Wade's Insights

From CEOs to Opera Singers – How to Harness the “Superstar Effect”

2010-10-27T06:26:00.000-07:00

From CEOs to Opera Singers – How to Harness the “Superstar Effect”

This is what I feel like working with lenders on loan mods and short sales

2010-10-07T10:39:00.000-07:00

Testimonial from a Recent Satisfied Client

2010-07-28T17:25:00.000-07:00

Dear Wade

We both thank you for being patient with this whole process. We are extremely satisfied with your knowledge, professionalism, and the "never give up" attitude. We hope that this is not the end of our "business transaction". We believe we can always count on you on other real estate related matter that we might later encounter. If we know anyone who is planning to buy a house we will definitely refer you to them. Thank you both Wade and Karen. You are both such sweethearts. We hope that your business will continue to prosper.

Regards,
Minh and Thuy

Goldman Sachs Pay $550 Million Fine - Big Deal.

2010-07-27T16:16:00.000-07:00

You may have heard about Goldman Sachs paying a $550 million fine to the Feds for fraud — on the condition they admit to no wrongdoing. For you and me, $550 million is a lot of money. For Goldman, that's three-days income.

You may also know why they were fined. It seems they were selling collateralized debt obligations (CDOs) as an asset to clients like big banks, pension funds, and governments.

At the same time, another client named Paulson, not related to Treasury Secretary Paulson, was creating another so-called "asset" betting against the CDOs. Here's the problem: Goldman allowed Paulson to select the so-called "assets" that were included in the CDOs he was betting against. Goldman allowed Paulson to literally stack the deck with losers.

Now, if this is confusing, let me simplify. It would be similar to you going to Las Vegas, walking up to the black jack table, and begin playing with only one other player at the table. For an hour, all you get are losing cards. Meanwhile, the other player is winning every hand. Later on you find out that the other player paid the dealer to deal you only losing cards.

How would you feel about being cheated and about the dealer? What if your losses were your life savings and your retirement? Would you be OK with the dealer paying three-days wages to the gambling commission and being allowed to continue working?

Personally, I think Goldman's $550 million fine is a joke. It hardly begins to reflect the pain these large banks have caused throughout the world. Think of the millions of people who've lost their homes, their jobs, their businesses, their savings, and their
retirement. $550 million is a drop in the bucket when compared to the trillions in debt taxpayers will have to pay back via higher taxes.

If the world knew that Las Vegas dealers were cheating, Las Vegas would close. But in the world of banking, crooked dealers are only fined, not shut down.

There is something very rotten going on at the highest echelons of global financial power. This is why I'm an advocate for financial education so that you can protect yourself from crooked dealers.

Source: RichDad

Why I Like Land Trusts

2010-07-14T13:59:00.000-07:00

The land trust is a very powerful tool for the savvy real estate investor. A land trust is a revocable, living trust used specifically for holding title to real estate. Each property is titled in a separate trust, affording maximum privacy and protection. I have been using them for about a decade now. Here's the reasons why:

Seven reasons to use land trusts:

1. Privacy. In today’s information age, anyone with an internet connection can look up your ownership of real estate. Privacy is extremely important to most people who don’t want others knowing what they own. For example, if you own several properties within a city that has strict code enforcement, you could end up being hauled into court for too many violations, even minor ones. Having your real estate investments titled in land trusts makes it difficult for city code enforcement to find who the owner is, since the trust agreement is not public record for everyone to see.

2. Protection from Liens. Real estate titled in a trust name is not subject to liens against the beneficiary of the trust. For example, if you are dealing with a seller in foreclosure, a judgment holder or the IRS can file a claim against the property in the name of the seller. If the property is titled into a trust, the personal judgments or liens of the seller will not attach to the property. This effectively separates the owner or seller from the property.

3. Protection from Title Claims. If you sign a warranty deed in your own name, you are subject to potential title claims against you if there is a problem with title to the property. For example, a lien filed without your knowledge could result in liability against you, even if you purchased title insurance. A land trust in your place as seller will protect you personally against many types of title claims because the claim will be limited to the trust. If the trust already sold the property, it has no assets and thus limits your exposure to title claims.

4. Discouraging Litigation. Let’s face it, people tend to only sue others who appear to have money. Attorneys who work on contingency are only likely to take cases which they can not only win, but collect, since their fee is based on collection. If your investment properties are hard to find, you will appear "broke" and less worth suing. Even if a potential plaintiff thinks you have assets, the difficult prospect of finding and attaching these assets will discourage litigation against you. This is a huge benefit!

5. Protection from HOA Claims. When you take title to a property in a homeowner’s association (HOA), you become personally liable for all dues and assessments. This means if you buy a condo in your own name and the association assesses an amount due, they can place a lien on the property and/or sue you PERSONALLY for the obligation! Don’t take title in your name in an HOA, but instead take title in a land trust so that the trust itself (and thus the property) will be the sole recourse for the homeowner’s association’s debts.

6. Making Contracts Assignable. The ownership of a land trust (called the "beneficial interest") is assignable, similar to the way stock in a corporation is assignable. Once property is titled in trust, the beneficiary of the trust can be changed without changing title to the property. This can be very advantageous in the case of a real estate contract that is non-assignable, such as in the case of a bank-owned or HUD property. Instead of making your offer in your own name, make the offer in the name of a land trust, then assign your interest in the land trust to a third party.

7. Making Loans "Assumable". A non-assumable loan can become effectively assumed by using a land trust. The seller transfers title into a land trust, with himself as a beneficiary. This transfer does not trigger the due-on-sale clause of the mortgage. After the fact, he transfers his beneficial interest to you. This latter transaction does trigger the due-on-sale, but such transfer does not come to the attention of the lender because it is not recorded anywhere in public records. This effectively makes a non-assumable loan "assumable".

These are just a few of the uses I found for a Land Trust.

Quote of the Century? What Do You Think?

2010-07-14T13:47:00.000-07:00

Some people have the vocabulary to sum up things in a way you can understand them. This quote came from the Czech Republic.

"The danger to America is not Barack Obama, but a citizenry capable of entrusting a man like him with the Presidency. It will be far easier to limit and undo the follies of an Obama presidency than to restore the necessary common sense and good judgment to a depraved electorate willing to have such a man for their president. The problem is much deeper and far more serious than Mr. Obama, who is a mere symptom of what ails America . Blaming the prince of the fools should not blind anyone to the vast confederacy of fools that made him their prince. The Republic can survive a Barack Obama, who is, after all, merely a fool. It is less likely to survive a multitude of fools such as those who made him their president."

Who Will Be The Next One To Lose Their Job?

2010-07-12T15:06:00.000-07:00

I find it mind-boggling that our leaders don't seem to understand why unemployment is so high. While the “official” report places unemployment at 10 percent, it's actually much higher when you count the people who've been unemployed for so long that they've given up looking for a job—or those who are quite happy not having one. When you count those categories, we’re looking at over 20% unemployment.

One simple reason why there are fewer jobs, especially in developed countries such as the US, Europe, England, and Japan, is because wages are too high. Today, US wages are substantially higher than wages in emerging countries. Why would a business owner want to pay $20/hr to US workers when they can higher someone for $5/day in China?

Today, the highest paid workers in America aren't from the private sector—they're in the government. Although many state and local governments are letting people go, the federal government is hiring and paying wages that are significantly higher than the private sector, on average over $71,000 per year for federal workers vs. $44,000 for private sector employees. This makes our economic situation worse because in order to pay for those high-paid workers and their benefits, the government must print more money and increase taxes. This leads to inflation, and more probably hyper-inflation down the road.

In England, the new British government has declared war on middle class benefits, the poor, and parents by cutting many cherished social programs. Meanwhile, here in America, we're increasing benefits for federal workers and the poor—the healthcare bill is a good example. It seems to me that the US should learn from Britain, since Britain is about five years away from bankruptcy. If the US keeps increasing benefits for government workers, the US will go bankrupt faster.

Unfortunately, politicians see the world in terms of election to election—not in terms of the long run. They'll do whatever it takes to get re-elected, which is what the Democrats are doing today. Business people and the rich, however, need to plan for the long term. And they need to see and anticipate the consequences of politicians' short-term, reelection-oriented actions.

For now, in the US, the smart thing to do is get a federal job. That's a good move in the short term. But if you look at Britain, that choice may prove to be a bad idea.

So who will lose their jobs in the near future? I predict it will be anyone who expects to be paid more and do less work that will eventually lose their job. As the bankruptcy of Britain and the US looms, job cuts will come—and high-paying jobs will be the first to go.

For those of you who have read in this field, you know that it's the Fed and the world's central banks printing excessive amounts of counterfeit money that's keeping this economy from going into a depression. The problem is that printing money and creating multi-trillion dollar deficits can't go on forever. If our leaders don't make drastic changes, as Britain and Germany are doing today, the global economic collapse will be severe. Always remember, the bigger the boom the bigger the bust—and it’s very possible that the biggest bust in history is still coming.

Rather than look for a higher paying job, I continue to recommend starting your own business, educating yourself financially, buying some silver rather than saving cash, and preparing for the worst. If the bust never comes, you'll still be better off in the long run.

Britain has about five years to make changes, and the US has about ten. If our leaders make the appropriate changes, we'll all be better off. But if they don't, I'm afraid we're in very serious trouble.

Sources:

“Conspiracy of the Rich” by Robert Kiyosaki
“The Dollar Crisis” by Richard Duncan
“The Corruption of Capitalism” by Richard Duncan
“Guide to Investing in Gold and Silver” by Michael Maloney
“The Ascent of Money” by Niall Ferguson

Are We Seeing The End of Europe?

2010-06-15T16:07:00.000-07:00

Robert Kiyosaki reports that he is currently on a flight from Germany to England. So far he’s been to Warsaw, Poland; Tallin, Estonia; Prague, Czech Republic; Stuttgart, Germany; and now London, England.

He says the question that he has been dealing with on his journey through Europe is: If the Euro crashes, as the dollar eventually will, what will happen to the European Union? Already, the doom-and-gloomers are predicting a horrifying future for many Europeans.

In London, the headline of the British Newspaper, The Independent, reads: WELFARE CUT. PENSIONS CUT. SPENDING CUT. (AND TAX RISES TO COME)

The same basic headline can be found all across Europe. In other words, Europe is crashing and the people that are paying the price are the poor, the pensioners, and the middle class.

On an interior page of the same British paper, the headline blares, "OSBORNE'S BOMBSHELL: CHANCELLOR DECLARES WAR ON MIDDLE-CLASS WELFARE."

George Osborne, the English Chancellor, warned the cabinet that the spending party is over and the middle class is going to foot the bill. The article states that benefits for children, the unemployed, and the sick and disabled will be reduced or cut altogether. Also targeted are tax credits, special benefits, and the generous pensions paid to public servants. That does sound like a war on the middle class.

The same thing is going on all over Europe. In Germany, their newspapers announced that Germany's chancellor is preparing to cut $100 billion from the German economy. Many citizens are angry, not at Greece, but at France for pressuring the EU to bail out Greece. It seems that France wants the bailout because Greece owes the French a lot of money, and the German taxpayers are upset that they have to share in France's bailout.

This puts Germany at odds with France because the French seem to want control of the EU and to be more liberal while the frugal Germans are willing to have poor countries go bankrupt. Could this be the end of the European Union and the European Central Bank? I don’t think so, but who knows. The point to remember is that this is the conspiracy in action. The objective of the Rich Progressive movement is to make people poorer through higher taxes and inflation while they get richer.

The tragedy is that most people are angry but seem content to let their government leaders solve the problem.

What does this mean?

To me, it's ironic that the US is increasing social programs while Europe is cutting them. I believe the world is heading for a depression, the New Depression. It will not be the same as the old depression, the Great Depression.

One of the differences will be how you and I respond to the problems ahead. Most people save, save, save because cash is king in a depression. For me, it is more prudent to go into more and more good debt because, after 1971, the dollar was no longer backed by gold and became debt. As the world economy slides towards a depression, prices will come down and the opportunity to use more and more debt to acquire assets will increase.

The tragedy is that while it's smart for most people to save, they'll be the ultimate losers as the dollar, or the euro, or yen, or peso becomes less and less valuable, and as taxes and inflation rob people of their wealth. Rather than saving money, my portfolio will increasingly center around gold, silver and positive cash flow—assets.

A very important question is: what are you doing? This is the greatest wealth transfer in the history of the world. This is a great time for those with the appropriate financial education and a horrible time for those following the old rules of money.

Looking at the headlines from Europe, it's obvious the rich plan on staying rich and asking the poor and middle class to pay the price for their mistakes. The crisis is only beginning for many people who once thought the crisis was over.

Remember, money stopped being money in 1971 and became debt. And the last depression lasted from 1929 to 1954, a period of 25 years. While I doubt the two depressions will be the same, one thing is for certain, many who were rich or middle class in 2005 will be poor or broke in the next ten years.

Please stay alert and keep increasing your financial education. I don't want you to be one of the victims of this crisis—a crisis that is just beginning. Instead make this the opportunity of your lifetime.

2010-06-10T14:15:00.000-07:00

Title : Rich Dad, Poor Dad
Author : Robert T. Kiyosaki With Sharon L. Lechter, C.P.A. Publisher : Warner Books Ed., 2000
ISBN :
Pages : 207

The Big Idea

FINANCIAL LITERACY - FINANCIAL INDEPENDENCE
A true tale of two dads - one a highly educated professor, the other, an eighth grade dropout. Educated dad left his family with nothing, except maybe some unpaid bills. The dropout later became one of Hawaii's richest men and left his son an empire. One dad would say, "I can't afford it" while the other, asked, "How can I afford it?"
Rich dad teaches two boys priceless lessons on money, by making them learn through experience. The most important lesson of all is How to Use Your Mind and Time to create personal wealth. Free yourself from the proverbial "rat race". Learn to spot opportunities, create solutions and "mind your own business". Learn to make money work for you, and not be its slave.
Rich Dad's Words of Wisdom: You are what you Think.
· A job is a short-term solution to a long-term problem.
· A highly paid slave is still a slave.
· Why climb the corporate ladder when you can own the ladder?
Good Thinking:
Two roads diverged in a wood, and I- I took the one less traveled by,
And that has made all the difference. Robert Frost, from ‘The Road Not Taken'
Overview
There is a Need.
The rationale for teaching people financial literacy comes from the fact there is no real job security these days. Even after years of toil, the poor and middle class may find they do not have sufficient funds for their children's college education, or their own retirement. Why work for a corporation, the
government, and the bank all your life? Awaken your financial genius and gain financial independence and freedom!
Lesson 1: The Rich Don't Work For Money
At age 9, Robert Kiyosaki and his best friend Mike asked Mike's father (Rich Dad) to teach them how to make money. After 3 weeks of dusting cans in one of Rich Dad's convenience stores at 10 cents a week, Kiyosaki was ready to quit. Rich Dad pointed out this is exactly what his employees sounded like. Some people quit a job because it doesn't pay well. Others see it as an opportunity to learn something new.
WORK TO LEARN
Next Rich Dad put the two boys to work, this time for nothing. Doing this forced them to think up a source of income, a business scheme. The opportunity came to them upon noticing discarded comic books in the store. The first business plan was hatched. The boys opened a comic book library and employed Mike's sister at 1$ a week to mind it. Soon they were earning $9.50 a week without having to physically run the library, while kids read as much comics as they could in two hours after school for only a few cents.
Lesson 2: Why Teach Financial Literacy? They don't teach this at school.
The growing gap between rich and poor is rooted in the antiquated educational system. The system trains people to be good employees, and not employers. The obsolete school system also fails to provide young people with basic financial skills rich people use to grow their wealth. Know your options and use this knowledge to build a formidable asset column.
In an age of instant millionaires it really isn't about how much money you make, it's about how much you keep, and how many generations you can keep it.
Steps to get out of the proverbial rat race:
1. First, understand the difference between an asset and a liability.
Assets Liabilities
* Real Estate * Mortgages
* Stocks * Consumer Loans
* Bonds * Credit Cards
* Notes
* Intellectual Property
The poor have day-to-day expenses, the middle class purchase liabilities that they think are assets (i.e., a home or a car), and the rich build a solid base of income-generating assets.
The middle class finds itself in a constant state of financial struggle. Their primary income is wages, as wages increase, so do their taxes. Expenses increase as wages increase. Hence the phrase "the rat race." They treat their home as their primary asset instead of investing in income-generating assets.
The rich get richer because they keep acquiring more assets and investments to generate more income, which far exceeds their expenses.
Reasons why the home is not an asset but a liability:
1. People work almost all their lives to pay off a home (30-year loans)
2. Maintenance and utilities expenses.
3. Property tax
4. House values can depreciate.
5. Instead of investing in income-earning assets, your money goes out to payments for the house.
Your losses:
1. Time that could have been used to grow value in other assets.
2. Capital which could have been invested rather than paying home-related expenses 3. Education that makes you a Sophisticated investor
If you want to buy a house, first generate the cash flow by acquiring assets, which bring income to pay for it.
Examples of real assets are:
· Apartments for rent
· Real estate
· Businesses that do not require your physical presence. You hire managers.
Average time of holding on to an asset before selling it for a higher value: 1 year
· Stocks (Startups and small companies are good investments)
· Bonds
· Mutual funds
7 years
· Real estate
· Notes (IOUs)
· Royalties on intellectual property
· Valuables that produce income or appreciate
In summary, the key steps to getting out of the rat race are the ff:
1. Understand the difference between an asset and a liability.
2. Concentrate your efforts on buying income-earning assets.
3. Focus on keeping liabilities and expenses at a minimum.
4. Mind your own business.
Lesson 3: Mind Your Own Business
KEEP YOUR DAY JOB
BUT START MINDING YOUR OWN BUSINESS.
Kiyosaki sold photocopiers on commission at Xerox. With his earnings he purchased real estate. In 3 years' time his real estate income was far greater than his earnings at Xerox. He then left the company to mind his own business full time. He knew that in order to get out of the rat race fast, he needed to work harder, sell more copiers and mind his own business.
Don't spend all your wages. Build a good portfolio of assets and you can spend later when these assets bring you greater income.
Lesson 4: The History of Taxes and the Power of Corporations
Income tax has been levied on citizens in England since 1874. In the United States it was introduced in 1913. Since then what was initially a plan to tax only the rich eventually "trickled down" to the middle class and the poor.
The rich have a secret weapon to shelter themselves from heavy taxation. It's called the Corporation. It isn't a building with the company name and logo in brass signage out front. A corporation is simply a legal document in your attorney's file cabinet duly registered under a government state agency. Corporations offer great tax advantages and protection from lawsuits. It's the legal way to protect your wealth, and the rich have been using it for generations. Do your own research and find out what tax laws will bring you the best advantages.
The Golden Rule: PAY YOURSELF FIRST.
Rich dad says paying yourself first forces you to create more sources of income to cover your expenses. It's a simple rule that works like this:
The Rich with Corporations People who work for corporations:

Earn Earn
Spend Pay taxes
Pay taxes Spend
Key Financial IQ Components:
It helps to take some courses to gain financial literacy; rich dad stresses the importance of learning -
· Accounting. It pays to know how to read financial statements. When acquiring businesses or assets you need to quickly see the financial standing of the company you are acquiring. Many grown adults do not know how to balance a balance sheet. In the long term, this knowledge will pay off for you and your business.
· Investment Strategy. This skill will sharpen with experience. Talk to investors and observe how they play the game. Kiyosaki and Mike spent many boyhood hours sitting in on Rich Dad's meetings with brokers, accountants, and attorneys.
· Market Behavior . Know the laws of Supply and Demand. No business owner can do without understanding these basic principles of the market. Bill Gates saw what people needed. Open your
eyes to opportunities. Look at what sells and who buys.
· Law Kiyosaki recommends doing everything you can to grow your business within legal boundaries. Know your corporate, state, and accounting laws.
Lesson 5: The Rich Invent Money
Self-confidence coupled with high financial IQ can certainly earn more for you than merely saving a little bit every month.
Make good use of your time and find the best deals.
An example: In the early 90's the Phoenix economy was bad. Homes once valued at $100,000 sold for $75,000. Kiyosaki shopped at bankruptcy courts and bought the same houses at only $20,000. He resold these properties for $60,000 making a cool $40,000 profit. After six more transactions of the same manner he made a total $190,000 in profit and it only took 30 hours of work time.
Rich Dad explains there are Two Types of Investors:
· Buyers of Packaged Investments.
This is when you call a retail outlet, real estate company, stockbroker or financial planner and put your money in ready-made investments. It's a simple, clean way of investing.
· The Professional Investor
Design your own investment. Assemble a deal and put together different components of an opportunity. Rich dad encourages this type. You need to develop three main skills to be this type of investor, namely how to:
· Identify an opportunity everyone else has missed.
· Raise capital
· Organize smart people
Identify an opportunity everyone else has missed.
Learn to identify hidden Freebies in business deals. For example: The real business of McDonald's isn't hamburgers. It's the free real estate underneath each franchise, on every important intersection, in cities all over the world that is the real wealth of its owners.
THERE IS ALWAYS RISK. You need to learn how to manage risk and not avoid it. Lesson 6: Work to Learn - Don't Work for Money
The Author's Odyssey
After college graduation Robert Kiyosaki joined the Marine Corps. He learned to fly for the love of it. He also learned to lead troops, an important part of management training. His next move was to join Xerox where he learned to overcome his fear of rejection. The thought of knocking on doors and selling copiers terrified him. Soon he was among the top 5 salespeople at the company. For a couple of years he was No.1. Having achieved his objective - overcoming his shyness and fear—he quit and began minding his own business.
Learn skills like PR, marketing, and advertising.Take a second job if it means learning more.
A Difference in Education
Schools train professionals. Professionals become so specialized they cannot apply themselves in other fields and need to form unions to protect their jobs. Remember you can have a profession, say, learn to be a pilot if you want to learn how to fly, but at the same time mind your own business.
The rich "groom" the next generation by training the heir in all aspects of running the business. They move him from department to department so he learns how each one relates to the other. Specialization is not the key here, but picking up important lessons from each area and seeing the business as a whole.
Rich Dad groomed Kiyosaki and Mike in the same manner. Mike would later take over Rich Dad's empire, which included restaurants, convenience stores, and a construction company. Kiyosaki created his own empire with real estate, new products and educational materials.
Three Main Management Skills
1. Management of Cash Flow
2. Management of Systems (Includes Time with family and time for your self) 3. Management of People
Five Obstacles to Financial Independence
1. Fear. Don't play it safe and cling to what you think is secure. If you don't go for it and think big you won't be able to earn big.
2. Cynicism. Don't listen to advice of others who are not doing what you intend to do. Listen to your self and those who are doing what you aim to do.
3. Laziness. Greed is good and fights laziness. Think about the freedom and money you'll have and you will put in those extra work hours. Change your thinking. Instead of saying "I can't afford it." Ask yourself "How can I afford it?" Challenge your mind to create solutions.
4. Bad Habits. Spending habits should turn into saving and investing habits.
5. Arrogance. Don't think you know everything there is to know about money. Listen to others.
Enroll in useful seminars.
Ten Steps to Awaken Your Financial Genius:
1. Find a reason greater than reality, a big dream. Think of the freedom, the lifestyle wherein you control your own time. Think of what you don't want, i.e. "I don't like being an employee".
2. Use the power of choice, daily. You can choose to watch MTV, or watch CNBC. It's how you choose to use your time and energy everyday that brings financial success in the long run.
3. Choose your friends carefully. It pays to have friends who are focused and achieving their goals. Surround yourself with friends you can learn from.
4. Master a formula. Learn a new one, and learn fast.
5. Pay yourself first. Practice self-discipline by keeping expenses low. Tenants can pay for your expenses if you rent out apartments or mini-storage, for instance. Savings are used for investing and creating more money, not for paying bills.
6. Pay your broker well. Attorneys, accountants, stockbrokers, and real estate brokers will have more incentive to work harder for you. If they make more money, it means you make more money as well. 3-7% is a good incentive.
7. Be an Indian giver. It's the concept behind ROI. (Return on investment) Invest and then take the initial money out after a time when the investment has earned for you.
8. Buy luxuries last. Let the income from your growing assets afford you the new car. Wait for your asset base to grow first. Middle class people buy luxuries first, on credit.
9. Find yourself a hero. When you play golf you can imagine you are Tiger Woods. When you do business, you can ask yourself, "What would George Soros have done if he was in my place right now?"
10. Teach and you shall receive. As in money, love, or friendship. If you give without expecting anything in return, you receive more.
According to Kiyosaki, the Japanese have a belief in three great powers:
1. The Sword (weapons)
2. The Jewel (money)
3. The Mirror (self-awareness)
The most valuable of the three is the mirror, or knowing your self. Without this knowledge of self you will have no direction in life and in your business.
To-Do List
1. Stop what you're doing. Take a step back to assess your situation. Stop doing what is not working and look for a new option.
2. Look for new ideas.
3. Take action. Find someone who has done what you want to do. Take them to lunch. Ask for tips.
4. Take classes and buy tapes.
5. Make lots of offers. Finding a good business deal is a lot like dating. You must go to the market
and talk to a lot of people, make offers, counteroffers, negotiate, accept and reject. Many single
people sit at home waiting for the phone to ring instead of going out and hitting the dating scene.
6. Take a walk through your neighborhood and look for bargain real estate deals.
7. Buy the pie and cut it into pieces. People buy only what they can afford so they think small. Think big. This goes for land and other investments.
8. Learn from history. Colonel Sanders lost everything in his 60's and started from scratch with a fried chicken recipe. Bill Gates became rich before he was 30.
ACTION ALWAYS BEATS INACTION .

What To Do About the Crash of The Future

2010-05-13T17:09:00.000-07:00

I recently read “The Dollar Crisis” by Richard Duncan. Duncan, who’s a former advisor to both the World Bank and the IMF, paints a frightening picture of the future. In his talk at a recent event, he spoke about how China will be the next country to implode due to excessive debt and government stimulus (most business loans issued by the Government will never be repaid in China. Over 50% are already in default)

The issue at hand during the event at which Duncan was one of the keynote speakers was the monster crash that is still coming and how you can not only survive but also profit from it. Some of the different ways discussed were:

1. Buy gold and silver. For most people this is the simplest way to protect your financial future. As long you can purchase gold under $2,000 and silver under $50 an ounce, your chances of surviving the coming crashes are good—if you can afford to accumulate a stockpile of gold and silver. The nice thing about gold and silver is that's a good investment, even for financially brain-dead people. It doesn't take much intelligence to go to your local coin store, buy gold and silver coins, and hide them.

2. Invest in oil and gas. For doctors, lawyers, and other high-income people, oil and gas production is a great investment. The reasons oil and gas are good investments for high-income people are the tax advantages and monthly passive income, if you invest with a good drilling company. For example, if an investor invests $100,000 in an oil project, the government grants a 70 percent tax break to the investor. And if—and that is a big if—the drilling product strikes oil or gas, the investor receives cash flow from the sale of the oil or gas every month. If an oil well produces oil for twenty-five years, the investor receives passive income for twenty-five years. On top of the passive income, the investor receives a tax break for twenty-five years on the income. That means that rather than pay taxes on their income, which they'd pay if they saved money in a bank or invested in a retirement plan, the investor gets a tax break.

3. Invest in real estate. Investment real estate, property other than your primary or vacation home, is by far best passive income investment with low to zero taxes. Unfortunately, since the Tax Reform Act of 1986, doctors, lawyers, accountants, and other such licensed professionals aren't afforded the same tax advantages professional real estate investors are granted.

The people who will do the worst when the crash comes are employees and the self-employed. When the crash comes, the central banks of the world will print more money, which will cause inflation. When inflation hits, employees and the self-employed will probably work harder and demand more money to cover their higher cost of living. This will drive them into a higher tax bracket, which means they will work harder and make more money, but they will also pay progressively higher taxes.

As stated in Conspiracy of the Rich, the recent best seller by Robert Kiyosaki, the rules of money changed in 1971. Today, millions of people are being wiped out by following the old rules of money like go to school, get a job, work hard, save money, buy a house, get out of debt, live below your means, and invest in a well-diversified portfolio of stocks, bonds, and mutual funds. Most people following these rules are working harder, trying to save money, struggling under mountains of bad debt, and clinging to hope in retirement plans filled with risky assets such as stocks, bonds, and mutual funds. On top of that, the people following these old rules are having their wealth siphoned from their pockets by the government through taxes.

While no one wants a crash, a crash is unfortunately inevitable. Those of you who've read Conspiracy of the Rich know that the Federal Reserve Bank—which is not federal, is not a bank, and has no reserves—is the primary cause of the crisis.

These organizations have done a lot of good as well as a lot of bad. Rather than protest and riot, as people are doing in Greece, I think it's smarter to learn the New Rules of Money and not be a victim of the ultra rich. We can only do this by increasing our financial education.

1st Trust Deed Investment

2010-04-16T11:11:00.000-07:00

The following is a summary of the property and the borrower for a 1st Deed of Trust:

Amount of New 1st Trust Deed: $60,000
Payment: $ 631.93
Amortized over: 300 months, balloon payment in 5 years
Interest rate: 12%
First payment: July 1, 2010

I will consider 2 Investors that would receive the following:

Minimum Investment Required: $30,000
Payment: $ 315.96

Existing Loan:

Owner has owned the property for 30 years and has 1 payment left on the original loan.

Property:

Location: Santee, CA
House: 2 BR/2 BA, 1,000 square feet, built 1979, good condition
Lot: Condo

Borrower:

Lived in home: owned home for 30 years. He bought another house 20 years ago and turned it into a rental. Has a long time renter.
Occupation: Fire Captain for San Diego Fire Department
Income: Income of over $16K/month
Length of time on job: 21+ years
Credit Score: 662

Reason for loan:

Client put the property into a Family trust a few years ago. With new, stiffer regulations in conventional financing, he has to pull himself out of the Trust and have it season for 6-12 months before he can get conventional financing.

There is a lot of equity in the home and this would be considered a safe investment even in the current real estate climate. The client will probably be refinancing in about 12-24 months.

For more information contact: Wade at 760-643-4152 or wtompson@ix.netcom.com

Second Trust Deed Investment

2010-04-01T12:00:00.000-07:00

The following is a summary of the property and the borrower for a 2nd Deed of Trust that has been drawn.

Amount of New 2nd Trust Deed: $28,500
Payment: $ 633.97
Amortized over: 60 months
Interest rate: 12%
First payment: May 1, 2010

I will consider 2 Investors that would receive the following:

Minimum Investment Required: $14,250
Payment: $ 316.98

Existing Loan:

Current 1st: $172,000; Original balance: $182,000; Originated: 1991
Arrears: $4,700
Value: $491,000
Loan to value: 35.03%
Combined LTV: 38.90% (with the new 2nd)

Property:

Location: Carlsbad, CA
House: 2 BR/2 BA, 1,400 square feet, built 1950, fair condition
Lot: 1+ acres

Borrower:

Lived in home: 30 years
Occupation: Engineer for radio and television operations
Length of time: 25+ years
Credit Score: 506

Reason for loan:

Client has fallen behind on payments on his two rental properties due to an illness in the family and because there was a long vacancy in one of his rentals. We have tried to negotiate loan modifications on his two rental properties. One is a little upside down and we are listing it for Short Sale now. The other rental has too much equity for a loan modification and is being considered for listing to sell.

There is a lot of equity in the home and this would be considered a safe investment even if the property values in the area would drop another 30%.

For more information contact: Wade at 760-643-4152 or wtompson@ix.netcom.com

Wade Thompson Opens Professional Coaching Practice

2010-03-11T12:02:00.000-08:00

Vista man helps clients identify, realize their goals

Vista - He says he's been coaching people throughout his adult life, and now Wade Thompson is marketing his motivational talent.

The Oceanside resident founded Vista-based Wade Thompson Coaching in 2010.

The business is designed to help people determine their individual challenges and goals and find ways to solve and reach them.

"When all these things are balanced, people will have a smoother ride in life," Thompson said.

“My skill sets and my goal in life is to study and effectively communicate dynamic ways of creating “true” wealth in the lives of my clients in order to assist them in recognizing their untapped potential and in achieving a meaningful, healthy and balanced life.”

Although coaching sessions vary, Thompson usually asks his clients to rate their health, money, career and personal relationships on a scale of 1 to 10. He then tells them to give a concrete description of what the rating means to them, and asks them what rating they would prefer. A concrete description of that second rating also is given.

Thompson then discusses whether that's a reasonable goal, and what his clients could do to meet it.

"I help them see their problems and goals from a different perspective," Thompson reiterated.

"Then the magic happens. All kinds of doors they thought were locked are opened and real possibilities occur."

Coaching sessions are available for a range of people, from entrepreneurs to managers, executives and people simply in transition, Thompson related.

Thompson said he's been coaching people for years.

When he was in his 30’s, he counseled people when he was pastoring Broadway Baptist Church in Santa Ana, Ca.

''People would ask me, how do I grow, not only spiritually, but as a person and in business as well?"

I would counsel them on steps to put in place that would maximize the potential for “good things” to take place in their lives. Many would see incremental change as we worked through the steps and dealt with the setbacks that naturally occur as we venture through life.

Life isn’t straight up or straight down normally and one of my favorite quotes is “Don’t wish for an easier life, wish for more capability to ease gracefully through life.” We work on the capability factor through more creativity, relationship building and ultimately leadership in their core areas.

Thompson was even a mentor after his official pastoring days came to an end.

As an Associate trainer for Challenge Systems, a real estate training organization founded by Robert Allen, I would work with clients helping them to implement the principles of real estate acquisition in their communities. At one time I traveled throughout the country holding one day follow up seminars that focused on taking book learning and applying it to their local markets.

A 1974 Chemistry major from Taylor University and 1981 theological graduate from Talbot Theological Seminary, Wade has a life-long love affair of integrating research, long-lasting values and practical application of life principles.

Desirous of putting his talents to maximum use and expand his consulting, he formed Wade Thompson Coaching.

Sessions can last a half-hour or an hour.

WADE THOMPSON COACHING
400 SO. MELROSE DRIVE, STE. 104
Vista, CA 92081
Phone (760) 643-4152

The Blessing Factor

2010-03-08T14:28:00.000-08:00

Why Good Things Always Happen to the Same People

Professor Richard Wiseman

Professor Wiseman believes that only 10% of life is purely random. The remaining 90% is “actually defined by the way you think.” In other words, your attitude and behavior determine nine-tenths of what happens in your life.

The good news is that Wiseman says that within weeks, you can learn the secrets of his “Luck” School and increase your good fortune by more than 40%.

There are four reasons why good things happen to the same people.

First, so called “blessed” people constantly happen upon chance opportunities. “Being at the right place at the right time is actually about being in the right state of mind. Lucky people also tend to be more relaxed about life, and they operate with a heightened awareness of the world around them. They spot and seize upon openings that other people miss. They also tend to be more social and maintain a “network of luck.”

Second, they listen to their hunches and make good decisions without really knowing why. Studies have shown that people’s gut feelings and hunches tend to pay off time and time again. Unlucky people often ignore their intuition and regret their decision. Over and over, survivors recount how gut feelings and intuition helped them overcome adversity.

Third, lucky people persevere in the face of failure and have an uncanny knack of making their wishes come true. They expect good things to happen. They’re convinced that life’s most unpredictable events will “consistently work out for them.” They keep going in the face of failure until they accomplish their objectives. Unlucky people gave up before they even started.

Fourth, lucky people have a special ability to turn bad luck into good fortune. Of all four defining factors involved in luck, Wiseman believes this one plays the most important role in survival. When misfortune strikes, life’s best survivors not only cope well, they often turn potential disaster into a lucky development.

Here’s a simple test to determine if you are inclined toward counterfactual thinking or luck.

If you were standing in line at the bank when an armed robber entered, fired one shot, and hit you in the arm, how would you feel, lucky or unlucky?
Imagine slipping on loose stair carpet, falling down a flight of stairs, and twisting your ankle. Luck or unlucky?

Are you prone to accidents, or possibly a klutz? The people most at risk tend to be more hyperactive, impulsive, neurotic, extroverted and inclined to use alcohol or drugs. People do encounter bad luck, but people are largely responsible for their misfortune.

Ninety percent of your life and your survival come down to the small choices you make. It seems almost too mundane to mention, but did you check the air pressure in your tires? Did you replace the batteries in the smoke detector? Did you tighten the straps on your child’s car seat? Did you get your annual mammogram? Yes, bad luck strikes and awful things happen. But nine out of ten times, we bring misfortune and accidents upon ourselves. If you want to break the cycle, you’ve got to change your mind-set and take responsibility.

What are some things you can do to turn your luck around and created more blessings? Here’s a five step program.

The first stage involves signing a “declaration” in which you pledge to incorporate the next four principles into your life for one month. This means you are going to make a real investment, and not just do lip service. Second, you create your profile by filling out a short questionnaire. The goal is to identify your strengths and weaknesses when it come to fortune? Do you maximize chance opportunities in life? Do you listen to your gut? Do you expect good things to happen? Do you turn your bad luck into good?

The third step involves incorporating a few techniques into your daily life. For instance, you need to expand your network and meet new people; practice a more relaxed attitude to life; open yourself to new experiences; and pay more attention to your gut instincts.

The fourth step involves keeping a luck journal and jotting down fortunate events that happen to you.

Eighty percent of the participants in this type of program report that their luck improves at least a little bit. The average increase is more than 40%, and it takes only a month.

It also works in the business world as well. In one case a computer company in England put around 40 employees through this process. Every month, productivity jumped 20 percent.

Resilience Booster

2010-03-05T11:30:00.000-08:00

Dr. Dennis Charney is dean of the Mount Sinai School of Medicine in New York. He is known as the reigning king of resilience studies in America. After years of study, he has come to the conclusion that everybody can boost his or her resilience by following a ten-step plan that he developed with Dr. Steven Southwick, a professor of psychiatry at the Yale School of Medicine.

The first and most important part of the Resilience Prescription is to practice optimism. Some people are born optimistic; others learn it. Either way, studies show that optimists respond better when they’re diagnosed with breast cancer and they experience fewer problems requiring hospitalization after heart surgery. Even though other studies have revealed that unguarded optimism can make your problems even worse, the key is to stay positive and hopeful while confronting reality.

The second step is to identify a resilient role model. You can choose someone you know or someone who inspires you. Lance Armstrong is a good example. So is your aunt Millie who has beaten breast cancer. Imitation is an excellent way to learn to be more resilient.

Third, develop a moral compass and unbreakable beliefs. Resilient people find strength in God, in ideals and principles greater than themselves.

Fourth, practice altruism. By helping others, Dr. Charney says, you can help yourself feel better in tough times.

Fifth, develop acceptance and cognitive flexibility, meaning the ability to learn and adapt your knowledge and thinking to new situations.

Sixth, face your fears and learn to control negative emotions.

Seventh, build active coping skills to handle your problems.

Eighth, establish a supportive social network to help you.

Ninth, stay physically fit.

Tenth, laugh as much as you can.

Interestingly enough, you don’t need to try all ten steps at the same time. Focus only on a few and you’ll see results. Bare minimum, pick out just one and take a very small step towards implementing it into your life. Practice the “Pringle Principle.” For any of you who have ever eaten a Pringle potato chip, you know that when you take that first bite from the can, you can’t stop until you’ve eaten half the can. The same applies here. When you take a small bite out of the steps to create resiliency, you often set in motion the seeds of change that lead to much bigger progress in the future.

Is This The Funniest Joke In The World?

2010-03-03T14:44:00.000-08:00

"Two hunters from New Jersey are hunting in the woods. One collapses near the end of the day and the other dials 911 for help. He tells the 911 operator that he thinks his friend is dead. He tried CPR, slapped him, poked him and threw water on his face and still no response.

The operator asks if he's sure that's his friend is really dead, or maybe just unconscious. There is a long silence that seems like an eternity and then two gunshots before he returns to the operator to say, "Okay, now what?"

Consider This: Two School Systems

2010-02-17T16:05:00.000-08:00

Education in America could use a big dose of innovation. How about one public school system for employees, and another for entrepreneurs?

By Robert Kiyosaki

In the summer of 1932, presidential candidate Franklin Delano Roosevelt promised, "I pledge you, I pledge myself, to a new deal for the American people."

Today, it is time not for a "New Deal," but a "New Mission."

America's schools need to take a page from the businesses that have been created by entrepreneurs over the past decades. Henry Ford, Bill Gates, Steve Jobs, Sergey Brin and Larry Page have all given us the road map, but the path toward entrepreneurship is often the road less traveled America's schools.

The U.S. unemployment rate is currently 9.7% in what many call a "jobless recovery." So what should we do? The problem and the solution can be found in America's educational system and its current mantra: "Go to school and get good grades, so you can get a good high-paying job." In simpler terms that means, "Go to school to become a good employee." But there are too many employees, which is why we have an unemployment problem. Today, kids just out of school aren't finding jobs. At the same time, many of their parents are going back to school for retraining. But they're not finding jobs, either.

The idea of a high-paying job for life is truly an American dream — but no longer a reality. With low-priced labor and lower-priced, higher-performance technology, high-paying American jobs will be disappearing at greater speed as they move overseas.

Two-track system

America's education system needs an injection of innovation — which is just what entrepreneurs do. We need two different public school programs: one for employees and one for entrepreneurs.

The way to train entrepreneurs is almost exactly the opposite of the methods used to train employees. Another common thread about Ford, Gates and Jobs is that they all dropped out of school. This is not to say education is not important, but training entrepreneurs is different from training people to be employees. It is much like the difference between traditional education and the military academy model.

Many of the lessons I drew upon to write my book, Rich Dad, come from the U.S. military academy system.

In 1965, I left a sleepy sugar plantation town of Hilo, Hawaii, and journeyed to Kings Point, N.Y., to attend the U.S. Merchant Marine Academy. With four years at the academy and six years as a Marine Corps pilot, including two trips to Vietnam, I gained many of the real-life skills and character traits I count on today as an entrepreneur.

Success in the military is a great bellwether signaling achievement in business. For example, the Israeli Defense Forces are a breeding ground for education and entrepreneurs, where many serve in units specializing in military technology. At the beginning of 2009, the 63 Israeli companies listed on the Nasdaq, many led by former IDF members, outnumbered those of any other foreign country, according to the book Start-up Nation by Dan Senor and Saul Singer. There are simple lessons here for America's gridlocked education system.

If I were running America's schools system, I would create the U.S. Business Academy for Entrepreneurs, modeled after our federal military academies. Admissions would be via congressional appointment along with nominations from community business leaders. The entrance exams would be rigorous; the curriculum would be very different from traditional colleges.

On first day at any of the five federal military academies, each student is required to memorize the academy's mission. In the military, mission is more important than life. After leaving the Marine Corps and starting my own business, I found many executives with MBA degrees focused only on money. Money was their only mission. If they could cut expenses by firing employees, so be it. This was unconscionable at the academy and the Marine Corps. As military officers, our mission was to serve our country and bring our troops home alive. It was drummed into our souls that our mission was more important than our lives.

The mission of the U.S. Academy for Entrepreneurs would be to create sustainable, well-paying jobs for employees by aggressive growth of the business. Too many executives are trained to grow the business through mergers and acquisitions, using massive amounts of debt. Though this might make shareholders happy, in most cases it rips the soul out of the business, loading it with debt while putting the jobs of employees at risk.

Creating real jobs

If corporate executives cannot grow a business organically, they will often repurchase their shares to make it look as if the share price is going up — again to keep shareholders happy and the CEO employed. This is business manipulation, and not the true mission of a sustainable business. The lesson learned is, a loyal employee is not as important as money.

The U.S. Business Academy for Entrepreneurs would have only real entrepreneurs as teachers. I would ask that they work for only $1 a year (think of the great entrepreneurial CEOs who have turned around their businesses doing the same). You see, if they were real entrepreneurs, they would not need the money. They would teach for the same reason the students are there: the mission to create entrepreneurs who create sustainable jobs for the country.

Whether you agree with me or not, I hope it's clear that we need to create more entrepreneurs — since only entrepreneurs can create real jobs.

We need to pledge ourselves to this New Mission: job creation by those who are true job creators.

Robert Kiyosaki is an educational entrepreneur, founder of the financial education-based Rich Dad Co. and author of best-sellers Conspiracy of the Rich and Rich Dad Poor Dad.

Some Quotes By Martin Luther King

2010-01-18T08:07:00.000-08:00

A genuine leader is not a searcher for consensus, but a molder of consensus.

Change does not roll in on the wheels of inevitability, but comes through continuous struggle. And so we must straighten our backs and work for our freedom. A man can't ride you unless your back is bent.

Never forget that everything Hitler did in Germany was legal.

Our lives begin to end the day we become silent about things that matter.

The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy. (One of my favorites, W.T.)

Shallow understanding from people of good will is more frustrating than absolute misunderstanding from people of ill will.

The function of education is to teach one to think intensively and to think critically. Intelligence plus character - that is the goal of true education.

I believe that unarmed truth and unconditional love will have the final word in reality. This is why right, temporarily defeated, is stronger than evil triumphant.

We will have to repent in this generation not merely for the vitriolic words and actions of the bad people, but for the appalling silence of the good people.

When you are right you cannot be too radical; when you are wrong, you cannot be too conservative.

Quotes On Personal Development

2010-01-18T07:31:00.000-08:00

To attract attractive people, you must be attractive. To attract powerful people, you must be powerful. To attract committed people, you must be committed. Instead of going to work on them, you go to work on yourself. If you become, you can attract.

We can have more than we’ve got because we can become more than we are.

The big challenge is to become all that you have the possibility of becoming. You cannot believe what it does to the human spirit to maximize your human potential and stretch yourself to the limit.

Pity the man who inherits a million dollars and who isn’t a millionaire. Here’s what would be pitiful: If your income grew and you didn’t.

The most important question to ask on the job is not, “What am I getting?” The most important question to ask on the job is, “What am I becoming?”

It is hard to keep that which has not been obtained through personal development.

After you become a millionaire, you can give all of your money away because what’s important is not the million dollars; what’s important is the person you have become in the process of becoming a millionaire.

Income seldom exceeds personal development.

What you become directly influences what you get.

Quotes by Jim Rohn

The REAL Unemployment Numbers Are Revealed

2010-01-12T11:17:00.000-08:00

The unemployment numbers for December came in last Friday…85,000 jobs were lost, 10,000 more than expected. The Unemployment rate remained at 10%. How does that happen where you lose 85,000 jobs and unemployment remains the same? Sounds a little suspect to me. So I dug deeper to find out what is really going on here.

Here’s what I found. The 85,000 job loss comes from the “business survey”, which uses many estimation tools, including the birth-death ratio for businesses. The mechanics in coming up with the business survey allow the information to be gathered quickly, but it also makes the information far less accurate. That’s why you see the previous month(s) numbers revised often times.

Another survey that is used is the “household survey”, where a sampling of households receive actual phone calls. This survey is used to get the rate of unemployment – but the survey can also give you the number of people in the workforce, as well as its own version of job losses or creations each month. And last month, the survey indicated that 661,000 left the workforce.

What does that mean, “leaving the workforce”? It’s a “discouraged worker”, who has not looked for a job during the past four weeks. With this in mind, I feel there are a few contributing factors that would help us understand why this would indicate such a large number of people “exiting the workforce.” And more people leaving the workforce means less people counted as unemployed.

There is a lesser known report that the Labor Department releases that does include the short-term “discouraged worker”, as well as those who are employed part time, but really want a full time job. They call this the “U6 Unemployment Rate” and it rose to 17.3% in December. The U6 report showed a humongous 589,000 jobs lost, which is a much better picture of what really happened.

Finally, if you add long-term “discouraged workers”, you get the chart below, with unemployment running close to 22%. This is quite a different version from the “officially” released version.

The first thing we have to do to turn things around is tell ourselves the truth. This is a good start. Now let’s start creating jobs that will put people back to work.

Robert Kiyosaki's Predictions For 2010

2010-01-08T14:17:00.000-08:00

“It was the best of times. It was the worst of times.” – Charles Dickens

Is the recession over? Are happy days really here again? Paraphrasing Dickens, my answer is, “For people who are prepared, 2010 will be the best of times. For many, 2010 will be the worst of times.”

The following are a few of my predictions and reasons behind them…

Prediction #1: The real estate market will crash again.

Pictured to the side is a graph of mortgage resets. In simple terms, a mortgage reset is when a mortgage comes due. In normal times, refinancing was a simple process…but these are not normal times. Some points of interest:

1. In September 2008, the mortgage resets hit $35 billion that month. That was the exact time the financial crisis hit. When people could not afford to refinance and began to default, the stock market and banking industry crashed.

2. The eye of the storm: In the summer of 2009 mortgage resets were low -- around $15 billion a month. This is when optimists began to see “green shoots” in the economy. The green shoots were the eye of the storm. In 2010, as I see it, the second half of the financial hurricane hits. By late 2011, the resets climb to nearly $40 billion a month. The storm will not end until 2012.

3. The first half of the storm was primarily due to subprime defaults. The second half of the storm will hit more solid homeowners. The question is, can they weather the storm? Will Mac Mansion foreclosures be next?

4. In America, there are over 40 million people who own more than two homes. Can they afford to carry and refinance two or more mortgages?

5. Since home values have gone down, many homeowners will find they owe more than their home(s) are worth. Will the bank be kind to them?

6. The time for using your home as an ATM is over. This is crushing retailers and retail real estate. Shopping centers are in trouble. Strip malls are empyting as shopkeepers close -- permanently. This will lead to the crash of the office, warehouse, and other commercial properties.

My prediction: Obviously these are the best of times if you are a buyer of distressed properties and the worst of times if you are a seller.

Other things I am watching for in 2010:

1. Will China crash? America’s crash has hit China in the gut. The Chinese are laying off millions of workers. Only massive government bailout is keeping the economy afloat. The Chinese boom will eventually go bust…but will it bust in 2010? Only time will tell.

2. When America stopped importing from China, China stopped importing from the rest of the world. This affects Asian countries as well as Australia, Brazil, and other suppliers of raw materials.

3. Fed Chairman Ben Bernanke is replacing toxic debt with new debt. By protecting his friends in the mega-banks, he is turning the U.S. into a zombie nation. The recession is over, but America is entering an era we will be calling The New Depression, a period when the rich become extremely rich but everyone else becomes poorer. Taxes will kill anyone working for a paycheck.
4. The U.S. dollar will grow weaker. If the dollar strengthens, we will have more unemployment because our goods become too expensive and we will export less.

5. The deficit will increase. The bailouts for the rich are killing the economy.

6. Israel may attack Iran. Israel will not tolerate Iran developing nuclear power, even if Iran claims it is for peaceful purposes. If there is an attack, oil prices will go through the roof.

7. Dead cat bounce. The current stock market rally will probably turn into a dead cat bounce. If the Dow drops below 6500, 5,000 may be the next stop.

The Best of Times

I know I sound painfully pessimistic. I know my predictions are bad news for most people.

Yet, for others, bad news is good news.

The following are the bright spots for people who are prepared.

Prediction #2: Gold, silver, and oil will continue to be safe investments in 2010.

The following recaps the year-end prices of gold and silver:
YEAR GOLD SILVER
2000 $ 273 $ 4.57
2001 $ 279 $ 4.57
2002 $ 348 $ 4.78
2003 $ 416 $ 5.92
2004 $ 438 $ 6.79
2005 $ 518 $ 8.80
2006 $ 638 $ 12.78
2007 $ 838 $ 14.77
2008 $ 882 $ 11.33
2009 $1100 (approx) $ 17.50 (approx)

In 2009, the Dow rose approximately 18%. Gold rose approximately 25%. Silver rose approximately 50%.

By the end of 2010, I predict gold will be at $1,775 an ounce, silver at $24 an ounce, and oil at $85 a barrel. If Israel attacks Iran, these predictions will be blown away.

Prediction #3: The next market to crash will be commercial real estate.

Cash flow positive real estate will be even more affordable. 2010 through 2012 will be a real estate buffet for those with cash and access to credit.

My Personal Investments

As I stated in 2002, “You have up to the year 2010 to become prepared.”
The following are things I have done to prepare myself:

1. I started The Rich Dad Company in 1997 because I saw this crisis coming. For the past three years, I have tightened internal controls and prepared for global expansion via a franchise distribution system. The company is debt free with strong income.

2. 2009 was my best real estate year to date. With the Fed handing out large sums of money and pension funds looking for projects to invest in, my real estate holding company has acquired tens of millions of dollars for acquisition of bankrupt properties and development projects. Development projects are affordable again, as labor, material, and land costs are low and the government is generous with 40-year, low interest, non-recourse loans. People still need a roof over their heads.

3. My oil development projects have done well. We drilled three wells and hit oil on two of them. Government tax breaks for oil exploration remain generous, even for dry holes. Even if the economy crashes, we will still burn oil.

4. I took 90% of my money out of the stock market in 2007. If the Fed raises interest rates, the stock market and real estate market will collapse.

5. I loaded up on gold and silver between 1996 and 2004.

6. With the Fed printing trillions of dollars, cash is trash and savers are losers. As soon as I have excess cash I invest in oil, real estate, gold, and silver.

7. In a zero-interest-rate environment, debtors are winners…but only if you have good debt…debt that’s paid by tenants.

In Conclusion

A few years ago, Japan was ‘King of the Financial World.’ Japan’s economy was the world’s second largest economy -- till the bubble burst in 1990. Japan’s budget went into deficit in 1993. Since then, the deficit has averaged 5.4 percent of GDP per year. As a result, Japanese government debt is now 200 percentof GDP today. The U.S. is following Japan, and China will follow the U.S.

We will not see much inflation because the Fed is not able to print enough money to replace the losses from the burst of the credit bubble. Also, factories have too much excess capacity due to lack of demand, which means prices for consumer goods will remain low and unemployment will remain high. Instead, we will see inflation in gold, silver, oil, some stocks, some real estate sectors, and food -- not because values are going up but because the dollar is going down.
Welcome to The New Depression. And may these times be the best of times for you.

Keeping a Journal: One of the Three Treasures to Leave Behind

2010-01-04T11:50:00.000-08:00

If you’re serious about becoming a wealthy, powerful, sophisticated, healthy, influential, cultured and unique individual, keep a journal. Don’t trust your memory. When you listen to something valuable, write it down. When you come across something important, write it down.

I used to take notes on pieces of paper and torn-off corners and backs of old envelopes. I wrote ideas on restaurant placemats, on long sheets, narrow sheets and little sheets and pieces of paper thrown in a drawer.

Then I found out that the best way to organize those ideas is to keep a journal. I’ve been keeping these journals since the age of 31. The discipline makes up a valuable part of my learning, and the journals are a valuable part of my library.

I am a buyer of blank books. Some people find it interesting that I would buy a blank book. They say, “Twenty dollars for a blank book! Why would you pay that?” The reason I pay 20 dollars is to challenge myself to find something worth 20 dollars to put in there. All my journals are private, but if you ever got a hold of one of them, you wouldn’t have to look very far to discover it is worth more than 20 dollars.

I must admit, if you got a glimpse of my journals, you’d have to say that I am a serious student. I’m not just committed to my craft; I’m committed to life, committed to learning new concepts and skills. I want to see what I can do with seed, soil, sunshine and rain to turn them into the building blocks of a productive life.

Keeping a journal is so important. I call it one of the three treasures to leave behind for the next generation. In fact, future generations will find these three treasures far more valuable than your furniture.

The first treasure is your pictures. Take a lot of pictures. Don’t be lazy in capturing the event. How long does it take to capture the event? A fraction of a second. How long does it take to miss the event? A fraction of a second. So don’t miss the pictures. When you’re gone, they’ll keep the memories alive.

The second treasure is your library. This is the library that taught you, that instructed you, that helped you defend your ideals. It helped you develop a philosophy. It helped you become wealthy, powerful, healthy, sophisticated and unique. It may have helped you conquer some disease. It may have helped you conquer poverty. It may have caused you to walk away from the ghetto. Your library, the books that instructed you, fed your mind and fed your soul, is one of the greatest gifts you can leave behind.

The third treasure is your journals: the ideas that you picked up, the information that you meticulously gathered. But of the three, journal writing is one of the greatest indications that you’re a serious student. Taking pictures, that is pretty easy. Buying a book at a bookstore, that’s pretty easy. It is a little more challenging to be a student of your own life, your own future, your own destiny. Take the time to keep notes and to keep a journal. You’ll be so glad you did. What a treasure to leave behind when you go. What a treasure to enjoy today!

(excerpted from Jim Rohn’s “How to Use a Journal” audio CD)

Some Ideas On How To Use A Journal

2009-12-28T09:59:00.000-08:00

Why pay so much for an empty book? Because I plan on putting something valuable in it. Why put a million dollar idea into a 10 cent book?

What should go into your journal? A journal is a place for you to figure out life as it relates to yourself, your business, your job, etc. It becomes magical in the sense that it accomplishes those ends. It helps to clarify what is going on.

Example: Write about a current dilemma you’re facing – it could be a business matter or a family situation. Take the time to capture it on paper the way it really is. Then, carefully analyze what you have written.

Look for:

1. Exaggerations or distortions of the truth. Are you really telling it like it is?

2. A tendency to blame circumstances or someone else for your problem instead of seeing yourself as the cause. Failing to do what we could have done or doing in haste what we never should have done.

3. A tendency to expect circumstances or other people to change in order for your problem to be solved. “Things get better when you get better.”

4. Look closely for weak points in the obstacles where you might attack to bring that obstacle to its knees. Remember, David slew Goliath with one small stone.

Be sure to record the solution to your problem. If it worked well, then it is worth remembering. If it didn’t work well, then it is even more important to record and remember.

“Better decision making comes from better thinking habits and better thinking habits come from practical experience.”

So, step 1 was to write down problems that you encounter.

Step 2: The capturing of good ideas. “What we do not somehow capture today is lost forever.” “Life always rewards the serious students for their labors.”

Consider keeping an index at the back of each volume. Ex.: Financial ideas – pages 5, 53, 76, 105. Ideas for increasing company efficiency – pages 46, 79, 104 and 126.

After years of experience, Jim Rohn settled on setting aside certain sections of his journal for specific uses. In the back of the journal, there could be a separate section for recording goals, for listing interesting quotes, and for thoughts on new speech material. You could also include a section for ongoing projects.

“Failure more often than not is attributable to lack of information on how to succeed.”

Step 3: Review Ideas

For journals to have real value, they must be frequently reviewed. It is by rereading our journals that we begin the process of translating information into practical knowledge about ourselves, our environment, our relationships, our businesses, our financial affairs, our dreams and our own better future.

Set aside a day each week, or at the very least, each month to review recent entries. Then once a year, take all of your journals off the shelf and read them from cover to cover.

A journal should also capture observations and reactions. Describe near misses that you have. Outline your observations of people’s behavior at family gatherings or office parties. Paint the picture of your day at the beach. Go a step further. Describe your feelings, your emotional response to life.

Describe your feelings when someone else got the promotion you thought was rightfully yours. Capture the joy of your victories as well as the agonies of your defeats.

It doesn’t have to be a monumental event to capture. The better that we are able to describe what goes on around us, the better we will be able to understand some of the turmoils and conflicts within us.

Powerful negative emotions are diminished by writing and powerful positive emotions become explosive.

Writing about your fear reduces its strength and capturing your excitement magnifies its power.

Draw pictures, make diagrams, neatness doesn’t count and neither does spelling. Glue in newspaper articles, cartoons, quotes, whatever moves you.

You should start off each entry with the location, date and time of the entry.

Writing in your journal is one of the most effective ways to develop your communication skills. As you become better at describing life to yourself, you will find you will become better at describing yourself to life.

How often should you write? As often as you wish and as often as you need to.

The first discipline to develop is to always have your journal with you. Carry your journal with you.

One of your first entries into your journal is a complete account of how it is for you right now in this life. What’s got you turned off? What’s got you turned on? How’s it going for you at home, at work? Are you happy, frustrated, excited, perplexed, worried, doubtful?

You might write a description of how it’s going in each area of your life. Honestly tell it like it is.

For a more comprehensive 50 minute recording of How to Use Your Journal, email me at wtompson@ix.netcom.com.

The Best Gift to Give Others

2009-12-21T11:07:00.000-08:00

A question that I often ask myself is, “How can I best help my children, spouse, family member, staff member, friend, etc., improve/change?” “How can I help change someone else?”

The answer comes back to me in a reverberating mandate, “Help yourself first…help yourself first…help yourself first.” Sounds a little selfish at first glance, but the best contribution I can make to someone else is my own personal development. If I become 10 times wiser, 10 times stronger, think of what that will do for my adventure as a father... as a grandfather... as a business colleague.

The best gift I can give to others, really, is my ongoing personal development. Getting better, getting stronger, becoming wiser. I think parents should pick this valuable philosophy up. If the parents are okay, the kids have an excellent chance of being okay. Working on my own personal development as a parent, that’s one of the best gifts I can give to my children.

If you have ever ridden in an airplane, then you might have noticed the oxygen compartment located above every seat. There are explicit instructions that say, “In case of an emergency, first secure your own oxygen mask and then if you have children with you secure their masks.” Take care of yourself first... then assist your children. If we use that same philosophy throughout our whole parental life, it would be so valuable.

Over 3 years ago my wife and I made a commitment to consistent, regular exercise. I lost 40 pounds the first year and as an additional benefit I felt much better too. It’s been interesting to see how our children have progressed as well in this area. One of them lost 25 pounds, another lost 80 pounds and a third has been more consistent in exercise over the past 12 months.

If I learn to create happiness for myself, my children now have an excellent chance to be happy. If I create a unique lifestyle for myself and my spouse, that will be a great example to serve my children.
Self-development enables me to serve, to be more valuable to those around me; for my child... my business... my colleague... my community... my church.

“The major value in life is not what you get. The major value in life is what you become. That is why I wish to pay a fair price for every value. If I have to pay for it or earn it, that makes something of me. If I get it for free, that makes nothing of me.” Jim Rohn

The Spirit Of Giving, Our Key To Greatness

2009-12-14T06:25:00.000-08:00

In the spirit of giving, Zig Ziglar tells the story about famed American contralto Marian Anderson. She was the first African American to be named a permanent member of the Metropolitan Opera Company.

Marian Anderson got her start by scrubbing floors for 10 cents an hour so that she could buy a pawnshop violin. The church she attended recognized her rare talent and raised money for a professional voice teacher to work with her. When the teacher pronounced her ready, she went to New York where critics crucified her. She returned home to regroup. Her mother and her church encouraged her and paid for more lessons.

Because of the intense racial prejudice in America, she went to Europe and took the continent by storm. She came back to America and sang at the Lincoln Memorial with more than 60,000 people in attendance. She sang, "O Mia Fernando," "Ave Maria," "Gospel Train," and "My Soul Is Anchored in the Lord," among other songs.

One day a reporter asked Marian what the most satisfying moment in her life was. Without hesitation, she responded that (it was) when she was able to tell her mother that she did not have to take in any more washing.

The reporter asked, "What did your mother give you?"”

Marian Anderson responded, "Everything she had."

That's greatness, and giving everything we have is our key to greatness.

Is The Housing Market Really In Recovery?

2009-12-03T08:58:00.000-08:00

The housing market appears to be in recovery. There's lot of stats to say it is. Here are three:

• Existing home sales are up and supplies are down
• New home sales are up and supplies are way down
• Pending home sales are posting at record paces

And, perhaps, most importantly, the best gauge of the housing market's health -- home values -- is showing consistent improvement. Both private-sector Case-Shiller Index and the government's own
Home Price Index showed home prices on the mend.

Foreclosures may not yet have peaked, but the worst of the housing market appears to be behind us. We still don’t know what the effect of phasing out the first time homebuyer credit will have, but for now, housing is advancing and improving in many areas.

Between the 2nd and 3rd quarter this year, according to the Federal Home Finance Agency, home values rose 0.2 percent nationally.

As we dissect the third quarter data, it's important to pick up on a few of the subtler points as compared to the second quarter.

First, geography does not appear correlated to home price improvement. Each region is represented equally in the Top 10 and spread equally throughout the list. Clearly, this isn't just a Coastal Recovery.

And second -- stunning analysts -- is that home value changes are occurring independent from foreclosure activity. For example:

1. California ranks #2 in home value improvement between Q2 and Q3 2009. Over that same period, California's Foreclosures per Capita is second-worst in the nation, behind Nevada.

2. Illinois beat the national average for home value improvement between Q2 and Q3 2009. Over that same period, though, Illinois foreclosure rate was nearly 3 times the national average.

3. Between Q2 and Q3 2009, Delaware's foreclosure activity was third-lowest in the country. Its home values, however, fell by more than any other state.

The supply-driven relationship between foreclosure rate and home prices is broken. This is because buy-side demand for homes now exceeds new supply is most U.S. markets. The inevitable result is higher prices everywhere.

Low mortgage rates, an expanded tax credit, and general optimism about housing should sustain demand through the winter. Therefore, expect home values to continue to climb further. If you plan to buy a home in 2010, consider moving up your time frame.

The best "deals" may the ones you get between now and the Super Bowl.

Warren Buffett Knows His Unique Ability – Do You?

2009-11-18T06:50:00.000-08:00

I’ve known Lee Brower, Founder of Quadrant Living, for several years now. I’ve been impressed by his keen insight into what makes people great and how we can leave a legacy to our families and our communities for generations to come.

He recently had the privilege of meeting with Warren Buffett over dinner. He has some pretty astute observations that he gleaned from his time with Buffett. Well, take a peek as he shares his experience in his own words:

Recently I had the opportunity to meet with a small group of board members and supporters of The Oquirrh Institute, a non-profit public policy organization. Warren Buffett joined us for dinner and captivated us for over an hour by answering our questions. Actually, there were not that many questions because once he started, he eloquently kept us spell bound with his common sense rules of life and his down to earth good-ole-boy sense of humor.

His preferred style is a very informal setting where he can casually, without any script, begin with a few questions and then talk about what’s on his mind. With great candor he shared his opinions of the current business and social environment. I took over seven pages of notes. His comments were random. I’ve studied my notes and uncovered what I believe to be great gems of wisdom. I share with you a few of his “Buffettisms.” I don’t know if he would say the following are keys to his success, but I am sure he would agree that they’re significant truths.

They’re in no particular order.

Warren said that there are two major factors for his success:

1. He’s wired to be great at Capital Allocation.
2. He was born in the United States.

There are two ingredients that have allowed the United States to produce such an incredible bounty in such a short time:

1. The U. S. provides more equality of opportunity.
2. The U.S. has a market system that is designed to produce what people want.

Mr. Buffett is in touch with his unique ability and knows his boundaries. He admitted that he was able to stay focused on his unique talent and not get distracted with all the so-called opportunities. Are you in touch with your unique ability? Are you really aware of which activities generate the greatest results with the least amount of effort and result in the greatest amount of personal satisfaction?

When asked what motivates him, he responded with: I do what I love to do the way I want to do it. I like appreciation and I like my shareholders.

He also volunteered that he allows management to run businesses. And I applaud! With over sixty companies acquired by Mr. Buffet’s organization, he has never had a CEO leave voluntarily for another job. He selects companies to acquire that are led by founding individuals who are not in love with the money. They love what they are doing and they love their company. I let them paint their own painting. It will never be finished. I focus on being in good businesses with good people. Another tongue in cheek rule: When you buy a business, buy a business that is so strong that even a dope can run it, because eventually one will!

It was obvious that he is not fond of the traditional board meeting. He said that boards tend to be social organizations. They are ineffective and don’t allow for true objectivity and the only thing that causes corporate change is embarrassment.

His rules for his board members:

1. I don’t pay them anything.
2. They must have business savvy.
3. They must have shareholder orientation.
4. They must be shareholders.
5. They must be independent.
6. He doesn’t pay errors and omissions insurance.

Finally, when asked about the current condition of our society, he stated, “the great problems of society money won’t solve. That is probably the same with your families, too.”

I leave you to think about this: “What will solve society’s problems and how can you and I be a catalyst in changing it for the good?” I have some ideas. Give me a jingle and let's talk about them.

2009-11-17T06:58:00.000-08:00

Conforming mortgages are appropriately named; they "conform" to the mortgage underwriting guidelines of Fannie Mae or Freddie Mac. Mortgages meeting these criteria are securitized on Wall Street as mortgage-backed bonds.

As mortgage performance has weakened, however, lending standards have tightened. Today's would-be borrowers are asked to document more income, deeper reserves, and higher credit scores. One underwriting area that hasn't tightened, however, is the maximum allowable loan size.

For the 5th consecutive year , the 1-unit conforming mortgage loan limit is $417,000.
As released by the Federal Housing Finance Agency, the official 2010 conforming mortgage loan size limits are, by property type:

• 1-unit properties : $417,000
• 2-unit properties : $533,850
• 3-unit properties : $645,300
• 4-unit properties : $801,950

Note, however, that maximum conforming loan limits vary by market. Counties in which "typical" home prices dwarf the conforming loan limits are declared "high-cost" areas. Each gets its own, individual conforming loan limit that ranges up to $729,750.

For example, a home in Imperial, California is capped at $417,000 but a home in San Diego gets clearance up to $697,500. The loan size limits for San Diego are, by property type:

• 1-unit properties : $697,500
• 2-unit properties : $892,950
• 3-unit properties : $1,079,350
• 4-unit properties : $1,341.350

Same for Phoenix, Arizona and Flagstaff, Arizona. Phoenix's maximum loan size is $417,000; Flagstaffs' is $450,000.

Mortgages that exceed conforming loan limits are considered "jumbo" or "super jumbo". Excellent pricing is still available, you just have to know where to look. And it's not at Fannie Mae.

There are 197 designated high-cost areas in the U.S. -- just 6% of the country. For the majority, your 2010 conforming loan limit is $417,000. To find your local market's loan limit and confirm it, check the Fannie Mae website.

2009-11-11T06:18:00.000-08:00

Consider this a last call for FHA Streamline Refinances. Starting next Tuesday, the popular rate-lowering program gets strict on borrowers.

There's 5 days left.

Under the current streamline refi guidelines, FHA homeowners have minimal program eligibility requirements.

•FICO scores must be 620 or higher
•The refinance must provide a "tangible benefit"
•No mortgage lates allowed in the last 12 months

Beyond that, everything else goes, practically. There's no income, asset, or job verification with the current FHA Streamline program. Neither is there an appraisal requirement. It doesn't matter if you're 50% underwater.

Until next week, that is.

Beginning November 17, FHA Streamline Refinance applicants must show evidence of income and employment, plus proof of cash required to close. Furthermore, the FHA is limited loan-to-values to 97.75% for homeowners that want to "roll closing costs" into their mortgage.

In areas of declining home values, this may render refinancing impossible.

There's more changes, too, as highlighted by the Federal Housing Commissioner. Read up for yourself, or ask a mortgage professional for help.

If you're a homeowner and you're currently financed through the FHA, it may be prudent to explore the possibility of an FHA Streamline Refi. Mortgage rates are low right now and FHA guidelines are loose.

Starting next week, FHA Streamlines will be a completely different beast.

The "New" First Time Home Buyer Tax Credit

2009-11-05T16:34:00.000-08:00

Congress voted to extend and expand the $8,000 First-Time Home Buyer Tax Credit on Thursday. The bill is expected to be signed into law Friday.

If you're planning to claim the tax credit, the first thing you'll want to know is the new drop dead dates.

You must be under contract by April 30, 2010
You must be closed by June 30, 2010

Apparently this program worked so well the first time they have given us one more shot. And I really think they mean it this time.

The First-Time Home Buyer Tax Credit was originally part of the American Recovery and Reinvestment Act of 2009. It granted qualifying first-time homebuyers a tax credit of up to $8,000 as a means to stimulate entry-level home purchases.

Since its February 2009 passage, the First-Time Homebuyer Tax Credit helped to place 400,000 new home owners which, in turn, lowered housing inventory, raised home prices, and generated new tax revenues for local cities.

Figures like these persuaded Congress to grant the program a 30-week extension, and also to extend its reach.

The "First-Time Home Buyer Tax Credit" isn't just for first-time home buyers anymore.

Under the new rules, homeowners with at least 5 years in their current residence qualify for the tax credit, too. However, instead of the full $8,000 bonus afforded to first-timers, "move-up" buyers get capped at $6,500.

Most of the program's qualification criteria remains as-is, with a few notable changes:
You may not acquire the home from a mother, father, spouse, or child
You may not acquire the home from an entity in which you're a majority owner
You may not acquire the home by gift or inheritance
You must be 18 years of age or older

The subject property's purchase price may not exceed $800,000

The subject property must be meant for use as a primary residence

All parties to the purchase must be meet the eligibility requirements

And then assuming you qualify, there are two ways by which your credit can be reduced.

First, the tax credit is limited to 10 percent of the home's purchase price. If the subject property sells for $75,000, your credit is limited to $7,500. And, second, your income can affect the credit, too.

Single-filers earning more than $125,000 and joint-filers earning more than $225,500 forfeit 5% of the expected tax credit for each $1,000 in earnings over the program's limit. A single-filer earning $135,000, therefore, gets 50% of the tax credit. A single-filer earning $145,000 gets none.

If you qualify, claiming your tax credit is simple:

Go under contract by April 30, 2010
Close by June 30, 2010

Submit IRS Form 5405 and your HUD-1 settlement with your tax returns

That's it!

But beware -- the First-Time Home Buyer Tax Credit program comes with some sensitive spots. For example, if you sell your home, or stop using it as your "main home" within 36 months of your purchase, the IRS will require a 100% payback. This means flipping properties for resale will be afforded this expense to take into consideration. This policy has few allowable exceptions so don't count on getting one.

Also, I recommend that first-time (and move-up) buyers review the IRS "scenario page" -- it's got every wacky home-buying setup you could think of. Most "Do I qualify for the First-Time Home Buyer Tax Credit" questions are answered pretty clearly from the government guys that make the final call.

If you haven't already, take advantage of this great opportunity to buy a home at bargain basement prices

Another Look At Spray-On Solar Power Cells

2009-10-29T12:12:00.000-07:00

Quote: “Like paint, the composite can be sprayed onto other materials and used as portable electricity. A sweater coated in the material could power a cell phone or other wireless devices. A hydrogen-powered car painted with the film could potentially convert enough energy into electricity to continually recharge the car’s battery.”
Source: Lovgren, Stefan. “Spray-On Solar-Power Cells Are True Breakthrough.” National Geographic News. 14 Jan 2005.

I’m usually a little skeptical of the entire environmental movement, and especially the whole attempt to create alternative energy sources. There’s a very good reason why we rely on petroleum, coal, and nuclear power: They provide massively more return on investment than wind or solar power. They are simple to use, and they become relatively cheaper with each passing decade.

Not only that, the distribution systems for these so-called “dirty” energy sources are incomparably better established and more efficient than any alternative.

But there is one alternative idea that has caught my attention: spray-on solar energy generation, which is being actively developed by a number of entrepreneurial companies around the world.

Here’s how it works: A special compound is sprayed on all exterior surfaces of your home or business building—or your car, boat, or any other physical structure. This clear liquid compound, consisting of miniaturized (“nano”) solar cells, captures solar energy at the infrared level, which means that it works just as well on cloudy days as on sunny ones.

When you paint your house with these cells, you capture five times the amount of the eventual electrical power as is possible with today’s solar panels—which makes it competitive with coal-generated electricity.

The reason I like this possible breakthrough so much is that it makes everybody who uses it “energy independent”—that is, free from corporate and government bureaucracies.

Can Goal Setting Actually Be Counter-Productive?

2009-10-26T09:01:00.000-07:00

Even though I've been a big goal-setter during my adult years, and especially over the past 10 years, the following is a different look at what you can do to achieve your maximum potential.

Vision, Motion and Gravitation

by Lee Brower

Have you ever set a goal? Have you ever set a goal and not achieved it? Hmmm…. Have you ever set the same goal again and not achieved it? And again?

When you reset goals, how do you feel? What is your self-talk telling you? Does your self-talk move you into the realm of negativity—bringing with it the negative vibrations that perhaps attract even more of the negative results you are working so hard to leave behind?

Are we bombarded to the point of redundancy that we must be a “goal setter—goal achiever” to succeed? Accepting the premise that unless we achieve our goals in the expected timeframe we are not succeeding; then, this attitude of underachieving, or, in some cases perceived failure, derails our intentions to accomplish all we are capable of achieving. The improper use of goals has unintentionally done more to disappoint the expectations (both from self and those imposed by others) of entrepreneurs, family leaders, and our youth than all of the good that may come from successful goal setting.

A recent working paper that is a collaboration of associates from Harvard Business School; Eller College of Management, University of Arizona; Wharton School, University of Pennsylvania; and, Kellogg School of Management, Northwestern University, states:
“In this article, we argue that the beneficial effects of goal setting have been overstated and that systematic harm caused by goal setting has been largely ignored. We identify specific side effects associated with goal setting, including a narrow focus that neglects non-goal areas, a rise in unethical behavior, distorted risk preferences, corrosion of organizational culture, and reduced intrinsic motivation.”

So, what do we counter with? How do we increase performance without the potential side effects of traditional goal setting?

In Chapter 10 of The Brower Quadrant, I discuss the concept of “motion theory,” including the power of vision, the simplicity and effectiveness of the Pringles and a step-by-step process for achieving faster and with less effort. Let me expand that thought with the concept of “gravitation.”

For gravitation to have an effect, more than one object must be present and at least one of the objects must be in motion. When a bee leaves the hive in search of nectar, the even bigger “precessional” effect is the unintended, but more impactful, gravitational attraction of pollen to the feet and wings of the bee. If the bee had never had the vision of collecting nectar, had never left the hive—the gravitational benefit of pollen to all of the rooted botanicals in the world, would not occur.

How about you? It is one thing to have a goal. And one may say that is the vision. But the goal seems overwhelming or the obstacles appear and then we become paralyzed unable to take advantage of the gravitational, and many times incredibly larger result. The goal is not the vision … the vision is who you are once you have passed certain milestones. For example, if I desire to be a father/grandfather who runs and plays with my children and grandchildren into old age—enjoying my health—then that is the vision that inspires and motivates me. The “pringle” or initial motion (once an object is in motion, it tends to stay in motion) may be putting on my workout clothes and doing one push-up every day. It is important I celebrate that achievement even if it is only one push-up, consequently attracting more positive energy.

So, establish your vision, share it often and visit it frequently. Get in motion in the right direction and be aware of gravitational attraction that will bring you greater relationships and opportunities that you had never imagined. And then don’t forget to celebrate every “pringle” along the way.

(An interesting take that may require some time to process and evaluate)

Forcing Loan Modifications Subject of New Housing Bill

2009-10-13T15:39:00.000-07:00

Four senators are putting their muscle behind a new housing bill intended to prohibit lenders operating in the U.S. from foreclosing on home owners without first having discussed reasonable modification options with the borrowers.

The bill, called the Preserving Homes and Communities Act is being sponsored by Rhode Island Senator Jack Reed, Illinois Senator Dick Durbin, Jeff Merkley of Oregon and Sheldon Whitehouse of Rhode Island.

Under this bill, lenders will be forced to the negotiating table under the threat of stiff fines and other legal penalties.

All lenders will be required to perform what the bill terms as a "net present value" test for all seriously delinquent borrowers. The test would be a financial analysis weighing the benefits of a modification of loan terms against the benefits of foreclosure.

For borrowers who do not fit into this program, the bill would create a multi-billion national fund for states to make loans or grants in order to prevent foreclosures.

The senators' rationale behind the creation of this bill is that they are frustrated with the slow pace of current loan modification programs and feel that they are not keeping up with the record numbers of foreclosures this year.

"Voluntary efforts to keep families in their homes have failed," said Durbin. "This bill will force lenders to modify qualified mortgages rather than letting them move quickly to foreclosure, which destroys households and neighborhoods."

The act will also set up a mortgage payment assistance program to provide money to state housing agencies to assist people who have lost income and face the prospect of foreclosure.

The most significant aspect of this bill would be to create "mandatory mediation" requirements forcing lenders to allow some mediation efforts between them and their borrowers before being able to file foreclosures against home owners.

This proposal will, no doubt, be met with opposition by banking and mortgage lending groups. It is, however, currently favored to be supported in the House.

Who's Killing Short Sales?

2009-09-29T10:46:00.000-07:00

Written by Bob Hertzog

Is The FDIC Killing Short Sales?

As some of you already know, I blogged recently about being interviewed recently by our local NBC news affiliate. Basically, IndyMac Bank (now OneWest Bank), is holding one of my clients hostage, demanding a $75k promissory note, or they will proceed to foreclosure. For the life of me, I couldn't figure out why they were doing this. The BPO came in at the contract price of $275k, with a net to IndyMac of $241k. What advantage could there possibly be for them to proceed to foreclosure?

Yesterday, I figured it out. You see, IndyMac was taken over by the FDIC and sold to OneWest Bank in March/2009. Guess who the investors are behind OneWest? George Soros, Michael Dell, Steve Mnuchin (former Goldman Sachs executive), and John Paulson (hedge-fund billionaire).

Now, listen to the deal they got from the FDIC....

Basically, they purchased all current residential mortgages at 70% of par value (70% of the outstanding loan amounts). They purchased all current HELOCS at 58% of Par Value!!!

Next, in order to "sweeten the pot", the FDIC stepped in and guaranteed the following: For any residential mortgages where OneWest experiences a loss, the FDIC will step in and cover anywhere from 80%-95% of the loss. The loss is calculated using the ORIGINAL LOAN BALANCE, not the amount that OneWest paid for the loan. Let's use my clients situation as an example:

Loan Amount is $478,000, plus 6 months of missed payments, for a grand total of $485,200
OneWest pays $334,600 for the loan
We have an all cash offer of $241,000, net to OneWest.

So, let's do the math, shall we? The net loss, according to the FDIC formula is the ORIGINAL LOAN AMOUNT minus the amount of the offer. In this case, $485,200-$241,000, or $244,200.

Next, the FDIC, according to their Loss Share Agreement, writes a check to OneWest for 80% of the so-called "net loss". So, in this case, OneWest gets a check from Uncle Sam for $195,360 (.80 X $244,200).

Add the $195,360 to the sales price of $241,000, and you get a grand total of $436,360.

Remember, OneWest paid $334,600 for the loan. So, OneWest puts $101,760 in their pocket, thanks to the FDIC. Folks, that is over $100k of our hard-earned tax dollars!

So, you ask...Why does this program hurt short sales? Because, our brilliant government offers this SAME PROGRAM FOR FORECLOSURES! The only difference is, the government picks up 80% of the tab on all of the extra costs associated with a foreclosure (BPO's, upkeep, utilities/maintenance, legal fees, etc.)

So, If I'm OneWest, why would I want to waste my time negotiating through a Short Sale, when I can make the same amount of money (if not more) by just letting it go to foreclosure? And we wonder why nobody can get a Loan Modification? Why would OneWest approve a loan modification for this guy, when they can foreclose and make over $100k? And, to add injury to insult, they have held this loan for 6 months! Not a bad ROI, huh?

What infuriates me the most is that in my particular case mentioned above, they have the guts to hold my client hostage for a $75k promissory note, after they are already making more than $100k on the sale!!! This is his primary residence, 1st Position loan, and OneWest has NO RECOURSE! Imagine if they could make $100k, then get a deficiency judgement! Talk about making some big bucks!

Can you say "GREED"?

The scary thing is that over 50 banks have Shared Loss Agreements in place with the FDIC. Some of them include: Bank of America (go figure), CitiMortgage, Wells Fargo, etc.

This entire agreement between the FDIC and OneWest can be found here, on the FDIC website. It's all there, for the world to see! They have it all layed out. All of the formulas, worksheets, etc.

Now, it's up to us to bring it to the attention of our elected officials and the media. Enough is Enough!

FOR MORE DETAILS ON THE ABOVE. TAKE THE TIME TO READ THIS WHEN YOU GET A CHANCE! CLICK HERE TO READ IT.

Wait, it gets better...The FDIC just announced that it needs to start borrowing money from the U.S. Treasure in order to replenish it's deposit insurance fund (the same fund being used to pay all of these banks in the Loss Share Agreements). Go Figure! Click Here to read it.

Thanks to Bob Hertzog for shedding some light on the matter.

Why IndyMac (One West Bank) Won't Do Short Sales

2009-09-29T10:27:00.000-07:00

Written by Mandelman of "Mandelman Matters"

When it comes to being inflexible and unresponsive to homeowners in need of a loan modification, IndyMac Bank, which has just been renamed “One West Bank,” is legendary.

This is the bank that failed spectacularly in July 2008, was taken over by the FDIC, and ended up costing taxpayers something like $11 billion… give or take… I can’t keep track of billions anymore… I’ve moved on to tracking trillions. And the new buyers of this fire sale financial institution that’s deservedly become the poster child for stupid lending tricks, includes billionaire George Soros.

Soros, along with billionaire Michael Dell and others, agreed to purchase the bank for $20.7 billion. As of Jan. 31, 2009, IndyMac’s assets totaled $23.5 billion and deposits were $6.4 billion, roughly half the cash and assets the bank had at the time of its failure. The new buyers also got a handy-dandy “loss sharing agreement” from the FDIC, whereby after shouldering the first 20% of any future losses, the FDIC gets stuck with most of the rest. So, I guess you could say they got a deal. A sweetheart of a deal… not to put too fine a point on it.

Considering that kind of taxpayer supported deal, and with so-called liberal philanthropist George Soros as one of the bank’s major shareholders, you might think the new One West Bank would be the last financial institution to be throwing people out of their homes when loan modification would make more sense financially, but you’d be wrong. One West Bank isn’t participating in the President’s program either.

Basically, the President of the United States asked the banks of this country to participate in a program designed to stop our economy from circling the drain, after the taxpayers of this country agreed to save the financial institutions who had bankrupted themselves… and this bank said: “No, thank you… no.” Or in other words… "Up yours, Mr. President.”

They declined to participate. Am I the only one that feels like a 5 year-old just told me he or she wasn’t going to take a bath as requested? Oh really? Get in the tub now… one… two…

How can George Soros, the liberal philanthropic billionaire who’s money made MoveOn.org the country’s most influential left wing political force, capable of mobilizing hundreds of thousands if not millions of volunteers, influencing millions of voters, and defending ACORN no matter the charge, now owns a bank that’s about as easy to reason with as Kim Jong-il with a migraine?

No matter which side you’re on… MoveOn.org was a huge success, now raises untold millions, and occasionally runs ads that would have to make even those on the left… cringe.

I get more letters complaining about IndyMac than any other lender or servicer in the country, although there are others, like Litton, that come in close seconds. I was personally involved in one situation in which an Arizona homeowner, who’s wife had been fighting breast cancer and brain cancer, whose mortgage of $250,000 was $50,000 more than the home’s appraised value, and whose employment was temporarily interrupted by the economic meltdown, was denied a modification. They ultimately lost their home to foreclosure and now it sits empty while the bank pays a maintenance company to mow the lawn. Shrewd, IndyMac… very shrewd… the bank will be lucky to clear $100,000 on the deal… if and when the house sells, which could be some time.

And once I was in an attorney’s office listening in while he called IndyMac on behalf of a client seeking a loan modification with the borrower also on the call. When the IndyMac representative finally answered the phone, which took about 30 minutes, her first words shocked me. She said to the borrower: “You know… you don’t have to pay him.”

I couldn’t help it. I interrupted and said: “Excuse me. I’m a writer and I was just wondering… how do you know she’s paying him? What if he’s her brother-in-law and doing this for free? Did someone train you to say that? Is that part of your training program there?” And the woman from IndyMac hung up. Nice.

Just this past week, I received a call from another attorney who expressed his frustration at IndyMac’s/One West Bank’s refusal to modify a Freddie Mac mortgage because they said their bank isn’t participating in the HAMP program. The attorney reminded the bank that it didn’t matter because Freddie Mac WAS participating in the program and the mortgage in question was owned by Freddie Mac. The bank representative wasn’t interested. Click… and that was that.

So, if you want more information on Mr. Soros’ new bank maybe you’ll soon be able to find it online at: www.MOVEOUT.org

Using 401(k) Funds For A Downpayment Appears Great At First - Until You Consider The Tax Consequences

2009-09-22T11:06:00.000-07:00

As downpayment requirements increase, anecdotally, home buyers are tapping 401(k) plans for extra cash.

Classified as a "hardship withdrawal", loans against your retirement funds can be cheap and simple:

* There's no credit check or approval process
* There's only a small set of paperwork
* Money can be available in as little as a day

But just because you can get access to your retirement money doesn't mean that you should. 401(k) withdrawals should only be made after careful consideration.

There are some serious negatives, specifically with respect to taxation.

If you open a 401(k) loan and don't repay according to the loan terms, the withdrawal ends up getting taxed as income, plus a 10 percent penalty for people under 59 1/2.

That's a stiff penalty.

But, even if you do repay the loan on time, you're still getting leaving yourself subject to double-taxation.

Taxation #1 occurs when the loan is repaid using post-tax dollars
Taxation #2 occurs upon final withdrawal at retirement

Furthermore, when you borrow against a 401(k), you assume the opportunity costs of having that money out of the market. Since March, the Dow Jones Industrial Average is up 44 percent.

If your 401(k) was empty, you'd have missed those gains forever.

Taking a loan against a 401(k) isn't necessarily a bad idea, there just may be better choices. If you're planning to withdraw from your 401(k) to make a downpayment on a home, talk with a qualified financial professional first.

You can never have too much good information.

What Is The Best Credit Card To Get After A Foreclosure Or Bankruptcy?

2009-09-17T17:12:00.000-07:00

This is a frequently asked question, where do I get one and which one is the best for my situation? Remember, after a foreclosure it is critical that you reestablish new credit immediately. That's muy pronto!

After an event like a foreclosure, you need to reestablish credit with three new credit cards! Not 1, not 2, but 3.

It is okay to apply for two or three of the same credit cards, as long as all of the credit cards are reported to all three credit bureaus.

According to Philip X. Tirone, author of 7 Steps to 720, Public Savings Bank Classic Visa Secured Card is the best secured card available today.

Here is why:

* 0% APR on Purchases for 6 Months
* No Annual or Monthly Fee
* No Credit, Income or Employment Requirements
* Reports to ALL three Credit Bureaus
* Use this Card Everywhere you see a VISA Logo
* One Time Set up fee – $79

Most banks charge yearly or monthly fees for their secured credit cards, which is why this one is superior to most others.

A crucial question that must be asked is:

After the foreclosure, how many new credit cards have you applied for?
If the answer is 0, apply for 3 Public Savings Bank Cards, (read important note)
If the answer is 1, apply for 2 Public Savings Bank Cards, (read important note)
If the answer is 2, apply for 1 Public Savings Bank Card.
If the answer is 3 or more, don’t apply for more credit!

Important Note: If you need to apply for more than one Public Savings Bank Secured Visa Card, you do not want to apply for them all at once. Instead, apply for one secured Visa card every 2 weeks.

According to Tirone, if you follow these steps you will have a 720 Credit Score 4-5 years sooner than that foreclosure or bankruptcy falls off your credit.

Unfortunately, secured cards are no longer converting to regular credit cards. That being said, don’t worry about that, when you get to a 720 credit score, you will have creditors tracking you down!

In the end, remember why you are applying for this credit card – to build credit, not to use it.

Guard your credit closely!

How To Make $1,000 - $5,000 In 30 Days (Not MLM)

2009-09-16T21:30:00.000-07:00

What if I told you about a system where you would make a small investment of $10 or less and convert it to a return of $1,000 to $5,000 within 30 days.

Now – I know this sounds too good to be true, however, Jim Shaw has come up with an interesting idea.

There are thousands of people who live close to you that have “stuff” they are not interested in anymore. In fact, they consider it junk!

Jim has a system he developed in 1993 that will show you how to find the people who have “stuff” that they want to get rid of and convert it to cash.

When somone asked Jim if he could refer someone who has used his system, he referenced a woman by the name of Cynthia P. from Pismo Beach, California. Here is what Cynthia said about Jim’s system:

"I ordered your report about making $1,000 in 30 days. -- I've made $400 in just under two weeks and can't believe how easy it seems to be (well, aside from the 'elbow grease'). I've teamed up with my teenage son, and expect to really go at it over the next month or so. He wants money to buy his first car. -- I'm happy to have found something we can do together, and that he will now also have as a 'fall-back' in the future."

Jim sells his system for only $10! It’s a great way for you to get some quick cash!

For more information on his money making system, visit www.businesslyceum.com.

For more information about Jim Straw personally, visit him at www.businesslyceum.com.

Thanks for the idea Jim!

Thanks to Philip X. Tirone for reference.

How To Increase Your Cashflow By $500 A Month

2009-09-03T09:41:00.000-07:00

Visit msnbc.com for Breaking News, World News, and News about the Economy

There are two ways to boost your personal cash flow -- increase your income or reduce your spending. The former can be a challenge but the latter doesn't have to be.

The headline of the above video -- "Cut Your Spending By $500 Per Month" -- is a little over the top, but the advice given during the video is right-on.

From NBC's The Today Show, the 5-minute piece offers a half-dozen ways to reduce your cash outflows each month, including:

•How to negotiate a lower credit card interest rate
•Why it's important to go grocery shopping with "a list"
•How to "time" certain purchases like tires, linens, and clothing

It also covers saving money on a family pet.

It's often easier to save money than to make money. This video shows how easy it can be.

Home Inventories Plummet, Pressuring Home Prices Upward

2009-08-27T06:38:00.000-07:00

It's no wonder that builder confidence is soaring -- their inventory of homes for sale is depleting at a furious pace.

For the 4th straight month, New Home Sales gained, posting the best numbers since last September's meltdown and handily beating economist expectations.

The available supply of homes is down to 7.5 months nationwide. It's a lot less than that in North San Diego County, down to under 4 months worth of supply.

It's further evidence that the housing market may have bottomed at some point this past spring.

To be sure, the strong housing data is, in part, a reaction to four outside factors:

1.Low mortgage rates
2.An expiring government tax credit
3.Hefty builder incentives
4.A moratorium on foreclosures in states like California

But, buyers are buyers and the clearing out of outstanding inventory provides terrific support for home prices. It also gives them reason to rise.

Coupled with the blowout Existing Home Sales numbers from July, therefore, this months' New Homes Sale report may be a signal that the Buyers' Market is ending and the Sellers' Market is beginning.

If you're planning to buy a home this year or next, it may be time to get a move on. Wait too long, and prices may be up.

Home Prices On The Upswing

2009-08-27T06:29:00.000-07:00

18 of 20 markets tracked by the Case-Shiller Index showed rising home values in June. It's the 5th consecutive month with strong numbers and the best showing for the benchmark housing index since home values began deflating in 2006.

Some would argue it's a sign that housing has finally bottomed out. Even Case-Shiller representatives acknowledge that home prices are "on an upswing".

Despite the Case-Shiller Index's popularity with economists and the press, though, it's falls short of being a perfect housing indicator. As examples:

1.Its data is reported with a 2-month lag
2.Its sample set includes just 20 U.S. cities
3.Real estate isn't a "national" market -- it's local

Nevertheless, flaws aside, Case-Shiller is still important. It helps identify broader trends in housing and many people believe the housing is the keystone of the economy right now.

This is why June's Case-Shiller Index gives cause for hope. The nascent housing recovery has a long road ahead but June's Case-Shiller data shows that we're heading in the right direction.

Only 6 Weeks To Go To Be Able To Use The $8,000 Tax Credit

2009-08-21T11:10:00.000-07:00

If you plan to use the First-Time Home Buyer Tax Credit program, time is running out. The program expires November 30, 2009 and closing on a home can take up to 60 days.

That leaves you 6 weeks from today to find a home and go under contract.

The First-Time Homebuyer Tax Credit program was passed as part of the 2009 economic stimulus plan. It credits up to $8,000 in tax payments to qualified buyers.

The qualification criteria are as follows:

•Buyer may not have owned a "main home" in the past 36 months
•The home may not be purchased from a parent, spouse, or child
•Adjusted gross income for the household must be below $95,000 for single tax filers and $170,000 for joint tax filers

Furthermore, not everyone who's qualified will get the full $8,000. The credit can't exceed 10 percent of a home's purchase price, for example, and households with income approaching program limits get lesser benefits, too.

Meanwhile, an interesting note about the First-Time Home Buyer Tax Credit is that it's a true tax credit and not a deduction. . A person or couple claiming the $8,000 credit whose "normal" tax liability is $5,000 would get back $5,000 or whatever had been withheld for federal income taxes plus an additional $3,000 from the US Treasury when their tax return is processed by the IRS.

Review the program's criteria at your leisure, but don't wait until October to start looking for homes. If you can't close by November 30, 2009 for any reason whatsoever, you won't qualify for the tax credit.

Better to be ahead of the deadline than chasing it.

Little Johnny Digs A Hole

2009-08-14T14:22:00.000-07:00

One day little Johnny was digging a hole in his back yard.The next-door neighbor spotted him and decided to investigate."Hello Johnny, what are you up to?" he asked."My goldfish died and I'm gonna bury him," Johnny replied."That's a really big hole for a goldfish, isn't it?" asked the neighbor."That's because he's inside your cat!"

Foreclosures Are Still Concentrated In Three States

2009-08-14T14:17:00.000-07:00

Foreclosure-tracker RealtyTrac reports that the number of foreclosures nationwide rose 7 percent on a month-to-month basis last month.

However, 3 states dominated the foreclosure list, tallying more foreclosures between them than the rest of the country combined.

•California : 30.0 percent
•Florida : 15.7 percent
•Arizona : 5.4 percent

On a per-household basis, the states ranked 2, 3 and 4. Only Nevada's foreclosure rate was higher.

Now, we point out these statistics for two reasons.

The first is to remind you that foreclosures can be highly local. For all of the foreclosure-related stories that run in the papers and on TV, defaults make a much larger impact on home values in some areas versus others.

And, second -- foreclosures can represent a terrific buying opportunity. Not every foreclosed home is in pristine condition, but there is a plethora of affordable housing out there, suitable for first-time buyer, move-up buyers and investors, too.

Furthermore, as banks get better at disposing of foreclosed homes, the process of buying one isn't as challenging as it was, say, 12 months ago.

As part of its research, RealtyTrac.com catalogues a lot of foreclosed homes and lists them online. However, you may find it better to start your search with a local real estate agent that knows the foreclosure market.

So long as buying foreclosures is a high-touch process -- and it is a high-touch process -- you may want to have a human face and agent to guide you through it.

The Federal Reserve Statement In Simple English

2009-08-13T11:53:00.000-07:00

The Federal Open Market Committee voted to leave the Fed Funds Rate within its target range of 0.000-0.250 percent.

It also reiterated plans to support the mortgage market to the tune of $1.5 trillion.

In its press release, the FOMC noted that the U.S. economy is "leveling off" and that financial markets continue to improve.

The change in verbiage is the rosiest from the Fed since the start of the recession and it may signal that the downturn's end is near.

That said, the Fed highlighted lingering economic soft spots that could still impact a recovery through the end of 2009 and into 2010.

1.Ongoing job losses
2.Reduced "housing wealth"
3.Tight credit conditions

Furthermore, rising energy costs remain a threat to inflation.

Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent "for an extended period" and to honor its $1.25 trillion commitment to the mortgage bond market.

Market reaction to the Fed's press release is muted. With no real change in message and a basic confirmation of what most investors already knew, Wall Street sees no reason to panic. Mortgage rates are unchanged.

The FOMC's next scheduled meeting is September 22-23, 2009.

Most Americans know that recovery lies with business, not government, even in this economic downturn,

2009-08-10T12:11:00.000-07:00

Quote: “The American economy is dynamic because Americans like it that way, even now. A Pew poll released on May 21st (2009) found that 76% of Americans agree that the country’s strength is ‘mostly based on the success of American business’ and 90% admire people ‘who get rich by working hard.’”Source: “Piling on.” The Economist. 28 May 2009.

Before 2008, there were only two U.S. senators, Harding and Kennedy, elected to the presidency. Obama is the third.

There is a reason why there have been so few: Senators are the elected officials in America most disconnected from the marketplace. The majority of them have always been politically-focused lawyers. Very few have worked in business or managed anything, public or private, before they entered the Senate. For those reasons, Americans generally don’t trust that they’ll be good presidents.

Unfortunately, in the last election, the three main candidates, Obama, McCain, and Clinton, were all sitting senators with no business experience. So, it was probably going to be the same outcome regardless of which of the three was elected.

Barack Obama seems unaware of the business of America, which is entrepreneurial wealth creation. Even in democratic circles, there is a growing consensus that he “doesn’t get” how America progresses and grows. It’s understandable that a man whose entire advancement has been based on government subsidies and campaign contributions would be strongly committed to expanding government.

Likewise with Mrs. Obama and all of Mr. Obama’s closest confidants and mentors over the years. Government has been good to them. Why should it not be good to everyone else?

A big collision is coming, starting in the off-year elections in 2010 and then the next presidential contest in 2012. It pits the American people, who understand that America is created by business, against an administration that thinks all of life depends on government.

Looking Back and Looking Ahead, August 10, 2009

2009-08-10T11:25:00.000-07:00

To say that the mortgage markets took a beating last week would be an understatement.

After better-than-expected consumer spending, housing and employment data, stock markets rallied and mortgage markets suffered.

Mortgage rates unwound completely their gains of the last six weeks and now rest near the loftiest levels from June.

Headed into Monday's market activity, mortgage rate momentum is moving away from home buyers and would-be refinance.

This week, there isn't much data to reverse the tide but there is a Federal Open Market Committee meeting.

The FOMC is the policy-setting group of the Federal Reserve and, each time the FOMC meets, markets can get volatile. This is because of the Fed's power to speed up or slow down economic growth via the Fed Funds Rate.

When the Fed Funds Rate is rising, the economy is generally expanding at too fast of a pace for the Fed's comfort and when the Fed Funds Rate is falling, the economy is generally slowing.

Today, the Fed Funds Rate is as low as it's even been -- resting in a "target range" of 0.000-0.250 percent. The Fed isn't expected to change that.

However, just because the Fed Funds Rate won't be changing doesn't mean that mortgage rates won't be changing. Depending on what the FOMC says in its post-meeting press release, mortgage rates could rise or fall -- maybe even by a lot.

If the Fed shows concern for inflation, rates should jump; worry of a recession retread would draw rates down.

The FOMC adjourns from its 2-day meeting Wednesday at 2:15 PM so consider locking prior the official announcement.

July Jobs Data Is Strong Enough To Batter Mortgage Rates

2009-08-07T11:38:00.000-07:00

This morning's jobs report is doing a number on mortgage rates, putting another dent in home affordability nationwide.

Despite the slightly flat Unemployment Rate, the government's July Non-Farm Payrolls report reinforced the notion that the recession may be ending soon, if it hasn't already.

Just 247,000 jobs were lost last month -- much fewer than analysts had expected.

Now, if it seems strange to be talking economic recovery while Americans are still losing jobs -- 5.7 million in the last 12 months, in fact -- remember that we have to take the data in context.

Job loss doesn't lead to economic growth, per se, but analysts tend to treat employment data as a lagging indicator. Business is often slow to hire and slow to fire, so the jobs report rarely reflects the "right now".

A terrific real-world example of jobs data as a lagging indicator is that the peak of recent job loss -- January 2009 -- occurred 4 months after the peak of the financial crisis in September 2008.

The same pattern was present during the Recession of 2001.

Government data shows that job loss peaked during the recession in October 2001, 1 month before the recession's official end. Meanwhile, job losses continued nationwide for the next year and didn't turn net positive until October 2002 -- nearly 12 months into the recession's subsequent recovery.

This is what we mean by lagging indicator and it's why investors are cheering today's jobs data. Strength in today's report may be signaling the end of the recession.

Unfortunately for today's rate shoppers, it pushing mortgage rates higher. As stock markets soar, bond markets sink.

How Do Consumers Spend Their Money?

2009-08-06T13:24:00.000-07:00

Where does the money go?

If you're like most U.S. consumers, more than half of it goes to housing and transportation costs.

According to the government's most recent Consumer Expenditure Survey, spending patterns are little changed from years prior.

More money is spent on entertainment and less money is spent on dining out. Beyond that, the figures are somewhat static.

Meanwhile, using on the survey's industry-by-industry breakdown, we can see how monthly housing payments and daily commuting costs impact a household's budget.

For the budget-conscious, going out less often and bargain-shopping can help pad the bottom line, but not as much as living in a less expensive home or moving closer to work.

Even a refinance into lower rates can make a difference.

Apple uses the App Store to create a “value creation monopoly” for its hardware sales.

2009-08-05T15:34:00.000-07:00

Quote: “When he checked his account with Apple to see how many copies the game had sold, Mr. Nicholas’s jaw dropped: On its first day, iShoot sold enough copies at $4.99 each to net him $1,000. He and Nicole were practically ‘dancing in the street,’ he said.” Wortham, Jenna. “The iPhone Gold Rush.” The New York Times. 5 Apr 2009.

There are hundreds of emerging stories about people who have struck it rich by designing applications for Apple’s iPhone and iPod. As I write this, the number of applications in the App Store exceeds 35,000 and is growing quickly.

The story I quote from features Ethan and Nicole Nicholas. Short of money, Ethan decided to design an artillery-based game called iShoot that people can purchase for $4.99 and play on their Apple devices. In its first three months, it was downloaded over two million times, with the Nicholases making $35,000 on a peak day.

A growing number of application designers have netted over a million dollars in their first 12 months. The total number of downloads on either iPhones or iPods is now in the billions and climbing fast. It’s interesting to note that Apple doesn’t actually make that much money from the App Store—only $45 million net after the first billion downloads.

Competitors are questioning why Apple keeps encouraging this strategy, not realizing that Steve Jobs and his team have a much bigger vision. The point of the App Store is to continually create a more powerful relationship with the customers of Apple hardware. Once you load up your hand-held device with 20 or so applications, use them every day and come to rely on them, you will never switch to another brand. Plus, there’s something new coming along all the time, so the Apple future is more exciting than that offered by competitors. That’s strategy one.

The second is to encourage people whose first Apple purchase is either an iPhone or iPod to switch their main computers at work and at home to Apple. Once you are inside the Apple “value creation monopoly,” it is unlikely you will look or go elsewhere.

Provided by Dan Sullivan, Strategic Coach

Pending Home Sales Rise Again - For The Fifth Month In A Row!

2009-08-05T15:22:00.000-07:00

The number of homes under contract to sell rose in June for the fifth straight month.

It's the Pending Home Sales Index's longest winning streak since 2003 and another piece of evidence that the housing market may be rebounding.

•The supply of new homes is falling
•The supply of existing homes is falling
•The Case-Shiller Index showed home value increases in many of its markets

Separately, the data is interesting. All together, it paints the portrait of a recovery.

That said, we can't forget that the Pending Home Sales Index is somewhat unique versus other real estate reports. Whereas data on existing and new home sales measures closed transactions, the Pending Home Sales Index only measures intent to buy.

Just because a home goes under contract, in other words, doesn't mean that it actually will sell.

Purchase transactions can fall apart for a multitude of reasons including, but not limited to, buyer-seller disputes, failed home inspections, and an inability to secure mortgage financing. The Pending Home Sales Index doesn't account for these types of issues.

In general, though, as the number of homes under contract increases, Existing Home Sales increase, too -- usually on a 2-month lag. Home sale data should remain strong through early-Fall, at least.

For active home buyers, be conscious of the fact that that more home sales plus falling home supplies leads to higher home values. If you're looking for a bargain, the longer you wait, the less likely you may be to find it.

Few Homeowners Getting Mortgage Relief

2009-08-05T11:42:00.000-07:00

By Alan Zibel, AP Real Estate Writer

WASHINGTON -- The government's $50 billion program to ease the foreclosure crisis is helping only a tiny fraction of struggling homeowners.

As of July, only 9 percent of eligible borrowers had seen their mortgage payments reduced. And a progress report on the plan yesterday showed that 10 lenders had not changed a single loan.

Both Bank of America Corp. and Wells Fargo & Co. -- which have received billions in federal bailout money -- were below average. BofA, which did not immediately comment, modified 4 percent of eligible loans, and Wells Fargo 6 percent. And Wachovia Corp., which was taken over by Wells Fargo last December, modified just 2 percent.

"We know we've fallen short of our customer service goals in some cases," Mike Heid, co-president of Wells Fargo's mortgage unit, said in a statement. The company aims to sign up most borrowers for the Obama plan with one phone call and plans to send customers a trial offer within two days.

Foreclosures, meanwhile, continue to rise. About 1.5 million households received at least one foreclosure-related notice in the first half of this year, according to RealtyTrac Inc.

"There are certainly more foreclosures going on in the country then there are modifications -- by a long shot," said Bruce Dorpalen, director of housing counseling at Acorn Housing, a nonprofit housing group. He said his group has intervened to prevent about 500 foreclosure sales in cases where borrowers wanted to be considered for the Obama plan.

There are 38 companies participating in the program, and some noticeable holdouts that control 15 percent of outstanding mortgages. Litton Loan Servicing, owned by Goldman Sachs and HomEq Servicing, owned by Barclays PLC, have yet to join.

So far, more than 400,000 offers have been extended to 2.7 million eligible borrowers who are more than two months behind on their payments. More than 235,000 of those borrowers have enrolled in three-month trials.

"We think they could have ramped up better, faster, more consistently and done a better job serving borrowers and bringing stabilization to the broader mortgage markets and economy," said Michael Barr, the Treasury Department's assistant secretary for financial institutions. "We expect them to do more."

But the government is partly to blame for the languid start. The administration rolled out the guidelines gradually this year. Much of the program was not finished until mid-May, and the guidelines were updated again in early July.

The administration maintains it is still on track to meet its goal of helping up to 4 million homeowners by 2012, and last week extracted a verbal promise from the mortgage industry to reach 500,000 borrowers by Nov. 1.

American Home Mortgage Servicing and PNC Financial Services Group Inc. were among the companies that had a zero next to their names on yesterday's report.

David M. Friedman, the president and CEO of American Home Mortgage Servicing, explained that his company started the program on July 22, and expects to help 60,000, or about 40 percent of its borrowers.

The best results among the large loan services came from Saxon Mortgage Servicers Inc. One in four of Saxon's eligible borrowers has a trial loan modification with a lower monthly payment to help the homeowner avoid foreclosure. Aurora Loan Services LLC, GMAC Mortgage Inc. and JPMorgan Chase all had one in five qualified borrowers in a trial loan.

For each homeowner who makes regular payments for three months, the loan servicer collects $1,000 from the government. The company is paid thousand of dollars more if the borrower stays current for three years.

Little Johnny's History Lesson

2009-08-04T16:16:00.000-07:00

Little JohnnyThe teacher said, "Let's begin by reviewing some American History. Who said 'Give me Liberty , or give me Death'?"

She saw a sea of blank faces, except for Little Johnny, a bright Navajo Indian boy, who had his hand up: "Patrick Henry, 1775," he said.

"Very good!

Who said, "Government of the People, by the People, for the People, shall not perish from the Earth?"

Again, no response except from Little Johnny. "Abraham Lincoln, 1863."

The teacher snapped at the class, "Class, you should be ashamed. Little Johnny knows more about history than you do."

She heard a loud whisper: "Screw the Indians.""Who said that?" she demanded.

Little Johnny put his hand up. "General Custer, 1862."

At that point, a student in the back said, "I'm gonna puke."

The teacher glared around and asked, "All right!!! Now who said that!?"Again, Little Johnny said, "George Bush to the Japanese Prime Minister, 1991."

Now with blood in his eyes someone said, "You little twit. If you say anything else, I'll kill you."

Little Johnny frantically yells at the top of his voice, "Michael Jackson to the child witnesses testifying against him, 2004."

The teacher fainted.

And as the class gathered around the teacher on the floor, someone said, "Oh crap, we're screwed!"

Little Johnny said quietly, "The American people, November 4, 2008"

New - Scientific Speed Reading: How to Read 300% Faster in 20 Minutes

2009-08-03T11:57:00.000-07:00

How much more could you get done if you completed all of your required reading in 1/3 or 1/5 the time?

Increasing reading speed is a process of controlling fine motor movement—period.

This post is a condensed overview of principles I taught to undergraduates at Princeton University in 1998 at a seminar called the “PX Project”. The below was written several years ago, so it’s worded like Ivy-Leaguer pompous-ass prose, but the results are substantial. In fact, while on an airplane in China two weeks ago, I helped Glenn McElhose increase his reading speed 34% in less than 5 minutes.

I have never seen the method fail. Here’s how it works…

The PX Project

The PX Project, a single 3-hour cognitive experiment, produced an average increase in reading speed of 386%.

It was tested with speakers of five languages, and even dyslexics were conditioned to read technical material at more than 3,000 words-per-minute (wpm), or 10 pages per minute. One page every 6 seconds. By comparison, the average reading speed in the US is 200-300 wpm (1/2 to 1 page per minute), with the top 1% of the population reading over 400 wpm…

If you understand several basic principles of the human visual system, you can eliminate inefficiencies and increase speed while improving retention.

To perform the exercises in this post and see the results, you will need: a book of 200+ pages that can lay flat when open, a pen, and a timer (a stop watch with alarm or kitchen timer is ideal). You should complete the 20 minutes of exercises in one session.

First, several definitions and distinctions specific to the reading process:

A) Synopsis: You must minimize the number and duration of fixations per line to increase speed.

You do not read in a straight line, but rather in a sequence of saccadic movements (jumps). Each of these saccades ends with a fixation, or a temporary snapshot of the text within you focus area (approx. the size of a quarter at 8? from reading surface). Each fixation will last ¼ to ½ seconds in the untrained subject. To demonstrate this, close one eye, place a fingertip on top of that eyelid, and then slowly scan a straight horizontal line with your other eye-you will feel distinct and separate movements and periods of fixation.

B) Synopsis: You must eliminate regression and back-skipping to increase speed.

The untrained subject engages in regression (conscious rereading) and back-skipping (subconscious rereading via misplacement of fixation) for up to 30% of total reading time.

C) Synopsis: You must use conditioning drills to increase horizontal peripheral vision span and the number of words registered per fixation.

Untrained subjects use central focus but not horizontal peripheral vision span during reading, foregoing up to 50% of their words per fixation (the number of words that can be perceived and “read” in each fixation).

The Protocol
You will 1) learn technique, 2) learn to apply techniques with speed through conditioning, then 3) learn to test yourself with reading for comprehension.

These are separate, and your adaptation to the sequencing depends on keeping them separate. Do not worry about comprehension if you are learning to apply a motor skill with speed, for example. The adaptive sequence is: technique ‘ technique with speed ‘ comprehensive reading testing.

As a general rule, you will need to practice technique at 3x the speed of your ultimate target reading speed. Thus, if you currently read at 300 wpm and your target reading speed is 900 wpm, you will need to practice technique at 1,800 words-per-minute, or 6 pages per minute (10 seconds per page).

We will cover two main techniques in this introduction:

1) Trackers and Pacers (to address A and B above)
2) Perceptual Expansion (to address C)

First – Determining Baseline
To determine your current reading speed, take your practice book (which should lay flat when open on a table) and count the number of words in 5 lines. Divide this number of words by 5, and you have your average number of words-per-line.

Example: 62 words/5 lines = 12.4, which you round to 12 words-per-line

Next, count the number of text lines on 5 pages and divide by 5 to arrive at the average number of lines per page. Multiply this by average number of words-per-line, and you have your average number of words per page.

Example: 154 lines/5 pages = 30.8, rounded to 31 lines per page x 12 words-per-line = 372 words per page

Mark your first line and read with a timer for 1 minute exactly-do not read faster than normal, and read for comprehension. After exactly one minute, multiply the number of lines by your average words-per-line to determine your current words-per-minute (wpm) rate.

Second – Trackers and Pacers
Regression, back-skipping, and the duration of fixations can be minimized by using a tracker and pacer. To illustrate the importance of a tracker-did you use a pen or finger when counting the number of words or lines in above baseline calculations? If you did, it was for the purpose of tracking-using a visual aid to guide fixation efficiency and accuracy. Nowhere is this more relevant than in conditioning reading speed by eliminating such inefficiencies.

For the purposes of this article, we will use a pen. Holding the pen in your dominant hand, you will underline each line (with the cap on), keeping your eye fixation above the tip of the pen. This will not only serve as a tracker, but it will also serve as a pacer for maintaining consistent speed and decreasing fixation duration. You may hold it as you would when writing, but it is recommended that you hold it under your hand, flat against the page.

1) Technique (2 minutes):

Practice using the pen as a tracker and pacer. Underline each line, focusing above the tip of the pen. DO NOT CONCERN YOURSELF WITH COMPREHENSION. Keep each line to a maximum of 1 second, and increase the speed with each subsequent page. Read, but under no circumstances should you take longer than 1 second per line.

2) Speed (3 minutes):

Repeat the technique, keeping each line to no more than ½ second (2 lines for a single “one-one-thousand”). Some will comprehend nothing, which is to be expected. Maintain speed and technique-you are conditioning your perceptual reflexes, and this is a speed exercise designed to facilitate adaptations in your system. Do not decrease speed. ½ second per line for 3 minutes; focus above the pen and concentrate on technique with speed. Focus on the exercise, and do not daydream.

Third – Perceptual Expansion
If you focus on the center of your computer screen (focus relating to the focal area of the fovea in within the eye), you can still perceive and register the sides of the screen. Training peripheral vision to register more effectively can increase reading speed over 300%. Untrained readers use up to ½ of their peripheral field on margins by moving from 1st word to last, spending 25-50% of their time “reading” margins with no content.

To illustrate, let us take the hypothetical one line: “Once upon a time, students enjoyed reading four hours a day.” If you were able to begin your reading at “time” and finish the line at “four”, you would eliminate 6 of 11 words, more than doubling your reading speed. This concept is easy to implement and combine with the tracking and pacing you’ve already practiced.

1) Technique (1 minute):

Use the pen to track and pace at a consistent speed of one line per second. Begin 1 word in from the first word of each line, and end 1 word in from the last word.

DO NOT CONCERN YOURSELF WITH COMPREHENSION. Keep each line to a maximum of 1 second, and increase the speed with each subsequent page. Read, but under no circumstances should you take longer than 1 second per line.

2) Technique (1 minute):

Use the pen to track and pace at a consistent speed of one line per second. Begin 2 words in from the first word of each line, and end 2 words in from the last word.

3) Speed (3 minutes):

Begin at least 3 words in from the first word of each line, and end 3 words in from the last word. Repeat the technique, keeping each line to no more than ½ second (2 lines for a single “one-one-thousand”).

Some will comprehend nothing, which is to be expected. Maintain speed and technique-you are conditioning your perceptual reflexes, and this is a speed exercise designed to facilitate adaptations in your system. Do not decrease speed. ½ second per line for 3 minutes; focus above the pen and concentrate on technique with speed. Focus on the exercise, and do not daydream.

Fourth – Calculate New WPM Reading Speed
Mark your first line and read with a timer for 1 minute exactly- Read at your fastest comprehension rate. Multiply the number of lines by your previously determined average words-per-line to get determine your new words-per-minute (wpm) rate.

Congratulations on completing your cursory overview of some of the techniques that can be used to accelerate human cognition (defined as the processing and use of information).

Final recommendations: If used for study, it is recommended that you not read 3 assignments in the time it would take you to read one, but rather, read the same assignment 3 times for exposure and recall improvement, depending on relevancy to testing.

Happy trails, page blazers.

Written by Tim Ferris

Are We Seeing The End Of The Recession And Is The Case-Shiller Index Proof Of That

2009-08-03T11:23:00.000-07:00

For May, the Case-Shiller Index showed home values up in 15 of its 20 tracked U.S. markets. It's the first time in nearly 3 years that the index showed such strength and a signal that home prices may be turning higher for good.

According to a Case-Shiller Index spokesperson, "this could be a signal that home price declines are finally stabilizing."

However, just because the Case-Shiller Index indicates home values are stabilizing, doesn't necessarily make it true. Real estate is a local phenomenon and the Case-Shiller Index tracks just 20 U.S. cities.

Residents of every other town are unaccounted for.

Additionally, even within the 20 tracked cities, there are distinct neighborhoods and pockets that are under-performing the general market -- just as there are those that are over-performing. The Case-Shiller Index can't get that granular.

Despite its imperfections, the Case-Shiller Index remains a helpful, broader measurement of U.S. real estate. Economists believe that housing led the U.S. into the recession and they believe housing will lead us out, too.

If that's true, May's figures are the next step in the right direction.

Google aims to have the biggest and most profitable social network — and we will make it happen for them.

2009-07-31T11:15:00.000-07:00

“Why would Google want to encourage people to create profiles of themselves? Because it aims to take on Facebook. By promising improved vanity searches, the thinking goes, Google is getting us to tell the company a lot more about ourselves. In the process, it’s garnering enough information to build the world’s largest social network—and make a fortune besides.”

Manjoo, Farhad. “Google’s Trojan Horse.” Slate Magazine. 30 Apr 2009

Google is already the 800-pound gorilla in the Internet universe—the perfect example of “those that have always get more.” When you’re the most frequently visited website—1.5 billion hits per day as of today—you keep inviting even more visits.

Now the geniuses at Google have given us another reason to visit their site. It’s called a Google Profile (just type in those words), a page on their site that you create, and continually update, that presents you in the best light to the whole world. In other words, you get to control exactly what people see when they look up your name.

This is part of a fast growing Internet industry called “online reputation management.” Since anyone can write anything they want about you, without any editorial control or censorship, it becomes extremely important that what shows up on Google is what you want to see there.

Google will probably get hundreds of millions of people to create their Google Profiles, but that’s only one-tenth of their strategy. Once they have your self-created profile, they can then create and sell custom-designed advertising campaigns directed just to you, based on their record of what you have searched for on their site.

In my case, they have dozens of Google searches over the past ten years. They know my tastes, my interests, and which products and services I am likely to buy. Whenever I go to my site, I will see dozens of focused advertisers appealing to my wallet. This is a winning strategy. I like it. It makes me feel good. It makes me feel special.

Why Are Mortgage Rates Rising This Week And Why May They Go Higher?

2009-07-30T10:25:00.000-07:00

After starting the week with a run lower toward 5 percent, mortgage rates have reversed course.

It started mid-day Tuesday and the culprit is Basic Economics.

Here's why.

Mortgage rates are based on the price of mortgage-backed bonds and -- like most things -- mortgage-backed bonds prices are based in Supply and Demand.

When bond supplies grow faster than the corresponding demand for them, bond prices tend to fall and when bond prices are down, bond yields are up.

Meanwhile, this week, the U.S. Treasury is making its largest weekly auction in history, $115 billion in new debt, to be exact. This means that before the week is through, $115 billion in new bond supply will have been introduced into the market and -- so far -- demand hasn't kept pace with the new supply.

Prices are plunging.

For home buyers and rate shoppers, this is especially bad news because mortgage-backed debt is less desirable to investors than is treasury debt. As a result, when treasury debt loses values, mortgage-backed debt tends to lose value, too. Not always, but most of the time.

So, beginning with Tuesday afternoon's auction, debt supplies have been growing faster than buyer demand.

Bond markets are suffering from an abundance of debt supply and it's been a big reason why mortgage rates are rising. The week's not over yet, either. $28 billion is due for auction Thursday.

If demand at the auction is similarly low, watch for mortgage rates to spike again.

Secrets That Lenders Won't Tell You About Your Short Sale

2009-07-29T11:28:00.000-07:00

Rarely a day goes by that I don't hear a real estate agent ask, "Why would the bank mess up my short sale and let it go to foreclosure?" It's really quite simple...BECAUSE THEY CAN!

I could write a book about everything the lenders won't tell you about the short sale process. However, it would be worthless the moment it is published. The business changes every day, every hour, every minute. The lenders, investors, collections agencies, government agencies and everyone involved in this mess are still trying to figure out what happened, let alone what is happening right now.

ANYONE THAT TELLS YOU THEY KNOW ALL THE SECRETS OF DOING SHORT SALES, CAST A VERY SUSPICIOUS EYE, AND HERE ARE THE REASONS WHY...

1) The lenders still are not sure that what they are doing is right FOR THEM. They are constantly changing their short sale and loss mitigation processes to figure out what will make the best return on the loss. It will change at the whim of those assigned to review the pipeline disaster that is their loss mitigation. And, time and time again, the changes usually are not for the best. They only further complicate the process. The banks are in the business to lend money. The whole loss mitigation and short sale business is still a blur to them. Think about how absurd this business is...I know of one case where they forgave $353,000 on a property without blinking, but killed a loan mod and subsequent short sale for a paltry $5,000.

2) The property is ONLY A DEBIT! The lender will never see or visit the home. The only one that cares about how the home looks is the homeowner. The lenders and their investors DO NOT CARE ABOUT THE FEELINGS OF THE BORROWERS/HOMEOWNERS. They have NO emotional attachment to the property. However, they want to assure that the borrower absolutely HAS an emotional attachment. Remember, those lovely photos in the appraisal are only seen by an underwriter that initially approved the loan. The actual lender does not care for photos and will never see them. THE PROPERTY IS SIMPLY A DEBIT OR A "THING".

3) Lenders and investors make secret deals for billions of dollars every day behind your back! Many agents remain shortsighted on the housing industry, alltogether. They only want to see and believe that their real estate transaction is the only way the lender can move the property. In fact, this is not by any means the principal manner of unloading their inventory. REO's, performing and non-performing notes account for the majority of their swaps. However, those sales are never recorded in public records. Most of them are sold for pennies on the dollar.

4) The housing crisis is NOWHERE NEAR A BOTTOM! The biggest reason for this is the tremendous amount of inventory. And I'm not simply talking about the inventory in the lender's hands. I'm talking about inventory yet to be taken back. There are millions of homeowners living in their homes for free. I have clients going on 2 years without a mortgage payment. The lenders and their investors are simply overwhelmed by this crisis and they would rather see someone in the property taking care of it. Once they foreclose, they are responsible for all the bills on the house. Only 30% of the lender inventory is even available for sale. Nearly three times the current inventory is pending foreclosure. And unless everyone behind on their payments gets back to work and starts paying their mortgage, the crisis will not be going away any time soon.

Mortgage Rates Drop, Bernanke Offers Us His "Exit" Strategy

2009-07-22T14:33:00.000-07:00

Mortgage markets rallied Tuesday while Fed Chairman Ben Bernanke gave his semi-annual testimony to Congress.

By the time the day was over, some conforming mortgage rates were down by as much as 0.250 percent.

One of the leading causes for the market rally was Chairman Bernanke revealing an "exit strategy" from its massive market stimulus.

Until Tuesday, the Fed hadn't gone into much depth about means and methods by which it would unwind its interventions. In addition to penning a widely-read Op-Ed piece in the Wall Street Journal Tuesday, Bernanke testified to Congress that the Federal Reserve has a viable "exit strategy".

Wall Street was pleased to hear it.

The specter of long-term inflation has spooked the mortgage markets off-and-on since the start of the year. It's one of the reasons why mortgage rates have been so jumpy, and why they crossed 6 percent last month. Inflation is terrible for mortgage markets.

So, with the fear of inflation subsiding -- at least temporarily -- mortgage rates sunk Tuesday.
With any bit of luck, momentum will carry rates lower today and through the rest of the week. But, don't get greedy. Mortgage markets are notoriously fickle and one "bad" statement from the Fed Chairman could cause rates to rise right back up.

Bernanke's complete Tuesday testimony can read online at the Federal Reserve website.

The First Time Homebuyer Tax Credit Timeline Is Starting To Run Out

2009-07-21T14:52:00.000-07:00

The government's First-Time Home Buyer Tax Credit expires December 1, 2009.

If you expect to use the program in conjunction with a home purchase, therefore, you may want to consider yourself officially "on the clock".

Assuming a 60-day window between contract and closing, there are now 77 days left to find a home and go under contract for it.

The First-Time Home Buyer Tax Credit refunds up to $8,000 at Tax Time for qualified home buyers. A few of the program's qualification criteria include:

•Home buyer must not have owned a primary residence in the past 36 months
•The home may not be purchased from a family member
•The household adjusted gross income must be below $95,000 for single tax filers and $170,000 for joint tax filers

The tax credit itself is limited to $8,000 or 10% of the purchase price, whichever is less.

Remember, though: The refund is a true tax credit -- not a deduction. This means that a taxpayer owing $8,000 to the IRS and claiming the $8,000 First-Time Home Buyer Tax Credit would owe the IRS nothing on April 15, 2010.

Why Our "Leaders" Are More And More Uninformed About Progress Occurring Everywhere Around Them.

2009-07-20T16:23:00.000-07:00

Quote: “We are in a golden age of medical innovation—but not in the sense that this is a shining era upon which historians will look with fondness (like the great age of classical music) distant decades from now. In free markets, every glittering age of technology is succeeded by another that is even more glittering."

Source: Calfee, John. “The Golden Age of Medical Innovation.” The American. March/April 2007

Every day, medical breakthroughs are occurring that don’t make the news. This is one reason politicians and government bureaucrats seem increasingly uninformed about the health care industry and other parts of the economy.

For example, a drug called Lucentis, produced and marketed by Genentech, stops and reverses degenerative blindness in older people. It is a product of applying biotech methods to genetically engineered bacteria and has been successful in 95 percent of clinical cases. Macular degeneration, which affects millions of people, had previously been incurable. My father suffered from blindness due to macular degeneration for the last 27 years of his life. We had hoped that something like this would have come along before his death last year. But now it is finally here.

Back in October of 1987, the day after U.S. stock prices had fallen 23 percent to 1,738, Sir John Templeton, of mutual fund fame, was asked in New York where the stock market would go now. Templeton predicted that by the year 2000, the stock market would hit 10,000. The reporters were incredulous. One asked, “How can you say that? Isn’t capitalism broken?” Sir John replied that of all the scientists, engineers, researchers, and technicians who have ever lived on the planet, 99 percent of them were alive today, and they were all connected electronically. How could there not be an ever-increasing number of great new opportunities to invest in?

As he predicted, the stock market exceeded 10,000 by the year 2000. We are in a strange situation today. Each day, increasing technological improvements are occurring throughout the economy. And each day, the so-called leaders in the media and academic and political establishments who only look for bad news are more and more out of touch with progress being made everywhere.

Why did the earth warm so much in the 1990s? Why is it cooling so much now? Blame it all on sunspots.

2009-07-17T21:49:00.000-07:00

Quote: “‘This is the quietest Sun we’ve seen in almost a century,’ says NASA solar scientist David Hathaway. But this is not just a scientific curiosity. It could affect everyone on Earth and force what for many is the unthinkable: a reappraisal of the science behind recent global warming.”

Source: Whitehouse, David. “The missing sunspots: Is this the big chill?” The Independent. 27 Apr 2009.

Evidence that the sun is the primary cause of global warming and cooling has been available for centuries. Dramatic evidence from this decade now proves the point. For approximately the last two years, there has been no sunspot activity on the sun’s surface. This is the longest absence on record, and it coincides with a global drop in temperature since 2007 of almost two degrees Fahrenheit.

There are also two other unusual phenomena occurring. The “solar wind”—an outpouring of charged particles from the sun that appears visually as the northern lights—is at its weakest on record.

As well, the sun’s magnetic axis is tilted to an unusual degree. Over the past century, especially in the 1980s, there was very high sunspot activity, which led to a steady increase in global warming.

Global warming alarmists, ignoring the volumes of evidence from solar scientists, universally blamed everything on carbon dioxide emissions caused by human beings. But then the temperatures stopped rising in 1998 due to a lessening of sunspots. At the same time, global carbon dioxide emissions have gone up 30 percent over the past decade. The only proven scientific impact of these emissions is that plant life on Earth has increased by a remarkable eight percent since 1980.

Why do alarmists ignore the solar evidence? Because they can’t regulate the sun. And because their real objective isn’t scientific proof, but control of the global economy. If the sun continues to be less active over the next decade, we’ll all be saying extra prayers for global warming.

Taken from "The Global Thinker" by Dan Sullivan

The Claim Of “46 Million Uninsured” Americans Deserves A Closer Look.

2009-07-16T14:55:00.000-07:00

Quote: “Subtract noncitizens and those who can afford their own insurance but choose not to purchase it, and the number of uninsured falls dramatically. ‘Many Americans are uninsured by choice.’”

“The Phantom Uninsured.” Investors.com. 16 June 2009.

A friend of mine, Dan Sullivan*, lives in both Canada and the U.S., and is insured under two different health insurance programs, one government and one private. Which system is better?

Well, each is good in its own way, he says. He calls the Canadian approach an “80 percent system” because it’s good for 80 percent of what ails you—in other words, ordinary injuries and sicknesses. The treatments are good, fast, and low-cost.

But the moment you get into more specialized care and treatments, the system fails badly; for example, getting an MRI can take months. When his friend needed cataract surgery, she was told that she was too young and wouldn’t be eligible for treatment until she was sixty-five. A phone call had her taken care of in a private Chicago-area surgery center within a week.

There are many specialized forms of care that are scarce or non-existent because the system won’t pay for the doctors or the technology. For all of those, he comes to the U.S., where his coverage gives him instant access to top care.

He believes that the Canadian system wouldn’t work in the U.S. because America’s population is ten times bigger and far more individualistic and entrepreneurial in its attitudes. The American system wouldn’t work in Canada because Canadians have a greater belief in and dependency on government than Americans do.

U.S. Census Bureau statistics show that of the reported 46 million who are not insured in the U.S., more than nine million are not citizens. In addition, more than 17 million with incomes of $50,000 or more choose not to buy insurance. Forty percent of the uninsured, or more than 18 million, are young, healthy individuals. Last year, all uninsured individuals in the U.S. received a total of $116 billion in health care despite their lack of coverage. No insurance doesn’t mean no care.

* Dan Sullivan is founder of Strategic Coach and the author of The Global Thinker

Foreclosures Still Concentrated In Three States

2009-07-16T14:07:00.000-07:00

For the fourth consecutive month, the country's foreclosure activity was dominated by a small number of states.

As reported by RealtyTrac.com, more than 50 percent of the country's foreclosure-related actions in June concentrated in just 3 states:

California
Florida
Nevada

The states rounding out the Top 10 include Arizona, Georgia, Michigan, Texas, Ohio, Illinois and Colorado.

Meanwhile, June's reported foreclosure figures are consistent with the data from earlier this year, suggesting that the foreclosure remedy plans put forth by the government and by lenders can barely keep pace with the national default rate.

Foreclosure-related actions nationwide are up 5 percent from May.

The silver lining in data this negative is that foreclosures are creating tremendous buying opportunities for the right buyers. Because foreclosed homes tend to sell at a discount versus non-foreclosed homes and because mortgage rates are low, home sales are showing strength in a multitude of markets because of ample supply at relatively cheap prices.

Distressed homes accounted for one-third of all existing home sales in May.

Search the complete June 2009 foreclosure report for yourself, including foreclosure heat maps and other trends on the RealtyTrac website.

Why Did Mortgage Rates Go Up 3 Days In A Row?

2009-07-15T10:52:00.000-07:00

Mortgage markets worsened for the third straight Tuesday after the government reported June's Retail Sales report came in slightly better than expected.

Since falling to near 5.000 percent last week, 30-year fixed conforming mortgage rates have risen by almost 3/8.

It's a similar mortgage rate pattern to what we've seen over the last 10 months -- rates drift down to near their "all-time lows", and then surge higher over just a few days time.

This week's movement, in particular, is vexing home buyers and would-be refinancers.

Many people thought mortgage rates would break below the 5.000 percent threshold. The markets, however, had other ideas.

In addition to the unexpectedly strong Retail Sales data, last month's Producer Price Index reported higher than expectations, too.

A rising PPI is important to rate shoppers because the figure is akin to the Cost of Living measurement for household, but for American businesses instead. The thought goes that if business costs are rising, consumer costs will eventually rise, too, as businesses share their expenses with American households.

This is inflationary, of course, and inflation is awful for mortgage rates. It's part of the reason why mortgage rates closed higher again Tuesday.

All year long, mortgage rates have been jumpy and unpredictable. This past week has been no different and it's why you shouldn't necessarily try to time for a market bottom with mortgage rates.

If an interest rate looks good to you today and the payment is manageable, consider locking it in. There's no guarantee rates will ever fall back toward 5.

Lawyers Say Lenders Are Setting The Stage To Collect On "Short Sales"

2009-07-14T15:38:00.000-07:00

"Foreclosure may be a better option for some struggling homeowners."

A "short sale" might not be the end of a homeowner's problems.

The practice, which has exploded in popularity as homeowners struggle to pay their mortgages, is supposed to allow a borrower to sell a home for less than the mortgage amount, walk away, and avoid a credit-killing foreclosure.

Not so fast, say local real estate attorneys.

Lenders appear to be inserting language into short sale contracts that allow them to sue for any "deficiency," or the amount lost by a bank by selling a home for less than the mortgage ---- opening the door to collection agencies and court judgments that can run into the hundreds of thousands of dollars for some North San Diego County homeowners.

What's more, the nation's premier credit scoring firm says that short sales and foreclosures are equally damaging to credit scores.

Yet short sales have surged in popularity, as homeowners struggling with falling values and rising unemployment seek a way out.

It's not clear how many short sales in fact fail to protect former homeowners from subsequent collection efforts. But local real estate attorneys and other professionals say such vulnerability may be widespread.

One real estate agent who specializes in short sales, Chris Mackey of Carmel Valley, said about 50 percent of the short sale contracts he has seen include the language before he requests its removal. Banks generally have removed the language, he said.

Major lenders Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. (owner of the former Washington Mutual) declined comment for this story or, through spokesmen, said officials were unavailable for comment.

However, the North County Times obtained a short sale contract issued by Countrywide Financial Corp., which together with parent company Bank of America services roughly 20 percent of the mortgages in the nation.

The contract warned the homeowner, who owned a house in El Cajon, that Countrywide "may pursue a deficiency judgment for the difference in the payment received and the total balance due ... " The owner, who is still negotiating with the lender, declined through a lawyer to comment.

Attorneys say such clauses mean that a borrower's troubles might not end with the short sale ---- the lender could sue the borrower for a deficiency at a later date or turn over the unpaid debt to collectors after the short sale closes.

Indeed, under some conditions borrowers may face fewer troubles by letting their properties fall into foreclosure.

Ins and outs

For borrowers who do not know the ins and outs of short sales, "you absolutely should get an agent or somebody who is an expert and help you with the process," said Bart Blechschmidt, a partner with Galuppo & Blechschmidt, a Carlsbad real estate law firm.

Blechschmidt said his firm charges between $1,000 and $1,500 to negotiate a short sale.

Keeping up with mortgage payments ---- and thus keeping the house ---- is getting harder for thousands of families in San Diego and Riverside counties, where unemployment rates shot into record territory in March.

Meanwhile, home values have plummeted more than 40 percent since 2006, leaving roughly one-third of San Diego County mortgage holders "under water," or owing more than their homes are worth, according to First American CoreLogic, a data firm. The figure is higher in Southwest Riverside County; three of every four mortgage holders in Lake Elsinore is under water, for example.

Such conditions have led to an increase in the popularity of short sales.

Of about 14,000 properties for sale across the county on one real estate listing service, 5,610 "required lender approval," which usually means they are short sales.

In a foreclosure, the homeowner leaves immediately, his credit ruined, and the bank is typically left auctioning an empty house, often at a depressed value and leaving the lender with losses.

Short sales are touted as helpful to both lenders and borrowers: Banks hope to recover more money when homeowners stay put and assist in an orderly sales process. And borrowers hope to suffer less damage to their credit score when banks agree to settle for less than the full mortgage.

All the same to FICO

However, a spokesman for Fair Isaac, creator of the widely used FICO credit score, said its mathematical models make no distinction whatsoever between a short sale and a foreclosure.

Yet short sales do offer a key advantage. Mortgage giant Fannie Mae will back a loan from a borrower two years after a short sale. Borrowers with a foreclosure on their record must wait five years, a Fannie Mae spokeswoman said.

To walk away free and clear, borrowers must make sure all loans are extinguished and debts forgiven, said Blechschmidt, the Carlsbad lawyer.

But in some cases the lender can pursue a deficiency judgment in foreclosure, as well, depending on the type of loan.

Whether the lender pursues a deficiency depends upon a multitude of factors, including the borrower's story or payment history, and whether the loan had been sold to a third-party investor, said Martin McGuinn, a San Diego lawyer who represents banks and debt collectors.

It's possible those lenders won't sue the borrowers at first because "that's why they're in a short sale anyways, they don't have the money," said Susan Anderson, manager of the Coldwell Banker real estate brokerage in Vista. So banks "are saying, 'Down the line, if you have the money, we'll go after it.' "

If done the right way, short sales do allow borrowers to move on free and clear.

Letters, no cases

Despite one report from a real estate agent of an active lawsuit involving a lender suing a borrower, the North County Times couldn't confirm any cases.

And local lawyers who represent borrowers say they haven't heard of any.

"I'm aware of letters, but I don't know where that's gone," said David Bright, a real estate attorney in Escondido. "Stay tuned, fasten your safety belt. We have to wait and see what these lenders do. They might not think it's worth it politically."

But one short sale specialist, real estate agent John Woodall of San Marcos, said he doesn't buy the scares from lawyers that short sales open the door to deficiency when foreclosure would have allowed a free-and-clear walk away.

"I just don't see a judge or jury saying, 'We appreciate you trying to do the right thing, but you still have to pay all the money back,' " Woodall said.

It wasn't clear last week whether homeowners merely face a risk, based on contract language, or real lawsuits. The North County Times has found no local case of a lender suing a borrower after a short sale.

Legal briefing

Borrowers can face deficiency judgments at any point on certain types of loans. But California law allows special privileges for what is known as "purchase money" loans, or the original loan used to purchase the home.

On such mortgages, a bank cannot legally sue the borrower for nonpayment. The bank's only means of recouping the loan is to foreclose on the house.

Therefore, a homeowner late on payments on a purchase money loan cannot face a lawsuit ---- even if the owner put no money down.

But all bets are off if the borrower refinanced the mortgage. Especially on home equity lines of credit, lenders can sue the borrower for the unpaid amounts following either foreclosure or short sale.

However, lawyers said, if the borrower negotiates a short sale, the bank might issue a contract that says it will agree to sell the house and release the borrower from the "trust deed," the contract saying the borrower must pay back the loan in full.

Lenders might include a clause in a short sale contract that releases the lien but creates the possibility for a lawsuit to collect debts at a later date, said John Brady, a San Diego attorney.

Effectively, lenders will try to transform a purchase-money loan into one in which the bank can sue to collect, Brady said.

"They're being sneaky," he said. "They're trying to keep the door open to be able to collect on any deficiency."

How To Get A Lower Mortgage Rate By Choosing The Right Closing Date

2009-07-13T11:26:00.000-07:00

Whether you're buying a home in San Diego or refinancing one, there's lots of ways to make a play for lower mortgage rates or fewer loan fees.

1.Have a higher credit score
2.Make a larger downpayment
3.Do your Good Faith Estimate homework

But, sometimes, the easiest way to save money on your mortgage is by picking a better closing date.

It's all about Rate Lock Commitments.

A Rate Lock Commitment is a bank's promise to honor a specific mortgage rate for a specific period of time. It's a contract, of sorts, in which the lender says: "Provided you close on your loan in the next however-many days, we'll make sure you get your locked rate."

In many respects, a mortgage lender's profitability is linked to its ability to accurately predict what mortgage markets will look like at the end of a Rate Lock Commitment.

It's a dangerous game to predict the future and banks know that the farther into the future they try to predict, the more likely their predictions will be wrong. It's why longer rate lock commitments tend to carry higher interest rates, higher fees, or both -- banks are purposefully hedging against "time risk".

Rate locks typically come in 15-day increments with the 30-day rate lock serving as the basis for all other pricing:

•15-day rate lock : Often 1/8 percent lower than the 30-day rate lock
•30-day rate lock : The basis for all other pricing
•45-day rate lock : Often 1/8 percent higher than the 30-day rate lock
•60-day rate lock : Often 1/4 percent higher than the 30-day rate lock

Based on the chart, you can see why choosing a closing date matters. A simple 1-day difference can lower your mortgage rate by 0.125% -- an annual $380 savings against a $400,000 home loan.

And the math doesn't just apply to purchase mortgages. It applies to refinances, too.

A refinance that can close in 30 days is going to be better priced, in general, than one that takes 45 days to close. It's one reason why being responsive to documentation requests is so important -- quicker to process means quicker to close.

Managing a mortgage rate lock commitment is an often-neglected method for keeping mortgage rates and loan fees down -- mostly because homeowners and real estate agents rarely know how to do it, and loan officer rarely talk about it.

So, before choosing a closing date for your pending home purchase, or starting to work on a new refinance, consider the impact of time on your bottom line. The shorter your rate lock commitment, the more money you're likely to save.

How Does A Higher Unemployement Rate Translate Into Lower Mortgage Rates?

2009-07-07T11:20:00.000-07:00

Last week's jobs report is the latest data point to drag down rates for today's home buyers and would-be refinancers.

As reported by the government, the national Unemployment Rate rose to 9.5 percent in June -- a 25-year high.

As the percentage of out-of-work Americans grows, households have less disposable income to pump back into the economy.

And so, because consumer spending accounts for two-third of the economy, the growing ranks of the unemployed are forcing markets to change expectations about when the U.S. economy will reach its full recovery.

Inflation is the enemy of mortgage rates. The perceived absence of inflation, therefore, can be its friend.

With fewer working Americans, we can expect slower economic growth plus a smaller probability for inflation over the medium-term. This is why mortgage rates are lower of late, off by as much as a half-percent from the peak.

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2009-07-02T15:48:00.001-07:00

Think Memorable, Not Material.

2009-07-02T14:42:00.000-07:00

Think memorable, not material. If you have to choose between, say, a new car and a family vacation, pack your bags. Even the sexiest sports car becomes routine over time. But the memory of a good time with friends and loved ones will last forever.

The Expanded First-Time Home Buyer Tax Credit: 10 Common Questions (and Answers)

2009-07-02T13:52:00.000-07:00

In late May, Uncle Sam rolled out a policy change that provided home buyers with expedited access to a recently-enacted tax credit worth up to $8,000. The change allows home buyers to put this tax incentive toward closing costs or part of their down payment, instead of waiting until after tax season to get their hands on the funds. But while helpful, the program to "monetize" the tax credit can be puzzling to consumers. In an effort to help consumers better understand how the program works--and how they can take advantage of it--the National Association of Home Builders has released the following "FAQ on Monetization:"

[See The $8,000 First-Time Home Buyer Tax Credit Program Expands: 5 Things to Know]

1. What exactly does “monetizing” the tax credit mean?

The term “monetization” is defined as the act of converting something into money. In the context of the first time-home buyer tax credit, monetization means to treat the payment of the credit as if it was cash and allow its use as a payment for certain closing and downpayment expenses.

2. What is a “bridge” loan?

A bridge loan is a type of loan that is intended to be outstanding for a very short time period, often only a few days or weeks. Bridge loans are use to provide funds in situations where the borrower is expected to receive funds, such as the payment of this tax credit, within a very short time.

3. What is a state housing finance agency?

A state housing finance agency, often referred to as an “HFA,” is an organization that provides funding for a variety of loan and grant activities related to for-sale and rental housing. HFAs are also typically responsible to distribute grant funds from federal agencies, such as the U.S. Department of Housing and Urban Development (HUD).

4. How do I find out if my state housing finance agency is providing this service?

The best way to locate information about your state’s HFA is via the Internet. The National Council of State Housing Agencies (NCSHA) maintains a directory of state HFAs at: http://www.ncsha.org/section.cfm/4/39/187

5. What kinds of lenders are doing this? How can I find a list of lenders who are providing these short-term loans?

Many state housing finance agencies are either running or sponsoring programs that will use a tax credit for a downpayment. These programs often place a second lien on the home as collateral to secure the eventual repayment of the tax credit funds. Some state HFAs lend directly to home buyers while other HFAs work through networks of state-approved lenders.

In addition to state agencies, FHA-approved lenders may be offering to purchase a first time home buyer’s tax credit in conjunction with an FHA-insured mortgage loan. Interested buyers should check with area lenders, home builders, or real estate agents for the names of participating lenders.

The Federal Housing Administration (FHA) also has an online tool to find FHA-approved lenders: http://www.fhaoutreach.gov/FHALookup/

6. What types of loans qualify?

Any lender could offer a program that would permit a first-time home buyer to apply the tax credit to funds needed for a loan that is obtained in conjunction with a home purchase. At this time, however, only the Federal Housing Administration (FHA) has issued guidance regarding the monetization of the first-time home buyer tax credit in conjunction with FHA-insured mortgage loans.

7. Can this short-term loan be applied to the minimum 3.5% downpayment required by my FHA loan or is it only available above and beyond the initial downpayment required?

If an FHA-approved lender or state housing finance agency is purchasing a tax credit and therefore making a short-term loan that is secured only by the repayment of the first-time home buyer tax credit, these funds cannot be applied to a downpayment in lieu of the home buyer’s funds. A home buyer still has to provide the 3.5 percent downpayment from his or her own funds. The money from the short-term loan can be used to pay closing costs and prepaid expenses, such as escrows for taxes, insurance, and community association assessments. These funds could also be used to make a larger downpayment or to “buy down” the interest rate on the mortgage loan.

However, many HFAs are offering tax credit loan programs that offer home buyers a short-term loan backed by the anticipated tax credit and secured by a second lien, which in general will be paid off after the homebuyer receives their income tax credit from the IRS. The proceeds of these loans may be used to satisfy the 3.5 percent downpayment requirement for FHA-insured loans. The National Council of State Housing Agencies (NCSHA) maintains a list of such tax credit loans programs at: http://www.ncsha.org/section.cfm/3/34/2920.

8. Who should I contact at my state housing finance agency to urge them to participate in this program if they don’t already do so? What should I say?

The best way to locate information about your state’s HFA is via the Internet. The National Council of State Housing Agencies (NCSHA) maintains a directory of state HFAs at: http://www.ncsha.org/section.cfm/4/39/187

Most state HFA web sites include phone numbers and email addresses by which they can be contacted.

9. Is this an interest-free loan or are there fees associated with this type of short-term loan?

If a governmental agency, such as a state housing finance agency, or an FHA-approved lender purchases a first-time home buyer tax credit, they are allowed to charge no more than 2.5 percent of amount of the credit.

10. How can I tell if the short-term loan on the tax credit is being offered by a reputable company?

If the organization is a unit of state government, it is safe to say that it is reputable. Otherwise, a home buyer may want to check with their local Better Business Bureau or through a state or local government’s department of consumer affairs.

Pending Home Sales Are Up For The Fourth Month In A Row

2009-07-02T10:01:00.000-07:00

The number of homes under contract to sell increased in May.

It's the fourth straight month in which sales volume increased, providing added strength to the growing notion that housing is on the mend in most U.S. markets.

Consider these other housing-related stories from the past month:

•Existing Home Sales are rising
•New home supplies are falling
•The Case-Shiller Index is turning positive-like

Put it all together and it looks like the housing market is about to reach its bottom (if it hasn't already).

But just because homes are going under contract to sell doesn't mean that they actually will sell. A "deal" can fall apart for all sorts of reasons including failed home inspections, buyer-seller disputes, and mortgage-related problems. In the San Diego area, appraisers are under pressure to provide ultra conservative values that are increasingly killing deals.

In general, though, as the number of pending contracts increase, we find that Existing Home Sales rise, too, some 45-60 days into the future. And so long as buyers' demand for homes remains strong, we would expect that home prices edge higher.

It's too soon to say that housing has turned the corner for certain, but there's an awful lot of data lately that suggests that it has.

Economic booms and busts are as American as baseball and apple pie. They will always happen.

2009-07-01T21:37:00.000-07:00

“Fueled by easy credit, the real estate market had been rising swiftly for some years. Members of Congress were determined to assure the continuation of that easy credit. Suddenly, the party came to a devastating halt. Defaults multiplied, banks began to fail. Soon the economic troubles spread beyond real estate. Depression stalked the land. The year was 1836.” John Steele Gordon, “The Madness of Crowds.” Commentary Magazine. Nov. 2008. www.commentarymagazine.com

There is a Canadian by the name of Paul Philp who has studied American booms and busts extensively. He has identified approximately 20, I’ll repeat that, 20 historical periods going back to 1776 that are similar to the current economic downturn. He believes that financial crises are actually a unique mechanism inside the American system for making big jumps in technological productivity and economic prosperity. Just when other countries start to catch up with the technological capabilities and economic performance of America, U.S. society takes one of these big jumps that leaves other countries eating our dust.

It’s very messy, and it can be very destructive for individuals. But the vast majority of Americans are always better off for the experience.

No other country has such a mechanism. Mr. Philp believes that it is in the basic character of the American people to visualize extraordinary personal gains and to take personal risks that other people would find dangerous and even bizarre.

Alexis de Tocqueville, a French aristocrat who visited America in the 1830s, described the citizens as the most ambitious, imaginative, restless, and impatient creatures he had ever encountered.

Over time, this basic characteristic of the people became institutionalized in social, economic, and political structures and processes.

The boom-and-bust nature of our American society is ingrained in the very fabric of our being. It is who Americans are, individually and collectively, and we will never change (at least I hope not).

Half Time Scorecard For Economists Predictions For 2009

2009-06-30T10:43:00.000-07:00

At the start of the year, the "experts" made a lot of predictions about the U.S. economy and what to expect in 2009.

•Some said housing would rise
•Some said housing would fall
•Some said mortgage rates would rise
•Some said mortgage rates would fall

And nobody predicted just how big the government's stimulus package would be.

Now, on June 30, with the year officially half-over, it's as good a time as any to remember that people are much better at interpreting the past than predicting the future. Economists can make educated guesses about the future, but they're guesses nonetheless.

It's like watching the Weather Channel. A meterologist can look at the data and say it's going to rain next week, but the forecast is never 100%.

So far this year, mortgage rates have been up and down, credit availability has been higher and lower, and home prices have varied immensely from neighborhood to neighborhood. These are not the types of predictions we get from the pundits.

There's another 6 months until 2010 and there's no reason to expect the current trends to change.

The world is unpredictable and so is the U.S. economy. Therefore, consider making your personal finance decisions based on the information at hand today instead of on an educated guess about the future.

After all, the weatherman's been wrong before.

Looking Back and Looking Ahead: June 29, 2009

2009-06-29T09:54:00.000-07:00

Mortgage markets improved last week on the heels of benign economic data and a non-inspired press release from the Federal Reserve.

Aside from trader momentum, 3 market-moving events helped set the pace last week:

1.Housing data hinted at strength
2.Jobless data showed softness
3.The Fed said growth appears on-track

The combination of the three created volatility that -- for just the second time in the last 8 weeks -- worked in favor of rate shoppers.

Mortgage rates changed a lot last week, but they trended lower overall.

Already, however, markets are looking ahead to this week's holiday-shortened trading sessions. There is a ton of data to be released and as the week progresses, the ever-falling market volume could create some wide swings in mortgage rates.

The mystery is whether rates will be getting better or worse.

On Tuesday, markets will get Consumer Confidence and Case-Shiller Index data at 9:00 AM ET. The Case-Shiller Index is a home price measurement and it always gets a lot of press. Strength in either number should lead mortgage rates higher. Weakness should help rates ease.

Then, on Wednesday, Crude Inventories should take the spotlight. Normally, we don't watch this data point too closely but with gas prices easing last week, rising oil supplies could mean even lower gas prices ahead. This is anti-inflation and a good sign for mortgage rates.

And lastly, on Thursday, the government releases June's jobs report. This report is always a market-mover -- good or bad. And with trading volume low by Thursday, mortgage rates should move more than "normal".

Be ready to lock at a moment's notice this week. Mortgage rates continue to be volatile and the holiday-shortened week won't do anything to counter that. If you're the nervous type, when you see a rate that fits your budget, consider locking it in.

Relax Like A Pro: 5 Steps to Promoting Sleep

2009-06-25T21:10:00.000-07:00

I once went almost five days without sleep in 1996 just to see 1) if I could make a week (I couldn’t), and 2) what the side-effects would be.

I was a new neuroscience major at Princeton at the time and hoped to do research with famed serotonin pioneer, Barry Jacobs.

Hallucinations cut my sleep deprivation trial short, but I’ve continued to experiment with sleep optimization and variation as a means of improving performance.

Here are a few effective techniques and hacks I’ve picked up over the last five years from sources ranging from biochemistry PhDs to biologists at Stanford University…

1. Consume 150-250 calories of low-glycemic index foods in small quantities (low glycemic load) prior to bed.

Morning fatigue and headache isn’t just from sleep debt or poor sleep. Low blood sugar following overnight fasting is often a contributing factor. Just prior to bed, have a small snack such as: a few sticks of celery with almond butter, a mandarin orange and 5-8 almonds, or plain low-fat (not fat-free) yoghurt and an apple. Ever wonder how you can sleep 8-10 hours and feel tired? This is part of the explanation. Make a pre-bed snack part of your nutritional program.

1-2 tablespoons of flaxseed oil (120-240 calories) can be used in combination with the above to further increase cell repair during sleep and thus decrease fatigue. It tastes like a mixture of cat urine and asparagus, so I recommend pinching your nose while consuming it — thanks Seth Roberts, PhD. for this tip — or using capsules.

2. Use ice baths to provoke sleep.

Japanese have longer lifespans that do most other ethnicities. One theory has been that regular ofuro or hot baths at bedtime increase melatonin release, which extends lifespan. Paradoxically, according to the Stanford professors who taught Bio 50, cold is actually a more effective signaller for sleep onset, but it could have no relation to melatonin production.

I decided to test the effect of combining 10-minute ice baths, timed with a countdown kitchen timer, one hour prior to bed (closer to bed and the adrenergic response of noradrenalin, etc. won’t allow you to sleep) with low-dose melatonin (1.5 – 3 mg) on regulating both sleep regularity and speed to sleep. The icebath is simple: 2-3 bags of ice from a convenience store ($3-6 USD) put into a half-full bath until the ice is about 80% melted. Beginners should start with immersing the lower body only and progress to spending the second five minutes with the upper torso submerged (fold your legs Indian-style at the end of the tub if you don’t have room). I’ll talk about the fat-loss and sperm-count benefits of this in future post.

The result: it’s like getting hit with an elephant tranquilizer. Don’t expect it to be pleasant at first.

3. Eating your meals at set times can be as important as sleeping on a schedule.

People talk a lot about circadian (circa dia = approximately one day) rhythms and establishing a regular sleep schedule, but bedtime timing is just one “zeitgeber” (lit: time giver), or stimulus that synchronizes this biorhythm (like pheromones and menstrual cycle). Eating meals at set times helps regulate melatonin, ghrelin, leptin, and other hormones that affect sleep cycles. Other “zeitgebers” for sleep include melatonin, light, and temperature. Parting suggestion: Get a sleep mask if you have any degree of light in your bedroom.

4. Embrace 20-minute caffeine naps and ultradian multiples.

Test “caffeine naps” between 1-3 pm. Down an espresso and set your alarm for no more than 20 minutes, which prevents awakening in the middle of a restorative sleep cycle. Interrupting cycles often leaves you feeling worse than no sleep (though some researchers assert your performance will still improve in comparison with deprivation).

For longer naps, test multiples of 90 minutes, which is called an “ultradian” rhythm in some papers, though the proper term should be “infradian” since it’s less than 24 hours. Thomas Edison, despite his vocal disdain for sleep and claim to sleep only four hours per night, is reported to have taken two three-hour naps daily.

Don’t forget to factor in your time-to-sleep. It often takes me up to an hour to fall asleep, so I’ll set my alarm for seven hours ((4 x 90 minutes) + 60-minute time-to-sleep).

5. Turn off preoccupation with afternoon closure and present-state training.

I have — as do most males in my family — what is called “onset insomnia.” I don’t have trouble staying asleep, but I have a difficult time falling asleep, sometime laying awake in bed for 1-2 hours. There are two approaches that I’ve used with good effect without medications to address this: 1) Determine and set a top priorities to-do list that afternoon for the following day to avoid late-night planning, 2) Do not read non-fiction prior to bed, which encourages projection into the future and preoccupation/planning. Read fiction that engages the imagination and demands present-state attention. Recommendations for compulsive non-fiction readers include Motherless Brooklyn and Stranger in a Strange Land.

—

From fat-loss (leptin release decreases with sleep debt) to memory consolidation, sleep is the currency of high-performance living.

Have you taken time to master it like a skill?

Here are a few questions for the researchers among you:

-What is the fastest way to pay off sleep debt?
-Can you eat more food — or protein specfically — to compensate for sleep deprivation? To what degree?
-How do side-effects of ongoing melatonin use compare to drugs like Ambien?
-What is the interplay of the hypothalamus and RAS ( reticular activating system)?
-Does insulin sensitivity change between waking and sleep cycles? How?
-Can coffee and its effects on adenosine affect sleep depth or length?

Provided by Tim Ferriss, author of the Four Hour Workweek

The Federal Reserve Statement In Simple English

2009-06-25T07:24:00.000-07:00

The Federal Open Market Committee voted to leave the Fed Funds Rate unchanged today within its target range of 0.000-0.250 percent.

The Fed also reiterated its plan to support the mortgage market to the tune of $1.5 trillion.

In its press release, the FOMC noted that the U.S. economy is not slowing with the same speed versus just two months ago and that financial markets, in general, are improving.

These are two signs that the country may be emerging from recession, if it hasn't already.

The news isn't all good, however. The Fed made a point to highlight the potential hazards the nations faces on its path to economic recovery:

•The prices of energy and commodities have been rising

•Job losses are still mounting nationally

•Businesses are reducing capital expenditures

Also in its statement, the Fed acknowledged a plan to hold the Fed Funds Rate near zero percent "for an extended period" and a re-commitment to the U.S. Treasury and Mortgage Bond markets.

Market reaction to the Fed's press release has been muted.

With no new stimulus and no new "tools" to spur the economy unveiled, Wall Street is business as usual. Mortgage rates are unchanged post-FOMC today.

The FOMC's next scheduled meeting is August 11-12, 2009.

3 More Signs That The Real Estate Market Is Getting Stronger

2009-06-24T08:57:00.000-07:00

The housing market got another dose of good news yesterday.

According to the National Association of REALTORS, the number of homes sold in May increased for the third straight month and the national housing supply fell by 5 months.

Furthermore, first-time home buyers are accounting for nearly one-third of the market activity.

But, before we declare a bottom in housing, it's important that we remember the First Rule of Real Estate:

All Real Estate Is Local

National housing statistics like Existing Home Sales are painted with a very broad brush. They lump locales such as San Francisco and Seattle into one sample set and don't account for regional differences, let alone neighborhood ones.

Furthermore, getting down to a city-by-city, or even street-by-street basis, we can always find homes that are selling quickly and homes that are languishing. Real estate is highly local and subject to countless influences.

That said, the national data isn't completely useless. From the patterns, we can infer that low mortgage rates, ample home supply and available tax credits are providing a quantifiable boost to the broader real estate market.

And based on recent pending sales data, we can expect June and July's Existing Home Sales figures to be as strong or stronger than May.

Therefore, if you're in the market for a new home right now -- or plan to be soon -- be conscious of home inventory levels in your target neighborhoods. Fewer homes on the market usually means less ability for buyers to negotiate and that leads to higher sales prices.

Plus, the NAR is reporting buyer activity up 10 percent from last year.

The housing market may not be fully recovered in every housing market just yet, but in studying the data, a lot of the pieces appear to be falling into place.

Should I Lock My Mortgage Rate - Or Not - Ahead Of This Week's Federal Reserve Meeting?

2009-06-23T09:29:00.001-07:00

The Federal Reserve starts a 2-day, policy-setting meeting today, one of 8 scheduled Fed meetings this year.

The purpose of the oct-annual meetings is to review economic conditions around the country and, when deemed necessary, create new monetary policy to stimulate or retard growth.

Now, for the last 21 months, you have to remember that the Federal Reserve has been in stimulus mode, fighting this recession blow-for-blow. It's been a knock-down, drag-em-out fight and -- finally -- it looks like the Fed is winning the battle.

•Key housing stats are turning positive
•Layoffs and jobless claims appear to be slowing
•Inflation is still within tolerance

But beating the recession has come at a terrific price -- both figuratively and literally. Not only has the Fed dropped the Fed Funds Rate as far as it can possibly go, it's committed well over 1 trillion dollars to the effort which, as PageTutor reminds us, is a million-million.

Both of these actions are kindling in the economic fire and, when they catch, Wall Street expects the flames to burn the bright colors of inflation. It's why mortgage markets have been all jacked up lately. Investors know inflation's coming -- they're just at odds about when it's coming.

So that brings us to today's Federal Open Market Committee meeting.

Looking at the chart at top, markets are 99.3% certain that the Federal Reserve won't raise the Fed Funds Rate from its current range of "near-zero". Investors have come to this conclusion because the Fed has repeatedly said it will keep the Fed Funds Rate as low as possible for as long as possible. There's no real reason to raise it now.

But just because the Fed Funds Rate won't be changing doesn't mean that mortgage rates won't be changing.

In the Federal Reserve's press release, it will undoubtedly talk about rising energy costs nationwide, the nascent economic recovery, and the country's prospects for the next few quarters. Furthermore, Chairman Bernanke & Co. will likely acknowledge how rising mortgage rates could hamper recent housing strength.

Any or all of these points will shake the mortgage markets at their core, causing rates to rise or fall. The problem here is that we don't know what the Fed will say and how it going to impact mortgage rates.

Therefore, if you need to lock your mortgage rate in the next week or so and you lose sleep over the thought of mortgage rates going up, do yourself a favor and just lock it up now. Mortgage rates may end up falling post-FOMC tomorrow, but then again, they may not. I wouldn't want to be on the wrong side of that bet.

However, if your rate-locking timeframe is a little more elastic, consider waiting this one out. Mortgage rates may rise post-FOMC Wednesday afternoon, but the higher that rates get, the more likely the Fed will intervene to bring them back down.

Remember, the government has said repeatedly strong housing markets are essential for a full economic recovery and there's lot of high-paid lobbyists telling Congress that high mortgage rates are a threat to housing. Furthermore, the Federal Reserve has anted up twice in the mortgage-backed bond market to help keep rates down.

There's history here, folks, and mortgage rates should take one more run through 5 percent. It may not happen after the FOMC adjourns tomorrow, but it will happen sometime soon. When it does, make sure you're ready. Low rates rarely last long.

Stem Cell Research Breakthrough Means That Human Embryos Don’t Need To Be Used.

2009-06-22T20:41:00.000-07:00

“The controversy surrounding stem cell research might soon be moot, with new research showing that ordinary skin cells can be transformed into an equivalent of embryonic stem cells, which have been the focus of research because of their ability to become any kind of cell in the human body.” (“One step closer to Embryo-Free (and controversy free) stem cells.” Discover Magazine, March 2, 2009. blogs.discovermagazine.com)

Researchers in Canada and Britain have successfully transformed ordinary skin cells into a form that can be used to create any other kind of cell in the human body.

To get some sense of what this breakthrough might mean, let’s imagine what standard medical practice might look like in 2030. You sign up for an ongoing program of cell replacement and regeneration. Every six months, you get a test that shows what part of your body is damaged or breaking down. Then you go through a treatment that replaces bad cells with new cells. Any propensity for disease is immediately stopped in its tracks.
In fact, every time you go through testing and treatment, you get healthier and younger.

Dan Sullivan, founder of Strategic Coach, describes the first time he did the Lifetime Extender exercise with a particular client 15 years ago. The client talked to me at the next workshop break, saying, “This is a great thinking exercise, but as a doctor, I can tell you quite frankly there will never be a way of stopping or reversing aging. No one’s going to be living into their 120s or beyond.”

Last November, Sullivan continues, we revisited The Lifetime Extender in his workshop. He said this to all of the other clients: “When Dan introduced this exercise, I was the most skeptical person in the room. But I know dozens of people involved in genetic research, and now I’m a believer. What they are telling me is that if you can just stay healthy and fit for the next twenty years, scientific miracles will be waiting to support you on the other side.”

This breakthrough in Canada and Britain will certainly be seen as one of those miracles.

What is disappointing to me is the noticeable absence of U.S. leadership in this most significant breakthrough.

Looking Back and Looking Ahead, June 15, 2009

2009-06-15T07:49:00.000-07:00

The mortgage market roller coaster continues. Markets worsened badly in the early part of last week, before rallying into Friday's close.

Overall, mortgage rates were slightly higher for the week even though -- briefly -- they rose to levels not seen since November 2008.

Last week marks the third week in a row and the sixth out of the last seven that mortgage rates increased.

It's not all bad news for mortgage rate shoppers, however. The market's surge higher appears to be slowing and its momentum may start to reverse.

See, mortgage rates don't come from thin air. They're based on the price of mortgage-backed bonds and, over the last few weeks, it seems as if nobody on Wall Street wanted anything to do with them. A massive sell-off that caused bond prices to plummet and mortgage rates to soar.

Freddie Mac says rates are up 3/4 percent in the last 3 weeks but loan officers will tell you that's undercutting it. Conforming mortgage rates are up more than 1 percent since Memorial Day.

The biggest reason for the sell-off was that markets feared a runaway inflation scenario. The U.S. Treasury has assumed an unprecedented debt load this year and to repay it, markets expect the government to print more cash -- an inflation-inducing scenario.

However, when a number of high-profile investors and a country said last week that their faith in the U.S. economy remains strong, markets viewed it as an endorsement of government-issued debt. It served as Thursday and Friday's rate-dropping catalyst.

This week, mortgage rates will move on three points:

1.Data, including key inflation and housing reports
2.Rhetoric, including 5 Federal Reserve member speeches
3.Momentum, including technical trading patterns

It's unclear whether these factors will lead rates higher or lower, but one thing has been clear lately -- when mortgage rates change, they change quickly.

Therefore, if you're shopping for a rate and find one that fits your budget, consider locking in right away. With rates changing every few hours, it's likely that if you wait too long, the rate will be gone

Make Up Your Mind To Succeed

2009-06-15T07:10:00.000-07:00

Well-intentioned parents have unwittingly left their kids defenseless against failure. The current generation of millennials (born between 1980 and 2001) grew up playing sports where scores and performance were downplayed because “everyone’s a winner.” And their report cards had more positive spin than an AIG press release. As a result, Stanford University psychologist Carol Dweck, PhD, calls them the “overpraised generation.” Fortunately, once you understand the situation, there’s some quick corrective action that can be taken. And even if you’re well past your child-rearing years, her advice will help you better withstand setbacks.
Dweck has been studying how people handle failure for 40 years. Her research has led her to identify two distinct mind-sets that dramatically influence how we react to it. Here’s how they work:

A fixed mind-set is grounded in the belief that talent is genetic—you’re a born artist, point guard, or numbers person. The fixed mind-set believes it’s entitled to success without much effort and regards failure as a personal affront. When things get tough, it’s quick to blame, withdraw, lie, and even avoid future challenge or risk.

Conversely, a growth mind-set assumes that no talent is entirely heaven-sent and that effort and learning make everything possible. Because the ego isn’t on the line as much, the growth mindset sees failure as opportunity rather than insult. When challenged, it’s quick to reassess, adjust, and try again. In fact, it relishes this process.

We are all born with growth mind-sets. (Otherwise, we wouldn’t be able to survive in the world.) But parents, coaches, and teachers often push us into fixed mind-sets by rewarding certain behaviors and misdirecting praise. Dweck’s book, “Mindset: The New Psychology of Success”, and online instructional program, brainology.us, explain this in depth. But she says there are many little things you can start doing today to guarantee that your kids, grandkids, and even you never get derailed by failure.

For Kids

In school: Never compliment a child by saying “You’re so smart” or “You picked that up so quickly.” Instead, praise effort or strategy by saying “That was clever of you to take that approach” or “I’m proud of your persistence.” Listen for similar remarks from teachers and correct them.

In sports: Instead of “You’re a natural,” say “Practice is really making you
better.” Instead of inquiring “Did you win?” ask “Did you give your best effort?” Explains Dweck, “Talent isn’t passed down in the genes; it’s passed down in the mind-set.”

At the dinner table: Instead of the standard “How was your day?” (which everyone dreads anyway), ask “What did you learn today?” or “What mistakes did you make that taught you something?” Describe with zeal something you’re struggling with. “Instill a passion for learning,” says Dweck.

In making plans for the future: Don’t just ask about goals; ask about the plan for reaching those goals.

In frustration: Don’t permit children to refer to themselves as losers, failures, stupid, or clumsy. “Never let failure progress from an action to an identity,” says Dweck. Likewise, don’t label your kids. Don’t say this one is the artist, and this one is the computer geek. Anyone can be anything.

In doubt: If you encounter skepticism, ask the child to think of areas in which she once had low ability and now excels, or to recall a time when she saw someone learn something or improve in ways not thought possible.

For You

At work: Instead of letting salary, benefits, and status define job satisfaction, ask yourself if you’re still learning. If the answer is yes, then you’re fortunate to have a job that encourages a growth mind-set. View its challenges as opportunities rather than stress. If you’ve stopped learning, then consider looking either for new avenues of growth or for another job.

In relationships: Blame never resolves anything. It’s merely the fixed mindset insisting that you’re right. The next time you’re tempted to blame, says Dweck, remember that “the whole point of marriage is to encourage each other’s development.”

When feeling down: People who are depressed tend to believe that’s just the way they are. Instead of viewing yourself as a failed end product, think of yourself as a temporarily derailed work in progress. “We usually think of personality as something very stable,” says Dweck, “but we’re finding that even core parts of it can be changed by shifting mind-sets.”

From Reader’s Digest

Which Home Repairs Can Be Delayed and Which Home Repairs Need To Be Fixed Right Away?

2009-06-12T08:53:00.000-07:00

Visit msnbc.com for Breaking News, World News, and News about the Economy

When finances are tight, homeowners are often forced to choose between making home repairs right away, and putting them off until finances improve.

Some repairs, though, become more expensive if not tackled on the double. The hard part is knowing which fixes those are.

In this 5-minute piece from The Today Show on NBC, a Consumer Reports editor talks about important, must-make-them-now home repairs, including:

•Re-sloping soil for runaway rainwater
•Replacing curled and cracked roofing shingles
•Sealing damaged vinyl siding
•Replacing soft wood
•Treating mold issues -- both major and minor

Maintaining a home preserves its long-term integrity and can help support resale value, too. Not every minor fix must made today, but left unchecked, some minor fixes can turn into major ones -- and that's when costs can pile up.

A Guide To Food Spoilage For Men

2009-06-11T08:42:00.000-07:00

Eggs: When something starts pecking its way out of the shell, the egg is probably past its prime.

Meat: If opening the refrigerator door causes stray animals from a 3 block radius to congregate outside your house, the meat is spoiled.

Flour: If it wiggles...it's spoiled.

Lettuce: Bibb lettuce is spoiled when you can't get it off the bottom of the vegetable crisper without Comet. Romaine lettuce is spoiled when it turns liquid.

Raisins: Raisins should not be harder than your teeth.

Potatoes: Fresh potatoes do not have roots, branches or dense, leafy undergrowth.

Chip dip: If you can take it out of its container and bounce it on the floor, it has gone bad.

Unmarked item: You know its well beyond its prime when you're tempted to discard the Tupperware along with the food. Generally speaking, Tupperware containers should not burp when you open them.

Frozen food: Frozen foods that have become an integral part of the defrosting problem in your freezer compartment will probably be spoiled (or wrecked, anyway) by the time you pry them out with a hammer and knife

Need Down Payment Assistance? Here's How To Receive It.

2009-06-10T09:22:00.000-07:00

Tighter mortgage guidelines since late-2008 are forcing home buyers to make bigger downpayments. Anecdotally, the change has led to a surge in buyers taking gifts of cash from family members.

If you're among those accepting a cash gift from family, it's important to know that you can't just deposit the money in your bank account.

There is a proper way to accept a cash gift and it requires 3 distinct steps:

1.Complete and sign an acceptable gift letter
2.Document the gifter's withdrawal of funds with teller receipts
3.Document the giftee's deposit of funds with teller receipts

See, mortgage lenders pay close attention to gifts-for-downpayments. For one, lenders have to make sure that downpayment cash is "clean" (i.e. not laundered). And, secondly, they want the gift to really be a gift and not a loan-in-disguise.

This is why lenders will often require that a signed, dated letter accompany the home loan application.

As an example:

I am the [relationship to recipient] of [name of recipient] and this letter serves as evidence that I am gifting [name of recipient] [amount of gift] to be used for the purchase of the home at [complete address of property].

This is a gift -- not a loan -- and there is no expectation of repayment.

Signed,
[Signature of gifter]

To further appease lenders, gift recipients should make sure that gift funds are not commingled at the time of deposit. If the gift is for $12,000, for example, the bank's deposit slip should indicate that a $12,000 deposit was made -- nothing more, nothing less.

Don't add a random $50 check to the deposit, in other words. If you have a separate deposit to make, make it as a subsequent transaction with its own receipt.

It's also worth noting that gifting funds between family members can create both legal and tax liabilities. If you're unsure about how donating or receiving a gift may impact you, call or email me directly. If I can't help you with your questions, I can refer you to somebody that can.

Funny Little Johnny Joke

2009-06-09T08:37:00.000-07:00

Little Johnny Meets Obama

Little Johnny is at it again... President Obama was visiting a primary school and he visited one of the classes. They were in the middle of a discussion related to words and their meanings.

The teacher asked the president if he would like to lead the discussion on the word 'tragedy'?

So our illustrious president asked the class for an example of a 'tragedy'.

One little boy stood up and offered:

'If my best friend, who lives on a farm, is playing in the field and a tractor runs over him and kills him, that would be a tragedy?' 'No,' said Obama, 'that would be an accident.' A little girl raised her hand: 'If a school bus carrying 50 children drove over a cliff, killing everyone inside, that would be a tragedy.' 'I'm afraid not,' explained Obama. 'That's what we would call great loss.' The room went silent. No other children volunteered. Obama searched the room. 'Isn't there someone here who can give me an example of a tragedy?' Finally at the back of the room, Little Johnny raised his hand. In a quiet voice he said: If the plane carrying you and Mrs. Obama was struck by a 'friendly fire' missile and blown to smithereens that would be a tragedy.'

'Fantastic!' exclaimed Obama. 'That's right. And can you tell me why that would be tragedy?'

'Well,' says the boy, 'It has to be a tragedy, because it certainly wouldn't be a great loss... and it probably wouldn't be an accident either.

Why Did Mortgage Rates Go Up Over 1.125% in 10 Days?

2009-06-09T07:55:00.000-07:00

Forget about that 4.750 percent mortgage rate you passed on last month. It's gone. Today, conforming mortgage rates are bearing down on 6 percent.

For a homeowner in San Diego with a $300,000, fixed-rate home loan, the impact is not insignificant. Since the unofficial start of summer, rising mortgage rates have added $240 to a monthly mortgage payment.

There are two reasons why rates are rising -- one fundamental, and one superstition-like. We can't ignore either.

The fundamental reason rates are rising is that mounting evidence shows the global economy in recovery. There's bound to be setbacks from month-to-month, but overall, the foundation for economic growth appears to be in place.

Unfortunately for active home buyers and shoulda-woulda-coulda refinancers in San Diego and everywhere else, the recovery is coming faster and with more force than was expected. The pace of the recovery is forcing traders to account for longer-term inflation and inflation just kills mortgage rates.

The superstition reason is important, too. It's about heeding trends and patterns -- something Wall Street players call Technical Analysis. It's not that important that you get how Technical Analysis works, you just need to know the basic premise.

Technical Analysis is a pseudo-science; a way of studying markets that says patterns repeat themselves over time. Ironically, in a blatant case of Self-Fulfilling Prophecy, because traders believe in pattern watching, they often cause the pattern to be fulfilled.

This is why mortgage rates sometimes dip and soar for no apparent reason -- their strings are getting pulled by technical traders. And, part of what's driving rates up right now should eventually drop them back down. Maybe not to 4.500 percent, but somewhere close, perhaps.

If you've missed the bottom in rates, there's still hope:

•Technical trading patterns should eventually draw rates back down
•The Federal Reserve will likely accelerate its commitment to low rates
•Mortgage rates tend to be seasonal and cyclical

Make sure you don't miss the next rate drop. It will happen -- we just don't know when.

Of course, you have a day job and have probably spent more time researching rates than you want to already. two terrific ways to get your mortgage rate news are to:

1.Follow me on Twitter at http://twitter.com/wadethompson

2.Get this blog delivered by email each day wtompson@ix.netcom.com

Rates move too fast to rely on slow-to-break stories on TV or in the papers. You'll want mortgage rate news in real-time and you'll want my advice on whether to lock a rate or wait it out for something "better", too. Reach out to me via email and I'll put you on my mortgage rate "watch list".

--------------------------------------------------------------------------------

Wade Thompson is an active loan officer for all Western States. Reach Wade via email at wtompson@ix.netcom.com or call toll-free to 800-727-5175.

Looking Back and Looking Ahead: June 8, 2009

2009-06-08T07:16:00.000-07:00

The economy posted stronger-than-expected data last week, reigniting fears of inflation on Wall Street.

The positive-slanted economic news caused conforming mortgage rates to rise by another 1/2 percent last week.

It marked the second week in a row of soaring mortgage rates and the fifth week out of six that rates have moved higher.

Conforming mortgage rates are now as high as they've been all year and rest at the levels of December 2008.

The biggest news of last week is likely to influence mortgage rates this week, too.

On Friday, we learned that 345,000 Americans lost their jobs in May. And while that's an awfully large number, it wasn't nearly as bad as Wall Street had expected. Furthermore, the Unemployment Rate spiked to over 9 percent.

Now, again, with respect to the Unemployment Rate, the number looks bad, but the data may be a positive. This is because the Unemployment Rate measures Americans in the workforce versus the unemployed actively looking for jobs.

If the number of people trying to re-enter the workforce starts to surge, it's basic math that Unemployment Rates will rise. This is what some economists think happened last month and it served as the backdrop for Friday's rate surge.

With fewer Americans expected to be out of work, consumer spending seems poised to rebound in the months ahead, pushing the economy out of recession sooner than expected. If the sentiment holds this week, mortgage rates should rise even more.

Without much new data this week, markets are likely to trade on emotion -- a difficult situation for rate shoppers. Conforming mortgage rates have been extremely volatile since May and are changing every few hours. If you see a rate you like, consider locking it.

Wait around too long, and it'll be gone.

Funny Friday

2009-06-05T08:42:00.001-07:00

This is a disturbing picture that was taken at the San Diego Wild Animal Park.

Beware of the animals. They are becoming more proactive. They have "turf" concerns and are forced to secure their space with new forms of protection.

Homes Under Contract Soar in April

2009-06-03T14:09:00.000-07:00

The number of homes under contract to sell soared in April, climbing nearly 7 percent nationwide versus a month ago.

It's the third straight month in which the Pending Home Sales Index gained and the biggest monthly jump since October 2001, the month prior to the end of the Early 2000s Recession.

A "pending" home sale is one that's under contract to close, but has yet to do so.

The Pending Home Sales Index is an imperfect statistic because not every home under contract makes it to closing, but the data can a reliable indicator of home buyer activity.

It's not tough to understand why homes-under-contract are spiking:

1.There's a $8,000 tax credit for first-time home buyers
2.Conforming and FHA mortgage rates are hovering near 5 percent
3.Home prices are still soft nationwide

These elements are combining to make homes more affordable than they've been in the recent past. Indeed, in April, the Home Affordability Index posted its second highest reading since 1970.

We can't know if home prices will rise or fall going forward, but if Pending Home Sales translate into closed home sales, values will be pressured to rise. This is because each closed transaction takes a home "off the market", reducing the supply of available properties.

If demand rises while supplies fall, sellers regain the upper-hand in negotiations and higher prices are the inevitable result.

An estimated 80 percent of all Pending Home Sales close within 2 months.

Special Opportunity For Today June 2 Only

2009-06-02T14:32:00.000-07:00

I want to let you know about a very short window of opportunity that's happening TODAY, June 2. You can get a highly unusual package of benefits by taking a small action today and simply buying a book.

Bill Bartmann is launching his book on Amazon and is giving away a special bonus package, but only if you order his book today, Tuesday June 2.

You may have seen Bill on the cover of Inc. Magazine as the "Billionaire Nobody Knows", or watched him recently on major network TV. Bill's in the news daily because his book, "Bailout Riches", is creating a real stir. It's about how you can benefit--directly and fast--from the government bailout.

"What's the big deal about this book?"

1. The last time there was a government bailout of the banks, Bill went from being a bankrupt former street gang member to becoming a self-made billionaire. Bill says the opportunity is even bigger this time around--and his blueprint is in his new "Bailout Riches" book.

2. The great thing about this opportunity is this:

* It doesn't require any up-front investment;
* You don't have to know anything about banks or loans;
* You can start make money from the comfort of your home (Bill started at his kitchen table); and
* You can even do this part-time if you wish.

3. This is NOT the same, tired, worn-out type of "business opportunity" we see all the time. In fact, you've almost certainly never seen this type of opportunity before in your life.

"Why should I buy the book TODAY instead of any other day?"

Bill thinks big, and is shooting for Amazon "Bestseller" status. So if you get the book TODAY on Amazon and send Bill your receipt, he's piling on additional benefits:

1. Invitation-only private teleseminar with Bill about profiting from the government bailout of banks. Bill will personally describe how he made a billion dollars the last time such an opportunity came around. More importantly, Bill will explain how YOU can get in on this opportunity too—-even if you have no money and are working a 9-to-5 job.

2. Free access to Bill’s video: “How To Make Millions Buying Non-Performing Loans”. Even if you can’t make the teleseminar, you can watch this video.

3. Free 1-year membership to Bill’s “Billionaire University”. People currently pay $1,000 to join this unusual online group. Bill has personally created dozens of modules of video content. They cover the most important skills for growing any business. You get one year of access for free, if you get the book today.

4. Bill’s famous “Self Esteem Workbook”. While building a multi-billion-dollar organization, Bill discovered that self-esteem issues often are the difference between the most successful people and everyone else. He also discovered that many people have self-esteem problems and don’t even know it. This easy-to-read guide determines how you rate in this crucial area. It also explains how any self-esteem issues can be easily fixed—-if you know how.

5. Access to Bill’s video, “How To Borrow All The Money Your Business Needs”. What could be more timely right now—-when banks aren’t even lending to other banks! This is a precious skill that can help you for many years to come.

It's as simple as "A B C" to get these benefits:

There's only ONE way to get these success tools for free and it's to buy Bill's book through Amazon today, June 2. The process will take under 5 minutes. It's as simple as "A B C":

A. Go to the following link and buy Bill's book:
http://www.amazon.com/gp/product/047047825X?ie=UTF8&tag=wwwbillbartma-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=047047825X

B. Check your email for Amazon's receipt. When you have it, then...

C. Go to the following website and enter your name and Amazon Order Number:
http://www.RoadToMajorWealth.com/LaunchBonus.aspx?AID=10062
(Note: Please MANUALLY enter the number, and don't try to cut-and-paste, which does not work.)

That's it! Bill will then email you with instructions for all your bonuses.

As far as I know, no other gang member and slaughterhouse worker has ever become a billionaire. Bill's book contains secrets on how to succeed no matter how many challenges you have.

Getting this book on Amazon may be the best investment of a few dollars you'll ever make in your life. I hope you take this easy step.

Wade

P.S. This is a no-brainer decision to get a big package of bonuses, and discover a great profit opportunity right in the midst of the recession. Click on the link above to get your copy.

P.P.S. If for some reason that link does not work, simply go to www.amazon.com and type in "Bailout Riches" and buy the book directly from that page. If you have any questions, just call Bill's office at 918-388-3328

Mortgage Rates Up 1/2 Percent For The Second Time In The Last Week

2009-06-02T07:48:00.000-07:00

Mortgage rates are on the move.

After a two-month period of relative calm, Memorial Day 2009 ushered in a new era of mortgage rate volatility. Over the last 5 days of trading, mortgage lenders have issued 19 separate rate sheets, or nearly four per day.

Every 2 hours, in other words, mortgage rates are changing and when they change, they change big.

The frenzied pace of change is making it next to impossible for mortgage applicants to shop for "the lowest mortgage rate". By the time a buyer talks to competing lenders and gathers the rate quotes, it's time to start the process all over again.

More important than the pace of mortgage rate change, though, is the size of mortgage rate change. Look at the action since last week from a sample of lenders:

•Tuesday, May 26, 2009: Rates up by 0.250 percent
•Wednesday, May 27, 2009: Rates up by 0.625 percent
•Thursday, May 28, 2009: Rates down by 0.250 percent
•Friday, May 29, 2009: Rates down by 0.375 percent
•Monday, June 1, 2009: Rates up by 0.500 percent

These are outrageously mega-sized movements for the mortgage market, a Wall Street niche accustomed to gradual change. Furthermore, it's making a real impact on household budgets. The rate hikes since last week have added $92 per month to a $200,000 mortgage -- or, $1,100 per year.

That's the cost of a new washer and dryer set; or a multi-million dollar life insurance policy; or food for a few months.

Long-term, the mortgage market can't sustain this pace. That's one part that's clear. But to homebuyers, sustainability is a moot point -- homebuyers don't live in the long-term world.

Homebuyers in San Diego, Los Angeles or wherever need mortgage rates now and those rates have been both hit-or-miss, and all over the map.

Homebuyers under contract are short-term players by every definition and can only hope to cash in on a minor miracle on the day they need to lock a rate.

The most challenging part to homebuyers and other rate shoppers is that the movements of the mortgage markets have neither come with warning signals, nor have been followed specific trading Rules of Thumb like "strong economic data makes rates go up". It's been mostly momentum trading; investors hitching a ride on the sentimental favorite of the day.

For now, a concensus that the global economic recovery is underway is fueling stock markets and it's coming at the expense of bonds. It's the reverse of the Safe Haven Buying pattern that drove rates down earlier this year while investors shunned all types of risk in their respective portfolios.

Today, investors clamor for risk. They're behaving as if stocks will outperform bonds over the next few years and why wouldn't they? The S&P 500 is up 40 percent in the last 3 months and the Dow Jones is up 24 percent over the same period of time. Although past performance is no guarantee of future results, traders tend to gravitate toward numbers like that -- at the expense of the mortgage bond market.

Until it's more clear what's happening with the economy, expect volatility to stay high. Maybe not half-point-swings-to-mortgage-rates-in-a-day high, but high nonetheless. Consider getting defensive with your mortgage rate shopping, locking in a rate as soon as you find a payment that makes sense for you.

As we're seeing first-hand, annual payment swings of $1,000 aren't too uncommon anymore.

Why Did Mortgage Rates Rise Over 1/2% Wednesday?

2009-05-28T09:00:00.000-07:00

Conforming mortgage rates rose by 0.625 percent Wednesday. Yes, you read it right. Zero-point-six-two-five percent.

The surprise surge in pricing started shortly after 1:00 P.M. ET, then continued all the way until the market's closing. It was the sharpest one-day surge in mortgage rates in recent history.

For mortgage rate shoppers swept up in the surge, monthly payments are now higher by $29 per $100,000 borrowed.

That's a significant shift.

For as rare as Wednesday's events were, though, middle-of-the-day, 0.625 percent rate changes don't just happen. Yesterday, the action was the result of several factors, including:

•Rising oil prices and gas prices
•Optimistic predictions about the end of the recession
•Concerns over the U.S. total debt load
•Fears of inflation

In addition, momentum trading played a role.

As markets worsened, selling begat more selling, amplifying Wall Street's total losses. As mortgage bond prices fell, mortgage rates went up.

Mortgage markets are notoriously fickle and yesterday's events proved it. Days like Wednesday are precisely why insiders recommend shopping for mortgage rates in a compressed timeframe.

The faster you finish, the lower the risk of losing low interest rates to new market conditions.

3 Ways to Take Control of your Career! Suggestions from Richard Branson

2009-05-27T15:45:00.000-07:00

Richard Branson insists that as the pinkslips start flying, get off your keester, skip the bar and get down to business.

Step ONE: Whip out the address book and check in with folks to see how they are faring during this outrageous period in world history. It's in amazing times like these you don't have to worry about why you're calling! Give them a ring, drop them a note, send them flowers, take them a snack, email them an article--just be there for them adding some value and touching the hearts of everyone in your network.

Step TWO: Ask not what your country can do for you, ask what you can do for people who matter! There is no bailout, no knight in shining armor coming to rescue us. We've got to be self-reliant and the most effective way that the world's most successful people do that is by helping others in times of need. You will earn huge points when you take one step beyond pleasantries and actually provide some support to others. 'Success is earned by helping others achieve success.'

Step THREE: Get Training & Start a home based business. You need that for three reasons:

(1) It's smart to have a backstop, a fallback if the job doesn't work out. Beef up your skills in something you love and get set to start doing it.

(2) Doing a home based business gives you some sense of control and reassurance if it's based on something you love doing.

(3) If you don't know what that business should be, get a piece of paper and make three columns:

In the first, Column A, put a list of all the things you love to do. (Stuff you'd secretly do for free, that give you energy and you're willing to tell the world about).

Then in the next column, Column B, make a list of all the ways those things in Column A could be of value to others who will pay you for it.

Finally, in Column C, write down all the people you know who might advise you, or somehow could be recruited to those passions.

Nobody does anything worthwhile alone. Whatever you do, don't just sit there, as Branson demanded, extraordinary times call for extraordinary action! This may be the best time in a lifetime of excuses to get started doing something that really matters to you!!

Home Values Are Better Than The Press Reports

2009-05-27T06:51:00.000-07:00

Each month, researchers measure home values in 20 large U.S. cities, then compile their findings in a report called the Case-Shiller Index. It's a popular measurement of housing health across the country, but it's far from perfect.

As 3 examples:

1.It gives more weight to expensive homes than inexpensive ones
2.Its sample set includes just 37 states of 50 states
3.Real estate isn't a "national" market -- it's local

All that said, however, the data is still important. The Case-Shiller Index helps identify broader trends in housing and it's widely believed that the economy won't recovery until the sector starts to stabilize.

We may be at that recovery point now.

Despite newspaper headlines blaring about 19 percent drops from March 2008, the month-to-month values appear to be stabilizing and the latter is the more important development. 15 of the 20 markets covered by Case-Shiller either improved, stayed flat, or declined by 0.2 percent or less.

Versus 2008, the rate of speed at which home values are falling is slowing.

Furthermore, because the Case-Shiller Index is on a 2-month delay, it doesn't account for all of this year's Spring Buyers, or first-timers taking the $8,000 first-time homebuyer tax credit.

Two months don't make a trend, but if Case-Shiller Index continues to report similar data for April and May, it could be the signal that housing finally bottomed.

Looking Back and Looking Ahead: May 26, 2009

2009-05-26T08:42:00.000-07:00

Mortgage markets reacted poorly to not-as-strong-as-expected housing data and employment data last week causing mortgage rates to rise on the week overall.

It was the third time in 4 weeks that mortgage rates were up.

To the detriment of rate shoppers, mortgage rates were especially volatile Thursday and Friday.

As an increasing number of traders punched out ahead of the 3-day weekend, the mortgage pricing swings grew wider and wider.

Rates were at their lowest last week on Wednesday morning. By Friday, some mortgage rates were higher by as much as 3/8 percent.

This week, with traders coming back to work, the pace of change should slow a bit, if not for the volume of closely-watched data expected to be released.

The data with the largest potential impact on mortgage rates this week is related to the housing market. There will be 3 separate reports -- each expected to show that housing is still weak, but not as weak as it was.

•Tuesday: Case-Shiller Price Index
•Wednesday: Existing Home Sales
•Thursday: New Home Sales

However, because real estate is local in nature and these reports are broadly national, it's important to not read into them too much. They're good for an overview but shouldn't be used as the basis for an offering price.

In addition, there will be two consumer confidence surveys released -- one on Tuesday and one on Friday.

Consumer surveys can be important in a recovering economy because as confidence rises, spending often does, too, and consumer spending represents two-thirds of the U.S. economic engine. If confidence is rising, expect the stock market to benefit and the mortgage bond market to suffer.

This would lead mortgage rates higher.

It's unlikely that mortgage markets will display the same volatility this week as compared to last week, but that doesn't mean that mortgage rates won't change. With so much data crossing the wires in the next 4 days, it's likely that Friday's rates will be different from today's.

Therefore, if you've found a rate and payment with which you can be comfortable, consider locking it in. It's unlikely to last long.

Mortgage Rates Shoot Up - Why?

2009-05-22T07:29:00.000-07:00

Rates go up, rates go down. Catch them while you can.

After Wednesday's mortgage market rally drove rates down by a bunch, Thursday's sell-off pushed them right back up.

This has been a common pattern in the skittish world of mortgage rates this year.

With the U.S. economy still teetering between recession and growth, markets are looking for signals anywhere it can find them. Thursday's clue came from a government report showing that more Americans are collecting unemployment benefits than at any point in history.

Strangely, mortgage rates rose on the news.

We call it "strange" because weak economic data has tended to draw mortgage rates lower lately to the benefit of prospective home buyers and would-be refinancers. Lower rates make homes more affordable.

Thursday, though, the pattern broke.

The main reason why mortgage rates rose Thursday isn't because of the employment report or any other piece of data. Rates rose Thursday for the same reason that they had dropped the day prior -- the Federal Reserve.

On Wednesday, the released minutes from the Fed's last meeting suggested that the group might make a larger mortgage market intervention. On Thursday, in the face of worsening jobs data, markets bet the Fed wouldn't.

Mortgage rate shoppers, unfortunately, got caught in the crosshairs.

Rates can -- and do -- change quickly, without warning. And, thus far this year, the changes have been extra sudden. This is one reason why it's often prudent to lock a mortgage rate as soon as you find one that's agreeable. Wait too long, and it could be gone.

Expect more volatility today with traders leaving early for Memorial Day Weekend. Less volume means more chances for rates to change.

The Fed Minutes...How Does It Affect Mortgage Rates?

2009-05-21T09:00:00.000-07:00

Mortgage rates fell after the Federal Reserve released its April 28-29, 2009 meeting's internal notes Wednesday.

Officially known as "Fed Minutes", the report is an in-depth account of the Federal Reserve's last get-together, detailing the discussions and decisions that create our country's monetary policy.

It's the lengthy companion to the Federal Reserve's brief, post-meeting press release.

For comparison's sake, the Federal Reserve's April 29 announcement contained 383 words. The minutes of that same meeting held 5,754 words. The extra words offer extra details about what the next monetary steps might be for the nation's policymakers.

This is a big deal to markets because investors are always looking for clues about what's next -- especially considering how the April Fed Minutes showed that group discussed increasing its $1.25 trillion mortgage market commitment to something bigger, possibly another $500 billion.

Remember that the Fed's mortgage-buying program is largely credited with keeping mortgage rates low this year. If there's more buying ahead, that should help rates stay low a while longer. Mortgage rates fell Wednesday in anticipation of a move like that. For now, though, the Fed Minutes are just talk.

As economic conditions change later this year, so will the Federal Reserve's stance.

Another Positive Sign In Housing - New Home Construction Starts Not Falling.

2009-05-20T08:26:00.000-07:00

A "housing start" is a new home on which construction has started and, for the fourth straight month, single-family home construction remained flat in April.

For the battered housing market, this is the latest in a series of signals that a long-awaited turnaround is coming.

* The number of homes under contract to sell are rising
* The national housing inventory is down by nearly 1 million from March 2009
* Home values are rising, according to a government report

The current plateau in Housing Starts may indicate that builders are more confident in the economy, and that Americans are, too. Especially in light of the freefall over the past few years.

Single-Family Housing Starts have hugged the 360,000 mark since January 2009.

However, there is a footnote to the story.

As noted by the Commerce Department in its official report, the April Housing Starts conclusion is suspect because of the data's large Margin of Error. Had the government's sample set included a different series of data, in other words, it may have concluded that housing starts had fallen instead of staying flat. Or risen.

We won't know the final results of the report until 3 months from now but if the initial figures hold, it will fortify the argument that the housing market has, indeed, found its bottom.

First-time Homebuyer Tax Credit Advances to Finance Costs From FHA

2009-05-19T09:18:00.000-07:00

FHA has approved the use of bridge loans up to $8,000 against the "refundable" first-time homebuyer tax credit (FTHBC) to finance downpayment and closing costs:

"The government today gave the green light to the financing of bridge loans of up to $8,000 to first time home buyers who qualify for tax credits under the Obama Administration's economic stimulus plan. However, the new mortgagee letter stipulates that only government agencies and non-profits can give advances on the tax credits, which means lenders and loan brokers are left out in the cold."

First-time homebuyers receiving an "advance" under these new guidelines will still be required to pay back the funds. And similar to an income tax refund advance, there may be fees and charges for the advance that HUD states must not exceed "a nominal amount necessary for preparing and administering the loan."

For more details, a pdf version is available here. (or see below)