Welcome to the "Z" Team!

A recent survey found two out of three Americans are more concerned about their finances today than they were at the beginning of the financial crisis two years ago.  The survey, conducted by the Certified Financial Planners (CFP) Board, also found 44 percent of Americans expect the U.S. economy to improve in the next six months, while only 28 percent expect conditions to worsen.

Other highlights of the CFP survey include:

Slightly more than one-third of Americans (37 percent) expect to see their personal finances improve in the next six months versus less than half (46 percent) who expect to hold onto what they currently have and 16 percent who expect to lose money.

80 percent of Americans say that Congress and regulators have not done enough “to deal with the financial market problems and their impact on American investors.”

When asked to describe how they feel about their personal finances, the number-one response was “cautious” (33 percent), followed by “calm” (26 percent), “concerned” (25 percent), and “hopeful” (25 percent).  Respondents could select multiple responses.

More information at: http://www.cfp.net/media/release.asp?id=253

Affordable home prices and historically low interest rates have created an ideal situation for many qualified first-time home buyers to purchase a house. Despite this opportunity, some buyers may be overconfident and make mistakes during the home-buying process.

KEEP THIS IN MIND

• Some first-time buyers are unaware of the vast amount of paperwork and negotiations that go into purchasing a home. As a result, buyers may think they can save money by forgoing the use of a REALTOR®. However, managing the nuances of offers, inspections, financing, and other pivotal steps when buying a home often causes confusion and anxiety for buyers. Working with a REALTOR®–who is obligated to put the buyer’s best interests first–will help to alleviate buyer concerns during this process.

• Online mortgage calculators can help buyers estimate the amount of house they can afford, but calculators should not be the sole source for mortgage-approval information. Buyers are advised to meet with a mortgage broker or banker prior to beginning the home search to help determine the loan amount for which they are most likely to be approved.

• Although there is a large selection of homes available for sale, home buyers should not assume they can make low offers or unreasonable demands. Even in hard-hit housing markets, homes in desirable neighborhoods are receiving multiple offers.

To read the full story, please click here: http://online.wsj.com/article/SB10001424052748703579804575441472748516734.html?mod=WSJ_hpp_sections_realestate       

The continual monthly bailout of Freddie Mac and Fannie Mae with unimaginable sums of money from the government is disturbing to taxpayers, but encouraged by Russia and China, the holders of huge portions of their bonds, since those countries do not want to suffer losses on their mortgage-related holdings. If they did, they would consider those losses financial warfare and retaliate.

For the homebuyer and the multiple listing service (MLS) market, support of the government as the lender of last resort must continue until the home prices in California stabilize for at least a two-year period and insolvent homeownership due to negative equities no longer exists. This means loan balance cramdowns or massive strategical defaults, and the sooner the medicine is taken by the lenders, the more quickly the MLS market place will recover for agents and homeowners.

Until then, the mortgage-backed bond market will not be attractive for anyone other than the Federal Reserve investment and treasury guarantees, implicit or actual.  [For more information on the future of Fannie Mae, see the February 2010 first tuesday article, The fate of our Fannie and Freddie]

These GSEs will eventually be dismantled and the government guarantees will be differently directed to keep the mortgage market viable until Wall Street gets its collective act together and fully returns to the mortgage-backed bond market. Wall Street was most adept at floating these bonds in the past, and they went way beyond the limits of government guarantees in the risky mortgages they were able to fund, package and resell to bond investors around the world.

This Wall Street Bankers are destined to do again — they only need some time to find their comfort zone. They figured out how to sell government-guaranteed mortgage-backed bonds without a hitch in early 2010 after the Feds quit purchasing all of the mortgage-backed bonds for over a year at the height of the financial liquidity crisis.

Thus both Freddie and Fannie will eventually be unnecessary since the private sector has demonstrated they can supply all the mortgage money homebuyers and apartment buyers need to do deals. Watch for a quiet fade into the past as their disappearance is exploited only by pundits and political types.

Re: “Freddie Mac seeks more aid amid loss” from the Wall Street Journal

Re: “Fannie Mae narrows loss, but asks for more aid” from CNNMoney.com

first tuesday take:  By Kelli Galippo

Copyright © 2010 by first tuesday Realty Publications, Inc. Readers are encouraged to reprint or distribute this information with proper credit given to the first tuesday Journal Online