This post might seem a bit like a plug. Well, I guess it is. Primarily, because I have seen the light. Well, at least the clouds have broken open a bit, (enter the sun) through my otherwise close-minded vision of what I might call a home. Perhaps it is just a story of a man’s vice-grip on what he feels comfortable, slowly loosening.

After growing up in Greenwich, Connecticut I seem to have traditional architecture supplanted in my psyche all the way down to the cellular level. Along with that goes the North of the Merrit Parkway standard four-acre-zoning, then comes the never-ending rolling lawns, black shutters framing the windows, multi-story boxy styling, terraced gardens, pool houses, ponds, gazebos, tennis courts, and, the like. Unfortunately, my present pumpkin-world existence doesn’t offer that kind of extravagance. That’s alright, the weather back there was horrific for the most part, anyway.

Begrudgingly, I look at all the McMansions out here, which often consist of the pseudo-Spanish style, stucco and a few tiles tossed in here and there. Well, it isn’t quite that bad. Some of the track developments are though. I should perhaps temper my sarcasm a tad, as there are truly some stunning homes in Southern California; they come in all shapes and forms, with enough architectural diversity to satisfy a broad spectrum of varying tastes.

Along Comes 171 3rd Anita in Brentwood, Los Angeles

Perhaps what has surprised me the most was seeing Randy Forbes Jr.’s most recent listing located at 171 Anita 3, in Brentwood. I remember when I lived in Venice 15 years or so ago, I used to call those concrete contemporary homes the special bunker styling. It was quite prevalent and still remains the foundation to the artsy architectural landscape down there. Even though I was renting at the time, I was way too close-minded to appreciate it.

Enter 2009, the end of the world part two has come, people are scrambling for their identity, new careers are being considered, Wall Street has come undone, Bankers are wearing camouflage and hiding somewhere. And, I, the traditional purist, have embraced this stunning contemporary home on Anita. I’m not sure I have had an epiphany, although, I have changed my tune considerably. Do traditional homes still give me the warm and fuzzies? Well, yes, but I have to tell you, this home on Anita really opened my eyes.

During the open house with a hundred people roaming through there, it felt like it was hardly occupied. There were intimate areas scattered all over the home. A variety of living spaces and areas to gather. The screening room was awesome, the downstairs family room was insanely cool. The views out the back are expansive, and, the architecture wasn’t cold and stark but rather unique, warm and very functional. Fountains seemed to be everywhere, the outdoors and indoors areas seemed to have no borders, but existed through some invisible diaphanous membrane that made both worlds merge as one.

The scary part…I could actually see myself living there! Nice pool, very private, outdoor indoor living space, outdoor fireplace, barbecue potential on multiple layers, really, quite complete. It encompasses all the accoutrement’s of fine upscale living. When I checked my pockets I realized I was slightly out of my purchasing range, but, irregardless I could see myself sipping my double latte in the morning on one of the balconies or some other concoction at dusk. Some builders and architects have their fingers on the pulse. These folks have a traditionalist reevaluating his stance on comfort and style. If you are so inclined, you owe it to yourself to see this fine piece of living space. That is, if you can afford a multi-million dollar home. It’s funny, I still find myself reflecting on Anita with a true sense of admiration and respect.

 It seems that the real estate market is experiencing a bit of life again. Thank God. Buyers are snatching up some great deals too. But, unfortunately, sellers in a lot of instances  are the highest bidders on their own properties.  Whether it’s Santa Monica, Brentwood, Los Angeles, or Pacific Palisades, I see it happen time and time again.  Just in case sellers haven’t noticed, it is a buyers market! But it isn’t all bad, with the right price- tag anything will sell. I promise you that.

Bottom line- even in this market, if a home is priced right, it sells.

Often sellers have a figure in their head they “need to make” to have it all work out for them. “I need to net $500,000, after paying off my note or I won’t sell.” ” I need to, after all expenses, put $100,000 in my pocket.” Whatever the figure is, often it is based on something other then market reality. It is based on emotion, what you would prefer, but, often times it isn’t realistic based on the current market conditions. Expectations need to be tempered with the market reality.

“Well, darn It, I just remodeled that bathroom last year!”

Often they have lived there for years. Maybe that’s where their children grew up. Maybe they remodeled and spent a ton of money, blood sweat and tears in the process. A labor of love. There  is an emotional attachment to the home. And, often we feel justified based on that attachment to overvalue our home. We don’t think we’re being unrealistic. We see it differently, we just see “more” value there. Often Realtors, in an effort to accommodate the seller, will take that listing. “Let’s give it a shot at that price-you never know.” Almost every realtor has done it over the years. And, we have all enjoyed sales, even multiple offers when we felt homes might have been priced too high. So, the market place can often be fickle and surprising.

Often the realtor has spent a great deal of time and money on the marketing and advertising, not to mention the photography, MLS, mailers…the list goes on. Even fancy brochures and a big advertising budget won’t sell an overpriced home. Actually, some of these real estate magazines should be titled, “The  Fancy Over-Priced Homes that will NEVER sell!”  They are fun to look at though. After all, you are hiring a professional, take their advice. Would you tell your dentist or doctor how to do his work?

It happens over and over again… A realtor will place a home on the market and it will be over- priced. After painfully examining the data ad-nauseum, the seller just “has a feeling” they should start at that high figure.  So what happens? The real estate community will then see it during the open house and they’ll probably leave saying; “You know, I loved that home on San Vicente, but it was just so overpriced.” Now what?

You just lost a great deal of the potential momentum you could have harnessed into a sale.  

It is all such a delicate balance…

And, often that property will be later reduced and not sold at the lower price as it has now become stigmatized by the original price!  Just the opposite happens when a home is priced right. The realtor community talks it up and spreads the word.

You just might see the front lawn covered with Realtors phoning their buyers trying to get them in the home! Let’s face it, no one wants to overpay! And, everyone loves a great value.

So when you price your home…please let your realtor price it right.

You never know, it could create a buzz and you might even end up in multiple offers; driving the sales price up! Comps from three months ago in this market might not be accurate any more. Let the realtor community embrace the listing and get behind it. Because if it isn’t priced right, you the seller will remain the only one that thinks it is a great deal. You’ll have a lot of reasons why too;” look at the view, the fixtures are top notch, the floors are wood!” The only problem is, you’ll get to keep that home you have such a high opinion of!

“My son was always so sweet, and he still is, but, I just feel things could be better, and frankly, I’m at a loss on what to do.”

As parents, early on, we often have a vision of how we would like our child to turn out. Based on our parenting skills, our children’s experiences, their education, friends, and, perhaps some luck, the results will often be varied. What’s the cause and effect? Maybe as parents sometimes we become complacent, not out of a lack of caring or love. No one said it would be easy. Maybe our complex lives are the culprit. Sometimes it takes a lot of work, sometimes it’s simple and at other times our efforts seem to have the opposite affect on our children that we had hoped for. Do we lower our expectations? That sounds crazy. Then, after all, we are awfully busy. Is that just the way it is? How can we create a significant shift? “How can I enrich my child’s life?”

“We just want to be good parents and give our kids a chance. What are those experiences and influences that have some kids go awry and others make choices that keep them on a great path? What if there was a way you could increase the probability significantly that your child will learn and embrace values such as; responsibility, humility, fairness, compassion, and, develop courage and a sense of indomitable spirit? How about learning to face fear head-on and not fearing fear itself but using it as a tool to recognize areas that need work? 

We accept that our children might not be the best at everything they do, but, at a minimum we want them to be decent people.

“It would be so cool if there was a class on ‘how to live your life right’, where does one go for something like that?” 

I’m going to share a little ‘hidden gem’ in our community that many of you might not know a thing about. A place where our children are encouraged and nurtured to let their true spirit blossom.  All while learning respect and recognizing authority and boundaries as a good thing, regardless of how young they might be. This will occupy their time and minimize the time they spend vegging-out in front of the computer, playing video games or watching television. Does that seem a little too good to be true? Champions Martial Arts in Brentwood is that place. Owner and Master Sensei Keith Cooke Hirabayashi has built a school that nurtures our children, by teaching lessons through a thoughtful, comprehensive and rigorous curriculum. Champions Martial Arts isn’t just another Karate Studio, I wish you could have seen the transformations I have witnessed over the last decade or so.

“The ultimate aim of karate lies not in victory or defeat, but in the perfection of character of its participants” (Master Gichin Funakoshi)

Karate in America has evolved considerably in the last 40 years or so.

For the most, part Karate was introduced to America through the armed services. Soldiers who studied the fighting art brought it back from Asia after the Korean war, and, consequently, some opened their own studios. The karate schools back then were pretty brutal, not unlike the military itself. In most cases, it wasn’t really a place where you sent young kids.

“To win one hundred victories in one hundred battles is not the highest skill. To subdue the enemy without fighting is the highest skill.” (Sun-Tsu)

In the 60’s and 70’s America was introduced to karate through Bruce Lee’s movies and David Carradine in the television series Kung Fu.

The early Martial Artists such as Chuck Norris became popular action hero’s. But karate for kids, as we see it today, really didn’t get a strong foothold until the 80’s and 90’s. Karate studios began digging deeper into the spiritual aspects of Martial Arts and instructors saw this as an opportunity to enrich the character of their young students through this training, while teaching them self defense and keeping them in shape.

Most of the really good karate schools today instil more of an emphasis on character development. They teach their students to avoid violence and confrontations. Consequently, I have rarely or heard of any instances where kids have ever had any issues. Once the confidence has been developed and one develops a sense of what is right the student would feel as if he let his school and family down by using martial arts training for anything other then a life-threatening situation. But where the true benefit comes in is they get to use the what they learn in Martial Arts training and see the parallels and transfer those lessons to real life situations on a daily basis.

Champions has blended a number of styles of Martial Arts, taking the best from a variety of disciplines and creating a hybrid of sorts.

I’ve seen overweight kids get a handle on their eating habits, I’ve witnessed kids with Asperger’s (highly functioning autistics), over the course of their training, develop social skills, I’ve seen kids with ADHD make great progress and gain confidence, and, I’ve also seen kids that were already functioning at an exemplary level ratchet up their game even more. While results will always be varied, it is exciting to watch the transformation.  It’s been fun watching little kids grow and go off to Cal, Penn., Yale and other great academic institutions. They just turn out to be great kids. After all, we’ve known a lot of them since they were four years old and now they are going off to college. Earning your Black Belt doesn’t look too shabby on a college resume, either.

“I feel that the challenges we receive in the practice of Martial Arts are metaphors for the challenges we face in life. We learn how to deal with them over time with practice. When I can remain calm and centered, particularly as an advanced student, when kicks and punches are coming at me, I then remain in the present moment. When I get upset and fearful, I am not present. Consequently, I will get hit more, and, things will get worse. When I am present and aware, I can make rational decisions from moment to moment, and my situation will improve. Every challenge we face in training can be a metaphor for the challenges we face outside of the dojo. The key is, we are building character, the true foundation of all great people.” Keith Cooke Hirabayashi

  Champions Martial Arts Brentwood – Los Angeles 310-440-1947 in the Barrington Village

The Reality

With the current economic crisis forever worsening, no one seems to be immune to the onslaught of financial hardship. Whether wealthy or living on the fringe, people have been affected. Some are seeing what they have worked for over the last decade or more disappear right before their eyes. Some seniors have watched their annuities fade away, others have watched their retirement accounts dwindle to nearly zero. Every day hard-working folks, just like you and I, are losing jobs. Some families have seen one of their income earners laid off. Others are hardly able to make house payments, while some are slipping into foreclosure. There is no denying America and the rest of the world are deeply embedded in a catastrophic economic crisis, even those veiled in denial have changed their opinion by now.

But, now what, where do we turn?

Businesses, banks and individuals alike are all in this financial crisis together. So, we are all trying to mitigate the onslaught of financial hardship as best we can. Lenders are, for the most part, willingly modifying their customers loans; providing you can show a hardship. People ask, “What constitutes a hardship? What’s the criteria? Things are really hard for me, do I qualify?”  Based on the way many of us feel right now, we could all wave the white flag from behind the bunkers of debt, economic uncertainty and hardship. The fact is, if you can prove an economic hardship, and, your circumstances truly have affected your bottom line, that’s probably all you really need to do to qualify. Lost job, huge cut in pay, increased debt, your value has dropped, your adjustable has adjusted…the list goes on. If foreclosure has already begun, it is probably too late. Keep this in mind, if you have no way to pay the lender back, realistically, it would be hard for them to be motivated to modify your loan. But, if your present conditions are not insurmountable, but workable through reduced payments and or reduced debt, they are likely to work with you rather then see more foreclosures on their books.

Doing your own modification…

Working through the mêlée; the multiple phone calls,  layers of poor communication and dead-ends is a bloody nightmare. When you call the lender yourself, you’ll eventually speak with people that will take some of your information and promise to get back to you. After numerous attempts, you’ll finally get to someone who will actually process that information from you and seemingly start the ball rolling. Sometimes, just this part takes sixty days! Finally, if your lucky, someone will be assigned to you and eventually a deal will be worked out. The savings can be substantial or not. It’s hard to give an exact example as there are so many differing loan situations and varying hardships. But it isn’t out of the question to see your payment reduced enough to have a positive impact on your hardship. But, is that the best you could have received? Probably not!

Where the loan modification company comes in handy…

Most of us doing loan modifications are working through an attorney, consequently, your modification doesn’t remain stacked in the “lost Mitigation” department, but rather gets sent off to the legal department as it is accompanied with a cover letter from the Law office. The negotiation is usually expedited this way, improprieties and errors in the original loan docs are discovered and discussed, (quite often used as leverage) and, as a result, a better deal is negotiated.The lender really does want to help out the client. (Anything but another foreclosure).  But, they are really not well equipped to deal with the enormity of what is presently happening. If they are, they sure aren’t doing very good job of moving it along. Although, now, with the help of the attorney, the lender takes your modification a bit more seriously. Some of the deals are really quite extraordinary.  Occasionally, some debt will be forgiven, but more commonly the modification negotiated is based on interest rate and payment. It usually falls well within the range that makes it palatable for the client to remain in their home and continue making payments, allowing them to get back on their feet again. It really is a win/win for all parties.

It’s like anything, it can only be as effective as the weakest link in the process. It takes time, have you the time? Determne what the opportunity cost is. While you might be taken seriously by a lender doing it yourself, you know your transaction will be taken seriously when an attorney is negotiating on your behalf.  The good news is you can get a modification if you qualify. The bad news, or the reality I should say, like any benefit-it will cost you. Once again, pinpointing an exact figure is a moving target as there are so many different scenarios. Although, on the smaller conforming loans, you can expect to pay around three thousand dollars. On the bigger jumbo loans you might pay a point. And, on the super jumbo multi-million dollar loans you might pay a half point or more.

How much could it help you?

At the end of the day, let’s hope, what you pay is directly proportional to the benefits you are receiving.It is not unlike a refinance. (Sans the majority of the costs.) But, in this present interest rate environment modifications reflect the current market conditions and are the new terms for the life of loan! So, if you started out at 8% on a 1.5 million dollar loan and qualified for a modification and they consequently reduced it to 5.00%. That would reflect a payment reduction of nearly $3,000! Dropping your payment $3,000 a month is a pretty substantial example of payment relief. I’ve seen much more dramatic examples. But this gives you an idea of the willingness and benefits available for us in this present market. After all, presently, there are modifications being awarded to people, in my opinion, that are on the outer limits of financeability. If your are a hard working individual or family and they can see you’re going through a tough spot, more than likely this relief will jettison you to the other side of that dark tunnel, and, you might be able to finally grasp a bit of light at the end of that long corridor. This event alone might be the impetuous that motivates people to work a little bit harder so they don’t have to see their world toally implode. We’ve been disrupted enough already, totally loosing it all is really disruptive.

I have heard of some folks negotiating fairly decent deals directly with their lenders. (Unfortunately, the best examples are attorneys doing their own mods.) Now working with someone, a loan modification company, might shorten the process, it will certainly cost more, but, most importantly, it will increase the probability of better results. In the end, I suppose you get what you pay for.

http://www.msnbc.msn.com/id/28658811

http://www.msnbc.msn.com/id/28642344

http://www.msnbc.msn.com/id/28846944

After all, you might be in your home for a long time. Getting the best deal you can makes a lot of economic sense.

Contact Malcolm Scott for questions on Loan Modifications

310-245-2608

“The Great Depression was, no doubt, depressing”

I thought I’d compile a few paragraphs to give us a glimpse of the past as the majority of us weren’t around back then. Thank God, because it sure wasn’t much fun.

As it turns out the Stock Market Crash of 1929 didn’t create the Great Depression,

it was just perhaps the last tick of the bomb that imploded the whole market and world economy. The SEC, The Security and Exchange Commission had not been created yet and the practices in the 20’s were operating in a rather less-than-ethical space. New Companies like General Motors, seemed to be making everyone rich, operators like Joseph Kennedy, (and a slew of others) were notorious for making the big bucks in questionable practices. Investment scams that inflated values of stocks ( that were eventually dumped by the scammers) and consequently, left the investor pools holding the proverbial bag. These were the scams of the day.

Ivar Krueger was notoriously one of the best con men of the day. Known as the “Swedish Match King” as it turns out, his whole empire was founded on deception. Issuing worthless securities and counterfeiting Italian government bonds were some of his scams. Another king of unscrupulous behavior was Samuel Insull a claimed self-made millionaire who lulled working class investors into his public utilities empire.

Just prior to the depression unemployment was already very high.

Housing starts were way down in 1927 and the new mechanized factories were laying lower level workers off by the thousands. Warehouses filled up with supplies and the demand suddenly slipped because people just could not keep up with the increasing supplies manufacturers were now producing. To further complicate the situation people were taking their life savings, and like lemmings were rushing off into half-cocked investments with the hope of getting rich. Investment firms offered massive amounts of credit as it only took 20% in actual cash to obtain credit. Banks joined the fun as well and loaned millions to speculation and quesationable schemes. Enormous debt had been established and the wealth was all on paper.

In 1928 Hoover made a speech making a bold statement to eliminate poverty.

By September of 1929 the market had reached it’s peak. Although, a closer examination proved steel and automobile production in steep decline. Steel and automobiles were the centerpieces of the American economy. Like animals that sense a earthquake before it happens, startled European investors started to withdraw their investments in the US market. The free-fall had begun. Brokers called investors to pay off the debt they had leveraged. As a result they quickly sold stock to pay their debt. This brought more fear as stock prices plummeted and the demise expanded exponentially as the vicious cycle ensued. By Black Tuesday October 24, 13 million shares were sold off. J.P. Morgan Jr. tried to offset the the fall with a pool of bankers and money to fluff up consumer confidence -but this too failed. By the following Tuesday another 16 million shares were sold off and within a few days the wealth of a country, which was built on inflated stock prices simply vanished before every one’s eyes!

In one year alone, 1300 banks failed.

Obviously there was no FDI insurance back then so when your bank went down, so did everything you had with it! Within three years or so 5,000 banks had closed. Speculative investments and the bad mortgages were the culprits behind the failures. This created more trouble as there were very few banks to extend credit and capital to people and businesses. Ford laid off 75,000 workers, and Ivar Krueger and Samuel Insull’s empires came crashing down.

In prior domestic depressions the American people were able to shake them off.

Prior to America’s mechanization people lived on farms and were able to produce, for the most part, what they needed to survive. But now through technology, America had revolutionized it’s economy, and, the worlds. This newly urbanized and mechanized America suddenly had millions of workers unemployed. Record keeping was obviously less accurate back in the day, but official estimates put unemployment at 25%. Most historians scoff at those figures and claim that 40 to 50% of the available workers were out of work!

Just to keep it in perspective we’re presently (at the time of this writing) enjoying 7% unemployment.

Hoover really couldn’t do a thing to right the ship

whatever he did it was either wrong or done too late. “Hoovervilles”, communities of cardboard shacks were in all of America’s largest cities.  Hundreds of thousands were without hope, homeless and in a depressing state of despair. Hoover in 1932 created the RFC, the Reconstruction Finance Corporation. This functioned solely to loan money to the railroads and banks. This wasn’t accepted very well as it was another example of his willingness to aide Corporations and ignore the poor. Hoover was staunchly opposed to assist the starving populace with direct aid. He felt that was something the socialists would do- he was diametrically opposed. He preferred ”rugged individualism.”

It appeared to many Americans that Hoover just didn’t care about the millions out there starving, homeless and out of work.

In 1932 the depression perhaps peaked. And, the pain was felt across the land, although, in the White House Hoover kept up an image he felt would be good for ‘moral’ and had white gloved servants serving them multi-course meals.

In perhaps one of the more inhumane incidents that is preserved in the Great Depressions history was the “dough boys and the Bonus Army’s march on Washington.” The populace was at a breaking point and a group of former World War I infantrymen though it be a good idea to let Washington see the reality for themselves. The “dough boys” complete with families, journeyed any way they could to the Capital. They were a vagrant Army of sorts. They occupied buildings along Pennsylvania Avenue and set up encampments. They had all reached the end of their line, destitute, out of work and with no hope. These veterans were guaranteed a bonus and they came calling on it now. They coined themselves the Bonus Expeditionary Force. Rather then meet with the leaders of the movement Hoover decided to call out the troops, which were commanded by none other then Douglas MacArthur. The third cavalry led the assault and moved in on the “bonus Army”. Major George Patton commanded the operation. Innocent bystanders mixed in with the former soldiers were attacked with tear gas, tanks and bayonets. After nightfall the tanks rolled over the encampment and then it was torched and burned down. In the aftermath there were more then one hundred casualties and including two babies that died from suffocation from the tear gas.

Not long after that Hoover lost the election to Roosevelt and things began a slow mend. Eleanor Roosevelt met with the Bonus Army, mingled and talked with them. While Hoover will be remembered for sending the army in, Roosevelt was remember for sending his wife.

During these trying economic times we are experiencing today, right now, I couldn’t help but reflect back in history to the great Depression to get a glimpse of just how bad it was. It was bad, real bad. Based on what I have read there are many similarities. One wonders if the administration has reflected back on the depression to better understand what we and the world are dealing with now. Let’s hope we are turning the corner in the United States and will see a transition over the next twelve months or so.  While I’m an optimist at heart, I still believe we have a long way to go.  The foundation has been shaken and we need to strengthen it before we can totally rebuild.

http://www.msnbc.msn.com/id/28698830

http://www.msnbc.msn.com/id/28917922/

http://news.bbc.co.uk/2/hi/business/davos/7859179.stm

http://www.dontknowmuch.com/kids/about.html

Sources:

Don’t Know Much About History

By: Kenneth C. Davis  ISBN 0-380-71252-0

Copyright 1990 Avon Books

a division of the Hearst Corporation

1350 Avenue of the Americas New York, New York 10019

There are communities around the United States that are practically abandoned due to the recent wrath of foreclosures.

Real Estate Development deals have been stopped for lack of construction financing when nearly 90% complete. Businesses that need loans for equipment and expansion are being turned down that once had no problems getting financed. Mezzanine financing on large commercial real estate deals has almost completely dried up. And, the lenders that are still lending more resemble hard money shysters, yielding the kind of fees and interest rates that most would call usurious. Not to mention, the deals are now contingent upon the lender becoming an equity partner too. Thanks for the due diligence, we love being your partner. Surprise!

http://realestate.msn.com/article.aspx?cp-documentid=16831437&GT1=35000

The last couple of years probably can’t end quick enough for most of us in the mortgage industry. The same could be said for those of us in real estate. I’m sure there are some securities brokers that wished the windows opened in some of those big office buildings. Most of them didn’t leap, although, there are a few that I would have liked to push out! I mean that in a nurturing and loving way. I’m sorry, after I’m finished standing in the bread line I’ll go see my therapist to suppress this festering resentment I have! Speed-bump?

The times have certainly changed

and with that the lending guidelines have adjusted to our new, not so, “Brave New World.” That isn’t necessarily a bad thing, seeing some folks were giving out loans to pretty much anyone that could fog a mirror. We knew the house of cards was destine to fall sooner or later. When a mortgage back security is leveraged out 38 times or so, a lot was depending on those questionable folks making payments. Of course times got tough, jobs were lost, rates adjusted, home values finally plummeted and here we all are in a heap sorting through the ashes of what we once knew. I could use a hug.

Change is good, right?

Well, as long is it is someone else suffering through the change. Unfortunately, we’re all adjusting to the new reality, and we as turn each blind corner we are really not sure what we are going to see lurking there. There are people that have been in the lending business for twenty years that are saying: “Gosh, I feel like I’ve never worked in this industry before!” Well, it’s because the whole lending landscape has changed. Quite frankly, not all for the better. The usual, ‘better get it fixed quick’ over-reactions have taken place. The pointing of fingers has happened and the shotgun blast of blame has left its mark on the usual suspects; the appraisers, the mortgage lenders and brokers, and the Banks as well as the government agencies that regulate all that stuff.

So what can we expect this year,

as we all ponder which spa membership would most likely catapult us into that svelte body we wish for in 2009? Well, seeing ‘yours truly’ got an “A” in economics, and seeing the big-shot economic geniuses are still trying to determine if we’re in a recession, I suddenly feel qualified to predict with the same ‘extreme uncertainty’ as the best of them! My answer: Probably a bit more of the same. (Where’s Chancey Gardener when you need him?)

Compared to what we had before, it seems our choices on loans are, well, a bit limited to say the least. But, lets examine just what’s out there. Wait, it’s easier to say what isn’t out there. For the most part option arms are gone. At least the stated income version of those products. You pretty much used to be able to put 20% down based on good credit and reserves and get an 80% loan. In some instances up to a couple of million dollars. There are a few stated income lenders left. Although, as I write this, they may have changed their lending guidelines. Definitely a thing of the past. Although, I’m sure they’ll return after the taste has been flushed from their proverbial mouths and spreadsheets.

You can still get big loans. Loans over one million, two million or so, but…you need to qualify with recent tax returns, show great reserves and, oh yeah, you actually have to have a job or a regular source of income that supports the debt payments. I know, it’s a lot to ask, but seeing the financial markets have gone down the toilet, something had to change. Perhaps the worst news of all this change is there isn’t a market out there for jumbo products. In other words, no one will buy jumbo loans yet so the rates are still off compared to what is going on ‘in’ the market and compared to the conforming products. Try pricing out a 30 year fixed rate product on a million dollar loan. Not a 30 year amortization on an adjustable, a straight 30 year fixed. Before you do this clear the room of the children so you don’t spew naughty language while on the phone.

Now the good news is, there are still competitive jumbo loans out there, at the time of this writing, some jumbo stuff was in the mid-5’s. But that would be on five year fixed rate products. Now the real good pricing is on the conforming products. There has been a lot of discussion that the Feds were going to reduce the interest rates to 4.5% on 30 year loans. That’s pretty exciting to me. So far it’s only discussion. A bunch of yappin’. But for fun let’s do the math. On a $400,000 loan your payment would be around $2,027 a month. Not too shabby. The only bummer is, you have to have a job. I’m sorry, I don’t want to sound, well, so presumptuous.

So the trick to obtaining financing right now is:

• Save money (you need reserves & down payment money)
• You must have a good credit score, over 730 is great!
• Have a job, It’s a necessary evil. Bummer.
• Keep your debt down (you want a house or an $800 a month car payment?)

I personally feel we’re on the brink of another huge refinance boom in the coming months. I feel the rates are going to come down more, and, it will be just simply be hard to ignore. (That rhymes) Now some people won’t be able to do anything because their loan to value will be all out of whack. For those of you that qualify, look into loan modifications. Whatever you do, take advantage of this low interest rate environment. Rates will be down for a while- don’t miss the boat.

Another thing I see happening right now; the lenders are squeezing out the brokerage community. Setting themselves up to eventually monopolize the mortgage lending environment completely. After all, there are only a few big banks left that run it all. Is that a good thing? You be the judge.

As far as buying is concerned…

I’m seeing deals that are pretty awesome already. All around the country there are amazing real estate deals. Some areas will continue to get further depressed, but, for the most part the Los Angeles area already has deals that are hard to ignore.A lot of areas around Los Angeles have already seen a reduction in value of 30%. Some more than that. The higher end coastal properties have come down as well and my guess is they have further to go. Seeing you can’t really plan to buy at the bottom. (The bottom is always a retrospective vision.) So when deals get hard to ignore, buy! It truly depends what your buying needs are. In this coming year, while there might be a bit more of the same, I’m hoping that there will be a tad more optimism then we witnessed last year. Last year was a shock to even the wealthiest. For most of the year people were wandering around resembling a scene from “Night of the Living Dead.” Even those ghouls had more spunk then most of us. If there was one good thing that came of it, people seem more involved , more engaged and more of a community. So as we embark on another year, if you need to, steal some light from some perky individual that hasn’t been affected. (Probably someone that doesn’t own anything). And remember; It’s just a cycle. Just keep repeating, it’s just a cycle. Perhaps what we all should do is ponder on what we personally could have done differently. I’ll let you savor that thought privately (seeing I’m just out of slapping range) while I graciously bid you a good day. Cheers.

http://articles.moneycentral.msn.com/Banking/HomeFinancing/whats-ahead-for-mortgages-in-2009.aspx

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