What's your rate?

Our friend David Beck sends the following letter about how better to understand mortgage talk.

My hair was getting way too long. You know that feeling when it just doesn't feel right? I had to get to get my haircut right away!

So there I am under the shears, so to speak, at Sandy's, that delightful Norman Rockwell place where you feel like you've been transported back in time to when your Dad's watchful eye made sure that the young man's hair never touched his ear. The conversation was light and full of the latest news of the day. And wouldn't you know, the topic of mortgage rates comes up. Gee, what a surprise.

The conversation was quickly directed to me. "So," this gentleman says to me, "David, what are your rates? I'm shopping." My immediate response was, "It depends. It depends on many variables." I went on to explain that things have changed dramatically since the 'Great Implosion' and suggested that his best course of action, before he make any real estate purchases or refinancing, was to develop a Mortgage Plan.

As you might expect, that comment fell short of dissuading him. He wanted a rate, pure and simple. "I don't need a plan, I know what I am doing," he said. I countered by saying, "That may be, but let me ask you, what is your FICO score? Are you going to take cash out of your home? What is your loan to value ratio? Will you be paying your own taxes? Are you self employed? Can you document your income? How long do you plan on staying in your home? Are your kids planning on college? Retirement?"

"For the sake of argument," I said, "let's say I quote you a rate of 4.875%. But, if your credit score is less than 740 (which is an absolutely excellent score, by the way) you are going to pay more for your loan. How much more depends on your score. If your credit score is below 640 you may pay up to 3% of the loans value in extra closing costs. How about the loan amount when compared to your homes value? Is it more than 75%? If so you may pay more. How much more? It depends. Would you like to take some cash out of your home when you refinance? Well, that's going to cost you, too. Want to pay your taxes separately from your mortgage so you can save some money? That's going to cost you, as well. I think you can see where I am going with this, right?"

Things are not what they seem to be! Yes, you can walk into any bank, mortgage broker or on-line lender and think you are going to get the quoted rate. Wrong! When you add up lender's fee and all of those additional costs you have one of two options:

1) You can pay all of the "add on" fees up front. Be prepared to bring in tens of thousands of dollars at closing.

2) Should you wish to roll these costs into the loan itself your loan amount will expand by the amount of the additional costs and your actuall interest rate may increase dramatically. How about 6% compared to what you thought you were going to get when you started, which was 4.875%. Now extend the actual cost of those fees over the life of the loan and you're not getting a hair cut you are watching your hair fall out. It is huge!

Money is money of course, and either way you are going to pay. As always, the choice is yours. For most of us, our mortgage is one of our largest financial obligations. You can project yourself into the picture I tried to paint above or you can be proactive and create a mortgage plan with an advisor. Doing so will illustrate how you may be able to correct or avoid some of the 'dings' you may get hit with. In addition, get yourself ready so that when you act you are prepared to act, and in turn save thousands of dollars in the long run. That, my friends, is how you can really save money.

We may all, at one time or another, have wished that life were as simple and straight-forward as is depicted in those beloved Norman Rockwell paintings. Unfortunately, we are in a "brave new world" of financial reality. Now is the time to take control of your financial house, as best you can. 

Is this description accurate?

OK, all you citizens of Bainbridge, here's your chance to get published. 

The New York Times has raved about our home in its "Havens" series. Is this rave accurate, do you think? Or is it foo-foo dust? Click Comments at the end of this post to weigh in.

Can you afford that home?

Remember there's more to the cost of home ownership than the selling price. Here's some valuable advice from Prudential: div>

Before you start searching for your dream home, you first need to determine a price range you can afford. According to the Federal Housing Administration (FHA), depending on the consumer’s current debt ratio, most people can typically afford to pay 31 percent of their gross monthly income for mortgage payments. For example, if you earn $50,000 annually, then your monthly income is about $4,167. Thirty-one percent of that is $1,292.

There are several online tools to calculate a monthly mortgage you can afford using factors such as your current monthly expenses, down payment and the interest rate. You can also work with a lender to get pre-qualified for a loan. This estimate will help you gauge how much money you may be able to borrow and the monthly mortgage payments.

However, the amount you are able to afford for a home loan should not be your only consideration for determining your price range. With homeownership come other housing expenses.

Utilities

The most obvious of additional housing expenses are utilities—gas, electricity and water. But don't forget about telephone, trash collection, and cable or satellite bills.

Taxes

As a property owner, you are responsible for property taxes. The rate will vary from city to city. In our community, the tax rate is (insert %) percent. That means for a home with a market value of $200,000, yearly taxes will run (insert dollar amount). To get a general idea on how much the tax bill will be for a property, ask the seller for a copy of the previous year's tax assessment. Your real estate professional can help you refine these figures.

Association Dues

Another cost you may incur is homeowner association (HOA) dues. Most condominiums and some (residential developments/subdivisions/neighborhoods) have HOAs, which are legal entities, created to maintain common areas and enforce deed restrictions. As a property owner, you are required to pay the established monthly or annual homeowner association dues. Be sure you factor this cost into your budget.

Maintenance

You also need to consider the upkeep of your home. You should budget for seasonal maintenance such as lawn care, pest inspections and carpet cleaning, as well as unexpected repairs. The amount you budget will depend on the age of the home, as older homes tend to require more repairs such as installing a new roof, painting and replacing older appliances.

Insurance

Depending on the type of coverage and your area, the costs for homeowners insurance each year can be anywhere from a few hundred to thousands of dollars. And, if you live in an area that has high risks for flooding, earthquakes, hurricanes, etc., you may need supplemental insurance.

Remodeling/Upgrades

Unless the home you purchase is picture perfect, you’ll more than likely be adding your personal touch. Therefore, you need add to your housing budget the costs for remodeling and upgrades. According to “Remodeling Magazine’s” 2007 Cost vs. Value Report, the national average for a midrange minor kitchen remodel is $21,185; a bathroom remodel averages $15,789. Even minor cosmetic fix-ups such as light fixtures, window treatments, carpeting and decorative cabinet knobs can begin to add up.

By determining all the costs associated with homeownership, you can go into your home search with a reasonable price range that will allow you stay within your budget.

Cabin Fever

After a week of heavy snow and a power outage, I found myself with a case of cabin fever. To fight it, I'm re-reading Blue Highways--for the fourth time. In its context I understand again the wisdom of my community to continue its fight against allowing Bainbridge Island to give into America's drive toward building the longest strip mall in the world.

The world Heat Moon discovered in the seventies as he drove his old Ford Econoline around the back roads of America is probably gone by now. They exist now only in the pages of this wonderful account. I recommend it to you. I wish every American who can read would read it.

Get home schooled!

Thanks to Mother Prudential for passing on this very helpful advice!

Educated Homeowners Surviving Housing Crisis

November 20, 2008 -- Realty Times Feature Article by Broderick Perkins

If the experts have said it once, they've said it a thousand times, but they can't say it enough.

Homeownership doesn't come with a manual.

It's up to you to learn what you are getting into before you embark on what's likely the most valuable acquisition you'll ever complete.

It's no surprise new mortgage modification programs, foreclosure assistance and bankruptcy laws come with mandated homeownership counseling.

When you get schooled on the issues of homeownership, you have much greater chance to continue as a homeowner -- even when the economy crashes down around you.

The foreclosure rate for low-income homeowners who attended homeownership education programs had a foreclosure rate that was 20 times less severe than that for subprime borrowers and three times better than that found in the prime mortgage market during the second quarter of 2008, according to data from NeighborWorks America, a staunch non-profit advocate for healthy communities.

"The facts tell the real story," says Kenneth D. Wade, CEO of NeighborWorks.

"The vast majority of mortgages facilitated by NeighborWorks organizations are to buyers with low and moderate incomes and less than perfect credit scores, yet by obtaining quality mortgage advice these homeowners have been able to sustain homeownership during the most severe housing crisis since the Great Depression," Wade added.

Long before homeownership counseling was de rigueur, South County Housing, a chartered NeighborWorks member in Gilroy, CA, was doling out a heavy curriculum of homeownership studies along with sweat-equity programs and loans that look a lot like subprime mortgages.

However, thanks to smarts the group gave its largely Latino buyers, South County's portfolio foreclosure rates today hover around zero, belying rates in the rest of foreclosure-hammered California.

There's more.

When NeighborWorks compared its total loan portfolio's foreclosure start rate of 0.21 percent in the second quarter of 2008, it found the overall nationwide homeowner market had a foreclosure rate more than five times as much, 1.08 percent.

Nationwide, the foreclosure start rate for only conventional conforming loans was 0.61 percent, compared to NeighborWorks' portfolio rate of 0.21 percent.

Buying a home today without learning what it takes to keep it, is like a trip to a Vegas -- for insights on both the money-losing potential in the casinos and the kind of widespread homeownership devastation that comes with ignorance.

Learned homeowners consistently out perform those without the lessons.

Says Wade, "The idea that some observers now are pointing to low-income people as the cause of the financial crisis we're facing today is just wrong. NeighborWorks organizations have a track record of providing one-on-one mortgage advice, encouraging homebuyers to avoid loans that they can not afford for the long term."

The message is brutally simple. Seek accredited homeownership counseling now and prepare in advance for your own home. Even if you already own your home, enroll in a counseling session.

There's plenty of counseling available. In October, the U.S. Department of Housing and Urban Development (HUD) doled out, to more than 2,300 local housing counseling agencies, $50 million in housing counseling training and housing counseling grants for first-time home buyers.

It's your tax money. Use it. Get home schooled.

Buyer Alert: Be sure to ask your Realtor to review your closing statement!

As in all professions and industries, not everyone is ethical. Here is an article that EVERY potential home buyer should take the time to read. Print it and save it for the future. If anything is unclear to you, please contact me with your questions. It's very important information.

Subprime mortgage 'rip-off' has legitimate roots

By AUBREY COHEN
P-I REPORTER

At the height of the real estate boom, lenders paid mortgage brokers as much as $15,000 or more to steer borrowers into overpriced loans.

Called yield-spread premiums, these kickbacks increase with the gap between what loan borrowers qualify for, and the higher interest rates and terms they actually accept. And they are part of nearly all subprime mortgages, noted David Leen, a Seattle lawyer who represents borrowers.

"The payment of yield-spread premiums is the single most important problem relating to the mortgage meltdown."

While brokers defend them as a way to allow more people to buy homes, critics say they've gone way beyond that role.

"It's a classic example of how they use a legitimate thing to rip people off," Seattle bankruptcy lawyer Melissa Huelsman said.

Last week, the U.S. Department of Housing and Urban Development released new requirements for disclosing the premiums, aimed at helping borrowers figure out if they're worthwhile.

Yield-spread premiums

Yield-spread premiums became widespread in the early 1990s, according to a 2002 Harvard Law School report.

The legitimate idea is that borrowers who don't have the cash for brokers' fees, or don't want to pay the fees up front, agree to a higher interest rate and, in exchange, the lender that issues the loan pays the broker.

"Yield-spread premiums are a very useful tool in helping a consumer, a borrower, get into a property with less money up front, less money for closing costs, less money for down payment," Marc Savitt, president-elect of the National Association of Mortgage Brokers testified to the House Financial Services Committee in October 2007.

Having bigger premiums for bigger rate spreads is necessary to cover broker fees on smaller loans, since the premiums correspond to percentage points on the loan, said Jason Bloom, chairman of Elliott Bay Mortgage in Bellevue and president of the Washington Association of Mortgage Professionals.

But the premiums no longer replace cash fees, particularly in the subprime market, Leen said. "In the last five years, they've always been in addition to the origination fee, the processing fee and all the other fees that they disclose."

Rodney Tom, a Realtor and Democratic state senator from Bellevue, has seen premiums in excess of $15,000. "It's the biggest dirty secret in the real estate industry," he said.

In fact, yield-spread premiums generally cost borrowers an extra $1,046 per loan that isn't recouped by reducing fees, bringing the borrower only 25 cents of value for every dollar paid, the Harvard report found.

A HUD study earlier this year found borrowers got only 7 cents of benefit for every dollar of premiums paid to mortgage brokers and 29 cents per dollar for similar premiums to large banks. It also found that African-Americans, Hispanics and people without college degrees paid more for their mortgages, assuming all other factors are equal.

Prime mortgage interest rates tend to be set for the life of the loan or for a certain number of years, after which they adjust with standard industry indexes. Subprime mortgages often have artificially low teaser rates to start with and then adjust up to much higher payments.

Brokers get premiums for selling loans with higher rates and prepayment penalties, and for selling certain types, such as mortgages with options to pay less than the accrued interest each month, said Michael Calhoun, president and chief operating officer of the Center for Responsible Lending. "This market sold the most complex, riskiest products to the least sophisticated borrowers."

Leen has clients who would have qualified for prime loans but were talked into subprime mortgages with higher rates, he said. About half his subprime clients are senior citizens.

Kevin Lisota, president of Seattle real estate brokerage Findwell, said he personally had a loan where he was paying all broker fees, then found out the broker also was getting a yield-spread premium, disclosed before the final settlement statement.

"He was essentially hiding an extra $3,500 from me," Lisota said.

The same thing has happened to Findwell clients, he said. "That's where I think the abuse occurs, because it's a fee that's easy to sneak by the borrower."

Industry response

Brokers continue to defend yield-spread premiums as useful, particularly because tighter loan standards have driven up required down payments.

"Someone may be very tight and just have the money to make that down payment, but they don't have the money for their closing costs," Bloom said.

But for first-time buyers, having to pay closing costs out of pocket may encourage responsibility, Huelsman said. "If $3,000 in closing costs is going to put you over the edge, then you need to wait another six months and save up that $3,000."

Brokers acknowledge there are bad apples -- not that yield-spread premiums are a particular problem.

"In any industry you're going to have bad practitioners that are making egregious transactions," said Adam Stein, president of Integrated Mortgage Origination Systems in Auburn and past president of the Washington Association of Mortgage Professionals. "It happens on a much bigger and broader scale outside the mortgage broker industry."

Retail lenders, such as banks, charge higher rates for low- or no-fee loans and then get a service-release premium for this spread when they sell the loans to investors on the secondary market, brokers note. It's a sore point that federal rules require disclosure of yield-spread premiums but not service-release premiums.

The Federal Trade Commission reported in 2004 that disclosure of yield-spread premiums caused many borrowers to choose bank-originated loans over broker loans that actually were cheaper. But bankers and consumer advocates counter that borrowers think brokers work to find them the best loan, though they don't have the same expectation of banks.

"If I'm going around to used-car lots shopping for a car, I'm expecting it's an adversarial situation," Calhoun said. "But if I hire somebody and pay them a fee to go around shopping for a car for me, I don't expect them to get an additional fee from the dealer for raising my price."

In comments made to HUD in June, Federal Trade Commission staffers argued the best solution would be a disclosure that "just like direct lenders, brokers seek to maximize their own profits and may not provide the least expensive loan for which the consumer qualifies."

What to do

Last November, the House of Representatives passed a mortgage bill with a ban on most yield-spread premiums, but the Senate did not act on the measure.

The new good-faith estimate form and settlement statement that HUD released Wednesday and plans to require as of Jan. 1, 2010, include more disclosure of premiums. Specifically, they show the origination charge, with adjustments up or down depending on whether there's a premium for a higher rate or points paid for a lower one. The good-faith estimate also has a table for comparing options.

Washington state added a premium disclosure requirement earlier this year. The state Senate passed a requirement for a more-detailed disclosure that would spell out the cost of added interest versus the benefit of reduced fees, but the House didn't act on the bill.

Tom, who proposed the bill, said earlier this month that he was leaning toward proposing a ban on yield-spread premiums.

"I've been in real estate for 19 years and disclosures just don't get read," he said. "I think you're better off with an outright ban."

Yield-spread premiums should be banned for subprime mortgages, whose pricing tends to be much less transparent than that of prime loans, Calhoun said. "In the subprime market they have shown to be just horrifically abusive."

Bloom said the state's new one-page summary disclosure form clearly lays out yield-spread premiums. But Stein said the best thing would be for borrowers to compare rates and terms without worrying about lender payments to brokers.

"I honestly think that it's easier for the consumer to not really see any of the back-end compensation," he said.

New regulations are not needed to curb problem mortgages, Stein argued. "We've got a ton of regulation out there already. I think you've got to crack down on predatory lending with enforcement."

P-I reporter Aubrey Cohen can be reached at 206-448-8362 or aubreycohen@seattlepi.com.

Bainbridge resources: A pole-dancing accountant!

Emily Boberg-Courts is opening probably the most unusual fitness studio Bainbridge has ever seen. Ready? It's intended to teach Island women (sorry guys!) exotic dance and . . . wait for it . . . pole dancing. Yes! Pole dancing--but not the kind we used to watch at Bada Bing!--actual athletic pole dancing. Here's what Emily writes about the founder of Dolphin Dance and what she intends to do in the coming years.

"Kristen Titko, the creator of Dolphin Dance, has been dancing for over 30 years, and Exotic/Pole dancing since 1990. She studied Ballet, Jazz, Modern Dance, and Gymnastics. Kristen became an exotic dancer while attending college and pursuing a career in acting and modeling. She was featured as a pole dancer in the hit movies Showgirls, and Exit to Eden. Her career came to a screeching halt when she became suddenly and inexplicably ill at age 26. Kristen had opted, as most women in Hollywood have, to get saline breast implants to enhance her appearance. After spending a decade of terrible and debilitating illnesses, in the spring of 2005 Kristen finally stumbled on the information she needed to prove that her implants were the cause. In June of 2005 she had them removed.

Dolphin Dance is Kristen's creation in the wake of her new found health. It is her way of reaching out to women of all types to teach them that sexy is a state of mind. It is not about how we look, or how our bodies are shaped, it is about how we feel that makes us sexy. Kristen hopes that through her classes women will gain confidence and self esteem so that they never feel inadequate in any way.

The Dolphin Dance style is based on her own personal dance form and experience. While dancing in this very sensual way Kristen discovered what it was like to truly feel sexy and beautiful, and she hopes that you will too!

Exotic dance is a free-form of sensual, fluid, sexy dance, and is based on the dance moves commonly used in gentlemen's clubs. The important thing is that the dancer is emotionally in-tune with her music, her body, and her movements. The dance is slow and controlled, and therefore and excellent workout! Dance, in any form, is sensual, but exotic dance has a heightened sensuality where the movements are exaggerated. Exotic dance is an excellent way to get in touch with your inner beauty, and awaken your sexuality. It is also a fun and exciting thing to bring home to your partner as it can really spice up your relationship!

Emily has been a Dolphin Dance student since November of 2006, after actively searching and being fortunate to find an exotic dance studio in Columbus, Ohio. From that time forward, Emily took all of the classes that she could – exotic, pole, lap, fusion, etc. In January of 2008, she was given the opportunity to train intensively with Kristen to become an instructor with Dolphin Dance.

Through Dolphin Dance, Emily, who is an accountant by trade, was able to get in touch with her sensual side in a safe, supportive, and woman-centric environment. Not having a background as a dancer, Emily was originally known to comment about her pole-dancing, "Don't worry – it's not sexy when I do it. But it is a great workout!" Dolphin Dance gave her a chance to overcome these inhibitions to be and feel both beautiful and sexy in a safe space. She also found that the self-confidence she gained through her classes translated to other aspects of her life – including making her a better, more confident auditor!

After instructing many lovely ladies in Columbus, Ohio, including various family members and co-workers, Emily is excited to offer Dolphin Dance in the Pacific Northwest. She can't wait to share with more beautiful women what she has been fortunate to learn – the feeling of Dolphin Dance's mottos, "Sexy is a State of Mind" and "Every Woman Deserves to Feel Sexy!"

You can reach Emily by email at emilybc@dolphindanceexotic.com.

Noisy out there?

We've all had the unpleasant experience of being kept awake by neighbors, especially in a hotel room. With experience, we learn to pick up the phone and call the desk clerk, or learn to bring earplugs when we travel.

But what if the noise level outside the home we love has risen? More traffic? Noisy neighbors? 

Here are some helpful solutions.

Fall back! Run away!

This weekend will once again spawn thousands of online and offline rants about daylight (what other kind? Moonlight? Starlight?) saving. Even though last year the period been extended in the U.S., we give up the effort once again. No daylight saved. Fall back! Quit!

The effort has a long history, actually first proposed by Ben Franklin. Comments for and against are legion. Some are like the proverbial chief who wryly observed to a farmer that the attempt to save daylight was no more useful than cutting one edge off a blanket and sewing it on the other end. The passionate argue that we should be saving energy, or the world, or the future of our children instead. Others are not so cynical, arguing that DST has many benefits.

And look how seriously the State of Indiana has taken it!

We in the Northwest are so far north that we're used to hibernating from November through March. For us, whatever we give up by reverting to standard time just doesn't matter. It's dark when we roll out of bed, and it's dark when we sit down to supper. Let the wimps of the rest of the country whine all they want. We're tough up here!

Trick or treat! Huh?

Have you noticed that for the past ten years kids showing up at your front door have no clue about Halloween tradition? Ask every kid who rings your doorbell tonight what "trick or treat" means. Every one of them will say (cutely, unless it's one of the neighborhood teenagers who usually don't even bother with costumes) "candeee?"

We have failed as parents! These little goblins don't know they're supposed to scare us because we haven't trained them properly. We need to recover our national identity. This year, please, please, please instruct your children in proper Halloween etiquette. Show them how to appear menacing, how to threaten the mysterious trick should the homeowner not fork over the goods.

I do my part by opening the door with my usual Halloween roar and fierce aspect, costumed as a righteous tax collector. Once the kids take the step forward they've just lost, I tell them that I'll take the treat and start to reach into one of the bags. When they protest, I say "Get used to it, Joker and Batman, this is America! You're going to have to learn to live with the fact that scary characters will take your hard-earned money as long as you live." (This remark usually brings applause from the parents shivering at the fringe of the flickering porch light.) We all have a good laugh, I put the Snickers in the bags, and wave goodnight.

I enjoy Halloween more than the kids. And I don't really think that all my hard-earned money is being taken by the scary characters every April. Just most of it.

Real Estate Myth 9

This is a continuation of a series of posts inspired by a conversation with an acquaintance who revealed a good deal of ignorance about the real estate profession. Because I think an educated market benefits everyone, I intend to debunk as many myths as possible. I hope you find this information useful. Please feel free to comment!

Myth #9: It's a terrible time to sell.

FACT - Wrong. In this market, homes priced correctly in Kitsap County are selling, and selling quickly.  For a seller wishing to trade up, selling low is more than offset by buying the new move-up home at a lower price. The market will recover, and when it does, appreciation on the new home will yield a good return. 

Consider: Homebuyers want bargains. If you price your home much lower than your competition, it's possible to start a bidding war. 

Who's your neighbor?

It's an important question, especially if you have children. Why? Because sex offenders don’t advertise their home or business location, but wouldn’t you want to know?

Finding out if one of your neighbors is a sex offender or being notified if a sex offender moves into your neighborhood can be done with just a few clicks of the mouse by visiting the Washington State Sex Offender Information Center.

The site provides up-to-date information about registered sex offenders in your surrounding neighborhood, and has several educational tools available for your family as well.

Bainbridge resources: Bainbridge Performing Arts

The productions at Bainbridge Performing Arts just keep getting better and better. If the video below is representative, its production of Macbeth (opening Thursday) should be well worth your time. Please let us know your opinion if you attend!

Why Congressman Inslee voted NO

Here is the letter I received today from my congressman explaining his reasons for voting against the economic recovery package last week.

October 13, 2008

Dr. Paul Pival
Bainbridge Island, WA
98110-2615

Dear Dr. Pival:

Thank you for contacting me regarding the economic recovery package. I appreciate hearing from you on this important issue.


As you know, I voted against the first economic recovery legislation due to grave concerns about taxpayer protection, accountability, and oversight. While I worked with my colleagues in the House of Representatives for stronger protections, unfortunately my concerns were not addressed in the Senate’s version of the bill and it remains, in my opinion, inadequate and inequitable. For this reason, I was unable to support the Senate’s version of this bill passed the House by a vote of 263-171 and was subsequently signed into law by President Bush.

Please be assured that my opposition to this bill did not stem from any misunderstanding of the severity of the credit crisis that is currently restricting the flow of capital at all levels of our economy. My background in economics as well as my service during previous Congresses as a member of the House Financial Services Committee has made clear how dropping real estate prices triggered a major credit crisis affecting interbank credit rates, corporate bond insurance, and ultimately restricting loans for small and large businesses and consumers. While these linkages don’t encompass the entire problem, they do show that an effective solution to reduce the very real danger of economic stagnation is necessary. My vote reflects my desire to protect the long-term growth of the American economy by enacting economic policy that is more likely to result in getting our economy back on track, and to fix some of the underlying problems of the bill.

I realize the need to find consensus and it is my hope that the enacted plan works to free up credit. However, this basic plan to have government officials choose which troubled assets to purchase and set the prices at which to buy and sell them, as it was proposed by Treasury Secretary Paulson, has not offered adequate protection for the taxpayer, nor has it addressed the underlying reason for this credit crisis -- the collapse of the housing market. Therefore, while our credit challenge is real, I found the recently enacted legislation to be fatally lacking.

First, we needed to include real taxpayer protections. It’s not enough to have a provision asking for an unidentified President in 2013 to present an unidentified plan to ask for taxpayer money back from Wall Street. It was an illusion of protection. At this time, a shortfall created by this bill remains unpaid for and I don’t think that burden is fair when so many Americans are struggling to make ends meet. Instead, Congress should have stayed to work for a plan that works for taxpayers. One such example would be what Warren Buffet achieved in his recent deal with Goldman Sachs– acquiring an equity stake directly from the banks in the form of preferred stock in exchange for much-needed investment capital from the government. Under such a plan, banks would begin investing again immediately and taxpayers could profit with them. Congressional leaders suggested that the Treasury acquire equity guarantees, but the recently enacted legislation still lacks an explicit requirement for taxpayers’ to be guaranteed an equity stake commensurate with the amount of taxpayer assistance given.

Second, this package does not address needed reforms to the financial and housing markets to prevent a crisis like this from happening again. Imprudent banking practices like severe overleveraging and faulty corporate insurance as well as lax government oversight are just a few systemic weaknesses which must be addressed immediately. Without proper oversight and brakes in place to slow down the rate of the economic downturn on a micro level, I fear these problems will continue despite the passage of this package.

In addition, we must address the root of this financial crisis by doing more to help the people who played by the rules to stay in their homes. I remain unconvinced that this bill will trickle down to stop the widespread bleeding in our housing market. A plan of this size should include both a macro and micro approach to improving our financial markets.

Under the enacted plan, even with minor changes placed in the Senate’s version of the Economic Recovery Act, such as increasing the FDIC coverage limit for individual deposits to $250,000, and adding extensions of energy tax credits as well as the Washington State sales tax deduction which I voted for earlier this year, this plan falls far short of what the American people need. In making my decision, while I recognized the need for expediency on this matter, my bottom line on this legislation was not met: explicit and legally binding protections for the taxpayers (such as the equity stake I mentioned previously) and including homeowners who are struggling down on main street.

Please be assured that I remain concerned about where we are headed as a nation and steadfast that I must do everything I can to ensure justice and economic prosperity. Like you, I worry about the health of our investments, about the security of our retirement – these are the essential tools around which we plan our futures. Although we may have disagreed on this issue, I hope you will continue to contact me so that we may find common ground and work together in the future.

Please continue to contact me about the issues that concern you, as I both need and welcome your thoughts and ideas. I encourage you to contact me via email, telephone, or fax, as security measures in the House cause delays in receiving postal mail. For more information on my activities in Congress, and for information on services that my office can provide, please visit my website at http://www.house.gov/inslee. If you would like to subscribe to my email updates, please visit http://www.house.gov/inslee/signup.htm.

Very truly yours,

JAY INSLEE
Member of Congress

JRI/et

Confirmation# 2757816


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DISCLAIMER
I cannot guarantee the integrity of the text of this letter if it was not sent to you directly from my Congressional Email Account: Jay.Inslee@mail.house.gov. If you have any questions about the validity of this message, please email me at: Jay.Inslee@mail.house.gov or call my Washington, DC office at: 202-225-6311. If you would like to be removed from my email update list, please email me your name and address at: Jay.Inslee@mail.house.gov and type "REMOVE" in the subject line.
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Lighten up!

Our friend Kathy Caraher passed these on. I don't know the source, but these work for me!

CEO --Chief Embezzlement Officer.

CFO-- Corporate Fraud Officer.



BULL MARKET -- A random market movement causing an investor to mistake himself for a financial genius.

BEAR MARKET -- A 6 to 18 month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no sex.

VALUE INVESTING -- The art of buying low and selling lower.

P/E RATIO -- The percentage of investors wetting their pants as the market keeps crashing.

BROKER -- What my broker has made me.

STANDARD & POOR -- Your life in a nutshell.

STOCK ANALYST -- Idiot who just downgraded your stock.

STOCK SPLIT -- When your ex-wife and her lawyer split your assets equally between themselves.

FINANCIAL PLANNER -- A guy whose phone has been disconnected.

MARKET CORRECTION -- The day after you buy stocks.

CASH FLOW-- The movement your money makes as it disappears down the toilet.

YAHOO -- What you yell after selling it to some poor sucker for $240 per share.

WINDOWS -- What you jump out of when you're the sucker who bought Yahoo @ $240 per share.

INSTITUTIONAL INVESTOR -- Past year investor who's now locked up in a nuthouse.

PROFIT -- An archaic word no longer in use.

New scam alert

Our friends at Silver Planet have just posted an updated list of current scams. It's worth your time to look at these. And in my opinion, it's worth your time to subscribe. Please let us know what you think (click COMMENTS below).

Bainbridge resources: Help for stressed moms

Laura Lowrey, the owner/esthetician at Island Spa Lounge, has help for stressed moms:

Me & Mommy Spa Party This Friday Friday , October 10th BISD No School Day 10 AM to 2 PM Child Spa Menu Fizzy Foot Soak $10 Bubble Bar Hand Treatment $10 Mini Facial $15, Mini Mani $15, Mini Pedi $15 Organic Cupcakes & Tea FREE Make & Take Bath Soak FREE Mommy Spa Menu SAME AS ABOVE PLUS..... Organic Champagne FREE Brow Wax $15 Mineral Makeup Application $20 $10 Spa Gift Card FREE Appointment Schedule is Approximate Stay as long as you like during the party Mommies should stay at party with child $20 Party Fee for Mommy & Child non-refundable upon cancellation $5 each extra child Reserve by phone 842.SPA1 (7721) Discount Spa Services Today ISLAND SPA LOUNGE Located in Madrone Village Next to Winslow Green & Flowering Around 115 Hall Bros., Suite 102 Bainbridge Island 842.SPA1 (7721)

Caveat from a mortgage broker

Joe Prevost at Pioneer Funding sends the following:

The real estate value correction we are currently experiencing is not a surprise to me. Home values appreciated at levels that could not be sustained. Major mistakes were made in how Wall Street created mortgage backed securities and sold them on the open market. Disreputable mortgage bankers and lenders created and pushed high risk mortgage products to unsophisticated real estate investors.


New investors acting as speculators tried to cash in on the aggressive appreciation by taking out risky mortgage loans as a vehicle to purchase properties they could not afford. When the market adjusted and values decreased a bit the speculation ended.

Remember about 2 years ago there were about 15 different "flip this house" type television shows running? Countrywide and Washington Mutual were pushing Adjustable Rate and Negative Amortization loans with large undisclosed commissions to loan representatives who were trained to get the client to sign on the dotted line.

Paul, you remember I predicted the demise of these two specific companies a long time ago. They should be held accountable for their abuses.

100% financing and reduced documentation loans were created to boost home ownership. Unfortunately the mortgage lenders mentioned above and many others twisted, lobbied and bullied the system to its knees. Now they have their cash and are out of the business or have moved on to another bank,leaving the American taxpayer and homeowner to pay the bill.

A home is still the best investment and source of wealth creation for most people. I caution all homeowners to be careful where you apply and take mortgage advice from.

Joseph Prevost
Mortgage Broker
360-697-5444
www.Pioneer-Funding.com
WA State License 510-MB-28031

What to know about mortgages today

With so much changing in the real estate and financial markets in recent weeks, many potential buyers are looking for answers. If you're currently shopping around for a mortgage, here is some information to consider.

Rates Remain Low

The federal government's recent backing of mortgage giants Fannie Mae and Freddie Mac has helped re-assure financial markets about the stability of the mortgage industry, and as a result already-favorable rates have dropped even further.

Interest rates on traditional 30 year fixed rate mortgages dropped by between .3 and .5 percent in the days following the news of the government bailout. Some analysts believe that rates will continue to drop, particularly if the government reduces or eliminates some of the fees that Fannie Mae and Freddie Mac currently charge lenders.

Today's Loans Require Extensive Documentation

Interest rates remain very favorable for buyers, but obtaining a home loan is not as easy as it has been in recent years - even for buyers with good credit. Some lenders had previously been amenable to approving buyers for a loan based on either basic income documentation, or in rare cases, no documentation at all. Today, lenders are carefully scrutinizing the income and credit situations of all loan applicants.

For the best chance at getting the loan you want, make sure to provide complete financial documentation, including:


* Completed federal tax returns for the previous three years.
* One to two month's worth of pay stubs
* All W-2 forms for each person who will be named on the loan
* Contact information of your supervisor or human resources manager, to confirm employment
* Two to three statements for every bank account, 401(k), IRA, or other retirement account that you have.
* Addresses and account numbers for any open forms of credit in your name.

Down Payments Grow

On the flipside of lower loan rates, some banks are raising the minimum down payment required in order to secure a loan. The existence of the once-popular "no money down" mortgages has already all but disappeared this year. Today, even homeowners able to put down 10 percent of the home's purchase price may find difficulty securing a loan product.

The reason: banks concerned over soften markets are attempting to limit their exposure. As a result, many are already adopting guidelines that Fannie Mae has indicated it would apply in 2009. Chief among those guidelines is the requirement that homeowners put down 15 percent of the home's purchase price.

Fluff

This post has absolutely nothing to do with life and real estate in Bainbridge Island and Kitsap County. But I'm tired of all the gloom and doom from the national media. I thought you'd appreciate a break.

Last year I posted some outrageous puns. My friend Helen sent these, perhaps in revenge. I share these with a caveat: don't read this unless you can tolerate what Dr. Johnson called the lowest form of humor. I not only tolerate puns, I love them. Thanks, Helen!

1. The roundest knight at king Arthur's round table was Sir Cumference.
He acquired his size from too much pi.

2. I thought I saw an eye doctor on an Alaskan island,
but it turned out to be an optical Aleutian.

3. She was only a whisky maker,
but he loved her still.

4. A rubber band pistol was confiscated from algebra class because
it was a weapon of math disruption.

5. The butcher backed into the meat grinder
and got a little behind in his work.

6. No matter how much you push the envelope,
it'll still be stationery.

7. A dog gave birth to puppies near the road
and was cited for littering.

8. A grenade thrown into a kitchen in France
would result in Linoleum Blownapart.

9. Two silk worms had a race.
They ended up in a tie.

10. Time flies like an arrow.
Fruit flies like a banana.

11. A hole has been found in the nudist camp wall.
The police are looking into it.

12. Atheism is a non-prophet organization.

13. Two hats were hanging on a hat rack in the hallway.
One hat said to the other, 'You stay here, I'll go on a head.'

14. I wondered why the baseball kept getting bigger.
Then it hit me.

15. A sign on the lawn at a drug rehab center said: 'Keep off the Grass.'

16. A small boy swallowed some coins and was taken to a hospital.
When his grandmother telephoned to ask how he was,
a nurse said, 'No change yet.'

17. A chicken crossing the road is poultry in motion.

19. The short fortune-teller who escaped from prison was
a small medium at large.

20. The man who survived mustard gas and pepper spray
is now a seasoned veteran.

21. A backward poet writes inverse.

22. In democracy it's your vote that counts.
In feudalism it's your count that votes.

23. When cannibals ate a missionary,
they got a taste of religion.

24. Don't join dangerous cults:
Practice safe sects!

Budda bump (tshhhhh!)