Archive for the ‘Uncategorized’ Category

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Banking Business from WSJ

November 9, 2009

From the Wall Street Journal

http://blogs.wsj.com/economics/2009/11/09/banks-choosing-treasury-bonds-over-loans/

  • November 9, 2009, 12:40 PM ET
  • Banks Choosing Treasury Bonds Over Loans

    You know an economy isn’t healthy when banks are using as much of their money to buy government debt as they are to make loans to businesses. That’s just what’s happening right now. According to the Federal Reserve’s latest weekly measure of bank assets and liabilities, released every Friday, banks held 1.37 trillion of Treasury and Fannie Mae or Freddie Mac debt securities at the end of October and $1.37 trillion of commercial and industrial loans.

    We’ve seen this movie before — in the early 1990s after the savings and loan crisis and in the early part of this decade, after the tech bust Treasury holdings exceeded business lending. What’s stark about the latest version is that business lending is falling so fast and Treasury purchases are rising so fast. At the end of October, business loans were down 17% from a year earlier, while Treasury and agency debt holdings were up 8%. Total bank loans and leases are down 8%.

    These trends are important for several reasons. First, this helps explain why yields on Treasury bonds are so low even with mammoth U.S. budget deficits. Credit-wary U.S. banks are helping to finance this deficit because they’re afraid to put their money anywhere else. They can still earn a good, low-risk return buy borrowing very cheap short-term money and parking it in higher yielding Treasury bonds. They’re not the sole factor, but they contribute. Second, this should help to allay some of the market’s concerns about inflation. It’s hard to get inflation when unemployment is so high. It is also hard to get it when banks aren’t lending money. This is one factor that is likely to keep the Fed on hold for some time.

    The central bank puts out its Senior Loan Officer Survey this afternoon, a quarterly survey on lender attitudes about extending credit. In the July survey, loan officers said decreased loan demand and deteriorating credit quality were driving the contraction in business lending. Most banks also said they expected their lending standards across all loan categories would remain tighter than average until at least the second half of 2010.

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    REprint of Banks Tighten Lending Standards

    November 9, 2009

    Banks Tighten Lending Standards

     By DARRELL A. HUGHES

    U.S. financial firms continued to tighten standards on household and business loans in the third quarter, despite receiving billions in government aid, according to a Federal Reserve survey.

    The survey, released Monday, showed that as some banks are continuing to make it difficult for consumers and companies to obtain credit–the net percentages of banks that tightened standards and terms for most loan categories continued to decline from the peaks reached late last year.

    “The exceptions were prime residential mortgages and revolving home equity lines of credit, for which there were only small changes in the net fractions of banks that had tightened standards,” the survey said.

    Additionally, a “significant net fraction” of banks tightened standards for commercial real estate loans, the October survey showed. About 35% of domestic banks reported tighter standards, a drop from the 45% that reported doing so in July.

    The report, officially called the Senior Loan Officer Opinion Survey on Bank Lending Practices, provides a window into banks’ lending practices and is reviewed for signs that the credit crunch is abating.

    Monday’s report is based on responses from 57 domestic banks and 23 U.S. branches of foreign banks. Participating firms received the survey on or after Oct. 6; responses were due Oct. 20.

    Write to Darrell A. Hughes at darrell.hughes@dowjones.com

     

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    How can you Mend a Broken Real Estate Heart?

    November 9, 2009

    I haven’t written on my blog in some time and it is not because I lack anything to say – it’s because I have too much to say and it’s not positive. I keep trying to think of what’s good about my real estate career right now and the one thing that sustains me is the fact that I’m trying, against surmounting odds, to help people navigate this real estate morass.

    On any given day, I can guarantee that I will break someone’s heart. Why? Because I am going to have to tell them the truth and the truth is that the home they bought for an investment and to provide a place of refuge for their family has now become their biggest and saddest liability. They bought into the dream of home ownership but didn’t buy into market manipulations that have destroyed a large part of their future.

    I find it intriguing that so many want to blame the consumer – but the consumer believed  in a system that was a based on greed fostered by the banking institutions who NOW profit from the consumer’s misfortune.

    How will our country repair itself? How will people regain good credit? How will lives be restored and how will hard working Americans ever believe, really believe, that they can trust the banks with their dreams?

    I don’t have the answers. Like you, I have a LOT of questions and I don’t trust anyone in the banking industry, Wall Street or the federal government to be honest.

    I believe in the future – I believe in America – I believe in the good and honestly hard-working Americans and I hope we find a way home.  I believe that someday, good will prevail. That’s why I sell real estate.

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    FHA loans are hottest on market

    September 2, 2009

    FHA on track for busiest year

    WASHINGTON – Sept. 2, 2009 – Almost a year after the federal government launched its rescue of the housing market, nearly one in four new mortgages is insured by the Federal Housing Administration (FHA).

    With less than a month to go in the 2009 fiscal year, the FHA is on pace for its busiest year.

    From Oct. 1 through mid-August, applications for FHA single-family-home mortgages were up 50 percent, to 2.52 million, from the same period a year earlier.

    Approvals for purchases, refinancings and reverse mortgages rose 70 percent to 1.67 million.

    Eighty percent of the FHA mortgages for purchasing homes went to first-time buyers drawn to the FHA’s low-downpayment requirements, starting at 3.5 percent. Private lenders making conventional loans typically require at least 10 percent down.

    The FHA’s market share, about 3 percent in 2006, has swollen to more than 23 percent. With credit still tight, many borrowers could not get a mortgage without FHA help.

    FHA loans “are one of the most important sources in this market,” says Mark Zandi of Moody’s Economy.com. “Without FHA, the housing slide would be much more severe. We wouldn’t be talking about a recovery now. We’d still be talking about a crash.”

    FHA loans also have become more popular because of the demise of many subprime lenders, which sometimes allowed buyers to purchase a property with nothing down and no documentation of income.

    In addition, FHA increased its loan limits at the beginning of the year. Previously, the maximum had been $362,790. The new ceiling raised that to $729,750 in high-cost areas such as Boston, New York and Washington, D.C.

    Also fueling demand for FHA-insured loans is this year’s tax credit of up to $8,000 for first-time home buyers.

    But as FHA insures more loans, it is also assuming more risk.

    Foreclosures on homes with FHA mortgages rose to 1.76 percent in June from 1.6 percent a year ago, and the default rate – for mortgages 90 days or more delinquent – was 6.88 percent, up from 5.57 percent.

    “I’m very concerned about risk,” says FHA Commissioner David Stevens, who adds that risk is mitigated in part because applicants today are more solid than those in recent years.

    Borrowers with FHA-insured loans now have average credit scores of about 690, compared with about 630 two years ago.

    FHA also has tightened lending standards, requiring a 10 percent downpayment for those with credit scores below 500.

    Copyright © 2009 USA TODAY, a division of Gannett Co. Inc., Stephanie Armour.

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    Rent is not a four letter word

    August 22, 2009

    In today’s marketplace, the one thing I am now seeing more and more often is qualified renters looking for executive level homes.

    Why? Because they have lost their homes due to foreclosure. That’s right…these are great tenants who, in good times, were paying up to $10,000 per month in mortgage payments but due to circumstances, they are now displaced and need a rental home. They have high standards though and while willing to downsize…they still want a respectable, executive type home for around $2,000 to $3,000 per month. They can afford it.

    The Wall Street Journal recently published an article entitled “The New American Dream: Renting”  and it was very accurate in reporting that with 1 in 355 home currently in foreclosure – these owners need to move into a rental home.

    If you are an investor or if you have a vacant home – it’s time to think about renting and making a profit on your home for a few years while the market fluctuates. No one knows what the future holds – it’s still a mystery – but one thing is certain…there is a demand for rental housing and you have great quality tenants now available to rent your properties. Call me if you want more information.

     http://online.wsj.com/article/SB10001424052970204409904574350432677038184.html

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    Home Office Space

    August 12, 2009

     

    When Headquarters Meets Living Quarters

    Workspaces That Inspire

    by Iyna Bort Caruso

    As more people work from home, fewer of them are content to commandeer a spare bedroom for a makeshift office or carve out an alcove for a studio. Instead, they’re building wings, designing free-standing workshops and customizing floor plans to create live-work environments that are as architecturally arresting as they are inspiring.

    Arthur Carter is one individual who has successfully balanced life and work in extraordinary surroundings.  The former investment banker, founder of The New York Observer and sculptor built a 1,100-square-foot studio on his 1,500-acre Connecticut farm.

    Carter, whose works have been exhibited in galleries in the U.S. and abroad, uses the studio to sketch and sculpt. He says he carefully weighed the merits of building a standalone structure against integrating the workspace into his existing home, which dates back some 350 years.  Ultimately, however, “I didn’t easily see how I could add a good amount of space without compromising the integrity of the home’s architecture.”

    He collaborated with Mark Simon of Centerbrook Architects in Centerbrook, Conn., on the design of the studio, which draws on the property’s 18th century roots. Simon says, “The common goal was to make a spacious studio fit in a delicate New England landscape with several old houses.”

    The studio is a barn-like saltbox with a lead-coated copper roof and vertical cedar board siding.  The interior features a fireplace, kitchen and bathroom.  For Carter, maximizing daylight was an important factor in the design. That was accomplished through a large arched window, facing north for even lighting.

    The New Must-Have Space

    According to a 2007-08 consumer preferences survey by the National Association of Home Builders, 50% of recent or potential home buyers find a home office desirable.  And among properties of distinction, they are essential.  In Toronto, Ontario, Claudia DiPaola of Sotheby’s International Realty Canada says, “Ten years ago, an office was a plus. Today, for executives and professionals, it’s just a must.”

    Broker-owner Vivian Bridaham of The Collection Sotheby’s International Realty in Bozeman, Mont., has two homes on the market that boast astonishing home offices.  Both residences are priced in the mid-$4 million range. One home, built out of 200 tons of stone, has a 182-square-foot exterior glass cube office that looks out onto the Bridger Mountains.  “The idea that you could conduct business all over the world from this gorgeous setting is incredible,” Bridaham says.

    The home office of another estate in Bridaham’s portfolio has vaulted wrought-iron trusses, skylights, a large picture window and built-in cabinetry hand-constructed out of aged distillery wood.

    “Most people coming here are in their 40s, 50s and 60s. They’re still working and they want to be able to work out of their house. And do it in an amazing environment,” says Bridaham.  “This setting is their reward.”

    Blending Form and Function

    For architects, the challenge is tailoring a workspace to the needs of the task and the comforts of the homeowner. Fernando Brave, founder of Brave/Architecture in Houston, Tex., was commissioned to design a 4,200-square foot building to house a photographic art gallery, working studio and private living quarters. 

    The test for Brave was to construct the building — known as the De Santos Gallery — with a clear separation between the gallery, studio and living space so the public sections could be leased to a tenant, if necessary.  Brave segregated the function areas of the property both structurally and aesthetically.  The first floor houses the gallery, the second floor a studio and the third is a loft-like sleeping area that opens onto a large terrace.  The building is clad in two different materials. “The materials were chosen for simplicity of use and to express the two interlocking parts of the building. The private areas are expressed in galvanized metal while the public areas are in white cement stucco,” he says.

    Argentina-born Brave maintains a small office in Buenos Aires, as well, where he says live-work spaces are prevalent. “Artists, professionals, architecture firms, design firms, shops, little factories and all kinds of food services. It’s common to see families living upstairs.”

    Adding Flexibility and Value

    While the De Santos Gallery overlooks downtown Houston, the transformed workspace of Justine Wetherington in Gainesville, Fla., overlooks 11.5 acres of oaks, sago palms, blooming agave plants and yellow peanut flowers. Wetherington bought the property last year, smitten by both the landscape and the unconventional bermed home, earth covering its windowless walls up to the roof. “When you find the perfect house, it will tell you,” she says.

    Architect William Morgan, who also designed the Florida State Museum of Natural History, named it The Forest House for its lush setting when he built it in 1979.  As part of the renovation of her house, Wetherington transformed a 2 1/2-car garage, connected to the home via a 30-foot breezeway, into a jewelry design and fabrication studio for her company, Enamelation. “I knew whatever house I was going to buy was going to have to have an extra chunk of space that I could turn into a workspace with elbow room and more in the way of aesthetics,” she says.

    The sloping garage floor was leveled off with concrete. The garage door was replaced with 16 feet of windows. The ceiling was plastered, outlets were added and the floor was painted a dark green in keeping with the property’s forest setting. 

    Although Wetherington has no plans to sell, enhancing her real estate investment was on her mind during the overhaul of the 625-square-foot space. “The space is not defined as a studio,” she says. Empty it out, and it is flexispace that can be converted into a den, billiards room, woodworking shop or a home theater.

    But for now, Wetherington has made it uniquely and joyfully her own.  “It’s so lovely that it does not feel like a work place.  I stare out the window for a while. The ideas percolate through.  Looking out there, it’s so beautiful one would feel somewhat ashamed not working on coming up with something equally beautiful.” 

    http://online.wsj.com/ad/article/sir-living?WC=HPLivThumb

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    Why Some Homes Sell – The REAL reasons

    August 3, 2009

     

    I recently read an article on REALTOR.com which listed six reasons a home sells and to be honest, they were all good reasons. But I don’t think they are the MAIN reason homes sell in this market.

    The article contained “ideas” about helping a home to sell such as freshly painted front door, fix all leaks, etc. Basically, the same old and tired news. But honestly, in this market there are TWO reasons a home sells.

    1. IT IS PRICED right. No amount of fix up is going to get you top dollar in this real estate market. Recently I sold a house that was absolutely stunning and totally renovated. It shined. But when the appraiser got involved it turned into little more than an “outhouse” in his narrow vision of value. The appraiser didn’t care about the renovations and the pristine condition. He cared about the foreclosure down the street which now jeopardized the value of this home. It was a fight but we got it sold. So I would say, PRICE IT FOR THE MARKET and be prepared to fight for your value.

    2. LUCK – Short and sweet. Plain and simple – you need a little bit of luck on your side. In todays market all the rules and all the reasons are thrown out the window and are replaced by being in the right place at the right time. You are lucky. You have a willing seller (realistically priced – see #1) and a willing and READY buyer and the great good fortune to have a contract. Take the deal and run. You have, in essence, won the real estate lottery.

    There you have it – a Reader’s Digest version of the reasons a home sells. GOOD LUCK.

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    Luxury Home Market has sluggish sales

    June 19, 2009

     

     

    According to CNBC – The Highest-End Real Estate has been adversely affected by the economy.

    In 2008, with falling prices, sluggish sales and currency fluctuations, the credit crunch and global financial crisis have hurt real estate in places that have traditionally been the most expensive markets in the world.

    On March 23, Knight Frank released the Wealth Report 2009, a survey of high-end, prime real estate around the world. The findings show big price fluctuations around the world in the 2008 calendar year, and even more dramatic swings from Q3 to Q4. The firm defines prime real estate as: “The most expensive 1% of property in each location. Commonly – but not always – this will relate to the US $1m+ segment – and often will comprise an international client base.”

    This past Spring sales in the million dollar category are at a standstill and sluggish would be a generous term for sales in this market. Some economists are calling for a stimulus package for all buyers and not just the $8,000 first-time homebuyer credit. I’m in agreement that we need to jumpstart the sales of homes across our nation to help restore consumer confidence and increase demand!

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    God Bless America – Memorial Day

    May 24, 2009

    To Honor my father, S.A. PARVIN, B-17 Pilot and former POW, WWII. In Memory of RAY JOSEPH HUTCHINSON, KIA, Mosul, Iraq, December 7, 2003 and to all the other brave sons and daughters who serve our military. God Bless America and God bless our soldiers.

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    Give people hope

    March 23, 2009

    I rarely post someone else’s thoughts but today…I loved this one.

    It is written by  John C. Maxwell.

    A reporter asked Prime Minister Winston Churchill, who led Britain during the dark moments of the Second World War, what was the greatest weapon his country possessed again the Nazi regime of Hitler. Without pausing for a moment, Churchill said, “It was what England’s greatest weapon has always been—hope.”

    Hope is one of the most powerful and energizing words in the English language. It is something that gives us power to keep going in the toughest of times. And its power energizes us with excitement and anticipation as we look toward the future.

    It’s been said that a person can live forty days without food, four days without water, four minutes without air, but only four seconds without hope. If you want to help people win, then become a purveyor of hope.