Monday, May 9, 2011

Unemployment Rate Blues

For the past three years, the U S economy has struggled with the “Great Recession.” Aside from the near collapse of our financial system, the most devastating part of the economy has been the loss of jobs. At one time, the economy was losing over five hundred thousand (500,000) jobs per month. The jobless unemployment rate rose to above ten (10%) per cent at one point.

This Friday the Labor Department will be reporting the number of jobs gained in April 2011. It is expected that the jobs number will increase by over two hundred thousand (200,000) jobs but the unemployment rate may rise to 8.9 per cent! How do we increase jobs but the unemployment rate not only does not fall but actually increases???

This is one of the tricky elements of our economic system and the way that unemployment is reported. The unemployment rate measures the percentage of people who are looking for work but who can’t find jobs. As our economy and its multiple parts change with each month, the number of people looking for work vacillates.

Therefore, as the number of jobs increase, more people who have been discouraged and have stopped looking for employment start to feel better about the job market and re-enter the employment pool as they start looking for work again. This means the economy can create jobs, give people hope, get more people looking for work, and the result is that the unemployment rate goes up!

So beware of the unemployment rate. It has a tricky side. It may not reflect the number of those out of work but rather those who have started looking for work again.

Thursday, May 5, 2011

Banks as Sellers

As part of our new economic situation, many banks now own foreclosed property that is being offered for sale. Because there have also been a lot of bank failures, we also have Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) as our owners/sellers. This situation is causing some consternation among potential buyers of these properties who are unaccustomed to the rigid rules and regulations affecting these sales.

When a buyer submits an offer on a foreclosed property owned by Fannie Mae or Freddie Mac, they in turn receive an Amendment from the seller that basically says “Here are our terms…take it or leave it.” No changes to the contract addendum are accepted. The HUD has to be presented to the seller for approval a full 72 hours prior to closing. If any changes are made after that, they start the 72 hour requirement over again as though it is a new HUD.

As real estate professionals, we understand that this is the way it is with financial sellers. The problem is that the buyers often don’t understand. Realtors need to prepare their buyers to understand that the seller does not negotiate.

If the buyer becomes frustrated and backs out of the purchase, the seller knows that at some point in the future there will be another buyer who will buy on the bank’s terms. They don’t mind waiting.

J. Byron Wyndham   

Friday, February 25, 2011

The Craziness Just Doesn’t Stop….

Latest file with title problems: The owner got title to Gilmer County property in 1980. After running title we discover-the vesting Warranty Deed is recorded in……. the wrong county (don’t ask how long it to find that out); there is a Quit Claim Deed from the owner to the Owner’s Trust that is missing a witness (and therefore should have never been recorded); a Certification of Trust is recorded naming the Trustees but not saying if the three Trustees can sign individually or must sign all together, so we have to track down the Michigan attorney that drafted the trust Agreement; and finally, (what has made my day) I get a call that says the well may be contaminated and we don’t know if we will close or not?

            Can anyone give me directions to the nearest Drugstore?

Monday, February 21, 2011

Mortgage Companies-Only in America

These are truly some strange financial times. We have seen lenders losing billions of dollars but still paying employees million dollar bonuses. Lenders are foreclosing on properties when the borrowers can bring the loan current, but the lender would rather foreclose and lose money than let it stay with the borrower. Applicants with good credit and collateral are being denied new loans despite their financial worthiness.

I have a “strange but true” story to share. Borrowers with a high interest rate decide to refinance. They make application with the lender that has the current loan on their home (“Lender A”). The owners go through the application and approval process only to be denied. Their denial letter says they are not qualified under current lending criteria.

Being determined to get a new loan with a much lower interest rate, the owners file a new application with a different lender (“Lender B”). After a few weeks and jumping through a few hoops with the new lender and its application and approval process, they are approved for a new loan at the much lower interest rate. Happy with their new lender, their new loan and the efforts that they put in to get approved, the owners close on their new loan.

A few short weeks later, they are preparing to make the first payment on their new loan to Lender B. A letter is received from Lender B which states that they are NOT to make their payments to Lender B. Their new loan has been sold and transferred. Instead, they are requested to please make all payments of their new loan to the new assigned lender…Lender A!

So after all is said and done, they continued to make their payments to their old lender (Lender A) who had denied the refinance of their loan stating they weren’t qualified…but Lender A bought the new loan because Lender B had a good loan to sell! Only in America…

Monday, August 23, 2010

a real feeling of Loss

A friend died today. It was expected but it wasn't. He had been fighting Stage 4 lung cancer for about 4 years. He had originally been given 6 months but he was a fighter. Funny (?) thing is he never smoked. He had been a missionary to Hong Kong for about 25 years and I can't help but think that maybe it was all the "second-hand" smoke. (It seems like all Asians like to smoke.) He sang in the church choir with me and he had a wicked sense of humor. I visited with him last Thursday, not knowing it would be the last visit. Although he was in Hospice, I really thought he had several more months left.

Many of you  have expressed concern and sympathy for my secretary who lost her only child in an accident last month. I know she appreciates your experssions of support. There is NEVER a thing you can do to help someone who is deep in grief-except be present at the appropriate times and let the one left behind know how much they are all loved.

It makes you realise how important family and friends are. It also means we all need to live as lives to the fullest. 

Monday, August 16, 2010

What if Banks....

I was watching CNBC business channel today when I heard a great idea. Why not refinance all the people who have been making their payments faithfully without missing any. Under the current bank rules they want you to have 20% equity in your property. The appraisal has to show that you have this equity. However, since the bank is already on the hook for the money, who cares if the borrower is upside down on his loan if he is making his payments in full and on time. So let's reward the good guys. Refinance the good guys, lower their rates and put more money in their pockets. Thay way they will also have more money to spend to help the economy.

Banks don't get it...never did

Monday, August 9, 2010

Bank Seized-again

There was another bank failure in north Georgia recently. On July 23, 2010, Crescent Bank of Jasper was seized by the FDIC and was reopened as Renasant Bank, which is out of Mississippi. Crescent Bank had approximately $1 billion dollars in assets. With the acquisition, Renasant Bank will be operating the 11 branches of Crescent Bank across north Georgia .

Crescent Bank was an active mortgage broker in the north Georgia area. It remains to be seen how the acquisition by Renasant Bank will affect it’s mortgage operations.