His opinion about why things fell apart in the first place:
To be clear, although Mr. Forstmann talks about "fear and greed" getting out of whack, his is not a condemnation of "greedy speculators" or a "culture of greed" or any of the lamentations so popular among the populists in Washington. It is a diagnosis of the ways in which the financial sector responded to a government policy of printing money that was free, or nearly so. "The creation of much too much money caused all of this excess," he says. In other words, his is not an argument for draconian regulation, but for sound money.]]>Nor does he blame Alan Greenspan, even though he argues that this all started with the dot-com bubble and 9/11. "Greenspan," he allows, "had really tough decisions to make, so I don't think it's a black-and-white kind of thing at all." It was, and is, rather, "a case of first impression." Mr. Greenspan, he says, admits that he was "totally sure" that what he was doing was right. But he had "no idea what the consequences [were] going to be."
Liebmann said most of the money would be divided among more than a dozen families suing Nochumowitz and a business partner, alleging lead paint poisoning of their children during the 1990s. The money will be paid by Nochumowitz, the business partner, and members of their families.
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Everyone?
I pose this question because two journalists have weighed in with a book called Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis. So, without further ado, I'd like to hear which group you most blame. (Just to be absolutely clear: Choosing one group does not necessarily mean you're saying the rest were innocent.)
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HOPE NOW, the alliance of mortgage industry players focusing on foreclosure prevention, says it's helping quite a bit, thanks. In a press release yesterday, it estimated that "more than 1.7 million homeowners have avoided foreclosure because of industry efforts" in the last 12 months. That includes 170,000 in May alone.
But the Center for Responsible Lending fired back with a press release of its own that says the numbers "greatly overstate the help being provided" and fail to note that the problem is worsening rather than improving:
[O]ver 16 percent of subprime loans were “seriously delinquent,” that is 90-days or more delinquent or in foreclosure, at the end of March. This is double the 8 percent rate from one year earlier and the highest on record. Furthermore, though defaults on subprime loans continue to drive the overall housing crisis, prime loans are also faltering, with the percent of seriously delinquent prime loans more than doubling from a year earlier.
Foreclosure prevention has been such a hot topic not only because many homeowners are behind on their mortgages but also because rising foreclosures hurt neighborhood home values, government budgets and the lending industry.
]]>2) ForeclosurePoint, a find-foreclosures site that says it offers more information for free than its competitors.
Seen other interesting sites? Chime in.
]]>What is offsetting the housing slump is spending by business on technology to make its operations more efficient and lower costs. But the resiliency of the U.S. economy in the face of the housing bubble is amazing. It is a testament to the Federal Reserve for doing such a good job at dealing with a difficult situation.]]>But for every action, there is a reaction. The Fed has flooded the economy with money, and this has depressed the value of the U.S. dollar. This boosts inflation.
Inflation is no longer well-anchored, to use [Federal Reserve Chairman Ben S.] Bernanke's term. This is going to be felt much more today than it was in the 1970s, partly because of how companies interact with their employees. In the 1970s, companies were willing to pay their employees a few percentage points more to beat inflation. But today in the era of downsizing and outsourcing, this has not happened.
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Sure, you get a tax deduction for the interest you pay on your mortgage, but that doesn't mean you aren't heartsick about all that interest. That's why paying off a mortgage early -- and cutting out as much interest as possible -- will always appeal to some homeowners.
There are various options, some better than others, experts say.
Consider, for instance, biweekly payment plans through your lender. If you make half your mortgage payment every other week, that's 26 half-payments -- or 13 full payments rather than 12, eliminating mortgage debt more quickly. But don't sign on the dotted line if the lender charges you a fee to participate, says Bankrate.com's Greg McBride.
"You can achieve the very same objective on your own," he says.
]]> Here's how: either make an extra payment once a year or add 1/12th of that amount to each monthly payment. "Neither of those cost a dime, and you retain the flexibility to change course if money is tight," McBride says.Ethan Ewing, president of Bills.com, makes the same recommendation. "Check your monthly statement from the lender and make sure it's being applied to principal," he adds.
You can see your total interest and principal due, and how those would change if you made extra payments, at Bankrate.com's mortgage calculator.
More complex pay-off-early plans suggest you replace your mortgage with a home equity line of credit and use that line as your savings and checking account, depositing your paychecks and withdrawing money for your bills. The idea is that your deposits lower your mortgage balance as long as the money sits there, unspent. You end up with a lower average monthly mortgage balance than you otherwise would, saving you on interest payments.
"It's good if you're cash-flow positive. If you're cash-flow negative, you're going to be in trouble," says Ewing. Spend more than you earn, and you're eating up your home equity. "We've got a negative savings rate in this country, so there are certainly a lot of people who would be cash-flow negative."
Also consider the cost to refinance and the possibility nowadays that your line of credit could get scaled back or frozen by your lender, McBride says. Remember too that lines of credit have variable rates. You can often fix the amount you borrow upfront -- the amount of your mortgage, in this case -- but any later borrowing could end up with a higher rate.
Following along? OK, here's a related concept that requires a home equity line of credit in addition to, rather than instead of, your mortgage:
Again, you deposit your paychecks and pay your bills through the line of credit. The difference? Every few months, you put, say, several thousand dollars from the line of credit toward your mortgage. In other words, reduce principal by borrowing against your line of credit, paying interest on what you borrowed for the several months it takes for your discretionary income to catch up.
Rich Leffler, a Towson-based consultant for Money Merge Account, a $3,500 program that comes with software telling you when to make the extra payments and how much the payments should be, says you'll come out ahead because your deposits lower the balance on your line of credit as long as they sit there.
"Eight to 14 years is when you could expect a typical 30-year mortgage to be paid off with this program," says Leffler, who's also a mortgage consultant. Depending on the loan, "You could save $80,000 on the mortgage by paying it off sooner and end up spending maybe $5,000 in interest over the life of the line of credit."
A variety of financial commentators are skeptical. McBride doubts the net benefit for most homeowners would be nearly that dramatic, particularly if they're starting off with a $3,500 payment for the program. With isolated exceptions, he doesn't see how it would work to your advantage unless the interest rate on your line of credit is lower than the rate on your first mortgage -- and remains lower.
McBride and Leffler agree on one point: Find out the costs and savings for you, personally, before you take the plunge.
Another thing to consider before paying down a mortgage more quickly: so-called "opportunity costs." If you're putting additional money into your mortgage, you're not doing something else with that cash. Paying down higher-interest credit card debt, for instance. Or saving for retirement. Or making investments that have nothing to do with the housing market.
"If you put $100 extra into your house, basically -- into your mortgage -- you have to consider that an additional investment into real estate," Ewing says. "My wife and I, .... we'd rather save that money and put it into other investments."
Tried any pay-off-early ideas? Have any recommendations? Chime in.
]]>The report, written by Loyola College economics professor Stephen J.K. Walters and Loyola graduate Louis Miserendino, was produced as part of the Institute for Justice’s series on eminent domain abuse. (The institute is a libertarian public interest law firm.) The authors write:
Often, areas that were well-functioning (if unappealing to planners’ eyes) became emptied-out slums only after they were designated as part of a renewal area or were unlucky enough to sit in the path of a planner transit artery thought necessary to revitalize downtown.
Eminent domain has always been controversial, though it has seemed to have more supporters in the city than, say, a suburban community where a state or local agency was eying privately owned land. What do you think its effect has been on Baltimore?
]]>The first scenario assumes that real house prices fall no further than their level as of March 2008. The second scenario assumes that real house prices fall an additional 10 percent as a 2009 average. The third scenario assumes that real house prices fall an additional 20 percent for a 2009 average. The projections show that the vast majority of families in these age cohorts will have little or no wealth by 2009 in any of these scenarios and that the cohorts just approaching retirement will have very little to support themselves in retirement other than their Social Security. The projections also show that a large number of families in these age cohorts will have little or no equity in their homes in 2009.The picture is brighter for renters, as the press release notes:
In fact, the renters within each wealth quintile in 2004 will have more wealth in 2009 under all three scenarios, than will the homeowners from the same quintile. These projections underscore the dramatic impact of policies that promoted homeownership during the housing bubble.
Well -- you know what comes next. Poll time:
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People getting a median-priced home in the Baltimore area and making a 20 percent down payment on a 30-year fixed-rate loan will pay $1,188 extra a year than if they'd borrowed in April, Zillow says. (It based its calculations off rates offered through its Mortgage Marketplace to borrowers who had "good or better" credit scores.) The change in the annual percentage rate? From 5.75 percent in April to 6.44 percent in June, Zillow says.
It's a useful reminder that dropping prices won't always mean a better bottom line.
]]>1. Ask your Realtor
2. Investigate the companies
3. Make the moving company look at your home
4. Get three estimates
5. Demand a contract that covers everything
6. Ask about the claims process
7. Do the movers conduct drug tests and background checks?
8. Be cautious of Internet movers
9. Look at the actual trucks used
10. Pay little up front
More details can be found HERE.
Would you add anything to that list? What about suggestions for moving yourself successfully?
]]>The February increase was greeted with cautious hope from some economists, who say declining home prices will attract bargain-hunters, increasing sales. The May numbers, released today, brought this comment from Wachovia: "It is still too early to call a bottom in the home sales market, but clearly the vast majority of the declines in sales are behind us." (The continuing problem, Wachovia says, is "excess inventory" -- too many would-be sellers competing for too few buyers.)
Compared with May 2007, sales are down about 16 percent, the NAR says. Both the average and median price of a U.S. home dropped more than 6 percent in May compared with a year earlier.
May numbers for the Baltimore metro area, released earlier by Metropolitan Regional Information Systems, show fairly flat prices -- up a bit on average, down a bit on median -- but a larger, 30 percent drop in year-over-year sales.
]]>Instead of using powers granted by Congress to buy jumbo loans for the first time, Freddie Mac and Fannie Mae are purchasing their own mortgage-backed securities, helping reduce losses, company filings show. ...The National Association of Realtors estimated last year that Fannie Mae and Freddie Mac would buy $150 billion of jumbo loans in 2008. UBS AG analysts now say the amount may be $74 billion; the companies' own projections indicate that they may not even reach that figure.
So-called jumbo mortgages are above the $417,000 limit previously set for Fannie and Freddie. The feds temporarily raised the limit for a number of markets. It's $560,000 in the Baltimore metro area.
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