Hard-To-Do-Loans and the Hard Money Industry

Foreclosures, Preforeclosures, Bail Outs and Short Sales

brandon@TheEquityExperts.com (Brandon Thienes) — Sat, 14 Jun 2008 08:44:21 GMT

Those that know me intimately know that I rarely ever watch television. I typically work from about 6:30 AM til I retire - whether that is 8 PM, or 4 AM, or anytime in between. I do read papers, and I do subscribe to certain internet resources, but seldom turn to TV as a source of either education or entertainment. So, last night as I found myself returning to my hotel room with a desire to be mindlessly entertained while finishing my burger and shake, I turned the TV on.

I was in "shock and awe" as I saw that infomercials had changed gears completely. I remember years ago when a moderate few was the count of thirty-minute real estate investment programs. But, wow. Last night I discovered that every channel except cartoons and a Spanish-speaking drama channel were dedicated to either exercise equipment or real estate investing opportunities. No wonder I am seeing so much confusion among new investors that inquire with our company.

In response to this new epiphany, and the questions I keep receiving from people craving to increase their ROI and exploit the current real estate market, I've decided - in my somewhat limited capacity - to comment on the difference in investing into hard money lending and that of actual hard real assets (real estate).

First, allow me to say that real estate is a safe bet almost every time - providing the price is right and you are willing to allow it to mature in value (either organically or through strategic improvement) before liquidating. In fact, I am familiar with a young couple who just became millionaires overnight because their remaining parent died and left them with hundreds of acres of developed land in the center of L.A. - This land was purchased for a song in the 1940's and has been held by the family since. THIS IS REAL - REAL ESTATE INVESTING.

But let's be realistic. In this day of quickie burgers and microwaves, it is difficult for any new investor to imagine buying a piece of investment real estate with the vision of it being in the family for generations to come. WE are a quick-in, quick-out, make-that-money, generation. So, with that said, I would like to comment about the pros and cons of real estate investing as a SOLE investment option - As I see it.

The pro's of buying foreclosures, preforeclosures, short sales and other discounted real property:

1) If the price is right the profit on a transaction can be substantial upon liquidation
2) You might be helping to rescue someone from certain financial collapse
3) There are certain tax breaks for real estate ownership
4) It just plain feels good to be a property owner
5) Donald Trump made his billions in real estate

The Cons:

1) If the price is wrong, or the market is wrong, or the geographic area is wrong - you could have just bought an albatross.
2) You better love being a landlord
3) With today's gas prices, the cost of property improvement is probably 50% higher than it was just -4- years ago.
4) There are tax responsibilities for property ownership
5) Donald Trump is more of a skilled negotiator and overall jerk than most real estate investors are willing to become.

Now, let's look at what kind of pros and cons that Hard Money (trust deed / private mortgage) investing presents:

1) Trust Deed investing is an investment secured by a Real asset but does not require direct ownership
2) Hard Money investments are held against low Loan-to-Value ratios, giving the investor the opportunity to liquidate and retrieve investment funds if borrower defaults.
3) Investor receives immediate monthly returns in the form of payments from the borrower.
4) No property taxes, management or transaction fees
5) Strong, fixed-rate returns for determinable and pre-stated periods of time.
6) Investor chooses where their money goes based on investment opportunity presentations.
7) Investor can earn additional income through occasional late payment fees
8) Hard money investing represents a relatively passive income - unlike real estate investing which demands hands-on involvement.

The Cons:

1) Cash remains in investment until end of term (typically 3-60 mos.)
2) Borrower can default resulting in foreclosure of property, which means the property is either put into the investor's personal ownership portfolio or liquidated at below-value price to recapture investment funds and costs.
3) Foreclosure may cost the investor until property is sold or acquired by investor.

Another thing to consider in Trust Deed / Private Mortgage / Hard Money / Private Equity investing is that unlike a purchased property that typically holds a debt for the investor, a hard money investment holds no debt for the investor (unless the investor were to incur such a debt in order to participate - this would not a suggested practice.) As a result of this lack of debt, the investor is making 100% profit on their return.

Now, don't take me wrong. I believe, if there is an appetite and a will, real estate is an excellent component to a well rounded high-return portfolio. Yet, I will confess that 80% of my investment funds are in hard money investments rather than real asset investments - it just makes more sense. I hate being a landlord, and I hate paying property taxes, so this is the right choice for me.

If you are interested in learning more about hard money / trust deed / private mortgage / private equity investing, please visit one of our sites: HTTP://www.TheEquityExperts.com or HTTP://www.ASafeWay2Invest.com

Til next time!
Brandon Thienes, Hard Money Specialist

The Paradox of Hard Money Lending and Sketchy Financial Markets

brandon@TheEquityExperts.com (Brandon Thienes) — Thu, 15 May 2008 10:24:25 GMT

An interesting and little known dilemma that all private equity lenders (hard money lenders) face on a regular basis is the lack of really good qualified projects and borrowers. Few people, investors or borrowers, realize that it is only one in dozens of loan requests received that are accepted as fundable (at least by genuine lenders). The remainder are basically pipe dreams or rescue operations that offer little, if any real security for an investor.

Some companies (I call them fee mongers) take advantage of these dozens of worthless opportunities by charging application fees, due diligence fees, commitment fees, etc. with promises of the amazing and the inevitable. However, these companies make a majority of their income on the desperation of applicants, and the occasional quality project that they fund as a result of what I would call industry luck.

Genuine hard money agencies, like The Equity Experts, and Indian Nation Investments, do not charge any fees unless they perform and actually bring a loan to fruition and close. This is the type of company that is extremely particular about what kind of project they fund, because an unfunded project is a waste of time, resources and much needed corporate income. Therefore, particularity is critical to boutique agencies such as those listed above. This means a constant "farming" of quality projects and a very intensive internal due diligence and filtering process that eliminates 99% of funding requests being submitted for consideration. This creates a very strong portfolio of loans that perform in any market condition.

The result of such scrutiny is a hunger for genuine projects in which to infuse investor dollars. So, here's the amazing paradox of such times as this. Since money is no longer being thrown at anyone who walks by the door of a bank, most projects have found themselves turning to the private funding industry in droves. A practice that was common 25-30 years ago, but became unpalatable by the formal financial establishment.

It's a wonderful paradox for hard money lenders of all ilks because instead of digging through a hundred or so loan applications per MONTH to qualify a couple of decent opportunities, we are now filtering hundreds of loan applications a week - what does this mean? Well, it means three things:

1) If you are an investor who puts money into the security of private equity lending, you are now potentially overwhelmed with a barrel-full of high-quality investment opps to choose from - with rates of return as high as 50% per annum, and equity cushions as great as 75% of the quicksale value of a property.

2) As a borrower you have a new level of competition for money that is at a premium, and you must readjust your budget to reflect the high cost of this cyclic paradigm in acquiring funds for your project or property; and,

3) Successful private equity agencies like those mentioned above must stoke up the fires of responsible due diligence, project marketing and investment execution in order not to miss great investments for their clients, especially since there are so many great opportunities to be had, and to keep investor's interests when they have indigenous investment opportunities knocking at their doors on a daily basis. Yes, things have changed. In an industry that usually has more available funds than qualified deals, we are now finding ourselves lacking qualified funds in a glut of high yield qualified opportunities!

What an interesting balance of life. A paradox of sorts. Thirty years ago, there were basically two types of funding, private and "A" credit institutional. The media cries that the private funding world is only a step away from the mafia, and demands new institutional financing options. The government responds by stimulating and rewarding institutions for new funding products and the sub-prime industry is born.

Thirty years later, the media cries wolf regarding a potential financial situation that lurks to pounce on the country; society responds by walking away from their homes because it is now no longer socially taboo to do so; the financial industry, solely blamed for the seemingly blind practice of sub-prime financing, practically collapses as a result.

Empowered by their prophetic abilities, the media touts it's amazing insight and ability to educate regarding reality (or at least their take on it); the government takes note of the potential or actual public panic and steps in; the sophisticated financial industry is stepped on by political pride and the government's egotistical need to show constituents that they know more than the financial industry, partnering with the media to create a pressured response from the world of money and trade and the federal regulatory agencies that oversee them, to reconstruct the greedy and failing establishment that is victimizing the flock of sheep that is our country (in spite of the fact that this same establishment has been responsible to keep our markets and economy purring amidst huge world recessions and wars.)

With new threats of over-regulation and social responsibility, banks and funding institutions shut their doors to any request short of perfect even if that request would be instrumental in the breaking of the real estate slump and the stimulation of the market.

In an effort to assuage fears that were cannibalistically created by the superpowers themselves, the result is the creation of a huge sucking void in lieu of the much needed capital required to pet and perpetuate economic growth and overall worldwide financial well-being.

Ironically, entrepreneurs are forced to once again turn to private sources for the ability to continue in the spirit of capitalism and its tendency to create jobs, safety and governmental health. . .

So what's the paradox? If you haven't gotten it yet, allow me to extrapolate even further: It seems, in the attitude of Ayn Rand's book "Atlas Shrugged", that we have returned to the primitive industrialistic battle between the powers of ignorance and the pedestrian creativity of private individuals and society's right to make decisions without external pressure. The media and the government, each of which were established on principals of public protection, education and emboldenment, have become immovable, bullying bastions of repression and attack against both the proletariat who explores the creativite options of escaping day-to-day drudgery, moving toward profit and progress, and the practically faceless giant that is the financial establishment who was created by these bastions in an effort to help the poor retarded (yes I used the word) public from making mistakes - that's what retards need, a companion to assist in difficult (good thing we don't have a thriving consulting industry) and/or even mundane decisions.

What does this mean? It's good for those of us who have been devoted to the simplicity and practice of private finance in spite of mockery through the years; even though it is unfortunate that our industry's good is riding on the back of those who consider themselves so much more qualified to make decisions for the masses the huge quagmires they've created, resulting in a new genesis and respect of the private funding industry. And, it's good for those who are willing to think outside of the box and put their money into investments that are as old and promen as time.

It's a sad and happy time for those of us who are genuinely committed to the integrity and promotion of the private equity lending industry, but we will remain consistent in our functionality and ability to progress society - no matter how "sophisticated" everyone else becomes.

If you are an investor of any type, and not making high yield returns with collateralized security backing up your money, then it's time to make a change. Contact The Equity Experts at http:\\www.theequityexperts.com or 505-892-7200 and begin a whole new paradigm while this interesting paradox is fresh and active.

Until next time!

Brandon Thienes

Mortgage Pools vs. Private Equity Consulting & a bit more

brandon@TheEquityExperts.com (Brandon Thienes) — Thu, 24 Jan 2008 10:37:31 GMT

I find it very interesting that less than 5% of investors nationwide understand, or perhaps even know about the value of trust deed / private mortgage investing. Yet, more than 50% of non-residential mortgages throughout the U.S. are actually private. That means that there is a continuing market for our services and products, yet there are so very few individuals, trusts, companies and investor groups that actually participate in such vehicles.

As a result of such a small consortium of informed private equity investors - most of whom keep their investing secrets to themselves - I find myself spending about 80% of my investor farming time in a mode of education. We are taught from a young age to categorize information in our lives. Keep business and relationship separate (you know the old saying, "Sorry, but this is business."), keep religion and politics separate, etc. Investing is another thing we tend to package into a certain mental box. When something out of the norm comes along, we wrestle with it and if it doesn't fit into the categories already established in our minds, then we discount it as suspicious or disqualified. We suffer many lost opportunities due to our lack of education, fear of the unknown or just plain laziness.

I've prefaced this entry with the first two paragraphs because as a private equity specialist who is dedicated to the thorough education of my investors (just see my sites at www.TheEquityExperts.com and www.ASafeWay2Invest.com), I am constantly overcoming a couple of common mental hurdles that exist in the categorical mentality of my potential investor clients.

First, a recent and somewhat legitimate ideology: The mortgage business is in trouble - I don't trust it.

Well, you're right. However, what we're seeing now is not actually the trouble. What we saw for 5 years prior to this recent adjustment was the actual trouble. Now, we're seeing correction and will discover an extremely mature, refined industry that comes out the other end. Also, we are seeing the results of home-owners who were put into loans that made no economic sense. In the world of private mortgage / trust deed lending, most of us who are legitimate do not chase foreclosure rescues, or buyer/flippers of homes, or the primary home-owner. We pursue commercial-based projects with viable borrowers and strong equity positions that protect our investors. So, in an effort to curb concerns about the mortgage business - the private side of the industry is actually very strong and showing very good returns.

Second, there is an extreme difference in the boutique private equity investment consultancy (like our firm) and the mortgage pools firm. Boutique consulting firms never touch your funds. We discover great investment opportunities, perform necessary due diligence and present you with opportunities to participate at the level you feel comfortable with. Each deal is an investment unto itself and therefore offers diversification by nature of allowing you to enter as many separate lending scenarios as you wish - each of which will hold different fixed return rates, risk ratios and terms. Contrastingly, the mortgage pool firm requires that you turn over a minimum investment amount to the firm who promises a specific, and same, flat rate return for every dollar given to them for management. They then enter your funds into projects that THEY see fit.

I am not against either of these business models, each has its own place. I confess that although our business model is more complicated, and demands more administration and investor maintenance, we are very comfortable and satisfied with how we operate our business - as a boutique agency instead of a mortgage pool.

So, if you are investigating the values and benefits of private mortgage investing, please keep in mind the differences between these two options. Also, keep in mind that even in bad real estate markets, and bad financial markets, many people make millions of dollars through private equity investing vehicles.

Until next time,

Brandon Thienes

I love New Mexico

brandon@TheEquityExperts.com (Brandon Thienes) — Mon, 21 Jan 2008 17:16:18 GMT

Author: Brandon Thienes

As my last entry for 2007 I listed twenty or so reasons that New Mexico's economy continues to evade the national recession-istic economy. As the new year has begun, there are even more reasons to celebrate New Mexico and its potential as an investment haven. I am listing below a few more reasons why I am happy to be in the Land of Enchantment.

1* Development of the New Mexico Spaceport, "Spaceport America" 100,000 square-foot hangar and terminal facility is scheduled to begin in 2008. This venture between the state of New Mexico, and Virgin Galactic owned by Billionaire Richard Branson will be "The world’s first purpose-built commercial spaceport is designed to convey the thrill of space travel while making a minimal impact on the environment." The terminal and hangar facility are projected to cost about $31 million, and will provide a destination experience for visitors to Spaceport America. This venture is anticipated to bring a large consortium of visitors, scientists and customers.

A study conducted by New Mexico State University projects that by Spaceport America’s fifth year of operation, it will employ 2,300 people with a payroll of $300 million. Download the NMSU study.

Futron Corporation predicts that by 2020, Spaceport America will employ more than 5,000 people with an excess of $1 billion in total revenues. Download the Futron study.

2*     International financial giant Fidelity investments has announced the construction of a $15MM, 200,000 sf. office just outside of Albuquerque to employ over 1200 people with average salaries of $60k.

3*    The following state infrastructure investments are planned for the coming year:

        $10MM for roads to the NM spaceport.
        $14MM for state fairgrounds renovations
        $ 6MM for renovations to UNM's basketball arena
        $ 5MM for renovations to UNM's football stadium
        $19MM for an arts complex at NMSU
        $12MM for construction of a dental school at UNM
        $79MM for assorted university and public school upgrades
        $ 5MM for substance abuse facility construction
        $ 5MM for film promotion
        $70MM for film incentives
        $28MM for misc. state and prison infrastructure

4*    Aquatic Consultants, a national lake and pond consulting firm is breaking ground on a $4MM 16,900 sf. office
        building to house their growing practice.

5*    Albuquerque is renovating and expanding it's fire academy at a price of $8.5MM

6*    Presbyterian Healthcare is building an additional $7MM medical complex to meet the growing demands of the
        Rio Rancho (Albuquerque) suburb.

7*    In spite of media reports of the downturn in national real estate, Albuquerque remains strong. The last year
        that Albuquerque showed a drop/decline in our housing market was in 1988 when we had a 2% decline.
        The average sale price of homes in Albuquerque between Sept. 06 and Sept. 06 increased $6,413. (AMBR
        statistics).

8*    Venture capitalists have committed to pour in $121.7MM in investment funds into New Mexico
        companies during the first quarter of 2008. Here are a few of the recipients:

        Aspen Avionics
        Wellkeeper - developing wireless oil well monitoring systems
        Altela - Cleaning brackish water produced by oil & gas drilling
        Enerpulse - developers of highpower sparkplugs.


Once again, I cannot reiterate the wonderful things happening in New Mexico, and I want to invite investors and investor representatives both to consider working with The Equity Experts as you look into the benefits and profits to be made in our wonderful state.

til next time, don't forget to visit our site: TheEquityExperts.com

Brandon Thienes

Extra! Extra! Brandon Thienes proclaims 2007 ends and Business is Good!

brandon@TheEquityExperts.com (Brandon Thienes) — Sun, 30 Dec 2007 12:16:45 GMT

A couple of weeks ago, an investor of mine asked why the real estate numbers in New Mexico were so weighted compared to other Western States, and the country as a whole.   I gave a few brief examples, but since that time, I've done a bit of homework in order to better answer his question.

I thought I would post my final entry by recapping a few reasons why this little recognized planet we call New Mexico is a forerunner in positive economic and real estate statistics. Here's a few reasons why NM will continue to be a good investment for years to come, and this is just things that have taken place this year in a state that barely hosts 2 million residents:

*    Eclipse Aviation began delivery of its unique small-engine personal jet planes - it is anticipated to deliver over 300 planes a year when at full capacity and already has a backorder of hundreds of planes by consumers throughout the world. Employment = 1500 new, high-paying jobs.

*    Sperry Van Ness, a national commercial real estate firm listed Albuquerque in the top 10 U.S. retail investment markets to watch. The study examined 60 American metro areas.

*    National Geographic Magazine named Albuquerque on of America's top "waterfront" towns due to its affiliation with the Rio Grande River.

*    Cincinnati-based Convergys moved into Albuquerque creating 500 new jobs.

*    Verizon wireless added 300 jobs in 2007 to total 1400 employees in their customer Albuquerque-based customer service center.

*    Allstate insurance is opening a customer claims service center in Las Cruces New Mexico, adding 250 new jobs.

*    Volt Information Services opened an Apple & Mac customer service call center in Las Cruces, New Mexico, adding 300 jobs.

*    Eberline LLC, Santa Fe, NM was awarded a Navy contract for $28.4MM in a new technology contract that is creating many high-tech jobs.

*    Albuquerque based Lumidgm entered contracts with the U.S. military to provide new, less expensive, proprietary biometric fingerprint scanners for all types of security applications worldwide.

*    Albuquerque's University Medical Hospital added a $244mm, 500,000sf. children's hospital and emergency department. They also broke ground for a new 190,000sf. cancer center to be built for approx. $100MM.

*    Grants NM, has been approved to begin mining uranium, opening hundreds of jobs for blue and white collar workers.

*    Eunice NM has been approved to open a uranium processing facility that will eventually employ over 1200 people.

*    MovieMaker magazine, a major trade publication in the film industry cited Albuquerque as a "hot spot" in the United States for movie production. At any given time there are 3-10 films being shot in full or in part within the New Mexico landscape. Such films as the fourth "Indian Jones and the City of Gods", "Wild Hogs" and many others.

*    In response to New Mexico's rising popularity in the movie industry, 2007 saw the breaking ground and completion of the $74MM Albuquerque Studios on 28 acres and housing eight sound stages. Several movies and television series have been or are being shot there already.

*    Seeing New Mexico's potential as a movie industry mecca, Sony announced it is bringing part of its Sony Pictures Imageworks from California to Albuquerque in early 2008, creating several hundred new jobs.

*    Understanding the need to get in early, an unnamed movie investment company from California just purchased many acres of land just outside of Albuquerque that has housed a bankrupt shopping outlet. They intend to infuse the property with an initial $30MM in order to convert it into another production studio. It is intended to market itself to feature films, music videos, TV sitcoms and commercials.

*    Sandia National Laboratories opened its $516MM Microsystems and Engineering Sciences Applications facility which designs and manufactures electronic circuits for nuclear weapons. 650 jobs have been added.

*    Kirtland Airforce Base has announced plans for a $390MM mixed-use development on 92 acres which will house retail, office, hotel and assisted living facilities.

*    California-based Tesla Motors announced plans in 2007 to build a factory in Albuquerque for an all-electric sedan which will be marketed world-wide.

*    Due to New Mexico's high per-capita of PhD's, we are constantly seeing new technologies that are both indigenous and extra-local, who want to base themselves in the mix of our scientific community. One such example is the new fuel plant, American Renewable Fuels, an Australian company who has developed a way to convert animal fat into gasoline. The new plant is being built in Clovis, New Mexico, and intends to produce approximately 75MM gallons of fuel in 2008 alone.

*    2007 brought the announcement and breaking ground of New Mexico's first commercial-size biomass power plant. Public Service Company of New Mexico, a power provider to New Mexico, Texas and Mexico has already entered contract to purchase all power conducted through the new $80MM facility.

*    Although not exactly high-tech, New Mexico continues to create jobs through low tech as well. Tempur-Pedic broke ground on its new 18-acre Albuquerque-based plant which is projected to employ 300 people and produce 60,000 mattresses a month.

*    Fighting hard to become the Nation's most recognized "green" state, New Mexico continues to court companies that have the vision and technology to promote green living. As such Advent Solar is building an 87,000 sf. design and manufacturing facility that will produce and ship thousands of solar cells per month. Again adding hundreds of jobs to the community.

*    Few people know it, but Rio Rancho, a suburb of Albuquerque, houses one of Intel's largest engineering and manufacturing facilities in the world. 2007 brought the announcement that their 1,000,000 sf. facility and operations will be getting a $1.5 Billion dollar upgrade as it moves into the next generation of computer chip design and fabrication.

*    Mel Gibson is known for his illustrious movie career. However, he and some other investors have chosen New Mexico to build a $30MM tire recycling plant that is based on state-of-the-art, green, technology. The company is called Green Rubber Global and will again bring white and blue jobs to the state.

*    Lala, a Mexican Dairy Products producer announced the opening of a cheese factory outside of Lovington, NM. The factory will employ approximately 75 people and ship goods internationally.

*    At final count, New Mexico holds one of the lowest ratios of foreclosures of any state in the country. Only 1/1365 homes are in some point of the foreclosure process within the state as a whole. This is primarily due to the continuing job growth and income stability of the state.

I hope this helps to explain why New Mexico is a smart bet, and will continue to be for years to come.

Until Next time, remember to visit my site at www.TheEquityExperts.com

Happy New Year!

Brandon Thienes, Private Equity/Exotic Lending Specialist

New Mexico continues to shine

brandon@TheEquityExperts.com (Brandon Thienes) — Sat, 29 Dec 2007 11:36:34 GMT

According to the most recent data released by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, the only region of the United States that had an actual housing sales increase in November of 2007 was the Western Region. Considering that home sales are down and foreclosures are up in California, Nevada, Arizona and Texas, this leaves the bulk of home sales increase to Utah, New Mexico and Idaho. In another recent article I read, it was stated that Nevada is once again the fastest growing state in the country, while New Mexico is the 13th. Yet, Nevada's overall home sales are still in decline while New Mexico is up almost 8% over the course of 2007. Not amazing numbers, but encouraging anyway.

Even though I do not fund residential loans, the reason I bring this information to you is two fold:

1) I am blowing my own horn in regards to my ability to foresee and target markets of future or continuing success (this helps my investors who trust me with my judgment for their placement of funds), and;

2) The fact that certain markets are down nationwide (and getting the most attention) doesn't mean that the real estate or mortgage industry has gone up in flames. This is an adjustment that was sure to come, and only an adjustment. Even though we've seen over 200 large mortgage companies close their doors; we've seen subprime mortgage all but disappear; and we've seen huge write-offs from mortgage investors nationwide, the world still needs homes, construction, commercial space and land. As long as there are people, there will be a real estate industry. Don't get discouraged during this time. Granted you might need to wait tables to supplement your income during a time when finding one or two loans a month is a daunting task, but perseverance is the key to success.

Whether you're a real estate investor, mortgage investor, mortgage professional, or curious reader, don't get swallowed up by the sensational tendency our culture has toward alarmism. A cool head and a steady pace will prove successful even amidst the heaviest of mortar fire.

Until next time, feel free to visit my site www.TheEquityExperts.com

Brandon Thienes, Exotic Funding Specialist

Finally - A Voice of Balance

brandon@TheEquityExperts.com (Brandon Thienes) — Tue, 18 Dec 2007 10:14:26 GMT

In this day of sensationalism that has pervaded our marketplace, entertainment, churches, etcetera, it is acceptable to have a numbness toward sensationalism in the news media. One such area of sensationalism is the issue of Sub prime mortgages and the proclaimed downfall of the mortgage world as it has ever existed.

I've made several commentaries on this issue, but have held my tongue regarding much of my opinion because personal experience has told me that the masses prefer hysteria to logic. So I just plot along doing my job thoroughly and integriously while I hear rumors of Rome burning.

However, I read a syndicated column this morning in our money section of the newspaper that has given me hope that there are others out there who are willing to reveal the truth of the current situation. This is a correction, not a downfall and if we over-react, we will most certainly create a monster that is larger than the problem itself. Allow me to re-present the article I read this morning.

_________________________________________-
Author: Eric Tyson, King Features Syndicate
Title: SUBPRIME MORTGAGE CONCERNS OVERBLOWN
Date: December 18, 2007

Q: I am terrified to invest in stocks because of all the concern about subprime mortgages and the fallout from those risky loans that are now going bad. Homeowners seem to be in trouble; the banking, housing and mortgage company stocks have plunged because of all the losses; and now there's concern about all of this spilling over into the rest of the economy. What do you say?

A: My analysis suggests that the concerns about subprime mortgages (those mortgages made to borrowers with relatively low credit scores) are overblown.

I will say, though, that it's sad when a homeowner who wants to keep his or her home is overextended and loses the home because he or she can't make mortgage payments.

When a bank makes a loan — whether it's to a small business, on a credit card, or via a mortgage — there is some small risk that the borrower will default on the loan.

Consider that credit-card loans are far riskier, since there's no collateral behind those loans, and there are higher rates of loan charge-offs (losses) to financial institutions than with mortgages.

For sure, more homeowners are falling behind in their mortgage payments and seeing their homes go into foreclosure. However, if you look at the percentage of mortgage and other loans being written off by banks, according to the Federal Deposit Insurance Corp., banks have been charging off 0.5 percent of all loans outstanding this year — just under half of what it was five years prior.

The charge-off rate was more than 1.6 percent in the early 1990s — triple what it is today.

I — and most economists with a pulse — expect the current charge-off percentage to increase, but the sky is far from falling.

Another way to look at subprime mortgages is to consider that there is slightly more than $600 billion of subprime mortgages outstanding, according to Morgan Stanley.

The figure of $600 billion sounds like a lot until you realize that this represents less than 6 percent of the more than $10 trillion in mortgages outstanding.

So even if all of these sub-prime mortgages went completely bad — which could never happen — it's a small portion of all outstanding mortgages.

Let's say that 20 percent of the subprime mortgage borrowers end up defaulting; that would be just 1.2 percent of all mortgages. But remember that, unlike with an unsecured credit-card debt, banks have collateral in the form of a house, which they take over when they foreclose on a home. Suppose home prices drop 25 percent nationally — a decline we've not seen since the Great Depression — banks would still get back a hefty chunk of their mortgage debt from the sale of the real estate.

Please don't get me wrong. I'm not in any way minimizing what a horrible experience it is when people lose a home they want.

But my analysis is to show that, from an overall economic standpoint, subprime mortgages aren't as big a concern as you might think.

Eric Tyson, author of Let's Get Real About Money! and Investing for Dummies, receives e-mail at eric@erictyson.com. King Features Syndicate
_______________________________

Let's all work with the mortgage industry, the National Association of Mortgage Brokers and our legislators to bring a balance of thinking amidst a very challenging time in the world of finance, home-ownership and the mortgage industry.

Til next time

Brandon Thienes www.TheEquityExperts.com

I Guess Mortgage Brokers and Originators are Just Evil

brandon@TheEquityExperts.com (Brandon Thienes) — Mon, 17 Dec 2007 10:55:35 GMT

I continue to receive daily updates on the legal battles and legislative maneuvers being stimulated by our current mortgage industry correction. I am a bit disturbed about the fact that all of the blame seems to rest on those who are on the front lines of the mortgage industry. Are mortgage professionals just inherently evil? Are we so desperate to fund our lifestyles that no borrower is safe from our unjust and deceptive ways? What about the lenders who push their programs down our throats and turn blind eyes to certain underwriting details that should be blatant red flags? Is not the whole mortgage process - legislated or not - already inundated with checks and balances that should police itself and sift the good loan from the bad? Yes, in my opinion, the system is in place, but when you have large investors clamoring to get their hands on billions of dollars of high-yield loan pools, large wall-street underwriters pushing the packages of these pools and national mortgage lenders who are thirstily attempting to supply the demand, then the system goes awry.

I believe whole heartedly in the trickle-down theory. When a company is run by a leadership who is dedicated to morality, to integrity, to a code of positivity, it trickles down into the ranks and permeates everything that a company is and does. Likewise, the opposite is true. Now, let's take a real look at those evil mortgage brokers who are on the front lines of producing what the lenders are asking for. Are we really evil? Or are we simply an extension of that which is trickling down from the highest echelons of the financial industry?

Granted, I am for educated loan originators - I've been an uneducated one, and it got me in trouble. I didn't quit though. I chose to learn from my mistakes and move on. Now, I am one of a few truly qualified specialists in my field. And, as such a specialist, I am really not very challenged by all of the new proposed legislation and regulation that is being aimed at all of us evil mortgage professionals. However, I feel provoked by the fact that we have become the scapegoat of a much larger evil, and it's a shame that we must bare the brunt of our industry's failure to operate according to the very well established guidelines that have taken competitive mortgages out of the hands of bankers and put them into the hands of specialists who can offer a plethora of options for a qualified client.

Anyway, enough ranting for today, I am posting some information recently relieved from Buckley Kolar, LLP - do with it as you will.

Dodd Introduces Anti-Predatory Lending Bill. On December 12, Senate Banking Committee Chairman Chris Dodd (D – CT) introduced the “Homeownership Preservation and Protection Act of 2007” (bill number not yet assigned), which, if enacted, would dramatically alter federal regulation of the mortgage industry. Among the many changes would be (i) expanding the loans covered by the Home Ownership and Equity Protection Act (HOEPA) and prohibiting, among other things, prepayment penalties, balloon payments, and yield-spread premiums in connection with these loans; (ii) defining “subprime” and “nontraditional” mortgages and imposing heightened consumer protection measures on these loans, such as a maximum debt-to-income ratio of 45% and a net tangible benefit requirement; (iii) making mortgage brokers liable for violations of the Truth in Lending Act (TILA); (iv) increasing maximum statutory damages under TILA to $5,000 and maximum class action damages to the lesser of 1% of net worth or $5 million; (v) imposing a fiduciary obligation and a duty of good faith and fair dealing on mortgage brokers; (vi) prohibiting “steering” to more expensive loans; (vii) restricting use of yield-spread premiums for all loans; and (viii) imposing a duty of good faith and fair dealing on appraisers and servicers. The Senate Banking Committee has not yet scheduled a hearing for H.R. 3915, the anti-predatory lending bill recently passed by the House (reported in the November 16, 2007 issue of InfoBytes). For the Banking Committee press release, please see http://banking.senate.gov/index.cfm?Fuseaction=Articles.Detail&Article_id=224. For a copy of the bill, please contact InfoBytes@BuckleyKolar.com.

Until next time - feel free to peruse my site - www.TheEquityExperts.com

Sincerely,

Brandon Thienes

I love good news

brandon@TheEquityExperts.com (Brandon Thienes) — Thu, 06 Dec 2007 16:37:46 GMT

In the last week, I've read two dynamic statistics that makes me all the more confident that I made the right decision in moving my hard money and commercial funding practice into the Albuquerque market. Granted I was laughed at by some and querried by others, but I felt like this market has so much untapped potential that I had no other option but to make this my new drilling ground. Here's what I mean:


Rank	Real Estate Market	Median Price	2007 Forecast
1.	Albuquerque, NM	$194,000	9.1%
2.	McAllen, TX	$112,000	8.9%
3.	Salt Lake City, UT	$241,000	8.6%
4.	Austin, TX	$174,000	8.4%
5.	Seattle, WA	$380,000	8.2%
6.	Houston, TX	$148,000	7.8%
7.	Biloxi, MS	$204,000	7.5%
8.	El Paso, TX	$132,000	7.2%
9.	Nashville, TN	$155,000	6.9%
10.	Portland, OR	$241,000	6.7%
11.	San Antonio, TX	$154,000	6.5%
12.	Las Cruces, NM	$ 154,000	6.4%
13.	Little Rock, AR	$117,000	6.4%
14.	Dallas, TX	$161,000	6.4%
15.	Monroe, LA	$164,000	6.3%
16.	Boise, ID	$162,000	6.1%
17.	Jackson, MS	$137,000	6.1%
18.	New York, NY	$535,000	6.0%
19.	Raleigh, NC	$239,000	5.9%
20.	Newport, NC	$208,000	5.8%
21.	Fort Smith, AR	$112,000	5.8%
22.	Spokane, WA	$178,000	5.8%
23.	Charlotte, NC	$235,000	5.7%
24.	Bar Harbor, ME	$398,000	5.5%
25.	Hot Springs, AR	$159,000	5.4%

These numbers are quoted from Housing Predictor, an independent and unbiased real estate watchdog site. You can find this chart at http://www.housingpredictor.com/top25.html.

The second item was in this morning's paper, and I quote:

"Foreclosures nationally are at all-time highs, with one for every 196 households nationwide in the third quarter, according to Irvine, California - based RealtyTrac.

Albuquerque and the state as a whole appear to have missed the worst of it.

The Albuquerque metro area had on foreclosure for every 880 households in the third quarter, according to RealtyTrac. New Mexico had one for every 1,348 households."

Like I said in the title, I love good news. If you're looking for a safe place to put your investment dollars, there seems to be a little bit of a bastian in the wild west of New Mexico!

Thanks for reading, and don't forget to visit our sites at www.TheEquityExperts.com

Brandon Thienes, Hard Money Specialist

Some More Good News about New Mexico

brandon@TheEquityExperts.com (Brandon Thienes) — Mon, 19 Nov 2007 10:42:48 GMT

In spite of the constant alarmist barrage of media reports regarding the downturn in the national real estate market, our local market remains very healthy. If you're an investor, it's time to look beyond your immediate area and start looking into New Mexico's consistent growth and potential returns.

Let's look at the facts:

"Albuquerque is rated the #1 real estate market for buyers." (HousingPredictor.com, 10/23/07)

"The 'drop' in median home prices from Sept. 2006 to Sept 2007 was only $750, yet the average resale price INCREASED $6,413!" **

"In the past two decades, Albuquerque's slow, steady growth has kept our market healthy without the enormous gains - or losses - seen in other western cities. The only year our market had a decline was in 1988, a drop of just 2%" **

** (AMBR statistics as sited by Albq. Journal 10/28/07)

Additionally, we've just seen completion of a huge movie studio (Albuquerque Studios: abqstudios.com) and a second studio just purchased acreage for another new full-service studio between Albuquerque and Santa Fe. Hollywood is coming to the Albuquerque and Santa Fe areas and although we've seen a slight slow down in our real estate market, we continue to see property values rise and investment opportunities abound.

So what's my point? Think New Mexico - this little thought of state - as a great place to put your private trust deed or private mortgage investment dollars.

For help locating great investment opportunities, please call me directly:

Brandon Thienes
The Equity Experts (www.TheEquityExperts.com)
505-350-6945