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Month: December 2008 (page 5 of 6)

December 9, 2008

Can We Stop Falling House Values? An Op Ed piece by the NAHB

by

Mortgage Officer

Author website

This is excerpts from an op ed piece written by Steve Hodgkins.   I’ll throw some comments in to explain/clarify what he’s saying and why I don’t agree with a large portion of it.

The decline in single-family home values is the predominate reason for the current economic collapse……

Tom here – which came first, the chicken or the egg?   Did the subprime mortgage lending boom send housing prices way too high because credit was too easy?   Or did housing prices fall because those loans went bad?   Or both?

Falling values have decimated the single-family construction industry, which normally supplies roughly 16% of the gross national product of the United States……

At the height of the housing boom, developers and home builders were buying land, developing lots and building houses based on an economy fueled by subprime mortgages.

They neither asked for nor were even aware of this giant social experiment conceived by our political leaders and the heads of mortgage giants Fannie Mae and Freddie Mac.

Tom here – so they didn’t ask for increased lending?   They weren’t even aware of the fact that lending was significantly more lenient than it was before?   They are saying that they never lobbied for easier lending?   I’m sorry I’m not buying it….

As entrepreneurs and job creators, home builders were simply responding to perceived market conditions. Likewise, their banks and financial partners were making decisions based on historical market data.

Tom here – “making decisions based on historical market data?”   So he’s saying that the sudden relaxation of mortgage guidelines was based on historical data?   How does he figure that?   I’m absolutely positive that I’m not the only mortgage lender who said, “Wow, I can’t believe that Fannie and Freddie will buy this loan…..”

After the subprime loans were pulled out of the marketplace, builders were left with large inventories of land, lots and houses and far fewer buyers who were able to qualify…..

Tom here – I’m not sure that it’s quite an accurate description of the market dynamics.   Did the subprime mortgages get pulled or did buyers stop buying a new home because prices have gotten too high and the increase Read more

December 9, 2008

The Tangled Web of TARP

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

It’s deja vu, all over again.

Republic Window and Door announced it would be closing its doors next month.   Republic lost over $5 million YTD and $12 million in 2006 and 2007.  Bank of America suspended its line of credit.  Faced with the prospect of going it without any money, Republic rolled over and died.

Workers at the soon to be defunct Republic Windows and Door are staging a 60’s-style sit in to recoup some of their lost vacation and severance pay.   The union demands that the Company make good on its promise to its workers.  Remember, the Company wasn’t bailed out; it lost close to $18 million in the past three years and light isn’t appearing at the end of the tunnel.  President-Elect Obama supports the union’s effort.

Federally-detained Illinois Governor Rod Blagojevich and State Treasurer Alexi Giannoulias fired a shot across BofA’s bow, threatening to suspend State business with the Bank.

Illinois Governor Rod Blagojevich said the state will suspend business with Bank of America Corp. until the lender restores credit to the shuttered Republic Windows & Doors company in Chicago where workers are staging a sit-in.

Blagojevich, a Democrat, spoke at a news conference today after meeting with employees who remained at the factory since Dec. 5, when it closed following the bank’s cancellation of its credit line. Illinois does “hundreds of millions of dollars” in business with the bank, he said. The Illinois Department of Labor will sue the manufacturer if Republic doesn’t respond to employee requests for vacation and severance pay, the governor said in a press release.

Cook County Commmissioner Mike Quigley follows suit:

Cook County Commissioner Mike Quigley will introduce an ordinance to block the state’s biggest county from doing business with Bank of America, he said in an interview.

“I’m usually cautious, but this is an extraordinary example at an extraordinary time,” Quigley said. “When you talk theory, they nod and wink, but when you put in an ordinance, they know you are serious.”

Should the Bank be able to cut its losses and focus on less risky lending practices?  Not if it receives TARP funds figure the Cook Read more

December 7, 2008

Death, Taxes and Real Estate 3.0

by

Realtor, Rabble-Rouser

Author website

What do death, taxes and real estate all have in common?

Technology.

I’ve blogged on several occasions about Real Estate Web 2.0 and my belief that in the myriad of solutions that have been developed, deployed and adopted, there has yet to be a “real estate agent killer” app.

Not long ago, innovators wanted to develop technology solutions that unleashed the knowledge within the MLS – that is where the perceived value of the real estate transaction was hidden.  Enhanced property search and data analytics was the way to break the current commission based business model, drive down the cost of the transaction and essentially eliminate the middleman – the agent and/or broker.

I was often confused when I read comparisons between the real estate industry and the travel industry.  Again, technology innovators wanted to do to the real estate business what Expedia, Orbitz or Hotwire have done to the travel industry – put the consumer in the driver’s seat and eliminate the middleman – the travel agent.

Not to belittle the travel agent, but clearly much has been learned about the real estate transaction process to determine that real estate is not like the travel industry.  Unlocking the MLS and aggregating data alone does not address the complexity of the real estate transaction, nor does enhanced search engines that exploit mapping technologies.

Real estate is a knowledge-based business.  In creating true innovation, my question is why aren’t technology innovators drawing parallels to other professions that are knowledge-based?    I can’t help to think that there can be a significant disconnect between our current business model, i.e our compensation, and the knowledge and expertise that experienced agents have developed over time.

To better understand the disconnect is to understand how the Pareto principle applies to a real estate transaction.  Could a knowledge management solution address 80% of the process-related issues to buying and selling real estate, leaving the 20% of the really tough, unexpected issues and problems to be addressed and managed by a licensed real estate professional?

I have my business degree in accounting – I never practiced accounting, however, when it comes to tax time, I feel obligated Read more

December 6, 2008

Making the Scenius scene: I’m prepared to share an entirely new style of blogging with you — but you have to hold up your end

by

Suburban Phoenix Real Estate Broker

Author website

I wrote last week about the Scenius blogs we’ve been playing with. The concepts we’ve developed constitute a new style of blogging, a hybrid of the best features of link-blogging and RSS feeds with much better control and with none of the defects.

A Scenius blog called “Switched-On Marketing” is riding in our sidebar, along with some other real estate blogs. I have another one called “Phoenix Area Headlines” running on our client-focused real estate weblogs.

That last sentence is important: I maintain one Scenius blog for “Phoenix Area Headlines”, but I can echo it wherever I want it to appear. And it comes in like a blog, not like a feed or a widget, with full control over the appearance and with all the links behaving as expected.

Why is that important? Because I now have a reliable source of keyword-rich dynamic content that I can share with other Phoenix-area weblogs. Other Phoenix real estate webloggers are free to use it, but I’m much more interested in hanging around the sidebars of weblogs run by my clients or future clients.

The “Phoenix Area Headlines” Scenius blog is composed of content that will be interesting to readers of any weblog in the Phoenix area. It’s a regularly-updated supply of new content for any weblog that hosts it.

The “Phoenix Area Headlines” Scenius blog is rich in keywords that will cause the blogs that host it to score well with search engines. I’m giving my neighbors content and also boosting their SEO.

The “Phoenix Area Headlines” Scenius blog consists of highly dynamic content. There are new posts every day, and old posts scroll off the bottom every day. What this means is that search engines will see new unique content on every page they spider, every time they spider, if those pages are echoing my Scenius blog.

And the “Phoenix Area Headlines” Scenius blog links back to BloodhoundRealty.com. I’m using sweat equity to buy a place on your sidebar. Your readers win, you win, I win — everybody wins.

The “Switched-On Marketing” Scenius blog does the same sorts of jobs for real estate and marketing weblogs: I give you interesting Read more

December 6, 2008

Seriously, who’s a better risk for a mortgage than someone who has already lost a home to foreclosure?

by

Suburban Phoenix Real Estate Broker

Author website

This is my column for this week from the Arizona Republic (permanent link).

 
Seriously, who’s a better risk for a mortgage than someone who has already lost a home to foreclosure?

We talked last week about credit flexibility among merchants as they try to find ways around the banking crunch. The flip side of the same coin is how the credit marketplace will react, going forward, to home foreclosures.

You’ve heard all your life that a foreclosure is second only to a bankruptcy in the way it will ruin your credit. This is still true, but “ruin” may turn out to be an adjustable calamity.

Here’s why: A lot of people are going through foreclosure. Ninety percent or more of homeowners are unaffected by the wave of bank repossessions, but that still leaves millions of people who are going to have a foreclosure on their credit for the next seven years.

What’s going to happen to those folks when they go to the furniture store or the jewelry store or the car dealership? They might end up paying a higher interest rate, but they’re still going to get financing.

I have been advising my investor clients for months to ignore recent foreclosures on credit reports. Past performance on every other sort of credit account matters a lot. But if landlords refuse to rent to folks who have lost their homes, they will be turning away half or more of the tenant population.

My take is that, right now, a recent foreclosure is like hospital debt: If everyone else was getting paid before, during and after the financial catastrophe, you just have to look past the elephant in the room.

And here’s the funny part: I am sure this will apply to home loans in due course, also. If mortgage money remains freely available, lenders will find a way to overlook recent foreclosures in order to underwrite new home loans.

We can hope that, this time, interest rates will reflect the true risk lenders are taking on. But this country runs on credit. Just because a borrower recently defaulted on a six-figure debt, that’s no reason to withhold the unlimited boon Read more

December 5, 2008

Speaking in tongues: Revising my universal contact form for real estate weblogs — e-paging support and friendlier coding

by

Suburban Phoenix Real Estate Broker

Author website

About eleven months ago, I built a universal contact form for real estate webloggers. Just lately, I’ve revisited that code to add support for e-paging and other kinds of hyper-brief email-based messaging. Getting a form emailed to the office is a nice thing — unless you’re out previewing or inspecting all day. The new version will find you wherever you are.

The revised contact form will email you your prospect’s contact information (to as many email addresses as you like) and, also, optionally e-page you with a very brief form of the information (again transmitting to as many e-page addresses as you choose).

The e-page will give you the party’s name, email address and phone number (the latter two are clickable if your phone supports this function), along with as much of the message as will transmit. The form imposes brevity, so you should be able to puzzle out what is wanted. Everything in the e-page is sent in the briefest practical form to maximize the amount of space left for the message.

Nothing has changed in the form of the user interface — and the UI should inherit its appearance from your CSS specification. But I’ve changed the way the software works internally and the way it installs, both to make it easier to deploy and to avoid conflicts with your ISP’s tech support team.

This contact form is built for WordPress.org weblogs only. It might work in other blogging platforms — and it will certainly work in any static PHP page — but that’s not what we’re talking about right now. You can install the contact form in your sidebar, provided you know how to edit the theme file called sidebar.php. If you have a PHP plug-in installed in your weblog, you can install the form on a WordPress Page, perhaps adding a “Contact Me” button on your sidebar.

Nota bene: There can only be one “Submit” button per page in HTML, so, if you install the contact form on your sidebar, your search button is no longer going to work. If you have to kick something off the sidebar and onto a WordPress Read more

December 4, 2008

Unlocking the scenius of BloodhoundBlog Unchained in Phoenix, a hands-on, step-by-step, learn-by-doing guerrilla marketing boot camp

by

Suburban Phoenix Real Estate Broker

Author website

This came in by email, but I’m answering it publicly because I expect the question is fairly common:

I am a member of the Cyberprofessionals group. I was unable to attend the session in Orlando and therefore missed your presentation. I have read the materials about the upcoming event in Phoenix and I’m not entirely sure what it’s all about. From what I can see it’s going to be about blogging, and that’s great, but I have perhaps a more broad interest in social networking as well. I know some of the people involved may be experts in that. Could you give me some idea as to the time that is going to be devoted to each of the subject matters.

For a start, let me say that everything I’m saying right now is subject to change. We have some of this ironed out in detail, but much is still to be determined. Moreover, we’re pretty flexible in the way we think. The world we live in upends itself entirely every 15 months or so, and we’re always prepared to turn on a dime. Even so, BloodhoundBlog Unchained in Phoenix is going to break out something like this:

First, as I’ve said, the event is going to be a hands-on, step-by-step, learn-by-doing guerrilla marketing boot camp. Our students will be with us for 72 hours total, and out of that time, we could end up working 54 or more hours. We are going to take on every aspect of your marketing praxis, and we’re going to rebuild as much of it as we can in our time together. If you do the prep work your instructors are going to recommend, and if you come to Phoenix prepared to work, you’ll fly home exhausted but with a completely overhauled marketing profile — online, in the social graph, in print and face-to-face.

That’s ambitious, but we can pull it off because we intend to work like no other marketing conference you’ve ever been to or heard about. You are literally going to do the actual work you are learning about — as you learn about it. It Read more

December 4, 2008

What If The Divine Was Merely…Mortal?

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

I must admit that I agree with Barack Obama.  I’ve been trying to keep my chin up and look for the positive aspects of his Presidency.  I remember thinking, on election night, that he would have an awfully tough time governing from the center with the Pelosi/Reid Politburo pressuring him.

Why is governing from the center important?  Well, that’s what Candidate Obama promised and that’s what 3 out of 4 of the voters wanted:

On the other side of the argument are the exit polls showing the Americans who voted Tuesday described themselves as 44 percent moderate, 34 percent conservative and only 22 percent liberal. That would seem to portray a center-right nation.

Here’s his first test:

Democrats are growing impatient with President-elect Barack Obama‘s refusal to inject himself in the major economic crises confronting the country. Obama has sidestepped some policy questions by saying there is only one president at a time. But the dodge is wearing thin. “He’s going to have to be more assertive than he’s been,” House Financial Services Committee Chairman Barney Frank, D-Mass., told consumer advocates Thursday.

Make no mistake about it, Barney Frank is a member of the Pelosi/Reid Politburo.  He is at the center of the everything is fine with Franklin controversy that eventually blew up in our faces.  Today, Frank and others want to divert funds appropriated for banks to the auto industry.  Their colleagues aren’t buying it.  What happens when the Politburo doesn’t have the support of the Faithful?  It turns to its Messiah…but the Messiah is just a man… and that man doesn’t want to dirty his hands with axle grease.

Presidents-elect typically spend the transition period assembling their cabinets, their White House staff and preparing to take the reins of power. But this transition is occurring at an extraordinary time, with bad economic news mounting by the day and with one of the country’s major industries begging for a hand to keep from collapsing.

Two Democratic senators involved in trying to salvage the auto companies have said Obama could help move the process along and should become more engaged.

“The Obama team has to step up,” Sen. Christopher Read more

December 4, 2008

Latest Findings From the Buyer, Seller Profile

by

CEO, PA Association of Realtors

Author website

Good stuff from Greg’s Rotary Club…

Who are today’s buyers? Sixty-one percent are married couples, 20 percent are single women, 10 percent are single men, and 7 percent are unmarried couples. Learn more about who’s buying homes today and what they’re looking for in a sales professional in an NAR Research analysis based on the latest NAR Profile of Home Buyers and Sellers.

December 4, 2008

Rustling up some Frontier Spirit in the old midwest

by

Rust Belt Realtor

Author website

From The Wall Street Journal’s Op-Ed page: America Needs Its Frontier Spirit. Daniel Henninger spells it out. And quite nicely, I might add. An excerpt:

The greatest danger in the current economic crisis is that the United States will lose its historic appetite for risk. The mood now is that risk-taking got us into this mess. Risk, though, is the quintessential American trait that built the nation — from the Battle of Bunker Hill to the rise of the microchip. If we let risk give way to a new ethos of commercial reserve and regulatory restriction, the upward arc of the U.S. ascendancy will flatten. Maybe it already has.

By “we” I mean the policy makers in Washington who will write the new rules of finance, our stunned bankers and businessmen, and the average Joes of Main Street who with reason have lost confidence. If all lose faith at once in the American idea of risk, refinding it when the recession ends may prove difficult.

This is the moment for Americans to rediscover the “frontier thesis” of Frederick Jackson Turner. In a seminal paper delivered in 1893 to the American Historical Association, “The Significance of the Frontier in American History,” Turner argued that the U.S. found its identity as it pushed away from the Eastern seaboard and crossed a series of frontier “fall lines”: the Allegheny Mountains, the Mississippi, the Missouri, the plains, the Rocky Mountains and California.

Every American absorbs the frontier experience from reading biographies of great Americans or from movies. Frederick Turner, however, made it clear that with this effort to transform the wilderness the Americans broke decisively with what he called, believe it or not, “old Europe.” “Here is a new product,” Turner wrote, “that is American.”

“From the conditions of frontier life,” Turner believed, “came [American] intellectual traits of profound importance . . . coarseness and strength combined with acuteness and inquisitiveness; that practical, inventive turn of mind, quick to find expedients; that masterful grasp of material things, lacking in the artistic but powerful to effect great ends; that restless, nervous energy, that dominant individualism, working for good and for evil.” Read more

December 4, 2008

Stirred but not Shaken

by

Chicago Broker Owner Realtor | RE 2.0 Blogger

Author website

There’s probably no pressing need to own up to this right now but I’m isolating in front of my laptop at 3 AM and anything but Facebook and internet Texas Hold ’em seems like a heart healthy idea. So I peck away into my imagination. There’s a dull pang of ungratefulness sticking in my side this holiday season. Wait… better make that a thorn. No, a twinge. A twinge of Fate. (Or should that be a twist?) A twist of Fate. No, that’s Dylan. Man, all the really good sayings are already taken. Anyway, here’s what I’m copping to; my short, snapped-off end of the turkey wishbone:

As a kid, I never daydreamed about growing up to be {whisper}… a Realtor. There, I said it—almost out loud. Scurrying about my parents’ postage stamp backyard from bush to tree and back again dressed in full army combat uniform, cowboy boots, football helmet, with Secret Agent Man attache case tucked safely away under the old National Geographics (and pictures of half-naked female Aborigines) in the work shed, I was always a little whimsical about which distant star I might hook my future prospects on to. I didn’t start daydreaming about growing up to be a Realtor until I’d already been in the Insurance business for 15 years and one dark day discovered myself scurrying about my own postage stamp backyard as a salesman with almost nothing tucked away except some nickel and dime house equity and no naked ladies of any kind to be found. And an insurance salesman, no less. A life insurance salesman…(I think I’ll stop there.)

I wanted a career where I could ditch the suit and wear boots everyday if I cared to. And shave my already mostly bald head. And stay at home whenever I pleased. And never have to say “God forbid” unless I really meant it. It pretty much boiled down to those few requirements plus, of course, the potential to make some decent dough and drive a Mercedes. And when choosing a path to comfortable living based on such thin orders, symptoms like Read more

December 3, 2008

Treasury may lower mortgage rates?

by

Mortgage Officer

Author website

WASHINGTON (MarketWatch) – The Treasury Department is contemplating a proposal that would cut mortgage rates for new loans for homes, according to the Wall Street Journal.

The plan would employ Fannie Mae to offer mortgages with rates as low as 4.5%, roughly 1% lower than current rates.

The measure is under consideration as part of the Treasury Department’s continued effort to limit foreclosures, which has been at the core of the financial crisis. The plan would seek to revitalize the financial market without bailing out homeowners and lenders, the Journal reported.

As part of the proposal under consideration, Treasury would buy mortgage securities backed by Fannie Mae and Freddie Mac, in addition to those guaranteed by the Federal Housing Administration.

Fannie Mae and Freddie Mac guarantee a significant chunk of all new mortgages in the United States.

Treasury may set mortgage rates at 4.5% to boost sales – MarketWatch.

Okay, not to rain on everyone’s parade, but let’s take a logical look at the numbers and the statistics behind it.

  1. What’s the only way possible that I’m aware of to lower mortgage rates?  By raising the price of mortgage backed securities which lowers the rates on them.   Lower rates on mortgage backed securities equals lower mortgage rates.
  2. How do you increase the price of mortgage backed securities?  The only way that happens is by increasing the demand for them.
  3. How do you increase the demand for them?  Have the government step in and buy a HUGE (I’m talking many many many zeroes!) amount of mortgage backed securities off of Fannie and Freddie.
  4. How is the US government going to come up with that money?   All joking about printing presses aside, in reality, they are going to have to borrow the money.
  5. How do they borrow the money?   By issuing a LOT of US Treasury bonds to finance their purchase of mortgage backed securities.

So, what happens with the price of US Treasuries if suddenly there’s another $1 Trillion on the market?

  • Demand stays the same
  • Supply goes way way up because the government is flooding the market with more debt.
  • Price goes up down because there is more supply than demand.
  • Rates go up.

(Thanks Sean for correcting my Read more

December 3, 2008

BloodhoundBlog Unchained in Phoenix will be a hands-on overhaul of your online and offline marketing – enroll now to be sure you get a seat

by

Suburban Phoenix Real Estate Broker

Author website

We’ve got the dates for BloodhoundBlog Unchained in Phoenix: April 28th to May 1st, 2009.

We’ve got the location: The Radisson Phoenix Airport Hotel North, 427 North 44th St, Phoenix, AZ 85008.

And we’ve got the game plan: A three-day Guerilla Marketing Boot Camp during which you’re going to completely revise your marketing profile — in class. We’re not going to tell you how we work. We’re not going to show you how we work. We’re going to work with you, hands-on, step-by-step as we overhaul your marketing strategy from the ground up.

What are we missing? You. Skip ahead if you’re ready to register for the most intense real estate marketing conference you will ever attend.

Got questions? Here are some BloodhoundBlog posts discussing Unchained in Orlando and anticipating the scenius to come in Phoenix:

Want to know even more? Why not. We’re in the marketing business, after all.

Who should come to BloodhoundBlog Unchained in Phoenix? If it’s part of your job to attract and convert new business, we have what you need. On BloodhoundBlog, we talk a lot about Social Media Marketing, but in our own businesses, we work with Social Media Marketing, Search Engine Optimization, Search Engine Marketing, Direct Marketing and good old-fashioned belly-to-belly sales. We also work directly with internet-based tools from PHP to RSS to CSS — acronym soup.

Why should you come? We’ll be going through every bit of this at BloodhoundBlog Unchained in Phoenix. Not lecturing as you race to keep up in your notes, but actually doing the work, hands-on, on your own marketing materials.

How will you benefit? Not only will you completely overhaul your existing marketing profile, you’ll learn how Read more

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Inventing Real Estate 2.0

Welcome to BloodhoundBlog, the national real estate industry marketing and technology weblog written by, for and about real estate professionals. Better yet, welcome to the wired world of real estate. We are busily inventing Real Estate 2.0 – technology, marketing, service and salesmanship. Like all Bloodhounds, we are smart, frisky and fiercely independent. We've built a spot on the earth – beloved over all – where each one of us can be who we are, no matter who that might be. We are committed to an idea of excellence that will flush the bums, the con-men and the crybabies out of the real estate industry. If you yearn to have your failures excused, your moral lapses absolved or your boo-boos kissed, seek elsewhere. But if you are sick to death of mediocrity – welcome home. Read all about us, subscribe to our feed and steel yourself for the hunt. We work hard, we play hard, we learn everything we can – and we bow to no one.

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