I also believe there is more to learn about the lack of success in getting mortgages modified. 

Or, as recently published reports on certain court cases have shown, why foreclosing entities either cannot or will not produce a valid chain of title in foreclosure proceedings even though it may cost them the case or sanctions by the courts. 

Just as baffling, why would a lender make a loan and then lose the means by which to repossess the asset? There are, as it turns out, other ways for financial institutions to make money and when they can, they do. 

That goes to the very heart of what happened to our prosperity. By reclassifying liabilities as assets, Wall Street was able to sell debt as an investment. 

Any kind of debt will do because the debt doesn’t matter. No risk is too great because there is no risk. They sell the loan and then make a bet that it will default. It’s called a Credit Default Swap (CDS). 

A CDS is the most widely traded type of derivative, and these investments represent the biggest financial market in the world. CDS resemble insurance policies, but there is no requirement to actually hold any asset or suffer any loss, so CDS are widely used just to increase profits by gambling on market changes

According, to the Bank of International Settlements [BIS], the aggregate derivative positions of banks grew from $100 trillion in 2002 to — believe it — $516 trillions in 2007; that is over 500 per cent in five years.

The BIS recently reported that total derivatives trades exceeded one quadrillion dollars – that’s 1,000 trillion dollars. 

This is curious when you realize that the gross domestic product of all the countries in the world is only about 60 trillion dollars. 

The answer is that gamblers can bet as much as they want. They can bet money they don’t have, and that is where the huge increase in risk comes in. There is no regulation of these instruments and they do not show as liabilities on the balance sheets of the institutions. 

A Derivative is a financial instrument whose value is not its own, but derived from something else, on some underlying asset or transaction, such as commodities, equities (stocks) bonds, interest rates, exchange rates, stock market indexes, why, even inflation indexes, index of weather. Basically, they are just bets. You can “hedge your bet” that something you own will go up by placing a side bet that it will go down. “Hedge funds” hedge bets in the derivatives market. 

Nor, did mortgage defaults cause the crisis. Mortgage securities made up only $7 trillion of the huge derivative market. 

To the extent that any information is available on what brought us to this point, it is mostly bloggers. 

Most of the blogging perceives the foreclosure problem as the result of sub-prime loans, irresponsible borrowers, and mortgage resets. 

Such a superficial view reveals a complete lack of understanding of how the securitization of mortgages makes Wall Street all of that money out of nothing at all. You have to follow the money. 

An important distinction is that the consumer was not the driving force behind this money binge, but the profits Wall Streets was making on Derivatives. 

When you break it all down, it looks to me like Wall Street possibly took a lesson from Broadway. The Producers is about a Broadway producer and his accountant who realize they can make more money with a musical that was guaranteed to fail than one that would succeed. But, the musical’s sure-to-fail hit song, “Springtime for Hitler” surprisingly turned out to be an astonishing success. When the investors came for their profits, there were too many investors to pay back. 

Wall Street, where life imitates art.

George W. Mantor is known as “The Real Estate Professor” for his wealth building formula, Lx2+(U²)xTFP=$? and consumer education efforts. During a career that has spanned more than three decades, he has amassed experience in new home and resale residential real estate, resort marketing, and commercial and investment property. He is currently the founder and president of The Associates Financial Group, a real estate consulting firm.

Mantor can be reached at GWMantor@aol.com.

Don’t miss these headlines on RISMedia.com:
Record Streak Continues for Pending Home Sales
Stalking the Elusive Foreclosure Deal; Bargains are Few, Obstacles are Many

With the invention of paper money, so too came the counterfeiters. And, of course, there is a long and varied history of stock and securities fraud. 

In most cases, fraud is committed by those in the best position to do so–insiders. 

So, I was thinking about my battered retirement nest egg and I started to wonder, where did it go? Not just yours and mine but everyone’s money. That has to be a big chunk of change and must have had an impact somewhere. It didn’t build any bridges or schools, and it didn’t create any jobs so it had to go somewhere. Americans’ net worth, which rose last quarter by $2 trillion, is still down $12.2 trillion since 2007. 

We had it; now it’s gone. Sure, I know what you are thinking, “It’s the bubble, stupid.” I just don’t understand how that explains where the money went.

Somewhere, buried in the vocabulary of “securitization,” “derivatives,” “Collateralized Debt Obligations,” “Credit Default Swaps,” and “arbitrage,” there may be an answer.

But, when I hear the various explanations for what went wrong, I get this uneasy feeling that something funny has been going on. It’s like listening to someone tell the most convoluted and complicated lie. It sounds implausible, but it has so many tentacles it’s hard to be sure.

In my case, I tend to wild speculation. Unanswered questions lead to more unanswered questions and the hunch just won’t go away.

Take for example the securitization of trust deeds, and lenders arbitrarily deciding to cease the age-old practice of filing assignments with the county. See last week’s column, 60 Million Mortgages May Have Fatal Flaws. 

Did that lead to the collapse of our economy?

And, where exactly are all of these missing notes?

First they cease the public recordings, and then the notes disappear? How could that happen? Are they not registered securities? Isn’t the buyer supposed to receive the security with an endorsement on the back? Would that alone be a securities violation?

Oh, I’ve got a lot of questions.

While looking for answers, I came upon the case of a woman whose note had been sold over 600 times since 2007. Why would a note be sold over 600 times in two years? That’s almost every day. Is that really profitable? And, to accommodate all of the endorsements on the rear, wouldn’t it have to look like a role of toilet paper?

And, what would reselling that note almost every day add in value that someone else would want it tomorrow? Isn’t that like trying to turn lead into gold? Are there commissions paid on the reselling?

Or, does it become more valuable every time it changes hands? I don’t get it.

Or, if it really is 60 million mortgages and only three million are actually foreclosed and resold, is that enough to destroy the economy? And, AIG insured the investors against defaults. If we bailed out AIG and still paid all of those bonuses to their senior people, who actually lost money? Where did it go?

In the absence of any plausible explanation for any of this, I wonder if there isn’t an even bigger story. What if, in absence of the promissory notes actually being delivered to the investors, they were sold again to another buyer, and another?

Maybe the Broadway play “The Producers” isn’t really fiction but a formula for modern-day finance. Max Bialystock and Leo Bloom sold and resold the rights to a musical so bad that it was destined to fail. But, when it defied logic and became a success, they couldn’t pay back the investors.

Only in the case of mortgage-backed securities, it was the other way around. As long as nobody defaulted, no one would ask to see the note. If they were only issuing copies of the note, they could sell it over and over.

So, if I have this right, the solution to the banks defrauding their investors was for Henry Paulson, formerly of Goldman Sachs, a major player in mortgage backed securities, to bailout AIG, which insured the securities. So, why did we also have to bailout the banks, too? They already had sold the notes and gotten their money back long before the collapse.

As time goes by and we learn more about how the financial industry operates, we may eventually be able to cut through the jargon and get to the truth about what happened to our money.

Until then, I’ve still got a lot of questions.

George W. Mantor is known as “The Real Estate Professor” for his wealth building formula, Lx2+(U²)xTFP=$? and consumer education efforts. During a career that has spanned more than three decades, he has amassed experience in new home and resale residential real estate, resort marketing, and commercial and investment property. He is currently the founder and president of The Associates Financial Group, a real estate consulting firm.

Mantor can be reached at GWMantor@aol.com.

For more real estate tips and topics on RISMedia.com, be sure to see:
No Reservations: Manage the Consumer Confidence Slump
Today’s Manufactured Homes Naturally “Green” – Provide Less Waste, More Value

Now we can add another question to the list of ongoing mysteries: With foreclosure activity breaking records nearly every month, where are all the REOs?

It’s a fair question. In normal market situations, a bank will repossess a home and usually process it through to a listing agent to put on the MLS within 30 days. In a relatively short period of time, virtually every marketable REO property finds itself listed for sale on the local MLS. Today, that’s simply not the case; it’s likely that between 450,000 and 500,000 properties repossessed over the past year are still not on the market. And with buyers hungry for housing bargains, and agents and brokers chomping at the bit ready to sell the properties, it begs for a reasonable answer.

Lenders and servicers admit that it’s taking longer to process REOs than it has in the past, and they offer a number of legitimate reasons:

-Many of the properties have title issues that need to be resolved.

-Many of the properties are in states of utter disrepair.

-A number of states have strict redemption-rights periods, which prevents the lender from reselling the property.

-A few states have extended the length of eviction proceedings.

-The sheer volume of REO activity has created a “pig in the python” phenomena, (to put this in perspective, there will be roughly 10 times the number of REOs this year as in the last “normal” year, 2005).

What else could be slowing things down? A popular theory is that many banks are holding the properties off the market in order to defer losses. There is some accounting logic to this theory, as in most cases, banks aren’t required to adjust asset prices until the actual resale of the property. Another idea is that the industry is holding back the inventory to create leverage with the government in order to force the creation of a “toxic bank” or RTC-like entity that would buy the distressed assets at 50 to 60 cents on the dollar rather than the 30 to 35 cents available on the market today. This theory suggests that, seeing the threat of a massive inventory of distressed homes being released all at once, the government would “blink” rather than risk another housing market meltdown.

Whatever the reason—process issues or conspiracies—we’re going to continue to see record-breaking numbers of REOs for at least the next year, and we’ll all be watching to see when these sought-after homes finally make their way to the market.

Rick Sharga is senior vice president at RealtyTrac. For more information, please visit www.realtytrac.com.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

The good news is that the government is trying to help rectify some of the challenges noted above. The Credit Card Accountability, Responsibility and Disclosure Act of 2009—commonly referred to as the Credit Card Act (“The Act”)—was signed into law on May 22, 2009 and represents some of the most protective credit card consumer legislation in 60 years. Everyone who uses a credit card should at least have a basic understanding of The Act and how it could impact their personal situation and credit profile.

Effective August 19, 2009, two key provisions of the law were enacted. First, until now, consumers were only given 15 days notice if their interest rate was going be changed by their credit card provider. Now, they must alert you 45 days prior to any change. For card holders who read their notices, this gives them reasonable time to call their creditor and “plead their case” for a better interest rate before it takes effect. If you have a good credit profile and they won’t reduce your rate, then move your business to a competitor. Secondly, card holders will now have 21 days instead of 14 to make their payments. This is a real win for consumers who are fighting to keep on top of their bills and those who travel a lot.

The most significant portions of the law go into effect on February 22, 2010. Here are a few highlights of those changes:

NO UNFAIR CHANGES – Unlike today, credit card issuers will not be able to change your credit status at anytime, for any reason. So, if you miss a payment with one creditor, another cannot automatically increase your interest rate or drop your credit limit, which often

unfairly affects your credit scores.

RESTRICTIONS UNDER 21 – Consumers under the age of 21 will need a co-signer or a job in order to get a credit card. This is designed to help control the number of young, college-aged students building up credit card debt and negatively impacting their credit profile before they even graduate.

OVER-LIMIT FEE CONTROL – Credit card companies will no longer be allowed to let card holders exceed their limit without having the card holder’s permission to do so. If you have not agreed to allow over-limit exceptions, your card will simply be declined, protecting your credit score and protecting you from over-limit fees.

LATE FEES – If your credit card provider charges late fees, they must clearly disclose them on your monthly statement.

CREDIT CARD AGREEMENTS – Changes occur so often that consumers don’t know which agreement is accurate. Creditors will now be required to have a copy of your credit agreement available for you on a website.

Americans need a healthy flow of credit in our economy. However, for too long, credit card company practices have steadily grown unfair against the consumer. The Act takes a strong, positive first step forward in creating transparency for everyone. Nevertheless, it is still critical to actively manage and monitor your credit profile to ensure you are fully aware of any changes.

Jeff Mandel (left) is president and Marlin Brandt is COO of ApprovalGUARD. For more information, visit www.ApprovalGUARD.com.

For a complete summary of the Credit Card Act, see the “Latest News” at www.approvalguard.com.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

“The Fed is the single largest buyer of mortgage bonds in the market today,” said Gibran Nicholas, Chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers. “The way mortgage companies set their interest rates is by figuring out the price that Fannie Mae and Freddie Mac are willing to pay them for the mortgage. Fannie and Freddie set their price by figuring out what investors on the bond market are willing to pay them for the Mortgage-Backed Securities (mortgage bonds) that they issue. When the Fed stops buying mortgage-backed securities, the demand for these bonds will be much less, and mortgage rates will go higher.”

Since the Fed began purchasing mortgage bonds and intervening in the mortgage markets, interest rates on fixed rate mortgages have dropped a full percentage point below where they would be otherwise. “Take out the Fed’s subsidy, and mortgage rates are likely to drift back up by at least one percent,” Nicholas said. “A one percentage point increase in mortgage rates – from 5.25% to 6.25% – would cost an extra $127 per month and $45,730 in interest over the life of a $200,000 30 year mortgage. This is exactly what could happen in 2010 once the Fed stops buying mortgage bonds.”

Fed officials have been signaling for some time that their unprecedented interventions in the mortgage markets may come to an end or even be reversed once the economy begins to improve. “While we don’t believe the Fed will start selling mortgage bonds right away, we do believe that rates will start drifting higher in 2010 once the Fed stops purchasing mortgage bonds,” said Nicholas. “After all, it’s not every day that the Fed spends a whopping $1.25 trillion to subsidize mortgage rates. Take out this enormous subsidy, and the average person with a $200,000 mortgage who refinances or buys a house stands to lose $45,000 over the life of their home loan. That is why homeowners and buyers should really talk to their Certified Mortgage Planning Specialist and take advantage of this window of opportunity to refinance or buy a home while rates are artificially low.”

For related information that is beneficial to homeowners and buyers, visit Gibran Nicholas’ blog at http://gibrannicholas.com. Recent posts include:

How to Save Over $30,000 on Your Home Purchase
Two Reasons Why House Prices Will Go Up
Is Housing Still Overvalued?

For more information or to find a certified professional near you, please visit www.CMPSInstitute.org or call 888.608.9800.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

The average 15-year fixed rate mortgage fell to 4.93 percent, while the average jumbo 30-year fixed rate plunged to 6.45 percent. Adjustable rate mortgages were lower, with the average 1-year ARM dipping to 5.19 percent and the 5-year ARM dropping to 4.93 percent.

Mortgage rates have been in a narrow range for nearly two months, even as the economy has shown improvement. With the Federal Reserve beginning to wean the markets from its repurchases of Treasury debt, there will be less to restrain mortgage rates if the economic data continues to improve. Should the economic recovery stumble, as it most likely will at some point, mortgage rates will pull back. Historically, bond yields and mortgage rates have shown very little movement over long periods of time that are punctuated by sharp movement in a very short period of time. Mortgage rates are closely related to yields on long-term government bonds. The pattern is likely to play out once again, but it remains unclear whether the next big move is up or down.

Mortgage rates remain much lower than one year ago. This time last year, the average 30-year fixed mortgage rate was 6.74 percent, meaning a $200,000 loan would have carried a monthly payment of $1,295.87. With the average rate now 5.67 percent, the monthly payment for the same size loan would be $1,157.00, a savings of $139 per month for a homeowner refinancing now.

SURVEY RESULTS
30-year fixed: 5.67% — up from 5.65% last week (avg. points: 0.36)
15-year fixed: 4.93% — down from 4.97% last week (avg. points: 0.39)
5/1 ARM: 4.93% — down from 5.03% last week (avg. points: 0.43)

Bankrate’s national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

For a full analysis of this week’s move in mortgage rates, go to http://www.bankrate.com/mortgagerates.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Home values have flattened significantly in the short term, with the Zillow Home Value Index falling 2.7 percent from the first quarter to the second quarter, and falling only 0.9 percent from May to June.

Nationally, the total number of home sales in June fell 23.7 percent versus a year earlier. However, total home sales rose 3.8 percent in June versus May. Additionally, in 39 markets, home sales increased year over year. Some of these larger markets include Miami-Fort Lauderdale, Los Angeles and Phoenix.

Despite encouraging signs in some markets, distress signals tracked by Zillow remain high, suggesting that for most U.S. metropolitan areas the bottom of the market has not yet arrived, at least in terms of home values.

Negative equity remains high, with 23 percent of all owners of single family homes with mortgages owing more on their mortgage than their home is currently worth, relatively flat compared to 22 percent in the first quarter. Foreclosure re-sales made up more than one-fifth (22 percent) of all home sales nationally in June, and 29.2 percent of all homes sold in June were sold for less than what the owner originally paid.

Meanwhile, 29 percent of homeowners say they would be at least somewhat likely to put their home on the market if they see signs of a turnaround, according to Zillow’s second quarter Homeowner Confidence Survey, signaling an abundance of potential shadow inventory waiting in the wings.

“While we are encouraged by the increasing sales in many markets and the overall improvement in the rate of decline of the Zillow Home Value Index, I hesitate to be overly optimistic for the near future,” said Dr. Stan Humphries, Zillow chief economist. “There are still many hurdles to true market recovery. Foreclosure re-sales are buoying overall sales numbers, but their low prices are keeping home values down. Reports of increasing mortgage defaults signal that foreclosures are likely to increase again and peak in mid-2010. With increasing unemployment and high rates of negative equity, we have a fertile breeding ground for even more foreclosures, which add to the already-high level of for-sale inventory that needs to be cleared before values begin to rise.

“While the abundance of affordable foreclosure properties is a boon for many first-time homebuyers, I don’t believe we’ll see significant recovery until demand-side fundamentals improve, and more move-up and move-across buyers re-enter the market.”

A real estate market bottom may be closer in some areas than in others. Eighteen of 142 declining MSAs have posted at least three consecutive quarters of smaller year-over-year home value declines, signaling a true trend. Nine of those markets are in California, where housing markets have been hard-hit by foreclosures and declining values. Those markets are:

• Los Angeles MSA
- Home values there have fallen 34.8 percent from the peak of the market in 2006.
- Sales were up substantially in June, rising 11.4 percent compared to the same time last year.
- The Zillow Home Value Index fell 14.9 percent, compared to 18.6 percent in the first quarter.

• San Diego MSA
- Home values have fallen 35.7 percent since the peak of the market in 2005.
- Sales were up 9.7 percent year-over-year in June.
- The Zillow Home Value Index fell 14.5 percent year-over-year in Q2, compared to 18.1 percent in Q1.

• Stockton, Calif. MSA
- Home values have fallen 60.9 percent since the market peaked in 2006.
- In June, sales were down 12 percent year-over-year.
- The Zillow Home Value Index fell 29.9 percent in the second quarter, compared to 32.9 percent in the first quarter.
- Foreclosures continue to be an issue, however, with 69.2 percent of all sales in June being foreclosure re-sales.

• Other California markets with three consecutive quarters of shrinking year-over-year declines are:
- Oxnard MSA
- Santa Rosa-Petaluma MSA
- Modesto MSA
- Vallejo-Fairfield MSA
- Yuba City MSA
- Napa MSA

In total, 142 U.S. metropolitan areas experienced year-over-year home value declines, eight markets were flat, and 11 markets experienced year-over-year appreciation in home values.

The full national report, in its new, interactive format, will be available at www.zillow.com/local-info on Tuesday, Aug. 11. Additionally, in most areas data is available at the state, metro, county, city, ZIP and neighborhood level.

For more information, visit www.zillow.com.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com

Durbin is the main backer of legislation that failed to pass the Senate earlier this year that would have empowered bankruptcy judges to modify primary home mortgages. On Monday, he said he would consider resurrecting that bill, but is also interested in a range of alternatives that may find broader support.”

Durbin’s bankruptcy legislation, derided as “cramdown” in the financial industry, fell 15 votes shy of passing the Senate and for years has been vigorously opposed by the industry.

“Americans don’t have time for any more voluntary half-measures that fail to significantly reduce avoidable foreclosures,” Durbin said at the Center for American Progress, a liberal-leaning think tank.

The Obama administration met with the financial industry last week and worked out a goal of 500,000 completed mortgage modifications by November.

On Tuesday, the Treasury Department will release the first monthly progress report on the administration’s efforts to encourage mortgage modifications. Durbin said that he is also sending letters to the 34 banks and mortgage servicer companies that are participating in the administration’s loan modification plan, asking them to detail their efforts so far.

Durbin said he is still strongly in support of bankruptcy legislation as a way to force the industry’s hand.

“There is growing consensus that principal reductions are the key to sustainable modifications that won’t redefault, since a homeowner who has equity will fight harder to make the mortgage work,” Durbin said.

The financial industry has shown no signs of easing its opposition to the measure. The industry engaged in one of its heaviest lobbying battles this year to beat back the policy.

Among other options, Durbin said he is considering policies that would mandate arbitration between borrowers and servicers prior to foreclosure. Arbitration would allow homeowners and lenders to renegotiate the terms of the mortgage and avoid foreclosure. Congress could also help finance arbitration programs in cities and states.

Durbin also suggested that legislation could allow homeowners to stay in their homes for some time while they pay fair-market rent.

Additionally, lawmakers could pursue financial penalties against firms that fail to meet the administration’s foreclosure-reduction standards, he said.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

“Realtors are busy people,” says NATIONAL ASSOCIATION OF REALTORS® (NAR) President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. “Realtors FCU offers convenient, accessible financial services to our members when and where they need it. Realtors FCU is friendly to Realtors and truly a partner that members can trust.”

Dedicated to the Unique Financial Needs of Realtors

Realtors FCU, a new partner in NAR’s Realtor Benefits Program and a major component of NAR’s Second Century Initiatives, offers a full range of products supporting the professional and personal interests of Realtors.

“What makes us unique is that we understand Realtors,” says Realtors FCU President Tom Glatt. “They are who we serve. We understand what it means to run a small business or sole proprietorship and the peaks and valleys of the revenue cycle.”

100% Virtual Credit Union

The first completely virtual credit union, Realtors FCU opened for business on May 1, 2009. To accommodate Realtors’ busy schedules, the credit union is open seven days a week, offering 24-hour online account access and member care that provides friendly service and trusted advice by phone or online. Members also have access to thousands of surcharge-free ATMs nationwide and secure online banking and bill pay.

“We’re not some lumbering giant like a big-box bank,” explains Glatt. “I used to work with the Navy, and the admirals used to say that it takes eight miles to turn around a battleship. We’re more like a speedboat. We’re getting instant feedback from members and can turn around on a dime to respond immediately to their needs.”

Full Range of Financial Products and Services

Realtors FCU offers competitive rates on savings and lending products, access to surcharge-free ATM networks and many additional services for members. These include traditional and money market savings accounts; fee-free eChecking with overdraft protection and MasterCard® Debit Card; flexible personal loans and lines of credit; new and used vehicle loans; home loan financing; home equity loans and credit lines; and share certificates. Funds are federally insured to at least $250,000 and fully backed by the U.S. government.

More Services in the Future

Realtors FCU is growing quickly and has a number of products and services planned for the future, including Rewards Checking accounts, Health Savings Accounts (HSAs), Individual Retirement Accounts (IRAs), Simplified Employee Pension Plans (SEPPs) and business services.

More Information

NAR members and their families are eligible to become members of Realtors FCU and access their unique financial services. Apply online at REALTORSFCU.ORG.

About the Realtor Benefits Program

The Realtor Benefits Program is offered as a benefit of NAR membership. NAR has partnered with industry leaders to provide Realtors with value-added offers and significant savings on products and services they use every day. For the most up-to-date list of Program partners, please visit www.REALTOR.org/REALTORBenefits.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

On Monday, rates for 30-year fixed purchase mortgages dropped further, with the average rate on Zillow Mortgage Marketplace at 5.19 percent. For current, up-to-the-minute rates, visit www.zillow.com/Mortgage_Rates/.

Thirty-year fixed mortgage rates varied by state. California mortgage rates, Georgia mortgage rates and Pennsylvania mortgage rates decreased the most, from 5.39 percent to 5.21 percent in California, from 5.32 percent to 5.16 percent in Georgia and from 5.42 percent to 5.26 percent in Pennsylvania. Ohio mortgage rates (5.39%), Illinois mortgage rates (5.36%) and Massachusetts mortgage rates (5.36%) were the highest in the country, while Georgia mortgage rates (5.16%) were the lowest.

The Zillow Mortgage Rate Monitor is compiled each week using thousands of mortgage rates for conforming loans quoted on Zillow Mortgage Marketplace by mortgage lenders to borrowers who have submitted loan requests. State-level data is gathered for the top 20 states with the highest quote volume on Zillow. Learn more about our rates.

For more information, visit http://www.zillow.com/.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

For more real estate tips and topics, see:

Jewel-box Homes are Built Smaller, Smarter 
Sounding an Optimistic Note – 8 Questions for NAR’s Leader 
Are Tighter Appraisals Hurting Home Sales?

“My focus now, as it has always been, is to provide the best possible Information and tools for all Homeowners as well as the entire real estate community. I seen an important need to bring specialized real-results to the market that is consumer-friendly, lender-friendly and attorney-friendly more importantly Homeowner Friendly and give today’s Homeowners the solutions they need in this distressed situation. I think it’s our job and our responsibility to help protect the American Dream whenever and however we can. I am reminded of a great quote by President Lincoln: “I am a firm believer in people. If given the truth, they can be depended on to meet any national crisis. The great point is to bring them the real facts.” That’s my passion: to bring people the facts.

According to Weaver, to reach those Homeowners who do not have the knowledge they need to avoid Foreclosure. Will Weaver has developed this Powerful (F.A.C.T.) Workshop in addition the F.A.C.T. (Foreclosure Avoidance Comprehensive Training) Package included in the package is an Audio CD, Homeowner and Realtor Resource Guide Booklets full of valuable information Available to Homeowners and Realtors anytime, anywhere. “Making it simple and convenient for Homeowners & Realtors to learn at their own pace and at times that make sense for them. How can we convey this information and these tools to the Homeowners who need it the most? We believe we have definitely accomplished that in this simple, easy-to-use Audio CD format and Resource Guide Booklets,” shared Will Weaver.

(MAR) Michigan Association of Realtors

“The Michigan Association of REALTORS® wanted to provide the best foreclosure training for both our members and the public. Will Weaver’s material met and surpassed that goal.”

Kathie Feldpausch, CPA RCE
MAR, Senior Vice President

To learn more about the Foreclosure Avoidance Comprehensive Training Workshops and Training tools, please Contact Will Weaver at will@househelp101.com, www.HouseHelp101.com or (248) 953-9665. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

More news stories:

Are Tighter Appraisals Hurting Home Sales? 
Thinking Outside the Box – One Agent’s Unique Approach to Real Estate 
Sustainability Is the New Economy

It seemed like a low-risk move – until the bank that issued the CD failed. Then Katker had to get in line with other former customers of California-based IndyMac Bank to recover his cash. It took him nearly a month.

“I didn’t lose my principal, but I lost access to the money and almost a month’s worth of interest,” said the retired stockbroker, who lives in Orlando. “It upset me because my brokerage knew IndyMac was having problems but didn’t tell us.”

Even relatively safe, federally insured certificates of deposit issued by banks and credit unions can pose hazards for investors seeking to squeeze the biggest returns from their portfolios amid a slumping stock market and historically low interest rates.

In some cases, investors are turning to their brokerages, which offer them higher CD rates based on special deals negotiated with certain banks. In other cases, nonbrokerage firms are luring investors with high rates they claim to have tracked down at relatively unknown banks.

Experts say that, even with something as straightforward as a savings CD, you should be wary of any claim that sounds too good to be true.

“There is a real need for consumers to be on their toes and do their homework,” said Greg McBride, senior financial analyst for Bankrate.com in North Palm Beach, Fla.

Start with the basics, such as the current limits on Federal Deposit Insurance Corp. coverage. Generally, each account holder at a single bank or credit union is covered for as much as $250,000, though people can increase their coverage by having both joint and individual accounts.

Next, you should know something about the bank or credit union whose CD you’re planning to buy. The FDIC (1-877-275-3342 or fdic.gov) can tell you whether the bank is still in good standing. For credit unions, call 1-800-755-1030 or go to ncua.gov. Any sign of financial difficulty at an institution should give you pause, even if it is insured by the FDIC. If the bank does fail – as 64 U.S. banks have since early 2008 – you may have an aggravating and income-losing wait before you regain your money.

Buying a CD through a broker, as Katker did, can complicate things further.
Although “brokered CDs” typically offer some of the best rates available, there are limits, in some cases, to the FDIC insurance that could result in loss of principal.

“If you need to get your money out prior to the CD maturity date, it’s not as easy as forfeiting some interest as an early-withdrawal penalty and going on your way,” McBride said. “In fact, the CD will be sold to an investor, and the amount you receive back depends on what the investor will pay on the secondary market.” You should also be sure you know how long your money will be tied up before you bite on a high rate. Fidelity Investments, for example, recently offered its clients a CD paying 5.5% from a community bank in Georgia. The catch? You would have to lock in your money for 20 years.

Buying through a brokerage also may expose you to account fees, said Jason Chepenik, managing partner of Chepenik Financial in Orlando. “Some brokerage accounts have closing fees of up to $100, so that would eat into any extra income you’d get” from the higher CD rate, he said.

Potentially worse are high-yield CDs promoted by unfamiliar companies that may, in fact, be peddling much riskier investments.

Florida regulators broke up a CD-related fraud two years ago run by some companies in Fort Myers. The scheme promoted high-paying CDs to lure mostly elderly investors but instead sold the victims high-risk, unregistered securities such as viatical settlements, which are life-insurance policies tied to terminally ill policyholders.

Some companies – often known as CD-locater services – operate legitimately by referring investors to a bank that offers the high-yield CD advertised, regulators say. Even if the advertised rate isn’t available, the firms must cut a check to investors to make up the difference in yield.

But people who respond to such promotions should be ready for a sales pitch for other financial products because that’s how such operations really make their money, said Mark Mathosian, an investigations manager for the Florida Office of Financial Regulation.

“These companies are looking for sales leads,” he said, “and if many of the people who come in asking about the CD end up buying an annuity, the company will make some big commissions.” Investors should call the Office of Financial Regulation consumer phone line (1-800-848-3792) to find out if a particular company is properly registered with the state and whether anyone has filed complaints against it. A veteran owner of one such company insists the CD-locater business has unfairly gotten a bad reputation because of a few isolated cases of bad business practices.

“Some of our competitors have taken unfortunate shortcuts with customers,” said Matlock L. Schilleman, head of Clearwater-based First Financial Group LLC, which has an office in Lake Mary. “But we do everything in the best interest of our clients. We’ve been around since 1998, and our clients have never lost a dime.”

But that is not always the case in the CD-locater business, said Paul Auslander, a financial planner and chairman of American Financial Advisors Inc. in Orlando. Too many people end up roped into high-fee annuities and other costly or high-risk investments, he said, when all they wanted was a safe but high-paying certificate of deposit.

“Obviously, people have to take some personal responsibility and do their due diligence in these things,” he said. “But some of these outfits can be very slick. Sometimes you think you’ve done enough, and you can still end up with a big problem.”

©2009, The Orlando Sentinel (Fla.).
Distributed by McClatchy-Tribune Information Services.

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Take a recent client we will call “Rachel.” Rachel was reviewing her credit and decided to close her eight-year-old VISA credit card with a credit line of $18,000. She didn’t use the card but once or twice a month and had two other major bank cards that provided “rewards points.” So to keep her credit record “clean” she decided to cancel the card. The next month she found out that this one decision cost her 87 points on her credit score, dropping it from 752 to 665.

This story happens way too often and is typical for how most people manage their credit by trial and error. Over a lifetime, many people eventually build up some decent credit, however, that same level of credit could have been achieved so much earlier in life with guidance and help.

A consumer credit score is made up of five key components:

- Payment History – 35% Types of accounts (credit card, mortgage, etc.), accounts paid as agreed, number of past due accounts, etc.
- Amounts Owed – 30% Balances of current loans, debt-to-credit ratio, proportion of installments still owed, etc.
- Length of Credit History – 15% Time since accounts opened, last activity, etc.
- New Credit – 10% Recent inquiries, new accounts, etc.
- Types of Credit Used – 10% Mortgages, credit, retail, etc.

In Rachel’s case, the major bank credit card she canceled was paid on time every month for eight years. She didn’t use credit a lot, and this particular credit card represented the best contribution to the amounts owed and length of credit history category. Although Rachel had two other major bank credit cards that offered rewards points, they were only months old and had only been used intermittently, giving them much less value on her credit score. Next to her mortgage loan, the eight-year-old VISA credit card was her strongest piece of credit. Consequently, the other newer cards also had higher interest rates and yearly fees than her VISA card.

Contrary to popular belief, credit scores do not penalize you for having too much available credit. With this in mind, it’s better to preserve your credit score with 15 years of established credit history and old accounts in good standing than to have fewer and newer open accounts. Major bank credit cards have more impact on your credit than, say, a department store card.

Closing a credit card can greatly affect your credit scores; however, sometimes you may have no choice. Credit cards that are unused or rarely used can have their credit line reduced or may even be closed without your approval by the credit card company. This can affect your credit score just as much as canceling the card yourself.

Jeff Mandel is president and Marlin Brandt is COO of ApprovalGUARD.

For more information, please visit www.ApprovalGUARD.com.

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There is, for example, wide speculation that banks have been holding back significant numbers of REO properties in order not to flood the market.

A cursory review of local tax records suggests that there are far more properties in default than there are in either the auction or bank owned phase. Are these temporary defaults that will ultimately be cured, or are these the first waves of what alarmists like to call the Tsunami? Are the majority of these early stage defaults inevitably going to make their way to auction?

If homeowner equity was rising, the majority of defaults would likely be cured before auction. Now, the only options are to sell or forfeit the home. But, a hard target search of specific defaulted property sold between 2005 and 2007 revealed that most are not listed through the local MLS which suggests that they are not really trying to sell and most appear to be well maintained.

And, if lenders fearful of flooding the market are delaying auctions, why not further limit the damage by not recording the notice of default? That way there is no public record for people like me to uncover and question.

Trying to read the tea leaves may reveal many things but, perhaps, no definitive answer to where we are headed.

The uncertainty about the future of the economy is threatening even those jobs once thought to be recession proof and has caused many people to adopt an almost survivalist approach to short term life planning. If your job goes away, what would you wish you had more of, cash, or the good will of the mortgage company?

People who can pay their mortgages have stopped, and their number is growing. Among probable reasons are the following:

- The decreasing stigma of such an action compared to the widespread fraud underlying our economic collapse. When GM is synonymous with bankruptcy, it’s clear that the game has changed.
- The uncertainty of the revival of the economy and the corresponding fear of loss of income if the recession deepens or lengthens has many people waiting for a signal regarding the economy in general or the security of their job in particular.
- Belief that, if they are current, they will not qualify for a mortgage modification.
- Chaos theory is yet another reason that some aren’t paying their mortgages. There has been a persistent rumor that behind the bank bailouts and the bankruptcies, the Federal Government is working on a plan B for dealing with a complete economic collapse and the ensuing anarchy.

People who believe this argue that there wouldn’t be anyone coming to see about the mortgage. And, if everyone who had a mortgage began to withhold their payments, that could happen. Those working short sales and REOs have discovered that the banks and servicing companies are already overwhelmed.

And, because the revenue stream of mortgage servicers is entirely dependent on collecting mortgage payments, when those stop coming, they won’t be able to make payroll or keep the lights on. And, it will be lights out for the banks next. Unlike GM, they don’t have many assets and make nothing.

The government can only bailout so many things with our money before we hit a tipping point. California is facing an unprecedented financial crisis, and other states are facing similar revenue shortfalls. If the choice comes down to saving the banks or saving our neighborhoods, the politicians need voters more than they need banks. Or, so say the chaos theorists.

There are many different reasons why certain homeowners might be withholding their mortgage payments to preserve their cash. Fear of job loss or economic collapse, loathing for the high-flying financiers who are getting bailout funds, the lessoning stigma associated with bankruptcy and default, or to qualify for a mortgage modification.

Some are fully intending to make up the payments and pay the late fees if the economy shows signs of improving soon. Others think that banks might make concessions so why not wait and see what happens? But, as the number of non-payers grows, whether by choice or necessity, they further imperil the survival of many financial institutions.

George W. Mantor is known as “The Real Estate Professor” for his wealth building formula, Lx2+(U²)xTFP=$? and consumer education efforts. During a career that has spanned more than three decades, he has amassed experience in new home and resale residential real estate, resort marketing, and commercial and investment property. He is currently the founder and president of The Associates Financial Group, a real estate consulting firm.

Mantor can be reached at GWMantor@aol.com.

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Lending organizations-including Boeing Employees Credit Union/Prime Alliance System, the Federation of Community Development Credit Unions, Federation of Appalachian Housing Enterprises, Inc., Mortgage Grader and Clearinghouse CDFI-are among those electing to become certified and offer mortgages that meet FMC’s rigorous certification standards. The Collaborative also includes loan counseling and lending networks (including NeighborWorks America) and secondary market intermediaries (such as Neighborhood Housing Services of America).

The Fair Mortgage Collaborative will hold a 9 a.m. news conference on June 10, 2009 at the National Council of La Raza headquarters in Washington, D.C. FMC will outline the full scope of its initiative, including the pillars of the Collaborative’s certification standards.

News event speakers will be:

- Janis Bowdler, chair, Fair Mortgage Collaborative;
- Howard Banker, executive director, Fair Mortgage Collaborative;
- George McCarthy, U.S. director development finance and economic security, Ford Foundation; and
- The Alvin and Debra Newman family of Los Angeles, CA., and Jeff Lazerson, CEO of Mortgage Grader, where the Newman family is now getting a FMC-certified mortgage. Other families will be present and the lenders that made them their loans under the FMC standards for fair and safe mortgages. The families will be available for questions and to tell their stories.

The Fair Mortgage Collaborative is a nonprofit membership organization whose members are individually and collectively committed to providing low and moderate income and minority homeowners and home buyers access to mortgages with the consumers’ best interests at its heart, at a fair rate of compensation.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

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Not knowing where to start or fully comprehending that everything you need to do to be successful in the new paradigm touches everything else, they end up doing nothing. If we break it down into smaller, “bite-sized” chunks, the task seems much more manageable.

First off, let’s compare the old paradigm to the new one…they are not that different:

Old Paradigm

• Physically networking at events
• Large offices to house agents, computers, meet clients, etc.
• Engaging consumers through local activities such open houses, etc.
• Print advertising
• Helping someone right away when they walk into your office looking for real estate

The new paradigm consists of the same activities as before, but now improved and enhanced with technology.

New Paradigm

• Supplementing physical networking with online networking through social media sites, such as LinkedIn, Facebook and Twitter
• With devices such as iPhones and BlackBerrys making mobility of agents prevalent, a smaller physical footprint is now possible
• Engaging consumers online through Web 2.0 platforms, utilizing enhanced search and chat features
• Internet marketing, search engine optimization and listing syndication puts your company in front of infinitely more potential customers.
Internet lead-management systems give you the ability to respond to the consumer immediately.

You are performing the same basic activities, however, now using a technology-driven platform. Before telephones, people spoke. After telephones, people were performing the same activity (speaking) but could now do so even if they were not in the same room.

There is another very important fact to internalize… all the activities in this new paradigm are connected to each other, so you must take an integrated approach:

-You need closings to make money
-You need listings to have closings
• You don’t have to fear “the cost” of listings if you are marketing correctly
-You get buyers because of listings and Web traffic
• SEO, measurable marketing
-You need lead generation to get listings and buyers
-You need listing opportunities and buyers to recruit agents
• Gen X and Gen Y agents want the newest, “hippest” time-management tools
-You need marketing tools (CRM) and lead management to profit by design
• Instant response, drip e-mail, back-office admin-all to manage your leads
-You need a comprehensive Web platform to support all of these efforts
-You need a broker who sees the future of real estate
• Those who reinvent will survive

Michael Pappas, president of Keyes Real Estate, an 83-year-old, 1,500-agent, 25-office regional brokerage in South Florida, has helped his company effectuate an ongoing transformation over the past several years. “Regardless of the difficult market conditions that certainly frame many of our decisions, we are always keeping an eye on the future and how we can emerge from this trough as a stronger entity. We are truly ‘reinventing’ ourselves every day as we leverage our technology to provide better service to our agents and our clients.”

The time to “reinvent” is now. Don’t be overwhelmed. Break it down into smaller goals that will fit together over time to create a new you.

Jose Perez is the president of PCMS Consulting. For more information, please visit www.pcmsconsulting.com or e-mail jperez@pcmsconsulting.com.

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Testifying before the House Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises, NAHB Chairman Joe Robson, a home builder from Tulsa, Okla., said that NAHB supports changes to the structure and operations of Fannie Mae and Freddie Mac to enable them to support mortgage market liquidity and address affordable housing finance needs without creating excessive taxpayer risk.

“NAHB believes that the federal backstop must be a permanent fixture in order to ensure a consistent supply of mortgage liquidity, as well as to allow rapid and effective responses to market dislocations and crises. It has been clearly demonstrated that the private sector, unaided, is not capable of consistently fulfilling this role,” said Robson.

“Fannie Mae and Freddie Mac should be recast, retaining federal backing but limited primarily to providing credit enhancement of mortgage-backed securities,” he added. “Limited portfolio capacity should be permitted to accommodate mortgages and housing-related investments that do not have a secondary market outlet, although Fannie Mae and Freddie Mac should have the flexibility to support the mortgage market in times of crisis, such as the conditions we are currently experiencing.”

NAHB outlined several principles for federal government support and structure of the housing finance system:

- The federal government must provide a permanent backstop to the housing finance system in order to ensure available and affordable mortgage credit in all geographic areas and under all economic circumstances.

- Secondary market entities (Fannie Mae, Freddie Mac and the Federal Home Loan Banks) should retain sufficient federal backing to allow them to reduce mortgage rates and fees.

- Fannie Mae and Freddie Mac should focus on the core business of securitizing mortgages and limited portfolio capacity should be permitted to accommodate mortgage and housing-related investments that do not have a secondary market outlet, including acquisition, development and construction (AD&C) loans.

- Fannie Mae and Freddie Mac must have the authority and ability to provide reliable liquidity to the mortgage markets during times of stress, which requires flexibility in terms of portfolio composition and size over the mortgage credit cycle, or with changing conditions in the secondary mortgage markets.

- Secondary market entities must be adequately capitalized.

- The secondary market must have a private sector component with risk shared by participants/shareholders, with governance by a board that includes public interest, housing industry and shareholder representatives.

- Flexibility in pursuing new mortgage programs and products should be balanced with accountability and safety and soundness.

Robson stressed that these changes should not proceed until the current financial turmoil passes and the markets return to more normal conditions.

For more information, visit www.nahb.gov.

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Adults were asked how the recent changes in the economy has affected their purchasing of “green” products or services such as non-toxic or biodegradable cleaning products and restaurants that serve locally sourced food.

Among the 73% of those who reported buying “green”:

-67% reported buying the same;
-26% bought more;
-8% bought less

Asked how knowing that a store or restaurant focused on being “green” as part of their business would impact their likelihood to visit, 49% said they would be equally as likely to visit, regardless of extra distance or effort. Another 26% said they would be more likely to visit if it involved no extra distance/effort, and 8% would be more likely to “go green” and visit even if it required extra distance/ effort.

“The overall results of this survey highlight the staying power of green among consumers even during the toughest of economic times,” said Mike Kapalko, environmental and tork services manager, SCA Tissue North America.

Methodology
This survey was conducted online within the United States by Harris Interactive via its QuickQuery(SM) online omnibus service on behalf of SCA Tissue North America between March 27 and 31, 2009, among 2,014 U.S. adults aged 18 years and older. Results were weighted as needed for region, age within gender, education, household income and race/ethnicity.

For more information, visit www.sca.com.

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Currently, 56% of Americans say they are hearing a mix of good and bad economic news, up from 46% in March and just 19% last December. The proportion saying they are hearing mostly bad news has fallen dramatically over this period – from 80% in December and 51% in March to 39% currently. Very few Americans – just 4% continue to say they are hearing mostly good economic news.

The latest weekly News Interest Index survey, conducted April 9-13 by the Pew Research Center for the People & the Press, finds that the share saying they are hearing a mix of economic news has increased.

When asked about perceptions of news about their local economy, the public is narrowly divided. Still, people in states struggling to manage their finances are more likely than people in other states to say they are hearing mostly bad news about the economy in their area.

Last week, the public continued to track economic news more closely than other major stories. More than three-in-ten (31%) say they followed reports about the condition of the economy most closely. Economic news took up 13% of the newshole (counting stories about state and local budget troubles separately).

The change in perceptions on the tone of economic news comes amid signs that the worst decline in decades may be slowing. When asked about news concerning the economy in their local area, the public expresses fairly similar views about national economic news. Nearly half (49%) say they are hearing a mix of good and bad news, while 44% say they are hearing mostly bad news. Another 5% say they are hearing mostly good news.

However, people who say they have been following news about state and local budget problems very closely are more likely than those paying less attention to say the news they’ve been hearing about the local economy is mostly bad. A majority (52%) of those who followed the week’s state and local budget news very closely report that what they’ve been hearing about their local economy is mostly bad; that compares with 41% of those who were less attentive to news about state and local budget troubles.

The balance of good and bad news that people are hearing about their local economy may be related to how well their states are managing state finances. In those states receiving below-average grades for fiscal management in an analysis by the Pew Center on the States, half (50%) of the public reports hearing mostly bad news about the economy in their area; while 44% say they are hearing a mix of good and bad news. By contrast, those who live in states whose financial health is rated above average, a majority (53%) say they are hearing a mix of good and bad news about their local economy and fewer (38%) report hearing mostly bad news.

There is some difference in perceptions of national economic news however. Six-in-ten of those in the better performing states say they are hearing a mix of good and bad news about the broader economy, while 52% of those in the lowest rated states say the same.

In addition, there is somewhat greater interest in state and local budget problems in states that get lower ratings for fiscal management. A third (34%) of those living in states graded below average say they are following news about state and local budget problems very closely, compared to one-in-four (24%) in states ranked average or above average.

For more information, visit http://people-press.org/.

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