All Forum Posts by: Account Closed

If the average homeowner thinks they are going to see any benefit from the bailout they have not only been smoking weed but unlike the claims of Bill Clinton they have most definitely been inhaling.

Word on the street is Chase did not buy all of WaMu's mortgage business. They have agreed to service it indefinitely if needed but the agreement with the Comptroller of the Currency allows them to pass on buying the riskier parts of the WaMu portfolio.

I can only tell you what I would do...

I would keep the umbrella. Why?

It is inexpensive AND provides prima facia proof you are not trying to structure your finances to make yourself judgment proof should your tenants (or their guests) be injured and you are held liable.

Others may have a different opinion but $300 a year is protecting far more than just the equity you outlined above.

Homes
Investment properties
Bank accounts
CDs
Stocks
Bonds
Mutual Funds
IRAs (in some cases)
401k (depending on the circumstances)
Furniture
Cars
Jewelry
Your wife's china, crystal and silver

Sure, you could declare bankruptcy, maybe, but you would still lose much of what you have to settle the judgment and any other debts.

Short sales and foreclosures have not in any way contributed to the declining market values. Any piece of real estate is worth EXACTLY what a willing and able buyer will pay and a willing seller will accept. If the sellers could get more they would, if they buyers could pay less they would.

You mentioned this was a refi and that probably eliminates any possibility WaMu would accept a reduction in the principal amount and let you just walk away from the difference. With a refi, in Florida, they are likely going to seek a deficiency judgment unless you get it negotiated out as part of the short sale. if you can get them to write it off instead of seeking a deficiency you will likely see a 1099 for the write off amount.

I think your central question is flawed in asking if they would just do a write down of the principal and let you keep the home. Why would they? How is that in their best interest or to the benefit of their shareholders?

I'm not sure how wedded you are to this idea but I will tell you there is a bank here in Georgia that has negotiated write downs of the principal and allowed the borrowers to stay in the home. However, these were primary residences, not investment properties. The two I have actually seen documentation on were a write down of 40% of the difference and 35% of the difference. In other words, if the loan balance was 100k more than current value they knocked off 40K and 35K respectively. In both of these cases, the borrowers will see a 1099.

How much are you paying for the umbrella?

I really detest the idea but I don't see any way around it politically or economically.

The root of the problem was caused by the government several years ago when they passed legislation letting activists organizations like ACORN apply pressure on lenders to force them to write loans that should NEVER have been written. That opened the door for the creation of the CDO marketplace. The CDO is the reason we are in the mess we are in and it is here because markets fill voids and lenders writing loans they knew were likely to default left a void.

Once CDOs were created and marketed, the doors were open and many lenders quickly figured out they didn't need to worry so much about underwriting standards.

The bailout will happen and it will be much more than 700 billion because politicians can only think of increasingly socialist solutions to market problems because those solutions buy the most votes.

I do find it very funny that the people screaming about the need for more regulation now are the ones who opposed it when McCain and other republicans, including the current administration, proposed it years ago.

There is a lot of finger pointing happening right now and the only purpose is an attempt to rewrite history and preserve political power.

For the next 15 to 20 years we are moving back to a time when business did not rely on institutionalized lending to manage cash flows.

Personally, I think it is a very good thing that will happen and about darn time.

As to the bailout, without it, we will see a pretty big hit to the world economy in a very short time. With it, we will see that pain spread out over a number of years. It will "feel" better but the net result will be the same.

The thing real estate investors should be concentrating on is how to not just survive but actually thrive in the economic reality we face.

No, the economy is not going to collapse. No the dollar is not going to be worthless. No, people are not going to start carrying pockets full of gold coins to transact business.

But, from this point forward, the way a real estate investor operates must change. Every investor, not just in real estate btw, is faced with the same options they have always had when markets change...

Adapt or die.

Opportunities abound, if you are well prepared and positioned...

http://www.bloomberg.com/apps/news?pid=20601087&sid=ahgsBrJatCso&refer=worldwide

They aren't nationalizing the debt and the economy is not going to collapse.

What they are talking about is RTC version 2.0, you can read about the original RTC at http://en.wikipedia.org/wiki/Resolution_Trust_Corporation

Insured

As Richard said, the ones at banks are insured but they aren't really money market accounts, they are hybrids.

True money market accounts are not insured, that is one reason why the rates are higher.

However, the fund managers use conservative investment vehicles so as to not "break the buck" or end up with a share price less than $1.

There is talk of a new entity being created to provide insurance for money market accounts like demand deposit accounts.

Personally, I am not draining my money market accounts. But, I have mine with very stable institutions.