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I suggested that the real estate brokerage and finance industries stop devouring flesh, as a means for survival.  That idea generated close to 150 comments.  I was surprised that nobody called a hyprocrite for advocating smaller government while funding government-guaranteed home loans.

Carl Schumacher called me out:

I also happened to notice that in the title of your blog here you're claiming to be "America's Number 1 VA Home Loan Broker." Interesting ad for a guy that feels the government shouldn't be involved in housing. Last I knew, the VA lending program is a "government guaranteed" loan program. Based on your analogy then, I'm guessing you feel it should be eliminated because the government created it?

Just sayin' . . .

Carl, this conundrum confounded me daily until...

I found the answer.

When I pleaded for our industries to stop the practice of devouring our children's flesh, I made a few references to the fact that we have never lived in a free market economy.  Historically, the march to Collectivism started in the 1930s with FDR's New Deal.  FDR introduced hundreds of Socialists into the Government and started the concept of a planned economy with the New Deal.  Chesly Manly outlines this in The Twenty Year Revolution:  From Roosevelt to Eisenhower (just read Chapter 3 and 4 for the meat of his argument).

While this wasn't a complete Marxist transformation, it introduced the concept of crony capitalism or, as Greg Swann calls it, Rotarian Socialism:

We are apt to think of Communism as being Capitalism’s natural enemy, but there is another, perhaps more insidious foe to unfettered laissez faire. I call it Rotarian Socialism, just to give it a name. Rotarian Socialism is legislation written by and for the membership of a politically-powerful elite. Most of the criticisms you hear about Capitalism are in fact criticisms of Rotarian Socialism.

Adam Smith warned, in Wealth of Nations, that when businesspeople get together, they are likely to collude against the populus for their benefit.  It is when they enlist the aid of the State, to conspire to defraud the populus through legislation towards price-fixing and protectionism; that crony capitalism has a more insidious effect than Marxism.  

The NAR's shameless push for Congress to extend or expand the home buyer tax credits are just that; crony capitalism.  This video, produced by the Acton Institute does a nice job outlining how far we've regressed since the Reagan Era:

The crony capitalism practiced by the NAR (and MBAA, for that matter) is a conspiracy to defraud the public by "rigging the game against the little guy".  It "devours the flesh" of our children because it adds to the federal budget deficit, saddling them with bills they can hardly pay.  When their flesh is eaten, the carcass will be a nation of indentured servants, cowering to a political class.

The moral relativist's argument is "the Government is spending all this money, why not give it to buyers so I can earn some commissions ?".  Please know that I understand the short-term rationalization that comes with an increased paycheck but I beseech you to wonder how much better our industry would be if we didn't have to rely on the Government anymore.  In short, theft is theft; ask Duke Cunningham what happens when the rationalizations come unglued.

You have most likely NEVER truly lived in a free market society (unless you're 90 years old).  Please consider what could be if you did, before commenting.

Please stop this zombie behavior.  Government doesn't create wealth, it devours it like a zombie devours all that is living.  Do you know what happens to zombies?  They devour everything living until there is nothing living anymore....then they die, too.

Government home buyer tax-credits are bribes.  They're bribes to get unwilling and unsophisticated home buyers to purchase assets which may be artificially inflated.  Haven't we learned enough from the mistakes of Government's social engineering in the mortgage markets?  The social engineering associated with the Community Reinvestment Act inflated a real estate bubble which popped and ruined families' opportunity to create a reliable nest-egg from equity in their homes.  It started off slowly and accelerated when expanded to encompass most any sub-prime loan.  The Government-provided backstop for losses encouraged market participants (banks and non-depository lenders) to make mortgage loans with complete disregard for the borrowers' abilites to repay those loans.  

Government intervention to entice asset purchases creates a pyramid scheme which ultimately leaves someone holding the bag.  Like Bernard Madoff did with unsuspecting investors, the National Association of REALTORs attempts to start a new Ponzi scheme based upon a Government incentive.  Someone's gonna get left holding the bag for this scheme; most likely our children.

We are in the midst of the largest "right pricing correction" of our lifetimes.  The existing housing decline, driven by the failure of the unsustainable, poor lending practices (foreclosures) is healthy.  Free markets reward prudent use of leverage and punish the irresponsible.  Many people trusted mortgage consultants and real estate agents to advise them to eschew bad business practices and make prudent purchase decisions.  Instead, we nursed on the milky teat of a Government-sponsored Ponzi scheme destined to fail.

Fail is what the extended tax credit will do.  The initial first-time home buyer tax credit was an interest-free, loan from the US Treasury.  While still immoral, it provided for the repayment of that loan to the Treasury.  We descended down the slippery slope of "jump starts", expanded the size of the credit, and forgave the repayment of those "loans" with the sole purpose of giving the housing INDUSTRY, not housing market, a boost.

To request further Government assistance for our industry is deplorable.  We need a housing market that relies on the principles of supply and demand rather than some cheap, two-bit hustle.  More foreclosures are coming and that will be tragic for millions of American families.  One man's tragedy, however, is another man's opportunity.  If we, as real estate agents and loan originators are to support the principles of private property ownership, free markets, and real estate as a reliable vehicle to build long-term security, we MUST do what is moral, regardless if it won't allow us to line our pockets.

Please say, "No Zombies!  I won't allow you to devour my children's flesh" and encourage your elected reprsentatives to act like sober, prudent people...

...not zombie enablers.

PS:  If you're a first-time home buyer, by all means take the tax credit but make no mistake about it, this credit REALLY wasn't for you, it was for us, the zombies in the housing industry.

Why Devouring Flesh Is Morally Wrong (and how you can stop doing it)

In the spirit of bi-partisanship, I'm recommending a subscription to The American Prospect for all the progressive thinkers on Active Rain.  You can order it at a discount here ($20.00 for a year's subscription).  Be certain to denote Maggie Brady as the student and if you'd be kind enough to enter her e-mail (surfermaggie@yahoo.com), we'll be notified of your commitment to progressive thought.

American Prospect describes itself as:

The viewpoint of the Prospect is that of committed, engaged progressives--realistic but committed to the idea that there is greater range for genuinely transformative policies than is often imagined, especially in Washington. We believe in an economy that provides broadly shared prosperity, and in which a foundation of economic security allows all people to make the most of their own talents and aspirations. We believe in a renewed democracy, based on transparency and civic engagement. Prospect writers and columnists have written emphatically about the need for a decisive and ambitious response to the current economic crisis, about the urgency of universal health care as well as the options for achieving it, about the revolutionary possibilities of climate change legislation as well as the political obstacles to achieving it.

Certainly, a subscrpition to American Prospect will arm you better in philosophical debate against me, a card-carrying member of the Vast Right Wing Conspiracy. It will also support my daughter's school.

Maggie's pitch is here...and here...and here...and here.  Thanks for your support!

Here we go again!  It's time for our second season at MaggieBrady.com.

Maggie Brady is raising money for her school through a magazine drive.  Last year, she won the iTouch for superior sales efforts.  Here's Maggie congratulating Linda Davis for being the "smartest REALTOR in Connecticut".

Won't you consider purchasing or renewing a magazine subsciption here?  Close to half of the subscription fee supports St James Academy and maggie receives double points for online subscriptions.  Magazine subscriptions start as low as $15.00.  

Browse your options here.

From the Active Rain wayback machine.  The first ever "Active-Rain affiliated" Real Estate Bar Camp", written January 7, 2007:

A light rain couldn't spoil the excitement and enthusiasm I felt this morning as I drove into the heart of the City of Phoenix. Papa Joe Brady, my able seminar assistant, retired sales executive for First American Real Estate Solutions, and proud Luddite negotiated the streets of the boom town as we headed to the first Arizona Real Estate Bloggers Roundtable.

 
The Roundtable was a trial balloon post here at Active Rain.  I had planned to be in Phoenix this first week of the new year to write some loan applications and visit my family.  I had hoped I might convince a few AZ Realtors from Active Rain to allow me to buy them some donuts and have a collaborative discussion.  Yes, boys and girls, you heard that correctly, America's Most Opinionated Mortgage Broker broke marketing to Realtors rule #1; I bought them donuts.

Many things contributed to the excitement I felt.  Nostalgia was one of them because I spent 12 years in Phoenix.  The compelling reason for my excitement was the Roundtable, an historic event. Today reinforced my earlier declaration that Phoenix is the epicenter of real estate blogging.

The huge draw was the presence of three accomplished webloggers:  Greg Swann of BloodhoundBlog (accompanied by the lovely and articulate Cathleen Collins) . Jonathan Dalton of Phoenix Arizona Real Estate Blog, and Jay Thompson of The Phoenix Real Estate Guy.

READ:  The Bloodhound's post about this event complete with a picture and follow-up action item (BLOGINAR) 

The excitement was further driven by budding blogging superstars, Tony And Suzanne Marriott, Adam Tarr and Sharon Kotula, Ken Spencer, Mario Romero,  and "Doctor" (check his profile) Kaushik Sirkar.  The enthusiasm was apparent in newer entries to the Real Estate 2.0 world, Lorine Lovett, Brian Cross, Rich Pieropan, Nicole Whitman, Sandra Heredia, and Blake Mata.

I tried to gently moderate the Roundtable by asking three questions:
1- How did you get here?
2- Why are you writing?
3- Where do you see the future of Real Estate 2.0?

This prompted two hours of lively discussion which is not limited to but highlighted in these points:

1- Transparency is clearly working.  Consumers love to "get to know" a future real estate professional by reading about them online.  Jay Thompson shared the story of the Vanilla Pepsi buyer, I related how quickly I've built relationships with Realtors, and Greg Swann cautioned us that transparency is a double-edged sword; lie and you die.

2- Real estate bloggers blog to find business,  Adam Tarr was unabashed in his declaration of this goal as was Tony Marriott (I stipulated),  The "Old Guard" of the epicenter  Greg, Jay, and Jonathan were somewhat circumspect in the desired results of that goal but were quick to offer practical solutions to those who felt it possible.  That discussion led to...

3- The Solution; linking to local blogs for your "farm" area.  Note that we concluded you should link to local blogs, NOT local real estate blogs.  An example might be for Kaushik Sikhar to find a city council race in Chandler, AZ and link to the candidates weblogs as a mode of setting himself up as the expert in Chandler, AZ.  Rich Pieropan proudly claimed the title of #1 for Luke AFB, AZ.  When the group chuckle died down, Greg Swann ebulliently offered a detailed plan for taking advantage of the long tail by writing about topics relevant to the communities surrounding Luke Air Force Base and thereby establishing yourself as the expert.

4- The Long Tail versus SEO rankings.  Fancy words for getting ranked high on Google search versus establishing yourself as an expert online for a specific community or market.  I attempt to do this with my articles about hard money.  Thoughts steered to the conclusion that The Long Tail might indeed be the future versus SEO rankings.   One only has to look at the creation of Localism.com andMyHouseKey.org as examples of how some of the big thinkers in Real Estate 2.0 believe this war can be won.

5- Active Rain is the absolute best place to learn how to become a real estate weblogger.  The environment is friendly, supportive, and very instructive.  Newer or hesitant authors should attempt and hone the craft here.  I will personally reinforce this thought by stating that the Active Rain community doesn't care if you suck.  The members want to give constructive advice because we are grateful to have a forum to explain our views and improve our writing skills.  Newer authors MUST take the leap here and MUST do it today.  

In 13 years of lending and 22 years of financial services, I have NEVER seen a cause more exciting, a group of people more supportive, or a time more relevant.

Today was the epitome of that conclusion.  Thank you to everyone working in the epicenter.

Related posts include:

Jonathan Dalton's  Meeting at the Epicenter of Phoenix Real Estate

Jay Thompson's The Power of the Long Tail and Local Content Blogging

Suzanne Marriott's A Bloggers Blowout Blast!   

Adam Tarr and Sharon Kotula's GREAT BIG THANKS to Brian Brady - ARIZONA'S FIRST BLOGGERS ROUND TABLE

If you’re reading REALTOR magazine, you’re hearing about how to find business blogging, or using Twitter, LinkedIn and Facebook. 

Does this stuff work or is it all a hoax?

The answer is yes; social media marketing works and…

YES, it is incredibly over-hyped. 

What started as a Web 2.0 revolution, some 5-7 years ago has morphed into a full-blown industry in itself…complete with “experts” charging you for a webinar about how to use these media.  The sad fact is that you might go broke if you relied only on social media to market your real estate agency practice. 

BloodhoundBlog’s Greg Swann (Phoenix real estate broker) and Brian Brady (national lender based in San Diego) will be giving you the low-down on social media                             

• Friday, September 11, 2009
• 8:55AM-11:55AM
• Phoenix Association of REALTORs, 5033 N. 19^th Ave Suite 111, Phoenix, AZ 85015

COST: .........FREE

Call Kerri Melcher at 602-390-9309 to reserve your spot today.. 

 Only 15 seats available so act IMMEDIATELY! 

PS:  Can’t join us?    Get the scoop on www.BloodhoundBlog.com

From fellow San Diegan, William Johnson.  The "Blue Bombers" of Chula Vitsa brought home the WORLD title!

Most mortgage companies offer a VA no down payment option up to $417,000 but did you know that VA loans can be for much more?

The Veterans Administration works off of a "guaranty", meaning that they pay the lender 25% of the loan amount should the veteran default on her mortgage.  Pragmatically, it would make sense that the borrower be allowed to invest 25% of the difference between the purchase price and the VA loan limit.  That's just what the VA jumbo mortgage program allows.

Some high-cost counties have higher loan limits until 2012.  In San Diego, that loan limit is $593,750.  For Los Angeles and Orange counties, that loan limit is $737,500.  Some Bay Area counties go as high as $1,094,750. That's over a million bucks for a zero-down VA loan.

What's a veteran to do if she doesn't live in a high-cost county but wants to buy a $700,000 home?  Normal jumbo loan programs require as much as 30% down payment (in distressed markets).  That high down payment prevents many buyers from owning a luxury home, offered at a healthy discount.  Veterans, however, have another option.  Use this formula to determine the down payment requirement for a VA jumbo mortgage.

In the aforementioned case, the required down payment for the $700,000 home purchase, for a property that is not in a high-cost county, is just over $75,000.  That down payment requirement is just about 11%; far below some of the higher down payment conventional loans.

What about mortgage insurance?  VA home loans don't require mortgage insurance; they charge a funding fee (which can be financed).

Are the rates really high?  That depends on your definition of "really".  VA jumbo mortgage and FHA jumbo mortgages are typically about .5% higfher than the loans under the county loan limits.  Most of the VA jumbo mortgages we've funded this year are in the 5.5%-6.0% range.

Consider offering your property with a fiancing proposal drafted by a VA jumbo mortgage expert.  Sometimes, showing that low down payment option could be the thing that attracts the right buyer for your luxury home.