Stuck With McMansion

Posted on March 3, 2010
Filed Under foreclosure investment property | Leave a Comment

Were you lured by low mortgage payments into buying a palatial mansion, only to be stuck with a big house and earth shattering mortgage payments? You are not alone. Many well-educated individuals are in the same position.

The subprime mortgage crisis and its foreclosure cousin has affected more than the less than perfect credit borrowers the media has presented. Subprime lenders expanded their market base by offering products exclusively for borrowers with good to perfect credit. These mortgages - option arm, no money down, and 125% home equity - were offered to improve families’ home ownership opportunities. They did. Homeownership peaked at an all time high of 69.2% in 2004 from 64%.

The subprime crisis has become national as it affecting 60% of the American population. People are losing their dream homes and their sanity. They are stressed, attempting to cover mortgage payments that are increasing wildly, they cannot afford. Property values nationally are dropping sharply trapping people into a negative situation. Their American dream of owning a home, a major investment in America, is being crushed. People are stressed, depressed, and frustrated. People are in a financial funk.

Ida Byrd-Hill, President of Uplift, Inc. a 501(c)3 Idea Incubator has published a book, Breakin’ Out of Your Financial Funk, to help people mentally and emotionally deal with the financial panic they are now feeling due to the mortgage crisis.

Ida Byrd-Hill spent 15 years as a financial advisor and mortgage lender attempting to educate people to view their mortgage as a part of an integrated financial plan and not the plan alone. She believes when property values increased double and triple fold, Americans were baited into the false sense this boom would continue forever. People secured adjustable rate option arm, no money down and 125% home equity mortgages, not realizing greedy mortgage companies would increase their rates astronomically even when interest rates remained low.

Affluent well-educated people have been bamboozled by the trusted financial industry. Affluent well-educated people were baited into low mortgage payments with option arm mortgages. Option arm mortgages is the street term for the negative amortization loan which promised start interest rates as low as 1.25% to 4% compared to 5.25% to 8%. See the difference in the table below.

$500,000 Loan Amount

Rate
1.25% $1666.26 5.25% $2761.02
2.25% $1911.23 6.25% $3078.59
3.25% $2176.03 7.25% $3410.88
4.00% $2387.08 8.00% $3668.82

People trusted mortgage companies when they should not have been trusted. Adjustable rate mortgages once adjusted annually. Along the way, mortgage companies slipped in semiannual interest rate adjustment. Instead of a maximum rate increase of 2% annually, people are realizing a 4% rate increase annually. If your rate began at 3.25% and every year the interest rate is increased 4% a year, in three years, a person will reach the maximum legally allowable interest rate of 13.99 %. For a $500,000 mortgage, the payment in three years would jump to $5920.40 almost triple the original payment of $2176.03. Most people cannot handle an adjustment of that magnitude especially not over 3 years. The interest rate cap was once 9% but the mortgage companies lobbied Congress to increase it to make more money.

Option arm mortgages were designed for the super wealthy, who understood there would be balance of interest left over from paying only 5 percent of the interest due. The super wealthy gambled that their property value would increase faster than this interest balance increase and they would generate a sizable profit from this real estate transaction. The common individual would not be so lucky. Property values nationally have rapidly declined. People can not even refinance themselves out of this situation as their mortgage balance is higher than the worth of their house. Hence, they are stuck with a big house, a declining investment, earth shattering payment and an increasing mortgage balance.

Even when the foreclosures began to mount, mortgage companies could have renegotiated mortgages to adjust the rate annually rather than semiannually. They were not going to cut into their profits to save America.

Before you react irrationally and enter into a business decision that will ruin your life forever. Fight the funk. Read Breakin’ Out of Your Financial Funk, a book written to ease people out of the financial panic into a thinking, dreaming, and planning mode again. Or, better yet, give yourself a mental break at one of our Breakin’ Out of Your Financial Funk seminars coming soon to your region. Purchase the book or register for the seminar at http://www.upliftinc.org or http://Amazon.com.

Ida Byrd-Hill
http://www.articlesbase.com/finance-articles/stuck-with-mcmansion-580983.html

Loan Modification for Do it Yourselfers

Posted on March 3, 2010
Filed Under home foreclosure investing | Leave a Comment

Visions of a glamorous lifestyle, back yard barbecues and pool parties that were fueled by teaser loan rates, not to mention negative amortization loans, wooed millions of homeowners into a false sense of security in the early years of this millennium.  House prices soared overnight and the dream of having a solid piece of real estate in a safe neighborhood, close to good schools, took on the utmost importance in the minds of millions of would-be homeowners.

The results of years of unchecked desire to become a buyer combined with irresponsible loan management have put American homeowners into a financial panic.  Over 2.2 million foreclosures were filed in 2007 and that was up 75 percent over the previous year.  The year 2008 is certainly sliding into the record books as well.

If these facts threaten to include you this year, STOP!  If you don’t want to join them, then this is the time to make some clear determinations about what you will do.  It could take approximately 30 days for you to gather and present your case to your lender with the expectation that in the end you will have renegotiated your loan to include figures you CAN live with.

          You can request a modification from your lender without having to use an attorney or loan modification company.  You will need to gather all the same documentation that they would request from you to handle your case, so why not save the $2500 - $4500 that would be charged by using an attorney or loan modification company. 

          You may ask if it wouldn’t be better to pay a financial expert to do this for you.  Maybe, but if you had the extra money to do this, you probably already took that route. And, like everything else in life, they cannot guarantee that this will work.   On the other hand, and without investing a lot of money, you can do this yourself and save thousands in the process.  The Loan Modification experts could not proceed without a great deal of input from you, so before you prepare to part with any more of your hard earned cash, consider handling the process yourself.

          Do not wait until the lender is ready to complete the foreclosure on your home, it may be too late to save your home by that point.  You will want to contact your lender as soon as you know that you are running into a problem with your payments. 

          There are many options that the lender may present to you other than a loan modification.  If your financial loss was due to some hardship, an illness, divorce, death of spouse, or some sort of unexpected tax levy, sick child or disability or other hardship, you can talk with your lender about a loan modification or one of the other options explained below.

          FOREBEARANCE - Forebearance happens when you have fallen behind in payments and are moving into the dangerous area of foreclosure.  It is designed to bring your past due payments current over a specified period of time.  As one of the most common options, it encompasses a written agreement that you will make your full payment each month and a partial payment on your delinquent amount.

          An example of this is that if you have missed three payments you will agree to make the full payment and then you will spread the amount of the missed payments over a 6 to 12 month period in order to catch up and be completely current.

          Do you have an FHA/HUD loan?  You may want to consider PARTIAL CLAIM, which is an interest free loan available to owners of that type of loan.   If this is negotiated, the delinquent portion can be tacked on to the end of the original loan and will go into effect after the first loan is paid in full.

          Next, look at SHORT SALES.  Your lender may allow you to sell your home to someone for less than you currently owe.  The main focus in this scenario is to talk with your lender first because he MUST agree to take a payoff that is lower than the current mortgage balance before the sale is final.

Last, but not least, is the LOAN MODIFICATION.  This changes the terms of the loan to include lower payments, longer term loans, interest only, principle reduction or any combination that the lender is willing to work out with you.   

It is very important to present a complete package to your lender when requesting any type of modification from your lender. You need to be prepared to document every hardship you claim with all of the encompassing legal paperwork.

 “The Complete Handbook on Loan Modification” that is presented by LoanModificationDIY deals with helping you get a successful Loan Modification. 

To learn about the different options that the lender may propose to you and how to prepare the best loan modification package, please visit <a href:”www.loanmodificationdiy.com”>LoanModificationDIY.com. </a>

Eli Zaken
http://www.articlesbase.com/mortgage-articles/loan-modification-for-do-it-yourselfers-736604.html

Real Estate Investor Jargon Every Newbie Should Know

Posted on March 3, 2010
Filed Under foreclosure investing | Leave a Comment

Real estate investing is a new, exciting, and wonderful adventure when you’re first getting started. For me, the new hasn’t worn off. I love real estate investing as much as I ever have. But, if there’s one thing I would have changed, it would be my knowledge of the terminology thrown around by more seasoned investors. If you’re tired of feeling like a dunce for having to look up the meaning of a real estate term every time you hear one, here’s a primer that should help get you up to speed.

Acceleration clause – a provision in a mortgage loan that allows the lender to demand immediate payment of the entire outstanding balance because of the violation of a loan provision, such as defaulting on the mortgage.

Addendum – an addition to a contract adding a provision that wasn’t in the original document. Once agreed to by both parties, the addendum then becomes a part of the original contract and is enforceable in court (assuming the provision is legal).

Appreciation – the increase in value of an asset.

Balloon payment – a required large final payment of a contract, frequently a large percentage of the original amount borrowed. Many times a contract will consist primarily of interest only payments for a period of time followed by a large payment that pays off the entire balance. For instance, someone might make interest only payments on a property for five years and then have to pay the entire balance off at the very end.

Cash flow – the amount of money left over on a monthly basis after paying all operating expenses on a property. This amount can be expressed as either a positive or a negative number. For example, if a property has total income of $1500 per month and expenses and debt service of $1000 per month, monthly cash flow on the property would be $500.

Closing – a meeting between the buyer and seller of a property where legal ownership is transferred. When this happens, there is typically a large stack of legal documents that needs to be signed by both parties. At this time, the seller receives certified funds as payment for their property, all closing costs are paid, and the buyer signs mortgage and other legal documents and receives a large stack of papers related to the purchase.

Closing costs – expenses that must be paid in order to legally transfer ownership of a property from the seller to the buyer.

Depreciation – a provision in the Internal Revenue Code that allows the owner of a property to take a tax reduction for the value lost through the year. One unique aspect of this provision is that the federal tax code allows a real estate investor to take a depreciation allowance on their tax return even though their property actually increased in value.

Due on Sale Clause – a provision in a mortgage contract requiring that the entire loan balance be paid immediately on demand in the event of the sale of a mortgaged property. Certain things can trigger the due on sale clause in the contract, such as the legal transfer (or equitable transfer) of ownership from the original loan borrower to another party.

Earnest money deposit – when someone places a written offer on a property, the seller will normally require that the buyer provide a small deposit (usually $500 or $1000) to prove to the seller that they are serious about making the purchase. These funds are normally placed into an escrow account by the real estate agent and will become the property of the seller in the event that the buyer fails to execute the contract as agreed.

Foreclosure – the legal process involved in repossessing a property, usually for nonpayment of a mortgage contract. There are two kinds of foreclosure: judicial and nonjudicial. Specific foreclosure laws vary from state to state, but in general the foreclosure process takes considerably longer in a judicial state because the lender must go to court and prove that the borrower has failed to make their payments as agreed. In a nonjudicial state, the process is much shorter and simpler because the lender is not required to receive court approval prior to forcing the removal of the borrower from the property.

GRM – also known as the Gross Rent Multiplier, which is a ratio you can use to estimate the value of an investment property. To figure the GRM, you need two pieces of information about the property: the sales price and the market rent rate. The way you figure the GRM is by taking the sales price and dividing by the monthly rent. For instance, pretend you have a property with a list price of $125,000 that would rent for $1600 per month. 125,000/1600=78. In this case the GRM would be 78.

Home Equity Loan – a type of loan where the owner of a property borrows money from a lender based upon the value of the property. Proceeds from a home-equity loan are typically used to make repairs to the property, pay off other debt, or to fund additional real estate investments.

HELOC – Home Equity Line of Credit is a type of loan where the borrower pledges the equity in their home as collateral. In exchange for receiving a HELOC loan, the homeowner usually receive a checkbook that they can use to access funds. While the homeowner is typically notified at the time that their loan is approved how much money they are qualified to receive, they don’t normally receive cash at that time. Instead, they use the checkbook to access HELOC funds, so they only pay interest on the portion of the loan that they are utilizing at any given time.

HUD-1 settlement statement – this form is also known generically as the closing statement. Put simply, it is nothing more than a detailed accounting sheet that discloses where every dollar of a real estate transaction is going. It lists things such as real estate commissions, mortgage broker fees, escrow amounts, etc. At the very bottom of the sheet it details the total amount of money paid by or on behalf of the buyer to the seller.

Lien – a type of encumbrance that can be placed on a property by a creditor that prevents the property’s sale without the payment of a legitimate debt. For instance, if a homeowner loses a lawsuit and is bordered by the court to pay the winning party a certain amount of money, many times the winning party will place an encumbrance upon their real estate to ensure that the judgment is paid.

LTV – a numeric value that can be used to determine how heavily leveraged a property is. If a borrower takes out a loan in the amount of $100,000 and the property is worth $125,000, the LTV is 80%.

NOI – the Net Operating Income of an investment property is the amount of money left over each month after making all debt payments and paying all operating expenses, such as insurance, maintenance, and repairs.

Owner financing – a method of financing where the seller acts as the bank and agrees to take payments for their equity over a period of time. This is a very common and creative real estate financing technique utilized by a lot of real estate investors who for one reason or another have decided to forgo institutional bank financing or the use of hard money lending sources.

PITI – an acronym that stands for principle, interest, taxes, and insurance.

ROI – an acronym that allows a real estate investor to determine their return on investment, which is expressed as a percentage. For instance, if you invest $100,000 and you receive $10,000 in annual returns, your ROI would be 10%.

Title insurance – an insurance policy that the purchaser of a real estate property can purchase to guarantee that there are no outstanding liens or other encumbrances that would affect the transfer of ownership from one party to another.

As you can clearly see from this list of real estate investing terminology, there is a huge vocabulary for you to learn as you begin to fully immerse yourself into the world of real estate investing. This is by no stretch of the imagination a full list. It is, however, enough of a starter list that you can feel a little more comfortable with getting up to speed. Your eyes won’t completely glaze over if you happen to overhear more experienced investors talking, and in many cases you can smugly smile – knowing that you’re a member of a select club of special entrepreneurs who have their own secret language. Plus, you won’t have to wear a special uniform or try to explain to people where the Klingon empire is located.

To learn even more of the jargon used by real estate investors, navigate over to www.REIconferences.com and look around a site built by investors for investors. It’s packed with all the tips, tools, and information you need to turn the corner and reach all of your investing dreams.

Charrissa Cawley
http://www.articlesbase.com/real-estate-articles/real-estate-investor-jargon-every-newbie-should-know-671669.html

Plunging Auto & Gas Sales Hurt Retail Sales in November

Posted on March 2, 2010
Filed Under foreclosure short sale investing | Leave a Comment

Dragged down by plunging gasoline prices and an auto industry struggling for survival, retail sales fell by 1.8% in November for a record fifth straight month, according to the U.S. Commerce Department.

But a historic drop in retail gasoline prices and auto sales may have exaggerated the decline.  Filling-station sales mirrored the recent drop in prices from $4 a gallon in July to less than $2 a gallon recently. Auto sales fell 2.8%, confirming automakers’ assertions that business had sunk to the lowest levels in decades.

Excluding gasoline, which fell by almost 15%, retail sales fell just 0.2%.

In fact, without sales of autos, gasoline and building materials, sales actually rose 0.5%, the most since May.

“The financial markets were braced for a horrific retail sales report for November, but the numbers were actually not so bad,” Mark Vitner, a senior economist for Wachovia Corp. (WB), told MarketWatch.com.

Retail fell a projected 2%, according to the median estimate of 73 economists in a Bloomberg News survey. Economists consider retail sales to be a bellwether for the overall economy since it accounts for about 50% of all consumer spending.

There were some promising stats, however. Aside from the automotive sectors, sales surged in almost every other important category.  General merchandise store sales rose 1.3%, the biggest gain in three years. Electronic stores had a 2.8% jump in receipts.

Purchases at department stores rose by the most in three years as Americans took advantage of discounts by retailers from Macy’s Inc. (M) to Best Buy Co. Inc. (BBY) to start shopping for the holidays.

But while it appears retailers have been successful in getting consumers to loosen the spending reins with aggressive discounts, the devil may be in the details.  Retailers have been consistently warning that their profits will suffer from the heavy discounting they’re using to entice shoppers.

Neiman Marcus, the luxury retailer owned by ) and TPG Inc., which recently used heavy discounts to reduce inventories, said this week that profits dropped in the quarter ended Nov. 1.  Purchases of expensive goods are also falling because of tight credit restrictions imposed by banks.

Retail analysts have been increasingly concerned about “cherry-picking,” where consumers storm the aisles for heavily advertised items, but leave the store without making other purchases.

That has led some to question the validity of the numbers themselves.

“We are somewhat suspicious of the November results and believe that a seasonal adjustment quirk may have influenced the results,” wrote David Greenlaw, an economist for Morgan Stanley (MS), MarketWatch reported.

Same-store sales in the U.S. fell 2.7% in November from a year earlier, the biggest drop since records began in 1969, the International Council of Shopping Centers said last week.

And aworsening labor market is unlikely to sustain any rebound.  The employment outlook is likely to drag down holiday shopping, a time when many stores expect to reap up to half of their annual revenue.

The unemployment rate climbed to 6.7% percent in November, the highest level since 1993. Employers have cut 1.9 million workers from payrolls so far this year.  Surging unemployment usually leads to a plunge in consumer confidence and spending cutbacks.

A dismal holiday shopping season also bodes ill for retail sales throughout 2009.  That could likely lead to a consolidation in the sector with many retailers closing their doors for good.

In fact, bankruptcies of stores such as Sharper Image Corp. (OTC: SHRPQ) and Circuit City Stores Inc. (OTC: CCTYQ) are already having a negative effect on the sale of gift cards, with consumers afraid to bet on long-term survival of some retail franchises.

Counting on the survivors being the heavy discounters such Costco Wholesale Corp. (COST) and the world’s largest retailer, Wal-Mart Stores Inc. (WMT).

“This is Wal-Mart time,” Chief Executive Officer H. Lee Scott Jr. told Wall Street analysts during an Oct. 27 presentation at company headquarters in Bentonville, Ark., BusinessWeek reported. “This is the kind of environment that Sam Walton built this company for.”

News and Related Story Links:

  • MarketWatch:
    Retail sales fall 1.8% in fifth straight decline

  • Bloomberg:
    Retail Sales in U.S. Probably Fell for Fifth Month in November

  • BusinessWeek:
    For Exiting Wal-Mart CEO, a Victory Lap

ShareThis

More on this topic (What’s this?) Auto Bailout Compromise Fails (naked capitalism, 12/11/08) Short Interest Down on Financials and Auto Companies (naked capitalism, 11/28/08) Auto Bailout Discussion….Schiff Is Right Here (Todd Sullivan’s - ValuePlays, 12/12/08) Plunging Auto & Gas Sales Hurt Retail Sales in November (Contrarian Profits, 12/15/08) Read more on Auto Makers, Gasoline Prices at Wikinvest

IMF Quietly Creating Three 100%+ Winners

The International Monetary Fund is about to pump $100 billion into a few select countries. This “no strings attached” bailout is creating three 100%+ gainers in the coming days - if you know how to play it. Get all the details in this report: The Trigger Event Strategy: The Only Proven Way to Make Money in an Insane Market. Just go here…

Investing News

Money Morning
http://www.articlesbase.com/investing-articles/plunging-auto-gas-sales-hurt-retail-sales-in-november-686009.html

Your Guide to Setting Real Estate Investing Goals

Posted on March 2, 2010
Filed Under foreclosure real estate investing | Leave a Comment

Without them, our endeavors would all be in vain as we sit idly by and watch our interests stagnate.

In the world of real estate investing, goals are extremely important. Every investment opportunity requires several goals pertaining to scheduling, budgeting, construction, and marketing. If you are to make money in real estate, you have to stick to your plan and achieve the goals that you have made for your project. If you fail to do so, you could sacrifice a great deal of your profit or ultimately see your investment fail.

The first step to setting goals in real estate investing is that they have to be realistic. Don’t try to cram 8 weeks of construction into 4. If you really want to complete construction in 4 weeks instead of 8, trim away excess and unnecessary renovation projects rather than try to work quickly or around the clock. Setting unrealistic goals only sets you up for failure, and a sense of failure can ruin the entire outlook and motivation for a project.

Goals of the financial variety are also extremely important in real estate investing. In any sort of money-making venture, you need to know how much money you are going to invest and how much money you would like to make in the bargain. But more important than these short-term financial goals are the long-term goals.

These goals center on how much money you want to invest over a long period of time with what results. For example: You may have made your first investment with a small sum of money, and part of this money may have been financed through an equity loan, personal loan, by other means, or through a combination of sources. If you continue using these same sources of funding without upping the ante any, you will not move forward in your investing business. This is where long-term goals come in.

Long-term financial goals do not focus on your immediate real estate investing project. They instead look to the future. A great example of this type of goal would be having your loans paid off and be investing purely with profit after your third investment. Another example would be to be able to purchase more expensive properties or multiple properties instead of focusing on just one low-budget project at a time.

When setting your goals, keep in mind that no two investors will have the same goals. While you can draw inspiration from your peers, don’t try to absorb their business strategies as your own. Instead, look to your own future and set goals that will lead your real estate investing ventures in the direction that you wish them to go.

James Klobasa
http://www.articlesbase.com/non-fiction-articles/your-guide-to-setting-real-estate-investing-goals-99266.html

2008 Market Crash Recap

Posted on March 2, 2010
Filed Under foreclosure investment property | Leave a Comment

2008 is over at last. It has been an extremely turbulent year and everyone’s swept under its currents such that it was hard to see what actually happened, so, here’s a recap of what happened in the stock market in 2008.

Summing up, the Dow lost a total of 4488 points this year, down 33.84%. The Nasdaq composite lost a total of 1075 points, down 40.54%. The S&P500 lost a total of 565 points, down 38.49%. The more volatile Nasdaq Composite became the loss leader this year just as it is expected to be the gain leader in a rising market, so, no surprise there. Both the Nasdaq Composite and the S&P500 went lower than the low of the last crisis in 2002. Only the Dow managed to stay above the last crisis level marginally. I had expected it to also make a lower low but it did not.

How did it all begin? Indications of this 2008 market crash actually started showing up as early as July of 2007 when short term bond yields begun yielding higher than long term bond yields in a bond yield curve that is almost perfectly horizontal above the 4% yield line. Such a bond yield curve indicates excessive optimism in the capital market as the 20yr bond hit an all time low price (relative to recent years). Bond prices go down when demand for bonds goes down. Demand for bonds goes down when capital gets reallocated, usually into the equities market (for simplification sake), resulting in high bond yields. At that time, the Dow was trading well above the 13000 points level, just one step from the 14000 level resistance which marked the beginning of the 2008 market crash. At the same time, foreclosure rates had been and continued to rise nation wide, putting pressure on the value of the most complex derivative instrument ever created amongst investment bankers, CDOs or Collateralized debt obligations.

All 3 major indices hit their peak in October of 2007 and begun their long retreat. The retreat didn’t look at all menacing for a start as all 3 major indices backed down to their respective short term support levels and even rebounded slightly, making it all look like a classical pullback in a strong primary bull trend. At that time, the Fed’s still all confused with what to handle, inflation or growth, and talks of Stagflation begun showing up as real GDP went sideways in Q3 2007 and then retreated in Q4 2007. This was when 2 groups of economists; Recession Talkers and Goldilocks, begun their battle of tongues over the major wires. Of course, now we know who knew better. Sensing danger, investors begun taking positions in bonds once again, bringing bond yields down from their previous highs. The Fed also begun taking Fed Fund Rate down from its high of over 5% in August gradually (too gradually, argued by some economists). At this time, a perfect storm is brewing as the more the Feds cut rates, the lower the dollar goes and the higher commodities prices went (as well as prices at the pump of course), putting further pressure on the real economy.

The first warning sign of a recession surfaced in January 2008 as unemployment rate hit 5% for the month of December 2007. 5% is a psychological level that says that something might be wrong in the economy as full employment rate (normal unemployment with minimal cyclical unemployment) is around the 4.5% level (number arrived at from my own research). That was probably one of the catalysts that caused all 3 major indices to break their respective short term support levels downwards in the first month of 2008, threatening the integrity of the primary bull trend that was in place since 2003. At the same time, inflation continued to be a problem as oil continued it march to the $140 per barrel level while talks of CDOs becoming worthless due to significant doubt about the fixed income ability of mortgage loans built into them begun hitting the wire. In fact, it was around this time when analysts begun finding CDOs being over-rated by rating agencies (well, like one of the high profile analysts said, they belonged to the same club).

By February of 2008, it has become apparent from the charts that the intermediate term bull trend has been compromised as investors rushed for quality, depressing short term bond yields to almost half of what they were just a couple of months ago. On the charts, however, it could still be argued that the Dow merely made its first major intermediate term correction since the primary bull trend started in 2003. Such a technical correction is also an acceptable argument under the Dow theory as some technical chartists expect the major indices to make a rebound from that level, which, did not happen (even though the Dow did rebound just a little bit for a couple of months as technicians took position). At this time, however, the economy’s already not looking at rosy as it did just months ago with rising unemployment, lowering durable goods order, rising oil price and a dropping GDP. Signs of trouble also begun emerging in the investment banking sector as major investment bankers started changing CEOs and writing off worthless CDOs and subprime loans. By this time, the Fed is beginning to get it that the economy is in real danger but has yet to take major actions on the fed fund nor to take coordinated action with central banks around the world. The dark cloud also spreaded into stock markets worldwide, making it obvious that this is not only an USA crisis but a world crisis.

By July 2008, investors were convinced that the economy is indeed in a recession (at last) and the credit crisis is deeper than most has expected. All 3 major indices made their first significant downwards breakout, totally disintegrating the previous primary bull trend, and stated without a doubt that the bear has arrived. All hell broke loose after that as Lehman Brothers closed down, unemployment rate soared and real GDP went negative. Investors begun rushing for the door, taking major indices down by a greater magnitude each month. The Dow was down 9% for the month of September and over 17% in October. At the same time, as aggregate demand drops in the economy, so did demand for oil as crude oil price dropped like a rock from its high of $140 per barrel all the way to below $40, taking CPI along with it. The US dollar also took a surprising turn and surged upwards against major currencies for months, wiping out forex traders trading on the “short-the-dollar-golden-strategy”.

Right now, commodities prices are at lows that was not seen for decades, bond prices has formed a bubble waiting to be burst and unemployment rate has reached higher than the previous crisis. Talks of write downs are also disappearing. This is certainly the best time for enterprising companies to take advantage of better prices and start hiring once again. In fact, purchasing by companies are already picking up slightly as indicated by the latest PMI number. All the ingredients needed for economy recovery seems to be in place and I suspect we should see some real signs in 2009. 2008 has done a good job of quickly and mercilessly draining waste from the economy instead of making it a prolonged agony. With stocks this low and bond bubble waiting to be burst, the stock market definitely has a lot more upside potential than downside potential right now. Let’s say a nice goodbye to 2008 and welcome 2009! :)

** I am sorry if I did not include many of the other major events that contributed in the 2008 crash as I intend to keep this as short as possible while correlating events in the economy to the stock market.

Jason Ng
http://www.articlesbase.com/finance-articles/2008-market-crash-recap-715104.html

Real Estate Investors Help People

Posted on March 2, 2010
Filed Under home foreclosure investing | 3 Comments

In this business, you don’t sit in front of your computer all day and trade. You actually interact with people, and help them in their situations, whether you are buying a house from them or selling/leasing a house to them. We do make a profit at what we do, of course, but we are helping people solve their problems at the same time. We are not taking advantage of people. ‘Filthy rich’ people may do that, but their ill-gotten gain will be temporary. That’s what Proverbs 13:22 means when it says, ‘The wealth of the wicked is stored up for the righteous.’ God has promised the wealth gained through manipulation or deception will be transferred to those who choose to be ‘righteously rich’ and gain their wealth with integrity and honesty. We make it a win-win situation for everyone involved in our real estate transactions or we won’t go through with the deal.

We may buy houses from people who are facing foreclosure or behind on their payments, are in a divorce situation, are building a new house and can’t afford two payments, are in a job relocation, or just want a quick sale for numerous reasons. We have some properties where people sold them to us simply because they didn’t want to spend the time and resources to fix the house up in order to get it ready for the traditional retail market. The bottom line in these situations is that the sellers were thankful that we bought their houses, and we have their testimonies to prove it!

Not only that, but we are helping people toward home ownership through our lease-option programs that perhaps could not buy a home any other way. These buyers may have credit issues and need a second chance. The buyer may be a single mom who was turned down by a traditional mortgage company. Again, our buyers are very thankful that we have allowed them to move into one of our houses, and we keep their testimonies as well.

Look at the story of Joseph and the famine that begins in Genesis 41 and goes through chapter 47. God gave Joseph the interpretation of Pharoah’s dream, which indicated there would be seven years of plenty followed by seven years of famine. What did Joseph do? He gathered all the grain and stored it during the seven plentiful years. In modern terms, he was basically investing in the commodities market! He actually profited from his investments! To state it more accurately, he made all the money so that no one else had any (Genesis 47:14-15).

But Joseph didn’t stop there. When everyone ran out of money, he asked for their livestock in exchange for bread (Genesis 47:16-17). Then, when Joseph had all the livestock, he became a real estate investor! Joseph bought the entire land of Egypt in exchange for grain (Genesis 47:18-20)! Of course, this truth is so beautiful to us as fellow real estate investors, it brings a tear to our eyes just thinking about it! But even after this, Joseph took it one step further. After Joseph collected all the money, the livestock, and the land, he loaned it all back to the people he had gotten it from and charged them twenty percent interest (Genesis 47: 23-24)!

Was Joseph taking advantage of the needy and hungry people by taking everything from them and loaning it back to them? No, he didn’t take advantage of the people, but he did take advantage of an opportunity! In fact, they were thankful to Joseph. Genesis 47:25, the people say to Joseph, ‘You have saved our lives; let us find favor in the sight of my Lord.’ Joseph was a wise and intelligent investor! Pharoah may have controlled that money for a time, but it later financed God’s work when Moses led Israel out of Egypt.

I call you blessed!

Billy O’Neal

Billy O\\\’Neal
http://www.articlesbase.com/real-estate-articles/real-estate-investors-help-people-706645.html

Loan Modification and the Scams Involving it

Posted on March 2, 2010
Filed Under foreclosure investing | Leave a Comment

The growing economic pinch has everyone scrambling to secure their finances as best as they can, and that includes trying to make sure they don’t lose the roof over their heads, considering that foreclosure was already a grave threat on families even before the recent recession. People have increasingly turned to loan modification as the primary means to try to save their homes from foreclosure, but it seems that there are some unscrupulous individuals who see this last ditch effort to save homes as an opportunity to scam already desperate people.

People needing a loan modification, already pretty much distraught and willing to cling on to whatever little sliver of hope they can see just to save their homes, are just ripe for the picking for scam artists and snake oil peddlers. All that is needed are some well-written and rehearsed pitches to get them to sign on for what they think is a chance to evade foreclosure on their home, by investing whatever little money they have left in a fake loan modification deal perpetrated by crooks who are not in the least bothered by stealing from frantic people already steeped in debt.

These scammers will ask for an exorbitant upfront fee, supposedly to work out a loan modification for the person seeking it, with a bogus guarantee of returning half the amount in the event of failure in the deal. These scammers will then claim to have already contacted the mortgage company or the lender to work out the deal, but add that, unfortunately, the deal wasn’t successful. They will then claim half of the upfront fee they charged you, and then return the other half, having already put the person into a deeper hole than what they were already in before the deal.

These scammers can be found virtually everywhere, even online. They will try to lure unwitting victims with spectacular stories of success in securing a loan modification and just how many homes they had managed to save from foreclosure. In many cases, they are so good in pretending to be legitimate that it is almost impossible to tell if they are scammers or not. One sure way is to try and consult with a real estate lawyer. Be sure, however, to seek out a real estate lawyer that is versed on the issue of loan modification. It is also a great help if the lawyer you happen to consult with is quite familiar with the Real Estate Settlement Procedures Act, as well as in the Truth in lending Act, primarily so that they can speak the language of the lenders.

To make things easier, however, look for a legitimate firm offering a decent loan modification procedure. It pays to study any firm or service you are about to contract, as most scams are quite transparent under close scrutiny. Most scams are only able to fly because of the haste most people practice, precluding any attempts at a close look at the legitimacy of the service. Hence, it pays to really look through and think over anything before fully committing to it.

Rico Franco
http://www.articlesbase.com/loans-articles/loan-modification-and-the-scams-involving-it-731195.html

Posted on March 1, 2010
Filed Under home foreclosure investing | Leave a Comment

Duration : 0:0:0

Read more

Posted on March 1, 2010
Filed Under foreclosure investing | Leave a Comment

Duration : 0:0:0

Read more

« go back — keep looking »