Mike Lafferty

The Feds have a new plan to buy the bad debt from banks. It looks like they want private investors to pay 6%, FDIC to take 84%, and 6% to come from the $700 Billion bailout funds and since this does not add up to 100% the Banks must be taking a 4% hit. From day 1 the Feds have been talking about buying the bad debt. The reason these loan are bad is very simple. The ones that borrowed the money stopped paying the loans back. If the loans are not being paid back then the holder of the loan is not making any money.

So, The Feds want private investors to take a stake in non-performing loans and investors only invest to make money. The only way investors can make money from these loans is if the homes held as collateral are sold.

Now I have asked this multiple times and no one can give me an answer. How will these homes be sold? Will the Feds create a new Asset Management company, Use existing Asset Management companies or use the system they have set up right now through HUD?

Either way these homes have to be sold at some point and refinancing them will not work.

Click this link to see the article: http://tinyurl.com/d8p6zw

I thought this link would help explain the $15,000 homebuyer Tax credit. Comments welcome.

http://tinyurl.com/assdpc

I'm surprised that with all the foreclosures in the last year and what is coming this year that the Banks haven't said they want to be allowed to sell Real Estate. Banks have been trying for years to get legislation passed that would allow them to sell Real Estate and now they have a slightly opened door. I'm sure they will argue that they would be the best to sell the properties that are past due or in foreclosure. They could make the loans to the new buyers and give discounts on appraisals........ This would then open the door to selling all Real Estate.

I'm also surprised it hasn't been hidden in this stimulus bill. The banks would have to hire Brokers, associates, processors thus creating jobs and getting rid of the bad debt.

Keep your Eyes open.

Pending Home Sales Show Healthy Gain

Pending home sales increased as more buyers took advantage of improved affordability conditions, according to the NATIONAL ASSOCIATION OF REALTORS®. Big gains in the South and Midwest offset modest declines in other regions.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in December, rose 6.3 percent to 87.7 from an upwardly revised reading of 82.5 in November, and is 2.1 percent higher than December 2007 when it was 85.9.

Lawrence Yun, NAR chief economist, says the index shows a modest rebound. "The monthly gain in pending home sales, spurred by buyers responding to lower home prices and mortgage interest rates, more than offset an index decline in the previous month," says Yun. "The biggest gains were in areas with the biggest improvements in affordability."

NAR's Housing Affordability index rose 10.9 percent in December to 158.8, the highest on record.² The HAI shows that the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970.

"Significant uncertainty still clouds the housing market despite improved affordability conditions. For a sustainable housing market recovery and, hence, sustainable economic recovery, we need a significant housing stimulus and mortgage availability for qualified borrowers," adds Yun.

The PHSI in the Northeast slipped 1.7 percent to 62.1 in December and is 14.5 percent below a year ago. In the Midwest the index jumped 12.8 percent to 83.7 but remains 1.2 percent below December 2007. The index in the South surged 13.0 percent to 96.8 in December and is 1.6 percent above a year ago. In the West, the index fell 3.7 percent to 97.5 but remains 17.5 percent higher than December 2007.

NAR President Charles McMillan, says the rise in contract signings is encouraging. "However, housing activity remains weak compared with potential demand, and the market is fragile given the economic backdrop," he said.

"We can't take our eye off the need to stimulate housing, which can set the foundation for an economic recovery," McMillan says. "Last week's actions in the House to eliminate the repayment feature on the first-time home buyer tax credit, and to raise mortgage loan limits, are helpful. However, we need to take additional steps to meaningfully draw down inventory and stabilize home prices."

McMillan says some enhancements that could bring more buyers into the market include expanding the $7,500 tax credit to all home buyers and extending it until the end of 2009, and making loan limit increases permanent. "We also need to direct funds in the Troubled Asset Relief Program to add liquidity to the mortgage market, buy down mortgage interest rates and increase other forms of credit," he says

Yun says the outlook for housing and the economy is murky. "Although Congress and the Obama administration are taking steps to help the economy, the stimulus package must deal with the root cause of the economic downturn, and apply the right fix to turn it around. If housing is ignored, a significant downward overshooting of home prices would continue to drag the economy down independent of the scale of the stimulus," Yun says.

Source: NAR

I am convinced more every day that social networks like Facebook, Twitter, LinkedIn..... are the future of Real Estate. The other day I had a lunch reception for 30 new agents that joined our association and when introducing myself to the group I told them to embrace the Internet. Use the social networks and they, along with other board members, looked at me like I was speaking another language. One person out of the entire group came up to talk to me about social networking. Hard to believe. The rest will most likely rely on mailings, open houses, other print media and the name of the companies they work for. At some point they will then try to catch up with the rest and always be behind.

Associates will listen to me at some point. Until then I will stay on this soap box.