Real Estate News & Views

Financial Reform?

2010-07-18T12:59:00.001-07:00

The newly passed (in the Senate) Financial Reform legislation has some interesting aspects. in addition to the several hundred new regulatory controls provided to the Executive without Congressional oversight. Also in addition to the fact that nothing is done to assist the small banks in their needs to facilitate lending to small business. Most interesting is the authorship of the Bill, largely at the hands of Chris Dodd and Barney Frank, the two most responsible for pushing Fannie and Freddie in their reckless lending to unqualified borrowers, which lies at the heart of the financial mess the Bill is intended to alleviate. Strangely enough, the same Fannie and Freddie are not even mentioned in the Bill, nor are they constrained in any way from continuing their reckless behavior. It could be that Obama wants this Bill, and it could be a coincidence that Obama, Dodd and Frank were the three largest beneficiaries of Fannie and Freddie political contributions, but I don't think so. Strange also that a settlement has been reached with Goldman Sachs, big numbers to be sure, but nothing compared to the benefits they enjoyed in the AIG bail-out. A bail-out with tax dollars. Now Goldman and the administration can again be friends, and presumably the contributions to those favored recipients can resume. Those favored include but are not limited to, the above mentioned threesome. Threesome may carry some connotation not specifically political, but there has been sufficient written to suggest that all of them may be willing to extend their interest in screwing beyond just the taxpayers.
The administration has some peculiar agendas. They are NOT suing sanctuary cities for violating immigration law. They ARE suing Arizona for voluntarily aiding in the enforcement of immigration law. They are not enforcing voting right violations when blacks are the violators. They did seat Al Franken although there is substantial evidence his win margin was produced by illegal votes of convicted felons. They have interfered with candidates in Senate races in Pennsylvania and Colorado. In the BP oil spill they have appointed an oversight panel composed entirely of environmentalists opposed to drilling, and not one oil expert or businessman. They lie about the meaning of unemployment figures and have spent almost 20 million dollars on propaganda signs extolling the virtues of a failed stimulus package. They have appointed without oversight a new head of financial control in Medicare who holds that he has a love affair with the British Socialist system of health care, and have submitted for approval for the Supreme Court a person with no judicial experience who holds that our court decisions should include a reliance on international law. Most of us are of the opinion that our Constitution made us the best country in the history of the world and we are loathe to surrender those values to an aggregation of laws pursued by a group of failed societies. When another country has surpassed us it will be time for us to consider conforming to that new standard. Until then, let them copy us.
Just to preserve the integrity of this as a real estate blog: Foreclosures are up, prices are flat to down, interest rates are remarkably low. If we can help you in any real estate or mortgage endeavour, please call us.
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Mortgage Confusion?

2010-07-09T07:12:00.000-07:00

In one of the publications we receive, intended for mortgage brokers, and designed to present the wares of wholesale lenders plus "informative" articles and editorials, the conflicting information boggles the mind. Within a single column, which cites various sources, the information points to dramatically different conclusions, and sometimes there is conflict within a single source. Case in point. The Mortgage Bankers Association reports that foreclosures hit another record, "perhaps their peak", yet conclude that "If mortgage delinquencies are not yet clearly improving, it also appears they are not getting worse". In the same column it's reported that home sales in April increased "across the board", a result of the tax credit, so not a reliable statistic, just accelerating future sales. At the same time the Case-Shiller Home Price Index reported a 3.2% drop in home prices in major markets in the first quarter. Also at the same time it is widely reported that Jumbo Loans are becoming easier to finance, of interest to a very small segment of the population, yet unreported is the increasing difficulty of obtaining a conventional loan, those financed under Fannie/Freddie guidelines, which affects most of the population. As you probably know, Fannie and Freddie have been forced to de-list their stock from the major exchanges because of too low valuation. It is estimated by some that the ultimate cost to taxpayers of the mismanagement of those institutions is likely to exceed ONE TRILLION dollars, a real tribute to the leadership abilities of Frank and Dodd and other Congressmen. Trying to understand the marketplace is keeping many good people awake at night. Possibly after November some sense of order will be restored.
We have hired as captain of our ship of state an individual with no clear idea of our destination, no clear idea of how to reach it, no ability to hire crew members with any knowledge of the functioning of the system, and an inability to make the simplest decisions, unless we include choosing a tee time. HERE is an article of interest about why we're where we are.

Our office can still arrange financing or refinancing for you, and at rates that are the lowest in years. Call and let us compete for your business.
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Happy Birthday

2010-07-05T08:53:00.000-07:00

For just a moment we can reflect on our collective very good fortune to be the beneficiaries of the actions of a small group of people who revolted against the notion that some people are born to be "rulers" and some are born to be ruled. The excitement of the celebrations, of fireworks, inspiring music, and the faces of citizens literally glowing with the joy of simply "being American", fills all of us with a sense of pride and gratitude. As a nation we come together to recognize our greatness. We are the most generous people one earth. We are the most innovative people on earth. We are the most fortunate people on earth. All because a small group of people gathered 234 years ago to put into words the philosophical concept that "All men are created equal". No government can infringe on this notion, and any government rules only with the consent of the governed. We have flourished as no nation before us because we are a nation of individuals, and government exists to secure and protect us as individuals. Tomorrow we'll be back to business as usual, and we are in perilous times. If we can individually recognize, and collectively exercise, the idea that the guarantee of equality is one of opportunity, and not of outcome, we'll probably survive. There are many issues to be addressed, but for today I wanted to join in the feelings of gratitude for being a part of the whole thing. Particularly a great thanks to the dedicated members of our military.
For those wishing more from better writers, go HERE
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Lowest Mortgage Interest In A Long Time

2010-06-29T19:18:00.000-07:00

While not directly tied to the 10 year Treasury, mortgage interest tends to track it pretty closely, and today the 10 year dipped below 3% for the first time since last year. This should be incredibly good news for folks looking for a purchase or refinance loan, and it is except for a couple of details. First, loans are tough to come by, they require very good credit and substantial down payments or equity in the case of refinance applications. Second, the folks who have the level of credit and finances that lenders are looking for, characteristically have substantial stock holdings, usually 401K or similar. While interest rates are down, so are stocks, and the valuation of portfolios has taken some severe hits. It's tough to concentrate on other matters when the decline in personal wealth is so sharp and so severe, and the fear of more to come is so pervasive. This government can not accept the reality that taking from one group to give to another group is not stimulating nor creative of job or economic growth. Wealth is removed from those who would utilize it for entrepreneurial gain, creating jobs, and given or redistributed to those whose sole purpose on the planet is developing innovative strategies to take even more.
Obama is a failed President and painfully, for us, demonstrates that you can't expect executive leadership from someone with absolutely NO executive experience. Bad enough that he is hurting all of us directly but he has become a laughingstock in the international community and has diminished the luster that we rightfully enjoyed as leaders and protectors of the free world. Until very recently we were respected or feared by every nation on earth, allowing us to enjoy great freedoms for ourselves and to provide help for those who sought to emulate us, and discourage those who sought to disrupt the rights of others. With some wise choices in November, and again in 2012, we'll begin the restorative process, and we will recover, but what a waste it has been. We must take care to choose elected officials with attention to the values they adhere to, using the same techniques any employer would use, experience, ethics, goals, and a desire to leave things better than they found them. Enough of career politicians, enough of lobbying, earmarking, favoritism, and the culture of greed. Enough of fancying that bureaucrats or politicians can better determine the use of money than the people they took it away from. There are a million things that need to be done, but with the right people guiding the process, we'll get them done. The country sought out and utilized the founding fathers. We need to choose their successors with greater care than we've so far and most recently exercised.
With bodies dropping all around us, I'm pleased to note that we're still able to get you a very favorable loan, probably find a buyer for your home, or help you find a home. All of those things take a little longer than we would like, and all of them are considerably more work, but if you're realistic and patient, we'll get you to your real estate goal.
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Who Is Obama?

2010-06-18T13:54:00.000-07:00

This link is to the best description of our President that I have yet read or heard. Additionally there is an opportunity to discover Imprimus, a free publication of Hillsdale College, and if you're a freedom lover, a great way to stay in touch with our value system. Go HERE.
We are witness to the greatest bunch of dithering idiots in our history, and it is costing all of us a great deal. The housing market, which is supposed to be my main concern, is still troubled, mainly because of government action and inaction, or inappropriate action. Foreclosures continue to plague the inventory, and no relief in sight. Mortgage rates are very favorable, but it's very tough to qualify for a loan for purchase or refinance. Possible certainly, but credit is severely restricted by lenders, mainly because they can make more money, more safely, by not loaning it on mortgages.
We have serious security issues with our porous borders, ignored by the federal government, a calamitous oil spill, ignored or mismanaged by the federal government, a health care bill which is now revealing itself as the disaster most of thought it was from the outset, and a group of clowns trying to swap jobs and favors in an attempt to control the outcome of elections. The list of course is much, much longer.
We are seeing some activity in home sales, but not much, and too much influenced by distress selling, foreclosures and short sales. If we could somehow induce the government to let market forces work we could get through this mess in a fairly short period, but the insistence by bureaucrats on forcing modification programs that are not working, giving seller credits to influence behavior, and generally messing with the financial markets has provided an effective bar to any short term recovery.
Does anyone remember a very old commercial in which a mother insists on advising and "helping" her daughter in some kitchen activity until finally the daughter says "Mother, I'd rather do it myself!"? Well politicians, we'd rather do it ourselves.
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Could Things Be Worse?

2010-06-04T22:54:00.000-07:00

Usually if you scan the horizon it's possible to find something cheerful to lighten the mood, but boy oh boy, the pickings are really slim now. In real estate, the downward slide continues, foreclosures are a continuing problem, modifications have proven to be expensive and ineffective for the most part, and even though mortgage rates are very low, getting a loan is very difficult. The tax credit much like the "cash for clunkers" program, has siphoned of future sales and new mortgage purchase applications are down to 1997 levels. The stock market took a 300+ point dive today, stripping enormous value from 401K accounts and generally reflecting the malaise of the country.
We have been the strong protector of the entire world because of our financial and military strength, and our devotion to protecting human rights as a reflection of our own ideals. We now have a regime in Washington that insults our friends, bows to our enemies, and demonstrates weakness and indecisiveness with every challenge, whether an oil spill, saber rattling by North Korea or Iran, an economy in shambles brought about largely by failed government policies. The consequence of this demonstrated weakness of purpose is a stepped up testing of our resolve by everyone on the planet. Even the President of Mexico and an aging Beatle feel free to insult us publicly. The Chicago thugs were able to get this guy elected, but nothing is going to teach him, or them, how to govern. November is a long way off, but we absolutely must begin the process of restoring some semblance of sanity and fiscal responsibility to all levels of government, and if we can't teach some leadership skills to the President, we must at the very least change the disastrous course he's set us upon. ( I know that's a preposition.)
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Government Solutions

2010-05-13T07:50:00.000-07:00

When incompetence is combined with criminal greed you arrive at the current state of the union. The national debt is closing in on 13 TRILLION dollars. Not only is there no apparent concern for this fact, there is a continuing effort to further burden the taxpayers, current and far into the future. Bailing out failure has become a new norm, the latest being a bonus to the banks holding Greek debt, as if the failure of this socialistic society is a responsibility of American taxpayers. Government in bed with financial institutions enriches a narrow segment of society at the expense of all the rest of us. Small businesses, the driver of a successful economy, have no mechanism for enriching politicians, so they are dying in droves while the larger financial firms, banks and investment houses, are prospering. No accident, of course, since the funding for politicians comes from them. In the latest "financial reform" legislation pending debate and vote there is no mention whatever of controlling Fannie and Freddie, the prime mover in the current mortgage crisis. In fact a vote just taken to include provisions to begin controlling and reining in these two GSE's, the Democrats managed to defeat the effort by 56 to 43. The New York attorney general is bringing action against several big institutions for fraud in the mortgage market, alleging manipulation of the credit reporting agencies for the purpose of misrepresenting the risk potential of mortgage backed securities. Of course they did and of course many investors lost a great deal of money, initially, but your friendly politicians came to their aid, bailed them out with your tax dollars, and life pretty much goes on. The mortgage market gets a lot of press, but it really is not the intention of the government or the lenders to "help" the borrowers. The complicated interplay of programs apparently designed to help borrowers is designed at root to get politicians re-elected and insure that financial institutions are protected from loss. No one should be naive enough to believe that politicians have any other goal than insuring their retention of power. Did you know that JP Morgan and Goldman Sachs have made a profit every single trading day this year in the stock market? Do you believe that anyone is either that smart or lucky? Do you believe that the 1000 point drop in the Dow a few days ago was caused by someone with a thick finger on the keyboard of a computer? The market corrected very quickly of course, but in the movement I'm sure a lot of money was made. I'm not suggesting conspiracy. Simply that the system is set up for gaming. The idea of stocks as an investment in companies engaged in commerce for profit has pretty much evolved into a casino mentality, and the dice are not in your hands.
Politicians are incapable of ethics driven behavior. The financial markets are manipulated for the benefit of a few and the re-election of their friends. Even something as simple as deciding to seal our borders against illegal immigration can't be tackled for the obvious reason of security, but instead, concentrating on how to convert these illegal bodies into legal votes. Poor Arizona is now being castigated for producing legislation to protect itself that is the mirror image of federal law that has been on the books for decades, but not enforced for political reasons. When the federal government fails or refuses to act to defend the citizenry of the state, the state has an obligation to act. In our larger war on terror, the administration has gone to great lengths to categorize repeated attempts to harm us as "lone wolf" events. The care given to avoid using the word "terror" or "Muslim" or "jihad" is frightening. There is no rational explanation. Now since the New York Times Square event the AG Holder has used the word terror several times in just a few days. Something this guy said must have inspired some level of fear, but still no "Muslim" or "Jihad".
Politicians are not our friends generally. Usually they are simply self-serving dolts, but this current crop are positively frightening, because of their direction, and their unbelievable incompetence and blatant thuggery. If we're not awake in November, 2010 then we deserve our fate.
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Loan Modification Help

2010-04-26T09:58:00.000-07:00

We're offering to help anyone in our market area with loan modification, without charge or obligation. The obvious question is "what's the catch?", or simply "why?" Three reasons. First, we don't think things are going to stay this bad forever, so any goodwill we can put in the bank is a benefit. We hope that you'll remember us favorably for future real estate or mortgage needs. Second, if the modification doesn't work and a short sale is the best answer, then we'd like to be the listing agent for that sale. Third, psychic income. You remember from your economic studies that one of the powerful motivators for human behavior is "psychic income". The "feel good" return on investment. Many doctors, policemen, firemen, etc. are driven to their occupations for this "feel good" return, and almost everyone to some degree derives pleasure from helping others. So their is no "catch", and those are our three reasons "why"
Government programs come and go, and are constantly being modified, but at the moment the HAFA offering for modifications is particularly beneficial to troubled mortgage holders. Call us and we'll try to walk you through the process. Let me repeat. It's free, friendly, and without obligation.
Extracting from the sea of information about the real estate market, it's up, it's down. It's improving, it's getting worse, here is a link to some hard numbers that will inform you. We don't think you want to be pacified with the spin from the government, or the the real estate industry, just facts. Employment figures are awful nationally, worse in California. Our state is on the brink of bankruptcy and the self-serving unions and politicians are not likely to come up with any meaningful solutions. New Jersey, of all places, has a governor making the hard choices, and if he can stick to his guns will correct their problems over time. Our state has the unions demanding, (demanding?), a 40 Billion tax increase. All of this of course to insure their exorbitant pay and pension benefits. Seems easy but one must remember that the businesses that pay wages will and and are leaving the state, and the government jobs will disappear when bankruptcy is declared. The revenue source of the offshore oil is still waiting for someone to act.
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Goldman Sachs, Politics, Mortgages

2010-04-21T15:15:00.001-07:00

The news about Goldman Sachs involvement in the financial meltdown is not "news". There are a variety of threads to follow here, but the most obvious is the fact of a hedge fund manager, Paulson, wishing to have a vehicle to sell short, approaching Goldman to put together a security instrument based on his recommendations for securities to be included, and then paying them 15 million dollars to do so and then sell it to investors expecting to profit from their investment, boggles the mind. A legitimate company would have thrown Paulson out the window for the suggestion. Goldman didn't and instead participated in a scheme to defraud the investors. They made an initial 15 million, Paulson made over a BILLION from the positions he took, and many investors lost hundreds of millions from the scheme. The talking heads in many cases have taken the position that the investors are sophisticated and should have exercised "due diligence". Goldman is even on record as saying that the investors "should have known that someone was on the other side of their transaction". Of course they should. They should also have been informed that the party on the other side had specifically contrived the debt instrument to fail. Does anyone in their right mind believe that equipped with this knowledge they would have been buyers?
At the moment the White House is pushing hard for a financial reform bill, one supposed to contain provisions that will eliminate this kind of problem, and some of the other difficulties leading to the financial melt-down. People who have had an opportunity to study the bill insist that it does nothing of the sort but instead confers an increasing amount of authority to the executive, diminishes congressional oversight, and no way guards against the "too big to fail" mentality of the past. This is becoming a familiar pattern with this administration, grabbing power not delegated to it by the constitution, note autos, finance, insurance, health care, etc.
A lot of noise is being generated about the ties of the financial markets, and others, to Washington, through very generous campaign donations. Democrats are the largest beneficiaries, but Republicans are far from having clean hands. A very large question that I have not seen addressed is why there is ANY legitimate reason for a business of any type to contribute money to any politician. It follows as night the day that a quid pro quo is the only rational reason for giving away stockholder or investor money to a politician, and it should be outlawed. Not restricted to amount. Outlawed.
Politicians have a single interest in running for office; to be re-elected once they've won. Let them pay for their election themselves and restrict the amount that can be spent to a level that will insure that any citizen can participate and win on his/her merits. Then term limits. Politics was once a calling, not a career choice, and we need to return to that concept. Very ordinary men can rise to very wise decisions if they are not burdened with self-interest during the deliberative process. Self interest is a normal human trait and can not be eliminated by edict, but the fruits of pursuing that interest can be denied by edict, and should be.
Distrust of government is over 70% and growing. That simply must be changed.
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Real Estate News

2010-04-14T10:29:00.001-07:00

Everywhere we turn the media presents us with news about the real estate economy, and depending on which source one relies upon, we are either encouraged or discouraged. Like the fable of the blind men and the elephant, the elephant is like a wall, snake, spear, tree, fan or rope, depending upon where they touch, we are left with a distorted view of reality unless we exert a great deal of effort in studying the facts. The government would have us believe that they have been instrumental in reducing the problems in the real estate and mortgage markets. Actually the government has been the prime driver of the crisis, and continues, through inept handling and a total unfamiliarity with business principles, to prolong and exacerbate the problem. Home values are still declining, foreclosures are increasing, new defaults are increasing, inventories are increasing, and the efforts to"fix" mortgage defaults by encouraging modifications has been a failure. A very expensive failure. Congress is about to pass increased regulation of the financial markets, which sounds good, but is in fact a gift to their friends in the banking industry. With every move they make they increase or extend the uncertainty in the financial and mortgage community, and as a consequence banks are not lending to businesses or consumers, business is not hiring, costs driven by health care changes are going up, taxes are going up, national security is threatened. WOW.
Here are some links to sources for information on the mortgage and real estate market, in no particular order. Number One. Number Two. Number Three. Number Four. Number Five.
Foreclosure Radar reports foreclosure sales are double previous year.
Reality is not all sunshine and flowers, and facing it is necessary to formulating an intelligent coping strategy. We're committed to helping where we can and will assist anyone with modification assistance, without charge, (FREE), just for asking. We prefer you be in our market area.
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Foreclosure Intervention

2010-03-31T09:54:00.000-07:00

The programs designed to save borrowers from default and foreclosure have for the most part been less than satisfactory. The number of modifications encouraged by government programs have been far fewer than predicted, and the results have been disappointing. Approximately 1/2 of modifications that took place have resulted in new defaults, simply wasting time and resources and prolonging the agony. Now a new and improved approach to reduce principal balances for first mortgages and for Equity Lines of Credit has been floated as a solution. Nothing will dissuade government types from tinkering in the marketplace, apparently. The problems originated with the government, encouraging lenders and the GSE's to make bad loans to people so that everyone was able to own a home, as if that were a natural right, and then when it became apparent that economic forces rather than social engineering should have been in play, once again the intervention to prevent the disaster resulting from bad policy has simply prolonged and worsened the problem. With our 24 hour news cycles and a voracious appetite to come up with "news", every little blip in market performance is viewed as dramatically important. "Home prices rise .4%", "Foreclosure notices increase", etc. This type of reporting is usually politically driven and does not accurately reflect the state of the real estate market and is useless for making personal decisions. Real estate is local, so if you're in the Northeast, conditions are improving. Of course the government has been pouring money by the billions into the financial sector, and hiring for government jobs at higher than prevailing wages, so naturally things are better in that area. Florida however has a glut of over 500,000 backlogged foreclosure filings and the courts have petitioned for almost $10 million dollars to hire people to handle the work. No one is certain about the size of the "shadow inventory" of troubled mortgages, but the certainty is that it is huge. The activities and dithering of the government keeps the banking industry off balance so the loan servicers are not following a logical and smooth progression in filing defaults, foreclosing, and selling off the bad debt. The "shadow inventory" is held to escape taking a certain loss and damaging the balance sheets while there is any possibility the government will come up with some new program to bail them out, at least partially. When there is some certainty that more help is not forthcoming, this inventory is going to be released, in a dribble or a stream, but released. The impact on home values is for sure going to further depress them. The activities of the government are only delaying the inevitable and postponing a return to some semblance of normalcy. The mortgage intervention by this administration is such a small part of the total intrusion in our lives; student loans, health care, auto manufacturing, and no end is sight, that how much our homes are worth may be the least of our worries. This is community organizing run amok.
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Your Credit/Your Government/A Dirty Little Secret

2010-03-19T14:41:00.000-07:00

This is an interesting article on many levels. First, the intended subject, to tell people that applying for loan modification will do a great deal of damage to their credit scores, is an important fact for people to know, but within the article just look at some of these things. Two government approved counselors, charged with giving advice to troubled homeowners, profess a lack of knowledge of this consequence of their counseling and are surprised at the "unfairness" of the practice of lowering scores for people who confess to being in trouble with their finances. The naive lack of understanding of the purpose and function of scoring may be excusable on the part of the borrower, certainly not on the part of a credit counseling professional. Credit scores are not the equivalent of a star on the forehead as a reward for past behavior but are designed as a predictor of likely future behavior and a warning system for future creditors. Applying for loan modification, much like hiring a credit consolidator, is an admission that things are not going well, and the precise duty of a credit reporting agency is to hoist the flag of warning for future creditors, and the mechanism used is to reduce the score. The person in this article adopts the attitude that someone should have told him. This is pretty much typical blame shifting behavior and a much better approach would suggest that he should have asked. Actions always have consequences. On a broader note, as an included point in the article, he went from a Public sector job to a private sector job and took a pay cut of approximately 30%. This is simply a stark example of the fact that public sector employees, in general, are paid too much and have much too generous benefits, which are about to overwhelm the economies of all governments, local, state, and federal. The pension programs and pay schedules are unsustainable and the current state of the economy is only revealing what has been bubbling to the surface for some time.
Our office stands ready at any time to offer counseling to people headed for, or already in trouble with real estate debt. We don't charge a fee and we don't have any hidden agenda to sell you anything. When things get better maybe you'll remember us kindly and then we can do some business together.
Just in case you thought things were getting better, here's another article for you on California real estate.
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Foreclosure and the market

2010-03-14T15:55:00.000-07:00

Almost all of the government intervention into the real estate business has been ineffectual. No news there really since they are unable to understand business of any type and make a mess of anything they touch. "They" being legislators and bureaucrats alike. Individually and collectively their need for power and control and unremitting greed drive them to confound the performance of the free market, cause and exacerbate economic problems, and enrich themselves. Dodd, Frank, Obama when a Senator, were recipients of the lion's share of gratuities from Fannie Mae, Freddie Mac, and major financial institutions, and they are still driving legislation to further enrich their friends. Frank recently called for major investors in Home Equity credit lines and other secondary mortgage financing to reduce the principal balances on these loans to benefit troubled borrowers. Such loans make up billions of dollars of highly toxic assets for these institutions and their write-down would be calamitous for their balance sheets. While one would expect the institutions to resist this encroachment on their business, quite the opposite is true. They welcome with enthusiasm this government directive, saying they welcome the opportunity for "guidance" from the government, meaning no doubt, a government plan to once more bail them out of their bad debt and remove one more more hazard of their unconscionable risk taking. This likely reach into the taxpayer pocket for the benefit of banker friends one more time is simply the continuing cronyism of politicians with their supporters. Color me suspicious, but I think Frank had discussions with his friends long before he floated this notion so that it would appear to be an economic necessity rather than another helping hand for friends of those in high places. One article is here, another is here.
This is the same Barney Frank who recently warned that investors in Freddie and Fannie are likely to take a severe hit because of their losses, despite his protestations not that many months ago that there was no possibility of a loss by these institutions. Letting these clowns play with our money is a very expensive proposition, and they seem immune to punishment for their cavalier disregard for truth, ethics, and honesty.
Foreclosures are continuing, home prices continue to fall, the government continues out of control and the HOPE & CHANGE we're now looking for is a return to republican principles. That's a small "r", so no one is offended.

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FORECLOSURE ACTIVITY IN CALIFORNIA

2010-02-20T19:51:00.000-08:00

Here is the latest article pointing up the continuing problem of foreclosures. Go HERE
While Obama is in Nevada promising more billions to troubled borrowers in exchange for votes for Harry Reid, the real estate market continues in chaos. No one in government seems able to connect the dots of their intervention with the long slow collapse of the housing market. Left alone the market by now would likely have reached some level of equilibrium. We might not have liked the level, but it would be on the way back to normal. As it is we're expending enormous amounts of money, we've stalled the economy, and we're headed for the same level anyway. Interest rates, as indicated by this article are in great shape, and these pronouncements are intended to make us all feel good, but the fact is you probably can't qualify for the loan, or even if you do, no one will loan you the money. We see the same advertisements you do, advising 48 hour approval, fast this and fast that, but in fact what we used to be able to do in two weeks is taking more like 45-60 days, and even then the risk of collapse before funding is very great. Originating lenders are running very scared, mainly because the investors who buy the mortgages are not especially anxious to do so. The government has made it possible for them to borrow money at virtually zero interest and use it to buy government securities at a profit with zero risk. So why lend it to real estate borrowers?
Reagan was right. Government is the problem.
Meantime, if you or anyone you know is faced with foreclosure, please send for the FREE booklet explaining your options. http://www.foreclosurebooklet.com or email askdougnow@yahoo.com
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More Foreclosures?

2010-02-17T12:24:00.000-08:00

Realty-Trac advises over 300,000 home into foreclosure in January, and the articles linked below indicate the worst is far from over. If you're one of the millions of borrowers in, or heading for, trouble and expect some sympathetic help from your lender, you may want to consider some hard facts. For every news release advising of some government effort to encourage lenders to help you save your home, there are government programs designed to bailout lenders and hold them harmless should they foreclose and face a loss. The news releases are public relations ploys designed to make you comfortable with your politicians while the actual behavior is designed to make sure that cronies in finance don't lose any money. Tax dollars will continue to reward the risk takers and consequently disadvantage the borrowers. Billions of dollars have been pumped into banks with the advertised expectation the money would be loaned. In actuality, getting a mortgage loan is very difficult, the money is instead being used to shore up balance sheets, and to take advantage of very low rates for their own investment purposes.
Go HERE 0r HERE for a couple of worthwhile articles about the foreclosure picture. I try to provide you with reliable information and these are article from the lending industry, not some governmental propaganda. Information will allow you to make reasoned decisions about your buying, selling, or financing of real estate. We still offer a FREE booklet of information about your options if your mortgage is in trouble. You can order it HERE
If it's easier just email askdougnow@yahoo.com. If you want a referral to a knowledgeable mortgage/foreclosure attorney just go HERE
With any luck we'll find a way to get the government out of the way and we'll all survive this mess, but it won't be easy, and it won't be soon.
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defaults-short sales-foreclosures

2010-02-12T19:34:00.000-08:00

Some news from the lender front. While the economy is really, really hurting a large number of people, and a large number of businesses, some folks are just plain prospering. An example of how to buy assets for less than ten cents on the dollar is here.
I previously posted here the intention of Fannie to buy back a pile of mortgages over 120 days delinquent, and now Freddie is going to do the same thing. When you hear the talking heads on the news opining that things are improving, take into account the huge number of foreclosures this situation will lead to. Also consider that the liabilities of these two GSE's, (government sponsored enterprises) are not figured into the administration's deficit figures. That large sucking sound is your tax dollars leaving you for the boys and girls in Washington and their friends.
A lot of the news we hear is intended too convey that government behavior and the actions of lenders are designed to ameliorate the woes of borrowers and help them through a rough patch.
This article about the plans of CitiMortgage to "help" troubled borrowers is part of the propaganda campaign. If you think for one minute this is an altruistic move, think again. When the incredibly complicated mess of the mortgage security market is finally sorted out you'll find that the government which enabled the huge profits gained by the lenders will have shielded them from the risks of of their bad bets, and have in fact further enabled even larger profits funded with your tax dollars. Goldman Sachs is an early example, but simply the highest profile to date. There are others and will be more still. There are those "too big to fail", and the rest of us, "too little to care about".
For those in trouble or headed that way, our free booklet is available here and if you want a referral to an experienced attorney anywhere in the country, visit here
We'll continue to offer informational links on matters of interest to borrowers, or anyone with an interest in watching the politicians steal our money and pay off their friends.
As usual,
Thanks for visiting.

Foreclosure-Default-Real Estate

2010-02-10T07:49:00.000-08:00

If you enjoy irony you'll enjoy this site.
The Mortgage Bankers Association is losing a bunch of money on an investment gone bad, just like many others in this economy. Please note in the article that the Association may pay some of the debt due the lenders. If you wonder why morality and ethics are flexible and don't concern all of us equally you're probably part of an older generation that has not tuned in to modern values. Think Edwards, Spitzer, Dodd, Geithner, well you get the idea.
Foreclosures continue to drive much of the market in residential sales despite the prodigious amount of money the government is throwing at the problem trying to stem the tide. Efforts to shore up the toxic mortgages that fill the portfolios of financial institutions with tax dollars, presumably to help troubled homeowners with modified loans, etc. have not been entirely on target. The beneficiaries of the bad lending practices inspired by Frank, Dodd, and their friends at Fannie and Freddie have not lost their place in line, as evidenced by the video available here
If you thought the government was attempting to help you with your mortgage problem this little video may change your thinking.
We have tried in the past to help people with mortgage needs or problems, and we'll continue to do so, but it is discouraging to watch as people continue to allow themselves to be deluded by opportunists both in and out of government. There is a steady flow of misinformation directed at the vulnerable, some well intentioned, some self-serving, and you must protect yourself. There is no tooth fairy. A recent article in the New York Times, dealing with foreclosures, etc. quoted a Phoenix Mortgage Broker who claimed to have counseled 60 people who were upside down in their mortgage to "just walk away". Perhaps the law in Arizona is more relaxed than in my state, but that advice requires either or both, a license to practice law, and/or a CPA, and my Mortgage Broker License would be a thing of the past if I offered that advice to my clients. I have a FREE booklet available for people to learn their options when confronted with mortgage issues, http://www.foreclosurebooklet.com , and better still a lawyers referral service to help insure getting an expert in the field at http://www.foreclosurelawyersreferral.com.
No charge to you ever, so do your homework. If you think "walking away" is a good idea you may want to check http://www.strategic-foreclosure.com
I'm going to try to update this blog more frequently and focus on foreclosure issues. I'll link to relevant sites and articles in the hope that someone will benefit from one of them, if in no other way than entertainment value. Watching politicians and others discover new and ingenious ways to steal from you can be exhilarating, and may provide you enough warning to get out of harms way.
As usual
Thanks for visiting

VOX POP

2010-01-20T20:11:00.000-08:00

Many years ago, growing up in Detroit, Michigan, the old "Detroit Free Press" had a column headed. vox pop, short for vox populi, the voice of the people. Significant at the moment for the fair state of Massachusetts has just spoken, and expressed their unhappiness with Washington, Obama, and business as usual politics. And it's about time. Imagine if you owned a business and had hired someone with no experience to run it for you. After a year of fumbling and bumbling would you be surprised to discover you business was in danger of collapse? That's where we are. The electorate was sold a bill of goods, bought it, and now is suffering the consequence of a very ill-advised choice. First Virginia, then New Jersey, and now Massachusetts have all awakened and sensing the danger of a novice at the controls have started the process of disengagement. There will be more, and none too soon.

On a business front, real estate continues in a slump, prices are still not stable, and foreclosures are at a high level, partially because of the underlying problem of shrinking asset value, mainly because of the economy in the tank and a very tepid job market. We have just published three new web sites aimed at helping people in distress mortgage circumstances. The first is offering a free mortgage help booklet designed to inform people of their options. First we were going to try to sell the thing, but it seemed better to give it away. Click here for that one. Second is a simple site for people thinking of a strategic foreclosure to escape an "underwater mortgage". Click here for that one, and finally a site for free referral to an experienced foreclosure attorney. We think selecting legal counsel at the instant mortgage trouble looms is the only sensible response to the threat of losing your home and the prospect of financial devastation. The yellow pages is not a reliable way to select an expert. That site can be accessed here.
Home prices continue to be strongly influenced by the sale of distressed properties, and because interest rates continue to be very low, many of those properties are attracting multiple offers. Don't be deluded into believing that multiple offers for these properties indicate a burgeoning demand. Not so. Simply bargain hunters at work and not a legitimate picture of increasing demand. The latest issue of our Real Estate Magazine reports the experience of one broker who almost breathlessly states one of his clients has submitted 12 different offers on 12 different properties and hasn't been successfulon any of them, suggesting that the market is "hot" I guess. Actually it indicates he has a fool for a client who insists on trying to buy property for something like half its actual value. This behavior is not a reflection of the market, simply an indication that not all brokers are intelligently selective in choosing clients to serve, but it sounds impressive. If you're serious about buying, a good broker will do a thorough market analysis, suggest a probable range for your offer, and if you listen, you'll wind up with house. If you ignore the advice and try to steal the house, you won't get it, and if you really have a good broker, you will be looking for another one for your next try.

As usual
Thanks for visiting

Loan Modification-Foreclosure

2009-12-29T18:04:00.000-08:00

The administration is at it again, Treasury granting almost unlimited credit access to FannieMae and FreddieMac, presumably because they have demonstrated an uncanny ability to mismanage the assets under their management. While this is bad news for taxpayers, since this credit line is directly added to the national debt, for those in trouble with their mortgage, this money will likely be used to fund a new program to help forestall foreclosures. Called the Home Affordable Foreclosure Alternative Program, (HAFA), it's scheduled to become effective April 5, 2010, although some lenders may implement it earlier. If you are troubled in any way with your mortgage you should read this article, linked here.
We're in the process of putting together a small booklet dealing with mortgage issues which should be available soon. We intend to SELL the booklet for about $10, little enough to learn something as important as handling the trauma of default and the threat of foreclosure. Too many sites offer services for some pretty hefty fees, walking away from foreclosure, loan modification, etc., and we thought it would be good for people to have an informational booklet to help them make informed decisions, absent the pressure of someone trying to sell something.
We'll try to keep the buyers updated as events change. We're not even printed yet and already the site liked above has been added and the news was just released 12/01/2009.
Anyway. 2009 is winding to a close and we have an administration and Congress seemingly determined to bankrupt the economy. We hear the expression "spending like a drunken sailor", usually quickly followed by someone noting that the sailor is at least spending his own money. The tone deaf among the politicians are likely to be among the unemployed soon, and even though unemployment figures are high, another 500 or so won't hurt anything. Wouldn't it be nice if even failing to throw the rascals out we could find some way to keep them home for six months or so?
Real estate is still in the tank, foreclosures are high and going higher, and too many of recorded existing home sales are comprised of distress sales. Interest rates are low, loans are tough to get, almost 95% of loans are government guarantee programs, and that is not going to change anytime soon. Banks can borrow for almost 0% interest and can loan to the government for 2-3% risk free. Why would they take on risky real estate mortgages? Well that's pretty easy to answer.
Even if your mortgage is not a problem you'll likely find the above link entertaining. This will have an impact on the value of your home, and on your taxes.
Very best wishes for a successful and healthy new year.
As usual, thanks for visiting.

Foreclosures-Glenn-Butte-Tehama

2009-11-25T11:45:00.000-08:00

Every little bit of positive news receives gushing comments from the media, "home prices advance .3%", "unemployment applications decline by 35,000", etc., and that's all to the good, but like a magician distracting with one hand while the other is busy with the actual ''trick", this news distracts from the activities of Washington and Wall Street in the background. Taxes are going up, every conceivable excuse is being advanced for this fact, and no one remembers the solemn promises not to allow this to happen, but all of us common sense folks have known all along that the monster debt of health care, cap and trade, stimulus, bail-outs and so on were going to require some repayment strategy, and printing more money is not a viable option. Meanwhile the hedge fun folks have found a new way to cash in again on the toxic debt they created in the mortgage markets. They are buying up bad mortgage debt for 40 cents on the dollar, taking advantage of FHA and other programs to re-write some portion of the mortgages to make them acceptable, and selling them to the government. Anything they sell over 40% is instant profit, and the taxpayer is on the hook for the new product, and the loose standards of FHA are a sure indicator of future problems. The twin vices of arrogance and greed driving Washington and Wall Street are almost unstoppable, and certainly will remain so while the bulk of us accept such actions as purchasing Louisiana for $300,000,000 in exchange for a health care reform vote as appropriate political behavior.
Foreclosures in Glenn, Butte, and Tehama counties now number 485, notices of default and scheduled auctions total 1530. That is a significant number of distressed families. Nationally over 25% of home owners are "underwater" (owe more than the home value), and millions are delinquent 30 days or more, but not yet in default. So long as Washington continues to increase debt, increase taxes, and fails to take responsible action for job creation the situation will only worsen. Small business is the job creation engine of our economy, yet every move of Washington is punitive for small business. For all business for that matter.
For those facing mortgage problems, call us for answers. If we can help, we will, and if not we'll point you to where help is available. We really are all in this together. For those "underwater" go here for an excellent article written by Brent T. White, a law professor at the University of Arizona. When the site comes up click "Download" then"SSRN"
As usual,
Thanks for visiting

Mortgage Upside Down?

2009-11-23T22:02:00.000-08:00

As brokers we're seriously constrained in our ability to offer advice or suggestions as to how to handle burdensome mortgage payments, a mortgage balance exceeding the home value, the appropriateness of a "short sale" or "deed in lieu". Not because we don't know the answers, but because we don't want to wind up in court and lose our license for "practising law without a license". So! Our mission is to offer as much help as possible in all areas of real estate; sales, purchase, finance, and general guidance, removing as much fear as possible and saving as much money as possible for our friends and clients. That's why our web site is so rich in information, Free credit reports, home valuation data bases, MLS listings, mortgage information. For the growing problem of people being "underwater" in their mortgages we have added a link to an article written by Brent T. White, a law professor at the University of Arizona. You will find it exhaustive in detail and certainly adequate to allow you some intelligent decision making. We believe that information and knowledge provide power. You're entitled. The link is HERE
Just click "Download" and then "SSRN"
Hope this is helpful to you.
As usual,
thanks for visiting

Foreclosures and interest rates

2009-11-20T09:20:00.000-08:00

Foreclosure rates continue to climb, interest rates continue to remain low. For the few people with some money and the security of a good job this represents opportunity, although with some level of caution since housing prices continue to decline also. What to do? If you buy something there is the risk that the "something", whether stock, real estate, or anything else will decline in value. If you don't buy anything there is the absolute certainty that the value of your dollars is going to shrink. Helps explain the rise in gold prices. Each little bit of news that seems to offer some reassurance is touted as a return to normalcy, by government types and financial gurus alike, but until the administration and the Congress reverse their policies of increasing debt burden and the tax load on business, nothing is going to improve. Until government gets out of the way of free market forces nothing is going to improve. No sane businessman is going to invest his money in expansion or the hiring of people unless and until there is some certainty the government is not going to intrude further on their activities.
In the home mortgage market, the holders of mortgage paper are faced with the uncertainty of future government actions and so don't know for sure whether to keep loans on their books as under-performing, or foreclose for a certain loss. The bad loans made during the ridiculous sub-prime fiasco are being joined by a whole bunch of new underwriting errors through the auspices of FHA mistakes, and because of the economic downturn and unemployment increases, an increasing number of "A" paper loans are also going sour.
On the subject of FHA, even after the disaster of " no money down" financing for people with damaged credit pushed by FannieMae and FreddieMac (Frank and Dodd), along comes the FHA offering home loans to people with FICO scores in the 500's with as little as 3% down, and with some "wiggle room" even for the 3%. The last two years have produced enough bad loans that the delinquency rate is approximately 25% already, and surely with more and worse to come. This sort of government tampering with market forces creates another level of uncertainty as to the value of homes. How many more homes are going to come on the market under distress circumstances? How do you know how to value your home? How do you know how to value a potential purchase? Until some sanity arrives in Washington we are all like a feather in the wind. Debt in the trillions already and an insatiable appetite for more. Health care reform, cap and trade, bail-outs, stimulus, and who knows what else. No centrally planned economy has ever been successful, and never will be. The lessons that should have been learned from the past have already been forgotten, or worse still, ignored. It would be easier to train a chimpanzee to sing opera than to teach a politician the fundamentals of business. When people with zero experience run for public office we should ignore them, not elect them. How's that "hope and change" working out for you? The "change" is killing me, and I "hope" it stops soon.
As usual,
Thanks for visiting.

Banks, Bucks, and Bungling

2009-10-31T14:15:00.000-07:00

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.

As usual
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Real Estate/Mortgages/Politics

2009-10-29T21:00:00.000-07:00

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.

As usual,
thanks for visiting

Foreclosure update

2009-09-29T21:42:00.000-07:00

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.
As usual
Thanks for visiting.

Agricultural Financing

2009-09-27T20:41:00.000-07:00

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.
As usual,
Thanks for visiting.

Chico Foreclosures

2009-09-02T13:20:00.000-07:00

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.

As usual
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Banks, Banking, and real estate

2009-08-28T11:09:00.000-07:00

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.
As usual
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Are You Stimulated Yet?

2009-08-18T11:30:00.000-07:00

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.
As Usual
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The Financial Dominoes Continue to Fall

2009-08-14T12:44:00.000-07:00

Just last week a mortgage originator, Taylor Bean & Whitaker, based in Florida but with nationwide offices, was shut down by Federal folks for some funny accounting practices. Today, Colonial Bancgroup, apparently with some ties to Taylor Bean and also the nations largest warehouse mortgage lender was seized by regulators.
Link http://www.forbes.com/2009/08/14/colonial-bancgroup-bbt-business-wall-street-fdic.html
Why does this matter to anyone? It will result in a further tightening of already very difficult mortgage originations. Fannie & Freddie account for something like 90% of residential mortgages but the applicants not fitting neatly into their box just lost a substantial funding resource. The upshot of this will be a further chilling effect on sales and refinances for a very large group of people.
When Taylor Bean was closed my email box started to fill with offers from other originators offering to help me just in case I had some loans in the Taylor Bean pipeline. When the sub-prime collapse took 100's of mortgage originators out of the market the email box was filled with offers to help place sub-prime clients in the the FHA system. Now the FHA system has overextended in these bad mortgages. This will probably come to be known as sub-prime #2. Greed has a way of distorting the learning curve.
Just as the beating wings of a butterfly in Brazil may contribute to the breeze wafting over your patio, every incident in the financial marketplace has an impact on your well-being.
As usual,
Thanks for visiting.

Securty Based Lending

2009-08-13T09:56:00.000-07:00

An opportunity for people with large stock portfolios to convert their equity to cash for any purpose, at below market interest rates, generally 2.5% to 4.5%. Superior to margin loans these loans provide up to 80% of valuation. 7-10 business days to funding, no credit checking or reporting, fixed interest for 3-5-7-10 year terms, these loans provide a vehicle for a sharp investor to free up cash to take advantage of buying opportunities in the current real estate market. $100,000 minimum with no maximum. If you wish to explore this opportunity, call. 530-824-8284.
Foreclosures continue to plague the market, but the real psychological impact on home sales comes from the inverted equity positions of home owners. Over 30% of Californians are reported to owe more on their mortgages than the value of the home. Deutsche Bank is predicting that nationally 58% of mortgage holders will be in a negative equity position. Couple that with the estimate that over 12% of mortgage holders are at least 30 days late and the picture is bleak indeed. Foreclosure Radar describes this as "trapped in a prison of debt". Can't sell, can't refinance.
Lenders are NOT making it easy to get a loan for purchase or refinance. Good people are being kicked to the curb for not fitting "inside the box" and lenders are unwilling or unable to consider exceptions. Fortunately their are still some portfolio lenders who will make sane underwriting decisions, and if you have been disadvantaged by a Fannie/Freddie decline you should call us.
Retail sales are down, and no wonder. Three billion dollars of tax dollars given to the auto industry by way of the Cash For Clunkers program has burdened a large number of people with car payments at a time when discretionary money was already in short supply. Congress can not learn the laws of unintended consequences. Nor can they absorb the fact that neither they nor bureaucrats are capable of running any type of business enterprise. For those who are wearing rose colored glasses its time for a reality check. We are increasing our debt at warp speed, and no end in sight apparently. Job creation is entirely restricted to government work, a non productive part of the economy and a further drain on resources. The administration is under the control of people who have never run so much as a candy store, and they flounder around compounding the error of thinking transferring wealth from productive people to unproductive people will somehow buy our way out of this mess.
Not going to happen.
As usual
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Underwriting for a career choice

2009-08-05T15:42:00.000-07:00

Part of the dramatic impact of the government dithering about trying to correct the market disruption caused by government encouragement of bad lending, is the over-correction of regulations to prevent a recurrence. Since late 2006 over 350 mortgage lenders have gone out of business. That's a lot of employees, many of them skilled, most still unemployed in their former occupations. In the remaining lenders the folks known as underwriters are now reduced to clerks. Lenders are so frightened of making a mistake they have almost entirely abandoned the underwriting process. They still call it underwriting, but what it really is, is making sure that loan applications conform exactly to the conditions stipulated by machine programs generated by Fannie and Freddie. No decisions at all. Couple that with the new appraisal guidelines which obviate hiring an appraiser with known ability in deference to a government requirement that they be appointed by "lot" by some independent agency and the whole business of approving loans becomes almost entirely removed from intelligent weighing of risks and disadvantages many, many deserving applicants. If two years from now you meet someone with two years experience as a mortgage underwriter with a major prime lender, they will have the skill set equivalent of someone taking inventory in a big box retailer.
At a time when glut of homes on the market is huge and growing, due to an increase in foreclosure activity, and prices are in many cases beginning to look favorable to some buyers, wouldn't it be nice if it were possible to get loans for these folks? It would be nice. The mortgage market is tight. There are programs for the low end applicants with government supported or subsidized options, but for the deserving people who have demonstrated some prudence in their behavior, loans are tough.
Every move the government has made has been a mistake. Every intervention in private business has been a disaster. Tax dollars have been used to buy GM for the UAW and hosed the bondholders who had a contractual right abrogated. Cash for clunkers is using tax dollars as a gift to some a subsidy to others and a debt for all the rest of us. The health care "crisis" which exists only in the heads of politicians seeking to buy a constituency is destined to cost over a trillion dollars to insure ? If I understand correctly there are approximately 46 million uninsured. Many are illegal aliens, many choose not to buy insurance. For the remainder, we could afford to buy each of them their own hospital for a trillion dollars.
As this is written Obama is in Indiana to give over 2 billion dollars in grants for the purpose of building electric motors and batteries for "green" cars which no one wants to buy. Again buying a constituency. Obama doesn't have two billion dollars, neither does the government and it isn't his job to take it from us and give it to someone else.
The fiscally responsible crowds showing up at Town Hall meetings are being vilified by the White House as a bunch of nuts. What they really are is a bunch of scared and disillusioned patriots. The nuts the White House remembers are from the Acorn family and were showing up for entirely different purposes, mostly selfish.
As usual
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More On Foreclosures

2009-07-18T12:31:00.000-07:00

Here is a link that contains some valuable information about short sales and foreclosures. http://realestate.msn.com/article.aspx?cp-documentid=20773062>1=35000
Do not accept everything as gospel but it does provide some guidance for planning if you're in trouble.
We hope you trust us enough to call for advice when you need help. In advance I can say that if you ask us if you should consider or actually take either of these steps, we'll advise consultation with a competent attorney and/or a CPA. Real Estate and Mortgage Brokers are neither licensed nor legally qualified to counsel on these matters. Where we can offer some valuable help is when your informed decision has been made to sell your home through a short sale, or you have determined to keep your home and want help modifying your mortgage to an affordable level. I urge you to call us. We'll help you where we can and refer you to appropriate counsel where we can't. Calling costs nothing, failing to call could. Visit the foreclosure link at http://newagerealty.biz/
or http://chicorealtymortgage.com

You can get a good view of the probable current and future value of property by considering the number of properties likely to be coming on the market in your area, maybe even on your street. In the current financial market the chances are very good that you can get a satisfactory modification of your mortgage, keep your home, get rid of the worry. No Up-Front Fees. Call us.
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Foreclosures

2009-07-15T20:27:00.000-07:00

The last blog dealing with appraisals and the difficulty appraisers have identifying legitimate comparable sales results in large measure from the subject of this blog, foreclosures and properties in default in ever growing numbers. I'm going to list some statistics taken from the Foreclosure Radar data base, which we have included on both of our web sites for your continued use. The numbers are frightening and reflect, but do not adequately describe, the emotional and financial trauma being visited upon so many of our neighbor families. Still waiting to enter this more serious level are the approximately 12% of mortgages in the country that are delinquent by 30 or more days.
In this list REO=foreclosed, NOD=notice of default filed.
Chico, REO 68, NOD 171; Paradise, REO 31, NOD 64; Red Bluff, REO 32, NOD 80; Orland, REO 20, NOD 43; Oroville, REO 79, NOD 167; Willows, REO 13, NOD 16, and the last, Yuba City, REO 143, NOD 358.
I'm trying to position our offices to be of some help in this tragic mess. Although we're a loan broker, I'm not particularly interested in being an advocate for the lenders, but will negotiate very hard for buyers of foreclosed properties. We will reduce fees to the minimum for those wishing us to list and sell their distressed property through a "short sale". We will reduce our fees for those in a position to refinance in advance of the wave of resetting mortgages expected in late '09 and 2010. Finally we will provide a no up-front fee mortgage modification program to those wanting to keep there homes. Guaranteed results or no fee. The Federal Home Affordable Mortgage program has given lenders some inducement to cooperate and it is likely that upwards of 75% of people facing default or in default can restructure their mortgages to make it realistic to keep their homes. If you work with us we'll work for you.
Not meant for this to be a doom and gloom blog, just a reality check. We're a long way from the end of this mess.
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Appraisal Problems

2009-07-03T09:52:00.000-07:00

Our industry is in some turmoil because of many things, banks unwilling to lend, uncertainty as to the possible bottom of the steady decline in home values, uncertainty as to the future level of interest rates, and now, added to the problems, a dramatic change in the appraisal process which now requires appraisers be selected under a program called HVCC, Home Valuation Code of Conduct. Under this system appraisers are no longer selected and hired by brokers like me, or by the wholesale lenders with whom we do business, but instead by companies to whom we submit our appraisal requests who then select, or designate, an appraiser from a pool of appraisers. The result of this is a removal of possible influence on the appraiser by the broker or lender, also it represents an additional fee to the borrower since these companies are taking a very large slice of the fee, and a reduction in income to the appraiser, plus a greater likelihood the appraiser will be of lesser skill or quality than under the previous system. Because appraisals have been coming in below expectations nationally there has been a great deal of concern about the effectiveness of the new system. The National Assoc of Realtors has been lobbying hard to get a change in the rules because they feel the market is being adversely impacted by a too conservative approach by appraisers, and at the moment there is a bill being presented to cause an 18 month moratorium in the new program. This bill is a joint effort by Childers, a Mississippi Democrat, and Miller, a California Republican. The perception is that appraisers are running scared under this new program, which resulted from the excesses of the recent past in appraising to too loose a standard. Certainly there are transactions which have been blocked by low appraisals and real estate and mortgage people are upset at this interference in their income stream, but whether the appraisals are unrealistic is another question altogether. The appraisal process depends on finding a number of representative comparable properties that have recently changed hands between informed buyers and sellers. Not that easy to do when a significant number of sales are of a distress nature, foreclosed properties or "short sales", and when the number of transactions is reduced, and when the market is declining. Every time the government becomes involved in the business process some form of calamity follows. Lenders were induced to make bad loans, appraisers cooperated, now we're led to believe the same government can correct the problem. Changing underwriting standards is well beyond the expertise of government. All that really needed to happen to correct the problem of the recent excesses was to let the investors who pushed for looser and looser lending suffer the consequences of their cupidity and not reward them with a bail-out. If a loss is the result of bad judgement, then judgement soon improves. If gambling is risk free then it will continue. The change in appraisal regulations is typical government response. The appraisers didn't cause the problem, they were a symptom. Possibly the NAR is right to want a review of the new HVCC rules, but I'm sceptical of the motives in their request.
On a local note. Chico has enjoyed a niche environment in the real estate market, because it's a nice place to live, and because there are some above average incomes available in the area. As a result the price decline in home values has been more modest than surrounding communities. That may be about to change. The high end employers are beginning the process of furloughing and laying off, and unemployment is rising at all levels. The condition of the economy in California is desparate because of profligate spending and lack of fiscal responsibility, and the federal government is racing to demonstrate that they can be even more inefficient and thoughtless. Not to be a viewer with alarm, but be prepared for a long recovery period after the recovery begins.
If you're thinking of buying or selling, or need to talk about a mortgage, we're here to help. Your interests come first, always.
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Breathtaking

2009-05-19T22:02:00.000-07:00

It's almost impossible to assimilate the torrent of pronouncements, proclamations, promises, and just plain BS coming at us from our friends in politics, Federal and State. The State will soon be a past issue if some mechanism isn't found to remedy the effects of past profligacy in pension and benefit plans for government employees and teachers. We're threatened with a loss of services, educational funding, etc., which even realized, still won't stem the tide of debt already contracted. If the government can, without blushing, cause the contracts with bond-holders of Chrysler to be abrogated in favor of enhancing the UAW position, certainly someone with gumption could tell the government employees unions to take a hike with their bloated benefit programs. And then we could also drill for some of that offshore oil.
At the Federal level, Obama is like a kid on speed in a toy store. A trillion here, a trillion there, government designed automobiles, government controlled health care, Federal control of education, pretty soon he'll run out of ideas to spend things on, or to control. And then of course there are the dolts Pelosi and Reid orchestrating the collapse of capitalism. Racing to adopt the European model of economics they ignore the facts of the failure of those models, and more importantly, the disastrous consequences of trading freedom for social welfare. The indolence induced by a paternalistic government has caused a lack of innovation, and even a shrinking of family size, to a level which already has in place an irretrievable march to extinction. The Muslim population, originally allowed to immigrate to do the work for the indolent native populations, is reproducing at a rate already destined to make them the dominate culture in our lifetime. So, we have a President with no practical experience in anything, surrounded by a group of mental midgets, busily dispensing tax dollars to recipients to whom they owe for favors at the polls, or using criminals like ACORN to insure that the next election will be be controlled by the welfare crowd.
Independence in thought and action, self determination and self-reliance are not dead, but they are viewed with fear by the folks at Homeland Security and will get you put on a list of dangerous folk, along with military veterans for some obscure reason. If you enjoy reading about and sharing in the value system that made us great, let me make you a suggestion. Send an email to imprimus@hillsdale.edu, and they will put you on a mailing list for their publication, FREE. Hillsdale College is a Liberal Arts College that in its entire history has never taken a dime of government money, and never will. They honor initiative and effort, and reading the many authors and lecturers who appear in their publication "Imprimus", is great fun. Mention my name in your email if you wish, or not.
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Finally Some Good News

2009-04-08T10:31:00.000-07:00

Well not in real estate. After a week of watching our President humbling himself, and us, before the entire world, apologizing for our "arrogance" to a bunch of self-centered and self-serving Europeans and to a bunch of Muslims who wish us dead, and a political delegation making nice with the tyrannical Castro, 20 American crew members of an American merchant vessel overtook their hostage taking captors and regained control of their vessel. These 20 folks did enough in twelve hours for national pride to overwhelm the negative effects on that pride of our "leaders" recent activities. As a nation we are compassionate, and caring, and sharing, but we don't submit easily to injustice. Those same leaders might do well to consider this appropriate action of our people when they attempt their own acts of "piracy", on our institutions, our rights, and our freedoms.. We don't want our capital markets, our corporations, our health system, our schools, or our rights taken over by the Federal government and it would behoove the folks in Washington to note that actions have consequences. The action of these twenty merchantmen may not equal the famous "shot heard 'round the world", but if it serves as even a modest wake-up call it will be a good thing. It's already a good thing. We react when our independence is threatened. That made us the best nation on earth. When pushed, we push back, decisively, and it should be a lesson even Washington can understand.
In real estate matters, not much has changed. We have a great 100% financing program for people with a stable job and good credit who simply lack funds for a down payment. Applies to rural areas, Glenn, Colusa, Tehama, etc., some sections of Butte. Worth looking into now while home prices are depressed and interest rates are low.

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Chico And Glenn County

2009-03-31T20:37:00.000-07:00

March has ended and the sales figures do not reflect the sunny optimism of my peer group, but do mirror the unease and outright fear generated by the government in our financial and credit markets.. Explosive spending and outright usurpation of the rights of contracts and the capital markets by Congress and the administration have reduced confidence levels enough to insure a really long slow recovery.. The Keystone Cops couldn't make a bigger mess than the Beltway crowd aided and abetted by the thugs from Chicago. Housing prices continue downward, and why not, since the acceleration of the recent past had no basis in reality. Sales of single family residences in greater Chico last month totaled 52, of which 13, or 25%, were foreclosed properties, Glenn County sales totaled 25, of which 20, or 80%, were foreclosed properties. This is a really alarming situation if you're trying to sell your home, since the competition for buyers is not fairly balanced. The lenders selling foreclosed properties can better afford the loss than you can, and with the government pumping bail-out money into the financial market, (your money), it may very well be that their loss may not be a loss at all. Following the trail of an individual mortgage through to the final buy-back by AIG of a mortgage backed security is probably not even possible, so the lenders made a fortune on the front end of these bad loans, and when all is said and done, with the help of Geithner, Dodd, Frank and Obama, your tax dollars through the bounty of your government in action, they will also make out OK on the back end as well. Business losses and failure are the result of poor business decisions, but apparently if you have friends in finance, or the union, government will not permit you to lose. You don't even have to get up to try again, a benevolent government will hold you up throughout. Pelosi, Reid and Bush share in all the blame to go around, also Paulson and Bernanke. Maybe easier to just provide a roster of Congress.
Didn't mean this to be a rant but it is very difficult for a real estate or mortgage broker to offer meaningful guidance to potential clients in this environment. For those with a genuine need to sell their home, we can get it done. For those with a need to buy a home to live in, we can get that done also, and financed. For those thinking of a home as a real estate "investment", you're on your own. Anyone who offers you advice in that area is probably selling stock market tips on the side, with an equivalent probability of success.
If you enjoy logic you could say: Uncertainty causes fear, the government causes uncertainty, therefor the government causes fear. It does for me anyway.
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Madoff and Others

2009-03-12T21:21:00.000-07:00

Mr. Madoff who diverted several billion dollars of other peoples money to purposes he deemed important, is now in jail. Only awaiting sentencing to be sure, but probably permanently. Meanwhile the members of our executive and legislative branches who have diverted trillions of other peoples money to purposes deemed important by them, are still running around loose. This is not to suggest that Madoff should not be in jail, simply that he should have a lot of company. The latest debacle, the $410 billion omnibus(t) bill just signed by Obama was made possible with the help of some Republicans who felt we the many should fund they the few in their pork projects. Shameful, but understandable. Ethics and integrity are not even vocabulary words for these people, let alone concepts. Obama has proven himself to be a categorical liar and certainly incapable of reasoned decisions,(how many time have we heard straight from the teleprompter,"no earmarks"), only 8500 in this bill give or take a few. With the economy in serious trouble the concentrated effort it requires to address it is being squandered on longer range plans for universal health care, federal takeover of the school system, and paying back a debt to the unions by way way of card check. Mr. Geithner has, so far, not been able to put together a group of one to act with him in Treasury, three withdrawals of potential appointees to date. He is not very impressive from a distance but he must be a disaster up close. No one wants to be in his orbit.
As for our more parochial interest in local real estate values, sales, purchase opportunities, mortgages and foreclosures, the news is not good and it it is prevented from starting the correcting process by the constant stream of mixed signals from Washington. Promises and threats of action to do something about or for the approximately 7% of Americans in trouble on their mortgages, at the expense of the 97% who are paying on time no matter the difficulty, keep the credit markets in uncertainty which equates to inaction. Nothing of substance is going to happen until the government either lays out a clear path of action, or signals that it is going to stop interfering. Government cannot manage car companies, manage banks, manage schools, manage health care, manage the post office, social security, medicare, medicaid, etc., etc.
We're running along at about 50% of normal sales in Chico, and Glenn County with about 1/3 of Chico sales described as distress, foreclosed and short sale. Glenn County runs about 70% distress sales. All this means is that for people simply wanting to sell their home they are competing on an uneven field, and determining actual value of a home is difficult. We've mentioned before, but worth repeating, a property appraisal requires sales of comparable properties between an informed seller and an informed buyer. Distress sales fail to meet that test.
This is not doom and gloom. Intelligent adults need to be realistic and as we have been here before and survived, we will survive again. I've been in this business since the middle 1970's, and while a long way from comfortable, (politicians being what they are), I think we'll find a way to thwart their ineptitude and come out OK.
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Welcome To Oz

2009-02-24T20:44:00.000-08:00

Watching the antics of our government in action makes it seem like Oz, although we are short a few wizards. Our President, eloquent though he may be, is an empty suit, flying unnecessarily to Arizona in Air Force One to make a foreclosure bail-out speech at a cost of approximately $650,000, (that's just for the airplane). He is threatening to nationalize health care, reduce our defense spending (the only thing that's been keeping us safe), and remove some money from the over 90% of people paying their mortgages and give it to those who are not. Contrary to Senator Dodd's unfortunate comments we are not going to nationalize the banks, according to Bernanke, but are instead going to give the 20 largest banks a "stress test" to see if they're adequately capitalized, and to those that are not we're going to infuse them with public money so that they will be. The "Recovery Act" often referred to by politicians as the "stimulus act", over 1100 pages unread by the President who signed it, or the politicians who passed it, was originated in large part by Pelosi who is garnering substantial money for some project in her district, and by Reid who is winning a rail system from Las Vegas in his home state to Disneyland. Out the window are the promises of no lobbyists to be appointed,(the stack of waivers is growing), and the most careful vetting process in history (a 60 page questionnaire) for cabinet positions, has produced the worst appointment record in history. Many are called, few are chosen, and rightly so. The same lack of judgment that allowed affiliation with Ayers, Wright, Acorn, dogs this man's every move, but he will do or say whatever it takes to get where he wants to go, never mind what the country needs. It worked once. Probably not again.
The dithering and profligacy of this government has brought the real estate market, and credit markets generally to a standstill. Locally we have sold 24 homes in greater Chico in February on the 24th of the month. In 2007, the last almost normal year we sold 63 in the same period. Pretty sad.
Back to government for a moment. Barney Frank is trying to put together a regulatory framework for the housing industry. He's the same one who effectively and very vocally objected to and blocked attempts to regulate Fannie and Freddie because to regulate would thwart their efforts to initiate sub-prime mortgages. Feinstein, Chair of the Intelligence Committee, who in an epiphany reversed her objection to our new, inexperienced, Director of the CIA, blurted out classified information in open session and caused substantial harm to our relations with Pakistan. Should it come to pass that the circus should again gain favor as an entertainment medium, we have a reservoir of clown talent immediately available, and I hope soon, not otherwise employed.

Exciting Times

2009-02-04T13:26:00.000-08:00

Here we are with an incredibly huge stimulus (SPENDING) package that made it through the House with every piece of pork that Pelosi could find, currently undergoing Senate scrutiny and likely to pass in some form. Enlarging government didn't work in 1933 and won't this time either. Dems vowed to end the recession, and they will. It will now be a depression. Of the projected cabinet appointments, Geithner made it in spite of his tax evasion, Richardson didn't on ethical grounds, Daschle didn't on tax evasion, and the new czar of efficiency failed the tax test. So much for cleaning up government and transparency in politics. We have a new administration that's in way over their head and business, taxpayers, the economy are going to take a severe battering, and it's not going away any time soon. We have executive orders that order the types of cars to build, the pay scales of executives in industry, the protectionist orders for steel suppliers (no foreign supply). The so-called stimulus bill calls for 5 Billion for Acorn, (Remember them and voter fraud?, several million for contraceptives,(that's a different form of stimulus), although we perhaps should applaud that provision. If Congress is going to be doing it to us we should have some kind of protection. The arrogance of politicians is boundless, and how nice it would be if we could start over tomorrow with every seat in the House and Senate with a new occupant, no personal agendas, beholden to none.
To the local scene: January sales of SFR in greater Chico totaled 39 homes, 12 of them foreclosed properties, 6 short sales, or 46% of total sales were distress circumstances. Glenn County had 27 sales, 19 foreclosed and 2 short sales for 78% distress rate. Not good at all. The conventional wisdom is that prices are still dropping, foreclosures are up and increasing and while mortgage rates are favorable, the uncertainty of the market place is severely restricting activity. The Senate is pushing for some legislation to provide government backed mortgages at 4 or 4.5% for purchase and refinance. That should effectively stop any activity of any kind until there is some resolution. Why would anyone sign a contract today? Answer is they won't.
Just finished reading Ferguson's "The Ascent Of Money", now re-reading Friedman"s "Free To Choose". It's fascinating to see how often we have to repeat mistakes in matters of money and economics. Policies which have clearly failed in the past, some of which have never had any degree of success, are now on the agenda for handling this current crisis. The lessons of history are once more being ignored, and we are going to pay a substantial price. Best we can do individually is preserve the human values, care for each other and maintain tight bonds with family and friends. On that note: Everywhere we turn we are inundated with opportunities to make money by referring troubled homeowners to loan modification "companies", or we see the direct appeals by these people to homeowners to solve their mortgage problems through loan modifications for a fee. Let me keep repeating-If you have a problem with your loan, YOU talk to your lender, they have a loan modification department. If they don't have a satisfactory solution for you, or if they offer you something you don't fully understand, then call and make an appointment with a local attorney, one with real estate experience, ask the hourly rate and the likely total fee, and follow the advice you pay for. If your real estate agent refers you to a loan modification company he or she is most likely being paid a fee for the referral. Run, and change agents. Your mortgage is a legal contract between you and your lender. They have attorneys, you should have your own, not some outfit that claims to have some on staff. If you want this advice repeated, newagerealty@sbcglobal.net will get you a response.
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General Views

2009-01-24T21:50:00.000-08:00

Finally the hysteria is mainly behind us, mainly, but not altogether. Our new President has the reins and is taking charge. Already the order to close Guantanamo has been signed, but no idea what to do with the people there who will kill us given the opportunity. Assurances of absolutely no lobbyist positions in this administration and already a Raytheon boy is headed for number two position at the Pentagon, and the Treasury will inherit a tax cheat as Secretary to oversee, among other things, the IRS he cheated. Barney Frank has funneled some bail-out money to a bank in his district, possibly to help pay for the Porsche they use for a company car. B of A has found it necessary to request more bail-out funds to pay for the mistake of acquiring Merrill, and has fired Thain, the former head of Merrill, who among other transgressions, spent over a million dollars rehabbing his office. Patterson has finally ended the circus of selecting a replacement for Clinton for the New York Senate seat. Shouldn't have been that tough to replace her. Her only claim to fame was an inability to find law office records when requested, an inability to come up with a workable health care program, no public office experience other than apologizing for her adulterous husband. Now as Secretary of State she can monitor the contributions of the Arab money flowing into her husband's "library fund". Citigroup which had a capitalization of 119 Billion,has received two infusions of our money, one for 20 billion, another for 25 billion, and now has a capitalization of just 19 billion. As an investment strategy this government bail-out doesn't seem to be working out. Now of course the next 825 billion will be easier to dispose of now that the pattern is clear. And we haven't even talked about Illinois. "Whom the Gods would destroy, they first make mad".
My email and fax machine are busy daily promising great wealth if I will only refer people for loan modification and short sale negotiations. The one tonight offers $15,987.00 per month with almost NO WORK Almost too good to be true. One of our local Brokers is soliciting other agents for the same thing, and Craigs List, which we use heavily, is always full of ads directed both to agents and to consumers. An unbelievable amount of slime is concealed under the rocks, anxious for any opportunity to prey on the helpless and the gullible. We keep saying, and will keep saying, if you need help in negotiating with your lender, consult a local attorney. If you don't know one, call us. We don't accept money for a referral, nor will a legitimate office offer one.
Month to date the Chico area closed sales are 1/3 Foreclosed properties or short sales. Not a good thing, and heading for worse most likely. If you're interested in buying and want to look at foreclosed properties, please call us. We'll get you a list of the available properties in the price range and area of interest, show them to you, negotiate for you,(remember it's a lender on the other side of this transaction), and when the price is right, we'll get you a loan. This is what our license and experience qualifies us for. We'd love to help you, and you can go to the bank with the knowledge, if we can't help you we surely won't hurt you.
As usual,
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A Look At Our Local Market

2009-01-14T21:06:00.000-08:00

As real estate agents a large part of our responsibility is guiding clients with a realistic evaluation of property value, and the appropriate process is identical to that used by appraisers, looking at the sales of comparable properties. (For the record, appraisers have a more rigid framework since their estimate can only be based on history and is entirely designed to protect the investing lender. Real estate agents have a modest amount of latitude in that we can inject some forward looking subjective elements). Be that as it may, the job of evaluating always assumes the sales are between informed buyers and informed sellers, and in this market, that is clearly not the case. Of the only 7 homes closed since Jan 1 in the greater Chico market, one was an REO (foreclosure sale), one was a "short sale" (negotiated mortgage with seller's lender). In Glenn County of 8 sales since Jan 1, one was a short sale, four were REO's. December 2008, Chico 58 sales, 5 short sales, 16 REO's. Glenn County, 24 sales, no short sales, but 19 REO's. Of the homes currently listed in Chico, 370, 79 are either short sales or REO's, 21% Glenn listings, 170, 75 either short sale or REO's, 44%. It's fair to say that many of these sales reflect distress circumstances and have not been representative negotiations between informed parties. Worse, in the case of the foreclosed properties it may well be the case that the lender collected a substantial payment from mortgage insurance and can afford to drop the price and still mitigate their loss. The sales stand as comparables even though the lender may have priced for their reasons and not been driven to hold for the top dollar. The government can not leave anything alone, and with their promises of help with modification schemes, bail-out money to banks, the promise of help for borrowers, and the economic fact of a very weak economy, now and for a considerable time into the future, the real estate market is chaotic. What all this boils down to is that we are not very confident about valuations, and it takes a lot more work than usual to come up with what we hope are realistic numbers. Some things are true. There is money available at some of the best rates in decades, there are some really nice homes for sale. If a person is looking for a home to buy to live in for some period of time, this is a pretty good time to be looking. If a person is looking for a shorter term investment opportunity, residential real estate in not the place for it in California. Home values have declined considerably, but unless you must sell for some reason it doesn't matter much. The loss is nothing compared to what has happened to your GM or Ford stock, should you have some in your portfolio.
Our mission is to be as helpful as possible to people in matters of real estate and real estate finance, reducing costs and eliminating anxiety. Saving money is just smart business. If we can't help you we'll try to get you pointed in the right direction.
As usual,
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Greed And Arrogance

2009-01-12T09:17:00.000-08:00

If it were not so terribly expensive, and potentially dangerous, watching the antics of our elected and appointed officials would be amusing verging on hilarious. The Illinois governor, about to be under indictment and hanging by a thread manages to pull on the string of the Senate leader Harry Reid whose posturing is childish and whose position is insupportable. Feinstein, aghast at the Obama choice for head of the CIA, within three days discovers he is the answer to every problem known to man with management skills of exceptional quality. Pelosi and Reid, with a little help from Dodd, Frank and some others are going to deny any Republican amendment suggestions to the pending trillion plus package for resuscitation of our economy. This is a heart warming view of cooperative spirit in the interests of the people. And then we have Mr. Madoff whose self interest defies description, performing in the private sector. We have banks, recipients of enormous largess from public funds, unable or unwilling to reveal what the money is being used for, or even where it went. We have the government encouraging the revision of mortgage contracts, a distinctly illegal action by any other than bankruptcy courts. It's easy to believe that the world is now experiencing a new level of ineptitude and greed, but Hark!, as they say in the dime novels. Remember Richard Daley the first? Boss Tweed and Tammany Hall? Teapot Dome and oil? The original Ponzi? Anyone for the Holland Tulip extravaganza?
The only thing new is improved communication and the increasing ingenuity of the thieves and power seekers. Human nature is unchanged. The good guys still far outnumber the bad guys, but the bad guys have more effectively grasped the reins of power. It's probably not too late to change that, but indifference to, and tolerance for, selfish behaviour must be changed.
At a personal level we're witnessing a large number of opportunists sliding out from under the rocks attempting to take advantage of those suffering in these economic times. Offers to help in loan modification, for a fee of course, and offering real estate and mortgage people a split of these fees for referrals. There are offers of help in arranging short sales, or advice on the advisability of foreclosure as an option. I have some advice, and it's free. If you feel you need to talk to someone about either of these matters, see your CPA and/or your attorney. If you don't have one, get a referral to one. Real estate agents or mortgage agents are not qualified nor authorized to offer short sale or foreclosure advice. We are qualified to provide a property valuation, to sell your home, to finance or refinance your home, or to help you buy a home. Short sales and foreclosures have both legal and financial consequences. They require professional guidance. In all things be sure the person you're talking to has your best interests at heart. Speaking of best interests and hearts. Remember the Redding surgeons performing unecessary by-pass surgery? Money and power.
As usual,
thanks for visiting

What An Incredible Age It Is

2008-12-18T21:24:00.000-08:00

50 Billion Dollar Ponzi Scheme. Trillion Dollar Stimulus Package. UAW Bailout. Fox Business News Suing Paulson, Treasury To Force Revelation Of Where TARP Funds Are Going, And, The News In Mortgages, 30 Year Fixed At Lowest Rate In 37 Years. Now if only we could make effective use of it. For some of you it represents a chance to buy at very favorable terms, for others, a chance to refinance out of potentially dangerous adjustables or high fixed rate loans, and for a great many others it's simply a point of interest because there is no job, or you're upside down in your home, or credit scores have deteriorated because living expenses have escalated beyond expectations. I hope that for many of you we can provide some service by placing your loans with one of our many premium lenders, including the largest mortgage companies in the country. Chico and Northern California generally have many great buying opportunities and our business philosophy of saving clients as much as possible will either put or leave extra money in your pocket. Please call us to list, buy, or finance your home or your commercial property.
Our best wishes for a safe and prosperous year for you and yours, and a very Merry Christmas.

Thanks for visiting.

Turbulent Times

2008-12-09T13:53:00.000-08:00

Congress and the bureaucrats cannot leave well enough alone. Each day brings some new intervention or threat of one that absolutely guarantees instability in equity markets, credit markets (including mortgages), and business in general. There is apparently going to be a new "Car Czar" to oversee manufacturing of the Big Three. Probably just in design, emission standards, number of doors and colors. Not certainly in labor costs. It will be easy to select the new "Czar" from the large pool of people who have been in charge of Social Security, Medicare, the Post Office and providing oversight to Fannie and Freddy.
So far the stock market is still in turmoil, credit is frozen, and mortgages are uncertain. At our very low level of participation in the economy, trying to sell and finance homes for people, people ready to make a move are now on hold again because the treasury may be providing 4.5% interest money in the near future, so everything waits for that to happen, or not, as the case may be. The altruistic move to force loan modification on lenders to benefit delinquent borrowers has been less than satisfactory. One third of mortgages are again delinquent three months after modification, and after eight months fully 58% are delinquent again. Nothing is more frightening to investors and businessmen than unpredictability, and the frantic behavior of legislators and bureaucrats is providing more fear than the markets can stand, and creating an instability that threatens to bury us all. As this is written the former CEO'S of Fannie and Freddie are undergoing a scorching at the hands of a Congressional Committee for causing the financial mess we're suffering through. Just a few short months ago these same Congressmen were exerting pressure on these same CEO'S to make risky loans to expand home "ownership", and their institutions were threatening lenders to make such loans or risk being eliminated from participation in the loan pools and guarantees. Why do we continue to return these misfits to office? Pelosi, Dodd, Reid, Frank, Schumer, Waxman are unfit to manage a magazine stand, and here they are standing and posing for pictures while giving away billions of tax dollars and contriving to appear able to ask intelligent questions of business people (who are not blameless). A clear picture of what these people are really all about is being developed by the current Governor of Illinois. Egocentricity and greed in its most naked form on display, and as voters we ignore it on election day.
This was going to be on the subject of real estate commissions but that will wait for another day. My ranting about politicians won't have any impact, but maybe will keep my own heartbeat in parameters.

As usual,
Thanks for visiting.

Home Pricing

2008-12-05T19:01:00.000-08:00

We need listings, as does every agent or broker, and the biggest barrier for us in obtaining listing is our unwillingness to list a property for an unrealistic price. All agents complain about the same thing when comparing notes; prospective sellers will not accept the reality of the marketplace, or they are too deep into their mortgage and cannot afford to sell. The latter is beyond our ability to solve. Short sales or some other accommodation from the lender is called for, and this requires counseling, legal guidance, and financial advice, and we are not particularly interested in talking to these potential sellers until they have these problems sorted out, and by that time some other office has the business. The people unwilling to confront reality we have a chance with if we can point out that the loss of value is a market fact. A house is a tangible asset just as a share of stock in General Motors or some other company is an asset, and the value is determined in the same way; what is someone willing to pay for it? Sure people have lost money on their homes, but a lot less than on most other assets, and if there is a reason to convert the asset to cash, it will happen fairly quickly if the asking price reflects the real value. Most homes listed appropriately sell within 30 days of listing, even in this market. The prospective buyers are out there, but they are not going pay for the seller's emotional attachment. One of the problems with home pricing is the enormous, (in our view), commission add on of the real estate agent. In any market, but particularly in a troubled market, adding 4 to 6 per cent to the home price makes no sense, and in some cases prices the home out of reach of potential buyers. We charge $4995 to sell a home, provide the same service as any other broker, and in general make it possible to price a home for a fast sale and still return maximum value to the seller. When home prices were escalating rapidly and people were selling at huge profits, it allowed buyers and sellers alike to ignore the large amount of money being dissipated in selling costs. No longer. It was always silly to waste money. Now it's almost criminal.
More on this subject later, but remember, it's always smart to reduce the cost of doing business.
As usual,
Thanks for visiting.

Feds To The Rescue?

2008-12-04T18:44:00.000-08:00

The incredible uncertainty about the possible/probable next action of the Fed, the Treasury and the Congress is keeping the banks, the equity markets, and us, just plain folks in a state of disarray. It's a little like being trapped in a room with a drunk waving a loaded gun. Do we run, duck, or attack? Our elected and appointed officials who have a track record of running everything they touch into the ground are engaged in debating the strategy for running corporate manufacturers, banks and the mortgage industry, either by direct investment or the creation of oversight committees to provide guidance. One way or another the Congress, which is deeply beholden to the UAW, is going to find a way to throw a lot of our money at the auto industry, or at least the most inefficient members. Toyota, Hundai, BMW, Honda, and Mercedes won't get any of the money because they have efficient business models and don't need it. Mr. Paulson has already delivered a freight car full of money to the banks, so far without increasing their desire to lend to any noticeable degree. Now there is a plan afoot to provide mortgages for home purchase at 4.5%, a full point below the current market rate, in an attempt to spur home purchases. The rate will not be available for refinance, thus no benefit to those who have been diligent in maintaining their mortgage, nor any benefit to those facing foreclosure. We assume there will be another plan to help this latter group. Once more this is a scheme to help a few at the expense of the many. A major problem with our representatives is that they are not smart enough to realize that they are not smart enough. Not even close. We keep putting them back in office, so what does that say about us?
A thought occurred about helping people buy or sell their homes. Why not have real estate agents reduce their commissions so the price of homes would be more realistic? Why does it cost twice as much to sell a home for $400,000 as one for $200,000, or three times as much for a $600,000 home. Same paperwork. Why does it cost between $16,000 and $24,000 to sell a $400,000 home? Reduce that commission by 1/2 and a lot more people could afford the home. Reduce it a bit more and even more people could buy. That would have a dramatic impact on home sales. More than the reduction in mortgage interest. The idea has the same chance of adoption by the real estate community as you have of making a rock float, but why not ask your real estate agent anyway?
As usual,
Thanks for visiting.

Elections Are Over (Almost)

2008-11-16T14:41:00.000-08:00

Except for a couple of unresolved Senate races the elections are finally behind us, and now the tough calls begin. There is almost no hope that Congress has either the skill nor the will to do what is best for the country. There are favors to be called in and it's going to be very expensive for current and future taxpayers. The Unions have some debts to be paid (credits to be collected) and besides attempting to end secret ballots, a tremendously important worker right, the UAW is pushing frantically for a government bailout of the auto industry, billions of dollars to perpetuate a losing business model that permits benefits and wages to add approximately $1500 per vehicle to the big three products while foreign brands (built in this country by American workers) add only $150. It has to stop, and bankruptcy and restructuring are the only reasonable solutions. A bailout without restructure will only have to be repeated. Next to the unions in contributions are the financial companies, and they of course have already had billions and want more. Sensing a bunch of economically uneducated children posing as Congressmen all the world is now lining up for largess. No one seems to catch on to the fact that the only money the government has for handouts is money which has been taken from someone else, someone productive. Someone who saved it. Printing the stuff only devalues it, and produces the most insidious form of taxation there is, reducing the buying power of everyone. Those most affected are the very people that presumably are the intended beneficiaries of government intervention in economic and business matters. The fact that politicians are ignorant or indifferent to the consequences of their actions is frightening. The fact that the majority of us continue to place them in positions of power is more so. The likes of ACORN and similar rabble rousing groups building up an uniformed voter base to place in office those committed to perpetuate their existence will haunt us for a very long time to come. Neil Cavuto, an exemplary business journalist, suggested we're like a guy trying to give himself a transfusion. Actually it's worse than that. In this transfusion we're losing half of what we're taking out and soon we'll be dry.
This blog is supposed to about real estate and mortgages, although I suspect it's little read anyway, so some notes. In our market far too many of the listed properties are either REO's ( foreclosures), or short sales, those that sell for less than the existing mortgage balance. This means the market is difficult to read since it lacks the informed seller/informed buyer test of value. Certainly there are good opportunities for buyers and sellers alike. For mortgages. There are still mortgages available both residential and commercial for qualified buyers or refinances. Rates are volatile, but in a very narrow range, and still quite cheap. By cheap I don't mean Ditech cheap. I watch their commercials and don't know how they get away with them. If I advertised rates below my ability to deliver my license would disappear. Call if you want to know what is available for your circumstances. Love to hear from you.
As usual,
Thanks for visiting

Financials

2008-08-06T13:23:00.000-07:00

After the Fed meeting and the decision to leave things alone for this time, stocks got a bit of a bump, but for the things that matter to the mortgage market, nothing much changed. Rates remain favorable, but qualifying for them is tough and not likely to get any easier any time soon. FreddyMac dropped their dividend enormously and advised they now believe housing prices may drop another 20% rather than the 10/15% previously announced. Since they couldn't foresee the problems they got themselves into there is no apparent reason to believe their crystal ball has improved now. What is true is that if mortgage lenders believe a decline of that significance is in the future, then why make a loan on an asset that is going to decline in value? That's why home loans are tough to get. For people needing cash and believing the equity in their home may provide a solution, the potential for disappointment looms large. Equity lines of credit are not readily available for houses. There is a bright spot for business real estate and it is a resource for raising cash. We have a major bank that is offering credit lines to $500,000 at prime, guaranteed at that rate for 6 months. A really good deal if you own commercial real estate. When money is a problem we can be a good solution, since as brokers we can tap into many sources.
In Orland, a major developer has just sold off 50 lots in the subdivision to CHIP for the building of low end housing. The people who have purchased homes in that subdivision already are a long way from pleased at this move. Whether the developer bonded the completion of the project to the city and made them the beneficiary, no one seems to know. We'll find out. Another developer lost his project to the bank in another part of town. Don't know it that one had a completion bond either. The impact on prices in Orland has been severe, and there are probably some opportunities for alert buyers, but that is whistling past the graveyard. Good news for a very few and bad news for everyone else is not a good thing. The Chico market is dramatically different. Not nearly as bad but certainly prices are still in decline. The next shoe to drop in home mortgages will be the recasting of option ARMS. Countrywide was a major initiator of these diabolical notes and they were sold indiscriminately to people who should not have been offered them. (I know that's a preposition). There are bankers and observers forecasting a 48% default rate on these notes in California. December 2009 is the peak recast period, building slowly from right now, so we'll see.

As usual
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Some Industry Thoughts

2008-07-26T09:57:00.000-07:00

Well- the bailout bill passed the Senate, contrary to the wishes of over 70% of the taxpaying public, and now the fun begins. As a mortgage broker I'm ashamed of the behavior of members of our industry, as a taxpayer I'm appalled by the behavior of our legislators. Not surprised, but appalled. It will be interesting to see how many hands can get into this new, huge, cookie jar at the same time. Just in case anyone thinks that the recent devastating experience in the real estate/mortgage industry has been corrected or altered I offer the following link to some superb reporting. http://www.ocregister.com/articles/camile-house-mortgage-2104411-fargo-wells
It's a long, thorough article, and the comments following are worth a read as well. This is a continuing problem and will go away only when investors/lenders are accountable for their own losses and bad decisions. In other words, privatize. As long as there is a bailout possibility this behavior will continue. The bill calls for a new, tougher, regulator to oversee the performance of Fannie/Freddie. That should work. If anyone can offer an example of government oversight resulting in successful performance of anything you get a prize.
The bright side. There are honest mortgage/real estate people out there. There are mortgages for deserving and qualified buyer/borrowers. We hope you'll call us, but whoever you call, be careful.
As usual,
Thanks for visiting

Taxpayer Bail Out For Lenders

2008-07-25T17:41:00.000-07:00

Over 700 pages in the bill passed by the House and about to be passed by the Senate, favored by only 21% of taxpayers but more importantly favored by 100% of lenders. This will probably be the costliest piece of legislation in history when the dust finally settles. FannieMae and FreddyMac are in trouble and the people who oversee their activities, (Congress) have received the benefit of $170,000 of lobbying funds from them. No conflict there. Countrywide and Bank of America are other major beneficiaries of this bill and of course their friends in Congress have had some substantial sweetheart deals from them, Dodd foremost among them.
Meanwhile the hoopla in the media covering the election campaign, or at least half of it, contributes nothing to our peace of mind. Our spend crazy government is likely to get a lot worse if we don't make some wise choices. If the voters would simply act like a personnel director interviewing for the most important job in the company the process of choosing becomes simple. Not just this election, any election. Check the resumes. What have these guys done? What kind of choices have they made? What is the basis for the promises made? The face to face interview, (what we're getting daily in sound bites), may sound exciting, but if it doesn 't comport with past performance the promises are simply pleasant rhetoric and without substance. If you're hiring a salesman, and I've hired a few, the promise of becoming your star performer is only as good as past performance. If there are no accomplishments of note in his past then why would you expect something new now?
Real estate is slow, no news there. Mortgages are available to the credit worthy. Home prices in our area are still declining and foreclosures and short sale listings are far too prevalent. For buyers the market is favorable. For sellers it's not a disaster, but realistic pricing is key to a sale.
As usual,
thanks for visiting

REPRESENTATIVE GOVERNMENT

2008-07-13T19:07:00.000-07:00

The perception most of us have is that we enjoy representative government in this country. It turns out that while that is a true statement, we can clearly see that the interests being represented by our elected officials are not those of the voters, but rather those of the dollar contributors. It takes both votes and dollars to get elected, and dollars are trump. National polls were showing just over 20% of the voters favored passage of the $300 billion mortgage bail-out bill designed to offload the worst of the worst mortgages onto the FHA so we all can lose on them instead of those companies like Countrywide who made the loans and should lose on them. The Senate responded to the public will by passing the bill anyway. Senator Dodd should be in jail. Some reports suggest he is instead being considered for the second position with Obama. Politics makes for strange bedfellows.
Indymac has become the second largest bank failure in history, in the hands of FDIC receivers. (Their high level execs also made some contributions to Senator Dodd, but apparently too little or too late.) Their is a list of 90 banks slated for possible failure, and believe it or not, Indymac wasn't even on the list. Scary how little anyone knows about the extent of the financial market problems. Scarier perhaps is the news that has hammered the stock value of Fanniemae and Freddiemac, the perception that they may lack the liquidity to address their mortgage position, and now the hinting around that there may be bailout plans by the Treasury and the Fed. First Bear Stearns and now who knows? For the vast majority of us who handle our obligations responsibly to be confronted with the probability that we are also going to become liable for the obligations of all those who are irresponsible or crooked such as Countrywide is sickening. But the representation we have from elected officials is zero. The efforts of politicians to manage the economy has always been disastrous and now can only get worse. Our dollar is shrinking, oil prices and dependency are killing us, and our elected representatives are clueless. If that doesn't keep you awake at night, then what?

OF FOXES & HENHOUSES

2008-06-23T21:04:00.000-07:00

Far too little attention is being paid to a scheme to shift billions of dollars of bad mortgage loans from the initiators of the loans to the taxpayers by way of the FHA. This is a very small blog with very limited readers, but perhaps if you are as offended by this theft and the graft of our elected and supposedly responsible elected officials you can pass it along, and maybe then?
http://www.examiner.com/a-1449448~Bank_of_America_PAC_money_behind_Dodd_s_Countrywide_loan.html
This is only one of many articles available if you google dodd countrywide. Dodd should immediately resign his chair position, should be investigated for grafts and/or bribes as should others whose names arise in an investigation. How these people can continue their search for culprits in the mortgage mess we're in, while the culprits are among the search party, is beyond description. For those who ask if there's anything anyone can do about the filth that surrounds us, how about a letter or phone call to your congressman to block this effort?

Better Late?

2008-05-05T21:12:00.000-07:00

Most of the blogs I read appear regularly and frequently, even when there is nothing to say. Trying to avoid annoying people with no news I thought I'd wait until there was something positive or newsworthy, but there isn't really, not either one of those. Resale homes on the market are at record levels, and reportedly 25% of them are REO's (lender owned properties), and no statistics for how many more are short sale candidates. This has a dramatic impact beyond just the simple glut. How do you determine the value of a home in this environment? Appraisers use closed sales taking place at arms length between informed buyers and informed sellers for establishing value. This is clearly not the case in this market. They are forced into using sales taking place under duress because there are not enough "normal" sales taking place to provide reliable data, and there is no formula for changing the duress sales into meaningful data. Appraisers are stressed, underwriters, who must rely on this data are in even worse shape. The trickle-down consequence of this of course is that none of us really know how much a house is worth. Sad really because our entire marketing effort is directed to that point at which an informed buyer and seller agree that a price is fair, and our job is to ensure that we bracket that price with some accuracy so that people don't waste their time with unrealistic expectations. It's getting very tough to do.
Most frequently asked question? How low are prices going to go? The answer is, no one knows. My peer group is persuaded that positive thinking will make everything OK and because there are lots of houses to pick from and prices have come down, and interest rates are favorable, this is a good time to buy. Not in my opinion unless you're going to make it your home for a very long time, certainly not as an investment decision. How about a good time to sell? Well actually about 18 months ago would have been better, but if you don't want or need your house any longer, now is probably better than 6 months from now. As mortgage people I can tell you that rates are favorable and if you have taken care of your credit some dandy refinance opportunities are out there. One of the our very best lenders is actually opening new offices while others are going out of business, but these guys are very, very good, and very, very careful.
Since there isn't any good real estate news let me tell you story passed on to my wife by a friend of hers. Her step-mother awoke one morning to the very noisy chirping and singing of birds. Since this was unusual she slowly opened her eyes and discovered she was lying in the grass in her front yard, dressed only in her peignoir, and daylight had arrived. Quickly, and she hoped invisibly, she made it into the house, remembering only vaguely the intake of the night before. Not wanting her neighbors thinking of her as a common drunk, for the next two weeks, after nightfall, she wandered about her front yard in her peignoir, attempting to portray a somnambulist. Whether it worked or not we don't know, but it doesn't sound like a dull neighborhood does it?

as usual,
thanks for visiting.

Foreclosure and Short Sales Revisited

2008-04-10T12:49:00.000-07:00

Because we are real estate agents as well as mortgage brokers we perhaps receive a disproportionate share of inquiries about what to do and how to handle mortgage difficulties. Other than directing the people to appropriate sources of information or help we have to be silent. We can not offer advice, suggestions, guidance, or even hints as to the "best" course of action for any person , or for any set of circumstances. This is not because we don't know or care, simply that we are not licensed to give legal advice or financial counseling, both of which are required to address mortgage delinquencies and the impact of various remedial strategies. We can and do offer advice as to the market value of property and the approximate time required to sell the property. And that's it. We suggest to everyone that legal counsel be obtained and financial guidance be sought, because whatever happens you can be assured there will be legal and financial consequences for action or inaction whenever mortgage delinquency occurs. Having said all that, we can still discuss the process of foreclosure and provide timeline information, and talk about what a short sale really means. Here is a foreclosure timeline under CA law: Foreclosure Timeline for California
(The foreclosure timeline and process varies from state to state. In California it is generally non-judicial and done outside of the courts but some states have judicial foreclosure. Be sure you understand the correct process and timeline in your state.
Day 1
You are in default on the 2nd day after your payment is due.
Day 32
You have now missed two monthly payments.
Day 32-90
Sometime during this period you will receive a letter stating that the Notice of Default(NOD) has been recorded. The speed with which lenders record the NOD depends on the policy of each individual lender.
NOD Recorded
From this day, the next 90 days is a silent period in which you can pay lender all back payments, fees, and other charges and your default will be cured.
Trustee Sale Date
At the end of the 90 day silent period you will receive another letter specifying the date that the Trustee’s Sale will take place. This is usually 3 weeks from the date you receive this second letter.
Right to Cure
You have until 5 business days before the Trustee’s Sale to reinstate your loan (cure) by paying all payments, fees, and other costs associated with the foreclosure.
Eviction
After the Trustee’s Sale you may have up to 30 days to remain prior to being evicted.

Short Sale has become a common expression and sounds as if it's a commodity rather than an event. Quite simply it's the agreement of a lender to relinquish their right and interest in a property for less than the amount they are owed by contract (short of the amount due). It is an agreement which must be negotiated between the lender and the debtor and is going to be unique to each circumstance. The lender obviously must feel threatened by a greater loss if the short sale is not agreed to, otherwise why agree to any loss at all? As noted above, the consequences of this negotiated agreement are both legal and financial, and should not be entered into without professional guidance. The lender will have experience and legal talent in depth on their side. The borrower should have no less.
As to the market for short sale properties, buyers should be aware that there are now two parties to negotiate with in the purchase, and the lender is remote, may have many different staff people handling the matter so continuity is non-existent, and has no emotional interest in the outcome. The lender is not going to be anxious to accept less than fair market value so there is really no built-in advantage to bidding on a property just because it's offered as a short sale. Caveat emptor is in full force in this situation. The weapons are all on the other side.
If you're contemplating a short sale agreement we'll be happy to discuss the listing of your home with our office, but whether we accept the listing is going to depend a great deal on our perception of the level of cooperation we can expect from your lender and how effectively we can communicate with them. We owe that much to you and to prospective buyers.
I hope some of this helps someone.
As Usual,
thanks for visiting.

Chico Area Update

2008-03-27T10:53:00.000-07:00

Because the last blog noted a substantial discrepancy between local home sales and the figures reported by the National Assoc of Realtors I thought I'd continue offering you local MLS figures to make of what you will. These are March month to date (27) 2008-7. Greater Chico, 31 in 08 vs 79 in 07; Paradise Area 17 in 08 vs 30 in 07; Glenn County 12 in each year; Greater Oroville 21 each year.
There is no way I know of to give honest perspective to the foreclosure situation. It's a political year and so much of the "news" is a bunch of sound bites playing on the fears of the uninformed that it's difficult to know fact from fantasy. One of the economic advisers for a candidate just opined that the situation is so bad that people are walking out of loans that out value the home and are going down the street and buying a distressed property at a bargain price. Come on. A lender is going to let a credit risk that bad have a new loan? I don't recall whether this adviser works for the Bosnian sniper fire victim or the one that for twenty years didn't hear a word his preacher preached, but the ailment seems to be contagious. Foreclosure is a nasty business with no winners, but I don't believe it's happening to many deserving, responsible home owners, but rather to those who started with no equity and went downhill from there, or speculators who are not eligible for our sympathy, let alone our money for bail-out. As to the lenders who thought to profit from reckless behaviour, tough. They made bad decisions and can and should now suffer the consequences. Strangely enough, if a manufacturer puts out a bad product they must suffer the expense of correcting the problem. Banks put out some bad products. Let the cost of the recall be on them, not us. At a practical level, while the banks are jockeying for some government munificence, we find that they are surprisingly unresponsive in their loss mitigation departments to appeals for some work-out strategy that would benefit both lender and borrower. Phone calls and emails go unanswered, not returned when some contact can be made, and seemingly indifferent to the urgency of the problem. We know of this behaviour from Countrywide, Chase and Citigroup with clients of ours, and title company people tell us that this is industry-wide. Aren't those three companies frequently named as being in the most trouble? Why not put some intelligent people to work on the phones and get the problem fixed internally where it belongs?
The brighter picture indicates that for buyers, there is money available for loans, a huge inventory of homes to pick from and prices that should appear attractive. For sellers it will continue to be tough. A lot of competition for buyers and an uncertain future for home values. Best advice is to carefully consider the price and make the old place as sharp as you can make it and consider what you can offer by way of incentives. A positive outlook will help a lot.
As usual,
Thanks for visiting.

Local Counterpoint

2008-03-24T08:28:00.000-07:00

The financial news this morning presents a mixed bag, but since the Wall St. reaction is reportedly somewhat reactive to the news from the National Assoc. of Realtors that Feb existing home sales were up 2.9% I thought I'd compare the local performance to those figures. Not quite the same. Feb of 2008 in the greater Chico area the MLS reported sales for single family residences totaled 43. For 2007 they totaled 74, a significant reduction. This year for March to date the MLS reported sales total 22, less than one a day, while for 2007 for the same 24 day period they totaled 73, an even more significant reduction year over year. This is not a viewing with alarm report, simply a reality check if you're selling your home. There are almost 400 homes for sale in this market area, so you need to be prepared for a wait while the buyers make their choices, and certainly you need to very carefully consider your pricing strategy. There is the additional reported factor in the the stock market bounce that Morgan is going to pay $10 a share for Bear Stearns instead of the original reported $2 per share. Why we consider a reduction in bad news as the equivalent of good news is a mystery. Maybe this is supposed to distract us from the real news that a major financial institution messed up big time and is costing a lot of people a lot of money.
On a different note. When a buyer shows up for your home we have some substantial resources available to finance the purchase, including some access to money for the credit challenged. Even some very good opportunities for refinancing for those with some equity. Call us and tell us what you need. Chances are very good we can help you.
As usual
thanks for visiting.

Economics 101

2008-03-14T11:01:00.000-07:00

The calamity of Bear Stearns brings up memories of a long ago classroom in Long Beach, CA and my failure to pay adequate attention to a very good economics instructor named Duane Taylor. Maybe a little more attention then, would clarify for me now, how intelligent business people could become embroiled in the fiasco that is our current financial marketplace. This shambles in the credit markets would be more understandable if the companies were run by a bunch of people recruited from around the blackjack tables in Las Vegas, but they're not. These folks are MBA's with substantial training in the workings of credit and the necessity of supporting collateral for credit extended, so this kind of failure is really inexcusable. Bear Stearns, number two in underwriting mortgage backed securities, announced that in the last 24 hours there had been a substantial deterioration in their liquidity. Other traders and banks were reluctant to trust their offerings, so, no money. You and I would have this same explanation for our position if our last check bounced. Fortunately for the market, the New York Fed moved to funnel money to them through JP Morgan/ Chase, so saved by the bell for at least 28 days, and the market so far has survived this first shoe dropping.
If the government can manage to keep their hands out of this mess, let the miscreants take their hits, then the situation will right itself, sooner rather than later. If the government tries to fix a train wreck with band-aids then the end will be a longer time in getting here. There has been no underlying value to the mortgage securities, or at least not enough value, for some time. To believe otherwise is to ignore reality and conjures up many similes; "The emperor has no clothes", or from the biblical, "making bricks without straw ", and my favorite from Gertrude Stein in her description of her home town of Oakland, "There's no there there".
At a more practical and local level, our real estate market is really in the doldrums in Butte and Glenn counties, Chico and Orland particularly. Sales are down, inventories are high, and people who might buy are worried about the unknown. For those thinking of buying or selling now is as good a time as any if the reasons for doing so are valid. If selling, the value is probably as high as it's going to be for the near future. If buying, prices are down, generally realistic, interest rates are very favorable, and if you intend to live in the home for a fair period of time, you'll very likely make out just fine. Just remember, a home is not a speculative investment vehicle. If you believe otherwise then you're holding a ticket on cruise ship that has already sailed.
We need some help in our mortgage section. If you know of an honest, reliable, licensed agent that would consider changing employers, we'd like to talk to them. We do everything residential except FHA, plus commercial. Special products for CalPERS and CalSTRS and Calhfa for first time home buyers, plus other down payment assistance programs. Have them call me.
As usual,
Thanks for visiting.

Fascinating Stuff

2008-03-10T14:17:00.000-07:00

The news today is full of the governor of New York allegedly consorting with employees of a prostitution ring. Mr Spitzer, formerly known as the sheriff of Wall Street for his relentless pursuit of unethical behavior while the Attorney General of New York, apparently has another standard of conduct for himself. This is pretty much the definition of megalomania. It also describes political suicide. In the same framework of the sauce not necessarily being for the goose as well as the gander, three CEO's recently appeared before congress to explain why they were paid astronomical salaries while the shareholders they were charged with protecting were losing their respective shirts. One of them, Countrywide, is under investigation for loan fraud by the FBI. As a counterpoint to the discouraging behaviour of people in positions of trust, just a couple of days ago the news described a worker in a thrift store in Pomona who returned $30,000 she found while sorting donated clothing. Turns out the money had belonged to a woman recently deceased, and the family rewarded the finder for her honesty. The money had been in an envelope stuck into the corner of a box of clothing donated for charity. The finder reported there was never a thought of not turning in the money. Describe me as naive, but my belief is that this lady is a member of a very large majority, representative of most of us, and the other guys are beneath our contempt.
Real estate is relatively inactive. No Spring surge, or not yet at least. Prices are moderately declining still and likely to continue. Interest rates are moving in a tight range of low to mid 6%, and not likely to drop substantially. Mortgage money is available, lots of good programs, but underwriting standards are more rigorous. Essentially all that means is a prospective borrower should be able to demonstrate acceptable credit habits and the ability to service the debt, (make the payments). We have all kinds of stuff available, CalPERS, CalSTRS, 100% and down payment assistance programs for first time home buyers and others, even some loans for the credit challenged. All that plus commercial, which if someone owns a business may provide some cash from refinance if the home is already heavily burdened.
We're going to keep a positive outlook and assume most everyone is like the thrift shop lady, until it's proven otherwise. Watch for our billboard on the Esplanade near 11th in Chico this month.
As usual,
Thanks for visiting

LOCAL AND GLOBAL

2008-03-04T14:31:00.000-08:00

That tired old expression says that all real estate is local and it's true enough, but we have reached a point where it is equally true that all economics are global. Much as it is suggested allegorically that the beating of the wings of a butterfly in the Amazon gives rise to the flutter of the leaves in the trees in our backyard, any small financial movement anywhere in the world can have an impact on the economy of geographically distant markets. The financial markets are making adjustments in the billions, largely the result of some very bad sub-prime decisions, but not exclusively so. Gamble fever created some very reckless behavior in other market segments as well, highly leveraged buy-outs and unrealistic valuations of business entities, etc. Whether or not it was global credit problems at fault, the fact of the local real estate activity is that for February, even with an extra day, sales of single family residences were just over50% of February 2007. We're coming into traditional season for an upsurge in activity. Be interesting to see what develops. Foreclosures continue to make the news, from Bernanke on down. Lots of viewing with alarm but solutions seem in short supply, and in this election year those solutions that are bandied about, almost uniformly call for the use of our money to bail out those who made bad decisions. It's probably a selfish view, but I think if you speculate and win, good for you and enjoy the proceeds, but if you lose, suffer in silence. A house is a home, not an investment vehicle.
Enough of that. We are now approved to originate loans for teachers, and government employees, (California), plus have taken on some new programs to assist first time home buyers and others with down payment money in short supply to get into a new home. These latter programs are NOT for poor credit or limited income applicants. We also have come upon a major investor through whom we can provide mortgage financing for those with damaged credit. Again, this is not a return to the nutty sub-prime days, simply someone who will take a measured look at applicants on a case by case basis.
Our perspective on the market in our local area, we expect home prices to continue adjusting downward, modestly in the Chico area, more significantly in the Orland and Oroville area. There is a large pool of homes on the market and an increasing number of foreclosed properties available also. Interest rates are moderately volatile, but at a low level, ranging in the low 6's for the most part. Some lower rates are available for some of the specialty products mentioned above. We still see people listing their homes with real estate agents charging 6% and it is baffling. Why anyone would pay $18,000 or more of their money to sell a home when the same service is available for so much less is beyond understanding. Spending wisely is adult behavior, and saving money simply makes good sense.
As usual,
Thanks for visiting/

The Magic Show

2008-02-12T14:15:00.000-08:00

Election years have the quality of exacerbating whatever conditions catch the attention of the politicians. Recession is now freely discussed, so to rid ourselves of this problem we're going to redistribute some wealth. Watching the legislators signing bills into life with their almost hysterically giddy happiness is like watching the hostess at a child's birthday party, gleefully handing out prizes to children who didn't work for them, and in which the hostess had no financial interest. Politicians know and understand at some level I'm sure, that they didn't produce anything or create anything to earn the money they are moving from one set of hands to another, but they simply don't care. It warms the heart of the voting public to witness their apparent concern. Good luck with this one.
The next magic act is a real sleight of hand exercise. Somehow we are being persuaded that the mighty efforts to have lenders come up with forgiveness and bailout programs to help the helpless avoid foreclosures is to benefit those same helpless homeowners. More likely, wouldn't you think, to benefit the lenders who would otherwise have to swallow the terrific losses resulting from trying to resell those foreclosed properties. Lenders clearly would rather have a little something than a certain loss. Besides, even an underperforming loan doesn't tear up the balance sheet like a sale at a loss. Much of the press attention is geared to talk about the plight of the poor borrowers, people who have essentially been renting their homes, and now find they can't afford the rent. At the outset they knew the rent was going up, (at least in some cases) so some preparation for that day was called for. For the others where the rent simply proved unsustainable and hasn't gone up, why is that someone else's problem. 94% of people are paying their mortgages on time, and they don't deserve to have the burden of subsidizing those who made bad financial decisions, for whatever reason. Despite the notion that home ownership is for everyone and all should strive for it, it simply is not true. Not everyone enjoys the social, financial, and psychological level of maturity and responsibility that home ownership requires, and the cities of the country are littered with slums resulting from the nonsensical notion that giving people the benefits of material advantages without first developing the maturity required to appreciate them is a good idea. The granting of credit for home purchases where such credit was not warranted has resulted in some dislocation for some, but they aren't really losing a home since they never really had an equitable interest. The real tragedy in the home mortgage debacle is the loss of confidence in credit markets. Credit rating agencies employed by the people who are selling the rated instruments to an unsuspecting audience have perhaps done irreparable harm to a global financial community which has always relied on trust for the valuation of underlying securities. Granted that the suffering of a few is touching, and offers a great opportunity for political campaigners to demonstrate the compassion they feel for all of us, but a situation which if left alone could probably right itself in a few months or perhaps just over a year is now destined to drag on for a much longer period. Whatever the business of government, it is certainly not business.

Some Reactions

2008-01-30T12:03:00.000-08:00

Whether you watch current events with fear or amusement depends on your politics and the state of your bank account I guess, but in this charged campaign environment we're all a little like Alice in Wonderland where nothing is exactly as it seems. The politicians talk to us as if we're all gullible and simple twits, and since we put them in office with regularity, perhaps they're right. The State Of The Union message tells us that the government is going to hand out some money to save us from our reckless spending habits, which should solve the housing problem pretty well, and other than that, things are going along pretty well apparently. At least from Presidential perspective. We see that the Kennedys have not endorsed the Clintons. These two families, paragons of virtue both, simply don't like each other, and with so much in common you would expect them to be more supportive. One family acquired it's wealth from bootlegging during prohibition and the most vocal of the group is a drunk who ran and hid while his girl of the moment slowly drowned while trapped in his car. The other is a consummate liar who perjured himself in court and lied to us and investigators about his affairs, and horror of horrors, he was messing around on company time. Power does strange things to people. Remember Gary Hart? He was going to be a candidate for president and had a woman problem. Essentially he told the press to catch him if they could. So they did. There were some really great pictures of him with his sweetie on his lap sitting on a boat. Great enough that he decided he didn't want to be president after all. Don't know what his wife did to him. It's amazing really that people we wouldn't allow in our living room, and surely wouldn't want hanging around our kids,we put into positions of considerable influence. Speaks to our resilience I suppose that we survive these disastrous decisions, but future generations are really going to have a tough time bailing out.
News on the mortgage front has the FBI descending on several lenders to investigate their behaviour. It would be easier to hear them approaching and closing the barn door if it weren't for the deafening sound of the horses hooves disappearing in the distance. If you do happen to hear the barn door closing, I'll bet you anything you won't hear any jail cells slamming on the likes of the Countrywide crowd and their ilk. It really is an election year, and appearances are very important to politicians. Looking like you're doing something is just as good as doing something, except for those of us with real jobs.
For the stuff I should be talking about, mortgages and real estate, our local market is in pretty good shape. Interest rates are quite low, buying interest is picking up and with a ton of mortgage programs to pick from we can place almost anyone in a home. The capacity to pay is the major criterion. We're a certified CalPERS lender, so for those members there are some significant mortgage advantages we can bring you, and for everyone else the opportunities are also out there. The Chico housing market is reasonably active, the Orland market is not. Nothing meaningful in this, it's just the current state of affairs. We're still excited in our offices, maybe because we're a segment of the gullible twit group, but real estate and real estate mortgages are fun and helping people with them is exciting.
If I've offended any politicians with this blog; good. For everyone else,
as usual,
thanks for visiting.

New Year, New Beginning?

2008-01-08T20:48:00.000-08:00

We don't think so. Just exactly where we are in the process of settling down to "normal" in the real estate business is uncertain, but for sure we're a long way from the end. Inventories of new and existing homes are too high, prices are too high, demand is not high and pending sales are off a substantial percentage. The stock market is uncertain and for the first five days of the new year the Dow Industrials have seen losses not seen since 1978, read that as in 30 years. All of that being said, what does it matter? Houses as an investment vehicle ceased to be viable some months ago, so there are probably very few people basing their decisions to sell or buy a home on economic events, which brings us a little closer to the real world of making decisions based on personal circumstances. Job changes, promotions, transfers, growing or shrinking family, etc. If a move into another home makes sense, or an entry into homeownership makes sense. Do it. If a job transfer mandates selling, do it. Interest rates are spectacularly good, well under 6% on fixed 30 year loans today, and mortgage money is available to qualified borrowers. Even commercial loans are carrying attractive rates.
The news about increasing numbers of foreclosures is not a myth, but it is also not the result of predatory lending practices. So far the problem stems from the unrealistic behavior of borrowers buying more home than they could afford with the expectation rising values would bail them out. Well the rising stopped, the payments are due, and they exceed the capacity to pay. Sort of like buying stock on margin at the peak. If there are no reserves, there is a serious problem. Soon the resetting mortgages will begin to have an impact on foreclosures, but these will happen for the same reason as above, unrealistic expectations and bad judgment. The ramifications for real estate prices in general will be to further depress prices to some degree. How much? Who Knows? Depends on the community, since all real estate tends to be local. But so what? If you're living in your home and have no personal reason for selling, don't. List it at a fair price if there is some reason for selling and move on. If there are good personal reasons for buying and it makes financial sense. Do it. Making buying or selling decisions in response to a perception of market forces is speculating, and if that's your purpose you may have to wait for the next cruise liner to pull into the dock. The last ship already left.
On a business note, we have tried very hard to make our web site resource rich, so if you're a serious buyer or seller it should be helpful. If you're simply curious it should be entertaining. Properties for sale, valuation data bases, mortgage information, free credit reports are all available, and if it's still lacking what you need, call. Our listings are now on every major real estate web site in the country, and if you're trying to sell your property on your own, call us and we'll give you a position on our site free, no obligation. One way or the other we're going to twist the tail on this tiger and make 2008 a good real estate year. We hope you'll join us. Watch for our billboards. Behind Carls Jr. at East and Esplanade this month.
As usual,
thanks for visiting.

Last Post of the Year

2007-12-18T19:36:00.000-08:00

I've given a lot of thought to this blog and the possibility of saying anything meaningful about the state of things real estate/mortgage. It will quickly become apparent that the amount of thought has had almost no impact on the content. The media has enjoyed the daily announcements of savior plans for rescuing troubled mortgage borrowers. almost breathlessly reporting on the details they don't understand, details which say much. promise little, and will do nothing. Countrywide leads the pack in cupidity, and their CEO is still not in jail. But these things take time. It is apparently more difficult to recognize larceny on a grand scale than to spot some guy hotfooting it out of the 7-11 with a stolen six pack under his arm. There is a constant linking of the current level of foreclosures with the resetting of sub-prime teaser loans, while in fact most of those loans have not yet begun resetting. The foreclosures taking place are by people who quite simply should never have been granted financing, or multiple foreclosures by "investors" who bought with the expectation of flipping for a profit and got caught. The government really has no business making any type of concessions with our money in a search for a resolution of this problem, and even less business in messing with the integrity of the contracts which created an obligation on the one hand and an expectation on the other. Any tampering in this area will forevermore call into question the advisability of entering into contractual agreements by any lender foreign or domestic. Words like ex post facto come to mind. Enough of this I expect.
Thinking about politics and politicians can put a person off their feed for the all important season of ignoring caloric needs in favor of indulging shamelessly in the bounty of gastronomic wonders of the holiday table. Anyway...From the time we were tiny we have been conditioned to view our surroundings with wonder and delight at this time of the year, and to embrace fondly all those around us. It is a time for optimism and hope and we hope you will allow us to share in that with you. If we can sustain a regard for each other and a concern for the welfare of others, we'll get over the small bumps OK.
Have a very Merry Christmas.

Can You Handle Some Good News?

2007-12-03T21:52:00.000-08:00

Usually I try to make this exercise somewhat informative and not just a sales pitch for our company, but! Interest rates are under 6% for 30 year fixed rate mortgages, and for people who have their credit in good repair, this is a stunningly good time to dump a dangerous mortgage, option ARMS or other adjustable vehicles and move into the safety of a fixed rate mortgage. And boy can we help. The reduction in rate in some cases is sufficient to reduce monthly outgo even if a pre-pay penalty has to be taken into account. This is not cookie cutter stuff,so if you think you could benefit, call us. Couldn't hurt. Could do a bunch of good.
Some changes to our web site for what we hope is the better, increasing the amount of information available to everyone. Readers from the past are aware of our feeling that knowledge empowers, and we think informed consumers are our best chance for continued success in the real estate business. Our "resource" page is loading up with places to go for information. Please take advantage of it.
The real estate market is in turmoil and the number of sharks in our business is remaining pretty steady rather than diminishing. They are however trying to identify a different prey. Now it's not just the uninformed who are targeted, it's also the vulnerable. Just be careful. All of our agents are willing to help answer any question you may have, including guiding you to appropriate sources if we don't have the answer. You don't create an obligation. Instead we hope it's simply the first step in a long term trust relationship.
We don't sell gas, but we're also happy to report a slight moderation in oil prices.
As usual,
Thanks for visiting.

Short Sales

2007-11-23T12:29:00.000-08:00

This is not going to be easy. The essence is easy, but there are many facets, many ramifications, that complicate matters. At base, a short sale takes place when the mortgagor, the lender, agrees to let the mortgagee, the borrower, transfer title to someone for an amount less than the balance owing on the mortgage. The only certainty in the transaction is that the buyer is guaranteed clear title as to the mortgage in question. Nothing else is certain. The short sale agreement, from the lender perspective, is granted because it presents the least loss scenario, or the best of a bad situation. Faced with the certainty of foreclosing and unable to identify any means of collecting on the note, the lender offers some agreement to the borrower. No one other than legal counsel is in a position to advise the borrower that the proffered agreement is in their best interest. There are significant tax and legal consequences and financial considerations that can only be identified by a professional in real estate law as they relate to an individual borrower. All agreements are not the same. All borrower circumstances are not the same.
Because real estate agents live to secure listings to sell property, and because the market has tightened up considerably, a cottage industry has sprung up, holding seminars for real estate agents for a fee of course, teaching them how to cash in on the booming foreclosure market. One of the ways is to advertise as short sale experts, promising some extra knowledge that will make their service more valuable. Keep in mind that a short sale listing is just another listing. A little more work once an offer to purchase comes in, but still just another listing, and it is deceptive to suggest that there is some special training or skill that will serve your interests. Only you can negotiate with your lender for the terms of your agreement, or your lawyer if you will only hire one as I suggest. Get legal help. If a short sale agreement is determined to be what you need, negotiate it, then shop for a real estate agent you think will work hardest for the least cost. Compare services and fees, just as with a regular listing for sale. From a buyer perspective, there is no necessary advantage in looking at short sale listings in search of a bargain. All lenders are different and will have differing flexibility in their view of fair market value. Keep in mind that your negotiation to purchase will require satisfying the underlying agreement for the short sale, and the lender is in firm control of that. For practical purposes you should simply find the home you like, decide how much it's worth to you, and negotiate within that limit, regardless of the type of offering.
One other thought. As mortgage brokers, as well as real estate brokers, we're held to some pretty high standards for our conduct. Since we know that a great number of the impending foreclosures, or defaults, are related to contracts that were entered into by deceptive means; misrepresenting income, occupancy, bank balances, employment, source of down payment, etc., if we are asked to represent a client in a short sale we will ask questions to determine if these events took place. If we determine that fraud was involved we will refuse to participate. Lenders are entitled to protect themselves and as licensed professionals we are obliged to protect them. If the contract involved fraudulent representations the lender is not obliged to enter into any agreement, and can in fact move rather swiftly in both civil and criminal proceedings to find relief.
For a final bunch of thoughts. If default is imminent, call your lender. All lenders have loss mitigation departments. Keep in mind that the loss they want to mitigate is theirs, but if it can be worked to your advantage, listen to them. Seek professional help immediately. This could be a mortgage broker you trust since there are some programs that might help you. Do not seek the advice of sales people until you have determined from legal counsel that your best interests are served by that decision. The web is filled with foreclosure sites. All promise for a fee to avoid foreclosure. Not likely. You or your attorney need to talk to your lender. Get information about the timeline for default/foreclosure actions. From our site you can access title companies that will provide you the information. Lacking that, call us. We'll get something to you. Here are some FHA sites with info about about a temporary program for helping people in some special circumstances. If you think you qualify, you must have your application in by Dec. 31. We can do that for you if it works for you. http://www.fha.gov/about/fhascusqa.cfm http://www.fha.gov/about/fhasfact.cfm
We're trying to locate a foreclosure consumer advocate with free legal help in our market area. So far no luck. If you know of one please call and let us know and we'll publish for all to share.

As usual,
Thanks for visiting

Foreclosures

2007-11-21T21:41:00.000-08:00

I hope with this blog to provide a little food for thought, not a group of solutions. As much as most of us enjoy watching magicians dazzle us with their dexterity and their skill at misdirection, watching politicians and others of similar persuasion is almost as much fun, but a lot tougher on the audience if you miss how the trick is done. Our governator recently showed up on TV with a group of like minded folk having a meeting to discuss what could be done to protect the consumer from the threat of foreclosure. That's what they said anyway. Keeping in mind that there are two parties to a foreclosure, the lender and the borrower, and the borrower probably owes more than the home is worth. The lender on the other hand has a significant dollar investment, and if foreclosed upon the collateral is going to devalue farther and produce a whopping loss. The borrower is probably not a significant campaign contributor, the lenders probably are. It seems to follow that what was said and what was intended are not the same thing. Countrywide, rapidly becoming notorious, GMAC, and other lenders are apparently offering program modifications to keep payments at current levels rather than resetting to the higher levels contracted for originally. This is characterized as a socially and ethically good thing to do for the benefit of the borrower. Since social and ethical motivation has been absent until now, the reasoning is suspect at least. The lenders are faced with situations which are going to cause them to lose either a lot of money, or a lot more money, and keeping some income stream is preferable to causing a substantial outflow, or asset reduction. Having suggested that these parties are lying in their teeth about the motivation for their actions, there remains the valid argument that the greater social and economic purpose will be served by preventing as many of these foreclosures as possible. The repercussions of foreclosures on other properties in the vicinity, either near as in the same block, or even in the same community, would be great and even potentially devastating, and these repercussions would afflict people who were not in any way culpable in creating the problem. Clearly we have some issues to resolve and some strategies for resolution are urgently called for. Just as clearly, the issues need to be identified for what they are and dealt with reasonably, not with the dexterity of a magician but the thoughtfulness of a statesman. There is blame aplenty to be shared, and the pointing out of errors could make for some good historical reference, but for now, solutions requiring some intelligent thought and action should be the order of the day. This is not Philosophy 101 where we may discover some universal truth susceptible of proof from any direction. We need some expedient resolution, and soon.
For anyone facing the possibility of default on a mortgage I urge you to get educated as to the process and the timeline. There are links on our site to Title companies that can provide you some information in that respect, and possibly some description of short sales and other remedial possibilities. If that doesn't work call our office,and we'll get some information to you.
The next blog is going to talk about short sales and the real estate agents' role as we see it. We encourage you to first consult an attorney. Not a consultant, not a real estate agent, not your uncle Willie who once had a car repossessed, a real estate attorney. One national study predicts 20% of sub-prime loans in Chico will go into foreclosure. That's one in five, and we need to get ahead of that curve if possible.
As usual,
Thanks for visiting.

Thanksgiving

2007-11-18T21:36:00.000-08:00

It's that time of year again when real estate slows considerably and thoughts of houses shift to thoughts of "homes", and families, and loved ones. And that's a good thing. We're particularly surrounded this year by bad news; falling dollar, rising oil, now trillion dollar losses in the credit markets, and escalating foreclosure rates. The general economic mood is somber, as well it should be, but we are a resilient lot and will put our emphasis on the values of family and friends, and this time of the year especially reminds us that the warmth of these associations far outweighs the chill of economics.
We hope that you can join with us in an appreciation for who we have rather than what we have, and the notion of thanksgiving that we celebrate is for the support of all of those with whom we share the daily travails; family, friends, co-workers.
Enjoy the holiday, and as usual,
Thanks for visiting.

Tumultuous Times

2007-11-09T11:19:00.000-08:00

Almost all of the news relating to real estate and real estate financing has been uniformly bad, so why add more to the pile. Just a capsule view of the latest, and then on to more positive things. I may be the only one in the world amazed by the relaxed view of losses that begin with the letter B. Billions are the unit of measure for investment firms and investment banks, and now along comes GM with a third quarter loss of 39 billion. Those are all figures that exceed the GNP of many countries in the world. Mortgage foreclosures are double the year ago figures, oil prices are about to hit $100, and the value of the dollar is declining. Since we depend on oil so heavily and since we depend on imported products so heavily, the latter two circumstances have a significant potential for pain. Contrary to what the doctor tells you, this may "pinch" more than a little bit.

On the plus side of things, mortgage interest is low, existing home inventory in the Chico market is down about 15%, and while prices are still coming down, it is not precipitous. Buyers are being more cautious, as are mortgage underwriters, so while the money to buy is available it is not being dispensed recklessly.

From our standpoint we are aggressively marketing loan products, both commercial and residential. We are able to deliver sound, safe financing or refinancing on any type of real estate, and at very favorable rates. Turn times for residential mortgages have always been short, but we are able to offer very fast turn times on commercial loans as well.

We're trying something new for us and are using billboard advertising in the Chico area. Because we are so fanatic about the use of the internet for real estate, the most effective tool available, our billboard is designed to direct traffic to our website. If you haven't explored it recently there are some new additions, Cyberhomes has been added for home valuation, we're co-branded with them, so now both they and Zillow are available. Also new is a link to free, confidential credit reports, plus a bunch of other good stuff. Our core purpose as we see it is to provide a trouble-free, worry-free, inexpensive, real estate experience. Most service, least cost. Our site is simply our way of introducing us to you, and providing as much information as possible, about houses, mortgages, and the communities we serve.
As usual
Thanks for visiting

The breath of recession?

2007-10-21T21:16:00.000-07:00

The word is showing up more and more, and certainly there are enough signs out there. The banks and the government are busily crafting strategies to conceal the problems of the mortgage credit mess, instead of admitting to the problem and addressing it. It's just some more of the ostrich approach to problem solving. A disingenuous behavior we have come to expect. Note that oil prices are at record levels, and projected to go higher still. Oil prices directly influence the price of almost everything we buy, and indirectly, everything else. As previously noted, housing starts and permits are sharply lower, and locally, Johns Manville has announced the layoff of 62 people in the Willows facility. For those folks, it's a recession. National news talked about the high cost of everything impacting families, and reported one family whose pay check formerly lasted 4 days now lasting 2. Didn't anyone notice that 4 days was something short of a week? Rumor, as yet not announced officially, has Sierra Pacific idling their second shift. If true some more folks who would describe things as recession. You can pretty much follow the dominoes. Plants don't ship, trucks don't haul, stores don't sell, craftsmen don't work, etc. My peers would rather we don't mention these things, believing that a proper spin will make things better. We believe that knowledge is power, and that awareness results in fast on your feet responses to changing events. We want to be informed so our clients can be informed, and on that note, once more your attention is directed to a good source of information about the mortgage market and the credit markets generally, here.
One of the bright spots in the mortgage news is the interest of the Justice Dept. in the substantial sale of stock by the head man at Countrywide. It has only taken a year for the interest to be aroused.
The last of the sour notes. Sales for the month to date vs last year are at 61% in both Chico and Paradise/Magalia. Sales for Glenn County are dead even, but since there were only 2 recorded sales each year for the period, the celebration is a little muted.
Now the bright stuff. We have added three major national real estate sites to the growing list of those carrying our listed properties. This is big. We have added a link to a confidential free credit report (no sales pitches) to our web site. It's on our mortgage page. We have added access to Cyberhomes.com from our site for really elaborate property valuation and neighborhood information. This in addition to Zillow which has been on our site for some time, and we have increased the size and appearance of the Nolo website link which gives access to all kinds of legal help information, including how to sell your own home. We want our site to be a valuable real estate destination site for our market area. Saving money is smart business, and saving you money on home sales and mortgages is what we do. Interest rates are low, housing inventory is high. Selling a home is tough, but if we work together we can get it done. If you are one of those directly affected by current market conditions, call us. If there's a way to help you we'll save you as much as we can in the process.

As usual
Thanks for visiting

A FINE KETTLE OF FISH

2007-10-17T07:57:00.000-07:00

Remember the antics of Laurel and Hardy? "A fine kettle of fish you've gotten us into Ollie" was the finger pointing line Stan used to point out some problem that Ollie had caused, and in our broad real estate and mortgage markets there are a lot of "Stans" pointing to a lot of "Ollies". The Fed, mortgage lenders, hedge fund operators, real estate agents, appraisers, government, to name a few, are responsible for the real estate market tanking, and by golly, something must be done. The flurry of activity by politicians, in this gearing up for election time period, is kind of fun to watch. The problems of course are serious, caused by greed at all levels, from the consumer expecting to turn a home into an unrealistic investment vehicle, to the real estate agent, appraiser, mortgage lender, hedge fund operator, and investor, expecting a higher than normal return for a higher than normal risk. Legislation is unlikely to provide a solution. Some of the impending moves; removing the IRS threat of taxing the forgiven amount on a loan default, (a good thing), providing some sort of government bail-out for defaulting borrowers, reminiscent of the savings and loan debacle, and not a good thing, new laws forbidding real estate agents from influencing appraisers to value property at higher than actual value, (that's always been illegal, it's called fraud), and laws designed to prevent lenders from loaning money to people who can't pay it back. Most of this activity is knee-jerk response and isn't going to have any impact. Commissions drive this industry and people will find a way to enhance their income. Fee for service such as appraisers do would resolve much of this problem, and drive many of the real estate agents and mortgage people out of the business, but the latter didn't cause this enormous problem. They took advantage of a situation, and the situation was presented by some clever designers of investment vehicles that offered significantly higher than normal returns to investors. These vehicles provided a home for mortgages of questionable value and merit, and the flood gates were open. And now here we are.
Chico sales for last month were under 50% of year previous. This month to date we're running at 65% of previous year, Paradise/Magalia is at 68% of last year. Inventories are 507 and 374 respectively. Interest rates are very favorable for all mortgage products so people buying or refinancing have a favorable climate. Underwriting standards have tightened but not unrealistically. Good credit=good loan.
Housing starts nationally for September were down 10.2% to lowest level in 14 years and building permits were also sharply lower. If you work in the construction trades, not a good thing, for the real estate market, a good thing, we'll be able to burn off some of the excess inventory and restore some stability to the market.
There is still a lot of money out there for mortgages. Our e-mail and fax machine are filled daily by lenders offering "great deals" both residential and commercial. Our problem is finding people who want to borrow some of the stuff, so if you know someone?
Our offices are enjoying pretty good activity and we keep finding new web sites for exposure of our listed properties. Pretty exciting really. We're very aggressive on the internet so when listed with us a home is exposed to the whole world, quickly and consistently.
Enough sales pitch.
As usual
Thanks for visiting.

ALMOST END OF MONTH

2007-09-26T20:38:00.000-07:00

Wouldn't it be great if someone knew where the market was going? Depending on where one sits in the political spectrum it's possible to view the goings on in the political arena, legislative and executive; and the reporting media, print and visual, with alarm; outright fear; amusement; glee; approval or disapprobation. Politicians of all persuasions are leaping into the mortgage mess with solutions guaranteed to get them some press, probably guaranteed to hit all of us in the pocketbook, and very little else of merit. If left alone the market forces that got us here will almost certainly extricate us over time. Economic disruptions are somewhat like the common cold, the cure takes about seven days if treated, a week if left untreated. Not terribly sagacious on my part but the posturing of fools simply distracts us from attending to the business at hand, whatever that may be. Now that the fed has spoken we can all sit around and wonder what impact that will have, if any, and take bets on whether they're going to do it again, and if so what will that do, etc., etc. For the mortgage market, whether because of, or in spite of the fed, interest rates are about where they have been, in the low to mid 6% range for 30 year fixed rate loans. A very nice place to be.
Home sales however are something else again. The national figures are pretty heavily reported and don't mean a whole lot if you only are interested in one home you want to sell or buy. In our little neck of the woods the figures do mean a whole lot to us, and they are not pretty. September month to date (9/26/07) in greater Chico, 30 homes, 56% of 9/06. Paradise-Magalia, 20 homes, also 56% of 9/06, and for Glenn County 7 homes, 70% of 9/06. There are 556 homes listed in greater Chico, 387 in Paradise-Magalia, 177 in Glenn County. Remember these are MLS reported sales only and same for the listings. If you do the math you realize we have many, many months of supply at current sales levels. Great for buyers, tough on sellers. For the projections of resetting mortgages having a dramatic impact on the market, I doubt it. For people who simply need to get into a fixed vehicle and out of a resetting variable, the rates as noted are favorable. For those who have burdened their home beyond it's value by recklessly taking perceived equity out for good times and toys, tough. That's a personal financial problem, self induced, and not a social issue. However it is the issue the politicians are attempting to address.
Once again I can report that our offices are upbeat, listing activity is good, not great, sales are good, not great, commercial loan activity is pretty close to great, and so on. One of our commercial lenders called today and spent some time talking about how nice it's going to be when many of the opportunists are left by the wayside in this market and the client dedicated professionals are once again serving the needs of the public without distraction. We hope so.
Once again,
Thanks for visiting.

Another Peek Into Our Office

2007-09-16T20:41:00.000-07:00

Almost all of the news is more of the same, tightening credit internationally, more lenders in trouble, the National Assoc of Realtors fighting for legislation to induce some action to "help" borrowers, more realistically to help realtors however, and Wall Street also looking for some sort of bail-out so the consequences of poorly thought out investment strategies can be shifted from a few of them to all of us. Reminder of the savings and loan bail-out of a few years ago. Pretty predictable behavior. In light of this media saturation with reporting and commentary about the mortgage mess, a look into our office to see if much has changed in real estate agents attitudes. I don't know if everyone is old enough to remember the Sonny & Cher hit of 1967, "The Beat Goes On", but it jumped to my mind when an offer from another office came in for one of our listed properties. The offer was for less than the listed price, not unusual but a tad excessive in this case, but most importantly asked for a 3% seller concession to pay for closing costs, and was predicated on the prospective buyer obtaining 100% financing. Didn't we understand that much of our current mortgage problem arose from people buying homes they couldn't afford? I would submit that if you can't afford a down payment or the cost to close the transaction, you should not be looking at homes to buy. Our listing client rejected the offer. As real estate agents we are obliged to present all offers to our clients. The decision to accept, reject, or negotiate is entirely theirs to make, but had we been approached to act for the prospective buyers in this case, as real estate agents we would have counseled them to wait for some greater financial strength. As mortgage agents we would probably have declined to represent them. There could be extenuating circumstances, but for a mortgage guy or gal, the question always comes down to, "if you can afford the payments for a 100% mortgage, which with taxes and insurance is undoubtedly higher than the rent you've been paying, then how come you haven't been able to save enough for closing costs and some sort of down?" As I said, "The Beat Goes On". Apparently agent greed has not taken a holiday, and putting people at risk is still the appropriate thing to do.
Maybe doing the right thing is attractive, maybe pure chance, but our commercial loan activity is moving nicely, and our real estate sales are good. Not great, but good. I'm continually surprised that more sellers don't seek us out to list their properties. We're running strong in that respect also, but since we do everything so well, and for so little in comparison to the % offices, I think we should have all the listings. My own form of greed probably.
As usual,
Thanks for visiting.

Better Late Than Never?

2007-09-07T22:36:00.000-07:00

The daily intention has been to get this thing done, not that the world is waiting, but daily the torrent of news causes a "gee maybe something is about to happen" reaction in me, and so the delay, and nothing particularly surprising has happened. For today the Dow dropped almost $250 points and the "flight to quality" caused a jump in treasuries, and a similar drop in mortgage interest. Now a quality 30 year loan is down to about 6.25, no points. This is very attractive money, but not readily available to the same mob that have caused all the problems. This money is destined for people who intend to pay it back. The surprising thing to me about the jittery stock market, and the seeming alarm at the rapidly shifting patterns in the economy is the fact that it seems surprising to the media, and investor types. We've all known that the withdrawal of equity from rising home values for spending on "things" has been driving the economy. Now there is no equity, no spare cash, and Sear's has quit selling appliances, Home Depot and Loews have stopped selling big ticket improvement items, dealers have quit selling new cars, and many of the building trades are effectively shut down. Employment in the mortgage industry is in the tank, Countrywide announced today a layoff of 12,000 is pending, and other peripheral industries are likewise hurting. Would you like to be in the furniture business? Or perhaps buy a kitchen cabinet and appliance store? If all your money isn't tied up in an ice pick sharpening franchise this could be the big chance. Watching the first domino fall over and considering it a solitary event is a touch naive, and so is expecting the mortgage debacle to confine itself to housing. This is not negative commentary, and as the figures for sales in our little corner of the world will show, we're enjoying some semblance of normalcy. Are home prices dropping? Of course they are. Is that a problem? No. The problem was they were too high. As usual these figures are for MLS listed sales only and for single family residences. Chico, Aug 07, 85; Aug 06 91; Aug 05 108. Paradise/Magalia, Aug 07 37; Aug 06 42; Aug 05 60. Glenn County, Aug 07 12; Aug 06 14; Aug 05 24. The 2005 figures obviously reflect the flipping and speculative fervor of the time, aided in no small part by the activities of real estate people.
For whatever it may be worth, our offices are doing well both in real estate and mortgage activity, Chico and Orland both enjoying positive results, including I'm happy to say, some commercial loan business. We have a new web site which I hope you'll visit, devoted to mortgages and trying to attract commercial interest. If I've mentioned this before, I apologize. It's here.
The sky is not falling, if you want to sell or buy a home this is as good a time as any, and if refinancing is in your future, rates could hardly get any better. Call us.
As usual,
Thanks for visiting.

Belated Blog

2007-08-25T16:45:00.000-07:00

This is long overdue in time, but if there's nothing interesting to say, no loss. I'm on the mailing list of some industry bloggers and every couple of days here comes a new blog, lots of cute stuff and a real waste of time. Almost all the news is national so you already know it, and most of it is bad. Countrywide in trouble and stoutly denying it and along comes B of A with two billion of bail-out money. Even with that the top dog at Countrywide, who has been busily selling his company stock for the past year, says on the public airwaves that the worst is yet to come and the mortgage business is going to lead the national economy into a recession. He could be right, but what is his opinion worth? Why ask a failed leader for advice about anything? Like asking the Hutton girl her opinion on the state of public morality.
Closer to home, one day last week in came an e-mail from one of our "A" lenders, Mortgage Investors Group, advising of their departure from the wholesale mortgage business. They haven't taken any hits, just getting too difficult to sell loans into a shrinking secondary investment pool. The number of lenders still out there is declining and from the remaining we receive regular e-mail notices of program changes and underwriting modifications. The market is tightening in response to substantial potential losses looming in the mortgage backed securities business. Greed is a pervasive thing. Wall Street set the stage, but there were an overwhelming number of applicants for a role in the drama. We will muddle through.
For our bunch of good guys, business has been great. It's been a productive month in Chico and Orland and no end in sight. Prices are still declining though not dramatically, and interest rates are holding fairly steady. We're excited by our continued movement into commercial lending, in fact have a brand new web site which is still kind of a work in progress which you can visit here if you wish. With the tightening of the real estate and lending markets we think (hope) that some of the less than professional agents will have made some career changes and leave a gap that we can fill. We want to make a difference and slowly but surely we'll persuade people that saving money is smart business. Well over 90% of real estate buyers start their search on the internet now, and we're out there. Over 20 national real estate web sites carry our listings and one of our partners is about to put us on three more major, new, sites. It just keeps getting better. Next week I'll summarize the area sales figures for you, but 'til then
As usual
Thanks for visiting

THE END OF JULY

2007-07-31T21:15:00.000-07:00

I was tempted to add "but not life as we know it" to the title but held back. The news has seemingly been uniformly bad for all things real estate but maybe if we burrow around a bit there may be a bright spot. First the local statistics. Chico MLS reported single family homes sold for July; 54, down from 83 year ago, or 65% of year ago. Not good at all, and especially measured against the 563 homes listed for sale. Paradise/Magalia had 37 sales, same as year ago figures, from an inventory of 417 homes. Glenn County, 10 sales this year, 11 last year, but inventory a whopping 183 for that small population area. So much for local. Nationally home sales are down, inventories are up, and prices are dropping in most markets, not precipitously, but dropping. The stock market was thrashed last week, based on the inability of some major corporate players to place some large/huge bond issues at favorable rates. Or at any rates in some cases. This is a reaction of the money markets to the beatings being taken in the high risk hedge funds, related to the mortgage debacle, which is continuing and not likely to soon go away. Once again let me offer the link which is a pretty good window into the mortgage scene.
http://ml-implode.com/ . Pay some attention to the American Home Mortgage Investment Corp., number 10 lender in the country, and not a sub-prime lender. We used them from time to time, locally they were doing business as American Brokers Conduit, and were OK to deal with. The tragedy of these collapses is not written in headlines anywhere, but picture if you can the number of individuals who were expecting their loans to fund and their purchases to be completed in the approximately $700 million in reneged deals in the last two days. Sellers who may have already moved, buyers who maybe have no place to go. Tragic.
The bright spot. Both of our offices are seeing great phone traffic, writing listings, writing offers, busy, busy agents. Our web site traffic is up and pretty consistent. I hope this is true for other offices as well, but I frankly don't concern myself much with the other guys. We're happy.
A note about our trade that may be amusing. As a group we're commission people, generally gullible and a little naive as sales people can be, so we get a lot of advice from self ordained gurus trying to sell us ways of improving our performance and incomes, and etc. One such email that comes to me regularly from the Broker Agent News had an article written by someone who was offering advice on how an agent could sell more of the agent's listings. It was advised that this guru had come up with a technique for "triangulating" the prospective home listing for value, determining the fair market value, and then listing the property for ten percent below that value. He reports that he was successful in generating many offers with this technique. Wonders will never cease. Selling ten dollar bills for nine bucks should work pretty well in any kind of market. These publications also carry lots of advice on how agents should justify their high commissions to prospective clients. I've heard a lot of the justifications, never one that was satisfying, but the salesman who can sell a 6% fee should have no trouble persuading a client to take a 10% bath on his house.
As usual,
Thanks for visiting.

Local and other news

2007-07-22T20:43:00.000-07:00

Before diving into any of the thoughts for the week, let me again suggest a visit to this link, http://ml-implode.com/ and spend a few minutes reading the reprint from the Boston Globe. Succinct and an accurate portrayal of what's real. At the local level, closed sales from the MLS files for Chico are down, and if there is not a significant surge in the last few days of the month, it will be a poor July. We'll see. Still a huge inventory, over 500 single family homes to pick from. We had a call from someone asking what 3 bedroom 2 bath homes were going for in Chico. Kind of a silly question and we tried not to give a silly answer, but really. What's your pleasure?
Our own office activity is up sharply in both Chico and Orland, listing and selling. Good for us and it's about time.
We recently joined the Chico Chamber of Commerce, we're already a member of the Orland Chamber, and I'd like to say it's an altruistic "let's support the community" gesture, but it's not. It's a frank attempt to gain exposure to possible candidates for commercial loans. We have many programs that offer opportunities banks simply can't match, and we also have some bank stuff to go with them. As with all businesses our problem is identifying the people who need our services. Having the best hula hoops in the world is no help if you can't find anyone who wants or needs one. We think our residential home listing program whips the socks off everyone else, but since we don't yet have all the listings, our message has obviously not yet reached everyone. To those who may watch our web site just for entertainment value you may notice slight changes in copy and soon probably a change in format for the listed property page, which is our landing page. We have added some links and will add more if we can determine some utility value to our web visitors. We monitor closely the activity on our own site, and for information, of the search engines directing to our site, Google is over 70%, Yahoo, MSN and AOL way down the line. Possibly a good sign, our web traffic is up substantially. People are looking at homes. The hits recorded on the 20 some national sites carrying our listing are also up, indicating an increasing interest, and that's where the buying process begins. We'll see how it plays out. My feeling, and that's all it is, is that if there is no serious disruption in the economy, we'll begin to see a return to some buying normalcy. Still a lot of foreclosure activity going to happen, still a lot of people going to be hurt, but these are the consequences of some bad past decisions and not necessarily an indicator of future behavior. I could be wrong, and I've been there before too.
As usual,
Thanks for visiting.

SHARED THOUGHTS

2007-07-15T12:23:00.000-07:00

Since it's mid-month let's look at the sales track. If your home isn't listed for sale and you don't intend listing it, these figures are only for entertainment value. Remember these are only single family homes listed on the Sierra North Valley MLS. Greater Chico, total listed homes, 564, sales month to date (MTD), 19, last year 34. Paradise/Magalia total listed, 414, sales MTD, 12, last year 17. Glenn County total listed, 171, sales MTD, 2, last year 5. Our offices have seen an uptick in sales activity which won't be reflected until next month, but a good thing just the same. Some criticism comes my way for reciting figures which don't provide a rosy glow, as if by not mentioning less than flattering data it will somehow morph into good news. There are enough official real estate organizations feeding puff pieces into the media already, so with the belief that knowledge empowers, I'll give you the local news unfiltered. There is an old sales mantra that says, "Every Day in Every Way, Things Are Getting Better and Better and Better". I think there are better ways to develop the mind set necessary to making them better. One of my advertising reps told me that when he asks his real estate clients how things are going they first tell him how tough things are, then provide some of that upbeat nonsense, at which point he asks them if it would be possible for them to pay their bill. On advertising. A man named John Wanamaker, regarded as the first to open a department store in this country in the late 1800's has the attribution for the following, "Half the money I spend on advertising is wasted; the trouble is I don't know which half". Wanamaker is actually a pioneer in marketing. Before his momentous decision to put price tags, (fixed prices) on merchandise, customers and clerks engaged in bartering and haggling in a flexible pricing market. Customers were unhappy to discover that someone else bought identical goods for a lower price, time was wasted, so he figured a fair mark-up, priced the goods, and advertised honestly. He became famous and we are beneficiaries today, as we go shopping with the knowledge that we will be treated fairly without haggling. If you suspect I'm creeping up on a comparison to our real estate business, you're right. Nothing justifies a % fee for selling a home in the first place, and surely there is no reason for the client to feel the need to 'negotiate" whether the fee will be 3%, 4%, 5%, or higher. We don't have any money invested in the inventory to mark it up, we're simply providing a service, and it's fairly simple to calculate the costs of providing that service and charging accordingly. We charge $4995 to list and sell a home. For that fee you get the same peace of mind and assurance of value as with any other office, franchise or otherwise, and get to keep a whole lot more of your equity when your escrow closes. My apologies for the sales pitch, but I like the Wanamakers of the world, and the Schwabs and the Costcos. We certainly don't equal them in stature, but our motivation is the same; high quality, great service, fair prices.
As usual,
thanks for visiting.

MISCELLANY

2007-07-01T22:00:00.000-07:00

Had a phone call today from an old friend, a broker from Red Bluff that I first met in the 1970's when I opened an office in that fair city. She was then the chair of the ethics committee for the MLS, a position she treated very seriously. We used to spend hours talking about the business and our shared concern for the greed driving so much of the business, rather than a concern for clients. Her call today reflected her feelings for some of her consulting clients that indicate not much has changed in our business, except for the worse, as demonstrated by the foreclosure and mortgage difficulties affecting so many. I am flattered that she thinks I have an explanation for what has happened, or that some solution is at hand, governmental or otherwise. What happened is easy enough, the solution less so. Simple greed, beginning with lenders and programs with ridiculously relaxed standards funded by greedy investors seeking the higher return of high risk mortgages, fed cheerfully by the real estate community selling homes at ever increasing prices and commissions, arranged or aided by appraisers anxious to please their real estate referral base, and let's not forget the eager buyers hoping to turn what should have been a home purchase into an investment opportunity. Why is anyone surprised by the result?
We are getting listing inquiries from people that have burdened their property beyond the market value, and they ask us how that works, and we have to be very careful how we answer. Because they wake up in the morning in "their" house it is difficult to grasp the concept that what what they "own" is the equitable interest in the house. So long as payments are made on time, the house is theirs, in a possessionary sense, but to sell it without spending some money, they first have to develop an equity interest. In some cases the value of the home has gone down and left them in an untenable position, but in most cases that we run into, the people have tapped into their equity and used the money for other purposes. Most of us learn early on that having and eating cake are mutually exclusive. Without doubt the rampant greed in our industry is the underlying cause of our current problems and my pointing to the participation of the home buyers is not intended to excuse that. We are the people with the licenses after all.
June statistics for the market watchers. All figures are for MLS reported sales of single family residences. Greater Chico, 83, last year, 98, total listings, 542. Paradise/Magalia 39, last year, 46, listings, 409 Glenn County, 10 each year, listings, 169. The significance, if any, is the ratio of sales to listings, 15% for Chico, 9.5% for Paradise/Magalia, for Glenn, 6%, and a whopping (to me) 1120 listed properties in that small market area. If you are considering listing you should fine tune these figures for the listings and sales in your price range to provide meaningful guidance.
We have just finished production on our new TV spot. Pointed to the loan market chiefly and should be on Fox channels beginning right about now.
All of our agents just completed a training session for reverse mortgage lending and all are now certified with the largest reverse mortgage company in the nation. These are critical loans for senior citizens and it very important that we offer proper guidance. They are a good solution for many, but not everyone.
Our commercial lenders offer ongoing training in which we are quick to participate, and a new to us lender will shortly be visiting our offices to bring us up to speed on some pretty exciting products for small businesses.
I want our people to be fast on their feet and able to provide professional help across the whole spectrum of real estate sales and mortgage lending. Single source responsibility we used to call it in institutional selling. We owe it to you .
As usual
Thanks for visiting.

Many Questions, Few Answers

2007-06-19T21:06:00.000-07:00

For those keeping an eye on the interest rate picture it's not news that rates are moving, or have moved up. Rates now for "A" credit, conventional 30 year fixed rate with a 20% down payment are ranging in the 6.5 to 6.75 area. Still cheap money, but up from recent history. If you watch the 10 year treasury note, its movement will give you a feel for the direction and the probable extent of coming mortgage changes. There are a lot of sites providing this information. One I like is http://www.smartmoney.com/bondmarketup/ Read the interpretations of the experts with your tongue in either cheek. If these people actually knew what was going to happen next the national lotteries would be taking some serious hits. Still fun and informative though.
The questions I referred to in the title have to do with people behavior, and so I'll describe a couple of recent situations and let you ponder with me the appropriate mechanisms we should consider for our reaction. First is a listing we had been competing for. We made our normal presentation, major appearances on web sites, print media, regular reporting on number of hits the property received, and etc...We were pressed by the seller to offer a virtual guarantee of being able to locate a buyer within 30 days. We pointed, realistically we thought, to the average days on market in the entire Sierra North Valley MLS, which naturally includes Chico as the major market. Those statistics YTD are 85 days, and I have indicated in past blogs that those numbers can be fudged, or not entirely accurate. With the knowledge that we would very likely not make the promised date should we agree to the seller demand, we didn't make such a commitment. Another guy did. The seller listed with a conventional percentage fee broker and is on the hook for almost $15,000 in commission, three times our best case offer and about $5,000 higher even if an MLS office should have sold our listing. We know for a fact our advertising which is heavily skewed to take advantage of the shopping habits of modern real estate has no peer. Should we have lied to the man and prayed for a lightning strike? We don't think so.
Second case is an Orland problem. One of our agents has three different potential sellers with homes in an upscale subdivision talking about listing. They all feel their homes are worth in the $400,000 range. They are not, we can't come up with comparable sales to support such a price, and with brand new homes in nearby areas that are 500' larger selling for $365,000 the hopes for an overpriced listing are dismal. The owners are essentially charging our agent with trying to keep the price down to insure a quick sale. I'm particularly proud of our agents and their client focus and integrity, and a quick sale is the last thing on their mind. Protecting the client's interests is foremost. So far nothing unusual here, just the inflated hopes of some sellers. But Wait. Some nut case appraiser appraised a home in the same general vicinity for $410,000. How our agent asked? The appraiser told our agent he couldn't find comps in the area so he used some from an estate subdivision several miles away, all 1 acre or larger estates with homes ranging up from the middle $400's to $800,000. Word of this appraisal "leaked" out and here we are. Owners misled, real estate agents looking bad, yet again. As a mortgage broker I can assure you that if that appraisal was to satisfy a loan application it did not get past GO. It would have been sent back for a revisit, or more likely subjected to a peer review. Meanwhile substantial damage has been done.
Last note. Don't want this to sound like a dreary exercise, or certainly not "poor us". For home buyers and sellers the real estate industry is viewed a some monolithic whole, lots of credibility in the training and ability of the practitioners, and some level of comfort derived from consulting with professionals. Would that it were so. The entrance requirements for licenses in our business are very nearly a joke, and the oversight in most offices has to do with making sure the paperwork is complete so as not to be sued. There are many agents and some offices with high standards and high regard for clients. Seek them out. If you only want someone to tell you what you want to hear, call anybody.. When your body is ailing you can consult with Dr.Feelgood who will smile and send you home with some happy pills, or you can find a real Dr. who will tell you exactly what you need to do to fix whatever it is. The news may not make you feel good, but the treatment will.
As usual,
thanks for visiting.

It's Not Paris Hilton, But Maybe Interesting Anyway

2007-06-09T19:28:00.000-07:00

Picture has nothing to do with anything. Just for your amusement. Desparate times call for desparate measures, I guess.

Just another recitation of where we are in the market, and a small peek into the trials and tribulations of a real estate office. Chico sales (MLS records) of single family homes for May; 88. Compare to 2006; 97, and 2005; 102. Inventory stands at 531 currently, in 2005 it was only about 120. Looks like we're going downhill, but for year to date comparisons we're currently 381 sold, 2006 it was 353, for 2005 454. Not really all that dramatic a difference in sales but as a percent of the hopeful sellers it's a dreary picture. A broker friend of mine from Red Bluff tells me that of their 500+ inventory over 200 of them are vacant and that's kind of scary. Our Orland office is getting more than it's proportionate share of business in the resale market, but that's not surprising given our business model and the quality of our agents, but the total market is way down in Glenn county in resale homes. I'll start here with the peek inside our office. We just lost two listings to other offices, one after having one offer submitted, numerous showings by our office and other MLS agents and our ability to demonstrate exactly how many times the property had been viewed on the 20+ web sites it appeared on, plus the heavy traffic on our own site. Shoot the messenger. The other loss did not involve an offer and had fewer showings. The seller resisted our agent's attempts to get a price reduction to increase showing activity and listed with a %fee broker from out of town, (much higher commission obligation) and reduced the price $40,000. This property, as with all of our listings, had web visits numbering in the thousands. We don't even know of anyone doing as much as we do to expose properties to prospective purchasers, but that's all any marketer can do. We can not manufacture a buyer, we can only get property in front of them. To extend this peek inside, just one more example of a client moving on. We had a property listed for 175 days, showed it repeatedly to local and out of town buyers, had it shown by MLS agents (we track these showings by lock box activity and contact the agents for feedback) and tried to get the seller to reduce the price, couldn't even get an agreement to concede $2000 to a prospective buyer for costs. The seller listed at a full 6% with a franchise office, reduced the price by $35,000 and it has now been listed with that office for 113 days and the price has just been reduced an additional $10,000. It goes without saying that the current listing offices in all of the above are not even in the same league with us for exposing properties on the web. You may gather from all of the above that this is not a rational business. The folks with property for sale can be excused perhaps for listening to the blandishments of professional sweet-talkers, because they are at least concerned and maybe even a little frightened by events swirling around them, but the logic of lowering the asking price for a replacement agency rather than dropping it for a known marketing pattern really baffles me. Embarrassed perhaps for not listening earlier. Just thought it might be interesting to view some of our "trial and tribulations". This is not a complaint by any means. What is, is.
We are in the process of being trained and certified by the largest reverse mortgage lender in the nation, and will shortly be able to offer these products. Much of the industry seems to have a pyramid scheme flavor to it, pamphlets on display wherever seniors gather, and referral fees being paid I'm sure. For that reason I've been suspicious that some of the selling of this product, maybe most of it, has been focused on income for the agent and not the benefit to the senior.
Our involvement will be the same as all of our other mortgage activities. If it is in the clear best interests of our client, we'll make it happen at the lowest price possible. If it is not we'll suggest the best alternative.
I've had some nice comments recently about our company, our agents, and our focus. Nothing can be more rewarding to us than a recognition that our efforts are appreciated. Thank you.
As usual,
thanks for visiting.

Some market info

2007-05-27T06:49:00.000-07:00

The news in the real estate world seems to perplex the pundits at a national level and confuses us if we try to make sense of their interpretations. Existing home sales are down, frighteningly so, new home sales are up, encouragingly so. So they say. Median home prices are down, or up, depending on where you live. The median home price nationally is around $220,000, and we just don't have a whole bunch of those in Chico. To make some sense of what's happening it requires looking at the actual events. New home sales are up because the national developers are slashing prices in a big way. They must reduce their inventory, so even though they sell at a modest loss it's better than suffering a continuing drain on their underlying financing. (That's true locally as well, in the Orland area, where homes are selling at sharp reductions from the anticipated pricing.) Existing home sales are down and inventory nationally is pegged at an 8+ month supply. Two reasons probably. First a slight tightening of credit standards, some 76 lenders, mostly sub-prime, have folded their tents since late 2006, so some caution has been injected into the market. Second and main reason is the reluctance of sellers to recognize their home is simply not worth what they hoped it was. In our local market MLS listed home sales for April totalled 87 for Chico, add 36 more for Paradise and Magalia, for April, 2006 it was 66 and 48, and for April, 2005, 108 and 75. Listed properties, (these are all single family home figures) total a whopping 541 for Chico and 383 for Paradise and Magalia. Remember, these are MLS figures and do not count private sales or properties being sold privately. The increase in listed properties may well be an attempt to take advantage of the normal seasonal increase in buying activity. If pricing is not aggressive however, the market forces at work, including higher gas and food prices will militate against any buying surge.
One of the surprises for me is the listing activity that is passing by our offices. We know we can't get all of them, but why any informed person would pay a great deal more money for exactly the same or inferior service simply baffles me. Maybe the operative word is informed and we need to step up our advertising, or maybe our business model simply seems too good to be true. But then so did Costco and Schwab in the merchandise and securities fields.
Just so this recitation of events doesn't seem too doom and gloomy, our web site activity is up, meaning people are looking and are presumably looking for opportunities. We're running over 2000 page loads a month, and for a small broker in a small market area, that's pretty encouraging for the future.
As usual,
thanks for visiting.

Some Postal Musings

2007-05-19T22:14:00.000-07:00

Having nothing to do with real estate, other than our use of the Post Office for some direct mail advertising, I'd still like to talk about them, and the latest rate increase. I guess they are not technically a governmental agency, although we all feel that "flavor" about them, they are none- the-less a well protected monopoly, and certainly a bureaucracy, and the behavior of bureaucrats is a constantly intriguing study. The price increase apparently stems from a need to increase profitability which requires increasing income, which in the more formalized government usually means simply raising taxes. For a bureaucrat there may be an almost perfect correlation between raising prices to increase income and raising taxes for that purpose. A businessperson might ask why profits were shrinking in the first place and seek some strategy that would work to try to correct the problem. Unquestionably the use of e-mail and the competition of the private sector such as FedEx, United Parcel, California Overnight, DHL and others have seriously reduced the USPS business volume, and they have enormous investment in plant and equipment to handle a large volume of mail, plus a difficult to dislodge and very well paid personnel roster. The effect of raising prices is likely to be the opposite of the one intended. If shrinking volume caused the income reduction, the rise will likely drive away even more marginal users, and reduce the volume even further, probably eliminating any hoped for increase in revenue and profitability. The high cost of plant and people is not going to go away. A business approach to the problem would more realistically involve studying the capacity of the current system and determining a postage price that would attract sufficient volume to utilize that capacity and return a profit. That determination would likely result in a price cut, but an increase in profit. That isn't going to happen of course, and if the "forever" stamp doesn't save them possibly they might just get out of the business. Private enterprise would fill the void in a heartbeat.
The furor about the mortgage industry continues. Even for those of us in the business it's getting a little tiresome. Barney Frank would introduce some legislation making it possible for borrowers who felt wronged to sue right through the system into the bond holders who buy the security instruments made up of mortgages. Not a carefully thought out idea. If you want to dry up the availability of mortgage money that would be a nifty beginning. Cleaning up the origination arena of mortgages would be a good idea. Support the integrity of the appraisal process, make sure underwriters and staff in loan origination brokerages and mortgage banks are salaried rather than commission employees, eliminate stated income loans for any W-2 employed people. For the most part the hand wringing over the disadvantaged is overplayed. The bulk of the troubles in foreclosures stem from the use of the home as an ATM machine. The people who took out the equity loans, got the money, spent the money, and Detroit, the TV manufacturers and other consumer goods providers were the beneficiaries of this lending activity. The party was fun, but sobriety may be painful. If you want to read some excellent blogs, diverse and daily, http://ml-implode.com/, go there. Note that everyone, including us, speaks from some position of interest, so read accordingly. We think our position is benign, but probably not if you're a real estate agent or mortgage seller.
As usual,
Thanks for visiting.

60 Minutes redux

2007-05-14T20:22:00.000-07:00

"60 Minutes" spent some time on the fallacy of the percentage based real estate commission Sunday night and the fall-out will probably be substantial, although muted officially in public. Our local peer group, other agents and brokers, have tried to express their displeasure as will others you may be sure, but very carefully, since to discuss this matter can very quickly drift into conspiracy in restraint of trade territory. We of course, are the guys in the white hats on this issue, and the highly noted Redfin takes a back seat to us on both matters of commission and in service, but even at that I'm happy for the attention that commissions are receiving. When housing prices were accelerating madly the high commissions paid to agents didn't make a dent in the profits realized by the seller. Now it's reality check time. Commissions paid are paid from the owners equity, and squandering it is no longer an option. It never was a good idea to pay those hefty fees, but less so now. I could fill this and several future blogs with the in-person details our agents handle for sellers, the visits to government offices to verify code compliance, the meetings with inspectors, roof, building, termite, etc. The gathering of water samples, arranging for contractors to remedy defects, etc. These are things that neither Redfin nor any purely on-line broker can do, but all full service brokers do. We do all those things, and for fees that are less than Redfin. In this market of sliding home values, retention of equity is becoming increasingly important, and in some cases where equity has been reduced through aggressive refinancing, it may be the difference between selling at break-even or at a loss. The real estate lobby is very powerful and will do whatever it takes to protect the interest of real estate agents. Your protection is being informed and making intelligent business decisions in your choice of agent.
The market is still tough and some sellers have elected renting to try to weather the storm instead of taking price reductions on a sale. Lease options will no doubt increase in number as sellers realize the time required to sell a home is increasing, absent a real price adjustment. The inventory of single family homes is very high and as the following foreclosure figures show, are likely to go higher. The figures are provided by a service we subscribe to and are probably very accurate since they are gleaned from county records. For convenience the following abbreviations are used: NOD=Notice of default, the first step in the foreclosure process; REO=Real estate owned, property foreclosed upon and title held by the lender. Auction=imminent sale date, usually occurring about 120 days after first NOD.
Butte County-302NOD's, 57 Auctions, 94REO's. Tehama County-82NOD's, 7 Autions, 24 REO's. Shasta County-278 NOD's, 45 Auctions, 85REO's. Glenn County-24NOD's, 5 Auctions, 6 REO's. The majority of these NOD's seem to have come about from injudicious refinancing, sometimes serial refinancing, and with home values slipping these folks find themselves owing more than the sale value of their home. Unfortunate, but if this has been a speculative investment it is no different from investing in stocks or tulip bulbs. People who bought their homes to live in will come out ok.
As usual,
thanks for visiting.

Some Random Thoughts

2007-05-05T21:48:00.000-07:00

Not precisely about real estate, but close maybe. Our local TV stations were once again on the subject of falling real estate values and citing a report of zillow.com to support the story. We happen to be a fan of zillow, in fact spent a great deal of money modifying our web site to give access to their data base. We hope it helps you, but we would like to point out that zillow statistics in macro form, e.g. covering a broad market area, are likely to be accurate, but in small market areas such as Chico, Red Bluff, Orland, Oroville, etc. their micro estimates of value are not entirely reliable and should be used only as a general guide and should be verified. If you are seriously considering selling we urge you to get a comparative market analysis from a reputable broker. (that's not entirely an oxymoron). A good report will provide you with actual recent sales of comparable properties and enough information to provide an informed opinion of your probable sales outcome. Because that outcome is your money we suggest you consider carefully the fees you agree to pay and the service you expect to get. Compare before you list.
If we consider that the money we don't give directly to the government to be our disposable income, then we are seeing a serious dilution in the effectiveness of that income. Fuel prices are high, driven by what amounts to a lack of competition in the production and distribution of fuel. The government has extended it's catering to the farm lobby by enforcing the use of ethanol from corn as an additive in fuel. Now corn prices are at record levels and animal feed costs are off the charts, so our trip to the grocery store is kind of a double whammy, we can barely afford to drive to the store and then can't afford to buy much when we get there. What does this have to do with a real estate blog? Disposable income. At a time when interest rates are good, home prices are becoming realistic and good loan programs abound, people have less disposable income to divert to housing needs. This fuel issue in not going to go away, and it is not just gasoline at issue. Perhaps some of you are also able to remember when locomotives and ships used coal for fuel, and trucks used gas. Mr. Diesel designed an engine that ran very nicely and economically on what was "garbage fuel", diesel oil. Cheap because refining was fairly simple.
Over time the use of coal was replaced by the new "cheap" diesel in locomotives and ships, and the highly refined gasoline was replaced by diesel in trucks. Even the growth of airlines with jet engines use a variation of this "cheap" fuel. Now since everything that is transported uses some variation of diesel fuel it costs almost the same per gallon as gasoline. Since there are very few producers of petroleum products the control of pricing is a very simple matter, and because the cost of entry into the business, building refineries, etc. is prohibitively expensive, here we are. Almost obscene profits for the oil producers, an incredible burden for the consumer and the government piling on with their aid to the farmer by creating a market where market forces did not provide one.
This whole thing is intended to be commentary, not viewing with alarm. Conditions are what they are, and in the business of trying to guide people intelligently in the process of selling, buying, or financing a home, we'll do it as effectively as we know how. I think being aware of some of the larger issues will help our clients understand the problems we face in helping them reach their housing expectations.
As usual, thanks for visiting.

April Numbers

2007-05-01T23:33:00.000-07:00

Some numbers to help satisfy the need to know what's really going on in the marketplace locally. For April the closed sales as reported by MLS. We've noted before that there will be other sales which were private or not MLS generated. For greater Chico, 81 sales compared to 67 for April 2006, for Paradise, 27 compared to 33 last year, for Oroville, 8 compared to 9 last year, and finally for Glenn county, 7 compared to 15 last year. Chico is doing rather well, probably because prices are responding to market conditions and there is a fairly steady demand for Chico properties.
Despite the media attention to the bad news in housing and the finger pointing exercises, things are not all that bad. The tightening of credit and underwriting is long overdue and the people who are now unable to qualify shouldn't own a home anyway. Some government types are saying we need an alternative to high mortgage costs, and my favorite response I've seen in print says there is one already, it's called rent. The phrase "first time home buyers" is used like a mantra as though there is some intrinsic right to own a home. First time car buyers or first time leather jacket buyers don't have the same emotional appeal, but for all of these events it's a good idea to have a financial plan in place. Foreclosures are up, dramatically in some areas, but these are largely the result of treating homes as an investment vehicle, draining equity for some purpose and then suffering the consequence of a debt load that exceeds the ability to repay. People do that with all kinds of investments, buying stocks on margin, etc. and if you make a bad guess you lose. Speculating with home equity is little different, and the bad guesses are catching up. While whining is possibly therapeutic, and certainly good TV fodder, it is not a very good problem solver. The housing market will doubtless correct itself and those industries that have prospered as a result of the cash generated from home equity speculation, (autos, major appliances, etc.) will survive, and the folks who want to buy a home to live in will do so. For those of us who have been in the business for a while, (I started in the middle 1970's) we have always held that the best time to buy a home is now, when you want to. True, a home is an investment and an estate builder, but it is primarily a place to live and raise a family, and it is for the long term.
Hope the sales figures are useful to some, and as usual,
Thanks for visiting

Foreclosure News & Blues

2007-04-29T15:59:00.000-07:00

Hard to escape someone talking about the sad state of the housing market and the burgeoning growth in foreclosure activity. Because there are only two really local TV stations in the Chico area and both of them carrying exactly the same "news", when the ignoramuses there decide to do a hatchet job on someone or something it's difficult for viewers to peel back the veil of deception concealing whatever it is these folks really have on their minds. Their recent two day investigative report was far from an honest portrayal of events, and the family they used to demonstrate the results of predatory and rapacious real estate and mortgage lending was not the victim they present themselves to be. Since this family agreed to be interviewed publicly I'm assuming it's ok to demonstrate, from public records, the actual sequence of events which led to their apparent inability to make the payment on their current loans. Portrayed as helpless first time home buyers and a victim, as Paul Harvey used to say, now the rest of the story. They bought their home in May, 2004, almost three years ago, and have presumably accumulated three years worth of home owner experience.. They were really well taken care of at purchase and acquired a loan with Wells Fargo at 5.4%, a very nice loan indeed. Seven months later almost to the day they decided to turn their home into an ATM machine and traded the good loan for a variable rate with a different lender, and increased their debt by %28,000. Remember these people portrayed as first time home buyers are now and have been home owners for a while. In September, 2006 they went back to the ATM machine for a Home Equity Line of Credit for an additional $36,000. Now they have been home owners for approximately 28 months, certainly no longer novices, and by no stretch of the imagination the helpless victims as first time home buyers that channels 12 & 24 have tried to paint them. There is a great deal of hard news out there about the housing market and the increase in foreclosures, and about some of the abuses of the industry. It is also the case that many of the foreclosure problems are the result of speculative purchases gone wrong (flipping), and the misguided attempts by many home owners to treat their home as a cash cow rather than a place to live. Probably if the TV stations could arrange to pay the news staff something above the start rate at Burger King the quality of the news would improve. In case this is seen as advocating a raise for the current staff, it's not. They're not worth the current pay. The hope would be that more money would attract someone with ability, and the ability to distinguish between honesty and deception.
My favorite appraiser tells me Chico is considered Golden. Prices are obviously sliding somewhat but in comparison with the Redding market and the Yuba City area, we're in great shape. Our Orland and Chico offices are both busy and we thank you for that, but Orland properties are still not responding to the need to reduce prices. If owners don't change their thinking they will have their homes for a while. Developers in Orland have been and are reducing prices and making concessions to spur sales. Gas prices only add to the problem for that market since it adds significantly to the cost of living if employment is in Chico.
Please be careful where you get your housing news. The local TV is less than worthless, the newspapers not much better. We've posted some links in the past to specialty sites that can keep you informed, Google is a good place to start. If we can help we will, or if you just want to chat about the state of things, call us, or drop by. We're friendly folk.
As Always,
Thanks for visiting.

Call this one UNTITLED

2007-04-21T20:47:00.000-07:00

My last blog drew a bit of criticism from one of my own agents, describing it as negative in my depiction of our Orland office performance. I am sorry, but not for the depiction. Could have been left unsaid of course, but if I don't talk about what's happening, and honestly, then why do I write, and why would you read? Happily, both Chico and Orland are seeing a nice flow of activity now. Home prices are declining, and are likely to decline further. The realization of this fact of the marketplace has not influenced many would-be sellers to drop asking prices into realistic range. The web hits we are getting on our site and partner sites for our listed properties number in the thousands in some cases, and yet no offers are forthcoming on many of them. In our business that simply points to a disconnect between seller expectation and the reality of the buying marketplace. Our job is marketing, and as humbly as possible I'll state that we're as good as it gets. If we put property before an interested audience and nothing happens, the problem does not lie with us. Possibly the best view of the current housing situation and its enormous impact across the whole economy appears in this article http://www.pimco.com/LeftNav/Global+Markets/Global+Credit+Perspectives/2007/U.S.+Credit+Perspectives-+5-2007.htm Be advised it is long, but well worth the time to at least scan it. No doubt my own troops and probably some others will accuse me of introducing negative information into this blog, but I feel knowledge confers power and our ability to serve professionally is enhanced by having a knowledgeable client. That, we hope, is you.
Just before leaving let me note that we are doing everything in our power to reach the people with loans that are about to become troublesome to offer our services in converting to safer loan vehicles. We have a quality stable of lenders we use, and those who know us for our intense client focus know that we will provide the best for the least.

As usual, thanks for visiting.

More pot pouri

2007-03-31T11:25:00.000-07:00

I promised some good news in the last blog, and we have some, but not exactly as I had hoped. Effective right now we are offering to place a photo and description of for sale by owner properties on our web site, free, no obligation. To the home owner this can be a very good deal since we get a lot of traffic and it's traffic looking for homes in our market area. Inquiries are directed to the home owner, we do not collect data, we make it clear we are not listing the property. Is there a quid pro quo? Well sure, but really painless. Home owner gets additional exposure to aid in the sale of their home. We get some really good feelings about our company, probably referrals should their buyer need a mortgage, maybe referrals to buyers, and possibly if the for sale by owner thing doesn't work out, first consideration for listing the property should it become necessary. This is a classic win/win opportunity for us and for you. We are naturally restricting this offer to our market areas, Glenn, Butte, and Tehama counties generally. Our legal counsel advises we get written permission from you to put your home on our site, so we will need that. Legal counsel also, in a carefully researched 4 page opinion, shot down our other good idea. We were going to offer to do the paperwork for your private sale for a very modest fee, but the chances for crossing the line into the "practice of law" are too great and developing an "agency" relationship simply for that purpose is not a practical solution. We suggest you get a book from Nolo, link on our site, and for about $30. you can have the legal requirements in your possession. We're doing all this because we think it's wrong to erect barriers to make it difficult for people to sell their own home. We don't feel threatened by this and certainly don't view this as competition. If we can help you we will. Our feelings mainly come about because we are absolutely certain our offices provide the best economic and marketing power choice should you decide to hire someone to sell your home.
On a mortgage note, we are going to be offering reverse mortgages beginning in May. We have been approached in the past by companies encouraging us to become originators of this type of mortgage, but the fees have been excessive and I'm not convinced it's the panacea they claim. We will offer these programs only after significant consultation with the senior borrowers, and with family members as well should that seem appropriate. The company we'll be working with is a major national mortgage bank and this is a new program for them.
On a local note, our Orland office is laying there like a lump. All of Glenn county, some 19 broker offices, did 1/3 the business in March this year compared to last year. Chico on the other hand is moving very nicely, about the same sales this year as last for March, and our own office can be described as hot. Only 20 geographic miles separating the two towns but a world apart economically. I've mentioned before that we have stat counters on the hits on our listed properties, and Chico runs between 4-5 times the hits on comparably priced property. A sobering factoid and maybe an indication that Orland prices have to come down some. Reading statistics is easy, accurately interpreting them is not.
Running long-
As usual, thanks for visiting

Mortgage News

2007-03-26T23:20:00.000-07:00

Really soon for another blog, but the news tonight carried some significant "testimony" in Sacramento before the legislature by some self appointed experts. Finger pointing is perhaps entertaining but the fingers were otherwise engaged while the problem was growing and was largely ignored by the owners of the fingers. The problem is variously laid at the feet of investors, mortgage brokers, lenders and real estate salespeople. Appraisers were not mentioned in the news segment I watched. We have said previously that the problem is caused by a pervasive greed, no different from the greed that afflicts the likes of Enron, Worldcom, Tyco, political lobbyists and those they lobby. The ability to take advantage of those greedy impulses in the real estate business arose from the substantial and largely artificial escalation of home prices. Like tulip bulbs, Ponzi investments or the dot coms without substance, eventually the Emperor shows up in his birthday suit. The current viewing with alarm is hypocritical at least, and productive of nothing. Market forces which became badly skewed in the race to be first at the trough will right themselves and only people who should be homeowners will be homeowners. The folks in our industry are rightfully burdened by a load of guilt for putting their interests ahead of their clients, but while the shame is certainly there, caveat emptor has always been a good guide, and those who ignored it share a portion of the blame. After the fingers have been returned to their holsters and the politicos have turned their blather to some other cause, those of us with a serious interest in the sale of real estate and the provision of mortgage money will continue to serve. There are good guys out there waiting to help you. A little diligence on your part will make for a satisfying experience.
As usual, thanks for visiting.

Pot Pouri

2007-03-25T20:22:00.000-07:00

The real estate news for the past two weeks has been pretty tightly focused on the faltering or collapse of some big players in the sub-prime lending arena. This naturally follows from making loans to people who have no demonstrated capacity to repay them or any track record of paying anybody on time for any type obligation. There will be more foreclosure activity from the next level of credit-worthiness, generally referred to as Alt-A. This is the level at which most of the option ARM programs originated, and were the result of people buying beyond their means, hoping for a continuation of the surge in home values to cover the increasing balance on their loans, or hoping to use refinance money to buy out of the loan when it rolled into a more realistic pay schedule. Urged on by real estate agents and lenders these people put themselves at substantial risk. Now those chickens are heading home. Whether any of the above is of interest most likely depends on viewpoint. Spectator or participant?
In the face of all the publicity about mortgages, let me tell you that every day my e-mail traffic from lenders indicates a huge amount of available mortgage money, almost all of the old programs are still available, and the only difference is that credit restrictions have tightened a bit. If you should be buying a house, you can be buying a house.
The local market, Butte and Glenn counties are seeing buying activity, Butte more than Glenn of course. Our listed properties are getting offers and our commercial loan activity is up. $300,000+ properties in Orland are tough to sell, easy in Chico. We have our listings on over twenty national real estate web sites and the number of hits on Chico properties are running 4-5 times those of Orland in all price ranges. The number of hits overall is encouraging, but if your home for sale is in Orland, not such good news.
We've had a couple of bright ideas to help sellers who want to do their own thing instead of listing with a real estate office. As soon as legal counsel gives us the ok we'll share them with you. Seems that there are laws we need to observe to keep out of trouble. The laws are presumably under the heading of consumer protection but really are for real estate people protection. When we find the way to get this done I promise you'll like it. The consumer response to our marketing program is growing, people quite simply are tired of squandering their equity on commissions. We appreciate the support. We also need, almost desperately, a licensed agent for our Chico office. Must have highest integrity and customer focus and should be willing to learn mortgage lending. Team environment, high income, and a real sense of making a difference. There may be laws about this too, but for a good referral I will spring for lunch.
Thanks for visiting.

When you're a hammer

2007-03-11T10:12:00.000-07:00

When you're a hammer everything looks like a nail and as real estate people we see the world through a distorted lens. Some of the news of late has implications that are broader in consequence than simply affecting real estate and mortgage people and companies. We're talking about the apparent decline and fall of the sub prime mortgage market as we have come to know it. The media is keeping people pretty well informed about the demise of many major players (lenders) in the sub prime business, and for those of us in the mortgage business it's obvious that it's worse than the reports in many respects. The immediate public impact will only concern those who are candidates for that type of financing, and many of those shouldn't be trying to buy homes anyway. The broader consequences are sociological and economic. Realtytrac.com, a foreclosure reporting company, just sent me an email describing January 2007 as reporting more notices of default filings than at any time in their reporting history. Bad news for the people involved. Bad news for the housing markets. How did this come about? Simple greed. Greedy real estate people pushing for whopping commissions, greedy appraisers stretching to accommodate the greedy real estate folks and the equally greedy mortgage brokers and bankers, and the greedy mortgage lenders, concealing the weakness of the loans they were making and putting into the investment pool. The clucking noise we hear is simply the sound of those chickens coming home to roost. The actual blame probably lies mainly with the lenders. If they had adhered to reasonable underwriting standards none of the other issues could have reached such proportions. Appraisals should have been reviewed, loan applications should have been carefully validated, and a great number of loan programs should never have been promulgated, programs designed to reach out to those who could not qualify under conventional guidelines. No responsible person could have believed that the price of homes was going to continue on an upward spiral forever, yet many sales and lending strategies used that premise as a supporting argument. "Buy this today and even if the payments are too high you can refinance in 6 months with the increase in value for bail-out." "Take this loan today and refinance when the interest rates become variable and home values have gone up." These strategies were used by supposed professionals on the naive and unwary, frequently first time home buyers. Here's a link to a site for some realistic reporting on the mortgage market situation, http://mortgageimplode.com. Suggest reading link by Pollack.
Just so this doesn't come off as a negative view of the world, some other thoughts. Chico sales are moving along nicely, ahead of last year. Listing inventory is fairly high, but off it's maximum by considerable. Interest rates are very favorable, and all things considered it's a very good and very healthy real estate market for most of us. Just had a business expo in Orland and the turn-out was good, attitudes generally seemed to be up-beat. Keep noticing that the predominate advertising strategy in print media is lots of pictures of agents, lots and lots of agents. There is some mention of properties, but mostly pictures of agents. We're going to keep on treating the sale of homes and the negotiation of mortgages as a business. It's not that we don't photograph well, we just don't think anybody cares.
As usual, thanks for visiting.

Media and Government on Guard

2007-02-26T21:15:00.000-08:00

This is really soon for another post but a show on CNN really excited me. It was a show designed to warn and protect the consumer and everything was delivered with a breathless sense of urgency and importance. They talked about the "mortgage meltdown" and fraudulent car repairs, etc. The mortgage part is my interest, but for others it might have been the warning not to be duped into paying for an unnecessary replacement of the air in your tires, or something equally important. The "mortgage meltdown" segment led to an "interview" with a Democratic senator named Frank, Barney I believe is his first name. When asked by the airhead doing the segment why the congress hadn't done anything to stop or head off the incredible foreclosure rate, he said it was because the Republicans had been in the majority. Now of course everything is going to be OK. When asked how, the senator said that they were going to introduce legislation making it unlawful to loan more money to someone than they could afford to repay. They didn't want to discourage making loans to home buyers generally, he was quick to point out, only those who couldn't afford to pay them back. The second prong in this two pronged legislation would take the form of not allowing people to borrow more on a home than the home was worth. Whew! and Golly! You can almost hear the sigh of relief from the financial markets. A solution that had entirely escaped their notice is about to be provided, no, enforced, by a wise and benevolent government. Don't loan money to people who aren't going to pay it back. Until you see it written down you can't believe it's so simple. The interviewer was so dazzled by the brilliance of the senator's speech and financial wisdom she neglected to ask him if he were at all involved in other governmental financial matters, such as Social Security, Medicare, general budget shortfalls, etc.
Without doubt there is an increase in foreclosures, brought about by many different forces, some market driven, some driven by the greed of real estate and mortgage practitioners, some from the actions of the government. Probably some corrective action is necessary, but certainly not from the likes of our Congress. Consumer education is foremost, enforcing the existing laws covering loan and bank fraud would be nice, and finally, perhaps reducing the high fees involved in the sale and financing of real property, although market forces (competition) should take care of the latter if education is adequately provided.
I'm going to keep watching CNN for more good solutions from our elected officials. With gas prices on the rise again maybe they can legislate something like only driving our cars to work, and thus reduce our consumption by 50%.
As usual. Thanks for visiting.

Web site down

2007-02-24T16:21:00.000-08:00

My apologies to all attempting to view our listed properties Saturday morning. The first time our site has been out of service since inception, and I brought it on myself trying to enhance the value of that page. Instead I made it disappear for several hours.
This blog is going to be about mortgages, so if that's not your interest you need not read on. We are busily trying to reach the many people who have Adjustable Rate Mortgages, or fixed rate that are about to morph into variable rate, by any means possible; direct mail, print media, word of mouth, etc., because the market is still favorable for refinancing into a good fixed rate mortgage. While we are trying to do this we notice ads on craigslist, TV, and in print advertising trying to attract people to finance at 1%, 1.25% etc. attempting to lure people into the very situations we want to rescue them from. (I know that's a preposition but that's where the sentence ended). It should be illegal to use terms like 1%, rate, interest, and mortgage in the same sentence in advertising mortgages. The NOTE rate which is what you sign up for is hovering around the 6% level. That's the actual rate you're obligated to pay and which you are being charged. The 1% rate (or similar low figure) is what you are paying, and that teaser rate usually only applies to the first month in any case and then starts to increase. Any payment you make which is less than the actual amount owed, let's say 6%, is simply added to your principal balance, so each and every month your balance increases, and the interest you are obliged to pay is calculated on that increasing balance amount. These loans are called neg-ams (negative amortizing) and you can increase your debt at an alarming rate. At a time when real estate values have flattened it is a very simple matter to see your equity disappear and owe more than the sale value of your home. This has happened to many people, and is still happening to many more. We can generally find a way to help if we can only find a way to locate the people in trouble. If selling is the only way out of trouble our flat fee commission is a sure fire way to preserve as much of the equity as possible. Either way we get to feel good about helping and do some business besides. Financing we can do pretty much anywhere in California. Listing and selling we're not effective beyond Butte, Glenn and Tehama counties.
Apologies again for the web interruption, and as usual, thanks for visiting.

THROUGH THE LOOKING GLASS

2007-02-16T22:03:00.000-08:00

"The time has come the Walrus said, to talk of many things". If Lewis Carroll or his heirs don't sue for copyright infringement that's a dandy heading for a blog. As promised we'll address gold fish bowls, initials on cards and validation. Many years ago I noticed someone looking at fish in an aquarium, leaning in and tapping on the side of the glass to get the attention of the fish, and while I didn't say anything I thought, "wow!", needing to be noticed by a fish is pretty far down the self-esteem ladder. Does personal validation take place if the fish looks at the person and rejection if it simply swims away? We all need validation, but there are mature ways to achieve it. Real estate sales persons, (this gender equality is really silly), more so than most salespeople seem to need validation and seek it by putting pictures on their cards and appending a string of letters after their name. The letters are supposed to indicate a superior ability to show people a house because of satisfactory completion of some course or other, offered by someone anxious to relieve them of money in exchange for a certificate authorizing the use of the letters on business cards. We're sales people for heaven's sake, and if we're any good at it, it will show, and if not, letters on a card won't help. We even have letters now to show that we are sympathetic to "green" causes. What next? Best miles per gallon while showing property? Real estate salespeople have too much extra money, too much free time, and way too much need to validate themselves at some level above that of "salesperson".
Enough fun with that, but remember next time you're looking at the goldfish to keep your hands behind you. Someone may be watching.
Now some serious real estate stuff. Obviously we are a maverick business model, doing business at a modest flat fee and providing full service with no gimmicks and we are enjoying some success. The percentage people are hanging in there, one because it's hugely profitable and there are still a lot of uniformed people to prey on, and two, because the winds of change have not yet come to their attention. I'm not egocentric enough to mean us as the winds of change. We're simply a step along the way to wherever this business is going. Major national real estate sites are offering to allow homeowners free listing of their properties on those sites, and there is starting to be some direct activity from seller to buyer without the intervention or assistance of a real estate agent. This is good for the sites at the moment, it allows them to charge advertisers more for space, and seems to be allowing a service to consumers. For the future, I think I see the free service morphing into a fee for listing the homes. Still a good deal for consumers and a great deal, because of volume, for the sites. I note that some of the heaviest advertisers on real estate sites are mortgage lenders, probably positioning themselves to take care of the growing number of people who are not relying on the guidance of real estate agents in the sales transaction. Real estate agents are traditionally the best referral source for mortgage people, and if real estate agents aren't involved in a transaction what will be the mechanism for finding a suitable mortgage? I have talked before about our position in this business and how important I think we are to the process. Not very if you don't need us to find your buyer. We are a marketing engine and a sales force. If the growing influence of the internet reduces the need for those elements of the transaction then our importance shrinks commensurately. We have on our site a link to Nolo for those who want to go it alone, and if people are comfortable doing so they should. I think, speaking as a mortgage broker, that except for a very few people, almost everyone benefits from a face to face meeting for a mortgage loan. The programs are vast in number and no algorithm is going to insure that the match is a good one.
As a final note for this blog. Our contemporaries are valiantly resisting change to hold on as long as possible to the exorbitant fees they've become accustomed to receiving, meanwhile seeming to embrace changing technology. We are excited by change and are ramping up our internet exposure and involvement, gathering statistics like crazy to make sure our program is exposed to as many of you as possible, because one, we know it's the best deal out there, and two, we can probably find ways to improve it.
AS usual. Thanks for visiting.

The good news continues

2007-02-12T21:02:00.000-08:00

We're busier and getting busier and isn't this great? Some interesting statistics are starting to reveal themselves in the numbers provided by some of our web partner sites relating to the unique views of our property listings. Our Orland area properties in the $300,000 to $350,000 are seeing pretty good activity while the properties that include 1 through 10 acres are seeing great activity, even in slightly higher price ranges. In Chico, lot size doesn't seem to be a factor, and to contrast with the Orland area the $300,000 to high $300's are getting five times the views, over 500 unique views on these properties. We've only been able to track this stuff since January 24th and I'm impressed. We have some really nice homes listed in Orland in this $300,000 range and traffic has been modest. There are several developers building homes in Orland in this range, and were it me I'd be somewhat anxious. Chico on the other hand is seeing a lot of traffic, at least in our office and I believe we're in for a great year. Orland traffic is also very heavy, just not in single family homes in town in the $300,000 price range.
Enough with the numbers. Remember the expression "what's in a name"? We had a call about listing a home from a woman who saw us on TV and she wondered about the "meaning" of New Age Realty. Seems she is a born-again Christian and she felt we might be wearing beads or engaging in some strange rituals. Despite our efforts to convince her that New Age Realty represented our view of a new age in real estate marketing and of our absolute neutrality in matters of faith or politics she took her business to a more expensive and presumably more favorably named competitor. On yet another strange behaviour note, strange in my mind anyway, I recently had a meeting with a city employee, in a very small city, who had the letters PhD following his name on his business card. Why? It had nothing to do with his job. Do we have to call such a person Doctor if he puts it on his card? Our meeting didn't go particularly well and I wonder now in retrospect if it was because I asked if I could call him by his first name. That was before I saw his business card of course. This may not seem to have anything to do with real estate, but with any luck at all I'm going to tie initials on business cards; need for validation; and gold fish bowls all together. And it will have something to do with real estate. But not in this blog, it's gone on long enough.
Thanks for visiting.

Marketing 101?

2007-01-31T21:57:00.000-08:00

I hope this entry will be of some general interest and I hope I'm able to be coherent. It has to do with our perception of the role of the real estate broker and how we fulfill our obligations to those we set out to serve. In my view we are essentially a marketing engine. We sell things which are not ours and in which we have no control over design or utility value. We cannot for the most part create the desire to buy the "things" we sell, we can only attempt to identify the people who already have an interest in ownership and attract them to our door to view the products we have in our "inventory". None of this has to do with the nuts and bolts of the sales process itself, negotiation, legal requirements, escrows, inspections and all of that. We all do those things and while I think we're better at them than most, that's subject to competitive challenge. I'm interested here in the marketing, the thing we promise to listing sellers that we'll do more effectively than others, and to buyers the promise of a broad inventory of fairly priced and honestly presented homes. Historically brokers put out some signs, bought some newspaper ads, held some "open houses" and hoped for the best. With the advent of the internet that approach required some serious adjustment and that's really the place I was trying to get to with this blog. We're adjusting almost on a daily basis to discover the best venues, the proper mix of media, the frequency of appearance, etc. I know we're on the leading edge of the learning curve, but could we be doing even better? That's the type of thing I worry about every day, and I suspect that the answer is always yes, and that's a challenging thought. Following successful precedent is good, establishing new precedent is better. Statistically over 80% of home buyers now begin their search on the internet. The next most effective advertising strategy is the sign at the property, falling into a distant but necessary third is print media, and last, and in our office, the discouraged practice of the "open house'. Open houses account for less than 1% of home sales and we simply can't justify agents spending hours sitting like a spider in a web. Our listed homes appear on approximately 20 national real estate web sites, all linked back to us and we can provide a count of views. Our own site is heavily trafficked for a small real estate company, averaging over 1000 visits and almost 3000 page loads per month. This is the kind of traffic that leads prospective buyers into the neighborhoods of interest, and there, waiting for them are our reflective signs at the property, providing 24 hour a day visibility. Our print advertising covers our market area, newspaper, magazine and periodical, and we are visible daily on local TV. This was not intended to be a sales pitch. We're excited by the prospects of constantly shifting strategies to take advantage of changing opportunities. I thought you might get a kick out of sensing what we do to try to improve our service and just maybe have an idea of what else we might try. We don't even know all the questions, let alone all the answers. If you think that real estate marketing is running ads with pictures of 50+ smiling agents we're probably not your best choice for selling your home.
As always, thanks for visiting.

Unsettling news?

2007-01-24T17:22:00.000-08:00

At what has become for us an upbeat time in real estate activity we were saddened to hear of a problem afflicting some homeowners. An account executive for a sub-prime wholesaler that calls on us, "account executive" by the way is what they call the field sales reps for mortgage companies, brought the news that in some areas south of us, that would be Yuba City, Marysville, etc., some of the developers are sharply reducing prices to drop inventory. As you can imagine, there is financing in place for all those unsold units and the dollar drain can be substantial. Some of these reductions are reported to be in the $40,000 range. Pretty big chunk of change. While the reduction may be bad for developers, good for new buyers, here is the sad domino result for many homeowners. Many of the folks bought these homes at or near 100% financing with mortgages that contain variable features that are just now kicking in. These are 2/28 and 3/27 programs designed to help people gain entry to home ownership. The plan for these mortgages is to re-finance out of them to avoid the substantial interest and payment jump when they roll over into a variable rate. Now, because of the reduction in price of brand new homes, appraisers are unable to support the value needed to justify a re-finance loan. In short, the market is now saying that these folks owe much more than their home is worth, so no re-finance and they are stuck with what has become a bad mortgage. This is really sad. As mortgage brokers we take delight in rescuing people right at the deadline so they avoid any pre-payment penalty on the old loan and never have to pay any increase. This requires of course that the home has held value or improved, and the credit of the borrowers has not worsened. We like doing this because we can bring a lot of flexibility to the process and save clients a bunch of money. Plus of course we get paid.. When market forces take away the equity of the homeowner we're pretty much dead in the water to do anything, and that's a shame. We're real estate agents and we're mortgage folks and we enjoy doing those things for people, but we also have a responsibility to counsel people as to the wisdom of their choices, and that sometimes means advising against a purchase, even though the mechanics of the transaction might be easy for us. If our experience and our licenses have any value at all we should share our cautionary feelings with prospective buyers and borrowers and attempt to keep them from harms way. If we can't help people we surely can refrain from hurting them. I have great pride in all of our agents and their determination to place their client's interests above all else. If you or someone you know is in a hole or headed for one, call us. If we can't help we can surely make sure you stop digging.

Thanks for visiting

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