The night was stormy. The wind was trashing and thunder was crashing and trees were falling all around us. It was a horrible storm. The rain was coming down in sheets and water flowed through a gash in the roof filling bucket after bucket with water.

The next day we surveyed the damage. After pulling a huge tree limb out of the roof it revealed a gaping hole. Something had to be done so a huge blue tarp was strung across the house. It was a temporary fix but it worked until the roof could be repaired and all could be made right again.

In a way, this is what has happened to our economic system and isn't it appropriate that the government would name the portion of HR 1424 Emergency Economic Stabilization Act that is designed to stabilize home ownership T.A.R.P. (Troubled Asset Relief Program)

Many people ask me what this bill is all about and the answer is complex. You see the bill is about a lot of things. Some of what is in the bill is important, however I am sad to say that there is a lot in the bill that is not. So let's focus on what is important in the bill and for the time being, leave the pontification of what should not be there to the pundits.

One of the most important parts of this bill is the TARP (Troubled Asset Relief Program). The TARP is the portion of the bill that gives the Secretary of the Treasury the authority to purchase non-performing and under-performing loan assets from banks. This huge fund should start to get all of the bad loans out of the credit system so that the real value of the loan pools that are performing can be determined.

The American economy, our financial house, has just been through a really bad storm. The TARP is there to temporarily cover the hole in the rough until it can be fixed properly. It is truly and temporary fix.

However, don't fret, there is a portion of this bill that is designed to permanently fix the hole and put our economic house in order. After the Sec. Tres. buys these troubled assets he has several tools he can use to transform the troubled assets from worthless pieces of paper into valuable streams of income.

First, the bill gives the Secretary the ability to adjust non-performing loans. The secretary can lower the interest rate, lower the loan balance or reset the loan to a 30 year fixed. He can do one or all of these things to help the borrower stay in their home and to make the home affordable based on the current income of the homeowner. This should allow the homeowner to start making their payments on time and should turn a non-performing asset with no value into a performing asset that can be sold for a profit.

Second, the Secretary has the authority to insure the payments on the new loan. If the secretary feels that the new loan would sell faster and for more money in the tertiary market if it were insured, the secretary can add a premium to the payment. This premium would insure the loan for up to 100% of it's payment if it went into default. Essentially this means that anyone purchasing the loan as an investment would have no downside risk.

As I said, there is much more in this bill that can be discussed. Much of it has to do with technical issues relating to how banks lend to each other and how they borrower from the Fed. The bottom line is that the TARP is the major portion of the bill that will help homeowners and that will stabilize the real estate markets.

So we've decided to do something about the hole in the roof caused by the storm. We've put a TARP over it to stop the damage. Now let's hope our politicians have the knowledge and foresight to take the next steps to do the hard work to remove the TARP as quickly as possible and truly fix the gaping hole in our economic house.

Michael Gross is the President of Dividend America Mortgage and has been in real estate for over 20 years. He has been a builder, a Realtor, an appraiser, and currently he is a lender and an active real estate investor. He uses all of his experience and knowledge to show individuals how to properly use a mortgage as a tool to help create greater wealth through real estate investing. For more information on residential and small commercial loans please call 770-350-7373 or email mgross@dividendamerica.com

Ladies and Gentlemen, Elvis has Left the Building

Do you remember the old saying; 'Ladies and gentlemen, Elvis has left the building!' The reason that the saying exists is because after an Elvis concert the concert hall would stay packed and people would not leave. They would linger, not knowing what to do next. Would he come back, was it all over, they had no ability to make a decision.

Well, a similar thing has happened in the stock market and in the credit markets and everybody is milling around and wondering what to do. Wonder no more, some important changes are happening and you need to take advantage of them.

The recent take over of Fannie Mae and Freddie Mac and the failure of Lehman Brothers and even the lifeline thrown to AIG have a positive side. Even though our retirement accounts and stock portfolios are taking a beating, the stock market and bond market are finally working in unison.

Traditionally, when the price of stocks decline it causes the price of bonds to increase. This ying and yang of the financial world is caused by a desire by investor to find safe investments when the economy goes bad. Traditionally the fixed income Treasury Bond market has been the safe haven. But recent ‘structural’ problems related to the credit crisis had left investor with no place to hide.

Enter the Feds! The take over of Fannie Mae and Freddie Mac helped to right the markets. The take over caused a reduction in the spreads between the yields on Mortgage Backed Securities (MBS) and the Treasury Bonds. The actions by the government sent a clear message that our government would support our banking system and this caused the spreads to decrease to normal levels. Now this gobblee-gook doesn’t mean a whole lot too many people and explaining why this is important could take a whole day. We’re not here for an economics lesson so suffice to say that this is how the markets are supposed to work.

Many investors seeing that the markets are now working properly have begun to pour their dollars into the safety of government debt…..i.e. Treasury Bonds. As more and more investors purchase these bonds the price of the bond increases and as the price of the bond increases its yield decreases! Guess what happens to interest rates? That’s right, interest rates follow the yield. So as the yield decrease so do the interest rates.

This structural change in the market place has provided another great opportunity for home owners. Right now interest rates are below 5.5% - today they are as low as 5.25% on a 30-Year Fixed!(this is for a primary residence, of course the interest rates on an investment property would be slightly higher.) We don’t know how long this will last. Any sign of inflation, a weakening dollar or oil climbing above $110 per barrel could make all this opportunity melt away like butter in hot iron skillet.

If you know of any one looking to buy or who needs to refinance, they need to do it now. Don’t wait, get moving or get them moving before it’s to late. Elvis has left the building and the entertainment hall is in turmoil.

Don't look back and regret not making a decision. The exit signs are well lit. You can be the one outside standing beside Elvis' bus getting the autograph and adding value to your day just by being one of the first to make a decision.

If you have any questions please don’t hesitate to give me a call or to shoot me an email. I am here to serve.

Michael Gross is the President of Dividend America Mortgage and has been in real estate for over 20 years. He has been a builder, a Realtor, an appraiser, and currently he is a lender and an active real estate investor. He uses all of his experience and knowledge to show individuals how to properly use a mortgage as a tool to help create greater wealth through real estate investing. For more information on residential and small commercial loans please call him at 770-350-7373 or via email at mgross@dividendamerica.com

Playing The Real Estate Game - The Offer Phase

Today I want to talk about making offers. I often think I should devise a game to teach people how to make offers. I'm not talking about negotiating, just making a plan old, vanilla, down and dirty offer.

Real estate can be a trying business at times. Especially at times like these. With tons of foreclosures on the markets and agents fielding calls from every nare-do-well on the block asking inane questions and basically wasting their time, it's tough to get anyone to accept your REAL offer to purchase a property.

Right now I'm playing the real estate game in the offer phase in hopes that I'll get to up the stakes and get into the negotiation phase. But first I have to get somone to take me seriously.

I've had several conversations with 'duty' agents who promise to call me back but the promise is never kept. I call the office to try and locate the listing agent but they will not accept any calls and will only deal with other licensed agents. Highly FRUSTRATING!

So what do we do? We play the game, and trust me, it is a game. Here's how the game works. Sometimes you are just dealing with inept agents or agencies that make their money off maintaining the listing. They can care less if the property sells, they make a fee to maintain the property.

Other times you are dealing with agents that see opportunity in a particular piece of real estate and they want to squelch offers on the property so that they can buy it for themselves at a future date. Unethical? You bet! Do they care, NO!

So it's a game and I understand the rules. So here's what I do. First, I'm tenacious! I bully, cajole, call-call-call and then call again. I'm relentless, I've got nothing better to do all day than to try and get my offer presented on this property.

I'm calling to gather information. I want to see the inside, I want to know the taxes, the MLS or FMLS number. I want details.

Once I've gathered the details, I call MY agent. I always teach that investors should use an agent. You should have a Team of Trusted Advisers and high on the team list should be a Realtor. Notice I said a Realtor, not just a licensed agent.

So the rules that the listing agent gave me were that they only deal with agents. Fine, I've got one! And she's tenacious just like me! If she feels like I'm offering to high, she gives me a cross look and shakes her head. Okay then, what? Lower! How low? Well, how about 50% of the asking price! LOL You go girl!

I'm playing the game. Now instead of being frustrated, I'm the one doing the frustrating. I'm winning, offers are being accepted. I'm playing the offer phase! When I win this phase of the game its on to the next phase, The Negotiation Phase. Stay tuned........

Michael Gross is the President of Dividend America Mortgage and has been in real estate for over 20 years. He has been a builder, a Realtor, an appraiser, and currently he is a lender and an active real estate investor. He uses all of his experience and knowledge to show individuals how to properly use a mortgage as a tool to help create greater wealth through real estate investing. For more information on residential and small commercial loans please call 770-350-7373 or email mgross@dividendamerica.com