The Bains

Folks will be looking for banks with quality. They will start putting their money in places
that are run THE OLD FASHIONED WAY. Some lenders have relatively clean balance sheets,
as opposed to those wrestling with hugh loan losses. Just look around!
Four Texas metros are least likely in the country to experience home-price depreciation
in the next 2 years (less than l%):
Fort Worth-Arlington - 0.89% volatility rate & 3.07 appreciation.
Dallas-Plano-Irving - 2nd with 0.93 volatility & 2.06 appreciation.
Houston-Sugar Land -Baytown - 1.74 volatility & 4.44 price appreciation.
San Antonio - 3.95 volatility & 4.02 price appreciation.
This was done by PMI Group, Inc. in Walnut Creek, California.
TEXAS IS THE PLACE TO BE, as opposed to late 80’s & early 90’s when the Southwest & TX
was hard hit with the oil drop in value.

We all misunderstand the financial situation because of inadequate information, but we see
our groceries & gas going sky high! E-mail us at realestate@thebains.com
Then we will e-mail you back a 1 page information sheet from Dr. Mark Dotzour, economist
with the TX A&M Real Estate Center to fill you in on the buy-out. We were all lead to
believe Fannie, Freddie and the big banks were adequately capitalized & many folks invested
in them. We are just not inclined right now to believe what the government says & looking
back, the govt. officials should have been more direct & told the publlic how serious the
problem really is.
Just in the past 2 days, we have received e-mails from local lenders that THEY HAVE MONEY
TO LEND & are ready to do it. One will do 100% loans, but of course GOOD CREDIT is
necessary. Again just let me know so we can direct you.

That is exactly what the RTC is tooking in from the now failing banks & Savings & Loans - the
sub-prime loans made by these financial institutions NOW is the same “end run” that was
done in the late 1980’s and early 1990’s. At that time the oil price crash hurt us in Texas
& the Southwest, but now Texas has fewer forclosures than the rest of the nation. The
present sub-prime loans were now passed off as investment grade loans and that has gone
bad! NO SURPRISE!!
Conventional rates are about 6.250% for the best qualified borrowers, with government
loans - like FHA/VA - at 6.000% with a score of over 620. Investors are on the sidelines
waiting on Washington’s answer. Unfortunately some congressmen are trying to get their
pet want list items into a straight forward rescue bill. Watch Washington!

Hence mortgage rates will remain higher. Fannie Mae & Freddie Mac did a great job of providing low cost mortgages for 3 decades, but then morphed into the largest mortgage
bond speculators on the planet, according to Dr. Mark Dotzour, Chief Economist at TX A&M
Real Estate Center. They failed when they became part of the problem & not the solution to
the housing market by veering from their mission of ‘packaging mortgages” into the risky waters of keeping mortgages & hoping they hold their value.
Fannie & Freddie MUST go back to their original purpose as a conduit for mortgages. Govt.
should monitor the spread between Fannie mortgage rates & the 10-year treasury rate.
Mortgage rates should be about 1.6% higher. That means a 30 year mortgage would be 5.1% TODAY. If value is crammed down - as the Federal Reserve & Congress want to do -
why buy any more U. S. mortgage securities?

go to www.tylertexas.com
then click on blue Tyler icon - 1st left,
click on Tyler Chamber Radio - right of screen,
click on 9/1/08 to hear The Bains on RADIO for a few minutes.
Luxury housing in NYC is a plasma TV in each room. Customization & uniqueness is the key,
but finding craftsmen & quality of materials is often difficult to find or create. We are seeing
some of this drifting to our market. Viking or Miele appliances, spa bath & lavish swimming
pools, set the tone.

Visit.toginet.com to listen to Dave & Carolyn Bain & Martin Ibarra, Bain Real Estate, on what is
happening with real estate in Tyler and with their company. The website is a nifty way to keep up with businesses in Tyler and the area.
With oil prices PLUNGING - TO $110 a barrel on 9/2/08 - this follows the prediction of Dr.
Mark Dotzour, chief economist for the Real Estate Center at Texas A&M U. As early as 2007,
he mentioned that high prices for building materials and energy would hinder economic growth
in the U. S. He also suggested the Chinese economy may be overbuilt & that commodity prices would decline the weeks following the Beijing Olympics. Less than 2 weeks after the
Olympics ended, oil prices dropped and the jury is out on construction costs.
If China is overbuilt, then we will see a decline in construction materials, as we have oil prices.
If this does not happen by the end of the year, then we can expect cost of erecting buildings
is going to be higher for a long time.

Average price for 2008 - UP to $187,655 but $175,906 in 2007.
Dollar volumn DOWN approx. $6.5 million to $33,590,290 in 2008.
233 LESS units sold in 2008 with 1,173 units SOLD.
Average SALES PRICE is $3,900 UP to $177,664.
All of this information is from the Greater Tyler Assoc. of Realtors statistics.
For a change lets go to the TIERRA GRANDE magazine, the TX A&M Real Estate Center’s flagship periodical, has won 4 awards - illustration, photography, design & overall content.
Tierra Grande has been published continually for 30 years and the primary audience includes
more tan 150,000 Texas real estate agents. We are proud of this periodical!!

The effects of the recently signed housing-rescue act might not be immediate & might not be
large, according to Dr. Jim Gaines, research economists at Real Estate Center at Texas A&M U.
This market is so large, it is not going to TURN ON A DIME. Real Estate markets move slowly &
with fall coming it may take months to manifest the changes in the Housing & Economic
Recovery Act of 2008. The bill became law during the time of the year when the housing
market starts to slow down. Gaines said the recovery act has many individual remedies, so
their cumulative effect may be difficult to see.
BAD NEWS - identity thieves are targeting homeowners with good credit & particularly,
substantial untapped home equity. Until recently, homeowners with poor credit were easy prey for identity thieves, but with tightening the thieve are looking to other sources. Watch
out.

The TX economy continues to create more jobs albeit at decreasing rates while the nation’s
labor market is losing jobs. TX nonfarm employment increased 2.3%, but 0.1 decrease in U. S.
Higher oil prices, has driven the mining industry, followed by professional & business services,
leisure & hospitality, construction, education & health services industries. The complete
economic review is available at the TX A&M Real Estate Center’s website.
The U. S. House of Representatives has passed legislation that National Assoc. of Realtors
say will stabilize the housing market & stem foreclosures. It is called The Housing and Economic Recovery Act of 2008 - modernized the FHA by simplifying the procedure & making
these mortgages more available to thousands of families refinancing existing mortgages & keep
their homes. Hopefully those who can afford to own a home & want to do so will have that
opportunity.

Shady lending is what sent many folks into foreclosure & these changes will occur:
1. no loan unless can document borrower’s income,
2. lenders to escrow money to pay taxes & insurance for risky borrowers,
3. limit & in some cases, ban - prepayment penalities,
4. prohibit lenders from making a loan - must consider borrower’s ability to pay from
sources, other than home’s value,
5. mortgage advertising to contain info on rates, monthly payments, etc.
6. lenders credit a mortgage payment to homeowner’s acct. on day it is received,
7. forbid brokers, etc. from “coercing or encouraging” an appraiser to misrepresent the value
of the house.
To become effective 10/1/08, but escrow requirements 3/1/10.