"Cram Down" The Wrong Solution To Our Foreclosure Crisis

Then senate is going to have an accelerated hearing on this Tuesday.  The ramifications for our industry are huge.

A cram down is where a judge can literally "cram down" new terms on an existing mortgage.  The investor or owner of the mortgage has to live with it.  The bankruptcy judge can force this upon the investor. During the Saving and Loan crisis of 1990 and 1991 this was done with some commercial loans in various parts of the country.  The bankruptcy cram down bill S2636 is being put forth by Democrat Harry Reid.

I have to write this today to warn us all about the repercussions of America's willingness of not allowing people to fail.  It is with much dismay and consternation that I see bills like this being proposed in congress that allow judges to determine the interest rate and repayment amount on a mortgage.  This is simply WRONG.  I don't want anybody to lose their house.  At the same time, a contract was made between and investor and borrower.  That contract has remedies for non payment.  If the lender wants to do their own modification to the note, let it be their decision.  If they want to take the property back in foreclosure, let it be their decision. 

Put yourself in the shoes of the lender or investor.  If any bankruptcy judge could modify a mortgage note and deprive you of your rights as an investor, would you EVER buy or invest in a pool of mortgages again?  The answer is NO you wouldn't.  If the investors completely leave the mortgage market, rates will need to rise to attract them back, and high loan to value mortgages will become non existent.  This will worsen the housing crisis because the cost for everyone will be higher and options will be fewer.

We need more mortgage programs, not less.  We can't deprive the investors of their rights.  Remember there is plenty of blame to go around in this mortgage foreclosure crisis mess of today.  It is easy to pass the buck and blame the investors and banks as that relieves people of any personal responsibility.  

We must let the free market work.  If we change the rules during game, we have a new game, and nobody will play in that game.  The recent Mortgage Debt Forgiveness Act was supposed to help people work out payment solutions with their lender and not incur a 1099c for debt relief.  Instead, I have witnessed in the last week alone, four individuals make the decision to go into foreclosure and live 6 months free during their redemption period.  Instead of stem foreclosures, it actually encourages it by making it penalty free. 

Visit our online Twin Cities real estate site at http://www.selling.mn and our Minnesota mortgage site at http://www.ventureloanapp.com

Housing Research Report for Minneapolis St Paul & Surrounding Communities

The report was just released today by the MAAR-Minneapolis Area Association Of Realtors.  It is a very interesting report.  It gives you a lot of data regarding what occurred within the Twin Cities metropolitan real estate market.  It covers price data, median prices, unit and price sales data for each city and suburb surrounding the Twin Cities, and even price per sqft in each community.  If you like data, this is YOUR report.  It also shows the trend in pricing from 2001+ and the percentage change from from 2001 and 2006.  

If you are a consumer, you will want to review this report when selecting an area.  You can have access to the report via a download on my Minnesota Real estate site.  On the lower left hand side you will see Reports/Press Releases.  It is about the 5th or 6th item on the list. 

On that same list, you will find the MAAR 125.  This provides you with month over month and year over year data comparison.  Most interesting to note is the percentage of list to sales price.  You will find the range is 90-97% within most communities.  The more desirable communities will hold closer to the 97% whereas the communities under more pressure will be lower.  What does this mean?  It means that sellers are NOT taking huge price reductions.  Why is this important?  YOU need to manage your expectations.  I have met with some buyers recently who think that they can go in and bid whatever they want and the seller should accept it.  The data doesn't lie.  As a whole, sellers aren't taking huge hits in pricing.  Obviously, price to offer acceptance is all about area and will be house specific.  With that in mind, don't plan on stealing a house.  Plan on buying a house that suits your needs.  The sellers in this market are aware of the market and are pricing their home to sell. 

Expand The Free Line With Your Own Squidoo Lens

Have you heard of Seth Godin? 

Here is Seth's description of himself from his website-copied verbatim:

SETH GODIN is a bestselling author, entrepreneur and agent of change.

Godin is author of ten books that have been bestsellers around the world. His most recent titles include The Dip and Meatball Sundae. Free Prize Inside was published in early May, 2004 and All Marketers Are Liars was published in 2005. His books that have been bestsellers around the world and changed the way people think about marketing, change and work. Permission Marketing was an Amazon.com Top 100 bestseller for a year, a Fortune Best Business Book and it spent four months on the Business Week bestseller list. It also appeared on the New York Times business book bestseller list.

Unleashing the Ideavirus is the most popular ebook ever written. More than 1,000,000 people downloaded the digital version of this book about how ideas spread. Featured in USA Today, The New York Times, The Industry Standard and Wired Online, Ideavirus hit #4 on the Amazon Japan bestseller list, and #5 in the USA.

The Big Red Fez, Godin's take on web design, was the #1 ebook (worldwide) on Amazon for almost a year before it was published in paperback in 2002. The Miami Herald called it one of the best business books of the year.

Survival is Not Enough has made bestseller lists in Germany, the UK and the United States. With a foreword by Charles Darwin, this breakthrough book redefines what change means to anyone who works for a living. Tom Peters called it a, "landmark." The book was first excerpted in Fast Company, where Godin is a contributing editor.

His latest book, Purple Cow, was a New York Times and Wall Street Journal bestseller. It's all about how companies can transform themselves by becoming remarkable.

Seth is a renowned speaker as well. He was recently chosen as one of 21 Speakers for the Next Century by Successful Meetings and is consistently rated among the very best speakers by the audiences he addresses.

Seth was founder and CEO of Yoyodyne, the industry's leading interactive direct marketing company, which Yahoo! acquired in late 1998.

He holds an MBA from Stanford, and was called "the Ultimate Entrepreneur for the Information Age" by Business Week.

He's the man behind the Squidoo Lens.  If you go to www.squidoo.com  you can build out a mini expert page.  The pages are FREE to build.  There is no hosting fee and they are indexed and ranked in the search engines.  If you are looking for back links and a quick way to attain expert status for various keywords, then you should head over to Squidoo and spend an hour to build a lens.  There are no limit-other than your time-on the number of lens that you can build.  Build your lens and Shout Out to the world where you are an expert.

I live and work in Minnesota.  As such, my area of expertise is the Twin Cities- Minneapolis St Paul area and surrounding suburbs.  I've built two lens.  One is Minnesota Real Estate and the other is Twin Cities Real Estate.  Check them out.  This is a free resource that many internet marketers use. 

It's Coming SOON-My New Book-Downloadable PDF Available

I have been selling homes since 1986 and financing them since 1995. Currently and over the years, I've acquired/managed/bought/sold rental properties.   The current market presents a huge opportunity for qualifed investment property purchasers.  In order to prosper instead of perishing, you need to be informed and educated. 

Last year I started to write a book about investment properties entitled "Reality Based" Real Estate Investing.  I have always wanted to write a book and share my knowledge and experience.  We've just released the book in PDF format.  It is currently available for purchase via download at http://www.freeiq.com/realitybasedrealestateinvesting.  

Also, It will be published at Amazon.com within the next few weeks as a 7x10 paperback.  If you would like to be made aware about the upcoming paperback release, let me know.  Our website specific to the book is http://www.RealityBasedRealEstateInvesting.com

Timely Investing For A New Home Or Investment Properties

Vulture investing in foreclosures or short sales can turn out to be tremendously profitable IF you have a long enough holding period of time.  Based on what I see in the market today, you should plan on at least a 4 year holding period.  I feel that the market should have turned around within the next four years. Real estate investing has always been attractive to those looking to build wealth.  In the past few year,with all the stories of people making tremendous amounts of money in real estate it's no wonder why so many are looking at real estate as an investment vehicle. In general, real estate may offer more security than the stock market.  In addition, real estate provides great potential leveraged returns and tax benefits.  Everybody can buy and sell stocks from their phone or computer these days. But real estate requires a time commitment and mastery of a learning curve to be successful.

Lack of capital can be one of the obstacles that many are faced with. Lack of money to acquire a piece of property prevents most people from buying.  Although in reality this is usually not the biggest problem. Credit or job status have typically been bigger limiting factors.  You might say "Hey, what do you mean that "no money", isn't the biggest obstacle. I would love to invest in real estate, but I just can't afford to!" The point is that hardly anyone who buys a piece of real estate has enough money in their account to pay for it with cash. That's where your banker comes in. Do you know anyone that owns their own home? I mean truly own it? Probably not unless they are retired. You know a lot of people that have a house to their name, but wait until they get behind on their monthly mortgage payments and you will soon find out who really owns their house. That's right, the bank. So if these people can use the bank's money to buy a house, why can't you? This is the principal of leverage.

Understanding and accepting that "money" is not the limiting factor will allow you to move forward. For example, just take a look at how many people are still renting a property instead of buying one. Now of course the relation between rent and housing prices varies from country to country and even from area to area. But wherever you go you will still find people renting, because in their mind "they don't have enough money to buy a house." In reality it would be much cheaper for them to buy! If only they would shift their paradigm. We have many programs that provide for 100% financing.  Zero down in not just limited to veterans with VA loans.  

Renting can be the right decision, but it might not be.  When you rent, you are getting the pleasure of living with less responsibility, but you're not building any long term equity. Every dollar you spend on rent is a dollar you will never see again. Whereas if you own your own home, instead of paying rent you would be paying for your mortgage and getting appreciation.  This assumes a normal real estate market.  In the Twin Cities, Minnesota we are projected to grow in population by over the next 15 years.  The influx in population will lead to greater demand and appreciation.

So if you've ever thought about getting started in real estate-either as an investor or first time home buyer-JUST DO IT. Take action now. Owning real estate is a great first step towards building your wealth.  In the renting Vs owning analysis,in many cases, it just makes more sense financially to own your home. When real estate prices go up, so does the value of your property. Whereas the money you owe the bank, your mortgage, remains the same. In other words this helps you build your net worth. Compare this to people that are paying rent... Their net worth does nothing. However their landlord's net worth is doing very nicely in this scenario and he or she will probably love you for it. So if you get a warm fuzzy feeling about making somebody else rich at your own expense... Keep renting. If you would rather build your own equity... Buy your own house!

Think about people you know.  Many who have been home owners have accumulated more money through appreciation of their property than by working a full time job for many years. As you may or may not know, real estate prices do not always go up, and certainly not in a straight line. The current market we are in has led some to analysis paralysis. The downtrending market has been a nightmare for many people. If for some reason you would have to sell your home in a down market, it can be a costly adventure. You wouldn't be the first to end up with a house worth considerably less than the existing mortgage balance. This is when people approach their bank with a short sale or foreclosure.  The new mortgage debt forgiveness act was specifically developed for this reason. Historically, real estate prices  rise, but in any cycle there are down periods. This why we say you should consider buying now.  We are at the lower end of the market cycle. Patientience will be enable you to sit through these times and profit from the long term up-trend of rising values when they return.

Relocation to Minneapolis St Paul - The Twin Cities MN

PMI Companies ARE Dropping Programs And Raising Rates

Unless you are in the mortgage industry, you probably haven't heard about the Mortgage Insurance Industry is experiencing HUGE losses.  Public company MGIC Investment Corp-symbol MTG just announced today that they lost 1.5 BILLION DOLLARS LAST QUARTER ALONE.  PMI Group-symbol PMI and Radian Group Inc-RDN might be next.  They haven't announced their earnings yet.  Since they are all in the same business it might be a logical inference to assume they will be announcing less than positive news.

What PMI did do this week is send out a letter to mortgage broker clients like myself with a guideline change effective for March 1st.  Basically, they are not going to be insuring the all the same loan programs at the higher loan to value 100% limit that they once did.  They are also raising their cost of insurance.  What does this mean to a consumer?  YOU need to buy now before the programs change. Most companies will allow you to close on an older approved program at the lesser cost mortgage insurance, as long as you are approved with a mortgage certificate by a certain date.  PMI told me when I called them that I needed to have my client's mortgage insurance certificate in hand by March 1st.  Some area of the country are also being designated as declining areas, this too is a reason the insurance companies are stopping to provide insurance for high loan to value loans.  If you are a first time buyer-it's time to take action.

The higher cost of MI and greater down payment requirements are defensive measures put in place because of all the foreclosures and defaults in mortgage loans.  I can't blame the mortgage insurance companies, in fact I commend them for being proactive and protecting their business.  At the same time, if you are a buyer who needs the maximum amount of financing-such as 100%-you might not be able to get it.  Not all programs are affected by this change and not all mortgage insurance companies have changed their guidelines-YET.  The window of opportunity is here and now.  This lack of liquidity will remove more potential buyers from the real estate marketplace and make the inventory of unsold homes that much worse.  That in turn will put more pricing pressure on the existing inventory of homes.  What a viscous cycle. 

We have been in this business since 1986.  We've seen something similar in the real estate and mortgage markets back in 1989-1991 during the Resolution Trust days and the first Gulf War.  This time it seems a little more severe in nature.  If you are contemplating buying, NOW really is the time to buy, especially if you need underwriting flexibility or a low down payment program.  Visit my Minnesota real estate site to begin an online search for a new home.

Happy Valentines Day to Everyone!!

This my Valentines Day song for everyone out there!  It is my first attempt at embedding video in the blog and it WORKED!!  Yipee!!!

Tidbits Of Wisdom For The First Time Buyer

Terrific Tips for Minnesota First Time Home Buyers and first time buyers everywhere

Are you currently thinking about buying your first house? Real estate is a fantastic investment. Don't let the media hype fool you: low interest rates combined with reduced home prices make this an excellent economic environment for first-time home buyers. Here are a few tips to help you along the way.

The first and most important thing to remember is to buy only as much house as you can afford. Just because a lot of young people in your area are buying gigantic homes with acres of property and four car garages doesn't necessarily mean they could afford their mortgages.  All you have to do is look at the foreclosures situation to see examples of  people who purchased more than they should have.

Adjustable rate mortgages, or ARMs, have been exceedingly popular in the last ten years. When the housing market was on fire a few years ago, banks were giving out loans to practically anyone, regardless of their income or credit.

ARMs made it possible for people to buy enormous homes even though they didn't make a lot of money because they start out with low payments and then balloon as time passes. This is a big contributing factor to the current housing crisis.  More and more people who had adjustable rate mortgage loans are defaulting as their homes go into foreclosure.  I tell you this not to discourage you from looking at ARMS, but to help you understand the risks.  In fact, FHA offers a great ARM that have 1% annual caps and a lifetime cap of 5%.  This will beat any conventional ARM offered.

Because the banks are feeling the crunch, credit standards are being raised. If you are uncertain of your credit score, it is wise to check online with a company like TransUnion or Experian to find out where you stand before you apply for a home loan. Clear up any financial loose ends and get your score looking the best it can before you start the home loan process. You'll get a better interest rate and have more leverage with lenders.  It may even allow you to get 100% financing.  Yes, we still can do 100% financing and you don't have to be a veteran.

As far as your down payment is concerned, you may want to come up with as much money as you possibly can. Why, you ask? PMI, or principal mortgage insurance, will add to your monthly payment until you've paid for twenty percent of your home. Even if you can't get that much money together, and most first time home buyers simply can't, try your best if you want to avoid PMI.  As an added bonus, a nice down payment improves your chances of getting your loan in the first place.The good news is that your PMI might be deductible.  You have to have an adjusted gross income of under 100K to deduct it all otherwise it will phase out when it reaches 110K.

You will pay half a percent to one and half percent of your loan value every year until it reaches approximately 75-80% of either the initial loan balance or of the market value.  The rules are different for FHA and conventional loans and vary slightly.  Generally,lenders won't tell you that you're eligible to get your PMI dropped from your payment. So, be sure to keep tabs on your remaining loan balance and contact your lender to get the PMI dropped. It will save you quite a bit of money in the long run.

Fixed Rates Or ARM's-It's An Easy Decision Today

Take Advantage of Low 30-Year Fixed Rates

Are you looking to buy a home?  You are actually at a great advantage now, despite all the horror stories on the news every night. The astounding number of foreclosures across the country has forced the government to find ways to stimulate the economy. One of the major benefits for buyers in the market today is the low 30-year fixed rate.

Recently, 30-year fixed rates dropped to the lowest level in the last four years. The average fixed mortgage rate in the final weeks of January 2008 was 5.48%, marginally above 2004's low of 5.40%. This marks the third consecutive week that 30-year fixed rates were below six percent.

In a battle to combat a recession, the Federal Reserve implemented key interest rate cuts.  This has been one of the main factors in the drop, along with a further weakening of the economy. It is hoped such a large drop in rates will spur more people to buy homes, whether new or existing.

For current homeowners looking to refinance, the current low 30-year fixed rate is the perfect opportunity. With so many in foreclosure peril from adjustable rate mortgages, homeowners are looking to save money and lower payments.

The advantages of a 30-year fixed rate are obvious. While the payments initially may be more than an adjustable rate mortgage, the fixed nature of the mortgage will keep payments steady. When adjustable rates balloon, as they have recently, the fixed rate will remain the same. Also, the early payments of a 30-year fixed rate loan are primarily interest, which is tax deductible. Monthly financial planning is easier when you know what each payment will be.

One of the cons of a 30-year fixed rate is higher interest. With a 15-year mortgage, payments are much higher but interest is significantly lower. Also, without a down payment, mortgage insurance is usually required. This adds a small amount onto each payment until a percentage of the principle has been paid, usually twenty percent. After this the private mortgage insurance (PMI) is no longer required. If you have PMI in your mortgage payments, be sure to notify the lending institution when you have paid off that percentage of your property. Otherwise they may continue to charge you for it.

Though there are some slight drawbacks associated with a 30-year fixed rate mortgage, they are generally a homeowner's best bet. Some studies have shown homeowners saving money on adjustable rate mortgages, but these are rare cases. Especially with the current economic uncertainty, a 30-year fixed rate is a reliable constant.

Lending institutions have varying interest offers. Many Websites report on the current rates offered by large lenders. A good site has no direct connection or interests attached to any of these companies. Be mindful of any sites that offer advertising for any financial institutions.

With smart shopping, it's a great time to find a home with the current 30-year fixed mortgage rates. The housing situation will recover, and the rates will go up. So take advantage of this time to buy your dream home or refinance your existing property. Visit our mortgage broker website at http://www.ventureloanapp.com

Real Estate: The Best Investment You'll Ever Make

"The housing market is falling apart! This is a horrible time to buy a home, or sell a home or even LIVE in a home!"

Have you been hearing a lot of news that sounds like this lately? Well, economists love, and I mean LOVE, to spread the gloom and doom. When the economy's going great, they don't get any attention. But as soon as the market changes, everybody's listening to them again. So, when you hear all that bad news, keep in mind that it sells newspapers.

That's certainly not to say the market hasn't changed. It is still changing, in fact. But that makes investing in real estate all the more enticing, if you know what you are doing.

But here's the skinny on investing in real estate. It is one of the best decisions you'll ever make. And guess what? I'm here to tell you that this is actually a GREAT time to buy.

There are very few purchases you will ever make in your life that will actually increase in value while you are using them every day. These are called INVESTMENTS, and anyone that knows anything about investments will tell you that good investors are in it for the long haul.

If you are thinking about investing in real estate in the current market, as long as you choose a property that is worthwhile and maintain it well, it will reward you with plenty of equity over the years. If you are a foolish investor that just wants to get in and out and turn a quick profit, this likely isn't the best market for you.

But if you are thinking of investing in real estate the smart way, using pragmatism and patience, this is a great time to buy. Prices have fallen on homes, and so have interest rates. So, you can lock in a mortgage at a fantastic rate and save money on your purchase price.

Prices will inevitably rise back up, and you'll be sitting pretty with a great interest rate and extra profit from your amazingly discounted price. Since sellers often have had their homes on the market for longer than they've wanted to, they may be willing to cut you a deal. That's all the better for you, and they will finally be able to get on with their lives. Everybody wins, especially your pocketbook.

If you are looking to buy a fixer-upper to rent out as an income property, this economy will benefit you, too. Because lenders are leery nowadays about handing out home loans to people with bad credit, and many people have lost their homes because their adjustable-rate mortgages went through the roof (literally), a surplus of renters is soon to hit the streets.

Just don't be overly eager to flip your investment property. If that's your intention, it might take some time before it sells in this market. But by all means, rent it out.

The economy might be cyclical, but history teaches us that investing in real estate is nearly always a great decision for the long term. Despite what the media tells you, today is no exception to the rule.

 Visit http://www.selling.mn and begin your home search NOW