Landlords: Renters That Smoke, by Troy Rappold, Rappold Property Management, LLC


The ability to smoke in public and at apartment communities has been under attack for years. But what about rental homes? Often times an owner plans to rent their home for only a year or two. Certainly the owner does not want to receive the house back with the smell of cigarette smoke still lingering in the house. Even if the renter was a model tenant in all other respects, cigarette smoke can be very destructive. Smoking turns walls yellow (new paint job $1,200), it destroys carpets ($1,500), and it requires a deeper cleaning, perhaps with a deionizer ($500). The cost of all this stress…priceless.

The best approach? In all of our homes we have a no smoking policy. However, we do allow the renter to smoke outside, perhaps on the porch or deck. However, this issue can be a hard one to enforce. What if it’s cold outside? Who wants to stand outside when it’s only 35 degrees? The renter is easily tempted to stand inside the house or close to an open window and light up. Inevitably, smoke gets in the house and the home owner smells the evidence. A good suggestion is to do an inspection within the first month or two of a new lease if you know the renter smokes. Catch the problem early. Then do another inspection a few months later to make sure. If you detect smoke after the tenant moves out, a landlord can charge the tenant for the remediation of the smell. But this can be a tricky proposition. It is always best to be pro-active and keep this issue from becoming a possible expense.  It is less ideal to react and pursue a vacating tenant for money.

You can always call Rappold Property Management with questions about your single family home investment.

Troy Rappold
Rappold Property Management, LLC
1125 SE Madison Street, suite #201
Portland, OR  97214

Phone: 503-232-5990
Fax: 503-232-1462

 

4 Tips On Giving Your Mudroom A Makeover, by Steph Noble, Northwest Mortgage Group


4_Tips_On_Giving_Your_Mudroom_A_Makeover

From crunched-up leaves stuck to bottoms of shoes to bulky coats shed as soon as kids walk through the door, mudrooms are ideal for keeping outdoor dirt, wet clothing and outerwear from being strewn throughout your home.

Mudrooms not only keep the rest of your house clean, but they also designate a spot for those last-minute grabs, such as coats, umbrellas and purses, when you’re running out the door.

These rooms are great catchalls. However, an organized mudroom can make your life and those hectic mornings much less stressful. Below are smart tips for getting your mudroom ready this fall.

1. Put In Seating

After shedding outer layers, the next thing anyone wants to do after coming inside on a cold, wet day is to take off their mucky shoes. So make sure there is a built-in bench or convenient chair for people to sit down and tend to their tootsies. Whether taking off or putting on shoes, it makes life a little more comfortable.

2. Install A Sink

A mudroom is supposed to be the catchall for everything dirty from the outdoors. With this in mind, a sink for washing off the grime and mud makes sense. Then you can clean your clothing in the contained space without having to haul them to the kitchen sink or laundry room.

3. Create Cubbies

Even though this space is designated as a drop-off point before entering the main living space, you don’t want everything just thrown into one big confusing pile. Create individual cubbies for every person in your household. Each cubby should contain a shelf for purses and backpacks, hooks for coats and a low place for shoes.

4. Splurge On A Boot Warmer

While electric boot warmers can be a little expensive, you will definitely think it’s worth the money when it’s freezing outside and your shoes are damp. Electric boot warmers heat your shoes on pegs and dry them out at the same time. They also work well on gloves.

Fall is a mudroom’s busy season; so get it in shape with the tips above. With all the coats hanging on their hooks, shoes in their cubbies and dirt contained to this designated space, your life will be a little more organized and much less stressful!

 

 

 

Steph Noble
Northwest Mortgage Group
(503) 528-9800
http://www.stephnoble.com
http://www.nwmortgagegoup.com

 

 

Asking Prices and Inventory for Homes in Portland Oregon June 3rd 2013


As of June 03 2013 there were about 8,714 single family and condo homes listed for sale in Portland Oregon. The median asking price of these homes was approximately $285,077. Since this time last year, the inventory of homes for sale has decreased by 23.4% and the median price has increased by 10.1%.

June 03, 2013 Month/Month Year/Year
Median Asking Price $285,077 +1.8% +10.1%
Home Listings/Inventory 8,714 +3.5% -23.4%

Recent Asking Price and Inventory History for Portland

Date Single Family & Condo
Inventory
25th Percentile
Asking Price
Median
Asking Price
75th Percentile
Asking Price
06/03/2013 8,714 $199,000 $285,077 $449,900
05/27/2013 8,631 $197,700 $285,000 $449,000
05/20/2013 8,597 $195,000 $282,500 $441,100
05/13/2013 8,460 $194,950 $280,000 $448,500
05/06/2013 8,420 $191,900 $279,900 $449,000

Portland Asking Price History

The median asking price for homes in Portland peaked in April 2007 at $354,740 and is now $69,663 (19.6%) lower. From a low of $239,125 in February 2011, the median asking price in Portland has increased by $45,952 (19.2%).

25th, Median (50th) and 75th Percentile Asking Prices for Portland Oregon

Portland Housing Inventory History

Housing inventory in Portland, which is typically highest in the spring/summer and lowest in the fall/winter, peaked at 23,354 in July 2008. The lowest housing inventory level seen was 7,969 in March 2013.

Housing Inventory for Portland Oregon

Portland Asking Price and Inventory History

Date Single Family & Condo
Inventory
25th Percentile
Asking Price
Median
Asking Price
75th Percentile
Asking Price
June 2013 8,714 $199,000 $285,077 $449,900
May 2013 8,527 $194,888 $281,850 $446,900
April 2013 8,075 $186,800 $274,540 $439,060
March 2013 7,969 $182,923 $267,425 $427,213
February 2013 7,981 $179,900 $262,450 $419,731
January 2013 8,250 $179,075 $259,217 $404,725
December 2012 8,627 $178,900 $259,720 $405,750
November 2012 9,408 $179,675 $260,950 $408,963
October 2012 10,259 $179,900 $267,160 $418,600
September 2012 10,828 $179,900 $268,975 $418,450
August 2012 11,102 $179,675 $268,725 $418,500
July 2012 11,140 $177,600 $266,598 $411,651
June 2012 11,362 $174,825 $259,675 $399,950
May 2012 11,227 $169,713 $252,463 $399,450
April 2012 10,820 $169,160 $249,910 $397,940
March 2012 9,683 $174,450 $259,450 $406,225
February 2012 10,549 $169,225 $248,250 $388,025
January 2012 10,833 $169,080 $246,960 $381,960
December 2011 11,461 $169,925 $248,375 $385,675
November 2011 12,018 $174,750 $250,972 $397,425
October 2011 12,846 $179,530 $258,720 $399,900
September 2011 13,509 $179,939 $259,900 $399,900
August 2011 14,672 $179,360 $256,590 $395,540
July 2011 14,772 $178,150 $253,188 $389,225
June 2011 14,762 $176,475 $250,970 $386,970
May 2011 14,582 $173,184 $249,160 $375,780
April 2011 14,748 $169,950 $242,400 $364,975
March 2011 15,458 $169,800 $239,675 $359,575
February 2011 15,531 $169,675 $239,125 $354,725
January 2011 15,001 $170,760 $239,158 $356,380
December 2010 16,118 $176,200 $242,700 $363,363
November 2010 17,018 $180,160 $249,330 $373,780
October 2010 17,614 $184,975 $253,375 $381,975
September 2010 18,282 $189,100 $258,925 $390,950
August 2010 18,579 $190,940 $261,150 $397,160
July 2010 18,160 $195,163 $267,475 $399,000
June 2010 17,488 $196,853 $268,875 $399,800
May 2010 17,035 $198,880 $269,620 $399,818
April 2010 17,279 $198,000 $266,750 $392,500
March 2010 16,495 $195,600 $264,460 $393,960
February 2010 15,382 $194,938 $264,450 $395,198
January 2010 14,895 $197,819 $267,425 $399,225
December 2009 15,329 $199,897 $272,038 $402,212
November 2009 15,902 $202,750 $277,760 $417,780
October 2009 16,573 $209,675 $283,646 $428,225
September 2009 17,165 $210,000 $289,475 $436,100
August 2009 17,595 $211,760 $292,880 $444,320
July 2009 17,819 $212,950 $294,950 $449,000
June 2009 17,870 $213,460 $294,920 $449,100
May 2009 17,713 $211,475 $293,291 $445,250
April 2009 17,978 $212,525 $289,925 $444,725
March 2009 18,506 $214,153 $289,930 $443,360
February 2009 18,449 $216,014 $293,968 $448,125
January 2009 18,872 $219,952 $297,855 $452,809
December 2008 19,842 $223,220 $302,773 $458,508
November 2008 20,983 $226,382 $307,532 $464,024
October 2008 22,086 $229,650 $312,450 $469,724
September 2008 22,973 $233,730 $319,580 $474,990
August 2008 23,314 $235,200 $322,000 $475,725
July 2008 23,354 $236,074 $324,550 $475,000
June 2008 22,657 $239,150 $324,920 $479,459
May 2008 21,505 $239,900 $325,000 $480,947
April 2008 20,669 $239,900 $324,937 $479,912
March 2008 19,381 $241,300 $324,860 $485,960
February 2008 18,409 $240,485 $324,925 $479,912
January 2008 17,659 $243,500 $324,962 $481,765
December 2007 18,584 $245,120 $327,975 $489,355
November 2007 19,926 $248,665 $330,475 $486,425
October 2007 20,762 $249,950 $337,260 $493,980
September 2007 20,656 $253,425 $339,900 $497,749
August 2007 19,837 $257,712 $342,975 $499,124
July 2007 18,710 $261,120 $349,120 $499,930
June 2007 17,670 $264,282 $349,950 $507,949
May 2007 16,386 $264,900 $350,975 $512,662
April 2007 15,059 $264,900 $354,740 $517,740
March 2007 13,897 $264,450 $353,850 $523,425
February 2007 13,814 $258,517 $349,800 $516,750
January 2007 13,726 $255,810 $349,637 $507,441
December 2006 14,746 $257,149 $348,246 $499,949
November 2006 15,671 $258,837 $348,750 $499,900
October 2006 16,027 $259,640 $348,834 $499,900
September 2006 15,239 $261,098 $349,675 $499,937
August 2006 14,029 $264,925 $350,737 $518,587
July 2006 12,864 $264,920 $350,470 $525,980
June 2006 11,261 $264,925 $349,975 $530,937
May 2006 9,804 $262,340 $350,940 $532,360
April 2006 8,701 $256,433 $346,433 $526,224

Data on deptofnumbers.com is for informational purposes only. No warranty or guarantee of accuracy is offered or implied. Contact ben@deptofnumbers.com (or @deptofnumbers on Twitter) if you have any questions, comments or suggestions.

 

 

 

Department of Numbers
http://www.deptofnumbers.com/

Nearly Half of U.S. Families Teetering on Edge of Ruin. by MANDI WOODRUFF, Business Insider


In the past few years, Americans have certainly learned a thing or two about how quickly disaster can strike.

And with each Hurricane Sandy, housing crisis, and stock market crash that rocks our world, we’re faced with the harsh realization that many of us simply aren’t prepared for the worst. A sobering new report by the Corporation for Enterprise Development shows nearly half of U.S. households (132.1 million people) don’t have enough savings to weather emergencies or finance long-term needs like college tuition, health care and housing.

 

According to the Assets & Opportunity Scorecard, these people wouldn’t last three months if their income was suddenly depleted. More than 30 percent don’t even have a savings account, and another 8 percent don’t bank at all.

We’re not just talking about people who living people the poverty line, either. Plenty of the middle class have joined the ranks of the “working poor,” struggling right alongside families scraping by on food stamps and other forms of public assistance.

More than one-quarter of households earning $55,465 to $90,000 annually have less than three months of savings. And another quarter of households are considered net worth asset poor, meaning “the few assets they have, such as a savings account or durable assets like a home, business or car, are overwhelmed by their debts,” the study says.

BASIC NECESSITIES  
One of the prolonging reasons consumers have consistently struggled to make ends meet has more to do with larger economic issues than whether or not they can balance a checkbook. According to the report, household median net worth declined by over $27,000 from its peak in 2006 to $68,948 in 2010, and at the same time, the cost of basic necessities like housing, food, and education have soared.

It’s a dichotomy that is hammered home in a new book by finance expert Helaine Olen. In Pound Foolish: Exposing the Dark Side of the Personal Finance Industry, Olen knocks down much of the commonly-spread advice that is sold by the personal finance industry –– the idea that if you’re not making ends meet in America, you’re doing something wrong.

“The problem was fixed cost, the things that are difficult to ‘cut back’ on. Housing, health care, and education cost the average family 75 percent of their discretionary income in the 2000s. The comparable figure in 1973: 50 percent,” Olen writes.

“And even as the cost of buying a house plunged in many areas of the country in the latter half of the 2000s (causing, needless to say, its own set of problems) the price of other necessary expenditures kept rising.”

And wherever consumers can’t cope with costs, they continue to rely on plastic. The average borrower carries more than $10,700 in credit card debt, one in five households still rely on high-risk financial services that target low-income and under-banked consumers.
Read more at http://www.thefiscaltimes.com/Articles/2013/02/04/Nearly-Half-of-US-Families-Teetering-on-Edge-of-Ruin.aspx#DVKZCYevJIMwCEyw.99

FHA Eases Requirements for Condo Certification, from Melissa Stashin, Pacific Residential Mortgage


HUD announced in a recent Mortgagee Letter that temporary provisions have been made to the condominium project approval guidelines. These new provisions took affect September 13, 2012 and will stay in place through August 31, 2014.

Changes include:
-Relaxed HOA certification forms,
-Allowance for mixed-use developments,
-Updates to the definition of “Under Construction”,
-Developers/Investors may own up to 50% of the total units at the time of approval.

This ease in condo certification means more borrowers can purchase condos using low-down FHA financing. Call me today to learn more about how you can take advantage of these changes.

Share the benefits of FHA with your clients today!

For more information on FHA changes to condo lending, check out these sources:
FHA eases restrictions on condo lendingChicago Tribune
Real estate industry welcomes changes to FHA condo rules – Inman News

PRM, Your Solution Based Lender

MARKET COMMENT

Mortgage bond prices finished the week higher which pushed rates lower. Rates were lower throughout most of the week as the majority of economic data releases showed continued economic weakness. The weaker than expected New York Fed’s Empire Manufacturing Report started rates moving lower. This was followed by weaker than expected housing starts, higher than expected weekly jobless claims, and weaker than expected Leading Economic Indicators data. Existing home sales did surprise to the upside but did not move the market much. Mortgage interest rates finished the week better by about 1/2 of a discount point.

 

MELISSA STASHIN
MLO – 40033

4949 Meadows Road
Suite 150
Lake Oswego, OR 97035
melissa.stashin@pacresmortgage.com
(503) 699-5626

MultnomahForeclosures.com Updated with New Notice of Default Lists



Visit MultnomahForeclosures.com for the notice of default lists (Homes in Foreclosure) for Multnomah County and other Oregon counties.

Multnomah Country Foreclosures
http://multnomahforeclosures.com

Fred Stewart
Stewart Group Realty Inc.
info@sgrealtyinc.com
http://www.sgrealty.net

How to use “Gift Funds” to buy your next home!


Did you know that your relative, fiance, domestic partner, or even employer can “gift” you the money needed for your down-payment and closing costs?  Watch today for details!

FHA costs rising in April – and HARP 2.0 refi program just got better!


If you need an FHA loan to buy a home or refinance, then you have until April 6th to call me, before the cost goes up.  Plus, we have new updates on the HARP 2.0 government refi program, and it’s good news!  Watch today’s video for details.

Buyer’s market forming – and why your mortgage rate doesn’t matter!


Big housing market shift has created more competition for those that want to buy homes.  Watch for details, and I will also explain why the lowest interest rate isn’t always the best deal for you!

America’s Credit and Housing Crisis: New State Bank Bills, Marketoracle.co.uk


Seventeen states have now introduced bills for state-owned banks, and others are in the works.  Hawaii’s innovative state bank bill addresses the foreclosure mess.  County-owned banks are being proposed that would tackle the housing crisis by exercising the right of eminent domain on abandoned and foreclosed properties.  Arizona has a bill that would do this for homeowners who are current in their payments but underwater, allowing them to refinance at fair market value.

The long-awaited settlement between 49 state Attorneys General and the big five robo-signing banks is proving to be a majordisappointment before it has even been signed, sealed and court approved.  Critics maintain that the bankers responsible for the housing crisis and the jobs crisis will again be buying their way out of jail, and the curtain will again drop on the scene of the crime.

We may not be able to beat the banks, but we don’t have to play their game.  We can take our marbles and go home.  The Move Your Money campaign has already prompted more than 600,000 consumers to move their funds out of Wall Street banks into local banks, and there are much larger pools that could be pulled out in the form of state revenues.  States generally deposit their revenues and invest their capital with large Wall Street banks, which use those hefty sums to speculate, invest abroad, and buy up the local banks that service our communities and local economies.  The states receive a modest interest, and Wall Street lends the money back at much higher interest.

Rhode Island is a case in point.  In an article titled “Where Are R.I. Revenues Being Invested? Not Locally,” Kyle Hence wrote in ecoRI Newson January 26th:

 

According to a December Treasury report, only 10 percent of Rhode Island’s short-term investments reside in truly local in-state banks, namely Washington Trust and BankRI. Meanwhile, 40 percent of these investments were placed with foreign-owned banks, including a British-government owned bank under investigation by the European Union.

Further, millions have been invested by Rhode Island in a fund created by a global buyout firm . . . . From 2008 to mid-2010, the fund lost 10 percent of its value — more than $2 million. . . . Three of four of Rhode Island’s representatives in Washington, D.C., count [this fund] amongst their top 25 political campaign donors . . . .

Hence asks:

Are Rhode Islanders and the state economy being served well here? Is it not time for the state to more fully invest directly in Rhode Island, either through local banks more deeply rooted in the community or through the creation of a new state-owned bank?

Hence observes that state-owned banks are “[o]ne emerging solution being widely considered nationwide  . . . . Since the onset of the economic collapse about five years ago, 16 states have studied or explored creating state-owned banks, according to a recent Associated Press report.”

2012 Additions to the Public Bank Movement

Make that 17 states, including three joining the list of states introducing state bank bills in 2012: Idaho (a bill for a feasibility study), New Hampshire (a bill for a bank), and Vermont (introducing THREE bills—one for a state bank study, one for a state currency, and one for a state voucher/warrant system).  With North Dakota, which has had its own bank for nearly a century, that makes 18 states that have introduced bills in one form or another—36% of U.S. states.  For states and text of bills, see here.

Other recent state bank developments were in Virginia, Hawaii, Washington State, and California, all of which have upgraded from bills to study the feasibility of a state-owned bank to bills to actually establish a bank.  The most recent, California’s new bill, was introduced on Friday, February 24th.

All of these bills point to the Bank of North Dakota as their model.  Kyle Hence notes that North Dakota has maintained a thriving economy throughout the current recession:

One of the reasons, some say, is the Bank of North Dakota, which was formed in 1919 and is the only state-owned or public bank in the United States. All state revenues flow into the Bank of North Dakota and back out into the state in the form of loans.

Since 2008, while servicing student, agricultural and energy— including wind — sector loans within North Dakota, every dollar of profit by the bank, which has added up to tens of millions, flows back into state coffers and directly supports the needs of the state in ways private banks do not.

Publicly-owned Banks and the Housing Crisis

A novel approach is taken in the new Hawaii bill:  it proposes a program to deal with the housing crisis and the widespread problem of breaks in the chain of title due to robo-signing, faulty assignments, and MERS.  (For more on this problem, see here.)  According to a February 10th report on the bill from the Hawaii House Committees on Economic Revitalization and Business & Housing:

The purpose of this measure is to establish the bank of the State of Hawaii in order to develop a program to acquire residential property in situations where the mortgagor is an owner-occupant who has defaulted on a mortgage or been denied a mortgage loan modification and the mortgagee is a securitized trust that cannot adequately demonstrate that it is a holder in due course.

The bill provides that in cases of foreclosure in which the mortgagee cannot prove its right to foreclose or to collect on the mortgage, foreclosure shall be stayed and the bank of the State of Hawaii may offer to buy the property from the owner-occupant for a sum not exceeding 75% of the principal balance due on the mortgage loan.  The bank of the State of Hawaii can then rent or sell the property back to the owner-occupant at a fair price on reasonable terms.

Arizona Senate Bill 1451, which just passed the Senate Banking Committee 6 to 0, would do something similar for homeowners who are current on their payments but whose mortgages are underwater (exceeding the property’s current fair market value).  Martin Andelman callsthe bill a “revolutionary approach to revitalizing the state’s increasingly water-logged housing market, which has left over 500,000 ofArizona’s homeowners in a hopelessly immobile state.”

The bill would establish an Arizona Housing Finance Reform Authority to refinance the mortgages of Arizona homeowners who owe more than their homes are currently worth.  The existing mortgage would be replaced with a new mortgage from AHFRA in an amount up to 125% of the home’s current fair market value. The existing lender would get paid 101% of the home’s fair market value, and would get a non-interest-bearing note called a “loss recapture certificate” covering a portion of any underwater amounts, to be paid over time.  The capital to refinance the mortgages would come from floating revenue bonds, and payment on the bonds would come solely from monies paid by the homeowner-borrowers. An Arizona Home Insurance Fund would create a cash reserve of up to 20 percent of the bond and would be used to insure against losses. The bill would thus cost the state nothing.

Critics of the Arizona bill maintain that it shifts losses from collapsed property values onto banks and investors, violating the law of contracts; and critics of the Hawaii bill maintain that the state bank could wind up having paid more than market value for a slew of underwater homes. An option that would avoid both of these objections is one suggested by Michael Sauvante of the Commonwealth Group, discussed earlierhere: the state or county could exercise its right of eminent domain on blighted, foreclosed and abandoned properties.  It could offer to pay fair market value to anyone who could prove title (something that with today’s defective title records normally can’t be done), then dispose of the property through a publicly-owned land bank as equity and fairness dictates.  If a bank or trust could prove title, the claimant would get fair market value, which would be no less than it would have gotten at an auction; and if it could not prove title, it legally would have no claim to the property.  Investors who could prove actual monetary damages would still have an unsecured claim in equity against the mortgagors for any sums owed.

 

Rhode Island Next?

As the housing crisis lingers on with little sign of relief from the Feds, innovative state and local solutions like these are gaining adherents in other states; and one of them is Rhode Island, which is in serious need of relief.  According to The Pew Center on the States, “The country’s smallest state . . . was one of the first states to fall into the recession because of the housing crisis and may be one of the last to emerge.”

Rhode Islanders are proud of having been first in a number of more positive achievements, including being the first of the 13 original colonies to declare independence from British rule.  A state bank presentation was made to the president of the Rhode Island Senate and other key leaders earlier this month that was reportedly well received.  Proponents have ambitions of making Rhode Island the first state in this century to move its money out of Wall Street into its own state bank, one owned and operated by the people for the people.

Ellen Brown is an attorney and president of the Public Banking Institute, http://PublicBankingInstitute.org.  In Web of Debt, her latest of eleven books, she shows how a private cartel has usurped the power to create money from the people themselves, and how we the people can get it back.  Her websites are http://WebofDebt.com and http://EllenBrown.com

Ellen Brown is a frequent contributor to Global Research.  Global Research Articles by Ellen Brown

© Copyright Ellen Brown 2012

Disclaimer: The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of the Centre for Research on Globalization. The contents of this article are of sole responsibility of the author(s). The Centre for Research on Globalization will not be responsible or liable for any inaccurate or incorrect statements contained in this article.

http://www.marketoracle.co.uk/Article33365.html

Financial Force Majeure


Financial Force Majeure: The Virtual World Taylored to Our Real World

If any of you have ever played the virtual reality game, Sim City or any similar, you will probably appreciate the point to be made more immediately than those unfamiliar. For the unfamiliar, this is a game in which you are the master of the land, tasked with taking what amounts to any empty field and building, expanding, and developing yourself a thriving metropolis.

This entails tapping into the natural resources that are available within your splotch of land, thereby harnessing those resources to grow your community. As master of your domain, you have to the politician, the banker, the shopkeeper too, making wise decisions with your electronic currency inasmuch as budgeting and investment are concerned. You have to provide the infrastructure, exploiting what resources you have to attract more Sims (the inhabitants of your city) to further grow your town.

You zone the land for residential, commercial, and industrial zones and providing for greenbelt, park, and recreational zones. You build schools, banks, retail and shopping centers, single-family and multi-family residential, industrial, and hospitals. As in the real world, this is done through various types of investment deals in the both the private and public sectors, involving commercial and investment banks, private investors and businesses. Your metropolis’ success depends on good investment strategies.

Mother Nature is an ever present threat, just as in the real world, throwing a natural disaster your way now and again. Of course, disaster strikes when least expected, testing the validity of your decisions, most of all your infrastructure. It is than you discover if value engineering the levy walls was such a good idea. Should news of cutting corners for costs leaks out, it costs your city, as restitution to flood victims is yours to bear.

Of course, the entirety is based on a designed program consisting of a language, codes, and locks. As with any program there savvy programmers, some might say hackers, having the learned knowledge to manipulate codes, language, and changing locks or even to remove locks. Purposes in hacking games might be to expand the games capabilities or to be able to be able to skip ahead to more advanced levels without having to play through the levels not desired.

Virtual reality games are rooted in fantasy, even if based on real situations, there is no tangible result. Emotional personal satisfaction or perhaps of monetary award if in some sort of competition is the best reward one can hope for. You can’t physically walk the streets of your city, go to one of its schools, or benefit from the investment dividends in terms of attaining real dollars.

For the developers, the tangible aspects are realized by sales which return in real dollars to the owners of the rights to the game. The developers might not necessarily be the owners either, depending on whether the developers retain rights or assigned them away to another.

The point to take away from this little piece is more of a question. What if, with highly sophisticated programming, it was possible to design investment strategies, for instance and than somehow apply them to the real world? What if it has already been done…..What if our whole entire economy has been modeled in the virtual world, brought forth into the real world?

Sound ridiculous? ………think again…….

 

INFORMATION PROCESSING SYSTEM FOR SEAMLESS VIRTUAL TO REAL WORLD OPERATIONS      

US Patent Pub. No.: US 2002/0188760 Al

 

SECURING CONTRACTS IN A VIRTUAL WORLD    

US Patent Pub. No.: US 2007/0117615

 

WEB DEPENDENT CONSUMER FINANCING AND VIRTUAL RESELLING METHOD      

US Patent Pub. No.: US 2001/0056399 A1

 

TRANSACTIONS IN VIRTUAL PROPERTY      

US Patent Pub. No.: US 2005/0021472 Al

 

VIRTUAL FINANCE/INSURANCE COMPANY       

US Patent Pub. No.: US 2003/0187768 A1

 

 

 

 

 

 

 

 

 

 

Has Housing Really Bottomed? Oftwominds.com


Massive intervention by Federal agencies and the Federal Reserve have kept the market from discovering price and the risk premium in real estate. That sets up a “catch the falling knife” possibility for impatient real estate investors.

 

A substantial percentage of many households’ net worth is comprised of the equity in their home. With the beating home prices have taken since 2007, existing and soon-to-be homeowners are keen to know: Are prices stabilizing? Will they begin to recover from here? Or is the “knife” still falling?

To understand where housing prices are headed, we need to understand what drives them in the first place: policy, perception, and price discovery.

In my December 2011 look at housing, I examined systemic factors such as employment and demographics that represent ongoing structural impediments to the much-awaited recovery in housing valuations and sales. This time around, we’re going to consider policy factors that influence the housing market.

Yesterday while standing in line at our credit union I overheard another customer at a teller’s window request that her $100,000 Certificate of Deposit (CD) be withdrawn and placed in her checking account because, she said, “I’m not earning anything.” The woman was middle-aged and dressed for work in a professional white- collar environment — a typical member, perhaps, of the vanishing middle class.

Sadly, she is doing exactly what Ben Bernanke’s Federal Reserve policies are intended to push people into doing: abandoning capital accumulation (savings) in favor of consumption or trying for a higher yield in risk assets such as stocks and real estate.

It may strike younger readers as unbelievable that a few decades ago, in the low-inflation 1960s, savings accounts earned a government-stipulated minimum yield of 5.25%, regardless of where the Fed Funds Rate might be. Capital accumulation was widely understood to be the bedrock of household financial security and the source of productive lending, whether for 30-year home mortgages or loans taken on to expand an enterprise.

How times — and the US economy — have changed.

Now the explicit policy of the nation’s private central bank (the Federal Reserve) and the federal government’s myriad housing and mortgage agencies is to punish saving with essentially negative returns in favor of blatant speculation with borrowed money. Official inflation is around 3% and savings accounts earn less than 0.1%, leaving savers with a net loss of about 3% every year.  Even worse — if that is possible — these same agencies have extended housing lenders trillions of dollars in bailouts, backstops and guarantees, creating institutionalized moral hazard on an unprecedented scale.

Recall that moral hazard simply means that the relationship between risk and return and has been severed, so risk can be taken in near-infinite amounts with the assurance that if that risk blows up, the gains remain in the hands of the speculator. Another way of describing this policy of government bailouts is “profits are private but losses are socialized.” That is, any profits earned from risky speculation are the speculator’s to keep, while all the losses are transferred to the public.

While the housing bubble was most certainly based on a credit bubble enabled by lax oversight and fraudulent practices, the aftermath can be fairly summarized as institutionalizing moral hazard.

Policy as Behavior Modification and Perception Management

Quasi-official pronouncements by Fed Board members suggest that the Fed’s stated policy of punishing savers with a zero-interest rate policy (ZIRP) is outwardly designed to lower the cost of refinancing mortgages and buying a house. The first is supposed to free up cash that households can then spend on consumption, thereby boosting the economy. With savings earning a negative yield, consuming more becomes a tangibly attractive alternative. (How keeping the factories in Asia humming will boost the American economy is left unstated.)

This near-complete destruction of investment income from household savings yields a rather poor return. Plausible estimates of the total gain that could be reaped by widespread refinancing hover around $40 billion a year, which is not much in a $15 trillion economy.

There are real-world limits on this policy as well. Since the Fed can’t actually force lenders to refinance underwater mortgages, millions of homeowners are unable to take advantage of lower rates. From the point of view of lenders, declining household incomes and mortgages that exceed the home value (so-called negative equity) have lowered the creditworthiness of many homeowners.

As a result, the stated Fed policy goal of lowering mortgage payments to boost consumer spending has met with limited success. Somewhat ironically, the mortgage industry’s well-known woes — extended time-frames for involuntary foreclosure, lenders’ hesitancy to concede to short sales (where the house is sold for less than the mortgage and the lender absorbs a loss), and strategic/voluntary defaults — may be putting an estimated $80 billion in “free cash” that once went to mortgages into defaulting consumer’s hands.

The failure of the Fed’s policies to increase household’s surplus income via ZIRP leads us to the second implicit goal, lowering the cost of home ownership via super-low mortgage rates, which serves both as behavior modification and perception management. If low-interest rate mortgages and subsidized Federal programs that offer low down payments drop the price of home ownership below that of renting an equivalent house, then there is a substantial financial incentive to buy rather than rent.

The implicit goal is to shape a general perception that the bottom is in, and it’s now safe to buy housing.

First-time home buying programs and FHA (Federal Housing Authority) and VA (Veterans Administration) loans all offer very low down-payment options to qualified buyers. This extends a form of moral hazard to buyers as well as lenders: If a buyer need only scrape up $2,000 to buy a house, their losses are limited should they default to this same modest sum. Meanwhile, lenders working under the guarantee of FHA- and VA-backed loans are also insured against losses.

The Fed’s desire to boost home sales by any means available is transparent. By boosting home sales, it hopes to stem the decline of house valuations and thus stop the hemorrhaging of bank losses from writing down impaired loan portfolios, and also stabilize remaining home equity for households, which has shrunk to a meager 38% of housing value.

As many have noted, given that about 30% of all homes are owned free and clear, the amount of equity residing in the 70% of homes with a mortgage may well be in the single digits. (Data on actual equity remaining in mortgaged homes is not readily available, and would be subject to wide differences of opinion on actual market valuations.)

Broadly speaking, housing as the bedrock of middle class financial security has been either destroyed (no equity) or severely impaired (limited equity).  The oversupply of homes on the market and in the “shadow inventory” of defaulted/foreclosed homes awaiting auction has also impaired the ability of homeowners to sell their property; in this sense, any remaining equity is trapped, as selling is difficult and equity extraction via HELOCs (home equity lines of credit) has, for all intents and purposes, vanished.

The Fed’s strategy, in conjunction with the government-owned and -operated mortgage agencies that own or guarantee the majority of mortgages in the US (Fannie Mae, Freddie Mac, FHA, and the VA), is to stabilize the housing market through subsidizing the cost of mortgage borrowing by shifting hundreds of billions of dollars out of savers’ earnings with ZIRP.

Since roughly 60% of households either already own a home or are ensnared in the default/foreclosure process, then the pool of buyers boils down to two classes: buyers who would be marginal if not for government subsidies and super-low mortgage rates, and investors seeking some sort of return above that of US Treasury bonds. The Fed has handed investors two choices to risk a return above inflation: equities (the stock market) or real estate. Given the uneven track record of stocks since the 2009 meltdown, it is not much of a surprise that investors large and small have been seeking “deals” in real estate as a way to earn a return.

Recent data from the National Association of Realtors concludes that cash buyers (a proxy for investors) accounted for 31% of homes sold in December 2011. Even in the pricey San Francisco Bay Area, where median prices are still in the $350,000 range, investors accounted for 27% of all sales. Absentee buyers (again, a proxy for investors) paid a median price of around $225,000, substantially lower than the general median price.

This data suggests that “bargain” properties are being snapped up for cash, either as rental properties or in hopes of “flipping” for a profit after some modest cleanup and repair.

Price and Risk Premium Discovery

There is one lingering problem with the Fed and the federal housing agencies’ concerted campaigns to punish capital accumulation, push investors into equities or real estate, and subsidize marginal buyers to boost sales at current valuations. The market cannot “discover” price or establish a risk premium when the government and its proxies are, in essence, the market.

By some accounts, literally 99% of all mortgages in the U.S. are government-issued or -guaranteed. If any other sector was so completely owned by the federal government, most people would concede that it was a socialized industry. Yet we in the US maintain the fiction of a “free market” in mortgages and housing.

To establish a truly free and transparent market for mortgages and housing, we would have to end all federal subsidies and guarantees/backstops, and restore the market as sole arbiter of interest rates — i.e., remove that control from the Federal Reserve.

Everyone with a stake in the current market fears such a return to an open market because it is likely that prices would plummet once government subsidies, guarantees, and incentives were removed. Yet without such an open market, buyers can never be certain that price and risk have truly been discovered. Buyers in today’s market may feel that the government has removed all risk from buying, but they might find that they “caught the falling knife;” that is, bought into a false bottom in a market that has yet to reach transparent price discovery.

So, the key question still remains for anyone who owns a home or is looking to soon own one…how close are we to the bottom in housing prices?

In Part II: Determining the Housing Bottom for Your Local Market, we tackle that question head-on. Because local dynamics inevitably play such a large role in determining fair pricing for any given market, instead of giving a simple forecast, we instead offer a portfolio of tools and other resources for analyzing home values on a local basis. Our goal is to empower readers to calculate an informed estimate of “fair value” for their own markets — and then see how closely current local real estate prices fit (or deviate) from it.

Click here to access Part II of this report (free executive summary, enrollment required for full access).

This article was originally published on chrismartenson.com.

There Is No Bubble and Even if There Is It’s Not a Problem, by Economist’s View Blog


The big story today seems to be the Fed’s comments about the housing bubble in transcripts from their meetings in 2006. The transcripts show what we already knew, that the Fed was never fully convinced there was a housing bubble, and asserted that even if there was the dmage could be contained — they could easily clean up after it pops without the economy suffering too much damage:

Greenspan image tarnished by newly released documents, by Zachary A. Goldfarb, Washington Post: The leaders of the Federal Reserve went around the room saluting Alan Greenspan during his last major meeting as chairman of the central bank Jan. 31, 2006. …

Some six years later, Greenspan’s record — sterling when he left the central bank after 18 years — looks much more mixed. Many economists and analysts say a range of Fed policies contributed to the financial crisis and resulting recession. These included keeping interest rates low for an extended period, failing to take action to stem the bubble in housing prices and inadequate oversight of financial firms.

The Thursday release of transcripts of Fed meetings in 2006 shows that top leaders of the Fed — several of whom continue to hold key positions today — had a limited awareness of the gravity of the threat that the weakness in the housing market posed to the rest of the economy. And they had what turned out to be an excessive optimism about how well things would turn out. …

A Fed economist reported in a 2006 meeting that “we have not seen — and don’t expect — a broad deterioration in mortgage credit quality.” That turned out to be incorrect.

 

http://economistsview.typepad.com/economistsview/

 

Real Estate News On The National Scene, by Phil Querin, Q-Law.com


The credit and real estate meltdowns, coupled with the subsequent foreclosure crisis, caused many politicians, all with differing motives, to shift into high legislative gear.  Without commenting on motivation, which is an admittedly fertile area for discussion, let’s take a look at the national legislative scene to see what has occurred[1], and whether things are better today than in 2008.

MERS. I am addressing this issue at the beginning, primarily to get it out of the way.  I for one am suffering from “MERS Fatigue,” which is a malady afflicting many of us who watch and wait for something new to occur on this front.

It’s important to understand that MERS, which is the catchy acronym for the “Mortgage Electronic Registration System”, was never a creature of statute.  It was born and bred by the lending and title industries in the late 1990s, for reasons that most people already know.  But because of its national scope – affecting approximately 60% of all home mortgages – MERS bears mentioning here.

Despite all the national attention, the MERS controversy is really one that can only be resolved on the local level, since real estate recording and foreclosure statutes occur on a state – not national – level.  In Oregon, although there have been several federal court rulings, MERS’ legality is still up in the air.  This is because the local federal judges, who are supposed to follow Oregon law, have no binding Oregon appellate court precedent to follow when it comes to MERS.  The result is that there have been divergent federal court rulings.  And, the topic is so contentious at the Oregon legislature that there is little political appetite to tackle the problem, since few can agree on a solution.

So, the news is that there is no news.  It will take months for the one state court case currently on appeal to find its way to the Oregon Court of Appeals or Supreme Court.  And, although there is a slight chance of a breakthrough in the upcoming session, 2012 does not appear to be a year in which we will see a legislative answer.

Fannie and Freddie. Since the fall of Lehman Brothers in 2008, these two Government Sponsored Enterprises or “GSEs” have come under government ownership and control.  For a summary of the issues from the Congressional Budget Office, go to  the link here.  Since the private secondary mortgage market effectively disappeared between 2007-2008, this means that today, there is no viable buyer of residential loans except the federal government. To some observers, depending on their political bent, this is a good thing; but to others, it’s bad.

One thing is certain; as long as the federal government, through Fannie and Freddie, dictate borrower qualifications, LTVs, and conforming loan limits[2], the conventional mortgage market will continue to be tight.  This does not bode well for higher end homes, especially.  Unfortunately, we don’t have to go back very far in time to remember what happened in the “private label” secondary mortgage market (i.e. non-GSE market) where home loans were handed out like party favors, and those who should never have qualified did.

While there is much talk about doing away with Fannie and Freddie, it is unlikely any time soon.  However, what is occurring, albeit slowly and somewhat quietly, is a move to shift some of the GSEs’ loans to the private sector, where the risk would not be backed by the federal government.  If this works, perhaps more will follow.  While there may be some investors for such loans, it is likely that without a governmental safety net, the nascent private secondary market will demand a higher rate of return to offset the higher risk.

 

In the meantime, the loans of choice appear to be through the FHA.  While the paperwork may be daunting, the LTVs are good and the bar to borrower qualification is much lower and more flexible than conventional loans.

The Consumer Finance Protection Bureau. In recognition of Wall Street’s role in the credit and mortgage meltdowns, Congress established the Consumer Financial Protection Bureau (CFPB) through the Dodd-Frank Wall Street Reform and Consumer Protection Act. On July 21 of this year, it was opened for business. This is no ordinary federal agency.  It is a super agency, responsible for regulating many, many areas of consumer finance and mortgage loans.[3]

Elizabeth Warren, a Harvard law professor and Presidential Advisor, was the driving force behind the Agency’s creation.  She was a zealous advocate for the consumer.  Unfortunately, the political reality was that she may have been too zealous.  Instead of being appointed director, Richard Cordray, former Ohio Attorney General, was appointed to head the agency.  However, his nomination is currently tied up in Congress, and he may not be confirmed.  Many Republicans oppose the idea of so much power being wielded by a single person rather than a board of Senate-confirmed appointees.  So as it stands, the CFPB – this mega agency that was created to oversee so many aspects of consumer law – has a website, is hard at work making manuals and processing paperwork, yet has no director to oversee enforcement of anything.

Risk Retention, Skin in the Game, and the QRM. Mindful of the risks created when banks used their own safety net capital to trade in high risk loans, known as “proprietary trading,” the 2010 Dodd-Frank Act enacted Section 619, which placed severe restrictions on the ability of banks to use their funds to place risky bets (known as the “Volker Rule”).  Billions of dollars of these bets failed in 2008, leading up to the massive government bailouts that taxpayers funded.  What is the status of the Volker Rule today?  It’s still out for public comment, with banks arguing that the Rule will reduce their revenues and thereby force them to increase the cost of loans to borrowers. Given that big banks are still suffering the reputational fallout from the bailouts, the Volker Rule -with most of its teeth – may actually become law. When? Who knows.[4]

Also mindful of the risks created through sloppy underwriting of securitized loans, Dodd-Frank sought to require that banks retain a 5 percent interest in the risk of loss on those loans. This risk retention rule has been referred to as “skin in the game,” and was intended to require banks to share a portion of the risks they securitized to others.  Instead of investors taking on the entire risk of a slice of securitized loans, banks would have to hold back 5% on their own balance sheet.

However, the law made a major exception; it provided that through rule making, a standard be set for certain loan types with statistically lower default rates for which risk retention would be unnecessary.  This exception became known as the “Qualified Residential Mortgage” or “QRM.”  The QRM rules were intended to impose high standards for documentation of income, borrower performance, low debt-to-income ratios and other quality underwriting requirements.  Although they were to be the exception, not the rule, today, most lenders want these standards to be flexible rather than inflexible, so that there is more wiggle room for their loans to qualify as QRMs and thereby remain exempt from risk retention.  The argument in favor of looser loan standards is the fear that an inflexible QRM exemption will impair access to home loans by low and moderate income borrowers. This debate continues today, and there is some reason to believe that these rules will be substantially diluted before becoming law.

 

PCQ Editorial Comment: It was not so long ago that certain banks criticized borrowers of 100% home financing as creating “moral hazard” – i.e. they took risks because they had no financial risk of default since they had no down payment to lose.  Today, the concept of “moral hazard” seems to have been forgotten by those same banks opposing risk retention rules.  They now expect their borrowers to have “skin in the game” – hence the higher down payment rules – but deny the need to do so themselves.  “Pot meet Kettle.”

Conclusion. So, notwithstanding the fact that this country teetered on the brink of disaster in 2008, the politicians’ rush to legislate has continued to move at a snail’s pace.  Query:  Is the American consumer really better off today than in 2008?


[1] This article will not cover Mortgage Assistance Relief Services (“MARS”), since the much ballyhooed national law was never intended to apply to Realtors®, even though that realization did not come soon enough to avoid all sorts of unnecessary industry handwringing and forms creation. All of the Oregon-specific legislation has been discussed in my prior articles.

[2] On September 30, 2011, Fannie’s high loan limits for certain high housing cost parts of the country expired.  In portions of California, this may result in otherwise qualified buyers having to wait a year or two to save for the additional down payments.

[3] Here is a listing of its responsibilities: Board of Governors of the Federal Reserve: Regulation B (Equal Credit Opportunity Act); Regulation C (Home Mortgage Disclosure); Electronic Fund Transfers (Regulation E); Regulation H, Subpart I (Registration of Residential Mortgage Loan Originators); Regulation M (Consumer Leasing); Regulation P (Privacy); Regulation V (Fair Credit Reporting); Regulation Z (Truth in Lending); Regulation DD (Truth in Savings); FDIC: Privacy of Consumer Financial Information; Fair Credit Reporting Registration of Residential Mortgage Loan Originators; Office of the Comptroller of the Currency: Adjustable Rate Mortgages Registration of Residential Mortgage Loan Originators; Privacy of Consumer Financial Information; Fair Credit Reporting;  Office of Thrift Supervision: Adjustments to home loans; Alternative Mortgage  transactions; Registration of Mortgage Loan Originators; Fair Credit Reporting; Privacy of Consumer Financial Information; National Credit Union Administration: Loans to members and lines of credit to members; Truth in Savings; Privacy of Consumer Financial Information; Fair Credit Reporting Requirements for Insurance; Registration of Mortgage Loan Originators; Federal Trade Commission: Telemarketing Sales Rule; Privacy of Consumer Financial Information; Disclosure Requirements for Depository Institutions Lacking Federal Depository Insurance; Mortgage Assistance Relief Services; Use of Pre-notification Negative Option Plans; Rule Concerning Cooling-Off Period for Sales Made at Homes or at Certain Other Locations; Preservation of Consumers’ Claims and Defenses; Credit Practices; Mail or Telephone Order Merchandise Disclosure Requirements and Prohibitions Concerning Franchising Disclosure Requirements and Prohibitions Concerning Business Opportunities Fair Credit Reporting Act Procedures for State Application for Exemption from the Provisions of the Fair Debt Collection Practices Act; Department of Housing and Urban Development: Hearing Procedures Pursuant to the Administrative Procedure Act; Civil Monetary Penalties; Land Registration Purchasers’ Revocation Rights; Sales Practices, and Standards Formal Procedures and; Rules of Practice Real Estate Settlement Procedures Act; Investigations in Consumer Regulatory Programs. For source, link here.

[4] It is rumored that Morgan Stanley and Goldman Sachs, both of whom changed their charters from securities firms to become “banks”, in order to be eligible for taxpayer funded bailout money, are now considering exiting that status, precisely so they will not have to comply with the Volker Rule – if it passes.