Tag Archives: Real Estate

Real Estate

Banks Help Themselves Not Borrowers

Bank of America Nevada City, CA
Bank of America Nevada City, CA

So why am I so mad at banks? Because they have gotten federal bailout monies to start the lending process for borrowers who are distressed and to create new loans. Instead, they have used the money to fatten their bottom line. Have you tried to get a loan for a home lately? Even if you want an equity loan, you need to have a credit score in the upper 700’s, full documentation of your assets and income.
Now how does this grab you for arrogance? A direct quote from a the chairman of Whitney National Bank of New Orleans, quoted from the New York Times:

“At the Palm Beach Ritz-Carlton last November, John C. Hope III, the chairman of Whitney National Bank in New Orleans, stood before a ballroom full of Wall Street analysts and explained how his bank intended to use its $300 million in federal bailout money.

Make more loans?” Mr. Hope said. “We’re not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans.”

I’ve talked to several people with good credit scores and good income and the banks seem to just put off the loans. In short, the banks do not want to make loans, they want to buy assets. For example, Bank of America has recently bought Countryside, Merrill Lynch and in 2002 they bought FleetBoston Financial for $48 billion. Now, they have received $20 billion to shore up its purchase. Here’s a quote from the BBC News:

“The objective of this program is to foster financial market stability and thereby to strengthen the economy and protect American jobs, savings and retirement security,” the US Treasury said.

In addition to the $20bn cash injection, the Treasury will “provide protection against the possibility of unusually large losses on an asset pool of approximately $118bn of loans”.

If that dosn’t make you mad, let’s start a bank.

Real Estate

Cram Down On Your Primary Mortgage

The Federal Government is modifying the bankruptcy code to allow cram downs for primary home mortgages. After meeting with lawmakers, Citigroup has agreed to back legislation that would allow bankruptcy judges to alter the amount due on primary mortgage principals, so called cram-downs. (I guess if we want banks to change we have to cram it down their throats)

Quoting Buiness Week

“As it stands, Durbin’s Bill (SB 61) would essentially give judges the authority to rewrite the terms of a home mortgage — a so-called “cramdown,” something possible already for every other kind of debt, mortgages on vacation homes and any real-estate other than a primary residence. It would also extend Truth in Lending Act protections to bankruptcy court, meaning predatory loans — made in violation of TILA — would be wiped.”

If the bill passes, a home owner who is facing foreclosure would have the option of filing for bankruptcy and have the mortgage reduced to a level where future payments would be manageable. As we said, every other kind of mortgage can be reduced except for a person’s personal residence. Doesn’t make sense, but the banks have fought this change forever

This would help save millions of homes from foreclosure, which some people may not agree with, but somehow we have to stop the foreclosure rate. Until we do that, the economy is not going to come back and more unemployment will result.

Of course, the rest of the mortgage industry opposes this, since it feels that it would hurt their bottom line.

Real Estate

Residential Sales In Nevada County July 2007

Residential sales in Western Nevada County in July 2007 vs. July 2006 fell about 6 percent. In July 2006, 98 homes were sold at an average sale price of $479,969, which was at 96.96 percent of the asking list price of $495,078.

In July 2007, 92 homes were sold at an average sale price of $406,267 which was at 96.37 percent of the asking list price of $421,556. Sales have not really dropped very much, but the average sales price dropped $73,702.

Of course one month does not reflect the true market conditions. Lawrence Yun, NAR senior economist, said “he isn’t looking for any notable changes in sales activity. A modest upturn is projected for existing-home sales toward the end of the year, with broader improvement to include the new-home market by the middle of 2008.”

With increased population growth in California, demand for housing is not going away. New construction has dropped considerably, land is scarce and interest rates are still low. Buyers will have to come into the market place sooner then later. Various reports that I have read expect a yo-yo effect, with nation wide prices dropping 2.3 percent and then rising 2.3 percent next year. Interest rates are expected to be 6.7 percent at the end of the year and ease off to 6.5 percent the beginning of next year. (Source, National Association of Realtors® NAR)

Real Estate

Newspapers Lose Battle for Real Estate Ads

Real estate advertising will become less prevalent in newspapers as it shifts to the Web, where online home buyers are actively searching for properties, analysts say.

Currently about 15 to 20 percent of real estate advertising is online, but Mike Simonton, media industry analyst for Fitch Ratings credit analysis service, says it is poised to go higher for a number of reasons.

Suzy Antal, director of marketing for Prudential Real Estate Affiliates, a unit of Prudential Financial Inc., said many Prudential practitioners have been pulling back on advertising during the current downturn, but as they return, they’re shifting ad budgets to their own Web sites, creating blogs, and taking different approaches beyond newspapers.

“Is newspaper a high priority? No,” Antal says. “I don’t believe my buyers and sellers are going to be in that market.”

Tim Fagan, president the real estate portion of Classified Ventures, which manages website for 125 newspapers, says it plans to “significantly increase’ its investment in Homescape, a real estate-related Web site that provides home listings, but he declined to provide specific numbers.

It’s wrong to assume that online advertising is cheaper than buying space in the paper, says Blanche Evans, editor of Realty Times, a online real estate news service. After all, online users expect extensive color photographs, lengthy descriptions, and even video tours —and all of those features can add up for a real estate practitioner.