My Life as a Realtor

Hi Guys! What a beautiful place UT is. We were in the Mountains our beautiful Cabin in Timber lakes for this weekend. We were doing a sale up there and we got to be there for the changing of the aspens! It is amazing to see the mountains change from green to yellow to red in a mater of days. What an amazing experience it was.

Anyway, the sell didn't go as planed and we are going to be listing it today for about $100K under appraisal. We had the appraisal done last Mon and it came in at $457K. I also have many other properties for sale and many are great deals! Google my name and trulia so -- Brian E. Betts Trulia -- paste and click it into google and you will see the listings that are live now! I have a few more coming up in the next few weeks.

One of my properties was appraised at $1.4 mill 18 months ago and we will be selling this for a start of $830K and dropping it $15K a week until it sales! Another is the cabin I spoke of up top and another is a 4 bed 2 bath home in Magna. It will be listed about $175K. Keep looking for it and you will find it!

Enough about me, lets look at what is going on out there! Here it is and quotes are at the bottom. Call me for anything RE related! 435-513-0973

Market thoughts...

The Fed announced plans to create a market place for illiquid mortgage debt. This should do a lot of long-term good to help the housing and lending environment. As if that weren't enough, the Securities and Exchange Commission also placed a temporary ban on the short selling of 799 different financially related stocks.

After 158 years in existence, Lehman Brothers filed for bankruptcy last Monday due to overexposure of high-risk loans in the mortgage arena. Then, the Fed gave insurance giant AIG an $85 Billion lifeline to keep it from going into bankruptcy, after initially stating it would not intervene. Then it was announced that Merrill Lynch is being acquired by Bank of America, which will save them from the same fate as Lehman Brothers, and now troubled bank Washington Mutual is looking for a buyer as well.

The government's announcements on Friday are great news for the overall health of our financial system, though they did cause Bonds and home loan rates to move away from their best levels of the week. All in all, Bonds and home loan ended the week slightly worse than where they began. Additionally, stocks had their most volatile week in history - but ended the week almost exactly where they started.

Over all we feel the Fannie and Freddie news will result in lower long-term mortgage rates. But there are bound to be bumps along the road and we are bouncing over one of them right now. As a result, rates are up currently but as stability returns they should move down.

Deals are out there, let me know if I can do anything to help you land them.

“The Bailout” is the biggest thing on everyone's mind this morning as we have watched the government get involved in the capital markets, again.

Unfortunately most of the sign point to the bill being passed, with the Democrats getting the voting cover they wanted from Republicans. (As a side note, I was disappointed to see that many Senator and House Members had added ‘Pork’ to the bill. What crazy times we live in when the government is so disconnected from the lives of every day people).

The biggest question people are asking is if the bill will result in there being little to no pain associated with the financial turmoil we are seeing in the markets.
And the answer is…… no one knows. And also no one is willing to stand up and tell us that either.

So here is our takeaway. The bailout and other moves that have happened and will happen will act to bring stability to the lending and credit situation. Banks will continue to lend money to people. And people will continue to buy homes.
As one expert said to me, “there were many homes bought with 10—20% down payments in the past and there will be many more in the future.”

Basically the markets might tighten even more, but we’ll come through it and hopefully the policy makers in Washington won’t bind us up some much that they also limit the upside in the future.

Today we are running business as usual.

F Y I:

Quick Analysis of GSE Takeover

As you know, in a truly historic event on Sunday, Treasury Secretary Paulson and Federal Housing Finance Agency Director Lockhart announced that “FHFA has placed Fannie Mae and Freddie Mac into conservatorship.” The government (FHFA) will now be managing Fannie Mae and Freddie Mac for the foreseeable future.

Below are our thoughts.

Overview

To stabilize and to stimulate the housing and financial markets, the Federal Government is taking the following key steps.

· The GSEs will be allowed to increase their MBS portfolios through the end of 2009

· Treasury will be initiating a program to purchase GSE mortgage-backed securities (through December 31, 2009)

· Treasury has established a new secured lending credit facility which will be available to Fannie Mae, Freddie Mac and the Federal Home Loan Banks

We believe that Treasury Secretary Paulson and the Bush Administration determined Fannie Mae and Freddie Mac were unable to perform their housing missions at a time when they were most needed because the GSEs were trying (unsuccessfully) to address safety and soundness issues associated with raising capital. As a result of this plan, Treasury has indicated that the GSEs will now not be under any pressure to sell assets.

In the short-term, we expect mortgage liquidity should improve. Rates should decline as the risk spreads built into the GSE pricing (due, in part, to fear of potential GSE failure) should be reduced if not eliminated. The extent of the decline will depend on what happens to Treasury yields in the coming days.

Without capital constraints in the near term and based on Secretary Paulson’s comments (see below) , we believe the new Fannie and Freddie will likely rollback at least some of their price increases and loosen underwriting requirements to some extent. It will be curious to see the MI reaction to this government intervention as their tightening of guidelines will now be “front and center” in the effort to expand mortgage financing availability.

We also believe Secretary Paulson’s call to examine the guaranty fee structure could lower those fees across-the-board. It will be interesting to see if the government-controlled GSEs will implement a Ginnie Mae-type flat fee structure and at what level.

On a longer term basis, there will be a “heavyweight” debate next year and beyond about the future size and structure of the GSEs (e.g. public or private entities). That debate will not occur until the new Congress and Administration take office next year.

Why did Treasury/FHFA take this action?

It appears to us that Treasury/FHFA lost confidence in Fannie Mae and Freddie’s Mac’s ability to support the housing recovery while, at the same time, addressing their safety and soundness responsibilities by preserving and raising capital. Below are some of Secretary Paulson and Director Lockhart’s remarks which lead us to this conclusion.

Director Lockhart said:

(bold and italics added)

“Their market share of all new mortgages reached over 80 percent earlier this year, but it is now falling. During the turmoil last year, they (the GSEs) played a very important role in providing liquidity to the conforming mortgage market. That has required a very careful and delicate balance of mission and safety and soundness. A key component of this balance has been their ability to raise and maintain capital. Given recent market conditions, the balance has been lost. Unfortunately, as house prices, earnings and capital have continued to deteriorate, their ability to fulfill their mission has deteriorated. In particular, the capacity of their capital to absorb further losses while supporting new business activity is in doubt. Today’s action addresses safety and soundness concerns. … The result has been that they have been unable to provide needed stability to the market. They also find themselves unable to meet their affordable housing mission. Rather than letting these conditions fester and worsen and put our markets in jeopardy, FHFA, after painstaking review, has decided to take action now. “

Secretary Paulson said:

“I attribute the need for today’s action primarily to the inherent conflict and the flawed business model imbedded in the GSE structure and the ongoing housing correction”. He added that he has “long said, the housing correction poses the biggest risk to the economy”.

“Our economy and our markets will not recover until the bulk of this housing correction is behind us. Fannie Mae and Freddie Mac are critical to turning the corner” and that “the primary mission of these enterprises will now be to proactively work to increase the availability of mortgage finance including by examining the guaranty fee structure with an eye toward mortgage affordability”.

Comment

We have all seen the steps that Fannie Mae and Freddie Mac have taken to preserve and raise capital throughout this year. These measures have included raising prices on mortgages and tightening underwriting guidelines. As everyone is also aware, they have been aggressively trying to put back loans to seller-servicers who, in turn, are going back to originators.

Secretary Paulson in particular appeared to conclude that GSEs cannot serve two masters (i.e. its housing mission and its shareholders) during the housing crisis.

What does this mean?

To state the obvious, we are in uncharted waters. This plan is not a “silver bullet” that will address the underlying problems (i.e. record mortgage delinquency and foreclosures) that caused the need for this unprecedented action. MBA’s National Delinquency Survey last week indicated that over 9% of all mortgages are either delinquent or in the foreclosure process. While the new GSE approach to mortgage availability will increase the number of potentially eligible borrowers, it will likely not have any significant impact on affordability (borrowers must still qualify and make downpayments) in those markets where house prices increased the most during the “housing bubble” until house prices and borrower incomes are in line. With this as a caveat, below are our immediate thoughts.

· Short term goals

Two of the immediate goals of this action are: 1) “to increase the availability of mortgage finance” as Secretary Paulson said and 2) to lower mortgage interest rates through the Government guarantee of GSE debt.

· Long term objectives

On a longer term basis, the Government’s action yesterday raises the fundamental question about the government’s role in housing going forward. Secretary Paulson deferred the discussion of this question and the “flawed GSE business model” ( i.e. serving two masters ---public and private objectives) to the next Administration and Congress.

In this update, we will focus on short-term impact since the debate about the GSEs’ future structure and size will depend on who wins the election and the make-up of the Congress.

Short term Impact

For the housing industry, the short-term impact of the Government takeover appears to be positive.

· Mortgage rates should decline

· Liquidity should be increased

o GSEs should loosen standards (somewhat)

o GSEs should reduce fees including guaranty fees

· Some housing experts feel house price may stabilize sooner and the level of further house price decline will be moderated as a result

Potential Impact

· There could be a mini-refinance boom if the rate decline materializes.

o Hedging of servicing portfolios and pipeline problems will have to be addressed

· More aggressive GSEs could slow down FHA’s growth

o FHA appeared on the way to 50% market share later this year.

o What will be the impact on margins?

There are many questions to be answered in the coming days and weeks:

(Here are a couple)

· How will the MIs react?

o Their underwriting and pricing policies will be “front and center” if the GSEs take the actions we expect

· What will the new Fannie/Freddie management’s policy be on buybacks? Will they be more reasonable?

· On g-fees, will the GSEs a different approach (e.g. more like Ginnie Mae – uniform fees for all lenders)

QUOTES!

"Gauge your success by what you gave up to achieve it."
-- Eden Hampson

"A business is successful to the extent that it provides a product or
service that contributes to happiness in all of its forms."
-- Mihaly Csikszentmihalyi, Professor of Psychology and Management

"The price of greatness is responsibility."
-- Winston Churchill, Former British prime minister

"A true leader has the confidence to stand alone, the courage to make
tough decisions, and the compassion to listen to the needs of others. He
does not set out to be a leader, but becomes one by the quality of his
actions and the integrity of his intent. "
-- Anonymous

"If you are going through hell, keep going."
-- Winston Churchill, Former British prime minister

"You can accomplish anything if you're willing to pay the price"
-- Vince Lombardi, American Football Coach

"Think of yourself as on the threshold of unparalleled success. A whole
clear, glorious life lies before you. Achieve! Achieve!"
-- Andrew Carnegie, Industrialist

"Set your goals high, and don't stop till you get there"
-- Bo Jackson

"Let me tell you the secret that has led me to my goal. My strength lies
solely in my tenacity."
-- Louis Pasteur, Chemist and Microbiologist

"If opportunity doesn't knock, build a door."
-- Milton Berlet, Actor

"Create the highest, grandest vision possible for your life, because you
become what you believe"
-- Oprah Winfrey, Talk Show Host

"Opportunity often comes disguised in the form of misfortune, or
temporary defeat"
-- Napoleon Hill, Motivational Writer

"It takes the hammer of persistence to drive the nail of success."
-- John Mason, Writer