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Friday, October 17, 2008

Ask the Loan Man - Hans Bruhner on the Bailout

Hans Bruhner is a rather remarkable person. Even in this troubled economy he keeps a positive attitude and finds ways to help people get good loans they can afford with their good credit rating. He'll never lie, coerce or distort information and you can count on him to tell you the truth…even if it hurts. This momth - he writes about the Big Bailout.

I have no idea what to write…….. so Bailout it is!

Guys and gals, I am stumped. I need your help. I don’t want to make this a question and answer column but I am looking for some questions that will help me write my article. I may be my own worst critic but I am excited about some columns and not quite as excited about others I write. Talk to me, tell me what is on your mind and I will write about it.

I know that you guys are sick of hearing about the bailout but I am going to give you my spin on it anyway. The name wasn’t very smart to begin with because it just doesn’t have a very good ring to it, I’ll get to that later, here is the part that is really bugging me today: AIG was bailed out to the tune of $85 Billion dollars and some of their top executives went and had a party at the St. Regis Hotel in LA. These guys were living it up on our dime! I just heard that they are having a lush party for their top sales people as well. I am OK with recognizing the sales team but they aren’t having it at the Stockton Ramada folks, they are having their party at the Ritz Carlton Hotel in Half Moon Bay……..smooth! A friend of mine called the St. Regis and wanted to know how you spend $440,000 at their hotel and the answer was amazing. I have posted it on my video blog at just click on the video at the right entitled AIG gets $85B………

Ok, so back to the name. It should not have ever been called a bailout, that just sounds like a handout which it really isn’t. What the recovery plan really does is a lot like welfare. They are offering a leg up to someone who really needs it and when they system works it is a beautiful thing and when the system doesn’t work, well it’s not so nice. The federal government is going to go in and buy up some pretty stale investments that no one else is buying and put some liquidity back into our market place. The idea is to jump start the economy so it can take care of itself again (see the welfare link here?). If this works then not only have we helped the economy but our investment may actually start to gain some value as well. So if the “bailout” works, then we have invested in something that we believe in and in so doing we have moved forward. Since it is a government program set up to simply help the economy then any return on our initial investment is a bonus! Think about it, if someone loses their job and needs some help and goes on welfare or unemployment and they then turn it around and get a job and get back on their feet and go back to being a productive member of society and get off welfare then the program is a success. This bailout program is exactly like that except we are actually holding onto some investments that may turn around as the economy gets better.

So just to bring it back to the real estate market and my area of expertise…… Now is the time to buy a house! Prices are low, rates are low and if the bailout works then rates will go up and slowly but surely home values will start to go up again also. In my nearly 2 decades in the real estate and lending business, I have seen 30 year fixed rates around 10.5% and in the early 80’s, rates were well into the teens (as in 16, 17…) so are you kidding me when you are upset that the rate is around 6.00% and not 5.00%! You guys have been spoiled and you better get on it before you lose this great market that we are in.

Hans Bruhner, CMPS is licensed in CA & HI. If you have a question, please contact Hans at (707) 887-1275 or First Priority Financial, Inc. is licensed by the CA DRE #00654852.