Today's Review!

Mortgage rates up, but still low

Freddie Mac released the results of its Primary Mortgage Market Survey (PMMS) today. For the week ending April 9, 2009, the 30-year fixed-rate mortgage (FRM) averaged 4.87 percent, up from last week when it averaged 4.78 percent. Mind you, last year at this time, the 30-year FRM averaged 5.88 percent. Homeowner affordability should stay at record levels according to Frank Nothaft, Freddie Mac's vice president and chief economist: "Mortgage rates rose slightly this week but still remained historically low," he said. "Given these low rates, housing demand has strengthened. Conventional mortgage applications both for refinancing and for home purchases have increased over the past five consecutive weeks ending April 3.

"Oil demand to drop and stay low

The International Energy Agency (IEA) said world oil demand will drop by 2.4 million barrels per day in 2009, blaming a growing consensus that economic recovery won't take place until next year. It said demand for this year was expected to be 83.4 million bpd, around one million bpd less than in its previous monthly report, a rate of oil demand contraction last seen in the early 1980s. The IEA's report said expectations of a collapse in fuel consumption were not "solely conjecture," and cited early indications of "much lower" demand in developed and non-developed countries for the first quarter of this year. The Organization of the Petroleum Exporting Countries has agreed to reduce supply by 4.2 million bpd since September, but in last month's report, the IEA said even with strict adherence with OPEC supply cuts already in place oil stocks in developed nations won't shrink until the middle of the year, and demand is already expected to contract further.

Goldman Sachs buying out of TARP?

According to a Wall Street Journal report, Goldman Sachs is considering a new stock sale to repay the $10 billion loan it received from the government last year under the Troubled Asset Relief Program (TARP). Goldman could announce the offering to investors as early as next week, the report said and it is expected to be several billion dollars. It's really no wonder, since along with the money came an inquisition, all sorts of obligations, and public humiliation from the same politicians who set the stage for the problem in the first place. If there's one thing worse than bankers with their hands on our money, it's politicians.

Stress Tests pass, and fail

The "stress tests" the administration is conducting on the banks to see how well they would hold up if the recession deepens is under wraps for now, since President Obama asked the banks not to reveal the results until sometime around the end of April. The surprise profit announcement for Wells Fargo may have kicked off a rally yesterday, but the results of the stress tests will probably show that the banks will still need more bailout funds. Regulators say all 19 banks undergoing the exams will pass the tests, but add that no bank CAN fail them, since taxpayers will make sure they stay liquid. And in spite of the recent rally, some analysts say that with the recession, banks are likely to record further large losses on credit cards, corporate loans and real estate. Obama will meet today with Treasury Secretary Timothy Geithner, Federal Reserve Chairman Ben Bernanke, and Federal Deposit Insurance Corp Chairman Sheila Bair to discuss the stress tests.

What does $11 Trillion look like?

CNBC has a series of graphics giving viewers a visual of just how deep in a hole we are - or in this case how big of a stack we are. The national debt is shown as a huge stack of greenbacks dwarfing the Dubai Tower (tallest building in the world) and accompanied by the following caption:

US National Debt...$11,046,247,657,049.48 (According to US Treasury Direct, 3/26/09)

The mounting US National debt, growing by billions every day, has recently topped the $11 trillion mark. If denominated in $1 bills, the cash would stack as high as the tallest building in the world, the 2683.7 foot Burj Dubai skyscraper... 1,474,918 times. At this height, it would create a block of bills with a base approximately twice the size of the Empire State Building, which is just under the size of three American football fields. It is also interesting to note that this number is approximately 13 times the amount of US currency in circulation, according to the Treasury bulletin, which lists the amount at $853.6 billion as of December 31, 2008.

Now on to our real estate investing education section

How to Irritate Lenders- Short Sale Newbie Mistakes

With all the benefits to be derived from approving a short sale offer, you might wonder why any bank would rather risk long vacancies, vandalism, months of no mortgage payments and the eventual cost and uncertainty associated with a home going to auction or other foreclosure sale. Believe it or not, most short sale investors simply don't have the know-how to get the job done right. To put it plainly, the lack of professionalism and irritating actions dramatically decrease their odds of obtaining a great investment property.

Badgering. Let's face it, nobody likes to be badgered. Yes, you might be excited by submitting your first short sale offer but resist the urge to call too often or otherwise badger overworked staff. Maintain regular contact and put a system into place.

How Low Can You Go---Not that Low! While lowball offers are expected, don't waste everyone's time by submitting something excessively below the current market value. Keep it realistic and plan to justify the reasons why you think the offer is fair.

Requesting Repairs or Refunds. Although there are exceptions to every rule, short sales are sold 'as-is'. The price should reflect needed repairs - including time and labor. Don't expect the bank, lender or current homeowner to fix or repair anything. Problems that arise after the sale are also your problem so be sure to add in a bit of wiggle room especially if the homeowner plans to occupy the house for some time during or after the sale.

Bad Credit. Yes, they will look. Get your own finances in order and make a point of presenting them in the best light possible.

Threats. Threatening to walk away from a deal, sue or other tactics rarely result in anything more than frustration for everyone involved. Unless a gross degree of misconduct was perpetuate against you related to a federal issues such as discrimination or other similar point, regular day to day mishaps are part of learning how to play the game. It's essential to have a tried and true system in place that maximizes profit while minimizing time.

Homeowners with Assets. Homeowners have to demonstrate their need an inability to pay before a lender will agree to take a major loss. If your homeowner has other assets that could be turned into cash or compensate the lender for a loss then there is a high likelihood your offer will be rejected. Do your homework before blaming the bank - make sure the deal is win-win for all involved or you will likely just waste everyone's time.

See you at the top! Also check out my site at www.ShawnDodson.com