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Like scary stories? I usually stay away from the horror movies section, but I was intrigued by the idea behind of Financial Armageddon: Protecting Your Future From Economic Collapse by Michael Panzer. This is a book about why our economic system is in danger, how it will collapse, and the bleak future ahead. Keep in mind that this was initially published in March 2007, even before the peak of the subprime mortgage mess and current economic slowdown. The book is separated into four parts: Threats, Risks, Fallout, and Defenses.

Threats
Here, the author lays out a relatively convincing picture of how fragile our economic system really is right now. This is the best part of the book in my opinion, and what you should read it for.

Debt. Our nation is in huge debt. Many consumers are also in huge debt or living paycheck-to-paycheck. We spend and spend, and don’t save for a rainy day. Guess what? Neither does the government. Does this sound healthy?

The Retirement System. We all know that more people are on their own with plans like 401ks, for better or worse (mostly worse). The problems with Social Security are relatively well-known. After a few big blow-ups like United, we now know that many private pensions are underfunded. And you know what? Many public pensions are underfunded as well. This is what happens when you allow politicians who need to get re-elected every few years to make promises for the next 100 years. If you think municipal…

WalletPop:

Filed under: Real Estate, Saving, Technology, Mortgage Confidential

Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

In the olden days, say before electricity maybe, mortgage applications required all sorts of documentation before the loan request was even looked at by a human being: the underwriter.

Nowadays most underwriters won’t review a loan request until the loan application has been electronically submitted through either Fannie Mae’s Desktop Underwriter or Freddie Mac’s Loan Prospector. While this may not mean a whole lot at first glance, this method can actually save you some money for closing costs: particularly for your appraisal. That’s about $400, and if you’re scraping up money for a down payment that $400 can mean a lot. How can electronic approvals save on appraisal money?

When your loan officer first submits your loan request through either Fannie or Freddie’s automated underwriting system, your loan decision will be returned in mere moments. This decision will list all of the documentation you’ll need to provide your lender: nothing more and nothing less.

Among all the required documents is a section that addresses the value of your current or proposed property and whether or not an appraisal is even warranted. The automated decision can ask for a full appraisal, a simple “drive by” appraisal costing maybe $200, or even extend an “appraisal waiver,” meaning you don’t have to shell out for a new property appraisal at all.

This…

WalletPop:

Filed under: Real Estate, Investing, Mortgage Confidential

Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

Q: The Fed has reduced rates by three full percentage points since last September. I have been following long term mortgage rates for quite some time. 15 and 30 year fixed rate mortgages are only .25% lower than they were last September. No one I ask seems to know why mortgage rates are still so high and happen to be rising as I write this. The current yield on the 10 year bond is 3.83, up from 3.47 early last week. My question is this. Do you think we will see lower mortgage rates in the future? - Carl

A: Carl — good question. No, I really don’t see lower rates in the future, certainly not anything like three percentage points. If 30-year and 15-year fixed rates do fall they might go down another 1/4 to 1/2% but nothing near to what the Fed has done with the Fed Funds Rate.

The fact is that the Fed has very little to do with fixed mortgage rates. Surprised?

Fixed mortgage rates are directly to to their respective mortgage bond, which are traded all day long. They’re then securities backed by mortgages (mortgage-backed securities). The Fed reduces the Federal Funds rate, which is a very, very short term rate…as in overnight. This rate is what banks pay for short term loans, typically in order…

WalletPop:

Filed under: Real Estate, Recession

As the real estate market continues its decline, the number of short sales — a sale of a home for less than the amount owned on it, with the lender forgiving the differences — are booming. The National Association Realtors estimates that short sales currently account for about 18% of all home sales nationwide.

While you might be able to find bargains in this segment of the distressed real estate, it can be a minefield full of long waits, confusion, and red tape. In a normal home sale, the buyer and the seller simply have to agree on a price. In a short sale, the institution servicing the loan must agree on the price, and sometimes takes months to approve the offer. If they approve it at all. The Wall Street Journal quotes (subscription required) Molly Kay Hamrick, president of Coldwell Banker Premier Realty in Las Vegas, as saying that 20% of short-sale offers in the area lead to completed sales, compared with 85% for traditional sales.And if waiting months for one lender to approve the deal sounds bad, try dealing with a homeowner who has multiple mortgages from multiple companies. That can quickly deteriorate into a word that starts with “cluster” and ends with a four-letter word that I can’t write on WalletPop.

But help may be on the way. The Journal reports that “Fannie Mae says that it plans to introduce a policy in the next few months under which real-estate brokers would be given an advance…