Happy Holidays From Fannie & Freddie

Fannie Mae & Freddie Mac issued orders suspending foreclosures from Nov 26 - Jan 9 just in time for the holiday season! This suspension is intended to help implement the new Streamlined Modification Program which will be launched in a few weeks.

The newly announced loan modification program is aimed to help high-risk borrowers who have already missed at least 3 mortgage payments and haven't filed for bankruptcy. Loan modifications can be done by either reducing the interest rate, extending the length of the loan, or temporarily reducing principal payments.

The suspension on foreclosures only applies to occupied properties, not to vacant homes and should help 6000 borrowers avoid foreclosure at the end of this year.

I think this is a great step in the right direction....

End Of Wall Street's Boom

This little diddy was emailed to me today by an old co-worker. It's a really interesting look at how the past 20-30 years in Wall Street banking led to the financial crisis we've been hit with today. It's a pretty long article but definitely worth the read for some insight. It's written by Michael Lewis, author of Liar's Poker who is now being validated in his qualms about Wall Street 20 years after the book's publication. Much of this is relevant to the condition of the housing market today so I'll pick out a few such excerpts:

There’s a simple measure of sanity in housing prices: the ratio of median home price to income. Historically, it runs around 3 to 1; by late 2004, it had risen nationally to 4 to 1. “All these people were saying it was nearly as high in some other countries,” Zelman says. “But the problem wasn’t just that it was 4 to 1. In Los Angeles, it was 10 to 1, and in Miami, 8.5 to 1. And then you coupled that with the buyers. They weren’t real buyers. They were speculators.”

In 2000, there had been $130 billion in subprime mortgage lending, with $55 billion of that repackaged as mortgage bonds. But in 2005, there was $625 billion in subprime mortgage loans, $507 billion of which found its way into mortgage bonds. Eisman couldn’t understand who was making all these loans or why.

He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S&P couldn’t say; its model for home prices had no ability to accept a negative number. “They were just assuming home prices would keep going up,” Eisman says.

Read the full article here: http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom#page1

Obama Drama

I think the fact that our next U.S. president comes from Hyde Park on the South Side of Chicago may have a teeny bit of influence over whether we get the Olympics in 2016, don't you? The only real drama at the Obama rally in Grant Park on Nov 4 was Oprah crying on the shoulder of a random stranger; there were no "incidents" or any form of violence. The crowd was estimated to be somewhere in the ballpark of 250,000 people, so he's already proven that Chicago can handle crowd control.

I was there (not in the special people section, but in the overflow areas watching Senator Obama speak on the big screen), and this place was PACKED. Zack and I rode our bikes down there on a whim after his flag football game, and were glad we went. Really, this was a historic event and it was very exciting to be able to be there for it in our very own city of Chicago. On the bike ride down, most streets were blocked off. But for whatever reason, there were still cars on State Street, and you could hear the echo of honking horns from blocks away. There was honking, waving of flags, crying, cheering, chanting, screaming like crazy people, and much more. I can't even explain the sound of it... you really had to be there. But as soon as Obama took the stage, the crowd fell silent to watch and listen.

Either way, I'm glad we maintained a tame atmosphere in Grant Park on Nov 4 and I'm also crossing my fingers that our "good behavior" gives us brownie points when it comes to picking the location for the 2016 Olympics next year.

I know this is a terrible picture of the Obama rally, but it was the best I could do with my camera phone! I'll get better photos off Zack's camera later...

CTA Strikes Again

Start saving your pennies, commuters. The CTA is planning on raising fares again in January. The increase will be up to 50 cents per ride, depending on which card you use.

Bus rides will be $2 instead of $1.75, and el train rides will go up to $2.25 from $2.00. They're also eliminating the discount that Chicago Card users now receive. Prices of multi-day passes are also going up.

The CTA blames the increases on Governor Blagojevich for allowing seniors to ride free.