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Wishes everyone a Happy Thanksgiving!  Make it a great holiday!

The Fed announced today it will purchase up to $600 billion in mortgage backed securities issued by Fannie, Freddie and Ginnie Mae.

As a result, 30 year fixed rates drop to 5.50%. This is great news!  What isn’t such great news is that those in need of a “hand up” are NOT going to get it.

Image by robertodevido via Flickr

There are millions of American Tax Payers that given a few months time, forebearance of arrears, or other economic relief, could make good on their financial obligations.  I have spoken with two such people in the past month.  Unfortunately, they will each probably end up losing their home.  And, after the foreclosure, will have a long road ahead before being able to purchase another one.

This Foreclosure Epidemic is not what the lawmakers are striving to solve. Instead, the solution is to prop up the financial institutions, add liquidity to the lending markets, and make sure that those wanting to make purchases, or business investment in the future, will be able to do so.

This is great for our economy, and I believe that it will get the economic wheels put back into motion.

Unfortunately, I think our law makers have fallen shamefully short! There certainly could have been a way to allocate a portion of the $$Billions, potentially $$Trillions to help those most in need, and at the center of this crisis.  The homeowner that is behind on their payments, and facing foreclosure has no relief in sight.  The most damaged from this crisis are the only ones not getting a piece of the action.  They will not get help today, or most likely ever.  And, for years to come, the tightened lending criteria will prevent them from entering the real estate market again.

I think it’s a shame!

Here is some more information for those of you wanting to get your read on.  This is pretty long, but I wanted to re-publish it in it’s entirety:

By Scott Lanman and Dawn Kopecki

Nov. 25 (Bloomberg) — The Federal Reserve took two new steps to unfreeze credit for homebuyers, consumers and small businesses, committing up to $800 billion.

The central bank will purchase as much as $600 billion in debt issued or backed by government-chartered housing-finance companies. It will also set up a $200 billion program to support consumer and small-business loans, the Fed said in statements today in Washington.

With today’s announcement, the central bank is starting to use some of the unorthodox policy tools that Chairman Ben S. Bernanke outlined as a Fed governor six years ago. Policy makers are aiming to prevent a financial collapse and stamp out the threat of deflation.

“They’re trying to put funds into the system, trying to unfreeze these markets,” said William Poole, the former St. Louis Fed president, in an interview with Bloomberg Television. “Clearly, the Fed and the Treasury are beginning to take a large amount of credit risk.”

The Fed will purchase up to $100 billion in direct debt of Fannie Mae, Freddie Mac and the Federal Home Loan Banks and up to $500 billion of mortgage-backed securities backed by Fannie, Freddie and Ginnie Mae, the statement said.

Help for Housing

“This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally,” the Fed said.  Fannie and Freddie bonds rallied. The yield premium on Fannie Mae’s five-year debt over similar-maturity Treasuries tumbled 21.5 basis points to 114.7 basis points as of 8:35 a.m. in New York, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.

“The cheaper that they could issue their debt, the more aggressively they should be able to buy mortgages in the secondary market,” said Alan Bosworth, director of agency trading at Vining Sparks in Memphis, Tennessee.

Separately, under the new Term Asset-Backed Securities Loan Facility, the Fed will lend up to $200 billion on a non-recourse basis to holders of AAA rated asset-backed securities backed by “newly and recently originated” loans, such as for education, automobiles, credit cards and loans guaranteed by the Small Business Administration, the Fed said.

Commercial Paper

The ABS program is similar to the Fed’s effort to bring down the cost of financing for commercial paper, the short-term debt companies issue to finance payrolls and other expenses, because it goes beyond banks.

“What the Fed has been trying to do is get a sense of what works and what doesn’t work,” said Derrick Wulf, who helps manage $70 billion in mostly fixed-income assets at Dwight Asset Management Co. in Burlington, Vermont. “One of the things that has worked is the commercial paper facility.”

Wulf added that “it can certainly improve credit conditions for consumers.”  The Treasury will provide $20 billion of “credit protection” to the Fed in the lending program, using funds from the $700 billion financial-rescue package. The Treasury said in a statement that the facility may expand over time and cover other assets, such as commercial and private residential mortgage-backed debt.

‘Continued Disruption’

On the ABS facility, the Fed is trying to avoid having “continued disruption of these markets” that would limit lending and “thereby contribute to further weakening of U.S. economic activity,” the central bank said.

Under the new lending program, known as the TALF, the New York Fed will auction a fixed amount of loans each month for a one-year term. Assets will be held in a special-purpose vehicle to be created by the Fed. The program will stop making new loans on Dec. 31, 2009, unless the Fed Board of Governors extends it.

Lenders providing credit under the TALF “must have agreed to comply with, or already be subject to,” executive-compensation restrictions in the October bailout law, the statement said.  The Fed will start buying the direct debt of government-sponsored enterprises — Fannie, Freddie and a dozen federal home loan banks — through primary dealers in government debt from next week. The purchases of mortgage-backed securities will be done through asset managers, and officials aim to begin the effort by year-end.

Purchases of both types of debt “are expected to take place over several quarters,” the Fed said.

A common question I get asked is “Should we decorate for the holidays while our home is on the market?”

My answer is always “Yes, within reason!”

Here are a few simple rules to follow:

• If you live in a condo or small home, make sure your decorations are small in scale, too. Consider a table-top tree instead of a full-size one.

• Even in a large home, try to keep decorations to a minimum.

• Resist the urge to decorate every room in the house.  Try to stick to one or two rooms. You want buyers to look at your home, not your holiday trimmings.

• You never want photos taken of your home while holiday decorations are up.   Just like a yard full of snow, it tells buyers how long your home has been on the market.

• Try to avoid the extra clutter which is common during the holidays. Buyers won’t appreciate that you’ve turned the dining room into a gift wrapping station.

• Holiday baking can create some wonderful smells, but to really impress buyers, put out a plate of treats for them.

• Resist the temptation to have holiday music playing during showings. Not everyone enjoys it.

Keep in mind that buyers don’t want to be looking during the holidays, but some are forced to. It may be tempting to take your home off the market for a few weeks, but you may be missing out on these very serious buyers. With the inventory reduced, your home will stand out even more.

Enjoy the holidays, keep your home in good showing condition, and your biggest wish may come true!

How does making an inquiry on your Credit Report effect your credit score???

Image via Wikipedia

When a consumer pulls their own credit report, it is considered a “consumer disclosure” request and therefore their credit scores will not be impacted by the pull.  However, anytime a creditor accesses a consumer’s credit report it posts a credit inquiry. The credit report keeps a record of who pulled the credit report and on what date.  The credit bureaus are required to keep a complete list of all inquiries into a credit report for, in most cases, 24 months.  According to credit scoring research, consumers who are actively shopping for credit are higher credit risks than consumers who are not.  Since there is a correlation between shopping for credit and being a higher credit risk, an inquiry will, in some cases, lower a consumer’s credit score.

FICO scoring models have logic built into them that addresses “rate” shopping for auto and mortgage lending.  The models are smart enough to discriminate between comparison-shopping for the best interest rate and trying to open many credit accounts in a short period.

While the actual number of points that an inquiry is worth is a closely guarded secret, it is safe to say that only consumers who are “excessively” shopping for credit are seriously damaging their scores.  Consumers should shop and apply for credit only when they need it and, optimally, only after getting their credit and scores in good order.

This is a great topic for discussion, so please leave your comments and questions below.  Hopefully, this can be a learning experience for us all!

The number of unsold homes in the Denver area continues to decline. In October there were 23,120 homes on the market, a 20.1% drop from 2007!  Inventory hasn’t been this low since January 2005, when there was slightly less than 21,000 homes available.

One of the primary reasons for the lessening inventory is the fact that would be home sellers, are not putting their homes on the market given the current conditions.  Many sellers we work with are choosing to be landlords, or just sit tight until the competition from bank owned properties subsides.  Unfortunately, they may have to wait a while.  I predict the REO properties will continue to dominate our landscape for the next 6-9 months.

Another reason for the smaller inventory numbers is that we’ve seen investor money start to pour in.  There has been 3 occassions in the past month where Get Home Denver Team clients, have lost buying opportunities due to bids on properties we identified.  These multiple offer scenarios are a good sign that this market is on the rebound!

There are some really good deals out there, and investors are starting to gobble them up!  We scour the market on a daily basis, and present these deals to our clients.  If you would like to be included on these deals, simply contact us and I’ll make sure you are receiving this info!

The Parker Road Corridor study extends along the eight mile stretch of Parker Rd. from Hampden on the North, to E-470 on the South.  Currently Traffic volumes range from 40,000 vehicles per day north of E-470 to over 80,000 per day just south of Hampden.  Forecasts for the year 2035 estimate 95,000 and 145,000 respectively.

Now that we have the facts, and assumptions how will this get fixed? This stretch of road is already congested and handling double the traffic is going to be quite a challenge.  I’ve alread discussed the Parker Rd. / Arapahoe Rd interchange, in my opinion, the worst of the problems.

The Corridor Project objectives are as follows.

• Collaborating with local jurisdictions to find creative solutions.
• Providing roadway and intersection improvements.
• Expanding the the opportunities for mass transit, bicycle and pedestrian facilities.

Project website: ParkerRoadCorridor.com
Bryan Weimer
Project Manager
bweimer@co.arapahoe.co.us

• Accomodating and supporting previous transportation and infrastructure improvements.
• Enhancing the image and design character.
• Minimize the community and environmental impacts of the improvements.

Other Area Improvements

• Hampden & Buckley: Construction of additional turn lane
• Parker & Orchard Rd.: Improve lanes
• Broncos Pkwy & Peoria St.: Improve alignment of lanes and install traffic signal.
• Smoky Hill Rd.: Widening of Smoky Hill from 4 to 6 lanes from Buckley Rd. to E-470
• Arapahoe Rd.: Widening of Arapahoe from 2 to 6 lanes from Waco to Himalaya.  Conceptual design is underway but Funding is currently not available)

Some good news from the State of Colorado Department of Treasury!

Cary Kennedy, State Treasurer
Eric S. Rothaus, Deputy Treasurer

………………………………..

Treasury Notes, October 2008

We all have been watching closely as our nation’s credit markets have experienced extreme stress in recent months. The collapse of some of our nation’s largest and longest-standing financial institutions has caused a crisis of confidence – and liquidity - in the global financial system. It is not yet clear how long these challenges will last or how broadly the impacts will be felt.

The good news is that Colorado’s economy is outperforming the rest of the nation. However, poor real estate and credit conditions continue to slow our state’s economy.

Colorado Ranking vs. The Rest of the Country

When selling, it would be great to update your home, and make it more desirable to buyers. But, in reality, most sellers have no budget or a very small one to work with. The good news is that there is still hope.

There are many things homeowners can do to prepare their home for the market and improve the chances for a successful sale:

1. Cleaning your home is probably the most important task you can take on for no money. Dirt, dust and bad odors are the biggest turnoffs for buyers. So, roll up your sleeves and make your home sparkle!
2. Move or remove! Two very important words, which will help make your home look more spacious. Move furniture away from walls. Placing furniture around the perimeters of a room make it appear smaller. The ability to see more walls will actually create more visual space. Remove all furniture which does not add function or beauty. It is not necessary for every space to be filled.
3. De-personalize and de-clutter! It’s very important for buyers to see your home, not your stuff.
4. Painting is a very low-cost way of brightening up your home, making it appear more clean and modern. Even if you only do an accent wall, it will create drama, and perhaps draw the eyes of buyers away from dated flooring. A freshly painted front door will really add to the curb appeal.
5. Get creative! Appliances can be painted, tubs and showers re-glazed, at a much lower cost than replacement. New lampshades can modernize old lamps for a fraction of the cost of a new lamp. Bring old wood back to life with a treatment of wood oil. Brass fireplace doors can easily be painted with heat-resistant paint. Bathroom mirrors can be updated by framing them with molding you have painted or stained. Heavy drapes can be replaced with inexpensive sheer panels. The options are endless. Home improvement magazines or TV shows are a great source for other low-cost ideas.

So, don’t get discouraged when you realize there is little or no money for fixing up your home. Maybe, your home won’t be the best on the market, but with a little hard work and imagination, you can make your home the best it can be!

Daylight Savings Time ends on Sunday and will start up again on March 8th, 2009.  Don’t forget to set you clocks back one hour Saturday night before you go to bed!

For the record, I hate it getting dark at 5pm!

For more information on Daylight Savings Time you can check out these sites.

http://aa.usno.navy.mil/faq/docs/daylight_time.php

and

http://en.wikipedia.org/wiki/Daylight_saving_time