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Negative Amortization to the Rescue- Fred Glick on CNBC

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Believe it or not, our old friend that caused evil mortgage people to get temporarily rich, fooled many into the American Dream and if done properly actually help some people is on of the solutions to the mortgage crisis!

How you ask? worldsavings

Well, here I am today on CNBC at 4:40PM ET on the Closing Bell.

Watch it, let me know what you think and then I will put up a post with everyone’s ideas.

Realty Reality! That describes Fred, a sharp witted and outspoken realist for the mortgage and real estate world who has appeared on CNBC and NPR's Marketplace along with being quoted in the New York Times, The Wall Street Journal and other media outlets. Fred is the CEO of U S Spaces, Inc/Arrivva (a real estate brokerage firm in PA, NJ, DE and CA) and U S Loans Mortgage Inc (mortgage brokerage in PA, CA, FL and VA), and serves on the Board of Directors and is the Federal Legislative Director for the UpFront Mortgage Brokers. Fred is also the co-creator of real estate startup Rentscoper.com, a mathematically driven rental search engine. See everything Fred at fredglick.com.

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17 Comments

17 Comments

  1. Mike

    January 5, 2010 at 5:57 pm

    Nice job Fred. I’m a CNBC junkie and my general beef with them is that they have 4 or 5 guests talking over each other. I like this format better.
    Getting to the matter at hand. I’ve been saying that the modification plan was never going to work since the get go. Unless you reduce principle, the reduction won’t be enough. All that Hamp has done is delay the inevitable.I am completely against a mandated principle reduction, (voluntary, case by case is fine) because there are too many buyers who didn’t over reach, yet are still upside down, yet paying the mortgage in full and on time. It’s bad enough that they can’t get a mod, but now the neighbor is going to get a mod AND a reduction in principle? There would be national outrage. I don’t see Neg Am working out too well either.
    As far as inventory, here in Northern Virginia, and as an example, Loudoun County, we have roughly 1050 active listings, when in November 2007, it was at 3300. Most buyers can’t find a property. If there is an REO back log, it’s be a great time to start rolling them out.
    The next big issue will be the rising rates due to the gov’t discontinue the MBS buying at the end of march.

  2. aMY L cavENDER

    January 5, 2010 at 7:43 pm

    Great interview Fred. I wish we could take the last 5 years back and start over. Buyer’s were greedy, lenders were greedy. I’d have Realtors tell me that if I didn’t do the 80/20 Interest only, no doc loan without checking credit, someone else would. I did one of those and that house was lost to foreclosure. I have other clients that are upside down – because their loan was not sold to FNMA/FHLMC, they are not eligible for the DU refi plus. They want to stay in their home, are ok owing more on it than it’s worth but are struggling. Too sad that there are so many more stories.

    I don’t think there is one solution. Each case, borrower, city, state, house is different. Kind of like those people who pay their credit cards on time may now have to pay a higher rate because of the billions of dollars of losses by those not paying. Or those who have healthcare have to pay higher because of those without health care. I have been on both sides of this argument and it comes down to life just isn’t fair.

  3. Brad Officer - Jacksonville Real Estate

    January 5, 2010 at 11:06 pm

    The system is working it’s just bogged down. Home owners have options: Loan mod, short sale, deed in lieu, foreclosure. Creating another “program” would just continue to overload the system.

    Besides, didn’t congress just vote down the “mortgage slam down” that would allow judges to force the principle balance down in Bankruptcy cases?

  4. joshuakeenrsb

    January 6, 2010 at 4:11 am

    @agentgenius Negative Amortization to the Rescue- Fred Glick on CNBC https://bit.ly/5wFSra

  5. BawldGuy

    January 6, 2010 at 2:24 pm

    Fred — A local homeowner here in San Diego had a neg-am loan. He received an unsolicited offer from the lender to A) Stop the neg-am part of the loan. B) lower the interest to 2.5% with interest only payments for two years. C) Interest rose each year for three years after, capping at 5% beginning the sixth year with a 30 year ammo.

    He couldn’t sign the offer quickly enough. 🙂

    His payment was substantially reduced without principal reduction. The investor’s capital is now at less risk, while all involved averted foreclosure. Frankly, I see a win/win/win scenario here — without principal reduction.

    Your thoughts?

  6. Fred Glick

    January 7, 2010 at 7:37 am

    @All…there is no one real solution but generically, the lowering of inventory, the creation of jobs and if people can deal with realities of the market and the world, it can all right itself.

    If I had a couple more minutes on the air, i would have called for a consolidation of towns and have the Air Force practice blowing stuff up by striking unsold developments!

    This would help both the housing market and national security at the same time!

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Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?

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NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<

#CarsonHUD

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Economic News

Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.

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Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

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The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.

What’s next

If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.

If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.

#JobOpenings

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Economic News

Gas prices are down, so are gas taxes about to go up?

Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.

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Gas taxes and your bottom line

Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.

Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.

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Supporters and opponents are polar opposites

Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.

Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.

While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.

The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.

Is a gas tax politically plausible?

Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”

Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”

Others would note that this rating has not crumbled in just a few years, that despite many bridges and roads in need of repair, our infrastructure is still superior to even the most civilized nations.

Regardless of the reasons, most believe that Congress won’t touch this issue with a ten-foot pole, especially leading up to another Presidential campaign season starting next year.

“I think it’s too toxic and continues to be too toxic,” Steve LaTourette (the former Republican congressman best known for his close friendship with his fellow Ohioan, Speaker John Boehner) tells The Atlantic. “I see no political will to get this done.”

Whether the time is fortuitous or not, and regardless of the positive side effects, many point to a fear of voters’ retaliation against any politician siding with a gas hike, so this matter going any further than the proposal stage is unlikely.

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