Thursday, September 18, 2008


Stock values dropping . . . money markets devalued . . . giant investment houses being gobbled up or declaring bankruptcy . . .

And yet people will persist and turn money over to stock brokers with promises that things are going to turn around soon. To people they don't know, to be managed by people they don't know

But people are "afraid" of investment real estate? Where apartment renters pay the owner a monthly fee to live in a few hundred square feet? Or businesses or retailers pay the building owner for the right to operate out of a few thousand square feet of the owners space?

Where is the risk in THAT? Why the irrational fear of investment real estate (no I don't mean houses, I mean commercial buildings and multifamily) when the real volatility, uncertainty and high risk is in the markets?

Sunday, September 7, 2008

U.S. Treasury Dept. Seizes Control of Fannie Mae, Freddie Mac

This week, the U.S. government will take over Fannie Mae and Freddie Mac -- the two organizations that fund the majority of mortgages in the United States.

They are being placed in a government conservatorship for the time being. A tough decision, but one that had to be made in the end. My concern is that people who gambled and used these mortgages to fund questionable investments will be bailed out. CASH ON CASH readers know my distaste for flipping houses and calling the process "an investment." Some estimates are that upwards of 50 percent of foreclosures are on houses in which the owner does not reside, but purchased for investment.

People who used these organizations for their mortgages and are living in homes they may lose due to the credit crunch, however, are people who deserve a helping hand -- in most cases.

In many cases, Fannie Mae and Freddie Mac made loans that . . . for lack of a better phrase, should never have been made. To risky, sub-prime home buyers who in most instances should never have been allowed "the dream" of home ownership. Because anyone could see what was coming. Many of us in the industry have been talking for more than three years about the events unfolding now.

Time will tell how this all sorts out.