Real Estate Investing Strategies For Today’s Market
The term “real estate investing” likely brings a number of things to mind. You might immediately leap to real estate investing being real estate portfolios and real estate retirement plans or you may think instead of short sales, bulk reo investing and virtual real estate investing. You probably also wonder how these things play out in real estate investors’ life in the current economy.
You will need to know a lot about real estate investing. Knowing the basics of real estate investing education is a good way to get the most out of every lesson. Whether your target is short sales, bulk reo sales, virtual real estate or improving real estate investor abilities, you need to know some real estate investing basics. Here are three real estate investing basics that even some experts do not really know:
1. Real estate investing education always yields positive. Every good real estate deal represents thousands of dollars in potential wealth. The knowledge of how to get that wealth is the key to your success. Learning about real estate increases your odds of success when you do a real estate deal. Small investments yield big results when you invest in learning and then implement what you learn.
2. Any economy allows for success in real estate investing. Often people think that you can only be a success in real estate when the economy is good. In reality, a bad economic situation is not bad for real estate investors. You can often buy properties at deep discounts. You might also find deals that simply would not exist in a booming economy. In fact, real estate investing can turn the tide for a poor economy. When an economy is less than thriving, short sales, bulk reo sales and virtual real estate can prosper. You can save yourself and others from major financial woes if you know how to do these deals.
3. You do not need lots of your own cash to be a successful real estate investor. You can make a success of real estate investing no matter how much or little money you have. There are lots of deals that you can use other people’s money to do. If you are a good investment private lenders may let you use their money. An investor who is a good investment knows as much as they can when it comes to real estate investing. This will enable you to show people who have money for real estate investing but may not know how to use it that you are a good investment.
Real estate investing is a great way to create a good amount of wealth. You will have the ability to create income in any economy. You can create success for yourself using knowledge of real estate investing, short sales, bulk reo sales and virtual real estate. You will be helped to succeed as a real estate investor by knowing real estate investing basics.
Click here for information about Non-Purpose, Non-Recourse Lending
The Great 401K Stock Loan Scandal – How Wall Street Minted Money While Retirees Picked Up the Losses
During the “Go-Go” Wall Street days of a few years ago, some companies got rich by being middle-men between 401k mutual funds and short sellers who wanted to borrow their stock.
The short sellers put up collateral, agreed to pay dividends, and paid a small amount of interest. These middle-men companies took a big slice of the earnings. The 401k funds got only a little, but did not complain because they thought it was essentially a risk free source of extra money.
Unfortunately, the middle-man companies overseeing the transactions got greedy, and started investing the collateral in commercial paper, instead of safer T-bills. When the financial crisis hit, and Lehman Brothers went bankrupt, there was a panic in the commercial paper market, and some of the invested collateral suffered losses.
These Wall Street firms then passed the losses onto the funds. Ultimately, it was the “little guy retirees” who are paying the price. Effected S&P 500 funds, for example, lagged their benchmark index by 11 basis points (0.11%) before fees. Mortgage-backed funds lagged by up to 53 basis points (0.53%).
Even though these losses caused by poorly invested collateral are insignificant compared to the overall loss in the mutual funds (e.g. the S&P 500 index lost 36% in 2008), they still angered some investors – who have filed class action law suits.
Overall, this situation seems to be limited to mutual funds. People with brokerage accounts who buy individual stocks do not have to worry. All the major brokerages keep 100% of any fees from lending securities to short sellers. In return, they cover any losses.
Today stock loans are very popular. Since the financial markets have been turned up-side down and banks are not lending, one method of financing has gained a lot of attention – securities based lending.
Click here for information about Non-Purpose, Non-Recourse Lending
Securities Lending is a long-established process. In fact, hundreds of successful stock-lending transactions have been executed involving the American Stock Exchange (AMEX), National Stock Market and Small Cap Stock Market (NASDAQ), New York Stock Exchange (NYSE), Over-the-Counter Bulletin Board (OTCBB), and certain foreign exchanges.
For those with money invested in marketable securities, there is a safe way to leverage their assets and take advantage of the golden opportunities now available to cash-in on terrific RE investment opportunities which are available today.
If you are a forward-thinking investor who wants to retain the future ownership of your assets as well as leverage the present value of your securities for immediate cash needs, securities lending (also known as stock loans) can be a terrific program.
Securities base loans are –
· Simple & Quick – NO Credit Check / NO Income Verification / NO Upfront Fees / NO Closing Costs / NO Personal Guarantee
· Loans are “Non-Purpose” – loan can be used for virtually anything borrower wants to accomplish (personal or business)
· Loans are “Non-Recourse” – giving the borrower the opportunity to simply “walk away” if the collateral falls below a set floor amount
· High Loan-to-Values – up to 80% LTV (depending upon security); which is much higher than banks and brokerage companies can offer
· Loans are Interest Only – principal payment at maturity; otherwise loans can be refinanced or extended
· Low Fixed Interest Rates – usually between 2% to 4%
· Loan Term – minimum of 3 yrs; also 5 yr / 7 yr / 10 yrs
· Quick Funded – usually within 5 to 7 business days
Share Trading Signals
By following a trading system, market condition will at times be favourable to buy and at other times be favourable to sell. Clearly defined conditions give ‘signals’ that the educated investor can read and act on. Signals are not as crucial for the long term investor. For these people, market conditions and the value of particular companies can be watched on a daily basis. For day-traders, however, signals are crucial for acting quickly on stock market movements.
Investors who treat trading as a full-time job have the time to watch the market movements for signals. Oftentimes, however, signals can be automated and integrated into trading software. The investor can choose which signals to be alerted about and they will automatically appear on screen. Software signals are usually only available by subscription and some services charge hundreds of dollars a year for a complete package. This includes trading software and access to up-to-the-minute charts for the latest information about the stock market.
Investors who don’t have the time to watch the market closely can subscribe to services which publish signals on a daily or hourly basis. These services may employ market analysts who may follow several indicators to arrive at a particular signal. More commonly, however, their systems are completely automated with signals being generated by software which examines market conditions. Some of these services have a better track record than others – it’s a good idea to research them before signing up.
With any third-party signal provider it pays to know how the signals are being generated. Since there are such a large number of market indicators some of them may contradict each other. In addition, a particular indicator may send out conflicting signals depending on the time frame.
Market conditions also play an important part on the accuracy of indicators. During upswings in the market, for example, trend indicators will send out buy signals but longer-term oscillator indicators will view the market as being overbought and send out a sell signal. Generally speaking, trend indicators are most accurate during trend conditions and oscillators are best during times of transition. Both types of indicators are often in variance with the other.
To overcome these problems, try to find a signal generator that uses at least 3 market indicators for verification. Signals that are verified by 3 different indicators are strong and tend to be accurate. It is also important to look at signals from varying time frames. An upswing may simply be a short term correction and the market may afterwards continue its downward movement. Taking a broad view of market conditions allows you to see these variations more clearly.
Depending on the type of service you sign up for, signals can be delivered by email on a daily basis, available for viewing on a website, or be integrated into your trading software so that popups appear on your screen for particular signals that you are watching.
Companies which provide signals usually offer their services on a monthly basis. Some are quite expensive – as high as several hundred dollars a month. These are obviously aimed at the professional trader but other services are also available at more reasonable costs.
The value of these services has to be weighed by the individual investor. They can be a great time saver but they may also encourage laziness when it comes to analyzing the market. A knowledgeable trader should have the tools necessary to judge the effectiveness of a signal system and do some of the calculations himself to keep on top of the market.
Since the financial markets have been turned up-side down and banks are not lending, one method of financing has gained a lot of attention –securities based lending.
Click here for information about Non-Purpose, Non-Recourse Loans
For those with money invested in marketable securities, there is a golden opportunity to cash-in on the tremendous RE investment opportunities now available. Today, there are multiple commercial & residential RE properties available for about 30% to 50% of what they were only two years ago.
If you are a forward-thinking investor who wants to retain the future ownership of your assets as well as leverage the present value of your securities for immediate cash needs, this can be a terrific program.
What Is Technical Share Analysis? Section 1
Technical analysis is the art and science of examining share chart data and predicting future moves on the stock market. Investors who use this style of analysis are often unconcerned about the nature or value of the companies they trade shares in. Their holdings are usually short-term – once their projected profit is reached they drop the stock.
The basis for technical analysis is the belief that stock prices move in predictable patterns. All the factors that influence price movement – company performance, the general state of the economy, natural disasters – are supposedly reflected in the stock market with great efficiency. This efficiency, coupled with historical trends produces movements that can be analyzed and applied to future stock market movements.
Technical analysis is not intended for long-term investments because fundamental information concerning a company’s potential for growth is not taken into account. Trades must be entered and exited at precise times, so technical analysts need to spend a great deal of time watching market movements.
Investors can take advantage of both upswings and downswings in price by going either long or short. Stop-loss orders limit losses in the event that the market does not move as expected.
There are many tools available to the technical analyst. Literally hundreds of stock patterns have been developed over time. Most of them, however, rely on the basic concepts of ‘support’ and ‘resistance’. Support is the level that downward prices are expected to rise from, and Resistance is the level that upward prices are expected to reach before falling again. In other words, prices tend to bounce once they have hit support or resistance levels.
Charts
Technical analysis relies heavily on charts for tracking market movements. Bar charts are the most commonly used. They consist of vertical bars representing a particular time period – weekly, daily, hourly, or even by the minute. The top of each bar shows the highest price for the period, the bottom is the lowest price, and the small bar to the right is the opening price and the small bar to the left is the closing price. A great deal of information can be seen in glancing at bar charts. Long bars indicate a large price spread and the position of the side bars shows whether the price rose or dropped and also the spread between opening and closing prices.
A variation on the bar chart is the candlestick chart. These charts use solid bodies to indicate the variation between opening and closing prices and the lines (shadows) that extend above and below the body indicate the highest and lowest prices respectively. Candlestick bodies are coloured black or red if the closing price was lower than the previous period or white or green if the price closed higher. Candlesticks form various shapes that can indicate market movement. A green body with short shadows is bullish – the share opened near its low and closed near its high. Conversely, a red body with short shadows is bearish – the stock opened near the high and closed near the low. These are only two of the more than 20 patterns that can be formed by candlesticks.
Since the financial markets have been turned up-side down and banks are not lending, one method of financing has gained a lot of attention –securities based lending.
Click here for information about Non-Purpose, Non-Recourse Loans
For those with money invested in marketable securities, there is a golden opportunity to cash-in on the tremendous RE investment opportunities now available. Today, there are multiple commercial & residential RE properties available for about 30% to 50% of what they were only two years ago.
If you are a forward-thinking investor who wants to retain the future ownership of your assets as well as leverage the present value of your securities for immediate cash needs, this can be a terrific program.
Click here for information about Securities Based Lending / Stock Loans
What Is Fundamental Stock Analysis? Section 2
Although the raw data of the Financial Statement has some useful information, much more can be understood about the value of a stock by applying a variety of tools to the financial data.
Earnings per Share
The overall earnings of a company is not in itself a useful indicator of a share’s worth. Low earnings coupled with low outstanding shares can be more valuable than high earnings with a high number of outstanding shares. Earnings per share is much more useful information than earnings by itself. Earnings per share (EPS) is calculated by dividing the net earnings by the number of outstanding shares. For example: ABC company had net earnings of $1 million and 100,000 outstanding shares for an EPS of 10 (1,000,000 / 100,000 = 10). This information is useful for comparing two companies in a certain industry but should not be the deciding factor when choosing shares.
Price to Earning Ratio
The Price to Earning Ratio (P/E) shows the relationship between share price and company earnings. It is calculated by dividing the share price by the Earnings per Share. In our example above of ABC company the EPS is 10 so if it has a price per share of $50 the P/E is 5 (50 / 10 = 5). The P/E tells you how much investors are willing to pay for that particular company’s earnings. P/E’s can be read in a variety of ways. A high P/E could mean that the company is overpriced or it could mean that investors expect the company to continue to grow and generate profits. A low P/E could mean that investors are wary of the company or it could indicate a company that most investors have overlooked.
Either way, further analysis is needed to determine the true value of a particular stock.
Price to Sales Ratio
When a company has no earnings, there are other tools available to help investors judge its worth. New companies in particular often have no earnings, but that does not mean they are bad investments. The Price to Sales ratio (P/S) is a useful tool for judging new companies. It is calculated by dividing the market cap (stock price times number of outstanding shares) by total revenues. An alternate method is to divide current share price by sales per share. P/S indicates the value the market places on sales. The lower the P/S the better the value.
Price to Book Ratio
Book value is determined by subtracting liabilities from assets. The value of a growing company will always be more than book value because of the potential for future revenue. The price to book ratio (P/B) is the value the market places on the book value of the company. It is calculated by dividing the current price per share by the book value per share (book value / number of outstanding shares). Companies with a low P/B are good value and are often sought after by long term investors who see the potential of such companies.
Dividend Yield
Some investors are looking for shares that can maximize dividend income. Dividend yield is useful for determining the percentage return a company pays in the form of dividends. It is calculated by dividing the annual dividend per share by the share’s price per share. Usually it is the older, well-established companies that pay a higher percentage, and these companies also usually have a more consistent dividend history than younger companies.
Since the financial markets have been turned up-side down and banks are not lending, one method of financing has gained a lot of attention – Securities Based Lending.
Click here for information about Non-Purpose, Non-Recourse Loans
For those with money invested in actively traded securities, there is a golden opportunity to cash-in on the tremendous RE investment opportunities now available. Today, there are multiple commercial & residential RE properties available for about 30% to 50% of what they were only two years ago.
If you are a forward-thinking investor who wants to retain the future ownership of your assets as well as leverage the present value of your securities for immediate cash needs, this can be a terrific program.
Click here for information about Securities Based Lending / Stock Loans
Why You Should Look for Stock Advice Online –
Why should you look for stock advice online? Consider overwhelming reason. In “years past”, a person looking to invest in stocks had to pay a hefty commission to a stock broker who made the transactions for them. The majority of these individuals had to rely on the broker for advice or study the stock market on their own seeking information from newspapers, magazines and the library.
Stock brokers made their money whether or not the advice they gave you was any good and the information available to the average person was not usually enough to qualify them to make good decisions, so only the rich could afford the kind of information that would make them richer.
Today, things have radically changed – we are in the “information age”. Everyone has access to a lot of top quality stock advice online. You don’t have to be an elite member of society to have a real chance of making your fortune on the stock market. Rather than blindly trusting a broker’s advice, doesn’t it make more sense to educate yourself with good stock advice online so you can make a qualified decision?
Today there is just so much information available online today that it would be entirely foolish not to take the time to educate yourself so that you can recognize the shifts and trends in the market that can make you rich. There is a wealth of information available for anyone willing to look for it.
Finding good stock advice online isn’t as difficult as you might think, either. You should look for information that teaches you how to read and analyze stock charts because these are instrumental in helping you to recognize a trend that indicates that you should buy or sell a particular stock. Once you are armed with this type of knowledge you will be much better prepared to make a healthy profit through buying and selling stocks on the stock market.
The internet is the “great equalizer” of today because so much quality information is available to everyone regardless of their race, religion or economic standing. The best stock advice online is there for the taking to anyone who will reach out their hands and grab it. Especially during these tough economic times when people need to increase their incomes more than ever, stock advice online is there to help lead the way. Of course a person still has to use that information wisely, but nonetheless, it is available for any person to study and use to make good stock purchasing decisions.
Why should you look for good stock advice online?
- 1. For starters, to help you achieve “financial independence”, and
- 2. Give you a chance to save for retirement and maybe even retire early so you won’t have to rely on your employer or the government to have any money left to give you when the time comes.
- Wealth building should be your number one reason for seeking online stock advice.
Since the financial markets have been turned up-side down and banks are not lending, one method of financing has gained a lot of attention – Securities Based Lending.
Click here for information about Non-Purpose, Non-Recourse Loans
For those with money invested in marketable securities, there is a golden opportunity to cash-in on the tremendous RE investment opportunities now available. Today, there are multiple commercial & residential RE properties available for about 30% to 50% of what they were only two years ago.
For example, CEOs, CFOs or COOs, with large publically traded companies, who have large blocks of corporate stock can leverage those assets to take advantage of investment opportunities.
If you are a forward-thinking investor who wants to retain the future ownership of your assets as well as leverage the present value of your securities for immediate cash needs, this can be a terrific program.
These loans are –
· Simple & Quick – NO Credit Check / NO Income Verification / NO Upfront Fees / NO Closing Costs / NO Personal Guarantee
· Loans are “Non-Purpose” – loan can be used for virtually anything borrower wants to accomplish (personal or business)
· Loans are “Non-Recourse” – giving the borrower the opportunity to simply “walk away” if the collateral falls below a set floor amount
· High Loan-to-Values – up to 80% LTV (depending upon security); which is much higher than banks and brokerage companies can offer
· Loans are Interest Only – principal payment at maturity; otherwise loans can be refinanced or extended
· Low Fixed Interest Rates – usually between 2% to 4%
· Loan Term – minimum of 3 yrs; also 5 yr / 7 yr / 10 yrs
· Quick Funded – usually within 5 to 7 business days
Click here for information about Securities Based Lending / Stock Loans
2nd Mortgages are gone – what’s today’s new lending strategy?
Since the mortgage melt-down, lenders across America have mostly doing away with Stated Super Jumbo Seconds. There is no longer a secondary market to purchase this type of loan.
The sub-prime meltdown actually began in December 2006, when lenders did away with stated 100% investor loans and it has gone much, much further since then.
Estimated losses due to foreclosure of Adjustable Rate Mortgages actually adjusting this year and next year are in the billions, if not trillions, and lenders are responding by removing products from their portfolios.
Like anything else, the mortgage market is driven by supply and demand, and the supply actually comes from Wall Street Banks who are willing to buy closed loans from Mortgage Lenders. Previously, Wall Street had a seemingly insatiable appetite for sub-prime loans, “alt A” loans, and jumbo loans. (The press has combined everything that isn’t “A Paper” into the heading sub-prime, when actually sub-prime loans are loans with substandard credit, not non-conforming agency loans.)
Alt A Loans are loans that are A Paper loans, but with alternative documentation – stated income, stated asset, no doc, etc and therefore don’t meet Fannie Mae and Freddie Mac ‘s conforming loan underwriting standards.
And obviously Jumbos, Super Jumbos and Mega Jumbos could be prime, sub-prime or alt a loans, as far as the credit rating is concerned, and the documentation likewise could be any level.
The press and Capital Hill with their multiple legislation attempts have all lumped together any loan that is not fully documented, conventional loan limits and a plain vanilla 30 year fixed rate into the now hated “sub-prime” category. Neither the press nor the legislators have the time or inclination to learn the vagaries of the mortgage business and do their jobs “on the fly” as it were, and so, there is bad information and misinformation flying everywhere.
With the losses Wall Street Banks are experiencing in foreclosures of all kinds, they’ve lost their appetite for anything other than strictly “A Paper” loans. They aren’t buying much, and so, the supply of money for mortgages has gone to an historical low.
Click here for information about Non-Purpose, Non-Recourse Loans
Stated owner occupied loans for purchases and refinances are topped at 90% LTV; stated investor loans for purchases and refinances are also topped at 90%, and credit score requirements s for everything have gone up to levels previously regarded as pristine. That is, of course if your home is not a multi-million dollar purchase or refinance and then you are really looking at 65% to 70% max.
Estimates for the duration of this dearth of funds range from six months to two years. With the programs available for refinances, and talked about to become available for refinances, to the rational mind, it seems that this shouldn’t last forever. The strange thing is that borrowers who are in trouble don’t seem to be trying to do anything about their foreclosures because the numbers just keep getting larger every month.
FHA Secure for instance will allow a refinance of a mortgage already in default, with no regard for the late payments if they occurred after the loan’s interest rate adjusted.
The FHA is, in my opinion, the sub-prime loan of choice – the rates are as good as, conventional interest rates, and when that is combined with the fact that they IGNORE late payments, I would think people would be clamoring for those loans.
Additionally, if the value of a house has gone down during this market turbulence, and the property was originally bought with a first and a second, they will allow the second to stay, even if the LTV goes over 100%.
Fannie Mae and Freddie Mac are considering raising conforming loan limits above the $417,000 maximum presently allowed in order to assist borrowers in California (where less than $417K doesn’t get you much of a home). While this was regarded as a probability earlier on, it seems to have lost steam lately.
And finally, there is the possibility of a work out arrangement with the lender to whom one is late. While it may not be the perfect arrangement because at this point in time the fees allowable on forbearance workarounds are still very high, there is legislation pending that will limit the amount mortgage companies can actually charge for late fees, payoffs, forbearance, etc.
If you’re buying one of those million dollar bargains, be prepared to appear at the closing table with big bucks. If you’re interested in refinancing your ARM, Get BUSY. Opportunities abound, and the country is going to be in trouble if they aren’t refinanced.
For those with money invested in marketable securities, there is a golden opportunity to cash-in on the tremendous RE investment opportunities now available. Today, there are multiple commercial & residential RE properties available for about 30% to 50% of what they were only two years ago.
For example, CEOs, CFOs or COOs, with large publically traded companies, who have large blocks of Corporate stock or other marketable securities can leverage those assets to take advantage of investment opportunities. If you are a forward-thinking investor who wants to retain the future ownership of your assets as well as leverage the present value of your securities for immediate cash needs, this can be a terrific program.
These loans are –
· Simple & Quick – NO Credit Check / NO Income Verification
NO Upfront Fees / NO Closing Costs / NO Personal Guarantee
· Loans are “Non-Purpose” – loan can be used for virtually anything borrower wants to accomplish (personal or business)
· Loans are “Non-Recourse” – giving the borrower the opportunity to simply “walk away” if the collateral falls below a set floor amount
· High Loan-to-Values – up to 80% LTV (depending upon security); which is much higher than banks and brokerage companies can offer
· Loans are Interest Only – principal payment at maturity; otherwise loans can be refinanced or extended
· Low Fixed Interest Rates – usually between 2% to 4%
· Loan Term – minimum of 3 yrs; also 5 yr / 7 yr / 10 yrs
· Quick Funded – usually within 5 to 7 business days
Click here for information about Securities Based Lending / Stock Loans
Little Know FACT (something the banks aren’t telling you):
American homeowners who are NOT LATE on their mortgage payments or “non-delinquent” can LEGALLY lower their mortgage payments by hundreds of dollars per month.
Yes, it true – you can legally reduce your monthly mortgage payments from 25% to 40% -
Even If You’ve Never Been Late & Currently Have NO Equity!
If you have an Adjustable Rate Mortgage (ARM) that is going to be adjusting, this can save you thousands of dollars.
Here’s the SECRET – by using a powerful tool know as a FORENSIC LOAN AUDIT you are able to aggressively negotiate better loan terms with your current lender.
A forensic audit of your current mortgage loan will determine if you were a victim of “Mortgage Non-Compliance” or “Loan Fraud” - most loans are non-compliant!
The shocking truth about our FORENSIC LOAN AUDIT is that we uncover violations and fraud in over 83% of our client’s loan documents - resulting in an overall success rate of 95.7%.
Because of this Forensic Loan Audit, lenders are compelled to modify your existing mortgage loans & reduce your monthly payments -
- Regardless of Your MORTGAGE PAYMENT HISTORY
- Regardless of Your EQUITY (or lack thereof)
- Regardless of Your CREDIT SCORE
Normally, lenders won’t even discuss a loan modification with borrowers who aren’t 60 to 90 days late (or in foreclosure), but with our Forensic Loan Audit which reveals a majority of home loans to be non-compliant, they will talk with us.
You see, lenders aren’t obligated nor compelled to accommodate a “non-delinquent” borrower’s modification request without a legal precedent. However, this is where the Forensic Mortgage Loan Audit comes into play. This is an extremely powerful tool.
When a lender knows their loan is non-compliant, it changes everything – they are then compelled to modify your existing mortgage loan, rather than pay the cost of legally defending a non-compliant loan.
For Those Who May Behind on Your Payments –
If You Have a Foreclosure Sale Notice, THEY WILL STOP YOUR SALE DATE!
Click here for information about Non-Purpose, Non-Recourse Lending
CA Public Employees Retirement System Sues – Over Ratings of Mortgage Backed Securities
Finally a large financial entity, Calpers, the California Public Employees Retirement System, worth an estimated $173 billion, has sued those responsible for rating the Toxic Assets that are now decimating our national and global economy.
The three primary rating agencies; Moodys, Standard and Poors, and Fitch made “negligent misrepresentations” to the pension fund. The agencies’ ratings “proved to be wildly inaccurate and unreasonably high.” Calpers goes on to say that the methods used to assess these securities were “seriously flawed in conception and incompetently applied”.
It has been my contention all along that this group is by far the most culpable in this affair, because they took perfectly lousy financial instruments and slapped triple A ratings on them; the equivalent of United States Bonds. These complicated instruments that only the most sophisticated financial engineers could understand, were pushed onto countries, cities, municipalities and large pension funds as the greatest and safest investment since the United States Savings Bond, yet they were the farthest thing from safe. Most of these instruments have now lost ALL of their intrinsic value.
It wasn’t until the three credit agencies set their stamp of approval on these incredibly risky investments that the mortgage backed securities boom on Wall Street exploded. Wall Street entrepreneurs sold their new product to anyone looking for a larger annual return.
After they were sold, the inflow of money (billions or more likely trillions of dollars) was then funneled back to mortgage lenders like Countrywide and New Century Mortgage, who were busy underwriting these risky high yield, subprime loans; the key element within the financial instruments that the giants on Wall Street were so successfully selling. In other words, the securities were selling like hot cakes and Wall Street couldn’t get enough mortgages to back them, and so they pushed their lending partners to create more loans no matter how risky. Why….because they already had them sold to China, Calpers, cities in Norway, etc….. and why were they so easy to sell….. because Moodys, and Fitch, and Standard and Poors were slapping triple A ratings on them…. the highest rating possible.
It makes one wonder why Calpers, who has probably some of the most sophisticated financial experts in the industry, could not detect the risk in these securities? The reason was because of their opaqueness.
The information about what was inside of them was kept hidden from the buyer under the guise that “the securities in these packages were considered proprietary and unavailable for review”. Hence the triple A rating was the key measuring gauge the investor had, to determine the risk in the product that they were buying.
Furthermore, Calpers contends in their suit that the rating agencies were not only responsible for inaccurately rating these financial securities, but that there was an “inherent conflict of interest”, since they were actually paid by the companies issuing the securities.
Finally, the insidious behavior of these institutions reached a new ethical low when Calpers revealed in their lawsuit that the agencies themselves actually assisted, for a hefty fee, those who were creating these securities, so that they would produce a product that would receive the prestigious triple A rating.
No wonder Calpers decided to sue the rating agencies. My only question is what took them so long?
Furthermore, why hasn’t a criminal investigation been initiated? There are people and corporations out there that are undeniably responsible for our financial mess, and in my opinion, should be held accountable. After all, as financial agents they have a fiduciary responsibility to the public, and by issuing triple A ratings on these securities they not only abandoned their responsibility, but assisted in the meltdown of our global economy.
In this time of re-regulating the banking industry, and trying to create laws that would prevent a similar situation, if we do not address this conflict of interest, between Wall Street and the agencies that rate their financial instruments, we are certain to repeat the mistakes that led us into this current financial crisis.
*primary source The New York Times July 2009
Click here for information about Non-Purpose, Non-Recourse Loans
Understanding Student Loan Consolidation
In today’s current economy, where the whole world is reeling under a huge economic crisis, paying off multiple student loans can prove to be really difficult.
Apart from the fact that you need to remember the monthly repayment dates for all your student loans, keeping a track of the varying interest rates and paying off huge sums of money each month can surely disturb your monthly budget.
Click here for information about Non-Purpose, Non-Recourse Loans
Therefore, if you are looking for an option that is far simpler and can assist you in lowering your monthly repayments, you can go ahead and consolidate student loans. Yes, by consolidating your student loans you end up making life much easier for you.
Here are some key features of student loan consolidation:
- To begin with, instead of paying simultaneous monthly payments, each with a different date, you simply need to make a single monthly payment.
- After you consolidate student loans, you are presented with a fixed interest rate that is capped at 8.25 percent, which is much lower than the interest rate of your student loans.
- The monthly payment, if you consolidate student loans, becomes pretty less than the total of your individual student loan monthly payments.
- The repayment period can increase, if you consolidate student loans. Therefore, instead of paying off all your loans within 10 years, you can consolidate them and extend the loan repayment period to 12, 15, 20, and even 30 years.
- You can pay off your single consolidated loan electronically. Most lending companies even offer you 0.25 percent off on the interest rate, if you pay your monthly installments electronically.
- You do not need to pay any processing fees to consolidate student loans. The whole process is free of cost, which is yet another advantage for you.
Students as well as parents who borrowed the money can consolidate student loans. However, students and their parents cannot combine their individual loans for consolidation. This is because only loans from a single borrower can be consolidated.
You have the option to consolidate student loans with any lender. This provides with the facility to look for lenders that offer the lowest interest rates and other benefits.
With such great features, it is not surprising that more and more students opt to consolidate student loans. This makes life relatively easier for them and allows them to concentrate on their job and career.
By getting to consolidate student loans, you know how much exactly you need to shell out each month. In addition, the single monthly payment, which can be paid electronically or through direct debit from your bank, relieves you from remembering the monthly loan repayment date.
A lower monthly repayment option is one feature that most students look out for while repaying their student loan. This is because most fresh graduates need to be contended with a low monthly salary that can increase only through performance and experience.
In such a situation lower monthly repayments are really welcome to such graduates. This and the above mentioned features, is exactly the reason why student loan consolidation is gaining such prominence.
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