Real Estate News Daily

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In the financial crisis of today, to use a popular maxim of Donald Rumsfeld’s invention, “there are known unknowns and unknown unknowns.” Some major unknowns have surfaced to become economic hurricanes reeking havoc on financial markets worldwide, such as the failure of Freddie Mac and Fannie Mae. But what unknown unknowns are still lurking under the surface, waiting to be discovered, buried in the media headlines, that could have an equally devastating effect on the economy and real estate markets across the country? One such potential dangerous unknown unknown that hasn’t received very much press attention recently is the current lack of financial stability in the municipal bond market.

Municipal bonds are sold by cities and municipalities across the nation to fund large real estate and infrastructure construction projects. They offer investors a tax free stream of income and offered by brokers around the nation as a low risk way to receive income without increasing the investor’s tax burden. Well, it turns out that the municipal bond markets now are starting to sound like a familiar story. Municipalities across the nation have taken advantage of low interest rates over the past two years to fund construction projects. However, about a one third of these funds were borrowed using a variable rate of interest. Now the municipalities are having trouble paying back their investors.

One of America’s leading economists who have predicted the events of today way before they were entering their critical levels, Robert Shiller releases his view and forecast of the current housing market crisis. The figures the Yale economist sees in Standard & Poors-Shiller home price index shows that the levels are so low they might even surpass levels of the great depression of the 1930’s. Many fail to accept his views as they try to maintain a positive outlook for the housing industry, but the figures don’t lie. He also says that the only way the government can avert a catastrophe is if the Federal bank releases billions in bail-out packages so the millions of Americans facing foreclosure can get to keep their homes. His analysis places the industry at a position where the figures have no where else to go but down further quelling hopes that the industry would be bouncing back soon.

As promised, the proposal for the federal government to offer loans to homeowners who are under threat of losing their homes is going to the house for deliberations and a subsequent ruling. The move is aimed to keep people in their homes as they continue to fail to make their mortgage payments. The loan would allow people to borrow as much as 20% of their mortgage which would give them time to regroup and also give the economy time to recover from the economic slowdown. The problem is that if the Federal government does not do anything now, they still end up losing in the long run. As people lose their jobs and also the ability to pay their mortgages they get thrown out of their houses, end up on the street with the state picking up their housing, medical care and the many other costs. The end product, strain on the Federal government again, sot hey are moving to take some steps to alleviate the increasing problems with defaults on mortgages that is running into the millions since the problem began last year.

Selling your home in today’s rock-bottom market may be hard enough but making it reality is even harder. This may sound scary, but it sure is for the tons of regulations and safety requirements that must be met for a house to be allowed for sale can cost you an arm and a leg if you’re serious about your plans. The clause “AS IS” is your way of telling prospective buyers that the contents of your house may or may not all function properly, it doesn’t end there. The stiff regulations in building and safety codes dictate that all safety related issues are to be remedied before a permit for listing the house would be allowed. Brokers would also advise you to do such for any problems with these issues can come to haunt you just as you are about to close your deal, ending all dreams of getting your dream house that is more manageable and would cost you less to maintain. Do consult licensed brokers for advice and hire one for your sake, they cost money but they can save you that arm and leg we started with!

Even non-financial firms are bearing the brunt of the problems with many in the services and manufacturing industry reeling back from the increasing prices of materials and other overhead costs. The problem is that most of the people and companies that provide the bulk of the necessary economic cushioning have run dry due to sleeping investments in those unsold houses. Foreclosures are no solutions either for even as lenders get their property in exchange for lost capital, no new buyers are turning them into cash that should be pouring into their stores. All costs are on the rise as companies try to get funds form their customers, electricity, gas and even food are rising so fast most Americans are finding it hard to come by. Time will tell if the decisions of today will bring a swift end to this crisis, some say next year others by 2010, no one knows. What should be known is that the lessons gathered from this experience should be collated and made into proper measures of control and regulation so it does not happen again.

Freddie Mac has forged an agreement with three major mortgage lenders which would enable funding for large home loans or those that reach almost half a million dollars. Freddie and Fannie Mae are two of the government-backed lenders who have been doing damage control after billions of dollars of losses in the sub-prime lending financial crisis they have been forced to deal with. The deal seems to be forged with Mac and those big-time lenders with no news yet from the avenue of Mae whether they would be following suit. This paves the way for large homes that would otherwise have to be foreclosed allowing more funding to alleviate and even prevent it from happening. This is one more event in the long period of recovery that would be needed to amend the broken housing market which is hoped to start rebounding this 2009.

Underwriters are the risk analyses arms of financial institutions and they are being blamed for the current crisis for allowing people with less than favorable financial standing to continue getting houses without enough money to pay for them. The mentality that the economy is rock solid and can handle just about anything is a very false belief. The economy of countries is inter-dependent and instability in one ripples thought the whole system. The problem happened when the ripple hit the housing market and they couldn’t recover due to billions of dollars in bad loans they were not able to collect. The effect, many homeless, many homes without homeowners, new homes with nobody buying and it goes on and on and on. Hopefully the market will self-heal in the near future so people can go on back to living their lives not speculating and just to go on living.

Charles Morrison is a respected economic historian and banker who has been accredited by many to have predicted the economic crash we are all facing. Being a banker who designs investments and hedge fund packages, which is packaged for credit instruments and he saw all this coming last spring 2007. He tried to tell people that a “Mother of all Crashes” was coming yet nobody listened and politicians continued to say the economy was doing great with the proper mix of inflation, growth and employment. He saw the immense volumes that were being traded on Wall Street which were too good to be true and went ton by saying this can’t all be true. He was in the industry and he knew what he was talking about yet still nobody listened. The crunch came when too much volume was traded with no sure way of accounting the validity and effectivity of the economy. Then it all came tumbling down taking all of us in the process.

People who have been wanting to purchase a house for the first time are getting wet feet due to disturbing news and trends that can be seen all over the internet. When house prices started falling, many jumped on the bandwagon and started buying only to end up loosing their investment early in the fight. Others who were cautious faired well for they got the time they needed to see the trend which showed the sharp drop in new house prices and the accompanying mortgage foreclosures that followed. This prompted more prospective home buyers to halt their plans whilst they waited for the rut the market was in to clam down. Those who were facing foreclosure are advised by many experts to take advantage of bailout options offered by lenders and other financial institutions rather than to loose everything all together.

Mortgage firms, lending investors and real estates brokers are falling victim to smart mobs who target people who are responsible for the foreclosure crisis that still continues to this day. Their method of attack is bold and sometimes surprising enough a homeowner can get wrongly accused. They use plastic sharks to show their disgust at these people especially those who lend money to homeowners or “loan Sharks” as they call them. They throw them all over the front yard or hang them in front of their offices which have caused some alarm for these people who have already fallen prey to the attack of these sharks (plastic).