The recent passage of the Housing and Economic Recovery Act brought forth big buzz in regards to the $7500 tax credit that will be provided to homebuyers. Let’s review this subject in a bit more detail since January 31 is just around the corner!

First, in order to claim and receive the tax credit, the filer(s) must be first-time homebuyers and they must close on the purchase of the home between April 9, 2008 and July 1, 2009. The actual tax credit will equal 10 percent of the purchase price for a maximum amount of $7500. If the return is filed for married persons, each spouse will receive up to $3750 credit.

A first-time homebuyer is defined as a person who has not had ownership in real property as a primary residence for the previous three-year period prior to settlement on the purchase. For a married couple, both histories are taken into consideration. If either borrower owns or has owned a second home, vacation home or investment property in the prior three years, they are still eligible as long as they did not own a primary residence.

Sounds like a great deal, right? Sounds like a great incentive to stimulate our crumbling housing market and keep realtors employed? Well yes if you or your borrower qualifies to receive it!

First off, the credit isn’t just free money. It’s actually an interest-free loan that is repayable over the following 15 years. So for a credit totaling $7500, you would need to deduct $500 from each of your tax return filings for the following 15 years.

Second, if the homebuyers purchase the home using any home loan program connected with state-revenue bond funding, they are not eligible to receive the tax credit whatsoever. With the cease of seller-funded downpayment assistance programs, many borrowers are purchasing homes utilizing special state-specific programs that offer grant funding for downpayment assistance and closing cost credits.

Third, if the single borrower’s gross adjusted income exceeds $75000 or joint borrowers’ gross adjusted income exceeds $150,000 total, the amount of tax credit starts to phase out and the amount lowers. For single borrowers whose gross adjusted income exceeds $95000 and joint borrowers whose gross adjusted income exceeds $170,000, the tax credit eligibility no longer applies.

A few other notes of importance:

~ A borrower who constructs a home on land he/she already owns is eligible for the credit as long as he/she has not owned any other real property as a primary residence in the prior three year period. The borrower must take occupancy of the newly constructed property between April 9, 2008 and up until July 1, 2009.

~ Single family detached, attached, condominiums, manufactured homes and houseboats qualify

~ There is no special claim form or application process. The tax credit is something the qualifying party will be able to claim within their federal tax return when they file in 2008 or 2009.

~ For purchasers in the District of Columbia, only one tax credit may be claimed for first-time homebuyers. They may not claim the existing DC credit in addition to the HERA tax credit.

~ Permanent and non-resident aliens are eligible in addition to U.S. Citizens as long as they meet the definitions explained in IRS Publication 519.

So for realtors and originators, it’s important to know and understand the various provisions associated with the HERA tax credit. For those buyers who meet the eligibility criteria, this tax credit could be a great benefit.

Angie Williams
Senior Loan Officer
Venture Bank
Ph: (253) 534-3137
Cell: (253) 314-8603
Fax: (253) 853-5834

It’s almost Thanksgiving Day so, it’s time for the Basket Brigade.

The Basket Brigade is a Non Denominational organization of volunteers who come together each year and provide baskets of food for about 275-300 local families who are less fortunate than we are.

Give thanks and share your blessings by:

1. Donating food; boxed and canned goods, baby food and formula

2. Volunteering time to help families in need

3. Give monetary donations to help with the basket preparation and delivery.

Special Baskets With Special Meaning

All baskets carry the following message: “This basket comes to you from someone who cares about you. All we ask is that you take care of yourself well enough to do this for someone else someday”

For more information on how you can help with this fantastic program please contact Shannon Wulick at 253.606.9382 or email her at shannon.wulick@kw.com.

If you want to donate any of the following items, just drop them off at our Keller Williams office located at 11515 Burnham Drive NW, Suite A Gig Harbor, WA 98332 OR, for a courtesy pick-up call Shannon!

CORN                              (15 oz.)
BEANS                            (15 oz.)
PEAS                              (15 oz.)
CRANBERRY SAUCE    (15 oz.)
TOMATO SAUCE              (6oz.)
YAMS                              (15 oz.)
PEACHES                       (15 oz.)
PEARS                            (15 oz.)
CANS OF TUNA                (6oz.)
PEANUT BUTTER          (15 oz.)
STUFFING
PKG. OF GRAVY MIX
RICE                         (1 lb. pkgs.)
PASTA                      (1 lb. pkgs.)
MAC. CHEESE
CANS OF PUMPKIN       (29 oz)
CANS OF EVAP. MILK   (12 oz.)
PIE CRUST MIX
SUGAR                 (5 LB. BAGS)
FLOUR                  (5 LB. BAGS)
TOP RAMEN
TURKEY ROASTING PANS

Cheers!

UPDATE. Thursday, November 20th

2.  DOWN MONTHS - 9 of the last 12 months (i.e., November 2007 to October
2008) have been negative on a total return basis for the S&P 500 stock
index. Before this most recent 1-year period, 9 of the previous 39 months
were negative (source: BTN Research).

3.  A LOT OF MOVEMENT - Over the last 30 years (i.e., 1978-2007), the S&P
500 experienced a day-over-day change of at least 1% on 23% of its trading
days (i.e., measured by the closing value of the index for consecutive
trading days). During the first 10 months of 2008, the S&P 500 experienced a
day-over day change of at least 1% on 49% of its trading days or nearly
every other day (source: BTN Research).

4.  SOME UP - Only 22 of the individual stocks in the S&P 500 (i.e., just
over 4% of the 500 stocks in the index) are up YTD through the close of
business last Friday (source: NASD100.com).

5.  BIG DAY - The S&P 500 rose +4.1% last Tuesday, the largest Presidential
Election Day performance ever for the index. Before 1980, the US stock
market was closed on Election Day (source: Rocky Mountain News).

6.  VOTES - 133.3 million Americans voted in last week’s presidential
contest (a record), equal to 62.6% of our voting-age population (# 2
all-time). The previous record was 122.3 million voters from the 2004
election. A record 62.8% of voters went to the polls in 1960 (source:
Statistics of the Presidential Election, Denver Post).

7.  THE SENATE - The 111th Congress (i.e., the session that begins in
January 2009) has a 57/40 Democrat-to-Republican Senate split with 3 races
yet to be decided (contests in Georgia, Alaska and Minnesota). The total of
57 includes 2 independent senators that caucus with the Democrats (source:
Senate).

8.  A YEAR FROM NOW - Alan Greenspan was nominated to be the Fed Chairman by
Republican Ronald Reagan in 1987, and then he was re-nominated in 1992 by
Republican George Bush (# 41), then again in 1996 and 2000 by Democrat Bill
Clinton, and for the final time in 2004 by Republican George Bush (# 43).
Current Fed Chairman Ben Bernanke’s initial 4-year term runs until 1/31/10
at which time Democratic President Barack Obama will decide whether or not
to re-nominate Bernanke for a second 4-year term (source: Federal Reserve).

9.  COLLEGE COSTS - Tuition and fees for 1-year of college at an average
4-year public university (in-state tuition) is $6,585 for the current
2008-09 school year. That amount is greater than the cost of tuition and
fees for 1-year of college at an average 4-year private university ($6,121)
during the 1985-86 school year or 23 years ago. The figures do not include
the cost of room and board (source: College Board).

10.  BIG BUCKS FOR THE FIFTH GRADER - The average cost for 1-year of college
education at an in-state public college is $14,333 for the 2008-09
school-year (cost includes tuition, fees, room and board). The total 1-year
cost has increased +6.5% per year over the last 30 years. If that same
annual rate of inflation continues into the future, then a 5th grader today
will ultimately pay $105,000 for his/her 4-years of education at an in-state
public college during the years 2016-20 (source: College Board).

11.  TAX STATS - In 1980, the top 1% of US taxpayers earned at least $81,000
in adjusted gross income (AGI), accounted for 8% of all AGI nationwide and
paid 19% of all federal income tax. In 2006 (the most recent year for which
data is available), the top 1% of US taxpayers earned at least $389,000 in
AGI, accounted for 22% of all AGI nationwide and paid 40% of all federal
income tax (source: Internal Revenue Service).

12.  DEBT - From the end of 1997 to the end of 2007, the total amount of
mortgage debt held by Americans increased by nearly $7 trillion (to $10.5
trillion), an annual increase of almost +11% per year (source: Federal
Reserve).

13.  NO WORK FOR MANY - There were 7.7 million unemployed workers in the USA
in December 2007. That total grew to 10.1 million idled workers in October
2008 (source: Department of Labor).

14.  SELLING TO AMERICA - 40% of all imports shipped into the USA are
processed through the docks of Los Angeles and Long Beach, CA (source:
Financial Times).

15.  GOLF AND MONEY - Vijay Singh earned $6.6 million and 3 victories on the
PGA Tour during the 2008 season. Jack Nicklaus earned $5.7 million and 73
victories in his 44-year PGA career (source: Golf Channel).

From Forbes Magazine.

Learn Your Market
One of the most important things you can do to get your house sold is to learn your market, the value of your property and your competition. Most sellers operate in the dark, simply offering the property for the price they want, without regard to what other homes have sold for and are currently selling for. Undervaluing or overpricing your home can cost you tens of thousands of dollars.

Position Yourself in the Right Price Range
Buyers search by price range, such as between $200,000 and $225,000. Make sure your property is properly positioned so that it is the best value within a standard price range. For example, pricing it at $230,000 could miss the people looking for a bargain on a home in the $200,000 to $225,000 range.

Be Prepared
Delay on the seller’s part is one reason that deals often fall apart. Before you list your home, have information readily available about your schools, taxes, utilities, any neighborhood covenants and information about liens that have to be released prior to closing.

Stage It
Whether you’re selling your principal residence or a fixer-upper, it should be clean and presentable. It must make a strong, positive impression. Staging a house is the cheapest way to make a house look different from your competition so it becomes the most memorable one that the buyer saw.

A Good Flier
Surveys show that people who drive by your house are more likely to grab a flier than to call the number on the “For Sale” sign. If you want to get as many people interested as possible, you must have a good flier in front of the house. Make sure the flier has great photos of the property from all angles, inside and out, as well as a link to a Web site where people can take a “virtual tour.”

Market to People Who Are Likely Buyers
In addition to placing an ad in the newspaper and using the multiple listing service, you should advertise to people who are already in the market for a house. For example, have your real estate agent pull a list of people who have just listed their own house within a five mile radius of your home. People are likely to want to stay within the same school district if they have kids.

Open Houses
An open house should be held every weekend for the first three weeks your house is listed for sale. Have a drawing for a door prize so that you can gather all of the names of the people who attend for follow up.

Offer Terms
Cash buyers are becoming harder to find in a market where financing is tougher to get. Offer creative financing terms to attract more buyers.

Private Auction
You can do a private reserve auction to sell your property to the highest bidder. If your reserve price is not met, you are not obligated to sell. If nothing else, it will bring a lot of people through your house during the open house period.

The First Offer Rule
If you get an offer within the first few weeks, the tendency is for sellers to try and hold out for a better offer. This is generally a mistake. The biggest fish usually bite first, so keep in mind that your first offer will often be your best.

Courtesy of Kyle Rohrbaugh | Rohrbaugh Engelland Group | Metrocities Mortgage | t 877.858.2640 ext. 3 | f 866.926.2018 |

BY THE NUMBER$ - Election Edition

1.        A TIE? - There are 538 electoral votes at stake in tomorrow’s election.  It will take 270 electoral votes to win the Presidency.  There has been a tie in the Electoral College voting only one time in the nation’s history.  In 1800, both Thomas Jefferson and Aaron Burr each received 73 electoral votes (source: PresidentElect.org).

2.        SENATE TO THE WHITE HOUSE - Only 2 Presidents in the history of our country have ever gone directly from the Senate to the White House.  They were Warren Harding (President # 29) and John Kennedy (President # 35).  Both John McCain and Barack Obama are US Senators and one of them will become US President # 44 (source: WhiteHouse.gov).

3.        MAJORITY VOTE – The 2004 presidential election broke a streak of 3 consecutive elections where no candidate won 50% of the popular vote.  President George Bush won the last election with 50.7% of the national vote.  Bill Clinton won the 1992 election with 43.0% of the vote and then won reelection in 1996 with 49.2% of the vote.   President Bush won the 2000 election with 47.9% of the popular vote.  Before 1992, the last President to win the White House with less than 50% of the vote was Richard Nixon in 1968 (source: PresidentElect.org).

4.        SOUTHERN DEMOCRATS – The last Democrat to win the White House that wasn’t from the South was John Kennedy (1960).  Since 1964, the 3 Democrats that have won the White House have been from the South.  The 3 are Lyndon Johnson (Texas), Jimmy Carter (Georgia) and Bill Clinton (Arkansas) (source: WhiteHouse.gov).

5.        WE’RE OPTIMISTIC - A majority of Americans have a positive opinion of both presidential candidates, as indicated by the favorability rating of both Barack Obama (61%) and John McCain (57%) from a survey released on Friday 10/24/08 (source: Gallup, USA Today).

6.        THE BUCKEYE INDICATOR - The candidate that has carried the state of Ohio has won the White House for the last 11 presidential elections.  The last time that the winner of Ohio did not win the White House was Richard Nixon in 1960.  Nixon beat John Kennedy in Ohio but Kennedy won the White House (source: PresidentElect.org).

7.        60-VOTE SENATE - If either political party was to achieve 60 votes in the 100-member Senate that party would be able to stop a filibuster by the minority party, or end floor debate and bring any proposed legislation to a vote.  The last time when either party had a filibuster-proof majority in the Senate resulted from the 1976 elections when the Democrats achieved a 61-vote majority (source: Senate).

8.        SONS IN THE MILITARY - John McCain, Sarah Palin and Joe Biden each have a son that is currently serving in the military.  Jimmy McCain is in the Marines, Track Palin is in the Army and Beau Biden is a military attorney with the Delaware National Guard.  The last US president to have a child serve in the military during his term in office was Dwight Eisenhower, our 34th president (source: Wall Street Journal).

9.        SHORT LIST - 1,000 days before tomorrow’s presidential election (i.e., 2/08/06), the most widely read newspaper in the USA had a story documenting the 20 most likely Republican and Democratic candidates for the White House in 2008.  John McCain and Joe Biden were on that list but Barack Obama wasn’t (source: USA Today).

10.     REPUBLICAN VP - In a 7/26/08 Wall Street Journal article, the potential selection of Sarah Palin to be John McCain’s VP was described as a possibility if he wanted to “go outside the box.”  The selection of Governor Palin was announced on 8/29/08 in Dayton, OH (source: Wall Street Journal).

11.     WHERE IT BEGAN - Barack Obama announced his run for the White House in Springfield, IL on 2/10/07, almost exactly 146 years after Abe Lincoln did the same thing in the same city.  John McCain announced his candidacy on 2/28/07 on the David Letterman Show (source: BTN Research).

12.     ON THE JOB EARLY - Secret Service protection for presidential candidates is not required by law until 120 days before the November election date, or as of 7/08/08 for the 2008 election.  The Homeland Security Department can authorize earlier coverage and did so on 5/03/07 for Barack Obama.  John McCain accepted the government’s protection on 4/27/08 (source: Houston Chronicle).

13.     YALIES - Every president since 1988 has earned a degree from Yale (source: PresidentElect.org).

14.     WIDE OPEN RACE - The 2008 presidential race is the first time since 1952 that no current president or vice president is running for the White House (source: PresidentElect.org).

15.     PERSONAL STATS – Democrat Barack Obama stands 6 feet, 1 ½ inches, more than a ½ foot taller than Republican John McCain’s 5 feet, 7 inch height.  Both gentlemen are left-handed (source: Wall Street Journal).

Courtesy of Kyle Rohrbaugh | Rohrbaugh Engelland Group | Metrocities Mortgage | t 877.858.2640 ext. 3 | f 866.926.2018 |

BY THE NUMBERS

1.  IT IS DIFFERENT THIS TIME - Since 9/01/08 (i.e., a period less than 2 months in duration), the S&P 500 has experienced 19 trading days that have produced at least a 3% gain or loss (i.e., the change in the index’s closing value over consecutive trading days). The S&P 500 had 19 trading days producing at least a 3% gain or loss in the 6 years prior to 9/01/08. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market (source: BTN Research).

2.  BOTH ARE DOWN - In the last 15 weeks (i.e., the trailing 3 1/2 months from Friday 7/11/08 to Friday 10/24/08), the S&P 500 stock index has fallen 29.3% while the price of a barrel of oil has fallen 55.8% (source: BTN Research).

3.  HOW LONG WILL IT LAST? - Of the 8 bear markets for the S&P 500 since 1960 (i.e., a peak to trough drop of at least 20%), the average length of time from the index’s bull market closing high to its bear market closing low has been 13 1/2 months. The index’s most recent bull market closing high (set on 10/09/07) occurred 12 1/2 months ago (source: BTN Research).

4.  LAST TWO BEARS - At the bottom of the 2000-02 bear market, the S&P 500’s low closing value was 776.76, down 49.1% from the index’s all-time closing high. The S&P 500 closed last Friday (10/24/08) at 876.77, down 44.0% from the index’s all-time closing high (source: BTN Research).

5.  WORSE THAN OURS - The Chinese Shanghai Class A stock index (open to both Chinese and foreign investors and priced in the local Chinese currency) has lost 65% YTD through Friday’s close of business. The Shanghai index is an unmanaged index that is generally considered representative of the Chinese stock market. These international securities involve additional risks including currency fluctuations, differing financial accounting standards and possible political and economic volatility (source: BTN Research).

6.  GLOOMY - Harry Dent, a stock market watcher famous for his year 2000 prediction where he forecasted a 40,000 Dow value (note that the Dow closed at 8,379 last Friday), now believes the USA is in an economic downturn that occurs “once every 80 years” and that the current stretch will last a dozen years until 2020. The Dow Jones Industrial Average is an unmanaged index of just 30 stocks and is not generally considered representative of the broad US stock market (source: BTN Research, WSJ).

7.  SAVING LOTS OF MONEY - The national average price of gasoline peaked on 7/16/08 at $4.11 a gallon. By last Friday (10/24/08), the national average price of gasoline had fallen to $2.78, a drop of $1.33 a gallon. Since every 1 cent reduction in the price of gasoline saves Americans $3.4 million a day, a drop of $1.33 a gallon equates to a $447 million daily savings for US consumers (source: AAA, Wall Street Journal, Fortune).

8.  NOT UNIVERSAL APPROVAL - President Bush signed into law a $700 billion financial rescue plan on Friday 10/03/08. 54% of Americans approve of the plan, aka TARP, the Troubled Asset Relief Program (source: AP).

9.  ONLY THE BIGGEST ESTATES - Only 1 out of every 106 deaths results in the payment of federal estate taxes (source: CDC National Center for Health Statistics, Wall Street Journal).

10.  FED MEETS - The Fed will hold its 7th scheduled meeting of the year this week. They also held 2 emergency meetings this year. The Fed has lowered interest rates 5 separate times in 2008 (source: Federal Reserve).

11.  OUT OF WORK - In the 6 months following the 9/11/01 attacks on the USA, 1.5 million workers lost their jobs. In the last 6 months, 513,000 workers have been let go by American employers (source: Department of Labor).

12.  ACTUAL vs. EXPECTED - When President Bush presented his fiscal year 2008 budget to Congress on 2/05/07 (i.e., for the period 10/01/07 to 9/30/08), the plan called for spending to exceed tax receipts by $239 billion. The actual result for the 12 months that ended on 9/30/08 was a $455 billion deficit (source: Treasury Department).

13.  PENSION LIMIT Participants in defined benefit pension plans will be able to fund their plans to provide an annual retirement benefit of $195,000 in calendar year 2009. 20 years earlier (1989), the maximum annual pension benefit that could be funded was $98,064 (source: IRS).

14.  GIVING IT AWAY - The annual gift exclusion rises to $13,000 in calendar year 2009, an increase of $1,000 from this year. All US citizens can make gifts of cash or other property worth up to $13,000 in 2009 to an unlimited number of people without gift tax consequences (source: IRS).

15.  A WEEK FROM TOMORROW - There are 14 individuals on the official presidential ballot other than Republican John McCain and Democrat Barack Obama (source: Official Ballot for General Election).

Welcome to our Real Estate statistics page!

Here we make available as much information as possible with the goal of giving you a great idea of how the real estate market is doing in this and the surrounding area. These are all PDF files that are very easy to load, view and print.

The statistics cover residential and condominium sales in Pierce and King County for 2008.

We hope you find these helpful.

____________________________________________________________

ULI ranks Seattle top among real estate markets
The report is based on the insights and predictions of real estate experts nationwide. According to the report, “Seattle boasts its ‘corporate giants,’ but the market braces for rising downtown office vacancies; now at 10 percent.

Pierce County Real Estate Statistics YTD Part1
Residential sales volume: off 42% to $2.1 billion, Residential transactions: off 39% with 7,160, Mobile home sales on land: off 62% to $55 million and much more.

Pierce County Real Estate Statistics YTD Part 2
Average sale price: $339,647, off 10%, Median sale price: $308,773, off 6%, Best range: $300,001 - $350,000, with 28.3 per month and much more

RESIDENTIAL RESALE REPORTS
Pierce County September 2008 and YTD Residential Home Activity
Pierce County September 2008 and YTD Residential Condominium Activity

King County September 2008 and YTD Residential Home Activity
King County September 2008 and YTD Residential Condominium Activity

Courtesy of Kyle Rohrbaugh | Rohrbaugh Engelland Group | Metrocities Mortgage | t 877.858.2640 ext. 3 | f 866.926.2018 |

1.        WORST BEAR EVER - Between 9/06/29 and 6/01/32 (a bear market lasting 33 months), the S&P 500 fell 86.2%.  After hitting bottom on 6/01/32 (at an index value of 4.40), the S&P 500 did not recover back to a new all-time high (i.e., above the 9/06/29 high of 31.92) until 9/22/54.  The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market (source: BTN Research).

2.        CURRENT BEAR - Between 10/09/07 and 10/10/08 (a period of 12 months), the S&P 500 fell 42.5%, a tumble that was half as bad as the 86.2% index decline that took place during the Great Depression (source: BTN Research).

3.        BAD QUARTERS - The 3 worst quarterly performances for the S&P 500 (i.e., calendar year quarters, not any 3 consecutive months) occurred during the 1929-32 bear market.  The 2nd quarter 1932 (down 39.4%), the 3rd quarter 1931 (down 34.5%) and the 4th quarter 1929 (down 28.9%) rank 1-2-3 as the largest quarterly declines ever for the stock index (source: S & P , USA Today).

4.        CURRENT QUARTER - The current 4th quarter 2008 (which is only 2 ½ weeks old) is down 19.4% as of last week’s close, a decline that would rank as the 8th worst quarter ever for the index if the 3-month period had ended last Friday (source: BTN Research).

5.        CALENDAR YEAR RESULTS - The years 1929-32 is the only period in the history of the S&P 500 where the stock index suffered through 4 consecutive years of negative total return results.  The 2 occurrences of 3 straight down years took place in 1939-41 and earlier this decade in 2000-02 (source: BTN Research).

6.        BORROW AND BUY - An estimated 40% of stock investors were purchasing equities by using borrowed funds (i.e., margin accounts) in 1929 at the time of the crash.  Margin debt on the New York Stock Exchange hit an all-time high of $381 billion in July 2007 but was down to $292 billion by the end of August 2008.  Total margin debt was $279 billion when the stock market peaked in March 2000 (source: Wall Street Journal, NYSE).

7.        MILLIONS TO BILLIONS - Trading volume on the New York Stock Exchange first exceeded 10 million shares in a single day during the 1929 crash.  Trading volume on the exchange on Friday 10/10/08 was 11.2 billion shares or more than a 1,000 times increase from the 1929 level (source: NYSE).

8.        JOBLESS - The unemployment rate in the US during the Great Depression reached 25%.  Even as the decade of the 1930s was ending, the nation’s unemployment rate was still close to 15%.  The unemployment rate in the US is 6.1% today (source: Wall Street Journal, Newsweek, Department of Labor).

9.        BAD DEBTS - As of 1/01/34, an estimated 43.8% of all owner-occupied homes in the US that had a first mortgage were in default on that loan (source: Department of Commerce, Federal Reserve Bank of St. Louis).

10.     BILLS TO PAY - As of 6/30/08, 2.75% of loans were in the foreclosure process (i.e., default notices, auction sale notices or bank repossessions).  An additional 6.41% of loans were at least 1 month delinquent with regard to their regular principal and interest payment (source: Mortgage Bankers Association).

11.     GONE - 40% of US banks failed during the 5-years from 1929-1933.  The Federal Deposit Insurance Corporation, guaranteeing an individual’s account up to a maximum threshold of $2,500 initially, was signed into law on 6/16/33 and became effective on 1/01/34, too late for thousands of US citizens (source: Newsweek, FDIC).

12.     PROBLEMS TODAY - There have been 15 banks taken over YTD by the FDIC out of 8,451 FDIC-insured banks nationwide or less than 0.2% of all banks.  As of 6/30/08, there were 117 banks on the FDIC “problem list” (source: FDIC).

13.     NOT A GOOD DECISION - The Great Depression began in the US in October 1929 just 8 months after Republican Herbert Hoover took office.  During the last of Hoover ’s 4 years in office (1932), the IRS raised the top marginal tax rate for individuals from 25% to 63% (source: Tax Foundation).

14.     SHRINKING - The size of the US economy contracted during the 4 consecutive years of 1930-33, the only 4-year stretch of time in US history where that has happened.  The economy reduced in size by 27% for the 4-years (source: Department of Commerce).

15.     IRONIC - When Ben Bernanke took over a vacant slot on the Federal Reserve’s Board of Governors in August 2002, he was required to set aside the 120 pages he had written for a book that he began 2 years earlier.  A New York City publisher had paid Bernanke an advance on a book that was to be titled “Age of Delusion: How politicians and central bankers created the Great Depression” (source: Wall Street Journal, Federal Reserve).

Partially cleared yet wonderfully private and wooded lot is very level and has no standing water. All utilities available and possibilty of shared well with neighboring parcel. Excellent place for a mini farm, horses or building your dream home. Really, there are very few pieces like this on the market anywhere and the price makes it a fantastic place to start your next adventure.

MLS 28170149 Offered for $165,000
Call Joe Sosky 253-229-0506 or email thesoskyteam@aol.com
Keller Williams Realty/West Sound

The Chinese have a proverb: “May you live in interesting times.” And we are living through interesting times indeed.

Whatever the political posturing regarding the current rescue plan, a plan needs to be passed. Credit
markets are frozen and banks are going bust every day. This is not totally because of “toxic” mortgages.
This has a lot to do with FASB 157, also known as “mark to market”.

Each day lenders must mark their assets to the marketplace. It’s like you having to appraise your home
everyday and if your neighbor was under duress because they got very ill, divorced, lost their job and
was forced to sell their home quickly they may have sold it super cheap. Now, does that mean your
house is worth that super cheap price? Clearly not. Why? Because you are not under duress. You have
the time to sell your home and get a more normal price, which more accurately reflects true market
conditions. But “mark to market” does not allow for this, which creates a vicious cycle.

Why is this so bad? Because as lenders mark down their assets, the amount that they have loaned
previously becomes much riskier in relation to their assets. For example, say a bank has $1 million in
assets and say they have $15 million in loans outstanding. Their ratio is an acceptable 15 to 1. But
should they take a paper write down of $500 thousand due to “mark to market” requirements, their
ratio suddenly changes to 30 to 1. This is because their assets are now only $500 thousand after taking
the paper loss, while their loans outstanding are $15 million. And at 30 to 1 this bank is viewed as a
risky investment. So the stock price starts to get hit, it becomes harder to borrow, and most
importantly harder to make money. The bank is then forced to sell some of its loans to reduce its
ratio…at cheap prices. And this makes the vicious cycle continue.

And a quick look at the holdings of these loans show that 95% are problem free. Additionally, the
Credit Default Swaps (CDS) that are used with the pools of mortgages are relatively safe. But this
requires a bit of understanding. You see, when a pool of mortgage loans is put together, it isn’t just A
paper or B paper etc….it’s everything. It’s got some A paper, B paper, C paper…and even what looks
like toilet paper. An “A” investor buys the whole pool but because they are an “A” investor their safety
is greater because they can avoid the first 20% (an example) of defaults. So they own the whole pool
but are sheltered from the first batch of defaults, and for this they get the lowest rate of return. As you
can figure from here the more risk investors want to take, the higher the return. So the investments
are relatively safe, but the accounting rules currently place undue pressure on the banking institutions.

Now add to all this, the opportunistic “shorting” done on the financial stocks, much of it illegal because
those shorts did not legitimately borrow shares (called naked shorting), and you exacerbate this whole
problem. Thank goodness for the recent temporary ban on shorting in the financial sector. As for the
plan the government is the only one who can step in to do this. And they have to do this. And they will
do this. The nauseating political posturing from both sides is just part of the process.

This is not easy to understand for the general public. In fact most politicians don’t get this either. That’s
why it is a difficult yet critical bill for them to vote on.

Once this is done it will take some time but the markets will stabilize. As for the real estate and
mortgage industries, it will take a bit of time but we will make it through this. Rates will remain
attractive and the influx of credit availability will help the housing market gradually improve. This
ultimately will be the medicine needed to improve the situation overall.

To your success,

Kyle Rohrbaugh & Eric Engelland

253.858.2640
reg@metrocitiesmtg.com