All right, all right, all right.  So it’s been a while since I’ve posted anything on our blog.  Needless to say, it’s been a wild rde in the mortgage industry of late.  I promise to do better.

So I’m guessing you’re wondering what my reaction is to the rejection by the House of the $700 billion bailout bill.  Let me put it this way: Wall Street and I have very little in common right now.  Because unlike many on Wall Street, I prefer, to paraphrase Kipling, to keep my head when everyone else appears to be losing theirs.

Like Dr. Mark Dotzour at Texas A&M has written, the idea of a bailout such as the one that was proposed is less than palatable.  As he notes, most American homeowners did buy homes within their means and continue to make the payments on those loans-and those homeowners should not have to pay for other people’s poor choices.

At the same time, however, some form of a bailout is probably necessary.  As Dr. Dotzour indicates, some confidence must be restored in the mortgage bond market in order to keep it moving forward.  As someone who believes in letting the market correct itself-even if that means some bumps in the road-it pains me to say it.

I guess it would be easier, if I believed that a bailout-which I believe will happen eventully in one form or another-would solve the problem.  But it won’t.

People need to realize that, in a free market economy, there are some inevitable things that must occur as part of this market adjustment.  As with anything in life, actions have consequences-both good and bad.  Some areas of the country lived pretty high, as home values ballooned, new home construction exploded and people were making tens of thousands-even hundreds of thousands-of dollars in a matter of a few months as they flipped houses.  There is a natural cycle which now must occur (and is occurring) in those areas.  Property values which increased exponentially must now fall exponentially.  People who bought investment properties with the plan of flipping them don’t always get to make a profit; some of them are going to take a hit.  And yes, people who made $30,000 a year and bought a quarter million dollar home are probably going to end up having to walk away from them.

It will not be until there is absolute transparency in mortgage lending, and better qualification of mortgage borrowers, that the mortgage industry as a whole will begin to rebound and continue its growth the way it should.

And in the meantime, there are many positives that cannot be ignored.  First, the majority of Americans are paying their mortgages on time.  Second, there are many communities in this country that are continuing to grow-even if the rate of growth has slowed.  Texas happens to be one of them.  And third, we just happen to live in the greatest country in the world that has been through tough times before.  We’ll make it through this one too, $700 bilion bailout or not.

What are your thoughts?  Tell me by posting your response here on our website.

This blog is intended for informational/entertainment purposes only and is not meant to provide any financial or legal advice.

Well, it took about 45 days for the bailout bill to open the door for the takeover by the federal government of Fannie Mae and Freddie Mac.  I can’t say that I was particularly surprised at Sunday’s announcement.

As noted in Tami Luhby’s recent article at CNNMoney.com, interest rates have already started to fall as the world markets responded positively to the announcement.  Now, I’m not going to say that’s bad news-for those who are buying a home, it’s just one more great reason to take the leap.  I mean, home prices are down, there are some great homes on the market, and now the interest rates have gotten more favorable.  Heck, I’m the first one to encourage people to buy a home.

I am somewhat concerned about Luhby’s note that the bailout is “aimed at making mortgages easier to obtain and afford.”  Not so many years ago, Congress encouraged lenders to make mortgages available to more people…which eventually led to the recent market downturn.  I’m not sure that opening that door is necessarily the best way to solve the problem long-term despite the fees and restrictons mentioned in the CNNMoney article.

From the beginning, I have believed that in a free market the housing difficulties we have faced would eventually correct themselves-even if it took some rocky times in order to get us there.  Whether this bailout will delay or derail that natural recovery is unknown at this time.

I guess it comes down to this: our economy has been a lot worse.  Yes, I remember the late 70s (despite my unbelievably youthful appearance).  Six percent mortgages may be higher than the rates we saw two years ago, but they’re a far cry from the 15% or more that accompanied the questionable era that brought us-gulp-Gremlins, disco, perms and Smoky & The Bandit.  It goes without saying that we look better, and the fact is, our economy is screaming along in comparison.

For folks in certain U.S. regions that have been mentioned here before (California, Florida, Nevada, Michigan, etc.) life is pretty tough right now.  But there are a lot of great cities (including many right here in the Lone Star State) that aren’t seeing that kind of downturn.

Again, just keep in mind that there are still a lot of reasons to buy a home and there’s more information available to homebuyers than ever before, thanks to the transparency that’s provided by RateWindow™.  And for those looking for long-term investment properties, now is definitely the time to buy, when home prices have lowered and sellers are willing to negotiate.  After all, history has always shown that real estate is the best way to build long-term wealth, provided you do it wisely.

So for now, I’m taking a wait-and-see attitude, keeping my fingers crossed, my hair unpermed, and hoping for the best.  Now if I could just summon the courage to purge the Bee Gee’s out of my CD collection…

This blog is intended for informational/entertainment purposes only and is not meant to provide any financial or legal advice.