Alvaro Ramirez

The reality of things are that we will see an increase in foreclosures for the reasons everyone knows already and this doesn't even take into account the baby boomer retirement group that will need to dump real estate to maintain their current life style. With approximately 500,000 trial mods and only 1,700 permanent mods (5yrs)done this according to the US Treasury - HAMP isn't working. We should know the government won't do anything to keep people in their homes. Treasury’s job is to help revive the economy not to keep you and in our homes. How did my contact at Treasury say it? Oh yeah "Alvaro I could care less if some keeps his home or not. Our job is to bring back the economy... Don't get me wrong, we would like to help, it is just not what we do". I say fair enough and so where does that leave us. As a homeowner I can say it makes sense for them to lower my principal down to market value but I also want an interest below market rate because I may still now be able to keep my home without it. The question then is will that ever happen as an industry standard? ASF put out its white paper on what think about principal reduction. Now we just have to wait and see if the servicers will do it. As much as investors know they will have to do it they will not tell the servicers to do so. Investors will not want to free the servicer of any responsibility or liability. Remember Bill Frey? The investor who suit BofA for modifying his loans and not purchasing back as dictated in their contract. The court's decision was in his favor. So why would an investor or a bond holder - remember too if you have a retirement account, you may be invested in Mortgage Securities and forgiving principal could your retirement could go down in value also. On an MBA report, it was said servicers and investors alike expect the market to continue to decline until December of 2011 and 20 years for property values to come back to where they were prior to this meltdown. Everyone can have their opinions as to when it will turn or that it already has. I am more interested in the mortgage investor who is worried about how much more he will lose and how long it will take to recover some of his money. Wouldn't you? Unless you are the one who seats down and has a beer with his cousin and does market forecast and investment advice.

Call me pesimistic but what else can Bernanke do but to say we are getting better. Can you imagine if Bernanke, Geithner or even Obama said we are still in deep trouble. The panic it will create? When it comes to housing, the problem still exists. Yes, we are having multiple offers but it doesn't mean we are out of the woods. Servicers tell RMBS and other investors that they expect the worst to show up starting April of next year and to remain until end of 2011. That is for all the bad to come out in the open. So to say that we are almost out of the financial problem is just a wishfull thinking. We now that all goverment programs have failed at really fixing and preventing further mortgage defaults - HAMP the one program that had chance may just become part of the many that didn't work. Treasury purchasing the notes! I know I heard something like this... Yeah it was TARP. Scratch that idea. While HAMP can help some consumers so far only 12% of the said qualifed, it puts more fear in the mortgage investor who now looks at added conflict of interst HAPM created for servicers. Treasury needs to be a facilitor to let the private sector fix the mess. My humble opinion.

Let us not forget that the magnitude of the mortgage crisis can't really be quantified simply by the fact that servicers hold the information on their assets and don't have to release it even to their note holders. However when you seat down and have a drink with servicing executives and RMBS investors both tell you they don't expect a recovery for another four to five years. Interestingly enough hardly anyone makes mention of our baby boomers retirement age. Isn't that supposed to begin next year? Economist Harry H Dent (www.harryhdent.com) speaks on this subject and the impact this generation retirement day will have in the real estate market. We haven't even hit bottom - A real estate broker in Salinas CA said to me that they are having multiple offers and the market is recovering. For the obvious reasons she has to believe that. The reality is that the positive change of the market is only Artificial. Alvaro Ramirez Managing Director HRA www.hrahelp.com (408) 850-7415