November 2006 Archives

Found this on a public forum

I need help to stop foreclosure on my home. I need to sell quickly? I am a couple months behind on my payments and want to sell now. I am not looking to make a profit just need to get what i owe.

Boy, did the sharks swarm over that one! There were at least a dozen offers to purchase before I saw it.



Anybody will buy your house for half the market value.



Contact an agent about selling at quick sale prices. Offer 2% listing agent, 3% buyers agent. Even a quick sale price should get you at least 80% of value. Yes, that will cost you 5%. But you'll come out with 75% of value, net instead of 50. If your loan balance is anywhere under 75% of the value, this puts more money in your pocket. If your loan balance is more than that, it means you'll owe less in taxes when the lender hits you with a 1099. Not to mention that trying to sell a short payoff without a good agent is an exercise in futility.



Now this is not to say that you should list it for 80% of your most fevered imagination of what it is worth. You need to sell, as in have someone offer a price that they can actually pay you. You need offers. Ideally, you want multiple offers fast. You do this by underpricing the market value of your property, so that you will attract people who want to look, and they think it's a good price so they make an offer. The offer will not be full asking price, and don't waste your time hoping that you will get such an offer. Once that Notice of Default hits, everybody knows that you need to sell. To use one example I'm going through with a buyer client right now, if your property is a two bedroom place that basically looks like wild animals have been living there, and your list price is 99% of the three bedroom down the street, you are not going to get it, and you have a deadline, while your prospective buyers do not. You need to figure out what it is really worth by sales of comparable property happening right now, and then you need to discount that price by enough to make a difference. How much? Depends upon what your local market is like. That's part of what good agents get paid for.



Toss any concept of "negotiating room" or "getting what the property is worth out of your head. Get your attitude out of the seller's market of two years ago. Especially in the current buyer's market, all of the power is in the hands of the prospective buyers. If you won't sell for what they offer, the one down the street who is a little bit smarter, or a little bit more desperate, will. Sellers have little enough power right now without the deadline of foreclosure. People who need to sell have only the power to say no, and what happens if they don't say yes to someone? I'll tell you what happens: You get nothing. The chances are better of flying to the moon by flapping your arms than of getting some of your equity back out of a foreclosed property. Since your best alternative is lose everything you have in the property, that's not a strong negotiating position. This buyer does not have to have your property. With thirty seven sellers per buyer in my local market, they can go find a more attractive property, cheaper, from someone else. Their best alternative in negotiations is that they go find some other seller who will sell for what they want to offer. Negotiating position: Very strong. Net result, the buyer offers what the property is worth to them. If you won't take it, they only need a bit of patience to find something else that will. If you didn't need to sell, you could just hold on to the property, of course, but we've already determined that you don't have that option, and time is not your friend. A very large proportion of agents still have their heads in seller's market mode. Indeed, most of the major chains are still telling their agents to think like it's a seller's market. This kind of thinking is of no use in the present market, as roughly 46,000 residential property owners have discovered in San Diego County within the last year. Considering that only 31,000 transactions have successfully closed in the same time period (and the ratio is getting worse, not better), that is a sobering warning. Only about 40% of property owners who listed their properties sold at all, on any terms. When you consider the time constraints of selling under pending foreclosure, it behooves you to understand your position.



Caveat Emptor

UPDATED here

I've written a lot here about how to manage your mortgage so that you control it instead of it controlling you.



Let's consider what happens when that project fails.



If you don't pay your mortgage, on time, no big deal at first. The lenders don't like it, but there's a grace period built in. Fifteen days later, the first consequence is that you owe the lender a late payment penalty. It's a doozy, typically four to six percent, depending upon where you live. Here in California, it's four percent. Doesn't sound like so much, but four percent for fifteen days is the equivalent of ninety-six percent annualized interest, over three times the most horrible credit card I'm aware of. I don't like paying ninety-six percent interest, and neither should you. Don't get fifteen days late if you can help it. But once you've paid the penalty and brought yourself current, nobody knows and nobody cares.



Suppose you get to thirty days delinquent - one full month. At this point longer term consequences set in. First off, your lender marks your credit as being thirty days late on your mortgage. This is a big negative as far as everyone goes, and can easily make a difference of 100 points or more on your credit score. Additionally, if you are applying for a mortgage loan (or plan to), you just got a "1x30". For A paper, this means that if your credit is otherwise perfect, you barely slide through. For subprime, this makes a difference on your rate. It takes two years for this to work its way out of affecting your mortgage application, even if your credit score recovers.



Most people end up being thirty days late for several months in a row, each month hurting their credit score, before it goes to sixty days late. They missed one payment and struggle but manage to make several more before they miss another. Occasionally, they go straight to two months late. Either way, it's a Bad Thing. A single "1x60" might scrape through A paper if there's no cash out and your credit is otherwise perfect. Otherwise you are subprime for at least two years. In the subprime world, a "rolling 30" is generally not as bad as a 60 day late, but both are steps down from even a "1x30" and a "rolling 60" is worse. It gets worse yet if you pay your way current and then backslide again. And of course, you are paying penalties and interest is accruing on your loan and you're falling further behind every time you are late. This amounts to a notable chunk of change very quickly. So none of this is good.



On the other hand, depending upon the state you live in, until you get to ninety or 120 days late the situation doesn't become dire. Each state's foreclosure law is different, but once the lender has the option of marking you in default, the situation gets uglier. It is a common misconception that lenders like foreclosing. In actuality, only so-called "hard money" lenders will usually start foreclosure immediately upon eligibility, especially if you've been talking to them about your situation. If they have some real reason to believe yours will eventually become a performing loan again, regulated lenders will cut you significant slack, by and large. It costs lenders a lot of money to foreclose and there's always the risk they end up stuck with the property, so they'll usually give you as much leeway as they reasonably can. One thing I keep telling people who want a loan approved based upon the equity in the property alone is "The lender doesn't want your house. They want to make loans that are going to be repaid. The lender is not in the business of foreclosure. They don't make any money on it."



Nonetheless, even the most forgiving lender is going to eventually hit you with a Notice of Default. At this stage, things are starting to move towards a resolution that nobody likes, but you least of all. At this stage, you are now liable for a large amount in extra fees that was written into your contract to cover the lender's cost of going through the foreclosure process. At this point, the lender has the right to require you to pay the loan all the way current, with all fees, in order to get them to rescind the notice. Refinancing becomes almost impossible, except with a hard money lender, and unless something about your situation has changed from what caused it to get to this point, that is only delaying the inevitable and making it worse.



As soon as that Notice of Default is recorded, your situation becomes part of public record. You are going to get calls and letters and everything else coming out of the woodwork. One category is going to be lawyers, who will typically tell you they can keep you in the house a long time without payments by declaring bankruptcy. Well, this is true as far as it goes, but it's not going to make the situation any better. As a matter of fact, it will steadily get worse. Just because you go into bankruptcy doesn't mean that the penalties and fees and interest go away or stop accruing. They are still there, and they keep coming. I'm not a lawyer, and you should consult both a lawyer and an accountant if you are in this situation. Nonetheless, bankruptcy is not something I would even consider in this situation without something highly unusual going on.



The second group that will contact you are the "hard money" lenders, looking to lend you money at 15% with five points upfront and a hefty pre-payment penalty, to buy your way out of the situation. Once again, unless something about your situation has suddenly changed, not a long term solution, and it only makes it worse.



Another group that's going to call is investors looking for a distress sale. They want you to sell it to them for less than it would otherwise be worth. This is actually something I might consider. Yes, I lose some money, but that's better than going through denial with the lawyer for a year and a half while any equity I might have left gets frittered away in interest and fees and penalties, not to mention paying the lawyer.



The final category, and one with a significant overlap from the previous, is real estate agents looking to sell the property for you. Assuming you're not deep in denial, this is probably the best option as to least unfavorable resolution. The drawback is that it depends upon whether somebody will make an offer in a timely fashion, a factor which is not under your control. No matter how great the price, no matter how hard my agent works, there might not be an offer. It happens.



If you do nothing, eventually a Notice of Trustee's Sale will follow the Notice of Default. In California, seventeen days after that happens, the property gets sold at auction (unless you've somehow brought it current). There are some protections in place here in California. The lender must perform an appraisal, and for the property to sell at auction, the minimum bid is ninety percent of this amount. Nonetheless, these are typically very conservative appraisals by design. At this point, the lender wants the property sold at auction, because if it doesn't sell, they own it, and they don't want to own the house. They are in the loan business, not the real estate business. So a house that may be actually worth $500,000 on the open market gets appraised at $400,000, and sold for $360,000. If the loan was for $250,000, that's $140,000 of equity you allowed to be taken from you because you were in denial, when you probably could have saved most of it. And if the loan with penalties and fees and interest was $450,000, that's worse, and not only because you forfeited $50,000 you could have gotten, and not only because they may be able to go after you in court for their loss in some states.



You see, because the lender took a $90,000 loss, they want to write it off on their taxes. And in order for them to do this, they have to hit you with a form that says you got away with $90,000 from them. This is taxable income!. So the IRS comes after you for the tax on the $90,000. IRS liens are one of the things that is not discharged by bankruptcy, and it stays with you forever. Ten years absolute minimum for any purpose. Sometimes your lawyer, CPA or Enrolled Agent will get you an "offer and compromise" that cuts your liability, but that's technically taxable income also and may be subject to another round of this crud. It it seems like to you the system is rigged so you can't win, you're right. The loan was an obligation you agreed to, and took the money for, and taxes are on obligation of anyone who is a citizen or resident.



The smart thing to do? As soon as you realize that you can't make your payment, take a long look at your situation and decide if this is something that's going to get enough better to make a difference, or not. Then figure out how much equity in the property you have.



If the situation is likely to improve, and you'll start making your payments in thirty days because hey, you just started your new job, that's one thing. Most of the time, however, most folks lie to themselves on this issue, for a variety of reasons. Remember: Denial Digs Deeper, and makes the situation worse.



Even if selling the property isn't going to net you anything, it's still worth doing as it gets you out from under the sitation. Your credit score stops dropping, you quit getting marked late by your lender, you quit getting socked with penalties and interest and fees you can't pay. The IRS obligations you are incurring stop.



Particularly if you have significant equity built up, the sooner you contact a real estate agent to sell, the better off you will usually be. You are going to lose the house if you don't sell. The sooner you sell, the lower the penalties and fees and extra interest you are charged by the lender will be. This translates into dollars in your pocket - dollars you are likely to need. If you can sell before the Notice of Default is filed, so much the better, as that's thousands of dollars right there. You don't have the luxury of taking your time about it, though. Taking the first reasonable offer is highly advised, and you have more time to get a reasonable offer if you start sooner. Once a Notice of Default is filed, it's a matter of public record and so your bargaining situation gets a lot worse because the buyer should know that you are over a barrel, metaphorically speaking, assuming their agent does their homework. Considering that it's two or three clicks of the mouse, it's easy homework to do and even the greenest new agent is going to catch it more often than not.



Trying the various delaying tactics with a lawyer is likely to end up costing you more than a quick sale. Even if you remain in bankruptcy for five years or more, within about a year and a half at most, the lender will almost certainly persuade the court to cut the home and loan out of the bankruptcy as a secured debt, and sell it. Since the loans and penalties and fees and interest kept accruing all this time, you end up with less money - or none, along with a little love note from the IRS that says "You owe us thousands of dollars! Pay up NOW!"



Every situation is different. At a minimum, consult a loan officer, lawyer, accountant, and real estate agent in your area. But when all is said and done, what I've talked about is the way most of these end up.



Caveat Emptor

UPDATED here

I've also got a "what happens next" kind of article called "Short Payoffs" up.

An email I got Tuesday November 28, 2006:

My husband and I are not specifically on the market at the moment for a property but are always on the lookout for a great bargain. We have children, so school district is a big factor, but if the right place for the right price comes around, we'd definitely be interested in potentially buying a house, as we're ready to settle down. We don't mind a fixer-upper, but aren't looking to do any major, "needs a contractor" work. Our price range is under 400K, as we intend to wrap any debt into our mortgage. We both have good jobs — I work for NAME DELETED as a loan specialist and he is a DELETED — but aren't looking to kill ourselves with a mortgage payment, especially once you wrap taxes and insurance into the whole deal.

(emphasis mine)



Un-be-(censored)-lievable.



This person is a loan officer, and they're wanting to do something that is FRAUD. I mean, I know it goes on, but to be propositioned cold, via the first email I got from this person, to commit a felony (or aid in its commission, thereby making me guilty of conspiracy, another felony) just blows my mind. Admittedly, this particular company is one where you don't have to be licensed to work for them, but still, you should know the big issues like this, and perhaps at least pretend to have some respect for the law and good business practice.



My response?

You do realize that lenders don't go along with this, don't you? Purchase money loans if the purchase price is $400k and the seller gives you back 20k to pay off your debts, the effective purchase price is $380,000 - not $400,000. If you don't conceal it the loan doesn't work. If you do conceal it, it's fraud.



I could use the business. But not so badly as to get involved in this.



No thank you.

Her response?

I may have misrepresented myself and my goals to you. Don't be so quick to judge.

Oh, so now instead of soliciting my cooperation in felony fraud, she's committing entrapment. And I'm supposed to think this is better.



Ladies and Gentlemen, I have a firm policy here of not naming specific malefactor companies or individuals (unless they pop up and name themselves!). Telling people how bad any one company in particular may be is beside the point of this website. I'm trying to give people the tools to use to judge as to whether or not they are being lied to, abused, etcetera in their specific instance - what people can do to prevent it, what they can do to improve their situation, what they should do if all the other tools fail and everything falls apart.



However, this one particular company represented by the alleged person in question is one on whom I have extensive amounts of evidence as to how bad their rates are, how misleading their business practices are, how badly they low ball their quotes, and in general, how shoddily they treat the customers that put money in their pocket. If I was going to list the two companies in the mortgage industry that (in my honest opinion) everyone should stay away from, this company would be on that list.



So it is very tempting to name names publicly, just this once. However, the lawyers would then get involved to no particularly good effect for anyone, and this very large company has a lot more resources than I do. Furthermore, I suspect, although I cannot prove, that I might be hurting a very few good loan officers who happen to work for this company in addition to all of the bad ones - and there are a lot of the bad ones working for this company. Finally, as I explained above, the point if this site is not revenge, and it's not punishing evildoers. I am not the Count of Monte Cristo, nor am I a law officer, a prosecutor, or a judge. I'm a loan officer and a Realtor® who is also trying to give people real tools to judge their situations and achieve a better result. So if you are reading this, back off. I will not name names unless you force me to. But solicitations of fraud, and entrapment, from people who should know better and go out of their way to be jerks, really pisses me off, and if you want to force my hand, I really won't regret it very much. I guarantee it will hurt you a lot worse than it will hurt me. Instead of trying to entrap me into a felony, just go away and pretend I don't exist. The type of suckers who are your bread and butter don't read this website anyway, or they sure as heck wouldn't patronize your company!

We aren't married. How do we buy a house together?

Basically, the same way that married people do. The qualifications are exactly the same, provided that you both will be living in the property. If not all of the people who will be buying will also be living in the property, they have to show that they can afford both the place where they are living and their share of the expenses of the property. The only real difference in the paperwork is that unmarried parties cannot submit a single loan application - they must fill out separate applications. Most lenders will require that all of the disclosures also be signed and submitted individually. But that's just to keep the lumberjacks happy killing trees.

Now it is highly advisable that you consult an attorney as to how you want to hold title, and that there be some kind of partnership agreement that gives the other parties rights to recover any extra they paid to keep the partnership out of trouble, if one or more of the partners can not or do not make their share of the payments on time. But that's not a part of the purchase process, and you can certainly buy a property with basically anyone. It's one of the most basic of rights here in the United States. Convicted felons, jail inmates, illegal aliens, and people who have never set foot in the United States can all buy property here, as long as they have the money or can persuade someone to lend it to them.

The fact that people are not married means basically nothing to the loan qualification process, either. The guidelines are exactly the same either way. Yes, there are complex variables as to how you qualify, and what loan you qualify for. But people who are married but aren't going to be living together are treated the same as two random business partners, except that they can put all of their joint information on one application. You can have any number of people on title to a property, or responsible for a mortgage. The major thing to watch out for is that they must qualify as a group, and almost always under the same set of qualifications. If one person has to do stated income, they all might as well be stated income, because they're not going to get full documentation rates anyway.

Caveat Emptor

UPDATED here

neo-neocon on future consequences of present decisions.



Big Lizards on movement Libertarians. I haven't been welcome at Libertarian Party meetings in a very long time, but I remain a libertarian. I have huge problems with anyone - even those with whom my sympathies lie - advocating policy without a clear understanding of what happens next, or alternative methods for accomplishing the same necessary goal.

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Only the poor minority folks without other choices join the military? Not so fast



For some people, it's still 1968.



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Been under the weather now for weeks, but it intensified over the weekend. Have a short new article for tomorrow, but don't know how soon I'll be able to write more.

One of the consumer attitudes I encounter constantly is the feeling that if you cannot afford the loan, the lender will not loan you the money. This safety zone common sense sort of reliance upon lender policy as a backstop is not only false, but one of the best ways to get in trouble with real estate there is.



Once upon a time it may have been true. Back in the dim times fifty years ago, lenders required down payments, and retained their loans for the full duration. This provided at least two levels of protection for the lender. First, if people did default upon their loan, that down payment was a cushion for the lender in that the property was genuinely worth more than the lender had at risk. All real estate loans were done "full documentation", where the borrower proved they made enough money to make the payments and repay the loan. Underwriting rules were designed to filter out those whose employment was not stable enough, those who couldn't afford the loans, and those whose creditworthiness was marginal.



At the same time, however, real estate was far more affordable. The inability to get a loan on good terms meant that you were a little further away from the middle class house of your dreams, that you were going to have to save a little more, work a little harder, and perhaps settle for something less than you really wanted, but you could still have a good property. 800 square feet on a fifth of an acre, instead of 1200 square feet on half an acre. These really were typical property choices available then. You saved until you had forty or fifty percent down, instead of twenty, and then you maybe had to look a little bit harder, but it could be done, and people paid cash for their properties all the time. A three or five thousand dollar property was something that people could save the money to pay cash for, even at seventy five cents per hour.



That's not the case now. Even though people may make $40,000 per year, and the family has two incomes, they are not content with the lifestyle of fifty years ago that enabled people to save a down payment within a couple of years. Nor is employment as stable. People don't work forty years for The Company any longer.



The changes on the lender end have been even more profound. Lenders discovered making stock valuations rise as a primary method of becoming wealthy. Where once the most important thing to the stockholders was to have every single loan repaid in full, now it becomes more important to have portfolio growth, which makes potential investors willing to pay more for existing stock. Then it became unnecessary to actually hold loans until they ran their course, as investors were willing to pay more than the face value of the loan for the rights to receive payment! This nice dependable mortgage bonds were good as gold! Matter of fact, the money the lenders received by selling the loans was higher than they made by holding the loans. True, they might only make three to four percent from selling the obligation, as opposed to seven percent for the obligation itself, but they could do it in two to three months, as opposed to the entire year. In fact, they could go through the process four, five, or even six times per year: Receive a loan application, provide the funds on a short term basis, and then sell to investors for a three to four percent markup. Instead of earning seven to eight percent on their money per year, they were now earning twenty or twenty five. They could even retain servicing rights, as the investors had no idea how to run the loans, and make even more money. Stock prices would show the effects of growth, as investors expected them to be able to keep in up, and current stockholders could cash out for huge gains by selling part or all of their holdings.



However, you now have a new group of stockholders, who bought - or held existing investments - in the belief that this growth curve could be maintained. They want that growth to keep going - however are they going to sell for a big profit if it doesn't? If the growth doesn't continue, how are performance awards to management going to be paid?



And so it goes. Growth begets a need for more growth. Now there's nothing wrong with growth - quite the contrary - but when the expectations shift over time from a two or three percent annualized growth curve, to eight or ten or even thirteen percent, it creates an expectation that no one wants to fall short on. Furthermore, other people with money, seeing the rewards, join in the lending business. Joe made fifty percent in two years with Bank of Nowhere in Particular! Let's all invest in that bank! They'll double our money in three years!



The fact of the matter is that there is only so much revenue growth that can be had in any given set of economic conditions. When you try to overshoot that amount, it can come from very few places. First, it can come at the expense of the competition. Unfortunately for that hope, the lending market grows more competitive, not less. Second, it can come from places that weren't a part of the market previously - in other words, people who were not good credit risks or who would not have applied in previous markets. The reason most of those would not have applied is that they are less credit worthy, and they know it as well as the lenders do. Third, growth can come through individual loans being larger, being willing to loan more money per property. This has also happened, but you cannot loan more per property without subsequently having more at risk, although the lenders have learned how to solve this. Remember that we discussed them selling the loans? Well, that's how the lenders limit their risks - by selling to someone else for cash. Let them assume the risks!



So we have increased competition for borrowers, including those who may not have been as solidly credit worthy as a previous day's client. There are more lenders competing for limited pools of borrowers, and pressure to qualify the borrowers for increased loan amounts, because, after all, that's how the bank makes money.



Furthermore, shifts in consumer habits played into this. People don't live in the same house for as long, and they don't keep loans nearly so long as they once did. Where they once lived in the same house from the time they bought it until they died, now the first house they buy in their twenties is a "starter," and then they sell that and buy a trade-up when the family expands a little, then another when they move up the corporate ladder, and this leaves out the effects of transfers and changing employers. Furthermore, they refinance and take cash out when they want a bigger SUV or a European vacation, and then they take more money out when the rates go down because they can afford a larger loan on the same payments.



The increased prevalence and availability of the stated income loan has played right into this. Certainly, some people in your profession make that much, but what if you're not one of them? Simply say that you are! After all, you're in that profession, right? Furthermore, there is no payoff for telling people that they don't qualify. They've made up their mind that they want that three thousand square foot six bedroom house, and if you tell them they don't make enough, they're not going to give up their dream house! They'll just find another way to do it, so someone else will get that loan! That nice, wonderfully wonderfully large loan that means a huge commission check to the loan officer and a forty thousand dollar premium on the secondary market for the lender!



Traditionally, the check upon this was the fact that the borrower had to actually make the payments on the loan once they had it, which limits their ability and willingness to sign for more loan than they can handle. However, competition between lenders once again found a way: First, the interest only loan, and then the negative amortization loan solved that problem, particularly as sub-prime lenders make their qualification for the loan based solely upon the initial minimum payment. Whereas when A paper lenders underwrite a hybrid ARM that's interest only for a given amount of time, they will base their computations upon a fully amortized loan payment, and even assume the rate will rise slightly, that is not the case in the sub-prime world. Sure they've bought the property on a 2/28 interest only loan with a three year prepayment penalty, and they bought in a flat or declining market, and they are not going to pay the principal down any in two years, and the property isn't going to be worth any more, so it's unlikely they will be able to refinance, and they certainly won't be able to afford the payments when they adjust, so they're going to lose the house, but hey! You got a commission check and your lender sold the loan (at a fat markup due to the prepayment penalty), and your employer won't have any money at risk when they do default! What's not to like?



So how is a consumer going to protect themselves in this sort of environment? Obviously, you've got to start by figuring out a budget and sticking to it. This is hard. This is very unpopular, as far as real estate professionals go. When I sit down with people's finances and tell them what they can afford with a sustainable loan, the first words out of their mouths are usually, "I can't afford anything I want with that!" A certain percentage of them just walk out right there, sure that they can find someone else who will tell them they can afford more.



As I've just covered, they certainly can find someone who will tell them that they can afford more. However, the reason I sit down and go through the numbers, including today's rates, what they make, how much they spend, is to show them precisely what they can afford. When somebody shows you real numbers and you deny those numbers, and are certain you can afford more, you are essentially performing magical thinking. "I want it and I deserve it, and this other guy tells me I can just pull myself up by my bootstraps and fly!"



However, loans aren't magical. In fact, there is nothing magical about loans. You may get a negative amortization payment that you can afford for a while, but the money that you are not paying does not just vanish into thin air. It may be held in abeyance for a while, but it is there, and it will turn around and bite you. You wanted a $600,000 home for a $2000 monthly payment, and you got it for a little while. However, you now owe $680,000 and the property (which you put $50,000 down on) is now only worth $540,000. It doesn't take a genius to see what happens next. Even if the property increased in value by $100,000, it costs you $55,000 to sell the property and you have to pay $15,000 of their closing costs so that they can qualify for the loan, and that fifty thousand dollars you put down has turned into nothing.



A rapidly increasing market, such as we had for several years ending about the end of 2004, covers a multitude of sins and mistakes. If the property doubled in price over three years, you came away with $400,000 and you were very happy! Unfortunately, this is not the type of market we are in now, nor are we likely to have that sort of market any time again in the forseeable future. It's always a bad idea to bet on it, because you never know it's going to happen ahead of time.



So what are you going to have to do? As I said earlier, figure out what your real budget is and stick to it. If you can't afford anything you want, then want less. Insist upon sustainable loans, and qualifying for them full documentation. Full documentation loans have better interest rates anyway. Fully amortized loans, where you are paying principal and interest, have lower interest rates, as well, and if you stick with A paper guidelines (and 100 percent loans on A paper are possible for people with decent - not spectacular - credit), you get better interest rates and can usually avoid pre-payment penalties.



"I just won't buy anything if I can't afford what I want!" some of you are saying. Right now, with prices retreating somewhat, it may even make a limited kind of sense for those with strong credit and stable prospects. However, the market here locally is not going to retreat that much more. Indeed, where prices are is currently being masked by a stubborn type of seller and a not very competent stripe of real estate agent. It doesn't matter that three fourths of the sellers want $X for property of given characteristics, if the sales that are taking place are $100,000 lower. If this seller won't sell, someone else will, and it is the sale that actually happens that tells where the market is, not the hundred comparable properties where the asking price is $100,000 higher.



However, real estate, even in markets that are rising just slightly, is such a fantastic investment due the the effects of leverage, that I do not anticipate the local market going much lower. Indeed, very smart investors are swarming, intending to hold the property five years or so instead of flipping it. Yes, we've lost between twenty and thirty percent the last two years, but the statistics have been manipulated to make the decline seem much shallower. I'm starting to see evidence of a reversal in the not too distant future, and people who decide to sit on the sidelines because they can't afford anything that they want are likely to discover themselves being able to afford still less when they do decide to jump into the market - or nothing at all. If you've got a family of three and don't want a two bedroom condo, what are you going to do when you can't afford that?



Caveat Emptor

UPDATED here

Classical Values has a post about, among other things, fake SWAT teams and the immunity of police and the insanity of disarming citizens.

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Poisoned Spy Blames Putin for His Death

The Health Protection Agency said the radioactive element polonium-210, which is extremely hard to detect, had been found in Litvinenko's urine.

Now how did that get in there? He must have ingested it while cleaning his weapon collection, and he slipped and shot himself 357 times with bullets of varying caliber, after which thieves made off with every last piece of the weapons collection, vanishing in the 29 seconds before the police got there.



Polonium is such a minute part of the environment that the weapons scenrio above is vastly more plausible than that Litvenenko wasn't intentionally poisoned. Do we know who did it? No. But there is a logical suspect.

Goldfarb said the attack on Litvinenko bore "all the hallmarks of a very professional, sophisticated and specialist operation."



"The very fact that experts are still at a loss to say what poisoned him tells you it is not a sleeping pill that has been given to him," he said.

Circumstantial evidence, to be certain. But it does point in the direction of the Putin government.

The Russian government has strongly denied involvement, and Putin told reporters at a European Union summit Friday in Helsinki, Finland, that British medical documents did not show "that it was a result of violence, this is not a violent death, so there is no ground for speculations of this kind."

Pay no attention to that man behind the curtain. These are not the droids you're looking for.



Motive, Opportunity, and Method points squarely at the Putin government. It is very possible that someone else did it as a frame job, but in that case, the Putin government had better devote some serious resources to discovering he real culprit. Absent a smoking gun pointed at someone else, the chances of a reasonable person believing anyone other than the Putin government did this are nil. Of course, Russia has no free press, so why would they Putin government care?

"You may succeed in silencing me but that silence comes at a price. You have shown yourself to be as barbaric and ruthless as your most hostile critics have claimed," Litvinenko said in the statement read by his friend and spokesman Alex Goldfarb. The former spy said "the howl of protest from around the world will reverberate, Mr. Putin, in your ears for the rest of your life."

Let us hope so. The Russian people deserve better than Putin. They should have had better than Putin, and if we had invested more heavily in democracy in Russia, as opposed to keeping apparent friends in power, both the US and the world would be in a much stronger position today.



Democracy: It isn't perfect. But it beats the alternatives.



If you ever wonder why I have nothing but contempt for the "accommodate the tyrants" school of diplomacy (as exemplified by James Baker, Warren Christopher, and Madeline Albright), you have only to look at the results of its machinations in Russia. As well as a couple score other nations.



Yes, it's an imperfect world, and you've got to pick your battles. But that doesn't mean being unwilling to confront the tyrants in order to improve things, so that you've got better choices next time.



The last time our leadership tried to make certain we got better choices next time was just after World War II, with the Marshall Plan. And everybody knows what a miserable failure that was, right?



While they are at it, the Putin government has now Russia sent an air defense system to Iran, so that if our politicians ever do get the gumption to actually deal with an Iranian nuclear threat, they'll be better able to shoot down the planes they send.



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Ex-employee says FAA warned before 9/11

In the years leading up to the Sept. 11, 2001, terrorist attacks, Dzakovic says, the team was able to breach security about 90% of the time, sneaking bombs and submachine guns past airport screeners. Expensive new bomb detection machines consistently failed, he says.

The FAA is a culture of patronage, not a culture of service or results. The problem with cultures of patronage is not just that they waste money and resources, but when a challenge happens, they view it in terms of the the mordida they can extract, not in terms of the best or most effective way to deal with the challenge. Before 9/11, they could fool themselves that there was no challenge. Unfortunately, they are still fooling themselves.

Eventually, the FAA began notifying airports in advance when the Red Team would be doing its undercover testing, Dzakovic says. He and other Red Team members approached the Department of Transportation's Office of the Inspector General, the General Accounting Office and members of Congress about the FAA's alleged misconduct regarding the Red Team's aviation security tests. No one did anything, he says.

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Could well be the longest drive in history (to date) Cosmonaut hits golf ball into space



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Anti-Syrian Christian Leader Pierre Gemayel Assassinated in Lebanon

Gemayel, the industry minister, was the fifth anti-Syrian figure to be killed in the past two years and the first member of the government of Prime Minister Fuad Saniora to be slain.

Is there anyone who is actually surprised by this?



Gateway Pundit notes that Hezbollah got involved after it was "insulted" at Gemayel's funeral.



What was said? I can't see how it's possible to insult Hezbollah. The worst things I can possibly say about any organization are no more than the truth about Hezbollah.



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Democracy Versus Freedom



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In keeping with my earlier rant about Russia, A Doctrine Worth Saving



Max Boot: Cutting and running on our allies



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Wizbang: You can't keep a bad idea down.



Ladies and gentlemen: If you want to freeze the pharmaceutical state of the art right where it is, the proposal to re-import price controlled drugs back from Canada has a lot going for it.



Pharmaceutical companies do all this research because they want to make money. They make money by selling the drugs they research for what people will pay for the first seventeen years those drugs are on the market, after which, the patent expires and the generics swoop in.



If the company cannot make money, there is zero motivation for them to spend all that money researching it, getting FDA approval, etcetera. If they cannot make as much money, there is less motivation than currently, which means it will happen less often and there will be fewer new drugs - potentially, none. If the drug doesn't get invented and approved and patented in the first place, there will be no cheap generics in seventeen years.



The pharmaceutical companies spend billions of dollars per year bringing new drugs to market. They do this because they can make more billions doing it - and as a corollary, tens of millions of people in this country lead better, less painful, more productive lives because of it. Hundreds of thousands of lives are extended, by which I mean that they survive a critical incident, such as a heart attack or blunt instrument trauma every year.



Now they'll still spend money on stuff with obvious potential for profit. A new headache medicine? Sure. But a new medicine that saves the lives of people with a disease that strikes maybe five people per million? Emphatically not.



We are footing the bill for socialized medicine in Canada. If the US Congress had any guts, we'd prohibit sales abroad at a per dose cost less than the best that can be negotiated in a free market. In other words, let's say Company X has a brand new wonder drug, and they're charging $100 per dose here in the US, and the lowest that anyone can persuade them to offer the product for is, let's the the VA hospital system, for $80 per dose. If they sell the drug anywhere in the world for less than $80 per dose, they get hit with some appropriate penalty like a fine for the difference, in the form of free product, distributed in accordance with prchasing percentages.



The US Health Care consumer has long shouldered the burden of funding development for the rest of the world, which. Of course Congress isn't going to do anything about it. But that's the real crime of the present system.



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What American journalists (and others) should be thankful for



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According to my server logs, I hit my millionth visitor sometime Tuesday, November 21st.



Thank you all for stopping by.

I am profoundly lucky in that I read "I Will Fear No Evil" in high school. Not an assignment, I just like to read, and Robert A. Heinlein has always been one of my favorite authors.



A very few pages into the book, he has one of his characters toss off two fantastically good pieces of advice in quick succession, viewed from the point of view of thirty years later and multiple licenses in financial planning. He has one character, a lawyer no less, deal effectively and beyond challenge with two financial problems in quick succession. The first had to do with a very ill old gentleman with a will of longstanding effect, who doesn't want the existing provisions upset, as often happens to people who die with a new will. This extremely wealthy man has decided he wants to leave his secretary a million dollars.



The solution? A single-pay policy of life insurance. Problem solved. But once he's out of the room, the secretary protests, saying she'd just waste the money, or even get in trouble with it. She wants it given to charity.



Solution? Write it so she got an income off of it every week - essentially turn the lump sum into an income generating asset, with the additional advantage of a donation to charity when she shuffles off the mortal coil. She tells the lawyer she would never have thought of that solution.



His answer? "That's because most people think of money as something to pay the rent. They don't think of money in terms of what it can do."



Okay, I always was a math geek, but this concept was something I understood immediately, and it made a huge difference in the way I thought about money forever afterwards. Money wasn't just something to buy stuff with. Money could do things. Money could make more money. Money was potential, potential that got bigger all on its own if you only let it.



Now from a much later viewpoint, I see the flaws in Mr. Heinlein's plan. If you don't want your estate plan messed with, a living trust beats a will on every point. Furthermore, the interest rate imputed in the return of the life insurance proceeds was only a simple compounding at less than four percent - I can almost certainly do that much above inflation if I invest reasonably. Nonetheless, Mr. Heinlein grasped some very powerful concepts very well, and he was able to show the application to a teenager of no particular qualification. This is better than the vast majority of supposedly more sophisticated writers of serious "litracha" can usually do, and he did in almost in passing - no preaching, no granstanding, just one heck of an effective example, twice in the space of a hundred words or so that were completely aside of the main plot.



These days, I still love reading fiction where the writers show they really understand economics and finance. They're hard to find. I happened to be volunteering as an event coordinator at a con a couple years ago, and ended up assigned to a reading with an author who made a mistake so elementary it showed that he had done no research because it impacted a benefit that literally everyone gets - he just didn't know about it. It really was critical to the plot, and if he had made one phone call when writing the story, any professional he called would have corrected the error. I very tactfully (for me, anyway) informed him of this gap, and I recently ran across the story in print. He hadn't fixed the error. I'm not planning on buying any more of his stuff. Another highly hyped novel said that the author understood economics and finance. What the author understood was that illegal drugs were a highly profitable trade if there's no real possibility of getting caught. Well, duh. He blew it, otherwise, not even considering the constraints of the problem he had set up. Despite the fact that I really enjoyed most of his writing, I may not buy the sequel just because what he missed was so painfully obvious to me that it really destroyed the rest of the story. As long time friends have heard me say many times, "I'm willing to suspend disbelief, but not hang it by the neck until dead!" This stuff is more constant than even the laws of physics, unless you postulate that you're dealing with a non-human psychology, and even then they're still there. Don't even get me started on the stuff supposedly written for everyday, mundane situations.



Still, some do get it right. S.M. Stirling in his Island In the Sea of Time stories, and to a lesser extent in Conquistador. Poul Anderson must have gone back through merchant records in the early Age of Sail, or known someone who did, for some of his Polesotechnic League stories, because he more than once cites some of the same sort of brutally coldblooded logic that was present then. Many of his other stories bear this same kind of mark. I was pleasantly surprised about a year ago by a side plot in a stand-alone novel from Michael P. Kube-McDowell - although he always seems to do solid research.



Got some suggestions? I'd love to hear about more such authors, who manage to teach, or at least stay in touch with economic realities while they entertain. Those authors who do a good job of this perform a real public service, while those who ignore it so that they can tell their story unencumbered by mere facts often earn their work a ceremonial throwing - twice across the room.



Caveat Emptor.

First off, let me say that your site has been very informative and helpful. I stumbled across your blog looking for information on ARM vs. 30 year fixed loans and ended up reading every article.

One issue I have never really seen addressed is joint loans. When a couple, married in this case, gets a loan, which FICO score do they use?

Right now, my wife is a nursing student, when she graduates in August we want to buy a new home that is significantly more expensive than our current home. Our combined salaries at that point should be somewhere around 120K. I have been told by a mortgage professional in our first phone conversation that being a student counts for "years in
line of work", but we would have to wait until she receives her first paycheck from her new job before we could count her income. We just accepted an offer on our current home last week, and will have enough cash to put down 10% in the price range we are looking at (200-300 K). If we want to buy before she is employed, but has an offer so we know
her salary, what are our options? It seems to me that we would be in a situation where we are doing a Stated Income type loan.

The answer to this is that whoever make more money is the primary borrower. This works with a couple as well as other arrangements. It's a very simple answer, but you'd be amazed how often I have to repeat it for trainee loan officers. Of course we all want to use whichever score is better, but it's the person who makes more money whom the lender will consider to be the primary borrower.

Now as far as A paper goes, it's kind of academic. If you want to use both incomes for the loan, you both have to qualify. This can be an issue when one spouse forgets to pay bills and the other is as a-retentive as I am about it. Over time, spouses credit reports tend to track one another more and more closely, as they switch from single credit accounts to joint accounts. If it's a joint account, doesn't matter who forgot to pay the bill - you both take the hit. On the other hand, even long-married spouses don't tend to have exactly the same score, and in many cases they have intentionally segregated the credit accounts for precisely this reason, that one spouse is better about paying bills. So one spouse has a 760, and the other spouse has a 560. Ouch.

It is to be noted that the superior solution is to have the responsible spouse pay all of the bills, which results in two high credit scores. Why is this important? If one of you has a 760, they may qualify A paper. If the other has a 560, you have a choice: go sub-prime, or have the high scoring spouse be the only person on the loan. In other words, when you're talking about A paper, you both have to meet the credit score minimums, or you don't qualify as a couple.

This has implications. Suppose you have a 760 score spouse who makes $3000 per month, and a 560 score spouse who makes $5000 per month, you have a choice: Qualify based upon $3000 per month, go stated income, or drop to sub-prime.

$3000 per month doesn't qualify for a lot of house most places. So if you're thinking 3 bedroom house, you can be stuck with small one bedroom condo - if you want the best rates.

The second alternative is going stated income. This only works if the necessary income for the loan is believable for someone in that occupation. Somebody who makes $3000 per month is not likely to be in a profession where $8000 per month is a believable income, and most people tend to overbuy a house rather than under-buy, regardless of the fact that under-buying is a lot more intelligent in most cases.

The third solution is to go sub-prime, where you'll qualify, but get a higher rate. A single borrower with a 760 credit score gets a better loan, with less of a down payment, than the couple in this case - the primary borrower has a 560 score, remember - but they just won't qualify for as large of a loan because they can't afford the payments.

You might also go NINA, which is a "here I am - gotta love me!" approach where income is not verified, nor employment history. The loan you get is based totally upon your credit score and equity picture (how much of a down payment you make, in the case of a purchase). The rate is higher than stated income and the restrictions on equity is greater, but you'll get a better loan at a better interest rate in most cases for a NINA A paper loan than even a full documentation loan for a 560 score.

Now, as to what you were told, student does not, in general, count as time in line of work. As a question to make why this is obvious: How are you going to compute her average income over the last two years? That is the way full documentation loans are justified. Some sub-prime lenders will accept it (not the better ones), or the person who told you this could just be planning to substitute a stated income loan based upon your income. The fact is, that unless you're talking ugly sub-prime, they're not going to accept your wife's income until there's some time actually working it. Many people graduate school and never work in the field. They don't pass licensing, or they decide soon after they start that it's not for them.

In this case, you are talking stated income unless you go sub-prime. It's just the way things are computed. Sorry.

As I keep telling folks, there are a lot of shysters out there in my profession. The easiest way to get people to sign up is to promise the moon, and until you get the final loan paperwork you have no way of knowing whether they intend to deliver what they said.

Caveat Emptor

UPDATED here

Carnival of Real Estate



Carnival of The Capitalists



Carnival of Personal Finance



UPDATE: Rino Sightings. Obviously the host has already eaten Thanksgiving Dinner, and is too bloated to be witty.

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Now this might cause people to accept $1 coins: U.S. Mint to unveil presidential coins



After it became blazingly obvious to anyone that the previous $1 coin was a product of affirmative action and political correctness, not merit, people weren't interested. I've got nothing against Sacajawea, but why should one of Lewis and Clarke's guides be featured on currency when Lewis and Clarke themselves aren't?



Susan B. Anthony started a noble cause, but her coin was too subject to confusion with the quarter. People didn't want it because they were handing out dollars when they thought they were handing out quarters. It was also one of the ugliest coins in the modern era - It even managed to make the Eisenhower dollars look good.



If the US wants to make a $1 coin popular, they need to take a lesson from the UK. They've got a 1 pound coin that looks and feels like no other coin. It's thicker, it's a different color - there is no way of mistaking it for any other coin. They also need to put some person who's part of our American consciousness on it. Susan B. Anthony is deserving, but not popular. This one might have it right, as many others did: Eisenhower (the dollar), Franklin and Kennedy (fifty cent pieces), Washington, Roosevelt, Jefferson, Lincoln. Before them, various Liberty figures. The previous nickel and penny were both Indian head (the nickel before Jefferson is also known as the buffalo nickel after the reverse). What do all of these have in common? Every schoolkid understands the part these figures played in our national history.



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Condition of Former KGB Spy Worsens

Doctors said Litvinenko was seriously ill after being given the deadly poison thallium - a toxic metal found in some types of rat poison that can cause damage to the nervous system and organ failure. Such poison has been outlawed in Britain since the 1970s, making it highly unlikely any could have gotten into his food by accident.

Every time the Clinton Adminstration had a choice between supporting democratic systems and supporting Yeltsin, they supported Yeltsin. Result: We now have Putin to deal with, and one of the most powerful countries in the world, with thousands of nuclear warheads, has gone from a nascent democracy in 1993 back to almost completely totalitarian. And people have to ask "what's wrong with the realism school of diplomacy?" Thank you, yet again, Warren Christopher and Madeline Albright. And they're trying to give us another...

Litvinenko, who has been a thorn in the Russian government's side since the late 1990s, fell ill after a meal with a contact who claimed to have details about the slaying of another Kremlin critic - Anna Politkovskaya, the Russian investigative journalist who was gunned down Oct. 7 in her Moscow apartment building.



Litvinenko blamed her killing on Russian President Vladimir Putin.

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Key Democrats oppose renewing military draft



Oh, those wonderful Democrats, protecting the country from the rapacious draft of the Bush Administration. Except that, down in the fourth paragraph, we are told that the Bush Administration didn't ask for a draft - it was a powerful Democratic legislator, incoming committee chair Charles Rangel.



Next, we're going to hear that the Democrats want an average of twelve hours per day of sunlight, favor trial by jury, and want to keep the First Amendment.



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Gingrich '08: The stealth candidate



The Republicans have been missing Newt, whether they realize it or not. Furthermore, for the past two years plus, he's been building support nationwide for his ideas. Yes, he's a polarizing figure. So was Ronald Reagan in 1976 and 1980 and throughout his Presidency, and for that matter, Lincoln in 1860 and throughout his presidency. Neither of those two men built any political alliances that lasted, did they? (The Republican interest alliance Lincoln built lasted until the Depression, and while Reagan's thirty year old alliance may be wounded, Gingrich supports it)



He appears to be trying to back the presidential campaign off a level. Instead of the war of personalities and supporters of particular candidates, he's trying to create a the demand for a presidential candidate whose views are compatible with his, and while I'm certain it wouldn't break his heart if he were he party's candidate in 2008, I think that if the Democrats win in 2008, by 2012 his ideas may be irresistable. Look at the parallels: An unpopular war effort, Republicans getting trashed in 2006 (1974). That's what we've got so far. Then a cosmetically appealing but incompetent Democrat wins the Presidency in 2008 (1976). By 2010 the Republicans are winning back seats (the Republican freshman congressional class of 1978 was huge), and in 2012 (1980) an ideas driven Republican wins office.



Would I vote for Gingrich? I honestly don't know. He's a bomb thrower, but at least you always know where you really stand with him, what his real take on the issues is, and he's not afraid to go to the mat - even in the face of a hostile press - and fight for what he believes is right.



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Palestinian human shields give Israel pause

In perhaps the most effective act of nonviolent protest in the six-year Palestinian uprising, hundreds of Gazans forced Israel over the weekend to call off airstrikes on the residence of a militant leader by swarming the house as human shields.

Why don't we ever hear about human shields volunteering to protect innocent Israeli women, children, and other civilians? I'll tell you why. Because there is no chance it would work. The presence of additional targets would be an inducement to the Paleosimians. "The normal women and children, plus some infidel volunteers? Wonderful!"



So while Israel lets the guilty go lest they attack the somewhat innocent, the Paleosimians light off a few extra rockets, because the presence of more innocent bodies in the area makes it more worthwhile to their way of thinking.



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I have my older daughter with me this week due to school closure this week, so new articles are going to be fewer as I have less time to write. Thanksgiving week traffic is pretty sparse anyway, but if you've got a question, please ask it.

what happen when 401K leave blank on beneficiary

Nothing unless you die, and it's not covered in your will or other documents. Then the state's intestate code takes effect. Each state has a law for how the estates of those who die intestate will be divvied up. These laws were typically made generations ago, and the societal assumptions that they make are no longer valid. Furthermore, by failing to name a beneficiary, you are passing up on the chance to avoid probate, the legal process by which your estate is gotten to your heirs. Everybody has a probate, and fees are levied on the basis of the value of the assets that are in probate. For many assets, such as bank accounts and investment accounts, avoiding probate is as easy as naming someone a beneficiary, and any accounts where you have names someone a beneficiary go to them immediately upon proof of your death, outside of probate.

This is important because your heirs do not have access to probated assets until probate is settled. This is a minimum of nine months, and in large complex cases can be a couple of decades. Probate fees are about seven percent per year, and until probate is settled, they might get to live in the house you left - but they can't sell the house if they need to move, or if, for instance, all of your assets are tied up in probate and they can't make the payments on the loan.

Most people do not understand the naming of beneficiaries, and never give it a second thought. Many times this translates to the first spouse still being the beneficiary of a policy of life insurance, when you divorced without children fifteen years ago, and now your second spouse has two young children to bring up without you, and without your life insurance proceeds. Even if the first spouse is generous enough to disclaim the money, since you obviously did not name your second spouse as a beneficiary, the money now has to go through probate.

Contingent beneficiaries are also important. Primary beneficiaries sometimes predecease you, or perish in the same accident. One common (and often worthwhile) tactic is to name spouses as primary beneficiaries, children as contingent beneficiaries. Many accounts allow the naming of secondary contingent beneficiaries as well. One approach is to name them individually, another to name them as a class ("all natural and adopted children of John and Jane Smith"), and two ways of accounting for their as yet unknown numbers of people who may be born later, "per stirpes" which is by branch, and "per capita" which is by head.

Every time you have a major life event, such as marriage, divorce, birth of a child, or the death of someone who is one of your beneficiaries, you should make a habit of going through all of your accounts and making certain the beneficiary designations are up to date with the new developments. Of course, if you have trusts and the like, this is also an ongoing requirement for them, and trusts are even better for avoiding unnecessary estate complications.

Caveat Emptor

I have repeatedly advised my readers to sign up for a back-up loan if they can find somebody willing. So every once in a while, I get email like this:

Hi! Would you be willing to do my backup loan? I'm already signed up with my brother-in-law but you tell people to get a backup loan so I'm asking you.

No loan officer with any sanity is going to agree to that request. You've already made up your mind who is doing your loan. You are not honestly shopping your loan, and you're kidding yourself if you think you are. You're not likely to evaluate your brother-in-law's loan critically when it comes to final signing, you're just going to sign on the dotted line. So the back-up loan officer is going to spend hundreds of dollars and a lot of time pushing your loan through for zero prospect of getting paid. Suppose your asked you to work through the weekend, and maybe a couple extra nights, spend about a week's worth of your own pay, but that you wouldn't be paid, you wouldn't get a bonus, and it wouldn't be considered at your next review. That's essentially what you're asking them to agree to with the above scenario. There is no carrot whatsoever in the case of loan officers, because (unlike employers) you're not paying them at any other time, either. Quite frankly, I'd rather spend the time trying to find another client, or with my family, or doing anything else. I'm not interested in wasting my time on backup loans like that, and neither is any other loan officer.



The first thing you have to do if you're hoping for someone to agree to be a backup loan provider is give them an honest chance at being the primary loan. You have to shop them before you have signed up with anyone. You have to have the whole loan officer conversation with several loan officers: what you've got, where you want to get to, your situation, etcetera. Don't forget to ask the Questions You Should Ask Prospective Loan Providers. They go out and price the loan, and get back to you with what they can do. If you are actually signed up with someone else prior to this point, you have not honestly shopped your loan, and no loan officer in the world is going to agree to provide a backup, not to mention that you have placed yourself completely at the mercy of the loan officer you signed up with. There never was any real chance that other loan officers could actually earn your business. It's like going to an auto dealer and asking them to special order a car for you, despite the fact that you've already paid another dealer, are not going to put down a deposit, and indeed, really want to do business with the other dealer, but hey, you want them to do this for you on the chance that other dealer cannot deliver. If you have any doubts, why did you order with the other dealer, or more precisely, why did you sign up with your brother in law for the loan? Especially prior to checking with anyone else?



So after honestly shopping your loan, you obviously need to make a choice. Now the reason I advise people to get a back-up loan is because everything you are told when you make that choice could very well be a lie. With the majority of loan companies, either the federal Good Faith Estimate or the California MLDS are subject to all kinds of misrepresentation, intentional misquoting, etcetera. If this were not the case, there would be no need to sign up for a back up loan. The purpose of signing up for a back up loan is to give yourself another option if, when you go to sign final documents, the loan they actually offer you a contract for is different from the loan they dangled to get you to sign up, that they have been talking about all this time but at the moment of truth they don't really have it. Whether it's a different rate, has closing costs thousands of dollars higher, thousands of dollars added to your loan amount that they conveniently "forgot" to tell you about, has a pre-payment penalty when they told you it didn't, is a completely different kind of loan than they told you about in the first place, or even all of the above, the loan isn't what got you to sign up. In some cases, they don't have a loan at all, and are stringing you along in hopes that they will have a loan Real Soon Now. If you only have one loan ready to go, your options are limited to "sign on the dotted line or don't." If you've made a substantial deposit on a property you are buying and all of a sudden you don't have a loan, guess what? You will probably lose that deposit. So people will sign on the dotted line, even for refinances, when it's not the same loan they were led to believe they were getting in the first place. Hence, my advice to sign up for a back-up loan. That gives you the option of signing the other loan officer's loan contract, and the mere fact that someone else also has a loan ready to go is much better leverage than anything else you can do to get them to produce the loan they said they had in the first place. You can use the first loan officer's loan as a club for your back-up, too, if need be.



But if you're not going to evaluate your primary loan officer's loan critically, if you're not going to go through the paperwork and make sure that rate, terms, and costs is indeed, as described, that back-up loan officer has just wasted all of their work, and all of their money. Excuse them if they are less than enthusiastic about doing that when there is no prospect of getting paid. It's not like they are being paid an hourly wage. If that loan doesn't close, they get nothing for all that time and effort. People work to earn money, even if they really do like their job.



So what you've got to do, preferably before you make a final choice for your primary, is ask your number two prospect about your number one prospect's loan. Does loan officer number two think offer number one is deliverable? I assure you that good loan officers know what is and isn't really deliverable. Whether the answer is "Yes" or "No", you've got some useful information. If the answer is "Yes," you know that what the low bid is talking about is possible. Whether they will actually deliver it or not is a different question. The way to bet is that they will not, unless they are willing to offer you a written Loan Quote Guarantees. If you ask for a Loan Quote Guarantee, most lenders and loan officers will not give you one. Instead, they will try to distract you with BS about how they are thus and such reputable company, and they honor their commitments. This is nonsense. Neither the Good Faith Estimate, Mortgage Loan Disclosure Statement, Truth In Lending form, or any of the other standard forms that you get at loan sign up, is in any way a commitment or a guarantee. They are only estimates, and they may be accurate estimates or they may be the biggest lie since the invention of the one night stand. Furthermore, loan officers don't write loan commitments. That is the exclusive province of underwriters, whom you will never communicate with directly. The most that loan officers can promise is that if the underwriter approves it, the loan will be on a given set of terms, and that is the sort of Loan Quote Guarantee you should look for.



Now, if the second lowest loan provider says "no," that the lowest's rate is not deliverable, that is your opening. "Well, tell you what, Mr. Loan Officer," you say, "If you're certain that loan quote is not deliverable, and that yours is, how about you agree to be my back-up loan provider. If they don't deliver on those terms, as you say they won't, and you do deliver on yours, I'll take your loan. What do you say?"



What they are most likely going to do, of course, is try and talk you into being the primary, and to forget this nonsense about back-up loans. After all, he (or she) is a sales person. If you do what they want, this puts them in the cat-bird seat thirty days down the line instead of your number one choice. And you know, if they are willing to give a Loan Quote Guarantee and the number one choice isn't, I'd probably make them my primary. Ask anyone who's dealt with construction contractors if they'd rather take a bid of $X that is just an estimate, or $X plus 5% that has good solid guarantees behind it? Same principle here. The one that's willing to guarantee their work gets the business, or at least first crack at it.



Now suppose number two won't agree to provide a back-up? Then ask number three. Suppose number one is going to try to hinder your back up loan? You need to explain that you fully intend to go with them, and that if they provide the loan on the terms they told you about, they are going to get the business, but you're providing yourself with an insurance policy, just in case they won't, and their attempts to sabotage that insurance policy are likely to force you to cancel your loan with them. Tell them that if they are really going to deliver what they said they would, their loan will be better than the competition's, so there will be no reason to choose the other loan, so their attempts to obstruct or sabotage the other loan have you thinking that maybe you should cancel their loan, because their actions are indicative of being nervous about their own loan. Be blunt, be truthful, and carry through on your threat to cancel if they keep being an obstacle to the back up. If they need to obstruct a worse loan, it's because they have no intention of delivering the better one. Carry through on your promise to cancel - and then go find yourself a new insurance policy.



Signing up for a back up loan is the cheapest, smartest thing you can do to protect yourself in one of the largest dollar value transactions of your life. But if there isn't a real possibility of getting the business, no loan officer in the world is going to agree to be your back up. You need to demonstrate to them that there is a real possibility of their loan being the one you actually sign the loan contract for at the end of the process, or they are not going to be interested. The type of email that is referenced at the top of the article isn't to protect yourself. It's to mollify your conscience, because you know you didn't really shop your loan around, and you know you're going to pay more than you need to, unless you get struck by pure dumb luck. The point of reading the consumer education here is that you don't want to rely on pure dumb luck.



Caveat Emptor

UPDATED here

Michael Barone on why Pelosi is supporting Murtha over Hoyer, and the risks she is taking. We'll find out sometime tomorrow who gets the nod for majority leader.



Later: House Democrats name Hoyer to No. 2 post

WASHINGTON (AP) — Democrats picked Rep. Steny Hoyer to be House majority leader on Thursday, spurning Rep. Nancy Pelosi's handpicked choice moments after unanimously backing her election as speaker when Congress convenes in January.



A Marylander and 25-year veteran of Congress, Hoyer defeated Rep. John Murtha of Pennsylvania in a vote of 149-86.

Credit where credit is due: The Democrats have dodged one bullet. But in the week since the election, they've stepped into the path of several others. So have the Republicans (Trent Lott? Give me a break!). I'm considering a recurring section called "Stupid Congresscritter Tricks"



Via Wizbang, looks like Abramoff has fingered Harry Reid.

A source close to the investigation says Abramoff told prosecutors that more than $30,000 in campaign contributions to Reid from Abramoff's clients "were no accident and were in fact requested by Reid."

and

The AP also reported that Abramoff's billing records showed extensive contact with Reid's office over a three-year period in which Reid collected more than $68,000 from Abramoff's firm, partners and clients.

Ham Nation (video) psychoanalyses both parties post election.



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Plutonium Found in Iran, and people are surprised?



I am only surprised 1) that someone actually looked, and 2) reported it when they found it.



The Europeans, Russians, Chinese, and IAEA have all decided that the Official Truth is that the Iranians are not developing nuclear weapons. The people in those governments (and the IAEA) are likely to be roasted alive by mobs after Iran nukes Israel and Israel nukes Iran back, catching half the world population in the fallout patterns. But hey, it relieves them of having to do anything the least bit difficult now.



Meanwhile: Iran says about to take "final step" in atomic plan

Ahmadinejad did not say what the final step was, but he repeated comments he made this week that Iran would celebrate its "right to nuclear technology" by March, the end of the Iranian year, the official IRNA news agency reported.



Tehran, which says its nuclear aims are peaceful...

Dead people and nuclear wastelands are very peaceful, as well as consistent with the goals of Iran's governing mullahs.



Likely related: Airport arrest turns up nuclear info

DETROIT (AP) — A man was arrested at Detroit Metropolitan Airport after officials say they found him carrying nearly $79,000 in cash and a laptop computer containing information about nuclear materials and cyanide.

He arrived from Nigeria by way of Amsterdam, and he is a US Citizen, but the article doesn't mention whether he was born or naturalized, or his religion. My money is on Shiite or Wahhabi Moslem. Anybody want to bet?



lgf notes that he's actually Ethiopian, which is mostly a christian nation, but doesn't mention his actual religion.



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OK So I'm Not Really A Cowboy with some real analysis on "Faith in people versus Fear"



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Fare thee well, Milton Friedman. You will be missed.



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McCain offers Republicans road to recovery. Nice talk. But if he really wants the party base, he's going to have to admit that McCain-Feingold was a mistake.



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I'm sure this is going to make all the difference: U.S. urges restrictions on anti-vehicle mines. From the same minds that brought us the war on drugs, no doubt. I had to look twice before I realized that said "US", not "UN".



Yes, they are a major problem. But people have been trying to restrict and ban weapons since the crossbow in the twelfth century. Not once has it worked.



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Iraq the Model notes evidence that the Iraqi government may be taking the November 7 wake up call seriously.



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Dr. Sanity explains that Arabs are not born idiots. Their rulers make them study.



I like this! Terrorist Death Watch (a body count of dead terrorists since November 1)

'Homeless dumping' charges for hospital

The case against it stems from a March surveillance video showing a 63-year-old patient from Kaiser Permanente's Bellflower hospital wandering Skid Row in a hospital gown and slippers. Prosecutors describe what happened to Carol Ann Reyes in a 20-page document supporting the false imprisonment and dependent-care abuse charges.



"We seek to end the inhumane and illegal practice," City Attorney Rocky Delgadillo said in Thursday's Los Angeles Times.



Delgadillo's office is also suing Kaiser under a state law on unfair business practices. The lawsuit asks a judge to forbid all Kaiser hospitals from dumping homeless patients on Skid Row and to impose financial sanctions if the order is violated.

You know, I want to see folks get good medical care. But there's this little niggling issue:



The Fifth Amendment of the US Constitution:

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

Emphasis mine, to show the important part.



Basically, Kaiser Hospital, among many others, is being forced to treat these people, despite no reasonable expectation of payment. Even when they do get paid, it is far below cost, and months to years after the fact. Kaiser would not have a hospital in the area did they not have a need to serve their members. When the county of Los Angeles or state of California or even the United States Government is paying, they are paying far below market rates, and months to years after the fact. This is not a case of the hospital making a decision to accept (for example) Medicare, where they agree ahead of time that they want the business more than they don't want the short payments and waiting times. They have no legal option but to treat these people. So not only are the members who pay Kaiser's insurance fees subjected to a tax, but unavoidably, in many cases they are going to wait longer, suffering additional pain and possibly additional damage while people who do not pay those fees are treated ahead of them. In some instances, there may be enough overflow to cause Kaiser to direct patients elsewhere. This tax on Kaiser insurees is no less a taking than the condemnation of their residence.



Now Kaiser could stop the majority of these charges easily enough, by limiting its emergency services to areas with few homeless or uninsured. Of course, this would make it more difficult and costly for lower income people to obtain coverage through Kaiser, which is one of the better and more affordable health plans out there. It might even mean that more people go uninsured, go untreated even if they are insured due to the difficulty of reaching services, etcetera.



If the government is going to mandate that these people be treated, particularly with the same legal and medical responsibilities as any other patient, then the government needs to reimburse Kaiser in full and in a timely manner for the treatment of those patients. Kaiser would be very glad to treat the patients on that basis. But it is not happening, or Kaiser wouldn't be trying to get rid of the patients. Yes, it disturbs me. No, I don't want them discharged. But forcing Kaiser, or any other health provider, to spend the money it pays for housekeeping and drugs and doctors and nurses and everything else from the chief surgeon down to the newest laundry employee, without just compensation is a violation of the fifth amendment. If the Bill of Rights is important to you, you need to support this no less than the right to avoid self-incrimination, which is a part of this same amendment, or double jeopardy, or due process of law itself, which, by the way, are also part of the Fifth Amendment. But if we're not going to pay the bill (and the County of Los Angeles hasn't paid these medical bills in a timely fashion for decades), then we cannot mandate treatment. Just because someone receives a medical license does not exempt them from coverage under the Fifth Amendment.

There is no such thing, of course. The perfect time to buy would mean that you have all kinds of leverage, and can make sellers give you pretty much the deal you want, but prices are nonetheless rising rapidly so that you will have a large amount of equity the first time you need or want to refinance, or if you need to relocate.



These two conditions never go together. If buyers have all the leverage, as they do right now, they are certainly not going to opt for increasing prices. Sellers can gripe and moan about it all they want, but prices are slowly decreasing right now, and they aren't going to go up until all of the extra inventory clears. Supply and Demand. Two years ago there might have been 4000 residential properties on the market locally at any one time. The last time I checked, there were about 22,000. That means 18,000 additional sellers are competing for no more than the same number of buyers (fewer by my count). If they don't really want to sell, if they just want to sabotage other sellers by adding to apparent inventory, that's no skin off the buyers' noses. If sellers want to actually sell the property, they've got to compete in order to attract those potential buyers. It's not like buyers just go out there and buy the property whose owner's turn it is to sell. They buy the best property for them at the cheapest price. So sellers can either compete by having a cheaper price, or they can compete by having a better property. Most house bling does not recover the money you spend on it, even in a seller's market, but it might give you the wedge you need to attract a buyer in a buyer's market - provided that your property is no more expensive than the comparables. Most sellers are still in denial about this. They've got something a little bit better than the comparables, they want to ask $50,000 more, and then they wonder why their property isn't selling.



If you're looking for a time when property prices are increasing by twenty percent per year, by all means wait. Those conditions are called "seller's markets," because people who are willing to sell can get buyers to do pretty much everything they want, including pay more than the last seller got. Most sellers want to hold when prices are going like that, and buyers are desperate to acquire. High demand, low supply.



Personally, I think conditions are as good as they get for buyers, if you're going to hang around three years or more. Yes, prices are deflating and you're likely to lose some money on paper. But trying to time the market so that you buy at exactly the moment when it hits bottom is an exercise in futility. Trying to "Time the market," whether stocks, bonds, or real estate, is a recipe for disaster. It's great if it happens, but it's sheer luck, and anyone who tells you different is lying. By the time people realize that prices are really going up again, buyers will come out of the woodwork and we'll be in a seller's market again.



Buyer's markets, where sellers outnumber buyers like they do now, do not last long, in large part due to the fact that once everyone figures out that prices are no longer declining, now everybody suddenly wants to buy. Inventory has usually been shrinking for quite some time before that happens. As a matter of fact, I just checked, and in the week or ten days since the last time I looked, local inventory has dropped by 1700 units (call it 7 percent), mostly due to people who don't have to sell removing their properties from the market.



Buy while the ratio of sellers to buyers is in the thirties, while you can pick and choose your properties, and if one seller won't play ball, the one down the street who's a little more desperate will. If you need some special consideration, like a seller carryback of part of the purchase price, you kind find sellers who will be willing to cooperate because that's the only way they will get the property sold. If you wait until the market heats up and there are only five sellers per buyer, they're a lot more likely to tell you to take a hike with special requests like that. If I want cash, why should I loan it to someone with poor credit money at a below market rate if it's likely that I'll find another buyer in a week?



On top of this right now is the time of year. Other things being equal, Christmas season is always the best time of year to shop for a property, because nobody wants to move the Christmas tree. Seriously, most people have enough extra stuff going on at Christmas that they don't want to add another major item: buying or selling their home. Those sellers who have their property on the market need to sell.



Nonetheless, with inventory finally dropping, and as fast as it is dropping, I wouldn't be surprised at all if the market started turning better for sellers and worse for buyers next selling season. Once that starts to happen, expect prices to stabilize and then start to rise again, and the period of best deals for buyers to be over.



Caveat Emptor

UPDATED here

Dems Keep Senate Leaders, Split on House

In the House, a bitter battle was under way after Pelosi said she would prefer Rep. John Murtha of Pennsylvania to be majority leader over her current lieutenant, Rep. Steny Hoyer of Maryland. Critics accused Pelosi of backpedaling on a pledge to scrub the House of corruption.



Both Murtha and Hoyer claim to have commitments from a majority of Democrats, but the balloting Thursday will be secret and commitments often change.



Murtha, a decorated Vietnam veteran who favors an immediate drawdown of U.S. troops in Iraq, has fought charges for years of using his senior status on the defense appropriations subcommittee to award favors to campaign contributors. He voted against a Democratic package of ethics reforms earlier this year and was touched by but never charged in the Abscam bribery scandal a quarter-century ago.

Not just Murtha, either. Hastings (impeached and removed from a federal judgeship), Waxman, and Conyers have been picked for committee chairs. Pelosi herself needs to answer some influence peddling questions, which the Democratic press gave her a pass on during the campaign. In the Senate, Reid's land deals don't look right to me.



What they didn't say about the so-called "culture of corruption" was that the change the Democrats wanted is their own side getting the majority of the spoils.



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I suppose I should mention my take on the now infamous NAR ad, that spent Realtor dues to try to build primary demand for Realtors: "Great time to buy or sell a home." Well, they got it half right, at least for my local market. It is a Great time to buy, but it's a putrid time to sell. If you don't have to sell, put it off for another day. On the other hand, enough people have to sell that there are some really great bargains out there.



California has all kinds of boards that are where old politicians who can't get elected any more (if they ever could) get appointed to high paying positions that really have no necessary function. These boards collect fees from farm and dairy producers, and they way they try to show them that they're earning the money those farmers and dairy folk pay is by advertising to build primary demand (for milk, for eggs, for avocados, for almonds - you name it). It doesn't work for them. It won't work for Realtors, either.



Great times for buyers never happen at the same time as great times for sellers. It's just one of the realities of economics. Not that the NAR has any great amount of credibility, but they're certainly not increasing it by saying such things.



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So chocolate really is a health food, at least in a way.



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Trent Lott wins back a slot in leadership. I always did think his crime was not thinking when he tried to be nice to an old man who was retiring, and then digging himself in deeper rather than issuing a mea culpa. I'm no fan of his, but far be it from me to assist the partisans on the Democratic side of the aisle in their ongoing attempts to kneecap the opposition. How many calls for have there been for Reid to resign? Murtha? Hastings? Pelosi? All of these have committed worse violations than "Open Mouth, Insert Foot, thereby offending an interest group." The Dems wanted Rumsfeld gone because he was good at his job - he forced the generals to organize correctly to fight insurgency, with field and company officers taking the lead. Don't believe me? Compare our casualties the last three years with British casualties in the North West Frontier Province when they ran India. The Dem partisans want Cheney gone because he supports the president as a vice president should. They want Rove gone because he's beaten them in elections every time but one. Any time a member of the opposition does a good job, look for the Democrats to try to kneecap them.



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U.S. Commander Warns Against Iraq Cutoff

The top U.S. commander in the Middle East warned Congress Wednesday against setting a timetable for the withdrawal of U.S. troops from Iraq, putting him at odds with resurgent Democrats pressing President Bush to start pulling out of the violence-torn country.

Anyone want to bet that the opinions of generals suddenly become unimportant to the Democrats?

Asked directly what effect he foresaw on sectarian violence if Congress legislated a phased U.S. withdrawal starting in four to six months, Abizaid replied, "I believe it would increase."

Well, duh

Abizaid said he believes U.S. troop levels, now at about 141,000, should stay steady but may have to rise temporarily to train and advise Iraqi military units. No reductions are advisable until the Iraqi security forces become more capable of dealing with the insurgency, securing Baghdad and dealing with the Shiite militia problem, he said.

I doubt the Democrats are going to listen. They've got most of what they want (the Presidency wasn't on the ballot last week), and now they are quite likely going to do what they want. The good of the country has no more to do with it than it did for the Republicans. I hate to sound like a Republican shill, but the main reason I voted Republican last week was that they have something much closer to a rational strategy in the War on Terror. They also espouse something closer to rational economic policy. When the Democrats start actually thinking about military, strategic, political, and economic consequences of what they do, and not merely how they can get more votes, they'll be able to compete for my vote on very favorable terms, unless of course the Republicans have gotten rational in the meantime about the things the Democrats are currently better on. My money is on the Republicans improving first and by larger increments in more important ways.



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Report: Scarlet Fever Spreads in N.Korea



There is nothing I can say that adequately describes to communist government of North Korea and how it has failed the people of North Korea.



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Some good news from Pakistan: Pakistan votes to roll back Islamic law on rape



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UPDATE: Wizbang is hosting the 2006 Weblog Award Nominations. Get over there and nominate your favorites!

I refinanced my house and an existing lien was not discovered

Now the important question: Is it a valid lien, or has it really been paid, and just not released of record? If it has been paid, you don't owe money simply because the lien on your property was not properly paid off. If you can prove it was paid off, either by yourself or a previous owner, you're out of the woods.

Since you are asking the question, however, I'm going to assume that it is a valid lien. Most are. You owe the money. It doesn't magically go away simply because the title company (or lawyer doing the title search) missed it.

Now, assuming you live in a title insurance state, it should make no difference to the state of your mortgage. You bought a lender's policy of title insurance as part of your transaction, and the title policy insures the lender from loss due to the extra lien.

You still owe the money, of course. Like any other bill, just because you neglected to pay it off or neglected to pay it on time does not mean you somehow don't owe the money. If it was in effect from before you bought the property, though, your owners policy of title insurance should kick in and pay it off. That's the way title insurance works - they tell you about known issues with your title, and then they insure (almost) everything else. They'll then go after the previous owner, of course. That's what subrogation is all about. They stepped in and paid to keep you from getting damaged, but they now assume the right to receive the money from the person who damaged you. If you live in an attorney title search state, my understanding is that you are going to have to sue the attorney involved, but suing attorneys is a tough proposition, and you can't recover the base lien, only increased damages resulting from that attorney's negligence. If the previous owner was really responsible for it, the title insurer is going to have to run them down and file a lawsuit, and quite often the previous owner has no assets that they can get at.

If the lien was your doing, as most are, you're going to have to start making an effort to pay that lien. How much of an effort depends upon whether you have a lender's policy of title insurance. If you do, it's really no huge deal, because the lender has access to the checkbook of a national megacorporation. If you don't, the lender can potentially force you to pay it in cash right now. They can also force you to refinance by calling your loan, or to take out a second mortgage to pay the lien off in many cases. It's possible they might just pay it and tack it on to your balance, usually boosting your payment in the process. Talk to a real estate lawyer in your state for details, but the lender is not generally going to leave an uncovered lien in place, when the pricing they gave you for that loan was predicated upon there not being such a lien. Since the lien predates their loan, it's almost certainly senior to it, by which I mean that if something happens and you have to sell the property to pay off the liens, it gets paid before your mortgage. The lender is not usually going to tolerate that.

Now suppose that you got a thirty year fixed rate loan at 5% back in 2003, and suppose rates have gone up to seven and a half percent by the time you rediscover the lien. The lender can do better with that money from your loan, and so they are going to want to seize upon any excuse to make you pay it off. This, all by itself, is a really good reason to be careful with your liens.

If you intentionally hid the lien, the lender may even sue for fraud in many jurisdictions. If you intentionally hid it, for instance, it's quite likely that your policy of title insurance won't cover you, and the lender is going to be very unhappy about that.

Most people, however, don't intentionally hide a lien, they just forgot it was there, and when the title search comes up empty any worries in the back of their mind went away. If they even think about it, they mentally write it off. "Oh, I must have forgotten that I paid it." You still owe the money, and now that it's discovered, you're going to have to start paying on it, but if they've got lender's title insurance the lender shouldn't freak.

Now, missing liens is actually fairly rare, but once title insurers miss them, they usually will not be caught on subsequent title searches, because the title company will use the previous title search as a starting point (around here, they actually call them "starters", but I don't know how widespread the practice is) for their new title search. Sometimes they do catch them, and ask the previous title company for an indemnity (which basically says that the previous title company is still liable for having missed it).

Caveat Emptor

UPDATED here

RINO Sightings



Carnival of Personal Finance



Carnival of the Capitalists Recommended: Gongol (report card on economic credentials of likely 2008 presidential candidates)



Carnival of real Estate recommended: Blue Roof (the power of reputation). Maury Properties (the limitations of on-line evaluations)

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T-shirt turns air guitar into music



Okay, I see the attraction for certain people, but on those occasions I actually played air guitar I was glad nobody could hear the results of me torturing some poor instrument.



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Lebanon crisis reignites wider 'cold war'



Letting places like Lebanon fester, as we have done for the last twenty years, merely makes the damage worse.



Lebanese Government OKs Hariri Tribunal



Hariri was the former Prime Minister assassinated upon Syrian orders a while back.



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Prognosis not good for bipartisanship: Pelosi supports Murtha for majority leader Hoyer, the current minority whip, worked hard on the campaign trail getting moderate Democrats elected. Furthermore, while a Democratic partisan, he has been at least reasonable in his opposition to the Bush Administration. Murtha has nothing to recommend him except his blanket opposition to the Bush Administration on Iraq, an opposition which has led him into multiple misrepresentations, and even flat out lies, and the fact that he's a political ally of Pelosi's. While you're at it, run "Murtha Abscam" through a search engine or two. Were it not for the fact that Democratic partisans control the media, he would have been out of Congress over twenty years ago. Along with Robert Byrd (and to be fair, Ted Stevens and Bud Schuster), he's a poster child for the "culture of corruption" that the Democrats said they wanted to change. Except that the only change is that they really want is control of the lion's share of the spoils.



Extreme Partisan: check. Completely corrupt: check. Has had any sense of integrity or fair play he may once have possessed surgically removed: check. Yeah, Murtha's got it all. I said a few days ago that if the Democrats play partisan games like in 1986 or 1997, the spanking the Republicans got this year will look like a mild case of voter disapproval compares to what happens to the Democrats in 2008, and it looks like the Democrats are already doing their best to insure that it happens.



Bush stands by his man for U.N. envoy



John Bolton has done more for this country in the UN the past year than all our other UN Ambassadors combined. Failing to confirm him would be criminally stupid.



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Moonbats to the left of me, Wingnuts to my right: Calif. suspect in threats due in court.



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Bush calls for Global Isolation of Iran. Oh, he's so unilateral:

"If they continue to move forward with the program, there has to be a consequence," Bush said. "And a good place to start is working together to isolate the country. And my hope is, is that there are rational people inside the government that recognize isolation is not in their country's interest."

Of course, Russia, China and France all wield UN Security Council vetoes. I'd actually like to see France's taken away and given to Japan, as that would be more representative of the real world.



In case anybody is unaware, if Iran carries through on its repeated threats to nuke Israel, the fallout patterns will make a large portion of the Middle East uninhabitable, and quite likely a significant portion of the Balkans, not to mention Egypt. If Israel nukes Iran in retialiation, the Turks, the Indians, the Pakistanis, and of course the Afghans are all in potential fall out zones. Not to mention provinces of Russia and China. You'd think the leadership of those countries would have the intelligence to realize what Iran getting atomic weapons would mean. But judging by the evidence, they don't.



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Right Wing News interviews Mark Steyn (via Instapundit)





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Michelle Malkin on a Bangladeshi moderate Moslem and his likely fate.



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Asymmetrical Information on what a national health care plan would almost certainly look like. No thanks.



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Out of time! It does look like the Project VALOUR IT exceeded its goals, and so there will be an additional 225 laptops for wounded veterans unable to use their hands. Thank you to anyone reading this who donated.

You see it all the time at open houses and elsewhere. People who desperately need buyer's agents, but think of Buyer's Agents in the same way they think of automobile sales folk, and that's the complete opposite of the way it is.



They don't want to deal with an agent, because an agent will use high pressure tactics, convince them that this property is the one they want even if there's better stuff out there cheaper, and trick them into signing on the dotted line. Or so they think.



Actually, the above person is part of the transaction. They're called the Listing Agent, and they're the one you're going to deal with regardless of whether you want an agent or not. It is their job to get that property sold. They have a fiduciary responsibility to the owner of that property to get it sold for the best possible price in the shortest amount of time. They only responsibility they have to the buyer is that they're not supposed to lie, mislead, or conceal the truth. All of those are tough to prove. If they can sell the property for $100,000 more than neighboring properties in better shape are selling for, they have done nothing else except their job. They have no responsibility to tell you there's a better deal around the corner. To a listing agent, the only importance of a better buy three blocks over is to hope you don't discover it.



Lest you think I am kidding or in any way exaggerating, consider this: Within five miles of my office are at least 100 Planned Unit Developments (PUDs) built within the last three years. These are legally condominiums, but they have detached walls. Most often, the developer puts up a 1700 to 2000 square foot two story dwelling, separated by maybe six feet from the next dwelling over. In many of these, the first thing most of the inhabitants do every morning is greet their neighbors in the next unit over, then get out of bed. Not that I'm against condos - I'm not - but the townhome I bought in 1991 has more privacy than most of these, and it's got a shared wall. The inhabitants of PUDs usually - not always - have a small quasi-private back yard, and they units may or may not have shared walls. The garage is always within the walls of the unit, because they are packed so tight there is no room for a driveway or outside parking. The developer slapped on false granite counters and travertine floors at a cost of maybe $300 extra, and with their in-house agents who dealt swiftly and efficiently with those who come to look, sold them for $100,000 to $150,000 more than comparable dwellings sitting on 8000 square foot lots and without a homeowner's association (and association dues) to deal with. Those PUDs are not going to be new forever - and as a matter of fact there are a much larger than representative percentage of the new owners trying without much success to sell them right now. Whether they decided they didn't like their neighbors whom they practically share a master bedroom with, they want a place with a yard where they can build a pool or even just a horseshoe pit, or that they want to paint the place a slightly different shade of off-white (and can't), they are finding out the difficulties, and trying to sell. But they're asking the same kind of prices they bought them for, and without the massive marketing campaign the developer used, it's not working. When you're trying to sell 20 units on what used to be two lots totaling half an acre, you can afford the kind of marketing campaign that pulls in the suckers. At $520,000 each for twenty units that cost you $150,000 each to build, if you spend $100,000 on advertising, you'll make it back in spades. Not so much if you spent that $520,000 buying one of those units and now the market has declined and you need $570,000 to break even - and I'm finding my prospects single family homes on their own 8000 square foot lots for $420,000, where they can spend a lot less than $150,000 putting in travertine if they've got to have it.



A Buyer's Agent is not the person who's out to sell you their property no matter what. That's the Listing Agent's job. A Buyer's Agent is there to represent the buyer's interests, the same as the Listing Agent represents the seller's. Buyer's agents aren't car lot sales folk. They're like the folks who make a good living representing people who don't want to deal with car lot sales folk, so they charge people who want to buy a car $300 and save them a couple of grand off the sales price.



Buyer's Agents don't make their living selling one specific property. They make their living helping people to find and buy the property that is the best bargain for them. It is a Buyer's Agent's job to point out all of the little and not so little stuff I talked about two paragraphs ago, as well as a lot of other stuff I haven't talked about here. Buyer's Agents make their living getting buyers a better bargain - just like Listing Agents make their living getting sellers more money for their property. Real estate is a lot more costly than automobiles, and a lot more games get played. The Buyer's Agent is the one with the responsibility to say "Slow down, let's stop and check out everything else that's available, and consider the state that the market is really in - and where it's likely to go," not to capitalize upon the emotion of the moment and get the prospect sucker's signature upon dotted line before they walk off the lot. So long as they stick to a real budget, that Buyer's Agent gets paid about the same no matter what you buy - and the happier you are when it's all over, the more likely it is that they will get paid again when you send them your friends, or when you come back again when you're ready to move up or buy an investment property.



This is not to say that Buyer's Agent's won't play games; this is why I use and recommend non-exclusive buyer's agency agreements to stop most of them. These agreements give the buyer's agent everything they really need - assurance that if they find the property you want, they will be the one getting paid the buyer's agent commission - while not committing you to work only with them. If they waste your time, don't get the job done, if they act more like a Listing Agent, or if you just decide they're not putting your interests first, you stop working with them and that's the end of it. Unlike the exclusive agency agreement which locks you in to dealing with that agent, and four months after the last time you see them you might still be obligated to pay them a commission on a property somebody else showed you, the non-exclusive agreement lets you go your own way, and so you have nothing to lose by signing it, unless you're the sort who will stiff someone who's done work for you. Let's face it, the Buyer's Agent finds you a property you think is worthwhile, you are doing yourself no favors to ditch them in favor of your brother-in-law who didn't or couldn't do the same, or the discounter who doesn't do anything, but generously allows you to keep half the commission which they did precisely zero good for you to earn. Who do you think will get you the better deal: The agent who went around with you to ten or fifteen properties (and looked at forty others that weren't worth your time) and knows the market that property is competing against, or the agent who only leaves the office to cash commission checks? Who's going to negotiate harder? Who's going to have more negotiating power? Which agent is more likely to get your the better total bargain? There are exceptions, of course, and sometimes the long shot beats the triple crown winner, too. But that's not where smart money bets when the payoff is structured on strictly one to one odds, as it is here.



Now buyer's agents do get paid, but it's out of the commission that the seller has agreed to pay no matter who sells the property, or for what price. Buyer's Agents will make more difference to the sales price - not to mention the quality of the property you end up with - than any reduction in price you might get by agreeing not to use one. They're out there in the market all the time. They know the market you're in, and they know the tricks in ways that you, the buyer, are not going to equal, unless you spend the time it takes to learn everything they know. And unless you're a buyer's agent yourself, you pretty much can't. You've got your own living to make. What are the chances they could do better than you at your profession? The odds are not good; Even if they have the book learning, they don't have your experience. Why would you think the situation is any different when the roles get reversed?



Caveat Emptor

UPDATED here

Day By Day Sunday, November 12. This may soon be the only place American credit is good.

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Q and O on the new Democratic majority.



Iraq the Model on the middle eastern perception of the election.



There's Still Life In The Lame Duck



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Mark Steyn: US Must Prove it's a Staying Power



Bruce Thornton at VDH Private Papers





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Volokh Conspiracy notes that Raich vs. Gonzales may have given a (future) Republican congress cover for a partial birth abortion ban.

I know I'm behind the power curve in posting this. I'll put Team Marines on my other site, San Diego having large numbers of both.



This will stay on top until the weekend. Scroll down for new posts.



Explanation here

Every cent raised for Project Valour-IT goes directly to the purchase and shipment of voice-activated laptops for wounded servicemembers. As of October 2006, Valour-IT has distributed nearly 600 laptops to severely wounded Soldiers, Sailors, Airmen and Marines across the country.



During its initial phase, Valour-IT created "libraries" of laptops equipped with voice-controlled software for the severely wounded staying at major military medical centers. In many cases a laptop was provided to a wounded hero for permanent use.



Valour-IT is continuing to accept donations of any amount to supply the "libraries" of laptops at major medical centers and gifts to individuals, but has also added the option of an individual or organization directly sponsoring a wounded soldier by completely funding the cost of a laptop and continuing to provide him or her with personal support and encouragement throughout recovery. This has proved to be an excellent project for churches, groups of coworkers or friends, and members of community organizations such Boy Scouts.



Most recently thanks to the efforts of the Military Order of the Purple Heart, Valour-IT is now able to reach personnel in VA hospitals who would benefit from a Valour-IT laptop.



Wounded military personnel can request a laptop through the sign-up form if they are recovering at home or in military hospitals, or through the Valour-IT/Soldiers' Angels representatives if they are patients at the following medical centers:



Balboa Naval Hospital



Brooke Army Medical Center



Madigan Regional Medical Center



National Naval Medical Center (Bethesda Naval Hospital)



Naval Hospital, Camp Pendleton



Robert E. Bush Naval Hospital (29 Palms)



Walter Reed Army Medical Center

Prevent this shame from happening to us:



The Last of the Light Brigade

There were thirty million English who talked of England's might,

There were twenty broken troopers who lacked a bed for the night.

They had neither food nor money, they had neither service nor trade;

They were only shiftless soldiers, the last of the Light Brigade.



They felt that life was fleeting; they knew not that art was long,

That though they were dying of famine, they lived in deathless song.

They asked for a little money to keep the wolf from the door;

And the thirty million English sent twenty pounds and four!



They laid their heads together that were scarred and lined and grey;

Keen were the Russian sabres, but want was keener than they;

And an old Troop-Sergeant muttered, "Let us go to the man who writes

The things on Balaclava the kiddies at school recites."



They went without bands or colours, a regiment ten-file strong,

To look for the Master-singer who had crowned them all in his song;

And, waiting his servant's order, by the garden gate they stayed,

A desolate little cluster, the last of the Light Brigade.



They strove to stand to attention, to straighten the toil-bowed back;

They drilled on an empty stomach, the loose-knit files fell slack;

With stooping of weary shoulders, in garments tattered and frayed,

They shambled into his presence, the last of the Light Brigade.



The old Troop-Sergeant was spokesman, and "Beggin' your pardon," he said,

"You wrote o' the Light Brigade, sir. Here's all that isn't dead.

An' it's all come true what you wrote, sir, regardin' the mouth of hell;

For we're all of us nigh to the workhouse, an, we thought we'd call an' tell.



"No, thank you, we don't want food, sir; but couldn't you take an' write

A sort of 'to be continued' and 'see next page' o' the fight?

We think that someone has blundered, an' couldn't you tell 'em how?

You wrote we were heroes once, sir. Please, write we are starving now."



The poor little army departed, limping and lean and forlorn.

And the heart of the Master-singer grew hot with "the scorn of scorn."

And he wrote for them wonderful verses that swept the land like flame,

Till the fatted souls of the English were scourged with the thing called Shame.



O thirty million English that babble of England's might,

Behold there are twenty heroes who lack their food to-night;

Our children's children are lisping to "honour the charge they made-"

And we leave to the streets and the workhouse the charge of the Light Brigade!

Rudyard Kipling



Please help if you can.

I went out previewing properties a couple days ago. That particular client's situation being what it is, I was concentrating on vacant properties. But over half the vacant properties in that area had restricted showing instructions. "Call agent first," or "call for appointment to see."



When the property is vacant, there just aren't any common reasons to restrict showing. It's not like the buyer's agent is going to surprise grandma in the shower or even could make off with the big screen TV. If you're really trying to sell it, if it's vacant, it's empty, at least of your stuff, and the stager's (if there is one) had better be insured. If there really is some reason to restrict showings, it should be somewhere on that listing report. But I'm seeing this schlock on lender-owned properties, where there is exactly zero reason for it, at least as far as the owner is concerned.



What the listing agent is trying to do is control access, so that people like my clients have a gatekeeper. Why? So that they are more likely to be the selling agent also, and keep both halves of the commission. If the offer they bring in isn't as good, or isn't as quick (thereby costing the owner money), they still made twice as much or more in commission if they represent the buyer as well.



I strongly suspect that many agents - and yes, I'm keeping track of who, even though I'll never share it - play gatekeeper with offers as well. I send over an offer, and I never hear back. I call the agent, and am informed my offer was rejected, but I never see anything with the client's signature or even initials. I don't list many, but when I do, every single offer gets a written response, even if it's just "Offer rejected!" signed by the owner. It's illegal for me - as a Buyer's Agent - to contact the owner directly to confirm that they know about an offer, or I would. I could really get behind a law that said I could send a postcard to the owner that says: "Dear Mr./Mrs. X. My client made an offer on your property recently at 1234 Name Street. If you are already aware of this, please disregard this notice. If you are not, please contact your listing agent about the details. If they cannot satisfy you as to whether you previously saw it, please direct all complaints to the California Department of Real Estate at XXX-XXX-XXXX." Boy would that be a good use for postage. Agents who did their job would have nothing to fear; agents who failed would be out of the business fast.



The motivations of the seller are to show that property as often as possible, to as many people as possible. No showing means no offer. No offer means no sale. Therefore, anything which is a nonessential impediment to showing that property should be dealt with, and agent restrictions are one of these. Believe me, I understand about not wanting client phone numbers in MLS databases, because the last time I had a listing decide they wanted to postpone the listing (therefore withdrawing it from MLS), they told me they got over a hundred solicitations from agents who ignored both the "do not call" list and the fact that I still had a valid listing contract at the time, which they didn't bother to ask about. It's illegal to solicit another agent's listing in California. If it wasn't, people who list their properties would be getting phone solicitations from 8 AM until 9 PM every day, and the junk mail would kill entire forests.



But the seller, whether they realize it or not, wants their property shown as often as possible, to as many people as possible. That's how you get get good offers, or even better, multiple offers that you can play off one another. Anytime you make it more difficult for anyone to view your property, you make it less likely they will view it, less likely they will make an offer, and less likely that it will be a good offer. The sharks out there don't care about viewing restrictions. They're willing to make their low-ball offers sight unseen, albeit with inspection contingencies. And even a shark's offer is better than no offer if you need to sell.



So how does a Buyer's Agent deal with problem personality listing agents? About the only thing I can do is not waste my time and most especially that of my clients on their nonsense. The only one with the power to deal with such antics is owner of the property. Just insisting that you want to see all offers isn't enough. How are you going to know? You can ask that instructions go into MLS for making certain that you get duplicates of all offers. E-mail, fax number, address, or even a PO Box if you have one. Buyer's Agents can't bypass the Listing Agent, but they can send duplicates if the MLS instructs them to.



Even better is to insist that the Listing Agent forswear the possibility of Dual Agency, or they don't get the listing. In other words, no matter what, they will not get the Buyer's Agent's part of the commission. As I have said many times, make them pick a side of the transaction - yours - and stick to it. The listing agent can refer buyers to another agent, or the buyers can go without representation - it's not your problem. Actually, as a seller, you would prefer that the buyer go unrepresented. Not only will you get a better price from the poor fool, you get to keep the Buyer's Agent Commission. But this way, the listing agent has no motivation not to present offers from other agents. You are perfectly within your rights, by the way, to make whether you are going to pay a buyer's agent commission part of your decision making process on offers, but it isn't a good idea to make too big a deal out of it. Most of the reasonable offers you get will be represented by a Buyer's Agent of some stripe.



Nor does it demotivate them from open houses and all that. It is more likely that the people I meet at open houses will want to buy something else anyway. Oh, I do sell listings through open houses - but the one who actually buys that house is usually a contact of the neighbor who comes in with no possibility of buying themselves. Curious neighbors at open houses may be the most likely source of the kind of sale price that makes clients happy - if you treat them correctly. Internet marketing is cheap and easy and effective enough that it's worth doing just to get the listing commission. And when the property goes into escrow and people call about the ad in the monthly magazine I put an ad in, well I just find something similar if not better to sell them. Remember that I'm always looking for bargains, and I've usually got several properties in mind where the sellers are more desperate than I ever allow my listings to get.



This isn't all of the games that listing agents play to try and get themselves a larger commission. Many try to require a pre-qualification letter from a particular lender, which is right on the borderline of illegality, or even that you use their loan brokerage, which is illegal - no borderline about it. I ignore either of these requests, and I'm not above bringing the latter to the attention of the Department of Real Estate. The vast majority of all pre-qualifications are worthless. Nonetheless, the tactics I've suggested cover you against them pretty thoroughly. One more worthwhile tactic if you don't follow my advice about disallowing Dual Agency is to walk into their office at random intervals, and insist that they pull an agent report - as opposed to client report that is all the general public is usually allowed to see - for your property in your presence and give it to you. You are allowed to see agent reports on your own property (and only on your own property), as the privacy reasons that restrict agents from showing agent reports to the general public do not apply. Look at the showing instructions. Does it say what you want it to? Are the requests for making offers restrictive? If not, you may have legal grounds to terminate the listing, and you should want to, because the reason MLS evolved the way it has is to encourage the widest possible interest in your property. A listing agent who wants to restrict that so that they can receive both parts of the commission is moving you back into the days of the single listing half a century ago, and that is not in your best interest, not for price, not for timeliness of sale, and not for the ability of prospective buyers to actually qualify.



Caveat Emptor

UPDATED here

That question brought someone to the site. The answer is "Yes, they can". As a matter of fact, just because they have you sign those documents does not in any way obligate that lender to actually fund your loan.



There are two sections of conditions on every loan commitment. The loan commitment is what the underwriter writes up when the loan is approved. The first section is called "Prior to Docs", meaning before the final loan documents the customer signs at closing are generated. These should be all the stuff that's substantive in nature, that governs whether or not you qualify. Unfortunately, that is not the case. The second section is called "prior to funding," or "funding conditions." This should be limited to simple procedural stuff like a final updated payoff demand, final verification of employment (they call and make sure you still work there), etcetera. However, more and more, conditions that more properly belong in "prior to docs" section are being moved to "prior to funding."



Why do they do this? Well, once you sign those documents you are more heavily committed to them. Once you sign, and the Right of Rescission (if any) expires, you are stuck with that lender. You no longer have the right to call it off. If you go elsewhere, to another lender, because they are taking too long, they can fund your loan and force you to live by the terms of the documents you signed. Bad business all around, and you're going to be dealing with two sets of high powered lawyers that the contracts you signed basically obligate you to pay for - but they work for the two different lenders!



One fact that many people don't understand is that it's a rare loan application which is rejected completely. I don't remember when I've ever had a loan application outright rejected. Of course, being a good loan officer, I'm going to be as careful as possible that the people will qualify before I submit their loan package, but this is far from universal. Many loan officers routinely tell people about loans and programs that they have no prayer of qualifying for, but there sure are some great rates attached, for all the good they will do you. Then the loan gets rejected but they sit on the rejection while they work the loan they had in mind for you all along, and come back and say, "This is the best I could do" at closing time, and an extremely high percentage of people will sign on the dotted line because they think they have no choice.



What happens much more frequently is that the loan gets approved, and the underwriter writes a loan commitment, but with conditions that cannot be met in this particular instance. The borrowers need to prove more income than they make is probably the classic example, but these "killer conditions" occur in every area of loan underwriting. More often than not, the loan officer is not really surprised by these, and most often, they won't ever tell you about them if they can avoid it. Why? Because that gives you a "heads up" that you're not going to get the loan you thought you were, and at a time when it's still very possible for you do go loan shopping elsewhere.



Now a good loan officer - both competent and ethical - will not tell you about a loan they don't think you're going to qualify for. My ambition is always to have the list of conditions, both "prior to docs" and "prior to funding", to be as short and unsurprising as I can possibly make it. This saves work and it saves time. Remember, every time that underwriter touches the file they can add more conditions, and they can also discover something that causes them to essentially reject the loan, by adding conditions the consumers in question cannot meet. If I can submit a file and the underwriter writes a commitment with only a few routine prior to funding conditions, I am much happier because now I can request documents, have them signed, and get this loan done. You get this kind of commitment by sending all of the documentation they need in every loan all at once, in the beginning, but only that documentation. It's not necessarily a sign of incompetence if the underwriter puts some other conditions on it - probably somewhere close to half of my commitments have some condition the underwriter took it into their heads to require in this instance. Like any good loan officer, I avoid arguments with an underwriter if I can, so when they give me a condition I didn't anticipate, I figure out what I need to satisfy it and whether I can get it. But you learn when extra documentation will be required.



Many loans, particularly sub-prime, are done completely in the reverse fashion. The loan officer submits a bare application, without supporting documentation, and waits for the conditions, and boy do they get a blortload of conditions. Not too long ago I helped an experienced real estate agent in my office with his first loan. He wanted to do it "the easy way," by which he thought he meant, "The lazy way," but he really meant, "The hard, stupid way." He submitted a bare application to the lender and got seven pages of conditions, which were added to as time went by and he submitted documentation piecemeal. Took him two months and four times the work of just taking another day and submitting a complete loan package in the first place. If he had done that, the loan probably would have been finished in two and a half weeks. Some of the conditions were for stuff I had never encountered before. What was going on, of course, was that the underwriter had gotten it into his head that this was probably a dangerous loan to approve, and he wanted to be extra careful on the approval.



So what can the average person do to safeguard themselves against this happening. Well, you can't - not completely. The underwriter can always add conditions, and so can the funder. Even if the loan gets funded, they can pull the money back right up until the moment that trust deed gets recorded with the county. That's just the way it is. What you can do is ask for copies of the loan commitment, and of the outstanding conditions, those that have yet to be met. Refusal on the part of a loan officer to provide this is always a bad sign. Ditto the inability. I definitely wouldn't sign the loan papers without a copy of the outstanding conditions in my possession, and it may be smart to ask for copies of the conditions at several points in your loan. Yes, they can be faked, pretty easily, but then they are ammunition in your lawsuit if something goes wrong. Before you even apply, you can ask questions about necessary income, what the program guidelines for debt to income and loan to value ratio are, etcetera. Much of the stuff in my article Questions You Should Ask Prospective Loan Providers is aimed at defusing that kind of situation. Furthermore, you can and should apply for a back up loan if you can find someone willing. Remember, at sign up you have all the power, but at closing, the lender has all the power. They have the loan, and nobody else does. Many times, the loan they deliver at closing will have nothing in common with the loan that got you to sign up. If you don't want to find yourself completely at their mercy, the only way to reliably do so is apply for at least two loans. In the worst case scenario, it means that you get the least bad of these two loans, and in most circumstances, you can use the fact that there's another choice you can make to motivate them to deliver something that more closely resembles what they told you in order to get you to sign up. At the very least, get a written Loan Quote Guarantee.



Loan officers have people sign loan documents every day that there is no hope of actually funding a loan on. It doesn't make sense to me, but they do it, mostly because they are afraid if they break down and tell you they can't fund this loan, you will go elsewhere and they won't get paid. Signing loan documents more strongly commits borrowers to this loan, and as long as they keep trying, there's always the possibility that they will get paid. I have talked with people that were strung along for three months before they finally gave up and realized that this loan was not going to happen.



Caveat Emptor

UPDATED here

Okay, two years ago, I had advice mostly for the Democrats. This time, my advice is going to be mostly for the Republicans.



The Republicans played way too hard to the wrong part of their base for the last two years, and ignored the more important part. The christian groups rewarded them for their effort, but as is plain to see now, the christian groups aren't enough. Furthermore, the christian groups, the republicans are pretty much going to get no matter what. The reasons that they vote are pretty much anathema to the Democrats. At most they might stay home. But by playing so hard to them, they got maybe a couple percent higher turnout and participation - at the cost of losing ten percent or more of some groups that are much larger in the aggregate directly to the democrats. Small government conservatives and small l libertarians have voted very strongly Republican in the last several elections. After the prescription drug benefit on top of the very necessary war related and homeland security expenses mandated by reality after 9/11, small government conservatives were looking for Democrats to support just on the theory that a divided government slows the growth in the federal budget. I happen to think they're wrong, but they had significant reasons to believe so. Furthermore, the prescription drug benefit didn't buy you much with the older voters who are concerned about social security. It is necessary to reform social security, and now, in order to save it for the long term, but those voters who are worried about cuts to present day benefits aren't going to be swayed by drug benefits, and those drug benefits were a major chink in your armor with small government voters.



I fully realize that political parties are creatures of privilege, nonetheless you have a situation where necessary government programs of surveillance for the War on Terror created significant anxiety among the libertarian minded voters. Now the hardcore Libertarians wouldn't vote for you anyway, but they vote Libertarian, not Democrat, essentially taking them out of the political equation. However, those who trend libertarian and vote based upon economic issues have tended in the past to vote very heavily Republican. You did a poor job explaining the reasons for the surveillance and the safeguards on it. Yes, I realize that the national media, being Democratic partisans, did their best to confuse the issue, but the means exists to get your message out. Just a simple factually complete email to a dozen of the largest bloggers on the right and center would have done more than all the press conferences and hostile questioning you went through with a hostile media. Furthermore, you could and should have made it a plain policy of enforcement that nobody was immune to these programs. If calls to the White House are subject to the same criteria for monitoring as calls to Achmed the immigrant cab driver, and everyone in between, that says they you consider it important enough that nobody is immune, which goes a long way towards showing how essential these programs are. You didn't do this, thereby exacerbating the perception that caused libertarians to trend a bit less economic libertarian and a bit more civil liberties libertarian, a reaction that always has bad consequences for Republicans. Piled on top of the Terri Schiavo controversy, this caused libertarians to think more civil liberties and less economic.



Finally, the American public has roughly the patience of mayflies. That the situations in Iraq and Afghanistan has been going on so long, and is actually being conducted quite well considering the underlying political realities, cuts no slack with the American people after three and a half years. You've got to explain it to them, constantly. You didn't do that, as a result of which we may have lost the war Tuesday night. If the Democrats consider it a mandate to leave Iraq, we have lost the war, plain and simple, and I strongly doubt we will have another Ronald Reagan to turn it around for us. It's going to take something else as big as 9/11 to get the attention and the support of the American public again, and by that time, it will probably be too late.



Now, just as two years ago I had some advice for the winning Republicans, which included the advice that the Republicans would have a lot more at stake this year than the Democrats, here's some advice for the Democrats. If you look at the Democrats who won, they ran as centrists, not leftists. Calls for the impeachment of President Bush or another go-around of something like Iran Contra will not endear you to the American public. Most of your leaders are leftists, but it's the centrists who won on Election night, and if they don't want to be swept out in their next election, they are going to have to act like centrists, talk like centrists, and most importantly, vote like centrists. The national media, which the Democrats control, pulled out all of the stops in spinning things your direction this cycle. Furthermore, the Republicans were completely inept politically, and it was the sixth year of a Presidency, and the majority who don't understand the War on Terror wanted to register a protest vote, and you benefited from all of that. The Republicans had a lot less going for them in 1994, and in 2004. If this is as good as you can do with everything like that in your favor, you are in no less trouble than you were two years ago. More actually, because now you're going to be held responsible for solutions, instead of merely criticizing the opposition, if not in the media, then at least by the citizens, who are more and more learning to bypass inappropriate filters on the news. Try to run the country hard left, like most of your leaders have been talking until very recently, and you'll be the minority party again in 2008. Stay in the center, and you'll do very well.



Now actually I'm very encouraged by what I see from the actual politicians of both parties in the two days since the election. But the test is not in how they talk prior to taking office; the test is in how they act and vote once they have taken office.



Worthy Articles from here and there

Don Surber on what won and what didn't.

Decision '08 on the death of the conspiracy theories

Coyote Blog: Parties are partisan, so get over it.

Blackfive on Pelosi's quote that Iraq is not a war

Q and O Dems actually have to do something now.

Michael Barone on what Bush is likely to do.

Eject! Eject! Eject! on the way to react to Republican defeat.

Scrappleface on something that would guarantee a Republican sweep in 2008.

Michelle Malkin notes that there are already indications it may happen.

Don Surber New for 2007: Most corrupt Congress ever!

One of the things people keep asking about is first time buyer programs. They exist, but lenders are not the first place to ask. Why? Because many, if not most lenders, actually charge a quarter of a point or so for first time buyers, in addition to their regular rates. They do this because so many of them fall out, and they want some money for their trouble. Also, interfacing with local first time buyer programs is a bit of a hassle, and it often takes much longer to close the loan, if it does close. Yes, you need to tell them if you are using a first time buyer program, but if you start at the lender you may get hit with the charge for your loan, and then find out at the last minute that that particular lender does not participate on the first time buyer program for that city.



The place to ask about first time buyer programs is the government of the city that you intend to buy in, usually the housing department, but sometimes the planning department. If you intend to buy outside of city limits, call the county housing department. Yes, you do need to know ahead of time where you're intending to buy. I know how many people hate to plan, hate to "limit themselves" and hate to do preparatory work, especially multiple sets with multiple cities if they're not certain where they will buy, but it's necessary if you're going to achieve a positive result.



Most first time buyer programs are funded with money that the municipality gets from the federal government. You'd think they would be similar, that funding would be consistent, and that participating lender lists would be mostly compatible. You could not be more wrong.



Once each city gets the money, they are still subject to federal oversight, but that is broad and there's a lot of latitude. One of the things that all of them have in common is that they charge a fee for a lender to participate every year. Unless that lender gets a lot of business through that program, it's not cost effective to automatically renew every year. I only routinely pay the fees for the much broader Mortgage Credit Certificate program every year - I wait until someone wants a given city's program before I pay the fees associated with that program. So the list of approved lenders is going to concentrate heavily on major direct lenders with offices in that city. This has the effect of limiting the competition, although brokers who are willing to sign up still have all of the advantages of brokers, because for the vast majority of these programs, it only matters that the originating office participate, not that the funding office does. Once I'm signed up with most programs, it does not matter what funding lender I use because originating office is what's important, not the actual funders of the loan.



Now, each and every first time buyer program will be different. Any similarities between any two programs are basically coincidence. Income limits, qualifying properties, amount of funding, how long it lasts into the fiscal year (or quarter), how much money they get from the federal government relative to the population and cost of living, and most importantly, whether they have any funds at the time you want them and qualify.



Even the form that the first time buyer program takes is wildly variable. Most common is a second (or third) mortgage with nominal payments and a nominal rate. For instance, one east county city requires a 3% interest only payment. Also very popular is a "silent" second (or third) mortgage with no payments, but it needs to be paid back in full if you sell, and in many cases, if you refinance. Some first time buyer programs work off of a "shared equity" basis, with no payments and no interest charged, but they own a fixed share of the property and are entitled to payment in full at sale, and in many cases, of the base loan amount plus appreciation if you refinance. This lessens the financial benefits of home ownership, because normally the appreciation belongs entirely to the homeowner. Nonetheless, without the program, you wouldn't have had any of the benefits of ownership, economic or otherwise. Still other cities have programs geared towards maintaining a pool of limited income housing in that area, and the price you sell for when you sell will be restricted, negating most of the financial benefits of ownership. Some programs are even tiered based upon income, and those making a lower amount will get more favorable terms that those who still qualify, but make more than people in the first group, and there may be more funding available for the lower tiers. It all depends upon the locality where you buy, and if you apply and qualify for a first time buyer program in City A but end up buying outside of that City limits, you are out of luck. For this reason, you need to work with a buyer's agent who knows the programs and their boundaries and is careful about them. Just because it has the appropriate ZIP Code or telephone prefix does not necessarily mean anything, and I find properties with the wrong ZIP Code in MLS quite often. For instance, properties that are actually in northern Pacific Beach here in San Diego will quite often have the more upscale La Jolla Zip in MLS. Before making an offer, you can always call to make certain the property is within the boundaries covered by the program, of course. You want to double check, because you will pay a fee, usually several hundred dollars, when you apply to the first time buyer program, and I don't know of any that refunds the money if you don't qualify, if you are outside the area, or if you just don't get the funds because they are out of money right then.



Please note that one other feature all first time buyer programs have in common is that they require owner occupancy of a single occupancy dwelling. These are not intended to help investors grow their real estate empire. These programs are intended for people who would not otherwise be able to afford the property and intend to live in it. In some cases, moving out triggers a requirement for immediate repayment in full (and just when it got more expensive to refinance because it's now investment property, too!). In others, so long as you live in it for a given number of years, you can keep it going providing you don't break other rules. Every program has it's own little twists on the owner occupancy requirement. None of them permit you to buy residences suitable for more than one family, either. Duplexes and apartment buildings are disallowed from every program I've worked with.



First time buyer programs are not grants. I've dealt with them all over southern California, and I don't know of any that are outright grants. In many cases, that would be more cost effective, not only to the buyer but to the city as well, than the hoops that have to get jumped through. So I suspect that outright grants are prohibited by the enabling federal legislation, although I've never read the regulations.



Some first time buyer programs do have mechanisms for forgiveness of the loans after a certain period of time. The requirements and length of time vary. I've seen those that have the forgiveness feature be as short as five years and as long as fifteen.



Prospects for subordination if you refinance are also variable depending upon where you buy. Some require payment in full if you refinance at all, while others will allow themselves to be subordinated to new First Trust Deeds providing certain requirements are met. Chief among these are usually requirements that essentially prohibit cash out refinancing unless you pay off the first time buyer program.



One final caveat to these programs is that most of them will not pre-approve you. In other words, they won't look at your application before you've got a fully negotiated purchase contract. I know of only one program that will pre-approve applicants, and none that will commit funds before you have a fully negotiated purchase contract. If they run out of money in the meantime, that's just too bad. - you're out the application fee. For this reason, you need to stay on top of not only the program requirements and boundaries, but also the funding status as well. If they don't have any money when you actually have a contract to buy, you are wasting the time and money to apply.



Now I don't mean to say these programs are not worthwhile. They can and do make the difference between being able to afford the property and being forced to continue to ride the rest escalator. I should also note that they are basically a band-aid to treat the gaping economic wound caused by artificial restrictions to the housing supply. But if the conditions are right for the band-aid to help you, there is no reason why you shouldn't take advantage of it.



Caveat Emptor

UPDATED here

(This will be updated as further thoughts strike)



1) Very Surreal moment: Fox News just called Maryland for Cardin - despite the fact that Steele is leading the actual count.



2) They just did the same thing to Ehrlich, the Maryland governor, who is ahead in the count. Do they have the feeds to the public reversed?



3) Republicans find absentee ballots after all the ballots supposedly counted in Ohio. Not much detail. (Later clarification on my part) These were found after all absentee ballots were supposedly secure.



4) Harry Reid bloviating about investigating Halliburton, how he wants to be a uniter. Bull. His actions of badmouthing the opposition are pure divider.



5) They're griping about Steele refusing to concede in Maryland. He's ahead in the count right now. I wouldn't concede either.



6) Conrad Burns in Montana is badly behind in the initial report.



7) Allen and Webb very tight race. Lass 11000 votes out of 2 million plus margin for Allen right now. 3% remaining, and still too close to call.



8) Looks like Democrats have successfully lawyered DeLay's seat. That was low, even for the party of Richard "Dead Man Voting" Daley.



9) Official projection of Democratic House Control.



10) Talking about Dems in Control. Conyers running amok, playing political games along the same lines they've been playing, then portray themselves as "bipartisan". If they do that, after two years you're not going to believe the spanking the Dems get in 2008.



11) Bloviating about immigration reform "which was stalled by the Republican House". Actually, it was stalled in the Senate.



12) With the Dems who are winning being mostly conservative, look for the Dems to overplay their hand, especially if Pelosi interprets this like as a mandate of some sort for liberals.



13) Webb now has a razor-thin lead in Virginia.



14) Lieberman, of course, blow NutRoots candidate Lamont out.



15) With Tennessee effectively out of reach, the Dems need to run the table on Missouri, Montana, and Virginia, but the way the counts are going now, it's looking like they'll do it. The Senate is the only real excitement left nationally.

No, this is not "Pick on Airbus" week, but FedEx drops A380 order, buys Boeing 777s. Not very long ago, it was looking like Airbus had Boeing on the run, but they are unable to deliver on their promises, and most especially unable to deliver on time and on price. Airbus has all the problems of being a state run patronage system. Boeing does get some subsidization but not nearly to the degree that Airbus does, and with nowhere near so may strings attached, so Boeing is beating them everywhere it counts.

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Chris de Burgh buys rare WW1 letter



It describes the Christmas 1914 truce. It is unknown what happened to the author.



Where Peaceful Waters Flow, my favorite of the ones youtube has of his.



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Via Tinkerty Tonk the How Democratic Are You? and How Republican Are You?. I came out 4% and 12% respectively, indicating there isn't a true dichotomy.



I tend to vote for whichever candidate is less stupid. Right now, that's mostly the Republicans. But neither party is doing well and both have an excellent chance at my vote in 2008. It's not like they have a high bar to get over...



And before I read anything about anybody freaking out (or celebrating) with exit polling this year, I have three words to say: Get. A. Grip. The only poll that counts is going on right now. The results will be released later today. Exit polling is skewed, for several reasons. I may or may not cover my reactions to election returns tonight.



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America blog is noting that Laura Ingraham may have suggested her listeners call the Democratic voter fraud hotline for purposes of jamming it. While not election tampering, if this allegation is true, it is despicable.



Gateway Pundit covers the other side: people voting despite being unable, or trying to vote more than once.



The Llama Butchers covers one of the largest and most influential voting blocs.



the dirty election tricks thread at aol elections



Opinion Journal has a time line of poll closings. Of course, it's based upon East Coast time. Subtract appropriately for your location (3 hours for California)



neo-neocon hopes that if they win, enough Democrats will remember what happened last time we left a war unfinished.



Wizbang catches the Pennsylvania Democrats breaking about six major electoral laws.



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Enemies of the internet: No surprises here.

The 13 countries are: Saudi Arabia, Belarus, Myanmar, China, North Korea, Cuba, Egypt, Iran, Uzbekistan, Syria, Tunisia, Turkmenistan and Vietnam.



Three countries were removed from RSF's 2005 list -- Libya, the Maldives and Nepal.

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Cool! The San Diego Reader is going to feature my other site http://www.danmelson.com/, and there just happens to be a Project Valour IT sticky-taped there, too (I did Team Marine over there). What's more, they say they're going to give me $50 which I will pass on. I took them at their word and added a $50 donation.



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Dr Sanity about WMDs and a recipe for what looks like a killer chocolate cake.



Opinion Journal and the Press at War



Bill Whittle over at Eject! Eject! Eject! may be months behind with the new book he promised us, but there's a new chapter up that worth the wait. He completely shreds many of the worst jingoistic responses of today's political climate.



Thank You, Bill.



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LGF catches Daily Kos saying "We hate Jews, but can't say so until after the election."



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Best messing with a telemarketer ever.

Carnival of Personal Finance



Carnival of Investing



RINO Sightings Recommended: Danegerus (trends in retroactive abortion)



Carnival of The Capitalists Recommended: Sox First (how accounting firms are trying to win protection from the government, after first winning the Sarbanes Oxley windfall)

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Saddam, Co-Defendants Sentenced to Hang



Or maybe not:

Iraq's former Vice President Taha Yassin Ramadan was convicted of premeditated murder and sentenced to life in prison.



Three defendants were given up to 15 years in prison for torture and premeditated murder. Abdullah Kazim Ruwayyid and his son, Mizhar Abdullah Ruwayyid, were party officials in Dujail, along with Ali Dayih Ali. They were believed responsible for the Dujail arrests.



A local Baath Party official Mohammed Azawi Ali, was acquitted for lack of evidence.

This is dealing with the past. Much more imnportant is how the Iraqis handle their future, and they are having difficulties with that.



Note that AP couldn't resist this snark:

Lost in the drama of Sunday's death sentence was any mention of the failed search for the alleged weapons of mass destruction that President Bush said led the United States to invade and occupy Iraq in March 2003.

That's because it's not relevant to the case at hand, which had to do with a massacre in the Kurdish north, and the Iraqi ABC programs were not relevant.

The United States has denied direct involvement in the trial, but some legal observers believe it was tainted by association with the American presence. Miranda Sissons, head of the Iraq program at the International Center for Transitional Justice in New York, said: "There will always be some doubt as to how much influence it exerted on the trial."

If President Bush had wanted to, he could have had Saddam Hussein tried anywhere. It was, after all, our soldiers that captured him and that hold the balance of power in Iraq. And the independence of the Iraqi government has been well established (you don't think we took down the checkpoints searching for our kidnapped soldier because we wanted to, do you?)



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This may be what kills Airbus: Airbus plans to cut 80 percent of subcontractors



Airbus is dependent upon political gravy for its subsidies. If they are no longer subsidizing 2500 subcontractors, that's a lot of political support they are tossing.



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Remember to vote tomorrow (if you haven't already)!

I'm clueless about how home loans work. Is there any way to figure out how much I can afford to spend per month on a home. If I were to get a home for $(figure) how much would that be per month? How do I know how much the interest will be? Any sites that explain it all in laymans terms? Thanks

It's actually pretty easy. You are allowed a certain percentage of your gross monthly salary for debt service and housing. According to Fannie Mae and Freddie Mac, who control A paper, it's essentially 45%. Some sub-prime lenders will go to 60 percent, but let's stay A paper until we know you don't qualify.

Lest it not be obvious to you, the less debt you have currently, the more you can afford to take on for a housing payment. One of the real problems, and reasons for abuse of a stated income loan, is couples who make $4000 per month each, but have $1200 or $1500 or $2100 in monthly payments for the two cars, credit cards, student loans, etcetera. Their coworkers all have $3000 mortgage payments, and $3000 buys a lot more house than the $1800 which is all they can afford. Actually, it's a pretty critical difference right now, since $1800 is the payment on about $275,000, which buys a decent two bedroom townhouse in an okay area, or a rotten three in an awful area, while $3000 is the payment for about $450,000 or a little more, which can buy a 3 or maybe 4 bedroom home in a decent area.

Take 45 percent of your gross monthly income, call it X. From X, subtract your current debt service. This is car payments, credit card payments, furniture payments, any actual debt you have.

The number that is left over, call it Y, is what you can afford for housing by traditional measures. It needs to cover principal and interest of the loan, property taxes, home owner's insurance, and association dues (if any), PUD fees (if any), and Mello-Roos (if any).

Assuming that there are none of the last three, you're left with PITI, the acronym you're going to hear about what this covers: Principal and Interest (on the loan), Taxes (property) and Insurance (home owner's insurance).

Right now, there are A paper thirty year fixed rate loans in the low sixes with 1 total point or less. Any loan calculator (except auto loans) can handle that calculation. Except that if you're not putting a down payment, you're going to want to split your loan into a first and a second to avoid PMI. To do this, you're only going to put 80% of your loan on the first mortgage. Adding the remaining 20% back in at 9.00% (doing this saves you about two and a quarter percent on the whole amount), for which you're going to need to do a separate calculation. Put the two numbers together and that's the principal and interest (PI) part of the PITI acronym. This assumes you've got decent credit, by the way.

I have no way of knowing your property taxes. Every state in the union has their own way of doing it. California's is actually one of the lower tax rates, considered on an assessment per unit of value basis. There are also zones where bond issues have passed, Mello Roos assessment districts to pay for the costs of bringing utilities to the development, and so on and so forth. Your county assessor will have the details. One of the things a good agent can often do here in California is deduce the presence of assessment districts based upon the taxes paid by a particular property, but it's subject to error, and your county assessor's office will have the information, and it won't b subject to guesswork.

I have no real way of knowing what home owner's insurance might be. I usually guess $100 to $110 per month for a good policy covering detached housing, but that's a guess, and it could be much more, or slightly less. The only way of moving from guess to certainty is to ask insurance agent how much to insure a given property.

Now, if the sum of these numbers (PITI) is less than $Y, that portion of your monthly income available for payments and left over after monthly debt service, you've got an excellent chance of qualifying for that loan. If not, you're going to have to go sub-prime, where the allowed debt to income ratio is higher, but the rates will also be higher and the terms less generous, for instance in the presence of a pre-payment penalty. It is actually likely that instead of playing games to stretch your ability to qualify, you would be better off shopping for a less expensive property in the first place. But that's a hard thing to get most buyers to accept. They've fallen in love with the brand new house and they don't want to hear that they can't really afford it. The universe knows that these good deeds do not go unpunished. But informing the client is still the right thing to do.

Caveat Emptor

UPDATED here

Looks like somebody has decided to spoof my email at this domain. My catch-all e-mail was full of returned spam again. As far as I know, there is no way to prevent spoofing.

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Armies of Liberation has yet another story on Yemen's problems: Children, in adult jail, as hostages for their relatives.

Torture on inmates. Real torture, not just forcing them to listen to Air America (or form human pyramids).



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Baghdad on alert awaiting Saddam verdict

On Wednesday, one of Saddam's lawyers said a death sentence would "open the gates of hell" to the roughly 140,000 U.S. troops in Iraq.

Illustrates the issue, although I think it's indicative of someone who should be in jail himself.



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Looks like the media black-out surrounding the New York Times article is over: Scientists protested Web site nuclear data: report



With the original article, the New York Times single-handedly refuted the "Bush lied" idea most of the media has been pushing for over three years. No wonder the wire services didn't want to cover it. But thanks to blogs etcetera, the story got enough attention that they can cover it, or watch everyone else cover it.



The Times said they were going to turn the results of the election. However, it looks like their intent to make it a Democratic run has backfired. Okay, mistake on the part of a low level bureaucrat putting actual nuclear data on the web. But Iraqi data can't help anyone less advanced than them. If Iraq had no nuclear program, their data wouldn't help anybody. Therefore, they did have a nuclear program, not to mention the Biological and Chemical programs. Therefore, President Bush did not lie.



All for:

A senior federal official, speaking on condition of anonymity, told the Times that scientists at California's Lawrence Livermore National Laboratory protested some of the weapons papers on the site to the National Nuclear Security Administration, an arm of the Department of Energy, in October. But the objections "never perked up to senior management," the Times quoted the official as saying. "They stayed at the mid-levels."

Better Late than never: Bush challenges Democrats to offer plan for Iraq



Mind you, by leaving it this long, it has become apparent to anyone of any intelligence whatsoever that the Democrats have no plan on Iraq. "Cut and run" is not a plan, and neither is "Starve the troops for funding.". "Get the French (or Germans, or Andorrans) involved" is a plan on the

level of "Fly to the moon by flapping your arms." It's not going to happen. Mind you, with the intifada on their streets every night, I think France is wishing they had sent some troops right about now, but they've committed too strongly to change course now.



The Democrats could have changed this at any point in the past three and a half years by getting real about their planning on the situation in Iraq. So as angry as I am that President Bush has let them go this long on a free pass, they have only themselves to blame that the effort does any damage. Kind of like a knight going into battle with no breastplate and a target on their chest.



Wars are not neat, clean surgical affairs. Not victorious ones, anyway. I had severe reservations before the invasion, mostly having to do with the American will to deal with extended conflicts of this nature, but I thought (and still think) the consequences of not invading were worse than the consequences of invading. Yes, there have been many mistakes made. This is a by-product of the fog of war. The next war in which even the victorious side makes no major mistakes will be the very first.



Meanwhile, terrorists are openly rooting for Democrats. The Right Place refers us to Mideast terror leaders to U.S.: Vote Democrat

Everybody has an opinion about next Tuesday's midterm congressional election in the U.S. - including senior terrorist leaders interviewed by WND who say they hope Americans sweep the Democrats into power because of the party's position on withdrawing from Iraq, a move, as they see it, that ensures victory for the worldwide Islamic resistance.

You want to know how stupid withdrawal is? The Islamics don't believe the Democrats would actually do it

Saadi stated, "Unfortunately I think those who are speaking about a withdrawal will not do so when they are in power and these promises will remain electoral slogans. It is not enough to withdraw from Iraq. They must withdraw from Afghanistan and from every Arab and Muslim land they occupy or have bases."

What would American withdrawal mean?

Jihad Jaara said an American withdrawal would "mark the beginning of the collapse of this tyrant empire (America)."

Unfortunately, I think I have to agree with him there. Why should anyone ally with us if we make a habit of leaving our allies high and dry? The US is the glue that holds the civilized world together. Without us, the world will fall piecemeal.



Q and O has more worthwhile information.



May the universe help us when the terrorists get to be as smart as "dumb" President Bush, who refused to endorse Joe Lieberman because it wouldn't help the Sentor with the people who were voting for the opposition.



Victor Davis Hanson has some perspective.



I have a theory about pre-election polls: They skew away from the party in power, as those who are disgruntled are more likely to want their voice heard. I've hung up on more than one of these idiots in the past week or so, and dozens of their even stupider kin, campaign telemarketers (I just don't have time to torture them mentally, the only worthwhile thing to do with either of them). The only poll that means anything is on Tuesday, November 7th. That's close enough, and I am patient enough, to be content waiting until then to get my answers. I happen to believe that we're likely to see two years of Speaker Pelosi, although not Majority leader Reid. I also happen to believe actual power-sharing with the Democrats in the session leading up to the 2008 elections will be a dream gift to any Republican with Presidential aspirations in that year. If I'm wrong on any of these beliefs, well, it won't shatter my world. We'll find out about the 2006 elections very soon. I can wait.

Oliver Willis (among others) is going bananas over allegations in the NY Times that the Bush administration put Iraqi documents on the web that supposedl gave third world nations the atomic bomb. He has an article here on Democrats reacting to the news.



One question: If Iraqi documents we published on the Web gave some other nation the technical know-how to build a nuclear bomb, wouldn't that mean that Iraq knew how to build one?



Here's the article: U.S. Web Archive Is Said to Reveal a Nuclear Primer

Experts say that at the time, Mr. Hussein's scientists were on the verge of building an atom bomb, as little as a year away.

and

In September, the Web site began posting the nuclear documents, and some soon raised concerns. On Sept. 12, it posted a document it called "Progress of Iraqi nuclear program circa 1995." That description is potentially misleading since the research occurred years earlier.

News flash: Once you know how to do something, the knowledge doesn't just vanish. If they knew how to do it in 1991, they still knew in 1995, and in 2003. Soon as the sanctions come off, work starts. And the sanctions were fraying badly. Or has everyone else forgotten the votes and negotiations, and the Oil for Food corruption?



Let's look at the sources and quotations: Peter Zimmerman, quoted by the article, is a chair for the AAAS. Run his name through some search engines, and you'll come upon things like this gem. Looks like one of the other quoted authorities, Ray E. Kidder, has some very interesting information himself on his website here, including pictures of actual warheads and their component parts. From reading his webpage, and some Times Select stubs, we discover that he's another anti-SDI leading light.

Ray S. Blanton and the National Security Archive here. Iran Contra seems to be their main claim to fame.



Plus all those unnamed "senior officials."



In short, this piece looks to be something that looks credible for a few days (just coincidentally reaching the election) but is, IMHO, a hit piece.



Just One Minute has more



enrevanche notes that there may indeed, have been some damaging documents, and why.



Anchoress, of all people, lays on the snark very well.



National Review covers it much the same, but with less snark.



Carol Platt Liebau about sums it up.



Argghhh! seems to have the clearest vision: Dumb move, to put it on the web (if, in fact, it's real -DM). But it means that Iraq had the means for the bomb that the Times (and others) have been denying they had for years.



Hot Air has all the itemized details of what might possibly have happened in the future with this information.



Michelle Malkin has the complete text of Representative Hoekstra's statement.

"With respect to the possibility that documents may have been released that should not have been released, I have always been clear that the Director of National Intelligence should take whatever steps necessary to withhold sensitive documents. In fact, as of today the DNI had withheld 59 percent of the documents that it had reviewed, and has become more risk-averse over time. If the DNI believes that the documents that were released were in the safe 40 percent, imagine what the 60 percent being withheld must contain.



"That said, it is also important to emphasize that the IAEA, contrary to its assertions, never raised any concerns about this material with the United States Government before going to the press. Similarly, the DNI's office has informed me that no agency of the U.S. Government had raised any issues about the potential or actual release of these documents before yesterday. If there were such problems, they would have been better addressed through the appropriate channels rather than the press.

In other words, for the politically challenged, the New York Times did a hit piece which nonetheless validated the claims of the Bush administration and the intelligence community prior to the war on the status of the Iraqi nuclear program.





Captain's Quarters, who has been working extensively with that particular archive that contained the alleged leaks, connects the dots in a manner that only someone intentionally blinding themselves to what is there could miss.



(He just earned another "Blogger of the Year" nomination, although in his case, that's redundant.)

Quick word about something I'm running into a lot: Lenders that sell the note but retain servicing rights. So when the note goes south, and my client wants to buy into a distressed situation, the servicers are rejecting offers without checking with the actual investor, because they could get sued (for misrepresentation and bad underwriting) if they accept less than they loaned. On the other hand, if the property sits on the market (thereby costing the investors even more money), they don't get sued because, hey, the asking price is enough to cover the note. Now there is a legal deadline involved with lender owned properties, and nobody is going to offer enough to bail them out. But it's kind of like the old joke: "A lot can happen in a year. I may die. The King may die. And perhaps the horse will sing." Corporations don't die. Even if it were an individual investor, someone's going to inherit the right to payments. I do not think this horse will sing - it probably won't even whinny. In other words, nobody is going to offer enough to bail the lender out of their fix. Near as I can figure, those controlling the corporations holding servicing rights are evidently hoping that by that time, they will have moved on to other jobs and can't be held liable as individuals.



One more reason to be very careful investing in trust deeds.

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North Korea wants bank accounts unfrozen.

North Korea said Wednesday it would return to nuclear disarmament talks in an effort to get access to frozen overseas bank accounts, a vital source of hard currency for the impoverished and isolated communist nation.

I get email from Nigerians every day who would be pleased to help the North Koreans out...



But I suppose they can't email Kim Jong Il, can they? No internet in North Korea! D'oh!



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While we're on the subject of rogue nuclear powers, Russia says won't back draft text on Iran sanctions

Russian Foreign Minister Sergei Lavrov said on Wednesday Moscow would not support a draft U.N. sanctions resolution on Iran proposed by European states, Russian news agencies reported.

Can't support a UN Draft resolution? So much for it being the capitalists that sell the rope to hang themselves with.



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U.S. fails to protect illegal workers: petition



Far be it from me to want to see the poor lawbreakers exploited. I think that if we deport them like we should, they won't be exploited in the United States.

"By not protecting undocumented workers, the government is sending the message to employers that they can abuse and harass immigrant women, and that our lives are not as valued as other workers," one of the workers, identified as Melissa L., said in a statement.

How about "abusing" them by not hiring them? Fact is that these folks willingly accept the jobs. I know that if I were to ever do illegal work, it would certainly cross my mind that they could maybe deport me instead of paying me.



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Nine shot at San Francisco Halloween street party



But San Francisco has strict laws regarding firearms. Only the politically connected are allowed to carry handguns. So if only those with permits actually carry guns, because we know that criminals won't carry guns if it's illegal, then obviously the guilty party is the only person I'm sure has a San Francisco concealed carry permit: Dianne Feinstein.



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Captain's Quarters on one of the many reasons I hope the Republicans retain control of the House next week: Alcee Hastings. Successfully impeached by a democratically controlled House and Senate for corruption, Ms. Pelosi has tapped him to head the House Intelligence Committee if Dems take the House.

My lender told me that there is an application fee?

He said an application fee of $250 and then we'll need the appraisal fee and of course we'll need an inspection. Does all this sound legit, is there always an application fee?

If they are asking for upfront money, they are trying to hold your money hostage to commit you to the deal. Most of the companies that do that know that 1) Better rates are available to the public and you're likely to find something better if you try, 2) they're going to hit you with a bunch of extra stuff they didn't tell you about at the end.

Never pay for more than a credit report up front. You should want to choose the appraiser if you're going to pay them - that way you own the appraisal, not them. You should also choose the building inspector if you've got to have one - most refinances don't, but only a complete idiot wants to spend that much money to buy a property and *doesn't* pay a few hundred for the inspection first. If the lender orders them, they own them. They have to give you a copy, but you can't take it to another lender to use if this one hoses you.

Now, at closing, you can expect to pay some fees. How much depends upon a lot of factors. I tell people with entry level single family residences to expect about $3500 total in actual loan costs, plus whatever points are paid to buy the rate down, plus the expenses related to the purchase, which vary a lot. By the time you're done with title and escrow and appraisal and lender's fees, that's what it really is. I'd rather tell the truth and guarantee the total, but since most people don't realize how many games prospective lenders can play, quite often the person signs up with the person who talks a good game but won't guarantee the quote. Usually you can choose a higher rate to get some or all of your costs paid (I love doing zero cost loans myself, and they actually are a good thing for most clients), but there is ALWAYS a trade-off between rate of the loan and cost of the loan.

Nonetheless, the idea of money you pay before the loan is ready is to commit you to the lender. People understand checks that they write in their gut. That $1500 check for the deposit on the loan is more important to many people than the $450,000 loan that comes with it. As evidence, I have offered people loans that were more than $5000 cheaper on exactly the same loan type and rate, but people would not sign up for my loan because they didn't want to "lose" that $1500 deposit. I've shown people better loans at lower rates on exactly the same terms that saved $1500 per year in interest, and they wouldn't switch. Why? Because they are thinking about that money that came out of their checking account, that they scrimped and saved and set aside laboriously over a period of months, not the money in the loan, which is just as real, but they haven't had to save it, and they don't realize that it is real in the same way as that deposit check.

So lenders who want large deposits typically do so because they know that their loan will not stand the light of scrutiny, and competition from other lenders, so they want to tie you to them emotionally, with money you don't get back if you switch lenders. Money that you've physically got in your checking account, money that you understand on the gut level. Be very wary of this sort of lender. Seeing as there are many loan providers who will do your loan without requiring such a deposit, I would suggest you find one of them (or better yet, two of them) to do your loan instead.

Caveat Emptor

UPDATED here