Wednesday, September 21, 2011

Fed decides to put more downward pressure on long term interest rates!

The Fed announced a new policy called “Twist”, this new policy will allow them to sell short-term bonds to free up money so they can buy long-term bonds, as well as buy more Mortgage backed Securities, while keeping their balance sheet the same.

Here is how the money flows:
• The banks make loans that it knows it can sell to Fannie Mae and Freddy Mac
• Fannie Mae and Freddy Mac “Securitize” these loans into Mortgage Backed Securities
• These MBS will deliver a certain rate of return
• Insurance and Investment Companies buy these MBS with our 401K and other investment money

This is why so many 401K’s and investments dropped when the Mortgage Crisis hit, all those bad MBS’s stopped paying out… and our investments tanked, and banks would not lend any money because no one was buying MBS's. So the Fed has been buying them, providing “liquidity” into the market.

Therefore, in buying the MBS's, it will provide more money into the market and allow the banks to continue to lend while keeping long term interest rates down.

The other item that we all need are for home values to increase… many homeowners cannot take advantage of the low rates because they are so far underwater Fannie Mae and Freddy Mac will not buy these loans, therefore the banks will not make the loan.

If you find this info helpful, or not, or want to hear more on this topic please let me know by commenting on this blog, as well as, sharing it with friends, family, and co-workers.

Monday, September 19, 2011

What to do if you have to short sale, how should you prepare?

Getting into a position to short sale is one of the most unnerving and stressful things a person or a family can go through… I don’t mean the actual sale itself… it really is the emotional loss that makes people stay up at night and worry whether or not everything will be ok. For that all I can say, is don’t worry everything always works out, just trust yourself… and educate yourself

Once you put your home up for a short sale, most people already are aware that they cannot pay for the home anymore and need to get out from under the high monthly debt; however what most people don’t know is that the banks don’t usually entertain the idea until after you are already late on your payments.

Heck why should they approve the sale if you are paying and they are collecting? I am not saying you should stop making your payments; however I am saying from my experience the banks will kind of stall the process until the homeowner is pretty much out of money or until they stop paying, which is usually both.

The Short Sale process goes like this.
1. You list your home with a realtor
2. You get an offer and accept it yourself
3. You submit this offer to the bank
4. Along with the offer, you will submit a “short sale” packet (much like a home loan packet)
5. You wait for the bank to approve the short sale this is where you wait, and wait, and wait…(usually this is the time the bank waits you out until you are out of cash, and stop paying)
6. After the sale is approved, and if the buyers are still waiting around, the process takes about 30 to 45 days to close after the approval from your bank to take less money.

Tax implications? Well during the Bush administration; they passed a law “Mortgage Debt Forgiveness Act” that expires in 2012, that you do not have to pay back any income tax that may be owed on a short sale of your primary residence. Example: You owe 500K the home sells for 400K, you are relieved of 100K of debt to the bank… however the bank will 1099 you as income on the 100K… so if you are at a 25% tax bracket you would owe the IRS 25K income tax, however this law relieves you of that tax burden.

Now, if you stop paying and put your home up for a short sale, then you can keep the money every month and the bank will most likely respond quickly to get this “Bad loan” off their books…. The only draw back on the not paying part is that your credit gets hit ASAP. And most of your credit cards will either cut the limit they give you, or cancel the cards. So be prepared to go all cash for a few years. Honestly what I have seen is that people use up all their savings during the short sale, then get their credit hit. It might be better (however I am not suggesting this) to not pay and keep as much cash, while you short sale.

The difference between a short sale and foreclosure on your credit report, and ability to get another home loan in the future is about 2 more years… however you may end-up with a foreclosure anyway if the buyer walks while you are waiting for the “approval” and have to spend all your money waiting and then end up broke, with jacked up credit and a foreclosure waiting for the bank.

If you find this info helpful, or not, or want to hear more on this topic please let me know by commenting on this blog

Tuesday, September 13, 2011

Things we can’t live without?

London Science Museum survey comes up with the top 50 things we can’t live without… in that priority…

Things we can’t live without?
1. The Sun
2. The Internet
3. Water
4. Fridge
5. Facebook

See all 50 things @London Science Museum

Bank Of America looks to cut 30,000 US jobs:

Bank Of America looks to cut 30,000 US jobs, and says it’s only non-profitable arm is their mortgage business… it seems that as the US economy goes, so does Bank Of America the country’s largest bank, is looking to down size and save a few billion in the next couple of years.

With the world working through an almost 98% likelihood that Greece will default on its loans we can only expect more energy and focus on your economy, and it will be interesting to see what happens over the holiday months when our economy gets into more spending.

List to more from Market Place morning report.

Monday, September 12, 2011

Google Business Rules... “Your worst customer is your best friend"

“Your worst customer is your best friend” Is one of the first rules you will learn from Jeff Jarvis, in his book “What would Google Do?” Jeff does a great job explaining the in-site to the new world of openness within business.

What would Google Do? Is an excellent study of the business model that Google holds to, Jeff Jarvis, provides excellent direction and ideas that will get you thinking about your own business and you will end up asking yourself; What would Google do to change it? What would Google do with the upset client?