Dow dips below 7,000

It’s an historic event that takes us back to 1997.  Below is a chart showing the history of the DJIA from 1929 to present, courtesy of msn money central. the first thing I look at every morning when I wake up.

When I started working in 1972, the Dow was at about 950.  When I switched to real estate in 1990, the Dow was just under 3,000.  It’s interesting to read some of the rationalizations of the 2002 low point. 

Dow Jones Industrial Average History

Dow Jones Industrial Average History

Dow Jones Industrial Average 10 year

Dow Jones Industrial Average 10 year


“The ‘game changer’ will be the housing market, and whether (or not) it can stablilize”

$8,000 Homebuyer Tax Credit

Looks like the $8,000 Home Buyer Tax Credit is now signed, sealed and delivered.

Update: Everything you wanted to know about the 2009 home purchase $8,000 credit. (There is a similar link below for the 2008 $7,500 loan/credit)

Zillow reports it is a FULL $8,000 credit, even if the buyers total tax liability is less than that amount. “Buyers may not have owned a home for the past three years to qualify.”

CNN Reports That you can get your $8,000 faster by claiming it on your 2008 Return (or amended return if you have already filed), even though to qualify for this $8,000 non-refundable credit, you have to buy a house between 1/1/2009 and 11/30/2009

There is an income limit of $75,000 for single people and $150,000 for couples, though there are reports that people making over the limit might be able to get a partial credit.

If anyone has any details on the partial credit for people earning over the limits, please do let us know. Update: This answer is in the link at the top of this post.

For people who bought between 4/9/08 and 12/31/08

I don’t see any news so far that there are any changes for people who bought in 2008.

PMI Mortgage Insurance Company drop kicks Mortgage Brokers

Today I had several Mortgage Professionals contact me regarding PMI Private Mortgage Insurance Company cutting off mortgage brokers via email and comments here.    I thought it must be a rumor…but it’s not, effective February 20, 2009 PMI Mortgage Insurance Company will no longer underwrite or insure loans for mortgage brokers.   However if you’re a lender, PMI is ‘Right alongside you…we’re in it for the long run”.  

From an email I received today from a Loan Originator:

It’s believed that PMI is the first of the nation’s seven MI firms to totally exclude loan brokers from their coverage menus. In recent months other MIs – including Genworth and MGIC – have tightened guidelines on broker-sourced loans, particularly condominiums and high LTV notes. A PMI spokesman confirmed the new policy change to National Mortgage News adding that, “This does not apply to correspondents.

$15,000 Home Buying Credit? No! How about $8000 For Some Instead?

The $15,000 home buying credit in the Stimulus Package seems to be dead.

This credit would have been for more than just first time home buyers and was generating a lot of increased activity over the last week or so both on the Internet and in open houses across Seattle. There have been many arguments both for and against this particular tax credit and over who would benefit from it the most, but in the end the Senate and the House had to come up with a compromise

The Compromise?

According to Los Angeles Times and the Associated Press, only first time home buyers “could

Should builders and banks receive an excise tax exemption as WA State faces a budget deficit?

House Bill 1495 has been introduced into the legislature and is now in committee.  In these times filled with hope, I am hoping this bill dies or at least comes out looking substantially different.  Let’s take a look.

AN ACT Relating to real estate excise tax exemptions to stabilize neighborhoods…

The legislature finds that there is a substantial inventory of unsold or foreclosed vacant homes on the market that is driving property values down and destabilizing neighborhoods. These homes also present an opportunity to provide affordable homes to low-income families, addressing some of the unmet need for affordable housing in the state of Washington. The legislature also finds that providing targeted incentives to housing developers will stimulate the sale of these vacant homes to low-income buyers now and stabilize neighborhoods affected by this growing inventory. The legislature intends to provide such incentives through excise tax relief on sales of homes to low-income first-time homebuyers.

I’ve been asking Realtors in all my classes to begin watching the percentage of financially distressed sellers with homes for sale in their market area.  Agents can do an MLS keyword search using terms such as “short sale,

Obama plans on tighter regulations for mortgage brokers

From the New York Times

The Obama administration plans to move quickly to tighten the nation’s financial regulatory system. Officials say they will make wide-ranging changes, including stricter federal rules for hedge funds, credit rating agencies and mortgage brokers, and greater oversight of the complex financial instruments that contributed to the economic crisis.

Aides said they would propose new federal standards for mortgage brokers who issued many unsuitable loans and are largely regulated by state officials. They are considering proposals to have the S.E.C. become more involved in supervising the underwriting standards of securities that are backed by mortgages.

None of this should be a surprise for regular readers of Raincityguide.  I’ve been talking about tighter rules for mortgage brokers since 2001 and here on RCG for two years.   Mortgage brokers will always argue that they are already tightly regulated. In some states, brokers have tougher regulations than consumer loan companies.  Hey, wait a minute.  Is President Obama going to let the consumer loan companies slide by without proposing tougher regulations for them as well?  The top two largest predatory lending lawsuits were against consumer loan lenders Household Finance and Ameriquest. Both companies settled out of court and “admitted no wrongdoing” even though there was lots of evidence that their sales people were meticulously trained by management on how to do wrong. 

Maybe tougher minimum sanctions and penalties are in order as well.  We must also realize that these new regulations mean nothing without enforcement.  I would rather see the states be in charge of enforcement than the federal government (well, with the exception of Florida where they have proven their supreme incompetence.) We need only to look at RESPA and the miserable job HUD has done trying to enforce this massive piece of regulation since 1975.  So if it’s going to be up to the states, then the industry should prepare for a higher cost of doing business as a mortgage broker or consumer loan lender.  This will be passed on to the consumer in the way of higher fees, rates, or both.

Today we come together…

american-flag1Quiet tears stream down my face…

My whole life, and all that I have witnessed and experienced, flashes past as if in fast forward  in my brain…

I believe in God…I pledge myself to this Country and its people…

Words I once heard very long ago, and have never forgotten, come to the forefront…

“Keep us, O Lord, from all pettiness…and let us forget not…to be kind.”

It is a great day…truly the first day…of the rest of our lives.

Nationalization and "Bad Bank" Analysis

Dr.Paul Krugman “Wall Street Voodoo”

“recent news reports suggest that many influential people, including Federal Reserve officials, bank regulators, and, possibly, members of the incoming Obama administration, have become devotees of a new kind of voodoo: the belief that by performing elaborate financial rituals we can keep dead banks walking.”

“What I suspect is that policy makers — possibly without realizing it — are gearing up to attempt a bait-and-switch: a policy that looks like the cleanup of the savings and loans, but in practice amounts to making huge gifts to bank shareholders at taxpayer expense, disguised as “fair value