Monday, May 12, 2008

The New York Times - "When Should the Fed Crash the Party?" (5-11-08)

"Did Mr. Greenspan’s Fed make the right decisions? Did it set a bad example for Mr. Bernanke to follow? It is important to remember that deflation is devilishly hard to deal with. When people expect prices to decline, they tend to hold back from spending, which only makes prices fall further. The policy choices open to the Fed are limited. It can try to stem the tide by cutting interest rates, but once the interest rate falls to zero, there is no place else for it to go. Then the authorities have no choice but to open up the monetary spigot, a route that can haunt them later by creating inflationary pressures or asset bubbles."

Morgan Florida Real Estate Group - "REO Failure at Fannie Mae" (5-11-08)

"We've been finding an increasing number of 'hidden listings' of REO properties. A hidden listing is when a broker lists the property in such a fashion that it cannot be found by local agents working with buyers. This might be unintentional, due to gross negligence, or it might be fraud. The fraud end is clear. If the listing is hidden, eventually the REO owner will keep dropping the price until it is sold. At some point, when the price is low enough, the listing agent can call a friend to buy the property, which they will flip after closing."

Orange County Register - "Half of 2005-07 O.C. buyers owe more than home’s value" (5-11-08)

"Buyers who purchased in 2005 and 2006 were in the worst shape, figures by Zillow.com figures show. They bought at the peak of the market, and their median down payment was just 10% of their home’s value, hence they had less equity to begin with. (Equity is the amount of a home’s value above the amount owed.)"

No comments: