Archive for April, 2008
Why the worst may be over
Wednesday, April 30th, 2008 | Money, Real Estate, The Economy | No Comments
The credit crunch may be behind us and earnings have been better than expected. That could lead to happier times if the Fed starts focusing on inflation.
Oil hit another record high but has since pulled back. The dollar has finally started to show some signs of life. And for the most part, corporate earnings were – as Larry David would say – pretty pretty good.
Sunny side of the street
Tuesday, April 22nd, 2008 | Investment, Money, Real Estate, The Economy | 1 Comment
Seventy-seven percent of the wealthiest people surveyed think real estate presents a “real opportunity” right now. In the survey, “wealthy” meant having discretionary household income of more than $500,000 a year.
And these high-income earners are putting their money where their mouths are:
Article
From the RealEstateJournal Archives
Wednesday, April 9th, 2008 | Money, Real Estate | 2 Comments
 FHA May Aid Those
‘Underwater’ on Loans
Phil found this article for us
by Damian Paletta
From The Wall Street Journal Online
March 31, 2008
WASHINGTON — The Bush administration is considering regulatory changes to aid homeowners who owe more money on their mortgages than their homes are worth, people familiar with the proposal said.
The Department of Housing and Urban Development plan would enable homeowners who are “underwater” on their mortgages to qualify for a partial backstop through HUD’s Federal Housing Administration, these people said.
HUD Secretary Alphonso Jackson “is examining the potential for FHA to be a solution for these borrowers,” Treasury Secretary Henry Paulson said Wednesday.
The FHA is central to multiple plans to revitalize the housing market and prevent foreclosures.
Meanwhile, Democrats are trying to pass legislation that would allow the FHA to insure up to an additional $400 billion in mortgages by requiring lenders to take partial losses on loans and refinance borrowers into more affordable products. HUD’s proposal is likely to be much smaller in scale and is expected to offer partial insurance for certain borrowers, leaving lenders on the hook for some losses.
Lenders, real-estate agents, and other housing-industry officials have complained to HUD that FHA’s current framework makes it too difficult for homeowners to qualify, partly because FHA won’t accept homeowners who have missed a payment in the previous six months.
HUD’s new plan, recently submitted to the White House’s Office of Management and Budget, would allow many more people to qualify, though it still is unclear how. The OMB must review the proposal and approve it.
In an interview last week with the Washington Times, Mr. Jackson said the plan he submitted to the White House would provide partial insurance for certain loans in areas where house prices are falling.
“I just made a proposal this morning to the White House for those loans that are underwater,” Mr. Jackson said, according to the Washington Times. “We will insure 80 to 85% of the loan — give ourselves some leeway even if it falls a little more.”
HUD spokesman Stephen O’Halloran wouldn’t confirm Mr. Jackson’s comments to the Washington Times or that anything has been submitted to the White House.
“The secretary was referring to one possible idea that has been out there for some time,” he said.
HUD had $21.3 billion in its mortgage-insurance fund at the end of 2007 to protect against losses. At the end of February, the agency insured 3.8 million loans with a total unpaid balance of $364.7 billion.
HUD and the Bush administration have been under pressure to step up efforts to help stabilize the country’s housing market.
Depending on the breadth of Mr. Jackson’s plan, a HUD proposal could steal momentum from Democrats’ legislative efforts. But Democrats aren’t likely to endorse whatever the Bush administration approves.
Relations between Democrats and Mr. Jackson have become fractious in recent months, as lawmakers have openly criticized his leadership. Connecticut Sen. Christopher Dodd last week called on Mr. Jackson to resign.
The White House has said it supports Mr. Jackson.
Email your comments to rjeditor@dowjones.com.
Why Haven’t Your Mutual Funds Made You Rich?
Monday, April 7th, 2008 | Investment, Money, Real Estate, Statistics | 3 Comments
I hear, just like most of you, that you can put your money in a good mutual fund and watch it grow at 12% a year. The only thing about that is I have never really seen that happen to me. Then as I looked around I noticed that I didn’t see it happen to many others either. So, as inquisitive as I can be sometimes, I started looking around.
I went to a New York Life presentation where they said that the average net gain for a mutual fund investor was less that 3% if you adjusted for inflation. New York Life probably wants the numbers to look like their investments were better. So I doubted their entire premise. But me being me, I started looking for verifying reliable information. Wow! Did I find a great place to see that actual numbers. Here is the link –
1997 – 2007 – 5%,
1998 – 2007 – 3%,
1999 – 2007 – 1%,
2000 – 2007 – 0%,
2001 – 2007 – 4%,
2002 – 2007 – 8%,
2003 – 2007 – 11%,
2004 – 2007 – 9%,
2005 – 2007 – 10%,
2006 – 2007 – 13%.
Since only one year average was at or above 12%, why expect 12%? The years from 1986 – 1995 gave a 9% annual return. Not only that, but INFLATION, FEES and TAXES are not figured in the calculations! This really isn’t a BAD investment if your employer matches your deposits. But it sure isn’t the “safe retirement” fund that I hear touted by all the gurus.
9% annual return
25% of the 9% for state and fed tax -2.25%
3.5% inflation and fees
9% – 2.25 – 3.5 = 3.25% annual return cash in pocket
Let’s figure you put $3,000 year away which means that with 3.25% return that year’s deposit gives $3,097.50. Using the same calculation multiply it by the 20 years $3,000 in and 20 years out, $4,195. Even if you do some significant compounding, the net – net is not going to provide a wonderful quality of life because the annual returns are just too low.
If you are like most of us, your mutual funds just took a significant decrease in value since December 2007. You are probably looking and another very low return year at best. Maybe you might want to get a little more proactive with the money that is supposed to keep you in your later years.
Housing rescue: What you need to know
Thursday, April 3rd, 2008 | Investment, Money, Real Estate | 2 Comments
Article from CNN Money
Washington in crisis mode
Washington is awash in plans to attack the foreclosure crisis and mortgage meltdown. With both foreclosure rates and the election season heating up, politicians and policymakers are feeling pressure to find solutions to housing problems.
Some community advocacy groups charge that 2 million Americans could lose their homes to foreclosure over the next two years. That would not only have a huge impact on neighborhoods and towns but also damage the economy.
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