On Monday July 23, 2012, Louis Cammarosano, General Manager of HomeGain, was a guest on the Real Estate 360 Live radio show on The Big Talker 1580 WHFS AM, hosted by Ryan Sloper.

Listen to the show.

Part 1 (14:42)

Ryan discusses the Spanish debt crisis. Ryan and Louis discuss the low interest rates of German and US bonds. Louis notes that the low rates highlight investors’ demand for “safety” even though yields are below the stated official inflation rate. Louis notes that because rates are artificially low, it is good for those who want to take out long term low interest mortgages.

Louis and Ryan note that the US interest rates are being kept low because the US government can not afford to pay its debt if interest rates were higher. Louis notes that the US treasuries becomes by default the safe haven because the US is the largest sovereign and also because gold, silver and real estate (arguably safer investments) are more thinly traded and less widely held.

Louis notes that even municipal bonds are being preferred by investors seeking safety even though municipalities have limited means of raising revenues and are bankruptcy risks.Louis notes that Spain’s 7%+ interest rates are an example of what a sovereign must pay if its investors are concerned about its inability to pay principal and interest back.

Louis notes that the US rates are not near 7% because the US can print the difference. Louis notes however by doing so becomes in effect a default as the investors received debased currency in return. Louis notes that low interest rate punish savers who would help their economy by savings and that low interest rates encourage consumption which does not help the economy because people consuming are doing so with borrowed money.

Louis notes that the low interest rate environment helps the banks, the government and the rich. Louis notes that perhaps deflation is preferable for those on fixed incomes. Louis notes when prices go higher the only way to afford higher prices is to take out a loan.
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On Monday April 30, 2012, Louis Cammarosano, General Manager of HomeGain, was a guest on the Real Estate 360 Live radio show on The Big Talker 1580 WHFS AM, hosted by Ryan Sloper.

Listen to the show.

Part 1 (15:27)

Louis and Ryan discuss Ben Bernanke’s recent comments relating to keeping interest rates low for an extended period of time.  Ryan notes that interest rates are kept low out of necessity to keep the US interest payment obligations from being too expensive. Louis  adds that low interest rates also help keep the banks solvent. Louis notes that the policy statements don’t refer to these two points but rather state that low interest rates are in place to help the economy and consumers.

Louis notes that low interest rates are not good for consumers as they create an environment that does not encourage savings, so people are almost forced to put their savings into the stock market. Low interest rates also encourage consumers to take on more debt which is good for banks and not necessarily good for consumers. Ryan notes that loans are not available to small businesses that want to take advantage of the low interest rates.

Louis notes that the Fed policy of keeping interest rates low is market manipulation as interest rates are not driven by the market. Louis notes that if one can take advantage of these artificially low interest rate and lock in a long term mortgage you can hedge your future shelter costs against future increases. Louis notes that food and energy are stripped out of the official inflation rate.

Louis notes that the only reason the Federal Government can continue to run up deficits is because the Federal Reserve purchases the debt and that the Federal Reserve purchases 61% of all US Treasury issuance. Louis notes the Fed buys the debt with money that they print out of thin air which devalues the dollar.

Louis notes that Paul Krugman believes  that the government should be borrowing more money, and the Fed should be printing more money to pay for the borrowing to help the economy, rather than encouraging savings and production. Louis notes that if printing money was the solution to economic woes, all countries would just print more and all economic problems would be solved.

Louis notes that wealth is not created from the production and spending of money but rather from the savings and investing of money and production. Ryan notes Ron Paul’s views on monetary policy. Louis notes that gold and silver hold their value.  Louis notes that Congress ceded their authority on money to the Federal Reserve, a private bank and also notes Congress has also ceded to the President certain war powers.

Louis notes that Ron Paul’s position is not to run the economy or regulate people’s lives but rather to let people and the economy sort themselves out. Louis notes that most politicians make promises to get elected and that its difficult to get elected without a scheme.

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On Monday April 9, 2012, Louis Cammarosano, General Manager of HomeGain, was a guest on the Real Estate 360 Live radio show on The Big Talker 1580 WNEW AM, hosted by Ryan Sloper.

Listen to the show.

Part 1 (14:46)

Ryan and Louis discuss the jobs report. Ryan notes that the unemployment rate actually dipped even though more people are unemployed as the participation rate in the labor force has dropped. Louis notes that once a worker is classified as no longer in the labor force, they are no longer considered “unemployed”.

Louis notes the disconnect between companies doing well and consumers doing well. Louis notes that the stock market is up in part because companies with a lot of cash are purchasing their own stock. Louis also notes that companies are in a different position than consumers as many companies are not in debt and have huge cash balances while many consumers have little cash and large debt balances.

Louis notes that Apple’s over performance makes the overall market appear to be doing better than it is. Louis notes that perhaps Apple is overvalued. Ryan notes that many companies have their cash overseas. Louis notes that companies also hold US treasuries and that when they decide to free up their cash, they will have to sell their US Treasuries which will put downward pressure on those securities. Louis notes that 61% of US Treasuries last year were bought by the Federal Reserve.

Louis notes that the US government engages in deficit spending and relies upon the Federal Reserve to print money to purchase the US Treasuries to fund the spending. Louis notes that up to 20-30 years ago most of the US Treasuries were bought domestically by US companies and individuals.

More recently China and Japan bought large percentages of US Treasury issuances, however in the past two or three years they have cut their purchases of US Treasuries. Louis notes that the US government has increased spending each year which means it relies more heavily on debt issuances to fund its spending-debt issuances that are increasingly purchased by the Federal Reserve Bank. Louis notes that if the Federal Reserve was not buying the debt, interest rates would be much higher.

Ryan notes that the Federal Reserve can’t continue to be the purchaser of last resort forever. Louis notes that the Atlantic is calling Ben Bernanke a hero and that Paul Krugman is arguing that inflation is too low! Louis notes that Krugman thinks that because money is cheap that we should be spending more of it. Louis argues that is akin to telling someone the morning after who is hungover to have more beers because they are cheaper in the morning than they were last night. Louis notes that the less money you make the greater percentage food and energy are as part of your budget.

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On Monday March 26, 2012, Louis Cammarosano, General Manager of HomeGain, was a guest on the Real Estate 360 Live radio show on The Big Talker 1580 WHFS AM, hosted by Ryan Sloper.

Listen to the show.

Part 1 (15:18)

Ryan and Louis discuss the controversy regarding the allegations of a Congressional Budget Office employee who claims that the CBO prohibited statements in their reports indicating that foreclosures  had an impact on the housing market and that the decline in housing prices had an impact on household wealth.

Louis notes that economic data is often politicized as data can be included and excluded according to political aims. Louis notes that manipulation can also occur in the unemployment and inflation data. Louis notes that the Federal Reserve official manipulates the market and therefore its not surprising that economic data is also subject to manipulation.

Louis notes that statistics and science are also manipulated in other areas ie. cigarettes and cancer and global warming findings. Ryan and Louis discuss shadow inventory and foreclosures impact on the market.

Louis notes that bad assets should have been sold off by the banks rather than having been bailed out. Louis notes that the current low interest environment forces savers to put their money into stocks. Louis notes a recovery can be built on savings, but that with low interest rates borrowing, rather than savings is encouraged.

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On Monday February 27, 2012, Louis Cammarosano, General Manager of HomeGain, was a guest on the Real Estate 360 Live radio show on The Big Talker 1580 WHFS AM, hosted by Ryan Sloper.

Listen to the show.

Part 1 (14:27)

Louis and Ryan discuss the $5 billion suit against the banks for wrongfully foreclosing on homeowners. Louis notes a moral hazzard is created when companies and individuals are bailed out. Louis notes that when you keep interest rates artificially low borrowers have no incentive to pay off debt earlier and no incentive to save. Low interest rates urge consumption and borrowing. Louis notes that rising gas prices have little to do with speculators or problems in the Middle East but rather the decline in the value of the dollar.

Louis notes that in 1964 a gallon of gas cost $.30. In 1964 a US quarter was 90% silver. Today a 1964 quarter is worth $6.43 (MORE than the price of a gallon of gas-at today’s price of about $4.25 a gallon) a 1964 US dime is worth $2.50, so the  price of gas has gone up less vs the dollar than silver. Ryan notes that Warren Buffet is a stock expert but not necessarily an expert in real estate.

Louis notes that its probable that the local Realtor knows far more about real estate than Warren Buffet. Louis notes that many people believe that Warren Buffet’s views on taxes are somehow more valid because he has made a lot of money in stocks. Louis notes that sadly, the people equate wealth with intelligence.

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First Look Program

Fannie levels the field

New Incentives
Fannie Mae markets its REO through its HomePath.com Properties. Under the new incentive program, owner occupants and public entities that buy a HomePath Property between now and December 31, can receive up to 3.5% of the purchase price in closing cost assistance. The sale must close within 60 days of acceptance of the offer and no later than December 31, 2010.  The incentive must be requested in the initial offer.

What Is It
Individuals and public entities are given a period of time, generally 15 days after a property is listed at HomePath.com (a Fannie Mae site). HomePath.com is the listing site for about 190,000 properties held by the GSEs. Individuals and public entities (read non-profits) have a lead time over investors to inspect  and submit an offer to purchase. After 15 days, the listing is open to all potential buyers.

The idea is to offer first to those who would live in the home and become stakeholders, adding stability to the community and to avoid  too quickly putting property back into a supply laden market. By offering a sneak preview to owners first, Fannie hopes to encourage home ownership without the edge professionals may have and avoid the pressures of bidding against professional investors.

Why Should I Care
Levels the playing field and it’s working.

Fannie has moved more than 29,000 homes out of its owned real estate portfolio of properties acquired by the  through foreclosure to owner occupants. Some 800 non-profits have also bought an additional 5,000 properties through First Look.