The HBH Group Real Estate News

The $700 billion bailout has a goal of restoring market confidence and stability, but is it enough, and does it even address the right problem?

Because of the make up of the pieced mortgage security pools, it is impossible to determine the value of the securities. It is impossible to determine how much is needed to purchase the bad mortgages. It is impossible to determine the potential loss.

The markets are not really responding well to the hope of the rescue plan. The Asian markets have dropped. The Wachovia sale has been announced today, despite the hope of this rescue. Two European banks are being nationalized.

Do the markets see this $700 billion rescue as enough to address the problem?

The mortgages are bad because the home owners are not making payments. The mortgage securities' asset values cannot be established because the income stream from homeowner monthly payments is not dependable.

Home values are uncertain because of the increasing inventory, caused in part by the growing foreclosure problem.

The rescue plan is short on details about how foreclosures are to be addressed.

Will the Treasury be able to modify individual mortgages that will change the yields on mortgage security pools?

There just is too little information about how this plan will be able to impact mortgage terms that are the root cause of foreclosures.

As I write this post, the Federal Reserve has just increased the limits on short term lending outlets by several hundred billion dollars. This action is being done in coordination with other national central banks.

Is this money really addressing the cause of the crisis?

It just does not seem to me that it is, and that may be the real problem with the $700 billion rescue plan.

 

Richard Smith
American Acceptance Mortgage, Inc
Toll Free 888-474-9920 Cell 423-280-0345
Home financing in Tennessee, Georgia, and Alabama.
Experience matters when it is your home loan.

FHA, VA, Rural Development, Reverse Mortgages, Construction Permanent, Renovation, FHA Renovation
Mortgage lending offices located in Chattanooga, TN
rsmith@aamonline.com

I remember doing a paper in college about the olfactory sense, which is the technical name for our sense of smell.  The olfactory sense is generally believed to be the most closely linked to your memory, and it is some 10,000 times stronger than your sense of taste.  Also, certain scents will produce a highly emotional reaction.  You can probably think of at least one perfume or cologne that reminds you of someone in your past.

Why is this important to real estate?

Well, allow me to explain, if you will (and I guess even if you won't).  I have probably shown several thousand homes to home buyers over the course of my real estate career.  Patterns emerge, and trends occur with buyers.  When buyers are looking at a good number of homes, I have found it helpful and natural to designate each home with a shorthand of some sort:

• "The house with the skyline view"
• "The one with the tile roof"
• "The place with the incredible landscaping"

Of course, all of these are positive attributes, right?  On the flip side of the coin, think about how it would make you feel if your home received one of these descriptions (all of these are real, from buyers I have worked with):

• "The dog pee house"
• "The house with the weird smell"
• "The stinky house" 
• "The spice house" - This was from ethnic cooking of some sort, as I recall

Not as appealing, is it?  It probably won't surprise you to learn that the dog pee house didn't make the top three for my buyers. 

All homes have some sort of scent/odor, so it's hard to make it completely neutral.  Sometimes, frankly, the scent is too strong in the other direction (i.e. it smells heavily perfumed, which is equally distracting).  I think the worst possible combination is when there is a bad smell that is clearly (though not completely) covered with an air freshener:

 

"Is that rotten laundry smell with a hint of lavender?  Ahhhhh....nice."

"WOW!  Is that damp mustiness and lemon freshness combined?  I like it!"

No one says these things.  You must eliminate the source, not just spray Febreze and call it a day.  For the record, I like Febreze for the most part, in case you were wondering.

The best solution is to allow someone else (such as your real estate agent) to give you the lowdown on this.  We tend to get used to the smell of our own home, which is why it is sometimes jarring to sleep in another house when visiting relatives.  If you are wondering if your home has a distinct smell, I would recommend going outside for a few minutes and then coming back in.  The results may surprise you.  This method sort of cleanses your nasal palate, so to speak, and you may discover a problem that you didn't realize existed. 

Essentially, you are just going for a clean scent or something that may evoke a positive memory.  Real estate trainers the world round recommend baking something or at least using a few drops of vanilla on a cookie sheet when doing an open house.  There are tons of other techniques, but this post is really just to teach you the importance of this (often overlooked) angle when selling.

Take it from me: when you are trying to sell your home, smells do matter!  You want them to focus on your granite counters, or your high-end flooring upgrades, or your designer paint colors, not the cat boxes.

 

If you are considering selling your home anywhere in the general Austin area, please feel free to give me a call.  I would love the opportunity to help you get it sold quickly.  You can visit my primary Austin Texas real estate website at www.austintexashomes.com.  You can also reach me anytime on my cell phone at 512-796-7653 or via email at jason@austintexashomes.com.  I hope to hear from you soon!

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Breaking News!

From NY Times blog:

"Citi assumes Wachovia banking operations for $1 a share, a move that that would concentrate power within the nation's banking industry in the hands of a few giant lenders, The New York Times's Eric Dash and Andrew Ross Sorkin reported Monday morning.

The Federal Deposit Insurance Corporation said in a statement on Monday that Citigroup will assume Wachovia's senior subordinated debt, and emphasized that Wachovia did not fail."

So much for having time to digest and understand one of the most important bills that will have a huge impact on all Americans.

Rep. Michael Burgess mentioned that House Speaker Nancy Pelosi declared that she would use House Martial Law for the balilout bill.

That term scared me so I did some digging to find out what he was referring to.

Here is the explantion.  They used this back in 2006. 

This extraordinary procedure is known as a "martial law" rule because it suspends the normal procedures and safeguards and allows the House Leadership to operate in a more authoritarian fashion.  It enables the Leadership to seek to ram a bill or conference report through before the Members have the opportunity to fully understand what they are voting on.

Legislation that has far-reaching implications for millions of Americans deserves to be considered under a more democratic process.  Waiting until the last minute to reveal what is in these bills, and then "spinning" or potentially mischaracterizing changes in the bills without Members of the House or the public having an opportunity to obtain a more objective review of what the legislation does, is unfair to Members of the House.  It also is unfair to the millions of Americans whose lives could be affected by this legislation.  It represents a further step in reducing the degree of transparency and democracy in how this country is governed and how decisions are made.  At a time when our leaders preach the goal of promoting democracy abroad, they should not be reducing it at home.

And this is the system that we are trying to convince the world to embrace.

Mortgage Market for Conservatives

As a former home builder, and current partner in a mortgage company and consultant to a few real estate related companies, I have an avid interest in what has been happening over the last 18 months in housing and especially mortgages. I have been saying over at Northwest Indiana Real Estate, for months now that the problem is too much regulation. Of course this position isn't held in very high esteem, Presidential candidates are scared to even suggest that the government is getting in the way ... and regulators would lose their jobs if we found that they actually caused the problem.

But they did!

I read The Foundry most every day on my reader, and regularly post from those terrific posts to my numerous sites, including my Northwest Indiana Mortgages site. (Sorry for all the self links, but I'm trying to build a case that I actually understand a little bit). The key question in my mind at the end of last week's craziness? WHAT IS A FAIR POSITION FOR A CONSERVATIVE WHO ACTUALLY CARES ABOUT HOMEOWNERSHIP?

Some exerpts from today's awesome post at the Open Market.org $700 Billion for Disastrous Financial System Bailout. Not the Foundry but a well written article with great links:

Either the mortgages are just as worthless as their current market price suggests, in which case the banks that hold them, rather than taxpayers, should pick up the tab (and any insolvent banks should be closed, so that they cannot gamble with depositors’ and taxpayers’ money in the future).

"Or, the mortgages are worth much more than they are currently valued — their current value being set under federal “mark-to-market“ accounting regulations, which require that assets like mortgages be conservatively valued at what they can currently be sold for at the moment, rather than what they would be worth if held to maturity. If that’s the case, then federal accounting regulations need to be immediately relaxed by federal agencies like the SEC that enforce them — as John Berlau argues today in the Wall Street Journal, and as former FDIC Chairman William M. Isaac urged yesterday in a Journal editorial attacking the federally-enforced Fair Value Accounting Rules and Basel II capital rules. (This would also be a good time to revisit the truly senseless accounting regulations imposed by the Public Company Accounting Oversight Board, which cost the U.S. economy over $35 billion per year, and were used by sub-prime mortgage lender Countrywide Financial as a smokescreen to hide its risky business practices)."

 

Bankers need a reason to start lending again. Sure the government can buy all the junk bonds which have small percentages of sub-prime loans with even smaller percentages of unperforming loans. Imagine, the government buying $700 Billion worth of loans ... at 20 cents on the dollar ... they may actually make money on this investment! But all they really needed to do was relax regulations that don't make sense and cost us billions in overhead and management.

Anyone know a politician with the guts to step up and say that? I'm a little frustrated with John McCain this week for not stepping into the Maverick role and telling Americans what they need to hear. Barack Obama is predictably suggesting more and more government, which is not what we need. I'm waiting ...

 

Update:  Great post in Wall Street Journal today

"Once upon a time, in the land that FDR built, there was the rule of "regulation" and all was right on Wall and Main Streets. Wise 27-year-old bank examiners looked down upon the banks and saw that they were sound. America's Hobbits lived happily in homes financed by 30-year-mortgages that never left their local banker's balance sheet, and nary a crisis did we have.

Then, lo, came the evil Reagan marching from Mordor with his horde of Orcs, short for "market fundamentalists." Reagan's apprentice, Gramm of Texas and later of McCain, unleashed the scourge of "deregulation," and thus were "greed," short-selling, securitization, McMansions, liar loans and other horrors loosed upon the world of men."