Martin Rodriguez - President

5 Things Every Realtor needs to know for this Weekend

By now you already know that the FTHB Tax credit has been extended and expanded, but do you know the details so that you can properly explain it to your clients.

Here are some bullet points:

• You need to be in contract by 4/30/2010 and close the transaction by 6/30/2010.
• The income limits for the tax credit have been raised to $125,000 for a single filer and $225,000 for a joint filer.
• The best part of this extension is the expansion to all home buyers that have owned a home for 5 consecutive years out of the last 8.
• If your buyer is a repeat home owner the credit is $3250 for a single filer and $6500 for a joint filer.

•· It's that time again -- Ready or not, the Holiday's are in full swing and this means your open house needs to compete with the mad shoppers at the mall. Talk to your local stores and restaurants and ask them for coupons that you can pass out at your open house. You help them - they help you. Advertise that you'll be passing out coupons to visitors. Find creative ways to keep the foot traffic flowing through your open house.

•· The Valencia mall expansion is finally about to open.. On Thursday Nov 19, the Patios restaurants complex at the mall is planning to finally open its doors. Just in time for the holiday rush. (imagine that) Time to go check out some new restaurants. Why not treat your clients --especially if they're moving into SCV from out of the area.

•· Interest rates really surprised me this week with 2 late bond market rallies on Thursday and Friday causing rates to move back down. I don't expect them to stay this low for very long and there's a good chance that rates will bounce back up on Monday, so if you have a buyer ready to go. Call me immediately! We can lock and load and get them a phenomenal rate this weekend.

•· Loan Limits for 2010 have been published and Fannie and Freddie have decided to keep everything the same for next year. This means conforming loan limits will stay at $417,000 across the nation and high cost areas such as Los Angeles County will be eligible for higher balance limits up to $729,750. That's a big plus for everyone... If you want a better understanding on the significance of this call me. Your buyers and sellers need to understand this..

Ok that's my update for this weekend. Remember I'm always available to help you and your clients, so please don't hesitate to call me.

Over the last several weeks HUD, along with FHA, have been back and forth as to the legality of whether or not they would allow the use of the $8000 First time home buyers Tax Credit to be used as part of the down payment and closing costs of a qualified purchase.

Well now we have an answer. Yes! You can cash in your $8000 instant rebate at the register!

There are some rules that need to be followed, so if you want this credit instantly applied to your purchase transaction, you need to make sure that your lender follows the specific steps that are outlined in HUD letter to Mortgagee's dated May 29. I have posted a copy of this letter here for you to review.

The letter outlines 2 ways that you can apply the credit. You can either get secondary financing from an FHA eligible agency such as a non-profit organization or State Govt Agency or you can sell your tax credit and get a cash advance from an approved FHA non-profit organization or Govt Agency.

So while HUD has made provisions to instantly cash in on this money, you still have to take several steps to qualify with an approved agency that can provide you with the $8000 before your close of escrow date.

I realize that many borrowers want to cash in on this immediately, but it raises some interesting questions. Look at it this way, If a seller knows that the buyer is going to instantly cash in on $8000 will this affect the barganing table? Think about it? Will a seller really be willing to pay more in buyers closing costs if they know that the buyer is receivng $8000 to assist in the transaction?

While I think that HUD's announcement is a good thing for some borrowers, it is certainly not something for everyone and needs to be carefully evaluated by your Realtor and Mortgage lender. If you want to know how to tilt the tables for your advantage, call me at SCV Loan Solutions, we'll be happy to help you assess your situation.

Lies Lies Lies... We see them everywhere.. Everything from asking Johnny if he had a cookie before dinner; only to see him wipe crumbs from his face and say "no mom", to the Bernie Madoff's of the world that schemed millions with a carefully crafted series of deceit and forgery.

We all condenm lies, and generally speaking no one wants to be a liar. Yet we all occasionally fall into the trap ourselves and justify this ocassional mistep by saying it's ok as long as it's a white lie. Meaning a white lie is acceptable provided that no one is hurt by it or if the lie was unintentional.

Let me clarify. A lie is a lie!

It's a misrepresentation of the truth and intent doesn't matter, it either IS or it ISNT.

For century's we've been seeking ways to determine if a person is lying or not. People have been persecuted and convicted for lying, and in many cases also persecuted when they were innocenct and it was believed that they lied.

To this day however, there is still no full proof way to determine if a person is lying or not, sure law enforcement has lie detector polygraph tests and psychologists have done extensive testing on human behaviors that are exhiibted when one lies, but the truth can only be confirmed by facts. If you have the facts, you can usually prove it one way or the other, but in the absence of facts there is no way to confirm what is true.

So how do lies factor into business?

How does a consumer know if they are being lied to by an individual or a corporation?

The mortgage industry for years was issuing stated income loans that where referred to as a "liars loan". This was an accepted practice that was embraced by many, so long as no one was being hurt by it (and everyone got what they wanted). Well fast forward to 2009 and we see that the bubble didn't just burst, it exploded! And it took the real estate industry and the American economy with it. Now we are in the midst of a recession trying to assess blame and figure out what went wrong.

Im not going to get into all the dynamics of how we got into this mess, thats a whole topic of discussion on its own, but its clear there were a series of lies and a lot of people got hurt by it.

So what can you do to protect yourself?

One answer is to create checks and balances where you can. Work with proven individuals that have a track record and compare them to others. Educate yourself on important matters and investigate anything that doesnt seem right to you.

Recently, I was at a restaurant with a friend and he asked me a casual question. When I gave him my answer, he said "you're lying! I saw you look down and to the right." I was surprised by his remark because I didn't think I had lied about anything, but his police training taught him to watch for certain mannerisms that could indicate a lie. Well I don't know how credible this technique really is, but my point is that if you have a hunch that something isn't right. Look into it. Don't assume and don't accept things for face value. And if you find yourself taking part in a lie, even a white lie, correct it immediately. Sometimes lies may appear to have no repercussions, but lies left uncorrected can often re-surface years later to cause irrepairable damage.

Honesty really is the only policy, not just the best policy.

Real estate isn't so much about property as it is about people.

As an investor you need to know and understand the sellers circumstances. You need to be respectful of the fine line where one mans financial misfortunes become another mans exploitation for his own fortune.

I oftern hear Realtors talk about what a great time it is to invest because there are so many foreclosures and great deals to be had right now. True, but lets put this into perspective. Foreclosures are bad! Its a terrible thing for society, terrible for our economy, and it causes a deep psychological impact and stress on the family being foreclosed upon.

As an investor/buyer you might consider buying a foreclosure becuase it really is a good deal. However, your responsibilites should go well beyond the finances. You have a resonsibility to ensure that your actions are not predatory in nature and that once you complete the purchase transaction, you will use your investment as a place to provide housing at fair prices. Your tenants should have a safe home, that is well kept and maintained by you. Your investment doesn't have to be the nicest house on the block, but it should be something that is appropriate for the community and something that you are proud of.

Understanding people is at the cornerstone of SCV Loan Solutions. We work with buyers and sellers everyday to ensure that our investment solutions are optimal for all parties and done so with respect. We want you to make it BIG as an investor, but do this with respect and integrity first.

As President of SCV Loan Solutions, I'm always networking with buyers and sellers and I look for ways to put parties together that can complement one another, so as to create win/win solutions. You can take advantage of this and make it work for you by letting me know what types of investments you are interested in.

Contact me to discuss your goals, your vision, and how we can partner to make your next transaction something that gives back to the community.

This weekend we witnessed the biggest Govt expansion into the private sector ever. I'm a free enterprise guy and personally, I don't like Govt involvement in the private sector. Fannie and Freddie where designed as a publicly chartered agencies designed to operate in the private sector, and when things are going well you can make this work, but during down times you cant. They have an internal conflict of interest because they're trying to serve the general public and also be profitable for investors and shareholders. It's like having a non-profit company with shareholders. You can't have it both ways. Earlier this year the US Treasury bailed out Bear Stearns and now Fannie/Freddie. Who's next GM or Ford? My favorite French word is Laissez-faire, and we need to re-introduce this term to Washington.

Having said that, I think the govt had to do this and they had no other choice but risk the entire US economy. The catalyst for this surprise move was PIMCO's announcement that they won't buy anymore mortgage backed securities, (PIMCO is the largest buyer of mortgage securities from Fannie) followed by foreign investors also saying that they are pulling back. Those statements left unattended would have ignited a wild fire in our economy that would have gone out of control. Fannie and Freddie hold too much of our economy within 1 company. A failure of either will crush the markets. You may as well put a big for sale sign on the White house lawn.

Can you say S&L Crisis? This is almost a complete repeat. Our Govt was criticized at the time for getting involved, but in hind sight it proved to be the right thing to do and the cost of the S&L bail out was recuperated through the R.T.C. in the years that followed. By comparison, the Japanese didn't do anything to fix their banking industry and they continued into a 10 year recession.

The Govt actions this weekend established a preferred bond of $200 billion to keep the 2 firms from becoming insolvent and thus renewing investor confidence. The liquidity and investor confidence will keep money flowing and it will bring down interest rates (in the short term). It won't fix the mortgage crisis, but it will make it cheaper to borrow money. The cost to tax payers is yet to be determined, but taking a preferred bond position helps to ensure that the US will get its money paid back over time.

The long term picture is very uncertain and the new administration will have to tackle this issue next year. Secretary Paulson is pushing for down sizing of Fannie and Freddie to be no more than $250B in guaranteed mortgage securities.

Time will tell.

What's you're take on this?