WHERE ARE WE GOING, AND WHY AM IN IN THIS HANDBASKET

Well.  If you haven’t turned on the television or the radio or read a newspaper in the past 24 hours, let me be the harbinger of bad news: we had the biggest point drop in the Dow Jones Industrial Average yesterday.  Why this massive stock crash, you may ask?  Not because something catastrophic hap­pened.  It is because something Wall Street perceived as helpful DIDN’T happen.

The 700 billion dollar Wall Street bailout plan got shot down by the House of Representatives yester­day, brutalizing the market in it’s aftermath.  While this does save a ton of taxpayer money, it also presses more banks to the brink of insolvency.  We just saw Wachovia get gobbled up Pac-Man style by CitiBank, and many people are wondering whish bank will be next to fall.  As such, investors are afraid of investing, pulling a ton of capital out of the markets.

The super-terrible part about it is that mortgage rates hardly benefitted from the flight from risk.  Part of the bailout was aimed at buying up mortgage-backed securities, which would have instilled a re­newed confidence in the investment vehicle and would have driven rates down.  With no bailout, peo­ple are back to treating mortgage-backed securities like active grenades.  This means we can expect higher rates until some iteration of this bailout gets through Congress.

Thursday is the tentative date for a second attempt for Congress to pass the bailout bill.  In the mean-time, it is expected that many more Democratic leaning provisions and earmarks will be added to the bill (because the Democrats have a majority in the House of Representatives).

Maybe we can jump on a floating door and start paddling to Cuba.

By Greg Whiteside, certified mortgage planning specialist and licensed mortgage broker.

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ORLANDO AUCTION - RESULTS

6:30pm on a Wednesday night: An unlikely start time for an auction perhaps but over 800 were seated by the time bidding began, and the total number of visitors over the course of the next four hours likely topped 1000 according to our estimates.

The REDC auction of central Florida bank owned properties included million dollar mansions and mediocre condos - and some bargains were had with most properties selling for about 40% of their prior estimated worth (and although some of those “estimates” looked a way too high, others seemed reasonable.)

One of our bidders claimed a 1000 SF, 2/2 condo in MetroWest’s <em>The Fountains</em> for just $55k, while across the street at Central Park a similar 2/2 condo loft sold for just $60k (plus 5% auction fee).

Who said investors can’t cash flow in today’s market!?

At the other end of the scale, this beautiful 5 bed, 4 bath 3,500 SF home on Anna Catherine Drive sold for just $235k <em>cash </em>and was previously valued at $529k (44%). And I know plenty of wood frame condo conversions that are still listed for more than that…

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Wall Street Melt Down

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