The New Age Checklist For Refinancing Your Home

Back to the Good Old Days…

Its January 2009, and the days of the 1% down, no dock, interest only, teaser rate mortgage is over. And for the millions of taxpayers, their children and grandchildren that will have to pay for the past absurdity, I say good riddance!
 
As I have written in the past, homeownership is not a right…it;s a privilege and one that should be earned. Giving away loans to people who will simply never be able to afford them is no different then Bernie Madoff’s ponzi scheme. In fact, the display we have seen in home lending over the past 5 years will end-up making Madoff’s scheme pale in comparison. Instead of $50 billion, risky home loans will end-up costing Americans more like $500 billion.
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TARP: Banks Shouldn’t be Forced to Make Risky Loans

I was thrilled this morning to hear an echo of my own thoughts coming from someone with much more clout than me on CNBC.  My last post was titled “Don’t Ask Banks to Make Risky Loans” and today on CNBC, Neel Kashkari, head of TARP commented, “banks shouldn’t be forced to make risky loans.” Seriously, we are on to something here.  I hope people stop and listen.

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The Cram Down: Citigroup’s Deal on Home Loans Signal Start of New Process

In my November 21st post, “It’s the Monthly Payment, Stupid,” I quoted Larry Anderson, a bankruptcy attorney in Washington DC, as saying, “[He] favors allowing bankruptcy judges to modify loan terms.” His point was that without the power to adjust loan terms, ergo, reduce the monthly payments, homebuyers were wasting their time trying to save their homes. If they can’t reduce the monthly payment, they can’t stay in the house.

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Move Over Nostradamus

Will the Next 20 Years Be More of the Same?

The day after Thanksgiving is usually reserved for my annual trek to the attic. Christmas lights, ornaments, bows and extension cords are on my mind. What I wasn’t thinking about was the state of our nation and the challenges we face.  When I opened a box that I thought was lights, I found binders of newsletters that were published by Sumichrast Publications, the company my father started after his retirement as Chief Economist of the National Association of Home Builders in 1987. I had the privilege of joining him in that venture as I worked on my college degree. We published over 200 reports in 5 years. One of the first newsletters we did was called Mike Sumichrast’s STRAIGHT TALK (20 years before McCain’s Straight Talk Express). As I read one of the issues, I keep glancing at the date of the newsletter…January 15, 1989. Could it be that many of my father’s warnings about the challenges we faced in America had come true? And, will the next 20 years bring more of the same?
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It’s the Monthly Payment, Stupid

There is virtually unanimous consent that housing’s recovery is the linchpin to the economic recovery. Unfortunately, the run-up of housing prices over the past five years was so large, that the shake-off of this excess will take more time than most want to admit. The National Association of Home Builders predicts house prices will fall another 5% nationally to 25% by the end of June, 2009 before bottoming.  I think this is probably a little optimistic. Unless we can curtail the potential for millions more foreclosures over the next two years, house prices will most likely drop further.
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Change Begins With Personal Responsibility

As the son of two Eastern European immigrants, I was always taught that the American Dream started with home ownership.  But homeownership is a “dream” and not a right or an entitlement. When we look back on the leading causes of the economic meltdown in 2008, most economists will point to the “run-away” lending policies in the housing market as the culprit. The goal of helping millions of Americans achieve homeownership was a noble one. The problem is that it’s completely void of any reality of the fundamentals of finance, house prices and consumer debt. Most people call it a housing bubble. I would go one step further and call it a housing ponzi scheme. The difference being, that the leadership in America knew the music had to stop. Unfortunately, the ones who didn’t end up with the chair  are the very people for who the American Dream policy was set out to help.

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The Sumichrast Report is Reborn

Welcome to TheSumichrastReport.com. My name is Marty Sumichrast. A couple of months ago, I was talking to my friend in Southern California, Andre Peschong. Andre mentioned that he had started his blog site www.dealflowdiaries.com for one simple reason…he loved to write and got joy from doing it. After hearing that I said right then and there, ”That’s exactly what I’m going to do.” Because of that epiphany, I now have a vehicle for my voice.  As a result, I would like to dedicate the initial launch of this blog site to my friend Andre. I would also highly recommend his blog for those readers interested in private equity, venture capital and market commentary discussion.

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