Why Do You Have Trouble Getting Help With Your Mortgage?

Where’s all the money going? We all have our  ideas… This past week, almost under the radar, the Congress passed yet another “Supplemental” war spending bill–$97 billion for our wars in Iraq and Afghanistan… And, these wars are accomplishing exactly what? Nobody seems to know.  We do know this money is supplemental to the already bloated Defense Department budget which consumes nearly 40% of the total U.S. budget.

How does it break down? Well,f or the 2009 fiscal year, the base budget rose to $515.4 billion. Adding emergency discretionary spending and supplemental spending brings the sum to $651.2 billion.  This does not include many military-related items that are outside of the Defense Department budget, such as nuclear weapons research, maintenance and production (about $9.3 billion, which is in the Department of Energy budget), Veterans Affairs (about $33.2 billion), interest on debt incurred in past wars, or the wars in Iraq and Afghanistan (which are largely funded through extra-budgetary supplements, about $170 billion in 2007). As of 2009, the United States government is spending about $1 trillion annually on defense-related purposes.

Military discretionary spending accounts for more than half of the U.S. federal discretionary spending, which is all of the U.S. federal government budget that is not appropriated for mandatory spending. Every year it rises, but it is not sustainable. Soon, the government will not be able to make mandated payments, such as Social Security and Medicare, which are in direct support of its citizens–US–since it will be too impoverished  supporting military adventures abroad and monstrous military expenditures at home. Altogether the US is spending HALF  of the entire world’s military budget, over 8 times as much as the next biggest spender, China.

There you have it. In case you’re wondering why you get no help with health care or your mortgage, that’s why.

Want To Refi? Maybe You Can Now

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The program rolled out amidst much fanfare in March from the Obama administration, Home Affordable Refinance Program [HARP], was a major dud as far as California was concerned…The reason? As explained in this post at the time, instead of the typical 80% loan to value [LTV] for a refi, it offered government help for up to 105% LTV. Some places, even many places in the country, that’s a big help, but not here. We are too far underwater.

So, it was good to hear the other day that Obamanites have figured this out finally–the program has been pretty much a bust–and changed the rules so that now the government will help for up to 125% LTV. This means you can refinance if say your home is worth $300,000 right now, but you owe $375,000 and you’re paying 8% on an adjustable  If you’re eligible, you could get that refi at the new, lower rates, maybe in 5.5% on a 30-year fixed.

Who is eligible? First, your loan must be owned by Fannie Mae or Freddie Mac. To find out if your is, check the Fannie Loan Look-up or the Freddie Loan Look-Up.  Good so far? Well, now it comes to you and your house. You must have a job or at least income sufficient to take on such a loan. This is becoming more difficult when L.A. County’s unemployment rate is 12.6% as of May.  And, then, your home must be worth that $375,000 you think it is. Talk to a reputable lender and s/he can figure all this out for you in minutes over the phone.Call me at 626-641-0346 for a referral.

Don’t delay. Property values are still sinking. Next month might be too late.

Some will question whether this applies to rental property as well…I believe it does, as the previous loan limit of 105% LTV did. Small investors need help right now. Rents are not covering costs and the big initial down payment that many investors made to get their loans have disappeared as the value of the homes has sunk.

And, last, of course, you still owe $375,000 and you’re paying on $75,000 that isn’t there. If you have a financial turn of mind, you will see that doesn’t make a lot of sense.  So far, we haven’t seen too much relief for that problem.  Maybe down the road…

Very Punny

Here’s some real groaners sent to me by a friend..We all can always use a laugh..

Two Eskimos sitting in a kayak were chilly, so they lit a fire in the craft.
> Unsurprisingly, it sank, proving once again that you can’t have your kayak
> and heat it, too.
>
> Two hydrogen atoms meet. One says, ‘I’ve lost my electron.’ The other says,
> ‘Are you sure?’ The first replies, ‘Yes, I’m positive.’
>
> Did you hear about the Buddhist who refused Novocain during a root canal?
> His goal: transcend dental medication.
>
> A group of chess enthusiasts checked into a hotel and were standing in
> the lobby discussing their recent tournament victories. After about an
> hour, the manager came out of the office and asked them to disperse. But why
> they asked, as they moved off. ‘Because,’ he said, ‘I can’t stand chess-nuts
> boasting in an open foyer.’
>
> A group of friars were behind on their belfry payments, so they opened a
> small florist shop to raise funds. Since everyone liked to buy flowers from
> the men of God, a rival florist across town thought the competition was
> unfair. He asked the good fathers to close down, but they would not. He went
> back and begged the friars to close. They ignored him. So, the rival florist
> hired Hugh MacTaggart, the roughest and most vicious thug in town to
> ‘persuade’ them to close. Hugh beat up the friars and trashed their store,
> saying he’d be back if they didn’t close up shop. Terrified, they did
> so, thereby proving that only Hugh can prevent florist friars.
>
> Mahatma Gandhi, as you know, walked barefoot most of the time, which
> produced an impressive set of calluses on his feet. He also ate very little,
> which made him rather frail and, with his odd diet, he suffered from bad
> breath. This made him a super calloused fragile mystic hexed by halitosis.

Funny Video About Health Care

This is actually a funny video about the opponents of health care, especially universal health care. We’ve all seen them going nuts all over telelvision, US Representatives, TV personalities, FOX personnel…We’ve all noticed they’re not making a lot of sense. As President Obama said today, echoing perhaps what Bill Maher said as well, opponents are saying the government messes up everything and we don’t want the government to ruin our current health care system, “the best in the world.” Then, they say that having a government plan competing with the private system would be “unfair” because everybody would want it?!!  Huh?  Make up your minds, guys…

Caution: this following video is brought to you by a union. Yes, a union. Specifically the SEIU. Good job over there.  Unions are not usually noted for their sense of humor. My impression is more the length of their meetings…This is pretty funy about an organization called Healthy Americans Against Health Reform [HAARM].

Having lived in Canada for a number of years with universal health care, I can only laugh at the ridiculous statements being made about it. Is Canada socialist? The Conservative Prime Minister Stephen Harper would certainly beg to differ. Canada actually has a political party that is “socialist”, always a minority party…And, the health care system works great. It is a wonderful relief not to worry about paying for it or wondering if fellow citizens are being denied it for lack of money…

Goldman Sachs To Give Record Bonuses

Wow, as if we hadn’t already suspected a giant conspiracy to defraud the public and sack the US Treasury, those barbarian bandits over at Goldman Sachs are giving out the biggest bonuses in their 140-year history! Yes, this is the same company that was about to bring down the entire global financial system a scant nine months ago…How did they accomplish this remarkable turnaround?

Why, you already know the answer. Their former CEO was US Treasury Secretary Henry Paulson and he arranged for billions of taxpayer bailout to “save” this company while others went under…remember Lehman Brothers?  So, now thanks to NO COMPETION LEFT, Goldman is cleaning up. Trading foreign currency, bonds and fized-income assets, the company has had a spectacular first half of the year.  Now, they’ve paid back the bailout money, leaving them free from the government’s new rules about executive compensation and bonuses.

Hey, wait just a darn minute there, cowboys…Isn’t this just a little too cozy? As was suggested at the time and has continued to be suggested, isn’t this just a giant conspiracy to elimnate the competition and  here’s another idea being thrown around–how about a conspiracy to derail the proposed government regulation of the financial sector?  These Hogs at the Trough can never have too much money and it’s always amusing for them to dupe the poor schmucks who actually work for a living.

In fact, this whole bailout thing is increasingly looking like The End for the middle class.  Barry Ritholtz of Bailout Nation has come up with this amazing visualization of the taxpayer’s money already spent or promised…Showing that the Barbarian Bailout, the hordes sacking our Treasury, has already consumed more than the sum total of ALL American wars since the beginning of the Republic. This is $12 Trillion…

Credit goes to  Jess Bachman at Wallstats, Ritholtz’s  list of expenditures (inflation adjusted of course). This early Bailout Nation graphic shows the the total costs to the taxpayer of all the monies spent, lent, consumed, borrowed, printed, guaranteed, assumed or  otherwise committed.

It is nothing short of astonishing.

It includes the total outlay for all the bailouts to date. In just about one short year (March 2008 -  March 2009), the bailouts managed to spend far in excess of nearly every major one time expenditure of the USA, including WW1&2 (omitted from graphic), the moon shot, the New Deal, total NASA budgets (omitted from graphic), Iraq, Viet Nam and Korean wars — COMBINED.

206 years versus 12 months. Total cost: ~$15 trillion and counting

Yesterday, the N. Y. Times published a poll showing that 72% of Americans are in favor of a government-opotion health-care plan, opposed, naturally, by those who enthusiastically voted for this Barbarian Bailout.  Cost for  health-care reform? $4 Trillion? Why don’t we have that dough to ensure the health of every citizen of this nation….Guess.

Websites To Help Us Weather the Recession

Despite the happy talk from Wall Street, we all know the Great Recession is not over, far from it. When California posts an employment rate of 11.4% and L.A. County 11.6% as it did yesterday, it ain’t over at all, at all. So, belt-tightening is the order of the day and, thankfully, we now have the Internet to help us save the few pennies we have left.

If you’re looking for a job, for smarter job searches, try the Riley Guide.

Wondering how some of your financial moves will affect your credit score?  There’s a nifty website called credit.com that will help you figure out what the result will be for your credit score.  The  place to check is the middle of the page–called Credit Score Compass–it’s a simulator giving your score based on your answers to a few questions.

Here’s another great resource. Let’s say you’re running around  town looking for a job and a good one pops up in conversation. Get a grip. You can check it out fast using Free Wi-Fi available at thousands of public places. Find them at Wifi Free Spot.

Looking for thrift stores? Sometimes the best deals are right there. And, you can find almost any category of item. It all depends on what other people are donating that day or week.  Search among 8,000 charity shops at Thrift Shopper.

How about finding those bargain deals? It’s more important than ever to get value for your increasingly scanty dough. Try the site “where high prices come to die”, the Graveyard Mall.  It’s better than QVC.

OK, let’s say you have no money to buy things, not even at thrift stores or graveyard malls. What to do? Here’s a place to enter contests and sweepstakes of all kinds. It takes time, but you could wind up a big winner. Check out Contests

Maybe you’ve always wanted to start your own business. Depending on what you have to offer, now might be the best time in years. For help starting and running your business, go to Cayenne Consulting.

Finally, Americans used to be know for their self-reliance. Remember Ralph Waldo Emerson’s famous essay, Self-Reliance? No? Well, it’s famous,  and we used to be famous for that, too, pioneers, woodsmen and all that. Today, we can get back some of that by going to, you guessed it! the good old Internet. Check out this how-to site, wonder how to

See? Saved the best for last. Enjoy…

Why Can’t I Ask What I Want For My House?

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This is a question that comes up quite frequently…After all, this is a free country. Why can’t I put my house on the market and set the price myself?

These days many people are doing just that.  Especially in the upper price ranges, home owners who want to sell are taking the inititive to price their homes the way they want. If I bought my home for $400,000 six years ago, saw its reputed value go to $775,000 a year or two ago, why can I not ask $750,000 or even $775,000 for it? That’s the only way I’ll make a tidy profit and also pay for those upgrades I put in such as the new roof, the landscaping and the painting inside and out.

It seems to make sense. Sellers decide what they need to get and then put it on the market for that amount. Only it doesn’t work that way. First, buyers don’t flock to homes that are priced $100,000 to $200,000 or even $20,000 over comparable homes in the same neighborhood. To the buyers, that roof is supposed to be there. It’s not an “amenity” as we are now saying in the biz. It’s a requirement. Same goes for the landscaping and the paint. If you had added a room or a bathroom, different story.

Sellers know all this, but many feel they have to try out their own prices anyway, “run it up the flagpole” so to speak.  What they are secretly hoping is that a buyer will come by who absolutely falls in love with their house, with their decor and their way of life. Then, that buyer will pay more for the house, blinded by emotion, I guess.

Does this happen? Oh yes, it surely does. Buyers fall for houses just like we all go into a tizzy when those certain special pheromones float through the air. But, just as a crazy romance runs into the brick wall of reality, so, too, do buyers. Most buyers, especially those naive ones who fall off the turnip truck in front of that special house, need loans.  They have to get the loans from banks and that’s where the brick wall comes in…Appraisals are always called for and appraisers are looking for the true value of the home which they determine by comparing and contrasting it to other, similar homes. No romance, no hazy emotional attachments here. Nope, it’s all cut and dried. If your house is similar to neighborhood homes currently valued at $625,000, that’s the limit to which the bank will lend. End of story. If the buyers still want it, they have to come up with the difference in cash. Few buyers are that in love.

Is there a way out? There surely is…Several, in fact.  If your buyers offer cash for your property, there you are.  No appraisal necessary because there’s no loan.  Cash buyers exist, too, perhaps far more than you might imagine. But, tday, most buyers with that kind of dough are smart enough to realize they should be getting a great deal, not paying through the nose.

Another way to get your price, maybe, is to offer to finance it yourself. Seller-financing is a great inducement to many buyers. It’s a little complicated, but it’s certainly not brain surgery and there are plenty of ways to protect yourself against  any potential pitfalls from defaulting buyers.  Of course, now your money comes in monthly installments instead of nice big pile of moola. If that’s OK, this is a good way to go.

A third way is lease-option your house for a specific period of time. If you specify your price after, say, 3 to 5 years, maybe it will be worth it by then and the lessee-buyer will activate the contract and purchase your home. In the meantime, whatever they do, you’ve had all that lovely rent.

What’s This? SoCal Home Prices Going Up?

Yeah, amazing, eh? Today, the L.A.Times ran an article in the Business Section pointing out that homes in three SoCal counties had actually gone up a notch, a tick, a blip…

Portents for the future? It’s all over now? Not so fast, my friends, not so fast. It’s far from over as the article did mention further down the column. It seems Orange County, Ventura and San Diego County Counties had all edged up in median price just the teeniest, tiniest bit, a couple of thousand, because home sales in the higher price ranges had finally come out of their year-long stall and moved again, thus bringing up the median.

Here’s the L.A. Times graphic illustrating the three: highest Orange, then Ventura, then San Diego.

Overall, SoCal sic counties’ median price moved to $249,000 from $247,000 last month. That’s for all So/Cal counties, including L.A., San Bernardino and Riverside alongside the lucky three with higher medians.

Orange County’s median is up 8% over April, Ventura is up 4% and San Diego 2%. Of course, these are more affluent areas, ranking first, second and third in income levels and so have a larger stock of  middle- and high-priced homes. Still, it’s at least a bit of a breather…It seemed as though the real estate plunge was into a bottomless pit. Now we know there’s a bottom.

This is the first upward tick since July of 2007. The new SoCal median is 51% below that peak. Wow. Still last month it was down 54% and still down 33% from last year May 2008. It’s been a brutally fast crash. We are definitely injured, but maybe we’ll make it after all.

What’s the cause of this seeming miracle? Partially, it’s 18 months of solid declines in San Diego and more like 12 in Orange County, convincing many stubborn sellers that the good times weren’t coming back anytime soon. Sellers are becoming more realistic and buyers are buying at appropriate prices.

Another reason is that the jumbo loan market has been virtually frozen for almost a year, and, gradually, banks are getting back into this formerly extremely lucrative market.  Banks  do charge higher rates for jumbos, and they do get better performance. The thaw has helped buyers who wanted to buy but couldn’t get financing.

So, what’s the story for L.A. County?  Holding steady at last month’s median..$300,000. as is Riverside at $180,000 and San Bernardino at $137,000.

Investing: Real Estate v. Stock Market

Cover of Fat Cats

The stock market is coming back, we’ve noticed, as all media are trumpeting. It’s still a hundred points below where I finally bailed out last September at  30% down, but, hey, who’s counting? This return of value to stocks must mean it’s now a good time to invest there, right?

For me, I’ve decided to forego the stock market completely. My investments were strictly in mutual funds and only because of the tax rules for deducting. Because I didn’t unerstand how the stock market worked as I have no idea about puts and calls and price/earnings ratio and all that, I just trusted Vanguard to take care of my money. Which they did, for quite awhile, but even Vanguard couldn’t have foreseen the drastic decline in the market.

Like many today,  the chaos of the unrestrained markets has led me to believe, cynically, that the stock market is really a big  lottery and all the odds are set against me and all the other little investors that are just trying to make a few bucks. Obviously, even the Big Boys, the Wizards of Wall Street, didn’t get it either as so many have plunged, dying and gasping, from their vertiginous financial heights.

When I look at the recent rallies on the Street, it just looks to me like a few Fat Cats dancing around with my money. After all, Wall Street, unlike the rest of us proletarian worker bees, has the assurance of the full faith and support of the U.S. Government. They’ve got our dough and the promise of all they need, so why not start climbing all over again?

But, once burned, twice shy. I’ll never go back.  I am looking for alternative investments. For me, real estate is the place I will put my few shekels. That’s a place I understand and where I have already made a few bucks.  Investing in real estate can be complicated, too, but at its core, it’s simple. There are just a few things to keep in mind: Buy low and sell high, location and location,  look for cash flow…

What I like best about real estate is that it’s concrete. If I buy a property, I can go look at it. It’s right out there. It’s not some electronic bleep.  And, I can improve it myself. If I wanted [I don't want], I could actually paint it or put up new drywall or add tile or whatever I want to increase its value and its attractiveness. It’s under my control. Being a control freak , that’s very important to me. What I do with the property is up to me, not to some suit on the Street.

I like it.

DWP, Neuton and Me

This is the most terrific story about a utility that is doing everything it can to make a difference and that would be the DWP [Department of Water & Power]. Handling water and electricity for vast swaths of  L.A. County, the DWP’s mandate includes reducing smog and conserving water.

To reduce smog, the department offers a variety of rebates, as mentioned in a previous post, but what caught my eye awhile back was their offer of  very-reduced-rate battery-powered lawn mowers. “How cool,” I  thought when I first heard about it, ” but, hey, I have gardeners and my lawn is so big, I really have no need.”

Well, fast forward in my thinking to what I can do to help reduce smog and I wound up about 6 months ago reserving a lawn mower the next time they were distributed. That was yesterday at the Rose Bowl.

That’s Alison, Sales Manager for Neuton Inc., manufacturer of the lawn mower that I selected. Her mower is the 19-inch variety with an optional edger for which she gave us 30% off  coupons. She was the first stop at the very-well-organized event at the Rose Bowl. With various stations set up and many, many workers it kind of reminded me of a haz-mat collection. Anyway, Alison demonstrated how the machine works.

I originally planned to buy the 14″ model–yes, we had to buy the machines. The 14″ was $100 and the 19″ which I wound up with  was $160. Plus, of course, you have to hand over your old gas guzzler which I was very happy to do since, with gardeners, I don’t use it anyway. Each of the two models is guaranteed to have enough battery power to mow 10,000 square feet, the exact size of my lot and the 19-incher to do 15,000.

That’s me, wearing my Neuton baseball cap, with the mower back at home. Alison explained how everything worked and it’s beyond easy. The whole machine weighs 69 pounds. The battery under the light-colored cover just plugs into any outlet via an adapter like a telephone. It’s a bit heavy, but it doesn’t smell. It doesn’t leave an oil slick behind it. It doesn’t pose a fire hazard and I think this thing is really great.

Of course, we had to try it out today. The gardeners, true to form, are kind of hit and miss and have missed for the past couple of weeks so the grass was pretty high. No problem–the Neuton just zapped it all, and it’s quiet,  at least compared to regular mowers. We left the mulcher in for half the lawn so the grass clippings remain on the lawn. I’ve never been able to convince my gardeners to do that; it just goes against their grain, I guess. And, then in the backyard where the grass was really high, we put on the leaf bagger attachment.

So, there you have it. This is my attempt to help reduce smog. I would also like to take out my lawn to help conserve water, but I don’t think that’s going to happen anytime soon.  When my gardeners come back, I will ask them to use my lawn mower instead of their own and I do hope they will agree.