Ricardo 's Blog

Would Down Payment Assistance Programs Help or Hurt the Credit Markets?

Ricardo Cortez (Liberty One Lending ) — Tue, 18 Nov 2008 15:58:52 -0600

We need to get some form of Down Payment Assistance Back to help the real estate market moving again

Via James Wexler, Scottsdale AZ Luxury Homes (Coldwell Banker):

In the midst of the mortgage crisis, rising interest rates and tighter lending and the disappearance of 100% financing, the last lending option has been taken away for credit worthy borrowers who lack the money for a down-payment

Down-payment assistance programs like

Ameridream,

Nehemiah

Grant America Program

have offered Phoenix area home buyers....an opportunity to obtain mortgage loans with the help of non-profit organizations and charity assistance groups that contribute the down-payment for buyers to obtain FHA loans.

However,

Federal Regulators believed that these lending practices and programs is actually a contribution or kick-back from the seller. Here's why.

The buyer is including an extra amount (usually 3%-5%) in the price of the loan which is insured by FHA which insures all loans involving down-payment assistance. The money then is a credit funneled from the seller to the non-profit organization to the buyer as a down-payment.

This practice, which has been described as a ‘loophole' in FHA guidelines that allows down -payments from charities has been banned.

Now that sub-prime loans require much higher down-payments, this has become a very popular strategy to get risky loans approved with little money down that are still insured by FHA. Thus, Wall Street buyers of loans can more comfortably buy the debt as any default would be insured by the FHA.

The housing-reform bill eliminatd this practice.

What do you think?? should this be reversed ??

Would Down Payment Assistance Programs Help or Hurt the Credit Markets?

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Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale Real Estate needs

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Danger Signs that your Finances are in Trouble!

Ricardo Cortez (Liberty One Lending ) — Sun, 16 Nov 2008 13:13:52 -0600

I encourage my clients to get a quarterly financial check-up by reviewing their credit report

Via James Wexler, Scottsdale AZ Luxury Homes (Coldwell Banker):

As real estate prices continue to slide in greater Phoenix and the surrounding towns including Scottsdale, Fountain Hills, Peoria, Tempe, there has been a flurry of activity of an again emerging class of buyers, First-Time home buyers.

Prices have fallen back into affordability levels. Interest rates are still historically very low. And with Federal legislation allowing incentives and exceptions in Fannie Mae and Freddie Mac financing,

...these buyers are who had been for many years, priced out of entry level housing are now the lone winner of they housing crisis sweepstakes.

However, if you are in the market to buy a home using FHA financing, keep an eye out for danger signs of your personal finances before you buy as financing and purchasing home using FHA loans is now more than ever credit score driven.

Know your FICO score and what it means

Review your credit report with a lender sooner than later

Report mistakes or outdated information

pay down debt

do not make an large purchases

Dont' fall for credit repair scams

Pay your bills on-time

these may be signs that your finances are in trouble. If you find yourself ,

maxing out credit cards

paying late on debt

borrowing on cards to pay other cards

tapping into home equity to pay other debt

receiving notices that credit lines are being reduced

HELOC or credit card rates are being increased

If this might be the case, I encourage you to address the situation sooner than later. And,...

...definitely do not add more debt and leverage and

don't purchase a home before your financial foundation is firmly on the ground.

____________________________________________________________________________

© James Wexler, *Danger Signs that your Finances are in Trouble! *

Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale Real Estate needs

Is your Phoenix AZ Builder going bankrupt?

Ricardo Cortez (Liberty One Lending ) — Fri, 07 Nov 2008 10:36:12 -0600

Great Info provided by James Wexler

Via James Wexler, Scottsdale AZ Luxury Homes (Coldwell Banker):

Until now, Phoenix area home sellers where those most severely impacted by the sharp drop in Arizona real estate prices and disappearance of home buyers.

A new victim is emerging; .....Buyers of new home construction.

There are an increasing number of builders who are suffering from this Real Estate recession. As a result, they are having problems with financing and many new home builders in Arizona are filing for bankruptcy protection.

In fact, nationally, there are a record number of builders going broke and looking to the U.S. bankruptcy court for protection from creditors.

The larger builders are suffering less than the small local builders who were caught in the Phoenix, Scottsdale downturn and national mortgage crisis and have less access to capital to weather the storm.

Let me be clear. The vast majority of builders in the Greater Phoenix area are stable and have the assets and resources to remain.

However, there are also a growing number who are struggling to meet financial demands. As a result, they are having difficulty continuing operations.

What does this mean to buyers?

The new victim is the buyer of new construction from these failing builders. Buyers bough lots, picked floor plans and are in the middle stages of the building process of their home. Now, there are increasing instances of builders not being able to finish the homes.

The buyers of new construction are in a unfortunate situation. They have put down a minimum of 10% of the home value. They have prepared to move into their home at a predetermined date. Now the builder is insolvent and filing for Bankruptcy. They do not have the financial capability to complete construction.

This is such a growing concern that Sam Wercinski, Arizona's Real Estate Commissioner, issued a Consumer Alert to buyers of homes form Arizona home-builders.

"Homebuyers and their real estate agents have the right to know if a builder is in financial trouble and what the status of their earnest money or home completion is. The Department of Real Estate can help provide this information and give assistance to consumers in need,"

The Arizona Department of Real Estate is now posting information on builders who are in bankruptcy or are having financial difficulties so consumers can make informed decisions and take steps to protect themselves.

A list of known builders is available on the Department's website: www.azre.gov Consumers should also reference the Commissioner's Advisory No. 2 on the website's home page which provides guidance for homebuyers, real estate agents and others impacted by a builder ceasing operations.

You can also contact the National Association of Homebuilders (NAHB) or the Arizona Association of Homebuilders for information on local builders financial health.

If you have been considering buying a home from a new home builder, make sure you check the list before making a decision.

If you are in the middle of the home building process, ask your Realtor for an update and information on its ability to continue and complete construction.

Bernanke: " Must back Fannie Mae Debt" !

Ricardo Cortez (Liberty One Lending ) — Fri, 31 Oct 2008 14:11:15 -0500

Federal Reserve Chairman Ben Bernanke said on Friday it is appropriate to debate the future of mortgage finance firms Fannie Mae (NYSE:FNM - News) and Freddie Mac (NYSE:FRE - News), but U.S. backing for Fannie Mae and Freddie Mac debt they issue in their current form must stay firm.

"Even if alternative organizational structures are considered for the future, the U.S. government's strong and effective guarantee of the obligations issued under the current GSE (government-sponsored enterprise) structure must be maintained," he told a public policy symposium by videoconference.

The U.S. government took over Fannie Mae and Freddie Mac in September as the companies finances foundered.

Bernanke said that some form of government backing for bundling mortgages together as securities is probably still needed in times of financial strain.

"Experience suggests that, at least under the most stressed conditions, some form of government backstop may be necessary to ensure continued securitization of mortgages," he said.

5 Reasons Not to Buy a home!

Ricardo Cortez (Liberty One Lending ) — Fri, 31 Oct 2008 14:06:52 -0500

I recommendign asking these 5 Questions to all your clients

Via James Wexler, Scottsdale AZ Luxury Homes (Coldwell Banker):

I am sure that if you have thought about buying a home and asked real estate agents, co-workers, friends and family the question if now is the time to buy, you have heard this response,

"there will never be a better time to buy".

This may or may not be true. In greater Phoenix, Scottsdale, Fountain Hills, Peoria and many other of the surrounding cities of Phoenix, home prices are down more than 20%. In some place more than 30%.

Real Estate Buyers are asking themselves if now is the time to buy. No one has a crystal ball or clear picture of the future. However, one answer to the question of whether or not now is the time to buy a home is "it depends"!

I am not skirting the question. In fact, "it depends" is the only certain answer. What may make sense for you friends, may not be the right reasons for you and your family to buy a home.

In theory, every time there is a buyer , there is a seller. Thus, 2 people simultaneously having the exact opposite outlook. The reason is not opposite long-term outlook on Real Estate; but simply, different wants, needs, desires and financial conditions at that point in time.

Bottom line; each person's individual situation situation is unique.

Ask yourself these 5 questions, ...

so you can decide if now is "Not" the right time to buy real estate.

Will you be in your current job for at least 3-5 years? - If there is any chance of relocation or job change in the near future, I would not recommend you buy with this potential financial instability.

Do you see any major family changes, children, divorce or separation in the foreseeable future? children are a large expense and selling a home through a divorce or separation is not an ideal scenario for best results.

Will a new mortgage test your financial limits? - there is no reason to work so hard to barely pay a mortgage on a home you cannot enjoy.

Do you have at least 6 months of emergency savings in case of unforeseen financial hardships? Make sure that you have savings should an unforeseen event cause short-term problems in paying your mortgage. Losing your home can be emotionally and financially devastating to families.

Do you have 10% (20% is better) down payment? - If you cannot get a fixed mortgage payment at a favorable rate, it is likely that you cannot quite be certain enough you will be able to afford your home for more than 3 -5 years.

There are other consideration and questions to ask if you should buy a home. However, it is an important decision. Be prudent and consult with many real estate experts who truly understand your personal and financial snapshot.'

If you are not 100% sure, it probably means you should wait; Remember, there is no last opportunity to buy.

For a list of more important questions you may want to ask prior to buying a home, please contact me directly 480.221.8080

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Copyright © James Wexler, *5 Reasons - Not to Buy a home! *

Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale Real Estate needs

Will mortgage brokers become extinct?

Ricardo Cortez (Liberty One Lending ) — Wed, 22 Oct 2008 15:23:09 -0500

Via James Wexler , Associate Broker ~ Coldwell Banker (Scottsdale AZ):

earlier this year, while it was still in business, Wachovia Bank announced that they, (Wachovia) is exiting the General Bank wholesale mortgage origination channel.

This was a shocking follow up from the announcement from Bank America closing its wholesale division of lending through mortgage brokers.

Look no further than www.ML-Implode.com; Here you can watch the wreckage in the mortgage lending business tallied for the world to see.

Industry guru, Rob Blake wrote asked ... are Mortgage Brokers are an endangered species?

He pointed out that If you listen to Mortgage (broker) Industry insiders you will hear whispers that the 'all-powerful' "banking lobby will finally get the Government to legislate mortgage brokers out of existence."

In his very well written article, he outlines the history of the banking industry's "pursuit of the killing off their competition, many believe the banks decided upon a "scorched earth" plan to rid themselves of retail mortgage competition once and for all. The Plan was one they pulled from the S&L play book a decade earlier".

Blake argues that if the Banks "Give the mortgage brokers just enough rope to hang themselves just like the Savings and Loans did!"

Before, you write this banter off as conspiracy theory hogwash, listen to what has happened and the now dreaded word of the year for 2007. Sub-Prime :

Sub-prime loans, Alt-A loans, option-arm 's , etc.. where originated through private banks; specifically depositor banks to start. (many other private and smaller institutions entered the frenzy to make a quick buck from borrowers who mostly could not afford the loans. Although this is another topic for another day.)

Borrowers did not need to go to their local banks to get a loan. They could get these sub-prime loans through mortgage brokers who could virtually originate a loan to anyone who could sign their name.

Borrowers wanted to buy, they wanted these aggressive loans and the bank underwriters approved the loans. Hey, give the customer what they want, right? and, ultimately the deposit banks where approving these loans.

So, in the vast majority of cases, it's not the honest mortgage broker's fault. It's the banks who approved the risky loans. Right?.. Wrong!

You know who is now getting too much of the blame. -- The mortgage broker.

Currently, their is a vast inspection and audit of the entire industry. Primary focus are new and strict lending guidelines and practices aimed primarily at the mortgage broker.

In fact, not only are the banks not being blamed. They are getting bailed out by the Government.

Think Bear Stearns. Think Fannie Mae. Think Freddie Mac. So on, and so forth , and so on.....

Wow, a deposit bank, JP Morgan/Chase was able to sweep in and buy Bear Stearns . Not only at pennies on the dollar, but with guarantees and assurances and actual insurance from the Federal government. Not bad for Chase Bank, right?

The current and pending Federal Legislation (pushed by the banking lobby) that requires heavy regulation and oversight of mortgage brokers. Mortgage brokers will continue to have less and less product availability. Comparatively to banks, they have unfavorable pricing of rates.

It is not unforeseeable that these factors may ultimately put mortgage brokers out of business!.

Ask yourself, ....why would you go anywhere else but a big bank?

"when the dust settles a few years from now, every one will go to a bank to get a mortgage because that is all that is left.

Often, where there is smoke, there is fire.

I hope he is wrong. However, I am concerned he may be right

____________________________________________________________________________

Copyright © James Wexler *Will mortgage brokers become extinct?*

Contact James Wexler (480) 221-8080 for your Phoenix | Scottsdale Real Estate needs

Presidential Race is going to be a photo finish

Ricardo Cortez (Liberty One Lending ) — Wed, 22 Oct 2008 15:22:30 -0500

The presidential race tightened after the final debate,

John McCain gaining among whites and people earning less than $50,000, according to an Associated Press-GfK poll that shows McCain and Barack Obama essentially running even among likely voters in the election homestretch.

The poll, which found Obama at 44 percent and McCain at 43 percent, supports what some Republicans and Democrats privately have said in recent days: that the race narrowed after the third debate as GOP-leaning voters drifted home to their party and McCain's "Joe the plumber" analogy struck a chord.

Three weeks ago, an AP-GfK survey found that Obama had surged to a seven-point lead over McCain, lifted by voters who thought the Democrat was better suited to lead the nation through its sudden economic crisis.

The contest is still volatile, and the split among voters is apparent less than two weeks before Election Day.

who will be hit the hardest in the mortgage crisis

Ricardo Cortez (Liberty One Lending ) — Thu, 09 Oct 2008 19:17:39 -0500

Mr. Prashant Gopal of Business week wrote an article about the financial crisis and what towns will be hit the hardest.

10 Towns That Will Be Hit Hardest

1. Darien, Conn.
Share population in finance and real estate: 27.23%
Nearest large city: New York
Population: 20,666
Median salary: $168,687

2. Bloomington, Ill.
Share population in finance and real estate: 26.31%
Nearest large city: Chicago
Population: 70,395
Median salary: $54,971

3. Hoboken, N.J.
Share population in finance and real estate: 23.33%
Nearest large city: New York
Population: 40,002
Median salary: $81,356

4. West Des Moines, Iowa
Share population in finance and real estate: 22.15%
Nearest large city: Des Moines
Population: 54,627
Median salary: $61,303

5. Garden City, N.Y.
Share population in finance and real estate: 20.22%
Nearest large city: New York
Population: 21,671
Median salary: $121,831

6. Summit, N.J.
Share population in finance and real estate: 19.74%
Nearest large city: New York
Population: 20,618
Median salary: $111,497

7. Westport, Conn.
Share population in finance and real estate: 19.39%
Nearest large city: New York
Population: 26,822
Median salary: $137,133

8. University Park, Tex.
Share population in finance and real estate: 18.83%
Nearest large city: Dallas
Population: 24,582
Median salary: $110,976

9. Wethersfield, Conn.
Share population in finance and real estate: 18.73%
Nearest large city: Hartford
Population: 26,146
Median salary: $63,359

10. Mountain Brook, Ala.
Share population in finance and real estate: 18.66%
Nearest large city: Birmingham
Population: 20,654
Median salary: $115,148

Banks borrowing record amounts ! Is it enough?

Ricardo Cortez (Liberty One Lending ) — Thu, 09 Oct 2008 19:13:37 -0500

Banks borrowed in record amounts from the Federal Reserve's emergency lending facility over the past week, while investment banks drew loans at a brisk -- though slightly lower -- pace, fresh proof of the credit problems gripping the country.

The Fed's report released Thursday said commercial banks averaged a record $75 billion in daily borrowing over the past week.

For the week ending Wednesday, investment firms drew $134 billion. That was down from a record $147.7 billion in the previous week.

This category was broadened last week to include any loans that were made to the U.S. and London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley and Merrill Lynch.

Squeezed banks and investment firms are borrowing from the Fed because they can't get money elsewhere. Skittish investors have cut them off, moving their money into safer Treasury securities. Financial institutions are hoarding whatever cash they have, rather than lend it to each other or customers.

Stock Market Crash? yes!

Ricardo Cortez (Liberty One Lending ) — Thu, 09 Oct 2008 19:11:28 -0500

The Dow ended the day at its lows, finishing down 678.91, or 7.3 percent, at 8,579.19. T

he blue chips hadn't closed below 9,000 since June 30, 2003, and haven't closed at this level since May 21, 2003.

The Dow's 2,271-point tumble over the last seven sessions is its steepest seven-day point drop ever.

Its seven-day percentage decline of 20.9 percent is the largest since the seven-day plunge ending Oct. 26, 1987, when the Dow lost 23.8 percent.

That sell-off included Black Monday, the Oct. 19, 1987 market crash that saw the Dow fall nearly 23 percent in a single day.

The S&P 500 fell 7.6 percent,

Nasdaq composite index fell 5.5 percent, to 1,645.12.

Appraisal Contingency - clarified by AAR (Arizona Association of Realtors)

Ricardo Cortez (Liberty One Lending ) — Thu, 09 Oct 2008 19:08:39 -0500

Via James Wexler, Associate Broker~Coldwell Banker:

A quick post for my fellow real estate professionals in Arizona;

as well as home buyers and home sellers who may be in escrow and should be aware of the AAR (AZ Association of Realtors) legal opinion on...

‘Appraisal Contingency' and how it buyer & seller rights, time frames and earnest monies.

Please note, this opinion pertains only to the AAR Purchase Contract used in Arizona.

Neither the AAR or myslef is offering any opinion in other states.

However, I encourage all Real Estate Agents and Brokers to examine rules in their respective states.

In the past there has been some confusion on whether or not,

according to AAR Purchase Contract ..... as it pertains to cash buyers,

Can Cash Buyers ** cancel a contract if the home fails to appraise for the purchase price anytime during the escrow period??

In essence,

does the appraisal for sales price contingency runs the life of the contract??

According to the newsletter this month from AAR, This is NOT TRUE!

"Cash buyers can only cancel a contract within the inspection period, if a home fails to appraise.

Lines 59-61 (of the AAR Purchase Contract) only apply if financing is involved.

I hope this helps! and Good luck to all of you!

~ james wexler

Associate Broker

Coldwell Banker

Time to Buy!! or sell ??

Ricardo Cortez (Liberty One Lending ) — Thu, 09 Oct 2008 19:07:36 -0500

Stocks plunged Thursday, sending the Dow Jones industrial average down 679 points -- more than 7 percent --

the stock markets are at their lowest level in five years.

Stocks took a nosedive after a major credit-rating agency said it might cut its rating on General Motors and Ford, further rattling investors already fretting over the impact of tight credit on the economy.

I know I cannot be too far off when I say, you have to consider buying at these levels.

Unemployment is the real problem

Ricardo Cortez (Liberty One Lending ) — Sat, 04 Oct 2008 11:02:38 -0500

Jobs are vanishing at the fastest pace in more than five years with pink slips likely to keep stacking higher in the months ahead,

an urgent signal the country may be careening toward a deep and painful recession just as Americans prepare to elect a new president.

It was the ninth straight month of job losses.

Over the last year, the number of unemployed people has risen by 2.2 million to 9.5 million.

Even with Congress' unprecedented $700 billion financial bailout, the faltering economy and the jobs market probably will get worse.

The unemployment rate could hit 7 or 7.5 percent by late 2009.

If that happens, it would mark the highest since after the 1990-91 recession.

Some economists say the jobless rate could rise even more before the situation starts to get better.

Bailout - will not work right away

Ricardo Cortez (Liberty One Lending ) — Sat, 04 Oct 2008 10:55:36 -0500

The Treasury will buy banks' risky mortgage-backed assets in an effort to alleviate investors' worries about the institutions' solvency and free them up to do more lending.

Even if those efforts succeed, the effects of the FED bailout will be far from instantaneous, and borrowing could remain very expensive for some time.

With the economy in such a weak state, lending to consumers and businesses will still appear risky until certain factors -- particularly employment and the housing market -- improve.

It could also get even harder for certain individuals to get home loans.

Banks have gotten more stringent in their mortgage underwriting, and Wisconsin's affordable-housing agency recently suspended making loans for single-family homes because it was unable to sell tax-exempt mortgage re

Obama or McCain! - who is better for real estate recovery

Ricardo Cortez (Liberty One Lending ) — Fri, 03 Oct 2008 20:35:32 -0500

Via James Wexler, Associate Broker~Coldwell Banker:

As we are watching the rhetoric of the Debates and the campaigning to be the next President of the United States.

One of the key issues and question on many people's mind is what will either candidate do, if elected, to stimulate an ailing real estate market, especially here in Arizona.

Each candidate has expressed strong views on the housing market, sub-prime debacle, and the economy overall as high energy and food prices are cutting into many peoples ability to pay their mortgage.

Senator McCain was originally against strong Federal legislation in a sense bailing out home owners, investors and even banks who lent risky loans.

However, he has "joined Senator Obama in supporting the idea of the $700 Biillion Federal Bailout or "Rescue Plan" for the banks to create liquidity in the banking system

Sen. Obama has suggested $10billion in direct government funding to help homeowners sell their homes of modify their loans to avoid bankruptcy or Foreclosure.

Sen. McCain feels struggling homeowner and borrowers should share the responsibility and if helped should share equity (if there is a gain) with the lender and Federal Government.

Obama wants the government to lend money to struggling home owners. Money which usually comes in the form of higher taxes

McCain has pledged to eliminate (AMT ) taxes. A break that many Americans want (and need). However AMT tax cut with other extended tax cuts leaves less money help to home owners. Unless, of course, other government programs are sacrificed. A move, most do not want.

The November election and January inauguration is on the doorstep.

We have to see how the $700 Billion bailout shake out plays out. (kind of rhymes :) ... for the housing and mortgage market to indicate what role and lwhat plan will work better for our 44th President.

Please contribute to a simmering and what is sure to become a boiling discussion and debate (argument ?) in the coming months.

I encourage everyone to chime in and speak your mind!! ... remember ,

$700 billion divided by $100 million is $7 thousand per Taxpayer !!

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is the bailout enough?

Ricardo Cortez (Liberty One Lending ) — Fri, 03 Oct 2008 20:32:26 -0500

The credit markets finally got a bailout bill, but the stranglehold hasn't let up --

a troubling sign that lenders and investors believe the package will only be a baby step in the long road to economic recovery.

The credit markets, where companies go to get cash loans, have seized up since the bankruptcy of Lehman Brothers Holdings Inc. and in anticipation of the $700 billion plan initially voted down by the House.

The House passed a revised version of it Friday following the Senate's approval earlier this week, but anxiety about its effectiveness kept demand for Treasury bills high and nearly nonexistent for other types of debt.

Overall, market participants have begun regarding the rescue plan as a medicine for what's ailing the financial system, but not a cure-all.

Some are worried, though, that the plan will not work at all.

Wall Street doesnt like Main St. bailout

Ricardo Cortez (Liberty One Lending ) — Fri, 03 Oct 2008 17:09:12 -0500

Wall Street ended its worst week in seven years with another tumble on Friday on fears that the $700 billion financial rescue package may not unblock credit markets and stave off a U.S. recession.

After much legislative haggling that roiled and captivated global markets for the past two weeks, the U.S. House of Representatives passed the bill on its second try and President George W. Bush signed it into law.

Financial stocks, which had traded sharply higher on the expectation the bill would be passed, fell after the House vote. Traders cited profit-taking and said the market was now focusing on the tough economic road still ahead and on how the bill will be implemented.

The S&P financial index fell 3.9 percent, while the three major indexes all fell more than 1 percent.

Freddie Mac - mortgage rate report

Ricardo Cortez (Liberty One Lending ) — Thu, 25 Sep 2008 15:18:23 -0500

The Freddie Mac survey showed that other mortgage rates rose this week as well.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, rose to 5.77 percent, up from 5.35 percent last week.
Rates on five-year, adjustable-rate mortgages averaged 6.02 percent this week, up from 5.67 percent last week.
One-year, adjustable-rate mortgages rose to 5.16 percent, up from 5.03 percent last week.

The mortgage rates do not include add-on fees known as points.

A year ago,

rates on 30-year mortgages stood at 6.42 percent,
15-year mortgage rates averaged 6.09 percent,
five-year adjustable-rate mortgages were at 6.15 percent and
one-year adjustable-rate mortgages stood at 5.60 percent.

30-year rates jump

Ricardo Cortez (Liberty One Lending ) — Thu, 25 Sep 2008 15:10:58 -0500

Rates on 30-year mortgages, which had been falling for five weeks, jumped sharply this week, reflecting the turbulence in global credit markets.

The increase, which pushed rates above 6 percent for the first time since early September, was blamed on turbulent financial markets, which in recent weeks have been hit by the biggest upheavals on Wall Street since the Great Depression.

Freddie Mac reported Thursday that its nationwide survey found that the average for 30-year, fixed-rate mortgages rose to 6.09 percent this week, up from 5.78 percent last week. Last week's rate had been the lowest level for 30-year rates since February.

"Mortgage rates followed Treasury bond yields higher this week amid market uncertainty over the current state of the economy," said Freddie Mac chief economist Frank Nothaft.

stocks up 200 on bailout news

Ricardo Cortez (Liberty One Lending ) — Thu, 25 Sep 2008 15:08:24 -0500

Financial markets grew more upbeat Thursday as congressional leaders said they had struck an agreement in principle on the government's plan to revive the crippled financial system.

The Dow Jones industrial average rose more than 200 points on optimism about the plan, and demand for short-term, safe-haven assets eased slightly as some investors bet that a deal would help unclog credit markets.

Stock market investors clearly were more upbeat after key lawmakers said they would present the $700 billion plan to the Bush administration and hoped for a vote by both houses of Congress within days. Still, some resistance

President Bush is expected ratify this plan in the next few days

We need the bailout!

Ricardo Cortez (Liberty One Lending ) — Thu, 25 Sep 2008 14:40:18 -0500

We need the Bailout. No matter how much it hurts. the outcome is worse.

Economic reports are staggering besides the weak housing report,

new claims for unemployment benefits shot up last week to the highest level in seven years.
Orders to factories for big-ticket manufactured goods fell by a much-bigger-amount than expected amount of 4.5 percent in August.

Both indicate the rising pressures facing the economy.

The big drop in new home sales
the steepest housing downturn in decades.

That housing slump has contributed to a record surge in mortgage defaults,

billions of dollars in losses by financial firms
severe credit crisis that is threatening to send
the country into a steep recession.

and some not so good news

Ricardo Cortez (Liberty One Lending ) — Thu, 25 Sep 2008 14:14:20 -0500

New home sales tumbled in August to the slowest pace in 17 years, while the average sales price fell by the largest amount on record, demonstrating the depth of the problem that Washington is trying to solve.

New home sales have been slow across the country.

The Commerce Department said Thursday that new homes sales fell by 11.5 percent in August to a seasonally adjusted annual sales rate of 460,000 units, the slowest sales pace since January 1991.

It was a much bigger sales decline than the small 1 percent drop that economists had been expecting. The average price of a new home sold in August dropped by a record amount of 11.8 percent to $263,900,

Financial Health of the American Consumer

Ricardo Cortez (Liberty One Lending ) — Thu, 25 Sep 2008 14:12:21 -0500

Via James Wexler, Associate Broker~Coldwell Banker:

Amidst the good news of home sales increasing , we see some discouraging news of the financial health of the American consumer and business.

The government reported that Bankruptcy filings surged 29% in the 12 months that ended June 30.

Business filings jumped more than 41%

This jump in bankruptcy was for all Bankruptcy types, 7 , 11 and 13.

More surprising, is the large jump in numbers since the strict limitations imposed by the 2005 Bankruptcy Abuse Prevention and Consumer Protection.

Please note the following political positions on bankruptcy law and reform

Sen. John McCain, R-Ariz., supports the current more strict legislation.

Sen. Barack Obama, D-Ill has proposed to fast-track bankruptcy proceedings for military families and help seniors facing bankruptcy keep their home

I am not a proponent of consumers taking advantage of bankruptcy if the can repay the debt.

However, in light of the fallout from the real estate crisis and sub-prime debacle, we are facing unique times and many consumers do not need to be drowning in debt they cannot repay.

After all, America and its people are a country of second chances.

how about some good news ?

Ricardo Cortez (Liberty One Lending ) — Thu, 25 Sep 2008 14:10:49 -0500

Financial markets were strong today.

Politicians said they had struck an agreement in principle on the government's plan to revive the crippled financial system.

The Dow Jones industrial average rose as much as 300 points on optimism about the plan, and demand for short-term, safe-haven assets eased slightly as some investors bet that a deal would help unclog credit markets.

Stock market investors clearly were more upbeat after lawmakers said they would present the $700 billion plan to the Bush administration and hoped for a vote by both houses of Congress within days

Equity stake in Banks a Must

Ricardo Cortez (Liberty One Lending ) — Thu, 25 Sep 2008 10:37:54 -0500

The big problem with the bailout in its originial form was that we were buying bad debt with little security. The new draft woud offer Ability to take equity when real money is at stake.

The whole plan should be recast to mirror the bailouts Paulson has already put in place--loans and/or equity infusions--but the addition of equity stakes is an improvement.

This is smart and important.

Note, however, that Paulson would probably only use the equity stakes with banks that have admitted that they are on the verge of bankruptcy (e.g., WaMu). And what bank is going to admit that when the government will otherwise pay them for the privilege of hauling their trash away