How about a little bit of good news? Not too much, just a little bit!

Capital Economics is a worldwide consulting firm that provides independent economic analysis (www.CapitalEconomics.com).

They report the United States housing crisis will end this year. Yippee! Are you excited?

Why? Loosening credit. Capital Economics says:

1. The average credit score required to attain a mortgage loan is 700. This has been constant for about one year.

2. Banks are lending up to 3.5 times a borrower's earnings. The low was 3.2.

3. Loan to Value ratios have gone from a low of 74 percent in mid 2010 to a current 82 percent.

How does this jive with your experience in your area?

Housing price gains, however, are another story, and these improvements won't be significant enough to help prices. When the banks unload a few million foreclosed homes onto the marketplace, what happens then?

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One month ago I paid $3.56 per gallon for gas. This past weekend I paid $4.29 at the same place. $5 here we come!

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 A few years ago, a friend and I were discussing the housing crisis. We had a simple solution: "If something happened in my life that made paying my mortgage difficult, why won't my bank just ask me to come in, sit down with them, figure out how much I can pay, and rework my loan? They would keep a customer, I would keep my home, and I would be pleased that they respected me and wanted my business. I would feel indebted to them. I would feel good about them. I would keep my self respect."

Isn't this the right thing to do? A simple thing to do? Buyers/sellers in seller financed transactions do it all the time. It boggles my mind the way this whole crisis has been handled by our financial institutions and government.

You probably are aware that the nation's five largest banks have agreed to a settlement that would forgive some of the debt of borrowers who are in real hardship. Of course, it does not go far enough to truly help people, plus, the banks have strings that ensure their long term losses are cut substantially. Now, the LA Times is reporting that Fannie Mae and Freddie Mac - the two biggest players in the mortgage finance world - have refused to go along with the deal. They have rejected "principal forgiveness". Instead, they want to give troubled borrowers a "temporary reprieve from paying interest on a portion of their loans." Read the previous sentence again! Boy, this will really help people, won't it. This will really go a long way to solving the real problem, huh?

We elect politicians to solve big problems. They are unwilling or incapable of doing so. We let our money sit in banks at 1% or less interest, the banks  do foolish things with that money, the government bails them out, their customers suffer, and in the end the banks say "Screw you" to the customer.

The beat goes on!

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If you are selling a note in today's marketplace, ask about a "partial purchase" - you just sell a part of your note, not all of it.  Buyers are interested. Make sure you understand the advantages and disadvantages.

If you are selling a property and creating a note, and think you may want to sell that note, ask for the largest downpayment possible. Use an 8-10% interest rate. Use the shortest pay period possible. Check your buyer's credit and job history. Use a service company to collect your monthly payments. Keep good records.

Sincerely,

Denny Stanz

760-245-5366
760-245-5367 fax
dennystanz@verizon.net
www.CaliforniaNoteBuyerLLC.com