So what is the Good Sense approach we need to take now? Whether your financial portfolio is in stocks, bonds, real estate or cash in your sock drawer (or a combination of all). The formula is still simple. Move forward. Work hard. Focus on those things that have produced results for you in the past. Most important … DON’T LET FEAR CONROL YOU !!! Take action to control panic. Limit the amount of time you spend listening to the media. The media will tend to dramatize as that’s how they make money (and, we need media attention to help gain perspective and information on world events, but maybe just not 24/7 “the sky is falling”). I’m not dismissing this financial crisis as a theatrical production … our country really does have financial issues to work through that will affect us all. But we’re not going to suddenly fail as a country overnight. The media reported Monday being the biggest one-day drop in history, which is true, but on a percentage basis it wasn’t even close to Depression-era drops or October 1987. And, keep in mind lots of money through timely investments can be made during times of financial stress/opportunity! There is a liquidity problem to be fixed, but we’ll survive even if it takes some time for lawmakers to find the appropriate long-term method. The blame game is a lose-lose proposition. Learning from mistakes makes winners. It’s also easy to join the band-wagon of focusing on not wanting to “bail-out” Wall St companies that, obviously, made some very bad financial decisions. That was greed, but that was “then”. I do believe we have to remember the “trickle-down” effect. It can be easy to try to divide the so-called “haves” from the “have-nots”, but we are all in this together. If wealthy Americans aren’t spending money, then middle class businesses aren’t making sales and working class families are losing jobs and so on. No matter how you feel about the bail-out, we have to do something to revitalize credit markets and get money flowing again. There will not be an economic recovery without a housing recovery. Now what practical “action” steps can anyone take to protect your personal finances and your income in the short-term? 1) Control your spending. 2) Limit unnecessary borrowing. 3) Pay off credit cards and other high-interest debt. 4) Save as much as possible out of your paychecks to make sure you have a “rainy day fund”. Most experts suggest at least 6 months of reserves.5) Business people and those in sales positions should go back to basics, and evaluate your marketing budgets. Don’t waste money on empty leads or advertising that doesn’t produce consistent, measurable results. Only spend on what makes you money and brings in solid business.6) Embrace the principals of saving and cutting back on discretionary spending until credit cards are paid off.7) For those with cash reserves and low credit card debt, support small businesses as long as you have excess funds and help keep our local economy strong. Look for opportunities in stocks, bonds, money market accounts or real estate. 
If you are in the market for a home or investment property to round out your portfolio, there are some fantastic buys out there, and interest rates are still near record lows. Many sellers are willing to negotiate. In the real estate market, money/credit is available but some of the rules have changed: Here’s a summary of the new wait times if there’s a bankruptcy or foreclosure:1) Bankruptcy Chapter 7 – 4yrs from discharge date2) Bankruptcy Chapter 13 – 2yrs from discharge date3) Multiple Bankruptcy’s – 5yrs from most recent discharge4) Foreclosure – 4yrs5) Short Sale or Pre-foreclosure – 2yrs up to 4yrs depending on investor vehicle6) Deed-in-Lieu of foreclosure – 4yrs for purchases with 10% down. Now, if there are extenuating circumstances (such as divorce or medical reasons), there can be exceptions to some of the wait terms. Talk to a reputable lender for more information. When negotiating a loan modification with your mortgage lender, try this four-step process:1) Make sure you are dealing with your lender’s loss mitigation department.2) Write a hardship letter demonstrating job loss, serious medical condition, balloon payment coming due, adjustable rate reset or some other financial calamity that will make it impossible for you to continue making your mortgage payments as scheduled. Unless you are in imminent danger of default as required by this new law, lenders are not likely to work with you.3) Send the lender your financial statements, employment records, tax returns and bank statements outlining how you would be able to afford the modified loan terms under your present financial circumstances.4) Send the lender a current appraisal of your home or some documentation on recent comparable sales in your neighborhood demonstrating the current value of your home. The key is to show how the lender is likely to recover less money through foreclosure than they would be working with you on your proposed modification plan. If you know someone who is now late on their mortgage as a result of an ARM (adjustable rate mortgage) re-adjusting to higher payment they can’t afford AND they were clean (one 30day late or less in the previous 12mo), then they could be eligible to refinance into an FHA 30yr loan with very good rates/terms. Basically this is to help ARM victims who were solid borrowers prior to the re-adjustment. The borrower must meet current FHA loan limits and be able to qualify (full-documentation only) as normal. Conversion of primary residence to rental/investment property (while purchasing a new home):1) must qualify using both PITI (principal, interest, taxes, insurance) payments 2) must show 2mo PITI (both homes) in liquid assets (bank accounts, stocks, 401k) if there is 30% equity in the current residence3) If not 30% equity in current home, the liquid assets must show at least 6mo worth of PITI payments4) Rental income can be used if minimum 1yr agreement AND proof of 1st payment or deposit into bank account5) Some lenders/investors will not allow rental income for qualifying unless the client has had at least a year history of being a landlord. Varies based on programs. Keep the faith….all markets are temporary.
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Janeese Jackson
Bill Norris
