Your Goverment Bailout? Nyet!

There is only one thing more harmful to society than an elected official forgetting the promises he made in order to get elected; that’s when he doesn’t forget them. – John McCarthy

So… The big banks and the President are going to bail you out of your upside-down mortgage? You have been saved from the housing downturn. You have been rescued by the great pumpkin! Thank the Maker! May I get real for a moment? That’s not going to happen. But here is how this was reported by our 4th estate this week:

“HUGE settlement between nation’s largest mortgage banks and US Government to ease housing woes.”

Let’s examine this more carefully, and in the full light of truth. The total amount of the settlement is approx $40 billion. That sounds like a big number, but in relation to the total amount of upside down mortgage debt, it’s a drop in the bucket. In the 4th quarter of 2011, the Federal Reserve estimated the total outstanding single-family mortgage debt to be over $10 Trillion. The $4 Billion our government has extorted from the major banks will amount to 0.4% of the total. Doesn’t seem so grandiose now, does it?

In addition to being a paltry sum, you must be upside-down and delinquent on your mortgage. If you have fought, scratched, gone without food and other necessities to pay your mortgage on time every month through hardships, layoffs, and a horrible economy – there is nothing for you. If you were delinquent in the past few years of turmoil, but have fought your way back to good standing – there is nothing in this for you. If you are struggling to make payments on a mortgage with a much higher rate, but do not now meet the qualifications for refinancing at today’s historically low rates – this settlement will do absolutely nothing for you. In fact, you might be hard pressed to find somebody who will benefit from this settlement beside the President’s re-election campaign.

This is largely a “market problem” and the market will need to clear it out. Washington can do all the arm-twisting it wants, but until it becomes very painful for the banks to hold onto these mortgages as-is, or it fits into their forecast for profitability, no changes will be made. Banks have had problem mortgages on their balance sheets for years. But after stubbornly hanging on to those trouble assets, some banks are coming around and changing their tone when it comes to so-called “short sales.” In fact, not only are they allowing such transactions to happen, they’re also giving homeowners some big incentives to do so.

Short sales occur when a prospective buyer makes an offer on a home that isn’t enough to pay off the seller’s mortgage. Especially in states like California, where the lender often doesn’t have recourse to hold the homeowner liable for any shortfall, lenders have often resisted short sales. For a while, that made sense, as banks figured that short-sale offers were low-balling the true value of the home and that if they foreclosed on the property, they could resell it at its higher market price.

But lately, banks have realized that the foreclosure process is long, costly, and fraught with peril. With regulatory investigations into foreclosure practices adding to the potential problems of years-long delays and an obstacle course of legal requirements, banks are concluding that it’s better to accept the bird in hand of a short sale than to hope for a recovery that may take years to come.

I’m not trying to rain on your parade here. You may be one of the few who are going to be helped by this latest development. Your mortgage may be refinanced at today’s low rates and put you in a better position to keep your home or make it possible to sell it. If you think you may be one of the lucky few, it is definitely in your best interest to ask. Call your lender and ask if your loan is eligible. The worst they can say is no.

If you’re in the majority, then you are stuck with your current mortgage and home. You have a couple choices. You can try to refinance. You can try to sell, or short-sell if you are under-water. Or you can stay pat and live in your home and wait for the recovery. This is how the market works. It is isn’t always fun or fair, but it works itself out eventually.

My point in all this is to give you some perspective on what you hear coming out of Washington. Remember, it’s an election year and both sides are going to promise to take care of all your ills. Promises like bailing you out of your debt, and paying for retirement, and covering college tuition for your kids. The problem is that those promises will likely never materialize. It pains me to be the messenger but – we’re on our own. Sometimes the problems are too big to be fixed by campaign promises and rhetoric. Hold fast. The recovery will come from Main Street, not Wall Street. It will come from the heartland, not the Beltway. You and I will be the recovery if we’re diligent and patient and resolute.

All Real Estate.  All the Time.

Christmas and the Grateful Heart

Christmas Eve, eve. I like today. Tomorrow is Christmas Eve and it will be a little frantic with last minute trips to Walmart, or as I affectionately call it – “The Pit of Despair.” There will be cooking and gift wrapping and then Church, and it will feel a little like a foot race until we can go to bed. But today, the day before Christmas Eve, it feels like the holidays are really here. That feeling is enhanced greatly by the few inches of snow we woke up to and the steady pace of the white stuff falling from the sky. I can’t remember the last time we had a white Christmas, but we’re getting one now. So today I’m writing a blog and only working a few hours. Then I’m going to spend time with my family and build a fire, and cook some posole. Yep. Today is pretty great.

In fact 2011 has been pretty great for the Takacses. Mrs. Takacs moved into a new position as Principal of Yucca Elementary and, of course, she’s a natural. My children are beautiful, healthy and smart as whips (They get that from me). My career change to Real Estate has turned out to be a wise decision – one I should have made years ago. All in all, I am blessed beyond measure and I am certain I don’t deserve the life I have.

One of my goals is to live life gratefully. It doesn’t take a genius to realize that a life of comfort and peace and health and joy is a gift, not a by-product of my guile or intelligence. Those may be contributing factors, but mostly what I have is unmerited favor and I am thankful for every bit of it. I read recently that grateful people have demonstrably better health indicators such as blood pressure, headaches, cancer occurrences, etc. So if there is a correlation between being grateful and being healthy, then sign me up for both.

It’s hard to be grateful at times. Things aren’t always good, and there is real pain and suffering in this life. It’s a challenge to be grateful for the storm when it’s raging around you, but I have actually found it therapeutic to force myself to give thanks when things are bad or stressful. It is calming and helps me to focus to think of all the the things that I take for granted. Things like a warm house when it’s cold, a dry bed when it’s raining, food in the pantry and water that comes magically out of a tap. These are things that I know are not commonplace for many of the world’s citizens.

So Merry Christmas from me. Be grateful for what you have. I am grateful for the opportunity to write this blog, and to practice Real Estate and to live in our great country. I am grateful for you.

All Real Estate. All the Time.

Ray Ave in Winter

View out my front door this morning.

Mr. Takacs Goes to Washinton

This week I am going to veer away from Real Estate a bit. It’s related somewhat, as our economy struggles, and our elected leaders in congress and the White House fail to make the connection between it’s weakness and housing. It always has to do with real estate in some fashion. My rant today is going to be about the once vogue, now passe’ topic of term limits. We need them. We need them for all elected officials and I’m going to tell you why. I think I have figured people out and we are corruptible creatures, and power corrupts. I will illustrate why anybody would need term limits, if elected to – let’s just say for this illustration– the U.S. House of Representatives.

Suspend disbelief for a moment, and walk with me down an imaginary life that might or might not happen. Right now, I have a very comfortable life. I make a good, but not obscene, living as my own boss in Real Estate. I am confident that after being in the business for several years, I will be making a very comfortable, hopefully bordering on the obscene living, in the aforementioned profession. Now imagine that my kids are grown and making obscene amounts of cash in their own lucrative professions, and the lovely Mrs. Takacs has retired from education and is consulting, or speaking, or writing books and we are in the fabled “cat-bird’s seed.” At this point in my life it occurs to me that my civic duty to “give back” includes a run for the US House seat in Southern NM. Public service is a noble pursuit I tell myself, so I set out. Again, in my hypothetical world, I run, I win, and soon I’m a Freshman Congressman in Washington DC. The salary of $174,000 per year is a nice topping on my otherwise adequate resources, but I’m not doing this for the money. No. I’m doing it for the children.

I’m off to DC for my first session in congress. It’s great. I have a great apartment in Georgetown, paid for by you, and the first few nights I’m taken to very swanky restaurants and filled with liquor and lobster by lobbyists. The work begins, so I lay off the hooch for a few days to regain my strength for what I think will be a grueling session of “standing my ground” and “defending the little guy.” It turns out the sessions aren’t so grueling after all. In fact, it’s pretty much a come-and-go affair where you literally pick your battles and spend the rest of the time rubbing elbows in the halls and chatting up your staff and interns. Access to a first-rate gym facility gets my fitness juices flowing again and I’m feeling and looking pretty good. I settle into an easy rhythm and Mrs. Takacs and I are having a fabulous time seeing the sights and eating like kings. A few moths in and we haven’t paid for a single meal or night at the theater or museum admission. It’s sort of like being royalty and it begins to grow on me. My eyes are opened somewhat to the largely fruitless and feckless exercise known as legislating.

During my first recess, I come back home to New Mexico to reconnect with my constituents. I attend meetings at local civic clubs and I’m asked to speak at functions, fairs and town halls. Life is pretty mundane at home though, and I begin to miss the comfort, convenience and luxury of Washington. Of course, before I am able to get too restless, I’m invited to a couple junkets to Europe and Asia to tour some water treatment facilities and “out of the box” schools. These are paid for by lobbyists, of course, and no expense is spared from first class seats on flights to five star hotel stays to golf outings, and lavish galas while in country. These “educational” trips are a nice break in the monotony of the high desert of New Mexico. Before I know it, I have to be back in DC for meetings and talks to gear up for the coming session. A senior colleague asks me if I’ve begun work on my re-election campaign. No, I answer – I just got here. He informs me that to stay in Washington, you NEVER stop campaigning. I wonder to myself – do I really want to perpetually campaign for office?

When I decided to run, I thought that serving one or two terms would be enough, but I now begin to feel that the lifestyle afforded to a congressman may be too good to let go of easily. All of my colleagues talk constantly about how they are working to stay, not to be. It seems to be the reigning espirit de corps. Not just the elected man or woman themselves, but their staff, their families, their interns all seem to have their hopes and dreams pinned to that person staying in office. It is a group effort. They are unabashedly protective of their positions and perks. Slowly, the reasons for getting into politics fade into the growing sense of elitism and entitlement I feel as one of our Nation’s leaders. I realize soon enough, I don’t know if I can go back to being who I was. I don’t want to go back to selling real estate in Artesia, New Mexico. I don’t want to play golf everyday at Artesia Country Club, when I could be playing at Congressional and not paying for it. I don’t want to be isolated from the free dinners, trips, entertainment or the Per Diem and fuzzy expense reimbursement policies of the US House. I have it too good now, and over time I realize that I never want to give those things up.

It is thus decided over a period of time, not suddenly, that I will stay as long as I can in this penthouse of power. My energy and industry will, from this point forward, be dedicated to preserving the feather bed where I now lie. Power has had its way with me, and I succumb to its intoxicating elixir completely. When I speak to people, one individual or a convention hall full of them, I no longer truly believe the words that spring from my lips. The slogans that I campaigned on about removing barriers to business, protecting freedoms, and empowering the disenfranchised are empty promises now. Don’t get me wrong, I still plan to vote for bills I ought to vote for and against bills I ought to be against, given my right or left affiliation (It doesn’t really matter which side). But those are more about establishing myself as a good party member and pandering to the particular political bent of my district than doing the right thing. I would vote for a bill to slaughter puppies if it meant the party would inject cash into my reelection war chest in the next cycle. Power corrupts, and it’s work is compete in me.

The problem is that this illustration is reality in every corner of our Government. I used myself as an example and allowed my imagination to follow the thread of truth, but it’s not wild fantasy to travel down this imagined future. The only way to prevent the compete seduction of fallible humans by the power of leadership is to make sure they can’t stay permanently. If you know going in that you have two terms to serve and that’s it, the paradigm changes. Lobbyists won’t be willing to grant you lifetime memberships to their luxury and leisure associations. You won’t be as likely to be influenced by them, since you came here to work. You won’t allow yourself to become accustomed to the lifestyle of Washington, because you know you’re not a permanent resident.

It’s time we brought the idea of term limits back up for every elected official in our government. The crystal palaces our leaders have made for themselves are an affront to the reality of most working Americans today. We’ve allowed this class of “servants” to create a completely different America than the one where you and I live. It’s time to pull them back into our America and make sure we keep them here while they make rules for everyone. Many things need fixing, but this is one step we could take quickly in the right direction.

All Real Estate. All The Time.

 

 

Fear and Loathing on Wall Street

The “Occupy” movement sweeping across the nation and, even the world, baffles me. I don’t, for one minute, want to take away the rights of Americans to peacefully assemble, protest, or march in support of a cause. My grandfather used to say that he went to Korea to defend the right of everyone, even idiots, to say freely what they believe. The flashpoint of the movement seems to be that they are just now figuring out that in America, we have some very rich people. And it seems to further anger the OWS people that these very rich folks are still rich despite the nasty recession in which we find ourselves. I hate to be the one who bears bad news, but that’s the way it has always been and will always be. Protesting won’t change it. Drum circles won’t change it. Clever signage along the picket lines won’t change it. But I have some ideas of what will.

There is injustice in the world. Some have more than they can possibly ever use while many have less than what is required to live. It’s unfair. I hate it. Over 2 billion people in this world eek out an existence on $2 a day. It’s deplorable that so many live like that with the incredible wealth available the world over. Income disparities in our US of A are atrocious too. Many live hand to mouth and jobs are hard to come by in this age. I get it. It sucks. But could somebody please explain to me how living in a tent in a public park and chanting is going to solve these problems? I have seen some of the participants interviewed by reporters and there are always a couple of key questions asked and the answers are always the same. “How long are you going to stay here?” and “What would have to happen to make you give up and go home?” The now very predictable answers are respectively “As long as it takes.” and “Until things change.” OooooKaaaaayyyy… That doesn’t exactly qualify as a plan of action with clear objectives, and attainable goals. And that’s my point. How exactly does the movement hope to effect change when they don’t even know what change they’re after?

There are real things that can be done here and now to effect change. The first is put your money where your mouth is. There are hundreds of great organizations and nonprofits helping people all around the world. Some of them feed children or drill water wells or educate the illiterate. Here at home we have food banks, job assistance programs, and training academies for those needing to re-purpose their skill-set. If you see a need that’s not being met in your community, start your own organization and meet that need. The point I’m making is that its not wrong to be angry at the gross injustices in our society. We should be angry and then let that anger spur us to action – not to inaction disguised as activism. Wall street execs are not going to give up their multi-million dollar bonuses because of a tent city and candle-lit marches. Government is not going to crack down on fraud and corruption and abuse in the financial system because your clever sign calls a spade a spade. The unemployed are not going to find work because of your chants that demand they be given jobs.

Doing nothing gets nothing. But doing nothing in something’s clothing is counter-productive. The people who have participated in this movement all across the country could have such a great impact for good, if they only did something. Instead of sweeping the land as agents of change by doing, they have become drains and a blight on the communities they sincerely want to help. The ideas are noble and have some merit. The underlying compassion is real and I respect it. But as with so many ideas, the execution is the hard part, and with OWS, the execution has failed to deliver.

All Real Estate. All The Time.

The Green, Green Grass of Home

I plagiarized this from the Albuquerque Journal. I have been reading about overseeding my Tall Fescue lawn to get it healthy for next pring and, serendipitously, I came across this little nugget. So germane! Anyway, many of us have fescue lawns, but I will bet that not many of us realize how important overseeding is, and the proper time to do it. It was a surprise to me that most experts recommend overseeding every 3-4 years. The plants actually get old and don’t look as green and grow as as lush as young plants. Who knew? Here is some expert advice on the subject. Enjoy!
Autumn offers another chance at a flourishing lawn, if you play your seeds and fertilizer just right

Cool season grasses make up the majority of turf lawns in the Albuquerque metro area and locales north. September, October and November are good months for fertilizing and reseeding these lawns.

Cool season lawns, typically Kentucky bluegrass, tall fescue or perennial ryegrass, green up sooner in the spring and stay green longer into the fall,” explains Cheryl Kent, a horticulturist with the Bernalillo County Cooperative Extension Service. Their biggest drawback is clearly visible at the height of the summer heat, when they are inclined to go dormant and take on a yellow-to-brown hue before greening up again as the weather cools in the fall.

Cool season lawns should be fertilized twice in that second active growing phase — in early fall and six to eight weeks later. Lawns also should be reseeded as needed and as early in the fall as possible so seeds have time to germinate and grass blades can grow 2-3 inches tall before winter sets in.

By late fall, Kent says, the root system of a lawn should have stored enough energy to get it through the winter and provide a boost for greening up early in the spring. Cool season lawns should be fertilized and reseeded again in the spring.

Warm season grasses typically grown in the southern part of New Mexico, green up later in the spring and go dormant earlier in the fall. Their strength is that they are better able to thrive in the hottest part of the summer. Bermuda, buffalo and grama grasses are common warm season grasses.

Create green grasses in fall

Fertilizing lawns in the fall should be done with a product that has a higher nitrogen content.  Be careful not to apply more than one pound of nitrogen per 1,000 square feet of lawn, Kent says.  Bags of fertilizer have a series of three analysis numbers that represent nitrogen, phosphorus and potassium, in that order, says Wes Brittenham, manager of Plants of the Southwest.  Nitrogen should be the largest of the three numbers. Nitrogen is what encourages grass to grow hardy, thick and green, he says.  A healthy, thick lawn is better able to resist weeds, bugs and survive drought.

Phosphorus encourages strong, healthy and deep roots, which translates to stronger and thicker grass blades above the soil.  Potassium supplements the nitrogen to help further toughen the roots and foliage.  Brittenham also recommends an iron supplement to bolster and maintain green lawns.  He notes that iron deficiencies are common in New Mexico’s sandy soils because the iron leaches out of the soil faster.

Also, in the early fall, reduce lawn waterings to twice a week, Brittenham says, and after the lawn is dormant in late fall, step down to twice monthly waterings.

This article was written for Albuquerque and Northern New Mexico, so adjust accordingly to our climate and seasons. I aerated my lawn last weekend and will overseed with a Tall Fescue blend I found online. I plan to continue to water daily until it gets much cooler, albeit the duration my sprinklers are shorter each day.

All Real Estate.  All The Time.

My Teeth, Your House

I went to the dentist recently and while I was sitting there in the chair, staring into the light, mouth agape, my mind wandered. I thought about the hygienist doing her work on my teeth. She clearly was trained and experienced and knew her way around a mouth. She stepped away for a moment and I looked at her tray of utensils, and thought “I could do this myself.” If I had the correct tools, I could just copy the process she was using in my bathroom at home. One step further; I could become the dental hygienist for my entire family and oh! The savings! Absurd isn’t it? Yes it is. But this is exactly what many people do with the largest investment they will ever make.

I’m talking about Real Estate, of course. There are trained, educated, experienced professionals whose job it is to assist you in the purchase or sale of homes, land, buildings, multi-units, and businesses. The legal aspects, the hidden pitfalls, the paperwork required are all daunting enough that rational people would want a professional to guide them through the maze. But amazingly, scores of citizens will attempt to conduct the entire process on their own. Did you know? According to a national survey done in 2007, that over half of real estate transactions conducted without the help of a Realtor ended up in some type of litigation or legal dispute. The average price of home sales made with the help of a Realtor is around 10% higher than those conducted without a Realtor. The standard commission rate for Realtors is 6%. I’m no math major, but 10 is bigger than 6. Realtors assume the risk, do the work, know the dangers, and keep you out of court. Why would anybody want to do it alone?

 

Just like the dental hygienist who told me I needed to take better care of my mouth, your Realtor may have to tell you some bad news. It’s news you probably already knew – that your house smells like a zoo, that your gold-foil paisley wallpaper is not cool, but ugly, and that your overgrown lawn is not “natural looking” it is a sign of your procrastination. If you want your house to sell, then you should listen to the learned and tested advice of your broker. We want to sell your house as quickly and for as much as we can. Sometimes people just think they know better. They think their collection of 1,000 cat figurines is not clutter, but “homey.” Nope – just claustrophobic and hurting your efforts to sell the place.

When you are looking for a house and your Realtor shows you several homes in your price range and they don’t meet with your approval; you may have to adjust either your expectations or your price. But many buyers will trawl Craigslist thinking they can find a 2,500 square foot foreclosure in the best neighborhood and in perfect condition for a song. Here’s a hint from your buddy Scott – there’s a reason the foreclosures sell really cheap, and it’s not because you just have a knack for finding bargains. It’s because they’re in really bad shape. If they were in really great shape, the bank would hire a Realtor to get full market value for them – not post them on Craigslist or auction them off on the front steps for pennies on the dollar. Think about it.

I just want to help. Do I get paid for helping? Yes, but I still really like helping people sell or find a home or piece of land or building for their business. The equation will work out in favor of using a Realtor 90% of the time. Let us do the work, and we will steer you well.

All Real Estate. All The Time.

QRM and the Coming Disaster

Most everyday folks probably don’t know what the term “qualified residential mortgage rule” or QRM means, but take it from me — you need to know.

If the administration implements the “QRM” rule as proposed, it will dramatically change the landscape of homeownership in the country. Instead of the average 5 percent currently required for a down payment, you will need 20 percent to get the best mortgage on the market. That’s right: 20 percent. The rule is an outgrowth of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was designed to prevent another housing crisis from occurring and wrecking the global economy again. Yet, the 20 percent proposal creates a whole new crisis, jeopardizing the ability of ordinary working families to purchase a home and sanctioning a separate and unequal lending system in which only the wealthy can buy the most affordable loans.

Under this rule, it doesn’t matter if you have a high credit score or job security. If you don’t have the 20 percent down payment, then you’re facing a more expensive mortgage. It’s estimated that for the average home buyer, it could take 14 years to save the 20 percent down payment and additional 5 percent closing costs.

 

Based on the false premise that prime lending with low down payments is responsible for the collapse of the economy, the proposed down payment requirement will do nothing to revive our faltering housing market and help grow the economy; it will only make things worse.

 

Little correlation exists between the size of a down payment and default rates, according to the findings of a recent study conducted by the National Community Reinvestment Coalition. We looked at nearly 1 million loans written for the most creditworthy borrowers in 2006 and 2007 and found that the default rate on a QRM loan with a 20 percent down payment was just .14 percent, but the rate was only .26 percent for those who put down just 3 percent.

 

Given the small margin, it’s hard to fathom why Washington would want to tighten the vise around the availability of credit, which only frustrates potential borrowers, drags down the market and prohibits the economy from experiencing any kind of real recovery. The amount of a down payment should be based on the underwriting of a borrower’s credit worthiness, not some blanket rule that treats all borrowers the same.

 

Homeowners don’t need more hurdles to jump. They have plenty. The foreclosure rate in Albuquerque, for instance, was 2.4 percent in April, up sharply from 1.75 percent last year. And the inventory of available homes in that market is more than 6,500 — three times + what it was 30 months ago.

In the meantime, the Consumer Financial Protection Bureau has no confirmed director, which the Dodd-Frank bill created as a counter-weight against the financial services industry. Wall Street is rolling in the dough and CEO pay is at an all-time high as the rest of us worry about the next paycheck, our home values and a dormant economy.

Our attention should be focused on what will get the housing market back on track: preventing risky and abusive lending while making homeownership affordable for the majority of our citizens.

The administration, as well as Congress, must move past their political stalemate and re-consider the ramifications of the QRM proposal. Not only does it stand to price out millions of responsible borrowers, drive down home prices and cripple an all-too fragile market, but it stands to radically change the profile of homeownership in this country.

If you are wealthy, you have nothing to worry about. But for the rest of us, the QRM rule will stand in the way of a home you may be more than qualified to buy.  Until this rule is rolled out, there are great mortgage options for buying a home.  Call me and we’ll get started.

All Real Estate.  All the Time