Category — Mortgages-Financing

INMAN NEWS REPORTS, the 10 year T bill is stuck at 3.55%,  fixed rate mortgages are still at almost 5.5%, and the 30 year T bond at 4.44%.

With the Fed printing money (i.e. ‘quantitative easing’ by the Fed buying treasuries) and doing everything it possibly can to create inflation, people shouldn’t be surprised bond and mortgage interest are more than 6.5% higher than the rate of inflation deflation.

Message to Obama:  heh, the $2 trillion the Treasury has to borrow by selling T bills and bonds to finance the national debt, the $1.8 trillion deficit and Stimulus, only 7% disbursed, ain’t agonna happen without higher interest rates ’cause the foreigners expected to buy ain’t a’ buyin’.

An’ if Bernake keeps a’ buyin’ Ts from the left Treasury pocket ($1 trillion this year) to put in the right Fed pocket ($2 trillion more) it will provoke foreigners ta’ mutiny an’ throw the dollar in the pond, ’cause it won’t be worth nothin’.

Obama: Everyone In The Water Now!!

BLOODHOUND has seen the Google Wave Development preview and predicts bye-bye to existing residential Realtor brokerage practice .

Online sites like Zillow, Trulia, and others do away with the need the public or Realtors  have for local MLS services.  The demise of the MLS for residential home sales has been looming for a couple of years.  All that now ties agents to State and local real estate boards are the form Purchase and Sale Agreement contacts these organizations “approve.”

This is a healthy market development reducing costs for buys,  sellers, and agents.  This may bring an end to 6% commissions as the 6% is actually a cost related problem, not price fixing as has often been alleged.

Let the new Wave Pheonix of real estate practice arise from the ashes of the MLS!

Loopnet commercial real estate listing website conducted a poll of 1500 real estate commercial brokers and investors in the Bay Area asking when the commercial market will recover.  Poll results show 46% say not until 2010.

The number one reason cited by poll respondents for commercial property not selling is lack of available mortgage financing, the second reason,  seller high expectations of value.

There is a lack of commercial mortgage financing.  Commercial agents and investors are in a state of denial.  There will be no significant improvement in the availability of commercial mortgage financing by 2010, or even 2012.  It is going to take 10 years for banks and insurance companies to recover from existing capital losses, unless the PPIP works.  Further, foreign lenders are out of the market.

Doctor Gloom And Doom Housing Bubble has been running his series of posts on understanding the Great Depression. Read the whole post.  It is extraordinarily doubtful there will be a repeat of the Great Depression of the 1930s.  Ben (”Whac-A-Bear, Whac-A-Fannie”) Bernake is a student of the Depression.  What brought on the severity of the Depression was collapse of the money supply.  In the 1930 not enough currency existed to support a market economy.  Farmers dumped milk, eggs, and products.  No one could buy them because there was no money, no dollars.  Today we talk about “liquidity” and the money supply.  While I have agreed with the good Doctors analysis, I doubt “Whacky” Bernake and the Fed are going to make the same mistake again.

As of the passage of the housing bill, presumably tomorrow, about $1 trillion dollars, $345 billion for mortgage lender bailout, and $600+- billion Fed line of credit for Freddie & Fannie.  That’salota mortgages.  Freddie and Fannie will “own” the mortgage market again.  But there will be liquidity.

Because this bailout is funded by the taxpayer, there some negative consequences.

Up until recently there has been an economic perfect storm of declining home prices, financial markets crisis, a falling dollar crisis, and rising energy cost crisis.  These four, coming at the same time, is unique.  From a purely analytic view, Negative Dynamical Volatility was setting in.  Chaos.  Each crisis whacked was worse than the preceding crisis, and each crisis occurring at more and more frequent intervals.  Negative Dynamic Volatility is a condition that precedes chaos.

It is not over yet.  But doing a quick bit of math, the $1 trillion liquidity infusion will dampen the volatility and create some stability.  Real estate will probably not lead the nation into a depression.

OVER 1400 REAL ESTATE & MORTGAGE professionals were arrested today.  Bear Sterns hedge fund managers were taken away in handcuffs.  FBI special agents are the guys that carry guns.  They actually arrest people for mortgage and real estate fraud.

I used to remind mortgage agents that when their client (my clients too) sign a deed of  trust there is bold ten point print that points out that not occupying the property on a owner occupant loan, is a felony.  I’ve even had people (not my clients) actually ask me “do we really have to move in?”  Ya.  Otherwise the guys with the guns show up.  And now you know.  They do arrest borrowers.

There are a variety of mortgage scams, but the most common one is the investor who applies for and gets an owner occupied loan, and never intends to move in.  Bye Bye Puddin’ Pie.

McMurdie’s Real Estate Rule No. 26: Don’t be a Puddin’ Pie.  Tell the truth.