“I cant give you a surefire formula for success, but I can give you a formula for failure:  try to please everybody all the time.”   Herbert Bayard Swope,  First Recipient of the Pulitizer Prize

“Many a false step was made by standing still.”   Fortune Cookie from The 4 Hour Workweek

“I am an old man and have known a great many troubles, but most of them never happened.”  Mark Twain

“There’s no difference between a pessimist who says, ‘Oh, it’s hopeless, so don’t bother doing anything,’ and an optimist who says, ‘Don’t bother doing anything, it’s going to turn out fine anyway.’  Either way, nothing happens.”  Yvon Chouinard

Any information about the state of the real estate and mortgage industry is of interest at this site.  The following information, excerpted from an article by Anthony Napoli, was written with San Diego as the setting; however, the information is generic and can be applied nationwide.

“A few years ago, money was really easy to get if you wanted to purchase a home. Many loan applications were literally only one page long. The joke was if you had a pulse and were vertical, you qualified. Then it progressed to the point where you only had to be vertical. One loan program offered the borrower 125 percent of the purchase price with no down payment. Yes, that’s right. On a $500,000 purchase, the lender actually gave the buyer a first mortgage of $500,000 and an immediate second mortgage of $125,000. The lender assumed, along with the rest of the universe, that property price appreciation would never end. What did the borrower have to show the lender in order to get this incredibly generous loan? They showed…nothing. These types of loans were called “no doc” loans. The borrower’s income was “stated”, meaning he or she just told the bank what they earned. They didn’t have to show W-2 tax forms. Their assets were also “stated”, which meant that the borrower told the bank what they had in reserves. The lender did not check on this.”  It was the negative press that gave us the term “sub prime loans”.

“Fast forward to the present. To put it mildly, the state of the lending industry is such that many people would rather visit a proctologist than apply for a loan. A sharp stick up the nose into the brain is less painful than producing the paperwork necessary to get a mortgage. One of my clients who borrowed $8,000 dollars from her mom had to show the lender a copy of the $8,000 check, a copy of the deposit after it was deposited into her account, a copy of the bank statement showing the $8,000 in the account, a copy of the canceled check from her mother’s bank, and a copy of the mother’s bank statements pre- and post-$8,000. Whew. That’s a lot of work for a $200,000 loan. It’s as if the bank thought this lady’s mom was the head of one of Tijuana’s drug cartels and wanted to trace the money back to Columbia.”

Washington and the banking and mortgage regulators need to take a second look at the “help” they’re providing consumers.  We need a less of  ”We’re the government and we’re here to help you

With short sales available in every neighborhood, and excellent incentives offered by builders on new homes, and up to a 50% drop in values in the resale market, now is the time to purchase to own and to invest for cash flow.  ”Throw in the fact that you can get a 30-year, fixed-rate mortgage for under five percent, and you have the perfect storm. One thing that drives me bonkers is when a client hems and haws about locking in a 4.975 percent interest rate because they think it may go down to 4.875 percent. They risk not locking in a fantastic rate and chance having rates shoot up.”

Now is the time to be serious about owning a home and to build a real estate investment portfolio for cash flow.  Panicky and finicky buyers stop worrying about tenths of a percent and start jumping at the great prices and historically low interest rates.

“Named must your fear be before banish it you can.”  YODA from Star Wars:  The Empire Strikes Back

Informative article I found on Chris McLaughlin’s site.

Freddie and Fannie Delisted!  What Does it Mean for Real Estate?

You might have missed this little item in the nightly news report; government home mortgage giants Freddie Mac and Fannie Mae are delisting from the New York Stock Exchange. Despite $145 billion in taxpayer funds spent to shore up the pair, shares have dropped so significantly they no longer qualify for inclusion on the exchange but will continue to be traded via the infamous bulletin board instead. In order to participate in the traditional exchange, shares must trade above $1…Fannie has been below that level for well over a month making delisting a legal necessity. Freddie has continued to struggle at just over the $1 level but will also be delisted given the eventual prospects. Given the difficulty of becoming profitable…much less an actual attempt to repay the government aid, it’s unlikely any serious effort to revive the failing entities will be forthcoming.

Since January of 2010, Freddie and Fannie (with some help from the Veterans Administration) have underwritten nearly all new home mortgages for the year; throw in the assumption of non-performing assets and bail-outs and the combined total for the defunct duo now accounts for nearly half of all the mortgages in the entire nation. With bank lending standards showing little sign of relief, experts are wondering what the delisting of Fannie and Freddie may mean for the future of a struggling real estate industry.

Aside from the loss of shareholder value…which is expected to be significant as neither entity has retained any level of significant value…the immediate impact is expected to be minimal. “Business as usual” is the anticipated motto for the time being. However, experts predict the long term consequences could dramatically alter the landscape of mortgage lending for years to come. There is significant support for privatizing the role of Freddie and Fannie while liquidating assets to recoup some of the anticipated $1 Trillion in losses currently shouldered by the tax payers.

But what would that really entail? According to AEI think tank guru Peter Wallison, a combination of liquidation followed by privatization is the preferred method of reform and would allow both to compete in the marketplace for securitization and the goal of providing affordable housing. Bernake is also an advocate of the privatization plan but suggests the prior operational model was unsustainable prior to the collapse but suggest the new footing would establish a firm foundation going forward. Critics argue this is a rehashing of the same trends that put us here in the first place and seek nationalization instead. Time will tell but as of this writing, it appears there is strong support for a push toward privatizing. Stay tuned for more information or sign-up for a free newsletter and Twitter updates to stay informed on the latest news you need to know in real estate.

” ‘Someday’ is a disease that will take your dreams to the grave with you.  Pro and con lists are just as bad.  If it’s important to you and you want to do it ‘eventually’, just do it and correct course along the way.”  Timothy Ferris, Author of The 4-Hour Workweek.

“The first principle is that you most not fool yourself, and you are the easiest person to fool.”   Richard Feyman

The median price of a home in Southern California was up 15.4% from April 2009 to April 2010.  Home sales in the more expensive coastal communities account for the positive, over-all gain in home price for SoCal.