In a sign that things have really gone awry, a 90 year old woman, Addie Polk, who was being evicted from her foreclosed home, shot herself two times. This tragedy has become a national story.

According to CNN, “Fannie Mae said it will set aside the loan of a woman who shot herself as sheriff’s deputies tried to evict her from her foreclosed home. On Friday, Fannie Mae spokesman Brian Faith said the mortgage association had decided to halt action against Polk and sign the property “outright” to her.

‘We’re going to forgive whatever outstanding balance she had on the loan and give her the house,” Faith said. “Given the circumstances, we think it’s appropriate.’”

Thoughts?

If you're new here, you may want to subscribe to our RSS feed or sign up for our real estate social network. Thanks for visiting!

Tags: addie polk, bailout, fannie mae, foreclosure, mortgage mess

Talk about a banking coup! Just last week we thought that Citi would wind up as the winner of the Wachovia banking sweepstakes . . . fast forward to this morning, and it looks like Wells Fargo’s bid, which is over 7 times that of Citi - a whopping $15.1 billion, is going to help to create Wells Fargo Wachovia, the largest retail bank in the country.

According to the Columbus Business Journal:

San Francisco-based Well Fargo (NYSE:WFC), whose home mortgage division runs three branches in Central Ohio, said Friday it intends to buy all operations of Charlotte, N.C.-based Wachovia with no need for financial assistance from the Federal Deposit Insurance Corp. or other government agencies.

Wells Fargo expects the combination would be profitable in its first year, excluding integration costs, write-downs, transaction charges and additions to its credit reserves. The company expects to incur merger and integration charges of about $10 billion. The bank plans to issue up to $20 billion of new Wells Fargo securities, primarily common stock.

The combined company would take the title of the largest coast-to-coast retail bank in the U.S. away from Wachovia’s crosstown rival Bank of America Corp. (NYSE:BAC), which has $701.5 billion in domestic deposits. The merger would create a bank with $1.42 trillion in assets, $787 billion in deposits and a customer base of 48 million and nearly 11,000 branches.

What are your thoughts? Who will end up owning Wachovia?

Tags: bank merger, banks, merger, wachovia, wells fargo

They’re Here! We’ve Launched BiggerPockets Blogs!

In last week’s newsletter, we told you some of the reasons to blog. Now that we’ve officially launched BiggerPockets Blogs, I’d like to share some of the great features of our blogging system, along with some great reasons to get blogging on BiggerPockets.

Some Reasons to Set Up a Blog with BiggerPockets Blogs Include:

1. It’s EASY - Setting up a blog takes less than a minute, and you never need to know any HTML or other code to use the blog. Easily upload images or YouTube videos, alter your fonts and post layouts, and more using our WYSIWYG (Whay You See is What You Get) blog creator!
2. Customizable Layouts - We’ve made customizing the layout of your blog, quick and easy. Choose your own colors, layout design (more layouts coming soon), sidebar additions and create a blog that fits your personality.
3. Widget Ready - Got a widget that you must have on your blog? Members can simply paste the widget code into our Blog customizer and viola!
4. SEO Ready - Our blogs are search engine optimized so inclusion in Google, Yahoo, Ask, MSN, etc should be fast and effortless.
5. Instant Publicity - All Bloggers with a BiggerPockets Blog will have the opportunity to have their blog and profile promoted across our site. Those bloggers who are more active in their posts and comments will be promoted on our stats page and elsewhere. Additionally, members profiles are promoted to the search engines (unless you request profile privacy), and just having an account on our site allows you to be found by millions of people in the real estate world!
6. Communicate with other Bloggers with Trackbacks - With our trackback system, by simply linking to posts of other bloggers in your articles, both on BiggerPockets and off, our system will notify them, and you’ll instantly let them know that you find their article relevant. Its a great way to stay in touch with other bloggers and let them know that their content is important to you.
7. Build an Audience with Blog and Comment Subscriptions - both BiggerPockets members and visitors can subscribe to your blog or individual articles, either through RSS feeds or email subscriptions. Your audience can easily be automatically notified whenever you post new content, or whenever someone adds to a conversation in the comments of your blog.
8. Save Your Favorite Posts Across BiggerPockets Blogs - We’ve established a system for members to be able to save any post on the site that interests them. Once saved, you can easily find your favorite saved blog posts in your dashboard.
   Promote yourself, your real estate ideologies and thoughts
9. Ping the World - Automatically ping the world upon publication of a new post. Pinging notifies blog search engines and directories that you’ve got a new post, and helps them keep the most up to date records of your content.
10. Make Money - We saved the best for last! BiggerPockets members have the opportunity to make money with their blogs by adding advertising. BiggerPockets does not show any ads on member’s blogs. Instead, we’ve created specific ad slots where you can add advertisements from Google AdSense, Yahoo, MSN, or ANY OTHER AD NETWORK. Just set up an account, find the right ad size to match the specified slot, and paste the code your network provides you. All that’s left is to provide great content so your visitors keep coming back, and you’ll be on your way to make some real cash! (Launching this week!)

What Are You Waiting For?

NOTE: I’m going to be maintaining a blog to help our members use our Blogs and other site functions. Swing by and check out the BiggerPockets Founder’s Blog

Tags: bigger pockets, biggerpockets, biggerpockets blogs, blog, blogger, blogging, marketing, publicity

As our great and venerable (throat clears) leaders continue to debate the bailout of banks and millions who cannot afford their homes, I thought that I’d share some quotes that might bring some perspective to the issue:

On the value of money nowadays:

And to think, $50 billion use to sound like an unimaginable amount of money. Now the way people throw around the world billion, $50 billion sounds like milk money.

I bet with the inflation our country is going to go through after this bailout, you will actually need close to that for milk. - Jason F.

On WaMu failure and Funding of the FDIC:

WOW! The FDIC prefers to move in and take over at 5pm on Fridays to give them the weekend to clear things up and so people can’t panic as much-that shows just how bad things were for WaMu if they couldn’t wait 24 hours.

On a WaMu side note-we just got a new client at my firm in the past month, her father passed away and surprisingly left her 2.5 million. 750k of that was in WaMu CD’s. I was trying to get my boss to really press them to get the money out asap, regardless of penalties, but they wanted to wait on the “death put” (in case of death a cd can be paid out without penalty) to avoid losing out on any money. Talk about Penny smart, Pound foolish! Please people, DO NOT keep more than the FDIC limits in your bank accounts. I know that may be hard for some business accounts but you never know who and when this is going to happen to next.

Next order of business for congress-bailing out the FDIC. With all the talk about ‘bailouts’, you’d think there was a sinking ship around here… - Bob H.

On the bailout stall in Congress:

Good. I am glad the House Republicans are stalling this. We need serious debate over this issue, before we hand over 700 billion dollars of our money. This reminds me of the Patriot Act. Legislation was rammed through Congress so fast that watchdog groups had little time to examine the bill.

Extraordinary legislation deserves extraordinary due diligence. - Matthew G.

On the Bailout:

An outright bailout of people and institutions reinforces bad patterns that emerge again down the road in a new set of clothes. I’m not sure if nothing can be done now, but it seems like there must be some sort of middle road where financial solutions can be reached while still keeping the people on the hook that made poor decisions. - Scott S.

On the Consequences of a Bailout:

Every action has an equal and opposite reaction. Unfortunately the reaction isn’t always obvious. This bailout will cause problems that can’t be foreseen now. How often has the government done something only to have it backfire? - Richard W.

On government intervention aka. Bailout:

I think it’s preposterous and tampering with the free market. I believe that one of the reasons we’re in this mess is because the Fed forced rates to stay low for so long after they were due to increase, which led to the buying spree, inflated prices, and further blowing the bubble. - Alan B.

Tags: bailout, congress, Foreclosures, housing, housing bailout, Mortgages, paulson

The snowball that is the US and Global Financial Crisis continued to get larger Tuesday as American International Group (AIG), the nation’s largest insurer came close to collapse. Over the weekend, the Fed failed to provide a $40 Billion bridge loan that the company’s leadership had been pressing for, but late Monday night, the Fed stepped in. In exchange for an 80% ownership stake in the company, the government went against earlier promises and rescued AIG with an $85 Billion loan.

According to CNN:

Officials decided they had to act lest the nation’s largest insurer file bankruptcy. Such a move would roil world markets since AIG (AIG, Fortune 500) has $1.1 trillion in assets and 74 million clients in 130 countries. An eventual liquidation of the company is most likely, senior Fed officials said. But with the government loan, the company won’t have to go through a tumultuous fire sale.

The failure of AIG could have caused unprecedented global ripple effects, said Robert Bolton, managing director at Mendon Capital Advisors Corp. AIG is a major player in the market for credit default swaps, which are insurance-like contracts that guarantee against a company defaulting on its debt. Also, it is a huge provider of life insurance, property and casualty insurance and annuities.

“If AIG fails and can’t make good on its obligations, forget it,” Bolton said. “It’s as big a wave as you’re going to see.” AIG has had a very tough year. Rocked by the subprime crisis, the company has lost more than $18 billion in the past nine months and has seen its stock price fall more than 91% so far this year. It already raised $20 billion in fresh capital earlier this year. Its troubles stem from its sales of credit default swaps and from its subprime mortgage-backed securities holdings.

According to the International Herald Tribune:

The decision, announced by the Fed only two weeks after the Treasury Department took over the quasi-government mortgage finance companies Fannie Mae and Freddie Mac, is the most radical intervention in private business in the central bank’s history. With time running out after AIG failed to get a bank loan to avoid bankruptcy, Treasury Secterary Henry Paulson Jr. and the Fed chairman, Ben Bernanke convened a meeting with House and Senate leaders on Capitol Hill at about 6:30 p.m. Tuesday to explain the rescue plan.

The decision was a remarkable turnabout by the Bush administration and Paulson, who had flatly refused over the weekend to risk taxpayer money to prevent the collapse of Lehman Brothers or the distressed sale of Merrill Lynch to Bank of America. Earlier this year, the government bailed out another investment bank, Bear Stearns, by engineering a sale to JPMorgan Chase that left taxpayers on the hook for up to $29 billion of bad investments by Bear Stearns. The government hoped at the time that this unusual step would both calm markets and lead to a recovery by the financial system. But critics warned at the time that it would only encourage others to seek bailouts, and the eventual costs to the government would be staggering.

Was there any other option for the government? What now? Taxpayers now own Fannie, Freddie, and AIG . . . any guesses as to what’s next?

This week’s news has been the financial equivalent of a 9.5 earthquake on the richter scale . . . unprecedented!

Tags: AIG, American Insurance Group, fed, government bailout, paulson

Update: The Dow ended up closing down 504 points for the day

The past 24 hours have been about as chaotic a time as Wall Street has seen since Black Monday or possibly the Great Depression. Here are a few highlights:

• We’ve seen one of the top investment banks fail to secure a bidder and file for bankruptcy
• We’ve seen Merrill Lynch essentially forced to be acquired by Bank of America for $50 billion in stock
• We’ve seen shares of AIG fall 80% today (World’s Largest Insurer)
• We’ve seen WaMu shares fall down 25% to a market cap close to $3 billion
• With 40 minutes left in trading, the DOW Industrials are down 399 points or 3.5%
• Alan Greenspan called this a once in a century crisis.

With all that going on, what else could be happening?

A Consortium of 10 Banks Has Established a $70 Billion Loan Program to Protect Liquidity

According to the AP:

The ten banks, which include JPMorgan Chase & Co. and Goldman Sachs Group Inc., said they were committing $7 billion each for the pool. The pool would act as a signal to the marketplace that banks, brokerages, and other financial companies can lean on the fund to take care of borrowing needs.

The banks said the program will be available to participating banks which can get a cash infusion up to a maximum of one-third of the total size of the pool. The size of the loan program might increase as “other banks are permitted to join.” All participating banks intend to use this facility beginning this week, the statement said.

The banks also include Bank of America Corp., Barclays PLC, Citigroup Inc., Credit Suisse Group, Deutsche Bank AG, Merrill Lynch & Co., Morgan Stanley and UBS.

Could this action from the banks help preserve their own future and that of other banks?
Personally, I think it is a great idea and hope that other major banks jump in and help pool funds to build the loan program. It is forward thinking like that which has been absent from the financial institutions for some time. Perhaps the banks can save themselves — we see that Washington failed to save Lehman — seems that there are few other options left.

Any Thoughts?

Tags: AIG, bank of america, finance, lehman, lending, Merrill Lynch, mortgage

Real Estate Groups Getting Lots of Attention

Since the launch of our groups feature, our members have flocked to create or join groups meeting their interests. I thought I’d remind everyone of groups today because we just had one (the Private Money Group) pass the 100 member mark for the first time!

Who Would Benefit From Real Estate Groups?

A sampling of people who would find groups helpful include:

• Investors who want to network locally might join or create a group for investors in their city.
• Real Estate Agents may want to set up or join referral groups to share business.
• Real Estate Clubs may want to set up a group to draw new traffic to their group.
• Landlords, wholesalers, or people of some other real estate specialty may want to create or join a group designed for people sharing the same interest.

Real Estate Group Features Include:

• Group members have their own private forum
• Group founders (administrators) and moderators (set by the admin) can post news or announcements for the group, where members are notified by email and kept in the loop (you can shut your notifications off in your settings tab of the Dashboard).
• Group members can invite any of their colleagues to the group, or they can invite people who are not yet members of BiggerPockets with the email invite function. Once someone joins the site through this method, they automatically are registered as a member of your group.
• Groups allow people to essentially create mini communities within the overall BiggerPockets community.
• Group members can subscribe to discussions and be notified of new posts.
• Coming soon - group members will be able to get periodic notifications of new topics in their groups.

Real Estate Group Examples:

Here are a few examples of groups on the site - 64 Total Groups as of 9/11/08:
Out of State Investors, Lenders Place, Personal REO Investing, Bulk REO Group, Pennsylvania Investors, Phoenix, Arizona Investors, Twitter Addicts For Real Estate, etc.

What Are You Waiting For?
Join or create a group today!

Tags: biggerpockets groups, groups, local networking, networking, networking groups, real estate, real estate club, real estate group, real estate networking, social network