April Resource Post-Raw Rate Data Rocks!

Greetings Rebels!!

I have been accused of being everything from an old fogey to a young whippersnapper, and never has my age and skill set been more questioned than when it relates to the Internet and the tools it represents.

Obviously, I love the Internet. I'm on LinkedIn and FaceBook, I Blog (duh), and every now and then, I even Tweet. But I don't Digg stuff, I don't have a playlist on MySpace, and my old college photos of that embarassing incident with the goat better not show up on Flickr any time soon. I consider the Internet a tool for business, staying in touch with clients, colleagues and some friends, and most of all, RESEARCH.

I find that the flattening of the playing field when it comes to available data is probably the best aspect of the dub-dub-dub, and while my years of digging deep into obscure financial info are behind me, I do keep an eye on what's happening that effects my business-particularly information on interest rates.

If anything, there's TOO much data out there, and more often then not you're asked to provide some kind of contact data before you can get the information you're looking for. So for this month's Resource Post, I thought I'd separate some metaphorical wheat from the virtual chaff and show you a few spots where I keep an eye on the financial indicators around lending/borrowing. As always, read rebelliously and make up your own mind.

• For the official picture, if you can ignore the "Aint we cute, we got a website" nature of the government's online presence, the Dept of the Treasury has the 411 on interest rates. And if there's not enough there for you, head over the the Federal Reserve website. Also VERY handy if you find yourself needing some help getting to sleep. Just click the link to any of Chairman Bernanke's speeches and save a fortune on Sominex.

• For something a little more consumer friendly, as well as comparison shopping for things like credit cards and mortgages, I'm a fan of Bankrate. Plus, they have a lot of helpful calculators that don't require you to give them your contact data before making the calculations.

• While I think it's important for Rebels to think about their own situations before thinking in big, national terms, there is room for some counter opinions. So for data with a bit of a technical bent and analysis, more technical head to tradingeconomics.com

• And lastly, for the die-hard big picture people, if you're looking for worldwide stats at your fingertips global-rates.com has a wealth of data, including historic and in-depth American inter-bank numbers.

So, my Rebellious Readers, go forth and get informed! No more excuses!

Yours in Rebellion,
LARRY

April Rant-It may be Lending...or it may be Predatory Lending

I was having coffee the other day with one of my bird dogs (the people who hunt up properties at risk of foreclosure), and he said to me, “Ever notice how ‘Banker’ rhymes with ‘Wanker’?”

I nearly choked on my coffee! I’m proud of being The Real Estate Rebel, but we were at a crowded café in the middle of San Francisco’s financial district, and even Jack Sparrow (er…CAPTAIN Jack Sparrow) knew to keep his voice down when the Governor could hear him.

Although now I can admit that the thought had occurred to me. Especially after I spent some time catching up on some of the latest shenanigans in the banking world. And “shenanigans” are about the nicest things I can call them.

Seriously, I’m thinking that some of this latest stuff may fall in the predatory lending category. I urge you to do some more digging and, if you agree, it may be time to call your local lawmakers to action.

So here’s what I’m hearing in the Loan Mod world, through conversations and digging around…

A homeowner applies for a loan modification…then the lender says that they’ll “consider” the application and while they’re doing that, the homeowner will be put on a 3-month trial repayment plan with a lower interest rate.

So far, nothing abnormally abnormal here. I’ve talked before about how shaky that is, but for now, I’m more ticked off at the NEXT point…

BUT THE BANK ALREADY KNOWS THEY WILL BE DECLINING THE MODIFICATION.

Yes, that’s right. This stuff isn’t rocket science. It’s not like there is an army of analysts taking that application for modification and pouring over it with a fine tooth comb to see what the bank should do with it. A few key pieces of data are plugged into a spreadsheet and the answer is there.

SOOOOOoooo…why do the wankers…I mean Bankers…approve the “trial period”??

Because it does two things for them:

1) During the trial period, any outstanding interest piles up and is capitalized if the application is ultimately declined. If the bank already know the application will be declined, it’s a way to get the outstanding balance even higher than when the trial period started

2) It creates a larger asset that may be picked up eventually by you and me via the intervention of TARP, who won’t be looking at where the balance comes from.

And if TARP doesn’t buy it, and if the owner goes into foreclosure, well, that’s just a bigger, inflated number that can be written off as a loss against any profits that year.

Holy cow. I’m really really smart, I’m really really tricky, and even I couldn’t have come up with a scheme that does all this.

So, ya know what, for the next few weeks, even if I whisper it, “Wanker” it is…

Stay Rebellious!
-Larry

April Buyer's Tip-Tax Credit Expiring Soon!

There's nothing certain but death and taxes. And when it comes to temporary tax credits, those aren't even all that certain.

I was chatting with one of my rebellious buddies the other day over a glass of wine and we were discussing the tax credit for first time buyers (defined, conveniently, as those who have not owned a principal residence for 3 years or more), and he said those words I HATE to hear.

"You know Larry, I'm telling people not to hurry their decision to buy a place in order to take advantage of the tax credit. It'll probably get extended again..."

Oh, my dear readers, you KNOW how much I hate that "let's wait and see" thing. So, in addition to making him pay for the wine as punishment, I told him to put on his rebel hat and "get, while the getting is good".

It also occurred to me that many folks out there aren't completely sure what's going on with the credit-how it's defined, how it's claimed, etc.

Now, it's against my rebel nature to tell people what to do and where to go (I hear you snickering, quit it!), but there are some great resources out there so people unsure of the credit can get the information first hand. As ALWAYS, read rebelliously and consult your tax advisor (Or your magic 8-Ball, if it can be trusted more) about what all this means for your situation in particular.

A good layman's discussion can found here, on a site provided by the National Association of Home Builders. It uses normal language and does a nice job of clarifying the different credits.

For those of you like pain and primary sources, the relevant IRS sections about the extensions of the credit can be found here, on the IRS site itself. I recommend taking an aspirin both before and after sorting through the legalese.

Lastly, there's some nice discussion of the extensions available via the CBS site MoneyWatch, which you can access here.

As always my Rebellious Readers, my advice is always on the Go For It side. If you are looking a home and a deal and a tax structure that works for you NOW but are hesitating to see if things get better, the odds are just as good that waiting will hurt you.

Coming Next Week...
More Shenanigans in the Banking World...

Best,
Larry

April Seller's Tip-You might HAFA do it, so do it right

Ah, it's like those old Campbell's soup commercials, where the letters kept rearranging themselves to spell out new words...the government just keeps coming up with more and cleverer (clever-ier? cleverererer??) agencies and acronyms.

But this time, I think it's a pretty good thing. You've heard me rant about the problems that plague anybody working with the banks to work out their loan modification or to get a short-sale approval through the system. Now, with the Home Affordable Foreclosure Alternatives Program (HAFA) from the Obama administration, those of you are trying to avoid foreclosure via short sale have some real support.

In brief, HAFA is designed to help those homeowners who will just not be able to stay in their homes avoid foreclosure through increased incentives to banks to allow a short-sale, in addition to other assistance. One of the BEST of these additional benefits, and kudos to whoever thought it up, is that the program actually has a relocation benefit to help the homeowner make the transition to different housing arrangements.

This is a remarkable win-win, in my rebellious view (at least on paper-more on that later). Banks are increasingly encouraged to support the short sale process, the homeowner trying to make a graceful exit gets some assistance themselves, and all of this means that there are some real solutions out there.

BUT.

And in this case, it could be a BIG but...or a small one...depending on the lender...

As in many of the cases for these government sponsored programs, participation by the lender is optional, and, according to the official information page about the program ( http://makinghomeaffordable.gov/hafa.html ) the lenders write their own guidelines for eligibility.

So the success or failure of the program depends on the actual willingness, flexibility, and preparedness of the lender.

No, wait, don't laugh.

Yet.

The program has just been rolled out, and some early signs are very optimistic. According to DSNews, the on-line news site of the Default Servicing industry, real estate companies and banks are putting a lot of effort into getting on board with the program. http://www.dsnews.com/articles/government-agents-lenders-vendors-one-solitary-force-when-it-comes-to-hafa-2010-04-06

So, those of you that are looking at a short sale as a better solution than foreclosure for yourselves, and for investors like my team, this could be great news. It's well worth your time to check out the website to learn more about your options. http://makinghomeaffordable.gov/hafa.html

And if it joins the jumble of other progras and agencies and fades uselessly back into soupy mix, you can bet that I'll be Ranting about it!

Rebelliously,
-Larry

Happy Easter!!!

Well gang, just a quick happy Easter greeting to all you rebels out there! We'll be back next week with more tips, tricks, rants, and raves!!

-Larry