Real Estate Investing

When I saw the article in Business Week titled If You Don’t Buy a House Now, You’re Stupid or Broke, my mouth nearly hit the floor.  What is bad news for a seller remains great news for buyers – consistently low interest rates, a tax credit for first-time buyers (haven’t owned a home in three years), and a tax credit for existing homeowners who’ve lived in a house for five consecutive of the last eight years.  To top it off prices are ideal not only because they’ve dropped, but also because appraisers are skittish these days resulting in numbers that miss the contract price enabling buyers to renegotiate at an even lower price.

The Business Week article mostly focuses on the mortgage interest rates,

As of today, the average 30-year fixed-rate loan with no points or fees is around 5%. That, as the graph above—which you can find on Mortgage-X.com—shows, is the lowest the rate has been in nearly 40 years.

In fact, rates are so well below historic averages that it should make all current and prospective homeowners take notice of this once-in-a-lifetime opportunity.

What are you waiting for?

• Already comfortable in your home so not interested
• The return of consumer confidence
• A job
• A job with security
• The market to hit bottom

While I can’t address how comfy you are in your current abode, nor can I predict the job market or consumer confidence, it is almost certain that we are at the bottom – and have been for several months now.  We may walk awhile in this level valley of the real estate market, but gradually we’ll hit the incline and start the gradual climb back up.

So if you’ve thought about buying in the last year, this is a good weekend to sit down and crunch numbers.  You need to figure out if you are too broke to buy because we know you are not stupid.

At the age of 71, Bernard Madoff will be 221 years old by the time he leaves prison.  We don’t expect he’ll be around that long, but the 150 year sentence is little consolation for the people who lost EVERYTHING because of Madoff’s criminal PONZI scheme in which he stole billions of dollars from people under the guise of investing.  Our own Miranda Marquit talks about the lesson that should be learned over at Loan Shak,

The bottom line is that there are plenty of other crooks out there in the financial world. While they may not be instigating Ponzi schemes, they are — quite likely — involved in other sneaky and underhanded practices. But most financial sector workers and companies have emerged largely unscathed. 

The Wall Street Journal reports on what Madoff said during the sentencing hearing,

“I cannot offer you an excuse for my behavior,” Mr. Madoff said. “How do you excuse betraying thousands of investors who entrusted me with their life savings? How do you excuse deceiving 200 employees who spent most of their working life with me? How do you excuse lying to a brother and two sons who spent their entire lives helping to build a successful business? How do you excuse lying to a wife who stood by you for 50 years?”

Mr. Madoff said he made “a terrible mistake” and an “error of judgment” and that he lives in a “tormented state” now. He also denied that he and his wife have been silent and not sympathetic to victims of the fraud.

The memory of Bernie Madoff will fade to most of the world, but not without years of regret by him, his family, and his victims.

Cartoon from Save our Bankers.

Out here in the streets, I’ve already talked about how people are facing major struggles to find mortgage relief from lenders even after the foreclosure rescue plan has been put into place by the administration of President Obama.  Apparently the problem is widespread as indicated in an article published by CNNMoney.com.  The news agency published the experiences that home owners have shared with them in seeking relief and in reading through them, it appear that most have been either told “No.” directly or are still waiting for an answer after being given the runaround.  For example Jose Rivera was seeking a lower interest rate,

Rivera hit roadblocks from the start. He never received a call back from the first customer service agent at Bank of America, which bought Countrywide, despite leaving three messages. In May, he requested a different agent and was told because he has private mortgage insurance, he couldn’t apply until the end of May. He called back in early June and was told to try again at the end of July. Now that interest rates are rising, he’s concerned it won’t be worth it to refinance.

According to the article, the plan allows people with little or no equity in their home to refinance so they can have lower mortgage interest rates. “The plan waives the requirement that homeowners have at least 20% equity in their home, allowing them to participate even if they have loans of up to 105% of the value of their property, as long as they meet other criteria. This aids those who are current in their payments but have seen their home values decline.”

However people making their payments – even though they struggle – are the low man on the totem pole so are not finding help.  This is why one of my friends skipped her December payment …. so she could move up on the priority list.  In January she was able to refinance at a much lower rate.

This is a sorry state of affairs when people do try to hold on, but get such negative responses such as those experienced by Jeffrey Huegel,

It’s been nothing but a runaround. They just don’t care. Rather than let me stay in my home at an affordable interest rate, the bank would rather foreclose and receive nothing. I guess it’s better just to let them foreclose because I am fighting a losing battle trying to stay.

Tsk tsk.  Read the full CNN article here.