It seems there’s a lot of lip service being paid to helping financially troubled homeowners. I think most people who heard about the $700 billion bailout believed one of its objectives would be assisting troubled homeowners. On November 18 when Congress questioned Treasury Secretary Henry Paulson he asserted that he never promised assistance to homeowners and the rescue plan was designed to stabilize financial markets and the flow of credit and “is not a panacea for all our economic difficulties.”

It’s become more and more apparent that the $700 billion bailout was poorly conceived, politically motivated and had no stipulations or timeframes to actually address the problem which is homeowners are losing their homes!  Everyone identifies the problems yet very few, other than FDIC chairwoman Sheila Bair, are making it their mantra. 

I know the term “rush to judgment” conjures up a scenario of injustice but it is the appropriate term to describe the bailout. It’s embarrassing to remember the rhetoric that we were inundated with regarding the importance of passing the $700 billion and the necessity of passing it NOW! Well, well, well what a disappointment it is on every level - from the abuse of the public’s trust to the robbery of the American people.

It’s becoming more and more obvious that there is no quick solution to this financial mess. It is also becoming obvious that the overbearing interference by our government has only added to confusion, exacerbated the abuses and contributed net zero to solving our problems.

As I write this Treasury Secretary Paulson is testifying be¬fore Congress… sounding defensive with his voice raised! Congress is grilling Treasury Secretary Paulson and Ben Bernanke today regarding the Hope Now Program and the use of TARP bailout funds. Their focus was on why Treasury funds under the TARP bailout plan have not been better utilized to keep people in their homes. It is clear that the Hope Now Program is a complete failure, and few bor¬rowers are actually getting their loans modified through it. Sheila Bair, leader of the Indy Mac modification program, is having much better success in completing modifications… So Congress is now considering adopting her program nationally.

The bottom line is that homeowners are having a rough time when they try to deal with their lenders directly to get their loan modified. I’ve made some calls to lenders myself and can confirm that they are not working with homeown¬ers in a reasonable fashion. Until a national program is created it’s better to use a loan modification company for modifications. Congress is hammering Paulson over the way TARP funds are being used, especially in the case of PMC buying National City with these funds. There is gen¬eral fury about this in Congress! Increased regulation will be key in restoring tax payer and investor confidence.

The stock market fell again Monday and the bear market continues to drive indexes lower globally. A major issue on the table right now is whether to offer Treasury Funds to US auto makers… who are failing yet again due to econom¬ic conditions. Since auto makers have resisted retooling to build eco-friendly cars and trucks for at least 3 decades, there is valid resistance to bailing them out.

Real Estate lending continues to struggle in the face of a secondary MBS (Mortgage Backed Securities) market that is dysfunctional. Although bailout money has flowed into large lender’s balance sheets, they continue to horde the cash instead of increasing lending. Now the trouble has bled over into other types of credit, auto loans and other lines of credit are restricted. If you have a home equity line with an open balance you may wish to draw on the line and put the money in an interest bearing account to ensure that the available credit is not taken from you just when you need it. Call me for resources and analysis of your scenario.

The news keeps getting worse. The continuing slump in the housing market along with the failing credit market is exacerbating the serious problems facing the US and global economies. Marin County has been known as a bastion of “old money” and “security” that ordinarily weathers economic storms better than most. Unfortunately, that is not so in these very troubled times. For instance, back in 1991 when there was a world-wide recession, we saw home prices fall. Yes, there were short sales and foreclosures in Marin County but they were a rarity. Most Marin homeowners who tried to sell their homes during 1991-1995 were, generally speaking, not in a position where they had to sell. In fact they did not sell unless they received the price they wanted. Granted, there were fewer sales, but the homes that did sell did so for healthy prices. That helped preserve Marin County home prices. The fact is that during those years Los Angeles area homes lost almost 50% of value, San Francisco lost about 16%and Marin lost 3%.

Today, however, all of the ‘funky financing’ of the past 6 years – no doc loans, NINJA (no income, no job or assets) loans, 100% financing, frantic refinancing – has created a situation where many of Marin homeowners are “underwater”  and facing short sale or foreclosure.

For home owners wanting or needing to sell it will feel as though you’re selling your home in a “fire sale”. What will seem like dramatically low pricing to the sellers is exactly what it takes to interest the few buyers out there. How will most sellers fare selling their home in this market? 

The bottom line is that buyers have some really good opportunities to buy properties at greatly reduced prices and sellers must understand that this market is not for the timid seller. Sellers must be realistic about declining values and how pricing must make sense in this market. My advice to those who need to sell is to get an up-to-the-minute comparative market analysis on their property by an experienced, reputable Realtor and listen to his/her advice. Testing the market with high prices, by not being ahead of the declining value curve and by not putting 100% into making the home as presentable as possible, are death knells to selling your home.

Treasury Secretary Paulson has changed the terms of the bailout. After promising that the 700 billion would be used to purchase troubled home loans in order to keep Ameri¬cans in their homes he has now reversed course. Instead, it was announced today that the money WILL NOT be used to purchase troubled loans, but rather simply given to the banks to encourage them to lend. It’s a typical bait and switch as far as I’m concerned and Wall Street seems to agree. When will people learn that giving all the money to those already rich and powerful does not help the little guy down the line? This is a big disappointment and deserves a big backlash.

Loan modifications are the big buzz as it becomes clear that lenders are not aiding home owners who need to mod¬ify their mortgages. After doing several weeks of research into how modifications work and the various methods modification companies are using, I’m pleased to announce that I’ve located two in particular that I can refer clients to. My favorite is a law firm who has been doing modifications for 14 years with success. Most importantly, the process this firm uses does not damage the credit of the borrowers involved and protects them legally. Fees run less than refi¬nancing and can be paid in payments over time if needed. Contact me for more information.

Last week it was finally announced that we are officially in a “recession”… BIG SURPRISE, eh? New stimulus plans are being worked on in Congress as the global recession worsens. Europe, and especially China, have all introduced rate cuts and economic stimulus packages. Today it was an¬nounced that US auto makers are going to get some bailout money as well. American Express has decided to become a bank, a trend among many financials.

How does this affect you? There are still jumbo loans avail¬able at excellent rates. Loans under $417,000 still have the best rates and easiest qualifying. It remains to be seen if the December 31st deadline for closing “agency jumbo” loans (those between $417,000 and $729,750) will stay intact. If it does then the new limits on January 1 for “high cost” areas like Marin will go to $625,500 on one unit prop¬erties for Fannie and Freddie loan products. One thing is certain. Unless the secondary mortgage market is restored to functionality real estate values will continue to contract.

Regardless of what you thought of the Nov. 4 elections, I think we can all agree it was good to have some diversion from the gloomy financial news that has plagued us for months. Unfortunately, whether it was Barack Obama or John McCain who won, the times ahead will still be rough-going. I thought the celebrations and parties following the election were a thing of joy and a necessary release of the frustrations and fears that have had us in their grip for too long. I just hope that after the celebrations settle down people understand the scope of problems facing Mr. Obama and his administration. Let’s hope all parties can join together to make a unified effort to get us through these difficult times with as much grace and as little pain as possible.

 Getting back to Marin’s real estate market, I’d like to talk a little bit about our condominium resale market. In my July 11 posting I pointed out that the sales volume of condos was down from 2007 by 37% and that prices were down 13%. As I’ve mentioned in previous postings, this market is all about pricing. Buyers can smell value a town away, and until they do they will be not be submitting purchase offers. Since July there have been deeper reductions in condo pricing, and the impact on voume has been substantial. As of November 5, 2008, there have been 423 condos sold throughout Marin County vs 444 for the same period of 2007. That translates into a 4.7% drop in volume over the same period of 2007. Quite a difference from the 37% drop I reported in July. What happened? Well, condo pricing went from July’s asking price of $416.91 per square footdown to the current price of $389.19 which is almost a 20% drop from 2007 prices. Apparently, in condo sales it took/takes a drop of about  20% over 2007 prices to generate prchase offers. Again, I’m talking in Marin County generalities with each town and each neighborhood within each town performing diffierently. However, as a generalization these statistics speak volumes in helping with condo pricing.

 Feel free to contact me for a information regarding Marin County condominium activity and pricing for 2007 vs 2008.