Biggest Gain in Home Sales Since July 2003

Written By Patrick Rucker
WASHINGTON (Reuters) - Sales of previously owned U.S. homes rose 5.5 percent last month, the biggest gain since July 2003, and the inventory of unsold homes fell, a hopeful sign for a housing market mired in a long slump.

The National Association of Realtors said on Friday that sales of existing homes rose to a 5.18 million-unit annual rate from the 4.91 million unit pace set in August. Economists had expected sales to rise to only a 4.93 million unit rate.

It was the first time the sales pace had risen above its year ago level in nearly three years, a sign the market could be stabilizing.

The surprisingly large jump in sales pushed the inventory of unsold homes down by 1.6 percent to 4.27 million, or a 9.9 months' supply at the current pace, the lowest since February.

"We're not out of the woods yet by any means when it comes to falling house prices and our fundamental problem of an oversupply of homes, but we're getting near to the bottom every day," said White House spokeswoman Dana Perino.

Home prices, however, showed no signs of escaping their long, deep slide and economists said the number of homes on the market would likely have to fall further before they do.
The median national home price declined 9 percent from a year ago to $191,600, the lowest level since April 2004.

"As the median price continues to decline, seeking out that new equilibrium level, demand is -- slowly and hesitantly -- moving back into the market," said Lindsey Piegza, an economic analyst at FTN Financial in New York.

A Reuters poll taken October 21-24 found economists expect prices to continue to fall through next year. The median forecast from the survey was for a 15 percent drop this year and a 6.4 percent fall in 2009. Economists expect prices to turn up in 2010, but by a meager 1 percent.

'VULTURE INVESTORS'

Rising U.S. mortgage defaults have sent credit markets into a tailspin, threatening economies worldwide. A majority of economists polled said finding a floor for house prices is an essential condition for ending the financial crisis.

In order for prices to recover, the glut of unsold homes needs to be whittled down further, analysts said.

"Most, if not all, the rise in sales is due to vulture investors buying cheap foreclosed homes, but all sales reduce inventory," said Ian Shepherdson, the chief U.S. economist at High Frequency Economics in Valhalla, New York.

"If this continues, people will stop expecting further price falls and activity will start to recover."
Lawrence Yun, the chief economist for the Realtors' trade group, also pointed to a rise in foreclosure and other 'distress' sales in regions hard-hit by the housing downturn.

"In some regions, the lower prices are seeing buyers return to the marketplace," he said. "This was a nice jump and hopefully this trend can continue because the first step to stabilizing the market is an increase in home sales."

Sales jumped 16.8 percent in the West, while rising 4.4 percent in the Midwest and 2.2 percent in the South. In the Northeast, sales fell 1.2 percent.

Sales of single-family homes, which represent the lion's share of the market, rose 6.2 percent. Sales of condominiums held steady.

"We're still struggling with falling home prices and we will for a while, but we're forming a bottom here," said Bob Walters, chief economist at Quicken Loans in Livonia, Michigan.

(Additional reporting by Pedro Nicolaci da DaCosta, Ellen Freilich and Nick Olivari in New York; Polling by Bangalore polling unit; Editing by Andrea Ricci)

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NAR: NAR: Home Sales Rise as Affordability Improves

Existing-home sales increased last month as buyers responded to improved housing affordability conditions, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 5.5 percent to a seasonally adjusted annual rate of 5.18 million units in September from a level of 4.91 million in August. Home sales are 1.4 percent higher than the 5.11 million-unit pace in September 2007.

Lawrence Yun, NAR chief economist, said more markets are seeing year-over-year gains. “The sales turnaround which began in California several months ago is broadening now to Colorado, Kansas, Minnesota, Missouri, and Rhode Island,” he says. “The South was hampered by much lower home sales in Houston in the aftermath of Hurricane Ike.”

NAR President Richard F. Gaylord says low home prices and low interest rates have helped attract buyers. “This is the first time since November 2005 that home sales have been above year-ago levels,” Gaylord says. “Credit tightened at the end of September, but the improvement demonstrates that buyers who’ve been on the sidelines want to get into the market to make a long-term investment in their future.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.04 percent in September from 6.48 percent in August; the rate was 6.38 percent in September 2007.

Yun says there may still be market disruptions.

“The credit markets are not settled yet, although the mortgage market stabilized with the government takeover of Fannie Mae and Freddie Mac," Yun says. "Inventory remains high, and price declines are pressuring owners." Yun says that an additional housing stimulus would stabilize prices more quickly and help bring faster stability to Wall Street. "Removing the repayment feature on the [$7,500] first-time buyer tax credit and permanently raising loan limits would bring more buyers into the market and further reduce inventory,” Yun says.

A Closer Look at the Numbers

Total housing inventory: at the end of September fell 1.6 percent to 4.27 million existing homes available for sale, which represents a 9.9-month supply at the current sales pace, down from a 10.6-month supply in August. This marks two consecutive monthly declines since inventories peaked in July.

National median existing-home price: $191,600 in September, for all housing types. That's down 9 percent from a year ago when the median was $210,500. “Compared to a fairly small share of foreclosures or short sales a year ago, distressed sales are currently 35 to 40 percent of transactions," Yun says. "These are pulling the median price down because many are being sold at discounted prices. The current market is not being dominated by speculative investors. Rather, 80 percent of current buyers are purchasing a primary residence, which is a bit higher than historic norms.”

Single-family home sales: increased 6.2 percent to a seasonally adjusted annual rate of 4.62 million in September from a pace of 4.35 million in August, and are 3.8 percent above the 4.45 million-unit level a year ago. The median existing single-family home price was $190,600 in September, which is 8.6 percent below September 2007.

Existing condominium and co-op sales: were unchanged at a seasonally adjusted annual rate of 560,000 units in September, but are 15.7 percent below the 664,000-unit pace in September 2007. The median existing condo price was $199,400 in September, down 10.2 percent from a year ago.

By Region

Here's a breakdown across the country of existing-home in September:

West: sting-home sales in the West jumped 16.8 percent to an annual rate of 1.25 million in September, and are 34.4 percent higher than September 2007. Median price: $253,600, down 18.5 percent from a year ago.

Midwest: sales increased 4.4 percent to an annual pace of 1.19 million in September, but are 2.5 percent below a year ago. Median price: $152,500, which is 7.9 percent lower than September 2007.

South: sales rose 2.2 percent in September to a pace of 1.9 million but remain 7.8 percent below September 2007. Median price:$167,200, down 4.1 percent from a year ago.

Northeast: sales slipped 1.2 percent to an annual pace of 840,000 in September, and are 7.7 percent lower than a year ago. Median price: $246,800, down 5.4 percent from September 2007.

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/24/08

Treasury Aims to Disperse Rescue Funds Quickly

Senior Treasury official Neel Kashkari, who is heading up the $700 billion financial rescue effort, told Congress Thursday that the Treasury is working hard to get the plan up and running.

Kashkari said the plan would include setting standards for changing mortgages to make them more affordable and giving loan guarantees to banks that need them.Kashkari told the Senate Banking Committee that "we are passionate about doing everything we can to avoid preventable foreclosures."

Kashkari has been openly supportive of the position taken by Sheila Bair, chairman of the Federal Deposit Insurance Corp., who has pushed for a program that forces banks and loan services to modify troubled borrowers’ loans.

Source: The Associated Press, Marcy Gordon (10/23/08)

This article is from Realtor Magazine Online Edition Dail Real Estate News for 10/24/08

Both presidential candidates have announced plans to help voters deal with the challenging housing economy.

Here are their ideas as posted on their election Web sites:

Sen. John McCain:
*Direct assistance to homeowners. No taxpayer money should go to real estate speculators who made bad decisions about investments.
*Reform financial and lending systems to prevent a repeat.
*Require participating lenders to forgive part of subprime borrowers' loan principals and place them into new 30-year Federal Housing Administration loans.
*Give financing to municipal and civic groups trying to solve problems within their own communities.

Sen. Barack Obama
*Create a standardized disclosure plan that allows for full-disclosure of loan costs and provisions.
*Crack down on mortgage fraud.
*Give a mortgage credit to those who don’t itemize deductions.
*Create a fund to help homeowners who face foreclosure refinance.
*Allow bankruptcy courts to modify a homeowner's mortgage payments.

Source: The San Diego Union-Tribune, Lori Weisberg (10/19/08)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/23/08

Foreclosure Filings Slowed by New State Laws

Foreclosure filing were reported on 765,558 U.S. properties during the third quarter, up more than 3 percent from the second quarter and up 71 percent from the third quarter of 2007, according to RealtyTrac, an online foreclosure market.

In September, foreclosures declined 12 percent compared to August, but that doesn’t appear to be necessarily good news. "Much of the 12 percent decrease in September can be attributed to changes in state laws that have at least temporarily slowed down the pace at which lenders are moving forward with foreclosures," said James J. Saccacio, chief executive officer of RealtyTrac.

Compared with September 2007, foreclosures in September 2008 rose 21 percent.

States with the highest rates of foreclosure in September were Nevada, Florida, California, Arizona, Georgia, Michigan, Ohio, New Jersey, Indiana and Colorado.

Six states accounted for more than 60 percent of U.S. foreclosure activity in the third quarter with California alone accounting for 27 percent. Other states with the most foreclosures were Florida, Arizona, Ohio, Michigan and Nevada.

Source: RealtyTrac (10/23/2008)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/23/08

Analysts: Many Are Underwater on Mortgages

More than 12 million U.S. homeowners are underwater on their mortgages, owing more than their homes are worth.

"When you're underwater and you have some kind of hit to your income or some kind of unintended expense, that's when you default. And so now we've got this noxious mix of millions of people under water and quickly rising unemployment," says Mark Zandi, chief economist at Moody's Economy.com.

Zandi calculates that there will be another 14.6 million homeowners under water by September 2009. Zandi and other economists believe this housing crisis will prove to be much more costly for the U.S. taxpayer than the $700 billion the U.S. government has already promised to recapitalize banks and buy up distressed debt from financial institutions.

"The government is going to have to start filling this negative equity hole and that's just going to be a direct cost to taxpayers," Zandi said. "This is going to be the really costly part, I think, for taxpayers."

Source: Reuters News, Tom Brown (10/21/2008)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/22/08

Baby Boomers Face Need to Save, Not Spend

Baby Boomer homeowners are putting their homes up for sale and finding that there are fewer buyers, in part because younger generations can’t afford expensive property.

Many observers, including economist and author Harry S. Dent, say things are unlikely to get better until at least 2020 when the millennial generation, which is 79.4 million strong, will finish college and start buying homes.

Many boomers, who lost about $2 trillion of wealth in the recent economic meltdown, plus billions in home equity in the housing downturn, are facing life without much of a financial cushion.

Olivia Mitchell, a professor at the University of Pennsylvania’s Wharton (business) School, believes the recent market crash should have been a wake-up call for boomers. "The Baby Boomers are going to have to work longer and [spend] less," Mitchell says.

Source: The Wall Street Journal, Joe White (10/21/2008)

This article is from Realtor Magazine Online Edition Daily Real Estae News for 10/22/08

Mortgage Workouts Increase as Banks Ramp Up

Banks, faced with rising foreclosures, government pressure and economic realities, are growing more willing to modify loans to keep borrowers out of foreclosure.

More than three million U.S. homeowners over the last 15 months have either received loan modifications or are involved in programs where that will be the result.

* About 2.26 million mortgages have been modified under the Hope Now program, an alliance of mortgage servicers, counselors and investors.

* An estimated 400,000 homeowners are expected to participate in a new Federal Housing Administration program that allows borrowers in trouble to refinance into a 30-year FHA loan.

* Nearly 400,000 borrowers whose loans came from Countrywide Financial will be refinanced through new owner Bank of America as part of an agreement resulting from a class action lawsuit.

Source: USA Today, Stephanie Armour (10/22/2008)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/22/08

Banks Weigh Other Uses for Rescue Money

Despite the fact that the $250 billion the government plans to invest in banks is intended to help them make new loans, J.P. Morgan Chase, BB&T, and Zions Bancorporation are among the financial institutions hoping to use the money to acquire other banks.

While some experts are worried such deals could further the trend of creating banks "too big to fail," others believe they could prevent the failure of numerous small banks and boost the economy.

U.S. Treasury Secretary Henry Paulson acknowledged that the money could be used to acquire smaller, weaker banks. "There will be some situations where it's best for the economy and for the banking system for there to be a consolidation," he says.

Source: Washington Post, Peter Whoriskey and Zachary Goldfarb (10/22/08).

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/22/08

Well, we may as well be up front about it - we are either in or about to enter an economic recession. My forecast calls for the next two quarters to post zero or negative GDP growth. (Remember: the "official" definition of a recession is two consecutive quarters of negative growth.) Housing will need to lead us out of this recession. On that front, there have been some positive developments. Both the housing stimulus package passed earlier this summer and the $700+ billion rescue package (or bailout, if you prefer) will, eventually, help turn housing around.

Of course, recession is hardly good news for the housing market because few jobs are created and many are lost. Indeed, so far this year the economy has shed 760,000 payroll jobs. Fewer jobs holders means lower housing demand. But if a recession is accompanied by rising housing affordability then home sales can trend higher. Indeed, we see that happening now. NAR's housing affordability index rose to 123.3 in August of 2008; compare that with the 106.6 level registered a year ago.

But a prolonged deep recession - certainly a possibility in light of the most severely tested financial market stress since the Great Depression - can dampen consumer confidence and put up barriers to homebuying. Fortunately, the economic downturn appears manageable. Let's see why by reviewing some of the key economic trends to watch.

Consumer Spending

Consumer spending accounts for nearly 70 percent of economic activity. A normal healthy consumer spending growth figure is about 3 percent (in real terms above the inflation rate). In the first half of this year consumer spending grew at only one percent -- and is expected to record a mild contraction in the upcoming quarters. Aggregate personal income is also likely to have fallen because of fewer jobs. In addition, there has been a sizable decline in net wealth from falling stock prices and falling home values. The combined income and wealth effects will be such that consumer spending, at best, will add nothing to economic growth in 2009. Another government stimulus plan may temporarily raise consumer spending but will do nothing for a long-term sustained rise unless the overall economy recovers and begins to add jobs.

Business Spending

Business spending for equipment turned negative in the recent quarter, not surprising given that corporate profits have fallen for four straight quarters and weak sentiment regarding consumer spending prospects. Construction activity for commercial real estate, which had been growing solidly, will be weakening in light of the credit crunch and rising vacancy rates. One positive picture is on the current lean business inventory conditions. Unlike many past economic downturns when companies had to hold back production because of bloated inventory, the very thin inventory conditions will permit companies to ramp up production at the first sign of economic recovery.

Government Spending

Government spending can create jobs. Upgrading and expanding nation's infrastructure, hiring more teachers, or building jets and tanks can stimulate the economy over the short-term. But spending without additional tax revenue over the long run can result in higher interest rates. For the short-term at least through 2009, government spending is expected to rise 1 to 2 percent.

Net Exports

Net exports have been steadily improving in the past year. The U.S. continues to import more items, but the exports have been booming over the past five years, growing at near double-digit pace. The export growth in the second quarter was very impressive, clocking in at a 12.3 percent growth rate. Why the surge? The weak U.S. dollar has made U.S. products more competitive. Interestingly, the dollar has actually strengthened of late since the start of the global financial crisis. While foreign countries may blame the U.S. for the subprime loans and the credit market turmoil, they (as well as we) turn to and trust the dollar in times of crisis. The strengthening in the U.S. dollar this time around is a positive development because there is about a two-year lag time in impacting international trade flows from changes in currency. So the net exports continue to be a positive factor for the economy going into 2009. Also, oil prices, which are denominated in dollars, fall when the dollar strengthens. Given that REALTORS® traditionally are heavy drivers, lower oil prices are welcome.

The Bottom Line

Put it all together and what do we have? A recovering economy will help consumer and business spending to turn the corner and the economy to move in a self-sustaining pace. But it requires a catalyst to get things started. The tumbling housing market and the subprime mortgage defaults have caused financial markets to freeze and have pushed the economy to fall into a recession. But the rising home sales of late and a sustained momentum will bring the economy back into the fold. Rising home sales will also thin out housing inventory and begin stabilizing home prices. The credit market will start to unfreeze once home prices have hit bottom. Simply put, the economy will not recover without a housing market recovery.

Fortunately, policymakers and both Presidential candidates clearly recognize the need to get the housing market moving. The two housing stimulus bills (homebuyer tax credit and higher loan limits), $700 billion Treasury plan and the Federal Reserve's actions are designed to assure steady mortgage flow and help revive the housing sector. To push the "revival" along, additional stimulus - such as removing the repayment feature of the homebuyer tax credit and raising the loan limit higher - would be welcome. As housing recovers, the economy will expand and create jobs. America and its exceptional ingenuity always find a way to move past crises and back to economic prosperity.

Home Sales Skyrocket in Southern California

Home sales in southern California rose 65 percent in September compared to the same month a year ago.

A total of 20,497 new and existing houses and condominiums sold last month in Los Angeles, Riverside, San Diego, Ventura, San Bernardino, and Orange counties. It was the largest increase MDA DataQuick has recorded in the 20 years it has been keeping records, the company said Monday.

The increase was fueled by foreclosures, which drove down prices, MDA DataQuick said, pushing the median price down 33 percent from a year earlier to $308,500. Sales so far this month appear to have been slowed by bad financial news, says Andrew LePage, an analyst with MDA DataQuick.

Source: Bloomberg, Daniel (10/20/08)

This article is from Realtor Magazine Online Edition Daily Real Estate News for October 21, 2008

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President Bush Talks About Upcoming International Conference Concerning Worldwide Economic Crisis

Quote of the Week

"The entrepreneur always searches for change, responds to it, and exploits it as an opportunity."

— Peter F. Drucker: was a writer and management consultant

Bush Says economy Will Eventually Bounce Back

Written by TERENCE HUNT, AP White House Correspondent 10/18/08

President Bush on Saturday sought to reassure Americans about the cost and scope of the nation's financial bailout plan and said that in the long run "our economy will bounce back."
Bush, in his weekly radio address, acknowledged that people are concerned about their finances and, while he offered assurances about an eventual recovery, he did not say when that would happen.

Since Oct. 9, 2007, when the Dow topped 14,000, investors have lost $8.3 trillion from pension funds, college savings plans, 401(k)s and other investments.

"The federal government has responded to this crisis with systematic and aggressive measures to protect the financial security of the American people," Bush said. "These actions will take more time to have their full impact. But they are big enough and bold enough to work." Congress gave Bush a $700 billion plan to buy bad assets from banks and other institutions to shore up the financial industry.

Bush was to meet later Saturday at Camp David for talks on the economy with French President Nicolas Sarkozy and European Commission President Jose Manual Barroso, who were to stop in the United States on their way home from a summit in Canada.

In the Democrats' weekly radio address, Rep. Rahm Emanuel used the occasion for campaign criticism against John McCain, the Republican presidential nominee.

"On weekends like this, maybe you're like me and my neighbors, working around the house, trying to save a few bucks," said Emanuel, the chairman of the House Democratic Caucus. "My neighbors and yours are struggling in this economy. They're working as hard as they know how, but the economic policies that George Bush proposed and John McCain supports have left them working harder, paying more and making less."

White House press secretary Dana Perino said the Camp David meeting was not expected to produce any new policy decisions or the date or place for a planned meeting of leaders of major economic powers, the so-called G8. Instead, she said it would focus on efforts extending as far back as April on coordination for financial stability through measures such as bank disclosures, accounting rules at credit rating agencies, capital standards and asset valuation.

The bailout plan runs counter to Bush's oft-stated commitment to free enterprise and the president said he knew many Americans have reservations about the government's approach, particularly the Treasury's planned injection of up to $250 billion in U.S. banks in return for partial ownership stakes, something that hasn't been done since the Great Depression of the 1930s.

"As a strong believer in free markets, I would oppose such measures under ordinary circumstances," the president said. "But these are no ordinary circumstances. Had the government not acted, the hole in our financial system would have grown larger, families and businesses would have had an even tougher time getting loans and ultimately the government would have been forced to respond with even more drastic and costly measures later on."

Bush said the government's involvement was limited in scope and Washington will not exercise control over any private firm and federal officials will not have a seat on bank boards. He also said he believed that the final cost to taxpayers would be significantly less than the initial investment as the housing market recovers.

This article is from The Associated Press and appeared on Yahoo News on 10/18/08

Bernanke Says Recovery Will Take Time

Reuters News Highlights for This Past Week

Experts See Potential for Recession as Fears Persist

Economists are concerned that despite all of the government's efforts to put an end to the credit crisis, the nation will be unable to avoid an economic recession.

Many companies and municipalities still do not have access to the credit markets, and the price of Treasuries and mortgage-backed securities fell on Oct. 14 due to investor worries about more borrowing by the government.

Additionally, HSH Associates reported a jump in the 30-year fixed mortgage rate to 6.6 percent from 6.06 percent last week, though experts say mortgage rates could decline once Fannie Mae and Freddie Mac begin purchasing more loans and reducing fees and once banks increase lending.

Click here to read the entire New London Day article.

Source: New London Day (CT) (10/15/08) Bajaj, Vikas. This article is a reprint that appears on NYSAR's online news page 10/16/08 at www.nysar.com/members

California Association of Realtors® Predicts Increased Home Sales in 2009

The CALIFORNIA ASSOCIATION OF REALTORS® predicted Wednesday that the median price of a home in the state will fall 6 percent to $358,000 in 2009 as compared to the projected $381,000 median for 2008.

At the same time, the association anticipates that sales of existing single-family homes will rise 12.5 percent to 445,000 units, about the same percentage of increase as the state experienced this year compared to 2007.

"The worst is over, but we're still not out of the woods," said Leslie Appleton-Young, the association's chief economist.

Appleton-Young’s prediction calls for sales of distressed properties to decline in the latter half of 2009, slowing the fall of prices. "I would think by 2010 we would be up by mid-single digit (percentages)," the economist said.

Source: The Associated Press, Alex Veiga (10/15/2008)

This article is from Realtor® Magazine Online Edition Daily Real Estate News for 10/16/08

FDIC Cheif Says People, Not Banks Should Be Given Highest Priority Regarding Government's Actions

Federal Deposit Insurance Corp. Chair Sheila Bair is criticizing the federal government for giving a much higher priority to bailing out banks than it is to helping average Americans in danger of losing their homes.

"Why there's been such a political focus on making sure we're not unduly helping borrowers, but then we're providing all this massive assistance at the institutional level, I don't understand it," Bair told the Wall Street Journal on Wednesday. "It's been a frustration for me."

Bair also told newspaper editors: "I support all the measures; I've been a part of all the measures that have been taken," Bair added. "But we're attacking it at the institution level as opposed to the borrower level, and it's the borrowers defaulting. That is what's causing the distress at the institution level. So why not tackle the borrower problem?

"Bair’s comments are likely to increase the dissension among architects and critics of the government’s response to the financial crisis.

Source: The Wall Street Journal, Damian Paletta (10/16/2008)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/16/08

Senator Dodd Urges More Consumer Protection Legislation

Despite opposition from the banking industry, Senate Banking Committee Chairman Chris Dodd (D-Conn.) is expected to add consumer protection provisions to an economic stimulus bill slated for consideration following the November election.

The initiatives would institute a 90-day moratorium on foreclosures, reform the bankruptcy process with regard to home loans, ban predatory lending, and introduce tougher credit card regulations. According to Dodd, "Any effort to talk about the American financial system without also addressing the American consumer is lopsided and not going to work."

This article is from NYSAR's Governmental Affairs Update for 10/17/08 and is originally based upon an article from American Banker (10/15/08) P. 3; Kaper, Stacy

New Stimulus Package Under Way On Capital Hill

Capitol Hill legislators are busy hammering out another economic stimulus plan to help ordinary Americans. But their chances of gaining support from the president and lawmakers on both sides of the aisle is not certain.

The problem is that Democrats and Republicans have very different views of how a stimulus package should be structured, and the White House has signaled its opposition to some of the key ideas now being circulated.

Senate Majority Leader Harry Reid (D-Nev.) took the wraps off a $150 billion package similar to a stimulus proposal made by Democratic presidential nominee Sen. Barack Obama (D-Ill.) earlier in the week.

That proposal includes spending on infrastructure projects, providing energy assistance to low-income families, and a mandate for the federal government to be more aggressive in using its authority to push lenders to reduce foreclosures by renegotiating mortgage loans.

Republicans, by comparison, favor suspending the capital gains levy, lowering the corporate tax rate, and providing federal guarantees on interbank lending.

[Editor's note: The National Association of REALTORS® has called on Congress to pass a new stimulus bill during the lame-duck session of Congress later this year and to include four consumer-oriented housing provisions in the bill that would:

1. Make the temporary high-cost conforming loan limit of $729,750 permanent.

2. Eliminate the repayment requirement in the $7,500 homeownership tax credit and also expand eligibility for that tax credit to all buyers, not just first-timers.

3. Ensure the $700 billion in federal assistance to Wall Street gets filtered to lenders for new loan originations and refinancings, and not just be used to shore up investment banks' bottom lines.

4. Permanently keep banks out of real estate brokerage and management to ensure long-term protection of consumers.]

Source: Los Angeles Times, Jim Puzzanghera and Richard Simon (10/16/08)

This article is from Realtor Magazine Daily Real Estate News for 10/16/08

151 Mortgage Fraud Cases Opened in Last Year

151 Mortgage Fraud Cases Opened in Last Year Federal prosecutors and investigators have opened 151 criminal mortgage fraud cases since October 2007, according to an examination of records by the Transactional Records Access Clearinghouse at Syracuse University. The group looked at data from the Justice Department.

Because this is the first time that the Justice Department has distinguished mortgage from other kinds of fraud investigations, it is difficult to tell whether this is a significant increase.

The FBI is handling about half of the cases. Most of the rest of the cases are under investigation by the Federal Deposit Insurance Corp.

Investigations are limited to 10 of the 89 judicial districts in California, Florida, Georgia, Mississippi, New York, Ohio, Pennsylvania and Vermont. Prosecutors’ offices in South Florida are handling 69 of the cases. Pittsburgh is second with 24 prosecutions.

Source: The Wall Street Journal, Lynnley Browning (10/15/2008)

This article is from Realtor Magazine Daily Real Estate News 10/17/08

Henry Paulsen Talks About Economic Rescue Plan

NY Found Next-to-Last Concerning Business-Friendly Tax Policies

In what will be no surprise to New Yorkers, the Tax Foundation’s 2009 Business Tax Climate index found that New York is next-to-last in a ranking of states with business-friendly tax policies, slipping two places from 2008.

According to the report, only neighboring New Jersey provided a more hostile tax environment than New York to businesses among the 50 states. California, Ohio and Rhode Island complete the list of the bottom five.

Meanwhile, Wyoming ranked first with South Dakota, Nevada, Alaska and Florida rounding out the top five. The report has been published every year since 2003 and ranks states based on the taxes that matter most to businesses and business investment: corporate tax, individual income tax, sales tax, unemployment tax and property tax.

This article is from NYSAR's Governmental Affairs Update for 10/10/08 .

President Bush Explains Government's "Passive" Investment In Banks

Magic Trick With Improv

Bank Bailouts and Impending Recession

Government Takes $250 Billion Stake in Banks

The U.S. Treasury announced plans today to purchase up to $250 billion in preferred stock from the nation's top banks. The move is part of a plan that President Bush says will help prevent recession and preserve the free market.

"Government owning a stake in any private U.S. company is objectionable to most Americans – me included," Treasury Secretary Henry Paulson said in a statement. "Yet the alternative of leaving businesses and consumers without access to financing is totally unacceptable. When financing isn't available, consumers and businesses shrink their spending, which leads to businesses cutting jobs and even closing up shop."

Nine major financial institutions have already agreed to the voluntary plan. Combined, these institutions will receive $125 billion in capital from the government. The banks are:

Goldman Sachs Group Inc.
Morgan Stanley
J.P. Morgan Chase & Co.
Bank of America Corp.
Citigroup Inc.
Wells Fargo & Co.
Bank of New York Mellon
State Street Corp.

As part of the voluntary program, the government will buy stock "on attractive terms that protect the taxpayer," according to a joint statement by the Treasury, Federal Reserve, and FDIC.

The shares be non-voting, unless the matter directly affects the government's rights as a shareholder. Banks that agree to be part of the program will accept restrictions on executive compensation while the government is holding the stock.

Paulson said taxpayers should expect a "reasonable return" from the stock and said the government will also receive warrants to buy additional stock from institutions participating in the program.

"The actions today are aimed at restoring confidence in our institutions and markets and repairing their capacity to meet the credit needs of American households and businesses," Federal Reserve Chairman Ben Bernanke said in a statement.

Source: U.S. Treasury, Wall Street Journal

Chief Economist's Commentary as of 10/13/08

2009 Economic Outlook
By Lawrence Yun, NAR Chief Economist

The U.S. economy has entered a recession and will contract for the next three quarters, and the recovery, from the second half of 2009, will be tepid. The unemployment rate will peak at 6.7 percent by midyear next year before steadily heading down. However, existing home sales will be rising despite challenging economic times.

The most important factor driving home sales is affordability. With home prices falling in many parts of the country and mortgage rates still near historic lows, affordability conditions have markedly improved. Even with rising unemployment, nearly 93 percent of households will have jobs. This 93 percent of working households (rather than 95 percent during good economic times) respond to incentives. Added measures, from the first-time homebuyer tax credit to a larger number of mortgage loans qualifying to be purchased by Fannie and Freddie and through the FHA program, will further bring homebuyers to the marketplace.

Back in the previous recession, the economy shed nearly 2 million net jobs from 2001 to 2003. All the while, existing home sales rose from 5.2 million to 6.2 million just as jobs were being cut. New home sales likewise rose from 900,000 to 1.1 million. Mortgage rates were falling and housing affordability was rising during these years. The 2 million job cuts were painful, but the economy still had 130 million job holders.

An early indication that buyers are responding to incentives was the solid jump in the pending home sales in August to the highest level in over a year. The biggest increases were in areas with rising affordability from sharp reductions in home prices in California, Nevada, and Florida. The expansion will broaden to other markets where home prices have markedly fallen, including Rhode Island, Virginia, and Minnesota. Existing home sales, therefore, will likely breakout from the narrow trading range of 4.8 to 5 million of the past 12 months to 5.2 million by the year end and to 5.4 million in 2009. Even with the improvement, the next year's sales level will still be well below the 7.1 million peak sales achieved with rampant speculative buying in 2005.

New home sales will be a different story. There is an overhang of inventory and homebuilders are being forced to cut back sharply. New housing starts have fallen by about 60 percent from peak activity three years back. Because of the cutback in new home construction, the inventory of vacant new homes on the market has fallen to 408,000 as of August from nearly 600,000 just two years ago. The total inventory - new and existing combined - still remains elevated, so further reduction in building by builders will be welcomed. Because of low housing starts, new home sales will continue to tread at soft levels -under 500,000 in 2009 (far below the 1.2 million peak sales in 2005).

On the economic front, recession in itself is not a positive for the housing market because there are fewer job holders. But if a recession is accompanied by rising housing affordability, then home sales can trend higher - as is now. A prolonged deep recession, however - certainly a possibility in light of the most severely tested financial market stress since the Great Depression - can dampen consumer confidence and put up barriers to home buying. Fortunately, the economic downturn appears manageable. Let's explore why by reviewing each of the key economic data points and their projections.

Consumer Spending
Consumer spending accounts for nearly 70 percent of economic activity. Normal, healthy growth is about 3 percent (in real terms above the inflation rate). It grew at only one percent in the first half of this year and is expected to record a mild contraction in the upcoming quarters.

Aggregate personal income is likely to have fallen because of fewer jobs. In addition, there has been a sizable decline in net wealth from falling stock prices and falling home values. The combined income and wealth effects will be such that consumer spending, at best, will add nothing to economic growth in 2009. Another government stimulus plan may temporarily raise consumer spending but will do nothing for a long term sustained rise unless the overall economy recovers and begin adding jobs.

Business Spending
Business spending for equipment turned negative in the recent quarter, not surprising given that corporate profits have fallen for four straight quarters and weak sentiment regarding consumer spending prospects. Construction activity for commercial real estate, which had been growing solidly, will be weakening in light of the credit crunch and rising vacancy rates. One positive picture is on the current lean business inventory conditions. Unlike many past economic downturns when companies had to hold back production because of bloated inventory, the very thin inventory conditions permit companies to ramp up production at the first sign of economic recovery.

Government Spending
Government spending can create jobs. Upgrading and expanding nation's infrastructure, hiring more teachers, or building jets and tanks can stimulate the economy over the short-term. But spending without additional tax revenue over the long run can result in higher interest rates. For the short-term at least through 2009, government spending is expected to rise 1 to 2 percent.

Net Exports
Net exports have been steadily improving in the past year. The U.S. continues to import more items, but the exports have been booming over the past five years, growing at near double-digit pace. The export growth in the second quarter was very impressive, clocking in at a 12.3 growth rate. The weak U.S. dollar has made U.S. products more competitive. However, the dollar has strengthened of late since the start of the global financial crisis. Foreign countries blame the U.S. for the subprime loans and the credit market turmoil, yet people turn to and trust the dollar in times of the crisis. Foreign countries, initially delighted in seeing the U.S. fall, are now in a panic as their stock markets have started crashing even more sharply than the U.S market. Fair or not, the U.S. economic problem has caused a global economic mess. The strengthening of the U.S. dollar this time around should be viewed positively because there is about a two-year lag time in impacting international trade flows from changes in currency. So the net exports continue to be a positive factor for the economy going into 2009. Also oil prices, which are denominated in dollars, fall when the dollar strengthens. Given that REALTORS® are heavy drivers, lower oil prices are welcome.

The Bottom Line
Put it all together and what do we have? A recovering economy will help consumer and business spending to turn the corner and the economy to move to a self-sustaining pace. But it requires a catalyst to get things started. The tumbling housing market and subprime mortgage defaults have caused financial markets to freeze and have pushed the economy into a recession. However, recent rising home sales and some sustained momentum will bring the economy back into the fold. Rising home sales will also thin out the housing inventory and begin stabilizing home prices. The credit market will start to unfreeze once home prices have passed bottom. Simply, the economy will not recover without a housing market recovery.


Fortunately, policymakers and both Presidential candidates clearly recognize the need to get the housing market moving. The two housing stimulus bills (homebuyer tax credit and higher loan limits), $700 billion Treasury plan and the Federal Reserve's actions are designed to assure steady mortgage flow and help revive the housing sector. With it, the economy will expand and create jobs. America and its exceptional ingenuity always find a way to move past crises and back to economic prosperity.

This article is from The Nation Association of Realtors Research Update for October 2008.

The Proposed Plan to Inject Cash Into Banks

Charlie Rose Interview With Paul Volker-Part 1

This is the singularly best interview I have seen so far this year. It is very insightful, informative and while it is provided herein on this blog in 6 parts, it is well worth it. Please take the time to listen to this incredible and very timely interview. (This was taped and aired on Charlie Rose on 10/9/08).

Charlie Rose Interview With Paul Volker-Part 2

Charlie Rose Interview With Paul Volker-Part 3

Charlie Rose Interview With Paul Volker-Part 4

Charlie Rose Interview With Paul Volker-Part 5

Charlie Rose Interview With Paul Volker-Part 6

Interesting Perspective and Comments Made About Economic Crisis

This short interview outlines a few things that have not been widely discussed concerning the economic crisis. It is worthy of note what Mark Bloomfield says in this interview. Please watch.

G7 Agree to 'Aggressive Action Plan' to Fight Global Economic Crisis, But Lacking Any Specific Course of Action

By David J. Lynch, USA TODAY

WASHINGTON — The G7 group of nations agreed Friday on what U.S. Treasury Secretary Henry Paulson called "an aggressive action plan" to combat a worsening global financial crisis.

The five-point, single-page document gave evidence of a shared approach on the part of several of the world's major economic powers, but the meeting ended with no specific new anti-crisis measures.

"Never has it been more essential to find collective solutions to ensure stable and efficient financial markets and restore the health of the world economy," Paulson told reporters.
That was evident on Wall Street Friday, where the Dow Jones industrial average plummeted more than 700 points at the opening bell before recovering to end the day down 128 points at 8451. The past month, the Dow has lost 25% of its value as markets grew increasingly worried about policymakers' grasp on the crisis.

In their highly anticipated meeting, the G7 finance ministers agreed to coordinate their individual responses to the financial upheaval that has roiled markets around the world, saying the gravity of the situation demanded "urgent and exceptional action."

But the joint communique released at the end of Friday's semi-annual meeting of finance ministers from the six nations contained no specific new commitments.

"It doesn't sound like any fresh initiatives…The market was hoping for some sort of bolder, coordinated initiatives," said Marc Chandler, senior vice president at Brown Brothers Harriman in New York.

In the days leading to today's meeting, hopes built in financial markets for specific measures that would address a crisis of confidence in the markets. Among them: provisions to guarantee lending between banks.

But Paulson said demands for "precisely the same policies" from countries with different legal systems, banking industry structures and regulatory systems was "naive."

Asked if today's statement would be enough to calm skittish financial markets, he said: "I think we'll have some volatility for a while," adding "This is about confidence. We need to restore confidence…And there is every reason for people around the world to be confident."

Paulson says U.S. planning to Buy Financial Equity Stakes In Banks For First Time Since 1930s

By David Lawder, Writer for Reuters News

WASHINGTON (Reuters) - The United States is developing plans to buy equity stakes in financial institutions, providing another weapon in its war against financial market turmoil, U.S. Treasury Secretary Henry Paulson said on Friday.

Providing the first confirmation of the plan after a meeting of Group of Seven finance chiefs, Paulson said the equity purchases would be made alongside purchases of distressed assets as a way to recapitalize U.S. banks and other institutions reeling from soured mortgages and illiquid securities.

The Treasury will use authority granted by Congress in last week's $700 billion financial rescue legislation to buy largely non-voting common or preferred shares. Paulson said the two-pronged approach would more effectively recapitalize banks.

"We can use the taxpayers' money more effectively and more efficiently, have it go farther and get more for their dollars and more protection if we develop a standardized program for making and encouraging equity participation," he said.

Disclosure of the plan comes as the Treasury is considering a number of other major steps to deal with a worsening crisis of confidence that has frozen credit markets and halted interbank lending.

The Treasury may also push for a global backstop of interbank lending and possibly an unlimited guarantee on bank deposits, according to sources familiar with the discussions. A Treasury spokeswoman said the Bush administration is reviewing a British proposal to guarantee interbank lending.

The direct capital injections would help banks overcome the bad debts weighing down their balance sheets and boost their capacity to lend, complementing the bailout bill's objective of removing illiquid assets.

Oil plunges to 13-month Low on Global Slowdown

By STEVENSON JACOBS, AP Business Writer

The stunning collapse in oil markets accelerated Friday, with a barrel plunging below $78 as investors grow more pessimistic about a mushrooming global economic crisis.

A barrel of oil hasn't been this cheap in 13 months — a rare silver lining for consumers amid a rapidly imploding financial landscape.

Crude's steep losses came as Wall Street headed for its worst weekly drop ever. The Dow Jones industrial average fell as much as 700 points earlier in the day but swung in and out of positive territory as investors grappled with whether the market has finally hit a bottom.

"There's so much fear out there and that's really gripping the oil market. People are just afraid to hold a position so they're closing out and selling off," said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.

Light, sweet crude for November delivery fell $8.63 to settle at $77.99 a barrel on the New York Mercantile Exchange. It was the lowest settlement price for a front-month crude contract since Sept. 10, 2007.

Crude has now lost 47 percent of its value since hitting a record $147.27 on July 11 as a deepening credit crisis sparked by the subprime mortgage fiasco wreaks havoc around the globe and drives down energy demand.

Investors have shrugged off an array of market-stabilizing efforts by world governments, including a $700 billion U.S. financial rescue plan, several bank bailouts and a coordinated interest rate cut by the Federal Reserve and central banks around the globe.

Underscoring Americans' waning appetite for fuel, a gallon of regular gasoline dropped 5.3 cents overnight to a new national average of $3.35 a gallon, according to auto club AAA, the Oil Price Information Service and Wright Express.

Prices dipped below $3 a gallon on average in Kansas, Missouri and Oklahoma. If crude keeps falling, the rest of country should see sub-$3 gasoline in the next few weeks if not sooner, experts say.

Oil market traders got more proof that energy demand is falling away across the globe.

The International Energy Agency on Friday cut its global oil demand forecasts for this year and 2009, pointing to the worsening economic conditions and the tight credit supply.

The Paris-based energy watchdog cut its forecast for oil demand this year by 240,000 barrels per day, and slashed its 2009 forecast by 440,000 barrels per day. The IEA now expects global oil demand to total 86.5 million barrels per day this year and 87.2 million barrels per day next year.

"The fundamental game for oil has changed. In the last decade, oil went up because of strong global economic growth. That story for the near term is over, so everybody has to re-evaluate," said Phil Flynn, energy analyst at Alaron Trading Corp. in Chicago.

OPEC signaled it may tighten output to put a floor under falling prices, but it didn't seem to matter.

The Organization of the Petroleum Exporting Countries said Thursday it will hold a special meeting Nov. 18 to discuss how the economic crisis is affecting oil prices. The head of Libya's national oil company, Shukri Ghanem, called on oil producing nations to cut output.

Many doubt that an OPEC cut would reverse the extreme downward momentum on oil. OPEC's decision last month to cut production by 520,000 barrels a day did little to stop the losses.

Flynn said another output cut "may actually accelerate the slide."

"What's driving this market right now is fear of demand destruction and lack of credit," he said. "If you can't borrow money to buy crude, then demand falls more and so do prices."

US Stock Market Extends Loss Streak For Week

Benanke Says Economic Activity Will Be Subdued For Remainder of 2008 & 2009

Bush Says Financial Rescue Plan Aggresive Enough To Work

By TERENCE HUNT, AP White House Correspondent 10/10/08

President Bush said Friday that the government's financial rescue plan was aggressive enough and big enough to work, but would take time to fully kick in. "We can solve this crisis and we will," he said in brief remarks from the White House Rose Garden.

Bush spoke as leaders of the world's top economies gathered in Washington amid frozen credit markets, panic selling in stock markets and a looming global recession.

The president noted that major Western countries were working together in an attempt to stabilize markets and end the spreading panic, including coordinated cuts in interest rates.

"Through these efforts, the world is sending an unmistakable signal. We're in this together and we'll come through this together," Bush said.

Finance ministers and central bankers from the Group of Seven — the United States, Japan, Britain, Germany, France Italy and Canada — were here for a weekend meeting. Bush plans to meet with the leaders on Saturday.

Bush said he understood how Americans could be concerned about their economic future. "That anxiety can feed anxiety and that can make it hard to see all that's being done to solve the problem," he said.

But despite a relentless sell-off that has seen the Dow Jones industrials plunge 20 percent in the past seven trading days, Bush said, "We are a prosperous nation with immense resources and a wide range of tools at our disposal."

The president said the new $700 billion rescue plan that he signed into law a week ago authorizes the Treasury Department to use a variety of measures to rebuild their balance sheets including "purchasing equity of financial institutions."

It was the first time the president has mentioned suggestions that the government buy shares of banks, although it has been mentioned by other administration officials.

Since the bailout package was signed into law, the conversation about how it will be used has shifted from taxpayers buying troubled mortgages to taxpayers buying troubled banks. Or at least pieces of them.

Such a move would amount to a partial nationalization of the U.S. banking industry, a move once considered unthinkable.

The government is authorized under the law to buy "troubled assets."

Those assets include mortgages, but according to the law, they may also include "any other financial instrument" that is "necessary to promote financial market stability ... ."

It is the government's position that this authority extends to bank stocks.

"The plan we are executing is aggressive. It is the right plan. It will take time to have its full impact. It is flexible enough to adapt as the situation changes. And it is big enough to work," Bush said.

He also noted that the Federal Reserve has injected hundreds of billions into the system and with other central banks has made interest-rate cuts that should help thaw frozen credit markets and enable loans to flow again.

Government insurance on bank and credit union deposit accounts has been raised to $250,000 and the Treasury is offering insurance for the first time for money-market funds, he added.
"The federal government has a comprehensive strategy and the tools necessary to address the challenges in our economy," Bush said.

While he sought to reassure Americans that the government is doing all it can, Bush also acknowledged mounting worry among people about their retirement and investment accounts.
Bush said his administration had launched initiatives that "have helped more than 2 million Americans stay in their homes."

He also noted "rigorous enforcement" steps taken by the Securities and Exchange Commission to make sure that some investors don't "take advantage of the crisis to illegally manipulate the stock market."

Stock market volatility continued, with the Dow Jones industrials falling nearly 700 points soon after trading began, regaining all of that deficit to show an advance and then turning lower again.

"Over the past few days," Bush said, "we have witnessed a startling drop in the stock market, much of it driven by uncertainty and fear. This has been a deeply unsettling period for the American people."

NYC Mayor Bloomberg Preparing for Third-Term Despite Term Limits

NYC Mayor Bloomberg preparing for third-term despite term limitsNew York City Mayor Michael Bloomberg announced this past week that he plans to seek a third term as mayor.

The mayor will propose revisions to the city’s term limits law, which caps the number of terms for NYC officials to two terms. Bloomberg argued that the financial crisis in New York warrants an exception to the current regulations.

The City Council, which would benefit from the term limit extension, must pass Bloomberg’s legislative proposal in order to make the plan a reality.

According to a recent Marist College poll, city voters are evenly split on whether the current two-term limit should be changed to let Bloomberg run for a third term next year (46% in favor/44% opposed/10% unsure).

The poll interestingly found that Bloomberg would easily defeat any of the three Democratic challengers including City Council Speaker Christine Quinn, Rep. Anthony Weiner and City Comptroller William Thompson.

This article is from NYSAR Government Affiars Update for October.

Treasury Rushes to Set Up Rescue Program

The Treasury Department plans to hire five to 10 asset management firms that will set up a process to buy up to $700 billion of distressed mortgages and mortgage-related assets from financial firms.

One firm will be selected by Friday to provide custodial services such as tracking cash and assets. The asset management firms will be named next week.

Federal Reserve Chairman Ben Bernanke has said the government won't pay "fire sale" prices for the distressed assets, which would be less likely to achieve the bailout plan's objective of bolstering the financial sector.

Only companies with $100 billion in bonds and other fixed-income assets under management are eligible to apply to be asset managers, the department said, though future contracts will be opened to small businesses. Among those expected to bid are: Legg Mason Inc., Blackrock Inc. and bond manager Pacific Investment Management Co., or PIMCO.

Some anaylsts are concerned that the short timetable will result in the government overpaying for services. "We can't criticize them for rushing when we're telling them it's an emergency," said Steven Schooner, a law professor at George Washington University, but "there's no question when you rush, the contracts tend to be less well-drafted ... and lead to less disciplined cost control."

Source: The Associated Press, Christopher S. Rugaber (10/07/08)

This article is from Realtor Magazine Online Edition for 10/10/08

Bank of America Will Modify Troubled Loans

Bank of America on Monday said it is launching a "home retention program" on Dec. 1 to modify troubled mortgages for nearly 400,000 customers of Countrywide Financial Corp. Bank of America acquired Countrywide on July 1.

The program, which can reduce up to $8.4 billion in interest payments and principal, was developed in partnership with state Attorneys General to help borrowers that financed their homes with subprime loans or adjustable rate mortgages.

The goal is to "help as many Countrywide customers as possible stay in their homes," says Barbara Desoer, president, Bank of America Mortgage, Home Equity and Insurance Services.

The centerpiece of the program is a proactive loan modification process to provide relief to borrowers who are seriously delinquent or are likely to become seriously delinquent as a result of rate resets or payment recasts.

For more information, visit Bank of America's Web site.

Source: Bank of America

This article is from Realtor Magazine Online Edition for 10/6/08

Fed, Cantral Banks Around the World Cut Key Interest Rates

In an unusual coordinated move, the Federal Reserve and other major central banks from around the world slashed interest rates Wednesday to keep an escalating financial crisis from becoming a global economic meltdown.

The Fed cut its key rate from 2 percent to 1.5 percent. In Europe, which also has been hard hit by the financial crisis, the Bank of England reduced its rate by half a point to 4.5 percent, and the European Central Bank sliced its rate by half a point to 3.75 percent.

The central banks of China, Canada, Sweden, and Switzerland also cut rates. The Bank of Japan said it strongly supported the actions.

"The recent intensification of the financial crisis has augmented the downside risks to growth," the Fed said in explaining the coordinated action, the latest in a series of bold moves intended to spur lending and revive the global economy.

The Fed's action will reduce borrowing costs almost immediately for U.S. bank customers whose home equity and other floating-rate loans are tied to the prime interest rate. Bank of America, Wells Fargo, and other banks cut their prime rate by half a point to 4.5 percent after the Fed announcement.

White House spokesman Tony Fratto welcomed the cooperation among the Fed and other countries' central banks to battle the crisis. "It's important and helpful that central banks are working in a coordinated way to deal with stress in the financial system," Fratto said.
Source: Associated Press, Jeannine Aversa (10/8/08)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/8/08.

John Weidman - Recipient of the Otsego-Delaware Board of Realtors® President's Award

John Weidman, Licensed Real Estate Salesperson for Benson Agency Real Estate, located in Oneonta, is the latest Realtor® to receive the President's Award from the Otsego-Delaware Board of Realtors®.

It was awarded to John on Tuesday October 7, 2008 at the Board's quarterly meeting - this time held at the Delhi College Golf Course Restaurant in Delhi, NY.

The President's Award is given to selected Realtor® members of the Otsego-Delaware Board of Realtors® who exemplify superior ethics, practices, and outstanding service to the buying and selling public - the essence of what a Realtor® is all about!

When presented with the award John commented that his buyer/seller clients and customers are the best. One of the many reasons he received this award is because John's customers and clients feel he's the best!

John represents the best qualities of a Realtor® - ethical, professional, knowledgeable, as well as caring for the needs and lives of the people he serves. It is an honor for the Otsego-Delaware Board of Realtors® to present John with this award.

Well done John!

McCain Mortgage Buyout Proposal Rouses Critics

Presidential contender Sen. John McCain stepped into a political hornet’s nest Tuesday night when he proposed that the U.S. Treasury department "buy up the bad home-loan mortgages in America and renegotiate at the new value of those homes at the diminished value of those homes."

In subsequent explanations, McCain’s economic adviser Douglas Holtz-Eakin said McCain is proposing that the government would buy mortgages from banks and investors at the original value of loan, no matter how inflated that it now appears to be, and then give the home owner a new mortgage at current value at a more affordable interest rate. “Obviously, the taxpayer is on the hook for the difference,” Holtz-Eakin said.

Barack Obama’s top economic advisor Austan Goolsbee was among those highly critical of the idea. "This proposal, if enacted, would be a massive government subsidy from taxpayers to the most irresponsible banks, including the ones that committed fraud," Goolsbee said, adding, "This proposal would give the taxpayer all the risk, with no gain."

Source: BusinessWeek.com, Jane Sasseen (10/09/2008)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/10/08.

Seller Financing Becomes Popular Alternative

As credit and borrowing standards tighten, seller financing is becoming more common.

For those selling small business, the ability to offer it is particularly important.

"Sellers really have to be prepared to take back more of the financing or to take a second position behind the banks to make them come together ... because of the financial situation of the world today," says Wally Kocemba of the BizDealer Team at Calhoun Companies, a business brokerage firm in Minneapolis.

While considered riskier than bank financing, seller financing -- which is sometimes combined with bank financing -- can offer owners a better price and a faster transaction.

“I believe sellers are going to have to understand that if they want to obtain the price that they’re looking for, they may have to consider seller financing as an integral part of the transaction," says Dean Bachelor, chairman and founder of the Platinum Group, a private-equity firm in Eden Prairie. "If they believe in the business and believe in the future of the business, that's less of a problem.”

Source: Minneapolis Star-Tribune, Todd Nelson (09/29/08).
This article is from Realtor Magazine Online Edition Daily Real Estate News 10/7/08.

Rescue Bill Not Perfect, But Still Best Solution

Rescue Bill Not Perfect, But Still Best Solution

On Friday, the U.S. House of Representatives joined the Senate in passing the Emergency Economic Stabilization Act of 2008 — and President Bush quickly signed the bill into law.

In a letter to members of the NATIONAL ASSOCIATION OF REALTORS®, NAR President Dick Gaylord thanks everyone who voiced support for the revised bill. A failure to act, he said, "Would have pushed consumers into more dire circumstances."

Gaylord acknowledged that many REALTORS® were torn over whether or not to support the bill. "We realize this bill is not perfect," he said. "However, we believe the additions made by the Senate, including raising the FDIC insurance limit and several other measures that will benefit and protect taxpayers, make it a more favorable solution than the previous proposal."

NAR will continue to work with Congress and the Bush Administration to make sure the measures included in this bill are implemented quickly, "with the needs of Main Street placed front and center," Gaylord said. Real estate experts say the bill will give the market a much-needed boost, but that substantial recovery of credit markets will probably take time.

"The market should regain some confidence, and since markets are built mainly on confidence, that’s no small thing," says Gary Keller, head of national residential real estate franchisor Keller Williams in Austin, Texas. "In fact it’s a huge thing and it’s imperative for the market to move forward. But beyond that, we have to wait and see."

"It should give calmness to the financial markets by showing that we will in fact work through this crisis," said Kenneth Riggs, head of commercial real estate analysis firm Real Estate Research Corp., Chicago. "That said, I don’t see the fundamental, or the mechanics, of capital changing right away. That won’t happen until we see how this package will actually operate."

To read more on what Keller and Riggs have to say about the legislation and the future of the real estate market, visit REALTOR® Magazine's blog, Speaking of Real Estate (REALTOR.org/speakingofrealestate).

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/6/08

The National Debt Clock

The Outstanding Public Debt as of 04 Oct 2008 at 08:04:01 PM GMT is:

10,154,667,862,448.11

The estimated population of the United States is 304,847,872so each citizen's share of this debt is $33,310.61.

The National Debt has continued to increase an average of$3.08 billion per day since September 28, 2007!

You can view this information at http://www.brillig.com/debt_clock/

Bailout Mania: The Staggering Number & Costs for the Bailouts

Bailouts & Cost to Taxpayers

(Source: Reuters)

Financial bailout package approved this week = $700 billion or more

Bear Stearns financing =$29 billion

Fannie Mae and Freddie Mac nationalization =$200 billion

AIG loan and nationalization =$85 billion

Federal Housing Administration housing rescue bill =$300 billion

Mortgage community grants =$4 billion

JPMorgan Chase repayments = $87 billion

Loans to banks via Fed's Term Auction Facility = $200 billion+

Loans from Depression-era Exchange Stabilization Fund = $50 billion

Purchases of mortgage securities by Fannie Mae and Freddie Mac = $144 billion

POSSIBLE TOTAL = $1.8 trillion+

NUMBER OF HOUSEHOLDS PER U.S. CENSUS = 105,480,101

POSSIBLE COST PER HOUSEHOLD = $17,064+

(The information above is taken from an article titled "Bailout Bill Loops In Green Tech, IRS Snooping" posted by Declan McCullagh and appeared on CNET.com 10/3/08 10:07 PDT.)

****By the way, $1 trillion would be enough money to buy about a 1,000 boxes of Girl Scout cookies for every person in the United States - just to put things in perspective!!!