The Bains

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.