Pat Wilson Lake Conroe Real Estate

The alert was issued in response to the growing number of Web sites that have sprung up selling supposed information to help people get their share of the stimulus pie.

Some, like FedMarket.com charge $495.00 for a one-year membership.

Others, like GrantOneDay.com ask for personal information and a credit card for the $1.99 fee, then an automatic charge of $94.89 per month after a seven day trail.

The U.S. Small Business Administration issued one in response to fake letters printed on SBA letterhead seeking bank information from those who may be eligible for tax rebates.

The growing list includes:

·        Mail outs of fake checks that require a small wire transfer prior to deposit.

·        E-mails promising a free stimulus check from President Barack Obama in return for the purchase of something like a magazine subscription or the activation of a new credit card.

·        Bogus Web sites that use offers of stimulus money to release spyware onto personal computers.

Suspect mailings related to the American Recovery and Reinvestment Act should be reported to Attorney General Greg Abbott (TX) 1-800-252-8011.

This article was taken from the Houston Business Journal week of 6/12-6/18.

Government Intervention

Real estate cycles are a bit like the fashion industry. Some old theme is resurrected again and again, but always with a new a new twist that sets it apart from previous versions.

• The 1980 Depository Institutions Deregulation & Money Control Act and Economic Recovery Tax Act of 1981 were primarily driven by politicians' desires to stimulate the economy during recessions. The result was a significant increase in risky lending.
• Commercial real estate markets were temporarily paralyzed as the 1981 Tax Act worked it way through Congress. In the months that Congress debated the legislation, commercial property values dropped as much as 30%. Some investors chose to sell quickly during that perio0d of uncertainty to avoid possible increases in capital gains tax.
• The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 forced healthy S&Ls to sell real estate assets to raise capital. But high quality real estate assets that had been performing well were already worth less because of the tighter lending standards imposed by federal regulators.
• The Resolution Trust Corporation (RTC), created in 1989, was hamstrung from the beginning. The pressure from Congress to liuidate properties quickly was at odds with antidumping provision that was a part of RTC’s original legislative mandate.
• The RTC attempted to remain independent of political and economic pressure. By 1992 Congress was calling the RTC irresponsible and inefficient.
• The RTC was acutely aware that if it sold distressed properties too cheap, the new owners would offer rents so low that healthy properties would be affected. As the inventory of distressed assets great, estimating the value of all commercial properties become more difficult.
• $400 billion in failed S&L assets were eventually sold through the RTC. The rapid sale of real estate demanded by Congress Significantly weakened the value of other non-distressed properties in many markets as predicted.
• Policy overreaction occurred in the early 1990s in an environment of “blame avoidance” by Congress. Politicians had no desire to appear soft on the S&Ls. Regulators restricted banks from originating even viable commercial real estate deals.
• The 1988 Basel Accord and FIRREA increased commercial real estate capital reserve requirements. The office of the Comptroller of the Currency, the regulator for federally chartered banks, issued stricter underwriting guidelines in 1990. Higher risk was assigned to commercial real estate loans, forcing even higher capital retention. Meanwhile, creditworthy borrowers wee being penalized for the dead-beat borrowers of the 1980’s.
• Government regulators were running a significant number of banks by 1992, producing suboptimal results with their risk-adverse behavior. This risk aversion prolonged illiquidity in the credit markets. Regulators dictated harsh loan-to-value and debt service coverage ratios, fearing Congressional investigations into their decisions. By avoiding all risk, lending was severely curtailed. A borrower’s past payment history was often totally ignored.

Lessons Learned

Decisions by regulators were often more politically driven than market driven. Government regulation, ownership and management of private assets did lead to long-term market stability in commercial real estate markets. However, government intervention proved too slow and cumbersome to orchestrate any viable short-term relief in crisis situations.

At the height of the commercial real estate boom, Congress had refused to pass any reforms that would have lessened the impending downturn. As a result, it was forced to offer economic incentives at the bottom of the bust to attempt a recovery.

Don't overlook all your deductions! Remember if you had any hurricane damage you will want to claim it! You may be able to claim the deductible on your 2008 taxes. Question your CPA about a possible deduction if you purchased a genarator. Don't forget the charities that you may have given a contribution. If you are self employed you still have time to make a contribution to your SEP account.

Be sure to check all these with your CPA first.

Good luck on everything!

Pat Wilson-Thomas

When Senate Banking Committee Chair Christopher Dodd (D-Conn.) conducted a hearing last week on the credit crisis, he took aim at banks' intention to use funds from the massive $700 billion federal rescue to shore up their financial position rather than tackle the liquidity problem in the mortgage market that was so core to the government's goal in passing its bill.

"It's beyond troubling," said Dodd, "that those lenders who will be receiving billions of dollars from U.S. taxpayers are considering using those dollars not to make loans, but rather to pursue 'some acquisition opportunities' and to create a capital 'cushion' on which they will comfortably sit while the American consumer and small business person struggles."

That concern over banks' inward-looking use of the funds is one of the driving forces behind NAR's call for Congress to meet after the national elections in a lame-duck session to reinvigorate housing markets. One of the proposals NAR is touting in a four-point plan that it would like to see incorporated into legislation before the end of the year is a provision to hold banks to the purpose of the rescue by pushing them to use funds for lending.

NAR also wants to urge banks to stop dragging their feet on short sales and REO sales. "Qualified buyers must be able to get safe and affordable mortgage loans," NAR President Richard Gaylord said.

Since the introduction of its four-point plan, NAR has been in communication with members of Congress and their staff on the details. In addition to the bank provisions, the plan calls for expanding the $7,500 first-time home buyer tax credit to all buyers and eliminating that program's repayment requirement; making permanent the prohibition against banks entering real estate brokerage and management; and making permanent the high-cost conforming loan limit of $729,750, which has been in effect for less than a year.

Time is of the essence on the high-cost loan limits because the $729,750 drops to a permanent high-cost limit of $625,500 on Jan. 1.

NAR analysts say the $729,750 limit, to be effective, needs more time to work, so making it permanent before its expiration is crucial for stabilizing housing markets in high-cost areas like parts of California and Massachusetts.

To help push its four-point plan in Congress, NAR is planning a major communications push at the 2009 REALTORS Conference & Expo in Orlando Nov. 7-10 with a Call for Action to all members of Congress. To help publicize the campaign, NAR will invite REALTORS to sign their names to the exterior of a giant model house on the Expo floor emblazoned with the slogan, "We support the NAR housing stimulus plan."

The house symbolizes what the federal government's rescue package is all about: helping homeowners, buyers, and sellers on Main Street. That's something NAR hopes lawmakers, and banks, keep that in mind as hundreds of billions of federal dollars in rescue money goes to banks on Wall Street.

Part 2 - America Funds Newsline

How long do bear markets last? We still don’t know how long this bear market will last. A long-term look at the history of the Dow Jones Industrial Average shows that the stock market has come back after bear markets, but investors had to suffer substantial pain. After the 1929 crash, it took investors 16 years to restore their investments if they invested at the market high. In 2000, it took about five years. But after the 1990 crash, it took only eight months. (All examples assume dividends were reinvested.) Since 1900, a bear market has concurred once every 3 ½ years on average and has lasted about 329 days.

Words from Pat “Would someone go bear hunting please!!!!!!!!”

Hurricane Ike has wreaked havoc on the blood banks supplies, so this is your chance to help!  Walden is hosting it’s 21^st Annual Blood Drive to benefit M. D. Anderson Cancer Center, on Saturday, October 21, 2008,   at the Walden Yacht Club between 8:00 am and 4:00 pm.  Call Caryn Patton at 936-582-4355 for more information.