There’s quite a few of these on youtube. Each one substituting the subtitles into this scene from Valkyrie, where Hitler is chewing out his staff. The reason I put this up (and risked the ire of my readers) is that at one point it really cuts to the heart of the entitlement attitude so many people had (and have). Another biting, but very true point is his description of his agent.

Don’t trust someone who won’t tell you like it is. It feels good to hire yes men, but they do you no good and possibly…just possibly…great harm.

(for any readers who are very very sensitive, no…I don’t find Hitler funny, just the subtitles k? )

The Obama administration has put forth a plan that includes $75 Billion to help homeowners restructure their loans and an additional $400 Billion to shore up Fannie Mae and Freddie Mac in an attempt to correct the suffering economy.

In an attempt to stem the tide of foreclosures, the goal is to help people refinance so that their home payments do not exceed 31% of the homeowner’s income.

“You’ll start to see the effects quite quickly,” Treasury Secretary Timothy Geithner told reporters in Phoenix, noting that rules governing the changes will be published March 4.

Wall Street appears doubtful. I’m not sure that should be the thing that matters most.

Bottom line. He’s trying to keep rates low for the middle class. For homeowners that want to keep their home even if they are worth less than the loan value, he’s trying to encourage lenders to step up and work together to modify their loans. As an average citizen I have no control or say over what happens here, so I can only hope for the best and hope that it doesn’t simply prolong our pain (ref. to Japan’s lost decade).

Obama said:

But, he said, it will do nothing to help “the unscrupulous or irresponsible.” He cited so-called speculators who took out risky loans on multiple properties to make money by selling them during the housing boom, lenders who took advantage of naive buyers by glossing over the fine print, and people who willingly bought homes that were way beyond their means.

Great!

Just a reminder. If you or someone you know is in need of a loan modification. We can work with you. Working with our mortgage partner, we can help you or your friend find the best solution in these troubling times.

Good news: Rates last week fell to about 5.16% for 30 year fixed mortgages. Points for loans average about 0.7 and are not included in the percentage.

Not-so-good-news: New rules for Fannie Mae and Freddie Mac raise mandatory fees for borrowers while at the same time clamping down on credit score and down payment rules. For a while I was saying that it was a return to the days when I first bought a home and it was 20% down, solid income, low debt to income ratio, and good credit was required. As troubles have deepened, things have tightened even further, and now some people may be looking at needing 30% or more down payment as well as paying much higher fees just to get a loan.

Many lenders, who count on reselling the loan to Fannie or Freddie, are already tacking on the fees in anticipation.

According to the SF Chronicle (LINK)

Under Fannie’s and Freddie’s new guidelines, even applicants who assumed their FICO scores would get them favorable rates will be charged more unless they can come up with down payments of 30 percent or higher. For example, a buyer with a 699 FICO score who can make a down payment of 25 percent will now get hit with a 1.5 percent “delivery” fee at closing under the new guidelines.

A buyer with a Fair Isaac Corp. FICO score between 700 and 720 will pay an extra three-quarters of a point. Even someone with a 739 FICO will get dinged with a quarter-point add-on.

Applicants who seek to buy a condominium and cannot come up with a 25 percent down payment will be hit with a three-quarter point add-on penalty, no matter how high their credit score – simply because they are not purchasing a traditional detached, stand-alone home.

Buyers of duplexes, where one unit is owner-occupied and the other is rented, will be charged a flat 1 percent add-on from Fannie, even if they’ve got FICOs above 800 and make 50 percent down payments. Refinancers who take cash out at settlement also will be forced to pay extra – as much as three points if they’ve got low credit scores and modest equity stakes.

My advice is that if you’re ready to buy a home now, and are planning to live there for a while, it’s a good time to get moving. The market may (or may not) drop further, but it’s almost a certainty that your loan will cost more and be harder to get.

Check it out at http://1466-35th.com

It’s making the news. Sales are up over 6% for December and again in January. For those of us in the SF Bay Area, it’ll be important to note that much of the activity is in the mid-west and the south. Still, prices have come down to levels that are attracting buyers and despite a tiny increase from last week to this week, mortgage rates are near a 40 year low.

I’ve heard pros and cons for the proposed $15,000 tax credit to home buyers. Everything from doom and gloom about how it’s going to make everyone flip their home to their brother to sunshine and roses predictions that it’ll be enough to get the economy going. I predict that neither will happen in sufficient quantity to make a huge difference either way, however… this idea at least helps the common person and may help result in a few more home sales.

We shall see.

There were over a half million jobs lost last month, the worst in decades. A telling sign was the hiring day at Marine World, in Vallejo this past week. In the past, the average age of applicants was roughly eighteen. This year brought men in suits, former IT workers, people of all ages who are not willing to gamble sitting  around waiting for a better job. As one former IT manager said “I’ve got a family to feed”.

It’s going to take a long time to dig out of this. Looking at it from a world perspective the waves are just working their way out and some nations are just beginning to feel the pain.

“We’re talking years — not months — before we see a decent recovery in the jobs market,” predicted Sung Won Sohn, economist at the Martin Smith School of Business at California State University. “It is going to get worse before it gets better.” – AP via Yahoo

During these times, though, there are excellent opportunities for those who have positioned themselves. When things get like this, the rich (and liquid cash holders) can and do go shopping for investment bargains. If you look at the family history of some of the richest families you’ll see that they’ve prospered during times of adversity. I don’t recommend looking for get rich quick schemes. They come up all the time to fleece the unwary. Look at real estate investment properties as a “get rich slowly” proposal and I think you’ll see deals that are making good sense now.

Downward pressure appears to be slowing a little bit in some areas in the SF Bay Area, and the numbers of transactions are up, however it’s really still too early to tell if we’ve genuinely hit bottom and are moving up. It will most likely be a slow long haul regardless.

The good news is that in some areas the market seems pretty balanced, though there are more buyers than sellers, recent indicators show, for example, the Sunset district of San Francisco selling close to asking prices. This, of course, down from the zany last decade where homes were listed undervalued with the expectation they would bid up tens upon tens of thousands over the asking price.

Rueters

A plan by FDIC’s Sheila Bair is gaining some support in the Treasury dept. The goal of the plan is to reduce foreclosures.

I’ve said before and say again that any good plan should distinguish between owner occupied dwellings and the speculators that contributed to this mess.