a borrower would see the rates actually come down. Especially in this market when the lender have priced loans in a way that they are really dictating where loan rates should be at. If we talked on Monday about rates, we're at the same place on Friday.
So you really have to have a stomach of steel if you want to know what happens each day. You also need to comprehend that some days you're the winner and other days you're the looser. The only way to truly make it in this business or deal with your loan rationally so you're not crazed over the period of getting a loan is to agree and come to terms with a rate. If you're happy, go for it and close the loan out.
Lastly, let me give borrowers a little secret. If you're cool and settle on a rate that you can live with, don't be all over the broker about did rates get better or worse since you've locked it. Because it doesn't matter. Do you know the difference between 5 and 4.875% is probably on average only $35 - 50 per month. But that .125 could mean thousands in commission to the broker. I've noticed that not, just me but with other Brokers or LO's that if the borrower is cool and there's a chance or decsion that needs to be made, I'll lean in the borrower's favor. While if someone was riding me constantly for a month about rates and not worrying whether they're going to get the loan I'm going to lean towards making as much as I can. It's just a fact of nature. Like the boss you can't stand. Are you going to volitarily come in on Saturday to work or the boss that let's you get overtime or doesn't ride you all day, aren't you going to be more willing to go the extra mile and eat some pay to make things happen.
"Don't walk over dollars to pick up pennies", "Pigs eat and hogs go to the slaughter" and one from the Coach who recently passed "Things turn out best for the people who make the best of the way things turn out." Maybe not his best but fits our discussion - R.I.P. Coach Wooden.
We're in this job to make money, yes. But I've stayed in this job because of the people that I work for. Most of my clients trust that I'm doing the best job that I can. I've earned that rep because I actually do the best job that I can. I've learned that you can't do the best job if you're trying to make the most money out of every deal and you won't get a good job done for you if you're shopping around for the lowest deal and cheapest rates / prices around. I have to have a stomach of steel to go through the ups and downs of the market. But I also have the brain to know that if McDonald's stock goes up or down $5 in a day, will they stop serving burgers the next day? No, either way they'll continue and for good or bad they'll taste the same. Just like rates. The treasury will go and down each day. Rates will still be posted the next day and more than likely the rates will stay the same.
So how did the rates do today, Friday the 11th of June, they got better. Are you getting the same rate as you where going to get yesterday, probably. It doesn't make sense or maybe now it does. Or maybe as a Broker or LO you should be looking for the next deal and do the best job for your current borrower to just finish and close the loan.
Tuesday, May 25, 2010
Rates are good, let's keep this ball rolling!
What more can I say than rates are good and let's keep going for as long as we can.
The economy sucks. Don't let anyone tell you differently. I'm constantly seeing "signs" of a turn around. You never see the article weeks later that refutes those claims or that after the numbers are adjusted we're still suffering from a depression.
I had an interesting talk with an associate the other day. Everyone in the Real Estate business (that I feel knows what they're talking about) agrees that we're still only about 1/3 of the way through the foreclosure mess. People are not paying on their mortgages but it's become such a huge problem and the lenders don't want to 1) truly solve the mortgage issue which would be easy, drop the principal amount. Lowering the interest rates on modifications are just patchwork fixes and in some cases still won't solve the problem. If you owe 400k on a now 200k property, even a 0% interest rate isn't going to probably solve your issues. 2) hire more staff and quality staff to address all these files. I know from talking to inside people that not only is there more work and files than the people that are hired able to address but the people working on the files don't know anything about what they're working on. Many times your dealing with someone from a collection department that was transferred over to foreclosures / short sales and can't figure out what's a good deal or arrangement. They'll submit the file and the computer system will tell them no on a short sale. But maybe the offer on that short sale is only 1,000 off. The computer says no but a person who knows can say yes and save a company thousands in further interest and falling home prices. 3) been living off free money from the government. While most of these departments to rate mod or lower interest rates are slowly helping people (I read that B of A was touting that they had modified 57,000 loans in 2010 already, WOW out of probably 10 million loans in trouble, we should really be getting a grasp on this problem soon) on the other side of the bank, they're making money doing loans that then have been sold off to the government and backed so that there is no risk that falls to them. Banks have shown profits during this time while people are loosing their homes and jobs. Banks have been able to rely on Fed money to make sure that they're not risking anything, in essence it's been business as usual but with no risk. They just pass the risk on to the Fed or the smaller lenders who use them as money lines.
And the list goes on. Basically even though "We" are backing the loans, the lenders are doing the hardest to not close loans. Underwriters are nit picking each line of the approval and application to see how they can cover their asses when / if a loan gets put into question a month down the line.
Back to the issue of false news. The conversation I had was funny in a bad way. I was saying how a report was showing that people where spending more money and this was a sign that we where on our way to recovery. But from everyone that I talk to, we're way out from seeing true recovery. I don't see anyone that's doing better. There's no one saying that it's easier to find a good job or even a bad one. Then my friend tells me the secret behind this consumer "confidence"... People are buying more things because they're not paying their mortgage. I just thought to myself, DUH!! Sure, with all these modifications and people stringing out foreclosures, anyone who's still working will have extra cash so why not buy yourself something. You didn't pay your 2,000 mortgage so why not buy that new flat screen TV you've been checking out. People have more money to spend because they're not spending it on their monthly housing bill.
If anyone comes into my office and tells me that they're getting foreclosed on and loosing there house and this process just started a few months ago, my first question is what's wrong with you? I know of people who haven't paid a house bill for 2 years and are still in the property. With a few creative ways of working the system you can string out a foreclosure or short sale for a long time. The banks are so screwed up that you can play the game. Don't get me wrong, I'm not suggesting people do this or saying it's the right thing to do but lets get realistic; it's happening.
Is this fair to the people who are paying their mortgage, no. Is it fair to the banks, no (but come on, it's like if the deal accidentally give you an extra chip are you going to feel bad for the casino?). It's the world we live in. If I were to guess, and I feel this happens in cities more than rural areas, that 20 - 30% of people are trying to get assistance on their mortgage and in some why are going to be able to miss at least one payment if not multiple payments and not suffer severe consequences. In worse hit areas I'd put that number up to about 50 - 60% of homes. That's how bad this economy is.
That's why I tell people that this is a great time for loans. Sure the lenders aren't lending and are taking forever to get anything done. Sure they're over conditioning and denying anything that they can. But if you can survive the fight and close a loan, which we've been doing here at BEAR Financial (plug, plug, plug - hey it's my blog) you'll be extremely happy with the results over the life of your loan / home.
If you haven't thought of refinancing or purchasing something, it's time that you have. If we're in the middle of refinancing or purchase, just bear with us. It's a tough journey but we'll get there. Now some people won't fit into the box. I say to hang in as well because I'm guessing we're going to go through another batch of changes over the next six months with all the Federal regulations coming out soon. This year is about patience and as I started this post out, we need to keep the ball rolling. So hang on and push!!
The economy sucks. Don't let anyone tell you differently. I'm constantly seeing "signs" of a turn around. You never see the article weeks later that refutes those claims or that after the numbers are adjusted we're still suffering from a depression.
I had an interesting talk with an associate the other day. Everyone in the Real Estate business (that I feel knows what they're talking about) agrees that we're still only about 1/3 of the way through the foreclosure mess. People are not paying on their mortgages but it's become such a huge problem and the lenders don't want to 1) truly solve the mortgage issue which would be easy, drop the principal amount. Lowering the interest rates on modifications are just patchwork fixes and in some cases still won't solve the problem. If you owe 400k on a now 200k property, even a 0% interest rate isn't going to probably solve your issues. 2) hire more staff and quality staff to address all these files. I know from talking to inside people that not only is there more work and files than the people that are hired able to address but the people working on the files don't know anything about what they're working on. Many times your dealing with someone from a collection department that was transferred over to foreclosures / short sales and can't figure out what's a good deal or arrangement. They'll submit the file and the computer system will tell them no on a short sale. But maybe the offer on that short sale is only 1,000 off. The computer says no but a person who knows can say yes and save a company thousands in further interest and falling home prices. 3) been living off free money from the government. While most of these departments to rate mod or lower interest rates are slowly helping people (I read that B of A was touting that they had modified 57,000 loans in 2010 already, WOW out of probably 10 million loans in trouble, we should really be getting a grasp on this problem soon) on the other side of the bank, they're making money doing loans that then have been sold off to the government and backed so that there is no risk that falls to them. Banks have shown profits during this time while people are loosing their homes and jobs. Banks have been able to rely on Fed money to make sure that they're not risking anything, in essence it's been business as usual but with no risk. They just pass the risk on to the Fed or the smaller lenders who use them as money lines.
And the list goes on. Basically even though "We" are backing the loans, the lenders are doing the hardest to not close loans. Underwriters are nit picking each line of the approval and application to see how they can cover their asses when / if a loan gets put into question a month down the line.
Back to the issue of false news. The conversation I had was funny in a bad way. I was saying how a report was showing that people where spending more money and this was a sign that we where on our way to recovery. But from everyone that I talk to, we're way out from seeing true recovery. I don't see anyone that's doing better. There's no one saying that it's easier to find a good job or even a bad one. Then my friend tells me the secret behind this consumer "confidence"... People are buying more things because they're not paying their mortgage. I just thought to myself, DUH!! Sure, with all these modifications and people stringing out foreclosures, anyone who's still working will have extra cash so why not buy yourself something. You didn't pay your 2,000 mortgage so why not buy that new flat screen TV you've been checking out. People have more money to spend because they're not spending it on their monthly housing bill.
If anyone comes into my office and tells me that they're getting foreclosed on and loosing there house and this process just started a few months ago, my first question is what's wrong with you? I know of people who haven't paid a house bill for 2 years and are still in the property. With a few creative ways of working the system you can string out a foreclosure or short sale for a long time. The banks are so screwed up that you can play the game. Don't get me wrong, I'm not suggesting people do this or saying it's the right thing to do but lets get realistic; it's happening.
Is this fair to the people who are paying their mortgage, no. Is it fair to the banks, no (but come on, it's like if the deal accidentally give you an extra chip are you going to feel bad for the casino?). It's the world we live in. If I were to guess, and I feel this happens in cities more than rural areas, that 20 - 30% of people are trying to get assistance on their mortgage and in some why are going to be able to miss at least one payment if not multiple payments and not suffer severe consequences. In worse hit areas I'd put that number up to about 50 - 60% of homes. That's how bad this economy is.
That's why I tell people that this is a great time for loans. Sure the lenders aren't lending and are taking forever to get anything done. Sure they're over conditioning and denying anything that they can. But if you can survive the fight and close a loan, which we've been doing here at BEAR Financial (plug, plug, plug - hey it's my blog) you'll be extremely happy with the results over the life of your loan / home.
If you haven't thought of refinancing or purchasing something, it's time that you have. If we're in the middle of refinancing or purchase, just bear with us. It's a tough journey but we'll get there. Now some people won't fit into the box. I say to hang in as well because I'm guessing we're going to go through another batch of changes over the next six months with all the Federal regulations coming out soon. This year is about patience and as I started this post out, we need to keep the ball rolling. So hang on and push!!
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