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WASHINGTON ? Federal Reserve Chairman Ben Bernanke told Congress Tuesday that the fragile economy is being confronted by ?numerous difficulties? including persistent strains in financial markets, rising joblessness and housing problems, despite aggressive interest rate reductions and other fortifying steps over the past year.
At the same time, Bernanke, testifying before the Senate Banking Committee, said rising prices for energy and food are elevating inflation risks.
The situation, he said, poses ?significant challenges? for Fed policymakers as they try to chart the best course for keeping the economy growing, while making sure inflation doesn?t dangerously flare up. All the economy?s problems, including slumping home values, which threaten to make people feel less wealthy and less inclined to spend in the months ahead, represent ?significant downside risks? to economic growth.
Over the risk of this year, the economy will grow ?appreciably below its trend rate? mostly because of continued weakness in housing markets, high energy prices and tight credit conditions.
Inflation has remain high and ?seems likely to move temporarily higher in the near term,? he warned.
?Given the high degree of uncertainty? about the Fed?s economic outlook, Fed policymakers will need to carefully assess incoming information about inflation and economic growth, he said.
The Fed in June signaled an end to its nearly year long rate-cutting campaign because of growing concerns about inflation. Bernanke kept up his tough anti-inflation talk on Tuesday but stressed many other problems that could short circuit economic growth. He seemed to be keeping his options open in terms of rates. Given all the risky cross currents, economists believe the Fed will leave rates alone when they meet on Aug. 5.
Righting wobbly financial markets is key to getting the economy back on track, he said.
?In general, healthy economic growth depends on well-functioning financial markets,? Bernanke said. ?Consequently, helping the financial markets to return to more normal functioning will continue to be a top priority,? he said.
seller financing is getting easier and easier.
This could get ugly. When more banks start to fail, a run could start. We have boxed ourselves in because the government has dictated business policy that it doesn’t understand. From energy to housing, they don’t have a clue, yet they have set all the rules for the game. The one positive I see out of this is an even larger acceptance of owner financing from sellers. This golden age we appear to be in isn’t going to be ending anytime soon.
re: Seller Financing
I agree. My most recent transaction was an estate deal that was free and clear. The seller now holds a 4% note.
I’ve never done a “subject to” deal. It would be a great topic for a Tuesday call and/or a Forum thread. I totally understand the advantages/concepts but I’m weak on the actual mechanics. Like anything, I’m sure the first one will be quirky given the steep learning curve but the next ones will get easier.
What are the basic essentials to be competent enough to move forward on structuring a “subject to” deal?
Jimi –
I’ve done hundreds of subject to deals. I’ll schedule that for an upcoming conference call. Actually, if you look in the archive, I think I did one last September.
But we’ll do it again so everyone can get their questions answered.I’ll write up an instruction sheet for doing subject to deals — there are 2 ways and I’ll cover both – I’ll try to have that ready next week.
Jackie
Jackie –
Thank you-
I look forward to the instruction sheet and the conference call.
I’ll continue to search the archive for relavant material.
You’re awesome!In my market, prices have declined to 2002ish levels. 05′ o6′ and 07′ vintages are way underwater so not much to do with these except for ShortSales and Foreclosures. However, the 2000 – 2002 vintages are now in a position where many have only a sliver of equity after realtor fees, closing costs, vacancy expense, time on market etc..
So, appraoching these folks with payment relief is extremely viable. I also like the 8 or so years of amortization already built in.jimi
I’d be marketing heavily to the 1999 – 2002 deed dates if I were you!
Quote:Posted By Jackie on 07/17/2008 10:51 AMJimi –
I’ve done hundreds of subject to deals. I’ll schedule that for an upcoming conference call. Actually, if you look in the archive, I think I did one last September.
But we’ll do it again so everyone can get their questions answered.I’ll write up an instruction sheet for doing subject to deals — there are 2 ways and I’ll cover both – I’ll try to have that ready next week.
Jackie
Hi Jackie –
Thanks for setting up the Sub2 conference call on 8/19.
I’ve got a “live one” today …is the “instruction sheet” available in advance?Thanks!
Death Notices and Estate Sale advertisements.
I work a relatively small market area – so I also fish through the public property records (online) to seek out people who have owned the house for 20 plus years. It’s a neighborhood in transition with lots of “original owners” selling to the next generation. So a flyer is sent/delivered about twice per year.
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