Does the Fed really have any control over inflation?

As we sit here and watch a bunch of suits sit around and discuss theory, the rest of the nation is living reality. That reality is the fact that gas prices continue to rise, every other commodity is effected by the rising fuel prices and then to top that off, we have the real estate industry, the engine of the economy of the world continuing to crash or should I say foreclose in around us. To hear Gentle Ben Bernanke and his colleagues discuss the economy, you would think that they are living in a glass castle. Does anyone of them know what it is like to pump or pay for their own gas? When was the last time one of them went to the grocery store to by something to fix themselves?

These discussions about whether to raise or lower interest rates are simply wasted energy. We need to quit focusing on what the Fed is or isn’t going to do because what ever they do at this point is too little too late. They are now talking about raising interest rates to slow the economy. Are you kidding me? This economy is still going backwards. So called Fed experts will tell you that they are managing the economy six months in the future, but if that is they case, they really screwed up six months ago! I have an idea, let’s deal with the here and now. You know, like when they rescued Countrywide from going Bankrupt by getting Bank of America to be the lead bank in the buyout of Countrywide. Or more recently when Bear Sterns was crashing and they got J.P. Morgan Chase to purchase them. Both of these happened overnight and in theory were done to keep things from crashing around us.

Dear Ben, put pressure on the White House to solve the rising energy price challenge. That is your inflation monster. Until you figure out how to do that, everything else you are doing is just giving the talking heads on MSNBC something to talk about so they can keep their jobs.

For questions or comments, please contact Chris Scheer at cscheer@cornerstonestl.com or 314.223.9824.

FHA Lifts 90 Waiting Period

In a move to help get foreclosures off the books of lenders quicker and help avoid deterioration of properties that have been foreclosed upon the Department of Housing and Urban Development has lifted their ban on writing a contract if the title has changed in the past 90 days. See the following article: http://www.cnbc.com/id/25146122

For further clarification you can visit HUD’s website at http://www.hud.gov/news/release.cfm?content=pr08-082.cfm

For questions or comments please contact Chris Scheer at cscheer@cornerstonestl.com or 314.223.9824.

Summer is almost here!

After spending 5 of the last 7 days on the golf course, I realized (not for the first time) that my future is not in professional golf. Thus I am resigned to continuing to help people achieve the American Dream of home ownership. So what is going on in the real estate world you ask?

Well we finally have the long awaited to changes in FHA mortgage insurance premium coming into play. See the link to the HUD bulletin: http://www.mmbaonline.com/Portals/0/Documents/FHArisk.pdf

Therefore after July 14, 2008 it will be more expensive for borrowers with less than stellar credit to purchase a home. The effect in most cases will be less than $20 per month, but when you are living paycheck to paycheck, $20 a month can be a lot of money!

Foreclosures continue to rise! That is to be expected, but what it has done is that over the past 10 years an appraiser could ignore a comparable sale if it was a foreclosure. Now with the amount of foreclosures, they have to be treated as part of the marketplace. Thus property values are declining in areas of numerous foreclosures. The positive aspect of this is that those property owners who have been complaining about their rising real estate taxes will see a freeze on the rise and in some cases may see there property taxes come down in 2009!

For questions or comments on this post, please contact Chris Scheer at cscheer@cornerstonestl.com or 314.223.9824.