Tim's Atlanta Real Estate Blog ~ Save Money. Avoid Rip Offs.

Audit the Fed Bill Moves Forward After Attempted Gutting

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Fri, 20 Nov 2009 08:57:52 -0600

I think everyone is for more transperancy. Some like the sound of that word but are afraid to actually have some real transperancy in action. Some are afraid that if we actually knew what was going on it would cause panic in the streets and the whole system would come tumbling down.

One of the big things that President Obama promised was transperancy in government.

Ron Paul has a bill that would audit the Federal Reserve and bring to light what the Federal Reserve is doing with trillions of dollars.

He got 309 out of 434 members of Congress to cosponser the bill. Of course, a bill has to go through a long process and might come out being something much different than what the actual title of the bill might lead you to believe.

This almost happened to Ron Paul's bill. Finance committee member, Mel Watt, gutted the bill and turned it into a bill that would actually make the Federal Reserve more secretive and more powerful. I'm sure it wouldn't surprise you that Mel Watt represents the Charlotte area where Bank of America's headquarters are. And I guess it wouldn't surprise you that most of his campaign money came from banks and financial institutions.

Fortunately, an amendment, the Paul/Grayson Amendment, was passed that will bring back most of Ron Paul's original bill.

This morning on CNBC they are already trying to make auditing the Fed sound like it will be a really bad thing for the economy and the market.

I'll defer to Karl Denninger in explaining the Fed's track record and why the Paul/Grayson Amendment is needed.

Here is Ron Paul explaining his amendment.

Here is Alan Grayson explaining why the Watt amendment is a step back and then Mel Watt pleads his case that if the Paul/Grayson Amendment is passed it will wreak havoc in the markets. Who to believe? My trust is in Ron Paul.

My Stellar Predictions from Last Year and a Look Ahead to 2010

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Tue, 17 Nov 2009 21:15:18 -0600

Before I give you my predictions for 2010, let me show you just how good I was back in October 2008 when I made predictions on a slew of economics statistics for the second quarter of 2009. I know, predicting what the unemployment rate will be just 9 months ahead shouldn't be that tough. It's not like you have to be a highly trained and highly paid economist or something.

So the official numbers are in for the second quarter of 2009. Let's see how well I was able to predict some things. I know I must be good at this stuff because thousands of people came to hear me talk about what I see coming up for the next year.

I'm a housing specialist and I predicted prices to go up by 2.6% but they actually went down by 12.8%. I guess no one could have seen that one coming.

I guess it might have been because I was predicting unemployment to only be 6.6% and then it went all the way up to 9.3%.

Interest rates went down much more than I expected. 30 year fixed rate ended up at 5% instead of 6.5% as I predicted.

For some reason thousands of people still came to listen to my predictions for 2010. I guess they think I'm pretty good at this stuff. Maybe people like the way I sound or the way I present my numbers. Here's some good advice. If you sound like you know what you are talking about, people usually don't bother to check out your past performance, especially if you have a PhD or other smart sounding credentials.

I guess if you are a Realtor you like when someone like me says that the housing recovery has begun and good times are right around the corner. Someone has to give them hope.

Who am I to tell them differently? Who am I to think that I can predict what's going to happen to the housing market in the next 3-18 months?

I'll tell you who I am.

I'm Lawrence Yun, chief economist for the National Association of Realtors. I get paid the big bucks to come up with these fancy schmancy predictions. I find that if I use big words, a lot of numbers and some fancy charts, people really take me seriously.

If you don't believe my numbers, go check them out yourself, October 2008 and October 2009.

Democracy to Dictatorship

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Tue, 17 Nov 2009 07:49:29 -0600

Yes, another post about government and free markets. But dictatorship? I know most feel that "it can't happen here" but I read a great article that shows why most democracies usually end up going down the path to dictatorship. I love this country and I hate seeing the signs of it's demise.

James Madison, the father of our Constitution, knew the dangers of democracy:

A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship

Some seem to think that free market capitalism creates winners and losers and thus a big income gap which then creates social tension and divisiveness. As if only if everyone had the same amount of stuff, we would all live happily ever after.

Very rarely do you hear that free markets provide peaceful, social harmony. But think it through a little bit.

A free market, as competitive as it is, is based on peaceful, voluntary cooperation. When commerce is free and unfettered by government interference, both sides to a transaction normally gain, thereby promoting social harmony.

Democracy, by contrast, engenders social conflict. Money changes hands by force of the taxman and the threat of imprisonment, not voluntarily. Democracy pits citizens against each other in a sordid squabble whereby many strive to have the state confer benefits seized from their fellow citizens.

Here's another great quote that paints an easy to understand picture:

As the late, great economist Hans Sennholz described it, the democratic "transfer society" resembles the absurd spectacle of a circle of people, each trying to pick his neighbor's pocket. How can there be social harmony when everyone is trying to rip off someone else?

The government doesn't have a bottomless pot of gold to keep giving people all sorts of benefits. Government doesn't create any wealth at all. Any money it gives out eventually comes from the citizens: Either through taxation, borrowing(which is taxation in the future), or printing money out of thin air which is a stealth tax on everyone.

Have you seen what the national debt is. Our debt and obligations to social security and medicare are over $60 trillion! Do the math. That's $200,000 for each man, woman and child in America. Is it really possible to actually ever pay it off? Have we dug a hole so deep that it is impossible to climb out of? Is there an orderly way out of this mess?

We are starting to see two groups of people getting agitated and restless. Some people are demanding more government benefits to help them get through this recession. Others are getting angry about higher taxes and want to stop this crazy government spending.

When a financial crackup occurs, those who have been taught to depend on government will demand continued government benefits. If government fails to provide them, those demands could turn violent. On the other hand, if government moves to confiscate a significant chunk of whatever wealth remains in the hands of an already-hurting middle class, then millions of peaceful, law-abiding, hard-working Americans may finally reach the breaking point and rebel, as our forebears did in the 1770s, against a government viewed as abusive and oppressive.

How bad could it get? If the social order breaks down, civil unrest could disrupt markets and shortages of essential goods could occur. The resulting chaos could trigger martial law. A strong leader-a Caesar-could institute some sort of command order. Millions would resent it, but it would be accepted, because the alternative-civil conflict, chronic disorder, and impending starvation-would be intolerable. In such a calamity, Caesar would be the lesser of two evils. The American Republic and Constitution would join earlier democracies in the ashbin of history.

This is why I am so against all of these government programs. It's not that I don't want everyone to have healthcare. It's because I see where it will eventually lead.

I don't want to debate about details about which plan is better. I want to debate about why government should be involved in healthcare in the first place.

I don't want to fight for tidbits of benefits while I watch the greatest country in the world go down the tubes and destroy my right to life, liberty and the pursuit of happiness.

China's Stimulus Package Spurs GDP by 8% but the City It Built Is Empty

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Sat, 14 Nov 2009 11:28:42 -0600

In order to stimulate the economy, China built an entire city in Inner Mongolia. It was an incredible project and is a shining example of what government spending can do. With this scale of government spending, China is keeping their GDP growing by at least 8% per year.

Before you begin thinking that maybe the US should follow China's example, you might want to watch the following video.

You'll see that this brand new, complete city is pretty much empty. There it sits in Inner Mongolia just waiting for the people to come. I'm sure it created a lot of jobs for the Chinese but somehow I think that it might have been a waste of good resources.

I Pledge Allegiance To Americaʼs Debt, And To The Chinese Government That Lends Us Money

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Thu, 12 Nov 2009 14:23:12 -0600

Hit tip to the DailyBail.com for finding this funny but sad video.

"I pledge allegiance to Americaʼs debt, and to the Chinese government that lends us money. And to the interest, for which we pay, compoundable, with higher taxes and lower pay until the day we die."

Watch this video and take a second to think about the consequences of us piling up more and more national debt.

Thomas Jefferson had a lot to say about having a national debt and foisting it off on posterity.

"I sincerely believe... that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale." --Thomas Jefferson to John Taylor, 1816. ME 15:23

"We believe--or we act as if we believed--that although an individual father cannot alienate the labor of his son, the aggregate body of fathers may alienate the labor of all their sons, of their posterity, in the aggregate, and oblige them to pay for all the enterprises, just or unjust, profitable or ruinous, into which our vices, our passions or our personal interests may lead us. But I trust that this proposition needs only to be looked at by an American to be seen in its true point of view, and that we shall all consider ourselves unauthorized to saddle posterity with our debts, and morally bound to pay them ourselves; and consequently within what may be deemed the period of a generation, or the life of the majority." --Thomas Jefferson to John Wayles Eppes, 1813. ME 13:357

"No earthly consideration could induce my consent to contract such a debt as England has by her wars for commerce, to reduce our citizens by taxes to such wretchedness, as that laboring sixteen of the twenty-four hours, they are still unable to afford themselves bread, or barely to earn as much oatmeal or potatoes as will keep soul and body together. And all this to feed the avidity of a few millionary merchants and to keep up one thousand ships of war for the protection of their commercial speculations." --Thomas Jefferson to William H. Crawford, 1816. ME 15:29

I Agree With Bill Clinton's Words of Wisdom

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Wed, 11 Nov 2009 10:02:53 -0600

I really don't like Bill Clinton but he is a master politician. Maybe that's the reason for my dislike of the man.

But he did make a comment about the healthcare bill that I couldn't agree with more.

"There is no perfect bill because there are always unintended consequences, so there will be amendments to this effort," Clinton said he told Democrats, "whatever they pass next year and the year after and the year after."

The healthcare bill is a politicians dream come true. They will have something to keep them busy with for years and years. The more they interfere, the more unintended consequences they'll be called on to fix.

"These opportunities don't come along frequently," Sen. Ben Cardin of Maryland recounted Clinton saying.

He stressed to Democrats that they can always go back and retool initiatives and amend whatever overhaul they pass, calling it, "a big complex organic thing."

I agree. It is a big complex organic thing. And that's why I don't think that it's something that the government should get involved with.

John Stossel says it best in his column today.

The notion that a small group of politicians can know enough to design something so complex and so personal is astounding. That they were advised by "experts" means nothing since no one is expert enough to do that. There are too many tradeoffs faced by unique individuals with infinitely varying needs...

No matter how honorable the central planners' intentions, they will fail because they cannot know the needs and wishes of 300 million different people. And if they somehow did know their needs, they wouldn't know them tomorrow.

Extend and Pretend. The Results Are Never Pretty

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Wed, 11 Nov 2009 09:36:39 -0600

I seems quite evident that many banks and the Federal Reserve are playing the game of "extend and pretend". They refuse to "mark to market" the value of many of their toxic loans. By doing this, they can pretend that they are still solvent and continue in business along with giving themselves nice big bonuses.

A few banks are facing reality and doing what it takes to recognize their bad loans and to get their balance sheets back in order.

Georgia's Synovus Financial (SNV) shed some $339 million worth of similarly troubled real-estate development loans and mortgages in the third quarter. The company has said it plans on selling another $261 million by year end.

In September, the company revealed it had reached an agreement with the Federal Reserve Bank of Atlanta and the State of Georgia to boost its capital levels and reduce its non-performing assets.

Why haven't other banks faced reality?

...most banks have resisted selling their most troubled loans altogether -- largely out of fears that the sales could trigger severe losses.

"The problem is that banks are facing rather difficult capital problems these days and can't take the losses involved," said Minor.

... Of course, some banks are holding out hope that the U.S. economy is indeed pulling out of recession and that their loan portfolios will recover in value.

You might have heard that the FDIC is responsible to monitor the reserves of banks. Basically, a bank needs to have enough assets and reserves so that if they had to pay off all of their depositors, they would have enough from the sale of their assets and reserves to cover all of their depositors. When banks fail to meet this criteria, the FDIC is supposed to take "Prompt and Corrective Action". Usually they go in and close them down before the situation results in loss that the FDIC would have to cover. Many of the banks that the FDIC has closed down have resulted on losses of 30-50%. It seems like the FDIC is waiting much too long and allowing the situation to deteriorate which is creating huge losses to it's insurance fund.

I have a funny feeling that many of the major banks are not meeting this criteria. They are allowed to keep loans at full face value on their books even though they might be worth pennies on the dollar.

"Their hope is that things stay where they are, that interest rates stay low and that somehow the recovery bounces us out of this position before long," he said. "I don't believe this strategy will provide the results they are hoping for. It will simply prolong the devaluation of the assets."

Everyday I see foreclosures and short sales where the banks are taking huge losses. I always wonder how these banks can remain solvent. It just comfirms my suspicions of "extend and pretend". Unfortunately, the taxpayer ends up picking up the pieces.

Buyers, I'm Applying for a Job As Your Real Estate Agent. If You Have an Opening, I Want an Interview

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Wed, 11 Nov 2009 08:41:43 -0600

I've found that there are some agents who get offended that a potential buyer client might have the audacity to actually interview them before actually deciding to work with them.

To me, I'm always applying for the job as someone's real estate agent. How are buyers going to know if I'm compentent or not? I don't take it for granted that most people will automatically know that I am "Tim Maitski, Highly Successful Real Estate Agent".

So to help buyers out in the interview process, I've taken time to answer some questions that buyers seem to want to know. To some agents, this must seem like a big waste of time, but to me it's part of getting my next job. Yes, being a real estate agent is a "job". Maybe if you get enough jobs you can call it a career. But a career is only as good as each individual job along the way. I always take a minute to remind myself that it might be just one job out of many that I do every year but to the buyer, it's a huge deal and it's one of the most significant things happening in their life.

Here's a list of questions I found on the Internet along with my answers to each.

1. How long have you been licensed? I've been a licensed agent since June of 1999. It might be prudent to check it out yourself on the Georgia Real Estate Commission site. My license # is 208281. You'll see that I also got my broker's license in 2007. I don't really want to be a broker though. I took the training as continuing education. A lot of the training was how to run an office of agents and how to reduce a broker's liability. It's really not training on how to get the best deal for you buyer.

2. Do you work in real estate full time? Yes I do. I really don't see how you can do it well on a part time basis.

3. What percentage of your business is working with buyers? Probably about 80-90% of my business is working with buyers. I also help sellers but my internet marketing tends to attract buyers. I do prefer buyers because it's like going shopping every day. Who doesn't like to shop?

4. How familiar are you with the area where I want to purchase? Atlanta is a huge area and it would be very difficult for one agent to cover all areas well. I live in Sandy Springs and am very familiar with most of the northern part of Atlanta which includes Dunwoody, Roswell, Alpharetta, Cumming, Norcross, Marietta, Smyrna, Vinings, Chamblee, Tucker, Buckhead, Midtown. If you are interested in areas that I'm not too familiar with, I will refer you to another great agent in my network of agents which I've developed over the years.

5. Do you have references from other buyers who have used your services? I think it's a good idea to check references. I have no problem giving you the names of some of my most recent clients so that you can call them up and ask them questions about their experience with me. I have a few video testimonials on my website that you might want to view also.

6. Do you have an association membership that has a published code of ethics or standards of practice? If so do please list. If so do you abide by these ethics? I'm a member of the National Association of REALTORS which allows me to call myself a REALTOR. They have a code of ethics that all members agree to abide by. But most agents belong to this association so don't feel that it is any kind of big distinction. All you really have to do is pay your annual dues and take a 3 hour ethics class every four years.

7. Do you think foreclosures, bank-owned properties or for-sale-by-owner properties would be appropriate for my home search? I'll show you any homes that you want. There are advantages and disadvantages to everything. I'll try to give you the pros and cons and you can decide for yourself.

8. How often will you supply me with properties that meet my criteria? I have a great home search tool on my website that many people find to be really helpful. You can set up automatic email alerts for homes that meet your criteria. I also can set up an automatic system from my MLS that will do the same thing. I usually set up a special search in the MLS for each client of mine and I personally scan the new properties that come on the market everyday. When something good comes up, I email it to you.

9. How will you send a list of them to me? The MLS allows me to send you an email that has a link to the detailed listing sheets. I can also email you the tax records for individual properties. I also can send you an "archive" report that will show you exactly when a listing was put in the system and exactly when they made price changes and status changes.

10. Will you point out the negative aspects of each property as well as the positive aspects? Of course. I'll tell you the good, the bad and the ugly. There's never going to be a perfect home. Each home is a bag of problems. I try to help you recognize what might be in that bag of problems. I look at it from the perspective of eventually having to sell it for you when you are ready to move again. I don't want to sugarcoat everything when you are buying and then tell you a different story when you are ready to sell.

11. Please tell me how you represent buyers to help them get the best price and terms? The biggest thing I do is to help you educate yourself on value. We'll see a lot of homes which will allow you to be able to recongnize the homes that stand out from the rest. Then we'll do a comparative market analysis in order to find out what similar homes are actually selling for. We'll gather tax information and listing history information and I'll try to find out some stuff about the sellers. I'll advise you on how best to make your offer as attractive to the seller as possible. The best way to negotiate is to have 3 good choices and be ready to walk away if you don't get the price and terms that you desire.

12. Can you help me with the loan process? I have a few preferred lenders who I trust to give my client good advice, service and price. I'm not an expert in mortgages but I can help you with comparisons and with the questions you need to ask. On my preferred lender page I outline how I would go about shopping for a mortgage.

13. Can you provide a list of lenders, home inspectors, insurance agents and other professionals to recommend? Over the years, I've come across many very good service providers. I love to share my list. But like anything, check them out yourself and shop around.

14. How do you get paid (percentage, before, after sell, etc.)? I get paid only at closing. If you don't buy a home, I don't make a cent. So be aware that I am motivated to get a transaction closed. But I am not a desperate agent where any one transaction is going to make or break me. My fee comes from a split of the listing agent's commission, usually it's around 3% of the purchase price. If you would deal directly with the listing agent, they would usually get to keep that amount for themselves.

15. Do you have a written agreement? If so what is the duration of that agreement? Yes, it's called the Exclusive Buyer Brokerage Agreement. It spells out both my responsibilities along with your responsibilites. Many buyers have the fear of signing something like this because they don't want to be locked in with an agent who turns out to be a loser. We can make the duration of the agreement any length of time that you are comfortable with. You can actually cancel the agreement at any time you wish. But there is a clause that says that if you cancel and then buy a home that I had showed you, I will be due a commission for that.

16. What if I see a for-sale-by-owner house on my own? That is an item we will address in the Buyer's Agency Agreement. Most for-sale-by-owners offer a buyer's agent commission. For the few that don't, we can work out some sort of arrangement. Being an independent RE/MAX agent allows me to set my own policies on fees.

17. How would you represent me as a buyer client for properties listed with your firm? RE/MAX Greater Atlanta has hundreds of agents so there is a chance that you might want to buy a home that is listed with another RE/MAX Greater Atlanta agent. In that case, we specify that we will do "designated dual agency". That means that my broker assigns me to represent you and the listing agent to represent the seller. That gets you pretty much to the same representation that you would have in any other situation.

18. Will you change your relationship with me to "dual agency", "designated agent", or "transactional broker" Yes, we will change our relationship to "designatied dual agency"

19. How might that affect your ability to negotiate on my behalf for those properties? This really won't affect negotiations at all. I will keep all your information confidential just as I would in a regular agency status.

Please email me any other questions you might have. Your questions help me understand what buyers are thinking about and what they are concerned with.

Remember, I'm looking for the job of being your real estate agent. If you have an opening, I'd love to interview for it.

Recession Over? State Sales Tax Receipts Still Down. Where's the Spending?

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Tue, 10 Nov 2009 09:00:46 -0600

If the recession is over, why aren't we seeing state sales tax receipts rising? If the economy is 70% consumption, how can the economy be growing when retail spending is still going down?

Every month I do a Google News Search for "state sales tax receipts" to find the latest numbers being reported by the states. There's a great site that compiles all of the stats but it is always 4 months behind in crunching the numbers and getting out their report. News stories give the most current information. I also don't think that state treasurers can manipulate the stats too much unlike some of the other government stats that come out.

So here are some recent news stories about sales tax receipts. Just about every story about sales tax for October show a decrease from the same period in 2008, some by large amounts. Remember October 2008? At the very beginning of the month we were told that the economy was on the edge of collapse if we didn't get the $800 billion TARP passed. So it's not like October 2008 was a month that was an unusually positive month. Negative comparisons to that month should indicate that spending has really slowed down.

Georgia: -18.2%.

The amount of revenue the Peach State pulled in from various taxes plunged 17.8 percent in October...sales tax revenue (down 18.2 percent)

Missouri: -24.4%.

The biggest drops last month were in sales taxes (down 24.4)

Illinois: -15%

The steepest drop continues to be in sales tax collections, which were down 15 percent, or $90 million, from the October 2008 collections

Iowa: -9.1%

Of foremost concern was an 18.2 percent drop in sales tax receipts -- half of which could be attributed to calendar-related issues -- that were "worrisome," Robinson said.

Texas: -12.5%

Sales tax collections have been declining statewide since February, according to a news release from Combs' office. October's collections totalled $1.52 billion, which was down 12.5 percent from October 2008

Nevada: -24.1%

Statewide taxable sales for August 2009 of $3,076,350,687 represents a 24.1% decrease over August 2008

Rhode Island: -6.6%

Sales-tax collections fell by $19.77 million, or 6.6 percent, to about $278.6 million

Massachusettes: -5.5%

Sales taxes came in at $404 million for the month, $60 million more than during October 2008. But state officials cautioned that the boost was not a sign of increased retail activity but rather the result of a higher tax rate and an expansion of the tax to cover more products.

State Revenue Commissioner Navjeet K. Bal said in a prepared statement that had it not been for the changes, revenue for the category would have been down 5.5 percent from October 2008.

Arkansas: -8.4%

Gross receipts, mostly from sales tax revenue, totaled $163.1 million, a $15 million drop from last year and $6.9 million, or 4.1 percent, below forecast

California: -9%

while sales taxes were about 9 percent off.

Kentucky: -4%

Sales and use tax receipts were down about 4 percent.

Tennessee: -7.8%

Sales tax collections were $38.6 million less than the estimate for October. The October growth rate was negative 7.80 %

Virginia: -5.4%

Sales taxes fell by 5.4 percent for the month, reflecting retail activity in September

Colorado: -8.8%

Sales-tax collections came in 8.8 percent lower than the year before, while individual income tax revenue fell by 11.2 percent, according to the Colorado Department of Revenue

Maryland: -5.4%

Sales tax receipts fell 5.4 percent in October and are down 7.5 percent for the year

Maybe GDP went up 3.2% in the 3rd quarter but it makes me question whether that is actually a reliable indicator on what's actually happening in the economy.

Can we actually have a jobless recovery along with a spendingless recovery?

Edit: The retail sales number for October came out and showed increased retail sales. So what gives? How can sales be up yet sales taxes collected be down. Here a good explanation on how the retail sales reports don't take in account stores that close. Very interesting and it makes you question just how much confidence you can put on the reported numbers.

Mises vs. Keynes. After 70 years of Keynes, It's Time for Some Real Change

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Mon, 09 Nov 2009 15:17:09 -0600

The Wall Street Journal has an opinion piece today about Ludwig von Mises. It is well worth the read and then it would be well worth the effort to do a little more research on Mises and his Austrian school of economics.

I'm sure most people have heard of John Maynard Keynes. He's the "brilliant" economist who is the father of the government stimulus.

...along came John Maynard Keynes's tome "The General Theory of Employment, Interest and Money" in 1936. Keynes was dapper, fresh and sophisticated. He even wrote in English! And the guy had chutzpah, fearlessly fighting the battle against unemployment by running the currency printing press and draining the government's coffers.

He was the anti-Mises. So what if Keynes had lost his shirt in the stock-market crash. His book was peppered with fancy math (even Greek letters) and that meant rigor, modernity. To add insult to injury, Mises wasn't even refuted by Keynes and his ilk. He was ignored.

Ludwig von Mises wrote his book "The Theory of Money and Credit" back in 1912, just one year before our Federal Reserve was born. Unfortunately, his book, written in German, really didn't get much play. It explained exactly why something like the Federal Reserve would eventually lead to ever more volatile business cycles.

This is the best, to the point, analysis of his theory and is very relevant to our current situation:

Government-imposed interest rates artificially below rates demanded by savers leads to increased borrowing and capital investment beyond what savers will provide. This causes temporarily higher employment, wages and consumption.

Ordinarily, any random spikes in credit would be quickly absorbed by the system-the pricing errors corrected, the half-baked investments liquidated, like a supple tree yielding to the wind and then returning. But when the government holds rates artificially low in order to feed ever higher capital investment in otherwise unsound, unsustainable businesses, it creates the conditions for a crash. Everyone looks smart for a while, but eventually the whole monstrosity collapses under its own weight through a credit contraction or, worse, a banking collapse.

The system is dramatically susceptible to errors, both on the policy side and on the entrepreneurial side. Government expansion of credit takes a system otherwise capable of adjustment and resilience and transforms it into one with tremendous cyclical volatility.

It reminds me of the academic debate between communism and capitalism. Even after seeing the Soviet Union do a 70 year long experiment with total government control and seeing it fail, many still think that more government control is the path to work towards.

So now that we've been following the path of Keynes for the past 70 years and have seen how it has failed, many still think that more of the same is what is needed. More government stimulus and more government borrowing. Hopefully our system won't collapse like the Soviet Union. Unfortunately, it will probably take a collapse in order to get back to a system that works.

So How's the Stimulus Package Working? Wasn't Unemployment Supposed to be at 7.8% by Now?

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Fri, 06 Nov 2009 13:47:07 -0600

Remember how we were told how important it was to pass the $787 billion "American Recovery and Reinvestment Act"? Obama's chief economic advisor, Christina Romer, put out a nice study showing how many jobs would be created or saved with this "stimulus" bill.

On page five of the report they had a nice graph projecting the unemployment rate with and without the stimulus bill being enacted. That was in January of 2009, just 10 months ago. Let's see how the best and brightest economic minds in Washington did vs. the reality of what has actually happened.

With the Recovery Plan, the unemployment rate was projected to be 7.8% by now. Without the Recovery Plan it was projected to be 8.8%. The reality is that it's 10.2%. The actual rate is 43% higher than they projected!!

I'll let you decide whether it's a matter of incompetence or a matter of deceit in order to get their agenda passed.

With this sort of track record, can we trust them at all with the projected cost of the proposed healthcare bill?

Walmart's Straight Talk. $45/month for Unlimited Talk, Text & Data. No Contract.

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Sun, 01 Nov 2009 20:44:41 -0600

Get Verizon's wireless network at more than 50% off. I heard about Straight Talk in a blog the other week and checked it out. It sounded like a great deal so I switched from Verizon.

Tracfone buys blocks of time from Verizon and resells it using Walmart as it's marketing arm. So you get the quality of the Verizon network but at a bargain price with no contract to tie you down.

I've been with Verizon for years now and I figured that this is a no brainer. I was paying Verizon $99/month for unlimited talk. Text would have been an additional $10 and data an additional $10. With Straight Talk, I get unlimited talk, text and data. I guess the only negative might be that the phone selection is limited and there isn't any big discount on the phones. I just had a very basic phone so the Razor, $99, was a step up for me.

The switch over was pretty easy. I went to Walmart and bought my phone and service plan. I logged onto Straight Talk and keyed in some numbers along with my current Verizon account number. In seconds, my current phone number was ported over to my new phone. I had to make a simple call to activate it and I was done. I quickly set up a new voice mail messege and I was back in business. It took me maybe 5 minutes to get it all up and running.

Fifteen minutes of work could save you a lot on your cell phone bill.

Bite Size Halloween Candy. Are We Poorer or Just More Thrifty?

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Sun, 01 Nov 2009 08:35:56 -0600

My Halloween memories go back to 1964-1973. I remember in the early years, we'd come back home with a bag full of full size candy bars. I kind of remember seeing the bite size candy starting to creep into my bag around 1970.

Last night, my kids came home with nothing but bite size and mini size candy.

It made me wonder about what has changed? I grew up in a very blue-collar middle class area in Pennsylvania. Now I live in a much more white-collar upper middle class area.

Are we actually poorer than we were in the sixties or are we just more thrifty or less giving?

Steamy Stock Market News Reports Arousing My Interest in Investing

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Mon, 19 Oct 2009 21:28:24 -0500

The DOW broke though the 10,000 mark and the reports on it sound like the reporting of a pornographic movie.

Stephen Cobert put together a really funny collection of financial news snippets reporting the new high in the stock market in very seductive terms.

Enjoy.

The Colbert Report

Mon - Thurs 11:30pm / 10:30c

The Money Shot

www.colbertnation.com

Colbert Report Full Episodes

Political Humor

Michael Moore

Have professional courtesy but don't cross the line.

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Fri, 16 Oct 2009 20:31:28 -0500

As a real estate agent, I always remind myself who I'm working for. I have to do what's best for my client. If that means your client gets upset or loses money, so be it. It's not my job to make sure both sides are happy with the deal. It's my job to get the best deal for my client.

Broker Bryant says it better than I can so I'm just going to reblog his post.

Via Bryant Tutas-Tutas Towne Realty, Inc:

Hi folks. Let's talk a little bit about professional courtesy. I hear this term quite a bit on AR and in my business. Usually, it goes something like this:

"The listing agent should have told me he had other offers on the property, as a professional courtesy".

"Even though my buyer's offer was a low ball the listing broker should have gotten back to me before the offer expired, as a professional courtesy."

You get my point. Anyway, let me see if I can shed some light on this professional courtesy "thingie". First, I want to say, that anyone who has ever worked a deal with me will tell you that I am very professional in all that I do. I treat my peers with respect. I am always willing to help "newbies" in anyway I can and if I say I'm going to do something, I do it.

But, and it's a big but, sometimes what you are expecting me to do, as a "professional courtesy", is completely against what my customer/client is telling me to do or not do. Last time I checked, I work for my customer/clients NOT my peers.

My job, as a listing broker, is to look out for my Sellers and do everything I can to get their property sold in a reasonable amount of time and for a reasonable price. Sometimes, that may require my Seller and I to "sit on" your Buyer's offer. We may even choose to ignore it completely. We can do that. We may even use your offer to negotiate a better deal with another Buyer. We can do that too.

And you know what? I don't have to tell you I'm doing it. There is nothing unprofessional about that. Your Buyer is NOT my concern. What may seem like my lack of action or response, from your perspective, may very well be a negotiating strategy from my Seller's perspective. Don't jump to conclusions about my professionalism or lack of.

I completely agree that we should all work together and that we do not have to work in a disrespectful manner. We should be professionals in all we do. If you want to be a professional then please remember who you are working for and who is paying you. Your "professional courtesy" could very well jeopardize your customer/client's position. How professional is that? What say you?

Bryant Tutas
Broker/Owner
Tutas Towne Realty, Inc
Licensed Florida Real Estate Broker
http://CentralFloridaShortSales.com

http://ShortSaleSuperStars.com

Are you a Florida REALTOR(R) looking for a change? Check it out.

CENTRAL FLORIDA REALTOR(r) OPPORTUNITIES

Copyright © 2009 http://www.brokerbryant.com/ | All Rights Reserved

Massachusetts Land Court Reaffirms Ruling Invalidating Titles To Thousands of Foreclosures

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Thu, 15 Oct 2009 21:23:43 -0500

A judge's ruling in Massachusetts might invalidate thousand of foreclosures going back to 1989.

Long ruled that banks can't foreclose on homes unless they have complete paperwork covering every time a specific loan changed hands.

The judge found that fixing documents after the fact, as Wells Fargo and U.S. Bank did in the Springfield cases, isn't enough. He ruled that flaws not resolved earlier can depress bids at foreclosure auctions, reducing how much consumers who face home losses get for their places.

"The issues in this case are not merely . . . a matter of dotting i's and crossing t's. Instead, they lie at the heart of the protections given to homeowners and borrowers," Long wrote yesterday.

Experts say the ruling paves the way for thousands of people who've lost houses to foreclosure to challenge their homes' seizures

I enjoyed reading the complete ruling. The banks were arguing that that's the way they've always been doing it so it shouldn't be a big deal. I was glad to see the judge stick to the law.

If they believe a change is warranted to reflect "industry standards and practice," they must seek that change from the legislature. I note, however, that if those "standards and practice" have brought us to the present situation (see, e.g., Chairman Ben Bernanke, Financial Innovation and Consumer Protection, speech at the Federal Reserve System's Sixth Biennial Community Affairs Research Conference (Apr. 17, 2009); R. Posner, A Failure of Capitalism: The Crisis of '08 and the Descent Into Depression (Harvard University Press 2009)), "we should learn something from that experience." Korematsu v. United States, 323 U.S. 214, 242 (1944)

A good read on the topic was posted by Karl Denninger. Some interesting discussionon his Market Ticker Forum. Denninger did a post last month explaining the problem in more detail

I'm not a lawyer so I thought before writing my own post, I would see if any resident expert on ActiveRain wrote about the topic. I saw Richard Vetstein's post and thought it would be best to reblog it since he's actually an attorney who seems to be pretty knowledgeable.

Via Richard Vetstein (Vetstein Law Group, P.C.):

Originally posted on The Massachusetts Real Estate Law Blog

Today, Massachusetts Land Court Judge Keith Long reaffirmed his controversial ruling made back in March 2009 that invalidated foreclosure proceedings involving two Springfield homes because the lenders did not hold clear titles to the properties at the time of sale. A copy of the decision can be found here.

As I outlined in my prior post on this case, the problem the Land Court dealt with in this case is what happens when modern securitized mortgage lending practices meets outdated foreclosure laws. When mortgages are packaged to Wall Street investors, the ownership of a mortgage loan may be divided and freely transferred numerous times on the lenders’ books. But the mortgage loan documentation actually on file at the Registry of Deeds often lags far behind.

The Ruling

Judge Long ruled that foreclosures were invalid when the lender failed to bring the ownership documentation (known as an assignment) up-to-date until after the foreclosure sale had already taken place. An assignment is a legal document confirming that a mortgage loan has been transferred from one lender to another. Assignments must be recorded with a registry of deeds so anyone researching a property’s title can track the loan’s origin and ownership. Oftentimes, as in the Ibanez case, lenders will sell bundles of loan and record backdated assignments with an effective date before the first foreclosure notice. Judge Long effectively prohibited this practice.

Despite the lender’s attempt to convince him otherwise, Judge Long came out (again) in favor of consumers:

The issues in this case are not merely problems with paperwork or a matter of dotting i’s and crossing t’s. Instead, they lie at the heart of the protections given to homeowners and borrowers by the Massachusetts legislature. To accept the plaintiffs’ arguments is to allow them to take someone’s home without any demonstrable right to do so, based upon the assumption that they ultimately will be able to show that they have that right and the further assumption that potential bidders will be undeterred by the lack of a demonstrable legal foundation for the sale and will nonetheless bid full value in the expectation that that foundation will ultimately be produced, even if it takes a year or more. The law recognizes the troubling nature of these assumptions, the harm caused if those assumptions prove erroneous, and commands otherwise.

Judge Long also had some choice words for lenders:

[T]he problem the [lenders] face (the present title defect) is entirely of their own making as a result of their failure to comply with the statute and the directives in their own securitization documents… What the plaintiffs truly seek is a change in the foreclosure sale statute (G.L. c. 244, § 14), which can only come from the legislature.

What Now?

That’s a good question and one not readily answerable. To be sure, the current state of flux and confusion surrounding foreclosure titles affected by an Ibanez issue will remain intact until an appellate court considers the case or some action by the Legislature (which may be unlikely). Given the importance of the decision, I predict that the Massachusetts Supreme Judicial Court will take the unusual step of taking the case directly from the Land Court.

As for what happens in the year or so the case may be in appellate limbo, I asked an in house counsel for a leading title insurance company, and his response was essentially that it’s going to take a fair amount of time and research to figure this one out. If there’s an existing title insurance policy on the property, some but not all of the title companies may be willing to insure over the problem. If there’s no title policy in place, affected parties are going to have to ride this one out for awhile.

Once title insurance companies offer some further guidance, I will post it here.

Is The FDIC Killing Short Sales?

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Tue, 29 Sep 2009 09:01:18 -0500

This is a big story that needs to get out there.

It's all starting to add up and make some sense. Unfortunately, it's the same old story. Taxpayers are getting screwed and the well connected like George Soros and making billions.

Via Bob Hertzog (Summit Home Consultants):

Is The FDIC Killing Short Sales?

As some of you already know, I blogged recently about being interviewed recently by our local NBC news affiliate. To read the blog, click here. Basically, IndyMac Bank (now OneWest Bank), is holding one of my clients hostage, demanding a $75k promissory note, or they will proceed to foreclosure. For the life of me, I couldn't figure out why they were doing this. The BPO came in at the contract price of $275k, with a net to IndyMac of $241k. What advantage could there possibly be for them to proceed to foreclosure?

Yesterday, I figured it out. You see, IndyMac was taken over by the FDIC and sold to OneWest Bank in March/2009. Guess who the investors are behind OneWest? George Soros, Michael Dell, Steve Mnuchin (former Goldman Sachs executive), and John Paulson (hedge-fund billionaire).

Now, listen to the deal they got from the FDIC....

Basically, they purchased all current residential mortgages at 70% of par value (70% of the outstanding loan amounts). They purchased all current HELOCS at 58% of Par Value!!!

Next, in order to "sweeten the pot", the FDIC stepped in and guaranteed the following: For any residential mortgages where OneWest experiences a loss, the FDIC will step in and cover anywhere from 80%-95% of the loss. The loss is calculated using the ORIGINAL LOAN BALANCE, not the amount that OneWest paid for the loan. Let's use my clients situation as an example:

Loan Amount is $478,000, plus 6 months of missed payments, for a grand total of $485,200

OneWest pays $334,600 for the loan

We have an all cash offer of $241,000, net to OneWest.

So, let's do the math, shall we? The net loss, according to the FDIC formula is the ORIGINAL LOAN AMOUNT minus the amount of the offer. In this case, $485,200-$241,000, or $244,200. Next, the FDIC, according to their Loss Share Agreement, writes a check to OneWest for 80% of the so-called "net loss". So, in this case, OneWest gets a check from Uncle Sam for $195,360 (.80 X $244,200).

Add the $195,360 to the sales price of $241,000, and you get a grand total of $436,360. Remember, OneWest paid $334,600 for the loan. So, OneWest puts $101,760 in their pocket, thanks to the FDIC. Folks, that is over $100k of our hard-earned tax dollars!

So, you ask...Why does this program hurt short sales? Because, our brilliant government offers this SAME PROGRAM FOR FORECLOSURES! The only difference is, the government picks up 80% of the tab on all of the extra costs associated with a foreclosure (BPO's, upkeep, utilities/maintenance, legal fees, etc.)

So, If I'm OneWest, why would I want to waste my time negotiating through a Short Sale, when I can make the same amount of money (if not more) by just letting it go to foreclosure? And we wonder why nobody can get a Loan Modification? Why would OneWest approve a loan modification for this guy, when they can foreclose and make over $100k? And, to add injury to insult, they have held this loan for 6 months! Not a bad ROI, huh?

What infuriates me the most is that in my particular case mentioned above, they have the guts to hold my client hostage for a $75k promissory note, after they are already making more than $100k on the sale!!! This is his primary residence, 1st Position loan, and OneWest has NO RECOURSE! Imagine if they could make $100k, then get a deficiency judgement! Talk about making some big bucks!

Can you say "GREED"?

The scary thing is that over 50 banks have Shared Loss Agreements in place with the FDIC. Some of them include: Bank of America (go figure), CitiMortgage, Wells Fargo, etc.

This entire agreement between the FDIC and OneWest can be found here, on the FDIC website. It's all there, for the world to see! They have it all layed out. All of the formulas, worksheets, etc.

Now, it's up to us to bring it to the attention of our elected officials and the media. Enough is Enough!

UPDATE 9/18/09: I JUST READ AN AWESOME ARTICLE ON THIS, THAT GOES INTO WAY MORE DETAIL THAN MY BLOG ABOVE. TAKE THE TIME TO READ IT WHEN YOU GET A CHANCE! CLICK HERE TO READ IT.

Wait, it gets better...The FDIC just announced that it needs to start borrowing money from the U.S. Treasure in order to replenish it's deposit insurance fund (the same fund being used to pay all of these banks in the Loss Share Agreements). Go Figure! Click Here to read it.

Short Sale Strategies- Getting The Facts Straight - Case In Point

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Mon, 28 Sep 2009 20:28:48 -0500

Can someone with good credit and good assets actually get a lender to do a short sale for them?

Katerina Gasset gives real life examples of situtations where banks are accepting short sales for people who's "hardship" might not be exactly what one would define as a hardship.

The bottom line is, everything is negotiable and you never know what a bank will be willing to do until you approach them with a proposition.

Via Nestor & Katerina Gasset Realtors® Wellington Florida Luxury Homes (International Properties and Investments, Inc.):

Short Sale Strategies- Getting The Facts Straight For Sellers With Money- Case In Point

Let me set the record straight with who can get a short sale approved and who can not.

The main answer to the question is that is all depends on the lender and their policies regarding approving short sales.

Most lenders would rather have a short sale approved then foreclose on yet another property even if there is no financial hardship.
There are some lenders who will only approve short sales for financial hardships and others who will approve short sales if the terms are right for just about anybody.
Before taking on short sales you need to find out the policies of each of the short sale lenders that you will come into contact with.

It is simply NOT true when agents tell you that your clients without financial hardships can not do a short sale. In fact, just the mere fact that an agent is making a judgment call like that without knowing or trying is doing a disservice to a seller. It depends on how hard you want to fight for your sellers.

There are a lot of blogs out there where agents who say they know how to do short sales are not stating the facts correctly.

Just because your seller does not have a financial hardship does not mean they will not get approved for a short sale.

First let's get clear on what a short sale is since even after the last several years of short sales being prominent here in Florida, many states are just now beginning to experience short sales in their respective markets. A short sale is when a seller's property is worth less and will only sell for less than what the seller owes to his lender. So the seller is going to have to ask his lender to accept less than a full pay off of what he borrowed from his lender. It is up to his lender to say yes or no or yes with conditions.

A short sale is a short pay off of a loan, nothing more, nothing less. There are many terms and conditions that can be attached to a short pay off.

So now that we all understand what a short sale actually is we can look at some different possible outcomes for a wealthy seller, an investor or a non financial hardship case. There are also many cases where the seller may appear not to have any hardship but after you ask some probing questions you may discover hardships that the seller may not think of. I will write a short sale strategy post on this process.

One other thing I want to get really straight right now is that we do list and sell short sale listings and we have clients from all different financial backgrounds and situations. So the cases I will expand upon are real but I can not disclose the names to protect the identity of clients' financials. I want to make it very clear that these are true cases. I am not making this stuff up. I am not teaching out of some real estate book. I am not out in left field. I am in my own back yard, my own field of short sales. So if you want to listen to agents who don't do short sales but tell you how to do them, that is your decision. We are in the trenches. We carry a lot of listings and we close a lot of short sales.

When you first do your intake evaluation with a potential short sale client you must make certain things very clear and you must assess the client's situation. Financial hardships are relative and you can create a good case if you know the right questions to ask.

When we have clients who have money in their bank accounts or who own several to many other properties we will not take their short sale listing unless they agree to participate in the terms of the short sale. The usual way that a short sale lender treats a short sale is that the more financially strong the homeowner is, the more the lender is going to want them to contribute with a cash contribution towards the short fall and/or a promissory note.

We have closed on short sales where there is not a financial hardship for the homeowner but that something else changed in their lives. We just closed one that Broker Bryant referred to us where the sellers have great credit, they own and live in a home in another state and they no longer wanted their rental here.

They had tenants in the rental who were paying the mortgage. Their lender turned down our first short sale offer because the sellers were current on their mortgage on the rental which is the property they wanted to do the short sale on. So then they stopped paying their mortgage.

We received another offer. You should have seen the bank statements and what they used their money for. They were also paying off their credit card debt. They kept the rental money too. The first lien holder let them off free and clear through our negotiations with them. The second lien holder asked for a $30,000 promissory note which we negotiated down to $13,000 with payment of $110 per month and ZERO interest. This was a great offer for these sellers and they understood going into this deal that they would be required to participate in some way.

It was not our job to judge their motives or whether they were 'worthy' of a short sale approval or not. Our job was to negotiate the best possible outcome for them based on their own set of circumstances.

We never take their initial offer as fact. Everything is negotiable.

Nearly every situation where there is not a hardship case the seller is going to be adding cash or signing a note. If the sellers do not want to take part in that then we don't take the listing. There are many ways around this situation which we won't go into now- suffice it to say- you got to pay if you want to play.

On our financial hardship cases, we always get our sellers off without any payment plan or cash contributions even when there is PMI involved, which I will post on later- how to deal with PMI companies.

We have another listing where the seller owes over 2.6 Million dollars ( not disclosing exact #s). We just got approval on the short sale to close in the $600,000's. The buyer is going to pay all cash. The lender wants a $25,000 cash contribution. The buyer and seller are going to pay that contribution to the short sale lender.

Case in point- Seller has over 1 million dollars in his bank account and has some joint accounts. He was going to pay to play then changed his mind. We have been through several buyers because the lender wants a cash contribution from the seller of $50,000 but the seller does not want to take that out of his bank account. He owns several other properties and is not late on any mortgage payment except this one. This is not sitting too well with his lender. They feel he is getting off too easy. We negotiate back, saying, what does it matter, still better than a foreclosure. Now we finally found a buyer who is going to contribute a large hunk of this and the seller now will finally contribute to make the short sale happen. We will get this closed.

Case in point- Seller owns many properties around the country. They want to short sale their rental here in Florida. They make very good money. We will only accept their short sale listing if they agree to contribute to the short sale financially. We know their lender and they will be able to do the short sale. The seller agrees to participate financially if that is a condition. Knowing this lender- they most likely will require a contribution. The seller understands this and will participate. Investors can get short sales approved. We have one investor where we have listed and sold 4 of his properties so far as short sales and all were approved. By the way, all of his were Countrywide loans.

Case in point- Doctors and attorneys. We list and negotiate short sales for attorneys' personal and investment properties. We have already listed and closed short sales for 2 attorneys and are in negotiations on short sales for 3 other attorneys right now. The attorneys look great on credit and paper. It is all about selling their story. They all understand that based on their occupations alone they are going to be scrutinized and expected to play ball with cash to close or promissory notes. Many attorneys have taken a hit in income depending on what their specialty is. So although they may be able to pay a mortgage payment of $3500 a month; they no longer can make payments of $7,500 a month. If the lenders are not going to approve their loan modification which has been the case for each of our attorney clients their best option may be to try to get a short sale approved, cut their losses and move on with their lives and businesses.

The biggest obstacle is getting your short sale file to the upper management in these cases because employees at these servicers are looking at the occupation of 'attorney' or 'doctor' and instantly judge them to be some rich people who are much better off than they are. Diligence is key here.

Hopefully this clears up some misconceptions as to who may get approved for a short sale. Please remember this is based on Florida stats, Florida laws and the way the lenders treat properties in Florida which is going to be much different than in Arizona or other trust deed states. The only constant is that rules and policies change in regards to short sales often.

For more information about Florida Short Sales- click here.

T o view Florida Short Sales- Click here . We know Palm Beach County Short Sales and Port St Lucie Florida Short Sales and will help you get your home Sold if you need to Sell your home and help you buy your home in Palm Beach County Florida : Call us today.

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Short Sale Strategies- Getting The Facts Straight- Case In Point! -was first published on South- Florida-Luxury-Living.com.

Copyright © 2009 By Katerina Gasset, All Rights Reserved.*Short Sale Strategies- Getting The Facts Straight- Case In Point!.*

Short Sale Commissions. Know What the Bank Will Pay Upfront.

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Sun, 27 Sep 2009 20:13:04 -0500

Cutting commissions on a short sale has been a hot topic over the past few days.

My thinking about commissions associated with short sales is that the listing commission should be negotiated up front with seller, listing agent and also seller's mortgage lender who is going to be asked to take a big hit to make the transaction happen. Let all parties involved agree before any work is started.

How can a seller in a short position agree to pay a listing commission when he knows he can't pay off the mortgage? I really don't think that is a valid contract. Agreeing to something that you know you can't perform is fraud. So why would you knowingly enter into such a contract and expect a third party to respect your contract with the seller?

I haven't taken a short sale listing so I really have no idea if a bank will agree on a commission before the listing is taken or not. But that just seems like the most logical thing to do. If you can't work out a reasonable commission, then you shouldn't take the listing.

Here is a perspective that might make you see things from the bank's perspective a little.

Let's say that you take on a short sale and the bank cuts your commission to practically nothing. Since your listing agreement is not with the seller's bank, but with the seller, there isn't much you can do. You decide to go after your seller for the commission that they agreed to pay you after the closing of the sale that shortchanged you.

Let's say that the seller owns a second car worth $20,000 which just so happens to be what they owe you for your commission. You and the seller agree that the seller will sell the car and give you the proceeds in order to settle your claim against them for your real estate commission.

They hire an attorney to arrange the sale of the car. The attorney finds a buyer for the car for $20,000. This is a very skilled attorney who has a lot of experience and isn't ashamed to charge what he thinks he is worth. He charges the seller $18,000 for his services which leaves the seller only $2,000. The seller is $18,000 short on your commission. This is the only asset they have left.

You think to yourself that the seller is an idiot for paying the attorney $18,000 to sell a $20,000 car which then leaves only $2,000 for them to pay you. You call the attorney and say that $18,000 is way too much of a fee to charge for selling a car and that the attorney needs to reduce his fee so that your seller has more money to pay you. The attorney promptly reminds you that you have no right to interfere with the attorney's agreement with the seller. The attorney has to run his business as he sees fits and it's only up to him how much he charges for his services. He has the exclusive right to sell that car for the seller and he's not going to cut his fees one penny.

You tell the seller that the $18,000 in fees to sell a car is way too much to spend and you can show them others who will do it for much less. This will allow the seller to be able to pay a much bigger portion of the commission that they owe you. The attorney says that you are illegally interfering with a contract between two other parties.

The seller says that his attorney has worked long and hard to find this car buyer and put together this deal. His attorney has many expenses he needs to pay to stay in business. Your seller goes into details about how expensive it is for attorneys to run a business. The attorney says that the partners in his firm actually take a big portion of the fee and he, himself, actually ends up with very little.

I guess my point is that a short sale is not a normal real estate transaction and if you choose to participate in it, be aware of what can happen and cover yourself accordingly. If you can't get the bank to agree to an acceptable commission up front, then decide whether or not you want to spend your time in such a risky situation.

Social Security Ponzi Scheme Starting to Collapse. Deficits to Start Next Year.

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Sun, 27 Sep 2009 19:39:04 -0500

Social Security wasn't supposed to start paying out more than it took in until 2016 according to the 2009 OASDI Trustees Report. Surprise, Surprise. Due to the unexpected rise in unemployment and early retirements, that dreaded day is here right now.

Big job losses and a spike in early retirement claims from laid-off seniors will force Social Security to pay out more in benefits than it collects in taxes the next two years, the first time that's happened since the 1980s.

The deficits - $10 billion in 2010 and $9 billion in 2011 - won't affect payments to retirees because Social Security has accumulated surpluses from previous years totaling $2.5 trillion. But they will add to the overall federal deficit.

Applications for retirement benefits are 23 percent higher than last year, while disability claims have risen by about 20 percent. Social Security officials had expected applications to increase from the growing number of baby boomers reaching retirement, but they didn't expect the increase to be so large.

Just what we needed, something else to increase the budget deficit. Do you think that their assumptions on unemployment and GDP going forward are too optimistic or too conservative? I think that they are probably expecting a much stronger recovery than we will actually see.

Even Matthew Lesko Sees Where All of the Free Government Money is Leading. Really Ironic.

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Sun, 27 Sep 2009 14:22:42 -0500

This is too funny, Matthew Lesko doing a satire on his own commercials.

If you haven't seen Matthew Lesko, he sells books on how to take advantage of all kinds of government programs. The second video is actually one of his ads.

I find it so funny and ironic that he did the first video. I guess it's just a whacky world we live in.

If the Economy is Turning, Why Are Ships Sitting Idle at the Peak of the Christmas Shipping Season?

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Sat, 26 Sep 2009 17:30:28 -0500

I've seen many economists say that the recession has ended and the economy has started to turn.

Last week I showed how state sales tax receipts in July and August are down about 10%.

At this time of year, most of the products that are going to be sold during the Christmas season need to be on a boat on their way to store shelves.

Instead of ships being loaded down with cargo, steaming across the oceans, empty ships are floating around remote waters with no place to go.

The ghost fleet of the recession is an indicator that is saying that the recession doesn't look like it's over yet.

The biggest and most secretive gathering of ships in maritime history lies at anchor east of Singapore. Never before photographed, it is bigger than the U.S. and British navies combined but has no crew, no cargo and no destination - and is why your Christmas stocking may be on the light side this year
...
This time last year, an Aframax tanker capable of carrying 80,000 tons of cargo would cost £31,000 a day ($50,000). Now it is about £3,400 ($5,500).
...
'A couple of years ago those ships would have been steaming back and forth, going at full speed. But now you've got something like 12 per cent of the world's container ships doing nothing.'

Shipping numbers and sales tax receipts are two real time statistics that show what's actually going on in the economy. It's hard for the government to distort them too much.

Businesses seem to think that Christmas sales will be way down this year. I guess if they guessed wrong, shoppers will be fighting over the limited supplies.

Bailouts Are Mob Rule, not Rule by Law

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Wed, 23 Sep 2009 15:29:26 -0500

Do we live by mob rule or the rule of law? The more I think about it, the more I see it as mob rule. Better yet, mobster rule.

I don't believe in any kind of bailouts. I'm a simple guy. I believe in living by the law and having the government enforce the law. The law should protect people from theft, fraud and assault. The law should enforce contracts. The law shouldn't favor one group of people over another.

When you start straying from those limited duties and allow the government to show favor to one group or another, you either get mobster rule or mob rule, which turns into mobster rule.

What do bailouts do? They take money from the many and funnel it to the few. Who decides who gets the money? There always has to be decision makers for that. The more you influence the decision makers, the more likely you'll get a piece of the bailout.

In mobster rule, you get corrupt government officials manipulating the system to the benefit of their benefactors. You have to be a Good Fella and play the political game. If the common folk don't pay, they have Guido, the IRS agent, pay them a visit.

Unfortunately, the common schmuck just doesn't have much influence. So they get upset and angry when they see favors being dished out to insiders who have the means and connections to influence the decision makers.

If they band together and form a majority, they might be able to get the system to steer some benefits to them. Many call this democracy. I like to refer to it as mob rule. Mob rule is great if you are part of the mob. But I'd hate to be the chicken when it's me and two foxes deciding what's for dinner. Mobs have to eventually get organized and have leaders, so it eventually gets back to mobster rule.

Human nature is what it is. Our founding fathers recognized it and set up a great system to account for this human nature. They created the Constitution that put strict limits on what the Federal government was allowed to do. Unfortunately, we have allowed these limits to be ignored and now with the passage of time, have forgotten how important these limits were.

I feel sorry for everyone who is upside down on their home. Real estate prices weren't supposed to go down. Like much in life, timing is everything. But should we tax everyone, homeowners and renters, in order to help the few home owners in trouble? Is that fair to the renter who sat on the side lines because they thought the prices people were paying for homes were crazy? Should we prop up home prices to help current home owners. Many non-owners haven't benefited yet from past home appreciation and unless prices come down, they'll never be able to hop on to the homeowner bandwagon. So by propping up prices, you help some but hurt others.

So what should be done? Maybe you are the smart and wise one who can decide who pays and who receives. That's a very powerful position to be in. Can you handle that power? Should you really have that power?

I say that the big government experiment has been tried and shown to be a failure. It's time to get back to basics and back to very limited government as stipulated in the Constitution.

Let's get the government out of guaranteeing everything. It has taken a generation or two to finally see that the nanny state just doesn't work. I think it's becoming clear that the system has removed personal and corporate responsibility from decisions.

Whenever there's too much of a guarantee, people take more risks or they don't do good due diligence.

Why worry about what bank you put your money in? The FDIC is there to bail you out if you make a bad decision. So you go with the bank that pays you the most interest. Why not? There's nothing to lose. In order to pay you that extra interest, the bank has to make riskier, higher paying investments. If they luck out, you win and they win. If not, the taxpayer bails out the banks because they are too big to fail.

Fear of loss is a good thing. It's one of the checks that keeps things balanced.

Maybe some long held beliefs need to be changed.

Real estate prices always go up.
Your home is an appreciating asset.
Renting is just throwing money away.
Some banks are too big to fail.
Trust me, I'm from the government.

Let's stop the insanity of relying on the government to bail us out. No good will ever come of it. It just gets us going down the road of dependency and away from self reliance.

The best way to start to change things is to vote out every Congressperson who voted for any bailouts. Throw them out and replace them with people who respect the limits imposed by the Constitution. When government gets to be an insignificant player in the lives of people, and gets back to enforcing the laws, freedom will be given the opportunity to work it's magic again.

I trust the actions of free people over the actions of big government.

Losses Don't Just Disappear. Eventually Their Loss Is Your Tax Bill.

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Wed, 23 Sep 2009 14:48:17 -0500

Money magazine just had the stories of 4 people who were "victims" of the housing bubble. These people all have made it through a tough journey and you kind of feel happy for them that they are out of their dire circumstances.

A series of personal choices and a few unforeseen circumstances wrecked them finanacially.

"their goddaughter came to live with them. ....

Bill stopped working so someone would be home, which halved the couple's income. Then, there were big expenses for taking care of the child.

"She needed a lot of extra care," Lori says. "We put a lot of money into her education, dropping $50,000 the first year into Sylvan Learning Center for remedial work."

The coup-de-grace happened when Lori injured her back and couldn't work.

They burned through their savings and took out a second loan on the house. Their monthly mortgage bill, about $1,400 when they first bought the house, ballooned to $4,400. They started missing payments; they simply didn't have the money. They went nine months without paying.

"Oh my God, it was so horrible, the worst stress we'd ever been under," Lori says. "It sent my husband over the edge to a nervous breakdown."

Before this all happened, the article goes on about how they spent a lot of money on vacations and nice stuff. I guess they didn't think saving for a rainy day was very important.

So they did a short sale and now they are have their dream jobs and are renting a place from his mother.

That sounds nice that everything worked out and they are back on their feet.

But I began thinking about the losses that were taken by the bank in the short sale. Do those losses just disappear? These people borrowed real cash from their cash-out refinances to buy real stuff. They were supposed to repay the money from the money they eventually earned by doing real work. So when they default on the loan, does the work they needed to do in the future to repay the loan just magically disappear? Can we just forget about it and make believe it never happened?

Let's follow the money. There are a few possible scenarios.

The bank has to take the loss. I guess it's just part of the business that they are in. Their job is to try to lend money to people who they think will be able to pay them back. On this one they took a loss. So the bank's shareholders will lose money.

But what if this is one of the many troubled banks or a bank that is "too big to fail". They will get a bailout from the Treasury which means that Mr. and Mrs. taxpayer are picking up the loss.

What if it is a bank that actually does fail because they made too many of these loans that didn't get paid back? Well then the bank gets shut down by the FDIC and all of the bank assets are sold off and any losses eat up the capital reserves that the investors in the bank paid. I guess that's a risk of investing in a bank. Now the way the FDIC is supposed to work is that it supposed to monitor the capital reserves a bank holds in case some of it's loans go bad. Usually the FDIC forces a bank into bankruptcy when they figure that the reserves are at a point where if they had to sell off all of the assets of the bank there wouldn't be enough to cover all of the deposits of their depositors.

Unfortunately, the FDIC hasn't been doing their job too well. They've been waiting too long to close down many banks until the losses of the banks are more than the capital reserves. So not only do the investors get wiped out, but now the FDIC has to dip into their insurance fund to pay off all of the depositors.

Now the FDIC is out of money. It is broke. So now it has to tap into a credit line that the Treasury has issued to it.

You got it. That means Mr. and Mrs. taxpayers gets to pick up the loss.

The point is that losses just don't disappear into thin air. Someone has to pay for them. Someone has to sell something of value or work a certain length of time to produce the money that was squandered or lost by someone's unfortunate circumstances.

So the taxpayer who was lucky and thrifty and conservative with his money gets to pick up the tab for someone else's misfortune and lack of savings.

The taxpayer also gets to backstop the bad decisions of the incompetent bankers without sharing in the profits that were made from the fees collected in originating the loans. The banks get to keep the profits while the taxpayer gets to share in the losses. With that kind of set up, why wouldn't a bank try to make as many loans as possible? Why not go for the high risk, high fee loans? When times are good, profits go up and big fat bonuses are given out. Bonuses that don't get clawed back if things eventually blow up.

I have a feeling that some of this is what's getting many taxpayers riled up. They might not know the exact details of how they are getting screwed, but they get the sense that something just isn't right here and they keep getting the short end of the stick.

Voluntary Taxes. Politicians and Their Twisted Meanings of Words

Tim Maitski "Video Agent Guy" (HomeAtlanta.com) — Wed, 23 Sep 2009 07:21:04 -0500

My general rule of thumb is to never trust what a politician is saying even though it sounds like they are saying something that you agree with.

It seems like many politicians can take a simple word and attach a very different meaning to it.

Harry Reid says that paying your income taxes is voluntary? Forget about the little detail that if you don't pay them that the IRS will use force to collect them or use force to put you in jail. You see, "voluntary" in his dictionary means that you are allowed to fill out the forms yourself and send in your taxes in the mail.

I wonder if you rob a bank but allow the teller to fill up your bag while you're pointing a gun at them, is the bank voluntarily giving you their money?

Jan Helfeld has done a bunch of interviews over the years asking some pretty simple questions. He gets down to the basic principles on issues. It's interesting to see how many of those that he interviews get all flustered and angry. I find it very entertaining.

Here's Harry Reid explaining how the US tax system is a voluntary system. It makes you question everything else that comes out of his mouth.