If you are short of time this is as succinct an analysis as I could offer on the new Federal Short Sale Program offered by the White House to fix the foreclosure problems plaguing the country.

The trillion dollar foreclosure program will not be fixed by any band-aid or government program. The notion that we can fix systemic problems that took years to create overnight by a program or two is crazy, but it seems that Washington thinks this is the way to do it. All this does is perpetuate the problem and draw it out.

Here is the analysis by the NY Times:

The problem is highlighted by a routine case in Phoenix. Chris Paul, a real estate agent, has a house he is trying to sell on behalf of its owner, who owes $150,000. Mr. Paul has an offer for $48,000, but the bank holding the mortgage says it wants at least $90,000. The frustrated owner is now contemplating foreclosure.

To bring the various parties to the table — the homeowner, the lender that services the loan, the investor that owns the loan, the bank that owns the second mortgage on the property — the government intends to spread its cash around.

Under the new program, the servicing bank, as with all modifications, will get $1,000. Another $1,000 can go toward a second loan, if there is one. And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in “relocation assistance.”

Now let’s be serious for a brief moment and look at this situation realistically. A bank that is seeing a short sale and is upside down on the offer by $101,000 is now going to throw manpower it does not have to earn an extra $1,000?

Have these folks on Washington not waited on the phone for Bank of America’s mortgage guys to answer? You have to be kidding me.

The difference between reality on the streets and the ideology in Washington is getting further and further apart. And the sad thing is, if Washington had kept out of the process we would have had a market by now. The short term pain would have been greater but there would be hope for the future.

Now all we have is death by a thousand paper cuts.

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

New Federal Short Sale Program Offers Little To Everyone

Related posts:

1. Making Home Affordable New Short Sale Worksheet The Make Home Affordable program from the Federal Government has…
2. Federal Reserve Offers TALF To Commercial Lending Is this another indicator that the next wave of bad…
3. The HomeSteps-SmartBuy Program Ends This Month If you are looking for a quick buy of a foreclosure…

The deleveraging of America is happening right before our eyes and for some it is welcome news. Of course, there is a consequence to this, the money that was coming out was keeping our economy humming. Think about it for a second. If money is being saved it is not being spent creating jobs and buy “stuff”.

But the irrational purchasing during the past decade may have kept employment high and businesses humming, it was still an artificial bump. The consumers bringing money to the table to refinancing their mortgages is a great example. They will be able to save on costs like Private Mortgage Insurance and have the opportunity to qualify for lower mortgage rates.

The savings on these cost will provide a more disposable income for families, income that will not be predicated on debt that must be re-payed down the line.

America is wising up…

Now the pendulum in consumer psychology appears to be swinging toward reduction of household debt — whether on credit cards or mortgages.

In Freddie Mac’s latest quarterly survey of refinancings, 33% of homeowners put cash into the deal to lower their mortgage balances, the highest percentage ever. By contrast, only 27% of refinancers took cash out — the lowest percentage on record.

Why shift money from savings into your house? Nothaft says a small percentage of refinancers — including himself and his wife — traditionally have preferred to lower their mortgage balances whenever possible.

There are at least two key rationales for doing so, Nothaft says. No. 1: If interest rates are low and you’re getting minuscule returns on your bank savings or money market funds, paying down your home loan may well provide you a better return on your investment. via the LA Times

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

Cash-In Refinancing Gaining in Popularity

Related posts:

1. Bank of America Modified 600,000 Mortgages in Last 2 Years Missing Goal Significantly Bank of America announced today they have modified more than…
2. How Will Fannie and Freddie Deal With The Second Mortgages? The news is inundated with talk of Federal bailouts of…
3. Real Estate Commissions Drop 6.2 Percent in 2009 The total commissions paid to real estate agents dropped in…

The idea was brought up by Brian Taylor of the hedge fund Pine River. And it does align with my observations.

We had a slight uptick in the market in the 4^th quarter of the year. This coincided with tremendous incentives offered by the Federal Government for new home buyers. Essentially the government subsidized the upturn not the marketplace.

Now that the effects of the government subsidy have run their course, the market is back in control. And the market does not have confidence we have hit a true bottom. Nervous buyers and sellers do not create a great deal of confidence and lower prices are typically the result.

My bet is with the Pine River team. This year will be one of nerves and concern until the marketplace sees the strong potential of profits.

Hedge fund firm Pine River, which makes big bets on housing, is bracing for a double dip in that market, its chief executive officer said on Tuesday.

“There are still issues in the housing markets and it would not surprise us to see the recovery turn down,” Brian Taylor, who founded the $1.6 billion hedge fund eight years ago, said at the Reuters Private Equity and Hedge Funds Summit in New York.via Reuters

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

Related posts:

1. Washington Programs That Are Destroying The Real Estate Market In another sign that all business is being run through...
2. Chicago Rents to Skyrocket Due To Double Digit Property Tax Increases When it comes to stupidity, the government of the city...
3. Real Estate Investors Driving Market? We are all thrilled that real estate sales volume has...

I am sure this news is not what real estate agents are hoping to hear, I tend to agree. The housing market still has way to much overhang from foreclosures and short sales for buyers to have confidence investing in homes. Add to that a nervous economy, it would be foolish to think that all will be okay this summer.

So real estate agents,  tighten that belt and continue to build your systems this year, so you are ready for 2011.

“Within a year or so, residential housing problems should largely be behind us,” Buffett wrote Saturday in his annual letter to the shareholders of his Berkshire Hathaway. “Prices will remain far below ‘bubble’ levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits. Indeed, many families that couldn’t afford to buy an appropriate home a few years ago now find it well within their means.”

Record foreclosures flooded a U.S. real estate market already glutted with unsold property, causing housing starts to fall.

“People thought it was good news a few years back when housing starts — the supply side of the picture — were running about 2 million annually,” wrote Buffett, 79, chairman and CEO of Omaha-based Berkshire. “But household formations — the demand side — only amounted to about 1.2 million.”

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

Warren Buffet Predicts Real Estate Rebound — In 2011

Related posts:

1. Some Interesting Real Estate Employment Statistics Dana Mattioli in the Wall Street Journal has an article…
2. University of Central Florida Offering Masters in Real Estate One of the complaint you hear about real estate agents…
3. Signs Of A Commercial Real Estate Crash As the real estate industry has weathered an epic crash…