the Property Monger Real Estate Blog

This past Sunday, the U.S. government officially took over the gigantic mortgage companies Fannie Mae and Freddie Mac, in what will most likely prove to be the largest federal bailout our government has ever participated in. Bigger then the Savings and Loan crisis. Concerned over huge losses from the two companies, the government has stepped in to help reverse the prolonged housing and credit crisis, and is now responsible for roughly $6 trillion in outstanding mortgage debt.

One of the first items on the government’s ajenda, was to replace the existing management. Freddie Mac’s chief executive Richard Syron and Fannie Mae’s CEO, Daniel Muddy, were replaced by David Moffett, and Herb Allison, respectively. Second, with a pledge to shore up the finances of America’s largest lenders, the government committed up to $100 billion in support for each of the two behemoths. Additionally, the U.S. Treasury will take about a $1 billion equity stake in each institution, in the form of senior preferred stock with a guaranteed 10% rate of return. This stock will rank above both existing preferred and common shares and could give the government an ownership stake of up to 79.9 percent.

The treasury is to begin buying mortgage-backed securities issued by the two companies this month. And there will be a 15-month deadline for the move to make its impact before the mortgage agencies are reduced in size and their future decided in 2010. The clock is ticking.

In a very positive response, stocks sored as the Dow Jones climbed nearly 300 points on Monday, while the interest rate dropped from around 6.5 % on Friday, to 6% on Monday. Analysts believe it will eventually settle in at around 5.5%. This is good news.

At a time when it seemed interests rates had nowhere to go but up, thousands of potential home buyers just got some very good news. And with the price of oil dropping at the moment, could this be the turnaround we all have been hoping for? It certainly seems that way to me. 

Have something to say? Leave a comment at the Property Monger, or have a discussion at the Boston Real Estate Forum.

Sellers, Win a Staging of Your Home

The contest closes Sept. 11 at midnight.

Well, if my ego weren’t big enough, it’s moments like this that help inflate it.   Back in April, I was stupid enough to make a market prediction, and put it in writing:

“I honestly believe that 3 months from now, this same graph (with new data), will look worse than it does now….. short of some brand new unforseen fiasco, we are currently looking at the worst of the market”

- Moi,  April 7th 2008

So from the cities I’ve been looking at, Boston, Chicago, and New York have all seen slight increases since they appear to have “bottomed out” between April and May (Achem!!!!  3 months later, I rule..).  Other cities that have seen bottoming out / price increases include:

Denver, CO,   -  Atlanta, GA  -   Chicago, IL  -  Boston, MA   -  Minneapolis, MN  -  Charlotte, NC   -  New York, NY  -   Cleveland, OH    -  Dallas, TX

Unfortunately, that still leaves 11 out of the 20 cities followed by the Case Shiller with decreasing home prices.  However,  for 7 of those Cities (as well as the composits as a whole), the rate of negative change in the prices, has been consistently decreasing as well for the last 4 months, which implies that they will be soon to follow the flattening/upward trend.

Which still leaves the somewhat consistent losers…. Phoenix AZ, San Diego & San Fransisco CA, and Tampa FL.    Boooo you guys… BOOOOOOOO!!!!!

A shot to the arm of the U.S. housing market

President Bush signed into effect one of the most robust housing legislation bills in history yesterday. Designed to give another shot in the arm to the country’s ailing housing market, this bill is MASSIVE.

Some of the highlights of this bill are tax credits for first-time home buyers, mandatory refinancing options for certain individuals, increases to fed-backed jumbo mortgage allowances in certain markets such as Boston, increases of property tax breaks for home owners, and $4 Billion in federal aid to the primary mortgage providers Freddie Mac and Fannie Mae, in order to support, rehabilitate, and stabilize low-income housing projects in certain areas. So, yes, this bill is HUGE.

Perhaps one of the most amazing aspects of the bill is the mandatory refinancing options. In order to help those homeowners facing foreclosure, $300 billion in funding will be available to the FHA in order to help mortgagees whom are locked into upside-down, high interest  mortgages, allowing them to refinance into more affordable loans. An estimated 400,000 sub-prime and other high-cost mortgages will be eligible for this program. This is unprecedented. Under the bill, mortgagors will have to accept losses on new loans and which can be no more than 90 percent of a home’s current market price. What a country! In return, the borrowers will eventually have to forgo a portion of any future appreciation when they sell. How about that?

It is a monumental day for the slumping housing market in the U.S. Hopefully the impact of this ground breaking bill will be felt immediately and help to stabilize those markets that have been hit hardest by the recent mortgage meltdown and subsequent real estate downturn.

… in honor of the Celtics Win, your very own one of a kind, 2008 Larry Bird Replica Mustache!!!!

Yup… this one has nothing to do with Real Estate, but  a buddy of mine put up an auction on Ebay for the One of a kind Replica.  And how could I not do my best to add to the hype.

The bidding started at 99 cents and is currently riding the wave up to a whopping $8.50.  Mostly due to the excellent sales pitch as you scroll further down on the item listing.  I mean who doesn’t want to slap someone elses facial hair on their upper lip to improve their jumpshot???  I suspect the attention it got from a few other sites didn’t hurt either….

 The auction only has a week left, so Bid while you can!!!!!