More Fiscal Cliff Talks

My Quick Rant On This Topic

You know...this crap of fear mongering by the media is so elementary and obvious it's sickening.  This whole show about the Fiscal Cliff and taxes, and the wealthiest Americans paying more, and blah blah blah, is such a racket that is designed to divide us all.

When really looking at the numbers the top earners don't pay as much in taxes as you think they do folks.  Warren Buffet even said openly that he pays less in taxes in terms of percentage of income, than the average person does.

The very top earners pay people to find ways to reduce their taxes. Don't get me wrong I'm not against being wealthy and making money and living a very good life - who doesn't want to live a rich and fulfilling life? Everyone does that's a no brainer.. My point is this is a sneaky way to divide people through social stratification.

If you have money and ran a business or several businesses your goal would be to reduce your tax expense..duh.. Who likes to pay taxes? Nobody does.  The real people who pay taxes are the ones in the middle.  They carry the load which is why the soundbites are always targeted to "middle class" Americans which again the labels create a huge problem as it divides people into groups which leads to warfare...which is what they want!

If we're too distracted fighting a false paradigm, we can't actually come together as a nation and figure out a way to fix the problem.  "Class warfare" they label it ensues only worsening the problem.  It's trickery and is designed to keep us distracted, fighting, and living in fear and confusion.

What you fail to realize is that inflation is a silent tax and is way worse than what we're dealing with here on income taxes.  Have you noticed your food bill lately?

Oh but they want you to think that's a good thing because if prices are going up then that means your incomes will go up to match and plus the stock market is doing good and home prices are rising so just shut up and "feel" more wealthy when in reality you're income is not going up and the only ones profiting from the rising prices are the ones that control the lever...

If it's not a war on drugs, it's terrorism or taxes, or a bad economy, or murders, shootings, rapes, car wrecks, environmental calamities...It's a constant stream of bad news designed to keep people distracted, scared, confused, and worried all the time..

Jesse Ventura says it best when he describes our Congress as the world federation of wrestling as in front of the camera's they hate each other we have division, they're fighting it out but behind closed doors they're all buddies.

What you need to do is educate yourself and don't be fooled by what's going on around you.

This economy isn't going to get any better any time soon.  You need to decide how you are going to utilize your skills, talents, and brains to create extra income you can convert to stores of value like gold and silver and protect your family from the worst case scenario.

There are many ways to get started now in creating additional streams of income in your part time and start protecting yourself now - create your own economy and don't let this trash talk distract you or rob you of joy, happiness, and peace in your life.  Spend time with loved ones and cherish the special memories.

God Bless,

D...out...

New Housing Market

The days of fast money and anybody and their mama getting into the real estate business and hitting it big is over obi one kenobi...

And you know what I say?

Thank God!  The reason is we need a marketplace of professionals; leaders; trend setters; and customer service oriented champions who know what they are doing and can take their business to the next level.

Don't mean to be so harsh here (actually I do and I hope the wannabe's feelings are hurt) but this industry suffered greatly by people being able to get in so easily, and do to all the fast money, booming economic conditions, title companies, brokers, realtors, everybody was just jumping in for the quick buck, ran around and caused a muck.

See my post on building a brand or chasing a check because I dig into this by talking about what kind of value you bring to the marketplace and pose the question are you just in it for the money or are you in it to build a brand and a presence or chasing a check?

The new housing market; the new economy; the new way of doing things will be far different than what it was before. We'll be in a wet, sloshy, and muddy waters for some time to come. Call this cycle the "cleansing"...

Because while the wannabe's are going to be stuck in the mud, trying to figure out why the same things; the same talk; marketing schemes, advertising; and using old tricks that work in a booming economy where EVERYONE gets a piece... are not working anymore.

The Champions are flying above looking down for just a second then back up focused on achieving their next level.  See there are walkers and talkers ladies and gentlemen and their are people who talk a lot of "stuff" but are not getting the results.

What are you going to do in this new housing market?  Are you going be those stuck in the mud or are you going to build your brand and following, and create your own economy out of the ashes and prosper for the next year?

Ignore the governments numbers - people will always need housing.  Ignore the FED and the news talking about interest rates - interest rates can't and won't go anywhere for a while.  Stop focusing on where the market is everyday - unless you're a stock broker; investment adviser or something because that's just  a distraction...

What you need to do are these simple steps:

1. Have a clear vision
2. Decide on a strategy
3. Simplify and implement the strategy at the same time building value
4. Take MASSIVE freaking action.

Want to know the secret?....

That's it, there is no secret... YOU are the secret...

Clock's ticking....every second you let pass by with indecision is another second lost that you could be working on becoming the person you want to be. 

So in conclusion; we are in a new housing market, a new economy, but the best part is WE make our own economy.. so lets get to it.

Obama's Refinance Plan (Take Four)

Obama's First Refinance Program

Are you ready for another one of my rants? lol, I promise it will be a good one.


Well here we are folks...first we had the Obamafi 1 (aka HARP 1.0), this come out in 2009 where people with mortgages backed by Fannie and Freddie could refinance into new lower rate mortgages to help
reduce monthly payments and prevent more foreclosures.  The program was launched initially letting
homeowners refinance up to 105% of the homes value with NO add ons.

In the mortgage industry we have lingo - just like any industry - and the lingo related to add ons is loan level pricing adjustments; rate adjusters; bumps in pricing; and several other names.  But the gist of it is - based on certain "risk" criteria - the rate would be higher or lower depending on this information and would be built
into the pricing of the rate to derive at a finalized price.

Well it was well intended at first until the Fannie and Freddie added a bunch of adjusters and people who
needed it most couldn't benefit as they had the lowest scores and highest loan to value (loan amount divided
by value of the home).  So they were hit with massive bumps to the rate and it didn't even make sense to refinance. Well duh.....that's who it was for (the people who could benefit most) but what it ended up being is a cash cow fee generation system for Fannie and Freddie by putting these bumps into the rate and initializing an all out mini refi boom to extract needed cash to help the failing entities. 

Obama's Refinance Plan Take Two

At any rate...time went by and we had it adjusted to 125% loan to value.  Now we have HARP 2.0 or
Obamafi retake numero deuce where now the loan to value is unlimited!  That means your loan amount divided by the value can be 200% or more...doesn't matter, it's unlimited.  This again was another shot in the arm for the mortgage industry and banks are making money hand over fist on this program.  Mini refinance boom two.

This was designed to help all the people who couldn't get in the first time under HARP 1.0 and who were under water more than 125%.  A few programs exist; One was set up for loans serviced by your current lender (which had less restrictive guidelines since they already owned the mortgage) or you could switch lenders.  Now that this plan has been out for a little bit and because the risk is a little higher (actually it should be better because if they would make it beneficial for all everybody's payments would be much lower), some lenders are making it a requirement that the loan being refinanced is serviced by them.

You can find the differences here below:  See the vid.

NOTE: (Video is from youtube and posted by Kenney66)

Obama's Refinance Plan Take Three

The next plan involved changes to FHA's refinance programs.  You can find this HERE This allowed the homeowner with an FHA backed loan who qualified for the streamline refinance, AND, who's mortgage was originated prior to a certain date, could revert back to the old mortgage insurance annual premium calculation allowing them to take advantage of low interest rates. 

As you know FHA loans have been modified significantly over the past few years to help the ailing, failing, mortgage insurance fund as it is now WAY, WAY below Congressional mandated levels so the monthly premiums (also known as MIP and in the Conventional mortgage world PMI) have gone up and up and up so even if you could get a lower rate, the increase in the mortgage insurance didn't make it worth the money to refinance.  So the new program has spawned yet another mini boom. 

Obama's Refinance Plan (Take Four)

Obama's proposed new refinance program (you can find this HERE on the press release from the White House) is targeting all non GSE owned  loans (Fannie/Freddie) to be eligible to refinance into lower rate mortgages.  The proposed minimum credit score is 580 but will this be the same thing? High loan adjusters to the rate making it too pricey for people who really need it to take advantage? Time will tell if it's implemented.

They keep creating new mini refi booms coupled with Ben Bernanke's QE infinity program pretty much guaranteeing interest rates to stay low, we're seeing massive refinance volume. 

The volume has spike so high, lenders can't keep up and they won't hire new people to deal with the volume so you have horror stories of loans taking 90-120 days or longer to close! 

Again, this creating HUGE profits for the banks as they are selling these loans to Fannie/Freddie/and FHA and in turn the agencies are extracting more cash from the system to funnel it into the coffers because they're all BROKE as hell and bankrupt.  Just like this country is but nobody wants to realize or admit it. 

So What Next?

We're rolling into election time; we're starting to see reports of home prices increasing (I don't listen to a thing the government tells me) and the only people I see benefiting are the banks in this situation as people are refinancing which requires closing costs to be rolled back into their loans increasing your balance and stretching your term back out another 30 yrs. 

True, this scenario does help some and true this will benefit some people but if they really wanted to help people out then get rid of ALL adjustments; do it with no limited costs so that the people with the lower scores can benefit like they did when the HARP first came out but was quickly....and I mean QUICKLY changed to requiring all kinds of adjustments to the reates preventing alot of people from saving money on their payments.

So my question is: Where is the cookie for all the people who actually need it?!

That's my two cents on the matter. 

P.S. if you like this blog check out my other one http://www.livingwithnolimits.net

God Bless,

Super Low Mortgage Rates - What Happened?

I'm sure all of you have been seeing the news of how bleek the economy is. To me its blah, blah, blah, blah. But now the Treasury is stepping up to the plate in an effort to reduce mortgage rates to the point that people jump into the market and start buying or refinancing. This is going to pull the first time homebuyers back in and start getting some inventory off the market.

The Treasury announced a purchase plan of roughly 600 Billion dollars that they will use to buy mortgage-backed securities and government issued treasuries over the next couple of months. So what does this mean? How long will this last? I'm not sure but for those of you who don't know why this makes rates go down I'll explain briefly.

Mortgage rates are tied to mortgage-backed securities. These are bonds that are issued by Fannie and Freddie which contain securitized mortgage loans. Pools of loans are put together then packaged into securities and sold as bonds. Now there are three areas of risk with these, credit risk (default risk), IR (interest rate exposure), and early redemption (pre-payment). Now as rates go down, pre-payment is more likely because people can refinance into a lower rate. When pricing these bonds for sale we must take into consideration bond convexity. Bond convexity is simply the measure of sensitivity to the duration of a bond to changes in interest rates. So what does this mean? Well it means that to compensate the risk of payoff to investors these bonds are priced at a spread (fixed margin) over government treasuries, usually the 10yr bond.

So in order for the purchase of mortgage-backed securities to work effectively the Treasury will also buy government bonds to drive down their yields resulting in lower spreads, thus resulting in lower mortgage rates. They are hitting this thing from both sides

By purchasing both government and mortgage-backed bonds, the Treasury is essentially subsidizing mortgage rates. As they buy up these bonds, prices go higher resulting in lower yeilds. Lower yeilds mean lower mortgage rates. I can tell you its worked. I've taken eight loan applications over the last two days and I expect it to get better after Thanksgiving.

Keep in mind, when first time homebuyers are not buying homes this leaves the market flooded with inventory. The sellers of this inventory can't buy another home until they sell theirs and so on and so forth. So see the first time homebuyer is essential and will cause a domino effect once they've returned to the market.

Now not all first time homebuyers have vanished but most of them are on the sidelines not sure what to do. I can't stress enough that this is a cycle that we will come out of eventually. The government is doing what they can to stimulate the market and we should see housing begin to stabilize when inventory begins to come back down to healthy levels.

The trends, in some areas, are starting to show positive signs of improvement. The one thing the media leaves out is that there ARE STILL loan options out there and banks are lending. The media makes its sound as if financing has all but vanished. This is simply not true. If you are in the market NOW is the time to jump. Don't wait for it pass by. There has only been a handful of days in four decades where rates have been lower. Rates have dropped about a full point in the last two days. This doesn't mean they will stay down so make a move if you're on the fence.

Realtors start picking up the phones.

Happy Thanksgiving!

Copyright © 2008 by Dustin Swigart

Are We At the Bottom in Housing?

Well experts are scratching their heads to answer this question. We've seen home prices drop some 27%-30% since the 4th quarter of 2006. But really if you look at the data the majority of the declines came from the west and east coasts, mostly California and Florida. Take these states out and you have a flat market. In some markets prices are actually increasing. So is there a bottom? How do you know?

I really believe if we can get the media to start telling good news, consumer confidence will come back and "the markets" state of mind will change. All the bad publicity housing has been getting has caused a shift in thinking keeping people on the sidelines. I can't stress this enough that NOW is the time to buy a home. The government is giving a tax credit for first time homebuyers and when they begin to jump back into the market, you'll see a domino effect upward.

In the midst of the RED HOT real estate boom home prices were skyrocketing and rates were low. Now you have the same low rates but home prices have come down so why not take advantage of the opportunity. Don't listen to the hype that makes news, work the numbers and realize that this is only a correction, a hefty one, but a correction that will not last too much longer.

The media wants you to believe that home financing options have vanished. This simply not true. FHA, which stands for Federal Housing Authority, was enacted in 1934 to help stimulate a flat housing market. FHA provides low down payment, low interest, affordable financing for not only first time homebuyers but repeat buyers alike. FHA is ran by the Department of Housing and Urban Development and operates fully on self-generated income that costs the taxpayers zero. The insurance premiums, called UFMIP or upfront mortgage insurance premium, is charged on every loan and is put into an account to which the program is funded.

FHA has mortgage insurance on a monthly basis as well, similar to PMI or private mortgage insurance issued by private companies such as Radian, PMI, MGIC, and RMIC. This mortgage insurance is at a much lower cost than conventional mortgage insurance and in some instances is half the cost.

The media doesn't talk about this program of course and its important that we get some stigmas out of the way. FHA in its old days was a little more strict on the property guidelines. They would require a very long form of an appraisal called a VC sheet. This sometimes made it difficult for the Realtors and buyers because certain guidelines required additional inspections and repairs not figured into the sales price that would delay closing or cost the seller more money than they anticipated. This was for the protection of the buyer so that they were not moving into a home that needed a lot of repairs and that would put a strain on the new homeowner. Realtors and builders grew to hate the program and tried to find other avenues of financing. Since 2006 FHA has loosened its guidelines to change with the market and has made it easier to close on a home using FHA financing.

With the explosion of 100% purchase programs FHA became obsolete. Do not be afraid of this program because this is an excellent way to get low cost, low down payment financing to purchase a home. The problems we are having came from the provisions in the Community Reinvestment Act in 1995, which made banks make more and more loans to people who really couldn't afford them. Very very lax underwriting guidelines fueled by greed on Wall Street with exotic mortgage-backed bonds and collateralized debt obligations that have crippled names like Merriyl Lynch and Bear Stearns.

We've seen some consolidation in the this industry and I believe we'll see more coming down the pike. So are we at a bottom? I honestly believe the worst is behind us and we'll see an upward trend in the coming quarters. Don't listen to the hype on the news, if you are in the market talk to a mortgage professional and work the numbers.

For information on FHA loans please visit my site, www.53.com/mlo/dustin-swigart.

Have a great weekend!!!

"We all have the seeds to personal growth within us, but very few ever realize the important role circumstances play in nurturing those seeds to trees of opportunity."

Dustin Swigart

Copyright © 2008 by Dustin Swigart

Credit is Starting to Ease

As we all know we've been hammered everyday about the economic conditions we face. It's funny though how, when speaking about mortgages, the media fails to talk about government backed loans. They only talk about Fannie and Freddie but leave out Ginnie, which backs FHA securitized loans.
We still have financing available for first time homebuyers and marginal credit loans through financing with FHA, VA, and USDA rural housing loans. When talking with prospective buyers I keep hearing how "scared" people are to make a move. After I explain some of the conditions in the market and why the stock market is so volatile they settle down and understand what is happening with market dynamics.

The automobile industry used to be the main driver of the economy and signaled the dominance of manufacturing in our economy. Well now the main driver is housing. Yep that's right back in 2001 after the 9/11 attacks government was reluctant to impose regulation on the only part of the economy that appeared to be thriving, the red hot real estate market. Now we are facing the problems that all the credit default swaps, collateralized debt obligations, and other derivatives, that have caused problems for the banks and institutions that had them on their balance sheet.
We are in a flushing out phase and it will end, just not immediately. The Housing Recovery Act of 2008 made great strides to modernize FHA and come out with a tax credit for first time homebuyers in order to get them back into the market. Lets face it we need the first time homebuyers back in to purchase bloated inventory so we can start the domino effect again.

I want to explain a little bit about what is going on in the credit markets. I believe through education, you can ease your prospects minds with important information and convert more leads into sales.

Lets start with the credit markets. Credit markets are vital for individuals and businesses who need to access credit in order to purchase goods and services, make payrolls, expand business operations, make capital expenditures, school loans, and more.

The most important spread being watched right now is the LIBOR/OIS Spread. This is the spread between dollar LIBOR (london inter bank offered rate) and the Overnight index swap rates. This is a good indication of the willingness of banks to lend to each other. To give you a comparison before the credit crunch the LIBOR/OIS spread was 11bps (bps mean basis points which is 1/100th of a percent, example 11 basis points is .11% - 100bps is 1%.) The higher the spread the less likely banks will lend to each other. This week it closed at an a staggering 331bps but dropped from 341bps, which means we are seeing slight improvement.

Now what about all the selling? Well with the craziness in the market and Hedge Funds, investment vehicles for the wealthy, are deleveraging their positions and being forced to sell due to redemptions from their wealthy clients. Hedge funds are down about 19% ytd (estimate), some hedge funds after fees return 20%-26% annually. Hedge funds make their money in the stock market, credit markets, and derivative markets but in some cases borrow heavily to invest and hedge their bets. That's fine and dandy in an economic boom but in a slowdown like this they must sell and deleverage their positions causing downward pressure in the markets and then also selling on the down side, short selling, put options, etc, to keep from losing money from long, bullish positions, which causes more downward pressure. Not to mention mutual fund clients are selling their positions to meet growing redemptions from their clients as well. Thus creating the volatile environment we find ourselves in.

If you had some extra money laying around right now would be the best time to invest in real estate, and stocks pounded and are now undervalued.

The moral of the story, educate your clients in contrary to what is being splattered on the media, we are in election time and some news stations with political agendas are attempting to make this look like this is all the Bush Administrations fault and are attempting to make it sound so HORRID. Both parties failed to take action but many attempts were made but shot down by democrats in Congress. Right now is the best time to buy a home and with the Treasury recently being given 1.1Trillion dollars in buying power to purchase mortgage-backed securities (the main driver of mortgage rates) we should see some easing in the rate volatility here shortly as well.

If I can help with anything feel free to call or email me. Stay positive, do your homework on the market, this kind of thing happened in 1987 as well but how soon we forget.

God Bless!

FHA's Comeback

One of the things I want to talk about is FHA loans. This program up until earlier this year had maybe 2% penetration into the market place. Reason for this is the influx of money, from investors, into the mortgage market thus creating a plethora of alternative loan programs that were giving borrowers more options. These loans include no income verification loans, stated income an asset loans, piggyback loans to avoid pmi, and others.

The market became very creative and helped fuel a red hot real estate market that set record sales for 5 years in row. Many people don't realize that while the market was creative in providing alternative loan programs to borrowers, lax underwriting guidelines and fraudulent activity created the majority of the mess we now see today. A severe decline in home values played and is playing a major role itself. I'm not going to talk about a lot of bad news here I think we get enough of that already from the media. Lets face it bad news makes the front page. My intent is to provide information about a old but new program that many steered away from but now is one of the only high loan to value options left.

Lets talk about the benefits of an FHA loan.

1. No minimum credit score- FICO scores over the last 15 or so years have been used heavily by lenders to determine the creditworthiness of a borrower to repay a loan. Being in the people business for 7 plus years now and pulling credit and looking over credit reports I can tell you it doesn't give a very good indication. The system is designed to give you a snapshot in time of what borrowers score is and not a trend of creditworthiness. I say this because I've pulled credit on someone with a 700 credit score and 6 months later they have one late payment and their score dropped to 550. Now is that a good indication of the borrowers ability to pay back a loan? Let me answer that for you NO! With FHA you don't need a minimum credit score to qualify however common sense is needed here. A 400 credit score is highly unlikely to get approved. Now this year FHA has added risk-based premiums to their upfront mortgage insurance and that is credit score driven but overall there is not a minimum criteria for a score to qualify.

2. Low Down payment - With FHA, up until Oct 1, 2009, only has to contribute 3% down payment. After October 1 it goes up to 3.5%. The 3% can come from a relative as a gift or borrowers own funds. This is powerful because right now in the conventional world you need a minimum of 5%, if the property is located in a declining market as indicated by the mortgage insurance companies, you'll then need 10% down. Not to mention you need over a 680 credit score to get the mortgage insurance approved. You might be approved for loan but can't get the insurance. Which moves me into my next benefit.

3. Low mortgage insurance - FHA handles their own mortgage insurance so if you are approved your loan will have the mortgage insurance on it. FHA mortgage insurance also is at a lower expense then conventional and if you put 10% and take out a 15 yr fixed loan no monthly mortgage insurance is required.

4. No income restrictions - For the first time home- buyer group this is huge. Most first time home-buyer programs are designed to meet the needs of low to moderate income borrowers. Well if you make more than the income limit these programs are unavailable to you. FHA has no income restrictions to qualify.

5. Purchase or refinance new or existing 1-4 unit homes - This is a big plus. You can still get 97% on the purchase of a 1-4 unit primary residence. Conventional requires more down payment on multi-unit properties. On cash out refinances there are limitations to loan to value.

6. Financing for manufactured homes - With the credit tightening in the mortgage market some areas have an ample supply of manufactured homes. The same 97% guidelines apply on these but they must meet FHA guidelines and be on a permanent foundation.

7. You can use a non-occupying co-borrower - This is a forgotten rule but if you can have a non-occupying co-borrower, as long as they are a relative, sign on the loan and the borrower can still get the maximum financing of 97%. This is limited to 1 unit properties if the ltv is over 75%. Certain restrictions apply.

These are just a few of the many benefits to FHA financing. It provides a solution for many borrowers needs and helps them fulfill the American Dream of owning a home. I've been in the industry over 4 years now and I love providing solutions for my clients to purchase their first or next home. I get great joy out of what I do.

Stay tuned for more of my blogs and industry news. I've never been a big fan of bad news I like to spread good news but we are facing problems in the housing industry but i believe it when I say its a cycle and we'll survive this storm and come out of it with better times. Remember the market is what you make it. There are still many opportunities out there you just have to change your marketing strategy, do things a little differently, try something new to see what works and what doesn't.

Never become victim of all the bad news because you can sure find a lot of it. Now is the time to become more proficient at what you do and become a trusted adviser to your clients and business partners.

God Bless

"Whether you think you can or you think you can't, either way you're right"

Henry Ford

Copyright © 2008

Are We Headed to The Point of No Return?

Well in one week we lost Freddie Mac, Fannie Mae, Lehman Brothers, and Merrill Lynch, some of the biggest financial firms in the country and the world. And now there are talks that Morgan Stanley will merge or be bought out as well, and then there was one, Goldman Sachs. Out of the five biggest investment firms in the nation only one may be left standing. So what happened? Well its complicated but simple. These firms used leverage to maximize profits while the housing boom was in full steam. Let me explain. Some of these firms borrowed up to $30 dollars for every dollar in assets and while this is a very risky strategy, it can pay big dividends if executed properly. It’s called trading on the equity or using leverage.

See companies get a tax break on interest expense paid to its creditors. For instance you have net income before taxes but after expenses of say $2 million dollars and an interest expense of $150,000. That $150,000 is deducted from the $2 million and then you are taxed on the difference. This will increase the bottom line by using the interest expense as a deduction. Companies have quite a few ways to raise capital to finance its operations but the two main ways is to issue stock or issue debt. Issuing stock dilutes shareholder ownership but is a cheaper way to raise capital. But by issuing more shares net income now has to be spread over more shares outstanding lowering its EPS or earnings per share. By issuing debt and not issuing stock the company can reflect a higher EPS, more income spread over fewer shares of common stock outstanding.

This is all fine and dandy when revenues are growing but in sharp economic downturns this can cause the insolvency of a company very quickly. Take Countrywide for example, this company operated on leverage and when investor confidence eroded, they started to dump shares of Countrywide reducing its market cap by billions of dollars in a matter of a few short weeks. When creditors wouldn’t renew their notes, and after they tapped their lines of credit, the company was then bought out by Bank of America for $4 billion in stock.

This may seem very frightening and the media has made the word mortgage an ugly word claiming that the subprime mess caused it all. Well that’s only a small piece of the puzzle. In 2006, which was the peak of the subprime boom, 20% of all originations were considered subprime, roughly $800 billion dollars. While this is surely a lot of money it pales in comparison to the roughly $3 trillion dollars in mortgage originated in that year. Alt-A is becoming a recent problem, which represented 13% of originations in 2006, and was responsible for the majority of Fannie and Freddie losses in the past quarters. However in the midst of all this bad publicity there are still a great percentage of subprime borrowers making their payments. The real cause of this financial problem was the greed on the Wall Street, bad news causing naked short selling driving down the stock prices of financial stocks, and the lack of transparency in risky securities like CDO’s (collateralized debt obligations).

The value of these assets were grossly overestimated and was shown clearly by the liquidation by Merrill Lynch for 22 cents on the dollar which pushed them to a huge loss in their last quarter.

Regardless of what is going on right now it is still a great time to buy a home. Right now interest rates are still at historical lows and prices have retracted in some areas in the double digits. The cost of waiting right now in this volatile market is too great to let it pass you buy. Its funny how they talk about how hard it is to obtain a mortgage but the media never wants to talk about FHA insured mortgages. Its being estimated now that FHA originations, after only being a mere 2% in 2006, will skyrocket to 30-35% for 2008 and even more in 2009. FHA insured mortgages are a great way to get into a home with little down payment and competitive interest rates. Conventional loans right now are being hit heavy with credit score and ltv adjustments to pricing that drives the interest rate up for borrowers who have less than 740 credit scores. Don’t wait now is the time to take advantage of this market cycle.

Copyright © 2008