Washington, DC-- Last night, Federal Reserve Chairman Ben Bernanke, SEC Chairman Chris Cox and I had a lengthy and productive working session with Congressional leaders. We began a substantive discussion on the need for a comprehensive approach to relieving the stresses on our financial institutions and markets.
We have acted on a case-by-case basis in recent weeks, addressing problems at Fannie Mae and Freddie Mac, working with market participants to prepare for the failure of Lehman Brothers, and lending to AIG so it can sell some of its assets in an orderly manner. And this morning we've taken a number of powerful tactical steps to increase confidence in the system, including the establishment of a temporary guaranty program for the U.S. money market mutual fund industry.
Despite these steps, more is needed. We must now take further, decisive action to fundamentally and comprehensively address the root cause of our financial system's stresses.
The underlying weakness in our financial system today is the illiquid mortgage assets that have lost value as the housing correction has proceeded. These illiquid assets are choking off the flow of credit that is so vitally important to our economy. When the financial system works as it should, money and capital flow to and from households and businesses to pay for home loans, school loans and investments that create jobs. As illiquid mortgage assets block the system, the clogging of our financial markets has the potential to have significant effects on our financial system and our economy.
As we all know, lax lending practices earlier this decade led to irresponsible lending and irresponsible borrowing. This simply put too many families into mortgages they could not afford. We are seeing the impact on homeowners and neighborhoods, with 5 million homeowners now delinquent or in foreclosure. What began as a sub-prime lending problem has spread to other, less-risky mortgages, and contributed to excess home inventories that have pushed down home prices for responsible homeowners.
A similar scenario is playing out among the lenders who made those mortgages, the securitizers who bought, repackaged and resold them, and the investors who bought them. These troubled loans are now parked, or frozen, on the balance sheets of banks and other financial institutions, preventing them from financing productive loans. The inability to determine their worth has fostered uncertainty about mortgage assets, and even about the financial condition of the institutions that own them. The normal buying and selling of nearly all types of mortgage assets has become challenged.
These illiquid assets are clogging up our financial system, and undermining the strength of our otherwise sound financial institutions. As a result, Americans' personal savings are threatened, and the ability of consumers and businesses to borrow and finance spending, investment, and job creation has been disrupted.
To restore confidence in our markets and our financial institutions, so they can fuel continued growth and prosperity, we must address the underlying problem.
The federal government must implement a program to remove these illiquid assets that are weighing down our financial institutions and threatening our economy. This troubled asset relief program must be properly designed and sufficiently large to have maximum impact, while including features that protect the taxpayer to the maximum extent possible. The ultimate taxpayer protection will be the stability this troubled asset relief program provides to our financial system, even as it will involve a significant investment of taxpayer dollars. I am convinced that this bold approach will cost American families far less than the alternative – a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion.
I believe many Members of Congress share my conviction. I will spend the weekend working with members of Congress of both parties to examine approaches to alleviate the pressure of these bad loans on our system, so credit can flow once again to American consumers and companies. Our economic health requires that we work together for prompt, bipartisan action.
As we work with the Congress to pass this legislation over the next week, other immediate actions will provide relief.
First, to provide critical additional funding to our mortgage markets, the GSEs Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities (MBS). These two enterprises must carry out their mission to support the mortgage market.
Second, to increase the availability of capital for new home loans, Treasury will expand the MBS purchase program we announced earlier this month. This will complement the capital provided by the GSEs and will help facilitate mortgage availability and affordability.
These two steps will provide some initial support to mortgage assets, but they are not enough. Many of the illiquid assets clogging our system today do not meet the regulatory requirements to be eligible for purchase by the GSEs or by the Treasury program.
I look forward to working with Congress to pass necessary legislation to remove these troubled assets from our financial system. When we get through this difficult period, which we will, our next task must be to improve the financial regulatory structure so that these past excesses do not recur. This crisis demonstrates in vivid terms that our financial regulatory structure is sub-optimal, duplicative and outdated. I have put forward my ideas for a modernized financial oversight structure that matches our modern economy, and more closely links the regulatory structure to the reasons why we regulate. That is a critical debate for another day.
Right now, our focus is restoring the strength of our financial system so it can again finance economic growth. The financial security of all Americans – their retirement savings, their home values, their ability to borrow for college, and the opportunities for more and higher-paying jobs – depends on our ability to restore our financial institutions to a sound footing.
[ add comment ] | permalink |
( 2.9 / 42 )
1905 Luce Creek Court - Annapolis, MD 21401
This property features:
Distinctive custom 4 bdrm. home on quiet cul-de-sac. Great Annapolis Country kitchen/family Room with oversized granite island. Opens to deck with shady electric awning. Rear yard with lush crept myrtles & heavenly gardens surrounding a delightful heated in-ground pool. Gas heat, cooking & 2 fireplaces. Custom built-in’s. Fully fenced. Handsome hardwood floors, 9ft ceilings on first level. Private with Great Annapolis Location!
Click here for the virtual tour!
Connie Cadwell, CRS, GRI
Associate Broker
Coldwell Banker Residential Brokerage
[ add comment ] | permalink | related link | ( 3 / 63 )
309 Fourth Street - The Tecumseh
Just Repositioned to $799,000!
This rarely offered townhouse features:
• 4 Bedrooms, 3.5 Baths
• Over 2500 sq ft of living space
• Exquisitely renovated in every detail
• Repositioned to $799,000!
• www.cbmove.com/AA6711074
Click here for the virtual tour!
Call me today for a showing of this unique property!
Connie Cadwell, CRS, GRI
Associate Broker
Coldwell Banker Residential Brokerage
[ add comment ] | permalink | ( 2.9 / 63 )
Net Appreciation
Coldwell Banker Residential Brokerage
September 1, 2008 -- In the first half of this decade, most areas in the Mid-Atlantic experienced a substantial increase in home prices. So far in the second half of the decade, most areas are experiencing a decrease in home prices due to the oversupply of houses on the market. Let's say someone purchases a house in 2000 for $300,000, and by 2005 it appreciates to a market value of $500,000. Today, after the recent decrease in the market, that house might sell for $400,000, and the seller would see $100,000 net appreciation. If this seller only remembers the $500,000 at the peak of the market, the seller may think they lost $100,000 instead of gaining $100,000 from the $300,000 originally paid.
In fact, homeowners who have purchased several houses over the years should look at the cumulative equity gains for all of the purchased houses. For example, if you bought your first house years ago for $150,000 and sold it for $250,000 to buy a $400,000 house that appreciated and sold for $600,000 to buy an $800,000 house in 2005, you would see a total gross equity gain of $100,000 for the first house and $200,000 for the second house for a total of $300,000 net appreciation. For an investment in the commodity of residential real estate, $300,000 net appreciation is a significant gain. In today's market, if you sold that last house purchased for $800,000 for a price of $680,000 (15% less or a "loss" of $120,000), your total real estate equity gain would still be $180,000.
As a commodity, real estate prices go up and down, but historically over time houses have proven to be an excellent investment as well as contributing to a satisfying lifestyle. Although the primary purpose of owning a home is the lifestyle it brings, the secondary benefit is the investment potential. Sellers should look at the investment benefit over a longer period of time to see the gains that eventually come from real estate.
Check out the Anne Arundel graph here to see how the current market is doing and let me know anytime when you or someone you know would like current and correct information about the housing market.
Anne Arundel County Graph
Connie Cadwell, CRS, GRI
Associate Broker
Coldwell Banker Residential Brokerage
[ add comment ] | permalink | ( 3.1 / 73 )
Real Estate Outlook: Prices Stabilizing
by Kenneth R. Harney
The economy continues to send mixed messages -- some encouraging for real estate, some not -- but this week the positive are edging out the negatives.
Take housing prices for example. The research company with the largest database of ongoing real estate transactions - First American CoreLogic, which tracks property values in thousands of Zip codes and neighborhoods - reports that nominal price drops have "stabilized" in 883 core-based statistical areas, showing no declines in the past two months.
Why's that important? Because flattening out is what we need before we can see a cyclical turnaround -- in other words, where even in the hardest hit local markets in California, Florida, Arizona and Nevada, prices have hit bottom.
They're not likely to drop much further, and in some parts of California are now at such bargain levels that large investors are prospecting for entire packages of houses -- ten or more in some cases -- to buy in bulk and rent out.
Gary Crabtree, an appraiser in Bakersfield, California, told Realty Times that he knows of one investor who has a standing order for 20 houses that fit specific price and locational characteristics that he wants to purchase.
The National Association of Realtors sees similar bottoming out -- even the first signs of turnaround -- in a number of key markets in the U.S. In its latest quarterly report, home sales were up year-to-year in 26 percent of all states and 35 percent of metropolitan statistical areas.
Biggest price jumps were in Yakima, Washington, where the median was up 8.9 percent, Binghampton, New York, up 8.7 percent, and Amarillo, Texas, up by 7.2 percent.
On the other hand, the Realtors also reported the national median sales price was down by 7.6 percent from the second quarter of 2007, and now stands at $206,500.
In other key economic developments: New housing starts fell by three percent last month - which is only logical given builders' still bulging unsold inventories.
And mortgage rates took a dip this week to an average 6.47 percent for 30 year fixed. Fifteen year rates slipped below 6 percent to 5.99 percent. New loan applications for FHA mortgages to purchase homes rose slightly, according to the Mortgage Bankers Association of America -- even while applications for conventional home purchase mortgages from Fannie Mae and Freddie Mac dropped for the week.
Published: August 26, 2008
For the Latest OFHEO Press Release, click here.
If you are in need of a real estate professional that can help navigate you through this unique market, give me a call today.
-Connie Cadwell, CRS, GRI
Associate Broker
Coldwell Banker Residential Brokerage
[ add comment ] | permalink | related link | ( 3.1 / 63 )
Next
We have acted on a case-by-case basis in recent weeks, addressing problems at Fannie Mae and Freddie Mac, working with market participants to prepare for the failure of Lehman Brothers, and lending to AIG so it can sell some of its assets in an orderly manner. And this morning we've taken a number of powerful tactical steps to increase confidence in the system, including the establishment of a temporary guaranty program for the U.S. money market mutual fund industry.
Despite these steps, more is needed. We must now take further, decisive action to fundamentally and comprehensively address the root cause of our financial system's stresses.
The underlying weakness in our financial system today is the illiquid mortgage assets that have lost value as the housing correction has proceeded. These illiquid assets are choking off the flow of credit that is so vitally important to our economy. When the financial system works as it should, money and capital flow to and from households and businesses to pay for home loans, school loans and investments that create jobs. As illiquid mortgage assets block the system, the clogging of our financial markets has the potential to have significant effects on our financial system and our economy.
As we all know, lax lending practices earlier this decade led to irresponsible lending and irresponsible borrowing. This simply put too many families into mortgages they could not afford. We are seeing the impact on homeowners and neighborhoods, with 5 million homeowners now delinquent or in foreclosure. What began as a sub-prime lending problem has spread to other, less-risky mortgages, and contributed to excess home inventories that have pushed down home prices for responsible homeowners.
A similar scenario is playing out among the lenders who made those mortgages, the securitizers who bought, repackaged and resold them, and the investors who bought them. These troubled loans are now parked, or frozen, on the balance sheets of banks and other financial institutions, preventing them from financing productive loans. The inability to determine their worth has fostered uncertainty about mortgage assets, and even about the financial condition of the institutions that own them. The normal buying and selling of nearly all types of mortgage assets has become challenged.
These illiquid assets are clogging up our financial system, and undermining the strength of our otherwise sound financial institutions. As a result, Americans' personal savings are threatened, and the ability of consumers and businesses to borrow and finance spending, investment, and job creation has been disrupted.
To restore confidence in our markets and our financial institutions, so they can fuel continued growth and prosperity, we must address the underlying problem.
The federal government must implement a program to remove these illiquid assets that are weighing down our financial institutions and threatening our economy. This troubled asset relief program must be properly designed and sufficiently large to have maximum impact, while including features that protect the taxpayer to the maximum extent possible. The ultimate taxpayer protection will be the stability this troubled asset relief program provides to our financial system, even as it will involve a significant investment of taxpayer dollars. I am convinced that this bold approach will cost American families far less than the alternative – a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion.
I believe many Members of Congress share my conviction. I will spend the weekend working with members of Congress of both parties to examine approaches to alleviate the pressure of these bad loans on our system, so credit can flow once again to American consumers and companies. Our economic health requires that we work together for prompt, bipartisan action.
As we work with the Congress to pass this legislation over the next week, other immediate actions will provide relief.
First, to provide critical additional funding to our mortgage markets, the GSEs Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities (MBS). These two enterprises must carry out their mission to support the mortgage market.
Second, to increase the availability of capital for new home loans, Treasury will expand the MBS purchase program we announced earlier this month. This will complement the capital provided by the GSEs and will help facilitate mortgage availability and affordability.
These two steps will provide some initial support to mortgage assets, but they are not enough. Many of the illiquid assets clogging our system today do not meet the regulatory requirements to be eligible for purchase by the GSEs or by the Treasury program.
I look forward to working with Congress to pass necessary legislation to remove these troubled assets from our financial system. When we get through this difficult period, which we will, our next task must be to improve the financial regulatory structure so that these past excesses do not recur. This crisis demonstrates in vivid terms that our financial regulatory structure is sub-optimal, duplicative and outdated. I have put forward my ideas for a modernized financial oversight structure that matches our modern economy, and more closely links the regulatory structure to the reasons why we regulate. That is a critical debate for another day.
Right now, our focus is restoring the strength of our financial system so it can again finance economic growth. The financial security of all Americans – their retirement savings, their home values, their ability to borrow for college, and the opportunities for more and higher-paying jobs – depends on our ability to restore our financial institutions to a sound footing.
[ add comment ] | permalink |
( 2.9 / 42 )1905 Luce Creek Court - Annapolis, MD 21401
This property features:
Distinctive custom 4 bdrm. home on quiet cul-de-sac. Great Annapolis Country kitchen/family Room with oversized granite island. Opens to deck with shady electric awning. Rear yard with lush crept myrtles & heavenly gardens surrounding a delightful heated in-ground pool. Gas heat, cooking & 2 fireplaces. Custom built-in’s. Fully fenced. Handsome hardwood floors, 9ft ceilings on first level. Private with Great Annapolis Location!
Click here for the virtual tour!
Connie Cadwell, CRS, GRI
Associate Broker
Coldwell Banker Residential Brokerage
[ add comment ] | permalink | related link |
( 3 / 63 )309 Fourth Street - The Tecumseh
Just Repositioned to $799,000!
This rarely offered townhouse features:
• 4 Bedrooms, 3.5 Baths
• Over 2500 sq ft of living space
• Exquisitely renovated in every detail
• Repositioned to $799,000!
• www.cbmove.com/AA6711074
Click here for the virtual tour!
Call me today for a showing of this unique property!
Connie Cadwell, CRS, GRI
Associate Broker
Coldwell Banker Residential Brokerage
[ add comment ] | permalink |
( 2.9 / 63 )Net Appreciation
Coldwell Banker Residential Brokerage
September 1, 2008 -- In the first half of this decade, most areas in the Mid-Atlantic experienced a substantial increase in home prices. So far in the second half of the decade, most areas are experiencing a decrease in home prices due to the oversupply of houses on the market. Let's say someone purchases a house in 2000 for $300,000, and by 2005 it appreciates to a market value of $500,000. Today, after the recent decrease in the market, that house might sell for $400,000, and the seller would see $100,000 net appreciation. If this seller only remembers the $500,000 at the peak of the market, the seller may think they lost $100,000 instead of gaining $100,000 from the $300,000 originally paid.
In fact, homeowners who have purchased several houses over the years should look at the cumulative equity gains for all of the purchased houses. For example, if you bought your first house years ago for $150,000 and sold it for $250,000 to buy a $400,000 house that appreciated and sold for $600,000 to buy an $800,000 house in 2005, you would see a total gross equity gain of $100,000 for the first house and $200,000 for the second house for a total of $300,000 net appreciation. For an investment in the commodity of residential real estate, $300,000 net appreciation is a significant gain. In today's market, if you sold that last house purchased for $800,000 for a price of $680,000 (15% less or a "loss" of $120,000), your total real estate equity gain would still be $180,000.
As a commodity, real estate prices go up and down, but historically over time houses have proven to be an excellent investment as well as contributing to a satisfying lifestyle. Although the primary purpose of owning a home is the lifestyle it brings, the secondary benefit is the investment potential. Sellers should look at the investment benefit over a longer period of time to see the gains that eventually come from real estate.
Check out the Anne Arundel graph here to see how the current market is doing and let me know anytime when you or someone you know would like current and correct information about the housing market.
Anne Arundel County Graph
Connie Cadwell, CRS, GRI
Associate Broker
Coldwell Banker Residential Brokerage
[ add comment ] | permalink |
( 3.1 / 73 )Real Estate Outlook: Prices Stabilizing
by Kenneth R. Harney
The economy continues to send mixed messages -- some encouraging for real estate, some not -- but this week the positive are edging out the negatives.
Take housing prices for example. The research company with the largest database of ongoing real estate transactions - First American CoreLogic, which tracks property values in thousands of Zip codes and neighborhoods - reports that nominal price drops have "stabilized" in 883 core-based statistical areas, showing no declines in the past two months.
Why's that important? Because flattening out is what we need before we can see a cyclical turnaround -- in other words, where even in the hardest hit local markets in California, Florida, Arizona and Nevada, prices have hit bottom.
They're not likely to drop much further, and in some parts of California are now at such bargain levels that large investors are prospecting for entire packages of houses -- ten or more in some cases -- to buy in bulk and rent out.
Gary Crabtree, an appraiser in Bakersfield, California, told Realty Times that he knows of one investor who has a standing order for 20 houses that fit specific price and locational characteristics that he wants to purchase.
The National Association of Realtors sees similar bottoming out -- even the first signs of turnaround -- in a number of key markets in the U.S. In its latest quarterly report, home sales were up year-to-year in 26 percent of all states and 35 percent of metropolitan statistical areas.
Biggest price jumps were in Yakima, Washington, where the median was up 8.9 percent, Binghampton, New York, up 8.7 percent, and Amarillo, Texas, up by 7.2 percent.
On the other hand, the Realtors also reported the national median sales price was down by 7.6 percent from the second quarter of 2007, and now stands at $206,500.
In other key economic developments: New housing starts fell by three percent last month - which is only logical given builders' still bulging unsold inventories.
And mortgage rates took a dip this week to an average 6.47 percent for 30 year fixed. Fifteen year rates slipped below 6 percent to 5.99 percent. New loan applications for FHA mortgages to purchase homes rose slightly, according to the Mortgage Bankers Association of America -- even while applications for conventional home purchase mortgages from Fannie Mae and Freddie Mac dropped for the week.
Published: August 26, 2008
For the Latest OFHEO Press Release, click here.
If you are in need of a real estate professional that can help navigate you through this unique market, give me a call today.
-Connie Cadwell, CRS, GRI
Associate Broker
Coldwell Banker Residential Brokerage
[ add comment ] | permalink | related link |
( 3.1 / 63 )Next
Google Real Estate News
- Striking Declines Seen in Manhattan Real Estate Market - New York Times
- Real-Estate Executive Found Dead in Apparent Suicide - Wall Street Journal
- Tough '09 Is Seen for Commercial Real Estate - Washington Post
- New York City neighborhoods with the best real estate bargains - New York Daily News
- Boston-area commercial real estate sales plunge - Boston Globe
- Tom & Katie Are Not NYC's Next Real Estate Moguls - E! Online
- Shaquille O'Neal boxed in by drop in real estate values - Los Angeles Times
- International Real Estate For Sale in Mexico - New York Times
- Real estate icon Hal Ellis dies - San Francisco Business Times
- Recession brings weak real estate markets for '09 - Tallahassee.com
Baltimore Sun Real Estate Headlines
- Our favorite spaces of 2008
- New life for the common fireplace
- Insider's guide to West Annapolis
- Top-selling property: $2.75 million, 2026 Greenspring Valley Road, Stevenson, Baltimore County 21153
- Cold house may be the product of an insufficient heating system
- Home sales
- If you have to sell, do your homework before listing your house
- 30-year mortgage rate continues fall, to 5.1%
- Fed to buy securities tied to mortgages
- Home values stay up in city
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