Good News from Dr. Manny: April '10

Good News from Doctor Manny

Patience serves as a protection against wrongs as clothes do against cold.  For if you put on more clothes as the cold increases, it will have no power to hurt you.  So in like manner you must grow in patience when you meet with great wrongs, and they will then be powerless to vex your mind.
                                                         -- Leonardo da Vinci

Mortgage Good News

After the collapse of Wall Street, the secondary market for mortgage back securities, which provided banks with mortgage funds, fell apart.  To prevent a total collapse of the mortgage industry, the government took control of Fannie Mae and Freddie Mac, the agencies who offer conforming mortgages.  As a result, we all benefited from low interest rates for loans up to $417,000 and those a bit higher for $729,750.  On March 31st the government stopped buying mortgages from Fannie and Freddie, and there was concern that interest rates would skyrocket.  Thankfully, rates have only slightly increased.  Let’s hope it will continue this way.

During the boom years, when property prices grew like mushrooms after the rain, many jumbo mortgages were higher than $729,750.  Additionally, many loans were fixed for periods of time like 5, 7 or 10 years, or were adjustable with negative amortization.  Over the last two years, those who had jumbo loans (many of them over $1,000,000) were stuck, because a majority of lenders no longer offered these loans.  Now many major banks offer loans up to $2 million, and higher.  These loans are kept in a portfolio, since there is no longer a secondary market.  As this trend continues, and since all of these loans are qualified based on one’s real income, and have a relatively low loan to value (LTV), I believe that in a few years the secondary market will resurface.

One major source of income for banks and mortgage companies in the last two years has been FHA loans.  One of their major advantages is they require a low down payment of 3.5% and accept a relatively low credit score.  The drawback of FHA loans is 1.75% for mortgage insurance (MI).
Recently, lenders came up with new loan programs with 95% LTV and much lower MI, which makes it an excellent alternative. 

Personal Good News

Recently, I participated in a four day class, taught by the Master Photographer Joe Meyerowitz at the Palm Springs Photo Festival.  It inspired me to change my style of capturing images.  Soon, I will upload my new images to my photography website. In the meantime, here’s a preview of an image I took while driving home from L.A.

Overall Good News

I always listen to various tapes/CDs in the car.  In the past, I used to buy them, until I “discovered” the public library.  They have a huge collection of books on CDs.  Recently, while driving to Palm Springs, we listened to a long (12 CDs) novel by Pullitzer Prize winning author Gerald Brooks “People of the Book.”  It is a fictional story about the Sarajevo Hagada.  A Hagada is a small book, that describes exodus of the Hebrew slaves from Egypt, and is traditionally read during the seder, the dinner held on Passover.  It is an incredible story about the book’s miraculous 600 years journey through many countries, the people involved, and their part in World history.  The book survived many obstacles, as will we in our lives.

One of my favorite magazine publications is Ode, self-coined the magazine for intelligent optimists  http://www.odemagazine.com/. They recently launched an Ode Salon series.  If you consider yourself an intelligent optimist, I hope to see you at the first event, on April 27.  Click here to read more.

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