Alt-A Mortgages and the Real Second Wave in the Mortgage Crisis:
And What You Can Do….
by Paul R. Whitacre
3/8/2010
Alt-A Real Estate mortgage crisis looms like a tidal
wave that makes the subprime mortgage crisis look like
a ripple in a pond.
So how does this affect you, the average real estate investor?
First, you have to define what an Alt-A mortgage is and what it
is going to do to the fledgling recovery in the current economy.
An Alt-A mortgage, short for Alternative A-paper, is a type of U.S.
mortgage that is generally considered a larger risk than A-Paper,
which is a traditional prime mortgage. It is also known to be less
risky than subprime mortgages, the mortgages that got the U.S.
housing industry into dire straits to begin with.
The Alt-A crisis is so big, that it is estimated to be twice as damaging as the subprime mortgages that our wonderful leaders in Congress, such as Barney Frank and Chris Dodd, forced us into. They focused on using the power of the law to force lenders to give mortgage and home loans to people who had ‘less than stellar’ credit. This led to the subprime mortgage crisis of 2008, the very unpopular bank bailouts, Henry Paulsen, and the disconnect widening between Wall Street, Washington, and Main Street.
The estimates are that nearly $1 Trillion in Alt-A mortgages are up
for resets over the next 30 months. That’s including several mortgages that are wrapped up in Adjustable Rate Mortgages (ARMs).
So what do you do now if you are lucky enough to have a secure mortgage, a great job, and a healthy IRA or 401(k)? Invest your IRA in Real Estate.
Take advantage of the foreclosures, pre-foreclosures, bank owned
properties, and more with money from your IRA and 401(k).
These issues surrounding the Alt-A crash, as well as the tremors
that still remain with the previous mortgage crash of 2008, show the current instability of the existing stock market and the ‘rally’ of 2009. The most important thing one can do in this time is to
make sure they diversify their investments.
Don’t’ think that things are back where they were in 2006 and 2007. They aren’t stable, people aren’t employed and are still losing their jobs. Home prices are the lowest they have been in 50 years, adjusted even for inflation. Use this time to solidify yourself a wealthy IRA and a secure retirement.
A retirement with dignity. A retirement where you
can work because you want to, not because you have to.
Paul R. Whitacre is a managing partner at WealthyIRA.com.
The passion of WealthyIRA is to teach everyone to invest their IRAs and 401(k)s in the deepest discounted Real Estate in decades. Check out how to invest your IRA or 401k in Real Estate at WealthyIRA.com Blog. Follow us on Twitter at WealthyIRA. Email Paul here.
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Crude Oil Races Towards $100 a Barrel, Spiraling Home Prices Downward!
by Paul R. Whitacre
3/8/2010
So Oil is expected to reach $100 here very soon and it is sitting currently at $80 dollars a barrel for light, sweet crude oil. As I say that, I think back to why I as a Real Estate investment person is focusing on the world oil market.
Let's look at some facts of the matter. Not only is there enough raw oil in the United States to last us
for 50 plus years alone, but we are not harvesting that oil ourselves and we are subjugating ourselves to the leaders of the Oil Producing and Exporting Countries (OPEC) and their price setting.
OPEC is currently running at only 80% capacity as well. This means that they could produce more barrels of light, sweet, crude oil for the open market, but since there is a lower demand, the price would go down. Yes, that is the very definition of artificial price inflation for a good or service.
You can thank OPEC for paying nearly $3.00 a gallon for fuel right now, with an expectation that the price will only go up as the summer driving season kicks in.
Ok, so how does this relate to residential and commercial real estate investing? It completely relates. The rule of thumb when looking at an economy is that "housing starts", or the amount of new homes that are being built, is a sign of a good or bad economy.
Well housing starts and home building companies rely on cheaper fossil fuels to help truck supplies across the US and run machines at job sites.
So what happens if the cost of cheap fossil fuels becomes not so cheap? The builders slow development, thus laying off more workers, and again heading away from an increase in production.
The lower production results in further declining home values. These lower priced home values equates to the best-priced Real Estate in decades. Use this opportunity to round out your investment strategy by using your IRA to invest in Real Estate.
Take some of the IRA funds that you have invested in simple stocks that have been under-performing as of late, and invest the money into a rental property, strip mall, or vacation home. But do it soon while the best-priced properties are still available.
Let macroeconomics and fuel prices take care of themselves. You take care of your retirement.
No one else will.
Seize this opportunity to cement your retirement with dignity.
Paul R. Whitacre is a managing partner at WealthyIRA.com.
The passion of WealthyIRA is to teach everyone to invest their IRAs and 401(k)s in the deepest discounted Real Estate in decades. Check out how to invest your IRA or 401k in Real Estate at WealthyIRA.com Blog. Follow us on Twitter at WealthyIRA. Email Paul here.
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The Second Wave in the Mortgage Crisis is Here!
by Paul R. Whitacre
2/3/2010
Yes, it is here. 2010 is the year of the real mortgage crisis. With nearly 2.4 million home mortgages expected to go bust in 2010 as compared to the roughly 1.7 million in 2009, the real issue is what is driving this crisis. It is the adjustable rate mortgages (ARMs) that were refinanced, approved, and set for the five year mark are coming due in 2010. It is all the 2005 5-1 ARM sales during that housing market boom.
The problem with these ARMs is the timing. It could not be worse. Many Americans are reeling from the nearly 50%, 60%, and even 70% losses in the stock market in the past year and now they are going to be forced to come up with extra money monthly to pay their once stable and now readjusting mortgage payments. Couple that with the interest-only loans shifting to a principal-plus-interest model and what we have is a perfect storm for a double-dip recession.
Many who have scrimped and saved to prepare themselves for the worst are investing their IRAs and 401(k)s in real estate. Many are turning to self-directed IRAs more and more, taking advantage of the deepest discounted real estate in decades.
Along with the struggle of readjusting ARMs and interest-only loans, many Americans have to get used to double-digit unemployment, severe deflation of the monetary supply in 2010 with strong expectations for hyperinflation in the years to come, as well as considerably less pay for work they have been doing for years. This is the upside for those who are currently employed.
Those without a job or career security are reeling with the one-two-three punch combination of the retrenching of the economy, the extremely high unemployment rate, as well as the significantly tougher job market with so many other qualified candidates applying for the same jobs.
That said, there are a few rays of light are shining through the darkness. The economy grew in the fourth quarter of 2009, rather than the steady decline that has been so prevalent since 2008. There has also been a focus by many organizations to show that there are plenty of jobs available in the current economy, as well as how to get an interview at these jobs.
Obama's stimulus package, the American Reinvestment Act of 2009, is getting some credit for pumping money into the economy. How much is still being debated.
So for those who are scared to reinvest heavily in the stock market, what options do you have?
Take a recommendation from the many millionaires in America. 4 out of 5 millionaires made their fortunes in real estate. The ray of sunshine in a bleak economy is what it has always been. Real Estate. Many people are searching for new ways to learn how they can invest their IRAs and 401(k)s in foreclosures, preforeclosures, REOs (bank-owned properties), short sales and other real estate opportunities.
With the cheapest and deepest discounted deals in real estate in decades, it's more important now than ever to learn how to use your self-directed IRA to earn steady income as well as provide a supplemental investment in real estate to your portfolio. Now is the time to secure yourself a wealthy retirement by investing in real estate.
Stay tuned to WealthyIRA.com to keep updated on the latest information on how you can invest your IRA or 401(k) in Real Estate.
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