Banks, Bucks, and Bungling

Here we are with 115 banks closed down by FDIC. Kind of shakes your faith in the intelligence and integrity of people we had come to regard as caretakers of our deposits. CIT which benefited from a substantial infusion of taxpayer cash by their friends in government are now poised to file bankruptcy which promises to cost the said taxpayers over two BILLION dollars. The same friends in government who are currently pointing to the "success" of the stimulus in creating and/or saving jobs in the face of figures that dispute their claims and a jobless rate that continues to climb and pure number of unemployed that continues to rise. We can be sure that the bad news is going to continue so long as the concept of spending our way out of the economic mess with borrowed dollars continues. Only job growth will solve our problems, only a reduction in taxes on the job providers will permit job growth. Moving in the opposite direction the administration and congress are pushing hard to increase the tax burden and the debt with an ill-conceived health care overhaul, to "transform" a system which is the envy of the world. To be sure some reform is needed, but incremental and targeted, not radical and authoritarian. Competition across state lines by the approximately 1300 insurance companies would drop rates significantly. Tort reform would reduce the costs of defensive medicine. A THOROUGH attack on fraud in existing government programs by vendors, (FREE SCOOTERS), providers, (hospitals, etc.) Texas runs a tight ship and provides a model that works. Massachusetts and Tennessee provide models that don't, as do England, Canada, and other socialized schemes.
Free markets made us the greatest society in the history of man. Kind of silly to abandon a winning strategy to satisfy the power hunger and egos of a bunch of incompetents who have never run so much as a news stand.

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Real Estate/Mortgages/Politics

Home values are up, or down, depending on what paper you read, or what government purpose needs to be served. Money is more/less available for financing with the same caveat. The administration in Washington/Sacramento/(your city here), is the finest the world has ever seen or headed for absolute disaster. For most of us, the pulse that we keep our fingers on, and most pay attention to, is our own. For most of us that pulse is weak and at best erratic, and therefor troubling. Those we elected to provide leadership would apparently have trouble organizing a one car parade, and couldn't track an elephant in two feet of snow, and yet they persist. For the careful planner viewing the probable outcome of our mounting national debt, a study of the Chinese language might provide some gainful employment in the near future. Next best might be a study of survival skills in the wild.
Enough with that. For those with credit still intact we can provide financing in this tightening market at very desirable rates and terms. Tougher than it used to be for sure, but possible. Commercial financing, largely reported as dead, is readily available, and none to soon for those with balloon payments coming up in 2010. Agricultural financing, both real property and receivable financing is available. For those who want to convert a stock portfolio to useful cash, at very low interest rates, we have a solution. And for those for whom a loan modification may be the only salvation, we can provide no up-front fee assistance. Our work is significantly more difficult now than in the past, but the rewards of successful completion, the psychological rewards that is, are also greater. Home sales are slow and prices are driven by the foreclosure and distress sale markets so it's not a good time to be looking for a generous buyer. For the buyer it's a good time if there is some intent to keep the home for a substantial period. There are some good bargains out there, but no way to know if the bargain may be better in the future. Personal circumstances must drive the decision process. Advice from someone who believes they're able to read the market is less than worthless. About on a par with buying a tip sheet on the horse races. We hope you'll let us help with your decision process or your financial needs.

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Foreclosure update

Just in case anyone thinks the situation is improving, here are some of the facts. In Butte, Glenn and Tehama Counties there are currently 436 foreclosed properties. Thee are 1541 properties with default notices filed, including those with auction dates set. That's a lot of personal tragedy, a lot of economic disruption, and certainly a tremendous influence on housing prices. The government continues to intervene by bailing out banks, shoring up mortgage debtors, tinkering with interest, and generally slowing down the process of returning the markets to normalcy. What should have been a short surgical failure for those institutions and individuals that gambled and lost has become instead a drawn out affair while the world waits to see which of the culprits will be rewarded by the power players, and which "allowed to fail". The economy, and all of us, can only twist in the wind for just so long. Despite the occasional blip in housing prices, or the report of a slight decline month over month in foreclosures, the trend for values is down and the trend for foreclosures is up. We must deal with it and hope that some sanity will appear in Washington, an unlikely prospect with this administration and Congress.
If there is a bright spot it is for the prudent and still employed among us who are in a position to take advantage of the very low interest rates available. There are a large number of adjustable mortgages due for reset in the near future and this is a great opportunity to get into a fixed rate program. When the lid is removed the expectation is that rates will move up fairly sharply, and while not a certainty, it would be silly to bet against it. For buyers intending to keep their home for a substantial period it's probably a pretty good time to consider buying. There are some attractive bargains out there, and even though prices will possibly decline further, the attractive interest rates are not likely to be repeated any time soon. My crystal ball is imperfect, but those are my thoughts.
Naturally we'd like to be the agent to help in any of the above activities, buying, financing, refinancing.
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Agricultural Financing

First let's get the bad news out of the way. The FDIC has now presided over the demise of 95 banks since the first of the year. Existing home sales were down last month. Foreclosures are still high, although many of them are being held off the market by the banks in possession. There are six job applicants for every job opening. It is quite possible to hear words of optimism emanating from various pundits and from Washington, but the facts belie the words. The problems are serious, deep, and are being exacerbated by fumbling governmental policy which is increasing the deficit, burdening the productive elements of society, attempting to manage the business community, and generally inhibiting an orderly recovery. That's the bad news.
The good news, at least for us, is a recent alliance with a major agricultural lender which permits us to offer not only an array of mortgage products, but more importantly, the ability to provide receivable financing, (factoring), crop financing, supply chain financing, equipment financing, etc.
At a time when cash is a problem for many businesses, the ability to provide help is a valuable addition for us, and for our clients. Not just help, but a broader range of service and better pricing than any of the competition we're aware of. Additionally we have added a security based lending option for those with stock portfolios that permit us to provide liquidity without triggering a taxable event. Interest rates are very low, from 2.5 to 4%.
We have to be innovative and we're constantly seeking ways to increase our value to people needing, or seeking help with real estate matters. For those with difficulty placing loans, or those seeking financial solutions, we hope we will be one of the resources considered. We're aggressive in problem solving.
My apologies for the "bad news" beginning, but to ignore reality is to loosen your seat belt before the crash. It's going to get worse before it gets better, count on it.
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Chico Foreclosures

Chico foreclosed properties number 70 with 174 more in default and pending auction. In contrast, Oroville, approximately 1/6th the size of Chico, has 84 foreclosed properties with 182 pending auction. Bad news for those expecting a turn-around in home values. To date 84 banks have gone into receivership nationally and the continued expectation is for many more before year end. The unemployment news today shows a continuing, although slowing, rise in numbers.
Despite some flurry in the stock market reasoned outlook calls for a protracted period of recession, kind of bumping along the bottom, since consumers don't have either the cash or the will to spend it to drive a turn upwards.
Our websites continue to offer a broad information base, foreclosure info, MLS listings, mortgage information, free credit reports, and property valuation data bases. We think information makes you stronger, so we do what we can. Additionally we offer a no up-front fee loan modification service to try to help those who don't want to go it alone.


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Banks, Banking, and real estate

There are now 81 failed banks so far this year, with another 400+ on the danger list. Some estimates place the probable troubled banks likely to go into receivership in the four digit range.
Frightening times. Meanwhile unemployment marches upward, and the national debt is revised upward a trillion at a time, without considering the possibility of a health care bill that proposes to cost well over a trillion more. Sanity is in short supply in Washington where it appears that the average IQ never exceeds room temperature. The health care reform proposed is likely not to happen because of the obvious resistance of the citizenry, although most of us believe some reform is necessary. Tearing down your home because of a leak in the roof would not be prudent, nor is it prudent to tear down the current health care system to address the problems. Tort reform would reduce costs by the billions, strengthening the investigative oversight of Medicare/Medicaid would save billions more in fraud elimination, and allowing the crossing of state lines by insurers would improve competition. Taxing of benefits as income would provide some revenue. These measures are for the most part not being mentioned or considered because implementation would possibly interrupt the income stream from lobby groups.
On a happier note. Although real estate values continue to decline and lenders are generally tougher to deal with, a sharp broker, (that would be us), can offer some attractive financing for residential purchase or refinance, commercial loans at favorable rates for most types of properties, and agricultural loans for vineyards. hobby farms, farms, ranches, and orchards, also at great rates. To cite the old cliche, when the going gets tough, the tough get going. There is some credibility in the argument that a recession is a great opportunity to start a business, or some enterprise. Property is cheap, labor is plentiful, money is inexpensive.
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Are You Stimulated Yet?

Most of us are becoming numbed by the repeated news that the debt is escalating by the trillions, one government move after the other, and the seeming indifference of legislators and the executive to this uncontained profligacy. The pervading sentiment is fear, and rightly so. One bad move after another has the taxpayer owning banks with negative assets, car companies, and now pretty soon if the health bill passes, another insurance company styled after medicare. No one in government currently has run so much as a candy store yet they want to continue to expand their control, the impending bankruptcy of Social Security, Medicare/Medicaid, Fannie Mae, Freddie Mac not dissuading them in the least, nor the losses at the Post Office in the billions nor the huge losses at FHA and Ginnie Mae.
Since 2000 there have been 131 bank failures requiring FDIC intervention, and to get a sense of the momentum of the problem, 28 of those happened between 2000 and 2007, 26 happened in 2008, and 77 so far this year with over a third of a year yet to go. Over 300 banks are listed as "troubled" so more to come no doubt. One of the 77 was Colonial, noted in a previous blog, about the fourth largest failure so far just behind IndieMac and Washington Mutual.
Foreclosures persist as a downward influence on housing prices and is not likely to end any time soon, and unemployment figures are discouraging and continuing to worsen. The ability to purchase a home is constrained by very stringent lending policies, although strong credit is a great driver and allows us to find amicable lenders for most applicants. Refinancing is difficult because of the sharp reduction in asset value. For those with a stock portfolio we can provide security based loans in the range of 2.5% to 4.5% fixed rate. Just one more way to convert an asset to a different form and perhaps free up capital for some other purpose.
The fear most of us feel is from the lack of confidence we have in government's ability to make wise or prudent decisions. Most of what we see is ego driven behavior without any concern for long term consequences, and that's frightening. The greatest country in the world is being brought to its knees by greed and ineptitude and its time for that to end. Town Hall meetings are a beginning, but the ballot box beckons.
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