Creative Mortgage Solutions

Experts wrong again and again and again

Homes for sale in Everett and Everett real estate in general just took another “unexpected” drop. Are you getting as tired of the “experts” being wrong, wrong, wrong again and again as I am. This broken record is not unexpected to me. For almost a full year the number of sales of new homes has dropped. There was a minor blip in October / November 2009 from the new home tax credit but all that did was suck purchases from December and January and put them into October/November. Month after month the “experts” have been wrong. I am whining but why can’t I get a job where I can be paid well and be wrong over and over. In my business and I am sure yours too, you get paid to be right.

Well new home sales PLUNGED to historic lows in January. Just to show you how wrong the MSM (main stream media) is Bloomberg wrote on February 24^th that housing would be up. Here is a quote from the story.

“Purchases increased 3.5 percent to an annual pace of 353,000 new homes, according to the median estimate of 71 economists surveyed by Bloomberg News. Demand slumped 7.6 percent in December, the month after the incentive (the tax credit) was originally scheduled to expire.”

That’s right 71 over paid economists predicted a completely wrong scenario.

What really happened was New Home Sales plunged to 309,000 the lowest level since the US Commerce Department has kept records starting way back in 1963. How does this affect Everett real estate and homes for sale in Everett in general? Well think about this, if you can’t sell or will not buy a home then the economy in general will not recover. If consumer confidence doesn’t go up we will never see the “good times” again.

Right now as I write this Obama and the Liberals are arguing about health care. Mr. Obama stop the BS and get us some Jobs. Nancy Pelosi claims that 4 Million jobs will happen if we just pass the Obamacare health bill. What hogwash! If congress passes a bill that lowers payments for healthcare do you think that will increase the number of jobs?

The litany of bad news goes on and on.

• Inventories went up to a 9.1 month supply. That’s from an 8.1 month supply in December and a 7.9 month supply in November.
• In January the median price fell again by 2.4% compared to a year ago. And a year ago was a disaster.
• In January, new home sales plunged 35% in the Northeast, fell 12% in the West, and decreased 10% in the South; they rose 2% in the Midwest.
• Investors will note that new home sales, historically, correlate to an economic expansion.
• The “unexpected” drop in new home sales should (but probably will not) raise questions about the efficacy of Obama’s new home buyer credit. You know the one that robs sales from the near future just to inflate the current numbers.

My friends please vote all incumbents out. Get rid of the incompetents that we have running this government.

How will we improve the market for Everett real estate and homes for sale in general? JOBS, JOBS AND MORE JOBS Mr. Obama.

Jim Johnson and comments are always welcome

Everett Mortgage on Line

Another Obama plan that will do nothing for Everett real estate

This information will not have a major impact on homes for sale in Everett and / or Everett real estate in general. The IRS finally got around to clarifying the guidelines for the home buyers tax credits. That’s right the $8000 credit for first time buyers and the $6500 credit for move along buyers.

This is the same credit that many think, myself included, hasn’t made a single additional sale since its inception.

Think about it, if I am on the market for a home for sale in Everett I am going to buy regardless of an $8000 credit. I personally think this credit is just like so many other things the Obama administration has done in that it is completely ineffectual. I think this credit has had no affect on demand for Everett real estate or the prices of homes for sale in Everett.

Because of abuse of the original credit the IRS and Congress revised the program last November. They also extended the credit life and included the $6500 move along portion.

In a few cases IRS and Congress found phony claims and so with typical reaction they punished everyone equally. For a while they didn’t pay legitimate claims. Using a sledge hammer to kill this fly here is what Congress wanted IRS to do. Congress directed the IRS to spell out documentation standards in detail and to install monitoring systems to try to spot fraud upfront. Among the keys to the monitoring system is that all documentation accompanying credit claims must comply with IRS’ detailed rules.

Here is what IRS came up with for anyone claiming the credit:

• You must fill out the IRS form 5405 (the form is here www.irs.gov). This provides basic information supporting the claim for eligibility, appropriate dates, income information and amount of credit claimed.
• A copy of the settlement statement called the HUD-1. This proves the transaction actually took place and who was party to it.

There are problems with the HUD-1. IRS wants both the buyer and sellers to sign the HUD-1. In some states that isn’t required. On February 12, 2010 IRS loosened up that requirement and said they will allow whatever the respective state allows. That was very big of them.

Will this spur more sale of Everett real estate, I doubt  but who knows? Will this improve the outlook for homes for sale in Everett again who knows?

The form 5405 does say that both parties must sign the HUD-1 but IRS is now saying don’t worry be happy.

Nationwide, according to estimates by the National Association of Realtors, about 1.5 million repeat purchasers and 900,000 first-timers are expected to apply for credits this year.

Also don’t forget that if you are a repeat buyer you will need to prove that you lived in the home for 5 continuous years out of the last 8. They say property tax records or hazard insurance records or mortgage interest statements can help that. I say that stuff is open to abuse and doesn’t prove a thing.

I personally don’t think the credit will produce one single extra sale of any home for sale in Everett. I don’t think this credit will produce any measurable effect on Everett real estate at all.

Jim Johnson and comments are always welcome.

Everett mortgage on line.

Again the Law of Unforeseen Consequences strikes at the heart of Government Actions

Or how to not think something through.

More wasted tax dollars and how that affects the market for homes for sale in Everett. Don’t expect the feds to help improve the outlook for homes for sale in Everett or the Everett real estate market in general. To put it politely they can’t find their behind with both hands at the same time.

Let’s take the new the weatherization plan, it’s part of the porkulis or stimulus plan, and your wasted $500,000,000 so far. (PS that’s a drop in the bucket) This is part of the Obama administrations $5,000,000,000 ( 5 BILLION DOLLARS) green jobs program that’s going to create 87,000 new jobs.

Fat chance.

It was going to make 593,000 homes more energy efficient, again fat chance.

Well the General Accounting Office has declared the program woefully behind. In fact about 98.24% behind and it may never catch up. Now how does that affect the market for homes for sale in Everett or Everett real estate in general? It’s those 87,000 green jobs that will not materialize. Or if they do these jobs will be temporary and not really help. I keep harping on this but without real private sector jobs there is no recovery. And “green” jobs that don’t last will not help either anyway.

Now I don’t know about you but if I wanted to weatherstrip my home I wouldn’t need to spend $8432 to do it. Nor would it take 5.9 guys to do it. But consider these statements directly from Joe Biden and Mr. Obama himself. The plan is not to insolate but to weatherize the homes. No new windows or new doors but simple stuff, just caulking and weather stripping only.

If I project to weatherize 593,000 at a cost of $5,000,000,000 then I am going to spend $8432 per home. If I am going to create 87,000 temporary green jobs then I will use 5.9 guys per home. This is typical of a government boondoggle that hasn’t been thought through. And sad to say some of you trust this government to do healthcare properly.

Why has it taken so long to get started you might ask? Again assuming that government can do anything right is an oxymoron. I defy you to name one thing the government does well outside of the military. And even the military has its problems if you are keeping up with current events.

It seems that a depression era law (the Davis-Bacon Act) requires that the Labor Department pays the going wage rate in every single county in America, and that’s about 3000 different counties. So after screwing around for almost a year they are finally starting to work.

If you remember a few months ago I had came out with my ideas on how to curb the bloated governments that are drowning us in red tape. If you recall I wanted term limits on every elected position and a sunset of every law and regulation for city, county, state and federal agencies. Term limits prevent absolute power from corrupting these eminently corruptible politicians. Sunsets would keep unelected bureaucrats from enacting more and more regulations that are killing our entrepreneurial spirit. Like the EPA declaring CO2 to be a greenhouse gas. The same CO2 that is necessary for life on this planet. Unelected bureaucrats are strangling our economy with a blatant power grab. Thank God Texas is fighting back, because Washington State with our political hacks would never do that.

A friend pointed out that if the government has an energy audit on your home they could come along and say your home must be upgraded or we will fine you. Given how starved for new revenue sources that isn’t as farfetched as it sounds.

As I started out I will end. There will be no recovery for Everett real estate nor will the market of homes for sale in Everett recover until we have real private sector jobs.

Jim Johnson and comments are always welcome.

Everett Mortgage on Line.

Everett Real Estate May Never Recover

Ever wonder why loan Mods are so hard to get?

Wow, with sweetheart deals like this Everett real estate may never recover its value. If the value of homes for sale in Everett doesn’t recover then the entire economy will not recover any time soon.

Have you heard about the sweetheart deal the FDIC gave 1 West Bank? That is the bank George Soros owns. You know he’s the guy who bankrolls the Democratic Party. I well remember the old adage it’s who you know.

Well back in July of 2007 IndyMac Bank failed. 1 West Bank bought it in March of 2009. The FDIC gave 1 West a deal like you can’t believe.

1 West paid 70% of the value on all mortgages and 58% of the value of all HELOCs.  The FDIC guaranteed 1 West 80-95% of all losses for 1 West.

Everett real estate is having a hard time recovering because of foreclosures and short sales. The value of home for sale in Everett is suffering because of the same reasons. Ever wonder why it is so hard to get a loan Mod? Well here is why.

This is an actual example of why the FDIC bureaucrats should be fired, every damn one of them.

A homeowner owes $478,000 and with lates fees and missed payments the total due 1 West is $485,200. 1 West paid (70% of the $478,000) $334,600 for this mortgage. The homeowner can’t get a loan mod because IndyMac and 1 West wouldn’t allow it. The homeowner gets an offer of $241,000 and 1 West approves the sale.

You take the original loan amount plus late fees and missed payments of $485,200 less the $241,000 and you get a loss on sale of $244,200. FDIC guaranteed 80% of the loss so they pay 1 West ($244,000 X .8) $195,360.

1 West got $241,000 (short sale) plus $195,360 (FDIC loss guarantee) = $436,360 for the house that they paid $334,600 for. So 1 West gets a profit of $101,760.00. To add insult to injury 1 West got the homeowner to sign a note of an additional $75,000. Multiply this over 1000’s of homes and you see why there is no incentive to do a loan modification for anyone. There is much more profit in a foreclosure or a short sale. Now you see why Everett real estate is having a hard time recovering. Now you see why the market for homes for sale in Everett is so soft.

Do you see why 1 West can sell any home for any price because they are guaranteed a profit on every home mortgage they bought? They have no risk what so ever on any mortgage. Now do you see why lenders make loan mods so hard to get. There is no incentive to make a loan mod and every incentive not to.

To top even that 1 West will only get these payments if the show a $2.5 Billion loss. So guess what, they don’t do loan mods because they will not get paid by the FDIC if they do.

I will leave you to figure out who is actually paying George Soros and 1 West to screw up the entire American economy.

Now you can see why Everett real estate may never recover. Now you know why the market for homes for sale in Everett is so soft.

Want to watch a video on this? http://www.thinkbigworksmall.com/mypage/player/tbws/23622/1017333

Jim Johnson and comments are always welcome.

Everett Mortgage on Line.

6 Reasons Why Housing Prices are Headed Lower

Look for all prices for homes for sale Everett to fall. After 4 months of miniscule gains home prices flattened in October and I expect them to go much lower in 2010. There are many forces working to push down and limit demand while this happens.

1) The number one reason for prices to fall is NO JOBS. What does it take to get through to the idiots we have in Washington DC to see we are heading for a major crash if we don’t get folks back to work soon. The real unemployment rate in America is about 22%. Without a job you can’t pay your mortgage. If you can’t pay your mortgage then you lose your home. If you lose your home it floods the market with distressed homes  called “short sales” selling at lower and lower prices.

2) The shadow inventory of 1.7+ million foreclosed homes not yet on the market. There are 100’s of homes for sale Everett that are not on the market yet. These are called REO homes (REO is jargon for the inventory of bank owned homes) and many experts think the banks are holding on to them until the market recovers. Fat chance that it will recover if no one has a job to pay for a mortgage.

3) Mortgage Modification Programs (MMP) are not working. Right now because the federal government is supporting the banks by using TARP money the lenders really don’t have a reason to get serious about making the MMP work. And really how fair is it? If I pay my mortgage and my neighbor doesn’t. He goes to his lender and gets the lender to lower the mortgage principle (using my tax dollars) and interest rate. Why does he get the break and I don’t?

4) Option ARM’s are coming due at about 50,000 to 65,000 per month for the next 2 years. These are almost all upside down loans that will face huge increases in payments. With jobs uncertain there is no market to sell these homes. Many of these owners will simply walk away from their homes and leave the keys on the counter.

5) Interest rates will be going up and up soon. I expect mortgage rates to be in the mid 6% range by the end of 2010. As soon as the federal government stops buying mortgage backed securities the current subsided mortgage rates will increase.

6) Expiration of the First Time Home Buyer Credit at the end of April 2010. This credit has been robbing the future sales to bring to the present. It was never large enough to really entice anyone to buy who wasn’t going to buy anyway.

I have a simple way to improver the market for homes for sale Everett. Cut business taxes in half. Cut the capital gains tax in half.

Jim Johnson and comments are always welcome.