But here’s my question: would you ever think about buying the place?  I found a great article from washingtonpost.com that addressed that very issue.  Believe it or not, it’s not that unusual for adult children to purchase their childhood homes either from their parents directly or from the estate after their parents pass away.

Depending on your circumstances, buying your family home can offer a lot of benefits and can be great for both you and your parents and/or siblings.  You know the neighbors, the local shopping locales, and all of the best ways to get to and from your house from all of your favorite hangouts.  But there can be some less-than-ideal consequences too, as spelled out in the Post article.

If you’ve thought about moving back home (only without your parents actually living there, of course), you’re going to want to consult your accountant and/or your attorney.   There are laws that govern gifts from parents to children, and if your parents are the ones from whom you’re purchasing the property, you’ll want to make sure that every “t” is crossed and “i” is dotted.  Keeping everything above board is also important if you have siblings-heaven only knows that smaller things than buying the family homestead have brought brothers (and sisters/aunts/cousins/girlfriends, if you’re to believe the kind of hype that used to make regular appearances on Jerry Springer) to blows.

It’s also important that you involve your mortgage banker as part of the transaction to make sure that all of the lending requirements are also met.  Being upfront with the terms of the sale will prevent closing and funding problems once you’re ready to sign the final papers.

Now comes the really tough decision: what to do with those freakish ceramic owls….

This blog is intended for informational/entertainment purposes only and is not meant to provide any financial or legal advice.

Noting our business-friendly environment that generates  “jobs and tax revenue”, the four selected cities are as follows: Houston (number one), Austin (number two), San Antonio (number five), and Dallas (number six).  Houston was listed in another Forbes article published earlier this year as being one of the best cities for bargain hunters, and still another one which focused on tech cities.  Here in Dallas, we’re seeing major business developments, expansions of our mass transit systems, and more companies moving in.

Why did these cities make the list?  Affordable housing, good jobs, and cultural benefits are just a few of the items that Forbes included.  In Dallas, for instance, the median home price is about $150,000.  Especially when considering the lower interest rates we’ve been seeing this year (and the fact that the Fed didn’t adjust rates in its most recent meeting), it means that a lot more people can afford to buy rather than rent.  And home prices in many Texas areas (including Dallas) are increasing-bucking the national trend.

As we begin to come out of this “housing funk” (a delightful term used by some media outlets) you can be sure that Texas will continue to lead the recovery.  That means that right now-while home prices are still very reasonable and there are a greater number of homes for sale-is a great time to consider purchasing a home.

Make a list of all of the things that you want most in a home, the things that you’d like, but would be willing to compromise on, and a list of things that you absolutely do not want in your next house.  Start attending open houses in neighborhoods that fit you and your lifestyle.  And take time to research current rates, pricing and payment amounts to double check what you’re truly able to afford.  (Hey-RateWindow can give you all of that!)  Once you have all of the information in hand, narrow down your house choices, make an offer, close the deal and move on in to your own piece of heaven (also known as the great state of Texas).

This blog is intended for informational/entertainment purposes only and is not meant to provide any financial or legal advice.

In a recent Business Week posting, writer Chris Farrell echoed their sentiment-noting that it wasn’t fair.  He did, however, determine that it was necessary.  Citing Milton Friedman and Anna Schwartz’s A Monetary History of the United States, 1867-1960, Farrell notes that the Fed’s actions (and presumably, Congress’s) are shaped by the actions taken in the early 1930s.  When public confidence in banks fell and they withdrew their money, the Fed didn’t, according to Friedman and Schwartz, break the “cycle of fear”.

Farrell notes that there will some day be a review of the actions that were taken by Congress, the Fed and by the President in moving to bail out banks, mortgage lenders and individuals.  In the meantime, he says, people who didn’t engage in risky borrowing still have a chance to buy homes at a discount.

Not having read Friedman and Schwartz’s book myself, I can’t really comment on their arguments.  I am not as constrained with Mr. Farrell’s writings, however.  In truth, despite the headline of the peice (”Why Bailouts Stink-and Why We Need Them) I’m not so sure that he even believes his own press.  If he does, I respectfully disagree with at least one statement: that those who were prudent with their money will benefit from buying lower-priced homes.

I wholeheartedly agree that now is a great time for people to buy a home-particularly those who are first-time homebuyers.  The problem is that those people who were less rash in their home purchase can still have a difficult time selling their properties because 1) there are more homes on the market for sale with which they are competing; 2) they may not have as much equity as they need to sell their home, make a profit, and roll it into a new home; and 3) many media stories put absolute fear into the hearts of anyone who is thinking about buying or selling, making them less likely to take that step.

I guess only time will tell us whether the bailout was a wise action by the government.  As an American, as a business owner, as an investor and as a homeowner, I certainly hope that the reward is worth the risk at which we (and future generations) have all been placed.

This blog is intended for informational/entertainment purposes only and is not meant to provide any financial or legal advice.

Here’s the deal: Calfornia led the way for a number of years in terms of exponential home price increases.  People were buying and flipping houses left and right.  Soon even tiny (as in 1000 square feet) homes in some areas of Los Angeles, San Francisco and other areas were selling or upwards of $1 million-a cost per squre foot unheard of in most of the U.S.

In December of 2005, the market peaked and home values began to fall.  Those who bought homes at the top of the market anticipating rapid equity growth and a quick flip were stuck with houses that they couldn’t afford.  Waves of defaults and foreclosures soon followed until, according to the Bloomberg article, almost $1.3 trillion of homeowner equity was lost.

What has happened, while certainly devastating to some families, was not only to be expected-it was needed.  The market corrected itself-as it must, and the home prices that Californians are now seeing are more in line with actual values.  No housing market can sustain that kind of growth forever and anyone who believes otherwise is nuts.

What’s more, California has been on this rollercoaster ride more than once before.  Look at the early 1980s when, as reported in the Bloomberg article, home sales dropped by more than 60%.  Or in the 1990s when they also tumbled.  And the people who took advantage of reduced home prices in those years benefited big time when prices began to climb.  And people who buy homes now have the chance to be in a perfect place to make a profit as the market rebounds in the next year, five years or ten years.

This blog is intended for informational/entertainment purposes only and is not meant to provide any financial or legal advice.

You’d think that, given all of the recent reports in the news and online, real estate professionals would be running for the hills and taking everyone in the mortgage industry with them.  After all, how could any of us stay in business when no one is buying or selling homes?

The fact is, the real estate professionals that I talked to weren’t dropping out of the market-they were pressing harder than ever.  They were excited about learning new technologies aand ideas that would help them increase the types and levels of service that they could provide their customers.  Without an exception, these men and women saw opportunity and hope the in real estate marketplace-not gloom and doom.  And their energy and enthusiasm, I have to say, were contagious.

I wish that every person who is thinking about buying or selling a home could have spent even just an hour with these realtors, because I think that it could spur a new generation of growth.  Let me tell you what I was hearing:

• Homeownership is still one of the best ways to build personal wealth on a long-term basis.
• Just like with the stock market, the rule in real estate is “buy low, sell high”.  People who couldn’t buy a year ago now have the chance not only to get into a home, but also to start accruing equity once the housing market rebounds.
• Homebuyers are seeing more upgrades in homes than ever before, as many sellers are striving to make their homes stand out in the marketplace with new paint, hardware, countertops and more.
• Although places like California, Arizona, Nevada, and Florida have areas in which there is a housing “glut”, it’s not a problem across the board.  While time on the market may have increased nationally, there are states-including Texas, thank you very much-which aren’t seeing even close to the same numbers.  (See Amy Lemen’s great column on buying and selling in Texas this time of year to see what I mean.)

In short, I came back re-energized and excited about the possibilities not just for our industry, but also for consumers.  There are great properties on the market, excellent loan programs and, as underscored by my Real Estate Connect experience, terrific, dedicated and professional real estate agents who are ready to help their clients accomplish their goals.

This blog is intended for informational/entertainment purposes only and is not meant to provide any financial or legal advice.

A recent Reuters article gave a great explanation about Fannie and Freddie.  Here are some of the highlights: Fannie Mae, the Federal National Mortgage Association, was created in the late 1930s to spur homeownership.  Congress christened Freddie Mac, the Federal National Home Loan Mortgage Corp., in 1970 to further expand home financing options.  As explained in the Reuters article, the companies (which are owned by shareholders and traded on Wall Street) buy mortgage loans from lenders and repackage them as securities for investors.  Between the two, they are estimated to own or guarantee over $5 trillion in mortgage loans.

For the most part, Fannie and Freddie have largely flown under the radar, staying in the background and keeping the mortgage industry clicking.  But with the media-monickered “mortgage crisis” of the last year, they’ve moved to the forefront of consumer awareness.  Share prices fell due to investor concerns about market pressures.

In a controversial move, the U.S. House of Representatives have now voted on legislation that could provide up to $300 billion in assistance to homeowners and, as requested by Treasury Secretary Henry Paulsen, allows the Treasurey the opportunity to provide not only a line of credit to Fannie and Freddie, but also to buy stock in the two companies if push comes to shove.  President Bush, who has long said that he would veto such a bill, has now indicated that he will sign it if passed by the Senate.  When or if that will happen is unsure as Senate Republicans have indicated that they may filibuster the bill.

This bill is certainly a divisive one-not only in Congress, but also among Americans generally.  While no reasonable person wants to see Fannie, Freddie or the market fall further, government intervention and ownership in private companies is always a concern.  But what is most concerning to many folks is that the bill-which is estimated to cost taxpayers upward of $25 billion-doesn’t just stop with shoring up Fannie and Freddie.  Its provisions also include wide scale bailouts for homeowners at risk of foreclosures, funds for cities and states to buy and rehab foreclosed properties and permanently increase conforming loan limits, which were “temporarily” raised earlier this year.

Some friends of mine, who were discussing the bailout bill, were definitely not pleased with many of the provisions contained in its 700 pages.  They had the same response that others I’ve talked to have had: they bought a house well under what they qualified for, shopped around to find the best rate, and have lived conservatively so that they could make their mortgage payments.  Now, they say, they’ll not only be paying for their own housing, but also for the houses of peope who purchased homes significantly beyond their means.  They also question the wisdom of certain members of Congress-many of whom called on Fannie and Freddie several years ago to open the doors of homeownership to more Americans-whether or not, apparently-they could afford it.  These companies did as Congress asked, and now they seem to be struggling as a result.

In a free market economy such as our own, I’m not sure that this kind (and size) of bailout package has a place.  I believe strongly-as I’ve written many times before-that the market will rebound and home sales will climb again, with or without government intervention.  I guess time will tell.

What do you think?  Post your responses and let me know your opinion.  Who knows, maybe it’ll change mine.

This blog is intended for informational/entertainment purposes only and is not meant to provide any financial or legal advice.

So begins the article by Washington Post reporter Renae Merle, recently republished in the Chicago Tribune.  Noting that a study conducted by HUD early this year shows that minorities and those without college degrees, among others, pay higher closing costs, the article encourages homeowners to “eliminate junk fees and ask for discounts”, do their research and really become involved in the loan process.

Merle’s other suggestions include frequently asking about the loan status, asking a lot of questions about the closing costs, and requesting a settlement a week before closing to review the costs.

Wharton professor Jack Guttentag, also a Post contributor, thereafter wrote a column in which he at times praised the new Good Faith Estimate being redesigned by HUD and at other times calling it “disappointing”.  He claims that an “odious network” of relationships exist between lenders and third-party service providers, such as title companies, which should be eliminated.  For instance, Guttentag suggests that “if lenders want title protection, they should buy it and pay for for it, passing the cost to borrowers in the rate and points.”

In reading these articles, I couldn’t help but be stunned that the two could appear in the same publication.

Guttentag broadcasts the same tired diatribe: mortgage providers are one step off (I’m not sure whether it’s a step up or down) of Beelzebub himself.  In Guttentag’s own words, lenders will charge you “as much as they can get away with”.  He also suggests that any changes in pricing practices which would (gasp) benefit the borrower would surely alienate and be opposed by mortgage brokers.

Merle may lack Guttentag’s curriculum vitae, but she has presented a far more reasonable and rational view.  While far from promoting mortgage lenders as the greatest thing since sliced bread, she encourages homeowners to ask questions, to search out the best opportunities and to monitor their loan closely in order to make sure that they get the optimum loan.  She suggests that despite the extra legwork needed, homeowners must take the time and the responsibility to find and do business with the mortgage providers not only with the best pricing, but the ones that will clearly show the costs that are being paid.

To Guttentag especially, I would suggest he look into the self-policing that many in our industry-yes, including yours truly-are espousing.  It was not Guttentag and his Wharton colleagues (many of whom are the greatest minds in academia and have my admiration) who developed the transparent pricing model that is rolling out across the U.S.  It is coming from the industry itself.  (Seen a RateWindow™ box around anywhere?)

Likewise, there are many mortgage professionals who have long offered reasonably priced mortgage loans, passed through actual third party costs and never utilized “junk fees” or abused the YSP to enhance profit.  And while I and those like me don’t believe that individual lenders should be restricted by the government in the amount of fees that they charge, we absolutely belive that there should be both clarity and transparency in lending.  (Back to that pesky RateWindow™ thing again.)

Why?

Because with transparency, it is easy for consumers to find the best rate, the best price, the best deal and the best lender for them.  Those who provide lousy service, astronomical costs and ridiculous rates will go out of business.

I know, I know-I didn’t graduate from Wharton, and the whole capitalism thing is probably just a crazy idea that happens to be a few hundred years old.  But you know, it just might work…

It was in one of my daily online news gathering moments that I found a story on CNNMoney.com with the headline: “A Plan to Jumpstart the Mortgage Market”.

Obviously, I’m a fan of jumpstarting the mortgage market and am, in fact, working daily to make just such a thing happen.

As such, I read on to the subheading which began, “An industry outfit hopes that by making it easier for investors to understand pools of mortgage-backed securities….”  Now THAT really caught my attention.

It seems that a private, industry-based group, the American Securitization Forum, has launched Project RESTART.  Its goal: to rebuild investor confidence in mortgage-backed securities, especially in the secondary market with loans not backed by Fannie Mae or Freddie Mac.

How do they plan to do it?

According to the story, it’s simple: they’re going to make “the process of securitizing loans for investors more transparent so they can more clearly understand the nature of the mortgage pools they purchase.”

And why, you might ask?

Check this out: because it “would allow investors to better assess the risks and rewards…”

Well good heavenly days, why didn’t someody think of such a novel concept as transparency in the mortgage business before?  Oh wait-they did.  Or, more specifically, we did.  But once again, I digress.

This story underscores why transparency is good business both on the borower level and on the larger level of the mortgage investor.  Being able to see all of the information and understand all of the information is key to any individual making a good financial decision.  It is the individual-whether a homebuyer or an investor-who needs the opportunity to determine, based on his or her assessment of risk versus reward, what choice he or she is willing to make.

Based on the information in the article, I think that the American Securitization Forum is right on target in the plan that is being proposed.  Anything that brings more transparency to this industry is sure to bring more consumer and investor confidence to it.  I applaud them for their efforts, and gladly welcome them to the mortgage transparency marketplace.

This blog is intended for informational/entertainment purposes only and is not meant to provide any financial or legal advice.

In that release, OTS Director John Reich was quoted as follows: “Although this institution was already in distress, I am troubled by any interference in the regulatory process.”

Reich was referencing a letter written by Senator Charles Schumer (D-NY) to the OTS and the FDIC expressing his concerns about IndyMac, which was in the process of restructuring and pursuing a recovery after taking a significant hit over the last year.  Specifically, he wrote “IndyMac’s financial deterioration poses significant risks to both taxpayers and borrowers and…the regulatory community may not be prepared to take measures that would help prevent the collapse of IndyMac or minimize the damage should such a failure occur.”

Senator Schumer’s concerns may have been valid.  The OTS, at least, was aware of the IndyMac situation and were working with the bank to bring it back into a more stable position.  What was unfortunate, however, is that the letter was released to the press-and the impact was devastating to IndyMac and, potentially, many of its depositors.

During the next 11 business days, $1.3 billion-yes, billion with a “B”-was withdrawn from IndyMac.  The removal of that amount within such a short timeframe threw the bank into crisis, necessitating its close.  Although the bank is now back open, having been transferred to the FDIC, consumers are still lining up-literally-to withdraw their funds.  And that’s not all.  Consumers across the nation have become increasingly edgy, wondering if their bank is next.

Hey-IndyMac was having some troubles, and I’m not going to say that they were in the best of shape.  They were at the forefront of offering no-doc loan products, and they got hit hard when housing prices adjusted and homeowners defaulted.  But, as noted in the OTS’s press release, they were reacting to market changes, responding to OTS concerns and actively seeking a significant cash infusion.  The decision to release Mr. Schumer’s letter, however, virtually destroyed any of Indy’s chance at recovering-and may have actually put depositors at higher risk for loss.

I am forced to point out that the senior senator from New York didn’t decry the mortgage industry when home prices in his state were skyrocketing and mortgage loans were being handed out like Pez candies.  He, like many of his colleagues from both sides of the aisle, rode to re-election on the strong housing market, seeming to forget that with every up in the market, there must also be a down.

Perhaps-even if it is too late for IndyMac-a valuable lesson has been learned here.  People in the public eye who have easy access to media outlets need to use wisdom and think about what the ultimate impact of their words might be.

We can only hope.

This blog is intended for informational/entertainment purposes only and is not meant to provide any financial or legal advice.

As written, the plan will, among other things, do away with no-income verification loans, limit (or ban) prepayment penalties, require lenders to consider the borrower’s ability to repay the loan, and require mortgage advertising to contain information about rates, monthly payments and other features.

I have to give the Board another pat on the back for one crucial decision that they made as part of the amendment process.  As reported by Sue McAllister in Mercury News, the Fed did decide not to support the proposal that yield spread premiums (YSP) be eliminated-although they will review alternatives that will prevent excessive broker fees.

These rules, most of which will take effect on October 1, 2009, are a good first step.  And it was a good call not to get rid of YSPs.  But you know what?  In my book, they still missed the point.

The best way to protect consumers is for lenders to provide them all of the information about their loan-including all of the pricing information-in a way that they will understand.  In other words, the entire process must be made absolutely transparent.

Making the loan process transparent will allow the YSP to serve the purpose for which it was originally designed: to help consumers get the loan that works best for them.  The YSP can be a huge help for people who qualify to buy a home, but need a little help with the closing costs.  And it also provides a way for them to “buy down” to a lower rate to maximize their savings both monthly and over the term of the loan.  Getting rid of the YSP only harms the consumer it was meant to assist.

Without this transparency, however, there will always be the opportunity for a mortgage broker to take advantage of his customers by manipulating the YSP to his advantage-and offering only those rates and programs which will put the money in his pocket.

Mr. Bernanke, I congratulate you and your colleagues on taking a step in the right direction.  Now, keep on going.

This blog is intended for informational/entertainment purposes only and is not meant to provide any financial or legal advice.